Dayton Tire v. Secretary of Labor

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 16, 2011 Decided March 6, 2012

No. 10-1362

DAYTON TIRE, A DIVISION OF BRIDGESTONE/FIRESTONE, INC.,

PETITIONER

v.

SECRETARY OF LABOR,

RESPONDENT

UNITED STEEL, PAPER AND FORESTRY, RUBBER,

MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE

WORKERS INTERNATIONAL UNION,

INTERVENOR

On Petition for Review of a Final Order of the

Occupational Safety & Health Review Commission

Willis J. Goldsmith argued the cause for petitioner. With

him on the briefs was Jacqueline M. Holmes.

Gary Stearman, Attorney, U.S. Department of Labor,

argued the cause for respondent. With him on the brief were

Joseph M. Woodward, Associate Solicitor, and Charles F.

James, Counsel.

Andrew D. Roth argued the cause for intervenor. With

him on the brief was Laurence Gold.

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Before: BROWN, GRIFFITH, and KAVANAUGH, Circuit

Judges.

Opinion for the Court filed by Circuit Judge BROWN.

BROWN, Circuit Judge: In 1994, the Secretary of Labor

personally and publically served Dayton Tire with a citation

alleging over 100 willful violations of the Occupational

Safety and Health Act (the “OSH Act”). Dayton contested

the citation, and by 1997, its appeal was before the

Occupational Safety and Health Review Commission. There

it sat, fully briefed and untouched, for over twelve years, until

the Commission issued an order in 2010 affirming nearly all

of the violations and assessing a $1.975 million penalty.

Dayton urges us to set aside the order because of the

Commission’s lengthy delay. We grudgingly decline; the

Commission’s dawdling—while regrettable—did not render

its order inequitable or pointless. We agree with Dayton,

however, that the Commission lacked substantial supporting

evidence for its finding that the violations were willful.

Accordingly, we vacate that portion of the order and remand

for the Commission to reassess Dayton’s level of culpability.

We trust the Commission will act before the decade is out.

I

The “lockout/tagout” standard, or LOTO standard,

“covers the servicing and maintenance of machines and

equipment in which the unexpected energization or start up of

the machines or equipment, or release of stored energy[,]

could cause injury to employees.” 29 C.F.R. §

1910.147(a)(1)(i). The standard requires employers to

“establish a program . . . for affixing appropriate lockout

devices or tagout devices to energy isolating devices,” id. §

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1910.147(a)(3)(i); conduct periodic inspections to ensure

compliance with the program, id. § 1910.147(c)(6)(i); and

train employees on the “purpose and function of the . . .

program,” id. § 1910.147(c)(7)(i). “Authorized employees,”

who perform service and maintenance on covered equipment,

must receive more rigorous training than “affected

employees,” who simply operate covered equipment. See id.

§§ 1910.147(b), (c)(7)(i)(A), (B).

From 1969 to 2006, Dayton operated a tire-

manufacturing facility in Oklahoma City, where it employed a

separate company, Ogden Allied, to service and maintain the

equipment. When the Occupational Safety and Health

Administration (“OSHA”) promulgated the LOTO standard in

1989, Dayton’s safety manager, Phillip McCowan, reviewed

the job tasks at the plant and determined that Dayton

employees were only “affected employees” because Ogden

employees were responsible for all service and maintenance

on site. McCowan’s successor as safety manager, Kelley

Mattocks, reviewed McCowan’s LOTO assessment in 1992

and concluded it was still valid.

In October 1993, a Dayton employee died from injuries

he sustained when a machine activated unexpectedly. The

incident prompted OSHA to send an inspector to the plant to

assess Dayton’s LOTO compliance. Based on that inspection,

then-Secretary of Labor Robert Reich traveled to Oklahoma

City in April 1994 and personally served Dayton with a

citation alleging 107 willful LOTO violations and proposing a

penalty of roughly $7.5 million. Of those 107 violations, 98

were for failing to train individual Dayton employees to the

“authorized” level. The remaining nine violations were for

failing to develop adequate safety procedures for particular

machines, failing to utilize LOTO procedures, failing to

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provide necessary locks and tags to authorized employees,

and failing to conduct periodic inspections.

Dayton appealed the citation to the Occupational Safety

and Health Review Commission, where it was referred to an

administrative law judge. After hearing from 90 witnesses

over 31 days of trial, the ALJ issued a decision in 1997 that

affirmed each violation that had not been withdrawn by the

Secretary. And though the ALJ found that Dayton’s “actions

were consistent with a good faith belief and effort to comply

with the LOTO standard throughout the Oklahoma City

plant,” he characterized 37 of the violations as willful because

Dayton knew its corporate parent, Bridgestone, had

previously been cited under the LOTO standard for similar

violations. Dayton Tire, 1997 WL 152083 (No. 94-1374,

1997) (ALJ), at *22–23 (“ALJ Ruling”). The ALJ assessed a

total penalty of $518,000. Id. at *63.

Both Dayton and the Secretary petitioned the

Commission for review, and the Commission granted the

petitions in March 1997. Then the parties waited, and waited,

until September 2010, when a divided Commission affirmed

all but one of the violations, and went beyond the ALJ ruling

to find all of the violations willful. Dayton Tire, 2010 CCH

OSHD ¶ 33,098 (No. 94-1374, 2010) (“Commission Ruling”).

The Commission did not rely on the Bridgestone citation to

reach its willfulness determination. Id. at *18 n.12. Instead,

it found that, “over a period of years, Dayton consciously

disregarded the LOTO standard by operating . . . in a manner

that was patently inconsistent with the requirements of the

standard, and by failing to reexamine its violative practices

despite receiving information and inquiries that should have

led it to do so.” Id. at *18. The Commission generally

assessed larger per-violation penalties than the ALJ—in part

5

to reflect its broader willfulness determination—and imposed

a total penalty of $1.975 million.1 Id. at *26.

II

The Administrative Procedure Act (APA) obligates an

agency “to conclude a matter presented to it” “within a

reasonable time.” 5 U.S.C. § 555(b). Dayton acknowledges

that an agency’s failure to abide by Section 555(b) does not

“require its order[] to be set aside in every or even most

cases.” Pet. Reply Br. 17. But it submits that the order here

should be set aside because the “Commission’s egregious

delay in adjudicating [the] matter defeat[ed] the entire

purpose of the underlying enforcement action,” and “equity

should intervene to prevent enforcement of a senseless order.”

Id.

The Secretary claims Dayton’s argument stumbles out of

the gate. She asserts that the APA remedy for a party

aggrieved by agency delay is a petition to “compel agency

action unlawfully withheld or unreasonably delayed,” 5

U.S.C. § 706(1), and Dayton’s failure to pursue that remedy

during the pendency of its appeal precludes it from

challenging the timeliness of the Commission’s order now.

That reading of the APA is unsupportable. Section 706(1)

does not state that a petition to compel is a party’s only option

in the face of agency delay. Nor does it state that a petition to

1

The Commission also stated its “affirmance of each cited violation will

result in an abatement order directing Dayton to develop, document, and

utilize distinct LOTO procedures for the unique equipment covered by

each citation item.” Commission Ruling, 2010 CCH OSHD ¶ 33,098, at

*16 n.10. It is not clear from the record whether the Commission actually

issued an abatement order. In any event, such an abatement order would

be moot because it would be directed at Dayton’s Oklahoma City plant,

and Bridgestone closed that plant in 2006. Therefore, we will focus only

on the Commission’s assessment of civil penalties.

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compel is a prerequisite for any future challenge to long-

delayed agency action. As such, Section 706(1) does not

restrict our authority to “set aside agency action . . . found to

be . . . not in accordance with law,” id. § 706(2)(A), including

agency action that does not conclude a matter “within a

reasonable time,” id. § 555(b).

Although we are empowered to set aside the

Commission’s order on the basis of delay, we decline to do so

here. Yes, in the words of the Secretary herself, the

Commission’s twelve-year delay was “excessive and

deplorable.” Resp. Br. 43. But as Dayton admits—and its

cited cases demonstrate—delay alone is not enough; it is the

“consequence[s] of the Commission’s delay” that dictate

whether corrective action is needed. Pet. Reply Br. 18. And

in this instance, the consequences of the Commission’s delay

do not justify setting aside its chosen penalty.

Unlike the petitioner in TNS, Inc. v. NLRB, 296 F.3d 384

(6th Cir. 2002), Dayton cannot show that enforcement of the

Commission’s order would be inequitable. In TNS, the court

set aside a National Labor Relations Board (NLRB) backpay

award because the award “ha[d] potentially been mounting”

during the agency’s eighteen-year delay, and there was no

“reasonable way to hold the [employer] responsible for

damages accruing over all of this time.” Id. at 404. Here, the

Commission’s delay did not increase Dayton’s liability. If

anything, it decreased it by giving Dayton more than a decade

to earn interest on the money it would have to use to pay the

penalty. As for Dayton’s assertions of non-financial prejudice

from the Commission’s delay—that it lacked clear guidance

on how to conform to the LOTO standard and could not

benefit from a remand to the ALJ because the ALJ had

retired—they are factually dubious, and, in any event, not

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dependent on whether we enforce the Commission’s penalty

or not.

Dayton also fails to demonstrate that enforcement of the

Commission’s penalty would be futile or nonsensical. Dayton

relies on NLRB v. Mountain Country Food Store, Inc., 931

F.2d 21 (8th Cir. 1991), and Emhart Indus. v. NLRB, 907 F.2d

372 (2d Cir. 1990), but in both cases, the court set aside

orders of injunctive relief that had become pointless with the

passage of time: in Emhart, an order directing an employer to

change its method for reinstating striking workers at a

particular plant had become useless because the parties had

already signed two new collective bargaining agreements

addressing reinstatement, and the plant in question had been

shut down, 907 F.2d at 380; and in Mountain Country, an

order directing an employer to permit union members to pass

out handbills at its stores had become useless because the

union had since been decertified, one of the stores at issue had

been relocated, and the number of affected employees had

changed, 931 F.2d at 22. Unlike the injunctive relief ordered

in those cases, which addressed “ongoing or future

violations,” the civil penalty assessed here “address[es] past

violations,” and is based on “the employer’s status at the time

of the violation.” Reich v. OSHRC, 102 F.3d 1200, 1202

(11th Cir. 1997). As a result, it has not become outdated

because of the Commission’s delay.

Dayton maintains enforcement of the penalty would be

pointless because “OSHA penalties are meant to inflict

pocket-book deterrence,” Kaspar Wire Works, Inc. v. Sec’y of

Labor, 268 F.3d 1123, 1132 (D.C. Cir. 2001), and the penalty

here no longer has any deterrent effect: Dayton cannot be

deterred from future violations because it no longer exists as a

separate entity; Dayton’s corporate parent, Bridgestone, need

not be deterred because it encouraged Dayton to comply with

8

its LOTO obligations before the underlying citation issued,

and generally has a stellar safety record; and other employers

already have been deterred because the deterrent effect

occurred “when the citation first issue[d],” Pet. Reply Br. 7.

While the deterrent effect of a single penalty is difficult

to assess with much precision, we are confident that

enforcement of this penalty will have some effect on

Bridgestone and employers in general. True, Bridgestone

encouraged Dayton to review its LOTO compliance over a

year before Dayton received its citation. But if Bridgestone

must pay a penalty for LOTO violations committed by one of

its divisions, perhaps in the future it will be more insistent

when it encourages compliance with health and safety

regulations. Although Bridgestone has a strong safety record,

there is always room for improvement. As for other

employers, the issuance of the underlying citation may well

have had a deterrent effect, but the enforcement of the penalty

will send the additional message that LOTO violators should

expect to pay even when the Commission drags its feet.

Our willingness to enforce the Commission’s penalty

should not be mistaken for approval of its “deplorable”

conduct. Resp. Br. 43. The Commission does a disservice to

both employers and employees when it fails to clarify health

and safety standards promptly. Nevertheless, in this instance,

the Commission’s delay did not render its penalty inequitable

or inconsistent with the goals of the OSH Act, and we will not

set aside an order without a compelling reason to do so.

III

Dayton argues in the alternative that the Commission’s

finding of willfulness should be vacated because it lacks

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substantial supporting evidence. See 29 U.S.C. § 660(a). We

agree.

A violation of the OSH Act can be “serious,” “not

serious,” or “willful.” 29 U.S.C. § 666(a)–(c). For a willful

violation, the OSH Act authorizes the Secretary to impose a

maximum penalty of $70,000—ten times the maximum

penalty for a serious or a not serious violation. Id. Yet

despite defining what a serious violation is (and by negative

implication, what a not serious violation is), see id. § 666(k),

the OSH Act does not define what a willful violation is. See

Am. Wrecking Corp. v. Sec’y of Labor, 351 F.3d 1254, 1262

(D.C. Cir. 2003) (“[N]either the [OSH] Act nor Commission

regulations define the term ‘willful’ . . .”).

We have defined “willful,” however, and our narrow

definition reflects the potential severity of the OSH Act’s

penalty. A willful violation is “an act done voluntarily with

either an intentional disregard of, or plain indifference to, the

Act’s requirements.” Ensign-Bickford Co. v. OSHRC, 717

F.2d 1419, 1422 (D.C. Cir. 1983); see also AJP Constr., Inc.

v. Sec’y of Labor, 357 F.3d 70, 74 (D.C. Cir. 2004); A.J.

McNulty & Co., Inc. v. Sec’y of Labor, 283 F.3d 328, 337–38

(D.C. Cir. 2002). As the Commission has elaborated, to

sustain a willful violation, “‘[t]he Secretary must show that

the employer was actually aware, at the time of the violative

act, that the act was unlawful, or that it possessed a state of

mind such that if it were informed of the standard, it would

not care.’” AJP Constr., 357 F.3d at 74 (quoting Sec’y of

Labor v. Propellex Corp., 1999 CCH OSHD ¶ 31,792 (No.

96-0265, 1999), at *8). A “good faith, reasonable belief by an

employer that its conduct conformed to the law negates a

finding of willfulness.” A.J. McNulty, 283 F.3d at 338.

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Here, the Secretary argued before the ALJ that Dayton

“either intentionally disregarded or was plainly indifferent to

the requirements of the LOTO standard as a matter of

corporate policy throughout the Oklahoma City facility.”

ALJ Ruling, 1997 WL 152083, at *16. Dayton countered that

it had “attempted in good faith to comply with the provisions

of the LOTO standard.” Id. at *18. After reviewing the

relevant testimony and evidence at some length, id. at *18–21

the ALJ sided with Dayton, finding that the actions of

Dayton’s safety managers, Phillip McCowan and Kelley

Mattocks, demonstrated that “an effort was made to comply

with the standard on a plant wide basis.” Id. at *21. The ALJ

did deem some of Dayton’s violations willful, however,

because Dayton’s apparent failure to review a LOTO citation

for another Bridgestone facility and correct similar

deficiencies at the Oklahoma City plant showed “plain[]

indifferen[ce] to the requirements of the LOTO standard for

the activities and machines listed in the [Bridgestone]

citation.” Id. at *23.

On appeal, the Commission found that Dayton acted

willfully, albeit on different grounds than did the ALJ. It

found the “evidence [did] not support the [ALJ]’s decision to

characterize . . . particular citation items as willful” because

the record was “silent regarding the actions of plant

management after receiving the . . . [Bridgestone] citation.”

Commission Ruling, 2010 CCH OSHD ¶ 33,098, at *18 n.12.

Yet it found sufficient evidence to conclude that Dayton had

willfully violated the OSH Act as a matter of corporate

policy. In the Commission’s telling, McCowan’s initial

assessment that only Ogden employees performed tasks

covered by the LOTO standard was “plainly erroneous,” id. at

*19; Mattocks “adopted and perpetuated [McCowan’s]

approach without ever conducting her own assessment,” id. at

*20; and Mattocks ignored five separate warnings to review

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Dayton’s LOTO compliance in the year or so following her

adoption of McCowan’s approach, id. at *20–23. On the

strength of those findings, the Commission proclaimed that

“Mattocks either knew that her predecessor’s LOTO analysis

was incorrect or chose to avoid such knowledge by refusing to

conduct her own assessment.” Id. at *24. And because

“Dayton’s failure to comply with the cited provisions hinge[d]

on its reliance on Mattocks’s unfounded determination,” all of

Dayton’s violations were willful. Id.

The linchpin of the Commission’s willfulness

determination is its finding that Mattocks either knew Dayton

was non-compliant or was unwilling to investigate for fear of

uncovering Dayton’s non-compliance. We think that finding

is based more on speculation than evidence. Accordingly, the

Commission’s willfulness characterization does not withstand

our review.

The Commission does not cite a single piece of evidence

indicating that Mattocks “was actually aware, at the time of

the violative act, that the act was unlawful.” AJP Constr., 357

F.3d at 74. Its statements about Mattocks invariably focus on

her failure to investigate Dayton’s compliance, rather than her

actual knowledge of Dayton’s non-compliance. See, e.g.,

Commission Ruling, 2010 CCH OSHD ¶ 33,098, at *24

(“Mattocks’s steadfast refusal to reassess the basis of . . .

McCowan’s decision to exempt Dayton from the bulk of the

standard’s requirements was nothing short of obstinate.”).

Indeed, the Commission quotes Mattocks’ testimony that she

“believed that we [Dayton] were within full compliance.” Id.

at *21 n.16. Thus, the Commission is left only with its

finding that Mattocks “chose to avoid such knowledge [of

Dayton’s non-compliance] by refusing to conduct her own

assessment,” id. at *24—that Mattocks was, in other words,

12

“plain[ly] indifferen[t] to . . . the Act’s requirements.”

Ensign-Bickford, 717 F.2d at 1422.

Although there is some supporting evidence, there is not

enough, particularly “when contradictory evidence is taken

into account.” Am. Wrecking Corp., 351 F.3d at 1261. As

our cases demonstrate, it takes a lot to be plainly indifferent.

We have affirmed the Commission’s finding of plain

indifference when there was evidence the company had

disregarded repeated warnings from an employee that it was

in violation of safety standards, and had failed to “make any

effort to address the safety problems.” AJP Constr., 357 F.3d

at 74 (emphasis added). We have also affirmed a finding of

plain indifference on the basis of evidence that a company had

ignored repeated reports from its own safety engineer that its

facilities contained “hundreds of safety type violations.” A.E.

Staley Mfg. Co. v. Sec’y of Labor, 295 F.3d 1341, 1346 (D.C.

Cir. 2002). Here, the Commission relies primarily on

Mattocks’ responses to five incidents to show that she was

plainly indifferent. But those responses evince negligence at

most.

The first two incidents occurred in 1992. After a safety

training session, certain Dayton employees raised concerns

about whether they should be treated as authorized employees

instead of affected employees. A few months later,

Bridgestone’s new safety director sent a memo to all

Bridgestone safety personnel encouraging them to “revisit”

their LOTO practices. Commission Ruling, 2010 CCH

OSHD ¶ 33,098, at *21. In response to these two events,

Mattocks (in the Commission’s words) “asked Dayton’s

various production supervisors whether the nature of any of

the jobs performed by Dayton employees had changed since

McCowan had first determined that all of those employees

should be classified as affected.” Id. When she did not

13

receive any “indication from supervisors that any of the jobs

had changed, she ended her inquiry.” Id. While Mattocks

could have done more, she did not do nothing.

The third incident took place in 1993. In the

Commission’s telling, Mattocks did nothing after Faye

Kearney, an OSHA ergonomics inspector, toured the

Oklahoma City plant and expressed her concerns about

Dayton’s LOTO compliance for certain machines. Id. at *21–

22. Setting aside the Commission’s decision to credit

Kearney’s testimony over Mattocks’, see id. at *32–33

(Thompson, Comm’r, dissenting) (arguing Commission erred

in this respect), and assuming Kearney told Mattocks what

she claimed to have told her, Mattocks’ inaction was

reasonable. Kearney was “an industrial hygienist” who

“admitted that she specialized in health-related inspections,

not safety-related inspections.” Id. at *33. Even Kearney’s

OSHA supervisor discounted her concerns about Dayton’s

LOTO compliance because he was uncomfortable with her

level of expertise. Id. We cannot find Mattocks plainly

indifferent for doing the same.

In response to the fourth event—the death of a Dayton

employee in October 1993—Dayton managers “investigated

how the accident occurred” and determined “LOTO was not .

. . relevant,” but “committed to reexamining the application of

LOTO to Dayton’s entire operation.” Id. at *23. When the

managers reminded Mattocks of this commitment, she

conducted “some review of the LOTO standard” and

concluded that Dayton was still in compliance. Id. Again,

while Mattocks’ review may not have been as thorough as the

Commission would have liked, it did not display plain

indifference.

14

The fifth and final incident occurred in November 1993,

when OSHA inspector George McCown came to the

Oklahoma City plant to review Dayton’s LOTO compliance.

Following the inspection, McCown “reviewed with

[Mattocks] the alleged LOTO violations” in various

departments, and “Mattocks never acted on McCown’s

admonitions” before OSHA issued the underlying citation in

April 1994. Id. at *23. Mattocks’ inaction in the face of

McCown’s views is not sufficient proof of indifference. In an

analogous situation, the Commission stated that “an employer

is entitled to have a good faith opinion that his conduct

conforms to regulatory requirements,” and “such conduct

should not be construed as constituting a willful violation of

the [OSH] Act merely because Labor holds a contrary opinion

on the facts and advises the employer of that opinion.” C.N.

Flagg & Co., Inc., 2 BNA OSHC 1539 (No. 1409, 1975), at

*2.

Indeed, what the ALJ acknowledged and the Commission

dismissed was the possibility of good faith. The LOTO

standard covered servicing and maintenance and exempted

production processes. Because service and maintenance at

the Oklahoma City plant was the responsibility of an

independent company, McCowan concluded Dayton

employees were not covered. Mattocks followed his lead.

Dayton and the Secretary clearly disagreed about the scope of

the exemption and the Secretary’s view prevailed. But a

difference in interpretation—even a persistent one—is not

synonymous with willfulness, particularly when, as here, the

Commission relies on rulings issued after the underlying

citation to resolve the interpretive dispute. See Commission

Ruling, 2010 CCH OSHD ¶ 33,098, at *5–7; see also

McLaughlin v. Union Oil Co., 869 F.2d 1039, 1047 (7th Cir.

1989) (holding that a willful violation “would have to be

apparent at the time committed,” and that a “violation is not

15

willful when it is based on a nonfrivolous interpretation of

OSHA’s regulations”).

Mattocks may not have displayed the kind of initiative

we would expect when lives and limbs are at stake. But the

evidence before the Commission did not establish that

Mattocks “possessed a state of mind such that if [she] were

informed of the standard, [she] would not care.” AJP Constr.,

357 F.3d at 74. Mattocks made some effort to ensure

Dayton’s LOTO compliance, and under these circumstances,

some effort is enough to save Dayton from a willfulness

determination.

IV

The Commission lacked substantial supporting evidence

for its finding that Dayton’s violations were willful.

Accordingly, we vacate that portion of the Commission’s

order and remand for the Commission to reassess the nature

of Dayton’s violations and recalculate the appropriate penalty.

We affirm the Commission’s order in all other respects.

So ordered.