Acosta v. Hensel Phelps Constr. Co.

• Decision Date: 26 November 2018
• Docket Number: No. 17-60543,17-60543
• Parties: R. Alexander ACOSTA, Secretary, Department of Labor, Petitioner, v. HENSEL PHELPS CONSTRUCTION COMPANY, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

909 F.3d 723

R. Alexander ACOSTA, Secretary, Department of Labor, Petitioner,

v.HENSEL PHELPS CONSTRUCTION COMPANY, Respondent.

No. 17-60543

United States Court of Appeals, Fifth Circuit.

FILED November 26, 2018

Amy S. Tryon, U.S. Department of Labor, Office of the Solicitor, Washington, DC, for Petitioner.

Michael V. Abcarian, Esq., Fisher & Phillips, L.L.P., Dallas, TX, for Respondent.

Victoria Louise Bor, Sherman, Dunn, Cohen, Leifer & Yellig, P.C., Washington, DC, for Amicus Curiae North America's Building Trades Unions.

Arthur Grushkow Sapper, Esq., Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Washington, DC, for Amici Curiae National Association of Home Builders, Texas Association of Builders, Associated Builders and Contractors, Associated General Contractors of America, Associated General Contractors-Houston, Associated General Contractors-Texas Building Branch, Texo ABC/AGG Incorporated.

Before GRAVES and COSTA, Circuit Judges, and BENNETT, District Judge.^*

JAMES E. GRAVES, JR., Circuit Judge:

Thirty-seven years ago, this court, in a tort case, announced that "OSHA regulations protect only an employer’s own employees." Melerine v. Avondale Shipyards, Inc. , 659 F.2d 706, 711 (5th Cir. Unit A 1981). That decision has endured despite the seismic shift brought about by Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), and the decades of administrative-law aftershocks that followed.

Today we reexamine Melerine , and the precedent on which it relies,¹ in the light of that shift. In this appeal, the Secretary of Labor asks the court to decide whether he has the authority—under either the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. (the Act), or Occupational Safety and Health Administration (OSHA) regulations—to issue a citation to a general contractor at a multi-employer construction worksite who controls a hazardous condition at that worksite, even if the condition affects another employer’s employees. We conclude that he does have that authority under the Act.

I

The parties have stipulated to the relevant factual and procedural history in this action. In 2010, Respondent Hensel Phelps Construction Company entered into a contract with the City of Austin to build a new public library. Hensel Phelps, as general contractor, maintained control over the worksite through the presence of on-site management personnel, including superintendents, project engineers, and project managers. In 2014, Hensel Phelps contracted with subcontractor Haynes Eaglin Watters, LLC (HEW), to do certain work on the project’s Seaholm Substation East Screen Wall. Later that year, HEW contracted with sub-subcontractor CVI Development, LLC, to complete demolition, excavation, and other work as required for the East Screen Wall.

As the excavation at the worksite progressed, a nearly vertical wall of "Type C" soil² was allowed to develop, measuring approximately 12 feet in height and 150 feet in length. OSHA regulations mandate that excavations in this type of soil use protective systems, such as sloping, to protect employees from cave-ins. See 29 C.F.R. §§ 1926.652(a)(1) & (b). No such protective systems were put in place at this excavation.

On the rainy morning of March 4, 2015, CVI was assigned to reinstall reinforcing rods ("rebar") at the base of this excavated wall of soil, preliminary to pouring concrete footings. The wall was not properly sloped or otherwise protected from cave-in hazards, and had not been for several days. Concerned about the combination of the weather and the instability of the excavation wall, CVI owner Karl Daniels sent his employees to work on another area of the site while he awaited instructions from HEW or Hensel Phelps on how to proceed at the excavation area. A City of Austin inspector saw the CVI employees working at the other location and told Daniels that his employees should work only at the excavation. The inspector also reported to Hensel Phelps' area superintendent that CVI employees were working at the other location. The superintendent instructed Daniels to have his employees return to the excavation and not to do any other work until the excavation work was completed. Daniels sent an email to HEW’s senior project manager, stating that "[P]lacing rebar in the mud and rain is unorthodox and very dangerous." The project manager gave only a cursory reply that CVI should comply with its instructions. Daniels thereafter removed his employees from the other work area and sent them back to the excavation area to install rebar.

That same day, the OSHA Area Office in Austin received a complaint of hazardous working conditions at the library project excavation area. A compliance officer conducted an inspection of the site and discovered three CVI employees working at the base of the unprotected wall of excavated soil. The city inspector, Hensel Phelps' superintendent, and both Hensel Phelps' and HEW’s project superintendents were present at the wall, as well, with full views of the CVI employees working there.

OSHA cited both CVI and Hensel Phelps for willfully violating 29 C.F.R. § 1926.652(a)(1)³ by exposing employees to a cave-in hazard from an unprotected excavation at a construction site.⁴ Hensel Phelps Constr. Co. , 26 BNA OSHC 1773, 2017 WL 2501141 at *4 (No. 15-1638, 2017) (" ALJ Decision"). OSHA issued its citation against Hensel Phelps pursuant to its multi-employer citation policy. Under this policy, an employer who causes a hazardous condition (a "creating employer") or a general contractor or other employer having control over a worksite who should have detected and prevented a violation through the reasonable exercise of its supervisory authority (a "controlling employer") may be cited for a violation, whether or not its own employees were exposed to the hazard. See generally Occupational Safety & Health Admin., CPL 02-00-124, Multi-Employer Citation Policy (1999); see also Occupational Safety & Health Admin., CPL 02-00-160, Field Operations Manual 4-5 (2016). OSHA considered Hensel Phelps a "controlling employer" because the company had "general supervisory authority over the worksite, including the power to correct safety and health violations itself or require others to correct them." ALJ Decision at *5–6.

Hensel Phelps timely contested the citation. In the proceedings before the Occupational Safety and Health Review Commission ALJ, the parties stipulated that (1) the excavation was not adequately protected; (2) Hensel Phelps knew that the excavation was not adequately protected because its supervisors observed CVI employees working next to the unprotected excavation; (3) and Hensel Phelps had management authority over the entire library project and had the specific authority to prevent the violation by correcting the hazardous conditions or by stopping CVI’s employees from working in the area. The ALJ determined that Hensel Phelps met the requirements to be considered a "controlling employer" who has a duty under the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. , to act reasonably to prevent or detect and abate violations at the worksite even when the affected employees are those of another employer. Under Commission precedent, the stipulated facts dictated a finding that Hensel Phelps violated 29 C.F.R. § 1926.652(a)(1). ALJ Decision at *6.

But this finding was not the end of the matter, for "[w]here it is highly probable that a Commission decision would be appealed to a particular circuit, the Commission [ ] generally applie[s] the precedent of that circuit in deciding the case—even if it may differ from the Commission’s precedent." Kerns Bros. Tree Serv. , 18 BNA OSHC 2064 (No. 96-1719, 2000) ; see also Smith Steel Casing Co. v. Donovan , 725 F.2d 1032, 1035 (5th Cir. 1984) ("A holding by a court of appeals on a legal question is binding on the [ ] Commission in all cases arising within that circuit until and unless the court of appeals or the Supreme Court overturns that holding...."). Because this citation arose within the jurisdiction of the Fifth Circuit, the ALJ found that Fifth Circuit precedent foreclosed the citation. ALJ Decision at *6. Specifically citing Melerine v. Avondale Shipyards, Inc. , 659 F.2d 706, 711 (5th Cir. Unit A 1981), which stated that "OSHA regulations protect only an employer’s own employees," the ALJ concluded that an employer at a worksite within the Fifth Circuit cannot be held in violation of the Act when the employees exposed to the hazard were employees of a different employer. ALJ Decision at *6–7. The ALJ vacated the citation.

The Secretary sought discretionary review of the ALJ’s decision. The Commission did not grant it, so the decision became a final order of the Commission. See 29 C.F.R. § 2200.90(b). The Secretary timely filed a petition for review in this court.

II

Because the ALJ’s decision became a final order of the Commission, we review that decision on appeal. W.G. Yates & Sons Constr. Co. v. Occupational Safety & Health Review Comm'n , 459 F.3d 604, 606 (5th Cir. 2006). The issues the Secretary raises are purely issues of law, and the court reviews the Commission’s legal conclusions "for whether they are ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.’ "

Aus. Indus. Specialty Servs., L.P. v. Occupational Safety & Health Review Comm'n , 765 F.3d 434, 438–39 (5th Cir. 2014) (per curiam) (quoting Trinity Marine Nashville, Inc. v. Occupational Safety & Health Review Comm'n , 275 F.3d 423, 427 (5th Cir. 2001) ).

III

A court reviewing an agency’s interpretation of its authority under the statute it administers must engage with the two-step framework established in Chevron . See W. Ref. Sw., Inc. v. FERC , 636 F.3d 719, 723 (5th Cir. 2011). At the first step, "applying the ordinary tools of statutory construction, the court must determine ‘whether Congress has directly spoken to the precise question at issue. If...