Professional Documents
Culture Documents
Published United States Court of Appeals For The Fourth Circuit
Published United States Court of Appeals For The Fourth Circuit
I.
A.
The issue of health care benefits for retired coal industry workers
and their dependents has a protracted history. See generally Eastern
Enters. v. Apfel, 118 S. Ct. 2131, 2137-42 (1998) (plurality opinion)
(discussing history leading to the enactment of the Coal Act); id. at
2165-66 (Breyer, J., dissenting) (same); Holland v. Big River Minerals Corp., 181 F.3d 597, 600-01 (4th Cir. 1999) (same); Holland v.
Keenan Trucking Co., 102 F.3d 736, 738-39 (4th Cir. 1996) (same).
Disputes concerning health care for miners date back to the time early
in this century when such care was funded with a prepayment plan
through payroll deductions and was supplied by company doctors. In
the 1930s and 1940s, the United Mine Workers of America (UMWA)
and coal industry employers sought changes in the method of providing essential services to miners, and from the late 1940s through the
early 1970s pension and medical benefits were provided by several
UMWA funds created under a series of National Bituminous Coal
Wage Agreements (NBCWAs), including a 1950 and a 1974 UMWA
Benefit Plan. The funding for these benefits was supplied in part by
a royalty on each ton of coal mined and in part by payroll deductions.
As benefits improved under UMWA plans and the number of beneficiaries increased, other factors such as a decrease in the amount of
coal produced and a rapid increase in health care costs conspired to
produce financial problems for the funds. In response to these financial pressures, the 1978 NBCWA allocated to signatory employers
responsibility for the health care costs of their active and retired miners. The 1974 UMWA Benefit Plan remained in place, but was
responsible for providing benefits only to "orphaned" retired miners
--those whose former employers were no longer in business.
Despite this restructuring, the benefit plans continued to suffer
financially, and by the late 1980s they were facing insolvency. Unrest
concerning this situation led to an 11-month strike beginning in 1989
by mine workers against the Pittston Coal Company, which ended
only after the Secretary of Labor intervened and negotiated a settlement. Thereafter, the Secretary established the Advisory Commission
on United Mine Workers of America Retiree Health Benefits (the
"Coal Commission"), a bipartisan commission formed to assess the
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employed the retiree in the coal industry for any length of time. See
id. 9706(a)(2). If no operator meets those criteria, the retiree is
assigned to the signatory operator that employed the retiree in the coal
industry for the longest period of time prior to the effective date of
the 1978 NBCWA. See id. 9706(a)(3). These "assigned operators"
are then required to pay annual premiums to the Combined Fund for
each person assigned to them. See id. 9704.
A retiree not assigned under 9706 is an"unassigned beneficiary."
See id. 9704(d). Health care payments for unassigned beneficiaries
derive from three sources, the first two being surpluses from the 1950
UMWA Pension Plan that are transferred to the Combined Fund, see
id. 9705(a), and transfers from the Abandoned Mine Reclamation
Fund, see id. 9705(b); 30 U.S.C.A. 1232(h) (West Supp. 1999).
If these sources prove insufficient to pay for the unassigned beneficiaries' health care, an "unassigned beneficiaries premium" is assessed
to each assigned operator based on the number of its assigned beneficiaries. See 26 U.S.C.A. 9705(a)(3); id. 9704(a)(3).
An assigned operator's health benefit premium for assigned beneficiaries for any year is the product of the "per beneficiary premium"
for that year multiplied by the number of eligible beneficiaries
assigned to that operator under 26 U.S.C.A. 9706. See id.
9704(b)(1). The per beneficiary premium for each year is calculated
by adjusting the per beneficiary premium for the initial year--1993-for inflation. See id. 9704(b)(2). The Coal Act as originally enacted
provided that the Secretary of Health and Human Services (the Secretary) would calculate the amount of the per beneficiary premium and
assign beneficiaries to assigned operators. See 26 U.S.C.
9704(b)(2), 9706(a) (Supp. IV 1993). However, effective March
31, 1995, both of those duties were transferred to the Commissioner
of Social Security (the Commissioner). See Social Security Independence and Program Improvements Act of 1994, Pub. L. No. 103-296,
108(h)(9)(A), (B), 108 Stat. 1464, 1487-88 (1994).
B.
Pittston is a Virginia corporation whose subsidiaries and predecessors have been mining coal in the eastern United States for the past
150 years. In 1997, Pittston initiated this tax refund action, see 26
6
that even if the amount of the Coal Act premiums otherwise would
be recoverable in a tax refund action, the Coal Act bars remedies
against the Government for wrongly assessed and collected premiums. We address these arguments in turn.5
A.
Absent waiver, sovereign immunity shields the United States from
suit. See FDIC v. Meyer, 510 U.S. 471, 475 (1994). Congress, however, has waived sovereign immunity from suits "for the recovery of
any internal-revenue tax alleged to have been erroneously or illegally
assessed or collected." 28 U.S.C.A. 1346(a)(1). The question of
whether Coal Act premiums are taxes such that the Government
waived sovereign immunity under 1346(a)(1) is a jurisdictional one
subject to de novo review. See Global Mail Ltd. v. United States
Postal Serv., 142 F.3d 208, 210 (4th Cir. 1998).
Although the Government contends that the Coal Act premiums
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espoused the opposite view in National Coal. Pittston vehemently argues
that it took no such position in National Coal . Even assuming that Pittston did take that position, however, judicial estoppel would not bar Pittston from advancing the contrary view here. Judicial estoppel applies
only to the making of inconsistent statements of fact, and therefore is of
no relevance to Pittston's legal contention that the Coal Act premiums
are taxes. See Folio v. City of Clarksburg, 134 F.3d 1211, 1217-18 (4th
Cir. 1998) (holding that question of whether an assessment is a fee or a
tax is a legal one to which the doctrine of judicial estoppel does not
apply).
5 The Trustees, as third-party defendants, join in the Government's
arguments that Pittston cannot recover wrongly assessed or collected
Coal Act premiums in a tax refund action against the Government. They
also join the Government's position that the district court correctly dismissed Count One on res judicata grounds. See Fed. R. Civ. P. 14(a)
(stating that a "third-party defendant may assert against the plaintiff any
defenses which the third-party plaintiff has to the plaintiff's claim"); cf.
F & D Property Co. v. Alkire, 385 F.2d 97, 100 (10th Cir. 1967)
(explaining that "[q]uite clearly a third party defendant may resist plaintiff's motion for summary judgment to the same extent as the defendant").
10
The Government makes two arguments that Leckie is not controlling on the issue of whether Coal Act premiums are taxes. First, it
claims that the term "tax" has "different meanings in different contexts" and that the definition employed by this court in determining
whether the Anti-Injunction and Declaratory Judgment Acts applied
should be different from that utilized to determine whether the premiums are taxes for purposes of the refund statute. Brief for the United
States as Appellee/Cross-Appellant at 19. We disagree. The very purpose of the two statutes discussed in Leckie is "to allow the Federal
Government to assess and collect allegedly due taxes without judicial
interference and to compel taxpayers to raise their objections to collected taxes in suits for refunds." Leckie , 99 F.3d at 584 (citing
Enochs v. Williams Packing Co., 370 U.S. 1, 7 (1962); Flora v.
United States, 362 U.S. 145, 164 & n.29 (1960)). Accordingly, a decision that a premium is a tax for the purposes of the Anti-Injunction
and Declaratory Judgment Acts necessarily is a decision that an
objection to that assessment must be litigated in a tax refund action.7
The Government also contends that Leckie is not controlling
because our conclusion in that case that Coal Act premiums are taxes
is merely dictum. Again, we disagree. Dictum is"a statement in a
judicial opinion that could have been deleted without seriously
impairing the analytical foundations of the holding--that, being
peripheral, may not have received the full and careful consideration
of the court that uttered it." United States v. Crawley, 837 F.2d 291,
292 (7th Cir. 1988) (internal quotation marks omitted); see Hormel
Foods Corp. v. Jim Henson Prods., 73 F.3d 497, 508 (2d Cir. 1996);
see also Gillespie v. United States Steel Corp., 321 F.2d 518, 530 (6th
Cir. 1963) (concluding that statement was not dictum when "the matter was before the court ...; was argued before the court; and was
passed upon by the court"), aff'd, 379 U.S. 148 (1964).
In Leckie, the decision that Coal Act premiums are taxes was
clearly integral to the analytical foundations of our holding. The
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7 The dissent interprets 1346(a)(1) to waive sovereign immunity only
for actions for recovery of taxes that were paid to the Government and
not actions for recovery of taxes that were required by the Government
to be paid to a third party. However, there simply is no support for that
position in the language of the statute.
12
Id. Here, the first two elements are satisfied, and only the third
element--identity of causes of action--is in dispute. In accordance
with the modern trend, we have held that the appropriate inquiry to
determine whether causes of action are identical for claim preclusion
purposes is whether the claim presented in the new litigation "arises
out of the same transaction or series of transactions as the claim
resolved by the prior judgment." Harnett v. Billman, 800 F.2d 1308,
1313 (4th Cir. 1986); see Restatement (Second) of Judgments 24
(1982).
No simple test exists to determine whether causes of action are
identical for claim preclusion purposes, and each case must be determined separately within the conceptual framework of the doctrine.
See Aliff v. Joy Mfg. Co., 914 F.2d 39, 43 (4th Cir. 1990). Generally,
the court must balance the interests of the defendant and of the courts
in bringing litigation to a close against the interest of the plaintiff in
not being denied the right to prosecute a valid claim. See Restatement
(Second) of Judgments 24 cmt. b. The expression "transaction" in
the claim preclusion context "connotes a natural grouping or common
nucleus of operative facts." Id.; see In re Varat Enters., 81 F.3d at
1316. Among the factors to be considered in deciding whether the
facts of the current and prior claims "are so woven together" that they
constitute a single claim "are their relatedness in time, space, origin,
or motivation, and whether, taken together, they form a convenient
unit for trial purposes." Restatement (Second) of Judgments 24 cmt.
b.; see Davenport v. North Carolina Dep't of Transp., 3 F.3d 89, 97
n.8 (4th Cir. 1993).
The transactions giving rise to Pittston's respective claims are not
difficult to identify. The constitutional claims asserted in the present
case arise from the 1993 through 1996 assessments, while the claim
in National Coal arose from the Secretary's calculation of the initial
per beneficiary premium. Both the National Coal claim and the constitutional claims present strictly legal issues, and the Secretary's calculation of the initial per beneficiary premium, while a necessary
antecedent of the imposition of the 1993 through 1996 assessments,
is clearly distinct in time, space, and origin from the assessments Pittston is now challenging. Cf. Commissioner v. Sunnen, 333 U.S. 591,
598 (1948) (explaining that in the context of income tax liability, each
tax year gives rise to a new assessment and a separate cause of
15
833 F.2d 38, 41 (4th Cir. 1987); see Sweetheart Plastics, Inc. v.
Detroit Forming, Inc., 743 F.2d 1039, 1044 (4th Cir. 1984) (stating
that the fact that a motion for amendment was made the day of trial
is not sufficient reason for denial absent prejudice to the nonmoving
party); Davis, 615 F.2d at 613 (stating that"[d]elay alone ..., without
any specifically resulting prejudice, or any obvious design by dilatoriness to harass the opponent, should not suffice as reason for denial"
of a motion to amend). Here, Pittston's motion to amend was unopposed and the Government has not identified any way in which it was
prejudiced by Pittston's failure to amend its complaint sooner than it
did.
The district court, in its order denying the motion for leave to
amend, did not indicate that it found any bad faith on Pittston's part
and did not identify how it believed the Government might be prejudiced by the late amendment. Rather, the court stated only that it had
"already issued judgment on the Complaint, and to allow Pittston to
amend the Complaint now would create undue prejudice on the
opposing party." J.A. 732. We read that explanation to mean that the
district court considered that the lateness and delay constituted prejudice per se. Because that analysis is contrary to the law of this circuit,
see Deasy, 833 F.2d at 41; Sweetheart Plastics, 743 F.2d at 1044;
Davis, 615 F.2d at 613, we must conclude that the district court
abused its discretion in denying Pittston leave to amend its complaint
to add the takings and due process claims. See James v. Jacobson, 6
F.3d 233, 239 (4th Cir. 1993) (explaining that district court abuses its
discretion by failing "adequately to take into account judicially recognized factors constraining" the exercise of its discretion or by basing
its decision on "erroneous factual or legal premises").
V.
In sum, we hold that the district court correctly ruled that Coal Act
premiums are taxes, that the district court erred in dismissing Count
One on claim preclusion grounds, and that the district court erred in
denying Pittston's motion to amend its complaint. Accordingly, we
reverse and remand for further proceedings consistent with this opinion.
REVERSED AND REMANDED
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that the Combined Fund should have assessed" for the years 1993 and
1994. At that point, the Combined Fund had not been named a defendant in the Alabama action even though it had assessed and collected
the premiums required to be paid. The decision in the Alabama case
was appealed to the Eleventh Circuit, which affirmed. See National
Coal Ass'n v. Chater, 81 F.3d 1077 (11th Cir. 1996). Thereafter, the
plaintiffs in the Alabama action brought suit against the Combined
Fund, seeking a refund, with interest, of the excess payments. After
Pittston voluntarily withdrew from that action, its co-plaintiffs won a
judgment for a refund of the amounts sought. See National Mining
Ass'n v. Apfel, No. 96-1385 (N.D. Ala. Feb. 10, 1999).
In connection with the same premiums paid for the same years,
Pittston filed the action in this case, amplifying its claim of illegality
by asserting constitutional claims. In Count I of this action, Pittston
challenges the constitutionality of the Coal Act because it "places
government powers and federal revenues in the hands of a private
entity," the trustees of the Combined Fund. On the basis of these allegations, Pittston requests "a refund" from the United States of all
"taxes or other sums" ever paid by Pittston to the Combined Fund. In
Count II, Pittston alleges that the United States erroneously calculated
the amounts that Pittston was required to pay to the Combined Fund
for the years 1993, 1994, and 1995, requesting "a refund" from the
United States of all "taxes or other sums" paid by Pittston to the Combined Fund "in excess of the statutory formula" for the years 1993-95.
Following the judgment in favor of Pittston's former co-plaintiffs in
the second Alabama suit and prior to this appeal, Count II of this
action was settled, leaving only Count I for our consideration. On this
count, the district court dismissed the claim because it arose out of the
same transaction as the claim in the first Alabama case and therefore
was barred by res judicata. See In re Varat Enterprises, Inc., 81 F.3d
1310, 1316 (4th Cir. 1996) ("Generally, claims are part of the same
cause of action when they arise out of the same transaction or series
of transactions or the same core of operative facts" (internal citations
omitted)).
II
I turn first to our subject matter jurisdiction. Pittston invokes the
tax refund statute as the basis for this suit, styling its action as one to
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recover taxes from the United States. The United States, on the other
hand, contends that the tax refund statute, 28 U.S.C. 1346(a)(1),
does not vest district courts with jurisdiction over claims for the "restitution" of assessments that are neither paid to the United States nor
intended to support the United States. Section 1346(a)(1) provides
that the district courts shall have jurisdiction of:
Any civil action against the United States for the recovery
of any internal-revenue tax alleged to have been erroneously
or illegally assessed or collected, or any penalty claimed to
have been collected without authority or any sum alleged to
have been excessive or in any manner wrongfully collected
under the internal-revenue laws.
To support its argument that we have jurisdiction over its suit
against the United States, Pittston relies on our decision in In re
Leckie Smokeless Coal Co., 99 F.3d 573, 583 (4th Cir. 1996) (holding
that Coal Act premiums are taxes). It argues that because premiums
are taxes, it can sue the United States under 28 U.S.C. 1346(a)(1)
for a refund of taxes.
While we did hold in Leckie that Coal Act premiums are taxes, this
holding does not end the inquiry here whether we have jurisdiction
under 1346(a)(1). Our decision in Leckie established that Coal Act
premiums are taxes for purposes of the Anti-Injunction Act, 26 U.S.C.
7421, and the Declaratory Judgment Act, 28 U.S.C. 2201. Similarly, we have determined that Coal Act premiums are taxes entitled
to priority over unsecured claims under the Bankruptcy Code, 11
U.S.C. 503, 507. See Adventure Resources, Inc. v. Holland, 137
F.3d 786, 794 (4th Cir. 1998). However, we have not, thus far, determined whether Coal Act premiums are subject to recovery under
1346(a)(1) as taxes "erroneously or illegally assessed or collected."
This determination must be made, just as our prior determinations
were made, by taking into consideration the context, policies, and
objectives of the pertinent statutes -- here, the tax refund statute and
the Coal Act. See King v. St. Vincent's Hospital , 502 U.S. 215, 221
& n.10 (1991) (the meaning of statutory term depends on context);
United States v. Reorganized C F & I Fabricators of Utah, Inc., 518
U.S. 213, 220-24 (1996) (the term "tax" may have different meanings
in the Internal Revenue Code and the Bankruptcy Code).
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obligated to pay. Indeed, both actions not only challenge the obligation to pay all past premiums, but also future premiums that could be
assessed.
The doctrine of res judicata is intended to promote judicial economy and finality by requiring a plaintiff to advance in a single action
all of the legal theories and demands for relief arising out of the same
cause of action. The doctrine applies "even though the plaintiff is prepared in the second action (1) [t]o present evidence or grounds or theories of the case not presented in the first action or (2) [t]o seek
remedies or forms of relief not demanded in the first action."
Restatement (Second) of Judgments 25. A challenge to the constitutionality of a statute can and should be brought in the same action
alleging the misapplication of that statute. Cf. Chicot Cty. Drainage
Dist. v. Baxter State Bank, 308 U.S. 371, 375 (1940) (Res judicata
bars litigant from raising a constitutional challenge to a statutory
scheme governing the conduct at issue in a prior case where the prior
litigation proceeded "on the assumption by all parties and the court
itself that the statute was valid"); 46 Am. Jur. 2d Judgments 569
(1994) ("[E]ven though the constitutionality of the statute is merely
assumed in the earlier action, the judgment is nevertheless operative
to prevent a relitigation of the same cause of action"); 18 Wright, Miller & Cooper, Federal Practice and Procedure 4411, at 92 ("The
short of the matter is that theories arising from different sources of
law may be blended into a single claim that must be asserted on pain
of preclusion").
This circuit has followed the transactional approach to claim preclusion adopted by the Restatement (Second) of Judgments. See Keith
v. Aldridge, 900 F.2d 736, 740 (1990). Pursuant to this approach, we
have held that claim preclusion operates to bar"litigation by the
plaintiff in a subsequent action of claims `with respect to all or any
part of the transaction, or series of connected transactions, out of
which the [first] action arose.'" Harnett v. Billman, 800 F.2d 1308,
1314 (4th Cir. 1986) (quoting Restatement (Second) of Judgments
24).
In the earlier suit decided in Alabama, Pittston obtained a declaratory judgment in its favor and a final injunction directing the United
States to recalculate the premiums payable under the Coal Act, both
24
for past and for future premiums, and to notify the Combined Fund
of the revised calculations. Pittston's claim in this action merely seeks
further relief with respect to these same transactions. Moreover, its
contention that the premiums it paid were imposed pursuant to an
unconstitutional statute could have been advanced in the earlier suit.
Even though Pittston was the "master of its complaint" and even
though its constitutional claims were available, it chose not to raise
them at that time, and the claims are therefore now barred by res
judicata. See Brown v. Felsen, 442 U.S. 127, 131 (1979) (Res
judicata bars previously available claims "regardless of whether they
were asserted or determined in the prior proceeding"); Dionne v.
Mayor and City Council of Baltimore, 40 F.3d 677, 683 (4th Cir.
1994) (claim preclusion "forc[es] a plaintiff to raise all possible theories of recovery and to demand all desired remedies in one proceeding
at peril of losing all not raised in it").
At bottom, Pittston's various challenges to the imposition of Coal
Act premiums and its various claims for refunds arise out of the same
transactions and the same set of operative facts-- the payment of premiums to the Combined Fund for the periods from 1993 forward.
These challenges and claims could have been presented in the Alabama action. Accordingly, they are barred from being asserted now
in this action.
Therefore, both because of our lack of subject matter jurisdiction
and because of the bar imposed by res judicata principles, I would
affirm the judgment of the district court. I therefore respectfully dissent.
25