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United Mine Workers of America v. Brushy Creek Coal Co.

January 18, 2006


The opinion of the court was delivered by: Gilbert, District Judge


This matter comes before the Court on Defendants' Motion for Summary Judgment and their amended brief in support thereof (Doc. 19, 20). Plaintiffs combined their response in opposition to Defendants' motion with their own motion for summary judgment (Doc. 21), to which Defendants have responded (Doc. 22).


This is an action brought pursuant to Section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185, and Section 502 of the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132. Individual Plaintiffs Thomas H. Adkins, et al. ("individual plaintiffs"), and the United Mineworkers of America ("Union") claim Brushy Creek Coal Company ("BCCC")*fn1 breached its collective bargaining agreement with the Union and violated provisions of ERISA by unilaterally imposing benefit cuts to retired BCCC employees and refusing to provide benefits for other retired employees. BCCC claims it was entitled to modify the benefits due individual plaintiffs and that it has violated neither its agreement with the Union nor any provision of ERISA. BCCC purchased a coal mine in Galatia, Illinois ("Mine") from Kenellis Energies, Inc. ("Kinellis") in 1991. BCCC operated the Mine from 1991 to December 1999, when it ceased all mining operations. While it owned the Mine, BCCC entered into a series of collective bargaining agreements with the Union. When BCCC first took over operations, it adopted Kenellis's pre-existing collective bargaining agreement with the Union. At that time, Kinellis was a "me-too" signatory to the 1988 National Bituminous Coal Wage Agreement ("NBCWA"); one in a series of collective bargaining agreements periodically negotiated nationally by the Bituminous Coal Operators Association ("BCOA") and the Union. BCCC was not a member of the BCOA. When the NBCWA expired in 1993, BCCC negotiated its own agreement with the Union; an agreement distinct from the 1993 NBCWA. This new agreement, the Brushy Creek Coal Wage Agreement of 1993 ("BCCWA"), was in effect from 1993 to 1995. The parties entered into negotiations for a new agreement in 1995, which culminated in the execution of a Memorandum of Understanding in 1995 ("1995 MOU"). The 1995 MOU terminated the 1993 BCCWA and adopted the 1995 NBCWA with certain amendments. Upon the expiration of the 1995 MOU in 1998, the parties came to a new agreement, which took the form of the parties' 1998 Memorandum of Understanding ("1998 MOU"). Like the 1995 MOU, the 1998 MOU adopted the 1998 NBCWA with various amendments. It also provided for employee benefits through the creation of an ERISA plan, the Employee Group Health Care Plan ("Health Plan"), which was "compiled as a separate document." (1998 MOU, ¶ 10) (Doc. 21, ex. 9). BCCC and the Union came to an agreement on the Health Plan in February 1999, and made the plan retroactive to February 1, 1998. This was the last agreement between the parties.

On March 15, 2001, approximately a year and a half after BCCC ceased mining operations, BCCC gave written notice to the Union that it would terminate the 1998 MOU effective May 15, 2001 (Doc. 19, ex. 27). Three years later, on March 8, 2004 BCCC notified the individual plaintiffs that it intended to make certain changes to the Health Plan. Those changes went into effect May 1, 2004 and significantly increased the individual plaintiffs' health care costs (Doc. 19, ex. 27). In the letter sent to UMWA announcing BCCC's intention to modify the health benefits, BCCC also stated that it would not accept new participants who were not then enrolled in the Health Plan (Doc. 19, ex. 27). Plaintiffs instituted this action on December 7, 2004.


BCCC claims it was within its rights under the 1998 MOU and the Health Plan when it modified Plaintiffs' benefits. It asserts that it had the right to modify the benefits provided to the individual plaintiffs by virtue of the plan termination provision in the Health Plan.*fn2 This provision is the crux of BCCC's claim. As the benefits at issue in this case are "welfare benefits" as that term is defined in ERISA, see § 29 U.S.C. 1001(1), BCCC maintains it retained the right to modify those benefits -- i.e., that the benefits never vested. BCCC rejects the notion that the "lifetime" language used in the NBCWA is sufficient to constitute a contractual agreement to vest benefits. Plaintiffs disagree. They combined their response to BCCC's motion with their memorandum of law in support of their own motion for summary judgment. Though they do not distinguish between the two within their memorandum, it is clear that in both they claim they have a vested right to lifetime benefits by the explicit language of the collective bargaining agreement. This claim rests on various provisions in the 1998 NBCWA which state that retirees are entitled to their Health Services card "for life" and that their spouses may keep the card "until . . . death or remarriage." Further, Plaintiffs claim a provision in the 1998 NBCWA dealing with modification clearly indicates that benefits provided thereunder were intended to outlive the agreement itself. These vested benefits, argue Plaintiffs, can only be modified by the joint agreement of the parties. Plaintiffs also argue that the phrase "subject to the Collective Bargaining Agreement" in the plan termination provision makes any right to modify or terminate benefits subject to their reading of the conditions for modification in the 1998 NBCWA. Alternatively, Plaintiffs offer allegedly "objective" evidence to show a latent ambiguity with respect to the duration of benefits provided under the Health Plan. The parties have filed cross-motions for summary judgment.

A. Standard on Summary Judgment

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Spath, 211 F.3d at 396.

In responding to a summary judgment motion, the nonmoving party may not simply rest upon the allegations contained in the pleadings but must present specific facts to show that a genuine issue of material fact exists. Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 322-26; Johnson v. City of Fort Wayne, 91 F.3d 922, 931 (7th Cir. 1996). A genuine issue of material fact is not demonstrated by the mere existence of "some alleged factual dispute between the parties," Anderson, 477 U.S. at 247, or by "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Michas v. Health Cost Controls of Illinois, Inc., 209 F.3d 687, 692 (7th Cir. 2000). Rather, a genuine issue of material fact exists only if "a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented." Anderson, 477 U.S. at 252; accord Michas, 209 F.3d at 692.

B. Welfare Benefit Plans

Under ERISA, it is important to distinguish between two types of employee benefit plans: welfare benefit plans and pension plans. See Bland v. Fiatalis North America, Inc., 401 F.3d 779, 783 (7th Cir. 2005). The parties do not dispute that the benefits at issue here are welfare benefits for ERISA purposes. See 29 U.S.C. § 1001(1). Generally, welfare benefits may be modified by employers "for any reason at any time." Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 79 (1995). Thus, unlike pensions benefits, welfare benefits only vest if the contract so provides. Bland, 401 F.3d at 783. The issue before the Court is one of contract interpretation. UAW v. Rockford Powertrain, Inc., 350 F.3d 698, 702 (7th Cir. 2003).

The resolution of this case depends on the construction of a number of different documents. When an ERISA plan is created pursuant to a collective bargaining agreement, as here, the agreement and the plan documents should be read together as part of the same contract. Bland, 401 F.3d at 783. In construing these documents, federal principles of contract construction apply. Bland, 401 F.3d at 783; Rockford Powertrain, 350 F.3d at 702. Contract terms should be given their "ordinary and popular sense." Rockford Powertrain, 350 F.3d at 702 (internal quotations and citation omitted). A court should consider the contract in its entirety, give all its parts effect, and read the relevant plan documents as a whole. Bland, 401 F.3d at 783. If the contract is not ambiguous, the use of extrinsic evidence should be avoided. Rockford Powertrain, 350 F.3d at 702-03. A contract is ambiguous if it can reasonably be interpreted in more than one way. Bland, 401 F.3d at 784 (citing Murphy v. Keystone Steel & Wire Co., 61 F.3d 560, 566 (7th Cir. 1995)). It is important to note the distinction between a patent and latent ambiguity. An agreement is patently, or intrinsically ambiguous if it is ambiguous on its face.

Rosetto v. Pabst Brewing Co., 217 F.3d 539, 543 (7th Cir. 2000). If a document is patently ambiguous, extrinsic evidence is only admissible if the ambiguity is not disambiguated elsewhere in the agreement. Vallone v. CNA Financial Corp., 375 F.3d 623, 632-33 (7th Cir. 2004). By contrast, a latent ambiguity "is an ambiguity . . . that is recognized as such only when a contract clear on its face -- that is, to an uninformed reader -- is applied to a particular dispute." Rossetto, 217 F.3d at 542 (citations omitted). Allowing extrinsic evidence to show a latent ambiguity in a contract otherwise clear on its face has the potential to deprive written agreements of their force. Thus, the proof of a latent ambiguity must come from "objective" facts -- facts that are uncontested or ...

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