Angel Bros. Enters., Ltd. v. Walsh

• Decision Date: 01 December 2021
• Docket Number: No. 20-60849,20-60849
• Citation: 18 F.4th 827
• Parties: ANGEL BROTHERS ENTERPRISES, LIMITED, Petitioner, v. Martin WALSH, Secretary, U.S. Department of Labor, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

18 F.4th 827

ANGEL BROTHERS ENTERPRISES, LIMITED, Petitioner,

v.Martin WALSH, Secretary, U.S. Department of Labor, Respondent.

No. 20-60849

United States Court of Appeals, Fifth Circuit.

FILED December 1, 2021

Merritt Banning Chastain, III, Esq., Ogletree Deakins Nash Smoak & Stewart, P.C., Houston, TX, for Petitioner.

Louise McGauley Betts, Esq., U.S. Department of Labor, John X. Cerveny, Occupational Safety & Health Review Commission, Kate S. O'Scannlain, U.S. Department of Labor, Office of the Solicitor, Washington, DC, for Respondent.

Before Jones, Costa, and Duncan, Circuit Judges.

Gregg Costa, Circuit Judge

The Occupational Safety and Health Administration cited Angel Brothers Enterprises because an employee was doing excavation work in a trench that lacked cave-in protection. An administrative law judge and the Occupational Safety and Health Review Commission affirmed the citation, found the violation to be willful, and assessed a $35,000 penalty.

The central issue on appeal is whether a supervisor's involvement in a subordinate employee's violation of workplace safety rules renders the employer liable. We hold that imputing the supervisor's knowledge of the safety violation to the employer is appropriate in this situation under basic agency principles. And because Angel Brothers' other challenges cannot overcome the deference we owe agency factfinding, we deny the petition for review.

I.

An Angel Brothers construction crew was installing a concrete drainage pipe alongside a road in LaPorte, Texas. For the first two days of the project, the crew had adequate protection from cave-ins. But beginning on day three, the work would be too close to the street to continue with the safety measure the company had been using—"benching" the walls of the excavation. Angel Brothers safety manager Kevin Bennett thus told foreman Salvador Vidal that the crew would need to start using a trench box, which is placed in the ditch and has walls that guard against cave-ins.

Vidal did not follow those instructions. The very next day, crew member Salvador Fonseca entered the excavation despite the lack of a trench box. Vidal admitted that he allowed Fonseca to work without the trench box. He thought that would not pose a problem because Fonseca would only need to spend ten to fifteen minutes inside the excavation. Vidal did not want to install the trench box because doing so would have blocked the adjoining intersection and taken more time. Vidal and another employee, Jose Garcia, stood by while Fonseca worked in the trench.

An OSHA Compliance Officer happened to visit the worksite while Fonseca was working in the trench without adequate protection. The inspector issued Angel Brothers a citation for violating the requirement that "[e]ach employee in an excavation shall be protected from cave-ins by an adequate protective system." 29 C.F.R. § 1926.652(a)(1).

Angel Brothers has never disputed that Fonseca's working in a trench without cave-in protection violated OSHA rules. But it has challenged whether it can be held responsible for the violation. An ALJ held a hearing and affirmed the citation against Angel Brothers as willful.

The Commission affirmed. It concluded that the Secretary of Labor had proven all elements of the violation, including the employer's knowledge. In the Commission's view, Vidal's knowledge as a supervisor flowed to the company. The Commission also rejected Angel Brothers' affirmative defense, determining that the company did not prove that it effectively enforced safety rules or disciplined employees for safety violations. Finally, the Commission affirmed the ALJ's finding that the conduct was willful.

Angel Brothers' third attempt to avoid the citation is now before us.

II.

We must accept factual findings of the Commission if they are supported by "substantial evidence on the record considered as a whole" and uphold those findings "if a reasonable person could have found what the [Commission] found, even if the appellate court might have reached a different conclusion." Sanderson Farms, Inc. v. Perez , 811 F.3d 730, 734 (5th Cir. 2016) (quoting 29 U.S.C. § 660(a) ). We review legal conclusions for "whether they are ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.’ " Austin Indus. Specialty Servs., L.P. v. Occupational Safety & Health Review Comm'n , 765 F.3d 434, 438–39 (5th Cir. 2014) (citation omitted); see 5 U.S.C. § 706(2)(A).

A.

To establish an OSHA violation, the Secretary "must show by a preponderance of the evidence: (1) that the cited standard applies; (2) noncompliance with the cited standard; (3) access or exposure to the violative conditions; and (4) that the employer had actual or constructive knowledge of the conditions through the exercise of reasonable due diligence." Sanderson Farms , 811 F.3d at 735. Angel Brothers disputes only the final requirement.

How do we determine the knowledge of inanimate business entities? Because "a corporation can only act through its agents," it "is usually liable for acts of its supervisors in the performance of their assigned duties." W.G. Yates & Sons Const. Co. v. Occupational Safety & Health Review Comm'n , 459 F.3d 604, 607 (5th Cir. 2006) (first quotation from Ocean Elec. Corp. v. Sec'y of Labor , 594 F.2d 396, 399 (4th Cir. 1979) ). That principle of vicarious liability is Agency Law 101. See RESTATEMENT (THIRD) OF AGENCY § 2.04 ("An employer is subject to liability for torts committed by employees while acting within the scope of their employment."). An employer can be held responsible not just for the conduct of its agents but also for their knowledge. Id. § 5.03 ("[N]otice of a fact that an agent knows or has reason to know is imputed to the principal if knowledge of the fact is material to the agent's duties to the principal"). We have recognized the application of these general agency principles in the OSHA context: "[W]hen a corporate employer entrusts to a supervisory employee its duty to assure employee compliance with safety standards, it is reasonable to charge the employer with the supervisor's knowledge, actual or constructive, of non-complying conduct of a subordinate." Yates , 459 F.3d at 607 (brackets omitted) (quoting Mountain States Tel. & Tel. Co. v. Occupational Safety & Health Review Comm'n , 623 F.2d 155, 158 (10th Cir. 1980) ).

Based on what we have said so far, this would seem to be an open-and-shut case. Angel Brothers' foreman knew about the safety violation, ergo the company knew about the violation.

But it is not so simple. The rub is an exception Yates recognized from the ordinary application of vicarious liability. When a supervisor's "own conduct is the OSHA violation," the supervisor's knowledge should be imputed to the employer only if the supervisor's misconduct was foreseeable. Yates , 459 F.3d at 607, 609 ; accord Penn. Power & Light Co. , 737 F.2d 350, 354–55 (3d Cir. 1984) ; Mountain States , 623 F.2d at 158 (both requiring foreseeability when the violation is a supervisor's own conduct). But see Dana Container, Inc. v. Sec'y of Labor , 847 F.3d 495, 499–500 (7th Cir. 2017) ; Danis-Shook Jt. Venture XXV v. Sec'y of Labor , 319 F.3d 805, 811–12 (6th Cir. 2003) (both automatically imputing knowledge to the employer when a supervisor commits the violation); see also Wayne J. Griffin Elec., Inc. v. Sec'y of Labor , 928 F.3d 105, 109 (D.C. Cir. 2019) (noting that the court was "skeptical" of Yates ’ s foreseeability requirement given the "background common law of agency" but not resolving the question). The rationale for the Yates exception is a concern that a strict liability regime, rather than one requiring knowing misconduct, would result if one supervisor were the source of both the underlying violation and the company's awareness of it. 459 F.3d at 607–09.

That situation is not present here. The violation was a crew member's working in the unsafe trench, and foreman Vidal allowed the violation to occur in contravention of his duty to ensure worker safety. Cf. id. at 607.

Angel Brothers nonetheless tries to characterize the violation as one involving the foreman's "own malfeasance" because he authorized the crewmember to work in the trench. But authorizing another's violation is not the same as committing the violation oneself. Yates makes this clear in both what the opinion says and what it did. The opinion "emphasize[s]" that the exception extends to "only the situation in which it is the supervisor himself who engages in unsafe conduct and who does so contrary to policies of the employer." Id. at 609 n.8. And while Yates rejected imputing a supervisor's knowledge to the employer for a citation listing the supervisor's failure to wear fall protection when working on a slope, id. at 610 (remanding to the agency for a foreseeability inquiry), a companion citation against the employer for "allowing the two crewmen to wear the harnesses backwards" was not even challenged on appeal, id. at 606. On its own terms then, the Yates exception does not apply when, like here, a supervisor did not commit the safety violation.

Nor does it make sense to extend the Yates exception to cases in which a supervisor authorizes a subordinate to violate a safety rule. Consider two situations. Situation A is this case, in which a supervisor authorizes a subordinate to engage in unsafe work. In Situation B, the subordinate chooses to engage in unsafe work on his own; a supervisor later visits the construction site and sees the unsafe condition. By any measure, there is a stronger case for holding the employer liable in Situation A given the active involvement of the supervisor. See Floyd S. Pike Elec. Contractor, Inc. v. Occupational Safety & Health Review Comm'n , 576 F.2d 72, 77 (5th Cir. 1978) ("Because the behavior of supervisory personnel sets an example at the workplace, an employer has if anything a heightened duty to ensure the proper conduct of such personnel."). Yet Angel Brothers' position...