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CONNORS v. SHANNOPIN MINING CO.

December 23, 1987

Joseph P. Connors, Sr., Donald E. Pierce, Jr., William Miller, William B. Jordan, and Paul R. Dean as Trustees of the United Mine Workers of America 1950 Pension Trust, 1950 Benefit Plan and Trust, 1974 Pension Trust, and the 1974 Benefit Plan and Trust, Plaintiffs,
v.
Shannopin Mining Company, a corporation, Defendant



The opinion of the court was delivered by: COHILL

 MAURICE B. COHILL, JR., CHIEF JUDGE.

 Plaintiffs, Trustees of the United Mine Workers' Pension and Benefit Trusts ("UMW Trustees" and "UMW Trusts"), have requested preliminary and permanent injunctions against Defendant Shannopin Mining Company ("Shannopin"). We conducted a hearing on the preliminary injunction on December 11, 1987, at which time plaintiffs requested that we treat the hearing as a trial on the merits, as provided in Rule 65(a)(2) of the Federal Rules of Civil Procedure. We note at the outset that we decline to consolidate the preliminary injunction hearing with trial on the merits.

 Defendant admits it has been delinquent in making the payments it owes to the UMW Trusts under the National Bituminous Coal Wage Agreement of 1984 ("NBCWA"). Plaintiffs submit that the amount of principal and interest owed as of December 11, 1987 is $ 2,337,859.16. Plaintiffs' calculation was offered into evidence at the preliminary injunction hearing, marked as Plaintiffs' Exhibit E. This exhibit was admitted subject to verification by defendant. As defendant has not entered any objection to plaintiffs' calculation of principal and interest owed, we find that the calculation is correct, and that defendant owed $ 2,337,859.16 to the UMW Trusts as of December 11, 1987.

 Defendant apparently ceased making payments to the UMW Trusts sometime between January 1, 1986, and May 31, 1986. Complaint para. 7. Defendant has also failed to provide plaintiffs with monthly reports of coal produced and hours worked, as required by the NBCWA, although plaintiffs acknowledge that defendant has cooperated with plaintiffs' auditor by providing records to enable the auditor to calculate the amount of money owed to the UMW Trusts.

 In order to issue a preliminary injunction, we must find that (1) plaintiffs are likely to eventually prevail on the merits; (2) irreparable injury will result to plaintiffs if the preliminary injunction is not issued; (3) the hardship imposed on plaintiffs if the preliminary injunction is denied outweighs the harm to the defendant if the preliminary injunction is granted; and (4) the public interest favors issuance of the preliminary injunction. See, e.g., Sullivan v. City of Pittsburgh, 811 F.2d 171, 181 (3d Cir. 1987); ECRI v. McGraw-Hill, Inc., 809 F.2d 223, 226 (3d Cir. 1987).

 Since defendant concedes that it has not satisfied its obligations to the UMW Trusts, it is likely that plaintiffs will eventually prevail on the merits.

 An irreparable injury is one that is "'of a peculiar nature, so that compensation in money alone cannot atone for it.'" A.O. Smith Corp. v. Federal Trade Commission, 530 F.2d 515, 525 (3d Cir. 1976) (citing Gause v. Perkins, 3 Jones Eq. 177, 69 Am. Dec. 728 (1857)); see also Dimond v. Retirement Plan for Employees of Michael Baker Corp., 582 F. Supp. 892, 899-900 (W.D. Pa. 1983) (finding irreparable harm in purchase of thinly traded stock by employee retirement trust). Although arguably compensable by money damages, a lapse of payments into employee trust funds has been recognized as an irreparable injury in the courts of this circuit. The finding of irreparable harm is generally based on some specific factual finding of the consequences of the lapse in payment. In United Steelworkers of America v. Fort Pitt Steel Casting, 598 F.2d 1273 (3d Cir. 1979), the employer ceased making payments into a health and insurance benefits fund during a strike. The employees' insurance coverage would cease in 30 days unless they then converted to individual policies. The Third Circuit Court of Appeals found irreparable harm in the possibility that a worker, lacking funds to pay for an individual policy during the strike, would be denied adequate medical care. Id. at 1280. In other cases, preliminary injunctions have been based on similar findings. See, e.g., Shultz v. Teledyne, Inc., 657 F. Supp. 289, 293 (W.D. Pa. 1987) (imminent suspension of retirees' health insurance during strike by active employees).

 Some courts demand a showing of a specific irreparable harm. A recent decision in the United States District Court for the Southern District of California held that a lapse in payments to union trust funds is not irreparable harm per se, and refused to grant a preliminary injunction absent specific evidence of irreparable harm in the record. Sheet Metal Workers' International Association v. West Coast Sheet Metal Co., 660 F. Supp. 1500, 1507 (S.D. Cal. 1987). See also Operating Engineers v. Joski Construction Co., 441 F. Supp. 849, 851 (E.D. Wis. 1977) (preliminary injunction refused on grounds that plaintiffs failed to show irreparable harm as a result of lapse of payments into employee benefit plans).

 However, Judge Weber of this court has held that a lapse of payments represents a significant harm in and of itself. As Judge Weber stated in Combs v. Hawk Contracting, Inc., 543 F. Supp. 825, 829-30 (W.D. Pa. 1982):

 
At the outset we feel that the denial of preliminary injunction would irreparably harm the plaintiffs and those individuals they represent. The Mine Worker Pension Funds are maintained exclusively through employer contributions. The continued integrity of these Funds is of vital importance to all union mine workers. Therefore, when an employer fails to make royalty payments, as required by contract, the interest of both the Trustees and the mine workers are imperiled.

 There is no evidence in the record before us that benefits will soon cease as a result of Shannopin's lapse in payments. In fact, though Shannopin admits it has no bearing on its ultimate liability, Shannopin alleges that the UMW Trusts are overfunded. See Bituminous Coal Operators' Association, Inc. v. Connors, 676 F. Supp. 1, 1987 U.S. Dist. LEXIS 14207 (D.C. Cir. 1987). Yet we are mindful of the UMW Trusts' argument that, if employers believe they can readily circumvent their obligations with pleas of financial hardship, there will soon be a crisis in funding. We tend to agree with Judge Weber that the uninterrupted funding of the UMW Trusts is of vital importance in and of itself, and that a lapse of payments may be significant enough to constitute irreparable harm.

 In this case, there has been a very significant lapse in payments. Shannopin's debt to the UMW Trusts is accumulating at a startling rate. Shannopin is incurring an obligation which it will likely find very difficult to satisfy. Under the circumstances, we find irreparable harm may be caused to the UMW Trusts by Shannopin's continuing failure to fulfill its monthly obligations to the UMW Trusts.

 This brings us to the third and fourth elements of the preliminary injunction analysis. We must weigh the relative harms caused by the grant or denial of a preliminary injunction, including the effect ...


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