ABATECO SERVICES, INC. v. Thеron J. BELL, Commissioner of Labor and Industry
Record No. 0328-96-3
Court of Appeals of Virginia, Salem
Nov. 19, 1996
477 S.E.2d 795
John R. Butcher, Assistant Attorney General (James S. Gilmore, III, Attorney General, on brief), for appellee.
Present: BAKER, COLEMAN and ELDER, JJ.
COLEMAN, Judge.
Abateco Services, Inc. (Abateco), a licensed asbestos removal contractor, appeals the trial court‘s order which upheld four citations issued by the Department of Labor and Industry (Department) and $9,665 in civil penalties assessed by the trial court against Abateco for refusing to provide the Department access to its records as required by Abateco‘s subcontract and by various provisions of the Virginia Occupational Safety and Health Standards. Abateco contends that the citations were not valid because it had revoked its contractual consent for the Department to access its records and, therefore, it had no legal obligation to produce the records without a warrant or court order. After revoking its consent, Abateco asserts that the Department, which had the statutory and regulatory right to access the records, would have been required to obtain a search warrant or subpoena in order to lawfully access its records. Therefore, Abateco argues, because the Department was required to obtain a warrant or subpoena for the records, it could not cite Abateco for exercising its constitutional right to require the Department to obtain a warrant in order to gain access to Abateco‘s private records. Abateco also contends that thе civil penalty of $9,665 as assessed by the trial court was excessive.
Initially, we decide the extent of Abateco‘s protected privacy interest in its records, irrespective of the Department‘s contention that it contractually waived whatever privacy right it had. We must address this question because the Department contends that Abateco, as a highly regulated industry, has no
We hold that Abateco had a diminished expectation of privacy in the requested records; however, we further hold that it contractually waived whatever Fourth Amendment rights it possessed in the records. Because Abateco could not unilaterally revoke its contractual waiver of Fourth Amendment rights without breaching the terms of the contract, the Department had the right to inspect the records without a search warrant, provided it could reasonably do so without breaching the peace. Accordingly, because the Department was not required to obtain a warrant in order to obtain access to the records, the citations issued by the Department were founded. Furthermore, the penalty of $9,665 assessed by the trial court was reasonable and within the range provided for in
I. FACTS
Abateco is an asbestos abatement contractor licensed in Virginia pursuant to
The subcontract executed by Abateco incorporated several documents,1 among them being the General Conditions, which provided:
Section 3(d). The provisions of all rules and regulations governing safety as adopted by the Sаfety Codes Commission ... and as issued by the Department of Labor and Industry under Title 40.1 of the Code of Virginia shall apply to all work under this contract. Inspectors from the Department of Labor and Industry shall be granted access to the Work for inspection without first obtaining a search warrant from the court.
* * * * * *
Section 21. The Architect/Engineer, the Owner, the Owner‘s inspectors and other testing personnel, and inspectors from the Department of Labor and Industry shall have access to the Work at all times.
(Emphasis added).
Upon receiving notification pursuant to
Conditions of the Contract, would be granted access to the work without a warrant.
On November 16, 1994, the inspector returned to the site to attend a construction progress meeting with representatives of Abateco, the Department of Corrections, and the architects. During this meeting, Abateco‘s contract with the Commonwealth was discussed. At that time, Abateco‘s president acknowledged that the contract provided for warrantless access to the records, but he stated that Abateco would not voluntarily allow the inspector to conduct a search.
On November 22, 1994, a сomplaint from an employee working at the Staunton Correctional Center prompted the commissioner to send the inspector back to the site under authority of
Abateco‘s supervisor refused to make these records available without a search warrant. The inspector then called Abateco‘s president, who also refused to consent to an inspection of the records and of the workplace. The inspector advised Abateco that a refusal to provide the records would be
considered a willful violation of the regulations, but Abateco continued to refuse to provide access to the records.
As a result of Abateco‘s refusal, the commissioner issued four citations for willful failure to produce the records. In accordance with
Abateco appeals the trial court‘s decision and argues that, despite its contractual consent to warrantless searches by the Department of Labor and Industry, it had the right to withdraw its consent and to demand a warrant under the Fourth Amendment before allowing inspection of the requested records. Abateco contends that because it had an expectation of privacy in its records, those records were not subject tо being searched except upon a showing of justifiable cause and with a warrant, subpoena, or injunction. Abateco also asserts that the contract did not create an irrevocable waiver of Fourth Amendment rights and that Abateco properly revoked the contractual waiver when the inspector asked to see the records.
II. EXPECTATION OF PRIVACY IN RECORDS
The Department contends, as the trial court held, that Abateco has no reasonable expectation of privacy in those rеcords that it is required to maintain because it is involved in the removal and disposal of asbestos, an industry that is heavily regulated by statute and by regulation. Abateco‘s claim that the citations were not valid because a warrant was required to lawfully search the records is predicated upon the premise that it has a reasonable expectation of privacy in those records as far as the Department is concerned.
In 1967, the United States Supreme Court ruled that the
As we explained in Camara [v. Municipal Court, 387 U.S. 523, 87 S.Ct. 1727, 18 L.Ed.2d 930 (1967)], a search of private houses is presumptively unreasonable if conducted without a warrant. The businessman, like the occupant of a residence, has a constitutional right to go about his business free from unreasonable official entries upon his private commercial property. The businessman, too, has that right placed in jeopardy if the decision to enter and inspect for violation of regulatory laws can be madе and enforced by the inspector in the field without official authority evidenced by a warrant.
Id. at 543, 87 S.Ct. at 1739. However, the Supreme Court also cautioned that business premises could be inspected in many more situations than private homes and that a case-by-case determination of reasonableness is necessary. Id. at 546, 87 S.Ct. at 1741.
Abateco claims that it had a reasonable expectation of privacy in the records requested by the commissioner‘s inspector and that a warrant was required based upon the rationale of Marshall. In Marshall, the Supreme Court struck down a provision of the Occupational Safety and Health Act which permitted inspectors to enter and inspect businesses without a warrant. The Court held that Barlow‘s electrical and plumbing installation business did not fall under the “clоsely regulated business” exception to the warrant requirement. Id. at 314-15, 98 S.Ct. at 1821-22. However, the Court also stated that “[t]he reasonableness of a warrantless search ... will depend upon the specific enforcement needs and privacy guarantees of each statute.” Id. at 321, 98 S.Ct. at 1825. It is that standard which controls our determination of whether the Department‘s regulatory requirements that asbestos contractors provide access to certain records encroaches upon the contractor‘s protected privacy interests.
Asbestos removal is a highly regulated industry in Virginia.
Abateco urges us to find that it had a reasonable expectation of privacy in its records even though the Department‘s regulations required Abateco to prepare and maintain the records. Abateco relies on McLaughlin v. Kings Island, 849 F.2d 990 (6th Cir.1988), and Brock v. Emerson Electric Co., 834 F.2d 994 (11th Cir.1987), to support its position. In both Kings Island and Brock, the courts found that OSHA could not inspect without a warrant certain logs or records of employees’ injuries and illnesses which the statutes at issue required to be maintained. The court in Kings Island stated, “[w]e conclude that even though the records in question are required by law to be kept, this does not remove any privacy expectation that the employer may have in the information.” Kings Island, 849 F.2d at 996.
The Department argues that the Fourth Circuit case of McLaughlin v. A.B. Chance Co., 842 F.2d 724 (4th Cir.1988), addressed the identical issue and should control this case. The controlling rationale in A.B. Chance recognized that the employer had a
We find the Fourth Circuit‘s reasoning in A.B. Chance persuasive. Because Abateco is required by law to maintain the records to which the inspector requеsted access, Abateco had a diminished expectation of privacy in the records. Both the Code and the regulations promulgated by the Department place asbestos removal contractors on notice that they are required to maintain these records and to provide the Department access to them. Therefore, Abateco had a diminished right to privacy in the records. Moreover, when the inspector requested access to the records he wаs on the site investigating an employee complaint.
We find that Abateco had a diminished expectation of privacy in those records that the inspector requested, for two reasons: first, Abateco is a licensee in a closely regulated business in the Commonwealth, which reduces its expectation of privacy; and second, Abateco was required by law to create and maintain the records. Having determined that Abateco has a diminished expectation of privacy in these records, the question remains whether, absent a waiver of Fourth Amendment rights, a warrant is required. We do not have to decide that question because Abateco contracted with the commissioner to provide access to the records upon request without requiring a warrant and Abateco cannot unilaterally withdraw that consent, which was a condition of its bargain to perform the asbestos removal.
III. CONTRACTUAL WAIVER OF RIGHT TO PRIVACY
It is well-settled that a knowing and voluntary consent to search obviates the need for a search warrant under the Fourth Amendment. See Schneckloth v. Bustamonte, 412 U.S. 218, 222, 93 S.Ct. 2041, 2045, 36 L.Ed.2d 854 (1973); Crosby v. Commonwealth, 6 Va.App. 193, 197, 367 S.E.2d 730, 733 (1988) (quoting Hairston v. Commonwealth, 216 Va. 387, 387, 219 S.E.2d 668, 669 (1975), cert. denied, 425 U.S. 937, 96 S.Ct. 1671, 48 L.Ed.2d 179 (1976)). More specifically, the right to require a search warrant may be waived by written contract. See Zap v. United States, 328 U.S. 624, 66 S.Ct. 1277, 90 L.Ed. 1477 (1946) rev‘d on other grounds, 330 U.S. 800, 67 S.Ct. 857, 91 L.Ed. 1259 (1947).
In Zap, the petitioner contracted with the Navy Department to conduct experimental
And when petitioner, in order to obtain the government‘s business, specifically agreed to permit inspection of his accounts and records, he voluntarily waived such claim to privacy which he otherwise might have had аs respects business documents related to those contracts.
Id. at 628, 66 S.Ct. at 1279. Where businesses or entities have contractually consented to inspections or searches of documents and worksites, courts have uniformly held such provisions to be valid waivers of the requirement for a warrant or subpoena under the Fourth Amendment. See United States v. Brown, 763 F.2d 984 (8th Cir.), cert. denied, 474 U.S. 905, 106 S.Ct. 273, 88 L.Ed.2d 234 (1985) (“The government has a substantial interest in establishing methods by which it can effectively monitor compliance with the regulations.... We see no constitutional infirmity in the government requiring a provider to agree to maintain records ... and to permit periodic audits of those records as a condition for [contracting with the government]....“); United States v. Jennings, 724 F.2d 436 (5th Cir.), cert. denied, 467 U.S. 1227, 104 S.Ct. 2682, 81 L.Ed.2d 877 (1984); First Alabama Bank v. Donovan, 692 F.2d 714 (11th Cir.1982); United States v. Griffin, 555 F.2d 1323 (5th Cir.1977); Lanchester v. Pennsylvania State Horse Racing Comm‘n, 16 Pa.Cmwlth. 85, 325 A.2d 648 (1974).
Although as a general proposition, consent to search granted at the scene may be revoked, withdrawn, or partially limited by the person who gives the consent, see Lawrence v. Commonwealth, 17 Va.App. 140, 435 S.E.2d 591 (1993); Grinton v. Commonwealth, 14 Va.App. 846, 419 S.E.2d 860 (1992); 79 C.J.S. Searches and Seizures § 126 (1995), we hold that such is not the case when the consent is given in a valid and binding bilateral contract.
Abateco contends, however, that contractual consent cаnnot create an irrevocable waiver of Fourth Amendment rights. In support of this argument, Abateco cites Tri-State Steel Constr., Inc. v. OSHRC, 26 F.3d 173 (D.C.Cir.1994), and National Eng‘g & Contracting Co. v. OSHRC, 45 F.3d 476 (D.C.Cir.1995). However, neither case is sufficiently similar to the instant case to be persuasive. In Tri-State Steel, although the general contractor had contractually consented to searches, Id. at 176-77, the subcontractor had not, which is different from the situation in the instant case. Moreover, the subcontractors objected to searches made by OSHA of the common areas, which led OSHA to obtain warrants in ordеr to search the areas that were under the exclusive control of the subcontractors. Id. In National Eng‘g, the search was also conducted pursuant to a warrant. National Eng‘g, 45 F.3d at 478. The holdings in these cases are not applicable to this case and do not support Abateco‘s argument that it could revoke its contractual waiver.
A party “cannot accept the benefits of the contract and then assert he is entitled to be relieved of its obligations.” Link Assoc. v. Jefferson Standard Life Ins. Co., 223 Va. 479, 489, 291 S.E.2d 212, 218 (1982) (quoting United States v. Idlewild Pharmacy, Inc., 308 F.Supp. 19, 23 (E.D.Va.1969)); see also Manassas Park Dev. Co. v. Offutt, 203 Va. 382, 385, 124 S.E.2d 29, 31 (1962) (“Where one enters into a contract to perform certain acts, without any exceptions or quаlifications, and receives from the party with whom he contracts a valuable consideration for his engagement, he must abide by the contract....“). Revoking only part of a written contract places a party in breach of the contract unless the other party consents to the revocation. See Spence v. Northern Va. Doctors Hosp. Corp., 202 Va. 478, 483, 117 S.E.2d 657, 660 (1961). In this case, Abateco attempted to unilaterally rescind the terms of its contract with the Commonwealth by withdrawing its consent.
To accept Abateco‘s position would be to allow the company to accept the benefit of its bargain with the Commonwealth without having to abide by its obligation to the commissioner.
IV. EXCESSIVE CIVIL PENALTY
Abateco argues that the civil penalty of $9,665 imposеd by the trial court was excessive because Abateco had reason to believe it was justified in requiring the Department to obtain a warrant before allowing its records to be inspected; therefore, its refusal was not willful. We disagree. The evidence before the trial court was sufficient to support its finding that Abateco willfully violated the terms of the contract and
In assessing penalties,
V. CODE § 40.1-51.21
Abateco contends that, because it had already been inspected by the Department earlier in 1994, the attempted inspection of the records and worksite at the Staunton Correctional Center in November 1994 was in violation of
At least once a year, during an actual asbestos project, the Department of Labor and Industry shall conduct an on-site unannounced inspection of each licensed asbestos contractor‘s and RFS contractor‘s procedures in regard to install- ing, removing and encapsulating asbestos. The Commissioner or an authorized representative shall have the power and authority to enter at reasonable times upon any property for this purpose.
Abateco urges this Court to interpret the language of the statute to mean that each licensed asbestos contractor should be inspected only once per year. The argument is not persuasive.
When a statute is plain and unambiguous on its face, a court may look only to the words of the statute to determine its meaning. Brown v. Lukhard, 229 Va. 316, 321, 330 S.E.2d 84, 87 (1985). “An ambiguity exists when the language is difficult to comprehend, is of doubtful import, or lacks clearness and definiteness.” Id. The language of
Affirmed.
Notes
The Contract Documents for this Subcontract consist of this Agreement and any Exhibits attached hereto, the Agreement between the Owner and Contractor dated as of August 22, 1994, [and] the Conditions of the Contract between the Owner and Contractor (General, Supplementary and other Conditions).... These form the Subcontract, and are as fully a part of the Subcontract as if attached to this Agreement or repeated herein.