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March 28, 2024

Federal judge voids Taj Mahal casino union contract

Trump Taj Mahal

Wayne Parry / AP

This Sept. 22, 2011, file photo shows the Trump Taj Mahal Casino Resort in Atlantic City NJ. Its owners and main casino workers union are clashing over the company’s demand for substantial union givebacks and government aid in return for keeping the casino open past November 2014.

Updated Friday, Oct. 17, 2014 | 1:27 p.m.

ATLANTIC CITY, N.J. — The owners of the Trump Taj Mahal Casino Resort voiced optimism Friday that they can avoid closing the struggling casino after a federal bankruptcy court judge voided its contract with union workers.

Judge Kevin Gross in Delaware granted a request by Trump Entertainment Resorts to terminate its contract with Local 54 of the Unite-HERE union. The company and billionaire investor Carl Icahn had said the casino can't survive without shedding costly pension and health care obligations.

But a big hurdle still remains: getting a study commission appointed by Gov. Chris Christie to agree to massive state aid for the Taj Mahal and other struggling casinos — something that is far from assured.

"We are proud of our efforts to keep the Taj Mahal open, to deliver our loyal customers a continued first-class gaming experience and to have the ability to save 3,000 jobs in a very difficult Atlantic City economy," said Robert Griffin, CEO of Trump Entertainment. "We look forward to working with our elected officials. With bipartisan leadership we believe we can take a collective step toward a brighter future in Atlantic City."

The reaction was less cheerful from the union, which lost guarantees on wages, pensions and health care. It planned to picket the casino for three hours next Friday in protest.

"The decision today will certainly enrage the workers who have relied on and fought for their health care for three decades," said Bob McDevitt, president of Local 54. "We intend to continue to fight this both in the courts and in the streets."

Referring to Icahn, McDevitt said: "Tropicana's major owner wants you to believe that the demand to take away workers' health insurance is necessary because of the financial situation at the Taj Mahal and in Atlantic City. We believe it has nothing to do with either. He has a long history of eliminating, reducing or freezing worker benefits which sometimes saddles government agencies with the burden of cleaning up the mess."

Icahn has rejected the union criticism and said he saved the Tropicana four years ago by acquiring it in a similar fashion to how he would acquire the Taj Mahal.

Icahn, who owns the Taj Mahal's $286 million in debt, would swap that debt for ownership of the casino and invest $100 million into it. But that investment is contingent on massive government aid from Atlantic City and the state.

The company says it needs big union concessions and massive tax breaks from Atlantic City and New Jersey — both of which already have rejected the demand. It originally sought to have Atlantic City lower its property tax assessments by nearly 80 percent, to have the state contribute $25 million in tax credits, and for union workers to give up their pension and health insurance. It would provide $2,000 stipends for workers to find their own coverage under the Affordable Care Act.

After getting a negative reaction from Atlantic City Mayor Don Guardian and state Senate President Steve Sweeney, the company revised its financial request from the state. It is now seeking $175 million in relief through a so-called PILOT program — payments in lieu of taxes — and the receipt of two types of state economic grants not usually available to casinos: the Economic Redevelopment Grant and the Urban Revitalization Grant. State legislators would have to vote on letting the casinos into the program.

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