Dana Container, Inc. v. Sec'y of Labor

• Decision Date: 01 February 2017
• Docket Number: No. 16-1087,16-1087
• Citation: 847 F.3d 495
• Parties: DANA CONTAINER, INC., Petitioner, v. SECRETARY OF LABOR, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

847 F.3d 495

DANA CONTAINER, INC., Petitioner,

v.SECRETARY OF LABOR, Respondent.

No. 16-1087

United States Court of Appeals, Seventh Circuit.

Argued September 12, 2016

Decided February 1, 2017

John J. Coleman, III, Marcel L. Debruge, Attorneys, Burr & Forman, Birmingham, AL, for Petitioner.

John X. Cerveny, Occupational Safety & Health Review Commission, Ronald Joseph Gottlieb, Attorney, Department of Labor, Washington, DC, for Respondent.

Before Wood, Chief Judge, and Easterbrook and Sykes, Circuit Judges.

Wood, Chief Judge.

It is not hard to find people who complain about government regulations, but the regulations often exist because people do not take optimal precautions on a voluntary basis. This case illustrates that problem. It arose after toxic fumes in a large container knocked out a man who was working inside it. Fortunately, he was rescued by the local fire department, but his employer, Dana Container, wound up fighting citations from the Occupational Safety and Health Administration (OSHA). After an administrative law judge (ALJ) and the Occupational Safety and Health Review Commission upheld OSHA's actions, Dana turned to this Court. Because Dana has not provided a compelling reason to overturn the Commission's determinations, we deny its petition for review.

I

Dana operates a truck-tank washing facility near the Stevenson Expressway in Summit, Illinois. The tanks cleaned at Dana's facility are long metallic cylinders used to transport products such as ink and latex. After the tanks are emptied at their destination, truckers bring them to Dana's facility for a cleaning so that they can haul different products without adulteration. Before washing a tank, employees drain any residual product from it. They then insert a mechanical spinner that rotates scrubbers from one end of the tank to the other, simultaneously dousing it with soap or solvents (or both). They then give the tank a final rinse of water and blow it dry. Most of the time, this process suffices to clean the tank thoroughly. When it does not, however, employees enter the tank and manually clean out the remaining sludge or residue. Because the tank space is confined and may contain chemicals that are hazardous to health, OSHA has promulgated regulations that require companies to enforce certain safety precautions when their employees enter these "permit-required confined spaces (PRCSs)." 29 C.F.R. § 1910.146.

At Dana's facility in Summit, employees enter tanks to clean them approximately ten times per month. Before doing so, the employee must obtain an entry permit from a supervisor; the permit contains a checklist of required safety precautions. The employee then climbs onto a catwalk above the tank and hooks a full-body harness he is wearing to a mechanical retrieval device that can pull him out of the tank if he becomes incapacitated for any reason. He must also test the tank air for atmospheric hazards before going in. When he enters the tank, he is required to wear a respirator and to conduct continuous atmospheric testing. While an employee is in the tank, automatic blowers force fresh air into it. A fellow employee is required to be on standby outside the tank in order to assist in case of an emergency. OSHA regulations and Dana's safety rules prohibit employees from entering a "dirty" tank before it has been mechanically cleaned.

In the cold early morning hours of January 28, 2009, one of Dana's supervisors, Bobby Fox, was on the third shift along with former employee Cesar Jaimes. Fox was working on a trailer and encountered a problem with a clogged valve just as he was about to begin the mechanical cleaning process. Disregarding the safety rules, he entered the tank prior to cleaning it, without attaching himself to the retrieval device or following the entry permit procedures. After a short while, Jaimes looked inside, saw Fox unconscious in a pool of chemical sludge, and called the Summit Fire Department. The firefighters hoisted him out, rinsed off the chemical residue, and transported him to the hospital. Fox was diagnosed with "Syncope and Collapse, Toxic Effect of Unspecified Gas, Fume, or Vapor" (i.e ., fainting).

A local TV news crew broadcast the rescue that morning, and OSHA inspector Jami Bachus happened to see it before heading to work. She volunteered to inspect Dana's facility and did so, arriving at the Summit station within three hours of the accident. After her inspection, Bachus issued two citations to Dana for serious and willful violations of the Occupational Safety and Health Act. Most of the items listed in the citations were for violations of the PRCS standards found at 29 C.F.R. § 1910.146. Dana contested the citations, and the Secretary of Labor and Dana settled some of the items. The rest were the subject of a hearing before an ALJ. The ALJ vacated a number of the citation items, for the most part because she found that Dana qualified for the less stringent "alternate entry procedures" described in § 1910.146(c)(5). She also upheld the findings of several of the specific violations. Both parties appealed the ALJ's decision to the Commission. This did not go well for Dana; the Commission decided, contrary to the ALJ, that Dana was not eligible for the alternate entry procedures, and so it reinstated those items in the citation. It affirmed the rest of the ALJ's findings. Dana has filed a petition for review in this court.

II

Dana attacks the Commission's decision in several ways. First, it asserts that it lacked the requisite knowledge to support the order and that it should be exonerated because the incident resulted from "unpreventable employee misconduct." It next argues that the Secretary did not prove the "willful" element of some of the items. Last, it contends that the Commission should have found that it satisfied the standard for alternate entry procedures.

We review the Commission's conclusions in enforcement actions under the Administrative Procedure Act, 5 U.S.C. § 701 et seq . We defer to the Commission's interpretations of law unless they are "arbitrary or capricious" or contrary to law. 5 U.S.C. § 706 ; Chao v. Gunite Corp. , 442 F.3d 550, 556 (7th Cir. 2006). We uphold an agency's determination "as long as [the agency] considered relevant data under the correct legal standards and offered a satisfactory explanation for its action." Wisconsin v. E.P.A. , 266 F.3d 741, 746 (7th Cir. 2001). An explanation is satisfactory if there is a rational connection between the facts the agency found and the decision it made. Howard Young Med. Ctr. Inc. v. Shalala , 207 F.3d 437, 441 (7th Cir. 2000).

Where, as here, the Commission reverses an ALJ, we confine our review to the Commission's order. Chao , 442 F.3d at 556. We must uphold the Commission's factual findings if they are supported by substantial evidence on the record as a whole. 29 U.S.C. § 660(a) ; Stark Excavating, Inc. v. Perez , 811 F.3d 922, 926–27 (7th Cir. 2016). Substantial evidence is " ‘such relevant evidence as a reasonable mind might accept as adequate to support the conclusion’ reached by the agency." Zero Zone, Inc. v. United States Dep't of Energy , 832 F.3d 654, 668 (7th Cir. 2016) (quoting Local 65–B, Graphic Commc'ns Conference of Int'l Bhd. of Teamsters v. NLRB , 572 F.3d 342, 347 (7th Cir. 2009) ); see also Consol. Edison Co. v. NLRB , 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) (explaining that the agency must produce "more than a mere scintilla" of evidence). We defer to the Commission's credibility determinations in all but extraordinary circumstances. Chao , 442 F.3d at 557.

A

The Occupational Safety and Health Act is not a strict liability statute. This means that the Secretary was required to prove that Dana knew about the problem in order to establish a "serious" violation. Kokosing Constr. Co. , 21 BNA OSHC 1629, 1631 (No. 04–1665, 2006), aff'd 232 Fed.Appx. 510 (6th Cir. 2007). Under Commission precedent the Secretary can satisfy his burden without demonstrating any inadequacy or defect in the employer's safety program, if a supervisory employee has actual or constructive knowledge of the violation. In that case, the supervisor's knowledge can be imputed to the employer. Secretary of Labor v. Dover Elevator , 16 BNA OSHC 1281 (No. 91–862, 1993). Because Fox was a supervisor and had actual knowledge of his own misconduct, the Commission imputed his knowledge to Dana.

This path for imputing knowledge is common in employment law. When an employee is acting within the scope of her employment, her knowledge is typically imputed to the employer. United States v. One Parcel of Land Located at 7326 Highway 45 North, Three Lakes, Oneida Cnty., Wis. , 965 F.2d 311, 316 (7th Cir. 1992). Conduct is "within the scope of employment when [it is] ‘actuated, at least in part, by a purpose to serve the [employer],’ even if it is forbidden by the employer." Burlington Indus., Inc. v. Ellerth , 524 U.S. 742, 756, 118 S.Ct. 2257, 141 L.Ed.2d 633 (1998) (quoting Restatement (Second) of Agency §§ 228(1)(c), 230 (1957) ). Here, Fox knew that he was violating the rules when he entered the dirty tank in order to kick loose a stuck valve so that he could then drain the tank. His act was in furtherance of Dana's tank cleaning business. We thus see no problem with the Commission's decision to impute Fox's knowledge to Dana.

Dana urges that the Third Circuit requires more than this, and that it has the better view. It requires the Secretary to prove that a supervisor's participation in misconduct was foreseeable by showing that the employer's safety program was inadequate. See Pennsylvania Power & Light Co. v. OSHRC , 737 F.2d 350, 354, 357–58 (3d Cir. 1984). In order to have an adequate safety program, that court says, the employer must have work rules designed to prevent the violation, adequately communicate those rules to its employees, take steps to discover violations, and effectively enforce the rules when it discovers violations. Id. at...