Comtran Group, Inc. v. U.S. Department of Labor

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-10275
________________________
OSHC-0:11-0646
COMTRAN GROUP, INC.,
Petitioner,
versus
U.S. DEPARTMENT OF LABOR,
Respondent.
________________________
Petition for Review of a Decision of the
Occupational Safety and Health Review Commission
________________________
(July 24, 2013)
Before MARTIN and ANDERSON, Circuit Judges, and VINSON, * District Judge.
VINSON, District Judge:
ComTran Group, Inc. (“ComTran”), petitions for review of a final decision
*
Honorable C. Roger Vinson, United States District Judge for the Northern District of
Florida, sitting by designation.
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of the Occupational Safety and Health Review Commission (“Commission”). The
Commission held that ComTran violated standards under the Occupational Safety
and Health Act (“OSHA” or the “Act”), 29 U.S.C. §§ 651 et seq., when one of its
supervisors was caught digging in a six-feet deep trench with an unprotected five-
feet high “spoil pile” at the edge of the excavation. This appeal presents an issue of
first impression in our circuit: Is it appropriate to impute a supervisor’s knowledge
of his own violative conduct to his employer under the Act, thereby relieving the
Secretary of Labor (“Secretary”) of her burden to prove the “knowledge” element
of her prima facie case? Upon close review of the record, briefs, and case law from
other circuits, and with the benefit of oral argument, we answer that question in the
negative. Therefore, we grant the petition, reverse the Commission’s decision, and
remand this case for further consideration.
I. BACKGROUND
Before turning to the facts and administrative history of this case, it will be
useful to describe the statutory and regulatory scheme that provides the backdrop
for this appeal.
A. The Statutory and Regulatory Scheme
Passed by Congress in 1970, OSHA sought to assure that “‘every working
man and woman in the Nation [had] safe and healthful working conditions.’” See
Reich v. Trinity Indus., Inc., 16 F.3d 1149, 1151 (11th Cir. 1994) (quoting 29
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U.S.C. § 651(b)). The Act “granted employees a new set of important rights and
[intended] that they play a vital role in achieving safe and healthful conditions at
the workplace.” Marshall v. Daniel Constr. Co., Inc., 563 F.2d 707, 711-12 (5th
Cir. 1977).1 It has been long-established that OSHA does not impose absolute (or
strict) liability on employers for harmful workplace conditions; instead, it focuses
liability where harm can, in fact, be prevented. See, e.g., Central of Ga. R.R. Co. v.
Occupational Safety & Health Review Comm’n, 576 F.2d 620, 623 (5th Cir. 1978)
(collecting cases); Brennan v. Occupational Safety & Health Review Comm’n, 502
F.2d 946, 951 (3d Cir. 1974); see also Brennan v. Occupational Safety & Health
Review Comm’n, 511 F.2d 1139, 1145 (9th Cir. 1975) (noting that there must be
“some nexus between the employer and the alleged violation”, otherwise
employers would be “strictly and absolutely liable for all violations” contrary to
what Congress intended). Thus, while courts have emphasized the importance of
proper instruction and adequate supervision in safety-related matters, “they have
consistently refused to require measures beyond those which are reasonable and
feasible.” See Horne Plumbing & Heating Co. v. Occupational Safety & Health
Review Comm’n, 528 F.2d 564, 569 (5th Cir. 1976) (discussing cases).
To implement its statutory purpose, Congress imposed dual obligations on
1
In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc), this Court
adopted as binding precedent all Fifth Circuit decisions that were rendered before October 1,
1981. Id. at 1209.
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employers. They must first comply with the “general duty” to free the workplace
of all recognized hazards. 29 U.S.C. § 654(a)(1). They also have a “special duty”
to comply with all mandatory health and safety standards. Id. at § 654(a)(2). With
respect to the latter, Congress provided for the promulgation and enforcement of
the mandatory standards through a regulatory scheme that divides responsibilities
between two federal agencies. See generally New York State Elec. & Gas Corp. v.
Secretary of Labor, 88 F.3d 98, 103-04 (2d Cir. 1996) (discussing the regulatory
scheme). The Secretary has rulemaking power and establishes the safety standards;
investigates the employers to ensure compliance; and issues citations and assesses
monetary penalties for violations. See id. at 103 (citing 29 U.S.C. §§ 655 and 657-
59). The Commission, meanwhile, has adjudicative power and serves as a “neutral
arbiter” between the Secretary and cited employers. Id. (quoting Cuyahoga Valley
Ry. Co. v. United Transp. Union, 474 U.S. 3, 7, 106 S. Ct. 286, 288 (1985)).
An employer contesting a citation is entitled to an evidentiary hearing before
an Administrative Law Judge (“ALJ”), at which the Secretary bears the burden of
proof. See 29 U.S.C. § 659(c); Atlas Roofing Co., Inc. v. Occupational Safety &
Health Review Comm’n, 430 U.S. 442, 446, 97 S. Ct. 1261, 1264 (1977). The ALJ
will make findings of fact and conclusions of law, and issue an order affirming,
modifying, or vacating the citation. See New York State Elec. & Gas Corp., 88
F.3d at 103 (citing 29 U.S.C. § 659(c)). The ALJ will consider the amount of the
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Secretary’s penalty de novo. See 29 U.S.C. § 666(j). The ALJ’s order becomes a
final decision of the Commission 30 days thereafter, unless the party affected or
aggrieved by the decision petitions the Commission for discretionary review, 29
C.F.R. § 2200.91, and a Commission member requests that the case be reviewed
by the full Commission. See 29 U.S.C. § 661(j).
Appeals from final decisions of the Commission are reviewed directly by the
Courts of Appeals. See 29 U.S.C. § 660(a). On review, the Commission’s findings
of fact must be upheld if they are “‘supported by substantial evidence on the record
considered as a whole[.]’” Fluor Daniel v. Occupational Safety & Health Review
Comm’n, 295 F.3d 1232, 1236 (11th Cir. 2002) (quoting 29 U.S.C. § 660(a)). The
conclusions of law, meanwhile, must be upheld as long as they are not “‘arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with [the] law.’”
See id. (quoting 5 U.S.C. § 706(2)(A)). The Commission and its ALJs are bound to
follow the law of the circuit to which the case would most likely be appealed. See,
e.g., Secretary of Labor v. Interstate Brands Corp., 20 O.S.H. Cas. (BNA) 1102, at
*2 n.7 (2003).
Under the law of our circuit, the Secretary will make out a prima facie case
for the violation of an OSHA standard by showing (1) that the regulation applied;
(2) that it was violated; (3) that an employee was exposed to the hazard that was
created; and importantly, 4) that the employer “knowingly disregarded” the Act’s
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requirements. See Reich, 16 F.3d at 1155 (citing Cleveland Consolidated, Inc. v.
Occupational Safety & Health Review Comm’n, 649 F.2d 1160, 1165 (5th Cir.
Unit B July 9, 1981)). As for the knowledge element (the one at issue in this case),
the Secretary can prove employer knowledge of the violation in one of two ways.
First, where the Secretary shows that a supervisor had either actual or constructive
knowledge of the violation, such knowledge is generally imputed to the employer.
See Georgia Elec. Co. v. Marshall, 595 F.2d 309, 321 (5th Cir. 1979); New York
State Elec. & Gas Corp., 88 F.3d at 105; see also Secretary of Labor v. Access
Equip. Sys., Inc., 18 O.S.H. Cas. (BNA) 1718, at *9 (1999).2 An example of actual
knowledge is where a supervisor directly sees a subordinate’s misconduct. See,
e.g., Secretary of Labor v. Kansas Power & Light Co., 5 O.S.H. Cas. (BNA) 1202,
at *3 (1977) (holding that because the supervisor directly saw the violative conduct
without stating any objection, “his knowledge and approval of the work methods
employed will be imputed to respondent”). An example of constructive knowledge
is where the supervisor may not have directly seen the subordinate’s misconduct,
but he was in close enough proximity that he should have. See, e.g., Secretary of
Labor v. Hamilton Fixture, 16 O.S.H. Cas. (BNA) 1073, at *17-19 (1993) (holding
2
We say that a supervisor’s knowledge is “generally imputed to the employer” because
that is the outcome in the ordinary case. The “ordinary case,” however, is where the supervisor
knew or should have known that subordinate employees were engaged in misconduct, and not, as
here, where the supervisor is the actual malfeasant who acts contrary to the law. See W.G. Yates
& Sons Constr. Co., Inc. v. Occupational Safety & Health Review Comm’n, 459 F.3d 604, 609
n.7 (5th Cir. 2006) (noting same). As will be seen, that important factual distinction is ultimately
what this case is all about.
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that constructive knowledge was shown where the supervisor, who had just walked
into the work area, was 10 feet away from the violative conduct). In the alternative,
the Secretary can show knowledge based upon the employer’s failure to implement
an adequate safety program, see New York State Elec. & Gas Corp., 88 F.3d at
105-06 (citations omitted), with the rationale being that --- in the absence of such a
program --- the misconduct was reasonably foreseeable.
If (and only if) the Secretary makes out her prima facie case with respect to
all four elements, the employer may then come forward and assert the affirmative
defense of unpreventable or unforeseeable employee misconduct. See New York
State Elec. & Gas Corp., 88 F.3d at 106-08 (discussing this defense and noting that
“[t]he Secretary must first make out a prima facie case before the affirmative
defense comes into play”). This defense requires the employer to show that it: (1)
created a work rule to prevent the violation at issue; (2) adequately communicated
that rule to its employees; (3) took all reasonable steps to discover noncompliance;
and (4) enforced the rule against employees when violations were discovered. See
id. at 106 (citations omitted).3
With the foregoing in mind, we will now turn to the facts and background of
3
The Secretary’s alternative method to show employer knowledge and the unforeseeable
employee misconduct affirmative defense “involve an identical issue: whether the employer had
an adequate safety policy.” New York State Elec. & Gas Corp. v. Secretary of Labor, 88 F.3d 98,
106 (2d Cir. 1996). This does not lessen the Secretary’s prima facie burden, however. See id. at
107 (stating “the fact that the employer might litigate a similar or even an identical issue as an
affirmative defense does not logically remove an element from the complainant’s case”).
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this particular case.
B. The Underlying Incident and Citations
ComTran is a communications utilities company located in Buford, Georgia.
It has approximately 50 employees and performs indoor and outdoor utilities work
that sometimes requires underground construction at a shallow depth, generally not
more than three to four feet. 4 Its work normally involves directional drilling
instead of digging. In 2010, Gwinnett County hired ComTran for a small, two-day
project that consisted of relocating some existing Department of Transportation
utilities that ran along a road in Lawrenceville, Georgia. It involved a simple “tie-
in” of the existing duct to a new duct and setting the new junction box. ComTran
assigned a two-man crew for the project: Walter Cobb, the supervisor (or foreman)
at the site, and Chris Jernigan, a helper who was “fairly new” at ComTran.
The crew broke ground on December 1, 2010. On the first day, Cobb used
an excavator to dig a trench that was approximately four feet deep. He placed the
“spoil pile” for the excavation at least two feet away from the edge of the trench,
and he erected a silt fence between the pile and the excavation. There does not
seem to be any dispute that this excavation was done properly and in compliance
with OSHA.
4
ComTran does not often (if ever) have to dig further than four feet because utility cables
--- in contrast to water and sewer lines, for example --- are not typically installed more than 36 to
48 inches underground.
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On the second morning of the job, ComTran’s project manager Sam Arno
stopped by to check on the progress. The crew had not yet started digging for the
day, and there were no problems with (or hazard in) the trench at that time, so he
left shortly thereafter to visit two other projects he was overseeing. Once Arno left,
Cobb got into the trench and began digging around to find the utilities conduit, but
he was unsuccessful. At some point, he took down the silt fence because he had to
“dig back” to find the utilities. As he continued to dig, he widened and deepened
the trench (to six feet) and the spoil came closer to the edge of the excavation.
Eventually, it got to the point that Cobb had a five-feet high spoil pile at the edge
of the excavation, which --- given its six feet depth --- created an eleven-feet high
wall of earth that was not sloped, benched, or otherwise properly supported. Cobb
was the only exposed employee in the trench. 5
While Cobb was still in the trench, an OSHA compliance officer drove by
and saw the spoil pile and only part of Cobb’s head showing out of the top of the
excavation. The officer called the local OSHA office, which then sent a different
compliance officer, Caliestro Spencer, to investigate. When he arrived at the site,
Spencer saw Cobb digging in the trench. He ordered Cobb out of the excavation
and proceeded to photograph the scene, take measurements, and interview Cobb
5
Jernigan was working at the road during this time and was apparently not involved in
the excavation.
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and Arno (who by that time had been called back to the site6). As a result of this
inspection, the Secretary charged ComTran with two violations (and assessed
penalties totaling $9,800.00) for Cobb’s failure to avoid a potential cave-in hazard
under 29 C.F.R. § 1926.651(j)(2) (excavated material must be kept at least two feet
from the edge of an excavation) and § 1926.652(a)(1) (requiring sloping, benching,
and adequate support systems to protect employees from possible cave-in hazards).
ComTran timely contested the violations, both of which qualified as “serious.” See
29 U.S.C. § 666(k) (defining a “serious violation” as one that carries “a substantial
probability that death or serious physical harm could result”).
C. The Administrative Law Hearing and Decision
On July 18, 2011, an administrative hearing was held before the ALJ. The
Secretary called one witness in support of her case: Compliance Officer Spencer.
He testified about what he saw when he arrived at the Lawrenceville jobsite and
about the substance of his interviews with the people at the scene. He testified that
when he asked Cobb why he had failed to properly protect the trench, Cobb replied
that he was just not paying attention to what he was doing.7
6
Arno testified at the administrative hearing that when he returned to the jobsite during
the investigation he was “taken aback” by how large the trench was. That size excavation was
very unusual, not consistent with his instructions, not planned for, and not “[priced] into the job.”
7
This account was confirmed by Cobb, when he later testified (during ComTran’s case)
that he did not realize the trench had gone deeper than four feet because: “I just kept on digging.
I had problems [finding the utilities] and was trying to get out of there, and really I didn’t pay no
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After the Secretary rested her case-in-chief, ComTran called five witnesses
to testify, including --- in addition to Cobb and Arno --- Greg Bostwick (President
of ComTran); Glen Sherwood (Vice President); and Phillip Clark (Vice President
of Premise Cabling). These witnesses testified about the general type of work that
ComTran performs and about the details of the Lawrenceville project. In addition,
they testified about ComTran’s safety program and the extent to which employees
have been disciplined for violating safety standards.
The ALJ subsequently affirmed both citations by written order. After noting
that it was undisputed that the Secretary had satisfied the first three elements of her
prima facie case --- i.e., the applicability of the regulations, failure to comply with
them, and employee exposure to the dangerous condition --- the ALJ went on to
discuss the fourth and final element: employer knowledge. The ALJ began this
portion of his analysis by holding that Cobb had knowledge of the violative
conduct because “he himself had dug the excavation and placed the spoil pile at its
edge.” Relying on Commission precedent, the ALJ further held that since Cobb
was a supervisor, his knowledge of his own malfeasances was imputable to
attention to it until OSHA come up and started asking me questions [about] how deep the hole is
and about my spoil pile.” He similarly testified on cross examination that “I didn’t realize how
deep I was until Spencer made me aware of the spoil pile.” In fact, however, Cobb knew earlier
that he was not following proper procedure. He acknowledged during the hearing --- in response
to direct questioning by the ALJ --- that he was “not supposed to ever infringe on the silt fence”,
let alone “tear it down.” Thus, while it may be true that Cobb got “lost in his work” while he was
actually digging in the trench, he knew from at least the moment that he took down the fence that
he was doing something he was not supposed to do.
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ComTran. See Secretary of Labor v. Dover Elevator Co., Inc., 16 O.S.H. Cas.
(BNA) 1281, at *7 (1993) (stating that “when a supervisory employee has actual or
constructive knowledge of the violative conditions, that knowledge is imputed to
the employer, and the Secretary satisfies [her] burden of proof”). During his
discussion of this issue, the ALJ noted that the Fifth Circuit has concluded that “a
supervisor’s knowledge of his own malfeasance is not imputable to the
employer[.]” See W.G. Yates & Sons Constr. Co., Inc. v. Occupational Safety &
Health Review Comm’n, 459 F.3d 604, 608 (5th Cir. 2006) (emphasis original).
However, as the ALJ further noted, the Sixth Circuit has held to the contrary. See
Danis-Shook Joint Venture XXV v. Secretary of Labor, 319 F.3d 805, 811-12 (6th
Cir. 2003). Insofar as the Eleventh Circuit had not yet weighed in and “directly
addressed this issue”, the ALJ held that the afore-cited Commission precedent
applied. The ALJ then considered the unforeseeable employee misconduct defense,
ultimately concluding that ComTran failed to establish the four elements under that
defense. However, the ALJ reduced the penalty (from $9,800.00 to $5,000.00)
because ComTran showed “good faith” by taking “decisive steps” to strengthen its
safety program after the violations were discovered. The ALJ’s order became a
final decision when the Commission denied discretionary review, and ComTran
now appeals.
II. DISCUSSION
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It is undisputed on appeal (as it was before the ALJ) that the Secretary has
satisfied the first three elements of her prima facie case. The parties thus agree ---
as do we --- that (1) the regulations applied; (2) Cobb did not comply with them;
and (3) an employee was exposed to the hazardous condition. Consequently, our
inquiry is narrowed down to (4) whether ComTran had knowledge.
Before turning to whether ComTran knew (or should have known) of the
violations, it is important to make clear how the Secretary tried to establish it. As
previously discussed, there are two ways that the Secretary can show knowledge.
First, if the Secretary establishes that a supervisor had either actual or constructive
knowledge of the violation, such knowledge is (in the typical case) imputed to the
employer. Or, the Secretary can prove constructive employer knowledge based on
the employer’s inadequate safety program. During the administrative proceedings
in this case, the Secretary made no effort to establish employer knowledge by the
second method. She called only one witness during her case-in-chief, Compliance
Officer Spencer, and he provided no evidence as to ComTran’s safety program. It
is thus clear --- and was acknowledged by the Secretary during oral argument, see
Oral Argument at 23:25-25:17 --- that she sought to establish employer knowledge
in this case solely by utilizing the first method.
We agree with the Secretary and the ALJ that Cobb had knowledge of his
violative conduct. Notwithstanding his testimony that he was absorbed in his effort
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to find the elusive utilities conduit and he just got “lost in his work”, there is ample
evidence that he at the very least should have known of the dangerous condition he
put himself in. As indicated in note 7, supra, Cobb knew that was “not supposed to
ever infringe on the silt fence”, and yet he tore it down and proceeded to extend the
excavation until he was standing in the shadow of an 11-foot wall of earth. Photos
of the trench that were introduced during the administrative hearing and made part
of the record on appeal belie any claim that he did not realize the dangerousness of
the situation. It was manifest. We thus have little difficulty holding that Cobb knew
(or reasonably should have known) of his misconduct.
Cobb’s knowledge of his own violative conduct does not resolve this case,
however. As explained at the outset of this opinion, the question we are called on
to decide is whether it is appropriate to impute, as here, a supervising employee’s
knowledge of his own malfeasance to his employer under OSHA. While this is an
issue of first impression in this circuit, we do not write on a blank slate. The issue
has already been considered and decided by at least five of our sister circuits.
The Fourth Circuit appears to have been the first appellate court to consider
this issue in Ocean Electric Corp. v. Secretary of Labor, 594 F.2d 396 (4th Cir.
1979). That case involved an experienced electrical contractor foreman who
opened the door to a switch gear unit (in order to remove an unenergized ground
bus bar) and left it open, which led to the electrocution and death of an apprentice
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electrician. It was stipulated and agreed by the parties that leaving the door open
was an accident and purely a human error. Nevertheless, his employer, Ocean
Electric Corporation, was cited for a serious violation under the Act. Applying the
common law doctrine of respondeat superior, the ALJ upheld the citation because
Ocean was responsible for its foreman’s negligence. The Commission affirmed the
ALJ’s ruling, but for a different reason. It concluded that although OSHA does not
hold employers strictly liable for the negligent acts of their supervisors, liability
can be avoided only if the employer has tried to do “everything reasonably possible
to assure compliance[.]” The Commission rejected this defense, however, because
Ocean “had not carried its burden of proof by showing the adequacy of its safety
program.” See generally id. at 397-98.
The Fourth Circuit reversed. It began by observing that employers could not
escape “all responsibility” for the negligence of its supervisors because, of course,
a corporation “can only act through its agents and to excuse Ocean simply because
its foreman was negligent would emasculate the Act.” See 594 F.2d at 399. On the
other hand, however, “an imputation of a supervisor’s acts to the company in each
instance would frustrate the goals behind the Act.” See id. After analyzing the law
(both Commission precedent and circuit case law) in depth, see id. at 399-401, the
Court summed up the law this way: “[I]f a violation by an employee is reasonably
foreseeable, the company may be held responsible. But, if the employee’s act is an
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isolated incident of unforeseeable or idiosyncratic behavior, then common sense
and the purposes behind the Act require that a citation be set aside.” See id. at 401.
The Fourth Circuit held that it is the Secretary’s burden to prove that the violation
should have been “reasonably foreseeable” by the employer --- as opposed to an
“isolated incident of unforeseeable or idiosyncratic behavior” by an employee ---
and that it was error for the Commission to shift the burden onto Ocean. See id. at
401; accord id. (stating that “no part” of the Secretary’s prima facie burden can be
“left to speculation or conjecture”, and that an employee’s “isolated violation of a
standard” that is both unknown to the employer and contrary to its orders does not
constitute a violation of OSHA’s “special duty” clause) (citation omitted). During
its discussion of the Secretary’s burden, the Court cited a procedural rule, which
(although rescinded years later, in 1986) provided at the time: “‘In all proceedings
commenced by the filing of a notice of contest, the burden of proof shall rest with
the Secretary.’” See id. at 401-02 (quoting 29 C.F.R. § 2200.73(a)).
Thereafter, the Tenth Circuit addressed this issue in Mountain States
Telephone & Telegraph Co. v. Occupational Safety & Health Review Comm’n,
623 F.2d 155 (10th Cir. 1980). That case involved a two-man utilities crew that
was sent out by their employer, Mountain States, to perform telephone utilities
work. One of the men of the crew, Howard Halverson, was an experienced
subforeman --- the supervisor on the job --- and the second employee was an
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inexperienced first year apprentice. While on the job, Halverson violated OSHA
standards by not wearing rubber gloves as he worked on live wires, which resulted
in his electrocution and death. The employer was cited under the Act, and the
Commission affirmed the citation on the ground that “Mountain States failed to
show Halverson’s violation of the standard was unpreventable because it did not
show the enforcement of its safety program was adequate.” See id. at 157. On
appeal, the Tenth Circuit stated:
Commission rule 73(a), 29 C.F.R. s 2200.73(a), provides
that “(i)n all proceedings commenced by the filing of a
notice of contest, the burden of proof shall rest with the
Secretary.” Reasonably construed, this rule requires the
Secretary to prove the elements of a violation. See
Brennan v. OSHRC, 511 F.2d 1139 (9th Cir. 1975). The
question we decide here is whether the Commission erred
when it placed upon Mountain States the burden of
proving the violation was unpreventable. The Fourth
Circuit, in reviewing a Commission decision involving
circumstances similar to those here, held the Commission
may not place the burden on the employer. Ocean Elec.
Corp. v. Secretary of Labor, 594 F.2d 396 (4th Cir. 1979)
[additional citations omitted] . . . We agree with the result
reached by the Fourth Circuit.
Id. at 157-58. The Court specifically rejected the suggestion that “the Secretary’s
burden of showing the employer’s knowledge was met by proof that Halverson had
some supervisory responsibilities and that Halverson knew his own failure to wear
rubber gloves was a violation.” Id. at 158. Although the Court acknowledged that a
corporate employer can only act and acquire knowledge through agents, and, thus,
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ordinarily the acts and knowledge of supervisory employees are correctly imputed
to their employer, the situation is “different” when the supervisory employee is the
actual malfeasant:
When 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
noncomplying conduct of a subordinate. Upon a showing
of the supervisor’s knowledge, it is not unreasonable to
require the employer to defend by showing the failure to
prevent violations by subordinates was unforeseeable.
But when the noncomplying behavior is the supervisor’s
own a different situation is presented. Halverson knew he
personally violated the safety standards, of course; if we
impute that knowledge to the employer and declare that
now the employer must show the noncomplying conduct
was unforeseeable we are shifting the burden of proof to
the employer. All the Secretary would have to show is
the violation; the employer then would carry the burden
of nonpersuasion.
Id. at 158. Because the Commission made its findings in light of an “erroneously
allocated” burden of proof, the matter was remanded for reconsideration. See id.
The Third Circuit is in agreement on this issue. In Pennsylvania Power &
Light Co. v. Occupational Safety & Health Review Comm’n, 737 F.2d 350 (3d
Cir. 1984), the crew-leader of a three-man utilities crew, Willard Hankee, failed to
comply with an OSHA standard, and it led to injury and death. The ALJ found that
the Secretary established her prima facie case that the employer PP&L knew of the
violation by merely showing “that one of PP&L’s supervisory employees, Hankee
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himself, was aware of the violative conduct.” Id. at 355. The ALJ then shifted the
burden to the employer to rebut this inference by demonstrating “‘that it had done
everything reasonably possible to avoid a violation.’” See id. After noting that the
Secretary has the burden of proof with respect to every element of her prima facie
case, see id. at 357 (citing 29 C.F.R. § 2200.73(a)), and after noting the “prevailing
view among the circuits [that] . . . the employer’s knowledge or ability to discover
a violation is an element of the Secretary’s case-in-chief,” see id., the Third Circuit
reversed and held “the Secretary may not shift to the employer the ultimate risk of
non-persuasion in a case where the inference of employer knowledge is raised only
by proof of a supervisor’s misconduct.” Id. at 358. The Court did not “quarrel with
the logic” of imputing knowledge where the supervisor knows of violative conduct
by other employees; however, like the Fourth and Tenth Circuits before, the Third
Circuit determined that a different situation is presented when the supervisor is the
one personally engaged in the misconduct. See id. at 357-58 & n.9.
The Secretary here makes several arguments why Ocean Electric, Mountain
States, and Pennsylvania Power & Light should not be followed in this circuit. For
example, she points out that all three cases cited a former Commission procedural
rule which, as earlier noted, was rescinded in 1986 but which provided at the time:
“In all proceedings commenced by the filing of a notice of contest, the burden of
proof shall rest with the Secretary.” 29 C.F.R. § 2200.73(a). However, the fact that
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the rule was rescinded has no bearing on the continued viability of those cases. The
rule was not rescinded because the Secretary no longer has the burden to prove her
prima facie case --- she obviously does. It was rescinded only because experience
showed that its “unequivocal wording . . . misled pro se employers and sometimes
even attorneys into believing that they never bore a burden of proof” when, in fact,
“the employer bears the burden of proof on affirmative defenses.” See generally 51
Fed. Reg. 32,002, 32,012 (Sept. 8, 1986). However, the employer bears the burden
on affirmative defenses only if the Secretary proves a prima facie case first. See
New York State Elec. & Gas Corp., 88 F.3d at 108 (“The Secretary must first make
out a prima facie case before the affirmative defense comes into play”). In other
words, even without Commission Rule 2200.73(a) in effect, the Secretary still has
the burden to prove her prima facie case, and the rescission of this rule in 1986 did
not invalidate the ultimate holdings of Ocean Electric, Mountain States, or
Pennsylvania Power & Light.
The Secretary suggests that these cases not be followed for another reason:
they were decided a long time ago. 8 Judicial decisions, however, are not spoilable
like milk. They do not have an expiration date and go bad merely with passage of
8
The Secretary asserted during oral argument that the cases were decided shortly after
Congress passed OSHA in 1970, when the state of the law in this area was “murky”, “unclear”,
and akin to “the Wild West.” See Oral Argument at 9:20-9:26; 11:42-12:10. In fact, the first of
these cases, Ocean Electric, was decided in 1979, almost a decade after OSHA. Mountain States
was decided the following year, and Pennsylvania Power & Light was decided in 1984, 14 years
after OSHA became law.
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time. These cases have not been overruled, and, in fact, they have each been cited
(relatively recently) with approval in their respective circuits. See L.R. Willson &
Sons, Inc. v. Occupational Safety & Health Review Comm’n, 134 F.3d 1235,
1240-41 (4th Cir. 1998) (relying heavily on Ocean Electric and concluding that its
reasoning “is consistent with the clear intent of the Act”); Department of Labor v.
Occupational Safety & Health Review Comm’n, 938 F.2d 1116, 1117 (10th Cir.
1991) (citing Mountain States for the proposition that the Secretary has the burden
to prove the employer knew of the violation); Blue Ridge Erectors v. Occupational
Safety & Health Review Comm’n (No. 06-2475, Jan. 17, 2008, 3d Cir.) (relying on
Pennsylvania Power & Light for the proposition that the Secretary must prove the
misconduct was foreseeable and, therefore, preventable) (unpublished opinion).
Not only do the Ocean Electric, Mountain States, and Pennsylvania Power &
Light decisions have continued viability in their circuits, but they have been cited
with approval in other circuits as well, including the Fifth Circuit in W.G. Yates &
Sons Construction Co., Inc., 459 F.3d at 604, a case (from 2006) that involved a by
now familiar fact pattern.
W.G. Yates & Sons was the subcontractor on a construction job. On the day
at issue, it assigned a three-man crew for the project, one of whom, Martin Olvera,
served as foreman. OSHA compliance officers stopped by the jobsite and observed
Olvera working along a dangerous ledge without any fall protection, in violation of
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OSHA standards. The employer was thereafter cited for a serious violation and the
ALJ upheld the citation. In concluding that the Secretary had established her prima
facie case --- in particular, the employer knowledge element --- the ALJ stated that:
“The Respondent had knowledge of this violation. It knew, or with the exercise of
reasonable diligence could have known, of the violative condition. Mr. Olvera, the
Respondent’s foreman, knew that he was working on this slope, exposed to a 65-
foot fall with no fall protection. His knowledge of this condition, as a foreman of
the three-man Yates crew, is imputed to the Respondent.” Secretary of Labor v.
W.G. Yates & Sons Constr. Co., Inc., 21 O.S.H. Cas. (BNA) 1171, at *3 (2005).
The ALJ then proceeded to consider and reject the unforeseeable employee
misconduct affirmative defense, after noting that the defense would be difficult to
prove in that case because Olvera was a supervisory employee and the fact that he
engaged in the violative conduct “is strong evidence that Yates’ safety program is
lax.” Id. at *6.
The employer appealed, and the Fifth Circuit described the issue on appeal
as “when is it appropriate (or inappropriate) to impute the supervisor’s knowledge
of his own misconduct to the employer.” 459 F.3d at 607. The Court observed that
the issue had already been considered in other circuits, see generally id. at 606-08
(citing Ocean Electric, Mountain States, and Pennsylvania Power & Light), but the
question had not been “directly answered” in the Fifth Circuit. See id. at 608. After
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citing the Fourth, Tenth, and Third Circuit cases --- and a 1976 former Fifth Circuit
case, Horne Plumbing & Heating Co., 528 F.2d at 564 (which was not squarely on
point, but which was “instructive”), the Court, in a split decision, reversed the ALJ
and stated as follows:
Yates can be charged with knowledge only if Olvera’s
knowledge of his own misconduct is imputable to Yates.
The knowledge is imputed only if Olvera’s conduct was
foreseeable. Consequently, the Secretary, not Yates,
bears the burden to establish that the supervisor’s
violative conduct was foreseeable. Yet, the ALJ charged
Yates with knowledge of Olvera’s misconduct without
any inquiry as to whether the misconduct should have
been foreseen by Yates. Finding the Secretary had
established a serious violation (based only on Olvera’s
misconduct), the ALJ then shifted the burden to Yates to
establish the defense of employee misconduct. By failing
to conduct the foreseeability analysis before imputing
Olvera’s knowledge, the ALJ effectively relieved the
government of its burden of proof to establish a violation
of the Act and placed on Yates the burden of defending a
violation that had not been established.
***
The failure of the ALJ correctly to assign the burdens of
proof requires us to remand this case to allow the
respondent to conduct a forseeability analysis to
determine whether the knowledge of Olvera can be
imputed to Yates.
Id. at 609-10 (emphasis original; footnote omitted).
Against these decisions out of the Fourth, Tenth, Third, and Fifth Circuits is
a decision from the Sixth Circuit, Danis-Shook Joint Venture XXV v. Secretary of
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Labor, 319 F.3d at 805. This case arose out of an accident in which a foreman, who
was working in a water treatment facility basin without protective equipment (such
as a harness, lifeline, or buoyant vest), was pulled down into a drain and drowned.
His employer, Danis-Shook, was cited for several OSHA violations, and the ALJ
upheld the citations, in part, as did the Commission. The employer appealed to the
Sixth Circuit, where the question was “whether Danis-Shook had knowledge of the
violation.” See id. at 811. With relatively little analysis of the issue, the Court held
that “knowledge of a supervisor may be imputed to the employer. Because Wagner
was a foreman and knew of his own failure to wear personal protective equipment,
this failure may be imputed to Danis-Shook.” See id. at 812 (citations omitted).
The Sixth Circuit did not draw a distinction, as the other circuits have, between a
supervisor’s knowledge of misconduct by subordinate employees and knowledge
of his own misconduct.
After review of these cases from our sister circuits, we are persuaded by the
reasoning of the Fourth, Tenth, Third, and Fifth Circuits, and we adopt their legal
analyses and conclusions to the extent as described and set forth above.9 We hold
9
There is a part of the W.G. Yates & Sons Construction Company decision that was not
“described and set forth above” which we have some concerns about. Specifically, in the course
of its analysis, the Fifth Circuit appeared to suggest that imputing knowledge when a supervisor
is the malfeasant would be tantamount to the imposition of strict liability. See 459 F.3d at 607-
08. As the dissent pointed out in that case, however, see id. at 610 (Reavley, J., dissenting), and
as the Secretary has maintained in our case, that is inaccurate. Even if knowledge were imputed
to the employer in that situation, it would not end the inquiry as the employer would still be able
to raise the unforeseeable employee misconduct affirmative defense. Thus, imputing knowledge
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that the Secretary does not carry her burden and establish a prima facie case with
respect to employer knowledge merely by demonstrating that a supervisor engaged
in misconduct. A supervisor’s “rogue conduct” cannot be imputed to the employer
in that situation. Rather, “employer knowledge must be established, not vicariously
through the violator’s knowledge, but by either the employer’s actual knowledge,
or by its constructive knowledge based on the fact that the employer could, under
the circumstances of the case, foresee the unsafe conduct of the supervisor [that is,
with evidence of lax safety standards].” W.G. Yates & Sons Constr. Co., Inc., 459
F.3d at 609 n.8. Without such evidence, a supervisor’s misconduct may be viewed
as an isolated incident of unforeseeable or idiosyncratic behavior, see Ocean Elec.
Corp., 594 F.2d at 401, which is insufficient, by itself, to impose liability under the
Act. See W.G. Yates & Sons Constr. Co., Inc., 459 F.3d at 607 (“‘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’”) (citation omitted); Pennsylvania Power & Light
Co., 737 F.2d at 354 (OSHA does not impose liability on employers “for isolated
and idiosyncratic instances of employee misconduct”); see also Horne Plumbing &
Heating Co., 528 F.2d at 571 (“unforeseeable, implausible” employee misconduct
from the malfeasant supervisor would not be strict liability. It would, however, prematurely and
improperly shift the burden to the employer. To that extent, we agree with the Fifth Circuit and
the other circuits that have held similarly.
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is not imputable to employer). 10 Contrary to the Secretary’s contention in her brief
and during oral argument, there is, in fact, a “reasoned basis” to draw a distinction
between a supervisor’s knowledge of a subordinate’s misconduct (which everyone
agrees is imputable to the employer) and knowledge of his own misconduct (which
the clear majority of circuits have held is not).
“When 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 noncomplying
conduct of a subordinate.” Mountain States, 623 F.2d at 158. It is reasonable to do
this because a corporate employer can, of course, only act through its agents --- as
several of the above-cited cases have recognized --- and the supervisor acts as the
“eyes and ears” of the absent employer. That makes his knowledge the employer’s
knowledge. However, “a different situation is presented” when the misconduct is
the supervisor’s own. Id. In that situation, the employer has no “eyes and ears.” It
is, figuratively speaking, blind and deaf. 11 To impute knowledge in this situation
10
“Idiosyncratic”, “isolated”, “unforeseeable”, and “implausible” appear to be accurate
descriptions of Cobb’s behavior in this case. He was an experienced supervisor with, insofar as
the record is developed, no history of any OSHA violations, let alone “serious” ones. In fact,
Greg Bostwick, the President of ComTran, testified at the hearing that when he first heard about
what happened he “couldn’t believe it” and thought there must be “something more to the story”
as Cobb had attended “more trench safety classes than any employee in our company. He could
teach them.”
11
That is especially so in a case like this one, where the supervisor was focused intently
on a specific task; he was not paying close attention; he arguably did not know of the dangerous
condition (notwithstanding that he should have known); and there was nobody there to observe
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would be fundamentally unfair. Cf. Horne Plumbing & Heating Co., 528 F.2d at
570 (“‘Fundamental fairness would require that one charged with and penalized for
[a] violation be shown to have caused, or at least to have knowingly acquiesced in,
that violation. Under our legal system, to date at least, no man is held accountable,
or subject to fine, for the totally independent act of another[.]’”) (quoting Brennan,
511 F.2d at 1145).
Thus, as the Second Circuit has noted, these circuit decisions are ultimately
“bottomed” on fairness. See New York State Elec. & Gas Corp., 88 F.3d at 107
(discussing Pennsylvania Power & Light and Mountain States). Specifically, if the
Secretary is permitted to establish employer knowledge solely with proof of the
supervisor’s misconduct --- notwithstanding that the employer did not know, and
could not have known, of that misconduct --- then the Secretary would not really
have to establish knowledge at all. The mere fact of the violation itself (element 2)
would satisfy the knowledge prong (element 4). This is because, in the “special
situation” where the violative conduct belongs to a supervisor, “the usual rule that
a supervisor’s knowledge is imputed to the employer would make the knowledge
(and warn) him. This is not the situation where a supervisor was being intentionally careless and
watched by others. Cf. Horne Plumbing & Heating Co. v. Occupational Safety & Health Review
Comm’n, 528 F.2d 564, 566 n.1 (5th Cir. 1976) (noting the “rather cavalier attitude” on the part
of a malfeasant foreman who was specifically warned of the dangerous condition by a
subordinate employee watching nearby, yet he disregarded the warnings and, in fact, joked that
he “wouldn’t have to worry . . . if (he) was all right with God”). Cobb was digging in the trench
by himself and got lost in his work. It is difficult to see how ComTran even arguably had “eyes
and ears” at the Lawrenceville project at that time.
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requirement easy to prove [because] the non-complying supervisor obviously knew
of his or her own conduct.” Id. In other words, where a supervisor is the
malfeasant, the Secretary would only have to meet three of the four elements of her
prima facie case. She would not have to prove employer knowledge because that
element would be subsumed within the violation prong. See Mountain States, 623
F.2d at 158 (“[The supervisor] knew he personally violated the safety standards, of
course; if we impute that knowledge to the employer and declare that now the
employer must show the noncomplying conduct was unforeseeable we are shifting
the burden of proof to the employer. All the Secretary would have to show is the
violation; the employer would then carry the burden of nonpersuasion.”). We agree
with the circuits that have held this result would be arbitrary, capricious, and not in
accordance with the law.
In sum, we hold that if the Secretary seeks to establish that an employer had
knowledge of misconduct by a supervisor, she must do more than merely point to
the misconduct itself. To meet her prima facie burden, she must put forth evidence
independent of the misconduct. This could be done, for example, with evidence of
lax safety standards. But, the Secretary is the one who must provide such evidence.
The Secretary contends, however, that even if the Commission erroneously
imputed Cobb’s knowledge of his own malfeasance to ComTran, thus improperly
shifting the burden of proof on her prima facie case, the record viewed as a whole
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shows that the error was harmless. She maintains that because ComTran’s safety
program was “patently inadequate”, the company had constructive knowledge of
the violative conduct. We disagree. While ComTran presented some evidence on
the issue during its case --- and the ALJ found that evidence insufficient to support
the unpreventable employee misconduct affirmative defense --- in the absence of
the Secretary making her prima facie case, ComTran was not obligated to present
any evidence on the adequacy of its safety program. See New York State Elec. &
Gas Corp., 88 F.3d at 107-08. ComTran insists, and we agree, that it was in fact
harmed by the Commission’s failure to properly allocate the burden of proof. Had
the Secretary been required to carry her prima facie burden by attempting to show
employer knowledge (which, on the facts presented here, and as discussed above,
should have been through a showing of lax safety standards), then ComTran might
have been able to more effectively rebut the Secretary’s offer of proof with specific
evidence in direct response to the alleged inadequacies. 12 As it was, ComTran had
to guess what particular evidence might have been sufficient to rebut the Secretary
and establish the adequacy of its safety program. This was not harmless error. The
case must be remanded to the Commission for further development of the record.
III. CONCLUSION
12
ComTran asserts that it did not present all the evidence that it could have on the issue
of its safety program. It appears that it may have been reluctant to do so out of fear that it might
“offer proof against itself that it need not have introduced at all [since] . . . the Secretary fail[ed]
to introduce any evidence of the Employer’s safety program --- inadequate or otherwise.”
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For the reasons stated above and in the decisions by the Fourth, Tenth,
Third, and Fifth Circuits, we conclude that the Commission acted arbitrarily,
capriciously, and otherwise not in accordance with the law when it relieved the
Secretary of her burden to prove the essential “knowledge” element of her prima
facie case and prematurely shifted the burden to ComTran. As this error was not
harmless, the petition for review is GRANTED, and the Commission’s decision is
REVERSED. The case is remanded to the Commission for proceedings consistent
with this opinion.
REVERSED AND REMANDED
30