The International Longshore and Warehouse Union (ILWU), which represents dockworkers at ports along the Pacific coast of the United States and Canada, filed for Chapter 11 bankruptcy protection just before midnight on Saturday.
The ILWU “will continue to operate as usual throughout the restructuring process,” the union said in a statement on Sunday morning. It plans to “continue honoring its employee and payroll obligations in the ordinary course of business.”
Bankruptcy driven by long-running legal dispute
The bankruptcy filing was precipitated by a massive damage award and ongoing litigation in a long-running dispute between ILWU Local 8, the union chapter in Portland, Oregon, and terminal operator ICTSI Oregon.
In November 2019, a jury found that the union had engaged in unlawful practices in 2013-2017, including work stoppages, slowdowns, “safety gimmicks” and other coercive actions.
After a 10-day trial, the jury awarded $93.6 million in damages to ICTSI, which, if enforced, was expected to push the ILWU into bankruptcy. The jury found that ILWU National was responsible for 55% of ICTSI’s damages, and Local 8 was responsible for 45%.
In March 2020, Oregon District Judge Michael Simon dramatically reduced the amount due, ruling that damages should not exceed $19.1 million.
The two sides are currently filing briefs regarding the final extent of damages. The ILWU argued in a court filing on Friday that ICTSI’s damages “are non-existent or minimal, at most $3.9 million.”
The ILWU filed financial documents as part of its voluntary Chapter 11 petition in the Northern District Court of California, listing current assets of $11.6 million, including $9.5 million in cash, far below the maximum amount in the judge’s 2020 ruling.
In a letter sent to union chapters on Sunday, ILWU management said it had been prepared to “find a way” to pay the $19.1 million judgement at the time of the 2020 ruling, but “ICTSI rejected the reduced damages so a new trial was scheduled.” ICTSI is seeking $48 million to $142 million in damages in the new trial, said the ILWU.
“Unfortunately, the ILWU cannot afford to continue to litigate this case,” union management told members.
ILWU responds to ‘scorched-earth litigation tactic’
According to ILWU President Willie Adams, “While we have attempted numerous times to resolve the decade-long litigation with ICTSI Oregon, at this point, the union can no longer afford to defend against ICTSI’s scorched-earth litigation tactic.
“We intend to use the Chapter 11 process to implement a plan that will bring this matter to resolution. The officers are confident that we are taking the right step to put our organization on the best path forward — and we are optimistic for all that is ahead.”
ILWU management said in its letter to union members: “We want to assure you that the ILWU is operating business as usual. Our bankruptcy filing is not a liquidation or what is often thought of when you hear the word ‘bankruptcy.’”
The ILWU Chapter 11 filing comes a month after the union ratified a new six-year labor contract with the employers’ group, the Pacific Maritime Association, ending the threat of labor-dispute-related slowdowns at West Coast container ports. Concerns over port labor issues have led to a shift in container shipping volumes to East and Gulf coast ports over the past year.
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