Unity Real Estate Co. v. Hudson

178 F.3d 649

UNITY REAL ESTATE COMPANY, Appellant No. 97-3234, v. Marty D. HUDSON; Michael H. Holland; Thomas O.S. Rand;

Elliott A. Segal; Carlton R. Sickles; Gail R. Wilensky;

William P. Hopgood; Trustees of the United Mine Workers of

America Combined Benefit Fund; Thomas F. Connors; Robert

Wallace; Trustees of the 1992 United Mine Workers of America

Benefit Plan; United States of America (Intervenor in District Court),

LTV Corporation (LTV), NACCO Industries, Inc. (NACCO);

Amicus Curiae.

Barnes and Tucker Company, Appellant No. 97-3236, v. Marty D. Hudson, Trustee of the United Mine Workers of

America Combined Benefit Fund and Trustee of the 1992 United

Mine Workers of America Benefit Plan; Michael H. Holland,

Trustee of the United Mine Workers of America Combined

Benefit Fund and Trustee of the 1992 United Mine Workers of

America Benefit Plan; Thomas O.S. Rand, Trustee of the

United Mine Workers of America Combined Benefit Fund;

Elliott A. Segal, Trustee of the United Mine Workers of

America Combined Benefit Fund; Carlton R. Sickles, Trustee

of the United Mine Workers of America Combined Benefit Fund;

Gail R. Wilensky, Trustee of the United Mine Workers of

America Combined Benefit Fund; William P. Hopgood, Trustee

of the United Mine Workers of America Combined Benefit Fund;

Thomas F. Connors, Trustee of the 1992 United Mine Workers

of America Benefit Plan; Robert G. Wallace, Trustee of the

1992 United Mine Workers of America Benefit Plan; United

States of America (Intervenor in the District Court),

LTV Corporation (LTV), NACCO Industries, Inc. (NACCO); Amicus Curiae.

Nos. 97-3234, 97-3236.

United States Court of Appeals Third Circuit.

Argued Nov. 20, 1998.

Decided March 29, 1999.

David J. Laurent, Michael D. Glass, Polito & Smock, P.C., Pittsburgh, PA, Robert H. Bork (Argued), Washington, DC, for Unity Real Estate Co.

Frank W. Hunger, Assistant Attorney General, Linda L. Kelly, United States Attorney, Douglas N. Letter, Edward R. Cohen (Argued), Sushma Soni, Attorneys, Appellate Staff, Civil Division, U.S. Department of Justice, Washington, DC, for United States of America.

Peter Buscemi (Argued), John Mills Barr, Margaret S. Izzo, Morgan, Lewis & Bockius LLP, Washington, DC, David W. Allen, Office of the General Counsel, UMWA Health and Retirement Funds, Washington, DC, John R. Mooney, Marilyn L. Baker, Mooney, Green, Baker, Gibson & Saindon, P.C., Washington, DC, Ralph A. Finizio, Houston, Harbaugh, Pittsburgh, PA, for UMWA Combined Benefit Fund and Its Trustees and UMWA 1992 Benefit Plan and its Trustees.

Donald B. Ayer, Gregory G. Katsas (Argued), Jones, Day, Reavis & Pogue, Washington, DC, for Amici Curiae The LTV Corporation and NACCO Industries, Inc.

Before: BECKER, Chief Judge, ALDISERT and WEIS, Circuit Judges.

OPINION OF THE COURT

BECKER, Chief Judge.

In Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), the Supreme Court held unconstitutional the portion of the 1992 Coal Industry Retiree Health Benefit Act (Coal Act), 26 U.S.C. §§ 9701-9722 (1994 & Supp. II), that required former coal mine operators to pay for health benefits for retired miners and their dependents, as applied to a former operator who last signed a coal industry benefit agreement in 1964. In this case, we are asked to apply Eastern to former coal mine operators who were signatories to coal industry agreements in 1978 and thereafter. Eastern was decided by a sharply divided Court, and the parties disagree as to what, if any, principles commanded a majority.

The plaintiffs, Unity Real Estate ("Unity") and Barnes & Tucker Co. ("B & T"), challenge the Coal Act as applied to them as both a violation of substantive due process and an unconstitutional uncompensated taking. Although it is an exceedingly close question, and we are highly sympathetic to plaintiffs' unfortunate situation, in which retroactively imposed liability operates to bind them to commitments they had thought satisfied when they left the coal industry, we conclude that the Act is constitutional as applied to these plaintiffs. Accordingly, their recourse must be to Congress rather than to the courts.

First, we conclude, albeit with substantial hesitation, that the Coal Act does not violate due process. Our due process inquiry proceeds in two parts. We acknowledge at the outset that there is a gap between what the contracts between the union and the mining companies required and what the Coal Act now mandates from those former mining companies. Because this is a substantive due process challenge, we accord deference to Congress's judgments, based on the report and recommendations of the Coal Commission. While reasonable minds could differ on the point, we are satisfied that the agreements signed by the plaintiffs in 1978 and thereafter promised that miners and their dependents would receive lifetime benefits from the benefit funds, and that, at all events, these agreements informed reasonable expectations that the benefits would continue for life. Similarly, we conclude that it was reasonable for Congress to conclude that the plaintiffs' withdrawal from the funds contributed to the funds' financial instability, though the agreements themselves permitted withdrawal. The history of coal mining in this country also supports Congress's decision to step in when the funds that provided health benefits to retired miners began to falter.

The question we must then answer is whether those congressional judgments provide enough of a rationale for closing the gap between the contracts and the needs of the benefit funds through the mechanism of the Coal Act. Consistent with our due process jurisprudence, we ask whether the Coal Act was a rational response to the problems Congress identified, taking into account the Act's retroactivity, which is highly disfavored in our legal culture. In light of Congress's findings and in the context of extensive government regulation of the coal industry, we hold that it was not fundamentally unfair or unjust for Congress to conclude that the former coal companies should be responsible for paying for such benefits, even if they were no longer contractually obligated to pay into the benefit funds. The retroactive scope of this enactment, especially as applied to plaintiff Unity (eleven years), approaches the edge of permissible legislative action, but we cannot say that the law is beyond the legislative power.

We also decline to find a compensable taking on the ground that the Coal Act will put the plaintiffs out of business, because it is contrary to the reasoning of a majority of the Supreme Court in Eastern. Moreover, granting relief whenever a plaintiff could credibly argue that it would be driven out of business by a regulation would create major difficulties in evaluating the constitutionality of much modern legislation. We therefore decline to construe this regulatory burden as a "categorical taking" analogous to the total destruction of the value of a specific piece of real property.

I. Facts and Procedural History

A. History of the Coal Act

1. Early Agreements in the Coal Industry

The history behind the Coal Act has often been discussed in the pages of the federal reporters. See, e.g., Eastern, 118 S.Ct. at 2137-42 (plurality). Briefly, the relevant facts are as follows: The coal industry has witnessed a series of particularly vitriolic labor disputes over the past half-century. In 1946, motivated principally by miners' demands for decent health and retirement benefits, the United Mine Workers of America ("UMWA") called a nationwide strike. To forestall industrial paralysis, President Truman nationalized the coal mines. Following the execution of what came to be known as the Krug-Lewis Agreement, the government relinquished control of the mines. The UMWA and the Bituminous Coal Operators' Association ("BCOA"), a multiemployer group of coal producers, then executed the first National Bituminous Coal Wage Agreement ("NBCWA"). The 1947 NBCWA specified terms and conditions of employment in the mines and, among other things, extended the Krug-Lewis Agreement by providing health and pension benefits to miners.

A new NBCWA signed in 1950 provided that, in exchange for union concessions, the BCOA would create a welfare and retirement fund financed by a per ton levy on coal mined by signatory coal producers. The 1950 Fund was designed to receive employer contributions and to use the funds to provide health benefits to current and retired miners (and, in certain cases, to family members). Several more NBCWAs were signed over the next two decades. None of them altered this basic benefits format, although beginning in 1971 the UMWA and the BCOA were given power over the levels of benefits provided under the 1950 Fund, removing discretion formerly vested in the Trustees of the Fund. See In re Chateaugay Corp., 53 F.3d 478, 482 (2d Cir.1995).

2. The 1974 Agreement

In 1974, demographic changes that had increased the cost of benefits, along with the passage of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., led to a restructuring of the 1950 Fund. In its place, the 1974 NBCWA established four separate multiemployer plans, two covering pension benefits and two dealing with nonpension benefits. The nonpension entities were the 1950 Benefit Plan, which provided health benefits to coal workers who retired before 1976, and the 1974 Benefit Plan, which covered those who retired on or after January 1, 1976. The 1974 NBCWA explicitly guaranteed that miners and their dependents would retain their health services cards--which gave them access to Plan health benefits--"for life." No such express warranty had appeared in any earlier agreement. We will discuss these changes in more detail below. See infra Part III.

3. The 1978 Agreement

In response to continued labor unrest and unresolved concerns over benefits, the 1978 NBCWA incorporated a new provision assuring health care...