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UNITY REAL ESTATE CO. v. HUDSON

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA


June 7, 1995

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

The opinion of the court was delivered by: D. BROOKS SMITH

OPINION AND ORDER

 SMITH, District J.

 I. Introduction

 This matter currently is before the Court on the motion of plaintiff Unity Real Estate Co. ("Unity") for a preliminary injunction (Docket No. 4). Unity seeks to restrain enforcement of the Coal Industry Retiree Health Benefit Act of 1992, Pub. L. 102-486, 106 Stat. 2776, 3036-56 (codified at 26 U.S.C. §§ 9701-9722) (the "Coal Act"), by the defendants, the Boards of Trustees of the UMWA Combined Benefit Fund and the 1992 UMWA Benefit Plan. Unity claims that the Coal Act, as applied, violates the Substantive Due Process and Takings Clauses of the Fifth Amendment. *fn1" In addition, Unity argues that the liabilities imposed upon it pursuant to the Act were done without procedural due process. Because Unity's challenges to the Coal Act are based on claims that the Act is unconstitutional, the United States has intervened in support of the Act's constitutionality.

 Unity's motion was referred to Magistrate Judge Keith A. Pesto, 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. On December 7, 1994, Magistrate Judge Pesto issued his Report and Recommendation, in which he rejected Unity's due process arguments, but recommended that an injunction issue based on his conclusion that the Coal Act, as applied to Unity, "effects an uncompensated taking, and is therefore unconstitutional." Docket No. 26, at 12.

 Pursuant to 28 U.S.C. § 636(b)(1), all parties filed written objections to the Report and Recommendation. Unity objected to the conclusion that the Coal Act did not violate the substantive component of the Due Process Clause. The United States and the defendant Trustees objected to the Magistrate Judge's Takings Clause analysis, and also contended that he had improperly found irreparable harm based on financial injury alone. No party objected to the Magistrate Judge's conclusion that the procedural due process challenge to the Coal Act would not support the issuance of a preliminary injunction. *fn2" All of the parties filed supplemental evidentiary materials as well as extensive briefs in support of their objections to the Report and Recommendation.

 On January 11, 1995, the Magistrate Judge issued an Amended Report and Recommendation. Docket No. 42. In the Amended Report and Recommendation, the Magistrate Judge considered the additional factual and legal submissions, and adhered to his original recommendation that "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." Docket No. 42, at 3.

 In response to the Amended Report and Recommendation, the parties again filed lengthy briefs. *fn3" For the reasons set forth below, I agree with the Magistrate Judge's conclusions that the Coal Act, as applied to Unity, does not violate the Substantive Due Process Clause, but that the Act does effect an uncompensated taking in violation of the Fifth Amendment. Unity's request for a preliminary injunction shall be granted.

 II. Findings of Fact

 This Court, in large part, adopts the unchallenged findings of fact as set forth by the Magistrate Judge in his Report and Recommendation. Docket No. 26, at 3-5. Although the United States argues that it objects to certain of the Magistrate Judge's findings of fact (see Docket No. 46, at 2-3), those objections are more properly characterized as challenges to legal conclusions (e.g., Whether certain beneficiaries should be considered "orphan retirees"; whether there exists any "employment connectedness" between Unity and the assigned beneficiaries).

 Unity is a corporation owned by members of the Jamison family, and it 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.

 Unity was incorporated in 1947, and in 1969 was the surviving entity after a merger with three inactive coal companies: Stewart Coal & Coke, Penn View Coal, and South Union Coal Company. Like Unity, South Union was a Jamison family-owned company, which had incorporated in Pennsylvania in 1922. From 1922 through 1960, South Union operated at various times two coal mines in southwestern Pennsylvania and one mine in northern West Virginia. From 1961 until 1969 (when it merged with the other companies and became Unity), South Union mined no coal.

 The parties appear to agree that Unity also is the statutory successor to two additional coal producers: Jamison Coal Company and Moremet Coal Company.

 In 1974, Unity incorporated a wholly-owned subsidiary in West Virginia, also named South Union Coal Company, to reopen the mine formerly operated by the Pennsylvania-incorporated South Union. South Union (West Virginia) operated the mine in West Virginia formerly operated by South Union (Pennsylvania) from 1974 until 1981, when it went bankrupt.

 South Union (Pennsylvania) was a member of the Northern West Virginia Coal Association, which was a signatory to the 1950, 1951, 1952, 1955, 1956, and 1959 National Bituminous Coal Wage Agreements ("NBCWA") through its membership in the Bituminous Coal Operators Association ("BCOA"). South Union (West Virginia) was a member of the Western Pennsylvania Coal Operators Association, a member of the BCOA, and thereby a signatory of the 1974, 1978, and 1981 NBCWAs. When South Union (West Virginia) went into bankruptcy in 1981, it petitioned for leave and was granted leave by the bankruptcy court to reject its obligations under the 1981 NBCWA.

 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 obligations.

 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.

 III. The Coal Act

 The constitutionality of the Coal Act has been carefully considered -- and upheld -- by a number of courts. See, e.g., In re Chateaugay Corp., 53 F.3d 478, 1995 WL 226252 (2d Cir. April 17, 1995) (affirming district court's decisions upholding the constitutionality of the Coal Act and holding that LTV Steel's Chapter 11 bankruptcy protections did not operate to relieve it of its Coal Act obligations); Barrick Gold Exploration, Inc. v. Hudson, 47 F.3d 832 (6th Cir. 1995) (Coal Act does not violate Substantive Due Process Clause or Takings Clause to the extent that it fails to grant former operators refund, credit or offset for their contractual withdrawal liability payments and their transition rule payments); Templeton Coal Co. v. Shalala, 855 F. Supp. 990, 1995 WL 150439 (S.D. Ind. April 4, 1995) (rejecting plaintiffs' constitutional challenges to the Coal Act and granting defendant's cross-motion for summary judgment); In re Blue Diamond Coal Co., 174 Bankr. 722 (E.D. Tenn. 1994) ("super-reachback" provision of Coal Act not violative of Substantive Due Process or Takings Clauses).

 "In passing the Coal Act, Congress removed the subject of health benefits for current UMW retirees from the collective bargaining process and dealt with it legislatively instead." Barrick, 47 F.3d 832, 1995 WL 73352, at *2. The extensive political and social history which led to the passage of the Coal Act, set forth in detail in In re Chateaugay Corp., 53 F.3d 478, 1995 WL 226252, at *1-7, is quite lengthy and will not be reiterated here. As Magistrate Judge Pesto succinctly put it: "Congress passed the Coal Act to spread the costs of UMWA benefit plans established and funded by the NBCWAs since 1950. Congress did this by imposing liability for the lifetime health (and other) benefits promised in the NBCWAs to members of the UMWA on entities that had previously signed NBCWAs but which were no longer currently operating under a NBCWA." Docket No. 26, at 6.

 The "essential thrust of the Coal Act" was an attempt by Congress to address the financial crisis facing the health benefit plans for UMWA retirees -- by identifying "persons most responsible" for "plan liabilities." In re Chateaugay, 53 F.3d 478, 1995 WL 226252, at *6.

 

The [Coal] Act merged the existing 1950 and 1974 Benefit Trusts into a new private trust fund, the UMWA Combined Benefit Fund ("Combined Fund"). 26 U.S.C. § 9702. Only those retirees actually receiving benefits from the Benefit Trusts as of July 20, 1992, were declared eligible to receive benefits from the Combined Fund. Id., § 9703(f). In allocating financial responsibility for costs of the Combined Fund, Congress determined that "those companies which employed the retirees in question, and thereby benefitted from their services, will be assigned responsibility for providing the health care benefits promised in their various collective bargaining agreements." 138 Cong. Rec. S17,603 (daily ed. Oct. 8, 1992) (reproducing proposed conference committee report). Accordingly, Congress directed the Secretary of Health and Human Services to levy annual health insurance and death benefit premiums on each "assigned operator." 26 U.S.C. §§ 9704, 9705. An "assigned operator" was defined as a signatory to any NBCWA since 1950. Id., § 9701(c)(5). The Secretary of Health and Human Services "assigned" each beneficiary to the signatory operator for whom he or she most recently worked when possible, otherwise to the signatory operator that longest employed the beneficiary. Id., § 9706. Where the signatory operator is no longer in business, the liability for its beneficiaries passes to "related persons," such as successors in interest. Id., §§ 9704(a), 9701(c)(2). The costs of providing health care benefits to the remaining unassigned "orphans" were divided among the assigned operators in proportion to their share of the assigned beneficiaries. Id., § 9704.

 

In sum, the annual premium for an assigned operator equals the sum of the cost of providing health benefits to the company's assigned beneficiaries, its pro rata share of death benefit coverage, and its pro rata share of the cost of health benefits for "orphaned" beneficiaries. The Coal Act restricts liability for medical benefit premiums to companies that (1) signed one or more Wage Agreements between 1950 and 1988, (2) continue to "conduct[ ] or derive [ ] revenue from any business activity, whether or not in the coal industry," and (3) actually employed at least one retiree currently receiving benefits. Id. § 9701(c).

 In re Chateaugay, 53 F.3d 478, 1995 WL 226252, at *6-7.

 IV. Conclusions of Law

 A. Standards for Preliminary Injunction

 "In order to support a preliminary injunction, plaintiff must show both a likelihood of success on the merits and a probability of irreparable harm." Bradley v. Pittsburgh Bd. of Education, 910 F.2d 1172, 1175 (3d Cir. 1990) (citation omitted). "Additionally, the district court should consider the effect of the issuance of a preliminary injunction on other interested persons and the public interest." Id. (citation omitted).

 In order to prove irreparable harm, the moving party "must 'demonstrate potential harm which cannot be redressed by a legal or an equitable remedy following trial.'" Acierno v. New Castle County, 40 F.3d 645, 653 (3d Cir. 1994) (citations omitted). Mere economic loss "does not constitute irreparable harm." Id. 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 injury. See Doran v. Salem Inn, Inc., 422 U.S. 922, 932, 45 L. Ed. 2d 648, 95 S. Ct. 2561 (1975).

 In this action, it is undisputed that the Coal Act, as applied to Unity, will result in Unity's bankruptcy within the first several months of payments under the Act. The Court finds that such a result constitutes irreparable harm.

 With respect to the "public interest" and the "effect on third parties," the Court agrees with the Magistrate Judge that these factors "weigh neither in favor of or against issuance of an injunction." Docket No. 26, at 2.

 The Court, therefore, must determine whether Unity has demonstrated a "likelihood of success on the merits." In ruling on Unity's constitutional challenges to the Coal Act, it is important to maintain a clear analytical distinction between the Substantive Due Process challenge and the Takings challenge. At times, both the parties and the Magistrate Judge blur the distinctions between the two clauses (and the cases decided under the clauses) in their arguments and conclusions. *fn4"

 B. Substantive Due Process Challenge

 The Coal Act, as applied to Unity, does not violate the Substantive Due Process Clause. This conclusion is compelled by the Supreme Court's decision in Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust for Southern California, 124 L. Ed. 2d 539, 113 S. Ct. 2264 (1993) (employer withdrawal liability under the Multiemployer Pension Plan Amendments Act (MPPAA), as applied to plaintiff, did not violate Substantive Due Process Clause or Takings Clause).

 In Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 81 L. Ed. 2d 601, 104 S. Ct. 2709 (1984), and Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211, 89 L. Ed. 2d 166, 106 S. Ct. 1018 (1986), the Supreme Court had previously upheld the MPPAA against constitutional challenges under the substantive component of the Due Process Clause and the Takings Clause. The Concrete Pipe Court held that the employer's Substantive Due Process challenge must be rejected pursuant to the Court's decision in Gray, as well as the Court's decision in Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 49 L. Ed. 2d 752, 96 S. Ct. 2882 (1976) (rejecting Due Process challenge to Title IV of the Federal Coal Mine Health and Safety Act of 1969, which required operators to compensate miners with Black Lung who left employment in the industry before the effective date of the Act, and the survivors of such employees).

 The Court in Concrete Pipe explained the extremely deferential standard to be applied in Substantive Due Process challenges -- the party challenging the legislation must "establish that the legislature has acted in an arbitrary and irrational way." 113 S. Ct. at 2287-88. The Court stated:

 

In determining whether the imposition of withdrawal liability is rational, then, the relevant question is not whether a withdrawing employer's employees have vested benefits, but whether an employer has contributed to the plan's probable liability by providing employees with service credits. When the withdrawing employer's liability to the plan is based on the proportion of the plan's contributions (and coincident service credits) provided by the employer during the employer's participation in the plan, the imposition of withdrawal liability is clearly rational.

 As the Supreme Court held in Concrete Pipe, Gray, and Usery, as long as Congress has acted rationally, the legislation withstands scrutiny under the Due Process Clause. The Usery Court specifically noted that the wisdom of Congress' actions is not an appropriate inquiry for purposes of Substantive Due Process analysis:

 

The Operators do not challenge Congress' power to impose the burden of past mine working conditions on the industry. They do claim, however, that the Act spreads costs in an arbitrary and irrational manner by basing liability upon past employment relationships, rather than taxing all coal mine operators presently in business. . . . In essence the Operators contend that competitive forces will prevent them from effectively passing on to the consumer the costs of compensation for inactive miners' disabilities, and will unfairly leave the burden on the early operators alone.

 

. . . . But even taking the Operators' argument at face value, it is for Congress to choose between imposing the burden of inactive miners' disabilities on all operators, including new entrants and farsighted early operators who might have taken steps to minimize black lung dangers, or to impose that liability solely on those early operators whose profits may have been increased at the expense of their employees' health. We are unwilling to assess the wisdom of Congress' chosen scheme by examining the degree to which the "cost-savings" enjoyed by operators in the pre-enactment period produced "excess" profits, or the degree to which the retrospective liability imposed on the early operators can now be passed on to the consumer. It is enough to say that the Act approaches the problem of cost spreading rationally; whether a broader cost-spreading scheme would have been wiser or more practical under the circumstances is not a question of constitutional dimension.

 428 U.S. at 18-19.

 Given the holdings of Concrete Pipe, Gray, and Usery, and in light of the extremely deferential standard utilized by the Supreme Court, this Court agrees with the Magistrate Judge's conclusion that the Coal Act, as applied to Unity, does not violate the Substantive Due Process Clause. As the district court in Blue Diamond explained,

 

What these cases [Supreme Court precedent] tell us is that, in order to mount a successful due process challenge to the Coal Act's super-reachback provision, [the plaintiff] must show that there is no rational relationship between that part of the legislation and an appropriate government goal. In other words, it must show that there is nothing in its past conduct that would make it rational to consider it "responsible" for the "plan liabilities." This it cannot do.

 

* * * *

 

The actual Congressional finding which is mentioned in the legislation is not that [the plaintiff] and others like it had actually promised [lifetime] benefits but that they bore "responsibility" for the "plan liabilities." There is no doubt that, to some extent, they did. By ceasing to contribute to the UMWA trust fund after its contractual requirement to do so had expired, [the plaintiff] created some of the "orphans" who became the responsibility of the remaining contributing operators. These orphaned miners continued to draw upon the funds and contributed to their financial instability.

 Blue Diamond, 174 Bankr. at 726.

 Although reasonable minds certainly may differ over the wisdom of the means chosen by Congress, it cannot be said that Congress acted irrationally in passing the Coal Act. "Whether a broader cost-spreading scheme would have been wiser or more practical under the circumstances is not a question of constitutional dimension." Usery, 428 U.S. at 19. Unity's Substantive Due Process challenge must be rejected.

 C. Takings Challenge5

 "The Fifth Amendment's guarantee that private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Armstrong v. United States, 364 U.S. 40, 49, 4 L. Ed. 2d 1554, 80 S. Ct. 1563 (1960) (government's actions resulted in destruction of petitioner's liens for materials that petitioner furnished to a contractor that had been building boats for the United States; government's total destruction of all value in the liens was a taking for which just compensation is due under the Fifth Amendment).

 In Concrete Pipe and Connolly, the Supreme Court considered and rejected Takings challenges to the MPPAA, and clarified the analysis to be applied in challenges to such economic legislation. As explained in Connolly, Congress enacted the MPPAA in the aftermath of ERISA in an effort to protect multiemployer pension plans from the "adverse consequences that resulted when individual employers terminate their participation in, or withdraw from," multiemployer plans. Connolly, 475 U.S. at 215 (quoting Gray, 467 U.S. at 722).

 

As enacted, the [MPPAA] requires that an employer withdrawing from a multiemployer pension plan pay a fixed and certain debt to the pension plan. This withdrawal liability is the employer's proportionate share of the plan's "unfunded vested benefits," calculated as the difference between the present value of vested benefits and the current value of the plan's assets. Pursuant to 29 U.S.C. § 1461(e), these withdrawal liability provisions took effect on April 29, 1980, approximately five months before the statute was enacted into law.

 Gray, 467 U.S. at 725 (citations omitted). *fn6"

 In rejecting the Takings challenge to the MPPAA as applied to the plaintiff in Concrete Pipe, the Supreme Court reaffirmed the principle that a "taking" does not occur merely because a statute, as applied, overrides or upsets the claimant's private contractual protections:

 

Appellants' claim of an illegal taking gains nothing from the fact that the employer in the present litigation was protected by the terms of its contract from any liability beyond the specified contributions to which it had agreed. "Contracts, however express, cannot fetter the constitutional authority of Congress. Contracts may create rights of property, but when contracts deal with a subject matter which lies within the control of Congress, they have a congenital infirmity. Parties cannot remove their transactions from the reach of dominant constitutional power by making contracts about them." [citations omitted]

 

If the regulatory statute is otherwise within the powers of Congress, therefore, its application may not be defeated by private contractual provisions.

 Concrete Pipe, 113 S. Ct. at 2290 (quoting Connolly, 475 U.S. at 223-24).

  The Supreme Court has "eschewed the development of any set formula for identifying a 'taking' forbidden by the Fifth Amendment," and has relied instead "on ad hoc, factual inquiries into the circumstances of each particular case." Connolly, 475 U.S. at 224. See also Concrete Pite, 113 S. Ct. at 2290-91; Andrus v. Allard, 444 U.S. 51, 65, 62 L. Ed. 2d 210, 100 S. Ct. 318 (1979) ("There is no abstract or fixed point at which judicial intervention under the Takings Clause becomes appropriate. Formulas and factors have been developed in a variety of settings. Resolution of each case, however, ultimately calls as much for the exercise of judgment as for the application of logic." (citations omitted)).

 The Court has identified three factors which have "particular significance" in conducting the requisite factual inquiry:

 

(1) the economic impact of the regulation on the claimant;

 

(2) the extent to which the regulation has interfered with distinct investment-backed expectations; and

 

(3) the character of the governmental action.

 Connolly, 475 U.S. at 225 (quoting Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124, 57 L. Ed. 2d 631, 98 S. Ct. 2646 (1978)). See also Concrete Pipe, 113 S. Ct. at 2290 ("Following Connolly, the next step in our analysis is to subject the operative facts, including the facts of the contractual relationship, to the standards derived from our prior Takings Clause cases.").

 1. The Nature of the Governmental Action

 In Concrete Pipe and Connolly, the Court began its analysis of the MPPAA by considering "the nature of the governmental action." In both cases, the Court drew a sharp distinction between actions by the federal government which involve a physical invasion of property or a complete deprivation of all economic benefit of property, as opposed to those situations in which the government merely regulates economic activity so as to adjust the rights for the public good:

 

The Government does not physically invade or permanently appropriate any of the employer's assets for its own use. Instead, the Act safeguards the participants in multiemployer pension plans by requiring a withdrawing employer to fund its share of the plan obligations incurred during its association with the plan. This interference with the property rights of an employer arises from a public program that adjusts the benefits and burdens of economic life to promote the common good and, under our cases, does not constitute a taking requiring Government compensation.

 Concrete Pipe, 113 S. Ct. at 2291 (quoting Connolly, 475 U.S. at 225).

 The Court specifically rejected the argument that economic legislation such as the MPPAA should be evaluated pursuant to the analytical framework developed in cases dealing with permanent physical occupation or destruction of economically beneficial use of real property." Concrete Pipe, 113 S. Ct. at 2290.

 

While Concrete Pipe tries to shoehorn its claim into this analysis by asserting that "the property of [Concrete Pipe] which is taken, is taken in its entirety," . . . we rejected this analysis years ago in Penn Central,. . . where we held that a claimant's parcel of property could not first be divided into what was taken and what was left for the purpose of demonstrating the taking of the former to be complete and hence compensable. To the extent that any portion of property is taken, that portion is always taken in its entirety; the relevant question, however, is whether the property taken is all, or only a portion of the parcel in question.

 Id. (citations omitted). As this statement reveals, however, the Court's view of the nature of the governmental action often "blends" into its analysis of the economic impact of the governmental action on the claimant (one of the other factors that must be considered in a Takings analysis).

 In Connolly (upon which the Concrete Pipe Court relied), the Court made the seemingly categorical statement that when the government does not "physically invade" or "permanently appropriate any of the employer's assets for its own use," but when it simply adjusts the "benefits and burdens of economic life" in conjunction with a "public program" that promotes the "common good," such actions do not constitute a taking requiring government compensation. 475 U.S. at 225. The four cases cited by the Connolly Court in support of this sweeping conclusion ( Penn Central Trans. Co., 438 U.S. at 124; Turner Elkhorn, 428 U.S. at 15; Andrus v. Allard, 444 U.S. at 65; and Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413, 67 L. Ed. 322, 43 S. Ct. 158 (1922)), however, as well as the Connolly opinion itself, *fn7" make clear that there are limits to the reach of the Court's statement.

 In determining the "nature of the governmental action" (i.e., whether the government "physically invades" or "permanently appropriates", or whether the government merely "adjusts the benefits and burdens of economic life"), the Court in Connolly (and in the cases cited in Connolly) considered, at least in part, the effect of the government's actions on the claimant -- which is a factually specific inquiry. The Supreme Court's takings jurisprudence recognizes the principle that even a statute which adjusts the "benefits and burdens of economic life" in conjunction with a "public program" that promotes the "common good" if it goes too far, may, in fact, be properly characterized as action by the government in which it "permanently appropriate[s] . . . the employer's assets for its own use" (475 U.S. at 225) -- a conclusion that more readily supports a finding of an unconstitutional taking.

 For example, in Justice Holmes' seminal decision on "regulatory takings," Pennsylvania Coal Co. v. Mahon, the Supreme Court addressed the constitutionality of a statute enacted by the Pennsylvania Legislature that prohibited the mining of anthracite coal in a manner that would cause land subsidence. The following passage in Mahon was cited by the Connolly Court (425 U.S. at 225) in support of its analysis of the. "nature of the governmental action":

 

As applied to this case the statute is admitted to destroy previously existing rights of property and contract. The question is whether the police power can be stretched so far.

 

Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law. As long recognized some values are enjoyed under an implied limitation and must yield to the police power. But obviously the implied limitation must have its limits or the contract and due process clauses are gone. One fact for consideration in determining such limits is the extent of the diminution. When it reaches a certain magnitude, in most if not in all cases there must be an exercise of eminent domain and compensation to sustain the act. So the question depends upon the particular facts. The greatest weight is given to the judgment of the legislature but it always is open to interested parties to contend that the legislature has gone beyond its constitutional power.

 Mahon, 260 U.S. at 413. Elsewhere in its opinion, in striking down the Pennsylvania statute, the Court emphasized the constitutional limitations placed on governmental action, and again stressed the factually specific nature of the Takings analysis:

 

The protection of private property in the Fifth Amendment presupposes that it is wanted for public use, but provides that it shall not be taken for such use without compensation. A similar assumption is made in the decisions upon the Fourteenth Amendment. When this seemingly absolute protection is found to be qualified by the police power, the natural tendency of human nature is to extend the qualification more and more until at last private property disappears. But that cannot be accomplished in this way under the Constitution of the United States.

 

The general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. It may be doubted how far exceptional cases, like the blowing up of a house to stop a conflagration, go -- and if they go beyond the general rule, whether they do not stand as much upon tradition as upon principle. In general it is not plain that a man's misfortunes or necessities will justify his shifting the damages to his neighbor's shoulders. We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change. As we already have said this is a question of degree -- and therefore cannot be disposed of by general propositions.

 260 U.S. at 415-16 (citations omitted).

 Similarly, in Andrus v. Allard, 444 U.S. at 65-66, the Court affirmed the factually specific nature of the Takings inquiry. The Andrus Court considered a Takings challenge with respect to certain federal statutes that banned the sale of avian Indian relics that existed before the species of birds whose parts were used in the relics came under the protection of the federal laws. The following passage was cited by the Connolly Court (475 U.S. at 225) in support of its analysis of the "nature of the governmental action":

 

Government regulation -- by definition -- involves the adjustment of rights for the public good. Often this adjustment curtails some potential for the use or economic exploitation of private property. To require compensation in all such circumstances would effectively compel the government to regulate by purchase. "Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law."

 

The Takings Clause, therefore, preserves governmental power to regulate, subject only to the dictates of "'justice and fairness.'" There is no abstract or fixed point at which judicial intervention under the Takings Clause becomes appropriate. Formulas and factors have been developed in a variety of settings. Resolution of each case, however, ultimately calls as much for the exercise of judgment as for the application of logic.

 

The regulations challenged here do not compel the surrender of the artifacts, and there is no physical invasion or restraint upon them. Rather, a significant restriction has been imposed on one means of disposing of the artifacts. But the denial of one traditional property right does not always amount to a taking. At least where an owner possesses a full "bundle" of property rights, the destruction of one "strand" of the bundle is not a taking, because the aggregate must be viewed in its entirety. In this case, it is crucial that appellees retain the rights to possess and transport their property, and to donate or devise the protected birds.

 444 U.S. at 65-66 (citations omitted) (emphasis added). Thus, the effect of the federal statutes on the claimant was considered by the Andrus Court in analyzing the nature of the governmental action. *fn8"

  In attempting to characterize the "nature of the governmental action" with respect to the MPPAA, the Concrete Pipe and Connolly Courts spoke of the government adjusting "the benefits and burdens of economic life." 475 U.S. at 225. Significantly, in those cases, the Supreme Court was not confronted with a situation in which the "adjustment" of the "burdens of economic life" would result in the certain bankruptcy of the claimant, leaving it without any economic viability. Neither Concrete Pipe, Connolly, or the four cases cited in Connolly, stand for the radical proposition that any public program adjusting "the benefits and burdens of economic life" -- irrespective of the effect on the claimant -- will withstand constitutional scrutiny under the Takings Clause.

 Accordingly, although the Coal Act, at first blush, may be characterized merely as an "interference with the property rights of an employer [arising] from a public program that adjusts the benefits and burdens of economic life to promote the common good" (a conclusion that subjects the government's actions to a less rigorous constitutional scrutiny and lends support to a finding that no "taking" has occurred), the true nature of the governmental action can only be evaluated in conjunction with an examination of the severity of the economic effect of the governmental action on the claimant -- the second prong of the Supreme Court's Takings analysis.

 2. The Economic Impact On Unity

 In evaluating the severity of the economic impact of the governmental action in Concrete Pipe and Connolly, the Court found three factors significant in support of its finding that no "taking" had occurred by application of the MPPAA: 1) "mere diminution in the value of property" is insufficient to demonstrate a taking ( Concrete Pipe, 113 S. Ct. at 2291); 2) the employer's liability under the MPPAA was not "'out of proportion to [the employer's] experience'" with the benefits plan (Id. (quoting Connolly, 475 U.S. at 226)); and 3) the MPPAA contained "a significant number of provisions . . . that moderate and mitigate the economic impact of an individual employer's liability" -- including limiting withdrawal liability for an employer that liquidates its business ( Connolly, 475 U.S. at 225-26 & n.8).

 In Concrete Pipe, the petitioner argued that the economic impact of the MPPAA supported a finding of an unconstitutional taking because the petitioner would be required to "pay out 46% of shareholder equity" in order to satisfy its obligations under the Act. 113 S. Ct. at 2291. In rejecting this contention, the Court cited Euclid v. Ambler Realty Co., 272 U.S. 365, 71 L. Ed. 303, 47 S. Ct. 114 (1926), and Hadacheck v. Sebastian, 239 U.S. 394, 60 L. Ed. 348, 36 S. Ct. 143 (1915), for the proposition that "mere diminution in the value of property, however serious, is insufficient to demonstrate a taking." 113 S. Ct. at 2291. Euclid and Hadacheck involved challenges to land use restrictions which resulted in the diminution in value of the claimant's property of 75% and 92.5%, respectively. Significantly, the claimants in Euclid and Hadacheck retained at least some economic viability in the property at issue.

 The impact of the Coal Act on Unity Real Estate stands in marked contrast to the situation in Concrete Pipe and Connolly. It is undisputed that application of the Coal Act to Unity will result in its liquidation within the first several months of payments under the Act. This factor, while not dispositive, distinguishes the Coal Act's application to Unity from the situations in Concrete Pipe, Connolly, and the cases relied upon by the defendant Trustees and by the United States in this action. The other "Coal Act cases" in which courts have ruled upon the constitutionality of the Act also are distinguishable in this respect. See In re Chateaugay Corp., 53 F.3d 478, 1995 WL 226252, at *16 ("At its bankruptcy confirmation hearing, LTV's chief financial officer conceded that the Coal Act obligations will not interfere with LTV's ability to emerge from bankruptcy and return to profitability.").

 In evaluating this prong of the Takings analysis, however, the Supreme Court in Connolly was less concerned with the magnitude of the economic diminution, and instead focused on the conduct of the claimant in relation to the statute at issue:

 

As to the severity of the economic impact of the MPPAA, there is no doubt that the Act completely deprives an employer of whatever amount of money it is obligated to pay to fulfill its statutory liability. The assessment of withdrawal liability is not made in a vacuum, however, but directly depends on the relationship between the employer and the plan to which it had made contributions. . . . There is nothing to show that the withdrawal liability actually imposed on an employer will always be out of proportion to its experience with the plan, and the mere fact that the employer must pay money to comply with the Act is but a necessary consequence of the MPPAA's regulatory scheme.

 Connolly, 475 U.S. at 225-26. Since the withdrawal liability imposed on an employer by the MPPAA "'is the employer's proportionate share of the plan's "unfunded vested benefits,"'" ( id., at 217 (citations omitted)), the Court in Connolly found that the impact of the MPPAA was not so severe as to support a finding of an unconstitutional taking.

  Thus, as Magistrate Judge Pesto noted in his initial Report and Recommendation, in analyzing the economic impact of the Coal Act on Unity, the primary consideration is "the economic nexus between the burden and the party burdened by the statute." Docket No. 26, at 8. See In re Chateaugay Corp., 53 F.3d 478, 1995 WL 226252, at *15 ("Where a regulation mandates contributions to a benefit fund, the proper yardstick of economic impact is that of proportionality. Our assessment of economic impact 'is not made in a vacuum . . . but directly depends on the relationship between the employer and the plan to which it had made contributions.'" (quoting Connolly, 425 U.S. at 225)).

  In making this determination with respect to the Coal Act and the specific facts before it, the Second Circuit in In re Chateaugay held that LTV Steel, which had exited the coal mining industry in 1986, "has failed to show that its Coal Act liability will be 'out of proportion to its experience' with the 1950 and 1974 Benefit Trusts." 1995 WL 226252, at *15 (quoting Connolly, 425 U.S. at 226). The court explained:

  

LTV's obligation to contribute to the Combined Fund derives from Congress's rational decision to require the entire class of signatory coal mine operators to fulfill their promises of lifetime health benefits for retirees. As a leading member of the BCOA, LTV participated in the collective bargaining that created the 1950 and 1974 Benefit Trusts and in their operation for nearly four decades. Moreover, the employment relationship supplies the rational link by which LTV's Coal Act premiums are tied to its past experience with the benefit plans. As with the other signatory operators, the size of LTV's annual contributions depends entirely on the number of its former employees receiving benefits from the Combined Fund. By thus mooring a given company's funding obligations to a legitimate measure of its prior benefit from the UMWA health care system, the Coal Act rationally apportions future financial responsibility according to past participation. Consequently, we are not confronted with a case of Congress 'forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.'"

  Id., at *15 (citations omitted). The Second Circuit concluded that "LTV's liability under the Coal Act permissibly reflects its experience with the Benefit Trusts and the National Bituminous Coal Wage Agreements." Id.

  Unlike LTV Steel, however, Unity Real Estate does not have, and never has had, any direct experience (let alone influence) with the Benefit Trusts or the National Bituminous Coal Wage Agreements. Unity was not a "leading member of the BCOA"; in fact, Unity is "once removed" from having any experience at all with the Benefit Trusts or the NBCWAs. Unity's liability under the Coal Act hinges solely on the fact that, pursuant to 26 U.S.C. § 9701(c), it is a "related person" to two coal mining companies (a predecessor of Unity, and a former, bankrupt subsidiary of Unity) that ceased to do any business in the coal industry over ten years prior to passage of the Coal Act. Both the United States and the defendant Trustees argue that Unity's liability under the Coal Act nonetheless should be found to be "proportional" to Unity's experience with the benefit plans. Such a conclusion, however, goes far beyond the reasoning and holdings of the Supreme Court in Concrete Pipe and Connolly.

  In considering the "proportionality" of the liability imposed by the MPPAA, the Court in Concrete Pipe and Connolly was confronted with a situation in which the statute applied to employers who were still participating in the multiemployer pension plans when the legislation was enacted, or to employers who had withdrawn from the plans within five months prior to the statute's enactment. The Court, therefore, had no problem making a meaningful comparison between "current liability" and "experience with the plan" in order to determine "proportionality." In other words, an employer could be "tied" to the current liability (or at least a reasonable determination of "proportionality" could be made), because the liability was calculated at the time (or very close to the time) when the employer actually was in relationship with the plan at issue.

  The Court in Connolly and Concrete Pipe did not simply acquiesce in a finding of "proportionality" merely because the employer could be identified as a participant, at some undefined time, in the multiemployer pension plan -- "the assessment of withdrawal liability is not made in a vacuum . . ., but directly depends on the relationship between the employer and the plan to which it had made contributions." Connolly, 475 U.S. at 225 (emphasis added). Given the facts in Connolly and Concrete Pipe, the Court had little trouble finding that the claimants' liabilities were "proportional" to their experience with the plans. The same cannot be said of the Coal Act's impact on Unity.

  As Magistrate Judge Pesto correctly explains in his Amended Report and Recommendation (Docket No. 42, at 18):

  

It is important to realize that the burden imposed by the Coal Act, to pay for whatever general health benefits the Combined Plan will provide to beneficiaries, has no connection to the past employment of the beneficiaries, even when those beneficiaries themselves were employed by Unity's predecessors. Prior employment merely identifies the class of retirees which is assigned to Unity.

  Basically, the United States and the defendant Trustees ask this Court to find that the current liability imposed by the Coal Act on Unity should be considered "proportional" to Unity's experience with the benefit plans merely because the beneficiaries assigned to Unity were at some point (decades ago) employed by Unity's predecessors. In other words, the United States and the defendant Trustees seek to eliminate any quantitative or qualitative component to the "proportionality" analysis. Based on this "reasoning," "proportionality" would be stripped of any meaning, and Unity's liability could be characterized as "proportional" so long as Unity (or its predecessors) had any experience whatsoever with the benefit plans. Such an interpretation of "proportionality" is not supported by the reasoning and holdings of Connolly and Concrete Pipe.

  In the instant case, the Court must attempt to make a true comparison, and determine whether the current liability imposed by the Coal Act is proportional with the experience of Unity and/or Unity's predecessors with the benefit plans. In making this determination, the Court must take into consideration the following facts: Unity was incorporated in 1947, and in 1969 was the surviving entity after a merger with three inactive coal companies (Stewart Coal & Coke, Penn View Coal, and South Union Coal Company); South Union had operated at various times two coal mines in southwestern Pennsylvania and one in northern West Virginia; from 1961 until 1969, South Union mined no coal; in 1974, Unity incorporated a wholly-owned subsidiary in West Virginia, also named South Union Coal Company, to reopen the mine formerly operated by the Pennsylvania-incorporated South Union; South Union (West Virginia) operated the mine in West Virginia formerly operated by South Union (Pennsylvania) from 1974 until 1981, when it went bankrupt; South Union (Pennsylvania) had been a member of the West Virginia Coal Association, which was a signatory to the 1950, 1951, 1952, 1955, 1956, and 1959 National Bituminous Coal Wage Agreements through its membership in the BCOA; South Union (West Virginia) was a member of the Western Pennsylvania Coal Operators Association, a member of the BCOA, and thereby a signatory of the 1974, 1978, and 1981 NBCWAs; when South Union (West Virginia) went into bankruptcy in 1981, it petitioned for leave and was granted leave by the bankruptcy court to reject its obligations under the 1981 NBCWA; neither Unity nor its predecessors have had any relationship with the benefit plans for over a decade.

  Given Unity's (and its predecessors') long-terminated relationship with the benefit plans, the current liabilities imposed by the Coal Act are not "proportional" in any meaningful sense. Although Unity's predecessors participated in the funding of the multiemployer plans, the liabilities incurred by Unity's predecessors, as well as the benefits received from this participation (i.e., the availability of a labor pool, economies of scale, etc.), were completely realized decades ago. There is no "connection" between the current liabilities and the past experience of Unity's predecessors. The task before the Court in this case is much like comparing apples and oranges -- South Union (Pennsylvania) ceased mining coal in 1961, yet the Coal Act seeks to impose tens of thousands of dollars in liability on Unity in 1993 -- based, in large part, on the simple fact that the assigned beneficiaries were employed at some time by South Union (Pennsylvania).

  The United States and the defendant Trustees confuse and "blend" the issues in arguing that "proportionality" should be found based upon the retirees ' expectations of lifetime benefits. They argue:

  

Congress, in assigning responsibility for coal miner retiree health benefits to past and present signatories, selected a rational approach to resolving the financial crisis of the UMWA Benefit Trusts. . . . Congress reasonably required that NBCWA signatory operators, as opposed to the public at large or the entire coal industry, proportionally share in the cost of ensuring that UMWA retirees continue to receive health benefits: NBCWA signatories, like South Union Coal Company, and not the taxpayers, were responsible for the creation of the obligations to these beneficiaries. Likewise, the assigned operators, not the coal industry generally, were most responsible for the payment of the premiums for the health care benefits of the individual retired miners assigned to them.

  Docket No. 30, at 31-32. This argument assumes, rather than proves, proportionality. In addition, the argument that Congress acted rationally in passing the Coal Act -- which is a proper consideration with respect to a Substantive Due Process analysis -- adds little to the Takings inquiry.

  Magistrate Judge Pesto correctly disposes of the United States' argument that Unity's liability under the Coal Act should be considered "proportional" because of the retirees' expectation of lifetime health benefits. See Amended Report and Recommendation (Docket' No. 42), at 19-20. The argument, in large part, is based on the erroneous assumption that Unity (or its predecessors) created, or were ultimately responsible for, the retirees' expectation of lifetime health benefits.

  To the contrary, the prior employment relationship did not create any legitimate expectation of lifetime benefits from Unity (or its predecessors) once Unity's predecessors left the coal industry. "A significant reason for the Coal Act is precisely this failure of the trustees of the former benefit plans to establish that proposition judicially, while the benefit plans were faced with judicial decisions holding that retirees had an expectation of lifetime benefits from them." Amended Report and Recommendation (Docket No. 42), at 19.

  At most, the evergreen clauses in the 1978 and 1980 NBCWAs imposed a continuing (not perpetual) obligation to contribute to the plans if a signatory dropped out of the BCOA but continued to mine coal under an agreement with the UMWA without being bound by a current NBCWA. See UMWA 1974 Pension v. Pittston Co., 299 U.S. App. D.C. 339, 984 F.2d 469 (D.C. Cir.), cert. denied, 113 S. Ct. 3040 (1993). The evergreen clauses are not binding on an employer like Unity that left the coal business -- the duty to contribute under the clauses is based on tons of coal mined or hours worked in mining operations. *fn9"

  Admittedly, the retirees' expectation of lifetime health benefits may be one factor to consider in evaluating the coal industry and Unity's involvement therein. Given Unity's limited "connection" with this expectation, however, it should not be considered dispositive in determining whether the current liabilities imposed by the Coal Act are proportional to Unity's experience with the benefit plans.

  The inquiry involves a quantitative and qualitative examination of Unity's involvement with the benefits plans -- not an examination of whether a current crisis exists in the coal industry, or whether retirees in the coal industry developed an expectation of lifetime health benefits as a result of any reason whatsoever, or whether Congress has the authority to upset contractual expectations. As explained above, Unity's (and its predecessors') involvement with the benefits plans ended years ago. See Docket No. 39, at 10 ("When Unity's last collective bargaining agreement was rejected by the Bankruptcy Court in 1981, Unity permanently ceased contributing to, having any contractual or legal relationship with, or receiving any benefit whatsoever from the subject plans."). The current liabilities imposed by the Coal Act are so enormous that they cannot properly be characterized as "proportional" to Unity's experience with the plans.

  Finally, in analyzing the economic impact of the Coal Act, the Second Circuit in In re Chateaugay Corp. found it significant that the Act contains certain provisions that allegedly "moderate and mitigate" the burdens imposed:

  

We note that while the assigned operators may eventually have to bear some of the costs of providing benefits to the industry's "orphaned" retirees, the Coal Act contains several provisions mitigating that burden. First, the transfer of $ 210 million from the 1950 Pension Fund in the Combined Fund's first three fiscal years will eliminate the unassigned beneficiary and death benefit premiums for all assigned operators in at least the first two of those years. The second series of transfers from the Abandoned Mine Reclamation Fund will continue until at least 2004, potentially totalling hundreds of millions of dollars. By thus minimizing LTV's financial responsibility for retirees it never employed, the Coal Act reinforces the centrality of the employment relationship to the imposition of liability.

  1995 WL 226252, at *16. Since Unity is incapable of complying with its obligations for beneficiaries already assigned (i.e., Unity faces certain bankruptcy within a very short time), Unity can take little solace in the fact that the Coal Act contains provisions which "mitigate and moderate" Unity's possible future obligations for retirees that its predecessors never employed. This consideration does not weigh in favor of the Act's constitutionality, at least as applied to Unity.

  Although the Coal Act may have been intended by Congress to merely "adjust[] the benefits and burdens of economic life to promote the common good" ( Connolly, 475 U.S. at 225), the nature of the governmental action must be determined in conjunction with the effect of the Act on the claimant here -- the bankruptcy of Unity, a small corporation whose business involves leasing a small building and parking lot, and who is classified under the Coal Act as a "related person" to a predecessor corporation and a former (bankrupt) subsidiary that left the coal industry years ago. Thus, the true "nature of the governmental action" here is more properly characterized as "permanently appropriating . . . the employer's assets for [the government's] own use." 475 U.S. at 225. The first and second prongs of the Supreme Court's Takings analysis support a finding that the Coal Act, as applied to Unity, is unconstitutional.

   3. The Extent to Which the Coal Act has Interfered With Unity's Investment-backed Expectations.

  "The final factor [for consideration in the Takings analysis] is the degree of interference with [the claimant's] 'reasonable investment-backed expectations.'" Concrete Pipe, 113 S. Ct. at 2291 (quoting Connolly, 475 U.S. at 226). The Connolly Court explained that the withdrawal liability imposed by the MPPAA did not interfere with reasonable expectations because the employers had been given "sufficient notice" of the potential liability for withdrawing from multiemployer pension plans. 475 U.S. at 227. Pension plans "were the objects of legislative concern long before the passage of ERISA in 1974"; it was clear as of the time of ERISA's passage that employers faced at least potential liability for withdrawing from a multiemployer plan; and by the time that Congress passed the MPPAA in 1981, "prudent employers . . . had more than sufficient notice not only that pension plans were currently regulated, but also that withdrawal itself might trigger additional financial obligations." Id., at 226-27. "'Those who do business in the regulated field cannot object if the legislative scheme is buttressed by subsequent amendments to achieve the legislative end.'" Id. at 227 (quoting FHA v. The Darlington, Inc., 358 U.S. 84, 91, 3 L. Ed. 2d 132, 79 S. Ct. 141 (1958)). See also Concrete Pipe, 113 S. Ct. at 2292 ("Concrete Pipe's reliance on ERISA's original limitation of contingent liability to 30% of net worth is misplaced, there being no reasonable basis to expect that the legislative ceiling would never be lifted." (footnotes omitted)).

  Based on the reasoning of Concrete Pipe and Connolly, the United States and the defendant Trustees argue that the Coal Act does not interfere with Unity's reasonable investment-backed expectations -- "Given the extensive governmental involvement in and regulation of the coal industry over the years, and of the benefits field generally, one could reasonably foresee that the government might take action at some point to ensure that the Benefit Trust would remain solvent and capable of meeting its obligation." See Docket No. 30, at 41 (quoting In re Chateaugay, 163 Bankr. 955, 961 (S.D.N.Y. 1993)).

  Knowledge of the possibility that Congress, at some point, might institute some corrective measure for the funding of coal retirees' benefits, however, differs dramatically from reasonably foreseeing that Congress might impose liability on Unity in the unprecedented manner as that set forth in the Coal Act. The United States' and defendant Trustees' argument ignores the critical distinctions between the limited retroactive reach of the MPPAA and the more substantial impact of the Coal Act on a corporation such as Unity. In addition, as Magistrate Judge Pesto explained, the argument simply proves too much:

  

The possibility that the BCOA and UMWA might someday alter the contribution formula [for funding the benefits plans] after Unity's predecessors left the coal industry naturally would be a matter of complete disinterest to Unity, given that no judicial decision, regulation, or statute prior to the Coal Act made Unity's predecessors liable for continuing contributions to the coal industry's plans. And if the possibility of a decade-later legislative solution to a crisis makes the imposition of liability on Unity on some basis chosen by Congress constitutionally foreseeable, then the expectations prong of Takings Clause analysis ceases to exist, because legislation can always be foreseen.

  Amended Report and Recommendation (Docket No. 42), at 22-23. The district court in In re Blue Diamond summarized the Coal Act's drastic interference with the investment-backed expectations for claimants such as Unity:

  

The Secretary suggests that it was unreasonable for Blue Diamond to believe that its 1964 National Bituminous Coal Wage Agreement would forever limit its responsibility to the UMWA benefit trusts. Maintaining economic stability in the coal industry has long been a matter of federal concern. Blue Diamond should not be surprised that Congress acted in 1992 to avert the crisis in the 1950 and 1974 Benefit Trusts which threatened to disrupt coal production and deprive UMWA retired miners of their long-expected lifetime health benefits. The Court agrees that it was reasonably foreseeable that Congress would take action to ensure that the UMWA benefit trust would remain solvent and capable of meeting its obligations. But it was a good deal less foreseeable that the legislation chosen to solve the problem would reach back to conduct which occurred almost 30 years ago in order to enforce a "promise" Blue Diamond never actually made. The best that can be said for the Secretary's argument is that Blue Diamond had to have known that its own retirees were among the many "orphans" drawing benefits from the UMWA trusts and contributing to their financial instability. The second factor [in the Takings analysis] also favors Blue Diamond, but less emphatically [than the first (the severe economic impact)].

  174 Bankr. at 728 (emphasis added). *fn10" See also Concrete Pipe, 113 S. Ct. at 2293 (O'Connor, J., concurring) ("I also note that the Court's opinion should not be read to imply that employers may be subjected to retroactive withdrawal liability simply because 'pension plans [have] long been subject to federal regulation.' Surely the employer that joined a multiemployer plan before ERISA had been promulgated -- before Congress had made employers liable for unfunded benefits -- might have a strong constitutional challenge to retroactive withdrawal liability. The issue is not presented here -- again, petitioner joined the Construction Laborers Pension Trust after the passage of ERISA -- and the Court does not address it. It remains to be resolved in a future case." (citation omitted)).

  V. Conclusion

  "We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change." Mahon, 260 U.S. at 416. The Coal Act, as applied to Unity, goes far beyond the type of legislation upheld by the Supreme Court in Connolly and Concrete Pipe. An evaluation of the facts of this case, pursuant to the criteria set forth in the Supreme Court's Takings jurisprudence, leads to the conclusion that the Coal Act, as applied to Unity, effects an uncompensated "taking" in violation of the Fifth Amendment.

  An appropriate Order follows.

  ORDER

  AND NOW, this 7th day of June, 1995, consistent with the foregoing Opinion, plaintiff Unity Real Estate Co.'s motion for a preliminary injunction (Docket No. 4) is hereby GRANTED. This Court finds that the Coal Industry Retiree Health Benefit Act of 1992, Pub. L. 102-486, 106 Stat. 2776, 3036-56 (codified at 26 U.S.C. §§ 9701-9722) (the "Coal Act"), as applied to Unity, effects an uncompensated "taking" in violation of the Fifth Amendment.

  Unity has demonstrated a reasonable likelihood of success on the merits, and Unity will suffer irreparable harm in the absence of a preliminary injunction.

  Accordingly, it is hereby ORDERED that the defendant Trustees are hereby restrained from enforcing the Coal-Act against Unity in any respect pending a final disposition on the merits.

  Pursuant to Rule 65(c) of the Federal Rules of Civil Procedure, plaintiff Unity Real Estate shall post security in the amount of $ 5000.

  BY THE COURT,

  D. Brooks Smith

  United States District Judge


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