U.S. v. Ladish Malting Co., 97-2417

• Decision Date: 11 March 1998
• Docket Number: No. 97-2417,97-2417
• Parties: 18 O.S.H. Cas. (BNA) 1133, 1998 O.S.H.D. (CCH) P 31,502 UNITED STATES of America, Plaintiff-Appellee, v. LADISH MALTING CO., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 484

135 F.3d 484

18 O.S.H. Cas. (BNA) 1133, 1998 O.S.H.D. (CCH)

P 31,502

UNITED STATES of America, Plaintiff-Appellee, v. LADISH MALTING CO., Defendant-Appellant.

No. 97-2417.

United States Court of Appeals,

Seventh Circuit.

Argued Nov. 3, 1997.

Decided Jan. 30, 1998.

Rehearing Denied March 11, 1998.

Peggy A. Lautenschlager, David E. Jones (argued), Office of the United States Attorney, Madison, WI, for Plaintiff-Appellee.

James M. Shellow (argued), Shellow, Shellow & Glynn, Milwaukee, WI, for Defendant-Appellant.

Before CUDAHY, EASTERBROOK, and EVANS, Circuit Judges.

EASTERBROOK, Circuit Judge.

After one of its workers fell to his death when a rickety fire escape platform collapsed, Ladish Malting Company was charged with a criminal violation of the Occupational Safety and Health Act. The statute reads: "Any employer who willfully violates any standard, rule, or order promulgated pursuant to [29 U.S.C. § 655], or of [sic] any regulations prescribed pursuant to this chapter, and that violation caused death to any employee, shall, upon conviction, be punished by a fine of not more than $10,000 or by imprisonment for not more than six months, or by both". 29 U.S.C. § 666(e). According to the indictment, Ladish violated 29 C.F.R. § 1910.36(b), which requires employers to maintain safe fire exits. See also 29 C.F.R. § 1910.37(d)(1). Because Ladish is a corporation, 18 U.S.C. § 3571(c)(4) increases the maximum fine to $500,000, though the offense remains a misdemeanor, and therefore eligible for trial before a magistrate judge. 18 U.S.C. § 3401; Fed.R.Crim. P. 58. Magistrate Judge Crocker told the jury that:

A violation of an OSHA regulation, either by act or omission, is "willful" if it is done knowingly and voluntarily, either in reckless disobedience of the regulation or in reckless disregard of the requirements of the regulation.

"Reckless disregard" of a regulation means that the company, having knowledge of the hazardous condition, made no reasonable effort to determine whether its conduct would constitute a violation of the regulation, but acted with deliberate indifference toward the requirements of that regulation, about which the company actually knew or about which the company reasonably should have known.

In this context, "having knowledge of the hazardous condition" means that the company knew or should have known of the hazardous condition.

This instruction permitted the jury to conclude that Ladish "willfully" violated the rules if it "should have known" of the fire escape's dilapidated condition and "reasonably should have known" that such hazards violate federal regulations. The jury returned a verdict of guilty, the magistrate judge fined Ladish $450,000, and the district judge affirmed, rejecting Ladish's protest about the jury instructions.

"Willfully" is a notoriously slippery term, see Ratzlaf v. United States, 510 U.S. 135, 141, 114 S.Ct. 655, 659, 126 L.Ed.2d 615 (1994), which requires translation for placement among a more precise hierarchy of mental states such as the one devised by the Model Penal Code: purposely, knowingly, recklessly, and negligently. American Law Institute, Model Penal Code § 2.02(2) (1962). The Supreme Court found the Model Penal Code's classification of mental states useful when it had to determine what mental state is required in antitrust prosecutions, see United States v. United States Gypsum Co., 438 U.S. 422, 444-46, 98 S.Ct. 2864, 2878, 57 L.Ed.2d 854 (1978), as did the committee that wrote this circuit's pattern criminal jury instructions, see Federal Criminal Jury Instructions of the Seventh Circuit §§ 6.02 to 6.04 (1980), and it is equally helpful in disambiguating § 666. One common starting point for dealing with a wilfulness requirement is the ALI's proposal: "A requirement that an offense be committed wilfully is satisfied if a person acts knowingly with respect to the material elements of the offense, unless a purpose to impose further requirements appears." Model Penal Code § 2.02(8). See also Federal Criminal Jury Instructions of the Seventh Circuit § 6.03. A person acts "knowingly" in the ALI's vocabulary when, "if the element [of the offense] involves the nature of [a person's] conduct or the attendant circumstances, he is aware that his conduct is of that nature or that such circumstances exist". Model Penal Code § 2.02(2)(b)(i). See also Federal Criminal Jury Instructions of the Seventh Circuit § 6.04: "[T]he word 'knowingly' ... means that the defendant realized what he was doing and was aware of the nature of his conduct, and did not act through ignorance, mistake or accident."

One possible "further requirement" when the statute requires proof of wilfulness is knowledge of the law. Ratzlaf held that the wilfulness element in the currency-structuring statutes requires proof that the defendant knew the legal obligation as well as the factual elements of the offense. See also, e.g., Cheek v. United States, 498 U.S. 192, 201, 111 S.Ct. 604, 610, 112 L.Ed.2d 617 (1991); Liparota v. United States, 471 U.S. 419, 426, 105 S.Ct. 2084, 2088-89, 85 L.Ed.2d 434 (1985). The magistrate judge concluded that "willfully" in § 666(e) likewise requires proof that the defendant had basic legal information, as we held in McLaughlin v. Union Oil Co., 869 F.2d 1039, 1047 (7th Cir.1989) (interpreting the wilfulness element of § 666(a)), although this was watered down by allowing reckless disregard of the regulations to prove knowledge and then by allowing a belief that the firm "reasonably should have known" of the regulations to prove recklessness. This sequence is not terribly important (and we therefore do not decide whether this dilution is proper), because Ladish has never denied having actual knowledge of the legal requirement that fire escapes be strong enough to support a person's weight. Cf. McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988) (discussing wilfulness requirement under Fair Labor Standards Act). What matters, and what Ladish vigorously contests, is the requirement that it act "knowingly" with respect to the facts--that is, that the firm be aware that the fire escape platform had become unstable.

The instruction begins by requiring "knowledge of the hazardous condition" but then tells the jury that a corporation has "knowledge" if it "knew or should have known of the hazardous condition." This interprets "knowledge" as a level of understanding below even the weakest formulation in the ALI's list. The Model Penal Code § 2.02(2)(d) defines "negligently" this way:

A person acts negligently with respect to a material element of an offense when he should be aware of a substantial and unjustifiable risk that the material element exists or will result from his conduct. The risk must be of such a nature and degree that the actor's failure to perceive it, considering the nature and purpose of his conduct and the circumstances known to him, involves a gross deviation from the standard of care that a reasonable person would observe in the actor's situation.

This is a standard gloss of criminal negligence. The magistrate judge's formulation, by contrast, omitted any requirement that Ladish be aware of "a substantial and unjustifiable risk" or that its conduct involve a "gross deviation from the standard of care that a reasonable person would observe in the actor's situation." An unelaborated "should have known" is the usual formulation in civil cases. See Guess v. Bethlehem Steel Corp., 913 F.2d 463, 465 (7th Cir.1990). Thus the jury instruction in this case equated wilfulness with knowledge, watered down knowledge to recklessness, defined recklessness as negligence, and used the civil rather than the criminal approach to negligence.

Transforming wilfulness to civil negligence is inappropriate both in principle and for § 666 in particular. Knowledge in a criminal statute means actual knowledge. See Contract Courier Services, Inc. v. Research and Special Programs Administration, 924 F.2d 112 (7th Cir.1991). What one ought to have known, but did not know, is not knowledge; it is not even (necessarily) recklessness. Criminal recklessness may be so close to actual knowledge that proof of one suffices for proof of the other, but, as the Court stressed in Farmer v. Brennan, 511 U.S. 825, 114 S.Ct. 1970, 128 L.Ed.2d 811 (1994), criminal recklessness means awareness of facts from which an inference could be and is drawn. 511 U.S. at 836-37, 114 S.Ct. at 1978-79. The jury in this case was not asked to inquire whether Ladish perceived a risk that the fire escape was hazardous and concluded that the hazard actually existed. There would be no point to such an instruction: it comes to the same thing as actual knowledge.

Courts often say that knowledge may be proved by demonstrating that the defendant was conscious of a substantial chance that some fact obtained, but averted his eyes for fear of learning more. See United States v. Ramsey, 785 F.2d 184 (7th Cir.1986); United States v. Giovannetti, 919 F.2d 1223 (7th Cir.1990), rehearing denied, 928 F.2d 225 (1991). "An ostrich instruction informs the jury that actual knowledge and deliberate avoidance of knowledge are the same thing. When someone knows enough to put him on inquiry, he knows much. If a person with a lurking suspicion goes on as before and avoids further knowledge, this may support an inference that he has deduced the truth and is simply trying to avoid giving the appearance (and incurring the consequences) of knowledge." Ramsey, 785 F.2d at 189. Behaving like an ostrich supports an inference of actual knowledge; it is not some kind of substitute for proof of knowledge. At all events, the magistrate judge did not give an ostrich instruction but instead told the jury that imputed knowledge was enough, whether or not Ladish had actual knowledge. No case of which we are aware treats what a person "should have known" as knowledge or wilfulness. Unless...