Patriot Coal Corporation (OTCMKTS:PCXCQ): Federal Court Dismissed the Lawsuit

Joseph R. Goodwin, a federal judge in West Virginia, dismissed the lawsuit filed by eight retired miners and the UMWA (United Mine Workers of America) against Arch Coal Inc. (NYSE:ACI) and Peabody Energy Corporation(NYSE:BTU). The lawsuit accused both the companies for violating the federal ERISA (Employee Retirement Income Security Act) by spinning off union subsidiaries to rid themselves from liabilities arising out of employee retirement benefits. On Friday, September 28, 2013 the federal judge, in a 13 page order, granted motions by both these companies to dismiss the lawsuit.

The lawsuit was filed during 2012 to force the companies for continuing benefits for around 10,000 union retirees, in the case of bankruptcy reported by Patriot Coal Corporation (OTCMKTS:PCXCQ). However it is believed that most of retired miners for whom the benefits were sought, never worked for Patriot Coal (OTCMKTS:PCXCQ).

While Arch Coal Inc. (NYSE:ACI) favored the decision stating the ruling was validation of its legal position; spokesman of Peabody Energy Corporation (NYSE:BTU), Vic Svec mentioned that we are pleased about the court’s ruling and our position was certainly that the complaint was without merit.

Reacting to the ruling, UMWA President Cecil Roberts mentioned that we will appeal and continue to fight for our members in every possible way until we secure benefits for them. He added that the members who are at risk of losing the retiree health care benefits promised by both the companies, shall certainly earned those benefits.

Separately in another judgment on Friday, September 27, Kathy A. Surratt-States, the federal judge overseeing Patriot’s bankruptcy case in St. Louis, ordered Peabody Energy Corporation (NYSE:BTU) to produce documents sought by Patriot Coal (OTCMKTS:PCXCQ)and the committee of unsecured creditors – on a rolling basis no later than October 31, 2013.

Earlier this year, Patriot Coal (OTCMKTS:PCXCQ) and its creditors received court approval to summon Peabody Energy Corporation (NYSE:BTU) for documents including internal email and financial projections required to make a claim related to the company’s 2007 spin-off of Patriot Coal (OTCMKTS:PCXCQ).

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