Amoco Oil Co. v. Commissioner of Labor

• Decision Date: 18 April 2000
• Docket Number: No. 49A04-9810-CV-518.,49A04-9810-CV-518.
• Citation: 726 N.E.2d 869
• Parties: AMOCO OIL COMPANY, WHITING REFINERY, Appellant-Respondent, v. COMMISSIONER OF LABOR, Board of Safety Review and OCAW, Local 7-1, Inc., Appellees-Petitioners.
• Court: Indiana Appellate Court

726 N.E.2d 869

AMOCO OIL COMPANY, WHITING REFINERY, Appellant-Respondent, v. COMMISSIONER OF LABOR, Board of Safety Review and OCAW, Local 7-1, Inc., Appellees-Petitioners.

No. 49A04-9810-CV-518.

Court of Appeals of Indiana.

April 18, 2000.

Douglas J. Heckler, Barnes & Thornburg, Indianapolis, Indiana, Attorney for Appellant.

Jeffrey A. Modisett, Attorney General of Indiana, Andrew L. Hedges, Deputy Attorney General, Indianapolis, Indiana, Attorneys for Appellees.

OPINION

RILEY, Judge

STATEMENT OF THE CASE

Appellant-Respondent, Amoco Oil Company, Whiting Refinery (Amoco), appeals the trial court's order affirming the final decision of the Indiana Board of Safety Review (Board). The Indiana Department of Labor conducted an inspection at Amoco following an explosion at a propane truck loading facility, and the Commissioner of Labor (Commissioner) issued two safety orders¹ against Amoco as a result of the explosion. Amoco appealed the violations, and a hearing was held before an Administrative Law Judge (ALJ) who assessed penalties against Amoco. Amoco objected to the ALJ's findings and conclusions, but the Board affirmed the ALJ's decision. Amoco subsequently petitioned for judicial review to the Marion Superior Court, and that court sustained the Board's final order and entered judgment in favor of the Commissioner.

We affirm.

ISSUES

Amoco raises three issues for our review which we consolidate and restate as follows:

1. Whether the trial court erred in sustaining the Board's final order when the Board's order was based on hearsay.²

2. Whether the evidence was sufficient for the trial court to sustain the Board's final order that Amoco committed knowing violations of the General Duty Clause.

FACTS AND PROCEDURAL HISTORY

On February 20, 1990, an explosion occurred at Amoco's Liquid Propane Gas (LPG) truck loading rack at its oil refinery in Whiting, Indiana, killing two Amoco supervisors and injuring four truck drivers on the scene. As a result of the explosion, the Building and Factory Safety Division of the Indiana Department of Labor/IOSHA conducted an inspection at the refinery from the date of the explosion until July 18, 1990. As a result of the inspection, the Commissioner of Labor issued Amoco two safety orders, each containing multiple items, assessing a total penalty of $118,000.00. On March 6, 1992, the Commissioner amended the citation list, grouped some items, and reduced the penalty to $78,000.00. Amoco petitioned for review of each of the safety orders, and the dispute was certified to the Indiana Board of Safety Review.

An ALJ for the Board conducted a hearing on the amended safety orders. The Commissioner presented his case on May 6, 7, and 13, August 4, and October 7, 8, and 9, 1992. Amoco presented its case in chief on March 15 and 16, April 22, 23, and May 17, 1993.

On February 18, 1994, the ALJ entered his findings of fact and conclusions of law, sustaining eleven (11) of the fifteen (15) safety orders, and vacating four. On January 27, 1995, the Board adopted the ALJ's findings of fact and conclusions of law as its final decision.

On February 24, 1995, Amoco filed a Petition for Judicial Review to the Marion County Superior Court, asking the trial court to review the ALJ's findings as adopted by the Board. On September 11, 1998, the trial court heard oral argument. That same day, the trial judge entered his findings of fact and conclusions of law, ordering that the Board's action is sustained and entering judgment in favor of the Commissioner in accordance with the Board's final order. Amoco now appeals the trial court's order.

DISCUSSION AND DECISION

Standard of Review

Initially, we note our standard of review. When reviewing the decision of an administrative agency, this court stands in the same position as the trial court. Palin v. Indiana State Personnel Dept., 698 N.E.2d 347, 350-351 (Ind.Ct.App. 1998). On judicial review, a trial court may grant relief upon finding that the agency's action is: 1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; 2) contrary to constitutional right, power, privilege, or immunity; 3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; 4) without observance of procedure required by law; or 5) unsupported by substantial evidence. Ind.Code § 4-21.5-5-14. The trial court proceeding is not intended to be a trial de novo, but rather the court simply analyzes the record as a whole to determine whether the administrative findings are supported by substantial evidence. Natural Resources Comm'n v. Sugar Creek Mobile Estates, 646 N.E.2d 61, 64 (Ind.Ct.App.1995), reh'g denied, trans. denied. Courts that review administrative determinations, at both the trial and appellate level, review the record in the light most favorable to the administrative proceedings and are prohibited from reweighing the evidence or judging the credibility of witnesses. Id. Reviewing courts must accept the agency's findings of fact if supported by substantial evidence. Id. However, although a reviewing court owes some deference to an administrative agency's findings of fact, no such deference need be accorded an agency's conclusions of the law, as law is the province of the judiciary. Indiana Dep't of Public Welfare v. Payne, 622 N.E.2d 461, 465 (Ind. 1993),reh'g denied.

I. Agency Findings Based on Hearsay

Amoco argues that the trial court erred by affirming the Board's order that Amoco knowingly violated certain safety standards because the Board's findings were based exclusively on hearsay. Specifically, Amoco contends that the interview statements contained in the Investigation Report do not satisfy the business records exception to the hearsay rule, and therefore, the alleged facts as set forth in these statements cannot be used to sustain a finding of a violation of the IOSH Act.

A. The Investigation Report

As a result of the incident at the Whiting plant, Amoco formed a joint union-management committee to investigate the incident. The committee prepared an Investigation Report (Report) that was submitted to the ALJ under stipulation by both parties as a joint exhibit. Therefore, the Report was admitted into evidence on the basis that it was presented to the ALJ by stipulation of both parties. However, within the Stipulation to Admit Investigation Report as Joint Exhibit No. 1, Amoco specifically objected on hearsay grounds to the introduction of twenty-four (24) unsigned and unsworn interview summaries contained within the Report. Pursuant to his Entry Concerning Joint Exhibit 1, the ALJ noted that the issue of the Report's admissibility was determined by stipulation and the only issue for him to determine with respect to the Report is what weight to accord the exhibit, and that determination turned on the issue of whether the Report is hearsay or an exception to the hearsay rule.

Within the Stipulation, the Commissioner specifically requested that the entire Report be admitted into evidence as a business record; an exception to the hearsay rule. The Commissioner argued that the Report was made in the routine course of Amoco's business, at or near the time of the events recorded, and was made by employees under a business duty to make the entries as a permanent record.

The ALJ considered the arguments of both parties and concluded regarding Joint Exhibit 1 that:

... the investigative report prepared by Amoco, with the participation of OCAW officials, qualifies as a business record exception to the hearsay rule.

The investigative report appears to be the product of a conscientious effort to determine the cause of the explosion at the refinery that is the subject of these proceedings. As it is the Commissioner, and not Amoco, that wishes to rely on the report, the possibility of an underlying motive and opportunity to falsify the report is not an issue. Further, the reliability or trustworthiness of the statements it contains is enhanced by the fact that the statements were taken with both a Company and Union representative present.

As the cases cited by the Commissioner demonstrate, investigative reports made in a context with this type of assurances of reliability qualify as business record exceptions to the hearsay rule. Accordingly, subject to the condition described below, Joint Exhibit 1 will be considered as an exception to the hearsay rule and the material therein, if otherwise determined to be probative, may be used as the sole support of a finding.

(A.R.451-452).³ Essentially, the conditions set forth by the ALJ included a requirement that the Commissioner specify what portions of the numerous statements in the Report that he intended to use to establish the various items of the safety orders in order for the Report to be considered a hearsay exception; and to also identify those portions of the statements that the Commissioner intended to use as the sole support of a factual allegation.

B. Hearsay

Under Ind.Code § 4-21.5-3-26 of the Administrative Orders and Procedures Act, an administrative law judge may allow hearsay statements into evidence. The admission of hearsay in an administrative action is not, however, without limitation. Pursuant to Ind.Code § 4-21.5-3-26, if hearsay evidence is properly objected to and does not fall within a recognized exception to the hearsay rule, the resulting order may not be based solely upon the hearsay evidence. Id. (emphasis supplied). This codification of the common law "residuum rule" has been interpreted as requiring some corroborative evidence to support an administrative order when hearsay has been admitted over objection. Hinkle v. Garrett-Keyser-Butler School Dist., 567 N.E.2d 1173, 1178 (Ind.Ct.App.1991), trans. denied. However, if not objected to, the hearsay evidence may form the basis for an order. Id.; Ind.Code § 4-21.5-3-26.

In this case, we find that the interview statements found within the Report do in fact...