Amicus Curiae Brief — Micheal W. Buckner, as Trustee of the United Mine Workers of America 1992 Benefit Plan, et al., Petitioners v. United States Pipe & Foundry Co., et al.

No. 22-115

In the Supreme Court of the United States

MICHEAL W. BUCKNER, AS TRUSTEE OF

THE UNITED MINE WORKERS OF AMERICA

1992 BENEFIT PLAN, ET AL., PETITIONERS

v.

UNITED STATES PIPE & FOUNDRY CO., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

ELIZABETH B. PRELOGAR

Solicitor General

Counsel of Record

BRIAN M. BOYNTON

Principal Deputy Assistant

Attorney General

CURTIS E. GANNON

Deputy Solicitor General

AIMEE W. BROWN

Assistant to the Solicitor

General

MARK B. STERN

MICHAEL SHIH

Attorneys

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTIONS PRESENTED

1. Whether the equitable right to compel a company

required by the Coal Industry Retiree Health Benefit

Act of 1992 (Coal Act), 26 U.S.C. 9701 et seq., to maintain an individual employer plan is a “claim” that is dischargeable in bankruptcy under 11 U.S.C. 101(5)(B).

2. Whether respondents’ obligations under the Coal

Act to pay certain premiums and to maintain an individual employer plan arose when the Act became law in

1992 and were therefore dischargeable when a reorganization plan under Chapter 11 of the Bankruptcy Code

was confirmed in 1995.

(I)

TABLE OF CONTENTS

Page

Interest of the United States....................................................... 1

Statement ...................................................................................... 1

Discussion:

A. Further review of the dischargeability of

petitioners’ equitable claim against respondents is

unwarranted ................................................................... 10

B. Further review of whether petitioners’ monetary

and equitable claims arose prior to confirmation is

unwarranted ................................................................... 16

Conclusion ................................................................................... 22

TABLE OF AUTHORITIES

Cases:

Air Line Pilots Ass’n v. Continental Airlines (In re

Continental Airlines), 125 F.3d 120 (3d Cir. 1997),

cert. denied, 522 U.S. 1114 (1998) ..................................... 15

Apex Oil Co. v. United States, 562 U.S. 827 (2010) ............ 15

Eastern Enters. v. Apfel, 524 U.S. 498 (1998) ...................... 2

Epstein v. Official Comm. of Unsecured Creditors of

the Estate of Piper Aircraft Corp. (In re Piper Aircraft, Corp.), 58 F.3d 1573 (11th Cir. 1995) ...................... 16

Ford, In re, 967 F.2d 1047 (5th Cir. 1992) ........................... 18

Goldman v. Esso Virgin Islands, Inc., (In re Duplan

Corp.), 212 F.3d 144 (2d Cir. 2000) ................................... 21

Grogan v. Garner, 498 U.S. 279 (1991) .................................. 1

Johnson v. Home State Bank, 501 U.S. 78 (1991) .............. 15

Kennedy v. Medicap Pharms., Inc.,

267 F.3d 493 (6th Cir. 2001) ............................................... 15

LTV Steel Co. v. Shalala (In re Chateaugay Corp.),

53 F.3d 478 (2d. Cir.), cert. denied, 516 U.S. 913

(1995) ............................................................................... 19-21

(III)

IV

Cases—Continued:

Page

Ohio v. Kovacs, 469 U.S. 274 (1985) ............................ 8, 10-12

Penn Allegh Coal Co. v. Holland,

183 F.3d 860 (D.C. Cir. 1999) ............................................. 13

Rederford v. US Airways, Inc., 589 F.3d 30 (1st Cir.

2009) ..................................................................................... 15

Siegel v. Federal Home Loan Mortg. Corp.,

143 F.3d 525 (9th Cir. 1998) ............................................... 18

Standard Carpetland USA, Inc. (In re Udell),

18 F.3d 403 (7th Cir. 1994) ........................................... 14, 15

United Mine Workers of America 1992 Benefits

Plan v. Rushton (In re Sunnyside Coal Co.),

146 F.3d 1273 (10th Cir. 1998) ........................................... 21

United Mine Works of America Combined Benefit

Fund v. Toffel (In re Walter Energy, Inc.),

911 F.3d 1121 (11th Cir. 2018), cert. denied,

139 S. Ct. 2763 (2019) ........................................................... 5

United States v. Whizco, Inc., 841 F.2d 147

(6th Cir. 1988)...................................................................... 15

Statutes:

Bankruptcy Code, 11 U.S.C. 101 et seq.:

Ch. 1, 11 U.S.C. 101 et seq.:

11 U.S.C. 101(5) ........................................................... 2

11 U.S.C. 101(5)(A) ...................................................... 7

11 U.S.C. 101(5)(B) ............................... 8, 10-12, 15, 17

11 U.S.C. 101(12) ......................................................... 2

Ch. 5, 11 U.S.C. 501 et seq.:

11 U.S.C. 503(b)(1)(B) ......................................... 20, 21

11 U.S.C. 507(a)(1) ..................................................... 20

Ch. 7, 11 U.S.C. 701 et seq.:

11 U.S.C. 727 ................................................................ 1

V

Statutes—Continued:

Page

Ch. 11, 11 U.S.C. 1101 et seq. ................................. 1, 4, 20

11 U.S.C. 1114 .................................................. 5, 15, 21

11 U.S.C. 1114(a) ....................................................... 18

Coal Industry Retiree Health Benefit Act of 1992,

26 U.S.C. 9701 et seq. ............................................................ 2

26 U.S.C. 9701(c)(1) ........................................................... 2

26 U.S.C. 9701(c)(2) ........................................................... 3

26 U.S.C. 9701(c)(7) ........................................................... 3

26 U.S.C. 9703(f )................................................................ 3

26 U.S.C. 9704(a) ............................................................... 3

26 U.S.C. 9706(a) ............................................................... 3

26 U.S.C. 9707(a) ............................................................... 3

26 U.S.C. 9711(a) ......................................................... 3, 13

26 U.S.C. 9711(b) ......................................................... 3, 13

26 U.S.C. 9711(c) ......................................................... 3, 13

26 U.S.C. 9711(c)(1) ........................................................... 3

26 U.S.C. 9711(c)(2) ......................................................... 14

26 U.S.C. 9711(c)(3)(A)(ii) ............................................... 14

26 U.S.C. 9711(c)(3)(A)(iii) .............................................. 14

26 U.S.C. 9712(b)(2)(B) ............................................... 3, 13

26 U.S.C. 9712(d)(1) .................................................... 4, 13

26 U.S.C. 9712(d)(4) .......................................................... 3

Miscellaneous:

124 Cong. Rec. 32,393 (1978) ................................................ 11

In the Supreme Court of the United States

No. 22-115

MICHEAL W. BUCKNER, AS TRUSTEE OF

THE UNITED MINE WORKERS OF AMERICA

1992 BENEFIT PLAN, ET AL., PETITIONERS

v.

UNITED STATES PIPE & FOUNDRY CO., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

This brief is submitted in response to the Court’s order inviting the Solicitor General to express the views

of the United States. In the view of the United States,

the petition for a writ of certiorari should be denied.

STATEMENT

1. The Bankruptcy Code enables debtors in financial

distress to discharge their financial obligations and obtain a “fresh start,” while ensuring the maximum equitable distribution of assets to creditors. Grogan v. Garner, 498 U.S. 279, 286 (1991). Chapter 11 of the Code

authorizes the discharge of certain “debt[s]” as part of

a reorganization. 11 U.S.C. 727. The term “debt” is de-

(1)

2

fined as “liability on a claim.” 11 U.S.C. 101(12). And a

“claim” is a

(A) right to payment, whether or not such right

is reduced to judgment, liquidated, unliquidated,

fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or

(B) right to an equitable remedy for breach of

performance if such breach gives rise to a right to

payment, whether or not such right to an equitable

remedy is reduced to judgment, fixed, contingent,

matured, unmatured, disputed, undisputed, secured,

or unsecured.

11 U.S.C. 101(5).

2. This case involves the application of Section 101(5)

to certain obligations created by the Coal Industry Retiree Health Benefit Act of 1992 (Coal Act), 26 U.S.C.

9701 et seq. The Coal Act responded to a crisis that

threatened to deprive retired coal miners and their dependents of promised lifetime healthcare benefits. Before the Coal Act, those benefits were financed by trusts

established pursuant to several collective bargaining

agreements. See Eastern Enters. v. Apfel, 524 U.S. 498,

504-511 (1998) (plurality opinion). In the 1980s, economic

conditions threatened the industry’s viability, and many

coal companies stopped contributing to the trusts. Id.

at 511. The Coal Act converted the companies’ contractual obligations to provide healthcare benefits into statutory requirements. Id. at 514.

The Coal Act’s obligations generally apply to “signatory operators” (i.e., the companies that signed the prior

collective bargaining agreements), 26 U.S.C. 9701(c)(1),

as well as to “related persons” (i.e., entities that were

closely affiliated with signatory operators as of July 20,

3

1992), 26 U.S.C. 9701(c)(2). A related person is jointly

and severally liable for its signatory operator’s Coal Act

obligations. See 26 U.S.C. 9704(a), 9711(c), and 9712(d)(4).

Like the petition, this brief refers to signatory operators and their related persons as “covered companies.”

This case involves three obligations imposed by the

Coal Act. First, covered companies must pay premiums

to the United Mine Workers of America Combined Benefit Fund (Combined Fund), which is a private plan that

provides benefits to individuals who were receiving benefits from two particular healthcare plans (that the

Combined Fund displaced) in 1992. 26 U.S.C. 9703(f ).

Payments are due annually for as long as a covered company remains “in business.” 26 U.S.C. 9706(a); see 26

U.S.C. 9704(a). A company is in business if it “conducts

or derives revenue from any business activity, whether

or not in the coal industry.” 26 U.S.C. 9701(c)(7). The

Act imposes a monetary penalty for failure to pay the

required premiums. 26 U.S.C. 9707(a).

Second, a subset of signatory operators must provide

benefits directly to certain beneficiaries by maintaining

their own individual employer plans (IEPs). 26 U.S.C.

9711(a) and (b). Related persons are jointly and severally

liable for maintaining IEPs. 26 U.S.C. 9711(c)(1). That

obligation also persists while the company remains “in

business.” 26 U.S.C. 9711(a) and (c)(1).

Third, a subset of covered companies must pay premiums to the United Mine Workers of America 1992

Benefit Plan (1992 Plan). The 1992 Plan provides benefits to, among others, individuals who are entitled to

receive (but are not in fact receiving) benefits from an

IEP. 26 U.S.C. 9712(b)(2)(B). When such individuals

are enrolled in the 1992 Plan, the company responsible

for maintaining the defunct IEP must pay a monthly

4

premium based on the number of individuals the 1992

Plan is covering for the company. 26 U.S.C. 9712(d)(1).

3. a. In 1989, Hillsborough Holding Co. and its subsidiaries petitioned for reorganization under Chapter

11. Pet. App. 61. One subsidiary was Walter Industries

Inc., a holding company that owned a coal company

called Jim Walter Resources, Inc. Ibid. Respondents—

U.S. Pipe Foundry Co. and JW Aluminum Co.—were

also Hillsborough subsidiaries. Ibid.; see id. at 5.

After the bankruptcy petition was filed but before

the reorganization plan was confirmed, Congress enacted the Coal Act. Pet. App. 62. Under the Act, Jim

Walter Resources was a “signatory operator” obliged to

pay annual premiums to the Combined Fund and to

maintain an IEP (or pay monthly premiums to the 1992

Plan to the extent that its failure to maintain an IEP

caused individuals to receive coverage from the 1992

Plan). See Pet. 8; Br. in Opp. 5. Respondents were “related persons” that were jointly and severally liable

with Jim Walter Resources. See Pet. 8; Br. in Opp. 7.

Petitioners are the trustees of the Combined Fund

and the 1992 Plan. During the Hillsborough bankruptcy, petitioners filed a proof of claim against Jim

Walter Resources for certain Coal Act obligations, Pet.

App. 5, but they did not file such proofs of claim against

respondents, Pet. 8.

In 1995, the Hillsborough bankruptcy concluded

with a confirmed plan of reorganization. The plan discharged all “[c]laims against * * * [d]ebtors that arose

at any time before” the plan’s effective date. Pet. App.

40. It also required Walter Industries to continue to

fund medical benefits for retirees, though it did not specifically mention Coal Act obligations. Id. at 64 (foot-

5

note omitted). Petitioners did not object to the plan. Id.

at 5.

For two decades, Jim Walter Resources and Walter

Industries continued to maintain an IEP and paid at

least $8.8 million in Coal Act premiums. Pet. App. 42.

b. Eventually, Walter Industries changed its name

to Walter Energy and spun off or sold respondents.

Pet. 9. In 2015, Walter Energy and its remaining subsidiaries, including Jim Walter Resources, petitioned

for Chapter 11 reorganization. Pet. App. 5.

Petitioners filed proofs of claim for the Coal Act obligations of the Walter Energy debtors. Br. in Opp. 31.

The debtors asked the bankruptcy court to eliminate

their Coal Act obligations under 11 U.S.C. 1114, which

grants bankruptcy courts broad authority to modify

certain retiree benefits. The bankruptcy court granted

the debtors’ motion. United Mine Works of America

Combined Benefit Fund v. Toffel (In re Walter Energy,

Inc.), 911 F.3d 1121, 1157 (11th Cir. 2018), cert. denied,

139 S. Ct. 2763 (2019). Walter Energy ceased paying

Coal Act premiums and shuttered its IEP. Pet. 8. The

individuals enrolled in that IEP began receiving benefits through the 1992 Plan. Ibid. Those individuals have

continued to receive benefits through the 1992 Plan because no replacement IEP has been set up by any of Jim

Walter Resources’ related persons. Ibid.

c. Because respondents were not debtors in the

Walter Energy bankruptcy, they were not subject to

the Section 1114 order discharging the Coal Act liabilities.

In July 2016, petitioners sent respondents a letter

stating that respondents are “liable * * * to pay premiums to the [Combined] Fund and 1992 Plan for the period when Walter Energy was not providing benefits di-

6

rectly to its retirees.” Pet. App. 6. Petitioners also demanded that respondents “provide benefits directly to

retirees” by establishing an IEP. Ibid. After respondents refused those demands, petitioners sued them in

the United States District Court for the District of Columbia, seeking an order directing respondents to pay

the Coal Act premiums and establish an IEP. Ibid.

4. a. In response, respondents reopened the Hillsborough bankruptcy and filed an adversary complaint

against petitioners. Pet. App. 6. The complaint alleged

that the 1995 confirmation order concluding the Hillsborough bankruptcy had discharged all of respondents’

Coal Act obligations. Ibid.

The bankruptcy court ruled against respondents

with respect to petitioners’ claims for payment of Combined Fund and 1992 Plan premiums. Pet. App. 60-75.

The court explained that a bankruptcy discharge does

not apply to claims incurred after bankruptcy. See id.

at 68-69. The court analogized respondents’ obligation

to pay Coal Act premiums to the obligation to pay a

tax—a claim for which liability typically accrues when

the tax comes due. Id. at 74-75. Because petitioners

were seeking payment of premiums incurred beginning

in 2016—more than two decades after the Hillsborough

bankruptcy concluded—the court determined that the

Hillsborough bankruptcy had not discharged those

claims. Id. at 75. The court did not address petitioners’

claim for an injunction requiring respondents to establish an IEP.

b. The district court affirmed the bankruptcy court’s

decision on identical grounds. Pet. App. 37-59. In a

footnote, the district court noted that the bankruptcy

court had “not address[ed]” whether the Hillsborough

bankruptcy had also discharged respondents’ duty to

7

maintain an IEP. Id. at 58 n.7. The court suggested

that the duty “could not be terminated by bankruptcy,”

ibid., but it granted no relief to petitioners. The court

simply affirmed “[t]he decision of the bankruptcy court,”

id. at 59, which held that “any premiums that came due

after the effective date of ” the Hillsborough reorganization plan “were not discharged” by that plan, id. at 61.

c. A divided panel of the court of appeals reversed.

Pet. App. 1-23. With respect to the premium-payment

claims, the court agreed with the lower courts that the

key question is whether those claims arose before the

1995 confirmation of the Hillsborough reorganization

plan. Id. at 10; see id. at 22-23. But the court of appeals

concluded that all of those claims arose before the plan’s

effective date because the Coal Act became effective before confirmation and the claims were “based on the

companies’ pre-confirmation conduct,” including their

relationship to signatory operators. Id. at 10. The court

therefore held that all of petitioners’ premium-payment

claims had been discharged by the plan. Id. at 14.

The court of appeals acknowledged that, during the

Hillsborough bankruptcy, the “amount” of those obligations was uncertain. Pet. App. 11. The court further

acknowledged that petitioners “could not maintain a

suit against” respondents for satisfaction of those obligations because, at the time, Jim Walter Resources was

fully complying with its Coal Act obligations. Ibid. But

the court found that irrelevant because, in its view, petitioners’ rights were “merely ‘unliquidated’ * * * and

‘unmatured,’ ” but still within the definition of a

“ ‘claim.’ ” Ibid. (quoting 11 U.S.C. 101(5)(A)).

The court of appeals rejected the conclusion that petitioners’ premium-payment claims are best understood

as claims for taxes that “arise periodically”—that is,

8

when the premiums are due. Pet. App. 15; see id. at 1415. The court acknowledged that claims for taxes “ordinarily do not exist before the debtor engages in the

taxable conduct,” id. at 15, and that other courts of

appeals have characterized claims for Coal Act premiums as claims for taxes in other contexts, id. at 14-15.

But the court of appeals reasoned that, “even if Coal Act

[premium-payment] obligations could be considered

taxes,” petitioners’ claims still arose before confirmation of the Hillsborough plan because respondents’

“liability * * * turn[s] solely on their pre-confirmation

conduct”—that is, on the participation of Jim Walter

Resources “in the pre-Coal Act health-care system” for

retirees. Id. at 15.

The court of appeals additionally held that the Hillsborough plan had discharged petitioners’ “right to an

equitable remedy” compelling respondents to establish

an IEP. Pet. App. 16 (citation omitted). The court interpreted the Code’s definition of “claim,” which includes a “right to an equitable remedy for breach of performance if such breach gives rise to a right to payment,” 11 U.S.C. 101(5)(B), to mean that an equitable

claim satisfies that definition whenever it gives rise to

any right to payment, Pet. App. 19. The court “decline[d] to adopt” a narrower interpretation first articulated by this Court’s decision in Ohio v. Kovacs, 469

U.S. 274 (1985), and applied by several other courts of

appeals, under which an equitable claim is dischargeable in bankruptcy only if it gives rise to an alternative

or substitute monetary remedy. Pet. App. 18.

Applying its broader interpretation of Section

101(5)(B), the court of appeals held that petitioners’

IEP claim was a claim dischargeable in bankruptcy.

The court reasoned that, “[w]hen a covered entity

9

breaches its obligation” to maintain an IEP, “ the 1992

Plan provides those benefits instead and assesses the

entity premiums commensurate with the costs of providing the benefits,” such that respondents’ breach of their

IEP obligation gave rise to a right to payment. Pet.

App. 16. The court rejected petitioners’ alternative argument that, even assuming that the IEP claim was a

claim subject to discharge, it did not arise until Walter

Energy dissolved its IEP and respondents declined to

establish a new one. See id. at 19-21. The court held that

the IEP claim arose when the Coal Act was enacted—

even if performance was not yet due—given that the relevant coal mining pre-dated the confirmation of the

Hillsborough reorganization plan. Ibid.

b. Judge Anderson concurred in part and dissented

in part. Pet. App. 23-36. He agreed that petitioners’

claims for Combined Fund premiums had been discharged by the Hillsborough bankruptcy, but he dissented from the majority’s conclusion as to the IEP and

1992 Plan premiums. Id. at 23. With respect to petitioners’ IEP claim, Judge Anderson concluded that

“[t]he natural and plausible meaning of § 101(5)(B)

* * * is that the existence of a claim depends upon there

being a breach of performance” that occurs “before the

date of confirmation.” Id. at 34. Because “the crucial

basis” for respondents’ liability under this claim is the

“2016 breach of the obligation to maintain an IEP,” the

Hillsborough debtors’ “1995 bankruptcy confirmation

could not discharge [petitioners’] claim arising from it.”

Id. at 35. Judge Anderson also viewed petitioners’

claims for 1992 Plan premiums as arising in 2016, “when

Walter Energy ceased maintaining its IEP” and respondents “declined to do so themselves.” Ibid. He

10

therefore would have held that those claims were not

discharged in 1995. Ibid.

DISCUSSION

This case does not warrant further review. With respect to the first question presented (concerning the equitable IEP claim), although the court of appeals

adopted an incorrect interpretation of the Code’s definition of a “claim,” 11 U.S.C. 101(5)(B), petitioners

would not prevail under the proper interpretation. The

case thus presents a poor vehicle to resolve the conflict

in the circuits on that question. With respect to the

second question presented (concerning the premiumpayment claims), petitioners have not challenged the

standard that the court of appeals applied in determining when a covered company’s Coal Act obligations

arose. The petition instead contests the court’s application of that standard to the facts of this case. The

court’s fact-dependent conclusion does not squarely

conflict with how claims for Coal Act premiums have

been treated by other courts of appeals in other contexts. And both questions are presented in an unusual

posture that is unlikely to recur with great frequency.

The petition for a writ of certiorari should be denied.

A. Further Review Of The Dischargeability Of Petitioners’

Equitable Claim Against Respondents Is Unwarranted

1. Section 101(5)(B) specifies when a “right to an equitable remedy for breach of performance” may be considered a “claim” dischargeable in bankruptcy. 11

U.S.C. 101(5)(B). This Court interpreted that provision

in Ohio v. Kovacs, 469 U.S. 274 (1985), which arose from

a lawsuit brought by the State of Ohio against William

Kovacs for violations of state environmental laws. Id.

at 276. Kovacs settled the lawsuit by stipulating to a

judgment that, among other things, enjoined him from

11

causing further pollution and required him to remove

specified wastes from the property. Ibid. When Kovacs

failed to remove the wastes, Ohio obtained a state-court

order appointing a receiver to seize his assets and use

them to implement the clean-up order. Ibid. After the

receiver’s appointment, Kovacs filed for bankruptcy

and sought to discharge the clean-up order under Section 101(5)(B). Id. at 276-277.

This Court held that the clean-up order was dischargeable. Kovacs, 469 U.S. at 279-283. The Court invoked legislative history indicating that Section

101(5)(B) was “intended to cause the liquidation or estimation of contingent rights of payment for which there

may be an alternative equitable remedy with the result

that the equitable remedy will be susceptible to being

discharged in bankruptcy.” Id. at 280 (quoting 124

Cong. Rec. 32,393 (1978) (remarks of Rep. Edwards)).

The paradigmatic example of a dischargeable equitable

claim is a “judgment for specific performance [that]

may be satisfied by an alternative right to payment in

the event performance is refused.” Ibid. (quoting same).

Under such circumstances, “the creditor entitled to specific performance would have a ‘claim’ for purposes of a

[bankruptcy] proceeding.” Ibid. (quoting same). Because the State had “converted [its equitable claim] into

an obligation to pay money” by appointing a receiver

before Kovacs’s bankruptcy petition was filed, the

Court held that the clean-up order was dischargeable.

Id. at 283. The Court further emphasized, however,

that its opinion did not hold that “the injunction against

bringing further toxic wastes on the premises” was a

dischargeable claim. Id. at 285.

As petitioner observes, at least five courts of appeals

have relied on Kovacs to hold that an equitable claim is

12

dischargeable only if payment of money is an alternative or substitute remedy. See Pet. 17-18 (listing cases).

2. The court of appeals in this case created a circuit

split by holding that an equitable claim is dischargeable

in bankruptcy if the same breach “ ‘gives rise’ to both

the right to an equitable remedy and a right to payment.” Pet. App. 19; see id. at 18-19. The court rejected

the approach of other circuits limiting dischargeable

claims to those for which a right to payment is an adequate alternative or substitute remedy. Id. at 18. Under the court’s interpretation, a breach that gives rise

to an equitable remedy is susceptible to discharge under Section 101(5)(B) if it gives rise to any right to payment, even a de minimis one that is an inadequate alternative to equitable relief.

Respondents do not attempt to defend the court of

appeals’ interpretation of Section 101(5)(B) on the merits. And for good reason: That interpretation is in significant tension with this Court’s decision in Kovacs,

which applied the “alternative or substitute to equitable

relief ” test. See 469 U.S. at 280. Indeed, the Court

there carefully discussed the precise circumstances that

had rendered the clean-up order equivalent to a monetary judgment—the receivership that “disabled” Kovacs “from personally taking charge of carrying out the

removal of wastes,” such that the receiver sought only

“money to defray cleanup costs.” Id. at 283. That focused reasoning indicates that the mere fact that a

breach may also lead to some monetary payment would

be insufficient to render the order dischargeable. And

that view further accords with Congress’s intent that

bankrupt entities must continue to comply with general

laws. See id. at 285. The court of appeals failed to jus-

13

tify its departure from the reasoning of Kovacs. See

Pet. App. 17-18.

3. The government nevertheless agrees with respondents that the petition should be denied because

petitioners’ equitable claim would still qualify as a

“claim” under Kovacs’s reasoning and the test applied

by multiple courts of appeals. See Br. in Opp. 23-30.

The Coal Act requires certain covered companies to

maintain IEPs that provide healthcare coverage to certain beneficiaries. 26 U.S.C. 9711(a) and (b). But the

Act expressly provides for what happens when a covered company breaches its obligation to maintain an

IEP: The 1992 Plan provides benefits to those who are

entitled to receive (but are not in fact receiving) benefits from an IEP. 26 U.S.C. 9712(b)(2)(B). When such

individuals are enrolled in the 1992 Plan, the company

that has breached its obligation to provide IEP benefits

must pay a corresponding monthly premium to the 1992

Plan. 26 U.S.C. 9712(d)(1). The two obligations are

therefore directly correlated. As the court of appeals

explained, “[w]hen a covered entity breaches its obligation to provide health-care benefits to retirees,” the

“1992 Plan provides those benefits instead and assesses

the entity premiums commensurate to the costs of

providing the benefits.” Pet. App. 16; accord Penn Allegh Coal Co. v. Holland, 183 F.3d 860, 862 (D.C. Cir.

1999) (explaining that the Coal Act “ensures the continued payment of health benefits to certain retired coal

mining employees through either an” IEP or the 1992

Plan).

The structure of the Coal Act reinforces the close relationship between the IEP obligation and 1992 Plan

premiums. Section 9711(c) provides for the joint and

several liability of related persons for failure to main-

14

tain an IEP. But related-persons liability can be eliminated if a common parent of both the covered company

and its related persons provides security, 26 U.S.C.

9711(c)(2), in an amount “equal to 1 year of liability” for

maintaining the IEP, “determined by using the average

cost of such operator’s liability during the prior 3 calendar

years,” 26 U.S.C. 9711(c)(3)(A)(iii). That security must

be paid to the trustees of the 1992 Plan “solely for the

purpose of paying” 1992 Plan premiums “if the requirements of this section” (including the requirement to maintain an IEP) “were not met.” 26 U.S.C. 9711(c)(3)(A)(ii).

Finally, the outcome is the same whether a covered

company in breach of its IEP obligations is either compelled to reestablish its IEP in equity or compelled to

pay 1992 Plan premiums. Under the former remedy,

individuals receive healthcare benefits from the new

IEP, and the 1992 Plan is relieved of the obligation to

cover their benefits. Under the latter, individuals receive benefits from the 1992 Plan, and the covered company compensates the 1992 Plan. Given the express alternatives that are automatically triggered under the

statute, respondents are correct that the damages remedy is an adequate “substitute for the closely related

equitable obligation.” Br. in Opp. 26.

Petitioners respond (Cert. Reply Br. 3-4) that the

damages remedy is not a perfect substitute for the equitable remedy because a covered company compelled

to create an IEP will still be liable in damages for 1992

Plan premiums incurred while the company was in

breach, and a company paying 1992 Plan premiums can

still be compelled to establish an IEP. But a damages

remedy need not be an “outright substitut[e]” to the equitable remedy. Standard Carpetland USA, Inc. (In re

Udell), 18 F.3d 403, 408 (7th Cir. 1994). “For example,

15

the right to foreclose on a mortgage, though not strictly

an ‘alternative’ to the right to the proceeds from the sale

of the debtor’s property, nonetheless gives rise to a corollary right to payment.” Ibid. (discussing Johnson v.

Home State Bank, 501 U.S. 78 (1991)); see Rederford v.

US Airways, Inc., 589 F.3d 30, 36-37 (1st Cir. 2009); Air

Line Pilots Ass’n v. Continental Airlines (In re Continental Airlines), 125 F.3d 120, 135-136 (3d Cir. 1997),

cert. denied, 522 U.S. 1114 (1998).1

4. Further review of the first question presented is

also unwarranted given the circumstances of this case.

The question whether the obligation to maintain an IEP

is dischargeable pursuant to Section 101(5)(B) is unlikely to arise in bankruptcies involving coal companies

covered by the Coal Act because such companies may

be able to eliminate that obligation under 11 U.S.C.

1114, which permits a bankruptcy court to alter certain

benefits that a debtor owes retirees that it once employed. That is precisely what Jim Walter Resources

achieved in the 2015 Walter Energy bankruptcy. Of

The Sixth Circuit has suggested that, in the context of a bankruptcy petition filed by an individual debtor, an equitable claim is

dischargeable if compliance with the injunction would require the

expenditure of money. United States v. Whizco, Inc., 841 F.2d 147,

150 (1988). As the United States has explained, that outlier decision

“is inconsistent with the text of the Bankruptcy Code and with the

weight of relevant case law.” U.S. Br. in Opp. at 17, Apex Oil Co. v.

United States, No. 09-1023 (July 6, 2010); see Apex Oil Co. v. United

States, 562 U.S. 827 (2010) (denying petition for a writ of certiorari);

see also Kennedy v. Medicap Pharms., Inc., 267 F.3d 493, 495-498

(6th Cir. 2001) (agreeing with Udell that a covenant not to compete

by a franchisee was not dischargeable because payment of money is

not an adequate alternative remedy under applicable law). The decision below did not endorse Whizco, and the current petition does

not implicate any potential divergence in authority between (or

within) the Sixth Circuit and other courts of appeals.

1

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course, that avenue is unavailable in bankruptcies involving related persons who never employed any Coal

Act beneficiaries. See Pet. App. 54 n.5. In those cases,

petitioners—as the trustees of the 1992 Plan—may seek

to protect their rights by filing a proof of claim. Indeed,

petitioners acknowledge that the court of appeals’ decision will not bar them from filing proofs of claim for

Coal Act liability in future related-person bankruptcies.

Pet. 27 n.7. Petitioners assert that they have “largely

not filed proofs of claim” for Coal Act obligations in previous related-person bankruptcies, id. at 27, but they do

not indicate how many such bankruptcies may exist or

suggest that the number would be particularly large.

In addition, because the result in this case would be

the same under either test, the degree of divergence between the Eleventh Circuit and other circuits remains

uncertain. As petitioners note, the court of appeals “did

not explain precisely what it means for a breach of performance to ‘give[] rise to a right to payment.’ ” Pet. 16

n.3 (brackets in original). Accordingly, further percolation is needed to establish whether there will be a practical difference between the tests.

B. Further Review Of Whether Petitioners’ Monetary And

Equitable Claims Arose Prior To Confirmation Is Unwarranted

Under pre-existing Eleventh Circuit precedent, “[a]

claim exists and is dischargeable whenever a debtor’s liability on that claim arises from its past conduct” and

“ ‘there is a relationship established . . . between an

identifiable claimant’ and that past conduct.” Pet. App.

9 (quoting Epstein v. Official Comm. of Unsecured

Creditors of the Estate of Piper Aircraft Corp. (In re

Piper Aircraft, Corp.), 58 F.3d 1573, 1577 (11th Cir.

1995)). Applying that test, the court of appeals held that

17

the relevant “conduct” was Congress’s decision to enact

the Coal Act and the companies’ previous participation

in the coal industry’s healthcare system, which resulted

in the imposition of Coal Act obligations on respondents

as the related persons of Jim Walter Resources. Id. at

10-11; id. at 16-17; id. at 22-23. Because the Coal Act

was enacted well before the conclusion of the Hillsborough bankruptcy and imposed liabilities based on

participation in the pre-Coal Act healthcare system, and

because petitioners failed to file proofs of claim against

respondents during that bankruptcy, the court concluded that petitioners’ Coal Act claims arose before

confirmation and the liabilities were consequently discharged.

Petitioners do not challenge the test that the court of

appeals applied. They contend instead that the court

misapplied the test to the facts of this case. Although

petitioners may be correct that the court erred at a minimum with respect to the IEP claim and 1992 Plan premiums, that fact-bound dispute does not warrant this

Court’s review.

1. Petitioners contend (Pet. 24; Cert. Reply Br. 7)

that the court of appeals erred in concluding that respondents’ Coal Act liability arises “solely” from past

conduct and was therefore discharged. The government agrees that, at a minimum, the court likely erred

in reaching that conclusion with respect to the IEP

claim and the alternative 1992 Plan premiums.

Under 11 U.S.C. 101(5)(B), a creditor has a claim

only when it has “[a] right to an equitable remedy for

breach of performance if such breach gives rise to a

right to payment.” But those rights do not arise at all

until the breach occurs. And it is incorrect to view the

right as “contingent” on the debtor’s possible future

18

breach because “a debtor’s own future conduct cannot

make a claim contingent.” Pet. App. 30 (Anderson, J.,

concurring in part and dissenting in part) (citing Siegel

v. Federal Home Loan Mortg. Corp., 143 F.3d 525, 532533 (9th Cir. 1998)). The majority’s acknowledgement

that petitioners could not have maintained a suit against

respondents while Jim Walter Resources complied with

its Coal Act obligations demonstrates that the right to

an equitable remedy could not exist prior to the breach.

Id. at 11.

In addition, to determine whether a “contingent”

right to equitable relief exists, courts consider whether

the “triggering event” that gives rise to liability is an

“extrinsic event” and “one reasonably contemplated by

the debtor and creditor at the time the event giving rise

to the claim occurred.” In re Ford, 967 F.2d 1047, 1051

(5th Cir. 1992) (emphasis omitted). But, at the time of

the Hillsborough plan’s confirmation in 1995, it appears

that Walter Energy took on the responsibility for Coal

Act obligations.2 See Pet. App. 5-6. Given Walter Energy’s assumption of that responsibility, it would be illogical to conclude that the parties anticipated the relevant breach at the time of the plan’s confirmation. Under those circumstances, the relevant conduct—and the

Petitioners contend (Pet. 9 n.2) that Walter Energy did not expressly assume responsibility for Coal Act payments in the reorganization plan because it assumed only the obligation “to fund retiree

health benefits.” Pet. App. 5. Because that term was undefined,

petitioners claim it must incorporate the definition in Section

1114(a) and exclude benefits like Coal Act obligations that were established after the bankruptcy. Pet. 9 n.2. It is unclear whether

that is the best reading of the plan. Regardless, it is undisputed that

Walter Energy satisfied the Coal Act obligations for two decades

after the 1995 bankruptcy, suggesting that it did not view those obligations as having been discharged.

2

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accompanying claim—arose in 2016, when Walter Energy failed to maintain the IEP. And because that failure occurred post-confirmation, the court of appeals

erred in concluding that the claims arising from the

breach had already been discharged. See Id. at 30 (Anderson, J., concurring in part and dissenting in part).

2. Petitioners contend (Pet. 19) that this Court

should grant certiorari because the court of appeals’ decision conflicts with decisions of the Second and Tenth

Circuits. But neither decision directly addresses the

question presented here.

Petitioners rely principally on the Second Circuit’s

decision in LTV Steel Co. v. Shalala (In re Chateaugay

Corp.), 53 F.3d 478, cert. denied, 516 U.S. 913 (1995). In

that case, the debtors were LTV Steel Company and

three subsidiaries (collectively, LTV). LTV was in the

coal business and filed for bankruptcy in 1986. Id. at

484. When Congress enacted the Coal Act several years

later, LTV—which was a covered company with Coal

Act obligations—had not emerged from bankruptcy.

Id. at 496. LTV sought to avoid its obligation to pay

Combined Fund premiums by characterizing its obligations as “pre-petition debts” that arose when its employees “supplied” LTV with “labor.” Id. at 496-497.

Such pre-petition debts must be disallowed if no timely

proof of claim has been filed. Id. at 496. The Second

Circuit rejected LTV’s arguments, instead holding that

“LTV’s liability to the Combined Fund [wa]s newly imposed by the Coal Act,” and that “[n]o right to payment

on the part of the Combined Fund existed until the enactment of the Coal Act six years after the filing of

LTV’s petition.” Id. at 497. That holding does not conflict with the court of appeals’ similar conclusion here:

20

that respondents’ Coal Act liability arose when the Coal

Act was enacted.

Petitioners emphasize (Pet. 21-22) that the Second Circuit also rejected LTV’s alternative argument that Coal

Act liabilities incurred post-petition but pre-confirmation

should not be treated as administrative expenses entitled

to priority under 11 U.S.C. 507(a)(1). Chateaugay, 53

F.3d at 498. The court reasoned that, for purposes of determining whether Coal Act liabilities are administrative

expenses, such liabilities are best understood as taxes incurred by the estate (which are defined as administrative

expenses by 11 U.S.C. 503(b)(1)(B)). Chateaugay, 53

F.3d at 498. But the court of appeals here expressly

distinguished that conclusion, noting that “nothing in

this appeal turns on whether the premiums are taxes.”

Pet. App. 15. The court instead concluded that, “even if

Coal Act obligations could be considered taxes,” that

status “has no bearing” on the separate question of

“when claims for those [Coal Act] premiums arise.”

Ibid.

Petitioners also emphasize (Pet. 20-21) that, in a single sentence at the end of its opinion, the Second Circuit

stated that “[t]he remainder of LTV’s obligations was

not dischargeable in bankruptcy and is an obligation of

the reorganized LTV.” Chateaugay, 53 F.3d at 498. As

petitioners rightly note, that sentence cannot be reconciled with the Eleventh Circuit’s treatment of postconfirmation Coal Act liabilities. But the sentence is

dictum because it was not necessary to the resolution of

any of the questions presented in Chateaugay, which involved an appeal from two district court decisions: one

holding that LTV’s Coal Act obligations “were not prepetition claims that must be disallowed under Chapter

11 of the Bankruptcy Code,” and the other rejecting

21

LTV’s attacks on the constitutionality of the Coal Act.

Id. at 480-481.3 Accordingly, the decision below is not

in direct conflict with Chateaugay.

Petitioners’ reliance (Pet. 22-23) on United Mine

Workers of America 1992 Benefits Plan v. Rushton (In

re Sunnyside Coal Co.), 146 F.3d 1273 (10th Cir. 1998),

is similarly misplaced. There, the Tenth Circuit held

that premium payments to the 1992 Plan are administrative expenses because they qualify as taxes under 11

U.S.C. 503(b)(1)(B). Sunnyside, 146 F.3d at 1278. As

petitioners explain, the court of appeals suggested that

Coal Act premiums “ ‘accrue for each tax period.’ ” Pet.

22 (quoting Sunnyside, 146 F.3d at 1279). That statement is in tension with the Eleventh Circuit’s conclusion

that all Coal Act liability must be said to arise as of the

Coal Act’s enactment in 1992. But it does not directly

conflict with the decision on review, not least because

Sunnyside did not present the question whether and to

what extent Coal Act obligations are dischargeable, as

petitioners concede. See Pet. 23. Thus, any tension is

not a direct conflict necessitating this Court’s intervention.

3. Further review is also unwarranted given the

unique circumstances of this case. Like the first question presented, the second question will arise only if

Section 1114 has not been invoked and petitioners do

Petitioners contend (Cert. Reply Br. 9) that the Second Circuit

has treated the dictum as a holding, but in the single case they cite,

the court relied on Chateaugay’s holding that Coal Act claims could

not constitute pre-petition claims because the statute had been enacted post-petition. See Goldman v. Esso Virgin Islands, Inc. (In

re Duplan Corp.), 212 F.3d 144, 151 (2000). The court expressly declined to determine precisely when the claims at issue arose, see id.

at 155 n.10, and had no reason to rely on the single sentence in Chateaugay addressing discharge of post-petition claims.

3

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not file a proof of claim or objection to plan feasibility of

a related party to protect their rights in a pending bankruptcy. Nothing in the court of appeals’ decision prohibits petitioners from doing that in future bankruptcies. And their assertion (Pet. 27) that they have

“largely not filed proofs of claim” for Coal Act obligations in past bankruptcies does not speak to the magnitude of this asserted problem.

Nor will the court of appeals’ decision have broad effects outside of the context of the Coal Act. Indeed, the

court made clear that the result would be different in

cases involving “generally applicable laws” that “impose penalties” or “obligations on any entity that engages in specified conduct,” which “arise regardless of

bankruptcy status” and do not turn “solely on * * * preconfirmation conduct.” Pet. App. 12.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

ELIZABETH B. PRELOGAR

Solicitor General

BRIAN M. BOYNTON

Principal Deputy Assistant

Attorney General

CURTIS E. GANNON

Deputy Solicitor General

AIMEE W. BROWN

Assistant to the Solicitor

General

MARK B. STERN

MICHAEL SHIH

Attorneys

MAY 2023