Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
Sept. 6 — A group of retired coal miners is moving forward with a lawsuit accusing their former employer and its owner of draining the company’s assets to avoid paying for their health benefits ( Mine Workers v. Mystic, LLC , 2016 BL 288866, S.D. W.Va., No. 5:16-cv-02030, 9/2/16 ).
On Sept. 2, a West Virginia federal judge found that the retirees’ state law claims against defunct coal mine operator Mystic LLC and its majority owner were best categorized as fiduciary breach claims under the Employee Retirement Income Security Act. The judge then denied Mystic’s motion to dismiss, finding the lawsuit timely under ERISA and declining to hold that a settlement agreement barred the retirees’ claims.
The lawsuit stems in part from the unusual legal history surrounding health benefits for retired coal miners. Under the 1992 Coal Industry Retiree Health Benefit Act, mine operators like Mystic must provide lifetime health benefits for retired miners and their eligible spouses. When a mine operator is no longer in business and no longer financially capable of providing benefits, a multiemployer plan for “orphaned retirees” steps in to provide coverage.
In this case, a group of retirees accused Mystic and its majority owner of purposefully draining the company of assets before it ceased operations in 2006. According to the retirees, this was done to avoid the company’s ongoing obligation to provide health benefits to retired mineworkers.
Weighing these state law claims for breach of contract and unlawful distribution, Judge Irene C. Berger of the U.S. District Court for the Southern District of West Virginia found the lawsuit to be preempted by ERISA. That’s because the lawsuit alleged improper conduct—the siphoning of company assets—undertaken with the goal of avoiding obligations under an ERISA-governed benefit plan, Berger explained.
After finding the case to sound in ERISA, Berger rejected Mystic’s attempt to have the lawsuit dismissed as untimely. The challenged conduct occurred between 2005 and 2010, making the retirees’ 2015 lawsuit timely under ERISA’s six-year statute of limitations, Berger said.
Finally, Berger declined to hold that the retirees’ claims were barred by a 2013 settlement agreement between Mystic and the multiemployer health fund. According to Berger, it was too early in the litigation to consider the effects of this agreement.
The retirees were represented by Carbone & Blaydes and United Mineworkers of America. Bailey & Glasser represented Mystic.
To contact the reporter on this story: Jacklyn Wille in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Text of the decision is at http://www.bloomberglaw.com/public/document/Mine_Workers_v_Mystic_LLC_No_516cv02030_2016_BL_288866_SD_W_Va_Se.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)