affirming denial of 60(b) motion because the plaintiff “deliberately chose to negotiate away its constitutional claims while actively represented by competent counsel.”
How later courts described this case
- affirming denial of 60(b) motion because the plaintiff “deliberately chose to negotiate away its constitutional claims while actively represented by competent counsel.”
Written by the judges who cited it.
The opinion
Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit
2-1-2002
Coltec Ind Inc v. Hobgood
Precedential or Non-Precedential:
Docket 0-2458
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Filed February 1, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-2458
COLTEC INDUSTRIES, INC., a Pennsylvania Corporation;
FOUR LEAF COAL COMPANY, INC., a Tennessee
Corporation; L.G. WASSON COAL MINING CORP., an
Indiana Corporation,
Appellants
v.
WILLIAM P. HOBGOOD; MICHAEL H. HOLLAND; MARTY
HUDSON; THOMAS O.S. RAND; ELLIOT A. SEGAL;
CARLTON R. SICKLES; GAIL R. WILENSKY, as TRUSTEES
OF THE UNITED MINE WORKERS OF AMERICA
COMBINED FUND; UNITED MINE WORKERS OF
AMERICA COMBINED BENEFIT TRUST;
UNITED STATES OF AMERICA
(Intervenor in D.C.)
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 93-cv-01955)
District Judge: Hon. D. Brooks Smith, Chief Judge
No. 00-4385
COLTEC INDUSTRIES, INC., a Pennsylvania Corporation;
FOUR LEAF COAL COMPANY, INC., a Tennessee
Corporation; L.G. WASSON COAL MINING CORP., an
Indiana Corporation
v.
WILLIAM P. HOBGOOD; MICHAEL H. HOLLAND; MARTY
HUDSON; THOMAS O.S. RAND; ELLIOT A. SEGAL;
CARLTON R. SICKLES; GAIL R. WILENSKY, as TRUSTEES
OF THE UNITED MINE WORKERS OF AMERICA
COMBINED FIND; UNITED MINE WORKERS OF AMERICA
COMBINED BENEFIT FUND;
UNITED STATES OF AMERICA
(Intervenor in D.C.)
Coltec Industries, Inc.,
Appellant
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 93-cv-01955)
District Judge: Hon. D. Brooks Smith, Chief Judge
Argued September 19, 2001
Before: SLOVITER, NYGAARD and McKEE, Circuit Judges
(Filed February 1, 2002)
2
George E. McGrann (Argued)
Schnader, Harrison, Segal & Lewis
Pittsburgh, PA 15222
William H. Powderly, III
Metz, Schermer & Lewis
Pittsburgh, PA 15222
Attorneys for Appellant
Coltec Industries, Inc.
Peter Buscemi (Argued)
Morgan, Lewis & Bockius
Washington, D.C. 20036
Attorney for Appellees
William P. Hobgood, Michael H.
Holland, Marty D. Hudson,
Thomas O.S. Rand, Elliot A. Segal,
Carlton R. Sickles, and Gail R.
Wilensky, as Trustees of the
United Mine Workers of America,
United Mine Workers of America
Combined Benefit Fund
Mark B. Stern
Jonathan H. Levy (Argued)
United States Department of Justice
Civil Division, Appellate Staff
Washington, D.C. 20530
Attorneys for Appellee
United States
OPINION OF THE COURT
SLOVITER, Circuit Judge:
In this appeal, Coltec Industries, Inc. ("Coltec") seeks to
extricate itself from its voluntary dismissal with prejudice of
its claim against the United Mine Workers of America
Combined Benefit Fund and its trustees (collectively"the
Fund") that asserted that the Coal Industry Retiree Health
Benefit Act of 1992 (Coal Act), 26 U.S.C. SS 9701-9722
3
(2001), was unconstitutional. Subsequent to that dismissal,
the Supreme Court in Eastern Enterprises v. Apfel, 524 U.S.
498 (1997), declared the Coal Act unconstitutional as
applied to companies in situations similar to Coltec. Coltec
then filed motions in the District Court under Federal Rule
of Civil Procedure 60(b) seeking to reinstate its
constitutional claims. The District Court viewed Coltec as
seeking to escape the effects of its earlier agreements in
order to benefit from the ruling in Eastern and denied
Coltec's attempt to reassert its constitutional claims or to
have its liability for Coal Act premiums reduced to zero. The
District Court also ordered Coltec to pay to the Fund
$7,129,090.97 in premiums and interest. Coltec appeals
the rulings of the District Court.
I.
BACKGROUND
Congress enacted the Coal Act to resolve the imminent
insolvency of multi-employer trusts created by coal-
industry agreements to provide health benefits for coal
miners and their dependents. The background of the Coal
Act is thoroughly reviewed in Eastern Enterprises v. Apfel,
524 U.S. 498, 504-14 (1997), and thereafter in Unity Real
Estate Co. v. Hudson, 178 F.3d 649, 653-54 (3d Cir. 1999),
and in Blue Diamond Coal Co. v. Trustees of the UMWA
Combined Benefit Fund, 249 F.3d 519, 521-22 (6th Cir.
2001). We thus summarize only the particular provisions
and facts relevant to the case before us.
The Coal Act merged existing trusts into the appellee
United Mine Workers of America Combined Benefit Fund
and charged the Fund's trustees with collecting premiums
from the former employers of eligible retirees and using
those premiums to pay the retirees' benefits. Under the Act,
the Commissioner of Social Security assigns retirees to
their former employers, and the Fund charges premiums
based on these assignments.
Coltec was assigned 249 retirees as of February 1, 1993,
and the Fund assessed premiums against the company,
which made its first two monthly payments (totaling
4
$139,496.36), under protest.1 App. at 232. That November,
Coltec and two other companies, Four Leaf Coal Co. and
L.G. Wasson Coal Mining Corp., sued the Fund seeking
declaratory and injunctive relief (including a
contemporaneous motion for a temporary restraining order)
from further assessments of Coal Act premiums against
them. App. at 19-42. The first four counts of the complaint
claimed that the Act was unconstitutional as applied to
them under the Fifth Amendment's takings and due
process clauses because the plaintiff companies had not
signed the relevant agreements. They later added a fifth
count alleging errors in the assignments of beneficiaries to
them.
In December 1993, the parties executed an agreement
(the "Agreement"), App. at 236-37, under which the
plaintiffs agreed to withdraw their request for a temporary
restraining order. Coltec agreed to establish an escrow
account into which it would deposit all premiums due
during the pendency of its preliminary injunction motion.
The terms were established in a contemporaneous separate
written agreement (the "Escrow Agreement"). App. at 232-
35. In return, the Fund agreed to deem Coltec's payments
into escrow as payments to the Fund and not to treat the
other plaintiffs' failure to pay as a default.2 The Agreement
provided that the escrow funds, plus interest, would be
disbursed to the Fund if the injunction motion was denied
or to Coltec if it was granted.
In January 1994, the Fund answered the complaint and
counterclaimed, seeking, inter alia, a declaration that the
Coal Act was constitutional. Later that month, the United
States intervened to defend the Act's constitutionality. In
_________________________________________________________________
1. Coltec paid under protest on the ground that the Coal Act was
unconstitutional as applied to it because it did not participate in the
negotiations for the 1974 or any subsequent National Bituminous Coal
Wage Agreements and did not in any other way agree to make
contributions under these agreements. App. at 24.
2. Although the complaint was filed by all three coal companies as
plaintiffs, and they all entered into the Agreement (but not the Escrow
Agreement), depending on the context we will refer only to Coltec as its
claims are the only ones at issue in this appeal.
5
May 1996, Coltec and the other two plaintiffs withdrew
their preliminary injunction motion, and the District Court
dismissed that motion. App. at 126.
Meanwhile, several courts of appeals, including this one,
held that the Coal Act was constitutional as applied to coal
operators similarly situated to Coltec. See Eastern
Enterprises v. Chater, 110 F.3d 150 (1st Cir. 1997); Holland
v. Keenan Trucking Co., 102 F.3d 736 (4th Cir. 1996);
Carbon Fuel Co. v. USX Corp., 100 F.3d 1124 (4th Cir.
1996); Lindsey Coal Mining Co. v. Chater, 90 F.3d 688 (3d
Cir. 1996); Blue Diamond Coal Co. v. Shalala (In re Blue
Diamond Coal Co.), 79 F.3d 516 (6th Cir. 1996); Davon, Inc.
v. Shalala, 75 F.3d 1114 (7th Cir. 1996); LTV Steel Co. v.
Shalala (In re Chateaugay Corp.), 53 F.3d 478 (2d Cir.
1995). The Supreme Court had denied certiorari in Blue
Diamond, 519 U.S. 516 (1997), Davon, 519 U.S. 808 (1996),
and Chateaugay, 516 U.S. 913 (1995). Constitutional
challenges by other coal companies were still pending when
the plaintiff companies initiated settlement negotiations
with the Fund. See, e.g., Eastern Enterprises, 110 F.3d 150,
rev'd, 524 U.S. 498 (1998); Mary Helen Coal Corp. v.
Hudson, 976 F. Supp. 366 (E.D. Va. 1997), rev'd, 164 F.3d
624 (4th Cir. 1998).
On June 30, 1997, prior to the resolution of the pending
constitutional challenges in other cases, the parties in this
case signed a stipulation (the "Stipulation") which
referenced a decision by the Alabama federal court that
resolved a dispute as to the amount of premiums to be
assessed under the Coal Act. That decision was affirmed by
the Eleventh Circuit. National Coal Ass'n v. Chater, No.
CV94-H-780-S, 1995 WL 1052240 (N.D. Ala.), aff'd, 81
F.3d 1077 (11th Cir. 1996) ("NCA"). The Stipulation also
referenced the then-pending follow-up case, National Mining
Ass'n v. Chater, No. CV-96-N-1385-S (N.D. Ala. 1996)
("NMA"), in which coal companies sought a refund of the
differential between the amount they had paid over a period
of several years and the amount they would have paid
under the NCA formula (the "premium differential"). The
Stipulation stated:
plaintiffs seek either to obtain the benefits of the NMA
litigation, should the outcome be favorable to the
6
plaintiffs in that action, or to retain the right to litigate
the issue themselves should the outcome of the NMA
litigation be unfavorable to the plaintiffs in that case.
App. at 128.
Specifically, the Stipulation provided that: (1) plaintiffs
would amend their complaint to state a new claim seeking
the premium differential, (2) defendants would not oppose
this amendment, (3) plaintiffs would dismiss with prejudice
their five existing claims, (4) the parties would ask the court
to stay the premium differential claim pending resolution of
the NMA litigation, and (5) upon a final judgment in NMA:
a) if the said final judgment . . . is favorable to
plaintiffs in that case, then [the Fund] will afford
plaintiffs in this case the same treatment of [its] new
claim . . . as is afforded to the plaintiffs in the NMA
litigation; and b) if the said final judgment . . . is
favorable to defendants in that case, the stay imposed
on the new claim for relief . . . will be lifted, and
plaintiffs will be free to pursue that claim . . . and [the
Fund] will be free to defend . . . against that claim.
App. at 129-30. In other words, the plaintiff companies
would get the benefit of any decision determining that their
premiums should have been lower but could litigate that
point if the Alabama court found otherwise. Pursuant to the
Stipulation, the plaintiff companies amended their
complaint to include a new sixth count that concerned the
premium differential issue, App. at 132-38, 147-53, and
dismissed the first five counts with prejudice. The District
Court "so ordered" the Stipulation on July 2, 1997. The
District Court then granted the parties' joint motion to stay
this case pending the resolution of NMA.
On October 20, 1997, the Supreme Court granted
certiorari from the decision of the Court of Appeals for the
First Circuit holding the Coal Act constitutional. Eastern
Enterprises v. Apfel, 522 U.S. 931 (1997) (granting writ of
certiorari). On June 25, 1998, the Court found the Coal Act
unconstitutional as applied to companies which had not
signed relevant coal-industry agreements. Eastern, 524 U.S.
498 (1998). The decision in Eastern was"splintered." Unity
Real Estate Co., 178 F.3d at 658. Five Justices found the
7
Act unconstitutional as applied to companies who, like
Eastern and Coltec, had not signed the relevant coal-
industry agreements. Only four of those Justices believed
that, applied to such companies, the Act was an
unconstitutional taking, Eastern, 524 U.S. at 529-37
(plurality opinion), while the fifth believed the Act violated
due process but was not a taking, id. at 539-50 (Kennedy,
J., concurring and dissenting). The other four Justices
would have held that the Coal Act was constitutional as
applied to such companies. Id. at 550-53 (Stevens, J.,
dissenting); id. at 553-68 (Breyer, J., dissenting).
Shortly after Eastern was decided, the plaintiff companies
in this case filed three motions in an attempt to avoid Coal
Act liability. The first motion requested leave to file a new
complaint restating the dismissed constitutional claims and
altering the sixth count to claim zero premium liability. The
second asked for relief under Federal Rule of Civil
Procedure 60(b)(5) or (6) from the dismissal of the first five
counts of the complaint which challenged the
constitutionality of the Coal Act. The third motion sought to
lift the stay of count six (the premium differential). App. at
155-87. On November 9, 1998, while the motions were
pending, the Social Security Administration wrote to Coltec
voiding Coltec's assignments in light of Eastern (the "SSA
letter"). App. at 201.
The District Court denied the three motions on January
25, 1999. App. at 188-95. The District Court held that the
Eastern decision did not provide a basis for relieving Coltec
of the consequences of its bargain. The court also denied
Coltec's subsequent motion for "limited reconsideration"
based on the SSA letter, finding that the letter, which
Coltec received before the January order, was not new
evidence, and that Coltec's reliance on the letter was merely
another attempt to reassert the claims it had bargained
away. App. at 204.
In May 1999, the NMA parties reached a settlement with
the Fund under which the Fund agreed to pay back the
premium differential without interest. Supp. App. at 388-
93. The Fund, which had agreed in the Stipulation to give
Coltec the benefit of NMA if the coal companies were
successful in that litigation, offered to offset Coltec's
8
premium differential against Coltec's release of the escrow
money, but Coltec denied any liability. Supp. App. at 394-
95, 400-03. The Fund then filed a motion asking the
District Court to order disbursement of the funds that were
believed to be in escrow, App. at 219-20, at which time
Coltec first revealed that it had not in fact established an
escrow account as it had represented. App. at 287-88. The
District Court granted the Fund's motion on July 20, 2000
and ordered Coltec to pay directly to the Fund over $7
million in premiums and interest3 which should have been
in escrow. App. at 297-303. Coltec timely appealed. 4
Thereafter, the District Court directed the parties to file
dispositive motions.5 It ruled on those motions on
December 4, 2000, issuing a final judgment dismissing the
Fund's counterclaims as moot and granting Coltec
summary judgment on its premium differential claim. App.
at 370-78. Specifically, the District Court found that Coltec
had made a bargain to forego all challenges to its
underlying Coal Act premium liability in exchange for the
opportunity to (1) claim the premium differential and (2)
gain the benefit of a favorable NMA result while (3) retaining
the right to litigate the premium differential issue itself
should the NMA outcome be unfavorable to its position.
The court also reiterated its understanding of the parties'
deal when it granted the Fund's motion to order
disbursement of the escrow funds. It rejected Coltec's
argument that the Fund had no right to premiums due to
the SSA letter, treating it as another effort by Coltec to
renege on its concession of liability in the Stipulation. In
response to Coltec's argument that the Agreement required
denial of Coltec's initial injunction motion to trigger
disbursement of the escrow to the Fund, the District Court
found that Coltec's withdrawal and its dismissal of its
_________________________________________________________________
3. The order allowed Coltec to offset its payment by the amount of the
premium differential (approximately $150,000).
4. We need not decide if we have jurisdiction over that appeal because it
has been consolidated with Coltec's later appeal of the final judgment.
5. Around this time, Four Leaf and Wasson settled with the Fund,
although the District Court acknowledged that nothing had been entered
into the record regarding these settlements. App. at 314, 371 n.2.
9
injunction motion satisfied this condition. Morever, the
court held that Coltec's failure to make the agreed upon
payments into escrow did not excuse its obligation to pay
the amount that should have been (and was represented to
be) in escrow.6
The District Court held that because the NMA result was
undisputedly favorable to Coltec, the Stipulation limited the
relief to that afforded the NMA plaintiffs, which necessarily
meant that count six was limited to the premium
differential and that Coltec could not use count six as a
vehicle for recalculating its premiums to zero. The court did
award Coltec a $152,717.92 offset against the money it
owed the Fund and stayed the judgment pending Coltec's
appeal, which this court consolidated with the company's
earlier appeal.7
II.
JURISDICTION AND STANDARD
The District Court had federal question jurisdiction and
this court has jurisdiction under 28 U.S.C. S 1291. The
parties disagree as to the standard of review we should
apply to the District Court's treatment of the Stipulation,
with the Fund advocating a clearly erroneous standard and
Coltec advocating a plenary standard. We note that our
result in this case would be the same under either
standard. This court applies plenary review to a district
court's construction of settlement agreements, but should
_________________________________________________________________
6. We note our surprise that there is no reference in the record to any
sanction imposed by the District Court on Coltec or its attorney for what
appears to be years of falsely representing the establishment and
existence of an escrow fund, although the District Court did find the
conduct "troubling." App. at 302 n.1.
7. On March 27, 2001, the Fund wrote to Coltec and Wasson, offering a
partial refund of the premiums they had paid, pursuant to a fund set up
by Congress for partially reimbursing companies in their position in the
wake of Eastern. Letter from George E. McGrann, Attorney for Coltec, to
the Court (May 9, 2001) (enclosing letter from Carl F. Tennille,
Comptroller for Health and Retirement Funds (March 27, 2001)) (on file
in Clerk's office).
10
review a district court's interpretation of settlement
agreements, as well as any underlying factual findings, for
clear error, as it would in reviewing a district court's
treatment of any other contract. See, e.g., In re Cendant
Corp. Prides Litig., 233 F.3d 188, 193 (3d Cir. 2000)
("[B]asic contract principles . . . apply to settlement
agreements [and] . . . contract interpretation is a question
of fact, [thus] . . . review is according to the clearly
erroneous standard. In contrast, contract construction, that
is, the legal operation of the contract, is a question of law
mandating plenary review."). We review the denial of Rule
60(b) relief for an abuse of discretion. Rolo v. City Investing
Co. Liquidating Trust, 155 F.3d 644, 653 (3d Cir. 1998).8
III.
DISCUSSION
On appeal, Coltec makes several challenges to the
District Court's rulings. Primarily, however, the company
asserts that the District Court misinterpreted the
Stipulation, abused its discretion in denying the Rule 60(b)
motion, and had no basis to award money to the Fund.
Coltec seeks reversal of the $7,129,090.97 award to the
Fund and asks us to instruct the District Court to order the
Fund to refund the two premiums Coltec paid, with
interest. In the alternative, Coltec asks this court to remand
for another recalculation of its premium differential, but it
_________________________________________________________________
8. Coltec suggests review is plenary when a district court does not
exercise its discretion, citing, inter alia, Twelve John Does v. District
of
Columbia, 841 F.2d 1133, 1138 (D.C. Cir. 1988), for the proposition that
a denial of Rule 60(b) relief should be reversed if it is based on an
error
of law. This is consistent with the abuse of discretion standard. See,
e.g.,
Stokors S.A. v. Morrison, 147 F.3d 759, 761 (8th Cir. 1998) ("A district
court necessarily abuses its discretion if it bases its decision on an
erroneous view of controlling law."). Coltec also argues courts have no
discretion to deny a Rule 60(b) motion which is based on the
unconstitutionality of the underlying judgment. See Boughner v. Sec'y of
Health, Educ. & Welfare, 572 F.2d 976, 977 (3d Cir. 1978). The language
Coltec relies on is dictum. This court reviewed such a denial for abuse
of discretion in Marshall v. Board of Education , 575 F.2d 417, 422-24 (3d
Cir. 1978).
11
does not respond to the Fund's assertions (1) that Coltec
waived this issue by not raising it in the District Court and
(2) that the credit is correctly calculated. The Fund defends
the District Court's understanding of the parties' agreement
and, along with the United States, asserts that the court
properly denied Rule 60(b) relief.9
A. Coltec's Coal Act Liability
Coltec contends that it should prevail on this appeal even
without the constitutional claims it voluntarily dismissed
because its Coal Act liability is zero. Coltec argues that in
light of the Stipulation the District Court abused its
discretion in declining to lift the stay on count six and
erred in holding that its resolution of that count was
limited to the two options in the Stipulation.
It is manifest that Coltec explicitly agreed in the
Stipulation to dismiss with prejudice its first five counts,
which stated constitutional challenges to the Coal Act and
a statutory challenge to the company's assignments,
thereby forfeiting these avenues of contesting its underlying
liability. The District Court "so ordered" the Stipulation and
the related dismissal and stay orders. In exchange for
Coltec's abandonment of its challenges to its liability, the
Fund agreed that Coltec could challenge the amount of its
assessments by adding "a new claim for relief that will seek
to reduce, by the amount of the premium differential[from
NCA], the Coal Act premiums assessed against plaintiffs by
[the Fund]." App. at 129. The plain language of the
Stipulation thus confined the scope of this new sixth count.
Coltec clearly understood this because its sixth count
was narrowly drawn, alleging only that certain offsets due
under the Coal Act were under-calculated, resulting in the
premium differential, and requesting that the court order
the Fund to recalculate its pre-1996 premiums according to
the NCA method10 and release the premium differential plus
interest to Coltec from the company's payments in escrow.
As contemplated by the Stipulation, the sixth count did not
_________________________________________________________________
9. The United States takes no position regarding the money judgment.
Br. of United States at 10 n.1.
10. From 1996 on, the Fund assessed all premiums according to NCA.
12
challenge either Coltec's assignments or its underlying
premium liability based on these assignments.
Moreover, the Stipulation restricted the District Court's
ultimate resolution of the sixth count. It provided that the
parties would ask to stay count six pending the resolution
of NMA and then, if the resolution was favorable to the NMA
plaintiffs, the Fund would give Coltec the same treatment
regarding its premium differential claim as the NMA
plaintiffs received.11 It also provided that if the outcome
were favorable to the Fund, the stay on the sixth count
would be lifted and the parties would be free to litigate the
premium differential issue. The District Court's stay order
recited this language. App. at 145-46. By voluntary
agreement and subsequent court order, Coltec's sole
remaining cause of action is confined to seeking the
premium differential which the Fund has offered Coltec.
The Stipulation precludes Coltec from contesting its
underlying liability for Coal Act premiums. For this reason,
Coltec cannot use count six to state a claim for zero liability
or to request a refund of its two premium payments, and
nothing in the SSA letter requires otherwise. Thus, the
District Court did not abuse its discretion in failing to lift
the stay and properly denied Coltec's summary judgment
request for relief beyond that afforded the NMA plaintiffs.
B. Coltec's Rule 60(b) Motion
"The general purpose of Rule 60(b) . . . is to strike a
proper balance between the conflicting principles that
litigation must be brought to an end and that justice must
be done." Boughner v. Sec'y of Health, Educ. & Welfare, 572
F.2d 976, 977 (3d Cir. 1978). Coltec contends that the
denial of relief in this case was an abuse of discretion and
that relief is warranted under either Rule 60(b)(5) or
60(b)(6). The relevant portions of the rule provide:
(b) On motion and upon such terms as are just, the
court may relieve a party or a party's legal
representative from a final judgment, order, or
proceeding for the following reasons: . . .
_________________________________________________________________
11. On appeal, Coltec does not contest that under the Stipulation the
settlement terminating the NMA case was a resolution favorable to the
NMA plaintiffs.
13
(5) the judgment has been satisfied, released, or
discharged, or a prior judgment upon which it is based
has been reversed or otherwise vacated, or it is no
longer equitable that the judgment should have
prospective application; or
(6) any other reason justifying relief from the
operation of the judgment.
Fed. R. Civ. P. 60.12 Coltec based its motion in the District
Court for relief from the dismissal with prejudice of the first
five counts of its complaint on these subsections, and now
appeals the District Court's denial of this motion.
1. Subsection (5)
This court has held that "[t]he definitional limitation in
subsection (5) is significant in that it empowers a court to
modify a judgment only if it is `prospective,' or executory."
Marshall v. Bd. of Educ, 575 F.2d 417, 425 (3d Cir. 1978).
The District Court held that its dismissal with prejudice of
the first five counts does not satisfy the "prospective"
requirement of this section. Coltec argues that because
there was no money judgment against it at the time of its
Rule 60(b) motion, an order allowing it to reassert its
constitutional claims would have resulted in a finding that
it had no Coal Act liability, which would have given it relief
from the prospective application of the Stipulation. It
asserts that, therefore, the District Court's finding that the
dismissal was not prospective was erroneous and that the
court abused its discretion by failing to weigh the equities
of the company's motion.
As an initial matter, Coltec's motion asked for relief from
_________________________________________________________________
12. The United States argues that Coltec's Rule 60(b) motion is moot
because the motion seeks to reinstate claims challenging the
constitutionality of the Coal Act despite the fact that the government has
already declared Coltec's assignments void and agreed that further
assessments against Coltec are inappropriate. However, if we found the
District Court abused its discretion in denying Coltec's request for Rule
60(b) relief, it could affect Coltec's right to the premium payments it
made (and was supposed to put in escrow). So, while the question of the
Act's constitutionality as applied to Coltec may be moot, Coltec's appeal
of the denial of its Rule 60(b) motion is not.
14
the dismissal order, not from the Stipulation. Courts have
generally held that dismissals with prejudice are not
prospective within the meaning of Rule 60(b)(5). See, e.g.,
Maraziti v. Thorpe, 52 F.3d 252, 254 (9th Cir. 1995);
Schwartz v. United States, 976 F.2d 213, 218 (4th Cir.
1992); Picco v. Global Marine Drilling Co., 900 F.2d 846, 851
(5th Cir. 1990); Twelve John Does v. District of Columbia,
841 F.2d 1133, 1139-40 (D.C. Cir. 1988). Coltec cites no
authority to the contrary. Instead, Coltec argues that the
prospective effect of the dismissal prevents it from
reasserting its constitutional claims and defenses. However,
as the government notes, this collateral estoppel effect is
common to all judgments. If this were enough to satisfy
Rule 60(b)(5)'s threshold requirement, then the Rule's
requirement of "prospective application" would be
meaningless.
Numerous courts have explicitly rejected this argument.
See, e.g., Maraziti, 52 F.3d at 254 ("The construction . . . to
the effect that a judgment has prospective effect so long as
the parties are bound by it, would read the word
`prospective' out of the rule.") (quotation omitted); Picco, 900
F.2d at 851 ("The only arguably prospective effect of the . . .
dismissal is that it precludes relitigation of the issues
decided, which clearly is not enough."); Gibbs v. Maxwell
House, 738 F.2d 1153, 1156 (11th Cir. 1984) ("That
plaintiff remains bound by the dismissal is not a
`prospective effect' within the meaning of rule 60(b)(5) any
more than if plaintiff were continuing to feel the effects of
a money judgment against him.").
Coltec asserts that the prospective effect it describes is
narrower than the collateral estoppel effect at issue in the
above cases because the dismissal in this case was
executory. This differs, it contends, from the judgment for
monetary damages that had been paid and which this court
determined was not prospective in Marshall, 575 F.2d 417.13
_________________________________________________________________
13. Coltec also analogizes the District Court's interpretation of the
Stipulation in this case to the judgment in United States v. Kayser-Roth
Corp., 103 F. Supp. 2d 74, 79-80 (D.R.I. 2000) (judgment prospective as
to damages when it fixed liability for waste clean-up but left amount of
liability dependent on future events). But, as noted above, Coltec's Rule
60(b) motion sought only to vacate the dismissal, not the Stipulation.
15
However, although the court in Marshall sustained the
denial of Rule 60(b) relief when the judgment had already
been satisfied, the court explicitly noted that even if the
judgment had not yet been satisfied, it would not qualify as
prospective under Rule 60(b)(5) because "[a]`prospective'
injunction envisions a restraint of future conduct, not an
order to remedy past wrongs when the compensation
payment is withheld from the beneficiaries until some
subsequent date." Marshall, 575 F.2d at 425 n.27.
In fact, all of the cases Coltec cites which granted Rule
60(b)(5) relief involved injunctions or consent decrees
regulating ongoing behavior. See Agostini v. Felton, 521
U.S. 203, 212 (1997) (injunction preventing certain manner
of delivering publicly funded services to parochial school
students); Rufo v. Inmates of Suffolk County Jail, 502 U.S.
367, 374-75 (1992) (consent decree mandating construction
of new prison according to specific guidelines); Bellevue
Manor Assocs. v. United States, 165 F.3d 1249, 1251 (9th
Cir. 1999) (injunction mandating use of specific rent-
subsidy calculation method); Marshall, 575 F.2d 417, 419
(injunction requiring compliance with federal wage-and-
hour law).
Coltec's point that judgments are prospective when they
are executory is not in dispute.14 There was nothing
executory about the dismissal with prejudice of counts one
through five. Even though there was no money judgment
against Coltec at the time of its motion, it had previously
assured the District Court that it was depositing into the
escrow account the Coal Act premiums as they were due.
See, e.g., App. at 151 ("Plaintiffs have held under escrow
certain sums assessed to them for premiums for plan years
February 1, 1993, October 1, 1993, and October 1, 1995.");
App. at 170 (same); and App. at 198 ("[Coltec] has paid its
_________________________________________________________________
14. The United States cites a series of cases in support of this
proposition. See, e.g., Cincinnati Ins. Co. v. Flanders Elec. Motor Serv.,
Inc., 131 F.3d 625, 630 (7th Cir. 1997) (finding judgment not prospective
that interpreted contract and continued to affect rights and duties of
parties, and stating "[j]udgments are prospective when they are
`executory' or `involve the supervision of changing conduct or
conditions.' ") (quoting Twelve John Does , 841 F.2d at 1138); Maraziti,
52
F.3d 252, 254 (same).
16
Coal Act assessments since 1993 into an escrow account
pending the resolution of the respective rights of the
parties, and such monies remain in escrow. This escrow
fund contains several million dollars."). It is disingenuous
-- in light of Coltec's multiple false statements to both the
District Court and the Fund about its escrow payments --
for Coltec to attempt to use its failure to make the promised
payments to its own advantage. Therefore, the District
Court did not abuse its discretion in finding that the
dismissal did not satisfy Rule 60(b)(5)'s threshold
requirement of prospective effect.
2. Subsection (6)
Rule 60(b)(6) is a catchall provision which allows a court
to relieve a party from the effects of an order for"any other
reason justifying relief from the operation of the judgment."
Fed. R. Civ. P. 60(b)(6). However, "[t]his court has
consistently held that the Rule 60(b)(6) ground for relief
from judgment provides for extraordinary relief and may
only be invoked upon a showing of exceptional
circumstances." In re Fine Paper Antitrust Litig., 840 F.2d
188 (3d Cir. 1988) (quotation omitted); see also United
States Steel Corp. v. Fraternal Ass'n of Steel Haulers, 601
F.2d 1269, 1274 (3d Cir. 1979); Marshall, 575 F.3d at 425.
In rejecting Coltec's Rule 60(b)(6) motion, the District
Court relied in large part on the fact that a change in law
subsequent to the challenged order rarely justifies Rule
60(b)(6) relief. See Agostini, 521 U.S. at 239; Cincinnati Ins.
Co., 131 F.3d at 628-29; Marshall, 575 F.3d at 425-26. In
addition, as to the equities of Coltec's motion, the District
Court found the company was trying to escape the effects
of a bargain it regretted in hindsight and held that there
were no exceptional circumstance that would justify
allowing Coltec to renege on its deal.
Coltec acknowledges that its decision voluntarily to
dismiss its constitutional claims is an equitable factor
militating against Rule 60(b)(6) relief,15 but argues that the
_________________________________________________________________
15. Alternatively, Coltec appears to argue that the fact the court did not
consider the merits of its constitutional claims in granting the dismissal
at issue militates in favor of Rule 60(b) relief, citing Lasky v.
Continental
17
District Court abused its discretion by giving determinative
weight to this factor. Likewise, Coltec concedes that a
change in decisional law is not alone sufficient to justify
Rule 60(b) relief, but contends that the District Court
abused its discretion by erroneously concluding that a
change in law cannot support such relief and declining
further to consider the equities of the company's motion.
Coltec underscores that the new law in this case was a
Supreme Court decision based on a finding of
unconstitutionality.
In its ruling denying Rule 60(b) relief, the District Court
noted that decisional law cannot alone justify such relief
and that Coltec had consented to the dismissal. See, e.g.,
App. at 190 ("Failing to litigate to its conclusion a matter
that could have been pursued . . . all the way to the
Supreme Court does not constitute an exceptional
circumstance."); App. at 193 ("[A] change in the decisional
law after judgment is entered . . . is not considered
exceptional and does not justify relief."). However, the
District Court considered other equitable factors in the
remainder of its opinion, most notably the content and
context of the parties' agreement leading to the dismissal.
Even if the District Court could have been more explicit in
its analysis of the equitable factors, it did not abuse its
discretion, particularly since it focused on the principal
issue of whether Coltec should be excused from the effects
of a deal it voluntarily made.
_________________________________________________________________
Products Corp., 804 F.2d 250, 256 n.10 (3d Cir. 1986) ("[I]f relief is
sought from a default judgment or a judgment of dismissal where there
has been no consideration of the merits, [the court should consider]
whether in the particular case the interest of deciding cases on the
merits outweighs the interest in orderly procedure and in the finality of
judgments, and whether there is merit in the defense or claim, as the
case may be.") (quotation omitted).
In light of the voluminous case law mandating a high hurdle for Rule
60(b) relief from consensual orders, see, e.g. , Rufo, 502 U.S. at 383,
Bellevue, 165 F.3d at 1253 n.4, Phila. Welfare Rights Org. v. Shapp, 602
F.2d 1114, 1119-20 (3d Cir. 1979), this dictum from Lasky is better
understood as applying to adjudications on procedural grounds rather
than consensual orders like the dismissal in this case.
18
For purposes of an equitable analysis, the dismissal in
this case should be viewed in the context of the Stipulation
which precipitated it. As the District Court noted, the
parties to the Stipulation clearly knew how to provide for
contingencies such as future case law (i.e., NMA ) and knew
that there were still pending constitutional challenges to
the Coal Act. Coltec decided not to condition the dismissal
of its constitutional claims on the ultimate outcome of
these challenges, but deliberately forfeited its still viable
constitutional claims, apparently because it believed they
were unlikely to be successful in light of then-existing case
law. It did so in exchange for valuable consideration in the
form of a chance to pursue without litigation its premium
differential claim, which it presumably believed it had a
better chance of winning. In retrospect in light of the
Supreme Court's decision in Eastern, Coltec may wish that
it had not made this deal, but courts have not looked
favorably on the entreaties of parties trying to escape the
consequences of their own "counseled and knowledgeable"
decisions. Fine Paper, 840 F.2d at 195.
Coltec's situation is analogous to the circumstances of
other Rule 60(b) movants whose motions courts have
denied in large part because of their deliberate decisions
not to appeal unfavorable adjudications. See, e.g., id. at
188 (involving attorneys who chose not to appeal fee award
others appealed); Marshall, 575 F.2d at 420 (involving
school board that paid judgment after appeal rather than
petitioning for certiorari). The Supreme Court addressed
this situation in Ackermann v. United States, 340 U.S. 193
(1950), which involved the denaturalization of two
naturalized German citizens during World War II. For
monetary reasons, Ackermann declined to appeal, believing
the issue would be resolved after the war. When the appeal
of his brother-in-law, Keilbar, was successful, Ackermann
filed for Rule 60(b) relief from his denaturalization. The
Supreme Court held such relief was appropriately denied,
explaining:
Petitioner made a considered choice not to appeal,
apparently because he did not feel that an appeal
would prove to be worth what he thought was a
required sacrifice of his home. His choice was a risk,
19
but calculated and deliberate and such as follows a
free choice. Petitioner cannot be relieved of such a
choice because hindsight seems to indicate to him that
his decision not to appeal was probably wrong,
considering the outcome of the Keilbar case. There
must be an end to litigation someday, and free,
calculated, deliberate choices are not to be relieved
from.
Id. at 198.
Likewise, even if Coltec's decision to settle was
improvident in hindsight, the decision has been made and
cannot be revisited. Cf. Schwartz, 976 F.2d at 218 ("We find
no meaningful distinction between a motion asking for relief
from a decision not to appeal, as in Ackermann , and one
that asks for relief from a decision to settle, as in this
case."). The Court contrasted Ackermann's case to that of
the successful Rule 60(b) petitioner in Klapprott v. United
States, 335 U.S. 601 (1949), who also had failed to defend
denaturalization charges but who had been in custody,
sick, unable to procure counsel despite efforts to do so, and
preoccupied by efforts to protect himself against grave
criminal charges. Ackermann, 340 U.S. at 199-200. The
Court observed, "By no stretch of imagination can the
voluntary, deliberate, free, untrammeled choice of petitioner
not to appeal compare with the Klapprott situation." Id. at
200. The District Court did not err in determining that
Coltec similarly must bear the consequences of its
informed, counseled and voluntary decision.
Our decision in Boughner, 572 F.2d 976, which Coltec
cites, granting Rule 60(b) relief, is distinguishable from the
facts of the present case. The Boughner appellants had lost
summary judgment motions because their attorney, who
failed to file opposing papers, was inexcusably negligent. Id.
at 977. Coltec, unlike these litigants, deliberately chose to
negotiate away its constitutional claims while actively
represented by competent counsel.
Coltec also argues that it should not be punished for
serving the interests of judicial economy by bowing to the
weight of then-existing decisional law holding the Coal Act
constitutional instead of continuing constitutional litigation
20
would have been borderline frivolous. It appeals to this
court's sense of justice, claiming that it is fundamentally
unfair for it to be forced to pay unconstitutional Coal Act
premiums when the government has waived the premiums
of companies that had not yet paid the premiums and
refunded premiums of companies that settled before
Eastern. See Blue Diamond Coal Co. v. Trustees of the
UMWA Combined Benefit Fund, 249 F.3d 519, 523 (6th Cir.
2001).
The Fund responds that Coltec is not similarly situated
to the companies that did not settle because Coltec got the
benefit of its bargain and, had Eastern turned out
differently, it might have been in a better position than
companies that did not settle. We agree. Enforcing Coltec's
bargain is not a punishment and is not unfair. Moreover,
this court has already rejected such disparate treatment of
"similarly" situated parties as a basis for Rule 60(b) relief.
We stated, "The only showing made in support of Rule 60(b)
relief in this case is that litigants who pursued appellate
remedies fared better than litigants who did not. The
Marshall case explicitly forecloses Rule 60(b) relief on that
ground." Fine Paper, 840 F.2d at 194.
The United States further contends that if Coltec prevails,
the government will have no incentive to settle
constitutional cases. The government persuasively argues
that if Coltec is allowed to renege on the Stipulation and
the Agreement, then:
any settlement involving the abandonment of
constitutional claims would be illusory [and][a]ny
party that bargained away constitutional claims that
later turned out to have merit could renege on its
agreement. As a result, the United States would have
no incentive to enter into settlement agreements in
[such] cases, and litigants would lose the ability to
trade constitutional claims -- even highly questionable
ones -- for valuable consideration. [Further,] . . . the
courts would be inundated with constitutional claims
which could no longer be settled as well as parties
seeking to reopen long-closed cases based on more
recent precedent.
21
Br. of United States at 12.
Finally, Coltec claims that the Fund will suffer no undue
prejudice if Rule 60(b) relief is granted. To the contrary, the
Fund would in fact lose the benefit of the bargain it made
with Coltec. Like Coltec, the Fund took a deliberate risk --
which in fact materialized when it lost NMA-- in exchange
for a particular benefit, the security of the contemplated
escrow. If Coltec were to prevail, the Fund would be
prejudiced by losing the benefit it earned. For these
reasons, the District Court did not abuse its discretion by
failing to grant Coltec's Rule 60(b) motion.16
3. Other Post-Eastern Rulings on Rule 60(b) Motions by
Coal Companies
Our conclusion that the District Court properly denied
Coltec's Rule 60(b) motion is in line with the decisions of
the other courts that denied relief sought by companies
which settled or paid premiums pursuant to final
judgments before Eastern. In Blue Diamond Coal, a coal
company that had paid the Coal Act premiums it owed after
unsuccessfully litigating its constitutional claims all the
way to the Supreme Court, Blue Diamond Coal Co. v.
Chater, 519 U.S. 1055 (1997) (denying writ of certiorari),
moved for Rule 60(b)(6) relief. The district court granted
relief, Blue Diamond Coal Co. v. Shalala (In re Blue Diamond
Coal Co.), No. 3:93-CV-473, 1998 U.S. Dist. LEXIS 22711
(E.D. Tenn. Nov. 4, 1998), but the Court of Appeals for the
Sixth Circuit reversed, stating that a change in decisional
law, even when based on constitutional principles, is
generally insufficient to justify Rule 60(b)(6) relief. Blue
Diamond Coal Co., 249 F.3d at 524. It rejected the district
court's analogy to a line of cases which establishes that
post-judgment relief may be granted when litigants involved
in the same transaction or injury get divergent judgments
_________________________________________________________________
16. Additionally, the District Court's denial of Coltec's motion for
reconsideration based on the SSA letter was not an abuse of discretion.
The letter was not "new evidence" in that Coltec received it while the
Rule 60(b) motion was under consideration by the court. Moreover, the
District Court did not abuse its discretion because the letter is an
extension of the Eastern decision; to the extent Eastern does not justify
Rule 60(b) relief, neither does the SSA letter.
22
due to a change in decisional law, see id. at 525, because
those cases involve "transactions with a much tighter nexus
. . . than a law passed by Congress to regulate the payment
of medical health benefits to the retirees of an entire
industry." Id. at 526. It also found that the equities favored
denial of relief, citing the general interest in finality. The
Court of Appeals noted that the judgment had been fully
executed before Eastern was decided. See also Templeton
Coal Co. v. Apfel, No. 93-158 (S.D. Ind. Nov. 17, 1999)
(denying Rule 60(b)(6) relief to coal company that had lost
its constitutional challenge in district and circuit court and
filed a petition for certiorari which was denied by the
Supreme Court); Davon, Inc. v. Apfel, No. 93-198 (S.D. Ind.
Nov. 17, 1999) (same).
The case with the facts most similar to this one is
Holland v. Virginia Lee Co., 188 F.R.D. 241 (W.D. Va. 1999).
Virginia Lee had paid the Fund a set amount in settlement
of all past and future premium liability before there was
any binding law in the Fourth Circuit as to the
constitutionality of the Coal Act. The district court in
Virginia Lee denied the company's Rule 60(b)(6) motion,
finding that it had no grounds for relief from its voluntary
settlement and could not otherwise show extraordinary
circumstances. The court emphasized the extraordinary
nature of subsection (6) relief, noting that a change in law
does not, alone, justify such relief, even when the change is
based on constitutional principles, and it rejected various
fairness arguments similar to those made by Coltec here.
Id. at 254-55. The court also rejected the companies'
argument that their SSA letters justified relief, finding that
these letters were not meant to affect final judgments and
that, in any case, the SSA does not have the authority to do
so. Id. at 256; see also Lindsey Coal Mining Co. Liquidating
Trust v. Apfel, No. 94-143 (W.D. Pa. Aug. 4, 1999) (denying
relief to a coal company that lost its constitutional
challenge in district and appeals court and did not petition
for certiorari, based in part on the District Court's denial
here).
23
C. The District Court's Award of Seven Million Dollars to
the Fund
Coltec argues that the District Court had no "jurisdiction"
to award monetary damages to the Fund because the Fund
did not request any monetary damages and did not prevail
on its one declaratory judgment counterclaim.17 In
response, the Fund points out that it asked for such relief
as was just, and argues that the judgment is authorized by
Federal Rule of Civil Procedure 54(c) which provides that
"every final judgment shall grant the relief to which the
party in whose favor it is rendered is entitled, even if the
party has not demanded such relief in the party's
pleadings." Fed. R. Civ. P. 54(c); see also Kirby v. HUD, 745
F.2d 204, 207 (3d Cir. 1984) ("As long as the plaintiffs have
stated a claim for relief, it is the court's obligation to grant
the relief to which the prevailing party is entitled whether
it has been specifically demanded or not.").
In awarding the Fund some seven million dollars, the
District Court enforced the "so ordered" Stipulation and the
Agreement, and the court certainly had the authority to do
so. See Halderman v. Pennhurst State Sch. & Hosp., 901
F.2d 311, 317 (3d Cir. 1990) (holding that courts have
jurisdiction to enforce settlement agreements incorporated
into orders); Washington Hosp. v. White, 889 F.2d 1294,
1299 n.9 (3d Cir. 1989) (holding that the fact that court
had "so ordered" stipulation gave document"the same
effect as a consent order or consent decree" and gave the
court jurisdiction to enforce it). As the Fund argues, its
entitlement to pre-Eastern premiums arises from the
Agreement, not the Coal Act. This renders irrelevant
Coltec's lengthy discussion of the court's lack of authority
under the Coal Act to impose liability on it. The real issue
is whether the Stipulation, in conjunction with the
Agreement, which was "so ordered," authorizes the
judgment imposed by the court.
_________________________________________________________________
17. Coltec also asserts it would be illegal for it to pay the Fund without
Coal Act liability, under the Labor Management Relations Act S 302, 29
U.S.C. S 186 (barring employer gifts to labor organizations). However,
S 302(c)(2) exempts "payment . . . of any money . . . in satisfaction of a
judgment of any court . . . or in compromise, adjustment, settlement, or
release of any claim." 29 U.S.C. S 186(c)(2).
24
Coltec contends that the Stipulation does not provide a
basis for the award. It asserts that the document is
unambiguous and very limited, arguing that no language in
the Stipulation can be construed as an admission of
liability, an acknowledgment that any of its retiree
assignments or premium assessments are valid, or an
agreement to make premium payments. It claims that the
District Court erroneously augmented the plain meaning of
the Stipulation by resorting to the "context" of the
document when there had been no showing of any
ambiguity. We reject this contention. As we previously
noted, the language of the Agreement and Stipulation
supports the District Court's interpretation of the parties'
deal. Simply put, the Fund is entitled to the money
pursuant to the parties' bargain.
The District Court's finding that the Fund was, in these
circumstances, entitled to the disbursement it requested is
unexceptional. Coltec argues, however, that the Agreement
and the Stipulation reference "Coal Act premiums" and
that, in light of the SSA letter, it did not have any statutory
premium liability at the time of the judgment. This
argument is easily disposed of because the premiums
referred to in the Stipulation and the Agreement clearly
refer to the premiums due before Eastern was decided. App.
at 232.
IV.
CONCLUSION
In sum, Coltec made a binding agreement with the Fund
when it signed the Agreement, the Escrow Agreement, and
the Stipulation. The District Court found no basis in the
Supreme Court's ruling in Eastern to allow Coltec to back
out of its agreements, nor do we. Because Coltec failed to
open and maintain the escrow account as represented to
the court and to the Fund, Coltec does not deserve relief
from the agreements it freely entered.
For the reasons described herein, the order and the
judgment of the District Court are affirmed.
25
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
26