Templeton Coal Co., Inc. v. Shalala

• Decision Date: 18 November 1993
• Docket Number: No. TH 93-158-C.,TH 93-158-C.
• Citation: 855 F. Supp. 990
• Parties: TEMPLETON COAL COMPANY, INC., Sherwood-Templeton Coal Company, Inc., Princeton Mining Company, and Berwind Corporation, Plaintiffs, v. Donna E. SHALALA, Secretary, United States Department of Health and Human Services, 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, Defendants.
• Court: U.S. District Court — Southern District of Indiana

855 F. Supp. 990

TEMPLETON COAL COMPANY, INC., Sherwood-Templeton Coal Company, Inc., Princeton Mining Company, and Berwind Corporation, Plaintiffs, v. Donna E. SHALALA, Secretary, United States Department of Health and Human Services, 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, Defendants.

No. TH 93-158-C.

United States District Court, S.D. Indiana, Terre Haute Division.

November 18, 1993.

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David H. Goeller, Wilkinson Goeller Modesitt Wilkinson & Drummy, Terre Haute, IN, Rosemary M. Collyer, J. Michael Klise, Michael A. Bazany, Jr., Crowell & Moring, Washington, DC, for Templeton Coal Co., Inc., Sherwood-Templeton Coal Co., Princeton Min. Co., Inc., and Berwind Corp.

Jill E. Zengler, Indianapolis, IN, Gretchen E. Jacobs, Federal Programs Branch, Dept. of Justice, Washington, DC, for Donna E. Shalala, Secretary.

John R. Mooney, Beins Axelrod Osborne Mooney & Greene, PC, Peter Buscemi, Morgan Lewis & Bockius, Washington, DC, Edward J. Fillenwarth Jr., Fillenwarth Dennerline Groth & Baird, Indianapolis, IN, for United Mine Workers of America, Marty D. Hudson, Michael Holland, Elliot A. Segal, Thomas O.S. Rand, Carlton R. Sickles, Gail R. Willensky, and William P. Hobgood, trustees.

David W. Allen, Office of Gen. Counsel, UMWA Health and Retirement Funds, Washington, DC.

ENTRY FOLLOWING ARGUMENT ON REQUEST FOR PRELIMINARY INJUNCTION

TINDER, District Judge.

This suit involves a challenge to the constitutionality of a recently enacted piece of federal legislation affecting the funding of health care benefits for retirees of the coal industry. The suit is timely in the sense that in very recent days, Americans have undertaken a major public debate of health care costs and funding in this country. The challenged statutory scheme is one method of allocating health insurance costs for one significant segment of the work force. The outcome of this suit will have no direct bearing on the focus of that debate. Nonetheless, the suit reflects the types of dilemmas posed by efforts to address these difficult issues facing workers and their dependents, employers, and the nation's lawmakers.

However, in another real sense, the suit is untimely. The Plaintiffs have been aware of their potential obligations under the legislative scheme since at least June of this year, and most likely had substantial information about the issues brought before the court in this suit well before that. Nonetheless, the Plaintiffs waited until September 2, 1993 to file this suit, less than thirty days before the threatened actions complained of were scheduled to begin, thus leaving little time for the Defendants to make a fair response to the Plaintiffs' requests for emergency injunctive relief, and an unsuitably short period of time for the court to consider the complex issues presented by the suit. Under the circumstances, the parties have done a remarkably good job of compiling documents and well written briefs for the court's consideration. The court heard oral arguments on September 30, 1993 at which counsel did an admirable job of elaborating their positions.¹

I. FINDINGS OF FACT²

The statutory scheme in question and the historical events leading up to its congressional enactment were ably described by Judge Graham in Barrick Gold Exploration, Inc. v. Hudson, 823 F.Supp. 1395 (S.D.Ohio 1993) and there is no point in reiterating his fine discussion. Accordingly, this court adopts the discussion by Judge Graham at pages 1398 through 1401 and supplements it with the following facts to the limited extent that the parties in this case present a slightly different factual scenario.

The Plaintiffs in this suit are four companies that were previously involved in the coal mining business. They each were signatories to collective bargaining agreements with the United Mine Workers of America ("UMWA") in the 1950s and 1960s.³ Specifically, Templeton Coal Company, Inc. ("Templeton"), Sherwood-Templeton Coal Company, Inc. ("Sherwood"), and Princeton Mining Company, Inc. ("Princeton") bargained with the UMWA through the Indiana Coal Operators' Association ("ICOA"), an independent multiemployer bargaining association. Berwind Corporation ("Berwind") (formerly known as Berwind-White Coal Mining Company) bargained with the UMWA through the Central Pennsylvania Coal Producers' Association ("CPCPA"). The Bituminous Coal Operators' Association ("BCOA"), a multiemployer bargaining association, was formed by many of the UMWA coal mine operators and became the primary negotiator with the UMWA after 1951. Berwind was a member of BCOA between 1955 and 1962. The other three Plaintiffs were never BCOA members, but shadowed the BCOA's activities by membership in ICOA, a similar multiemployer bargaining association.

All four Plaintiffs were signatories to the 1950 National Bituminous Coal Wage Agreement ("NBCWA") and subsequent amendments thereto in 1951 and 1952. The NBCWA was also amended in 1955, 1956, 1958, 1964, and 1966, but the Plaintiffs' connections to those agreements after 1952 varied. Templeton ceased mining operations prior to the 1955 Amendment and consequently was not a signatory to it or any subsequent amendments to the NBCWA. Sherwood and Berwind were signatories to the 1955, 1956, and 1958 Amendments. Sherwood ceased mining operations with UMWA miners in 1960. Berwind ceased coal mining altogether in 1962. Thus, Sherwood and Berwind did not sign the 1964 or 1966 Amendments or any subsequent NBCWA. Princeton signed all the amendments through 1964, but ceased mining before the 1966 Amendment and did not sign any subsequent NBCWAs.

As discussed by Judge Graham in Barrick Gold Exploration, the enactment of the Coal Industry Retiree Health Benefit Act of 1992, Pub.L. No. 102-486, 106 Stat. 2776, 3036-3056 ("the 1992 Coal Act" or "the Coal Act"), occurred in October of 1992, and it was subsequently codified at 26 U.S.C. § 9701 et seq., as part of the Energy Policy Act of 1992. The Coal Act substantially affects the Plaintiffs, and they seek an injunction against its enforcement against them and a judgment that it violates the Due Process and Takings Clauses of the United States Constitution as applied to them.

The 1950 NBCWA established the United Mine Workers of America Welfare and Retirement Fund of 1950 ("1950 W & R Fund"). According to undisputed affidavits submitted by the Plaintiffs, when each of them ceased mining coal with UMWA-represented employees, they had fully complied with their obligations to contribute to the 1950 W & R Fund. The 1950 W & R Fund was created as an irrevocable trust under Section 302(c) of the Labor-Management Relations Act of 1947. According to the 1950 NBCWA, the 1950 W & R Fund was to provide "benefits to employees of said Operators, their families and dependents for medical or hospital care, pensions on retirement or death of employees, compensation for injuries or illness ... and benefits on account of sickness, temporary disability, permanent disability, death or retirement." 1950 NBCWA at 136. Sole discretion regarding the scope and duration of the benefits that employees might receive as a result of the 1950 W & R Fund belonged to the trustees of the 1950 W & R Fund. The principal obligation of the mine operator signatories to the 1950 NBCWA, including the Plaintiffs, was to contribute into the 1950 W & R Fund thirty cents per ton of coal mined. The duration of this obligation continued for the life of the agreement.

None of the amendments to the NBCWA in 1951, 1952, 1955, 1956, 1958, or 1964 changed the terms regarding providing health benefits to retirees under the 1950 NBCWA except that the 1952 Amendment increased the per-ton contribution to forty cents, which carried over to the succeeding agreements. The 1964 Amendment added a requirement that eighty cents per ton be contributed for coal purchased from non-UMWA operators.

Essentially, subsequent NBCWAs through 1974 maintained the general elements of the 1950 W & R Fund as the exclusive provider of health and other welfare benefits for both active and retired UMWA miners and their dependents. The first significant change occurred in the 1971 NBCWA when the trustees were directed to extend benefits at levels set by the BCOA and the UMWA, rather than at levels determined by the trustees as was previously done. Substantially more radical changes developed as a result of the 1974 NBCWA. That agreement converted the 1950 W & R Fund into an entity known as the UMWA 1950 Pension Trust. The 1974 NBCWA also created two other plans relevant to this proceeding:⁴ the UMWA 1950 Benefit Plan and Trust ("1950 Benefit Fund") and the UMWA 1974 Benefit Plan and Trust ("1974 Benefit Fund"). These Benefit Funds provided health and other non-pension benefits to covered miners who retired before January 1, 1976 (1950 Benefit Fund) or after January 1, 1976 (1974 Benefit Fund). The assets of the 1950 W & R Fund were transferred to the UMWA 1950 Pension Trust so that both Benefit Funds started with a zero funding base. The funding for the two new Benefit Funds was to come from BCOA members and other signatories to the 1974 NBCWA. However, perhaps the most revolutionary change brought by the 1974 NBCWA was the explicit promise that a covered retired miner would retain health benefits for life. The class of beneficiaries entitled to benefits also was expanded to include all surviving spouses of UMWA retirees, rather than just widows of miners killed in mines as was previously the case.

The next NBCWA — the 1978 version — brought about still more changes in UMWA retiree health benefits. As a result of the 1978 NBCWA, the source of benefits for UMWA miners who retired before January 1, 1976 was unchanged — the 1950 Benefit Fund. Miners...