Daniel B. Lowe v. Veris Gold USA, Inc. and Jerritt Canyon Gold, LLC

Plain-English summary

Daniel Lowe had established that Veris Gold discriminated against him under the Mine Act, but relief and potential successor liability against Jerritt Canyon Gold remained unresolved. A bankruptcy court enforced its free-and-clear sale order, enjoined Lowe and Matthew Varady from pursuing successor liability in other proceedings, and warned that continued action could lead to monetary sanctions. Judge William B. Moran said he would not put the self-represented claimants at financial risk and dismissed Lowe's discrimination claim on his own initiative, while recognizing that the Commission could direct review. The order also disputed the bankruptcy judge's characterization of the Commission proceedings and explained the ALJ's view of reasonable assistance to self-represented parties. The Commission later vacated the dismissal as premature because neither party had requested it and the parties had not been allowed to choose and brief their positions. It remanded the cases to the Chief Administrative Law Judge for reassignment and further proceedings.

Decision snapshot

• Governing authority: 30 U.S.C. § 815(c)(3); 29 C.F.R. § 2700.71
• Outcome: Lowe's discrimination claim was dismissed on the ALJ's own initiative after the bankruptcy court threatened sanctions for continued successor-liability litigation.
• Subsequent review: The Commission vacated the dismissal and remanded for reassignment in west-2014-614-dm-commission.
• Key point: A judge cannot prematurely choose dismissal for the parties merely to shield self-represented claimants from a bankruptcy court's sanctions warning.

Full text (FMSHRC public release)

FEDERAL MINE
SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF
ADMINISTRATIVE LAW JUDGES

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

WASHINGTON, DC
20004-1710

TELEPHONE:
202-434-9933 / FAX: 202-434-9949

October 25, 2016

DANIEL
B. LOWE,

Complainant,

v.

VERIS
GOLD USA, INC.,

and

JERRITT
CANYON GOLD, LLC,

Respondents.

DISCRIMINATION
PROCEEDING

Docket
No. WEST 2014-614-DM

WE-MD
14-04

Mine:
Jerritt Canyon Mill

Mine
ID: 26-01621

ORDER
OF DISMISSAL

Jerritt Canyon Gold, LLC (“JCG”) (FKA
WBVG, LLC) filed a motion to reopen bankruptcy proceedings related to the Veris
Gold USA, Inc. case for the purpose of enforcing the sale order and related
injunction and seeking sanctions. Three attorneys appeared before bankruptcy
court Judge Gregg W. Zive on August 11, 2016 in support of the motion. [1] The motion
also sought to shorten the time for the Mine Safety and Health Act (“Mine Act”)
discriminatees Daniel Lowe and Matthew Varady to respond to the motion. The
motion to shorten the response time was filed on August 4, 2015 and granted the
following day by Judge Zive. A proceeding before Judge Zive ensued on August
11, 2016; the Judge expressed at the outset that he was greatly concerned that
there were proceedings being conducted in another administrative forum that
were violative of Section 362(a) of the bankruptcy code. [2] Motion Tr.
4.

As noted, in its motion, Jerritt Canyon
also sought sanctions against the Mine Act Complainants. Judge Zive announced
near the end of the hearing that he was not going to sanction Lowe and Varady,
but he then warned, “But you’ve got to stop. . . . No. You’re stopping. You’re
not going to go anymore. You’re not going to go before Judge Moran or any other

• • you’re stopping regarding any attempt against successor liability, because
    it’s not allowed pursuant to the order that’s final.” Motion Tr. 45-46. After
    acknowledging that he would not tell any Administrative Law Judge what to do
    and that it would be inappropriate to do so, the Judge distinguished his
    authority over Lowe and Varady, stating that he does have jurisdiction over
    them, and adding “ You will not do anything more. If you do, than I [ i.e.
    Judge Zive] would have to consider monetary sanctions because now I’ve put you
    on notice .” [3]
    Tr. 46 (emphasis added).

With the threat of imposing sanctions if
Lowe and Varady continued to pursue damages for the acts of discrimination by
Veris, and potential successor Jerritt Canyon Gold, this Court cannot put the
pro se, non-attorney Complainants in financial jeopardy. Therefore, it is
dismissing their claims and hopes, but does not order, that neither Lowe nor
Varady appeal this Court’s dismissal. The Complainants’ determination of
whether to bring an appeal is strictly theirs to make.

This Court’s Order of Dismissal
does not necessarily mean that Lowe’s and Varady’s Mine Act cases are
terminated, because the Commission may, pursuant to 29 C.F.R. §2700.71, review
this Court’s decision on its own motion. [4]
In the event that the Commission opts to review this dismissal, Lowe and Varady
could not be held accountable or subject to the threat of monetary sanctions
being imposed by Judge Zive.

The August 11, 2016 Hearing Before Judge
Zive

At the outset of the
hearing, Judge Zive noted that Veris sought bankruptcy protection in a Canadian
court on June 9, 2014, under Chapter 15 of the United States Bankruptcy Code. Tr.

4. On May 22, 2015, a Motion for entry of an order to recognize and enforce the
   Canadian sale order was made. Tr. 15. The sale was pursuant to Section 363 of
   the Code and the Judge remarked that provision has all of the due process
   protections as section 1141 of the Code. [5]
   The Judge assumed that the financier, “got some money together, formed this
   entity, and bought it,” adding that none of the creditors, secured and
   unsecured, got paid. Tr. 16. Thus, the Judge stated that if Lowe and Varady had
   a judgment they would not have been paid. [6]
   Tr. 16.

On May 29, 2015 the
Judge entered a sale order. The Judge stated he was aware that there was a
Section 364 first position lien to the debtor in possession (“DIP”) lender,
(variously referred to as “WB,” “Whitebox,” “Wbox 2014-1”), meaning that the
DIP had priority over any other secured interests. The Judge noted that
Whitebox advanced $15 million and created an entity known as WBVG, Inc. LLC, which
then, on June 5, 2015, changed its name to Jerritt Canyon Gold, Inc., and the
transaction closed on June 24, 2015. Tr. 19. Eighty percent (80%) of the
interest in Jerritt Canyon Gold was transferred to Canadian billionaire [7] Eric
Sprott. Tr. 19. The DIP, Wbox 2014-1, had the remaining 20% interest in the
mine. Continuing with his recounting of the events, Judge Zive stated that the
Canadian sale order occurred on May 28 [2015] and that he issued his order on
June 4th [2015]. Tr. 19. The Judge stated that those orders clearly provided there
would be no successor liability. [8]
Tr. 19. The Judge stated that, on June 18th, a motion to stay was filed by
Lowe, Varady and others but that, as judgment had been entered for the Respondent
on September 9, 2014, this was “well after” the complaints filed by Lowe and
Varady and therefore their complaints were pre-petition. Tr. 20.

The Judge found that
there was neither a legal nor a factual basis for a stay of the U.S. sale order
and that Lowe and Varady had not complied with the proper procedure and that
they had failed to provide any authority for the relief they sought. Tr. 22. On
September 2, 2015 the case was closed. The Judge stated that in a liquidating Chapter
11 there is no discharge and that Lowe and Varady’s claims can’t be satisfied
by the “purchaser or anybody subsequent because the injunction found in the
sale order, which is a final order entered in the bankruptcy case when it was
open, precludes it.” Tr. 24.

Addressing this Court’s comment about
the appearance of fairness in allowing Lowe and Varady, to determine through
discovery the status of Jerritt Canyon as a successor, the Judge stated,

[w]ell, a couple points. Jerritt
Canyon was the buyer, the successor. The point is it was the purchaser. What
did it purchase? Their assets. But even if it is, it is of no legal
significance because there's no successor liability.”

Tr. 27.

The Judge continued
that, as for this Court’s suggestion to Lowe and Varady in advance of their
appearance before the Judge, that they be allowed to have full discovery
regarding the principal stock holding officers of these various entities,

there's no point to that. Even if
it was appropriate, and it's not, there's no successor liability. There's no
point to let the proceeding before the Federal Mine Safety and Health Review
Commission to continue to determine if Jerritt is the successor because once
again, there's no successor liability. [9]

Tr. 27- 28.

The Judge stated that,

[y]our choice is not to do anything
or to ask the bankruptcy court to get relief from the stay so that you can
proceed with your claim, and then the court would look at your pleadings and
any opposition and make a decision. Happens all the time in bankruptcy cases,
where we will allow folks that have been injured in automobile accidents or
states or counties that have suffered environmental damage.

Tr. 31-32.

The Judge continued,

Then I would have made a decision. Unfortunately,
it probably wouldn't have made much economic difference to you -- and this is
what I'm really trying to get across – because there is -- and none of the other
debtors had any ability to satisfy your claim. I'm not saying that you weren't
discriminated again. That's not what I'm saying at all. What I'm saying is that
even if you were able to get some type of damages, that you couldn't collect it
from the debtors. There is no money. That's why Wbox 214 [sic] made a credit
bid and Deutsche Bank didn't overbid. That's why there were millions and
millions and millions of dollars lost in this enterprise and lost forever. And
there's also a provision under 363 of the Code that allows sales of asset to
occur if that's in the best interest of both the creditors and the debtor. And
that was the findings (sic) made by both the Canadian judge and me. You're
being treated exactly the same as every other unsecured creditor in this case.

Tr. 32-33.

The Judge acknowledged
that Lowe had a judgment but that, “it’s void - - it may be void ab initio as a
result of a violation of Section 362 of the Bankruptcy Code.” Tr. 36. The Judge
did allow that “[t]he United States Courts of Appeal say the bankruptcy courts
make that, and you… the Gruntz case, which dealt with a state court action,
said the state court judgment entered its opinion, but if the state court judge
gets it wrong, the parties are at their own peril.” Tr. 36. The Judge offered
that, “you [Lowe and Varady] probably should have got stay relief.” Tr. 37. The
Judge also remarked, “But every other creditor in this case didn't get paid,
and you're in exactly the same position. . . . And they didn't do anything
wrong either.” Tr. 39.   The Judge also remarked,

if you want to proceed in another
forum, in another place, and there's no exception to the stay, which I believe
there isn't in this case -- and I understand there may be some disagreement
with that, that's fine. But then you need to seek relief from this court. And
the prudent measure -- and the Ninth Circuit has -- . . . has indicated that
whenever there is even a doubt whether or not you need to seek relief, seek
relief from the stay.

Tr. 40.

The Judge continued,

My point is this. When those cases
were filed, everybody was given the same notice you were given. And claims can
be discharged, and if there's a sale of assets, it generally does not allow
successor liability, which is allowed pursuant to Section 363 of the code. And
there are lots of cases dealing with discrimination -- TWA was a discrimination
case, if I remember correctly. . . . And those were flight attendants, I think.
. . . And those claims went away. And that's the result. People lose their
pensions in bankruptcy court. It's no -- one takes no pleasure in that, but
that is how Congress has written the statute for policy reasons that it
believes are paramount, and I don't get to wave a magic wand and ignore them,
and the United States Supreme Court Law v. Siegel case about a year and a half,
two years ago made that clear. . . . Everybody says the bankruptcy court is a
court of equity. In a sense we are, but that doesn't mean we just get to say,
well, this would be fair, and therefore I get to do it.

Tr.
41-42.

And
still later, the Judge told Lowe and Varady, “if you think I'm wrong and you
want to go to another court and tell the other court your position -- . . . you
can do that. . . . And that's what you -- what I'm really trying to tell you is
that's what you should have done last June.” Tr. 47.

Following those remarks,
the Judge stated,

I'm granting the motion to reopen. I'm
going to grant the motion to enforce my sale order. And I'm going to make it
clear if it wasn't clear in the order itself. There's an injunction against any
attempt to proceed regarding successor liability because successor liability is
specifically prohibited by the terms of the sale order. And I'm going to
instruct counsel for Jerritt Canyon to provide written findings and conclusions...What
it means is I've reopened the bankruptcy case. . . . That's why we have two
motions. . . . first, I have to open the case. If I don't reopen the case, then
I can't enter the order to enforce my earlier sale order. So I'm granting the
motion to reopen under Section 350, and I find good cause exists. Then I'm
granting the motion to enforce the order no success liability and injunction
precluding, preventing, stopping [Varady] and Mr. Lowe from proceeding in any
other forum regarding successor liability.

Tr.
58-59.

He concluded, “I put Mr. Lowe and Mr. Varady on
notice that if they violate my order, I will enforce it with monetary
sanctions.” Tr. 60.

Following the August
11, 2016 hearing, on September 2, 2016, Judge Zive issued his order affirming
his remarks at that hearing. [10]

Accordingly, as discussed
above, the Court feels it has no option but to dismiss this proceeding. Despite
the outcome, the Court believes that further discussion is warranted.

Discussion      

Judge Zive noted at the outset of the
proceeding that he was aware of the discrimination complaints brought by Lowe,
Varady and others. However, he then proceeded to state that he would “make the
record now, Administrative Judge Moran had telephoned [him] while the case was
pending, asking if [he] was aware of these [discrimination] claims.” Motion Tr.

5. [11] The Judge [12] couldn’t
   remember exactly what he told Judge Moran, nor did he take any notes, but he
   “remembered distinctly” telling this Court that he could not provide any legal
   advice, that it would be inappropriate to do so and that the discrimination
   complainants should obtain legal counsel, but that “[a]pparently that advice
   was not heeded.” Id.

The
problem with Judge Zive’s multiple references to speaking with this Court in
the transcript of his proceeding on Jerritt Canyon’s motion is that such
conversations never occurred. [13]

Upon reading the
transcript and Judge Zive’s multiple references to alleged conversations with
this Court, it was necessary, on August 16, 2016, for the Court to send the
Judge a letter calling attention to his multiple, egregious factual errors in
asserting that there had been such communication. This Court informed the Judge
that there had never been any sort of communication between Judge
Zive and this Court. The letter advised,

Judge Zive, you are mistaken. I
have never called you, never spoken with you and never emailed you. Perhaps you
spoke on some prior occasion with another administrative law judge, on that I
can only speculate, but there has never been any conversation or any form of
communication between us and, in the name of accuracy, I call upon you to
correct the record on this score. [14]

Judge
Zive recounted that he presided at the hearing to recognize the sale order,
which had been approved by the Canadian court, and that he inquired of counsel
for the debtor if they were aware of the discrimination claims and that he was
“told yes and they were being handled.” Id. Noting that those
discrimination complaints were brought by individuals and not by “any
governmental body or regulatory agency,” the Judge stated that the automatic
stay provision at Section 362(b)(4) appeared inapplicable. [15] Id .
at 5-6. The Judge then noted that the bankruptcy court retains jurisdiction to
determine if the automatic stay provision applies. [16] Id. at

6. Upon review of all the pleadings, the Judge concluded, “there was no money
   and [he] was satisfied that that was the situation and obviously so was the
   judge in Canada.” Id. at 6-7.

Judge Zive then noted that the “sale
order that was entered clearly provides that there will be no successor
liability for the purchaser,” and that a “new entity was formed before the
transaction closed on June 24 th .” Id. at 7. The Judge then
added that no request to seek relief to allow the discrimination claims to
proceed in the administrative forum was made and that, apart from whatever the
merits may be, it was the process that was not followed. Id . Judge Zive
then continued that,

astoundingly, it would appear that
the failure to follow that process was being advocated by an administrative law
judge who, so far as [the Judge] [could] determine, has an obligation to be
fair and impartial, and yet is clearly providing legal advice to at least two
of the claimants, notwithstanding the disclaimer that he was not doing so. [The
Judge didn’t] know how anyone who could be opposed or on the other side of the
discrimination claims could believe that they were going to get a fair hearing
when [one] read[s] emails indicating that the administrative law judge is
providing advice and - - to those claimants that are before him and telling
them how to proceed in this [Judge Zive’s] court. [17]  

Id. at 7-8.

It is difficult to know where to begin
with Judge Zive’s comments. First, fair hearings on the issue of liability
had occurred; the decisions upholding the discrimination complaints of Mr. Lowe
and Mr. Varady had long ago been decided by this Court: October 15, 2015 in the
case of Mr. Lowe, 2015 WL 6447553, and September 2, 2015, in the case of Mr.
Varady, 2015 WL 5307780. In the Varady matter, defense counsel hired by Veris
appeared before this Court. When the evidence at that hearing made it plain to
all that Varady was the victim of discrimination, Veris folded its tent and its
counsel withdrew. The same counsel then announced at the outset of the Lowe
discrimination complaint the week following the Varady hearing, that it was
withdrawing any defense to the Lowe matter as well. However, the damages phase
has never occurred for either complaint. Consequently, no amount of
damages has been determined for either complainant.

As to the Judge’s
assertion that this Court was “clearly providing legal advice to at least two
of the claimants, notwithstanding the disclaimer that [it] was not doing so,”
there are two points to be made. The Court made it plain when communicating
with the non-attorney pro se complainants, Lowe and Varady, about the
motion they faced by Veris to reopen the bankruptcy case, that its comments were
in response to Mr. Lowe’s communication to this Court upon being informed of
the Veris motion before the bankruptcy court. Far from providing legal advice,
the Court noted:

If [the Court] were in [Lowe’s]
position, when eventually before the Bankruptcy Court, [the Court] would make
the following points before that Court, all as expressed in the various
orders/decisions this Court has issued in your discrimination proceeding before
the Federal Mine Safety and Health Review Commission . You should not
view the points which follow as restricting the contentions that you may make
at the Bankruptcy Court hearing, as you may have other arguments to present
before that court. I would also provide the Bankruptcy Court with copies of all
orders/decisions issued by this Court as well as those issued by Mine Act Judge
David P. Simonton and the related Mine Review Commission’s issuances.

August 8, 2016 email to Mr. Lowe, which email also
copied the various Veris/Jarrett Canyon attorneys (emphasis added).

That the Court referenced its prior
orders to the pro se complainants to assist them before the daunting prospect
of facing multiple lawyers for Veris, Jerritt Canyon Gold, and Wbox 2014-1 LTD
did not amount to providing legal advice. The Court considers it as its duty,
in fact views it as part of its responsibility that essential justice be
provided, to provide a pro se litigant with clarification on the significance
of its decisions and the nature of the proceedings they face. Every person has
a fundamental right to access justice through a fair, impartial, and meaningful
hearing, regardless of whether they are represented by counsel. In particular,
judges have an ethical duty to be both impartial and fair. Model Code of
Judicial Conduct Canon 2 (1997) (hereinafter MCJC). Pro se litigants often find
it particularly difficult to navigate complex legal and procedural issues while
attempting to obtain a full hearing on the merits of their dispute. Therefore,
judges have the power to make reasonable accommodations in the courtroom to
ensure that pro se litigants are not unfairly hindered in exercising their
Constitutional right to a fair hearing. The MCJC was revised in 2007 to
clarify, “it is not a violation of [the canon of impartiality] for a judge to
make reasonable accommodations to ensure pro se litigants the opportunity to
have their matters fairly heard.” Comment 4 to MCJC.

There is not yet
comprehensive guidance on what specific accommodations are “reasonable,” or
what accommodations are prohibited. Jona Goldschmidt, Judicial Assistance to
Self-Represented Litigants, 17 Mich. St. J. Int'l L. 601, 608 (2009). When
confronted with this issue, the Supreme Court of West Virginia held,

The
fundamental tenet that the rules of procedure should work to do substantial
justice . . . commands that judges painstakingly strive to insure that no
person’s cause or defense is defeated solely by reason of their unfamiliarity
with procedural or evidentiary rules. . . . Cases should be decided on the
merits, and to that end, justice is served by reasonably accommodating all
parties, whether represented by counsel or not. This “reasonable accommodation”
is purposed upon protecting the meaningful exercise of a litigant’s
constitutional right of access to the courts.

Blair v. Maynard ,
324 S.E.2d 391 (West Virginia 1984).

The Court considers it no less than a
judicial obligation to provide pro se parties with reasonable assistance. Needless
to say, “this requires a balancing of the rights of both parties.” The Role of
the Judge in Pro Se Litigation, 10 No. 6 Divorce Litigation 115 (1998). There
is an important difference between judicial neutrality and judicial passivity,
especially in the pro se context when justice occasionally demands judicial
engagement, in service of true neutrality, to balance out the disadvantages of
only one party having the benefit of counsel. Richard Zorza, Esq., The
Disconnect Between the Requirements of Judicial Neutrality and Those of the
Appearance of Neutrality When Parties Appear Pro Se: Causes, Solutions,
Recommendations, and Implications, 17 Geo. J. Legal Ethics 423 (2004). The
Court’s task of balancing the judge’s function as an impartial arbiter against
the “necessity that the pro se litigant’s case be fully and competently
presented” is sometimes a difficult one. ABA Standards, Commission on Standards
of Judicial Administration, Trial Courts § 2.23 at 45-47 (1976). [18]

Judge Zive then proceeded to note that
the discriminated former employees of Veris had been before him earlier when
seeking to stay the sale order, and that they were creditors and that their
claims existed prior to the bankruptcy petition, citing the definition of a
creditor as an “entity - -and that includes an individual [19] - - that
has a claim against the debtor that arose at the time of or before the order
for relief concerning the debtor.” Id . at 8.

The Court certainly respects the jurisdictional
expressions made by Judge Zive, but it does not believe that this Court’s
perspective is as unsound as the Judge asserted. That the subject of
discrimination claims and their interface with bankruptcy protection is a
thorny issue has been recognized by others:

Bankruptcy courts, facing a surge
in claims stemming from employment discrimination, are slowly exploring the
impact of this area of law on case administration. An inherent conflict exists
between the policies underlying employment discrimination and bankruptcy laws. On
the one hand, employment discrimination laws seek to protect employees by
making them whole for losses suffered, while at the same time deterring
management from discriminating again. Conversely, the bankruptcy reorganization
process stresses rehabilitation of the debtor and equality of distribution
among the claimants. Although the Bankruptcy Code (the “Code”) affords some
protection to victims of discrimination, their claims are not afforded special
treatment under the bankruptcy laws. Low dollar distributions on discrimination
claims eviscerates the rehabilitative and deterrent goals of Title VII of the
Civil Rights Act of 1964 and state discrimination statutes. The swelling tide
of insolvencies involving parties to discrimination lawsuits warrants an
analysis of both the treatment of employment discrimination claims in
bankruptcy and the impact of these claims on the bankruptcy process… and the
ability to exempt employment discrimination claims in bankruptcy.

Joanne Gelfand, The
Treatment of Employment Discrimination Claims in Bankruptcy: Priority Status,
Stay Relief, Dischargeability and Exemptions, 56 U. Miami L. Rev. 601, 602
(April 2002).

Although
the Discrimination Claims in Bankruptcy article refers to the
automatic stay provision, 11 U.S.C. §362 and acknowledges that it does not
apply “to stay the commencement or continuation of proceedings by governmental
units to enforce their police or regulatory power or to enforce nonmonetary
judgments,” this Court finds it difficult to distinguish a Section 105(c)(3)
proceeding from a Section 105(c)(2) proceeding, simply because the government
launches the latter.

This
view arises because Congress did not establish a (c)(3) action as a lesser
claim and by providing such an action for an individual to pursue it was
effectively enforcing the governmental regulatory power through the individual.
Congress foresaw that the agency may get it wrong and therefore created the
alternative, but equal, avenue for relief against acts of discrimination
against miners. In that respect the Section 105(c)(3) action is arguably unique
among discrimination claims and can be viewed as indistinguishable by Congress’
inclusion of the provision.

In
addition, Veris proceeded to defend against Mr. Varady in the hearing before
this Court. It was only when it was beyond cavil that Veris would not prevail
that it packed up and left the Varady proceeding and quickly thereafter bailed
from the Lowe discrimination complaint.

Conclusion

For
the reasons set forth above, the Court hereby DISMISSES the
discrimination claim brought by Daniel B. Lowe.

SO ORDERED.

/s/
William B. Moran

William
B. Moran

Administrative
Law Judge

Distribution:

Danielle B. Lowe, P.O. Box 2609, Elko,
NV 89801, [email protected]

Matthew A. Varady, 701 S. 5th Street,

6, Elko, NV 89801, [email protected]

Mark Kaster, Esq., Dorsey & Whitney,
LLP, 1500 South 6th Street Minneapolis, MN 55402, [email protected]

Annette Jarvis, Esq., 136 South Main
Street, Suite 1000, Salt Lake City, UT 84101, [email protected]

Cathy L. Reece, Esq., Fennemore Craig,
P.C. 2394 East Camelback Road, Suite 600 Phoenix, AZ 85016, [email protected]

Shaun Heinrichs, Veris Gold, 688 West
Hastings Street, Suite 900, Vancouver, BC V6B 1P1, Canada

Tevia Jeffries Dentons, Canada LLP, 250
Howe Street, 20th Fl. Vancouver, BC V6C 3R8, Canada

Brad J. Mantel, Esq. Office of the
Solicitor, U.S. Department of Labor 201 12th Street, South, Suite 401
Arlington, VA 22202-5450, [email protected]

W. Christian Schumann, Esq., Office of
the Solicitor, U.S. Department of Labor, 201 12th Street, South, Suite 401,
Arlington, VA 22202-5450

[1] Local counsel
appeared for JCG, as did an attorney with Dorsey& Whitney, out of Salt Lake
City, and a third attorney with Fennemore Craig PC, out of Phoenix, on behalf
of Wbox 2014-1 LTD, opposing the two pro se non-attorney complainants in the
Mine Act discrimination proceedings, Mr. Daniel Lowe and Matthew A. Varady. Mr.
Lowe’s Mine Act docket number is listed in the caption. Mr. Varady’s Mine Act
discrimination docket number is WEST 2014-307. A separate order will be issued,
mirroring this one, but substituting Mr. Varady’s name and the docket number
for his case.

[2] 11 U.S.C. §362
is the automatic stay provision of the Bankruptcy Act. As the case had been
closed, there was no existing automatic stay. Therefore, the case first had to
be reopened by the bankruptcy court. In relevant part, §362 provides, “(a)
Except as provided in subsection (b) of this section, a petition filed under
section 301, 302, or 303 of this title, or an application filed under section
5(a)(3) of the Securities Investor Protection Act of 1970, operates as a stay,
applicable to all entities, of — (1) the commencement or continuation,
including the issuance or employment of process, of a judicial, administrative,
or other action or proceeding against the debtor that was or could have been
commenced before the commencement of the case under this title, or to recover a
claim against the debtor that arose before the commencement of the case under
this title.” 11 U.S.C. §362(a).

[3] Judge Zive’s
warning that he would consider imposing monetary sanctions against Lowe and
Varady are of concern because, apart from the automatic stay provision, the
Court does not know of the Judge’s authority to effectively stop a proceeding
in another tribunal. The Judge even seemed to contradict himself, telling Lowe
and Varady that if they think, “the orders that are entered as a result of
today’s hearing are incorrect, you have a remedy. You can ask a court to review
them. I am not the final word. I can, and often do, make mistakes. But you
don’t get to go to the [Mine Review] [C]omission. You need to exercise the remedies
that are provided by the Bankruptcy Code and the appellate rules statutes.” Tr.
46-47. Yet, later he acknowledged that the decision in Gruntz ,
“indicated that parties may request a state court or other forum to make a
determination if there has been a violation of the stay, but they run the risk
of the state court getting it wrong. And if the state court gets it wrong or
administrative law judge gets it wrong, all the proceedings and any orders
entered are void.” Tr. 9. Per, n. 12, infra the Judge’s reference to “ Gruntz”
was likely a cite to 202 F.3d 1074 (9th Cir. 2000). Ironically, although
the dicta in Gruntz certainly supports the Judge, the state court got it
right that the automatic stay did not void its criminal judgment. Id. at
1088.

[4] The section
provides: “At any time within 30 days after the issuance of a Judge's decision,
the Commission may, by the affirmative vote of at least two of the
Commissioners present and voting, direct the case for review on its own motion.
Review shall be directed only upon the ground that the decision may be contrary
to law or Commission policy or that a novel question of policy has been
presented. The Commission shall state in such direction for review the specific
issue of law, Commission policy, or novel question of policy to be reviewed.
Review shall be limited to the issues specified in such direction for review.” 20
C.F.R. 2700.71

[5] Not everyone agrees
with the Judge’s view that the due process protections under section 363 are
the same as section 1141. See this Court’s Order on Complainant’s motion
to amend, 38 FMSHRC 565, 578, n. 9 (citing George W. Kuney, “Misinterpreting
Bankruptcy Code Section 363(f) and Undermining the Chapter 11 Process,” 76 Am.
Bankr. L.J. (2002), and “Why Successor Liability Claims are not ‘Interests in
Property’ under Section 363(f),” 18 Am. Bankr. Inst. L. Rev. 697 (2010)).

[6] The Judge’s
remark that Lowe and Varady “would not have been paid” implicitly refers to
Veris. That is most certainly true, but the Mine Act’s successorship law would
inquire whether Jerritt Canyon could be held accountable. For that entity, the
Judge invoked his ruling that no successor would be liable.

[7]
Marianne
Kobak McKown, Going Private: Canadian billionaire buys Jerritt Canyon , Elko daily Free Press , June 26, 2015, available
at http://elkodaily.com/mining/canadian-billionaire-buys-jerritt-canyon/article_605d9414-8871-5695-878c-4c430c230929.html .

[8] The Judge, who
stated that he had “some experience with mining,” added, “I will confess now.
When I was a lawyer many, many years ago, I actually did work for Dee Gold and
for Barrick --

no,
I didn't do -- but for Newmont,” and expressed an upside to the sale as it “allow[ed]
this operation to go forward, which protected the jobs of the miners and, of
course, provided related economic benefit in the communities near the mine site.”
Tr. 41, 6. This suggested that the gold at Jerritt Canyon might otherwise be
left unmined, an unlikely event. Further, the multiple discrimination
complaints filed against Veris were equally important to “protecting the jobs
of the miners.” Around the time of those discrimination complaints, Veris was
also being reviewed to determine if it should be subject to a pattern of
violations charge by the Secretary of Labor.  

[9] With discovery
on the issue of successorship barred, the Judge’s determination means that the
financial relationships, if any, between those who had interests in Veris Gold
and Jerritt Canyon Gold will never be known and inquiry into the monitor’s
acknowledgement that “[w]hile the DIP Lender's lack of support for the various
EOIs might be perceived as a potential conflict of interest, the Monitor
remains of the view that the Credit Bid Transaction is the appropriate course
of action at this late stage of the proceedings,” will similarly not be known. Id .
at para. 39; 2016 WL 4158375 at *7. The Court is unaware of any on the record
discussion by the bankruptcy court inquiring into the potential conflict of
interest alluded to by the Monitor.

[10] The Judge’s order,
at his direction, was created by counsel for Veris/JCG and adopted by the Judge
who inserted his signature.

[11] To be clear,
the references are to Judge Zive’s statements during his August 11, 2016 motion
hearing.

[12] All references
to the “Judge” in this Order of Dismissal refer to Judge Zive. References to
the “Court” refer to the undersigned author of this Order, Judge William Moran.

[13] The Judge made
several other references during his hearing, claiming to have spoken with Judge
Moran. Among those errors at transcript page 12, the Judge states: “or Judge
Moran - - I think that’s how he’s referred to      is Administrative Judge
Moran - - who I already indicated that I talked to, seems like a very  nice man

• • responded to Mr. Lowe on August 8th.” Tr. 12. Later, the Judge remarked in
    the context of advice, “And that’s why I told Judge Moran he should tell you
    folks to get a lawyer.” Tr. 14. “And that’s why when Judge Moran called me some
    time ago, I - - as I do in every one of these cases, without exception, I
    strongly urged him to advise you, if that’s what he was going  to do - -.” Tr.
    34. As noted, the Judge never spoke with this Court at any time before his
    August 11, 2016 hearing and the only communication after that hearing
    was the Judge calling this Court to apologize for his errors.

[14] To his credit,
Judge Zive called this Court, twice, the same day the letter was sent to him. He
apologized for his errors and advised that the record in his case would reflect
his errors and include this Court’s letter to him. Judge Zive’s errors were not
limited to knowing whom he spoke with, as he twice referenced that “ the
solicitor general of the United States disagrees with [Lowe’s] position”
about miners being the most precious resource and that the bankruptcy court
disregards the Mine Act. Tr. 33 (emphasis added). It is the Solicitor of Labor
that took issue with this Court’s view, not the Solicitor General of the United
States.

[15] Though not
providing any specific case citations, the Judge stated, “there are a number of
cases finding that dealing with asbestos cases, dealing with SEC cases, dealing
with complaints regarding remediation of environmental hazards,” in support of
his statement that the automatic stay provision was applicable. Motion Tr. 6.  

[16] The Judge
stated this was not new law, and noted without specific citation, that one “can
go back to 2002 and look at the Gruntz case.” Motion Tr. at 6. The Judge
was apparently referring to In re Gruntz , 202 F.3d 1074 (9th Cir. 2000),
in which the Ninth Circuit addressed “(1) whether a state court modification of
the bankruptcy automatic stay binds federal courts; and (2) whether the
automatic stay enjoins a criminal prosecution for the willful failure to pay
child support. We hold that federal courts are not bound by state court
modifications of the automatic stay, but that the automatic stay does not
enjoin state criminal prosecutions.” Id. at 1077. Judge Zive’s expression of
the holding in Gruntz is that “parties may request a state court or
other forum to make a determination if there has been a violation of the stay,
but they run the risk of the state court getting it wrong. And if the state
court gets it wrong or administrative law judge gets it wrong , all the
proceedings and any orders entered are void.” Id. at 9 (emphasis added).
Ultimately the Judge may be correct but this Court is not aware of any decision
by a federal district or bankruptcy court holding that Mine Act
discrimination proceedings , with its unique anti-discrimination provisions,
are subject to the automatic stay.

[17] The Judge
apparently believed that this Court’s guidance to the pro se, non-attorneys
Lowe and Varady, demonstrated unfairness. “I don't know who would want to go
now in front of, frankly, Judge Moran once he's provided the assistance to you
he's provided to you. I would hate to be sitting on that other side of the
table, representing somebody else against you folks at this point, candidly.
That's why I was surprised when I saw those emails.” Tr. 28. The Judge
apparently forgot that liability had already been decided in both cases, with
Varady’s case decided after a full and fair hearing with Veris’ counsel
conducting extensive discovery and full participation in the Varady hearing and
then quitting participation on the eve of the Lowe hearing. Further, the
Court’s emails, all sent to both sides, informed that no determination
had been made on the successorship question, nor had damages of any amount been
determined. Full participation would have been provided by the Court on the
issues of successorship and damages. Further, while Lowe and Varady offered
preliminary thoughts about their claimed damages, this Court has never ruled on
those issues and noted that some of those claims were not cognizable under the
Mine Act. Those issues remain undecided even today.

[18] See also, A
Full and Fair Hearing: The Role of the ALJ in Assisting the Pro Se Litigant ,
27 J. Nat’l Ass’n Admin. L. Judiciary 447, Fall 2007.

[19] 11 U.S.C § 101,
provides, at section (10) that the term “creditor” means — (A) entity that has
a claim against the debtor that arose at the time of or before the order for
relief concerning the debtor;(B) entity that has a claim against the estate of
a kind specified in section 348(d), 502(f), 502(g), 502(h) or 502(i) of this
title; or (C) entity that has a community claim. Section (15) provides that the
term “entity” includes person, estate, trust, governmental unit, and United
States trustee.