Sidney Coal Co., Inc. v. Massanari
| Decision Date | 23 July 2002 |
| Docket Number | No. CIV.A.01-76-DCR.,CIV.A.01-76-DCR. |
| Citation | 221 F.Supp.2d 755 |
| Parties | SIDNEY COAL CO., INC., et al., Plaintiffs, v. Larry G. MASSANARI, Defendant, and Michael H. Holland, et. al., Intervenor-Defendants. |
| Court | U.S. District Court — Eastern District of Kentucky |
Joseph L. Famularo, U.S. Attorney's Office, EDKY, Lexington, KY, Brian G. Kennedy, U.S. Department of Justice, Richard G. Lepley, Stuart E. Schiffer, U.S. Department of Justice, Civil Division, Washington, DC, for Social Security Administration, William A. Halter, Acting Commissioner, defendants.
Linda J. Wallbaum, Kevin R. Winstead, Sales, Tillman & Wallbaum, Louisville, KY, Stephen J. Pollak, John Townsend Rich, Howard R. Rubin, Michele Lee Svonkin, Jeffrey D. Fox, Shea & Gardner, Washington, DC, for Michael H. Holland, Elliot Segal, William P. Hobgood, Marty D. Hudson, Thomas O.S. Rand, Carl E. Van Horn, Gail R. Wilensky, intervenor defendants.
This matter is before the Court for consideration of the Plaintiffs' Motion for Summary Judgment [Record No. 34], Defendant Larry G. Massanari's Motion to Transfer or, in the Alternative, for Summary Judgment [Record No. 48] and the Intervenor-Defendant's Motion for Summary Judgment. [Record No. 53] Because the Court finds that venue is proper in this district, that the statute of limitation did not run, that res judicata is not applicable, that Dixie Fuel Co. v. Comm'r of Social Security, 171 F.3d 1052 (6th Cir.1999), is controlling in this circuit and that the Commissioner overstepped his authority in making the Eastern Enterprises1 type reassignments, the Court will grant the Plaintiffs' Motion and will deny the Defendant's and the Intervenor-Defendants' Motions.
This case arises under the Coal Industry Retiree Health Benefit Act, 26 U.S.C. §§ 9701-9722, 30 U.S.C. § 1232(h) (the "Coal Act"). Over the past several decades, the Plaintiffs and other coal mine operators ("operators") collectively promised retirees and their dependents health benefits under a number of United Mine Worker collective wage agreements. In 1974, for the first time, some companies agreed to provide life-time health benefits for retirees. In 1978, the operators signed another agreement strengthening this benefit system. Over time, mine operators were unable to agree how to distribute their responsibility to pay for this joint promise to provide life-time health benefits to retirees. In response, Congress passed the Coal Act in October 1992, which contained a formula for allocating the responsibility to pay for these health benefits to operators.
The Coal Act provides for continuation of health benefits that the mine operators had promised but could not agree on how to finance. Under the Coal Act, the Social Security Administration ("SSA"), under the direction of the Social Security Commissioner (the "Commissioner"), assigns individual retirees and their dependents (collectively, the "beneficiaries") to operators that agreed to pay health benefits under the previous mine-wage agreements. Accordingly, an operator's financial liability varies with the number of "assignments" made by the Commissioner to the operator. For each beneficiary assigned to an operator, that operator is required to pay a "liability premium." Although the Commissioner was given the authority to make the assignments, the Trustees of the United Mine Workers of America Combined Benefit Fund (the "Trustees") were given responsibility to collect the premiums paid by the mine operators and for the oversight of the health benefit plan.
The Coal Act provided that the SSA was required to make all assignments before October 1, 1993. However, Congress did not appropriate funds for the SSA to conduct the enormous task of making assignments until July 1993, leaving only a few months to make all assignments.
The Coal Act established the criteria for assignments. Title 26, U.S.C. § 9706, provides for two classes of beneficiaries: (1) those who could be assigned under the statutory scheme (the "assigned" beneficiaries) and (2) those who could not be assigned under the statutory scheme (the "unassigned" beneficiaries). In making assignment determinations, the Coal Act requires that Commissioner establish a priority list for each beneficiary of all of his previous employers that could be taken into account under scheme. He is to take into account both recency and length of employment of a miner with different companies and whether a company did or did not sign the 1978 agreement. 26 U.S.C. § 9706(a).
The Commissioner must ignore any employment during periods in which the employer was not a signatory to one of the coal wage agreements or in which the employer had gone out of business. 26 U.S.C. § 9706(b). The Commissioner then assigns the beneficiary to the operator with the highest priority. The statute does not explicitly permit the Commissioner to assign a beneficiary to anyone other than the operator with the highest priority. That is, the Commissioner could only assign a beneficiary to the operator with the highest priority
All unassigned beneficiaries would be given benefits, but that coverage would come from an over-funded UMW pension plan and from interest earned on the Mine Reclamation Fund. Additionally, 26 U.S.C. § 9706 provided for the review and "reassignment" of beneficiaries, should the Commissioner find that an assignment was made to the wrong operator. Operators were permitted to directly ask the Commissioner to review assignments and also seek judicial review of the Commissioner's assignment decisions. 26 U.S.C. § 9706(f).
The Commissioner was unable to complete the assignment of all beneficiaries prior to October 1, 1993. Thus, he continued making initial assignments to operators after this statutory deadline. However, in making the assignments, the Commissioner never communicated to an operator whether it was an initial assignment or a reassignment.2 The Plaintiffs contest the validity of any assignments made on or after October 1, 1993, alleging those assignments were beyond the scope of the statutory scheme. Plaintiffs ask that those assignments be voided and those beneficiaries classified as "unassigned." [See Record No. 1, Counts I and II.]
In 1998, the Supreme Court held in Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), that while Congress intended that employers who had participated in the mine wage agreements as early as 1946 should be considered in making assignments, the necessary expectation of life-time benefits was not created until 1974. As such, companies that had left the system before 1974 could not be charged with contributing toward the health benefits under the Coal Act. As a result, those companies could not be assigned liability premiums for beneficiaries.
As a result of the Eastern Enterprises decision, the Commissioner re-examined assignments made to Eastern and companies that had not signed any agreement since 1974 ("Eastern Enterprises-type companies"). Since considering employment with these companies in making assignments was unconstitutional, the Commissioner ignored employment with Eastern Enterprises-type companies in making the re-assignments, although the statute did not expressly permit this. Thus, the Commissioner classified any employment with Eastern Enterprises-type companies as employment outside the scope of the national wage agreements in making these reassignment and did not take that employment into account as "certain employment disregarded" under 26 U.S.C. § 9706(b)(1)(B). As a result, even if an Eastern Enterprises-type company had the highest priority, that company was disregarded and the beneficiary was assigned to the company with the next highest priority.
Plaintiff A.T. Massey Coal Co., Inc. ("Massey") is a Virginia mine operator. Massey is either the direct or indirect parent of all other named Plaintiffs, all of which are also mine operators. Massey received the great majority of the assignments being challenged herein with the remainder being made to Massey subsidiaries that are incorporated outside of Kentucky and have their principal place of business in another state. In the event of a default by Massey or one of the subsidiaries that had received assignments, the other subsidiaries (including the Kentucky operator-Plaintiffs) would be liable for those liability premiums as a related operator.
After the Supreme Court issued the Eastern Enterprises decision, Massey and several subsidiaries asked the Commissioner to void assignments made to them on the basis that they were a related person to a defunct company that had not signed a 1974 or later wage agreement. (See Plaintiffs' Opposition, p. 16.) The Commissioner responded that these companies were not similarly situated to Eastern. Accordingly, in light of Eastern Enterprises, Massey and some of its non-Kentucky subsidiaries filed an action against the Commissioner in the Eastern District of Virginia on this issue. That lawsuit challenged 82 of the same assignments at issue in Counts I and II of the present action. See ...
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