International Union, United Mine Workers of America et al v. Consol et al Energy, Inc.

Filing 77

MEMORANDUM OPINION AND ORDER: Pursuant to Rule 41 of the Federal Rules of Civil Procedure, the court hereby DISMISSES Dunford from the case; Plaintiffs' Motion to Strike Count 2 is GRANTED; Plaintiffs' 67 Motion for Leave to File Second A mended Complaint is GRANTED; Plaintiffs are directed to file a complaint consistent with this Memorandum Opinion and Order and the Clerk is DIRECTED to file that complaint as Plaintiffs' "Second Amended Complaint." Signed by Senior Judge David A. Faber on 5/21/2018. (cc: counsel of record) (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
AT BLUEFIELD
INTERNATIONAL UNION,
UNITED MINE WORKERS OF
AMERICA, et al.,
Plaintiffs,
v.

CIVIL ACTION NO. 1:16-12506

CONSOL ENERGY, INC.,
Defendant.
MEMORANDUM OPINION AND ORDER
The dust has settled after a preliminary injunction was
entered, an arbitration decision rendered, and this court’s
preliminary injunction order appealed.

Now, International

Union, United Mine Workers of America (“UMWA”) and retired coal
miners (collectively “Plaintiffs”)1 seek to amend their complaint
for a second time.

ECF No. 67-3.

For good cause shown, the

court GRANTS Plaintiffs’ motion for leave to file a Second
Amended Complaint.

1

The Second Amended Complaint requests the dismissal of
plaintiff, George Dunford. See ECF No. 67 at p.4. Plaintiffs’
counsel orally requested Dunford be dismissed during the
preliminary injunction hearing on February 1, 2017. No
objection has been made by counsel for Defendants. Accordingly,
pursuant to Rule 41 of the Federal Rules of Civil Procedure, the
court hereby DISMISSES Dunford from the case.

I.

BACKGROUND

A. Factual History
The dispute centers on whether the defendant, CONSOL
Energy, Inc., can unilaterally change the health care benefits
contractually negotiated with UMWA under the 2011 National
Bituminous Coal Wage Agreement (“NBCWA”).

This 2011 NBCWA, like

its predecessor agreements, included an “Employer Plan”
guaranteeing lifetime health care benefits for its eligible
retirees.

ECF No. 16 at ¶¶ 20-30.

In order to ensure

uniformity and resolve disputes, the parties to the 2011 NCBWA
(and earlier NCWBAs) established a Resolution of Dispute
procedure.

This Resolution of Dispute procedure conferred power

upon four Trustees to issue opinions arising from disputes that
are binding upon the parties.

Id.

In March and May 2016, CONSOL transmitted three (3) letters
to retiree participants in the Employer Plan, indicating its
intent to no longer offer lifetime health care benefits.
¶¶ 35-38.

Id. at

Each of these letters was written on CONSOL

letterhead.

CONSOL later announced that it would offer to fund

health savings accounts for retiree participants instead.

See

id. at ¶ 3.
In November 2016, UMWA filed a Resolution of Dispute on
behalf of a retiree.

In its complaint, the UMWA requested a

determination as to whether CONSOL may “implement any unilateral
2

changes or modifications of the benefits provided by its plan,
either during the term of the 2011 NBCWA or following its
termination.”

See ECF No. 1, Ex. D.

UMWA also requested that

the opinion of the Trustees require CONSOL to “notify its
retirees that it cannot make any changes in their benefits
without the agreement of the UMWA.”

See id.

CONSOL and UMWA

also engaged in communications after the retirees’ receipt of
CONSOL’s letters, but the parties were unable to reach an
agreement.

Id.

B. Procedural History
On December 23, 2016, Plaintiffs filed a Complaint for
Injunctive Relief against CONSOL Energy, Inc., requesting
injunctive relief under Section 301 of the Labor Management
Relations Act, 29 U.S.C. § 185(a).

ECF No. 1.

Less than a

month later, Plaintiffs filed a motion for preliminary
injunction, seeking to enjoin CONSOL from taking action to
change the benefits available under the Employer Plan until the
completion of the Resolution of Dispute process.

ECF No. 8.

Before a hearing on the motion for a preliminary
injunction, CONSOL filed a motion to dismiss for lack of
jurisdiction.

ECF No. 13.

In an effort to circumvent this

jurisdictional argument, Plaintiffs filed an Amended Complaint
naming as defendants four (4) CONSOL subsidiaries: Helvetia Coal
Company, Island Creek Coal Company, Laurel Run Mining Company,
3

and CONSOL Amonate Facility, LLC (collectively “CONSOL’s
Subsidiaries”).

See ECF No. 16.

On February 1, 2017, the court heard oral argument on
Plaintiffs’ motion for a preliminary injunction.

Among other

arguments, Defendants alleged a lack of personal jurisdiction
over CONSOL’s Subsidiaries.

In the midst of the parties’ post-

hearing briefs, Plaintiffs again sought leave of court to file a
Second Amended Complaint to correct these jurisdictional
defects.

ECF No. 44.

Specifically, Plaintiffs attempted to add

three (3) causes of action for alleged violations of the
Employer Retirement Income Security Act of 1974 (“ERISA”), § 2
et seq., 29 U.S.C. § 1001 et seq., because the statute provides
for nationwide service of process.

See 29 U.S.C. 1132(e)(2).

Defendants opposed the amendment for essentially the same
reasons as stated in the instant motion.

See ECF No. 48.

On March 17, 2017, the court granted Plaintiffs’ motion for
a preliminary injunction, enjoining and prohibiting CONSOL:
(1) From terminating, changing or replacing the 2011
[NCWBA Employer Plan], which is presently providing
health care coverage to retired miners, pending the
results of the arbitration now underway and the
further order of this court; and (2) From
communicating further in any way with participants and
beneficiaries of the Employer Plan informing them of
termination, replacement or changes to the Employer
Plan.

4

ECF No. 51.2

The court also concluded that even though CONSOL’s

Subsidiaries were signatories to the 2011 NBCWA,
CONSOL Energy is the corporate parent . . . the agent
of Defendant subsidiaries, none of which have
employees or other personnel to make any significant
operational or administrative decisions or exercise
control over the Employer plan independent of
Defendant CONSOL . . . As such, the court concludes
that Defendant CONSOL Energy is the real party in
interest and is subject to the court’s power to issue
an injunction.
ECF No. 50 at p.11.

With this in mind, the court determined

that CONSOL was bound by the 2011 NCBWA and subject to the
pending Resolution of Dispute.

See ECF No. 51.

As to CONSOL’s jurisdictional defenses, the court concluded
that it had personal jurisdiction over CONSOL.
p.9.

ECF No. 50, at

On the other hand, the court determined that there was no

personal jurisdiction over CONSOL’s Subsidiaries because there
existed only attenuated contacts with West Virginia and the
Southern District of West Virginia.

Id. at p.10.

Accordingly,

the court dismissed CONSOL’s Subsidiaries from the action.3

Id.

at p.25.

2

An appeal of the court’s preliminary injunction to the Fourth
Circuit Court of Appeals was dismissed as moot. ECF No. 70.
3

Nevertheless, the injunction applied to CONSOL’s Subsidiaries
because the injunction extended to CONSOL’s “officers, agents,
servants, employees, attorneys, successors, and assigns, and
persons or entities acting in active concert or participation
therewith.” ECF No. 51 at p.2.
5

On October 31, 2017, the Resolution of Dispute Opinion was
issued in favor of Plaintiffs.

ECF No. 67-1.

Jurisdictionally,

the Opinion determined that CONSOL was bound by the 2011 NBCWA.
Id. at p.9.

On the merits, the Opinion held that CONSOL may not

modify or change the existing Employer Plan, unless by joint
agreement with the UMWA.

Id.

Therefore, because “[n]o

agreement with the [UMWA] has been reached for replacing the
[Employee Benefits Plan] with Health Reimbursement Accounts],”
CONSOL has no authority to make such changes unilaterally.

Id.

at pp. 6-7.
On the same day and with this favorable Opinion in hand,
Plaintiffs returned to this court seeking to file a revised
Second Amended Complaint.4
II.

SUBSTANCE OF THE AMENDMENT

Plaintiffs’ amendment seeks to include two causes of action.5
ECF No. 67-3.

First, Plaintiffs include a cause of action

requesting this court confirm the Resolution of Dispute Opinion

4

The court denied Plaintiffs’ original motion to file a second
amended complaint as moot. See ECF No. 74.
5

Plaintiffs’ proposed Second Amended Complaint also included a
cause of action seeking to continue the court’s March 17, 2017
preliminary injunction until the court confirms the arbitration
decision (Count 2). At the May 10, 2018 hearing, counsel for
Plaintiffs requested the court strike this count in light of
Defendants representation that it would continue to offer
retirees the benefits available under the Employer Plan until
the conclusion of this action. Defendants did not oppose this
motion. Plaintiffs’ motion to strike Count 2 is GRANTED.
6

(Count 1).

Second, Plaintiffs seek to bring an ERISA claim

against CONSOL and CONSOL’s Subsidiaries due to their misleading
written communications sent to retiree participants (Count 3).
Id.

On a related note, Plaintiffs use ERISA’s nationwide

service of process provision to again include the CONSOL
Subsidiaries as defendants, despite their previous dismissal.
Id.
III. APPLICABLE LAW
Federal Rule of Civil Procedure 15 governs the amendment of
pleadings.

Rule 15(a)(1) provides a plaintiff with an

opportunity to amend his or her complaint once as a matter of
course, subject to certain time limitations.

Rule 15(a)(2), on

the other hand, provides that “[i]n all other cases, a party may
amend its pleading only with the opposing party’s written
consent or the court’s leave.

The court should freely give

leave when justice so requires.”

The United States Supreme

Court indicated that leave to amend a pleading should be denied
only (1) when the amendment would be prejudicial to the opposing
party, (2) there has been bad faith on the part of the moving
party, or (3) the amendment would be futile.

Foman v. Davis,

371 U.S. 178, 182 (1962).
IV.

DISCUSSION

Defendants allege that allowing the proposed amendment
would be futile.

Further, Defendants assert that Plaintiffs’
7

ERISA claim is grounded in bad faith because it engages in
gamesmanship by fundamentally transforming Plaintiffs’ original
complaint, which only requested a preliminary injunction, to an
action which now seeks additional remedies.
A. Futility
An amendment is futile under Rule 15 if it would fail to
survive a motion to dismiss for failure to state a claim.

See

U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370,
376 (4th Cir. 2008).

Granting leave to amend a complaint is

futile when the proposed amendment is “clearly insufficient or
frivolous on its face.”

Johnson v. Oroweat Foods Co., 785 F.2d

503, 510 (4th Cir. 1986).

More specifically, “[f]utility is

apparent if the proposed amended complaint fails to state a
claim under the applicable rules and accompanying standards.”
Katyle v. Penn Nat. Gaming, Inc., 637 F.3d 462, 471 (4th Cir.
2011).

That is, an amendment is futile if it does not satisfy

the requirements of the Federal Rules of Civil Procedure.

See

Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (district court
did not abuse its discretion in denying leave to file an amended
complaint where the proposed amended complaint did not properly
state a claim under Rule 12(b)(6)).

8

1. Count I: Confirmation of Resolution of Dispute
Opinion Is Not Futile
CONSOL continues to argue that it is not subject to the
Resolution of Dispute process or bound by its October 31, 2017
Opinion because it was not actually a signatory to the 2011
NCBWA, which authorized the Resolution of Dispute procedure.
See ECF No. 68 at p.5.

CONSOL’s disagreement is with the

court’s March 17, 2017 preliminary injunction order where the
court concluded that CONSOL is subject the Resolution of Dispute
procedure as the “real party in interest.”

ECF No. 50 at p.11.

The court will not upset its previous ruling and finds that
allowing Plaintiffs to amend their complaint to assert Count I
would not be futile.
2. Count III: ERISA Claim Is Not Futile.
The retiree plaintiffs allege that CONSOL and CONSOL’s
Subsidiaries are liable under ERISA Section 502, 29 U.S.C. §
1132 for breach of their fiduciary duties.6

Section 502(a)(3)

permits a civil action,

6

Before determining whether the retiree plaintiffs have a claim,
the court briefly digresses to consider Defendants’ argument
that the retirees do not have standing to bring this action
because they are not suing in a representative capacity, but as
individuals. ECF No. 68 at p.13. Defendants rely on Estate of
Spinner v. Anthem Health Plans of VA, 589 F. Supp. 2d 738, 745
(W.D. Va. 2008). But Spinner deals with § 502(a)(2), not §
502(a)(3), which is at issue. Franchise Tax Bd. of State of
Cal. v. Constr. Laborers Vacation Tr. for S. California, 463
U.S. 1, 25, (1983) (“Section 502(a) specifies which personsparticipants, beneficiaries, fiduciaries, or the Secretary of
9

“by a participant, beneficiary, or fiduciary (A) to
enjoin any act or practice which violates any
provision of this subchapter or the terms of the plan,
or (B) to obtain other appropriate equitable relief
(i) to redress such violations or (ii) to enforce any
provisions of this subchapter or the terms of the
plan.”
29 U.S.C. § 1132(a)(3).
“In order to establish a claim for breach of fiduciary duty
based on alleged misrepresentations, a plaintiff must show: 1)
that a defendant was a fiduciary of the ERISA plan, 2) that a
defendant breached its fiduciary responsibilities under the
plan, and 3) that the participant is in need of injunctive or
other appropriate equitable relief to remedy the violation or
enforce the plan.

Adams v. Brink's Co., 261 F. App'x 583, 589–

90 (4th Cir. 2008) (emphasis added), citing Griggs v. E.I.
DuPont de Nemours & Co., 237 F.3d 371, 379-80 (4th Cir. 2001),
and Blair v. Young Phillips Corp., 235 F. Supp. 2d 465, 470
(M.D.N.C 2002).

Because the second question – whether

Defendants breached its fiduciary responsibility – is inherently
factual and unchallenged by Defendants, the court discusses the
first and third prongs in turn.

Labor-may bring actions for particular kinds of relief.”)
(emphasis added). As to who may bring a civil action under §
502(a)(3), in Varity Corp. v. Howe, 516 U.S. 489 (1996), the
Supreme Court recognized that individual participants may sue a
fiduciary for breach of its fiduciary duties under § 502(a)(3).
The court proceeds to determine if the retirees have stated a
proper ERISA claim.
10

a. Are CONSOL and CONSOL’s Subsidiaries Fiduciaries?
Plaintiffs must first demonstrate that CONSOL and CONSOL’s
Subsidiaries were acting in a fiduciary capacity.

ERISA §

3(21)(A) defines “fiduciary” as:
[A] person is a fiduciary with respect to a plan to
the extent-(i) he exercises any discretionary authority or
discretionary control respecting management of such
plan or exercises any authority or control respecting
management or disposition of its assets,
(ii) he renders investment advice for a fee or other
compensation, direct or indirect, with respect to any
moneys or other property of such plan, or has any
authority or responsibility to do so, or (iii) he has
any discretionary authority or discretionary
responsibility in the administration of such plan.
The context of a plaintiff’s claim matters when determining
who is a fiduciary.

The Fourth Circuit in Coleman v. Nationwide

Life Ins. Co., determined “the inclusion of the phrase ‘to the
extent’ in § 1002(21)(A) means that a party is a fiduciary only
as to the activities which bring the person within the
definition . . .

In other words, a court must ask whether a

person is a fiduciary with respect to the particular activity at
issue.”

969 F.2d 54, 61 (4th Cir. 1992) (collecting cases); see

also Darcangelo v. Verizon Communications, Inc., 292 F.3d 181,
192 (4th Cir. 2002) (“The same entity may function as an ERISA
fiduciary in some contexts but not in others.”).

Thus, the

court must determine whether CONSOL and CONSOL’s Subsidiaries

11

were acting as fiduciaries regarding the activity at issue – the
misleading communications to the retirees.
To determine whether a person is a fiduciary “with respect
to the particular activity at issue, a court is required to
examine the relevant documents to determine whether the conduct
at issue was within the formal allocation of responsibilities
under the plan documents and, if not, ascertain whether, in
fact, a party voluntarily assumed such responsibility for the
conduct at issue.”

Coleman, 969 F.2d at 61 (“There simply is no

basis in the plan document or [defendant’s] actions to conclude
that [defendant] possessed or exercised discretionary authority
or responsibility with respect to the notification at issue.).
The record appears clear that CONSOL, not CONSOL’s
Subsidiaries, wrote the March and May 2016 letters to its
retiree participants.

However, CONSOL’s Subsidiaries, not

CONSOL, were the actual signatories to the NCBWA.

Therefore,

the court remains aware that that CONSOL’s Subsidiaries did not
engage in any action regarding the alleged misleading
communications at issue.

Id.

Nevertheless, in order to

untangle the specific actions taken by each defendant and to
become fully aware of the responsibilities allocated under the
Employer Plan, the court allows Plaintiffs’ ERISA claims against
all Defendants to proceed.

Firestone Tire & Rubber Co. v.

Bruch, 489 U.S. 101, 111 (1989) (looking to plan documents to
12

determine whether plan administrator exercised discretionary
powers in interpreting plan provisions); see also Rambus, Inc.
v. Infineon Tech., AG, 304 F. Supp. 2d 812, 819 (E.D. Va. 2004)
(“Courts generally favor the ‘resolution of cases on their
merits' . . . [t]hus the substantive merits of a proposed claim
[or defense] are typically best left for later resolution, e.g.,
under motions to dismiss or for summary judgment, . . . , or for
resolution at trial.”) (quoting Davis v. Piper Aircraft Corp.,
615 F.2d 606, 613 (4th Cir. 1980)); Sentara Virginia Beach Gen.
Hosp. v. LeBeau, 182 F. Supp. 2d 518, 525 (E.D. Va. 2002) (“A
complaint cannot be dismissed merely because the court doubts
the plaintiff will prevail in the action.”) (citing Neitzke v.
Williams, 490 U.S. 319, 327 (1989)).
b. Is Plaintiffs’ Claim for Declaratory Relief Properly
Pled?
Determining the scope of “other appropriate relief” under
Section 502(a)(3) is not without controversy.

The Supreme Court

first evaluated the meaning of “equitable relief” in Mertens v.
Hewitt Associates 508 U.S. 248 (1993).

Here, plan participants

sought monetary relief after the plan actuary failed to make a
proper actuarial assumption when calculating the plan’s assets.
The Supreme Court held § 502(a)(3) did not authorize suits for
compensatory damages.

In reaching this conclusion, the Mertens

court announced that “equitable relief” under § 502(a)(3)

13

encompasses “those categories of relief that were typically
available in equity (such as injunction, mandamus, and
restitution, but not compensatory damages).”

508 U.S. 248, 256

(1993).
As relief, Plaintiffs’ Second Amended Complaint requests
that the court:
Enter an order declaring that Defendants, by and through
their misleading communications to Plaintiffs and other
retired miners, have breached their fiduciary duties under
ERISA; and, award reasonable attorneys’ fees and the costs
of this action . . .
ECF No. 67-3 at p.16.

At the hearing, Plaintiffs’ counsel

represented that retiree plaintiffs request for declaratory
relief centers upon obtaining an order from the court declaring
that Defendants may not change the retirees’ benefits without
agreement from the UMWA.

This request for relief appears to be

drawn from equity, Mertens, 508 U.S. at 256, therefore the
Second Amended Complaint states redress available under Section
502(a)(3).
Accordingly, allowing Plaintiffs’ ERISA claim to move
forward would not be futile.
B. Defendants’ Fairness Arguments
Defendants object that Plaintiffs’ proposed Second Amended
Complaint should be denied due to undue delay, dilatory motive,
and bad faith.

The court understands Defendants’ frustration.

Plaintiffs’ original complaint requested only injunctive relief.
14

Plaintiffs obtained this relief and now want more.

This

frustration is exacerbated by the fact that Plaintiffs attempt
to add CONSOL’s Subsidiaries as defendants for a second time
using ERISA’s nationwide service of process provision, despite
the court’s earlier dismissal of CONSOL’s Subsidiaries.
Viewed more concretely, however, this parade of horribles
is not so.

While the alleged conduct at issue for Plaintiffs’

ERISA claims stems from March and May 2016 communications,
Plaintiffs’ amendment is not dilatory.

Plaintiffs attempted to

include an ERISA claim within its proposed original Second
Amended Complaint, filed on March 1, 2017.7

Plaintiffs filed its

motion to file a second amended complaint just four months after
Plaintiffs’ original complaint and before this court’s dismissal
of CONSOL’s Subsidiaries for lack of jurisdiction.

ECF No. 51.

Moreover, this case remains in its infancy – without any
discovery having been undertaken and no scheduled date for
trial.

See Mayfield v. NASCAR, 674 F.3d 369 (4th Cir. 2012)

(affirming the district court's denial of a motion to amend
where the plaintiff had no justification for failing to include
additional allegations in the original complaint, the complaint
was filed over two and one-half years prior, and significant
discovery had already been conducted).

7

This court never decided this motion because of the pending
Resolution of Dispute. See ECF No. 44-1.
15

Second, the court can find no bad faith in the filing of
the proposed Second Amended Complaint.

The proposed claims and

the original request for a preliminary injunction are all
intertwined in CONSOL’s attempt to unilaterally change the
health coverage of its retirees.

See Equal Rights Ctr. v. Niles

Bolton Assocs., 602 F.3d 597, 603 (4th Cir. 2010) (affirming
denial of a motion to amend because the amendment would have
changed the nature of the litigation and prejudicing defendant’s
“ability to assess rationally its exposure to a damages
award.”).

Moreover, within its Resolution of Dispute,

Plaintiffs requested the relief it now requests in its ERISA
claim.

See ECF No. 1, Ex. D (requesting “Consol must notify its

retirees that it cannot make any changes in their benefits
without the agreement of the UMWA.”).

The Resolution of Dispute

Opinion declined to order this remedy.

See id.

Thus,

Plaintiffs are not acting in bad faith by requesting this court
provide declaratory relief under ERISA.
Finally, Defendants allege that Plaintiffs’ ERISA claim
functions as a backdoor for the inclusion of CONSOL’s
Subsidiaries.

Indeed, the proposed amendment provides

Plaintiffs with personal jurisdiction over CONSOL’s
Subsidiaries.

Trustees of the Plumbers & Pipefitters Nat.

Pension Fund v. Plumbing Servs., Inc., 791 F.3d 436, 443 (4th
Cir. 2015).

The parties provide the court with inconsistent
16

case law as to whether personal jurisdiction over one defendant
in one claim affords personal jurisdiction as to all claims.
However, these arguments are for another day.

The court cannot

conclude that Plaintiffs, who stated a valid ERISA claim against
Defendants, engaged in bad faith.
V.

CONCLUSION

For the reasons above, the court GRANTS Plaintiffs’ motion
for leave to file a second amended complaint (ECF No. 67).
Within seven (7) days, Plaintiffs are DIRECTED to file a
complaint consistent with this Memorandum Opinion and Order8 and
the Clerk is DIRECTED to file that complaint as Plaintiffs’
“Second Amended Complaint.”
The Clerk is further DIRECTED to send a copy of this
Memorandum Opinion and Order to all counsel of record.
IT IS SO ORDERED this 21st day of May, 2018.
Enter:
David A. Faber
Senior United States District Judge

8

In summary, Plaintiffs must remove Count 2 of the proposed
Second Amended Complaint, which has been stricken.
Additionally, the court directs the parties to confer and ensure
Plaintiffs have named the proper Defendants in light of CONSOL’s
recent corporate separation.
17