Or. Occupational Safety & Health Div. v. CBI Servs., Inc.

• Decision Date: 15 November 2018
• Docket Number: A164053
• Citation: 294 Or.App. 831,432 P.3d 321
• Parties: OREGON OCCUPATIONAL SAFETY & HEALTH DIVISION, Petitioner, v. CBI SERVICES, INC., Respondent.
• Court: Oregon Court of Appeals

294 Or.App. 831

432 P.3d 321

OREGON OCCUPATIONAL SAFETY & HEALTH DIVISION, Petitioner,

v.CBI SERVICES, INC., Respondent.

A164053

Court of Appeals of Oregon.

Argued and submitted February 5, 2018.

November 15, 2018

Carson L. Whitehead, Assistant Attorney General, argued the cause for petitioner. On the opening brief were Ellen F. Rosenblum, Attorney General, Benjamin Gutman, Solicitor General, and Dustin Buehler, Assistant Attorney General. Also on the reply brief were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

Eric S. DeFreest, Eugene, argued the cause for respondent. Also on the brief was Luvaas Cobb and Carl B. Carruth, South Carolina.

Before Ortega, Presiding Judge, and Garrett, Judge, and Powers, Judge.

GARRETT, J.

The Oregon Occupational Safety & Health Division (OR-OSHA) seeks judicial review of an order of the Workers’ Compensation Board (board) determining that OR-OSHA failed to prove that employer CBI Services, Inc. was liable for safety violations under the Oregon Safe Employment Act (OSEA). At issue is whether the administrative law judge (ALJ), on remand from the Supreme Court, OR-OSHA v. CBI Services, Inc. , 356 Or. 577, 341 P.3d 701 (2014), erred in concluding that OR-OSHA’s interpretation and application of the delegative term "reasonable diligence" under ORS 654.086(2) was not entitled to deference, and, based solely on that conclusion, determining that OR-OSHA had failed to prove the violations. We conclude that the ALJ did not err in concluding that part of OR-OSHA’s interpretation of ORS 654.086(2) was not entitled to deference; however, we also conclude that the ALJ erred in determining that OR-OSHA had failed to prove a violation. Accordingly, we reverse and remand.

We begin with the relevant legal background. The OSEA requires every employer to "furnish employment and a place of employment which are safe and healthful for employees." ORS 654.010. The director of the Department of Consumer and Business Services is vested with the responsibility for enforcing the terms of the OSEA. ORS 654.025(1). In doing so, the director, or the director’s authorized representative, can cite an employer for violations of those rules and impose civil penalties. ORS 654.031 ; ORS 654.086(1). The amount of a penalty depends on, among other things, whether the violation is "serious." A "serious violation" occurs if:

"there is a substantial probability that death or serious physical harm could result from a condition which exists, or from one or more practices, means, methods, operations or processes which have been adopted or are in use, in such place of employment unless the employer did not, and could not with the exercise of reasonable diligence, know of the presence of the violation ."

ORS 654.086(2) (emphasis added).

If an employer contests a citation for a serious violation, then OR-OSHA has the burden of proving the violation by a preponderance of the evidence. OAR 438-085-0820(1), (3). As part of its burden, OR-OSHA must prove that the employer either actually knew, or could have known with the exercise of reasonable diligence, of the violation. See ORS 654.086(2) ; OR-OSHA v. Tom O’Brien Construction Co., Inc. , 148 Or.App. 453, 459, 941 P.2d 550 (1997), aff’d , 329 Or. 348, 986 P.2d 1171 (1999) ("We have previously held * * * that, for an employer to be liable for a serious violation, OR-OSHA must prove that employer knew, or with the exercise of reasonable diligence could have known, of the violation." (Citing Accident Prevention Div. v. Roseburg Forest Prod. , 106 Or.App. 69, 72-73, 806 P.2d 172 (1991).)); Skirvin v. Accident Prevention Division , 32 Or.App. 109, 112-15, 573 P.2d 747, rev. den. , 282 Or. 385 (1978).¹ OR-OSHA’s burden of persuasion may not be shifted to the employer. Skirvin , 32 Or.App. at 112-15, 573 P.2d 747. Generally, knowledge by a supervisor can be imputed to the employer. See OR-OSHA v. Don Whitaker Logging, Inc. , 329 Or. 256, 264, 985 P.2d 1272 (1999) ; OAR 437-001-0760(1)(e)(A)-(C) ("every agent of the employer" is responsible for the conduct and safety of "all employees working under" their supervision).

We turn to the relevant facts, which are not in dispute. Employer, a contractor, performed work on a 32-foot-high water treatment tank that was under construction. Brink, a safety compliance officer for OR-OSHA, visited the construction site and saw Crawford working on top of the tank without fall protection (i.e. , a safety harness and lanyard). Brink reported the hazard to the site supervisor, Vorhof, who at that moment was approximately 65 feet away from Crawford with a clear line of sight to his position on top of the tank. As Brink was talking to Vorhof, Brink saw that Bryan was working without fall protection about five or six feet above ground level, also about 65 feet away from Vorhof. Brink cited employer for two "serious violations": first, failure to ensure that Bryan was using fall protection while working above ground level (item one), and second, failure to ensure that Crawford was using fall protection while working above ground level (item two).

Employer contested the citation and requested a hearing. In an order that became final, see ORS 654.290(2), an ALJ vacated item one on the ground that the applicable rules did not require the use of fall protection at heights of less than six feet and OR-OSHA had not demonstrated that Bryan was six feet or more above ground at the time of the alleged violation. The ALJ affirmed item two of the citation, concluding that OR-OSHA had proved the violation as to Crawford because employer’s constructive knowledge was established by evidence that Vorhof had been near Crawford and that "there was sufficient time for Vorhof to observe" Crawford.

In employer’s first petition for judicial review, employer argued that the ALJ erred in affirming item two of the citation because he used an incorrect legal standard in determining whether OR-OSHA had proved employer’s constructive knowledge of Crawford’s safety violation. OR-OSHA cross-petitioned, arguing that the ALJ erred in vacating item one of the citation. We reversed and remanded on both the petition and cross-petition. OR-OSHA v. CBI Services, Inc. , 254 Or.App. 466, 485, 295 P.3d 660 (2013).² Regarding employer’s petition on item two, we concluded that the ALJ had failed to consider key factors in assessing whether employer had exercised "reasonable diligence." Id. at 479-81, 295 P.3d 660. We enumerated several factors that should be considered on remand, including the time and place of the violation in relation to the supervisor, the foreseeability of the violation, and the extent and efficacy of the employer’s safety precautions. Id. at 481, 295 P.3d 660.

OR-OSHA then successfully petitioned for review in the Supreme Court. CBI Services, Inc. , 356 Or. at 584, 341 P.3d 701. The Supreme Court agreed with our conclusion as to the Crawford violation, but on a different rationale. The court concluded that the ALJ had failed to make a determination as to employer’s reasonable diligence, and had apparently assumed employer’s constructive knowledge based solely on Vorhof’s close proximity to the violation. Id. at 598-99, 341 P.3d 701. Explaining that a supervisor’s ability to observe a violation was "only half of the statutory equation," the court concluded that the ALJ was required to evaluate employer’s knowledge "in the context of ‘reasonable diligence.’ " Id. at 599, 341 P.3d 701. That is, as we understand it, the court disagreed with the ALJ’s assumption that a supervisor exercising reasonable diligence will necessarily see every violation that is potentially visible; the agency must explain why, under the circumstances, the exercise of reasonable diligence would yield that degree of attention by supervisor.

The court also declined to adopt our explanation of what additional factors the ALJ was required to consider on remand in resolving whether employer exercised "reasonable diligence." That term, explained the court, is a delegative term that requires interpretation and application by OR-OSHA —not the courts—through the "engage[ment] in value judgment about what is ‘reasonable’ and what is ‘diligence’ under the circumstances of each case," consistently with the policies and purposes of the OSEA. Id. at 591, 341 P.3d 701 ; see generally Springfield Education Assn. v. School Dist. , 290 Or. 217, 221-30, 621 P.2d 547 (1980) (clarifying the responsibilities of administrative agencies and courts for interpreting exact terms, inexact terms, and delegative terms in statutes). The court further explained that OR-OSHA’s interpretation and application of ORS 654.086(2) is entitled to deference as long as the agency’s determination remains " ‘within the range of discretion allowed by the [more] general policy of the statute.’ " CBI Services, Inc. , 356 Or. at 591, 341 P.3d 701 (quoting Springfield Education Assn. , 290 Or. at 229, 621 P.2d 547 ). The court remanded to the board to determine how OR-OSHA interpreted and applied "reasonable diligence." Id. at 599, 341 P.3d 701. In doing so, the court noted that the factors that we identified on review "may well aid in explaining how ‘reasonable diligence’ factors into a determination of an employer’s constructive knowledge." Id.

On remand, another ALJ heard testimony from OR-OSHA Administrator Wood regarding the agency’s interpretation and application of the term "reasonable diligence":

"[U]ltimately it can be a case specific determination. But the general principles that we apply are that an employer has exercised reasonable diligence when the employer takes steps to anticipate hazards that will occur on the job-site, addresses those hazards appropriately through work rules or other mechanisms to ensure that those hazards are corrected or that the risks they represent are mitigated. And then effectively addresses those from an enforcement standpoint. As a practical matter, we operate and give guidance to

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