<DOC>
[DOCID: f:eaj2002-2.wais]
GEORGES COLLIERS, INCORPORATED
EAJ 2002-2
June 14, 2002
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION
1730 K STREET, N.W., Room 6003
WASHINGTON, D. C. 20006-3867
Telephone No.: 202-653-5454
Telecopier No.: 202-653-5030
June 14, 2002
GEORGES COLLIERS, : EQUAL ACCESS TO JUSTICE
INCORPORATED, : PROCEEDING
Applicant :
v. : Docket No. EAJ 2002-2
:
SECRETARY OF LABOR, : Formerly CENT 99-178
MINE SAFETY AND HEALTH :
ADMINISTRATION (MSHA), : Mine: Pollyanna No. 8
Respondent :
DECISION
Before: Judge Barbour
This case is before me on an Application for Award of Fees
and Expenses under the Equal Access to Justice Act (EAJA),
(5 U.S.C. � 504 (1996)), which provides for an award to a
prevailing party against the United States or an agency thereof
unless the position of the government was "substantially
justified or that special circumstances make an award unjust"
(5 U.S.C. � 504(a)(1)). Georges Colliers, Inc. (GCI) filed the
application against the Secretary of Labor (Secretary) following
the issuance of a decision in numerous consolidated civil
penalty proceedings brought by the Secretary on behalf of her
Mine Safety and Health Administration (MSHA) against GCI and
three of its agents. The cases were filed pursuant to sections
105, 110(a), and 110(c) of the Federal Mine Safety and Health
Act of 1977 (30 U.S.C. ��� 815, 820(a) and 820(c); Georges
Colliers, Inc. 23 FMSHRC 1346 (Dec. 2001); see also Georges
Colliers, Inc., 24 FMSHRC 51 (Jan. 2002). I heard the cases.
Based upon the evidence and the parties' stipulations, I found
GCI violated all of the cited mandatory safety standards. I
also held the Secretary established the agents were liable for
several knowing violations. After considering the statutory
civil penalty criteria, I levied penalties against the company
and the agents.
In assessing the civil penalties, I concluded, among other
things, that GCI established the penalties proposed by the
Secretary would "adversely affect [the company's] ability to
continue in business" (23 FMSHRC at 1390) and that one of the
agents (Kenneth Clark) established the penalties proposed would
adversely affect his ability to meet his financial obligations
(23 FMSHRC at 1389). In addition, I noted the parties'
stipulations that the agents had no history of previous
violations (23 FMSHRC 1352, 95, 96, 97 and 98). In the
aggregate, the penalties I assessed were approximately 23
percent of those proposed by the Secretary (23 FMSHRC at 1416;
see also 24 FMSHRC at 52).
GCI argues the Secretary's proposed penalties and the
positions she took during litigation regarding those penalties
were "not substantially justified." The company views the
"Secretary's demands . . . [as] substantially excessive,
arbitrary, and capricious" (Appl. 1-2). GCI seeks a total of
$45,019.36 in fees and expenses (Amended Appl. 1).
I conclude no basis exists for an award.
STATUS OF THE APPLICANTS
The Commission's rules implementing the EAJA are found at
29 C.F.R � 2704. Rule 100 provides for the "award of attorneys
fees and other expenses to eligible individuals and entities
who are parties to certain . . . `adversary adjudications'
before [the] Commission" (29 C.F.R. � 2704.100).
To be eligible for an award, an applicant must be a
"party" as that term is defined in 5 U.S.C. � 551(3). Section
551(3) states a "party" includes "a person or agency named or
admitted as a party . . . in an agency proceeding." Under the
Commission's rules, party status is accorded "[a] person,
including the Secretary or an operator, who is named as a
party" (29 C.F.R. � 2700.4(a)). The Commission's rules also
state that the definitions of section 3 of the Mine Act apply.
Section 3(f) defines "person" as "any individual, partnership,
. . . corporation, . . . or other organization" (30 U.S.C.
� 802(f)).
The underlying proceedings involved two types of cases:
civil penalty cases filed by the Secretary against GCI and
civil penalty cases filed by the Secretary against GCI's agents.
The cases filed against GCI were brought pursuant to sections
105(a) and 110(a) of the Act (30 U.S.C. �� 815(a), 820(a)).
The cases filed against the agents were brought pursuant to
section 110(c) of the Act (30 U.S..C. � 820(c)). In the
105(a)/110(a) proceedings the "person named . . .as a party"
was the corporate operator. In the section 110(c) proceedings,
the "person[s] . . . named as . . . part[ies]" were the
individuals. However, when the cases were consolidated for
hearing the two types of cases effectively became a single case,
and both the company and agents became parties to the single
case. Thus, while the application was filed solely by GCI,
and while GCI clearly is authorized to bring an application
for itself, it also is authorized to apply for the individual
agents, who are subsumed in the application as parties to
the consolidated case.
ELIGIBILITY
To be eligible for an award, GCI must meet certain
specific requirements. The Commission's rules require a party
corporation to have a net worth of not more than seven million
dollars and to have not more than 500 employees (29 C.F.R.
� 2704.104(b)(4)(iii)). The underlying decisions establish that
the company meets these requirements (23 FMSHRC at.1389-1390;
see also 24 FMSHRC at 51-52). In addition, for the agents to
be eligible, each must have a net worth of not more than two
million dollars (29 C.F.R. � 2704.104(b)(4)(i)). As stated in
my findings regarding Clark and as was clear from the testimony
of the agents and others at the hearings, the agents meet this
requirement.
The question then is whether the Secretary's positions
were substantially justified.
SUBSTANTIAL JUSTIFICATION
The burden is on the Secretary to establish her positions
both before and during litigation were "substantially
justified." Neither the EAJA nor the Commission's rules define
"substantial justification." However, the standard is directly
adopted from federal civil litigation discovery, where the
essence of "substantial justification" is whether "reasonable
people could genuinely differ" (See The Essentials of the Equal
Access to Justice Act, 56 La. L. Rev. 22 (1995)). When drafting
the legislation, Congress stated, "where the Government [can]
show that its case has a reasonable basis both in law and fact,
no award [will] be made" (Id. 23). Moreover, as the Commission
has noted, the Supreme Court echoed this statement by defining
"substantially justified" as meaning the government's position
"must have a reasonable basis both in law and fact" and that
it was "justified to a degree that could satisfy a reasonable
person" (Pierce v. Underwood, 487 U.S. 552, 565 (1988), quoted
in James M. Ray, employed by Leo Journagan Construction Co.,
Inc., 20 FMSHRC at 1014, 1021 (Sept. 1998). The EAJA defines
the "position of the agency" as "the position taken by the
agency in the adversary adjudication [in addition to] the
action . . . by the agency upon which the adversary
adjudication is based" (5 U.S.C. � 504(b)(1)(E)). Finally,
an EAJA application may be granted where the government's
demand is "substantially in excess" of the relief awarded,
that is where the demand is unreasonable when compared with
the relief awarded (5 U.S.C. � 504(a)(4)).
MSHA'S POSITION PRIOR TO LITIGATION
In ruling on the merits of the application, the judge must
keep in mind the essentials of what was at issue in the
underlying disputes. All of the proceedings were cases in which
the Secretary sought the assessment of monetary penalties for
alleged violations of regulations promulgated pursuant to the
Act.
The disputes between the parties commenced when citations
alleging the violations were issued to GCI. Following the
issuance of the citations, the Act required MSHA to propose
penalties for the alleged violations. The company and the
individuals then contested all or part of the allegations upon
which the violations and proposed penalties were based. The
proposed assessments represented the ultimate position of the
agency prior to litigation.
The penalties proposed by the Secretary were the result of
her application of regulations for determining the amount of
"regular assessments" (30 C.F.R. � 100.3), "single penalty
assessments" (30 C.F.R. � 100.4), and "special assessments"
(30 C.F.R. � 100.5). The regulations codify MSHA's
implementation of the statutory civil penalty criteria. There
is no indication in the record (and it is a voluminous record)
that in computing the proposed civil penalties MSHA did
anything other than faithfully follow and properly apply the
regulations it was compelled to follow. Indeed, it is worth
noting that during the litigation stage of the proceedings
GCI stipulated to facts regarding its size and previous
history that fully accorded with those MSHA previously used
in its calculations ( see 23 FMSHRC 1350, 1352).
It is the company's position that prior to litigation the
Secretary did not properly consider the effect of the proposed
penalties on its ability to continue in business (Appl. 6-7),
but the record does not substantiate this claim. Throughout the
course of the penalty proposal process, the burden was on the
company, not on the Secretary, to come forward with information
that the penalties proposed would adversely affect its ability
to continue in business. The regulations state that the
Secretary must presume initially the operator's ability to
continue in business will not be affected by the penalties,
but the operator may submit information to the District
Manager concerning the business's financial status and if the
information indicates that the penalty will adversely affect
the ability to continue in business, the penalty may be
adjusted (30 C.F.R. � 100.3(h)). At the hearing, the company
offered numerous financial documents and detailed testimony
from its president, Craig Jackson, explaining both the
documents and the company's financial background. The record
does not reveal that during the penalty proposal process
GCI brought to the District Manager's attention all of the
financial documents and Jackson's explanations, items I found
compelling and persuasive during later litigation of the cases
(see 23 FMSHRC at 1389-90).
Nor does it reveal that prior to litigation the agents
came forward with information regarding the effect of the
proposed penalties on their abilities to meet their financial
obligations or with information indicating that other civil
penalty criteria should be weighed in their favor. Included
in the Secretary's assessment proposals were her consideration
of the fact that the individuals had no prior histories of
violations and the presumption the proposed penalties would
not adversely effect the individuals' abilities to meet their
financial obligations, presumptions the individuals did not
then challenge. Thus, in assessing civil penalties against
the individuals, the Secretary again properly followed her
regulations (30 U.S.C. � 100.4(e)).
I am also compelled to observe that the penalties proposed
for GCI ranged from $55.00 to $16,000.00 and those proposed for
the agents ranged from $600.00 to $3,000.00. The proposals do
not seem at all excessive when measured against the statutory
limit of $50,000 per violation (30 U.S.C. �� 820(a), 820(c)).
Finally, there is no indication that the company or its
agents were singled out or that the regulations were applied
differently to them than they would have been to any other
company or to any other agents in similar circumstances.
Although GCI ascribes an unlawful motive to the Secretary's
initiation and adjudication of the civil penalty proceedings
(Appl. 1-2), there is not an iota of evidence to substantiate
the charge, which I will not dignify by reciting. For these
reasons, I find that the actions of the agency in proposing
the penalties were substantially justified with regard to the
cases against the company and its agents.
MSHA'S LITIGATION POSITION
The question now is whether the agency's actions were
reasonable with regard to the positions it took during the
litigation process, and I conclude that they were. GCI sees
them as unreasonable because the Secretary did not officially
compromise the proposed penalties. However, the record
confirms that by insisting upon the proposed penalties, the
Secretary proceeded both reasonably and strictly according to
law.
With respect to the ability to continue in business civil
penalty criterion, just as during the penalty proposal process,
the burden was on the company, not on the Secretary, to come
forward with information that any penalties assessed would
adversely affect its continuation. The presumption that unless
the company proves otherwise the penalties are assumed to have
no adverse effect is one of the oldest in mine safety law (see
Buffalo Mining Co., 1 IBMA 226, 247-248 (Sept. 1973)). When a
civil penalty petition is filed and Commission jurisdiction
attaches, it becomes the duty of the judge to assess the
penalties de novo based on the statutory penalty criteria
(Sellersburg Stone Co., 5 FMSHRC 287, 291-292 (Mar. 1983);
aff'd, 736 F.2d 1147, 1152 (7th Cir. 1984)). The impact of
the proposed penalties on the company's ability to continue in
business is based on the evidence of record, and the ultimate
amounts assessed by the judge reflect the exercise of his or
her discretion bound by all of the statutory penalty criteria.
In the cases filed by the Secretary against the company, I
reduced the penalties from those proposed between 77.5 percent
and 80.84 percent. Much of the reduction was based on my
conclusion that imposition of the proposed penalties would have
an adverse effect on the company. Although the company argues
the magnitude of the reduction indicates the unreasonableness
of MSHA's demands, the test for determining whether the proposed
penalties were substantially in excess of those awarded can not
be based solely on mathematical percentages. Rather, it must
appear "the agency's . . . action did not represent a reasonable
effort to match the penalty to the actual facts and
circumstances of the case" (142 Con. Rec. 3242, 3244 (Mar. 29,
1996 (n. 4)).
GCI would have me judge the reasonableness of the
Secretary's litigation position by the settlement negotiations
and discussions which involved the company and the Secretary.
The Secretary, too, would not object to using her settlement
proposals as a basis for judging reasonableness, provided, of
course, they are the proposals as she recalls them. For example,
she states that on June 27, 2000, during the litigation stage of
the proceedings, GCI provided some information regarding its
financial condition and, in response, MSHA offered to "adjust
the penalty by 50%" (Sec's Opposition to Appl. 15). She also
states at one point she was "willing to go as far as exploring
a reduction of 90%" (Id. 16). In the Secretary's view, the test
for determining whether MSHA's demand was substantially in
excess of what I ultimately assessed should be based on the
difference between the 50 percent offer and my assessments
(Id. 15). GCI responds that the Secretary has the facts wrong,
that she "never offered a ninety percent . . . settlement
. . . . [and] that the fifty percent . . . offer was discussed
but was never memorialized with a specific amount" (GCI's
Response 2).
I decline the parties' invitation to delve into their
settlement discussions. Aside from the difficulty, indeed the
nearly certain impossibility, of establishing the facts, it
would be bad policy to require a judge to use the parties'
shifting negotiations as a bench mark for gauging the
reasonableness of the agency's demands. In most instances a
judge can not be expected to reconstruct with certainty what
may or may not have passed between the parties or to document
the myriad motives that may have spawned their settlement
proposals. This is especially true when, as here, definitive
written proposals are lacking.[1] Rather than use the parties'
settlement discussions, I will judge the reasonableness of the
Secretary's litigation position by whether that which was
revealed at trial was known, or reasonably should have been
known, by the Secretary.
As I have noted, in large measure, the civil penalties I
assessed against GCI were based on my conclusion the proposed
penalties would adversely effect its ability to remain in
business. In turn, that conclusion was based upon the
documentary evidence the company produced as well as on the
credibility of the company president's explanations of the
company's financial position (see 23 FMSHRC 1289-1390). Even
assuming that all of the documentary evidence presented at
trial was available to the Secretary during the course of
litigation, it was not unreasonable for the Secretary to
maintain her insistence on the proposed penalties. The
Secretary did not have Jackson's sworn explanations before
her, nor did she have the prescience to anticipate my
credibility determinations. It would be irrational,
unreasonable, and contrary to precedent to expect the Secretary
to obtain all of the evidence regarding the ability to continue
in business criterion that GCI introduced at trial, and it
would transpose the positions of judge and litigant to expect
the Secretary to gauge the credibility of Jackson and to
lower the proposed penalties so they did not vary substantially
from those I assessed. In the end, the Secretary simply followed
the law and required the company to prove its case, which is not
a basis for awarding EAJA fees and expenses.
Finally, in the cases the Secretary brought against the
individuals, it also was not unreasonable for the Secretary to
adhere to the proposed penalties. Even though the individual
litigants had no histories of prior violations, that was but
one criterion dictating what penalties ultimately would be
assessed. In every instance, the Secretary made reasonable
arguments regarding the existence of the violations, their
gravity, and the knowledge of the charged individuals.
Although she was not successful in proving all of her
allegations, none of her positions was so far outside the
bounds of reason and logic a reasonable person would have
found them without substance or a fair possibility of
success. Nor was it unreasonable for the Secretary to insist
the individuals establish the size of any penalties assessed
would affect their abilities to meet their financial
obligations. The law places the burden of proving that
criterion upon the individuals, as one of them ultimately
did (see 22 FMSHRC at 1387 - 89).
ORDER
For the reasons set forth above, the application is
DENIED and this proceeding is DISMISSED.
David F. Barbour
Chief Administrative Law Judge
Distribution:
Susan B. Williams, Esq., Madeleine T. Lee, Esq., U. S.
Department of Labor, Office of the Solicitor, 525 South
Griffin Street, Suite 501, Dallas, TX 75202
Elizabeth M. Christian, Esq., 7229 Nohl Ranch Road, Fort
Worth, TX 76133
dcp
**FOOTNOTES**
[1]: This is not to state that a judge in the exercise of
his or her discretion is barred from considering an undisputed,
fully documented settlement proposal as an element of
determining whether a demand is excessive. It is simply to
hold in this instance, where the alleged proposals and
considerations are neither fully documented nor undisputed,
it would be unwise to do so.