No. 99-12
In the Supreme Court of the United States
UNITY REAL ESTATE COMPANY, ET AL., PETITIONERS
v.
MARTY D. HUDSON, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
BRIEF FOR THE UNITED STATES IN OPPOSITION
SETH P. WAXMAN
Solicitor General
Counsel of Record
DAVID W. OGDEN
Acting Assistant Attorney
General
DOUGLAS N. LETTER
Attorney
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
QUESTION PRESENTED
Whether the provisions of the Coal Industry Retiree Health Benefit Act of
1992, 26 U.S.C. 9701 et seq., that assign responsibility for funding the
health-care benefits of retired coal miners and their dependents to the
coal mine operators that previously employed the miners pursuant to collective
bargaining agreements that promised the miners health-care benefits for
life violate the Due Process or Just Compensation Clauses of the Fifth Amendment.
In the Supreme Court of the United States
No. 99-12
UNITY REAL ESTATE COMPANY, ET AL., PETITIONERS
v.
MARTY D. HUDSON, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
BRIEF FOR THE UNITED STATES IN OPPOSITION
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1a-60a) is reported at 178
F.3d 649. The opinion of the district court in the Unity Real Estate case
(Pet. App. 61a-78a) is reported at 977 F. Supp. 717. The opinion of the
district court in the Barnes & Tucker case (Pet. App. 79a-95a) is unreported.
JURISDICTION
The judgment of the court of appeals was entered on March 29, 1999. The
petition for a writ of certiorari was filed on June 28, 1999 (a Monday).
The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).
STATEMENT
1. Congress enacted the Coal Industry Retiree Health Benefit Act of 1992
(Coal Act or Act), 26 U.S.C. 9701 et seq., to address a crisis in the funding
of two multi-employer welfare benefit plans that paid for the health-care
benefits of coal miners, retired miners, and their dependents. Those multi-employer
plans, the United Mine Workers of America 1950 Benefit Plan and Trust (1950
Benefit Trust) and the United Mine Workers of America 1974 Benefit Plan
and Trust (1974 Benefit Trust), were created and funded through a series
of national collective bargaining agreements, known as National Bituminous
Coal Wage Agreements (NBCWAs), between the United Mine Workers of America
(UMWA) and the Bituminous Coal Operators Association (BCOA). See generally
Eastern Enters. v. Apfel, 524 U.S. 498, 505-509 (1998) (plurality opinion).
Before 1974, a single multi-employer fund was the exclusive source of pension
and health-care benefits for UMWA miners, retirees, and their dependents.
See Eastern, 524 U.S. at 505-506 (plurality opinion). In the 1974 NBCWA,
the UMWA and the BCOA agreed to separate that fund into two multi-employer
pension funds and two multi-employer welfare benefit funds. Under the 1974
NBCWA, the 1950 Benefit Trust provided health-care benefits to miners who
retired before 1976, and the 1974 Benefit Trust provided health-care benefits
to both the active work force and miners who retired in 1976 or thereafter.
Id. at 509 (plurality opinion). Unlike previous agreements, the 1974 NBCWA
expressly stated that miners and their spouses would be entitled to health-care
benefits for life. Id. at 510 (plurality opinion); see also Pet. App. 102a
(1974 NBCWA, providing that "[a]ny pensioned miner covered in this
Plan will retain his Health Services card until death, and upon his death
his widow will retain a [H]ealth Services card until her death or remarriage");
In re Chateaugay Corp., 53 F.3d 478, 482 (2d Cir.), cert. denied, 516 U.S.
913 (1995).
The structure of the 1950 and 1974 Benefit Trusts was changed in the 1978
NBCWA. In that agreement, employers who were bound by the NBCWA (known as
signatory operators) agreed to provide benefits to their active employees
and future retirees through individual employer health plans, rather than
the 1974 Benefit Trust. The 1974 Benefit Trust was retained to provide health-care
benefits to post-1975 "orphaned" retirees, whose last employer
had gone out of business. See Eastern, 524 U.S. at 510 (plurality opinion).
The 1950 Benefit Trust for miners who retired before 1976 (and their dependents)
was also retained. See id. at 511 (plurality opinion). The 1978 NBCWA, like
the 1974 agreement, expressly promised that miners covered by the agreement
would receive health-care benefits for life. See Chateaugay, 53 F.3d at
482; Pet. App. 122a-123a.1
In the 1980s, the financial stability of the 1950 and 1974 Benefit Trusts
was plagued by spiraling health-care costs, the phenomenon of coal operators
"dumping" their retirees into the 1974 Benefit Trust by terminating
their individual welfare benefit plans or leaving the coal business, and
judicial decisions maintaining the trusts' beneficiary population without
corresponding increases in coal operator contributions. The withdrawal of
coal operators from the 1950 and 1974 Benefit Trusts forced the remaining
participating employers to shoulder increasingly large contribution obligations
to pay for not only their own retirees, but also newly "orphaned"
retirees whose employers had ceased contributing to the Trusts. Those rising
costs, in turn, influenced several still-contributing signatory operators
to withdraw from the Trusts, thus further shrinking the trust-fund contribution
base. See Eastern, 524 U.S. at 511 (plurality opinion). The Trusts' ability
to provide health-care benefits was jeopardized, and the issue of retiree
health-care benefits contributed to a protracted strike at the Pittston
Coal Company. Ibid. (plurality opinion).
2. In 1990, the Secretary of Labor established the Advisory Commission on
United Mine Workers Retiree Health Benefits (Coal Commission) to examine
the financial crisis confronting the Trusts and to recommend solutions.
See Eastern, 524 U.S. at 511-512 (plurality opinion). As relevant here,
the Coal Commission recommended, as one alternative solution, that current
and past signatories to the NBCWAs should bear the cost of providing health-care
benefits to "orphaned" retirees whose former employers were no
longer in the coal business, as well as to their own retirees. See id. at
512-513 (plurality opinion). The Coal Act was based in large part on that
alternative recommendation by the Coal Commission. See id. at 513-514 (plurality
opinion); 138 Cong. Rec. 5331 (1992) (statement of Sen. Wofford).
The Coal Act was designed to provide stable financing for the health-care
benefits of all retired coal miners and their dependents who were covered
by either the 1950 or 1974 Benefit Trust, or by an individual employer plan
under the NBCWAs. To that end, the Coal Act creates two new, private multi-employer
health-care benefit trusts. The first new fund, the United Mine Workers
of America Combined Benefit Fund (Combined Fund), the trust at issue in
Eastern, was created by the statutory merger of the 1950 and 1974 United
Mine Workers Benefit Trusts. It provides benefits to beneficiaries who were
receiving (and were eligible to receive) benefits from those trusts when
the Coal Act was enacted. See 26 U.S.C. 9702. Benefits are financed through
annual premiums paid by signatory employers that remain in business, or
by a "related person" if the employer is no longer in business;
the amount of the premiums is determined by the Commissioner of Social Security
under a formula established by the Coal Act. 26 U.S.C. 9706(a).
The second new fund, the United Mine Workers of America 1992 Benefit Plan
(1992 Plan), is an entirely new entity designed to provide lifetime health-care
benefits to individuals who should receive coverage under an individual
employer plan but do not. See 26 U.S.C. 9712(b)(2)(B).2 To provide financing
for benefits under the 1992 Plan, the Coal Act assigns responsibility for
funding the health-care benefits of a miner and his dependents to the signatory
employer that most recently employed the miner. See 26 U.S.C. 9712(d).
The Coal Act directs the creation of the Combined Fund and the 1992 Plan
as private multi-employer benefit plans and provides for the appointment
of the plans' trustees. 26 U.S.C. 9702(a), 9712(a)(1). The Act further provides
that the Combined Fund and the 1992 Plan have the same legal status as any
other private multi-employer welfare benefit plan under the Employee Retirement
Income Security Act of 1974 and the Labor-Management Relations Act of 1947.
26 U.S.C. 9702(a)(3), 9712(a)(2); see 29 U.S.C. 1002(1) and (37); 29 U.S.C.
186(c)(5).
3. Petitioner Unity Real Estate Company was assigned responsibility for
the health-care benefits of 74 beneficiaries of the Combined Fund and two
beneficiaries of the 1992 Plan. Pet. App. 9a. Those assignments were based
upon the miners' employment by Unity or by one of its "related"
entities (as defined by the Coal Act, see 26 U.S.C. 9701(c)(2)). Thirty
of the miners assigned to Unity had worked for Unity or for a related company
for more than ten years, and 13 for more than 15 years; the average duration
of the employment of the miners assigned to Unity was approximately ten
years. Pet. App. 9a & n.3. One of Unity's related entities, South Union
Coal Company (Pennsylvania), operated coal mines from 1923 until its absorption
into a Unity subsidiary, and signed the NBCWAs of 1947 through 1961. Id.
at 8a. It was succeeded in mining operations by South Union Coal Company
(West Virginia), a wholly owned subsidiary of Unity, which signed the 1974,
1978, and 1981 NBCWAs. Ibid. Another related company, Stewart Coal &
Coke Company, operated a coal mine and coke plant and made payments to the
UMWA Funds from 1949 to 1958, ceasing when it ended coal mining operations;
its former employees continued to receive benefits from the Funds. Ibid.
Other related companies signed NBCWAs and paid into benefit Funds throughout
the 1960s and 1970s. Ibid.3
4. Petitioner Barnes & Tucker Company was assigned 1544 Combined Fund
beneficiaries and 20 1992 Plan beneficiaries. Pet. App. 9a. Barnes and its
subsidiary corporations were engaged in large-scale coal production from
1905 until 1986, when its last mining operation was closed; its last agreement
to manage a mine terminated on January 1, 1987. Ibid. At the peak of its
coal mining operations, Barnes employed approximately 1100 UMWA-represented
miners. As a member of the BCOA, Barnes was also a party to the NBCWAs of
1971, 1974, 1978, and 1981, and contributed to the UMWA Funds. Ibid. Barnes
withdrew from the operators' association prior to the 1984 NBCWA, but it
agreed to be bound by the 1984 NBCWA. Ibid. Upon the termination of the
1984 NBCWA in 1988, Barnes discontinued its individual employer benefit
plan, and its retirees were left to be covered by the 1974 Benefit Plan
as "orphaned" beneficiaries. Ibid. Since 1986, Barnes has been
involved in leasing and subleasing its coal reserves to third parties, and
managing its investment portfolio. Id. at 10a.
5. Petitioners filed these actions against the Trustees of the Combined
Fund and the 1992 Plan, challenging the constitutionality of the Coal Act
under the Due Process and Just Compensation Clauses of the Fifth Amendment.
The United States intervened to defend the constitutionality of the Act,
pursuant to 28 U.S.C. 2403(a). In 1997, before this Court decided Eastern,
the district court rejected petitioners' constitutional challenges and granted
summary judgment for respondents. Pet. App. 61a-78a (Unity), 79a-95a (Barnes).
The district court first rejected petitioners' arguments that the application
of the Coal Act to them violated substantive due process. It followed several
appellate decisions upholding the constitutionality of the Coal Act against
due process challenges, Pet. App. 68a-69a, 88a-89a, and concluded that "the
Coal Act is rational economic legislation that comports with the substantive
requirements of the Due Process Clause," id. at 88a. As for petitioners'
claims that the Coal Act effected an uncompensated taking, the district
court sustained the Act under this Court's three-factor test, set forth
in Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211, 225 (1986),
for determining whether a regulatory measure gives rise to a taking. The
district court noted that the Coal Act does not appropriate any property
to governmental use but rather "acts to ensure the stability of a private
fund," Pet. App. 75a, 93a; that, as measured by comparing their liabilities
under the Act to their commitments under the NBCWAs or to the Benefit Trusts,
the assessments upon petitioners are proportional, id. at 74a, 91a; and
that, as signatories to NBCWAs that explicitly promised lifetime benefits,
Unity, its related companies, and Barnes participated in a system that fostered
the miners' legitimate expectation of lifetime benefits and did not have
a reasonable expectation of completely avoiding liability for those benefits,
id. at 77a-78a, 94a.
6. While these cases were pending on appeal to the Third Circuit, a divided
Court held in Eastern Enterprises v. Apfel that the Coal Act was unconstitutional
as applied to a coal mine operator that signed NBCWAs in effect between
1947 and 1964, but ceased coal mining operations in 1965. See Eastern, 524
U.S. at 516-517 (plurality opinion) (recounting history of Eastern's involvement
in the coal business). The Coal Act obligated Eastern to pay premiums to
the Combined Fund to cover the health benefits of more than 1000 retired
miners (or the dependents of the miners) who had worked for the company
before 1966. Id. at 517 (plurality opinion). Eastern contended that the
Coal Act violated substantive due process as applied to it and effected
an unconstitutional taking of its property without just compensation by
retroactively creating an obligation to finance the benefits of miners who,
when employed by Eastern, had no expectation that they would receive open-ended
health-care benefits at Eastern's expense.
The plurality concluded that the application of the Coal Act to Eastern
effected an unconstitutional taking without just compensation. See Eastern,
524 U.S. at 524-527. Applying the Court's three-factor test for analyzing
regulatory taking claims (id. at 523-524), the plurality found a constitutional
problem as to each factor. In particular, the plurality found it significant
that the Coal Act imposed liability on Eastern for lifetime health-care
benefits even though Eastern had withdrawn from the coal industry before
any of the NBCWAs had promised lifetime benefits to the miners. See id.
at 532 (with respect to the burden placed on Eastern, noting that Eastern
"had no control over the activities of its former employees subsequent
to its departure from the coal industry in 1965"); ibid. (with respect
to investment-backed expectations, stressing that Eastern never participated
in an industry-wide agreement creating expectations of lifetime benefits);
id. at 532-533 (with respect to the nature of the governmental action at
stake, stating that "Eastern cannot be forced to bear the expense of
lifetime health benefits for miners based on its activities decades before
those benefits were promised").
Justice Kennedy, concurring in the judgment and dissenting in part, disagreed
with the plurality's conclusion that the Coal Act should be analyzed as
a taking, see Eastern, 524 U.S. at 539-547, but concluded that the application
of the Coal Act to Eastern violated "[a]ccepted principles" of
substantive due process inhibiting the operation of severely retroactive
laws, id. at 547-550. Justice Kennedy noted that "the imposition of
liability on former employers based on past employment relationships"
may be upheld under due process principles as remedial legislation designed
to allocate properly the costs of the employer's business. Id. at 549. He
concluded, however, that the Coal Act did not serve that purpose as applied
to Eastern because, although "Eastern was once in the coal business
and employed many of the beneficiaries, * * * it was not responsible for
their expectation of lifetime health benefits or for the perilous financial
condition of the 1950 and 1974 Plans which put the benefits in jeopardy.
* * * [T]he expectation was created by promises and agreements made long
after Eastern left the coal business." Id. at 550.
Four Justices dissented, and concluded that the Coal Act, as applied to
Eastern, was not unconstitutional under either due process or taking principles.
Eastern, 524 U.S. at 553-568. The four dissenting Justices agreed with Justice
Kennedy that the Coal Act should not be analyzed as a taking at all. Id.
at 554-557.
7. After this Court's decision in Eastern, the court of appeals in this
case affirmed the grant of summary judgment to respondents. Pet. App. 1a-60a.
In reaching that decision, the court observed that it was "difficult
to distill a guiding principle from Eastern" because the rationale
of Justice Kennedy's concurring opinion (relying on the Due Process Clause)
was not a "narrower" ground of decision than the plurality's rationale
(based on taking principles). Id. at 15a-16a. Given the "splintered
nature" (id. at 15a) of the decision in Eastern, the court of appeals
concluded that that decision "mandates judgment for [petitioners] only
if they stand in a substantially identical position to Eastern Enterprises
with respect to both the plurality and Justice Kennedy's concurrence."
Id. at 16a. The court then held that the Eastern decision "is not on
all fours with [this] case," id. at 17a, because petitioners herein
signed NBCWAs in 1974 and thereafter, rendering them "factually distinguishable
from Eastern." Ibid.4 Those points, in combination with the "five-four
vote against the takings claim" in Eastern, ibid., led the court to
conclude that "due process analysis encompasses the relevant concerns"
when evaluating the constitutionality of the Coal Act as applied to petitioners.
Ibid.5
With respect to petitioners' substantive due process claim, the court first
considered whether "sufficient evidence exists to support Congress's
judgment that post[-]1978 signatories of NBCWAs could justly be charged
with responsibility for retirees' health benefits, based on the promises
they made to coal miners and on the effects of their departure from the
industry on the [1950 and 1974 Benefit Trusts]." Pet. App. 19a. After
reviewing the history of the Trusts, including the fact that, "[u]nlike
Eastern, * * * [petitioners] at some points in time negotiated for and adhered
to the very agreements that established the benefit funds at issue,"
id. at 21a-22a, the court ruled "that Congress could reasonably have
reached the conclusions it did about the expectation of lifetime benefits
and about the coal companies' responsibility for the situation in which
the [1950 and 1974 Benefit Trusts] found themselves after the changes of
the 1970s and 1980s," id. at 28a. The court rejected petitioners' argument
that holding them responsible for their miners' health-care benefits impermissibly
obligated them, in effect, to remain in the coal business perpetually, and
noted that the Coal Act "merely recognizes that all acts have consequences,
and that sometimes it is not permissible for a company simply to walk away,
leaving its former employees in the lurch." Id. at 23a.
The court also concluded that the duration of the Coal Act's retroactive
operation in this case does not render it irrational in violation of due
process. Pet. App. 38a. The court noted that the period of retroactivity
applicable to petitioners' case is "significantly less extensive"
than that in Eastern, ibid., but it did not rely solely on the diminished
retroactivity in this case, id. at 38a-39a. Rather, the court held, based
on this Court's previous retroactivity decisions, that "[w]here Congress
acts reasonably to redress an injury caused or to enforce an expectation
created by a party, it can do so retroactively." Id. at 40a. Based
on that approach, the court found the application of the Coal Act permissible
in this case because "workers can be harmed * * * by an employer's
failure to live up to a long-term promise that formed part of the worker's
reasonable expectations on the job." Id. at 40a-41a.
The court distinguished the financial burden imposed by the Coal Act on
petitioners (less than $1 million to date for Unity, and about $2.5 million
per year for Barnes) from the liability at issue in Eastern (over $50 million),
and observed that petitioners "are not in the same situation as Eastern
Enterprises." Pet. App. 41a. Stating that "proportionality is
the proper test of economic impact" to determine whether the retroactive
application of a law is permissible, id. at 42a, the court found the "necessary
proportionality" between the burden imposed on petitioners, on one
hand, and, on the other hand, the former coal companies' "conduct that
create[d] reasonable expectations about the object of the legislation [and]
conduct that create[d] the problems that impelled the legislature to act."
Id. at 42a-43a. In particular, the "expectation of lifetime benefits
created by contractual language combined with the parties' consistent practices"
and "the instability of the pre-Coal Act benefit funding structure
to which the former coal companies contributed" provided a sufficient
basis for the imposition of liability on petitioners. Id. at 43a.
In sum, the court held:
Congress could reasonably determine that [petitioners], along with other
coal operators in similar situations, placed the coal industry retiree benefit
funds in jeopardy after creating an expectation of lifetime benefits. Moreover,
the actions that created the need for the Coal Act are not so far in the
past as to make it fundamentally unjust to impose liability upon [petitioners],
because the burden is proportional to their contribution to the problem
and the retroactivity is not too excessive.
Pet. App. 54a.
ARGUMENT
1. Petitioners contend (Pet. 14-23) that the obligations imposed on them
under the Coal Act to finance the health-care benefits of their former employees
(and those employees' dependents) violate the Due Process and Just Compensation
Clauses of the Fifth Amendment. They contend, in particular, that the court
of appeals' decision conflicts with Eastern Enterprises v. Apfel, 524 U.S.
498 (1998), which held the Coal Act unconstitutional as applied to the coal
mine operator who challenged the Act in that case. Those contentions are
without merit. Petitioners' situation is fundamentally different from the
position of the coal operator before the Court in Eastern, because, unlike
that operator, petitioners signed collective bargaining agreements in 1974,
1978, and beyond that promised their employees health-care benefits for
life. The decision below therefore creates no inconsistency with Eastern.
The result reached by the court of appeals is also correct under well-settled
taking and substantive due process principles, and it does not conflict
with any decision of any other court of appeals. To the contrary, the only
other court of appeals that has considered a constitutional challenge to
the Coal Act since Eastern by companies that were bound by the 1974 and
1978 NBCWAs rejected that challenge, see Association of Bituminous Contractors,
Inc. v. Apfel, 156 F.3d 1246, 1253-1258 (D.C. Cir. 1998), and it did so
based on a reading of the plurality and concurring opinions in Eastern that
largely parallels that of the Third Circuit in this case. Further, this
Court recently denied review in another case from the District of Columbia
Circuit presenting the same challenges to the Coal Act. See Holland v. Robert
Coal Co., No. 97-5352, 1998 WL 794832 (D.C. Cir. Oct. 16, 1998), cert. denied,
119 S. Ct. 1803 (1999). There is no basis in this case for a different result.
Further review is therefore not warranted.
a. Although the Court in Eastern did not arrive at a single rationale for
finding the Coal Act unconstitutional as applied to Eastern, both opinions
supporting the judgment in that case emphasized the fact that Eastern left
the coal industry before any collective bargaining agreement gave miners
an expectation of lifetime health-care benefits. See 524 U.S. at 530-531,
532, 535-536 (plurality opinion); id. at 549-550 (opinion of Kennedy, J.).
This case, by contrast, presents a factual situation in which the coal operators
signed NBCWAs promising their employees lifetime benefits; thus, as the
court of appeals concluded, "Eastern is not on all fours with [this]
case." Pet. App. 17a. The result reached by the Court in Eastern therefore
does not govern here. To the contrary, as the court of appeals observed,
"[b]ecause [petitioners] signed NBCWAs in 1974 and thereafter, they
are factually distinguishable from Eastern Enterprises. Language in the
plurality and the concurrence suggesting that expectations fundamentally
changed after 1974 supports [that] conclusion." Ibid.; see also Association
of Bituminous Contractors v. Apfel, 156 F.3d 1246, 1257 (D.C. Cir. 1998)
("the clear implication of each opinion in Eastern Enterprises is that
employer participation in the 1974 and 1978 agreements represents a sufficient
amount of past conduct to justify the retroactive imposition of Coal Act
liability.").6
b. Petitioners' further contention (Pet. 14-17) that the court of appeals
failed to apply the "retroactivity principles" supposedly endorsed
by five Justices in Eastern is without merit. Petitioners submit (Pet. 14)
that those principles are that "retroactive employee benefits funding
legislation is unconstitutional if it imposes on employers a 'substantial'
economic burden, based on conduct 'far in the past,' that is 'unrelated
to any commitment that the employers made or to any injury they caused.'"
Contrary to petitioners' contention, the court of appeals examined each
of those factors in the context of the facts of this case and concluded
that the retroactive scope of the Act, as applied here, is not beyond Congress's
legislative power. Pet. App. 4a.
Thus, the court of appeals, expressly following this Court's decisions in
Eastern and in Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211
(1986), examined the proportionality of the burden imposed by the Coal Act
on petitioners and sustained that burden as permissible, noting that even
"a large burden is not unconstitutional if the liability actually imposed
is not out of proportion to the claimant's prior experience with the object
of the legislation." Pet. App. 42a; see also Connolly, 475 U.S. at
226. The court of appeals ruled that petitioners' participation in the creation
of miners' reasonable expectations of lifetime benefits under NBCWAs beginning
in 1974, and in the establisment of a funding structure vulnerable to the
excessive creation of "orphaned" retirees when companies left
the industry, provided the requisite proportionality of burden to experience
sufficient to sustain application of the Coal Act to these operators. Pet.
App. 46a. The imposition of liability on petitioners, therefore, can hardly
be considered "unrelated to any commitment that the employers made"
(Pet. 14).
The court of appeals also correctly concluded that the extent of retroactivity
present in this case is not so extreme as to contravene substantive due
process. Pet. App. 39a. The court observed that, whereas the application
of the Coal Act to Eastern resulted in at least 27 years' retroactive operation-from
passage of the Coal Act in 1992 back to Eastern's exit from the coal industry
in 1965-the extent of retroactivity at issue in this case is much less,
only four years in the case of Barnes. Ibid. The court of appeals further
noted that this Court has held that "Congress may retroactively bar
employers from giving their employees vested pensions in multiemployer plans
and then leaving those plans to collapse." Id. at 40a. In contrast
to Eastern, petitioners here participated in the creation of a reasonable
expectation of lifetime benefits and left the benefit plans in a condition
vulnerable to collapse. Accordingly, the periods of retroactivity applicable
to the conduct of petitioners survive constitutional scrutiny.
Finally, the court of appeals properly found that the Coal Act was an appropriate
congressional response to commitments participated in by petitioners, and
was designed to remedy injuries caused by petitioners and similarly acting
companies, which withdrew from the coal industry leaving "orphaned"
miners and dependents without provision for adequate funding to meet the
expectation of lifetime benefits. Petitioners' reliance upon Eastern to
counter the court of appeals' conclusions in this regard is wholly misplaced.
Pet. 17. The injuries that the Coal Act is intended to remedy are not physical
harms suffered in "employment in coal mines," ibid.; rather, as
the court of appeals observed, they are the harms caused by "dumping"
retirees on the Benefit Funds, whose funding structures were vulnerable
to such behavior. Pet. App. 46a.
2. Petitioners contend (Pet. 24-27) that the court of appeals incorrectly
applied Marks v. United States, 430 U.S. 188 (1977), by failing to give
controlling effect to the points of agreement between the plurality opinion
and Justice Kennedy's opinion in Eastern, and by giving controlling effect
to the points of agreement between Justice Kennedy and the dissenting Justices
in that case. That contention is without merit.
Marks addresses the situation where a concurring opinion in this Court reaches
the same result as that reached by a plurality of the Justices, but on narrower
grounds. In that situation, a lower court should follow the reasoning of
the concurring opinion, because the lower court may conclude that a majority
of this Court agrees with the narrower position reached by the concurrence.
430 U.S. at 193. To the extent that Marks provides any guidance here, it
supports the court of appeals' rejection of petitioners' due process challenge.
Even though the plurality and concurrence in Eastern analyzed that case
under different legal frameworks, those opinions agreed on the constitutional
significance of a particular fact, namely, that Eastern left the coal industry
before 1974, when the NBCWAs began expressly stating that retired miners
would receive health benefits for life. As we have explained, both the plurality
and Justice Kennedy concluded that the crucial constitutional problem in
Eastern was the Coal Act's application to an operator that had never signed
a wage agreement promising lifetime benefits, and both found that situation
distinguishable from the one where an operator had signed such an agreement.
See pp. 9-10, supra. The court of appeals properly focused on that point
of agreement between the plurality and Justice Kennedy in Eastern to reject
petitioners' due process claim.
Petitioners' contention (Pet. 26) that the court of appeals improperly created
a Marks majority out of Justice Kennedy's concurrence and the dissent in
Eastern to reject their taking claim is also incorrect. That argument overlooks
the reliance of both the plurality in Eastern and the court of appeals in
this case on Connolly (including the three-part taking analysis of Connolly)
in evaluating the constitutionality of the Coal Act as applied to petitioners.
See Eastern, 524 U.S. at 529-532; Pet. App. 12a-14a, 22a, 26a, 29a, 40a,
42a-43a, 44a, 53a. Moreover, although the court of appeals analyzed this
case principally under the rubric of substantive due process, it observed
that "[t]o the extent that Eastern embodies principles capable of broader
application, * * * due process analysis encompasses the relevant concerns."
Id. at 17a. Thus, rather than fashioning the Eastern dissent into "the
law of the land," as petitioners contend, Pet. 26, the court of appeals
effectively applied the analytical scheme of the plurality in Eastern to
the facts of this case. For the reasons given above, petitioners' claims
fail even under the reasoning of the plurality opinion in Eastern, which
emphasized that Eastern-unlike petitioners herein and other coal companies
that signed the 1974 and later NBCWAs--never contributed towards any reason-
able expectation of lifetime health benefits on the part of coal miners.
The plurality opinion and Justice Kennedy's concurrence therefore form a
majority rationale sufficient to reject petitioners' taking claim, and it
is not necessary to rely on the dissenting opinion in Eastern (although
it is also at least doubtful that Marks even addresses a situation such
as the explicit agreement of the four dissenting Justices in Eastern with
a concurring Justice's rejection of a particular constitutional claim).
3. Finally, petitioners contend that lower courts are divided about the
elements of a taking claim outside the context of the Coal Act, Pet. 27-28,
and that the "parameters for due process challenges" to regulatory
legislation are uncertain, Pet. 28-29. Those contentions provide no basis
for review in this case. The plurality and concurring opinions in Eastern
identified the same critical characteristics that distinguished the operators
that signed NBCWAs in 1974 and afterwards from those that did not, and both
opinions found the connection of the latter group of operators to miners'
expectation of lifetime benefits and the financial instability of the funds
too attenuated to sustain the Act as applied to those operators. In view
of that articulation of general agreement on the principles governing the
constitutionality of the Coal Act in particular--principles that were followed
by the court of appeals in this case and in the D.C. Circuit's decision
in Association of Bituminous Contractors, supra--there is no basis for further
review in a Coal Act case in order to address issues that might arise in
other contexts in the future.
Petitioners' contentions about the other cases they cite are in any event
without merit. Petitioners argue that the First Circuit, in Parella v. Retirement
Board of the Rhode Island Employees' Retirement System, 173 F.3d 46 (1999),
improperly relied on the concurrence and dissent in Eastern to conclude
that a taking challenge will lie only when a "specific" property
interest has been taken. In Parella, the court considered whether the plaintiff
had any property right at all before conducting a taking analysis, and concluded
on the facts of that case that the plaintiffs had a mere "expectancy
interest" not protected as "property" under the Just Compensation
Clause. See id. at 58-59. The Parella court did not conclude (as Justice
Kennedy and the dissenting Justices would have held in Eastern) that the
imposition of financial liability under a regulatory statute like the Coal
Act, which imposes liability among private parties, is necessarily not a
"taking." The Parella decision is therefore remote from this case.
In Central States, Southeast & Southwest Areas Pension Fund v. Midwest
Motor Express, Inc., 181 F.3d 799 (7th Cir. 1999), petition for cert. pending,
No. 99-420 (filed Sept. 7, 1999), the court of appeals followed the path
of the plurality opinion in Eastern and examined legislation challenged
as a taking under the well-settled three-factor test set forth in Connolly,
and observed that "Eastern Enterprises does not modify this traditional
approach or suggest a different test." Id. at 808. In Vermont Assembly
of Home Health Agencies, Inc. v. Shalala, 18 F. Supp. 2d 355 (D. Vt. 1998),
the court assumed the existence of a property interest at stake, see id.
at 369. None of those decisions reflects any confusion regarding the elements
of a takings claim.
As for the "parameters for due process challenges" (Pet. 28),
petitioners incorrectly suggest that the Court's emphasis in Eastern on
the fact that retroactivity is "generally disfavored" (Pet. 29)
constitutes a significant departure from the Court's previous substantive
due process decisions according a heavy presumption of constitutionality
to legislation (including retroactive legislation) that adjusts the burdens
and benefits of economic life. To the contrary, the plurality opinion in
Eastern emphasized the Court's long-standing "concerns about using
the Due Process Clause to invalidate economic legislation," 524 U.S.
at 537, and avoided resting its decision on the Due Process Clause. Justice
Kennedy's concurrence did rely on due process principles, but that opinion
did not discard the well-settled presumption of constitutionality for regulatory
statutes; rather, Justice Kennedy found that presumpion rebutted on the
particular facts of the case in Eastern, which he considered to be a "rare
instance[]" of "egregious circumstances." Id. at 550. For
the reasons we have given, this case presents no comparable circumstances.
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
SETH P. WAXMAN
Solicitor General
DAVID W. OGDEN
Acting Assistant Attorney
General
DOUGLAS N. LETTER
Attorney
SEPTEMBER 1999
1 The 1981 and 1984 NBCWAs had similar express promises of health-care benefits
for life. See Pet. App. 141a, 142a, 145a, 146a (1981 NBCWA); 162a, 163a,
166a, 167a (1984 NBCWA).
2 The Coal Act elsewhere requires a mine operator that was providing health-care
benefits to a miner or miner's dependents under an individual employer plan
maintained under a 1978 or subsequent NBCWA, as of February 1, 1993, to
continue to provide such benefits for as long as the operator remains in
business. 26 U.S.C. 9711(a). If such an operator goes out of business or
does not provide such benefits, a miner eligible to receive benefits from
the operator's individual employer plan will receive benefits from the 1992
Plan. See 26 U.S.C. 9712(b)(2)(B). The 1992 Plan also provides health benefits
to individuals who, but for the enactment of the Coal Act, would have been
eligible to receive benefits under the 1950 or 1974 Benefit Trusts as of
February 1993. See 26 U.S.C. 9712(b)(2)(A).
3 Unity is a corporation owned by the Jamison family, as were the entities
related to Unity. The relationships between and among the Jamison family
and the various related entities enabled the Jamison family to receive substantial
payments, in excess of $230,000, from Unity for promissory notes given by
Stewart Coal & Coke. In addition, Unity was able to shelter $288,000
in income from federal income tax because of net operating loss carryover
from the bankruptcy of its subsidiary South Union (W. Va.). Pet. App. 8a
n.2.
Unity's current net worth is approximately $85,000, its annual gross revenues
are approximately $50,000, and as of September 1995, it owed the Combined
Fund and 1992 Plan over $440,000 in unpaid premiums. Pet. App. 9a.
4 Judge Aldisert agreed in a concurring opinion that "the decisive
material facts" of the instant case and Eastern "bear no similarity"
because in Eastern, "the company (1) left the coal industry in 1965
and (2) was never a party to the 1974 and later Wage Agreements that first
suggested the commitment to lifetime benefits for retirees and family members,"
whereas petitioners "remained in the coal industry until 1981 and 1984
respectively, and participated in negotiations for the 1974 and later Wage
Agreements." Pet. App. 54a-55a.
5 The court separately considered and rejected petitioners' "categorical
takings" challenge to the Coal Act, based on the contention that the
application of the Act to petitioners would "entirely destroy[]"
their businesses. Pet. App. 17a, 46a-53a. Petitioners do not renew that
"categorical takings" claim in this Court.
6 Moreover, while the Coal Act required Eastern to begin paying premiums
to the Combined Fund in 1993, even though the company had not contributed
to the United Mine Workers Benefit Plans since 1965, the Coal Act requires
petitioners to finance the health benefits of retirees who were covered
by Unity's related companies until 1981 and by Barnes until the end of 1988.
See pp. 6-8, supra; 26 U.S.C. 9712(b)(2) and (d)(3); cf. Eastern, 524 U.S.
at 516 (plurality opinion).