BEFORE THE

OCCUPATIONAL SAFETY AND HEALTH APPEALS BOARD

DEPARTMENT OF INDUSTRIAL RELATIONS

STATE OF CALIFORNIA

 

In the Matter of the Appeal of:

C.C. MYERS, INC.

3286 Fitzgerald Road

Rancho Cordova, CA 95714

                              Employer

 

 

Docket No.

00-R1D3-008

 

DECISION AFTER

RECONSIDERATION

The Occupational Safety and Health Appeals Board (Board), acting pursuant to authority vested in it by the California Labor Code and having granted the petition for reconsideration filed in the above entitled matter by C. C. Myers, Inc. (Employer), makes the following decision after reconsideration.

JURISDICTION

Between August 3 and December 23, 1999, a representative of the Division of Occupational Safety and Health (the Division) conducted an accident investigation at a place of employment maintained by Employer at the San Francisco International Airport, California (the site).

On December 23, 1999, the Division issued to Employer citation 1, Item 1 alleging a regulatory violation of section 342(a) [failure to report serious injury] of the occupational safety and health standards and orders found in Title 8, California Code of Regulations.1 The Division also issued Citation 1, Item 2 alleging a general violation of section 3203(b)(2) [safety and health training documentation]. Civil penalties of $250 and $125 respectively were proposed for the alleged violations.

Employer filed a timely appeal contesting the existence of the alleged violations and the reasonableness of the proposed penalties.

On August 24, 2000, this matter came on regularly for hearing before Dennis M. Sullivan, Administrative Law Judge (ALJ) of the Board, in Foster City, California. Douglas A. Ridgeway, Risk Manager, represented Employer. Brian Brooks, Compliance Officer, represented the Division. Oral and documentary evidence was presented at the hearing and the matter was submitted that day.

At the outset of the hearing, Employer moved for dismissal of Citation 1, Items 1 and 2, and the related civil penalties. The motion was based on the ground that C. C. Myers, Inc., was not the employer of Emilio Madueno, a man injured in an accident at the site on July 1, 1999, or of any other employees working there. Ruling on the motion was reserved until the hearing on the merits of the appeals was completed and the case was submitted.

EVIDENCE

In support of the motion, Risk Manager Ridgeway testified that Myers formed a joint venture named “Myers/Kulchin-Condon, a joint venture,” (MKC) with other contractors for the sole purpose of bidding on and performing a contract for the construction of highway inbound and outbound ramps at the airport. The Airport Commission of the City and County of San Francisco (Airport Commission) offered the contract for bid. Ridgeway identified a copy of the written agreement made by the Airport Commission and MKC on May 7, 1997, for the performance of the job. He added that C. C. Myers’ participation in the joint venture was its only involvement in the employment at the site that was the subject of the inspection, the alleged violations and the proposed penalties.

Brian Brooks testified that Ridgeway, Office Manager Liz Gaffney, and the foreman he spoke to during his investigation identified themselves as employees of C. C. Myers. He also pointed out that the “Accident Report” form completed by the Division employee who received Ridgeway’s telephone call notifying the Division on July 2, 1999, of the injury to Madueno, listed “C. C. Myers” as the “Establishment Name.”

The log of accident-free hours of work by the men and women working on the job for the Airport Commission’s “Worker Safety Award Program” identified "C. C. Myers, Inc.” as the “entity” for which they worked. Additionally, to work at the airport, each employee had to apply for and obtain a permit from the Airport Commission. The applicant’s employer must verify the application by providing its name and having an authorized person sign the application. Ridgeway identified copies of 34 applications submitted for work permits during the months of February through June 1999. On each application, in the portion “To Be Completed By Employer,” the “Company Name” is given as "C. C. Myers, Inc.” and Liz Gaffney signed to verify that the applicant was an employee.

Ridgeway responded that C. C. Myers was named as the employer in records submitted to the Airport Commission’s self-insurance program (OCIP) to facilitate dealing with the program.

The Division did not make a motion to amend the name of the Employer from C. C. Myers to MKC.

ISSUES

Did the Division establish that C.C. Myers was the employer of
the injured worker?
Is estoppel properly asserted under the facts of this case?

FINDINGS AND REASONS
FOR
DECISION AFTER RECONSIDERATION

1. The Division Failed to Establish that C.C. Myers Was the Employer of the Injured Worker.

2. The Appeals Board attempts to keep proceedings simple and informal. (Occupational Safety and Health Appeals Board Booklet (OSHAB Booklet) (1998) pg. 16.)

Under Labor Code section 6612:

No informality in any proceeding or in the manner of taking testimony shall invalidate any order, decision, or finding made and filed as specified in this division. No order, decision, or finding shall be invalidated because of the admission into the record, and use as proof of any fact in dispute of any evidence not admissible under the common law or statutory rules of evidence and procedure.

Still the Division must provide solid, credible evidence to substantiate its actions. (OSHAB Booklet, supra.) Prosecuting the proper entity is an element of a violation that comes within the Division’s burden of poof.

The Appeals board has consistently held that the Division has the burden of proving all elements of a violation by a preponderance of the evidence (See e.g. Howard J. White, Inc., OSHAB 78-741, Decision After Reconsideration (June 16, 1983)) since Appeals Board hearings are civil in nature. (Lee Bolin & Associates, OSHAB 80-720, Decision After Reconsideration (July 29, 1981).)

In this case, the Division issued the citation to C. C. Myers on December 23, 1999. C. C. Myers timely appealed the citation to the Appeals Board.

Labor Code Section 6304 adopts, for the California Occupational Safety and Health Act of 1973, the Labor Code section 3300 definition of “Employer.” Subsection (c) of the definition, which applies to this case, states that “every person including any public service corporation, which has any natural person in service” is an employer.

Labor Code section 18 defines “Person” to mean “any person, association, organization, partnership, business trust, limited liability company, or corporation." Joint ventures are not specifically identified as a type of “person.” However, but for their typical one-project duration, they have much in common with partnerships and many are incorporated.

The Appeals Board has long recognized the liability of joint ventures, as “employers,” for violations affecting workers in their service (employees). (See, e.g., Gentry-Rados, a Joint Venture, OSHAB 75-190, Decision After Reconsideration (Mar. 15, 1976); Rados-Shea-Kordick, OSHAB 80-1263, Decision After Reconsideration (May 30, 1985). The Appeals Board has also recognized that a joint venture and the individual contractors who join forces to form it are separate and distinct legal entities. (See A & H Underground Construction, OSHAB 81-487, Decision After Reconsideration (May 2, 1986).)

Employer's motion to dismiss the citation because the Division cited the wrong entity was raised at the beginning of the hearing in this case so it can hardly be argued that the Division was so prejudiced that it could not have addressed the issue during the hearing. Instead, the Division continued to attempt to prove that C. C. Myers, rather than the joint venture, was the proper employer in this case.

It was undisputed that Madueno was injured while working on the construction of a vehicle ramp at the site. Risk Manager Ridgeway’s testimony that the contract for that work was awarded to the MKC joint venture and that MKC was performing the work through Madueno and other employees is credited. A copy of the agreement between the Airport Commission and MKC supplemented his testimony.

The conflicting evidence was less convincing. C. C. Myers was named as the “Employer” or employing “Entity” in records relating to employees doing the work. However, Ridgeway’s explanation that C. C. Myers’ name and forms were used as a matter of convenience or accommodation rings true. For C. C. Myers, in its individual capacity, to have been an employer of employees performing work on the MKC contract, C. C. Myers would have to have been a subcontractor of MKC. No evidence of such a subcontract was presented. Since C. C. Myers was a member of the MKC joint venture formed to do the contract work, subcontracting some of that work to C. C. Myers individually would seen to be unnecessary and, possibly, at odds with the purpose of the joint venture.

The fact that C. C. Myers' employees assigned to do MKC contract work for the time necessary to complete the job continued to think of themselves and identify themselves to others as C. C. Myers employees is not surprising. Accordingly, it is not viewed as appreciable evidence tending to prove that C. C. Myers rather than MKC was their employer for the limited duration of their work on the MKC contract.

3. Is Estoppel Properly Asserted under the Facts of this Case?

The Division contends that C. C. Myers should be estopped from asserting that the Division issued the citations to the wrong employer. We disagree. First, we are unaware of any civil authority that compels an employer to furnish the correct entity name to the Division for purposes of conducting an investigation prior to the issuance of a citation. We believe the Legislature did not address this issue because both civil and criminal acts can attach to employer violations under the Labor Code2.

The Division argues that estoppel is the proper theory in this case because any error in issuing the citation is directly attributable to MKC's misrepresentation regarding its employment of Madueno. In order to establish estoppel, a party must plead and prove four elements: 1) the party to be estopped must be apprised of the facts; 2) he must intend that his conduct shall be acted upon or must so act that the party asserting estoppel had a right to believe it was so intended; 3) the other party must be ignorant of the true state of facts; and 4) the other party must rely on the conduct to his injury.

We disagree that estoppel is proper in this case. If estoppel is a proper theory to be pled by the Division against an employer the Division must establish that the conduct was intended to be acted upon by the Division. In this case the Division did not establish that MKC or C.C. Myers intentionally misrepresented the identity of Madueno's employer as the ALJ determined on page 4 of the decision which reads:

The fact that Myers employees assigned to do MKC contract work for the time necessary to complete the job continued to think of themselves and identify themselves to others as Myers employees is not surprising. Accordingly, it is not viewed as appreciable evidence tending to prove that Myers rather than MKC was their employer for the limited duration of their work on the MKC contract.

We also question whether the third element (the other party (DOSH) was ignorant of the true state of facts) was ever intended to apply to governmental prosecutorial agencies.

The Division also contends, citing John T. Malloy, Inc., OSHAB 81-790, Decision After Reconsideration (Mar. 31, 1983) that the Board may “pierce the veil” created by MKC’s joint venture status. We disagree that John T. Malloy, supra, or basic notions of due process give us that authority under the facts of this case.

The Board is an independent adjudicatory agency responsible, among other matters for resolving appeals from citations. (Rick’s Electric Inc. v. Occupational Safety and Health Appeals Board (2000) 80 C.A. 4th 1023.) Except when judicial review is granted, Appeals Board decisions are final and binding on the Division with respect to the parties involved in the particular appeal. (Labor Code §§ 148.5, 148.6) The Division, on the other hand, shoulders primary responsibility for administering and enforcing the California Occupational Safety and Health Act of 1973 (Cal/OSHA or the Act), Labor Code section 6300 et seq. It does this through investigating workplaces and enforcing occupational safety and health standards. (Labor Code, §§ 6309, 6313, 6314.) Many of these standards, commonly referred to as safety orders, are codified at Title 8 of the California Code of Regulations.

We find the relationship between the two entities unconducive to the Appeals Board allowing the corporate veil to be pierced when no motion or pleading was made during the hearing by the Division to pierce MKC’s corporate veil.

We also find the argument that the facts in this case are similar to the facts in John T. Malloy, unpersuasive. In that case, the Division cited John T. Malloy as an individual rather than as a corporation. In a consolidated matter (Citation No. 1, Docket No. 81-789), Mr. Malloy listed himself as “owner” in the Notice of Contest (Appeal). Mr. Malloy appeared at the hearing representing Employer and volunteered under oath, that “the job was done as a corporate entity…by John T. Malloy, Incorporated, with (the individual John T. Malloy) as president and vice-president.” Mr. Malloy also represented that although the job was originally bid as an individual proprietorship, the job was contracted for and commenced as the first job by the corporation, and employees on the job were paid by the corporation. Mr. Malloy admitted that he personally was served with the citation. Understandably, when informed that employees worked for the corporation and that the correct name of the employer was “John T. Malloy, Inc.,” the Division moved to amend the name on the citation to conform to proof. Mr. Malloy, except to say that his personal preference was that the name not be changed so the citation would not be of record against the corporate entity, offered no legal ground to oppose the motion. The ALJ granted the motion.

We still agree with our holding in Malloy, supra, that “as a general rule administrative proceedings are not bound by the strict civil rules of pleading." “So long as the respondent is informed of the substance of the charge and afforded the basic, appropriate elements of procedural due process, he cannot complain of a variance between administrative pleadings and proof.” Stearns v. Fair Employment Practice Com. (1971) 6 Cal.3d 205, 213. This case differs from Malloy in that the Division never sought to amend its case according to proof. Nor, so far as can be ascertained from the record, did the Division attempt to ascertain the correct identity of Employer during discovery. Rather, it appears that the Division relied upon an incomplete investigation and inadequate legal follow-up to prosecute the wrong employer.

Thus, we concur with the ALJ that:

Upon consideration of the evidence summarized above, it is found that the Division failed to prove, by a preponderance, that C. C. Myers, Inc., rather than Myers/Kulchin-Condon, a joint venture, was the employer of Madueno, the injured employee, and the others performing MKC contract work with and around him. Therefore, Citation 1, Items 1 and 2, and the related penalties issued to C. C. Myers, Inc., individually, cannot be sustained.

DECISION AFTER RECONSIDERATION

The Board reinstates and affirms the ALJ’s decision setting aside the citation and granting the appeal.

MARCY V. SAUNDERS, Member
GERALD P. O’HARA, Member

OCCUPATIONAL SAFETY AND HEALTH APPEALS BOARD
SIGNED AND DATED AT SACRAMENTO, CALIFORNIA - April 13, 2001

1 Unless otherwise specified all references are to sections of Title 8, California Code of Regulations.
2 Criminal penalties can be sought against employers who do not assert their right against self-incrimination under Cal. Const. Article 1, §15, cl. 6 and who give false statements in violation of Labor Code section 6426.