October 29, 2015
CCAA -- Wild West Show of the
Monopolies
Where Might Makes Right
Court Grants Motion to Expedite
Appeal of Decision to Keep
Secret Stelco Deal Sealed
CCAA
-- Wild West Show of the Monopolies Where Might Makes Right
• Court of Appeal for Ontario Grants Motion to
Expedite Appeal
• The Prosecution of U.S. Steel for Crimes in
the U.S.
• Arbitrary Justice Is No Justice at All
- K.C. Adams
For Your Information
• U.S. Anti-Trust Ruling Against U.S. Steel et
Al
CCAA -- Wild West Show of the Monopolies
Where Might Makes Right
Court Grants Motion to Expedite Appeal of Decision to
Keep Secret Stelco Deal Sealed
The federal government ended its lawsuit against U.S.
Steel in 2011. Both parties refused to release the contents of the deal
that ended the federal court
case against U.S. Steel for breaking production and employment promises
made under the authority of the Investment Canada Act.
The U.S. monopoly signed an agreement with the federal
government and made various public promises to sustain production and
employment at specified
levels, protect pensions, and make investments in Stelco when it seized
control of the Canadian steel company in 2007. If U.S. Steel had
refused to come to
an agreement promising a net benefit to Canada, the
expectation was and remains that it would not have been allowed to buy
Stelco.
U.S. Steel soon broke the
agreement in its entirety. The federal government eventually launched a
lawsuit against U.S. Steel, which if successful, would
have resulted in punishing fines and other remedies to bring the
company into conformity with the law and agreement.
The federal government suddenly ended the lawsuit with a
settlement in 2011 that to all intents and purposes did nothing to
change U.S. Steel's destructive
behaviour. The anti-Canadian rampage of U.S. Steel has resulted in a net
loss for Canada and the present attempt with the Companies' Creditors Arrangement Act
(CCAA) fraud to liquidate Stelco's
production entirely, renege on promises to make the pension funds whole
by the end of 2015 and refuse to meet its other social responsibilities.
Canadian stakeholders in U.S. Steel contend that public
disclosure of the settlement is important for all concerned with the
future viability of Stelco. They
contend the settlement must be made public as part of the effort to
expose the fraud of U.S. Steel putting its Canadian subsidiary under
bankruptcy protection
of the CCAA. Stakeholders are fighting to oppose U.S. Steel's
liquidation of Stelco's production capacity and its ability to
produce value for the country, communities and all those who rely on
steel production for their livelihoods and pensions.
The Superior Court Justice Herman Wilton-Siegel in
charge of the CCAA case, in his May 19 decision, agreed that public
disclosure is necessary but that he lacks the authority
to order the two parties to comply. In a very brief hearing on October
26, the Ontario Court of Appeal agreed to an expedited hearing on
November 19, to hear
objections to Justice Wilton-Siegel's ruling and whether it should be
overturned.
Outside the courtroom after the October 26 hearing, the
President of Local 1005 USW Gary Howe said several issues are important
for Canadians to consider. One issue for
Canadians to think about is whether Canada should have a viable steel
industry or not. Howe said in the opinion of Local 1005 and its many
allies that
Canada, and any modern country for that matter, needs a steel industry
and government measures should be taken to ensure stable steel prices
and
production.
The value of fixed assets of a steel industry is
extremely large, he explained. To shut those assets down and then
decide in the future to restart them requires
great funds and efforts. The decision should not be taken lightly, as
it concerns nation-building.
The issue being addressed regarding public disclosure of
the settlement agreement is whether U.S. Steel should have been allowed
to buy Stelco in the first
place, whether it was ever serious about its commitments to sustain
Stelco or had something else in mind.
Another issue Howe raised
is the one of accountability not only to continued steel production but
also to the retirees who have given their productive lives
to Stelco. Somebody has to be held to account for the situation the
retirees have been put into, he said. They worked for decades producing
high quality steel
under hazardous conditions only to have their security in retirement
taken from them. Someone has to be held to account.
Also to consider, Howe said, is the issue of future
jobs. A steel industry not only generates direct employment but also
sustains many indirect jobs. Workers
who have produced the steel for much of their lives have to be
considered a priority as they have much to offer the Canadian economy.
In addition, a viable
steel industry and manufacturing generally offer futures for our young
people who want to participate in production.
The Prosecution of U.S. Steel for Crimes in the U.S.
U.S. Steel and several other global steel monopolies
have pleaded no contest to an anti-trust suit and have been forced to
pay millions of dollars in fines
to the plaintiffs. The total fine of $103,930,547.36 that U.S. Steel
and others must pay and the pro rata
amount each recipient will receive has been settled in
a U.S. court.
The prosecution of U.S. Steel for crimes in the U.S.
stands in sharp contrast with the present situation in Canada. Here,
U.S. Steel is using the Ontario
Superior Court and the Companies' Creditors Arrangement Act
(CCAA) to attack further those who have already suffered. Instead of a
criminal
standing in the dock accused by those it has harmed, the victims are
forced to suffer even greater abuse within CCAA court proceedings that
U.S. Steel and
its flunkies control and direct.
Unlike other court cases, the CCAA process hears no
evidence of the crimes of an accused. The actual actions of an accused
are not presented and judged
according to accepted practices of law. Instead, a powerful entity is
allowed to fabricate a story to serve its narrow private interests and
turn the tables on its
victims, forcing them to respond to the fanciful story and pay for the
crimes of the storyteller.
The people are fed up with this abuse of the court
system. The antics of U.S. Steel within the CCAA bring the entire
justice system into disrepute as a tool
of the global rich and the monopolies they own and control. The federal
and Ontario governments must intervene immediately with a pro-social
alternative, halt
this abuse of power and hold U.S. Steel to account for its crimes
against Canada and the people as a U.S. court is doing in the United
States.
Ruling in Anti-Trust Suit Versus U.S. Steel et Al
James B. Zagel, United States District Judge
(Illinois) has rendered a Memorandum
Opinion and Order in the anti-trust suit against U.S. Steel. (Excerpts)
Almost one year ago, in October 2014, I granted final
approval to the Settlements with Defendants CMC, Gerdau, AK Steel,
ArcelorMittal and U.S. Steel....
The Notice and Claims process is now complete, and the Claims
Administrator is prepared to distribute the net Settlement Funds to the
Class, on approval by
the Court. The current, total available balance of the Settlement Funds
is $103,930,547.36.
Presently before me is Plaintiffs' motion for
distribution of these settlement funds. In this motion, Plaintiffs
outline the Notice and Claims process and request
that I approve: (a) the procedures used, the actions taken, and the
determinations made by the Claims Administrator. [...]
I approve the distribution recommendations set forth in
the Cirami Declaration and Exhibit E thereto, as well as the proposed
methodology for determining
payment amounts for Claimants. [...]
GCG reports that as of August 31, 2015, the available
balances of the Settlement Funds total $103,930,547.36. [...]
GCG is directed to distribute the monies in the
Distribution Fund to the approved Claimants ... as soon as practicable.
[...]
The claims process in this case has been thorough,
straightforward and fair. It seems clear to me that every class
member's claim has been evaluated pursuant
to the same process and under the same standards. Accordingly, I am
granting Plaintiffs' motion. Plaintiffs may retain $250,000 in the
Settlement Funds to cover
their estimated future expenses described above and transfer
$103,680,547.36 into a new Distribution account, for distribution to
Class Members. GCG may
prepare and mail checks to all Approved Claimants for their pro rata
shares of the Settlement Funds as set forth in Plaintiffs' motion.
James B. Zagel
United States District Judge
DATE: October 19, 2015
Arbitrary Justice Is No Justice at All
- K.C. Adams -
Prior example of arbitrary
justice -- Justice Farley's ruling in Stelco's CCAA
that attacked the workers.
U.S. Steel's Canadian subsidiary is now under bankruptcy
protection of the Companies' Creditors Arrangement Act
(CCAA). Canadians have
long characterized the CCAA as a forum of injustice, where might makes
right. The CCAA is designed to give a veneer of legality to monopoly
right and its
attacks on public right. Rather than rule of law, the CCAA is a Wild
West Show where actions are not judged according to their conformity
with accepted
business practice and law but rather to advance the private interests
and monopoly right of those in control of the Show.
The current CCAA process involving the supposed
bankruptcy of U.S.
Steel in Canada follows a similar pattern to other CCAA cases.
Arbitrariness in favour
of certain private interests is sanctioned under the concocted aim of
those in control of the CCAA process. Those currently in control have
all been put there
by the executive managers of U.S. Steel (USS). They include William
Aziz the Chief Restructuring Officer (CRO), the CCAA Monitor, the
executive managers
and directors of USSC (the Canadian subsidiary so named by USS and
supposedly in need of bankruptcy protection), its Financial Advisor and
Brookfield Capital
Partners, the debtors-in-possession.
Justice H. Wilton-Siegel, the Ontario Superior Court
judge presiding
over the USS case says the general aim and purpose of the CCAA is, "to
further the
prospects of a viable plan of arrangement that will restructure the
debtor company or its business in a manner that will allow continued
operation of the
business."
(All quotations from the October 14, 2015 complete
ruling of Justice
Wilton-Siegel sanctioning the destructive "Business Preservation Plan"
and its anti-social
"Cash Conservation Measures" that U.S. Steel is imposing on Stelco and
its stakeholders and creditors.)
In this particular case, the debtor company, "USSC is an
indirect
wholly-owned subsidiary of United States Steel Corporation ('USS'). USS
acquired USSC
in October 2007." The "indirect wholly-owned subsidiary" has been put
into bankruptcy protection by its foreign owner. One wonders how a
direct wholly-owned
subsidiary would differ in substance from U.S. Steel's indirect
ownership. In any case, the indirect owner wants to avoid losing all or
part of its investment in
Stelco's fixed assets to stakeholders and creditors or competitors. To
accomplish this aim, the owner USS has declared itself the principal
and foremost creditor,
which is a highly unusual position for an owner in need of bankruptcy
protection, indirect or otherwise. USS has put its own people in
control of its CCAA
bankruptcy process and is running it to crush any real stakeholders and
creditors and any pro-social alternative for Stelco.
The aim of putting USSC into CCAA is not to deprive its
sole owners
in the U.S. of their investment. The aim of the U.S. owners, which they
have made
the aim of this bankruptcy protection, is to deprive any real
stakeholders and creditors of their rights and claims, liquidate the
fixed assets of USSC, escape back
to the U.S. with as much of their initial investment as they can, and
prevent any pro-social alternative for Stelco that would serve the
people, Canadian economy
and nation-building. This particular aim may or may not be in
contradiction with the general aim of the CCAA as explained by Justice
Wilton-Siegel but that
seems to be of no consequence for this is the Wild West.
USS has formulated its particular CCAA aim of not losing
its
over $2 billion investment, as a "Business Preservation Plan." The
"Business Preservation
Plan" would be better characterized as a "Business Liquidation Plan,"
as it contains a clear march towards destruction of USSC within a short
period.
So, the "Business Preservation Plan" foresees 12 to 15
more months
of existence at "a significantly reduced level" and then both mills
will be "idled." The
reduced level of production is almost wholly a consequence of USS
moving 40 per cent of USSC current production to plants in the United
States. The
Justice refers to this aspect of the "Business Preservation Plan" as
the "Diversion Decision."
"USSC estimates that the Diversion Decision will result
in a loss of
approximately $40 million and $8 million of EBITDA in the fourth
quarter of 2015."
"USS also notified the parties that ... it proposed to
refrain from
submitting any customer bids in the current round of negotiations with
the OEM (Original
Equipment Manufacturers) purchasers that would contemplate any
allocation of automotive-related steel production to USSC."
"In this context, given the present circumstances, USS
considers USSC's production capacity in 2016 to be uncertain."
USS is stealing Stelco's
most lucrative customers depriving it of 40
per cent of its gross income. The Business Preservation Plan guarantees
that Stelco has
no positive cash flow. As well, USS refuses to plough any revenue back
into the fixed assets such as the Lake Erie Works' blast furnace
reline. Any company
to survive must constantly put realized added-value back into the fixed
assets or they will become exhausted, atrophy and die. But death of the
fixed assets is
of no concern to U.S. Steel whose concern is to destroy Stelco as a
competitor and escape from the battle as unscathed as possible.
The diversion of Stelco production to USS plants in the
U.S. is not
new as USS admits in the Diversion Decision. U.S. Steel says that it
has deliberately
weakened production at Stelco over the course of its ownership in
contravention of agreements with the Canadian governments and in public
announcements
and promises.
To escape from Canada with as little loss as
possible resulting from its
liquidation of Stelco, USS hastily created a separate shell for its
wholly-owned Canadian subsidiary and put it into CCAA bankruptcy
protection under its control.
Within the CCAA, U.S. Steel concocted a Business Preservation Plan for
USSC that restricts its production and income, and guarantees its
destruction. To
compensate for the loss of Stelco income under the Plan, and to appear
as if it is concerned for the survival of USSC and "allow continued
operation of the
business," USS has called for "Cash Conservation Measures" that
directly attack workers, retirees, suppliers, contractors and even
various levels of
government.
Justice Wilton-Siegel says the Business Preservation
Plan and Cash
Conservation Measures are consistent with the aim of the CCAA "to
restructure the debtor
company (USSC) or its business in a manner that will allow continued
operation of the business." The contorted pragmatic logic of the end
justifies the means
is extended from the aim of the CCAA to the Business Preservation Plan
and on to the Cash Conservation Measures, which are necessary to
sustain USSC as
a result of its loss of income under the Plan.
"The Business Preservation Plan includes a number of
cash
conservation measures reflected in the Business Preservation Order that
the board of directors
of USSC believes are necessary to enable USSC to maintain sufficient
liquidity and continued access to DIP financing in order to continue
operations."
The supposed aim to save USSC, which is under a direct
destructive
attack from its U.S. owners, compels the violent means that tumble one
after another
onto the backs of retirees, steelworkers, salaried employees, the fixed
assets, surrounding communities and governments.
Those in control of the Wild West Show define the end
and give their
end a hallowed term "paramountcy." Any measure to achieve paramountcy
is
sanctioned. In this way, the end or paramountcy allows those in control
to deprive the people of their rights and wreck valuable productive
facilities. In fact,
monopoly right becomes the end or paramountcy and the application of
monopoly right to suppress public right is given an air of
righteousness.
The Justice describes the downward slide under the rule
of monopoly
right when he writes, "I would add that, insofar as the relief sought
(under the cash
conservation measures) would conflict with provincial pension or
municipal tax legislation, the Principle of paramountcy is properly
engaged to avoid a
bankruptcy scenario. While it is tempting to consider withholding
approval for one or more measures in light of their impact on
particularly vulnerable persons
who have the sympathy of the Court, in particular the retirees who rely
on the OPEBs [Other Post-Employment Benefits], the issue before the
Court is approval or rejection of
the Business
Preservation Plan as an entirety."
The Judge presents himself as sympathetic to the plight
of the
people, "particularly vulnerable persons who have the sympathy of the
Court," but he is caught
within the monopoly right and degenerate pragmatism of the ruling
capitalist elite. The greater end or paramountcy of the CCAA, as
articulated by the gang
representing the private interests of USS, has to be enforced with
means to achieve the end even though this justifies injustice against
"vulnerable persons."
Justice Wilton-Siegel must agree to deprive the people of their rights,
including 20,200 Stelco retirees, but he does shed some crocodile tears
for having been
forced to do so.
What kind of legal proceeding is this that sanctions
such injustice?
The attacks on people's rights are justified because the entire
arbitrary scenario has been
concocted and manipulated to favour the private interests and monopoly
right of U.S. Steel. It is a fraud. A Wild West Show allows whatever
wretched plan
those in control of the process have up their sleeves. As experience
has shown with the previous Stelco stint in CCAA and that of Nortel and
many others, for
the people affected to try to find an "arrangement" within the process
is impossible, as the end justifies the means however evil those means
may be. The process
is completely subservient to the private interests, monopoly right and
pragmatism of those in control. This CCAA justice is no justice at all.
It is arbitrary,
directly serves monopoly right and has no place in modern Canada. Both
the Ontario and federal governments should intervene immediately, put
an end to this
farce, take control of the situation and implement a plan to make
Stelco a public going concern that favours the people, upholds public
right and the rights of
all, and meets all its social responsibilities to the people, economy
and nation-building.
For Your Information
U.S. Anti-Trust Ruling Against U.S. Steel et Al
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION STANDARD IRON WORKS, on
behalf of itself
and all others similarly situated,
Plaintiffs,
v.
ARCELORMITTAL; ARCELORMITTAL
USA, INC.; UNITED STATES STEEL CORPORATION; NUCOR CORPORATION; GERDAU
AMERISTEEL
CORPORATION; STEEL DYNAMICS, INC.; AK STEEL HOLDING CORPORATION; SSAB
SWEDISH
STEEL CORPORATION;
COMMERCIAL METALS, INC.,
Defendants.
No. 08 C 5214
Judge James B. Zagel
MEMORANDUM OPINION AND ORDER
Almost one year ago, in October 2014, I granted final
approval to
the Settlements with Defendants CMC, Gerdau, AK Steel, ArcelorMittal
and U.S. Steel. I also approved Plaintiffs' proposed Plan of Allocation
and Class Counsel's request for payment of attorneys' fees and
reimbursement of litigation expenses.
The Notice and Claims process is now complete, and the Claims
Administrator is prepared to distribute the net Settlement Funds to the
Class, on approval by
the Court. The current, total available balance of the Settlement Funds
is $103,930,547.36.
Presently before me is Plaintiffs' motion for
distribution of these
settlement funds. In this motion, Plaintiffs outline the Notice and
Claims process and request
that I approve: (a) the procedures used, the actions taken, and the
determinations made by the Claims Administrator, Garden City Group
("GCG"), and by the
undersigned Class Counsel relating to the administration of, and
proposed distributions from, five settlement funds established in
accordance with Settlement
Agreements approved by this Court, including the administrative
determinations of the Claims Administrator and Class Counsel in
accepting, revising, and
rejecting Claims in connection therewith; (b) payment of certain
invoices associated with claims administration; and (c) distribution of
settlement funds to
approved Claimants.
Four claimants, however, do not accept the
determinations of the
claims administrator and have filed objections to Plaintiffs' motion.
After carefully
considering these objections, I am overruling them and granting
Plaintiffs' motion in its entirety.
DISCUSSION
The distribution of a settlement fund must be "fair,
reasonable, and adequate." Schulte v. Fifth Third Bank,
805
F. Supp. 2d 560, 589 (N.D. Ill. 2011). As I consider the four
objections that have been filed in this case, I must also keep in mind
the interests of the numerous
(here, nearly 2,000) absent class members who have an interest in the
fair allocation of the settlement fund. See Zients v. LaMorte,
459
F.2d 628,
630 (2d Cir. 1972) ("a court supervising the distribution of a
[settlement] fund has the inherent power and duty to protect unnamed,
but interested persons").
The first two objections -- made by IPSCO Tubular, Inc.
and Newport
Steel (the "IPSCO Entities") -- present nearly identical issues that
are largely resolved
by the plain terms of the class definition. It has been very clear
since the outset of this case that the class does not include
Defendants' affiliates (present or
former). Both of the IPSCO Entities, however, were subsidiaries of
co-conspirator IPSCO during the conspiracy period until July 2007, when
IPSCO was
acquired by Defendant SSAB. In fact, Plaintiffs' allegations against
SSAB stem in large part from conspiratorial conduct by its predecessor
IPSCO. The IPSCO
Entities, therefore, are not members of the class and, as such, they
are expressly excluded from the class defined by this Court. An
"individual who is not a
class member lacks standing to object to a settlement agreement to
which he is not a party." Kaplan v. Houlihan Smith & Co.,
No. 12 C 5134, 2014
WL 2808801, at *3 (N.D. Ill. June 20, 2014); In re Oil Spill by
Oil Rig Deepwater Horizon in Gulf of Mexico,
910 F. Supp. 2d 891, 941 (E.D.
La. 2012) ("Plaintiffs falling outside the settlement class are
entirely unaffected by the Settlement, and thus lack standing to
challenge it."), aff'd sub nom.
In re Deepwater Horizon, 739 F.3d 790 (5th Cir.
2014).
Unlike the objections made by the IPSCO Entities, the
other two
objections originate from class members. Both General Motors ("GM") and
Electrolux
argue that their own data supports greater purchase amounts than those
contained in Defendants' records. Although they have been given many
opportunities
over many months to substantiate their claims, both have failed to do
so. As a result, the class administrator has approved GM's and
Electrolux's claims for
the amounts contained in Defendants' records, and rejected their
disputes. I find that the claims administrator's decisions here were
reasonable, and indeed the
only reasonable ones that could have been reached on the record before
it. I am therefore overruling the objections made by GM and Electrolux.
Specifically, I am granting Plaintiffs' motion because I
find that
the procedures used, actions taken, and determinations made by GCG and
Plaintiffs' Class
Counsel for the administration of the CMC, Gerdau, AK Steel,
ArcelorMittal and U.S. Steel Settlements were proper and complete, and
I approve the
administrative determinations of GCG and Class Counsel accepting,
modifying, and rejecting Claims filed in this matter.
I have carefully reviewed Plaintiffs' motion and the
Declaration of
Stephen J. Cirami in support thereof, including the exhibits thereto,
as well as all of the
objections discussed above. After doing so, I approve the distribution
recommendations set forth in the Cirami Declaration and Exhibit E
thereto, as well as
the proposed methodology for determining payment amounts for Claimants.
Accordingly, the Claims listed in Exhibits E-1 and E-2 to the Cirami
Declaration
are approved, as are the Approved Purchase Amounts and Proposed Payment
Amounts for each Claim. I find that the Proposed Payment Amount,
calculated
to pay each approved Claim on a pro rata basis, based on
Approved Purchase Amounts, complies with the Plan of Allocation
previously approved
by the Court. I also approve GCG's and Class Counsel's recommendation
of a $100 minimum payment to all eligible Class Members, calculated as
described
in the Cirami Declaration. The Claims listed in Exhibits E-3 and E-4 to
the Cirami Declaration are rejected for the reasons set forth therein
and shall not receive
a distribution from the Settlement Funds.
I also find that the fees and expenses in the amount of
$332,969.11
invoiced by GCG were reasonable and necessary in connection with the
administration
of the Settlements.
GCG reports that as of August 31, 2015, the available
balances of
the Settlement Funds total $103,930,547.36. GCG and Class Counsel
request a reserve
of $250,000.00 for reasonable, anticipated further expenses, including
GCG's fees and expenses to prepare its report, conduct the
Distribution, provide notice
of the recent certification of the litigation class, and address
contingencies such as paying any taxes due on interest earned by the
Settlement Funds, and funding
any unanticipated costs. I am approving this request because it is
reasonable and advisable.
The current balances of the Settlement Funds, minus
$250,000.00
reserved for the purposes described above, shall be transferred into a
single Distribution
Fund forthwith. GCG is directed to distribute the monies in the
Distribution Fund to the approved Claimants, in the approved amounts,
listed in Exhibits E-1
and E-2 of the Cirami Declaration and approved by this Court, as soon
as practicable.
Checks for distribution to the approved Claimants shall
bear the
notation "Void and Subject to Re-Distribution if Not Cashed within 90
Days After Issue
Date," and no check shall be negotiated in the Distribution Fund more
than 120 days after the date of the check. Any Claims, or requests for
adjustments to
Claims, filed after September 24, 2015, shall not be considered and
shall not be eligible for payment from the Settlement Funds beyond the
amounts approved
herein.
CONCLUSION
The claims process in this case has been thorough,
straightforward and fair. It seems clear to me that every class
member's
claim has been evaluated pursuant to the same process and under the
same standards. Accordingly, I am granting Plaintiffs' motion.
Plaintiffs may retain $250,000 in the Settlement Funds
to cover
their estimated future expenses described above and transfer
$103,680,547.36 into a new
Distribution Account, for distribution to Class Members. GCG may
prepare and mail checks to all Approved Claimants for their pro rata
shares of the Settlement
Funds as set forth in Plaintiffs' motion.
ENTER:
James B. Zagel
United States District Judge
DATE: October 19, 2015
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