By Nick Brown
Oct 24 (Reuters) - Peabody Energy Corp and Arch Coal Inc are
being sued by mine workers who contend that the companies have
an obligation to pay pension and health care benefits that were
transferred to Patriot Coal in a 2007 spinoff.
Eight mine workers and their union, the United Mine Workers
of America, are seeking class action status in a lawsuit filed
on Wednesday in federal court in West Virginia.
The roughly 10,000 union members whose benefits were
transferred in the spinoff are worried that Patriot, in Chapter
11 bankruptcy, will try to take advantage of laws allowing
bankrupt companies to cut retiree health care and pensions. Some
of the workers whose benefits were transferred retired before
the spinoff and never actually worked for Patriot.
In court papers related to its bankruptcy filing, Patriot
said its current retiree obligations are untenable.
The union is determined to salvage benefits by going after
Peabody and Arch, which it accuses of dumping costly obligations
In an interview last week, Arthur Traynor, a lawyer for the
union, said the goal "is not to get money out of Patriot."
"We're going to go back and talk to the people who are
responsible, who made these gentlemen the promise of health
care, and that's Peabody and Arch.
"(But) Peabody and Arch, apparently, don't want to pay
that," he said.
A spokesman for Peabody said on Wednesday that Patriot was a
"completely viable" company when it was spun off and that its
downfall resulted from other forces.
"Patriot's decisions to make significant changes in its
capital structure (and) decreased demand for U.S. coal due to
sharp declines in natural gas prices" contributed to Patriot's
decline, spokesman Vic Svec said.
Last week, Svec said that a Peabody subsidiary still pays
about $600 million in Patriot retiree health care obligations
that it retained at the time of the spinoff.
A spokeswoman for Arch declined to comment on Wednesday.
The lawsuit was filed in West Virginia, home to most of
Patriot's operations. The union has said it wants Patriot's
bankruptcy to play out in West Virginia where its members would
have more of a voice.
Patriot filed for Chapter 11 bankruptcy protection in New
York despite not having operations there. The union has said
that constitutes unfair forum-shopping and has asked that the
case be moved to West Virginia. Its request is still pending in
bankruptcy court in Manhattan.
The bankruptcy is In re Patriot Coal Corp, U.S. Bankruptcy
Court, Southern District of New York, No. 12-12900.
The lawsuit is Howe et al v. Peabody Holding Co LLC et al,
U.S. District Court, Southern District of West Virginia, case
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