Nos. 00-3729/3798/3830 BERWIND CORPORATION v. Commissioner of Social Security

PRECEDENTIAL
Filed October 2, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 00-3729/3798/3830
BERWIND CORPORATION
v.
COMMISSIONER OF SOCIAL SECURITY;
UNITED MINE WORKERS OF AMERICA COMBINED
BENEFIT FUND; MICHAEL H. HOLLAND; WILLIAM P.
HOBGOOD; MARTY D. HUDSON; THOMAS O.S. RAND;
ELLIOT A. SEGAL; CARL E. VANHORN; GAIL R.
WILENSKY, as Trustees of the United Mine Workers of
America Combined Benefit Fund; THE UNITED MINE
WORKERS OF AMERICA 1992 BENEFIT PLAN;
A. FRANK DUNHAM, as Trustee of the United Mine
Workers of America 1992 Benefit Plan;
UNITED STATES OF AMERICA
United Mine Workers of America Combined Benefit Fund,
Michael H. Holland, William P. Hobgood, Marty D.
Hudson, Thomas O.S. Rand, Elliot A. Segal, Carl E.
VanHorn, Gail R. Wilensky, The United Mine Workers
of America 1992 Benefit Plan, A. Frank Dunham,
United States of America,
Appellants No. 00-3729
BERWIND CORPORATION,
Appellant No: 00-3798
v.
COMMISSIONER OF SOCIAL SECURITY;
UNITED MINE WORKERS OF AMERICA COMBINED
BENEFIT FUND; MICHAEL H. HOLLAND; WILLIAM P.
HOBGOOD; MARTY D. HUDSON; THOMAS O.S. RAND;
ELLIOT A. SEGAL; CARL E. VANHORN; GAIL R.
WILENSKY, as Trustees of the United Mine Workers of
America Combined Benefit Fund; THE UNITED MINE
WORKERS OF AMERICA 1992 BENEFIT PLAN;
A. FRANK DUNHAM, as Trustee of the United Mine
Workers of America 1992 Benefit Plan;
UNITED STATES OF AMERICA
BERWIND CORPORATION
v.
COMMISSIONER OF SOCIAL SECURITY;

-- 1 of 28 --

UNITED MINE WORKERS OF AMERICA COMBINED
BENEFIT FUND; MICHAEL H. HOLLAND; WILLIAM P.
HOBGOOD; MARTY D. HUDSON; THOMAS O.S. RAND;
ELLIOT A. SEGAL; CARL E. VANHORN; GAIL R.
WILENSKY, as Trustees of the United Mine Workers of
America Combined Benefit Fund; THE UNITED MINE
WORKERS OF AMERICA 1992 BENEFIT PLAN;
A. FRANK DUNHAM, as Trustee of the United Mine
Workers of America 1992 Benefit Plan;
UNITED STATES OF AMERICA
Commissioner of Social Security,
Appellant No. 00-3830
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(Civil Action No. 98-cv-05985)
District Judge: Hon. Jay C. Waldman
Argued: September 19, 2001
Before: SLOVITER, NYGAARD and McKEE, Circuit Judges.
(Opinion Filed: October 2, 2002)
2
PETER BUSCEMI, ESQ. (Argued)
JOHN MILLS BARR, ESQ.
ROBERT C. FARLEY, ESQ.
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, D.C. 20036
JOHN R. MOONEY, ESQ.
Mooney, Green, Gleason, Baker,
Gibson & Saindon, P.C.
1920 L Street, N.W., Suite 400
Washington, D.C. 20036
DAVID W. ALLEN, ESQ.
Office of General Counsel
UMWA Health and Retirement
Funds
Attorneys for Appellants/Cross-
Appellees UMWA Combined Benefit
Fund, UMWA 1992 Benefit Plan, and
their respective trustees
STUART E. SCHIFFER, ESQ.
Acting Assistant Attorney General
MICHAEL R. STILES, ESQ.
United States Attorney
MARK B. STERN, ESQ.
JONATHAN H. LEVY, ESQ. (Argued)
Attorneys, Appellate Staff
Civil Division, Room 9541
Department of Justice
601 D Street, N.W.

-- 2 of 28 --

Washington, D.C. 20530
Attorneys for Appellant/Cross-
Appellee, Commissioner of Social
Security
3
ARTHUR NEWBOLD, ESQ. (Argued)
ETHAN D. FOGEL, ESQ.
ANDREW S. MILLER, ESQ.
Dechert Price & Roads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attorneys for Appellee/Cross-
Appellant, Berwind Corporation
OPINION OF THE COURT
McKEE, Circuit Judge.
The basic question we must answer in these consolidated
appeals is whether assignments the Commissioner of Social
Security made pursuant to the Coal Industry Retiree Health
Benefit Act of 1992 (the "Coal Act"), 26 U.S.C. SS 9701-9722
are unconstitutional pursuant to Eastern Enterprises v.
Apfel, 524 U.S. 498 (1998). The Commissioner assigned
beneficiaries of the United Mine Workers of America
Combined Fund to Berwind Corporation as provided in the
Coat Act. Those beneficiaries were either miners who had
been employed by Berwind prior to 1962 or they were
dependents of miners who had been so employed. Berwind
permanently ceased coal mining operations in 1962.
Nevertheless, for the reasons that follow, we hold that
assignments are valid because the Act is not
unconstitutional as applied to Berwind.
I. THE COAL ACT
This case involves yet another of the disputes arising
from the historic enactment of the Coal Act and the
economic and social forces that spawned it. The history of
the Act has been recited in great detail in the Supreme
Court’s opinion in Eastern Enterprises v. Apfel , and to a
lesser extent in our opinions in Unity Real Estate v.
Hudson, 178 F.3d 649 (3d. Cir. 1999), and Anker Energy
Co. v. Consolidation Coal Co., 177 F.3d 161 (3d Cir. 1999).1
_________________________________________________________________
1. See also our discussion in Shenango Inc. v. Apfel, No. 00-2525, ___
F.3d ___ (3d Cir. 2002).
4
Thus, we need not repeat that history here except insofar
as it may be helpful to our discussion.
The Coal Act was enacted in 1992 "to resolve the

-- 3 of 28 --

imminent insolvency of multi-employer trusts created by
coal industry agreements," Coltec v. Hobgood , 280 F.3d
262, 265 (3d Cir. 2002). Congress wanted "to ensure that
retired coal miners and their dependents would continue to
receive the health and death benefits they had been
receiving since the 1940s pursuant to a series of collective
bargaining agreements." Anker Energy Corp. v.
Consolidation Coal Co., 177 F.3d at 163-64.
In enacting the Coal Act, Congress intended to remedy
problems with funding retiree health benefits in the coal
industry by providing for sufficient operating assets for
health benefit plans. Congress also intended to provide for
the continuation of a privately funded and self-sufficient
program that would deliver health care benefits to retired
miners and their dependents. Pub.L. No. 102-486,
S 19142(b), 106 Stat. 3036, 3037 (1992), 26 U.S.C. S 9701
note. Congress created two new statutory trust funds to
achieve these ends; the Combined Fund and the 1992 Plan.2
The Coal Act required that certain benefit plans
previously established under collective bargaining
agreements with the United Mine Workers of America
("UMWA") be merged into a new plan -- the United Mine
Workers of America Combined Benefit Fund. 26 U.S.C.
S 9702(a). This "Combined Fund" provides health and death
benefits to retired coal miners and dependents who were
eligible to receive benefits from the UMWA 1950 or 1974
benefit plans as of July 20, 1992. 26 U.S.C. SS 9703(a),
(b)(1), (c), (e) & (f). The 1992 Plan was an entirely new entity
designed to provide benefits to those eligible retirees and
their dependents who are not beneficiaries of the Combined
Fund and who are not receiving health care coverage
directly from their former employees. 26 U.S.C.S 9712.
_________________________________________________________________
2. The Combined Fund and the 1992 Plan are two of three components
formulated by Congress to achieve the purposes of the Coal Act. The
second component is the mandated continuation of individual employer
health plans maintained by signatories to the 1978 and later NBCWAs.
26 U.S.C. S 9711. It is not implicated in these appeals.
5
Benefits paid through the Combined Fund are funded in
part by premiums imposed on "signatory coal operators,"
i.e., coal operators that employed an eligible beneficiary and
that also signed a collective bargaining agreement between
the UMWA and Bituminous Coal Operators’ Association
("BCOA").3 The Act also required that other "related
persons" connected to the signatory operator by common
ownership or control pay such premiums. See 26 U.S.C.
SS 9701(c)(1) & (c)(2), 9704, 9706.
The Coal Act directs the Commissioner of Social Security4
to assign each individual beneficiary to one of these
signatory coal operators or its "related person" in
accordance with specified criteria. These criteria establish a
system of priorities based upon the length of the

-- 4 of 28 --

beneficiary’s service, the date of his service, and whether
his employer participated in national collective bargaining
agreements with the UMWA that were signed in 1978 or
subsequent years.5 26 U.S.C.S 9706(a). The system of
assigning beneficiaries by the Commissioner involves three
steps or tiers that we have described as the "linchpin" of
the Coal Act’s statutory scheme. Unity Real Estate Co. v.
Hudson, 178 F.3d at 654. The Coal Act provides:
(a) In general.--For purposes of this chapter, the
Commissioner of Social Security shall, before October
1, 1993, assign each coal industry retiree who is an
eligible beneficiary to a signatory operator which (or
any related person with respect to which) remains in
business in the following order:
_________________________________________________________________
3. The BCOA is a multiemployer group of coal producers.
4. Originally, the Coal Act provided that the Secretary of Health and
Human Services would be responsible for the assignment of Combined
Fund beneficiaries. The Secretary delegated this task to the
Commissioner of Social Security. In 1994, Congress transferred the
statutory responsibility directly to the Commissioner. See Social Security
Independence and Program Improvements Act of 1994, Pub.L.No. 10-3-
296, SS 105(a)(2)(A), 108(h)(9)(A), 108 Stat. 1472, 1487-88 (1994).
5. Inasmuch as it is a fair generalization to assume that practically all
miners during the relevant period were male, we will use the masculine
pronoun throughout.
6
(1) First, to the signatory operator which--
(A) was a signatory to the 1978 coal wage
agreement or any subsequent coal wage agreement,
and
(B) was the most recent signatory operator to
employ the coal industry retiree in the coal industry for
at least 2 years.
(2) Second, if the retiree is not assigned under
paragraph (1), to the signatory operator which--
(A) was a signatory to the 1978 coal wage
agreement or any subsequent coal wage agreement,
and
(B) was the most recent signatory operator to
employ the coal industry retiree in the coal industry.
(3) Third, if the retiree is not assigned under
paragraph (1) or (2), to the signatory operator which
employed the coal industry retiree in the coal industry
for a longer period of time than any other signatory
operator prior to the effective date of the 1978 coal
wage agreement.

-- 5 of 28 --

26 U.S.C. S 9706(a)(1), (2) & (3). Once the Commissioner
makes an assignment under S 9706, the assignee must
then pay annual premiums to the Combined Fund based
on the amounts needed to provide health and death
benefits for the assigned beneficiaries.
If a miner or his dependents cannot be assigned to an
extant company under this scheme, benefits are funded by
either asset transfers from one of the Combined Fund’s
predecessor benefit plans, see 26 U.S.C.S 9705(a)),
transfers from the U. S. Treasury’s Abandoned Mine Land
Reclamation Fund, see 26 U.S.C. S 9705(b), 30 U.S.C.
S 1232(h), or, if those sources are insufficient or
unavailable, an additional unassigned -- or "orphaned" --
retiree premium is imposed on all signatory operators. See
26 U.S.C. SS 9704(d), 9705(a)(3)(B), 9705(b)(2).
The Combined Fund’s assignment structure also includes
a set of statutory provisions governing the imposition of
Coal Act liability on business entities that are deemed
7
"related persons" with respect to miners’ original employers.
The Coal Act sets forth several provisions that, taken
together, treat a commonly controlled group of related
corporations as a single employer. This "grouping" is an
integral part of the Coal Act. It allows responsibility for
miners’ benefits to be assigned both to the original
employer and to a wide range of affiliated companies or
successors. Premium assignments may be made either to a
"signatory operator" that employed the miner or to any
"related person." 26 U.S.C. S 9706(a). A"related person" is
defined to include all members of a commonly controlled
group of corporations that includes the signatory, other
businesses under common control with the signatory, and
subsequent successors in interest to any of these affiliated
entities. 26 U.S.C. S 9701(c)(2)(A). A "controlled group" of
corporations is in turn defined as a group of companies in
which a common parent or concentration of individual
economic interests owns or controls more than 50% of the
stock in each of the affiliated companies. See 26 U.S.C.
S 9701(c)(2)(A), incorporating by reference 26 U.S.C. S 52(a)
& (b), which in turn incorporates by reference 26 U.S.C.
S 1563(a). The determination of which entities are "related
persons" for purposes of the Coal Act turns on the
companies’ structure and/or ownership as of a "look back"
date of July 20, 1992. 26 U.S.C. S 9701(c)(2)(B).
These "related persons" have a broad, shared
responsibility for statutory premiums. The Coal Act
expressly provides that any company within the commonly
controlled group may be treated as having employed a
related signatory’s miners. 26 U.S.C. S 9706(b). In addition,
related persons may be held "jointly and severally liable for
any premium required to be paid" by its affiliated signatory
operator. 26 U.S.C. S 9704(a). Congress instructed the
Commissioner to complete initial assignment of miners

-- 6 of 28 --

promptly after the Coat Act’s 1992 enactment. The statute
thus states: "For purposes of this chapter, the
Commissioner of Social Security shall, before October 1,
1993, assign each coal industry retiree who is an eligible
beneficiary to a signatory operator . . . ." 26 U.S.C. S 9706(a).6
_________________________________________________________________
6. We have, however, held that the Commissioner did not lose authority
to make such assignments after October 1, 1993. See Shenango Inc. v.
Apfel, No. 00-2525, ___ F.3d ___ (3d Cir. 2002).
8
With regard to the 1992 Plan, the Coal Act also requires
the last signatory operator to which each 1992 Plan
beneficiary is attributable to pay a monthly premium for
each attributable beneficiary to cover the cost of that
beneficiary’s health care. See 26 U.S.C.S 9712(d)(1)(b), (3).
The Commissioner of Social Security therefore plays no role
in assigning 1992 Plan beneficiaries. Rather, the last
signatory operator of each such beneficiary is automatically
responsible for the respective beneficiary’s health care. If
the last signatory operator under the 1992 Plan is no longer
in business, its premiums are provided by additional
premiums imposed on a proportional basis on signatories
to the 1988 National Bituminous Coal Wage Agreement
("NBCWA"). 26 U.S.C. SS 9701(c)(3); 9712(d)(1)(A), (6).
II. BERWIND CORPORATION’S HISTORY AND
ITS INVOLVEMENT IN THE COAL INDUSTRY
Berwind Corporation was originally incorporated in 1915
as "The Berwind-White Coal Mining Company". Berwind-
White signed the 1950 NBCWA and the 1951, 1952, 1955,
1956 and 1958 amendments thereto. The company mined
coal until 1962, when it permanently ceased coal mining
operations. It never employed any UMWA-represented coal
miners in any capacity after it closed its last mine in 1962.
However, in 1963, Berwind-White became the 98%
shareholder of Reitz Coal Company. It later acquired the
remaining 2% of the outstanding shares thus making Reitz
Coal Company its wholly owned subsidiary. Reitz Coal
Company was a signatory to the 1950 NBCWA when
Berwind-White acquired it.7
In 1967, Berwind-White changed its name to "Berwind
Corporation." In 1978, Berwind formed a partnership with
Scallop Coal Corp., affiliate of Royal Dutch Shell Petroleum
Corp., in which each partner had a 50% interest. The
_________________________________________________________________
7. The New River and Pocahontas Consolidated Coal Company ("New
River") operated mines in West Virginia and employed UMWA-
represented miners until 1961. New River merged into Berwind-White in
September, 1964. New River was a signatory to the 1959 NBCWA, and
the 1951, 1952, and 1955 amendments thereto.
9

-- 7 of 28 --

partnership, known as "Reitz Coal Associates", was formed
for the purpose of marketing coal produced by Reitz Coal
Company, which was still a subsidiary of Berwind.
In 1983, Reitz Coal Associates changed its name to
"Devon Coal Associates." That same year, Reitz Coal
Company leased its coal mining assets and coal reserves to
the Midlothian Company, which in turn subleased them to
Devon Coal Associates. Devon Coal Associates operated the
mines owned by Reitz Coal Company and assumed Reitz
Coal Company’s obligations under the 1981 NBCWA.
In July 1983, Berwind transferred its 50% interest in the
Devon Coal Associates partnership to Old Devon,
Incorporated; a wholly-owned subsidiary of Berwind. Reitz
Coal Company also changed its name to "Reitz Corporation"
and the Devon Coal Associates partnership changed its
name to "Reitz Coal Company."
In May 1992, Old Devon, Inc., purchased the remaining
50% interest in the partnership now known as Reitz Coal
Company. As a result, the partnership ceased to exist by
operation of law and all of the partnership’s assets and
liabilities vested in Old Devon, Inc.
On June 19, 1992, Old Devon, Inc., changed its name to
"Reitz Coal Co." This new Reitz Coal Co. remained a wholly-
owned subsidiary of Berwind. On December 31, 1993, the
original Reitz, i.e., "Reitz Corp.", was dissolved.
Although the constant name changes and shifting
corporate structures create a rather ephemeral corporate
lineage, one fact remains essential for our analysis: from
1963 until today, Berwind has owned at least 98% of the
entity originally known as "Reitz Coal Co."; an entity which
signed the 1974, 1978 and 1981 NBCWAs. In September of
1984, the UMWA declared a strike against the entity
originally known as Reitz Coal Co. It was unable to reach
an agreement with the UMWA on a successor contract to
the 1981 NBCWA and its mines never reopened. It never
mined coal after 1984, either with or without UMWA
miners, and it never again employed UMWA members in
any other capacity. Today, Berwind is a closely-held, family
corporation which has investments in a wide variety of
businesses, a number of which are unrelated to mining
10
coal. However, Berwind remains in the coal industry as
some of its subsidiaries lease land to coal mining
companies and others purchase coal and prepare it for
resale. Thus, Berwind is "in business" for purposes of the
Coal Act. 26 U.S.C. S 9701(c)(7). In addition, Berwind
admits that it still owns the now defunct Reitz Corp. and
that Berwind and Reitz are "related persons" as defined in
the Coal Act. 26 U.S.C. S 9701(c)(2).

-- 8 of 28 --

III. THE COMMISSIONER’S COAL ACT ASSIGNMENTS
In accordance with S 9706(a) of the Coal Act, 1,923
Combined Fund Beneficiaries who were previously
employed by, or were dependents of people previously
employed by, Berwind (and certain companies that merged
into Berwind in the 1960s) were assigned to Berwind by the
Commissioner as of February 1, 1993. As of October 1,
1998, the number of Combined Fund beneficiaries assigned
to Berwind had dropped to 1,209, primarily due to the high
mortality rate of the Combined Fund’s elderly beneficiary
population. Berwind’s monthly liability for the Plan Year
1998 -- the most recent in the record -- was $295,793.93.
Berwind unilaterally ceased making payments in or around
July 1998, and, as of May 25, 1999, its Combined Fund
liability was $3,220,473.81. Berwind was also assigned
premium liability for five Combined Fund beneficiaries who
had worked for Reitz.
Under S 9712 of the Coal Act, 26 U.S.C. S 9712, one 1992
Plan beneficiary was attributable to Berwind from the
outset, and two additional 1992 Plan beneficiaries, who
began receiving benefits in March of 1995, were also
attributable to Berwind.8 As of December 1998, the number
of 1992 Plan beneficiaries directly attributable to Berwind
had dropped to two. Berwind’s monthly premium was then
$566.50. Berwind unilaterally ceased making payments to
the 1992 Plan in or around July 1998 and, as of May 25,
1999, Berwind owed the 1992 Plan $6,299.62.9
_________________________________________________________________
8. As we have noted, the Commissioner plays no part in the assignment
of 1992 Plan Beneficiaries.
9. Berwind claims that since the inception of its liability under the Coal
Act, it has paid $16,779,414 in premiums to the Combined Fund and
11
IV. BERWIND’S RESPONSE TO THE COMBINED
FUNDS BENEFICIARIES’ ASSIGNMENTS
On September 2, 1993, after the Commissioner made
Coal Act assignments to Berwind, Berwind and three co-
plaintiffs sued the Secretary of Health and Human Services10
and the Combined Fund in the United States District Court
for the Southern District of Indiana. Plaintiffs claimed that
the Commissioner’s Coal Act assignments violated the
Takings and Due Process Clauses of the Fifth Amendment.
The district court granted summary judgment in favor of
the defendants and against Berwind. That ruling was
affirmed on appeal, and the Supreme Court denied
certiorari. Templeton Coal Co. v. Shalala , 882 F. Supp. 799
(S. D. Ind. 1995), aff ’d sub nom., Davon, Inc. v. Shalala, 75
F.3d 1114 (7th Cir.), cert. denied, 519 U.S. 808
(1996)("Berwind I"). Twenty-two months after certioriari was
denied in Berwind I, the Supreme Court decided Eastern
Enterprises v. Apfel.

-- 9 of 28 --

V. EASTERN ENTERPRISES AND THE
COMMISSIONER’S RESPONSE
In Eastern Enterprises, the Court considered the
constitutionality of the Coal Act as applied to Eastern
Enterprises, a company that had been involved in coal
mining until 1965, and had signed every NBCWA from
1947 until 1964. Pursuant to 26 U.S.C. S 9706(a)(3), the
Commissioner assigned Coal Act liability to Eastern for over
1000 miners, based on Eastern’s status as the pre-1978
signatory operator for whom the miners had worked for the
longest period of time. Its total liability was estimated to be
between $50 and $100 million. Eastern claimed that
S 9706(a)(3) was unconstitutional as applied to it because
_________________________________________________________________
$36,386 in premiums to the 1992 Plan. In June 1998, Berwind
calculated the pre-tax, net present value of its total future liability under
the Coal Act to be approximately $24.5 million. Actuarial projections
show that Berwind will be liable for Coal Act premiums until
approximately the year 2040. Amended Complaint, atPP 14, 15, 18 (App.
at 124).
10. See n.4 supra.
12
the enactment violated both the Due Process and Takings
Clauses of the Fifth Amendment.
Although a majority of the justices agreed S 9706(a)(3)
was unconstitutional as applied to Eastern Enterprises,
they could not agree on a rationale. A four-justice plurality
concluded that the Act violated the Fifth Amendment as
applied to Eastern as it was an unconstitutional taking.
Eastern Enterprises, 524 U.S. at 537. The plurality
recognized that a Takings analysis is "essentially an ad hoc
and fact intensive" inquiry. Nonetheless, the justices were
able to identify three factors that were generally of
particular significance: "the economic impact of the
regulation, its interference with investment backed
expectations, and the character of the governmental
action." Id. at 523-524 (quoting Kaiser Aetna v. United
States, 444 U.S. 164, 175 (1979)). The plurality then
reviewed its Takings Clause analysis in cases involving
legislative schemes similar to the Coal Act. This included
suits under the Black Lung Benefits Act, and the
Multiemployer Pension Plan Amendments Act ("MPPAA")
which was enacted to supplement the Employee Retirement
Income Security Act ("ERISA"). The Court concluded:
Congress has considerable leeway to fashion economic
legislation, including the power to affect contractual
commitments between private parties. Congress may
also impose retroactive liability to some degree,
particularly where it is confined to short and limited
periods required by the practicalities of producing
national legislation. Our decisions, however, have left
open the possibility that legislation might be

-- 10 of 28 --

unconstitutional if it imposes severe retroactive liability
on a limited class of parties that could not have
anticipated the liability, and the extent of that liability is
substantially disproportionate to the parties’ experience.
Id. at 528-529 (citation and internal quotations omitted)
(emphasis added).
The plurality, applied this Takings Clause jurisprudence
to Eastern Enterprises by first focusing on the economic
impact of the Coal Act, and concluded that the Act placed
a "considerable financial burden" on Eastern Enterprises.
13
Id. at 529. Although the plurality conceded that this
financial burden was not a "permanent physical occupation
of Eastern’s property of the kind [usually] viewed as a per
se taking," it reasoned that decisions upholding the MPPAA
"suggest that an employer’s statutory liability for
multiemployer pension plans should reflect some
proportionality to its experience with the plan." Id. at 530
(citation and internal quotations omitted). The assignments
to Eastern lacked such proportionality. Although Eastern
did contribute to the 1947 and 1950 W&R Funds, "it
ceased its coal mining operations in 1965 and neither
participated in negotiations nor agreed to make
contributions in connection with the 1974, 1978, or
subsequent NBCWAs." Id. The absence of any nexus to the
1974 and later NBCWAs was significant because those
agreements were the "first [to] suggest an industry
commitment to funding lifetime health benefits for both
retirees and their family members." Id. Thus, because
Eastern Enterprises had neither contemplated liability for
the provision of lifetime benefits to miners nor contributed
to the miners’ expectations of such benefits, the plurality
concluded that, even though Eastern had employed the
assigned miners at some point, "the correlation between
Eastern and its liability to the Combined Fund is tenuous,
and the amount assessed against Eastern resembles a
calculation made in a vacuum." Id. at 531 (citation and
internal quotations omitted).
The plurality also concluded that proportionality was
lacking with regard to the two other Takings Clause factors.
The Coal Act’s "substantial and particularly far reaching"
retroactivity11 interfered with Eastern’s reasonable
investment backed expectations. Id. at 534. The plurality
reasoned that because a coal industry employer could not
have contemplated liability for lifetime benefits to miners
until the 1974 NBCWA, "the Coal Act’s scheme for
_________________________________________________________________
11. Coal Act assignments operate retroactively because they require an
assignee to use current funds to provide benefits for miners after the
assignee believed its liability to the miners had been settled. See Eastern
Enterprises, at 534 (O’Connor, J.) ("[T]he Coal Act operates retroactively,
divesting Eastern of property long after the company believed its
liabilities under the 1950 W&R Fund to have been settled.").

-- 11 of 28 --

14
allocation of Combined Fund premiums is not calibrated
either to Eastern’s past actions or to any agreement--
implicit or otherwise -- by the company." Id. at 536.
Finally, the plurality concluded that the "nature of
governmental action . . . is quite unusual," and"implicates
fundamental principles of fairness underlying the Takings
Clause," because it "singles out certain employers to bear a
burden that is substantial in amount, based on the
employers’ conduct far in the past, and unrelated to any
commitment that the employers’ made or to any injury they
caused." Id. at 537.
Therefore, because each of the significant factors in a
Takings analysis was implicated, the plurality found that
the Act was an unconstitutional taking as applied to
Eastern Enterprises.
Justice Kennedy, provided the fifth vote striking down the
Act as unconstitutional as applied, but he disagreed with
the plurality’s Takings Clause analysis. Rather, he
concluded that the Act’s retroactivity violated due process.
Id. at 539-50. He applied an "arbitrary and irrational"
standard of review, Id. at 547, and focused on the fact that
Eastern Enterprises had not signed a 1974 or later
NBCWA. He reasoned:
Eastern was once in the coal business and employed
many of the beneficiaries, but it was not responsible
for their expectation of lifetime benefits or for the
perilous condition of the 1950 and 1974 plans which
put the benefits in jeopardy. As the plurality discusses
in detail, the expectation was created by promises and
agreements made long after Eastern left the coal
business. Eastern was not responsible for the resulting
chaos in the funding mechanism caused by other coal
companies leaving the framework of the National
Bituminous Coal Wage Agreement. This case is far
outside the bounds of retroactivity permissible under our
law.
Id. at 550 (emphasis added).
The four dissenting justices agreed with Justice Kennedy
that the application of the Act did not violate the Takings
15
Clause, but disagreed with his view that the Act violated
the Due Process Clause. Id. at 556-67.
In subsequent cases discussing the decision in Eastern
Enterprises, we have noted that the "splintered nature" of
the Court’s decision made "it difficult to distill a guiding
principle from Eastern." Unity Real Estate Co., 178 F.3d at
658. However, as recited above, both the plurality and

-- 12 of 28 --

Justice Kennedy focused on one significant fact. The 1974,
1978 and subsequent NBCWAs were the first wage
agreements that included a commitment to funding lifetime
health benefits for retired miners and their dependents. No
such commitment was contained in any earlier wage
agreement. Because Eastern Enterprises was not a
signatory to either the 1974 or the 1978 NBCWAs, it could
not have contemplated that it would be responsible for
contributing to the miners’ expectation of lifetime health
benefits. See Anker Energy Corp. v. Consolidation Coal Co.,
177 F.3d at 172 ("[A]nalysis of the decisions in Eastern
Enterprises leads us to the conclusion that a majority of the
Court would find the Act unconstitutional when applied to
an employer that did not agree to the 1974 or subsequent
NBCWAs, while application of the Act to a signatory to the
1974 or subsequent wage agreement would be an entirely
different matter."); see also, Association of Bituminous
Contractors, Inc. v. Apfel, 156 F.3d 1246, 1257 (D.C. Cir.
1998)("The clear implication of each opinion in Eastern
Enterprises is that employer participation in the 1974 and
1978 agreements represents a sufficient amount of past
conduct to justify the retroactive imposition of Coal Act
liability (for the dissenting justices, of course, such
participation is not even necessary."))
On September 24, 1998, the Commissioner voided the
Coal Act beneficiary assignments of 113 companies that he
concluded were similarly situated to Eastern Enterprises.
He also decided that no beneficiaries would be assigned to
another 11 similarly situated companies that had not yet
received assignments. The group whose assignments were
voided by the Commissioner included Berwind’s three co-
plaintiffs in Berwind I.12 Berwind also ceased making
_________________________________________________________________
12. The Court decided Eastern on June 24, 1998, twenty-two months
after it denied certiorari in Berwind I .
16
premium payments (after June 1998) and requested that
the Commissioner void Berwind’s assignment as well. The
Commissioner refused, and this lawsuit followed.
VI. DISTRICT COURT PROCEEDINGS
On November 12, 1998, Berwind filed suit in the United
States District Court for the Eastern District of
Pennsylvania seeking a declaration that the Coal Act
violates the Takings and Due Process Clauses of the Fifth
Amendment. Berwind named the Commissioner of Social
Security and the Combined Fund and its Trustees as
defendants. On February 3, 1999, Berwind amended its
complaint by naming the 1992 Plan and its Trustees as
additional defendants.
In Counts I and II of its eight count complaint, Berwind
alleged that the Coal Act violates the Due Process Clause
and the Takings Clause as the Act applies to Berwind. In

-- 13 of 28 --

Count III, Berwind alleged that the entire Coal Act is
unconstitutional. In Count IV, Berwind asserted a statutory
claim for a refund of premiums paid since April 1995.
Berwind argued that such a refund was required under
Section 9706(f)(3) of the Act, 26 U.S.C. S 9706(f)(3). In
Count V, Berwind sought relief against the Commissioner of
Social Security, claiming that the Commissioner violated
the Administrative Procedure Act, 5 U.S.C. S 706(2)(A), by
refusing to void the assignment of Combined Fund
beneficiaries to Berwind after Eastern Enterprises. In
Counts VI, VII and VIII, Berwind alleged alternative claims
for the refund of premiums that it had paid to the
Combined Fund and the 1992 Plan since April 1995.
Specifically, in Count VI, Berwind alleged a common law
claim for restitution; in Count VII, a claim for a refund
under the Employee Retirement Income Security Act
("ERISA"), as amended, 29 U.S.C. S 1001 et seq.; and, in
Count VIII, a claim against the United States for a tax
refund.
The Combined Fund, the 1992 Plan, and their respective
Trustees (collectively the "Trustees") answered and filed
counterclaims seeking a declaration that the Coal Act does
not violate either the Takings or the Due Process Clauses
17
as applied to Berwind. They also sought to recover the
assessed health care premiums that Berwind unilaterally
stopped paying after the Court’s Eastern Enterprises
decision.
In time, all parties moved for summary judgment and the
district court ruled on those motions in two separate
opinions and orders. Berwind Corp. v. Apfel, 94 F. Supp.2d
597 (E. D. Pa. 2000) and Berwind Corp. v. Apfel , 2000 WL
1337112 (E. D. Pa. Sept. 15, 2000). The district court held
that Berwind had fully litigated its constitutional claims in
Templeton Coal Co. v. Shalala, supra and that the adverse
judgment in that case was res judicata. Accordingly, the
district court dismissed Counts I, II and III. However, the
district court found that Berwind could proceed with its
APA challenge to the Commissioner’s decision not to void
Berwind’s Combined Fund beneficiary assignments after
Eastern Enterprises. The court also ruled that the
Commissioner had acted arbitrarily and capriciously in
deciding not to void those assignments. Therefore, the
district court granted summary judgment to Berwind on its
APA claim in Count V and on its claim for restitution in
Count VI. It awarded Berwind more than $14 million from
the Combined Fund and more than $35,000 from the 1992
Plan,13 and dismissed Berwind’s remaining claims. The
court rejected Berwind’s claims under the Coal Act itself
and under ERISA (as referenced in the Coal Act) because
neither statute provides for a cause of action to recover
alleged overpayments. Finally, the district court dismissed
Berwind’s claim for a tax refund because that claim was
only made in the alternative and it was therefore
_________________________________________________________________

-- 14 of 28 --

13. The district court, believing that the "1992 Plan assignments . . . are
made in precisely the manner as Combined Fund assignments. . . . ," 94
F.Supp.2d at 608 n.10, regarded the APA claim as dispositive of the
1992 Plan. However, as noted earlier, the Coal Act allocates financial
responsibility for the 1992 Plan in a manner completely different from
the Combined Fund. The Commissioner plays no part in assigning
beneficiaries to the 1992 Plan. In fact, beneficiaries are not even
"assigned" to the 1992 Plan. Rather, the last signatory operator of each
1992 Plan beneficiary is automatically responsible for the beneficiary’s
health care premium. 26 U.S.C. S 9712(d)(1)(b), (3). Moreover, Berwind
never asked for any relief against the 1992 Plan.
18
superfluous because the court had ordered restitution from
the Funds.
The district court also dismissed the Trustees’
counterclaims, except that it found that Berwind was a
"related person" to Reitz and that Berwind was therefore
obligated to pay Coal Act premiums for those assigned
beneficiaries who were retirees of Reitz. These appeals
followed.
VII. DISCUSSION
At first glance, these consolidated appeals appear to raise
several interwoven, yet distinct issues. However, upon close
examination, all of the issues -- Berwind’s as applied
constitutional challenges,14 its APA claim and its premium
_________________________________________________________________
14. Berwind does not contest the district court’s dismissal of its claim
that the entire Coal Act is unconstitutional. The Commissioner and the
Trustees claim that as a result of Templeton Coal Co. v. Shalala,
Berwind’s as applied constitutional challenge is barred by the doctrine of
res judicata. The Trustees also claim that Berwind’s common law
restitution claim for premiums paid is similarly barred by res judicata
because it is premised on the as applied unconstitutionality of the Coal
Act. Berwind responds by arguing that its as applied challenge and its
restitution claim are not barred by res judicata because they are based
on causes of action that arose after the district court in Berwind I
dismissed its constitutional challenge to the assignments. In Berwind’s
view, each new assessment of premium liability subsequent to the
district court’s decision in Berwind I constitutes a new cause of action.
We do not believe that we are required to resolve this issue. "[R]es
judicata is an affirmative defense and not a doctrine that would defeat
subject matter jurisdiction of this court." Rycoline Products, Inc. v. C &
W Unlimited, 109 F.3d 883, 886 (3d Cir. 1997) (quoting Livera v. First
Nat’l Bank of New Jersey, 879 F.2d 1186, 1190 (3d Cir. 1989)).
Therefore, we can proceed to the merits of the as applied constitutional
challenge and the common law restitution claim without violating the
Supreme Court’s prohibition against assuming "hypothetical jurisdiction"
to reach the merits of a claim. Steel Company v. Citizens for a Better
Environment, 523 U.S. 83, 101 (1998).
The Commissioner does not claim that Berwind’s APA claim is barred

-- 15 of 28 --

by res judicata. Yet, as explained below, see n.15, infra, determining
whether the Commissioner violated the APA requires the same inquiry
that we would have to undertake to determine if the Coal Act is
unconstitutional as applied to Berwind.
19
refund claims -- turn on whether Berwind is in a
substantially identical position to the plaintiff in Eastern
Enterprises.15
As we noted earlier, the Court’s judgment in Eastern
Enterprises was not based on any single rationale. Where
that happens, " ‘the holding of the Court may be viewed as
that position taken by those Members who concurred in the
judgment on the narrowest grounds.’ " Marks v. United
States, 430 U.S. 188, 193 (1977)(quoting Gregg v. Georgia,
428 U.S. 153, 169 n.15 (1976)). However, the Marks rule
only applies where "one opinion can be meaningfully
regarded as ‘narrower’ than another" and can"represent a
common denominator of the Court’s reasoning." Rappa v.
New Castle County, 18 F.3d 1043, 1057 (3d Cir.
1994)(quoting King v. Palmer, 950 F.2d 771, 781 (D.C. Cir.
1991)(en banc). Therefore, "in cases where approaches
differ, no particular standard is binding on an inferior court
because none has received the support of a majority of the
Supreme Court." Anker Energy Corp., 177 F.3d at 170
(citing Rappa v. New Castle County, 18 F.3d at 1058).
In Unity Real Estate, we acknowledged that"Justice
Kennedy’s substantive due process reasoning in Eastern
_________________________________________________________________
15. Procedurally, these appeals are here as a result of the district court’s
grant of summary judgment. Thus, our standard of review would be
plenary. Fertilizer Institute v. Bowen, 163 F.3d 774, 777 (3d Cir. 1998).
However, we review the Commissioner’s action as final agency action
under the APA to determine if the administrative decision was "arbitrary,
capricious, an abuse of discretion or otherwise not in accordance with
law." Anker Energy Corp. v. Consolidation Coal Co., 177 F.3d at 169
(quoting 5 U.S.C. S 706(A)(2)). The district court’s decision to grant
equitable restitution to Berwind is subject to an abuse of discretion
standard of review, so long as we agree with the district court’s legal
conclusions. See Bechtel v. Robinson, 886 F.2d 644, 647 (3d Cir. 1989).
However, because the district court granted equitable restitution to
Berwind after it found that the Commissioner violated the APA by not
voiding Berwind’s Combined Fund beneficiary assignments in light of
Eastern Enterprises, we must also determine if Berwind is in a
substantially identical position to the plaintiff in Eastern Enterprises.
That inquiry is the same inquiry that would be undertaken in
determining the constitutionality of the Coal as applied to Berwind.
Thus, our standard of review is de novo. Anker Energy Co. v.
Consolidation Coal Co., 177 F.3d at 169.
20
Enterprises is not a ‘narrower’ ground that we might take to
constitute the controlling holding." 178 F.3d at 658.

-- 16 of 28 --

Consequently, the only binding aspect of the fragmented
decision in Eastern Enterprises is its "specific result," i. e.,
the Act is unconstitutional as applied to Eastern
Enterprises. Anker Energy Corp., 177 F.3d at 170 (citing
Association of Bituminous Contractors, Inc. v. Apfel , 156
F.3d 1246, 1255 (D.C. Cir. 1998)). Given our analysis in
Unity Real Estate, "Eastern . . . mandates judgment for the
plaintiffs only if they stand in a substantially identical
position to Eastern Enterprises with respect to both the
plurality and Justice Kennedy’s concurrence." 16 178 F.3d at
659.
Berwind concedes that it and Reitz are "related persons"
as defined by the Coal Act, and therefore its obligation for
the premium liability for the five Combined Fund
beneficiaries formerly employed by Reitz is constitutional.
However, Berwind submits that the assignments of the
Combined Fund beneficiaries formerly employed by it are
unconstitutional as applied because of Berwind’s
substantial identity to Eastern Enterprises. Berwind claims
this substantial identity because, like Eastern Enterprises,
it stopped its coal mining operations in the early 1960s;
and, like Eastern Enterprises, it never signed a 1974 or
later NBCWA. Therefore, argues Berwind, it never created
or reinforced an expectation of lifetime health benefits in its
assigned Combined Fund beneficiaries or their dependents.
Indeed, Berwind argues that its circumstances are"better
than" Eastern’s, because Berwind stopped coal mining
three years earlier than Eastern Enterprises did and its
total Coal Act liability "is equal to or even larger than
Eastern’s was -- as much as $138 million cumulatively,
compared to between $51 million and $100 million for
Eastern." Berwind’s Brief as Appellee, at 23.
Berwind makes no other constitutional challenge to the
_________________________________________________________________
16. We also held in Unity Real Estate that because of the concurrence
and dissent in Eastern Enterprises, "we are bound to follow the five-four
vote against the takings claim. . . ." 178 F.3d at 659; see also Anker
Energy Corp., at 170 n.3. Therefore, Berwind’s challenge is on
substantive due process grounds.
21
Combined Fund assignments. It does not challenge the
constitutionality of the Act’s "related person" provisions and
it does not challenge the constitutionality of the"controlled
group" provisions. Therefore, as we said earlier, Berwind’s
as applied constitutional challenge, its APA claim and its
restitution claim rise or fall on whether it is in a
substantially identical position to Eastern Enterprises. For
the reasoning that follows, we conclude that Berwind’s
position is materially different from Eastern Enterprises’
and that the difference requires a different outcome.
Eastern Enterprises began operations in 1929 and mined
coal in West Virginia and Pennsylvania until 1965. Eastern,
524 U.S. at 516. It was a signatory to each NBCWA

-- 17 of 28 --

executed between 1947 and 1964 and made contributions
to the 1947 and 1950 welfare and retirement funds of over
$60 million. Id. In 1963, Eastern decided to spin-off its coal
operations to a subsidiary, Eastern Associated Coal Corp.
("EACC"). Id. The spin-off was completed by 1965, but
Eastern retained its stock interest in EACC through a
subsidiary corporation, Coal Properties Corp. ("CPC") until
1987, and it received dividends of more than $100 million
from EACC during that period. Id.
After 1965, Eastern ceased coal mining operations and
was therefore not a signatory to the 1974 NBCWA or any
subsequent wage agreements. As we have noted, the 1974
wage agreement was the first one to require an industry-
wide commitment to funding lifetime health benefits of
miners and their dependents. Id. at 530. However, EACC
did sign the 1974 and later NBCWAs even though Eastern
Enterprises didn’t. In 1987, Eastern sold its interest in CPC
to Peabody Holding Co., Inc. Id. at 516. As a consequence
of that sale to an unrelated third party, Eastern had
divested itself of all of its interests in its EACC subsidiary
five years before the enactment of the Coal Act.
After the enactment of the Coal Act, the Commissioner
assigned Eastern the obligation for Combined Fund
beneficiary premiums for over 1,000 retired miners who
had worked for Eastern before 1966 pursuant to
S 9706(a)(3). The assignments were based on Eastern’s
status as the pre-1978 signatory operator for whom the
miners had worked the longest. Id. at 517. No miners who
22
had been employed by EACC were assigned. Id. at 530.
Sometime after the Commissioner made the assignments,
Eastern filed the aforementioned suit attacking the Act as
unconstitutional as applied under the Takings and Due
Process Clauses.
When we compare Eastern’s circumstances with
Berwind’s, it is obvious that Berwind is not in a
"substantially identical position to Eastern." Eastern’s
premium liability under the Coal Act was based solely on
its having employed the miners assigned to it -- miners in
whom Eastern could not have created a reasonable
expectation of lifetime health benefits because it never
signed the 1974 NBCWA or subsequent NBCWAs. See Id. at
531 ("The company’s obligations under the Act depends
solely on its roster of employees some 30 to 50 years before
the statute’s enactment, without any regard to
responsibilities that Eastern accepted under any benefit
plan the company itself adopted."). Eastern never addressed
the question of premium liability under the Coal Act’s
"related person" provision, the basis of Berwind’s liability
here.
Berwind reminds us that Eastern Enterprises had a
subsidiary, EACC, that signed a post-1974 NBCWA, and
argues that Eastern Enterprises’ relationship with EACC

-- 18 of 28 --

was not sufficient to sustain the constitutionality of the
Commissioner’s assignments of Combined Fund
beneficiaries. However, this similarity does not put Berwind
into Eastern’s shoes because of one obvious and crucial
distinction that Berwind glosses over. Eastern divested
itself of EACC in 1987, five years before the enactment of
the Coal Act and the "look back date" of July 20, 1992. As
noted, the Coal Act provides that where ostensibly related
companies remain in business, the question of whether
they are "related persons" is determined with respect to
their relationship as of July 20, 1992, a date shortly before
the Act’s passage. 26 U.S.C. S 9701(c)(2)(B). Because
Eastern had sold EACC in 1987, EACC was not considered
a "related person" to Eastern under the Act as of July 20,
1992. Therefore, premium liability could not have been
imposed on Eastern based on any relationship it had to
EACC. This distinction is fatal to Berwind’s argument here.
23
Berwind not only glosses over the fact that Eastern
Enterprises did not involve the Coal Act’s related person
provisions, it also glosses over the fact that we have twice
held that premium liability under the Act’s related person
provisions removes an assignee from the holding of Eastern
Enterprises, and defeats the required similarity to the
position of that plaintiff. More precisely, we have twice held
that related persons to coal companies that signed the
1974 NBCWA and later NBCWAs are not in a substantially
identical position to Eastern Enterprises. Today, it is
necessary to reiterate that principle yet again.
In Unity Real Estate, we upheld the constitutionality of
the Coal Act as applied to a company that was a related
person to both a pre-1974 NBCWA signatory and a post-
1974 signatory. When the Commissioner made the
premium assignments at issue there, Unity Real Estate
Company was a small corporation closely held by members
of the Jamison family. Unity owned a small commercial
building and a parking lot. It never mined coal and never
signed a coal wage agreement. Nonetheless, under the Coal
Act, it was a related person to several, defunct coal mining
companies formed by members of the Jamison family that
ultimately merged into Unity. Among those companies were
South Union-PA and South Union-WVA. South Union-PA
had mined coal since 1923 and had signed the 1947
NBCWA and amendments thereto through 1961. South
Union-WVA began mining when South Union-PA stopped
and it had signed the 1974, 1978 and 1981 NBCWAs. 17
The Commissioner assigned Combined Fund premium
liability to Unity for the miners formerly employed by all of
Unity’s related person entities pursuant to SS 9706(a)(1) &
(2), and Unity challenged the assignments under Eastern.
After a comprehensive analysis of the various opinions in
Eastern, we upheld the constitutionality of the Coal Act as
applied to Unity and all of the disputed assignments,
including assignments of miners who had worked for South
Union-PA, even though South Union-PA had never signed a

-- 19 of 28 --

1974 or later NBCWA. The critical distinction was that
_________________________________________________________________
17. A bankruptcy court subsequently granted it leave to reject the 1981
NBCWA.
24
Eastern Enterprises never signed the 1974 or later
NBCWAs and it was not a related person to any entity that
had. In contrast, South Union-WVA, its related person, had
"signed". We noted that
[b]ecause the plaintiffs signed NBCWAs in 1974 and
thereafter, they are factually distinguishable from
Eastern Enterprises. Language in the plurality and
the concurrence suggesting that expectations
fundamentally changed after 1974 support our
conclusions.
178 F.3d at 659. Just as that distinction was crucial in
Unity Real Estate, the same distinction between Eastern
and Berwind "compels the conclusion that Eastern is not
on all fours with the case before us." Id.
In Anker Energy, we also upheld that Act’s application to
a related person with a nexus to a post-1974 signatory
operator. We held that the fact that Anker’s related person
had agreed to the terms of the 1974, 1978, 1981 and 1984
NBCWAs "factually distinguishes Anker’s situation from
that of Eastern Enterprises and compels a finding that the
Act is constitutional in this instance." 177 F.3d at 172.
There, Consolidation Coal contracted with King Knob Coal
for King Knob to mine coal on Consolidation’s property from
1967 to 1982. As part of this arrangement, King Knob
agreed that its employees would be UMWA members and
that it would be a signatory to the then current NBCWAs.18
An affiliate of Anker acquired King Knob in 1975 and the
relationship between Consolidation and King Knob
continued until 1982 when Consolidation canceled its
contract with King Knob. In 1994 and 1995, the
Commissioner informed Anker that it was a related person
to King Knob and assigned premium liability to Anker for
_________________________________________________________________
18. To achieve that end, King Knob signed "me too" agreements in 1974,
1978, 1981 and 1984. A "me too" agreement is an agreement whereby an
employer who is not a member of the BCOA agrees with the UMWA to
be bound by the terms of the NBCWA. Anker Energy , at 166-167. A "me
too" agreement has terms identical to the terms of a NBCWA and there
is no distinction regarding an employer’s contractual rights and
obligations. Id. at 172 n.4. Thus, the distinction between a NBCWA
signatory and a "me too" signatory is without a difference. Id.
25
King Knob’s retired miners. Anker sued alleging that the

-- 20 of 28 --

Commissioner’s assignments were unconstitutional under
Eastern Enterprises. In rejecting that claim, we relied upon
our earlier decision in Unity and held that because Anker’s
related person had agreed to be bound by the terms of the
post-1974 NBCWAs, Anker’s situation "falls outside the
specific holding of Eastern Enterprises." Id. at 172.
Accordingly, we concluded that the Act could
constitutionally apply to Anker. Id.
Berwind nonetheless attempts to avoid being caught
between the pincers of our prior case law. Berwind first
argues that even if its related person status to Reitz means
that it is not in a substantially identical position to Eastern
Enterprises, it nonetheless cannot be liable for the health
care premiums of its own retirees. Berwind claims this is
because the Coal Act does not permit the Commissioner to
treat Berwind as if it has signed the 1974 and later
NBCWAs since Reitz, its related person, signed the 1974
and later NBCWAs. Put another way, Berwind argues that
the Act does not allow the Commissioner to impute Reitz’s
signatory status to Berwind.
The Commissioner counters by pointing out that he has
not imputed Reitz’s signatory status to Berwind. Rather,
the Commissioner claims that he has merely imputed
employment status to all members of the same controlled
group as the Coal Act requires. Therefore, argues the
Commissioner, Berwind’s assignment is based upon its own
liability as part of a controlled group. According to the
Commissioner, "[a]ny employment of a coal industry retiree
in the coal industry by a signatory operator shall be treated
as employment by any related persons to such operator."
26 U.S.C. S 9706(b)(1)(A). Consequently, the Commissioner
argues that under the express provisions of the Coal Act, all
of Berwind’s former employees are treated as Reitz’s former
employees. Thus, in the Commissioner’s view, Berwind’s
premium liability is based on the imputation of employment
by one member of a controlled group to all members of that
controlled group and not on the imputation of signatory
status.
Berwind responds by arguing that the Commissioner’s
claim that S 9706(b)(1)(A) imputes employment status to all
26
members of the same controlled group (or more concretely,
that S 9706(b)(1)(A) means that Berwind’s former employees
are treated as Reitz’ former employees) is based on a
misconstruction of the statute. Berwind claims that
S 9706(b)(1)(A) is not a statute that imputes employment
status at all. Rather, it is merely an aggregation rule
describing a method for deciding which of a miner’s former
employers to assign the former miner to. Berwind correctly
notes that S 9706(b)(1)(A) -- captioned"Aggregation rules
(A) Related Person" -- and which provides that"[a]ny
employment of a coal industry retiree in the coal industry
by a signatory operator shall be treated as employment by
any related persons to such operator:" -- only applies "for

-- 21 of 28 --

purposes of subsection [9706](a)." SectionS 9706(a) sets out
the criteria for assigning a former miner to a particular
entity from among multiple coal operators that may have
employed the miner.
Berwind argues that within the context of the broader
S 9706(a) assignment scheme, S 9706(b)(1)(A) authorizes the
Commissioner to aggregate the periods of time that a miner
worked for two or more "related person" companies as the
Commissioner determines which signatory operator to
assign the miner to. Berwind further argues that
aggregation of a miner’s employment time with two"related
person" operators is potentially important because the
length of time of a miner’s employment is one of the factors
used to determine assignments under the S 9706(a)
scheme. Thus, says Berwind, S 9706(b)(1)(A) merely
facilitates the assignment of individual former miners to
signatory operators under the general S 9706(a) assignment
scheme. According to Berwind, it does not allow the
Commissioner to impute employment of a retired miner to
all members of a controlled group.
However, we do not have to decide which of these
intricate and overly technical readings is correct. Berwind
does not claim that retired miners (or their dependents)
were mistakenly assigned to it.19 Rather, it claims that the
_________________________________________________________________
19. The Coal Act provides that if an assigned operator believes that it has
been erroneously assigned beneficiaries, the operator can obtain
information about the beneficiaries from the Commissioner and seek
27
assignments, though factually correct, render the Act
unconstitutional as applied and that the assignments are
therefore invalid. This is not an issue of statutory
construction. Berwind’s challenge distills down to its claim
that it is in a substantially identical position to Eastern
Enterprises, and it does not turn on the hypertechnical
statutory construction it urges upon us. Moreover, it has
not challenged the "related person" provision of the Act.
Therefore, "[Berwind’s] obligations under Eastern must
stand or fall regardless of how [it] was assigned the
beneficiaries." Unity Real Estate, at 655 n.2.
Berwind next argues that our Unity Real Estate and
Anker Energy decisions do not support a finding that the
Coal Act is constitutional as applied to it. According to
Berwind, Unity and Anker hold that retired coal miners can
be assigned to a related person of their former employer
only if the former employer made promises of lifetime
benefits to those miners by signing the 1974 or later
NBCWAs. But, says Berwind, because it never signed the
1974 or subsequent NBCWAs, and thereby never promised
lifetime health benefits to its former employees, its former
employees cannot constitutionally be assigned to it, even
though its related person, Reitz, did sign the 1974 and
subsequent NBCWAs.

-- 22 of 28 --

Berwind is wrong. In Anker, we upheld premium liability
against a parent company because the parent company’s
related person had agreed to be bound by the terms of the
1974 and subsequent NBCWAs. Thus, we suppose that
superficially Anker could be read as supporting Berwind’s
claim that it can only be bound if its related person agreed
to the 1974 or subsequent agreements. However, Berwind’s
_________________________________________________________________
review of the assignments. 20 C.F.R. S 9706(f); see also 20 C.F.R.
SS 422.601-607. The burden is on the assigned operator to make out a
prima facie case that the assignments were in error. See 20 C.F.R.
S 422.605. If the Commissioner finds that the assignments were in error,
he can declare them void and reassign the beneficiaries to the
appropriate signatory operator or related person. 26 U.S.C.
S 9706(f)(3)(A). If the Commissioner finds that the assignments are not in
error, he must notify the assigned operator. The Commissioner’s
determination is final. 26 U.S.C. S 9706(f)(3)(B).
28
reading is extremely restrictive and ignores the fact that
Anker was decided after Unity and applied principles
established in that case.
Unity was not limited to holding that related persons to
coal companies that signed the 1974 and subsequent
NBCWAs are in a different position to Eastern Enterprises.
We also applied a substantive due process analysis based
upon a concern raised in Eastern Enterprises. The plurality
in Eastern noted that the Court’s prior decisions
have left open the possibility that legislation might be
unconstitutional if it imposes severe retroactive liability
on a limited class of parties that could not have
anticipated the liability, and the extent of that liability
is substantially disproportionate to the parties’
experience.
Eastern, 524 U.S. at 528-529 (plurality). Recognizing that
possibility, and "[t]o the extent that Eastern embodies
principles capable of broader application," we felt obligated
to apply an additional level of substantive due process
analysis to determine if the assignments to the Companies
there were constitutional as applied.20 Unity, 178 F.3d at
659. That additional level of analysis focuses on"the extent
of the gap between the coal companies’ contractual
promises to the Funds and the requirements of the Coal
Act." Id.
We noted that the standard of review of legislation when
a due process violation is alleged "is forgiving; it bars only
arbitrary and irrational congressional action." Id. The first
step in our due process analysis was an extensive review of
the available evidence to determine if Congress had a
sufficient basis to impose liability on companies"related" to
coal companies that signed the 1974 or later NBCWAs. We
_________________________________________________________________

-- 23 of 28 --

20. Although the plurality’s cautionary note that legislation might be
unconstitutional if it is severely retroactive and substantially
disproportionate was made in the course of its Takings Clause analysis,
the admonition is applicable to a substantive due process analysis as
well. As the plurality noted in Eastern,"[o]ur analysis of legislation under
the Takings and Due Process Clauses is correlated to some extent." 524
U.S. at 537 (plurality) (citing Connolly v. Pension Benefit Guaranty Corp.,
475 U.S. 211, 223 (1986)).
29
weighed that evidence against four separate criteria, viz.,
responsibility for the Combined Fund’s instability, the
background of government regulation of the coal industry,
the relevant contractual language and a company’s history
in the coal industry. Id. at 660-699. We concluded that
Congress’ finding that the coal industry’s conduct created a
reasonable expectation in the miners of lifetime benefits
and its finding that the coal companies were primarily
responsible for the deterioration of the Benefit Plans were
"reasonable evaluations of the problem." Id. at 670.
Next, we focused on the Act’s retroactivity and found that
the retroactive reach of the Act was not irrational under the
Due Process Clause. Id. We recognized that"[t]he heart of
a retroactivity analysis is an evaluation of the extent of the
burden imposed by a retroactive law in relation to the
burdened parties’ prior acts," and we held that"[w]here
Congress acts reasonably to redress an injury caused or to
enforce an expectation created by a party, it can do so
retroactively." Id. at 670, 671. In examining the retroactivity
in Unity, we first measured the time between a post-1974
related person signatory’s commitment to pay for benefits
and the date of the enactment of the Coal Act. Id. at 670.
For Unity, the period of time was eleven years. 21 We found
that this period of time, while "quite long," was "not so
extensive as to violate Justice Kennedy’s standard, 22
although Unity offers a close case["] id, despite the
considerable financial burden imposed under the Act. 23
Finally, we held that the burden imposed was not so
unreasonable or disproportionate as to defeat the
_________________________________________________________________
21. The Coal Act was passed in 1992 and South Union-WVA, Unity’s
related person, last signed a NBCWA in 1981.
22. In Unity, we relied on Justice Kennedy’s "explication of the relevant
due process principles because the plurality did not reach Eastern’s due
process claim." 178 F.3d at 670 n.13.
23. Eastern Enterprises’ estimated liability was between $50 and $100
million. 524 U.S. at 529. Unity alleged that its estimated Coal Act
liabilities were over six times its total assets and that if the assignments
were upheld, it would be bankrupted. 178 F.3d at 655. At the time
Unity’s appeal was before us, Unity’s total payments were under $1
million. Id. at 671.

-- 24 of 28 --

30
constitutionality of the Act.24 The burden imposed, though
not inconsequential, is justified by the industry’s conduct of
creating reasonable expectations of lifetime benefits, while
establishing inadequately funded benefit funds. All this was
compounded by the flight of operators from the coal
industry seeking to avoid further contributions to the fund.
Id. at 673. The Coal Act "is Congress’s attempt to do
equity." Id. at 672. The Coal Act did not violate substantive
due process because Congress was entitled to remedy the
problems caused by "the companies’ actions, through the
BCOA through which negotiations with the unions were
conducted, [which] created reasonable expectations about
benefits and established a funding structure vulnerable to
‘dumping’ retirees when companies left the industry." Id. at
673. We concluded that the Coal Act "is targeted to address
the problem of insufficient resources in the benefit funds
and that it puts the burden on those who, in Congress’s
reasonable judgment, should bear it."25 Id. at 674.
Despite the additional level of due process scrutiny we
subjected the Commissioner’s assignments to, we found
that the Coal Act was constitutional as applied to Unity
Real Estate Company.26 A close examination of the facts in
Unity confirms that we did not hold, as Berwind claims,
that retired miners can be assigned to a related person of
_________________________________________________________________
24. A statute will not violate substantive due process where the burden
imposed is "proportional to the harm legitimately addressed by the
legislature." Unity, at 671. Thus, a statute is not unconstitutional "if the
liability actually imposed is not out of proportion to the claimant’s prior
experience with the object of the legislation." Id. at 672. "Prior experience
can consist of conduct that creates reasonable expectations about the
object of the legislation or conduct that creates the problems that
impelled the legislature to act." Id.
25. Ironically, given Berwind’s structural evolution and network of
changing affiliates and names, it could be argued that Berwind’s
involvement in the coal industry reflects precisely the kind of "corporate
shell game" that Congress was concerned about when it enacted the
Coal Act.
26. In Anker Energy, we applied that same level of substantive due
process analysis to the Commissioner’s assignments to Anker. Anker’s
related person had agreed to post-1974 NBCWAs, and we upheld the
challenged assignments. 177 F.3d at 172-173.
31
their former employer only if the former employer signed
the 1974 or later NBCWAs. In fact, the assignments we
upheld there were much more problematic than the
assignments to Berwind.
As we have noted, Unity Real Estate was a small
corporation closely held by the members of one family. It

-- 25 of 28 --

owned a small commercial building and a parking lot. It
had never been in the coal business, had never mined coal
and had never signed a NBCWA.27 But, it had been a
"related person" to several, defunct coal mining companies
formed by members of the family that owned Unity Real
Estate that were ultimately merged into Unity Real Estate.
One of those companies, South Union-PA had mined coal
since 1923, and had signed the 1947 NBCWA and
amendments thereto through 1961, but had ceased mining
coal in 1961. Another company, South Union-WVA, started
mining coal in 1961 when South Union-PA stopped, and it
thereafter signed the 1974, 1978 and 1981 NBCWAs,
although a bankruptcy court allowed it to reject the 1981
NBCWA. Two other "related person" companies, Stewart
Coal & Coke Company and Jamison Coal Company, did
sign NBCWAs from the 1940s through the early 1970s.
However, they never signed the 1974 or subsequent
NBCWAs.
Despite the significant gulf separating Unity Real Estate
and coal mining, the Commissioner assigned Combined
Fund beneficiaries to Unity Real Estate for the miners
formerly employed by all of Unity Real Estate’s related
person entities. This included miners who had worked for
Unity Real Estate’s related person entities who had never
signed a 1974 or later NBCWAs as well as miners who had
worked for Unity Real Estate’s related person entity that
had signed the 1974 and subsequent NBCWAs (i.e. South
Union-WVA).
The majority of the Combined Fund beneficiaries
assigned to it had not worked for South Union-WVA.
Rather, they had worked for related persons that had
signed only pre-1974 agreements. Jt. App. at 230 (Unity
_________________________________________________________________
27. Because it never mined coal and never signed a coal wage agreement,
we can assume that Unity was never a member of the BCOA.
32
Real Estate’s Responses to Defendants’ First Request for
Admissions, at P 28).28 However, we found no substantive
due process impediment to holding Unity Real Estate liable
for the Coal Act assignments of miners whose former
employers never made a promise of lifetime health benefits.
So long as one related person member of the controlled
group made a promise of lifetime health benefits to its
retired miners, substantive due process did not prevent
that promise from inuring to the benefit of all retired
miners employed by each related person member of the
controlled group even if those members never made such
promises. Since substantive due process considerations did
not invalidate the Commissioner’s assignments to Unity
Real Estate, we are at a loss to understand how Combined
Fund beneficiary assignments to a company like Berwind,
that was in the coal mining business until 1962 and
continues to have ties to the coal industry, transcends
substantive due process restrictions. Its related person was

-- 26 of 28 --

a signatory to the 1974, 1978 and 1981 NBCWAs.
Moreover, we note that Berwind’s related person, Reitz,
last signed a NBCWA in 1981. Thus, it is eleven years from
the time Berwind’s related person’s contractual obligation
to the Combined Fund ended to the passing of the Coal Act
in 1992. That is exactly the period we found permissibly
retroactive in Unity. Berwind does no better under the
proportionality prong of Unity’s due process analysis. Since
Berwind’s related person was a signatory to the 1974, 1978
and 1981 NBCWAs, Berwind bears the same responsibility
as the Unity plaintiffs for creating a reasonable expectation
of lifetime health benefits and for creating the problem of
under-funding that the Coal Act seeks to remedy. 29
_________________________________________________________________
28. Out of a total of 63 Combined Fund beneficiaries assigned to Unity
Real Estate, only 10 had worked for the post-1974 signatory, South
Union-WVA. Id. The remaining 53 beneficiaries assigned had worked for
the various pre-1974 signatories.
29. We realize that Berwind was originally assigned Combined Fund
liability for more than 1,900 of its former employees to whom it never
made a promise of lifetime health benefits. However, despite that
apparent numerical disproportionality, it is clear under Unity that the
Constitution is not a bar to the assigning Berwind responsibility for all
of the miners under the "controlled group" provisions of the Coal Act.
33
Accordingly, we conclude that Berwind is not in a
substantially identical position to Eastern Enterprises, and
since Berwind’s assignments survive our Unity substantive
due process analysis, the Coal Act is not unconstitutional
as applied to Berwind.30
VIII. CONCLUSION
Because we hold that the Coal Act is constitutional as
applied to Berwind, we will reverse the district court’s grant
of summary judgment to Berwind on its APA claim (Count
V) and its common law claim for restitution. We will affirm
the district court’s grant of summary judgment to the
defendants on Berwind’s claims that the Coal Act is
unconstitutional as applied and unconstitutional in its
entirety (Counts I, II and III). Accordingly, the district court
correctly granted summary judgment in favor of defendants
on Berwind’s claim for a premium refund under the Coal
Act (Count IV), its claim for a premium refund under ERISA
(Count VII) as well as its claim for a tax refund against the
United States (Count VIII).
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________

-- 27 of 28 --

30. After this case was argued, the Supreme Court decided Barnhart v.
Sigmon Coal Co., 534 U.S. 438 (2002). That case involved a question of
statutory construction centering on whether the Coal Act permits the
Commissioner to assign retired miners to successors in interest of out-
of-business signatory operators. That question is not presented here,
and Barnhart therefore has no bearing on the issue presented in these
consolidated appeals.
34

-- 28 of 28 --