WORLD COLOR PRESS, INC., PETITIONER V. ANN MCLAUGHLIN, SECRETARY OF
LABOR, AND GRAPHIC COMMUNICATIONS INTERNATIONAL UNION, LOCAL 554

   No. 88-778

   In the Supreme Court of the United States

   October Term, 1988

   On Petition for a Writ of Certiorari to the United States Court of
Appeals for the District of Columbia Circuit

   Brief For The Federal Respondent In Opposition

            TABLE OF CONTENTS
   Question Presented
   Opinions below
   Jurisdiction
   Statement
   Argument
   Conclusion

                            OPINIONS BELOW

   The opinion of the court of appeals (Pet. App. A1-A12) is reported
at 843 F.2d 1490.  The decision of the Occupational Safety and Health
Review Commission, dated September 3, 1986 (Pet. App. A12-A25), is
reported at 12 O.S.H. Cas. (BNA) 2143 and (1986-1987) O.S.H. Dec.
(CCH) Paragraph 27,697.

                             JURISDICTION

   The judgment of the court of appeals was entered on April 15, 1988.
 A petition for rehearing was denied on June 23, 1988 (Pet. App.
A26-A28).  The petition for a writ of certiorari was filed on
September 21, 1988.  The jurisdiction of this Court is invoked under
28 U.S.C. 1254(1).

                          QUESTION PRESENTED

   In this case, the Occupational Safety and Health Review Commission
overruled its earlier decision allowing the Secretary of Labor, in
citation enforcement proceedings under the Occupational Safety and
Health Act, to use non-federal experts to conduct discovery
inspections of the cited employer's workplace, subject to a
comprehensive administrative protective order that guards against
improper disclosure of employer trade secrets.  The question presented
is whether the Commission's action was properly set aside by the court
below for failure to provide an adequate explanation for overruling
that prior decision.

                               STATEMENT

   1. Petitioner's Salem-Gravure Division operates a printing facility
in Salem, Illinois.  In May 1983, the Secretary of Labor (the
Secretary) issued a citation charging Salem-Gravure with a serious
violation of the "general duty" clause of the Occupational Safety and
Health Act of 1970 (OSH Act), 29 U.S.C. 654(a)(1).  /1/ The citation
alleged that employees in the bindery department were exposed to the
hazard of "undue repetitive motion trauma" when required to feed the
binding machines using repeated hand and wrist movements.  Petitioner
contested the citation and the matter was docketed with the
Occupational Safety and Health Review Commission (the Commission) for
adjudication.  Pet. App. A4.

   During pre-hearing discovery, the Secretary sought to have a
private consultant inspect the machinery and work procedures in the
employer's bindery.  The consultant, an ergonomics expert and
mechanical engineer, needed to observe the workplace firsthand in
order to evaluate the feasibility of abating the cited hazard.
Petitioner opposed the discovery request on the ground that a
non-federal expert posed a significantly greater risk of trade secret
disclosure than a federal employee, who is subject to criminal
sanctions under the Trade Secrets Act.  /2/ The Secretary then moved
the Commission's administrative law judge (ALJ) for an order
compelling discovery.  Pet. App. A4-A5, A14-A15;  App., infra, 1a.
/3/

   After a hearing, the ALJ found that legitimate trade secrets
existed in the bindery department, and ordered that the inspection be
carried out subject to a protective order including the precautionary
measures required by the Commission in Owens-Illinois, Inc., 6 O.S.H.
Cas. (BNA) 2162, (1978) O.S.H. Dec. (CCH) Paragraph 23,218 (Pet. App.
A5;  App. infra, 3a, 11a).  Chief among the measures the ALJ required
were (1) a non-disclosure agreement between the Secretary and the
consultant that makes the employer a third-party beneficiary of the
agreement with the right to recover damages in the event of a breach;
and (2) a requirement that the expert surrender all notes and
photographs from the inspection to the Secretary's counsel (Pet. App.
A5, A15-A16;  App., infra, 4a, 11a).  /4/ The ALJ found no statutory
basis for a categorical exclusion of outside experts and held that the
Secretary's need for the consultant's services outweighed the
employer's "speculative" fear of trade secret disclosure (App., infra,
9a-10a).  /5/ Petitioner sought and the Commission granted
interlocutory review of this ruling (Pet. App. A5, A16).

   2. The Commission vacated the ALJ's order and remanded with
directions to stay the proceedings to enable the Secretary to apply to
a federal district court for a search warrant or "other appropriate
order" authorizing the inspection of the Salem-Gravure bindery and
containing non-disclosure provisions applicable to the outside expert
(Pet. App. A23-A25).  In the Commission's view, its authority to
enforce protective orders was insufficient to deter violations of
those orders by outside experts, and the contractual remedies
available to an aggrieved trade secret owner under an Owens-Illinois
protective order were inadequate as compared with the "swift and sure"
contempt sanctions that a court could impose (id. at A21-A23).  The
Commission accordingly overruled the Owens-Illinois decision to the
extent that the decision upheld the use of administrative protective
orders in this context (id. at A21-A22).  /6/ However, to "strike a
balance" between the competing interests of the Secretary and the
employer, the Commission provided that the Secretary could use an
outside expert if a search warrant or similar order of a federal
district court authorized the entry with appropriate precautions (id.
at A23).

   Upon remand to the ALJ, the Secretary declined to seek judicial
authorization for the discovery request and, thus lacking the
necessary expert testimony, elected not to proceed to a hearing on the
citation (Pet. App. A6).  As a result, the ALJ granted petitioner's
motion to dismiss the case (ibid.).  The Secretary then sought
appellate review of this final Commission decision (ibid.).

   3. The court of appeals reversed the Commission's ruling on the
discovery issue as arbitrary and capricious, and vacated its dismissal
of the citation enforcement case (Pet. App. A4, A11-A12).  The court
held that the Commission had failed to supply a reasoned explanation
for departing from Owens-Illinois and had improperly relied, without
supporting evidence, on a presumed inability to impose meaningful
sanctions against private consultants and a belief that
confidentiality agreements are ineffective (id. at A10-A11).  /7/ The
court further observed that the Commission's decision "interposes
courts to perform a duty Congress expressly empowered the Secretary
and the Commission to perform, namely 'issu(ing) such orders as may be
appropriate to protect the confidentiality of trade secrets'" (id. at
A9-A10 n.3, citing 29 U.S.C. 664).  The court concluded that Congress
did not envision a Commission with such limited powers as to require
"repeated federal (court) interventions" at the discovery stage of
administrative proceedings (id. at A12).

                               ARGUMENT

   The decision of the court of appeals is correct and does not
conflict with any decision of this Court or any other court of
appeals.  Accordingly, further review is not warranted.

   1. The court of appeals correctly rejected the Commission's attempt
to overturn its earlier decision allowing discovery inspections by
non-federal experts.  In Owens-Illinois, the Commission thoroughly
evaluated the competing interests of employers in their trade secrets
and of the Secretary in achieving swift and effective abatement of
workplace hazards, and it took into account its unsatisfactory
experience under prior Commission rulings that barred the use of
outside experts in workplace inspections (6 O.S.H. Cas. (BNA) at
2165-2167, (1978) O.S.H. Dec. (CCH) Paragraph 23,218, at
28,071-28,072).  In holding that employer trade secrets could be
protected most appropriately in discovery entries by non-federal
experts through administrative protective orders, the Commission
struck a balance that would "avoid imposing * * * excessive
constraints on the Secretary's prosecution of cases while at the same
time adequately protecting employers' legitimate interests in
preserving the confidentiality of their trade secrets" (6 O.S.H. Cas.
(BNA) at 2166, (1978) O.S.H. Dec. (CCH) Paragraph 23,218, at 28,071).
The Commission's Owens-Illinois decision thus overruled past decisions
(including one involving another division of World Color Press, see
note 5, supra), that generally limited the Secretary to using federal
employees in conducting discovery inspections where trade secrets
could be found.

   During the eight years following Owens-Illinois, protective orders
of the kind outlined in that decision were used, with apparent
success, in nearly a dozen citation enforcement cases where outside
experts conducted workplace discovery on the Secretary's behalf.  /8/
And in similar contexts, at least three circuits have found such
measures, particularly the use of confidentiality agreements, to be an
adequate safeguard for trade secrets disclosed to private consultants
and other persons not employed by the federal government.  Hercules,
Inc. v. NLRB, 833 F.2d 426, 429 (2d Cir. 1987);  United Steelworkers
v. Auchter, 763 F.2d 728, 743 (3d Cir. 1985);  Bunker Hill Co. Lead &
Zinc Smelter v. EPA, 658 F.2d 1280, 1284 (9th Cir. 1981).

   In choosing to abandon this settled approach to the issue in the
present case, the Commission was obliged to supply "a reasoned
analysis * * * beyond that which may be required" if the issue were
being confronted in the first instance.  See Motor Vehicle Mfrs. Ass'n
v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42 (1983).  Here, the
Commission's rejection of administrative protective measures in the
trade secret context was neither well-reasoned nor supported by legal
theory or empirical evidence.  /9/ Indeed, as the court of appeals
pointed out, "the Commission c(ould not) point to a single case where
(the Owens-Illinois protective order) was insufficient," nor did it
provide "evidence * * * to disprove the efficacy of similar
confidentiality agreements applied by federal courts" (Pet. App. A11).
 /10/ The Commission instead ignored its past success with
Owens-Illinois protective orders and based its policy reversal on
unsubstantiated fears of unauthorized disclosure and on a supposed
need for penal sanctions as a deterrent.  "(T)his conjecture," the
D.C. Circuit properly concluded, "cannot substitute for a reasoned
explanation" (ibid.).

   2. Petitioner contends (Pet. 15-25) that the Secretary should be
required to obtain a search warrant from a federal district court in
order to conduct discovery inspections with outside consultants.  This
contention erroneously assumes that the district courts have authority
to issue such a warrant, but consideration of that matter by this
Court is not appropriate because the decision below did not
definitively address it.  In rejecting the inadequately explained
departure from Owens-Illinois, the court of appeals merely noted its
doubts that the district courts "possess(ed) authority to issue
discovery orders while a citation enforcement proceeding is pending."
Pet. App. A9 n.3.

   We note, in any event, that the court of appeals' skepticism
regarding the warrant requirement is well founded.  Section 15 of the
OSH Act (29 U.S.C. 664) plainly empowers the Commission to "issue such
orders as may be appropriate to protect the confidentiality of trade
secrets." Indeed, the Act established the Commission as a "neutral
arbiter" with functions similar in nature to a district court.  See
Cuyahoga Valley Ry. v. United Transp. Union, 474 U.S. 3, 6-7 (1985);
Oil, Chemical & Atomic Workers Int'l Union v. OSHRC, 671 F.2d 643, 652
(D.C. Cir.), cert. denied, 459 U.S. 905 (1982);  116 Cong. Rec. 38,708
(1970) (remarks of Rep. Steiger).  It accordingly possesses a wide
array of quasi-judicial powers and generally follows the Federal Rules
of Civil Procedure in the conduct of its proceedings.  See 29 U.S.C.
659, 661;  29 C.F.R. 2200.2(b), 2200.52(a)(1).  As in the case of
other formal adjudications under the Administrative Procedure Act, the
Commission here has broad authority to direct the hearing process.
See 29 U.S.C. 659(c) (incorporating by reference 5 U.S.C. 554(c)(2),
556(c)).  This authority, recognized in the Commission's own rules,
enables it to authorize and compel the use of pre-hearing discovery
methods in citation enforcement proceedings, and includes the power to
issue protective orders to safeguard trade secrets based on a showing
of good cause by the owner of the information and a fair balancing of
the "competing needs and interests of parties affected by discovery"
(29 C.F.R. 2200.11(f), 2200.52(d);  Fed. R. Civ. P. 26(c)).  See
Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984).  /11/

   By refusing to enforce any discovery request involving outside
experts and possible trade secrets, and relying instead on district
courts to authorize and control that segment of its proceedings, the
Commission abdicated a key portion of its adjudicatory function to the
courts, which have hitherto played no role in pre-hearing discovery
under the OSH Act.  As the court of appeals correctly noted (Pet. App.
A9 n.3), neither the Commission nor petitioner has cited any statutory
or decisional support for their assumption that district courts may
exercise such authority and control.  /12/ The OSH Act itself supplies
no support for such a proposition:  with only carefully circumscribed
exceptions, /13/ the Act envisions that questions related to the
enforcement of the Secretary's citations will be adjudicated solely
before the Commission, with subsequent review available in the courts
of appeals.  Congress's failure to specify a judicial role in
pre-hearing discovery, and its granting of broad adjudicatory powers
to the Commission (including explicit authority to "issue such orders
as may be appropriate to protect the confidentiality of trade secrets"
(29 U.S.C. 664)), certainly imply -- as the court below recognized
(Pet. App. at A10 n.3) -- that "Congress did not contemplate that the
Commission would delegate these duties to the federal judiciary." See
Whitney Nat'l Bank v. Bank of New Orleans & Trust Co., 379 U.S. 411,
422 (1965) (where there is "a specific statutory scheme for obtaining
review * * * the statutory mode of review (must) be adhered to
notwithstanding the absence of an express statutory command of
exclusiveness").

   3. Finally, although petitioner contends (Pet. 32-33) that
collateral estoppel barred the Secretary from even seeking to conduct
discovery with an outside expert, we note that the court of appeals,
the Commission, and the ALJ all rejected that assertion, and that even
the petitioner does not raise the issue as an independent ground for
review.  The decision in World Color Press (see note 5, supra), on
which petitioner relies, was overruled by the Commission in
Owens-Illinois.  Collateral estoppel, as this Court has long
recognized, is available only where the "applicable legal rules remain
unchanged." Commissioner v. Sunnen, 333 U.S. 591, 599-600 (1948).  See
also United States v. Stauffer Chem. Co., 464 U.S. 165, 169, 170
(1984);  Montana v. United States, 440 U.S. 147, 155 (1979);
Restatement (Second) of Judgments Section 28(2) (1982).  The court of
appeals was therefore correct in reviewing the propriety of the
Commission's decision in this case.

                              CONCLUSION

   The petition for a writ of certiorari should be denied.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   GEORGE R. SALEM

      Solicitor of Labor

   ALLEN H. FELDMAN

      Associate Solicitor

   MARY-HELEN MAUTNER

      Counsel for Appellate Litigation

   JEFFREY A. HENNEMUTH

      Attorney Department of Labor

   JANUARY 1989

   /1/ The "general duty" clause of the OSH Act requires an employer
to furnish employees "employment and a place of employment * * * free
from recognized hazards that are causing or are likely to cause death
or serious physical harm to (its) employees * * *." 29 U.S.C.
654(a)(1).

   /2/ The Trade Secrets Act, 18 U.S.C. 1905, prescribes fines and/or
imprisonment and removal from office for federal employees who,
without legal authorization, divulge trade secrets and other
confidential information obtained by them in the course of their
duties.

   /3/ Petitioner's appendix omits the decision of the administrative
law judge concerning the Secretary's discovery request.  We have
therefore reproduced that decision in an appendix to this brief.

   /4/ The other precautions required by the ALJ under the
Owens-Illinois decision included:  (1) affording the employer an
opportunity to examine the expert's resume for any past or present
affiliation with the employer's competitors;  (2) requiring the expert
to sign and comply with a written non-disclosure oath;  and (3)
framing the protective order in broad enough terms to include within
its coverage the Secretary and her representatives, and to indicate
that sanctions for a violation of the order apply to anyone acting on
the Secretary's behalf (App. infra, 4a).  See Owens-Illinois, Inc., 6
O.S.H. Cas. (BNA) at 2165, 2167-2168, (1978) O.S.H. Dec. (CCH)
Paragraph 23,218, at 28,071, 28,072-28,073.

   /5/ The ALJ also rejected petitioner's argument that the Secretary
is barred by collateral estoppel from relitigating the issue of
whether an outside expert can be used to conduct a discovery
inspection of its premises by virtue of an earlier ruling in World
Color Press, Inc., 6 O.S.H. Cas. (BNA) 1084, (1977-1978) O.S.H. Dec.
(CCH) Paragraph 22,358, affirming an ALJ's order limiting the
Secretary to using federal employees in conducting discovery in a
facility operated by another of petitioner's divisions (App., infra,
6a-8a).

   /6/ The Commission emphasized that collateral estoppel (see note 5,
supra) played no part in its decision.  (Pet. App. A22 n.7).  The
Commission observed that a prior decision rendered erroneous by an
intervening change in the law cannot form the basis for applying
collateral estoppel, in a subsequent action, against a party to that
earlier case (ibid.).

   /7/ As a threshold matter, the court of appeals agreed with the
Commission that because Owens-Illinois had changed the governing law,
the Secretary was not precluded by the earlier World Color Press
decision from seeking to use an outside consultant in discovery
proceedings in this case (Pet. App. A8-A9).

   /8/ See Maxwell Wirebound Box Co., 8 O.S.H. Cas. (BNA) 1995, (1980)
O.S.H. Dec. (CCH) Paragraph 24,758;  Reynolds Metals Co., 8 O.S.H.
Cas. (BNA) 1496, (1980) O.S.H. Dec. (CCH) Paragraph 24,607;  National
Mfg. Co., 8 O.S.H. Cas. (BNA) 1435, (1980) O.S.H. Dec. (CCH) Paragraph
24,519;  American Can Co., 7 O.S.H. Cas. (BNA) 1947, (1979) O.S.H.
Dec. (CCH) Paragraph 24,066;  Kaiser Aluminum & Chem. Corp., 7 O.S.H.
Cas. (BNA) 1486, (1979) O.S.H. Dec. (CCH) Paragraph 23,662;  Emerson
Elec. Co., Upland Indus. Div., 7 O.S.H. Cas. (BNA) 1454, (1979) O.S.H.
Dec. (CCH) Paragraph 23,640;  Fred's Frozen Foods, Inc., 7 O.S.H. Cas.
(BNA) 1271, (1979) O.S.H. Dec. (CCH) Paragraph 23,461;  Metal
Container Corp., 7 O.S.H. Cas. (BNA) 1202, (1979) O.S.H. Dec. (CCH)
Paragraph 23,384;  Ralston Purina Co., 7 O.S.H. Cas. (BNA) 1201,
(1979) O.S.H. Dec. (CCH) Paragraph 23,383;  American Can Co., 7 O.S.H.
Cas. (BNA) 1147, (1979) O.S.H. Dec. (CCH) Paragraph 23,385;  Kama
Corp., 7 O.S.H. Cas. (BNA) 1056, (1979) O.S.H. Dec. (CCH) Paragraph
23,296.  Although petitioner rejects our reliance on this history as
"naive()" (Pet. 19), there have been no allegations in these cases
that any Commission protective order was ever violated by the
Secretary's expert.

   /9/ Petitioner erroneously contends (Pet. 11, 31-32) that the
Commission's new rules of procedure "codif(y)" its ruling in this
case, permitting it to abandon the Owens-Illinois precedent without
further explanation.  First, under the new rules, an ALJ is empowered,
but not required, to prohibit disclosure of information to "persons
against whom the Commission could not enforce (a protective) order,"
and also to stay proceedings to allow a party "an opportunity to seek
an order of a court or search warrant with protective conditions" (29
C.F.R. 2200.11(f)).  By contrast, the Commission's decision in this
case would require such action in every instance where an employer
demonstrates that trade secrets might be uncovered.  Furthermore, the
rulemaking record provides no support for such a requirement.  Faced
with strong objections to a warrant requirement on grounds that a
federal district court would lack jurisdiction to issue such a warrant
and that such a requirement would lead to disruption and delay in
enforcement proceedings, the Commission left the matter for
"adjudicative resolution," and thus simply deferred its obligation to
address those objections (51 Fed. Reg. 32,002, 32,009-32,010 (1986)).

   /10/ We also note that the Commission's new rules of procedure (see
preceding note) authorize the ALJ to require written confidentiality
agreements that provide for liquidated damages (29 C.F.R.
2200.11(f)(2)).  Thus, the Commission's rejection of such agreements
as an effective means of protecting trade secrets information in this
case is difficult to square with the Commission's own regulations.

   /11/ Contrary to petitioner's assertions (Pet. 13-14, 15-19),
Congress did not guarantee employer trade secrets automatic and
complete immunity from disclosure in Commission adjudications.  "As
with most evidentiary and discovery privileges recognized by law,
'there is no absolute privilege for trade secrets and similar
confidential information.'" Federal Open Mkt. Comm. v. Merrill, 443
U.S. 340, 362 (1979) (quoting 8 C. Wright & A. Miller, Federal
Practice and Procedure Section 2043, at 300 (1970)).  Although Section
15 of the OSH Act affirms the need to prevent unauthorized disclosures
of trade secret information obtained by the Secretary and her
representatives, and it incorporates for that purpose the criminal
sanctions available under the Trade Secrets Act (see note 2, supra),
neither that provision nor the Trade Secrets Act prohibits the
Commission from requiring employers to allow discovery of trade
secrets by private individuals.  See 29 U.S.C. 664.

   /12/ Petitioner cites several district court decisions (Pet. 22-23,
24-25) regarding administrative inspection warrants and protective
orders for trade secrets.  Those cases are inapposite, however,
because none of them involved pre-hearing discovery in an ongoing
Commission proceeding;  they instead arose in the context of
pre-enforcement investigations and other circumstances where the
Commission has no statutory jurisdiction.  Unlike this Court's
decision in Marshall v. Barlow's, Inc., 436 U.S. 307 (1978), the
Commission's new search warrant requirement for discovery inspections
was not prompted by constitutional concerns;  the Commission in fact
assumed that "probable cause" would always exist in such cases (Pet.
App. A24).

   /13/ The OSH Act expressly creates jurisdiction in the district
courts to enforce subpoenas issued by the Commission during citation
enforcement proceedings (29 U.S.C. 661(i));  to restrain and remedy
employer retaliation against employee "whistleblowers" (29 U.S.C.
660(c)(2));  and to restrain preliminarily any conditions that create
an immediate danger of death or serious physical harm (29 U.S.C. 662).

   APPENDIX