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UMW INTL. UNION v. NOBEL

August 3, 1989

UNITED MINE WORKERS OF AMERICA INTERNATIONAL UNION, by THOMAS RABBIT, TRUSTEE ad litem; DISTRICT 4, UNITED MINE WORKERS OF AMERICA, Plaintiffs,
v.
MAX NOBEL, et al., Defendants. BOARD OF TRUSTEES OF THE UNITED MINE WORKERS OF AMERICA 1974 BENEFIT PLAN AND TRUST, et al., Plaintiffs, v. INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA, et al., Defendants, INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA, et al., Plaintiffs, v. UNITED MINE WORKERS OF AMERICA 1974 BENEFIT PLAN AND TRUST, et al., Defendants. INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA, et al., Plaintiffs, v. UNITED MINE WORKERS OF AMERICA 1974 BENEFIT PLAN AND TRUST, Defendant



The opinion of the court was delivered by: ZIEGLER

 DONALD E. ZIEGLER, UNITED STATES DISTRICT JUDGE.

 The instant case presents a straight-forward factual dispute. We are required to determine whether the Bituminous Coal Operators Association agreed to fund the health care costs and other non-pension benefits of pensioners of eight former signatory employers to various National Bituminous Coal Wage Agreements. After consideration of the language of the contracts, the structure, bargaining history, and the direct and circumstantial evidence of record concerning the intent of the parties, we hold the evidence preponderates that the BCOA agreed to fund the health benefits of the individual plaintiffs for the term of the agreement to gain acceptance of the National Bituminous Coal Wage Agreement of 1988 by the United Mine Workers of America. We further hold that the decision of the Trustees of the 1974 Benefit Plan to deny benefits to the individual plaintiffs was arbitrary and capricious, and that the Trustees are precluded from re-litigating in this court the definition of "no longer in business" which was resolved in District 29, UMWA v. UMWA 1974 Benefit Plan and Trust, 826 F.2d 280 (4th Cir. 1987), cert. denied, 485 U.S. 935, 108 S. Ct. 1111, 99 L. Ed. 2d 272 (1988). The 1974 Benefit Plan is required to provide health care and other non-pension benefits where, as here, a retiree's last signatory employer is no longer a signatory to the National Bituminous Coal Wage Agreement. Judgment will be entered for the International Union, United Mine Workers of America, Districts 2, 4, 5 and 6, the individual plaintiffs and the class, against the Bituminous Coal Operators' Association, Inc. and the United Mine Workers of America 1974 Benefit Plan and Trust.

 (1) The individual plaintiffs at civil action Nos. 86-2638, 88-546 and 88-1842, and the individual defendants at No. 88-545, are retired or disabled coal miners, surviving spouses or dependents of retired or disabled coal miners, who were last employed in the coal industry by Barnes & Tucker Coal Company, Y & O Coal Company, Menallen Coal Company, G.M. & W. Coal Company, Marmon Coal Company, Penn Pocahontas Coal Company, Canterbury Coal Company or Coalite, Inc.

 (2) The United Mine Workers of America International Union, Districts 2, 4, 5 and 6, and Local 1313, United Mine Workers of America, are labor organizations within the meaning of Section 2(5) of the Labor Management Relations Act, 29 U.S.C. § 152(5). These organizations were the collective bargaining representatives of the employees of the eight employers in dispute.

 (3) The Bituminous Coal Operators' Association, Inc. (BCOA) is a multi-employer bargaining association that currently represents approximately 16 companies in collective bargaining with the United Mine Workers of America (UMWA). The BCOA and the UMWA negotiate the National Bituminous Coal Wage Agreement (NBCWA), a collective bargaining agreement that governs the terms and conditions of employment for the coal miners of the BCOA-member companies and companies that sign "me too" agreements with the UMWA.

 (4) The BCOA has for approximately 40 years negotiated the national agreement with the UMWA. National Bituminous Coal Wage Agreements were executed in 1950, 1971, 1974, 1978, 1981, 1984 and 1988.

 (6) Jurisdiction is based on the Employee Retirement Income Security Act, 29 U.S.C. § 1132, Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, and 28 U.S.C. § 1331. Venue properly lies with this court under 29 U.S.C. § 1132 (e)(2) and the parties do not contend otherwise.

 (7) The International Union, Districts, Local 1313, and the individual plaintiffs, who are or were vested in a pension under the 1974 Pension Plan and the spouses or dependents of such persons, seek injunctive relief to compel the 1974 Benefit Plan to provide health and other non-pension benefits, pay all unpaid medical bills and establish an escrow fund to insure payment of such benefits. In seeking equitable relief, plaintiffs bear the burden of proving by a preponderance of the evidence (a) success on the merits, (b) irreparable harm, (c) defendants will not suffer substantial harm from the grant of an injunction and (d) the public interest, if any. The parties stipulated that the instant proceeding shall constitute a trial on the merits pursuant to Rule 65(a)(2).

 (8) Plaintiffs contend that the individual plaintiffs, who are retired or disabled miners (or their dependents), were last employed as coal miners for one of eight former signatory employers to various National Bituminous Coal Wage Agreements. The wage agreements from 1974 to the present guaranteed health and non-pension benefits to all pensioners for life when benefits were not paid by their last employer. When the eight employers failed to execute the NBCWA, the BCOA agreed to fund the benefits of the plaintiffs for the period of the 1988 agreement to prevent cessation of benefits because their former employers were no longer legally obligated to do so. Further, plaintiffs contend that the decision of the 1974 Benefit Plan to deny benefits to the individual plaintiffs was arbitrary and capricious because the Trustees (a) misconstrued the intent of the UMWA and the BCOA; (b) improperly interpreted the plan and trust documents; and (c) failed to enforce various contractual provisions to require the BCOA to fund the benefits. Finally, plaintiffs argue that the 1974 Benefit Plan is precluded from litigating in this court the phrase "no longer in business" of Article XX of the National Bituminous Coal Wage Agreements and Article IIE.4. of the 1974 Benefit Plan and Trust following the decision in District 29, United Mine Workers of America v. 1974 Benefit Plan & Trust, 826 F.2d 280 (4th Cir. 1987), cert. denied, 485 U.S. 935, 108 S. Ct. 1111, 99 L. Ed. 2d 272 (1988).

 (9) Article XX(c)(3)(ii) of the National Bituminous Coal Wage Agreement of 1988 provides as follows:

 
For purposes of determining eligibility under the 1974 Benefit Plan and Trust, an Employer is considered to be "no longer in business" only if the Employer:
 
(a) has ceased all mining operations and has ceased employing persons under this Wage Agreement with no reasonable expectation that such operations will start up again; and
 
(b) is financially unable (through either the business entity that has ceased operations as described in subparagraph (a) above, including such company's successors or assigns, if any, or any other related division, subsidiary, or parent corporation, regardless of whether covered by this Wage Agreement or not to provide health and other non-pension benefits to its retired miners and surviving spouses.

 Article IIE.4. of the 1974 Benefit Plan and Trust contains the eligibility test which refers to Article XX of the 1978, 1981 or 1984 wage agreements.

 
whether plaintiffs are responsible for providing health benefits to members of the Class under the Plan where they fail to satisfy the eligibility requirement for benefits under Article II of the Plan document in effect on and after June 7, 1981, because their last signatory employers do not satisfy the definition of 'no longer in business' set forth in the Plan document.

 (11) The BCOA intervened and filed a complaint in the action filed by the Trustees of the 1974 Benefit Plan contending that (a) a class is properly certifiable under Rule 23 (b)(2); and (b) each last signatory employer of the individual employees, since June 7, 1981, possessed one or more of the following characteristics:

 
(i) it continues or continued to engage in the business of mining coal; or
 
(ii) it continues to employ persons under wage agreements similar to the NBCWA; or
 
(iii) it has temporarily ceased coal mining operations with a reasonable expectation that such operations will resume; or
 
(iv) it is financially able to provide to pensioners the health benefits specified in the NBCWA (or similar agreement) to which it was signatory, or has a related division, parent or subsidiary corporation or successor or assign which is financially able to do so.

 (12) The eight employers of the individual plaintiffs were signatories to a national agreement. Menallen Coal Company, G.M. & W. Coal Company, Marmon Coal Company, Penn Pocahontas Coal Company, Canterbury Coal Company and Coalite, Inc., were last signatories to the 1981 Agreement. Barnes & Tucker Coal Company and Y & O Coal Company were last signatories to the 1984 Agreement.

 (13) Menallen ceased providing health benefits to its pensioners on October 1, 1985, Canterbury on August 5, 1985, G.M. & W., Penn Pocahontas and Marmon in April 1987, and Barnes and Tucker and Y & O on January 31, 1988. All of these employers, except Canterbury, have been assessed withdrawal liability by the UMWA Health and Retirement Funds based on the fact that they are no longer signatories to a collective bargaining agreement with the UMWA and are no longer obligated to contribute to the pension plans.

 (14) The National Bituminous Coal Wage Agreement of 1950 established a trust known as the "United Mine Workers Welfare and Retirement Fund of 1950" for the purpose of providing health care and retirement benefits to members of the United Mine Workers, including active and retired miners and their dependents. The trust was the successor to an earlier health and welfare fund established in 1947 during negotiations between the United Mine Workers and the Secretary of the Interior.

 (15) The Welfare and Retirement Fund of 1950 was governed by a board of three trustees, one appointed by the union, one by the BCOA, and one neutral trustee. It was funded by a royalty on the tonnage of coal produced or purchased by signatory employers. Between 1950 and 1974, the nature and level of benefits provided to active and retired mine workers was determined by the trustees of the 1950 Fund, who had complete discretion to determine the level of benefits and eligibility requirements. The trustees acted by means of formal resolutions. Pension benefits for retired miners were provided beginning in 1947, under the previous trust, and health benefits were provided to retired miners beginning no later than 1950. The pension and health benefits for retired miners were provided throughout the life of the miner. The eligibility of the retired miner to receive pension and health benefits from the 1950 Fund was not affected by whether the last employer ceased operations, went out of business, or failed to become signatory to successor agreements.

 (17) The UNWA and the BCOA also agreed during the course of the 1974 negotiations to extend lifetime health benefits to widows of retired mine workers, including the widows of miners who died prior to the 1974 Agreement, but did not extend lifetime benefits to a smaller group of widows of mine workers who had been working at the time of their death, although they were Pension-eligible. See United Mine Workers Health and Retirement Funds v. Robinson, 455 U.S. 562, 71 L. Ed. 2d 419, 102 S. Ct. 1226 (1982).

 (18) For the first time, the parties to the 1974 Agreement also agreed to define and set forth in the collective bargaining agreement the benefits to be provided to miners, pensioners, and their dependents. The parties negotiated the level of benefits and the eligibility requirements for those benefits. The benefits to be provided were summarized and placed in the agreement by including in Article XX a "Summary of Principal Provisions, UMWA Health and Retirement Benefits." The Article provided that, with respect to retired miners under both the 1950 Pension Plan and the 1974 Pension Plan, the retired miner would retain a health Services card "until death" and a widow would retain a card until her death or remarriage. "Any pensioned miner covered in this Plan will retain his Health services card until death, and upon his death his widow will retain a Health Services card until her death or remarriage." In addition, "a miner who was permanently disabled as the result of a mine accident after May 29, 1946 . . . will be entitled to retain his Health Services card for life. Upon his death, his widow will retain a Health Services card until her death or remarriage." See NBCWA of 1974, Article XX, Health and Retirement Benefits, paras. 1 and 5, pp. 31-32.

 (19) In 1977, the trusts experienced financial difficulty due to insufficient income, wildcat strikes, and increased costs for health care, and the trustees instituted a system of co-payments for health benefits, which continued until the expiration of the 1974 Agreement. Health benefits were ...


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