STATE OF CALIFORNIA
OCCUPATIONAL SAFETY AND HEALTH
In the Matter of the Appeal of:
BIG VALLEY LUMBER COMPANY
The Occupational Safety and Health Appeals Board (Board), acting pursuant to authority vested in it by the California Labor Code and having taken the petition for reconsideration filed in the above entitled matter by Big Valley Lumber Company (Employer) under submission, makes the following decision after reconsideration.
On March 8, 2001, 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 Highway 299E, Bieber, California (the site).
On May 15, 2001, the Division issued to Employer citations alleging serious violations of section 3999(b) [unguarded pulley tail]; section 3210(a) [no guardrails on walkway to ring barker] and 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 proposed civil penalties totaling $35,500 for the violations.
Employer filed a timely appeal contesting the existence and classification of the alleged violations, as well as the reasonableness of both the abatement requirements and the proposed civil penalties.
On May 29, 2002, a hearing was held before Bref French, Administrative Law Judge (ALJ) of the Board, in Redding, California. Steve Halterman, safety representative, of TOC Management Services represented Employer. Dennis Barker, Compliance Officer, represented the Division. On September 27, 2002, the ALJ issued a decision denying Employers appeals and assessing civil penalties of $35,000. Employer filed a timely petition for reconsideration on October 25, 2002. The Division filed an answer to the petition on November 27, 2002 and the Appeals Board took Employers petition under submission on December 12, 2002.
Dennis Barker (Barker) testified for the Division that on March 8, 2001, he conducted an investigation of an accident that had occurred on January 24, 2001, at Employers saw mill, at which time he observed the violations alleged in Citations 2 and 3. On a subsequent visit in late March 2001, Barker saw that Employers saw mill equipment was being removed from the site by the bank. Barker verified that Employer went out of business and ceased operations at its sawmill and lumber manufacturing sites.
Steven Halterman (Halterman) testified for Employer and requested on its behalf that no civil penalties be imposed against Employer since it has no assets, having gone out of business and relinquished its machinery and equipment in foreclosure. According to information in a letter from Bruce R. Main, the former president of Big Valley Lumber Company, dated January 22, 2002, (Exhibit A), Employer discontinued all operations and discharged the last of its employees on November 30, 2001. As Main stated in his letter:
At the Bieber site, the lumber manufacturing machinery & equipment was auctioned off in late November. The Burney machinery & equipment has been sold to a private party. These sales were conducted as a foreclosure sale by the senior creditor CIT Business Finance. The Cogeneration facility located at the Bieber site is still being offered for sale as an operating unit. All real estate at the Nubieber and Bieber sites are in the process of foreclosure by Capitol Crossing Bank.
The proceeds of the sales that have been completed, and are anticipated will not be adequate to fulfill the obligations to the secured creditors. Unfortunately, there will be no cash available to meet the balances owed unsecured creditors.
At this time, Big Valley Lumber will not be making any filing for bankruptcy. There simply are no assets to protect from creditors.
We at Big Valley Lumber had hopes that through a combination of operations and asset sales we would be able to satisfy our outstanding debts.
FINDINGS AND REASONS
DECISION AFTER RECONSIDERATION
Employer argues that the penalties assessed by the ALJ in this case should be set aside because the Boards case precedent affirms the practice of setting aside penalties against an employer who goes out of business. It argues that the case of Miller/Thompson-J. D. Steel-Harris Rebar, A Joint Venture, Cal/OSHA App. 99-3121, Decision After Reconsideration, (Sept. 26, 2001) which denied penalty relief is distinguishable because Miller/Thompson was a joint venture, whereas Employer here, Big Valley Lumber Company is a corporation. Big Valley further contends that it conclusively established that it had gone out of business while the Board in Miller/Thompson concluded that there was no evidence that former joint venture members had ceased business operations. Employer asserts that based upon such distinctions, Miller/Thompson should not control the outcome of this case.
Employer also contends that the case of Linsey Fashions, Cal/OSHA App. 96-2695, Decision After Reconsideration (Apr. 18, 2001) relied upon by the ALJ is distinguishable from the instant case because in Linsey, the new enterprise continue(d) substantially the same business operations at the same address with the same manager, under the same or a very similar name. Employer contends that the Board in this case should reach the same conclusion that it did in Leftys Pizza and Arcade Meats and Deli because like the businesses in those cases it has completely ceased business operations.
Employers last argument is that this case is significantly different than The Bumper Shop, Inc., Cal/OSHA App. 98-3466, Decision After Reconsideration, (Oct. 1, 2001) and Dye & Wash Technology, Cal/OSHA App. 00-2327, Denial of Petition for Reconsideration (July 11, 2001) because in those cases the alleged financial hardship and resulting decisions related to employers with on-going businesses who did not prove that the assessment of any penalty will force it out of business or will create a substantial likelihood of doing that,
Employer submits that:
This case is not about an Employer that has merely completed a project, but may be operating in a different capacity or location. It is not about an Employer that sold its operations to another company that still operates a business and employs workers. It is not about an Employer that is in financial distress and requesting relief so it can continue to operate. The Employer in this case has completely ceased business operations, for reasons of financial hardship. How would the Division collect on any penalty against the Employer, a corporation, when the principals of a corporation are separate and distinct from the corporation itself?
This case is indistinguishable from the Boards case precedence that has set aside penalties against employers in these circumstances. The Employer here requests the same outcome.
Big Valley Lumber Company submits this Petition for Reconsideration, and requests that the Appeals Board dismiss the citation and set aside the proposed penalty.
With respect to Employers evidentiary showing to establish a basis for penalty relief, the Division argues that::
The record herein lacks competent evidence to support the relief from penalties sought by Petitioner even if the Board were to countenance Petitioners views on the legal principles involved. Petitioner was represented at the hearing by a labor relations consultant, Mr. Steven Halterman, who was sworn and testified. The summary of evidence to be found at pages 2 and 3 of the Decision appears to be based entirely upon the contents of a letter over the signature of Bruce Main which was received as Exhibit A. The matters described and assertions found within the letter were never shown to have been within the personal knowledge of anyone who was sworn and testified. The evidence is therefore classified as hearsay.
The Board in determining that the mere cessation of business should not moot the penalties due under the occupational safety and health legislation of this state is entirely consistent with the remedial nature of those laws and with holdings in other jurisdictions. [Any] contrary policy was inconsistent with that purpose and only gave solace to the scofflaw. The OSHA penalties merit a righteous place in the ranks of Appellants creditors. If protection is warranted from the weight of these penalties that is a concern of the insolvency laws.
We agree with the Division that the testimony of Steven Halterman and the letter of Bruce Main are hearsay. There is no foundation laid that Mr. Mains letter came within any hearsay exception enunciated in the Evidence Code.
No person presented competent testimony upon which a finding might be based as to the nature of the business entity or its structure relative to the issue of whether it was ongoing in any form or for any purpose. No competent evidence was received as to the financial condition of Employer. There was no evidence the entity had been dissolved, that bankruptcy had been filed, nor was the Board advised of any concrete figures relative to Employers relationship to its creditors. It is not known whether the corporate entity, if such existed, bore such a relationship to Mr. Bruce Main that his personal assets might be reached by creditors.
In bringing issues of financial hardship before the Board, it is incumbent upon those asking for relief to present to the Board sufficient documented evidence that the Board can make a reasoned decision based upon such evidence that is fair to all parties. Employer failed in this case to present sufficient evidence to the Board that the Board could make that decision. Employers litigation strategy to present the Board with only a letter and no supporting documentation in this case did not provide the Board with sufficient information to allow the Board to make a reasoned decision on Employers request that penalty relief was appropriate based on financial hardship. Any evidence supplied by Employer would have to satisfy the concerns of the Board expressed in its earlier decisions of The Bumper Shop, supra, Eagle Environmental, Inc.2 and Dye & Wash, supra. Based upon the record, the ALJ could not have reached any other conclusion as to the liability for penalties in this case. We give great weight to the findings of ALJ French and find that Employer did not provide substantial evidence to refute the findings. (See Lortz & Son Mfg. Co., Cal/OSHA App. 80-618, Decision After Reconsideration, (Aug. 28, 1981); Lamb v. Workmens Compensation Appeals Board (1974) 11 Cal.3d 274.). We also believe that the ALJs legal analysis was correct under the facts presented in this case.
DECISION AFTER RECONSIDERATION
The Board affirms the ALJs decision and the assessment of a $35,500 civil penalty.
MARCY V. SAUNDERS, Member
GERALD P. OHARA, Member
OCCUPATIONAL SAFETY AND HEALTH APPEALS BOARD
FILED ON: January 30, 2003
1 Unless otherwise specified
all references are to sections of Title 8, California Code of Regulations.
2 Cal/OSHA App. 98-1640, Decision After Reconsideration (Oct. 19, 2001).