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Arguments Over NBCWA Article I Reach Apogee

Summer 2003

Co-Authors: Thomas P. Gies and Glenn Grant.

For literally decades, coal industry employers and the United Mine Workers of America ("UMWA") have engaged in litigation over the proper interpretation of the successorship provision found in Article I of the industry's pattern collective bargaining agreement, known as the National Bituminous Coal Wage Agreement ("NBCWA"). Article I of the NBCWA prohibits a signatory employer from selling or otherwise transferring its "operations" without first securing the purchaser's or transferee's agreement to recognize the UMWA and assume the obligations set forth in the NBCWA. The Union has long argued that the term "operations" within Article I applies to the sale of closed as well as operating mines. By contrast, employers have consistently argued that the term "operations" connotes activity and thus that the NBCWA's successorship clause only applies to the conveyance of active mines. In UMWA v. Apogee Coal, No. 01-6584 (6th Cir. June 5, 2003), the U.S. Court of Appeals for the Sixth Circuit recently rejected the UMWA's position and held that the NBCWA successorship clause does not apply to the transfer of mines that have been closed in good faith for legitimate economic reasons. This decision represents a significant victory for coal industry employers.

The Apogee litigation stemmed from the disposition of certain mines formerly operated by Apogee Coal Company in Lynch, Kentucky. Apogee's miners had been represented by the UMWA since the company began operating in 1984, and Apogee had been a party to a series of NBCWAs including the 1998 NBCWA. In late 1997, Apogee decided to cease operations completely at its Lynch mining complex because those operations had become unprofitable. In early 1998, Apogee informed the UMWA that it was permanently closing its last operating mine in Lynch. As part of winding down its business, Apogee relinquished its lease to the Lynch coal reserves, laid off all its UMWA-represented miners, and sealed the portals of all the mines.

Months after the closure of the last Lynch mine, Apogee entered into an asset purchase agreement with a third party, Resource Development LLC, in which Apogee sold to Resource Development certain mining permits and equipment relating to the former Apogee mines. Approximately a year after that transaction, Resource Development began to mine certain coal reserves located on the property. In some cases, Resource Development gained access to the reserves by reopening portals associated with former Apogee mines.

The UMWA filed suit in U.S. District Court for the Eastern District of Kentucky, claiming that Apogee had violated its successorship obligations under Article I of the 1998 NBCWA by selling assets to Resource Development without first requiring Resource Development to recognize the UMWA and to agree to be bound by the terms of the 1998 NBCWA. Apogee moved for summary judgment, arguing that the successorship clause in the 1998 NBCWA applies only to the sale, conveyance, transfer, or assignment of active coal mining "operations," whereas Apogee had not conveyed any active mines. The UMWA argued that the term "operations" included closed mines or at the very least was ambiguous, which precluded summary judgment on the UMWA's contract claim. In support of its claim of ambiguity, the Union offered its view of the bargaining history associated with the successorship clause, claiming that the UMWA had always intended the clause to cover the transfer of closed mines. The trial court rejected the UMWA's argument and granted summary judgment to Apogee, finding that the term "operations" connotes an active mine and that Apogee did not convey any active mines. The UMWA appealed.

On appeal, the Sixth Circuit affirmed the district court's summary judgment ruling for Apogee. In so doing, the Court specifically held that the term "operations" was not ambiguous, thereby rejecting, albeit sub silento, the Second Circuit's ruling to the contrary in UMWA v. LTV SteelCo. (In re Chateaugay), 891 F.2d 1034 (2d Cir. 1989). Citing Black's Law Dictionary, the Court observed that the plain meaning of term "operation" is "mode of action" or "activity." Accordingly, the Court also affirmed the district court's ruling that the "term operations in Article I connotes actively producing mines and does not include mines that have been closed in good faith for economic reasons." The Court distinguished the cases relied upon by the Union - cases involving application of Article I in which courts have denied summary judgment for employers - noting that those cases all involved questions of fact regarding either the employer's intent in closing the mines or the status of the mines themselves (i.e., whether the mines were truly closed). Neither circumstance was presented in Apogee, as UMWA conceded that all of the relevant mines had been closed in good faith for legitimate economic reasons well in advance of the challenged transaction.

Although the Sixth Circuit's ruling in Apogee certainly does not entirely foreclose the UMWA from engaging in future litigation concerning the meaning and application of the NBCWA's successorship clause, it should at the very least help to limit such litigation to situations in which there is a bona fide dispute over the circumstances relating to the closure of mines subject to corporate transactions.

[Editors' note: Crowell & Moring represented defendant Apogee before the district court and the Sixth Circuit.]
Thomas P. Gies
Partner – Washington, D.C.
Phone: +1.202.624.2690

Glenn D. Grant
Senior Counsel – Washington, D.C.
Phone: +1.202.624.2852