NORTHBRIDGE, MA -- After the U.S. Supreme Court late last year declined to hear a case involving alleged workplace violations brought by the Occupational Health and Safety Administration that bears directly on the currently contested authority of federal regulators, Riverdale Mills Corp. has applied under the Equal Access to Justice Act to be reimbursed for hundreds of thousands of dollars the company expended in legal fees to defend itself against several allegations that it contends were without merit.
Riverdale Mills is a 44-year-old company that manufactures coated wire mesh exclusively in the United States. The 1980 Equal Access to Justice Act allows awards to targets of government regulators when the administrators’ position was not substantially justified, with the government having the burden of proving its position had a reasonable basis.
Among 12 allegations against the company initiated in the spring of 2021, a total of nine were either withdrawn by OSHA, which is under the U.S. Department of Labor, or overturned in proceedings before an Administrative Law Judge.
“The Secretary did not have a reasonable basis in fact or law to support his theory of any of these citation items,” lawyers for Riverdale Mills wrote in a petition to the Occupational Safety and Health Review Commission on Aug. 4, 2022. “Therefore, RMC is entitled to its attorneys’ fees and expenses under the Equal Access to Justice Act.”
The company filed its petition to the commission on Dec. 20, 2023.
OSHA originally assessed fines totaling $141,506. Those were eventually reduced to $17,050, which related to three remaining allegations that were affirmed by the U.S. Court of Appeals and were the subject of a writ of certiorari to the U.S. Supreme Court in September. The high court declined to hear the case in November.
James Knott, Jr., Chief Executive Officer, challenged the three remaining alleged violations that the company says are unwarranted and is seeking reimbursement for legal costs under the Equal Access to Justice Act.
The company's challenge "stands as a clarion call for the preservation of American businesses, embodying the enduring struggle for freedom and liberty in the face of bureaucratic expansion," the company’s petition to the Supreme Court said. "... It's about standing firm against the tide of governmental intervention that threatens to stifle the creativity and resilience of American entrepreneurs.”
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RIVERDALE MILLS CASE BACKGROUND
The 12 original charges against Riverdale Mills related to two separate OSHA investigations of the company. An April 3, 2019, accident at the plant that resulted in an injury was followed by an OSHA inspection that led to eight allegations. The company prevailed at the administrative level on all of those except one of the eight, which was not directly related to the accident itself.
The second, unrelated OSHA inspection, in this case to assess health conditions, resulted in four further allegations. OSHA dropped two of those, and Riverdale Mills appealed the charges that survived from the two inspections to the U.S. District Court of Appeals in Washington, D.C. The court upheld the two health charges, in addition to the one following but unrelated to the accident. The company then unsuccessfully asked the U.S. Supreme Court to review that decision.
Having been notified of the impending health inspection, Riverdale Mills had provided documents known as safety data sheets, or SDSs, and OSHA had acknowledged receipt of those documents. But at a meeting on June 27, 2019, an OSHA compliance officer asked for "any SDSs not already provided."
In the case, Secretary of Labor vs. Riverdale Mills Corp., the company argued that the officer did not specify which safety data sheets she was requesting, resulting in confusion over whether the company had already fully responded and ultimately in a violation notice.
At the Court of Appeals, lawyers for Riverdale Mills argued that the allegation following the accident, which involved record keeping, was unproven by OSHA.
The company challenged one of the two health allegations because OSHA's request for the documents had been unspecific and also had been sent to the deceased former owner of the company, whose email account was no longer active, and did not follow up when notified. The other health allegation was unfounded, the company said, because OSHA had relied on a comment from a former employee whom the company had not been allowed to rebut or cross-examine.
"This landmark case ... delves into the heart of American legal principles, challenging the boundaries of federal agency authority and the role of the judiciary in interpreting regulatory standards," the company's petition stated.
The dispute potentially involves two previous Supreme Court cases, in which the high court has ruled that courts in general must show deference to regulators when interpretations of their words are ambiguous. In the 1997 case Auer v. Robbins and a prominent subsequent case, the high court has ruled that courts should defer to a regulatory agency's "reasonable" interpretation of its own "genuinely ambiguous" rule.
Lawyers for Riverdale Mills argued in their petition to the Supreme Court that the Appeals Court erred in failing to acknowledge that the OSHA officer's request was ambiguous, accepted the agency's interpretation that the company had not complied, and “rubber-stamped” OSHA’s interpretation.
“The courts should only defer to an agency’s interpretation if the regulatory language is genuinely ambiguous and their interpretation is reasonable," said James Knott, Jr., the Chief Executive Officer of Riverdale Mills. Referring to the nonspecific request for documents, he said, "In this case, the regulation isn’t ambiguous, and the Secretary’s interpretation isn’t reasonable."
The company's petition to the Supreme Court notes that there is history involving OSHA and the company that may have influenced its aggressive actions.
"Throughout RMC’s existence, RMC has long engaged in free speech activities dedicated to protecting its interests against federal agency overreach," the petition, filed by Travis W. Vance and Daniel E. Farrington of Fisher & Phillips LLP, of Charlotte, NC, and Washington, D.C., stated.
"RMC's founder, James Knott, Senior, was a well-known critic of federal agencies including the United States Occupational Safety and Health Administration and United States Environmental Protection Agency," the filing said. "RMC and Mr. Knott’s stance with respect to federal agencies’ authoritative overreach were well-known at the time of the subject OSHA inspections and influenced OSHA’s actions towards RMC."