Court Opinion

ID: 8995096
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:29:45.83866+00
Date Added: 2024-06-11T17:11:00.941759
License: Public Domain

RESTANI, Judge:
I dissent.
I.
According to the plain language of section 3 of the Retiree Benefits Bankruptcy Protection Act of 1988 (“Bankruptcy Protection Act” or “the Act”), “the trustee shall pay [health] benefits to retired former employees under a plan, fund, or program maintained or established by the debtor prior to filing a petition, ... until ... the dismissal of the case involved; or ... the effective date of a plan confirmed under section 1129....” 1 The Act also provides that the level of benefits may be modified if there is an agreement on modification, or the bankruptcy court finds modification is necessary to reorganization and “the balance of equities clearly favors the modification.” Bankruptcy Protection Act § 3(a)(1)(C); 11 U.S.C. § 1113(b)(1)(A). LTV et al., debtors in possession, have all the rights and duties of a “trustee,” with certain exceptions not relevant to this appeal. 11 U.S.C. § 1107(a), 1114(e)(1).
The district court decided, in essence, that although the Act applies to health benefits that are terminable at will, it does not apply to health benefits that are provided pursuant to a contract obligation which is interpreted to have expired. I would reverse this decision as I do not find any intent on the part of Congress to distinguish between a contract right which never existed and one which terminated.2
In reaching its conclusion that LTV is not responsible for the continued payment of LTV retiree health benefits, the district court did not quote the statute. Rather, the court relied on two pieces of legislative history which do not address whether a debtor in possession continues to be liable for benefits after the expiration of a bargained for collective agreement. The first is a comment of Senator Byrd to the effect that companies in Chapter 11 “have a legal and contractual obligation to their retirees ... This legislation will not guarantee continuation of these benefits, but it will provide a mechanism that will allow the retirees' position to be heard ...” 133 Cong. Rec. 3,732 (1987). The second comment was that of Senator Heinz that “[t]he bill will protect retirees from unilateral termination of benefits by a company filing a Chapter 11 bankruptcy petition.” 134 Cong.Rec. 12,700 (1988). The district court then concluded that “[t]he legislative history reveals that the Retiree Benefits Bankruptcy Protection Act of 1988 does not require LTV to continue to pay retiree benefits in this case.” Joint Appendix at 655. It is apparent from their lack of reliance on the statute that both the district court and LTV believe the bare words of the statute call for LTV to continue paying benefits. The majority takes a different approach, which at the outset focuses on statutory language, but it applies the statutory language in a circular manner, thereby defeating the purpose of the statute.
Furthermore, both the district court and the majority find that, despite the Act, the Benefit Trust, rather than LTV, must pay retiree benefits under the terms of the Wage Agreement. They base this conclusion primarily on the Royal Coal cases.3 *1212In the Royal Coal the Fourth Circuit held that a solvent mining company which had sold all of its mining operations without transferring to the purchasers its obligations to pay retiree health benefits, and which did not sign the 1981 Wage Agreement, was not liable for such benefits after the expiration of the 1981 Wage Agreement. See Royal Coal I, 768 F.2d at 592. The Benefit Trust, which is funded by Wage Agreement signatory employers, was held liable for the health benefits on the basis that the Wage Agreement intended funding of lifetime benefits. The court reached this conclusion despite contract wording which indicated not only that the Benefits Trust’s obligation applies “during the terms of this agreement” but also that the obligation depends on both cessation of operations and inability to pay on the part of the employer and its successor. Royal Coal II, 826 F.2d at 282-83.
The Royal Coal cases, however, deal with the interpretation of the Wage Agreement and not interpretation of the Retiree Protection Act, which was enacted after the Royal Coal case were decided. Furthermore, the Act specifically addresses the event of bankruptcy. The Act provides that the “trustee” (a successor to the employer) must pay. Under Royal Coal the Benefit Trust’s obligation arises because the obligation of the employer (and its successor) ceases. If one accepts the reasoning of the Royal Coal cases, the statute cannot be satisfied by payment from the Benefit Trust. That is, payment by the Benefit Trust cannot be payment by the trustee.
The legislative history cited by the district court and, more extensively, by the majority, is consistent with the plain language of the Act. The district court and majority, however, have seized upon the concept of the “unilateral” nature of certain terminations of benefits, a concept found in the Heinz statement quoted supra at 1211. This reliance is misplaced. Under the facts at hand, LTV’s decision not to continue its 1984 Wage Agreement obligations to the retirees was no less unilateral than the decision to terminate “at will” benefits, and certainly LTV’s original attempt to reject the Wage Agreement pursuant to the trustee’s ordinary bankruptcy powers was a unilateral action. But even more persuasive is the absence of the limiting word “unilateral” from the statutory language. Of course the Act does protect workers against unilateral termination of benefits, but the plain language of the statute does not limit it to this purpose only. As explained by the sponsors of the legislation, the Act applies whether or not a collective bargaining agreement is in effect. “The provisions of section 3 apply to union and nonunion retirees.... benefits subject to these standards are not required to arise from a collective bargaining agreement." 134 Cong.Rec. 12,698 (1988) (statement of Sen. Metzenbaum) (emphasis added). “This legislation protects retired employees who are covered by a collective bargaining agreement, as well as those where no collective bargaining agreement is in effect.” 133 Cong.Rec. 21,099 (1987) (statement of Sen. Heflin) (emphasis added).
The most telling passage of legislative history is the following:
[The bill] ... requires a company to continue paying for these [retiree health] benefits even after the termination of a collective bargaining agreement. Only if a company can prove a modification is absolutely necessary and that it treats everyone fairly can a court, after a hearing, order any modification.
Retiree Benefits Security Act of 1987: Hearings on S. 548 Before the Subcomm. on Courts and Administrative Practice of the Senate Comm. on the Judiciary, 100th Cong., 1st Sess. 14 (1987) (statement of Sen. Metzenbaum). This passage, unlike those cited by the district court, is directly on point. Appellees argue that Senator Metzenbaum was referring to hypothetical agreements which require continuation of retiree health benefits after the agreement *1213terminates. Senator Metzenbaum’s statement, however, is replete with references to LTV and its contracts. His statement was without limitation with regard to the terms of any contract. Therefore, I cannot agree with the majority that “[t]he legislative history of the Bankruptcy Protection Act does not suggest an interpretation other than the one we have reached.” At 1210.
Accordingly, the Act continues all retiree health benefits which are in effect immediately prior to bankruptcy. The Act also states that termination or modification of benefits is not permitted prior to reorganization unless either the trustee and an authorized representative of the affected parties agree to the modification, or if the trustee convinces the court that such modification is necessary and equitable. The clear purpose of the Act is to give the bankruptcy court power to resolve the competing interests of retirees, debtors and creditors, if agreement as to continuation and level of benefits cannot be reached. The health benefits of retirees are not to be terminated by any action until the bankruptcy court has time to act. The passages of legislative history cited by the majority do not reveal an intent other than that reflected in the plain language of the statute; that is, despite contractual rights or lack thereof, benefits are to continue on an interim basis until the parties agree or until the bankruptcy court makes the determinations specified in the Act. If Congress intended some distinction between former employees without contracts and those whose contractual rights had expired, it simply did not say so. If it had any distinction among employees in mind, it was a distinction between employees of companies which seek protection under the bankruptcy laws and employees of companies who do not. I believe that the majority errs in reading into the statute special exemptions applicable to bargained for benefits, not enunciated by Congress.
II.
I believe the majority also erred in relying in any way on the presence of the Benefit Trust with regard to interpretation of the statute. The Benefit Trust is intended as a last resort for the funding of retiree health benefits. Royal Coal II finds the Benefit Trust liable, despite contract language to the contrary, because of the overall purpose of the contract, that is, retirees must be provided for. Here, the Act spells out how provision for retirees is to be made. Moreover, although successor Wage Agreements require funding of the Benefit Trust to meet retiree health benefit requirements, it has not been established that current and future signatories will be able to bear the burden of former signatories throughout the lifetimes of the retirees. This factual issue is not resolved. In any case, given the plain language of the statute, I would find the status of the Benefit Trust irrelevant as to statutory construction.
I do not reach the issue of the contractual liability of the Benefit Trust. If LTV remains obligated to pay benefits under the statutory criteria, the obligation of the Benefit Trust does not arise.4 The bankruptcy court has not made the findings which would resolve this issue.
CONCLUSION
I would find LTV liable for payment of benefits unless the bankruptcy court makes the findings required for modification of benefits, as set forth in Section 3(a)(2) of the Retiree Protection Act.

.The Bankruptcy Protection Act is codified in the note following 11 U.S.C. § 1106. It was enacted in Public Law Number 99-591 on October 30, 1986 and amended by Public Law Numbers 100-41 (May 15, 1987), 100-99 (August 18, 1987) and 100-334 (June 16, 1988).

. See infra note 3 and accompanying text (regarding interpretation of the Wage Agreement at issue).

. District 29, United Mine Workers of America v. Royal Coal Co. (Royal Coal I), 768 F.2d 588 (4th Cir.1985) and District 29, United Mine Workers of America v. United Mine Workers of America *12121974 Benefit Plan & Trust (Royal Coal II), 826 F.2d 280 (4th Cir.1987), cert. denied, 485 U.S. 935, 108 S.Ct. 1111, 99 L.Ed.2d 272 (1988).

. It is interesting to note that even if one accepts the holdings of the Royal Coal cases, for companies in bankruptcy the statute restores in large measure the original language of the Wage Agreement, which premises the liability of the Benefit Trust on the inability of the employer to pay.