W.G. Yates & Sons v. Occupational Safety & Health

• Citation: 459 F.3d 604
• Decision Date: 04 August 2006
• Docket Number: No. 05-60216.,05-60216.
• Parties: W.G. YATES & SONS CONSTRUCTION COMPANY INC., Hvy Div., Petitioner, v. OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION; Elaine Chao, Secretary, Department of Labor, Respondents.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

459 F.3d 604

W.G. YATES & SONS CONSTRUCTION COMPANY INC., Hvy Div., Petitioner, v. OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION; Elaine Chao, Secretary, Department of Labor, Respondents.

No. 05-60216.

United States Court of Appeals, Fifth Circuit.

August 4, 2006.

Robert E. Rader, Jr. (argued), Rader & Campbell, Dallas, TX, for Petitioner.

Ray H. Darling, Executive Secretary, Occupational Safety Health Admin., Washington, DC, for Occupational Safety and Health Review Com'n.

Michael P. Doyle (argued), Ann S. Rosenthal, U.S. Dept. of Labor, Washington, DC, for Elaine Chao.

Petition for Review of an Order of the Occupational Health and Safety Administration.

Before REAVLEY, JOLLY and DeMOSS, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

W.G. Yates & Sons Construction Company seeks review of an order upholding a citation under the Occupational Safety and Health Act of 1970, 29 U.S.C. § 651, et seq., when a supervising employee, Martin Olvera, worked along a dangerous ledge without fall protection, in violation of 29 C.F.R. § 1926.501(b)(1). The Administrative Law Judge upheld the citation and assessed a penalty of $5,000. Finding that the decision rests on an error of law, we grant the petition for review, reverse the Commission's order upholding the citation, and remand to the Commission for further proceedings.

I

In the fall of 2003, W.G. Yates & Sons was the subcontractor responsible for the site work, including the dirt work and paving, required to construct a shopping center and business complex known as Patton Creek Mall in Hoover, Alabama. Two OSHA compliance officers, James Cooley and Ron Hynes, conducted an inspection of the Yates construction site on September 11, 2003. The officers observed a Yates crew laying grass mats along the slope encircling the parking lot. At the base of the slope, the landscape dropped off precipitously 65 feet.

To protect against falls, the Yates crew positioned a large front end loader and bulldozer on the top of the slope approximately 100 feet apart and strung a half inch steel cable between them. The crew then could wear safety harnesses and lanyards connected to the cable, allowing them to slide along the cable as they worked on the slope. However, officers Cooley and Hynes observed the crew's foreman, Martin Olvera, working on the slope without any form of fall protection, and Olvera's two crewmen wearing their harnesses backwards.¹ As a result, OSHA cited Yates for two serious violations—1) Olvera's failure to wear any fall protection while working on the slope in violation of 29 C.F.R. § 1926.501(b)(1);² and 2) allowing the two crewmen to wear their harnesses backwards in violation of 29 C.F.R. § 1926.502(a)(2).³

The Administrative Law Judge ("ALJ") examining the citation held that the Secretary had established both violations and imposed a $9,000 fine, $5,000 for the failure of Olvera to wear any fall protection, and $4,000 for the incorrect use of the fall protection by the two crew members. Yates's petition for review to the Occupational Safety and Health Review Commission was denied. Yates filed this timely petition for review, contesting only the citation relating to Olvera's failure to wear fall protection. Because the Review Commission declined discretionary review of Yates's citation, we treat the decision of the ALJ as a final order of the Commission. See 29 U.S.C. § 661(j) ("The report of the administrative law judge shall become the final order of the Commission within thirty days after such report by the administrative law judge, unless within such period any Commission member has directed that such report shall be reviewed by the Commission.").

II

There is no dispute in this case that working on a slope without fall protection was violative of 29 C.F.R. § 1926.501(b)(1). Neither is there a dispute that a fall from the 65-foot high edge would result in death or serious physical harm. On the other hand, however, it is clear that the failure to comply with a specific regulation, even coupled with substantial danger is, standing alone, insufficient to establish a violation of the Act. See, e.g., Horne Plumbing & Heating Co. v. OSHRC, 528 F.2d 564, 568-69 (5th Cir.1976) (citing Nat'l Realty & Construction Co. v. OSHRC, 489 F.2d 1257 (D.C.Cir.1973)); Penn. Power & Light Co. v. OSHRC, 737 F.2d 350, 354-55 (3d Cir.1984) (citing Brennan v. Occupational Safety and Health Review Com'n (Hanovia Lamp), 502 F.2d 946, 951-52 (3d Cir.1974)). In deciding where this case fits we can begin by observing that when drafting the Occupational Safety and Health Act "Congress quite clearly did not intend . . . to impose strict liability: The duty was to be an achievable one. . . . Congress intended to require elimination only of preventable hazards." Horne Plumbing, 528 F.2d at 568 (quoting Nat'l Realty, 489 F.2d at 1265-66). "The Act itself provides the basis for [this] reasoning [as] the statement of congressional purpose contained in the Act evidences an intent to ensure worker safety only `so far as possible'." Penn. Power & Light Co., 737 F.2d at 354 (quoting 29 U.S.C. § 651(b)). "Nothing in the Act . . . makes an employer an insurer or guarantor of employee compliance [with the Act] at all times." Horne Plumbing, 528 F.2d at 570 (quoting Brennan v. OSHRC, 511 F.2d 1139, 1144 (9th Cir. 1975)); see also Ocean Elec. Corp. v. Secretary of Labor, 594 F.2d 396, 399 (4th Cir.1979) (holding that Congress never intended "the employer to be an insurer of employee safety"). Instead, the Act seeks to require employers to protect against preventable and foreseeable dangers to employees in the workplace. See, e.g., Horne Plumbing, 528 F.2d at 571; Penn. Power & Light Co., 737 F.2d at 354 ("the purposes of the Act are best served by limiting citations for serious violations to conduct that could have been foreseen and prevented by employers with the exercise of reasonable diligence and care").

In keeping with this purpose of eschewing a strict liability standard, § 666(k)—which outlines the proof required to establish a serious violation of the Act—imposes liability on the employer only if the employer knew, or "with the exercise of reasonable diligence, [should have known] of the presence of the violation." 29 U.S.C. § 666(k). That is, employer knowledge is a required element of a § 666(k) violation. The ALJ found that because Olvera was the foreman, i.e., a supervisory employee,⁴ and because Olvera knew that his conduct violated both the Act and Yates's safety policy, "[Olvera's] knowledge of this condition . . . is imputed to [Yates]" thus satisfying the knowledge requirement.⁵ Rejecting Yates's argument that Olvera's actions constituted employee conduct, the ALJ upheld the citation. On appeal Yates argues that the ALJ erred in imputing to Yates Olvera's knowledge that, acting contrary to Yates's policy, his conduct violated the law.

It is certainly true, as the government's argument assumes, that a corporation is usually liable for acts of its supervisors in the performance of their assigned duties. "A corporation can only act through its agents." Ocean Elec. Corp., 594 F.2d at 399. Thus, "[w]hen a corporate employer entrusts to a supervisory employee its duty to assure employee compliance with safety standards, it is reasonable to charge the employer with the supervisor's knowledge[,] actual or constructive[,] of non-complying conduct of a subordinate." Mountain States Telephone and Telegraph Co. v. OSHRC, 623 F.2d 155, 158 (10th Cir.1980). However, "when the noncomplying behavior is the supervisor's own[,] a different situation is presented." Id.

In this case it is not disputed that Olvera was a supervisory employee, that his own conduct is the OSHA violation, and that he knew his conduct was violative of the law and of company policy. Yet, imputing to the employer the knowledge of a supervisor of his own violative conduct without any further inquiry would "amount[ ] to the imposition of a strict liability standard, which the Act neither authorizes nor intends." Horne Plumbing, 528 F.2d at 568. Thus we ask when is it appropriate (or inappropriate) to impute the supervisor's knowledge of his own misconduct to the employer. The answer to this question will guide this appeal.

In answering this question, we are aware of the differing opinions among the Circuits. All agree that the Secretary bears the burden of proving each element required to establish a violation—and in the case of a serious violation, that includes employer knowledge. The disagreement arises, however, in determining whether the government can establish an employer's knowledge of a violation of law based on a disobedient supervisor's misconduct. See, e.g., Danis-Shook Jt. Venture XXV v. Secretary of Labor, 319 F.3d 805, 811-12 (6th Cir.2003) (holding that the supervisor's knowledge of his own misconduct can be imputed to establish employer knowledge because such supervisor misconduct "raises an inference of lax enforcement and/or communication of the employer's safety policy"); Penn. Power & Light Co., 737 F.2d at 358-59 (Third Circuit holding that the Secretary cannot meet its burden to establish knowledge "where the inference of employer knowledge is raised only by proof of a supervisor's misconduct"); Mountain States Telephone & Telegraph Co., 623 F.2d at 156 (Tenth Circuit holding that supervisor's knowledge and violation of the safety standard is insufficient evidence to establish employer knowledge, finding that a contrary rule would inappropriately "shift the burden of proof to the employer" on a required element of the violation). Although our Circuit has not directly answered this question, our holding in Horne Plumbing is instructive.

Horne Plumbing involved an 11-employee sole proprietorship with a model 20-year safety record and an outstanding safety program, especially with respect to the work hazard at issue. Although the owner, Horne, was regularly at the work site inspecting...