United States District Court, E.D. Virginia, Alexandria Division
For Peabody Holding Company, LLC, Delaware Limited Liability Company, Black Beauty Coal Company, LLC, Indiana Limited Liability Company now known as, Peabody Midwest Mining, LLC, Plaintiffs: Zachary Stevens Stinson, LEAD ATTORNEY, Ogletree Deakins Nash Smoak & Stewart PC (DC), Washington, DC.
For United Mine Workers of America, International Union, Unincorporated Association, Defendant, Counter Claimant: Arthur Rodgers Traynor, III, LEAD ATTORNEY, United Mine Workers of America, Triangle, VA; John R. Mooney, Mooney Green Saidon Murphy & Welch PC, Washington, DC.
For Black Beauty Coal Company, LLC, Indiana Limited Liability Company, Peabody Holding Company, LLC, Delaware Limited Liability Company, Counter Defendants: Zachary Stevens Stinson, LEAD ATTORNEY, Ogletree Deakins Nash Smoak & Stewart PC (DC), Washington, DC.
Leonie M. Brinkema, United States District Judge.
Before the Court are plaintiffs' Motion for Summary Judgment and defendant's Motion to Dismiss or, in the Alternative, for Summary Judgment. For the reasons that follow, plaintiffs' Motion will be denied, as will defendant's Motion to Dismiss; however, defendant's Motion for Summary Judgment will be granted.
Only a brief recitation of the facts is required in this opinion, as they have already been extensively discussed in two previous opinions. See generally Peabody Holding Co., LLC v. United Mine Works of Am., No. 1:09cv1043, 2010 WL 3564274 (E.D. Va. Sept. 7, 2010), aff'd sub nom., Peabody Holding Co., LLC v. United Mine Workers of Am., Int'l Union, 665 F.3d 96 (4th Cir. 2012). Plaintiffs Peabody Holding Company, LLC (" PHC" ) and Black Beauty Coal Company, LLC (" Black Beauty" ) are mining companies, the latter a subsidiary of the former. Both companies are ultimately owned by Peabody Energy Corporation (" PE" ), which at one point owned several other mining companies that operated in the eastern United States, including Peabody Coal Company (" PCC" ). Defendant United Mine Workers of America (the " UMWA" or " Union" ) is a labor organization whose members were employed by plaintiffs.
In January 2007, PCC entered into a labor agreement with the Union on behalf of itself (as a " signatory" company) and as a limited agent of its immediate parent, PHC, and fellow subsidiaries (all " nonsignatory" companies), Black Beauty among them. The agreement, known generally as the National Bituminous Coal Wage Agreement (" NBCWA" or " Wage Agreement" ), included a Memorandum of Understanding Regarding Job Opportunities (" 2007 MOU" ). The purpose of the 2007 MOU was to " provide job opportunities for work of a classified nature to certain laid-off and active miners" by requiring nonunion mining companies within PHC's corporate family to offer three out of every five new classified job openings to miners who were either working for or laid off by PCC, the signatory employer. The 2007 MOU applied only to " existing, new, or newly acquired nonsignatory bituminous coal mining operations of the nonsignatory
[c]ompanies," and it " [did] not constitute a covenant running with the land and [did] not apply to the sale of nonsignatory coal lands, coal reserves or coal operations (either asset sales or stock sales) of the non-signatory [c]ompanies." Moreover, nothing in the 2007 MOU " encumber[ed] or limit[ed] in any way the rights of the nonsignatory [c]ompanies to sell, exchange, release, or otherwise similarly convey . . . any of their nonsignatory coal lands, coal reserves or coal operations to third parties." The parties agreed that their obligations under the 2007 MOU would terminate at 11:59 p.m. on December 31, 2011.
Importantly for present purposes, the 2007 MOU also contained an arbitration clause, which extended dispute-resolution authority to a " Jobs Monitor" :
In order to effectuate the implementation of these job opportunity provisions, the [Union] and the nonsignatory [c]ompanies subject to this [MOU] agree that the impartial Jobs Monitor . . . shall serve as the monitor under this [MOU]. The monitor shall review the job selections pursuant to these provisions and investigate any alleged violations herein. The monitor shall have the authority to request such information which may be reasonably necessary in order to secure compliance with the job selection provisions. The parties have the obligation to comply with such requests.
The Jobs Monitor's decisions were to be " final and binding on all parties" subject to the limitation that the Jobs Monitor could not " alter, amend, modify, add to or subtract from, or change in any way the provisions" of the contract.
In October 2007, less than a year after the parties had renewed the NBCWA and accompanying MOU, PE initiated a significant spinoff of its mining operations in the eastern United States. The spinoff gave birth to a new publicly-traded entity, Patriot Coal Corporation (" Patriot" ), which gained control over PCC and the rest of PHC's former subsidiaries, with the notable exception of Black Beauty. In addition to retaining ownership of Black Beauty, PE also remained the parent company of PHC. As a result, PHC and Black Beauty have not had any common ownership or operational connection to PCC or to any other Patriot-owned entity since the spinoff. PCC thereafter entered into a substantively identical job-preference agreement with the Union as a limited agent of Patriot, which agreed to be bound by its terms going forward.
In early 2008, Black Beauty contracted with a private mine operator, United Minerals, LLC (" United Minerals" ), to conduct surface mining operations at its property located in Warrick County, Indiana. (United Minerals has no ownership relationship to PCC or any of the other Patriot companies.) In November 2008, the Union wrote to PE to state its expectation that PHC and Black Beauty would continue to comply with the 2007 MOU. Specifically, the Union directed both companies to " make the requisite job offers" to PCC's classified employees, " keep the Union informed of such mining operations as they develop," and " give the required notice of the job selection process to the Jobs Monitor." The companies responded that " once the prerequisite corporate relationship between PHC and PCC was severed (as of
October 31, 2007), obligations under the Jobs MOU also were severed. An obligation to secure job opportunities for UMWA members . . . does not survive conveyance of the UMWA-represented subsidiary to a third party such as Patriot Coal Company." The parties' opposing views of their post-spinoff obligations form the core of this litigation.
Disputing the assertion that PHC and Black Beauty were no longer bound by the 2007 MOU, the Union submitted its grievance to the Jobs Monitor. Each of the parties provided the Jobs Monitor with materials supporting their respective arguments, though PHC and Black Beauty maintained that they did not " accept or acquiesce to consideration by the Job [sic] Monitor of claims asserted under the [2007 MOU], as that instrument no longer applie[d]" to them. After ruling that the parties had agreed to arbitrate arbitrability under the 2007 MOU, the Jobs Monitor found that the dispute was arbitrable but deferred a final resolution on the merits until further argument could take place.
PHC and Black Beauty responded by filing a declaratory judgment action before this Court, in which they asked for a declaration that the Union's claim was not arbitrable. The Union, for its part, filed a counterclaim seeking a declaration that the Jobs Monitor's decision was enforceable and that the companies must comply with the decision and proceed to a hearing on the merits. The Court entered judgment in favor of the Union, holding that the Jobs Monitor properly determined the arbitrability of the dispute. Peabody, 2010 WL 3564274, at *5-*6. The Court further held that the dispute was arbitrable in any event -- that is, even if the arbitrator lacked authority to decide the question.
PHC and Black Beauty appealed, and the Fourth Circuit affirmed on the ultimate question of arbitrability. Peabody, 665 F.3d 96. Although the Fourth Circuit determined that a federal court, not the Jobs Monitor, was required to decide the arbitrability question, it independently held that PHC and Black Beauty could not rebut the ordinary presumption in favor of arbitrability. Id. at 105-07. The Fourth Circuit then ordered the parties to proceed to arbitration on the merits question.
Back before the Jobs Monitor, the parties agreed to bifurcate the arbitration proceedings, " treating in [the first stage] solely the question of whether PHC and Black Beauty continued to be bound by the MOU after the October 31, 2007, spinoff." In the event that the Union prevailed on that question, and the parties subsequently failed to agree on an appropriate remedy, the Jobs Monitor would " resol[ve] the remedy issue" in the second stage.
On January 18, 2013, the Jobs Monitor issued the disputed Arbitration Award (the " Award" ). In it, he concluded that " [t]he absence of common ownership between PCC, the signatory employer to the [2007 MOU], and PHC/Black Beauty, the nonsignatory employers bound by the MOU, subsequent to PE's October 31, 2007, spinoff of PCC, did not terminate the obligations of PHC/Black Beauty under the MOU." In other words, the Jobs Monitor concluded that PHC and Black Beauty were still required to abide by the job-preference term notwithstanding the intervening change in corporate relationships. The Jobs Monitor made three findings essential to this conclusion. First, he found that " there [had] been no bona fide sale of either PHC or Black Beauty, the nonsignatory subsidiaries of PE, to an unrelated third party," which would ...