IBP, Inc. v. Herman

• Decision Date: 02 June 1998
• Docket Number: 97-1461,Nos. 97-1389,s. 97-1389
• Parties: , 18 O.S.H. Cas. (BNA) 1353, 1998 O.S.H.D. (CCH) P 31,577 IBP, Inc., Petitioner/Cross-Respondent, v. Alexis M. HERMAN, Secretary of Labor, and United States Department of Labor, Respondents/Cross-Petitioners.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 861

144 F.3d 861

330 U.S.App.D.C. 218, 18 O.S.H. Cas. (BNA) 1353,

1998 O.S.H.D. (CCH) P 31,577

IBP, Inc., Petitioner/Cross-Respondent, v. Alexis M. HERMAN, Secretary of Labor, and United States Department of Labor, Respondents/Cross-Petitioners.

Nos. 97-1389, 97-1461.

United States Court of Appeals District of Columbia Circuit.

Argued May 1, 1998.

Decided June 2, 1998.

On Petitions for Review of an Order of the Occupational Safety and Health Review Commission.

Charles M. Chadd argued the cause for petitioner/cross-respondent, with whom Jerome K. Bowman and John J. Vecchione were on the briefs.

Bruce Justh, Assistant Counsel for Appellate Litigation, United States Department of Labor, argued the cause for respondents/cross-petitioners, with whom Joseph M. Woodward, Associate Solicitor, and Ann S. Rosenthal, Counsel, were on the brief. Terri P. DeLeon, Counsel, entered an appearance.

Arthur G. Sapper argued the cause for amici curiae National Association of Manufacturers, et al., with whom Stephen C. Yohay was on the brief.

Before: EDWARDS, Chief Judge, SILBERMAN and GINSBURG, Circuit Judges.

SILBERMAN, Circuit Judge:

IBP, Inc. petitions for review of the Occupational Safety and Health Review Commission's order holding it responsible for the failure of another employer's employees to comply with certain safety procedures. We grant the petition for review and vacate the Commission's order.

I.

IBP, Inc. (the Company) operates a meat processing plant in Madison, Nebraska. In 1990, it hired DCS Sanitation Management, Inc., an independent contractor, to clean the plant's machinery after the close of production each day. To guard against the unintended activation of dangerous machinery, the Secretary of Labor has promulgated "lockout/tagout" (lockout) regulations under the Occupational Safety and Health Act. 29 C.F.R. § 1910.147 (1997). The regulations, inter alia, require employers to implement and enforce procedures by which employees cut machines off from their power sources before performing maintenance on them. DCS had its own lockout policy pursuant to those regulations, and was also bound by contract to comply with the Company's lockout policy. All of the Company's machines were capable of being locked out, and DCS employees were trained in the proper procedures.

Three Company employees, a product control manager and two inspectors, remained in the plant during the sanitation process. According to the contract, the Company could "tag" areas that did not meet its sanitation standards and DCS would have to reclean them. During the course of their quality control inspections, Company employees often saw DCS employees violating lockout procedures. One product control manager reported that "[o]n numerous occasions, I observed DCS employees ... reaching into tables [and] conveyors that were running, using fat augers as ladders to crawl up to the upper floors, riding on tables that were moving, [and] jumping across tables that were moving." Company employees often motioned to DCS employees to stop dangerous conduct, but DCS employees did not always take kindly to such suggestions. A Company employee testified that

[o]ne time, when a DCS hourly was retrieving pieces of fat from the boneless loin paste table[,] I told him to stop what he was doing. He turned to me and said, "I don't work for you. You can't tell me what to do."

....

... Another time, I told a DCS hourly employee to stop what he was doing and he turned to me and said, "I don't have to." And the third time that comes vividly to my mind, a DCS hourly employee was using the fat auger at the east end of the ham line complex as a ladder to get to the upper floor.

I hollered at him to stop what he was doing. He continued up the auger, turned and shouted obscenities at me.

Company employees reported the lockout violations they observed to DCS supervisors and sometimes to Company supervisors as well. On one occasion, a DCS employee who was recleaning a tagged area stuck his hand into a moving belt after his supervisor turned his back. The Company quality control inspector told the DCS supervisor and later reported the incident to Company management. In response, the Company's Safety Director recommended that DCS review lockout procedures with its employees. Similarly, after one of the three occasions when a DCS employee actually caught his hand in a moving belt, the Company's Plant Manager sought assurance that DCS would follow the lockout program. But no Company employee ever tried to discipline DCS employees for violations. When DCS' operations manager was asked what oversight, if any, the Company had over lockout, the manager responded: "We're there to enforce [lockout as to] our own employees."

In 1993, a DCS employee was killed when he removed debris from a running loin saddle machine. The Secretary of Labor cited both the Company and DCS for willfully failing to enforce the lockout policy against DCS employees. Her claim against the Company was that it could have controlled whether DCS employees complied with lockout procedures, by suspending its contract with DCS if necessary. She stipulated to several key facts: that the hazard was the failure of DCS hourly employees to follow lockout procedures, that no Company employees created this hazard, that no Company employees were exposed to it, and that DCS operated as an independent contractor.

The ALJ vacated the citation against the Company, holding that

[t]he sole indicia of control proven by the Secretary was IBP's right to rescind its contract with DCS based on DCS' safety violations. The Commission has never found an employer/employee relationship, for purposes of establishing liability under the Act[,] based solely on a contracting entity's right to rescind its contract with an independent contractor. This judge believes it would be inappropriate to so extend liability under the Act.

IBP, Inc., OSHRC Docket No. 93-3059 (Apr. 7, 1995). The Secretary sought review before the Occupational Safety and Health Review Commission, which reversed the ALJ and reinstated the citations. IBP, Inc., 17 O.S.H. Cas. (BNA) 2073 (1997). In its decision, the Commission emphasized that no employer/employee relationship is necessary to establish liability under the Occupational Safety and Health Act. Under the Commission's "multi-employer doctrine," an employer may be liable for hazards under its control even if none of its own employees is exposed to the danger. The Commission, like the Secretary, thought that the Company's right to cancel its contract with DCS gave it control over the hazard. ¹ It thus held the Company liable, but it did refuse to find the violation willful.

Commissioner Montoya vigorously dissented, arguing that the majority's decision "created a form of contractual indemnity that significantly expands the Commission's case law on multi-employer liability." Id. at 2077 (dissenting opinion). In her view, the Company's authority to cancel the DCS contract could not establish "control" in any realistic sense of the term. Prior Commission decisions had spoken of control primarily in the context of the employer's ability to abate physical hazards like defective machinery. She thought the majority's reach to the Company particularly inexplicable since DCS had been found liable in a separate proceeding and was under a judicially enforceable order to enforce the lockout policy at the Madison plant. DCS Sanitation Management, Inc. v. OSHRC, 82 F.3d 812 (8th Cir.1996).

II.

Petitioner argues that it cannot be held responsible for DCS' employees. According to the Company, OSHA duties are confined to the employment relationship and the multi-employer doctrine exceeds the Secretary's authority under both the Occupational Safety and Health Act and its own regulations. But even if the multi-employer doctrine is legitimate, the Company contends that the Commission erred in this case by concluding that the Company's authority to cancel the DCS contract gave it "control" over the behavior of DCS employees. The Secretary, on the other hand, asks us not only to deny the petition, but also to reverse the Commission's conclusion that the Company did not act willfully. She defends the multi-employer doctrine by asserting that both the Act and implementing regulations are ambiguous and that we must defer to her interpretation permitting liability outside the employment relationship. Although she does not elaborate much on the point, she also insists that the Company had control of lockout enforcement.

Both parties, as well as amici curiae, devote considerable effort to debating the legitimacy of the Secretary's multi-employer doctrine. The doctrine had its inception in the construction industry, where numerous contractors and subcontractors mingle throughout a single work site. Craft jurisdictional rules typically prevent specialists of one craft from performing work in another craft--so a plumber, for example, cannot remove exposed wiring even if his own employees must step over it to lay pipe. To address this problem, the Secretary of Labor began bringing enforcement actions against the employer responsible for a particular hazard, regardless of whether the employer's own employees were exposed to the danger. The Secretary's theoretical justification for this approach was based on her reading of 29 U.S.C. § 654(a) (1994), which sets out two obligations for employers:

Each employer--

(1) shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees;

(2) shall comply with occupational safety and health standards promulgated under this chapter.

The Secretary has repeatedly argued that subsection (a)(1) creates a general duty running only to an employer's own employees, while (a)(2) creates a specific duty to comply with standards for the good of all...