Blue Diamond Coal Co. v. Trustees of the Umwa Combined Benefit Fund, (99-6110), Secretary of Health and Human Services, (99-6111)

249 F.3d 519, 2001 F. App'x 0142P, 49 Fed. R. Serv. 3d 910, 26 Employee Benefits Cas. (BNA) 1129, 2001 U.S. App. LEXIS 8008
CourtCourt of Appeals for the Sixth Circuit
DecidedMay 3, 2001
Docket99-6110, 99-6111
StatusPublished
Cited by264 cases

This text of 249 F.3d 519 (Blue Diamond Coal Co. v. Trustees of the Umwa Combined Benefit Fund, (99-6110), Secretary of Health and Human Services, (99-6111)) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Blue Diamond Coal Co. v. Trustees of the Umwa Combined Benefit Fund, (99-6110), Secretary of Health and Human Services, (99-6111), 249 F.3d 519, 2001 F. App'x 0142P, 49 Fed. R. Serv. 3d 910, 26 Employee Benefits Cas. (BNA) 1129, 2001 U.S. App. LEXIS 8008 (6th Cir. 2001).

Opinion

OPINION

ALDRICH, District Judge.

Defendant-Appellants, the Secretary of Health and Human Services and the Trustees of the United Mine Workers of America Combined Benefit Fund appeal a district court’s order vacating a prior judgment under Fed.R.Civ.P. 60(b)(6). For the following reasons, we REVERSE the order of the district court and REMAND the case with instructions for the re-entry of final judgment in favor of the defendant-appellants.

I.

This appeal arises out of litigation concerning the constitutionality of the Coal Industry Retiree Health Benefit Act of 1992 (the “Coal Act”), 26 U.S.C. §§ 9701-9722. The factual circumstances surrounding the adoption of the Coal Act and its applicability to the plaintiff-appellee, Blue Diamond Coal Company (“Blue Diamond”), have been explained in detail by the Supreme Court in Eastern Enterprises v. Apfel, 524 U.S. 498, 504-14, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), and by this Circuit in In re Blue Diamond Coal Co., 79 F.3d 516, 518-20 (6th Cir.1996).

Since the 1930s, the coal industry has been negotiating with the United Mine Workers of America (the “UMWA”) concerning employee health benefits. Through a series of collective bargaining agreements, beginning with the Krug- *522 Lewis Agreement of 1946, several funds were established to provide health benefits for coal miner retirees and their families. Benefits were funded on a “pay as you go” basis by assessing a royalty on coal production. Due to numerous circumstances — including an increase in benefits, opt-out provisions in the collective bargaining agreements, the rapid escalation of health care, the retirement of a generation of miners and a decline in coal production — these various health benefit funds faced financial ruin in the late 1980s.

Consistent with a long history of federal mediation between the UMWA and the coal industry, Congress passed the Coal Act to ensure the continuation of medical health benefits to coal miner retirees and their families. This Act consolidated the several health benefit funds into the UMWA Combined Benefit Fund (the “Combined Fund”). Instead of the “pay as you go” funding structure, the Coal Act assigned an individual miner and his eligible dependants to a particular coal company based on criteria such as the length of employment with that company and whether that company participated in previous collective bargaining agreements. Existing coal companies were also required to pay an additional premium to cover retirees who were “orphaned” when the employers responsible for their health benefits went out of business.

To prevent the consolidation of liability upon a relatively small number of coal producers, the Coal Act also contained what has become known as a “super reach-back” provision, 26 U.S.C. § 9706(a)(3). See Lindsey Coal Mining Co. v. Shalala, 901 F.Supp. 959, 968 n. 2 (W.D.Pa.1995); In re Blue Diamond Coal Co., 174 B.R. 722, 724 (E.D.Tenn.1994). Under this provision, companies were assigned the health benefit liabilities of a coal miner retiree based upon his length of employment with that company under pre-1978 collective bargaining agreements. See 26 U.S.C. § 9706(a)(3). Consequently, super reach-back companies became responsible for health benefits under the Combined Fund despite having opted out of UMWA collective bargaining agreements and previous health benefit funds for many years.

Blue Diamond, a coal mining company located in Knoxville, Tennessee, and a reorganized debtor under Chapter 11 of the Bankruptcy Code, was one of the companies affected by the super reachback provision of the Coal Act. Though Blue Diamond has been in the coal mining business for over fifty years, it has not been party to a UMWA collective bargaining agreement, nor has it employed union labor, since 1964. Nonetheless, under § 9706(a)(3), Blue Diamond was responsible for the health benefits of approximately 1400 living beneficiaries despite having opted out of the collective bargaining agreements assigning health benefit liability almost three decades ago.

Given this retroactive allocation of liability, the constitutionality of the super reachback provision of the Coal Act was highly contested. Blue Diamond was one of the first corporations to test the Act, arguing that such retroactive liability was an unconstitutional taking and a violation of due process. In In re Blue Diamond Coal Co., 174 B.R. 722 (E.D.Tenn.1994), the district court upheld the constitutionality of the Coal Act, entering a final judgment against Blue Diamond and in favor of the government and the Combined Fund. Blue Diamond appealed and this Circuit, consistent with the rulings of other circuit courts to address the issue, upheld the constitutionality of the Act and affirmed the judgment of the district court. See In re Blue Diamond Coal Co., 79 F.3d 516; see also Davon Inc. v. Shalala, 75 F.3d 1114 (7th Cir.1996); Eastern Enterprises *523 v. Chater, 110 F.3d 150 (1st Cir.1997). Blue Diamond then appealed to the Supreme Court, which denied certiorari on January 6, 1997. See Blue Diamond Coal Co. v. Chater, 519 U.S. 1055, 117 S.Ct. 682, 136 L.Ed.2d 608 (1997).

However, on June 25,1998, the Supreme Court decided Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998). In that case, Eastern Enterprises, a company assigned liability under § 9706(a)(3), challenged that provision of the Coal Act as a violation of the Takings Clause and due process. The Supreme Court held that § 9706(a)(3) was unconstitutional as applied, but was deeply divided in its reasoning. Writing for a four-justice plurality, Justice O’Connor found that the super reachback provision of the Coal Act amounted to an unconstitutional taking under the Fifth Amendment. See id. at 522-38, 118 S.Ct. 2131. Justice Kennedy, concurring in part and dissenting in part, refused to extend a Takings Clause analysis to economic legislation that did not impinge a specific property right, and instead found that § 9706(a)(3) was a rare example of congressional legislation running afoul of due process. See id. at 547-50, 118 S.Ct. 2131. Justice Breyer, writing for a four-justice dissent, agreed with Justice Kennedy that the Takings Clause does not extend to economic legislation such as the Coal Act, but found that § 9706(a)(3) did not violate due process. See id. at 554-68, 118 S.Ct. 2131.

Consistent with the ruling in Eastern Enterprises, the government ended all payment proceedings for the coal companies affected by the super reachback provision of the Coal Act, including Blue Diamond.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
249 F.3d 519, 2001 F. App'x 0142P, 49 Fed. R. Serv. 3d 910, 26 Employee Benefits Cas. (BNA) 1129, 2001 U.S. App. LEXIS 8008, Counsel Stack Legal Research, https://law.counselstack.com/opinion/blue-diamond-coal-co-v-trustees-of-the-umwa-combined-benefit-fund-ca6-2001.