Mike Sumpter v. Secretary of Labor, Federal Mine Safety and Health Review Commission , 763 F.3d 1292 ( 2014 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-15360
________________________
Agency No. SE-2012-306-308
MIKE SUMPTER,
REX HARTZELL,
Employed by, Oak Grove Resources, LLC,
Petitioners,
versus
SECRETARY OF LABOR,
FEDERAL MINE SAFETY AND
HEALTH REVIEW COMMISSION,
Respondents.
________________________
Petition for Review of a Decision of the
Federal Mine Safety and Health Review Commission
________________________
(August 15, 2014)
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Before MARTIN, Circuit Judge, and RESTANI, * Judge, and HINKLE, ** District
Judge.
MARTIN, Circuit Judge:
In this appeal, we must decide whether the word “corporation” includes
limited liability companies (LLCs) for purposes of the Federal Mine Safety and
Health Act of 1977, 30 U.S.C. § 801 et seq. (the Mine Act). The Mine Act was
enacted “to provide more effective means and measures for improving the working
conditions and practices in the Nation’s coal or other mines in order to prevent
death and serious physical harm.” 30 U.S.C. § 801(c). To encourage compliance
with the Act, § 110(c) provides that “[w]henever a corporate operator violates a
mandatory health or safety standard . . . , any . . . agent of such corporation who
knowingly authorized, ordered, or carried out such violation . . . shall be subject to
the same civil penalties.” Mine Act § 110(c), codified at 30 U.S.C. § 820(c)
(emphasis added).
Petitioners Mike Sumpter and Rex Hartzell argue that the plain language
reference to agents of corporations in § 110(c) does not include agents of an LLC,
like themselves. Even if it does, Petitioners claim the administrative law judge’s
(ALJ) finding holding them personally liable was not supported by substantial
*
Honorable Jane A. Restani, United States Court of International Trade Judge, sitting by
designation.
**
Honorable Robert L. Hinkle, United States District Judge for the Northern District of Florida,
sitting by designation.
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evidence. Lastly, they argue that the violation underlying their civil penalties is
improperly duplicative of an earlier violation for which the mine was also cited.
After careful review, and with the benefit of oral argument, we affirm.
I.
Oak Grove Resources, LLC is a limited liability company registered in
Delaware that operates an underground coal mine in Jefferson County, Alabama.
During the time relevant to this appeal, Mr. Sumpter was the acting superintendent
at the mine and Mr. Hartzell was the general mine foreman. This dispute stems
from several violations issued by the Department of Labor’s Mine Safety and
Health Administration (MSHA) against Oak Grove in December 2009 and January
2010. To fulfill the purpose of the Mine Act, Congress authorized the Secretary of
Labor “to develop and promulgate improved mandatory health or safety
standards.” 30 U.S.C. § 801(g). Because of the dangers of fires and explosions,
detailed regulations require mines to develop a ventilation system, and methane
and dust control plans that must be approved by the Secretary. Id. § 863(a), (o);
see also 30 C.F.R. § 75.300 et seq. (ventilation standards for underground coal
mines). Inspectors from the MSHA, acting on behalf of the Secretary, regularly
visit mines to assure compliance with these and other regulations. 30 U.S.C.
§ 813(a).
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In December 2009, several water pumps that Oak Grove used to prevent
water accumulation in its ventilation system were not working properly. As a
result, high water levels prevented Oak Grove from keeping up with the
requirement that a certified person walk through the ventilation system every seven
days and take measurements at specific locations to ensure the system was working
properly. 30 C.F.R. § 75.364(a)(2)(iii). During an inspection on December 30,
MSHA inspector Derrick Busby issued Citation No. 6698645 (the Citation)
alleging a violation of that requirement. 30 C.F.R. § 75.364(a)(2)(iii).
When Inspector Busby issued the December 30 Citation, Oak Grove was not
mining coal from the affected area of the mine. But Oak Grove began those
operations again on January 4, 2010, apparently without notifying the MSHA and
before remedying the problem identified in the December 30 Citation. Another
MSHA Inspector, Edward Boylen, attempted to walk through the ventilation
system on January 5 and 6, but he was also unable to reach the measurement
locations specified in the ventilation plan because of water accumulation. He
noted the mine books showed measurements had not been taken at eleven different
locations for three weeks, instead of the required seven-day interval. Mr. Hartzell
and possibly Mr. Sumpter had signed these examination books. When Inspector
Boylen met with the mine supervisors, including Mr. Sumpter and Mr. Hartzell,
Mr. Sumpter told him they knew they had not checked those eleven locations
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because they were blocked by water. Inspector Boylen also noticed the pressure
differential at the exhaust fan in this part of the mine had increased significantly,
which meant a decreased quantity of air passing through the fan and a restriction in
air flow. Based on his observations, Inspector Boylen issued Order No. 669830 on
January 6, 2010.1 This Order required Oak Grove to remove workers and stop
producing coal from this area of the mine.
After a hearing, an ALJ affirmed the January 6 Order against Oak Grove, as
did the Federal Mine Safety and Health Review Commission (the Commission) on
appeal. Several months later, the MSHA filed petitions under § 110(c) of the Mine
Act, 30 U.S.C. § 820(c), to assess civil penalties against Mr. Sumpter and Mr.
Hartzell individually based on the January 6 Order. An ALJ affirmed these
petitions and the Commission declined Mr. Sumpter’s and Mr. Hartzell’s request
for discretionary review. Mr. Sumpter and Mr. Hartzell then filed this appeal
pursuant to 30 U.S.C. § 816(a)(1).
1
The Mine Act has a graduated scheme of enforcement that increases depending on the
operator’s compliance history and the gravity of the violation. Generally, an operator who has
violated a mandatory health or safety standard first receives a “citation,” describing the violation
and fixing a reasonable time for the violation to be addressed. 30 U.S.C. § 814(a). Oak Grove’s
December 30 Citation, for example, identified the violation—failing to walk through the
ventilation system every seven days—and set the abatement deadline for the next day. When an
operator fails to remedy a violation by the deadline, a MSHA inspector may then, depending on
the severity of the violation, issue an “order” requiring the mine operator to withdraw workers
from the mine or affected area of the mine until the violation is abated. Id. § 814(b). The
January 6 Order against Oak Grove was this type of follow up order.
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II.
A. Statutory Interpretation of Section 110(c)
Section 110(c) of the Mine Act provides that:
Whenever a corporate operator violates a mandatory health or safety
standard . . . , any director, officer, or agent of such corporation who
knowingly authorized, ordered, or carried out such violation . . . shall
be subject to the same civil penalties, fines, and imprisonment that
may be imposed upon a person under subsections (a) and (d).
30 U.S.C. § 820(c) (emphasis added). Mr. Sumpter’s and Mr. Hartzell’s principal
argument is that the statute’s use of the word “corporation” is unambiguous, and
that the plain language of § 110(c) demonstrates that it only applies to agents of a
corporation, not agents of an LLC, like themselves. In response, the Secretary
argues the undefined terms “corporation” and “corporate operator” in § 110(c) are
ambiguous and that the Secretary’s interpretation—that an LLC is a corporation for
purposes of the Mine Act—is reasonable. To resolve this dispute, we must
consider whether the terms are ambiguous, and if so, the level of deference
properly given to the Secretary’s interpretation.
1. Is the Statute Ambiguous?
This Court reviews de novo the Commission’s decision on a question of
statutory interpretation. See U.S. Steel Mining Co. v. Dir., OWCP, 719 F.3d 1275,
1280 (11th Cir. 2013). When reviewing an agency’s construction of a statute that
it administers, we first determine whether Congress has directly spoken to the
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question. Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837,
842, 104 S. Ct. 2778, 2781 (1984). “If the intent of Congress is clear, that is the
end of the matter; for the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress.” Id. at 842–43, 104 S. Ct. at 2781.
We agree with the Commission’s conclusion in Secretary of Labor v. Simola
that the term corporation in § 110(c) is ambiguous. 34 FMSHRC 539, 545 (2012).
Notably, neither “corporate operator” nor “corporation” is defined by the Mine
Act. When a term has no statutory or administrative definition, we look to its
ordinary or natural meaning. Schwarz v. City of Treasure Island, 544 F.3d 1201,
1214 (11th Cir. 2008). We also interpret the words of a statute by “taking their
ordinary, contemporary, common meaning” at the time Congress enacted the
statute. See Perrin v. United States, 444 U.S. 37, 42, 100 S. Ct. 311, 314 (1979).
The dictionary definitions of “corporation” around the time of the passage of
the Mine Act vary, but none limited its usage to an incorporated entity. Instead,
the definitions focus on attributes of a corporation. See, e.g., Webster’s New
International Dictionary 596 (2d ed. 1957)2 (“Any group of persons or objects
treated by the law as an individual or unity having rights or liabilities, or both,
distinct from those of the people or objects composing it.”); Black’s Law
Dictionary 307 (5th ed. 1979) (“An artificial person or legal entity created by or
2
The definition of corporation in the next edition from 1993 is substantially similar. Webster’s
Third New International Dictionary 510 (1993).
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under the authority of the laws of a state or nation . . . .”). These features—having
rights and liabilities distinct from the persons who compose it, and being an
artificial or legal entity—are not exclusive to a company with the phrase “Inc.”
after its name, but also describe an LLC. Black’s Law Dictionary 275 (7th ed.
1999) (defining an LLC as “[a] company—statutorily authorized in certain states—
that is characterized by limited liability. . .”). The lack of a specific definition of
corporation in the Mine Act and the fact that the common usage of the word also
includes some of the defining attributes of an LLC supports the conclusion that the
term “corporation” is ambiguous as used in the Mine Act.
The legislative history of the Mine Act, and its predecessor the Coal Act,
also suggest the term “corporation” is ambiguous. Specifically, the congressional
reports show a clear intent to “penetrat[e] the corporate shield,” H.R. Rep. No. 91-
563, at 12 (1969), and “to induce those officials responsible for the operation of a
mine to comply with the Act and its standards,” S. Rep. No. 95-181, at 41 (1977).3
Interpreting “corporate operator” and “corporation” to only cover one type of
3
The legislative history of the original Coal Act used terms like “corporate structure” and
“corporate entities,” also suggesting Congress intended the term in a general rather than a
technical sense. See, e.g., S. Rep. No. 91–411, at 39 (“Since the basic business judgments which
dictate the method of operation of a coal mine are made directly or indirectly by persons at
various levels of corporate structure, the committee believed it necessary to place the
responsibility for compliance with the act and the regulations, as well as the liability for
violations on those who control or supervise the operation of coal mines as well as on those who
operate them.”); id. (“Fines up to $50,000 are also prescribed for the corporate entity.”).
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commercial entity that shields individuals from liability would frustrate Congress’s
intent to pierce corporate forms that provide this liability shield.4
The fact that LLCs and other contemporary business forms authorized by
state law were not in common use when the Mine Act was passed also creates
ambiguity. The term LLC does not appear in Black’s Law Dictionary until the
Seventh Edition in 1999. Black’s Law Dictionary 275, 343 (7th ed. 1999). If
LLCs were not common when § 110(c) was enacted, we cannot read any intent
into the fact that Congress did not address that corporate form. 5 This lack of
clarity about how Congress intended LLCs to fit into the Mine Act is an ambiguity
that the Secretary, as the head of the agency charged with enforcing the statute, is
permitted to fill with a reasonable interpretation. See NBD Bank, N.A. v. Bennett,
67 F.3d 629, 633 (7th Cir. 1995) (“Many a statute resolves a portion of a problem,
leaving other issues to the future—perhaps because the questions did not occur to
anyone at the time . . . . That is one reason why Congress frequently delegates
power to executive officials . . . .”); see also Taylor v. Roberts, 94 So. 874, 876
4
Petitioners point to a proposed amendment that would have eliminated the word corporate and
corporation, and replaced them with the word “operator.” However, the fact that this amendment
did not pass does not clear up the ambiguity about the scope of the word “corporation.”
5
Petitioners argue that this Court should give weight to the fact that Congress has amended the
Mine Act twice since its enactment and chosen not to amend § 110(c). We reject this argument
because it would be inappropriate to read any significance into Congress’s actions where neither
amendment specifically addressed the scope of § 110(c). See Brown v. Gardner, 513 U.S. 115,
121, 115 S. Ct. 552, 556–57 (1994) (finding re-enactment of a statute “to be without
significance” to a dispute over statutory interpretation where the congressional proceedings made
no reference to the issue and “there is no other evidence to suggest that Congress was even aware
of the [agency’s] interpretive position” (quotation marks omitted)).
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(Fla. 1922) (extending application of a parking ordinance to automobiles even
though it only listed “hackney carriages, carts, omnibuses, wagons, and drays”
because the ordinance evidenced an intent to regulate all the then-known classes of
vehicles using the streets).
In support of their argument that we should read the word “corporation”
narrowly, Petitioners rely on Secretary of Labor v. Guess. 15 FMSHRC 2440(1993), aff’d mem. sub nom. Sec’y of Labor v. Shirel, 52 F.3d 1123 (D.C. Cir.
1995). In Guess the Commission found that § 110(c) did not apply to partnerships.
Id. at 2442–43. While we recognize the similarities between Guess and this case,
the differences are far more important. The conclusion in Guess cannot be
divorced from the fact that it was considering a partnership, an entity that was
common at the time the Mine Act was passed, as shown by its specific mention in
the statute. 30 U.S.C. § 802(f) (defining “person” as “any individual, partnership,
association, corporation, firm, subsidiary of a corporation, or other organization”). 6
6
Petitioners argue that this definition shows Congress contemplated a variety of business forms
under the Mine Act but in § 110(c) chose only to include one of them, a corporation. However,
neither this definition, nor any other part of the Act, shows that Congress considered LLCs or
other business forms that, similar to corporations, had as a defining feature that they provided a
liability shield. In contrast to an LLC, none of the general, overlapping terms listed in the Act’s
definition of “person,” aside from corporation, necessarily have this defining feature. Black’s
Law Dictionary 111 (5th ed. 1979) (defining “association” as “a term of vague meaning used to
indicate a collection or organization of persons who have joined together for a certain or
common object”); id. at 571 (defining a “firm” as a “[b]usiness entity or enterprise,” an
“[u]nincorporated business,” or a “[p]artnership of two or more persons”); id. at 991
(“Organization includes a corporation, government or governmental subdivision or agency,
business trust, estate, trust, partnership or association, two or more persons having a joint or
common interest, or any other legal or commercial entity.”). To the extent these terms can be
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Partnerships, especially as understood at the time, also did not provide the same
limitation on liability that motivated Congress to pass § 110(c). Black’s Law
Dictionary 1009 (5th ed. 1979) (defining “partnership” as “[a] voluntary contract
between two or more competent persons to place their money, effects, labor, and
skill, or some or all of them, in lawful commerce or business, with the
understanding that there shall be a proportional sharing of the profits and losses
between them”).
2. What Level of Deference Applies?
Having concluded that the terms “corporation” and “corporate operator” in
the Mine Act are ambiguous, we now consider what level of deference to extend to
the Secretary’s interpretation. If a statute is silent or ambiguous with respect to the
specific issue, the question is whether the agency charged with administering the
statute has offered a reasonable interpretation. Chevron, 467 U.S. at 843–44, 104
S. Ct. at 2782; Sec’y of Labor ex rel. Wamsley v. Mutual Mining, 80 F.3d 110, 115
(4th Cir. 1996). An agency interpretation made outside of a formal regulation may
still warrant Chevron deference in some instances, including where the agency
issued its interpretation through notice-and-comment rulemaking. See Miccosukee
Tribe of Indians v. United States, 566 F.3d 1257, 1273 (11th Cir. 2009) (finding
defined to include both entities that are similar to and distinguishable from corporations—and
even to include corporations themselves—the Act’s definition of “person” simply provides
further support for our conclusion that the meaning of “corporation” in § 110(c) is unclear.
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agency handbook entitled to Chevron deference where agency was authorized to
issue regulations and handbook was issued through notice-and-comment process).
In 2006, the Secretary of Labor issued an interpretive bulletin, providing that
“agents of LLCs may be held personally liable under Section 110(c) of the Mine
Act.” 71 Fed. Reg. 38,902, 38,903 (July 10, 2006). Although the Secretary
believed the bulletin was an “interpretive rule” that was not required to go through
notice-and-comment rulemaking, the Secretary, in an exercise of discretion,
solicited and responded to comments. Id. Because the Department of Labor is an
agency authorized to issue regulations to implement the Mine Act, 30 U.S.C.
§ 801(g), and because the Secretary issued the interpretive bulletin through a
discretionary notice-and-comment process, the interpretation is owed Chevron
deference. See Miccosukee Tribe of Indians, 566 F.3d at 1273.
We also conclude that the Secretary’s interpretation is reasonable. Perhaps
most importantly, construing § 110(c) to include agents of LLCs is consistent with
the legislative history we have discussed. Because LLCs provide a corporate
shield similar to incorporated entities, it is reasonable to extend § 110(c) to cover
agents of LLCs as well. Cf. Meyer v. Okla. Alcoholic Beverage Laws
Enforcement Comm’n, 890 P.2d 1361, 1362–64 (Okla. Ct. App. 1995) (extending
to LLCs a constitutional provision prohibiting corporations from holding a liquor
license because an LLC “has as its most important feature the limitation of
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liability[,]. . . a shield from the very responsibility and accountability that the
constitutional provisions. . . sought to impose”). The Secretary’s interpretation
furthers Congress’s intent to pierce the corporate form and reach officers or agents
who would not otherwise be liable. It also prevents the subversion of Congress’s
intent through the creation of new hybrid business entities with different names
that provide a similar limitation on liability. Cf. United Elec., Radio & Mach.
Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1091 (1st Cir. 1992) (“[I]n
federal question cases, courts are wary of allowing the corporate form to stymie
legislative policies.”).
We therefore conclude that the undefined terms “corporation” and
“corporate operator” in the Mine Act are ambiguous and the Secretary has offered
a reasonable interpretation that is entitled to Chevron deference. Based on that
conclusion, we further hold that an LLC is a corporation for purposes of the Act
and that § 110(c) can be used to assess civil penalties against agents of an LLC.
B. Whether the ALJ’s Decision was Supported by Substantial Evidence
We next consider Mr. Sumpter’s and Mr. Hartzell’s challenge to whether
substantial evidence supports the ALJ’s decision finding them personally liable for
Oak Grove’s January 6 Order. That Order involved Oak Grove’s violation of
30 C.F.R. § 75.334(d), which requires a mine operator to seal a work area if it
cannot be determined whether a ventilation system is working effectively.
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The ALJ’s conclusion, finding Petitioners personally liable for Oak Grove’s
violation, is a question of fact that is reviewed under the substantial evidence test.
30 U.S.C. § 816(a)(1) (“The findings of the Commission with respect to questions
of fact, if supported by substantial evidence on the record considered as a whole,
shall be conclusive.”). Substantial evidence “means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.” Richardson v.
Perales, 402 U.S. 389, 401, 91 S. Ct. 1420, 1427 (1971) (quotation marks omitted).
Under § 110(c), an agent can be found personally liable if he “knowingly
authorized, ordered, or carried out” a violation of a mandatory health or safety
standard. 30 U.S.C. § 820(c). “Knowingly” means the individual knew or had
reason to know of the violation. See Freeman United Coal Mining Co. v. Fed.
Mine Safety & Health Review Comm’n, 108 F.3d 358, 363–64 (D.C. Cir. 1997).
Section 110(c) requires aggravated conduct that is more than ordinary negligence.
Id. at 364.
Substantial evidence supports the ALJ’s finding that the Petitioners knew
that the ventilation system had not been evaluated as required and that its
effectiveness could not be determined. Inspector Boylen testified that given the
mine’s significant efforts to address the water problem, management plainly knew
or should have known that the required weekly examinations were not being
performed. Mr. Sumpter and Mr. Hartzell also acknowledged at the hearing that
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they knew that the effectiveness of the ventilation system could not be evaluated as
required by § 74.334(d) and the approved ventilation plan, because the examiners
could not travel to the ventilation plan’s designated measurement locations. One
or both of them also signed the mine books, which showed the required
measurements had not been taken for three weeks.
In reaching his conclusion the ALJ also considered the context of
Petitioners’ actions. The Oak Grove mine tended to produce large amounts of
methane, in that it liberated in excess of one million cubic feet of methane in a 24-
hour period. 7 Because of the safety risk presented by high methane levels, on top
the other rigorous safety standards and internal inspection requirements, Oak
Grove was also subject to spot inspections by MSHA every five days. 30 U.S.C.
§ 813(i). Given this characteristic of the mine, the ALJ also found significant
Petitioners’ decision to re-start coal production despite the knowing violation of a
“fundamental” standard and without seeking approval for their unproven and
unapproved alternative method of determining the ventilation system’s
effectiveness. These facts offer substantial evidence to support the ALJ’s
conclusion that there was a threat of serious injuries to the entire mining crew
which arose from aggravated conduct that was more than mere negligence.
7
The mine had five methane ignitions during 2009, including two in December just before the
mandatory safety violations at issue in this case.
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To contest these findings, Petitioners rely mainly upon evidence that they
believed the ventilation system was operating effectively and safely despite their
knowledge that the mine was not in compliance with a mandatory safety
requirement. This defense is not viable, because were we to adopt it, it would
allow people, based on their personal opinions, to circumvent the rigorous and
detailed health and safety standards Congress mandated to protect miners and
regulate their dangerous working conditions. See 30 U.S.C. § 801(g); 30 C.F.R.
§§ 75.1–75.1916 (subparts A–T of mandatory safety standards for underground
coal mines). Regardless, the ALJ, who was able to observe the witnesses, offered
a reasoned explanation for discounting Petitioners’ purported beliefs and we will
not reweigh his credibility determinations. See Bradberry v. Dir., OWCP, 117
F.3d 1361, 1367 (11th Cir. 1997) (“The ALJ is responsible for making credibility
determinations and for weighing conflicting evidence . . . in a reasoned manner”).
Because substantial evidence supports the ALJ’s decision to hold Petitioners
personally liable for the January 6 Order, we affirm on this issue.
C. Duplication
The Petitioners’ final argument is that the Order underlying their civil
penalties is impermissibly duplicative of the MSHA’s earlier December 30
Citation against Oak Grove. This Court reviews de novo conclusions of law. See
Stone & Webster Constr., Inc. v. U.S. Dep’t of Labor, 684 F.3d 1127, 1132 (11th
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Cir. 2012). Citations and orders are not duplicative as long as the standards
impose separate and distinct duties. Sec’y of Labor v. Spartan Mining Co.,
30 FMSHRC 699, 716 (2008).8
We reject the Petitioners’ argument because the duties imposed by the
regulations underlying the December 30 Citation and the January 6 Order were
distinct. The December 30 Citation was issued for a violation of 30 C.F.R.
§ 75.364(a)(2)(iii), which required Oak Grove to walk through the ventilation
system every seven days to take measurements and determine its effectiveness.
Meanwhile, the January 6 Order was based on § 75.334(d), which required Oak
Grove to seal the work area if it could not determine that the ventilation system
was working effectively. Because the two standards impose separate and distinct
duties—in a nutshell, monitoring versus sealing—the fact that Oak Grove’s
violations may have come about because of the same event is not dispositive.
Sec’y of Labor v. Cyprus Tonopah Mining Corp., 15 FMSHRC 367, 378–79
(1993) (“[A]lthough the [operator’s] violations may have emanated from the same
events, the citations are not duplicative because the two standards impose separate
and distinct duties upon an operator.”).
8
Petitioners also urge us to consider whether the required abatement efforts were duplicative.
However, the split decision in Spartan Mining demonstrates that the Commission has not
definitively adopted this principle. 30 FMSHRC at 728–730 (dissent by two of the four
commissioners). Regardless, Oak Grove could have abated the Citation and Order in a variety of
ways, as the ALJ noted here, some of which were not duplicative.
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III.
In sum, the terms “corporation” and “corporate operator” as used in § 110(c)
of the Mine Act are ambiguous and the Secretary’s interpretative bulletin provides
a reasonable interpretation of those terms to which we owe Chevron deference.
We therefore hold that § 110(c) permits assessment of civil penalties against agents
of an LLC. Based on that conclusion, and because the ALJ’s decision was
supported by substantial evidence and the underlying Citation and Order were not
duplicative, the ALJ’s decision is AFFIRMED.
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