Mineral Recovery Specialists, Inc.

Plain-English summary

Thomas P. Dye alleged that Mineral Recovery Specialists, Inc. discriminated against him after he insisted that repaired equipment be fully safety-tested before it returned to service. He sought to add Recovery Dynamics LLC and TBD LLC as respondents, arguing that the companies shared owners, employees, addresses, and other business resources with Mineral Recovery Specialists. Judge Richard W. Manning found that the evidence did not show either company operated the Cotter Mill, was a successor or alter ego of Mineral Recovery Specialists, or should be liable for the alleged discrimination. He denied the motion to amend the complaint.

Decision snapshot

• Governing provision: 30 U.S.C. § 815(c)
• Outcome: The motion to add Recovery Dynamics LLC and TBD LLC as respondents was denied.
• Key point: Shared ownership, employees, office resources, or business relationships did not by themselves establish that related companies were mine operators, successors, or alter egos liable under the Mine Act.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION
1244 SPEER BOULEVARD #280
DENVER, CO 80204-3582
303-844-3577/FAX 303-844-5268

                                    February 6, 2003

THOMAS P. DYE II, : DISCRIMINATION PROCEEDING
Complainant :
: Docket No. WEST 2002-408-DM
: RM MD 02-11
v. : Mine I.D. 05-01732
: Cotter Mill
MINERAL RECOVERY SPECIALISTS, INC., :
Respondent :

       ORDER DENYING MOTION TO AMEND COMPLAINT

TO INCLUDE RECOVERY DYNAMICS LLC AND TBD LLC AS RESPONDENTS

    This proceeding was brought by Thomas P. Dye against Mineral Recovery Specialists,

Inc., (“MRSI”) under section 105(c) of the Federal Mine Safety and Health Act of 1977, 30
U.S.C. § 801 et seq. (“Mine Act”) and 29 C.F.R. § 2700.40 et seq. The complaint alleges, in part,
that MRSI violated section 105(c) of the Mine Act when it did not hire Dye as a permanent
employee because he insisted that a recently repaired piece of equipment be fully safety-tested
before it was put back into service. MRSI denies the allegations in the complaint. MRSI states
that the business of the company has ceased and that it is in the process of winding up and
liquidating its affairs.

    Mr. Dye filed a motion to amend the complaint to add Recovery Dynamics LLC and

TBD LLC as respondents. Mr. Dye states that Recovery Dynamics, also known as Recodyne, is
the predecessor of MRSI. It appears that Recovery Dynamics entered into an agreement as a
subcontractor to CMS Enterprises Company to provide engineering and design services for a
zirconium recovery project at the Cotter Mill, owned and operated by Cotter Corporation. The
owners of Recovery Dynamics incorporated MRSI to perform this work. All rights and
responsibilities under the agreement were assigned to MRSI. Mr. Dye alleges that Recovery
Dynamics and MRSI are one and the same company because they have the same address, phone
number, and fax number and because they share other similarities. He alleges that these two
entities commingled funds. He also states that they shared employees. He bases his motion on
documents that he located on the Internet, records that were kept in the MRSI trailer at the Cotter
Mill, and the written statements of Rene L. Lucas, who was the shipping and receiving
administrator for MRSI at the mill. Dye states that Dan Dilday was the owner of MRSI and was
its project manager at the mill. Mr. Dilday was also working on the White Mesa Mill project for
Recovery Dynamics. Thus, Dilday was employed by both entities. Mr. Dye also states that
MRSI is owned by a company called TBD LLC. He states that TBD is also owned by Dilday
and is located at the same address as MRSI and Recovery Dynamics.

   The record in this case does not reveal who owns Recovery Dynamics, TBD, and MRSI.

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Dye contends that Mr. Dilday was the sole owner of these companies, but he offered no proof.
MRSI admits that the owners of MRSI also own Recovery Dynamics. Dye enclosed 19
attachments to support his motion. Many of these attachments are Internet records kept by the
Tennessee Secretary of State. These records show that Mr. Dilday was the registered agent for a
number of companies including TBD and EN2 LLC, which is a medical equipment supply
company. (Attach. 2 & 15). The principal office of these companies is listed as 200 East Main
Street, 6th Floor, Johnson City, Tennessee. These records show that a number of other
companies are also headquartered at the same address including MSRI and Recovery Dynamics.
(Attach. 2, 5, 16 & 19). These records also list David R. Tierney and W. Dan Black as registered
agents for Recovery Dynamics. (Attach. 18 & 19). None of these records specify who are the
shareholders of these corporations.

     A written statement of Ms. Lucas explains that there was a drawer of files in the MRSI

trailer at the Cotter Mill relating to Recovery Dynamics’ work for International Uranium
Corporation in Utah. (Attach. 1). Ms. Lucas helped organize files for MRSI and in her
statement she asserts that over three million dollars was paid to MRSI under the relevant contract
between March 2000 and January 2001. Id. Mr. Dye contends that the two companies must
have commingled funds because MRSI is now claiming that it is insolvent. Ms. Lucas states that
“I find it odd that MRSI would claim that they’re broke when I know for a fact that, though
MRSI did buy some equipment . . . , a major portion of what they received was for salaries,
wages, expenses, and services.” (Attach. 1 at 2).

    Dye also produced Internet records of the Colorado Secretary of State to show that

Dilday was president of Rooster’s Bar and Grill, Inc., in Canon City, Colorado. (Attach. 6).
Dye and Lucas visited this establishment and state that they were told by Christine Smith that
Mr. Dilday sold his interest in the bar for $1. (Attach. 7). Ms. Smith, who told them that she is
the current owner of the bar, advised Dye and Lucas that she had to pay $60,000 for these same
shares. Lucas’s statement on this matter includes other allegations including a description of a
conversation Ms. Smith said that she overheard at her bar to the effect that MRSI made sure that
the zirconium recovery project failed so that it “could file the patent [on the zirconium recovery
process] and collect the insurance money.” According to the statement, the insurance money
was obtained by deliberately destroying equipment.

    Section 105(c)(1) provides that no person shall discharge or in any manner discriminate

against a miner in any coal or other mine subject to the Mine Act because he has made a safety
complaint. A miner is defined as any individual working at a mine. A “coal or other mine” is
defined in section 3(h)(1) of the Mine Act to include facilities used in the milling of minerals.
The term “person” is defined in section 3(f) as any “individual, partnership, association,
corporation, firm, subsidiary of a corporation or other organization.” In this case, Mr. Dye filed
a complaint with the Department of Labor’s Mine Safety and Health Administration (“MSHA”)
alleging that MRSI discriminated against him for making safety complaints in violation of
section 105(c). When MSHA determined that Mr. Dye was not discriminated against, he
brought this action on his own behalf. At all pertinent times, Dye was employed by MRSI at its
project at the Cotter Mill.

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   Mr. Dye was never employed by Recovery Dynamics. Recovery Dynamics was not a

mine operator at the Cotter Mill. A mine “operator” is defined in section 3(d) of the Mine Act as
“any owner, lessee, or other person who operates, controls, or supervises a coal or other mine or
any independent contractor performing services or construction at such mine.” MRSI was an
independent contractor performing services as an operator at the Cotter Mill. There has been no
showing that Recovery Dynamics was in any way involved in operating, controlling or
supervising the work being performed at the Cotter Mill. There has also been no showing that
Recovery Dynamics was an independent contractor performing services or construction at the
Cotter Mill.

    The fact that the owners of Recovery Dynamics incorporated MRSI to carry out the terms

of the contract to provide services for the zirconium recovery project does not establish that
Recovery Dynamics was an operator at the Cotter Mill. It is clear that both corporations used the
same office and phone system in Johnson City, Tennessee. It is also clear that the two
corporations shared some employees. These facts do not establish that the two corporations
were one and the same or that Recovery Dynamics was an operator at the Cotter Mill. Although
it appears that Mr. Dilday was employed by both corporations, there is no evidence to show that
he was working for anyone other than MRSI when carrying out his duties under the contract at
the zirconium recovery project. The information provided by Mr. Dye does not prove that the
two corporations should be treated as one mine operator. The evidence concerning the money
paid MRSI under the contract is just an assertion; it does not establish that the two companies
commingled funds. I conclude that Recovery Dynamics was not an operator at the Cotter Mill
and cannot be held liable for any discrimination against Dye under section 105(c) of the Mine
Act.

    Mr. Dye presented very little information to support his motion with respect to TBD.

Dye apparently bases his contention that TBD owns MRSI on the information he obtained when
he entered the name of MRSI’s website (mineralrecovery.com) at domainwatch.com, which
apparently is an Internet resource that provides information on Internet domain names. When he
entered the website name for MRSI at the domain watch website, it listed TBD LLC as the
“organization” that holds the domain name. (Attach. 14). This information is insufficient to
establish ownership. Although it is clear that Dilday has a relationship with TBD, there is no
showing that TBD was an operator at the Cotter Mill. For the reasons discussed above, I
conclude that there is no proof that TBD was an operator at the mill and I conclude that TBD is
not subject to liability under section 105(c) of the Mine Act.

   A court must generally recognize and uphold a corporate entity unless specific, unusual

circumstances call for the exception. (18 Am. Jur. 2d Corporations § 58, at 868-69). If a
corporation is used as an intermediary to perpetrate fraud or promote injustice, its identity as a
corporate entity may be pierced. The “corporate veil may be pierced . . . when . . . the corporate
form would otherwise be misused to accomplish certain wrongful purposes, most notably fraud.”
United States v. Bestfoods, 524 U.S. 51, 61 (1998). I find that Mr. Dye did not establish that
MRSI was used by its owners to perpetrate fraud or promote injustice. Dye presented
information that he believes shows that MRSI, Recovery Dynamics, and TBD were rather shady

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operations that engaged in fraudulent transactions, but this information is insufficient to establish
that allegation because the information presented is pure speculation and hearsay. Mr. Dye has
not presented sufficient evidence to warrant piercing the corporate veil.

    The corporate form can also be set aside in certain situations if it can be shown that the

unity of ownership and interest is so great that the individuality or separateness of two
corporations has ceased. (18 Am. Jur. 2d Corporations § 56, at 861-62). I find that Mr. Dye
failed to establish that MRSI was the alter ego of Recovery Dynamics or TBD. The fact that
Recovery Dynamics and MRSI had the same owners is not enough to ignore the corporate form.
Likewise, that Dilday performed services for both corporations and that all three corporations
used the same address and support staff is insufficient to establish that they were alter egos.
“The fact that the stockholders, officers or directors in two corporations may be the same persons
does not operate to destroy the legal identity of either corporation, nor does the fact that one
corporation exercises a controlling influence over another through the ownership of stock or
through the identity of stockholders make either the agent of the other or merge the two
corporations into one. . . .” (Id. at § 57, p 865). Dye has not demonstrated that financial
transactions were improperly accounted for in the books of the corporations or that the
corporations did not honor the corporate form in all respects. It has not been established that
Recovery Dynamics or TBD were in any way involved at the Cotter Mill or that the three
corporations were treated as one by the owners. As discussed above, Dye’s allegations of
fraudulent transactions is too speculative to form the basis for the motion.

   In some circumstances, a successor may be required to remedy wrongful discrimination.

A successor is a corporation that assumes the rights and liabilities of the corporation that
engaged in the discrimination. In such cases a variety of relevant liability and economic factors
are considered, as follows:

           (1) whether the successor company had notice of the charge, (2)
           the ability of the predecessor to provide relief, (3) whether there
           has been a substantial continuity of business operations, (4)
           whether the new employer uses the same plant, (5) whether he uses
           the same or substantially the same work force, (6) whether he uses
           the same or substantially the same supervisory personnel, (7)
           whether the same jobs exist under substantially the same working
           conditions, (8) whether he uses the same machinery, equipment,
           and methods of production, and (9) whether he produces the same
           products.

Sec’y of Labor on behalf of Corbin v. Sugartree Corp., 9 FMSHRC 394, 397-98 (Mar. 1987)
(citation omitted). It has not been shown that Recovery Dynamics or TBD are successors to
MRSI. MRSI performed services at the Cotter Mill for about two years. MSRI is no longer
performing any services at the mill and neither Recovery Dynamics nor TBD ever performed
any services at the mill. It has not been shown that the same jobs exist at Recovery Dynamics or
TBD or that the same services are provided by Recovery Dynamics or TBD at any location in the
United States. Consequently, I conclude that Mr. Dye has not established that Recovery
Dynamics or TBD are successors to MRSI.

   For the reasons discussed above, Mr. Dye’s motion to amend his complaint of

discrimination to include Recovery Dynamics LLC and TBD LLC as respondents is DENIED.
.

                                        Richard W. Manning
                                        Administrative Law Judge

Distribution:

Mr. Thomas P. Dye, 1428 S 4th Street, Canon City, CO 81212-9664

Mineral Recovery Specialists, Inc., 200 E. Main Street, 6th Floor, Johnson City, TN 37604

RWM

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