This news just in, on the heels of Patriot Coal’s management shakeup this morning:

Eight retired and active members of the United Mine Workers of America (UMWA) and the union itself filed a federal class action suit late yesterday in the Southern District of West Virginia, asking the court to “enter judgment against Defendants declaring that Defendants are obligated to maintain funding of the Plaintiffs’ benefit plans.”

The suit is filed on behalf of more than 10,000 retirees and active workers whose health care and pension benefits Peabody and Arch transferred to the Patriot Coal Company, which is in Chapter 11 Bankruptcy reorganization.

The suit maintains that Peabody and Arch “planned to transfer (their) employees and benefit plan obligations to Patriot for the purpose of depriving (their) employees and retired employees of their welfare and retiree benefits.” This is illegal under the Employee Retirement and Income Securities Act (ERISA).

ERISA Section 510, 29 U.S.C. § 1140 makes it unlawful to “discharge, fine, suspend, expel, discipline or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, . . ., or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan . . . (emphasis added).”

“Peabody and Arch established separate spin-off companies, which have become today’s Patriot Coal, with the publicly stated intention of getting rid of their obligations to the retirees who gave a lifetime of service to those companies,” UMWA President Cecil E. Roberts said. “The companies bragged about getting those liabilities off their balance sheets.

“And as people with long experience in the coal industry, they knew that the cyclical nature of the industry would inevitably lead to Patriot’s inability to pay for those liabilities,” Roberts said. “It was a company set up to fail. But under the law, that does not relieve Peabody and Arch of their obligation to these retirees, their spouses and their widows.”

You can read the lawsuit here.