Holland v. Pardee Coal Co., Inc.

• Decision Date: 07 April 2000
• Docket Number: No. CIV. A. 98-110-A.,CIV. A. 98-110-A.
• Citation: 93 F.Supp.2d 706
• Parties: Michael H. HOLLAND, et al., Plaintiffs, v. PARDEE COAL COMPANY, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Virginia

93 F.Supp.2d 706

Michael H. HOLLAND, et al., Plaintiffs, v. PARDEE COAL COMPANY, INC., et al., Defendants.

No. CIV. A. 98-110-A.

United States District Court, W.D. Virginia. Abingdon Division.

April 7, 2000.

Peter Buscemi, Washington, DC, John Ellsworth Kieffer, Bristol, VA, for Plaintiffs/Counter-Defendants.

Daniel R. Bieger, Abingdon, VA, Mary Lou Smith, Washington DC, for Defendants/Counter Claimants.

MEMORANDUM OPINION AND ORDER

GLEN M. WILLIAMS, Senior District Judge.

I THE CASE AND CONTROVERSY

The Plaintiffs, trustees of the United Mine Workers of America Combined Benefit Fund ("Combined Fund"), filed suit in this court setting forth allegations that the Defendants, current or past coal operators and related parties, are jointly and severally liable for unpaid health care premiums for certain assigned beneficiaries (retired coal miners) of the Combined Fund. The Combined Fund is a trust fund created by Congress under the Coal Industry Retiree Health Benefit Act of 1992 ("Coal Act") to provide health and death benefits to retired coal miners and their dependents.

There are three assignments made to the principal Defendant, Pardee Coal Company, that are contested here. In a letter dated September 28, 1993, Pardee received notice of its responsibility for the assignment of Curtis Hess. (Mem. Supp. Defs.' Mot. Summ. J. at 14.) In two other letters dated September 20, 1995 and September 22, 1997, Pardee received similar notices of assignment for Grover Bolling and Orvil Brewer, respectively. Id. The Plaintiff trustees claim that the Combined Fund has paid out $86,102.62 in health care claims on behalf of these three beneficiaries. (Pls.' Mem. Supp. Mot. Summ. J. at 9.) From October 1, 1993 through June 25, 1999, Pardee made partial payments to the fund In the amount of $28,604.19. (Id. at 9-10; Mem. Supp. Def.'s Mot. Summ. J. at 14.) Pardee now counterclaims for the payments already made, (Mem. Supp. Def.'s Mot. Summ. J. at 14), and the trustees claim the balance of $57,498.43, as well as accrued interest, liquidated damages and attorneys' fees. (Pls.' Mem. Supp. Mot. Summ. J. at 8, 16-17.)

Upon consideration of each party's motion for summary judgment, the court makes the following rulings respecting the various claims and contentions of the parties: i) Pardee Coal Company was a "me too" signatory to the 1978 National Bituminous Coal Wage Agreement; ii) the Coal Act requires the assignments to be made no later than October 1, 1993; and iii) the Coal Act is constitutional. Therefore, the Bolling and Brewer assignments are void as a matter of law. However, the Hess assignment is binding on Pardee and Pardee is liable for any deficiency, or entitled to any excess, in payments pursuant to that assignment. Furthermore, the Defendants are jointly and severally liable for any deficiency. A final judgment as to the Plaintiffs' claim for fees, costs and liquidated damages must await a determination as to whether Pardee has "an obligation to pay" a deficiency as required by 26 U.S.C. § 9721 (West Supp.1999). Accordingly, each party is entitled to a partial summary judgment that gives full effect to this opinion.

A. THE POSITION OF THE DEFENDANTS

The Defendants deny liability on the following four grounds: i) the assignments were untimely when made and are thus void as a matter of law; ii) the principal defendant Pardee Coal Company was never a "signatory operator" as required for Combined Fund liability under the Coal Act; iii) the additional Defendants, even if they are "related parties" under the Coal Act, are not jointly and severally liable; and iv) the current funding mechanism for the Combined Fund established by the Coal Act is unconstitutional under the Fifth Amendment.

The Defendants claim the assignments were untimely because they were made after October 1, 1993, as set forth in the Coal Act as the date by which the Social Security Administration shall make its initial assignments. This, the Defendants assert, was a final date after which no further assignments could be made. Furthermore, the Defendants contend that the assignments are void because they were not signatories to the National Bituminous Coal Wage Agreement of 1978 ("1978 NBCWA") and thus are not liable for the subsequent revisions to the agreement which, under the Coal Act, ultimately established the funding provisions of the Combined Fund. To be liable, the operator must be a signatory to a coal wage agreement.

Moreover, the argument continues, the Defendants named in addition to the principal defendant, Pardee Coal Company, cannot be liable if the assignments to Pardee are void because claims against "related persons" are derived from the underlying claim and cannot stand alone. In addition, the additional Defendants claim that they neither employed the assigned individuals, nor were responsible in any way for the circumstances giving rise to the need for the legislative response embodied by the Coal Act. As a result, they deny both individual and joint and several liability for any contributions to the Combined Fund.

The final claim put forth by the Defendants is that the funding provision of the Coal Act is unconstitutional under a recent United States' Supreme Court decision, Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), and that the offending provision is not severable from the Act as a whole. As a result of the lack of severability, the Defendants argue that the entire Act must be struck down. In the alternative, the Defendants ascribe the Coal Act as unconstitutional in its application to them.

B. THE POSITION OF THE PLAINTIFFS

The Plaintiffs countervail that October 1, 1993 merely represented a congressional goal for completing the assignments, if possible, but in no way suspended agency power to make subsequent assignments. (Reply Mem. Supp. Pls.' Mot. Summ. J. at 23.) As support, the Plaintiffs cite a number of cases establishing that the passage of a statutory deadline does not necessarily end an agency's power to act where important public interests are at stake. Id.; see e.g., Brock v. Pierce County, 476 U.S. 253, 106 S.Ct. 1834, 90 L.Ed.2d 248 (1986).

The claimed interest here is ensuring that liability for the future health care of coal industry retirees be allocated to the responsible parties, the coal operators that formerly employed the miners. To date, nearly 10,000 beneficiaries have been assigned after October 1, 1993. (Reply Mem. Supp. Pls.' Mot. Summ. J. at 5, 32-34.) A ruling that assignments made after this date are void, the argument goes, would utterly frustrate the congressional purpose of the Coal Act because those assignees would then become part of the unassigned pool, whose benefits would be paid by unrelated entities who had no responsibility for the beneficiary. Thus, Congress could not have intended that October 1, 1993 be the final date for assignments under the Act.

The Plaintiffs further maintain that the assignments were not only timely, but binding on Pardee Coal Company as well because of its status as a signatory operator under the Coal Act. By the Plaintiffs' account, Pardee is, by its own admission, a signatory because it negotiated a wage agreement in 1978 that was essentially identical to, and incorporated by reference, the terms of the 1978 NBCWA. (Reply Mem. Supp. Pls.' Mot. Summ. J. at 11 (citing Mem. Supp. Def.'s Mot. Summ. J. at 14).)

In addition, relying on what the Plaintiffs believe to be a plain reading of the Coal Act, all of the Defendants are "related persons" because they are either successors in interest to the principal defendant Pardee Coal, or they are corporations existing under common control, and as a result, are jointly and severally liable for the assigned obligations to the Combined Fund.

Finally, the Plaintiffs disagree with the Defendants' interpretation of the Eastern holding. Eastern, according to the Plaintiffs, is a narrow holding specifically addressed to the unique facts of that case and is applicable only in subsequent cases that involve similarly situated parties. Accordingly, the Plaintiffs' position is that the facts of the case at bar are far too dissimilar to Eastern for it to represent controlling precedent over this matter.

II HISTORY OF THE COAL ACT

The great history of America's coal industry is unfortunately imbued with bloodshed and human tragedy. The portrait of the working and living conditions of the Nineteenth and early Twentieth Century coal miner is an appalling scene indeed. The miner's every workday was fraught with dangers of both a direct and indirect nature. On-the-job deaths and injuries by the tens of thousands resulted from methane explosions, cave-ins and other innate hazards of the occupation. Unknown to the early miner, a far more insidious but no less dangerous hazard invaded them with every breath in the form of silicosis and pneumoconiosis, collectively and modernly known as the dreaded "Black Lung" disease.

In addition to these physical dangers, the miners and their families endured a stark, pallid and insecure existence. The miners earned very low wages, and due to the rural nature of the mining industry, it was often necessary for miners to live in company towns where the mine operators essentially owned and controlled everything from the stores where the miners purchased necessities to the houses and apartments in which the families lived. In addition to low wages and unusually long work days, such absolute dependence on the mining companies forced miners to endure exorbitant and disproportionate prices for goods, sub-par company-provided physicians, and even arbitrary evictions from company housing into tent colonies for simply speaking out or displaying any civil disobedience to the omnipotent authority of the coal barons.

From this oppression arose the need for miners to form a collective voice that would enable them to bring about the fundamental changes...