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2000 Term, Number 14 / April 23, 2001

Today the Supreme Court granted certiorari in one case of potential interest to the business community. Amicus briefs in support of the petitioners are due on Thursday, June 7, 2001, and amicus briefs in support of the respondents are due on Monday, July 9, 2001. Any questions about this case should be directed to Eileen Penner (202-263-3242) or Miriam Nemetz (202-263-3253) in our Washington office.

Coal Industry Retiree Health Benefit Act of 1992 — Liability of Signatory's Successor In Interest. The Coal Industry Retiree Health Benefit Act of 1992 ("the Act"), 26 U.S.C. § 9701 et seq., established the United Mine Workers of America Combined Benefit Fund ("the Fund") to ensure the continued provision of health-care benefits to retired miners and their dependents who worked under collective bargaining agreements that promised lifetime health-care benefits. The goal of the Act is "to identify persons most responsible for plan liabilities in order to stabilize plan funding and to allow for the provision of health care benefits to such retirees." Accordingly, for purposes of calculating the premiums that must be paid to the Fund to finance those health-care benefits, the Act directs the Commissioner of Social Security to assign eligible beneficiaries of the Fund to the "signatory operator" or "related person" of the signatory operator that formerly employed them, if that signatory operator (or related person) is still "in business." 26 U.S.C. § 9706(a). The Supreme Court granted certiorari in Walter A. Halter, Acting Commissioner of Social Security v. Sigmon Coal Co., Inc., et al., No. 00-1307, to decide whether the Act permits the Commissioner to assign beneficiaries to the successor in interest of a signatory operator that is no longer in business.

In a series of decisions between 1993 and 1996, the Commissioner assigned 86 beneficiaries of the Fund to Jericol Mining Incorporated. Jericol filed administrative appeals of those assignment decisions. The Commissioner denied the appeals on the ground that Jericol was the successor in interest to a defunct mining company that had employed the retired miners.

Jericol, along with its affiliate Sigmon Coal Company, Inc., appealed the Commissioner's decisions to the United States District Court for the District of West Virginia. Jericol and Sigmon argued that the Act does not permit the Commissioner to assign Fund beneficiaries to the direct successor in interest of a signatory operator. The District Court agreed, and granted summary judgment to Jericol and Sigmon. 33 F. Supp. 2d 505 (1998).

A divided panel of the Fourth Circuit affirmed. 226 F.3d 291 (2000). The court concluded that the plain language of Section 9701(c)(2)(A) of the Act excludes successors in interest to signatory operators. The majority acknowledged some anomaly in a statutory scheme that imposes liability on the successor to a person "related" to the original signatory while shielding from liability the original signatory's direct successor, but concluded that it could not ignore the Act's "unambiguous language because we can imagine a preferable version." 226 F.3d at 308. In so ruling, the court expressly declined to follow R.G. Johnson Co. v. Apfel, 172 F.3d 890 (D.C. Cir. 1999), in which the D.C. Circuit reached the opposite conclusion.

Judge Murnaghan dissented. Although Judge Murnaghan conceded that a "literal reading" of the statute "unambiguously excludes successors in interest to signatory operators" (226 F.3d at 310), he agreed with the D.C. Circuit that this "is one of those ‘rare cases in which the literal application of the statute will produce a result demonstrably at odds with the intentions of the drafters.'" Ibid. (quoting R.G. Johnson, 172 F.3d at 895). According to Judge Murnaghan, the majority's interpretation would "turn Congress's stated purpose on its head" by imposing liability for Fund benefits on entities with only a "tenuous connection to the retired coal miners" while excluding direct successors to the operators who employed the miners. Id. at 310.

Like the D.C. Circuit in R.G. Johnson, the First Circuit also has held that the Act authorizes the Commissioner to assign responsibility for Fund beneficiaries to direct successors in interest of a signatory operator. See Eastern Enterprises v. Chater, 110 F.3d 150, 155 (1st Cir. 1997), rev'd on other grounds, 524 U.S. 498 (1998).

This case is of obvious interest to all mining companies, their successors in interest, and those otherwise related to mining companies. The case also may be significant to any business that has an interest in promoting or discouraging the literal interpretation of statutory language.

This Mayer, Brown, Rowe & Maw Supreme Court Docket Report provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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