November 1, 2011
It seems that, at least several times a month, I am asked by small mine operators, if they win a case, whether they are entitled to recover their attorney fees and expenses from the Mine Safety and Health Administration (MSHA).
This expectation stems from general experience with civil litigation, where it is fairly common for the prevailing party in a dispute to be awarded attorney fees by the judge or jury at the end of the case. As you might expect, however, when dealing with MSHA (or the Occupational Safety and Health Administration, a.k.a. OSHA), things are a bit different. It is rare, indeed, that attorney fees are ever awarded in these cases, although there is a mechanism for doing so: The Equal Access to Justice Act (EAJA).
Attorney fee/cost awards in MSHA and OSHA cases are governed by EAJA, which is codified at 5 USC §504. The rules implementing EAJA are found at 29 CFR Part 2704 (MSHA cases) and at 29 CFR Part 2204 (OSHA cases). The EAJA permits a “prevailing party” meeting eligibility criteria to obtain an award for fees and other expenses in connection with an adversarial proceeding with the U.S. Government — unless the government was “substantially justified” in citing and prosecuting the alleged violation, unless the applicant party has committed a willful violation of law or otherwise acted in bad faith, or unless there are “special circumstances” that would make an award unjust. For a sole owner of an unincorporated business, partnership, corporation, association, or public or private organization, the entity must have a net worth of not more than $7 million, including both personal and business interest, and employ no more than 500 employees.
Because assets such as “reserves” at a mine are valued for EAJA purposes, very few mine operators will qualify. For individuals (e.g., those charged with personal penalties under Section 110 of the Mine Act), EAJA fees to a prevailing individual are available if he/she has a net worth of no more than $2 million and also meets the “not substantially justified” test.
In MSHA cases, for the purpose of eligibility, the net worth, number of employees, or annual receipts of an applicant, as applicable, shall be determined as of the date the underlying proceeding was initiated under the Mine Act. In OSHA cases, for the purpose of eligibility, the net worth and number of employees of an applicant is determined as of the date the notice of contest was filed, or, in the case of a petition for modification of abatement period, the date the petition was received by the Commission. For the purpose of determining eligibility under the EAJA, the employees of an applicant include all persons who regularly perform services for remuneration for the applicant under the applicant’s direction and control. Part-time employees are included on a proportional basis.
If a company or individual does meet EAJA monetary and size criteria, and the other test is satisfied, they may recover “reasonable attorney fees” but these are normally capped at $125/hr., which is far below most fee rates for these specialized MSHA cases. EAJA also permits recovery of costs (e.g., deposition transcripts) and expert witness fees. Any person may file with the Commission a petition for rulemaking to increase the maximum rate for attorney fees. The petition should identify the rate the petitioner believes the Commission should establish and the types of proceedings in which the rate should be used. It should also explain fully the reasons why the higher rate is warranted. In certain localities, the Commission may (in individual cases) award a higher rate.
Under FMSHRC rules for EAJA cases, a prevailing applicant may receive an award of fees and expenses incurred in connection with a proceeding, or in a significant and discrete substantive portion of the proceeding, unless the position of the Secretary was substantially justified. The burden of proof that an award should not be made to a prevailing applicant because the Secretary’s position was substantially justified is on the Secretary, who may avoid an award by showing that his position was reasonable in law and fact. An award will be reduced or denied if the applicant has unduly or unreasonably protracted the underlying proceeding or if special circumstances make the award unjust.
In addition, even if the mine operator or individual does not prevail entirely, under FMSHRC rules, if the demand of the Secretary is substantially in excess of the decision of the Commission and is unreasonable when compared with such decision (for example, the Secretary proposes $70,000 in penalties and the judge reduces it to $2,000), under the facts and circumstances of the case, the Commission shall award to an eligible applicant who does not prevail the fees and expenses related to defending against the excessive demand, unless the applicant has committed a willful violation of law or otherwise acted in bad faith or special circumstances make an award unjust.
Therefore, if an unwarrantable failure (Section 104(d)) citation or order is upheld but the fine is substantially reduced, EAJA fees would not be available. The burden of proof is on the applicant (mine operator or individual) to establish that the Secretary’s demand is substantially in excess of the Commission’s decision. As used in this section, “demand” means the express demand of the Secretary which led to the adversary adjudication, and is not the maximum penalty that could be imposed.
If you believe your case is eligible for EAJA fees, after the matter is finally adjudicated, an application for an award of fees and expenses under the Act must be made to the Chief Administrative Law Judge of the Commission at 601 New Jersey Avenue, N.W., Suite 9500, Washington, D.C. 20001.
The application shall identify the applicant and the underlying proceeding for which an award is sought. It also must state the amount of fees and expenses for which an award is sought, and can include a request that attorney’s fees be awarded at a rate higher than $125 per hour because of an increase in the cost of living or other special factors. The application may also include any other matters that the applicant wishes the Commission to consider in determining whether and in what amount an award should be made.
The case is then assigned for consideration to the same Administrative Law Judge that ruled in the initial case. Unless the applicant is an individual, the application shall also state the number of employees of the applicant and describe, briefly, the type and purpose of its organization or business. The application also must include a statement that the applicant’s net worth does not exceed EAJA limits and include a detailed exhibit showing the net worth of the applicant when the underlying proceeding was initiated. If the party did not win entirely, but seeks EAJA fees because of the unreasonableness of the Secretary’s penalties compared with the actual judgment, these classes of applications must additionally show that the applicant is a small entity as defined in 5 U.S.C. 601(6), and the application must conform to the standards of the Small Business Administration at 13 CFR 121.201 for mining entities. All applications for attorney fees and costs must be accompanied by full documentation of the fees and expenses, including the cost of any study, analysis, engineering report, test, project, or similar matter, for which an award is sought.
Applications for EAJA fees must be filed no later than 30 days after the Commission’s final disposition of the underlying proceeding, or 30 days after issuance of a court judgment that is final and not able to be appealed. The Secretary of Labor has 30 days to file an Answer to the application (and the solicitor’s office has “canned briefs” to combat claims for EAJA fees), and then the applicant can file a reply brief within 15 days. The determination of an award will normally be made on the basis of the record made during the proceeding for which fees and expenses are sought, but the judge can order further proceedings including discovery or even a full-blown evidentiary hearing. The judge will rule within 75 days, but EAJA decisions can be appealed by either party to FMSHRC.
Although the odds are daunting and the barriers high in successfully seeking EAJA relief, it does happen on rare occasions. For example, an individual employed by a coal operator in 2005 succeeded in obtaining $18,000 in attorney fees (in settlement of an EAJA proceeding) after he prevailed in his Section 110(c) action and demonstrated that MSHA’s case was not substantially justified. In that case, David Coleman v. Secretary of Labor, while ALJ Feldman found that the Secretary’s case was initially “substantially justified,” he held that the Secretary lost her substantial justification the day before trial after a deposition revealed the testimony of her primary witness was unreliable.
However, in the latest EAJA case to be decided, the company was not so fortunate. In USA Cleaning Service & Building Maintenance v. Secretary of Labor (ALJ McCarthy, Sept. 23, 2011), a novel theory for EAJA fees was presented. USA Cleaning (a contractor at a cement plant) had received a training withdrawal order under Sec. 104(g)(1) of the Act for failure to provide 24 hours of new miner training to its janitorial staff under Part 46. The company contested the Order and requested expedited proceedings. Only 48 hours after the case was assigned to Judge McCarthy, the Secretary filed a motion to dismiss, vacating the citation and permitting the cleaning company to resume work at the cement plant.
USA Cleaning filed for $22,000 in EAJA fees, asserting that despite several attempts to convince MSHA to vacate the “clearly erroneous” order, the Secretary only ended her prosecution after a conference call with the judge indicated that he might be inclined to vacate the citation. Therefore, USA Cleaning asserted that it was a “prevailing party” within the scope of EAJA and was entitled to reimbursement. The Secretary countered that USA was not eligible because the underlying proceedings were not “an adversarial adjudication” and, alternately, that the inspector’s findings were “substantially justified” in law and fact.
The judge found that USA Cleaning did not meet the basic threshold for being a “prevailing party” under EAJA. He noted that, in 1999, EAJA fees were awarded in a case where the Secretary vacated a civil penalty action the day before trial, and in that matter the court analyzed whether MSHA’s pre-litigation posture throughout the lengthy pre-trial period was “substantially justified.” Therefore, Judge McCarthy acknowledged that a judgment on the merits was not a necessary prerequisite in establishing EAJA eligibility. However, he was reluctant to extend this to a case where the Secretary has promptly vacated an order before a penalty petition was filed and issued joined for litigation. In USA Cleaning, he found there was little preparation or discussion and only a Notice of Contest and Motion for Expedited Consideration were involved.
A U.S. Supreme Court landmark decision in a non-MSHA case, Buckhannon Bd. & Care Home Inc. v. W. Va. Department of HHR (2001) has addressed the definition of “prevailing party” and this ruling has been extended to various EAJA cases in the subsequent years. There is basically a three-prong test now applied: a party is classified as having prevailed if (1) there is a court-ordered change in the legal relationship of the parties; (2) the judgment is in favor of the party seeking the fees; and (3) the judicial pronouncement is accompanied by judicial relief.
Here, the order was vacated before a hearing was scheduled or held, and he found that MSHA’s withdrawal of the order did not result in the court conveying any judicial relief upon USA Cleaning, nor did it change the legal relationship between the parties. The Secretary of Labor has unreviewable discretion to vacate citations and orders, and so the judge’s action granting the motion to dismiss was simply procedural in nature, not a substantive finding in USA Cleaning’s favor.
About the author: Adele L. Abrams is an attorney, Certified Mine Safety Professional and trained mediator who is president of the Law Office of Adele L. Abrams P.C. in Beltsville, Md., a seven-attorney firm focusing on safety, health, and employment law nationwide. Abrams also provides consultation, safety audits, and training services to MSHA- and OSHA-regulated companies. She is a member of the Maryland, D.C., and Pennsylvania Bars, the U.S. District Courts of Maryland and D.C., the U.S. Court of Appeals, D.C. Circuit and 4th Circuit, and the United States Supreme Court. She is a graduate of the George Washington University’s National Law Center, and earned her Bachelor of Science in Journalism from the University of Maryland, College Park. For more information, contact her at email@example.com or visit the The Law Office of Adele L. Abrams on the Web at www.safety-law.com.