Carbon Fuel Co. v. Usx Corp.
| Decision Date | 18 November 1996 |
| Docket Number | No. 95-2471,PLAINTIFF-APPELLANT,DEFENDANTS-APPELLANT,N,DEFENDANTS-APPELLEE,DEFENDANT-APPELLAN,V,PLAINTIFF-APPELLE,AND,No. 95-2522,95-2471,95-2522 |
| Citation | 100 F.3d 1124 |
| Parties | CARBON FUEL COMPANY, A WEST VIRGINIA CORPORATION,, v. USX CORPORATION, A DELAWARE CORPORATION; U. S. STEEL MINING CO., INC., A DELAWARE CORPORATION,ARCH MINERAL CORPORATION; ARCH MINERALS OF KENTUCKY; CONSOLIDATION COAL COMPANY; OLD BEN COAL COMPANY, THIRD PARTY DEFENDANTS. CARBON FUEL COMPANY, A WEST VIRGINIA CORPORATION,USX CORPORATION, A DELAWARE CORPORATION; U. S. STEEL MINING CO., INC., A DELAWARE CORPORATION,ARCH MINERAL CORPORATION; CONSOLIDATION COAL COMPANY; OLD BEN COAL COMPANY, THIRD PARTYARCH MINERALS OF KENTUCKY, THIRD PARTY DEFENDANT. CARBON FUEL COMPANY, A WEST VIRGINIA CORPORATION,USX CORPORATION, A DELAWARE CORPORATION; U. S. STEEL MINING CO., INC., A DELAWARE CORPORATION,ARCH MINERAL CORPORATION; OLD BEN COAL COMPANY, THIRD PARTYARCH MINERALS OF KENTUCKY; CONSOLIDATION COAL COMPANY, THIRD PARTY DEFENDANTS. CARBON FUEL COMPANY, A WEST VIRGINIA CORPORATION,USX CORPORATION, A DELAWARE CORPORATION; U. S. STEEL MINING CO., INC., A DELAWARE CORPORATION,CONSOLIDATION COAL COMPANY, THIRD PARTYARCH MINERAL CORPORATION; ARCH MINERALS OF KENTUCKY; OLD BEN COAL COMPANY, THIRD PARTY DEFENDANTS. o. 95-2496,o. 95-2523 |
| Court | U.S. Court of Appeals — Fourth Circuit |
Appeals from the United States District Court for the Southern District of West Virginia, at Charleston. Charles H. Haden II, Chief District Judge. (CA-93-1073-2).
ARGUED: James Knight Brown, Sr., JACKSON & KELLY, Charleston, WV, for Appellant. James Michael Jarboe, USX CORPORATION, Pittsburgh, PA; Anthony J. Polito, POLITO & SMOCK, P.C., Pittsburgh, PA; John Allen Lucas, HUNTON & WILLIAMS, Richmond, Virginia, for Appellees. ON BRIEF: W. Henry Jernigan, Jr., JACKSON & KELLY, Charleston, WV; Larry L. Roller, CARBON FUEL COMPANY, Chesapeake, WV, for Appellant. Gregory B. Robertson, Bruin S. Richardson, III, HUNTON & WILLIAMS, Richmond, VA; Charles L. Woody, SPILMAN, THOMAS & BATTLE, Charleston, WV, for Appellees.
Before Murnaghan and Williams, Circuit Judges, and Mackenzie, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.
Murnaghan wrote the opinion, in which Senior Judge MacKenzie joined. Judge Williams wrote an opinion Concurring in the judgment.
The instant appeal and cross-appeal concern the financial responsibility for premiums assessed against coal mine operators under the Coal Industry Retiree Health Benefits Act of 1992 ("the Coal Act" or "the Act"), 26 U.S.C. 9701-9722, to finance health care for retired United Mine Workers of America ("UMWA") miners and their dependents. Plaintiff-Appellant Carbon Fuel Company ("Carbon") filed a lawsuit against USX Corporation and U.S. Steel Mining Co. ("USX") seeking a decree that under a settlement agreement and lease between the two companies, USX was required to pay for certain of Carbon's Coal Act premiums. USX filed a counterclaim against Carbon seeking a declaration of all the parties' rights and obligations under the Coal Act and initiated a third-party lawsuit against Arch Minerals Corporation ("Arch"), Old Ben Coal Company ("Old Ben"), and Consolidation Coal Company ("Consol"), contending that, under sales agreements with those companies, they were all liable to pay for certain of USX's Coal Act premiums. On cross motions for summary judgment, the district court held that the Coal Act abrogated all pre-Act contracts transferring obligations to finance health care for retired miners. Carbon Fuel Co. v. USX Corp., 891 F. Supp. 1186 (S.D.W. Va. 1995). Alternatively, the district court stated that if the agreements were applied, they would not transfer any Coal Act obligations or allow for indemnification. For the following reasons, we affirm in part. We remand so that the district court may determine whether USX must reimburse Arch, Consol, and Old Ben for attorney's fees.
All five mining companies involved in this lawsuit were parties to pre-Act commercial transactions involving the sale or lease of coal mines. Supporting agreements and contracts in those transactions contained provisions regarding the assumption of liabilities imposed by collective-bargaining agreements with the United Mine Workers of America ("UMWA") and cross-indemnification clauses. In particular, those agreements transferred liability to funds established through collective bargaining to provide UMWA retirees health benefits. Subsequent to the execution of the agreements, the United States Congress, however, enacted the 1992 Coal Act which created a new mechanism for allocating the costs of health benefits for UMWA retirees. We are confronted with the question of whether the various agreements obligate parties to them to reimburse other parties for assessed premiums under the Coal Act. In addressing that question, we find that it is helpful to have a reference framework, which includes some details of the events leading up to the Coal Act, the Act itself, and the agreements.
In 1946, the members of UMWA went on a nationwide strike over health and retirement benefits. The crisis led to the nationalization of the coal mines by President Truman, and eventually a collective-bargaining agreement establishing health and retirement benefits funded by an industry-wide royalty on tons of coal produced for use or sale. When the coal mines were returned to their owners in 1947, UMWA and the Bituminous Coal Operators Association, Inc. ("BCOA") agreed upon the first in a series of National Bituminous Coal Wage Agreements ("NBCWAs"). The 1950 NBCWA established a multiemployer fund to provide welfare and retirement benefits to active and retired miners and their dependents.1 The 1950 Fund was established as an irrevocable trust to be financed on a pay-as-you-go basis. Each mining company's contributions were calculated based on tons of coal mined. The basic contours of that agreement continued through subsequent NBCWAs until the early 1970s.
In the early 1970s, UMWA and BCOA realized that their system of funding the welfare and retirement fund needed an overhaul in light of the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1001-1461, and changing demographics. The 1974 NBCWA, therefore, divided the 1950 Plan into several separate multiemployer plans. It established a 1950 Pension Plan and Benefit Plan and a 1974 Pension Plan and Benefit Plan. The 1950 Benefit Plan provided health-care benefits to miners who retired prior to January 1, 1976, and their dependents. The 1974 Benefit Plan provided health-care benefits to miners who were active, or who retired on or after January 1, 1976, and their dependents. Importantly, the 1974 NBCWA provided that the benefits would be guaranteed for the life of the covered retirees. Mining companies who signed the 1974 agreement agreed to fund both the multiemployer 1950 and 1974 Benefit Plans based on cumulative hours worked as opposed to tons of coal mined.
In 1978, the NBCWA shifted away from the multiemployer funded plans to a decentralized system under which each mining company financed its own health benefit plan through individual employer plans ("IEPs"). The 1978 NBCWA provided that miners and their dependents who retired prior to January 1, 1976, would still receive benefits from the 1950 Benefit Plan. A miner retiring on or after January 1, 1976, however, would receive health-care benefits from an IEP operated by his or her last employer. Signatory coal companies to the 1974 Benefit Plan would continue to fund the 1974 Plan in order to provide benefits for those miners retiring on or after January 1, 1976, who were "orphaned" because their last employer was no longer in the coal mining business or participating in the Plan. Very significantly, the 1978 NBCWA also contained an "evergreen clause" which imposed a perpetual obligation on mining companies to continue their contributions to the 1950 and 1974 Benefit Plans. See UMWA 1974 Pension v. Pittston Co., 299 U.S. App. D.C. 339, 984 F.2d 469, 471-76 (D.C. Cir. 1993), cert. denied, 509 U.S. 924, 113 S. Ct. 3040 (1993).
The Benefit Plans came under great strain in the 1980s. Numerous mining companies left the mining business, leaving their "orphaned" retirees to be covered by the 1974 Benefit Plan. Other mining companies who failed to sign successor NBCWAs were able to discontinue their IEPs and shift the responsibility for paying "orphaned" retirees' benefits to the 1974 Benefit Plan. A shrinking number of signatories to the NBCWAs thus came to carry the responsibility for an increasing number of orphan retirees. That problem was exacerbated by increasing costs of health care in the 1980s, thereby creating a financial crisis in the Benefit Plans.
In 1989, the threat of insolvency in the 1950 and 1974 Benefit Plans led to a multi-month coal strike by the UMWA at the Pittston Coal Company, which was only settled after the intervention of the Secretary of Labor. That settlement resulted in the creation of an Advisory Coal Commission on UMWA retiree health benefits. The Coal Commission found that UMWA members had received a commitment of health-care benefits for life and had traded lower pensions over the years for better health-care benefits, but that the funds to finance those benefits were in grave danger of insolvency absent legislative action. It further found that collective bargaining was no longer capable of solving the problem of financing the Benefit Plans and recommended a legislative solution. See Coal Commission Report: A Report to the Secretary of Labor and the American People...
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