Two Personal Liability Cases Upheld Against Foremen

By Ellen Smith

The 11th Circuit Court of Appeals agreed with the Labor Secretary that an agent of a limited liability corporation, or “LLC,” can be charged under 110(c) of the Mine Act, and in a separate case, the Review Commission upheld charges against a foreman.

The case before the 11th Circuit stems from an MSHA citation issued Dec. 30, 2009, at Oak Grove Resources mine in Jefferson County, Ala.  During an inspection it was found that several pumps, used to prevent water accumulation, were not working properly, and prevented the company from having the areas examined as required by law. The examination books showed that the area had not been inspected for three weeks, and the mine was cited under, and paid a $108 fine.
Six days later, on Jan. 6, 2010, another MSHA inspector was following up, and found the same violations. MSHA fined the company again, for the lack of examinations and the water, and pursued 110(c) fines against Mike Sumpter, the acting mine superintendent, and Rex Hartzell, the general mine foreman.


Sumpter and Hartzell appealed the fines, arguing they could not be held responsible under 110(c), because Oak Grove is an LLC, and the 110(c) provisions apply only to agents of corporations.
In ruling in favor of the secretary’s interpretation, the 11th Circuit said the legislative history shows “a clear intent to penetrate the corporate shield, and to induce those officials responsible for the operation of a mine to comply with the Act and its standards. “Interpreting ‘corporate operator’ and ‘corporation’ to only cover one type of commercial entity that shields individuals from liability would frustrate Congress’s intent to pierce corporate forms that provide this liability shield.”
The court also noted that when the Mine Act was written, LLCs did not even exist, and an LLC wasn’t even defined in Blacks Law Dictionary until 1999.  In 2006, the secretary issued an interpretative bulletin with the secretary’s position that an agency of an LLC may be held personally liable under Sec. 110(c) of the Mine Act, and the Commission upheld that interpretation in 2012, affirming a 2010 decision of ALJ Jerold Feldman (see: BILL SIMOLA, employed by UNITED TACONITE LLC, 3/7/2012, Docket No. LAKE 2010-128-M, 34 FMSHRC 539 (affirming 32 FMSHRC 421) (ALJ Feldman).  
The 11th Circuit said that 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.”
In this case of whether the two individuals could be held liable for their specific actions, the court said substantial evidence supported a conclusion that management plainly knew or should have known that the required examinations were not being performed. “There was a threat of serious injuries to the entire mining crew which arose from aggravated conduct that was more than mere negligence,” the court said.

Mine Operating Safely

While the agents argued that despite the lack of examinations the mine was operating safely, the court said, “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.”
In another recent decision, the full Commission upheld a 110(c) case where a shift foreman was held liable when he allowed mining to continue without cleaning up accumulations of combustible materials.
The ALJ’s 110(c) liability findings were supported by the MSHA inspector’s notes, along with company production and examination records. The mine had also been cited 17 times for accumulations in a two-year period, and therefore the mine was on “notice” that better efforts were needed in keeping the mine clean.
In this case, the Commission said that once the shift foreman, Jason Robinson, made the decision to continue mining, instead of ordering the mine to be cleaned-up, he “knowingly and willfully violated the law at that time.”

MIKE SUMPTER, REX HARTZELL, Employed by, Oak Grove Resources, LLC, 8/15/2014, CA11 No. 13-15360; 21 MSHN D-2197

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