Docket No. 78-5498; 78-4449

JOHN DEERE FOUNDRY, A DIVISION OF DEERE COMPANY, BUNGE CORPORATION

OSHRC Docket No. 78-5498; 78-4449

Occupational Safety and Health Review Commission

February 24, 1981

[*1]

BEFORE: CLEARY, Chairman; BARNAKO and COTTINE, Commissioners.

COUNSEL:

Baruch A. Fellner, Office of the Solicitor, USDOL

Herman Grant, Regional Solicitor, USDOL

John O. Hayes, Deere & Company, for the employer

Lynn E. Pollan, Bunge Corp., for the employer

Robert A. Porter, Safety Representative, Local 81, UAW, for the employees

OPINION:

DECISION

BY THE COMMISSION:

These consolidated cases arise under the Occupational Safety and Health Act of 1970, 29 U.S.C. § § 651-678 ("the Act"). n1 Two orders of Administrative Law Judge Vernon Riehl are before the Commission for review under section 12(j) of the Act, 29 U.S.C. § 661(i). In both orders, as explained below, Judge Riehl modified the agreements submitted by the parties by approving only part of their agreements. In addition, the judge entered findings of fact in both cases even though no hearing [*2] had been held and the parties had not stipulated to the facts entered. Commissioner Barnako directed review of both cases to determine whether the judge's actions were proper. For the reasons that follow, we set aside the orders in both cases. We remand Docket No. 78-5498 for further proceedings consistent with this decision and we approve the settlement agreement in Docket No. 78-4449 as submitted by the parties.

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n1 The cases are consolidated under Rule 9 of the Commission's Rules of Procedure, 29 C.F.R. § 2200.9, which provides as follows:

Cases may be consolidated on the motion of any party, on the judge's own motion, or on the Commission's own motion, where there exist common parties, common questions of law or fact, or both, or in such other circumstances as justice and the administration of the Act require.

We consolidate these cases on our own motion because they raise the same legal issues with no material differences in the facts relating to these issues.

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In Docket No. 78-5498, the Secretary [*3] issued a citation alleging a serious violation of the Act in that Respondent John Deere Foundry failed to comply with 29 C.F.R. § 1910.95(b)(1), the occupational noise standard. The Secretary proposed a $120 penalty. Deere filed a timely notice of contest to the citation and notification of proposed penalty. Five days later, the authorized employee representative, Local 81 of the United Automobile, Aerospace and Agricultural Implement Workers of America ("the Union"), elected party status. n2 Subsequently, the Secretary and Deere entered into a settlement agreement providing for (1) reduction of the classification of the alleged violation from serious to other than serious, (2) elimination of the proposed penalty, (3) Deere's withdrawal of its notice of contest, and (4) Deere's agreement to abate the alleged violation according to a three-step plan to be completed by December 27, 1979. The agreement also contained a "non-admission clause" providing essentially that, although Deere admitted the allegations in the Secretary's amended citation and complaint for the purpose of proceedings under the Act, the agreement could not be used as an admission "for any other purpose whatsoever [*4] . . . ." n3

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n2 In his brief on review, the Secretary asserts that neither he nor Deere was aware of the Union's election of party status until after the judge issued his order approving the settlement agreement. However the record indicates that the judge acknowledged receipt of the Union's letter and notified the Secretary and Deere of the election of party status.

n3 The non-admission clause, paragraph V of the agreement, reads as follows:

Except for these proceedings, and matters arising out of these proceedings, and any other subsequent OSHA proceedings between the parties, none of the foregoing agreements, statements, findings, and actions taken by respondent shall be deemed an admission by the respondent of the allegations contained within the Citation and Notification of Penalty and the complaint. The agreements, statements, findings, and actions taken herein are made for the purpose of compromising and settling this matter economically and amicably, and they shall not be used for any other purpose whatsoever, except as herein stated.

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Judge Riehl issued an order approving the settlement agreement "with the exception of the exculpatory averments" of the non-admission clause. In addition, the judge entered several findings "based upon this stipulation", i.e., the settlement agreement, noting that the exculpatory language did not "detract from our legal finding." He found the following:

(1) [R]espondent is in violation of item 1 of the citation.

(2) The respondent by consenting to the affirmance of the amended citation has admitted that it did not furnish to each of his employees a place without a hazard caused by sound levels exceeding those listed in Table G-16, subpart g, of 29 CFR 1910[.95] and that feasible administrative or engineering controls were not utilized to reduce sound levels.

(3) This failure to furnish a proper safe workplace for respondent's employees is a negligent act.

(4) [R]espondent's failure to have the noise level within the permissable [sic] limits set for the standard has created a hazard.

(5) The hazard herein for which the respondent is cited is having a noise level which will impair the hearing of his employees.

(6) Respondent by consenting to [*6] the affirmance of the citation has admitted that he has not furnished to each of his employees a place of employment which is free from recognized hazards that are causing or likely to cause serious physical harm to his employees.

In a petition for discretionary review of the judge's order, Deere objected to the judge's striking of the non-admission clause and to findings two through four and six above. Deere asked the Commission to approve the agreement as entered by the parties and delete the judge's findings of employer negligence and of employee exposure to a hazard, or alternatively to disapprove the agreement and reinstate its notice of contest. In his direction for review, Commissioner Barnako granted Deere's petition.

In Docket No. 78-4449, the Secretary issued Respondent Bunge Corporation a citation alleging a repeated violation of the Act for failure to comply with the standard at 29 C.F.R. § 1918.23(b) and a citation alleging an other than serious violation of the Act based on noncompliance with section 502-4(a)(1) of the National Electrical Code, as adopted by the standard at 29 C.F.R. § 1910.309(a). Respondent timely contested those items of the citations and [*7] the corresponding penalty notifications. After obtaining cancellation of a scheduled hearing, the Secretary and Bunge entered into a settlement agreement providing that (1) the classification of the alleged repeated violation was reduced to serious, (2) Bunge withdrew its notice of contest to both citations, (3) Bunge tendered payment of the proposed penalty, (4) Bunge had corrected the conditions described in the citations, and (5) Bunge would "continue its good faith effort to comply" with the Act. The agreement also specifically provided that Bunge's withdrawal of its notice of contest and its payment of the proposed penalty "does not constitute an admission by Respondent that it has violated any provision of the Occupational Safety and Health Act or any regulations promulgated thereunder." In addition, the parties agreed as follows:

3. It is the express agreement of the parties of this action that in any future or other proceeding brought by Complainant, the Respondent may contend that the standard set forth in 29 CFR 1918.23(b) is vague, ambiguous and misleading, and not applicable to Respondent; that the classification of the location in Item 4 of Citation No. 2 was erroneous [*8] under the National Electrical Code as adopted by 29 CFR 1910.309(a); and that the standards set forth in the National Electrical Code as adopted by 29 CFR 1910.309(a) are vague, ambiguous and misleading, and not applicable to Respondent.

Judge Riehl entered an order in which he neither expressly approved nor expressly disapproved the settlement agreement submitted by the parties. Instead, he granted the motions of both parties contained within the settlement agreement, while making comments and entering findings that implicitly rejected the non-admission paragraph and paragraph 3 of the settlement agreement. Accordingly, the judge's order in Docket No. 78-4449 had the same effect as his order in Docket No. 78-5498, that is, an approval of only part of the agreement submitted by the parties. The judge's findings in Docket No. 78-4449 were similar to those entered in Docket No. 78-5498, as set forth above.

Although neither party requested review of Judge Riehl's order in Docket No. 78-4449, Commissioner Barnako directed review "because this case raises serious questions regarding the Commission's procedures in the review and approval of settlement agreements." Commissioner Barnako [*9] further noted his direction for review in Docket No. 78-5498 and the identity of the issues in the two cases.

On review both employers and the Secretary take essentially the same positions. Indeed, both Respondents have expressly concurred with the brief initially filed by the Secretary in Docket No. 78-5498 and refiled by him in Docket No. 78-4449. The Secretary and the Respondents first contend that the Commission has no authority under the Act to review or modify settlement agreements. Assuming arguendo that the Commission has this authority, their argument continues, the judge erred in modifying the agreements submitted to him. Asserting that the Commission may not change or insert settlement terms, the parties urge that Judge Riehl rendered their assent to the agreements ineffective by altering their provisions. They assert that the review authority of the Commission, assuming it has any, is limited to the function of approving or rejecting settlement agreements. Furthermore, they continue, the judge erred in finding that withdrawal of a notice of contest is an admission that the employer committed a negligent act by exposing its employees to a hazard. Under section [*10] 4(b)(4) of the Act, 29 U.S.C. § 653(b)(4), n4 they point out, "[n]either the Secretary nor the Commission may hold employers accountable under common law tort principles." Thus, they reason, the judge's finding of negligence is "legally gratuitous." They conclude that no compelling public interest justified the judge's actions and accordingly ask the Commission to approve the agreements as submitted.

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n4 Section 4(b)(4) provides:

Nothing in this Act shall be construed to supersede or in any manner affect any workmen's compensation law or to enlarge or diminish or affect in any other manner the common law or statutory rights, duties, or liabilities of employers and employees under any law with respect to injuries, diseases, or death of employees arising out of, or in the course of, employment.

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In addition, Deere separately argues that the judge's "gratuitous findings, arrived at without factual bases or an opportunity for Respondent to be heard" are "damaging . . . to its integrity and reputation, and . . . may affect [*11] collateral liabilities of Respondent . . . depriving it of Equal Protection and Due Process of Law under the 5th and 14th Amendments to the United States Constitution." Deere adds that the judge found it negligent without a hearing, without evidence to support the finding, and in derogation of the exculpatory language agreed to by the parties. n5 Bunge similarly argues, in its separate submission, that the judge's findings, "reached without an evidentiary hearing", deprived the parties of due process.

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n5 In addition, Deere notes that the judge denominated the violation "serious" despite the stipulation that it was "other than serious." Deere is apparently referring to the judge's finding that Deere admitted that it "has not furnished to . . . employees a place of employment which is free from recognized hazards that are causing or likely to cause serious physical harm to his employees."

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III.

The Commission has held that it is authorized to review settlement agreements to assure that they are consistent with the provisions [*12] and objectives of the Act. E.g., Farmers' Export Co., 80 OSAHRC , 8 BNA OSHC 1655, 1980 CCH OSHD P24,569 (No. 78-1708, 1980). In Farmers' Export, we reaffirmed our longstanding position that the Commission is required to reject settlement proposals that do not comport with the Act. Accordingly we reject the argument of the Secretary and the Respondents that the Commission lacks authority to review settlement agreements.

Nevertheless, we also have held that it is error for a judge to issue an order approving a settlement agreement while rejecting a provision in the agreement. Independence Foundry & Manufacturing Co., 80 OSAHRC , 8 BNA OSHC 2020, 1980 CCH OSHD P24,747 (No. 79-5772-P, 1980). We have taken this approach because a judge's selective approval of a settlement agreement might not reflect the intent of the parties to the agreement. For the reasons stated in Independence Foundry, we conclude that Judge Riehl erred in the cases now before us in approving only selected portions of the settlement agreements submitted by the parties. Furthermore, we conclude that the judge erred in rejecting the exculpatory provisions of the agreements. n6 Farmer's [*13] Export Co., supra. The judge also erred in making findings of fact without a hearing or an evidentiary record, e.g., a stipulation of facts. See Boston Gear, A Division of Murray Co. of Texas, 79 OSAHRC 38/E3, 7 BNA OSHC 1414, 1979 CCH OSHD P23,595 (No. 76-967, 1979). One finding entered by the judge in both cases was a finding that the respective employer was in violation of the Act as alleged in the citations. In entering these findings the judge reasoned that, notwithstanding the exculpatory language in the settlement agreement, the employer's withdrawal of its notice of contest resulted in a determination that the employer was in violation of the Act as alleged. We have previously indicated that it is unnecessary to enter a finding that the employer has violated the Act. Snider Industries, Inc., 80 OSAHRC , 8 BNA OSHC 2046, 2048 n.3, 1980 CCH OSHD P24,749 at p. 30,479 n.3 (No. 78-452, 1980). For these reasons, we set aside the judge's orders in Docket Nos. 78-5498 and 78-4449.

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n6 In Docket No. 78-4449, the judge also implicitly rejected paragraph 3 of the agreement, quoted supra, which preserved Bunge's right to assert specified defenses in future proceedings under the Act. We recently noted that this type of language is not "exculpatory" and that it is permissible in a settlement agreement. Nashua Corp., 80 OSAHRC , 9 BNA OSHC 1113, 1116 n.6, 1981 CCH OSHD P25,020 at p. 30,915 n.6 (No. 78-2146, 1980).

[*14]

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While we have the authority to review in this proceeding the settlement agreements at issue, we conclude that it is necessary to remand Docket No. 78-5498 to the judge. Before a settlement agreement is approved, the record must contain adequate certification of service of the agreement on affected employees. Anaconda Co., Wire and Cable Division, 80 OSAHRC , 9 BNA OSHC 1159, 1980 CCH OSHD P24,917 (No. 79-5449, 1980). See Reynolds Metals Co., 79 OSAHRC 4/A2, 7 BNA OSHC 1042, 1044 n.5, 1979 CCH OSHD P23,295 at p. 28,179 n.5 (No. 78-2485, 1979). We conclude that the certification of service is not adequate in Docket No. 78-5498.

In that case, the settlement agreement submitted by the Secretary and Deere included the following certification:

Respondent hereby certifies that this Settlement Agreement has been served on affected employees in the manner set forth in section 7 of the Rules of the Commission as follows: (1) By mailing or personal delivery of said Settlement Agreement to those employees represented by an authorized employee representative, if any, in accordance [*15] with section 7(f) of the Rules of the Commission, and/or (2) by posting in a place where the citation is required to be posted, a copy of this Agreement so as to inform employees who are not represented by an authorized employee representative, if any, in accordance with section 7(g) of the Rules of the Commission

(emphasis added). We have previously held that this type of ambiguous certification of service is not adequate under the Commission's Rules of Procedure. Anaconda Co., Wire and Cable Division, supra; Reynolds Metals Co., supra. n7

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n7 Our dissenting colleague joined without reservation in the Commission decisions in Anaconda and Reynolds Metals. He also joined in the unanimous adoption and publication of revised Rule 100, governing settlement agreements. 29 C.F.R. § 2200.100, 44 Fed. Reg. 70106, 70112 (1979). The Chairman acknowledges in this case that the certification of service is ambiguous. Nevertheless, he "[does] not find that the ambiguity is of a magnitude to warrant remanding the case." As discussed in Anaconda, the specific requirements for manner and proof of service set forth in Commission Rules 7 and 100, designed to ensure notice and an opportunity to participate to affected employees, are not satisfied by the type of certification contained in this case. Our colleague's reference to his separate opinion in Nashua Corp., 80 OSAHRC , 9 BNA OSHC 1113, 1981 CCH OSHD P25,020 (No. 78-2146, 1980), is itself ambiguous since Nashua did not involve a deficiency in employee notice. Affected employees in that case did have "an opportunity for meaningful participation in the settlement process, in particular [the] adequate notice of the agreement" that the Chairman is apparently willing to waive for other employees in the future since he will no longer determine whether there has been adequate employee notice.

[*16]

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We conclude that the settlement agreement in Docket No. 78-4449 complies with the criteria set forth in Commission Rule 100. n8 The agreement includes Respondent's withdrawal of its notice of contest to the citations, an assurance that Respondent paid the proposed penalty, a statement that the conditions have been abated, and certification that a copy of the agreement has been served on the authorized representative of affected employees. The record reflects that no objection was filed. Moreover, the agreement is consistent with the Act's objectives and provisions.

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n8 Commission Rule 100 provides, in pertinent part, as follows:

Rule 100 Settlement.

(a) Policy. . . . A settlement proposal shall be approved when it is consistent with the provisions and objectives of the Act.

(b) Requirements. Every settlement proposal submitted to the Judge or Commission shall include, where applicable, the following:

(1) A motion to amend or withdraw a citation, notification of proposed penalty, notice of contest, or petition for modification of abatement;

(2) A statement that payment of the penalty has been tendered or a statement of a promise to pay; and

(3) A statement that the cited condition has been abated or a statement of the date by which abatement will be accomplished.

(c) Filing: service and notice. When a settlement proposal is filed with the Judge or Commission, it shall also be served upon represented and unrepresented affected employees in the manner prescribed for notices of contest in § 2200.7. Proof of service shall accompany the settlement proposal. A settlement proposal shall not be approved until at least 10 days following service of the settlement proposal on affected employees.

[*17]

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Accordingly, we remand Docket No. 78-5498 to the judge for further proceedings consistent with this decision. In Docket No. 78-4449, we set aside the judge's order and approve the settlement agreement as submitted by the parties. Because the common issues of law in these cases have been resolved, the cases are hereby severed pursuant to Commission Rule 10, 29 C.F.R. § 2200.10.

SO ORDERED.

CONCURBY: CLEARY (In Part)

DISSENTBY: CLEARY (In Part)

DISSENT:

CLEARY, Chairman, concurring in part and dissenting in part:

I concur in parts I, II and III of the majority's opinion. I dissent, however, from the majority's decision in part IV of their opinion to remand Docket No. 78-5498.

Although I joined in the two remand decisions cited by the majority - Anaconda Co., Wire and Cable Division, 80 OSAHRC / , 9 BNA OSHC 1159, 1980 CCH OSHD P24,917 (No. 79-5449, 1980); and Reynolds Metals Co., 79 OSAHRC 4/A2, 7 BNA OSHC 1042, 1979 CCH OSHD P23,295 (No. 78-2485, 1979) - I did so with some misgivings. Those misgivings centered on my concern that we, as an administrative agency, might be falling into the common trap of elevating [*18] form over substance; that the Commission would be holding the parties appearing before it to a standard of draftsmanship specifically rejected by the Federal Rules of Civil Procedure. Cf. Surowitz v. Hilton Hotels Corp., 383 U.S. 363, 373 (1966) (the Federal Rules of Civil Procedure were designed to get away from "procedural booby traps"). On the other hand, however, I share with my colleagues the desire to have before us in cases of this type clear, unambiguous certificates of service that state in precise terms the manner in which all parties, in particular affected employees, have been given notice of a settlement agreement. After giving the matter much thought, I believe that unless there is a clear indication of inadequate service or no service at all, we do an injustice to the Act by remanding such settlement agreements when to do so continues to toll an already generous abatement period, thus creating the possibility that employees may continue to be exposed to hazardous working conditions.

The Commission has overlooked the fact that the counsel who appear before us are "officers of the court," and as such, if for no other reason, we have a right to rely on their [*19] representations. See generally American Bar Association, Code of Professional Responsibility. Moreover, nothing in Commission Rule 100, 29 C.F.R. § 2200.100, or Commission Rule 7, 29 C.F.R. § 2200.7, indicates precisely the form to be used for a certificate of service. Indeed, all Rule 100 states is that "Proof of service shall accompany the settlement proposal."

In this case, Docket No. 78-5498, counsel have signed and submitted a settlement agreement containing the following representation: "Respondent hereby certifies that this Settlement Agreement has been served on affected employees in the manner set forth in section 7 of the Rules of the Commission. . . ." I recognize that the representation goes on to raise some question about the precise method used to accomplish service on affected employees. On balance, however, given the initial certification by Respondent as well as my misgivings explained above, I do not find that the ambiguity is of a magnitude to warrant remanding the case.

In Nashua Corp., 80 OSAHRC / , 9 BNA OSHC 1113, 1981 CCH OSHD P25,020 (No. 78-2146, 1980) (Cleary, dissenting), I stated:

In general, therefore, I am of the opinion that [*20] where the Secretary and the employer have reached agreement on a basis to settle their dispute and the affected employees or their authorized representative have had an opportunity for meaningful participation in the settlement process, in particular adequate notice of the agreement, and they raise no objection to the settlement, the Review Commission should approve the agreement reached by the parties. (Footnote omitted.)

9 BNA OSHC at 1118, 1981 CCH OSHD at pp. 30,916-917. The settlement agreement in Docket No. 78-5498 satisfies the position I have taken.