Eastern Enterprises v. Shalala, C.A. No. 93-12372-WF.

• Citation: 942 F.Supp. 684
• Decision Date: 30 March 1996
• Docket Number: C.A. No. 93-12372-WF.
• Parties: EASTERN ENTERPRISES, Plaintiff, v. Donna E. SHALALA et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

942 F.Supp. 684

EASTERN ENTERPRISES, Plaintiff, v. Donna E. SHALALA et al., Defendants.

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

United States District Court, D. Massachusetts.

March 30, 1996.

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.

MEMORANDUM AND ORDER

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 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

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 to Eastern Enterprises because it is not out of business.

If the Social Security Administration had promulgated a regulation imposing plaintiff's liability, as now defined by the Social Security Administration, on Eastern Enterprises' alleged successors, that regulation would appear to be vulnerable to attack by successors, even under the deferential standard of Chevron.⁸ Chevron provides that "if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's [administrative interpretation] is based on a permissible construction of the statute."⁹ However, "[t]he judiciary is the final authority on issues of statutory interpretation and must reject administrative constructions which are contrary to clear congressional intent."¹⁰

Two decisions concerning this court's sentencing of Raymond J. Patriarca suggest that ambiguity, like beauty, may be in the eye of the beholder.¹¹ In Patriarca, this court found that the United States Sentencing Commission guideline at issue was ambiguous.¹² The First Circuit found that it was clear.¹³ On the pertinent point, the Coal Act is to this court more clear than the Sentencing Guideline was in Patriarca.

If, however, the statute were to be deemed ambiguous with regard to its application to East, this court finds that the Social Security Administration's interpretation resulting in the assignment of East to the plaintiff, and leaving it to the plaintiff to impose liability on its alleged successors, is a reasonable construction of the statute deserving of deference under Chevron.¹⁴

The fact that the Social Security Administration has equivocated in its interpretation of the statute as it applies to Eastern Enterprises does not qualify this conclusion. The Social Security Administration has now authoritatively determined that if a pre-1978 signatory operator is at present in business, it will assign beneficiaries similarly situated to East to that operator pursuant to § 9706(a)(3). This is a permissible and appropriate interpretation of the statute.

In addition, the Social Security Administration's assignment of beneficiaries in the USX/United States Steel Mining Company and Guyan Eagle matters does not alter the analysis or result of plaintiff's motion for summary judgment. As noted earlier, see footnote 1, the USX and Guyan Eagle matters are not properly part of the record before this court for review.¹⁵ More importantly, it appears that in those matters that assignments were made to successor companies only after the Social Security Administration's factual determinations that no otherwise assignable signatory operators or related persons remained in business. Thus, those cases are factually distinguishable from this case. The decisions in those cases were not made because the Social Security Administration used a different standard for making assignments.

Finally, addressing a point that was raised in plaintiff's memorandum, but not argued on February 1, 1996, this is not a case in which it is necessary to interpret an ambiguous statute to require assignment to plaintiff's alleged successor in order to avoid a grave and doubtful constitutional question.¹⁶ First, as stated earlier, the statute is not ambiguous. If it is unconstitutional as written, the court should declare it unconstitutional. Second, at this point the statute does not appear to this court to be unconstitutional as applied to pre-1978 signatory operators, like the plaintiff in this case.¹⁷

In view of the foregoing, plaintiff's motion for summary judgment is hereby DENIED.

II. Third Party Defendant Peabody's Motion to Dismiss

Peabody and its affiliates are ...