A.T. Massey Coal Co., Inc. v. Massanari

• Decision Date: 19 July 2001
• Docket Number: No. CIVA 3:88CV83.,CIVA 3:88CV83.
• Court: U.S. District Court — Eastern District of Virginia
• Parties: A.T. MASSEY COAL COMPANY, INC., Massey Coal Services, Inc., Peerless Eagle Coal Co., Tennessee Consolidated Coal Corporation, Plaintiffs, v. Larry G. MASSANARI, Acting Commissioner of Social Security, and Michael H. Holland, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carl E. Van Horn, Gail R. Wilensky and William P. Hobgood, as Trustees of the United Mine Workers of America, Defendants, Michael H. Holland, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carl E. Van Horn, Gail R. Wilensky and William P. Hobgood, as Trustees of the United Mine Workers of America, Counterclaim Plaintiffs, v. A.T. Massey Coal Company, Inc., Massey Coal Services, Inc., Peerless Eagle Coal Co., Tennessee Consolidated Coal Corporation, Rawl Sales and Processing Co., Omar Mining Co., PM Charles Coal Co., Rocky Hollow Coal Co., Sprouse Creek Processing Co., Big Bear Mining Co., Dehue Coal Co., Douglas Pocahontas Coal Corp., Hopkins Creek Coal Co., Joboner Coal Co., Majestic Mining, Inc., Performance Coal Co., Vantage Mining Co., Russell Fork Coal Co., and Vesta Mining Co., Counterclaim Defendants.

153 F.Supp.2d 813

A.T. MASSEY COAL COMPANY, INC., Massey Coal Services, Inc., Peerless Eagle Coal Co., Tennessee Consolidated Coal Corporation, Plaintiffs, v. Larry G. MASSANARI, Acting Commissioner of Social Security, and Michael H. Holland, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carl E. Van Horn, Gail R. Wilensky and William P. Hobgood, as Trustees of the United Mine Workers of America, Defendants, Michael H. Holland, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carl E. Van Horn, Gail R. Wilensky and William P. Hobgood, as Trustees of the United Mine Workers of America, Counterclaim Plaintiffs, v. A.T. Massey Coal Company, Inc., Massey Coal Services, Inc., Peerless Eagle Coal Co., Tennessee Consolidated Coal Corporation, Rawl Sales and Processing Co., Omar Mining Co., PM Charles Coal Co., Rocky Hollow Coal Co., Sprouse Creek Processing Co., Big Bear Mining Co., Dehue Coal Co., Douglas Pocahontas Coal Corp., Hopkins Creek Coal Co., Joboner Coal Co., Majestic Mining, Inc., Performance Coal Co., Vantage Mining Co., Russell Fork Coal Co., and Vesta Mining Co., Counterclaim Defendants.

No. CIVA 3:88CV83.

United States District Court, E.D. Virginia, Richmond Division.

July 19, 2001.

John R. Woodrum, Heenan, Althen & Roles, Washington, D.C., John M. Poma Esquire, A.T. Massey Coal Company, Inc., Richmond, VA, for Plaintiffs.

Debra J. Prillaman, Assistant United States Attorney, United States Attorney's Office, Richmond, Richard G. Lepley, Esquire, Brian G. Kennedy, Department of Justice, Civil Division, Washington, DC, for Massanari.

Samuel M. Brock, III, Troutman Sanders Mays & Valentine LLP, Richmond, VA, Charles P. Groppe, Peter Buscemi, Stanley F. Lechner, Morgan, Lewis & Bockius, L.L.P., David W. Allen, UMWA Health & Retirement Funds, John R. Mooney, Mooney Green, Gleason, Baker, Gibson & Saiden, PC, Washington, DC, for Trustees.

MEMORANDUM OPINION

PAYNE, District Judge.

This action involves the application of the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. §§ 9701-9722 (the "Coal Act" or the "Act"), to the plaintiff coal companies and the assessment of liability thereunder for healthcare premiums benefitting retired coal miners. The Plaintiffs in this action are: A.T. Massey Coal Company, Inc.; Massey Coal Services, Inc.; Peerless Eagle Coal Co.; and Tennessee Consolidated Coal Co. (collectively "Plaintiffs" or "Massey Plaintiffs").¹ The Defendants are Larry G. Massanari, Acting Commissioner of Social Security² and Michael H. Holland, Marty D. Hudson, Thomas O.S. Rand, Elliot A. Segal, Carl E. Van Horn, Gail R. Wilensky, and William P. Hobgood, Trustees for the United Mine Workers of America. The Plaintiffs assert that Defendant Massanari, acting for the Social Security Administration ("SSA"), has unconstitutionally assigned to them responsibility for paying the health care premiums for certain retired coal miners, and their dependents, who previously had worked for either the Plaintiffs or their related companies. The specific assertion made by the Plaintiffs is that the decision of the Supreme Court of the United States in Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998) precludes the Commissioner from constitutionally assigning to the Plaintiffs the responsibility for paying these premiums.³

The Plaintiffs seek: (1) a declaratory judgment that the Coal Act is unconstitutional as applied to them (Count I (due process), Count II (takings)); (2) a judgment that SSA violated the Administrative Procedure Act 5 U.S.C. § 701, et seq., when, pursuant to the Supreme Court's decision in Eastern Enterprises, it voided the assignment of Coal Act beneficiaries made to companies similarly situated to Plaintiffs, but refused to void assignments to Plaintiffs (Count III); and (3) an Order directing defendant Trustees of the United Mine Workers' Association Combined Benefit Fund ("the Trustees") to return all premiums previously paid by Plaintiffs on behalf of the wrongly assigned beneficiaries (Count IV (unjust enrichment)⁴ and VI (action for refund of payments under Employee Retirement Income Security Act)).⁵

In its counterclaims, the Combined Fund seeks: (1) a declaratory judgment that the Coal Act is constitutional as applied to companies like the Plaintiffs; (2) damages incurred as a result of the Plaintiffs' failure to pay the statutorily mandated premiums to the Combined Fund; and (3) injunctive relief requiring the Plaintiffs to pay the premiums and prevent the Plaintiffs from improperly disposing of corporate assets. The Combined Fund added the following related coal companies as counterclaim defendants: Rawl Sales and Processing Co., Omar Mining Co., PM Charles Coal Co., Rocky Hollow Coal Co., Sprouse Creek Processing Co., Big Bear Mining Co., Dehue Coal Co., Douglas Pocahantas Coal Corp., Hopkins Creek Coal Co., Joboner Coal Co., Majestic Mining, Inc., Performance Coal Co., Vantage Mining Co., Russell Fork Coal Co., and Vesta Mining Co.

The Plaintiffs have filed a motion for summary judgment requesting judgment as a matter of law in its their favor on their claims. The Commissioner has likewise filed a motion for summary judgment on the Plaintiffs' claims and the Trustees seek summary judgment on their counterclaims. The parties agree that the material facts are not in dispute and that the matter is appropriate for decision as a matter of law.⁶ For the following reasons, summary judgment is granted in favor of the Defendant Commissioner on the Plaintiffs claims and summary judgment is denied on the Trustees' counterclaims.

STATEMENT OF FACTS

I. The Coal Act

A. Factual History Leading to the Enactment of the Coal Act

The history of the Coal Act is quite detailed and has been laid out comprehensively in numerous court decisions, including the Eastern Enterprises decision.⁷ Hence, it will be recanted here but briefly. In 1946, a nationwide strike among coal miners erupted as a result of demands by the United Mine Worker's Association ("UMWA") that coal operators provide better health care benefits for their employees. See Eastern Enterprises, 524 U.S. at 504-05, 118 S.Ct. 2131.⁸ After intervention by the federal government, the UMWA and several coal operators entered into the National Bituminous Coal Wage Agreement of 1947 ("1947 NBCWA"). Id. at 505, 118 S.Ct. 2131. The 1947 NBCWA established a trust fund, financed by royalties on coal produced, designed to provide pension and medical benefits to miners and their dependents. Id. at 505-06, 118 S.Ct. 2131.

In 1950, 1968, and 1971 new NBCWAs were adopted, each only slightly changing the terms and structure of the original agreement and providing for increases in the amount of royalties paid to the fund based on coal production. Id. at 506, 118 S.Ct. 2131. Essentially, under all four of those agreements, the miners and their families were never promised any specific benefits; instead the trustees of the fund had the discretion to establish and adjust the level of benefits provided. Id. at 506-07, 118 S.Ct. 2131. Significantly, the agreements did not guarantee lifetime health benefits for retirees or their dependents. Id. at 508, 118 S.Ct. 2131.

After Congress passed the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., which required specific funding and vesting of pension plans, the UMWA entered into a new NBCWA with the Bituminous Coal Operators' Association ("BCOA"), a multiemployer bargaining association created in 1951 to be the primary representative of coal operators in negotiations with the UMWA. Id. at 509, 118 S.Ct. 2131. The 1974 NBCWA, which was funded by royalties on coal production and premiums based on hours worked by miners, created four trusts funds. Id. Two of the trust funds covered retiree health benefits: the 1950 Benefit Plan provided health benefits to coal workers who retired before 1976 and the 1974 Benefit Plan covered those who retired on or after January 1, 1976. Id. The 1974 NBCWA, unlike any of its predecessors, expressly provided lifetime benefits to retirees and provided benefits to their widows until their death or remarriage. Id.

Soon after their creation, the 1950 and the 1974 Benefit Plans encountered financial difficulties attributable to: (i) the increased benefits provided by the 1974 NBCWA; (ii) a decline in the demand for coal; (iii) the retirement of an entire generation of miners; and (iv) the increasing costs of health care. Id. at 510, 118 S.Ct. 2131. In an attempt to alleviate the financial burden and in a move towards decentralization of the health-care benefit system organization, the next NBCWA, signed in 1978, ("the 1978 NBCWA") gave signatory employers the responsibility of providing health care to their own current and retired miners. Id. at 510, 118 S.Ct. 2131; see also Sigmon Coal, 226 F.3d at 295. The 1974 Benefit Plan, financed by the remaining participating coal operators, was restricted to cover only "orphaned" retirees whose former employers were no longer in business or otherwise ceased contributing to the funds. Sigmon Coal, 226 F.3d at 295. The 1978 NBCWA contained two provisions intended to ensure the plan's solvency: first, a "guarantee" clause requiring signatories to make sufficient contributions to maintain benefits during the agreement; and, second, an "evergreen" clause which required signatories to contribute to the fund as long as they were in the coal industry, regardless of whether they signed any subsequent agreements. Eastern Enterprises, 524 U.S. at 510, 118 S.Ct. 2131.

Notwithstanding this attempt to shore up the financial problems of the funds, the financial decline rapidly progressed because of increasing costs and the withdrawal of employers from the 1978 NBCWA. Id. To address the problem, the federal government established an Advisory Commission on United Mine Workers of America Retiree Health Benefits ("Coal Commission"), which, after extensive studies, proposed...