Signature Mining Services, LLC v. Secretary of Labor, MSHA

Plain-English summary

Signature Mining Services sought fees under the Equal Access to Justice Act after settling contests involving mine-wide imminent-danger and withdrawal orders. Judge Thomas P. McCarthy held that Signature was a prevailing party as to one imminent-danger order because the Secretary's agreement to vacate it was incorporated into the case's judicial disposition. He also found the government's position on that order not substantially justified because MSHA used an overbroad withdrawal order to prevent the operator from exercising the Mine Act exception for people needed to eliminate the danger. The judge reserved whether Signature met the financial eligibility requirements, whether another company controlled the litigation, and the amount of recoverable fees. Those remaining issues were resolved later in eaj-2012-0002-alj.

Decision snapshot

• Governing authority: 5 U.S.C. § 504; 29 C.F.R. Part 2704
• Outcome: Signature established interim entitlement on one order, but financial eligibility and the amount of fees remained unresolved.
• Subsequent decision: The later final decision in eaj-2012-0002-alj denied the requested fee award.
• Key point: An operator may qualify as a prevailing party when a settlement-based agency concession is embodied in a judicial disposition, but a fee award still requires proof of eligibility and recoverable costs.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW
COMMISSION

OFFICE OF
ADMINISTRATIVE LAW JUDGES

1331 PENNSYLVANIA
AVE., N.W., SUITE 520N

WASHINGTON, DC 20004‑1710

TELEPHONE:
202-434-9958 / FAX: 202-434-9949

December 6, 2013

SIGNATURE
MINING SERVICES,

LLC,

Applicant

v.

SECRETARY
OF LABOR

MINE
SAFETY AND HEALTH     

ADMINISTRATION
(MSHA),

Respondent

EQUAL
ACCESS TO JUSTICE PROCEEDING

Docket
No. EAJ 2012‑02

Mine:
Coalburg No. 1

Mine
ID: 46‑09082

AMENDED DECISION AND ORDER

Before:            Judge
McCarthy

The
decision and order issued August 30, 2013, is hereby amended pursuant to
Commission Rule 69(c), 29 C.F.R. 2700.69(c), to read as set forth below.[1]

The
case is before me is on an Application for Award of Fees and Expenses under the
Equal Access to Justice Act (EAJA) (5 U.S.C. §
504). Signature Mining Services, LLC filed its application against the
Secretary of Labor’s Mine Safety and Health
Administration based upon a negotiated settlement that the parties reached in
the underlying contest proceedings.

I. Factual Background

On August 25, 2011, adverse roof and rib conditions developed at
the Coalburg No. 1 Mine at the 003 MMU-2 East Panel, a retreat mining section. Order
No. 8139507; Signature App. at 1-2. These conditions initially affected several
entries on the right side of the section along and inby the last open crosscut.
Order No. 8139507. After MSHA inspectors observed pillars taking weight on the
2 East Panel, MSHA issued imminent danger Order No. 8139507 pursuant to Section
107(a) of the Act. Order No. 8139507; Sec’y Answer at 3. This order covered the #6 and #8 entries along and
inby the last open crosscut. Order No. 8139507.             

Signature and the Secretary both represent that the conditions
began to spread from the mouth of the 2 East Panel to the Mains. Signature App.
at 3; Sec’y Answer at 3. In
response to this development, Signature began withdrawing miners from the
affected area, removing equipment, dangering off the affected area, and setting
Heintzman jacks along the roadway at break 15 along the Mains, which was outby
the area affected by the adverse roof conditions. Richmond Dep. 30:9-31:10;
Canterbury Dep. 11:21-12:13; Mackowiak Dep. 60:11-14, 65:2-5, 66:14-15;
75:11-19. At 1:30 a.m. on August 27, 2011, the Coalburg No. 1 foreman reported
that the pillars at the mouth of the 2 East Panel were taking weight. Richmond
Dep. 18:21-19:8. Randel Richmond, Signature’s President, was then informed by his representatives that the
ground failure had migrated into the Mains. Richmond Dep. 19:6-21:8. Before 10
a.m., Richmond spoke with Terry Price, MSHA’s Field Office Supervisor, and John Kinder, a representative of
the West Virginia Miner’s Health, Safety, and Training, to inform them about the adverse
ground conditions. Richmond Dep. 30:20-32:2. Richmond told Price that
Signature had stopped production and pulled out all its miners still working in
the area. Richmond Dep. 30:22-31:3. He also provided Price with assurances that
Signature had taken steps to monitor and correct the conditions. Richmond Dep.
31:5-10, 36:14-22.                 

Approximately fifteen minutes later, Joe Mckowiak, MSHA Assistant
District Manager, called Frank Canterbury, a mine foreman at Signature, to
further inquire about the adverse conditions. Mackowiak Dep. 57:8-12. Canterbury
informed Mackowiak that the ground failure had migrated into the Mains and that
men were underground setting jacks to prevent further migration of the adverse
ground conditions. Mackowiak Dep. 73:22-74:20, 97:3-13. Mackowiak was also told
that an abandoned mine existed 75 feet below the Coalburg No. 1, the
ventilation controls had been crushed, and the water sumps had gone dry. Order
No. 8126005; Mackowiak Dep. 81:16-82:19. The subsidence led Mackowiak to
conclude that the pillar failures and ground conditions created regional
instability. Mackowiak Dep 92:14-94:8. As a result, Mackowiak orally issued
imminent danger Order No. 8126005 pursuant to Section 107(a) of the Act over
the phone. Mackowiak Dep. 87:12-14. He also emphasized that the situation was
so dangerous that everyone ought to be withdrawn, without exception. Mackowiak
Dep. 99:16-19, 103:2-5.                                   

After issuing Order No. 8126005 orally, Mackowiak contacted Price
about dispatching inspectors to Coalburg No. 1 to reduce the Order to writing. Mackowiak
Dep. 87:21-88:11. Mackowiak then spoke with Price and faxed him instructions to
issue the imminent danger order with “[n]o exceptions,” which meant that no one was allowed to be in the mine site. Mackowiak
Dep. 102:8-15; Price Dep. 54:10-20, dated Nov. 8, 2011. When Price and James
Jackson, another MSHA employee, arrived at Coalburg No. 1, they reduced the
Order to writing. Price Dep. 56:19-57:4. At the time they arrived at the mine,
fourteen men were underground. Price Dep. 60:22-61:6. Although none of these
individuals were involved in running coal, Price and Jackson did not conduct
any further investigation as to the reason why these men had been underground. Price
Dep. 60:7-15. Price then provided further instruction that the entire mine site
was to be closed and no one was to be permitted underground without first
receiving MSHA’s approval. Price Dep. 62:14-18, 63:4-64:8; see Richmond
Dep. 36:15-20, 38:16-39:1. Price and Jackson did not travel underground to
further examine the adverse conditions. Price Dep. 64:14-65:5.

On August 29, 2011, MSHA inspectors, Signature personnel, and
Alpha Engineering traveled underground to observe the adverse conditions and
check to see if the ground failure event had stopped. Richmond Dep. 40:23-41:13.
Their inspection revealed that it was primarily the 2 East Panel and
approximately ten crosscuts inby break 15 that had been affected by the roof
and rib conditions. See Appl. For Fees and Other Expenses, at 3, dated
Jan. 6, 2012. Mackowiak heard pillars breaking and continued to express concern
that the ground failure posed a regional threat given the conditions of the
underlying mine. Mackowiak Dep. 141:22-144:17. As a result, the imminent danger
order remained in effect for the entire mine site. Order No. 8126005; see
Mackowiak Dep. 140:7-21. Signature filed a Notice of Contest to Order No.
8126005.

On August 30, 2011, MSHA issued withdrawal Order No. 7257539
pursuant to Section 103(k) of the Act. Order No. 7257539. In this Order, MSHA
alleged that “coal and floor rock outburst accident” had occurred and all
mining activities inby had been disrupted. Id. The order covered the
entire mine due to hazards presented by the crushed ventilation controls and
the instability of the mine pillars. Id. MSHA claims that the agency was
still unsure of the extent of damage at the Coalburg mine site or the need to
conduct an accident investigation. Sec’y Answer at 4. On August 31, 2011, Signature filed a Notice of
Contest to Order No. 7257539.

II. Procedural
Background

Six days before the scheduled hearing of the contest proceedings,
the parties entered into settlement negotiations. On December 2, 2011, the
Secretary of Labor, MSHA, and Signature filed a “Joint Motion to Continue” in which the parties presented the terms of settlement reached
with respect to the two Section 107(a) imminent danger orders and the Section
103(k) withdrawal order. Jt. Mot. to Continue at 3-4. With respect to the
Section 107(a) imminent danger orders, Signature agreed to withdraw its Notice
of Contest to Order No. 8139507 in exchange for MSHA’s promise to vacate
Order No. 8126005. See Jt. Mot. to Continue, at 3. While negotiations on
Order No. 7257539 were still ongoing at the time the Joint Motion was filed,
MSHA had agreed to narrow the area of the mine affected by Order No. 7257539
and to approve Signature’s ventilation plan. Jt. Mot. to Continue, Ex. 2. On December 5,
2011, the undersigned granted the parties’ Joint Motion to Continue. Order Granting Continuance.

On December 16, 2011, the undersigned granted Signature’s motion to partially
withdraw its Notice of Contest to Order No. 8139507. My Order also noted that
the Secretary had promised to vacate Order No. 8126005 and directed the matter
to be addressed in either a subsequent settlement motion or during the hearing.
On January 4, 2012, I granted the Secretary’s motion to vacate Order No. 8126005.

On January 20, 2012, Signature filed a motion to dismiss its
Notice of Contest to Order No. 7257539. By Order dated January 26, 2012, I
granted Signature’s motion.

III. Disposition and
Analysis

A. Prevailing Party Status

1. Legal Background

The
Supreme Court has rejected the “catalyst theory” as a basis for achieving “prevailing party” status, which had previously enabled a plaintiff to prevail if he
achieved any favorable change in a defendant’s conduct in the course of litigation. Buckhannon Bd. &
Care Home, Inc. v. W. Va. Dept. of Health & Human Res., 532 U.S. 598,
605 (2001). To be a prevailing party, the Court determined that a plaintiff
must be “awarded some relief
by the court,” which results in a “material alteration of the legal relationship of the parties’ necessary to permit
an award.” Id. (internal
citations omitted). In holding that consent decrees constitute such judicial
relief, the Court distinguished consent decrees from private settlements and
stated, “[p]rivate settlements
do not entail the judicial approval and oversight involved in consent decrees.
. . unless the terms of the agreement are incorporated into the order of
dismissal.” Id. at 604,
n.7 (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 381
(1994)). While Buckhannon dealt with the question of prevailing party
status under the Fair Housing Amendments Act of 1988 (FHAA) and the Americans
with Disabilities Act of 1990 (ADA), courts have consistently applied its
rationale to the EAJA. See USA Cleaning Serv. & Bldg. Maint. (“USA Cleaning”), 33 FMSHRC 2264,
2268, (Sept. 2011), (ALJ).[2]

Although the Supreme
Court held that consent decrees are sufficient to satisfy the prevailing party
requirement, courts have differed in the way they examine settlement agreements
lacking a formal consent decree designation. Notably, the Fourth Circuit developed
a functional approach for assessing such settlement agreements. See Smyth v.
Rivero, 282 F.3d 268, 281 (4th Cir. 2002). The court resisted the idea that
Buckhannon set out a formalistic rule and stated, “[w]here a settlement
agreement is embodied in a court order such that the obligation to comply with
its terms is court-ordered, the court's approval and the attendant judicial
over-sight Y may be equally
apparent.” Id. A
settlement agreement under these circumstances “may be functionally a consent decree for purposes of the
inquiry to which Buckhannon directs.” Id. The majority of Circuit Courts of Appeal have adopted
a similar approach.[3]

The
Eastern District Court of Virginia has held that a voluntary dismissal with
prejudice is sufficient to confer prevailing party status. Samsung Elecs.
Co., Ltd. v. Rambus, Inc., 440 F. Supp. 2d 495, 509, 512 (E.D. Va. 2006). Significantly,
the court held that the decision to grant voluntary dismissal under Rule
41(a)(2) of the Federal Rule of Civil Procedure “is committed to the discretion of the district court.” Id. at 508. Although
the court’s holding was limited
to voluntary dismissals with prejudice, the court indicated that other
conditions imposed on Rule 41(a)(2) dismissals can confer prevailing party status.
Id. at 511, n.15. (“In many cases, conditions short of a dismissal with prejudice may
be sufficient to confer prevailing party status.”). The court went on to suggest that the central factor in
assessing conditions imposed on voluntary dismissal is the “nature of the terms
and conditions that district courts can impose . . . .” Id.

Another
influential opinion comes from the Seventh Circuit, which also held that a
voluntary dismissal with prejudice made a movant a prevailing party. Claiborne
v. Wisdom, 414 F.3d 715 (7th Cir. 2005) (applying prevailing party to the
FHA fee shifting scene in accordance with the principles set forth in Buckhannon).
Most notably, the court determined, “[t]he critical fact is not what prompted the district court to act;
it is instead what the district court decided to do.” Id. at 719.
Therefore, consistent with Samsung and Claiborne, I find that the
level of discretion a court exercises, rather than a merits determination, is
most relevant for purposes of the prevailing party inquiry.

Courts
have also applied Buckhannon to fee-shifting provisions in the context
of administrative proceedings. Because Buckhannon refers to “judicial action,” courts have
determined that Buckhannon’s principles cannot be applied literally when differentiating
between “purely administrativeY proceedings that
give rise to a plaintiff's >prevailing party’ status” since doing so would prevent fee-shifting provisions from being
applied to administrative proceedings. A. R. Ex rel R.V. v. N.Y.C. Dep’t of Educ., 407 F.3d 65, 76 (2d
Cir. 2005). For example, the Second Circuit recognized that the Individuals
with Disabilities Education Act’s (IDEA) fee-shifting provision required the court to “give effect to the
IDEA's intent to permit awards to winning parties in administrative proceedings
even where there has been no judicial involvement.” Id. As a
result, the Second Circuit concluded that the combination of an adjudicative
official’s exercise of
administrative imprimatur, a change in the legal relationship of the parties
arising from such exercise of discretion, and subsequent judicial
enforceability conferred prevailing party status on an IDEA plaintiff. Id.
In applying these three criteria to settlements achieved in the course of administrative
proceedings, the court determined that a party is entitled to “prevailing party
status” where they achieve
the “administrative analog
of a consent decree.” Id. at 77. The Third Circuit has also adopted this
approach. P.N. v. Clementon Bd. of Educ., 442 F.3d 848, 854 (3d Cir.
2006).

For
the implementation of the EAJA in Commission proceedings, “[a]n eligible party
may receive an award when it prevails over MSHA, unless the Secretary of Labor’s position in the
proceeding was substantially justified or special circumstances make an award
unjust.” 29 C.F.R. § 2704.103(a). Applicable
adversary adjudications include,“[c]ontests of citations or orders issued under section 104 or 107
of the Mine Act (30 U.S.C. 814, 817).” 29 C.F.R. § 2704.103(a)(1).       

In
applying the standard set out in Buckhannon, the Commission’s rules require the
undersigned to “give effect” to the EAJA’s intent to permit the award of attorney’s fees to parties’ that “prevail” in the course of
Commission proceedings. See A.R., 407 F.3d at 77; P.N., 442 F.3d
at 854. The purposes underlying the administration of the Mine Act thereby
support adoption of the functional approach set out in Smyth to examine
settlement agreements reached in the course of contest proceedings. 282 F.3d at
281.

Parties
in contest proceedings may present the terms of a settlement arrangement to a
judge though a motion. In deciding whether to approve the motion, a judge may
decide to substantively review the terms of the settlement agreement. Where a
judge provides such review, exercises discretion in granting the parties’ motion, and
incorporates the reasons set forth by the parties in their motion into an
administrative order, the parties’ “obligation to comply” with the terms of settlement is made part of the administrative
order. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. at
381; Smyth, 282 F.3d at 281. In this way, the judge’s “oversight” and “approval” becomes the basis
for which the parties will carry out the terms of their settlement. See Buckhannon,
532 U.S. at 604, n.7. Additionally, the issuance of the order reveals a
change in the legal relationship between parties arising from the exercise of a
judge’s administrative
imprimatur and further permits parties to have their agreement subsequently
enforced. See A.R., 407 F.3d at 77; P.N., 442 F.3d at 854. In
determining whether a judge has afforded an EAJA plaintiff adequate
administrative relief, the “critical fact” becomes the level of discretion a judge exercises in permitting
parties to carry out the finalized terms of a settlement. See Claiborne,
414 F.3d at 719; Samsung, 440 F.Supp.2d at 511 n.15.

Therefore,
an EAJA plaintiff achieves the functional equivalent of a consent decree in
Commission proceedings where a judge substantively reviews settlement terms
presented by parties in the underlying proceeding and conditions the issuance
of a dispositive order on the parties’ decision to be bound by the terms of the settlement agreement.

2. The Parties’ Arguments

The Secretary argues that Signature is not a prevailing party
because Claiborne requires a voluntary dismissal with prejudice. Sec’y Resp. to Signature’s Reply, at 3, dated
May 31, 2012. Because there was no such judgment, the Secretary claims that the
dismissal of Order No. 8126005 and Order No. 7257539 amounted to “judicial
housekeeping.” Sec’y Resp. to Signature’s Reply, at 4. The Secretary also contends that the settlement
negotiations were distinct from any court order or judicial pronouncement. Id.

In
response, Signature argues that the dismissal of Order No. 8126005 and Order
No. 7257539 resulted in a court-ordered change in the parties’ legal relationship. Signature’s Answer in Opp’n, at 2, filed April
23, 2012. While Signature admits that the Secretary has discretion to vacate
Order No. 8126005, it argues that the dismissal order resolved all issues
relating to the August 2011 incident, deprived the Commission of its
jurisdiction to consider any related citations or orders,[4]
and precluded the Secretary from pursuing any other 107(a) Orders. Id. Signature
also claims that the undersigned had discretion to approve Signature’s motion to Withdraw
its Notice of Contest to Order No. 7257539, and such approval was necessary to
end the parties’ litigation. Id. at 3.

3. Analysis of Parties’ Settlement
   Negotiations

While the parties
only examine the dismissal orders related to Order No. 8126005 and Order No.
7257539, the undersigned examines the totality of circumstances in the
underlying proceeding consistent with the functional approach in Smyth. Accordingly,
I begin with analyzing the parties’ Joint Motion to Continue.

With respect to the
107(a) Orders, the Joint Motion stated, “Signature will withdrawal (sic) its contest of Order No.
8139507. . . MSHA will vacate Order No. 8126005 issued August 27, 2011.” Joint Mot. To
Continue at 3 (emphasis added). The use of the word “will” indicates that
Signature and the Secretary reached a final agreement and decided to be bound
by the terms set forth in the Joint Motion. This language is particularly
notable since the discretion to vacate an order is vested in the Secretary. RBK
Constr. Inc., 15 FMSHRC 2099, 2101 (Oct. 1993). By presenting a quid pro
quo styled arrangement in finalized terms, the parties apprised the
Commission as to the fundamental bargain agreed to in resolving the 107(a)
Orders.

With respect to the
103(k) Orders, the Joint Motion states, “[t]he parties anticipate that Signature will complete the
work required by the plan in approximately three weeks. The parties will report
the progress of these negotiations on December 21, 2011.” Joint Mot. To
Continue at 7 (emphasis added). Although the Joint Motion presented an attached
version of Signature’s ventilation plan and evidence that the Secretary had narrowed
the scope of the area affected by Order No. 7257539, the language that the
parties used indicates that the negotiations were still ongoing at the time the
Joint Motion was filed.

When presented with
the parties’ Motion to Continue
impending litigation, I had discretion to approve the Joint Motion. Under
Commission Rule 55, the undersigned possesses broad administrative discretion
to dispose of procedural requests or similar matters and make decisions in the
underlying proceeding. 29 C.F.R. § 2700.55. In issuing an Order Granting Continuance, I exercised
administrative discretion. The Order states, “[t]he Court hereby GRANTS the parties’ Joint Motion to
Continue for the reasons set forth in the motion” (emphasis added). The
“reasons set forth in
the motion” include the final
terms of settlement reached on the 107(a) Orders and the parties’ intention to settle
the 103(k) Order.

Looking next at the
dismissal order granting Signature’s Motion to Partially Withdraw its Notice of Contest to Order No.
8139507, my administrative approval was required for Signature to execute its
side of the bargain. Commission Rule 11 states that “[a] party may
withdraw a pleading at any stage of a proceeding with the approval of
the Judge or the Commission.” 29 C.F.R. §2700.11. In this way, I had the administrative discretion to alter
the parties’ legal posture and
substantively review the terms of Signature’s Motion to Partially Withdraw its Notice of Contest.

In deciding to grant
this Motion, I incorporated the parties’ settlement terms into a dispositive order. Signature’s Motion directly
refers to the agreement the parties reached on the 107(a) Orders. Pl. Mot. to
Partially Withdraw Notice of Contest, at 4. Signature moved for leave to
Partially Withdraw its Notice of Contest based on this agreement, noting that
the Secretary had promised and agreed to vacate Order No. 8126005 in exchange. Pl.
Mot. to Partially Withdraw Notice of Contest, at 5-6. Central to my decision to
grant Signature’s motion was my endorsement of the parties’ settlement
arrangement. The Order Granting Respondent’s Motion to Partially Withdraw its Notice of Contest states, “The court hereby GRANTS
the Contestant’s Motion to Partially Withdraw Notice of Contest in that docket for
the reasons set forth in the motion.” Order Granting Resp’t. Mot. to Partially Withdraw Notice of Contest (emphasis added). The
Order reveals that I actually examined the terms of agreement and conditioned
my approval on these terms, which in turn made the parties’ settlement part of
my dispositive order. See Smyth, 282 F.3d at 280-81.

My Order also imposed
an additional condition on the parties’ settlement arrangement. The Order states, “[t]he Motion also
notes that the Secretary has agreed to vacate Order No. 8126005. . . That
matter should be addressed in any subsequent settlement motion or
hearing in Docket No. WEVA 2011-2346R.” Order Granting Resp’t. Mot. to Partially Withdraw Notice of Contest (emphasis added). In
directing the Secretary to address his promise to vacate Order No. 8126005, the
parties were mutually obligated to comply with the terms of the negotiated
settlement. Furthermore, this Order provided Signature with a means through
which it could have its settlement arrangement judicially enforced. The
incorporation of settlement terms and the imposition of conditions requiring
the parties to address their obligation to comply with the agreement amounted
to administrative relief.

Having granted
Signature relief on the 107(a) Orders, my Order granting Signature’s Motion to Partially
Withdraw its Notice of Contest to Order No. 8139507 materially altered the
legal relationship between the parties. The undersigned set the terms of
dismissal, afforded Signature the benefit of its bargain, indicated that the
parties were obligated to comply with the terms of settlement, and provided
Signature with a basis for subsequent administrative review and judicial
enforceability. In satisfying the three criteria set out in A.R. and P.N.,
Signature achieved the administrative equivalent of a consent decree sufficient
to confer “prevailing party” status. A.R.,
407 F.3d at 76; P.N., 442 F.3d at 854.

The Secretary’s insistence that a
dismissal with prejudice is required misconstrues the standard set forth in Claiborne.
Although the court in Claiborne held that a merits determination had
been rendered, the court did not address the issue of a court imposing
conditions short of dismissal with prejudice. This issue was the precise
question left open in Samsung, where the court indicated that the proper
focus in analyzing a voluntary dismissal is “the nature of the terms and conditions that district courts
can impose.” Samsung, 440 F. Supp. 2d at 511, n. 15 (emphasis added). In
concluding that “conditions short of a dismissal with prejudice may be sufficient” under Buckhannon,
Samsung shows that the determining factor is the court’s exercise of
discretion. Id. Although I did not dismiss the case with prejudice, I
exercised sufficient judicial imprimatur when I incorporated the terms of
settlement into a dispositive administrative Order and required the Secretary
to address its obligation to comply with the terms of the negotiated
settlement. Because these terms of agreement were entered into the
administrative Order, the agreement became “embodied” into the dispositive Order. See Smyth, 282 F.3d at 280-81.

It
should also be noted that the Secretary’s discretion to vacate an order does not cast doubt on this
analysis. As the dismissal order in Docket No. WEVA 2011-2300R indicates, “the Secretary’s discretion to
vacate a citation or order is not subject to review.” Order Granting Mot.
to Withdraw Contest. Nevertheless, the exchanging of terms relating to the
underlying 107(a) orders deals with a distinct issue: the obligation
of the Secretary to vacate an order once the Secretary has already exercised
his discretion and determined to be bound by the parties’ settlement terms. Although
the Secretary is correct that the dismissal order following the Secretary’s decision to vacate
Order No. 8126005 was a procedural formality, Signature had already obtained
administrative relief in the form of a favorable quid pro quo
arrangement stamped with the undersigned’s administrative “approval and oversight.” See Buckhannon, 532 U.S. at 604 n. 7.[5]
Therefore, the Secretary’s discretion to vacate an order is distinguishable from the issue
of whether the undersigned provided Signature with administrative relief and
exercised administrative discretion in a way that brought about a material
change in the parties’ legal relationship.

Before
examining the dismissal order granting Signature’s motion to withdraw its Notice of Contest to Order No. 7257539,
it should be noted that the Order Granting Continuance only approved of the
parties’ mutual decision to
engage in settlement negotiations. While this Order permitted the parties to
continue talks and report on the progress of settlement at a later date, the
parties were not bound to participate in these negotiations, nor were they
obligated to comply with any specific set of terms. Before the Joint Motion for
Continuance was filed, the Secretary already narrowed the area covered under
Order No. 7257539. Additionally, the Joint Motion did not indicate that the
Secretary was required to modify the “Condition and Practice” section of Order No. 7257539. See Order Granting
Continuance. Whether Signature would withdraw its Notice of Contest was
dependent on the progress of the parties’ negotiation. The Order Granting Continuance merely postponed
trial so that they could further attempt to reach settlement. Such procedural
relief does not amount to a consent decree or an exercise of judicial
imprimatur sufficient to confer prevailing party status.

The
dismissal Order Granting Signature’s Motion to Withdraw its Notice of Contest to Order No. 7257539
further confirms that Signature failed to obtain administrative relief. In
granting this motion, all the undersigned “decided to do” was grant Signature leave to withdraw its Notice of Contest and
have the case dismissed. Claiborne, 414 F.3d at 719. Because the parties
had never presented the undersigned with a finalized settlement arrangement,
the dismissal order was silent on the content of the parties’ agreement and the
substance of the terms that the parties had reached. As a result, the terms
that the parties reached could not be entered into as an order of the court.

Finally,
the Secretary’s decision to modify the 103(k) Order had been secured before
Signature filed its Motion to Withdraw its Notice of Contest to Order No.
7257539. While the prospect of Signature withdrawing its Notice of Contest
likely enticed the Secretary to modify the Order, incentives and good
litigation tactics do not amount to administrative relief arising from a judge’s exercise of
imprimatur. Without such relief, the Secretary’s compliance with settlement of the 103(k) Order was completely
voluntary. Buckhannon thus requires the undersigned to reject Signature’s claim that it
prevailed on the 103(k) Order, as a voluntary change in conduct of the sort
encompassed by the “catalyst theory” cannot be a basis for achieving “prevailing party” status. Buckhannon, 532 U.S. at 605.

B. Substantial
Justification

1.
Legal Background

Under
the EAJA, a prevailing party is entitled to an award of attorney’s fees and expenses “unless the Secretary
of Labor’s position in the
proceeding was substantially justified or special circumstances make the award
unjust.” 29 C.F.R. § 2704.100. Therefore,
a court must, “examineY the Government’s litigation position and the conduct that led to litigation.” Fed. Election
Comm’n v. Rose, 806 F.2d 1081, 1090
(D.C. Cir. 1986). The government’s position is
substantially justified “if a reasonable person could think it correct, that is, if it has
a reasonable basis in law and fact.” Contractors Sand and Gravel, Inc., 20 FMSHRC 960, 967
(Sept. 1998)(quoting Pierce v. Underwood, 487 U.S. 552, 565 (1988). The
agency bears the burden of establishing that its view of the facts was
reasonable. Id. at 967 (citing Lundin v. Mecham, 980 F.2d 1450,
1459 (D.C.Cir.1992)).

An
imminent danger exists whenever “the condition or practice observed could reasonably be expected to
cause death or serious physical harm to a miner if normal mining operations
were permitted to proceed in the area before the dangerous condition is
eliminated.” Wyoming Fuel Co.,
14 FMSHRC 1282, 1290 (Aug. 1992). For an imminent danger order to be issued
under section 107(a), there must be some degree of imminence such that the
hazardous condition has a reasonable potential to cause death or serious injury
within a short period of time. Id. The Secretary bears the burden of
proving the reasonableness of the imminent danger order by a “preponderance of the
evidence.” Island Creek Coal
Co., 15 FMSHRC 339, 346 (Mar. 1993).

In
assessing the actions of an inspector, a judge “must support the findings and the decisions of the inspector unless
there is evidence that he has abused his discretion or authority.” Wyoming Fuel,14
FMSHRC at 1291 (quoting Old Ben Coal Corp. v. Interior Bd. of Mine
Operations Appeals, 523 F.2d 25, 31 (7th Cir. 1975)). An
inspector is considered to have abused his discretion “if he issues a
section 107(a) order without determining that the condition or practice
presents an impending hazard requiring the immediate withdrawal of miners.” Island Creek,
15 FMSHRC at 345. The abuse of discretion standard also “includes errors of
law.” See, e.g., Utah
Power, 13 FMSHRC 1617, 1623, n. 6 (Oct. 1991).

2. Validity
of Order No. 8126005

Signature’s contention that
there was no imminent danger is without merit. Although Signature had withdrawn
its miners from the affected area and took steps to mitigate the adverse
conditions at the time it contacted MSHA, the adverse roof and rib conditions
could reasonably be expected to place miners in immediate danger were “if normal mining
operations were permitted to proceed . . . .” See Wyoming Fuel Co., 14 FMSHRC at 1290. The ground
failure establishes that there was an imminent danger.

Signature’s contention that the
issuance of an imminent danger order required MSHA to go underground to
physically examine the adverse conditions must also be rejected. The Commission
has “resisted previous
invitations to give the Mine Act a technical interpretation at odds with its
obvious purpose.” Nacco Mining Co., 9 FMSHRC 1541, 1546 (Sept. 1987); see also Clintwood
Elkhorn Mining Co., Inc., 35 FMSHRC 365, 369 (Feb. 25, 2013). Although Signature argues that
words “upon inspection or
investigation” in Section 107(a) require MSHA to conduct a physical inspection, “common usage does not
limit the meaning of >inspection’ to an observation of presently existing circumstances nor
restrict the meaning of >investigation’ to an inquiry into past events.” Id. at 1547-48. Rather, “[b]oth words can encompass an examination of present and past
events and of existing and expired conditions and circumstances.” Id. at 1548. Therefore,
the meaning assigned to the words “investigation or inspection” depends on the particular provision within which it appears. See
Emerald
Mines Co. v. FMSHRC, 863 F.2d 51, 55 (D.C. Cir. 1988) (finding that the Mine Act “resists . . . tidy
construction” of the words “inspection” and “investigation).

With
respect to an imminent danger order issued under Section 107(a), the critical
fact is whether an inspector “finds that an imminent danger exists.” 30 U.S.C.A. § 817(a). While this
language indicates that an imminent danger order must address an existing
danger, the word “finds” is “not confined to the mere accidental discovery of things but
extends as well to detection by effort, analysis and study.” Emerald Mines Co., 863 F.2d at 55 (quoting Nacco
Mining Co., 9 FMSHRC at 1550). Therefore, so long as an inspector acquires
a level of information sufficient to enable an imminent danger finding, off
site contacts are a permissible method of “inspection or investigation.”

Having
collected information about the ground failure at Coalburg No. 1 through
ongoing phone contacts with Signature, MSHA conducted an “investigation” consistent with
Section 107(a). MSHA need not place its inspectors in the midst of imminent
dangers at the time they occur, as doing so would undermine the provision’s goal of correcting
existing adverse conditions and ensuring the safety of individuals at an
affected mine site.

To
assess the scope of Order No. 8126005, the undersigned must evaluate the
conduct of the inspectors that issued the Order and the validity of MSHA’s decision to defend
the Order in the underlying contest proceeding. While inspectors possess broad
authority to issue an imminent danger order, Section 107(a) grants an operator
a statutory right to maintain individuals in an adversely affected area for
abatement purposes. Under Section 107(a), an inspector can issue an imminent
danger order “to cause all persons, except those referred to in Section
104(c) of this title, to be withdrawn from, and to be prohibited
from entering, such area . . . .” 30 U.S.C.A. § 817(a) (emphasis added). Section 104(c) includes, “any person whose
presence in such area is necessary, in the judgment of the operator or
an authorized representative of the Secretary, to eliminate the condition
described in the order.” 30 U.S.C.A. § 814(c)(1) (emphasis added). Because the 104(c) exception takes
effect upon MSHA’s issuance of an imminent danger order, an operator may not be
deprived of its statutory rights under 104(c). Therefore, MSHA cannot withdraw
or inhibit persons an operator determines to be necessary for abatement efforts
at a mine site affected by an imminent danger.

In
his deposition, Mackowiak revealed that he intended to deprive Signature of its
statutory rights under the 104(c) exception. Although he made brief reference
to the Section 104(c) exception when he spoke to Canterbury, he mentioned the
exception in passing and did not otherwise explain the provision. Mackowiak
Dep. 99:16-19. He also emphasized his preference that everyone be withdrawn
from the mine, without exception, despite being informed that production had
been halted, all miners had been withdrawn, and Signature had only kept
individuals underground to prevent the further spread of conditions. Mackowiak
Dep. 101:9-10; 103:2-5. His deposition provides, in relevant part:

Q: So there was nothing to stop him from going in the mine, after
10:50 a.m. on August 27th, 2011?

A: The 107(a) imminent danger order as written probably led him to
believe that no one could go in the underground coal mine.

Q: Well B

A: Which was my preference, absolutely, was my preference.

Y

Q: Okay. You wrote the order to give the impression that nobody
could go in; is that what you are saying?

A: Yeah, but not purposely Y

Y

Q: When you sent Terry Price out to the mine, did you tell Terry
Price when he issued this to explain that the company had the right to go in
and abate the condition?

A: Absolutely not.

Q: And why did you make that obtuse?

A: I told Terry I didn’t want anyone going in that underground mine at all. And in doing
so I quite likely infringed upon 104(c).

Mackowiak Dep.
101:3-10, 101:15-18, 102:8-15.

Although
the Secretary contends that Mackowiak equivocated as to whether he knowingly
obscured the 104(c) exception, an inspector’s motives are irrelevant. Sec’y Answer 4. Instead, the undersigned must examine “the conduct that led to
litigation.” Fed. Election
Comm’n v. Rose, 806 F.2d at 1090
(emphasis added). Mackowiak’s deposition establishes that he took concrete steps towards
withdrawing all individuals from the Coalburg No. 1 B both in the way he
designed the written order and in the way he gave instructions to Price. In
acting to deprive Signature of its statutory rights, Mackowiak abused his
discretion.

The
way in which Price relayed Mackowiak’s instructions to Signature is also of particular relevance in
determining whether Signature was deprived of its statutory rights. In relevant
part, Price’s deposition states:

Q: Did you give any instructions or did you tell anyone at
Signature that no one was allowed underground?           

A: I think Joe already had and I probably confirmed it. I don’t know B they had already
pulled everybody out and it was understood.”

Y

Q: Okay. Does the operator need the government’s permission to
correct an imminent danger, when an imminent danger order has been issued?

A: I think if I’ve got it closed, yeah. Then I need to modify and allow him to do
what he needs to do with the consultants or whoever is going to do whatever he
is going to do.

Q: So in order to exercise his right under section 104 of the Act,
to abate the imminent danger, the operator needs the Government’s permission?

A: He needs a plan and I need to modify it to allow people in the
mine. [My notes] now says, “No one in the mine.”

Price Dep. 62:14-18, 63:21-64:8.

Price
indicates that both he and Mackowiak gave direct instructions to Signature that
it withdraw all persons from the mine site. Even after Signature had been
required to close off the entire site, the company received further
instructions that it was required to get approval from MSHA if it planned to
send anyone underground to correct the adverse conditions. Such instructions
and contacts are in direct contravention of the 104(c) statutory exception
prescribed by Congress. In prohibiting Signature from exercising its rights
under the 104(c) exception, Price carried out an illegal order under Mackowiak’s instruction. As a
result, Order No. 8126005 was overbroad and amounted to an abuse of discretion.

Price’s improper
understanding of the 104(c) exception also confirms why he and Jackson did not
conduct a further investigation at the time they arrived at the Coalburg No. 1.
At the time Richmond contacted Price, Price was aware that production had been
halted, all miners had been withdrawn, and Signature had taken steps to monitor
the situation. Richmond Dep. 30:22-31:10. When Canterbury spoke with Mackowiak,
Mackowiak was informed that men were kept underground to prevent the spread of
the pillar failure. Mackowiak Dep. 75:11-16. Despite Signature’s statutory right to
keep individuals underground to abate the adverse ground conditions, Mackowiak
indicated to Canterbury that these men should be withdrawn and directed Price
that all persons were to be withdrawn from the area, without exception. Mackowiak
Dep. 102:8-15; Price Dep. 54:7-20, 62:14-18. As a result, when Price arrived at
Coalburg No. 1 and found fourteen of Signature’s representatives still underground, he chose not to further
investigate why Signature had kept individuals underground, directed Signature
to withdraw these individuals, and further instructed Signature that it was
required to get MSHA’s approval before anyone was permitted to reenter the site. Price
Dep. 60:16-61:11, 63:21-64:8. As a matter of law, Price was obligated to
investigate whether the men remaining underground were involved in abatement
efforts and abused his discretion when he placed additional requirements on
Signature’s ability to exercise
its statutory rights.

This
conclusion finds further support from Richmond’s deposition. When Price and Jackson arrived at the Coalburg No.
1, Richmond expressed his desire to reenter the site to further investigate the
adverse conditions. Richmond Dep. 35:23-36:7. Richmond also expressed his
opposition to closing off the entire site to its representatives, explaining
that Signature had halted production efforts, withdrew its miners from the
affected area, monitored the progression of the situation, and taken steps to
correct the conditions. Richmond Dep. 36:14-22, 38:14-39:1. Despite Richmond’s objections, Price
further advised Richmond to follow MSHA’s instructions. R. Richmond Dep. 38:14-39:1. By failing to address
Richmond’s objections and
advising Richmond to follow Mackowiak’s improper instructions, Price transgressed the 104(c) exception.

On
August 29, 2011, the facts also show that Richmond engaged in discussions with
Mackowiak after returning from an underground inspection of the adverse
conditions. With respect to these discussions, Richmond stated, “Rather than us send a
plan over and them send it back a couple days later and having both agencies
that we needed to get approval from any rehab or recovery, I was asking
if we could draw up a plan and agree to have a meeting.” Richmond Dep.
45:4-8. It is no coincidence that Richmond, after receiving direct instructions
from Price to this effect, shared Price’s improper understanding of the 104(c) exception at the time the
Order was issued.[6]

The
text of Order No. 8126005 also reveals that MSHA’s officials intended to circumvent the 104(c) exception. On August
27, 2011, Signature received a modification that reads, “This order is hereby
modified only to allow the operator to travel approximately 2 breaks
underground for the purpose of charging their mantrips.” Order No. 8126005. (emphasis
added). On August 31, 2011, Signature received an identical modification when
it was permitted to travel 2 breaks underground under the supervision of a mine
foreman. Order No. 8126005. The use of the word “only” is suggestive, as it confirms that Signature was only allowed to
reenter the mine to take these trips , and could not exercise its statutory
rights under the 104(c) exception. This conclusion finds additional support in
Jackson’s deposition, as it
was Jackson who was responsible for drafting the order and drew up the
modification to allow mantrips under Price’s direction. Jackson Dep. 22:11-21, 24:4-7. Specifically, Jackson
testified that the Order precluded all persons from entering the mine at the
time he wrote and modified it. Jackson Dep. 28:11-23. These findings are
further corroborated by Mackowiak’s own admission that the written order was designed to give
Signature the impression that no person was permitted to enter the mine. and by
the fax that Price received indicating that the mine was to be closed off to
all persons, with “no exceptions.” Mackowiak Dep. 101:5-11; Price Dep. 54:16-20.

MSHA
and its representatives may not issue imminent danger orders that seek to
deprive an operator of its statutory rights under the 104(c) exception. As the
Commission has held, “[w]hile safety must be the paramount concern, the extraordinary
measure of shutting down a mine with a withdrawal order compels safeguards to
ensure that an inspector’s discretion is not abused.” Cumberland Coal Resources, LP, 28 FMSHRC 545, 556 (Aug.
2006). To ensure that MSHA inspectors do not abuse their discretion, I find
that inspectors must be evenhanded in explaining the 107(a) statutory
requirements. Although there is no affirmative duty to remind an operator of
its statutory rights under the 104(c) exception, MSHA inspectors cannot
mislead, misrepresent, or circumvent Section 107(a) statutory requirements.

Having
examined the conduct that led to the litigation, the undersigned is required to
examine “the Government’s litigation
position.” Fed. Election
Comm’n v. Rose, 806 F.2d at 1090. Despite
the fact that the breadth of Order No. 8126005 was an abuse of discretion, MSHA
set out to defend the validity of the Order in the underlying contest
proceeding. Further, MSHA used its promise to vacate this overbroad Order as a
bargaining chip in settlement negotiations with Signature. The Secretary’s decision to defend
Order No. 8126005 was without merit and cannot be substantially justified.

The
undersigned need not address the additional issue of whether Order No. 8126005
was overbroad in terms of the area affected.

V. Order

The
Secretary has requested an evidentiary hearing on the adequacy of Signature’s balance sheet and
on the issue of whether Signature is acting as a proxy for Patriot Coal Co. (“Patriot”). Although the
Secretary’s arguments appear to
be without merit as a matter of first impression, the Secretary has a right to
request further proceedings. 29 C.F.R. 306(b).

Further
proceedings shall address: 1) whether Signature’s balance sheet meets EAJA’s financial eligibility requirements; 2) whether Patriot
controlled the underlying contest proceedings; and 3) the amount of attorney’s fees to which
Signature is entitled to after prevailing on Order No. 8126005.

IT
IS ORDERED that the parties advise the undersigned within fifteen days how
they intend to proceed.[7]

/s/
Thomas P. McCarthy

Thomas
P. McCarthy

Administrative
Law Judge

Distribution:

Karen Barefield,
Esq., Office of the Solicitor, U.S. Department of Labor, 1100 Wilson Blvd., 22nd
Floor West, Arlington, VA 22209-2247

David Hardy, Esq.,
& Christopher Pence, Esq., Hardy Pence, PLLC, 500 Lee Street East, Suite
701, Charleston, WV 25329

/dsg

[1]
On November 25, 2013, the
Secretary filed a Motion for Modification of this Decision and Order issued
August 30, 2013. The Secretary seeks clarification on whether Signature was
eligible for EAJA fees and costs incurred defending 107(a) Order No. 8139507.
During a conference call with the parties on November 21, 2013, Signature informed the undersigned that it agreed
that a clarification was warranted and conceded that its application for fees
was limited to 103(k) Order No. 7267539 and 107(a) Order No. 8126005. While
the Secretary may have lacked substantial justification for 107(a) Order No. 8139507, Signature did not apply for fees related to
this order within thirty days of the Commission’s final disposition of the underlying proceeding, Docket No. WEVA
2011-2299, and thus is ineligible to be awarded fees incurred in its defense.
29 C.F.R. § 2704.206. Accordingly, the
August 30th decision is amended to clearly state that Signature may
only be eligible to be awarded fees and costs related to 107(a) Order No. 8126005.

[2]
This decision was upheld by the Seventh Circuit after the Commission declined
to review the case. Jeroski v. FMSHRC, 697 F.3d 651, 655 (7th Cir. 2012)
(“The Court's approach in Buckhannon
supports the position that eight circuits have taken with respect to the
meaning of >prevailing party,’ and we bow to this heavy weight
of authority.”).

[3]
See, e.g., Aronov v. Napolitano, 562 F.3d 84, 90 (1st Cir.
2009); Perez v. Westchester Cnty. Dep't of Corr., 587 F.3d 143, 151-52
(2d Cir. 2009); T.D. v. LaGrange Sch. Dist. No. 102, 349 F.3d 469, 478
(7th Cir. 2003); Am. Disability Ass’n,
Inc. v. Chmielarz, 289 F.3d 1315, 1317 (11th Cir. 2002);; Truesdell v.
Phila. Hous. Auth., 290 F.3d 159, 166 (3rd Cir. 2002); DiLaura v. Twp.
of Ann Arbor, 471 F.3d 666, 670 (6th Cir. 2006) (determining that the “touchstone” for the

“prevailing party”
requirement is whether there was a “material
alteration of parties’
legal relationship”
arising from “an
enforceable judgment . . . or comparable relief through a consent decree or
settlement.”
(citations omitted); Barrios v. Cal. Interscholastic Fed'n, 277 F.3d
1128, 1134, n.5 (9th Cir. 2002) (determining that a party prevailed after
obtaining a settlement agreement that is legally enforceable); but see
Christina A. v. Bloomberg, 315 F.3d 990, 993 (8th Cir. 2003) (holding
that a party can only prevail if it receives either an enforceable judgment on
the merits or a formal consent decree).

[4]
The Commission’s
discretion to retain jurisdiction and grant declaratory relief after the
Secretary has vacated an enforcement action need not be addressed in the case
at bar. Signature did not seek declaratory relief or request additional relief
following the dismissal of Order No. 8126005. See Sec’y v. N. Am. Drillers, LLC,
34 FMSHRC 352, 357 (Feb. 2012).

[5]
Signature appears to confuse this point as well in arguing that “all issues relating to the
August 2011 incident were resolved”
and “the Secretary was
precluded from pursuing any other 107(a) orders”
once the Secretary vacated Order No. 8126005. Under Buckhannon, a party
must show that it achieved “some
relief” that results
in a material change in the parties’
legal relationship. Buckhannon, 532 U.S. at 603. Claiborne then clarifies
that the “critical fact” is “what the district court decided to do.” Claiborne, 414 F.3d at 719. Achieving a favorable
outcome in the course of an underlying proceeding is distinct from achieving
administrative relief that arose from a judge’s
exercise of administrative discretion. It was only upon receiving the
administrative equivalent of a consent decree that Signature “prevailed.” Had the Secretary decided to
vacate the order as a result of private negotiations or its own internal
review, the dismissal of Order No. 8126005 would merely return the parties to
the legal position they held prior to these administrative proceedings. See
USA Cleaning, 33 FMSHRC at 2268.

[6]
It should be noted that Mackowiak and Richmond present contradictory accounts
of the meeting they had after the underground inspection. While Mackowiak
claims that Richmond only asked about recovering the affected equipment,
Richmond claims that he had asked about setting up a meeting to establish a
plan to recover equipment and rehabilitate the adverse conditions. Mackowiak
Dep. 105:3-15, 109:1-4, 109:14-110:14; Richmond Dep. 45:21-46:13. Although it
seems improbable that an experienced mine operator would not bring up the issue
of rehabilitation following an underground inspection of an imminent danger
(and the burden is on the Secretary to establish its view of the facts by a “preponderance of the
evidence”), the facts
still reveal that Mackowiak abused his discretion in the course of these
conversations. Both accounts indicate that Richmond was primarily concerned
with the length of time it would take Signature to get approval from MSHA in
submitting a plan to reenter the mine. This is particularly significant because
Price had relayed Mackowiak’s
instructions that no one could reenter the mine without MSHA’s prior approval. Because
Mackowiak was constructively aware that Signature had been provided improper
instructions regarding its right to reenter the mine for abatement purposes,
Mackowiak was required to inform Signature of its rights under the 104(c)
exception. In failing to adequately address the operator’s concerns and requests following the
underground inspection, Mackowiak abused his discretion.

[7] The issuance of this amended decision
shall not toll the time for any deadlines imposed by the original decision.
Deadlines are to be calculated from the date the original decision was issued,
August 30, 2013.