Eleventh Circuit Affirms LLC Constitutes a “Corporation” for Federal Mine Safety and Health Act

In Sumpter v. Secretary of Labor, No. 13-15360 (Aug. 15, 2014), the Eleventh Circuit held that the word “corporation” in the Federal Mine Safety and Health Act of 1977 (“Mine Act”) includes Limited Liability Companies (LLCs).  Section 110(c ), of the Mine Act states 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 [as the corporation]”.  In Sumpter, the court held that the language of §110(c ) applies to LLCs in addition to incorporated entities.

To determine whether §110(c ) of the Mine Act was applicable to commercial entities other than incorporated entities, the Eleventh Circuit court followed the rules provided by Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984).  Chevron states that in reviewing an agency’s interpretation of a statute, the court must first look to the language of the statute. If the statute is ambiguous, the courts will defer to the agency interpretation so long as it is reasonable. The Mine Act did not provide a definition for “corporation,” thus the Court looked to the ordinary meaning of the term to determine if it was ambiguous.  At the time the Mine Act was passed, none of the dictionary definitions limited the definition to incorporated entities.  Not to mention, LLCs were not in common use when the Mine Act was passed.  The court distinguished Secretary of Labor v. Guess from the case at issue, finding that while Guess interpreted “corporation” as excluding a partnership, not an LLC.  The holding in Guess was based on the attributes of a partnership and the fact that a partnership does not limit liability like a corporation. An LLC, however, limits liability.

After a finding that “corporation” was ambiguous in the Mine Act, the Eleventh Circuit determined that the agency’s interpretation of “corporation” was reasonable.  The court relied on the agency’s bulletin in 2006 providing notification that agents of an LLC fell within §110(c ) and may be held personally liable and also the agency’s solicitation of and response to comments on the issue. Following a finding of ambiguity and reasonable interpretation, the Eleventh Circuit affirmed the decision of the administrative law judge to hold petitioners, agents of an LLC, personally liable under §110 (c ).

Petitioners Sumpter and Hartzell also argued that there was not substantial evidence to support their personal liability, and that the violation leading to their personal liability was improperly duplicative of an earlier violation.  The court rejected both of these arguments.  There was substantial evidence to show that both Sumpter and Hartzell knew of the violations, including mine books signed by both parties showing that required inspections had not been performed as required. The Court also held that personal liability was not duplicative of other violations, because the violations shirked “separate and distinct duties.”

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