Former Blackjewel miners agree to let CSX train engines pass with no coal
As angry coal miners continued to block a set of railroad tracks in Harlan County Friday, the miners’ former employer, Blackjewel LLC., sought a court order to let a disputed coal train pass through the blockade.
Frank Volk, a judge in the U.S. Bankruptcy Court for the Southern District of West Virginia, did not make a final ruling on that request, but asked for another hearing within 10 to 14 days to continue the discussion.
Upset over not being paid for more than three weeks of work, a small group of miners stood on the tracks and blocked the train last month as it hauled coal from a Blackjewel mine.
The company failed to pay hundreds of Kentucky miners as it declared bankruptcy more than a month ago. Some former Blackjewel miners have said they’re owed thousands of dollars and have struggled to make ends meet in the weeks following the bankruptcy.
The coal, which was rolled back after the miners blocked its path, was produced at Blackjewel mines prior to the company’s bankruptcy filing. As part of a settlement agreement with a company called Blackjewel Marketing and Sales (BJMS), which is separate from Blackjewel LLC., Blackjewel agreed to sell the coal to BJMS.
According to court records, BJMS still owes $1.4 million as part of that settlement agreement, and will not pay until it is allowed to move the coal. BJMS has already paid more than $3 million in the settlement.
In addition to the miners, who say they will continue to block the tracks until they’re paid, the coal is formally blocked through a court action filed by the U.S. Department of Labor and approved by the bankruptcy judge.
The department has also filed suit against Blackjewel in the U.S. District Court for the Eastern District of Kentucky, and in the U.S. District Court for the Western District of Virginia, arguing that Blackjewel violated the Fair Labor Standards Act by selling and attempting to transport “hot goods.”
The Department of Labor argues that the coal — about 20,000 tons, worth $10 million — constitutes “hot goods” because it was produced by workers who haven’t been paid. The department has filed motions requesting that the coal be blocked until Blackjewel provides about $4 million in unpaid wages for the miners.
“(The Fair Labor Standards Act) says hot goods are prohibited from entering interstate commerce. Period,” said Samanta Thomas, a regional solicitor for the U.S. Department of Labor, during Friday’s court hearing.
Thomas argued that Blackjewel would need to devote about $4 million toward miners’ wages for the coal to be moved without violating the FLSA.
Blackjewel has agreed to put the remaining $1.4 million — the amount BJMS has yet to pay — into escrow, but Thomas said that would not be enough to cover back wages.
Even if the money were put into escrow, it could still be disputed by other creditors, so wouldn’t necessarily go to the miners, Thomas said.
Chris Dickerson, an attorney representing BJMS, said the company had “no knowledge or involvement of the non-payment of workers.”
“BJMS is a good faith purchaser who will be irreparably harmed if these goods are not moved,” Dickerson said.
Stephen Lerner, Blackjewel’s lead attorney, said that as the coal sits on the tracks it becomes less valuable because of a process called oxidization. If the coal sits too long, BJMS will refuse to pay the remaining $1.4 million, Lerner said.
That wouldn’t just hurt Blackjewel’s estate, it would hurt miners as well, he said.
As creditors battle over the amount of money left in Blackjewel’s estate, the loss of $1.4 million means there would be less money to go around, including to miners, he said.
The blocked coal train also is jeopardizing Blackjewel’s proposed sale to Kopper Glo Mining, LLC., which has agreed to buy a number of Blackjewel mines in Kentucky and help pay miners for their back wages, Lerner said.
“We understand (Kopper Glo) may not close as a result of this,” he said.
Lerner called the Department of Labor’s efforts to block the train “a terrible thing and incredibly ironic” for its alleged negative impact on the miners.
An attorney representing Kopper Glo declined to comment.
Chris Rowe, one of the miners protesting in Harlan County, said he doesn’t buy the argument that the blocked train would jeopardize Kopper Glo’s purchase of the mines.
“I don’t see why it would hinder the new company buying it out because there was an illegal action that took place,” Rowe said of the wage dispute.
Rowe said Blackjewel’s arguments wouldn’t persuade the miners to leave the tracks.
“We’re still here,” he said.