[1]     

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

, [5]     

Decided: April 17, 1995

, [6]      IN RE: CHATEAUGAY CORPORATION; IN RE: REOMAR, INC.; IN RE: LTV CORPORATION; " />

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In Re Chateaugay Corp., 53 F.3D 478, 19 Employee Benefits Cas. 1169 (2d Cir. 04/17/1995)

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

No. 81 -- August Term, 1994

Docket No. 94-6024

53 F.3d 478, 19 Employee Benefits Cas. 1169, 1995.C02.0000176 <http://www.versuslaw.com>

Decided: April 17, 1995

IN RE: CHATEAUGAY CORPORATION; IN RE: REOMAR, INC.; IN RE: LTV CORPORATION;

Before: MAHONEY, McLAUGHLIN and HEANEY,*fn* Circuit Judges.

[8]    

Argued: December 1, 1994

[9]    

Debtors;

LTV STEEL COMPANY, INC.; BCNR MINING CORPORATION; NEMACOLIN MINES CORPORATION; TUSCALOOSA ENERGY CORPORATION;

Appellants; v.

DONNA E. SHALALA, Secretary, Department of Health and Human Services; MARTY D. HUDSON, THOMAS O.S. RAND, ELLIOT A. SEGAL, CARLTON R. SICKLES, GAIL R. WILENSKY, Ph.D., MICHAEL H. HOLLAND, WILLIAM P. HOBGOOD, as Trustees of the United Mine Workers of America Combined Benefit Fund; and UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND;

Appellees.

KAREN E. WAGNER, Davis Polk & Wardwell, New York, N.Y. (DONALD B. AYER, Jones, Day, Revis & Pogue, Washington, D.C., of counsel) for Appellants.

EDWARD A. SMITH, Assistant United States Attorney for the Southern District of New York, New York, NY (Mary Jo White, United States Attorney for the Southern District of New York, Frank W. Hunger, Assistant United States Attorney for the Southern District of New York, New York, N.Y., of counsel), AND JAMI W. McKEON, Peter Buscemi, Morgan, Lewis & Bockius, Washington, DC (Paul A. Green, John R. Mooney, Beins, Axelrod, Osborne, Mooney & Green, P.C., Washington, D.C.; David W. Allen, Office of the General Counsel, UMWA Health and Retirement Funds, Washington, D.C., of counsel) for Appellees.

Appeals from (1) judgment entered December 14, 1993, in the United States District Court for the Southern District of New York, John S. Martin, Jr., Judge, dismissing the complaint of LTV Steel Company, Inc., BCNR Mining Corporation, Nemacolin Mines Corporation, and Tuscaloosa Energy Corporation, and upholding the constitutionality of the Coal Industry Retiree Health Benefit Act ("Coal Act") under the Due Process and Takings Clauses, and (2) judgment entered May 7, 1993, holding that the Coal Act's contribution requirements were not pre-petition claims disallowed under the Bankruptcy Code due to lack of timely proof of claim, but were taxes incurred by the estate and therefore entitled to administrative priority.

The judgments are affirmed and the case is dismissed.

HEANEY, Senior Circuit Judge:

LTV Steel Company, Inc. ("LTV Steel"), and three wholly owned subsidiaries, BCNR Mining Corporation, Nemacolin Mines Corporation and Tuscaloosa Energy Corporation (collectively, with LTV Steel, "LTV"), appeal from a judgment of the district court encompassing two separate decisions. The first decision held that LTV's obligations under the Coal Industry Retiree Health Benefit Act of 1992 ("Coal Act"), Pub. L. No. 102-486, 106 Stat. 2776, 3036-3056, were not pre-petition claims that must be disallowed under Chapter 11 of the Bankruptcy Code. In re Chateaugay Corp., 154 B.R. 416 (S.D.N.Y. 1993). The second decision rejected LTV's Due Process and Takings Clause attacks on the constitutionality of the Coal Act. In re Chateaugay Corp., 163 B.R. 955 (S.D.N.Y. 1993). We affirm.

I. FACTUAL BACKGROUND

The roots of this controversy stretch back to 1946, when the United Mine Workers of America ("UMWA") launched a strike over the issue of health and pension benefits. When labor/management negotiations collapsed, President Truman invoked his powers under the War Labor Disputes Act and ordered Secretary of the Interior Julius A. Krug to take possession of the nation's mines for one year. See Exec. Order No. 9728, 11 Fed.Reg. 5593 (1946); see also Exec. Order No. 9758, 11 Fed.Reg. 7927 (1946). Seeking a rapid resumption of production at the idled mines, Krug negotiated with UMWA President John L. Lewis to establish terms and conditions for the period of government control. The resulting Krug-Lewis Agreement established an unprecedented system for providing health and pension benefits to workers at the center of which stood two separate, industry-wide benefit funds. The first, the Welfare and Retirement Fund, was financed by a flat five-cent fee levied on each ton of mined coal and was jointly governed by representatives of the UMWA and the federal government. The second, the Medical and Hospital Fund, depended solely on miner-approved wage deductions and was administered by trustees appointed by the UMWA. The following year, the UMWA and the major mining companies agreed to make permanent the existence of the funds, though in different form. Marking the return of the mines to their corporate owners, the National Bituminous Coal Wage Agreement of 1947 merged the two Krug-Lewis funds into a single entity, the United Mine Workers of America Welfare and Retirement Fund. Perhaps unavoidably, various disputes between the UMWA and the coal operators accompanied the new fund's first several years of operation, generating labor unrest and periodic strikes.

In 1950, a successor National Bituminous Coal Wage Agreement ("NBCWA") was negotiated by the UMWA and the Bituminous Coal Operators Association ("BCOA"), a newly formed multiemployer association of major coal companies.*fn1 The 1950 Wage Agreement ushered in a two-decade era of labor/management cooperation in the coal industry. In exchange for union acquiescence in the mechanization of mines, the mining companies that signed the 1950 Wage Agreement ("signatory operators") agreed to establish the United Mine Workers Welfare and Retirement Fund of 1950 ("1950 W & R Fund"), an irrevocable trust funded on a pay-as-you-go basis. As provided in the 1950 Wage Agreement, the purpose of the 1950 W & R Fund was to provide "benefits to employees of [signatory] Operators, their families and dependents for medical or hospital care, pensions on retirement or death of employees, compensation for injuries or illness . . . [and] benefits on account of sickness, temporary disability, permanent disability, death or retirement." 1950 Wage Agreement, at 136.*fn2 The UMWA and the BCOA each named one trustee of the 1950 W & R Fund; those two in turn mutually agreed upon a third, neutral trustee. The trustees exercised sole discretion over the specific nature of the benefits provided by the 1950 W & R Fund. The 1950 Wage Agreement obligated signatory operators to contribute to the 1950 W & R Fund thirty cents per ton of coal mined throughout the life of the agreement.

Until 1971, the successor NBCWAs and related amendments left essentially untouched the operation of the 1950 W & R Fund.*fn3 The 1971 Wage Agreement removed from the 1950 W & R Fund's trustees the discretion to set benefit levels, vesting the power instead in the hands of the UMWA and the BCOA. Consequently, the scope and operation of the 1950 W & R Fund again became the central issue of the collective bargaining process. The negotiations over the 1974 Wage Agreement generated the first major overhaul of the miners' health and pension benefit delivery scheme. In the wake of court-ordered administrative reforms, see Lamb v. Carey


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