Tribe Signs Landmark Union Labor Contract For Casino Dealers

The Mashantucket Pequot Tribal Nation has reached a tentative agreement with the United Auto Workers Union (UAW) for a labor contract and collective bargaining on behalf of 2500 of table-game dealers at Foxwoods Resort Casino in Connecticut. The agreement is unique both for its scale – Foxwoods is billed as the largest resort casino in the United States – and for the fact that it was negotiated in the context of Tribal law rather than federal labor law.

The agreement has several facets that differ significantly from typical union labor contracts. The Nation’s laws prohibit strikes by workers and lockouts by owners, so the contract does not contain a strike provision. In the event of a labor dispute that cannot be resolved through negotiation, the matter will be submitted to private arbitration for resolution. The contract provides an average 12 percent increase in dealers' wages over two years, changes the distribution of tips for dealers, includes programs to reduce repetitive stress injuries, and creates a 24-table smoke-free gaming pit for workers and customers who prefer a smoke-free environment.

For the UAW, the agreement is being heralded as a major victory in their union organizing efforts. "Working together, we proved casino workers can successfully exercise their right to have a union under tribal law," said UAW Region 9A Director Bob Madore. "Our settlement demonstrates what we have known all along: that tribal sovereignty and employee rights need not be inconsistent. We value the investment and jobs the Mashantucket Pequot Tribe has brought to Connecticut, and we look forward to promoting this exciting resort as a destination of choice for working families and union members across New England."

For the Mashantucket Pequot Nation, the agreement may provide a measure of financial predictability for its casino operations. The casino, by far the Nation’s largest revenue source, is behind in its debt repayments and has been working with creditors to restructure its financing. The agreement with the UAW sets wage and benefit rates for two years, and eliminates the potential for labor unrest or further legal battles with the union or the federal government.
 

Mashantucket Pequot Reaches Deal To Extend Foxwoods Casino Debt Forbearance

The Mashantucket Pequot Tribal Nation, owner of Foxwoods Resort Casino, has reached a new agreement in principle with its senior lenders to extend a debt forbearance agreement. The agreement is designed to provide more time to improve the casino’s cash flow and repayment ability as it works to restructure $2.3 billion of debt. The existing forbearance agreement would have expired January 20th; the new agreement extends the timeline to April 30, 2010.

The agreement in principle has been made with a majority of the Tribal nation’s lenders and will be finalized and executed shortly, according to the Tribe’s spokesperson.  The statement emphasized that the Nation's debt restructuring efforts are separate and distinct from operations at Foxwoods and will not have any impact on guests, employees, suppliers or business partners at Foxwoods or MGM Grand at Foxwoods.

“Foxwoods remains committed to providing its guests with its signature guest service, unparalleled gaming options, the very best in entertainment, and world-class services, dining and amenities,” according to the statement.
 

Tribal Casino Defaults Raise Big Questions On Bankruptcy Laws

The economic downturn is opening some previously-uncharted legal territory - the question of applicability of federal bankruptcy laws and procedures for troubled Tribal enterprises. 

The Mashantucket Western Pequot Tribal Nation, owner of the massive Foxwoods Resort Casino, is seeking to restructure at least $1.45 billion in debt.  With gaming revenues in steep decline due to a lack of players, Foxwoods is at risk of becoming the biggest Tribal casino company to default on its debt. 

The looming cash crunch highlights the different economic and legal landscape in which Tribal enterprises operate. “They can’t do the types of things other debtors can in a restructure,” says Megan Neuburger, an analyst at Fitch Ratings in New York. “Tribal casinos can’t do a debt-for-equity swap. They can’t raise cash by selling off assets on Tribal land to repay creditors."  Standard & Poor’s has cut its Mashantucket rating four steps to CCC and placed the debt on credit watch.  Creditors probably can’t take over assets or operations of casinos on Tribal land, which are sovereign nations, as they may with commercial bankruptcies, Neuburger said. That leaves them little choice other than to restructure debts and work with the Tribe.

No Tribal casino has yet tested federal bankruptcy laws.  “Bankruptcy law does not apply to Tribal situations in the same way it does to a commercial situation,” Neuburger said.  Michael Thomas, chairman of the Mashantucket Pequot Tribal Council, told members that the Tribal government would be paid first, before bankers or bondholders.  “It might be posturing, but the Tribe is indicating that it might put itself, the equity holder, ahead of the debt, ignoring corporate law,” said Lawrence Klatzkin of municipal bond broker Chapdelaine Credit Partners. “It probably won’t happen, but if it does, who’s to say other Tribes don’t say, ‘If Foxwoods doesn’t need to meet its U.S. legal obligations, maybe I don’t either.’”

 

Mashantucket and UAW Agree to Negotiate Labor Agreement Under Tribal Law

Only days after filing an appeal of the National Labor Relations Board’s ruling ordering it to bargain with the over 2,500 dealers represented by the United Auto Workers, the Mashantucket Pequot Gaming Enterprise (Foxwoods Resort Casino) and the UAW have agreed to enter into discussions regarding a labor agreement under Tribal law.

The jurisdictional dispute over whether Tribal laws or the federal National Labor Relations Act of 1935 apply to employees on Tribal land has been waged since last November, when poker dealers at the Mashantucket Pequot Tribal Nation’s Foxwoods Resort Casino voted 1,289 – 852 to join the United Auto Workers union. The federal law is administered by the National Labor Relations Board. Mashantucket has supported employees’ right to unionize, but says they must do so under Tribal labor laws.

The dispute at Foxwoods has been watched closely by Tribes and unions across the country, as it will set a precedent for labor relations involving Tribal enterprises. Federal labor laws did not apply on sovereign Tribal land for almost 75 years after passage of the National Labor Relations Act, but in January 2007 a federal court decision upheld the NLRB’s own earlier ruling that the San Manuel Band of Mission Indians in California was subject to federal labor laws.

The San Manuel case involved a narrowly-applied definition of a casino as a commercial operation, but did not deal with the wider issue of Tribal sovereignty or Indian casinos as governmental operations that provide revenue for Tribal services – issues that may still be resolved in court if the Mashantuckets and UAW fail to reach agreement in the current talks.