Frank Irey, Jr., Inc., a Corporation v. Occupational Safety and Health Review Commission

519 F.2d 1200

• Court: Court of Appeals for the Third Circuit
• Decided: July 24, 1975
• Docket: 73-1765
• Status: Published

Opinions

OPINION OF THE COURT

WEIS, Circuit Judge.

The petitioner employer launched a broad based attack on the Occupational Safety and Health Act in this appeal. After a careful review of the record, we find that most of the assault stops short and that the constitutional challenges to the statute must fail. However, on one point there was error, and we conclude that the Occupational Safety and Health Review Commission applied an improper definition of the word “willful” in assessing one of the penalties against the petitioner. We remand for further consideration of that violation.

An employee of petitioner, Frank Irey, Jr., Inc., was killed on January 11, 1972, when a side of the trench in which he was working collapsed onto him. As a result of this tragedy, a Compliance Officer of the Occupationl Safety and Health Administration performed an inspection of the work site and determined that the Irey Company had violated a number of OSHA’s standards. A citation was issued charging that the employer failed to properly shore the trench and that other violations had occurred as well.

Irey was a contractor which was performing a construction subcontract in Morgantown, West Virginia awarded by the Boeing Company. That organization had caused certain test borings to be made in order to determine soil conditions, and the resulting information was made available to the petitioner. Irey was aware of the safety requirements for trenching work since its contract proposal to Boeing reiterated the OSHA standards in substance.

In November of 1971, West Virginia state safety inspectors cited Irey for permitting workers to be in a trench fifteen feet deep, the bottom portion of which appeared to be rock but the upper sides of which were composed of soft earth with substantial water content. Harley Six, the petitioner’s construction superintendent, ordered a backhoe operator to slope the sides of the trench, and the inspectors then permitted work to continue. The company was cautioned orally and in writing of the necessity for shoring or sloping the sides of trenches composed of unstable or soft material and of the added dangers posed by water accumulation in the soil.

On the day before the fatal accident, a trench was dug about 75 feet to 100 feet from the one which had come to the attention of the West Virginia inspectors some six weeks earlier. This new trench was started by blasting through solid rock. On the following day, softer material was reached, and a backhoe was used for the digging. The trench was about 33 inches wide and was taken down to a depth of about 7% feet. The sides of the trench were vertical and had not been shored. Some rain had fallen during the previous night, and water was pumped out from the 6 to 10 feet area of the trench which had been left open. The decedent then began to lay pipe on the bottom, and thereafter back-fill consisting of limestone chips was put into the excavation. It was about noon when the accident occurred.

At the hearing before the OSHA examiner, superintendent Six testified that he thought he was digging in shale and that consequently the trench did not have to be shored according to OSHA regulations.¹ He referred to test boring reports which he said described the soil in the area as brown to dark brown weathered shale with silty clay seams.

The employer also called a soils expert who performed some test borings in the vicinity of the accident some months afterward. This witness described the area as being of weathered limestone which, although similar to weathered shale in appearance, has more of a tendency to slide, particularly when wet.

The hearing officer found that the petitioner was guilty of a willful violation of § 5 of the Occupational Safety and Health Act of 1970, 29 U.S.C. § 654 (1970), (the general duty section of the Act) and of the standards relating to support of trenches published at 29 C.F. R. § 1926.652(b).² The Secretary of Labor’s proposed sanction of $7,500.00 for this violation was reduced to $5,000.00, and penalties were assessed for other violations of standards which are not of particular relevance at this juncture.

The Occupational Safety and Health Review Commission³ exercised its discretion to review the case, and the findings were affirmed. One of the three members dissented on the ground that the hearing officer had misinterpreted and misapplied the term “willful.”

The petitioner has chosen to attack the constitutionality of the Act on a variety of bases, asserting that the enforcement procedures involve an unlawful delegation of power to the executive branch and that the penalties, though denominated civil, are in fact criminal in nature. Some of the procedures to which the petitioner objects, that is, the power of the Commission to increase a proposed penalty, the vagueness of the general duty section, an employer’s Sixth Amendment right to be confronted with his accusers, and the imposition of penalties pending determination of an appeal, are not involved in this case, and consequently, we will not decide them.

As provided by the Act, the OSHA inspector who visited the scene of the fatality issued citations against the Irey Company for a number of violations which he found. Included with each was a suggested penalty which would have been binding on the company had it not advised OSHA of its intent to contest the citations.⁴ After Irey filed its notice of contest, the case was assigned to a hearing officer of the Review Commission who conducted the hearing at which both the Secretary and the employer presented evidence.

We need not recapitulate the Act in detail here.⁵ Basically, it authorizes the Secretary of Labor to establish standards for safe working conditions at places of employment throughout the United States. OSHA inspectors are authorized to visit job sites and issue citations for violations of specific standards or the broad “general duty” clause.⁶

Violations fall into four categories:

1. De minimis, where no monetary penalty is invoked;

2. Non-serious, where penalties of up to $1,000.00 may be assessed;

3. Serious violations, defined as those which create a substantial probability of death or serious physical harm, where a mandatory penalty of up to $1,000.00 is provided ; and

4. Willful or repeated violations, where a civil penalty of up to $10,000.00 may be assessed. The term “willful” is not defined by the statute.

Suits for recovery of the penalties may be brought in the district court, but there is no provision for review of the fact of violation or amount of penalty in that forum.⁷ Criminal liability can be invoked in a situation where there is a willful violation which causes death to an employee. Imprisonment for six months and/or a fine of $10,000.00 may be imposed in such an event. Since no mention is made of the forum in which such a proceeding is to be conducted, it may be assumed that it is in the district court.

Petitioner emphasizes that as to a corporation, the criminal punishment of a fine of $10,000.00 is precisely the same as the civil penalty for a “willful” violation without the constitutional protections afforded a criminal defendant. Thus, the argument goes that the employer is deprived of rights guaranteed by the Fourth, Fifth, Sixth and Seventh Amendments and is not allowed an appeal to the courts on factual issues.

There is force and logic to these arguments, and we do not dismiss them lightly. Fatal to the petitioner’s view, however, is a series of Supreme Court decisions which have validated the position that Congress has- a wide range of alternatives available to it for enforcing its legislative policy through administrative agencies. Thus, in Helvering v. Mitchell, 303 U.S. 391, 58 S.Ct. 630, 82 L.Ed. 947 (1938), it was held that monetary sanctions may be imposed administratively without invoking the judicial power, despite the contention that such ■penalties are essentially criminal in nature. The Court there also held that the same conduct may subject a person to both civil and criminal sanctions, if the civil aspects are considered remedial.⁸

In the case sub judice, candor compels us to concede that the punitive aspects of the OSHA penalties, particularly for a “willful” violation, are far more apparent than any “remedial” features. However, a deliberate and conscious refusal to abate a hazardous condition may bring about a situation where a heavy civil penalty might be needed to effect compliance with safety standards. In any event, we have now come too far down the road to hold that a civil penalty may not be assessed to enforce observance of legislative policy. See, for example, Oceanic Steam Navigation Co. v. Stranahan, 214 U.S. 320, 29 S.Ct. 671, 53 L.Ed. 1013 (1909), and Hepner v. United States, 213 U.S. 103, 29 S.Ct. 474, 53 L.Ed. 720 (1909). Although the label attached by Congress does not preclude judicial review of a statute which transgresses a constitutional right, no such infraction has occurred here.⁹ American Smelting & Refining Co. v. Occupational Safety and Health Review Commission, 501 F.2d 504 (8th Cir. 1974).

Much of the petitioner’s opposition is centered on the fact that the civil penalties are imposed, not through normal judicial processes but by administrative action — that is, by the executive branch with very narrow judicial review.¹⁰

It maybe that Congress, by giving broad enforcement roles to OSHA and granting it the power to assess heavy penalties while at the same time limiting the scope of judicial review, has come close to the line which separates executive and judicial powers. However, we do not think that the line has been crossed. The legislation is still in the area where congressional discretion may be exercised, and the question is one of the wisdom of a course of action —not its constitutionality. In that context, of course, we must defer to the legislative judgment.¹¹

In Kennedy v. Mendoza-Martinez, 372 U.S. 144, 83 S.Ct. 554, 9 L.Ed.2d 644 (1963), the Court considered the question of the criteria to be applied in determining whether sanctions are penal or regulatory in nature. The Court said that in the absence of an expression of congressional intent such factors as scienter, punishment, and exeessiveness, inter alia, may be weighed. We do not perform any such analysis here because the congressional intent is clear.¹²

Irey also objects to the procedures permitting the Secretary to propose a penalty which becomes final unless contested by the employer.¹³ According to the petitioner, this placed an undue and illegal burden on him. We find no merit to this contention. The procedures are expressly authorized by the statute and are an acceptable way to commence an administrative proceeding. From a practical standpoint, the burden on the employer to respond is little different than that which requires a party to answer a complaint within a given time on penalty of a default judgment for a fixed sum. Cf. Morton v. Delta Mining, Inc., 495 F.2d 38 (3d Cir. 1974).

The self-executing aspect of the Act is not violative of due process because an employer is given adequate opportunity for a hearing at a time when deprivation can still be averted. An employer who chooses not to file a timely contest is deemed to have waived his right to a hearing. The citation adequately apprises him of his right to contest and of the manner in which it is to be done; subsequent silence, therefore, is properly viewed as a knowing and intelligent waiver.

The discretion granted to the Commission to assess penalties is conditioned upon consideration of four factors:

1. Size of the employer;

2. Gravity of the violation;

3. Good faith; and

4. Previous history.¹⁴

We find the action of the administrative agency in applying those standards to these -facts to be reasonable and within the scope of statutory authority.

When the delegation of legislative authority to an administrative agency is broad in scope, the courts have a greater role to play to prevent or correct disparate treatment of those subjected to regulation. Furthermore, it is the duty of the courts to interpret the statiite under which the agency functions and to determine whether the agency is acting within the congressional purpose. See Wright, Beyond Discretionary Justice, 81 Yale L.J. 575 (1972).

It is in this spirit that we approach the issue raised by the dissenting member of the Commission on the proper interpretation of the term “willful.” ¹⁵

The hearing officer concluded that a willful violation may exist under the Act when the employer commits an intentional and knowing violation and is conscious that his action is proscribed or, if the employer is not consciously violating the Act, when he is aware that a hazardous condition exists and makes no reasonable effort to eliminate the condition.

The hearing officer found that the failure to shore the trench was a willful violation of the Act even though the superintendent “either misconstrued or misunderstood” the test boring data.¹⁶ He summarized by saying, “Respondent [Irey], in effect, admits that he did not ascertain beforehand the true nature of the soil which it was excavating, or that it failed to either comprehend from the information it had what was the true composition of the material it was excavating.” The decision concluded that the knowledge of the citation issued by the state in November of 1971 and the failure to acquaint itself with “the full facts” constituted a willful violation by the employer.

The Act defines a “serious” violation as one which requires proof of a substantial probability that death or serious harm could result from a condition, “unless the employer did not, and could not with the exercise of reasonable diligence, know of the presence of the violation.”¹⁷ To rephrase, a finding of a “serious” violation requires that the condition was hazardous and that the employer knew or should have known of it — precisely the alternative definition of “willful” which the hearing officer adopted.

It is obvious from the size of the penalty which can be imposed for a “willful” infraction — ten times that of a “serious” one — that Congress meant to deal with a more flagrant type of conduct than that of a “serious” violation. Willfulness connotes defiance or such reckless disregard of consequences as to be equivalent to a knowing, conscious, and deliberate flaunting of the Act. Willful means more than merely voluntary action or omission — it involves an element of obstinate refusal to comply.

The meaning of willfulness changes with the context in which it appears. Thus, willfulness in a tax case, e. g., United States v. Bishop, 412 U.S. 346, 360, 93 S.Ct. 2008, 36 L.Ed.2d 941, (1973), varies from the definition in a suit for a penalty for failing to unload cattle, e. g., United States v. Illinois Central Railroad, 303 U.S. 239, 242, 58 S.Ct. 533, 82 L.Ed. 773 (1938).

We believe that a restrictive definition is appropriate here since otherwise there would be no distinction between a “serious” offense and a “willful” one. The lack of demarcation would permit the agency to assess a higher penalty than that which is authorized for conduct defined as a “serious” violation. A broad interpretation of “willful” would disrupt the gradations of penalties and violations so carefully provided in the Act.

The government has the burden of establishing that an offense was willful,¹⁸ and this court has the power to determine whether that burden has been met. National Realty v. Occupational Safety and Health Review Commission, 489 F.2d 1257 (D.C.Cir.1973). However, since the Commission here based its judgment on an erroneous legal standard, we think it appropriate to remand for further consideration.

We have reviewed the record applicable to the other violations assessed against the petitioner and find no error.

The Commission’s decision finding a willful violation of 29 C.F.R. 192.652(b) is vacated and remanded for further consideration not inconsistent with this opinion. The order assessing penalties for violations of §§ 1926.652(h), 1926.-401(f), 1926.150(c) (l)(viii), 1926.350 (a)(1), 1926.51(c), and 1926.51(a)(1) will be affirmed.

1 . See 29 O.F.R. 1926.652(b), Table P-1.

2 . “Sides of trenches in unstable or soft material, 5 feet or more in depth, shall be shored, sheeted, braced, sloped or otherwise supported . . (1973). The effective regulation in 1972 required those precautions for trenches four feet or more in depth.

3 . The Review Commission is composed of three members appointed by the President for 6 year terms. The Commission is independent of the Secretary of Labor. It is authorized to appoint hearing examiners (now called administrative law judges) whose deei-sions it is authorized to review on a discretionary basis. 29 U.S.C. § 661 (1970). The Commission was established to counter congressional complaints that earlier versions of the Occupational Safety and Health Act would have made the Secretary of Labor, in effect, prosecutor, judge, and jury in violation cases.

The Commission’s function was designed to be adjudicative, and formulation of standards, together with the prosecution role, was assigned to the Secretary.

In this case, one of the Commissioners, sita aponte, proposed that consideration be given to raising the Secretary’s proposed penalty of $7,500.00 to $10,000.00. We suggest that by claiming such power the Commission invites criticism of its impartiality or at least its appearances. The Commission’s assertion of a policy role was treated with disfavor in Madden v. Hodgson, 502 F.2d 278 (9th Cir. 1974). Of. Brennan v. Occupational Safety and Health Review Commission, 492 F.2d 1027 (2d Cir. 1974).

4 . 29 U.S.C. §§ 658(a), 659(a), 659(c) (1970).

5 . See the general review of the Act and its purposes in Brennan v. Occupational Safety and Health Review Commission, 487 F.2d 438 (8th Cir. 1973), and Brennan v. Occupational Safety and Health Review Commission, 491 F.2d 1340 (2d Cir. 1974).

6 . 29 U.S.C. § 654 (1970) :

“(a) Each employer—

(1) shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees ;

(2) shall comply with occupational safety and health standards promulgated under this chapter.”

7 . In the House debate, it was stated that this provision should be narrowly construed and was intended to be limited to any process which might be necessary to actually collect the penalty. 116 Cong.Rec. 42207 (1970). Contrast this procedure with the one provided by the Coal Mines Health and Safety Act, 30 U.S.C. § 819(a)(3) (1969), where findings of fact are required before a penalty is assessed and where an employer is entitled to a limited de novo hearing in the district court. See also 2 Recommendations and Reports of the Administrative Conference of the United States 67, 896 (1970-72), Appendix to the report of Professor Harvey J. Goldschmid compiling the statutes which provide for the use of civil penalties by federal agencies.

8 . Cf. United States v. U. S. Coin, and Currency, 401 U.S. 715, 718, 91 S.Ct. 1041, 28 L.Ed .2d 434 (1971), where the Court observed there that “From the relevant constitutional standpoint there is no difference between a man who ‘forfeits’ $8,674 because he has used the money in illegal gambling activities and a man who pays a ‘criminal fine’ of $8,674, as a result of the same course of conduct. In both instances, money liability is predicated upon a finding of the owner’s wrongful conduct; in both eases, the Fifth Amendment applies with equal force . ” In Astol Galero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 94 S.Ct. 2080, 40 L.Ed.2d 452 (1974), however, a Puerto Rioan forfeiture statute, which sufficiently furthered punitive and deterrent purposes, was upheld against a constitutional challenge.

9 . In United States v. J. B. Williams, Inc., 498 F.2d 414 (2d Cir. 1974), Judge Friendly said, “[w]hile Congress could not permissibly undermine constitutional protections simply by appending the ‘civil’ label to traditionally criminal provisions, the statute here at issue is plainly not of that class.” 498 F.2d at 421. That case involved the Federal Trade Commission Act, 15 U.S.C. § 41 et seq. under which defendants were assessed civil penalties of $500,000.00.

10 . This objection was forcefully expressed by a number of witnesses and statements during the hearings of the House Select Subcommittee on Labor, Occupational Safety and Health Act of 1970 (Oversight and Proposed Amendments) (92nd Cong. 2nd Sess., 1973).

11 . The dissent focuses on another disturbing element of this case — the denial of a jury trial under the Seventh Amendment. The majority, too, has serious misgivings as to the wisdom of limiting de novo review but does not agree with the dissent’s conclusion of unconstitutionality. We do not think that the differences between in rem and in personam actions are sufficient to distinguish the thrust of such precedents as Ocemic Steam Navigation Co. v. Stranahan, 214 U.S. 320, 29 S.Ct. 671, 53 L.Ed. 1013 (1909). In that case the Court refused to accept the proposition that Congress could not authorize the imposition of a penalty and commit its collection to an administrative office without the necessity of resorting to the judicial power. This view was tempered somewhat by Lloyd Sabaudo Societa v. Elting, 287 U.S. 329, 53 S.Ct. 167, 77 L.Ed. 341 (1932), which interpreted the statute to require a fair hearing and determination by the administrative officer upon facts produced in evidence. See also Gellhorn, Administrative Prescription and Imposition of Penalties, Wash.U.L.Q. 265 (1970) ; James, Right to a Jury Trial in Civil Actions, 72 Yale L..T. 655 (1963).

However, we do share Judge Gibbons’ reservations about the extremely limited scope of judicial review and the absence of opportunity to a de novo trial on the merits. AVliile the prospect of burdening the court with large numbers of appeals is a matter of concern from the standpoint of efficient judicial administration, we think experience demonstrates rather conclusively that in cases of this nature de novo review is seldom requested. It is the availability of the remedy, not its infrequent utilization, which is important to the cause of justice. The mere existence of a local fire department is a source of satisfaction to a citizen, even though he would hope that he would never be forced to seek its assistance.

We perceive no overriding consideration which favors the congressional policy of recent years to insulate administrative adjudication from the open and searching examination that full judicial review provides. The necessity for an administrative agency on occasion to submit its determination to the scrutiny of a jury of citizens would be a healthful and disciplining experience.

The statutory court in Lance Roofing Co. v. Hodgson, 343 F.Supp. 685 (N.D.Ga.), aff’d 409 U.S. 1070, 93 S.Ct. 679, 34 L. Ed.2d 659 (1972), also expressed concern about judicial review, particularly as to penalties which may be assessed for failure to abate alleged continuing violations.

12 . Rut see Hay, OSHA Penalties: Some Constitutional Considerations, 10 Idaho L. Rev. 223 (1974), where a Mendoza-Martinez analysis was performed. We note also the comments of Senator Dominick on civil penalties : “ . . . We did it this way because I think most of us know how difficult it is to get an enforceable criminal penalty in these type of cases. Over and over again, the burden of proof under a criminal-type allegation is so strong that you simply cannot get there, so you might as well have a civil penalty instead of the criminal penalty and get the employer by the pocketbook if you cannot get him anywhere else.” 116 Oong.Ree. 37338 (1970).

13 . 29 U.S.C. § 659 (1970).

14 . 29 U.S.O. § 666(i) (1970). But see Madden v. Hodgson, supra.

15 . The statement of Chief Judge Bazelon in Wellford v. Ruckelshaus, 142 U.S.App.D.C. 88, 439 F.2d 598, 603 (1971), is apt. In remanding for reconsideration, he said, “this course is especially appropriate in view of the fact that we are venturing into a new and uncharted area of the law. A new public sensitivity to issues of environmental protection has imposed new responsibilities on the courts, the legislature, and the administrative agencies. A new Environmental Protection Agency has been established, and its Administrator has the critical task of developing standards for administrative action throughout this area . . . ”

16 . The examiner found that the bottom of the trench was at elevation 1054. Test boring report No. 107 shows shale beginning at elevation 1053.5 or 6 inches below the bottom of the trench, and the hearing officer concluded that the bottom of the trench was 6 inches above the level of the shale seam. However, he failed to note that the test boring was some 30 feet from the scene of the fatality. Another test boring, No. 105, approximately 45 feet from the accident scene showed the shale at elevation 1058.3, indicating that the level was rising from the point at test boring No. 107 to where the accident occurred. Furthermore, the soil expert, whose testimony was not contradicted, pointed out that the reports indicated that the rock levels were higher than the hearing officer found them to be. We make this point not to reverse the examiner’s findings of fact but to point out that the difference in interpretation of the technical data weakens any inference that conscious wrongdoing was involved.

17 . 29 U.S.C. § 666(J).

18 . 29 C.F.B. § 2200.73(a) (1973).