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HUGE v. ONDESKO

June 28, 1976

Harry HUGE et al., Plaintiffs,
v.
John J. ONDESKO et al., Defendants



The opinion of the court was delivered by: MILLER

 This labor case, brought pursuant to Section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. § 185, involves the basic question of whether the defendants are obligated to pay into the pension fund that is administered by plaintiffs pursuant to the 1971 coal wage agreement. Much of the factual background is not in dispute; thus, the following account, submitted by stipulation *fn1" , is adopted by the Court.

 Plaintiffs are the Trustees of the United Mine Workers of America Welfare and Retirement Fund of 1950 (Fund), a trust with its principal office located in Washington, D.C. Defendants, whom we shall hereafter collectively refer to as Dunlo Construction Company (Dunlo), are all citizens and residents of the Commonwealth of Pennsylvania and are engaged in the business, inter alia, of salvaging *fn2" coal mine refuse in and about Central City, Somerset County, Pennsylvania.

 The United Mine Workers of America Welfare and Retirement Fund of 1950 was created by the National Bituminous Coal Wage Agreement of 1950.

 On or about November 12, 1971, Dunlo and the United Mine Workers of America entered into the National Bituminous Coal Wage Agreement of 1971 (1971 Agreement). Under Article XV, Section (a) of the 1971 Agreement *fn3" , Dunlo was required to pay into the Fund the sum of sixty cents ($.60) per ton for each ton of coal produced for use or for sale during the period November 12, 1971, through and including November 11, 1972, and the sum of sixty-five cents ($.65) per ton for each ton of coal produced for use or for sale during the period November 12, 1972, through and including May 11, 1973, and the sum of seventy cents ($.70) per ton for each ton of coal produced for use or for sale during the period May 12, 1973, through and including November 11, 1973, and the sum of seventy-five cents ($.75) per ton for each ton of coal produced for use or for sale during the period November 12, 1973, through and including May 11, 1974, and the sum of eighty cents ($.80) per ton for each ton of coal produced for use or for sale during the period May 12, 1974, through and including September 30, 1974.

 During the period November 12, 1971, through and including September 30, 1974, Dunlo was engaged in the business of salvaging coal refuse in and about Somerset County, Pennsylvania. Dunlo also checked off and remitted union dues of its employees pursuant to the 1971 Agreement.

 During the period November 12, 1971, through and including September 30, 1974, Dunlo salvaged coal from coal refuse piles which were the property of Reitz Coal Company (Reitz), Central City, Pennsylvania. The workers employed in the salvage of the coal were members of the United Mine Workers of America.

 All of the coal salvaged by Dunlo as aforesaid was sold and delivered to The Florence Mining Company (Florence) and to M. F. Fetterholf Coal Co., Inc. (Fetterholf).

 At trial the following additional facts were established. Historically mine refuse, which can best be described as a by-product of the coal-mining process, has been an incidental problem to the industry. It is essentially a mixture of coal and other geological (but non-combustible) minerals or elements such as rock, slate and clay. Since the amount of coal in such mixtures is proportionally low, mine operators over the years have viewed the task of separating the saleable coal from the waste elements as economically impracticable. Thus this material, when removed from the mines, is set aside usually in large piles at or near the mine from which it came. While the material has come to be known by various terms -- e.g., slag piles, rejects, rock dumps, culm banks -- we shall refer to it as refuse.

 Because this refuse is not marketable for consumption it must be processed through coal preparation and treatment facilities which, in recent years, have become equal to the task. The refuse-processing operations, run by some of the larger coal operators, have the net effect of maximizing our resources because part of the refuse is recoverable as coal and then resold for use as fuel.

 During the period in question Dunlo sold and delivered approximately 41,000 tons of refuse to Florence and Fetterholf part of which, after being processed, resulted in recoverable coal. *fn4" Contrary to defendants' assertion that the coal contained in this refuse had previously been assessed the prevailing royalty rate, it is apparent to the Court that someone -- Florence, Fetterholf or Dunlo -- had to pay royalty on this "processed" coal under the 1971 Agreement. We infer as much because Dunlo, in its agreement to supply Florence with refuse, bore the responsibility of paying the royalty. *fn5" While the supply contract between Dunlo and Fetterholf is silent on this subject *fn6" we believe the practice in the industry was, unless otherwise agreed, for the supplier to incur the royalty obligation. We make this finding because nowhere in the record is there even a hint that Fetterholf paid into the fund on recoverable coal. Moreover, a letter to Dunlo from Fetterholf stating that prior deliveries of refuse were found to have a recovery range between 30%-52.5% indicates that Dunlo was to pay royalty on the amount of coal recovered. *fn7" Added to all of the above is the fact that Dunlo paid royalties on the tonnages of recoverable coal in the amount of $12,507.00 in accordance with the 1971 Agreement. *fn8"

 Sometime in 1972, however, Dunlo stopped paying royalties into the Fund, apparently believing that such contributions were not mandated by the 1971 Agreement. The figures for clean tonnage and corresponding royalty amounts allegedly due under the contract are not disputed; thus, if Dunlo is liable for pension contributions the amount owing is $9,960.25 plus interest. *fn9"

 Likewise Elmer Motillo, Mine Accountant for Florence, stated that the refuse was bought from Dunlo, weighed in, refined and processed for later resale to power generating stations. ...


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