BEFORE THE

STATE OF CALIFORNIA

OCCUPATIONAL SAFETY AND HEALTH

APPEALS BOARD

In the Matter of the Appeal of:

PORTER PIPE & SUPPLY
750 Diamond Avenue
Red Bluff, CA 96080

 

                              Employer

 

Docket No .

01-R2D3-3635

DENIAL OF PETITION
FOR RECONSIDERATION

 

The Occupational Safety and Health Appeals Board (Board), acting pursuant to authority vested in it by the California Labor Code hereby denies the petition for reconsideration filed in the above-entitled matter by Porter Pipe & Supply (Employer).

JURISDICTION

On November 2, 2000, a representative of the Division of Occupational Safety and Health (the Division) conducted an inspection at a place of employment maintained by Employer at 750 Diamond Boulevard, Red Bluff, California (the site). The Division issued to Employer citations alleging a serious violation of section 5021(a) [annual crane certification] and a general violation of section 5031(c) [cranes must be inspected four times a year] of the occupational safety and health standards and orders found in Title 8, California Code of Regulations.1

On February 26, 2001, a representative of the Division conducted a re-inspection at the site. On August 17, 2001, the Division issued a Notice of Failure to Abate Alleged Violation for the violations. The Division proposed an additional penalty of $39,810 for failure to abate the general violation and an additional penalty of $318,935 for failure to abate the serious violation.

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

A hearing was held before Dennis M. Sullivan, Administrative Law Judge (ALJ) of the Board. Ronald Porter, Owner, represented Employer. Christopher Grossgart, Staff Counsel, represented the Division.

The ALJ issued a decision finding that Employer had failed to abate the general violation of section 5031(c). The ALJ also found that Employer had abated the serious violation of section 5021(a) before the abatement period had expired, therefore the $318,935 penalty for failing to abate that violation was set aside. Employer filed a timely petition for reconsideration.

REASON FOR DENIAL
OF
PETITION FOR RECONSIDERATION

Labor Code section 6617 sets forth five grounds upon which a petition for reconsideration may be based:

(a) That by such order or decision made and filed by the appeals board or hearing officer, the appeals board acted without or in excess of its powers.
(b) That the order or decision was procured by fraud.
(c) That the evidence does not justify the findings of fact.
(d) That the petitioner has discovered new evidence material to him, which he could not, with reasonable diligence, have discovered and produced at the hearing.
(e) That the findings of fact do not support the order or decision.

Labor Code section 6616 provides that:

The petition for reconsideration shall set forth specifically and in full detail the grounds upon which the petitioner considers the final order or decision made and filed by the appeals board or a hearing officer to be unjust or unlawful, and every issue to be considered by the appeals board.

These requirements are mandatory. Louis G. Beary Plastering, Cal/OSHA App. 76-1296, Denial of Petition for Reconsideration (Nov. 14, 1977). Employer’s petition plainly failed to meet these statutory requirements.

The Board has adopted regulations implementing this statutory provision. Section 391 of the regulation states that “…[t]he petition for reconsideration will be denied if it contains no more than allegations of the statutory grounds for reconsideration, unsupported by specific references to the record and principles of law involved.”

The Board has consistently rejected petitions that do not contain sufficient detail. (See, e.g., Lusardi Construction Company, Cal/OSHA App. 86-318, Denial of Petition for Reconsideration (Oct. 29, 1986); Paterson Pacific Parchment Co., Cal/OSHA App. 80-1238, Denial of Petition for Reconsideration (Apr. 22, 1981).) The Board stated the policy underlying this specificity rule in Lusardi Construction Company, supra:

Without specific and detailed allegations in the petition, there is nothing of substance for the Appeals Board to review and weigh against the judge’s findings and decision to determine whether or not to grant Employer’s petition for reconsideration.

Employer’s petition for reconsideration alleges that it is “seeking penalty relief on the grounds that it will be a financial distress and closure of the company.” This contention of Employer was made and rejected at the hearing.

The ALJ decision stated the following regarding Employer’s proof of financial hardship:

In Dye & Wash Technology, Cal/OSHA App. 00-2327, Denial of Petition for Reconsideration (July 11, 2001), the Board held, at page 3, that penalty reductions may only be granted in instances where an employer can show that:

(1) Assessment of the full amount of the total proposed penalty would jeopardize its ability to continue operating while maintaining and improving employee safety and health at its places of employment.
(2) The employer has abated all of the violations upon which the penalties are based and has otherwise demonstrated a sincere commitment to employee safety and health.
(3) The employer is unable to pay the proposed penalty in installments spread over a period of time reasonable to the circumstances.

The Bumper Shop, Inc., Cal/OSHA App. 98-3466, Denial of Petition for Reconsideration (Sept. 27, 2001), at p. 6, adds that:

Any claimed financial hardship must be related, both in time and costs incurred, to correcting those [the appealed] violations. To allow otherwise would simply and impermissibly elevate financial hardship (which may be due to any number of economic influences and conditions) over the clear purposes of the Act.

Further, in Eagle Environmental, Inc., Cal/OSHA App. 98-1640 Decision After Reconsideration (Oct. 19, 2001) a case in which an employer sought penalty relief on the grounds that it was financially distressed and had ceased doing business, the Board applied the Dye & Wash and Bumper Shop guidance to the evidence and, at p. 6, concluded:

Assuming that Eagle Environmental Coating and Eagle Environmental, Inc. are the same entity, the 1997 corporate tax return shows a net loss of $87,420. However, the 1997 tax return also shows gross sales of $450,019 and a gross profit of $101,139. The cause of the majority of Employer’s ‘loss’ for that year are business deductions and depreciation which do not reflect that Employer did not have the resources to address and correct safety and health violations. Nor does the 1997 tax return reflect that Employer’s ‘loss’ for the year was caused by addressing and correcting safety and health infractions. Nothing in either return suggests that…[the employer] was forced to close Eagle Environmental because of financial hardship caused by addressing the safety violations.

We find that the evidence presented by Employer [Eagle Environmental], was insufficient to establish that the financial hardship was related, both in time and costs incurred, to correcting the cited violations and therefore must deny Employer’s request for penalty relief.

The ALJ’s decision in this case further held that:

Review of the Porters’ year 2000 joint federal tax return (Employer Exhibit E) indicates that Mrs. Porter is the sole proprietor of Porter Pipe and Supply, that it had gross receipts of $1,010,025 for the year, that the cost of producing the goods sold was $820,313, and that the gross profit was $189,712. The return also shows that business expenses totaling $167,557 were claimed, reducing the year’s net profit of the business to $21,957. However, as the Board found in Eagle Environmental, Inc., supra, tax returns alone do not provide a full picture of an employer’s financial resources because they do not disclose the value of the employer’s equity in its business and identify and value other assets the employer may have.

Furthermore, the only documentation of an expense relating specifically to abatement of one of the violations is Crane Certifier Morgan’s letter notifying Porter that the $850 invoice Morgan sent to Redford at the site had not been paid, with a copy of the invoice attached, and Porter’s ‘Record of Payment’ of the invoice dated July 18, 2000 (Employer Exhibit D).

Employer now indicates that it has “receipts that indicate the expenses the company incurred in upgrading the overhead cranes [and]…[that it has] other financial records that proves the company will close or go bankrupt.” Employer does not adequately explain why this evidence could not have been produced at the hearing. Petitioner has an obligation to explain why the evidence could not, with reasonable diligence, have been discovered and produced at the hearing. (Labor Code § 6617(d); § 390.1(a)(4))

The Board does not find Employer’s justification persuasive. Employer contended at the hearing that they had hired Allen Radford to manage the plant. He seemed to do well for a few years but then became ill, somewhat erratic, and less communicative while assuring the Porters that everything was under control. The Porters also relied on plant secretary Carol Radford. When owners delegate authority to employees to carry out management functions they cannot blame the internal workings of their company when documents or evidence are not timely produced. It is incumbent upon business owners to treat records necessary to comply with OSHA standards or records that may be necessary to defend against OSHA citations with the care that they treat their most important legal documents.

We therefore affirm the ALJ’s decision, which found that the evidence of financial hardship presented by Employer does not meet the Board’s criteria for reducing penalties on that ground. Hence, the $39,810 penalty for failure to abate the general violation shall not be reduced but may be paid in monthly installments as described in the ALJ’s decision at page 9.

DECISION

The Board affirms the ALJ’s decision and the assessment of a $39,810 civil penalty.

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

OCCUPATIONAL SAFETY AND HEALTH APPEALS BOARD
FILED ON: October 2, 2002

1 Unless otherwise specified all references are to sections of Title 8, California Code of Regulations.