A long-running legal feud between Union Pacific Railroad Company and the Illinois Mine Subsidence Insurance Fund hit a wall this month, as the US Court of Appeals for the Seventh Circuit dismissed Union Pacific’s latest attempt to shut down future lawsuits from the state-backed reinsurer.
In a decision handed down on June 2, 2025, the court ruled that it lacked jurisdiction to hear Union Pacific’s appeal, essentially telling the railroad giant to wait its turn in district court.
At the center of the dispute is an unusual insurance setup unique to Illinois, where mining has left deep scars beneath the ground. Since 1978, insurers in the state have been required to offer mine subsidence coverage - a protection against the kind of sinking or shifting that can occur when old underground coal mines collapse. To backstop those policies, the Illinois Mine Subsidence Insurance Fund was created to reinsure primary insurers and to pursue recovery if a third party, like a company responsible for old mining operations, is potentially liable.
That’s where Union Pacific comes in. The Fund has for years argued that Union Pacific, through corporate mergers, took on responsibility for damage caused by the long-defunct Superior Coal Company, which ran mines in Macoupin County, Illinois between 1904 and 1953. Superior dissolved in 1957. Union Pacific, which merged with Chicago and North Western Railway Company in 1995, has consistently pushed back, saying it isn’t on the hook for mine damage decades after the fact.
Since the 1990s, the two sides have gone back and forth in court. Union Pacific settled approximately 21 mine subsidence claims between 1996 and 2008, amounting to less than $1 million. The litigation escalated in 2009 when the Fund and the Gillespie School District sued Union Pacific following subsidence damage to a school. That case was initially dismissed, partially reinstated on appeal, and ultimately ended in a settlement after the appellate court held that only liabilities existing at the time of Superior’s dissolution in 1957 had been assumed. The court also left unresolved a key factual question - whether Superior Coal had been a “mere instrumentality” of Union Pacific’s predecessor.
In 2017, the Fund filed another lawsuit in federal court seeking reimbursement for mine subsidence claims paid to two homeowners in Macoupin County. Union Pacific agreed to toll the statute of limitations on 25 additional claims during that case. The district court ultimately rejected the Fund’s alter ego and de facto merger theories, ruling that the Fund had failed to justify piercing the corporate veil. The Fund initially appealed but voluntarily dismissed the appeal before it could be heard. Union Pacific then refused to toll any additional claims.
In 2020, the Fund filed a new action in state court—referred to as the Hill Complaint—seeking just over $45,000 and again asserting theories of assumed liability, alter ego, and for the first time, liability as a “related entity.” Union Pacific removed the case to federal court, but it was remanded due to the amount in controversy falling below the $75,000 threshold.
While that case moved forward in state court, Union Pacific launched its own federal case. It asked for a declaration that the Fund was barred by issue and claim preclusion from relitigating liability theories already decided in the Gillespie case and the 2019 federal ruling. It also sought an injunction to block the Fund from pursuing any future claims based on those same legal arguments.
The Fund responded by arguing that each reimbursement it made gave it new subrogation rights and that it could not be barred from asserting a new claimant’s rights in court. The district court largely agreed. It allowed Union Pacific’s case to move forward only with respect to subsidence claims the Fund had acquired before the prior court decisions. It dismissed the request for an injunction covering future claims tied to later-acquired subrogation rights.
Union Pacific appealed that partial dismissal, claiming it was effectively a denial of injunctive relief. But the Seventh Circuit said it wasn’t in a position to take the case. Because part of Union Pacific’s claim remained active in district court, the appeals court found the dismissal was not a final ruling and therefore not eligible for immediate appeal under the narrow rules that govern such cases.
The court emphasized that Union Pacific could still pursue its arguments about preclusion for earlier claims in the lower court and that any outcome there could affect a future appeal. Without a definitive refusal of relief, the appellate judges concluded they had no jurisdiction.
No insurance policy clauses or contract language were cited in the ruling. The focus remained on procedural questions—specifically whether the Fund could be blocked from bringing lawsuits tied to new subrogated rights after previous litigation outcomes.
For insurers and reinsurers, the decision underscores the complex legal territory surrounding long-tail liability, subrogation, and corporate succession in legacy risk scenarios. While the appeal may be over for now, the broader litigation continues in district court.
