Loading summary
Transcript45 lines
- [00:01]
A
In a small town on the eastern border of Alabama, right across the Chattahoochee river from Columbus, Georgia, a town called Phoenix City, Alabama, there's a lumber mill called Phoenix Lumber. And on a terrible day In August of 2023, one of its workers, Jim Streetman, was inspecting what would have caused a shutdown or a jam in an auger meant to carry wood chips from a wood chipper to a bin. He climbed up onto catwalks that overstretched the auger. The auger restarted. A worker below didn't see Jim Stretman, went up onto the catwalk to look for him and came upon a gruesome discovery of Jim Striedman in body parts having been chewed up and killed by the auger. He called the police. The Occupational Safety and Health Administration also arrived on the scene. OSHA conducted an investigation and issued citations and proposed penalties. Both the police and OSHA were well aware of Phoenix Lumber having visited the place in the past and Phoenix Lumber having had a history of prior alleged safety violations. The penalty that OSHA issued on account of that history and on account of the severity of the risks associated with its discoveries was one of the largest in OSHA history, certainly one of the largest in the past decade. And we're going to talk about the penalties in particular in The Case Secretary versus Phoenix Lumber. I'm Monish Rath and this is the June 2026 episode of the OSHA 3030. Well, welcome everyone to the OSHA 3030. I'm Manish Rath. I'm an attorney at Keller and Heckman, a law firm in Washington D.C. and for about 31 years I've been representing management in workplace law with a focus on occupational safety and health law. I'm very fortunate today because I'm joined by my friend and colleague Ben Idzik. Ben is an OSHA attorney as well as focusing on other areas including environmental and transportation law. And Ben, I think we have a terrible story underlying this very important case that we have to talk about, but we really have to go through the hard work of walking through this storyline so that our community members in the OSHA 3030, they better understand the penalty system and what Phoenix Lumber did to earn one of the highest penalty proposals in OSHA history so that they, they can move on and make their workplaces safer, better, better, more compliant.
- [02:45]
B
Yeah, no, the details, as Monash, you suggested are, are gruesome in this case, but there's a lot of important lessons that, that hopefully folks can walk away with.
- [02:52]
A
Maybe we should Start by talking about the facts of the case and then, then move on to discussing the penalty in the context of historic penalties.
- [02:59]
B
Yeah. And also get into how OSHA determines penalty amounts and in particular, what OSHA's arguments in this case were that warranted this significant fine here.
- [03:10]
A
Right. And in addition, it's important to understand the judge's decision and why he affirmed the proposed penalties from OSHA and his thought process there. This is one of the administrative law judges who's served for a considerable amount of time, is reputed to be very thorough and thoughtful. And so his explanation, I think, carries a significant amount of weight and should. Absolutely.
- [03:35]
B
And we'll conclude, as you always say, Manish, with the most important section for folks out there in a 3030 community of what we can learn from this case. Right.
- [03:43]
A
In the section what employers should do. So why don't we crack on. Let's talk about the facts in Secretary versus I'll call it Secretary versus Phoenix Lumber. Its formal name was MDLG Incorporated.
- [03:53]
B
Yeah. So Phoenix operated a sawmill in Phoenix City, Alab. Mill specialized in creating plywood. And it was known in the community as a place where folks could pretty quickly get a job. But unfortunately, throughout its time being operated by the Dunley family since the 1960s, it kind of developed a reputation for dangerous working conditions and had many, many run ins with OSHO inspectors in the past.
- [04:20]
A
The Washington Post wrote an article about the storyline at Phoenix Lumber, dubbing this particular lumber mill as the most dangerous place in America and describing the Dudley family as one of the wealthiest families in Alabama.
- [04:34]
B
Yeah, it's a very interesting backstory and I think folks encourage, if you're interested, more to check that article out and gives a great timeline of how everything unfolded, including this event.
- [04:44]
A
That's important because what we have been, you and I, is peeks into some of the underlying facts through the lay media. The decision that we're talking about today really just jumps right at ahead to the end and describes the validation by the administrative law judge of the agency's proposed penalty amount.
- [05:03]
B
Right.
- [05:03]
A
So these facts coming from the lay media are important to us being a window into facts that don't appear in that particular decision. So again, in August 2023, Jim Streetman, a worker, maybe about 65 years old, relatively new employee to Phoenix Lumber. However, he was working one day and there was a jam in the auger that carries wood chips from the wood chipper to bins. And that apparently happens with a degree of frequency.
- [05:35]
B
Yeah. It was certainly noted that this wasn't an uncommon Instance, and I think what was more disturbing is that it wasn't uncommon for employees to sort of use these informal tactics to clear these jams. So what happened here is that in order to clear the jam, Mr. Streetman used a elevator platform, which we see from the picture on the slide and from what we understand went over the guardrails and during this process had his leg caught and was pulled into the auger, which ultimately led to his death. And when police interviewed the employees who witnessed this event, they said that this was something that wasn't uncommon as ways to clear these jams.
- [06:14]
A
Workers testify DOSHA compliance officers that jams not only happen frequently, but that they were specifically instructed to just clear with their hands that they were instructed to clear it without shutting down the machinery and locking it out. Sometimes when the jam had occurred, the machine would stop and they wouldn't turn it off and lock it out before trying to inspect for the location of the jam and then begin unjamming procedures. And then on top of that, they would use their own hands rather than unjamming tools.
- [06:43]
B
Yeah, the locking out thing point is important here because from what we see, the auger itself, when Mr. Streetman went over to cross it apparently was not active, it wasn't functioning. But there was a point where the machine suddenly react energized and then that. Which, which led to his. To his really tragic death. And I think it underscores the importance of the lockout tagout standard being taken very seriously as it prevents these kinds of really awful instances from taking place.
- [07:11]
A
There's film footage of workers walking about the machinery trying to find the source of the jam. I think Jim Streetman was one of them on the film. So was the co worker who found him. That that worker was wearing a red shirt, could be seen on the video wearing a red shirt and walking about. He's the one who called the police. This idea that they would not lock out the machinery and they would unjam it by banging on parts with hammers or reaching the hand into a jammed item. There's two or three things to say about that. One is in the past 20 prior 25 years there had been, and this is a small facility, it only has 50 employees on average. And there have been 28 recorded injuries or illnesses, many of them including broken bones and amputations of extremities and two other fatalities. So three fatalities in a 25 year period, making it statistically for such a small pool. What the basis for why the Washington Post dubbed it the most dangerous workplace in America. The other thing I'd say about this unjamming process and not locking out Jim Streetman, if I accidentally refer to him as Jimbo, his nickname was Jimbo Streetman. Jimbo Streetman climbed up on the catwalk and wasn't found again. And his co worker went to look for him. We don't know because of that, this fraction of the storyline is off camera, is not caught on their existing camera network. So we don't know whether he fell off of the elevated platform and into the auger or for purposes of his own thinking that he might get better access to the place where he thought a jail might be located. Maybe he stepped onto the auger itself, thinking that since it was immobilized, it was safe to put a foot down. And at that same unfortunate timing, the auger restarted and may have sucked him in. This fact pattern, we can speculate on one of two or three scenarios, all of which are very difficult to contemplate. But when body parts of his were found, the people who found him were able to speculate that he was in a location that managers believed workers should not be climbing up to. Yet when the workers were interviewed, they said that this happens quite frequently, that this kind of unjamming happens quite frequently without locking out. So whether he was in a place he shouldn't have been or not locking it out would have prevented such a fatality. Yeah.
- [09:26]
B
And I think, disturbingly enough, the past fatality prior to Mr. Streetment that occurred in this case in 2020 also involved a metal auger and similar circumstances. It's unclear whether it was the same auger. I don't believe so. But it was the same process of employers just being exposed to these things and leading to really tragic and horrific results.
- [09:47]
A
There in that prior fatality, a worker was working all by himself at Phoenix Lumber, nobody else around. He was working the night shift. The machinery stopped feeding wood chips into the. In that case, it was a kiln for drying. A drying kiln. So the auger was feeding chips into the drying kiln. And when the auger stopped feeding wood chips, an alarm sounds off so that a worker can go attempts to maybe feed more chips into the augur, but nobody did and the arm kept going. So a neighbor came onto the site, looking around and found in the kiln, was it just a leg or an arm? Yeah. And there again there was clear evidence that the augur had been a culprit in killing that worker as well. And there again, I'd say that lockout tagout would have theoretically, if you can speculate as to what would have happened with accuracy. It's possible that lockout tagout would have prevented that fatality fatality too. And if not, certainly in both cases, at least in the case of Jimbo Streetman, guarding for elevator work surfaces could have prevented the fatality as well. So there's just multiple opportunities to have prevented this unnecessary fatality. So those are the facts in this case. Again, OSHA came in, conducted an inspection, and issued citations, a number of citations, each with proposed penalties, adding up to over $2 million.
- [11:10]
B
Yeah, it was around, I think, the total. Yet we see right there on the slide just shy of $2.5 million, which is a very significant penalty. And so what happened here is that after the penalty was issued, procedurally, Phoenix Lumber issued a timely notice of contest. And shortly after the notice contest occurred, the parties reached a stipulated agreement under which Phoenix stipulated to the penalties themselves and the facts that supported them. But the remaining point of contest was the penalty amounts. And after this portion, Phoenix declared bankruptcy.
- [11:46]
A
To be clear, they declared bankruptcy not just because of this $2.47 million in OSHA proposed penalties. There were also penalties assessed for totally unrelated violations with the city. They were found by the city to be tapped into the water system without paying for. For their water. And I think that they had tapped into the fire hydrant and their fire suppression system was alleged to be in, in violation. And so there were over $3 million of penalties there. When they filed for bankruptcy, they reported the bankruptcy court that in addition to those two multimillion dollar assessments, there were a total of $50 million in debts of various types. So. So they filed for bankruptcy. They also settled, I believe, with the. The decedent, maybe, but. But at any rate, and through bankruptcy. And now this contest was strictly about the penalty amount.
- [12:41]
B
Exactly. So after that happened, OSHA moved her summary judgment on the issue of the proposed penalties. And I think what's significant when we get into sort of how the AJ decided this issue is that Phoenix Lumber never filed an opposition to the summary judgment. So what the judge really had to look at is the stipulation that the parties reached and the brief that was submitted by osha, it is strange.
- [13:03]
A
They had lawyers working for them in the bankruptcy proceeding. They had a lawyer representing them in the OSHA process. I believe that they had other lawyers dealing with the city with the allegation of unlawful access to the city water system without paying for it. And with all those lawyers, they missed the deadline to file an opposition brief in a motion for summary judgment. On the penalty amount that they were themselves contesting. So here's what happens when that. When a motion for summary judgment is filed and the other side doesn't brief it, the court will necessarily take the facts as asserted by the mouvant at face value, there not being any countervailing facts to be supplied. The standard for a motion for summary judgment would be that the judge needs to look at only those facts that are not material and in genuine dispute. And because there weren't any facts put into genuine dispute or any dispute with an opposition brief by Phoenix Lumber, the result is that the facts as alleged by USHA were taken as the facts to be evaluated by the administrative law judge. And in doing so, I think he did it the right way. So let's put this in context. 2.47 million. We'll round it up. If we refer to it as $2.5 million, the 25th highest penalty ever assessed in OSHA history, as I understand it, would have been against an entity called Sunfield Incorporated for two point roughly again rounding out to 2.9 million. And here we are rounding up to 2.5 million. So not, not a lot less, putting it roughly in the top 30, top 35 highest penalties somewhere in that neighborhood in OSHA history and one of the highest in the decade. These are dwarfed by a few very large penalty amounts. Number one and two are both against British Petroleum, both associated with alleged violations flowing from the Deepwater Horizon environmental catastrophe and response to catastrophe. So if you take away Deepwater Horizon, Phoenix Lumber actually jumps up the list as one of the highest penalty amounts in OSHA history and even higher on the leaderboard for the recent decade. I think that that is in part why this case had to be covered by the OSHA 3030 as a sort of highly relevant to our OSHA 3030 community. Yeah.
- [15:27]
B
And certainly when you look at a company like BP and compare it to a company like Phoenix Lumber, the size differences are staggering. So to get an amount within the Same range as BP for a company over 50 employees is pretty notable.
- [15:41]
A
Yeah, that's a good point. Okay, so OSHA issued these penalties. The judge evaluates their basis for assessing 2.47 million.
- [15:49]
B
Right. And so the, the way that ALJs determine penalties, and we can sort of get some of the background, is that under the OSHA Act, Section 17, it does give OSHA the authority to propose penalty amounts. When a citation is contested, the proposed penalty becomes advisory and subject to the discretion of the, of the ALJ of the Review Commission, which will then assess the penalty.
- [16:12]
A
The bases for which OSHA assesses penalties, and they had to explain themselves to the administrative law judge in defending the reasonableness of their penalties are that, in part, OSHA will look at the gravity of the violation. And I think that that is the most significant factor so far.
- [16:31]
B
Absolutely. And what gravity means is we can look at ALJ case law on this. And ALJs typically use four factors to understand, to determine the gravity of a. Of a penalty or not. They look at the number of employees exposed, the duration of the exposure, the precautions taken by the employer, and the likelihood of injury as a result of
- [16:51]
A
the hazard, and the severity of the injury that they allege to be likely.
- [16:55]
B
Right? Absolutely. So when we apply that to this case, we can see that Phoenix Lumber's poor history, the conditions of the plant, the severity of the injury that was suffered by Mr. Streetman, by the history of the prior injuries and amputations and fatalities that occurred. It certainly makes sense. Why, why, why the penalty amount was as high as it was.
- [17:17]
A
Right. Other factors that the agency looks at when assessing penalty amounts is the employer's size and history of prior violations. We should probably talk about the history of prior violations a little bit. We've talked about their. Their known history as reported by OSHA to the administrative law judge. And this Washington Post article I was discussing before certainly goes into some of it as well. You know, only 50 employees and yet 28 recordables, three fatalities in the past. You know, numbers of broken bones or amputations, a pretty long history of alleged prior violations.
- [17:51]
B
Yeah. The ALJ noted to build off your point, Manish, that 183 final citation orders were issued in the past 20 years for this particular place.
- [18:00]
A
OSHA kept going back and kept going back. Police officers, when they arrived, said, we're very familiar with this place. The OSHA compliance officer was as well. On one occasion in the prior years, there was an employee complaint about dangerous conditions, and the compliance officer came the next day. And that very day there was a finger amputation. So within two days of each other. And the story keeps going. At some point, the agency put Phoenix Lumber on what's called a Severe Violators Enforcement Program, or svep, a controversial program promulgated by the agency to keep a closer eye on those employers that the agency believes are amongst the worst violators, as measured by their injury and illness rate, the days away from work rate. And so Phoenix Lumber was placed on the Severe Violators Enforcement Program, or svep, the second in command at OSHA at the time. This Was again, Jimbo Streamman was killed in 2023. The Deputy Assistant Secretary of Labor for OSHA, Jim Frederick, a friend who I've known since his days at United Steel and when he was the Deputy Assistant Secretary of Labor at osha, now he heads up the state OSHA program for my state, the Commonwealth of Virginia. And he was interviewed or quoted by the Washington Post as saying with respect to Phoenix Lumber, that the agency, OSHA tried to use all of the resources they had, all the tools they had to try and bring Phoenix Lumber into compliance. So that goes to this element that OSHA was trying to establish, the history of prior violations. Yeah, I think that's a lot. I just gave you about Phoenix Lumber's history of prior alleged violations.
- [19:43]
B
Yeah, absolutely. And, and I think what is even more disturbing when you look at to what happened here is that 71 of those 183 citations that were issued were for lockout tagout violations. So you would think that there would be some effort by the employer here to, to correct their, their processes to their safety program, but it just never seemed to have occurred and led to these drastic results.
- [20:04]
A
So of those factors, the history of prior violations, they also look at the good faith of the employer. We mentioned the employer size and the gravity of the alleged violation. The gravity of the alleged violation is, as I said before, the most significant factor in assessing penalty amounts.
- [20:19]
B
So when we look at osha's arguments, I think that they're pretty straightforward in terms of how they supported these proposed penalty amounts. What they said was that the citations that they assessed, which again were many, including violations, lockout tag out, fire protection standards, fall protection standards, they determined based on all those proposed penalties that the ones that posed a low risk of injury workers were assessed below the statutory minimum. I think we covered this a little briefly on the previous slide, but the penalty amounts are set by the OSHA act and are fixed and only adjusted for inflation annually. So the ones that they assess that posed low risk to workers were assessed below the minimum. And the ones that posed a high risk injury were assessed at or near the maximum because of the severity of the risk that we ultimately see led to the tragedy in this case. And we covered this, I think pretty extensively. But given Phoenix Lumber's history of citations, the classification that they put on some of these citations as willful was warranted. And the same thing with the risk of amputation and fatality, they warrant the classification of serious, which again justified such a high penalty amount.
- [21:29]
A
And to remind those of you who are listening, the gradations of alleged violation classifications start with other than serious, then move to serious. Willful is for those where an employer knowingly or with reckless indifference permits unsafe conditions. And then failure to abate is one where the agency has already told the employer that it believes there's a violation and what it needs to do to fix it, and the employer persists in not fixing it. Those last two alleged willful violations and alleged failures to abate carry much higher penalty structures to them than 10 times higher than the serious or other than serious alleged violations.
- [22:09]
B
So when we look at the ALJ's decision here, Manish, you covered this a little earlier, but just to review what the standard is on a motion for summary judgment is that the movement in this case, OSHA must show that there is no genuine dispute of material fact on any of the issues in dispute, which here are the proposed penalty amounts. So when we look at that, in light of the fact that Phoenix Lumber did not file an opposition motion, the court really only had to go off of OSHA's brief in support of summary judgment and the stipulation that the both parties entered into, under which Phoenix Lumber attested to the accuracy of the citations themselves and the facts in the inspection report that undermined them. So when we look at gravity, I think we probably covered it in previous slides, but the ALJ agreed. You know, the multiple instances, the many, many instances in which citations were issued against Phoenix Lumber, the severity of the injuries that workers suffered in this case, Mr. Street, and the potential risk of injuries and other hazards that workers were faced with, they warranted these penalty amounts.
- [23:15]
A
Yeah, the severity. He clearly it was a gruesome fatality. And the history that for 28 years there was just a long standing track record of OSHA coming back and coming back pointing out some of these hazards. So, so they. The administrative law judge, a very thoughtful judge, validated the proposed penalties, and now we're looking at penalties of $2.47 million, one of the highest in. In recent years, and it's one of the highest ever. Let's talk about what employers should do in light of the Phoenix Lumber case. I think the first thing, Ben, I'd say is it's important for employers to have a written plan for controlling hazardous tasks and to create that written record is the starting point for training programs and monitoring and for succession planning for others who are going to come on board and be responsible. In Phoenix Lumber's case, this would have been particularly important. The Washington Post reported that there was an almost a revolving door of new employees coming and going not having a long term relationship with Phoenix Lumber.
- [24:22]
B
And then in addition to Dimash what you discussed, written procedures, training, onboarding, we look at active supervision in this case and we stress as we do in the past, as we have in the past, that it's important that supervisors take an active role, role in assigning accountability to employees and in correcting violations of written procedures of training when they spot them. I think in the Washington Post article there was a supervisor who was interviewed who mentioned that the enforcement practices Phoenix Lumber were lacking. Some supervisors did enforce some sort of safety measures, others didn't. Things like hard hats, things like locking out. But it wasn't consistent and certainly makes sense in light of how the operation went.
- [25:05]
A
That's right when Mr. Dudley, and this goes to the next point, the management commitment to safety is a really critical recommendation that we'd have in light of this case management. And this has to be top down. Management has to be committed to safety, not just the managers, but the manager's immediate supervisors, all the way up to the CEO or the owner. Mr. Dudley stated to the compliance officer. The owner of the lumber yard stated to the officer, I don't have anything to do with lockout tag out. I think trust that entirely to my managers. But the managers reported that the employees knew what to do and didn't do it. That they were sometimes acting inconsistently with their own training. Yet when the employees were interviewed, they said that they were routinely instructed to ignore lockout tagouts, to just unjam it by hand and keep the thing running with as little downtime as possible. So three different testimonies.
- [25:55]
B
And when we look at having a solid training program, a solid safety program in general commitment by management, by ownership towards safety, we want to have a record of corrective actions to be able to show OSHA in cases of inspections that safety violations were taken seriously and they were corrected at the point of when they occurred. We don't want a situation where we don't have record to prove of the positive things that we as employers do.
- [26:21]
A
The other thing I'd say is predictable hazards should be addressed. The highest severity outcomes, those hazards should be prioritized.
- [26:30]
B
And then finally, we want to encourage employee participation in and positive safety approaches in the workplace. We want to make sure that employees, in addition to management, that employees are on board with looking after their own colleagues and in dangerous situations, pointing out hazards when they arise.
- [26:45]
A
So those are the takeaway items I think I gleaned and Ben, I know you picked up from this case that hopefully are helpful to y' all in the OSHA 3030 community. That's it for today's OSHA 3030. We have sister programs that you should know about if your organization is responsible for compliance under REACH or TSCA regulatory schema. You should know about the Reach 3030 and the Tosca 3030. The Tosca 3030 coming up August 12th at 1pm Eastern. And stay tuned for announcements for the next Episode of the Reach 3032 Excellent programs run by incredibly talented colleagues of ours here at Keller and Hackman. Our next episode, the OSHA 3030, will be back on July 22nd at 1pm Eastern. You can also catch these as a podcast or on YouTube through our website khlaw.comosha3030. You can catch all of our prior episodes or almost all of our prior episodes going back almost or about 13 years. So an incredible library of information for you and your colleagues. When you get the invitation to the next OSHA3030, please forward it on to three other people within your organization and elsewhere, both safety professionals and in house counsel responsible for safety and health compliance. And we're very grateful to you for performing that service for your fellow members of the OSHA 3030 community. We hope you continue to do so and keep thinking of new people to invite into the fold of the OSHA 3030 community. With that said, I'm thankful to all of you for participating. I'm thankful to our staff at Keller and Ackman, thankful to Ben Idzik for sharing this episode with me, and we look forward to seeing you again next month. And until then, stay safe. Sam.