barnhart v. peabody coal and john g roberts and john roberts and coal act of 1992

The case with which this essay is concerned, Barnhart v. Peabody Coal Co., 537 US 149 (2003), was one of the last ones Roberts argued before going on the bench for the DC Circuit. What is interesting is that this is the first case I have encountered in which his client won at the District and Court of Appeals levels but then lost when he entered the picture to be counsel of record when the case came before the Supreme Court. Usually if this is the result then there probably was something more than just a purely legal issue at stake. And, in this case I think there was. I think the Supreme Court felt that if they sided with Roberts' client, Peabody Coal Co., they would be doing an injustice to the other coal companies who were already burdened with paying more health benefits to retired workers than they deserved.

The Issue

Let's begin with the observation that the issue posed by the case is the easiest possible issue to understand in construing the most complex statute one can imagine. The statute has to do with a 1992 attempt by Congress (The Coal Act of 1992) to assure the security of health benefits to coal industry retirees when the company(ies) they worked for had either gone out of business or were unable to maintain their pension contributions as required by the CBA. In such cases the statute provided that these workers/retirees would become "unassigned" and then would have to be assigned to a remaining company by October 1, 1993. The statute is much more complex than this. If you don't want to take my word for it, read it.

The "easy" issue of the case had to do with whether a requirement in the statute obliging the Commissioner of the Social Security Administration (SSA) to assign retirees to a "signatory" of a coal collective bargaining agreement by a certain date in 1993 meant that if the Commissioner was dilatory in assigning retirees, then the apparent default plan of the statute "kicked in"--that certain other pension funds would "pick up the slack." That is, the statute provided that the Commissioner "shall" assign the remaining unassigned retirees to an existing company by October 1, 1993 but it provided no specific remedy if SSA was late in making the assignments. Because respondent coal company had received hundreds of late assignments (e.g., after October 1, 1993, for whom it was then responsible to pay their lifetime health benefits, as well as a death benefit), the company argued that the assignment to them was illegitimate. The Commissioner had violated the statute pure and simple. As John Roberts says dryly in his brief, "Congress did not tell the Commissioner to assign beneficiaries 'when you get around to it.'" Thus, the issue in the case was, apparently, a pure one of statutory interpretation. How do you "read" the following language:

"The Commissioner of Social Security shall, before October 1, 1993, assign each coal industry retiree who is an eligible beneficiary to a signatory operator which (or any realted person with respect to which) remains in business" (26 USC 9706(a)).

What is the "penalty" for noncompliance?

An added ironic detail, which the Supreme Court never points out, but which Roberts does, is that the statute covered fewer and fewer people each day. Because it only applied to people who retired before the effective date of the act, it meant that the statute will be of no effect probably by 2025 because all of the beneficiaries will have died. As it is, the statute covered about 114,000 people when passed in 1992 and 54,000 near the end of 2001, when briefs were written. By 2001, the average age of beneficiaries of the act was 78.

The Decision

Roberts argued, on behalf of Peabody, that the language of the statute was crystal clear and had to be taken at face value. This meant that because the Commissioner had been late in assigning beneficiaries to Peabody, those who were assigned after October 1, 1993 would not be the responsibility of Peabody but of an industry trust fund sent up decades previously. If one calculates a medical insurance benefit at $4,000 per year for an average of 20 years for more than 300 retirees, you have about $25 million at stake for Peabody. Not small change.

Justice Souter, writing for a 6-3 majority (and Rehnquist, interestingly, was in the majority while the third dissenter was O'Connor) made it sound equally crystal clear that the "shall" language should not be taken literally. Citing the structure of the statute and especially the use of other "shall's" in the law, Souter argued that these "shall's" didn't envision invalidation of the statute if not followed to the letter (such as a $70,000,000 contribution of one of the pension funds to a combined fund by a specific date).

Justice Scalia, quite obviously, dissented. He is one of the few Justices whose eyes you can see rolling in his head as you read his prose. He seemingly couldn't understand how the majority could read the clear language of "shall" as anything other than a command to the Commissioner to comply with the statute. Letting her assign retirees up to four years after the deadline would be tantamount to ignoring the plain language of the statute.

Conclusion

Ultimately what may have been at stake is the sense that Peabody, like all the rest of the coal companies, ought to take their "fair share" of so-called "orphan retirees," else the financial pressure be placed on fewer and fewer "signatories" (i.e., signers of one of the earlier CBAs between the unions and the coal owners). So, if this was a case, the majority's sense of simple "justice" trumped the literal wording of the statute. Roberts did the best he could, no doubt, but faced this larger issue which was probably beyond his control.

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