Secretary of Labor v. Olmos Contracting 1, LLC (Commission decision, November 15, 2017)

Read the official release (fmshrc.gov)

Plain-English summary

Olmos Contracting asked the Commission to reopen seven penalty matters, arguing that inexperienced office staff mishandled assessments and that the penalties threatened the company's business. The Commission found the oldest request barred by the one-year limit and denied four others because Olmos lacked basic internal procedures, did not show an intent to contest, and waited 49 unexplained days after learning of the defaults. It dismissed the request for CENT 2017-172 M because that assessment had been timely contested and settled. For CENT 2017-171 M, MSHA had not shown valid delivery, so the assessment never became a final Commission order and reopening was unnecessary. The Commission remanded that docket for ordinary proceedings.

Decision snapshot

• Cited authority: 30 U.S.C. § 815(a); Federal Rule of Civil Procedure 60(b)-(c)
• Outcome: Reopening was denied in five dockets, dismissed in one settled docket, and CENT 2017-171 M was remanded because valid service had not been shown.
• Key point: Reopening requires a detailed, timely explanation of excusable neglect, while an assessment that was never validly served does not need to be reopened.

Full text (FMSHRC public release)

FEDERAL

MINE SAFETY AND HEALTH REVIEW COMMISSION

1331

PENNSYLVANIA AVE., N.W., SUITE 520N

WASHINGTON,

DC 20004-1710

SECRETARY

OF LABOR,

MINE

SAFETY AND HEALTH   

ADMINISTRATION

(MSHA),     

v.

OLMOS

CONTRACTING 1, LLC

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Docket

No. CENT 2017-166-M

A.C.

No. 41-04108-386782

Docket

No. CENT 2017-167-M

A.C.

No. 41-04108-403245

Docket

No. CENT 2017-168-M

A.C.

No. 41-04108-417522

Docket

No. CENT 2017-169-M

A.C.

No. 41-04108-419904

Docket

No. CENT 2017-170-M

A.C.

No. 41-04108-422215

Docket

No. CENT 2017-171-M

A.C.

No. 41-04108-424371

Docket

No. CENT 2017-172-M

A.C.

No. 41-04108-426561

BEFORE: 

Althen, Acting Chairman; Jordan, Young, and Cohen, Commissioners

ORDER

BY

THE COMMISSION:

These

matters arise under the Federal Mine Safety and Health Act of 1977, 30 U.S.C.   

§ 801 et seq. (2012) (“Mine Act”). On January 17, 2017, the Commission received

from Olmos Contracting 1, LLC (“Olmos”) a motion seeking to reopen seven

penalty assessments [1]

that had become final orders of the Commission pursuant to section 105(a) of

the Mine Act, 30 U.S.C.

§

815(a). [2]

Under

section 105(a) of the Mine Act, an operator who wishes to contest a proposed

penalty must notify the Secretary of Labor no later than 30 days after

receiving the proposed penalty assessment. If the operator fails to notify the

Secretary, the proposed penalty assessment is deemed a final order of the

Commission. 30 U.S.C. § 815(a).

We

have held, however, that in appropriate circumstances, we possess jurisdiction to reopen uncontested

assessments that have become final Commission orders under section 105(a). Jim

Walter Res., Inc., 15 FMSHRC 782, 786-89 (May 1993) (“ JWR ”). In

evaluating requests to reopen final orders, the Commission has found guidance

in Rule 60(b) of the Federal Rules of Civil Procedure, under which the

Commission may relieve a party from a final order of the Commission on the

basis of mistake, inadvertence, excusable neglect, or other reason justifying

relief. See 29 C.F.R. § 2700.1(b) (“the Commission and its Judges shall

be guided so far as practicable by the Federal Rules of Civil Procedure”); JWR ,

15 FMSHRC at 787. We have also observed that default is a harsh remedy and

that, if the defaulting party can make a showing of good cause for a failure to timely respond, the case may be

reopened and appropriate proceedings on the merits permitted. See Coal Prep.

Servs., Inc., 17 FMSHRC 1529, 1530 (Sept. 1995).

Records

of the Department of Labor’s Mine Safety and Health Administration (“MSHA”)

indicate that six proposed assessments in Docket Nos. CENT 2017-166-M, CENT

2017-167-M, CENT 2017-168-M, CENT 2017-169-M, CENT 2017-170-M, and CENT 2017-172-M

were delivered to Olmos between July 2015 and December 2016. The proposed

assessment in CENT 2017-171-M was issued on November 15, 2016, but was returned

unclaimed. With the exception of the proposed assessment in CENT 2017-172-M,

which was timely contested, the proposed assessments became final orders 30

days after they were received or had been returned unclaimed. [3]

Olmos

asserts that it had never been inspected by MSHA prior to July 2015 and that

its employees were unaware that MSHA intended to issue penalties in association

with violations that had been terminated. In addition, Olmos argues that the

proposed assessments were mailed to the company’s director—who Olmos contends

was more akin to an “office manager” or “executive secretary”—and that, with

the exception of CENT 2017-166 and 2017-167, these proposed assessments were

not brought to the attention of Olmos management until MSHA emailed the company

on November 29, 2016. Olmos also contends that the economic impact of the

penalties could adversely affect the company’s ability to stay in business.

The

Secretary opposes the motion, arguing that Olmos failed to adequately explain

why the proposed penalties were not contested. The Secretary points out that,

while Olmos implicates its director as responsible for mismanaging Docket Nos.

CENT 2017-168-M, CENT 2017-169-M, CENT 2017-170-M, and CENT 2017-171-M, the

operator provides no such explanation for its failure to timely contest the

proposed penalties in CENT 2017-166-M and CENT 2017-167-M. In addition, the

Secretary argues that Olmos’ economic hardship is not a valid ground for

reopening.

Due

to the extraordinary nature of reopening a penalty that has become final, the

operator has the burden of showing that it should be granted such relief

through a detailed explanation of its failure to timely contest the penalty and

any delays in filing for reopening. The Commission considers the entire range

of factors relevant to determining mistake, inadvertence, excusable neglect, or

other good faith reason for reopening. Further, Rule 60(c) of the Federal Rules

of Civil Procedure provides that a motion to reopen shall be made within a

reasonable time, and for reasons of mistake, inadvertence, or excusable

neglect, not more than one year after the judgment, order, or proceeding was

entered or taken. Fed. R. Civ. P. 60(c).

The

motion to reopen the assessment in Docket No. CENT 2017-166-M was filed more

than one year after the proposed penalties became a final order of the

Commission. Therefore, under Rule 60(c), Olmos’ motion is untimely with respect

to this case. J S Sand & Gravel, Inc. , 26 FMSHRC 795, 796 (Oct.

2004).

In

Docket Nos. CENT 2017-167-M, CENT 2017-168-M, CENT 2017-169-M, and CENT

2017-170-M, Olmos has failed to adequately establish a basis for reopening. See

E. Associated Coal, LLC , 30 FMSHRC 392, 394 & n. 2 (May 2008)

(operators filing a motion to reopen must “provide a sufficiently detailed

explanation for its failure to timely contest the proposed penalty assessment”

and “disclose with specificity its grounds for relief.”). The operator contends

that it directed all proposed assessments to Olmos’ director, but that the

director was so unfamiliar with the MSHA citation process, she thought that

abatement of the citations would prevent MSHA from assessing any penalties. [4]

While unfamiliarity with contesting procedures may be grounds for reopening a

final order, the Commission has generally required the operator to clearly demonstrate

that it intended to contest the citations prior to filing the motion to reopen.

See Harriman Coal Corp ., 23 FMSHRC 153, 154-55 (Feb. 2001); J.P.

Donmoyer, Inc. , 24 FMSHRC 665, 666 (July 2002). In the present case, there

is no indication that Olmos took any actions to manifest its desire to contest

the penalties. To the contrary, Olmos has not claimed to have had any further

discussions with MSHA about the citations after they were abated, and has paid $981

of the $990 penalty proposed in Docket No. CENT 2017-166-M.  

Even

if we were to excuse the director’s unfamiliarity with the basic tenets of the

Mine Act, Olmos’ explanation does not fully explain the apparent lack of

attention to a series of citations alleging serious safety and health

violations. Olmos implies in its initial motion that the company director did

notify Olmos’ principals of the penalties assessed in Docket Nos. CENT

2017-166-M and CENT 2017-167-M. Olmos did not contest either of these proposed

penalties and partially paid the first assessment, which MSHA issued in May

2015. Moreover, in its motion Olmos states that it received no citations from

MSHA during an inspection in December 2015. To the contrary, however, CENT 2017-167-M

involves three citations written to the mine on December 21-22, 2015.

With

respect to the penalties issued following a set of MSHA inspections in July

2016, Olmos management was aware that MSHA had found significant safety

concerns at its Vogel Pit mining operation. In a sworn affidavit, Larry

Struthoff, Manager of Olmos and operator of the Vogel Pit, avers that he was

made aware on July 13, 2016 that MSHA had “shut down the mining operation” because

of hazardous ground conditions. [5]

Despite Olmos’ assertions of its dire financial state, the operator failed to

abate the violations, allowing the withdrawal order to stay in place for 56 days

during the “peak summer construction period.” Olmos’ principals never attempted

to inquire if such a drastic enforcement action by MSHA would result in any

civil penalties and did not timely contest the penalties that were assessed.

It is thus clear from the record that

Olmos lacked even the most basic internal system for processing penalty

assessments. As the Commission has consistently held, explanations for failures

to timely contest a proposed penalties founded upon a lack of internal

procedures constitute inexcusable neglect and are an insufficient basis for

reopening an assessment. See, e.g., Lone Mountain Processing, Inc. , 35

FMSHRC 3342, 3346 (Nov. 2013); Oak Grove Res., LLC , 33 FMSHRC 103, 104

(Feb. 2011); Elk Run Coal Co. , 32 FMSHRC 1587, 1588 (Dec. 2010).

Beyond

the fatal lack of effective internal procedures, we find other bases which

compel us to deny Olmos’ motion to reopen the aforementioned four cases. Under

Rule 60(c), a motion to reopen, regardless of its merit, is only granted if it

is filed within a reasonable time. In the context of penalty assessments, in

considering whether an operator has unreasonably delayed in filing a motion to

reopen, we find relevant the amount of time that has passed between an

operator’s receipt of a notification from MSHA and the operator’s filing of its

motion to reopen. Highland Mining Co. , 31 FMSHRC 1313, 1316 (Nov. 2009).

Once Struthoff was made aware that he had failed to timely contest the proposed

penalties, he did not take prompt action to try to rectify the situation. According

to Struthoff’s own account, he received an email from MSHA on November 29, 2016

notifying him that the proposed assessments had become final. The present

motion to reopen was filed on January 17, 2017, 49 days later. Olmos has

provided no explanation for this delay. This alone is reason enough to deny the

motion. See id .

With

respect to Docket No. CENT 2017-171-M, the Secretary states that the proposed assessment

was returned undelivered. However, the Secretary offers no evidence that the assessment

was mailed to the operator’s address of record or if an alternate means of

delivery was attempted.

MSHA

must attempt to mail proposed penalties to the operator’s correct address in

order to constitute valid service. See, e.g., Brahma Group, Inc., 31

FMSHRC 527 (May 2009). If the proposed penalty is sent to an incorrect address,

the operator has not been notified pursuant to 30 U.S.C. § 815(a) and the

30-day contest deadline was not triggered. Id . As Olmos was not notified

of the proposed assessment, the penalties never became a final order of the

Commission. The motion to reopen, as it pertains to CENT 2017-171-M, therefore

is moot.

Although

Olmos has moved to reopen CENT 2017-172-M, the Secretary states that the

proposed assessment in that case was timely contested. Subsequent to the filing

of the motion to reopen, the Secretary filed a petition with the Commission,

and the case was docketed as CENT 2017-178-M and assigned to Administrative Law

Judge Margaret Miller. On June 20, 2017, Judge Miller approved a settlement

resolving all of the contested penalties. As this matter was timely contested

and has now been resolved, the motion to reopen this case is moot.

Accordingly,

we deny the motion to reopen Docket Nos. CENT 2017-166-M, CENT 2017-167-M, CENT

2017-168-M, CENT 2017-169-M, and CENT 2017-170-M. The motion to reopen Docket

No. CENT 2017-172-M is dismissed, since that case has been settled.

We find that the motion to reopen Docket

No. CENT 2017-171-M is moot. Because Olmos was not notified of the proposed

assessment, it never became a final order of the Commission. Therefore, this

case is remanded to the Chief Administrative Law Judge for further proceedings

pursuant to the Mine Act and the Commission’s Procedural Rules, 29 C.F.R. Part

2700.

/s/ William I. Althen

William

I. Althen, Acting Chairman

/s/

Mary Lu Jordan

Mary

Lu Jordan, Commissioner

/s/ Michael G. Young

Michael G. Young, Commissioner

/s/ Robert F. Cohen, Jr.

Robert F. Cohen, Jr., Commissioner

Distribution:

Robert

W. Wachsmuth, Esq.

Robert

W. Wachsmuth & Associates

SWBC

Tower

9311

San Pedro Ave., Suite 707

San

Antonio, TX 78216

Larry

Struthoff

Olmos

Contracting 1, LLC

440

Pinn Rd.

San

Antonio, TX 77227

Ali

Beydoun, Esq.

Office

of the Solicitor

U.S.

Department of Labor

201

12th St. South, Suite 401

Arlington,

VA 22202-5450

Chief

Administrative Law Judge Robert J. Lesnick

Federal

Mine Safety & Health Review Commission

1331

Pennsylvania Ave. N.W., Suite 520N

Washington,

DC 20004-1710

Melanie

Garris

Office

of Civil Penalty Compliance

Mine

Safety and Health Administration

U.S.

Department of Labor

201

12th St. South, Suite 500

Arlington,

VA 22202-5450

[1] For the limited

purpose of addressing these motions to reopen, we hereby consolidate docket numbers CENT 2017-166-M, CENT

2017-167-M, CENT 2017-168-M, CENT 2017-169-M, CENT 2017-170-M, CENT 2017-171-M,

and CENT 2017-172-M involving similar procedural

issues. 29 C.F.R. § 2700.12.

[2]

On May 15, 2017, Robert Wachsmuth & Associates (“RWA”) moved to withdraw

itself as counsel for Olmos. According to RWA, Olmos has ceased all

communication and has failed to pay for professional services rendered since

January 12, 2017. After review of the motion, the motion is granted, and RWA is

hereby relieved of any and all further duties and responsibilities for Olmos in

these cases.   

[3]

The proposed assessment in Docket No. CENT 2017-166-M was delivered on July 17,

2015 and became a final order of the Commission on August 17, 2015. The

assessment in Docket No. CENT 2017-167-M was delivered on February 22, 2016 and

became final on March 23, 2016. The assessment in Docket No. CENT 2017-168-M

was delivered on August 22, 2016 and became final on September 21, 2016. The

assessment in Docket No. CENT 2017-169-M was delivered on September 19, 2016

and became final on October 19, 2016. The assessment in Docket No. CENT

2017-170-M was delivered on October 17, 2016 and became final on November 16,

2016. The assessment in Docket No. CENT 2017-171 was returned unclaimed and was

deemed a final order by MSHA on December 19, 2016.

[4] Even if Olmos’s

director initially believed that no penalties would be assessed, it is unclear

how she could have maintained this belief after receiving multiple proposed

assessments which place operators on notice of the penalties and provided

instructions for contesting the penalties to the Commission.

[5]

According to MSHA’s Mine Data Retrieval System, MSHA issued two section 107(a)

imminent danger withdrawal orders on July 13, 2016.