SECRETARY OF LABOR,
CHOICE ELECTRIC CORPORATION,
OSHRC Docket No. 88-1393
DECISION AND ORDER
BEFORE: FOULKE, Chairman; MONTOYA and WISEMAN, Commissioners.
BY THE COMMISSION:
Administrative Law Judge James A. Cronin, Jr., issued a default
judgment against Choice Electric Corporation for failing to file an answer as required by
Commission Rule 34(d)(1).[[1/]] At issue is whether Choice, appearing in this case without
counsel, or pro se, has established a "sufficient" reason to set aside that
sanction under Commission Rule 41(b).[[2/]]
The Secretary issued two citations to Choice for serious and other violations, to which choice responded by filing a timely Notice of Contest. The secretary then filed her Complaint on August 19, 1988. Under Commission Rule 34(d)(1), the employer must file an answer within 30 days after service of the complaint. Approximately a month after Choice's answer was due, the Secretary filed a Motion for Default Judgment based on Choice's failure to answer. Choice did not file a response to that motion. More than a month after the motion was filed, the judge issued his decision, in which he declared Choice to be in default, pursuant to Commission Rule 41(a)(2) (see note 2 supra),due to its failure to file an answer, as required by Commission Rule 34. The judge affirmed the two citations that had been issued to Choice and assessed a penalty of $520 for the serious violations.
In its Petition for Discretionary Review and its Brief on Review, Choice asserts that it did not file an answer because: (1) it thought that by completing and returning the Secretary's "Notice of Appearance and Designation of Representative" form to the Solicitor's office, as requested by the Secretary in her cover letter to Choice's copy of the Complaint, it had responded adequately to the Complaint; (2) it had not been notified that this case was before a judge; and (3) it thought that because it had requested simplified proceedings (see Commission Rules 200 through 212, 29 C.F.R. §§ 2200.200-2200.212), under which there are no pleadings, no answer needed to be filed. Choice also asserts that it has paid the penalty of $520 assessed by the judge, plus interest and administrative costs.[[3/]]
The Secretary contends that none of the reasons offered by Choice for not filing an answer are "sufficient" under Commission Rule 41(b). She argues that Choice had received more than adequate notice that an answer was required within 30 days of receipt of the Complaint.
The Commission has broad discretion in reviewing a sanction imposed on a party for not proceeding under Commission rules. In the only two Commission decisions interpreting Commission Rule 41(b), which both involved pro se employers who failed to file timely answers, the Commission stated that the burden of producing evidence that there was a "sufficient" reason for failing to answer, as required by Commission Rule 34(d)(1), is on the sanctioned employer. Wes Jones & Son, Inc., 13 BNA OSHC 1277, 1279, 1986-87 CCH OSHD ¶ 27,924 p. 36,625 (No. 86-1095, 1987); Bywater Sales & Service, Byco-MCS Div. ["Byco"], 13 BNA OSHC 1268, 1269, 1986-87 CCH OSHD ¶ 27,896 p. 36,597 (No. 86-1214, 1987) [[4/]] This approach is consistent with the general rule in administrative proceedings that the moving party has the burden of proof. "Except as otherwise provided by statute, the proponent of a rule or order has the burden of proof." Section 7(c) of the Administrative Procedure Act, 5 U.S.C. § 556(d). See Sarasota Concrete Company, 9 BNA OSHC 1608, 1612 & n.9, 1981 CCH OSHD ¶ 25,360, p. 31,531 & n.9 (No. 78-5264, 1981), aff'd, 693 F.2d 1061 (11th Cir. 1982).
Although the term "sufficient" is not defined in the Commission rules, the Commission has given it meaning by borrowing concepts from the following Federal Rules of Civil Procedure that are analogous to Commission Rule 41: Fed. R. Civ. P. 55(c), which permits the court to set aside an entry of default "[f ]or good cause shown"; and Fed. R. Civ. P. 60(b), which allows the court on motion to relieve a party from judgment for "excusable neglect." See Wes Jones, 13 BNA OSHC at 1279, 1986-87 CCH OSHD at p. 36,625 (burden of proving "good cause for its failures to respond" on employer); Byco, 13 BNA OSHC at 1269, 1986-87 CCH OSHD at p. 36,597 (burden of proof of "good cause for its failure to respond" on employer; insufficient information to determine if failure to answer due to "excusable neglect") Also, the Commission has wide latitude in granting relief from sanctions under its own Rule 41(b).
Addressing how an employer can meet its burden of proof, the Commission has stated that "[o]rdinarily we would expect a party seeking such relief [under Rule 41(b)] to make a formal motion supported by sworn affidavits or other evidence showing good reason for setting aside the dismissal." Wes Jones, 13 BNA OSHC at 1279, 1986-87 CCH OSHD at p. 36,625; see Byco, 13 BNA OSHC at 1269, 1986-87 CCH OSHD at p. 36,597. In this case, such information is lacking.
However, the Commission is under an obligation to ensure that all parties to a controversy have a full, fair, and equal opportunity to be heard. It is also sensitive to the needs of parties appearing pro se and recognizes that persons who are not trained in the law may require additional consideration of their circumstances. Thus, in view of Choice's pro se status and apparent lack of understanding of Commission procedures, we shall treat its Petition for Discretionary Review as a formal Motion to Set Aside Sanctions under Commission Rule 41(b).
Choice's statements relating to its reasons for not filing an answer are briefly set forth in its Petition for Discretionary Review and Brief on Review. However, Choice has failed to provide adequate factual information from which we could determine whether any of its stated reasons for failing to file an answer are "sufficient" to justify setting aside the default sanction. Because Choice is not represented by counsel and seems to lack sufficient knowledge of Commission procedures, probably most strongly demonstrated by its claimed payment of the penalty plus interest and costs, its failure to provide the necessary factual information will not be fatal to Choice's case at this juncture. See Wes Jones, 13 BNA OSHC at 1279, 1986-87 CCH OSHD at p. 36,625; Byco, 13 BNA OSHC at 1269, 1986-87 CCH OSHC at p. 36,597.
Accordingly, we remand this case to the judge, who may hold a hearing, take evidence in the form of sworn affidavits, or follow other procedures that he may deem appropriate to develop enough of a factual record for him to rule on whether Choice had a "sufficient" reason for failing to file an answer, as would justify setting aside the default sanction. If the sanction is lifted, then Choice would have an opportunity to file an answer. The judge could then proceed toward a determination of the merits of the case.
In order to facilitate prompt resolution of this case, we order that all further proceedings in this case be expedited in accordance with Commission Rule 103, 29 C.F.R. § 2200.103.
Edwin G. Foulke, Jr.
Donald G. Wiseman
Dated: November 7, 1990
MONTOYA, Commissioner, concurring in part and dissenting in part:
I agree with my colleagues that this case should be remanded to the Administrative Law Judge. However, I disagree with their unnecessarily legalistic disposition of this case because it involves an employer that is appearing before the Commission without an attorney, that is, a pro se employer. Employers who appear before the Commission pro se comprise 30 to 40 percent of all employers who appear in contested cases. In my view, the majority opinion ignores relevant Commission precedent that addresses some of the difficulties encountered by small employers appearing pro se. I would consider Choice's Petition for Discretionary Review to be a motion to set aside the sanctions imposed under Commission Rule 41(b) and would grant the motion, thereby setting aside the judge's default judgment against Choice and reinstating Choice's Notice of Contest. I would accept Choice's Notice of Contest and Brief on Review as an adequate answer to the Secretary's Complaint, and find that Choice has substantially complied with Rule 34(d) of the Commission's Rules of Procedure, which requires the filing of an answer. Finally, I join my colleagues in remanding this case to the judge for a hearing, but I would limit that hearing to the merits of the contested citation items.
The majority narrowly interprets[[1/]] the broadly-worded Commission Rule 41(b) to impose on the party seeking relief from a sanction the burden of showing a "sufficient" reason for lifting the sanction. However, the rule itself imposes no such burden; rather, it states that the Commission can set aside sanctions "[f]or reasons deemed sufficient by the Commission or Judge ......" In the decisions relied on by the majority, the Commission never explained why it chose that interpretation of the rule. Wes Jones & Son. Inc., 13 BNA OSHC 1277, 1986-87 CCH OSHD ¶ 27,924 (No. 86-1095, 1987); Bywater Sales & Service, Byco-MCS Div., 13 BNA OSHC 1268, 1986-87 CCH OSHD ¶ 27,896 (No. (?) 1214, 1987).
Rather than imposing such a burden on the sanctioned party, especially when that party is, like Choice, a small business that has chosen not to incur the expense of hiring an attorney and instead is appearing pro se, I would read Commission Rule 41(b) in the context of the commission decisions on sanctions that preceded the adoption of that rule but were not superseded by the rule.[[2/]] In Duquesne Light Company, 8 BNA OSHC 1218, 1222, 1980 CCH OSHD ¶ 24,384 p. 29,719 (No. 78-5034, 1980), the Commission concluded that, in the "absence of contumacious conduct on the part of the delaying party, we consider lack of prejudice to [the opposing party] as the controlling factor in determining that dismissal is too harsh a sanction under the circumstances."
As the majority correctly points out, Duquesne Light was decided prior to a major revision of the Commission's Rules of Procedure in September 1986. 51 Fed. Reg. 32,002, 32,015 (1986). This revision included the adoption of Commission Rule 41, which is the rule at issue in this case. The purpose of this rules change was to establish procedures for the imposition and lifting of sanctions for violations of the Commission's rules. Nevertheless, despite this change, I conclude that Duquesne Light is based on a principle that is still valid in interpreting and applying the Commission's current procedural rules, and I would therefore follow the reasoning, as well as the express holding, of Duquesne Light in interpreting and applying Rule 41.
The central premise of Duquesne Light is the policy favoring the resolution of cases on their merits rather than the dismissal of cases for the failure of a party to comply with procedural rules. As the Commission stated in Duquesne Light, "there is a policy in the law in favor of deciding cases on their merits." 8 BNA OSHC at 1222, 1980 CCH OSHD at p. 29,719. See Pearson v, Dennison, 353 F.2d 24, 28-29 (9th Cir. 1965); 9 C. Wright and A. Miller, Federal practice and Procedure § 2370 at 216-17 (1971). Thus, Duquesne Light should be viewed in the context of a vast body of case law arising under the Act in which the Commission and the court's have consistently shown an antagonism toward the dismissal of cases on procedural grounds because this disposition deprives all of the parties of a resolution of contested citations on their merits. See, e.g., Stephenson Enterprises Inc. v. Marshall, 578 F.2d 1021, 1023 (5th Cir. 1978) (Secretary's failure to issue citations with reasonable promptness); Marshall v. Western Waterproofing Co., 560 F.2d 947, 951-52 (8th Cir. 1977) (Secretary's failure to comply with procedures for walkaround and presentation of credentials); Accu-Namics, Inc. v. OSHRC, 515 F.2d 828, 833-34 (5th Cir. 1975), cert. denied, 96 S. Ct. 1492 (1976) (same); Atlantic Marine, Inc. v, OSHRC, 524 F.2d 476, 478 (5th Cir. 1975) (employer's failure to file timely notice of notice); Samsonite Corporation, 10 BNA OSHC 1583, 1587, 1982 CCH OSHD ¶ 26,054, p. 32,736 (No. 79-5649, 1982) (Secretary's noncompliance with discovery rules and orders); The Boardman Company, 9 BNA OSHC 1163, 1164, 1981 CCH OSHD ¶ 25,017, p. 30,905 (No. 80-75, 1980) (Secretary's failure to file timely complaint); Browar Wood Products Co., 7 BNA OSHC 1165, 1166-67, 1979 CCH OSHD ¶ 23,326, pp. 28,214-15 (No. 78-2230, 1979) (employer's noncompliance with technical procedural requirements).
I see no reason to depart from this fundamental policy merely because the Commission's procedural rules have been changed. There is no indication in the official record of the rules change that the Commission deliberately intended to shift the burden of proof from the party seeking dismissal on procedural grounds to the party seeking to preserve its right to a hearing on the merits. Rules of Procedure, Final Rule, 51 Fed. Reg. 32,002, 32,009 (Sept. 8, 1986); Rules of procedure, Proposed Rule, 51 Fed. Reg. 23,184, 23,187 (June 25, 1986). The policy underlying the majority's opinion in this case is one that will turn the Commission's procedures into an obstacle course for unwary pro se employers, who may find themselves "stepping on land mines," that is, unexpectedly losing their right to a hearing on the merits, at any one of several points along the way. In my opinion, the Commission should give greater weight to the Congressional objective, in creating the Commission, of providing a forum for employer challenges to OSHA citations than to the Commission's own objective of ensuring strict compliance with our own procedural rules.
Applying the Duquesne Light test to this case, the Commission should deny Choice's motion to set aside the default judgment only if Choice engaged in contumacious conduct or the Secretary demonstrated that she was prejudiced in the preparation or presentation of her case. There is no evidence of either factor here. Choice's failure to file an answer was not due to any contumacious conduct. Rather, it was the result of its confusion over the Commission's procedural rules, which the Secretary and the judge could have, but did not, clarify. The Secretary does not even suggest that she was prejudiced by the lack of an answer. Choice gave her fair notice of its primary defense to the alleged violations early in the case when it filed its Notice of Contest. Choice supplemented this in its Brief on Review. Therefore, the default judgment sanction against Choice should be set aside.
In addition to disagreeing with the majority as to the burden of proof imposed on Choice, I also take issue with the procedural requirements that the majority imposes on Choice once the case is remanded to the judge. The majority relies on language in Wes Jones that provides that the party seeking relief from the sanction is expected to "make a formal motion supported by sworn affidavits or other evidence showing good reason for setting aside the dismissal." 13 BNA OSHC at 1279, 1986- 87 CCH OSHD at p. 36,625; see Byco, 13 BNA OSHC at 1269, 1986-87 CCH OSHD at p. 36,597. Especially where it is a pro se employer who is seeking relief under Rule 41(b), the procedure of obtaining notarized affidavits in support of its motion is particularly burdensome. See note 2 supra. This was recognized in Browar Wood Products Co., 7 BNA OSHC at 1167, 1979 CCH OSHD at p. 28,215, where the Commission admitted into evidence unsworn statements made by the employer because it was a small business appearing pro se and "may not have been aware of the legal technicalities of the judicial process and the need to submit affidavits in support of its motion." An even greater burden for this employer would be imposed if it chooses the option of participating in a separate hearing solely on the procedural question of "whether any of its stated reasons for failing to file an answer are 'sufficient' to justify setting aside the default sanction." The majority's disposition of this case will force Choice to decide whether to make what I find to be unnecessary expenditures of time and resources for affidavits or a hearing that does not even address the merits of the case, or to abandon its challenge to the Secretary's citations.
Even if the burden of proving a sufficient reason were on Choice, I believe that the explanations that Choice presents in its Petition for Discretionary Review and Brief on Review, as summarized in the majority opinion, satisfy that burden. Thus, contrary to the majority, I would find that Choice has provided adequate factual information from which we could determine that Choice's reasons for failing to file an answer are "sufficient" to justify setting aside the default sanctions. As I noted above, the Commission has great flexibility under Commission Rule 41(b) in determining when to set aside a sanction, and it need not be bound by the strictures of the Federal Rules of Civil Procedure.
Particularly compelling is Choice's explanation that it did not file an answer because it thought that by completing and returning the "Notice of Appearance and Designation of Representative" form to the Regional Solicitor's office, as requested by the Secretary, it had responded to the complaint. I consider this to be a credible reason given the confusing nature of the form. Although the form is attached to the back of the complaint for return to the Regional Solicitor's Office, a pro se employer could reasonably conclude that, by completing and sending back the form, it was entering an appearance before the Commission under commission Rule 23(a).[[3/]] Choice's president asserts in the Petition for Discretionary Review that he thought that, by completing and returning the form as directed, "we assumed that OSHA would realize that we were pleading not guilty." His assumption is understandable.
Having voted to set aside the default judgment and reinstate Choice's Notice of Contest, I would not require Choice to file a separate new document called an "Answer." Choice's response to the allegations in the Complaint is clearly set forth in its Brief on Review, which reiterates and expands upon points made in its Notice of Contest. Among Choice's defenses on the merits of the case are that it lacked the requisite knowledge for the violations to be "serious" under section 17(k) of the Act because its office was 240 miles away from the worksite. Choice also asserts that it had no knowledge of the unguarded open "pits" and open-sided floors involved in the citations because they were constructed by another contractor on the multi-employer site. In addition, regarding one of the citation items, Choice argues that the cited standard requiring protective covers, 29 C.F.R. § 1926.500(b)(5), does not apply because the cited planter boxes were not "pits." Those and other statements in its Brief on Review constitute an adequate answer under Commission Rule 34(d), requiring the filing of an answer, as well as Commission Rule 36, prescribing the content of the answer.[[4/]]
Having concluded that Choice has substantially satisfied the answer requirements, I would remand this case to the judge for a hearing limited to the merits of the contested citation items.
Dated: November 7, 1990
UNITED STATES OF AMERICA
OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION
SECRETARY OF LABOR,
CHOICE ELECTRIC CORPORATION,
OSHRC DOCKET NO.
DECISION AND ORDER
Complainant moves for a default judgment in this proceeding. Respondent has not filed any response to this motion.
Commission Rule 34 requires that an employer shall file with the Commission an answer to the complaint within 30 days after service of the complaint. The complaint was filed on August 19, 1988. No answer to the complaint has been filed by respondent employer.
Because of respondent's failure to file an answer, respondent is in default.
Accordingly, it is ORDERED:
1. Citation No.1 and Citation No. 2, issued May 18, 1988, are AFFIRMED.
2. The total proposed penalty of $520.00 for Citation No. 1, issued May 18, 1988 is ASSESSED.
James A. Cronin, Jr.
Dated: December 14, 1988
[[1/]] Commission Rule 34(d)(1), 29 C.F.R. § 2200.34(d)(1), provides that, with specific exceptions not applicable to this case,
the employer shall file with the Commission an answer conforming to the requirements of § 2200.36 [rule on content of the answer] within 30 days after service of the complaint.
[[2/]] Rule 41(b) is part of Commission Rule 41, 29 C.F.R. §
2200.41, which provides:
§ 2200.41 Failure to obey rules.
(a) Sanctions. when any party has failed to plead or otherwise
proceed as provided by these rules ..., 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.....; or
(2) On the motion of a party......
(b) Motion to set aside sanctions. For reasons, deemed sufficient by the Commission or Judge and upon motion expeditiously made, the Commission or Judge may set aside a sanction imposed under paragraph (a) of this rule......
[[3/]] In response to Choice's request that the Commission return its penalty payment, we note that civil penalties for OSHA violations are paid to the Secretary, not the Commission. See Section 17(1) of the Occupational Safety and Health Act of 1970, 29 U.S.C. § 666(1). Therefore, the Commission can provide no relief to Choice regarding this request.
[[4/]] Unlike these two decisions that directly address the
circumstances at issue in this case, such pre-Rule 41(b) decisions as Duquesne Light
Company, 8 BNA OSHC 1218, 1980 CCH OSHD ¶ 24,384 (No. 78-5034, 1980), where the
Commission considered whether the judge abused his discretion in sanctioning the Secretary
for failing to file a timely conference report, are inapposite. In that case, there could
be no consideration of the approach set forth in Commission Rule 41(b) because the
Commission had not yet adopted it. Moreover, the Commission noted in that case that,
because it was the Secretary (not the employer) who was being sanctioned, to dismiss the
complaint and vacate the citations would frustrate the remedial purposes of the Act.
[[1/]] The majority relies on provisions in the Federal Rules of Civil Procedure to interpret Commission Rule 41(b) . However, the Commission adopted its own rules to free itself of the constraints of the Federal Rules of Civil Procedure, which would otherwise apply. See Commission Rule 2(b), 29 C.F.R. § 2200.2(b).
[[2/]] I emphasize that this case involves an employer appearing pro se and that the sanction imposed by the judge was the most extreme sanction possible, dismissal of the employer's Notice of Contest. This results in affirmance of the contested citations and assessment of the proposed penalties and also takes away the employer's opportunity to present its case. In a case where both sides are represented by counsel or a case involving lesser sanctions, the approach taken by my colleagues, including imposition of the burden of proof on the party seeking relief from sanctions, might very well be appropriate. Here, in my opinion, it is not.
[[3/]] Failure of pro se employers to understand the distinction between OSHA and the Review Commission is a commonplace occurrence in litigation under the Act. Even the U.S. Courts of Appeals have frequently been confused about this distinction.
[[4/]] Commission Rule 36 (a), 29 C.F.R. 2200.36(a), provides
that employer "shall specifically admit or deny each allegation or, if the employer
is without knowledge of the facts, the answer shall so state." Commission Rule 36(b)
requires employers to set forth their affirmative defenses in the answer.