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In re Bituminous Coal Wage Agreements

February 27, 1985

IN RE: BITUMINOUS COAL WAGE AGREEMENTS; TRUSTEES OF THE UNITED MINE WORKERS OF AMERICA HEALTH AND RETIREMENT FUNDS, APPELLANTS, IN NOS. 84-3166 & 84-3220; INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA, APPELLANT IN NOS. 84-3167 & 84-3237; DUQUESNE LIGHT COMPANY AND ASSOCIATED ELECTRIC COOPERATIVE, INC., APPELLANTS IN NOS. 84-3371 & 84-8067


Appeal From The United States District Court For The Western District Of Pennsylvania (D.C. Civil No. Misc. 9604-536).

Hunter and Weis, Circuit Judges, and Thompson, District Judge.*fn*

Author: Weis

Opinion OF THE COURT

WEIS, Circuit Judge.

The United Mine Workers Union has incorporated a "purchased-coal" clause in its collective bargaining agreements. By its terms, a signatory employer must contribute to the union Health and Retirement Funds an equal amount per ton of coal whether it mines the mineral or purchases if from a non-signatory. The district court enjoined enforcement of the clause because it was union signatory on its face. However, we conclude that the legality of the provision must be resolved in the circumstances affecting each purchase. Accordingly, we will vacate the summary judgment in favor of the employers and remand. Because resolution of these issues may moot the employers' antitrust claims, we will remand them as well.

This litigation consists of twenty-four cases that the Judicial Panel on Multidistrict Litigation consolidated and transferred to the district court for pre-trial proceedings. Common to all is the legality of a clause in three successive multi-employer collective bargaining agreements between the United Mine Workers and the Bituminous Coal Operators Association. In most of the suits the Trustees of the UMW Health and Retirement Funds seek to recover allegedly delinquent contributions from signatory employers, who in turn defend on the basis that the clause violates § 8(e) of the National Labor Relations Act. 29 U.S.C. § 158(e)(1982). Several employers brought other complaints seeking either declaratory relief or damages under the labor and antitrust laws.

The district court held that on its face the purchased-coal violated § 8(e) and entered summary judgment against the trustees. Having enjoined enforcement of the clause, the court did not consider claims for injunctive relief under the Sherman Act. However, in two cases employers sought antitrust damages. In those suits the court concluded that the rule of reason applied, and that unresolved questions of fact precluded summary judgment.*fn1 Because the orders in these latter two cases were not final, the court certified for appeal under 28 U.S.C. § 1291(b) the question whether the per se rule applied to the antitrust claims.

In their collective bargaining agreements of 1974, 1978, and 1981, the United Mine Workers and the Bituminous Coal Operators and Association included Article XX(d)(1)(v), which is now familiar as the purchase-coal clause. It reads in pertinent part:

". . . each signatory employer shall . . . contribute to the Trusts . . . in the amounts shown below based on cents per ton . . . of bituminous coal after production by another operator, procured or acquired by such Employer for use or sale on which contributions to the appropriate Trusts as provided for in this Article have not been made. . . ."

When read in conjunction with the "produced-coal clause,"*fn2 the effect is to require an employer-signatory to pay an identical contribution to the Health and Retirement Funds whether the coal was extracted from the employer's mines or was bought from an operator that had not already paid the contribution on the assessed tonnage.

After the suits were consolidated but before discovery commenced, a number of the employers filed motions for summary judgment, contending that the clause on its face violated § 8(e) of the NLRA. The district court stayed discovery pending disposition of the motions. In opposition to the motions, the union and trustees submitted evidence to show that as a result of the negotiated wage rates for union members, the signatory-employers had higher labor costs than did non-signatory employers. Consequently, unless the wage differential was offset, signatory operators would have an incentive to meet at least part of their customers' needs by purchasing coal at favorable prices from non-signatories.

The union saw this practice as a threat to the jobs of its members and, to discourage subcontracting, the purchased-coal clause was devised to narrow the gap between the labor costs of signatories and non-signatories -- generally, nonunion operators.*fn3 As such, the trustees and the union contend that the provision is a union standards or work preservation clause.

The employers, however, characterize the clause as "union signatory," reasoning that it imposed a "penalty" or "tax" on Coal purchased from non-signatories. From that standpoint, the employers assert that the clause was intended to encourage or compel other operators to enter into collective bargaining agreements with the UMW.

The employers point out that their signatory group includes not only commercial operators who sell the tonnage they produce but "captive" mines such as utilities which consume all of their own output. In addition, some of the signatories are "preparers" who do not mine but simply process supplies bought from others.

The district court found that the clause was not within the "union standards" definition because the contribution was imposed indiscriminately on a non-signatory "without taking into account that the non-union operator may have the same or better working conditions." 580 F. Supp. at 681. The "work preservation" label was rejected because the clause was intended to preserve the "work of the entire multi-employer bargaining unit." "The impact of the purchased-coal clause reaches beyond any case-defined 'work unit,' i.e., single employer, and seeks to benefit all Union members." Accordingly, the court concluded that the clause was not ...


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