LTV Steel Co. v. Griffin

Attorneys for Appellant

S.R. Born

Ellen D. Gregory

George Norwood

Ice Miller Donadio & Ryan

Indianapolis, IN

Attorneys for Amicus Curiae Indiana Legal Foundation

Lewis D. Beckwith

Danelle Miller Marks

Baker & Daniels

Indianapolis, IN

Attorneys for Appellee

Jeffery A. Modisett

Attorney General of Indiana

Jon Laramore

Rafal Ofierski

Deputy Attorney General

Indianapolis, IN

IN THE

INDIANA SUPREME COURT

LTV STEEL COMPANY

Appellant (Plaintiff below),

v.

JOHN P. GRIFFIN (formally Kenneth Zeller), In His Capacity As The

COMMISSIONER OF THE INDIANA DEPARTMENT OF LABOR,

Appellee (Defendant below).

)

) Supreme Court No.

) 49S04-9811-CV-692

)

)

) Court of Appeals No.

) 49A04-9612-CV-512

)

)

)

)

APPEAL FROM THE MARION COUNTY SUPERIOR COURT

The Honorable Richard H. Huston, Judge

Cause No. 49D10-9503-MI-0399

ON PETITION TO TRANSFER

June 30, 2000

SULLIVAN, Justice.

An employer was charged with serious and knowing workplace safety

violations after a state inspection. The state safety review board (the

adjudicator of workplace safety violations) dismissed the charges because

it found that the safety inspector had a conflict of financial interest.

We reverse, holding that an employer is not entitled to dismissal of such

charges on this basis.

Background

The Indiana Occupational Safety and Health Act (“IOSHA”) requires

Hoosier employers to “establish and maintain conditions of work which are

reasonably safe and healthful for employees, and free from recognized

hazards that are causing or are likely to cause death or serious physical

harm to employees.” Ind. Code § 22-8-1.1-2.[1] Under IOSHA, an

Occupational Safety Standards Commission is authorized to promulgate safety

and health standards. Id. § 22-8-1.1-7. In addition, IOSHA adopts certain

federal occupational safety and health standards as standards of the

Indiana Occupational Safety Standards Commission. Id. § 22-8-1.1-13.1.[2]

Every Indiana employer is required to “comply with the occupational health

and safety standards promulgated under” IOSHA. Id. § 22-8-1.1-3.1.

The Commissioner of the Indiana Department of Labor and the

Commissioner's designated representatives are charged with administering

and enforcing IOSHA and the safety standards adopted by the Standards

Commission.[3] Id. § 22-8-1.1-22.1. The Commissioner and designated

representatives are authorized by IOSHA to “enter without delay and inspect

at all reasonable times places of employment in order to enforce any

provisions of [IOSHA], including occupational safety and health standards.”

Id. § 22-8-1.1-23.1.[4]

This case arises out of such an inspection. Between April 11 and

August 15, 1991, an IOSHA compliance safety and health officer conducted an

inspection of LTV Steel Company’s Harbor Works Facility (“LTV Steel”) in

East Chicago, Indiana. The investigation identified a series of alleged

violations. Pursuant to the Commissioner’s authority under section 25.1 of

IOSHA, the Commissioner issued two notices of alleged violations, referred

to in IOSHA as “safety orders,” to LTV Steel.

The first safety order listed fourteen alleged “serious”[5] violations

of IOSHA safety standards including:

1. Storage of steel coils between five and six feet in height

in a way that obscured the vision of employees operating a remote

control crane in a high volume traffic area.

2. Transporting scrap hoppers down aisleways overloaded and

with sharp pieces of steel hanging over the sides causing a hazard to

persons walking or moving into the aisles.

3. Potholes and a large oil spill in the floor area around a

tin mill coil storage stand conveyor.

4. Huge potholes and uneven floor area where the slab carriers

transport slabs of steel.

5. Failure to instruct employees working in and around the

chromic acid tanks as to the hazards of their job.

6. Failure to instruct supervisors and workers in slab carrier

operations in the proper selection, use and maintenance of

respirators.

7. Water supply turned off and eye wash and drenching station

not readily available where industrial batteries were being replaced

and recharged.

8. A tin mill crane malfunctioned and the crane went out of

control.

The Commissioner assessed penalties totaling $12,200 for these

violations.[6]

The second safety order alleged “knowing” violations[7] of IOSHA

safety standards arising from a June 17, 1991, incident in which an

unsecured grate on a chromic acid tank slid out of place, causing an

employee to fall into the tank. The order further alleged that during a

recent maintenance, the bolts that secured the grate had been removed and

were not replaced, and that there had been no immediate supply of clean

cold water for washing off chemicals or other liquids. The Commissioner

assessed penalties totaling $20,000 for these violations.

The IOSHA compliance safety and health officer who conducted the

inspection was Harvey French. French had been a union employee of A.M.

General Corporation in Mishawaka prior to being laid off in December 1989.

Upon taking the position as compliance safety and health officer with the

Labor Department in May 1990, French notified A.M. General of his new

position. While employed with the Labor Department, French remained on

layoff status with A.M. General and enjoyed “recall rights” of re-

employment. French also had a vested pension with A.M. General.

Unbeknownst to French at the time he began a previous inspection of

the LTV Steel facility in late 1990, LTV Steel and A.M. General were sister

subsidiaries of the same parent corporation, LTV Corporation. At some

point during the prior inspection, French became aware of the connection

between the two corporations and advised LTV Steel officials of his layoff

status with A.M. General. French was told by LTV Steel officials[8] that

LTV Steel had no objection to his conducting the inspection and encouraged

him to proceed.[9] Likewise, during the 1991 inspection at issue, no LTV

Steel official or employee objected to French’s participation in the

inspection at the LTV Steel facility.

As noted above, French’s inspection resulted in two safety orders

dated September 23, 1991, being issued to LTV Steel. As authorized by

section 28.1 of IOSHA, LTV Steel filed a petition for review dated October

10, 1991, denying each of the allegations in the safety orders.[10] At

this point, the matter became subject to the procedural requirements of

both IOSHA and the Indiana Administrative Orders and Procedures Act, Ind.

Code § 4-21.5-1-1 et seq. (“AOPA”). Under IOSHA, the Commissioner

certified the dispute to the Indiana Board of Safety Review (“Safety

Board”). The Safety Board is given the power under IOSHA to affirm,

modify, or dismiss any action of the Commissioner concerning an alleged

violation (including any penalty and abatement period).[11] See Ind. Code

§ 22-8-1.1-30.1. By operation of AOPA, the Safety Board assigned the

matter to an administrative law judge for a hearing.

On March 24, 1993, LTV Steel filed a motion for summary judgment

contending that the entire inspection conducted by French and the resulting

safety orders were invalid because French had a statutorily prohibited

conflict of financial interest when he conducted the inspection. The

specifics of LTV Steel’s summary judgment argument were (1) that section

9(a) of the statute governing Indiana state employee ethics (“Ethics

Code”)[12] provides, “A state officer or employee may not participate in

any decision . . . in which the state officer or the employee . . . has a

financial interest, Ind. Code § 4-2-6-9(a);” (2) that French participated

in the decision to issue the safety orders to LTV Steel; (3) that French

had a “financial interest” within the meaning of section 1 of the Ethics

Code, in LTV Steel arising out of his employment relationship with A.M.

General/LTV, id. § 4-2-6-1(9); and (4) as a result, French’s inspection had

been conducted in violation of Indiana law and the safety orders should be

vacated. LTV Steel also provided an additional argument in support of

partial summary judgment.

For purposes of our decision today, it is sufficient to say that on

May 13, 1993, the administrative law judge denied the motion for summary

judgment without explanation.[13] On February 24, 1995, the Safety Board

reversed the administrative law judge’s decision and granted summary

judgment to LTV Steel. The Safety Board held that the inspection conducted

by French was invalid because French had a conflict of financial interest

that violated section 9 of the Ethics Code. Having rendered the inspection

invalid, the Safety Board dismissed all IOHSA violations that were subject

to the ALJ’s recommendation.

Exercising the right of judicial review of agency action under chapter

5 of AOPA, the Commissioner appealed the decision of the Safety Board. In

this petition for review, the Commissioner argued that LTV Steel failed to

demonstrate that French “was biased by [the] alleged financial interest,”

(R. at 1830), or that he “was influenced in any manner by the tenuous

relationship between [LTV Steel] and A.M. General when he conducted the

inspections.” (R. at 1831.) Therefore, the Commissioner contended that

the “Board’s decision [was] arbitrary and capricious, . . . in excess of

statutory jurisdiction, . . . and otherwise not in accordance with the

law, . . . because there is no factual or legal basis upon which the Board

could properly conclude that Harvey French’s inspection of LTV was clouded

by any conflict of interest .” (R. at 1768-69.)

On September 16, 1996, the Marion Superior Court vacated the Safety

Board’s decision reversing the ALJ’s denial of LTV Steel’s motion for

summary judgment and remanded the matter to the Safety Board for further

review. In reaching its conclusion, the trial court agreed with the

Commissioner’s contention that there was no evidence that French was

influenced by his attenuated relationship with A.M. General when he

conducted the inspections at the LTV Steel plant. The trial court further

determined that dismissing the IOSHA violations based on a “purported

conflict” of a regulatory inspector would contravene public policy because

such action would “unjustifiably reward LTV [Steel] for ignoring health and

safety regulations.” (R. at 1894.) But on January 12, 1998, the Court of

Appeals reversed the trial court and reinstated the determination of the

Safety Board. LTV Steel Co. v. Zeller, 686 N.E.2d 904 (Ind. Ct. App.

1997).[14]

Discussion

While the legislature has granted courts the power to review the

action of state government agencies taken pursuant to the Administrative

Orders and Procedures Act, this power of judicial review is limited. See

State Bd. of Registration for Prof’l Eng’rs v. Eberenz, 723 N.E.2d 422, 430

(Ind. 2000); Indiana Dep’t of Envtl. Management v. Conard, 614 N.E.2d 916,

919 (Ind. 1993); Indiana Dep’t of Natural Resources v. United Refuse Co.,

615 N.E.2d 100, 103 (Ind. 1993). A court may only set aside agency action

that is:

(1) arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law;

(2) contrary to constitutional right, power, privilege, or

immunity;

(3) in excess of statutory jurisdiction, authority, or

limitations, or short of statutory right;

(4) without observance of procedure required by law; or

(5) unsupported by substantial evidence.

See Ind. Code § 4-21.5-5-14(d).

While an appellate court grants deference to the administrative

agency’s findings of fact, no such deference is accorded to the agency’s

conclusions of law. See Indiana Dep’t of Pub. Welfare v. Payne, 622 N.E.2d

461, 465 (Ind. 1993), reh’g denied; Board of Trustees of the Pub.

Employees’ Retirement Fund of Ind. v. Miller, 519 N.E.2d 732, 733 (Ind.

1988). An interpretation of a statute by an administrative agency charged

with the duty of enforcing the statute is entitled to great weight, unless

this interpretation would be inconsistent with the statute itself. See

Indiana Dep’t of State Revenue v. Bulkmatic Transport, Co., 648 N.E.2d

1156, 1158 (Ind. 1995); cf. Lyng v. Payne, 476 U.S. 926, 939 (1986). But

an administrative agency does not have the power to make decisions properly

committed to another agency. See Spoon v. Town of Pittsboro, 706 N.E.2d

254, 257 (Ind. Ct. App. 1999); Bell v. State Bd. of Tax Comm’rs, 651 N.E.2d

816, 819 (Ind. Tax 1995); see also Charles H. Koch, Jr., Administrative Law

and Practice § 11.26, at 140 (2d ed. 1997) (“Courts will give no special

deference to interpretation by one agency of another agency’s rules.”).

An administrative agency has only those powers conferred on it by the

legislature, and unless we find the grant of powers and authority in the

statute, we conclude that no power exists. See Citizens Action Coalition

of Ind., Inc. v. NIPSCO Northern Ind. Pub. Serv. Co., 485 N.E.2d 610, 612

(Ind. 1985), cert. denied, 476 U.S. 1137 (1988).

For the reasons discussed below, we find the action of the Safety

Board in dismissing the safety orders was not in accordance with law, Ind.

Code § 4-21.5-5-14(d)(1), and was in excess of the Safety Board’s statutory

jurisdiction, id. § 4-21.5-5-14(d)(3).

I

The legislature has entrusted to the State Ethics Commission the

authority to establish, interpret, and enforce a code of ethics for the

conduct of state business. See Ind. Code § 4-2-6-1 et. seq. The Ethics

Code (the ethics statute and the regulations promulgated pursuant thereto)

constitutes a comprehensive remedial scheme. Of particular relevance to

this case, Ind. Code § 4-2-6-4(a)(2) authorizes the Ethics Commission to

receive and hear all complaints alleging a violation of the Ethics Code.

It may reject or dismiss any such complaint without further investigation,

id. § 4-2-6-4(b)(2)(A); must investigate any alleged violation not rejected

or dismissed, id. § 4-2-6-4(b)(2)(C); may determine whether a violation

occurred using a probable cause standard, id.; must conduct a public

hearing where probable cause has been found to exist, id.; must provide the

alleged violator “appropriate due process protection” during the hearing,

id. § 4-2-6-4(b)(2)(D); and must issue findings of fact after a hearing,

id. § 4-2-6-4(b)(2)(E). When the Ethics Commission finds that a violation

has occurred, it is authorized to recommend a sanction to be imposed by the

head of the state agency (called the “appointing authority”) or the elected

official for whom the violator is employed. Id. The Ethics Commission is

also authorized to forward a copy of any complaint to the prosecuting

attorney of the county in which the alleged violation occurred, id. § 4-2-6-

4 (b)(2)(A)(iii) & (H)(i), and to impose civil penalties, id. §§ 4-2-6-4

(b)(2)(F) and 4-2-6-12.

It is clear from this regulatory scheme that the legislature intended

the Ethics Commission to have exclusive jurisdiction to establish a code of

ethics for the conduct of state business, id. § 4-2-6-3, and to adjudicate

alleged violations thereof, id. § 4-2-6-4. The Ethics Commission shares

with the appointing authority or state elected official for which or whom a

violator is employed the authority to impose sanctions. Id. §§ 4-2-6-

4(b)(2)(E)-(F) and 4-2-6-12. That is, when a state employee is alleged to

have violated an ethics requirement, the allegation is not adjudicated by

the appointing authority or state elected official for which or whom the

alleged violator is employed but by the Ethics Commission. See, e.g.,

Indiana State Ethics Comm’n v. Nelson, 656 N.E.2d 1172 (Ind. Ct. App. 1995)

(state ethics requirement violations by State Department of Natural

Resources employees adjudicated by Ethics Commission), transfer denied.

The Safety Board resolved this case by adjudicating French to have had

a “financial interest” as defined by the Ethics Code[15] and thereby

violated Ind. Code § 4-2-6-9[16] which prohibits a state employee from

“participat[ing] in any decision or vote of any kind in which the state . .

. employee . . . has a financial interest.”[17] Id. § 4-2-6-9(a) (1990);

see also Ind. Admin. Code tit. 40, r. 2-1-9(f) (Supp. 1991). In making

these determinations, the Safety Board exceeded its jurisdiction. We shall

examine IOSHA, the statute under which the Safety Board operates in some

detail infra, but point out here that there is nothing in it that

authorizes the Safety Board to adjudicate violations of the Ethics Code.

And, as we just explained, we find such to be within the exclusive

jurisdiction of the Ethics Commission.

At least two policy reasons for entrusting such determinations

exclusively to the Ethics Commission seem clear to us. If each state

agency were to issue its own interpretations of what, say, constituted an

impermissible financial interest, the standards would inevitably vary from

agency to agency. This would make compliance unnecessarily difficult,

especially for employees who are reassigned among agencies or who may

perform responsibilities for more than one. We get a sense of such

inconsistency in this case where the Safety Board, the trial court, and the

Court of Appeals each tried their respective hands at interpreting the

meaning of “financial interest” in the Ethics Code with varying results.

Second, though not directly implicated here, entrusting such determinations

to a single agency assures consistency in the application of due process

rights of alleged violators.[18]

II

While it appears to us undeniable that all of the Safety Board, trial

court, and Court of Appeals engaged in an adjudication that was within the

exclusive jurisdiction of the Ethics Commission, we do not rest our

analysis exclusively on that conclusion. We also conclude that even if

French had been properly found by the Ethics Commission to have had an

impermissible financial interest in LTV Steel,[19] such a finding would not

have provided LTV Steel with a statutory basis for dismissal of the safety

orders. None of the Ethics Code, IOSHA, or AOPA suggests any authority for

a state ethics violation by an inspector serving as a defense to

allegations of serious workplace safety violations.

A

We return to the Ethics Code, this time to examine whether it

expressly or impliedly authorizes a violation thereof to be employed as a

defense in an IOSHA safety enforcement proceeding.

Section 9 provides: “A state officer or employee may not participate

in any decision or vote of any kind in which the state officer or the

employee or that individual’s spouse or unemancipated children has a

financial interest.” Ind. Code § 4-2-6-9 (1990). If the Ethics Commission

finds a violation of this requirement, the Ethics Code contains two

provisions governing sanctions. First, the Ethics Commission “may make a

recommendation for the sanctions to be imposed by the appointing authority

or state officer [for whom the violator works] for the violation,

including: (i) reprimand; (ii) suspension with or without pay; or (iii)

dismissal of an employee.” Id. § 4-2-6-4(b)(2)(E). Second, the Ethics

Commission “may also take any of the actions provided in section 12 of” the

Ethics Code. Id. Section 12 authorizes the following actions:

(1) Impose a civil penalty upon a respondent not to exceed the

greater of: (A) three (3) times the value of any benefit received from

the violation; or (B) ten thousand dollars ($10,000).

(2) Cancel a contract.

(3) Bar a person from entering into a contract with any agency

for a period specified by the commission. The period specified by the

commission may not exceed two (2) years from the date the action of

the commission is effective.

Id. § 4-2-6-12. It is clear that the express language of the Ethics Code

does not authorize the dismissal of an IOSHA safety order as a sanction for

a violation of the Ethics Code.

Nor do we find such authority implied by the statute. First, the

structure of the Ethics Code is clearly pointed at sanctioning state

employees who violate the Ethics Code and not conferring benefits on third

parties arguably injured by a state employee’s violation. All of the

sanctions impinge upon the individual state employee personally. It is

true that the Ethics Code remedy providing for the cancellation of a

contract entered into in violation of the Ethics Code could confer a

benefit on a party which had unsuccessfully sought the contract in the

sense that that party might again be able to seek the contract. But where

the legislature specifically provided the remedy of contract cancellation

without providing a counterpart remedy of regulatory action dismissal, we

are unable to infer any legislative intent that the Ethics Code be

available as a defense against an IOSHA safety order.

This conclusion comports with the law generally applicable to the

ability of private parties to enforce rights under particular statutes. As

a general rule, a private party may not enforce rights under a statute

designed to protect the public in general and containing a comprehensive

enforcement mechanism. See, e.g., Ritz v. Indiana & Ohio R.R., 632 N.E.2d

769, 775 (Ind. Ct. App. 1994), transfer denied; Coons by Coons v. Kaiser,

567 N.E.2d 851, 855 (Ind. Ct. App. 1991), reh’g denied; Borne by Borne v.

Northwest Allen County Sch. Corp., 532 N.E.2d 1196, 1203 (Ind. Ct. App.

1989); Hirschauer v. C & E Shoe Jobbers, Inc., 436 N.E.2d 107, 111 n.4

(Ind. Ct. App. 1982). We hold that because the Ethics Code is designed to

protect the public in general and contains a comprehensive enforcement

mechanism, it implies no entitlement for use as a defense against an IOSHA

safety order.

B

We also find that IOSHA itself neither expressly nor impliedly

authorizes a violation of the Ethics Code to be employed as a defense in an

IOSHA safety enforcement proceeding.

At the time the safety orders were issued to LTV Steel, the text of

IOSHA contained no express affirmative defenses to alleged workplace safety

violations. In 1995, the legislature added a new section to IOSHA

recognizing “an affirmative defense for a violation of any standard, rule,

or order that is the result of employee misconduct.” Ind. Code § 22-8-1.1-

27.2 (as added by P.L. 224-1995 § 1). The fact that the legislature has

provided an affirmative defense only for employee misconduct leads us to

conclude that the legislature did not intend that IOSHA itself provide any

other affirmative defenses to alleged IOSHA violations.

We believe this conclusion is harmonious with the central purpose and

basic policy of IOSHA.[20] As set forth supra, IOSHA requires that every

Hoosier employer must “establish and maintain conditions of work which are

reasonably safe and healthful for employees, and free from recognized

hazards that are causing or are likely to cause death or serious physical

harm to employees.” Ind. Code § 22-8-1.1-2. Further, every Indiana

employer must “comply with the occupational health and safety standards”

established under IOSHA. Id. § 22-8-1.1-3.1. To permit an employer to

have allegations of IOSHA violations against it dismissed on the basis that

the IOSHA inspector had a conflict of financial interest not permitted by

the Ethics Code would frustrate the Commissioner’s obligation under IOSHA

to enforce safety orders to “establish and maintain conditions of work

which are reasonably safe and healthful for employees.” Id. § 22-8-1.1-2;

see also id. § 22-8-1.1-22.1 (setting forth the Commissioner’s enforcement

power under IOSHA). An inspector’s Ethics Code impermissible financial

interest in no way excuses or mitigates workplace safety violations.[21]

Given the pervasive emphasis in IOSHA on an employer’s duty to maintain a

safe workplace, we are unable to find an implied affirmative defense for

violations of the Ethics Code.

C

Lastly, we turn to AOPA and find that it, like the Ethics Code and

like IOSHA, neither expressly nor impliedly authorizes a violation of the

Ethics Code to be employed as a defense in an IOSHA safety enforcement

proceeding.

In reaching this conclusion, we note three parts of chapter 3 of AOPA:

(1) Section 14, which discusses certain requirements for proceedings before

an administrative law judge, recognizes that a party may assert “an

affirmative defense specified by law,” Ind. Code § 4-21.5-3-14(a)(c); AOPA

itself does not provide or otherwise enumerate any affirmative defenses,

(2) Section 13 contains a specific provision prohibiting an investigator in

a regulatory proceeding from serving as an administrative law judge or

assisting or advising the administrative law judge in any way, id. § 4-21-5-

3-13; and (3) sections 9, 10, and 12 collectively contain an extensive set

of provisions governing the disqualification of administrative law judges

on grounds of bias. Our examination of these three parts of AOPA lead us

to conclude that, while the legislature specifically considered the role of

affirmative defenses, regulatory investigators, and bias in writing the

AOPA, it did not provide or suggest that an investigator’s impermissible

financial interest under the Ethics Code could serve as any type of defense

in AOPA proceeding.

III

Animating much of LTV Steel’s argument is its contention that unless

it can deploy the provisions of state employee ethics rules in its defense,

employers have “no remedy in situations, like this one, where the

inspection is tainted by serious impropriety or illegal conduct by the

inspector.” LTV’s Br. in Opp’n to Comm’r’s Pet. to Transfer at 7.[22]

With remarkable candor, LTV Steel employs the following analogy: “LTV has

merely raised the statute as a basis for invalidating the inspection, just

as a defendant in a criminal case, defending himself against charges

brought against him, might claim the investigators conducted an

unreasonable search and seizure.” Id. at 6.

Employers’ protection against wrongful allegations of safety

violations is the elaborate administrative and judicial review provisions

of the AOPA. This protection, constitutional in dimension,[23] gives an

employer a broad opportunity to exonerate itself from allegations of

workplace safety violations. But this protection, at least under current

law, does not extend to an automatic dismissal of charges on grounds that

the safety inspector violated the Ethics Code.

Conclusion

The Safety Board’s dismissal of the two safety orders issued to LTV

steel is reversed. This matter is remanded to the Safety Board for further

proceedings consistent with this opinion.

SHEPARD, C.J., and DICKSON, BOEHM, and RUCKER, JJ., concur.

-----------------------

[1] All IOSHA references to the Indiana Code and Indiana Administrative

Code, tit. 610, art. 4, r. 3, in this opinion are to the year 1988, which

were the Codes in effect at the time of the inspection.

[2] Repealed in 1994; now see Ind. Code § 22-8-1.1-16.2 (1998).

[3] Unless the context otherwise requires, the term “IOSHA” as used in this

opinion encompasses the Indiana Occupational Safety and Heath Act and the

safety standards thereunder.

[4] Effective in 1995, the legislature exempted certain employers from this

right of entry in certain circumstances. Ind. Code § 22-8-1.1-23.1 (Supp.

1995) (as amended by P.L. 221-1995, § 1, P.L. 220-1995, § 1).

[5] Ind. Code § 22-8-1.1-27.1(b) (1988) defines a “serious” violation as

one where “there is a substantial probability that death or serious

physical harm could result from a condition which exists from one or more

practices, means, methods, operations, or processes, which have been

adopted or are in use, in the place of employment, unless the employer did

not know and could not, with the exercise of reasonable diligence, have

known of the presence of the violation.” At the time of LTV Steel’s

inspection, employers who committed a violation of any safety standard or

rule “serious” in nature were subject to civil penalties up to $1,000 per

violation. See id. § 22-8-1.1-27.1(a)(2). In 1991, however, the Indiana

legislature increased this figure to $7,000 per “serious” violation, see

id. § 22-8-1.1-27.1(a)(2) (Supp. 1991); P.L. 170-1991 § 25 (effective

October 1991), and it remains so today. The definition of a “serious”

violation remained the same.

[6] See infra note 13.

[7] To prove a “knowing” violation under IOSHA, the Commissioner is

required to show that the employer acted voluntarily either in intentional

disregard of, or in plain indifference to its employees. See Union Tank

Car, Fleet Operations v. Commissioner of Labor, 671 N.E.2d 885, 890 (Ind.

Ct. App. 1996), transfer denied. At the time of LTV Steel’s inspection,

employers who “knowingly” violated any safety standard, rule, or order were

subject to civil penalties up to $10,000 per violation. Ind. Code § 22-8-

1.1-27.1(a)(4) (1988). In 1991, the Indiana legislature amended this

figure and currently sets the penalty at a minimum of $5,000 and a maximum

of $70,000 for each knowing violation. See id. § 22-8-1.1-27.1(a)(6)

(Supp. 1991); P.L. 170-1991 § 25 (effective October 1991).

[8] French informed John Carroll, the Manager of Safety Services for LTV

Steel, about his employment status with A.M. General. He also informed

Dennis Adams, the Chairman of the Safety and Health Committee of United

Steelworkers of America.

[9] On August 8, 1991, while French was conducting the LTV Steel

inspection, A.M. General granted French a “recall slip.” At the time he

received the recall, French had been working for the Labor Department for

just over one year. French chose to waive his recall rights for 60 days

and finished the inspection. On October 28, 1991, French formally tendered

his resignation from A.M. General.

[10] In addition to denying each of the allegations in the safety orders,

LTV Steel’s petition for review contended that one allegation contradicted

federal law and a prior IOSHA order, that three of the allegations were pre-

empted by federal regulation, and that it possessed insufficient knowledge

of one of the cited conditions to constitute a violation. As to the

chromic acid incident, LTV Steel denied the allegations and further

contended that the safety standard cited by the Commissioner was not

applicable to the facts.

[11] The Safety Board consists of five members appointed by the Governor,

two of whom are drawn from backgrounds with labor organizations, two from

backgrounds with employers, and one (the chairman) “from the highest

membership classification of the American Society of Safety Engineers.”

Ind. Code § 22-8-1.1-31.

[12] The statute governing Indiana state employee ethics is codified at

Ind. Code § 4-2-6-1 et seq. Section 2 of that statute creates a State

Ethics Commission and section 3 directs the Ethics Commission to adopt

rules establishing “a code of ethics for the conduct of state business.”

Unless the context otherwise requires, the use of the term “Ethics Code” in

this opinion refers to the statute and rules promulgated thereunder. And

all Ethics Code references to the Indiana Code in this opinion can be found

in the 1988 main volume or the 1990 supplements thereto, and Ethics Code

references to the Indiana Administrative Code can be found in the 1991

version, which were the versions in effect at the time of the inspection.

[13] The ALJ’s May 13, 1993 order denying LTV Steel’s motion for summary

judgment and partial summary judgment was not accompanied by findings of

facts or conclusions of law. From June 28 - 30, 1993, the ALJ held a

hearing to determine the merits of the contested safety orders. On April

4, 1994, the ALJ’s first recommendation upheld most of the violations but

recommended that the Board downgrade the second safety order regarding an

employee falling into the chromic acid tank from “knowing” to “serious.”

Both LTV Steel and the Department of Labor appealed to the Safety Board

where LTV Steel renewed its summary judgment motion. On August 16, 1994,

the Safety Board remanded the case to the ALJ, instructing the ALJ to

provide a factual basis for his earlier decision. The ALJ issued a second

recommended decision on December 29, 1994. In it, the ALJ upheld two

violations of the first safety order, which amounted to an $800.00 fine,

and all other violations were dismissed or reclassified to “de minimus,”

resulting in no fines. With respect to the second safety order, the ALJ

maintained the “serious” reclassification and penalized LTV for $1,000.00.

However, in neither recommendation did the ALJ address the issue of whether

French had a conflict of financial interest, the basis of LTV Steel’s

summary judgment motion and this appeal. Both parties again appealed to

the Safety Board and LTV Steel continued to argue its position that the

“underlying inspection was invalid as being performed in violation of” the

Ethics Code.

[14] When this case was on review with the Court of Appeals, Kenneth

Zeller held the position of Commissioner of the Indiana Department of Labor

(“IDOL”); however, John P. Griffin presides as the current Commissioner of

IDOL. Indiana Trial Rule 25(F)(1) provides in pertinent part:

When a public officer is a party to an action or other proceeding in

an official capacity and during its pendency . . . ceases to hold

office, the action does not abate and the officer’s successor is

automatically substituted as a party. Proceedings following

substitution shall be in the name of the substituted party . . . .

Accordingly, John P. Griffin “is automatically substituted as a party” for

Kenneth Zeller.

[15] Ind. Code § 4-2-6-1(9) (1990) states that a “financial interest means

an interest:

A) distinct from that:

i) of the general public; or

ii) as a state employee;

B) in a purchase, sale, lease, contract, option, or other transaction

between an agency and any person;

C) involving property or services; and

D) in which a state officer or an employee or that individual’s spouse

or unemancipated children may gain a benefit of two hundred fifty

dollars ($250) or more.

This term includes an interest arising from employment or prospective

employment for which negotiations have begun. . . .”

Ind. Admin. Code tit. 40, r. 2-1-4 (Supp. 1991) characterizes

“financial interest” as “economic interest,” meaning a “substantial

financial interest in investments, employment, awarding of contracts,

grants, loans, purchases, leases, sales or similar matters under

consideration or consummated between a state agency over which the person

has jurisdiction or in which the person is employed.”

[16] Although not relevant to the decision we make today, we recognize that

the Indiana legislature has since twice amended Indiana Code § 4-2-6-9

which now reads, “A state officer or employee may not participate in any

decision or vote of any kind in which the state officer or the employee, or

that individual’s spouse or unemancipated children has a financial

interest.” (As amended by P.L. 15-1992 § 5 and P.L. 22-1995 § 2).

[17] We need not and do not resolve whether French’s disclosed relationship

to a corporate sibling of LTV rose to the level of a “financial interest”

in French’s decisions as an inspector of LTV, or even if it did, whether

LTV was in a position to complain after inviting French to continue when

the affiliation between LTV and A.M. General was discovered.

[18] Here, French has been found by the Safety Board and the Indiana Court

of Appeals to have violated the State Ethics Code, violations of which

carry severe sanctions, without ever having had any due process at all.

[19] There is nothing in the record to suggest that LTV Steel filed a

complaint with the Ethics Commission alleging a violation by French.

[20] Congress has explained that the purpose of the federal Occupational

Safety and Health Act, which IOSHA implements in Indiana, is “to assure so

far as possible every working man and woman in the Nation safe and

healthful working conditions.” 29 U.S.C. § 651(b) (1994).

[21] This appears to be the context of the trial court’s conclusion that

“[s]etting aside the Safety Orders for a purported conflict would

unjustifiably reward LTV [Steel] for ignoring health and safety regulations

endangering its plant’s employees.” (R. at 1893-94.)

[22] LTV Steel begins its brief to the Court of Appeals as follows:

Increasingly of late, local and national newspapers and media

interests have carried substantial news stories regarding claims of

corruption by government officials. Whether those stories concern

Arkansas, Washington, D.C., or Indianapolis, Indiana, one abiding

element exists in each: the citizenry opposes actions by government

officials which aggrandize the power, position, or fortune of the

government official because he or she has the authority to make a

decision affecting others. That is the central core of the definition

of conflict of interest.

Appellant’s Br. at 1. While we appreciate the point LTV Steel makes, we

question its relevance to this case which we do not perceive to involve

any question of government corruption. At no point does LTV Steel accuse

French of corruption.

[23] The Due Process Clause ensures that “no person will be deprived of his

interests in the absence of a proceeding in which he may present his case

with assurance that the arbiter is not predisposed to find against him.”

Marshall v. Jerrico, Inc., 446 U.S. 238, 242 (1980). Thus, self-dealing

or bias on the part of a hearing officer would contravene not only the AOPA

but the Constitution itself. Marshall also indicates that the Due Process

Clause imposes some limits, which we do not find implicated here, on

“administrative prosecutors,” a category of persons which we believe could

include government investigators. Id. at 249-50. LTV Steel alleges no

violation of the Due Process Clause.