R.G. Johnson Co., Inc. v. Apfel, Civil No. 97-0003(HHK).

• Decision Date: 11 February 1998
• Docket Number: Civil No. 97-0003(HHK).
• Citation: 994 F.Supp. 10
• Court: U.S. District Court — District of Columbia
• Parties: R.G. JOHNSON COMPANY, INC. Plaintiff. v. Kenneth S. APFEL Commissioner for Social Security, et al., Defendants.

994 F.Supp. 10

R.G. JOHNSON COMPANY, INC. Plaintiff. v. Kenneth S. APFEL Commissioner for Social Security, et al., Defendants.

Civil No. 97-0003(HHK).

United States District Court, District of Columbia.

February 11, 1998.

William Henry Howe, Marylou Smith, Howe, Anderson & Steyer, P.C., Washington, DC, for Johnson Co., Inc.

Alexander Daniel Shoaibi, U.S. Atty.'s Office, Washington, DC, for Shirley S. Chater.

Peter Buscemi, Margaret Scott Izzo, Morgan Lewis & Bockius, L.L.P., Washington, DC, for Michael H. Holland, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carlton R. Sickles, Gail R. Wilensky, William P. Hobgood.

MEMORANDUM

KENNEDY, District Judge.

Before the court are cross motions for summary judgment filed by the plaintiff. R.G. Johnson Company. Inc. and the defendants, the Commissioner for Social Security ("Commissioner") and the Trustees of the United Mine Workers of America Combined Benefit Fund ("Trustees"). Upon consideration of the motions, the oppositions thereto, the replies, supplemental filings, and the record of the case, the court concludes that the plaintiff's motion should be granted because there are no material facts in dispute and the plaintiff is entitled to judgment as a matter of law.

I. BACKGROUND

R.G. Johnson Company, Inc. ("New Johnson"), seeks a declaration that it is not obligated to make health-care premium payments for certain beneficiaries to the United Mine Workers of America Combined Benefit Fund ("the Combined Fund") and seeks an injunction restraining the Commissioner from assigning these beneficiaries to it and from pursuing payment of premiums on their behalf. The Combined Fund is a statutory health-care trust created by Congress under the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C.A. § 9701 et seq. (West Supp.1997) ("the statute" or "the Coal Act"). Under the statute, the Social Security Administration ("SSA") is charged with the responsibility of assigning individual Combined Fund beneficiaries to specific former employers ("signatory operators") under the statutory criteria set forth in 26 U.S.C.A. § 9706 (West Supp.1997). The assigned operators are then required to pay health-care premiums to the Combined Fund to finance the cost of benefits for their assigned beneficiaries. 26 U.S.C.A. § 9704 (West Supp.1997). When a signatory operator is no longer in business, a "related person" of the signatory operator is required to pay the health care premiums. 26 U .S.C.A. § 9706(a) (West Supp. 1997).

New Johnson was formed in 1988 when it purchased the operating assets, certain real estate, and the right to use a similar name, of The R.G. Johnson Company ("Old Johnson"). Until this sale, Old Johnson operated as an independent construction contractor performing shaft and slope construction at various coal mines sites. In September 1993, the SSA assigned to Old Johnson, as a "signatory operator," the responsibility for making payments to the Combined Fund on behalf of certain of its former employees ("beneficiaries"). Following Old Johnson's request for review of the assignments, all were rescinded, apparently on the basis that Old Johnson was no longer in business. The SSA notified New Johnson in 1995 that it was responsible for the payments on behalf of the beneficiaries under the Coal Act because it is a successor company to Old Johnson. New Johnson claims that a successor company is not a "related person" as defined by the statute and thus it is not responsible for the payments. Whether a successor company to a signatory operator may be held liable for payments to the Combined Fund under the statute is an issue of first impression in this jurisdiction.

II. STANDARD OF REVIEW

Administrative Review Under the Chevron Framework

The plaintiff seeks judicial review of the SSA's determination that it is liable for payments on behalf of certain beneficiaries. This court may set aside SSA's determination if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C.A. § 706(2)(A) (West 1996). In reviewing an agency action which is based on the agency's interpretation of a statute entrusted to its care, the court must undertake a two-step inquiry, known as the Chevron framework. Eastern Enterprises v. Chater, 110 F.3d 150, 154 (1st Cir.1997) (citing Chevron USA Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)).

Under this analysis, the court must first exhaust the traditional tools of statutory construction to determine whether Congress has spoken to the precise question at issue.... If the court can determine congressional intent, then that interpretation must be given effect.... If, on the other hand, the statute is silent or ambiguous with respect to the specific issue, then the court will defer to a permissible agency construction of the statute.

Halverson v. Slater, 129 F.3d 180, 184 (D.C.Cir.1997), (quoting Natural Resources Defense Council, Inc. v. Browner, 57 F.3d 1122, 1125 (D.C.Cir.1995)).

This Chevron analysis, as recently interpreted by the D.C. Circuit Court in Halverson v. Slater, governs our interpretation of the statute at issue in this case. More so than previous case law, the Halverson decision emphasizes the first prong of the analysis — that the court must first attempt to determine the intent of Congress by using traditional tools of statutory construction. The Halverson court reversed the lower court, finding that it "erred by failing to `exhaust the traditional tools of statutory construction' ..." Id. (citation omitted).

III. DISCUSSION

Under the Coal Act, the SSA must assign each Combined Fund beneficiary to a "signatory operator which (or any related person with respect to which) remains in business," in a certain order of preference. 26 U.S.C.A. § 9706(a) (West Supp.1997). The statute authorizes the assignment of liability to a "related person" to a signatory operator, when the signatory operator, who would otherwise be the assigned operator, is no longer in business.

[A] person shall be considered to be a related person to a signatory operator if that person is —

(i) a member of the controlled group of corporations (within the meaning of [IRC] section 52(a)) which includes such signatory operator;

(ii) a trade or business which is under common control (as determined under [IRC] section 52(b)) with such signatory operator: or

(iii) any other person who is identified as having a partnership interest or joint venture with a signatory operator in a business within the coal industry, but only if such business employed eligible beneficiaries, except that this clause shall not apply to a person whose only interest is as a limited partner.

A related person shall also include a successor in interest of any person described in clause (i), (ii), or (iii).

26 U.S.C.A. § 9701(c)(2)(A) (West Supp. 1997). The statute thus creates four types of related persons: persons described in clauses (i), (ii), and (iii), and persons who are successors in interest to any of the first three types of related persons.

The defendants claim that New Johnson is liable to pay into the Combined Fund on behalf of certain beneficiaries because it is a successor company to Old Johnson. Old Johnson would have been the assigned "signatory operator" responsible for these payments if it were still in business. New Johnson rejoins that a successor company is not a "related person" to a signatory operator, and therefore may not be held liable.

Statutory Language

Employing the first step of the Chevron analysis, we must use traditional tools of statutory construction to determine if the statute evidences a clear expression of Congress' intent as to the liability of a successor company. The first place to look for the answer to this question is in the language of the statute. The first tenet of statutory construction is that the "plain meaning of legislation should be conclusive, except in the rare cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters." United States v. Ron Pair Enterprises, 489 U.S. 235, 242, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). "In such cases, the intention of the drafters, rather than the strict language, controls." Id. "Where, ... the plain language of the statute is clear, the court generally will not inquire further into its meaning, at least in the absence of a clearly expressed legislative intent to the contrary." Qi-Zhuo v. Meissner, 70 F.3d 136, 140 (D.C.Cir.1995). However, "[i]n ascertaining the plain meaning of the statute, the court must look to the particular statutory language at issue, as well as the language and design of the statute as a whole." K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988).

The plaintiff claims that under the plain meaning of the statute, a successor company to a signatory operator is not liable for Combined Fund payments if it does not fall within any of the four categories of "related persons" as defined by the statute. Consequently, the plaintiff argues that it is not liable because it does not fall within any of these categories. The plaintiff explains:

The first type of related person described in section 9701(c)(2)(i) is a person that is a member of a controlled group of corporations which includes a signatory operator. The meaning of "controlled group of corporations" is taken from Section 52(a) of the Internal Revenue Code ("IRC") (26 U.S.C. § 52(a)). which in turn incorporates Section 1563(a) of the IRC (26 U.S.C. § 1563(a)). As provided in these sections, for two companies to be members of a controlled group of corporations, they must share commonality of ownership of more than 50 percent under one of several defined circumstances. Because there is not, and never has been, any commonality of ownership between [New Johnson] and [Old Johnson], the two companies are not...