Brock v. Morysville Body Works, Inc., 87-3020

Citation829 F.2d 383
Decision Date19 October 1987
Docket NumberNo. 87-3020,87-3020
Parties17 Collier Bankr.Cas.2d 888, 16 Bankr.Ct.Dec. 934, Bankr. L. Rep. P 71,988, 13 O.S.H. Cas.(BNA) 1424, 1987 O.S.H.D. (CCH) P 28,048 William E. BROCK, Secretary of Labor, Petitioner, v. MORYSVILLE BODY WORKS, INC., Respondent.
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)

George R. Salem, Sol. of Labor, Cynthia L. Attwood, Associate Sol. for Occupational Safety & Health, Joseph M. Woodward, Counsel for Appellate Litigation, Barbara Werthmann (argued), Washington, D.C., for petitioner.

Craig S. Boyd (argued), Boyertown, Pa., for respondent.

Before WEIS, SLOVITER and BECKER, Circuit Judges.

OPINION OF THE COURT

BECKER, Circuit Judge.

This petition by the Secretary of Labor, seeking summary enforcement of an uncontested Occupational Safety and Health Administration citation against Morysville Body Works, Inc. (Morysville), a Chapter 11 debtor, presents three issues. We must first decide if we have jurisdiction over this petition, as against the contention that only the Bankruptcy Court (as surrogate for the District Court) has jurisdiction. We conclude both that we have concurrent jurisdiction with the Bankruptcy Court and that we should exercise that jurisdiction over the instant petition. Second, we must decide whether we have jurisdiction to determine issues concerning the applicability of the automatic bankruptcy stay. We also find that we share concurrent jurisdiction with the bankruptcy court over this issue and that we should decide it. Finally, we must determine the effect, if any, that the automatic bankruptcy stay has on the Secretary's petition. We conclude that, although the stay prevents us from enforcing the petition with regard to the fine required by the citation, it does not extend to that portion of the citation that orders abatement of health and safety violations, and for that portion of the citation, we grant the Secretary's petition for enforcement.

I. FACTS AND PROCEDURAL HISTORY

On August 3, 1984 Morysville filed for reorganization under Chapter 11 of the Bankruptcy Code, 11 U.S.C. Sec. 1101, in the United States District Court for the Eastern District of Pennsylvania. During the reorganization, Morysville continued operating its truck body manufacturing plant in Boyertown, Pennsylvania. On September 17, 1985 a representative of the Secretary of Labor conducted a health and safety inspection of the Morysville work site. The inspection revealed that Morysville had failed to provide its employees with an eye wash, had not affixed point-of-operation guards on certain machinery, had failed to provide goggles or shields for employees and had neglected to repair certain electrical equipment. The Secretary subsequently issued a citation charging Morysville with five violations of safety and health standards promulgated under the Occupational Safety and Health Act (OSHA), 29 U.S.C. Sec. 654(a)(2). The citation required Morysville to abate the violations; it also assessed a penalty of $21,000 against the company.

Morysville did not contest the citation within fifteen working days after it was issued. Therefore, on March 4, 1986, the citation became a final order of the Occupational Safety and Health Review Commission that is not reviewable by any court or agency. 29 U.S.C. Sec. 659(a). The Secretary petitioned this Court for summary enforcement of this final order pursuant to 29 U.S.C. Sec. 660. We in essence denied summary enforcement by setting the matter down for oral argument, and we now consider the Secretary's Petition for Enforcement in light of that argument and the written submissions of the parties.

II. JURISDICTION

Our jurisdiction over this case must be assessed in light of both OSHA and the Chapter 11 petition filed by Morysville. Putting aside for the moment the bankruptcy of Morysville, we look to an OSHA provision, 29 U.S.C. Sec. 660, as the source of our jurisdiction. By its terms, section 660(b) grants us original and exclusive jurisdiction. It provides that the Secretary may obtain "enforcement of any final order of the Commission by filing a petition for such relief in the United States court of appeals for the circuit in which the alleged violations occurred or in which the employer has its principal office...." 29 U.S.C. Sec. 660(b). Section 660(b) also specifically incorporates Sec. 660(a), which provides that "[u]pon the filing of the record with it, the jurisdiction of the court [of appeals] shall be exclusive...." 1

We must also account for Morysville's bankruptcy, however, to which the jurisdictional grant of 28 U.S.C. Sec. 1334(b) applies. Section 1334(b) provides:

Notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.

This court has defined "related to" as follows:

The usual articulation of the test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy.... An action is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate.

Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.1984); In re Bobroff, 766 F.2d 797, 802 (3d Cir.1985).

In the current case, enforcement of the Commission's citations against Morysville will undoubtedly alter its liabilities and have an impact on the administration of the debtor's estate. Enforcement will affect the arrangement, standing, and priorities of Morysville's creditors. Since the estate of the debtor has an interest in the enforcement of the Secretary's petition, it is "related to" a case under title 11.

Although section 1334(b) alters the effect of the jurisdictional grant of section 660(b) by expressly rendering it non-exclusive, it does not divest us of our jurisdiction. Rather, the effect of 28 U.S.C. Sec. 1334(b) is to grant the district court overseeing the bankruptcy concurrent original jurisdiction. 2 2] We thus share concurrent original jurisdiction with the district court overseeing the petitioner's bankruptcy, and because the instant enforcement petition was first filed with us, we must decide if we should defer to the district court in this matter. 3

The purpose of both sections 660(b) and 1334(b) is the expeditious resolution of the controversy at hand. The legislative history of OSHA details this purpose. If an employer wishes to contest a citation, he has numerous procedures which may be followed; when a citation is not contested and has become final, however, the order is uncontestable and is to be entered as "an automatic court enforcement order" of the Court of Appeals. See S.Rep. No. 1282, 91st Cong., 2d Sess., reprinted in 1970 U.S.Code Cong. & Admin.News 5177, 5191; see also id. at 5211; H.R.Conf.Rep. No. 1765, 91st Cong., 2d Sess., reprinted in 1970 U.S.Code Cong. & Admin.News 5228, 5235. Because of the importance of providing a safe workplace for employees, Congress provided summary enforcement to allow the Secretary to expeditiously rectify workplace hazards.

The jurisdictional grant of section 1334(b) similarly exists to allow the expeditious resolution of bankruptcy claims. Transferring controversies that are related to the petitioner's bankruptcy permits the district court to expeditiously complete the bankruptcy proceedings without the necessity of awaiting the outcome of state or federal trials. As the Senate detailed in its report,

This broad grant of jurisdiction will enable the bankruptcy courts, which are created as adjuncts to the district court for the purpose of exercising the jurisdiction, to dispose of controversies that arise in bankruptcy cases or under the bankruptcy code. Actions that formerly had to be tried in State court or in the Federal district court, at great cost and delay to the estate, may now be tried in the bankruptcy court.

S.Rep. No. 989, 95th Cong., 2d Sess. 153 (1978) reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5939; see also H.R.Rep. No. 595, 95th Cong., 2d Sess. 445 (1977), reprinted in 1978 U.S.Code Cong. & Admin.News 5963, 6400 (using similar language).

Given the reasons for these bases of jurisdiction, no purpose would be served if we were to defer to the district court for it to exercise the original, non-exclusive jurisdiction it shares with us. Transferring this petition would work contrary to the stated purpose of section 660(b) of OSHA. Rather than providing for expeditious enforcement, it would hinder the intended summary process. Moreover, the transfer is not necessary to the expeditious administration of the bankruptcy, the encouragement of which underlies the jurisdictional grant over proceedings related to the bankruptcy. Because no trial is required for this summary process, which is intended to be "automatic," no delay is created from our exercise of our original, non-exclusive jurisdiction. Indeed, transfer could only occasion delay. 4

We are cognizant of the countervailing argument against the exercise of our concurrent jurisdiction. Any order we may find enforceable would certainly have financial consequences for the distressed debtor, and it is the bankruptcy court that is familiar with the debtor's affairs. However, if the debtor were truly threatened by the exercise of our jurisdiction, it could have sought a stay of these proceedings under 11 U.S.C. Sec. 105(a). As one court of appeals has noted, "[t]o the extent that the exercise of this jurisdiction threatens the assets of the debtor's estate, the bankruptcy court may issue a stay of those...

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