Peabody Holding Company, LLC et al v. United Mine Workers of America, International Union

Filing 35

MEMORANDUM OPINION. Signed by District Judge Leonie M. Brinkema on 8/28/2014. (rban, )

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT

OF

VIRGINIA

Alexandria Division

PEABODY HOLDING COMPANY,

LLC,

et al.,
Plaintiffs,

I:13cv458

v.

(LMB/IDD)

UNITED MINE WORKERS OF AMERICA,
INTERNATIONAL UNION,
Defendant.

MEMORANDUM

OPINION

Before the Court are plaintiffs' Motion for Summary
Judgment and defendant's Motion to Dismiss or,

Alternative,
plaintiffs'

in the

for Summary Judgment.

For the reasons that follow,

Motion will be denied,

as will defendant's Motion to

Dismiss; however, defendant's Motion for Summary Judgment will
be granted.
I.

BACKGROUND

Only a brief recitation of the facts is required in this
opinion, as they have already been extensively discussed in two
previous opinions.

See generally Peabody Holding Co., LLC v.

United Mine Works of Am.,

No. I:09cvl043,

2010 WL 3564274

(E.D.

Va. Sept. 7, 2010), aff'd sub nom., Peabody Holding Co., LLC v.
United Mine Workers of Am.,

2012).

Int'l Union,

665 F.3d 96

(4th Cir.

Plaintiffs Peabody Holding Company, LLC ("PHC") and

Black Beauty Coal Company, LLC ("Black Beauty") are mining

companies,

the latter a subsidiary of the former.

Both

companies are ultimately owned by Peabody Energy Corporation

("PE"), which at one point owned several other mining companies
that operated in the eastern United States,
Coal Company ("PCC").

(the "UMWA" or "Union")

including Peabody

Defendant United Mine Workers of America

is a labor organization whose members

were employed by plaintiffs.

In January 2007, PCC entered into a labor agreement with

the Union on behalf of itself (as a "signatory" company) and as
a limited agent of its immediate parent,

PHC, and fellow

subsidiaries (all "nonsignatory" companies), Black Beauty among
them.

The agreement, known generally as the National Bituminous

Coal Wage Agreement ("NBCWA" or "Wage Agreement"),

included a

Memorandum of Understanding Regarding Job Opportunities ("2007

MOU").1

The purpose of the 2007 MOU was to "provide job

opportunities for work of a classified nature to certain laid-

off and active miners" by requiring nonunion mining companies
within PHC's corporate family to offer three out of every five
new classified job openings to miners who were either working
for or laid off by PCC, the signatory employer.

The 2007 MOU

applied only to "existing, new, or newly acquired nonsignatory

1 The NBCWA was first negotiated in 1993 between the Union and
the Bituminous Coal Operators' Association, Inc., a multi
employer bargaining group.
The NBCWA was subsequently renewed
at five-year intervals.
2

bituminous coal mining operations of the nonsignatory

[c]ompanies," and it "[did] not constitute a covenant running
with the land and [did] not apply to the sale of nonsignatory
coal lands,

coal reserves or coal operations

or stock sales)

(either asset sales

of the non-signatory [c]ompanies."

nothing in the 2007 MOU "encumber[ed]

or limit[ed]

Moreover,
in any way

the rights of the nonsignatory [c]ompanies to sell,

exchange,

release, or otherwise similarly convey . . . any of their
nonsignatory coal lands,

third parties."

coal reserves or coal operations to

The parties agreed that their obligations under

the 2007 MOU would terminate at 11:59 p.m. on December 31, 2011.
Importantly for present purposes,

the 2007 MOU also

contained an arbitration clause, which extended disputeresolution authority to a "Jobs Monitor":

In order to effectuate the implementation of these job
opportunity

provisions,

the

[Union]

and

the

non-

signatory [c]ompanies subject to this [MOU] agree that
the

impartial

monitor

the

job

under

Jobs
this

selections

investigate

any

Monitor

. . . shall

[MOU].

The

pursuant

alleged

to

serve

monitor

these

violations

shall

as

the

review

provisions

and

herein.

The

monitor shall have the authority to request such
information which may be reasonably necessary in order
to

secure

provisions.

compliance

with

the

job

selection

The parties have the obligation to comply

with such requests.

The Jobs Monitor's decisions were to be "final and binding on
all parties" subject to the limitation that the Jobs Monitor

could not "alter,

amend,

modify,

add to or subtract from,

or

change in any way the provisions" of the contract.
In October 2007,

less than a year after the parties had

renewed the NBCWA and accompanying MOU,

PE initiated a

significant spinoff of its mining operations in the eastern

United States.

The spinoff gave birth to a new publicly-traded

entity, Patriot Coal Corporation ("Patriot"), which gained
control over PCC and the rest of PHC's former subsidiaries,

the notable exception of Black Beauty.

with

In addition to retaining

ownership of Black Beauty,2 PE also remained the parent company
of PHC.

As a result, PHC and Black Beauty have not had any

common ownership or operational connection to PCC or to any

other Patriot-owned entity since the spinoff.3

PCC thereafter

entered into a substantively identical job-preference agreement

with the Union as a limited agent of Patriot, which agreed to be
bound by its terms going forward.

In early 2008, Black Beauty contracted with a private mine
operator, United Minerals,

LLC ("United Minerals"),

to conduct

surface mining operations at its property located in Warrick

Following the spinoff, Black Beauty was renamed "Peabody
Midwest Mining, LLC." In the interest of clarity, the Court
will continue to refer to the company by its erstwhile name,
the parties have done in their papers.

as

PCC was also renamed, and it now operates as "Heritage Coal."
As above, however, the Court will refer to the company by the
name it used when the agreement between the parties was signed.
4

County, Indiana.

(United Minerals has no ownership relationship

to PCC or any of the other Patriot companies.)
2008,

In November

the Union wrote to PE to state its expectation that PHC

and Black Beauty would continue to comply with the 2007 MOU.
Specifically,

the Union directed both companies to "make the

requisite job offers" to PCC's classified employees,

"keep the

Union informed of such mining operations as they develop," and
"give the required notice of the job selection process to the
Jobs Monitor."

The companies responded that "once the

prerequisite corporate relationship between PHC and PCC was
severed (as of October 31, 2007),

also were severed.

obligations under the Jobs MOU

An obligation to secure job opportunities

for UMWA members . . . does not survive conveyance of the UMWArepresented subsidiary to a third party such as Patriot Coal

Company."

The parties' opposing views of their post-spinoff

obligations form the core of this litigation.

Disputing the assertion that PHC and Black Beauty were no
longer bound by the 2 007 MOU,
to the Jobs Monitor.

the Union submitted its grievance

Each of the parties provided the Jobs

Monitor with materials supporting their respective arguments,

though PHC and Black Beauty maintained that they did not "accept
or acquiesce to consideration by the Job [sic] Monitor of claims

asserted under the [2007 MOU], as that instrument no longer

applie[d]" to them.

After ruling that the parties had agreed to

arbitrate arbitrability under the 2007 MOU,

the Jobs Monitor

found that the dispute was arbitrable but deferred a final
resolution on the merits until further argument could take
place.

PHC and Black Beauty responded by filing a declaratory
judgment action before this Court,
declaration that

Union,

in which they asked for a

the Union's claim was

for its part,

not arbitrable.

The

filed a counterclaim seeking a declaration

that the Jobs Monitor's

decision was

enforceable and that the

companies must comply with the decision and proceed to a hearing
on the merits.

Union,

The Court entered judgment in favor of the

holding that the Jobs Monitor properly determined the

arbitrability of the dispute.
*6.

Peabody,

2010 WL 3564274, at *5-

The Court further held that the dispute was arbitrable in

any event — that is, even if the arbitrator lacked authority to
decide the question.

Id. at *6.

PHC and Black Beauty appealed, and the Fourth Circuit

affirmed on the ultimate question of arbitrability.
665 F.3d 96.

federal court,

Peabody,

Although the Fourth Circuit determined that a

not the Jobs Monitor, was required to decide the

arbitrability question,

it independently held that PHC and Black

Beauty could not rebut the ordinary presumption in favor of

arbitrability.

Id. at 105-07.

The Fourth Circuit then ordered

the parties to proceed to arbitration on the merits question.
Back before the Jobs Monitor,

the parties agreed to

bifurcate the arbitration proceedings,

stage]

"treating in

[the first

solely the question of whether PHC and Black Beauty

continued to be bound by the MOU after the October 31, 20 07,

spinoff."
question,

In the event that the Union prevailed on that
and the parties subsequently failed to agree on an

appropriate remedy,

the Jobs Monitor would "resol[ve]

the remedy

issue" in the second stage.
On January 18, 2013,
Arbitration Award

the Jobs Monitor issued the disputed

(the "Award").

In it,

he concluded that

"[t]he absence of common ownership between PCC, the signatory
employer to the [2007 MOU], and PHC/Black Beauty, the
nonsignatory employers bound by the MOU,
October 31, 2007,

spinoff of PCC,

subsequent to PE's

did not terminate the

obligations of PHC/Black Beauty under the MOU."

In other words,

the Jobs Monitor concluded that PHC and Black Beauty were still

required to abide by the job-preference term notwithstanding the
intervening change in corporate relationships.

The Jobs Monitor

made three findings essential to this conclusion.
found that

"there

Black Beauty,

[had]

First,

he

been no bona fide sale of either PHC or

the nonsignatory subsidiaries of PE, to an

unrelated third party," which would free them of their

obligations under the terms of the 2007 MOU.

Second,

he found

that "requiring PHC/Black Beauty to offer hiring preferences to
the employees of PCC" would not violate federal labor law,
regardless of the lack of common ownership.
it

irrelevant

that

Finally,

he found

PCC and the Union had entered into different

(substantively identical) wage and job-preference agreements
following the spinoff, by which time PCC was acting as limited
agent of Patriot,

and did not purport to bind either PHC or

Black Beauty.

The Jobs Monitor declined to rule on one issue raised by
PHC and Black Beauty under the 2 007 MOU,

something of an affirmative defense.

which amounts to

Specifically, he reserved

"[t]he question of whether Black Beauty is exempt from the MOU
by virtue of"

a grandfather clause applicable to United

Minerals "until the remedy stage of the proceedings."

He did so

because the question "presents a factual issue that has not been

treated in these proceedings."
exempt,

Assuming plaintiffs are not

the Jobs Monitor noted that he would "retain

jurisdiction over this matter for the limited purpose of
resolving any remedial issues on which the parties cannot
agree."

Plaintiffs filed the instant action seeking to vacate the
Award as to their liability under the 2007 MOU.
II.

DISCUSSION

Defendant has moved to dismiss the Complaint as premature

and, in the alternative, for summary judgment, asking the Court
to enforce the Award and compel plaintiffs to complete the

arbitration process.

Plaintiffs have simultaneously moved for

summary judgment, asking the Court to vacate the Award or
declare it void and unenforceable,
labor

as applied,

under federal

law.

A. Defendants Motion to Dismiss

Defendant moves to dismiss the Complaint on the grounds

that the Court "lacks jurisdiction" over this action because it

is "premature" and presents claims "not yet ripe for review."
Ostensibly, its motion is brought under Fed. R. Civ. P.
12(b)(1), pursuant to which a court must dismiss an action if it

finds subject-matter jurisdiction lacking.
Corp.,

546 U.S.

500,

514

(2006).

Arbaugh v. Y & H

The burden of proof rests with

the plaintiff to establish that such jurisdiction exists.
Warren v. Sessoms & Rogers,

2012).

P.A.,

Defendant's argument,

676 F.3d 365,

however,

370-71

(4th Cir.

does not appear to be

properly characterized as "jurisdictional."4

Instead, its

4 That is, defendant has failed to clearly explain how the lack
of a final award in this instance would actually deprive the

argument appears more appropriate for resolution under Fed. R.
Civ. P. 12(b)(6), pursuant to which a court must assume the
facts alleged in the complaint are true and must draw all
reasonable inferences in the plaintiff's favor.
Co.

of Del, v.

2002).

Elkins Radio Corp.,

278,

Burbach Broad.

F.3d 401,

406

(4th Cir.

"Judgment should be entered when the pleadings,

construing the facts in the light most favorable to the nonmoving party,

fail to state any cognizable claim for relief."

O'Ryan v. Dehler Mfg.

2000).

Co.,

99 F. Supp.

2d 714,

718

(E.D.

Va.

The defendant must show that the factual allegations in

the complaint,

taken as true, are not "enough to raise a right

Court of jurisdiction.
Section 301 of the Labor Management
Relations Act of 1947 ("LMRA") confers jurisdiction on district
courts to enforce "contracts between an employer and a labor

organization representing employees in an industry affecting
commerce."

29 U.S.C.

§ 185(a).

A district court exercises this

jurisdiction when it enforces an award resolving an issue that
an employer and a union have contracted to arbitrate, as well as

when it enters an order directing that the parties proceed to
arbitration consistent with their contractual obligations.
There is some disagreement as to whether Congress simultaneously
limited this jurisdiction to review of final arbitration awards

or merely contemplated judicial application of a prudential rule
where it had already created sweeping jurisdiction over a class
of cases.
Compare Union Switch & Signal Div. Am. Standard Inc.
v. United Elec, Radio & Mach. Workers of Am., 900 F.2d 608, 612

(3d Cir. 1990) (recognizing a prudential "complete arbitration
rule" but concluding that "a final award is not a prerequisite
to the exercise by the district court of the jurisdiction
conferred by § 301"), with El Mundo Broad. Corp. v. United
Steelworkers of Am., AFL-CIO CLC, 116 F.3d 7, 9 (1st Cir. 1997)

("It is essential for the district court's jurisdiction that the
arbitrator's decision was final, not interlocutory.").
The
Court need not weigh in here because the award is final as to
liability and therefore reviewable.
10

of relief above the speculative level."
Twombly,

550 U.S.

544,

555

Bell Atl.

Corp. v.

(2007).

Regardless of where the burden rests,

the core question

presented by defendant's motion to dismiss is whether the
arbitration award under attack is "final and binding" under
§ 301 of the Labor Management Relations Act of 1947

U.S.C. § 185(a).5
519 (1963)

("LMRA"),

29

See Gen. Drivers v. Riss & Co., 372 U.S. 517,

(holding that the LMRA permits federal district

courts to enforce "final and binding" arbitration awards issued
pursuant to a collective bargaining agreement).

To this end,

defendant invokes the "complete arbitration" rule,
which courts must decline

pursuant to

to review an arbitration award unless

it was "intended by the arbitrator to be a complete
determination of every issue submitted."
United Bhd.

Millmen Local 550,

of Carpenters and Joiners of Am., AFL-CIO v. Wells

Exterior Trim,

828 F.2d 1373,

1375

(9th Cir.

1987).

Where the

underlying arbitration proceedings have been bifurcated into

separate liability and damages phases, as here, defendant argues
that an award as to liability only is not reviewable because
subsequent issues remain unresolved.

Id. at 1376-77.

That is,

1 Although labor arbitration is conducted under the LMRA, federal
courts routinely look to the Federal Arbitration Act, 9 U.S.C.
United
§ 1 et seq., for guidance in interpreting the LMRA.
Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 40 n.9
(1987) .
11

an award that postpones the damages determination cannot be
challenged in federal court because it does not constitute a
"final and binding award."

To find otherwise, the argument

goes, would "disrupt and delay the arbitration process and could
result in piecemeal litigation."
Sys.
68,

Council U-2,
70

(3d Cir.

Pub.

Serv.

Elec.

Int'l Bhd. Of Elec. Workers,

& Gas Co. v.

AFL-CIO,

703 F.2d

1983) .

The Fourth Circuit,

however,

has not expressly adopted this

approach, nor does this approach reflect the majority view among
the other circuits.

Instead, most courts have recognized an

exception to the usual rule when confronted by a party seeking a
time out for judicial review of an award following the liability
phase of bifurcated proceedings,

holding that an "arbitr[ation]

award with respect to liability [only] is a final
award . . . and is therefore subject to review by courts."
Providence Journal Co. v. Providence Newspaper Guild,
16,

19

(1st Cir.

2001)

(citations omitted);

see also

Metallgesellschaft A.G. v. M/V Capitan Constante,
283

(2d Cir. 1986)

271 F.3d

790 F.2d 280,

(holding that "an award which finally and

definitely disposes of a separate independent claim may be
confirmed although it does not dispose of all the claims that

were submitted to arbitration").

In other words, a partial

award is reviewable under § 301 as long as it resolves at least

12

one distinct phase of bifurcated arbitration proceedings, even
if the arbitrator has left the damages question unanswered.

Based on the weight of such authority,

the Court concludes

that the partial award as to liability is final for purposes of
§ 301, notwithstanding that the Jobs Monitor "retain[ed]
jurisdiction over this matter for the limited purpose of
resolving any remedial issues on which the parties cannot
agree."

It appears quite clear on the face of the Award that

the Jobs Monitor fully and finally resolved the separate and

independent question of plaintiffs'

liability under the 2007

MOU.

This conclusion is consistent with the parties'

intent to

bifurcate the arbitration proceedings for this very purpose and
the Jobs Monitor's understanding that his ruling constituted a

partial final award.
Inc.,

244 F.3d 231,

See Hart Surgical,
235

(1st Cir.

factors in the finality inquiry).

2001)

Inc. v. Ultracision,
(considering both

Specifically,

the parties

acknowledge that they arranged to have the Jobs Monitor rule

first on liability so that plaintiffs could test their strongest
legal theory before the parties incurred the expense of

discovery.

The Jobs Monitor likewise understood that his ruling

would conclusively settle the liability question,

leaving only

the matter of fashioning an appropriate remedy if plaintiffs did

13

not prevail.

Clearly,

then, both the parties and the Jobs

Monitor agreed that this was a final,

if partial,

award.

Any

lingering concerns about fostering (or merely condoning)
piecemeal litigation give way to the concrete issues already
decided by the Jobs Monitor, which are plainly ripe for judicial
review.

Because the arbitrator's liability determination is "final"
for purposes of § 301,

denied,

defendant's motion to dismiss will be

and the Court will proceed to consider the merits.
B. Cross-Motions for Summary Judgment

Plaintiffs and defendant have filed competing motions for
summary judgment.

Plaintiffs make two main arguments.

First,

they argue that the Award does not draw its essence from the

parties' agreement insofar as the Jobs Monitor erroneously found
that their obligations under the 2007 MOU survived early

termination of PCC's 2007 Wage Agreement, which incorporated the
2007 MOU by reference.

Second, plaintiffs broadly argue that

the 2007 MOU, as interpreted by the Jobs Monitor, may not be
enforced because it violates §§ 8(b)

and 8(e)

Labor Relations Act ("NLRA"), 29 U.S.C. § 158.

of the National

For its part,

defendant counters both arguments and affirmatively contends
that the Award must be enforced under the deferential standard

of review normally applied to the decision of an arbitrator.

14

The parties concede that these arguments raise pure issues of
law and that there are no material facts in dispute.
1.

The Award draws its essence from the agreement

On July 1, 2011, nearly four years after the spinoff but
six months before the 2007 MOU was set to expire,

PCC entered

into new (substantively identical) wage and job-preference

agreements with the Union as a limited agent of Patriot and its

nonunion subsidiaries.6

Plaintiffs argue that these agreements

"superseded" the 2 007 MOU because PCC was the signatory in both
instances.

Accordingly,

Beauty [and PHC]

plaintiffs argue that even if "Black

remained obligated to make job offers to

[PCC's] employees after the spinoff,

that obligation ended July

1, 2011," when the new agreements went into effect,

on December 31, 2011,

rather than

when the 2007 MOU would otherwise expire.

Plaintiffs presented the same argument to the Jobs Monitor,

disagreed.

who

The Jobs Monitor held that the new agreements did

not terminate plaintiffs'

hiring obligations under the 2007 MOU

There is no dispute that the Jobs Monitor's ruling on this
issue falls squarely within the universe of issues committed to
arbitration by the relevant provision of the 2 007 MOU.

The

Court's power to review this aspect of the Award is therefore
extremely circumscribed; after all,

judicial review of

6 None of PCC's post-spinoff agreements made any explicit
reference to plaintiffs,

which remained under the control of PE
15

arbitration awards is "among the narrowest known to the law,"
Union Pac.

R.R.

v.

Sheehan,

439 U.S.

89,

quotation marks and citation omitted),

91

(1978)

(internal

limited to "determin[ing]

only whether the arbitrator did his job — not whether he did it
well,

correctly,

or reasonably,

Mountaineer Gas Co.

76 F.3d 606,

608

v.

Oil,

(4th Cir.

but simply whether he did it."

Chem.

& Atomic Workers Int'l Union,

1996).

Indeed,

"as long as the

arbitrator is even arguably construing or applying the contract

and acting within the scope of his authority, that a court is
convinced he committed serious error does

overturn his decision."

Misco,

484 U.S.

not

suffice

at 38.

to

Such deference

serves as a bulwark against any erosion of the clear federal

policy in favor of settling labor disputes by arbitration.
United Steelworkers of Am.

593, 596 (1960).

v. Enter. Wheel & Car Corp.,

Without it,

See

363 U.S.

"judicial second-guessing . . .

would transform a binding process into a purely advisory one,
and ultimately impair the value of arbitration for labor and

management alike."

Westvaco Corp. v. United Paperworkers Int'l

Union, 171 F.3d 971, 974 (4th Cir. 1999)

(internal quotation

marks and citation omitted).

None of this is to say that an arbitrator has carte blanche
to "dispense his own brand of industrial justice."
Wheel,

363 U.S.

at 597.

Rather,

Enter.

"an arbitrator is confined to

16

interpretation and application of the collective bargaining
agreement."

Id.

w[H]is award is legitimate only so long as it

draws its essence from the

[parties']

agreement."

Id.

The

requirement that the award "draw its essence" from the parties'

agreement means that "[t]he arbitrator may not ignore the plain
language of the contract."
arbitrator does so,

Misco,

484 U.S. at 38.

When the

it can be said that the arbitrator has

simply failed to do his job.

See Mountaineer Gas,

76 F.3d at

610.

Applying this overwhelmingly deferential standard here,
plaintiffs'
fail.

argument that the Award must be vacated is doomed to

The Jobs Monitor explicitly addressed the claim in

question,

as was his job under the arbitration provision, and he

found in favor of defendant.

See id.

at

608.

Plaintiffs take

issue instead with the Jobs Monitor's reasoning.

They point out

that he seemed to believe that PCC, acting on behalf of Patriot,
had entered into new agreements with defendant on two different

occasions — immediately following the spinoff and again in July
2011.

The Jobs Monitor then justified his conclusion by

explaining that it was at least ambiguous whether the 2011
agreements terminated the immediate post-spinoff agreements or
the 2007 MOU.

Plaintiffs counter that the 2011 agreements were

the only ones entered into on behalf of Patriot, and that they

17

necessarily terminated the 2007 MOU as a result.

No matter how

persuasive plaintiffs' argument might be, however, it would
require the Court to delve into the merits of the Jobs Monitor's
decision — exactly what is prohibited under governing law.
Misco,

484 U.S.

arbitrator]

at 38

See

("[T]hat a court is convinced [the

committed serious error does not suffice to overturn

his decision.").

Likewise,

a review of the Award demonstrates that the Jobs

Monitor did not "dispense his own brand of industrial justice."
Enterprise Wheel,

363 U.S.

at 597.

The Award does not clearly

contravene the plain language of the 2007 MOU,
offend applicable common law.

To the contrary,

nor does it
basic tenets of

agency law hold that principals bound to an agreement, as were
plaintiffs by PCC, remain bound regardless of whether their
agent subsequently enters into a different agreement on behalf
of a different principal.

Accordingly,

arbitrator did his job in this instance,

it is clear that the
and therefore,

Court has no power to vacate any aspect of

the

the Award on the

ground that it does not draw its essence from the agreement.
2.

The

2 0 07

MOU does

not violate

the NLRA

Plaintiffs also contend that the 2007 MOU,
by the Jobs Monitor,

violates §§ 8(b)

and 8(e)

as interpreted
of the NLRA

because it requires them "to provide hiring preferences to the

employees of

[PCC], a mining company whose employees are

represented by [defendant], even though [plaintiffs] are not
party to a collective bargaining agreement with [defendant] and
share no common ownership with [PCC]."

Plaintiffs have made

this point at every juncture of their ongoing dispute with
defendant,

including before the Jobs Monitor,

to no avail.

Because federal courts have "a duty to determine whether a

[labor] contract violates federal law before enforcing it,"
Kaiser Steel Corp.

v. Mullins,

455 U.S.

72,

83

(1982),

the

issues raised by plaintiffs are "the type of [issues]" that this
Court must "decide and review de novo," Marrowbone Dev.

Dist.

17, United Mine Workers of Am.,

Cir. 1998)

147 F.3d 296,

Co.

v.

300 (4th

(citations omitted), notwithstanding the great

deference normally afforded an arbitrator's decision.
a.

Sections 8(b)(1)(A)

and 8(b)(2)

Plaintiffs argue that post-spinoff enforcement of the 2007

MOU would require them to offer jobs to PCC employees solely on
the basis of the latter's union membership,

in violation of

§§ 8(b)(1)(A) and (b)(2) of the NLRA, which generally make it
unlawful for employers to grant hiring preferences on such a

basis.

See 29 U.S.C. §§ 158(b)(1)(A),

(b)(2).

Specifically,

plaintiffs argue that the spinoff cut them out of the

multiemployer bargaining unit that entered into the 2 007 MOU,

19

leaving union membership,

as opposed to seniority with a related

subsidiary, as the sole factor in granting hiring preferences.
At core, plaintiff's argument is incompatible with the Jobs
Monitor's ruling that their obligations under the 2007 MOU

survived the spinoff, a ruling this Court will not overturn for
the reasons stated above.

Plaintiffs' argument is also flatly

contradicted by the record.

For starters,

expressly prohibits "dicriminat[ion]

the 2007 MOU

against any person on the

basis of union membership or the lack thereof."

This

prohibition is fully consistent with the ultimate objective of

the agreement, which is not merely to reward union membership,
but to provide the nonsignatory mining companies with access to

an experienced pool of miners.

Accordingly,

it is seniority

achieved through work with PCC, the signatory company, rather
than membership in the Union per se, that entitles miners in the

bargaining unit to job opportunities at nonsignatory companies.
It follows that the benefit of the job-preference term accrues

to individual miners.

That is, PCC miners are given job

opportunities irrespective of their status within the Union, and
those that accept jobs have no Union representation while
working for a nonunion company.

See Courier-Citizen Co. v.

Boston Electrotypers Union No. 11, Int'l Printing & Graphic
Commc'ns Union of N. Am.,

702 F.2d 273,

20

278

(1st Cir.

1983).

As

the Jobs Monitor correctly observed,

plaintiffs have failed to

cite any on-point case law to the contrary.

In sum, the Court independently concludes that post-spinoff
enforcement of the 2007 MOU against plaintiffs does not run
afoul of

§§ 8(b)(1)(A)
b.

or

(8)(b)(2)

of

the NLRA.

Section 8(e)

The more difficult issue is whether post-spinoff
enforcement of the 2007 MOU against plaintiffs violates § 8(e)

of the NLRA, which generally prohibits labor agreements that
encumber or otherwise restrict the manner in which neutral

employers conduct business.

See 29 U.S.C.

§ 158(e).

Plaintiffs

argue that the 2007 MOU is no longer a permissible agreement
designed to preserve bargaining unit work because it now reaches

out and affects the labor relations of neutral employers not
controlled by PCC, either by forcing plaintiffs themselves to

provide job preferences or to cease doing business with third
party contractors which do not provide such preferences.

The

critical point being, once again, that severance of plaintiffs'
corporate relationship with PCC rendered plaintiffs neutral
employers by ending their obligations under the 2007 MOU.

It is useful at this juncture to consider the backdrop

against which plaintiffs make their argument.

No party disputes

that plaintiffs were initially bound to the terms of the 2007

21

MOU by PCC, which signed the agreement in its capacity as
plaintiffs' agent, as well as in its own right.

An agent

authorized to act on behalf of a principal can,

of course,

create contractual obligations between the principal and a third

party.

Moreover,

those obligations persist without any regard

to subsequent changes in the relationship between the agent and

the principal,
See EPE,

including in the context of a labor agreement.

Inc. v.

N.L.R.B.,

845 F.2d 483,

487

(4th Cir.

1988)

("Obviously, a continuing unchanged employer remains bound by
its obligations, including a collective bargaining agreement,
just as any corporation remains bound by contracts into which it

enters."); see also N.L.R.B. v. Rockwood Energy & Mineral Corp.,
942 F.2d 169,

173

(3d Cir.

1991)

("A stock sale does not absolve

a corporate entity from labor obligations which accrued prior to
the sale.").

Because plaintiffs agree that PCC had authority to

bind them to the 2007 MOU, which was lawful at the time, it is
clear that they remained bound unless some other source of law
displaced the contract.

Plaintiffs direct the Court to § 8(e), which provides that
" [i]t shall be an unfair labor practice for any labor
organization and any employer to enter into any contract or
agreement . . . whereby such employer . . . agrees ... to

cease doing business with any other person."

22

29 U.S.C.

§ 158(e).

Especially relevant here, this provision covers

situations in which a primary employer,

fulfilling its

obligations under a labor agreement, must "exert[]

any pressure

calculated to cause a significant change or disruption of

neutral employer's mode of business."
Local Union No.

1990)

91 v.

N.L.R.B.,

(citations omitted).

[a]

Sheet Metal Workers,

905 F.2d 417,

In either event,

421

(D.C.

Cir.

Congress has sought

to insulate neutral employers from "union pressure . . . the

object of which [is]

to induce or coerce [the neutral employers]

to cease doing business with an employer with whom the union
[is]

engaged in a labor dispute."

N.L.R.B.,

386 U.S.

612,

621-22

For purposes of § 8(e),

Nat'l Woodwork Mfrs. Ass'n v.

(1967).

labor agreements are thus

considered either "primary" or "secondary," the former being
permissible while the latter are not.
Longshoremen's Ass'n,

AFL-CIO,

(hereinafter "ILA II").

473 U.S.

N.L.R.B.
61,

v.

78-79

Int'1
(1985)

"The touchstone is whether the

agreement or its maintenance is addressed to the labor relations

of the contracting employer vis-a-vis his own employees," Nat'l
Woodwork,

386 U.S. at 645, that is, whether the agreement's

"object ... is to benefit the employees of the bargaining unit
represented by the union" rather than apply pressure to "a[]
[neutral]

employer in order to require

23

[it]

to accede to union

objectives[.]"
776

(3d Cir.

A. Duie Pyle, Inc. v. N.L.R.B., 383 F.2d 772,

1967) .

One type of primary agreement presumptively permissible
under § 8(e)

is a "work preservation agreement," which is an

agreement that "reserves to a union's members the jobs that they
have historically performed."
Teamsters v. N.L.R.B.,
ILA II, 473 U.S.

Local 917,

577 F.3d 70, 76

at 78-79).

(2d Cir.

To qualify,

question must satisfy two criteria:

Int'l Bhd. of
2009)

(quoting

the agreement in

it must be

(1)

calibrated to

preserve the work traditionally performed by union-represented
employees in the bargaining unit,

as well as

(2) directed at

work over which the signatory employer has a right of control.
N.L.R.B. v.
504-05

Int'l Longshoremen's Ass'n,

(1980)

AFL-CIO,

447 U.S.

490,

(hereinafter "ILA I").

The first criterion is largely a matter of intent.
Becker Elec.

Co. v.

Int'l Bhd.

212 AFL-CIO,

927 F.2d 895,

898

of Elec.
(6th Cir.

See

Workers,

Local Union No.

1991).

There can be no

dispute that defendant bargained for the 2007 MOU "with the

object of work preservation in the face of a genuine job threat"
in the absence of any record evidence that defendant intended to

apply pressure to some then-unknown neutral employer.
473 U.S.

at 79 n.19.

ILA II,

Plaintiffs appear to concede as much but

argue that the spinoff worked a material change on this point.

24

Subsequent corporate developments, unforeseeable at the time of
negotiation, do not provide a sufficient basis to retroactively
impute improper motives to a party in defendant's position.
other words,

In

it would not be reasonable to fault defendant for

seeking work for its members at plaintiffs' mines when both were
a party to the resulting labor agreement,

and defendant had no

way of anticipating their eventual conscious uncoupling from the
multiemployer bargaining unit.

Regardless of the ultimate

consequences, all of the evidence shows that defendant's efforts
were in service of valid work preservation objectives at the

relevant time.

See 29 U.S.C.

§ 158(e)

(measuring lawfulness at

the time "any labor organization and any employer . . . enter
into any contract or agreement").

Nor does post-spinoff "maintenance" of the 2007 MOU against
plaintiffs take on an acquisitive character.

Woodwork,

386 U.S. at 645.

See Nat'1

Requiring plaintiffs to continue

providing notice of classified job openings to miners employed
or laid off by PCC before the spinoff, which is all defendant
demands, merely ensures that the benefits accruing to those

miners in the bargaining unit remain unchanged.

The jobs at

issue are the very same ones traditionally performed by the very
same miners to whom plaintiffs had been providing notice in the
years before the spinoff.

Accordingly,

25

the Jobs Monitor's

interpretation of the 2007 MOU does not impermissibly extend it
beyond the bargaining unit.
Int'l Union v.

N.L.R.B.,

68

Cf. Local 32B-32J,
F.3d 490,

(holding that an agreement which,

495

(D.C.

as applied,

Serv.
Cir.

Employees
1995)

would "extend the

contract to reach outside the contractual bargaining unit"
violates

§ 8(e)).

It is true that post-spinoff enforcement of the 2007 MOU
will necessarily diminish employment opportunities for nonunion

miners at PHC, Black Beauty, and any companies with which they
contract.

Even so, the Supreme Court has clearly stated that an

otherwise-valid work preservation agreement does not contravene
§ 8(e)

just because a neutral employer's mode of business is to

some degree affected.

Nat'1 Woodwork,

386 U.S.

at 627,

agreement's impact "on the employment opportunities of
employees],

no matter how severe,

is

640.

An

[nonunion

. . . irrelevant to the

validity of the agreement."

ILA I, 447 U.S.

decisive element is intent,

see Becker Elec.,

at 507 n.22.

The

927 F.2d at 898,

and defendant's intent was to preserve work for its members,

an

objective complicated only by the unilateral actions of the

bargaining employers.
Monitor,

The 2007 MOU, as interpreted by the Jobs

thus satisfies the first criterion.

The threshold question under the second criterion is

whether PCC, as the signatory employer, maintained a "right of

26

control" over jobs at PHC and Black Beauty throughout the term
of the 2007 MOU.

See ILA I,

447 U.S.

at 504-05.

Of course,

PCC

lost any measure of actual control when it was spun off to
Patriot,

thereby severing its corporate relationship with

plaintiffs.

Although that fact would seem to end the inquiry,

the Supreme Court has cautioned against "mechanical application"
of the right-of-control test.
Steam,

Hot Water,

& Gen.

Pipefitters of N.Y.

U.S. 507, 521 n.8

N.L.R.B. v. Enter. Ass'n of

Hydraulic Sprinkler,

(1977).

& Vicinity,

Pneumatic Tube,

Ice Mach.

Local Union No.

638,

42 9

Instead, equity must be considered

because "only an unoffending, neutral employer can effectively
disclaim control.

An employer may not engage in affirmative

conduct that it reasonably concludes would conflict with its

collective-bargaining obligations."
(internal quotation marks,
see also Int'l Bhd.

Local 917, 577 F.3d at 76

alterations, and citations omitted);

of Elec. Workers,

Local Union No.

CIO v. N.L.R.B., 566 F.2d 348, 352 (D.C. Cir. 1977)

5 01, AFL-

(holding

that only an unoffending employer is entitled to protection
under the NLRA).

The unoffending employer determination finds

support in decisions of the National Labor Relations Board:

[W]e have studied and shall continue to study not only
the

situation the

but

also

how he

pressured employer finds

came

to

be

in

that

himself

situation.

And

in
if

we find that the employer is not truly an "unoffending
employer" who merits the Act's protections, we
find no violation in a union's pressures ....
27

shall

Local Union No.

438,

United Ass'n of Journeymen and Apprentices

(George Koch Sons,

Inc.),

Koch Sons,

N.L.R.B.,

Inc.

v.

201 N.L.R.B.

59,

490 F.2d 323

64, enforced, George
(4th Cir.

1973).

Here, plaintiffs cannot be considered unoffending employers

— and thus entitled to shelter under § 8(e) — because PCC only
relinquished its right of control over jobs at PHC and Black

Beauty through the affirmative conduct of their mutual parent,
PE, which decided to spin off PCC and other subsidiaries but not
PHC and Black Beauty.

When the parties entered into the 2007

MOU, PCC had at least a nominal basis for asserting control over
such jobs by dint of its relationship to both plaintiffs as
members of PHC's

(and PE's) corporate family.

Only after PE

took the calculated, unilateral step of initiating the spinoff

could plaintiffs plausibly claim to be neutral employers.
Defendant, of course, had nothing to do with the spinoff

decision.

More importantly, the adverse impact on miners in the

bargaining unit was entirely foreseeable to PE when it initiated

the spinoff.

Cf. George Koch Sons, 490 F.2d at 328 ("Certainly

where the employer was initially in a position to accede to

potential union demands through the negotiating stages of the
contract,

then he should not later be deemed a

neutral

intentionally forfeited his potential for control.").

if he

Severing

the corporate relationship between the signatory company (PCC)
28

and at least two nonsignatory companies (PHC and Black Beauty),
when that relationship was declared the glue holding the

multiemployer unit together, posed an obvious conflict with
obligations under the 2007 MOU.
omitted).

Local 917, F.3d at 77 (citation

Plaintiffs cannot now rely on such conduct to excuse

their refusal to provide hiring preferences.
Plaintiffs respond that neither they nor their parent stand
to benefit from refusing to abide by the 2007 MOU because PCC is
a competitor and therefore unlikely to divert work to
plaintiffs.

matter,

That response begs the question.

As an equitable

the Court is also concerned that allowing plaintiffs to

evade their obligations would set the stage for employers with
less benign intentions to manipulate the corporate form to the
detriment of the collective bargaining process.

Rather than

perform the difficult task of attempting to scrutinize their
profession of good faith,
F.2d at 353,

see Int'l Bhd.

of Elec.

Workers,

566

it is more useful to look to the actual effect of

the disputed conduct,

which would be to undermine the bargained

for protections of a valid work preservation agreement.

In the final analysis, the 2007 MOU is a valid agreement
that preserved work for miners in the bargaining unit and was
directed at work over which the signatory company had a right of

control until such control was voluntarily relinquished by the

29

affirmative conduct of its ultimate parent.

are offending employers,

Because plaintiffs

§ 8(e) erects no barriers to post-

spinoff enforcement of the 2007 MOU.7
III.

For these reasons,

CONCLUSION

defendant's Motion to Dismiss and

plaintiffs' Motion for Summary Judgment will be denied,
defendant's Motion for Summary Judgment will be granted,
this matter will be remanded to the Jobs Monitor

and

to determine

the appropriate damages by an Order to be issued with this
Memorandum Opinion.

Entered this Jl8 day of August, 2014.
Alexandria, Virginia

Leonie M. Brinkema

^T %l^

United States District Judge

Defendant does not seek damages for miners who were hired by
PCC at any point after the spinoff, even though the 2007 MOU did
not terminate until December 31, 2011.
Instead, defendant
merely seeks damages for those PCC miners who were active or

laid off before October 31, 2007, the date of the spinoff,
because those miners clearly belonged to the original bargaining
unit and were familiar to plaintiffs.
30