Dana Container, Inc. v. Secretary of Labor, No. 16-1087 (7th Cir. 2017)

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Justia Opinion Summary

Dana operates a Summit, Illinois truck‐tank washing facility. Dana employees drain residual product from the truck’s metal tank; insert a mechanical spinner that rotates scrubbers, dousing it with soap or solvents; then rinse the tank with water. Occasionally, employees have to enter a tank and manually clean residual sludge. OSHA has regulations for entering these “permit‐required confined spaces (PRCSs),” 29 C.F.R. 1910.146: the employee must obtain an entry permit and checklist of required safety precautions; must hook a full‐body harness to a mechanical retrieval device that can pull him out of the tank; must test the tank air; and must wear a respirator and conduct continuous atmospheric testing. While an employee is in the tank, automatic blowers force fresh air into it. Another employee must be on standby. Employees may not enter a tank before it has been mechanically cleaned. Fox encountered a problem with a tank before beginning the mechanical cleaning. He entered the tank without attaching the retrieval device or following permit procedures. After a short time, another employee saw Fox unconscious in the chemical sludge and called the fire department. A TV news crew broadcast the rescue. An OSHA inspector saw it; she arrived at the facility within three hours of the accident, inspected and issued citations for serious and willful violations of the Occupational Safety and Health Act. An ALJ vacated some of the citation items, finding that Dana qualified for the less stringent “alternate entry procedures.” The Commission held that Dana was not eligible for the alternate entry procedures and reinstated the citation items. The Seventh Circuit rejected a petition for review. Dana did not provide a compelling reason to overturn the Commission’s determinations.

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In the United States Court of Appeals For the Seventh Circuit ____________________ No. 16 1087 DANA CONTAINER, INC., Petitioner, v. SECRETARY OF LABOR, Respondent. ____________________ On Petition for Review of Decision and Order of the Occupational Safety and Health Review Commission OSHRC No. 09 1184 ____________________ ARGUED SEPTEMBER 12, 2016 — DECIDED FEBRUARY 1, 2017 ____________________ Before WOOD, Chief Judge, and EASTERBROOK and SYKES, Circuit Judges. WOOD, Chief Judge. It is not hard to nd people who com plain about government regulations, but the regulations often exist because people do not take optimal precautions on a vol untary basis. This case illustrates that problem. It arose after toxic fumes in a large container knocked out a man who was working inside it. Fortunately, he was rescued by the local re 2 No. 16 1087 department, but his employer, Dana Container, wound up ghting citations from the Occupational Safety and Health Administration (OSHA). After an administrative law judge (ALJ) and the Occupational Safety and Health Review Com mission upheld OSHA’s actions, Dana turned to this Court. Because Dana has not provided a compelling reason to over turn the Commission’s determinations, we deny its petition for review. I Dana operates a truck tank washing facility near the Ste venson Expressway in Summit, Illinois. The tanks cleaned at Dana’s facility are long metallic cylinders used to transport products such as ink and latex. After the tanks are emptied at their destination, truckers bring them to Dana’s facility for a cleaning so that they can haul di erent products without adulteration. Before washing a tank, employees drain any re sidual product from it. They then insert a mechanical spinner that rotates scrubbers from one end of the tank to the other, simultaneously dousing it with soap or solvents (or both). They then give the tank a nal rinse of water and blow it dry. Most of the time, this process su ces to clean the tank thor oughly. When it does not, however, employees enter the tank and manually clean out the remaining sludge or residue. Be cause the tank space is con ned and may contain chemicals that are hazardous to health, OSHA has promulgated regula tions that require companies to enforce certain safety precau tions when their employees enter these “permit required con ned spaces (PRCSs).” 29 C.F.R. § 1910.146. At Dana’s facility in Summit, employees enter tanks to clean them approximately ten times per month. Before doing No. 16 1087 3 so, the employee must obtain an entry permit from a supervi sor; the permit contains a checklist of required safety precau tions. The employee then climbs onto a catwalk above the tank and hooks a full body harness he is wearing to a mechan ical retrieval device that can pull him out of the tank if he be comes incapacitated for any reason. He must also test the tank air for atmospheric hazards before going in. When he enters the tank, he is required to wear a respirator and to conduct continuous atmospheric testing. While an employee is in the tank, automatic blowers force fresh air into it. A fellow em ployee is required to be on standby outside the tank in order to assist in case of an emergency. OSHA regulations and Dana’s safety rules prohibit employees from entering a “dirty” tank before it has been mechanically cleaned. In the cold early morning hours of January 28, 2009, one of Dana’s supervisors, Bobby Fox, was on the third shift along with former employee Cesar Jaimes. Fox was working on a trailer and encountered a problem with a clogged valve just as he was about to begin the mechanical cleaning process. Dis regarding the safety rules, he entered the tank prior to clean ing it, without attaching himself to the retrieval device or fol lowing the entry permit procedures. After a short while, Jaimes looked inside, saw Fox unconscious in a pool of chem ical sludge, and called the Summit Fire Department. The re ghters hoisted him out, rinsed o the chemical residue, and transported him to the hospital. Fox was diagnosed with “Syncope and Collapse, Toxic E ect of Unspeci ed Gas, Fume, or Vapor” (i.e., fainting). A local TV news crew broadcast the rescue that morning, and OSHA inspector Jami Bachus happened to see it before heading to work. She volunteered to inspect Dana’s facility 4 No. 16 1087 and did so, arriving at the Summit station within three hours of the accident. After her inspection, Bachus issued two cita tions to Dana for serious and willful violations of the Occupa tional Safety and Health Act. Most of the items listed in the citations were for violations of the PRCS standards found at 29 C.F.R. § 1910.146. Dana contested the citations, and the Sec retary of Labor and Dana settled some of the items. The rest were the subject of a hearing before an ALJ. The ALJ vacated a number of the citation items, for the most part because she found that Dana quali ed for the less stringent “alternate en try procedures” described in § 1910.146(c)(5). She also upheld the ndings of several of the speci c violations. Both parties appealed the ALJ’s decision to the Commission. This did not go well for Dana; the Commission decided, contrary to the ALJ, that Dana was not eligible for the alternate entry proce dures, and so it reinstated those items in the citation. It af rmed the rest of the ALJ’s ndings. Dana has led a petition for review in this court. II Dana attacks the Commission’s decision in several ways. First, it asserts that it lacked the requisite knowledge to sup port the order and that it should be exonerated because the incident resulted from “unpreventable employee miscon duct.” It next argues that the Secretary did not prove the “willful” element of some of the items. Last, it contends that the Commission should have found that it satis ed the stand ard for alternate entry procedures. We review the Commission’s conclusions in enforcement actions under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. We defer to the Commission’s interpretations of No. 16 1087 5 law unless they are “arbitrary or capricious” or contrary to law. 5 U.S.C. § 706; Chao v. Gunite Corp., 442 F.3d 550, 556 (7th Cir. 2006). We uphold an agency’s determination “as long as [the agency] considered relevant data under the correct legal standards and o ered a satisfactory explanation for its ac tion.” Wisconsin v. E.P.A., 266 F.3d 741, 746 (7th Cir. 2001). An explanation is satisfactory if there is a rational connection be tween the facts the agency found and the decision it made. Howard Young Med. Ctr. Inc. v. Shalala, 207 F.3d 437, 441 (7th Cir. 2000). Where, as here, the Commission reverses an ALJ, we con ne our review to the Commission’s order. Chao, 442 F.3d at 556. We must uphold the Commission’s factual ndings if they are supported by substantial evidence on the record as a whole. 29 U.S.C. § 660(a); Stark Excavating, Inc. v. Perez, 811 F.3d 922, 926–27 (7th Cir. 2016). Substantial evidence is “‘such relevant evidence as a reasonable mind might accept as ade quate to support the conclusion’ reached by the agency.” Zero Zone, Inc. v. United States Dep t of Energy, 832 F.3d 654, 668 (7th Cir. 2016) (quoting Local 65–B, Graphic Commc ns Conference of Int l Bhd. of Teamsters v. NLRB, 572 F.3d 342, 347 (7th Cir. 2009)); see also Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938) (explaining that the agency must produce “more than a mere scintilla” of evidence). We defer to the Commission’s credibility determinations in all but extraordinary circum stances. Chao, 442 F.3d at 557. A The Occupational Safety and Health Act is not a strict lia bility statute. This means that the Secretary was required to prove that Dana knew about the problem in order to establish 6 No. 16 1087 a “serious” violation. Kokosing Constr. Co., 21 BNA OSHC 1629, 1631 (No. 04 1665, 2006), a d 232 F. App’x 510 (6th Cir. 2007). Under Commission precedent the Secretary can satisfy his burden without demonstrating any inadequacy or defect in the employer’s safety program, if a supervisory employee has actual or constructive knowledge of the violation. In that case, the supervisor’s knowledge can be imputed to the em ployer. Secretary of Labor v. Dover Elevator, 16 BNA OSHC 1281 (No. 91 862, 1993). Because Fox was a supervisor and had ac tual knowledge of his own misconduct, the Commission im puted his knowledge to Dana. This path for imputing knowledge is common in employ ment law. When an employee is acting within the scope of her employment, her knowledge is typically imputed to the em ployer. United States v. One Parcel of Land Located at 7326 High way 45 North, Three Lakes, Oneida Cnty., Wis., 965 F.2d 311, 316 (7th Cir. 1992). Conduct is “within the scope of employment when [it is] ‘actuated, at least in part, by a purpose to serve the [employer],’ even if it is forbidden by the employer.” Bur lington Indus., Inc. v. Ellerth, 524 U.S. 742, 756 (1998) (quoting Restatement (Second) of Agency §§ 228(1)(c), 230 (1957)). Here, Fox knew that he was violating the rules when he en tered the dirty tank in order to kick loose a stuck valve so that he could then drain the tank. His act was in furtherance of Dana’s tank cleaning business. We thus see no problem with the Commission’s decision to impute Fox’s knowledge to Dana. Dana urges that the Third Circuit requires more than this, and that it has the better view. It requires the Secretary to prove that a supervisor’s participation in misconduct was foreseeable by showing that the employer’s safety program No. 16 1087 7 was inadequate. See Pennsylvania Power & Light Co. v. OSHRC, 737 F.2d 350, 354, 357–58 (3d Cir. 1984). In order to have an adequate safety program, that court says, the employer must have work rules designed to prevent the violation, adequately communicate those rules to its employees, take steps to dis cover violations, and e ectively enforce the rules when it dis covers violations. Id. at 358–59. This argument would have more force if the Commission had ignored the Third Circuit’s position. But it did not. At the time of its decision, it knew that the Third Circuit might hear this petition for review, because Dana’s principal o ce is lo cated in New Jersey. See 29 U.S.C. § 660(a). It therefore tested its conclusion under the standard of Pennsylvania Power & Light and found that Dana’s safety program was indeed inad equate. That assessment nds su cient support in the record. There was evidence showing that nearly all of the tank entry permits at Dana’s Summit facility contained errors or omis sions. Some indicated that the entries had exceeded the max imum duration of 20 minutes by over an hour. Others had other aws: for example, they lacked the requisite air moni toring results; they failed to show the duration for which the permit was valid; they indicated that employees had not re viewed material safety data sheets (or had no information about review); and they failed to name either the entrant or the entry attendant. Whether these errors and omissions oc curred because the employees were violating entry proce dures or if they re ected only recording problems, there is no evidence that the Facility Manager followed up on the de ciencies. The Commission was therefore justi ed in conclud ing that there was a failure to enforce Dana’s safety program. 8 No. 16 1087 Dana argues that the particular problems the Commission mentioned would not have allowed it to predict Fox’s entry into a dirty tank. But this is asking for a higher degree of fore seeability than any court requires. The Commission was enti tled to nd that the uncorrected permit violations exhibited a pattern of disregard for the rules at Dana. Even in the face of a robust written program, lax disregard of the rules can send a message to employees that a company does not make safety a priority. In such an environment, conduct such as Fox’s is reasonably foreseeable. Dana’s e ort to persuade us that the Commission erred by rejecting the “unpreventable employee misconduct” defense also falls short. To use the defense an employer must show that it took steps to discover violations of its safety rules and that it e ectively enforced the rules when violations were dis covered. See Crowther Roo ng & Sheet Metal of Florida v. Occu pational Safety and Health Review Comm’n, 454 F. App’x 774, 776 (11th Cir. 2011). Here, the Commission agreed with the ALJ’s conclusion that Dana failed to take these steps. It relied on the evidence of permit de ciencies and lack of disciplinary or fol low up action. We have no reason to set aside this conclusion. See Howard Young, 207 F.3d at 441. B While serious violations of 29 C.F.R. § 1910.146 each carry a maximum penalty of $7,000, willful violations are subject to sti er monetary penalties—up to $70,000 for each one. 29 U.S.C. § 666(a)–(b). Though neither party disputes that Fox’s behavior was willful, Dana argues that it established a good faith defense that should have precluded the Commission from imputing Fox’s state of mind to the company. Dana cites No. 16 1087 9 a Commission case holding that an employer can demonstrate that the willful conduct of its supervisory personnel should not be imputed to the employer if the employer can demon strate a good faith e ort to comply with the standard. See, e.g., Anderson Excavating & Wrecking Co., 17 BNA OSHC 1890 (No. 92 3684, 1997), a ’d, 131 F.3d 1254 (8th Cir. 1997). Dana contends that it demonstrated this good faith e ort in numerous ways: (1) it had rules prohibiting exactly what Fox did; (2) Dana employees did not usually violate the rules; (3) the record contained instances of discipline and a lack of recidivism; (4) Dana’s wash process eliminated toxic atmos pherics; (5) Dana had continuous testing and forced air venti lation in clean trailer tanks; (6) Dana’s written program had previously been examined by OSHA and found acceptable; and (7) Dana had a good bilingual training program and no recordable injuries from tank injuries for years before the Fox incident. The Commission, however, was unpersuaded. It found that although, on the one hand, Dana had work rules that were communicated to its employees and had submitted evidence of three instances of disciplinary action, on the other hand the facility manager had never disciplined an employee for improperly completing permits or for the violations ap parent on the face of the permits. The Commission concluded that Dana had therefore failed to take action when violations of safety rules were plain, as would have been required in a good faith e ort. In Stark Excavating, Inc. v. Perez, 811 F.3d 922, 928–29 (7th Cir. 2016), we considered a similar problem. Stark had argued that its e orts to comply with safety rules negated willfulness, where the company was cited for a foreman’s failure to con struct a proper slope at an excavation site. The Commission 10 No. 16 1087 nevertheless found that Stark failed to enforce rules and poli cies e ectively when violations were discovered and thus could not establish a good faith defense on those grounds, and we upheld that result. Dana attempts to distinguish Stark on the facts, urging that Dana demonstrated good faith e orts to comply with the standard for con ned spaces contained in 29 C.F.R. § 1910.146. But that loses sight of the fact that in Stark we focused on the employer’s failure to enforce its own safety rules and policies when it discovered violations, and that it was this broader lack of enforcement that demonstrated a lack of good faith. 811 F.3d at 929. Here, too, the Commission found evidence of a failure to follow up on documented vio lations of Dana’s safety permit protocol, and it reasonably concluded that this defeated a nding of a good faith e ort. C Dana last argues that the Commission should have af rmed the ALJ’s nding that the Summit facility met the re quirements for alternate entry. According to 29 C.F.R. § 1910.146(c)(5), employees would have been eligible to use alternate entry procedures if Dana had demonstrated that it met certain requirements. Chie y, Dana needed to demon strate that potentially hazardous substances were not ex pected to approach the level at which they would create a haz ardous atmosphere, and that continuous forced air ventilation alone was su cient to keep the washed tanks safe for entry. § 1910.146(c)(5)(i)(A)–(B). Dana also needed to develop moni toring and inspection data to support such a nding before any employee could use the alternate procedures. See § 1910.146(c)(5)(i)(C); Permit Required Con ned Spaces, 58 Fed. Reg. 4462 01, 4488 (Jan. 14, 1993). No. 16 1087 11 The Commission held that Dana did not meet its burden because it could not identify relevant testing that established that the process removed all potential hazards or that ana lyzed the e ectiveness of the forced air ventilation system. Dana’s 2009 expert report was of little value, it thought, be cause the report was nalized nearly six months after Fox’s incident. Worse, it did not contain testing data, nor did it spec ify what testing results supported the conclusion that the wash process rendered the tanks free of a potentially hazard ous atmosphere. Dana had also o ered two reports from tests of other washing facilities in Alabama and Ohio in 1996 and 1999, but the Commission spotted relevant di erences be tween the wash process in the 1996 report and the process used at the Summit facility. The results of the 1999 report did not show that the wash process removed the potential for a hazardous atmosphere; to the contrary, in some cases the data showed levels of hazardous vapors above the limits and levels of oxygen below the acceptable range. The Commission also found that Dana’s pre entry testing did not compensate for the limitations of the wash process because the testing meter it used was incapable of testing for all potential atmospheric hazards. Dana o ers no reason why we should upset the Commis sion’s determinations. The Commission considered and weighed the data in the reports and expert testimony and pro vided a reasonable explanation in support of its nding that Dana had not met the alternate entry procedure standards in § 1910.146(c)(5). See Wisconsin v. E.P.A., 266 F.3d at 746. Though Dana vigorously attacks the credibility of the Secre tary’s expert witness, we defer to an agency’s credibility de terminations in all but extraordinary circumstances. Chao, 442 12 No. 16 1087 F.3d at 557. This case does not meet that standard, and so we DENY Dana’s petition for review.