Abateco Services, Inc. v. Bell

Decision Date19 November 1996
Docket NumberNo. 0328-96-3,0328-96-3
Citation23 Va.App. 504,477 S.E.2d 795
CourtVirginia Court of Appeals
Parties, 1996 O.S.H.D. (CCH) P 31,184 ABATECO SERVICES, INC. v. Theron J. BELL, Commissioner of Labor and Industry. Record

R. Leonard Vance, Richmond, for appellant.

John R. Butcher, Assistant Attorney General (James S. Gilmore, III, Attorney General, on brief), for appellee.

Present: BAKER, COLEMAN and ELDER, JJ.

COLEMAN, Judge.

Abateco Services, Inc. (Abateco), a licensed asbestos removal contractor, appeals the trial court's order which upheld four citations issued by the Department of Labor and Industry (Department) and $9,665 in civil penalties assessed by the trial court against Abateco for refusing to provide the Department access to its records as required by Abateco's subcontract and by various provisions of the Virginia Occupational Safety and Health Standards. Abateco contends that the citations were not valid because it had revoked its contractual consent for the Department to access its records and, therefore, it had no legal obligation to produce the records without a warrant or court order. After revoking its consent, Abateco asserts that the Department, which had the statutory and regulatory right to access the records, would have been required to obtain a search warrant or subpoena in order to lawfully access its records. Therefore, Abateco argues, because the Department was required to obtain a warrant or subpoena for the records, it could not cite Abateco for exercising its constitutional right to require the Department to obtain a warrant in order to gain access to Abateco's private records. Abateco also contends that the civil penalty of $9,665 as assessed by the trial court was excessive.

Initially, we decide the extent of Abateco's protected privacy interest in its records, irrespective of the Department's contention that it contractually waived whatever privacy right it had. We must address this question because the Department contends that Abateco, as a highly regulated industry, has no expectation of privacy and regardless of the contractual waiver, no search warrant would have been required to lawfully access the records.

We hold that Abateco had a diminished expectation of privacy in the requested records; however, we further hold that it contractually waived whatever Fourth Amendment rights it possessed in the records. Because Abateco could not unilaterally revoke its contractual waiver of Fourth Amendment rights without breaching the terms of the contract, the Department had the right to inspect the records without a search warrant, provided it could reasonably do so without breaching the peace. Accordingly, because the Department was not required to obtain a warrant in order to obtain access to the records, the citations issued by the Department were founded. Furthermore, the penalty of $9,665 assessed by the trial court was reasonable and within the range provided for in Code § 40.1-49.4(A)(4)(a). Therefore, we hold that the trial court did not err in upholding the citations and the penalty imposed by the trial court was not excessive.

I. FACTS

Abateco is an asbestos abatement contractor licensed in Virginia pursuant to Code § 54.1-503. In November 1994, Abateco was working as a subcontractor removing insulation containing asbestos from the boiler and pipes at the Staunton Correctional Center, a facility owned and operated by the Virginia Department of Corrections.

The subcontract executed by Abateco incorporated several documents, 1 among them being the General Conditions, which provided:

Section 3(d). The provisions of all rules and regulations governing safety as adopted by the Safety Codes Commission ... and as issued by the Department of Labor and Industry under Title 40.1 of the Code of Virginia shall apply to all work under this contract. Inspectors from the Department of Labor and Industry shall be granted access to the Work for inspection without first obtaining a search warrant from the court.

* * * * * *

Section 21. The Architect/Engineer, the Owner, the Owner's inspectors and other testing personnel, and inspectors from the Department of Labor and Industry shall have access to the Work at all times.

(Emphasis added).

Upon receiving notification pursuant to Code § 40.1-51.20 that Abateco was working at the Staunton Correctional Center, the commissioner assigned an industrial hygienist to conduct an unannounced inspection at the site under the authority of Code § 40.1-51.21. On November 10, 1994, the inspector visited the site and attempted to conduct an inspection. Abateco's site supervisor refused to allow an inspection without a search warrant despite the fact that the subcontract expressly stated that the Department, under the General Conditions of the Contract, would be granted access to the work without a warrant.

On November 16, 1994, the inspector returned to the site to attend a construction progress meeting with representatives of Abateco, the Department of Corrections, and the architects. During this meeting, Abateco's contract with the Commonwealth was discussed. At that time, Abateco's president acknowledged that the contract provided for warrantless access to the records, but he stated that Abateco would not voluntarily allow the inspector to conduct a search.

On November 22, 1994, a complaint from an employee working at the Staunton Correctional Center prompted the commissioner to send the inspector back to the site under authority of Code § 40.1-51.2, which requires the commissioner to inspect employee complaints of hazardous conditions. Abateco's site supervisor again refused to allow the Department to conduct an inspection without a search warrant. At that time, the inspector asked to see certain records that Abateco was required to keep by the Department's regulations pertaining to asbestos removal. The requested records included those showing employee exposure to asbestos, 2 records of employee asbestos training, 3 employee medical records, 4 and written hazard communication program documents. 5

Abateco's supervisor refused to make these records available without a search warrant. The inspector then called Abateco's president, who also refused to consent to an inspection of the records and of the workplace. The inspector advised Abateco that a refusal to provide the records would be considered a willful violation of the regulations, but Abateco continued to refuse to provide access to the records.

As a result of Abateco's refusal, the commissioner issued four citations for willful failure to produce the records. In accordance with Code § 40.1-49.4(A)(4)(a), the commissioner proposed a civil penalty of $20,000. After a bench trial on the merits, the trial judge found Abateco guilty of four willful violations and assessed a penalty of $9,665, which consisted of $5,665 for the commissioner's costs and $1,000 for each citation.

Abateco appeals the trial court's decision and argues that, despite its contractual consent to warrantless searches by the Department of Labor and Industry, it had the right to withdraw its consent and to demand a warrant under the Fourth Amendment before allowing inspection of the requested records. Abateco contends that because it had an expectation of privacy in its records, those records were not subject to being searched except upon a showing of justifiable cause and with a warrant, subpoena, or injunction. Abateco also asserts that the contract did not create an irrevocable waiver of Fourth Amendment rights and that Abateco properly revoked the contractual waiver when the inspector asked to see the records.

II. EXPECTATION OF PRIVACY IN RECORDS

The Department contends, as the trial court held, that Abateco has no reasonable expectation of privacy in those records that it is required to maintain because it is involved in the removal and disposal of asbestos, an industry that is heavily regulated by statute and by regulation. Abateco's claim that the citations were not valid because a warrant was required to lawfully search the records is predicated upon the premise that it has a reasonable expectation of privacy in those records as far as the Department is concerned.

In 1967, the United States Supreme Court ruled that the Fourth Amendment protects businesses from unreasonable warrantless searches and seizures by administrative agencies. See v. City of Seattle, 387 U.S. 541, 87 S.Ct. 1737, 18 L.Ed.2d 943 (1967).

As we explained in Camara [v. Municipal Court, 387 U.S. 523, 87 S.Ct. 1727, 18 L.Ed.2d 930 (1967) ], a search of private houses is presumptively unreasonable if conducted without a warrant. The businessman, like the occupant of a residence, has a constitutional right to go about his business free from unreasonable official entries upon his private commercial property. The businessman, too, has that right placed in jeopardy if the decision to enter and inspect for violation of regulatory laws can be made and enforced by the inspector in the field without official authority evidenced by a warrant.

Id. at 543, 87 S.Ct. at 1739. However, the Supreme Court also cautioned that business premises could be inspected in many more situations than private homes and that a case-by-case determination of reasonableness is necessary. Id. at 546, 87 S.Ct. at 1741.

Following the See decision, the Supreme Court recognized an exception to the warrant requirement for administrative searches of closely regulated businesses and industries. See Colonnade Catering Corp. v. United States, 397 U.S. 72, 90 S.Ct. 774, 25 L.Ed.2d 60 (1970) (liquor licensees); United States v. Biswell, 406 U.S. 311, 92 S.Ct. 1593, 32 L.Ed.2d 87 (1972) (gun dealers); Donovan v. Dewey, 452 U.S. 594, 101 S.Ct. 2534, 69 L.Ed.2d 262 (1981) (underground and surface mine owners); New York v. Burger, 482 U.S. 691, 107 S.Ct. 2636, 96 L.Ed.2d 601 (1987) (junkyard owners). Warrantless searches in these situations are reasonable because "[c]...

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    ...a gun on his person." 7. Even if not distinguishable, Letsinger would not be controlling. See, e.g., Abateco Servs., Inc. v. Bell, 23 Va.App. 504, 514-15, 477 S.E.2d 795, 799-800 (1996) (discussing Fourth Circuit case on Fourth Amendment expectation of privacy issue as "persuasive" rather t......
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