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In re Patriot Coal Corp.

United States Bankruptcy Appellate Panel of the Eighth Circuit

August 21, 2013

In re PATRIOT COAL CORPORATION, also known as Eastern Coal Holding Company, Inc., also known as Patriot Coal Corporation Midwest, Debtor.
v.
Peabody Holding Company, LLC; Peabody Energy Corporation, Defendants-Appellees. Patriot Coal Corporation; Heritage Coal Company LLC, Plaintiffs-Appellants

Submitted: Aug. 2, 2013.

Page 37

Elliot Moskowitz, argued, New York, NY, Jonathan D. Martin, Elliot Moskowitz, Marshall S. Huebner, Benjamin S. Kaminetzky, Andrew S. Gehring, on the brief, New York, NY, for appellant.

John M. Newman, Jr., argued, Cleveland, OH, Thomas Blumeyer Weaver, Susan K. Ehlers, Saint Louis, MO, John M. Newman, Jr., Carl E. Black, David G. Heiman, Cleveland, OH, Robert W. Hamilton, on the brief, Columbus, OH, for appellee.

Before FEDERMAN, Chief Judge, KRESSEL and SHODEEN, Bankruptcy Judges.

KRESSEL, Bankruptcy Judge.

The appellants, Patriot Coal Corporation and Heritage Coal Company, LLC, appeal from the bankruptcy court's summary judgment denying their request for declaratory relief and granting summary judgment to the appellees, Peabody Holding Company, LLC, and Peabody Energy Corporation. Patriot Coal Corp. v. Peabody Holding Co., LLC, 493 B.R. 530 (Bankr.E.D.Mo.2013). Patriot Coal and Heritage Coal sought declaratory relief under 28 U.S.C. § 2201 and Fed.R.Civ.P. 57 and requested a declaration that " Peabody Holding's obligations with respect to the healthcare benefits owed to the Assumed Retirees will not be affected by modification of the benefits of retirees of Heritage or Eastern Associated under Section 1114." The bankruptcy court held that Peabody Holding's obligations would be

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affected by a modification of the benefits under § 1114, denied the declaratory relief sought and ruled in Peabody Holding's favor. For the reasons that follow, we reverse.

Background

Akin to a once amicable divorce gone awry, the parties here disagree about the nature of their dissolution agreement after one of them has experienced a change in circumstances. The players in this appeal are Peabody Energy, Peabody Holding, Patriot Coal and Heritage Coal. In the background is Eastern Associated Coal. At one time, Peabody Holding, Patriot, Heritage and Eastern were all Peabody Energy subsidiaries. After a strategic spin off, only Peabody Holding remains with parent Peabody Energy, while Heritage and Eastern now operate under the Patriot Coal umbrella. A little background is required to make sense of it all.

The United Mine Workers of America is a union that represents a number of workers employed by the parties. The Bituminous Coal Operators' Association is a multiemployer bargaining association formed for the sole purpose of bargaining with the UMWA on behalf of its members. The most recent round of negotiations between the UMWA and the BCOA resulted in the 2011 National Bituminous Coal Wage Agreement— the current NBCWA— which expires on December 31, 2016.

" Me Too" Agreement and Article XX

Neither Heritage nor Eastern is a member of the BCOA. However, both companies have entered into what is known as a " me too" agreement with the UMWA. While not entirely clear from the record, it appears to us that some " me too" agreements simply say, " we agree to abide by the NBCWA," while others are individually negotiated between the employer and the UMWA, incorporating certain articles from the NBCWA by reference. Heritage's agreement is of the latter variety and has specifically incorporated article XX of the NBCWA into its " me too" agreement. Article XX defines and makes provision for health and other benefits for retirees and includes this pertinent language:

Each signatory Employer shall establish and maintain an Employee benefit plan to provide, implemented through an insurance carrier(s), health and other non-pension benefits for its Employees ... The benefits provided by the Employer to its eligible Participants pursuant to such plan shall be guaranteed during the term of this Agreement by that Employer at levels set forth in such plan.

Acknowledgment and Assent Agreement

On August 13, 2007, while Peabody Energy was contemplating a strategic spin off, Peabody Holding entered into an acknowledgment and assent agreement with the UMWA. The agreement stated that Peabody Holding would be " primarily obligated" to pay for the benefits for approximately 3,100 of Heritage's retirees, known as the assumed retirees or the attachment A retirees, under the terms of an individual employer plan maintained by Heritage pursuant to article XX. The agreement dictated that Peabody Holding would enter into a liabilities assumption agreement with Heritage to consummate and define their relationship post-separation.

Additionally, this agreement stated that Peabody Holding will not be a party to a collective bargaining agreement with the UMWA, that Peabody Holding does not have a labor relationship with the UMWA, and the acknowledgment and assent agreement does not create any right of action by the UMWA or its retirees against Peabody Holding with respect to the benefits provided by Heritage's individual employer plan. However, the UMWA and its members

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are allowed to file suit " for any benefits [Peabody Holding] has agreed to pay under the [NBCWA Liabilities Assumption Agreement], or as otherwise provided under ...


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