2012-12-26 / Front Page

Laid-off miners say firm refuses to pay promised ‘loyalty reward’

A coal company owned by one of the world’s wealthiest men is refusing to pay money owed to laid off coal miners who had participated in a “loyalty reward plan,” lawsuits filed by five underground miners charge.

In separate complaints filed in Letcher Circuit Court, the five miners accuse United Coal Company of Blountville, Tenn., and two of its subsidiaries, Sapphire Coal of Whitesburg and Wellmore Coal of Big Rock, Va., of failing to make the required “early payment” of money the plaintiffs earned in a deferred compensation account designed to help the company retain workers.

The plaintiffs are James Cornett of Whitesburg, Stanley Morgan of Colson, Mark Mullins of Deane, Mark Smith of Colson, Floyd Jason Reed of UZ, and Tommy Vanover of Seco. The five men contend that United and its subsidiaries have refused to honor an agreement that provides for early payment of the deferred compensation if miners are laid off because of a plant closing or mass layoff covered by the federal Worker Adjustment Retraining and Notification Act (WARN).

Attached to the lawsuit is a document in which a United Coal official wrote in December 2011 that early payment would be made if miners were part of a layoff or closing governed by the WARN Act, which requires companies with 100 or more employees to provide 60-day advance notice of layoffs or closings.

“Clearly the plaintiff is entitled to receive payment of his deferred compensation account pursuant to the loyalty reward plan provisions,” the lawsuit says. “The defendants have failed to provide the plaintiff with payment of the same.”

United Coal bought the old Golden Oak/Cook and Sons mining operation out of bankruptcy in 2005. The company was acquired in 2009 by Metinvest, a Ukraine-based steel company controlled by billionaire Rinat Akhmetov, whose $16 billion fortune placed him at No. 39 on Forbes’ Magazine’s March 2012 list of the world’s richest people.

In April, United announced it was closing its Sapphire operations and laying off 163 workers. United also laid off workers from its Wellmore subsidiary, including the Grapevine underground mine in Pike County where some of the plaintiffs worked.

The lawsuit says United’s loyalty reward plan called for an amount equal to 10 percent of the salary or base pay and overtime pay of eligible workers to be placed into a deferred compensation account where it would accrue for a period of six years. After six years, the workers were to receive a cash distribution equal to the accrual.

“Accordingly,” says the Metinvest/ United Coal document attached to the complaint, “if you earn $700,000 during those (six) years, your taxable cash distribution will be $70,000. Assuming a combined federal and state withholding rate of 25 percent, your net cash distribution will be $52,500.”

According to the lawsuit, the loyalty reward plan was available to mine foremen, section foremen, shift foremen, maintenance foremen, “outby” foremen, chief electricians, electricians, continuous miner operators, maintenance superintendents and pre-shift examiners.

The complaint does not specify how much the miners believe they are owed by United Coal, but says the “amount in the controversy does not exceed $75,000.”

The five plaintiffs are represented in the case by attorney Daniel F. Dotson of Whitesburg. They are seeking punitive damages in addition to the deferred payments they say they are owed.

United Coal and its two subsidiaries must answer the allegations contained in the complaint within 30 days of December 13, the date the lawsuit was filed.

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