Judicial Scrutiny, Proposed Settlements and Avoiding Settlement Rejections
In August 2012, the Federal Mine Safety & Health Review Commission (“FMSHRC”), the body that oversees the legal administration and review process of contested violations by mine operators, determined that Commission Administrative Law Judges (“ALJ”) (i.e., trial judges) are explicitly empowered to review proposed settlements consistent with the purpose of enforcement: to encourage operator compliance with mandatory standards. Black Beauty Coal Co., 34 FMSHRC ___, slip op., 19 MSHN 489, (LAKE 2008-327, LAKE 2008-590, & LAKE 2009-2240) (Aug. 20, 2012).
Within six weeks of this decision, two Commission judges1 signaled a possible return to the heightened scrutiny seen during the mid-1990s, when at least 15 proposed settlements were rejected in a three-year window (the highest concentration of reported settlement rejections in the last 25 years). Accordingly, the Black Beauty decision and the subsequent rejections of proposed settlements (based on that FMSHRC decision) have placed the solicitor’s office and defense bar on notice that more information is required to justify any proposed modification in a settlement document.
For at least the third time since the Black Beauty decision, an ALJ has rejected a settlement motion for lack of sufficient factual support or justification for the proposed modifications. Most recently, on February 11, 2013, ALJ William Moran rejected a proposed settlement between MSHA’s Conference and Litigation Representative (“CLR”) and American Coal Co.’s New Era Mine. The settlement documents proposed an across-the-board 30% reduction to 32 citations, but failed to provide any factual support justifying a single modification, much less the proposed 30% reduction in the aggregate penalty. ALJ Moran stated that the proposed modification was based on nothing more than the parties’ wish to achieve an amicable settlement and avoid additional litigation, but such a basis demonstrates a lack of understanding about the Mine Act’s requirements where civil penalty modifications are sought. For this reason, ALJ Moran refused recognition of the CLR’s notice of limited appearance, noting that competence is an essential part of the process and such competence was lacking in this instance.
The lessons taught by Black Beauty and the subsequent settlement rejections are multi-dimensional. Notably, the solicitor’s office and operator’s representative must work together to identify factual support to justify any proposed modification(s). In the wake of ALJ Moran’s recent settlement rejection, this imperative is absolutely clear. Conversely, a lack of factual support is an invitation for denial by the court, unrecoverable costs for the time invested in a dead-on-arrival settlement, and the subsequent efforts and costs necessary to ascertain the missing facts to support the modification(s).
The questions raised in the aftermath of these decisions are similarly complex. Since the solicitor’s office is responsible for the drafting and filing of settlement documents, the office often includes language in a proposed modification that is careful to avoid explicit factual and/or legal concessions that would admit the purported facts are persuasive or likely true, and/or present difficult obstacles for the office to meet its burden of proof at trial. However, especially in light of the Black Beauty decision, does such non-committal language encourage a judge (or the Commission) to become more engaged in the negotiation process than in the past? Is a judge encouraged to Monday-morning quarterback the solicitor’s office, requiring something less than findings of fact or a presentation of evidence but more than assertions on a page?
In the wake of these recent agency decisions, and public scrutiny related to adverse court decisions (see, e.g., Bragg et al. v. U.S., Case No. 12-0850, __ W.Va. __, __ S.E.2d __ (W.Va. February 5, 2013); MSHA Inspector Sentenced to Probation for Falsifying Reports; increased scrutiny of proposed settlement documents is understandable, thereby requiring the solicitor’s office and operator to make the additional effort in supporting proposed modifications. Since the solicitor’s office and the operator are mutually interested in settling many of the enforcement actions issued, and despite the hesitancy to yield on factual and/or legal positions, any hesitancy by the solicitor’s office should be quickly dispelled by the realization operators similarly yield the high-ground when accepting enforcement actions without modifications. Thus, to ensure entry of proposed modifications, the solicitor’s office must occasionally moderate its language in favor of the modification or risk rejection of the proposed term(s). As we have experienced, this strategy yields success in practice.
In anticipation of this renewed scrutiny, both the solicitor’s office and the defense bar may need to re-evaluate their respective practices regarding preparation of settlement documents. In particular, mine operators should marshal as many verifiable facts as possible, preferably on the front-end, not only in an attempt to develop a defensible trial strategy, but also with an eye toward supporting any proposed modifications it can reach with the solicitor’s office, and thereby insulating the settlement for unnecessary delay or rejection in light of Black Beauty.
(1) On October 15, 2012, ALJ Thomas McCarthy rejected the proposed settlement between the solicitor’s office and Dickenson-Russell Coal Co.; on October 18, 2012, ALJ Priscilla Rae rejected a settlement motion proposing modification to a single citation. ALJ’s McCarthy and Rae separately cited the solicitor’s failure to provide factual support for the proposed modification as the basis for denying approval and entry of the proposed settlements.