Secretary of Labor v. The N.C. Granite Corp.

Plain-English summary

N.C. Granite timely contested an MSHA citation and was actively litigating it when the related penalty assessment arrived. Its safety manager mistakenly believed a separate assessment contest was unnecessary, so the assessment became final. The company's first reopening motion was dismissed after its lawyer failed to answer a Commission notice, and the lawyer later said an amended filing had been lost by office staff during renovations. The Commission criticized that unreliable processing system but found that the balance of equities favored reopening because the underlying citation was already being litigated and the operator had adopted new deadline procedures. It reopened the assessment and remanded the case for penalty proceedings.

Decision snapshot

• Governing provisions: 30 U.S.C. § 815(a); 30 C.F.R. § 100.7; 29 C.F.R. § 2700.28
• Outcome: The final assessment was reopened and remanded for penalty proceedings.
• Key point: Active litigation of the underlying citation and corrective procedures outweighed serious filing-system failures in the reopening request.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

1331 PENNSYLVANIA AVENUE, NW, SUITE 520N

WASHINGTON, D.C. 20004-1710

February 11, 2013

SECRETARY OF LABOR,

MINE SAFETY AND HEALTH

ADMINISTRATION (MSHA)

v.

THE N.C. GRANITE CORP.

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Docket No. SE 2011-360-M
A.C. No. 31-00037-238802

BEFORE: Jordan, Chairman; Young and Nakamura, Commissioners 

ORDER

BY THE COMMISSION:

This matter arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §
801 et seq. (2006) (“Mine Act”). On March 1, 2011, the Commission received from The N.C.
Granite Corp. (“N.C. Granite”) a motion seeking to reopen a penalty assessment that had become
a final order of the Commission pursuant to section 105(a) of the Mine Act, 30 U.S.C.

§ 815(a).

Under section 105(a) of the Mine Act, an operator who wishes to contest a proposed
penalty must notify the Secretary of Labor no later than 30 days after receiving the proposed
penalty assessment. If the operator fails to notify the Secretary, the proposed penalty assessment
is deemed a final order of the Commission. 30 U.S.C. § 815(a).

We have held, however, that in appropriate circumstances, we possess jurisdiction to
reopen uncontested assessments that have become final Commission orders under section 105(a).
Jim Walter Res., Inc., 15 FMSHRC 782, 786-89 (May 1993) (“JWR”). In evaluating requests to
reopen final section 105(a) orders, the Commission has found guidance in Rule 60(b) of the
Federal Rules of Civil Procedure under which, for example, a party could be entitled to relief
from a final order of the Commission on the basis of mistake, inadvertence, or excusable neglect.
See 29 C.F.R. § 2700.1(b) (“the Commission and its Judges shall be guided so far as practicable
by the Federal Rules of Civil Procedure”); JWR, 15 FMSHRC at 787. We have also observed
that default is a harsh remedy and that, if the defaulting party can make a showing of good cause
for a failure to timely respond, the case may be reopened and appropriate proceedings on the
merits permitted. See Coal Prep. Servs., Inc., 17 FMSHRC 1529, 1530 (Sept. 1995).

The record shows that Proposed Assessment No. 000238802 was issued on November
18, 2010 and delivered to N.C. Granite on November 29, 2010. N.C. Granite did not contest the
proposed assessment, and it became a final order on December 29, 2010.

In its motion to reopen, N.C. Granite stated that Citation No. 8546405 (which was later
assessed in Proposed Assessment No. 000238802) was issued by MSHA on September 14, 2010,
and timely contested by N.C. Granite, together with a Motion for Expedited Hearing, on
September 21, 2010. The case was assigned to a judge, who denied the Motion for Expedited
Hearing, but directed the parties to conduct discovery and report back at a later date. The parties
then exchanged written discovery and conducted extensive depositions on December 3, 2010.
When N.C. Granite’s safety manager received the proposed assessment on November 29, he
thought that because the parties were already in litigation over the citation, it was not necessary
to also contest the proposed assessment.

The Secretary opposed the March 1, 2011, motion to reopen, and argued that N.C.
Granite had not made a showing of exceptional circumstances so as to justify reopening. The
Secretary pointed out that it is clearly explained on the face of every proposed penalty assessment
that pursuant to 30 § C.F.R. 100.7, the operator has 30 days after receipt of the proposed
assessment to either pay the penalty or exercise its right to contest the proposed assessment and
request a hearing on the violations in question. However, the Secretary acknowledged that N.C.
Granite had timely contested Citation No. 8546405, and that litigation on this citation was
pending before the judge.

On September 28, 2011, the Commission sent a notice to counsel stating that the motion
to reopen was deficient because it did not explain what office procedures are generally used to
prevent failures to timely contest penalty assessments, how those office procedures were
ineffective in this instance due to unusual circumstances, and how new office procedures have
been implemented to prevent future defaults. The notice informed counsel that a revised motion
must be received by the Commission within 45 days of the date of the notice, or else the motion
would be denied with prejudice.

N.C. Granite’s counsel failed to respond to the Commission’s notice. Accordingly, on
November 22, 2011, the Commission issued an Order dismissing N.C. Granite’s motion to
reopen.

On December 22, 2011, the Commission received from N.C. Granite’s counsel an
“amended motion” seeking to reopen the penalty assessment.

The amended motion contained
an affidavit from the Safety Manager which described a new procedure which N.C. Granite has
instituted, including assigning responsibility to more than one individual, to make sure that future
contests will be submitted in a timely manner.

The amended motion also included an affidavit by counsel which stated that upon
receiving the Commission’s September 28, 2011 notice, counsel re-drafted the motion and an
affidavit for the Safety Manager and emailed it to him. The Safety Manager signed and returned
the affidavit by email on October 6, 2011. Counsel states that she immediately sent the package
containing the motion, affidavit and attachments to her law firm’s front office staff for faxing and
mailing to the Commission. Counsel states that she believed that the motion had been filed.
Counsel further states that on November 22, 2011, she received the Commission’s Order of
Dismissal. Counsel states that she then investigated and discovered no evidence that the
amended motion had ever been submitted. After talking with the front office staff, counsel was
uncertain what had happened to the package, but thought it might have been mislaid in the course
of office renovations.  

In evaluating this motion, we note that counsel failed to respond to the Commission’s
September 28, 2011 notice informing N.C. Granite that the original motion was deficient.
Counsel’s explanation – that her law firm’s front office staff somehow lost the package
containing the amended motion and affidavit of the Safety Manager – bespeaks a completely
inadequate and unreliable internal processing system. However, we note that counsel has
implemented new procedures in her law office.

The Commission has made it clear that where a failure to contest a proposed assessment
results from an inadequate or unreliable internal processing system, the operator has not
established grounds for reopening the assessment. Oak Grove Res., LLC, 33 FMSHRC 103, 104
(Feb. 2011); Double Bonus Coal Co., 32 FMSHRC 1155, 1156 (Sept. 2010); Highland Mining
Co., 31 FMSHRC 1313, 1315 (Nov. 2009); Pinnacle Mining Co., 30 FMSHRC 1066, 1067 (Dec.
2008); Pinnacle Mining Co., 30 FMSHRC 1061, 1062 (Dec. 2008). The fact that it was counsel
who had the inadequate or unreliable internal processing system does not affect our analysis,
because a client may be held responsible for the acts and omissions of its attorney. M3 Energy
Mining Co., 33 FMSHRC 1741, 1746 (Aug. 2011); Keokee Mining, LLC, 32 FMSHRC 64, 66
n.1 (Jan. 2010).

Nevertheless, in this case we conclude that the balance of equities favors reopening the
penalty assessment. Clearly, N.C. Granite had contested the underlying citation and was actively
litigating it, with both written discovery and depositions. In this posture, the failure of the Safety
Manager to realize that the proposed penalty assessment must also be contested is excusable. See
Clean Energy Mining Co., 28 FMSHRC 87 (March 2006) (failure to contest proposed penalty
held excusable where operator contested underlying citation but inadvertently paid proposed
penalty). Moreover, N.C. Granite has explained how it has instituted a new procedure to ensure
that proposed penalty assessments will be timely contested.

Therefore, we hereby reopen this matter

and remand it to the Chief Administrative Law
Judge for further proceedings pursuant to the Mine Act and the Commission’s Procedural Rules,
29 C.F.R. Part 2700. Accordingly, consistent with Rule 28, the Secretary shall file a petition for
assessment of penalty within 45 days of the date of this order. See 29 C.F.R. § 2700.28.

/s/ Mary Lu Jordan

Mary Lu Jordan, Commissioner

/s/ Michael G. Young

Michael G. Young, Commissioner

/s/ Patrick K. Nakamura

Patrick K. Nakamura, Commissioner

Distribution:

Nichelle Young, Esq.

Law Office of Adele L. Abrams, P.C.

4740 Corridor Place, Suite D

Beltsville, MD 20705

W. Christian Schumann, 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

Chief Administrative Law Judge Robert J. Lesnick

Federal Mine Safety & Health Review Commission

1331 Pennsylvania Avenue, N.W., Suite 520N

Washington, D.C. 20004-1710