Sidney Coal Co Inc v. Social Sec Admin

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 05a0418p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

_________________

X

Plaintiffs-Appellees, -

SIDNEY COAL COMPANY, INC., et al.,

-

-

-

Nos. 04-6286/6291

v.

,

>

SOCIAL SECURITY ADMINISTRATION, -

Defendant-Appellant -

(04-6286), -

-

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Intervenors Defendants- -

MICHAEL H. HOLLAND, et al.,

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Appellants (04-6291). -

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Appeal from the United States District Court

for the Eastern District of Kentucky at Pikeville.

No. 01-00076—Danny C. Reeves, District Judge.

Argued: July 28, 2005

Decided and Filed: October 19, 2005

Before: SILER and DAUGHTREY, Circuit Judges; MARBLEY, District Judge.*

_________________

COUNSEL

ARGUED: Jonathan H. Levy, UNITED STATES DEPARTMENT OF JUSTICE, Washington,

D.C., Howard R. Rubin, SONNENSCHEIN, NATH & ROSENTHAL, Washington, D.C., for

Appellants. John R. Woodrum, OGLETREE, DEAKINS, NASH, SMOAK & STEWART,

Washington, D.C., for Appellees. ON BRIEF: Jonathan H. Levy, William Kanter, UNITED

STATES DEPARTMENT OF JUSTICE, Washington, D.C., Howard R. Rubin, William E. Copley,

Jacqueline Sadker, SONNENSCHEIN, NATH & ROSENTHAL, Washington, D.C., Stephen J.

Pollak, John T. Rich, GOODWIN PROCTER LLP, Washington, D.C., for Appellants. John R.

Woodrum, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, Washington, D.C., H. Kent

Hendrickson, RICE & HENDRICKSON, Harlan, Kentucky, for Appellees.

*

The Honorable Algenon L. Marbley, United States District Judge for the Southern District of Ohio, sitting by

designation.

1

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 2

_________________

OPINION

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ALGENON L. MARBLEY, District Judge. In 1992, Congress enacted the Coal Industry

Retiree Health Benefit Act, 26 U.S.C. §§ 9701-9722, 30 U.S.C. § 1232(h) (the “Coal Act”), which

ensured that retired miners received their promised benefits by assigning each retiree to the coal

company most responsible for that retiree’s employee benefits. In 1998, the Supreme Court, in

Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), declared part of the Coal Act unconstitutional

insofar as it imposed liability on coal operators that had never signed an agreement promising to

provide retirees with such benefits. Because Eastern Enterprises left numerous miners without a

company to provide for them, the Social Security Administration (the “SSA”) assigned these miners

to constitutionally-permissible coal operators, such as Plaintiffs-Appellees A.T. Massey Coal Co.,

Inc. and its subsidiaries,1 thereby raising these companies’ premiums. To protest the post-Eastern

Enterprises assignments, Plaintiffs-Appellees filed suit in the Eastern District of Kentucky, alleging

that the SSA impermissibly interpreted and applied the Coal Act. The Trustees of the United Mine

Workers of America Combined Benefit Fund (the “Trustees”) intervened as Defendants shortly after

suit was filed. The district court found in favor of Plaintiffs-Appellees, invalidating the post-Eastern

Enterprises assignments to Massey and its subsidiaries. On appeal, the SSA and the Trustees

(“Defendants-Appellants”) assert that the district court erred in concluding that the SSA overstepped

its authority under the Coal Act. Defendant-Appellants also argue that venue was not properly in

the Eastern District of Kentucky because Massey is a Virginia-based company and only its

subsidiaries reside in Kentucky. For the following reasons, we AFFIRM the district court’s

decision that venue was proper, but REVERSE the district court’s judgment relating to the Coal

Act.

FACTUAL AND PROCEDURAL BACKGROUND

I. The Coal Act

In 1947, the Bituminous Coal Operators’ Association and the United Mine Workers of

America negotiated the National Bituminous Coal Wage Agreement (“NBCWA”), which created

a trust fund to provide pension plans and medical benefits to retired coal miners and their families.

This 1947 NBCWA resulted from a workers’ movement to bring employee benefits to miners.

Eastern Enterprises v. Apfel, 524 U.S. 498, 504 (1998). Prior to this agreement, miners received

largely substandard health care from sometimes unskilled “company doctors.” Id. Moreover, the

cost of this company-provided care posed a substantial financial burden on individual miners. Id.

The 1947 NBCWA, managed by three appointed trustees, funded the workers’ pensions and medical

benefits with the “the proceeds of a royalty on coal production.” Id. at 505-06. In 1950, a new

agreement made this trust fund a multiemployer one, which coal operators contributed to based on

their production amounts. Under the 1950 NBCWA, the miners and their dependents were not

promised specific benefits; rather, the coal operators paid a fixed amount of royalties into a central

fund, and the trustees charged with distributing benefits were required to remain within a budget.

Id. at 506-07. As a result, the level of benefits provided was less than consistent. Id. at 508.

In 1974, a successive agreement created four separate trusts and, for the first time, explicitly

referenced benefits for retirees and their dependents. Prior to this 1974 NBCWA, retirees had never

been expressly included in the group of eligible beneficiaries. Because of the expanded number of

1

The other named Plaintiffs-Appellees are Sidney Coal Co., Martin County Coal Corp., New Ridge Mining

Co., Road Fork Development Co., Rawl Sales & Processing Co., Tennessee Consolidated Coal Co., Omar Mining Co.,

and Peerless Eagles Coal Co., Inc.

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 3

eligible beneficiaries, these trust funds began experiencing financial difficulties, which the owners

and unions tried to remedy in 1978 by enacting a modified agreement. This 1978 NBCWA, for the

first time, required each coal operator, instead of paying a defined amount into a central fund, to

fund specific benefits for its employees and retirees. The agreement also contained an “evergreen

clause,” which required each signatory to continue making contributions as long as it remained in

the coal business, even if that coal operator never signed a future NBCWA. Eastern Enters., 524

U.S. at 511.2 Notwithstanding these efforts to maintain the trust funds’ solvency, they continued

to suffer financially. At the same time, coal companies tried to avoid paying benefits by either

leaving the coal business altogether or refusing to hire union employees. Id. at 511 (“A spiral soon

developed, with the rising cost of participation leading more employers to withdraw from the Benefit

Plans, resulting in more onerous obligations for those that remained.”). By 1990, the trust funds had

incurred a $110 million deficit. Recognizing that more than 100,000 retirees were in danger of

never receiving their employee benefits, in 1992 Congress passed the Coal Act.

The Coal Act created a new multiemployer trust fund, the United Mine Workers of America

Combined Benefit Fund (the “Combined Fund”), which is still in effect today. It assessed annual

premiums against any coal operator that both (1) had previously signed an NBCWA (“signatory

operator”) and (2) remained in business. 26 U.S.C. § 9701(c)(1) (“The term ‘signatory operator’

means a person which is or was a signatory to a coal wage agreement.”). The Coal Act required coal

operators who signed an NBCWA to pay an annual premium into the Combined Fund. The amount

owed in premiums depended on the number of retirees and dependents for which each signatory

operator was responsible. 26 U.S.C. § 9704(a)(1)-(3) (explaining that the health benefit premium,

the death benefit premium, and the unassigned beneficiaries premium comprise each operator’s

annual premium). To determine which and how many beneficiaries to assign to each company, the

Coal Act implemented the following three-tiered system of priorities:

[T]he Commissioner of Social Security shall . . . assign each coal industry retiree

who is an eligible beneficiary to a signatory operator which (or any related person

with respect to which) remains in business in the following order:

(1) First, to the signatory operator which--

(A) was a signatory to the 1978 coal wage agreement or any subsequent coal

wage agreement, and (B) was the most recent signatory operator to employ

the coal industry retiree in the coal industry for at least 2 years.

(2) Second, if the retiree is not assigned under paragraph (1), to the signatory

operator which--

(A) was a signatory to the 1978 coal wage agreement or any subsequent coal

wage agreement, and (B) was the most recent signatory operator to employ

the coal industry retiree in the coal industry.

(3) Third, if the retiree is not assigned under paragraph (1) or (2), to the signatory

operator which employed the coal industry retiree in the coal industry for a longer

period of time than any other signatory operator prior to the effective date of the

1978 coal wage agreement.

26 U.S.C. § 9706(a)(1)-(3).

2

The 1978 NBCWA shifted the coal operators’ liability “from a defined contribution obligation, under which

employers were responsible only for a predetermined amount of royalties, to a form of defined benefit obligation, under

which employers were to fund specific benefits.” Eastern Enters. v. Apfel, 524 U.S. 498, 510-11 (1998).

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 4

Under the statute, then, the SSA must first try to assign a retiree to the coal operator that

signed the 1978 or any later NBCWA and was the most recent operator to have employed the retiree

for at least two years. § 9706(a)(1). If no such operator exists, the SSA then must attempt to assign

the retiree to the operator that signed the 1978 or any later NBCWA and was the most recent

signatory operator to have employed the retiree for any length of time. § 9706(a)(2). If no operator

has yet been identified, the SSA assigns the retiree to the signatory operator who employed the

retiree for the longest period of time prior to the date of the 1978 NBCWA, regardless of whether

the operator signed the 1978 or any later NBCWA. § 9706(a)(3).

If the SSA cannot identify a signatory operator or related person still in business, as required

by § 9706(a)(i)-(iii), the miner is deemed “unassigned.” 26 U.S.C. §9706(d). To cover the cost of

these so-called “unassigned beneficiaries,” Congress authorized annual transfer payments to be

made from the Abandoned Mine Reclamation Fund (“AML Fund”) and the Combined Fund from

a 1950 United Mine Workers of America Pension fund. 26 U.S.C. § 9705(a)-(b). Any gap in

funding was to be covered by assessing each signatory operator an unassigned beneficiaries

premium on a pro rata basis. 26 U.S.C. § 9704(d).

II. The Supreme Court Decision in Eastern Enterprises

The Supreme Court, in Eastern Enterprises v. Apfel, 524 U.S. 498, 537 (1998), altered the

Coal Act’s application by voiding all assignments the SSA had made pursuant to the statute’s third

prong. 26 U.S.C. § 9706(a)(3) (“Third, if the retiree is not assigned under paragraph (1) or (2), [the

Commissioner shall assign the retiree] to the signatory operator which employed the coal industry

retiree in the coal industry for a longer period of time than any other signatory operator prior to the

effective date of the 1978 coal wage agreement.”). Eastern Enterprises had been a part of the 1947

and 1959 NBCWA’s, but had not, since then, been a signatory to any other NBCWA. Yet, under

the Coal Act’s third prong, it became responsible for over 1,000 retired miners who had worked for

the company before 1966, based on Eastern’s status as “the signatory operator which employed the

coal industry retiree in the coal industry for a longer period of time than any other signatory operator

prior to the effective date of the 1978 coal wage agreement.” Id. at 517; § 9706(a)(3).

In a plurality opinion, the Supreme Court held unconstitutional the assignments to Eastern

Enterprises and any other company in a similar situation, i.e., those that had not signed the 1974

NBCWA or any subsequent NBCWA (“Eastern-type” companies). The Supreme Court reasoned

that because these companies had not participated in any agreement promising lifetime medical

benefits to retirees, they should neither be held to such a promise nor forced to contribute to the

Combined Fund.3 Id. at 535 (“Not until 1974 . . . could lifetime medical benefits under the

multiemployer agreement have been viewed as promised.”). Although there was no majority

rationale in Eastern Enterprises, the plurality and Justice Kennedy, who concurred in part and

dissented in part, found that the Coal Act’s “severe retroactive liability” could not be constitutionally

applied to those operators who had not signed a coal wage agreement explicitly promising miners

lifetime health benefits. Id. at 537, 547. As a result, the Supreme Court voided all assignments that

the SSA had made to Eastern Enterprises and all similarly-situated companies.

3

Justice O’Connor, writing for a four-justice plurality, found that assigning beneficiaries to operators, like

Eastern Enterprises, who had taken no part in a post-1974 agreement amounted to a violation of the Fifth Amendment’s

takings clause. Eastern Enters., 524 U.S. at 522-38. Justices Rehnquist and Scalia joined her opinion, and Justice

Thomas concurred. Justice Kennedy, who concurred in part and dissented in part, found no violation of the Takings

Clause because the Coal Act was economic legislation and thus, could not infringe upon a specific property right.

Instead, Justice Kennedy concluded that § 9706(a)(3) constituted a violation of the Due Process clause. Id. at 547-50.

The four-justice dissent, written by Justice Breyer, agreed with Justice Kennedy’s analysis that the Takings Clause does

not encompass economic legislation, but found that the § 9706(a)(3) Coal Act did not violate due process. Id. at 554-68.

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 5

In fall 1998, pursuant to Eastern Enterprises, the SSA invalidated all assignments it had

made to any Eastern-type company since the Combined Fund’s inception on February 1, 1993, and

temporarily designated these so-called “Eastern beneficiaries” as “unassigned.” In fall 1999, the

SSA assigned approximately 1,500 Eastern beneficiaries to coal operators, like Plaintiffs-Appellees,

that had employed the retired miners for the longest period and to whom it was constitutional to

make assignments under § 9706, i.e., only those4coal operators that had signed a 1974 NBCWA or

later agreement and that remained in business. Of these 1,500 Eastern beneficiaries, the SSA

assigned eighteen beneficiaries and their dependents to Plaintiffs-Appellees.

III. Procedural History

Plaintiffs-Appellees brought suit in the Eastern District of Kentucky challenging the SSA’s

authority to reassign those beneficiaries whose initial assignments were invalidated by Eastern

Enterprises. Plaintiffs-Appellees asked the district court both to vacate the challenged assignments

and enjoin the SSA from making such assignments in the future. In May 2001, the Trustees moved

to intervene as Defendants. The district court granted the Trustees’ motion, holding that “the

Trustees have a substantial legal interest in ensuring that the beneficiaries maintain their current

assignments.” The parties then filed cross-motions for summary judgment. Additionally, the SSA

moved to transfer the case, arguing that Massey, the parent company, had manufactured venue in

Kentucky to take advantage of favorable Sixth Circuit precedent.5

The district court concluded both that venue was proper and that Plaintiffs-Appellees’

argument was correct: the SSA had exceeded its power when reassigning Eastern beneficiaries.

With regard to venue, the district court found that, since 1971, all federal courts interpreting the

applicable venue statute, 28 U.S.C. § 1391(e)(3), found it required only one plaintiff to reside in the

selected district. Thus, the district court concluded, venue was proper because at least one Plaintiff-

subsidiary resided in the Eastern District of Kentucky.

Turning to the reassignment of Eastern beneficiaries, the district court acknowledged that

the Coal Act failed to address explicitly the post-Eastern Enterprises landscape, but concluded that

the SSA’s construction was impermissible because it contravened the statute’s plain and

unambiguous language. The district court rejected the SSA’s argument that its interpretation

effectuated congressional intent by assigning the beneficiaries to the most responsible operators,

4

The third prong of the statute reads:

Third, if the retiree is not assigned under paragraph (1) or (2), to the signatory operator which

employed the coal industry retiree in the coal industry for a longer period of time than any other

signatory operator prior to the effective date of the 1978 coal wage agreement.

26 U.S.C. § 9706(a)(3). Because the SSA could no longer constitutionally assign any beneficiaries to a coal operator

that had not signed a 1974 or later NBCWA, the SSA applied this provision to a newly narrowed pool of qualified

companies.

5

In Counts I and II, which are not now before the court, Plaintiffs-Appellees challenged the SSA’s authority

to make initial assignments on or after October 1, 1993, arguing that such an action was outside of the statute’s plain

language. The statute, Plaintiffs argued, explicitly requires: “The Commissioner of Social Security shall, before October

1, 1993, assign each coal industry retiree . . . to a signatory operator which (or any related person with respect to which)

remains in business . . . ” 26 U.S.C. § 9706(a) (emphasis added). At the time Plaintiffs-Appellees filed suit in the Eastern

District of Kentucky, this Court’s precedent was uniquely favorable to coal operators because in Dixie Fuel Co. v.

Commissioner of Social Security, 171 F.3d 1052 (6th Cir. 1999), this Court had held that the Coal Act’s plain language

indeed precluded any post October 1, 1993 assignments. The Supreme Court disagreed and overruled Dixie Fuel in

Barnhart v. Peabody Coal Co., 537 U.S. 149, 168 (2003), holding that the SSA did have the authority to make such

assignments. (“[T]here is . . . no implication that the Commissioner is powerless to make an initial assignment to an

operator after the specified date . . . . ”). In light of Peabody Coal, there are no Dixie Fuel-related claims before us today.

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 6

reasoning that Eastern beneficiaries should simply be designated as unassigned.6 Accordingly, the

district court declared all reassignments to Plaintiffs-Appellees to be null and void.

Following this ruling, Defendants-Appellants appealed to this Court, which, on April 1,

2004, sua sponte dismissed the appeal for lack of jurisdiction, stating that the district court had failed

to provide a sufficient explanation for its certification of issues for appeal. Upon remand to the

district court, Defendants-Appellants requested that the district court reconsider its decision in light

of contrary subsequent authority from the Fourth Circuit and the District Court of the District of

Columbia, which favored Defendants-Appellants’ position regarding post Eastern Enterprises

assignments.7 Although the district court issued an order acknowledging the non-binding decisions

of Pittson and Nell Jean, it reaffirmed its initial determination that the SSA acted ultra vires, and

entered final judgment in favor of Plaintiffs-Appellees. Defendants-Appellants now appeal from

this judgment.

ANALYSIS

I. Standard of Review

Because the district court granted summary judgment on undisputed facts, this Court reviews

the questions of law de novo. Herman v. Collis Foods, Inc., 176 F.3d 912, 916 (6th Cir. 1999).

II. Venue

The SSA argues that venue is not proper in the Eastern District of Kentucky because only

four of eight subsidiary-plaintiffs8 reside in Kentucky, not one of which actually received a post-

Eastern Enterprises assignment. These Kentucky subsidiaries, the SSA emphasizes, are merely

jointly and severally liable should a non-resident Plaintiff default. 26 U.S.C. § 9704(a) (“Any

related person with respect to an assigned operator shall be jointly and severally liable for any

premium required to be paid by such operator.”).9 The SSA argues that Massey manufactured venue

in the Eastern District of Kentucky in order to take advantage of Dixie Fuel Co. v. Commissioner

of Social Security, 171 F.3d 1052 (6th Cir. 1999), overruled by Barnhart v. Peabody Coal Co., 537

U.S. 149 (2003). Dixie Fuel was then-favorable Sixth Circuit precedent that would have invalidated

any post October 1, 1993 assignments made to Plaintiffs-Appellees, thereby substantially lowering

their financial obligations to beneficiaries. Although Plaintiffs-Appellees can no longer benefit from

6

The district court noted that when Congress has intended for “next in line” assignments to be made,

characterizing the SSA’s application of the Coal Act as such, Congress has explicitly provided for those assignments

by statute, as it did in the Black Lung Benefits Act, 30 U.S.C. § U.S.C. § 901, et. seq., which contains a fallback option

and criteria for apportioning liability among more than one operator. See 30 U.S.C. § 932(h); 20 C.F.R. § 725

(establishing “responsible operator” criteria).

7

See Pittston Co. v. United States, 368 F.3d 385, 405 (4th Cir. 2004) (concluding that the Commissioner’s

application of 26 U.S.C. § 9706(a) in making ninety-five reassignments to Pittston following Eastern Enterprises was

a permissible construction of the Coal Act); Nell Jean Indus., Inc. v. Barnhart, 224 F. Supp. 2d 10, 26 (D.D.C. 2002)

(holding that the Commissioner’s assignment of liability for a beneficiaries’ care premiums to a coal operator was a

reasonable and lawful application of the Coal Act in view of the holding of Eastern Enterprises).

8

Of Plaintiffs-Appellees, only Sidney Coal Co., Martin County Coal Corp., New Ridge Mining Co., and Road

Fork Development Co. reside in Kentucky.

9

An operator is “related” to another signatory operator if the former is (1) a member of the controlled group

of corporations which includes such signatory operator; (2) a trade or business which is under common control with such

signatory operator; or (3) any other person who is identified as having a partnership interest or joint venture with a

signatory operator in a business within the coal industry, but only if such business employed eligible beneficiaries, except

that this clause shall not apply to a person whose only interest is as a limited partner. 26 U.S.C. § 9701(c)(2)(A)(i)-(iii).

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 7

the now-overruled Dixie Fuel, the SSA argues that an affirmation of the district court’s finding that

venue was proper would essentially endorse forum-shopping. Such an outcome, the SSA asserts,

would encourage non-resident parent companies, like Massey, to sue in any one of the districts in

which a subsidiary resides.10

The relevant statutory provision is 28 U.S.C. § 1391(e)(3), which reads:

A civil action in which a defendant is an officer or employee of the United States or

any agency thereof acting in his official capacity or under color of legal authority,

or an agency of the United States, or the United States, may, except as otherwise

provided by law, be brought in any judicial district in which (1) a defendant in the

action resides, (2) a substantial part of the events or omissions giving rise to the

claim occurred, or a substantial part of property that is the subject of the action is

situated, or (3) the plaintiff resides if no real property is involved in the action.

28 U.S.C. § 1391(e) (emphasis added). The SSA urges this Court to interpret the words “the

plaintiff,” as found in § 1391(e)(3), to require each plaintiff or all plaintiffs to reside in the judicial

district, thereby precluding venue in Kentucky because all plaintiffs do not reside therein. While

conceding that no court has interpreted the statute as such since the statute’s enactment in 1962, the

SSA asks this Court to take a fresh look.

The statute’s legislative history and the plethora of case law interpreting the statute, taken

together, persuade this Court that § 1391(e)(3) contains no requirement that all plaintiffs must reside

in the same district. When interpreting the purpose of a provision, “the court will not look merely

to a particular clause in which general words may be used, but will take in connection with it . . . the

objects and policy of the law.” Stafford v. Briggs, 444 U.S. 527, 535 (1980) (interpreting § 1391(e)).

In Stafford, the Supreme Court analyzed the hearing transcripts of the House Committee on the

Judiciary, and found that Congress had passed this statute with the very specific purpose of easing

plaintiffs’ burdens when suing government entities:

The purpose of this bill is to make it possible to bring actions against Government

officials and agencies in U.S. district courts outside the District of Columbia, which

because of certain existing limitations on jurisdiction and venue, may now be

brought only in the U.S. District Court for the District of Columbia.

Id. at 539-40 (quoting H.R. Rep. No. 1936, 86th Cong., 2d Sess., 3-4 (1960)). The Supreme Court

explained that prior to 1962, only courts in the District of Columbia were constitutionally permitted

to issue writs of mandamus against government agencies and officials, forcing litigants seeking

mandamus relief against government entities to incur “significant expense and inconvenience in

bringing suits for enforcement of claimed rights.” Stafford, 444 U.S. at 534. Section 1391(e) aimed

to make it more convenient for an aggrieved person to file suit against a federal entity. Thus,

10

In addition to the Dixie Fuel issue, the SSA offers a second piece of evidence to prove that Plaintiffs-

Appellees engaged in forum-shopping. The SSA argues that Massey and many of its subsidiaries filed in Kentucky

because they had already lost a similar lawsuit in the Eastern District of Virginia. See A.T. Massey Coal Co. v.

Massanari, 305 F.3d 226 (4th Cir. 2002). The SSA’s characterization of the suit, however, is somewhat misleading.

In Massanari, Massey argued that it stood in a “substantially identical position” to Eastern Enterprises because it had

not signed the 1974 or any subsequent NBCWA; therefore, all assignments to it should be similarly invalid. The Fourth

Circuit rejected Massey’s argument, explaining that a coal operator would be “substantially identical” to Eastern

Enterprises only if it had no connection to the 1974 or a subsequent NBCWA. Id. at 237, 241 (finding that although A.T.

Massey had not signed the relevant agreements, several members of the Massey Group, of which A.T. Massey was a

part, had done so).

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 8

interpreting the phrase “the plaintiff” to mean “all plaintiffs” or “each plaintiff” would substantially

limit the statute’s breadth and undermine congressional intent.11

Each court faced with the same issue has interpreted “the plaintiff” to mean “any plaintiff,”

finding that Congress intended to broaden the number of districts in which suits could be brought

against government entities. Although this Court has not yet interpreted § 1391(e)(3), the district

court correctly noted that the broad interpretation “is not only the majority view - - it is the only

view adopted by the federal courts since 1971.”12 See, e.g., Exxon v. Fed. Trade Comm’n, 588 F.2d

895, 898-99 (3d Cir. 1978) (“[R]equiring every plaintiff in an action against the federal government

or an agent thereof to independently meet section 1391(e)’s standards would result in an unnecessary

multiplicity of litigation. The language of the statute itself mandates no such narrow construction.

There is no requirement that all plaintiffs reside in the forum district.”); A.J. Taft Coal Co. v.

Barnhart, 291 F. Supp. 2d 1290, 1302 (N.D. Ala. 2003) (noting that both the SSA and the Trustees

conceded at oral argument that “they could not identify a single case deciding that § 1391(e)(3)

should be interpreted to mean all plaintiffs,” concluding that venue was proper even though only two

out of ninety-eight plaintiff coal-operators resided in the district); Quarles v. Gen’l Inv. & Dev. Co.,

260 F. Supp. 2d 1, 12 (D.D.C. 2003) (citing Exxon and finding that § 1391 contains “a far less

restrictive requirement” than other venue statutes, and noting that it was passed to remedy specific

problems inherent in suing government entities); Dukes v. Wal-Mart Stores, Inc., No. Civ.A. 01-

2252, 2001 WL 1902806, at *6 (N.D. Cal. Dec. 3, 2001) (noting that “Stafford makes clear that

Congress passed Section 1391(e) to rectify specific venue and jurisdictional constraints”; stating

“[t]he Exxon court’s rejection of the proposition that every plaintiff must satisfy venue is amply

supported by the legislative history accompanying the adoption of 1391(e).”); Favereau v. United

States, 44 F. Supp. 2d 68, 70 (D. Me. 1999) (finding § 1391(e)(3) more permissive than preclusive

because it permits an action to be brought in “any judicial district in which . . . the plaintiff resides”

whereas a comparable venue statute, 28 U.S.C. § 1402(a), permits an action to be brought “only . . .

in the judicial district where the plaintiff resides”) (emphasis added); Minn-Dak Farmers Coop. v.

Espy, 851 F. Supp. 1423, 1425 (D. N.D. 1994) (“This court does not believe Congress intended each

and every plaintiff with a cause of action against a governmental officer located in Washington, D.C.

to travel to that city to plead his or her case. Such a requirement would exalt the federal officer or

employee above the citizens he is bound to serve.”); see also 15 Charles A. Wright, Arthur R. Miller

and Edward H. Cooper, Federal Practice and Procedure, § 3815 (2d ed. 1986) (commenting that

changing § 1391(e)(3) to read “a plaintiff” instead of “the plaintiff” is “unnecessary” because

11

The SSA asserts that Congress’s true intent can be found in the Senate’s deliberate decision to replace “a

plaintiff,” which appeared in the House of Representatives’s version of the bill, H.R. Rep. No. 87-536, at 6 (1961), with

“the plaintiff,” when the bill moved through the Senate. See 108 Cong. Rec. S18783 (daily ed. Aug. 31, 1962) (statement

of Sen. Mansfield). Similarly, the SSA asks us to discern legislative intent from the statute’s use of “a” in § 1391(e)(1)

(allowing venue in a district where “a defendant in the action resides”), as compared to the use of “the” in § 1391(e)(3)

(limiting venue to the district in which “the plaintiff resides”). Id. (emphasis added). These two arguments, however,

do not persuade us to reach a different result. The legislative history does not focus, or even substantively comment,

as to Congress’s reason for replacing “a” with “the”; instead, the legislative history emphasizes the statute’s purpose,

which was to broaden the venues available to plaintiffs for suits against the federal government. Accepting the SSA’s

argument would undermine Congress’s clearly stated intent.

12

The SSA asserts that the Supreme Court’s ruling in Smith v. Lyon, 133 U.S. 315, 317 (1890), requires the

conclusion that “the plaintiff” should be interpreted in the singular, as “each plaintiff” or as “all plaintiffs.” There, the

Supreme Court, interpreting a different residency-based venue statute, rejected the proposition that “it is sufficient if the

suit is brought in a state where . . . one of the plaintiffs is a citizen,” indicating that all plaintiffs needed to reside in the

same district. Id. at 317. The SSA’s reliance on Smith v. Lyon is misplaced. As stated by the district court, Smith

referenced an 1887 federal diversity statute that is by no means binding precedent with regard to this Court’s

interpretation of § 1391(e)(3). Indeed, the statute at issue in Smith was superceded in 1966 by Congress’s enactment

of 28 U.S.C. § 1406, which provided district courts some flexibility when making a venue determination. Thus, Smith

has no bearing on this Court’s interpretation of § 1391(e)(3).

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 9

“courts have read the statute as if the change had been made and have held that only one plaintiff

need satisfy the residency requirement.”).

In sum, the case law and legislative history compel this Court to hold that the residency

requirement of 28 U.S.C. § 1391(e)(3) is satisfied if at least one plaintiff resides in the district in

which the action has been brought. Thus, the district court’s holding with regard to venue is

AFFIRMED.

III. Assignment of Eastern Beneficiaries

Where a statute addresses clearly “‘the precise question at issue,’” we “‘must give effect to

the unambiguously expressed intent of Congress.’” Barnhart v. Walton, 535 U.S. 212, 217 (2002)

(citing Chevron, U.S.A, Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984)). In this case,

the Coal Act contains no language as to how the SSA should have handled the precise question

raised by the Eastern Enterprises holding. Without explicit guidance, the SSA, working with a

newly narrowed group of qualified coal operators, assigned each Eastern beneficiary to the coal

operator that had employed that beneficiary for the longest time prior to the effective date of the

1978 NBCWA, but who had also signed a 1974 or later NBCWA. The question becomes, then,

whether the SSA, in its effort to comply with Eastern Enterprises, permissibly construed the statute.

See Pittston Co. v. United States, 368 F.3d 385, 402 (4th Cir. 2004) (“Because Congress provided

no explicit instructions, the question presented is whether the Commissioner’s reassignments under

§ 9706(a) are ‘based on a permissible construction of the statute.’”) (citing Chevron, 467 U.S. at

843).

To determine whether the SSA permissibly construed the statute, the rules of statutory

construction tell us to determine “(1) whether the statute unambiguously forbids the Agency’s

interpretation, and, if not, (2) whether the interpretation, for other reasons, exceeds the bounds of

the permissible.” Walton, 535 U.S. at 218. Plaintiffs-Appellees argue that in assigning eighteen

Eastern beneficiaries and their dependents to Massey and its subsidiaries, the SSA impermissibly

interpreted the Coal Act, asserting that all Eastern beneficiaries should have been designated

permanently as “unassigned.” We disagree. For the reasons stated below, we hold that the SSA

permissibly construed the Coal Act when it assigned the Eastern beneficiaries to Plaintiffs-

Appellees.

Plaintiffs-Appellees assert that the statute’s plain language unambiguously forbids the SSA’s

post-Eastern Enterprises assignments because, first, the Coal Act provides for assignment to “one

– and only one” coal operator, emphasizing that § 9706(a)(3) requires the SSA to assign

beneficiaries to “the signatory operator,” highlighting the singular nature of the Coal Act’s words:

[I]f the retiree is not assigned under paragraph (1) or (2), to the signatory operator

which employed the coal industry retiree in the coal industry for a longer period of

time than any other signatory operator prior to the effective date of the 1978 coal

wage agreement.

26 U.S.C. § 9706(a)(3) (emphasis added). Citing § 9706(a)(3), Plaintiffs-Appellees emphasize that

the statute contains no13fallback provision instructing the SSA to assign beneficiaries to the next most

responsible operator:

In this case, “the signatory operator which employed the [miners at issue] in the coal

industry for a longer period of time than any other signatory operator prior the

13

Like the district court, Plaintiffs-Appellees compare the Coal Act to the Black Lung Benefits Act, 30 U.S.C.

§ 901, et. seq.

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 10

effective date of the 1978 coal wage agreement” and which “remains in business” is

indisputably Eastern (or Blue Diamond or Alabama Power). That they can not be

made to pay for miners Congress allocated to them by no means elevates Appellees

into liability. . . . Congress made no provision in the Act for a next most responsible

operator.

Plaintiffs-Appellees then argue that the statute unambiguously states that only two types of

employment can be disregarded under the statute: employment with a coal operator no longer in

business and employment with a coal operator during a period14when that operator “was not a

signatory to a coal wage agreement.” 26 U.S.C. § 9706(b)(1)(B). Because employment with an

Eastern-type company is not explicitly listed, Plaintiffs-Appellees argue, such employment cannot

be disregarded, contending that the Supreme Court’s decision in Eastern Enterprises may have

“prevented assignment of the retiree” to an Eastern-type company, but did not prevent consideration

of that company. Plaintiffs-Appellees assert that by ignoring these statutory constraints, the SSA

made the type of “unfounded policy decision” held invalid by the Supreme Court in another Coal

Act case, Barnhart v. Sigmon Coal Co., 534 U.S. 438, 451-52 (2002) (holding that the SSA

impermissibly stepped outside of the Coal Act’s plain language when it assigned liability to the

purchaser of a defunct coal operator, reasoning that the purchaser was not a “related person” under

the Act’s definition thereof).

Plaintiffs-Appellees’ arguments concerning the statute’s express limitations on the SSA’s

authority ignore the retroactive nature of Eastern Enterprises, which held that all assignments to

Eastern-type companies since February 1, 1993 had been unconstitutionally imposed. See Rivers

v. Roadway Express, Inc., 511 U.S. 298, 311-12 (1994) (holding a “judicial construction of a statute

is an authoritative statement of what the statute meant before as well as after the decision of the case

giving rise to that construction”). In other words, Eastern Enterprises held that the SSA “should

never have assigned the retirees to Eastern in the first place.” Pittston Co., 368 F.3d at 403. After

determining that its Eastern-type assignments were “invalid from the beginning,” the SSA began

anew, assigning beneficiaries “to comport with the terms of the statute as well as the Constitution.”

Id.

By assigning each Eastern beneficiary to the operator to whom they should have been

assigned in 1993, i.e., only those operators that had signed a 1974 NBCWA or later agreement, the

SSA applied the criteria in a manner that allowed the Act to “function effectively and serve [its]

purpose even after the invalid application has been excised.” Carnival Cruise Lines, Inc. v. United

States, 200 F.3d 1361, 1367 (Fed. Cir. 2000).15 Furthermore, Plaintiffs-Appellees’ reliance on

14

The provision, in full, reads:

(B) Certain employment disregarded.--Employment with--

(i) a person which is (and all related persons with respect to which are) no longer in business, or

(ii) a person during a period during which such person was not a signatory to a coal wage agreement,

shall not be taken into account.

26 U.S.C. § 9706(b)(1)(B)(i)-(ii).

15

Plaintiffs-Appellees argue that the general severability clause found in Title 26 forbade any sort of

reassignment of Eastern beneficiaries:

If any provision of this title, or the application thereof to any person or circumstances, is held invalid,

the remainder of the title, and the application of such provision to other persons or circumstances,

shall not be affected thereby.

26 U.S.C. § 7852(a) (emphasis added). This severability clause, Plaintiffs-Appellees assert, mandates that Eastern

beneficiaries be labeled “unassigned,” noting that the SSA did just that for several months after the Eastern Enterprises

ruling. (Pls.-Appellees Br. at 32).

The Supreme Court’s decision effectively excised now-ineligible companies from the list of coal operators to

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 11

Sigmon Coal is misplaced. There, the Supreme Court analyzed a statutory provision of the Coal Act

in which there was no constitutional infirmity, holding that the SSA had interpreted a provision in

contravention of the provision’s unambiguous meaning. Sigmon Coal Co., 534 U.S. at 461-62

(“When the words of a statute are unambiguous, then . . . ‘judicial inquiry is complete.’”) (citing

Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253-254 (1992)). In this case, however, the SSA

had to respond to an unforeseen situation resulting from a Supreme Court ruling that declared a

statutory application unconstitutional. This situation, unlike the one presented in Sigmon Coal, was

neither addressed nor contemplated by the statute’s plain language.

To the extent that Plaintiffs-Appellees argue that the SSA’s decision to disregard

consideration of Eastern-type employment impermissibly broadens § 9706(b)(1)(B), which instructs

the SSA to disregard only two types of employment, the statute’s explicit reference to two types of

employment need not preclude adding another to the list. See Barnhart v. Peabody Coal Co., 537

U.S. 149, 168 (2003) (“We do not read the enumeration of one case to exclude another unless it is

fair to suppose that Congress considered the unnamed possibility and meant to say no to it.”) (citing

United Dominion Industries, Inc. v. United States, 532 U.S. 822, 836 (2001)). Plaintiffs-Appellees

have not demonstrated that Congress “considered the unnamed possibility and meant to say no to

it.” Indeed, there is no evidence that Congress seriously contemplated that the Coal Act would be

partially invalidated. We will not read an intended omission of Eastern-type assignments into

§ 9706(b)(1)(B) because we see no evidence that Congress demanded as such.16 Id. at 168 (“[T]he

canon expressio unius est exclusio alterius . . . has force only when the items expressed are members

of an ‘associated group or series,’ justifying the inference that items not mentioned were excluded

by deliberate choice, not inadvertence.”) (citing United States v. Vonn, 535 U.S. 55, 65 (2002)). In

short, in light of the Eastern Enterprises opinion’s retroactive holding, neither the singular nature

of the Coal Act’s words nor the limited list of disregarded employment forbids the SSA’s

interpretation and application.

In finding the SSA’s interpretation of the statute permissible, we are guided by the Coal

Act’s legislative history. Congress’s primary purpose in enacting the Coal Act was to “identify

persons most responsible for plan liabilities” and to “provide for the continuation of a privately

financed self-sufficient program for the delivery of health care benefits.” Energy Policy Act of

1992, Pub. L. 102-486, § 19142, 106 Stat. 3037 (1992). Congress also intended to keep the number

of unassigned beneficiaries to a minimum by reserving that category for those miners whose former

employers were no longer in business.

whom beneficiaries could be constitutionally assigned, thereby creating a smaller pool of qualified operators. The SSA

simply applied the statute to the newly narrowed pool. As stated by the court in Pittston, 368 F.3d at 404, by removing

from the eligible pool those coal operators constitutionally precluded from contributing, the SSA, “among the remaining

contributors . . . followed the Coal Act’s assignment structure to the letter.” Id. (“[I]n making reassignments, the

Commissioner did not change the wording of the statute, but merely followed the Supreme Court’s ruling that the Coal

Act may only apply to a narrower group of persons than previously thought.”). The fact that certain companies’ liability

increased because of the SSA’s application of the Coal Act does not violate the clause “shall not be affected thereby.”

Id. at 405. Rather, that phrase only requires that the statute remains applicable to still-eligible coal operators.

16

Plaintiffs-Appellees, in support of their contention that Congress intended the provisions of § 9706(b)(1)(B)

to be exclusionary, cite to a post-Eastern Enterprises exchange between Senators Brownback, Rockefeller, and Conrad,

in which the Senators express their reluctance to modify the statute. Senator Rockefeller states: “[O]nce you start to

clarify a law that was passed, indeed, as a compromise, . . . once one gets into the clarification of the language of law,

I start to sweat.” Agency Management of the Implementation of the Coal Act: Hearing Before the Subcomm. on

Oversight of Gov’t Mgmt., Restructuring and The District of Columbia of the Senate Comm. on Gov’t Affairs, 105th Con.

14-15 (1998). While this exchange may be relevant to Congress’s decision not to revise the law in light of Eastern

Enterprises, it does not persuade us that Congress deliberately intended to prevent any additional type of employment

from being disregarded.

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 12

The Supreme Court’s opinion in Barnhart v. Peabody Coal Co., 537 U.S. 149 (2003), is

instructive. There, coal operators objected to any assignments made by the Commissioner of SSA

after October 1, 1993, because the plain language of § 9706(a) stated that the Commissioner “shall”

complete all assignments before that date. 26 U.S.C. § 9706(a) (“The Commissioner of Social

Security shall, before October 1, 1993, assign each coal industry retiree . . . to a signatory operator

which (or any related person with respect to which) remains in business . . . .”) (emphasis added).

The coal operators in Barnhart thus argued that any tardy assignment exceeded the Commissioner’s

statutory authority. Id. at 155. The Supreme Court rejected the coal operators’ textual argument,

reasoning, in part, that invalidating all assignments made after October 1, 1993 would undermine

the statute’s intended purpose: to allocate as many miners as possible to the coal operator most

responsible for a particular miners’ benefits. The Barnhart Court stated:

In the words of Senator Wallop’s report delivered shortly before enactment, the

statute is “designed to allocate the greatest number of beneficiaries in the Plans to a

prior responsible operator. For this reason, definitions are intended by the drafters

to be given broad interpretation to accomplish this goal.” 138 Cong. Rec. 34001

(1992). To accept the companies’ argument that the specified date for action is

jurisdictional would be to read the Act so as to allocate not the greatest, but the least,

number of beneficiaries to a responsible operator. The way to reach the

congressional objective, however, is to read the statutory date as a spur to prompt

action, not as a bar to tardy completion of the business of ensuring that benefits are

funded, as much as possible, by those identified by Congress as principally

responsible.

Id. at 171-172 (footnote omitted). Moreover, the Supreme Court concluded that failing to assign

a beneficiary to the responsible coal operator would shift an unintended number of beneficiaries to

the “unassigned” category, which Congress intended to reserve for those beneficiaries without any

former employer still in business, so-called “true orphans.” The Supreme Court explained:

On October 8, 1992, on the heels of the Conference Committee Report on the Act

and just before the vote in the Senate adopting the Act, Senator Wallop gave a

detailed explanation of the Coal Act’s provisions for unassigned beneficiaries, which

assumed that the “unassigned” would be true orphans:

“As a practical matter, not all beneficiaries can be assigned to a specific last

signatory operator, related person or assigned operator for payment purposes.

This is because in some instances, none of those persons remain in business,

even as defined to include non-mining related businesses. Thus, provisions

are made for unassigned beneficiary premiums.” 138 Cong. Rec. 34003

(1992).

The Senator’s report says that the transfer to the Combined Fund from the UMWA

Pension Plan and AML Fund would be made because “unassigned beneficiaries

were not employed by the assigned operators at the time of their retirement.... [I]f

no operator remains in business under the formulations described above, that retiree

becomes an unassigned beneficiary . . . . [The Coal Act’s] purpose is to assure that

any beneficiary, once assigned, remains the responsibility of a particular operator,

and that the number of unassigned beneficiaries is kept to an absolute minimum.”

Barnhart, 537 U.S. at 165.

In this case, the analysis in Barnhart holds firm. Invalidating the SSA’s reassignments

would undermine Congress’s stated intent to “identify persons most responsible for plan liabilities.”

Nos. 04-6286/6291 Sidney Coal Co., et al. v. Social Security Admin., et al. Page 13

Energy Policy Act of 1992, Pub. L. 102-486, § 19142, 106 Stat. 3037 (1992). If these operators’

former employees simply fall into the unassigned category, the costs of those retirees’ benefits will

be borne by coal operators that never employed the retirees despite a former employer’s solvency.

See Nell Jean Indus. v. Barnhart, 224 F. Supp. 2d 10, 24 (D.D.C. 2002) (“By providing an elaborate

set of assignment criteria and control group liability, Congress cast a wide net to capture as many

responsible parties as possible to hold accountable for retiree benefits. Only those retirees whose

former employers (and their related persons) no longer exist are left unassigned.”).

Given Congress’s stated purpose in enacting the Coal Act—to identify persons most

responsible for plan liabilities—the SSA’s construction of the statute post-Eastern Enterprises

effectuated this intent by reassigning the Eastern beneficiaries to the most responsible operator, as

opposed to stretching the unassigned category to cover non-“orphaned” beneficiaries. Other courts

have found similarly. See Pittston Co. v. United States, 368 F.3d 385, 404-05 (4th Cir. 2004)

(considering the “legislative intent expressed by Congress to minimize the number of unassigned

beneficiaries by assigning each retiree to a coal operator most responsible for providing benefits,”

and holding that the reassignment of Eastern beneficiaries to Pittston, the company that had

employed them the longest, was a permissible action on the Commissioner’s part because doing so

fulfilled this legislative intent); see also Elgin Nat’l Indus., Inc. v. Barnhart, Nos. 04-5243 and 04-

7094, 2005 U.S. App. LEXIS 7361, at *1 (D.C. Cir. Apr. 27, 2005) (unpublished) (“Elgin’s

argument pertaining to the reassignment of beneficiaries after Eastern Enterprises is rejected for the

reasons set forth in Pittston Co. v. United States, 368 F.3d 385, 401-05 (4th Cir. 2004).”); Wheeling

Pittsburgh Steel Corp. v. Barnhart, 229 F. Supp. 2d 539, 554 (N.D. W.Va. 2002) (“[T]he

Commissioner had the authority to reassign beneficiaries in response to the Eastern Enterprises

[decision] and, thus, did not act in an arbitrary and capricious manner but, rather, acted within the

bounds of the law.”).

In sum, the SSA permissibly construed the statute when it assigned Eastern beneficiaries to

Massey and its subsidiaries on the grounds that these coal operators had employed the retirees for

the longest period of time and had signed the requisite NBCWA’s. The Supreme Court’s ruling in

Eastern Enterprises left an unprovided for situation in its wake, and the SSA’s actions in response

thereto effectuated the Coal Act’s intent: to assign as many beneficiaries as possible to the most

responsible coal operator. Because at least one of these beneficiaries’ employers is still in operation

(Massey and/or a subsidiary), they are not “true orphans” and thus should not be classified as

“unassigned beneficiaries.” A contrary holding would allow Plaintiffs-Appellees to shirk their

responsibility and would directly contravene the Coal Act’s stated purpose. The Coal Act’s plain

language does not forbid the SSA’s construction thereof, and the statute’s legislative intent, as well

as the retroactive nature of the Eastern Enterprises decision itself, supports a conclusion that the

SSA’s interpretation was a permissible one.

CONCLUSION AND RECOMMENDATION

We AFFIRM the district court’s denial of the SSA’s motion to transfer venue and agree with

the district court that venue was properly in the Eastern District of Kentucky. The district court’s

judgment with regard to the Coal Act is hereby REVERSED.