Case Name: Lena McGLOTHLIN, et al., Plaintiffs, v. Joseph P. CONNORS, et al., Defendants
Court: United States District Court for the Western District of Virginia
Jurisdiction: United States
Decision Date: 1992-04-02
Citations: 142 F.R.D. 626
Docket Number: Civ. A. No. 92-0022-A
Parties: Lena McGLOTHLIN, et al., Plaintiffs, v. Joseph P. CONNORS, et al., Defendants.
Judges: 
Reporter: Federal Rules Decisions
Volume: 142
Pages: 626–648

Head Matter:
Lena McGLOTHLIN, et al., Plaintiffs, v. Joseph P. CONNORS, et al., Defendants.
Civ. A. No. 92-0022-A.
United States District Court, W.D. Virginia, Abingdon Division.
April 2, 1992.
As Amended April 2, 1992.
James E. Elliott, Mark M. Lawson, Steven R. Minor, Bristol, Ya., Robert H. Stropp, Jr., for plaintiff Doe McGlothlin.
John R. Mooney, Paul A. Green, Washington, D.C., Scott W. Mullins, Coeburn, Ya., for plaintiff Earl V. Brown.
David W. Allen, Margaret M. Topps, Angela T. Kennedy, Office of Gen. Counsel, UMWA Health & Retirement Funds, Washington, D.C., for defendants.

Opinion:
MEMORANDUM OPINION
GLEN M. WILLIAMS, Senior District Judge.
Plaintiffs, Lena Pearl McGlothlin, Edith Hess James, and Delmont Bush, filed this class action individually and on behalf of the beneficiaries of the United Mine Workers of America 1950 Benefit Plan and Trust ("1950 Trust") and 1974 Benefit Plan and Trust ("1974 Trust") (collectively, "Trusts"). Plaintiff-United Mine Workers of America ("UMW") is an unincorporated association and labor organization within the meaning of § 2(5) of the National Labor Relations Act, 29 U.S.G. § 152(5) and represents active and retired employees in the coal industry throughout the United States and Canada.
Defendants in this action are Joseph P. Connors, Donald E. Pierce, William Miller, Thomas H. Saggau, and Paul R. Dean, trustees of the Trusts ("Trustees"), and the Bituminous Coal Operators' Association, Inc. ("BCOA"), a multiemployer bargaining group formed for the purpose of bargaining with the UMW on behalf of certain coal industry employers.
PROCEDURAL HISTORY
On January 6, 1992, the Trustees disclosed their decision to notify Plaintiffs on or about March 1, 1992 that payments of health benefits under the Trusts would be suspended in mid-April 1992. On February 26, 1992, Plaintiffs filed this suit asserting that the Trustees breached their fiduciary duty by an arbitrary and capricious decision to interrupt health care benefits. Plaintiffs sought to enjoin the Trustees from discontinuing health benefits prior to the conclusion of the June 15, 1992 trial between the Trustees and the BCOA before the United States District Court for the District of Columbia ("D.C. District Court"). Plaintiffs also sought to enjoin the Trustees from notifying the beneficiaries that payments under the Trusts would be suspended.
Plaintiffs concurrently requested a temporary restraining order ("TRO") seeking to enjoin Defendants "from ceasing, or threatening to cease, the payment of health care benefits" under the Trusts. The court granted the TRO thereby preventing Defendants from terminating health benefits or from taking any action stating or suggesting that the payment of health care benefits under the Trusts would be interrupted.
On March 4, 1992, the court heard Plaintiffs' motions to add the BCOA as a party-defendant and for leave to file an amended complaint. The court granted both motions. The court also (1) extended the TRO until March 16, 1992, (2) enjoined the Trustees from mailing any notices to the beneficiaries regarding suspension of payments until after the March 16th hearing, and (3) directed the Trustees to refrain from suspending payments to either the beneficiaries or any health care providers of the same until after the hearing.
Plaintiffs subsequently amended their complaint and advanced two additional claims: (1) the BCOA breached its contract with the UMW by refusing to increase the employer contribution rate to a level sufficient to fund the Trusts (Plaintiffs maintain they are third-party beneficiaries of that contract); and, (2) the BCOA breached its fiduciary duty under its discretionary authority by failing to increase employer contributions to fully fund the Trusts. Plaintiffs now seek (1) to compel the Trustees from suspending the payment of health care benefits under the Trusts, (2) to enjoin the Trustees from notifying or taking any other action stating or suggesting that payment of health care benefits under the Trusts will be suspended, (3) to obtain a declaratory judgment that the BCOA is obligated to increase the employer contribution rate to the Trusts in an amount sufficient to fully fund the payment of health benefits under the Trusts, and (4) to direct the BCOA to increase the employer contribution rate.
On March 13, 1992, the BCOA filed a motion to dismiss or, in the alternative, to transfer for lack of jurisdiction. On March 16, 1992, the court heard oral argument on the jurisdictional issue. By Order and Memorandum Opinion dated March 17, 1992, the court held that it had jurisdiction over the case and denied the BCOA's motion. The court then commenced hearing evidence on the remaining issues of the suitability of the class action and the merits of issuing a preliminary injunction. At the conclusion of the evidence, the court granted a preliminary injunction from the bench, the precise parameters are defined herein, and made a tentative ruling that the class action was proper under Rule 23(a). By separate Order dated March 17, 1992, the court extended the TRO an additional ten days until a written opinion could be issued. The court also directed the parties to brief the issue of adequacy of Plaintiffs' legal counsel and further directed the BCOA and the Trustees to attempt to negotiate a compromise on an appropriate increase in the contribution rate. The Trustees and the BCOA were unable to agree on a contribution rate by the March 27, 1992 deadline. Thereafter, the court extended the TRO an additional ten days. On April 1, 1992, the court heard testimony and re ceived evidence on the contribution rate issue. The issues having been fully briefed and all the evidence taken, the court makes the following findings of fact and conclusions of law.
FINDINGS OF FACT
Based on that evidence presented, the court makes the following findings of fact:
The UMW and the BCOA have negotiated successive National Bituminous Coal Wage Agreements ("NBCWAs" or "Agreements") since 1950. The NBCWA established the Trusts to provide health care benefits to retired miners and their eligible dependents. Currently, over 120,000 persons are beneficiaries under the 1950 and 1974 Benefit Trusts. (Funds Exhibit 9 at 3).
Since 1974, the NBCWA has included a Guarantee Clause which provides in pertinent part:
Notwithstanding any other provision in this Agreement, the Employers hereby agree to fully guarantee the . health benefits provided by the . 1950 Benefit Fund . [and] the 1974 Benefit Fund . during the term of this Agreement. In order to fully fund these guaranteed benefits, the BCOA may increase, not decrease, the rate of contributions to be made to the . 1950 Benefit Fund . [and] the 1974 Benefit Fund . during the term of this Agreement. These contributions, which may be adjusted from time to time, shall be made by all employers signatory hereto during the term of this Agreement.
National Bituminous Coal Wage Agreement of 1988, Art. XX § (h). (Funds Exhibit 8 at 18). Also germane to the present ease is the Suspension Clause, which specifically prohibits the Trustees from suspending the Trusts during the term of the Agreement. The Suspension Clause of the current 1988 Agreement provides that:
[i]n the event the assets of [the Trusts] become insufficient to pay the benefits provided under the Plan on or after February 2, 1993, the benefits may be suspended or reduced to amounts which, in the judgment of the Trustees, can be paid from the net assets of [the Trusts].
UMW 1950 Benefit Plan and Trust, Art. Ill at 6 (1988) (Funds Exhibit 8); UMW 1974 Benefit Plan and Trust, Art. Ill at 8 (1988) (Funds Exhibit 8).
Prior to February 1, 1988, the effective date of the most recent NBCWA, the Trusts were funded primarily based on the number of tons of coal produced by the signatory employers. However, since February 1, 1988, the Trusts have been funded primarily by contributions based on each hour of classified work performed under the NBCWA for each signatory employer ("contribution units"). The exact amount contributed to the Trusts is determined in collective bargaining between the UMW and the BCOA ("contribution rate").
The Trusts are dependent on the contribution rate for funding. Due to insufficient contributions to the Trusts, Russell Crosby ("Crosby"), Director of Research and Analysis of the Funds, testified that the projected March 31, 1992 deficit for the 1950 Trust is $120.4 million, (Funds Exhibit 14), and the projected March 31, 1992 deficit for the 1974 Trust is $19.8 million. (Funds Exhibit 15). See March 16, 1992 Transcript at 86. As a result of this deficit, the income expected through the end of the current NBCWA will provide only enough monies to cover the current expenses. The Trustees anticipate that the crossover date for the 1950 Trusts will occur April 17, 1992 and the crossover date for the 1974 Trusts will take place April 7, 1992.
CONCLUSIONS OF LAW
A. Class Action
Plaintiffs bring this suit as a class action. The court must determine whether the action satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure. Rule 23 provides in relevant part:
One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
Fed.R.Civ.P. 23(a). Plaintiffs bear the burden of establishing a valid class. Poindexter v. Teubert, 462 F.2d 1096, 1097 (4th Cir.1972).
The court must make an initial determination that the representatives in a class action are members of the proposed class. Phillips v. Brock, 652 F.Supp. 1372, 1378 (D.Md.1987), vacated on other grounds sub nom., Phillips v. McLaughlin, 854 F.2d 673 (4th Cir.1988); see also 7A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure: Civil 2d § 1761 at 132 (1986), (hereinafter Wright & Miller, Federal Practice and Procedure). Plaintiff-Lena McGlothlin testified that she is a beneficiary of the 1950 Trust and provided a valid health card as evidence. (Plaintiffs' Exhibit 1). After reviewing the undisputed testimony and evidence, the court finds that Mrs. McGlothlin is a valid member of the proposed class. As to the remaining named Plaintiffs, the court accepts the evidence offered in their affidavits that they are also beneficiaries of the Trusts and are proper members of the proposed class.
1. Numerosity
The court recognizes that the class satisfies the minimum standards of definiteness. The beneficiary population is easily delineated and ascertained. Therefore, creation of the class is not a complicated matter, and the court will not make it so.
Next, the court notes that determination of whether the class is sufficiently large to make joinder impracticable is not guided by hard and fast rules. The court is free to consider, among other factors, the size of the class, the nature of the action, the location of the class members, the expediency of joinder, and the practicality of multiple lawsuits. It'is not necessary that Plaintiffs know precisely the size of the class, rather it is necessary only to show that the class is so large as to make joinder impracticable. See Moreno v. University of Maryland, 420 F.Supp. 541, 564 (D.Md.1976), aff'd, 556 F.2d 573 (4th Cir.1977), vacated on the merits, 441 U.S. 458, 99 S.Ct. 2044, 60 L.Ed.2d 354 (1979); see also Vargas v. Calabrese, 634 F.Supp. 910, 918 (D.N.J.1986), aff'd in part, rev'd in part, 949 F.2d 665 (3d Cir.1991).
The record supports Plaintiffs' allegation that the proposed class consist of approximately 120,000 members and that fact is largely undisputed. There is no question that 120,000 members constitutes a sufficiently large class to make joinder impracticable. Accordingly, the court finds that Plaintiffs have satisfied the numerosity requirement.
2. Commonality
The requirement that questions of law or fact must be common to the class is to be liberally construed. In Haywood v. Barnes, 109 F.R.D. 568, 577 (E.D.N.C. 1986), the court observed that commonality does not "require that all questions of law or fact be common to every member of the class" and recognized that some factual variance was permitted. In the present case, Plaintiffs allege breach of fiduciary duty and breach of contract claims against the BCOA and the Trustees. All beneficiaries of the Trusts would presumably make the same breach of fiduciary duty and breach of contract claims against Defendants because Defendants' conduct would involve class-wide injury, not harm simply directed at the named Plaintiffs. Furthermore, the court notes that suits for injunctive relief by their very nature present common questions of law or fact. See Inmates of the Attica Correctional Facility v. Rockefeller, 453 F.2d 12, 24 (2d Cir.1971) (finding class action proper by prison inmates for injunctive relief because "all inmates have a common interest in preventing the recurrence of the objectionable conduct"), cert. denied, — U.S.-, 112 S.Ct. 182, 116 L.Ed.2d 143 (1991); see also Wright & Miller, Federal Practice and Procedure § 1763 at 201. Therefore, the court finds that questions of law or fact are common to the class and the second prerequisite for class certification is met.
3. Typicality
The typicality requirement necessitates that the class representative's interest "ought to be squarely aligned in interest with the represented group." Haywood, 109 F.R.D. at 578 (citations omitted). Further, typicality requires that the claim "arise[ ] from the same event or course of conduct which gives rise to the claims of other class members and is based on the same legal theory." Id. (citing De La Fuente v. Stokely-Van Camp, Inc., 713 F.2d 225, 232 (7th Cir.1983)).
a. Interest Squarely Aligned
On the issue of whether the named Plaintiffs' interest is squarely aligned with the interests of the class, the court again examines the testimony of Mrs. McGlothlin. When asked why she became involved in the lawsuit, Mrs. McGlothlin testified: "Well, I wanted to protect my card, my health insurance." In a single, simple sentence, Mrs. McGlothlin was able to reach to the heart of Plaintiffs' claims. The court finds that her interest are clearly aligned with the goals of the class as a whole.
b. Claims Arising From the Same Conduct
The court next considers whether the representatives have claims which arise from the same event or course of conduct as the rest of the class. Plaintiffs' claims originate from the interpretation of the Guarantee Clause and the Suspension Clause and consequent injury to Plaintiffs should Defendants prevail. Interpretation of those clauses and the resultant effect on the financial stability of the Trusts is common to all class members. Courts acknowledge that some factual variations between the class members is not fatal to a finding that the predominant legal claims are similar. Haywood, 109 F.R.D. at 578. Although the variety of health care services provided, the degree of injury claimed, or the amount of damages suffered may vary among Plaintiffs, the court finds that the named Plaintiffs' legal claims arise from the same conduct and are typical of the entire class. Accordingly, the court holds that the requirement of typicality is satisfied.
4. Adequacy of Representation
Adequacy of representation is a factual issue in which the court conducts two separate inquiries: the adequacy of the class representative and the adequacy of legal counsel. Id. On the issue of adequate class representation, the court may consider the extent to which other class members support the representative parties, Peterson v. Oklahoma City Housing Auth., 545 F.2d 1270, 1273 (10th Cir.1976), and whether a potential conflict exists between the named Plaintiffs and the proposed class, Dameron v. Sinai Hosp., 595 F.Supp. 1404, 1409 (D.Md.1984), aff'd in part, rev'd in part, 815 F.2d 975 (4th Cir. 1987). The adequacy of legal counsel focuses on whether counsel is competent, dedicated, qualified, and experienced enough to conduct the litigation and whether there is an assurance of vigorous prosecution. The burden is on Defendants to establish inadequate representation. Haywood, 109 F.R.D. at 579.
a. Adequacy of Representative Party
Mrs. McGlothlin testified that her involvement in the lawsuit began when she became aware that her UMW health benefits card "was going to be taken." Mrs. McGlothlin's daughter attested that her husband, a local attorney, learned that the law firm of White Elliott & Bundy ("WE & B") was representing people trying to protect their UMW health cards. Mrs. McGlothlin's daughter spoke to her mother about the lawsuit and asked if she was willing to become involved or if she wanted to learn more about it. Mrs. McGlothlin indicated that she did and, with her daughter, met with the attorneys at WE & B, After learning what the suit involved, Mrs. McGlothlin decided to join in the lawsuit. Mrs. McGlothlin and her daughter expressed complete and total candor as to how they became apprised of and involved in the lawsuit. The court finds nothing improper about the way Mrs. McGlothlin was notified of the lawsuit nor from the act of seeking the assistance of her daughter or son-in-law. See Eggleston v. Chicago Journeymen Plumbers' Local Union No. 130, 657 F.2d 890, 896 (7th Cir.1981) (allowing named plaintiff to represent class although she did not understand the complaint, could not explain the statements in it, had little knowledge of the lawsuit, did not know the defendants by name, or the nature of the misconduct but had relied on her son-in-law), cert. denied, 455 U.S. 1017, 102 S.Ct. 1710, 72 L.Ed.2d 184 (1982).
The court notes that the physical ability of Mrs. McGlothlin to represent the class may be of concern. At the hearing, Mrs. McGlothlin testified that she suffers from congestive heart failure, high blood pressure, diabetes, and cancer. The court is not unmindful that most, if not all, Plaintiffs are elderly and likely to have varying degrees of health problems. Although Mrs. McGlothlin is in poor health, she presented herself to the court and testified on her own behalf. She understood questions and gave coherent answers. And, although she was unfamiliar with legal terminology, she attested to her signature on the affidavit and told of the events concerning how she became involved in the lawsuit. See Heastie v. Community Bank, 125 F.R.D. 669, 676 (N.D.Ill.1989) (declaring that lack of sophistication does not necessarily render a class representative inadequate). Further, Mrs. McGlothlin was able to identify the attorney with whom she spoke at WE & B. In short, although Mrs. McGlothlin is quite feeble, the court determines that she is an adequate class representative. As to the remaining named Plaintiffs, the court accepts the evidence offered in their affidavits and finds that they are also adequate class representatives.
As to the issue of other class members' support, the court notes that it has personally received numerous letters from beneficiaries of the Trusts writing in support of the lawsuit. The court has not received, either formally nor informally, a single letter from a class member in opposition to the suit. And, although the court acknowledges that this is not a representative sample, given the high profile of the case, the court is persuaded that there is no indication that other members of the class are opposed to the suit or the class representatives.
b. Adequacy of Legal Counsel
The biblical admonition that "no man can serve two masters" is a particularly worthy rule when applied to lawyers. Thus, Canon 5 of the Virginia Code of Professional Responsibility provides that "a lawyer should exercise independent professional judgment on behalf of a client." Virginia Code of Professional Responsibility Canon 5 (1991).
The court has broad discretion in disqualifying an attorney in order to prevent, not only a real conflict of interest, but an apparent conflict of interest. Ross v. United States, 910 F.2d 1422, 1432 (7th Cir.1990). The court must act on even an appearance of impropriety. The public's perception of an apparent conflict of interest must be avoided in order that public confidence in the integrity of the Bar remains. The court, however, should not exercise its discretion simply to yield to public opinion. There are segments of the public that judge all lawyers with suspicion, and, if they are on the losing side of a case, wrap themselves in the blanket of righteousness and accuse their lawyer of "selling out." The court considers the issue of adequacy of legal counsel within this framework.
WE & B is currently serving as Plaintiffs' counsel of record. Mr. Mark Lawson ("Lawson"), WE & B's chief counsel in this case, testified that WE & B became involved in the lawsuit when the law firm of Smith, Heenan & Althen ("SH & A") contacted'him at some time prior to February 26, 1992. SH & A indicated that there was a possibility that the Trusts were going to suspend benefits to the beneficiaries and suggested that WE & B might be interested in representing the beneficiaries. Lawson maintained that SH & A described themselves as representing a group of independent coal companies which was interested in the litigation. (March 17 Tr. at 101). Lawson denied that SH & A disclosed that it represented the Private Benefit Alliance ("PBA").
On February 26, 1992, WE & B and SH & A entered into an agreement whereby SH & A agreed to be responsible for WE & B's fees and costs in the litigation, estimated to be in the range of $40,000. (BCOA Exhibit 5). Lawson acknowledged that at some point prior to February 26, 1992 he became aware of the PBA, but disavowed any personal contact with anyone associated with PBA or any of the coal companies contributing to WE & B's fees. (March 17 Tr. at 103-04).
The BCOA has vigorously challenged the ability of WE & B to represent the class. The BCOA advances that the litigation "was brought at the behest of, is being funded by, and is intended to serve the legislative interests of the PBA." The BCOA contends that WE & B knew or should have known that PBA's interest was contrary to the beneficiaries of the Trusts. In short, the BCOA maintains that the interests of the PBA is in direct conflict with the beneficiaries; therefore, WE & B's involvement with SH & A creates a conflict of interest between WE & B and the beneficiaries, and suggests that it is an ethical violation for WE & B to represent the beneficiaries.
To accept the BCOA's argument is to embrace the premise that the PBA is thoroughly financing and controlling the lawsuit. The record is undisputed that a group of coal companies are funding the lawsuit. The court has received and placed under seal the list of companies contributing to the suit. After carefully reviewing the list and comparing it to a list of PBA members provided by the BCOA, the court finds that of the twenty-two companies listed as contributing to the beneficiaries' suit, only five are PBA members. The fact that less than one-quarter of the companies contributing fees and costs are PBA members is inadequate evidence to support a determination that the agenda of the organization dominates the lawsuit. Therefore, from the evidence developed to date, most of the coal companies providing funds for this lawsuit are not members of the PBA. The coal companies' interest in the subject matter of this lawsuit is to prevent a crippling strike which will harm the entire coal industry. In this way, the BCOA has failed to demonstrate an sufficient nexus between the PBA and WE & B to substantiate the allegation that this is a "PBA-driven litigation."
In further support of its argument that the PBA controls the case, the BCOA introduced a letter from WE & B to the court clerk which included a reference to the PBA. (BCOA Exhibit 4 at Al). The BCOA contends that the "In re" line in that letter, in addition to a letter from WE & B to SH & A in the same style, supports the PBA's active involvement in the case. WE & B has explained, however, to the court's satisfaction, that in considering the lawsuit WE & B obtained background information on the important legal and factual issues. Although not obtained from the PBA, the PBA generated the largest part of that information; therefore, WE & B created a file as a repository of that information and named the file "Private Benefit Alliance." When WE & B proceeded forward with the lawsuit, it did not change the internal file number, and through a clerical mistake, the file style remained unchanged. The court is satisfied with this explanation and has been provided with no other evidence to reach a contrary conclusion.
Further, the BCOA identified three separate occasions when WE & B "disparaged" the Rockefeller Bill and maintained that if WE & B was true to the interest of the beneficiaries it would "regard that Bill as sweetness and light." The court reviewed the three comments and found no suggestion by WE & B that the Rockefeller Bill would be inimical to the beneficiaries' position. In fact, when questioned about the Bill directly, Lawson testified that he personally favored the Rockefeller Bill if it would benefit the beneficiaries as he believed it would. (March 17 Tr. at 111-12).
Next, the BCOA observed WE & B's reluctance to admit the PBA's role in the case. The BCOA alleged that WE & B brought this suit in the name of John Doe to conceal its real client in interest. On this point, the court notes that perhaps WE & B has created some of this conception itself. The court has failed to discern the necessity of the anonymity of Plaintiffs. The court is mindful that Plaintiffs asked to proceed this way, and the court approved it. The court wonders, however, if, as a practical matter, more suspicion has been raised simply by hiding Plaintiffs behind John Doe. In this way, the BCOA's point is well taken. The court also notes that when the BCOA attempted to obtain copies of the court file in order to answer the suit, the affidavits used to obtain the TRO were missing, even though sealed by the court. These affidavits were still in WE & B's possession nearly two weeks after the case was filed and had never been tendered to the clerk. Furthermore, as noted above, Lawson testified that certain coal companies were contributing monies to the litigation but he was unable to provide the court with more than five names of companies, four of which were not PBA members. (March 17 Tr. at 105, 108). It was not until the court entered a protective order that SH & A reveal the complete list of coal companies contributing funds to the litigation. Finally, at the initial hearing after the court ordered the TRO, attorneys from SH & A appeared before the court with the attorneys from WE & B.
At this juncture, however, the court believes that WE & B has been forthcoming, at last, on the PBA's role in this litigation. As noted previously, the court accepted WE & B's explanation of the "In re" line on certain correspondence. Further, the court has reviewed the list of the coal companies contributing money to the suit and is satisfied that there is no conflict of interest. Moreover, the court has unsealed the names of Plaintiffs, and a named Plaintiff, Mrs. McGlothlin, has come forward to testify. Therefore, the court holds that WE & B's actions to date are not sufficient to remove it from the case.
Finally, the BCOA emphasized that WE & B cannot represent a party while accepting payment of its legal fees from an entity with conflicting interest. The United States District Court in the Eastern District of Virginia recently faced a classic case of potential conflict of interest and removed the attorneys from the case. Brooks v. Farm Fresh, Inc., 759 F.Supp. 1185 (E.D.Va.1991). The BCOA relies on Brooks for the proposition that potential conflict between the class and the party paying the class counsel's fees is an adequate basis for removing the attorneys from the case. In Brooks, the plaintiffs, grocery store workers, brought suit against Farm Fresh alleging violations of the Fair Labor Standards Act. A law firm, Baptiste & Wilder ("B & W"), regularly represented the local labor union in its efforts to organize the Farm Fresh employees. B & W was considered to be the union's "chief outside counsel." The union hired B & W to represent certain employees in a class-type action with the obvious purpose of using the lawsuit as a bargaining chip against Farm Fresh. The defendant moved to disqualify the plaintiff's counsel on the grounds of conflict of interest between the law firm and the local union.
The union in Brooks argued that its interest were one and the same as the employees. The court, however, recognized a potential conflict of interest and pointed out that if the employers wanted to settle the case quickly, it would serve the individual interest of the employees but would be against the interest of the union because prolonging the litigation would benefit the union. The court also noted that the union had a potential conflict if the employers and employees wanted to resolve the case and keep the settlement confidential.
In a'footnote on the issue of the union paying B & W's fees, the Brooks court stressed that it "does not normally inquire into the fee arrangements of attorneys practicing before it." Id. at 1189 n. 3. The Brooks court went on to characterize the fact that the law firm was "unconcerned about its fee [as] yet another indication that the Union's desires could have an inordinate effect on the firm's professional judgment." Id. This court agrees that reviewing fee arrangements is generally not within the realm of the court's business. However, since the issue has been raised, the court is required to deal with it.
At first blush, it may appear that the position of WE & B is the same as B & W, except that WE & B was employed by a Washington, D.C. law firm, SH & A, which in turn represents the PBA. The present case can be distinguished from Brooks, however, in several respects. First, certainly, there is no evidence that the PBA asked WE & B to bring this lawsuit. Second, the suggestion may be that the PBA asked SH & A to bring the suit, who in turn asked WE & B. As stated previously, however, there is no evidence to support the proposition that the PBA is in control of the litigation, nor is there evidence that the PBA is funding the litigation. Third, there has been no evidence that WE & B is actively campaigning against or has lobbied against the Rockefeller Bill itself. Finally, there is no evidence which indicates that WE & B cannot adequately represent the beneficiaries. The nexus established in Brooks simply has not been shown in the present case.
Moreover, the court can find no law, nor has any been cited to it, that a third-party paying the bills automatically disqualifies a firm from representing a party in a particular case. In the court's view, and in the view of Brooks, it takes more. See also McClendon v. Continental Group, Inc., 113 F.R.D. 39, 43 (D.N.J.1986) (noting that "third party funding, in and of itself, does not make the named plaintiffs antagonistic to the interests of the class"); Georgia State Conference of Branches of NAACP v. Georgia, 99 F.R.D. 16, 34 (S.D.Ga.1983) (concluding that attorneys provided by legal services organization were not rendered incompetent because employer advancing costs of litigation); Wolkenstein v. Reville, 539 F.Supp. 87, 91 (W.D.N.Y.) (permitting organization which is benign from ethical point of view to finance litigation), aff'd, 694 F.2d 35 (2d Cir.1982). Therefore, the court finds nothing improper about the financial arrangement between SH & A and WE & B.
The UMW has also challenged WE & B's involvement in the lawsuit. The UMW alleged that WE & B's interests are antithetical to the interest of the class because Plaintiffs' counsel is against the Rockefeller legislation. The UMW asserts that it has stood by its retirees and will continue to do so in terms of the long term solution before Congress and the court concerning the threat of health care benefits. When the court questioned the UMW's counsel on its interest in intervening in the present case, the UMW declared:
we're here for one primary reason. We believe that the notice that is being sent out to the Funds is misleading . Secondly, to the extent that the Court seeks to enjoin the BCOA and require it to add monies to the Funds if the evidence shows that that is needed in order to continue the benefits, we support that.
March 16 Tr. at 141. When asked about the UMW's position on whether Plaintiffs were adequate representatives of the class and WE & B's representation, the UMW questioned the need for anonymity and indicated that it would likely oppose WE & B representation based on what it knew about the PBA. (March 16 Tr. at 144). The UMW agreed that it was capable of representing Plaintiffs in the present suit. Finally, when asked about the UMW's position on the comity and collateral estoppel issues, the UMW seemed to concur with the arguments offered by the BCOA.
Although the court does not question the UMW's dedication to the active and retired miners, it is confronted with the question of the UMW's position in the present suit. The court notes that the UMW did not attempt to halt the suspension notices to the beneficiaries. The UMW now appears fully committed to preventing notification of the beneficiaries that their benefits will be suspended, but on the issue of seeking an increase in the contribution rate to fund the Trusts, the UMW appears agreeable to allowing the Trustees and the BCOA to proceed in the D.C. District Court litigation. At one point, the UMW even seemed content to wait until the end of the contract before requiring the BCOA to fulfill the terms of the Agreement and asserted that the health providers may just need to suffer with more delays in payments from the Trusts. (March 16 Tr. at 150-52). The UMW did concede that if providers can-celled their services it would cause irreparable harm to Plaintiffs; however, the UMW was not willing to acknowledge that a day would ever arrive when the Trustees would suspend the benefits. Although the court recognizes that it may have put the UMW attorney on the spot, the answers nonetheless offered some understanding into the UMW's position. The record shows that the BCOA and the UMW are embarked upon a common course and have neglected the interests of the beneficiaries. Indeed, as noted above, when questioned by the court, the UMW was not in sympathy with the purpose of this suit but sought only to enjoin the Trustees from mailing notice to the beneficiaries.
On the other hand, WE & B has maintained just as vigorously that its interests falls squarely with the beneficiaries. On February 26, 1992, before this suit was filed, James Elliott ("Elliott") of WE & B wrote to Bill Althen of SH & A that if the interest of the beneficiaries conflicted with the interests of SH & A, it was the duty of WE & B to advance the interest of the beneficiaries, not SH & A. The letter emphasized that:
from the very moment pensioners decide to proceed with this action and the action as filed, our clients will be the plaintiffs in the case. At any time that the plaintiffs' interest deviate from the interests of Smith, Heenan & Althen or its clients, our duty will be to promote the interests of the plaintiffs, which we will do.
BCOA Exhibit 5. WE & B recognized a possible conflict of interest and made clear to SH & A that its loyalty was to Plaintiffs and their cause.
WE & B also responded to the allegations with a letter to the court strongly denying the conflict of interest claims. (BCOA Exhibit 3). It is the court's position that when an attorney avows to this court that he or she intends to advance every legal argument on behalf of the client and will represent the client to the best of his or her ability, the court expects those statements to be true, and the court accepts them as true, until such time as proof is offered to the contrary. WE & B -has absolutely denied that PBA is their client. The court accepts this account as truth and has heard no concrete evidence to the contrary.
Moreover, the court has observed nothing in WE & B's handling of the lawsuit to suggest that it is unable to manage the litigation. As with each of the parties in the case, the court has been impressed with the excellence of the oral presentations and the caliber and quality of the memoranda and other documents submitted to the court. WE & B is no different. To date, the sum of WE & B's actions has been solely to the benefit of its clients, not to outside interests. WE & B has diligently and forcefully argued the beneficiaries' position at every stage. On February 26, 1992, WE & B successfully obtained a TRO, effectively halting the notice to beneficiaries that the Trustees intended to suspend their benefits. On March 16 & 17, 1992, WE & B successfully obtained a preliminary injunction against the Trustees and the BCOA, the parameters are defined herein, resulting in an increase in the contribution rate to the Trusts and thereby preventing a suspension in health care benefits to the beneficiaries. WE & B has won this lawsuit, despite the efforts of the UMW and the BCOA to defeat its objective; therefore, neither the BCOA nor the UMW has a right to be critical of the manner in which WE & B is conducting its duties. Therefore, the court finds that WE & B is competent to serve as Plaintiffs' class counsel.
Moreover, this suit was not brought against the BCOA nor the UMW. Rather, the action was commenced against the Trustees. WE & B believed the Trustees had sufficient funds to pay benefits without further funding. It was not until the court questioned whether complete relief could be granted without the BCOA's involvement was it even brought into the suit.
Further, the court notes that WE & B is a highly ethical law firm which has practiced in this area for nearly twenty years. Historically, WE & B has represented union members, and non-union members, large companies and small companies, union companies and non-union companies. The court finds no stereotype clientele to suggest that WE & B has built in hostilities toward retired union coal miners and their families.
Neither the BCOA nor the UMW have alleged any claim of unethical conduct against WE & B, nor has the court observed any. After balancing all the factors and carefully considering the evidence, both in favor of and against disqualifying WE & B, the court holds that WE & B has the ability to fairly and adequately represent Plaintiffs and have stated a desire to do so. WE & B has no axe to grind except on behalf of the beneficiaries of the Trusts. Therefore, the court finds no reason to dismiss it from the case.
If it is later demonstrated that WE & B cannot adequately protect the interests of the class, then the court will take whatever steps it deems necessary pursuant to Rule 23(c) or Rule 23(d) at that time. To date, WE & B has exhibited no conduct which would warrant their removal.
There remains the issue concerning a subpoena issued by the UMW to depose SH & A to induce further information concerning a preported conflict of interest. From a practical point of view, the issue is moot as the essential issues have already been addressed. The court perceives that no useful purpose will be served by taking additional evidence. Therefore, the court quashes the subpoena seeking further discovery from SH & A.
5. Class Certification
Once the court determines that a class exists and the class representatives are properly members of the class, the court may then consider certification of the class action. Paxman v. Campbell, 612 F.2d 848, 855 (4th Cir.1980), cert. denied, 449 U.S. 1129, 101 S.Ct. 951, 67 L.Ed.2d 117 (1981). Certification of a class is left to the sound discretion of the trial court and will be reversed only upon a showing of abuse of discretion. Stott v. Haworth, 916 F.2d 134, 139 (4th Cir.1990). For the following reasons, the court finds that the class is certified appropriately pursuant to Fed. R.Civ.P. 23(b)(2).
In addition to meeting the requirements of Rule 23(a), the Federal Rules require that the action falls within at least one of the three categories of Rule 23(b). Mobray v. Kozlowski, 724 F.Supp. 404, 419 (W.D.Va.1989), rev'd, on other grounds, 914 F.2d 593 (4th Cir.1990). Under Rule 23(b)(2), the action may be maintained as a class action if "the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole." Fed. R.Civ.P. 23(b)(2). The advisory notes emphasize that the subdivision "is intended to reach situations where a party has taken an action or refused to take action with respect to a class, and final relief of an injunctive nature or of a corresponding declaratory nature, settling the legality of the behavior with respect to the class as a whole, is appropriate." Paxman, 612 F.2d at 854. Thus, there are two basic factors which must be present under Rule 23(b)(2): (1) the opposing party's conduct must be "generally applicable" to the class and (2) final injunctive or corresponding declaratory relief must be requested for the class. Wright & Miller, Federal Practice and Procedure § 1775 at 448-49.
In order for the opposing party's conduct to be "generally applicable" to the class, it is not necessary that the party act directly against each member of the class. Rather, it is only necessary that the actions "affect all persons similarly situated so that [the] acts apply generally to the whole class." Id. at 448. Here, Defendant have acted in a manner generally applicable to the class. The BCOA's refusal to increase the contribution rate to a level sufficient to fully fund the Trusts affects all the beneficiaries. Also, the Trustees' threatened action to notify beneficiaries that health payments will be suspended affects the class equally. Therefore, this criteria is met.
Regarding the second requirement, certification under Rule 23(b)(2) is appropriate only when "the relief sought is exclusively or predominantly injunctive or declaratory." Lukenas v. Bryce's Mountain Resort, Inc., 538 F.2d 594, 595 (4th Cir.1976). Rule 23(b)(2) requires that a party seek final injunctive relief or corresponding declaratory relief. Thus, a request for a TRO or preliminary injunction does not qualify. Wright & Miller, Federal Practice and Procedure § 1775 at 461. The advisory note indicates that "corresponding declaratory relief" exists "when as a practical matter it affords injunctive relief or serves as a basis for later injunctive relief." Lukenas, 538 F.2d at 595. Stated differently, the declaratory judgment should be the equivalent of an injunction. Wright & Miller, Federal Practice and Procedure § 1775 at 462.
Here, Plaintiffs not only seek preliminary injunctive relief, which the court notes does not fall squarely into Rule 23(b)(2), but also seek declaratory judgment that the BCOA is obligated to increase employer contributions to the Trusts. This is the thrust of Plaintiffs' contentions and amounts to an injunction ordering the BCOA to increase the contribution rate. Therefore, the class is properly certified under Rule 23(b)(2). Bower v. Bunker Hill Co., 114 F.R.D. 587, 596 (E.D.Wash.1986) (observing that class of pensioners, seeking a declaratory judgment that medical benefits established as part of retirement plan were vested benefits and therefore improperly terminated, was proper under Rule 23(b)(2)).
Although the court notes that the class action also meets the requirements of Rule 23(b)(3) because, as previously discussed, questions of law or fact are common to the entire class, the court holds that the class is more appropriately certified under Rule 23(b)(2). When both provisions apply, the court should proceed under Rule 23(b)(2) so that all the class members will be bound. Wright & Miller, Federal Practice and Procedure § 1775 at 491.
Therefore, the court certifies this case as a class action and the class is defined as follows:
Beneficiaries of the UMW 1950 Benefit Trust and the UMW 1974 Benefit Trust as defined by Article 1(4) of the 1950 Benefit Plan and Trust and Article 1(4) of the 1974 Benefit Plan and Trust. The class includes, but is not limited to, retired miners, widows of retired union miners, and their eligible dependents.
Although the court certifies the class at this time, the court notes that class certification is not necessary prior to issuing a preliminary injunction. Sandford v. Coleman Realty Co., 573 F.2d 173, 178 (4th Cir.1978) (maintaining that there is no practical benefit to certify class action with injunctive relief because all class members affected equally by any action of the court).
B. Preliminary Injunction
Generally, a preliminary injunction is an extraordinary remedy which is granted only when the moving party clearly establishes entitlement to relief. Murrow Furniture Galleries, Inc. v. Thomas-ville Furniture Indus., Inc., 889 F.2d 524, 526 (4th Cir.1989). The purpose behind granting a preliminary injunction is to preserve the status quo until such time as a court can render a decision on the merits. Federal Leasing, Inc. v. Underwriters at Lloyd's, 650 F.2d 495, 499 (4th Cir.1981). Moreover, granting an injunction is within the sound discretion of the trial court which will be overturned only upon a showing of abuse of discretion. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bradley, 756 F.2d 1048, 1055 (4th Cir.1985); Virginia Chapter, Associated Gen. Contractors v. Kreps, 444 F.Supp. 1167, 1180 (W.D.Va. 1978).
The Fourth Circuit clarified the standard for granting a preliminary injunction in Blackwelder Furniture Co. v. Seilig Manufacturing Co., 550 F.2d 189 (4th Cir. 1977). In Blackwelder, the lower court denied a preliminary injunction primarily because the movant failed to make a strong showing that it was likely to prevail on the merits. When asked to review the lower court's application of the law, the Fourth Circuit outlined the following "balance-of-hardship" test:
the first step . is for the court to balance the "likelihood" of irreparable harm to the plaintiff against the "likelihood" of harm to the defendant; and if a decided imbalance of hardship should appear in plaintiff's favor, then the likelihood-of-success test is displaced . [and] 'it will ordinarily be enough that the plaintiff has raised questions going to the merits so serious, substantial, difficult and doubtful, as to make them fair ground for litigation and thus for more deliberate investigation.'
Id. at 195. The court went on to stress that "the importance of probability of success increases as the probability of irreparable injury diminishes; and where the latter may be characterized as simply 'possible,' the former can be decisive." Id. (citations omitted).
The Blackwelder court focused on the first two prongs of the balance-of-hardship test. Specifically, the court held:
[t]he two more important factors are those of probable irreparable injury to plaintiff without a decree and of likely harm to the defendant with a decree. If that balance is struck in favor of plaintiff, it is enough that grave or serious questions are presented; and plaintiff need not show a likelihood of success. Always, of course, the public interest should be considered.
Id. at 196. The Fourth Circuit has continued to consider the first two prongs the most important considerations. Rum Creek Coal Sales, Inc. v. Caperton, 926 F.2d 353, 359 (4th Cir.1991) (viewing that "the irreparable harm to the plaintiff and the harm to the defendant are the two most important factors"). Plaintiffs bear the burden of establishing each of these factors. Direx Israel, Ltd. v. Breakthrough Medical Corp., 952 F.2d 802, 812 (4th Cir.1991).
1. Irreparable Harm to Plaintiffs
The court must first consider the irreparable injury to Plaintiffs should the injunction not be granted. Irreparable damages are losses which are certain to occur if injunctive relief is not granted. The showing of irreparable harm must be actual and immediate. Dan River, Inc. v. Icahn, 701 F.2d 278, 284 (4th Cir.1983).
Although Plaintiffs have shown no present harm, as the benefits have not yet been suspended, the threat of future denial of health benefits represents a "sufficient direct threat of personal detriment." See Doe v. Bolton, 410 U.S. 179, 188, 93 S.Ct. 739, 745, 35 L.Ed.2d 201 (1973) (proclaiming that plaintiffs "should not be required to await and undergo a criminal prosecution as the sole means of seeking relief"). Plaintiffs should not be required to suffer through the hardship of losing health care benefits prior to pursuing redress. Moreover, the Fourth Circuit has acknowledged that a showing of likelihood of future injury in the absence of a preliminary injunction was sufficient evidence of irreparable harm. Rum Creek, 926 F.2d at 360. In-junctive relief depends on irreparable harm and an inadequate remedy at law. Plaintiffs estimate that 120,000 retired miners and their eligible dependents are covered by the Trusts. The harm of stripping health care benefits from 120,000 people is difficult to measure in monetary terms but is real and devastating to those affected.
The evidence is undisputed that the Trustees expected to inform the beneficiaries that health benefits would be terminated. The Trustees notified Joseph Brennan, President of the BCOA, by letter dated January 6, 1992, that they intended to "notify the beneficiaries of each of the benefit plans on or about March 1, 1992, that there will be insufficient funds to assure payments for future covered services and that payments will therefore be suspended until such additional funding is provided." (Plaintiffs' Exhibit 3 at 18). A draft of the letter the Trustees proposed to mail was included in the letter to Brennan. The Trustees also demonstrated their plan to notify the beneficiaries of the suspension of health benefits in a Memorandum of Points and Authorities filed in the D.C. District Court case. (Plaintiffs' Exhibit 3 at 17). Plaintiffs, therefore, have presented sufficient evidence to show that health benefits are in imminent danger of being suspended.
Plaintiffs claim that they rely on the Trusts for medical services including payment for doctors, hospitals, prescription drugs, and home nurses. They assert that the Trusts are the only source of insurance for certain medical services because Medicare does not cover all the services nor does Medicare pay the full amount on certain services. Mrs. McGlothlin testified that she takes prescription drugs which cost approximately $200 per month. She indicated that, without her UMW health care, she would not be able to afford prescription drugs nor the oxygen she is required to use from time to time.
According to Crosby's testimony, eighty-eight percent of the 1950 Trust beneficiaries are Medicare eligible and fifty-six percent of the 1974 Trust beneficiaries are Medicare eligible. (Funds Exhibit 16). The beneficiaries who are Medicare eligible would lose the following benefits should the Trusts be suspended:
1. Part A hospital deductible in the amount of $652 for 1992;
2. Part A coinsurance from the 61st— 90th hospital day in the amount of $163 per day;
3. Part A coinsurance on from 21st— 100th day in a skilled nursing facility in the amount of $81.50 per day;
4. Part A premium at $192 per month;
5. Part B deductible of $100 for 1992; and
6. Part B premium at $31.80 per month.
(Funds Exhibit 16). Crosby also testified that Medicare does not pay for pharma-cueticals, which Trustee William Miller reported accounts for approximately forty percent of the Trusts expenses. Crosby also testified that, per beneficiary per year, the Trusts pay approximately $1,578 in the cost of physician and other medical services, approximately $560 in the cost of hospital inpatient services, and approximately $648 in the cost of prescriptions. (Funds Exhibit 17). The beneficiaries would lose these benefits were the Trusts suspended and would be required to make up the difference themselves.
The net effect of the Trustees' decision to cease benefit payments under the Trusts would be devastating to the beneficiaries. The beneficiaries may be required to fore-go needed medical care. Alternatively, the beneficiaries may purchase their own health care insurance resulting in a reduction of finances for other necessities of life in order to keep up with health insurance payments; or the beneficiaries may seek to privately fund their own health care when, given today's skyrocketing health care cost, the results of a single illness can be catastrophic. The indirect result of suspension of health benefits is the emotional stress and concern about financial disaster which the beneficiaries would be forced to live with every day.
There is no question in the court's mind that the results to the beneficiaries will be overwhelming. Moreover, the court is persuaded by other courts which have held that the suspension of health care benefits constitutes irreparable harm to the beneficiary. Communication Workers of America v. NYNEX Corp., 898 F.2d 887, 891 (2d Cir.1990); United Steelworkers of America v. Textron, Inc., 836 F.2d 6, 8 (1st Cir.1987); United Steelworkers of America v. Fort Pitt Steel Casting, 598 F.2d 1273, 1280 (3d Cir.1979). Therefore, the court finds that Plaintiffs have established that the denial of a preliminary injunction would result in irreparable harm.
2. Injury to Defendants
The court must next weigh the substantial injury to Plaintiffs against the injury to the Defendants should the injunction be granted.
a. Injury to Trustees
The court is not unmindful of the attenuated position of the Trusts. Granting the injunction would compel the Trustees to maintain the Trusts notwithstanding the claim of insolvency. However, courts have ruled in favor of beneficiaries faced with cessation of health care benefits, even in the face of claims of financial insolvency. "[CJoncern over insolvency cannot be used by defendant to evade its responsibili-ties____" Central States, Southeast and Southwest Areas Pension and Health & Welfare Funds v. McNamara Motor Express, Inc., 503 F.Supp. 96, 99 (W.D.Mich. 1980); see also Mamula v. Satralloy, Inc., 578 F.Supp. 563, 579 (S.D.Ohio 1983). The court notes that actions the Trustees may be required to take, including aggressively pursuing final resolution of the Evergreen Clause cases or negotiating with health care providers on behalf of the beneficiaries for delayed payments, would be far less than any hardship to the beneficiaries.
b. Injury to the BCOA
Furthermore, the court is not unsympathetic to the plight of the BCOA. Granting an injunction would require the BCOA to fund the Trusts notwithstanding the BCOA's argument that an increase in contribution rates would result in mine shutdowns, lay-offs, and necessary harm to the miners. However, arguments that members may eventually drop out of the BCOA in response to increased contribution rates or that massive lay-offs will occur is, in the court's mind, somewhat speculative, considering the present state of the evidence. It appears to the court that the burden on the coal companies to absorb the cost of funding the Trusts, which is their obligation under the Agreement, is far less than the burden on the beneficiaries to privately fund health care or the consequences of going without any health care at all.
While Defendants allege that they would be substantially harmed by issuance of the injunction, the court is convinced the harm to Plaintiffs without the injunction far outweighs the harm to Defendants should the injunction be granted.
3. Balancing the Hardships
The court has determined that the harm to Plaintiffs without the preliminary injunction clearly outweighs the harm to Defendants with the injunction. "The likelihood of success determination is to proceed only after the hardship balance itself [has] been resolved." Direx Israel, 952 F.2d at 817. The Blackwelder court established two tests to evaluate the balance of hardships. First, the court declared that if the balance of harm tips decidedly in plaintiffs favor, then it was enough for the court to consider that the plaintiff had raised "questions going to the merits so serious, substantial, difficult and doubtful, as to make them fair ground for litigation and thus for more deliberate investigation." Blackwelder, 550 F.2d at 195. The second test, the likelihood of success, applied only if the balance of hardship was more equally divided between plaintiff and defendant. In this instance, the court need not decide which test to apply because the result would be the same under either standard. Applying the stricter of the two test—the likelihood of success—the court is persuaded that the scales tip decidedly in Plaintiffs' favor.
a. Likelihood of Success Against Trustees
Plaintiffs contend that the Trustees have a duty to carry out the plan of the Trusts and cannot reduce or suspend benefits pursuant to the language of the Suspension Clause. The Suspension Clause provides that the Trustees may suspend benefits provided under the Agreement only "on or after February 2, 1993." Therefore, the Trustees have no legal authority to interrupt benefits until after February 2, 1993, the date that coincides with the expiration of the current NBCWA. Certainly, the Trustees may suspend benefits after that date, but not before then.
The court recognizes the impossibility of forcing the Trustees to pay benefits when simply no money exists in the Trusts. To require the Trustees to continue paying benefits and thereby hold them in contempt for not doing so would be, in the court's view, counterproductive. Therefore, although Plaintiffs have displayed a strong likelihood of success against the Trustees, the issue of providing health benefits would remain essentially unresolved.
b. Likelihood of Success Against BCOA
The court is also persuaded that Plaintiffs possess a strong likelihood of succeeding against the BCOA pursuant to the Guarantee Clause. In the case pending before the D.C. District Court, the D.C. Circuit Court had the opportunity to review the Guarantee Clause in light of the Trustees likelihood of success against the BCOA.
In that case, the D.C. District Court suggested that the language in the Guarantee Clause, which provides that "the BCOA may increase, not decrease, the rate of contributions to be made .," gave the BCOA complete discretion in deciding whether to increase the contribution rate. Therefore, the D.C. District Court found it unlikely that the plaintiffs could prevail on the merits. Counsel for the Trusts introduced two memorandum for the file written by the BCOA negotiators indicating that "nothing would occur by which the benefit levels provided in the respective funds would fail to be paid." (Plaintiffs Exhibit 3 at 25A & 25B). The district court judge disallowed the memorandum because of the parole evidence rule. The D.C. Circuit Court, however, disagreed with the district court judge and reversed.
First, the D.C. Circuit Court determined that the district court judge should consider the memoranda because the reports were written by the BCOA negotiators contemporaneously with the initial negotiations. Therefore, the D.C. Circuit Court found the district court erred on this issue. Second, the D.C. Circuit Court indicated that the clear language of the Agreement suggested that the BCOA must continue to fund the Trusts. After a careful reading of the language of the Guarantee Clause and the memoranda to the file written by the BCOA, the court concurs completely with the findings and reasoning of the D.C. Circuit Court. The Agreement indicates that the BCOA must continue to fund the Trusts and the memoranda support that interpretation.
Perhaps most importantly, the D.C. Circuit Court also noted that the BCOA's argument that it has discretion in raising rates was implausible. The D.C. Circuit Court theorized that first, the only way to effectuate the guarantee was the authority given to the BCOA to raise the contribution rate; and second, if the BCOA was not compelled to raise the rate, then the Trustees would be required to sue each signatory employer individually; therefore, there would be no way to assess employers equally which would defeat the purpose of the Agreement. The court agrees. Requiring the Trustees to sue each and every signatory member to the Agreement would be both counter to the letter and spirit of the Agreement and would be time consuming and a waste of judicial resources.
Moreover, it is impossible to conceive how the BCOA can believe that it need not be bound to the terms of the contract. It entered into the contract of its own free will. The BCOA has not alleged the defenses of fraud, duress, nor misrepresentation, nor does the court believe these defenses exist. For these reasons, the court finds that Plaintiffs have demonstrated a strong likelihood of success.
4. Public Interest
The parties agree that the ramifications of this case are significant and widespread. Threats of industry-wide strikes on one hand weigh against threats of massive layoffs on the other. The court has no doubt that Congress intended to protect the beneficiaries similar to the ones situated here. ERISA provides that "[i]t is hereby declared to be the policy of this Act to protect . the interests of participants in employee benefit plans and their beneficiaries . by providing for appropriate remedies, sanctions, and ready access to the Federal courts." 29 U.S.C. § 1001(b).
The court views this case as a simple contract case. Although allegations of insolvency and faltering abound, they fail to overshadow a party's right to contract and the other party's obligation to be bound. The public's interest in protecting participants in employee benefit plans and the public's interest in the right to contract tilts the public interest element of the Blackwelder test in favor of Plaintiffs.
CONTRIBUTION RATE
The only issue remaining for the court to consider is the increase in the amount of the contribution rate. The court has heard a great deal of testimony and evidence on this issue. As previously noted, the projected March 31, 1992 deficit for the 1950 Trust is $120.4 million, (Funds Exhibit 14), and the projected March 31, 1992 deficit for the 1974 Trust is $19.7 million. (Funds Exhibit 15). Trustees seek an increase in employer contributions sufficient to fully fund the Trusts resulting in no deficit by the end of the contract. Crosby maintains that to eliminate the deficit in the Trusts, the contributions to the 1950 Trust must be increased from the current rate of $2.17 to $5.03 and the contributions to the 1974 Trust must be increased from the current rate of $0.33 to $0.91.
The BCOA has offered expert testimony that in order to maintain the Trusts at their current level, a contribution rate of $3.07 is required for the 1950 Trusts and a contribution rate of $0.60 is required for the 1974 Trusts. (BCOA Exhibits 6A, 8A). In calculating the contribution rate, the BCOA has included contributions from the Evergreen Clause litigation and other factors. Regarding the Evergreen Clause litigation, in the court's experience, appeals necessitate up to one year and, if the case should reach the Supreme Court, it could take up to five years to have the case fully .resolved. In setting the present rate, the court does not consider the amount of monies expected from the Evergreen Clause litigation.
The court has heard evidence including a memorandum by Jerry N. Clark ("Clark"), (former) Executive Director of the Funds, dated August 9, 1991, (BCOA Exhibit 7), to the effect that the Trusts have not historically applied the Medicare allowable payment in determining reimbursements to physicians simply because of the lack of a reliable data base. He understood the 85th percentile, however, to "represent[ ] an upper limit." In a deposition, Clark further stated that "the 85th was[,] we were required to use that as the Funds' ceiling, Funds maximum." Furthermore, an ex change of letters between the Funds, the BCOA, and the UMW showed a marked disagreement between the parties over interpretation of this provision. Therefore, the 85th percentile clause, resulting in the Trustees' reimbursement to Medicare participating physicians at levels above what a Medicare carrier would reimburse, is ambiguous.
It is incongruous for a physician or other health care provider to agree to accept Medicare as full payment for one group of individuals but refuse to accept Medicare as full payment for another group, like beneficiaries of the Trusts. This practice is contributing to the crisis which exists in this country in the health care area. The court, therefore, declares the 85th percentile as meaningless. The 85th percentile does not prevent the Trustees from limiting the providers, who accept Medicare payment in full for other Medicare recipients, to payment of this lower fee. Therefore, the court Orders the Trustees to only pay the Medicare approved rate both in regard to unpaid bills and to future bills. The court will assist the Trustees in implementing this opinion.
The court notes that the Trustees have broad powers under the Agreement to establish cost containment programs which do not result in loss or reduction of health care services to beneficiaries. While the Trustees have not petitioned this court to interpret their powers, the court would consider such a petition, if necessary, to resolve the stalemate which seems to have arisen between the Trustees, the BCOA, and the UMW in working together to answer questions about the Trustees' powers and to maintain the viability of the Trusts.
The court notes that it is the only court with all four parties before it at present time or in the foreseeable future. For this reason, the court has the authority to render justice in this situation. The court desires to maintain the status quo until the litigation pending before the D.C. District Court is resolved. Therefore, the court Orders the BCOA to commence paying, no later than April 10, 1992, into the 1950 Trust the amount of $3.07 per hour on each such hour of classified work performed, and into the 1974 Trust, the amount of $0.60 per hour on each such hour of classified work performed. Such contribution rate will be in effect until further order of the court, but no longer than the length of the current NBCWA.
The BCOA and the UMW are urged and encouraged by the court, but not ordered, to zealously seek passage of a bill in Congress to permit the transfer of other funds now in the possession of the Trustees, which are in excess of any future projected needs, to finance the Benefit Trusts. In other words, it appears to the court that if this part of the Rockefeller Bill would be placed in a separate bill it would have no difficulty passing in Congress because of its lack of controversy.
CONCLUSION
For the foregoing reasons, the court hereby GRANTS Plaintiffs' motion for a preliminary injunction and the BCOA is Ordered to increase the contribution rate as described herein. Further, having determined that the elements of Rule 23(a) are satisfied, the court certifies this case as a class action as described above. In addition, the law firm of White Elliott & Bundy shall remain as Plaintiffs' counsel. Finally, the court quashes the UMW's subpoena seeking further discovery from Smith, Heenan & Althen.
ORDER
For the reasons set forth in the Memorandum Opinion entered this day, it appears to the court that Plaintiffs will suffer serious irreparable harm without a preliminary injunction. The court recognizes that Defendants will be harmed by the granting of a preliminary injunction, but in balancing the harm between the parties, the court determines that the harm tips decidedly in favor of Plaintiffs. Moreover, after hearing the testimony and considering the evidence, the court finds that Plaintiffs have demonstrated a likelihood of success on the merits. The court notes that the public interest also falls in Plaintiffs' favor. Having determined that Plaintiffs have sat isfied the elements set forth in Blackwelder Furniture Co. v. Seilig Manufacturing Co., 550 F.2d 189 (4th Cir.1977), the court hereby GRANTS Plaintiffs' motion for a preliminary injunction.
Therefore, it is hereby ADJUDGED and ORDERED that:
(1) the Trustees are enjoined from suspending the payment of health care benefits under the United Mine Workers of America ("UMW") 1950 Benefit Plan and Trust and UMW 1974 Benefit Plan and Trust;
(2) the Trustees are enjoined from notifying or taking any other action stating or suggesting that payment of health care benefits under the UMW 1950 Benefit Plan and Trust and UMW 1974 Benefit Plan and Trust will be suspended;
(3) the BCOA is enjoined and directed to comply with the terms of the National Bituminous Coal Wage Agreement of 1988 by increasing the contributions to the UMW 1950 Benefit Plan and Trust to the amount of $3.07 per hour beginning April 1, 1992, on each such hour of classified work performed; and
(4) the BCOA is hereby enjoined and directed to comply with the terms of the National Bituminous Coal Wage Agreement of 1988 by increasing the contributions to the United Mine Workers of America 1974 Benefit Plan and Trust to the amount of $0.60 per hour, beginning April 1, 1992, on each such hour of classified work performed.
Based on the evidence presented to the court, the contribution rate is calculated on the remaining life of the current NBCWA. Therefore, the court's decision, regarding the amount of the contribution rate, applies to the remaining ten months of the Agreement. Accordingly, this rate shall remain in effect until the expiration of the current NBCWA, unless modified by this court or another court of proper jurisdiction, whichever shall first occur.
For present purposes, the court cannot consider the amount, if any, of monies expected from the Evergreen Clause litigation. If the Evergreen Clause litigation is terminated during the pendency of this injunction in favor of the Trustees, said monies shall first go to reduce any deficit in the Trusts, with any balance going to the signatory employers to reimburse, on a pro rata basis, for these increased payments herein ordered.
In regard to the 85th percentile clause, the court finds that the clause is ambiguous. Accordingly, the court declares, that for purposes of Medicare reimbursements, the 85th percentile is meaningless. The court, therefore, Orders the Trustees to only pay the Medicare approved rate both in regard to unpaid bills and to future bills. The court further finds that, with regard to any beneficiaries who are covered or should be covered by Medicare, the Trusts shall pay no more than the amount Medicare has negotiated with the physician or health care provider to pay. This provision of the Order shall apply fully to unpaid bills now due and owing by the Trusts.
There is evidence in this case that there are some beneficiaries of the Trust over sixty-five years of age who have not enrolled in Medicare. The Trustees are hereby ordered to ascertain all such beneficiaries and to withhold payments of their health benefits until the Trustees have ascertained that said beneficiaries are enrolled in Medicare.
This Order is binding, not only upon all parties to the action, but also to Defendants' officers, agents, servants, employees, and attorneys, and upon those person in active concert or participation with them, including all signatories to the current NBCWA.
The Clerk shall certify copies of the Order and Memorandum Opinion to all parties and, in addition, to any entities not named in this action who may be affected thereby. The court understands that there are numerous others who are not members of the BCOA but who, nevertheless, are bound by the Agreement. It is hereby ORDERED that all parties to this suit are enjoined and directed to ascertain and determine that everyone so bound shall be given notice of this preliminary injunction. It is further ORDERED that the BCOA, the Trustees, and the UMW are jointly and severally financially responsible for the notification costs to those bound by the Agreement but not named as parties.
For the additional reasons set forth in the Memorandum Opinion entered this day, and appearing to the court that the elements of Rule 23(a) are satisfied, it is hereby ADJUDGED and ORDERED that the class be certified as follows:
Beneficiaries of the UMW 1950 Benefit Trust and the UMW 1974 Benefit Trust as defined by Article 1(4) of the 1950 Benefit Plan and Trust and Article 1(4) of the 1974 Benefit Plan and Trust. The class includes, but is not limited to, retired miners, widows of retired miners, and their eligible dependents.
Further, as set forth in the Memorandum Opinion, and after considering the evidence and the briefs, the court hereby ORDERS that the law firm of White Elliott & Bundy remain as Plaintiffs' attorneys.
There remains the issue concerning a subpoena issued by the UMW to depose SH & A to induce further information concerning a preported conflict of interest. From a practical point of view, the issue is moot as the essential issues have already been addressed. The court perceives that no useful purpose will be served by taking additional evidence. Therefore, the court quashes the subpoena seeking further discovery from SH & A.
. Plaintiffs originally brought the suit under the name "John Doe." On March 17, 1992, by the direction of the court, the John Doe affidavits were unsealed and on March 18, 1992, the court ordered the case restyled to reflect Plaintiffs' true names.
. The Trustees have filed two suits against the BCOA in the D.C. District Court on behalf of the 1950 and 1974 Benefit Trusts. The Trustees sought an injunction to compel compliance with the Guarantee Clause and requested an increase in the contribution rate to the Trusts. UMW 1950 Benefit Plan and Trust et al. v. Bituminous Coal Operators' Ass'n, No. 89-1744 (D.D.C. filed June 20, 1989) and UMW 1974 Benefit Plan and Trust v. Bituminous Coal Operators' Ass'n, No. 90-0674 (D.D.C. filed Mar. 23, 1990). The D.C. District Court initially denied the Trustees' preliminary injunction request in the 1950 Trust case, citing a failure to demonstrate a likelihood of success on the merits. The United States Court of Appeals for the District of Columbia ("D.C. Circuit Court") reversed, however, and found that the Trustees were likely to succeed on the merits of their claim. The D.C. District Court thereafter granted preliminary injunctions in both suits. The cases were subsequently consolidated for trial.
The injunctions were limited, however, to a four-month period. The Trustees and the BCOA eventually entered into an agreement for an increased contribution rate. The agreement expired April 30, 1991. Thereafter, the BCOA continued the agreed upon contribution rate for the 1974 Trust but reduced the 1950 Trust to the preinjunction level.
On January 15, 1992, the Trustees again requested an injunction seeking an increase in the contribution rate. On February 13, 1992, the district court orally denied the Trustees' motion but set a June 15, 1992 trial date on the merits of the Trustees' claims. The Trustees appealed the district court's decision. During the penden-cy of the present case, the D.C. Circuit Court again reversed the district court's decision and remanded the case for further findings. (BCOA Exhibit 2). Yet, as of this date, no injunction has been issued.
. The court notes that the NBCWA also created the 1950 Pension Plan and Trust and the 1974 Pension Plan and Trust which provides pensions for retired miners. The four trusts are collectively known as the "Funds." No issue related to these pension funds is involved in the present case.
. The NBCWA is binding on three separate groups of employers. First, the NBCWA binds the BCOA and its members. The Agreement also binds non-BCOA companies who consent to be bound by signing "me-too" contracts with the UMW. Finally, companies who signed the 1978, 1981, or 1984 NBCWA agreed, in a provision known as the "Evergreen Clause," to continue making contributions to the Trusts as long as successor collective bargaining agreements required such contributions.
. References to the transcripts of the prior hearings on March 4, 16, and 17, 1992 are hereinafter designated as "March 4 Tr.," "March 16 Tr.," and "March 17 Tr."
. Crosby testified that the crossover date is the date when the outstanding accrued claims equal the total remainder of the income under the Trusts. (March 16 Tr. at 86). In other words, the money in the Trusts can no longer satisfy the debts incurred. The crossover date, however, does not consider the money expected from the successful Evergreen Clause litigation, nor the baseline contribution rate those companies will now be expected to pay. (March 16 Tr. at 91-92).
. In a related argument, the court finds that Plaintiffs have standing to sue. To have standing as a class representative, Plaintiffs must show that they have been or will be personally injured, Warth v. Seldin, 422 U.S. 490, 502, 95 S.Ct. 2197, 2207, 45 L.Ed.2d 343 (1975), and that the named Plaintiffs possess the same interest and suffer the same injury shared by all members of the class represented, Schlesinger v. Reservists Comm., 418 U.S. 208, 216, 94 S.Ct. 2925, 2929, 41 L.Ed.2d 706 (1974). Courts have generally held that "when rule 23(a) prerequisites are met, there will be standing, since those prerequisites demand that the plaintiff alleged injury resulting from a class wrong." Irving Trust Co. v. Nationwide Leisure Corp., 95 F.R.D. 51, 58 n. 6 (S.D.N.Y.1982). Because Plaintiffs have satisfied the elements of Rule 23, the court finds standing proper.
. The Private Benefit Alliance is a lobbying group whose recent activities include lobbying against the Rockefeller Bill, a bill supported jointly by the BCOA and the UMW. The Rockefeller Bill is designed to bail out the 1950 and 1974 Benefits Trusts of the UMW Health and Benefit Plans by taxing coal produced by nonunion as well as union mines. Therefore, PBA is funded by non-union coal companies whose interests are antagonistic to the UMW and the BCOA.
. Unlike the Fourth Circuit, the D.C. Circuit follows a likelihood-of-success test for granting a preliminary injunction. This inquiry begins with a determination of the likelihood of success on the merits of the case and proceeds to consider other factors.