Berwind Corp. v. Apfel

• Decision Date: 31 March 2000
• Docket Number: No. CIV.A. 98-5985.,CIV.A. 98-5985.
• Citation: 94 F.Supp.2d 597
• Parties: BERWIND CORPORATION v. Kenneth S. APFEL, United Mine Workers of America Combined Benefit Fund, Michael H. Holland, William P. Hobgood, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carl E. Van Horn, Gail R. Wilensky, as Trustees of the United Mine Workers of America Combined Benefit Fund, the United States of America, the United Mine Workers of America 1992 Benefit Plan and Michael H. Holland, Marty D. Hudson, Elliot A. Segal, A. Frank Dunham, as Trustees of the United Mine Workers of American 1992 Benefit Plan.
• Court: U.S. District Court — Eastern District of Pennsylvania

94 F.Supp.2d 597

BERWIND CORPORATION v. Kenneth S. APFEL, United Mine Workers of America Combined Benefit Fund, Michael H. Holland, William P. Hobgood, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carl E. Van Horn, Gail R. Wilensky, as Trustees of the United Mine Workers of America Combined Benefit Fund, the United States of America, the United Mine Workers of America 1992 Benefit Plan and Michael H. Holland, Marty D. Hudson, Elliot A. Segal, A. Frank Dunham, as Trustees of the United Mine Workers of American 1992 Benefit Plan.

No. CIV.A. 98-5985.

United States District Court, E.D. Pennsylvania.

March 31, 2000.

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Arthur Newbold, Andrew S. Miller, Dechert, Price and Rhoads, Philadelphia, PA, for Berwind Corp., Plaintiff.

Marcia K. Sowles, Department of Justice, Washington, DC, for Kenneth S. Apfel, Commissioner of Social Security, The United States of America, Defendants.

Peter Buscemi, Morgan, Lewis & Bockius, Washington, DC, Jami Wintz Mc Keon, Morgan, Lewis & Bockius LLP, Philadelphia, PA, for united Mine Workers of America Combined Benefit Fund, Michael H. Holland, William P. Hobgood, Marty D. Hudson, Thomas O. S. Rand, Elliot A. Segal, Carl E. Van Horn, Gail R. Wilensky, As Trustees of the United States Mine Workers of America Combined Benefit Fund, Defendants.

Jami Wintz Mc Keon, Morgan, Lewis & Bockius LLP, Philadelphia, PA, for the United Mine Workers of America 1992 Benefit Plan, Defendant.

MEMORANDUM

WALDMAN, District Judge.

I. Introduction

Plaintiff is a corporation which was previously engaged in the coal mining business. It was a signatory to collective bargaining agreements with the United Mine Workers of America ("UMWA") in the 1950s and early 1960s. Plaintiff was assigned responsibility under the Coal Industry Retiree Health Benefit Act of 1992 (the "Coal Act") to fund lifetime health benefits for retired members of the UMWA and certain of their dependents.

Defendant Apfel is Commissioner of Social Security. As such, he is responsible for assigning beneficiaries to operators which are then required to make premium payments to the UMW Combined Benefit Fund ("Combined Fund") and 1992 Benefit Plan ("1992 Plan"), entities created or reconfigured by the Coal Act.

Defendants Holland, Hobgood, Hudson, Rand, Segal, Van Horn and Wilensky are trustees of the Combined Fund. Defendants Holland, Hudson and Segal are also trustees of the 1992 Plan as is defendant Dunham.

In Counts I and II Berwind respectively seeks declarations that the application of the Coal Act by the Commissioner to assign responsibility for beneficiaries to plaintiff pursuant to § 9706(a)(3) violates the Due Process Clause and the Takings Clause of the Fifth Amendment. In Count III, plaintiff asserts that "the entire Coal Act must be invalidated as unconstitutional" because "Congress would not have enacted the Coal act without Section 9706(a)(3)." In its prayer for relief, however, plaintiff does not actually request a declaration that the Coal Act is unconstitutional.

In Count IV, plaintiff asserts a claim pursuant to the Coal Act, 26 U.S.C. § 9706(f)(3), for a refund of premiums for assigned Combined Fund beneficiaries which the Commissioner refused to withdraw and Combined Fund trustees refused to return following a Supreme Court decision that application of the Act to an entity similarly situated to plaintiff was unconstitutional.

In Count V, plaintiff asserts a claim under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706(2)(A). Plaintiff alleges that the Commissioner acted arbitrarily, capriciously and inconsistently with the law and abused his discretion when he declined to void Berwind's assignments while doing so for similarly situated companies following that Supreme Court Decision. Berwind seeks an order setting aside that decision.

In Counts VI, VII and VIII, Berwind asserts alternative claims to recover premiums it has paid since April 4, 1995 to the Combined Fund and 1992 Plan ("the Funds"). In Count VI, plaintiff asserts a federal common law claim for restitution for these premiums. In Count VII, plaintiff seeks a refund of these premiums under ERISA. In Count VIII, plaintiff seeks a refund from the United States pursuant to 26 U.S.C. § 7422 of any Combined Fund premiums plaintiff is unable to obtain from the Fund. In a prayer for relief section, plaintiff also seeks to enjoin the Commissioner and the United States from applying the Coal Act to Berwind and to enjoin the Funds from assessing or attempting to collect outstanding premiums.

The Funds and their trustees ("the Trustees") have asserted several corresponding counterclaims. In Count I, they seek a declaration that the Coal Act is constitutional as applied to Berwind.¹ In Count II, they seek to recover under ERISA from Berwind unpaid premiums for assigned Combined Fund beneficiaries since July 1998. In Count III, they seek the same regarding the 1992 Plan. In Count IV, they seek payment of current assessed premiums and to enjoin Berwind from disposing of assets until it satisfies all obligations to the Funds or from failing to comply with future Coal Act obligations.

All defendants assert that plaintiff's claims are barred by res judicata and collateral estoppel as a result of a judgment rendered on April 4, 1995 in a prior lawsuit in the Northern District of Indiana in which plaintiff asserted a similar challenge to the constitutionality of the Coal Act as applied.

Plaintiff has filed a motion for summary judgment on its Fifth Amendment claims in Counts I and II. The Commissioner and the United States (the "federal defendants") have filed a motion for summary judgment on plaintiff's claims. The Trustees have filed a motion for summary judgment on their counterclaims.²

II. Legal Standard

In considering each motion for summary judgment, the court determines whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Arnold Pontiac-GMC, Inc. v. General Motors Corp., 786 F.2d 564, 568 (3d Cir.1986). Only facts that may affect the outcome of a case are "material." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. All reasonable inferences from the record are drawn in favor of the non-movant. Id. at 256, 106 S.Ct. 2505.

Although the movant has the initial burden of demonstrating the absence of genuine issues of material fact, the non-movant must then establish the existence of each element on which it bears the burden of proof. J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3d Cir. 1990) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)), cert. denied, 499 U.S. 921, 111 S.Ct. 1313, 113 L.Ed.2d 246 (1991). A plaintiff cannot avert summary judgment by resting on the allegations in his pleadings, but rather must present competent evidence from which a fact-finder could reasonably find in his favor. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Ridgewood Bd. of Educ. v. N.E. for M.E., 172 F.3d 238, 252 (3d Cir.1999); Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir.1989); Woods v. Bentsen, 889 F.Supp. 179, 184 (E.D.Pa.1995).

III. Facts

While the parties obviously disagree on the ultimate conclusions to be drawn, they do not disagree about what relevant facts are established on the record presented. These uncontroverted facts and the pertinent history are as follow.

The Coal Act

Following a nationwide strike in 1946, the UMWA and the Bituminous Coal Operators' Association ("BCOA"), a multi-employer group of coal producers, executed the first National Bituminous Coal Wage Agreement ("NBCWA"). The 1947 NBCWA specified terms and conditions of employment in the mines and provided health and pension benefits to miners.

A new NBCWA was signed in 1950 which provided that the BCOA would create a welfare and retirement fund financed by a per ton levy on coal mined by signatory coal producers. The 1950 Fund was designed to receive employer contributions and to use the funds to provide health benefits to current and retired miners and, in certain cases, family members. Additional NBCWAs were signed over the next twenty years.

Following the passage of ERISA, the 1950 Fund was restructured in 1974. The 1974 NBCWA created four separate multiemployer plans, two covering pension benefits and two dealing with non-pension benefits. The latter were the 1950 Benefit Plan which provided health benefits to coal workers who retired prior to 1976, and the 1974 Benefit Plan which covered those who retired on or after January 1, 1976. The 1974 NBCWA guaranteed that miners and their dependants would retain their health benefits "for life."

The 1978 NBCWA incorporated a new provision to ensure health care for "orphaned" miners, those whose employers had abandoned the coal industry, as well as "guarantee" and "evergreen" provisions to ensure the solvency of the Plans. The "guarantee" clause obligated signatories to make sufficient contributions to maintain benefits at the negotiated levels during the period of the agreement. The "evergreen" clause required signatories who continued to mine coal to make benefit contributions for as long as such contributions were required by future NBCWAs, regardless of whether a particular operator actually signed the subsequent agreements. The 1978 NBCWA shifted responsibility for miners leaving covered service on or after January 1, 1976 from the UMWA multiemployer system to individual coal companies, with the 1974 Plan reserved as an "orphan" plan for retirees whose former employers went out of business.

The Plans were plagued by economic problems. By 1990, the 1950 and 1974 Benefits...