High Stakes in the Labor Department's Massey Coal Mine Case

The U.S. Department of Labor on Nov. 3 asked a court to shut down Massey Energy's Freedom Energy Mine No. 1 in eastern Kentucky until Massey (MEE) addresses the myriad dangerous conditions there. This is the first time Labor has asked for a judge to help it enforce mine-safety standards, even though the power to ask for an injunction has been available since 1977. As a result, this request is a test case.

Will the judge issue an injunction shutting down a mine with a record of safety violations as egregious as Freedom's? If so, Massey will then have to satisfy both that judge and regulators before the company is allowed to restart operations at the shuttered coal mine. That's a wild card that poses big risks for Massey.

But Labor also is facing a wild card: If the judge denies its request, Labor will lose the implicit threat of an injunction as a weapon to back up other enforcement actions. Of course, since Labor has never asked for an injunction before, I'm not sure the possibility had any deterrent effect before. Still, if the judge doesn't issue an injunction based on Freedom's atrocious safety record, what would it take?

Will the Miners Be Paid During a Safety Shutdown?

Although the stakes are high for both sides, they're highest for the miners themselves. In addition to demanding safety fixes and preventative procedures, both of which are crucial to miners' safety, Labor has asked the judge for something perhaps equally crucial to the miners in these hard economic times: continued paychecks.

Labor wants Massey to pay miners their regular wages while they're idled by the court-ordered shutdown and any related future safety shutdowns. That would remove a tactic Massey allegedly uses to avoid getting cited for safety violations that could result in mine closures: sending home complaining workers without paying them. Presumably, paying the idled minors would be costly enough to motivate Massey to speedily comply with the injunction (see Labor's "memorandum of law," page 41).

But just because Labor has asked for the wages, it doesn't mean the judge will order them to be paid -- even if he otherwise agrees the mine needs to be shut. Under the statute authorizing the injunction, the judge has the power to order any remedies he deems appropriate. Whether or not he'll consider maintaining the workers' wages an appropriate remedy is an open question.



Will Top Management Be Put on the Hook?

Second, Labor wants to eliminate plausible deniability among mine management for certain types of major problems. Every shift, Labor wants "Defendants' highest level management to personally conduct additional examinations of critical equipment and areas of the mine" (see proposed order, page 5).

That doesn't mean the CEO. Labor wants the mine superintendent and chief electrician to do the inspecting. If they can't, they still have to sign off on the inspection done by someone else. In addition to the inspections, the top management would also have to sign off on reports of elevated methane readings and escape-map accuracy. Other types of inspection reports also have to record the name of the person doing them.

Labor has asked for the injunction to stay in place for one year. Or, if all the conditions are met sooner, then Labor can ask that it be lifted sooner. Presumably, if the conditions aren't all met within a year, Labor would seek an extension.

Judge Gets A Clean Slate to Decide

One of the interesting features of Labor's "memorandum of law" justifying the injunction is how little law is in it. Because this injunction is literally unprecedented, there's no case law for the judge to look at. Instead, Labor makes its arguments entirely from the statute authorizing the injunction, as interpreted by legislative history and dictionaries.

The argument focuses on whether the detailed factual record Labor lays out meets the definitions of a "pattern of violation" that poses a "continuing hazard" to the health or safety of the miners. Just because there's no case law, however, doesn't mean the judge is entirely free to make his own interpretation of the statute. The law gives the Secretary of Labor the ability to decide if the definitions are met, and in making his decision, the judge must give the secretary's opinion deference.

Another striking feature of the motion is the time it takes to spell out all the prior enforcement actions Labor has taken. The department isn't required to exhaust other options before seeking an injunction. Nonetheless, Labor makes the case that it has exhausted them, and nothing will make the miners safe now short of an injunction.

No Home-Court Advantage

Massey coal is politically active and has come under fire for funding judicial elections in West Virginia to get favorable rulings. I haven't seen similar allegations regarding Kentucky's judicial elections, even if there were, Massey would have no innate home-court advantage in this case for two reasons: The injunction is being sought in federal court, where the judges are appointed -- not elected; and the judge in this case, U.S. District Court Judge Amul Thapar, had no ties to Kentucky before becoming the U.S. Attorney there, and he was promoted to the judgeship two years after that.

He's also the youngest federal judge, and among the newest, having been confirmed in December 2007. As a result, he doesn't have a long track record of opinions that would provide insight into how he'll rule in this case.

Massey had no comment beyond the generic statement it put out yesterday, the most important part of which was:

That raises the question: Would Massey try to avoid an injunction or limit its scope by preemptively shutting the mine, starting to make fixes and then telling the judge how it had changed its ways?

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When I asked what impact a preemptive idling would have, Labor said: "The request for injunctive relief includes remedial measures beyond idling the mine. If Freedom idled the mine voluntarily, the Department of Labor would still seek those remedial measures as a condition to reopen the mine."

I wonder if the judge would consider paying the idled miners' wages a remedial measure?

Even if so, the delay between a preemptive idling and any such order could be very costly to the workers, although not as costly as the catastrophes possible if the mine's dangers aren't addressed. Of course, closing the mine would be very expensive to Massey, too, in terms of lost production.

So, it's not clear how likely the preemptive move would be. But it's something to watch for. A hearing on the injunction is likely still weeks away, and a decision would come even later, so there's plenty of time for Massey to decide.

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