Action Group, Inc.

Plain-English summary

Action Group contested failure-to-abate penalties totaling $4,200 but did not file an answer to the Secretary's complaint. Its new plant manager timely responded to the ALJ's show-cause order by stating that he believed OSHA and the company had resolved the matter for $500, but the ALJ did not receive the letter before entering default. The Commission set aside the dismissal because the ALJ had not considered whether the pro se employer reasonably believed the case was settled. It remanded for findings on whether that belief provided good reason for the missed answer and authorized further evidence if needed. If Action established sufficient grounds, it was to receive another opportunity to file a proper answer. The Commission also directed that any reinstated default penalty be $4,200, correcting the ALJ's clerical assessment of $1,400. The decision does not identify the OSHA standards underlying the failure-to-abate notices.

Decision snapshot

• Cited standard(s): None identified in the decision
• Outcome: Default dismissal set aside; case remanded to determine whether the claimed settlement belief excused the failure to answer.
• Key point: A timely pro se response asserting a reasonable belief that the case settled must be considered before imposing default, but any later default must use the correct proposed penalty.

Full text (OSHRC public release)

Docket No. 88-2058

SECRETARY OF LABOR,

Complainant,

v.

ACTION GROUP, INC.,

Respondent.

OSHRC Docket No. 88-2058

DECISION AND ORDER

BEFORE: FOULKE, Chairman; MONTOYA and WISEMAN, Commissioners.

BY THE COMMISSION:

An order of Administrative Law Judge Paul L. Brady dismissing a
notice of contest filed by Respondent, Action Group, Inc. ("Action"), is before
us for review pursuant to section 12(j) of the Occupational Safety and Health Act of 1970
("the Act"), 29 U.S.C. � 661(j), and Commission Rule 92, 29 C.F.R. � 2200.92.
For the reasons that follow, we set aside the judge's order and remand this matter for
further proceedings.

Action was issued notifications alleging that it had failed to
abate four violations of the Act within the period of time permitted for their correction.
The Secretary proposed an aggregate penalty of $4,200 for the alleged failure to abate.
Action's president, Frank Denutte, contested this penalty, asserting that it was
burdensome and excessive in view of the expenditure Action was making to correct the
violations. After Action failed to file an answer to the Secretary's complaint as required
by commission Rule 34(d)(1), 29 C.F.R. � 2200.34(d)(1), [[1/]] the judge ordered that
Action "show cause within seven days of receipt of this order why it should not be
declared in default for failure to plead." The judge issued this order under Rule 41,
29 C.F.R. � 2200.41, which allows a judge to impose sanctions on a party for failure to
comply with the Commission's rules.[[2/]]

Action responded to the show cause order through a letter dated
February 26, 1989, signed by its plant manager, Ralph Fields. Fields advised that he had
assumed the position of general plant manager on January 15, 1989, which was approximately
two months after the complaint had been filed and one month after Action's answer was due.
He also asserted that "[n]o files remain from the previous plant manager."
However, Fields stated that ''[b]ased on information available to me, it is my
understanding that the matter has been resolved between O.S.H.A. and Action Group, Inc.
and a $500.00 [penalty] was agreed upon." Although this letter was dated within the
seven-day period permitted by the judge for a response, [[3/]] the judge did not receive
the letter until after he had issued his dismissal order. Accordingly, Action's letter was
treated by the Commission as a petition for discretionary review of the judge's order.

The Commission has observed that, generally speaking, employers
appearing pro se, like Action here, are often confused by legal terminology and may not be
fully cognizant of the legal technicalities of the judicial process. Browar Wood Products
Co., 7 BNA OSHC 1165, 1979 CCH OSHD � 23, 326 (No. 78-2230, 1979); Monroe & Sons, 4
BNA OSHC 2016, 1976-77 CCH OSHD � 21,470 (No. 6031, 1977), aff'd, 615 F.2d 1156 (6th Cir.
1980). A pro se employer could reasonably conclude that it need not file an answer to the
complaint if the case is in the process of being settled. However, on the limited record
before us here, we cannot determine whether Action's belief that it had satisfied the
Commission's procedural requirements was reasonable.

While there is some indication that the parties engaged in
settlement discussions, there is no indication that the parties ever reached a settlement,
or even that they came close to doing so. [[4]] Since the judge had not received Action's
letter before he issued his dismissal order, he had no opportunity to consider whether
Action has made a sufficient response to his show cause order. Accordingly, we remand for
the judge to decide whether Action has, stated adequate grounds to justify its failure to
file an answer in the circumstances presented here. The judge may, if necessary, conduct
further evidentiary proceedings to determine whether there is good reason to allow this
case to be reinstated, including making findings on whether Action reasonably believed
that there was a settlement. See Choice Electric Corp., No. 88-1393 (Nov. 7, 1990) (case
remanded to allow prose employer to demonstrate that it had reason for failing to file an
answer that would justify setting aside a dismissal sanction); Bywater Sales &
Service, 13 BNA OSHC 1268, 1986-87 CCH OSHD � 27,896 (No. 86-1214, 1987).

Should the judge conclude that Action has stated grounds to
excuse its failure to answer, the judge shall afford Action the opportunity to file an
answer that complies with the requirements of the Commission's rules. Although the judge's
show cause order satisfies Rule 41, the order does not make clear what an answer must
include. For the benefit of Action and other Pro se employers, we emphasize that the
substance of an answer is addressed in Rule 36, 29 C.F.R. � 2200.36, entitled
"Content of the answer," which provides as follows:

The answer shall contain in short and plain terms a response to
each allegation of the complaint. It shall specifically admit or deny each allegation or,
if the employer is without knowledge of the facts, the answer shall so state. A statement
of lack of knowledge has the effect of a denial. A failure to respond to an allegation
shall be treated as an admission that the allegation is true.

In other words, the answer should respond to each specific
paragraph of the complaint. It should state whether the allegations in each paragraph are
correct or incorrect, or, if the employer does not have enough information to either admit
or deny any portion of the complaint, the answer should so state. In short, the essential
purpose of both the complaint and the answer is to put both the parties and the judge on
notice of what issues are in controversy and what matters are not disputed.[[5/]] If the
judge concludes that Action is entitled to another opportunity to file an answer in this
case, the answer is to be filed with the judge, but Action must also send a copy of its
answer to the attorney representing the Secretary. If under these circumstances Action
fails to file an answer in a timely fashion, the judge shall affirm the failure to abate
notifications and dismiss Action's notice of contest.

One final observation must be made. The Secretary originally
proposed a total penalty of $4,200. However, apparently through clerical error, the judge
assessed a penalty of only $1,400 in his dismissal order. Should the judge conclude that
Action has not stated grounds for its failure to answer, the judge may reinstate his
dismissal order, but the penalty assessment in that event shall be $4,200. Should the
judge conclude that Action has stated sufficient grounds to explain its failure to answer
and provide Action with the further opportunity to answer, and should Action thereafter
fail to file an answer in a timely manner, the penalty to be assessed upon dismissal of
Action's notice of contest shall likewise be $4,200.

Accordingly, this matter is remanded for further proceedings consistent with this opinion.

Edwin G. Foulke, Jr.

Chairman

Velma Montoya

Commissioner

Donald G. Wiseman

Commissioner

Dated: December 4, 1990

SECRETARY OF LABOR,

Complainant,

v.

ACTION GROUP, INC.,

Respondent.

OSHRC Docket No. 88-2058

ORDER DISMISSING NOTICE OF CONTEST

Respondent, having failed to respond to an order to show cause
and pursuant to Rule 41(a) of the Commission's Rules of Procedure [29 C.F.R. �
2200.41(a)], is hereby declared in default for its failure to comply with Commission Rule
36, 2200.36, requiring the filing of an answer to the complaint in this cause.

Therefore, it is ORDERED:

1. The notice of contest is dismissed.

2. The citations are affirmed and a penalty in the amount of
   $1,400.00 is hereby assessed.

Dated this 7th day of March, 1989.

PAUL L. BRADY

Judge

FOOTNOTES:

[[1/]] This rule requires that "the employer shall file
with the Commission an answer conforming to the requirements of � 2200.36 within 30 days
after service of the complaint."

[[2/]] Rule 41(a) provides, in pertinent part, as follows:

When any party has failed to plead or otherwise proceed as
provided by these rules or as required by the Commission or Judge, he may be declared to
be in default either:

(1) On the initiative of the Commission or Judge, after having
been afforded an opportunity to show cause why he should not be declared to be in default.
. . .

[[3/]] The complaint was served on Action by mail on November 16, 1988, under Rule 7,
which permits pleadings to be served by first class mail. Allowing three days for mailing
under Commission Rule 4(b), Action's answer was due by December 19, 1988. Judge Brady
issued his show cause order on February 16, 1989. Assuming three days for mailing, Action
received the order Tuesday, February 21 (Monday, February 20, 1989 was a Federal and
postal holiday), and thus the seventh day from receipt would have been February 28. Under
Commission Rule 8, responses to orders sent by mail are deemed filed at the time of
mailing. Assuming, in the absence of evidence to the contrary, that Action's letter was
mailed on or about February 26, 1989, the date appearing on the letter, its response was
timely.

We note, however, that in order to eliminate uncertainty
regarding when orders to show cause are received, the Commission now requires that such
orders be sent by certified mail, return receipt requested. 55 Fed. Reg. 22780, 22782
(1990).

[[4/]] The file contains a handwritten narrative of an informal
conference between Action's president and representatives of the Secretary. The narrative
is written on an OSHA form used for keeping records of informal conferences. It appears to
be OSHA's official record of the conference with Action. According to this document, the
Secretary's representatives would not agree to a penalty less than $2,120, Action thought
that amount was still excessive, and "no settlement agreement was signed."

[[5/]] A copy of the Commission's rules is sent to each
employer when a case is docketed. In addition, each employer also receives a copy of the
Commission's publication, "A Guide to Procedures of the United States Occupational
Safety and Health Review Commission," which also contains a brief description of the
contents of an answer.