Oak Grove Resources, LLC (Commission decision, October 11, 2011)

Plain-English summary

Oak Grove Resources asked the Commission to reopen a $47,152 penalty assessment that became final when its contest was not mailed to MSHA. The company said its safety director left the reviewed assessment for a clerk, but the clerk never received it. The Commission held that this unexplained handoff failure showed an inadequate or unreliable internal processing system, particularly because Oak Grove had made three similar recent reopening requests. It also noted the Secretary's unrebutted evidence of roughly $738,439 in delinquent penalties across 21 earlier cases. Oak Grove did not establish good cause or excusable neglect, so reopening was denied with prejudice.

Decision snapshot

• Governing provision: 30 U.S.C. § 815(a)
• Outcome: The motion to reopen the final $47,152 assessment was denied with prejudice.
• Key point: Repeated failures in an operator's internal assessment-processing system do not establish excusable neglect, especially when the operator does not answer evidence bearing on good faith.

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

October 11, 2011

SECRETARY OF LABOR,  

MINE SAFETY AND HEALTH  

ADMINISTRATION (MSHA)  

v.

OAK GROVE RESOURCES, LLC  

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Docket No. SE 2011-465

A.C. No. 01-00851-245478

BEFORE: Jordan, Chairman; Duffy, Young, Cohen, 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 April 25, 2011, the Commission received from Oak Grove Resources, LLC (“Oak Grove”) a motion made by counsel 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 indicates that the proposed assessment was delivered on February 11, 2011, and became a final order of the Commission on March 14, 2011. Oak Grove asserts it has an established system for processing penalty assessments. Here, however, the Safety Director left the reviewed assessment for the Safety Clerk, who was supposed to forward it to a Senior Manager at Oak Grove’s parent company to mail to MSHA, but the Clerk never received it. Upon discovering the contest was never submitted, the Senior Manager contacted counsel, and the motion to reopen was filed on April 22, 2011.

The Secretary opposes the request to reopen and notes that Oak Grove makes no showing of exceptional circumstances that warrant reopening. Specifically, the procedural failure described in this request is similar to three previous reopening requests submitted by Oak Grove. Therefore, contrary to Oak Grove’s assertion, it is apparent to the Secretary that Oak Grove has not instituted a system that ensures the proper processing of penalty assessments. Moreover, this proposed penalty amount of $47,152 is added to a delinquency of about $738,439 for twenty-one previous cases since January 2004. The Secretary asserts that Oak Grove’s delinquency record of repeatedly disregarding final penalty assessments for a period of years indicates it has not acted in good faith.

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. Pinnacle Mining Co., 30 FMSHRC 1061, 1062 (Dec. 2008); Pinnacle Mining Co., 30 FMSHRC 1066, 1067 (Dec. 2008); Highland Mining Co., 31 FMSHRC 1313, 1315 (Nov. 2009); Double Bonus Coal Co., 32 FMSHRC 1155, 1156 (Sept. 2010); Oak Grove Res., LLC, 33 FMSHRC 103, 104 (Feb. 2011). In this case, we conclude that the failure to follow up on the proposed assessment to see that it was properly processed and timely contested represents an inadequate or unreliable internal processing system as the Secretary has alleged. Sloss Industries, Corp. v. Eurisol, 488 F.3d 922, 935-36 (11th Cir. 2007); Gibbs v. Air Canada, 810 F. 2d 1529, 1537 (11th Cir. 1987).

We also note that this type
of failure appears to be part of a pattern for Oak Grove, as shown by the fact that it also occurred in three other default cases recently before the Commission, Docket Nos. SE 2009-812-M, SE 2009-850 and SE 2011-16. See Oak Grove Res., LLC, 32 FMSHRC 1253, 1254 (Oct. 2010); Oak Grove Res., LLC, 33 FMSHRC _____, No. SE 2011-16 (June 7, 2011).

Additionally, it is well recognized in federal jurisprudence that the issue of whether the movant acted in good faith is an important factor in determining the existence of excusable neglect. Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395 (1993); FG Hemisphere Assocs., LLC v. Democratic Republic of Congo, 447 F.3d 835, 838 (D.C. Cir. 2006). Likewise, the Commission has recognized that a movant’s good faith, or lack thereof, is relevant to a determination of whether the movant has demonstrated mistake, inadvertence, surprise or excusable neglect within the meaning of Rule 60(b)(1) of the Federal Rules of Civil Procedure. M.M. Sundt Constr. Co., 8 FMSHRC 1269, 1271 (Sept. 1986); Easton Constr. Co., 3 FMSHRC 314, 315 (Feb. 1981); H&D Mining, Inc., 33 FMSHRC ____, slip op. at 3, No. KENT 2011-1410 et al (Sept. 15, 2011). The operator’s failure to respond to the Secretary’s argument that Oak Grove’s delinquency history demonstrates bad faith supports our conclusion that Oak Grove has not met its burden of establishing entitlement to extraordinary relief.

Having reviewed Oak Grove’s request and the Secretary’s response, we conclude that Oak Grove has failed to establish good cause for reopening the proposed penalty assessment, and deny its motion with prejudice.

/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:

R. Henry Moore, Esq.

Jackson Kelly, PLLC

Three Gateway Center

401 Liberty Avenue, Suite 1340

Pittsburgh, PA 15222

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

US Department of Labor

1100 Wilson Blvd. 25th Floor

Arlington, VA 22209

Chief Administrative Law Judge Robert J. Lesnick

Federal Mine Safety & Health Review Commission

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

Washington, D.C. 20001-2021