George V. Acosta, et al. v. Cyprus Amax Minerals Company

Plaintiffs, a group of former mine workers, appeal the district court's dismissal of their claims for severance pay from defendant Cyprus Amax Minerals Company. We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.

I.

In November 1986, Amax Potash Corporation (Amax Potash), a wholly-owned subsidiary of Amax, Inc. (Amax), began operating a potash mine near the city of Carlsbad, in Eddy County, New Mexico. Because federal lands covered portions of the mine, Amax Potash was required to enter into mineral leases with the Bureau of Land Management (BLM). Approximately five years later, in February 1992, Amax sold all of the stock of Amax Potash to Horizon Gold Corporation (Horizon Gold), a publicly-held corporation with no affiliation to Amax or any of its subsidiaries. As a result of the purchase, Amax Potash became a wholly-owned subsidiary of Horizon Gold. Horizon Gold changed the name of Amax Potash to Horizon Potash, Inc. (Horizon Potash), and also sought permission from the BLM to transfer or assign the federal mineral leases from Amax Potash to Horizon Potash. In June 1993, Horizon Potash permanently closed the potash mine and laid off the mine employees due to financial difficulties. See Kirby v. Cyprus Amax Minerals Co., 203 F.3d 835, 2000 WL 51799 at *1 (10th Cir. 2000) (unpublished opinion) (noting that Horizon Gold and Horizon Potash "are now bankrupt"). At the time of the closure, the BLM had not approved the request for assignment of the federal mineral leases.

In July 1993, the BLM issued a notice to Amax asserting that, because the assignment of the mineral leases from Amax Potash to Horizon Potash had not been approved, and because Amax Potash was (or at least had been) a wholly-owned subsidiary of Amax, the BLM considered Amax to be responsible for its continuing lease obligations to the United States, including site maintenance and payment of royalties. In particular, the BLM was concerned that Horizon Potash was in violation of several applicable regulatory requirements, including the duty to perform "a minimum level of mine maintenance in order to prevent waste of mineral and non-mineral resources," the duty to "pay royalties" to the BLM, and the duty to submit production maps to the BLM at the end of each royalty reporting period. App. at 399.

Amax (which became defendant Cyprus Amax Minerals Company in November 1993 as a result of a merger(1)) administratively appealed the BLM's decision. Cyprus Amax and the BLM ultimately settled the dispute in December 1996 but there was no conclusive determination by the BLM of whether Cyprus Amax was liable under the mineral leases. The settlement agreement specifically provided that, "[b]y entering into th[e] . . . agreement, Cyprus Amax does not admit that it is or was liable for the Horizon Potash Mine site or that it is or was an owner, operator or lessee of the federal or state leases or the facilities on privately owned property at the site." Id. at 442. As part of the settlement, the BLM also agreed to officially rescind all orders previously issued, including those asserting that Cyprus Amax was responsible under the mineral leases. Effective July 1, 1998, the BLM officially released Cyprus Amax from "any and all liabilities under the related potash leases." Id. at 452.

In June 1997, two former mine employees (Robert Kirby and Michael Mashaw) filed suit in federal district court against defendant Cyprus Amax claiming that it had violated the Worker Adjustment and Retraining Notification (WARN) Act, 29 U.S.C. §§ 2101-2109, by failing to give timely notice of the mine closure. The complaint sought, on behalf of the named plaintiffs and other former employees of the mine, backpay damages, lost benefits, and attorney fees. The district court certified a class of plaintiffs consisting of workers employed at the mine at the time of closure. Thereafter, however, the district court granted summary judgment in favor of Cyprus Amax. On appeal, this court affirmed the district court's decision, concluding: "Quite simply, the WARN Act applies only to employers. Cyprus Amax cannot be considered an employer under the Act, and therefore, cannot be liable to the employees." Kirby, 2000 WL 51799 at *1.

In June 1999, while the Kirby case was still pending, a group of fifty-one individuals, all of whom were members of the plaintiff class in Kirby, filed suit against Cyprus Amax in the District Court of Eddy County, New Mexico. The complaint, self-described as one for breach of contract, invoked 29 U.S.C. § 1132(a)(1)(B), which allows a beneficiary of an ERISA-governed benefit plan to sue for "benefits due to him under the terms of the plan," and 30 U.S.C. § 187, a provision of the Federal Mineral Leasing Act (FMLA) which imposes certain duties on lessees of federal mineral deposits. According to the complaint, each plaintiff had been a salaried employee at the mine at the time of its closure. The complaint further alleged that, due to Amax Inc.'s continuing responsibility under the FMLA and the federal mineral leases(2) at the time of the mine's closure, it was responsible for severance pay to each of the plaintiffs pursuant to § 2.2 of its Corporate Policy Statement on Employee Separation (which was issued on April 30, 1987).(3) Cyprus Amax removed the case to federal court. Cyprus Amax filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief could be granted. The district court granted Cyprus Amax's motion and dismissed the case.

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Court's opinion.

The judgment of the district court is AFFIRMED.

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Reported by Kent Morlan