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CONNORS v. ISLAND CREEK COAL CO.

December 28, 1990

JOSEPH P. CONNORS, SR., ET AL., Plaintiff,
v.
ISLAND CREEK COAL COMPANY, ET AL., Defendant; JOSEPH P. CONNORS, SR., ET AL., Plaintiff, v. ARCH OF ILLINOIS, INC., Defendant; JOSEPH P. CONNORS, SR. ET AL., Plaintiff, v. EASTERN COAL COMPANY, ET AL., Defendant; JOSEPH P. CONNORS, SR., ET AL., Plaintiff, v. TANOMA MINING COMPANY, INC., Defendant


George H. Revercomb, United States District Judge.


The opinion of the court was delivered by: REVERCOMB

GEORGE H. REVERCOMB, UNITED STATES DISTRICT JUDGE

 The plaintiffs, Joseph P. Connors, Sr., et al., ("Trustees"), brought these actions against the defendants, Arch of Illinois, Inc. ("Arch"), the Island Creek Coal Company ("Island Creek"), Eastern Coal Corporation, Clinchfield Coal Company, Buffalo Mining Corporation, Elkay Mining Corporation, Ranger Fuel Corporation and Sea "B" Mining Corporation (the "Pittston Companies"), Associated Electric Cooperative, Inc. ("Associated"), and Tanoma Mining Company ("Tanoma"). Each of these defendants has entered into or adopted the National Bituminous Coal Wage Agreement.

 In 1946, the International Union, United Mine Workers of America ("UMWA") and J.A. Drug, Coal Mines Administrator for the Federal Government, entered into a labor agreement, known as the "Krug-Lewis Agreement," which created the UMWA Welfare and Retirement Fund. This Fund was supported by contributions from signatory employers based upon cents "per ton on each ton of coal produced for use or for sale." This "tonnage contribution" provision has remained virtually unchanged from 1946 through the terms of the 1984 Agreement. Under this provision, signatory coal producers are required to pay a royalty to the Funds, which is calculated by multiplying a prescribed amount of cents per ton by the total number of tons of coal. This provision in the 1981 and 1984 National Bituminous Coal Wage Agreement ("Agreement"), Article XX, states:

 
(d) Contributions by Employers
 
(1) During the life of this Agreement, for the periods of time indicated below, each signatory Employer engaged in the production of coal shall contribute to the Trusts referred to in this Article the amounts specified below based on cents per ton on each ton of two thousand (2,000) pounds of bituminous coal produced by such Employer for use or for sale . . . .

 All bituminous coal contains "inherent moisture," which is moisture present in the coal when in the ground and when removed from the ground by mine workers. After the coal is mined, however, it can acquire additional "excess moisture" from exposure to the elements or during washing and preparation.

 On October 24, 1985, the Trustees issued a Special Notice to all signatories of the Agreement, which announced that contributions based on excess moisture deductions were "contrary to the terms of the Coal Wage Agreement and inconsistent with the Funds' policy of not permitting deductions for added moisture or other impurities which may be found in the coal product."

 In this case, the Trustees contend that the tonnage contribution provision, Article XX, required the defendants, signatory employers, to make contributions to the Funds based upon the actual weight of the coal produced by the employer for use or for sale, without reduction for "excess moisture." The Trustees allege that in the past, each of the defendants in this litigation calculated its tonnage contributions consistent with the Trustees' interpretation of the Agreement and paid on the actual weight of coal produced, without deducting for excess moisture. The Trustees further allege, that with a limited exception for certain employers in Alabama, it had always been the industry-wide practice nationally to calculate tonnage contributions without reduction for excess moisture. The Trustees brought these actions to enforce their claim that extraneous moisture should be included in Article XX(d) contribution calculations.

 The defendants argue that, under the terms of Article XX(d) of the Agreement, their monthly tonnage-based contributions to the Funds should be based on the weight of the coal produced, and not on the weight attributable to extraneous moisture.

 Procedural History

 Two weeks after the Trustees filed this suit, A.J. Taft Coal Company ("Taft") brought suit in the Northern District of Alabama on behalf of a class of all Alabama coal producers who had been permitted to take deductions for excess moisture in calculating contributions due to the Funds, challenging the Trustees' interpretation of the National Agreement as applied to Alabama companies. A.J. Taft Coal Co. v. Connors, C.A. No. CV86-H-245-S (N.D. Ala. filed February 13, 1986). The Trustees filed a counterclaim requesting that Taft be ordered to calculate tonnage contributions without deduction of excess moisture.

 On April 22, 1986, pursuant to a stipulation, this Court ordered the Trustees' claims against Drummond Company, Inc. ("Drummond") and Alabama By-Products Corporation ("ABC"), both Alabama coal producers severed from Connors v. Island Creek, C.A. No. 86-0299, transferred to the Northern District of Alabama so that the proceedings respecting those two companies could be consolidated with Taft. The litigation in the present case was stayed on December 15, 1986 pending the decision of the Eleventh Circuit in the Taft case.

 On April 5, 1989, the District Court in Taft issued its Memorandum of Decision, holding that the Alabama producers could calculate tonnage contributions to the Funds by reducing the actual weight of the coal produced by an amount representing "excess moisture." The Court based its decision on three grounds. First, the Court held that "the terms of the [National Bituminous Coal Wage Agreement] do not include 'extraneous moisture' within the definition of the word 'coal.'" Second, the Court stated that "the trustees have essentially waived their right to construe the contract to include extraneous moisture because they have long accepted the producers' practice." Third, the ...


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