Chief Administrative Officer of the Occupational Safety and health Administration, Division of Industrial Relations of the Department of Business and Industry, State of Nevada v. Savage Services Corp ( 2019 )

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF NEVADA 8 * * * 9 CHIEF ADMINISTRATIVE OFFICER Case No. 3:19-cv-00147-LRH-WGC OF THE OCCUPATIONAL SAFETY 10 AND HEALTH ADMINISTRATION, ORDER DIVISION OF INDUSTRIAL RELATIONS 11 OF THE DEPARTMENT OF BUSINESS 12 AND INDUSTRY, STATE OF NEVADA, 13 Petitioner, 14 v. 15 SAVAGE SERVICES CORPORATION, 16 Respondent. 17 18 Petitioner (“NOSHA”) has appealed the ruling of the Nevada Occupational Safety and 19 Health Review Board (“Review Board”), which dismissed its administrative safety citation of 20 respondent Savage Services Corporation (“Savage”) for want of jurisdiction. In addition to its 21 appeal, NOSHA has also filed a motion to remand the action back to Nevada state court (ECF No. 22 18). For the reasons stated below, the Court denies NOSHA’s motion to remand and affirms the 23 decision of the Review Board. 24 I. Factual Background and Procedural History 25 This administrative appeal concerns whether employers must provide fall protection 26 equipment to their employees when they work atop railcars and other similar containers in 27 railyards. As part of its business offerings, Savage (a Utah corporation) provides services to railcar 1 railcars or the railyard. (Id.) In providing these services at the Elko railyard, Savage’s employees 2 sometimes need to be on top of railcars that are not adjacent to any buildings or structures. (Id.) 3 Savage claims that despite providing services in fifty locations nationwide, none of its employees 4 has ever fallen from atop a railcar. (Id. at 12). Savage also asserts that even though the Federal 5 Railroad Administration (“FRA”) conducts annual inspections of its worksites, it has never been 6 cited for inadequate fall protection. (Id.) 7 On November 27, 2017, NOSHA conducted an inspection of Savage’s worksite at the 8 Elko railyard, which it asserts was the product of an “anonymous referral” alleging that Savage’s 9 employees were working on top of railcars without fall protection. (ECF No. 19 at 7). NOSHA 10 subsequently issued a safety citation to Savage for that reason on January 18, 2018, pursuant to 11 the “General Duty Clause” codified in NRS 618.375. (Id. at 8). Nevada’s General Duty Clause, 12 which is similar to its federal counterpart (29 U.S.C. §654), requires employers to, inter alia, 13 provide employees with a safe working environment free from hazards that are likely to cause 14 death or serious physical harm. It also requires employers to use safety devices and other 15 safeguards to meet that goal. The citation required Savage to pay a fine and incorporate fall 16 protection equipment into its business services in Elko within a month. (ECF No. 25 at 12). 17 Savage contested the citation, resulting in a hearing before the Review Board on December 18 13, 2018. (ECF No. 19 at 8). During the hearing, Savage argued that NOSHA lacked jurisdiction 19 to issue it a citation for improper fall protection because the FRA preempts both federal and state 20 OSHA agencies from promulgating rules affecting railroad workers when they operate on top of 21 railcars. (ECF No. 1-2 at 3). The Review Board ultimately agreed, ruling on January 29, 2019, that 22 FRA preemption prevented it from exercising jurisdiction over NOSHA’s citation of Savage. (Id. 23 at 5–6). NOSHA filed a motion for reconsideration on February 11, 2019, arguing that newly 24 discovered evidence demonstrated that NOSHA and the FRA have concurrent jurisdiction over 25 the issue of fall protection equipment for railroad workers. (ECF No. 25 at 15). NOSHA pointed 26 to search results from an online database that allegedly showed federal OSHA citations concerning 27 fall protection equipment on railcars and an email from Scott Woolstenhume, an FRA employee 1 jurisdiction with NOSHA. (Id. at 15–16). Before the Review Board could conduct a hearing, 2 NOSHA filed a petition for judicial review of the Board’s original January 29, 2019 decision in 3 Nevada state court. Because NOSHA’s petition for judicial review stripped the Review Board of 4 jurisdiction to rule on the motion for reconsideration, the most it could do was certify to the state 5 court how it would have ruled on the motion. (ECF No. 1-4 at 5). 6 Savage removed the case from state court to this Court on March 14, 2019. (ECF No. 1). 7 On March 27, 2019, the Review Board certified to the reviewing court that it would have denied 8 NOSHA’s motion to reconsider. (ECF No. 19 at 9). It found that NOSHA failed to demonstrate 9 how its failure to present the “newly discovered” evidence was excused by an exercise of 10 reasonable diligence. (ECF No. 1-4 at 7–8). In particular, the Review Board found that even if 11 NOSHA had been able to demonstrate reasonable diligence, the new evidence it sought to 12 introduce was merely “unsworn observations of counsel.” (Id. at 7). Before the Court now is 13 NOSHA’s motion to remand (ECF No. 18) and judicial review of the Review Board’s decision. 14 II. Legal Standard 15 A. Motion to Remand 16 Under 28 U.S.C. §1441, “any civil action brought in a State court of which the district 17 courts of the United States have original jurisdiction, may be removed by the defendant or the 18 defendants, to the district court of the United States for the district and division embracing the 19 place where such action is pending.” 28 U.S.C. §1441(a). Removal of a case to district court may 20 be challenged by motion, and a federal court must remand a matter if there is a lack of jurisdiction. 21 28 U.S.C. §1441. Removal statutes are construed restrictively and in favor of remanding a case to 22 state court, and it is the burden of the defendant to show that removal is proper. Shamrock Oil & 23 Gas Corp. v. Sheets, 313 U.S. 100, 108-109 (1941); Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th 24 Cir. 1992). 25 B. Administrative Review 26 Nevada judicial review of state agency decisions is similar to review of federal agency 27 decision. Pursuant to NRS 233B.135, a court may review a Nevada agency’s final decision, but 1 Douglas County, 2018 WL 1611184, at *5 (D. Nev. Apr. 2, 2018). The reviewing court cannot 2 reweigh the evidence, but it may set aside an agency decision if the decision: (1) violates 3 constitutional provisions; (2) is clearly erroneous in view of reliable, probative, and substantial 4 evidence; (3) is affected by an error of law, or (4) is arbitrary, capricious, or an abuse of discretion. 5 NEV. REV. STAT. § 233B.135(2)–(3). “Substantial evidence” means “evidence which a reasonable 6 mind might accept as adequate to support a conclusion.” Id. at (4). Substantial evidence may be 7 shown inferentially if certain evidence is absent. Wright v. State, Dep’t of Motor Vehicles, 110 8 P.3d 1066, 1068 (Nev. 2005). A state agency’s ruling on a question of law is persuasive but not 9 entitled to deference. Sierra Pacific Industries v. Wilson, 440 P.3d 37, 40 (Nev. 2019). 10 III. Discussion 11 A. NOSHA’s Motion to Remand (ECF No. 18) 12 Before addressing the merits of NOSHA’s petition for judicial review, the Court must first 13 determine if NOSHA is correct in arguing that removal to federal court was improper. Savage 14 argues that pursuant to the Supreme Court’s decision in City of Chicago v. International College 15 of Surgeons, 522 U.S. 15 (1997), federal courts have jurisdiction to review state administrative 16 decisions when the decision presents a substantial question of federal law. (ECF No. 21 at 5). And 17 because the Review Board dismissed NOSHA’s citation with prejudice on the basis that the FRA 18 preempts state OSHAs from regulating some issues related to railroad worker safety, the Review 19 Board’s decision presents an important question of federal law. (Id.) NOSHA responds by arguing 20 that because neither the FRA nor Congress has prohibited the promulgation of regulations 21 addressing fall equipment for railroad workers on top of train cars, state OSHAs have concurrent 22 jurisdiction with the FRA to regulate that area. (ECF No. 22 at 9). NOSHA also asserts that 23 concurrent jurisdiction is demonstrated through the evidence that it presented but that the Review 24 Board failed to consider, such as the Woolstenhume email. 25 In City of Chicago, the respondents challenged a decision by a historical landmarks 26 commission to designate two buildings they hoped to renovate as historical landmarks, thereby 27 preventing any possible construction. 522 U.S. 156, 159–60 (1997). The commission denied the 1 review in Illinois state court. Id. at 160. Among other claims, the respondents pleaded violations 2 of the Due Process and Equal Protection clauses of the U.S. Constitution and requested judicial 3 review of the commission’s decision. Id. The City of Chicago eventually removed the case to 4 federal court. Id. at 161. The Supreme Court held that the removal was proper because even if state 5 law creates a party’s cause of action, the case may still arise under federal law if the “right to relief 6 under state law requires resolution of a substantial question of federal law.” Id. at 164. The 7 Supreme Court further expounded on this doctrine in Grable & Sons Metal Products, Inc. v. Darue 8 Engineering & Mfg., explaining that federal jurisdiction exists where: (1) the state claim 9 necessarily states a federal issue; (2) the issue is actually disputed and substantial, and (3) the 10 federal court can decide the issue without encroaching on the purview of the state court. 545 U.S. 11 308, 313–14 (2005). 12 This is precisely the case here. The Review Board based its order of dismissal with 13 prejudice on its belief that the FRA had exclusive jurisdiction over promulgating safety regulations 14 for workers operating on top of railcars. (ECF No. 1-2 at 5–6). Whether the FRA or any federal 15 agency has exclusive jurisdiction over a matter is a clear question of federal law. Gallo Cattle Co. 16 v. U.S. Dep’t. of Agriculture, 159 F.3d 1194, 1198 (9th Cir. 1998); Kashkool v. Chertoff, 553 17 F.Supp.2d 1131, 1135 (D. Ariz. 2008). To resolve NOSHA’s petition, the Court necessarily must 18 decide whether the FRA has exclusive jurisdiction over the type of safety regulations in dispute 19 here. The issue is also contested, as NOSHA has maintained throughout the entire administrative 20 and judicial process that it, at worst, has concurrent jurisdiction with the FRA to regulate railcar 21 safety. Finally, a decision by this Court would not encroach the authority of the Nevada state courts 22 because it is the task of the federal courts, not state courts, to determine the scope of a federal 23 agency’s rulemaking authority. Tomasi v. Twp. of Long Beach, 364 F.Supp.3d 376, 388 (D.N.J. 24 2019) (citing Fed. Nat'l Mortg. Ass'n v. LeCrone, 868 F.2d 190, 193 (6th Cir. 1989)). 25 NOSHA’s arguments to the contrary are unavailing. The fact that the FRA has not 26 promulgated any rules requiring safety equipment for workers operating on top of railcars does 27 not change whether it has the exclusive authority to do so. (ECF No. 22 at 9). Nor does it change 1 the fact that the issue of whether it does have that exclusive authority is a substantial federal 2 question that vests this Court with jurisdiction. 3 As Savage asserts, the procedural history of this case is quite similar to Freeman v. 4 Burlington Broadcasters, Inc., 204 F.3d 311 (2d Cir. 2000). There, following numerous complaints 5 from disgruntled residents, the local zoning authority issued a notice of violation to the defendants 6 for operating telecommunications equipment that interfered with the residents’ radio equipment. 7 Id. at 315. The local zoning board held an administrative hearing and ruled that although the 8 evidence tended to show that the defendants had interfered with radio frequencies, the board could 9 not penalize them because the federal government had exclusive jurisdiction to regulate the 10 particular radio frequencies at issue. Id. The residents appealed the decision to state court under a 11 Vermont statute permitting judicial review of administrative environmental decisions, and the 12 defendants subsequently removed the case to federal court. Id. The Second Circuit held that the 13 defendants’ removal to federal court was proper because when the plaintiffs sought judicial review 14 in state court, their cause of action centered on whether federal law preempted local law. Id. at 15 318. The Second Circuit concluded by stating that “we think the better approach is to permit 16 removal when a litigant's initial entrance to a state court seeks a decision that an administrative 17 ruling upholding a federal preemption defense is erroneous.” Id. 18 The Court agrees with the Second Circuit and sees no meaningful difference between the 19 facts of Freeman and the case at bar. Accordingly, the Court finds that there is federal question 20 jurisdiction over the question whether the FRA preempts state OSHA enforcement of safety 21 regulations for workers operating on top of railcars. NOSHA’s motion to remand will be denied. 22 B. Administrative Appeal 23 As the party contesting the Review Board’s decision, it is NOSHA’s burden to demonstrate 24 that the state agency erred in some form when it found that it did not have jurisdiction to hear the 25 safety citation. NEV. REV. STAT. §233B.135. In its petition, NOSHA does not state the applicable 26 standard of review nor specifically explain how the Review Board erred pursuant to §233B.135. 27 Instead, it once again argues that because Congress has not either expressly or impliedly preempted 1 state OSHA authority to regulate employees working on top of railcars, NOSHA was allowed to 2 cite Savage for a lack of fall protection equipment. (ECF No. 19 at 16). 3 It is well-established that state laws that conflict with federal law are “without effect.” 4 Altria Group, Inc. v. Good, 555 U.S. 70, 76 (2008) (quoting Maryland v. Louisiana, 451 U.S. 725, 5 746 (1981)). Congress can indicate its intent to preempt state laws through a statute’s express 6 language (express preemption) or through its structure and purpose (implied preemption). Id. If a 7 federal law contains an express preemption clause, there is still a question of the what the 8 “substance and scope” of Congress’ displacement of state law is. Id. When preemption is implied, 9 courts must look to see whether the scope of the statute indicates that Congress intended federal 10 law to “occupy the legislative field” or if there is an actual conflict between state and federal law. 11 Id. at 76–77. Therefore, the Court must begin its analysis by examining the operative legislation 12 which, in this case, is the Federal Railroad Safety Act (“FRSA”). 13 The FRSA provides that a “[s]tate may adopt or continue in force a law, regulation, or 14 order related to railroad safety or security until the Secretary of Transportation (with respect to 15 railroad safety matters). . .prescribes a regulation or issues an order covering the subject matter of 16 the State requirement.” 49 U.S.C. 20106(a)(2). Even when the Secretary of Transportation has 17 prescribed such a regulation, a state still may enforce a more stringent law or regulation when it: 18 (1) is necessary to eliminate or reduce an essentially local safety or security hazard; (2) is not 19 incompatible with a law, regulation, or order of the U.S. government, and (3) it does not 20 unreasonably burden interstate commerce. Id. Savage points to an FRA policy statement issued in 21 1978 as evidence that the federal government has preempted safety regulations in the working area 22 at issue here. (ECF No. 25 at 20). In relevant part, that policy statement related that the FRA and 23 OSHA share regulatory authority over railroad working conditions with the FRA assuming 24 primary authority in areas involving its special competence over “the safety of railroad 25 operations.” 43 Fed. Reg. 10583, 10585 (Mar. 14, 1978). “Safety of railroad operations” was 26 defined as “conditions and procedures necessary to achieve the safe movement of equipment over 27 the rails.” Id. This also included “working surfaces,” described as “ladders, stairways, platforms, 1 “working surfaces,” those regulations are “generally” only applicable in “railroad offices, shops, 2 and other fixed workplaces.” Id. The OSHA rules do not apply to trains and other rolling 3 equipment, repair facilities, ladders, platforms, other surfaces on signal masts, cantenary systems, 4 railroad bridges, turntables, and walkways besides the tracks in yards or along the right-of-way. 5 Id. This is because they are “areas which are so much a part of the operating environment that they 6 must be regulated by the agency with primary responsibility for railroad safety.” Id. 7 Both parties also discuss a 1996 memorandum issued by John B. Miles, a director working 8 for OSHA.1 The memo addressed OSHA’s position on fall hazards from the tops of “rolling 9 stock,” such as train cars and hopper cars, following concern from the National Grain and Food 10 Association that OSHA might issue citations to its inspectors for not utilizing proper fall protection 11 equipment when working on top of railcars. The memo clarified that the “current fall protection 12 standard in general industry…does not specifically address fall hazards from the tops of rolling 13 stock,” and that the new proposed standard “explicitly excludes rolling stock from coverage.” The 14 memo also noted that it would be inappropriate to cite exposure to fall hazards using the personal 15 protection equipment standard “unless employees are working atop stock that is positioned inside 16 of or contiguous to a building or other structure where the installation of fall protection is feasible.” 17 In essence, the memo stated that OSHA would not be citing employers from not providing its 18 employees with fall protection equipment when working on top of a free-standing railcar. 19 Based on the above, the Court finds that federal law expressly preempts both state and 20 federal OSHA regulation of fall protection equipment for railroad workers operating on top of 21 rolling stock. The 1978 policy statement is clear in explaining that OSHA regulations do not apply 22 to working surfaces atop trains and other free-standing rolling equipment, which is precisely the 23 working area where NOSHA cited Savage for having what it deemed to be inadequate safety 24 measures. 43 Fed. Reg. 10583, 10587 (Mar. 14, 1978). NOSHA never addresses the policy 25 statement in its briefing, instead pointing to the Woolstenhulme email as evidence that NOSHA 26 had concurrent jurisdiction with FRA to regulate equipment to be used on top of train cars. (ECF 27 1 Memorandum from John B. Miles, Directorate of Enforcement Programs for the Occupational Safety and 1 No. 19 at 21). Even if this email was properly presented before the Review Board as evidence of 2 concurrent jurisdiction (it was not), NOSHA has not demonstrated how an email from an FRA 3 employee supersedes official statements issued by the FRA itself. 4 Several courts have interpreted the 1978 policy statement as it relates to FRA preemption 5 of OSHA regulations. In Velasquez v. Southern Pacific Transp. Co., the plaintiff was injured while 6 working on a railroad bridge in a railroad yard. 734 F.2d 216, 217 (5th Cir. 1984). The district 7 court allowed the plaintiff to argue at trial that the defendant shipping company negligently failed 8 to provide safeguards in accordance with OSHA regulations, but the Fifth Circuit found that this 9 was reversible error. Id. at 218. It held that pursuant to 1978 policy statement explicitly prohibiting 10 OSHA regulations from applying to railroad bridges, those regulations simply did not apply to the 11 plaintiff’s situation and could not be relied on to demonstrate negligence at trial. Id. 12 Similarly, in Cearley v. General American Transp. Corp., a railroad worker unloading 13 chemicals from on top of a railroad tank car died after falling from the tank car. 186 F.3d 887, 889 14 (8th Cir. 1999). In the ensuing lawsuit, the decedent’s family argued that the railings on the top of 15 the tank car were not high enough to put the decedent’s employer in compliance with OSHA 16 regulations. Id. After examining various federal regulations and the 1978 policy statement, the 17 Eighth Circuit found that the FRA had preempted OSHA regulation of fixed and stationary 18 platforms on top of tank cars. Id. at 893. 19 NOSHA’s attempts to distinguish these two analogous cases are unpersuasive; it argues 20 that because the FRA has promulgated formal regulations concerning fall protection equipment, 21 there can be no preemption. (ECF No. 26 at 11). Generally, deliberate agency inaction on an issue, 22 such as a decision to not regulate, will not alone preempt state law. Sprietsma v. Mercury Marine, 23 537 U.S. 51, 65 (2002). But the Ninth Circuit has held that the FRA’s rejection of a particular 24 safety regulation may preempt state regulation on the same subject matter. Burlington Northern R. 25 Co. v. State of Mont., 880 F.2d 1104, 1107 (9th Cir. 1989). This holding accurately reflects 26 Supreme Court case law. See Ray v. Atlantic Richfield Co., 435 U.S. 151, 178 (1978) (holding that 27 where federal officials affirmatively determine that regulation is not appropriate, States “are not 1 1978 policy statement, the FRA is clearly aware of the dangers imposed by falls from railcars. But 2 whereas the FRA has implemented safety regulations concerning potential falls from other raised 3 platforms in the railyard, it has not imposed similar regulations for falls from railcars. See 49 4 C.F.R. §§214.103, 214.105 (requiring fall protection equipment for railroad bridge workers when 5 working twelve or more feet above the ground). The FRA has also implemented regulations, inter 6 alia, concerning ladders and stairs on on-track maintenance machines (49 C.F.R. §214.519) and 7 ladders and railings on railcars (49 C.F.R. §231.2). A conscious decision by the FRA not to impose 8 a requirement that railroad workers atop railcars use fall protection equipment is not an invitation 9 to NOSHA to impose such a requirement. 10 Also working against NOSHA’s preemption argument is the fact that OSHA has repeatedly 11 declined to adopt fall-protection regulations for railroad workers operating on top of railcars. As 12 cited by Savage, in 2010, OSHA published a proposed rule concerning fall-protection equipment 13 and walking-working surfaces. 75 Fed. Reg. 28862 (May 24, 2010). There, OSHA declined to 14 adopt any regulation requiring fall protection equipment, instead requesting that interested parties 15 provide it with more information before it considered a formal rule. Id. at 28867. Similarly, in a 16 2016 final rule concerning the same subject, OSHA summarized numerous comments it had 17 received from said interested parties, many of whom supported OSHA regulation. 81 Fed. Reg. 18 82494, 82506–09 (Nov. 18, 2016). Even so, OSHA acknowledged that it only had authority to 19 regulate matters that are not classified as “railroad operations,” giving the example that it can 20 regulate the loading and unloading of rolling stock by non-railroad employees off railroad 21 property. Id. at 82509. OSHA once again declined to adopt fall protection regulations for workers 22 operating atop rolling stock. The fact that NOSHA’s federal counterpart has consistently refused 23 to adopt such regulations is another strong indication that neither OSHA nor similar state agencies 24 have the authority to do so. Accordingly, the Review Board was correct in finding that it did not 25 have jurisdiction to hear NOSHA’s citation of Savage. The Court therefore affirms its decision to 26 dismiss the case with prejudice. 27 /// 1 IV. Conclusion 2 IT IS THEREFORE ORDERED that NOSHA’s petition to remand the case to state court 3 || CECF NO. 18) is DENIED. 4 IT IS FURTHER ORDERED that the decision of the Nevada Occupational Safety and 5 || Health Review Board is AFFIRMED. The Clerk of Court shall enter judgment accordingly. 6 IT IS SO ORDERED. 7 DATED this 2nd day of December, 2019. - 9 LA R. HICKS 10 UNITED STATES DISTRICT JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28