Anker Energy Corp. v. Consolidation Coal Co. , 177 F.3d 161 ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
5-14-1999
Anker Energy Corp v. Consol Coal Co
Precedential or Non-Precedential:
Docket 98-3451
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"Anker Energy Corp v. Consol Coal Co" (1999). 1999 Decisions. Paper 128.
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Filed May 14, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-3451
ANKER ENERGY CORPORATION, AND KING
KNOB COAL COMPANY, INC.,
Appellants
v.
CONSOLIDATION COAL COMPANY; UNITED MINE
WORKERS OF AMERICA COMBINED BENEFIT FUND;
MARTY D. HUDSON, TRUSTEE; MICHAEL H. HOLLAND,
TRUSTEE; THOMAS O.S. RAND, TRUSTEE; ELLIOTT A.
SEGAL, TRUSTEE; CARLTON R. SICKLES, TRUSTEE;
GAIL R. WILENSKY, TRUSTEE; WILLIAM P. HOBGOOD,
TRUSTEE; KENNETH S. APFEL, COMMISSIONER OF THE
SOCIAL SECURITY ADMINISTRATION*
On Appeal from the United States District Court
for the Western District of Pennsylvania
District Judge: Honorable William L. Standish
(D.C. Civ. No. 96-01938)
Argued March 25, 1999
BEFORE: GREENBERG, ROTH, and ROSENN,
Circuit Judges
(Filed: May 14, 1999)
_________________________________________________________________
*Kenneth F. Apfel is substituted as a defendant for Shirley Sears Chater
as Commissioner, pursuant to Fed. R. Civ. P. 25(d) (i) and Fed. R. App.
P. 43(c).
Paul A. Manion (argued)
Robert D. Finkel
Manion McDonough & Lucas
600 Grant Street, Suite 882
Pittsburgh, PA 15219
Charles L. Woody
Paula Durst Gillis
Spilman Thomas & Battle
P.O. Box 273
Charleston, WV 25321-0273
James A. Walls
General Counsel
Anker Energy Corporation
2708 Cranberry Square
Morgantown, WV 26505
Attorneys for Appellants
Edwin J. Strassburger (argued)
David A. Strassburger
Strassburger McKenna Gutnick
& Potter
322 Boulevard of the Allies,
Suite 700
Pittsburgh, PA 15222
Robert M. Vukas
General Counsel
Consol, Inc.
Consol Plaza
1800 Washington Road
Pittsburgh, PA 15241-1421
Attorneys for Appellee
Consolidation Coal Company
Peter Buscemi (argued)
Morgan, Lewis & Bockius
1800 M Street, N.W.
Washington, DC 20036
2
John R. Mooney
Elizabeth A. Saindon
Mark J. Murphy
Mooney, Green, Baker, Gibson,
and Saindon
700 14th Street, N.W., Suite 1100
Washington, DC 20005
David W. Allen
Christopher Clarke
Office of the General Counsel
UMWA Health and Retirement
Funds
4455 Connecticut Avenue, N.W.
Washington, DC 20008
Attorneys for Appellees
UMWA Combined Benefit Fund and
Its Trustees
Frank W. Hunger
Assistant Attorney General
Harry Litman
United States Attorney
Douglas N. Letter
Edward R. Cohen (argued)
Attorneys, Appellate Staff
Civil Division, Room 9014
U.S. Department of Justice
601 D Street, N.W.
Washington, DC 20530
Frieda S. Colfelt
Department of Health and Human
Services
Office of General Counsel
6401 Security Boulevard
Altmeyer Building
Baltimore, MD 21235
Attorneys for Appellee
Commissioner of Social Security
3
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. INTRODUCTION
In 1992, Congress enacted the Coal Industry Retiree
Health Benefits Act ("Coal Act"), 26 U.S.C.S 9701-9722, to
ensure that retired coal miners and their dependents would
continue to receive the health and death benefits they had
been receiving since the 1940s pursuant to a series of
collective bargaining agreements. By the late 1980s,
problems had arisen that caused serious under-funding to
the two benefit plans funding the miners' benefits. Fearing
that the miners and their families would be left with no
health or death benefits, Congress stepped in and passed
the Coal Act, which provided a new funding mechanism
under which the Commissioner of Social Security
("Commissioner") would assign miners to a coal industry
employer based on the recency and longevity of a miner's
employment. That employer then would be responsible for
providing the funds for those miners' benefits.
The Coal Act has led to a flood of litigation challenging
the Commissioner's assignments of liability under the Act,
as well as Takings and Due Process challenges to the
constitutional validity of the Act's imposition of retroactive
liability. Following this legal trend, Anker Energy Corp.
("Anker") filed this action in the United States District Court
for the Western District of Pennsylvania seeking declaratory
and injunctive relief that the Commissioner improperly
assigned it responsibility for funding certain miners'
benefits and that these assignments violated the Takings
and Due Process Clauses of the Fifth Amendment to the
United States Constitution. Anker also asserted that
appellee Consolidation Coal Co. ("Consol") had agreed to
assume liability for any payments due for miners' benefits
and to reimburse Anker for any such payments Anker
made, and thus was liable to it for the monies attributable
to the assignments.
4
The district court dismissed all of these claims at the
pleadings and summary judgment stages of litigation. First,
the court granted Consol's motion for judgment on the
pleadings pursuant to Fed. R. Civ. P. 12(c) on Anker's
claims that the Commissioner should have assigned the
miners to Consol, and that Consol had agreed to indemnify
Anker for any liability it incurred for the payment of miners'
benefits. See Anker Energy Corp. v. Consolidation Coal Co.,
Civ. No. 96-1938 (W.D. Pa. July 25, 1997) (Anker I).
Subsequently, the district court upheld the constitutionality
of the application of the Coal Act to Anker on a motion for
summary judgment. See Anker Energy Corp. v.
Consolidation Coal Co., Civ. No. 96-1938 (W.D. Pa. Mar. 11,
1998) (Anker II). Finally, inasmuch as it had affirmed the
imposition of liability against Anker and had determined
that Anker was delinquent in its payments under the Act,
the district court entered a judgment of $1,180,489.06
against Anker for annual premiums, interest, liquidated
damages, attorney's fees, and costs. See Anker Energy Corp.
v. Consolidation Coal Co., Civ. No. 96-1938 (W.D. Pa. July
21, 1998) (Anker III). This appeal followed.
II. FACTUAL AND PROCEDURAL HISTORY
A. Factual History
The courts have well-chronicled the history of the coal
industry's struggles to provide retirement and health
benefits to miners. See, e.g., Unity Real Estate Co. v.
Hudson, ___ F.3d ___, 1999 WL 167765, at *2-*4 (3d Cir.
Mar. 29, 1999); Eastern Enters. v. Apfel, 524 U.S. 498, ___,
118 S. Ct. 2131, 2137-42 (1998) (plurality opinion).
Therefore, we only briefly will summarize this chronology
and outline the parties' roles within that larger story.
In 1947, the United Mine Workers of America ("UMWA")
and the Bituminous Coal Operators' Association ("BCOA")
agreed upon the first of a series of National Bituminous
Wage Agreements ("NBCWA" or "wage agreement"), which
specified the terms and conditions of employment and
provided health and pension benefits for miners. The 1947
NBCWA established the United Mine Workers of America
Welfare and Retirement Fund, which used the proceeds of
5
a royalty on coal production to provide pension and medical
benefits for miners and their families. The 1947 NBCWA did
not specify the benefits to which miners and their families
were entitled, instead leaving this task to three trustees in
charge of the Fund. In 1950 the union and the industry
association agreed upon a new NBCWA that created a new
Fund financed by a per ton levy on coal mined by signatory
operators. Like the 1947 Fund, the 1950 version did not
promise specific benefits, and the benefits were always
subject to cancellation or change.
This system did not change significantly until 1974
when, to comply with the newly enacted ERISA, the UMWA
and the BCOA negotiated a new wage agreement that
created four trusts funded by royalties on coal production
and premiums based on hours worked by miners. Under
the new agreement, the 1950 Benefit Plan covered miners
who retired before January 1, 1976, and their dependents,
while the 1974 Benefit Plan covered miners who retired
after 1975 and their dependents. Both Plans provided non-
pension benefits, including medical benefits.
The 1974 NBCWA explained that it was amending the
previous system to provide health benefits for retired
miners "for life," and to their widows until death or
remarriage. Because of this broadened coverage the number
of eligible benefit recipients increased dramatically, and the
Plans began losing money.
In response, the 1978 NBCWA assigned responsibility to
signatory employers for the health care of their own active
and retired employees. The 1978 agreement also restricted
the 1974 Plan so that it would provide health benefits only
for "orphaned" retirees, those whose last employer had gone
out of business or otherwise ceased contributing to the
Plans. To ensure the Plans' solvency, the 1978 NBCWA
included a "guarantee" clause that obligated signatories to
make sufficient contributions to maintain benefits during
that agreement, and the union and operators amended the
Plans to include "evergreen clauses" that required
signatories to contribute to the Plans if they remained in
the coal business even if they never signed another wage
agreement.
6
Despite the 1978 NBCWA and subsequent attempts to
improve the Plans, they continued to lose money because of
the increase in beneficiaries, the escalating costs of health
care, and the flood of signatory companies abandoning the
Plans. In 1992 Congress responded by passing the Coal
Act. The Act merged the 1950 and 1974 Benefit Plans into
a new multi-employer plan called the United Mine Workers
of America Combined Benefit Fund ("Combined Fund"). The
Combined Fund provides "substantially the same" health
benefits to retirees and their dependents that the 1950 and
1974 Plans provided. 26 U.S.C. S 9703(b)(1), (f). However,
Congress altered the funding mechanism, an action that
has led to the overflow of litigation.
The Act finances the Combined Fund with annual
premiums assessed against signatory operators, which are
companies that were or are signatories to a "coal wage
agreement." 26 U.S.C. S 9701(c)(1). The Act defines a "coal
wage agreement" as an NBCWA, or "any other agreement
entered into between an employer in the coal industry and
the United Mine Workers of America that required" the
provision of health benefits to its retirees or contributions
to the 1950, 1974 or any prior Benefit Plan. 26 U.S.C.
S 9701(b)(1)(A), (B). Any signatory operator who "conducts
or derives revenue from any business activity, whether or
not in the coal industry," may be required to contribute to
the Combined Fund. 26 U.S.C. SS 9701(c)(7), 9706(a).
Where a signatory operator is no longer involved in any
business activity, premiums may be assessed against
"related person[s]" including "successors in interest and
businesses or corporations under common control." Eastern
Enters., 524 U.S. at ___, 118 S.Ct. at 2142 (discussing 26
U.S.C. SS 9701(c)(2)(A), 9706(a)).
The Commissioner of Social Security assigns retirees to
particular signatory operators, and calculates premiums
according to these assignments based on the following
formula:
(a) In general. -- For purposes of this chapter, the
Commissioner of Social Security shall . . . assign each
coal industry retiree who is an eligible beneficiary to a
signatory operator which (or any related person with
7
respect to which) remains in business in the following
order:
(1) First, to the signatory operator which --
(A) was a signatory to the 1978 coal wage
agreement or any subsequent coal wage
agreement, and
(B) was the most recent signatory operator to
employ the coal industry retiree in the coal
industry for at least 2 years.
(2) Second, if the retiree is not assigned under
paragraph (1), to the signatory operator which --
(A) was a signatory to the 1978 coal wage
agreement or any subsequent coal wage
agreement, and
(B) was the most recent signatory operator to
employ the coal industry retiree in the coal
industry.
(3) Third, if the retiree is not assigned under
paragraph (1) or (2), to the signatory operator which
employed the coal industry retiree in the coal
industry for a longer period of time than any other
signatory operator prior to the effective date of the
1978 coal wage agreement.
26 U.S.C. S 9706(a).
The surge of litigation attacking the Coal Act began
shortly after the Commissioner began assigning retirees to
signatory operators. In Lindsey Coal Mining Co. v. Chater,
90 F.3d 688 (3d Cir. 1996), we held the Act constitutional
as applied to a coal company to which the Commissioner
had assigned retirees through section 9706(a)(3) concerning
those signatory operators who had not signed the 1978
agreement. See id. at 695. However, the Supreme Court's
decision in Eastern Enterprises, 524 U.S. 498, 118 S. Ct.
2131, calls the continuing vitality of Lindsey Coal Mining
into question, as the Court found the Act unconstitutional
as applied to a coal company that had ceased mining in
1965 and never signed the 1974 or subsequent wage
8
agreements. Id. at 2153 (plurality opinion); id. at 2154
(Kennedy, J., concurring in judgment).
We recently have had the opportunity to apply the
fragmented Eastern Enterprises decision to facts similar to
those here. In Unity Real Estate, 1999 WL 167765, we
upheld the Commissioner's assessment of liability against
two companies that had signed the 1974 and 1978 wage
agreements and later NBCWAs as constitutional in the face
of takings and due process challenges. Id. at *25, *29.
B. Procedural History
The seeds of discontent that led to this suit were sown on
March 30, 1994, when the Commissioner informed Anker
that she was assigning it liability for certain retired miners,
surviving spouses and dependents, and several orphaned
miners due to its relationship with King Knob Coal Co.
("King Knob") which no longer was in business. From 1967
until 1982, Consol had contracted with King Knob for it to
extract coal on certain of Consol's properties. As part of
these contracts, King Knob agreed that "its employees shall
be members of the United Mine Workers of America and it
shall be a signatory to the then current National
Bituminous Coal Wage Agreement." App. at 75.
To achieve this end, King Knob signed "me too"
agreements during the 1970s and 1980s, the last in 1984.
See app. at 8. Anker characterizes a "me too" agreement as
an agreement between an employer who was not a member
of the BCOA nor an NBCWA signatory yet who agreed by
separate instrument with the UMWA to "be bound by the
terms of the NBCWAs." App. at 8.
An affiliate of Anker acquired King Knob in 1975. The
parties' relationship continued uneventfully until Consol
canceled its contracts with King Knob following which they
entered into a settlement agreement on July 23, 1982.
Paragraph 4(b) of the settlement required Consol to
promptly reimburse King Knob for all subsequent
payments due to the UMWA Fund or any successor
fund attributable to (i) tonnage of coal produced under
the contracts, (ii) hours worked at the mine operated
under the Robinson Run contract on or before August
9
31, 1982, and (iii) hours worked at the mines operated
under the Booth contract on or before June 30, 1982.
App. at 17, 97.
In 1994 and 1995, the Commissioner informed Anker
that it was a related person to King Knob and was being
assigned liability for a number of beneficiaries under the
Coal Act. Arguing that Consol was the proper signatory
operator responsible for some of these retirees under the
Act as they worked at Consol's properties and Consol was
responsible for them, Anker protested this assignment. The
Commissioner responded that Anker's liability was based
upon the fact that King Knob (not Consol) was the signatory
employer of the eligible retirees. Moreover, the
Commissioner determined that she was not authorized to
assign Anker's premiums to Consol despite the parties'
possible contractual agreement for reimbursement of future
benefits because the Social Security Administration "is not
bound by any private agreements made between
companies, nor does the Coal Act allow for pro-ration of
premium payments between companies." App. at 33.
Anker and King Knob responded by filing this action
seeking declaratory and injunctive relief that Consol is
liable for any premiums due the Combined Fund, and that
the Commissioner's assessment of liability to the Combined
Fund under the Coal Act violates the Due Process and
Takings Clauses of the Fifth Amendment to the United
States Constitution. As a matter of convenience we usually
refer to Anker alone as the plaintiff and appellant. Besides
Consol, Anker named the UMWA Combined Fund, its
Trustees and the Commissioner as defendants.
In an unpublished disposition, the district court granted
Consol's motion for judgment on the pleadings pursuant to
Fed. R. Civ. P. 12(c) as to Counts One and Two of Anker's
complaint. Anker I at 2. In Count One, Anker alleged that
Consol had agreed with King Knob and the UMWA that it
would pay the premiums owed to the 1950 and 1974 Plans
based upon the amount of coal produced and the hours
worked by King Knob's employees. Id. at 13. Anker
contended that because of these agreements, Consol
became the signatory operator responsible for King Knob's
10
employees' benefits under the 1950 and 1974 Plans, and
thus was the proper party to which the Commissioner
should assign King Knob's retirees. Id. at 14.
The district court held that Anker could not support this
claim and granted Consol judgment as a matter of law on
Count One. Id. The court recognized that "it is undisputed
that King Knob was a signatory to one or more coal wage
agreements covering its employees at Consol's Booth and
Robinson Run properties, and that Anker is a ``related
person' to King Knob as defined in the Coal Act." Id. at 15.
King Knob was also clearly the employer of the miners. Id.
at 20. Thus, the Commissioner's assignment of
beneficiaries and liability under the Act to Anker as a
related person to King Knob was correct. Id. at 21.
Moreover, the court refuted Anker's argument that Consol
had agreed in 1982 to be responsible for any future
contributions owed to a subsequent benefit plan, and
agreed with the Commissioner that the Coal Act does not
allow for the assessment of liability based upon private
contracts. Id. at 15-16.
The court also granted Consol's motion for judgment on
the pleadings on Count Two, which alleged that pursuant
to their settlement agreement Consol was liable to Anker for
all premiums for which Anker is responsible under the Act.
Id. at 21. The court rejected Anker's argument that
paragraph 4(b) of the settlement agreement bound Consol
to reimburse King Knob, and thus Anker, for its liability
under the Coal Act, reasoning that premiums under the Act
are not
``attributable to' the tonnage of coal produced and the
number of hours worked under the contract mining
agreements, and the Combined Fund is not a
successor fund which requires premium payments
based on the tonnage of coal produced or the number
of hours worked by a signatory operator's employees.
Rather, under the Coal Act, health benefits are funded
by the imposition of what is, in essence, a tax.
Id. at 22-23. Finally, the court relied upon Carbon Fuel Co.
v. USX Corp., 100 F.3d 1124 (4th Cir. 1996), when it held
that even if Anker was entitled to reimbursement under its
11
contract with Consol, Consol still would be entitled to
judgment as a matter of law because "the Coal Act
abrogated pre-act contracts reallocating mining companies'
obligations to pre-Act benefit plans." Id. at 24 n.17. Next
the district court upheld the constitutionality of the
application of the Coal Act to Anker in a second
unpublished decision, and, relying upon our holding in
Lindsey Coal Mining, 90 F.3d 688, granted summary
judgment in favor of the Combined Fund, its Trustees, and
the Commissioner on Count Three which sought a finding
of unconstitutionality. Anker II at 6.
Finally, on July 21, 1998, the district court granted
summary judgment on the Combined Fund's counterclaim
for entry of a judgment against Anker and King Knob for
annual premiums, interest, liquidated damages, attorney's
fees, and costs. Anker III at 10-11. Anker did not contest
the assessment of annual premiums. Id. at 6 n.3.
Considering this fact and Congress's clear intent to provide
for liquidated damages, interest, attorney's fees, and costs
if an employer fails to make timely payments, the court
entered judgment for $1,180,489.06 against Anker and
King Knob in a third unpublished disposition. Id. at 11.
Anker and King Knob then appealed.
III. DISCUSSION
Anker argues that the Coal Act is unconstitutional as
applied to it according to the Supreme Court's decision in
Eastern Enterprises, 524 U.S. 498, 118 S. Ct. 2131.
Appellants' Brief at 19-26. Alternatively, Anker urges us to
reverse the district court's grant of judgment on the
pleadings against it on Counts One and Two of its
complaint. Id. at 26-37. Anker repeats its position
concerning Count One that the Commissioner should have
assigned the miners at issue to Consol. As to Count Two,
Anker contends that the district court erroneously found
paragraph 4(b) of the settlement agreement between King
Knob and Consol clear and unambiguous. Consequently,
Anker believes that the district court erred in not
considering its parol evidence, and that under our
precedent, parol evidence is essential to interpreting the
parties' intent correctly. Moreover, Anker argues that the
12
district court's interpretation of paragraph 4(b) of the
settlement agreement was simply wrong. Id. at 28-37.
Finally, Anker contests the district court's awarding the
Combined Fund interest, liquidated damages, attorney's
fees, and costs, arguing that the Act does not provide for
the assessment of these items. Id. at 37-48.
We will affirm the district court's decisions regarding the
constitutionality of the Act, the correctness of the
Commissioner's assignments, and the award of interest,
liquidated damages, fees and costs against Anker. However,
we will reverse the court's order granting judgment on the
pleadings on Count Two, Anker's contract claim for
reimbursement from Consol, and will remand to the district
court for further proceedings on that count.1
A. Standard of Review
In reviewing the district court's order, we examine the
Commissioner'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 (1985). Thus, we review the Commissioner's decision
as a final agency action brought under the Administrative
Procedure Act. See Lindsey Coal Mining, 90 F.3d at 691; 5
U.S.C. S 704. Accordingly, the issue is whether the
administrative determination was "arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with
law." 5 U.S.C. S 706(2)(A).2 See C.K. v. New Jersey Dep't of
Health and Human Servs., 92 F.3d 172, 182 (3d Cir. 1996).
_________________________________________________________________
1. The district court had federal question jurisdiction pursuant to 28
U.S.C. S 1331 because the case arises under the Constitution of the
United States and the Coal Industry Retiree Health Benefits Act of 1992,
26 U.S.C. S 9701-9722, and had supplemental jurisdiction over Anker's
breach of contract claim pursuant to 28 U.S.C. S 1367. We have
jurisdiction pursuant to 28 U.S.C. S 1291.
2. The district court appears to have reviewed the Commissioner's
decision de novo, as was also the case in Lindsey Coal Mining, 90 F.3d
at 691 n.3. However, as we noted there, inasmuch as we "come to the
same decision as the district court in affirming the Commissioner's
decision, any application of a different standard of review on its part
was
harmless." Id.
13
We review the district court's decision as to the
constitutionality of the Coal Act as applied to Anker de
novo. See Dyszel v. Marks, 6 F.3d 116, 123 (3d Cir. 1993).
Similarly, our review of the district court's granting of
judgment on the pleadings and summary judgment where
the district court was not reviewing the Commissioner's
decisions is plenary. See Smith v. National Collegiate
Athletic Ass'n, 139 F.3d 180, 183 (3d Cir. 1998), rev'd on
other grounds, 119 S. Ct. 924 (1999); Petruzzi's IGA
Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224,
1230 (3d Cir. 1993).
B. Takings and Due Process Challenges
Our discussion of Anker's constitutional challenge begins
with Eastern Enterprises, 524 U.S. 498, 118 S. Ct. 2131,
where a fragmented Supreme Court considered the
constitutionality of the Coal Act as applied to a company
whose coal operations had ceased in 1965. Id. at ___, 118
S.Ct. at 2143. A majority of the Court struck down the law
as applied to Eastern Enterprises by relying on two distinct
theories. The four-justice plurality held that application of
the Coal Act to Eastern Enterprises violated the Fifth
Amendment as an unconstitutional taking. Id. at ___, 118
S.Ct. at 2149. Justice Kennedy, who provided thefifth vote
striking down the application of the Act, disagreed with the
plurality's takings reasoning, but found that the Act's
retroactivity violated due process. Id. at ___, 118 S.Ct. at
2154 (Kennedy, J., concurring in judgment and dissenting
in part). The four dissenting justices agreed with Justice
Kennedy that application of the statute did not violate the
Takings Clause, yet disagreed with his opinion that the Act
violated due process. Id. at ___, 118 S.Ct. at 2161 (Breyer,
J., dissenting).
To consider Anker's takings and due process claims, we
first must decide what, if any, holding in Eastern
Enterprises binds our decision. "When a fragmented Court
decides a case and no single rationale explaining the result
enjoys the assent of five Justices, ``the holding of the Court
may be viewed as that position taken by those Members
who concurred in the judgment on the narrowest
grounds.' " Marks v. United States, 430 U.S. 188, 193, 97
S. Ct. 990, 993 (1977) (quoting Gregg v. Georgia, 428 U.S.
14
153, 169 n.15, 96 S. Ct. 2909, 2923 n.15 (1976)). However,
as we recognized in Rappa v. New Castle County , 18 F.3d
1043 (3d Cir. 1994), and reaffirmed in Unity Real Estate,
1999 WL 167765, at *9, the Marks rule is applicable only
where "one opinion can be meaningfully regarded as
``narrower' than another" and can "represent a common
denominator of the Court's reasoning." Rappa, 18 F.3d at
1057 (quoting King v. Palmer, 950 F.2d 771, 781 (D.C. Cir.
1991) (en banc)). Thus, in cases where approaches differ,
no particular standard is binding on an inferior court
because none has received the support of a majority of the
Supreme Court. Id. at 1058.
As to the immediate situation, we recognized in Unity
Real Estate that "Justice Kennedy's substantive due
process reasoning is not a ``narrower' ground that we might
take to constitute the controlling holding." 1999 WL
167765, at *9. In such a case, then, the only binding aspect
of a splintered decision is its specific result, in Eastern
Enterprises the Court's "holding the Coal Act
unconstitutional as applied to Eastern Enterprises."
Association of Bituminous Contractors, Inc. v. Apfel, 156
F.3d 1246, 1255 (D.C. Cir. 1998). Eastern Enterprises
requires a finding that the Coal Act is unconstitutional as
applied to Anker, then, only if Anker "stand[s] in a
substantially identical position to Eastern Enterprises with
respect to both the plurality and Justice Kennedy's
concurrence." Unity Real Estate, 1999 WL 167765, at *9.3
_________________________________________________________________
3. We also recognized in Unity Real Estate that in light of Eastern
Enterprises' concurrence and dissent, we are "bound to follow the five-
four vote against the takings claim. . . ." Unity Real Estate, 1999 WL
167765, at *9. See Eastern Enters., 524 U.S. at ___, 118 S. Ct. 2156
(Kennedy, J., concurring) ("The Coal Act neither targets a specific
property interest nor depends upon any particular property for the
operation of its statutory mechanisms."); id. at ___, 118 S.Ct. at 2161
(Breyer, J., dissenting) ("The ``private property' upon which the Clause
traditionally has focused is a specific interest in physical or
intellectual
property."); also Association of Bituminous Contractors, 156 F.3d at 1254
n.5 ("The only conceivable change in takings jurisprudence brought
about by Eastern Enterprises is that thefive dissenting justices . . .
apparently believe that the imposition of liability alone is not a taking
of
property under the Fifth Amendment.").
15
Applying Eastern Enterprises in accordance with the
foregoing methodology is not difficult inasmuch as its
plurality and concurrence both found significant the fact
that Eastern Enterprises was not a signatory to either the
1974 or 1978 NBCWAs, and thus it did not contemplate
either being responsible for or contributing to the miners'
expectation of lifetime benefits. The plurality recognized
that while the takings inquiry is "essentially ad hoc and
fact intensive" the Court, in prior decisions, had identified
three factors that are particularly significant: " ``the
economic impact of the regulation, its interference with
reasonable investment backed expectations, and the
character of the governmental action.' " 524 U.S. at ___, 118
S.Ct. at 2146 (quoting Kaiser Aetna v. United States, 444
U.S. 164, 175, 100 S. Ct. 383, 390 (1979)). The plurality
then summarized its takings case law as follows:
Our opinions . . . make clear that Congress has
considerable leeway to fashion economic legislation,
including the power to affect contractual commitments
between private parties. Congress also may impose
retroactive liability to some degree particularly where it
is ``confined to short and limited periods required by the
practicalities of producing national legislation.' Our
decisions, however, have left open the possibility that
legislation might be unconstitutional if it imposes severe
retroactive liability on a limited class of parties that
could not have anticipated the liability, and the extent of
that liability is substantially disproportionate to the
parties' experience.
Id. at ___, 118 S.Ct. at 2149 (quoting Pension Benefit Guar.
Corp. v. R.A. Gray & Co., 476 U.S. 717, 731, 104 S. Ct.
2709, 2719 (1984)) (internal quotation marks omitted)
(emphasis added) (citation omitted).
Applying these precepts, the plurality held that the Coal
Act placed a "considerable financial burden" upon Eastern
Enterprises, which was liable for between $50 and $100
million in cumulative payments. Id. at ___,118 S.Ct. at
2149. The plurality acknowledged that this type offinancial
burden was not a per se taking -- "a permanent physical
occupation of . . . property" -- yet noted that the Court's
decisions upholding the Multiemployer Pension
16
Amendments Act of 1980 to supplement ERISA suggested
that "an employer's statutory liability for multiemployer
plan benefits should reflect some ``proportion[ality] to its
experience with the plan.' " Id. at ___, 118 S.Ct. at 2149
(quoting Concrete Pipe & Prods. of Cal., Inc. v. Construction
Laborers Pension Trust for S. Cal., 508 U.S. 602, 645, 113
S. Ct. 2264, 2291 (1993)). The plurality found this
proportionality lacking because "while Eastern contributed
to the 1947 and 1950 W&R Funds, it ceased its coal mining
operations in 1965 and neither participated in negotiations
nor agreed to make contributions in connection with the
Benefit Plans under the 1974, 1978, or subsequent
NBCWA's." Id. at ___, 118 S.Ct. at 2150 (emphasis added).
This was significant because the 1974 and subsequent
agreements "first suggest[ed] an industry commitment to
the funding of lifetime health benefits for both retirees and
their family members." Id. at ___, 118 S.Ct. at 2150. Thus,
because Eastern Enterprises never had contemplated
liability nor contributed to the miners' expectation of
lifetime benefits, the plurality held that "the correlation
between Eastern and its liability to the Combined Fund is
tenuous, and the amount assessed against Eastern
resembles a calculation ``made in a vacuum.' " Id. at ___,
118 S.Ct. at 2150 (quoting Connolly v. Pension Benefit
Guar. Corp., 475 U.S. 211, 225, 106 S. Ct. 1018, 1026
(1986)).
The plurality also found the lack of proportionality
significant in its analysis of whether the Coal Act
substantially interfered with Eastern Enterprises'
reasonable investment backed expectations, and whether
the nature of the governmental action was unusual. The
plurality found that the Act's "substantial and particularly
far reaching" retroactive effect interfered with Eastern
Enterprises' reasonable investment backed expectations. Id.
at ___, 118 S.Ct. at 2152. It noted that inasmuch as an
employer in the coal industry could not have contemplated
that it was promising lifetime benefits until 1974 when
ERISA forced revisions to the 1950 Fund, the Coal Act's
"scheme for allocation of Combined Fund premiums is not
calibrated either to Eastern's past actions or to any
agreement--implicit or otherwise--by the company." Id. at
___, 118 S.Ct. at 2152. Likewise, the plurality reasoned that
17
the governmental action was highly unusual and implicated
fundamental principles of fairness because it "single[d] out
certain employers to bear a burden that is substantial in
amount, based on the employers' conduct far in the past,
and unrelated to any commitment that the employers made
or to any injury they caused. . . ." Id. at ___, 118 S.Ct. at
2153 (emphasis added). Therefore, each factor suggesting
that the application of the Coal Act was an unconstitutional
taking depended upon the fact that Eastern Enterprises
had left the coal industry in 1965 and had not agreed to
the 1974, 1978, or subsequent wage agreements.
Justice Kennedy, in finding the Coal Act's application to
Eastern Enterprises violated substantive due process, also
relied upon the fact that Eastern Enterprises had not
signed the 1974 or following agreements. Justice Kennedy
held that "[a]ccepted principles forbidding retroactive
legislation" dictated that the application of the Act to
Eastern Enterprises violates the Due Process Clause. Id. at
___, 118 S.Ct. at 2158 (Kennedy, J., concurring in
judgment and dissenting in part). Applying an "arbitrary
and irrational" standard of review, Justice Kennedy pointed
out that the assessment of liability against Eastern
Enterprises bore no legitimate relation to the government's
asserted interest in holding responsible those coal
companies that created an expectation of lifetime benefits
and then abandoned the industry to avoid this
commitment:
As the plurality opinion discusses in detail, the
expectation was created by promises and agreements
made long after Eastern left the coal business. Eastern
was not responsible for the resulting chaos in the
funding mechanism caused by other coal companies
leaving the framework of the National Bituminous
Wage Agreement. This case is far outside the bounds of
retroactivity permissible under our law.
Id. at ___, 118 S.Ct. at 2159 (citation omitted) (Kennedy, J.,
concurring in judgment and dissenting in part).
Thus, analysis of the decisions in Eastern Enterprises
leads us to the conclusion that a majority of the Court
would find the Act unconstitutional when applied to an
18
employer that did not agree to the 1974 or subsequent
NBCWAs, while application of the Act to a signatory to the
1974 or a subsequent wage agreement would be an entirely
different matter.
We believe the fact that Anker was a signatory to"me
too" agreements from the 1970s until 1984 factually
distinguishes Anker's situation from that of Eastern
Enterprises and compels a finding that the Act is
constitutional in this instance.4 This was, in fact, the Court
of Appeals for the District of Columbia Circuit's reasoning
in Association of Bituminous Contractors, 156 F.3d 1246, in
upholding the application of the Act to operators similarly
situated to plaintiffs here. Faced with signatory operators of
the 1974 and subsequent agreements by incorporation by
reference in related agreements, the court noted that "the
crucial fact upon which the Eastern Enterprises plurality
and Justice Kennedy relied in concluding that Eastern's
Coal Act liability was disproportionate to its past conduct
and thus unfairly retroactive--namely, Eastern's departure
from the coal industry in 1965--is absent in this case." Id.
at 1256. The court continued: "The clear implication of
each opinion in Eastern Enterprises is that employer
participation in the 1974 and 1978 agreements represents
a sufficient amount of past conduct to justify the
retroactive imposition of Coal Act liability (for the dissenting
justices, of course, such participation is not even
necessary)." Id. at 1257. See also Unity Real Estate, 1999
WL 167765, at *29 (Aldisert, J., concurring) ("The decisive
material facts in Eastern Enterprises are that the company
_________________________________________________________________
4. The difference between a member of the BCOA and a "me too"
signatory to a NBCWA is of no consequence to this case despite Anker's
contrary assertions. See, e.g., Connors v. Link Coal Co., 970 F.2d 902,
903 (D.C. Cir. 1992) (" ``Me too' agreements have terms identical to the
terms of the national agreement, and thus there is no distinction among
them concerning employers' contractual rights and obligations."); Arizona
Laborers, Teamster and Cement Masons Trust Fund v. Conquer Cartage
Co., 753 F.2d 1512, 1518 (9th Cir. 1985) (defining a "me too" agreement
as an agreement by which a smaller employer can obtain all the benefits
of the master collective bargaining agreement without joining the
industry association and incurring the costs of participating in industry
negotiations or negotiating independently with the union).
19
(1) left the coal industry in 1965 and (2) was never a party
to the 1974 and later Wage Agreements that first suggested
the commitment to lifetime benefits for retirees and family
members."). Thus, it appears that this case falls outside the
specific holding of Eastern Enterprises, and we therefore
find the Coal Act's application to Anker constitutional.
However, our opinion in Unity Real Estate directs us to
apply an additional level of due process analysis designed
to measure "the extent of the gap between the coal
companies' contractual promises to the Funds and the
requirements of the Coal Act." Id. at *10. We noted there
that the proper standard of review for a due process
analysis is whether Congress's action was arbitrary or
irrational. Id. We concluded that Congress's determination
that the coal industry acted in a way that created the
miners' reasonable expectation of lifetime benefits, and that
its finding that the coal companies were the most
responsible parties for the deterioration of the Benefit Plans
were "reasonable evaluations of the problem." Id. at *20.
We then held that the Act's retroactivity did not render it
irrational in violation of due process. Id. We recognized that
the "heart of retroactivity analysis is an evaluation of the
extent of the burden imposed by a retroactive law in
relation to the burdened parties' prior acts" and announced
that "[w]here Congress acts reasonably to redress an injury
caused or to enforce an expectation created by a party, it
can do so retroactively." Id. at *20-*21.
In the first step of a retroactivity analysis, we measured
the length of time of the retroactivity from the date the coal
company's contractual obligations ceased to the passing of
the Act, and held that Unity Real Estate's 11 years was not
so extensive as to violate Justice Kennedy's standard,
although we admitted that it was a "close case." Id. at *21.
We, however, recognized that the burden the Coal Act
imposes upon parties assessed liability is substantial. Id. at
*22. Finally, turning to the proportionality issue, we found
that the Coal Act imposes a burden justified by both the
industry's conduct that created reasonable expectations of
lifetime benefits -- creating a benefit fund legally obligated
to pay out more funds than the operators were required to
provide -- and conduct that created the problem of under
20
funding -- the same initial flaws in the funding mechanism
compounded by the mass exodus of operators from the
industry to avoid making further contributions to the
funds. Id. at *25. This analysis led us to conclude that the
Coal Act did not violate the Due Process Clause because
Congress was entitled to redress the problems caused by
"the companies' actions, through the BCOA through which
negotiations with the unions were conducted, [which]
created reasonable expectations about benefits and
established a funding structure vulnerable to ``dumping'
retirees when companies left the industry." Id.
Applying Unity Real Estate's retroactivity analysis
compels us to reach a similar conclusion here. The length
of time since King Knob last agreed in a "me too" contract
to abide by an NBCWA was eight years, and the length of
time since King Knob agreed to an NBCWA in a contract
with Consol was 11 years before Congress passed the Coal
Act. We found 11 years to be acceptable, although a"close
case," in Unity Real Estate. Id. at *21. Moreover, our
proportionality analysis in Unity Real Estate applies full
force here because King Knob was a signatory to the 1978
and subsequent NBCWAs, and thus bears the same
responsibility as the plaintiffs in Unity Real Estate for
creating the reasonable expectations and the problem of
under-funding that the Coal Act redresses. Id. at *25.
While some language in Unity Real Estate suggests that
we rested our holding on the operators' membership in the
BCOA which had negotiated the agreements that created
the miners' expectation of benefits, id. at *16-*18, we will
not read this language to allow "me too" signatures to avoid
the application of the Act. King Knob agreed to abide by
those same NBCWAs that the plaintiffs in Unity Real Estate
negotiated.5 Similarly, Anker's argument that its liability
fails Unity Real Estate's proportionality test since King
Knob was "never" responsible for contributing to the benefit
funds misses the mark. Anker fails to realize that while
Consol may have agreed to assume King Knob's payments
to the benefit funds in its contract-mining agreements
_________________________________________________________________
5. One of the plaintiffs in Unity Real Estate, was a "me too" signatory to
the 1984 NBCWA after dropping out of the BCOA. Id. at *4.
21
spanning 1967 to 1982, King Knob, as a "me too" signatory
to the NBCWAs was responsible in the first instance for the
provision of these payments. King Knob's ability to have
Consol assume this obligation is simply irrelevent to the
fact that by agreeing to the NBCWAs King Knob was a party
to the agreements that created the miners' expectation of
lifetime benefits. King Knob benefitted as much as Consol
from having the NBCWAs as those agreements kept a
consistent work force in place in part by promising the
provision of health and death benefits for the rest of the
miners' lives.
Overall, inasmuch as nothing germane to our holding in
Unity Real Estate distinguishes Anker from the plaintiffs in
Unity Real Estate, application of that case's due process
analysis leads us once again to conclude that the Act does
not violate constitutional norms, this time as applied to the
Anker. Thus, we find the Act constitutional as applied to
Anker because of the factual distinction that makes Eastern
Enterprises inapplicable, and because the case falls
squarely under our analysis and holding in Unity Real
Estate.
C. The Commissioner's Assignment of Beneficiaries to
Anker
In reviewing the Commissioner's decision to assign
beneficiaries to Anker, we decide whether her action was
"arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law." 5 U.S.C. S 706(2)(A). The
Commissioner rejected Anker's arguments that Consol was
the entity responsible for providing the miners' benefits.
Anker had argued to the Social Security Administration
that assignments made [because of Anker's affiliation
with King Knob] should be reassigned to Consolidation
Coal Co. because King Knob operated as an
independent contractor mining lands owned or leased
by Consol with no ownership rights in the minerals;
that amounts paid by Consol to the UMWA plans were
not deducted or credited against the amounts paid to
King Knob for the mined coal; that upon termination of
the agreement in 1982 Consol accepted responsibility
for current and subsequent payments to the UMWA
22
Welfare and Retirement Fund or any successor fund
based on hours worked prior to the summer of 1982;
[and] that for miners employed by King Knob after
1982, responsibility should be pro-rated. . . .
App. at 33. The Commissioner instead determined that
Under the Coal Act, ownership of a mine is immaterial
to assignment decisions. Assignments are made solely
on the basis of the signatory employer who employed
the eligible retiree. In the case involving King Knob, an
affiliate of Anker Energy, the signatory that employed
the retirees was King Knob, not Consol. Also, for Coal
Act purposes, SSA is not bound by any private
agreements made between companies, nor does the
Coal Act allow for pro-ration of premium payments
between companies. In light of the foregoing, no
assignments that were made to Anker on the basis of
its relationship to King Knob Coal can be reassigned to
Consol.
App. at 33. We will affirm the district court's grant of
judgment on the pleadings on Count One upholding the
Commissioner's assignment of beneficiaries to Anker,
because we find that her decision was not "arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law." 5 U.S.C. S 706(2)(A).
Anker contends that King Knob was merely the "nominal"
employer of the miners, while Consol was a signatory
operator in its own right under the Act that had received
"the entire economic benefit which those miners created,"
and was "the entity which had responsibility for all
payments required to be made to the UMWA Benefit
Funds." Appellants' Brief at 26. We find these contentions
to be without merit.
The Coal Act directs the Commissioner to assign each
eligible beneficiary to a "signatory operator" who employed
the beneficiary. 26 U.S.C. S 9706(a). Section 9706(a) also
attempts to ensure that the specific assignment of a
beneficiary is to the most recent and significant employer
still in business. The Act defines a "signatory operator" as
"a person which is or was a signatory to a coal wage
agreement." 26 U.S.C. S 9701(c)(1). The term "coal wage
23
agreement" includes "the National Bituminous Coal Wage
Agreement," as well as "any other agreement entered into
between an employer in the coal industry and the United
Mine Workers of America that required . . . the provision of
health benefits to retirees of such employer . . . or
contributions to the 1950 UMWA Benefit Plan or the 1974
UMWA Benefit Plan, or any predecessor thereof." 26 U.S.C.
S 9701(b)(1). Finally, the Act provides that "employment of
a coal industry retiree in the coal industry by a signatory
operator shall be treated as employment by any related
persons to such operator." 26 U.S.C. S 9706(b)(1)(A).
Applying these terms here, we uphold the
Commissioner's conclusion that Anker is a related person
to King Knob who was responsible for the provision of
health benefits to the 1950 or 1974 Plans. First, King Knob
was clearly a signatory operator under the Act. Anker
admits that King Knob was a "me too" signatory to the
1974, 1978, 1981 and 1984 NBCWAs. App. at 8. Although
it did not negotiate these agreements, as a "me too"
signatory King Knob agreed to each of these NBCWAs, and
agreed to contribute to the benefit funds. As such, King
Knob falls under the Act. 26 U.S.C. S 9701.
Moreover, Anker does not contest the Commissioner's
determination that it is a "related person" to King Knob
under the Act, and we find that King Knob was without
question the miners' employer. See Appellants' Brief at 26.
Anker's pleadings and the record reveal as much. As an
independent contractor, King Knob agreed in its contracts
with Consol that
all parties working for it in connection with the
undertaking covered by this Agreement shall be its
employees subject only to its orders and supervision.
. . . Neither Consol nor any of its agents, servants or
employees shall have the right to direct, supervise or
control the manner or method in which the work is to
be performed.
App. at 66. Anker confuses the matter by stating that King
Knob was only the miners' "nominal" employer, and that
Consol had received the entire "economic benefit" from the
miners' efforts. The Act does not mention the term
24
"nominal" employer, nor does the term have any
independent meaning in the context here. Likewise, the Act
does not assess premiums based upon who received the
"economic benefit" of the miners' work. Moreover, we do not
accept the accuracy of Anker's denial that King Knob
benefitted economically from its employees' mining efforts.
After all, Consol was paying King Knob for its services.
Furthermore, we find Anker's argument unpersuasive
that King Knob was not the correct signatory employer
because it never had made contributions to the benefit fund
inasmuch as Consol always paid King Knob's premiums
according to their mining agreements. As a "me too"
signatory to the 1974, 1978, 1981 and 1984 NBCWAs, King
Knob was responsible for making payments for its
employees to the benefit funds. Even though Consol
apparently relieved King Knob of this responsibility by
making all of its payments to the funds, such a contractual
agreement does not lead us to conclude that King Knob was
not a signatory operator responsible for making payments
to the funds. Thus, we cannot say that the Commissioner's
assignment of beneficiaries to Anker is "arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law." 5 U.S.C. S 706(2)(A).
D. Contract for Reimbursement
In granting Consol's motion for judgment on the
pleadings on Count Two the district court relied upon
contract and statutory interpretation in holding that Consol
is not liable to reimburse Anker for payments made to the
Combined Fund for the eligible retirees who worked for
King Knob pursuant to its mining contracts with Consol.
First, the court held that the language in the settlement
agreement6 was clear and unambiguous. Anker I at 22.
_________________________________________________________________
6. Once again, the pertinent portion of the settlement agreement states:
(b) Consol shall promptly reimburse King Knob for all subsequent
payments due to the UMWA Fund or any successor fund
attributable to (i) tonnage of coal produced under the Contracts,
(ii)
hours worked at the mine operated under the Robinson Run
Contract on or before August 31, 1982, and (iii) hours worked at
the
mines operated under the Booth Contract on or before June 30,
1982.
App. at 17, 97.
25
Next, the court determined that inasmuch as the contract
provides for reimbursement "attributable to" either the
tonnage of coal produced or the hours miners worked for
King Knob under the contracts with Consol, King Knob was
entitled to reimbursement only if the premiums Anker paid
to the Combined Fund were "attributable to" either factor.
Id. Because the Coal Act funds health benefits, according to
the district court, "by the imposition of what is, in essence,
a tax," it held that Consol was not obligated to reimburse
Anker for its payments. Id. at 23. The court also held that
even if Consol was contractually responsible for
reimbursing Anker, Anker still could not maintain its action
against Consol because the Coal Act "abrogated pre-act
contracts reallocating mining companies' obligations to pre-
Act benefit plans." Id. at 24 n.17. We will reverse the
district court's order granting judgment on the pleadings in
favor of Consol on Count Two for reimbursement because
we reject the district court's conclusions with respect to the
count.
1. Contractual liability
Anker urges us to reverse based upon the district court's
refusal to consider extrinsic evidence in light of its holding
the contractual language clear and unambiguous.
Appellants' Brief at 28. Under Pennsylvania law, which is
applicable here, a court can consider parol evidence only if
the contractual language is ambiguous. See Allegheny Int'l,
Inc. v. Allegheny Ludlum Steel Corp., 40 F.3d 1416, 1427-28
(3d Cir. 1994); Langer v. Monarch Life Ins. Co., 879 F.2d 78,
81 n.8 (3d Cir. 1989).
We hold that the district court erred in deciding that
paragraph 4(b) of the settlement agreement is clear and
unambiguous. The provision states that Consol will
reimburse King Knob for "all subsequent payments" due to
the then-current "UMWA Fund" or "any successor fund."
These payments must be "attributable to" either tonnage of
coal or hours worked under the contracts. Inasmuch as the
Coal Act does not assign liability based upon the amount of
coal mined or hours worked by miners, the court granted
Consol's motion for judgment on the pleadings.
26
In so doing, the court failed to acknowledge that "tonnage
of coal" and "hours worked" were the methods used to
determine an employer's premiums for the 1950 and 1974
Funds. By placing this language in the agreement, the
parties could have been agreeing, as Anker contends, that
Consol would be responsible for any payments owed to
these Funds or any successor fund arising from the work
performed pursuant to the mining contracts. The district
court, then, failed to read the mention of "tonnage of coal"
and "hours worked" consistently with industry usage.
In fact, reading the provision to bind Consol to reimburse
King Knob for any future benefit payments related to the
work completed under the contracts would be consistent
with the parties' inclusion of the term "successor fund" in
the agreement. As Anker pointed out in its brief, inasmuch
as there was no "successor fund" to the UMWA Fund at the
time of the settlement agreement, inclusion of this term
signifies that the parties were contemplating possible
responsibility for payment of future benefits to a future
fund. Appellants' Brief at 33. Otherwise, inclusion of this
language in the contract makes no sense.
The district court also incorrectly interpreted the contract
to bar reimbursement because the Coal Act does not assess
premiums based upon the tonnage of coal and hours
worked. While the Coal Act does not determine specifically
the premiums due based upon coal tonnage and hours
worked, the Act is concerned with operators who had
contributed to the 1950 and 1974 Plans which were funded
based on coal tonnage and hours worked. The Combined
Fund, by its very terms, is a successor plan, born on
February 1, 1993, when the Act mandated that "the settlors
of the 1950 UMWA Benefit Plan and the 1974 UMWA
Benefit Plan shall cause such plans to be merged into the
Combined Fund. . . ." 26 U.S.C. S 9702(a)(2). By
concentrating on the method of funding and ignoring the
industry significance of coal tonnage and hours worked, the
district court incorrectly held that, as a matter of law,
Consol was not liable to Anker for payments made for King
Knob's employees under its contracts with Consol. While we
do not take a position as to Anker's ultimate success in
proving that Consol is in fact liable to it for the premiums
27
for the miners assigned to it under the Act, we conclude
that the district court's disposing of the issue on the
pleadings was premature, and that further proceedings
with respect to it are necessary.7
2. Abrogation of contractual agreements
The district court followed the decision of a divided panel
of the Court of Appeals for the Fourth Circuit in Carbon
Fuel Co. v. USX Corp., 100 F.3d 1124 (4th Cir. 1996), when
it held that the Coal Act abrogates private contracts for
indemnification or reimbursement. Anker I at 24 n.17.
However, considering the Supreme Court's statements in
Eastern Enterprises concerning the language of the Act, we
will not follow Carbon Fuel. Instead, we hold that the Coal
Act does not prohibit indemnification or reimbursement
pursuant to previous contractual arrangements.
The Eastern Enterprises plurality stated that "the Act
preserves Eastern's right to pursue indemnification,"
although it does not grant any new rights, including a right
to reimbursement. 524 U.S. at ___, 118 S.Ct. at 2150. The
Court was referring to 26 U.S.C. S 9706(f)(6) which states:
"Nothing in this section shall preclude the right of any
person to bring a separate civil action against another
person for responsibility for assigned premiums,
notwithstanding any prior decision by the Commissioner."
In so stating, the Supreme Court (implicitly) disagreed
with Carbon Fuel, 100 F.3d 1124, where the court of
appeals interpreted the Act to prohibit suits for
indemnification or reimbursement based upon prior private
contracts. Id. at 1133. The court of appeals relied on
section 9708, which states that "[a]ll liability for
contributions to the Combined Fund that arises on or after
February 1, 1993, shall be determined exclusively under
this chapter. . . ." The court also found persuasive excerpts
from the legislative history stating that Congress "expressly
_________________________________________________________________
7. Consol points out that King Knob retained certain employees after its
agreements with it were terminated. At this time we do not deal with the
significance of this fact which was not material to the district court's
disposition of the reimbursement claim. Of course, paragraph 4(b) of the
settlement agreement has temporal limits.
28
intended to ``reach back' and impose obligations on
signatories to the NBCWAs notwithstanding that many
companies had ``bargained out of their funding
obligations.' " Carbon Fuel, 100 F.3d at 1129 (quoting 138
Cong. Rec. S17566-01, S17603). Despite the fact that no
language in the Act limits the scope of section 9706(f)(6),
the court of appeals interpreted its preservation of private
actions to apply only to "post-Act private agreements and
contracts." Id. at 1134.
We cannot accept this reasoning. As the concurrence in
Carbon Fuel pointed out, section 9708's statement that all
liability will be determined under the Act does not abrogate
a private party's liability to another private party for
indemnification. Id. at 1140 (Williams, J., concurring in
judgment). Instead, this provision provides that"[a]n
operator assigned Coal Act liability by the Commissioner is
primarily liable and must pay into the Combined Fund,
regardless of the operator's private, pre-Act contractual
rights." Id. Section 9706(f)(6), then, does not provide for the
reassignment of primary liability for a signatory operator,
but instead "preserves the right of private civil action for
determining responsibility for assigned premiums as
between contracting parties." Id. at 1141.
We agree with this reading of the Act.8 Section 9706(f)(6)
explicitly preserves a person's right "to bring a separate civil
action against another person for responsibility for assigned
premiums. . . ." This provision does not limit itself to post-
Act contracts, and without an explicit congressional
statement otherwise, we will not construe the Act to
contravene the seemingly unambiguous Congressional
desire to allow for private actions between parties for
reimbursement or indemnification.
Moreover, we believe that our reading of the Act is, in
fact, consistent with the legislative history upon which the
majority in Carbon Fuel relies. While Congress no doubt
wanted to "reach back" and ensure that companies could
_________________________________________________________________
8. Even if our reading of section 9706(f)(6) is incorrect, we believe that
we
would need a clearer expression of Congress's intent for us to agree with
Carbon Fuel that the Coal Act abrogates an entire class of private
contracts.
29
not contract out of their obligations to the Funds, the Coal
Act solves this problem by making the signatory companies
responsible in the first instance for premiums. Once the
Commissioner correctly assigns retirees to an operator,
liability to the Funds is guaranteed. Allowing for
indemnification between private parties if a previous
contractual agreement so provides in no way frustrates this
goal. Indeed, it may further the goal by providing for an
additional entity to be liable, albeit on a contractual basis,
for the payments due the Fund.
We believe the correct reading of congressional intent is
that Congress desired the Act to be remedial -- that
Congress wanted to ensure that miners would receive the
benefits the industry promised and placed liability on the
parties responsible for creating the problem in the first
place. Whether these parties had contracted with other
private organizations for indemnification in case of future
liability is irrelevant. In fact, allowing for indemnification
could provide for more complete funding inasmuch as small
independent contractors such as King Knob are probably
more likely to have gone out of business or to have
insufficient funds to pay the sometimes substantial
premiums than companies similar to Consol that owned
and leased the mines.
Thus, we will reverse the district court's order granting
Consol's motion for judgment on the pleadings on Count
Two for indemnification and remand the count to the
district court for further proceedings. The court erroneously
found the contractual language clear and unambiguous,
and erroneously interpreted the Coal Act to prohibit suits
for indemnification or reimbursement based upon prior
contractual arrangements.
E. Interest, liquidated damages, attorney's fees and
costs
Finally, Anker contests the district court's assessment of
interest, liquidated damages, fees and costs for its failure to
provide the premiums timely by arguing that the Act does
not provide for the assessment of these costs. Appellants'
Brief at 38. We, however, will affirm the district court's
judgment against Anker for these amounts. Anker misreads
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the Coal Act, as it incorporates the assessment of
liquidated damages and fees available in ERISA. See
Holland v. Keenan Trucking Co., 102 F.3d 736, 739 (4th
Cir. 1996) (affirming without comment the district court's
order awarding liquidated damages, interest, fees and costs
under the Coal Act); Holland v. Robert Coal Co., 986 F.
Supp. 621, 633 (D.D.C. 1997) (granting Combined Fund's
motion for summary judgment assessing liquidated
damages, interest, fees and costs), aff'd, 1998 WL 794832
(D.C. Cir. Oct. 16, 1998); Holland v. High-Tech Collieries,
Inc., 911 F. Supp. 1021, 1031-32 (N.D.W. Va. 1996) (same);
Holland v. Double G Coal Co., 898 F. Supp. 351, 356
(S.D.W. Va. 1995) (same).
Section 9721 of the Coal Act states that "[t]he provisions
of section 4301 of [ERISA] shall apply to any claim arising
out of an obligation to pay any amount required to be paid
by [the Coal Act] in the same manner as any claim arising
out of an obligation to pay withdrawal liability under
[ERISA]." 26 U.S.C. S 9721. Section 4301(b) of ERISA
provides that the failure of an employer to make a timely
withdrawal liability payment should be treated in the same
manner as delinquent contributions. 29 U.S.C. S 1451(b).
Finally, section 502 of ERISA requires a district court to
award interest, liquidated damages, and reasonable
attorneys' fees and costs when a plan successfully enforces
a demand for delinquent payments. 29 U.S.C. S 1132(g)(2).9
Applying this statutory scheme to Anker, the district
court correctly determined that Anker had not made
contributions, and thus ERISA's enforcement provisions
concerning delinquent contributions mandated the
assessment of the proper fees. Anker III at 10. We find this
decision clearly correct and uphold the judgment against
Anker.10
_________________________________________________________________
9. We have held that interest, liquidated damages, fees and costs are
mandatory charges in withdrawal liability cases under ERISA. See United
Retail & Wholesale Employees Teamsters Union Local No. 115 Pension
Plan v. Yahn & McDonnell, Inc., 787 F.2d 128, 134-35 (3d Cir. 1986); see
also Huber v. Casablanca Indus., Inc., 916 F.2d 85, 191 n.34 (3d Cir.
1990).
10. As the district court noted, Anker's reliance on Laborers Health and
Welfare Trust Fund for N. Cal. v. Advanced Lightweight Concrete Co., 484
U.S. 539, 108 S. Ct. 830 (1988), is sorely misplaced in light of the fact
that, unlike the NLRA which was involved there, the Coal Act specifically
incorporates ERISA's enforcement provisions. Anker III at 9-10.
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IV. CONCLUSION
For the foregoing reasons, we will affirm the district
court's order granting judgment on the pleadings on
Anker's claim on Count One that the Commissioner's
assignment was erroneous, and will affirm the district
court's order granting summary judgment on the
constitutionality of the Act as applied to Anker and King
Knob on Count Three as well as its award of liquidated
damages, interest, fees and costs on the counterclaim.
However, we will reverse the district court's order granting
judgment on the pleadings on Anker's contractual claim for
reimbursement on Count Two and will remand the case to
the district court for further proceedings on that count
consistent with this opinion. The parties will bear their own
costs on this appeal.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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