WELDSHIP CORPORATION

OSHRC Docket No. 77-3769

Occupational Safety and Health Review Commission

August 29, 1980

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Before CLEARY, Chairman; BARNAKO and COTTINE, Commissioners.  

COUNSEL:

Baruch A. Fellner, Office of the Solicitor, USDOL

Marshall H. Harris, Regional Solicitor, USDOL

John S. Hayes, for the employer

OPINION:

DECISION

BY THE COMMISSION:

An order of Administrative Law Judge Charles K. Chaplin approving a settlement agreement between the Secretary of Labor ("the Secretary") and Respondent, Weldship Corporation ("Weldship" or "the company"), is before the Commission for review pursuant to section 12(j), 29 U.S.C. §   661(i), of the Occupational Safety and Health Act of 1970, 29 U.S.C. § §   651-678 ("the Act").   The direction for review by Commissioner Cottine specified the following issues:

1.   Whether the Authorized Employee Representative was served with the proposed settlement agreement as required by Commission Rule 100(c), 29 C.F.R. §   2200.100(c).

2.   Whether the judge erred in approving a settlement agreement that fails to indicate whether abatement has taken place or will take place, and fails to assure future compliance.

3.   Whether the judge erred in approving a settlement agreement that includes the following exculpatory language: "[T]he Respondent does not admit liability but makes such [*2]   payment in order to avoid the expense of litigation."

4.   Whether the judge erred in failing to set forth the reasons or basis for his Order Granting Stipulated Settlement.

Weldship was issued two citations alleging a number of instances of violation of section 5(a)(2) of the Act, 29 U.S.C. §   654(a)(2). n1 The time periods for abatement fixed in the citation ranged from immediately to two months.   Penalties totalling $2,160 were proposed.

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n1 This section provides that "[e]ach employer . . . shall comply with occupational safety and health standards promulgated under this Act."

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Weldship contested the citations and proposed penalties and subsequently the Secretary and Weldship entered into a settlement agreement providing for the withdrawal of one item of one citation, the reduction of the penalties to a total of $1,730, and the withdrawal of Weldship's notice of contest. The settlement agreement does not indicate whether and on what date Weldship has abated or will abate the violations, and whether the proposed   [*3]   settlement agreement was served upon the affected employees. Also, the settlement agreement provides that "the Respondent does not admit liability but makes . . . payment [of the penalties] in order to avoid the expense of litigation."

On review the company argues that the settlement agreement was properly approved by the judge despite these deficiencies.   Reduced to basic terms, Weldship's argument is that the Secretary's agreement to any settlement "should be tantamount to a finding that it is within the purposes of the Act" because the Secretary is solely responsible for policy and enforcement under the Act.   In the company's view, the Commission's role is limited to adjudication of disputes between the parties in contested cases. n2 Weldship further asserts that because no violations of the Act were admitted, n3 it was unnecessary and impossible to include in the settlement agreement assurances about abatement. Nevertheless, the company also now avers that all "irregularities" alleged to exist in the company's workplace have been corrected and that the settlement was posted to give notice to affected employees as required by Commission Rule 100(c), 29 C.F.R. §   2200.100(c). n4 [*4]  

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n2 Weldship Corporation cites the opinion of the Court of Appeals for the Ninth Circuit in Dale M. Madden Const., Inc. v. Hodgson, 502 F.2d 278 (1974) and the separate opinion of former Commission Member Moran in Thorleif Larsen & Son, Inc., 74 OSAHRC 74/C8, 2 BNA OSHC 1256, 1974-75 CCH OSHD P18,826 (No. 370, 1974).

n3 Weldship excepts to the portion of the judge's order affirming the citations.

n4 The rule provides that "[w]here parties to a settlement agree upon a proposal, it shall be served upon represented and unrepresented affected employees in the manner set forth in §   2200.7.   Proof of such service shall accompany the proposed settlement when it is submitted to the Commission or the judge."

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The Secretary, however, requests that the Commission remand the case to the judge.   In a letter filed subsequent to Weldship's brief on review, the Secretary states that "[a]lthough we believe that [we] arrived at a settlement in this matter that adequately protected Respondent's employees, it does not specifically [*5]   provide for prospective enforceability of the Commission's order in accord with Matt J. Zaich [Construction Co., 73 OSAHRC 55/D5, 1 BNA OSHC 1225, 1971-73 CCH OSHD P15,683 (No. 756, 1973)]."

We recently reaffirmed our position that the Commission has authority to review settlement agreements to assure that they are consistent with the provisions and objectives of the Act.   Farmers Export Co., 80 OSAHRC    , 8 BNA OSHC 1655, 1980 CCH OSHD P24,569 (No. 78-1708, June 27, 1980).   Accordingly we reject Weldship's argument that the Commission lacks authority to disapprove a settlement agreement to which the Secretary has agreed.   Further, we have consistently held that for a settlement agreement to receive favorable consideration, (1) the agreement must reflect, among other things, that abatement has been completed or the date by which it will be completed, n5 and (2) proof that the proposed settlement agreement has been served upon represented and unrepresented affected employees must accompany the settlement proposal. Dawson Brothers, Mechanical Contractors, 72 OSAHRC 5/B8, 1 BNA OSHC 1024, 1971-73 CCH OSHD P15,039 (No. 12, 1972); accord, e.g., Farmers Export   [*6]    Co., supra; Globe Industries, Inc., 79 OSAHRC    , 7 BNA OSHC 1312, 1979 CCH OSHD P23,512 (No. 78-3605, 1979); Reynolds Metals Co., 79 OSAHRC 4/A2, 7 BNA OSHC 1042, 1979 CCH OSHD P23,295 (No. 78-2485, 1979); General Motors Corp., 78 OSAHRC 87/F13, 6 BNA OSHC 2056, 1979 CCH OSHD P23,126 (No. 78-1764-P, 1978); Commission Rules 100(b) & (c), 29 C.F.R. § §   2200.100(b) & (c).   The settlement agreement in this case fails to meet these requirements.

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n5 In this case, Weldship takes exception to the affirmance of the citations and contends that because the company does not admit violating the Act, the company is not required to include in the settlement agreement assurances that violations have been or will be abated. However, Weldship agreed in the settlement to withdraw its notice of contest. A notice of contest withdrawal constitutes an agreement to affirmance of the citations.   Consequently, abatement is required, as is compliance with the requirements of Commission Rule 100(b) for assurances in the settlement concerning abatement.

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On review Weldship represents that abatement has been completed.   The Secretary has not indicated whether he accepts this representation.   Weldship also represents on review that the affected employees duly received notice of the settlement proposal by posting at the same place where the citation was posted. However, it is not clear on the basis of the record before us that posting constitutes sufficient notice under the facts of this case. n6 Accordingly, although we have recently held that exculpatory language does not preclude Commission approval of a settlement agreement, Farmers Export Co., supra, n7 our determination that the settlement agreement fails to meet the requirements set forth in Commission Rules 100(b) & (c) requires that we set aside the judge's order approving the settlement and remand the case to an administrative law judge for further proceedings consistent with our precedent and Rule 100.   See Farmers Export Co., supra. n8 On remand the judge should determine the appropriate method of employee notice under Commission Rules 100(c) and 7(f)-(j).   See note 6 supra. Accordingly, the case is remanded to the   [*8]   chief judge for assignment to an administrative law judge for further proceedings consistent with this decision. n9 SO ORDERED.

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n6 Service on affected employees is accomplished by serving the authorized employee representative when the employees are represented or by posting a copy of the settlement agreement at the place on the worksite where the citation must be posted when the employees are unrepresented. Commission Rule 100(c), note 4 supra; Commission Rule 7(f)-(j), 29 C.F.R. §   2200.7(f)-(j).   In this case, Weldship certified service of its notice of contest and other documents upon the authorized employee representative, Teamsters Local No. 773, but in its brief on review Weldship states that "although Weldship Corporations's employees have chosen a Union, Weldship Corporation does not have a contract with the Union; nor is a contract being negotiated." Therefore, it is not clear from the existing record whether the affected employees are represented by an authorized employee representative within the meaning of Commission Rules 1(g) and 22(c), 29 C.F.R. § §   2200.1(g) and 22(c).

n7 In Commissioner Cottine's view, a settlement agreement containing exculpatory language that attempts to limit the use of the affirmed violations in future proceedings under the Act is inconsistent with the provisions and objectives of the Act and should not be approved.   Farmer's Export Co., supra (dissenting opinion).

n8 Under the circumstances of this case, Chairman Cleary would affirm the judge's decision approving the settlement. He would find that Weldship's representations concerning abatement and service by posting sufficiently demonstrate compliance with the requirements of Dawson Bros., Mechanical Contractors, supra, and Commission Rules 100(b) and (c).   In particular, the Chairman notes that Weldship has represented in its brief on review that all of the violations have been abated, that the service required by Rule 100(c) has been accomplished by posting of the settlement, and that the Secretary in his submission on review has not taken issue with these representations.   As a practical matter, the Chairman concludes, the Commission should require no more in this case.

As the Chairman views it, an order of remand in this case is clearly a triumph of form over substance.   Parenthetically, the Chairman notes that the Commission has, in the past, accepted representations concerning satisfaction of the requirements of Rule 100(c) that were not originally included in settlement agreements but were made when the cases were on review.   See, e.g., ITT Thompson Indus., Inc., 78 OSAHRC 70/D10, 6 BNA OSHC 1944, 1978 CCH OSHD P22,944 (Nos. 77-4174 & 77-4175, 1978); General Motors Corp., 78 OSAHRC 87/F13, 6 BNA OSHC 2056, 1978 CCH OSHD P23,126 (No. 78-1764-P, 1978).   Although the Commission has amended Rule 100(c) since the issuance of these cited cases, the portions of the rule requiring service and proof of service at the time the settlement is filed were not changed in any substantive way.   Compare 44 Fed. Reg. 70106, 70112 with Rule 100(c), at present codified at 29 C.F.R. §   2200.100(c) (July 1, 1979).

n9 Judge Chaplin has retired from the Commission since the issuance of his decision in this case.

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