Coltec Industries, Inc. v. Hobgood
| Decision Date | 01 February 2002 |
| Docket Number | No. 00-2458.,00-2458. |
| Parties | COLTEC INDUSTRIES, INC., a Pennsylvania Corporation; Four Leaf Coal Company, Inc., a Tennessee Corporation; L.G. Wasson Coal Mining Corp., an Indiana Corporation, Appellants, v. William P. HOBGOOD; Michael H. Holland; Marty Hudson; Thomas O.S. Rand; Elliot A. Segal; Carlton R. Sickles; Gail R. Wilensky, as Trustees of the United Mine Workers of America Combined Fund; United Mine Workers of America Combined Benefit Trust; United States of America, Intervenor in D.C. Coltec Industries, Inc., a Pennsylvania Corporation; Four Leaf Coal Company, Inc., a Tennessee Corporation; L.G. Wasson Coal Mining Corp., an Indiana Corporation, v. William P. Hobgood; Michael H. Holland; Marty Hudson; Thomas O.S. Rand; Elliot A. Segal; Carlton R. Sickles; Gail R. Wilensky, as Trustees of the United Mine Workers of America Combined Find; United Mine Workers of America Combined Benefit Fund; United States of America, Intervenor in D.C., Coltec Industries, Inc., Appellant. |
| Court | U.S. Court of Appeals — Third Circuit |
George E. McGrann, (Argued) Schnader, Harrison, Segal & Lewis, William H. Powderly, III, Metz, Schermer & Lewis, Pittsburgh, PA, for Appellant Coltec Industries, Inc.
Peter Buscemi, (Argued) Morgan, Lewis & Bockius, Washington, D.C., for Appellees, William P. Hobgood, Michael H. Holland, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carlton R. Sickles and Gail R. Wilensky, as Trustees of the United Mine Workers of America, United Mine Workers of America Combined Benefit Fund.
Mark B. Stern, Jonathan H. Levy, (Argued) United States Department of Justice Civil Division, Appellate Staff Washington, D.C., for Appellee United States.
Before SLOVITER, NYGAARD and McKEE, Circuit Judges.
In this appeal, Coltec Industries, Inc. ("Coltec") seeks to extricate itself from its voluntary dismissal with prejudice of its claim against the United Mine Workers of America Combined Benefit Fund and its trustees (collectively "the Fund") that asserted that the Coal Industry Retiree Health Benefit Act of 1992 (Coal Act), 26 U.S.C. §§ 9701-9722 (2001), was unconstitutional. Subsequent to that dismissal, the Supreme Court in Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), declared the Coal Act unconstitutional as applied to companies in situations similar to Coltec. Coltec then filed motions in the District Court under Federal Rule of Civil Procedure 60(b) seeking to reinstate its constitutional claims. The District Court viewed Coltec as seeking to escape the effects of its earlier agreements in order to benefit from the ruling in Eastern and denied Coltec's attempt to reassert its constitutional claims or to have its liability for Coal Act premiums reduced to zero. The District Court also ordered Coltec to pay to the Fund $7,129,090.97 in premiums and interest. Coltec appeals the rulings of the District Court.
Congress enacted the Coal Act to resolve the imminent insolvency of multi-employer trusts created by coal industry agreements to provide health benefits for coal miners and their dependents. The background of the Coal Act is thoroughly reviewed in Eastern Enterprises v. Apfel, 524 U.S. 498, 504-14, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), and thereafter in Unity Real Estate Co. v. Hudson, 178 F.3d 649, 653-54 (3d Cir.1999), and in Blue Diamond Coal Co. v. Trustees of the UMWA Combined Benefit Fund, 249 F.3d 519, 521-22 (6th Cir.2001). We thus summarize only the particular provisions and facts relevant to the case before us.
The Coal Act merged existing trusts into the appellee United Mine Workers of America Combined Benefit Fund and charged the Fund's trustees with collecting premiums from the former employers of eligible retirees and using those premiums to pay the retirees' benefits. Under the Act, the Commissioner of Social Security assigns retirees to their former employers, and the Fund charges premiums based on these assignments.
Coltec was assigned 249 retirees as of February 1, 1993, and the Fund assessed premiums against the company, which made its first two monthly payments (totaling $139,496.36), under protest.1 App. at 232. That November, Coltec and two other companies, Four Leaf Coal Co. and L.G. Wasson Coal Mining Corp., sued the Fund seeking declaratory and injunctive relief (including a contemporaneous motion for a temporary restraining order) from further assessments of Coal Act premiums against them. App. at 19-42. The first four counts of the complaint claimed that the Act was unconstitutional as applied to them under the Fifth Amendment's takings and due process clauses because the plaintiff companies had not signed the relevant agreements. They later added a fifth count alleging errors in the assignments of beneficiaries to them.
In December 1993, the parties executed an agreement (the "Agreement"), App. at 236-37, under which the plaintiffs agreed to withdraw their request for a temporary restraining order. Coltec agreed to establish an escrow account into which it would deposit all premiums due during the pendency of its preliminary injunction motion. The terms were established in a contemporaneous separate written agreement (the "Escrow Agreement"). App. at 232-35. In return, the Fund agreed to deem Coltec's payments into escrow as payments to the Fund and not to treat the other plaintiffs' failure to pay as a default.2 The Agreement provided that the escrow funds, plus interest, would be disbursed to the Fund if the injunction motion was denied or to Coltec if it was granted.
In January 1994, the Fund answered the complaint and counterclaimed, seeking, inter alia, a declaration that the Coal Act was constitutional. Later that month, the United States intervened to defend the Act's constitutionality. In May 1996, Coltec and the other two plaintiffs withdrew their preliminary injunction motion, and the District Court dismissed that motion. App. at 126.
Meanwhile, several courts of appeals, including this one, held that the Coal Act was constitutional as applied to coal operators similarly situated to Coltec. See Eastern Enterprises v. Chater, 110 F.3d 150 (1st Cir.1997); Holland v. Keenan Trucking Co., 102 F.3d 736 (4th Cir.1996); Carbon Fuel Co. v. USX Corp., 100 F.3d 1124 (4th Cir.1996); Lindsey Coal Mining Co. v. Chater, 90 F.3d 688 (3d Cir.1996); Blue Diamond Coal Co. v. Shalala (In re Blue Diamond Coal Co.), 79 F.3d 516 (6th Cir.1996); Davon, Inc. v. Shalala, 75 F.3d 1114 (7th Cir.1996); LTV Steel Co. v. Shalala (In re Chateaugay Corp.), 53 F.3d 478 (2d Cir.1995). The Supreme Court had denied certiorari in Blue Diamond, 519 U.S. 1055, 117 S.Ct. 682, 136 L.Ed.2d 608 (1997), Davon, 519 U.S. 808, 117 S.Ct. 50, 136 L.Ed.2d 14 (1996), and Chateaugay, 516 U.S. 913, 116 S.Ct. 298, 133 L.Ed.2d 204 (1995). Constitutional challenges by other coal companies were still pending when the plaintiff companies initiated settlement negotiations with the Fund. See, e.g., Eastern Enterprises, 110 F.3d 150, rev'd, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998); Mary Helen Coal Corp. v. Hudson, 976 F.Supp. 366 (E.D.Va. 1997), rev'd, 164 F.3d 624 (4th Cir.1998).
On June 30, 1997, prior to the resolution of the pending constitutional challenges in other cases, the parties in this case signed a stipulation (the "Stipulation") which referenced a decision by the Alabama federal court that resolved a dispute as to the amount of premiums to be assessed under the Coal Act. That decision was affirmed by the Eleventh Circuit. National Coal Ass'n v. Chater, No. CV-94-H-780-S, 1995 WL 1052240 (N.D.Ala.), aff'd, 81 F.3d 1077 (11th Cir.1996) ("NCA"). The Stipulation also referenced the then-pending follow-up case, National Mining Ass'n v. Chater, No. CV-96-N-1385-S (N.D.Ala.1996) ("NMA"), in which coal companies sought a refund of the differential between the amount they had paid over a period of several years and the amount they would have paid under the NCA formula (the "premium differential"). The Stipulation stated:
plaintiffs seek either to obtain the benefits of the NMA litigation, should the outcome be favorable to the plaintiffs in that action, or to retain the right to litigate the issue themselves should the outcome of the NMA litigation be unfavorable to the plaintiffs in that case.
Specifically, the Stipulation provided that: (1) plaintiffs would amend their complaint to state a new claim seeking the premium differential, (2) defendants would not oppose this amendment, (3) plaintiffs would dismiss with prejudice their five existing claims, (4) the parties would ask the court to stay the premium differential claim pending resolution of the NMA litigation, and (5) upon a final judgment in NMA:
a) if the said final judgment ... is favorable to plaintiffs in that case, then [the Fund] will afford plaintiffs in this case the same treatment of [its] new claim ... as is afforded to the plaintiffs in the NMA litigation; and b) if the said final judgment ... is favorable to defendants in that case, the stay imposed on the new claim for relief ... will be lifted, and plaintiffs will be free to pursue that claim ... and [the Fund] will be free to defend ... against that claim.
App. at 129-30. In other words, the plaintiff companies would get the benefit of any decision determining that their premiums should have been lower but could litigate that point if the Alabama court found otherwise. Pursuant to the Stipulation, the plaintiff companies amended their complaint to include a new sixth count that concerned the premium differential issue, App. at 132-38, 147-53, and dismissed the first five counts with prejudice. The District Court "so ordered" the Stipulation on July 2, 1997. The District Court then granted the parties' joint motion to stay this case pending the resolution of NMA.
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