Holland v. New Era Coal Co., Inc., 97-6332

Decision Date04 June 1999
Docket NumberNo. 97-6332,97-6332
Citation179 F.3d 397
PartiesMichael H. HOLLAND; Marty D. Hudson; Thomas F. Connors; Robert T. Wallace, as Trustees of the United Mine Workers of America 1992 Benefit Plan, Plaintiffs-Appellants, v. NEW ERA COAL COMPANY, INC., Defendant, Mate Creek Development, Inc.; Sidney Coal Company, Inc., doing business as Clean Energy Company, Inc., Defendants-Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

Appeal from the United States District Court for the Eastern District of Kentucky at Ashland. No. 94-00182--Henry R. Wilhoit, Jr., Chief District Judge.

ARGUED: Jonathan Sokolow, UMWA Health & Retirement Funds, Office of the General Counsel, Washington, D.C., for Appellants. Ellen S. Cappellanti, Jackson & Kelly, Charleston, West Virginia, Gregory B. Robertson, Hunton & Williams, Richmond, Virginia, for Appellees. ON BRIEF: Jonathan Sokolow, Larry D. Newsome, UMWA Health & Retirement Funds, Office of the General Counsel, Washington, D.C., Linda J. Wallbaum, Segal, Sales, Stewart, Cutler & Tillman, Louisville, Kentucky, for Appellants. W. Henry Jernigan, Jr., Jackson & Kelly, Charleston, West Virginia, Gregory B. Robertson, Hunton & Williams, Richmond, Virginia, Donald P. Wagner, Stoll, Keenon & Park, Lexington, Kentucky, for Appellees.

Before: JONES and SUHRHEINRICH, Circuit Judges; ECONOMUS, District Judge. *

OPINION

SUHRHEINRICH, Circuit Judge.

Plaintiff trustees of a coal worker benefit plan appeal from the grant of summary judgment to two Defendant coal-mine operator employers on Plaintiffs' claim to collect payments for employee benefits from three Defendant employers under the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. §§ 9701-9722 ("Coal Act") (West Supp.1998).

The district court found that primary liability for the employee benefit plan contributions rested on New Era Coal Company, Inc. ("New Era"), a coal operator that signed the 1988 National Bituminous Coal Wage Agreement ("NBCWA") and employed the coal workers for whom Plaintiffs are requesting benefit plan contributions. The district court found that two subsequent coal-operators of the mine, Mate Creek Development, Inc. ("Mate Creek"), and Sidney Coal Company, Inc. ("Sidney Creek"), doing business as Clean Energy Mining Company ("Clean Energy"), were not liable to Plaintiffs for benefits under the Coal Act because they had not signed the NBCWA, were not successors-in-interest to New Era, and had not assumed any liability for New Era's contribution to the benefit plan. We AFFIRM the judgment of the district court.

Plaintiffs raise three issues on appeal: (1) whether a transfer of stock or assets is necessary to be a successor-in-interest or whether merely a substantial continuity under the totality of circumstances is sufficient; (2) whether a successor and a successor-in-interest as that term is used in the Coal Act are equally liable for retiree health benefits; and (3) whether the district court failed to consider the NLRB determination that Mate Creek was a successor-in-interest.

I. BACKGROUND
A. Factual

Sidney Creek is a subsidiary of the Massey Coal Company ("Massey"). On October 1, 1984, Sidney Creek purchased coal mines in eastern Kentucky from Carolina Power & Light Co. ("CPL"), and two of CPL's mining subsidiaries, Leslie Coal Mining Co., Inc. ("Leslie") and Mclnnis Coal Mining Company, Inc. ("Mclnnis"). The mines owned by Leslie and Mclnnis were operated under collective bargaining agreements with the United Mine Workers of America ("UMWA"). However, after Sidney Creek acquired the mines, neither Sidney Creek nor any other Massey company signed a collective bargaining agreement with the UMWA. The UMWA then struck Sidney Creek and the other non-signatory Massey companies and sued them for violating the existing NBCWA. The UMWA also sued Sidney Creek, Leslie, and McInnis for violating Article I of the NBCWA. During the strike, the Mclnnis mine was idle. To settle the strike in 1988, Sidney Creek paid $4,470,000.00 to the UMWA as benefits for the strikers. Sidney Creek also agreed for five years to select a contractor to operate the McInnis mine who would sign the 1988 NBCWA and hire from the strikers collectively referred to as the "Roberts panel."

On June 10, 1988, Sidney Creek contracted with New Era to mine coal at the former Mclnnis mine for a fee based on production. New Era was incorporated in 1988, was capitalized at $500, and had no other assets. New Era signed the 1988 NBCWA and hired from the Roberts panel. New Era then operated the Mclnnis mine from June 1988 until October 1991, using Sidney Creek's machinery, maps, and engineering services. Sidney Creek also paid the black lung excise tax for black lung benefits on behalf of New Era and some of New Era's legal fees.

In October 1991, New Era ceased operations and notified its employees that it was terminating their medical benefits. Sidney Creek and New Era executed an agreement for the "orderly transition" of the operation of the McInnis mine from New Era to Mate Creek. Mate Creek began mining in November 1991, less than a month after New Era stopped. As with New Era, Sidney Creek supplied the equipment used by Mate Creek. Mate Creek also hired from the Roberts panel; in fact, all of the hourly employees that Mate Creek hired had previously worked for New Era. New Era even provided Mate Creek with its personnel files. Further, Mate Creek operated the McInnis mine in the same manner as New Era had operated it.

However, even though the 1988 Settlement Agreement required Sidney Creek to require an operator to sign an NBCWA, Mate Creek did not sign an NBCWA or any other agreement with the UMWA before it began mining. Mate Creek then unilaterally changed the terms and conditions of employment at the McInnis mine. The UMWA consequently filed unfair labor practice charges against Mate Creek with the National Labor Relations Board ("NLRB"). The NLRB found that Mate Creek was a successor to New Era, ordered Mate Creek to restore the previous terms and conditions of employment, and to pay its obligations to the employee benefit funds. After the NLRB determined that Mate Creek was a successor to New Era, Sidney Creek joined in a Settlement Agreement with the UMWA and Mate Creek to resolve the unfair labor practice claims. This Settlement Agreement did not alter the NLRB's determination that Mate Creek was New Era's successor. Under the Settlement Agreement, Mate Creek agreed to pay $1,000,000.00 to the UMWA and an additional amount to the UMWA 1974 Pension Trust. Mate Creek borrowed the money from a bank, and Sidney Creek guaranteed the loan. Further, Sidney Creek and Mate Creek contracted for Mate Creek to operate the Halfway Branch Mine, which Sidney Creek also owned, and to hire its former employees at the Mclnnis mine for the Halfway Branch mine. Mate Creek began mining at the Halfway Branch mine in September 1994 and stopped in January 1996.

After Mate Creek stopped mining at the Mclnnis mine, Sidney Creek doing business as Clean Energy, began mining at the McInnis mine. Sidney Creek as Clean Energy operated the McInnis mine as New Era and Mate Creek had operated it, using the same type of equipment, producing the same product, and selling it to the same customers. Clean Energy even hired six supervisors previously employed at the mine by Mate Creek and New Era. However, Clean Energy did not hire Mate Creek's other employees because Mate Creek had retained them to work at the Halfway Branch mine.

B. Statutory

The Coal Act is the result of federal involvement in the coal industry that began in 1946. See generally Blue Diamond Coal Co. v. Shalala (In re Blue diamond Coal Co.), 79 F.3d 516, 518-20 (6th Cir.1996). The federal government assumed operation of the nation's coal mines during a prolonged strike by the UMWA against coal producers. The Krug-Lewis Agreement settled the strike and required coal producers to provide health and pension benefits to their workers. After the strike in 1947, the Bituminous Coal Operators Association, Inc. ("BCOA") and the UMWA collectively bargained for the first NBCWA which required the coal producers to contribute a production royalty to the UMWA Fund, a health benefit and pension fund. Health benefits were neither vested nor guaranteed. Coal producers were liable to the UMWA Fund only for their assigned royalties.

In 1974, benefits and funding changed. In light of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (1994), the UMWA Fund was divided into the 1950 UMWA Benefit Plan for older employees and the 1974 UMWA Benefit Plan for new employees (collectively the "1974 Funds"). Under this new funding scheme, the 1974 NBCWA provided increased benefits, including lifetime health benefits. Later, however, the 1974 Funds became increasingly financially unstable because many coal producers went out of business or became non-union; many miners retired; and health care costs increased.

In 1989, the UMWA struck the Pittston Coal Company for ten months over retiree benefits. After the Pittston strike was settled, Congress enacted the Coal Act in 1992 to identify the payors most responsible for retirement health care benefits. The Coal Act consolidates the 1974 Funds into the Combined Fund and requires all coal operators that sign a NBCWA to contribute to the Combined Fund. See 26 U.S.C. §§ 9701(a)(5), 9702, 9704, and 9705. Under the Coal Act, beneficiaries under the 1974 Funds are assigned to current NBCWA-signatory coal operators based on the operators' obligations under their respective NBCWAs. See 26 U.S.C. §§ 9703(f), 9706. Eligible beneficiaries are first assigned to coal mine operators that (1) most recently employed the beneficiary for at least two years; and (2) signed a NBCWA in 1978 or later. See 26 U.S.C. § 9706(a)(1). If there is no such operator, a beneficiary is assigned to the operator that: (1) most recently...

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3 cases
  • Holland v. Williams Mountain Coal Co.
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • July 31, 2001
    ...all potential candidates for the (g)(2) transaction, the latter would, for the most part, be surplusage. See Holland v. New Era Coal Co., 179 F.3d 397, 403 (6th Cir. 1999). The trustees respond that, because the section heading for 9711(g)(1) is "Successor," Congress intended the terms "suc......
  • Holland v. Williams Mountain Coal Co.
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • July 31, 2007
    ...of Appeals for the Sixth Circuit reached a decision in accord with that of the West Virginia district court. See Holland v. New Era Coal Co., 179 F.3d 397, 403 (6th Cir.1999). On appeal, we cited the Sixth Circuit's conclusion in reaching our own. See Williams Mountain, 256 F.3d at But thes......
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    • March 2, 2023
    ...in interest” required a substantial or substantive connection between entities, “as would be evidenced by a transfer of stocks or assets.” Id. at 403. There, the fact that the mine operators had not with the previous coal operators “for the right to operate the mine or use the coal mining e......

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