Secretary of Labor v. Jesse Creek Mining, LLC

Plain-English summary

Jesse Creek Mining did not answer MSHA's July 14, 2015 penalty petition, so the Chief Administrative Law Judge issued an order to show cause that became a default order on September 28, 2015. The company moved to reopen, giving three reasons: its safety director had been reassigned, an office employee failed to record receipt of the petition, and its lawyer never received a copy. The Secretary did not oppose reopening but pointed out that the petition was mailed and delivered to both the company and its counsel, and said his position should not be read as approving weak office procedures. A three-member majority reopened the case and vacated the default order, applying the Rule 60(b) standard and the principle that default is a harsh remedy. Commissioner Cohen dissented. He would have denied the motion, noting that a planned reassignment is not an emergency, that the company could not even identify the employee who mislaid the petition, that it never responded during the 30-day show cause period, that a UPS receipt showed delivery to counsel's office, and that Jesse Creek had filed a motion in another docket blaming the same reassignment. The case returns to the Chief Administrative Law Judge for proceedings on the merits.

Decision snapshot

• Cited standard(s): 29 C.F.R. § 2700.29 and 29 C.F.R. § 2700.69(b)
• Outcome: Proceeding reopened and the default order vacated by a 3 to 1 vote, with the case remanded to the Chief Administrative Law Judge.
• Key point: The Commission will usually lift a default when the Secretary does not oppose, but the dissent lays out the counter-rule: relief under Rule 60(b) should not go to an operator that creates and condones a system which predictably misses deadlines.

Full text (FMSHRC public release)

FEDERAL
MINE SAFETY AND HEALTH REVIEW COMMISSION

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

WASHINGTON,
DC 20004-1710

SECRETARY
OF LABOR,

MINE
SAFETY AND HEALTH   

ADMINISTRATION
(MSHA),       

v.

JESSE
CREEK MINING, LLC

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Docket
No. SE 2015-310

A.C.
No. 01-03422-381588

BEFORE: Jordan,
Chairman; Young, Cohen, and Althen, Commissioners

ORDER

BY: Jordan,
Chairman; Young, and Althen, Commissioners

This
matter arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C.   
§ 801 et seq. (2012) (“Mine Act”). On October 14, 2015, the Commission received
from Jesse Creek Mining, LLC. (“Jesse Creek”) a motion seeking to reopen a
penalty assessment proceeding and relieve it from the Default Order entered
against it.

On
August 26, 2015, the Chief Administrative Law Judge issued an Order to Show
Cause in response to Clayton’s failure to answer the Secretary of Labor’s July
14, 2015 Petition for Assessment of Civil Penalty. By its terms, the Order to
Show Cause was deemed a Default Order on September 28, 2015, when it appeared
that the operator had not filed an answer with the Judge within 30 days.     

Jesse Creek claims that it failed to
timely answer the Petition for three reasons: 1) the safety director at the
mine was reassigned; 2) an employee inadvertently failed to properly record
receipt of the Petition, which caused the operator to inaccurately record the
deadline for answering the Petition in a timely manner; and 3) counsel for the
operator never received the Petition and has no record of ever receiving it. The
Secretary does not oppose the request to reopen. However, he notes that the
Petition was clearly mailed and delivered to both the operator and its counsel.
He states that his decision not to oppose reopening in this case should not be
construed as condoning inadequate office procedures or failure to take
Commission procedural rules and orders seriously.

The
Judge’s jurisdiction in this matter terminated when the default occurred. 29
C.F.R.  § 2700.69(b). Under the Mine Act and the Commission’s procedural rules,
relief from a judge’s decision may be sought by filing a petition for
discretionary review within 30 days of its issuance. 30 U.S.C. §
823(d)(2)(A)(i); 29 C.F.R. § 2700.70(a). If the Commission does not direct
review within 40 days of a decision’s issuance, it becomes a final decision of
the Commission. 30 U.S.C. § 823(d)(1). Consequently, the Judge’s order here has
become a final decision of the Commission.  

In
evaluating requests to reopen final orders, the Commission has found guidance
in Rule 60(b) of the Federal Rules of Civil Procedure under which the
Commission may relieve a party from a final order of the Commission on the
basis of mistake, inadvertence, excusable neglect, or other reason justifying
relief. 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”); Jim
Walter Res., Inc. , 15 FMSHRC 782, 786-89 (May 1993). 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 will be permitted. See Coal Prep.
Servs., Inc. , 17 FMSHRC 1529, 1530 (Sept. 1995).

Having reviewed Jesse Creek’s request and the Secretary’s response, in the
interest of justice, we hereby reopen the
proceeding and vacate the Default Order. Accordingly, this case is remanded 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 .

/s/ Mary Lu Jordan

Mary Lu Jordan, Chairman

/s/ Michael G. Young

Michael G. Young, Commissioner

/s/ William I. Althen

William I. Althen, Commissioner

Commissioner
Cohen, dissenting:

I
dissent from my colleagues’ decision because I believe that Jesse Creek Mining,
LLC has not established good cause to reopen this civil penalty case.

As
grounds to reopen the proceeding, Jesse Creek asserts that the Safety Director
at the mine had been reassigned and therefore was not present to process and
answer the Petition for Assessment of Civil Penalty received from the
Secretary. In addition, the operator stated that an “unidentifiable” office
employee improperly failed to record receipt of the Petition upon delivery. Finally,
counsel for the operator asserted that she had never received a copy of the
Petition. The operator submits that its failure to timely contest the citations
at issue in this case was an “inadvertent error” within the meaning of Rule
60(b) of the Federal Rules of Civil Procedure. Operator’s Motion to Reopen, at
1.

In
my view, Jesse Creek’s three contentions that its failure to timely file the
form was the result of excusable inadvertence are insufficient, and the
operator has not established good cause to reopen the proceeding. 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. Shelter
Creek Capital LLC , 34 FMSHRC 3053, 3054 (Dec. 2012); 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 same principle applies to
an operator’s failure to file an answer to a Petition for Assessment of Civil
Penalty, as required by Commission Rule 29. 29 C.F.R. § 2700.29. Moreover, in
examining the operator’s asserted justifications for reopening a particular
case, the Commission has also considered whether the operator has demonstrated
a pattern of behaviors that are attributable to inadequate or unreliable
internal processing systems in other cases. See Oak Grove Res., LLC ,
33 FMSHRC 2378, 2379-80 (Oct. 2011). In the Pinnacle cases, we
emphasized that “[r]elief under Rule 60(b) should generally not be accorded to
an operator who creates and condones a system which predictably will result in
missed deadlines.” 30 FMSHRC at 1062; 30 FMSHRC at 1067.

With
respect to the Safety Director’s absence, the operator’s proffered explanation
is not adequate. The Safety Director was “reassign[ed] . . . to the workforce.”
Operator’s Motion to Reopen, at 1. Such a reassignment is not an unplanned-for
departure, but rather something which should cause a prudent operator to take
precautions and make plans. Jesse Creek had contested four S&S citations,
and was aware of the fact that the Secretary would file a Petition in the
future, which would require an answer pursuant to Commission Rule 29. It had a
duty to plan for the Safety Director’s reassignment, and to ensure that
adequate personnel were in place to handle future documents, including this
Petition, received from the Secretary. The operator’s motion does not provide
any indication of planning by Jesse Creek to ensure the proper processing of
penalty Petitions and other MSHA mailings upon the departure of the Safety
Director.

In
fact, the motion shows that the operator’s precautions were so inadequate that
the Petition was mislaid by an office employee who cannot even be identified. If
any planning had been done, Jesse Creek would presumably have known the
identity of its employees who processed communications from the Secretary only
a few months earlier.

Further,
this inadequate processing system does not appear to be of short duration. The
Secretary sent a copy of its Petition on July 14, 2015 by UPS overnight
delivery, and it was never processed by Jesse Creek. Six weeks later on August
26, 2015, Commission Chief Judge Lesnick issued an Order to Show Cause. At no
time during the 30-day “show cause” period set forth in the Order did the
operator respond. Jesse Creek provided no explanation for its failure to
respond to the Judge’s Order. Thus, months after the initial Petition was
mislaid, the operator was still not properly processing its MSHA-related
documents. This provides further indication that the operator’s system was
legally insufficient.

The
operator’s assertion that its counsel’s law firm did not receive the Petition
is not substantiated. The Secretary provided tangible evidence of the delivery
of a copy of the Petition in the form of a UPS receipt showing delivery to
“Boatman” at the office of operator’s counsel. Despite this evidence, the
operator provided no reply in support of its assertion that counsel’s law firm
did not receive the Petition. In light of that unrebutted evidence, it is not
appropriate to rely on the operator’s assertion with respect to the allegation
of non-delivery of the Petition to counsel.

I
am further convinced that good cause does not exist to reopen this case because
it is not an isolated incident. This is not the only time that Jesse Creek has
filed a motion to reopen claiming the same “inadvertence.” As noted above, the
Secretary’s Petition in this case was sent by UPS to Jesse Creek on July 14,
2015. A month and a half later, on September 1, 2015, MSHA mailed Jesse Creek a
proposed assessment which covered seven other citations and orders.  Jesse
Creek failed to timely contest these proposed penalties, and they became final
pursuant to section 105(a) of the Mine Act, 30 U.S.C. § 815(a). Jesse Creek has
filed a motion with the Commission to reopen these penalties, asserting the
exact same reason as asserted here – that the reassignment of its Safety
Director to the workforce caused a failure to process documents from MSHA. Docket
No. SE 2016-43. Hence, the operator’s failure to timely answer the instant
Petition was not the result of a single, isolated breakdown, but part of a
long-running issue with Jesse Creek’s internal procedures.

I
conclude from Jesse Creek’s own submissions and the submissions made by the
Secretary that this is not a matter of mere “inadvertence.” The operator
created and condoned an unreliable internal processing system, and failed to
take reasonable precautions in the course of reassigning its Safety Director. Jesse
Creek is an above-average sized operator with a large mine and presumably has
the resources to ensure that correspondence from the Secretary and the
Commission is properly handled. It failed to do so over a substantial period of
time. Therefore, I would deny its motion to reopen.

/s/ Robert F. Cohen, Jr.

Robert F. Cohen Jr., Commissioner

Distribution:

Gregory
D. Neil

Safety
Director

Jesse
Creek Mining, LLC

1615
Kent Dairy Rd.

Alabaster,
AL 35007

Rebecca
J. Oblak

Bowles
Rice, LLP

7000
Hampton Center

Morgantown,
WV 26505

W.
Christian Schumann, Esq.

Office
of the Solicitor

U.S.
Department of Labor

201
12th St. South, Suite 500

Arlington,
VA 22202-5450

Chief
Administrative Law Judge Robert J. Lesnick

Federal
Mine Safety & Health Review Commission

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

Washington,
DC 20004-1710

Melanie
Garris

Office
of Civil Penalty Compliance

Mine
Safety and Health Administration

U.S.
Department of Labor

201
12th St. South, Suite 500

Arlington,
VA 22202-5450