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

MEMORANDUM OF LAW

S.D.W. Va.July 13, 2018

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 No.: 1:16-cv-12506 CONSOL ENERGY INC., et al., ) ) Defendants. ) ) HELVETIA COAL COMPANY, ISLAND CREEK COAL COMPANY, LAUREL RUN MINING COMPANY AND CONSOL AMONATE FACILITY, LLC’S MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED COMPLAINT Co-Defendants Helvetia Coal Company, Island Creek Coal Company, Laurel Run Mining Company, and CONSOL Amonate, LLC (collectively the “Coal Companies”) submit this Memorandum of Law in Support of their Motion to Dismiss Plaintiffs’ Second Amended Complaint (“SAC”) (ECF No. 78.) The Coal Companies’ corporate parent, co-Defendant CONSOL Energy Inc. (“CONSOL Energy”), previously filed its own Motion to Dismiss. (ECF No.79.) Plaintiffs, the United Mine Workers of America (“UMWA” or “Union”) and six individual retirees (“Retiree-Plaintiffs”), assert two new claims in their SAC: Count I (¶¶ 48-52) seeks confirmation of a labor arbitration decision pursuant to Section 301 of the Labor Management Relations Act of 1947 (“LMRA”), 29 U.S.C. § 185, and Count II (¶¶ 53-55) seeks equitable relief for an alleged breach of fiduciary duty under Section 502(a)(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(3). The Coal Companies raise a number of threshold, pretrial defenses pursuant to Federal Rule of Civil Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 1 of 21 PageID #: 2269 2 Procedure 12(b). This Court lacks subject matter jurisdiction pursuant to Rule 12(b)(1) and lacks personal jurisdiction pursuant to Rule 12(b)(2). Service on the nonresident Coal Companies is improper pursuant to Rule 12(b)(5), and venue in this District is improper pursuant to Rule 12(b)(3). Finally, Count II fails to state a cognizable claim for relief pursuant to Rule 12(b)(6) for reasons developed below, as well as in CONSOL Energy’s brief in support of its pending Motion to Dismiss. (See ECF No. 80, at 11-18; ECF No. 90, at 13-18.) Background On December 23, 2016, the Union and the Retiree-Plaintiffs filed a complaint against CONSOL Energy seeking a preliminary injunction in aid of labor arbitration. (ECF No. 1.) The underlying grievance (ROD No. 11-0143) was filed by Richard Fink, a Pennsylvania coal miner who had retired from Keystone Coal Company, a Pennsylvania-based subsidiary of CONSOL Energy. (ECF No. 78-1.) Plaintiffs amended their complaint in January 2017 to join the Coal Companies, four nonresident CONSOL Energy subsidiaries, as co-defendants. The amended complaint noted that joinder was merely a formality because it was CONSOL Energy’s conduct --not the Coal Company’s conduct-- that was at issue. (ECF No. 16 ¶ 4.) This superseding complaint did not allege a violation of ERISA nor did it seek to compel any Defendant to arbitrate under the LMRA. Rather, it prayed only for a LMRA-based restraining order during the pendency of the grievance-arbitration process.1 1 Specifically, Plaintiffs requested the Court to enjoin: (1) any unilateral action by Defendants to terminate and/or replace the Employer Plan; and (2) any further communication from Defendants to participants and beneficiaries in the Employer Plan informing them of any changes to the Employer Plan premised on the disputed notion that the obligation to provide the benefits set forth in the Employer Plan terminates at the expiration of the 2011 NBCWA on December 31, 2016. (ECF No. 16 at 20-21.) Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 2 of 21 PageID #: 2270 3 After briefing and a hearing, the Court issued an interlocutory order and memorandum opinion on March 17, 2017. Int’l Union, UMWA v. Consol Energy, Inc., 243 F. Supp. 3d 755 (S.D. W. Va. 2017), appeal mooted, No. 17-1378 (4th Cir. Nov. 27, 2017). The Court concluded the grievance was arbitrable, granted a preliminary injunction against CONSOL Energy (and its agents and assigns), and dismissed the nonresident Coal Companies for lack of personal jurisdiction.2 The arbitrators, the Trustees of the UMWA 1993 Benefit Plan (“Trustees”) processed ROD No. 11-0143 in Washington, D.C., issued their decision on October 31, 2017, and mailed their opinion to Mr. Fink at his Pennsylvania residence with a cover letter advising “your dispute” has been resolved. (ECF No. 78-1.) On October 31, 2017, Plaintiffs moved for leave to amend to overhaul their mooted West Virginia suit against CONSOL Energy to add a new LMRA count to confirm ROD No. 11-0143, a new ERISA count asserting a fiduciary breach, and to rejoin the Coal Companies as co- Defendants. (ECF No. 67.) Six months later, this Court granted Plaintiffs’ Rule 15(a) motion (ECF No. 77), and Plaintiffs filed a rewritten SAC on May 23, 2018. (ECF No. 78.) Governing Legal Standards Pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, plaintiffs bear the burden of establishing that standing and subject matter jurisdiction exist. In determining whether jurisdiction exists, the district court “is to regard the pleadings’ allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Richmond, Fredericksburg & Potomac R.R. Co. v. U.S., 945 F.2d 765, 768 (4th Cir. 1991). 2 CONSOL Energy appealed the Court’s March 17, 2017 grant of preliminary injunctive relief to the Fourth Circuit, which held oral argument on October 25, 2017. However, a decision in ROD No. 11-0143 issued on October 31, 2017, five days later. By Order dated November 27, 2017, the Court of Appeals dismissed CONSOL Energy’s appeal as moot. Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 3 of 21 PageID #: 2271 4 Pursuant to Rule 12(b)(2), plaintiffs bear the burden of proving the existence of personal jurisdiction by a preponderance of the evidence. In re Celotex Corp, 124 F.3d 619, 628 (4th Cir. 1997). To prevail on a motion to dismiss for improper venue, defendants must present facts sufficient to defeat plaintiffs’ assertion of venue after a court accepts plaintiffs’ well-pled factual allegations regarding venue as true. Mitrano v. Hawes, 377 F.3d 402, 406 (4th Cir. 2004). Finally, in assessing a motion to dismiss for failure to state a claim under Rule 12(b)(6), a court must accept all well-pled facts contained in the complaint as true and view the facts in the light most favorable to the plaintiffs. Ashcroft v. Iqbal, 556 U.S. 662 (2009). However, conclusory allegations, legal conclusions masquerading as facts, or bare assertions devoid of further factual enhancement will not prevent dismissal. Nemet Chevrolet, Ltd v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009). As developed below, the SAC must be dismissed against the Coal Companies for failure to state a claim, lack of jurisdiction, improper service of process and improper venue. I. THE UMWA’S LMRA CONFIRMATION COUNT MUST BE DISMISSED. The Retiree-Plaintiffs Lack Standing to Prosecute Count I. The UMWA is the only party Plaintiff with standing to prosecute an LMRA claim to confirm the ROD opinion. But the only well-pled fact alleged with respect to the Retiree- Plaintiffs is that each of them is a forum resident and “a ‘participant’ in and a ‘beneficiary’ of the Employer Plan.” (ECF No. 78, SAC ¶¶ 6-11.) Taking these allegations as true, they fall demonstrably short of conferring standing to maintain Count I. There is only one Employer Plan retiree who could possibly assert standing here. But he is a Pennsylvania resident who has never joined Plaintiffs’ West Virginia suit. Mr. Fink, not the Retiree-Plaintiffs, initiated the grievance-arbitration process. Mr. Fink, not any Retiree-Plaintiff, Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 4 of 21 PageID #: 2272 5 exhausted the administrative remedies provided for in the Employer Plan and the CBA. (ECF No. 78-1.) The Union and the Trustees acknowledge as much. (ECF No. 78, SAC ¶ 32) (“UMWA filed a ROD with the Trustees on behalf of a retired miner”); (ECF No. 78-1 at 2 n.5) (“this ROD was one filed by the Union on behalf of a pensioner”). Count I seeks confirmation of the Trustees’ favorable resolution of Mr. Fink’s dispute. The Trustees told him as much. The Executive Director of the UMWA Health and Retirement Funds wrote Mr. Fink the day the Trustees rendered their ROD opinion stating that “your dispute” has been resolved, and provided him a copy of their decision. (ECF No. 78-1). See also Peabody Coal Co. v. UMWA Dist. 12, C.A. No. 4:03-74-M, 2004 WL 1378703 *2 (W.D. Ky. May 12, 2004) (“the UMWA, as the representative . . . of . . . Plan beneficiary Hazel Steele filed a [ROD] request”); Riggle v. Marshall Cty. Coal Co., C.A. 15-169 (N.D. W. Va.) (ECF No. 12-4 ¶ 3) (“Riggle ROD”); Parsons v. Power Mtn. Coal Co., 604 F.3d 177, 181 (4th Cir. 2010) (“When Power Mountain refused to comply with the ROD decisions, the UMWA, [ROD Complainant] Parsons, and [ROD Complainant] Boothe sued in the Southern District of West Virginia . . . .”). In the SAC, however, six individuals with no involvement in the initiation or processing of the Fink ROD impermissibly seek judicial review of the ensuing opinion. But none of them allege in the SAC that they filed a health benefits dispute, or exhausted their administrative remedies with the Employer Plan, or joined the Fink ROD, or aver that the Trustees transmitted a copy of the ROD opinion to them in this Judicial District. The Retiree-Plaintiffs’ claimed status under ERISA as Employer Plan “participants” and “beneficiaries,” see 29 U.S.C. § 1002(7)-(8), does not confer standing under the LMRA to confirm (or defend) the ROD opinion in federal court. Nor will their dismissal on standing grounds from Count I prejudice the UMWA in obtaining judicial review in a proper and Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 5 of 21 PageID #: 2273 6 convenient venue. In sum, taking all well-pled facts alleged in the light most favorable to all Plaintiffs, only the UMWA has the requisite standing to maintain its LMRA confirmation action. The Retiree-Plaintiffs are properly dismissed as a matter of law from Count I on subject matter jurisdiction grounds. Plaintiffs Improperly Served the Nonresident Coal Companies with Local Summons in Western Pennsylvania under Rule 12(b)(4). The Coal Companies move to set aside service of process pursuant to Federal Rule 12(b)(5), and Federal Rule 4 which limits service of process. See Fed. R. Civ. P. 4(k)(1)(A). Rule 4 gives this Court jurisdiction within the territorial limits of West Virginia, except where the federal statute being sued upon provides otherwise. The LMRA makes no provision for nationwide service. United Elec. Workers v. 163 Pleasant Street, 960 F.2d 1080, 1086 n.5 (1st Cir. 1992). Daily Review Corp. v. Int’l Typographical Union, 9 F.R.D. 295 (E.D.N.Y. 1949), an early LMRA case, is instructive. An international union defendant successfully asserted that service upon it at its Indiana headquarters was insufficient for a federal court in New York to acquire jurisdiction over it. The New York district court agreed and concluded that it “[saw] nothing in the [LMRA] which extends . . . jurisdiction beyond the territorial limits of this State.” Id. at 296. The SAC alleges that the Coal Companies all reside outside of West Virginia. (ECF No. 78, SAC ¶¶ 13-16.) The docket confirms there has been no valid service of process upon them in West Virginia. (ECF Nos. 92-95, service by a Pennsylvania process server in Pennsylvania.) Extraterritorial service is insufficient under Section 301 of the LMRA and Rule 4 for this Court Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 6 of 21 PageID #: 2274 7 to acquire jurisdiction over the nonresident Coal Companies. The service of process is deficient and properly set aside.3 The Court Lacks Personal Jurisdiction Over the UMWA’s LMRA Confirmation Count under Rule 12(b)(2) and the Law of the Case Doctrine. In March 2017, this Court concluded as a matter of law that as of the time Plaintiffs filed suit it lacked in personam jurisdiction to render a civil judgment against the Coal Companies. Consol Energy, 243 F. Supp. 3d at 761-762. This ruling, which the Court made after considering the Coal Companies’ Rule 12(b)(2) briefing and the UMWA’s opposition briefing, is the law of case. The Coal Companies hereby incorporate their prior Rule 12(b)(2) briefing and the unrebutted facts presented in support of their February 15, 2017 motion to dismiss. (ECF No. 41 at 6-9; ECF No. 40-1 ¶¶ 5-7; ECF No. 47 at 5-8.) Plaintiffs have offered no new, well-pled factual allegation to support their assertion that this Court can exercise personal jurisdiction over the nonresident Coal Companies in Count I. Under the law of the case doctrine, this Court’s prior decision “should continue to govern the same issues in subsequent stages in the same case.” Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 816 (1988). See also TFWS, Inc. v. Franchot, 572 F.3d 186, 191 (4th Cir. 2009); United States v. Travelers Cas., No. 1:13CV240, 2015 WL 5634607 *7 (N.D. W.Va. Sept. 24, 2015). “[C]ourts should be loathe to [revisit prior decisions] in the absence of extraordinary circumstances.” Christianson, 486 U.S. at 817. No such circumstances exist here. For this reason alone, Count I must be dismissed as to each Defendant Coal Company. 3 A labor organization plaintiff cannot circumvent personal jurisdiction, service of process, and venue deficiencies under federal labor law remedying CBA breaches by pleading a new count alleging violation of another different federal law, animated by markedly different statutory purposes, that may provide for worldwide or nationwide service. Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 7 of 21 PageID #: 2275 8 Venue is Improper in this Judicial District for the UMWA’s LMRA Confirmation Count under Rule 12(b)(3). The UMWA and the Retiree-Plaintiffs bear the burden of establishing that venue is proper as to each count which they have standing to bring. Relf v. Gasch, 511 F.2d 804, 807 (D.C. Cir. 1975); Dull v. Energizer Personal Care, LLC, C.A. No. 14-195, 2015 WL 5308871 *3 (S.D. Ohio Sept. 9, 2015) (LMRA & ERISA counts). Count I is a stand-alone LMRA action, and venue must therefore be established under the LMRA.4 29 U.S.C. § 185. Count I has been brought in southern West Virginia by the Virginia- based Union seeking a judgment against five Delaware, Pennsylvania, and Virginia corporations confirming the Fink ROD. As noted, the Fink ROD is a grievance initiated by a Pennsylvania retiree that was resolved through an arbitral process managed, administered, and conducted exclusively by the Trustees at their District of Columbia headquarters. They sent it to Mr. Fink at his Pennsylvania residence located 50 miles from where all of the Defendants maintain their corporate headquarters and the Employer Plan is administered. The UMWA cannot bootstrap its way into its desired LMRA confirmation forum based on the mere allegation that it and several retirees --none of whom are alleged in the SAC to have had any involvement in the underlying ROD proceeding-- are located in southern West Virginia. The LMRA requires substantially more. The LMRA provision bearing the heading “venue, citizenship, and amount in controversy” restricts a “labor organization” seeking judicial review of a labor arbitration award to “district court[s] . . . having jurisdiction of the parties . . . .” 29 U.S.C. § 185(a) (emphasis added). Thus, LMRA venue analysis in confirmation suits properly 4 The SAC’s exclusive reliance on an ERISA venue provision to rationalize laying venue in southern West Virginia with respect to the Union’s LMRA confirmation count is misplaced. (See ECF No. 78, SAC ¶ 4) (“Venue with respect to the wholly owned subsidiaries of [CONSOL Energy] . . . lies in this judicial district pursuant to ERISA 29 U.S.C. § 1132(e)(2).”) (emphasis added). See supra n.3 Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 8 of 21 PageID #: 2276 9 focuses on each defendant’s connection with plaintiff’s preferred forum. This is in keeping with the Supreme Court’s longstanding recognition that venue is a personal privilege and that “the purpose of statutorily specified venue is to protect a defendant” against the risk that a plaintiff will select an unfair or inconvenient forum. Leroy v. Great Western United Corp., 443 U.S. 173, 183-84 (1979) (emphasis in original). The 2011 NBCWA did not designate any one court as the exclusive forum for seeking confirmation of a ROD opinion. But it did contemplate that the Trustees appointed by the UMWA and the BCOA (ECF No. 78, SAC ¶ 18) would process arbitrable RODs, conduct ROD proceedings, and render their ROD opinions from the UMWA Health and Retirement Funds’ headquarters in Washington, D.C. (ECF No. 78-1 & 78-2.) The LMRA confirmation petitioner here, the UMWA, cannot prove that its preferred forum, located hundreds of miles from where the ROD was made, where all Defendants are headquartered, where Mr. Fink resides, and where the Employer Plan is administered, has the requisite jurisdiction over each “of the [nonresident] parties.” As with confirmation suits brought under the Federal Arbitration Act (“FAA”)5, LMRA-based venue options are properly limited to safeguard LMRA defendants from improper forum selection. A recent Fourth Circuit case underscores Count I’s deficiencies in this regard. In Parsons, the UMWA joined the two West Virginia coal retirees who initiated RODs --i.e., the Parsons ROD and the Boothe ROD-- in a suit to enforce the ROD decisions. Parsons, 604 F.3d 5 See 9 U.S.C. § 9. See also Apex Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d 188, 191-92 (4th Cir. 1998); Amalgamated Clothing and Textile Workers Union v. Federation of Union Reps., 664 F. Supp. 995 (S.D. W. Va. 1987); U.S. for Kirchdorfer v. Aegis/Zublin Joint Venture, 869 F. Supp. 387 (E.D. Va. 1994) (confirming a New York arbitration over whose parties the court had personal jurisdiction). See also Peabody Coal, 2004 WL 1378703 *1 (applying an FAA framework to a UMWA “counterclaim[] seeking . . . a declaration that the Trustee’s [ROD] decision is valid and binding.”) Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 9 of 21 PageID #: 2277 10 at 177. They did not bring suit in Alabama or Pennsylvania, where the UMWA and other coal industry retirees are located. Rather, the UMWA, Parsons, and Boothe properly laid venue under the LMRA in this Court which indisputably had jurisdiction over the defendant, which was a resident coal company. In accordance with the Fourth Circuit’s directive in Apogee Coal, their LMRA ROD enforcement suit proceeded expeditiously and free from lingering appellate review concerns regarding standing, personal jurisdiction, or venue deficiencies. See Dist. 17, UMWA v. Apogee Coal Co., 13 F.3d 134, 137-138 (4th Cir. 1993) (judicial finality regarding an arbitration award “must follow swiftly” given the “singular importance of arbitration as a method of resolving labor disputes.”) In marked contrast, instead of suing for legal relief under the LMRA where all five Defendants reside and the Employer Plan is administered, or even where the ROD proceeding was conducted, the UMWA has improperly laid venue over Count I in this District.6 The Union’s confirmation action violates venue protections conferred by the LMRA, and should be dismissed. Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466-67 (1962). Count I Must be Dismissed under the First-to-File Rule. Section 301 of the LMRA confers subject matter jurisdiction over suits appealing “final and binding” labor arbitration rulings. Truck Drivers Union v. Riss & Co., 372 U.S. 517 (1963). But subject matter jurisdiction to affirm or vacate ROD No. 11-0143 did not vest in any district court until October 31, 2017 when the Trustees issued their decision. See Peabody Holding Co., LLC v. UMWA, 815 F.3d 154, 158 (4th Cir. 2016) (lack of Section 301 jurisdiction because arbitration was not complete); Union Switch & Signal Div. American Standard, Inc. v. United 6 CONSOL Energy has also asserted in its pending Motion to Dismiss that this Court lacks venue to hear the Union’s LMRA confirmation petition. (ECF No. 80 at 18-19; ECF No. 90 at 4-5.) Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 10 of 21 PageID #: 2278 11 Elec. Workers, Local 610, 900 F.2d 608 (3d Cir. 1990); National Football League Players Assoc. v. NFL, 874 F.3d 222, 225-226 (5th Cir. 2017) (union improperly filed just before arbitrator rendered his final and binding decision). On October 31, 2017, the Coal Companies sued to vacate ROD No. 11-0143. Helvetia Coal Co., et al. v. UMWA, 2:17-cv-01417-CB (W.D. Pa. Oct. 31, 2017) (ECF No. 1). Plaintiffs could have filed a new lawsuit to confirm the Trustees’ decision on October 31, 2017, but for tactical reasons they instead filed a Motion for Leave to Amend their mooted injunctive action against CONSOL Energy to add a count to confirm the ROD, and to add the Coal Companies as additional defendants. As a result of this gambit, the Union’s confirmation action was not filed until May 23, 2018. Where two parallel suits are pending in courts of competent jurisdiction, “the first suit should have priority, absent the showing of balance of convenience in favor of the second action.” Ellicott Mach. Corp. v. Modern Welding Co., 502 F.2d 178, 180 n.2 (4th Cir. 1974); VRCompliance LLC v. HomeAway, Inc., 715 F.3d 570, 574 (4th Cir. 2013) (“Suits are parallel if substantially the same parties litigate substantially the same issues in different forums.”); New Beckley Min. Corp. v. Int'l Union, United Mine Workers of Am., 946 F.2d 1072, 1073 (4th Cir. 1991). Given the subject matter jurisdiction defect barring any party from seeking judicial review prior to October 31, 2017, the Coal Companies’ Helvetia case was both properly filed and “first filed.” The UMWA did not file its LMRA count to confirm ROD No. 11-0143 until May 23, 2018. See Cortez Byrd Chips, Inc. v. Bill Harbert Const. Co., 529 U.S. 193, 198 Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 11 of 21 PageID #: 2279 12 (2000) (second-filed confirmation court should stay its hand). Count I should therefore be dismissed (or stayed).7 II. COUNT II MUST BE DISMISSED FOR PROCEDURAL AND SUBSTANTIVE DEFICIENCIES. Count II must be dismissed because it is riddled with irreparable procedural and substantive deficiencies developed below. The UMWA Lacks Legal Standing to Prosecute Count II. The UMWA lacks legal standing to prosecute a claim under Section 502(a)(3) of ERISA. Section 502 of ERISA “specifies which persons may bring actions,” and “[f]ederal jurisdiction is limited to the suits by the entities specified in the statute.” Coyne & Delany Co. v. Blue Cross & Blue Shield of Virginia, Inc., 102 F.3d 712, 714 (4th Cir. 1996). Labor unions are not listed.8 Trial courts have long recognized that “the Union lacks standing [under ERISA 502(a)] as a plaintiff … because it is neither a participant nor a beneficiary of the Plan.” United Food & Commercial Workers Local 204 v. Harris Teeter Super Markets, Inc., 716 F. Supp. 1551, 1561 (W.D.N.C. 1989). The SAC specifically pleads that each Retiree-Plaintiff is a participant and beneficiary under the Employer Plan (ECF No. 78 ¶¶ 6-11), but it avers that the UMWA is an 7 By Order dated June 26, 2018, the Pennsylvania Court transferred the Helvetia case to this Court, where it has been assigned Civil Action No.: 1:18-cv-01095. (ECF No. 35.) On July 10, 2018, Plaintiffs filed a Motion to Consolidate the Helvetia case with the instant case. (ECF No. 97.) The Coal Companies raise the first-filed doctrine in their Motion to Dismiss to ensure that this basis for contesting jurisdiction over Plaintiffs’ SAC is preserved. However, to avoid burdening the Court with repetitious pleadings, the Coal Companies will develop their first-filed argument in their Opposition to Plaintiffs’ Motion to Consolidate. 8 The applicable ERISA standard provides that that a “participant, beneficiary, or fiduciary” may bring a civil action under Section 502(a)(3). 29 U.S.C. § 1132(a)(3); see also Battle, Jeffrey C., Bloomberg BNA ERISA Litigation, § 8.1, page 8-3 (6th ed. 2018) (“Unions typically do not have standing to sue…”). Even if associational standing was available for the UMWA in the Fourth Circuit, the UMWA would fail to meet the elements because the individual plaintiffs here are retirees, none of whom allege they are members of the UMWA. Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 12 of 21 PageID #: 2280 13 “unincorporated association.” (ECF No. 78, SAC ¶ 5.) The UMWA therefore lacks legal standing under Article III of the U.S. Constitution and must be dismissed as a Count II Plaintiff, because “a federal court has no subject matter jurisdiction over a case or controversy in which the litigant lacks legal standing.” Gilbert Imported Hardwoods, Inc. v. Holland, 176 F. Supp. 2d 569, 574 (S.D. W. Va. 2001). Count II Must be Dismissed because the Retiree-Plaintiffs Failed to Exhaust Administrative Remedies. The SAC does not allege that any Retiree-Plaintiff invoked the specific dispute resolution mechanism in the Employer Plan regarding Count II, nor can any reasonable inference be drawn that doing so would have been futile.9 See Employer Plan Article III (a)(10)(b), ECF No. 8-8, p. 25 (“The Trustees of the UMWA Health and Retirement Funds will resolve any disputes…”). Under the circumstances, Plaintiffs cannot take the inconsistent legal position that a plan participant may compel arbitration of a dispute under the terms of the CBA and seek judicial enforcement of a decision in their favor (Count I), while simultaneously asserting that a plan participant may ignore the very same administrative review provision and file an action directly in this Court for a judicial declaration seeking the virtually identical remedy (Count II). Characterizing Count II as a claim for breach of fiduciary duty provides no exception to the requirement to exhaust administrative remedies. The Fourth Circuit has held that “a claim for breach of fiduciary duty is actually a claim for benefits where the resolution of the claim rests upon an interpretation and application of an ERISA-regulated plan rather than upon an 9 Significantly, the Retiree-Plaintiffs’ collective failure to exhaust contractual remedies stands in marked contrast to another similarly situated UMWA pensioner who has secured a purely legal remedy by utilizing an LMRA grievance-arbitration mechanism. The Trustees processed the Fink ROD submitted on Mr. Fink’s behalf by the UMWA, and rendered a ROD opinion in his favor upon finding a contract breach. (ECF No. 78-1, at 9) (“Respondent is not permitted to make these changes unilaterally. . . . [A]ny modification or changes . . . must be made only upon joint agreement”). Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 13 of 21 PageID #: 2281 14 interpretation and application of ERISA.” Smith v. Sydnor, 184 F.3d 356, 362 (4th Cir. 1999) (emphasis in original). Resolution of Count II does not require interpretation and application of ERISA itself. Rather, it rests solely on interpreting language in the Employer Plan regarding the Coal Companies’ authority to make benefit design changes. It is therefore nothing more than a dressed up claim to clarify future benefits under Section 502(a)(1) of ERISA. See Coyne, 102 F.3d at 714 (“To permit the suit to proceed as a breach of fiduciary duty action would encourage parties to avoid the implications of Section 502(a)(1)(B) by artful pleading...”). The Court should therefore dismiss Count II for lack of subject matter jurisdiction under Rule 12(b)(1) as to the Retiree-Plaintiffs. Count II Must Be Dismissed for Failure to State a Claim. The SAC seeks relief exclusively under Section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3). (ECF No. 78, at 16-17) (seeking a “Declaration Pursuant to ERISA Section 502(a)(3)” that “Defendant may not change the benefits provided through the Employer Plan without agreement from the UMWA.”) See generally U.S. Steel Min. Co., Inc. v. Dist. 17, UMWA, 897 F.2d 149 (4th Cir. 1990) (affirming dismissal of coal operator’s attempt to fit within subsection (a)(3)’s equitable constraints). The Fourth Circuit has outlined the elements for a claim for a breach of fiduciary duty under Section 502(a)(3) of ERISA as follows: “(1) the defendant was a fiduciary of the ERISA plan; (2) the defendant breached its fiduciary responsibilities under the plan; and (3) injunctive or other equitable relief is necessary to remedy the breach.” Estate of Spinner v. Anthem Health Plans of VA, 589 F. Supp. 2d 738, 747 (W.D. Va. 2008), aff'd sub nom., 388 F. App'x 275 (4th Cir. 2010). For a number of reasons, the allegations in Count II of the SAC fail to state a claim against the Coal Companies for a breach of fiduciary duty. Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 14 of 21 PageID #: 2282 15 1. Plaintiffs are Estopped from Asserting that the Coal Companies Issued the Plan Letters. The SAC refers to five pieces of correspondence sent to participants in the Employer Plan, ECF No. 78, ¶¶ 26, 39, 40 and 41 (collectively, “Plan Letters”), as the basis for their ERISA fiduciary breach claim. Plaintiffs, however, are judicially estopped from asserting the Coal Companies breached any fiduciary duty to the Retiree-Plaintiffs because their superseding complaint filed seventeen (17) months ago unequivocally asserted that CONSOL Energy -not the Coal Companies- was responsible for sending the letters. See ECF No. 25 ¶¶ 3-4 (“CONSOL Energy has undertaken the conduct and transmitted the correspondence at issue.”). A deliberate, clear and unambiguous statement that goes to matters of fact is a judicial admission that relieves the opposing party from having to prove the admitted fact. See Everett v. Pitt Cty. Bd. of Educ., 788 F.3d 132, 141 (4th Cir. 2015); Meyer v. Berkshire Life Ins. Co., 372 F.3d 261, 264 (4th Cir. 2004). Brown v. Sikora & Assocs., Inc., No. CIV.A.6:04 579 HFF, 2007 WL 1068241, at *4 (D.S.C. Mar. 30, 2007), aff’d, 311 F. App’x 568 (4th Cir. 2008) (party to ERISA case barred by its judicial admission) for claiming it was a fiduciary. Plaintiffs now assert in the SAC that “CONSOL Energy, Inc. and its subsidiaries” issued the Plan Letters (ECF No. 78 ¶ 39), but this statement is inconsistent with their prior unequivocal statement that CONSOL Energy transmitted the correspondence. It is therefore not well-pled under the standard of Rule 12(b)(6). The Coal Companies cannot be liable for an act Plaintiffs acknowledged they did not commit; an admission that the Court relied on in its March 17, 2017 decision enjoining CONSOL Energy from sending further communications to plan beneficiaries. Int’l Union UMWA, 243 F. Supp. 3d at 763 (“Notably, CONSOL Energy, and not its individual subsidiaries….transmitted the salient correspondence (invariably on ‘CONSOL Energy, Inc.’ letterhead.”)). Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 15 of 21 PageID #: 2283 16 Plaintiffs’ prior statement (and this Court’s finding) that CONSOL Energy transmitted the Plan Letters is a judicial admission which necessarily bars Plaintiffs from now asserting that the Coal Companies breached their fiduciary duty when they sent the Plan Letters. Lucas v. Burnley, 879 F.2d 1240, 1242 (4th Cir.1989) (party is bound by the admissions of his pleadings). 2. Count II Does Not State a Claim because Plaintiffs Cannot Demonstrate that Equitable Relief under Section 502(a)(3) is Available or Necessary. The SAC fails to assert facts that would show equitable relief is necessary to remedy the alleged breach, because adequate legal remedies are available and the SAC pleads no harm from the alleged breach for which a remedy is necessary. Count II Must be Dismissed because Adequate Legal Remedies are Available. Section 502(a)(3) of ERISA is an equitable safety net. By its terms it “empowers” ERISA “participants,” “beneficiaries” and “fiduciaries” to bring a civil enforcement action specifically limited to “appropriate equitable relief,” provided they do not otherwise have an adequate legal remedy available to redress their injury. Varity v. Howe, 516 U.S. 489, 515 (1996); U.S. Steel Min., 897 F.2d at 152 (“[Subsection] (a)(3) . . . provides only equitable relief. The limitation is not inadvertent.”) Given the maxim that equity is only available where legal remedies are inadequate, there will be many instances, as the Fourth Circuit has recognized, where it will be inappropriate to trigger ERISA’s equitable safety net. This is one of those cases. Plaintiffs have plainly adequate legal remedies. Consequently, they cannot pursue the equitable relief Congress provided through ERISA. First, Plaintiffs’ prayer for relief requests the Court to enter an order “declaring that Defendants may not change the benefits provided through the Employer Plan without agreement Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 16 of 21 PageID #: 2284 17 from the UMWA”. (ECF No. 78 ¶ 56(b).) Virtually identical legal relief is available through judicial review of the Trustees’ ROD opinion.10 See supra at 13 n.9 (LMRA relief). Second, an adequate legal remedy was also available under ERISA. Through Count II Plaintiffs now seeks a judicial safeguard against a denial of future benefits due to unilateral action. Suits at law to obtain clarification of future ERISA benefits, however, fall squarely within the ambit of a different ERISA civil enforcement subsection. See 29 U.S.C. § 1132(a)(1)(B) (conferring federal jurisdiction over suits in federal court “to clarify his rights to future benefits under the terms of the plan”). If adequate relief is available under Section 502(a)(1)(B), a plaintiff cannot bring a cause of action under Section 502(a)(3). Korotynska v. Metropolitan Life Ins. Co., 474 F.3d 101, 107 (4th Cir. 2006). Plaintiffs cannot repackage a claim for benefits as a claim for breach of fiduciary duty. Id. at 108 (“[I]f equitable relief were available here, every wrongful denial of benefits could be characterized as a breach of fiduciary duty.”) Plaintiffs’ approach would promote § 1132(a)(3) from a “safety net” to a default remedy, an outcome at odds with the plain language, structure, and purpose of ERISA § 502. In sum, Section 502(a)(3) of ERISA is a statutory backstop designed to afford relief “available in equity (such as injunction, mandamus, and restitution . . .”). Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993). The only ERISA-based relief Plaintiffs have requested is a judicial declaration that bilateralism is the only way to change the benefit design of the Employer Plan in the future, ECF No. 77 ¶ 55. The relief requested through equity in Count II bears a striking resemblance to the purely legal remedy the UMWA is simultaneously seeking through 10 ROD No. 11-0143, ECF No. 67-1, provided virtually the same legal relief. See ECF No. 78, SAC ¶ 47, noting that “The Trustees concluded in their written decision that … any modification or changes in the EBP after expiration of the 2011 NBCWA must be made only upon joint agreement of the Respondent and the UMWA…”. Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 17 of 21 PageID #: 2285 18 Count I and in the Coal Companies Helvetia case which the UMWA has answered. Moreover, since as the Trustees underscore in their ROD opinion, no change in the benefit design has been implemented for the Employer Plan, Plaintiffs have not and cannot assert any cognizable equitable ground for relief. This stands in marked contrast, for example, to Cigna v. Amara, 563 U.S. 421, 424 (2011), where actual changes had been made to the plan design, so reformation and estoppel was warranted under ERISA’s safety net to unwind the change. Count II Must be Dismissed because Plaintiffs Fail to Allege Any Harm from the Alleged Breach. An ERISA Section 502(a)(3) plaintiff alleging breach of fiduciary duty based on misrepresentation must show harm-either actual harm or detrimental reliance. Damiano v. Inst. for In Vitro Scis., 294 F. Supp. 3d 439, 444-45 (D. Md. 2018). Actual harm requires proving “that the violation injured [the plaintiff],” and detrimental reliance requires proving “that plaintiff acted or failed to act in reliance on the misrepresentation and plaintiff’s action or inaction proximately caused losses or other tangible injuries.” Id. at 444-45. The SAC marshals no facts that would support any finding of actual injury by or detrimental reliance on any putative misleading statements in the Plan Letters. The SAC alleges no action or inaction in reliance on the Plan Letters that lead to any injury or loss-much less any direct injury or loss caused by the Plan Letters. The Retiree-Plaintiffs’ failure to allege any facts concerning injury or even detrimental reliance further highlights that under the circumstances these ERISA participants or beneficiaries do not state a claim for “appropriate equitable relief” within the meaning of 29 U.S.C. § 1132(a)(3).11 11 As discussed in CONSOL Energy’s brief in support of its pending Motion to Dismiss, see ECF No. 80, at p. 11-18; ECF No. 90, at p. 13-18, the SAC also fails to show any actual breach of fiduciary duty because the Plan Letters did not contain any misleading statements, much less a material misrepresentation. Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 18 of 21 PageID #: 2286 19 Venue in this Judicial District for the Retiree-Plaintiffs’ ERISA Count is Improper. Count II is a standalone ERISA action against the Coal Companies that this Court should dismiss for improper venue. The SAC invokes ERISA’s civil enforcement venue provision. (ECF No. 78, SAC ¶ 4.) By its terms it limits the Retiree-Plaintiffs to laying venue “where the [Employer Benefit] plan is administered, where the [alleged fiduciary] breach took place, or where a defendant resides or may be found . . . .” 29 U.S.C. § 1132(e)(2). The Retiree- Plaintiffs, however, have failed to allege well-pled facts sufficient to establish that venue is proper in southern West Virginia. First, the SAC fails to allege that the Employer Plan was “administered” in West Virginia. Second, the situs of any alleged actionable breach of an ERISA fiduciary duty would necessarily have been Canonsburg, Pennsylvania. Canonsburg is where the Employer Plan, which is governed by ERISA, was managed, direct and administered. Moreover, it is also where each of the Coal Companies alleged in the SAC to be an Employer Plan “fiduciary”, are also alleged (and did in fact) maintain their “principle” corporate office. (ECF No. 78, SAC ¶¶ 13-16.) Finally, any claim that the Coal Companies “reside” or “may be found” in southern West Virginia is disposed of by the Court’s personal jurisdiction analysis, discussed above, and the Supreme Court’s recent rulings strengthening personal jurisdiction defenses for nonresident corporations. See Daimler AG v. Bauman, 571 U.S. 117 (2014). Bauman’s more exacting standard essentially subjects corporations to general jurisdiction where they are incorporated or have their principal place of business. This leads straight back to the Pittsburgh Division not the Bluefield Division. See Goldawr, 369 U.S. at 464. And, any “new” specific jurisdiction Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 19 of 21 PageID #: 2287 20 allegations in the SAC as to the Coal Companies are contrived, unsupported, and specious. They are not “well-pled” and are unavailing for purposes of laying venue over Count II. CONCLUSION For the reasons set forth above, Counts I and II in Plaintiffs’ Second Amended Complaint are properly dismissed against the Coal Companies. July 13, 2018 Respectfully submitted, /s/ John Woodrum John Woodrum Admitted Pro Hac Vice OGLETREE DEAKINS NASH SMOAK & STEWART Suite 1000 1909 K Street, N.W. Washington, D.C. 20006 Telephone: (202) 887-0855 john.woodrum@ogletree.com Jan L. Fox, Esq. (WVSB #1259) Steptoe & Johnson PLLC P.O. Box 1588 Charleston, WV 25326-1588 Telephone: (304) 353-8000 Jan.Fox@Steptoe-Johnson.com Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 20 of 21 PageID #: 2288 CERTIFICATE OF SERVICE I hereby certify that on this 13th day of July, 2018, I caused a copy of the foregoing Memorandum of Law in Support of Motion to Dismiss Plaintiffs’ Second Amended Complaint to be served via the Court’s electronic filing system on Plaintiffs’ counsel of record. Charles F. Donnelly, General Counsel W.V. Bar No. 1039 International Union, United Mine Workers of America 1300 Kanawha Boulevard East Charleston, WV 25301 Telephone: (304) 346-0341 cdonnelly@umwa.org Arthur Traynor Visiting Attorney Pro Hac Vice International Union, United Mine Workers of America 18354 Quantico Gateway Drive, Ste. 200 Triangle, VA 22172 Telephone: (703) 291-2400 atraynor@umwa.org /s/ John R. Woodrum___________ John R. Woodrum 34273192.3 Case 1:16-cv-12506 Document 99 Filed 07/13/18 Page 21 of 21 PageID #: 2289