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Holland v. Williams Mountian Coal Co.

In case concerning who should bear expenses of retirement benefits payable to miners whose company went bankrupt, judgment in favor of defendants who took over operation of bankrupt company's mines; defendants were not "successors in interest" as required by the Coal Industry Retiree Health Benefit Act.

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Argued April 6, 2001

Under the Coal Industry Retiree Health Benefit Act of 1992 (the “Coal Act” or “Act”), 26 U.S.C. ss 9701-9722 (1994), the duty of paying premiums for the health benefits of certain retired miners falls on the “last signatory operator.” Id. s 9711(a). For the six miners whose benefits are involved here, it is undisputed that Toney’s Branch Coal Company was that operator. But Toney’s Branch is bankrupt. The Act also imposes the duty on any “successor in interest” of the last signatory operator. Id. s 9711(g)(1). Defendant firms Augusta Processing and Williams Mountain never employed any of the six miners, but right after the withdrawal of Toney’s Branch they successively operated Shumate Eagle mine (where Toney’s Branch had employed the six miners), using other miners who had worked at Shumate Eagle for Toney’s Branch, and equipment previously used by Toney’s Branch at the mine. The sole issue before us is whether Augusta and Williams Mountain can on that account be held liable as “successors in interest” of Toney’s Branch.

From 1991 until September 1994 Toney’s Branch, a “contract mining” firm, mined coal from Shumate Eagle under contract with the mine’s owner. In September 1994 the mine owner terminated the contract with Toney’s Branch and sold the mine. The new owner contracted with Augusta to operate the mine, which it did until October 1995. Augusta used equipment that it had purchased, in an arm’s length transaction, from an affiliate of Toney’s Branch. In October 1995 Williams Mountain bought the mining equipment from Augusta and took up the mining operation. Neither Augusta nor Williams Mountain ever held an ownership interest in Toney’s Branch, or vice versa. Meanwhile, Toney’s Branch continued mining operations elsewhere, until its demise in bankruptcy.

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