U.S. v. Myr Group, Inc.
| Decision Date | 16 March 2004 |
| Docket Number | No. 03-3250.,03-3250. |
| Citation | 361 F.3d 364 |
| Parties | UNITED STATES of America, Plaintiff-Appellant, v. MYR GROUP, INC., Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Carole J. Ryczek (argued), Office of the United States Attorney, Chicago, IL, for Plaintiff-Appellant.
Joseph J. Duffy, Corey B. Rubenstein (argued), Stetler & Duffy, Chicago, IL, for Defendant-Appellee.
Paul M. Heylman, Schmeltzer, Aptaker & Sheppard, Washington, DC, for Amicus Curiae.
Before CUDAHY, POSNER, and ROVNER, Circuit Judges.
The district judge dismissed an indictment that charged MYR Group, Inc., with violating section 17(e) of the Occupational Safety and Health Act, 29 U.S.C. § 666(e), and the government appeals. The factual record is limited to the facts alleged in the indictment, according to which: MYR has a wholly owned subsidiary named L.E. Myers Company (the parties call it "LEM"), which repairs high-voltage lines. MYR oversees the safety programs of its subsidiaries, provides safety manuals and other safety instructions to the employees of the subsidiaries, and jointly with the subsidiaries is responsible for training those employees with regard to safety matters, including how to repair high-voltage lines without being electrocuted. Nevertheless, on two separate occasions, employees of LEM were electrocuted while repairing such lines. The indictment charges both MYR and LEM with two counts of causing the death of an employee by willfully violating rules promulgated under OSHA. 29 U.S.C. § 666(e). MYR is charged with violating regulations requiring, in essence, that employees be properly trained in safe working procedures. 29 C.F.R. §§ 1910.269(a)(2)(i), (ii). LEM is charged with violations of other rules as well, and is awaiting trial in the district court.
The government's argument is a simple one. MYR is an employer, albeit not of the two workers who were electrocuted; the two workers were employees; the regulations in question state simply that "employees shall be trained in" safe working procedures. Therefore, the argument concludes, the duties created by the regulations run to anyone's employees, not merely employees of the employer accused of having violated the regulations.
In its opening brief the government tried to make something of the fact that MYR and LEM are corporate affiliates, citing Esmark, Inc. v. NLRB, 887 F.2d 739 (7th Cir.1989). That, however, was a veil-piercing case, where we said that "it is solely where a parent disregards the separate legal personality of its subsidiary (and the subsidiary's own decisionmaking `paraphernalia'), and exercises direct control over a specific transaction, that derivative liability for the subsidiary's unfair labor practices will be imposed under the theory adopted by the Board in the present case." Id. at 757. At argument the government made clear that it is not attempting to pierce the corporate veil and by doing so attribute the subsidiary's acts to the parent, consistent with the principles of corporate law.
Breathtaking vistas of both criminal and civil liability (the latter not dependent on proof that the violation was willful, 29 U.S.C. §§ 666(b), (c); S.A. Healy Co. v. OSHRC, 138 F.3d 686, 688 (7th Cir.1998)) open before our eyes. Were LEM to hire the Illinois Institute of Technology to train LEM's employees in the hazards of uninsulated high-voltage electrical cables, and IIT fell down on the job and an employee of LEM was electrocuted as a result, IIT would, if the government is right, be either criminally or civilly liable for having violated OSHA. It would be so merely by virtue of having employees, even though those were not the workers endangered by its violation. It is true that LEM and IIT are not affiliates, but the government's lawyer acknowledged that this would make no difference, for remember that it is not arguing that MYR did anything that would justify treating LEM as if it were really just a division of MYR rather than a separate corporation.
The government's argument is not limited to service providers. A firm (provided only that it had employees) that sold a defective espresso machine to a coffee shop would be subject to OSHA liability if the machine exploded and scalded a waiter. OSHA would become a products-liability statute — with criminal sanctions for its willful violation.
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