Employment Law Daily 6th Circuit affirms $60K penalty against construction contractor for willful safety violation
Tuesday, June 7, 2016

6th Circuit affirms $60K penalty against construction contractor for willful safety violation

By Kathleen Kapusta, J.D. An administrative law judge did not abuse his discretion in finding that a construction contractor violated the Occupational Safety and Health Administration Act because, prior to an accident in which its crane’s boom cable broke, the cable had “visible broken wires” within the meaning of a provision requiring repair or replacement before further use and the company had knowledge of this deficiency, the Sixth Circuit ruled. Thus it denied the company’s petition for review of the citation and penalty issued against it by the Occupational Safety and Health Commission (Mountain States Contractors, LLC v. Perez, June 3, 2016, Stranch, J.). Citations. While working on a construction project, the boom cable of the company’s crane snapped, causing the crane’s extendable overhead arm to collapse onto the adjacent highway and damage a passing vehicle. An OSHA investigation ensued and the company was cited, for among other things, a willful violation of the Act. After a trial, the ALJ affirmed the citation, and assessed a $60,000 penalty. Standard. Addressing on appeal the company’s challenge to the requirements of the wire rope inspection standard at issue, the court noted that the company’s daily inspections forms, which were filled out by the crane operators, revealed the boom cable was in need of replacement more than a month before the accident. Further, despite the repeated notations in the forms regarding the cable’s poor condition, the equipment manager’s annual inspection of the crane prior to the accident made no mention of it. The manager testified that while he observed two broken wires, that did not meet the criteria for taking the crane out of service. The court, however, pointed out that he reached this conclusion without “booming down the crane,” a required component of an annual inspection when “the results of the visual inspection … indicate that further investigation” is necessary. Further, his conclusions were called into question by the signed statement of a mechanic after the accident in which he stated he had discovered additional broken wires in the boom cable shortly after the annual inspection and that he revealed this to a foreman. Trial testimony. The mechanic, however, departed from his signed statement during his trial testimony by refusing to use the word “broken.” Two of the crane operators also adjusted their language in their trial testimony, characterizing the alleged defects as just “some,” “a couple,” or a “few” cracks. The ALJ, however, found their testimony “generalized and obfuscatory,” and gave it little evidentiary weight. Refusing to set aside the credibility determinations of an ALJ unless inherently incredible or patently unreasonable, the court found ample evidence to support his conclusions. The unwillingness of the company’s witnesses to use the word “broken” at trial was not fatal to the ALJ’s finding, said the court, noting that a reasonable mind could conclude the company failed to meet the requirements of the Act’s wire rope inspection standard. Knowledge. As to whether the company knew or could have known of the hazardous condition, the ALJ found that at least three employees had actual knowledge of the boom cable’s condition. One was a foreman and crew supervisor, and thus said the court, was a supervisor under the Act so his knowledge could be attributed to the company. He noted on multiple daily inspection forms prior to the accident that a replacement had been ordered and that the integrity of the boom cable was a prominent issue. And while the ALJ also found two crane operators had actual knowledge of the deficiency, the company argued that even if they did, the ALJ erred by imputing this knowledge to it because neither was a supervisor. To hold otherwise, it asserted, would create “a new agency relationship, in violation of due process,” by which the “decision that an employee [is] designated as a competent person” would make the employee “automatically an agent of the employer.” It further contended that this finding wrongfully deprived it of the affirmative defense of unpreventable employee misconduct. Rejecting this argument, the court observed that the ALJ explained the several bases of his decision, drawing support for his finding that the company had actual knowledge of the boom cable’s condition from the record evidence of the knowledge of crane operators—all “competent persons” under the Act. First, the ALJ imputed to the company the actual knowledge of the foreman; then, he determined that crane operators qualified as supervisors under the Act, such that their knowledge could be imputed to the company because “the crane operators are given sole authority to monitor a crane, with what appears to be little supervision, and can stop work by pulling that crane out of service due to apparent safety hazards.” This latter, subsidiary argument was based on his factual determination of how employees actually functioned on the work site and did not wrongfully deprive the company of the opportunity to raise affirmative defenses, such as “unpreventable employee misconduct.” In addition, the company’s own policy required ongoing evaluation of worksites, procedures, and equipment to ensure compliance with its safety program. While the company complained that the ALJ’s reasoning amounted to a finding that effectively nullified the role of “competent persons” under the Act, because their work must now be overseen by a supervisor or they are inherently supervisors themselves, the court found this ignored the full basis of the ALJ’s decision that the employer knew or by exercising reasonable diligence would have known of the violation. That determination relied upon the failure to satisfy factors including the “employer’s obligation to inspect the work area, anticipate hazards, take measures to prevent violations from occurring, adequately supervise employees, and implement adequate work rules and training.” Even without attributing the crane operators’ knowledge to the company, there was substantial evidence that it took a lax approach to supervision regarding the crane and that reasonable diligence would have revealed the deficiency, observed the court.

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