Terra Contracting, Inc. v. Chief Admin. Officer of the Occup. Safety and Health Admin. ( 2016 )

IN THE SUPREME COURT OF THE STATE OF NEVADA
TERRA CONTRACTING, INC., No. 67270
Appellant,
vs.
CHIEF ADMINSTRATIVE OFFICER OF
THE OCCUPATIONAL SAFETY AND FILED
HEALTH ADMINISTRATION,
DIVISION OF INDUSTRIAL
JAN 1 4 2016
RELATIONS OF THE DEPARTMENT TRACE K. UNDEMAN
CLERK OF SUPREME COURT
OF BUSINESS AND STATE OF BY Ycts&2146....
DEPUTY CLERK
NEVADA,
Respondent.
ORDER AFFIRMING IN PART, REVERSING IN PART
AND REMANDING
This is an appeal from a district court order denying judicial
review of an occupational safety and health matter. Eighth Judicial
District Court, Clark County; Abbi Silver, Judge.
After respondent Nevada Occupational Safety and Health
Administration (NOSHA) discovered an employee of appellant Terra
Contracting, Inc., in an unprotected, excavated trench deeper than five
feet, working under the supervision of Terra's competent person to install
a concrete grease trap, NOSHA cited Terra for two serious violations,
based on (1) 29 CFR § 1926.651(k)(2) ("Inspections. . . . Where the
competent person finds evidence of a situation that could result in a
possible cave-in, . . . exposed employees shall be removed from the
hazardous area. . . .") and (2) 29 CFR §1926.652(a)(1) ("Each employee in
an excavation shall be protected from cave-ins by an adequate protective
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system. . . ."). 1 The Nevada Occupational Safety and Health Review Board
upheld the citations but recalculated the resulting fines, and the district
court denied Terra's subsequent petition for judicial review. Terra then
appealed.
When reviewing administrative NOSHA decisions, we
consider legal questions de novo and assess whether factual
determinations are based on substantial evidence. Century Steel, Inc. v.
State, Div. of Indus. Relations, Occupational Safety & Health Section, 122
Nev. 584, 588, 590, 137 P.3d 1155, 1158, 1159 (2006). Terra does not
dispute that NOSHA established the first three elements needed to prove
its prima facie case: (1) the cited standards are applicable; (2) the
standards were violated; and (3) Terra employees had access to the
violative condition. Atl. Battery Co., 16 BNA OSHC 2131 (No. 90-1747,
1994); see NRS 618.625(2); NAC 618.788. Instead, Terra contends that
NOSHA failed to prove the fourth and last factor, Terra's actual or
constructive knowledge of the violations. Atl. Battery Co., 16 BNA OSHC
2131; see NRS 618.625(2). Terra further asserts that, even if knowledge
was shown, Terra proved its affirmative defense of unpreventable
employee misconduct. See Adm'r of Div. of Occupational Safety & Health
v. Pabco Gypsum, 105 Nev. 371, 373, 775 P.2d 701, 703 (1989).
Knowledge
With regard to both violations, the Board found that Terra had
actual knowledge of the violative conditions through its competent person,
who was present and supervising the employees in the trench. Generally,
1 NRS618.295(8) provides that the federal regulations apply, as
Nevada has not adopted an alternative standard.
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the knowledge of a supervisor is properly imputed to the employer. Id.
Terra argues, however, that the competent person's knowledge cannot be
imputed here because doing so would impose strict liability on the
employer, which is not permitted. Rather, Terra claims, NOSHA must
show that the supervisor's actions were foreseeable or preventable by
proving the employer's safety program inadequate.
The Third, Fourth, Fifth, Tenth, and Eleventh Circuit Courts
of Appeal have concluded that, with respect to supervisor violations of
federal occupational safety and health law, "employer knowledge must be
established, not vicariously through the violator's knowledge, but by either
the employer's actual knowledge, or by its constructive knowledge based
on the fact that the employer could, under the circumstances of the case,
foresee the unsafe conduct of the supervisor [that is, with evidence of lax
safety standards]." ComTran Grp., Inc. v. U.S. Dep't of Labor, 722 F.3d
1304, 1316 (11th Cir. 2013) (alterations in ConzTran Grp.) (quoting W O,
Yates & Sons Constr. Co. Inc. v. Occupational Safety & Health Review
Comm'n, 459 F.3d 604, 609 n.8 (5th Cir. 2006)); see Penn. Power & Light
Co. v. Occupational Safety & Health Review Comm'n, 737 F.2d 350 (3d Cir.
1984); Mountain States Tel. & Tel. Co. v. Occupational Safety & Health
Review Comm'n„ 623 F.2d 155 (10th Cir. 1980); Ocean Elec. Corp. v. Sec'y
of Labor, 594 F.2d 396 (4th Cir. 1979); see also Century Steel, 122 Nev. at
589, 137 P.3d at 1158-59 (looking to federal decisional law in interpreting
similar provisions in the NOSHA). And here, NOSHA does not appear to
dispute the standard urged by Terra but instead argues that the Board's
knowledge finding was based on substantial evidence, pointing out that
Terra's competent person was in the trench, the trench took 4-5 days to
dig, and evidence of Terra's safety program contained little discussion on
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trenches and no documentation of any safety inspections. Therefore, we
conclude that the Board improperly imputed the competent person's
knowledge of the violative condition to Terra with respect to violation 1.
With respect to violation 2, however, the supervisor's knowledge was
properly imputed because the supervisor did not engage in the violative
conduct.
To the extent that NOSHA argues that the Board's failure to
place the burden on it was harmless error, we disagree. As recognized by
the Eleventh Circuit Court of Appeals under similar circumstances, such
error is not harmless and unfairly burdens the employer with the task of
identifying the exact evidence to rebut the agency's position without
knowing the agency's arguments. ComTran Grp., 722 F.3d at 1318. In
this case, NOSHA put on no evidence of foreseeability as to violation 1,
relying solely on the supervisor's own misconduct to impute knowledge,
and thus Terra was not even required to present rebuttal. As a result, we
reverse with respect to violation 1 (competent person's failure to remove
employees from unprotected trench) and, in light of the clarified standard,
remand for further proceedings.
Unpreventable employee misconduct
But imputation is permissible when it is not the supervisor's
own conduct at issue, ComTran Grp., 722 F.3d at 1314, and thus the
competent person's knowledge was properly imputed to Terra with regard
to violation 2 (employee in trench). Pabco Gypsum, 105 Nev. at 373, 775
P.2d at 703; Butch Thompson Enter., Inc., 22 BNA OSHC 1985 (No. 08-
1273, 2009 (AU)). As a result, we must examine whether the Board's
decision that Terra failed to prove its affirmative defense of unpreventable
employee misconduct is based on substantial evidence. To establish the
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affirmative defense of "unpreventable employee misconduct," the employer
must prove four elements: (1) established work rules designed to prevent
the violation, (2) adequate communication of those rules to the employee,
(3) steps taken to discover any violations of those rules, and (4) effective
enforcement of those rules after discovering violations. Marson Corp., 10
BNA OSHC 1660 (No. 78-3491, 1982); see Pabco Gypsum, 105 Nev. at 373,
775 P.2d at 703.
The Board's decision that Terra failed to show these four
requirements is supported by the record. Terra demonstrated that it had
a basic safety course that addressed trenching and which its employees
were required to attend and acknowledge understanding of upon
employment and annually thereafter. Terra further conducted weekly
safety meetings and asserted that it required its superintendents and
foremen to conduct informal and formal, documented safety inspections
daily, including the identification of high hazard areas, such as trenches
more than five feet deep, and had safety specialists perform random
inspections. Terra failed, however, to provide additional, targeted
trenching safety instruction for its employees and failed to address trench
safety at any of its weekly safety meetings, although the cited employees
did receive such specific training after the incident. Terra further failed to
produce written documentation, pursuant to its safety policy, of any onsite
inspections, and thus it is unclear whether any such inspections were
adequate to discover any violations of trench safety regulations. See, e.g.,
Complete Gen. Constr. Co. v. Occupational Safety & Health Review
Comm'n, No. 03-4456, 2005 WL 712491, at *3 (6th Cir. Mar. 29, 2005)
(concluding that the defense of unpreventable employee misconduct was
not shown when the employer failed to ensure employees read safety
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manual, held toolbox talks that failed to cover trenching or other safety
material, and held supervisory safety training only annually). Thus, the
district court properly denied judicial review with regard to violation 2,
and that portion of its order is affirmed. Accordingly, we
ORDER the judgment of the district court AFFIRMED IN
PART AND REVERSED IN PART AND REMAND this matter to the
district court so that it can remand it to the Board for further proceedings
consistent with this order.
Hardesty
A o t 4,4;
—
, J.
Saitta
J.
Pickering
cc: Eighth Judicial District Court Dept. 15
Israel Kunin, Settlement Judge
Shumway Van & Hansen
Dept. of Business and Industry/
Div. of Industrial Relations/Henderson
Eighth District Court Clerk
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