In re Ltv Steel Co., Inc.
| Decision Date | 23 December 2002 |
| Docket Number | Adversary No. 02-4078.,Bankruptcy No. 00-43866. |
| Citation | 287 B.R. 163 |
| Parties | In re LTV STEEL COMPANY, INC., et al., Debtors. Michael H. Holland, et al., Plaintiffs, v. LTV Steel Company, Inc., et al., Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
John R. Mooney, Marilyn L. Baker, Elizabeth A. Saindon, Mooney, Green, Baker & Saindon, P.C., Washington, DC, Joyce Goldstein, Goldstein & O'Connor, Cleveland, OH, for Plaintiff.
Heather Lennox, Jones, Day, Reavis & Pogue, Cleveland, OH, Richard F. Shaw, Jones, Day, Reavis & Pogue, Pittsburgh, PA, for Defendant.
David M. Fusco, Cleveland, OH, for United Mine Workers of America.
Philip J. Uher, Pittsburgh, PA, for JP Morgan Chase Bank.
Saul Eisen, Cleveland, OH, United States Trustee.
Plaintiff Michael H. Holland and others, as Trustees of the United Mine Workers of America 1992 Benefit Plan ("Plaintiff"), filed a complaint on May 1, 2002 asking for declaratory and injunctive relief that would require Debtor-in-Possession/Defendant LTV Steel Company, Inc. and others ("Defendant") to comply with 26 U.S.C. § 9711, the Coal Industry Retiree Health Benefit Act of 1992 ("the Coal Act").
A detailed explanation of the procedural history of this adversary proceeding, which follows, is necessary to explain this Court's findings of fact and conclusions of law pursuant to Fed. R. Bankr. P. 7052.
On May 2, 2002, Plaintiff filed a motion to withdraw the reference, pursuant to 28 U.S.C. § 157(d).1 On May 15, 2002, this Court received an acknowledgment from the United States District Court for the Northern District of Ohio in Youngstown ("District Court") regarding the motion to withdraw the reference. On May 29, 2002, the District Court denied the motion to withdraw the reference. A copy of the District Court's memorandum opinion and order ("District Court Order") is attached hereto as Exhibit A and is incorporated by reference as if fully rewritten herein.*
On May 31, 2002, in this Court, Plaintiff filed a notice of pending motion of preliminary injunction. A motion for a preliminary injunction was filed with the District Court on May 24, 2002 but was not filed with this Court until June 18, 2002. On June 3, 2002, Plaintiff filed an emergency motion for expedited consideration of the motion for a preliminary injunction. This motion was granted, and a hearing was held on June 4, 2002. Marilyn L. Baker, Esq., John R. Mooney, Esq., Elizabeth A. Saindon, Esq. and Joyce Goldstein, Esq. appeared on behalf of Plaintiff. Heather Lennox, Esq. and Richard F. Shaw, Esq. appeared on behalf of Defendant. David M. Fusco, Esq. appeared on behalf of the United Mine Workers of America. Philip J. Uher, Esq. appeared on behalf of JP Morgan Chase Bank.
At the June 4, 2002 hearing, a briefing schedule was set and this Court issued an order consolidating the motion for a preliminary injunction with a trial on the merits pursuant to Fed. R. Bankr. P. 7065 ("consolidated hearing"). Each party filed briefs with the Court on the issues of whether the Coal Act applies to Defendant and whether an injunction is appropriate. The consolidated hearing was held on June 19, 2002. Marilyn L. Baker, Esq., Elizabeth A. Saindon, Esq. and Joyce Goldstein, Esq. appeared on behalf of Plaintiff. John R. Woodrum, Esq., Jeffrey B. Ellman, Esq. and Richard F. Shaw, Esq. appeared on behalf of Defendant.
On June 19, 2002, pursuant to an oral motion to modify the automatic stay to permit the suit against Defendant, an order sustaining the motion was entered to the extent necessary to permit the proceeding to go forward. Stipulations of fact were filed, and this Court issued a partial ruling from the Bench, concluding that the Coal Act applies to Defendant.2 This Court reserved judgment on the issue of enforcement pending post-trial briefing by the parties. Both parties filed post-trial briefs. On July 12, 2002, Plaintiff filed a motion to strike or, in the alternative, to submit a reply to matters in Defendant's brief that are outside the scope of the enforcement of the Coal Act. On October 1, 2002, this Court sustained Plaintiff's motion to submit a reply, and Plaintiff filed a reply on October 11, 2002.
While pleadings were filed and the consolidated hearing was held, Defendant had not yet filed a responsive pleading. On August 15, 2002, this Court issued an order directing that service be effected within twenty (20) days. Plaintiff filed a certificate of service with this Court on August 23, 2002, evidencing that service of the summons and a copy of the complaint were served on Defendant. Defendant filed an answer with this Court on September 17, 2002.
The District Court Order denied the motion to withdraw the reference, holding that "the Bankruptcy Court provides the most efficient and effective forum for resolving this dispute." (District Court Order — Exhibit A at 7-8.) Despite this Court's reluctance to exercise jurisdiction where a plain reading of 28 U.S.C. § 157(d) leads to the conclusion that jurisdiction in this case has not been conferred to this Court by Congress, nevertheless, this Court feels compelled to decide this case because of the prior District Court Order denying the motion to withdraw the reference.3
The complaint in this case was filed on May 1, 2002. Defendant did not file an answer in this matter until September 17, 2002. This Court's records did not include a certificate of service or other evidence of service of summons and a copy of the complaint on Defendant. There was no evidence of waiver of service by Defendant in the Court's records.
Pursuant to Fed. R. Civ. P. 4(m), incorporated herein by Fed. R. Bankr. P. 7004(a), this Court directed that service be effected within twenty (20) days. Plaintiff filed a certificate of service with this Court on August 23, 2002. Defendant filed an answer with this Court on September 17, 2002. Having received an answer, the record is now complete.
Plaintiff filed a notice of motion for preliminary injunction with this Court after filing a motion for preliminary injunction with the District Court. The motion was not filed with this Court until the day before the consolidated hearing.
Federal Rule of Bankruptcy Procedure (FED. R. BANKR. P.) 9005 adopts Federal Rule of Civil Procedure (FED. R. CIV. P.) 61 regarding harmless error. It states, "[t]he court at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties."
In this case, Plaintiff filed an emergency motion for expedited consideration on June 3, 2002 on a matter that was not properly before this Court. This motion was granted, and a hearing was held on June 4, 2002. Defendant had notice of the motion for preliminary injunction as they were properly served a copy of it along with the notice of the pending motion for preliminary injunction before the hearing on June 4, 2002.
This Court, pursuant to Fed. R. Bankr. P. 9005, did disregard the procedural error as it did not affect the substantial rights of the parties. Defendant had notice of the appropriate motion. Moreover, Plaintiff corrected the error by properly filing a motion for a preliminary injunction before a hearing on the merits was held.
Defendant pleads the following affirmative defenses: failure to state a claim upon which relief may be granted; the complaint is barred by equitable doctrines including waiver, laches, estoppel and unclean hands; Plaintiff did not satisfy mandatory equitable requirements for obtaining injunctive relief; none of the Defendants who are "related persons" to Defendant remain "in business" within the definition of 26 U.S.C. § 9701(c)(7) and this Court lacks jurisdiction to require Defendant to establish an individual employer plan under the provisions of either the Coal Act or the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. For the reasons that follow, all of Defendant's affirmative defenses are overruled.
There are two issues pending before this Court. The first issue is whether the Coal Act applies to Defendant. The second issue is whether an injunction is appropriate.
The history of the health care crisis in the coal industry and the events leading to the enactment of the Coal Act have been recounted in detail by various courts, including the Supreme Court and the United States Court of Appeals for the Sixth Circuit. See, e.g., Barnhart v. Sigmon Coal Co., Inc., 534 U.S. 438, 445-48, 122 S.Ct. 941, 151 L.Ed.2d 908 (2002); E. Enters. v. Apfel, 524 U.S. 498, 504-11, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998) (plurality opinion); Blue Diamond Coal Co. v. Sec'y of Health and Human Servs. (In re Blue Diamond Coal Co.), 79 F.3d 516, 518-21 (6th Cir.1996); Barrick Gold Exploration, Inc. v. Hudson, 47 F.3d 832, 833-34 (6th Cir.1995); LTV Steel Co., Inc. v. Shalala (In re Chateaugay Corp.), 53 F.3d 478, 481-85 (2d Cir.1995); See also, Coal Comm'n Report: A Report to the Sec'y of Labor and the Am. People, November 1990 (analyzing the health care crisis in the coal industry and recommending solutions).4 A brief history is helpful to understand the nature of the instant case.
Beginning in 1946, coal miners received pension and health benefits pursuant to a series of employer-funded plans negotiated by the United Mine Workers of America ("UMWA") and the Bituminous Coal Operators Association ("BCOA"). From 1974 through 1978, non-pension benefits were provided under two plans, the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan. In 1978, the UMWA and BCOA partially decentralized the scheme in the National Bituminous Coal Wage Act ("NBCWA") by agreeing that each miner retiring after January 1, 1976 would...
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