Sidney Coal Co., Inc. v. Social Sec. Admin.
Decision Date | 19 October 2005 |
Docket Number | No. 04-6286.,No. 04-6291.,04-6286.,04-6291. |
Citation | 427 F.3d 336 |
Parties | SIDNEY COAL COMPANY, INC., et al., Plaintiffs-Appellees, v. SOCIAL SECURITY ADMINISTRATION, Defendant-Appellant (04-6286), Michael H. Holland, et al., Intervenors Defendants-Appellants (04-6291). |
Court | U.S. Court of Appeals — Sixth Circuit |
Jonathan H. Levy, United States Department of Justice, Washington, D.C., Howard R. Rubin, Sonnenschein, Nath & Rosenthal, Washington, D.C., for Appellants. John R. Woodrum, Ogletree, Deakins, Nash, Smoak & Stewart, Washington, D.C., for Appellees.
ON BRIEF:
Jonathan H. Levy, William Kanter, United States Department of Justice, Washington, D.C., Howard R. Rubin, William E. Copley, Jacqueline Sadker, Sonnenschein, Nath & Rosenthal, Washington, D.C., Stephen J. Pollak, John T. Rich, Goodwin Procter LLP, Washington, D.C., for Appellants. John R. Woodrum, Ogletree, Deakins, Nash, Smoak & Stewart, Washington, D.C., H. Kent Hendrickson, Rice & Hendrickson, Harlan, Kentucky, for Appellees.
Before: SILER and DAUGHTREY, Circuit Judges; MARBLEY, District Judge.*
In 1992, Congress enacted the Coal Industry Retiree Health Benefit Act, 26 U.S.C. §§ 9701-9722, 30 U.S.C. § 1232(h) (the "Coal Act"), which ensured that retired miners received their promised benefits by assigning each retiree to the coal company most responsible for that retiree's employee benefits. In 1998, the Supreme Court, in Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), declared part of the Coal Act unconstitutional insofar as it imposed liability on coal operators that had never signed an agreement promising to provide retirees with such benefits. Because Eastern Enterprises left numerous miners without a company to provide for them, the Social Security Administration (the "SSA") assigned these miners to constitutionally-permissible coal operators, such as Plaintiffs-Appellees A.T. Massey Coal Co., Inc. and its subsidiaries,1 thereby raising these companies' premiums. To protest the post-Eastern Enterprises assignments, Plaintiffs-Appellees filed suit in the Eastern District of Kentucky, alleging that the SSA impermissibly interpreted and applied the Coal Act. The Trustees of the United Mine Workers of America Combined Benefit Fund (the "Trustees") intervened as Defendants shortly after suit was filed. The district court found in favor of Plaintiffs-Appellees, invalidating the post-Eastern Enterprises assignments to Massey and its subsidiaries. On appeal, the SSA and the Trustees ("Defendants-Appellants") assert that the district court erred in concluding that the SSA overstepped its authority under the Coal Act. Defendant-Appellants also argue that venue was not properly in the Eastern District of Kentucky because Massey is a Virginia-based company and only its subsidiaries reside in Kentucky. For the following reasons, we AFFIRM the district court's decision that venue was proper, but REVERSE the district court's judgment relating to the Coal Act.
In 1947, the Bituminous Coal Operators' Association and the United Mine Workers of America negotiated the National Bituminous Coal Wage Agreement ("NBCWA"), which created a trust fund to provide pension plans and medical benefits to retired coal miners and their families. This 1947 NBCWA resulted from a workers' movement to bring employee benefits to miners. Eastern Enterprises v. Apfel, 524 U.S. 498, 504, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998). Prior to this agreement, miners received largely substandard health care from sometimes unskilled "company doctors." Id. Moreover, the cost of this company-provided care posed a substantial financial burden on individual miners. Id. The 1947 NBCWA, managed by three appointed trustees, funded the workers' pensions and medical benefits with "the proceeds of a royalty on coal production." Id. at 505-06, 118 S.Ct. 2131. In 1950, a new agreement made this trust fund a multiemployer one, which coal operators contributed to based on their production amounts. Under the 1950 NBCWA, the miners and their dependents were not promised specific benefits; rather, the coal operators paid a fixed amount of royalties into a central fund, and the trustees charged with distributing benefits were required to remain within a budget. Id. at 506-07, 118 S.Ct. 2131. As a result, the level of benefits provided was less than consistent. Id. at 508, 118 S.Ct. 2131.
In 1974, a successive agreement created four separate trusts and, for the first time, explicitly referenced benefits for retirees and their dependents. Prior to this 1974 NBCWA, retirees had never been expressly included in the group of eligible beneficiaries. Because of the expanded number of eligible beneficiaries, these trust funds began experiencing financial difficulties which the owners and unions tried to remedy in 1978 by enacting a modified agreement. This 1978 NBCWA, for the first time, required each coal operator, instead of paying a defined amount into a central fund, to fund specific benefits for its employees and retirees. The agreement also contained an "evergreen clause," which required each signatory to continue making contributions as long as it remained in the coal business, even if that coal operator never signed a future NBCWA. Eastern Enters., 524 U.S. at 511, 118 S.Ct. 2131.2 Notwithstanding these efforts to maintain the trust funds' solvency, they continued to suffer financially. At the same time, coal companies tried to avoid paying benefits by either leaving the coal business altogether or refusing to hire union employees. Id. at 511, 118 S.Ct. 2131 (). By 1990, the trust funds had incurred a $110 million deficit. Recognizing that more than 100,000 retirees were in danger of never receiving their employee benefits, in 1992 Congress passed the Coal Act.
The Coal Act created a new multiemployer trust fund, the United Mine Workers of America Combined Benefit Fund (the "Combined Fund"), which is still in effect today. It assessed annual premiums against any coal operator that both (1) had previously signed an NBCWA ("signatory operator") and (2) remained in business. 26 U.S.C. § 9701(c)(1) (). The Coal Act required coal operators who signed an NBCWA to pay an annual premium into the Combined Fund. The amount owed in premiums depended on the number of retirees and dependents for which each signatory operator was responsible. 26 U.S.C. § 9704(a)(1)-(3) ( ). To determine which and how many beneficiaries to assign to each company, the Coal Act implemented the following three-tiered system of priorities:
[T]he Commissioner of Social Security shall ... assign each coal industry retiree who is an eligible beneficiary to a signatory operator which (or any related person with respect to which) remains in business in the following order:
(1) First, to the signatory operator which —
(A) was a signatory to the 1978 coal wage agreement or any subsequent coal wage agreement, and (B) was the most recent signatory operator to employ the coal industry retiree in the coal industry for at least 2 years.
(2) Second, if the retiree is not assigned under paragraph (I), to the signatory operator which—
(A) was a signatory to the 1978 coal wage agreement or any subsequent coal wage agreement, and (B) was the most recent signatory operator to employ the coal industry retiree in the coal industry.
(3) Third, if the retiree is not assigned under paragraph (1) or (2), to the signatory operator which employed the coal industry retiree in the coal industry for a longer period of time than any other signatory operator prior to the effective date of the 1978 coal wage agreement.
Under the statute, then, the SSA must first try to assign a retiree to the coal operator that signed the 1978 or any later NBCWA and was the most recent operator to have employed the retiree for at least two years. § 9706(a)(1). If no such operator exists, the SSA then must attempt to assign the retiree to the operator that signed the 1978 or any later NBCWA and was the most recent signatory operator to have employed the retiree for any length of time. § 9706(a)(2). If no operator has yet been identified, the SSA assigns the retiree to the signatory operator who employed the retiree for the longest period of time prior to the date of the 1978 NBCWA, regardless of whether the operator signed the 1978 or any later NBCWA. § 9706(a)(3).
If the SSA cannot identify a signatory operator or related person still in business, as required by § 9706(a)(i)-(iii), the miner is deemed "unassigned." 26 U.S.C. § 9706(d). To cover the cost of these so-called "unassigned beneficiaries," Congress authorized annual transfer payments to be made from the Abandoned Mine Reclamation Fund ("AML Fund") and the Combined Fund from a 1950 United Mine Workers of America Pension fund. 26 U.S.C. § 9705(a)-(b). Any gap in funding was to be covered by assessing each signatory operator an unassigned beneficiaries premium on a pro rata basis. 26 U.S.C. § 9704(d).
The Supreme Court, in Eastern Enterprises v. Apfel, 524 U.S. 498, 537, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), altered the Coal Act's application by voiding all assignments the SSA had made pursuant to the statute's third prong. 26 U.S.C. § 9706(a)(3) (...
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