Holland v. Apfel

• Decision Date: 09 September 1998
• Docket Number: Civil Action No. 96-01744 (CKK).
• Parties: Michael H. HOLLAND, et al., as Trustees of the United Mine Workers of America Combined Benefit Fund, Plaintiffs, v. Kenneth S. APFEL, Commissioner, Social Security Administration, Defendant, and National Mining Association, et al., Intervenors-Defendants.
• Court: U.S. District Court — District of Columbia

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23 F.Supp.2d 21

Michael H. HOLLAND, et al., as Trustees of the United Mine Workers of America Combined Benefit Fund, Plaintiffs, v. Kenneth S. APFEL, Commissioner, Social Security Administration, Defendant and National Mining Association, et al., Intervenors-Defendants.

Civil Action No. 96-01744 (CKK).

United States District Court, District of Columbia.

September 9, 1998.

Stephen John Pollak, Shea & Gardner, Washington, DC, for Plaintiffs.

Gretchen E. Jacobs, U.S. Department of Justice, Federal Programs Branch, Washington, DC, for Defendant.

John R. Woodrum, Smith, Heenan, Althen & Roles, Washington, DC, for Intevenors-Defendants.

MEMORANDUM OPINION

KOLLAR-KOTELLY, District Judge.

The seven named plaintiffs in the above-captioned case, acting as Trustees of the United Mine Workers of America Combined Benefit Fund ("Trustees"), allege that Kenneth S. Apfel,¹ Commissioner of the Social Security Administration ("Commissioner"), violated the Administrative Procedure Act, 5 U.S.C. § 706(2)(A), by interpreting § 9704(b)(2) of the Coal Industry Retiree Health Benefit Act ("Coal Act") in a manner contrary to law. Both the Commissioner and the Intervenor-Defendants, coal companies that are assigned premium-payment obligations under the Coal Act, have moved to dismiss this action for failure to state a claim upon which relief may be granted. See FED. R. CIV. P. 12(b)(6). Having carefully reviewed the parties' well-drafted briefs, controlling law, and the entire record, the Court denies the motions to dismiss.

I. BACKGROUND

To adjudicate the pending motions to dismiss, a cursory review of the facts will suffice.² In 1992, Congress enacted the Coal Act, 26 U.S.C. §§ 9701-9722, to ensure that over 100,000 retired miners would continue to receive health-care benefits. This legislative effort is but the latest chapter in the long and storied history of this nation's coalmining industry and the labor struggles that it has precipitated. Just recently, the Supreme Court chronicled the more salient events during the past sixty-plus years that culminated in the Coal Act. See Eastern Enterprises v. Apfel, ___ U.S. ___, ___ _ ___, 118 S.Ct. 2131, 2137-42, 141 L.Ed.2d 451 (1998). Seeing no need to restate that which the Supreme Court already has documented, the Court simply notes that Congress enacted the Coal Act to "stabilize plan funding and allow for the provision of health care benefits to ... retirees." § 19142(a)(2), 106 Stat. 3037, note following 26 U.S.C. § 9701. Congress attempted to achieve this goal by merging two former benefit plans "into a new multiemployer plan called the United Mine Workers of America Combined Benefit Fund (Combined Fund)." Eastern Enterprises, ___ U.S. at ___, 118 S.Ct. at 2142 (citing 26 U.S.C. § 9702(a)(1)-(2)). The Combined Fund draws its revenues from "annual premiums assessed against `signatory coal operators.'" Id.

Although the Coal Act preserved the traditional, privately-financed approach to funding retirees' health-care benefits, Congress assigned an integral role to the Commissioner of Social Security in implementing the substantive promise of the Coal Act.³ Pursuant to § 9704(b)(2), the Commissioner is instructed to calculate a per-beneficiary premium for each plan year. See § 9704(b)(2). While the Commissioner enjoys broad power to calculate the premium, Congress has delineated the variables that the Commissioner is to apply in conducting this calculus. Under the Coal Act, the per-beneficiary premium for each plan year is to be equal to the sum of

(A) the amount determined by dividing —

(i) the aggregate amount of payments from the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan for health benefits (less reimbursements but including administrative costs) for the plan year beginning July 1, 1991, for all individuals covered under such plans for such plan year, by

(ii) the number of such individuals, plus (B) the amount determined under subparagraph (A) multiplied by the percentage (if any) by which the medical component of the Consumer Price Index for the calendar year in which the plan year begins exceeds such component for 1992.

26 U.S.C. § 9704(b)(2)(A)-(B).

For reasons that warrant no elaborate analysis at this point in the litigation, the Commissioner formerly interpreted the term "reimbursements" in a manner that generated per-beneficiary premiums in an amount favorable to the Trustees. Finding this interpretation at odds with congressional design, several contributing coal companies brought suit under the APA to enjoin the Secretary to adopt a less taxing interpretation of "reimbursement." See National Coal Ass'n v. Chater, C.A. No. CV94-H-780-S, 1995 WL 1052240, 1995 U.S. Dist. LEXIS 21125 (N.D. Ala. June 2, 1995) ("National Coal I"). The Commissioner initially moved to dismiss the complaint pursuant to FED. R. CIV. P. 19(b) for failure to join the Trustees. The district court, however, denied this motion. On the merits, the district court found that the Commissioner's interpretation of "reimbursement" contradicted the unambiguous meaning of the word as Congress used it. Accordingly, the court issued an injunction that compelled the Commissioner to recalculate the per-beneficiary premium consistent with the interpretation advanced by the coal companies. On appeal, the Eleventh Circuit affirmed. See National Coal Ass'n v. Chater, 81 F.3d 1077 (11th Cir.1996) ("National Coal II"). The Commissioner did not petition the Supreme Court for a writ of certiorari. Subsequently, the Commissioner announced that the per-beneficiary premium would be calculated according to the Alabama district court injunction.

II. DISCUSSION

A. The Trustees, never having participated nor having been joined in the prior Eleventh Circuit litigation, are not barred by res judicata from prosecuting the present action.

According to the venerable common-law doctrine of res judicata, "a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action." Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979); see also State of Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979); Lawlor v. National Screen Serv. Corp., 349 U.S. 322, 326, 75 S.Ct. 865, 99 L.Ed. 1122 (1955); Cromwell v. County of Sac, 94 U.S. 351, 352, 24 L.Ed. 195 (1876); Bank of the United States v. Donnally, 33 U.S. 361, 370, 8 Pet. 361, 8 L.Ed. 974 (1834). As rich an historical pedigree as the doctrine boasts, it coexists — in tension, at times — with "our `deep-rooted historic tradition that everyone should have his own day in court.'" Martin v. Wilks, 490 U.S. 755, 762, 109 S.Ct. 2180, 104 L.Ed.2d 835 (1989) (quoting 18 C. WRIGHT, A. MILLER & E. COOPER, FEDERAL PRACTICE AND PROCEDURE § 4449, at 417 (1981)). Thus, the general rule that governs federal-court practice is that "[a]judgment or decree among parties to a lawsuit resolves issues as among them, but it does not conclude the rights of strangers to those proceedings." Id.

Were this general rule an absolute, res judicata obviously would erect no barrier to the Trustees' present action. While the National Coal I litigation addressed the very issues that the Trustees seek to litigate in this forum, the Trustees did not participate in the prior proceedings nor did the coal companies attempt to join the Trustees. The Intervenor-Defendants, however, press into action a footnote from Martin v. Wilks, 490 U.S. 755, 762 n. 2, 109 S.Ct. 2180, 104 L.Ed.2d 835 (1989), to claim that, though absent from all proceedings, the Trustees should be bound by the Eleventh Circuit litigation. Footnote 2 from Wilks acknowledged that the general rule that a nonparty is not bound by a judgment reached among other parties is narrowly qualified. As the Court indicated, res judicata may preclude a party from litigating "when, in certain limited circumstances, a person, although not a party, has his interests adequately represented by someone with the same interests who is a party." Wilks, 490 U.S. at 762 n. 2, 109 S.Ct. 2180. The Intervenors maintain that during the National Coal I litigation, the Commissioner adequately represented the Trustees' interests when she defended the very interpretation of "reimbursements" that the Trustees now advance here.

Whatever the scope of the Wilks-footnote 2 exception is, by the Supreme Court's own words, it is to be invoked only "in certain limited circumstances." Id. Indeed, the Court cited explicitly just two situations in which the exception might apply; neither of which remotely manifests in this case. The first of these "limited circumstances" that the Supreme Court found applicable was the "class" or "representative suits." See id. (citing Hansberry v. Lee, 311 U.S. 32, 41-42, 61 S.Ct. 115, 85 L.Ed. 22 (1940); FED. R. CIV. P. 23). Yet the lack of any class certification in National Coal I plainly removes the litigation from the ambit of Rule 23. Moreover, quite apart from whether the Commissioner shared the same interests as the Trustees, National Coal I was not a representative suit as the Supreme Court has used and understood that term. See Hansberry, 311 U.S. at 41-42, 61 S.Ct. 115.

The only other "limited circumstance" that the Supreme Court recognized explicitly in Wilks was the situation presented by Montana v. United States, 440 U.S. 147, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979). In Montana, the Court precluded the United States from relitigating an issue decided in a prior proceeding. Although the United States was not a party to the earlier action, it exercised such control over one of the parties that the Court concluded that the United States essentially already had its day in court. Among the factors that demonstrated that the United States "had a sufficient `laboring oar' in the conduct of the state-court litigation," id. at 974, were: the United States (1) required the initial suit to be filed; ...