Fifth Circuit gives guidance on 'per employee' asbestos penalties

By G. Phillip Shuler

This is the case of Houston developer Eric K. Ho and his efforts to renovate a defunct hospital building into residential housing in the greater Houston area.

Because part of the renovation required removing asbestos, Ho hired two men to oversee the removal. These men, in turn, hired a crew of 11 Mexican nationals, all of whom were illegal immigrants, to perform the work.

Ho began the renovations, including asbestos removal, in January 1998. The workers were given only rudimentary dust masks unsuitable for working with asbestos and were not given protective clothing, any sort of respiratory protection program, asbestos or medical monitoring during the removal, or any adequate ventilation/debris-removal system while working.

It was undisputed that Ho was aware of the hazardous nature of asbestos and its presence in the defunct building.

A city inspector who visited the work site on Feb. 2, 1998, shut the work site down citing the possibility of asbestos exposure and required that the site remain closed pending city approval to re-start removal operations. Ho defied this order and, instead instructed his crew to continue their operations, but only at night. All of the workers basically lived in secrecy at the hospital building in very poor conditions.

The removal efforts continued like this until March 10, when Ho resumed daytime operations. The following day, Ho instructed one of his supervisors to wash down the interior of the building by tapping into an unmarked valve that he believed to be a water line. It was actually a gas line and a serious explosion resulted.

OSHA and its state counterpart each conducted an investigation into the incident. OSHA issued a total of 10 serious and 29 willful violations against Ho.

These violations "included 11 willful violations of 29 C.F.R. §1926.1101(h)(1)(i) for failing to provide respirators to 11 employees removing asbestos, and 11 willful violations of 29 C.F.R. §1926.1101(k)(9)(i) and (viii) for failing to train the 11 employees on the hazards of asbestos and safety precautions." Chao v. OSHRC [Erik Ho], No. 03-60958, at 4 (5th Cir. Feb. 21, 2005).

When Ho challenged the violations, the Labor Department's administrative law judge concluded that all 22 (representing two violations for each of the 11 employees, one for training and one for respirator) violations were, in fact, willful and therefore upheld them all.

Ho appealed to the OSHA Review Commission, which affirmed that he was subject to OSHA and that his violations and training standards were willful. However, the divided commission also ruled that those violations were to be cited on a "per-instance" basis, not a "per-employee" basis.

The commission believed that the regulations plainly imposed a duty on employers to have a single training program and to provide respirators to the employees as a group. In line with that thinking, it vacated all but two of the 22 violations and resulting citations. At the same time, the commission increased each of the affirmed citations to their maximum level of penalty because of Ho's lack of good faith.

The secretary of labor then appealed that ruling, seeking to have the per-employee penalties restored. Ho also appealed. Ultimately, a split panel of the United States Court of Appeals for the Fifth Circuit resolved the issue and ruled on Feb. 21 that Ho could not properly be cited on a per-employee basis for violations of the respiratory and training requirements in the asbestos standards, on the facts of this particular case.

In arriving at this two-to-one decision, the Fifth Circuit paid close attention to the plain language of the respirator portion of OSHA's asbestos standard. The court found that the respirator provision of the standard would not support a "per employee" citation.

It found differently, however, with respect to the training portion of the asbestos standard. Specifically, the court of appeals found that the plain language of that section would support a per-employee citation, but it found that the facts of Ho's case made it unreasonable to impose such a penalty because there was no evidence that one overall training session would not have been sufficient to properly educate the workers.

Put differently, the court had no evidence that training each employee individually would have necessarily abated the violation. Thus, it left the door open for "per employee" violations to be valid under this section given the proper set of facts.

Editor's Note: G. Phillip Shuler is a partner in the New Orleans office of Chaffe, McCall, Phillips, Toler & Sarpy.