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UNITY REAL ESTATE CO. v. HUDSON

December 7, 1994

UNITY REAL ESTATE CO., Plaintiff
v.
MARTY D. HUDSON, et al., TRUSTEES OF THE UMWA COMBINED BENEFIT FUND, and MARTY D. HUDSON, et al., TRUSTEE OF THE 1992 UMWA BENEFIT PLAN, Defendants



The opinion of the court was delivered by: KEITH A. PESTO

Report and Recommendation

 Pending before the Court is plaintiff Unity Real Estate Company's motion for a preliminary injunction restraining the enforcement of the Coal Industry Retiree Health Benefit Act of 1992, Pub.L. 102-486, 106 Stat. 3036-56, 26 U.S.C.§ 9701 et seq., by the defendants, the Boards of Trustees of the UMWA Combined Benefit Fund and the 1992 UMWA Benefit Plan *fn1" The matter was referred to me pursuant to the Magistrates Act, 28 U.S.C.§ 636(b) (1), and subsections 3 and 4 of Local Rule 72.1 for Magistrate Judges. I recommend that an injunction issue.

 In order to obtain a preliminary injunction, Unity must show a likelihood of success on the merits and a probability that irreparable harm will occur if the injunction is not granted. I must also consider the effect of the injunction on other interested persons, and the public interest. See Bradley v. Pittsburgh Board of Education, 910 F.2d 1172, 1175 (3d Cir.1990).

 Probability of irreparable harm

 Ordinarily, financial injury does not constitute irreparable harm as matter of law. It is not so much that money cannot be the subject of an injunction as that injuries that can be remedied by an award of damages do not warrant injunctive relief. See In re Arthur Treacher's Franchisee Litigation, 689 F.2d 1137, 1145 (3d Cir. 1982). Where the evidence shows the probability that the movant will suffer bankruptcy as a result of the challenged conduct, however, injunctive relief may be necessary to prevent irreparable harm. See Doran v. Salem Inn, Inc., 422 U.S. 922, 932, 45 L. Ed. 2d 648, 95 S. Ct. 2561 (1975).

 The public interest and effect on third parties

 These factors weigh neither in favor of or against issuance of an injunction. There is no evidence that the public at large or those third parties who are most directly affected by the Coal Act, the "orphan" retirees, liability for whom has have been assigned to Unity, will be affected adversely by the grant of preliminary injunctive relief.

 Likelihood of success on the merits

 Unity challenges the constitutionality of a statute regulating economic activity in an area committed to Congress by the Commerce Clause. Legislation such as the Coal Act therefore carries a strong presumption of constitutionality, and as the Supreme Court has repeatedly stated, must be upheld unless it is shown to be either contrary to a restraint placed on government by the Constitution or arbitrary and irrational, that is, not a rational means of furthering a legitimate legislative purpose. United States v. Carlton, 129 L. Ed. 2d 22, 114 S. Ct. 2018 (1994). Four district courts that have considered challenges to the Coal Act have found in favor of its constitutionality, although not without reservations. See Blue Diamond Coal Co., Inc. v. Shalala, Civ. No. 3-93-473 (E.D. Tenn. November 9, 1994); LTV Steel Co. v. Shalala, 163 Bankr. 955 (S.D.N.Y. 1993); Templeton Coal Co. v. Shalala, 855 F. Supp. 990 (S.D.Ind. 1993); Barrick Gold Exploration, Inc. v. Hudson, 823 F. Supp. 1395 (S.D.Ohio 1993). Finally, the Supreme Court has not held an act of Congress which regulates the economic affairs of nongovernmental entities unconstitutional since the New Deal. Notwithstanding all this, the Coal Act as applied to Unity is so palpably unconstitutional that a preliminary injunction should issue against the enforcement of the Act against it.

 Facts

 Based on the evidentiary hearing in this matter, the following facts are taken as proved for purposes of the plaintiff's motion:

 Unity is a corporation owned by members of the Jamison family which owns a small commercial building and parking lot in Greensburg, Pennsylvania. Unity employs two individuals, an officer at a salary of $ 7,200 per year, and a janitor. Its annual gross revenues are approximately $ 50,000 and its net worth is approximately $ 85,000.

 In October 1993, Unity received a letter from the defendant Trustees of the Combined Fund informing Unity that it had been assigned 78 beneficiaries under the Coal Act for which it was obligated to pay a premium of $ 96,158.84 for the first partial year of operation of the Combined Fund, from February 1, 1993 to October 1, 1993. Unity was advised that for the second year, from October 1, 1993 to September 30, 1994, it was assigned 76 beneficiaries at a premium of $ 170,681.08. Payment of the premiums was to be made in monthly installments; failure to pay premiums on a timely basis subjects Unity to fines of up to $ 100/day per beneficiary. Unity does not have the cash on hand to pay even the first month's premium, and its net worth is less than its first year obligation. Unity was assigned beneficiaries on the basis that the beneficiaries, or their deceased parents or spouses in the case of survivor beneficiaries, had last worked for South Union (Pennsylvania) or South Union (West Virginia) pursuant to a NBCWA. Unity had no records of former employees of South Union (Pennsylvania), having turned those over to the trustees of the UMWA 1950 Welfare and Retirement Fund after it left the coal ...


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