Roy's Construction, Inc.

Plain-English summary

Roy's Construction filed a late notice contesting three citations with $40,600 in proposed penalties and obtained relief from the final order under Federal Rule of Civil Procedure 60(b). The judge then ordered OSHA to file a complaint so the merits could be litigated. OSHA refused because it believed the Rule 60(b) ruling was erroneous and wanted to preserve an appeal. After a show-cause order, the judge treated OSHA as in default and vacated the citations. The Commission held that the judge acted within his discretion because OSHA knowingly defied the filing order and could have sought interlocutory review instead. It affirmed the vacatur of all citations.

Decision snapshot

• Cited standard(s): None identified in the decision.
• Outcome: All three citations and the proposed $40,600 penalty were vacated as a default sanction.
• Key point: A party that refuses to comply with a judge's order risks default, even when it believes the underlying ruling is legally wrong.

Full text (OSHRC public release)

Roy's Construction, Inc., Docket No. 04-1409

DECISION

SECRETARY OF LABOR,

Complainant,

v.

OSHRC Docket No. 04-1409

ROY’S CONSTRUCTION, INC.,

Respondent.

APPEARANCES:

Ronald Gottlieb, Attorney; Charles F. James, Counsel for Appellate Litigation; Daniel J.
Mick, Counsel for Regional Trial Litigation; Joseph M. Woodward, Associate Solicitor;
Howard M. Radzely, Solicitor; U.S. Department of Labor, Washington, DC

For the Complainant

Charles S. Russell, Jr., Esq.; Moore, Dodson & Russell, P.C.; St. Thomas, VI

For the Respondent

DECISION

Before: RAILTON, Chairman; and ROGERS, Commissioner.

BY THE COMMISSION:

In April 2004, the Occupational Safety and Health Administration issued three citations
to Roy’s Construction, Inc. (Roy’s Construction) alleging that it violated the Occupational
Safety and Health Act of 1970, 29 U.S.C. §§ 651-678 (OSH Act), at its workplace in St.
Thomas, U.S. Virgin Islands. Roy’s Construction filed its notice of contest (NOC) to the
citations outside the fifteen working day period specified by the Act, and sought relief from final
judgment under Federal Rule of Civil Procedure 60(b). After a hearing, Chief Administrative
Law Judge Irving Sommer granted the company’s request for relief and ordered the Secretary to
file a complaint within twenty days.

In a letter to the judge, the Secretary refused to file her complaint, explaining that she
believed the judge’s decision granting relief under Rule 60(b) was clearly erroneous and that her
decision not to file a complaint preserved her right to appeal. After a show cause order brought
no change in the Secretary’s position, the judge vacated the citations issued to Roy’s
Construction. For the reasons discussed below, we find that the judge’s sanction of dismissal
was appropriate and affirm his order.

DISCUSSION

Under Commission Rule 101(a), 29 C.F.R. § 2200.101(a), when a party fails to proceed
“as provided by [the Commission] rules or as required by the Commission or Judge, he may be
declared to be in default either on the initiative of the Commission or Judge,” after being
afforded an opportunity to show cause why he should not be held in default. Here, by refusing to
file a complaint, the Secretary failed to comply with Commission Rule 34(a)(1), 29 C.F.R.
§ 2200.34(a)(1),

and the judge’s order. Even though the Secretary was warned that her refusal
to file a complaint would result in a dismissal, the Secretary refused to proceed. The Secretary’s
decision left the judge with only two choices: either bend to the will of the Secretary and
dismiss the NOC, or vacate the citations. Rather than reversing the Rule 60(b) order, the judge
chose the latter option. Under these circumstances, we find that the judge did not abuse his
discretion under Commission Rule 101(a) by vacating the citations.

See generally Chartwell
Corp. , 15 BNA OSHC 1881, 1883-84, 1992 CCH OSHD ¶ 29,817, pp. 40,626-27 (No. 91-2097,
1992) (while “[p]rejudice and contumacy are factors to be considered in determining whether a
severe sanction is warranted,” other factors are also relevant).

Under Commission Rule 101(b), 29 C.F.R. § 2200.101(b), a sanction imposed under
subsection (a) may be set aside “[f]or reasons deemed sufficient by the Commission or Judge
and upon motion expeditiously made.” In asking the Commission for relief from the judge’s
order, the Secretary argues that she would have had no way of recouping litigation costs had she
filed a complaint and ultimately prevailed on the merits. However, the costs associated with
litigation do not provide the Secretary with a legal basis for refusing to file a complaint in
defiance of a judge’s order. Cf. Hallstrom v. Tillamook County , 493 U.S. 20, 32-33 (1989)
(while sympathetic to argument that “dismissal would unnecessarily waste judicial resources,”
Court gave retroactive effect to its decision which resulted in dismissal of action after nearly 4
years of litigation and a determination on merits by the district court).

The Secretary also argues that the procedure she utilized here is “the same procedure the
Commission has previously used to review grants of Rule 60(b) relief.” In support of this
proposition, she cites primarily to Northwest Conduit Corp. ( Northwest Conduit) , 18 BNA
OSHC 2072, 1999 CCH OSHD ¶ 32,027 (No. 97-851, 2000), and Jackson Associates of Nassau ,
16 BNA OSHC 1261, 1993 CCH OSHD ¶ 30,140 (No. 91-0438, 1993). Although these cases
demonstrate that the Commission has not always treated the Secretary’s failure to file a
complaint as a barrier to reaching the merits of the Rule 60(b) issue, the Commission has never
affirmatively stated that the Secretary may refuse to file a complaint in order to obtain
Commission review.

Indeed, only Northwest Conduit was analyzed through the lens of Commission Rule
101(b).

18 BNA OSHC at 2073, 1999 CCH OSHD at p. 47,853. While the Commission in that
case set aside the judge’s vacatur order, excusing the Secretary’s failure to file a complaint, the
case before us differs from Northwest Conduit in two key respects. First, in Northwest Conduit,
the Secretary could not have successfully petitioned for interlocutory review under Commission
Rule 73, 29 C.F.R. § 2200.73, because there was only one Commissioner when the judge ordered
the Secretary to file a complaint. Id. Here, the Secretary could have petitioned for such review
because there were two Commissioners at the relevant time. Second, in contrast to Northwest
Conduit , the Secretary has foreclosed the possibility of litigating the merits of this case: if we
were to reach the Rule 60(b) issue and decide in favor of the Secretary, the NOC would be
dismissed and Roy’s Construction would be required to pay the penalty without the benefit of a
hearing on the merits; if, upon reaching the Rule 60(b) issue, we were to decide in favor of Roy’s
Construction, there would still be no such hearing because the Secretary has waived her right to
litigate the merits of the case. In addition to these factual distinctions, we emphasize that the
Commission in Northwest Conduit warned the Secretary that “‘any party who fails to comply
with a Commission order, does so at its peril.’” Id. (quoting Trinity Indus. Inc. , 15 BNA OSHC
1579, 1583 n.6, 1992 CCH OSHD ¶ 29,662, p. 40,185 n.6 (No. 88-1547, 1993), rev’d on other
grounds , 16 F.3d 1149 (11th Cir. 1994)). In light of this warning and the two distinguishing
factors, we find that Northwest Conduit does not compel us to set aside the vacatur order.
Because we see no other reason sufficient to justify setting aside this sanction, we refuse to
exercise our discretionary authority under Rule 101(b).

Accordingly, we affirm the judge’s vacatur order.

SO ORDERED.

_/s/_________

W. Scott Railton, Chairman

_/s/___

Dated:   June 1, 2006                                                   Thomasina V. Rogers, Commissioner

SECRETARY OF LABOR,

Complainant,

v.

Docket No. 04-1409

ROY’S CONSTRUCTION, INC.,

Respondent.

DECISION AND ORDER

The Secretary failed to file a complaint in the instant case, as ordered.

Accordingly, the citations issued to the Respondent on April 15, 2004 are
VACATED in their entirety.

SO ORDERED.

/s/

IRVING SOMMER

Chief Judge

DATED: OCT 13, 2005

Washington, D.C.

SECRETARY OF LABOR,

Complainant,

v.

OSHRC DOCKET No. 04-1409

ROY’S CONSTRUCTION, INC.,

Respondent.

Appearances:

Terrence Duncan, Esquire                          Charles S. Russell, Jr., Esquire

U.S. Department of Labor                          Moore, Dodson & Russell, P.C.

New York, New York                                 St. Thomas, Virgin Islands

For the Complainant.                                             For the Respondent.

Before:            Chief Judge Irving Sommer  

DECISION AND ORDER

This matter is before the Occupational Safety and Health Review Commission (“the
Commission”) pursuant to section 10(c) of the Occupational Safety and Health Act of
1970, 29 U.S.C. § 651 et seq . (“the Act”), for the sole purpose of determining whether the
Secretary’s motion to dismiss Respondent’s notice of contest (“NOC”) should be granted.

The Occupational Safety and Health Administration (“OSHA”) conducted an
inspection of Respondent’s work site on December 10, 2003; the work site was the
Charles Harwood Medical Complex project (“the Project”) on St. Croix in the Virgin
Islands. As a result of the inspection, OSHA issued to Respondent a Citation and
Notification of Penalty (“Citation”) that alleged serious, willful and “other” violations of
OSHA standards and proposed a total penalty of $40,600.00. On April 15, 2004, OSHA
mailed the Citation by certified mail, return receipt requested, to Respondent’s mailing
address on St. Thomas in the Virgin Islands, and the Citation was received and signed for
on April 17, 2004. Section 10(a) of the Act requires an employer to notify the Secretary of
its intent to contest a citation within 15 working days of receipt, and the failure to file a
timely NOC results in the citation becoming a final order of the Commission by operation
of law. In light of the date of receipt of the Citation, Respondent should have filed its NOC
by May 7, 2004. Respondent did not file an NOC by that date; however, it did file one on
August 17, 2004. The Secretary filed a motion to dismiss the NOC as untimely, and the
hearing in this matter was held on April 13, 2005. Both parties have filed post-hearings
briefs.

The Secretary’s Evidence

Jose Carpena, the area director (“AD”) for the Puerto Rico office of OSHA,
testified in regard to the circumstances surrounding the subject Citation.

His office mailed
the Citation on April 15, 2004, by certified mail, return receipt requested, to Respondent’s
mailing address on St. Thomas in the Virgin Islands, and the Citation was received and
signed for on April 17.

When no NOC was received, a debt collection letter was sent to
Respondent on June 8, advising that the penalty was due. On June 17, Gerald Roy,
Respondent’s president, called the OSHA office and spoke to CO Ortiz, who told him that
the individual in the office who handled debt collection letters would call him.

That
individual called Mr. Roy that same day, but Mr. Roy was in a meeting and indicated he
would return the call. Mr. Roy called the OSHA office again on July 6, and he again spoke
to CO Ortiz, who told him that the contest period was over, that the Citation had become
final, and that if he wanted to appeal the matter he should do so to the Commission.

On
August 17, Mr. Roy faxed a letter to the OSHA office, wherein he disputed the Citation
and penalty; specifically, he requested “that this issue be opened to further discussion due
to the fact that all information pertinent to the incident was not immediately available to
Ms. Rivera at the time the penalty was assessed.”

On August 18, OSHA sent a letter to
Mr. Roy, explaining once more that the contest period had ended, that the Citation had
become a final order, and that he could appeal directly to the Commission; the letter also
provided the Commission’s address. On August 23, Mr. Roy sent a letter to the
Commission in which he stated that he wished “to appeal the citation based on
extraordinary circumstances and a misunderstanding as to the events and individuals
involved in the citation.” At the hearing, AD Carpena stated that, based on OSHA’s
records relating to Roy’s Construction, the company had been cited eight times; on four of
those occasions, the company had contested the citations before the end of the contest
date, and on the other occasions, the company had either requested an informal conference
within the 15-day period or had elected to pay the penalty proposed. (Tr. 7-21; C-1-5).

The Respondent’s Evidence

James Breunlin is a site superintendent for Respondent, and he was the site
supervisor for the Project. He testified that he was not on the Project when the OSHA CO
initially arrived on December 10, 2003, but that he was there the following day when she
returned to continue her inspection. Mr. Breunlin further testified that he cooperated with
the CO, that he was the person with whom she held a telephonic closing conference about
six weeks later, and that he understood from what she said that a citation would be issued
and penalties levied unless the company “started an appeal process.” Mr. Breunlin stated
that Roy’s Construction hired a former OSHA inspector within two to three days of the
inspection to make sure its abatements of the cited conditions were done correctly and to
monitor future OSHA compliance on the Project. (Tr. 31-32).

Noreen Taylor, Respondent’s office administrator, testified that the company had
20 to 25 employees at the time of the inspection and that about five had been office
workers. She further testified that while she could not say with any certainty when she first
saw the Citation, it could have been in May or June of 2004. She explained that the
company had moved to a new office between April and May of that year and that the
entire process from beginning to end, including unpacking and getting settled in the new
office, probably took six to eight weeks.

She also explained that Respondent received its
mail at a mailbox at the Nisky Center, a private company.

When certified mail arrived
for Respondent, a Nisky employee would sign for it, and the employee of Respondent who
picked up the mail would then sign in a book to confirm receipt. Ms. Taylor noted that
although she was the only one who picked up the mail currently, she and Bernita Roy, Mr.
Roy’s wife, were the two persons who picked up the mail at the time the Citation was
issued; Mrs. Roy had picked up the mail most of the time, and if it was something
important she passed it on to Mr. Roy.

Ms. Taylor said she had gone to the Nisky Center
to see if they had a record of who had signed for the Citation, but they did not. She also
said she did not know who had signed the return receipt for the Citation but that it would
have been an employee of Nisky. (Tr. 32-46).

Craig Farley, a project manager with Respondent, testified that he was familiar with
the Project and that he had talked to Mr. Breunlin about the alleged violations. He further
testified that he had first seen the Citation around the second week of June 2004. He
explained that Respondent had decided to move its office to a new location because the
old lease was expiring and the landlord wanted to double the rent. He also explained that
the new premises required substantial construction and that that, combined with moving,
unpacking and setting up the new office, took about a month.

Mr. Farley indicated he
became aware of the June 8 letter from OSHA when it arrived in the office and that he
immediately brought it and the Citation to Mr. Roy’s attention. (Tr. 47-56).

Gerald Roy, the owner and operator of Roy’s Construction for 25 years, testified
that the company had moved during the spring of 2004 as its old lease was expiring and
the landlord had wanted to double the rent; the build-out of the new premises and the
move, including unpacking and sorting everything out, had taken place in April 2004. He
further testified that his company had been cited before, that he knew he had to contact
OSHA within 15 days after receiving a citation, and that he had usually done so in an
attempt to have the penalties reduced. Mr. Roy said he was not aware of either the Citation
or the June 8 letter from OSHA until around the middle of June, when Mr. Farley brought
them to his attention; he was very upset, especially about the penalty, and he said he called
OSHA on June 17 so that he could “[o]pen it back up again for discussion.”

He spoke to
CO Ortiz, because CO Rivera was on vacation, and explained that the cited employee had
been working for another subcontractor and that his company had had only one employee
on the job; according to Mr. Roy, the CO could not find the file and said that Mr. Roy
would have to wait until CO Rivera came back. It was Mr. Roy’s understanding that
someone from OSHA would call him, but, when they did not, he called again on July 6
and spoke to CO Ortiz again, which resulted in his letter of August 16. Mr. Roy said the
August 16 letter was accurate and that while it did not mention the company’s move that
had not been the purpose of the letter. (Tr. 57-81).

Discussion

The record plainly shows that Respondent did not file an NOC within the requisite
15 working-day period. However, an otherwise untimely NOC may be accepted where the
delay in filing was caused by deception on the part of the Secretary or her failure to follow
proper procedures. A late filing may also be excused, pursuant to Federal Rule of Civil
Procedure 60(b) (“Rule 60(b)”), if the final order was entered as a result of “mistake,
inadvertence, surprise or excusable neglect” or “any other reason justifying relief,
including mitigating circumstances such as absence, illness or a disability that would
prevent a party from protecting its interests.” See Branciforte Builders, Inc. , 9 BNA OSHC
2113 (No. 80-1920, 1981). There is no evidence that the untimely filing in this case was
caused by any deception on the part of the Secretary or her failure to follow proper
procedures. Respondent contends, rather, that the late filing should be found to be
“excusable neglect” pursuant to Rule 60(b) and the Third Circuit’s decision in George
Harms Constr. Co. v. Chao , 371 F.3d 156 (3d Cir. 2004) (“ George Harms ”).

In George Harms , the court reaffirmed its holding in J.J. Hass Co. v. OSHRC , 648
F.2d 190, 195 (3d Cir. 1981), that the Commission had jurisdiction to consider late-filed
NOC’s.

371 F.3d at 163. The court then discussed the Supreme Court’s decision in
Pioneer Invest. Serv. v. Brunswick Assoc. , 507 U.S. 380 (1993) (“ Pioneer ”), which
addressed the “excusable neglect” standard. The court concluded that Pioneer’s broad
construction of the excusable neglect standard applied to Commission cases implicating
that standard, and it then went on to set out the factors the Supreme Court identified to
consider: “the danger of prejudice ..., the length of the delay and its potential impact on
judicial proceedings, the reason for the delay, including whether it was within the
reasonable control of the movant, and whether the movant acted in good faith.” 371 F.3d
at 163-64 (citing Pioneer , 507 U.S. at 395). The court noted that “a court must take into
account all relevant circumstances surrounding a party’s failure to file” and that the
“control” factor “did not necessarily trump all the other factors.” 371 F.3d at 164. The
court also noted that, as the Supreme Court stated in Pioneer , “the lack of any prejudice to
the [opposing party] or to the interests of efficient judicial administration, combined with
the good faith of respondents and their counsel, weigh strongly in favor of permitting the
tardy claim.” 371 F.3d at 164 (citing Pioneer , 507 U.S. at 398).

As the court points out in George Harms , the Commission has recognized that, in
almost all Rule 60(b) late filing cases, “it is a given that there is a lack of prejudice to the
Secretary or to the interests of efficient judicial administration, combined with a lack of
bad faith by the employer.” 371 F.3d at 164 (citing CalHar Constr., Inc. , 18 BNA OSHC
2151, 2153 n.5 (No. 98-0367, 2000)). I find, accordingly, that excusing the late filing in
this case would not prejudice either the Secretary or the interests of efficient judicial
administration. This is particularly true because, while Respondent’s NOC was filed on
August 17, 2004,

the Secretary’s motion to dismiss was not filed until December 7,
2004.

I also find that Respondent acted in good faith in this matter; Mr. Breunlin’s
testimony, which was not rebutted, was that he cooperated with the CO and that a former
OSHA CO was hired two to three days after the inspection to ensure that the company’s
abatements were done correctly and to monitor future OSHA compliance at the site. (Tr.
29-32).

As to the reason for the delay, Respondent suggests that the fact that Nisky had no
record of who picked up the Citation shows there is no evidence as to “exactly when, if
ever, the [Citation] was received by Roy’s.” I disagree. First, the record shows the Citation
was received and signed for by a Nisky employee on April 17. (Tr. 10-11, 35-36). Second,
Ms. Taylor testified that either she or Mrs. Roy picked up the mail during that time, and
she admitted she was unaware of any other difficulties in getting mail from Nisky. (Tr. 36,
40-46). Third, it is clear the Citation did arrive at Respondent’s place of business, in that
three employees testified they saw it in the company’s new office; as noted above, Ms.
Taylor thought she saw it in May or June, and Mr. Farley and Mr. Roy both said that they
first saw it in June. (Tr. 37, 49, 64-65). The most likely explanation is that the Citation was
picked up by Ms. Taylor or Mrs. Roy after Nisky received it and that it got “lost in the
shuffle” during the move and was not discovered until afterwards, when it was brought to
Mr. Roy’s attention.

Respondent also contends that the move disrupted its usual business practices and
caused its failure to file a timely NOC. The Secretary disputes this contention, noting that
Mr. Roy’s August 16 letter did not mention anything about the move or a reason for the
late filing.

(Tr. 77-79). However, as noted above, Mr. Roy testified that that was not the
purpose of the letter. (Tr. 80). Moreover, I observed Mr. Roy’s demeanor as he testified,
and that of Respondent’s other witnesses, and found them all to be credible and sincere
witnesses; further, Mr. Roy’s testimony about the move was consistent with that of Ms.
Taylor and Mr. Farley. I thus credit the statements of Respondent’s witnesses and reject
the Secretary’s suggestion that the testimony about the move was not believable. I also
found the testimony about the Citation not being discovered until June credible, and I find
as fact that Mr. Farley and Mr. Roy both became aware of the Citation around the middle
of June. Finally, I find that, pursuant to the Third Circuit’s decision in George Harms ,
supra , and its similar decision in Avon Contractors, Inc., v. Secretary of Labor , 372 F.3d
171 (3d Cir. 2004), Respondent’s failure to file a timely NOC before mid-June was due to
excusable neglect; this is so in light of the move and the consequent disruption to the
company’s regular business practices.

Notwithstanding the foregoing, I conclude that Respondent’s subsequent delay in
filing an NOC letter was not excusable neglect. The record shows that Mr. Roy called
OSHA on June 17 and spoke to CO Ortiz. (Tr. 13, 24, 66). While Mr. Roy’s account of the
conversation was different than that of AD Carpena, I find that any differences are
attributable to a misunderstanding on the part of Mr. Roy and/or the fact that AD Carpena
was reading from the case file and did not have personal knowledge of what was said.
Regardless, after the June 17 conversation, and whether Mr. Roy was to call back or
someone from OSHA was to call him back, Mr. Roy did not contact OSHA again until
July 6. (Tr. 14, 24, 67, 75-76). In addition, despite his conversation with CO Ortiz on July
6, when the CO told him the Citation was final and to write the Commission if he wanted
to appeal, Mr. Roy did not do so until August 17, when he faxed his letter dated August 16
to OSHA.

(Tr. 14-15, 68, 76-78). Mr. Roy’s company had been cited eight times before,
and he was familiar with OSHA and the 15-day filing requirement. (Tr. 17-21, 58, 68-69,
74). In these circumstances, Mr. Roy’s waiting until August 17 to fax an NOC letter to
OSHA was not excusable neglect.

Having found that the failure to file an NOC until August 17 was not due to
excusable neglect, I turn now to whether Respondent is nonetheless entitled to Rule 60(b)
relief. As set out above, the Third Circuit stated in George Harms that “a court must take
into account all relevant circumstances surrounding a party’s failure to file” and that the
“control” factor “did not necessarily trump all the other factors.” 371 F.3d at 164. The
Third Circuit also noted that, as the Supreme Court stated in Pioneer , “the lack of any
prejudice to the [opposing party] or to the interests of efficient judicial administration,
combined with the good faith of respondents and their counsel, weigh strongly in favor of
permitting the tardy claim.” 371 F.3d at 164 (citing Pioneer , 507 U.S. at 398). Based on
these statements, and upon considering all of the circumstances in this case, including the
good faith of Respondent, I conclude that Roy’s Construction is entitled to Rule 60(b)
relief in this matter.

In view of the foregoing, the Secretary’s motion to dismiss the NOC as untimely is
DENIED. The Secretary shall file her complaint within twenty (20) days of the date of this
order.

SO ORDERED.

/s/

Irving Sommer

Chief Judge

Dated: July 5, 2005

Washington, D.C.