Upland Industries, Division of Emerson Electric Company

Plain-English summary

OSHA cited Upland Industries over excessive noise in its press room and sought an inspection by an outside acoustical engineering expert. The judge found that the inspection would reveal a trade secret and required either a federal expert or an outside expert bound by an agreement that included indemnification. The Commission vacated that restriction under its Owens-Illinois decision. It held that an appropriate protective order and an enforceable third-party beneficiary provision in the expert's contract could adequately protect trade secrets without requiring liquidated damages or a surety. The case was remanded for further proceedings. Commissioner Barnako dissented because he would require the Secretary to show good cause for using an outside expert when trade secrets had been established.

Decision snapshot

• Cited standard(s): The decision describes an excessive-noise citation but does not identify the cited standard by number.
• Outcome: The discovery order was vacated and the case was remanded for proceedings consistent with Owens-Illinois.
• Key point: An outside expert may conduct a discovery inspection involving trade secrets when enforceable protective measures adequately guard against disclosure.

Full text (OSHRC public release)

Docket No. 77-3481

UPLAND INDUSTRIES, DIVISION OF EMERSON ELECTRIC COMPANY

OSHRC Docket No. 77-3481

Occupational Safety and Health Review Commission

June 21, 1979

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Before CLEARY, Chairman; BARNAKO and COTTINE, Commissioners.
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COUNSEL:

Baruch A. Fellner, Office of the Solicitor, USDOL

Marshall H. Harris, Reg. Sol., USDOL

Richard B. Lindenberger, for the employer

OPINION:

DECISION

CLEARY, Chairman:

This case is before the Commission pursuant to the Secretary of Labor's interlocutory appeal of Administrative Law Judge Benjamin G. Usher's order dated May 19, 1978, granting the respondent's motion to limit the Secretary's discovery inspection of respondent's premises in Upland, Pennsylvania, to employees of the federal government or, in the alternative, to require any expert who is not a federal employee to sign a covenant not to disclose respondent's trade secret.

The citation alleges that employees in Upland's press room were exposed to excessive noise levels and that feasible engineering or administrative controls were not utilized to reduce noise. The Secretary made a motion to compel entry upon respondent's premises so that a qualified acoustical engineering expert could inspect the press room to evaluate the feasibility of engineering controls.
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That motion was granted, subject to the agreement of the parties on the identify of the noise expert.
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The [*2]
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parties could not agree, and Upland filed a motion to limit the inspection to federal employees or, in the alternative, to require the Secretary's noise expert to sign an agreement not to disclose trade secrets. Respondent sought an agreement which would include a provision for liquidated damages. Upland argued that, if the discovery inspection were conducted by persons who were not federal employees subject to the provisions of 18 U.S.C. �
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1905, the confidentiality of Upland's trade secret could be endangered.
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Upland averred that it would suffer irreparable harm if its trade secret should be disclosed and argued that the only way it could be protected was to require the Secretary's noise expert to execute a covenant not to disclose containing a provision for liquidated damages. The Secretary stated that his expert could not agree to such a provision.

A hearing was held.
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Judge Usher found that Upland possessed a trade secret which would be revealed to the person conducting the discovery inspection. He entered an order granting respondent's motion, holding that the Secretary was entitled to conduct a discovery inspection but would be restricted to the use of federal experts
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to conduct the examination unless the outside expert executed a covenant against disclosure including an indemnification clause binding the witness, the government, or an independent surety. The judge relied on Reynolds Metals Co., 78 OSAHRC 51/F1, 3 BNA OSHC 1749, 1975-76 CCH OSHD P20,214 (No. 4385, 1975).

The Secretary petitioned Judge Usher to certify his order for interlocutory appeal pursuant to Rule 75 of the Commission's Rules of Procedure, 29 CFR �
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2200.75.
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On May 31, 1978, Judge Usher issued the certification.
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On interlocutory appeal, the Secretary argues that the judge erred in finding that Upland possesses any trade secret because Upland does not require secrecy pledges of its own employees and other private consultants it has engaged.
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The Secretary further states that his expert is willing to agree not to disclose any information learned during his visit and to subject himself to "appropriate sanctions and to all legal and equitable remedies" should be release any confidential information for purposes other than these proceedings.

We find that the issues presented here are governed by our recent decision in Owens-Illinois, Inc., 78 OSAHRC 105/C8, 6 BNA OSHC [*4]
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2162, 1978-79 CCH OSHD P23,218 (No. 77-648, 1978) ("Owens"). n1 In that case we held that the possibility of disclosure of trade secrets to an expert who is not a federal employee does not preclude us from granting a motion by the Secretary for entry upon respondent's land for discovery purposes so long as the respondent's trade secrets are adequately protected. We concluded in Owens that trade secrets could be adequately protected by appropriate protective orders and a provision in the Secretary's contract with the outside expert that would allow the employer an enforceable third-party beneficiary interest.
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Owens described the manner in which a trade secrets claim should be raised by an employer.
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It also set forth the procedure to be followed when an employer's trade secrets claim is disputed by the Secretary, as well as the minimum requirements of an acceptable protective order. To the extent that Reynolds Metals is inconsistent with Owens, it was overruled.

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n1 In this decision, we do not reach the Secretary's exceptions to the judge's factual finding that respondent possesses a trade secret. Under our decision in Owens-Illinois, a determination on the issue of trade secrets need not be made if the Secretary consents to the entry of a protective order. The record indicates that the Secretary and his proposed expert have essentially agreed to the provisions of a protective order as set out in Owens-Illinois. It therefore appears likely that, on remand, consent will be given for the entry of a protective order, in which case the judge's findings on the trade secret question would have no effect on the proceedings.

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It is not required by our Owens decision that an outside expert agree to a liquidated damages provision or that the government or a third party act as surety. Although the Secretary and his expert may agree to such provisions, we do not require them.
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To this extent, Judge Usher's order exceeded the requirements for a protective order set out in Owens.

Accordingly, the judge's order is vacated and this case is remanded for further proceedings consistent with the Commission decision in Owens. So ORDERED.
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DISSENTBY: BARNAKO

DISSENT:

BARNAKO, Commissioner, dissenting:

Judge Usher held a hearing on the trade secret issue raised in this case and found that Upland possessed a trade secret which would be revealed to an individual conducting the discovery inspection requested by the Secretary.
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My colleagues, however, decline to rule on whether the judge's finding was correct.
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They conclude instead that the case should be remanded to the judge for further proceedings consistent with their decision in Owens-Illinois, Inc., 78 OSAHRC 105/C8, 6 BNA OSHC 2162, 1978-79 CCH OSHD P23,218 (No. 77-648, 1978).
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I dissented [*6]
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in that case.
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Following my rationale in Reynolds Metals Co., n1 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.
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On the other hand, if trade secrets are not established, there is no basis for barring the use of an outside expert.
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Accordingly, under my view of the law, a ruling on trade secrets is essential.
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Because my colleagues do not rule on whether the judge's finding of a trade secret is correct and 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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n1 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).

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