Sec of Labor v. D.M. Sabia Co. ( 1996 )

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
7-29-1996
Sec of Labor v. D.M. Sabia Co.
Precedential or Non-Precedential:
Docket 95-3697
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
----------
No. 95-3697
----------
ROBERT B. REICH, SECRETARY OF LABOR,
UNITED STATES DEPARTMENT OF LABOR,
Petitioner
v.
D.M. SABIA COMPANY and OCCUPATIONAL
SAFETY AND HEALTH REVIEW COMMISSION,
Respondents
----------
On Petition for Review from the
Occupational Safety & Health Review Commission
(District: 93-3274)
----------
Argued Monday, June 24, 1996
BEFORE: ALITO, McKEE
and GARTH, Circuit Judges
----------
(Opinion filed July 29, 1996)
J. Davitt McAteer
Acting Solicitor of Labor
Joseph M. Woodward
Associate Solicitor for
Occupational Safety and Health
Ann Rosenthal
Counsel for Appellate Litigation
Terri P. Deleon (Argued)
U.S. Department of Labor
Room S-4004
200 Constitutional Ave., N.W.
Washington, D.C. 20210
Attorneys for Petitioner
Thomas J. McGoldrick
Robert T. Carlton, Jr. (Argued)
McAleese, McGoldrick & Susanin
455 South Gulph Road
Suite 240 - Executive Terrace
King of Prussia, PA 19406
Attorneys for Respondents
----------
OPINION OF THE COURT
----------
GARTH, Circuit Judge:
The Secretary of Labor's petition for review of the
decision of the Occupational Safety and Health Review Commission
("Commission") presents the question of whether respondent D.M.
Sabia Company ("Sabia") committed a "repeated" violation of a
safety standard within the meaning of 29 U.S.C. 666(a).
Applying the definition of "repeated" announced in Bethlehem
Steel Corp. v. OSHRC, 540 F.2d 157 (3d Cir. 1976), the Commission
concluded that Sabia had not committed a "repeated" violation.
The Secretary contends that we are neither bound by
Bethlehem nor bound by that court's 1976 definition of the term
"repeated" as that term then appeared in the text of 29 U.S.C.
666(a).
Sabia, on the other hand, argues that Bethlehemcontrols the
decision in this case and cannot be overruled by us
as a subsequent panel of this court.
In Bethlehem, we held that the Secretary, in order to
establish a "repeated" violation, under the Occupational Safety
and Health Act of 1970 ("Act"), 29 U.S.C. 651 et seq., must
prove that the employer had violated an Occupational Safety and
Health Administration (OSHA) standard on at least two previous
occasions; and that the employer had "flaunted" the requirements
of the Act. Id. at 162. In 1990, however, 29 U.S.C. 666(a)
was amended. In light of that amendment, the rationale and logic
of Bethlehem, while binding until the 1990 amendment, thereafter
did not retain the requisite precedential authority that would
preclude us from taking a fresh look at the now-amended section
666(a).
Our fresh look has resulted in a new definition: we
now deem an OSHA violation to be "repeated" "if, at the time of
the alleged repeated violation, there was a Commission final
order against the same employer for a substantially similar
violation." Secretary of Labor v. Potlatch Corp., 7 O.S.H. Cas.
(BNA) 1061, 1063 (Rev. Comm'n 1979). Applying this
interpretation, we conclude that Sabia committed a "repeated"
violation. Accordingly, we will reverse.
I.
The Commission had jurisdiction under 29 U.S.C.
659(c). We have appellate jurisdiction over the Commission's
final order under 29 U.S.C. 660.
The Commission's findings of fact must be upheld if
supported by substantial evidence in the record as a whole. 29
U.S.C. 660(a); D. Harris Masonry Contracting, Inc. v. Dole, 876
F.2d 343, 344 (3d Cir. 1989). Legal conclusions may be set aside
if they are "arbitrary, capricious, an abuse of discretion or
otherwise not in accordance with law." 5 U.S.C. 706(2)(A);
Atlantic & Gulf Stevedores v. OSHRC, 534 F.2d 541, 547 (3d Cir.
1976). In addition, we must defer to an agency's reasonable
interpretation of an ambiguous administrative statute. Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837, 843-46 (1984)
II.
Sabia, a Pennsylvania corporation, is a masonry
contractor which employs approximately 152 employees. On October
26, 1993, Mark Stelmack, an OSHA compliance officer, observed
Sabia employees setting block from two "non-stop" scaffold towers
located along the north wall of a construction site at 315 North
York Road, Willow Grove, Pennsylvania. The scaffold platforms
were sixteen to twenty feet above the ground. No guardrails or
toeboards were provided on the ends of the scaffold towers or on
the inside of the eastern tower where it extended beyond the end
of the wall. Hence, Sabia employees working on the scaffold
towers were exposed to the danger of falling off the scaffolds,
which could result in serious injuries or death.
On November 26, 1993, based on Stelmack's inspection,
OSHA issued two citations, only one of which is relevant to this
appeal. The relevant citation alleged a "repeat" violation of
29 C.F.R. 1926.451(a)(4) for failure to install standard
guardrails and toeboards on all open sides and ends of platforms
above the ground. Sabia had been cited on three previous
occasions for the same or similar violations, each of which
resulted in a final order: July 22, 1974; January 23, 1985; and
May 16, 1991. Jt. App. 20 (Stipulation of Facts).
Relying on a stipulated record and on Potlatch, the
ALJ held that Sabia had "repeatedly" violated section
1926.451(a)(4) "because 'at the time of the alleged repeated
violation, there was a Commission final order against the same
employer for a substantially similar violation . . . .'" Jt.
App. 14 (quoting Potlatch, 7 O.S.H. Cas. at 1063). Accordingly,
the ALJ assessed a $4,000 fine.
The ALJ acknowledged that the Commission's definition
of "repeated," as articulated in Potlatch, differed from the
Third Circuit's definition, as enunciated in Bethlehem Steel
Corp. v. OSHRC, 540 F.2d 157 (3d Cir. 1976). The ALJ
nevertheless applied the Potlatch definition rather than
Bethlehem's definition, based upon the ALJ's reading of Jersey
Steel Erectors v. Secretary of Labor, 16 O.S.H. Cas. (BNA) 1162(Rev. Comm'n 1993), aff'd, 19 F.3d 643 (3d Cir. 1994).
The ALJ interpreted the Commission's decision in Jersey
Steel as requiring application of the Potlatch definition even in
cases arising within the jurisdiction of the Third Circuit. The
Commission, however, rejected the ALJ's interpretation of Jersey
Steel. The Commission explained that in Jersey Steel, it had
found that the employer's violations would be considered "re-
peated" under either definition. In so holding, the Commission
recognized that Bethlehem's definition differed from the
Secretary's definition, as articulated in Potlatch. Hence, in a
decision dated October 30, 1995, the Commission reversed the
ALJ's order.
The Commission first noted its disagreement with our
analysis in Bethlehem, but then indicated that it felt compelled
to apply the Bethlehem definition of "repeatedly" in cases
arising within the Third Circuit. Applying the Bethlehem test,
the Commission concluded that the Secretary had failed to prove
that Sabia's violation was "repeated." Specifically, the
Commission found that while Sabia's four violations of the same
regulation over a period of years met the first prong of the
Bethlehem test (i.e., that the employer had committed more than
two violations), the Secretary had not established the second
prong of Bethlehem (i.e., that the employer had "flaunted" the
Act). Finding that the challenged violation was "serious," the
Commission assessed a $1,000 penalty.
The Secretary of Labor filed a timely petition for
review of the final order of the Commission.
III.
The central, and indeed the only, issue on this appeal
is whether Sabia's violation of 29 C.F.R. 1926.451(d)
constituted a "repeated" violation within the meaning of 29
U.S.C. 666(a). Applying the Potlatch standard, the Secretary
contends that "[a] violation is repeated under section 17(a) of
the Act if, at the time of the alleged repeated violation, there
was a Commission final order against the same employer for a
substantially similar violation." 7 O.S.H. Cas. at 1063.
As stipulated by the parties, Sabia had been cited for
the same or similar violation of section 1926.451(a)(4) on three
previous occasions, and "each citation went to a final order."
Jt. App. 20. Hence, the stipulated facts, under the Secretary's
theory, establish a "repeated" violation under the Potlatchstandard.
As noted earlier in this opinion, the Commission had
held that the Potlatch standard could not be applied in this
circuit as it conflicted with the standard articulated in
Bethlehem. In Bethlehem, which was the first court of appeals
decision to construe the term "repeatedly" as it appeared in the
unamended 29 U.S.C. 666(a), we held that a violation is
"repeated" if (1) the employer had violated the same standard on
at least two previous occasions; and (2) the employer "flaunted"
the requirements of the Act. Bethlehem 540 F.2d at 162. In
determining whether an employer had "flaunted" the requirements
of the Act, the Bethlehem court considered the following factors:
the number, proximity in time, nature and
extent of violations, their factual and legal
relatedness, the degree of care of the em-
ployer in his efforts to prevent violations
of the type involved, and the nature of the
duties, standards, or regulations violated.
Id. at 162. The Commission found that the stipulated facts in
the present case were insufficient to establish that Sabia had
"flaunted" the requirements of the Act.
The Secretary asserts, however, that Bethlehem has been
superseded, in light of the 1990 amendment to 29 U.S.C.
666(a). Sabia, on the other hand, argues that Bethlehemcontinues to be
"good law" and will continue to be binding
precedent until overruled by this court en banc.
We agree with the Secretary that Bethlehem does not
control the disposition of this case. Although a panel of this
court is bound by, and lacks authority to overrule, a published
decision of a prior panel, see supra note 2, a panel may reevalu-
ate a precedent in light of intervening authority and amendments
to statutes or regulations. See United States v. Joshua, 976
F.2d 844, 853 (3d Cir. 1992) (holding that a panel is "free to
consider the [Sentencing] Commission's [newly adopted
interpretive] commentary and, based thereon, reach a decision
contrary to the holdings of [prior precedent]"); United States v.
Bass, 54 F.3d 125, 131 (3d Cir. 1995) (explaining that "Joshua,
under certain circumstances, permits courts in this circuit to
consider subsequent amendments to official guidelines commentary
when interpreting prior guidelines, even if the new commentary
conflicts with a panel's decision rendered prior to the amend-
ment").
Our sister circuits abide by that self-same principle.
See, e.g., Williams v. Ashland Eng'g Co., 45 F.3d 588, 592 (1st
Cir.) ("An existing panel decision may be undermined by
controlling authority, subsequently announced, such as an opinion
of the Supreme Court, an en banc opinion of the circuit court, or
a statutory overruling."), cert. denied, 116 S. Ct. 51 (1995);
Mesa Verde Constr. Co. v. Northern Cal. Dist. Council of
Laborers, 861 F.2d 1124, 1136 (9th Cir. 1988) (en banc) (holding
that "if a panel finds that a NLRB interpretation of the labor
laws is reasonable and consistent with those laws, the panel may
adopt that interpretation even if circuit precedent is to the
contrary"); Landreth v. Commissioner, 859 F.2d 643, 648 (9th Cir.
1988) (holding that a three-judge panel may reexamine circuit
precedent "where Congress has retroactively clarified the meaning
of the statute at issue"). Cf. also Patterson v. McLean Credit
Union, 491 U.S. 164, 173 (1989) (precedent may be overruled when
intervening development of law has "weakened" conceptual
underpinnings of prior decision).
In the present case, two intervening developments
radically altered the legal landscape which gave rise to the
Bethlehem court's interpretation of section 666(a).
A.
The first development that took place was the 1990
amendment to section 666(a), which for the first time
distinguished between the civil penalties for a "willful"
violation and those for a "repeated" violation. See Pub. L. 101-
508, 3101, 104 Stat. 1388-29 (Nov. 5, 1990). In 1976, when
Bethlehem was decided, section 666(a) imposed no floor as to
penalties and imposed the same $10,000 penalty ceiling for
"repeated" violations as for willful violations:
Any employer who willfully or repeatedly
violates the requirements of section 654 of
this title . . . may be assessed a civil
penalty of not more than $10,000 for each
violation.
29 U.S.C. 666(a) (1976).
According to the Bethlehem court, the fact that the
civil penalty limitations were the same for "repeated" and
"willful" violations demonstrated that Congress intended that the
term "repeated" be equated with the term "willful." The
Bethlehem court, in defining the term "repeated," focused almost
wholly on the penalty structure set forth in the then-section
666(a), which, as noted, did not distinguish between the two
types of violations. To dispel any thought that the term
"repeated" had a different meaning than the term "willful," the
Bethlehem court reasoned that the violative conduct must be
sufficiently flagrant to rise to the level of "willful" conduct.
In concluding that "the . . . conduct which [the term]
'repeatedly' encompasses must be similar to that which would
raise an inference of willfulness," Bethlehem, 540 F.2d at 162,
the court relied conclusively on the fact that section 666(a)
authorized identical civil penalties for "repeated" and "willful"
violations.
It was only with the 1990 amendment to section 666(a)
that the statutory landscape changed. That amendment, by
requiring a $5,000 minimum penalty for willful violations but not
for repeated violations, negated the central premise underlying
the Bethlehem decision. Regardless of the validity of Bethle-
hem's reasoning with respect to the pre-1990 section 666(a), that
statute, as amended, clearly shows that Congress, at least by and
after 1990, intended a substantive distinction between a willfulviolation
and a violation that is repeated but not willful.
Hence, under the amended statute, Bethlehem's interpretation of
section 666(a), which equates "repeated" with "willful," is no
longer justified.
B.
Secondly, subsequent Supreme Court precedent has also
undercut Bethlehem. Specifically, Chevron, U.S.A., Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837 (1984),
decided some eight years after Bethlehem, established that a
federal court must defer to a reasonable construction of a
statute by the administrative agency charged with administering
the statute if Congress has not directly spoken to the precise
question at issue. Id. at 843, 846 ("[A] court may not
substitute its own construction of a statutory provision for a
reasonable interpretation made by the administrator of an agency.
. . . If the agency's choice represents a reasonable
accommodation of conflicting policies that were committed to the
agency's care by the statute, [a court] should not disturb it
unless it appears from the statute . . . that the accommodation
is not one that Congress would have sanctioned."); see also,
e.g., Elizabeth Blackwell Health Ctr. for Women v. Knoll, 61 F.3d
170, 182 (3d Cir. 1995), cert. denied, 116 S. Ct. 816 (1996).
Recently, the Supreme Court reemphasized that courts
must defer to an agency's interpretation of statutes that the
agency is charged with administering, explaining why such a high
degree of deference is owed:
It is our practice to defer to the reasonable
judgments of agencies with regard to the
meaning of ambiguous terms in statutes they
are charged with administering. . . . We
accord deference to agencies . . . not be-
cause of a presumption they drafted the pro-
visions in question, or were present at the
hearings, or spoke to the principal sponsors;
but rather because of a presumption that
Congress, when it left ambiguity in a statute
meant for implementation by an agency, under-
stood that the ambiguity would be resolved,
first and foremost, by the agency, and de-
sired the agency (rather than the courts) to
possess whatever degree of discretion the
ambiguity allows. . . . [T]he whole point of
Chevron is to leave the discretion provided
by the ambiguities of a statute with the
implementing agency.
Smiley v. CitiBank (South Dakota), N.A., 116 S. Ct. 1730, 1733-34
(1996).
At the time that Bethlehem was decided, the court did
not have the benefit of the Supreme Court's pronouncements in
Chevron and Smiley. Moreover, at the time, it was unclear
whether deference was owed to the Secretary or the Commission
when the two administrative actors disagreed. See Budd Co. v.
OSHRC, 513 F.2d 201, 205 n.12 (3d Cir. 1975) ("[W]e need not
address the question whether the court should afford greater
respect to the Commission's interpretation or the Secretary's
when the two are unable to agree as to the proper construction of
a safety standard."); see also Bethlehem Steel Corp. v. OSHRC,
573 F.2d 157, 160 (3d Cir. 1978) ("Bethlehem II") ("Unlike Budd,
we do not have an authoritative agency interpretation to assist
us since the decisions of the Commission are themselves in
conflict and inconsistent with the Secretary's position. We
rely, therefore, on the plain wording of the standard . . . .").
Hence, the Bethlehem court had not deferred to the
Secretary's construction of section 666(a), opting instead to
exercise plenary review. See Bethlehem, 540 F.2d at 160 ("This
is a question of law, and our review is necessarily broad.").
Since then, of course, the Supreme Court has explicitly held that
the Secretary is the administrative actor to whom deference is
owed. See Martin v. OSHRC, 499 U.S. 144, 152 (1991) ("The power
to render authoritative interpretations of OSH Act regulations is
a 'necessary adjunct' of the Secretary's powers to promulgate and
to enforce national health and safety standards."). Under
Martin, a federal court should defer to the Secretary where there
is a disagreement between the Secretary and the Commission. By
employing a plenary standard of review and failing to defer to
the Secretary's interpretation of section 666(a), Bethlehemoffended the
Martin standard.
Finally, it is evident that the Secretary's
interpretation of the term "repeatedly" in the post-1990 section
666(a) represents not only a reasonable interpretation but one
that is plainly consistent with the language of the statute.
Enhanced liability for a second or subsequent violation of the
same or similar regulation or standard is appropriate because
once an employer has been found to have violated the Act, it is
reasonable to expect that extra precautions will be taken to
prevent a "repeated" violation.
IV.
Although Sabia insists that we are bound by Bethlehem,
our analysis, which is informed by a different statute and a new
standard of review, dictates otherwise. In our opinion, the
Bethlehem court correctly decided the issue before it. It did so
in light of the statutory text which it was called upon to
interpret and in light of the standard by which it reviewed the
statute before it. Since then, as we have earlier observed, the
statute and the standard of review have changed so that Bethlehemno longer
controls our disposition.
We therefore conclude that a violation is "repeated"
"if, at the time of the alleged repeated violation, there was a
Commission final order against the same employer for a substan-
tially similar violation." Potlatch, 7 O.S.H. Cas. at 1063.
Accordingly, the formula prescribed in Bethlehem for determining
when a repeated violation occurs is no longer operative. A
repeated violation requires no more than a second violation and
does not require proof of "flaunting." Since Sabia stipulated
that it had been cited for "the same or similar violation" of
section 1926.451(a)(4) on May 16, 1991, a little more than two
years before the present violation, and that the citation had
resulted in a final order of the Commission, we necessarily
conclude that Sabia's violation was "repeated" within the meaning
of section 666(a).
We therefore grant the Secretary's petition for review.
We will vacate the order of the Commission, and we will remand to
the Commission with the direction that the Commission reinstate
the November 25, 1994 order of the ALJ affirming the citation and
imposing a penalty of $4,000 as stipulated by the parties. Jt.
App. 15.