A federal district court in West Virginia recently issued a preliminary injunction enjoining CONSOL Energy, Inc. and four wholly-owned subsidiaries from unilaterally terminating a group health insurance plan, which benefits retirees of shuttered coal mines, pending arbitration of the dispute under a National Bituminous Coal Wage Agreement. Mine Workers v. CONSOL Energy, Inc., 2017 LRRM 84691, 2017 BL 84691 (S.D. W.Va. 2017).
The case arises in a part of the country where candidate Donald Trump prevailed on election promises to “put the miners back to work.” It also shows how the effects of longer-term market shifts away from the use of Appalachian bituminous coal are being experienced well beyond the workplace as impacted coal operators shift certain legacy costs of production, including obligations to retirees that have been backstopped by the United States for more than 70 years.
Under a tripartite arrangement brokered by President Truman in 1946 in the wake of a nationwide coal strike following the end of World War II, the United States agreed to guarantee coal miner health and pension benefits. Congress recently reappropriated continued funding to guarantee miner health benefits, at least, in the budget deal that will run through September 30, 2017.
According to the court, starting in 1950, benefits were provided through a single plan, the UMWA Welfare and Retirement Fund of 1950. In the 1978 National Bituminous Coal Wage Agreement, the parties set up a dispute resolution procedure, which provides for arbitration by plan trustees.
In the spring of 2016, CONSOL Energy, Inc. informed the union that it intended to terminate and replace the health and retirement plan, but the company’s later negotiations with the union didn’t resolve disagreements over what, if any, changes the union and trustees would accept.
On or about Halloween of 2016, the company sent the union an official notice, under Section 8(d) of the National Labor Relations Act, that all its signatory subsidiaries “have permanently terminated their mining operations” and would terminate the 2011 NBCWA on its expiration date at the end of the year.
On November 1, 2016, the union asked for arbitration. The union wanted an order requiring the company to notify retirees that it can’t make any changes to their benefits without the union’s agreement, and it asked the court for a preliminary injunction until the issue could be decided in arbitration.
The court first rejected the company’s argument that it is “a non-signatory to the expired 2011 NBCWA” and never agreed to arbitrate disputes under it. The court found that the company is the agent of its subsidiaries, none of which has employees or other personnel to make significant operational or administrative decisions or to exercise independent control over the plan. Notably, the court also found that the company held meetings with retired miners throughout the federal judicial district and the state of West Virginia in order to solicit enrollment in the health reimbursement account scheme at issue.
Finding a likelihood of irreparable harm to the retired union members, the court noted that it previously interpreted the NBCWA as creating vested lifetime benefits, that the company had threatened to terminate its HRA scheme “at any time, for any reason,” that the arbitration process itself seems to be in threat, and that some of the most vulnerable retirees would likely lose health insurance coverage without an injunction.
Granting the injunction, the court reasoned that the company’s changes would weigh on retirees with new administrative burdens and risks that the company had agreed to carry for their lifetimes, and that the company has yet to implement a scheme to protect retirees from having to pay for their care and wait for reimbursement. The court found that, though the company can still cancel or change benefits if it should ultimately prevail, an injunction is in the public interest because of “the desire throughout society to provide medical benefits for the sick and the injured.”
A small victory for retired miners in an ongoing dispute with just one coal company, the case remains to play out in arbitration, just as the related issue of ongoing federal funding to guarantee miner benefits will likely resurface in future rounds of Congressional budget negotiations.
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