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Federal judge tosses UMWA benefits suit

A US district judge has dismissed a 2012 class-action lawsuit filed by the United Mine Workers of America and others against producers Peabody Energy and Arch Coal that sought to force the producers to continue benefits for retiree miners from bankrupt Patriot Coal.

Donna Schmidt
Federal judge tosses UMWA benefits suit

US District Court for the Southern District of West Virginia judge Joseph Goodwin in Charleston said the Employee Retirement and Income Securities Act does not protect the financial stability of a pension fund.

The union and a group of eight active and retired miners had argued that Peabody and Arch had spun off Patriot and Magnum Coal, respectively, to dodge benefits obligations.

Peabody spun off Patriot in 2007, and a year later Patriot acquired Magnum.

Patriot filed for Chapter 11 bankruptcy in US Bankruptcy Court in July 2012.

UMWA officials said Friday they would appeal the dismissal ruling.

“I am very disappointed in the court’s decision to dismiss the lawsuit we had filed under the Employee Retirement and Income Security Act to get Peabody and Arch to live up to their responsibilities to their retirees,” UMWA president Cecil Roberts said.

He said the union intended to appeal because it felt “the decision fails to recognise the purpose of ERISA, which is to protect the benefits employees have earned.

“Our members who are at risk of losing the retiree health care benefits Peabody and Arch promised them clearly earned those benefits,” he said.

“We will continue to fight for them in every possible venue until those benefits are secure.”

In August, union members voted in favour of a settlement with Patriot Coal that restored most cuts.

A subsequent five-year labor agreement brought back all but $1 per hour in wage cuts, versus previous plans for cuts as high as $7.53 per hour for some job classifications.

The deal also included annual wage increases of 50c per hour beginning January 1 2015 and the elimination of monthly premiums for healthcare benefits.

The US Bankruptcy Court approved the deal days later.

In the end, the agreement will help Patriot save about $130 million annually over the coming four years. That is more than 85% of the $150 million the company said it would need to save to successfully exit its Chapter 11 bankruptcy proceedings.

“Ratification of these agreements provides labour stability and ensures cost savings essential to

Patriot's plan of reorganisation,” Patriot president and CEO Bennett Hatfield said last month.

“These agreements should set Patriot on a path to emerge from bankruptcy by the end of 2013.”

Patriot’s bankruptcy case was initially filed in New York state but has become formally known as In Re Patriot Coal Corp et al, US Bankruptcy Court, Eastern District of Missouri, No. 12-51502.

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