Magruder Limestone Co., Inc. v. Secretary of Labor

Plain-English summary

Magruder Limestone sought attorney fees after an underlying decision reduced a fall-protection citation from unwarrantable failure and high negligence to moderate negligence, cut its penalty from $52,500 to $16,509, and vacated a lockout order. Judge Thomas P. McCarthy denied the Equal Access to Justice Act application. He found the Secretary's positions substantially justified because the supervisor's conduct supported a reasonable unwarrantable-failure theory and the lockout standard was subject to conflicting judicial interpretations. He also found special circumstances made fees unjust for the vacated order because Magruder had stipulated to the S&S violation and its own work did not uncover the circuit precedent that led the judge to vacate it.

Decision snapshot

• Underlying standards: 30 C.F.R. §§ 56.15005 and 56.12016
• Outcome: Magruder's application for attorney fees and expenses was denied.
• Key point: Prevailing on major issues does not justify EAJA fees when the government's position had a reasonable factual and legal basis, and equitable circumstances can independently make an award unjust.

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

MAGRUDER LIMESTONE CO., INC.,
Applicant

v.

SECRETARY OF LABOR

MINE SAFETY AND HEALTH     

ADMINISTRATION (MSHA),

Respondent

EQUAL ACCESS TO JUSTICE PROCEEDING

Docket No. EAJ 2013-01

Mine: Portable Plant #1

Mine ID: 23-00077

DECISION AND
ORDER

Appearances:               R. Lance Witcher, Esq., Ogletree, Deakins, Nash, Smoak,
& Stewart, St. Louis, Missouri, for Applicant

Courtney
Przybylski, Esq., U.S. Department of Labor, Office of the Solicitor, Denver,
Colorado, for Respondent

Before: Judge
McCarthy

I.      
Statement of the Case

Litigation is a crapshoot. The parties
relinquish control, and when the dust settles, reasonable minds can differ
about the legal import of the facts established, and the cogency of the legal
arguments advanced. Thorough investigation, preparation of witnesses, and legal
research is often an effective antidote, but not here.  Both sides dug in
during settlement efforts and were caught off guard by independent analysis and
research by the judge, or his clerk for that matter.

This case is before me upon an
Application for Award of Fees and Expenses filed by Magruder Limestone against
the Secretary of Labor’s Mine Safety and Health Administration under the Equal
Access to Justice Act (EAJA). 5 U.S.C. § 504 (2014).  The final decision in the
underlying proceeding approved partial settlement of several citations, and
after hearing, ordered that Citation No. 6575266 be modified from a section
104(d)(1) unwarrantable failure with high negligence to a section 104(a)
citation with moderate negligence, that the specially assessed penalty of $52,500
be reduced to $16,509, and that section 104(d)(1) unwarrantable failure Order
No. 6575267 be vacated based on circuit court precedent.  See Magruder
Limestone Co., Inc., 35 FMSHRC 1385 (May 2013)(ALJ).  

Applicant argues that it prevailed
in significant and discrete portions of the underlying consolidated civil
penalty proceeding.  It did. Applicant further argues that the Secretary’s
position was not substantially justified. I disagree.  For the reasons set
forth below, despite reclassification of the 104(d)(1) Citation with lower
negligence and a substantially reduced penalty, and vacatur of the 104(d)(1)
Order, I find that an EAJA award is not appropriate here because the
Secretary’s position was substantially justified with regard to Citation No. 6575266
and Order No. 6575267, and special circumstances make an award of fees unjust
with regard to the vacatur of Order No. 6575267.  

II.        The
Procedural Distraction – Alleged Improper Service

On June 20, 2013, Magruder mailed
its Application to the Commission, with certificate of service indicating same
date email transmission to the Secretary’s trial counsel. On June 20, 2013,
Applicant also emailed the undersigned and the Secretary’s trial counsel and
advised of the EAJA filing. The Commission docketed the matter on June 27,
2013, but under Commission Rules 301 and 7, service was effective with the
Commission on the date of mailing, i.e., June 20, 2013, and service was not
effective on the Secretary until email receipt. 29 U.S.C. §
2700.7(c)(2). 

The Secretary filed his Objection
to the Application on August 13, 2013. He argued that the Application was
improperly served on June 20, 2013 via email because the Secretary’s former
trial counsel left the office on April 12, 2013, and his email account was
deactivated shortly thereafter.  In support, the Secretary proffers an August
7, 2013 email from the system administrator indicating that at least as of that
date, an email sent to the Secretary’s former trial counsel did not reach its
recipient, and that the email account no longer exists.  Sec’y Obj. 2, n.1 and
Ex. A.  Alternatively, the Secretary argues that it had no notice of the
existence of the Application until the Commission docket office notified it on
August 5, 2013 of the existence of an EAJA filing on June 27, 2013. Accordingly,
the Secretary argues that its Objection filed on August 13, 2013 should be
treated as a timely answer.  

Applicant replies that the
Secretary provided no notification that his former trial counsel had left the
Department of Labor. Nor was any withdrawal or substitution of counsel ever
filed.  In fact, the undersigned’s May 21, 2013 Decision and Order listed the
Secretary’s former counsel as attorney of record, since the Commission also never
received any contrary notice from the Secretary. Applicant alleges that it did
not become aware that the Secretary’s trial counsel had left the agency until
August 13, 2013, when it received a copy of the Secretary’s Opposition.  Applicant
has no objection to the timing of the Secretary’s Opposition, which I treat as
its Answer.  

Given my disposition on the merits,[1]
I need not decide whether Signature’s EAJA application was timely served because
the Secretary’s email account had not been deactivated on June 20, 2013, such
that service was effective upon receipt.  Assuming arguendo that Signature’s
EAJA Application was timely served on the Secretary, I find that an EAJA award
is unwarranted because the Secretary’s litigation position was substantially
justified with regard to Citation No. 6575266 and Order No. 6575267, and
special circumstances make an award of fees unjust with regard to the vacatur
of Order No. 6575267.  

III.            
Substantial Justification

A.    General
Principles

EAJA entitles a prevailing party to
receive fees and other expenses incurred in an adversary adjudication, unless
the position of the agency was substantially justified.  5 U.S.C. § 504(a)(1).  The
government agency bears the burden of demonstrating that its position in an
adversary adjudication was substantially justified so as to preclude an award
of attorney's fees and expenses to the prevailing party. Loumiet v. Office
of Comptroller of Currency, 650 F.3d 796, 799 (D.C. Cir. 2011).  The agency
must prove that both its pre-litigation and litigation positions were
substantially justified.  Iowa Exp. Distribution, Inc., v. NLRB, 739
F.2d 1305, 1309-10 (8th Cir. 1984). "Substantially
justified" does not mean justified to a high degree, but rather justified
in substance or in the main - - that is, justified to a degree that could
satisfy a reasonable person.  Pierce v. Underwood, 487 U.S. 552, 565
(1988).  A position may be justified even though incorrect, and it may be
substantially (i.e., for the most part) justified if a reasonable person could
think it correct, that is, if it has a reasonable basis in law and fact. Id.
 To establish substantial justification, an agency must show a reasonable basis
in truth for the facts alleged, a reasonable basis in law for the theory
advanced, and a reasonable connection between the facts alleged and the legal
theory propounded.  See Iowa Exp. Distribution, 739 F.2d at 1308
(quoting United States v. 2,116 Boxes of Boned Beef, 726 f.2d 1481, 1487
(10th Cir. 1984).   

The "position of the
agency" is to be measured against the underlying proceeding as a whole,
not by reference to “separate parts of the litigation, such as discovery
requests, fees, or appeals.” Kuhns v. Board of Governors of Federal Reserve
System, 930 F.2d 39 (D.C. Cir. 1991) (quoting Commissioner, I.N.S. v.
Jean, 496 U.S. 154, 159 (1990). That is, whether or not the position of the
agency was substantially justified is determined on the basis of the
administrative record as a whole in the adversary adjudication for which fees
and other expenses are sought.  Alphin v. National Transp. Safety Bd.,
839 F.2d 817, 822 (D.C.Cir. 1988); see also 5 U.S.C. § 504(a)(1).  Partial
awards, however, are contemplated within the EAJA's statutory scheme.  Therefore,
if some, but not all, of the agency’s allegations are substantially justified, an
eligible prevailing party should be compensated for challenging those allegations
that are not substantially justified. In determining whether a partial award of
attorney's fees is appropriate, the EAJA demands that each allegation made by
the agency be evaluated at each step of the proceedings when new or additional
evidence indicates that an allegation lacks substance or is erroneous.  Id.

B.     Citation
No. 6575266

In the underlying civil penalty
proceeding, undisputed facts established that a rock jam occurred during
an MSHA inspection and that a stipulated rank-and-file plant operator, Harold
Nichelson, was observed by MSHA inspector, Lawrence Sherrill, standing on an
inclined conveyor belt, 10 feet off the ground, using a six-foot breaker bar to
clear the jam. Nichelson did not utilize fall protection (Citation No. 6575266)
or follow lock out/tag out protocol (Order No. 6575267). These alleged
violations occurred shortly after the inspector observed plant manager, Tim
Stewart, speak to Nichelson about the rock jam near a loud generator.  35
FMSHRC at 1385.  

Citation No. 6575266 alleged that Applicant
Magruder unwarrantably failed to comply with the fall protection standard at 30
C.F.R. § 56.15005. 30 C.F.R. § 56.15005 is a mandatory standard which provides
that “[s]afety belts and lines shall be worn when persons work where there is a
danger of falling . . . .” The citation ascribed high negligence to Magruder for
a violative practice that was “highly likely” to result in an injury that could
reasonably be expected to be fatal. The parties stipulated that the actions
alleged constituted a violation of the standard and that the citation was
correctly characterized as significant and substantial (S&S). The Secretary
proposed a specially assessed penalty of $52,500. As noted, after hearing, I modified
the 104(d)(1) unwarrantable failure citation with high negligence to a section
104(a) citation with moderate negligence, and assessed a penalty of $16,509.

Having again carefully reviewed the matter, I
find that the Secretary’s litigation position with respect to Citation No. 6575266
had a reasonable basis in fact and law and was substantially justified to a
degree that could satisfy a reasonable person.  Pierce, 487 U.S. at 565.
The Secretary reasonably argued that Stewart’s actions in the face of a
hazardous condition did not meet the heightened standard of care for
supervisors, and the fall hazard scenario presented a sudden, high degree of
danger, which was not necessarily suitable for a traditional, factor-dependent
unwarrantable failure analysis under Commission precedent such as Lopke
Quarries, Inc., 23 FMSHRC 705, 711 (July 2001).  P. Br. at 13-14, citing Midwest
Material Co., 19 FMSHRC 30 (Jan. 1997).  That is, where hazardous
conditions involve "a high degree of danger," a supervisor is held to
a "heightened standard of care." Lafarge Construction Materials,
20 FMSHRC 1140, 1145-48 (Oct. 1988). The Secretary argued that supervisor
Stewart’s failure to meet that heightened standard of care supported an
unwarrantable failure determination. P. Br. at 13-14.  

The Secretary specifically argued that
an unwarrantable designation was justified because Stewart acted with a
“serious lack of reasonable care” when he shouted hurried and confusing instructions
to plant operator Nichelson in front of a loud diesel generator, where such
instructions were easily misunderstood and conveyed a sense of urgency to take
immediate action without regard for safety protocol. In fact, the Secretary
relied on alleged inconsistencies within Stewart’s own testimony establishing that
Stewart instructed Nichelson to act (either shut down the conveyor belt or lock
out the power source), and not act (wait for him before doing anything).  The
Secretary argued that Stewart’s confusing and unclear instructions were easily
misunderstood when delivered in front of the 95 decibels of noise being emitted
by the diesel generator.  Additionally, the Secretary emphasized that Nichelson
was standing around with other miners waiting for Stewart to return from a discussion
with a vendor, when Nichelson told Stewart that the feeder was jammed.  Then, only
after instruction from Stewart, did Nichelson attempt to clear the jam.  P. Br.
at 14-15.

Nichelson testified that he ignored
the safety requirements because he desired to resume production as soon as
possible. 35 FMSHRC at 1392, citing Tr. 357.  Stewart admitted that before
promotion to management, he had ignored the fall protection and lock out/tag
out requirements when in a hurry. 35 FMSHRC at 1390, citing Tr. 296-98, 306. The
Secretary argued that Nichelson took cues from a hurried Stewart, assumed
production was more important than safety, and risked fatal injury in a hasty
attempt to comply with Stewart’s instructions. P. Br. at 15.

The Secretary also emphasized that Stewart had
opportunities to take precautionary measures and had no reason to rely on any
assumption that Nichelson would wait to handle the rock jam.  Stewart handled
approximately 10 rock jams when employed as a rank and file miner, and first
did so when his supervisor was too busy. P. Br. at 15-16. Also, Stewart knew
that Nichelson had handled at least two rock jams prior to July 14, 2010, one
of which Stewart witnessed.  P. Br. at 16, see also Tr. 273. Since Stewart
conceded that he thought Nichelson was going to lock out power to the conveyor,
the Secretary argues that Stewart should have assumed that Nichelson was going
to handle the rock jam.  The Secretary pointed out that Stewart knew from
personal experience that miners failed to use fall protection and lock out
power sources when in a hurry.  Therefore, the Secretary argued that if Stewart
did not want Nichelson to handle the rock jam, Stewart should have recognized
that Nichelson was taking steps to do so and clarified his instructions.  P.
Br. at 16.

The Secretary also argued that an
unwarrantable failure determination was warranted under a traditional,
factor-dependent, unwarrantable failure analysis, which considers aggravated
conduct based on extensiveness, duration, notice that greater compliance
efforts are necessary, abatement efforts, obviousness, high degree of danger,
and knowledge.  P. Br. at 17-19. In this regard, the Secretary reasonably
argued that the alleged violations posed a high degree of danger and that
Stewart should have known that a miner may overlook both lock out/tag out and
fall protection protocol when in a hurry. P. Br. at 18. Although conceding
short duration with high danger, the Secretary argued that the condition was
extensive because work was being performed on the elevated belt and that MSHA’s
Rules to Live By were adequate to put Magruder on notice that greater efforts
were necessary to achieve compliance.  P. Br. at 17. 

In this regard, inspector Sherrill observed
Nichelson standing on the elevated conveyor belt for 20-30 seconds, without
using fall protection or locking and tagging out the conveyor.  Tr. 120-21. Sherrill
testified that this was an extensive and extremely hazardous condition because
two standards were simultaneously violated and Nichelson was performing work at
elevated heights without fall protection.  Tr. 123-24, 135-36.  

Regarding obviousness or high degree of danger,
Sherrill testified that if Nichelson had continued working on the elevated
conveyor belt, without any fall protection, it was highly likely that he would
have fallen and suffered fatal injuries.  Tr. 103-04.  In addition, because
Nichelson was standing on the belt, any inadvertent belt movement likely would
have caused him to fall and suffer fatal injuries or broken bones, or be
impaled by the breaker bar.  Tr. 102-04, 135-36.

Regarding notice that greater compliance efforts
were necessary, the Secretary relied on Sherrill’s testimony that MSHA provided
all operators with its Rules to Live By prior to the July 14, 2010 inspection. Tr.
117-18.  Also, Stewart acknowledged that Superintendent Twellman advised Stewart
about MSHA’s Rules to Live By, confirming that Respondent knew that MSHA was
focusing compliance initiatives on certain standards, including fall protection
and lock out/tag out standards.  Additionally, the Secretary relied on Sherrill’s
testimony that he discussed the importance of using fall protection during the
pre-inspection conference with Stewart. Tr. 69-70, 141-44.  See P. Br. at 18.

Regarding Respondent’s knowledge of the
existence of the violation(s), the Secretary relied on Stewart’s allegedly conflicting
testimony about what he expected Nichelson to do, wait for him or lock out.  Tr.
261, 321. Stewart acknowledged that his instructions were unclear. Tr. 286.  The
Secretary emphasized that after issuing the instructions, Stewart testified
that he thought Nichelson was going to lock out the belt, and that the lock out
is performed by the individual who is going to clear the rock jam. Thus, the
Secretary argued that Stewart should have assumed that the Nichelson would
clear the rock jam himself.  Further, Stewart should have known from personal
experience that it was possible for a hurried miner to climb up to the rock jam
and overlook the need to lock and tag out and use fall protection.  See P. Br.
at 19.

Finally, the Secretary argued that
the high negligence designation was warranted per regulation because Stewart knew
or should have known of the alleged violations, and there were no mitigating
circumstances, as Sherrill testified. P. Br. at 19; Tr. 107-115.  More
specifically, the Secretary argued that Stewart’s response to a highly
hazardous condition, the rock jam, constituted high negligence because Stewart
should have given effective instructions to Nichelson regarding how to clear
the rock jam, and should have ensured that Nichelson used fall protection and
followed lock out/tag out procedures, particularly since a former plant
operator, who was present that day, could have inadvertently started the
conveyor belt while Nichelson was standing up there without tying off. Id.
at 20-22; Tr. 324.  The Secretary relied on Sherrill’s testimony that he did
not consider Stewart’s alleged instruction to Nichelson to "shut it down
and wait" to mitigate the ineffectiveness of the communication. Id.
 The Secretary argued that Stewart's unmitigated negligence resulted in a miner
working on an elevated conveyor belt without the use of fall protection, while
power was not locked out. P. Br. at 20-21. In sum, the Secretary concluded that
while the incident was brief in duration, it was extraordinarily dangerous and constituted
an inexcusable and unwarrantable breach of mine safety procedures involving two
mandatory safety standards as a result of a serious lack of reasonable care on
the part of management.  Accordingly, the Secretary argued that the undersigned
should have enforced both Citation No. 6575266 and Order No. 6575267 as
written, and assessed the proposed penalties.  P. Br. at 24

Although I
rejected these arguments after hearing all the evidence, and weighing the
credibility of witnesses, the language summarizing my conclusions regarding the
unwarrantable failure factors indicates that the issue was close and the
Secretary’s position was substantially justified.

. . . Citation
No. 6575266 was of a very serious nature and placed Nichelson in a high degree
of danger.  I strongly concur with the parties' stipulation that the fall
protection violation was properly designated significant and substantial. Nichelson's
failure to don fall protection as described in Citation No. 6575266 was highly
likely to result in an injury and there is sufficient evidence to show that
such an injury was reasonably likely to be fatal.

Despite the
high risk of danger, however, the other unwarrantable factors are either neutral
or weigh against an unwarrantable failure finding. The Secretary's own witness
testified that Stewart did not have knowledge of the violation and there was no
evidence that Stewart should have expected Nichelson to violate safety
protocols. Respondent was not placed on notice that greater efforts were needed
to achieve compliance with the standard, and the violation was not obvious to
Stewart given the location of the belt and the short duration of the hazard. Although
the scope of the hazardous practice was limited in terms of area and the number
of miners affected, Stewart's testimony of past violations suggests that the
violative practice may have been more extensive and signaled a possible culture
of disregard for safety standards when miners were in a hurry. This is
troubling and I take this into account in assessing a penalty for the
violation. Nevertheless, I find that the totality of the factors weigh against
a finding of unwarrantable failure for Citation No. 6575266.

35 FMSHRC at 1410-11.

Having reexamined
the record as a whole in light of the Secretary’s proof and arguments on
briefs, I find that the Secretary had a reasonable basis in fact and law for
pursuing its litigation theories in the civil penalty proceedings below and was
substantially justified to a degree that could satisfy a reasonable person.  Pierce
v. Underwood, 487 U.S. at 565.  As outlined above, the Secretary
established a reasonable basis in truth for the facts alleged, a reasonable
basis in law for the theories advanced, and a reasonable connection between the
facts alleged and the legal theories advanced.  As the Fourth Circuit has
recognized, “although the impulse to equate ultimate judicial rejection of the
Government's merits position--at whatever level--with its lack of substantial
justification is understandable, the courts perforce have rejected it as
inappropriate, for to do so, ‘“would virtually eliminate the ‘substantially
justified’ standard from the statute.”’ United States v. Paisley, 957
F.2d 1161, 1167 (4th Cir. 1992) (quoting Broad Avenue Laundry &
Tailoring v. United States, 693 F.2d 1387, 1391-92 (Fed. Cir. 1982). It would
be “a war with life's realities to reason that the position of every loser in a
lawsuit upon final conclusion was unjustified.” Id. (quoting Evans v.
Sullivan, 928 F.2d 109, 110 (4th Cir. 1991).

The Secretary’s litigation position
and proof could have satisfied a reasonable person. I emphasize that this case
could have come out differently depending on certain credibility resolutions or
other legal determinations made after trial. See e.g., Ray, employed by Leo
Journagan Constr. Co., 20 FMSHRC 1014, 1026-27 (Sept. 1998) (citing Europlast
Ltd. v. NLRB, 33 F.3d 16, 17-18 (7th Cir. 1994) (“noting that NLRB had no
way of foreseeing that the judge would make credibility resolutions in favor of
Respondent’s witnesses and against NLRB’s witnesses.”)). I could have credited Nichelson over Stewart’s varying versions of what was said and found that Stewart told
Nichelson to shut it down, but did not tell Nichelson to wait for him.  Nichelson
was the plant operator, Stewart was busy with MSHA trying to avoid additional
citations, and Stewart had previously witnessed Nichelson clear one rock jam
and was aware that Nichelson had cleared at least two rock jams prior to the
instant incident on July 14, 2010. Moreover, Stewart saw Nichelson walk off in
the direction of one who would perform lock out and tag out.  Based on this record
evidence, and my close examination of the demeanor of Respondent’s witnesses
and their responses to tightly scripted and often leading questions from
Respondent’s counsel, I came close to concluding that Respondent’s litigation
strategy was to make Nichelson the fall guy, who appeared to have violated
instructions, in an effort to shield Stewart and Respondent from responsibility
for Nichelson’s unlawful actions after direction from Stewart. 

Furthermore, irrespective of
exactly what Stewart told Nichelson, I found that Stewart’s decision to provide
instructions near the diesel generator was not without consequence and was (at
least) moderately negligent. 35 FMSHRC at 1404. Stewart conveyed instructions
with a lack of care, which departed from what an ordinary and prudent operator,
familiar with the mining industry and in dealing with MSHA, would have done in
the same or similar circumstances.  There is no doubt that his instructions
were conveyed in an extremely noisy environment, where they were capable of
falling on deaf ears or being misunderstood.  Further, Stewart’s instructions
were conveyed hastily, and outside the earshot of MSHA inspectors, who could
have helped Respondent properly resolve the rock jam. These facts, particularly
in light of Stewart’s admitted failures as a rank-and-file miner to comply with
both the fall protection and lock out/tag out standards when busy or in a
hurry, reasonably could have led to a conclusion that Stewart signaled
Nichelson to resolve the rock jam consistent with this unlawful practice before
it attracted additional attention from MSHA.  In fact, after speaking with
Stewart, Nichelson did just that, but got caught by MSHA in the violative
conduct. That could have been aggravated conduct with high negligence by
Respondent.

In short, the Secretary proved up
facts and advanced legal theory that reasonably supported the view that the
Secretary’s litigation position with regard to Citation 6575266 was
substantially justified.  Although ultimately not persuasive, the Secretary's
position turned largely on credibility and a weighing of various evidence, and it
was based on more than supposition or conjecture. His legal conclusions flowed
from a rational process of reasoning and logical deduction.  The unwarrantable
failure and high negligence issues were close, and could have come out another
way.[2]

B.        Order No. 6575267

Section 104(d)(1) Order No. 6575267 alleges that
Respondent unwarrantably failed to comply with the lock out/tag out standard at
30 C.F.R. § 56.12016. 30 C.F.R. § 56.12016 is a mandatory standard which
provides:

Electrically powered equipment shall be
deenergized before mechanical work is done on such equipment. Power switches
shall be locked out or other measures taken which shall prevent the equipment
from being energized without the knowledge of the individuals working on it. Suitable
warning notices shall be posted at the power switch and signed by the
individuals who are to do the work. Such locks or preventative devices shall be
removed only by the persons who installed them or by authorized personnel.

The citation ascribed high
negligence to Respondent for an alleged violative condition that was “highly
likely” to result in an injury that could reasonably be expected to be fatal. The
Secretary proposed a penalty of $17,301.  

The substantial
justification analysis for this Order is more problematic because I set aside
the parties stipulation of an S&S violation and vacated Order No. 6575267 based
on well-established circuit court precedent that neither party discussed or
relied upon.  I found that although the Secretary has long argued that 30
C.F.R. § 56.12016 covers hazards associated with mechanical movement as opposed
to electric shock, this interpretation is contrary to the clear meaning of the
standard when examined in the context of the regulatory scheme.  33 FMSHRC at
1440, citing Phelps Dodge Corp., 681 F.2d 1189, 1192 (9th Cir. 1982); Northshore
Mining Co., 709 F.3d 706 (8th Cir. 2013).

But the
undersigned’s reliance on such circuit court precedent does not compel the
conclusion that the Secretary’s legal interpretation was not substantially
justified, particularly when Commission law on the subject is unsettled and
could be read to support the Secretary’s longstanding interpretation that the
lock out requirements in 30 C.F.R. § 56.12016 were intended to protect miners
performing mechanical work even where there was no danger of electric shock. Although
I ultimately was persuaded that 30 C.F.R. § 56.12016 was not applicable based
on the reasoning of the Ninth Circuit in Phelps Dodge and the Eighth
Circuit in Northshore Mining -- a case that was not even decided at the
Commission level when the underlying civil penalty matter was tried in June
2012 --, this authority was not binding on the Secretary, who was free to
litigate a contrary position before the Commission to create a split in the
circuits, particularly where other extant authority supports the Secretary’s
long-standing position. See, e.g., Ray, employed by Leo Journagan
Constr. Co., 20 FMSHRC 1014, 1023 (Sept. 1998)(“[a]lthough section
56.12016, standing alone, could be viewed as containing a plain and unambiguous
lockout requirement, section 56.14105 and the case law interpreting that
standard creates uncertainty regarding the scope of that lockout requirement.”);
Empire Iron Mining Co., 29 FMSHRC 999, 1003 n.8 (2007) (dictum agreeing
with dissent in Phelps Dodge [681 F.2d at 1193 (Boochever, dissenting)] that
the language of § 56.12016 “is clear and unambiguous” and reiterating statement
of ALJ in underlying decision [29 FMSHRC at 328] that “the standard means
exactly what it says – to wit, that ‘[e]lectrically powered equipment shall be
deenergized before mechanical work is done on such equipment.’”); Northshore
Mining Co., 34 FMSHRC 663, 674 (Mar. 2012) (ALJ)(finding a violation of §
56.12016 despite Phelps Dodge and holding that “while 30 C.F.R. §
56.12016 and 30 C.F.R. § 56.14105 have many overlapping characteristics, they
do not in any way preclude one another.”); Blue Mountain Prod. Co., 32
FMSHRC 1464, 1478-79 (Oct. 2010) (ALJ) (finding violation of § 56.12016 where
miners were repairing conveyor that was not locked out/tagged out); QMAX
Co., 28 FMSHRC 848, 854 (Sept. 2006) (ALJ) (finding “clear” violation of §
56.12016 where miners working on conveyor belt that was de-energized but not
locked out/tagged out were exposed to entanglement hazards).  

In my view, this
split of authority gave the Secretary a reasonable basis in law to support a
violation of § 56.12016 in the instant litigation before the Commission,
notwithstanding contrary circuit precedent.  As I noted in Pattison Sand
Company, LLC, 34 FMSHRC 2938, 2943, n. 3 (Nov. 2012) (ALJ), the Commission
has not addressed the issue of non-acquiescence to circuit court decisions
despite the fact that there is considerable authority that an administrative
agency charged with the duty of formulating uniform and orderly national policy
in adjudications is not bound to acquiesce in the views of the U.S. Courts of
Appeals that conflict with those of the agency. See, e.g., S & H Riggers
& Erectors, Inc. v. OSHRC, 659 F.2d 1273, 1278-1279 (5th Cir. 1981); see
generally Samuel Estreicher, Nonacquiescence by Federal Administrative
Agencies, 98 Yale L.J. 679, 681 (1989). Clearly, the language of the Mine Act gives the Commission jurisdiction over “substantial question[s] of law,
policy or discretion.” 30 U.S.C. § 823(d)(2)(A)(ii)(IV). The Supreme Court has
recognized the unique role of the Commission as the arbiter of questions
of interpretation of the Mine Act. Thunder Basin Coal Co. v. Reich, 510
U.S. 200, 214 (1994) (affirming the Commission’s role in formulating a uniform
and comprehensive interpretation of the Mine Act).  

Accordingly, in
this unsettled area, the Secretary was entitled to advance its longstanding
interpretation of § 56.12016 in an effort to convince the Commission to utilize
its unique adjudicatory expertise and either bow to or disagree with the Ninth
and now Eighth Circuits. As the Eighth Circuit recognized in an analogous EAJA
context:

The substantial justification
standard, however, should not be used to deter the government from bringing
cases of first impression or offering novel arguments. The special
circumstances exception “is a ‘safety valve’ designed to ‘insure that the
Government is not deterred from advancing in good faith the novel but credible
extensions and interpretations of the law that often underlie vigorous
enforcement efforts.’ ” Russell v. Nat’l Mediation Bd., 775 F.2d 12884,
1290(5th Cir. 1985)(quoting H.R. Rep. No. 96-1418 at 11 (1980)).

S.E.C. v. Zahareas, 374 F.3d 624, 627 (8th Cir.
2004).  Similarly, if the case turns on an unsettled or close question of law, as
here, the government's position will normally be substantially justified,
notwithstanding the fact that its legal position is ultimately rejected, unless
it clearly offends established precedent. Washington v. Heckler, 756
F.2d 959, 961-62 (3d Cir. (1985).  As noted, Commission precedent on this issue
has not been clearly established.

It is troubling that the Secretary declined to
appeal to the Commission my underlying decision adopting the views of the two
circuits in this unsettled area.  Had he done so, he may have prevailed. Perhaps
the Secretary chose to wait for a better case, or for better facts, or for a
judge’s decision, like those in Northshore Mining, Blue Mountain Prod., or
QMAX Co., where the judges found a § 56.12016 violation where no
electric shock hazard was present. Certainly, given this difficult and
unsettled area of law, the Secretary presented facts supporting a longstanding lock-and-tag-out
theory of violation that, although rejected, was substantially justified because
reasonable persons, including numerous Secretaries and several other Commission
judges, have thought that it has a reasonable basis in fact and law when mechanical
work is done on electrically powered equipment.

Finally, since the Secretary
essentially relied on the same facts and legal arguments to justify the high
negligence and unwarrantable failure designations in Order No. 6575267 that he
relied on to justify those factually and legally parallel allegations in
Citation No. 6575266, I find that the Secretary has established that his
litigation position with respect to the failure to lock and tag out was also substantially
justified for essentially the same reasons as those set forth above concerning
the fall protection violation.  Accordingly, I conclude that the Secretary was
substantially justified both in fact and in law in proceeding with the underlying
litigation as a whole.

C.    Special
Circumstances Make an EAJA Award Unjust with Regard to Order No. 6575267

Magruder’s rather
audacious play for attorney fees is troubling given its stipulation that it
engaged in a significant and substantial violation of 30 C.F.R. § 56.12016.  Despite
the fact that Magruder and its attorneys never uncovered the circuit court case
law relied on by the undersigned to vacate Order No. 6575267, it now asks the
Commission to award it attorneys’ fees and costs because the Secretary should
have uncovered this precedent and backed off the stipulation. Although Magruder
correctly points out that the Secretary has the burden of proving that its
litigation position was substantially justified, I have found that he met that
burden with regard to the litigation as a whole, including the unwarrantable
failure and high negligence designations.  

I further find
that special circumstances make an EAJA award unjust with regard to the vacatur
of Order No. 6575267 because Magruder stipulated to an S&S violation, and
it would contravene principles of equity, fairness and justice to recompense Magruder
for time and expense that the administrative tribunal, sua sponte, determined
to be erroneous.  In explaining the “special circumstances” exception, the
House Report accompanying the EAJA stated:

Furthermore, the
Government should not be held liable where “special circumstances would make an
award unjust.” This “safety valve” helps to insure that the Government is not
deterred from advancing in good faith the novel but credible extensions and interpretations
of the law that often underlie vigorous enforcement efforts. It also gives the
court discretion to deny awards where equitable considerations dictate an award
should not be made.

H.R.Rep. No. 1418, 96th Cong., 2d
Sess. at 11, reprinted in 1980 U.S.C.C.A.N 4953, 4990. “The EAJA thus
explicitly directs a court to apply traditional equitable principles in ruling
upon an application for counsel fees by a prevailing party.” Oguachuba v.
INS, 706 F.2d 93, 98 (2d Cir. 1983). 

I agree with the
Secretary that Magruder justly cannot claim that it deserves to be paid for
time spent being wrong by stipulating to facts and law supporting the lock out
tag out violation and concomitant S&S designation during the course of this
litigation.  Not one billable hour nor one word in Magruder’s post-hearing
brief appears to be spent on supporting any argument or research that Phelps
Dodge Corp., 681 F.2d 1189, 1192 (9th Cir. 1982) or progeny justified vacating
Order No. 6575267.[3]

I further agree
with the Secretary that Magruder’s ongoing stipulation to the fact of the S&S
violation in Order No. 6575267 had the practical effect of foreclosing the
Secretary’s argument in the alternative that the facts in question supported a
violation of 30 C.F.R. § 56.14105. This was understandable since stipulations
are designed to narrow issues and areas of disagreement and simplify
proceedings.  Balancing the equities under the special circumstances exception,
Magruder’s work on a stipulated violation cannot equitably be deemed to have
been expended in pursuit of the fortuitous vacatur achieved here.  Cf., United
States v. 27.09 Acres of Land in Town of Harrison, 43 F.3d 769, 775 (2d
Cir. 1994)(eligible, prevailing party was denied attorneys' fees under the
special circumstances exception because it did not substantially contribute to
the successful phase of the litigation by ineligible parties, and fees were not
expended on discrete efforts that achieved an appreciable advantage).

IV.            
Order

Having evaluated
the record as a whole and the arguments presented by each party, and having
applied the relevant law, it is ORDERED that EAJA fees be DENIED.
The Secretary has established that an EAJA award is not appropriate because his
position was substantially justified with regard to Citation No. 6575266 and
Order No. 6575267, and that special circumstances make an award of fees unjust
with regard to the vacatur of Order No. 6575267.  

/s/
Thomas P. McCarthy

Thomas
P. McCarthy

Administrative
Law Judge

Distribution:

Courtney Przybylski, Esq., Office
of the Solicitor, U.S. Department of Labor, 1999 Broadway, Suite 800, Denver,
CO 80202-5708

R. Lance Witcher, Esq., Ogletree,
Deakins, Nash, Smoak, & Steward, P.C., 7700 Bonhomme Ave., Suite 650, St.
Louis, MO 63105

[1]
The determination of the merits of the EAJA
application “will be made on the basis of the record made during the proceeding
for which fees and expenses are sought,” except where either party requests or
the judge orders further proceedings.  See Commission Rule § 2704.306.  Neither
party requested additional proceedings nor sought to supplement the
administrative record.

[2]
Furthermore, although not
specifically argued by the Secretary in light of the stipulation that Nichelson
was a rank-and-file miner, it is arguable that such stipulation could have been
set aside as contrary to law.  In this regard, it was arguable that Nichelson was acting as Respondent’s agent, whose negligence
was imputable to Respondent for penalty and unwarrantable failure purposes. Section
3(e) of the Mine Act defines "agent" as “any person charged with
responsibility for the operation of all or a part of a coal or other mine or
the supervision of the miners in a coal or other mine.” Although Nichelson was
not a supervisory or managerial employee, he was charged with responsibility
for the operation of all or a part of the mine. He was the plant operator
controlling the operation of the mine by starting and stopping the plant from
the control booth.

In
taking steps to clear the rock jam and start the plant operating again, it is
arguable that Nichelson was acting within the scope of his employment as
Respondent’s operator agent with a level of responsibility normally delegated
to management personnel.  It is undisputed that a supervisor or plant manager
usually cleared the rock jams, although a rank-and-file miner occasionally did
so.  Stewart admitted as much. Here, the record establishes that Nichelson was
engaged in work that entailed "responsibility for the operation of all or
a part of a . . . mine.” Moreover, he was standing around near the rock jam
talking to other miners before Stewart arrived.  Thus, it could have been
argued that Respondent held Nichelson out as its agent with apparent authority
to act on behalf of management to clear the rock jam.

Thus,
in the unique circumstances of this case,
based on the facts the Secretary presented, it was arguable that Nichelson
acted as agent of Respondent when he performed a typical managerial function
and cleared a rock jam necessary for restarting production, without using fall
protection.  Had this been persuasively established, the undersigned could have
set aside the parties stipulation that Nichelson was a rank-and-file miner
whose conduct was not attributable to Respondent and found that Nichelson’s
gross negligence was imputable to Magruder Limestone for penalty and
unwarrantable failure purposes.

[3]
As noted, Northshore Mining Co., 709 F.3d
706 (8th Cir. 2013) came down in March 2013, two months before my underlying
decision, and a year after the judge in that case adopted the Secretary’s
interpretation of 30 C.F.R. § 56.12016 that was advanced here.