Lindsey Coal Min. Co. v. Chater

• Decision Date: 03 June 1996
• Docket Number: No. 95-3626,95-3626
• Citation: 90 F.3d 688
• Parties: LINDSEY COAL MINING COMPANY, Liquidating Trust by its Liquidating Trustees, H. Robert Lasday and Elaine K. Light, Appellants, v. Shirley S. CHATER, Commissioner of Social Security; United Mine Workers Of America Combined Benefit Fund, and its Trustees, Marty D. Hudson, Michael Holland, Elliot A. Segal, Thomas O.S. Rand, Carlton R. Sickles, Gail R. Willensky and William P. Hobgood.
• Court: U.S. Court of Appeals — Third Circuit

Page 688

90 F.3d 688

LINDSEY COAL MINING COMPANY, Liquidating Trust by its Liquidating Trustees, H. Robert Lasday and Elaine K. Light, Appellants, v. Shirley S. CHATER, Commissioner of Social Security; United Mine Workers Of America Combined Benefit Fund, and its Trustees, Marty D. Hudson, Michael Holland, Elliot A. Segal Thomas O.S. Rand, Carlton R. Sickles, Gail R. Willensky and William P. Hobgood.

No. 95-3626.

United States Court of Appeals Third Circuit.

Argued June 3, 1996.

Decided July 26, l996.

Jeffrey Lundy (argued), Lukehart & Lundy, Punxsutawney, PA, for Appellants.

Frank W. Hunger, Assistant Attorney General, Frederick W. Theiman, United States Attorney, Jeffrey Clair (argued), Appellate Staff, Civil Division, Department of Justice, Washington, DC, for Appellees--Commissioner of Social Security.

Peter Buscemi (argued), Dean C. Berry, Morgan, Lewis & Bockius, LLP, Washington, DC, John R. Mooney, Marilyn L. Baker, Beins, Axelrod, Osborne, Mooney & Green, P.C., Washington, DC, David W. Allen, Office of General Counsel, UMWA Health and Retirement Funds, Washington, DC, for Appellees--UMWA Combined Benefit Fund and its Trustees.

Before: BECKER, MANSMANN, Circuit Judges, and BROTMAN, District Judge. ^*

OPINION OF THE COURT

BECKER, Circuit Judge.

Lindsey Coal Mine Company Liquidating Trust ("Lindsey") maintains that it is not subject to the Coal Industry Retiree Health Benefit Act of 1992 ("Coal Act"), and, alternatively, that the Coal Act, as applied to Lindsey, violates the Due Process and Takings Clauses of the United States Constitution. It brought suit in the district court, in the nature of a declaratory judgment action, seeking judicial review of a final action of the Commissioner of Social Security ¹ and requesting summary judgment on its claims. The district court denied Lindsey's motion for summary judgment and, instead, granted summary judgment for the defendants, the Commissioner of Social Security and the United Mine Workers of America Combined Benefit Fund. See Lindsey Coal Mining Co. Liquidating Trust v. Shalala, 901 F.Supp. 959 (W.D.Pa.1995). The district court held (1) that the Commissioner did not abuse her discretion in determining that Lindsey was covered by the Coal Act, and (2) that the Coal Act did not offend the Due Process or Takings Clauses. Id. at 962. We affirm.

I. BACKGROUND FACTS

The provisions of the Coal Act and the history leading up to its enactment are already well chronicled. See, e.g., Davon, Inc v. Shalala, 75 F.3d 1114 (7th Cir.1996), petition for cert. filed, 64 U.S.L.W. 3741 (U.S. Apr. 22, 1996) (No. 95-1709), 64 U.S.L.W. 3742 (U.S. Apr. 23, 1996) (No. 95-1751); In re Blue Diamond Coal Co., 79 F.3d 516 (6th Cir.1996); Barrick Gold Exploration, Inc. v. Hudson, 47 F.3d 832 (6th Cir.), cert. denied, --- U.S. ----, 116 S.Ct. 64, 133 L.Ed.2d 26 (1995); In re Chateaugay Corp., 53 F.3d 478 (2d Cir.), cert. denied, --- U.S. ----, 116 S.Ct. 298, 133 L.Ed.2d 204 (1995); Coal Commission Report: A Report to the Secretary of Labor and the American People 16-19 (Nov. 1990). We, therefore, will provide only a brief summary here.

Congress enacted the Coal Act, 26 U.S.C.A. § 9701-9722 (West Supp.1995), to ensure that coal mine retirees and their dependents would continue to receive health and death benefits. Miners and their dependents had been receiving benefits under a series of agreements, stretching back to the 1940s, established by the coal industry and the miners' union. Faced with shortfalls in the trusts that provided for these benefits, Congress acted to provide adequate funding. It established, through the Coal Act, a comprehensive regime to provide benefits to retired coal workers and their dependents, funded through premiums allocated among present and former businesses in the coal industry.

The material facts in this case pertain to the history of Lindsey's structure and activities, especially over the last two decades. Incorporated in Pennsylvania in 1910, Lindsey Coal Mining Company mined coal in Pennsylvania for forty-two years. Through its membership in the Central Pennsylvania Coal Producers Association (CPCPA), Lindsey became a signatory to the 1947 National Bituminous Coal Workers Agreement (NBCWA), the 1950 NBCWA, and the February 1, 1951, amendment to the 1950 NBCWA. These agreements were negotiated with the union that represented Lindsey's miners, the United Mine Workers of America (UMWA). Lindsey contributed approximately $230,000 to the multi-employer benefit fund established by these NBCWAs. In 1952, Lindsey ceased its active coal mining operations and began leasing its properties, for royalties, to various coal, gas, and logging operators as well selling real estate and scrap metal.

In 1974, the shareholders of Lindsey Coal Mining Company decided, in large part for tax reasons, that it was no longer "desirable" to maintain Lindsey in its corporate form. In March 1975, noting that "time [was] of the essence," the shareholders of Lindsey entered into a trust agreement to "wind up the affairs" of the corporation as quickly as possible. The trust agreement granted to a Liquidating Trustee full corporation powers in the former assets of Lindsey Coal Mining Company, including its real estate and mineral reserves. ² See Lindsey Coal Mining Co. Liquidating Trust v. Shalala, 901 F.Supp. 959, 964 (W.D.Pa.1995).

It is now 1996, and Lindsey's liquidation has yet to be completed. In fact, liquidation is not expected to be completed for at least another two to four years, when all mineral and timber resources will have been depleted or extracted. Meanwhile, during the past twenty years, Lindsey--through the Liquidating Trust--has negotiated the lease of land to a shopping center complex; leased land for coal, gas, and timber extraction; sold scrap metal; and paid approximately $20,000 per year in employee wages. These activities generated significant income for Lindsey--money that the Trust collects and distributes to the beneficiaries of the trust, the former shareholders of Lindsey Coal Mining Company.

In 1993, the Commissioner of Social Security assigned Lindsey liability for twenty-three of its former miners (or their dependents or beneficiaries) pursuant to the Coal Act, to be paid the first year at a monthly rate of $6,667.34. Although Lindsey's disputes these obligations under the Coal Act, it has made timely payments to the Combined Fund to avoid the penalties for nonpayment. See 26 U.S.C.A. § 9707(b) (establishing penalty of $100 per day for nonpayment of premiums).

II. APPLICATION OF THE COAL ACT

A. Lindsey's Contentions and Scope of Review

Lindsey's first contention is that it is not subject to the provisions of the Coal Act. The Coal Act authorizes the Commissioner to assign premiums to any "signatory operator" (or "related party") that remains "in business." 26 U.S.C.A. § 9706(a). Lindsey is exempt from the Coal Act, it argues, because it is neither a "signatory operator" nor "in business" within the meaning of the Act. The Commissioner found otherwise.

Our review is deferential. In reviewing the district court's order, we examine the agency's action under the same standard of review properly applied by the district court, see Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744, 105 S.Ct. 1598, 1607, 84 L.Ed.2d 643 (1985), granting favorable inferences from disputed facts to Lindsey since this is a summary judgment, see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Although Lindsey sought review under the declaratory judgment act, see 28 U.S.C.A. § 2201, the determination that plaintiff Lindsey is a "signatory coal operator" that remains "in business"--and thus liable for Coal Act premiums--was a final administrative decision made by the Commissioner of Social Security. See 26 U.S.C.A. § 9706(f). We review the Commissioner's decision as a final agency action brought under the Administrative Procedure Act. See 5 U.S.C.A. § 704 ("Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review."). Thus, the question before us, as before the district court, ³ is whether the administrative determination challenged by Lindsey satisfies the applicable standard of review set forth in the Administrative Procedure Act: whether the agency action is "arbitrary, capricious, an abuse of discretion, or not in accordance with law." 5 U.S.C.A. § 706(2)(A).

B. "Signatory Operator"

We first take up Lindsey's contention that it is not covered by the Coal Act because it is not a "signatory operator." A "signatory operator" is a "person which is or was a signatory to a coal wage agreement." 26 U.S.C.A. § 9701(c)(1). It is undisputed that the Lindsey Coal Mining Corporation was a signatory to two coal wage agreements, one in 1947 and one in 1950. ⁴ The only question, then, is whether the current Lindsey Liquidating Trust is the same "person" as the Lindsey Coal Mining Company that became a signatory to those agreements.

Lindsey contends that it is not a "signatory operator" that can lawfully be assigned premium liability under the statute because it is not the same entity as the Lindsey Coal Mining Company. Because, in 1975, the Lindsey Coal Corporation became the Lindsey Liquidating Trust, the Lindsey Coal Mining Company has not existed for over twenty years, Lindsey argues. The government responds, and the Commissioner and the district court held, that Lindsey Coal is a "signatory operator" because the current trust is essentially the same entity--and thus the same "person" under the Coal Act--as the Coal Mining Company.

We cannot say that the Commissioner abused her discretion in determining that Lindsey, in its current form as Lindsey Liquidating Trust, is the same "person" that was a signatory to the coal agreements. The former shareholders of the corporation are now the beneficiaries of the trust,...