UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
DISTRICT 29, UNITED MINE WORKERS
OF AMERICA; ROY BREEDING; THOMAS E.
DAVIS; CARL S. HEFFINGER; PAUL A.
HUNT; GLENN E. KITTS; ALBERT L.
MARTIN; RICHARD L. SHRADER;
ELHIEU C. TAYLOR; HAROLD WICKLINE;
JOHN DOE; MARY DOE; WILLIAM A.
ALLEN,
Plaintiffs-Appellees,
and
UNITED MINE WORKERS OF AMERICA
1974 BENEFIT PLAN AND TRUST,
Defendant-Appellee,
and
No. 94-1444
UNITED MINE WORKERS OF AMERICA
COMBINED BENEFIT PLAN; UNITED MINE
WORKERS OF AMERICA 1992 PLAN
BENEFIT,
Defendants & Third Party
Plaintiffs-Appellees,
and
QUALITY LEASING, INCORPORATED;
KANAWHA TRANSPORT, INCORPORATED;
CAR-BEC TRUCKING COMPANY; CIRCLE
TRANSPORT, INCORPORATED,
Third Party Defendants-Appellees,
and
MICHAEL H. HOLLAND; MARTY D.
HUDSON; ROBERT C. WALLACE; THOMAS
CONNORS,
Trustees-Appellees,
and
DOUGLAS M. BOOTHE; BOBBY
DEMARCEY,
Plaintiffs,
v.
PATSY TRUCKING, INCORPORATED, a
corporation,
Defendant-Appellant,
and
CLOVIS D. COX,
Third Party Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of West Virginia, at Beckley.
Elizabeth V. Hallanan, Senior District Judge.
(CA-92-1013-5)
Argued: March 6, 1997
Decided: April 9, 1997
Before HAMILTON and WILLIAMS, Circuit Judges, and
KISER, Chief United States District Judge for the
Western District of Virginia, sitting by designation.
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Vacated and remanded by unpublished per curiam opinion.
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2
COUNSEL
ARGUED: Erin Elizabeth Magee, JACKSON & KELLY, Charles-
ton, West Virginia, for Appellants. Marilyn Louise Baker, MOONEY,
GREEN, BAKER, GIBSON & SAINDON, P.C., Washington, D.C.,
for Appellees. ON BRIEF: Daniel L. Stickler, JACKSON &
KELLY, Charleston, West Virginia, for Appellants. John R. Mooney,
MOONEY, GREEN, BAKER, GIBSON & SAINDON, P.C., Wash-
ington, D.C.; Peter Buscemi, MORGAN, LEWIS & BOCKIUS,
L.L.P., Washington, D.C.; David W. Allen, Office of the General
Counsel, UMWA HEALTH AND RETIREMENT FUNDS, Wash-
ington, D.C., for Appellees.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Patsy Trucking, Inc. (Patsy) appeals the district court's entry of
judgment in favor of the United Mine Workers of America 1992 Ben-
efit Plan and its trustees (collectively the 1992 Benefit Plan) follow-
ing a bench trial to determine whether Patsy is liable to provide health
benefits to certain eligible retirees under § 9711(a) of the Coal Indus-
try Retiree Health Benefit Act (the Coal Act), 26 U.S.C.A. §§ 9701
to 9722 (West Supp. 1996). Because the district court applied the
wrong standard to determine whether Patsy is liable to provide such
benefits under the Coal Act, we vacate the district court's judgment
and remand the case for further proceedings consistent with this opin-
ion.
I.
Prior to September 1, 1989, Patsy provided trucking services to the
coal industry. In 1988, Patsy became a signatory to a collective bar-
3
gaining agreement with the United Mine Workers of America (the
UMWA), which, by its terms, expired on February 1, 1993. The
agreement, known as the 1988 National Bituminous Coal Wage
Agreement (the 1988 Agreement), required Patsy to provide health
benefits to certain eligible retirees by maintaining an individual
employer health benefits plan. The 1988 Agreement provided that
Patsy would continue providing these health benefits until February
1, 1993, or until Patsy was determined to be "no longer in business."
(J.A. 444). The 1988 Agreement also provided that the 1974 UMWA
Benefit Plan and Trust (the 1974 Plan), a multiemployer health bene-
fits plan,1 would step in to provide the health benefits if Patsy was
determined to be "no longer in business."
Under the 1988 Agreement, a signatory employer is considered no
longer in business if: (1) the employer has ceased all mining opera-
tions and has ceased employing persons under the agreement, with no
reasonable expectation that such operations would start up again; and
(2) the employer is financially unable to provide health and other non-
pension benefits to its retired miners and surviving spouses.
By September 1989, Patsy had ceased all trucking operations.
Patsy, however, provided health benefits to eligible retirees pursuant
to the 1988 Agreement until June 30, 1992. At that time, Patsy
advised its eligible retirees that it was financially unable to continue
providing them with health benefits.2
In October 1992, Congress passed the Coal Act in an effort: (1) to
remedy problems that had arisen with the provision and funding of
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1 "Multiemployer plans are characteristically maintained to fulfill the
terms of collective-bargaining agreements. A group of employers makes
contributions to a multiemployer plan. The plan pools those funds into
a general fund available to pay any benefit obligation of the plan."
Carbon Fuel Co. v. USX Corp., 100 F.3d 1124, 1127 (4th Cir. 1996).
2 When Patsy ceased all trucking operations, it had $638,824.58 in
assets. In December 1991, at the direction of Patsy's president and sole
shareholder, Clovis Cox (Cox), Patsy forgave $271,009.81 of a loan that
Patsy had made in favor of Cox. Then, in January 1992, Patsy, again
through Cox, forgave Cox's remaining debt to Patsy of $352,903. This
last forgiveness left Patsy with $512.98 in assets.
4
health benefits to UMWA retirees under the existing multiemployer
health benefits plans; and (2) to provide for the continuation of the
individual health benefits plans already in place under collective bar-
gaining agreements. See Energy Policy Act, Pub. L. No. 102-486,
1992 U.S.C.C.A.N. (106 Stat. 3037) 1943. To effectuate this second
purpose, § 9711(a) of the Coal Act provides, in pertinent part:
The last signatory operator of any individual who, as of Feb-
ruary 1, 1993, is receiving retiree health benefits from an
individual employer plan maintained pursuant to a 1978 or
subsequent coal wage agreement shall continue to provide
health benefits coverage to such individual and the individu-
al's eligible beneficiaries which is substantially the same as
(and subject to all the limitations of) the coverage provided
by such plan as of January 1, 1992. Such coverage shall
continue to be provided for as long as the last signatory
operator (and any related person) remains in business.
26 U.S.C.A. § 9711(a) (emphasis added). Under this section, an eligi-
ble retiree is entitled to receive health benefits following expiration
of the relevant coal wage agreement from the "signatory operator
which was the most recent coal industry employer of such retiree." 26
U.S.C.A. § 9701(c)(4). The term "signatory operator" means a coal
industry operator that is or was a signatory to a coal wage agreement,
such as the 1988 Agreement involved here.
To effectuate its first purpose, the Coal Act established a new mul-
tiemployer health benefits plan named the Combined Fund. See 26
U.S.C.A. § 9702(a). The Combined Fund is so named because it
resulted from combining the 1974 Plan with another multiemployer
health benefits plan, the UMWA 1950 Benefit Plan and Trust (the
1950 Plan). Id. The Coal Act limited enrollment of the Combined
Fund to individuals receiving benefits under the 1974 Plan or the
1950 Plan as of July 20, 1992. 26 U.S.C.A. § 9703(e). Additionally,
the Coal Act created an entirely new multiemployer health benefits
plan, the 1992 Benefit Plan, which steps in to provide an eligible
retiree the health benefits that such retiree would receive under
§ 9711(a) of the Coal Act but does not because the last signatory
operator does not remain in business. 26 U.S.C.A.§ 9712(b)(2)(B).
5
Subsequent to the enactment of the Coal Act, District 29 of the
UMWA and certain individual beneficiaries (collectively the plain-
tiffs) filed suit against Patsy. The suit sought to hold Patsy liable for
health benefits under the 1988 Agreement and under§ 9711(a) of the
Coal Act. In the event Patsy escaped liability under the 1988 Agree-
ment, the suit sought the same benefits from the Combined Fund. Fur-
thermore, in the event Patsy escaped liability under§ 9711(a) of the
Coal Act, the suit sought such benefits from the 1992 Benefit Plan.
On April 7, 1993, the district court entered a preliminary injunction
on motion of the plaintiffs requiring Patsy to provide eligible retirees
retroactive health care benefits from July 1, 1992 until February 1,
1993. The injunction also required both the Combined Fund and the
1992 Benefit Plan to provide, as agreed between them, the same bene-
fits from February 2, 1993 forward.
Patsy cross-claimed against both the Combined Fund and the 1992
Benefit Plan to establish their respective liabilities under the 1988
Agreement and the Coal Act. Likewise, both the Combined Fund and
the 1992 Benefit Plan cross-claimed against Patsy. The Combined
Fund sought to establish Patsy's liability under the 1988 Agreement
to provide eligible retirees with health benefits for the period of July
1, 1992 through February 1, 1993. The 1992 Benefit Plan sought to
establish Patsy's liability to provide health benefits to eligible retirees
after February 1, 1993 under § 9711(a) of the Coal Act and to recover
the money that it (the 1992 Benefit Plan) had to expend to provide eli-
gible retirees health benefits per the injunction. Furthermore, the
Combined Fund filed a third-party complaint against Cox, alleging
that Cox had unlawfully distributed assets belonging to Patsy to him-
self that should be used to provide the disputed health benefits.
Both the Combined Fund and the 1992 Benefit Plan moved for
summary judgment on their respective claims against Patsy. The
Combined Fund also moved for summary judgment on its claim
against Cox. In response to these motions, Patsy and Cox conceded
that Patsy was financially able to provide health benefits to eligible
retirees for the period of July 1, 1992 through February 1, 1993. The
district court entered summary judgment in favor of the Combined
Fund on its fraudulent transfer claim against Cox, establishing that
Patsy had well over $600,000 in assets. The district court also entered
6
summary judgment in favor of the Combined Fund and the 1992 Ben-
efit Plan on their respective claims against Patsy, effectively dispos-
ing of the plaintiffs' claims by holding Patsy liable for health benefits
to eligible retirees under the 1988 Plan and the Coal Act.
Subsequently, the district court vacated the portion of its order
granting summary judgment in favor of the 1992 Benefit Plan on its
claim against Patsy under the Coal Act and conducted a bench trial
on this claim. At trial, Patsy argued that under the definition of "in
business," as provided in the general definitional section of the Coal
Act, see 26 U.S.C.A. § 9701(c)(7), it did not "remain in business" for
purposes of liability under § 9711(a) of the Coal Act. The Coal Act
defines the term "in business" for purposes of the entire statutory
chapter as one who "conducts or derives revenue from any business
activity, whether or not in the coal industry." 26 U.S.C.A.
§ 9701(c)(7).
For reasons that are not clear in the record, the district court
refused to apply this definition to determine whether Patsy "remained
in business" for purposes of the Coal Act. Instead, the district court
applied the definition of the phrase "no longer in business" as con-
tained in the 1988 Agreement. Thus, the district court considered: (1)
whether, by February 1, 1993, Patsy had ceased all mining operations
and had ceased employing persons under the agreement, with no rea-
sonable expectation that such operations would start up again; and (2)
whether Patsy was financially unable to provide health and other non-
pension benefits to its retirees and surviving spouses. Based on its
findings that Patsy had ceased all mining operations, but was finan-
cially able to provide health and other non-pension benefits to its
retirees and surviving spouses, the district court concluded that Patsy
"remained in business" for purposes of liability under § 9711(a) of the
Coal Act. Accordingly, the district court entered judgment in favor of
the 1992 Benefit Plan. Patsy noted a timely appeal of this judgment.
II.
Patsy contends the district court erroneously concluded that it is
liable to provide health benefits to eligible retirees under § 9711(a) of
the Coal Act. Patsy contends the district court reached this erroneous
conclusion by impermissibly applying the definition of "no longer in
7
business" contained in the 1988 Agreement to determine whether it
"remained in business" for purposes of § 9711(a) of the Coal Act.
Patsy continues to maintain that the district court should have applied
the definition of the term "in business" provided in the general defini-
tional section of the Coal Act, see 26 U.S.C.A. § 9701(c)(7). Accord-
ing to Patsy, applying the statutory definition requires that judgment
be entered in its favor.
After reviewing this alleged error of law de novo, as we must, see
Resolution Trust Corp. v. Maplewood Inv., 31 F.3d 1276, 1281 n.7
(4th Cir. 1994), we conclude that the district court did apply an incor-
rect definition of "remains in business" as that phrase is found in
§ 9711(a) of the Coal Act and that such error is not harmless. Under
§ 9711(a) of the Coal Act, the "last signatory operator" to a coal wage
agreement that was in effect on February 1, 1993, must provide health
benefits to eligible retirees beyond expiration of the relevant coal
wage agreement. See 26 U.S.C.A. § 9711(a). The last signatory opera-
tor remains so obligated for "as long as[it] (and any related person)
remains in business." 26 U.S.C.A. § 9711(a) (emphasis added). The
Coal Act itself defines the term "in business" for purposes of the
entire statutory chapter. See 26 U.S.C.A.§ 9701(c)(7) ("For purposes
of this chapter, a person shall be considered to be in business if such
person conducts or derives revenue from any business activity,
whether or not in the coal industry."); Carbon Fuel v. USX Corp., 100
F.3d 1124, 1128 (4th Cir. 1996) (citing § 9701(c)(7) for the proposi-
tion that signatory operators are considered to be"in business" if they
conduct business and derive revenues from any business activity,
regardless of whether that activity is in the coal industry); see also
Florida Dep't of Banking & Finance v. Board of Governors of Fed.
Reserve Sys., 800 F.2d 1534, 1536 (11th Cir. 1986) (definition of term
in definitional section of statute controls construction wherever that
term appears throughout the statute). Thus, in determining Patsy's lia-
bility under § 9711(a) of the Coal Act, the district court should have
considered whether Patsy conducted any business activity after Febru-
ary 1, 1993 or derived any revenue from any business activity after
February 1, 1993.
Because the district court applied the wrong definition of "in busi-
ness," it failed to conduct the proper analysis for determining whether
Patsy "remained in business" after February 1, 1993 for purposes of
8
§ 9711(a) of the Coal Act. The definition used by the district court
required it to make materially different inquiries than the statutory
definition. Patsy may be financially able to pay its eligible retirees
health benefits under the Coal Act, but may not have conducted any
business activity after February 1, 1993 nor derived any revenue from
any business activity after February 1, 1993. In such a case, Patsy
would escape liability to provide health benefits under § 9711(a) of
the Coal Act. Because the district court may well have reached a dif-
ferent ultimate result had it applied the correct definition, the error
was not harmless. See Fed. R. Civ. P. 61. Accordingly, we vacate the
district court's judgment in favor of the 1992 Benefit Plan and
remand this case for further proceedings consistent with this opinion.3
VACATED AND REMANDED FOR FURTHER PROCEEDINGS
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3 Due to some confusion in the district court's numerous orders in this
case, Cox could not discern whether the district court also found him per-
sonally liable to provide health benefits to eligible retirees under
§ 9711(a) of the Coal Act. Accordingly, Cox made himself a party to this
appeal out of an abundance of caution. While we see no legal basis to
hold Cox personally liable to provide health benefits to eligible retirees
under § 9711(a) of the Coal Act, we trust that the district court will clear
up the confusion on remand. Furthermore, in light of our disposition, we
do not address Patsy's alternative argument that its liability under the
Coal Act is limited to $352,903, the amount of Cox's remaining debt to
Patsy as of January 1992.
9