Reynolds Metals Company, Inc. (Commission decision, May 30, 1980)

Read the official release (oshrc.gov)

Plain-English summary

Reynolds Metals, one of the largest aluminum can manufacturers in the country, operates a plant in Tampa, Florida. After a two week inspection in November 1976 the Secretary cited it for noncompliance with the occupational noise standard at 29 C.F.R. § 1910.95(b)(1), alleging that several employees were exposed above the permitted limits and that feasible administrative or engineering controls were not used. The merits of that citation were never reached. The entire case turned on a discovery dispute.

Preparing for the hearing, the Secretary asked to reenter the plant to inspect, measure, survey and photograph the areas at issue. He sought access not only for authorized OSHA agents but for potential witnesses, and he conceded that these would include private consultants who were not federal employees. Reynolds moved for a protective order, arguing that the proposed discovery would endanger its trade secrets. The Secretary moved to compel.

Administrative Law Judge John L. Larkin denied the motion to compel. He relied on the Commission's 1975 decision in Reynolds Metals Co., which limited discovery inspections to federal employees where an employer's trade secrets would be endangered, unless the Secretary showed good cause for using someone else. He convened a hearing on the trade secrets question, weighed the testimony, exhibits and credibility of the witnesses, and found that trade secrets did exist at the Tampa plant. He also found that the Secretary had not shown why a federal employee could not do the inspection. The Secretary then filed a statement of position saying the order prejudiced him and barred him from proceeding, while expressly stating that he was not dismissing the action. Offered a final opportunity to present his case, he advised that he was unable to proceed, and the judge dismissed the citation with prejudice.

By the time the case reached the Commission the rule the judge applied was gone. In Owens-Illinois the Commission overruled Reynolds Metals, and in Kaiser Aluminum it reaffirmed Owens-Illinois on facts the Commission described as identical in all significant respects to these. The holding is that where an employer's trade secrets are otherwise adequately protected, the possibility that they may be disclosed to a non-federal expert does not preclude entry for discovery. Adequate protection means an appropriate protective order together with a provision in the Secretary's contract with the outside expert giving the employer an enforceable third-party beneficiary interest. Good cause is no longer required. An employer need not establish that it has trade secrets at all if the Secretary does not object to entry of a protective order.

That made the judge's trade secrets finding unnecessary to review. If a protective order meeting the Owens-Illinois requirements is entered, the question of whether trade secrets exist does not have to be answered. So the Commission reversed the dismissal and remanded without deciding it. Because the law changed after the last briefs were filed and the record does not show where the parties stand on a protective order, they were given the chance to reconsider their positions. Either party has ten days to say that the trade secrets issue should be reviewed now, in which case the Commission will reconsider whether a remand is appropriate. Not pressing the issue at this stage does not forfeit later Commission review of it.

Commissioner Barnako dissented. He dissented in Owens-Illinois and adheres to the rationale of the earlier Reynolds Metals decisions: where trade secrets have been shown to exist, a discovery entry should be limited to a federal expert unless the Secretary shows good cause for an outside one, and where trade secrets have not been shown there is no basis for barring an outside expert either way. On that view a ruling on trade secrets is essential to the disposition, and he dissented from an order that permits outside experts on a protective order alone and leaves the judge's finding unreviewed.

Decision snapshot

• Cited standard(s): 29 C.F.R. § 1910.95(b)(1)
• Outcome: Remanded. The dismissal with prejudice is reversed and the case returns for proceedings consistent with Owens-Illinois, unless a party asks within ten days that the trade secrets issue be decided now.
• Key point: An appropriate protective order and an enforceable third-party beneficiary clause can permit outside-expert discovery without resolving the trade secrets issue at this stage; either party could still seek Commission review of that issue.

Full text (OSHRC public release)

Docket No. 77-69

1 of 202 DOCUMENTS

TURNER COMPANY

A. SCHONBEK & CO., INC.

NORANDA ALUMINUM, INC.

GENERAL MOTORS CORP., GM ASSEMBLY DIV.

ALLIED PLANT MAINTENANCE CO. OF OKLAHOMA, INC.

CLEMENT FOOD COMPANY

MILLCON CORPORATION

FWA DRILLING COMPANY, INC.

CCI, INC.

GENERAL ELECTRIC COMPANY

CONSOLIDATED ALUMINUM CORPORATION

THE BRONZE CRAFT CORPORATION

CARGILL, INC.

CHAPMAN CONSTRUCTION CO., INC.

GALLO MECHANICAL CONTRACTORS, INC.

SPECIAL METALS CORPORATION

WILLAMETTE IRON AND STEEL COMPANY

NASHUA CORPORATION

WESTINGHOUSE ELECTRIC CORPORATION

RESEARCH-COTTRELL, INC.

ROCKWELL INTERNATIONAL CORPORATION

NEWPORT NEWS SHIPBUILDING & DRYDOCK CO.

NEWPORT NEWS SHIPBUILDING & DRYDOCK CO.

BUNKOFF CONSTRUCTION CO., INC.

GENERAL MOTORS CORPORATION, FRIGIDAIRE DIVISION

HARRIS BROTHERS ROOFING CO.

GENERAL DIVERS COMPANY

ORMET CORPORATION

R. ZOPPO CO., INC.

COEUR D'ALENE TRIBAL FARM

L. A. DREYFUS COMPANY

CMH COMPANY, INC.

BENTON FOUNDRY, INC.

MICHAEL CONSTRUCTION CO., INC.

WHIRLPOOL CORPORATION

BROWN & ROOT, POWER PLANT DIVISION

MARION POWER SHOVEL CO., INC.

ERSKINE-FRASER CO.

MORRISON-KNUDSEN AND ASSOCIATES

THE BOAM COMPANY

DIC-UNDERHILL, a Joint Venture

C. R. BURNETT AND SONS, INC.; HARLLEE FARMS

STRIPE-A-ZONE, INC.

FORTE BROTHERS, INC.

RAYBESTOS FRICTION MATERIALS COMPANY

TEXLAND DRILLING CORPORATION

THE ANACONDA COMPANY, WIRE AND CABLE DIVISION

SAM HALL & SONS, INC.

VAMPCO METAL PRODUCTS, INC.

LEONE INDUSTRIES, INC.

ASARCO, INC.

DURANT ELEVATOR, A DIVISION OF SCOULAR-BISHOP GRAIN COMPANY

PLUM CREEK LUMBER COMPANY

PLUM CREEK LUMBER COMPANY

STEARNS-ROGER, INC.

FERRO CORPORATION, (ELECTRO DIVISION)

AMERICAN PACKAGE COMPANY, INC.

BROWN & ROOT, INC., POWER PLANT DIVISION

FLEETWOOD HOMES OF TEXAS, INC.

DONALD HARRIS, INC.

A. PROKOSCH & SONS SHEET METAL, INC.; MID-HUDSON AUTOMATIC SPRINKLER COMPANY, INC.

ELECTRICAL CONSTRUCTORS OF AMERICA, INC.

DAYTON TIRE & RUBBER COMPANY (Division of the Firestone Tire & Rubber Company)

ASARCO, INC., EL PASO DIVISION; HUGHES TOOL COMPANY

NAVAJO FOREST PRODUCTS INDUSTRIES

METROPAK CONTAINERS CORPORATION

AUSTIN BUILDING COMPANY

BABCOCK AND WILCOX COMPANY

DARRAGH COMPANY

BABCOCK & WILCOX COMPANY

OTIS ELEVATOR COMPANY

R. ZOPPO COMPANY, INC.

LUTZ, DAILY & BRAIN - CONSULTING ENGINEERS

PENNSYLVANIA POWER & LIGHT CO.

HARSCO CORPORATION, d/b/a PLANT CITY STEEL COMPANY

NORTHWEST AIRLINES, INC.

INDEPENDENCE FOUNDRY & MANUFACTURING CO., INC.

GENERAL MOTORS CORPORATION, INLAND DIVISION

WELDSHIP CORPORATION

S & S DIVING COMPANY

SNIDER INDUSTRIES, INC.

NATIONAL STEEL AND SHIPBUILDING COMPANY

MAXWELL WIREBOUND BOX CO., INC.

CONTINENTAL GRAIN COMPANY

MISSOURI FARMER'S ASSOCIATION, INC., MFA BOONVILLE EXCHANGE; MFA, INC., d/b/a MFA GRAIN DIVISION; DESERT GOLD FEED COMPANY

CAPITAL CITY EXCAVATING CO., INC.

GAF CORPORATION

PPG INDUSTRIES (CARIBE) a Corporation

DRUTH PACKAGING CORPORATION

SOUTHWESTERN ELECTRIC POWER COMPANY

TUNNEL ELECTRIC CONSTRUCTION CO.

WEATHERBY ENGINEERING COMPANY

JOHNSON STEEL & WIRE CO., INC.

AUSTIN ROAD CO.

MAYHEW STEEL PRODUCTS, INC.

LADISH CO., TRI-CLOVER DIVISION, a Corporation

PULLMAN POWER PRODUCTS, INC.

NATIONAL ROOFING CORPORATION

OSCO INDUSTRIES, INC.

HIGHWAY MOTOR COMPANY, d/b/a PARK PRICE MOTOR COMPANY

S.J. GROVES AND SONS COMPANY

CAR AND TRUCK DOCTOR, INC.

PRESTRESSED SYSTEMS, INC.

TEXACO, INC.

GEORGIA HIGHWAY EXPRESS, INC.

RED LOBSTER INNS OF AMERICA, INC.

SUNRISE PLASTERING CORP.

STONE & WEBSTER ENGINEERING CORPORATION

H.B. ZACHRY COMPANY (INTERNATIONAL)

NATIONAL INDUSTRIAL CONSTRUCTORS, INC.

BUSHWICK COMMISSION COMPANY, INC.

CIRCLE T DRILLING CO., INC.

J.L. FOTI CONSTRUCTION COMPANY, INC.

TEXACO, INC.

KENNETH P. THOMPSON CO., INC.

HENRY C. BECK COMPANY

HEATH & STICH, INC.

FARMERS EXPORT COMPANY

FOSTER AND KLEISER

TURNER WELDING & ERECTION CO., INC.

TRI-CITY CONSTRUCTION CO.

THE DURIRON COMPANY, INC.

SAMSON PAPER BAG CO., INC.

MEL JARVIS CONSTRUCTION COMPANY, Inc.

MIDWEST STEEL ERECTION, INC.

GEISLER GANZ CORPORATION

NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY

NATIONAL MANUFACTURING COMPANY

WALLACE ROOFING COMPANY

REYNOLDS METALS COMPANY, INC.

OSHRC Docket No. 77-69

Occupational Safety and Health Review Commission

May 30, 1980

[*1]

Before CLEARY, Chairman; BARNAKO and COTTINE, Commissioners.

COUNSEL:

Baruch A. Fellner, Office of the Solicitor, USDOL

Bobbye D. Spears, Regional Solicitor, U.S. Department of Labor

John R. Amos, Reynolds Aluminum, Reynolds Metals Company, for the employer

Manuel Arduengo, United Steelworkers of America, AFL-CIO, Local 6813, for the employees

OPINION:

DECISION

BY THE COMMISSION:

A decision of Judge John L. Larkin, dismissing a citation and complaint issued under the Occupational Safety and Health Act of 1970, 29 U.S.C.

651-678 ("the Act") is before this Commission for review pursuant to section 12(j) of the Act, 29 U.S.C.

661(i). n1

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[*2]

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Respondent, Reynolds Metals Company, Inc., one of the nation's largest aluminum can manufacturers, operates a production plant in Tampa, Florida.

Following a two week inspection in November of 1976, the Secretary of Labor ("Secretary") issued a citation to Respondent alleging a violation of section 5(a)(2) of the Act, 29 U.S.C.

654(a)(2), for failure to comply with the noise standard at 29 C.F.R.

1910.95(b)(1).

The citation charged that several employees were exposed to noise levels exceeding the limits established by the standard and that feasible administrative or engineering controls were not utilized to reduce the noise. Respondent timely contested the citation, and the case was assigned to Judge Larkin for hearing.

In preparation for the hearing, the Secretary sought to reenter the plant area to "inspect, measure, survey and photograph" the areas in question.

The Secretary requested permission for "authorized agents" of OSHA as well as "potential witnesses" to enter the premises.

The Secretary conceded that such persons would include private consultants who are not federal employees. Respondent moved for [*3]

a protective order, contending that the proposed discovery would endanger the confidentiality of its trade secrets, and the Secretary simultaneously sought an order to compel discovery.

Judge Larkin denied the motion to compel discovery, basing his decision on Reynolds Metals Co., 78 OSAHRC 51/F1, 3 BNA OSHC 1749, 1975-76 CCH OSHD P20,214 (No. 4385, 1975) that restricted the Secretary to the use of federal employees for discovery inspections that would endanger an employer's trade secrets unless good cause was shown for the use of individuals who were not federal employees. The Secretary argued that Judge Larkin's ruling was improper since Respondent had not proved the existence of trade secrets and moved for a hearing on the issue of trade secrets. Judge Larkin assented and convened a hearing at which Respondent presented evidence relevant to its trade secrets claim.

Subsequently, Judge Larkin ruled that trade secrets did exist in Respondent's Tampa plant. The judge based his ruling on the testimony of the witnesses, exhibits introduced into evidence, and the credibility of the witnesses.

He also stated that the Secretary failed to show why the inspection could not be conducted [*4]

by a federal employee. Because there was no showing of good cause, the judge relied on Reynolds, supra, to deny the Secretary's discovery request. The Secretary then filed a "Statement of Position" advising the judge that the order denying the Secretary's discovery request "prejudices complainant and prohibits him from proceeding further in this matter." The Secretary also stated that by filing the Statement of Position he was not "dismissing the action." Judge Larkin offered the Secretary a final opportunity to present his case.

According to the judge's order, "complainant advised he was unable to proceed." The judge then granted Respondent's motion to dismiss the citation with prejudice.

The Secretary filed a Petition for Discretionary Review that was granted by Chairman Cleary.

The issues raised by the petition and specified in the direction for review are: (1) whether the judge erred in finding the existence of trade secrets that would be revealed in the course of a discovery inspection; (2) whether the judge erred in requiring the Secretary to show good cause for the use of non-government experts to conduct the discovery inspection; (3) whether the Commission decision [*5]

in Reynolds Metals Co., supra, should be overruled; and (4) whether the judge erred in dismissing the citation and complaint.

We reverse Judge Larkin with respect to his order denying the Secretary's motion to compel discovery with the use of non-government experts and granting Respondent's motion to dismiss the citation and complaint.

For the reasons that follow, we find it unnecessary to decide the remaining issues at this time.

The facts of this case are, in all significant respects, identical with Kaiser Aluminum and Chemical Corp., 79 OSAHRC 49/C10, 7 BNA OSHC 1486, 1979 CCH OSHD P23,662 (No. 76-1468, 1979).

In Kaiser, the Commission affirmed its holding in Owens-Illinois, Inc., 78 OSAHRC 105/C8, 6 BNA 2162, 1978 CCH OSHD P23,218 (No. 77-648, 1978), that where an employer's trade secrets are otherwise adequately protected, the possibility that these trade secrets may be disclosed to a non-federal expert does not preclude entry onto the employer's premises for discovery purposes.

In Owens-Illinois, we overruled Reynolds Metals, supra, the case upon which Judge Larkin relied here to require the Secretary to show good cause for the use of experts [*6]

who are not federal employees. n2 Thus, even if the existence of trade secrets is shown, if an appropriate protective order is issued we no longer require the Secretary to show good cause in order for a non-federal expert to enter an employer's premises for discovery purposes.

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n2 To the extent that it is inconsistent with Owens-Illinois, Reynolds Metals Co., 78 OSAHRC 51/D4, 6 BNA OSHC 1667, 1978 CCH OSHD P22,806 (No. 4385, 1978) was also overruled.

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In Kaiser, supra, we said:

[T]rade secrets [can] be adequately protected by an appropriate protective order and a provision in the Secretary's contract with the outside expert that [will] allow the employer an enforceable third-party beneficiary interest.

We then went on to note the "minimum requirements of an acceptable protective order and . . . the procedure to be followed when a trade secret claim is made by an employer."

In this case, as in Kaiser, a hearing was held on the question of trade secrets. Following the hearing, the judge found the existence [*7]

of trade secrets and granted the Respondent's motion to dismiss because the Secretary had failed to show why a federal employee could not conduct the discovery inspection. As a result of the intervening change of law, the Secretary is no longer limited to federal experts.

Further, under our decision in Owens-Illinois an employer need not establish the existence of trade secrets if the Secretary does not object to the entry of a protective order. Thus, the question of whether the judge erred in finding the existence of trade secrets need not be reached at this time if an appropriate protective order that meets the requirements set out in Owens-Illinois motion entered.

Thus, the case will be remanded.

Because the law has changed since the last briefs were filed, and the record does not disclose the position of the parties respecting a protective order, we will allow the parties an opportunity to reconsider their positions in light of the decision in Owens-Illinois. As we said in Kaiser, however,

[f]ailure to pursue the merits of the trade secrets issue at this stage of the proceedings . . . will not preclude later Commission review of that issue, should later review [*8]

become necessary for reasons not apparent now.

Accordingly, the decision of the judge will be reversed and the case remanded for proceedings consistent with this decision and our decision in Owens-Illinois unless within 10 days from the date of this order either party indicates that the trade secrets issue should be reviewed at this time.

Upon receipt of a submission the Commission will reconsider whether a remand is appropriate.

SO ORDERED.

DISSENTBY: BARNAKO

DISSENT:

BARNAKO, Commissioner, dissenting:

Judge Larkin held a hearing on the trade secrets issue raised in this case and found that Reynolds possessed trade secrets which would be revealed to an individual conducting the discovery inspection requested by the Secretary.

My colleagues, however, decline to rule on whether the judge's finding was correct.

Instead, they note that if an appropriate protective order which meets the requirements enumerated in their decision in Owens-Illinois, Inc., n1 can be entered in this case, the issue of whether the judge's finding concerning trade secrets is correct will not have to be resolved.

Therefore, they conclude that the case should be remanded to the judge for further proceedings consistent [*9]

with Owens-Illinois, Inc.

• • • • • • • • • • • • • • • • • -Footnotes- - - - - - - - - - - - - - - - - -

n1 78 OSAHRC 105/C8, 6 BNA OSHC 2162, 1978 CCH OSHD P23,218 (No. 77-648, 1978).

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I dissented in Owens-Illinois, Inc. Following my rationale in Reynolds Metals, Co., n2 I concluded that where trade secrets have been shown to exist any discovery entry shall be limited to a federal expert unless the Secretary shows good cause for use of an outside expert.

On the other hand, if trade secrets are not established, there is no basis for barring the use of an outside expert.

Accordingly, under my view of the law, a ruling on trade secrets is essential.

Because my colleagues do not rule on whether the judge's finding of trade secrets is correct, and they permit discovery inspections by an outside expert so long as an appropriate protective order is entered, I respectfully dissent from their decision and order.

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n2 78 OSAHRC 51/F1, 3 BNA OSHC 1749, 1975-76 CCH OSHD P20,214 (No. 4385, 1975) and 78 OSAHRC 51/D4, 6 BNA OSHC 1667, 1978 CCH OSHD P22,806 (No. 4385, 1978).

[*10]

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