BOB McCASLIN STEEL ERECTION COMPANY
OSHRC Docket No. 3776
Occupational Safety and Health Review Commission
June 23, 1975
[*1]
Before MORAN, Chairman; and CLEARY, Commissioner
OPINION:
BY THE COMMISSION: A decision of Review Commission Judge William J. Risteau, dated February 14, 1974, has been before this Commission for review pursuant to 29 U.S.C. § 661(i) for more than a year. Rather than further delaying the disposition of this case until a third member is appointed to the Commission, the Commission as presently constituted agrees to decide this case at this time.
Chairman Moran would reverse the Judge's decision on the basis that the evidence is insufficient to justify "piercing the corporate veil" to hold the respondent liable for the hazardous exposure of the employees of the Bob McCaslin Anchor Company. Commissioner Cleary affirms the Judge's decision for the reason set forth in his separate opinion.
Accordingly, the decision of the Judge is affirmed by an equally divided Commission. This decision has no precedential weight. Secretary v. Garcia Concrete, Inc., 18 OSAHRC 184 (1975).
CLEARY, COMMISSIONER: I would affirm Judge Risteau's decision finding that the Bob McCaslin Steel Erection Co., Inc. (respondent) and the Bob McCaslin Anchor Co., Inc., should be treated as a single entity for [*2] the purposes of this Act.
It is well settled that corporate entities may be disregarded where it is necessary to effectuate a clear legislative purpose. Schenley Distillers Corp. v. United States, 326 U.S. 432 (1946); Bruhn's Freezer Meats of Chicago, Inc. v. United States Department of Agriculture, 438 F.2d 1332 (8th Cir 1971); Joseph A. Kaplan & Sons, Inc. v. F.T.C., 347 F.2d 785 (D.C. Cir. 1965).
I find that in view of the following factors, the purposes of the Act are best effectuated by treating the two companies as a single entity:
(1) Both companies shared a single worksite;
(2) Work performed by the companies on this site was interrelated and integrated with both companies being engaged in essentially the same business or phase of construction;
(3) The Steel Erection Company was owned by Bob McCaslin, Sr., while the Anchor Company was owned by his son, Bob McCaslin, Jr.;
(4) The father and son were involved in the management of both companies;
(5) Employees of each company were supervised by the same supervisor and many employees had at one time or another worked for both companies; and
(6) All employees of both companies belonged [*3] to the same local union.
See Home Supply Co., 7 OSAHRC 527. This finding is supported by decisions of the National Labor Relations Board which hold that where two companies have a combination of most or all of the following factors: a common worksite, a common president or management, a close interrelation and integration of operations, and a common labor policy, the two companies will be treated as one for the purposes of the Labor Management Relations Act, 29 U.S.C. § 151 et seq. Bayside Enterprises, Inc., 216 NLRB No. 92, 88 LRRM 1478 (1975); Dee Knitting Mills, 214 NLRB No. 138, 88 LRRM 1273 (1974); R. L. Sweet Lumber Co., 207 NLRB No. 52, 85 LRRM 1073 (1973).
The testimony of respondent's foreman, suggests a possible labor relations problem in abating some hazardous conditions. This suggests that the circumstances of this case may be similar to those involved in Anning-Johnson Company v. O.S.H.R.C., 516 F.2d 1081 (7th Cir 1975) 7 OSAHRC 527. But this matter has not been raised by the parties before us or sua sponte in the order for review. It is therefore not discussed.
[The Judge's decision referred to herein follows]
RISTEAU, JUDGE: [*4] This is a proceeding pursuant to Section 10(c) of the Occupational Safety and Health Act of 1970 (29 USC 651 et seq., hereafter called the Act), contesting a Citation issued by the Complainant against the Respondent under the authority vested in Complainant by Section 9(a) of that Act. The Citation alleges that as the result of an inspection on June 13 to 15, 1973, of a workplace under the ownership, operation or control of the Respondent, located at "Dallas/Fort Worth Regional Airport Valet Parking," and described as "Bob McCaslin Steel Erection Establishment," Respondent violated Section 5(a) (2) of the Act by failing to comply with occupational safety and health standards promulgated by the Secretary of Labor pursuant to Section 6 thereof.
The Citation, which was issued on July 6, 1973, alleges that the violation resulted from a failure to comply with the following standards promulgated by the Secretary by publication in the Federal Register, and codified in 29 CFR 1926.
Item No.-Standard or regulation allegedly violated-Description of alleged violation
1-29 CFR 1926.25(a)-Loose boards, scrap lumber with protruding nails, and other debris were not kept cleared from [*5] work areas and passageways in the following locations: 1. Line -19-2. Stairwell "A"
2-29 CFR 1926.500(b)-Floor holes, into which persons could accidentally walk, were not guarded in the following locations:-1. Line -19-2. Stairs "A"
3-29 Cfr/ 1926.500(d)(1)-Open-sided platforms, more than six (6) feet above adjacent ground level, were not provided standard railings and toeboards in the following locations:-1. Line -19-2. Stairs "B"-3. Fourth floor balcony
The cited Regulations read as follows:
Standard
29 CFR 1926.25(a) Housekeeping.
During the course of construction, alteration, or repairs, form and scrap lumber with protruding nails, and all other debris, shall be kept cleared from work arcas, passageways, and stairs, in and around buildings or other structures.
29 CFR 1926.500(b) Guardrails, handrails, and covers.
(b) Guarding of floor openings and floor holes. (1) Floor openings shall be guarded by a standard railing and toe boards or cover, as specified in paragraph (f) of this section. In general, the railing shall be provided on all exposed sides, except at entrance to stairways.
(2) Ladderway floor openings or platforms shall be guarded by standard [*6] railings with standard toe boards on all exposed sides, except at entrance to opening, with the passage through the railing either provided with a swinging gate or so offset that a person cannot walk directly into the opening.
(3) Hatchways and chute floor openings shall be guarded by one of the following;
(i) Hinged covers of standard strength and construction and a standard railing with only one exposed side. When the opening is not in use, the cover shall be closed or the exposed side shall be guarded at both top and intermediate positions by removable standard railings;
(ii) A removable standard railing with toe board on not more than two sides of the opening and fixed standard railings with toe boards on all other exposed sides. The removable railing shall be kept in place when the opening is not in use and should preferably be hinged or otherwise mounted so as to be conveniently replaceable.
(4) Whenever there is danger of falling through a skylight opening, it shall be guarded by a fixed standard railing on all exposed sides or a cover capable of sustaining the weight of a 200-pound person.
(5) Pits and trap-door floor openings shall be guarded by floor opening covers [*7] of standard strength and construction. While the cover is not in place, the pit or trap openings shall be protected on all exposed sides by removable standard railings.
(6) Manhole floor openings shall be guarded by standard covers which need not be hinged in place. While the cover is not in place, the manhole opening shall be protected by standard railings.
(7) Temporary floor openings shall have standard railings.
(8) Floor holes, into which persons can accidentally walk, shall be guarded by either a standard railing with standard toeboard on all exposed sides, or a floor hole cover of standard strength and construction that is secured against accidental displacement. While the cover is not in place, the floor hole shall be protected by a standard railing.
(9) Where doors or gates open directly on a stairway, a platforn shall be provided, and the swing of the door shall not reduce the effective width of the platform to less than 20 inches.
29 CFR 1926.500(d)(1)
(d) Guarding of open-sided floors, platforms, and runways. (1) Every opensided floor or platform 6 feet or more above adjacent floor or ground level shall be guarded by a standard railing, or the equivalent, [*8] as specified in paragraph (f)(i) of this section, on all open sides, except where there is entrance to a ramp, stairway, or fixed ladder. The railing shall be provided with a standard toeboard wherever, beneath the open sides, persons can pass, or there is moving machinery, or there is equipment with which falling materials could create a hazard.
Pursuant to the enforcement procedure set forth in Section 10(a) of the Act, Respondent was notified by letter dated July 6, 1973, from Charles J. Adams, Director of Area 1730, Occupational Safety and Health Administration, U.S. Department of Labor, that he proposed to assess a penalty for the violations alleged in the total amount of $60, of which $30 was for Item 1 and $30 for Item 3.
After Respondent contested this enforcement action and a Complaint had been filed, the case came on for hearing at Dallas, Texas, on December 3, 1973. No question concerning the Respondent's status as an employer as defined in the Act or the jurisdiction of this Commission has been raised.
DISCUSSION
At the outset, it is necessary to deal with Respondent's principal defense -- that none of its employees were present at the workplace at the time of the [*9] inspection. This position is based on the existence of two separate corporations bearing the name Bob McCaslin. The first of these, the Bob McCaslin Steel Erection Company, installed, pursuant to contract with the general contractor, pre-cast "T'"s in the building under construction. Following this operation, the Bob McCaslin Anchor Company, also under contract, came in to tie in the reinforcing steel. On the date of the inspection only nominal employees of the Anchor Company, with the possible exception of the supervisor, Mr. James Cornish, n1 were present. Mr. Cornish, however, advised the Complainant's Compliance Officer during the inspection that the employees present were those of the Bob McCaslin Steel Erection Company, and it was on this basis that the Erection Company was named in the Citation.
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n1 The record, consisting of statements of Mr. Schmedel, is unclear as to just which corporation Mr. Cornish was working for at the time.
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Complainant now urges that Respondent is estopped to deny this [*10] statement of Mr. Cornish. It is the opinion of this Judge, however, that the most persuasive argument for attributing liability for the alleged violations to the named Respondent is the close relationship between the two corporations and their management. As the record shows, they are owned and operated by two individuals, father and son, both named Bob McCaslin. Further, Mr. Cornish supervises and schedules the work of the employees of both corporations, and has been employed by both at one time or another. Indeed, an employee may switch from the payroll of one corporation to that of the other as he is needed. Mr. Schmedel, also, is active in the affairs of the two firms. Finally it is apparent that Mr. Cornish, as evidenced by his conversation with the Compliance Officer, made no hard and fast distinction in his own mind between the affairs of the two business entities.
Under the circumstances, it appears reasonable to find that the two corporations are simply parts of a larger enterprise under the control of the McCaslins, and that for purposes of the Occupational Safety and Health Act of 1970 and on the facts of this case, public policy requires that employees of one corporation [*11] be treated as employees of the other. This disregard of a strict concept of corporate liability for limited purposes is not a new one to the Courts, which have consistently permitted the "corporate veil" to be "pierced" when the interests of justice will be served and when such action is required for the protection or enforcement of public or private rights. See: Kimbrell v. C.I.R., 371 F. 2d 897, 902, Fn 16 (5th Cir., 1967); Maule Industries, Inc. v. Gerstel, 232 F. 2d 294, 297 (5th Cir., 1956); Sell v. United States, 336 F. 2d 467, 472 (10th Cir., 1964); Great Northern Co-op. Association v. Bowles, 146 F. 2d 269, 271 (Emer. Ct. App. 1944). In the opinion of this Judge, the situation here presented is one that warrants disregard of the corporate identities involved; Respondent's defense in this respect is not, therefore, a valid one.
Respondent's second defense goes to its claimed lack of responsibility for causing or eliminating the violations alleged in the Citation. Under the decisions of the Commission and its Judges, however, a violation occurs when employees are exposed to a hazard, regardless of who has contract responsibility [*12] for performing work necessary to rectify the violation. Secretary v. James L. Brussa, This defense must, therefore, also be rejected.
Finally, Respondent makes no real denial that the alleged violations occurred. On the other hand, the Secretary has, by testimony and photographic Exhibits (Ex. C1-2) given substance to the Citation. Moreover, the proposal penalties appear to reflect accurately the gravity of the violations and the mitigating factors contemplated by the Act.
FINDINGS OF FACT
1. On June 13 to 15, 1973, an inspection was made by one of Complainant's Compliance Officers of a workplace consisting of the valet parking of the Dallas/Fort Worth Regional Airport while such airport was under construction.
2. In the course of this inspection, Complainant's Compliance Officer was advised by Mr. James Cornish that men under his supervision were employees of Bob McCaslin Steel Erection Company, a corporation; such employees were in fact on the payroll of another corporation, Bob McCaslin Anchor Company.
3. The two corporations referred to in Findings of Fact No. 2, above, are closely related by identity of management and work force; Mr. [*13] Cornish has supervised employees of both corporations.
4. On the dates and at the locations described above, the employees referred to above were exposed to work hazards arising from the presence of (a) loose boards with protruding nails and other debris in work areas, (b) unguarded floor holes, and (c) unguarded platforms more than six feet above ground level.
5. Exposure of said employees to the hazards described in Finding 4(a), (b), and (c), constituted non-serious violations of the Occupational Safety and Health Act of 1970.
6. Considering the gravity of the violation described in Findings 4, (a), (b), and (c) above, along with the good faith, size, and safety history of Respondent, penalties of $30, 0, and $30, respectively, for each of the three violations is appropriate.
CONCLUSIONS
1. On the facts of this case, violations of the Occupational Safety and Health Act of 1970 on June 13 to 15, 1973, at the construction site of the valet parking for the Dallas/Fort Worth Regional Airport may be attributed to Respondent.
2. On June 13 to 15, 1973, Respondent was in violation of Section 1926.25(a), 1926.500(b), and 1926.500(d)(1) of Title 29, Code of Federal [*14] Regulations, promulgated pursuant to the Occupational Safety and Health Act of 1970.
3. Penalties of $30, 0, and $30, respectively, should be assessed for these violations.
ORDER
For the foregoing reasons and on the entire record, it is hereby ORDERED that Items 1, 2, and 3 of the Citation issued on July 6, 1973, be AFFIRMED; penalties of $30 for Item 1; 0 for Item 2; and $30 for Item 3, a total of $60, are hereby assessed.