BANGOR — The sale of the Bucksport mill to a subsidiary of scrap dealer American Iron & Metal for $58 million may go forward after a federal judge Tuesday refused to halt it due to possible antitrust violations.
U.S. District Judge John Woodcock said in his 73-page ruling, issued about 2 p.m., that lawyers for the machinists union “have not met their burden to demonstrate a strong likelihood of success on the merits of their claims.”
That was the legal standard the judge said needed to be met for him to issue a temporary restraining order and a preliminary injunction to keep Verso from selling the shuttered paper mill.
The International Association of Machinists filed suit against Verso and AIM last month, alleging that Verso ignored inquiries from other paper companies so it could reduce competition in the North American coated paper market. Lawyers for the union wanted Woodcock to halt the sale and allow plaintiffs to have access to communications among Verso, AIM and other potential buyers under federal rules of discovery that they said would prove the sale violated antitrust laws.
Woodcock’s decision may be appealed to the 1st U.S. Court of Appeals in Boston.
John Carr, spokesman for the machinists, said late Tuesday in an email: “We are conferring with our legal counsel on how, and if to proceed.”
“We are truly disappointed in the judge’s decision today,” Carr said. “More so, his decision not to consider the resounding call from the Governor’s office and others that Verso was not being completely candid in revealing the existence of potential buyers for the Bucksport mill. This fight is about the working families in and around the Bucksport mill, preserving the good jobs and the community of Bucksport.”
At a status conference Tuesday morning, Woodcock encouraged representatives from Verso, buyer American Iron & Metal, the workers, potential buyers and the governor’s office “to sit down in a room together” and “work something out.”
He reiterated that idea in writing in the final paragraphs of an addendum to his decision: “… at the hearing, the court expressed the view that the unique juxtaposition of the many interests in this case may offer an opportunity for Verso, AIM, the unions, the potential purchasers, and state government to arrive at a global resolution of this difficult problem,” Woodcock wrote.
“If all interested parties were to get in the same room and negotiate, the court wondered whether some resolution could be arrived at, perhaps with the assistance of state officials, in which Verso and AIM walked away with the benefit of their negotiated contract, one of the interested purchasers bought the mill and operated it to make paper, and perhaps not all, but some of Verso’s approximately 500 employees remained employed at Bucksport.
“To this end, the court offered the mediation services of other federal judges, if the parties thought it would be worthwhile,” he continued. “As Verso and AIM were not inclined to mediate and demanded a decision on the pending motion, the court has issued the order. However, the court continued to offer the possibility of court mediation if the parties later conclude that such a global mediation would be helpful.”
Woodcock said Tuesday morning that either U.S. Magistrate Judge John Nivison or U.S. Bankruptcy Judge Louis Kornreich could act as mediators for such a meeting.
Efforts to reach Gov. Paul LePage to determine if he would be willing to send a representative to such a meeting were unsuccessful Tuesday afternoon.
The judge said Tuesday morning at a 30-minute status conference that the letters he received over the weekend and on the Martin Luther King Jr. holiday were not properly submitted as evidence in the form of affidavits or declarations.
Even if submitted as evidence, Woodcock wrote in his decision that the letters submitted by prospective buyers and from LePage’s office had no bearing on the union’s motion.
“The Court respects and appreciates the contents of the Governor’s and Mr. Pelletier’s letters, but neither, even if true, changes the merits of the pending motion,” Woodcock wrote. “As regards the letters from prospective buyers, each is an expression of interest, not an offer, and each is too vague to change the facts upon which the Court must base its Order. Even if these letters were submitted in affidavit form, they would not change the Court’s decision.”
Late Monday, representatives from Pennsylvania-based Fibre Technologies LLC and New York-based Minimill Technologies filed letters stating they potentially could find a way to repurpose the mill to operate in new markets.
The two letters were filed in court after Rahul Kejriwal, of a New York-based affiliate of Kejriwal Singapore International, wrote of his company’s interest in the mill Sunday.
The letters may have been sent in reaction to what Woodcock said Jan. 13 at a hearing on the motion for the temporary restraining order. The judge told attorneys that it was going to be difficult for him to decide whether the sale violated antitrust laws when he had no evidence a competitor existed — just “a suggestion there were people who were interested” in the property.
None of the letters stated that the companies made formal offers to Verso after it announced in October it would shut down the mill, which made the type of paper used in magazines and catalogs.
Town officials in Bucksport have said they would prefer that the mill be restarted as a papermaking facility so that the hundreds of Verso employees who were laid off last month could be rehired and get back to work.
“I think that would be the best outcome, to have a mediated settlement where all parties were assured that they could have what they wanted and we could put people back to work making paper in the town of Bucksport,” Town Manager Derik Goodine said outside the Bangor courthouse shortly after the morning conference.
Bucksport officials could not be reached after Woodcock issued his decision. They previously have said, however, that despite their desire to see the facility remain a paper mill, they have been in communication with AIM, providing the Canadian firm with information about the 250-acre waterfront site, in an effort to help maximize the economic benefit to the area of whatever redevelopment plans AIM may come up with. They said AIM also has told them it would consider reselling the mill to a paper manufacturing firm.
On Tuesday morning, before the judge had issued his ruling, Goodine said that, short of mediation, the legal wrangling over the mill’s future was likely to continue beyond Woodcock’s ruling.
“I think this is going to be appealed to a higher court no matter which way it goes,” Goodine said.
Kejriwal and Fibre Technologies penned letters to Woodcock on Friday, but Fibre’s letter was not made public in the court record until Monday afternoon. The Minimill letter was dated Monday.
Herbert Black, head of AIM, told Maine Public Radio on Monday that he had met with Rahul Kejriwal recently, but he did not have his financing in place.
Attorneys for Verso and AIM denied last week that there was a buyer other than the scrap dealer.
Clifford Ruprecht, who represents AIM, told Woodcock the company is “ready, willing and able to sell the mill to someone willing to pay more than the sale price, but we’ve seen no evidence that such a buyer exists.”
The attorney reiterated that point at Tuesday’s status conference.
Ruprecht and David E. Barry, who represents Verso, declined via email to comment on Woodcock’s ruling.
In the same lawsuit, the union also accused the company of trying to
“evade its legal obligation” under state law to make timely payments for severance, final wages and accrued 2015 vacation time. Woodcock on Jan. 6 dismissed that portion of the lawsuit in an 86-page ruling.
Attorneys for Verso and AIM told Woodcock last week that the sale closing was on hold because of the lawsuit and because the Federal Energy Regulatory Commission had not yet agreed to transfer permits to operate the power plant at the Bucksport Mill to AIM.
FERC approved the permit transfer Thursday, according to a previously published report.
The closing is expected to be scheduled now that Woodcock has issued his decision. Efforts Tuesday to determine if a closing date has been set were unsuccessful.
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