R.G. Johnson Co., Inc. v. Apfel

Decision Date09 April 1999
Docket NumberNos. 98-5109,98-5127,s. 98-5109
Citation172 F.3d 890
PartiesR.G. JOHNSON COMPANY, INC., Appellee, v. Kenneth S. APFEL, Commissioner of Social Security and Michael H. Holland, et al., Appellants.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeals from the United States District Court for the District of Columbia (No. 97cv00003).

Peter Buscemi, with whom John R. Mooney, David W. Allen, and Carolyn O'Meara Dutrow were on the briefs, argued the cause for appellants UMWA Combined Benefit Fund and its Trustees.

Alexander D. Shoaibi, Assistant U.S. Attorney, with whom Wilma A. Lewis, United States Attorney, Mark E. Nagle, and R. Craig Lawrence, Assistant U.S. Attorneys, and Donna J. Fuchsluger, Counsel, Social Security Administration, were on the briefs, argued the cause for federal appellant.

Mary Lou Smith, with whom William H. Howe and Richard A. Steyer were on the brief, argued the cause for appellee R. G. Johnson Company, Inc.

Before WILLIAMS and RANDOLPH, Circuit Judges, and BUCKLEY, Senior Circuit Judge.

Opinion for the court filed by Senior Circuit Judge BUCKLEY.

Dissenting opinion filed by Circuit Judge RANDOLPH.

BUCKLEY, Senior Circuit Judge:

The Coal Industry Retiree Health Benefit Act of 1992 directs the Commissioner of Social Security to assign financial responsibility for coal industry retirees covered by certain United Mine Workers of America collective bargaining agreements either to a "signatory operator" that formerly employed the retiree or to a "related person" to the signatory operator. Appellee R. G. Johnson Company, Inc. protests the assignment to it of the retired employees of a signatory operator whose assets and remaining business it had purchased seven years earlier. The district court granted the company's motion for summary judgment on the ground that the unambiguous language of the statutory definition of "related person" did not apply to successors or successors in interest to a signatory.

Although we cannot fault the district court's literal reading of the definition, we conclude that because such an interpretation would frustrate the clear intent of Congress in enacting the Coal Act, the phrase "related person" must be construed to include a successor in interest to a signatory operator. We therefore set aside the grant of summary judgment in favor of R. G. Johnson Company, Inc. and remand the case to the district court.

I. BACKGROUND
A. The Coal Act

The factors that led to the passage of the Coal Industry Retiree Health Benefit Act of 1992, Pub.L. No. 102-486, 106 Stat. 3036 (codified at 26 U.S.C. §§ 9701-22 (1994)) ("Coal Act" or "Act"), are well documented in prior litigation. See, e.g., Eastern Enters. v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 2137-42, 141 L.Ed.2d 451 (1998). We recount only those that are necessary to place the present litigation in context.

In 1974, the Bituminous Coal Operators' Association ("Association"), a multi-employer bargaining organization and the primary representative of coal mine operators in negotiations with the United Mine Workers of America ("UMWA"), entered into a collective bargaining agreement that created four trusts to provide pension and medical benefits to miners and their families. The coal operators, who as members of the Association were signatories to the agreement, undertook to fund the trusts through the payment of annual assessments that were based on the amount of coal they produced and on the number of hours their miners worked. One of the trusts, the 1950 UMWA Benefit Plan ("1950 Benefit Plan"), provided health benefits to miners who retired before 1976 while another, the 1974 UMWA Benefit Plan ("1974 Benefit Plan"), covered the health benefits of active miners and those who retired in 1976 or thereafter.

In 1978, the Association and the union executed a new agreement that restructured the 1974 Benefit Plan to make signatory operators primarily responsible for the health care of their own active employees and those who retired during or after 1976. Thus, while the 1950 Benefit Plan continued to cover all pre-1976 retirees, the 1974 Benefit Plan, as restructured, remained in effect only to cover employees who had retired after 1975 and whose last employer was no longer in business. The Association of Bituminous Contractors, Inc., which represented contractors to the coal mining industry, entered into similar agreements with the UMWA. These entitled its member companies' retired employees to participate in the 1950 and 1974 Benefit Plans established for retired miners.

In the 1980's, the benefit plans began to suffer increasing financial difficulties because of the growing number of signatories to the 1978 agreement that had subsequently either gone out of business or otherwise ceased to meet their continuing obligations under the agreement. As a result, the remaining signatories were forced to absorb the increasing cost of providing medical benefits for the retirees of the operators who no longer contributed to the plans.

In 1992, in response to the problems created by the plans' growing deficits, Congress passed the Coal Act in order "to provide for the continuation of a privately financed self-sufficient program for the delivery of health care benefits to the beneficiaries of [multi-employer benefit] plans." Coal Act, Pub.L. No. 102-486, § 19142(b)(3), 106 Stat. 3037 (1992) (codified as note following 26 U.S.C. § 9701 (1994)). To that end, Congress found it necessary "to identify persons most responsible for plan liabilities in order to stabilize plan funding and allow for the provision of health care benefits to such retirees." Id. § 19142(a)(2).

The Coal Act merged the 1950 and 1974 Benefit Plans into a new multi-employer plan called the UMWA Combined Benefit Fund ("Fund"). 26 U.S.C. § 9702(a)(2). The Fund provides retirees and their dependents with "substantially the same" health benefits that they were entitled to receive under the 1950 and 1974 Plans. Id. § 9703(b)(1), (f).

Section 9706 of the Act requires the Commissioner of Social Security ("Commissioner") to assign each eligible beneficiary of the Fund to a "signatory operator which (or any related person with respect to which) remains in business," such assignments to be made in accordance with the instructions contained in that section. Id. § 9706. Such operator or person must then pay an annual premium to the Fund based on the number of beneficiaries for which it is responsible. Id. § 9704. Beneficiaries for whom the Commissioner is unable to locate an appropriate assignee become the collective responsibility of all companies to which beneficiaries have been assigned. Id. § 9704(a)(3) ("unassigned beneficiaries premium").

B. Factual Background

In 1988, a group of investors organized appellee R. G. Johnson Company, Inc. ("New Johnson") for the purpose of acquiring the operating assets, certain real estate, and the right to use a virtually identical corporate name from The R. G. Johnson Company ("Old Johnson"). New Johnson employed, without interruption, much of Old Johnson's work force; rented space in the same building previously occupied by Old Johnson; and assumed the older company's only remaining contract. Following the sale to New Johnson, Old Johnson continued to exist essentially as a personal holding company for its owners. New Johnson, for its part, performed the same kind of coal mine shaft and slope construction work that Old Johnson had been engaged in since 1917.

In 1995, the Commissioner notified New Johnson, in a series of letters, of the assignment to it of a number of beneficiaries who had been former employees of Old Johnson. Each of the letters contained the following statement:

Our records and UMWA records indicate that you are related to [Old Johnson] who is no longer in business. This operator would have been responsible under the law for the miner named below under the rules for how we assigned responsibility.... Therefore, as a related company you must assume responsibility.

See, e.g., List of Assigned Miners and Other Beneficiaries, reprinted in Joint Appendix 729 (emphasis added). New Johnson requested review of these assignments based on its claim that it was not related to Old Johnson. The Commissioner conducted the review and upheld the assignments, explaining that "[u]nder current SSA policy, successors are considered another type of related person and are treated as a related person for purposes of making assignments under the Coal Act." Thereafter, the Fund notified New Johnson of its premium obligations in annual assessment letters. The company paid the premiums under protest and commenced this lawsuit seeking a declaration that it is not liable for beneficiaries under the Coal Act.

New Johnson's complaint contains five counts, each of which presents a distinct legal argument. The company moved for summary judgment based on the first two of these counts; namely, that it was not a related person to Old Johnson as defined in the Coal Act, and that the Act did not provide for the assignment of beneficiaries to a successor or successor in interest to a signatory operator. The Commissioner filed a cross-motion for summary judgment. After considering the two motions, the district court granted summary judgment in favor of New Johnson. It concluded that the plain language of the provisions of the Act defining "related person" did not include a successor to a signatory operator and that the legislative history cited by the defendants "could not determine legislative intent so conclusively that it would overcome the plain meaning of the statute." R. G. Johnson Co. v. Apfel, 994 F.Supp. 10, 14, 18 (D.D.C.1998).

II. DISCUSSION

As noted above, the Coal Act directs the Commissioner to assign a Fund beneficiary to a signatory operator or "any related person." 26 U.S.C. § 9706(a). The Act defines related person as follows:

(A) In general

A person...

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