Court Opinion

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Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

9-28-2007

Secretary Labor v. Trinity Ind Inc
Precedential or Non-Precedential: Precedential

Docket No. 06-2121

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                                  PRECEDENTIAL

   UNITED STATES COURT OF APPEALS
        FOR THE THIRD CIRCUIT

               No. 06-2121

         SECRETARY OF LABOR,
                       Petitioner

                    v.

TRINITY INDUSTRIES, INC., OCCUPATIONAL
 SAFETY & HEALTH REVIEW COMMISSION,
                          Respondents

               No. 06-2271

         SECRETARY OF LABOR

                    v.

TRINITY INDUSTRIES, INC.; OCCUPATIONAL
 SAFETY & HEALTH REVIEW COMMISSION

              Trinity Industries, Inc.,
                            Petitioner

PETITION FOR REVIEW OF THE FINAL ORDER
   OF THE OCCUPATIONAL SAFETY AND
       HEALTH REVIEW COMMISSION
            Docket No. 05-0773

          Argued: May 21, 2007

                    1
Before: BARRY, CHAGARES, and TASHIMA,* Circuit Judges

               (Opinion Filed: August 31, 2007 )

Michelle Yau, Esq. (Argued)
Michael P. Doyle, Esq.
United States Department of Labor
Office of the Solicitor
Suite S-4004
200 Constitution Avenue, N.W.
Washington, D.C. 20210

Counsel for Petitioner/Cross Respondents

Robert E. Rader, Jr., Esq. (Argued)
Rader & Campbell
2777 North Stemmons Freeway
Suite 1125, Stemmons Place
Dallas, TX 75207

Counsel for Respondents/Cross Petitioners

                  OPINION OF THE COURT

BARRY, Circuit Judge

      At issue before the Court is the decision of an

      *
        The Honorable A. Wallace Tashima, Senior Circuit Judge,
United States Court of Appeals for the Ninth Circuit, sitting by
designation.

                               2
Administrative Law Judge (“ALJ”) constituting a final order of
the Occupational Safety and Health Review Commission
(“OSHRC” or “Commission”), which upheld two violations of
the OSH Act but reclassified them as “non-serious.” The
Secretary of Labor, in 06-2121, contends that the ALJ erred in
this reclassification of the violations. Trinity Industries, in 06-
2271, argues that the ALJ erred in affirming the violations at all.
For the following reasons, we will grant the petition in 06-2121
and deny the petition in 06-2271.

                                 I.

        This action was tried on stipulated facts before the ALJ.
In brief, in 1988, Trinity purchased a foundry, which had been
constructed prior to 1981, in McKees Rocks, Pennsylvania. At
that time, Trinity had work done on the pusher furnace, which
required removing a brick wall and inner insulation blanket.
Trinity believed that any asbestos that had been present was
removed. Trinity also believed that any new insulation installed
at that time would be asbestos-free. Given these beliefs, in
2005, Trinity, in preparing to have work done on the same
pusher furnace, did not conduct tests to determine if asbestos
was present. It hired a contractor, Pli-Brico, to complete the
work on the furnace. After work commenced, a Trinity
employee noticed that an insulation blanket which had been
placed in a dumpster appeared to contain asbestos. Work
stopped and testing revealed that the insulation contained 5%
amosite asbestos, which was later confirmed by tests conducted
by the Occupational Safety and Health Administration
(“OSHA”).

       OSHA issued a citation to Trinity alleging violations of
29 C.F.R. § 1926.1101(k)(2)(i), for failure to “determine the
presence, location, and quantity of asbestos-containing material
and/or presumed asbestos-containing material at the work site,”
and 29 C.F.R. § 1926.1101(k)(2)(ii)(A), for failure to “notify
prospective employers bidding for work whose employees
reasonably can be expected to be exposed to areas containing
asbestos containing material (ACM) or presumed asbestos
containing material (PACM).” (A.R. 48–49.) It characterized

                                 3
these violations as “serious.”

        The ALJ found that the cited asbestos standard, which
applies to “[c]onstruction, alteration, repair, maintenance, or
renovation of structures, substrates, or portions thereof, that
contain asbestos,” 29 C.F.R. § 1926.1101(a)(3), applies in this
situation. As the stipulated facts established that Trinity did not
test for asbestos and did not notify Pli-Brico of its presence, the
ALJ ruled that Trinity violated both sections of the regulation for
which it was cited. The ALJ, however, reclassified the
violations as “other” or “non-serious,” because, according to the
ALJ, the violations could not be deemed “serious” pursuant to
29 U.S.C. § 666(k) as the Secretary had not met her burden of
showing “any significant exposure to asbestos.” (A.R. 20.) The
ALJ vacated the proposed $2000 penalty.

        Both parties appealed. The OSHRC did not direct the
case for review. As such, the decision of the ALJ is deemed the
final order of the OSHRC. See 29 U.S.C. § 661(j). We have
jurisdiction pursuant to 29 U.S.C. § 660.

                                 II.

       Pursuant to the Administrative Procedure Act, 5 U.S.C. §
706(a)(2), this Court may set aside the legal conclusions of the
ALJ if they are “arbitrary, capricious, an abuse of discretion or
otherwise not in accordance with law.” See Bianchi Trison Corp.
v. Chao, 409 F.3d 196, 204 (3d Cir. 2005). The Court “must
defer to an agency’s reasonable interpretation of an ambiguous
administrative statute.” Reich v. D.M. Sabia Co., 90 F.3d 854,
856 (3d Cir. 1996); see also Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 843–46 (1984). In those
instances in which the Secretary of Labor’s interpretation differs
from the interpretation of the OSHRC, the Court must defer to
the Secretary’s reasonable interpretation. Reich, 90 F.3d at
859–60; see also Martin v. OSHRC, 499 U.S. 144 (1991).

       OSHA cited Trinity for two violations of the OSH Act.
The regulation at issue, 29 C.F.R. § 1926.1101, applies, in part,
to construction and maintenance involving asbestos. Id. §

                                 4
1926.1101(a)(3). The regulation requires building owners 1 to
test for asbestos at the worksite and communicate the results of
those tests to employees and prospective employers bidding for
work. The testing, id. § 1926.1101(k)(2)(i), and notification, id.
§ 1926.1101(k)(2)(ii), provisions are those at issue in this case.
Pursuant to the regulation, the thermal system insulation and
surfacing materials of buildings constructed prior to 1981 are
presumed to contain asbestos and are deemed “presumed
asbestos containing material” (“PACM”). Id. § 1926.1101(b).
Tests done in accordance with the regulation can be used by the
building owner to rebut the presumption that such materials
actually contain asbestos. Id. § 1926.1101(k)(5).

        The first issue to be addressed is the ALJ’s
reclassification of Trinity’s violations as “non-serious.”
Pursuant to 29 U.S.C. § 666(k), “a serious violation shall be
deemed to exist in a place of employment if there is a substantial
probability that death or serious physical harm could result from
a condition which exists . . . unless the employer did not, and
could not with the exercise of reasonable diligence, know of the
presence of the violation.” The ALJ ruled that the Secretary had
failed to meet her burden of showing that a serious violation had
occurred because “there is no evidence to show any significant
exposure to asbestos.” (A.R. 20). Trinity agrees, arguing that the
Secretary “must present evidence either that there is a substantial
probability that serious disease or death could result from this
isolated one-time exposure, or that overexposure to asbestos was
typical of the employee’s job.” Trinity Br. at 12. We disagree.

       It is well-settled that, pursuant to § 666(k), “when the
violation of a regulation makes the occurrence of an accident
with a substantial probability of death or serious physical harm
possible, the employer has committed a serious violation of the

       1
          As the Secretary explained both at oral argument and in her
supplemental letter brief, the regulation applies only to building
owners “who are statutory employers” under the OSH Act. 59 Fed.
Reg. 40964, 40972 (Aug. 10, 1994). Trinity conceded at argument
that it is both a building owner and a statutory employer.

                                 5
regulation.” Bethlehem Steel Corp. v. OSHRC, 607 F.2d 1069,
1073 (3d Cir. 1979) (emphasis added). The “substantial
probability” portion of the statute “refers not to the probability
that an accident will occur but to the probability that, an accident
having occurred, death or serious injury could result,” Ill. Power
Co. v. OSHRC, 632 F.2d 25, 28 (7th Cir. 1980), even in those
cases in which an accident has not occurred or, in fact, is not
likely to occur, Cal. Stevedore & Ballast Co. v. OSHRC, 517
F.2d 986, 987 (9th Cir. 1975); see also Phelps Dodge Corp. v.
OSHRC, 725 F.2d 1237, 1240 (9th Cir. 1984); Usery v.
Hermitage Concrete Pipe Co., 584 F.2d 127, 131–32 (6th Cir.
1978).

        Trinity violated the statute by failing to test for asbestos
and notify Pli-Brico of the results. Given this failure, Pli-Brico
and its employees could not adequately prepare for the job or
arrange for protection to guard against the threat of asbestos
exposure. This is the failure which forms the basis for the
violations, and not the subsequent exposure suffered by Pli-
Brico’s employees. As such, the question is whether, as a result
of the failure to test and notify, it was possible that an accident
could occur in which it was substantially probable that death or
serious physical harm would result. See, e.g., Phelps Dodge
Corp., 725 F.2d at 1240; Miniature Nut & Screw Corp., 17 BNA
OSHC 1557 (OSHRC 1996); Dec-Tam Corp., 15 BNA OSHC
2072 (OSHRC 1993). Given that the violations made it possible
that workers could unwittingly stumble into large amounts of
asbestos without adequate protection, there was no need to show
that Pli-Brico employees suffered any actual exposure to
asbestos, much less the “significant exposure” that the ALJ
required, in order for the Secretary to show that a serious injury
could result. Given the “detrimental health effects” that can
result from exposure, 51 Fed. Reg. 22,612, 22,615 (June 20,
1986), the failure to test for asbestos in those situations in which
it is presumed to be present (and, given the failure to test, the
concomitant failure to communicate the results of any tests) is
unquestionably a “serious” violation. We will therefore grant
the Secretary’s petition and remand for consideration of the
proper penalty to be assessed.

                                 6
       We turn, then, to Trinity’s arguments that the citation
should have been dismissed altogether because the exposure was
limited to employees of Pli-Brico, as opposed to its own
employees, and because it did not have knowledge of the
presence of asbestos. We reject both arguments.

        First, Trinity argues that, pursuant to the Supreme Court’s
ruling in Nationwide Mutual Insurance Co. v. Darden, 503 U.S.
318 (1992), the term “employee” must be understood in the
context of the conventional master-servant relationship so as to
preclude liability when the affected workers are not actually
“employees” of the employer. Therefore, according to Trinity, it
could not be cited for a violation here, as the exposed workers
were employees of Pli-Brico. Trinity draws further support from
the Commission’s recent decision in Summit Contractors, Inc.,
No. 03-1622 (Apr. 27, 2007), in which it ruled that the
Secretary’s use of the multi-employer worksite doctrine in
construction cases was precluded by a regulation limiting her
authority to an “employer” and “his employees.” See 29 C.F.R. §
1910.12(a). We find neither case controlling or particularly
persuasive.

        Although Nationwide Mutual Insurance Co. stands for the
proposition that “employee” should be given its common law
“master-servant” definition, 503 U.S. at 322–24, that case was
decided under ERISA and has no impact on the question of
whether the scope of the OSH Act is broad enough to cover
workers who are not employees under the common law
definition. Courts have frequently ruled that the OSH Act, and
the regulations promulgated thereunder, sweep broadly enough
so as to allow the Secretary to impose duties on employers to
persons other than their employees. See, e.g., United States v.
Pitt-Des Moines, Inc., 168 F.3d 976, 982–83 (7th Cir. 1999);
Anthony Crane Rental, Inc. v. Reich, 70 F.3d 1298, 1306 (D.C.
Cir. 1995); Martin v. Am. Cyanamid Co., 5 F.3d 140, 141 (6th
Cir. 1993); James R. Howell & Co., 19 BNA OSHC 1277
(OSHRC 2000).

      Furthermore, unlike the regulations at issue in Summit
Contractors, Inc., the regulation at issue here specifically applies

                                 7
to building owners, and the Secretary has made it clear that only
those building owners who are also statutory employers under
the OSH Act are covered.2 We are not convinced that the
Secretary is powerless to regulate in this field, especially given
the findings she has made regarding the importance of building
owners in the discovery and communication of asbestos hazards.
See 29 C.F.R. § 1926.1101(k); see also Bldg. & Constr. Trades
Dep’t v. Brock, 838 F.2d 1258, 1278 (D.C. Cir. 1988).

        Second, Trinity argues that the regulation impermissibly
shifts the burden of proof regarding knowledge because, by
presuming the presence of asbestos in buildings built prior to
1981, it eliminates the Secretary’s obligation to prove that the
employer knew of, or with the exercise of reasonable diligence
could have known of, the condition constituting a violation of
the OSH Act. See Trinity Indus., Inc. v. OSHRC, 206 F.3d 539,
542 (5th Cir. 2000); see also 29 U.S.C. § 666(k).

       Trinity’s argument misses the mark. Pursuant to the
regulation, the “condition[] constituting the violation” of which
the building owner “was aware” was the fact that the building
was constructed before 1981 and that no testing was done in
accordance with the regulation. Odyssey Capital Group III, L.P.,
19 BNA OSHC 1252 (OSHRC 2000), review denied, 26 Fed.
Appx. 5 (D.C. Cir. 2001); James R. Howell & Co., 19 BNA
OSHC 1277 (OSHRC 2000). As such, the Secretary is required
to show that the building owner knew that his building was
constructed prior to 1981 and that he had not conducted the tests
required by the regulation to ensure that presumed asbestos
containing material was not, in fact, present. Actual knowledge
of the presence of asbestos is irrelevant—not because it is
presumed, but, rather, because a violation of the regulation does
not require that any asbestos actually be present. Having failed
to conduct tests compliant with 29 C.F.R. § 1926.1101(k)(5),
Trinity violated the regulation. See Odyssey Capital Group III,

       2
         Insofar as Trinity has conceded that it is both, see n.2
supra, we need not consider the Secretary’s ability to regulate
building owners who are not statutory employers.

                                8
L.P. v. OSHRC, 26 Fed. Appx. 5, 7 (D.C. Cir. 2001).

                              III.

       For the foregoing reasons, we will grant the petition in
06-2121 and deny the petition in 06-2271. We will remand for
further proceedings consistent with this opinion.

                               9
Secretary of Labor v. Trinity Industries, Inc.
Nos. 06-2121, 06-2271
TASHIMA, Senior Circuit Judge, dissenting.

        I respectfully dissent. I would grant Trinity Industries’
(“Trinity”) petition for review in No. 06-2271 and vacate the
citations because, in my view, the Secretary of Labor
(“Secretary”) lacked jurisdiction over Trinity.

        The OSH Act establishes workplace safety duties of
“employers” with respect to “employees.” 29 U.S.C. § 654. The
Supreme Court has clearly declared that, unless a statute sets
forth a broader definition, Congress intended the term
“employee” to connote traditional agency law criteria for master-
servant relationships. Nationwide Ins. Co. v. Darden, 503 U.S.
318, 322-24 (1992) (describing this principle as “well
established”). Under Darden, Trinity is an “employer” for OSH
Act purposes only with respect to its own employees. While
Trinity would be liable under the Act for actions or omissions
that placed its own employees in harm’s way, a failure to
safeguard non-employees – in this case, Pli-Brico’s workers – is
simply outside the scope of the Act. This is a more sensible
approach than that that adopted by the majority, under which the
Secretary’s regulations of building and facility owners may be
upheld as long as the cited business or facility owner has some
employees, somewhere, resulting in applying the OSH Act to
building owners on a completely arbitrary and random basis.

       Although, as the majority correctly notes, Darden was an
ERISA case, its reach is clearly not so limited. Darden
announced a general rule of statutory construction in broad
language, which the Court has never attempted to limit to
ERISA. See id.; see also, e.g., Neder v. United States, 527 U.S.
1, 21-22 (1999). Indeed, the Court reached its conclusion in
Darden by examining two previous attempts by the Supreme
Court to impose a broader definition of “employee” in the
context of other laws, both of which resulted in congressional
amendment of the statutes to reflect the common-law definition
of “employee.” See Darden, 503 U.S. at 324-25 (discussing the
National Labor Relations Act and the Social Security Act). The
Supreme Court and courts of this circuit have consistently
applied Darden to other statutes that include definitions of
“employer” or “employee” similar to ERISA’s. See, e.g.,
Clackamas Gastroenterology Assocs., P.C. v. Wells, 538 U.S.
440, 444-51 (2003) (Americans with Disabilities Act); Walters
v. Metro. Educ. Enters., 519 U.S. 202, 211 (1997) (Title VII);
Sempier v. Johnson & Higgins, 45 F.3d 724, 728 n.4 (3d Cir.
1995) (Age Discrimination in Employment Act); Shapiro v.
Sutherland, 835 F. Supp. 836, 837-38 (E.D. Pa. 1993) (False
Claims Act).

       ERISA defines “employee” as “any individual employed
by an employer.” 29 U.S.C. § 1002(6). That definition is
essentially identical to the definition of “employee” in the OSH
Act. See id. § 652(6) (“The term ‘employee’ means an employee
of an employer who is employed in a business of his employer
which affects commerce.”). Other courts of appeals, as well as
the Occupational Safety and Health Review Commission itself,
have already applied Darden to the Act. See e.g., Slingluff v.
OSHRC, 425 F.3d 861, 867-69 (10th Cir. 2005); IBP, Inc. v.
Herman, 144 F.3d 861, 865 (D.C. Cir. 1998); Loomis Cabinet
Co. v. OSHRC, 20 F.3d 938, 941-42 (9th Cir. 1994); Sec’y of
Labor v. Vergona Crane Co., Inc., 15 BNA OSHC 1782
(OSHRC 1992). The majority’s refusal to apply traditional
agency law principles to this case is therefore contrary to the
reasoning of Darden and is out of step with subsequent decisions
of the Supreme Court, this circuit, and other courts of appeals.

       Were it necessary to reach the question, I also disagree
with the majority’s conclusion that the ALJ erred in finding that
the Secretary failed to prove that Trinity’s violations were
“serious.” As I understand the majority’s logic, every failure to
notify or test for asbestos is necessarily a serious violation,
regardless whether exposure did occur or even could occur. But
caselaw teaches that the test for a serious violation is whether the
violation makes possible the occurrence of an event carrying

                                11
substantial probability of death or serious physical harm.3
Bethlehem Steel Corp. v. OSHRC, 607 F.2d 1069, 1073 (3d Cir.
1979). The level and duration of exposure to asbestos is highly
relevant to determining whether the “event,” i.e., the asbestos
exposure that could occur as a result of Trinity’s failure to test or
notify, carried such a probability of harm. Accord Usery v.
Hermitage Concrete Pipe Co., 584 F.2d 127, 131-33 (6th Cir.
1978) (rejecting the Secretary’s proposed rule that, because
silicosis is a serious disease, any exposure to silica dust
exceeding permissible amounts is per se a serious violation);
Sec’y of Labor v. Duquesne Light Co., 11 BNA OSHC 2033
(OSHRC 1984) (holding that one-time exposure to asbestos is
not a serious violation unless the Secretary makes an additional
showing that the particular incidence of exposure carried a
substantial probability of causing a serious disease).

       Because the classification of the violation is necessarily a
fact-based question subject to review only for “substantial
evidence,” see Bianchi Trison Corp. v. Chao, 409 F.3d 196, 204,
208 (3d Cir. 2005), I would defer to the ALJ’s sensible and
reasonable determination that the asbestos exposure experienced
by Pli-Brico employees on March 26 and March 28, 2005 –
amounting only to a matter of hours – did not create a substantial
probability of death or serious physical harm.

       For the reasons set forth above, I would grant the petition

       3
           The OSH Act defines a “serious violation” as:

       For purposes of this section, a serious violation shall
       be deemed to exist in a place of employment if there
       is a substantial probability that death or serious
       physical harm could result from a condition which
       exists . . . in such place of employment unless the
       employer did not, and could not with the exercise of
       reasonable diligence, know of the presence of the
       violation.

29 U.S.C. § 666(k).

                                 12
for review in No. 06-2271 and vacate the citations issued to
Trinity. Alternatively, I would hold that substantial evidence
supports the ALJ’s finding that the Secretary failed to prove a
serious violation and, thus, deny the petition for review in No.
06-2121.

                                13