Joseph Watson, D/B/A Joseph Watson Masonry

Plain-English summary

Joseph Watson Masonry sought fees and expenses under the Equal Access to Justice Act after several construction citations were vacated, reclassified, or assessed at lower penalties. The Commission held that an employer can be a prevailing party on a discrete issue when it succeeds in reducing a citation's characterization or penalty, even if the violation itself is affirmed. It found the Secretary was not substantially justified in alleging that scaffolds lacked ladders when the evidence showed ladders were present and the litigation instead challenged their adequacy. It also found no reasonable basis for the proposed $56,000 penalty on the scaffold-guardrail item because OSHA used an outdated penalty-reduction policy. The Commission remanded for an eligibility determination and, if the company qualified, an award of reasonable fees and expenses tied to those two issues.

Decision snapshot

• Cited standard(s): 29 C.F.R. §§ 1926.20(b)(1), 1926.502(b)(1), 1926.502(b)(2)(i), 1926.502(b)(9), 1926.451(e)(1), 1926.451(g)(4)(i), 1926.451(c)(2), 1926.451(f)(7), and 1926.454(a)
• Outcome: The Commission partly reversed the fee denial and remanded for eligibility and an award on two portions of the case.
• Key point: A party may prevail under the EAJA by obtaining a reduced characterization or penalty, and the government must justify the position it actually litigated.

Full text (OSHRC public release)

Joseph Watson D/B/A Joseph Watson Masonry, Docket No. 00-1726

SECRETARY OF LABOR,

Complainant,

v.

OSHRC Docket No. 00-1726

JOSEPH WATSON,

(EAJA)

D/B/A JOSEPH WATSON MASONRY,

Respondent.

APPEARANCES:

Howard M. Radzely, Esq., Joseph M. Woodward, Esq., Alexander Fernández, Esq.,

Daniel J. Mick, Esq., Peter J. Vassalo, Esq., Department of Labor, Washington, DC

For the Complainant

Mark A. Waschak, Esq., J. Larry Stine, Esq., Elizabeth K. Dorminey, Wimblerly &
Lawson, P.C., Atlanta, GA

For the Respondent

DECISION

Before: RAILTON, Chairman, ROGERS and THOMPSON, Commissioners.

BY ROGERS and THOMPSON, Commissioners:

Before the Commission is a decision of Administrative Law Judge Ken S. Welsch
denying the application of Joseph Watson, d/b/a Joseph Watson Masonry (JWM) for fees
and expenses under the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504. JWM
incurred these fees and expenses while defending against three citations alleging serious,
willful, and repeat violations of various construction safety standards promulgated under
the Occupational Safety and Health Act of 1970 (OSH Act), 29 U.S.C. § 651-678. For
the reasons given below, we reverse the judge’s decision in part and remand the case.

I. Background

JWM was under contract with Metric Constructors, Inc. to perform masonry and
brickwork on a barracks complex at Hunter Army Air Field in Savannah, Georgia,
pursuant to a contract with the U.S. Army Corps of Engineers (Army Corps). On
February 29, 2000, an OSHA compliance officer (CO) began a planned inspection of the
worksite. As a result of the inspection, OSHA issued JWM three citations alleging a total
of seven serious, willful and repeat violations with a total proposed penalty of $82,000.   

After a hearing in the case, Judge Welsch vacated three alleged violations,
affirmed four violations, recharacterized one of the affirmed violations from willful to
serious, and assessed reduced penalties for all but one of the affirmed items for a total
penalty of $13,000. Upon the judge’s decision becoming a final order of the Commission,
JWM filed for EAJA fees and expenses incurred in its defense of all but the one item
affirmed by the judge, together with the proposed penalty, as alleged. As a threshold
matter, the judge found that JWM was not a prevailing party for the three items that he
affirmed with a reduced characterization and/or lower assessed penalty. He further found
that the Secretary was substantially justified in her position as to those items that he
vacated.

II. Discussion

Under the EAJA, an eligible party that prevails against the federal government in
an adversarial adjudication is entitled to an award of attorney fees and expenses, unless
the government as a party to the proceeding was substantially justified in its position or
special circumstances make an award unjust.

5 U.S.C. § 504(a)(1). At issue here is
whether JWM was a prevailing party with respect to the three violations that were
affirmed but recharacterized and/or assessed lower penalties than proposed, and whether
the Secretary was substantially justified as to those violations for which JWM was the
prevailing party.

A. Prevailing Party

Neither the EAJA nor the Commission’s EAJA Rules define the term “prevailing
party.” However, under Commission EAJA Rule 106(a), 29 C.F.R. § 2204.106(a), “[a]
prevailing applicant may receive an award for fees and expenses in connection with a
proceeding, or in a discrete substantive portion of the proceedings. . . .” Here, it is
undisputed that JWM is a prevailing party as to those items vacated by the judge. On
review, JWM claims that the judge erred in rejecting the company’s claim that it was also
a prevailing party for the affirmed items that were recharacterized and/or assessed a lower
penalty than proposed. We agree.

There is nothing in the language of the EAJA or the Commission’s EAJA Rules to
support the judge’s conclusion that an applicant cannot be a prevailing party if it prevails
only as to penalty or characterization. A party prevails “‘if they succeed on any
significant issue in litigation which achieves some of the benefit the parties sought in
bringing suit.’” Hensley v. Eckerhart , 461 U.S. 424, 433 (1983) (quoted case omitted).
The Commission has held that because “[s]ection 10(a) of the OSH Act . . . specifically
allows a party to contest either the underlying citation, the penalty, or both[,]” a party that
succeeds in its challenge to the proposed penalty has in fact prevailed in a discrete portion
of the case. Pentecost Contracting Corp. , 17 BNA OSHC 2133, 2134-35, 1995-97 CCH
OSHD ¶ 31,382, pp. 44,323-34 (No. 92-3789, 1997) (EAJA) (consolidated cases) (citing
Hensley , supra , and H.P. Fowler Contracting Corp. , 11 BNA OSHC 1841, 1845, 1983-84 CCH OSHD ¶ 26,830, p. 34,358 (No. 80-3699, 1984) (EAJA)). Under this analysis, a
party who succeeds in challenging the proposed characterization of a citation has also
prevailed in a discrete portion of the case. Accordingly, we reverse the judge and find
that JWM was a prevailing party as to the three affirmed violations in question.

B. Substantial Justification

Once an eligible applicant establishes that it is a prevailing party, the Secretary
bears the burden of establishing that her position was substantially justified. See Consol.
Constr. Inc. , 16 BNA OSHC 1001, 1002, 1991-93 CCH OSHD ¶ 29,992, p. 41,072 (No.
89-2839, 1993) (EAJA). The fact that the Secretary lost her case does not automatically
mean that her position lacked substantial justification within the meaning of the EAJA.
Id. Rather, a position is substantially justified if it has a “reasonable basis in both law and
fact” or is “‘justified in substance or in the main’ – that is, justified to a degree that could
satisfy a reasonable person.” Pierce v. Underwood , 487 U.S. 552, 563-66 (1988); C.J.
Hughes Constr. Inc. , 19 BNA OSHC 1737, 1740, 2001 CCH OSHD ¶ 32,501, p. 50,389
(No. 93-3177, 2001) (EAJA). The Secretary must show that (1) there exists a reasonable
basis for the facts alleged, (2) there exists a reasonable basis in law for the theory that she
propounds, and (3) the facts alleged reasonably support the legal theory. Contour
Erection & Siding Sys. Inc. ( Contour Erection ), 18 BNA OSHC 1714, 1716, 1999 CCH
OSHD ¶ 31,822, p. 46,788 (No. 96-0063, 1999); Mautz & Oren, Inc. , 16 BNA OSHC
1006, 1009, 1991-93 CCH OSHD ¶ 29,986, p. 41,066 (No. 89-1366, 1993); Consol.
Constr. Inc. , 16 BNA OSHC at 1002, 1991-93 CCH OSHD at p. 41,072. Here, JWM
claims that the judge erred in finding that the Secretary was substantially justified as to
the violations for which it was a prevailing party. As set forth below, we find that the
Secretary was substantially justified as to all but two items.

1. Citation 1, Item 1

Under this item, the Secretary alleged a violation of 29 C.F.R. § 1926.20(b)(1),

based on JWM’s failure to develop and implement a safety and health program for this
worksite. The judge vacated the violation, finding that the Secretary failed to present
sufficient evidence to establish a violation in light of conflicting testimony at the hearing
regarding whether JWM had a written safety program. The CO testified that he had asked
during the inspection to see a copy of JWM’s safety program, but was told that JWM did
not have one. Several witnesses for JWM testified, however, that the CO had never asked
to see a copy of the safety program during the inspection. The CO admitted that before
the citations were issued, JWM’s owner told OSHA that the company did have a written
safety program, but JWM did not provide OSHA with a copy of the program until
discovery. In evaluating JWM’s EAJA claim as to this item, the judge concluded that the
Secretary’s position was substantially justified because the violation turned on his
resolution of the credibility of the witnesses whose testimony conflicted on this issue.

Although the judge did make a credibility determination in his decision on the
merits of the violation, we find that the Secretary was substantially justified as to this item
for other reasons. Section 1926.20(b)(1) requires that an employer “initiate and maintain”
a safety program, but does not require the safety program to be in writing. Under
Commission precedent, compliance with this standard requires that an employer
adequately implement its program by, for instance, training employees and enforcing
safety work rules. See Northwood Stone & Asphalt, Inc. , 16 BNA OSHC 2097, 2099,
1993-95 CCH OSHD ¶ 30,583, p. 42,348 (No. 91-3409, 1994), aff’d , 82 F.3d 418 (6th
Cir. 1996) (unpublished table decision); J.A. Jones Constr. Co. , 15 BNA OSHC 2201,
2206, 1991-93 CCH OSHD ¶ 29,964, p. 41,025 (No. 87-2059, 1993). In her citation, the
Secretary expressly alleged that JWM had failed to “develop and implement” a safety
program at the subject worksite. The CO testified that at the time of the inspection, he
not only believed that JWM lacked a written safety program, but also that any program
the company did have was not effectively implemented based on his observation of
numerous safety violations and training violations at the worksite. Indeed, JWM
confirmed to the CO that some of its employees had not been given training. According
to the CO, these deficiencies served as the basis in part for his recommendation of this
citation. Thus, even though JWM eventually provided OSHA with evidence that it had a
written safety program, the Secretary’s case was still reasonably based on the evidence
that JWM’s program was not adequately implemented. Accordingly, we find that the
Secretary was substantially justified in her position as to this item.

2. Citation 2, Item 1a

Under this item, the Secretary alleged a violation of 29 C.F.R. § 1926.451(e)(1)

based on JWM’s failure to provide ladders or a safe means of access or egress for its
scaffolds. The judge vacated this item, finding that JWM had in fact provided ladders for
its scaffolds on the date of the inspection. In evaluating JWM’s EAJA application as to
this item, the judge found that the Secretary was substantially justified because there was
evidence that JWM employees did not always use the provided ladders to access the
scaffolds and also that scaffolds were not always provided with ladders.

We disagree with the judge. In her citation, the Secretary alleged that scaffolds
were “not provided with ladders or any other means of safe access/egress.” (Emphasis
added.) However, the evidence presented by the Secretary at the hearing showed that
JWM had, in fact, provided ladders, albeit ones that the Secretary claimed were
inadequate. Indeed, when describing the violation, the CO testified that job-made ladders
leaning against the cited scaffolds were structurally defective. When questioned by the
judge regarding her allegation and the inconsistent testimonial evidence, the Secretary
expressly declined to amend her citation to allege a violation of the more specific
standard governing ladder specifications. Although the Secretary did ask the judge to
“amend the Complaint to conform to the evidence,” the judge left the matter open and the
Secretary never pursued her request either at the hearing or in her post-hearing brief.
Under these circumstances, we find that it was unreasonable for the Secretary to cite a
standard that requires the use of ladders, allege the violation as a failure to provide
ladders, and then proceed to present evidence that focuses on the adequacy of ladders that
were in fact provided. See Contour Erection , 18 BNA OSHC at 1716, 1999 CCH OSHD
at p. 46,788 (in order to establish that her position was substantially justified, the
Secretary must show that the facts alleged reasonably supported her legal theory).
Accordingly, we find that the Secretary was not substantially justified in her position as to
this item.

3. Citation 2, Item 1b

Under this item, the Secretary alleged a willful violation of 29 C.F.R.
§ 1926.451(g)(4)(i)

based on JWM’s failure to provide guardrails or other means of fall
protection on scaffolds. The judge found that the Secretary established a violation of the
cited standard, but affirmed the violation as serious rather than willful. The judge found
that the violation was not willful largely because the Secretary’s willful characterization
was based in part on the ladder violation, which was grouped with this item and vacated
necessarily OSHA’s standards. In evaluating JWM’s EAJA claims for this item, th by the
judge. The judge also found that numerous warnings from the Army Corps to JWM
regarding a recurring problem with guardrail protection were not sufficient to establish
willfulness because some of those conditions may have violated the Army Corps’
standards but not e judge found that his recharacterization of the violation did “not render
JWM the prevailing party.” Nonetheless, the judge noted that the Army Corps’ warnings
to JWM provided the Secretary with substantial justification for the willful charge.

For the reasons discussed above, we find that JWM was a prevailing party as to
this item. In addition, we agree with the judge that the Secretary was substantially
justified as to the willful characterization of this item. A violation is willful if it is
committed “with intentional, knowing or voluntary disregard for the requirements of the
Act or with plain indifference to employee safety.” Williams Enterp. Inc. , 13 BNA
OSHC 1249, 1256, 1986-87 CCH OSHD ¶ 27,893, p. 36,589 (No. 85-355, 1987). See
also Reich v. Trinity Indus. Inc. , 16 F.3d 1149, 1152 (11th Cir. 1994). Here, JWM knew
the requirements of the cited standard because it had been cited for violating the same
standard a year before the subject inspection. The record further establishes that JWM
knew that the cited scaffold lacked guardrails at least a day before the start of the
inspection, but did not abate the condition. Finally, as noted by the judge, the record
establishes that the Army Corps had repeatedly notified JWM about ongoing problems
with deficient scaffold guardrails at the worksite. Contrary to JWM’s claims on review,
the record establishes that these reported problems were not immediately corrected by
JWM. Although in the end, the judge found that the evidence did not support a willful
characterization, we find that the evidence above was sufficient to substantially justify the
Secretary’s prosecution of the willful characterization of this item. See Contour Erection ,
18 BNA OSHC at 1716, 1999 CCH OSHD at p. 46,788 (“that the government’s case
lacked ‘substantial evidence’ does not mandate a conclusion that its case was not
‘substantially justified’”).

We find, however, that the Secretary was not substantially justified in proposing a
$56,000 penalty for this citation item and the vacated ladder item. Having affirmed the
guardrail violation as serious, the judge assessed a penalty of $3,000 for this item. In
evaluating JWM’s EAJA application, the judge – having found that JWM was not a
prevailing party as to this item – did not address whether the Secretary was substantially
justified in proposing a penalty of $56,000. On review, JWM claims that it was
unreasonable for the Secretary to have proposed such a high penalty amount because she
failed to give full credit for JWM’s small size.

We agree. Though the burden of proving substantial justification clearly rests with
the Secretary, she failed to address JWM’s claim in her brief to the Commission.

We
further find from our review of the record that the Secretary’s basis for proposing a
$56,000 penalty was flawed. At the hearing, OSHA Area Director Luis Santiago
explained that a $56,000 penalty was proposed in accordance with OSHA’s Field
Inspection Reference Manual (FIRM), the manual that provides guidelines regarding
OSHA’s internal operations. Santiago testified that even though JWM only had 25
employees, the FIRM directed cutting the usual 60% size reduction in half to 30%
because of the willful characterization. According to Santiago, the FIRM permitted him
to cut the size reduction by an additional 10% in order to ensure the “proper deterrent
effect” for an employer like JWM.

Although the Commission is not bound by the FIRM, Santiago relied upon it to
determine the Secretary’s proposed penalty amount. See, e.g. , Orion Constr. Inc. , 18
BNA OSHC 1867, 1868 n.3, 1999 CCH OSHD ¶ 31,896, p. 47,222 n.3 (No. 98-2014,
1999) (penalty formulas in OSHA’s FIRM not binding on the Commission). Based upon
our review of the current FIRM, we find that Santiago apparently relied on an outdated
version of the manual in calculating the proposed $56,000 penalty.

Contrary to his
testimony, the FIRM in effect at the time of the subject inspection does not direct OSHA
to cut the size reduction for a willful violation in half. That guideline appears in a prior
version of the FIRM, which OSHA changed on March 23, 1995. James W. Stanley,
Deputy Assistant Secretary, Occupational Safety and Health
Administration, Memorandum: FIRM Change: Minimum Serious Willful
Penalty (March 23, 1995).

Thus, there is nothing in the record to establish that the
Secretary had a reasonable basis for her proposed $56,000 penalty. Accordingly, we find
that the Secretary failed to carry her burden of proving substantial justification as to the
proposed penalty for this item.

4. Citation 3, Item 2

Under this item, the Secretary alleged a violation of 29 C.F.R. § 1926.451(f)(7)

for JWM’s failure to have a competent person supervise and/or direct the erection, use
and alteration of scaffolding. The judge vacated this item based on his finding that JWM
had designated its foreman, who had 45 years of experience, as the competent person on
this project. In evaluating JWM’s EAJA application as to this item, the judge found that
the Secretary was substantially justified because the evidence showed that the foreman
lacked formal training and there were numerous scaffolding violations at the worksite for
which the foreman, as JWM’s designated competent person, would have been
responsible.

We agree with the judge that the Secretary was substantially justified as to this
item. A competent person is defined under 29 C.F.R. § 1926.450(b) as “one who is
capable of identifying existing and predictable hazards in the surroundings or working
conditions which are unsanitary, hazardous, or dangerous to employees, and who has the
authorization to take prompt corrective measures to eliminate them.” Here, the CO
observed numerous scaffolding violations, including repeat violations, throughout the
worksite. Further, the CO asked the foreman several questions during the inspection
about basic scaffold safety and the foreman failed to answer the CO’s questions. Under
these circumstances, we find that it was reasonable for the Secretary to infer that the
violative scaffolds had not been erected under the supervision of a competent person and
that the foreman, despite the length of his experience, was incapable of identifying
hazards and taking prompt corrective action. See Superior Masonry Builders, Inc. , 20
BNA OSHC 1182, 1188, 2002-04 CCH OSHD ¶ 32,667, pp. 51,421-22 (No. 96-1043,
2003) (person is competent where “he makes an inspection in a competent manner and
makes a reasonable determination that the condition is safe”; “experience alone does not
qualify the designated employee as a ‘competent person’”); C.J. Hughes Constr. Inc. , 17
BNA OSHC 1753, 1757, 1995-97 CCH OSHD ¶ 31,129, p. 43,473 (No. 93-3177, 1996)
(violation established if a competent person’s actions or failures to act are not
reasonable). Based on this evidence, we find that the Secretary was substantially justified
in her position as to this item.

5. Citation 3, Items 1 and 3

Under these items, the Secretary alleged repeat violations of two scaffolding
provisions with proposed penalties of $5,000 and $8,000, respectively. The judge
affirmed both items as repeat, but nominally reduced the penalty for each violation by
$1,000 and $3,000, respectively. In evaluating JWM’s EAJA claims for these items, the
judge found that JWM was not a prevailing party and, that even if it was, the slight
reductions in penalty were not a reflection on the Secretary’s justification as to the
proposed amounts.

For the reasons discussed above, we find that JWM was a prevailing party as to
these items. We also find, however, that on these facts, including the gravity of the
violations and the size of JWM, the Secretary was substantially justified in proposing
penalties of $5,000 and $8,000.

ORDER

We remand this case to the judge with instructions to determine as a threshold
matter whether JWM is eligible for an award of fees and expenses under the EAJA. See
29 C.F.R. § 2204.105. If JWM is an eligible party, then we direct the judge to award in
accordance with Commission EAJA Rule 107, 29 C.F.R. § 2204.107, the reasonable fees
and expenses for work performed in connection with JWM’s defense of Citation 2, Item
1a, and the proposed penalty for Citation 2, Item 1b.

SO ORDERED.

/s/______

Thomasina V. Rogers

Commissioner

/s/________

Horace A. Thompson, III

Commissioner

Dated: September 6, 2006

RAILTON, Chairman, concurring and dissenting in part:

As a threshold matter, I concur with my colleagues’ analysis and conclusion
regarding JWM’s status as a prevailing party for the citation items in question.  In
addition, I concur with my colleagues’ determination that the Secretary’s prosecution of
Citation 2, Item 1a was not substantially justified. I also concur that the Secretary was
substantially justified in her position as to Citation 2, Item 1b and Citation 3, Item 2, in
characterizing the former citation item as willful, and in proposing penalties of $5,000
and $8,000 for Citation 3, Items 1 and 3, respectively. As to the remaining issues,
however, I believe that my colleagues’ reasoning contradicts Commission precedent and,
in some instances, defies common sense.

My colleagues find that the Secretary was substantially justified in prosecuting
Citation 1, Item 1, which alleged a violation of 29 C.F.R. § 1926.20(b)(1). Even though
JWM informed the Secretary that it had a written safety program and provided her with a
copy of the program during discovery, my colleagues conclude that the Secretary could
still reasonably base her case on evidence that JWM did not adequately implement its
program. For the reasons that follow, I disagree with both their reasoning and conclusion.

First, my colleagues’ reasoning is at odds with their conclusion in the
Commission’s most recently decided EAJA case, Martin C. Heck Brick Contracting Co.
(Heck) , No. 04-0781 (Aug. 2, 2006). In Heck , the Secretary cited the company for failing
to maintain guardrails on a scaffold in violation of 29 C.F.R. § 1926.451(g)(1).

During
the informal conference, the company submitted unsworn written statements from two of
its employees attesting that they were raising the scaffold at the time of the inspection. If
these statements were true, the company’s activities would have been covered by 29
C.F.R. § 1926.451(g)(2)

rather than (g)(1) of that section. Based on these
circumstances, the same majority as in the present case concluded that “the Secretary’s
failure to conduct further factual investigation

. . . was not reasonable, and therefore her position in litigation was not substantially
justified.” Heck , No. 04-0781, slip op. at 7.

Here, the record reflects that Mr. Watson told the CO before the citation was
issued that JWM did, in fact, have a written safety program. Like the employees in Heck ,
Mr. Watson made an unsworn statement contesting the citation’s factual basis. The fact
that the statements at issue in Heck were written and Mr. Watson’s statement was oral is a
distinction without meaning – in both cases the authors of the statements were not under
oath. As I explained in my Heck dissent, “[t]he key issue . . . is whether or not the
secretary was reasonable , not omniscient, in continuing with her litigation.” Id. at 10
(Chairman Railton’s dissent). See also Contour Erection & Siding Sys. Inc. ( Contour
Erection ), 18 BNA OSHC 1714, 1716, 1999 CCH OSHD ¶ 31,822, p. 46,788 (No. 96-0063, 1999) (the government must show that there exists a reasonable basis for the facts
alleged and a reasonable basis in law for the theory that it propounds, and that the facts
alleged will reasonably support the legal theory); Taucher v. Brown-Hruska , 396 F.3d
1168, 1173 (D.C. Cir. 2005) (in context of EAJA, “as in other areas[,] courts need to
guard against being ‘subtly influenced by the familiar shortcomings of hindsight
judgment’” (quoted case omitted)). My colleagues in Heck nonetheless concluded that
the Secretary, if acting reasonably, would have further investigated the factual basis of
her citation after receiving the unsworn written employee statements. Given my
colleagues’ narrow interpretation of substantial justification in Heck , their decision to find
here that Mr. Watson’s oral statement does not require the Secretary to further investigate
whether JWM did, in fact, have a safety program flies in the face of what is now
Commission precedent.

Second, the Secretary’s subsequent receipt of JWM’s written safety program
during discovery served to corroborate Mr. Watson’s unsworn claim and therefore,
should have prompted the Secretary at that point to further investigate the factual basis of
her allegation that JWM had violated section 1926.20(b)(1). In Heck , I stated in my
dissent that the Secretary’s decision to continue prosecuting her case after receiving the
two unsworn written statements was substantially justified because, at that time, “there
was no objectively reliable indication that employees were raising the scaffold.” Heck ,
No. 04-0781, slip op. at 10 (Chairman Railton’s dissent). Likewise, here, before
receiving JWM’s written safety program, the Secretary had been acting on the reasonable
assumption that no such program existed. However, once the written safety program was
handed over during discovery, the Secretary had the “objectively reliable” proof she was
lacking in Heck . Because the existence of a safety program completely undermined the
Secretary’s legal theory under this citation item, she should have evaluated the strength of
her case and modified her arguments, accordingly. Cf. Contour Erection , 18 BNA OSHC
at 1716-17, 1999 CCH OSHD at p. 46,789 (Secretary “should have known that her case,
as then constituted, was no longer substantially justified” where the expert upon whom
she purportedly relied provided testimony during a deposition that undermined her legal
theory); Consol. Constr. Inc. , 16 BNA OSHC 1001, 1005-06, 1991-93 CCH OSHD ¶
29,992, pp. 41,074-75 (No. 89-2839, 1993) (Secretary’s prosecution was no longer
justified where respondent submitted lab report to the Secretary and the Secretary’s
expert, during his deposition, was unable to fully support her position).

Finally, despite my colleagues’ arguments to the contrary, the Secretary has never
contended that JWM failed to adequately implement a safety program. Although the
citation states that “[JWM] did not develop and implement a safety and health program”
for the construction project at issue, the Secretary’s post-hearing brief reflects that her
legal theory from the start was focused solely on JWM’s failure to have developed such a
program. While the record may in fact support the proposition that JWM did not
adequately implement its program, the Secretary simply did not litigate this issue and the
judge likewise never considered it in vacating the citation. See EEOC v. Clay Printing
Co. , 13 F.3d 813, 815 (4th Cir. 1994) (“[m]erits decisions in a litigation, whether
intermediate or final, cannot, standing alone, determine the substantial justification
issue”; nonetheless, “they – and more critically their rationales – are the most powerful
available indicators of the strength, hence reasonableness, of the ultimately rejected
position”); C.J. Hughes Constr. Inc. , 19 BNA OSHC 1737, 1741, 2001 CCH OSHD ¶
32,501, p. 50,390 (No. 93-3177, 2001) (citing favorably to Clay Printing Co. ).

Essentially, my colleagues have raised the issue of inadequate implementation on
the Secretary’s behalf in order to demonstrate that her prosecution was substantially
justified and in doing so, they move beyond the Secretary’s litigation position to all but
find that the judge erroneously vacated the citation item. However, the judge’s
underlying decision to vacate the citation is not before us. The law clearly reflects that a
decision to grant or deny EAJA fees must be based on the pre-litigation and litigation
positions actually taken by the Secretary, and not on positions that she could, or should,
have taken. See 5 U.S.C. § 504(b)(1)(E);

29 C.F.R. § 2204.106;

see also I.N.S. v. Jean ,
496 U.S. 154, 159 (1990) (position of the United States encompasses “both the agency’s
prelitigation conduct and the Department of Justice’s subsequent litigation positions”);
Jacobs v. Schiffer , 204 F.3d 259, 263 (D.C. Cir. 2000) (“[t]he government’s ‘position’
includes both its pre-litigation and litigation positions”). Indeed, with respect Citation 2,
Item 1a, which alleged a violation of the scaffold provision governing ladder access, my
colleagues adhere to this statement of law in finding that the Secretary lacked substantial
justification even though the record clearly contains evidence that supports an alternative
theory of liability. In contrast with their approach to the safety program item, my
colleagues make a point of not raising additional arguments to support the Secretary’s
position as to the ladder item. Under these circumstances, I would find that upon
receiving JWM’s written safety program during discovery, the Secretary should have
realized that her prosecution of the section 1926.20(b)(1) violation was no longer
substantially justified.

Turning to Citation 2, Item 1b, which alleged a violation of 29 C.F.R.
§ 1926.451(g)(4)(i), my colleagues conclude that, even though the violation was properly
characterized as willful, the Secretary’s decision to propose a penalty of $56,000 was not
substantially justified. See OSH Act § 17(a), 29 U.S.C. § 666(a) ($5,000-$70,000 range
for willful violations). In support of this conclusion, my colleagues rely on the
Secretary’s failure to utilize the most recent version of the FIRM. I disagree with my
colleagues’ reliance on the FIRM, and their ultimate conclusion that the Secretary’s
proposed penalty was not substantially justified.

The FIRM contains “only guidelines for internal application that do not have the
force and effect of law and create no substantive or procedural rights to employers,” see
Eric K. Ho , 20 BNA OSHC 1361, 1377 n.23, 2002-04 CCH OSHD ¶ 32,692, p. 51,586
n.23 (No. 98-1645, 2003) (consolidated cases), aff’d , 401 F.3d 355 (5th Cir. 2005),
whereas section 17(j) of the OSH Act, 29 U.S.C. § 666(j),

requires the Commission to
give due consideration to certain factors before imposing a penalty. S ee Spirit Homes,
Inc. , 20 BNA OSHC 1629, 1632, 2002-04 CCH OSHD ¶ 32,714, p. 51,822 (No. 00-1807,
2004) (consolidated cases). A penalty that is not in compliance with the FIRM is not
necessarily out of compliance with section 17(j), i.e. , the Commission could give due
consideration to the various statutory penalty factors but then assess a penalty amount that
diverges from what is recommended in the FIRM. Indeed, in analyzing the proposed
penalties for Citation 3, Items 1 and 3, and agreeing that the Secretary was substantially
justified, my colleagues recognize that the Secretary’s consideration of the statutory
penalty factors controls whether a proposed penalty is substantially justified, not her view
of those factors as set forth in the FIRM. Thus, the relevant question here is whether, in
proposing a penalty of $56,000, the Secretary gave due consideration to the factors in
section 17(j). I would find that the record, as described by my colleagues, reflects that
she did. Indeed, my colleagues do not disagree that the Secretary was substantially
justified in characterizing this citation item as willful and her proposed penalty of $56,000
was certainly consistent with such a characterization.

Based on the foregoing analysis, I respectfully dissent in part from my colleagues’
decision.

/s/____

W. Scott Railton

Chairman

Dated: September 6, 2006

Secretary of Labor,

Complainant,

v.

OSHRC Docket No. 00-1726

Joseph Watson, d/b/a Joseph Watson Masonry,

EAJA

Respondent.

Before: Administrative Law Judge Ken S. Welsch

DECISION ON FEE AND EXPENSE APPLICATION

Joseph Watson, d/b/a Joseph Watson Masonry (JWM), seeks attorney’s fees and
expenses in accordance with the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504, 29 C.F.R.
§ 2204.101 et seq. , for costs incurred in its defense against three citations and proposed penalties
issued by the Secretary on August 25, 2000. For the reasons stated below, JWM’s application is
denied.

Background

JWM was hired by Metric Constructors, Inc., to perform masonry and brickwork on a
new barracks complex at Hunter Army Air Field in Savannah, Georgia. Metric was under
contract with the United States Army Corps of Engineers. After an inspection by Occupational
Safety and Health Administration (OSHA) compliance officer Xavier Aponte, the Secretary
issued one citation to Metric and three citations to JWM, alleging serious, willful, and repeated
violations of the Occupational Safety and Health Act of 1970 (Act).

Item 1 of citation no. 1 alleged a serious violation of 29 C.F.R. § 1926.20(b)(1) for
failing to initiate and maintain a safety program at the worksite. Item 2a alleged a serious
violation of 29 C.F.R. § 1926.502(b)(1) for failing to maintain the top rails of its guardrail
systems at least 39 inches above the working level exposing employees to fall hazards greater
than 11 feet. Item 2b alleged a serious violation of 29 C.F.R. § 1926.502(b)(2)(i) for failing to
maintain midrails of its guardrail system between 19.5 and 21 inches above the working level.
Item 2c alleged a serious violation of 29 C.F.R. § 1926.502(b)(9) for failing to place flags with
high visibility materials at no more than 6-foot intervals on wire rope used for top rails.

Item 1a of citation no. 2 alleged a willful violation of 29 C.F.R. § 1926.451(e)(1) for
failing to provide ladders or other means of safe access and egress for employees performing
masonry work on scaffolding. Item 1b alleged a willful violation of 29 C.F.R. §
1926.451(g)(4)(i) for failing to provide standard guardrails or other means of fall protection for
employees performing masonry work on scaffolding.

Item 1 of citation no. 3 alleged a repeated violation of 29 C.F.R. § 1926.451(c)(2) for
failing to erect a scaffold using base plates and mud sills. Item 2 alleged a repeated violation of
29 C.F.R. § 1926.451(f)(7) for failing to erect scaffolds under the supervision of a competent
person. Item 3 alleged a repeated violation of 29 C.F.R. § 1926.454(a) for failing to provide
safety training in scaffolding.

The court issued a decision and order in this matter on January 24, 2002, which vacated
item 1 of citation no. 1, item 1a of citation no. 2, and item 2 of citation no. 3. The other items
and subitems were affirmed (Item 1b of citation no. 2 was affirmed as serious rather than
willful), with some reduction in the proposed penalties. The decision became a final order of
the Review Commission on February 28, 2002.

On March 8, 20002, JWM filed an application for attorney’s fees and expenses in the
amount of $32,616.44. The Secretary filed a response objecting to JWM’s application on April
4, 2002. JWM filed a reply on April 19, 2002.

The Equal Access to Justice Act

The EAJA allows prevailing parties in an administrative proceeding involving the
Federal government to recover attorney’s fees and expenses unless the government agency’s
position was substantially justified or special circumstances make an award unjust. It ensures
that an eligible applicant is not deterred from seeking review of, or defending against, unjustified
government actions. Ewing v. Rodgers, 826 F.2d 967 (10th Cir. 1987). The EAJA does not
routinely award attorney’s fees and expenses to a prevailing party. While the applicant has the
burden of proving eligibility, the government has the burden of demonstrating that its action was
substantially justified. Dole v. Phoenix Roofing, Inc., 922 F.2d 1202, 1209 (5th Cir. 1991).

Eligibility

The party seeking an award for fees and expenses must submit an application within 30
days of the final disposition in an adversary adjudication. 5 U.S.C. § 504(a)(2). JWM timely
filed its application.

The prevailing party must meet the established eligibility requirements before it can be
awarded attorneys’ fees and expenses. Commission Rule 2204.105(b)(4) requires that an
eligible employer be “a . . . corporation . . . that has a net worth of not more than seven million
dollars and employs not more than five hundred employees . . .” Eligibility is determined as of
the date of the notice of contest. Rule 2204.105(c).

In its application, JWM owner Joseph Watson, by affidavit, states that the company was
a corporation with a net worth of less than 2 million dollars and fewer than 50 employees at the
time of the OSHA inspection. JWM attached no documentation (such as tax records, balance
sheets, or accounting statements) supporting its statement of net worth.

The Secretary argues that JWM’s application should be dismissed because it fails to
provide sufficient evidence that meets the eligibility requirements. Commission Rule 2204.202
requires that the applicant “provide with its application a detailed exhibit showing the net worth
of the applicant . . . that provides full disclosure of the applicant’s assets and liabilities. . .”

The record in this case leaves little doubt that JWM met the eligibility requirements of
the EAJA at all times of its existence. Commission Rule 2204.202 provides, “The Commission
may require an applicant to file additional information to determine its eligibility for an award.”
The appropriate course of action in this case would be to allow JWM to supplement its
application, not to dismiss it. That step is unnecessary, however, because it is determined below
that JWM is not entitled to attorney’s fees and expenses.

Prevailing Party

Section 504(a)(2) of 5 U.S.C. provides in pertinent part:

A party seeking an award of fees and other expenses shall within thirty days of
the final disposition in the adverse adjudication submit to the agency an
application which shows that the party was the prevailing party.

The parties agree that JWM was the prevailing party with regard to the vacated items
(item 1 of citation no. 1, item 1a of citation no. 2, and item 2 of citation no. 3). JWM also claims
that it is the prevailing party on item 1a of citation no 2. because the court reclassified that item
from willful to serious, and on items 1 and 3 of citation no. 3 because the court assessed lower
penalties than those proposed by the Secretary.

JWM’s argument that it is the prevailing party with regard to the reclassified item and the
items with lowered penalties is rejected. In those instances, the court found the violations to
exist, affirmed the items, and imposed penalties.

The Commission is the final arbiter of penalties in all contested cases. Receiving a lower
penalty than the one proposed does not result in the noncompliant company’s “prevailing” over
the Secretary. The court slightly reduced the penalties based on the company’s small size. The
reduction in penalty is no reflection on the Secretary’s justification in bringing the charges on
these items.

Similarly, the reclassification of item 1b of citation no. 2 from willful to serious does not
render JWM the prevailing party. Item 1b was grouped with item 1a and classified as willful by
the Secretary. As discussed, infra, although item 1a was vacated, the Secretary was substantially
justified in her position on that item. Vacating item 1a resulted in much of the Secretary’s
evidence of willfulness on grouped items 1a and 1b becoming moot. Under item 1b, the
Secretary proved that JWM violated § 1926.451(g)(4)(i) by failing to provide guardrails on
scaffolds. The Secretary presented evidence that JWM received numerous warnings from the
Corps regarding ongoing deficiencies in its scaffolding guardrails. In a close decision, the court
declined to classify the violation as willful because “[t]he Corps has more stringent safety
standards than does OSHA, so that not all of its warnings to JWM resulted from OSHA
violations” (Decision, p. 11). The record of previous warnings did, however, provide the
Secretary with substantial justification to charge a willful violation.

The items that will be analyzed for substantial justification will be only those three items
vacated in the decision and order.

Substantially Justified

The Secretary must prove that its position was substantially justified. “The test of
whether the Secretary’s action is substantially justified is essentially one of reasonableness in
law and fact.” Mautz & Oren, Inc., 16 BNA OSHC 1006 (No. 89-1366, 1993). The
reasonableness test comprises three parts: the Secretary must show “that there is a reasonable
basis . . . for the facts alleged . . . that there exists a reasonable basis in law for the theory it
propounds and that the facts alleged will reasonably support the legal theory advanced.” Gaston
v. Bowen, 854 F2d. 379, 380 (10th Cir. 1988). There is no presumption that the Secretary’s
position was not substantially justified simply because she lost the case. Also, it does not require
that the Secretary’s decision to litigate be based on a substantial probability of prevailing. See S
& H Riggers & Erectors, Inc, v. OSHRC , 672 F.2d 426, 430 (5th Cir. 1982).

The Alleged Violations

Item 1 of Citation No. 1: § 1926.20(b)(1)  

Section 1926.20(b)(1) provides:

It shall be the responsibility of the employer to initiate and maintain such
programs as may be necessary to comply with this part.

Compliance officer Aponte testified that he had asked JWM owner Joseph Watson and
JWM foreman Jessie Fowler if JWM “had any kind of work rule or procedures of inspections,
training, or any kind of safety program and there was none” (Tr. 673-674). Aponte stated that
Fowler “was not aware of the existence of any kind of recent document or recent safety
program” (Tr. 674).

Fowler contradicted Aponte at the hearing. He stated that he had a copy of the safety
program on site in his truck at the time of Aponte’s inspection (Tr. 395). Aponte stated that
Watson had told him that JWM did not have a safety program (Tr. 674). Watson also
contradicted Aponte’s statement and testified that JWM did have a safety program on the site
(Tr. 35).

The determination of this issue turned upon the credibility of the witnesses. If Aponte’s
testimony had been credited, the Secretary would have prevailed on this issue. “[A] case which
truly turns on credibility issues is particularly ill-suited for the reallocation of litigation fees
under the EAJA.” Consolidated Construction, Inc., 16 BNA OSHC 1001, 1006 (No. 89-2839,
1993).

At the time the Secretary went to hearing, she was relying on information provided by
Aponte that JWM did not have a safety program. JWM failed to produce a safety program
during the inspection, even though the owner and the foreman testified that Aponte questioned
them on this issue. It was not unreasonable for the Secretary to accept Aponte’s statements that
JWM’s management personnel had told him there was no safety program. It was logical to
assume that JWM would have produced the safety program if it existed. Based on this
information, the Secretary was substantially justified in her position. No costs are awarded for
this item

Item 1a of Citation No. 2: § 1926.451(e)(1)

Section 1926.451(e)(1) provides:

When scaffold platforms are more than 2 feet (0.6 m) above or below a point of
access, portable ladders, hook-on ladders, attachable ladders, stair towers
(scaffold stairways/towers), stairway-type ladders (such as ladder stands), ramps,
walkways, integral prefabricated scaffold access, or direct access from another
scaffold, structure, personnel hoist, or similar surface shall be used. Cross braces
shall not be used as a means of access.

The court dismissed this item because the Secretary focused on the adequacy of the
ladders provided by Metric, rather than on whether employees were actually using the ladders as
required by the cited standard. As noted in this judge’s decision (Decision, p. 8):

The Secretary’s basis for citing item 1 appears to have changed between
the date the citation was issued and the date of the hearing. Each instance of item
1 in the citation charges JWM with a violation of § 1926.451(e)(1) for permitting
employees to work on “a scaffold that was not provided with ladders.” At the
hearing, compliance officer Aponte conceded that the scaffolds were provided
with ladders.

Aponte testified that he observed two job-made ladders leaning against the
scaffolds that are the subject of this item. It was Aponte’s opinion that the job-made ladders were structurally defective (Exhs. R-27, R-31; Tr. 562-564, 590-591). The Secretary’s examination of Aponte led to some confusion regarding
wherein the alleged violation occurred, with Aponte contending that the
adequacy of the ladders was at issue:

Q.: Was this ladder a part of any of the violations that you had found?

Aponte: There were some problems with the ladder. So one of the job-made ladders that had some structural defects on it [sic]. It did not
have any supports or filler blocks between the cleats.

Judge Welsch: The question she asked was: Is that ladder that’s depicted
at that portion of the video part of any of the alleged violations that
you cited in this case?

Aponte: Yes.

Judge Welsch: Do you know which one?

Aponte: That would be the citation for 451(e)(1). . .

Q.: Do you have any knowledge as to whether employees used this ladder?

Aponte: No, ma’am.

(Tr. 591).

Despite this confusion at the hearing, there was evidence that JWM’s employees did not
always use the ladders to access the scaffolds, and that at times scaffolds were not provided with
ladders (Decision , p. 7):

The record establishes both that Metric provided ladders for access to the
scaffolds, and that the Corps had ongoing problems with JWM’s employees
failing to use the ladders. Gotthardt stated (Tr. 86):

I had had numerous discussions with regard to ladders
[prior to February 29, 2000]. As scaffolds would be moved from
one location to another, the ladders seemed like they wouldn’t
move with the scaffolds, and about the time that we would get the
scaffold or the contractor would get the scaffold set up properly
with all the ladders and so forth, they would finish their work in
that area, and they would start moving to another location.

Gotthardt’s testimony supports the conclusion that JWM’s employees were not
consistently using ladders to gain access to the scaffolds. Evidence is substantial if it is the kind
of evidence a reasonable mind might accept as adequate to support a conclusion. Capitol
Tunneling, Inc., 15 BNA OSHC 1304 (No. 89-2248, 1991). The Secretary had a reasonable
basis for alleging that JWM failed to provide safe access to the scaffolds used by its employees.
No costs are awarded for this item.

Item 2 of Citation No. 3: § 1926.451(f)(7)

Section 1926.451(f)(7) provides:

Scaffolds shall be erected, moved, dismantled, or altered only under the
supervision and direction of a competent person qualified in scaffold erection,
moving, dismantling or alteration. Such activities shall be performed only by
experienced and trained employees selected for such work by the competent
person.

Section 1926.450(b) defines a competent person as “one who is capable of identifying
existing and predictable hazards in the surroundings or working conditions which are unsanitary,
hazardous, or dangerous to employees, and who has authorization to take prompt corrective
measures to eliminate them.”

Foreman Jessie Fowler was JWM’s designated competent person (Tr. 823). Fowler
supervised JWM’s employees while they erected scaffolds. Fowler inspected the scaffolds after
they were erected (Tr. 387-388).

The Secretary charged that Fowler was not qualified as a competent person based on his
lack of formal safety training and the noncompliance of the scaffolds with the safety standards.
Fowler conceded that he had never taken a class in scaffold safety training (Tr. 348).

The court vacated this item based on Fowler’s 45 years of experience in erecting
scaffolds, and on his testimony in which he demonstrated that he was capable of identifying
existing and predictable hazards on scaffolds.

Despite the dismissal of this item, the Secretary was substantially justified in her position
that Fowler was not a competent person under the cited standard. Fowler had no formal safety
training. The scaffolds erected under his supervision the day of the OSHA inspection violated
several safety standards, most notably the guardrail standard at § 1926.451(g)(4)(i). The
employees’ exposure to fall hazards were in Fowler’s “direct line of sight” during the OSHA
inspection (Tr. 575-578, 682). No costs are awarded for this item.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The foregoing decision constitutes the findings of fact and conclusions of law in
accordance with Federal Rule of Civil Procedure 52(a).

ORDER

Based upon the foregoing decision, it is hereby ORDERED that:

JWM’s application for attorney’s fees and expenses is denied.

/s/                                                    

KEN S. WELSCH

Judge

Date: October 14, 2002