Pennsylvania Mines Corp. v. Holland, THIRD-PARTY-PLAINTIFFS

• Decision Date: 13 July 1999
• Docket Number: Nos. 98-3610 and 98-3642,THIRD-PARTY-PLAINTIFFS,THIRD-PARTY-DEFENDANTS,s. 98-3610 and 98-3642
• Citation: 197 F.3d 114
• Parties: (3rd Cir. 1999) PENNSYLVANIA MINES CORPORATION v. MICHAEL H. HOLLAND, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; DONALD E. PIERCE, JR., TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; ELLIOT A. SEGAL, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 PENSION PLAN; JOSEPH J. STAHL, II, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; MARTY D. HUDSON, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; THOMAS F. CONNORS, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; ROBERT T. WALLACE, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN MICHAEL H. HOLLAND; MARTY D. HUDSON; THOMAS F. CONNORS; ROBERT T. WALLACE,V. BRUSH VALLEY COAL COMPANY; LADY JANE COLLIERIES, INC.; INTERSTATE ENERGY COMPANY; PEMICO, INC., PENNSYLVANIA MINES CORPORATION; LADY JANE COLLIERIES, INC. AND INTERSTATE ENERGY COMPANY, APPELLANTS PENNSYLVANIA MINES CORPORATION V. MICHAEL H. HOLLAND, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; DONALD E. PIERCE, JR., TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; ELLIOT A. SEGAL, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 PENSION PLAN; JOSEPH J. STAHL, II, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; MARTY D. HUDSON, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; THOMAS F. CONNORS, TRUSTEE OF THE UNITED MIN
• Court: U.S. Court of Appeals — Third Circuit

Page 114

197 F.3d 114 (3rd Cir. 1999)

PENNSYLVANIA MINES CORPORATION v. MICHAEL H. HOLLAND, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; DONALD E. PIERCE, JR., TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; ELLIOT A. SEGAL, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 PENSION PLAN; JOSEPH J. STAHL, II, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; MARTY D. HUDSON, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; THOMAS F. CONNORS, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; ROBERT T. WALLACE, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN

MICHAEL H. HOLLAND; MARTY D. HUDSON; THOMAS F. CONNORS; ROBERT T. WALLACE, THIRD-PARTY-PLAINTIFFS

V.

BRUSH VALLEY COAL COMPANY; LADY JANE COLLIERIES, INC.; INTERSTATE ENERGY COMPANY; PEMICO, INC., THIRD-PARTY-DEFENDANTS

PENNSYLVANIA MINES CORPORATION; LADY JANE COLLIERIES, INC. AND INTERSTATE ENERGY COMPANY, APPELLANTS

PENNSYLVANIA MINES CORPORATION

V.

MICHAEL H. HOLLAND, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; DONALD E. PIERCE, JR., TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; ELLIOT A. SEGAL, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; TRUSTEE

OF THE UNITED MINE WORKERS OF AMERICA 1993 PENSION PLAN; JOSEPH J. STAHL, II, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1974 PENSION PLAN; MARTY D. HUDSON, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; THOMAS F. CONNORS, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1993 BENEFIT PLAN; ROBERT T. WALLACE, TRUSTEE OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN

MICHAEL H. HOLLAND; MARTY D. HUDSON; THOMAS F. CONNORS; ROBERT T. WALLACE, THIRD-PARTY-PLAINTIFFS THIRD-PARTY-DEFENDANTS

UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN AND ITS TRUSTEES, & MICHAEL H. HOLLAND; ELLIOTT A. SEGAL; MARTY D. HUDSON AND A. FRANK DUNHAM, APPELLANTS

Nos. 98-3610 and 98-3642

U.S. Court of Appeals, Third Circuit

Argued: July 13, 1999

Decided: November 22, 1999

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, (Civ. No. 97-00042-j) District Judge: The Honorable D. Brooks Smith

Pennsylvania Power & Light Company Andrew K. Williams Two North 9th Street Allentown, PA 18101 Babst, Calland, Clements & Zomnir David J. Laurent (argued) Two Gateway Center 8th Floor Pittsburgh, PA 15222 Counsel for Appellant and Cross- Appellees, Pennsylvania Mines Corporation, Brush Valley Coal Co., Lady Jane Collieries, Interstate Energy and Pemico, Inc.

Morgan, Lewis & Bockius Peter Buscemi Marilyn L. Baker (argued) 1800 M Street, N.W. Washington, D.C. 20036 Counsel for Appellees, Michael H. Holland, Trustee of the United Mine Workers of America 1974 Pension Plan; Trustee of the United Mine Workers of America 1992 Benefit Plan; Trustee of the United Mine Workers of America 1993 Benefit Plan, Donald E. Pierce, Jr., Trustee of the United Mine Workers of America 1974 Pension Plan; Trustee of the United Mine Workers of America 1993 Benefit Plan, Elliott A. Segal, Trustee of the United Mine Workers of America 1974 Plan; Trustee of the United Mine Workers of America 1993 Pension Plan, Joseph Stahl, II, Trustee of the United Mine Workers of America 1974 Pension Plan, Marty D. Hudson, Trustee of the United Mine Workers of America 1992 Benefit Plan, Thomas F. Connors, Trustee of the United Mine Workers of America 1992 Benefit Plan; Trustee of the United Mine Workers of America 1993 Benefit Plan, Robert Wallace, Trustee of the United Mine Workers of America 1992 Benefit Plan

Before: Greenberg and Alito, Circuit Judges, and Rosenn, Senior Circuit Judge

OPINION OF THE COURT

Per Curiam

Pennsylvania Mines Corporation ("PMC") appeals a judgment declaring it responsible for providing health benefits for certain of its former employees, coal miners who are now disabled. The main issue in this appeal is whether these miners are eligible to receive health benefits under the Coal Industry Retiree Health Benefit (Coal) Act of 1992, 26 U.S.C.A. §§ 9701-22 (West Supp. 1999). The chief issue before us was addressed in recent decisions of the Fourth and District of Columbia Circuits. See Penn Allegh Coal Co. v. Holland, 183 F.3d 860 (D.C. Cir. 1999); Holland v. Big River Minerals Corp., 181 F.3d 597 (4th Cir. 1999). We follow these decisions and affirm the judgment of the District Court.

I.

A.

The provision of pension and health benefits to coal miners has a long and involved history, which has been chronicled by both the Supreme Court, see Eastern Enterprises v. Apfel, 118 S. Ct. 2131 (1998) (plurality opinion), and by various courts of appeals, see, e.g., Anker Energy Corp. v. Consolidation Coal Co., 177 F.3d 161 (3d Cir. 1999); Holland v. Big River Minerals Corp., 181 F.3d 597 (4th Cir. 1999). Because an understanding of the labor agreements governing mine workers' health and pension benefits provides important background information, we summarize them briefly below.

In 1947, the United Mine Workers of America ("UMWA") and the Bituminous Coal Operators' Association ("BCOA"), a multiemployer group of coal producers, agreed upon the first of a series of National Bituminous Coal Wage Agreements ("NBCWA's") to settle a nationwide coal strike. See, e.g., Eastern Enterprises, 118 S. Ct. at 2137; Anker Energy Corp., 177 F.3d at 164; Unity Real Estate Co. v. Hudson, 178 F.3d 649, 653 (3d Cir. 1999). These NBCWA's set the terms and conditions of employment in the coal industry and provided health and pension benefits for miners. See Anker Energy Corp., 177 F.3d at 164. The 1947 NBCWA was modified in 1950. Both the 1947 and the 1950 NBCWA's were financed by a per-ton levy on coal produced by signatory operators--that is, those bituminous coal producers who, through the BCOA, were subject to the NBCWA. Neither agreement promised specific benefits; rather, the benefits were subject to cancellation or change depending on the discretionary judgment of the NBCWA's trustees. See Eastern Enterprises, 118 S. Ct. at 2138; Anker Energy Corp., 177 F.3d at 165.

The 1950 NBCWA remained largely unaltered until 1974, when, partially in response to the Employee Retirement Income Security Act (ERISA) of 1974, 29 U.S.C. § 1001 et seq., the UMWA and the BCOA negotiated a new agreement. See Eastern Enterprises, 118 S. Ct. at 2139. The new NBCWA created four trusts, two to deliver pension benefits to miners and two to deliver non-pension benefits, such as health care coverage, to miners. Under the new agreement, the UMWA 1950 Benefit Plan and Trust (the "1950 Plan") provided non-pension benefits to miners who retired before January 1, 1976, while the UMWA 1974 Benefit Plan and Trust (the "1974 Plan") provided non-pension benefits to miners who either were active or who had retired after 1975. See id. Unlike the earlier NBCWAs, the 1974 Plan provided for lifetime medical benefits for retired miners. See id.

The increased expense that accompanied the provision of lifetime medical benefits, combined with a decrease in coal revenues as alternate energy sources developed, created financial problems for both the 1950 and 1974 Plans. See id. at 2140. The next NBCWA, executed in 1978, altered the financing scheme that governed the 1950 and 1974 Plans by assigning responsibility individually to signatory employers for the health care of their own active and retired employees. As a result, coal operators subject to the 1978 NBCWA, such as PMC in this case, created their own individual employer plans ("IEP's") to provide benefits for their employees. The 1974 Plan remained in effect, but only to cover "orphan" retirees -- those miners whose employers were no longer in business in 1978. Id.; Anker Energy Corp., 177 F.3d at 165.

Despite these financial modifications, the 1978 NBCWA and subsequent agreements soon experienced financial difficulties. In 1992, prompted by a lengthy strike against the Pittston Coal Company, Congress passed the Coal Act 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." Pub. L. No. 102-486, § 19142(a)(2), Stat. 2776, 3037 (1992) (quoted in Big River Minerals Corp., 181 F.3d at 601).

To accomplish this goal, the Coal Act legislates three major changes in the structure of health benefits for miners. First, it consolidates the 1950 and 1974 Plans in the UMWA Combined Benefit Fund (the "Combined Fund"). See 26 U.S.C.A. § 9702(a)(2). This fund provides health and death benefits to coal industry retirees who, as of July 20, 1992, were eligible to receive and were receiving benefits from the 1950 or 1974 Plans. See 26 U.S.C.A. § 9703(a), (f); Big River Minerals Corp., 181 F.3d at 601.

Second, the Coal Act requires signatories to the 1978 and subsequent NBCWAs to maintain coverage through their IEP's for two classes of employees. The first class is comprised of "any individual who, as of February 1, 1993 [was] receiving retiree health benefits from an individual employer plan maintained pursuant to a 1978 or subsequent coal wage agreement." 26 U.S.C.A. § 9711(a). The second class is comprised of

"any individual who, as of February 1, 1993,[was] not receiving retiree health benefits under the individual employer plan maintained by the last signatory operator...