“Docket No. 83-0509 SECRETARY OF LABOR, Complainant, v. SALEM-GRAVURE DIVISION OF WORLD COLOR PRESS, INC., Respondent.GRAPHIC COMMUNICATIONS INTERNATIONAL UNION, LOCAL554, Authorized Employee Representative.OSHRC Docket No. 83- 0509DECISION Before: BUCKLEY, Chairman; RADER and WALL,Commissioners. BY THE COMMISSION:This case is before the Commission on ChiefAdministrative Law Judge Paul A. Tenney’s certification of interlocutory appeal.Judge Tenney determined that Salem’s plant containstrade secrets. The Secretary desires to reinspect Salem’s plant with a consultant who isnot a government employee, and thus not subject to sanctions for disclosure of tradesecrets under the Trade Secrets Act, 18 U.S.C. ? 1905. Judge Tenney ordered Salem topermit the Secretary’s consultant to enter its plant subject to a protective order such aswas approved in Owens-Illinois, Inc., 78 OSAHRC 105\/C8, 6 BNA OSHC 2162, 2167-2168, 1978CCH OSHD ? 23,218, pp. 28,072-28,073 (No. 77-648, 1978). Salem objects to entry by aconsultant who is not subject to sanctions under the Trade Secrets Act, 18 U.S.C. ? 1905,contending that the Commission’s protective order by itself provides no real protectionagainst disclosure of its trade secrets. Thus, we are directly faced with the issue ofwhether our protective orders provide meaningful protection against disclosure of tradesecrets by nongovernment employees. Concomitantly, if our protective orders do not providemeaningful protection against disclosure of trade secrets, should we nonetheless seek tocompel entry by imposition of sanctions against the employer? We answer both questions inthe negative.I.In April of 1983, the Secretary conducted an inspection of the company’s Salem,Illinois workplace. On May 25, 1983, the Secretary issued a citation alleging that Salemviolated 29 U.S.C. ? 654(a)(1), section 5(a)(1) of the Occupational Safety and Health Actof 1970, 29 U.S.C. ?? 651-678 (\”the Act\”), by exposing certain employeesworking in its bindery department \”to the hazard of undue repetitive motiontrauma.\” Salem contested the citation. After the Secretary filed a complaint andSalem filed an answer, the Secretary requested permission to enter Salem’s workplace\”for the purpose of inspecting, measuring, testing, surveying, photographing orsampling [Salem’s] Bindery Department with respect to determination of abatement measuresavailable to reduce employee exposure to repetitive motion trauma.\” In response,Salem stated that it had no objection to the entry of \”full-time governmentemployees,\” but did object to the entry of \”independent or private consultants,other than full-time government employees . . . to protect valuable trade secrets andother commercial or proprietary information of great value, in its workplace.\” TheSecretary then moved for an order compelling entry from the judge. The Secretary statedthat he was willing to have Dr. Armstrong, his outside consultant, sign a written oathpromising not to disclose trade secret information obtained during his inspection ofSalem’s establishment, except to the Secretary or his representatives. In response, Salemmoved for a protective order. It claimed that the trade secrets and commercial informationobservable at its plant could be adequately protected only by precluding disclosure tothose \”most likely to inadvertently or deliberately disclose it to or permit itsutilization by [Salem’s] competitors.\” Salem claims that such protection is possibleonly if entry into its bindery department is limited to counsel for the Secretary andfull-time government employees, both of whom are subject to the criminal sanctions againstdisclosure of trade secrets that are contained in the Trade Secrets Act, 18 U.S.C. ?1905, which is quoted at length below.Following a hearing, at which Salem introducedevidence that its plant contains trade secrets, Judge Tenney found that Salem had proventhat trade secrets were present in its bindery department. He also ordered Salem to permitthe Secretary’s expert to enter its plant on the condition that the protective measuresoutlined in Owens-Illinois, 6 BNA OSHC at 2167-68, 1978 CCH OSHD at 28,072-73, befollowed. These measures, which we discuss below in greater detail, are: (1) the affordingto the employer an opportunity to challenge the Secretary’s choice of expert on the groundthat he is closely aligned with a competitor of the employer; (2) the signing by theexpert of a written oath that trade secrets will not be disclosed except to theSecretary’s representatives or during litigation before the Commission; (3) the inclusionin the Secretary’s contract with the expert of a nondisclosure provision identical to theoath and making the employer a third-party beneficiary of it; and (4) the application ofthe protective order to those acting on the Secretary’s behalf. Judge Tenney alsorestricted the inspection to the areas of the bindery department described in thecitation, and ordered that any notes or photographs taken by the outside consultant in thecourse of the discovery inspection be surrendered to the Secretary’s counsel in order tobe subject to the Trade Secrets Act.At Salem’s request, Judge Tenney certified his orderfor interlocutory appeal on two issues: first, whether a Commission decision involvingSalem’s parent company, World Color Press, Inc., 77 OSAHRC 202\/B9, 6 BNA OSHC 1084,1977-78 CCH OSHD ? 22,358 (No. 76-2005, 1977), appeal dismissed, 78-1010 (7th Cir. July14, 1978), collaterally estopped the Secretary from using an outside expert; and second,under what circumstances the Secretary may use an outside expert to inspect a plant withtrade secrets.The Commission also asked the parties to discuss twoadditional issues: whether the Secretary’s expert is or could be made \”an employee ofthe United States\” within the meaning of the Trade Secrets Act; and what means areavailable to the Commission or any other party to enforce a protective order issued by theCommission.II.If an outside expert were covered by the Trade Secrets Act [[1]] and subjectto the same threat of criminal prosecution that discourages disclosure of trade secrets byemployees of the Department of Labor, our decision would be an easy one. Both partiesagree, however, that Dr. Armstrong would not be covered by the Trade Secrets Act becausehe is not an \”employee of the United States.\”The Secretary states that he cannot hire outsideexperts as employees because he must pay outside experts at a daily rate in excess of thatallowed by section 7(c)(2) of the Act; the pay of independent contractors, however, is notrestricted by section 7(c)(2). Hence for economic reasons, the Secretary asserts he isunable to hire Dr. Armstrong as a federal employee.[[2]]Since the Secretary elects to hire an expert as anonfederal employee, we must therefore consider to what extent the Commission can protecttrade secrets through the enforcement of its protective orders. Section 15 of theOccupational Safety and Health Act, 29 U.S.C. ? 664, grants the Commission authority toissue orders protecting the confidentiality of trade secrets. Section 15 states that:All information reported to or otherwise obtained bythe Secretary or his representative in connection with any inspection or proceeding underthis Act which contains or which might reveal a trade secret referred to in section 1905of title 18 of the United States Code shall be considered confidential for the purpose ofthat section except that such information may be disclosed to other officers or employeesconcerned with carrying out this Act or when relevant in any proceeding under this Act. Inany such proceeding the Secretary, the Commission, or the court shall issue such orders asmay be appropriate to protect the confidentiality of trade secrets.Commission Rule 11, 29 C.F.R. ? 2200.11, alsoprovides for the protection of trade secrets.[[3]] Thus, the Commission may issueprotective orders establishing the conditions under which parties may have access to tradesecrets.In Owens-Illinois, the Commission observed thatprotective orders have been used by federal courts to deal with situations in which tradesecrets were to be disclosed in discovery. However, there is a very significant differencebetween a protective order issued by a federal court, and an order issued by theCommission. If an independent expert in a federal court action violates a protective orderissued under Fed.R.Civ.P. 26(c)(7),[[4]] he may be cited for contempt. 18 U.S.C. ? 401empowers a federal court to punish by fine or imprisonment those it finds in contempt fordisobeying its orders.[[5]] The Commission, however, is not a federal court. If Salem’strade secrets were disclosed by the Secretary’s outside expert in violation of JudgeTenney’s protective order, the Commission could do nothing to the outside expert but debarhim from appearing before the Commission.[[6]] It has no authority to fine or imprison himfor violating the order. Although Commission Rule 54 and Fed.R.Civ.P. 37 together providethat the Commission may vacate the citation if the Secretary violates a protective order,or may vacate the notice of contest if the employer violates the order, these sanctionsare available only against the parties, and then only if the case is still pending beforethe Commission or an administrative law judge. They cannot be used to sanction an outsideexpert who discloses trade secrets.We thus conclude that the Commission lacks theauthority to impose sufficient sanctions against a nonfederal expert who violates ourprotective order. The Commission’s decision in Owens-Illinois relied in part on theprospect that a private lawsuit against the outside expert would deter disclosure, for itrequired that the contract between the Secretary and outside expert contain a third-partybeneficiary clause. Unlike the other sanctions contemplated by Owens-Illinois, thissanction does not depend on or require Commission action. We share the implicit view ofthe Commissioners in Owens-Illinois, however, that the third-party beneficiary clausealone does not provide sufficient protection. The contempt sanction of a court is a swiftand sure step that can be aimed directly at deterring breaches of confidentiality. Bycontrast, a third-party beneficiary clause of a contract gives the party whose tradesecrets were disclosed only the prospect that after a long lawsuit, he might recoverdamages of uncertain amount from a private person of possibly modest financial means.Although the prospect of such a lawsuit would be some deterrent to the outside expert, wedo not consider that deterrent to be sufficient. An employer who has suffered largedamages from the disclosure of a trade secret may be unable to recover fair compensation.We therefore conclude that the protective order contemplated by Owens-Illinois confersinsufficient protection for trade secrets. [[7]] To the extent that Owens-Illinois heldotherwise, it is overruled.[[8]] The question remains of what relief we should afford theparties. Section 7(c)(2) of the Act authorizes the Secretary to \”employ experts andconsultants\” while section 15, which requires us to issue protective orders for tradesecrets, does not empower us to directly enforce such orders so we cannot fairly imposesanctions against an employer for his unwillingness to risk the irreparable loss of histrade secrets when that risk of loss is due to the unenforceability of our own protectiveorders against third party consultants. On the other hand, we are reluctant to return toReynolds Metals Co., 78 OSAHRC 51\/Fl, 3 8NA OSHC 1749, 1975-76 CCH OSHD ? 20,214 (No.4385, 1975), and generally exclude outside experts from workplaces where trade secretscould be observed. Rather than adopt a hard and fast rule, we prefer to strike a balancebetween the employer’s need for confidentiality and the Secretary’s need for discovery. Wehave concluded that if the Secretary wants to use a nonfederal employee expert to conducta discovery inspection, and if the employer establishes the existence of trade secrets anddeclines to abide by the Commission’s order compelling entry for fear of losing his tradesecrets, we will stay Commission proceedings to allow the Secretary to obtain aninspection warrant or other appropriate order in a federal district court that authorizesthe inspection he desires and contains nondisclosure provisions that would bring thenonfederal expert under the court’s contempt authority.[[9]]In our opinion a warrant or other appropriate orderis the only way to protect the interests of both parties. On the one hand, the Secretaryhas asserted entry by an outside expert is needed to determine the measures necessary toreduce employee exposure to repetitive motion trauma which the Secretary must prove toestablish Salem’s violation of section 5(a)(1) of the Act. On the other hand, Salem hasdemonstrated that it has an actual expectation of privacy with respect to certain portionsof its workplace that contain trade secrets. This is an expectation that is protected bylaw, as evidenced by the Trade Secrets Act, section 15 of the Occupational Safety andHealth Act, and a host of other state and federal enactments.Obtaining a warrant or other order should not bedifficult here. Salem did not argue that probable cause did not exist for the originalinspection. Indeed it consented to that inspection. As a result of the initial inspectionthere is \”specific evidence of an existing violation,\” Marshall v. Barlow’s,Inc., 436 U.S. 307, 321 (1978), to establish probable cause for the warrant. See Hutton v.Plum Creek Lumber Co., 608 F.2d 1283, 1287 (9th Cir. 1979); In re Establishment Inspectionof Marsan Corp., 7 BNA OSHC 1557, 1979 CCH OSHD ? 23,856 (N.D.Ind. June 21, 1979); RobertK. Bell Enterprises, Inc., 84 OSAHRC __\/__, 12 BNA OSHC 1149, 1984-85 CCH OSHD ? 27,139(No. 78-4332, 1984), aff’d on other grounds, No. 85-1547 (10th Cir. Feb. 19, 1986). Inaddition, because the inspection is for a very specific purpose, the warrant can be verylimited in scope. See Rockford Drop Forge Co. v. Donovan, 672 F.2d 626 (7th Cir. 1982);Donovan v. Burlington Northern, Inc., 521 F. Supp. 99 (D.C. Mont. 1981); In reEstablishment Inspection of ASARCO, 508 F. Supp. 350 (N.D.Tex. 1981); see SarasotaConcrete Co., 81 OSAHRC 48\/A2, 9 BNA OSHC 1608, 1981 CCH OSHD ? 25,360 (No. 78- 5264,1981), aff’d, 693 F.2d 1061 (11th Cir. 1982).Accordingly, the March 5, 1984 order permitting entryof the Secretary’s expert at Salem’s plant is vacated and the case is remanded to thejudge. If the judge is notified by the Secretary within 15 days of the date of thisdecision that he intends to apply for a warrant or an order, the judge is authorized tostay proceedings in the case until the Secretary informs him that the court has ruled onthe matter.The Secretary shall inform the judge within 15 dayswhether he intends to apply for a search warrant or other judicial order to compel entryinto Salem’s plant. If the Secretary decides to apply for a warrant or other order, weexpect that he and Salem will be able to reach agreement on the provision to be put in theapplication that will protect Salem’s trade secrets. Cf. Brock v. Nabisco Brands, Inc., 12BNA OSHC 1753, 1986 CCH OSHD ? 27,549 (W.D.N.Y. Feb. 28, 1986)(guarantee of trade secretconfidentiality incorporated in ex parte warrant). If no agreement is reached, we suggestthat the Secretary provide Salem with 3 working days notice of the time and place that hewill apply for the warrant or order, so Salem may have an opportunity to appear andpresent its concerns about its trade secrets to the court. This will enable the court toinclude in the warrant or order provisions that protect against unauthorized disclosure oftrade secrets. See Exxon Corp. v. Donovan, 2 Government Disclosure Service (Prentice Hall)? 81,383 at p. 82,023 (D.D.C. Sept. 28, 1981) (court would not object to signing consentorder to restrain disclosure by outside consultants).[[10]]FOR THE COMMISSIONRay H. Darling, Jr.Executive SecretaryDATE: September 3, 1986FOOTNOTES: [[1]] The Trade Secrets Act provides:Whoever, being an officer or employee of the United States or of any department or agencythereof, or agent of the Department of Justice as defined in the Antitrust Civil ProcessAct (15 U.S.C. 1311-1314), publishes, divulges, discloses, or makes known in any manner orto any extent not authorized by law any information coming to him in the course of hisemployment or official duties or by reason of any examination or investigation made by, orreturn, report or record made to or filed with, such department or agency or officer oremployee thereof, which information concerns or relates to the trade secrets, processes,operations, style of work, or apparatus or to the identity, confidential statistical data,amount or source of any income, profits, losses, or expenditures of any person, firm,partnership, corporation, or association; or permits any income return or copy thereof orany book containing any abstract or particulars thereof to be seen or examined by anyperson except as provided by law; shall be fined not more than $1,000, or imprisoned notmore than one year, or both; and shall be removed from office or employment.[[2]] It is not clear whether an outside expert can be made a federal employee through acontractual provision. In any event, even if this could be done, we question whether theTrade Secrets Act would apply once the expert left federal service. From the wording ofthe Trade Secrets Act, it appears that it applies to acts committed only as long as one isan \”employee of the United States.\” There is no indication in the language ofthe Trade Secrets Act that it applies forever to those who once were \”employee[s] ofthe United States.\” The Trade Secrets Act requires the imposition of a sanction thatpresupposes current employment: it states that a violator \”shall be removed fromoffice or employment.\” It also does not refer to former government employees. Bycontrast, 18 U.S.C. ? 207, a criminal provision of the Ethics in Government Act of 1978,is directed at persons whose employment with the government has ceased. In light of thestrict construction given criminal statutes, we think it unlikely that the Trade SecretsAct would apply to conduct that occurred after federal employment has ceased.[[3]] Commission Rule 11 provides:Protection of trade secrets and other confidential information.Upon application by any person, in a proceeding where trade secrets or other matters maybe divulged the confidentiality of which is protected by 18 U.S.C. 1905, the Judge shallissue such orders as may be appropriate to protect the confidentiality of such matters.See also Fed.R.Civ.P. 26(c)(7)(protective orders for trade secrets), note 5 infra.[[4]] Rule 26(c)(7) provides:Upon motion by a party or by the person from whom discovery is sought, and for good causeshown, the court in which the action is pending or alternatively, on matters relating to adeposition, the court in the district where the deposition is to be taken may make anyorder which justice requires to protect a party or person from annoyance, embarrassment,oppression, or undue burden or expense, including . . . (7) that a trade secret or otherconfidential research, development, or commercial information not be disclosed or bedisclosed only in a designated way;[[5]] 18 U.S.C. ? 401 states:? 401. Power of courtA court of the United States shall have power to punish by fine or imprisonment, atits discretion, such contempt of its authority, and none other, as–(1) Misbehavior of any person in its presence or so near thereto as to obstruct theadministration of justice;(2) Misbehavior of any of its officers in their official transactions;(3) Disobedience or resistance to its lawful writ, process, order, rule, decree, orcommand.[[6]] At least one court of appeals has found that anagency’s ability to debar an expert is \”not a light penalty in view of the fact thatEPA contracts often involve millions of dollars.\” Bunker-Hill Co. v. EPA, 658 F.2d1280, 1284 (9th Cir. 1981). Without disagreeing with the court’s reasoning, it has beenour experience that the need for experts in OSHA inspections is not so frequent and onsuch a large scale that the prospect of debarment is a reliable deterrent.[[7]] The Secretary contends that an Owens-Illinois protective order would provideadequate protection to the employers. However in a proceeding before an Administrative LawJudge in E.I. du Pont de Nemours & Co., OSHRC Docket No. 80-4785 (ALJ, Dec. 15, 1982),proceeding terminated by Commission order, 86 OSAHRC ____, (May 23, 1986), when it wasalleged that a protective order prohibiting the disclosure of confidential medicalinformation had been violated, the Secretary took the position that the Commission had nojurisdiction to enforce a protective order after the entry of a final order on theunderlying citation.[[8]] Salem’s argument that the Secretary iscollaterally estopped from using an outside expert plays no part in our decision tooverrule Owens-Illinois in part. The doctrine of collateral estoppel has no applicationwhere there has been an intervening change in legal principles that renders a priordetermination erroneous. Commissioner v. Sunnen, 333 U.S. 591, 599 (1948). World ColorPress, the case relied on by Salem, followed Commission precedent established in ReynoldsMetal Co., 78 OSAHRC 51\/F1, 3 BNA OSHC 1749, 1975-76 CCH OSHD ? 20,214 (No. 4385 1975),which restricted the Secretary to the use of federal employees in trade secret inspectionsunless a good cause showing was made that the presence of an outside expert was necessary.Before this present litigation was brought, World Color Press was overruled inOwens-Illinois, which placed no such restriction on the use of outside experts by theSecretary.[[9]] In the typical case involving an inspection bya nonfederal expert, the administrative law judge would be required to hold a hearing ifthe Secretary disagreed with the employer’s claim that its trade secrets would bejeopardized. If the Secretary does not disagree with employer’s claim, or the judge findsthat trade secrets are present, the judge would stay the proceedings to allow theSecretary to obtain a warrant or an order in district court.[[10]] Although the Exxon case arose in the contextof a Freedom of Information Act proceeding, it addresses most of the issues that we havewrestled with here. In that case the court declined to enter a declaratory judgementbecause it would unnecessarily restrict the administrative process. However, the courtheld that it did have jurisdiction to enter restraining orders prohibiting thegovernment’s outside consultants from disclosing information to third parties until afterthe agency rendered its final administrative decision. Indeed, the court encouraged theparties to submit a consent order \”to specifically restrain power of the Court asprotection for their interests in this matter with respect to disclosure by theseconsultants.\””