Holland as Trustee of UMWA 1992 Benefit Plan v. Arch Coal, Inc.
| Decision Date | 17 January 2020 |
| Docket Number | No. 18-7159,18-7159 |
| Citation | 947 F.3d 812 |
| Parties | Michael H. HOLLAND, AS TRUSTEE OF the UMWA 1992 BENEFIT PLAN, et al., Appellees v. ARCH COAL, INC., Appellant |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
John R. Woodrum, Washington, DC, argued the cause and filed the briefs for appellant.
Stephanie Schuster, Washington, DC, argued the cause for appellees. With her on the brief were John R. Mooney, Washington, DC, Paul A. Green, John C. Goodchild, III, Bryan Killian, and Stanley F. Lechner, Washington, DC. Diana M. Bardes, Washington, DC, entered an appearance.
Before: Tatel and Srinivasan, Circuit Judges, and Ginsburg, Senior Circuit Judge.
The Coal Industry Retiree Health Benefit Act of 1992 (Coal Act) created the United Mine Workers of America 1992 Benefit Plan (1992 Plan) to provide benefits to retirees of coal companies that had signed retiree benefits agreements with the Union. Certain of those companies, referred to here as "1988 last signatory operators," or LSOs for short, are responsible for financing the benefits provided by the 1992 Plan. The Trustees of the 1992 Plan seek to compel Arch Coal to provide security pursuant to the Coal Act as a person related to an LSO. Arch Coal argues the Coal Act does not require related persons to provide security – as opposed to financing benefits – or alternatively that the security previously provided on behalf of Arch Coal’s former subsidiaries (or the proceeds thereof) already satisfied the requirement.
We hold the Coal Act requires Arch Coal, as a person related to an LSO, to provide security and that the security previously provided on behalf of Arch Coal’s former subsidiaries does not satisfy that requirement. We therefore affirm the judgment of the district court.
Starting in 1947, the Union and the operators negotiated a series of National Bituminous Coal Wage Agreements ("NBCWAs"), E. Enters. v. Apfel , 524 U.S. 498, 505–11, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), under which the operators "agreed to pay benefits not only for their workers but also for workers whose employers had failed to meet their obligations under the agreement, so-called orphaned workers," Holland v. Williams Mountain Coal Co. , 256 F.3d 819, 821 (D.C. Cir. 2001). Over time "more and more coal operators abandoned the Benefit Plans" created by these NBCWAs, forcing "the remaining signatories ... to absorb the increasing cost of covering retirees left behind by exiting employers." E. Enters. , 524 U.S. at 511, 118 S.Ct. 2131. The result was "a maelstrom of contract negotiations, litigation, [and] strike threats" that culminated in passage of the Coal Act. Barnhart v. Sigmon Coal Co. , 534 U.S. 438, 445–46, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002). The Coal Act created "the UMWA 1992 Benefit Plan to pay health care benefits and collect premiums from former employers and their successors." Holland v. Bibeau Const. Co. , 774 F.3d 8, 11 (D.C. Cir. 2014).
The Coal Act provides health benefits to coal industry retirees in three ways. First, it combined two trust funds created by the 1950 and 1974 NBCWAs into a new Combined Fund that offers benefits to eligible beneficiaries who were receiving benefits as of July 20, 1992. 26 U.S.C. § 9703(e). Second, it requires operators still offering independent employer plans to continue doing so. 26 U.S.C. § 9711. Third, it created the 1992 Plan, which provides health care benefits to all eligible beneficiaries not covered by either of the two aforementioned provisions. 26 U.S.C. § 9712(b).
In passing the Coal Act, the Congress found it necessary "to identify persons most responsible for plan liabilities in order to stabilize plan funding." Pub. L. No. 102-486, § 19142, 106 Stat. 2776, 3037 (1992). For the 1992 Plan, those persons the Congress identified as responsible for the financing were primarily operators that had signed the 1988 NBCWA, referred to as LSOs, § 9712(d)(6), and "related persons," such as businesses that were under common control with an LSO as of July 20, 1992. 26 U.S.C. § 9701(c)(2) ; Williams Mountain , 256 F.3d at 821.
The Coal Act requires LSOs to contribute to financing the 1992 Plan in three ways. 26 U.S.C. § 9712(d)(1)(A)–(C). They must: (A) pay a premium for each of their retirees who is enrolled in the 1992 Plan; (B) provide "security (in the form of a bond, letter of credit, or cash escrow) in an amount equal to a portion" (to be determined by the Trustees) of their retirees’ future health care costs; and (C) pay a backstop premium to help cover the cost of providing benefits to orphaned retirees if contributions from the Abandoned Mine Reclamation Fund, 30 U.S.C. § 1232, created in 1977 by the Surface Mining Control and Reclamation Act, Pub. L. No. 95-87, § 401, 91 Stat. 445, 456 (1977), are insufficient to do so. In addition, the Act makes persons related to an LSO "jointly and severally liable ... for any amount required to be paid ... under this section." 26 U.S.C. § 9712(d)(4). It is the parties’ conflicting interpretations of the last provision that gives rise to this case.
In 1992, Arch Coal owned several coal companies that were LSOs. Arch Coal is therefore a person related to those operators. Accordingly, Arch Coal initially provided security to fulfill its subsidiaries’ obligations under § 9712(d)(1)(B). In 2005, Arch Coal sold its LSO subsidiaries to the Magnum Coal Company and, in the course of the transaction, Magnum substituted its own security for that previously provided by Arch. In 2008, the Patriot Coal Corporation acquired Magnum and replaced Magnum’s security on behalf of Arch Coal’s former subsidiaries by adding Arch Coal’s former subsidiaries to a letter of credit previously issued by Fifth Third Bank for the account of Patriot’s other LSO subsidiaries. The letter of credit allowed the 1992 Plan to draw down the security if Patriot ceased to provide benefits under § 9711 or if the 1992 Plan later enrolled its retirees. Arch Coal was not a party to the letter of credit.
In May 2015, Patriot and its subsidiaries, including Arch Coal’s former subsidiaries, filed for bankruptcy, pursuant to which the Coal Act obligations of Arch Coal’s former subsidiaries were terminated in October 2015. That same month, Arch Coal notified the 1992 Plan that, as a related person, it would provide health care benefits to retirees of its former subsidiaries. In November 2015, Arch Coal began providing benefits to retirees of its former subsidiaries per § 9711, and paying premiums to the 1992 Plan per § 9712(d)(1)(A). It did not, however, provide security pursuant to § 9712(d)(1)(B). In December 2015, the 1992 Plan drew down Patriot’s $8,608,392 letter of credit, with which Patriot had fulfilled the obligations to provide security for the benefit of Arch’s former subsidiaries.
In March 2016 the 1992 Plan first informed Arch Coal it was obligated as a related person to provide security pursuant to § 9712(d)(1)(B). Arch Coal refused, arguing Patriot’s letter of credit not only satisfied its obligation under that provision but in fact over-secured the obligations of Arch Coal’s former subsidiaries.
The Trustees of the 1992 Plan sued under the Coal Act and the Employee Retirement Income Security Act (ERISA) to compel Arch Coal to provide security. Arch Coal counterclaimed to recover the $447,672 in excess security provided by the letter of credit.
The district court held that, as a related person, Arch Coal was required to provide the security demanded by the Trustees. The court reasoned that the cash proceeds the Plan received from Patriot’s letter of credit did not satisfy Arch Coal’s obligation to provide security because they were not in a form acceptable under the Coal Act, to wit, a bond, a letter of credit, or a cash escrow. Further, the court rejected Arch Coal’s alternative contention that the 1992 Plan was obligated to use the proceeds of the letter of credit to provide security on behalf of Arch Coal’s former subsidiaries or to provide benefits solely for retirees of those former subsidiaries. The district court therefore granted the Trustees’ motion for summary judgment and ordered Arch Coal to provide security pursuant to § 9712(d)(1)(B). Notwithstanding the apparent anomaly of the 1992 Plan receiving security from Arch Coal after drawing down the $8,608,392 from Patriot’s letter of credit to cover the very same retirees, we are constrained by the Coal Act to affirm the judgment of the district court.
On appeal, Arch Coal argues first that the Coal Act does not require a related person to provide security to the 1992 Plan. Second, and more narrowly, Arch Coal contends the requirement to provide security was satisfied by the letter of credit provided by Patriot on behalf of Arch Coal’s former subsidiaries, with which Arch Coal is jointly liable. More narrowly still, Arch Coal argues the 1992 Plan is required to use the proceeds of Patriot’s letter of credit to fund benefits for retirees of Arch Coal’s former subsidiaries, thereby relieving Arch Coal of at least some of its obligations under the Coal Act, including the obligation to provide security. Notably, however, Arch Coal does not pursue its counterclaim nor otherwise take issue with the Trustees’ decision to draw down the letter of credit.
As in any case involving a question of statutory interpretation, "we begin with the language of the statute." Sigmon Coal , 534 U.S. at 450, 122 S.Ct. 941. Because Arch Coal agrees it is a person related to an LSO, the question before the court is whether the provision of security in § 9712(d)(1)(B) is included in a related person’s joint and several liability for "any amount required to be paid" in § 9712(d)(4). As the term " ‘any amount required to be paid’ is not defined in the Coal Act [it] thus takes on its ordinary meaning." Holland v. Arch Coal, Inc. , 346 F. Supp. 3d 99, 105–06 (D.D...
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