Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-07072/USCOURTS-caDC-00-07072-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 6, 2001 Decided July 31, 2001

No. 00-7072

Michael H. Holland, et al.,

Appellants

v.

Williams Mountain Coal Company, d/b/a Naoma Coal Company,

and Augusta Processing, Inc.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(No. 96cv01405)

Peter Buscemi argued the cause for appellants. With him

on the briefs were Stanley F. Lechner, David W. Allen and

John R. Mooney. Charles P. Groppe entered an appearance.

Gregory B. Robertson argued the cause for appellees.

With him on the brief were Susan F. Wiltsie, Mary Lou

Smith and Charles L. Woody.

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Before: Williams, Sentelle and Henderson, Circuit

Judges.

Opinion for the Court filed by Circuit Judge Williams.

Concurring opinion filed by Circuit Judge Sentelle.

Williams, Circuit Judge: 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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Plaintiffs are trustees of the 1992 United Mine Workers of

America ("UMWA") Benefit Plan ("1992 Plan"). The Plan

was established under the Act, as part of Congress's response

to the failure of certain coal companies to pay the health

benefits they promised their miners. Under successive National Bituminous Coal Wage Agreements ("NBCWAs") between the coal operators and the UMWA, companies had

agreed to pay benefits not only for their workers but also for

workers whose employers had failed to meet their obligations

under the agreement, so-called orphaned workers. R.G.

Johnson Co. v. Apfel, 172 F.3d 890, 892 (D.C. Cir. 1999). A

considerable number of operators responded by withdrawing

from the Agreement, either to continue mining with nonunion employees or to leave the coal business altogether. See

Eastern Enters. v. Apfel, 524 U.S. 498, 511 (1998). The result

was a spiral of increasing obligations for the remaining

signatories, and increasing withdrawal. Id. In response,

Congress sought to assign health care liability in a form that

would be free from such unraveling. Id. at 513-14.

The plaintiff trustees are obligated to provide benefits for

retirees who are entitled to benefits under s 9711 (including

the six involved here) but who are not receiving them. 26

U.S.C. s 9712(b)(2)(B). If they cannot compel payment by

the last signatory operator, a related person, or a "successor

in interest," they can adjust the premiums they charge employers obliged to contribute to the 1992 Plan. Id.

s 9712(d)(2)(B). Thus there is no chance of the miners being

denied their benefits. The only issue is whether the expenses

will be borne by defendants or by the broad class of coal

operators obliged to fund the 1992 Plan. The trustees contend that defendants Augusta and Williams Mountain are

"successors in interest" within the meaning of s 9711(g)(1)

and therefore responsible for the charges. The district court

disagreed and granted summary judgment for defendants.

We affirm.

* * *

The trustees urge a broad definition of successors in interest, namely the "substantial continuity of operations test."

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This is a multi-factor inquiry that examines, among other

things, the ability of the predecessor to provide relief; whether the new employer had notice of potential liability; whether

he uses the same plant, equipment and workforce; and

whether he produces the same product. See, e.g., Secretary

of Labor v. Mullins, 888 F.2d 1448, 1453-54 (D.C. Cir. 1989).

Under this standard, the companies may well be successors in

interest to Toney's Branch: Toney's Branch is now bankrupt,

the Act is familiar to all coal operators, and the companies

seamlessly took over operations at Shumate Eagle.

Against this the companies urge narrower definitions,

drawn both from general corporate law and from federal tax

law (noting that the Act is in fact embedded in Title 26, the

Internal Revenue Code ("I.R.C.")). Black's Law Dictionary

(6th ed. 1990), for example, provides the standard corporate

law definition:

In order to be a "successor in interest", a party must

continue to retain the same rights as original owner

without change in ownership and there must be change

in form only and not in substance, and transferee is not a

"successor in interest." ... In case of corporations, the

term ordinarily indicates statutory succession as, for

instance, when corporation changes its name but retains

same property.

Id. at 1283-84 (citations omitted). In the alternative, the

companies suggest a definition from the I.R.C. that shares

with the corporate law definition the element of commingled

ownership. See 26 CFR s 1.1503-2A(c)(3)(vii)(B); 26 U.S.C.

s 381. Under both of these definitions the "successor in

interest" is a successor to the wealth of the predecessor,

typically through a corporate reorganization. A party simply

acquiring property of a firm in an arm's length transaction,

and taking up its business activity, does not become the

selling firm's "successor in interest." Under both definitions

the companies are plainly not successors in interest of Toney's Branch, and we need not here wrestle with which of

them is to be preferred in the event of a clash.

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Because both sides assume that federal law controls the

meaning of "successor in interest," we do the same. See

generally Atchison Topeka & Santa Fe Ry. v. Brown &

Bryant, Inc., 159 F.3d 358, 362-64 (9th Cir. 1998).

At the outset the trustees' proposed reading of s 9711(g)(1)

encounters difficulty from the adjacent statutory language.

While s 9711(g)(1) mandates that "successors in interest"

share liability with last signatory operators, s 9711(g)(2) permits "successors" to assume by contract liability for health

benefits owed to retirees. The natural reading is that Congress intended "successors" in subsection (g)(2) to include a

broad class of persons, e.g., firms that take over mining

operations from others, and are not liable as a matter of law,

but assume liability by contract with the seller to suit the

mutual convenience and risk-allocation preferences of the

contracting firms. If s 9711(g)(1) imposed liability by law on

virtually all potential candidates for the (g)(2) transaction, the

latter would, for the most part, be surplusage. See Holland

v. New Era Coal Co., 179 F.3d 397, 403 (6th Cir. 1999).

The trustees respond that, because the section heading for

s 9711(g)(1) is "Successor," Congress intended the terms

"successor" and "successor in interest" to be used interchangeably. For them the only role of s 9711(g)(2), as

against subsection (g)(1), is to allow successors to contract for

primary responsibility. But, quite apart from the customary

reluctance to give great weight to statutory headings, see,

e.g., Bhd. of R.R. Trainmen v. Baltimore & Ohio R.R. Co.,

331 U.S. 519, 528-29 (1947), it seems very odd to use a

heading, which normally is a kind of shorthand, to justify

stripping the actual text of two words, "in interest," that were

obviously included deliberately.

This conclusion accords with the structure of the Act.

Section 9711 specifies two groups that share liability with last

signatory operators: related parties and successors in interest. Related persons, defined in s 9701(c)(2)(A), encompass

members of a controlled group of corporations including the

signatory operator in question, a business under common

control with the signatory operator, and a person in a partUSCA Case #00-7072 Document #614064 Filed: 07/31/2001 Page 5 of 18
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nership or joint venture with the signatory operator in the

coal business. A common feature of all such entities is that

they share ownership or comparable economic interests with

the signatory operator. Understanding successor in interest

as embodying the standard corporate concept gives it a

closely congruent meaning.

We note that the Internal Revenue Service has promulgated definitions of "successor in interest" for various specific

purposes. See, e.g., 26 CFR s 1.1503-2A(c)(3)(vii)(B); id.

s 301.6110-2(l); id. s 302.1-1(e). See also In re Leckie

Smokeless Coal Co., 99 F.3d 573, 585 n.14 (4th Cir. 1996).

Because of the variety of definitions we question whether the

term can be said to have received the sort of consistent

treatment that led the Supreme Court in Commissioner v.

Keystone Consolidated Industries, Inc., 508 U.S. 152 (1993),

to infer, for the phrase "sale or exchange," an intent to

incorporate a previously "settled" meaning. Id. at 159. But

we also note that the trustees do not claim that any of the

definitions chosen by the IRS in other contexts is broad

enough to sweep in the two coal companies here.

In sum, then, the text and structure of s 9711 point

powerfully toward the two companies' position. The trustees,

however, brush aside this textual analysis and offer three

arguments to support a broad definition of successors in

interest. First, they contend that the Act is a remedial

statute and therefore should be liberally construed. This is

meaningless. All statutes seek to remedy some problem, so

the maxim does nothing to identify what statutes should be

"liberally construed" (assuming that phrase to have a discrete

meaning). E. Bay Mun. Util. Dist. v. U.S. Dep't of Commerce, 142 F.3d 479, 484 (D.C. Cir. 1998); Ober United

Travel Agency, Inc. v. U.S. Dep't of Labor, 135 F.3d 822, 825

(D.C. Cir. 1998).

Second, trustees argue that broad successor liability fits

Congress's stated intent to assign the duty of paying premiums "to persons most responsible for plan liabilities." 26

U.S.C. s 9701 note (Findings and Declaration of Policy)

(quoting s 19142 of Pub. L. No. 102-486). For our purposes

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Congress here selected the last signatory operator, Toney's

Branch, the last firm to receive benefits from the six miners'

labor. After that the Act assigns liability to related persons,

s 9711(b), and to successors in interest, s 9711(g)(1). What

the trustees fail to explain is why companies such as the two

here--whose only link to the six miners is to have started

mining operations with equipment bought from Toney's

Branch, after the six retired, at the mine where the six had

formerly worked--are in any material respect more "responsible" for plan liabilities for the six than is the broad class of

firms funding the 1992 Plan. The defendants' arm's length

purchase of mining equipment at the Shumate Eagle mine

seems to tie them to the six miners no more than would any

firm's purchase of any assets (office equipment, real property,

etc.) from Toney's Branch. The set of operators that would

bear the premiums for the six miners' benefits under the 1992

Plan, however, are all signatories to the 1988 NBCWA,

whereby they have promised to fund the benefits of orphan

retirees. The Secretary of Labor's Advisory Commission on

United Mine Workers of America Retiree Health Benefits,

Coal Commission Report 27 (Nov. 1990). The Coal Act

merely enforces these promises. 26 U.S.C. s 9712(d).

Even if Congress's purpose were recast in more general

terms--securing health benefits for retired miners, see, e.g.,

26 U.S.C. s 9701 note (Findings and Declaration of Policy)--

broad successor liability is hardly essential to that goal. The

six miners will receive benefits regardless of whether the

defendants are billed for them. To address the concern that

in the absence of successor liability the scheme set up by the

Act might collapse as last signatory operators sold off assets,

pocketed the money, and declared bankruptcy, the Act itself

expressly denies effect to any transaction of which a "principal purpose ... is to evade or avoid liability." 26 U.S.C.

s 9722. The bankruptcy laws similarly provide relief against

fraudulent transfers. See, e.g., 11 U.S.C. s 548. Nor is it

the case that lack of successor liability would discourage some

conduct Congress sought to encourage; this contrasts (for

instance) with the Multiemployer Pension Plan Amendments

Act ("MPPAA") of 1980, where courts have been concerned

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that without broad successor liability firms would be discouraged from joining pre-existing multi-employer pension agreements. See Upholsterers' Int'l Union Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323, 1329 (7th Cir.

1990). Here the classes of both beneficiaries and ultimate

obligors is substantially fixed. Not only does the Act apply

solely to miners who retired by September 30, 1994, 26 U.S.C.

s 9712(b)(2), but it legally obligates their employers, if they

have signed a 1988 NBCWA, to provide benefits, id.

ss 9712(d), 9701(c)(3).

The trustees' final argument is that courts have often used

the substantial continuity test to determine successor liability

in federal statutes (particularly those adopted for the protection of employees), even when those statutes include no

language directly supporting liability for successors of any

kind. Because statutory interpretation proceeds on the assumption that Congress's choice of words reflects a familiarity with judicial treatment of comparable language, Traynor v.

Turnage, 485 U.S. 535, 545-46 (1988), we cannot say, without

some consideration of the cases using substantial continuity,

that the trustees' claim is a priori wrong. In reality, however, courts have adopted that standard only in the presence of

certain factors, the most notable of which, at least, is palpably

missing here.

Before presenting our core objections to the trustees' argument, we review, for context, the origins of the substantial

continuity test. Under the traditional rule on corporate

successorship liability, a corporation that acquires manufacturing assets from another corporation does not thereby

assume the liabilities of the seller. The rule admits four

exceptions: (1) when the successor expressly or impliedly

assumed those liabilities; (2) when the transaction may be

construed a de facto merger; (3) when the successor may be

considered a "mere continuation" of the predecessor; and (4)

when the transaction was fraudulent. See Mozingo v. Correct

Mfg. Corp., 752 F.2d 168, 174 (5th Cir. 1985) (citing 15

William Meade Fletcher, Fletcher Cyclopedia of the Law of

Private Corporations, s 7122 (Perm. ed. 1983)). Most relevant for our purposes is the "mere continuation" exception.

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Traditionally, this applies when, after the transfer of assets,

there is an identity of stock, stockholders, and directors

between the purchasing and selling corporations. See, e.g.,

Weaver v. Nash Int'l, Inc., 730 F.2d 547, 548 (8th Cir. 1984).

Thus the "mere continuation" exception appears to closely

parallel the basic "successor in interest" concept invoked by

Augusta and Williams Mountain.

As the Third Circuit has observed, the traditional rule

concerning the liability that attaches to asset sales was "designed for the corporate contractual world," and "protects

creditors and dissenting shareholders, and facilitates determination of tax responsibilities, while promoting free alienability

of business assets." Polius v. Clark Equipment Co., 802 F.2d

75, 78 (3rd Cir. 1986). But it is also generally applied in

cases involving tort plaintiffs, see, e.g., id. at 82-83; Travis v.

Harris Corp., 565 F.2d 443, 446 (7th Cir. 1977), and the

beneficiaries of federal statutes, see, e.g., Atchison Topeka &

Santa Fe Ry., 159 F.3d at 364 (Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")),

even though such parties may have had no real opportunity to

protect their interests by contract with the predecessor corporation. For their protection some courts have stretched

the "mere continuation" test into the substantial continuity of

operations test advocated by the trustees, see Polius, 802

F.2d at 78 (noting cases); Cyr v. B. Offen & Co., 501 F.2d

1145, 1152-54 (1st Cir. 1974). The majority, however, still

follow the traditional rule in tort cases, see Polius, 802 F.2d

at 80 (products liability); Restatement (Third) of Torts:

Products Liability s 12 cmts. a, b (1997), and in cases

involving federal statutes such as CERCLA, see Atchison,

Topeka & Santa Fe Ry., 159 F.3d at 364.

In the context of federal statutes whose primary beneficiaries are employees, however, it appears that most courts

invoke the substantial continuity test. This departure from

the traditional rule was sparked by four Supreme Court

cases, two involving disputes under the National Labor Relations Act ("NLRA"), Golden State Bottling Co. v. NLRB, 414

U.S. 168 (1973); NLRB v. Burns Int'l Security Servs., Inc.,

406 U.S. 272 (1972), and two the Labor Management RelaUSCA Case #00-7072 Document #614064 Filed: 07/31/2001 Page 9 of 18
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tions Act ("LMRA"), Howard Johnson Co. v. Detroit Local

Joint Executive Bd., Hotel & Rest. Employees & Bartenders

Int'l Union, 417 U.S. 249 (1974); John Wiley & Sons, Inc. v.

Livingston, 376 U.S. 543 (1964). Neither statute mentions

successors, let alone successors in interest. Steinbach v.

Hubbard, 51 F.3d 843, 845 (5th Cir. 1995). Yet, proceeding

under principles of equity, the Court in each case addressed

the extent to which successors to the originally liable firm's

operations could be lawfully burdened with promises entered

or statutory torts committed by their predecessors. The

Court weighed congressional interest in the policy promoted

by the statute, and the extent to which successor liability

would promote it, against the cost and inequity to the successor of imposing liability. See, e.g., Golden State, 414 U.S. at

184; Burns Int'l, 406 U.S. at 287-88.

Although the four cases concerned the core labor relations

statutes, the reasoning has been used to find broad successor

liability under other statutes that govern employees' rights

whether they explicitly address successor liability, Leib v.

Georgia-Pacific Corp., 925 F.2d 240, 244-45 (8th Cir. 1991)

(Vietnam Era Veterans' Readjustment Assistance Act of 1974

("VEVRAA")); Vanderhoof v. Life Extension Inst., 988 F.

Supp. 507, 512-13 (D.N.J. 1997) (Family Medical Leave Act)

(relying on NLRA and Title VII case law), or not, Wheeler v.

Snyder Buick, Inc., 794 F.2d 1228, 1235-36 (7th Cir. 1986)

(Title VII); Musikiwamba v. ESSI, Inc., 760 F.2d 740, 745-

46 (7th Cir. 1985) (Civil Rights Act of 1866). In none of these

cases, however, did the text and structure of the underlying

legislation point firmly against successor liability based on

substantial continuity of operations. The four Supreme

Court cases that provide authority for these cases, for example, interpreted a pair of statutes that, unlike the statute

before us, failed to give guidance on successor liability one

way or the other. Moreover, even pursuing this line of cases

would leave our conclusion unchanged.

A key factor motivating courts to extend successor liability

beyond the textual bounds of a statute is that the victim of

the predecessor's behavior may be left without a remedy

unless recourse against the successor is allowed. MusikiUSCA Case #00-7072 Document #614064 Filed: 07/31/2001 Page 10 of 18
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wamba, 760 F.2d at 746. (This is, of course, ordinarily an

aspect of Congress's intent.) The relief sought under the

statutes involved in the Howard Johnson-Golden State line of

cases is typically "nonmonetary and can be effective only if

directed against the workers' current employer." EEOC v.

G-K-G, Inc., 39 F.3d 740, 748 (7th Cir. 1994) (Age Discrimination in Employment Act ("ADEA")); see, e.g., Harter

Tomato Prods. Co. v. NLRB, 133 F.3d 934, 936-37 (D.C. Cir.

1998) (successor's duty under NLRA to bargain with union

for predecessor's employees); Leib, 925 F.2d at 247 (successor's duty under VEVRAA to rehire predecessor's employee);

Criswell v. Delta Air Lines, Inc., 868 F.2d 1093, 1094 (9th

Cir. 1989) (successor's duty under ADEA to rehire predecessor's worker and change mandatory retirement policy); Bates

v. Pac. Marine Mkt. Ass'n, 744 F.2d 705, 710-11 (9th Cir.

1984) (successor's duty to obey Title VII consent decree

requiring a certain level of representation of blacks among

workforce at a harbor). Even if the remedy sought by the

plaintiff in a particular case is simply damages, the possibility

that other plaintiffs suing under the same statute may seek

injunctive relief supports successor liability under that statute. G-K-G, 39 F.3d at 748. But the Coal Act contemplates

no specific performance remedies. 26 U.S.C. s 9711(a); see

also id. ss 9704(a), 9712(d). Because (1) only pure money

cases may be brought, (2) the "successor in interest" standard

of corporate law allows the beneficiary (or the 1992 Plan

trustees) to pursue the wealth of the last signatory operator,

and (3) the Coal Act as a whole assures protection for the

beneficiary without his incurring the costs and risks of pursuing a departed past employer, there is no warrant whatever

for broad successor liability.

Thus we reject the trustees' claim that s 9711(g)(1) adopts

the "substantial continuity of operations" test. As we observed before, the two companies prevail here under either of

their candidates--the general corporate definition or one of

the special tax definitions, see, e.g., 26 CFR s 1.1503-

2A(c)(3)(vii)(B); 26 U.S.C. s 381. Accordingly we may leave

to another day the resolution of any differences in detail

between these and possibly other candidates.

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The judgment of the district court is

Affirmed.

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Sentelle, Circuit Judge, concurring: I concur completely

in the result reached by the majority and its basic textual

analysis of the Coal Industry Retiree Health Benefit Act of

1992 ("Coal Act"), 26 U.S.C. ss 9701-22. This analysis alone

is sufficient to support the outcome reached by the majority;

the remainder of the opinion is obiter dicta. I write separately because I fear the majority's discussion of the trustees'

final argument--that we should adopt a broad substantial

continuity test--may be misleading. The cases from our

sister circuits that have "extend[ed] successor liability beyond

the textual bounds of a statute" are in no way relevant to our

analysis in this case. Opinion at 10. While it is fashionable

in some legal circles to deride "hyper-technical reliance upon

statutory provisions," Palm Beach County Canvassing Bd. v.

Harris, 772 So. 2d 1220, 1227 (Fla.), vacated, 531 U.S. 70

(2000), this Court does not--and should not--move in them.

The majority cites the Supreme Court's decision in Traynor v. Turnage, 485 U.S. 535, 545-46 (1988), for the proposition that we must assume that "Congress's choice of words

reflects a familiarity with judicial treatment of comparable

language." Opinion at 8. In fact, the Traynor Court assumed that by using a specific term in a veterans' benefits

statute, Congress "intended that the term receive the same

meaning for purposes of that statute as it had received for

purposes of other veterans' benefits statutes." 485 U.S. at

546. In other words, the Court stated that statutory terms

should be interpreted in the same way in statutes covering

similar topics--not in any statute covering any topic. Cf. Del

Commercial Props., Inc. v. Commissioner, 251 F.3d 210, 218

(D.C. Cir. 2001).

In the present case, this maxim of statutory interpretation

suggests that the term "successor in interest" in the Coal Act

should be interpreted consistently throughout the Internal

Revenue Code, see Commissioner v. Keystone Consol. Indus.,

508 U.S. 152, 159 (1993), and that Congress was aware of how

the term had been interpreted in that context, see Traynor,

485 U.S. at 546. Treasury Regulations define "successor in

interest" as "an acquiring corporation that succeeds to the tax

attributes of an acquired corporation" through the following

transactions: the liquidation of a subsidiary, a merger or

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consolidation, the sale of "substantially all of the properties of

another corporation" for voting stock, 26 U.S.C. s 381, or the

mere change of identity. 26 C.F.R. s 1.1503-2A(c)(3)(vii)(B).

Relatedly, state business association law historically has been

used to determine the tax liability of "a successor corporation

for the debts of its predecessors." 15 Mertens Law of

Federal Income Taxation s 61.17, at 47 (2000); see also

United States v. First Dakota Nat'l Bank, 137 F.3d 1077,

1079-80 (8th Cir. 1998); Atlas Tool Co. v. Commissioner, 614

F.2d 860, 870 (3d Cir. 1980); George v. Commissioner, 2000

WL 1545066 (T.C. Oct. 19, 2000) (mem.). In West Virginia,

where both the defendant companies are incorporated, a

corporation that purchases the assets of another corporation

is not liable for the debts of the seller unless: (1) the

purchaser expressly or impliedly assumes the liability, (2) the

transaction was fraudulent, (3) "some element of the transaction was not made in good faith," (4) the purchase effected a

consolidation or merger, or (5) "the successor corporation is a

mere continuation or reincarnation of its predecessor." Jordan v. Ravenswood Aluminum Corp., 455 S.E.2d 561, 563

(W. Va. 1995); see also West Texas Ref. & Dev. Co. v.

Commissioner, 68 F.2d 77, 80 (10th Cir. 1933) (applying the

same factors in a tax dispute). Under either of these formulations, the defendant companies would not be liable under

the Coal Act. This analysis is sufficient to affirm the district

court's decision in this case.

If Congress had sought to adopt something similar to the

trustees' articulation of the substantial continuity of operations test it likely would have done so explicitly. For example, the Black Lung Benefits Act holds companies liable for

benefit payments to coal-mining employees when the companies are successive operators of a coal mine or acquire

substantially all of the assets of the previous operator. See

30 U.S.C. s 932(i)(1). Of course, in the Coal Act, Congress

did not adopt this approach.

The majority's lengthy discussion of cases employing the

substantial continuity of interest test does not clarify "judicial

treatment of comparable language." Opinion at 8. As the

majority recognizes, courts largely have adopted this test in

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cases when the statute at issue does not address successorship, much less use the term "successor in interest." See,

e.g., Wheeler v. Snyder Buick, Inc., 794 F.2d 1228 (7th Cir.

1986).

The majority rightly traces this analysis to four Supreme

Court decisions. Two of these decisions dealt with claims

brought under the Labor Management Relations Act

(LMRA), and two arose from decisions issued by the National

Labor Relations Board (NLRB) pursuant to the National

Labor Relations Act (NLRA). In the first of the LMRA

decisions, John Wiley & Sons, Inc. v. Livingston, 376 U.S.

543, 544 (1964), the Supreme Court addressed whether a

successor company was required to comply with an arbitration clause in a collective bargaining agreement between a

union and the predecessor company. Significantly, the predecessor corporation had merged with the successor corporation, and the Court was confronted with a question of "contractual origin"--and therefore did not interpret or apply any

statute. See id. at 545, 546, 550-51. Construing the contract

and noting the "substantial continuity of identity in the

business enterprise" following the merger, the Court held

that the successor corporation was required to comply with

the arbitration clause. Id. at 551. Later, the Court explained that the Wiley "holding dealt with a merger occurring

against a backdrop of state law that embodied the general

rule that in merger situations the surviving corporation is

liable for the obligations of the disappearing corporation."

NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. 272, 286

(1972).

In the second LMRA case, Howard Johnson Co. v. Detroit

Local Joint Executive Board, 417 U.S. 249, 251-52 (1974), a

franchiser bought all of the personal property associated with

a franchisee's business operation, but did not retain the

franchisee's employees. The employees' union claimed that

the franchiser was required to "arbitrate the extent of its

obligations" to the employees under the collective bargaining

agreement between the franchisee and union. Id. at 253.

The Court held that the franchiser was not bound by the

agreement because it did not have a "substantial continuity of

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identity" with the franchisee. Id. at 264. The Howard

Johnson Court contrasted the circumstances of the case with

Wiley, emphasizing that Wiley "involved a merger, as a result

of which the initial employing entity disappeared." Id. at 257.

In Howard Johnson, however, "the initial employers remain

in existence as viable corporate entities." Id. Significantly,

in neither Wiley nor Howard Johnson did the Supreme Court

purport to interpret the LMRA--or any statute--to encompass any successorship doctrine.

Unlike Wiley and Howard Johnson, the Court in Golden

State Bottling Co. v. NLRB, 414 U.S. 168, 171-72 (1973), and

NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. at 277,

reviewed the Board's interpretation of its organic statute.

When reviewing such decisions, the Court employs a deferential standard, upholding the Board's interpretation of the

NLRA as long as it "adopts a rule that is rational and

consistent with the Act." Fall River Dyeing and Finishing

Corp. v. NLRB, 482 U.S. 27, 42 (1987); see Golden State

Bottling Co., 414 U.S. at 181 (considering "whether the Board

properly exercised its discretion" in ordering a bona fide

purchaser of a business to reinstate employees with backpay

when the predecessor corporation had engaged in unfair labor

practices); Burns Int'l Sec. Servs., 406 U.S. at 278-79 (holding that "it was not unreasonable" for the NLRB to hold that

the successor employer is required to bargain with an existing certified union). Indeed, "[i]n Burns [the Supreme

Court] approved the approach taken by the Board and accepted by the courts with respect to determining whether a new

company was indeed the successor to the old." Fall River,

482 U.S. at 43. That approach, as the majority explains, is

the broad totality of the circumstances test that the trustees

now advocate. See id.

In previous cases, this Court has affirmed the use of the

substantial continuity of interest standard to determine the

obligations of successor corporations--but only when reviewing an agency decision that had employed it. For example, in

Harter Tomato Prods. Co. v. NLRB, 133 F.3d 934, 938 (D.C.

Cir. 1998), we upheld the NLRB's conclusion that a company

that merely leased assets from a predecessor company could

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still be a successor required to bargain with an existing union

if it met the broad substantial continuity test. See also Pa.

Transformer Tech., Inc. v. NLRB, No. 00-1388, slip op. at 4-5

(D.C. Cir. June 29, 2001). Our decision was based on the

deference we accord to NLRB rules that are "rational and

consistent" with the NLRA. Harter Tomato, 133 F.3d at 937

(internal quotation omitted). Similarly, we deferred to the

Federal Mine Safety and Health Review Commission when it

used the test to determine successor liability under the Mine

Safety and Health Act. See Secretary of Labor v. Mullins,

888 F.2d 1448, 1451 n.10, 1453-54 & n.15 (D.C. Cir. 1989).

Our deference to reasonable statutory interpretations made

by agencies to which Congress has specifically delegated

authority should not be confused with an adoption of those

interpretations or a belief that they are correct. We have

never interpreted a statute de novo and concluded that

liability under the statute is determined based on a substantial continuity of interest.

In contrast, some courts have adopted the substantial

continuity standard when interpreting statutes de novo. In

doing so, they have relied on the four Supreme Court decisions discussed above--even though the cases before them

did not review an agency decision, did not focus on labor

contracts, and did not even deal with statutes that mention

successorship. This reliance is mistaken.

The Supreme Court has never adopted any amorphous

totality-of-the-circumstances test in cases raising successorship questions not arising in a context requiring deference to

an agency. Instead, it has stated that there must be a

"substantial continuity of identity in the business enterprise,"

which "necessarily includes ... a substantial continuity in the

identity of the work force across the change in ownership."

Howard Johnson Co., 417 U.S. at 263 (citation omitted).

Even if this language could be read with the breadth some of

our sister circuits suggest, the Supreme Court has only

applied it in cases dealing with current employees seeking to

establish a company's obligations under an existing collective

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nies has been extinguished, and all of the predecessor's

employees have been retained by the successor company.

Furthermore, nothing in either Howard Johnson or Wiley

can be read to extend the reach of their holdings beyond their

"contractual origin," much less beyond statutes governing

labor-management relations.

The courts that have morphed the substantial continuity

standard of Howard Johnson and Wiley into a sweeping

totality-of-the-circumstances standard have allowed rules

adopted by the NLRB pursuant to its authority under the

National Labor Relations Act, see, e.g., Fall River, 482 U.S.

at 43, to serve as the law for other statutes well outside the

NLRB's reach. See, e.g., Musikiwamba v. ESSI, Inc., 760

F.2d 740, 750 (7th Cir. 1985). It is the role of Congress, not

the judiciary, to establish when successors should be held

liable for the statutory violations of predecessor companies

and whether successors have obligations to their predecessor's former employees. See Wheeler v. Snyder Buick, Inc.,

794 F.2d 1228, 1237 (7th Cir. 1986). Courts simply should not

extend liability "to a variety of statutory contexts when the

equities have so dictated" no matter how "important" the

policy they seek to fulfill. Upholsterers' Int'l Union Pension

Fund v. Arctic Furniture of Pontiac, 920 F.2d 1323, 1327 (7th

Cir. 1990). When Congress seeks to establish broad rules of

successor liability, it will do so on its own. See, e.g., 30 U.S.C.

s 932(i)(1). Under the Coal Act, it did not. Insofar as the

majority's opinion by discussion of the "factor[s] motivating

courts to extend successor liability beyond the textual

bounds" of statutes suggests any legitimacy for that approach, I wish to make plain that that is not the holding of

this case, nor the analysis that commands my concurrence.

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