Assessing the Identity of a Claim: the Preclusive Effect of a Prior Challenge to an Administrative Agency's Statutory Interpretation on Subsequent Tax Litigation in Pittston Co. v. United States

• Publication year: 2022
• Citation: Vol. 34

34 Creighton L. Rev. 1027. ASSESSING THE IDENTITY OF A CLAIM: THE PRECLUSIVE EFFECT OF A PRIOR CHALLENGE TO AN ADMINISTRATIVE AGENCY'S STATUTORY INTERPRETATION ON SUBSEQUENT TAX LITIGATION IN PITTSTON CO. v. UNITED STATES

Creighton Law Review

Vol. 34

Jesse O. Brant - '01

INTRODUCTION

The doctrine of res judicata bars a party from the relitigation of a claim that was raised or could have been raised in a prior action.(fn1) However, this doctrine is applicable to bar a claim only when three conditions have been met.(fn2) These conditions include: (1) a prior final judgment on the merits, rendered in accordance with the rules of due process by a court of proper jurisdiction; (2) identical parties; and (3) the claims in the later action are based upon the same cause of action involved in the prior proceeding.(fn3) In order to determine whether causes of action are identical, the United States Court of Appeals for the Fourth Circuit employs the transactional approach set forth in the Restatement (Second) of Judgments.(fn4) This paradigm embodies a pragmatic approach to assessing the dimensions of a claim, referring to a number of factors to be considered.(fn5) These factors include such considerations as whether the claims would form a convenient trial unit, whether the claims are related in time, space, and origin, and the expectations of the parties.(fn6) In the context of tax litigation, the United States Supreme Court has established, in Commissioner v. Sunnen,(fn7) that the concepts of claim preclusion apply.(fn8) In Sunnen, the Supreme Court stated that each year gave rise to a new tax liability, and, thus a separate cause of action.(fn9) As such, a determination for one tax year will not have a preclusive effect on an action involving a later tax year.(fn10)

In 1992, Congress enacted the Coal Industry Retiree Health Benefit Act ("Coal Act")(fn11) in an effort to stabilize the funding of health benefit plans established under a series of collective bargaining agreements between the United Mine Workers of America and the Bituminous Coal Operators' Association.(fn12) The Coal Act merged these collective bargaining agreements, creating the United Mine Workers of America Combined Fund ("Combined Fund").(fn13) Under the Coal Act, coal mining operations that were signatories to any pre-1978 collective bargaining agreements were required to contribute to the Combined Fund according to an allocation formula based established through the Coal Act.(fn14)

Recently, in Pittston Co. v. United States,(fn15) the Pittston Coal Company ("Pittston") initiated a tax refund action in the United States District Court for the Eastern District of Virginia, seeking the return of particular health care premiums Pittston had paid pursuant to the Coal Act.(fn16) Pittston asserted two challenges to the Coal Act.(fn17) First, Pittston challenged the constitutionality of the Coal Act, seeking a refund for premiums paid pursuant to 26 U.S.C. § 9704(fn18) from 1993 through 1996.(fn19) Second, Pittston alleged that the Secretary of Health and Human Services ("Secretary") incorrectly calculated the per beneficiary premium and sought a refund of particular overpayments made pursuant to the Coal Act from 1993 to 1995.(fn20) The government moved to dismiss Pittston's claims on several grounds.(fn21) Most notably, the government contended that Pittston, which had previously sought judicial review of the Secretary's interpretation of Coal Act language pertaining to the calculation of premiums, was barred under the doctrine of res judicata from challenging the constitutionality of the Coal Act.(fn22) The district court granted the government's motion with regard to Pittston's constitutional challenge, ruling that Pittston could have raised the challenge in the previous litigation.(fn23) Pittston appealed the order of dismissal.(fn24) On appeal, the United States Court of Appeals for the Fourth Circuit reversed the orders of the district court and remanded the case for further proceedings in accordance with the opinion.(fn25) The Fourth Circuit held that Pittston's constitutional claim and the previous proceeding were sufficiently different in time, space, and origin and, as such, were not based on the same cause of action.(fn26)

This Note will first review the facts and holding of Pittston.(fn27) This Note will then examine the prior cases in which the United States Supreme Court, the Fourth Circuit, and the First Circuit, have applied res judicata principles in analyzing the identity of a claim.(fn28) In addition, this Note will examine United States Supreme Court precedent regarding the application of the claim preclusion doctrine in the context of tax litigation.(fn29) This Note will then examine the Pittston holding in relation to these cases.(fn30) In doing so, this Note will contend that the Fourth Circuit correctly ruled that Pittston's prior litigation seeking judicial review over an administrative agency's interpretation of statutory language did not bar a subsequent constitutional challenge by Pittston.(fn31)

FACTS AND HOLDING

In 1992, Congress enacted the Coal Industry Retiree Health Benefit Act ("Coal Act")(fn32) to address the issue of health benefits for coal miners.(fn33) The subject of health benefits for coal industry employees has a long, divisive history, dating back to the early twentieth century.(fn34) At that time, the coal industry provided medical services to their employees by way of a prepayment system that was funded by payroll deductions.(fn35) Company doctors provided the health care for the coal miners.(fn36) These doctors were often selected by companies for reasons other than their competency or training.(fn37) As such, the avail-able health care for coal miners was deficient in many regards.(fn38) In addition, the cost of the company health care plan, along with other company-provided services, consumed a large portion of the miners' compensation.(fn39)

In response to these problems, the United Mine Workers of America ("UMWA") sought new methods of providing health care to miners.(fn40) As a result of a series of collective bargaining agreements negotiated by the UMWA and the National Bituminous Coal Operator's Association, coal industry employees received pension and medical benefits.(fn41) In 1950, the UMWA established a welfare and retiree benefit plan for coal miners, which was expanded upon in 1974.(fn42) The 1950 plan, revised by the 1974 plan ("Plan"), created the private, multi-employer benefit programs that were eventually merged to create a combined fund.(fn43) Payroll deductions funded a portion of the cost of the benefits program, and a royalty based on the tonnage of coal mined paid for the remainder.(fn44) Following the enactment of the collective bargaining agreements between the coal workers and the coal mine operators, the benefits improved while the number of beneficiaries increased.(fn45) As many coal mining companies ceased operations or utilized non-union labor, Plan revenues declined.(fn46) These facts, coupled with a dramatic increase in health care cost and a decline in the amount of coal produced, created financial difficulties for the Plan.(fn47)

In response, the 1978 National Bituminous Coal Wage Agreement ("NBWCA") assigned health care responsibility for active and retired workers to signatory employers.(fn48) The NBWCA took measures to insure the solvency of the program.(fn49) The Plan remained valid, but only for the purpose of providing benefits to retired miners whose former employers ceased operations.(fn50)

In spite of the NBWCA, which restructured the coal miner's benefit plan, financial pressures continued to plague the Plan.(fn51) By the late 1980's, the benefit programs approached insolvency.(fn52) In 1989, mine workers began an eleven-month strike against the Pittston Coal Company, stemming from the unrest caused by the pending insolvency of the Plan.(fn53) Eventually, the Secretary of Labor stepped in and negotiated a settlement between Pittston and the mine workers.(fn54) In an effort to assess the viability of the UMWA health benefit plans, the Secretary of Labor also established the Advisory Commission on United Mine Workers of America Retiree Health Benefits ("Coal Commission").(fn55) The Coal Commission attempted to devise possible solutions in order to ensure the future solvency of the Plan.(fn56)

The Coal Commission determined that health care obligations to retired miners must be honored.(fn57) In addition, the Coal Commission concluded that current and former members of the NBCWA's should be statutorily obligated to fund the benefits, and that further consideration should be given to improving the means of funding benefits for orphaned miners.(fn58) Following a hearing on the Coal Commission's suggestions, Congress enacted the Coal Act in 1992.(fn59) The Coal Act sought to stabilize the funding of health benefit plans established under a series of collective bargaining agreements between the UMWA and coal mine operators.(fn60) In doing so, the Coal Act merged the 1950 and 1974 UMWA Benefit Plans to create the United Mine Workers of America Combined Benefit Fund ("Combined Fund").(fn61) Specifically, the Coal Act established an allocation formula that assigned a retiree to a coal operator based on their length of service tothe operator.(fn62) As originally enacted, the Coal Act provided that the Secretary of Health...