Secretary of Labor v. Virginia Drilling Company, LLC

Plain-English summary

Virginia Drilling timely contested a proposed penalty assessment but did not answer the later penalty petition or respond to an order to show cause, resulting in default. The company sought reopening shortly after receiving a delinquency notice and said it had not received an assignment and prehearing order. The Commission majority found good faith and excusable neglect because the operator had timely contested the assessment, had prepared a document explaining its disagreement with the violations, and promptly moved to reopen. It vacated the default and remanded for further proceedings. Chair Traynor dissented because the motion did not explain the operator's failure to respond to the petition and show-cause order.

Decision snapshot

• Cited authority: 29 C.F.R. §§ 2700.1(b), 2700.69(b), and 2700.70(a); 30 U.S.C. §§ 823(d)(1) and 823(d)(2)(A)(i)
• Outcome: The default order was vacated and the penalty proceeding was remanded for consideration on the merits.
• Key point: A timely contest and prompt reopening request supported excusable neglect for the majority, despite the dissent's concern that the missed filings were not explained.

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.

VIRGINIA
DRILLING COMPANY, LLC

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Docket
No. WEVA 2019-0226

A.C.
No. 46-09075-481854

BEFORE:  Traynor, Chair;
Althen and Rajkovich, Commissioners

ORDER

BY: Althen and
Rajkovich, Commissioners:

This
matter arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §
801 et seq. (2018) (“Mine Act”). On July 23, 2019, the Commission received from
Virginia Drilling Company, LLC (“Virginia Drilling”) a motion seeking to reopen
a penalty assessment proceeding and relieve it from the Default Order entered
against it.

The
proposed assessment was delivered to the operator on January 25, 2019. The
operator timely contested the assessment on February 4, 2019. MSHA issued a
penalty petition on February 19, 2019. [1]

On
April 2, 2019, the Acting Chief Administrative Law Judge issued an Order to
Show Cause in response to Virginia Drilling’s perceived failure to answer the
Petition for Assessment of Civil Penalty, filed by the Secretary of Labor on
February 19, 2019. By its terms, the Order to Show Cause was deemed a Default
Order on April 23, 2019, when it appeared that the operator had failed to
respond to the Show Cause Order within 20 days.         

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, here the Judge’s order became a final order of the
Commission on June 3, 2019. On July 9, 2019, MSHA mailed a delinquency notice
to the operator.

The operator seeks
to reopen this matter, claiming that it never received the “Secretary of
Labor’s Order of Assignment and Pre-Hearing Order.” The operator states an
intent to file an answer in a timely manner upon receipt of such order. The
Secretary does not oppose the “Request to Reopen,” but requests that Virginia
Drilling take its obligations seriously.

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).

In
this case, we must consider whether the operator demonstrated that it acted in
good faith, and whether the Secretary opposes the motion or alleges that the
operator acted in bad faith.  Noranda Alumina, LLC, 39 FMSHRC 441, 444
(Mar. 2017). Here, the operator demonstrated good faith by timely contesting
the proposed penalty, and by filing its request to reopen within 30 days of
receiving the delinquency notification. Moreover, the operator provided a
document, entitled “Notice of Contest” and hand dated March 11, 2019, briefly
stating why the operator disagrees with each violation. This further indicates
that the operator had a desire to proceed with litigation.  Notably, the
Secretary does not oppose the motion or allege that the operator acted in bad
faith. [2]

Having
reviewed Virginia Drilling’s request and the
Secretary’s response, we find that the evidence demonstrates the
operator’s good faith and that the failure to timely file an answer was the
result of excusable neglect. 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/
William I. Althen

William
I. Althen, Commissioner

/s/ Marco M. Rajkovich,
Jr.

Marco M. Rajkovich, Jr.,
Commissioner

Chair
Traynor dissenting:

I
dissent from the majority’s erroneous decision to reopen the final orders in
this proceeding. The majority determines – without evidence – that Virginia
Drilling has established “good cause” for its failure to respond to both the
Secretary of Labor’s Penalty Petition and the Commission’s Order to Show Cause. [3] Slip op. at

3. Because the operator’s motion does not address whether it had a “good cause”
   reason for its failures to respond to both aforementioned documents, it fails
   to set forth grounds for relief. That the operator has demonstrated “good
   faith” in filing its motion is not sufficient to establish “good cause.” [4]

My colleagues purport to ground their decision in Noranda
Alumina, LLC , 39 FMSHRC 441 (Mar. 2017). However, they do not articulate a
rationale for their decision to find good cause for Virginia Drilling’s failure
to timely respond based upon any one or more of the relevant factors outlined
in Noranda . [5]
Under Noranda , a finding the operator has brought its motion in good
faith, while relevant, does not by itself resolve the question of whether there
was good cause for the failure to respond.

Virginia
Drilling’s motion is incomplete as it does not address the critical element of
good cause for its failure to timely respond. However, given that the operator
is appearing before the Commission pro se and does not have a history of
filing motions to reopen defaults, I would have remanded this matter to our
Chief Administrative Law Judge and given Virginia Drilling the opportunity to
make the necessary case regarding good cause, whether by reference to the Noranda
factors or other considerations relevant to good cause for the failure to
timely respond (as distinguished from the separate inquiry into whether the
motion is brought in good faith). See, e.g.,
Monongalia County Coal Co ., Docket No. PENN 2020-0004 et al. (Sept. 8,
2021).    

I.

Legal Standard

In Noranda, the Commission stated that it
considers whether the operator’s motion to reopen a final order provides
sufficient detail and explanation of facts and circumstances surrounding the
movant’s default to determine whether there is “good cause” to reopen the case.
The opinion in that case clearly distinguishes between the concepts of good
cause and good faith as applied in the contexts of motions to reopen and so I
quote it extensively as follows: 

Reopening a penalty that has become final is
extraordinary relief. Thus, the operator has the burden of showing that it is
entitled to such relief, through a detailed explanation of its failure to
timely contest the penalty and any delays in filing for reopening:

At a minimum, the applicant for such relief must
provide all known details, including relevant dates and persons involved, and a
clear explanation that accounts, to the best of the operator’s knowledge, for
the failure to submit a timely response and for any delays in seeking relief
once the operator became aware of the delinquency or failure. Higgins Stone
Co ., 32 FMSHRC 33, 34 (Jan. 2010).

In reviewing an operator’s explanation, we consider
the entire range of factors relevant to determining whether the operator’s
error was the result of mistake, inadvertence, surprise, excusable neglect, or
another good faith reason. No precise formula exists for weighing the factors,
and the analysis is conducted on a case-by-case basis. However, key factors are
identifiable. The Commission has provided guidance to operators on its website
explaining the factors that will generally be considered in determining whether
to grant relief:

The Commission has considered a number of factors in
determining whether good cause exists: (1) the error does not reflect
indifference, inattention, inadequate or unreliable office procedures or
general carelessness; (2) the error resulted from mistakes that the operator
typically does not make; (3) procedures to prevent, identify and correct such
mistakes have been adopted or changed, as appropriate; (4)… A proper motion
must also provide all relevant documentation and identify the persons who have
knowledge of the circumstances…. Your motion should also be supported by
affidavit(s) of (a) person(s) with direct knowledge of the underlying facts.
Motions for relief must identify and explain: (1) why a timely contest was not
filed; (2) how and when you first discovered the failure to timely contest the
penalty and how you responded once this was discovered. (3) If the motion to
reopen was filed more than 30 days after you first learned that the penalty was
not timely contested, you must provide a reasonable explanation for the delay
or your motion may be DENIED.

In addition, it is important to consider the good
faith of the operator’s actions and whether MSHA opposed the motion to reopen.
To justify reopening, an operator’s detailed recounting of the circumstances
should demonstrate that the operator acted at all times in good faith and
without any purpose of evasion or delay, taking into account the nature of the
violation, the amount of the penalty, and the circumstances of receipt and
processing of the proposed assessment. The operator’s motion should also
address whether errors were within the operator’s control, and the reasons for
any delay in filing the motion itself, especially after notice of the
delinquency.

Noranda , 39 FMSHRC at 443-444 (some
internal citations omitted).

II.

Virginia Drilling’s Motion to
Reopen

On
February 19, 2019, the Secretary of Labor issued the operator the Petition for
Assessment of Civil Penalties. On April 2, 2019, having not received the
required Answer to the Petition, the Commission’s Acting Chief Administrative
Law Judge issued an Order to Show Cause. Virginia Drilling did not respond to
the Order to Show Cause, and thus by terms of the Order was in default on April
23, 2019. On July 9, 2019, the Secretary issued a delinquency notice to the
operator. On July 23, 2019, the operator filed its motion to reopen.

Virginia
Drilling’s motion fails to address its receipt or processing of either the
Penalty Petition or the Order to Show Cause. It contains none of what we
said in Noranda is the minimum necessary to demonstrate an
entitlement to relief, including “all known details, including relevant dates
and persons involved, and a clear explanation that accounts, to the best of the
operator’s knowledge, for the failure to submit a timely response.” Id . Accordingly,
it is not possible to determine whether the operator’s multiple failures were
the result of “excusable neglect” or conversely whether its neglect was the
result of an inadequate or unreliable internal processing system. See Oak
Grove Res ., LLC , 33 FMSHRC 103, 104 (Feb. 2011).

I would have remanded the matter to the Chief
Administrative Law Judge to provide Virginia Drilling the opportunity to
supplement its initial filing with an account of its failure to timely respond
before default judgment was entered against it.  

/s/
Arthur R. Traynor, III

Arthur R. Traynor,
III, Chair

Distribution
(e-mail):

Anthony
Kidd

Virginia
Drilling Company, LLC

P. 0.
Box 1198

Vansant,
VA 24656

[email protected]

John M. McCracken,
Esq.

Office of the
Solicitor

U.S. Department of
Labor

Mine Safety and
Health Division

201 12th Street
South, Suite 401

Arlington, VA
22202-5452

[email protected]

Archith Ramkumar,
Esq.

Office of the
Solicitor

U.S. Department of
Labor

201 12th Street
South, Suite 401

Arlington, VA
22202

[email protected]

April Nelson, Esq.

Office of the
Solicitor

U.S. Department of
Labor

Mine Safety and
Health Division

201 12th Street
South, Suite 401

Arlington, VA
22202-5452

[email protected]

Melanie Garris

U.S. Department of
Labor

Office of Civil
Penalty Compliance

Mine Safety and
Health Administration

201 12th Street
South, Suite 401

Arlington, VA
22202-5452

[email protected]

Chief
Administrative Law Judge Glynn F. Voisin

Federal Mine
Safety & Health Review Commission

1331 Pennsylvania
Avenue, NW, Suite 520N

Washington, DC
20004-1710

[email protected]

[1] The penalty
petition incorrectly listed the total civil penalty as $8,863, as opposed to
the actual amount of $9,863. Pet. for Civil Penalty at 3, Ex. A; Del. Not.                                    

[2] The Secretary
makes no comment about the March 11, 2019 document, or the operator’s claim
that it did not receive an Order of Assignment or Pre-Hearing Order for this
proceeding.

[3] More
specifically, the majority finds that the operator established that its failure
to respond to the Secretary or the Commission was the result of “excusable
neglect.” Slip op. at 3. Notably, the operator’s motion references neither the
receipt nor processing of either document.

[4] Stated another
way, the operator’s prompt remedial efforts do not excuse its prior failures to
respond in the absence of a sufficient accounting of whether there was “good
cause” for that failure.

[5] The hand-dated
document referenced by the majority in their decision is a copy of the original
letter contesting the civil penalties. Sec’y’s Response (exhibit, page 13). Furthermore,
the majority notes that the Secretary did not respond to Virginia Drilling’s
claim that it did not receive an Order of Assignment or Pre-Hearing Order from
the Commission. Slip op. at 2 n.2. Of course, no response was necessary; the
case was not assigned to a Judge because Virginia Drilling did not file the
required Answer to the Penalty Petition and thus was in default .