942 F.Supp. 684 (D.Mass. 1996), C. A. 93-12372, Eastern Enterprises v. Shalala

Docket Nº:C. A. 93-12372
Citation:942 F.Supp. 684
Party Name:Eastern Enterprises v. Shalala
Case Date:March 30, 1996
Court:United States District Courts, 1st Circuit, District of Massachusetts

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942 F.Supp. 684 (D.Mass. 1996)



Donna E. SHALALA et al., Defendants.

C.A. No. 93-12372-WF.

United States District Court, D. Massachusetts.

March 30, 1996.

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John T. Montgomery, William L. Patton, Ropes & Gray, Boston, MA, David Martland, Hutchins, Wheeler & Dittmar, Boston, MA, Rosa C. Hallowell, Gadsby & Hannah L.L.P., Boston, MA, for Eastern Enterprises.

Robert A. Murphy, Casner & Edwards, Boston, MA, for Donna E. Shalala, Joseph P. Connors, Sr., Marty D. Hudson, Thomas O.S. Rand, Elliott A. Segal, Carlton R. Sickles, Gail R. Wilensky, John Doe.

Peter Buscemi, Morgan, Lewis & Bockius, Washington, DC, Robert A. Murphy, Casner & Edwards, Boston, MA, John R. Mooney, Beins, Axelrod, Osborne, Mooney & Green, P.C., Washington, DC, for United Mine Workers of America Combined Funds.

Gretchen E. Jacobs, Department of Justice, Federal Programs Branch, Washington, DC, for Shirley S. Chater.

Kenneth A. Sweder, Stroock Stroock & Lavan, Boston, MA, for Peabody Holding Co., Eastern Associated Coal Corporation Inc.


WOLF, District Judge.

The following analysis is based upon the transcript of the decision rendered orally on February 1, 1996, denying plaintiff Eastern Enterprises' motion for summary judgment and denying third-party defendant Peabody Holding Company's ("Peabody") motion to dismiss. This memorandum adds citations, revises some of the discussion and deletes certain non-essential matters.

The transcript of the February 1, 1996 hearing is being prepared and may be acquired from the court reporter.

* * *

I. Plaintiff's Motion for Summary Judgment

Plaintiff Eastern Enterprises has filed a motion for summary judgment on its complaint seeking a declaratory judgment that beneficiaries assigned to the plaintiff by the Social Security Administration, pursuant to 26 U.S.C. § 9706(a) (3), and related regulations, should have been assigned to Eastern Associated Coal Corporation ("EACC"), a former subsidiary or affiliate of plaintiff, whose stock was acquired by Peabody in 1987. This court's review is under the Administrative Procedures Act, 5 U.S.C. § 551 et seq.1 As the parties recognize, the decision

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of the Social Security Administration is ripe for review on summary judgment.

This dispute concerns the Social Security Administration's assignment of Samuel East, a miner, to the plaintiff as a person entitled to pension benefits under the Coal Act and related regulations.2 It is undisputed that East did not work for any company that was a signatory to the 1978 Coal Wage Agreement or any subsequent agreement. Thus, there was no company to which he could be assigned pursuant to 26 U.S.C. § 9706(a) (1) or (2). The parties also do not dispute that prior to the effective date of the 1978 Coal Agreement, East was employed by Eastern Enterprises for a longer period of time than he was employed by any other signatory operator as defined in the Coal Act. Thus, the Social Security Administration assigned East to plaintiff pursuant to its interpretation of 26 U.S.C. § 9706(a) (3).

East's situation, in effect, is a test case. The Social Security Administration evidently intends to assign all similarly situated miners to the plaintiff. Plaintiff asserts that this group of miners is more appropriately assigned to EACC, which, it contends, was the successor to its coal operations. Plaintiff asserts that ultimately Peabody is responsible because when Peabody acquired the stock of EACC it assumed EACC's liabilities. The decision with regard to East is expected, by the normal operation of collateral estoppel, to decide the issue of the propriety of assignments to Eastern Enterprises of similarly situated miners in other disputes between Eastern Enterprises and the Social Security Administration in which the facts are not materially different than those in East's case.3

For the reasons stated by the Social Security Administration in its opposition to the motion for summary judgment, the court finds that the Social Security Administration properly assigned liability for East to the plaintiff pursuant to 26 U.S.C. § 9706(a) (3).4 The statute is not ambiguous. Rather, the Coal Act statute clearly manifests an intent that the Social Security Administration assign miners like East to the signatory to a pre-1978 Coal Wage agreement which employed the miner for the greatest period of time. If there is a successor to that signatory company which has assumed responsibility for such payments, the pre-1978 signatory operator has a right to bring a civil action for what is, in effect, indemnification.5

More specifically, § 9706(a) is not ambiguous. With regard to East, the statute clearly prescribes assignment to plaintiff. The statute's failure to provide for the assignment of East to the plaintiff's alleged successor, EACC, was neither an oversight nor an ambiguity. Because the Coal Act makes several references to successors,6 the court infers that the omission of the term successor from § 9706(a) (3) was intended by Congress.7

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In addition, the decision not to include successors in § 9706(a) (3) is rational. It provides a comparatively simple way for the Social Security Administration to assign responsibility for a miner like East. It imposes a duty on the pre-1978 signatory operator, which is likely to be most familiar with the unique facts of its situation, to collect from anyone who may have agreed to assume its liability or is otherwise obligated to do so. Section, 9706(f) (6) makes clear that the Coal Act statute does not preempt or preclude such private rights of action. Section 9706(f) (6) expressly states that: "Nothing in this section shall preclude the right of any person to bring a separate civil action against another person for responsibility for assigned premiums, notwithstanding any prior decision of the Commissioner."

The Coal Act is silent with regard to who must be assigned beneficiaries if § 9706(a) (3) applies and the pre-1978 signatory operator who would otherwise be assigned the beneficiary is no longer in business. As plaintiff points out, the Social Security Administration has decided to assign such beneficiaries to the successors of pre-1978 signatory operators if such successors are now doing business. This provision, however, is of no assistance...

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