Federal court rules against UMWA in Patriot benefits case - WBOY.com: Clarksburg, Morgantown: News, Sports, Weather

Federal court rules against UMWA in Patriot benefits case

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U.S. District Judge Joseph R. Goodwin has dismissed a lawsuit in which the United Mine Workers of America and eight West Virginia residents sought to hold Peabody Energy and Arch Coal responsible for paying lifetime benefits of Patriot Coal employees.

Goodwin issued his decision the morning of Sept. 27, and before noon the UMWA announced it would appeal.

"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," UMWA President Cecil Roberts said in a prepared statement. "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. We will continue to fight for them in every possible venue until those benefits are secure."

The suit, which was filed in October 2012, maintains that Peabody and Arch created subsidiaries for the purpose of shedding the lifetime benefits some employees were owed under the National Bituminous Coal Wage Agreements and other related agreements. In his decision, Goodwin noted news releases stating that was the intent of Arch in forming Magnum Coal Co. in 2005 and of Peabody when it spun off some of its holdings as Patriot Coal in 2007.

Patriot acquired Magnum Coal and its liabilities in 2008.

In May of this year, the U.S. Bankruptcy Court in St. Louis ruled that Patriot could terminate its existing collective bargaining agreement with Patriot and modify its obligations to provide health care benefits to retirees. The court also ruled Peabody could discontinue the health care benefits it had agreed to assume.

On June 30, Patriot and the UMWA entered into a new collective bargaining agreement that allows Patriot to transfer retiree health care benefits to a voluntary employee benefit association. The VEBA will be funded by an equity interest in post-bankruptcy Patriot, a cash contribution, royalty payments and profit-sharing contributions.

"According to the plaintiffs, these funding sources are insufficient to provide ‘uninterrupted benefits for the affected population of retirees,'" Goodwin wrote. "Absent relief by this court, the plaintiffs claim that the affected employees will experience either a diminution or a complete loss of their benefits."

The union and the eight other plaintiffs had asked the court to rule that Arch's and Peabody's decisions to sell their subsidiaries were violations of ERISA, and they the court to require the two companies to maintain their benefit plans, Goodwin wrote.

But Goodwin ruled that the section of ERISA the plaintiffs were using to seek their benefits does not contain protections against transactions that impact the financial security of benefit plans. The employer cannot interfere with an employee's ability to attain a right or a benefit, but ERISA does not protect the financial capacity of the fund to pay the employee's entitled benefits, Goodwin ruled.

Arch Coal issued a one-sentence response to Goodwin's ruling.

"We were confident the court would render a decision in accordance with the law, and the court did," Arch spokesperson Kim Link said.

Peabody Energy spokesperson also had a short response.

"Our position has been that this case was without merit, and we are pleased that the court has agreed," she said.