Judge tosses UMW benefit case against Peabody, Arch
CHARLESTON, W.Va. -- A federal judge has thrown out a suit brought by the United Mine Workers and a group of retired miners who are trying to preserve pension and health-care benefits for 10,000 active and retired Patriot Coal miners and their families.
U.S. District Judge Joseph R. Goodwin ruled in favor of Peabody Energy and Arch Coal after the companies sought to have the class-action suit dismissed.
The class-action lawsuit in federal court in Charleston was filed in October 2012 on behalf of the UMW and eight active and retired miners. Peabody and Arch, both based in St. Louis, were named as defendants.
The suit alleged that Peabody and Arch planned to transfer employees and benefit plan obligations to Patriot Coal "for the purposes of depriving" the employees and retirees of their benefits. The suit alleged that such a move is illegal under federal law.
In a 13-page ruling issued Friday, Goodwin said that actions by Peabody and Arch did not violate the federal Employee Retirement Income Security Act, or ERISA.
One provision of ERISA prohibits an employer from interfering with the attainment of any right to which employees may become entitled under a benefit plan covered by the law.
But Goodwin said that section of the law applies only to the individual rights of employees to attain benefits, not to the financial security of the plan as a whole.
"Here, the plaintiffs do not assert that the spin-off/sale of the subsidiaries interfered with their right to attain benefits," the judge wrote. "Instead, the plaintiffs argue their rights were interfered with because the sale/spin-off of the subsidiaries jeopardized the fund's capacity to pay their entitled benefits. However, courts have generally held that [ERISA] does not protect the financial stability of a pension fund."
In a footnote, though, Goodwin also noted that the situation could provide the miners with a cause of action under a separate law, the Coal Act, if the purpose of the moves that created Patriot was to evade benefit liability under that law. The miners and the UMW did not make such claims, however, the judge noted.
The suit against Peabody and Arch was part of the UMW's broader campaign to protect pensions and health-care benefits for its miners at Patriot, which is undergoing financial reorganization in bankruptcy court.
Patriot Coal was founded in 2007 when Peabody Energy sold its union operations east of the Mississippi to the newly created company. In 2008, Patriot bought Magnum Coal, a company that in 2005 took over union mines previously operated by Arch Coal.
In July 2012, Patriot declared bankruptcy, citing financial problems, especially the costs of health insurance and pensions paid for miners who had worked for Peabody and Arch.
A bankruptcy judge allowed Patriot's plan to cut many employee and retiree benefits, but the UMW negotiated a new deal in which the company reinstated many of those benefits. Now, the UMW has tried to focus its campaign on Peabody and Arch.
UMW President Cecil Roberts said that the union would appeal Goodwin's decision.
"I am very disappointed in the court's decision to dismiss the lawsuit we had filed under the Employee Retirement and Income Security Act (ERISA) to get Peabody and Arch to live up to their responsibilities to their retirees," Roberts said. "The UMWA intends to appeal, because we believe the decision fails to recognize the purpose of ERISA, which is to protect the benefits employees have earned.
"Our members who are at risk of losing the retiree health care benefits Peabody and Arch promised them clearly earned those benefits," Roberts said. "We will continue to fight for them in every possible venue until those benefits are secure."
Vic Svec, a Peabody spokesman, said, "Our position has been that this case was without merit, and we are pleased that the court has agreed."
Officials from Arch Coal did not immediately respond to requests for comment on the ruling.
Reach Ken Ward Jr. at email@example.com or 304-348-1702.