United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 6, 2001 Decided July 31, 2001
No. 00-7072
Michael H. Holland, et al.,
Appellants
v.
Williams Mountain Coal Company, d/b/a Naoma Coal Company,
and Augusta Processing, Inc.,
Appellees
Appeal from the United States District Court
for the District of Columbia
(No. 96cv01405)
Peter Buscemi argued the cause for appellants. With him
on the briefs were Stanley F. Lechner, David W. Allen and
John R. Mooney. Charles P. Groppe entered an appearance.
Gregory B. Robertson argued the cause for appellees.
With him on the brief were Susan F. Wiltsie, Mary Lou
Smith and Charles L. Woody.
Before: Williams, Sentelle and Henderson, Circuit
Judges.
Opinion for the Court filed by Circuit Judge Williams.
Concurring opinion filed by Circuit Judge Sentelle.
Williams, Circuit Judge: Under the Coal Industry Retiree
Health Benefit Act of 1992 (the "Coal Act" or "Act"), 26
U.S.C. ss 9701-9722 (1994), the duty of paying premiums for
the health benefits of certain retired miners falls on the "last
signatory operator." Id. s 9711(a). For the six miners
whose benefits are involved here, it is undisputed that To-
ney's Branch Coal Company was that operator. But Toney's
Branch is bankrupt. The Act also imposes the duty on any
"successor in interest" of the last signatory operator. Id.
s 9711(g)(1). Defendant firms Augusta Processing and
Williams Mountain never employed any of the six miners, but
right after the withdrawal of Toney's Branch they successive-
ly operated Shumate Eagle mine (where Toney's Branch had
employed the six miners), using other miners who had
worked at Shumate Eagle for Toney's Branch, and equipment
previously used by Toney's Branch at the mine. The sole
issue before us is whether Augusta and Williams Mountain
can on that account be held liable as "successors in interest"
of Toney's Branch.
* * *
From 1991 until September 1994 Toney's Branch, a "con-
tract mining" firm, mined coal from Shumate Eagle under
contract with the mine's owner. In September 1994 the mine
owner terminated the contract with Toney's Branch and sold
the mine. The new owner contracted with Augusta to oper-
ate the mine, which it did until October 1995. Augusta used
equipment that it had purchased, in an arm's length transac-
tion, from an affiliate of Toney's Branch. In October 1995
Williams Mountain bought the mining equipment from Au-
gusta and took up the mining operation. Neither Augusta
nor Williams Mountain ever held an ownership interest in
Toney's Branch, or vice versa. Meanwhile, Toney's Branch
continued mining operations elsewhere, until its demise in
bankruptcy.
Plaintiffs are trustees of the 1992 United Mine Workers of
America ("UMWA") Benefit Plan ("1992 Plan"). The Plan
was established under the Act, as part of Congress's response
to the failure of certain coal companies to pay the health
benefits they promised their miners. Under successive Na-
tional Bituminous Coal Wage Agreements ("NBCWAs") be-
tween the coal operators and the UMWA, companies had
agreed to pay benefits not only for their workers but also for
workers whose employers had failed to meet their obligations
under the agreement, so-called orphaned workers. R.G.
Johnson Co. v. Apfel, 172 F.3d 890, 892 (D.C. Cir. 1999). A
considerable number of operators responded by withdrawing
from the Agreement, either to continue mining with non-
union employees or to leave the coal business altogether. See
Eastern Enters. v. Apfel, 524 U.S. 498, 511 (1998). The result
was a spiral of increasing obligations for the remaining
signatories, and increasing withdrawal. Id. In response,
Congress sought to assign health care liability in a form that
would be free from such unraveling. Id. at 513-14.
The plaintiff trustees are obligated to provide benefits for
retirees who are entitled to benefits under s 9711 (including
the six involved here) but who are not receiving them. 26
U.S.C. s 9712(b)(2)(B). If they cannot compel payment by
the last signatory operator, a related person, or a "successor
in interest," they can adjust the premiums they charge em-
ployers obliged to contribute to the 1992 Plan. Id.
s 9712(d)(2)(B). Thus there is no chance of the miners being
denied their benefits. The only issue is whether the expenses
will be borne by defendants or by the broad class of coal
operators obliged to fund the 1992 Plan. The trustees con-
tend that defendants Augusta and Williams Mountain are
"successors in interest" within the meaning of s 9711(g)(1)
and therefore responsible for the charges. The district court
disagreed and granted summary judgment for defendants.
We affirm.
* * *
The trustees urge a broad definition of successors in inter-
est, namely the "substantial continuity of operations test."
This is a multi-factor inquiry that examines, among other
things, the ability of the predecessor to provide relief; wheth-
er the new employer had notice of potential liability; whether
he uses the same plant, equipment and workforce; and
whether he produces the same product. See, e.g., Secretary
of Labor v. Mullins, 888 F.2d 1448, 1453-54 (D.C. Cir. 1989).
Under this standard, the companies may well be successors in
interest to Toney's Branch: Toney's Branch is now bankrupt,
the Act is familiar to all coal operators, and the companies
seamlessly took over operations at Shumate Eagle.
Against this the companies urge narrower definitions,
drawn both from general corporate law and from federal tax
law (noting that the Act is in fact embedded in Title 26, the
Internal Revenue Code ("I.R.C.")). Black's Law Dictionary
(6th ed. 1990), for example, provides the standard corporate
law definition:
In order to be a "successor in interest", a party must
continue to retain the same rights as original owner
without change in ownership and there must be change
in form only and not in substance, and transferee is not a
"successor in interest." ... In case of corporations, the
term ordinarily indicates statutory succession as, for
instance, when corporation changes its name but retains
same property.
Id. at 1283-84 (citations omitted). In the alternative, the
companies suggest a definition from the I.R.C. that shares
with the corporate law definition the element of commingled
ownership. See 26 CFR s 1.1503-2A(c)(3)(vii)(B); 26 U.S.C.
s 381. Under both of these definitions the "successor in
interest" is a successor to the wealth of the predecessor,
typically through a corporate reorganization. A party simply
acquiring property of a firm in an arm's length transaction,
and taking up its business activity, does not become the
selling firm's "successor in interest." Under both definitions
the companies are plainly not successors in interest of To-
ney's Branch, and we need not here wrestle with which of
them is to be preferred in the event of a clash.
Because both sides assume that federal law controls the
meaning of "successor in interest," we do the same. See
generally Atchison Topeka & Santa Fe Ry. v. Brown &
Bryant, Inc., 159 F.3d 358, 362-64 (9th Cir. 1998).
At the outset the trustees' proposed reading of s 9711(g)(1)
encounters difficulty from the adjacent statutory language.
While s 9711(g)(1) mandates that "successors in interest"
share liability with last signatory operators, s 9711(g)(2) per-
mits "successors" to assume by contract liability for health
benefits owed to retirees. The natural reading is that Con-
gress intended "successors" in subsection (g)(2) to include a
broad class of persons, e.g., firms that take over mining
operations from others, and are not liable as a matter of law,
but assume liability by contract with the seller to suit the
mutual convenience and risk-allocation preferences of the
contracting firms. If s 9711(g)(1) imposed liability by law on
virtually all potential candidates for the (g)(2) transaction, the
latter would, for the most part, be surplusage. See Holland
v. New Era Coal Co., 179 F.3d 397, 403 (6th Cir. 1999).
The trustees respond that, because the section heading for
s 9711(g)(1) is "Successor," Congress intended the terms
"successor" and "successor in interest" to be used inter-
changeably. For them the only role of s 9711(g)(2), as
against subsection (g)(1), is to allow successors to contract for
primary responsibility. But, quite apart from the customary
reluctance to give great weight to statutory headings, see,
e.g., Bhd. of R.R. Trainmen v. Baltimore & Ohio R.R. Co.,
331 U.S. 519, 528-29 (1947), it seems very odd to use a
heading, which normally is a kind of shorthand, to justify
stripping the actual text of two words, "in interest," that were
obviously included deliberately.
This conclusion accords with the structure of the Act.
Section 9711 specifies two groups that share liability with last
signatory operators: related parties and successors in inter-
est. Related persons, defined in s 9701(c)(2)(A), encompass
members of a controlled group of corporations including the
signatory operator in question, a business under common
control with the signatory operator, and a person in a part-
nership or joint venture with the signatory operator in the
coal business. A common feature of all such entities is that
they share ownership or comparable economic interests with
the signatory operator. Understanding successor in interest
as embodying the standard corporate concept gives it a
closely congruent meaning.
We note that the Internal Revenue Service has promulgat-
ed definitions of "successor in interest" for various specific
purposes. See, e.g., 26 CFR s 1.1503-2A(c)(3)(vii)(B); id.
s 301.6110-2(l); id. s 302.1-1(e). See also In re Leckie
Smokeless Coal Co., 99 F.3d 573, 585 n.14 (4th Cir. 1996).
Because of the variety of definitions we question whether the
term can be said to have received the sort of consistent
treatment that led the Supreme Court in Commissioner v.
Keystone Consolidated Industries, Inc., 508 U.S. 152 (1993),
to infer, for the phrase "sale or exchange," an intent to
incorporate a previously "settled" meaning. Id. at 159. But
we also note that the trustees do not claim that any of the
definitions chosen by the IRS in other contexts is broad
enough to sweep in the two coal companies here.
In sum, then, the text and structure of s 9711 point
powerfully toward the two companies' position. The trustees,
however, brush aside this textual analysis and offer three
arguments to support a broad definition of successors in
interest. First, they contend that the Act is a remedial
statute and therefore should be liberally construed. This is
meaningless. All statutes seek to remedy some problem, so
the maxim does nothing to identify what statutes should be
"liberally construed" (assuming that phrase to have a discrete
meaning). E. Bay Mun. Util. Dist. v. U.S. Dep't of Com-
merce, 142 F.3d 479, 484 (D.C. Cir. 1998); Ober United
Travel Agency, Inc. v. U.S. Dep't of Labor, 135 F.3d 822, 825
(D.C. Cir. 1998).
Second, trustees argue that broad successor liability fits
Congress's stated intent to assign the duty of paying premi-
ums "to persons most responsible for plan liabilities." 26
U.S.C. s 9701 note (Findings and Declaration of Policy)
(quoting s 19142 of Pub. L. No. 102-486). For our purposes
Congress here selected the last signatory operator, Toney's
Branch, the last firm to receive benefits from the six miners'
labor. After that the Act assigns liability to related persons,
s 9711(b), and to successors in interest, s 9711(g)(1). What
the trustees fail to explain is why companies such as the two
here--whose only link to the six miners is to have started
mining operations with equipment bought from Toney's
Branch, after the six retired, at the mine where the six had
formerly worked--are in any material respect more "respon-
sible" for plan liabilities for the six than is the broad class of
firms funding the 1992 Plan. The defendants' arm's length
purchase of mining equipment at the Shumate Eagle mine
seems to tie them to the six miners no more than would any
firm's purchase of any assets (office equipment, real property,
etc.) from Toney's Branch. The set of operators that would
bear the premiums for the six miners' benefits under the 1992
Plan, however, are all signatories to the 1988 NBCWA,
whereby they have promised to fund the benefits of orphan
retirees. The Secretary of Labor's Advisory Commission on
United Mine Workers of America Retiree Health Benefits,
Coal Commission Report 27 (Nov. 1990). The Coal Act
merely enforces these promises. 26 U.S.C. s 9712(d).
Even if Congress's purpose were recast in more general
terms--securing health benefits for retired miners, see, e.g.,
26 U.S.C. s 9701 note (Findings and Declaration of Policy)--
broad successor liability is hardly essential to that goal. The
six miners will receive benefits regardless of whether the
defendants are billed for them. To address the concern that
in the absence of successor liability the scheme set up by the
Act might collapse as last signatory operators sold off assets,
pocketed the money, and declared bankruptcy, the Act itself
expressly denies effect to any transaction of which a "princi-
pal purpose ... is to evade or avoid liability." 26 U.S.C.
s 9722. The bankruptcy laws similarly provide relief against
fraudulent transfers. See, e.g., 11 U.S.C. s 548. Nor is it
the case that lack of successor liability would discourage some
conduct Congress sought to encourage; this contrasts (for
instance) with the Multiemployer Pension Plan Amendments
Act ("MPPAA") of 1980, where courts have been concerned
that without broad successor liability firms would be discour-
aged from joining pre-existing multi-employer pension agree-
ments. See Upholsterers' Int'l Union Pension Fund v. Ar-
tistic Furniture of Pontiac, 920 F.2d 1323, 1329 (7th Cir.
1990). Here the classes of both beneficiaries and ultimate
obligors is substantially fixed. Not only does the Act apply
solely to miners who retired by September 30, 1994, 26 U.S.C.
s 9712(b)(2), but it legally obligates their employers, if they
have signed a 1988 NBCWA, to provide benefits, id.
ss 9712(d), 9701(c)(3).
The trustees' final argument is that courts have often used
the substantial continuity test to determine successor liability
in federal statutes (particularly those adopted for the protec-
tion of employees), even when those statutes include no
language directly supporting liability for successors of any
kind. Because statutory interpretation proceeds on the as-
sumption that Congress's choice of words reflects a familiari-
ty with judicial treatment of comparable language, Traynor v.
Turnage, 485 U.S. 535, 545-46 (1988), we cannot say, without
some consideration of the cases using substantial continuity,
that the trustees' claim is a priori wrong. In reality, howev-
er, courts have adopted that standard only in the presence of
certain factors, the most notable of which, at least, is palpably
missing here.
Before presenting our core objections to the trustees' argu-
ment, we review, for context, the origins of the substantial
continuity test. Under the traditional rule on corporate
successorship liability, a corporation that acquires manufac-
turing assets from another corporation does not thereby
assume the liabilities of the seller. The rule admits four
exceptions: (1) when the successor expressly or impliedly
assumed those liabilities; (2) when the transaction may be
construed a de facto merger; (3) when the successor may be
considered a "mere continuation" of the predecessor; and (4)
when the transaction was fraudulent. See Mozingo v. Correct
Mfg. Corp., 752 F.2d 168, 174 (5th Cir. 1985) (citing 15
William Meade Fletcher, Fletcher Cyclopedia of the Law of
Private Corporations, s 7122 (Perm. ed. 1983)). Most rele-
vant for our purposes is the "mere continuation" exception.
Traditionally, this applies when, after the transfer of assets,
there is an identity of stock, stockholders, and directors
between the purchasing and selling corporations. See, e.g.,
Weaver v. Nash Int'l, Inc., 730 F.2d 547, 548 (8th Cir. 1984).
Thus the "mere continuation" exception appears to closely
parallel the basic "successor in interest" concept invoked by
Augusta and Williams Mountain.
As the Third Circuit has observed, the traditional rule
concerning the liability that attaches to asset sales was "de-
signed for the corporate contractual world," and "protects
creditors and dissenting shareholders, and facilitates determi-
nation of tax responsibilities, while promoting free alienability
of business assets." Polius v. Clark Equipment Co., 802 F.2d
75, 78 (3rd Cir. 1986). But it is also generally applied in
cases involving tort plaintiffs, see, e.g., id. at 82-83; Travis v.
Harris Corp., 565 F.2d 443, 446 (7th Cir. 1977), and the
beneficiaries of federal statutes, see, e.g., Atchison Topeka &
Santa Fe Ry., 159 F.3d at 364 (Comprehensive Environmen-
tal Response, Compensation and Liability Act ("CERCLA")),
even though such parties may have had no real opportunity to
protect their interests by contract with the predecessor cor-
poration. For their protection some courts have stretched
the "mere continuation" test into the substantial continuity of
operations test advocated by the trustees, see Polius, 802
F.2d at 78 (noting cases); Cyr v. B. Offen & Co., 501 F.2d
1145, 1152-54 (1st Cir. 1974). The majority, however, still
follow the traditional rule in tort cases, see Polius, 802 F.2d
at 80 (products liability); Restatement (Third) of Torts:
Products Liability s 12 cmts. a, b (1997), and in cases
involving federal statutes such as CERCLA, see Atchison,
Topeka & Santa Fe Ry., 159 F.3d at 364.
In the context of federal statutes whose primary beneficia-
ries are employees, however, it appears that most courts
invoke the substantial continuity test. This departure from
the traditional rule was sparked by four Supreme Court
cases, two involving disputes under the National Labor Rela-
tions Act ("NLRA"), Golden State Bottling Co. v. NLRB, 414
U.S. 168 (1973); NLRB v. Burns Int'l Security Servs., Inc.,
406 U.S. 272 (1972), and two the Labor Management Rela-
tions Act ("LMRA"), Howard Johnson Co. v. Detroit Local
Joint Executive Bd., Hotel & Rest. Employees & Bartenders
Int'l Union, 417 U.S. 249 (1974); John Wiley & Sons, Inc. v.
Livingston, 376 U.S. 543 (1964). Neither statute mentions
successors, let alone successors in interest. Steinbach v.
Hubbard, 51 F.3d 843, 845 (5th Cir. 1995). Yet, proceeding
under principles of equity, the Court in each case addressed
the extent to which successors to the originally liable firm's
operations could be lawfully burdened with promises entered
or statutory torts committed by their predecessors. The
Court weighed congressional interest in the policy promoted
by the statute, and the extent to which successor liability
would promote it, against the cost and inequity to the succes-
sor of imposing liability. See, e.g., Golden State, 414 U.S. at
184; Burns Int'l, 406 U.S. at 287-88.
Although the four cases concerned the core labor relations
statutes, the reasoning has been used to find broad successor
liability under other statutes that govern employees' rights
whether they explicitly address successor liability, Leib v.
Georgia-Pacific Corp., 925 F.2d 240, 244-45 (8th Cir. 1991)
(Vietnam Era Veterans' Readjustment Assistance Act of 1974
("VEVRAA")); Vanderhoof v. Life Extension Inst., 988 F.
Supp. 507, 512-13 (D.N.J. 1997) (Family Medical Leave Act)
(relying on NLRA and Title VII case law), or not, Wheeler v.
Snyder Buick, Inc., 794 F.2d 1228, 1235-36 (7th Cir. 1986)
(Title VII); Musikiwamba v. ESSI, Inc., 760 F.2d 740, 745-
46 (7th Cir. 1985) (Civil Rights Act of 1866). In none of these
cases, however, did the text and structure of the underlying
legislation point firmly against successor liability based on
substantial continuity of operations. The four Supreme
Court cases that provide authority for these cases, for exam-
ple, interpreted a pair of statutes that, unlike the statute
before us, failed to give guidance on successor liability one
way or the other. Moreover, even pursuing this line of cases
would leave our conclusion unchanged.
A key factor motivating courts to extend successor liability
beyond the textual bounds of a statute is that the victim of
the predecessor's behavior may be left without a remedy
unless recourse against the successor is allowed. Musiki-
wamba, 760 F.2d at 746. (This is, of course, ordinarily an
aspect of Congress's intent.) The relief sought under the
statutes involved in the Howard Johnson-Golden State line of
cases is typically "nonmonetary and can be effective only if
directed against the workers' current employer." EEOC v.
G-K-G, Inc., 39 F.3d 740, 748 (7th Cir. 1994) (Age Discrimi-
nation in Employment Act ("ADEA")); see, e.g., Harter
Tomato Prods. Co. v. NLRB, 133 F.3d 934, 936-37 (D.C. Cir.
1998) (successor's duty under NLRA to bargain with union
for predecessor's employees); Leib, 925 F.2d at 247 (succes-
sor's duty under VEVRAA to rehire predecessor's employee);
Criswell v. Delta Air Lines, Inc., 868 F.2d 1093, 1094 (9th
Cir. 1989) (successor's duty under ADEA to rehire predeces-
sor's worker and change mandatory retirement policy); Bates
v. Pac. Marine Mkt. Ass'n, 744 F.2d 705, 710-11 (9th Cir.
1984) (successor's duty to obey Title VII consent decree
requiring a certain level of representation of blacks among
workforce at a harbor). Even if the remedy sought by the
plaintiff in a particular case is simply damages, the possibility
that other plaintiffs suing under the same statute may seek
injunctive relief supports successor liability under that stat-
ute. G-K-G, 39 F.3d at 748. But the Coal Act contemplates
no specific performance remedies. 26 U.S.C. s 9711(a); see
also id. ss 9704(a), 9712(d). Because (1) only pure money
cases may be brought, (2) the "successor in interest" standard
of corporate law allows the beneficiary (or the 1992 Plan
trustees) to pursue the wealth of the last signatory operator,
and (3) the Coal Act as a whole assures protection for the
beneficiary without his incurring the costs and risks of pursu-
ing a departed past employer, there is no warrant whatever
for broad successor liability.
Thus we reject the trustees' claim that s 9711(g)(1) adopts
the "substantial continuity of operations" test. As we ob-
served before, the two companies prevail here under either of
their candidates--the general corporate definition or one of
the special tax definitions, see, e.g., 26 CFR s 1.1503-
2A(c)(3)(vii)(B); 26 U.S.C. s 381. Accordingly we may leave
to another day the resolution of any differences in detail
between these and possibly other candidates.
The judgment of the district court is
Affirmed.
Sentelle, Circuit Judge, concurring: I concur completely
in the result reached by the majority and its basic textual
analysis of the Coal Industry Retiree Health Benefit Act of
1992 ("Coal Act"), 26 U.S.C. ss 9701-22. This analysis alone
is sufficient to support the outcome reached by the majority;
the remainder of the opinion is obiter dicta. I write separate-
ly because I fear the majority's discussion of the trustees'
final argument--that we should adopt a broad substantial
continuity test--may be misleading. The cases from our
sister circuits that have "extend[ed] successor liability beyond
the textual bounds of a statute" are in no way relevant to our
analysis in this case. Opinion at 10. While it is fashionable
in some legal circles to deride "hyper-technical reliance upon
statutory provisions," Palm Beach County Canvassing Bd. v.
Harris, 772 So. 2d 1220, 1227 (Fla.), vacated, 531 U.S. 70
(2000), this Court does not--and should not--move in them.
The majority cites the Supreme Court's decision in Tray-
nor v. Turnage, 485 U.S. 535, 545-46 (1988), for the proposi-
tion that we must assume that "Congress's choice of words
reflects a familiarity with judicial treatment of comparable
language." Opinion at 8. In fact, the Traynor Court as-
sumed that by using a specific term in a veterans' benefits
statute, Congress "intended that the term receive the same
meaning for purposes of that statute as it had received for
purposes of other veterans' benefits statutes." 485 U.S. at
546. In other words, the Court stated that statutory terms
should be interpreted in the same way in statutes covering
similar topics--not in any statute covering any topic. Cf. Del
Commercial Props., Inc. v. Commissioner, 251 F.3d 210, 218
(D.C. Cir. 2001).
In the present case, this maxim of statutory interpretation
suggests that the term "successor in interest" in the Coal Act
should be interpreted consistently throughout the Internal
Revenue Code, see Commissioner v. Keystone Consol. Indus.,
508 U.S. 152, 159 (1993), and that Congress was aware of how
the term had been interpreted in that context, see Traynor,
485 U.S. at 546. Treasury Regulations define "successor in
interest" as "an acquiring corporation that succeeds to the tax
attributes of an acquired corporation" through the following
transactions: the liquidation of a subsidiary, a merger or
consolidation, the sale of "substantially all of the properties of
another corporation" for voting stock, 26 U.S.C. s 381, or the
mere change of identity. 26 C.F.R. s 1.1503-2A(c)(3)(vii)(B).
Relatedly, state business association law historically has been
used to determine the tax liability of "a successor corporation
for the debts of its predecessors." 15 Mertens Law of
Federal Income Taxation s 61.17, at 47 (2000); see also
United States v. First Dakota Nat'l Bank, 137 F.3d 1077,
1079-80 (8th Cir. 1998); Atlas Tool Co. v. Commissioner, 614
F.2d 860, 870 (3d Cir. 1980); George v. Commissioner, 2000
WL 1545066 (T.C. Oct. 19, 2000) (mem.). In West Virginia,
where both the defendant companies are incorporated, a
corporation that purchases the assets of another corporation
is not liable for the debts of the seller unless: (1) the
purchaser expressly or impliedly assumes the liability, (2) the
transaction was fraudulent, (3) "some element of the transac-
tion was not made in good faith," (4) the purchase effected a
consolidation or merger, or (5) "the successor corporation is a
mere continuation or reincarnation of its predecessor." Jor-
dan v. Ravenswood Aluminum Corp., 455 S.E.2d 561, 563
(W. Va. 1995); see also West Texas Ref. & Dev. Co. v.
Commissioner, 68 F.2d 77, 80 (10th Cir. 1933) (applying the
same factors in a tax dispute). Under either of these formu-
lations, the defendant companies would not be liable under
the Coal Act. This analysis is sufficient to affirm the district
court's decision in this case.
If Congress had sought to adopt something similar to the
trustees' articulation of the substantial continuity of opera-
tions test it likely would have done so explicitly. For exam-
ple, the Black Lung Benefits Act holds companies liable for
benefit payments to coal-mining employees when the compa-
nies are successive operators of a coal mine or acquire
substantially all of the assets of the previous operator. See
30 U.S.C. s 932(i)(1). Of course, in the Coal Act, Congress
did not adopt this approach.
The majority's lengthy discussion of cases employing the
substantial continuity of interest test does not clarify "judicial
treatment of comparable language." Opinion at 8. As the
majority recognizes, courts largely have adopted this test in
cases when the statute at issue does not address successor-
ship, much less use the term "successor in interest." See,
e.g., Wheeler v. Snyder Buick, Inc., 794 F.2d 1228 (7th Cir.
1986).
The majority rightly traces this analysis to four Supreme
Court decisions. Two of these decisions dealt with claims
brought under the Labor Management Relations Act
(LMRA), and two arose from decisions issued by the National
Labor Relations Board (NLRB) pursuant to the National
Labor Relations Act (NLRA). In the first of the LMRA
decisions, John Wiley & Sons, Inc. v. Livingston, 376 U.S.
543, 544 (1964), the Supreme Court addressed whether a
successor company was required to comply with an arbitra-
tion clause in a collective bargaining agreement between a
union and the predecessor company. Significantly, the prede-
cessor corporation had merged with the successor corpora-
tion, and the Court was confronted with a question of "con-
tractual origin"--and therefore did not interpret or apply any
statute. See id. at 545, 546, 550-51. Construing the contract
and noting the "substantial continuity of identity in the
business enterprise" following the merger, the Court held
that the successor corporation was required to comply with
the arbitration clause. Id. at 551. Later, the Court ex-
plained that the Wiley "holding dealt with a merger occurring
against a backdrop of state law that embodied the general
rule that in merger situations the surviving corporation is
liable for the obligations of the disappearing corporation."
NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. 272, 286
(1972).
In the second LMRA case, Howard Johnson Co. v. Detroit
Local Joint Executive Board, 417 U.S. 249, 251-52 (1974), a
franchiser bought all of the personal property associated with
a franchisee's business operation, but did not retain the
franchisee's employees. The employees' union claimed that
the franchiser was required to "arbitrate the extent of its
obligations" to the employees under the collective bargaining
agreement between the franchisee and union. Id. at 253.
The Court held that the franchiser was not bound by the
agreement because it did not have a "substantial continuity of
identity" with the franchisee. Id. at 264. The Howard
Johnson Court contrasted the circumstances of the case with
Wiley, emphasizing that Wiley "involved a merger, as a result
of which the initial employing entity disappeared." Id. at 257.
In Howard Johnson, however, "the initial employers remain
in existence as viable corporate entities." Id. Significantly,
in neither Wiley nor Howard Johnson did the Supreme Court
purport to interpret the LMRA--or any statute--to encom-
pass any successorship doctrine.
Unlike Wiley and Howard Johnson, the Court in Golden
State Bottling Co. v. NLRB, 414 U.S. 168, 171-72 (1973), and
NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. at 277,
reviewed the Board's interpretation of its organic statute.
When reviewing such decisions, the Court employs a deferen-
tial standard, upholding the Board's interpretation of the
NLRA as long as it "adopts a rule that is rational and
consistent with the Act." Fall River Dyeing and Finishing
Corp. v. NLRB, 482 U.S. 27, 42 (1987); see Golden State
Bottling Co., 414 U.S. at 181 (considering "whether the Board
properly exercised its discretion" in ordering a bona fide
purchaser of a business to reinstate employees with backpay
when the predecessor corporation had engaged in unfair labor
practices); Burns Int'l Sec. Servs., 406 U.S. at 278-79 (hold-
ing that "it was not unreasonable" for the NLRB to hold that
the successor employer is required to bargain with an exist-
ing certified union). Indeed, "[i]n Burns [the Supreme
Court] approved the approach taken by the Board and accept-
ed by the courts with respect to determining whether a new
company was indeed the successor to the old." Fall River,
482 U.S. at 43. That approach, as the majority explains, is
the broad totality of the circumstances test that the trustees
now advocate. See id.
In previous cases, this Court has affirmed the use of the
substantial continuity of interest standard to determine the
obligations of successor corporations--but only when review-
ing an agency decision that had employed it. For example, in
Harter Tomato Prods. Co. v. NLRB, 133 F.3d 934, 938 (D.C.
Cir. 1998), we upheld the NLRB's conclusion that a company
that merely leased assets from a predecessor company could
still be a successor required to bargain with an existing union
if it met the broad substantial continuity test. See also Pa.
Transformer Tech., Inc. v. NLRB, No. 00-1388, slip op. at 4-5
(D.C. Cir. June 29, 2001). Our decision was based on the
deference we accord to NLRB rules that are "rational and
consistent" with the NLRA. Harter Tomato, 133 F.3d at 937
(internal quotation omitted). Similarly, we deferred to the
Federal Mine Safety and Health Review Commission when it
used the test to determine successor liability under the Mine
Safety and Health Act. See Secretary of Labor v. Mullins,
888 F.2d 1448, 1451 n.10, 1453-54 & n.15 (D.C. Cir. 1989).
Our deference to reasonable statutory interpretations made
by agencies to which Congress has specifically delegated
authority should not be confused with an adoption of those
interpretations or a belief that they are correct. We have
never interpreted a statute de novo and concluded that
liability under the statute is determined based on a substan-
tial continuity of interest.
In contrast, some courts have adopted the substantial
continuity standard when interpreting statutes de novo. In
doing so, they have relied on the four Supreme Court deci-
sions discussed above--even though the cases before them
did not review an agency decision, did not focus on labor
contracts, and did not even deal with statutes that mention
successorship. This reliance is mistaken.
The Supreme Court has never adopted any amorphous
totality-of-the-circumstances test in cases raising successor-
ship questions not arising in a context requiring deference to
an agency. Instead, it has stated that there must be a
"substantial continuity of identity in the business enterprise,"
which "necessarily includes ... a substantial continuity in the
identity of the work force across the change in ownership."
Howard Johnson Co., 417 U.S. at 263 (citation omitted).
Even if this language could be read with the breadth some of
our sister circuits suggest, the Supreme Court has only
applied it in cases dealing with current employees seeking to
establish a company's obligations under an existing collective
bargaining agreement, and then only has found such a conti-
nuity when two companies have merged, one of those compa-
nies has been extinguished, and all of the predecessor's
employees have been retained by the successor company.
Furthermore, nothing in either Howard Johnson or Wiley
can be read to extend the reach of their holdings beyond their
"contractual origin," much less beyond statutes governing
labor-management relations.
The courts that have morphed the substantial continuity
standard of Howard Johnson and Wiley into a sweeping
totality-of-the-circumstances standard have allowed rules
adopted by the NLRB pursuant to its authority under the
National Labor Relations Act, see, e.g., Fall River, 482 U.S.
at 43, to serve as the law for other statutes well outside the
NLRB's reach. See, e.g., Musikiwamba v. ESSI, Inc., 760
F.2d 740, 750 (7th Cir. 1985). It is the role of Congress, not
the judiciary, to establish when successors should be held
liable for the statutory violations of predecessor companies
and whether successors have obligations to their predeces-
sor's former employees. See Wheeler v. Snyder Buick, Inc.,
794 F.2d 1228, 1237 (7th Cir. 1986). Courts simply should not
extend liability "to a variety of statutory contexts when the
equities have so dictated" no matter how "important" the
policy they seek to fulfill. Upholsterers' Int'l Union Pension
Fund v. Arctic Furniture of Pontiac, 920 F.2d 1323, 1327 (7th
Cir. 1990). When Congress seeks to establish broad rules of
successor liability, it will do so on its own. See, e.g., 30 U.S.C.
s 932(i)(1). Under the Coal Act, it did not. Insofar as the
majority's opinion by discussion of the "factor[s] motivating
courts to extend successor liability beyond the textual
bounds" of statutes suggests any legitimacy for that ap-
proach, I wish to make plain that that is not the holding of
this case, nor the analysis that commands my concurrence.