No Gain, No Appeal. 7th Circuit Dismisses Appeal Of Bankrupt Coal Company

This dispute began 27 years ago when Robert Melvin applied for black lung benefits. After “amazingly protracted proceedings,” the Benefits Review Board upheld an award to Melvin’s widow. However, Melvin’s former employer, Old Ben Coal Company, and its parent company, were liquidated by a bankruptcy court. Although Old Ben and its parent had no assets, Mrs. Melvin’s award was to be paid by the Department of Labor out of the Black Lung Disability Trust Fund.

Old Ben petitioned the appellate court for review of the award. How does a defunct corporation that has been liquidated in bankruptcy do that? And why?

Here’s the explanation Old Ben’s attorneys gave. Horizon Natural Resources owned Old Ben at one time. Standard Oil of Indiana owned Horizon. B-P America bought Standard Oil. St. Paul Travelers Insurance Company issued a surety bond to Standard Oil. Old Ben’s lawyers said that a federal statute may allow the Department of Labor to recover from St. Paul the sums it paid to Mrs. Melvin. So St. Paul and B-P were paying Old Ben’s lawyers to dispute the award to Mrs. Melvin.

But St. Paul and B-P were not parties to the lawsuit, and never tried to intervene. The 7th Circuit Court of Appeals dismissed the petition because Old Ben was not a real party in interest – being defunct and liquidated out of bankruptcy, Old Ben had nothing to gain or lose from the petition for review. And if B-P or St. Paul had a legal interest to protect, they should have intervened in the case. They “could not protect that interest by directing [their] lawyer to represent a named party that was not a real party in interest.”

Get the whole case, Old Ben Coal Co. v. Office of Workers’ Compensation Insurance, No. 06-2189 (1/25/07), by clicking here.