UNITED STATES OF AMERICA

OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION

SECRETARY OF LABOR,
Complainant,
v.	OSHRC DOCKET NO. 4385
REYNOLDS METALS CO.,
Respondent.

June 14, 1978

DECISION

Before CLEARY, Chairman; BARNAKO, Commissioner:

BARNAKO, Commissioner:

This case is again before the Commission following Judge Jerry Mitchell’s order dismissing a complaint and vacating a citation which charged Reynolds with a failure to utilize feasible engineering or administrative controls to reduce noise levels to within the limits permitted by 29 C.F.R. § 1910.95. Previously, this case was before the Commission on interlocutory appeal of the Judge’s order denying the Secretary’s motion for discovery through entry upon land. At that time a divided Commission held that although the Secretary was entitled to discovery, he should be restricted to the use of Federal experts to conduct the discovery inspection because Reynolds asserted it had trade secrets which might be revealed if the inspection was conducted by an outside expert and because the Secretary had not shown good cause why it was necessary to use outside experts. Reynolds Metals Co., 3 BNA OSHC 1749, 197576 CCH OSHD para. 20,214 (No. 4385, 1975) (‘Reynolds I’). For the reasons that follow we again remand for further proceedings consistent with this opinion.

This case has had a protracted history involving a dispute over the Secretary’s pre-hearing attempt to discover information relevant to the allegedly excessive noise levels at Reynolds’ Haywood, California can manufacturing facility. A representative of the Secretary inspected the Haywood plant in July, 1973. In August, 1973, the Secretary issued Reynolds a citation alleging a failure to comply with the noise standard, § 1910.95(b)(1),[1] at five locations in its plant. Following Reynolds’ timely notice contesting the citation and its subsequent refusal to allow discovery by entry upon land, the Secretary moved to allow entry by one or more outside experts into Reynolds’ plant, for the purpose of discovering facts regarding whether feasible engineering controls exist to reduce noise in the plant.[2] The trust of the Secretary’s motion was that he was entitled to discovery as a matter of right. He argued that Rule 34 of the Federal Rules of Civil Procedure authorized the requested discovery through Commission Rule of Procedure 2200.2(b). Supra note 2. He further contended that the information sought was relevant to the subject matter of the action and that he was not required to show good cause in order to obtain discovery. The Secretary argued that nothing in the Occupational Safety and Health Act of 1970 (29 U.S.C. § 651 et seq., ‘the Act’) or in the Fourth Amendment precluded discovery. Next, he alleged that Reynolds failed to specify how the requested discovery would, as it contended, constitute a burdensome and oppressive intrusion. Finally, the Secretary noted that Reynolds had available a remedy under Rule 26(c) of the Federal Rules of Civil Procedure which it had not sought. That is, for good cause shown, it could have sought a protective order against what it considered burdensome or oppressive aspects of any discovery request.

Reynolds opposed the motion on the grounds that 1) the discovery request was an unlawful attempt to conduct a post-citation inspection of Reynolds’ plant; 2) the Act did not permit witnesses to enter Reynolds’ workplace; 3) the Commission’s Rules of Procedure did not permit the requested discovery; 4) the discovery request was broad, vague, and ambiguous and accordingly violated the Act; 5) the discovery request established that the citation was improperly issued; and 6) inasmuch as Reynolds has a proprietary interest in its machinery, the discovery request violated Reynolds’ rights under § 15 of the Act which provides for protecting the confidentiality of trade secrets. Infra note 4.

Judge Mitchell denied the Secretary’s motion in its entirety. He also refused to certify the case for interlocutory appeal. Pursuant to Commission Rule 2(b) the Secretary then petitioned the Commission for special permission to appeal the denial of his discovery request.

In his petition for special permission to appeal the Secretary continued to expend the majority of his efforts maintaining that he had an unbridled right to the requested discovery. However, he also noted that Reynolds had raised before Judge Mitchell the question of protecting its alleged proprietary interests. The Secretary commented that Reynolds nevertheless did not claim that trade secrets were involved. In addition, the Secretary alleged that Reynolds had not attempted to make any showing by way of affidavit or sworn testimony to the effect that trade secrets were involved.

The Commission granted interlocutory appeal and the proceedings were stayed pending the Commission’s disposition of the appeal. In granting the appeal we ordered that Reynolds could have an opportunity to file a statement in opposition to the Secretary’s memorandum in support of his request for special permission to appeal. The Secretary filed nothing further and we also denied his subsequent request to respond to Reynolds’ statement in opposition.

In its statement in opposition Reynolds continued to argue primarily that the Secretary had no right to the requested discovery. It did submit, however, an affidavit of its vice-president and general manager of Reynolds’ can division which stated that Reynolds was a pioneer in the development of aluminum cans and that its present market position depended on keeping its processes secret.

As noted above, the Commission, in Reynolds I, granted the Secretary’s motion subject to his use of Federal employees rather than outside experts to conduct the discovery inspection. In doing so I stated in the lead opinion my belief that the Secretary could locate a qualified Federal expert in noise control who, as a Federal employee, would be subject to the sanctions of 18 U.S.C. § 1905 for the unlawful disclosure of confidential information.[3] The case was then remanded for further proceedings.

Following the remand the Judge entered on order granting the Secretary’s motion for entry upon Reynolds’ land but limiting entry to a Federal employee. Pursuant to the Commission decision in Reynolds I and the Judge’s order, the Secretary conducted a search of 29 Federal agencies for a qualified noise expert and reported to Judge Mitchell that he could find no available Federal expert equivalent in education and experience to the average outside expert he had previously used. The Secretary thereupon moved that the Judge permit the use of outside experts to conduct the discovery inspection. The Judge refused to vacate his previous order limiting entry to a Federal employee and dismissed the case upon the Secretary’s statement that he was therefore unable to proceed. The Secretary thereafter petitioned for review and review was granted.

In his brief on review of the Judge’s order dismissing the citation and complaint the Secretary concedes that Judge Mitchell was bound by Reynolds I and had no alternative but to dismiss the case upon the Secretary’s contention that he was unable to proceed under the terms of that decision. However, the thrust of the Secretary’s contentions have now shifted from the question of his right to inspect to the issue of the manner of inspection where trade secrets have been alleged. While out questioning the legitimacy of Reynolds’ proprietary interest claim, the Secretary now contends that any restriction on discovery cannot be based upon a mere unsupported assertion that trade secrets exist. He argues that Reynolds, as the party requesting discovery limitations on the grounds of trade secrets, has the burden of establishing their existence. And in order to meet this burden the Secretary contends that Reynolds must introduce specific facts which establish that the information sought actually involves trade secrets. Furthermore, he argues that the Commission erred in requiring the Secretary to show good cause as to why he should not be limited to using a Federal expert to conduct the inspection. The Secretary contends that, assuming trade secrets are intertwined with information sought in discovery, the trade secrets privilege must yield if, on balance, the Commission determines that the competing interests at stake in the litigation do not justify the withholding of information. The protection of workers from excessive noise, the Secretary asserts, outweighs Reynolds’ interest in protecting its trade secrets, and the use of the best available expert to conduct the discovery inspection is essential to enable the Secretary to prove a complex noise case and thereby secure abatement of a noise violation. In any event, the Secretary argues that even if trade secrets exist that warrant protection, the proper safeguard is an order binding an outside expert to confidentiality, not a Federal employee restriction. Finally, the Secretary contends that, even if § 15 of the Act[4] authorized the Commission to impose a Federal employee restriction, such a restriction is unreasonable in this case because a survey of Federal agencies indicate a qualified Federal noise expert is unavailable.

Based on the foregoing arguments, the Secretary requests that the case be remanded in order for Reynolds to make a proper showing on its trade secrets claim and, if sustained, for the Judge to then issue an appropriate order allowing the discovery inspection to be conducted by an outside expert but binding the outside expert to confidentiality.

In its review brief urging affirmance Reynolds argues that the only issue is whether, following the Secretary’s refusal to proceed, the Judge abused his discretion by dismissing the case. In Reynolds’ view it is the law of the case that the Secretary must use a Federal employee to conduct any discovery inspection. Therefore, according to Reynolds, when the Secretary stated he could not proceed under this limitation, the Judge properly dismissed the case. Reynolds also contends that the Secretary cannot now dispute the existence of trade secrets because he failed to raise the issue of their existence either before the Judge or when the case was on interlocutory review before the Commission. Reynolds argues that, in any event, in Reynolds I the Commission made the required factual findings, including that Reynolds had trade secrets to protect, and properly balanced the competing interests of the parties. Finally, Reynolds alleges that the Secretary did not make a bona fide attempt to locate a qualified Federal noise expert and therefore did not establish that he was unable to locate such an expert. Reynolds therefore requests that if a second remand is ordered the Commission require the Secretary to prove that he is unable to obtain a qualified Federal employee.

I note initially that the parties disagree as to the issues before the Commission. The Secretary argues that the Commission erred as a matter of law in imposing a Federal employee restriction, but that, assuming such a restriction can ever be proper, it is unjustified in this case because Reynolds has not proven the existence of valid trade secrets and because a diligent search has revealed that a qualified federal expert is unavailable. Reynolds argues that these issues can no longer be litigated and that the only issue is whether the Judge correctly dismissed the complaint upon the Secretary’s refusal to proceed in accordance with Reynolds I.

In Reynolds I the Commission held that, as a matter of law, the Secretary is limited to the use of a Federal employee to conduct a discovery inspection if inspection by an outside expert would endanger the employer’s trade secrets and if the Secretary failed to show good cause why it was necessary to use an outside expert. That holding is the law of the case and I therefore reject the Secretary’s argument that limiting him to the use of a Federal employee to conduct a discovery inspection can never be proper.

However, contrary to Reynolds’ contentions, there are two as yet unresolved issues in this case. The first is whether Reynolds has established the existence of trade secrets.

When Reynolds I was decided, Reynolds had placed in the record the affidavit that it had trade secrets a discovery inspection might reveal, and the Act places on the Commission the duty of protecting trade secrets from disclosure. Supra note 4. Therefore, having decided that the Secretary had the right to a discovery inspection, the Commission could not ignore the issue presented by Reynolds’ claim of trade secrets. Since the Secretary did not question the existence of trade secrets at the time of Reynolds I, we issued a protective order based on the record as it existed at that time.

I agree with the Secretary that, as the party seeking to limit discovery on trade secret grounds, Reynolds has the burden of establishing their existence. Fed. R. Civ. P. 26(c).[5] See, e.g., Davis v. Romney, 55 F.R.D. 337, 340 (E.D. Pa. 1972). However, I reject the Secretary’s argument that an affidavit, without more, is an insufficient basis upon which to find that Reynolds possesses trade secrets. Placing this matter in proper perspective, I emphasize that at issue here is a dispute over a pre-hearing discovery motion. And at least at this preliminary stage of the case, it is entirely proper to rely on an uncontroverted affidavit to establish the existence of trade secrets for purposes of a discovery limitation under Rule 26(c). Fed. R. Civ. P. 44(e). See Israel Aircraft Industries, Ltd. v. Standard Precision, 559 F.2d 203 (2nd Cir. 1977); Covey Oil Co. v. Continental Oil Co., 340 F.2d 993 (10th Cir. 1965). Consequently, I would normally find that, based on the record as it now exists, Reynolds possesses the necessary trade secrets and that any objection as to their existence is untimely because the Secretary failed to raise the argument prior to our decision in Reynolds I.

However, this case is unique both in its procedural history and in its establishment of new legal principles. In the beginning, the question of trade a secrets was secondary to the Secretary’s right to obtain discovery inspections. However our decision in Reynolds I brought the trade secrets issue to the forefront. By placing on the Secretary the duty of finding qualified Federal experts in order to protect trade secrets, we gave the issue of trade secrets added significance. As a result of that decision, the Secretary may not be able to rely upon orders of confidentiality to protect trade secrets. Moreover, instead of using private experts, he must find Federal experts. Although I expressed the limitation in terms of being ‘confident’ the Secretary could locate a qualified Federal expert, the Secretary claims such a task is impossible. Yet failure in this regard may lead to dismissal. Hence whether trade secrets actually exist may become crucial to the ability of the Secretary to proceed. Accordingly, our decision in Reynolds I placed the entire issue of trade secrets in a different context. Because the effect trade secrets have on a discovery inspection was an issue of first impression before the Commission and the parties did not fully address the issue prior to Reynolds I, I hold that the parties should have the opportunity to relitigate the trade secrets issue and will remand for a hearing on whether Reynolds has the requisite trade secrets. Cf. Grossman Steel and Aluminum Co., 76 OSAHRC 54/D9, 4 BNA OSHC 1185, 1975–76 CCH OSHD para. 20,690 (No. 12775, 1976); Anning-Johnson Co., 76 OSAHRC 54/A2, 4 BNA OSHC 1193, 1975–76 CCH OSHD para. 20,690 (No. 3694, 1976).

The second issue yet to be resolved involves the Federal employee restriction. Again, Reynolds contends that our earlier decision is unequivocal in requiring that the Secretary use only Federal employees to conduct the discovery inspection. As noted above, however, I expressed that limitation in terms of being ‘confident’ the Secretary could locate a qualified Federal expert. Thus, our decision did not go so far as to preclude the Secretary from showing good cause why a nonfederal employee must be used, i.e. that a qualified Federal expert was unavailable.

Even accepting Reynolds’ position that Reynolds I unequivocally required a Federal employee to conduct the discovery inspection, I would nevertheless be constrained to also reconsider the discovery limitation issue in light of the intervening circumstance of the Secretary’s alleged inability to locate a Federal expert. See Brennan v. OSAHRC (John J. Gordon), 492 F.2d 1027 (2nd Cir. 1974); Faircrest Site Opposition Committee v. Levi, 418 F. Supp. 1099 (N.D. Ohio 1976); cf. Placid Oil Co. v. FPC, 483 F.2d 880 (5th Cir. 1973), Bookman v. U.S., 453 F.2d 1263 (Ct. Cl. 1972).

Accordingly, I am remanding to the Judge for factual findings on the threshold question of whether Reynolds has trade secrets which a discovery inspection would endanger, and on the secondary question of whether the Secretary has shown good cause for using a nonfederal expert. On the issue of whether Reynolds has the requisite trade secrets, the burden is upon Reynolds to establish their existence. If the Judge, after making specific factual findings on the matter, finds that Reynolds has not shown that trade secrets exist, the Secretary is to be granted permission to conduct discovery using any expert he chooses. The second question therefore need not be reached.

If the Judge finds that trade secrets do exist, and after allowing for the introduction of additional evidence, he is to make specific factual findings on whether the Secretary has established good cause for the use of a nonfederal expert. If the Secretary shows good cause, he shall be permitted to use any expert of his choice. If he is unable to establish good cause, the Secretary shall be limited to using a Federal employee to conduct any discovery inspection.

Also, in the event the Judge finds that trade secrets exist, he is to protect that confidentiality by issuing any such additional orders as may be appropriate, in accordance with our earlier decision in this case and Rule 11 of the Commission’s Rules of Procedure.

Accordingly, the case is remanded for further proceedings consistent with this decision.

FOR THE COMMISSION

RAY H. DARLING, JR.

EXECUTIVE SECRETARY

DATED: JUN 14, 1978

CLEARY, Chairman, CONCURRING:

This case demonstrates why Reynolds I should be reexamined in the near future. Nevertheless, I concur in the result because Reynolds I is controlling here.

UNITED STATES OF AMERICA

OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION

SECRETARY OF LABOR,
Complainant,
v.	OSHRC DOCKET NO. 4385
REYNOLDS METALS CO.,
Respondent.

July 6, 1976

ORDER DISMISSING COMPLAINT AND VACATING CITATION

An aluminum can manufacturing plant at Hayward, California, owned by Reynolds Metals Company (Respondent) was inspected by a Compliance Safety and Health Officer on behalf of the Secretary of Labor (Complainant) on July 31, 1973. As a result of that inspection a Citation for Nonserious Violation of the safety and health standard codified at 29 CFR 1910.95(b)(1) was issued to Respondent on August 3, 1973. The Citation alleged that feasible engineering or administrative controls had not been utilized to the extent necessary to reduce exposure to noise in five (5) specific areas of the plant to the acceptable intensity and time durations set forth in the cited standard.

Complainant subsequently sought, and on April 2, 1974 was DENIED, an order permitting entry to Respondent’s plant for the purpose of discovery in connection with the Citation. Complainant sought to use an outside expert to make this requested discovery inspection. On April 17, 1974 the Review Commission granted Complainant’s Petition for Interlocutory Appeal and Stay of Proceedings with respect to the April 2nd Order.

In an Order dated December 10, 1975 the Commission remanded the case to this Judge for further proceedings. Complainant’s Petition for Reconsideration of the December 10th Order was denied by the Commission on January 16, 1976. The December 10th Remand Order granted Complainant’s request for discovery but limited performance of the discovery inspection to an expert who was a federal employee.

The following chronology summarizes the proceedings subsequent to the remand of the case:

1. January-March 1976—Several telephone pre-trial conferences were held to arrange mechanics of identifying the expert and setting the dates for his inspection of the plant. During these conferences Complainant indicated considerable difficulty in finding an expert in federal employment who had acceptable qualifications.

2. March 15—Entered an Order Granting Complainant’s Motion for Order Requiring Respondent to Permit Entry, etc., with the discovery inspection to be made on March 31 and April 1, 1976. This Order required that the discovery inspection be performed by an expert from federal employment and limited the scope of the inspection to that requested in Complainant’s original 1973 request.

3. In late March Complainant advised that it was unable to locate an acceptably qualified expert in federal employee ranks. Following this advice, Complainant did not make the ordered March 31st-April 1st discovery inspection.

4. April 14th—Trial Noticed for May 4th in San Francisco.

5. April 19th—Complainant filed a Motion to Vacate the Order of March 15th.

6. April 22nd—Trial scheduled for May 4th postponed to on or about June 1st.

7. May 4th—Entered Order Denying Motion to Vacate Order of March 15th.

8. May 13th—Trial Noticed for June 2nd in San Francisco.

9. May 18th—Complainant filed a document captioned ‘Statement of Position’ stating in effect that, ‘Complainant cannot proceed.’ The scheduled June 2nd trial was postponed pending a ruling on Complainant’s Statement of Position.

10. June 2nd—Issued Order to Show Cause why the Citation and Complaint should not be Dismissed for failure and refusal of Complainant to proceed to Trial.

11. June 16th—Complainant filed a Memorandum of Points and Authorities in Response to the Order to Show Cause. In this document Complainant asserts that it has been denied the opportunity to prove an essential element of its case, ‘Feasibility’, by denial of the opportunity to use an expert from private industry. This argument is based on the further assertion that there is no available qualified noise expert in the ranks of federal employees. Complainant seeks a dismissal without prejudice.

12. June 28th—Respondent filed a Reply to Complainant’s Memorandum of Points and Authorities in Response to Order to Show Cause. In this Memorandum Respondent seeks to have this Action dismissed with prejudice.

The foregoing chronology clearly demonstrates the fact that Complainant has refused to proceed to trial. Complainant did not perform the discovery inspection at the time ordered for it and affirmatively states that it cannot to forward without being permitted discovery by an expert from private industry. Under these circumstances the case must be Dismissed. The circumstances, as a whole, do not justify an order other than DISMISSAL. There is no valid reason to make the order either with or without prejudice.

Accordingly, because Complainant has failed and refused to proceed to trail in this matter as outlined above, it is

ORDERED that:

1. The complaint herein be, and the same hereby is, DISMISSED; and that

2. The Citation herein be, and the same hereby is, VACATED.

Dated this 6th day of July, 1976.

JERRY W. MITCHELL

Judge

[1] Section 1910.95(b)(1) states:

When employees are subjected to sound exceeding those listed in Table G–16, feasible administrative or engineering controls shall be utilized. If such controls fail to reduce sound levels within the levels of Table G–16, personal protective equipment shall be provided and used to reduce sound levels within the levels of the table.

Table G–16 entitled ‘Permissible Noise Exposures’ includes the following:

Duration per day, hours

Sound level dBA slow response

100

1 1/2

102

105

1/2

110

1/4

115

[2] The Commission’s Rules of Procedure do not cover discovery by entry upon land, and the discovery rules of the Federal Rules of Civil Procedure therefore apply. 29 C.F.R. § 2200.2(b). See Reynolds Metals Co., 3 BNA OSHC at 1750. Fed. R. Civ. P. 34, in pertinent part, states:

(a) Scope. Any party may serve on any other party a request. . . to permit entry upon designated land or other property in possession or control of the party upon whom the request is served for the purpose of inspection and measuring, surveying, photographing, testing, or sampling the property or any designated object or operation thereon . . .

Fed. R. Civ. P. 37, in pertinent part, states:

(a) Motion for Order Compelling Discovery . . . . (2) Motion. . . . if a party, in response to a request for inspection submitted under Rule 34, fails to respond that inspection will be permitted as requested, the discovering party may move for . . . an order compelling inspection in accordance with the request.

[3] 18 U.S.C. § 1905 provides for criminal sanctions for any Federal employee who makes unauthorized disclosures of trade secrets of which he learns in the course of his employment.

[4] Section 15 of the Act provides, in part:

. . . In any such proceeding which contains or which might reveal a trade secret the Secretary, the Commission, or the court shall issue such orders as may be appropriate to protect the confidentiality of trade secrets.

Rule 11 of the Commission’s Rules of Procedure, 29 C.F.R. § 2200.11(a), in essence parallels § 15 of the Act. Rule 26(c) of the Federal Rules of Civil Procedure, infra note 6, provides the court with authority to order, under certain circumstances, that discovery be conducted with no one present except persons designated by the court. Fed. R. Civ. P. 26(c)(5). This rule applies to the Commission’s proceedings. Supra note 2.

[5] Fed. R. Civ. P. 26(c), in part, states:

Protective Orders. Upon motion by a party or by the person from whom discovery is sought, and for good cause shown, the court in which the action is pending . . ., the court in the district where the deposition is to be taken may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: . . . (7) that a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way: . . ..