LTV Steel Co. v. Griffin

• Citation: 730 N.E.2d 1251
• Decision Date: 30 June 2000
• Docket Number: No. 49S04-9811-CV-692.,49S04-9811-CV-692.
• Parties: LTV STEEL COMPANY, Appellant (Plaintiff below), v. John P. GRIFFIN (formally Kenneth Zeller), In His Capacity as the Commissioner of the Indiana Department of Labor, Appellee (Defendant below).
• Court: Supreme Court of Indiana

730 N.E.2d 1251

LTV STEEL COMPANY, Appellant (Plaintiff below), v. John P. GRIFFIN (formally Kenneth Zeller), In His Capacity as the Commissioner of the Indiana Department of Labor, Appellee (Defendant below).

No. 49S04-9811-CV-692.

Supreme Court of Indiana.

June 30, 2000.

S.R. Born, Ellen D. Gregory, George Norwood, Ice Miller Donadio & Ryan, Indianapolis, IN, Attorneys for Appellant.

Lewis D. Beckwith, Danelle Miller Marks, Baker & Daniels, Indianapolis, IN, Attorneys for Amicus Curiae Indiana Legal Foundation.

Jeffery A. Modisett, Attorney General of Indiana, Jon Laramore, Rafal Ofierski, Deputy Attorney General, Indianapolis, IN, Attorneys for Appellee.

ON PETITION TO TRANSFER

SULLIVAN, Justice.

An employer was charged with serious and knowing workplace safety violations after a state inspection. The state safety review board (the adjudicator of workplace safety violations) dismissed the charges because it found that the safety inspector had a conflict of financial interest. We reverse, holding that an employer is not entitled to dismissal of such charges on this basis.

Background

The Indiana Occupational Safety and Health Act ("IOSHA") requires Hoosier employers to "establish and maintain conditions of work which are reasonably safe and healthful for employees, and free from recognized hazards that are causing or are likely to cause death or serious physical harm to employees." Ind.Code § 22-8-1.1-2.¹ Under IOSHA, an Occupational Safety Standards Commission is authorized to promulgate safety and health standards. Id. § 22-8-1.1-7. In addition, IOSHA adopts certain federal occupational safety and health standards as standards of the Indiana Occupational Safety Standards Commission. Id. § 22-8-1.1-13.1.² Every Indiana employer is required to "comply with the occupational health and safety standards promulgated under" IOSHA. Id. § 22-8-1.1-3.1.

The Commissioner of the Indiana Department of Labor and the Commissioner's designated representatives are charged with administering and enforcing IOSHA and the safety standards adopted by the Standards Commission.³ Id. § 22-8-1.1-22.1. The Commissioner and designated representatives are authorized by IOSHA to "enter without delay and inspect at all reasonable times places of employment in order to enforce any provisions of [IOSHA], including occupational safety and health standards." Id. § 22-8-1.1-23.1.⁴

This case arises out of such an inspection. Between April 11 and August 15, 1991, an IOSHA compliance safety and health officer conducted an inspection of LTV Steel Company's Harbor Works Facility ("LTV Steel") in East Chicago, Indiana. The investigation identified a series of alleged violations. Pursuant to the Commissioner's authority under section 25.1 of IOSHA, the Commissioner issued two notices of alleged violations, referred to in IOSHA as "safety orders," to LTV Steel.

The first safety order listed fourteen alleged "serious" violations⁵ of IOSHA safety standards including:

1. Storage of steel coils between five and six feet in height in a way that obscured the vision of employees operating a remote control crane in a high volume traffic area.

2. Transporting scrap hoppers down aisleways overloaded and with sharp pieces of steel hanging over the sides causing a hazard to persons walking or moving into the aisles.

3. Potholes and a large oil spill in the floor area around a tin mill coil storage stand conveyor.

4. Huge potholes and uneven floor area where the slab carriers transport slabs of steel.

5. Failure to instruct employees working in and around the chromic acid tanks as to the hazards of their job.

6. Failure to instruct supervisors and workers in slab carrier operations in the proper selection, use and maintenance of respirators.

7. Water supply turned off and eye wash and drenching station not readily available where industrial batteries were being replaced and recharged.

8. A tin mill crane malfunctioned and the crane went out of control.

The Commissioner assessed penalties totaling $12,200 for these violations.⁶

The second safety order alleged "knowing" violations⁷ of IOSHA safety standards arising from a June 17, 1991, incident in which an unsecured grate on a chromic acid tank slid out of place, causing an employee to fall into the tank. The order further alleged that during a recent maintenance, the bolts that secured the grate had been removed and were not replaced, and that there had been no immediate supply of clean cold water for washing off chemicals or other liquids. The Commissioner assessed penalties totaling $20,000 for these violations.

The IOSHA compliance safety and health officer who conducted the inspection was Harvey French. French had been a union employee of A.M. General Corporation in Mishawaka prior to being laid off in December 1989. Upon taking the position as compliance safety and health officer with the Labor Department in May 1990, French notified A.M. General of his new position. While employed with the Labor Department, French remained on layoff status with A.M. General and enjoyed "recall rights" of re-employment. French also had a vested pension with A.M. General.

Unbeknownst to French at the time he began a previous inspection of the LTV Steel facility in late 1990, LTV Steel and A.M. General were sister subsidiaries of the same parent corporation, LTV Corporation. At some point during the prior inspection, French became aware of the connection between the two corporations and advised LTV Steel officials of his layoff status with A.M. General. French was told by LTV Steel officials⁸ that LTV Steel had no objection to his conducting the inspection and encouraged him to proceed.⁹ Likewise, during the 1991 inspection at issue, no LTV Steel official or employee objected to French's participation in the inspection at the LTV Steel facility.

As noted above, French's inspection resulted in two safety orders dated September 23, 1991, being issued to LTV Steel. As authorized by section 28.1 of IOSHA, LTV Steel filed a petition for review dated October 10, 1991, denying each of the allegations in the safety orders.¹⁰ At this point, the matter became subject to the procedural requirements of both IOSHA and the Indiana Administrative Orders and Procedures Act, Ind.Code § 4-21.5-1-1 et seq. ("AOPA"). Under IOSHA, the Commissioner certified the dispute to the Indiana Board of Safety Review ("Safety Board"). The Safety Board is given the power under IOSHA to affirm, modify, or dismiss any action of the Commissioner concerning an alleged violation (including any penalty and abatement period).¹¹ See Ind.Code § 22-8-1.1-30.1. By operation of AOPA, the Safety Board assigned the matter to an administrative law judge for a hearing.

On March 24, 1993, LTV Steel filed a motion for summary judgment contending that the entire inspection conducted by French and the resulting safety orders were invalid because French had a statutorily prohibited conflict of financial interest when he conducted the inspection. The specifics of LTV Steel's summary judgment argument were (1) that section 9(a) of the statute governing Indiana state employee ethics ("Ethics Code")¹² provides, "A state officer or employee may not participate in any decision . . . in which the state officer or the employee . . . has a financial interest, Ind.Code § 4-2-6-9(a);" (2) that French participated in the decision to issue the safety orders to LTV Steel; (3) that French had a "financial interest" within the meaning of section 1 of the Ethics Code, in LTV Steel arising out of his employment relationship with A.M. General/LTV, id. § 4-2-6-1(9); and (4) as a result, French's inspection had been conducted in violation of Indiana law and the safety orders should be vacated. LTV Steel also provided an additional argument in support of partial summary judgment. For purposes of our decision today, it is sufficient to say that on May 13, 1993, the administrative law judge denied the motion for summary judgment without explanation.¹³ On February 24, 1995, the Safety Board reversed the administrative law judge's decision and granted summary judgment to LTV Steel. The Safety Board held that the inspection conducted by French was invalid because French had a conflict of financial interest that violated section 9 of the Ethics Code. Having rendered the inspection invalid, the Safety Board dismissed all IOHSA violations that were subject to the ALJ's recommendation.

Exercising the right of judicial review of agency action under chapter 5 of AOPA, the Commissioner appealed the decision of the Safety Board. In this petition for review, the Commissioner argued that LTV Steel failed to demonstrate that French "was biased by [the] alleged financial interest," (R. at 1830), or that he "was influenced in any manner by the tenuous relationship between [LTV Steel] and A.M. General when he conducted the inspections." (R. at 1831.) Therefore, the Commissioner contended that the "Board's decision [was] arbitrary and capricious, . . . in excess of statutory jurisdiction, . . . and otherwise not in accordance with the law,. . . because there is no factual or legal basis upon which the Board could properly conclude that Harvey French's inspection of LTV was clouded by any conflict of interest." (R. at 1768-69.)

On September 16, 1996, the Marion Superior Court vacated the Safety Board's decision reversing the ALJ's denial of LTV Steel's motion for summary judgment and remanded the matter to the Safety Board for further review. In reaching its conclusion, the trial court agreed with the Commissioner's contention that there was no evidence that French was influenced by his attenuated relationship with A.M. General when he conducted the inspections at the LTV Steel plant. The trial court further determined that dismissing the IOSHA violations based on a "purported conflict" of a regulatory inspector would contravene public policy because such action would "unjustifiably reward...