Secretary Labor v. Roy's Constr Inc ( 2008 )

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
2-29-2008
Secretary Labor v. Roy's Constr Inc
Precedential or Non-Precedential: Precedential
Docket No. 06-3577
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Case No: 06-3577
ELAINE L. CHAO,
SECRETARY OF LABOR,
Petitioner
v.
ROY'S CONSTRUCTION, INC.;
and
OCCUPATIONAL SAFETY AND HEALTH REVIEW
COMMISSION,
Respondents
On Petition for Review of a Final Order of the
Occupational Safety and Health Review Commission
OSHRC Docket No. 04-1409
Argued December 10, 2007
1
Before: SMITH, NYGAARD, and ROTH, Circuit Judges.
(Filed: February 29, 2008)
Counsel:
Ronald J. Gottlieb (argued)
Scott Glabman
U.S. Department of Labor
Office of the Solicitor
Rm. S4004
200 Constitution Avenue, N.W.
Washington, D.C. 20210
Counsel for Petitioner
Charles S. Russell, Jr. (argued)
Moore, Dodson & Russell, P.C.
P.O. Box 310, 5035 Norre Gade
Carlotte Amalie, St. Thomas, V.I. 00804
Counsel for Respondent, Roy’s Construction, Inc.
2
OPINION OF THE COURT
SMITH, Circuit Judge.
The Secretary of Labor (“Secretary”) petitions for review
of a final order of the Occupational Safety and Health Review
Commission (“Commission”). The Commission’s order
affirmed the order of an Administrative Law Judge (“ALJ”)
vacating citations that the Secretary had issued to Roy’s
Construction, Inc. (“Roy’s”). For the reasons set forth below,
we will affirm the Commission’s order.
I.
In December 2003, a representative of the Occupational
Safety and Health Administration (“OSHA”) inspected the
Charles Harwood Medical Complex project, one of Roy’s
Construction’s work sites in the Virgin Islands. As a result of
this inspection, on April 15, 2004 OSHA mailed citations to
Roy’s alleging violations of OSHA safety standards at the site
and proposing total penalties of $40,600.00. On April 17,
someone signed for the citations on Roy’s behalf; a Roy’s office
administrator later testified before the ALJ that the signer was
not a Roy’s employee but rather an employee of a private mail
company used by Roy’s. Under Section 10(a) of the
3
Occupational Safety and Health Act of 1970 (“OSH Act”), an
employer has fifteen working days from receipt of a citation and
assessment of penalty to notify the Secretary of its intent to
contest them. 29 U.S.C. § 659(a) (2000). If the employer has
not provided such notice within fifteen working days, the
proposed citation and assessment “shall be deemed a final order
of the Commission and not subject to review by any court or
agency.” Id. Roy’s did not notify OSHA of its intent to contest
the citations within the statutory fifteen-working-day period,
which expired on May 7, 2004. Accordingly, in June 2004
OSHA sent a letter to Roy’s requesting payment of the penalties
plus interest. Roy’s attempted to reopen discussion of the
citations with OSHA by telephone and eventually received a
reply that the citations were final and that the only recourse
available was an appeal to the Commission. In August 2004,
OSHA sent a debt collection letter to Roy’s. Subsequently,
Roy’s sent letters to OSHA (on August 17) and the Commission
(on August 23) announcing its intent to contest the citations.
The Secretary moved before the Commission’s ALJ to
dismiss Roy’s challenge to the citations as untimely. After
holding an evidentiary hearing on April 13, 2005, the ALJ
issued a Decision and Order on July 5, 2005 denying the
Secretary’s motion to dismiss. The ALJ invoked Federal Rule
of Civil Procedure 60(b), which states that a court may relieve
a party from a final judgment or order resulting from, inter alia,
4
“excusable neglect.” 1 See Rule 60(b)(1). In George Harms
Construction Co. v. Chao, 371 F.3d 156 (3d Cir. 2004), we
noted that the relevant factors for evaluating an “excusable
neglect” motion include “the danger of prejudice . . . , the length
of the delay and its potential impact on judicial proceedings, the
reason for the delay, including whether it was within the
reasonable control of the movant, and whether the movant acted
in good faith.” See id. at 163–64 (quoting Pioneer Inv. Servs. v.
Brunswick Assocs., 507 U.S. 380, 395 (1993)). The ALJ
concluded that excusing the lateness of Roy’s notice of contest
(“NOC”) would not prejudice the Secretary (who had also
missed deadlines prior to the ALJ hearing)2 and that Roy’s had
1
In George Harms Construction Co. v. Chao, 371 F.3d 156(3d Cir. 2004), we held that the Commission and its ALJs have
jurisdiction, through invocation of the excusable neglect
standard of Rule 60(b)(1), to entertain late notices of contest to
citations that have become “final” under OSH Act § 10(a). Id.
at 160–63. In doing so, we reaffirmed our earlier holding in J.I.
Hass Co. v. OSHRC, 648 F.2d 190 (3d Cir. 1981), and declined
to follow the Second Circuit’s contrary holding in Chao v.
Russell P. Le Frois Builder, Inc., 291 F.3d 219 (2d Cir. 2002).
2
Prior to the hearing, the Secretary had apparently missed a
deadline to file a complaint, which prompted the ALJ to order
the Secretary to show cause by October 31, 2004 as to why the
citations should not be vacated for failure to file a complaint.
The Secretary missed the October 31 deadline to show cause,
5
acted in good faith by abating the violations and attempting to
ensure future compliance. He accepted Roy’s explanation that
part of its delay was the result of the company’s move to a new
office.3 Therefore, the ALJ granted Rule 60(b) relief to Roy’s
on “excusable neglect” grounds and ordered the Secretary to file
a complaint regarding the merits of the citations within twenty
days. (Subsequently, at the Secretary’s request, the ALJ
but on November 8 filed a motion for an extension of time to
file a complaint. The ALJ granted the extension on November
30 and set December 8 as the new deadline for the Secretary’s
complaint. The Secretary filed her complaint on December 7,
2004.
3
The ALJ decided that Roy’s failure to file a timely NOC
before mid-June was the result of “excusable neglect.” He
found that Roy’s delay after mid-June was “not due to excusable
neglect” but that Roy’s was “nonetheless entitled to Rule 60(b)
relief” because of Roy’s good faith and lack of prejudice to the
Secretary. In context, the ALJ’s meaning appears to be that
although the “control” factor (i.e., Roy’s lack of control over the
delay due to the move) explains only part of the delay, good
faith and lack of prejudice justify a finding of excusable neglect
anyway for Rule 60(b) purposes. But the literal meaning of his
words is that Rule 60(b) relief should be granted despite the
absence of “excusable neglect,” which makes little sense
because “excusable neglect” was the only available ground for
Rule 60(b) relief. As we explain below, however, our holding
does not depend on the quality of the ALJ’s explanation for
granting relief.
6
extended the deadline for filing a complaint.)
Instead of filing a complaint, the Secretary sent a letter to
the ALJ on August 24, 2005, informing him that “the Secretary
hereby declines to file a Complaint to proceed on the merits
because the Secretary believes that Your Honor’s decision to
allow defendant’s [sic] to file a late notice of contest was clearly
erroneous.” The Secretary explained that her decision was
intended “to preserve her right to appeal” and “is not
characterized by bad faith, nor is it intended to prejudice the
respondent in this case.” The ALJ responded on September 8,
2005 by ordering the Secretary to show cause “why the
contested citation(s) should not be vacated for failure to file a
complaint.” On September 16, the Secretary informed the ALJ
again by letter that she would not file a complaint because she
sought to “put this matter in a posture suitable for appeal.”
Consequently, on October 13 the ALJ vacated the citations.4 On
November 1, the Secretary petitioned the full Commission for
discretionary review of the ALJ’s decision granting Rule
60(b)(1) relief to Roy’s and his subsequent order vacating the
4
The Decision and Order vacating the citations states simply:
“The Secretary failed to file a complaint in the instant case, as
ordered. Accordingly, the citations issued to the Respondent on
April 15, 2004 are VACATED in their entirety. SO
ORDERED.” Decision and Order, Sec’y of Labor v. Roy’s
Constr., Inc., 2005 WL 4114103 (OSHRC Docket No. 04-1409,
Comm’n ALJ Oct. 13, 2005).
7
citations. In her petition, the Secretary acknowledged that if the
Commission ruled in Roy’s favor regarding the propriety of
Rule 60(b)(1) relief, the ALJ’s vacatur order would stand and
the Secretary would be precluded from litigating the citations on
the merits.
The Commission issued its decision on June 1, 2006.
Noting that ALJs have discretion under Commission Rule
101(a), 29 C.F.R. § 2200.101(a), to rule against “any party
[who] has failed to plead or otherwise proceed as provided by
these rules or as required by the Commission or Judge,” the
Commission found that the ALJ had not abused his discretion by
vacating the citations. See Sec’y of Labor v. Roy’s Constr., Inc.,
21 O.S.H. Cas. (BNA) 1557 (Rev. Comm’n 2006). The
Commission acknowledged that, in past cases, it had reviewed
Rule 60(b) rulings on their merits even after the Secretary had
refused to file a complaint as ordered. Id. at 1558–59.
Nonetheless, the Commission concluded that it had never
“affirmatively” approved this procedure for obtaining review
and that several past cases were distinguishable. Id. at 1559.
The Secretary has filed a petition with this Court, asking
us to review the Commission’s decision not to reach the merits
of the Rule 60(b)(1) claim and to reverse the ALJ’s grant of
Rule 60(b)(1) relief. We have jurisdiction under 29 U.S.C.
§ 660(b) (2000), which allows “[a]ny person adversely affected
or aggrieved by an order of the Commission” to obtain review
“in any United States court of appeals for the circuit in which
8
the violation is alleged to have occurred or where the employer
has its principal office.” The Secretary’s petition presents two
questions: 1) whether the Commission erred by affirming the
ALJ’s vacatur order solely on the ground that the Secretary
failed to file a complaint, without reviewing the Secretary’s
argument that the ALJ improperly excused Roy’s untimely
NOC; 2) if we rule in the Secretary’s favor on the first issue,
whether Roy’s filed its motion to excuse the untimeliness of its
NOC “within a reasonable time” as required by Rule 60(b).
Because we rule against the Secretary on the first issue, we need
not reach the second question.
II.
Before addressing the Secretary’s contention that the
Commission erred in its decision, we must address Roy’s
arguments that the Secretary is barred from attacking the ALJ’s
vacatur order at all. We find these arguments to be without
merit.
First, Roy’s argues that the Secretary is barred from
attacking the vacatur order as an unwarranted sanction because
she did not raise this issue before the Commission. Our reading
of the Secretary’s Brief before the Commission indicates
otherwise. The Secretary’s Brief argued that the ALJ’s vacatur
order should be reversed, that the Commission should not treat
the order as a sanction for misconduct, and that the order is
reversible even though the ALJ “appropriately entered it” at the
9
Secretary’s request. See Opening Brief of the Secretary at
23–27, Sec’y of Labor v. Roy’s Constr., Inc., 21 O.S.H. Cas.
(BNA) 1557 (Rev. Comm’n 2006) (No. 04-1409). These are
essentially the same arguments that the Secretary raises in the
instant petition. Accordingly, we conclude that no basis exists
for the claim that the Secretary failed to raise the necessary
arguments before the Commission.
Second, Roy’s contends that the Secretary is “judicially
estopped” from arguing that the ALJ’s vacatur order was “in any
manner improper” because she made the allegedly inconsistent
argument before the Commission that she had actively solicited
the order. We reject Roy’s contention because we do not view
the Secretary’s arguments as inconsistent. The Secretary’s
position all along has been that she sought the vacatur order
solely as a means to obtain immediate review of the ALJ’s Rule
60(b) decision. She has never taken the position that the order
was justified as a sanction for any alleged misconduct, and she
has always made clear that her ultimate goal was to obtain a
reversal of the order. Moreover, even if we believed that the
Secretary’s positions have been inconsistent, we would not
exercise our discretion to apply judicial estoppel because Roy’s
has not identified any other factors that justify application of this
doctrine.5
5
Although a court’s decision to apply judicial estoppel is not
subject to “inflexible prerequisites or an exhaustive formula,”
New Hampshire v. Maine, 532 U.S. 742, 751 (2001), Supreme
10
Finally, Roy’s claims that if we reach the merits of the
ALJ’s July 5, 2005 decision without setting aside the ALJ’s
October 13, 2005 vacatur order, we would be rendering an
advisory opinion. Roy’s argues further that we should not set
aside the vacatur order because the Secretary is foreclosed from
Court and Third Circuit precedent demonstrate that some
aggravating factor, and not mere inconsistency, is necessary for
the application of judicial estoppel. The Supreme Court has
identified several factors that “inform” a court’s decision
regarding whether to apply judicial estoppel. Not only must the
court find that a party adopted inconsistent positions, but it
should also consider whether the party succeeded in convincing
a tribunal to accept its position and whether the party would
derive an unfair advantage in the absence of estoppel. Id. at
750–51. Our Court’s decisions instruct that judicial estoppel has
three threshold requirements: first, the party in question must
have adopted irreconcilably inconsistent positions; second, the
party must have adopted these positions in “bad faith”; and
third, there must be a showing that judicial estoppel is tailored
to address the harm and that no lesser sanction would be
sufficient. See Krystal Cadillac-Oldsmobile GMC Truck, Inc.
v. Gen. Motors Corp., 337 F.3d 314, 319–20 (3d Cir. 2003)
(quoting Montrose Med. Group Participating Savings Plan v.
Bulger, 243 F.3d 773, 779–80 (3d Cir. 2001)). We have also
endorsed the view that judicial estoppel is an extreme remedy,
to be used only “when the inconsistent positions are ‘tantamount
to a knowing misrepresentation to or even fraud on the court.’”
Krystal, 337 F.3d at 324 (quoting Total Petroleum, Inc. v. Davis,
822 F.2d 734, 738 n.6 (8th Cir. 1987)).
11
challenging it and because it is based on grounds independent
from the July 5 decision. We have already rejected Roy’s
arguments that the Secretary is foreclosed from challenging the
vacatur order. As for Roy’s contention that we should not set
aside the vacatur order because it stands on independent
grounds, this is essentially a restatement of the Commission’s
reasoning for affirming the vacatur order without considering
the July 5 order. Accordingly, our discussion of the
Commission’s decision in the next section will address this
argument.
III.
Under Section 706 of the Administrative Procedure Act
(“APA”), 5 U.S.C. § 706 (2000), a reviewing court shall set
aside agency action that is “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” We apply
this standard to our review of the Commission’s decision. The
Secretary presents two arguments in support of her contention
that the Commission acted in an arbitrary and capricious manner
by affirming the ALJ’s vacatur order without reviewing the
ALJ’s earlier Rule 60(b) decision. First, she contends that the
Commission’s action arbitrarily and capriciously flouted the
federal “merger rule,” which provides that “interlocutory” orders
issued before a final judgment are reviewable at the same time
as the final judgment. By reviewing the ALJ’s final order
vacating the citations without reviewing the interlocutory Rule
60(b) order, the Secretary argues, the Commission departed
12
from the merger rule without a reasoned explanation. Second,
she contends that the Commission arbitrarily and capriciously
departed from its previous practice of allowing the Secretary to
obtain immediate review of an order by refusing to proceed and
thereby inducing the ALJ to issue a final appealable order.
A.
The Secretary’s first argument is that the Commission’s
action arbitrarily and capriciously flouted the federal merger
rule. Under this rule, “prior interlocutory orders merge with the
final judgment in a case, and the interlocutory orders (to the
extent that they affect the final judgment) may be reviewed on
appeal from the final order.” In re Westinghouse Sec. Litig., 90
F.3d 696, 706 (3d Cir. 1996).6 The Secretary argues that
because federal appellate courts apply the merger rule to review
a district court’s interlocutory orders on appeal from a final
order, the Commission is similarly obligated to apply the merger
rule to review an ALJ’s interlocutory orders on appeal from a
final order. She argues that federal precedent on the merger rule
required the Commission to apply the rule to review the
6
Federal courts have recognized exceptions to the merger
rule when reaching the interlocutory ruling would create
piecemeal litigation, see In re Westinghouse Sec. Litig., 90 F.3d
at 706, or when a party obtained the final judgment through
misconduct or bad faith tactics, see Sere v. Bd. of Trs. of Univ.
of Illinois, 852 F.2d 285, 288 (7th Cir. 1988).
13
interlocutory Rule 60(b) order despite the fact that the final
vacatur order was a response to her refusal to file a complaint.
She analogizes her situation to Bethel v. McAllister Bros., Inc.,
81 F.3d 376 (3d Cir. 1996), in which the plaintiff, who had
obtained a favorable judgment at his original trial and objected
to the district court’s order requiring a retrial, refused to proceed
at the retrial and thereby induced the district court to enter a
final judgment against him for “failure to prosecute.” Id. at
378–79. We held in Bethel that the plaintiff’s “failure to
prosecute” did not prevent our review of the retrial order, largely
because the plaintiff had foreclosed the possibility of “piecemeal
litigation” by renouncing any intention of proceeding at the
retrial if he lost the appeal. Id. at 379–81.7 Likewise, the
Secretary argues, her failure to file a complaint did not prevent
Commission review of the Rule 60(b) order because she had
foreclosed the possibility of piecemeal litigation by declaring
she would not litigate the citations on their merits. In short, the
Secretary’s argument is that when the Commission departs from
7
In Bethel, we noted that the plaintiff’s attorney explained
during oral argument that “this was an all-or-nothing appeal in
which appellant was seeking only the reinstatement of the
judgment predicated on the verdict.” 81 F.3d at 379. If we
ruled in the plaintiff’s favor regarding the propriety of the
retrial, the litigation would end because the original judgment
would stand. Id. at 379–80. If we ruled against the plaintiff, the
litigation would end because the dismissal for failure to
prosecute would stand. Id.14
an allegedly indistinguishable federal precedent such as Bethel
without a reasoned explanation, its action is arbitrary and
capricious.
Whether Bethel and similar cases are distinguishable is
beside the point, however, because nothing compels the
Commission to follow federal merger rule precedents in the first
place. The federal statute governing Commission procedure
states simply: “The Commission is authorized to make such
rules as are necessary for the orderly transaction of its
proceedings. Unless the Commission has adopted a different
rule, its proceedings shall be in accordance with the Federal
Rules of Civil Procedure.” 29 U.S.C. § 661(g) (2000).
Similarly, Commission Rule 2(b) provides: “In the absence of
a specific provision, procedure shall be in accordance with the
Federal Rules of Civil Procedure.” 29 C.F.R. § 2200.2(b)
(2007). Nothing in the Commission Rules specifically addresses
the merger rule, but the Federal Rules of Civil Procedure are
also silent about it. Thus, we conclude that the Commission
may depart from federal merger rule case law in its
adjudications.
Moreover, although the Commission Rules do not
address the merger rule directly, they arguably address it
indirectly through Commission Rule 73, which governs
interlocutory appeals. See 29 C.F.R. § 2200.73 (2007). In the
federal judicial system, the merger rule is closely linked to the
statutory final judgment rule. The final judgment rule provides
15
that, with a few limited exceptions,8 federal appellate courts
have jurisdiction to review only “final decisions” of federal
district courts and not interlocutory ones. See 28 U.S.C. § 1291(2000). By allowing appellate courts to review interlocutory
rulings on appeal from the final judgment, the federal merger
rule ensures that those rulings will not escape review. See
generally 15A Charles Alan Wright, et al., Federal Practice &
Procedure § 3905.1 (2d ed. 1992 & Supp. 2006). If federal
appellate courts could routinely review interlocutory rulings
prior to final judgment, they could be less generous in their
application of the merger rule.
The Commission is more tolerant of interlocutory appeals
than the federal court system. Under Commission Rule 73, the
Commission has discretion to grant a petition for immediate
interlocutory review of an ALJ’s ruling if it “involves an
important question of law or policy about which there is
substantial ground for difference of opinion” and immediate
review “may materially expedite the final disposition of the
8
The most important exceptions are the statutory provisions
for interlocutory appeals provided in 28 U.S.C. § 1292 (2000),
and the “collateral order doctrine,” established in Cohen v.
Beneficial Indus. Loan Corp., 337 U.S. 541 (1949), and
developed in many subsequent cases. See generally 16 Charles
Alan Wright, et al., Federal Practice & Procedure § 3920 (2d
ed. 1996) (providing an overview of exceptions to the final
judgment rule).
16
proceedings,” or if the challenged ruling might result in the
release of allegedly privileged information. 29 C.F.R. § 2200.73(2007). The only comparable provision for interlocutory appeals
in federal courts is 28 U.S.C. § 1292(b), which permits an
appellate court to grant immediate interlocutory review when a
district judge states in writing that an interlocutory order
“involves a controlling question of law as to which there is
substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the
ultimate termination of the litigation . . . .” See 28 U.S.C.
§ 1292(b) (2000). Although much of the language of § 1292(b)
is similar to that of Commission Rule 73, the two provisions
differ significantly because § 1292(b) allows an appellate court
to grant interlocutory review only when a district judge grants
permission, whereas Commission Rule 73 allows the
Commission to grant interlocutory review without an ALJ’s
permission. In light of its greater discretion to hear interlocutory
appeals, the Commission could reasonably conclude that the
merger rule should have less force in appeals of an ALJ’s final
judgments, at least when those final judgments are directed
against a party that refused to proceed and made no attempt to
seek interlocutory review.9 Thus, Commission Rule 73 bolsters
9
The Secretary correctly notes that the Commission has
indicated that interlocutory appeals are generally disfavored.
See Sec’y of Labor v. Nw. Conduit Corp., 18 O.S.H. Cas. (BNA)
2072, 2073 (Rev. Comm’n 2000) (quoting Oneida Indian
Nation v. County of Oneida, 622 F.2d 624, 628 (2d Cir. 1980)).
17
our conclusion that the Commission is not bound by federal
precedent regarding the merger rule.
The Secretary also suggests that the Commission
announced in its own case law that it would follow federal
precedent on the merger rule. She contends that in LTV Steel
Co., 13 O.S.H. Cas. (BNA) 1090 (Rev. Comm’n 1987), the
Commission announced that it follows and expects its ALJs to
follow the federal final judgment rule and policy against
piecemeal appeals. Apparently, the Secretary’s implicit
argument is that these purported statements in LTV Steel are
equivalent to endorsement of the merger rule and the related
federal case law. First, we disagree with the Secretary that LTV
adopts the final judgment rule. Nothing in LTV adopts this rule
directly,10 and the opinion even observes that the Commission
may grant interlocutory review in a number of situations—in
But this does not change the fact that the Commission has
discretion to permit interlocutory appeals in many situations in
which federal appellate courts do not.
10
Perhaps the Secretary sees traces of the final judgment rule
in LTV’s statement that “[i]t will generally be more efficient for
the judge to issue a single decision disposing of all issues so that
the parties can seek Commission and court review of the entire
case at one time and so that the entire record can be kept
together.” See 13 O.S.H. Cas. (BNA) at 1090–91. But nothing
in this language actually forbids appeal of non-final judgments
as 28 U.S.C. § 1291 does.
18
direct contrast to the federal final judgment rule’s heavy
presumption against interlocutory appeals. See 13 O.S.H. Cas.
(BNA) at 1091 (citing 29 C.F.R. § 2200.73). Second, although
we agree that LTV endorsed the federal policy against piecemeal
appeals, we do not view that endorsement as equivalent to
adoption of the merger rule. LTV endorses the policy against
piecemeal appeals as “embodied in Rule 54(b) of the Federal
Rules of Civil Procedure,” which applies only to piecemeal
appeals of final judgments related to a particular claim or party.
Id. at 1090. Therefore, LTV’s endorsement of Rule 54(b) tells
us nothing about the Commission’s views on the appropriate
manner in which to obtain review of a non-final ruling.11
Accordingly, we conclude that LTV does not adopt federal case
law or policy related to the merger rule.
Finally, we emphasize that the Commission’s decision
did not depart altogether from the merger rule. Instead, it
declined to apply the merger rule in a situation where the
Secretary obtained dismissal by declining to file a complaint.
11
In Bethel, we indicated that “the federal policy against
piecemeal appeals” is “codified in the final judgment rule of 28
U.S.C. § 1291.” See 81 F.3d at 381. The facts of LTV and its
explicit reference to Rule 54(b) make clear, however, that its
embrace of the federal policy against piecemeal appeals is not
equivalent to an embrace of the federal final judgment rule.
Both § 1291 and Rule 54(b) help to prevent piecemeal appeals,
but they apply in different situations.
19
Many federal courts have held that “interlocutory rulings do not
merge into a judgment of dismissal for failure to prosecute, and
are therefore unappealable.” See John’s Insulation, Inc. v. L.
Addison & Assocs., Inc., 156 F.3d 101, 105–07 (adopting this
approach and citing cases from other circuits that have done the
same). Even Bethel acknowledges that dismissal for failure to
prosecute generally precludes application of the merger rule, but
it carves out an exception for situations where there is no risk of
piecemeal litigation. 81 F.3d at 379–81. The Secretary cites no
evidence indicating that Bethel’s exception has won broad
acceptance in other circuits, however.12 Thus, even assuming
arguendo that federal case law generally binds the Commission,
we conclude that the state of federal precedent on this specific
issue is not well-established enough to justify condemning the
Commission’s approach as arbitrary and capricious.
B.
The Secretary’s second argument is that the Commission
arbitrarily and capriciously departed from its own past precedent
that permitted the Secretary to obtain immediate appeal of an
ALJ’s “interlocutory” order by refusing to proceed and thereby
obtaining a dismissal. Specifically, she points to past
12
Even the Bethel panel was not unanimous in its conclusion
that the trial court’s earlier order was reviewable despite the
plaintiff’s refusal to prosecute. See Bethel, 81 F.3d at 385–89
(Nygaard, J., concurring).
20
Commission decisions, such as Northwest Conduit Corp., 18
O.S.H. Cas. (BNA) 2072 (Rev. Comm’n 2000), Jackson Assocs.
of Nassau, 16 O.S.H. Cas. (BNA) 1261 (Rev. Comm’n 1993),
and Byrd Produce Co., 16 O.S.H. Cas. (BNA) 1268 (Rev.
Comm’n 1993), in which the Commission reviewed an ALJ’s
“interlocutory” decision to excuse a late notice of contest despite
the ALJ’s subsequent dismissal of the citations in response to
the Secretary’s failure to proceed. She also points out that the
Commission has permitted immediate review of other types of
orders, such as discovery orders, even after the Secretary refused
to proceed. See, e.g., Donald Braasch Corp, 17 O.S.H. Cas.
(BNA) 2082 (Rev. Comm’n 1997). As we observed in Donovan
v. Adams Steel Erection, Inc., 766 F.2d 804 (3d Cir. 1985), “[i]t
is settled that where an agency departs from established
precedent without announcing a principled reason for such a
reversal, its action is arbitrary . . . and an abuse of discretion . .
. and should be reversed.” Id. at 807 (citations omitted).
Accordingly, we must conduct a two-part inquiry, determining
first whether the Commission has in fact departed from past
precedent, and second whether it has announced a “principled
reason” for any departure. We conclude that although the
Commission departed from its precedent, it provided a
“principled reason” for its departure and therefore did not abuse
its discretion or act arbitrarily and capriciously.
1.
We conclude that the Commission has departed from its
21
established precedent. Below, we discuss the most significant
cases cited by the Secretary to illustrate the extent to which the
Commission’s decision in the present case was a departure.
In Jackson Assocs. of Nassau, 16 O.S.H. Cas. (BNA)
1261, the Commission permitted the Secretary to obtain review
by using the same method that it rejected in the present case.
The defendant, Jackson, had not filed a notice of contest to
OSHA citations within the statutory fifteen-working-day period.
16 O.S.H. Cas. (BNA) at 1262. The ALJ invoked Rule 60(b) to
excuse Jackson’s untimely NOC and ordered the Secretary to
file a complaint within thirty days. Id. When the Secretary did
not file a complaint as ordered, the ALJ dismissed the citations
and proposed penalties “for failure to file a complaint under
Commission Rule 34.” Id. The Commission reviewed the
ALJ’s grant of Rule 60(b) relief on the merits at the Secretary’s
request without explicitly commenting on whether the
Secretary’s failure to file a complaint was appropriate.13
The Commission decided Byrd Produce Co., 16 O.S.H.
Cas. (BNA) 1268 (Rev. Comm’n 1993), on the same day as
Jackson. As in Jackson, the ALJ invoked Rule 60(b) to excuse
Byrd’s late notice of contest to OSHA citations and ordered the
13
Ultimately, the Commission reversed the ALJ’s decision in
part and remanded a separate issue to the ALJ—making clear
that “the citations must be reinstated and affirmed” if the ALJ
ruled against Jackson on the remanded issue. Id. at 1266.
22
Secretary to file a complaint. See Byrd, 16 O.S.H. Cas. (BNA)
at 1268. The Secretary declined to file a complaint, requesting
instead that the ALJ reconsider his ruling. Id. Upon
reconsideration, the ALJ affirmed his Rule 60(b) ruling,
declared the Secretary in default under Commission Rule 41
(now renumbered as Commission Rule 101) for failure to plead,
and dismissed the citation and proposed penalties. Id. The
Commission reversed the ALJ’s Rule 60(b) decision without
commenting on the Secretary’s failure to plead, and declared
that “the citations have become a final order of the Commission
under section 10(a) of the Act.” Id. at 1270.
In Northwest Conduit Corp., 18 O.S.H. Cas. (BNA) 2072(Rev. Comm’n 2000), in contrast to Jackson and Byrd, the
Commission explicitly addressed the propriety of the Secretary’s
refusal to file a complaint in response to an ALJ’s Rule 60(b)
ruling. See 18 O.S.H. Cas. (BNA) at 2073–74. Although the
Commission ultimately concluded that her refusal did not
preclude review of the Rule 60(b) ruling given “the unusual
circumstances of this case,” its analysis suggested that it would
not allow the Secretary to obtain review in this manner in all
cases. Id. at 2074. Northwest Conduit Corporation
(“Northwest”) had filed its notice of contest to a citation one day
late, and the ALJ excused Northwest’s lateness under Rule
60(b).14 Id. at 2073. The Secretary refused to file a complaint,
14
The ALJ in Northwest Conduit was Judge Irving Sommer,
the same ALJ that is involved in the instant case. See 18 O.S.H.
23
prompting the ALJ to vacate the citations. Id. The Commission
then considered and affirmed the Rule 60(b) ruling without
comment on the Secretary’s refusal. See Northwest Conduit
Corp., 18 O.S.H. Cas. (BNA) 1948 (Rev. Comm’n 1999)
(earlier decision). On remand, the ALJ initially ordered the
Secretary to file a complaint within twenty days. 18 O.S.H. Cas.
(BNA) 2072, 2073 (Rev. Comm’n 2000). After the Secretary
filed her complaint, however, the ALJ changed his mind and
dismissed the case altogether as a sanction for the Secretary’s
earlier refusal to file. Id. On appeal again, the Commission set
aside the ALJ’s second dismissal, citing its discretion to set
aside sanctions under Commission Rule 41(b) (now numbered
as Commission Rule 101(b)). Id. The Commission noted that
the Secretary would not have been able to pursue an
interlocutory appeal of the Rule 60(b) order under Commission
Rule 73 due to the lack of a quorum on the Commission at that
particular time, and it also observed that interlocutory appeals
are generally discouraged. Id. The one dissenting
Commissioner would have upheld the ALJ’s sanctions because
the Secretary does not “enjoy any special privilege to disregard
a judge’s order.” Id. at 2075 (Weisberg, J., dissenting). The
dissent distinguished Jackson on the ground that the employer
in that case had not raised the Secretary’s refusal to file a
complaint. Id. at 2076 (Weisberg, J., dissenting).
2.
Cas. (BNA) at 2073.
24
Having established that the Commission has excused
the Secretary’s refusal to file a complaint in several past cases
involving Rule 60(b) orders, we now turn to the question of
whether the Commission adequately distinguished these cases
or articulated principled reasons for departing from them. If
not, we must deem its decision to be arbitrary and capricious.
Although we think that the Commission certainly could have
provided better explanations for its decision not to follow
these cases, we conclude that they are sufficient to escape
classification as arbitrary and capricious.
Of the cases discussed above, the only one that the
Commission discusses in depth in its opinion is Northwest
Conduit. The Commission distinguished Northwest Conduit
with the following statements:
While the Commission in [Northwest Conduit] set
aside the judge’s vacatur order, excusing the
Secretary’s failure to file a complaint, the case
before us differs from Northwest Conduit in two
key respects. First, in Northwest Conduit, the
Secretary could not have successfully petitioned
for interlocutory review under Commission Rule
73, 29 C.F.R. § 2200.73, because there was only
one Commissioner when the judge ordered the
Secretary to file a complaint. . . . Here, the
Secretary could have petitioned for such review
because there were two Commissioners at the
relevant time. Second, in contrast to Northwest
25
Conduit, the Secretary has foreclosed the
possibility of litigating the merits of this case: if
we were to reach the Rule 60(b) issue and decide
in favor of the Secretary, the NOC would be
dismissed and Roy’s Construction would be
required to pay the penalty without the benefit of
a hearing on the merits; if, upon reaching the Rule
60(b) issue, we were to decide in favor of Roy’s
Construction, there would still be no such hearing
because the Secretary has waived her right to
litigate the merits of the case. In addition to these
factual distinctions, we emphasize that the
Commission in Northwest Conduit warned the
Secretary that “‘any party who fails to comply
with a Commission order, does so at its peril.’” .
. . In light of this warning and the two
distinguishing factors, we find that Northwest
Conduit does not compel us to set aside the
vacatur order.
Sec’y of Labor v. Roy’s Constr., Inc., 21 O.S.H. Cas. 1557, 1559
(Rev. Comm’n 2006) (citations omitted).
We agree with the Commission that a valid distinction of
the present case from Northwest Conduit is that interlocutory
review was not readily available in the latter case. The specific
reference in the Northwest Conduit opinion to the absence of the
necessary quorum suggested that later decisions may consider
this factor when deciding what method the Secretary should use
to appeal an unfavorable order. That said, we also recognize
that Northwest Conduit cited a second factor in support of its
26
conclusion that the Secretary was not obliged to seek
interlocutory review: that interlocutory review is generally
disfavored. See Northwest Conduit, 18 O.S.H. Cas. at 2073–74.
The Commission’s opinion in the present case ignores this
factor, which would be just as applicable in the present case as
it was in Northwest Conduit. Nonetheless, it is possible to read
Northwest to say that the Commission’s disfavor of interlocutory
review is not, by itself, enough to absolve the Secretary of a
responsibility to seek it rather than refuse to file a complaint.
Arguably, Northwest treated the lack of a quorum, and not the
allegedly disfavored status of interlocutory review, as the
dispositive issue. This reading of Northwest is plausible enough
to save the Commission’s distinction from arbitrary and
capricious status.
Although the existence of interlocutory review is by itself
an adequate reason for the Commission to treat the Secretary’s
refusal to file a complaint differently here than in Northwest, the
Commission’s second factual distinction of Northwest provides
additional support for its decision. In Northwest, the
Commission had already affirmed the ALJ’s Rule 60(b) order,
so the only obstacle to a hearing on the merits was the ALJ’s
belated decision to punish the Secretary for her initial refusal to
file a complaint. In the instant case, because the Secretary had
renounced any intention of proceeding on the merits if she
successfully challenged the Rule 60(b) order, no hearing on the
merits would occur even if the Commission excused the
Secretary’s failure to file a complaint and reached the Rule
60(b) issue. In Trinity Industries, Inc., 15 O.S.H. Cas. (BNA)
1579 (Rev. Comm’n 1992), the Commission recognized the
need to balance “the Commission’s obligation to enforce its
27
orders” with “the principle that the public interest requires that
cases be decided on their merits.” 15 O.S.H. Cas. (BNA) at
1583. Whereas the desirability of review on the merits provided
the Northwest Commission with a counterweight to the interest
in punishing the Secretary’s disobedience of the ALJ’s orders,
review on the merits cannot provide such a counterweight in the
instant case.15 As the Secretary points out, it is true that the
Commission has adopted a policy against piecemeal appeals, see
LTV Steel, 13 O.S.H. Cas. (BNA) at 1090, and that her decision
to waive a hearing on the merits can be construed as an attempt
to comply with this policy. But LTV never suggested that the
policy against piecemeal appeals is so strong that it could
mandate a decision to foreclose the option of litigating citations
on their merits. Thus, the Commission’s statement about a
hearing on the merits is not an arbitrary and capricious
distinction of Northwest from the present case.
Finally, the Commission in Northwest suggests that its
holding was intended to be limited to the “unusual
circumstances” of the case. See 18 O.S.H. Cas. (BNA) at 2074.
15
We acknowledge that review on the merits would not be a
foregone conclusion even if the Secretary had not renounced any
intention of proceeding on the merits. Even if the Commission
had excused the Secretary’s failure to file a complaint, review
on the merits would not have occurred if the Commission had
reversed the ALJ’s Rule 60(b) order. Nonetheless, it is possible
to read the Commission’s opinion as saying that it will require
at least a possibility of a hearing on the merits before excusing
the Secretary’s disobedience.
28
Although it is true that, as the Northwest dissent asserts, the
majority never explained “what these unusual circumstances
may be,” id. at 2075 n.1 (Weisberg, J., dissenting), this
statement supports our conclusion that Northwest was not an
unlimited endorsement of the Secretary’s ability to obtain
review by refusing to file a complaint. Rather, Northwest
merely recognized that the Secretary may do so under some
circumstances. It was not arbitrary and capricious for the
Commission to decide that such circumstances do not exist in
the present case.
The Commission provides a less convincing distinction
of the pre-Northwest cases such as Jackson and Byrd that
permitted the Secretary to obtain Commission review of an ALJ
order after refusing to file a complaint. It does not mention
Byrd, and all it says about Jackson is the following:
Although these cases [Northwest Conduit and
Jackson] demonstrate that the Commission has
not always treated the Secretary’s failure to file a
complaint as a barrier to reaching the merits of the
Rule 60(b) issue, the Commission has never
affirmatively stated that the Secretary may refuse
to file a complaint in order to obtain Commission
review.
Indeed, only Northwest Conduit was analyzed
through the lens of Commission Rule 101(b).
21 O.S.H. Cas. at 1559 (footnote omitted). Thus, the
Commission’s only explicit distinctions of Jackson (and
29
implicitly Byrd) are that they did not “affirmatively” state that
the Secretary used an appropriate means of obtaining review 16
and that they did not invoke Commission Rule 101(b) to
determine whether to set aside the ALJ’s vacatur order.17 We
conclude, with some qualifications, that this is sufficient as a
“reasoned explanation” for departing from the Jackson and Byrd
precedents. If Jackson or Byrd had provided reasoning for its
decision to excuse the Secretary’s refusal to file a complaint,
then any “reasoned explanation” for departing from these
precedents would, at the very least, need to explain why this
reasoning should no longer control. When there is no reasoning
for the earlier decision, however, a brief explanation for the
departure may be permissible. Although it is a close question,
we conclude that the Commission’s explanation—that these
earlier cases contained no affirmative statements approving the
practice and did not analyze the issue using the Commission’s
own Rules—to be sufficiently “reasonable” so as not to be
16
According to the dissenting judge in Northwest Conduit,
Jackson did not address the Secretary’s refusal to file a
complaint because “[t]hat issue was not raised by the employer.”
See Northwest Conduit, 18 O.S.H. Cas. (BNA) at 2076
(Weisberg, J., dissenting).
17
Byrd states that the ALJ had declared the Secretary in
default for failure to plead under Commission Rule 41 (which
is now Commission Rule 101). See Byrd, 16 O.S.H. Cas.
(BNA) at 1268. Byrd did not, however, invoke Commission
Rule 101(b) to “set aside” the ALJ’s sanction and is therefore
not meaningfully different from Jackson in this regard.
30
arbitrary and capricious.18
3.
A separate line of cases consists of those in which an
ALJ dismisses citations after the Secretary refuses to comply
with the ALJ’s discovery order on the ground that the requested
information is privileged. Donald Braasch Corp., 17 O.S.H.
Cas. (BNA) 2082 (Rev. Comm’n 1997), is an example of this
type of case. The Braasch opinion held over a dissent19 that
despite the Secretary’s disobedience and the ALJ’s consequent
sanction, the Commission should review the merits of the
18
We note, however, that our decision might be different if
the precedent in question were more firmly established. For
example, if the Commission allowed the Secretary to obtain
review in this manner on a regular basis, we might require a
more detailed explanation for a reversal of course. The
Secretary cites only a few cases in addition to Jackson, Byrd,
and Northwest Conduit, suggesting that this situation arises
relatively infrequently and that the precedent was not firmly
established.
19
The dissenting Commissioner relied largely on the fact that
the Secretary had failed to pursue interlocutory review before
flouting the ALJ’s orders. See 17 O.S.H. Cas. (BNA) at
2087–88 (Montoya, J., dissenting). The majority conceded that
pursuing interlocutory review may have been “the better
practice,” but held that the Secretary’s decision not to do so was
not contumacious. 17 O.S.H. Cas. (BNA) at 2086 & n7.
31
discovery order and lift the sanction if this order proved to be
erroneous. See 17 O.S.H. Cas. at 2086–87. Braasch also noted
that “failure to comply with an order is not, by itself, an
indication of bad faith or contumacious conduct where the
party’s reason for refusing to comply has a substantial legal
basis and its conduct did not indicate disrespect towards the
Commission or the issuing judge.” Id. at 2086. The Secretary
argues that although Braasch involves a discovery order rather
than a Rule 60(b) order, we should regard it as presenting
essentially the same issue. In support of this claim, she cites a
Tenth Circuit case stating that there is “no principled distinction
between sanctions imposed for discovery violations and
sanctions imposed for noncompliance with other orders.” See
Mobley v. McCormick, 40 F.3d 337, 340 (10th Cir. 1994).
The Commission’s explanation for distinguishing
discovery cases like Braasch is not extensive. Referring
specifically to Braasch’s statement that failure to comply with
an order is not itself contumacious, the Commission states
simply that “[o]ur review of Commission precedent . . . indicates
that this rule of law has only been applied to cases where a party
has refused to comply with a discovery order, and is thus not
applicable to the case before us.” 21 O.S.H. Cas. (BNA) at
1558. Notwithstanding the Tenth Circuit’s conclusion in
Mobley, we conclude that the Commission does not act
arbitrarily and capriciously by applying a different rule in
discovery cases. In most cases regarding whether the
Secretary’s refusal to comply with a discovery order has a
“substantial legal basis,” the inquiry is whether the
Commission’s interest in obtaining information outweighs a
recognized legal right to withhold the information. See Braasch,
32
17 O.S.H. Cas. (BNA) 2082 (Secretary cited an “informers’
privilege” when refusing to comply); St. Lawrence Food Corp.,
21 O.S.H. Cas. (BNA) 1467 (Rev. Comm’n 2005) (Secretary
cited the attorney-client and work product privileges); Trinity
Indus. Inc., 15 O.S.H. Cas. (BNA) 1579 (Rev. Comm’n 1992)
(Secretary cited the employer’s improper challenge to a search
warrant). In contrast, the “substantial legal basis” for refusing
to comply with the ALJ’s order to prosecute in this case would
be the invalidity of the Rule 60(b) ruling. Since Rule 60(b)
rulings are discretionary, being based on an ALJ’s determination
of what constitutes “excusable neglect” and a “reasonable time,”
there is little risk that a Secretary’s challenge to a Rule 60(b)
ruling will implicate established legal rights. The worst that can
happen if the Secretary proceeds after an erroneous Rule 60(b)
ruling is that an employer will receive relief or a hearing that its
delay should have foreclosed. In contrast, compliance with
erroneous discovery orders could reveal privileged information
and harm third parties (such as informers). Thus, we think that
the discovery context is different enough, that those differences
are generally understood, and that a thorough explanation from
the Commission is unnecessary. See Hall v. McLaughlin, 864
F.2d 868, 873 (D.C.Cir. 1989) (“if the court itself finds the past
decisions to involve materially different situations, the agency’s
burden of explanation about any alleged ‘departures’ is
considerably less.”).
IV.
Because we have found that the Commission’s decision
to uphold the ALJ’s vacatur order without addressing the ALJ’s
Rule 60(b) order was not arbitrary, capricious, or an abuse of
33
discretion, we need not address the Secretary’s argument that
Roy’s NOC was not filed “within a reasonable time” for Rule
60(b) purposes. We will affirm the judgment of the
Commission.
34