ELR Citation: ELR 20696
No(s). 92-1650 (7th Cir. Mar 17, 1995)

The court holds that a boat manufacturer must pay a $1,452,000 civil penalty for its two-year failure to comply with a judicial order requiring it to spray organic peroxides only in a booth equipped with a sprinkler system, as the Occupational Safety and Health (OSH) Act and 29 C.F.R. §1910.107(m)(1) require. The U.S. Department of Labor first cited the manufacturer for violating §1910.107(m)(1) in May 1986. After the manufacturer continued to violate the regulation, despite the issuance of several more citations and the imposition of a $135,000 penalty, the Department applied to the court for an enforcement order. In May 1992, the court issued an order requiring the manufacturer to comply with administrative orders that directed the manufacturer to abate the violations and pay the $135,000 penalty, but the manufacturer failed to comply with the judicial order, too. The Department then requested the court to find the manufacturer in contempt of court. The court first rejects the manufacturer's argument that the judicial order was too vague, because the order explicitly directed the manufacturer to comply with the administrative orders, and those orders explicitly direct the manufacturer to install and use a booth with sprinklers. The court also rejects the argument that the Department promised not to enforce §1910.107 against the manufacturer, because the manufacturer did not apply for a variance. The court notes that even though the manufacturer changed to are formulated peroxide mixture, which its consultant claimed did not require a booth with sprinklers, the procedure for using that mixture was legally identical to the procedure for using the old mixture because the reformulated mixture included organic peroxides. Furthermore, the manufacturer was cited for noncompliance after its supposedly approved modification. The court holds that the manufacturer is in contempt of court and notes that under OSH Act §17(d), the court possesses the power to impose the daily penalty that the Department may use in administrative proceedings. In determining the amount of the penalty,the court notes that the contempt was deliberate and enduring, because the manufacturer refused to comply with the regulation despite formal notices and demands commencing in January 1986, and the manufacturer formed another company to which it transferred its assets and operations and which continued spraying the peroxide mixture without a booth with sprinklers. The court imposes a penalty of $2,000 per day, noting that it was inclined to make the number higher if it thought the Department could collect more. The court holds that the penalty will be the statutory maximum of $7,000 per day for infractions after the date of its opinion.

The court next grants the Secretary of Labor's motion to amend his pleading to accuse the manufacturer's sole stockholder, and the corporation to which the manufacturer transferred its assets, of contempt. The court notes that the sole stockholder received actual notice of the court's order and is no less bound by it than the manufacturer, and the corporation to which the manufacturer transferred its assets, as the manufacturer's successor in interest, acquired the business subject to the court's order. Also, by applying the peroxide mixture outside a booth with sprinklers, the successor company violated both the regulation and the judgment. The court holds that the Secretary's motion to amend, filed 17 months after the Department's July 1992 inspection of the manufacturer's facility, falls within both the six-year period that applies to most civil actions by the United States and the new four-year period for statutory claims that lack explicit statutes of limitations. The court directs the special master to reopen the record and offer the manufacturer's sole stockholder and its successor an opportunity to present any additional arguments and evidence bearing on the question whether they are in contempt of court. Finally, the court notes that the manufacturer still owes the original $135,000 penalty assessed against it.

Counsel for Petitioner
Jonathan Gottlieb
Department of Labor
200 Constitution Ave. NW, Washington DC 20210
(202) 219-6610

Counsel for Respondent
Donald J. Vogel
Fagel & Haber
140 S. Dearborn St., 14th Fl., Chicago IL 60603
(312) 346-7500