The Fifth Circuit first addressed whether an Eleventh Circuit decision involving the same issue and plaintiffs prevented it from reviewing the bankruptcy court's decision (see In re Walter Energy, Inc., 911 F.3d 1121 (11th Cir. 2018)). The Fifth Circuit concluded that an exception to issue preclusion applied and so the court could review the decision. The Fifth Circuit reasoned that:

The Fifth Circuit next addressed a jurisdictional question under the AIA that turned on whether premiums required under the Coal Act's combined plan were taxes. As addressed in a Supreme Court ruling involving the Affordable Care Act's (ACA's) individual mandate, the AIA prohibits lawsuits to restrain the assessment or collection of any tax (see Legal Update, Supreme Court Upholds the ACA's Individual Mandate: Anti-Injunction Act Does Not Apply). Following the approach taken by the Eleventh Circuit in Walter Energy, the Fifth Circuit assumed that, because the penalty for failing to pay the combined plan premiums must be treated like a tax (26 U.S.C. § 9707), the premiums are effectively taxes for AIA purposes.

Relying on an exception, however, the Fifth Circuit concluded that the AIA did not bar the company's Section 1114 proceeding (and by extension the related adversary proceeding). The court reasoned that the only way for a company to modify its Coal Act obligations is through a Section 1114 proceeding in a bankruptcy court. Accordingly, absent an alternative avenue for the company to modify its payments, the AIA did not deprive the court of jurisdiction.

On the merits, the Fifth Circuit held that Coal Act obligations are retiree benefits under Section 1114, and therefore are subject to modification under the Bankruptcy Code. In reaching this conclusion, the court first considered whether the company had maintained the plans, in whole or in part, before filing for bankruptcy (11 U.S.C. § 1114(a)). The trustees argued that the company did not "maintain" the plans because it merely provided financial support (that is, the company did not administer or otherwise handle plan operations). In support of this argument, the trustees relied on cases addressing what constitutes an "employee welfare benefit plan" under ERISA. However, the Fifth Circuit declined to rely on ERISA cases in interpreting the Bankruptcy Code, reasoning that the two statutes have different purposes. Based on the plain meaning of "maintain," the court concluded that the company's financial support maintained the plans (at least in part). The court also observed that the relevant statutory language regarding maintaining an ERISA plan versus maintaining a plan under the Section 1114 definition of retiree benefits – though similar – are not identical.

The court also rejected the trustees' argument that the company's Coal Act obligations, aside from premiums, were not retiree benefits. The trustees argued that although the company posted a bond to satisfy the Coal Act's security requirement before it filed for bankruptcy (26 U.S.C. § 9712(d)(1)(B)), the money did not reach the 1992 plan before bankruptcy because the company maintained individual employer plans until that point. In the court's view, however, the Coal Act did not require the bond payments to reach the plan before bankruptcy to meet the Section 1114 definition of retiree benefits.

Finally, the court addressed the potential conflict between the Coal Act and Section 1114 of the Bankruptcy Code. The trustees asserted that several Coal Act provisions prevented the type of negotiations required for a modification under Section 1114. The trustees argued that Coal Act obligations cannot be negotiated or modified because they are statutorily required. While the court agreed that Coal Act obligations are mandatory, it noted that such obligations have, in certain situations, been modified by settlement. The court also cited Fourth and Eleventh Circuit decisions holding that Coal Act obligations are somewhat negotiable. In the absence of a clear congressional intent to prevent Section 1114 from applying to Coal Act obligations, the Fifth Circuit held that Coal Act obligations can be modified under Section 1114.