IN THE MATTER OF: WESTMORELAND COAL COMPANY, ET AL, Debtors, MICHAEL H. HOLLAND, as trustee for THE UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND AND UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; WILLIAM P. HOBGOOD, as trustee for THE UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND; MICHAEL W. BUCKNER, as trustee for THE UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND; MICHAEL O. McKOWN, as trustee for THE UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND AND UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; JOSEPH R. RESCHINI, as trustee for THE UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND AND UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; CARLO TARLEY, as trustee for THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN; CARL E. VAN HORN, as trustee for THE UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND; GAIL R. WILENSKY, as trustee for THE UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND, Appellants, versus WESTMORELAND COAL COMPANY; ABSALOKA COAL, L.L.C.; BUCKINGHAM COAL COMPANY, L.L.C.; DAKOTA WESTMORELAND CORPORATION; DARON COAL COMPANY; ET AL., Appellees.
No. 19-20066
United States Court of Appeals for the Fifth Circuit
August 4, 2020
GREGG COSTA, Circuit Judge
Appeal from the United States Bankruptcy Court for the Southern District of Texas USBC No. 4:18-AP-3300
Before DAVIS, SMITH, and COSTA, Circuit Judges.
This case involves the interaction of two laws that protect retirees’ health care benefits. Passed in 1992, the Coal Act culminated decades of efforts to guarantee benefits for retired coal miners. It requires coal companies to pay premiums that fund retirees’ benefits and limits interference with those obligations. Enacted four years earlier, section 1114 of the Bankruptcy Code followed a number of high-profile Chapter 11 cases in which debtors—among them, a coal company—unilaterally terminated their retirees’ benefits. It requires a debtor to keep paying benefits unless those benefits are modified through either an agreement between the debtor and the retirees’ representative or a court order. This appeal asks whether section 1114 allows for the modification of Coal Act obligations. In line with every other court that has answered the question, we conclude that it does.
I.
A.
The history of the Coal Act is detailed elsewhere, so we review it only briefly. See generally E. Enterprises v. Apfel, 524 U.S. 498, 504–15 (1998); In re Walter Energy, Inc., 911 F.3d 1121, 1126–32 (11th Cir. 2018).
Before the Coal Act, a series of National Bituminous Coal Wage Agreements between the United Mine Workers of America (UMWA) and coal companies had resulted in two multiemployer trusts that provided health care benefits to retired miners: the 1950 Benefit Plan and the 1974 Benefit Plan and Trust. These trusts guaranteed lifetime benefits, but they quickly
To remedy the Plans’ financial troubles, Congress enacted the Coal Industry Retiree Health Benefit Act of 1992 (Coal Act). Pub. L. No. 102-486, 106 Stat. 2776. The Act requires coal companies that had entered into any National Bituminous Coal Wage Agreements from 1978 on—the statute calls such comрanies “signatory operator[s]“—to provide retirees’ health care benefits through IEPs.1
Coal Act was passed as well as orphaned retirees who are entitled to IEP coverage but are not yet receiving those benefits.
Also included in the Coal Act are several provisions that prоtect its benefit scheme. Two are relevant to this case. One annuls “any transaction” with “a principal purpose” of “evad[ing] or avoid[ing] liability” under the Act.
The Bankruptcy Code does address a debtor‘s health care obligations to its retirees. Four years before Congress passed the Coal Act, it added section 1114 to the Code. It responded to a series of Chapter 11 debtors—most famously, the coal company LTV—that unilaterally terminated their retirees’ health care benefits. 7 COLLIER ON BANKRUPTCY ¶ 1114.01[2], at 1114-10 (Alan N. Resnick & Henry J. Sommer, eds., 16th ed. 2019). Section 1114 requires a debtor to continue paying promised “retiree benefits” unless the debtor and the retirees’ representative agree to modify
A debtor can move for court-ordered modification if it first proposes modifications to the retirees’ representative and negotiates in good faith, only to have the representative refuse the proposal “without good cause.”
B.
In October 2018, Westmoreland Coal Company and its affiliates3 filed Chapter 11 petitions. As part of its reorganization, Westmoreland negotiated an agreement with creditors to sell the bulk of its assets through an auction. Every bidder conditioned its purchase of Westmoreland‘s assets on the termination of successor liability for Westmoreland‘s Coal Act obligations.
Consequently, Westmoreland proposed modifying those obligations under section 1114. The Trustees of the Combined Plan and the 1992 Plan responded by filing a complaint for a declaratory judgment that Coal Act obligations are not “retiree benefits” and thus cannot be modified under section 1114. Westmoreland moved for a Rule 12(c) judgment on the pleadings.
Before the bankruptcy court ruled, the Eleventh Circuit decided the same issue. See In re Walter Energy, Inc., 911 F.3d 1121 (11th Cir. 2018). Walter Energy—in which the Trustees were a party—determined that Coal Act obligations were “retiree benefits” subject to modification under section 1114.
Id. at 1126.4 Two days later, the bankruptcy court issued an opinion arriving at the same conclusion. It then certified its judgment for direct appeal to our court. See
II.
“When directly reviewing an order from a bankruptcy court, findings of fact are reviewed for clear error and conclusions of law are reviewed de novo.” In re OCA, Inc., 552 F.3d 413, 419 (5th Cir. 2008). This appeal involves the latter. But Westmoreland says we should engage in no review at all because the Trustees lost on these same issues in the Eleventh Circuit.
Issue preclusion, or collateral estoppel, prevents the same party from relitigating an issue when “(1) the identical issue was previously adjudicated; (2) the issue was actually litigated; and (3) the previous determination was necessary to the decision.” Pace v. Bogalusa City Sch. Bd., 403 F.3d 272, 290 (5th Cir. 2005) (en banc).6
This suit checks all three boxes: Walter Energy rejected the same outcome-determinative claim the Trustees press again here.
But something seems amiss. If one circuit‘s resolution of a legal issue is binding when the losing litigant has a case in another circuit, how would circuit splits develop with repeat litigants (like the Trustees here or, perhaps most often, the federal government)? Sure enough, there is an exception to nonmutual issue preclusion for pure issues of law. Preclusion does not apply if “[t]he issue is one of law and treating it as conclusively determined would inappropriately foreclose opportunity for obtaining reconsideration of the legal rule upon which it was based.” RESTATEMENT (SECOND) OF JUDGMENTS § 29(7) (1982). Two situations in which issue preclusion is usually inappropriate are when the issue was previously decided by a coordinate court of appeals or when the issue is of public importance but the highest court that can resolve it has not done so. Id. cmt. i. Applying preclusion in those circumstances would inhibit a court from “perform[ing] its function of developing the law.” Id.; see also 18 CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 4425, at 697-701 (3d ed. 2016) (summarizing the considerations underpinning “[t]he rule that issue preclusion does not attach to abstract rulings of law,” id. at 697).
The Trustees’ suit falls within this exception. It presents only questions of law. So preclusion is inappropriate both because the other court that decided them was a fellow intermediate federal court and because they
are important ones the Supreme Court has not decided. Issue preclusion thus does not bar the Trustees’ suit. See Pharm. Care Mgmt. Ass‘n v. District of Columbia, 522 F.3d 443, 446-47 (D.C. Cir. 2008) (declining to apply issue preclusion to legal question under ERISA addressed in First Circuit case); Af-Cap, Inc. v. Chevron Overseas (Congo) Ltd., 475 F.3d 1080, 1086 (9th Cir. 2007) (declining to apply issue preclusion to Foreign Sovereign Immunities Act issue decided in Fifth Circuit case).
We nevertheless consider the Eleventh Circuit‘s recent decision as persuasive authority. That is no small thing. Our usual reluctance to create circuit splits is even more pronounced in bankruptcy cases where the need for uniformity is a constitutional command. In re Ultra Petroleum Corp., 943 F.3d 758, 763-64 (5th Cir. 2019) (citing In re Marciano, 708 F.3d 1123, 1135 (9th Cir. 2013) (Ikuta, J., dissenting) (quoting
III.
There is a threshold question before we get to the heart of the matter: Does the Anti-Injunction Act bar a section 1114 modification of Coal Act premiums?
A.
The parties disagree about what the relevant “suit” is for purposes of the AIA. Westmoreland contends that its Chapter 11 bankruptcy case is not an adversarial “suit” subject to the AIA but is instead a petition to a bankruptcy court for relief. But adversary proceedings like the one the Trustees initiated “are separate lawsuits within the сontext of a particular bankruptcy case.” 10 COLLIER, supra, ¶ 7001.01, at 7001-3; see also In re TWL Corp., 712 F.3d 886, 892 (5th Cir. 2013). Consequently, the AIA can still apply to them. See Laughlin v. I.R.S., 912 F.2d 197, 199–200 (8th Cir. 1990); In re Am. Bicycle Ass‘n, 895 F.2d 1277, 1279–80 (9th Cir. 1990); Matter of LaSalle Rolling Mills, Inc., 832 F.2d 390, 392–94 (7th Cir. 1987).
Even though we look at this adversary proceeding rather than the bankruptcy as a whole, Westmoreland still says the AIA does not apply. That is because it is a suit brought by the Trustees to compel the collection of taxes—if that is what Coal Act premiums are—as opposed to a suit to “restrain” collection. Indeed, this declaratory judgment action is in a posture different from that of other cases that addressed the AIA in proceedings where debtors actually moved to modify their obligations. Walter Energy, 911 F.3d at 1133–34; In re Leckie Smokeless Coal Co., 99 F.3d 573, 583 (4th Cir. 1996). For that reason, the Trustees agree that the AIA does not bar this proceeding; they are the ones who filed it after all. But, the Trustees explain, this suit asks us to declare what the law is for the impending section 1114 proceeding. That is typically the point of a declaratory judgment—to decide the issues in another suit that is on thе horizon. See 10B WRIGHT ET AL., supra, § 2751 (“[The declaratory judgment] gives a means by which rights and obligations may be adjudicated in cases involving an actual controversy that has not reached the stage at which either party may seek a coercive remedy and in cases in which a party who could sue for coercive relief has not yet done so.“). Because we end up holding that the
AIA is not a bar, we will assume the declaratory judgment posture allows us to decide if the AIA would forbid the section 1114 proceeding that everyone agreed was going to happen (and now has).7
B.
1.
The key question is whether a Coal Act premium is a “tax” under the
label, see id. at 544-46. With the AIA, form—specifically, the label Congress uses—does matter over substance.
The Coal Act‘s labels indicate that Congress did not intend premiums to be taxes for AIA purposes. Most obviously, Congress called the annual exactions on signatory operators “premiums,” not taxes. E.g.,
The Trustees raise several counterarguments. First, they assert that premiums are the “same thing” as taxes because the government assesses them for a public purpose. But that functional analysis misses the point of NFIB: because the AIA is a statutory creature, how Congress labels the exaction is key. See 567 U.S. at 544 (rejecting the argument that “even though Congress did not label the shared responsibility payment a tax, we should treat it as such under the Anti-Injunction Act because it functions like a tax“).
Second, the Trustees point to several cases holding that Coal Act premiums are taxes. But only one addressed the application of the AIA.8 See Leckie Smokeless, 99 F.3d at 583. And all the cases predated
The Trustees’ final argument holds more water. They point to
That potentially means the AIA forbids not only suits involving the penalty for failing to pay Combined Fund premiums, but also suits involving the Combined Fund premiums themselves. At least two circuits have held that the AIA prohibits challenges to nontax obligations if those obligations are enforced by a tax because relief from the nontax obligation would “necessarily ‘restrain’ the assessment and collection of the tax.” See Fla. Bankers Ass‘n v. U.S. Dep‘t of the Treasury, 799 F.3d 1065, 1072 (D.C. Cir. 2015) (Kavanaugh, J.); accord CIC Servs., LLC v. IRS, 925 F.3d 247, 257 (6th Cir. 2019).
The Eleventh Circuit applied this principle to Combined Fund premiums, explaining that even a suit to modify only the premiums would “mak[e] it impossible for the Combined Fund to assess or collect a tax—that is, the penalty imposed by the Coal Act for a company‘s failure to pay its premiums.” Walter Energy, 911 F.3d at 1141.
Like the Eleventh Circuit, we will assume that, because the section 9707 penalty should be treated like a tax, Combined Fund premiums are effectively taxes under the AIA too. We thus consider whether an exception to the AIA permits litigation to modify Combined Fund premiums.
2.
The AIA applies “only when Congress has provided an alternative avenue for an aggrieved party to litigate its claims on its own behalf.” South Carolina v. Regan, 465 U.S. 367, 381 (1984). In a typical tax case, that other avenue is a postpayment refund suit. NFIB, 567 U.S. at 543. The exception, then, is that when no alternative avenue for federal court jurisdiction exists, the AIA will not bar a suit to restrain tax collection. Regan, 465 U.S. at 381 (concluding that the AIA did not block South Carolina‘s suit challenging a federal tax on state bonds on Tenth Amendment grounds because there was no other way to bring that claim). The same idea underlies courts’ reluctance to read a statute as precluding all judicial review as opposed to merely channeling litigation into a specific forum. See generally Elgin v. Dep‘t of Treasury, 567 U.S. 1, 9–10 (2012).
Two courts have held that bankruptcy court motions to modify Coal Act obligations fit within the Regan exception. See Walter Energy, 911 F.3d at 1141-42 (addressing section 1114 proceeding like this one); Leckie Smokeless, 99 F.3d at 584-85 (addressing section 363(f) request to sell assets “free and clear” of Coal Act obligations). As the Eleventh Circuit explained, a debtor cannot modify its retiree benefits except through section 1114, which applies
only to Chapter 11 proceedings in bankruptcy court. Walter Energy, 911 F.3d at 1141-42 (citing
The Trustees do not point to an alternative avenue that Westmoreland could pursue. Instead, they argue that the Regan exception is “very narrow” and “almost unique.” E.g., RYO Mach., LLC v. U.S. Dep‘t of Treasury, 696 F.3d 467, 472 (6th Cir. 2012). In particular, they contend that Regan applies only to suits challenging the validity of a tax.9 Several cases in the Trustees’ briefs describe Regan‘s holding in those terms, but they are distinguishable.10
The bigger point is that other courts—including ours, though we have not discussed Regan at length—view the exception more broadly. See Interfirst Bank Dallas, N.A. v. United States, 769 F.2d 299, 307 n.13 (5th Cir. 1985) (“In Regan, the Supreme Court held that the [AIA] was not intended
to bar an action where Congress has not provided an adequate, alternative remedy.” (citation omitted)); see also, e.g., Walter Energy, 911 F.3d at 1138; SEC v. Credit Bancorp., Ltd., 297 F.3d 127, 139 (2d Cir. 2002). That view is consistent with the language the Supreme Court used in Regan, which does not limit the exception to validity challenges. See 465 U.S. at 378 (“In sum, the [AIA‘s] purpose and the circumstanсes of its enactment indicate that Congress did not intend the [AIA] to apply to actions brought by aggrieved parties for whom it has not provided an alternative remedy.“); id. at 381 (“[T]he [AIA] was intended to apply only when Congress has provided an alternative avenue for an aggrieved party to litigate its claims on its own behalf.“).
We therefore side with the other two courts of appeals to decide the issue and hold that, because bankruptcy court is the only place a debtor can use section 1114 to modify its Coal Act obligations, the AIA does not bar adversary proceedings seeking to do so.
IV.
We finally reach the merits and examine whether Coal Act obligations are “retiree benefits” subject to modification under section 1114. We note at the outset that all courts to consider the question have held that Coal Act obligations are subject to modification. See Walter Energy, 911 F.3d at 1142-51; In re Alpha Nat. Res., Inc., 552 B.R. 314, 326-28 (Bankr. E.D. Va. 2016); In re Horizon Nat. Res. Co., 316 B.R. 268, 274–79 (Bankr. E.D. Ky. 2004).
A.
Section 1114 defines “retiree benefits” as:
[P]ayments to any entity or person for the purpose of providing or reimbursing payments for retired employees and their spouses and dependents, for medical, surgical, or hospital care benefits, or benefits in the event of sickness, accident, disability, or death under any plan, fund, or program (through the purchase of insurance or otherwise) maintained or established in whole or in part by the debtor prior to filing a petition commencing a case under this title.
1.
The first question is whether Westmoreland‘s payment оf premiums “maintained” the Coal Act plans (at least in part). The statute does not define “maintain,” so we look to the word‘s ordinary meaning. United States v. Lauderdale Cty., 914 F.3d 960, 964 (5th Cir. 2019). Dictionaries indicate that providing financial support fits within the plain meaning of “maintain.” Maintain, BLACK‘S LAW DICTIONARY (6th ed. 1990) (including “bear the expense of” and “furnish means for subsistence or existence of“); WEBSTER‘S THIRD NEW INTERNATIONAL DICTIONARY 1362 (1993) (“to provide for : bear the expense of“); 9 OXFORD ENGLISH DICTIONARY 224 (2d ed. 1989) (“to bear the expense of, afford“). A homeowner who pays HOA fees thus helps maintain the homeowner‘s association.
The Trustees counter that “an employer does not ‘maintain’ a plan simply by cutting checks; a plan is ‘maintained’ by the persons who operate and administer it day-in and day-out.” For support, they cite cases interpreting “employee welfare benefit plan” under ERISA, which they
believe should be read consistent with “retiree benefits” in section 1114 because they share similar language.11
The Trustees’ argument faces several roadblocks. First, they cite no cases saying that “employee welfare benefit plan” and “retiree benefits” should be read the same (the Latin phrase is in pari materia). Although some courts have looked to the former to interpret the latter, they do so to inform the phrase “any plan, fund, or program,” not “maintained or established.” See 7 COLLIER, supra, ¶ 1114.02[2][b], at 1114-12 (citing cases). And although the Bankruptcy Code does define some terms by cross-referencing other federal statutes,12
Second, the two provisions come from statutory schemes with different purposes. Indeed, they are different enough that the Supreme Court has warned against courts’ using ERISA to “fill in blanks in a
Bankruptcy Code provision.” Howard Delivery Serv., Inc. v. Zurich Am. Ins. Co., 547 U.S. 651, 661 (2006). Even the courts that have looked to ERISA for guidance in interpreting “retiree benefits” have acknowledged doing so “with due regard . . . for the different purposes that animate ERISA and the Bankruptcy Code.” E.g., In re Avaya Inc., 573 B.R. 93, 102 (Bankr. S.D.N.Y. 2017). Those different purposes prevent us from reading the statutes in tandem. See Latimer v. Sears Roebuck & Co., 285 F.2d 152, 157 (5th Cir. 1960) (“[A] statute is not in pari materia if its scope and aim are distinct . . . .” (citation omitted)).
Third, though the cases the Trustees cite suggest that “maintaining” an ERISA plan may require something more than financial support, none definitively says that. Three of them grappled with the preliminary question of whether a “plan” exists. See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 6, 12 (1987); Cantrell v. Briggs & Veselka Co., 728 F.3d 444, 451 (5th Cir. 2013); Golden Gate Rest. Ass‘n v. City & Cty. of S.F., 546 F.3d 639, 648-52 (9th Cir. 2008).13 Two others held that a plan was not an employee welfare benefit plan because it was not established or maintained by an employer or employee organization. See MDPhysicians & Assocs., Inc. v. State Bd. of Ins., 957 F.2d 178, 185–86 (5th Cir. 1992); Taggart Corp. v. Life & Health Benefits Admin., Inc., 617 F.2d 1208, 1210 (5th Cir. 1980). Another two concerned whether a plan satisfied an exemption from ERISA‘s coverage. See Medina v. Catholic Health Initiatives, 877 F.3d 1213, 1219 (10th Cir. 2017) (church
plan)14; Hightower v. Tex. Hosp. Ass‘n, 65 F.3d 443, 448-49 (5th Cir. 1995) (governmental plan).15
In sum, the ordinary meaning of “maintain” includes providing financial support. The Trustees have not convincingly demonstrated that ERISA cases suggesting otherwise should govern section 1114. Coal Act obligors thus “maintain” the Combined Fund and the 1992 Plan, in part, by funding them.
2.
The Trustees argue that, even if Westmoreland “maintained” the funds by paying premiums, its other Coal Act obligations do not constitute “retiree benefits” subject to modification. In particular, they assert that posting security for the 1992 Plan did not maintain the plans “prior to filing a petition” under Chapter 11.17
Under the Coal Act, a 1988 last signatory operator18 must provide security “in an amount equal to a portion of the projected future cost” of providing healthcare benefits to its retirees under the 1992 Plan.
The Trustees concede that “[s]ecurity is a form of payment.” See Holland as Tr. of United Mine Workers of Am. 1992 Benefit Plan v. Arch Coal, Inc., 346 F. Supp. 3d 99, 105–06 (D.D.C. 2018). But they argue that “the money Westmoreland and Basin paid to secure their bonds didn‘t reach the 1992 Plan‘s accounts” before bankruptcy because, until then, “Westmoreland and Basin continued their IEPs.”
Their position does not comport with section 1114. Although Westmoreland‘s and Basin‘s bonds did not funnel cash directly into the 1992 Plan, section 1114 does not require that. Under the statute, “retiree benefits” include “payments to any entity . . . for the purpose of providing . . . retired employees . . . medical . . . benefits
B.
Having determined that Coal Act obligations are “retiree benefits” under section 1114, we now consider the potential clash between those two laws. When evaluating two laws that may conflict, we must “regard each as effective” if they “are capable of co-existence” unless there is “a clearly expressed congressional intention to the contrary.” Morton v. Mancari, 417 U.S. 535, 551 (1974).
1.
The Trustees’ broаdest attack is that several provisions of the Coal Act affirmatively “block” the negotiation process that section 1114 requires for a debtor to modify its Coal Act obligations.
The first Coal Act protection they invoke,
liability” under the Coal Act.
The problem with the Trustees’ next argument is that it does not give force to both statutes but instead asks us to displace the bankruptcy modification procedure in favor of a Coal Act provision. The Trustees contend that the provision stating that “[a]ll liability for contributions to the Combined Fund . . . shall be determined exclusively under” the Coal Act,
(“Effect on pending claims or
In the first sentence, Congress explained that because the Combined Fund was replacing the 1950 and 1974 Benefit Plans, the Coal Act—not the wage agreements—would determine coal companies’ liabilities for contributions going forward. The next sentence clarified that to the extent that a coal company owed obligations to the 1950 and 1974 Benefit Plans that pre-dated the creation of the Combined Fund, those obligations would remain.
Id. Accordingly, section 9708 can be read in a quite reasonable way that does not block a bankruptcy court‘s ability to modify Coal Act obligations.
Lastly, the Trustees point to
determined by, and shall be subject to, collective bargaining, lawful unilateral action, or other applicable law.” This subsection, they argue, implies that Coal Act obligations are not subject to “collective bargaining, lawful unilateral action, or other applicable law.” That is a strong negative inference to draw from the fairly bland language of section 9711(e). We agree with other courts that read section 9711(e) as leaving benefits for noncovered employees to future collective bargaining agreements or legislation. See Pa. Mines Corp. v. Holland, 197 F.3d 114, 118 n.1 (3d Cir. 1999); Barrick Gold Expl., Inc. v. Hudson, 823 F. Supp. 1395, 1400–01 (S.D. Ohio 1993), aff‘d, 47 F.3d 832 (6th Cir. 1995). Section 9711(e) hardly amounts to the clear indication required to show that Coal Act benefits should not be subject to “other applicable law[s]” like section 1114.
2.
The Trustees’ next structural argument stems not from the Coal Act but from another part of the Bankruptcy Code. They cite the statute requiring a bankruptcy court to confirm that a reorganization plan provides for the payment of retiree benefits “for the duration of the period the debtor has obligated itself to provide such benefits.”
Even assuming that is true, the Trustees
retiree health care benefits” now required under the Coal Act. Walter Energy, 911 F.3d at 1145. The Coal Act imposes obligations only on signatories to the wage agreements from 1978 onward that guaranteed lifetime health care benefits to miners. And the Supreme Court has found that initial voluntariness significant in past Coal Act litigation. See E. Enterprises, 524 U.S. at 530–37 (plurality opinion) (holding that levying Coal Act premiums on a pre-1978 signatory operator was an unconstitutional taking because the operator never agreed to provide lifetime benefits to its retirees); id. at 549-50 (Kennedy, J., concurring in the judgment and dissenting in part) (finding due process violation on similar retroactivity grounds). So although Coal Act obligations are now “undeniably involuntary,” In re Sunnyside Coal Co., 146 F.3d 1273, 1278 (10th Cir. 1998), Westmoreland did originally “obligate[] itself” to provide lifetime health care benefits to its retirees through the National Bituminous Coal Wage Agreements.
3.
Finally, the Trustees argue that section 1114 assumes “retiree benefits” are “negotiable” because it permits a bankruptcy court to modify them only after the debtor negotiates with the retirees’ representative and the representative rejects a debtor‘s modification proposal “without good cause.” See
The first step of the argument is correct. Section 1114‘s modification scheme not only presumes but requires a back-and-forth negotiation between the debtor‘s trustee and the retirees’ authorized representative. See
The second step of the Trustеes’ argument is the difficult question. To be sure, the Coal Act imposes its financing obligations in mandatory terms. E.g.
256-57 (W.D. Va. 1999) (enforcing settlement in which coal company paid Trustees lump sum in exchange for release “from any and all past and future funding liability to the Combined Fund“); In re Bethlehem Steel Corp., 2004 WL 601656, at *2 (Bankr. S.D.N.Y. Feb. 9, 2004) (describing settlement in which Coal Act obligor paid Trustees lump sum in exchange for, inter alia, release of “claims for the funding of the provision of health care benefits by the 1992 Plan“). Although a settlement does not affect the Coal Act‘s statutory provisions, it can permit a coal company to pay something less than the Act requires by preventing the settlement‘s counterparty from enforcing against that company the Act‘s full obligations. A coal company can thus negotiate with its retirees’ representative an effective “modification” of its Coal Act obligations (as enforceable by the retirees) through the back-and-forth bargaining process described in section 1114.
Another circuit‘s decision on a closely related issue is instructive. Section 363 permits a bankruptcy trustee to sell property free and clear of another entity‘s interest in the property if “such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.”
* * *
Given who the parties are, it may seem like this case decides whether retirees will receive their promised benefits. But that is not what is at stake; the retired miners will receive their benefits regardless of this case‘s outcome. Walter Energy, 911 F.3d at 1156. The question insteаd is whether Westmoreland must continue to pay those obligations or whether the government—that is, the taxpayers—will have to pick up the slack.
To find the answer, we have to reconcile two laws addressing the persistent problem of underfunded retiree health care benefits. That duty does not let us pick the law that we think is the better policy. We must instead give effect, when possible, to both section 1114 and the Coal Act. The unusual nature of the Coal Act—a codification of retirement benefits that are ordinarily (and were originally) the product of private bargaining—makes that task a difficult one. But seeing no clear indication that Congress intended to carve out Coal Act obligations from section 1114‘s reach, we hold that section 1114 can apply to those obligations. And recall that section 1114 prohibits the unilateral
We therefore AFFIRM the bankruptcy court‘s ruling that Coal Act obligations may be modified via section 1114, though we clarify that a court must find that the principal purpose of the transaction is not to avoid liability under the Act.
Notes
[A]ny plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or рrepaid legal services, or (B) any benefit described in section 186(c) of this title (other than pensions on retirement or death, and insurance to provide such pensions).
All liability for contributions to the Combinеd Fund that arises on and after February 1, 1993, shall be determined exclusively under this chapter, including all liability for contributions to the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan for coal production on and after February 1, 1993. However, nothing in this chapter is intended to have any effect on any claims or obligations arising in connection with the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan as of February 1, 1993 . . . .
Treatment of noncovered employees.—The existence, level, and duration of benefits provided to former employees of a last signatory operator (and their eligible beneficiaries) who are not otherwise covered by this chapter