Klondex Midas Operations, Inc v. Secretary of Labor and Secretary of Labor v. Klondex Midas Operations, Inc. and Secretary of Labor v. Klondex Gold and Silver Mining Company

Plain-English summary

Klondex Midas Operations contested citations and orders issued after a miner was found unresponsive at the Midas Mine, an underground gold mine, and after later inspections at the Fire Creek Mine. Klondex argued that the Secretary lacked evidence to support the enforcement actions and that the citations should be vacated without a hearing. Judge Richard W. Manning found genuine disputes about working alone, footing and housekeeping, document production, negligence, and unwarrantable failure, so he denied partial summary decision and kept the May 9, 2017 hearing date. The order did not decide whether the cited violations occurred or determine what caused the fatal accident.

Decision snapshot

• Cited standards: 30 C.F.R. §§ 57.18025, 57.7052(b), and 57.20003
• Outcome: Klondex's motion for partial summary decision was denied, and the cases remained set for hearing.
• Key point: A motion for summary decision cannot resolve citation issues when material factual and legal disputes remain.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH
REVIEW COMMISSION

721 19th Street, Suite
443

Denver, CO 80202-2536

303-844-3577 FAX
303-844-5268

April 28, 2017

KLONDEX
MIDAS OPERATIONS, INC.,

Contestant

v.

SECRETARY
OF LABOR

MINE
SAFETY AND HEALTH   

ADMINISTRATION
(MSHA),

Respondent

SECRETARY
OF LABOR

MINE
SAFETY AND HEALTH   

ADMINISTRATION
(MSHA),

Petitioner

v.

KLONDEX
MIDAS OPERATIONS, INC.,

Respondent             

v.

KLONDEX
GOLD AND SILVER MINING COMPANY,

Respondent,

CONTEST
PROCEEDING

Docket
No. WEST 2014-777-RM

Order
No. 8697481; 06/16/2014

Mine
ID 26-02314

Midas
Mine

CIVIL
PENALTY PROCEEDINGS

Docket
No. WEST 2015-416-M

A.C.
No. 26-02314-372746

Docket
No. WEST 2015-0607-M

A.C.
No. 26-02314-361821

Docket
No. WEST 2015-742-M

A.C.
No. 26-02314-384346

Midas
Mine

Docket
No. WEST 2016-039-M

A.C.
No. 26-02691-390994

Fire
Creek Mine

ORDER DENYING
MOTION FOR PARTIAL SUMMARY DECISION

Before:
Judge Manning

These cases are before me on one
notice of contest filed by Klondex Midas Operations, Inc. (“Klondex”) and four petitions
for assessment of civil penalty filed by the Secretary of Labor, acting through
the Mine Safety and Health Administration (“MSHA”) pursuant to sections 105 and
110 of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §§ 815 and 820
(the “Mine Act”). By notice dated January 4, 2017, these cases were set for
hearing commencing on May 9, 2017.[1]

On April 14, 2017, after the
close of business, Klondex filed a motion for partial summary decision. Under
Commission Procedural Rule 67(a), a motion for summary decision or partial
summary decision may be filed “no later than 25 days before the date fixed for
hearing on the merits[.]” 29 C.F.R. § 2700.67(a). Thus, Klondex filed its
motion at the last possible moment.

The motion asks that I vacate the
citations and orders discussed below. The following documents accompany the
motion: (1) a 37 page “Memorandum of Points and Authorities” in support of the
motion; (2) a 31 page “Statement of Undisputed Material Facts” in support of
the motion that includes 203 numbered paragraphs; and (3) 20 exhibits, one of
which contains numerous subparts. Many of these exhibits consist of portions of
deposition transcripts. The paper copy of the motion with accompanying documents
is about two inches thick.

These cases arise out of a fatal
accident that occurred at the Midas Mine, an underground gold mine and a later
inspection at Klondex’s Fire Creek Mine. Exactly what happened at the time of the
accident at the Midas Mine is not clear. According to the motion, an
experienced miner was operating a jackleg drill on April 28, 2014.[2] Later during the shift,
a co-worker found the miner sitting on the ground in an unusual location and
position. He was unresponsive and facing the “wrong direction” over 15 feet
from the working face with his jackleg drill in his lap and his coveralls
wrapped around the smooth shaft of the drill steel.

The Secretary issued one citation
and several orders (hereinafter “citations’) following his investigation of the
accident. In its motion, Klondex argues that MSHA has no evidence to support
its enforcement actions and the citations have no merit as a matter of law. “Without
knowing how the accident occurred, MSHA cannot support its speculative”
post-accident conclusions that it used as the basis for the citations. (Klondex
Memorandum 3). Klondex states that there is “no evidence to rule out the
possibility that [the miner] ‘suffered a medical event that could have caused
him to lose his balance, his ability to handle the drill that he was using, or
his consciousness, thereby resulting in his clothes becoming entangled.’” (Klondex
Memorandum 14).

In a response filed after the
close of business on April 26, 2017, the Secretary opposed Klondex’s motion for
partial summary decision. He argues that there are genuine issues of material
fact with respect to each citation and that Klondex is not entitled to summary
decision as a matter of law. He asks that the motion be denied.

Commission
Procedural Rule 67 sets forth the grounds for granting summary decision, as
follows:

A motion for summary decision shall be
granted only if the entire record, including the pleadings, depositions,
answers to interrogatories, admissions, and affidavits, shows:

(1) That there is no genuine issue as to
any material fact; and

(2) That the moving party is entitled to
summary decision as a matter of law.

29
C.F.R. § 2700.67(b).

The
Commission has long recognized that “[s]ummary decision is an extraordinary
procedure.” Energy West Mining Co., 16 FMSHRC 1414, 1419 (July 1994)
(quoting Missouri Gravel Co., 3 FMSHRC 2470, 2471 (Nov. 1981)). The
Commission has analogized Commission Procedural Rule 67 to Federal Rule of
Civil Procedure 56. Hanson Aggregates New York, Inc., 29 FMSHRC 4, 9
(Jan. 2007); See also Energy West, 16 FMSHRC at 1419 (citing Celotex
Corp v. Catrett, 477 U.S. 317, 327 (1986)). Summary decision “is authorized
only upon proper showings of the lack of a genuine, triable issue of material
fact.” Hanson Aggregates New York, Inc., 29 FMSHRC at 9 (citations
omitted). When the Commission reviews a judge’s summary decision under Rule 67,
it looks “‘at the record on summary judgment in the light most favorable to … the
party opposing the motion,’ and that ‘the inferences to be drawn from the
underlying facts contained in [the] materials [supporting the motion] must be
viewed in the light most favorable to the party opposing the motion.’” Id.
(citations omitted).

ANALYSIS

A
few preliminary matters must be noted. First, it is important to understand
that the parties have not stipulated to any facts. In response to Klondex’s Statement
of Undisputed Material Facts the Secretary filed his Statement of Disputed
Facts. He alleges that most of Klondex’s undisputed facts are actually immaterial
and he referenced evidence to support his position that the “undisputed” material
facts presented by Klondex are actually in dispute.

Second,
it is also important to understand that the issue in these cases is whether the
Secretary established the violations set forth in the citations and related
issues such as whether any of the violations were of a significant and
substantial nature or were the result of the operator’s unwarrantable failure
to comply with the safety standard. This court is not charged with determining
the exact sequence of events that led to the miner’s death. Of course, the
citations were issued as a result of the fatal accident, which is relevant, but
exactly what happened in the moments prior to the accident is unlikely to be fully
resolved in these cases and such resolution is not necessary to adjudicate the
issues raised in the citations.

I
find that there are genuine disputes as to the material facts with respect to
each citation. Given that the hearing is scheduled for May 9 and it is
incumbent on me to rule on the motion in a prompt manner, I have not discussed
every dispute of fact or issue of law in this order. I have also not referenced
every exhibit used by the parties to support their claims.

A.
Citation No. 8697488, Section 57.18025, Working Alone.

The
subject miner was assigned to operate a jackleg drill. Although other miners checked
on him from time to time, he was working alone in the heading. Klondex argues
that the Secretary cannot establish a violation of the working alone standard because
jackleg drilling is a routine mining operation and does not present a hazardous
condition under the working alone standard. (Klondex Memorandum 18-27). It
argues that undisputed facts demonstrate that the Secretary cannot establish a
violation of the safety standard.

In
his response, the Secretary presented facts to show that jackleg drilling can
present a hazardous condition that invokes the requirements of the standard and
that such hazardous conditions existed in the heading in which the miner was
working. (Sec’y Opposition 12-14; Sec’y Statement of Disputed Facts 2-5). In
addition, he argues that there is a dispute as to whether large rocks and other
tripping hazards were present on the floor of the heading that contributed to
the hazardous conditions. (Sec’y Opposition 15). Assuming that hazardous
conditions were present, there is a genuine dispute over whether the deceased
miner had sufficient contact with other miners during his shift commensurate
with the hazards presented. Id. at 15-16.

I
agree with the Secretary that there are genuine issues of material fact with
respect to this citation and that, as a consequence, summary decision cannot be
granted.

Klondex
also raised issues concerning the Secretary’s alleged new interpretation of the
safety standard that makes jackleg drilling a per se hazardous activity
no matter how experienced or skillful the jackleg operator is. That issue is
discussed in sections D and F, below.

B.
Order Nos. 8697489 and 8697490, Sections 57.7052(b) and 57.20003, Insecure                    Footing
While Drilling and Housekeeping.

These
orders allege that large and loose rocks, air and water hoses, drill steels, an
axe, and an oil container were strewn about the ground in the miner’s work area
as he was drilling. As a result, the miner did not have secure footing as he
was drilling and secure footing was not provided to keep the leg of the drill
from moving or sliding while in operation. Klondex maintains that the undisputed
facts demonstrate that, while such conditions may have existed after the first
responders arrived and moved things around, the Secretary has no proof that
these conditions existed while the miner was working. (Klondex Memorandum 27-31).
It offered deposition evidence that the miner’s work area was clean and
unobstructed at the time he was drilling.

The
Secretary disputes Klondex’s contention that the miner’s heading was clean and
orderly before the accident. He points to other deposition testimony as well as
other evidence that contradicts the evidence that Klondex provided with its
motion. (Sec’y Opposition 19-21; Sec’y Statement of Disputed Facts 5-7).

I
find that at least two photographs show that the cited conditions existed at
the time of MSHA’s investigation of the accident. (Sec’y Exs. 14 & 17). Whether
some or all of these conditions existed at the time of the accident is in
dispute. The Secretary presented sufficient evidence to deny the motion. At
least one miner, who was in the heading before the accident, testified that rocks
shown in a photograph may have been present earlier in the shift. (Sec’y Ex.
5). In addition, an MSHA inspector testified that during the investigation he
saw large rocks near the face where the miner was drilling that looked like
they had been in that position for a while. (Sec’y Ex. 16). A genuine, triable
issue of material fact exists as to the conditions in the heading at the time
of the accident. As the trier of fact, I must analyze the evidence and
determine how much weight and credibility I should give to the evidence
presented by each party. As stated above, whether these alleged conditions
contributed to the fatal accident is relevant but will not determine whether a
violation was established.

C.
Citation No. 8697468, Section 103(a), Failure to Provide Documents.

This
citation alleges that Klondex failed to provide “all documentation of dispatch
logs” for a specified period of time after the MSHA investigators requested
them. The Secretary subsequently issued Section 104(b) Order No. 8697481 for
Klondex’s continued failure to provide these documents. Klondex argues that it produced
all the existing dispatch records and that the additional records that the
Secretary is seeking do not exist. (Klondex Memorandum 32-36; Klondex Statement
of Undisputed Facts 20-25).  It states that it made a diligent, extensive, and
timely search for the materials requested and produced all it could locate. Klondex
maintains that there is no evidence to establish that it failed to comply
section 103(a) of the Mine Act.

The
Secretary responds that MSHA requested the records in large part to create a
timeline of the events on the day of the accident and because MSHA believed
that the mine required anyone working alone to call into the dispatcher every
two hours. (Sec’y Opposition 22-23). The Secretary asserts that there is a
genuine factual dispute over the existence of dispatch records for Crews A and
C. He states that the miner who was acting as a dispatcher on April 28, 2014
“has given varying accounts as to whether he took notes on the day of the
incident.” (Id. at 23; Sec’y Statement of Disputed Facts 8-11). The
Secretary relies upon this miner’s deposition testimony. (Sec’y Statement of
Disputed Facts 9-11; Sec’y Ex. 23).  

As
stated above, I must look at the record on summary decision in the light most
favorable to the party opposing the motion. It may well be that Klondex
produced all requested documents in its possession, but there is sufficient murkiness
in the record to raise questions on this issue. The Commission has stated that
in a motion for summary decision the moving party must establish “a right to
judgment with such clarity as to leave no room for controversy” and must affirmatively
prove “that the adverse party cannot prevail under any circumstances.” KenAmerican
Resources, Inc., 38 FMSHRC 1943, 1947 (Aug. 2016) (citation omitted). The
evidence provided by the moving party cannot simply allow the court to find in
the movant’s favor, “it must require the court to do so.” Id.
(citation omitted) (emphasis in original). In this instance, Klondex’s evidence
may be stronger than the Secretary’s but I am unable to hold that the Secretary
cannot prevail under any circumstances.

D.
Citation Nos. 8876233 and 8876236, Section 57.18025, Working Alone at the

Fire
Creek Mine.

In
July 2015, MSHA Inspector Pat Barney issued two citations at Klondex’s Fire
Creek Mine under section 57.18025 because in each instance a miner was working
alone while operating a jackleg drill. In filing the motion for these citations,
Klondex relies on Inspector Barney’s testimony that jackleg drilling is a
hazardous condition, no matter what the circumstances. (Klondex Memorandum 21).
He testified that it “is inherently hazardous.” (Id.; Klondex Statement
of Undisputed Facts ¶ 177). Klondex argues that the inspector’s position is
contrary to current law. (Klondex Memorandum 21; Cotter Corporation, 8
FMSHRC 1135 (Aug. 1986)). It argues that in Cotter, the Commission ruled
that operating a jackleg drill is not per se hazardous. Because the citations
were based on the Secretary’s new, impermissible interpretation of section
57.18025, Klondex maintains that it is entitled to summary decision as a matter
of law.

Klondex
also argues that even if the safety standard is applicable as alleged in the
citations, the Secretary failed to offer evidence that it was not in
compliance. The inspector recognized that supervisors checked on the jackleg
operators three or four times per shift. (Klondex Memorandum 24). Two Fire
Creek miners told the inspector that, in addition to supervisors, other miners
stop by on a regular basis. As stated by the Commission in Cotter, if a
condition is determined to be hazardous, the safety standard requires a level
of “communication or contact of a regular and dependable nature commensurate
with the risk present in a particular situation.” 8 FMSHRC at 1139. Klondex
contends that the evidence demonstrates that it met the requirements of this
test.

The
Secretary maintains that Klondex is misreading Cotter. The Commission
clearly limited its holding to the facts of that case. In addition, there is
disputed evidence as to whether there were “regular and dependable” contacts
with the miners operating the jackleg drills. (Sec’y Opposition 26). Inspector
Barney testified that Klondex should have established a check-in policy to make
sure that the contacts were dependable and that more frequent contacts were
necessary to comply with the safety standard. Id.

I
find that genuine issues of law and fact need to be resolved with respect to
these citations. First, the coverage of the safety standard must be determined
as applied to the particular facts of the case. The issue is not whether, in
the abstract, the safety standard prohibits the operator of a jackleg drill
from working alone, as alleged by Klondex, but rather whether the safety
standard prohibited these particular miners from working alone given the
totality of the circumstances. The record is simply not fully enough developed to
resolve these issues on summary decision. In addition, Klondex relies heavily
on the Commission’s holding in Cotter, but I agree with the Secretary
that the Commission was careful to limit its holding to the facts. That
decision does not resolve the issues in these cases as a matter of law.  

E.
Unwarrantable Failure and Negligence Issues.

Klondex
also maintains that there is no factual or legal basis for the Secretary’s
allegations that the accident citations were the result of Klondex’s unwarrantable
failure or aggravated conduct. (Klondex Memorandum 31-32). It points to the
fact that the conduct of a rank-and-file miner is not imputable to the
operator. It further states that without knowing how the accident occurred, the
Secretary cannot establish that Klondex should have done something more to
prevent it. All the evidence suggests that his accident was entirely
unforeseeable and unexpected. Id.

The
Secretary contends that multiple disputes of material fact preclude summary
decision with respect to unwarrantable failure issues. (Sec’y Opposition
21-22). There is a dispute as to the degree of danger posed by the alleged
violations. Without resolving these disputes, the court cannot decide whether
the violations were unwarrantable. There are also disputes concerning whether Klondex
had adequate policies in place to protect the subject miner. For example, there
are disputes as to whether Klondex had policies in place concerning how clean jackleg
drillers should “keep their headings.” (Sec’y Opposition 22) (citations
omitted). There was deposition testimony that the rocks on the floor of the
subject miner’s heading were typical at the mine. Id.

I
agree with the Secretary that there are genuine issues of material fact that
must be resolved before unwarrantable failure and negligence issues can be
addressed. In addition, I note that the issue in these cases is whether the
citations should be affirmed, modified, or vacated. These proceedings were not designed
to determine what caused the accident.

F. Klondex
Reply Brief.

After
the close of business on April 27, Klondex filed a motion to file a reply brief
in support of its motion for summary decision along with a copy of the reply
brief. For good cause shown, the motion is GRANTED.

Klondex
seems not to understand the purpose of summary decision in Commission
jurisprudence. Klondex argues that because the evidence it presented to support
its motion is stronger and more convincing than the evidence submitted in
opposition, it is entitled to summary decision as a matter of law. When
considering a motion for summary decision, a Commission judge is not permitted
to evaluate the relative strength or credibility of the evidence presented by
the parties and enter findings of fact and conclusions of law after weighing
this evidence. I agree with Klondex that, at least with respect to some of the
citations, the evidence it presented to support its motion appears to be stronger
and more persuasive than the evidence presented by the Secretary in opposition.
Nevertheless, I am unable to conclude that the evidence presented requires
me to grant the motion for partial summary decision in any respect.

With
respect to the working alone citations, the safety standard provides that no
miner shall be allowed to perform work alone “in any area where hazardous
conditions exist that would endanger his safety unless his cries for help can
be heard or he can be seen.” 30 C.F.R.

§ 57.18025. Klondex
maintains that the sole issue is whether the operation of a jackleg drill
automatically invokes the requirements of the standard such that a jackleg
drill operator can never work alone unless the operator can be seen or heard. That
is, the only legal issue is whether the operation of a jackleg drill is per
se hazardous. Based on Commission precedent and undisputed evidence, it
argues that it is entitled to summary decision on this issue as a matter of
law. (Klondex Reply Br. 2-6). Klondex seemingly disregards that it is possible
for a judge to hold that the facts in a particular case warrant a finding that
the use of a jackleg drill created a hazardous condition thereby establishing a
violation of the safety standard without holding the operation of a jackleg
drill is an inherently hazardous activity and can never be operated alone.[3]

With
respect to the housekeeping and secure footing citations, Klondex argues that
the Secretary in his response “tries to create factual disputes where they do
not exist.” (Klondex Reply 7). It argues that the “Secretary’s alleged factual
issues depend on selective quotations” in the deposition testimony he
presented. Id. It maintains that there is no credible evidence to
support a conclusion that the conditions in the heading where the accident
occurred were the same as shown the post-accident photos. It presented evidence
that “everyone who saw the [heading] that morning, before the accident, thought
it was in good condition.” Id. at 7-8. I tend to agree with Klondex that
the evidence presented by the Secretary on these citations does not appear to
be particularly strong or convincing, but he presented sufficient evidence to
raise a genuine issue of material fact as discussed in section B, above.

Klondex
argues that this court “can rule that there was no violation of [section 103(a)
of] the Mine Act relating to documents as a matter of law even based on the
Secretary’s version of events.” (Klondex Reply 8-9).  It states that the
evidence clearly shows that any notes that were taken and not produced do not
exist. The deposition testimony proves that the miner who was acting as the dispatcher
at the relevant time discarded any notes taken at the end of each shift or left
them on the dispatch office desk. Id. at 9. Klondex represents that it
promptly and thoroughly searched for any of the records requested by the
Secretary. As stated above in section C, there is sufficient murkiness in the
record presented by the parties to raise questions of fact that must be
resolved. I agree with Klondex, however, that based on the evidence presented by
the Secretary in response to the motion, the Secretary’s evidence appears to be
weak on this issue.

Finally,
Klondex argues that the Secretary’s alleged disputes of fact regarding
negligence are not supported by the sources he cites. (Klondex Reply 9-10). Klondex
states that there can be no dispute that Klondex miners were properly and
extensively trained and the deceased miner was a highly skilled jackleg drill
operator. Klondex argues that there is simply no evidence upon which a judge
could conclude that Klondex’s negligence was high or that the citations were
the result of its unwarrantable failure to comply with the safety standards. I
find that there are some disputes of fact as discussed in section E above and,
more importantly, there are legal issues that must be resolved when applying
the facts to established precedent concerning negligence and unwarrantable
failure. Evidence necessary to establish high negligence and unwarrantable
failure is inexorably related to the evidence necessary to establish a
violation and the gravity of any violation. Issues surrounding the negligence
of an operator cannot be resolved in a vacuum.

OTHER
CONSIDERATIONS

Given
that I had to issue this order in a prompt manner, I have not addressed all of
the issues raised by the parties. Although I reviewed the relevant exhibit
evidence presented by the parties, I have not referenced each of them in this
order. To the extent any issues raised by Klondex are not discussed herein, I hold
that they do not meet the standard for granting summary decision.

For
the reasons set for above, I hold that there are genuine issues of material
fact and that Klondex is not entitled to partial summary decision as a matter
of law. Klondex did not establish that it has a right to partial summary judgment
“with such clarity as to leave no room for controversy” and it did not establish
that the Secretary “cannot prevail under any circumstances.” KenAmerican
Resources 38 FMSHRC at 1947.

ORDER

The
motion for partial summary decision filed by Klondex is DENIED. The
hearing will commence on May 9, 2017 as previously scheduled. I strongly urge
the parties to attempt to negotiate a settlement of as many of the citations as
possible and to enter into stipulations of fact on as many issues as possible
that cannot be settled.

/s/
Richard W. Manning

Richard
W. Manning

Administrative
Law Judge

Distribution:

Cheryl
L. Adams,
Esq., Office of the Solicitor, U.S. Department of Labor, 90 7th
Street, Suite 3-700, San Francisco, CA 94103-6704 ([email protected])

Tara
E. Stearns, Esq., Office of the Solicitor, U.S. Department of Labor, 90 7th
Street, Suite 3-700, San Francisco, CA 94103-6704 ([email protected])

Sean
Allen,Esq., Office of the
Solicitor, U.S. Department of Labor, 1244 Speer Blvd., Suite 216, Denver, CO
80204-3518 ([email protected])

Avi
Meyerstein, Esq., Husch Blackwell, LLP, 750 17th Street, NW Suite 900,
Washington, DC 20006-4675 ([email protected])

Mark
Savit, Esq., Husch Blackwell, LLP, 1801 Wewatta Street, Suite 1000, Denver, CO
80202 ([email protected])

Mark
Hill, Esq., Husch Blackwell, LLP, 13330 California Street, Suite 200, Omaha, NE
68154 ([email protected])

RWM

[1]
The
hearing in these cases was originally scheduled to commence on January 24,
2017. The hearing was continued until May 9, 2017 upon the request of Klondex.

[2]
Jackleg
drills are frequently used in underground metal mines, especially in headings
that are too tight for a jumbo drill. The drill is supported by a hydraulic leg
that rests on the ground. Because the leg is generally angled so that the
bottom of the leg is behind the drill, the leg can also be used by the miner to
help provide pressure against the rock face that is being drilled.

[3]
Klondex also
argues that the evidence establishes that it did not violate the safety
standard even if it is assumed that operating a jackleg drill alone is
considered to be hazardous. (Klondex Reply 6-7). I find that there are
significant factual disputes concerning this issue as discussed above in
sections A and D.