Secretary of Labor v. Mize Granite Quarries, Inc., Robert W. Mize III, and Clayborn Lewis

Plain-English summary

MSHA proposed eleven penalties against Mize Granite Quarries and four individual penalties against owner Robert Mize III and foreman Clayborn Lewis. The administrative law judge vacated two company citations, affirmed four proposed company penalties, reduced five company penalties, dismissed one set of individual penalties, and reduced three other individual penalties. The Commission held that the Judge adequately tied the company reductions to the quarry's small size, good-faith abatement, limited history, financial losses, and the facts of each violation. It also affirmed dismissal of the individual penalties tied to Order No. 6505714 because the Judge had not found the aggravated conduct needed for section 110(c) liability. The Commission vacated and remanded the remaining individual penalties because the Judge improperly assumed Mize would pay the corporation's penalties and did not adequately explain the reductions for Lewis. On remand, the Judge was directed to consider each individual's own finances and give Lewis a clear, direct opportunity to submit financial evidence.

Decision snapshot

• Governing provisions: 30 U.S.C. §§ 820(c) and 820(i)
• Outcome: The company penalties and one individual-penalty dismissal were affirmed, while the remaining individual penalties were vacated and remanded.
• Key point: Corporate penalties and mine size cannot substitute for an individualized assessment of an agent's income, net worth, obligations, and ability to pay.

Full text (FMSHRC public release)

Federal Mine Safety and Health Review Commission

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

601 NEW JERSEY AVENUE, NW

SUITE 9500

WASHINGTON, DC 20001

August 7, 2012

SECRETARY OF LABOR, 

MINE SAFETY AND HEALTH 

ADMINISTRATION (MSHA) 

v.

MIZE GRANITE QUARRIES, INC.

ROBERT W. MIZE III; and

CLAYBORN LEWIS

Both Employed by MIZE GRANITE

QUARRIES, INC. 

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Docket Nos.

SE 2009-401-M

SE 2009-402-M

SE 2009-553-M

SE 2009-554-M

SE 2010-849-M

SE 2010-850-M

BEFORE: Jordan, Chairman; Duffy, Young, Cohen, and Nakamura, Commissioners

DECISION

BY THE COMMISSION:

This proceeding arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C.
§ 801 et seq. (2006) (“Mine Act” or “Act”). This case involves eleven penalties proposed by the
Department of Labor’s Mine Safety and Health Administration (“MSHA”) against Mize Granite
Quarries, Inc. (“MGQ”), and four penalties proposed under section 110(c) of the Mine Act, 30
U.S.C. § 820(c), against the mine’s owner, Robert W. Mize III (“Mize”), and, separately, against
the mine’s foreman, Clayborn Lewis (“Lewis”). Administrative Law Judge Priscilla M. Rae
substantially reduced five of the penalties proposed against MGQ and three of the penalties
proposed against Mize and Lewis, and she dismissed one penalty proposed against Mize and
Lewis. 33 FMSHRC 886, 914-18 (Apr. 2011) (ALJ).

The Commission granted the Secretary of Labor’s petition for discretionary review only
as to the issue of whether the judge failed to adequately explain the basis for substantially
reducing the penalties proposed against MGQ and for substantially reducing or entirely
dismissing the penalties proposed against Mize and Lewis. Unpublished Order dated May 27,
2011. For the following reasons, we affirm the judge’s reduction of the penalties proposed
against MGQ, affirm the judge’s dismissal of the penalties proposed against Mize and Lewis
associated with Order No. 6505714, and remand the remaining penalties proposed against Mize
and Lewis for further consideration consistent with our decision.

I.

Factual and Procedural Background

Mize owns and operates MGQ, a stone quarry located in Elberton, GA. 33 FMSHRC at

888. MGQ employs one foreman, Clayborn Lewis, and, at the time of the hearing, seven miners.
     Id. The citations and orders at issue before the judge arose during two inspections conducted by
     authorized MSHA inspectors on January 13, 2009, and March 11-12, 2009. Id. at 888-90. The
     Secretary also conducted a special investigation which resulted in proposed assessments against
     Mize and Lewis under section 110(c) of the Act.

Id. at 888.

At issue before the judge were eleven proposed penalties against MGQ and four proposed
penalties against Mize and Lewis, separately. In the “Citations and Orders” section of her
decision, the judge detailed the issues, arguments, evidence, applicable law, and her conclusions
regarding each separate citation or order. Id. at 890-913. The judge then listed the six statutory
criteria that she must consider in her assessment of penalties under section 110(i) of the Act, 30
U.S.C. § 820(i). Id. at 914. The judge observed that “[t]he penalty assessment for a particular
violation is within the sound discretion of the administrative law judge so long as the six
statutory criteria and the deterrent purpose of the Act are given due consideration.” Id., citing
Sellersburg Stone Co., 5 FMSHRC 287, 294 (Mar. 1983), aff’d, 736 F.2d 1147 (7th Cir. 1984);
Cantera Green, 22 FMSHRC 616, 620 (May 2000). Of the eleven proposed penalties against
MGQ, the judge vacated two citations, affirmed four citations and proposed penalties in full, and
reduced the amounts of five penalties. Id. at 914-15. With regard to the four penalties proposed
against Mize and Lewis, the judge dismissed the penalties for Order No. 6505714 and reduced
the amounts of the remaining three penalties. Id. at 915-18.

II.

Disposition

The Secretary argues that the judge failed to adequately explain the basis for substantially
reducing five penalties against MGQ and three penalties against Mize and Lewis, and entirely
dismissing one proposed penalty against Mize and Lewis. The Secretary maintains that the judge
did not resolve the conflicting claims concerning the effect of the proposed penalties on MGQ’s
ability to remain in business, and that the judge did not discuss the submitted corporate tax
returns. In assessing penalties against MGQ, the judge stated: “I have considered the criteria in
110(i) in view of the evidence of record in making my findings herein. The following penalties
w[i]ll not affect the operator’s ability to continue in business and are appropriate under the Act.”
33 FMSHRC at 914. The Secretary asserts that this conclusory statement fails to identify the
basis for the judge’s penalty reductions, since it is unclear whether they were based on MGQ’s
claim of financial hardship, the judge’s disagreement with the Secretary’s proposed penalty
amounts, or some combination of both. Moreover, the Secretary asserts that since Lewis did not
submit any financial information, and the judge did not address Mize’s net worth, the judge
failed to resolve the conflicting claims concerning the individual financial abilities of Mize and
Lewis to pay the proposed section 110(c) penalties. Finally, the Secretary states that there was no
discernible method used by the judge in arriving at the penalty reductions.

In response to the Secretary’s brief, the respondents, appearing pro se (with Mize
appearing on behalf of Lewis), submitted copies of MGQ’s corporate tax returns for fiscal years
2007-2009. In the accompanying cover letter, MGQ maintains that it is a small mine and that the
proposed penalties will affect its ability to remain in business. These tax returns had previously
been submitted to the Judge at the close of the evidentiary hearing.

Section 110(i) of the Mine Act grants the Commission the authority to assess all civil
penalties provided under the Act. 30 U.S.C. § 820(i). It further directs that the Commission, in
determining penalty amounts, shall consider:

the operator's history of previous violations, the appropriateness of
such penalty to the size of the business of the operator charged,
whether the operator was negligent, the effect on the operator's ability
to continue in business, the gravity of the violation, and the
demonstrated good faith of the person charged in attempting to
achieve rapid compliance after notification of a violation.

30 U.S.C. § 820(i).

Under this clear statutory language, the Commission alone is responsible for assessing
final penalties. See Sellersburg Stone Co. v. FMSHRC, 736 F.2d at 1151-52 (“[N]either the ALJ
nor the Commission is bound by the Secretary’s proposed penalties . . . we find no basis upon
which to conclude that [MSHA’s Part 100 penalty regulations] also govern the Commission.”).
While there is no presumption of validity given to the Secretary’s proposed assessments, we have
repeatedly held that substantial deviations from the Secretary’s proposed assessments must be
adequately explained using the section 110(i) criteria. E.g., Sellersburg Stone, 5 FMSHRC at
293; Hubb Corp., 22 FMSHRC 606, 612 (May 2000); Cantera Green, 22 FMSHRC at 620-21
(citations omitted). A judge need not make exhaustive findings but must provide an adequate
explanation of how the findings contributed to his or her penalty assessments. Cantera Green,
22 FMSHRC at 622. In addition to considering the statutory criteria, the judge must also set
forth a discernible path that allows the Commission to perform its review function. See, e.g.,
Martin Co. Coal Corp., 28 FMSHRC 247, 261 (May 2006).

As the judge noted in her decision, the penalty assessment for a particular violation is
within the sound discretion of the administrative law judge so long as the six statutory criteria are
given due consideration. 33 FMSHRC at 914; Sellersburg Stone Co., 736 F.2d at 1152; Cantera
Green, 22 FMSHRC at 620. The parties stipulated that MGQ is a small operator with no prior
history of accidents or injuries, and that it demonstrated good faith in abating the violations. Tr.
9, 151-52, 180, 187. Besides these stipulated factors, the judge also considered the negligence
and gravity of the violations, the operator’s history of violations, and the effect of the penalties
on the operator’s ability to remain in business. MGQ submitted tax returns indicating that it has
been losing money and operating at a net loss in fiscal years 2007-2009. Resp. Ex. 1. Based on
all of this information, the judge found “several of the penalty amounts proposed by the Secretary
to be out of proportion to the size of the mine and the facts presented.” 33 FMSHRC at 914. She
further noted that the penalties she assessed “w[i]ll not affect the operator’s ability to continue in
business and are appropriate under the Act.” Id. We find that the judge adequately considered
the statutory criteria and, in her detailed analysis of each violation, applied her findings to her
decision to reduce the operator’s penalties, and that her findings are supported by substantial
evidence. Therefore, we conclude that the judge did not abuse her discretion, and affirm her
decision to reduce the operator’s penalties.

The six statutory criteria also apply, with revisions appropriate to individuals, to the
assessment of section 110(c) penalties against individuals. Sunny Ridge Mining Co., 19
FMSHRC 254, 272 (Feb. 1997). As the judge noted, the relevant inquiries include whether the
penalty will affect the individual’s ability to meet his financial obligations and whether the
penalty is appropriate in light of the individual’s income and net worth. 33 FMSHRC at 916;
Ambrosia Coal and Constr. Co., 19 FMSHRC 819, 824 (May 1997).

At the outset of consideration of the judge’s section 110(c) penalties against Mize and
Lewis, we affirm the judge’s dismissal of the penalties proposed by the Secretary that were
associated with Order No. 6505714. 33 FMSHRC at 917. She had held that the underlying
violation was not a result of the operator’s unwarrantable failure to comply with the mandatory
standard (although she determined that a finding that the operator was highly negligent was
supported by the evidence). Id. 909-10. Her reasoning was that the “danger posed by this
condition [in contrast with the unwarrantable failure violation in Citation No. 6505709 and
Citation No. 6507102]

. . . was not of such grave concern that a failure to address it constituted
aggravated conduct.” Id. at 910. Additionally, the judge found that the fact that MSHA did not
cite this same condition in the previous inspection two months earlier “does militate against a
finding that [MGQ] was on notice that greater efforts were necessary to comply with the
standard.” Id. Her finding that the violation was not unwarrantable sufficiently explains why in
her view no penalties against the individuals should be assessed, because she did not find them
liable under section 110(c). Id. at 917.

Regarding the remaining individual penalties, after the parties filed post-hearing briefs,
the judge ordered Mize and Lewis to provide documentary evidence of their personal income and
financial responsibilities because it was germane to the determination of appropriate penalties for
a section 110(c) assessment. Unpublished Order Reopening for Submission of Evidence at 1-2
(Mar. 4, 2011). The judge further noted that the corporate finances are not relevant to the issue
of personal liability. Id. at 1 (citing Sunny Ridge, 19 FMSHRC 254). However, in her decision
the judge stated that she had considered:

th[e] fact that [MGQ] has been assessed rather significant 110(i)
penalties for the violations which will also be paid by Mr. Mize. I
have taken this overlapping effect of the penalties into account in
the assessment of the personal penalties. I find the penalties
proposed by the Secretary are disproportionate to the size of the
mine vis a vis the income of the agents, and their lack of personal
histories for previous violations.

33 FMSHRC at 916-17.

However, we have made clear that the proper inquiries for the determination of individual
penalties ought not include the size of the mine nor the penalties levied against the corporation.
Sunny Ridge, 19 FMSHRC at 271-72. MGQ is a corporation, with the advantages of a corporate
structure, including limited liability. By assuming that Mize would pay the penalties assessed
against MGQ, the judge in effect was treating it as a partnership or an individual proprietorship.
Thus, the judge’s assumption that Mize would pay the operator’s penalties is incorrect.
Therefore, we remand for the judge to consider the individual penalties assessed against Mize
based solely on Mize’s personal financial status.

Regarding the penalties assessed against Lewis, the judge said, “[t]aking into account that
Mr. Lewis is a paid employee of Mize, and not the owner, but otherwise for the same reasons set
forth above regarding Mr. Mize, I assess the following penalties.” 33 FMSHRC at 917. The
judge also noted that Lewis did not respond to her March 4, 2011 Order reopening the record for
the submission of financial information. Id. at 916. However, the judge stated, “[u]nder the
circumstances, I find that making additional inquiries and delaying the case further would not be
fruitful. Instead I make the finding that the penalties I assess will not adversely affect the ability
to meet individual financial obligations of Mr. Lewis.” Id. (citation omitted). We conclude that
the Judge did not adequately explain her reasons for reducing the penalties for Lewis.

We note that the Judge’s March 4, 2011 Order was not sent to Lewis directly but was
addressed to him c/o Mize Granite Quarries, Inc. Moreover, the order was written in language
which might not readily be understandable by a layman. Lewis was represented by Mize at the
hearing and the answer to the petition was submitted on his behalf by Mize. Although Lewis
testified at the hearing, his testimony was confined to the circumstances of the violations and did
not touch on his personal financial situation. Tr. 161-78. Mize’s closing statement at the end of
the hearing did not address the personal liability issues. Tr. 179-83. There is nothing in the
record which indicates that Lewis understood that the amount of his penalty would be affected by
consideration of his income and net worth, and his ability to meet his financial obligations.

As a result, we remand for the judge to reconsider the individual penalties assessed
against Lewis, after he is directly notified of the penalties proposed by MSHA (a total of
$17,600), and given another opportunity to provide documentary evidence and an affidavit or
declaration regarding his personal income and financial responsibilities.

Lewis should be
specifically notified that (1) the amount of the penalties the judge will impose may be affected by
the amount of his income and net worth, and by the impact of the penalties on his ability to meet
his financial obligations; and (2) if Lewis fails to provide evidence of income, net worth, and
financial obligations, the judge may presume that the imposition of the assessed penalties would
not adversely affect his ability to meet financial obligations.

Although we remand for the judge’s consideration of the individuals’ personal financial
information, in order to preserve the individuals’ privacy, we do not expect a detailed financial
analysis in the judge’s decision. Rather, we seek an adequate explanation of which conflicting
claims the judge considered with regard to each separate penalty, how the claims were resolved,
and how the statutory criteria were applied to substantially reduce or entirely dismiss each
proposed penalty.

Pursuant to our direction for review, the petition for discretionary review remains under
seal because it contains confidential financial information, and any subsequent filings by the
parties containing confidential financial information shall also be placed under seal.

III.

Conclusion

For the reasons set forth above, we affirm the penalties imposed by the judge against
MGQ, affirm the judge’s dismissal of the penalties proposed against Mize and Lewis associated
with Order No. 6505714, vacate the remaining penalties imposed against Mize and Lewis, and
remand this matter for further proceedings consistent with our decision.

/s/ Mary Lu Jordan

Mary Lu Jordan, Chairman

/s/ Michael F. Duffy                                                                                        

Michael F. Duffy, Commissioner

/s/Michael G. Young

Michael G. Young, Commissioner

/s/ Robert F. Cohen, Jr.

Robert F. Cohen, Jr., Commissioner

/s/ Patrick K. Nakamura

Patrick K. Nakamura, Commissioner

Distribution:

Clayborn Lewis

P.O. Box 881

Elberton, GA 30635

Clayborn Lewis,

Mize Granite Quarries, Inc.

P.O. Box 299

Elberton, GA 30635

Robert W. Mize, III, President

Mize Granite Quarries, Inc.

P.O. Box 299

Elberton, GA 30635

W. Christian Schumann, Esq.

Edward Waldman, Esq.

Office of the Solicitor

U.S. Department of Labor

1100 Wilson Blvd., Room 2220

Arlington, VA 22209-2296

Melanie Garris

Office of Civil Penalty Compliance

MSHA

U.S. Dept. Of Labor

1100 Wilson Blvd., 25th Floor

Arlington, VA 22209-3939

Administrative Law Judge Priscilla M. Rae

Federal Mine Safety & Health Review Commission

Office of Administrative Law Judges

601 New Jersey Avenue, N. W., Suite 9500

Washington, D.C. 20001-2021