VINCENT RIZZO, d/b/a VINCENT RIZZO CONSTRUCTION COMPANY or MASONCRAFT, INC.

OSHRC Docket No. 4224

Occupational Safety and Health Review Commission

December 22, 1975

[*1]

Before BARNAKO, Chairman; MORAN and CLEARY, Commissioners.

COUNSEL:

Marshall H. Harris, Regional Solicitor, USDOL

Stanley William Balick, for the employer

OPINIONBY: CLEARY

OPINION:

DECISION

CLEARY, Commissioner:

On September 24, 1975, Judge Donald K. Duvall rendered his decision in this case granting Vincent Rizzo's (respondent) motion to dismiss the citation and proposed penalty for three alleged serious violations of the Act. n1 Respondent's motion was based upon the Secretary's (complainant) failure to cite the proper party as respondent within the statutory six month time limitation. n2

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n1 The Occupational Safety and Health Act of 1970, 29 U.S.C. 651 et seq.

n2 Section 9(c) of the Act, 29 U.S.C. 658(c).

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The case was directed for review and is before us pursuant to section 12(j) of the Act on the following issue:

Whether the Judge erred in granting respondent's motion to dismiss and in refusing to treat the citation and complaint as amended to name Masoncraft, Inc. as the proper party respondent.

For the reasons that [*2] follow, we affirm the Judge's disposition.

Vincent Rizzo is the president of two Delaware corporations - Vincent Rizzo Construction Company and Masoncraft, Inc. On August 2, 1973, complainant issued a citation and notification of proposed penalty to Vincent Rizzo as President of Vincent Rizzo Construction Company. The citation was the result of an inspection by the Secretary of Labor of a Rehoboth Beach, Delaware construction site on June 27, 1973.

The Secretary's action was contested in a letter on the Masoncraft, Inc., letterhead wherein Mr. Rizzo clearly states that "Masoncraft, Inc. is the correct name of the company on the above job [and hence the proper party respondent] rather than the Vincent Rizzo Constr. Co." The Secretary, ignoring the separate legal entity of the proper party respondent, filed a complaint against "Vincent Rizzo, d/b/a Vincent Rizzo Construction Company or Masoncraft, Inc." While the caption employed by complainant is arguably susceptible to differing interpretations, the record as a whole indicates quite clearly that the Secretary sought to establish the alleged violations against Vincent Rizzo as an individual.

On February 7, 1974, respondent, [*3] Vincent Rizzo, filed a motion to dismiss the citation and proposed penalty for the three alleged violations of the Act on the grounds that: (1) Vincent Rizzo, individually, does not and never has maintained a business in his own name or as they other name; (2) Vincent Rizzo Construction Company is a Delaware Corporation, and therefore a separate legal entity, which has never done construction work at the cited workplace; and (3) Masoncraft, Inc. is also a Delaware Corporation and the only organization of those mentioned actually involved in construction work at the cited workplace, but since it is not named as a party respondent, prosecution at this time would violate section 9(c) of the Act.

In his opposition to respondent's motion to dismiss, complainant essentially makes the following two arguments: (1) that Vincent Rizzo was and is an employer within the meaning of section 3(5) of the Act and "[t]he Citation and Complaint make clear that the Complainant intended to and did cite Vincent Rizzo [individually] irrespective of the name under which he was doing business;" and (2) that at the time of inspection of the cited workplace an agent of Vincent Rizzo represented to the compliance [*4] office that the Vincent Rizzo Construction Company was the party doing the work - thus, respondent is estopped from moving to dismiss the citation on the ground that the wrong corporation entity has been cited.

Judge Duvall reserved his ruling on Mr. Rizzo's motion, but made the following statement in his pre-hearing order:

The identity of the Respondent in this matter is deemed to be Vincent Rizzo, d/b/a Vincent Rizzo Construction Company or Masoncraft, Inc. as set forth in the citation as amended by the complaint, substantially in accordance with Commission Rule 33(a)(3). It is the Judge's understanding that the parties construe the foregoing designation of Respondent as not including Masoncraft, Inc. as a named party and requiring proof that Vincent Rizzo was and is an employer within the meaning of section 3(5) of the Occupational Safety and Health Act of 1970 (emphasis added).

Neither party opposed the Judge's pre-hearing order. Furthermore, at the hearing, Secretary's counsel reiterated that complainant was seeking to establish the alleged violations against Vincent Rizzo as an individual and not against either of the corporations.

The issue of whether Vincent Rizzo [*5] as an individual was an employer within the meaning of section 3(5) of the Act was hotly contested throughout the entire proceeding. Judge Duvall in his decision concluded that Vincent Rizzo individually did not come within the Act's definition of "employer." On the other hand, the Judge found that Masoncraft, Inc., a Delaware corporation, did fit the term "employer" as given in section 3(5) of the Act, but he made the following observation:

[I]n the face of the pre-hearing exchange of information, the testimonial and documentary evidence presented at the hearing which convincingly established Masoncraft, Inc. as the employer of the cited hazards and negated Vincent Rizzo individually as such employer, complainant has persisted in pressing its case against the latter without ever seeking to amend its complaint and the citations to show the correct party respondent.

Therefore, Judge Duvall granted respondent's motion to dismiss for lack of a proper party respondent. n3

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n3 The Judge's "Order" is somewhat ambiguous concerning the granting of respondent's motion, but a reading of the entire decision makes it abundantly clear that the motion to dismiss was granted.

[*6]

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Now, at this stage of the proceeding, the Secretary requests that we invoke the provisions of Rules 4(h), 15(a), and 15(c) of the Federal Rules of Civil Procedure in order to amend the pleadings to show the proper party respondent and that, under Rule 15(c) such amendment should relate back to the date of the original pleading. n4 We deny the request. The motion to amend the pleadings at this time is simply too late.

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n4 The Federal Rules of Civil Procedure govern Commission proceedings. See section 12(g) of the Act and Rule 2(b) of the Commission's Rules of Procedure (29 CFR 2200.2(b)). Rule 4(h) provides:

Amendment. At any time in its discretion and upon such terms as it deems just, the court may allow any process or proof of service thereof to be amended, unless it clearly appears that material prejudice would result to the substantial rights of the party against whom the process issued (emphasis added).

Fed. R. Civ. P. 4(h)

Rule 15(a), in pertinent part, provides:

Amendments. A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calender, he may so amend it at any time within 20 days after it is served. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires (emphasis added).

Fed. R. Civ. P. 15(a)

Rule 15(c) provides:

Relation Back of Amendments. Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining him defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him (emphasis added).

Fed. R. Civ. P. 15(c)

[*7]

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The rules of procedure cited by the Secretary speak in terms of "when justice so requires" and "but for a mistake." Does "justice" require that we permit an amendment to rectify circumstances that were known to the Secretary long before the six-month statutory period in section 9(c) expired? Does "justice" require that we permit the Secretary to correct his error even though he persisted in his "mistake" long after the true situation was known? We think not. This was no "mistake" on complainant's part. It was an obstinate refusal to pursue the case against the proper party respondent. n5

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n5 This Commission recently endorsed an appropriate application of Rules 15(a & c) by Judge Duvall in Urban Builders, Inc., No. 4626 (September 9, 1975).

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Indeed, can we find a "mistake" in the Secretary's pleading when, in his brief on review, he notes that the reason for the position taken against Vincent Rizzo individually "was to seek a definition [*8] of an 'employer' which could, when necessary penetrate the various forms of business organization in order to simplify OSHA record-keeping procedures (footnote omitted)." We cannot.

In addition, complainant contends that he should not have been precluded from, in effect, returning to a case against Masoncraft, Inc., after the failure of his proceeding against Mr. Rizzo individually. We reject this argument. The Secretary made no attempt to demonstrate that he was prosecuting the case against both parties. He essentially "put all his eggs in one basket." We refuse to permit complainant to try seriatim the same case against different parties.

Accordingly, it is ORDERED that the decision of Judge Donald K. Duvall granting respondent's motion to dismiss the citations and notification of proposed penalty be affirmed.

CONCURBY: MORAN

CONCUR:

MORAN, Commissioner, Concurring:

I join in affirming Judge Duvall's well-reasoned decision which is attached hereto as Appendix A.

APPENDIX A

DECISION AND ORDER

Louis Weiner, Regional Solicitor, U.S. Department of Labor and Michael D. Shapiro, for complainant

Stanley William Balick, for respondent

DUVALL, D.K., Judge, OSHRC

Statement of Case

This [*9] is a proceeding pursuant to sections 9 and 10 of the Occupational Safety and Health Act of 1970 (29 U.S.C. 651, et seq., hereinafter "the Act") contesting alleged serious violations of safety and health standards and proposed penalties therefor contained in three citations and notification of proposed penalty issued on August 2, 1973. Citation number 1 alleged violation of the standard set forth at 29 CFR 1926.451(a)(15) (scaffold insecurely braced), for which a $500.00 penalty was proposed. Citation number 2 alleged violation of the standards set forth at 29 CFR 1926.500(d)(1) and 1926.500(b)(8) (unguarded open-sided floors and floor hole), for which a penalty of $500.00 was proposed. Citation number 3 alleged violation of standards set forth at 29 CFR 1926.552(b)(2); 1926.552(b)(3) and 1926.552(b)(5)(ii) (unprotected hoistway entrances and top), for which a penalty of $500.00 was proposed. The aforesaid citations were based on complainant's inspection on June 27, 1973 of respondent's workplace, being a condominium apartment building under construction at Rehoboth Beach, Delaware.

The parties stipulated that respondent was at all material times herein engaged in a construction [*10] business affecting commerce within the meaning of section 3(5) of the Act (Complaint, Answer, Tr. 139-140); that respondent is subject to the Act and all regulations promulgated thereunder; that Masoncraft, Inc., employed persons at the aforesaid condominium building under construction at Rehoboth Beach, Delaware; that Masoncraft, Inc.'s net worth for 1972 was $39,329.24 and that in 1974 it had two employees per day on an average daily number, 20 working days per month basis; that Vincent Rizzo was and is an officer and stockholder of Masoncraft, Inc.; and that Masoncraft, Inc. previously paid a $250.00 penalty for a violation under the Act.

Respondent duly filed its notice of contest herein, but whether this legally contested the violations as well as the penalties proposed for the three aforesaid citations is at issue. A hearing thereon was held on March 13, 1974, at Wilmington, Delaware, before the undersigned Judge. No affected employees asserted party status in this matter. Briefs were submitted by both parties.

The issues considered herein are: (1) whether Vincent Rizzo, individually, d/b/a Vincent Rizzo Construction Co., and/or Masoncraft, Inc., was an employer within [*11] the meaning of the Act; (2) whether respondent's notice of contest of the penalties proposed herein also contested the cited violations under the circumstances of this case; (3) if (1) and (2) are determined in the affirmative, whether complainant has proved by a preponderance of the evidence that respondent committed the serious violations alleged in the three citations under sections 5(a)(2) and 6 of the Act; and (4) whether the penalties proposed for the cited violations are appropriate under section 17 of the Act.

Discussion

Respecting the first issue of proper party respondent, a review of the pertinent procedural history is important. The citations (Case File Item 1) and notification of proposed penalty (Case File, Item 2) issued by complainant to respondent on August 2, 1973, were directed to "Mr. Vincent Rizzo, President, Rizzo Construction Company". The notice of contest (Case File, Item 3) was signed by Vincent Rizzo on "Masoncraft, Inc." letter-head dated August 6, 1973, which contained a note type below the signature, to wit: "Masoncraft, Inc. is the correct name of the company on the above job rather than the Vincent Rizzo Construction Company."

The complaint [*12] (Case File, Item 6), filed with the Commission on September 10, 1973, is directed to "Vincent Rizzo, d/b/a Vincent Rizzo Construction Company or Masoncraft, Inc." On October 9, 1973, complainant filed a motion to dismiss respondent's notice of contest under Commission Rules 33(b) and 38 for failure of respondent to file an answer. Attorney for respondent filed an answer to the motion to dismiss (Case File, Item 7), requesting an extension of time to file answer supported by an affidavit signed by Vincent Rizzo stating in part that he was the President and owner of Masoncraft, Inc.; that he had delegated responsibility for this matter to an estimator in his office who did not act in a timely manner; that as soon as he learned of this inaction he consulted with complainant's attorney and retained his own attorney; and that he himself is not legally trained and did not understand the legal significance of all the papers sent to him in this matter.

Commission Judge Herbert E. Bates (now retired) denied complainant's motion to dismiss and allowed respondent time to file a more complete answer (Case File, Item 8), which it did on February 7, 1974, together with a motion to dismiss (Case [*13] File, J-1), on the grounds that (1) Vincent Rizzo, individually, does not and never has for the purposes herein maintained a business in his own name or as any other name; (2) Vincent Rizzo Construction Company is a Delaware Corporation, and therefore a separate legal entity, which has never done construction work at the cited workplace; and (3) Masoncraft, Inc. is a Delaware Corporation and the only one of respondents name herein involved in construction work at the cited workplace, and since it is not a named party respondent herein, to prosecute it now would violate section 9(c) of the Act.

In its filed opposition to respondent's motion to dismiss (Case File, J-4), complainant contended that (1) at the time of inspection of the cited workplace an agent of Vincent Rizzo represented to complainant's compliance officer that the Vincent Rizzo Construction Company was the party doing the work; (2) Vincent Rizzo is the controlling figure of both corporate entities, Vincent Rizzo Construction Company and Masoncraft, Inc.; (3) Vincent Rizzo was and is an employer within the meaning of section 3(5) of the Act and "The Citation and Complaint make clear that the Complainant intended to and [*14] did cite Vincent Rizzo irrespective of the name under which he was doing business."; (4) respondent (or his agents), having mislead complainant concerning the identity of the legal entity doing work at the workplace, is estopped from moving to dismiss the citation on the ground that the wrong corporate entity has been cited; (5) under authority of Commission Rule 33(a)(3), the complaint herein clearly amends the citation to show Vincent Rizzo as the employer being cited irrespective of the name under which he may have been doing business; (6) dismissal of the citations herein for error in citing the proper legal name of respondent is without precedent before the Commission and is an inappropriate sanction which would undermine the purposes and policies of the Act; and (7) respondent's motion, having been filed four months after the complaint, is not timely and should be stricken.

In its reply to complainant's opposition to its motion to dismiss, (Case File, J-6), respondent asserted that (1) complainant had the burden of making sure of the proper party respondent when it issues citations and complaints, especially when that information is readily available; (2) the applicable law [*15] concerns legal entities, not "controlling figures"; (3) Vincent Rizzo is not an employer under the Act; (4) complainant was not mislead; (5) nothing in the pleadings herein indicates an intent by complainant to amend the citation, or sets forth the reasons for amendment and stating with particularity the change sought as required by Commission Rule 33(a)(3); (6) respondent knows of no authority and complainant has cited none in support of the latter's contention that dismissal of citations for error in citing proper party respondent is without Commission precedent; and (7) respondent's motion to dismiss is timely since it would have been inappropriate to have made the motion prior to expiration of the six months statute of limitations under section 9(c) of the Act upon which the motion is based.

In my Order of February 26, 1974, I (1) deferred ruling on respondent's motion to dismiss pending consideration of evidence to be presented at a hearing; (2) recognized respondent cited herein to be Vincent Rizzo, d/b/a Vincent Rizzo Construction Company or Masoncraft, Inc., as set forth in the citation as amended by the complaint substantially in accordance with Commission Rule 33(a)(3), [*16] with the understanding that respondent as designated herein does not include Masoncraft, Inc., and (3) that proof that Vincent Rizzo was and is an employer within the meaning of section 3(5) of the Act would be required.

At the hearing, the parties confirmed their understanding and intent that the issue to be tried was whether Vincent Rizzo individually d/b/a Vincent Rizzo Construction Company and/or Masoncraft, Inc., is an employer within the meaning of section 3(5) of the Act (Tr. 30-32). That section of the Act provides as follows:

"The term 'employer' means a person engaged in a business affecting commerce who has employees, but does not include the United States or any State or political subdivision of a State."

Section 3(4) of the Act defines the term "person" as meaning one or more individuals, partnerships, associations, corporations, business trusts, legal representatives, or any organized group of persons.

Since the amended citation herein, as clearly intended by complainant, cites Vincent Rizzo individually for the alleged violations, complainant has the burden of proving that Vincent Rizzo individually (i.e., d/b/a Vincent Rizzo Construction Co. or Masoncraft, Inc.), [*17] on June 27, 1974, was engaged in a business affecting commerce and had employees. By unrebutted affidavit or testimony of Mr. Rizzo, it was established of record that Mr. Rizzo was the President and owner of Masoncraft, Inc. (Affidavit, Case File, Item 7; Complainant's Brief, p. 7); that all other officerships in Masoncraft, Inc. were held by Mr. Rizzo's wife, and two children, one of whom was a minor (Tr. 136, 390); that Rizzo and his wife owned 51% of Masoncraft's corporate stock, with the balance owned by the two sons (Tr. 136-137); that Rizzo visited the workplace at least once a week, actively supervised work there, and signed the contract on behalf of Masoncraft, Inc. for the masonry work at the workplace (Tr. 137-138); that Rizzo and his adult son directed the affairs of Masoncraft, Inc., had authority (which was exercised) to hire and fire Masoncraft employees (Tr. 137); that Rizzo and Masoncraft, Inc. foreman Spence set the pay rates and that Rizzo, his wife, and/or adult son signed the employee paychecks for Masoncraft, Inc. (Tr. 138). Complainant argues that the foregoing evidence "points to the inescapable conclusion that the legal entity, Masoncraft, Inc., which had [*18] the contract for masonry work at the jobsite, is completely dominated and controlled by Vincent Rizzo" (Complainant's Brief, p. 7).

On the other hand, the evidence also shows that Rizzo bid and signed the contract for masonry work at the workplace on behalf of Masoncraft, Inc. (Tr. 137, 142, 174) that the employee paychecks carried the corporate name Masoncraft, Inc., and were signed by Rizzo and his wife (Tr. 116-117, 138); that Rizzo signed the notice of contest herein, on letterhead of Masoncraft, Inc., as its President (Tr. 174), and participated in discussions with OSHA officials respecting the citations herein on behalf of Masoncraft, Inc., (Answer/Affidavit, Tr. 141). Indeed, Rizzo testified that he did business only in the name of Masoncraft, Inc. during 1973; that his only income from any source involving doing business in 1973 was salary from Masoncraft, Inc. (Tr. 143-144), and this was confirmed by Rizzo's accountant.

Fairly weighed, the evidence of record does not support complainant's contention that Vincent Rizzo individually, doing business as Vincent Rizzo Construction Company or as Masoncraft, Inc., was engaged in business affecting commerce or had employees [*19] within the meaning of the Act.

However, complainant further contends that the employment relationship under the Act should not be construed according to the technical concepts of the common law; that while the distinctions between corporations and individuals as separate, legal entities cannot be completely ignored, they should not be allowed to take precedence over and frustrate the basic purposes of remedial legislation; that since the basic purpose of the Act is protection of the job safety of employees, Vincent Rizzo should not be permitted to frustrate this remedial purpose by hiding behind the shield of a corporation created, operated, and controlled by him (Complainant's Brief, pp. 5, 9). In support of this theory, complainant cites several Commission cases and a number of court decisions involving NLRB cases (Complainant's Brief, pp. 5-9). Careful reading of these cases cited by complainant leads me to the same conclusion reached by respondent's counsel (Reply Brief, p.1): not one of them is on point with the issue and facts of the case at bar.

Complainant has not sustained its burden of proving by a preponderance of the evidence that the traditional distinctions between [*20] separate legal entities has been changed by the Act for the purpose of determining the employment relationship in the circumstances of this case. I find no cases, including those cited by complainant, which change the established law posited by Respondent (Respondent's Brief, p. 7):

"In no legal sense can the business of a corporation be said to be that of its individual stockholders or officers.

The corporate entity is distinct although all or a majority of its stock is owned by a single individual or corporation, or although the corporation is a so-called 'family' or 'close' corporation." 18 Am. Jur. 2d 13, p. 558.

[*21] cases cited by complainant, the Commission stated:

"These authorities, however, do not stand for the proposition that an agency should create an employment relationship when one does not exist in fact. Yet, the creation of such a relationship would be the necessary result were we to adopt Complainant's position." Gilles v. Cotting, Inc., supra at 4.

Similarly, in the case at bar, the facts that Vincent Rizzo, in his corporate capacity as President of Masoncraft, Inc., signed contracts and employee paychecks, and exercised direction and control and power to hire and fire over employees of Masoncraft, Inc., did not legally create an employment relationship between Vincent Rizzo individually, and said employees. Yet to impose on Rizzo individually the liability for the violations alleged herein would necessarily create a limited employment relationship for the purposes of the Act. Such a result would be legally unwarranted and mischievous. For example, under complainant's theory Rizzo as an individual would have the right to control and direct the activities of the corporation's employees in ways that might conflict or be inconsistent with similar rights of Rizzo as President [*22] or of other officers of Masoncraft, Inc. I do not believe that the Congress intended the Act to go so far. As stated by the Commission, "the terms used in this Act contemplate an existing employment relationship. Nowhere do we find an indication that Congress intended the creation of the relationship where it does not exist in fact." Gilles and Cotting, Inc., supra at 5.

Furthermore, the NLRB cases cited by complainant are inapposite since, for the most part, they involve judicial construction of the more liberal definitions of "employer" and "employee" contained in the Fair Labor Standards Act, and the Labor-Management Relations Act (See Respondent's Reply Brief, p.2) for the purpose of determining whether certain categories of workers are employees under the law in question. In none of these cases did the courts ignore or overrule or make exceptions to established concepts of and distinctions between legal entities, such as those recognized by section 3(4) of the Occupational Safety and Health Act. For example, in NLRB v. Hearst Publications, 322 U.S. 111 (1944), where the issue was whether newsboys were independent contractors or employees under the Labor-Management [*23] Relations Act, the Court sought to effectuate the purposes of the latter Act (eliminate causes of labor disputes and balance the contending forces in economic relationships) by avoiding technical distinctions which would ultimately lead to the exclusion of large segments of workers from the protection of the Act and thus largely defeat achievement of the statute's objectives.

The issue in the case at bar is quite different, although the determination of the proper employer here, if in favor of complainant's position, could, by doing juridical damage to the established concept of distinctions between separate legal entities, cause considerable havoc and confusion among employers, employees, and the Department of Labor in administering and complying with the Act. In this respect, the Commission no less than the courts has an important balancing and legal policy-making function to perform. On this score, the Supreme Court in the Hearst case prescribed some guidelines which are deemed pertinent here:

"Congress, on the one hand, was not thinking solely of the immediate technical relation of employer and employee. It had in mind at least some other persons than those standing in [*24] the proximate legal relation of employee to the particular employer involved in the labor dispute. It cannot be taken, however, that the purpose was to include all other persons who may perform service for another or was to ignore entirely legal classifications made for other purposes." NLRB v. Hearst Publications, supra at 124.

The McCaslin case (subject to Commission review) would have been legal authority for complainant's position here had the original respondent in the citation (against Rizzo Construction Company) not been changed to Vincent Rizzo, individually, by the amending complaint herein.

In connection with this issue, complainant also asserts that employees of Masoncraft, Inc. mislead the compliance officer as to the identity [*25] of the employer on the jobsite (Complainant's Opposition to Respondent's Motion to Dismiss, Case File, J-4) and that Vincent Rizzo is hiding behind "the shield of a corporation created, operated and controlled by him" (Complainant's Brief, p. 9). These assertions do not bear close analysis and therefore fail to inject that measure of deceit or fraud normally required to provide an exceptional basis for departing from established legal principles.

Respecting the misleading assertion, the compliance officer, Mr. Carmany, testified that a summer employee (John Easom) at the workplace had said he worked for "Rizzo Construction", but Mr. Easom testified that Masoncraft, Inc., was his employer, whose checks he received signed by Mr. and Mrs. Rizzo whom he considered owners of the corporation (Tr. 106-108, 116-117). Mr. Carmany's testimony was contradictory since initially he did not recall respondent's foreman Spence saying anything as to which company was the employer (Tr. 177-178), whereas, subsequently he stated that Mr. Spence had told him that he worked for Rizzo Construction Company (Tr. 248-249). While Spence did not recall giving that information, he testified that he received [*26] checks from Masoncraft, Inc., and that he had never been an employee of Rizzo Construction Company or Vincent Rizzo individually (Tr. 359-360). However misleading this initial information may have been, it was soon corrected by respondent. In its letter notice of contest dated August 6, 1973, Mr. Rizzo clearly identified the proper employer as Masoncraft, Inc. Certificates of Incorporation for both Vincent Rizzo Construction Company and Masoncraft, Inc. (Respondent's Exhibits R-2 and 3) were on file with the Secretary of State of Delaware since 1960 and 1963, respectively (Respondent's Exhibits R-2 and 3). Furthermore, far from hiding, Mr. Rizzo personally conferred with OSHA officials as soon as he learned that a timely answer had not been filed by his estimator on his behalf (Respondent's Answer to Motion to Dismiss, Case File, Item 7).

In its opposition to respondent's motion to dismiss (Case File, J-4), complainant alleged that the Commission and its Judges have uniformly allowed the correct name of the party respondent to be made part of the record at the hearing. At the hearing herein, as previously discussed, there was no substantial evidence introduced showing that Vincent [*27] Rizzo individually was an employer within the meaning of section 3(5) of the Act. Indeed, even Mr. Ashley, the OSHA Acting Area Director, who finally approved issuance of the citations and penalties stated that his intention in issuing said citations initially to Vincent Rizzo, President, Rizzo Construction Company, was to cite the mason contractor who was engaged in the construction of the Henlopen workplace, and so, based on the compliance officer's report, he directed the citations to the chief officer in authority (Rizzo as President) with the Rizzo Construction Company (Tr. 275).

Even after being advised by respondent that Masoncraft, Inc. was the proper employer at the workplace, complainant inexplicably amended the citation by its complaint substituting Vincent Rizzo, d/b/a Vincent Rizzo Construction Company and/or Masoncraft, Inc., as party respondent. And in the face of the pre-hearing exchange of information, the testimonial and documentary evidence presented at the hearing which convincingly established Masoncraft, Inc. as the employer of the employees exposed to the cited hazards and negated Vincent Rizzo individually as such employer, complainant has persisted in pressing [*28] its case against the latter without ever seeking to amend its complaint and the citations to show the correct party respondent.

As suggested by respondent (Respondent's Brief, p. 6), we find this cavalier handling of employer-respondent identification difficult to understand, and without legal foundation. Furthermore, the position taken by complainant and its counsel respecting the party respondent herein affords no proper legal basis for amendment of the pleadings or citations or relation back of such amendment under Rule 15 of the Federal Rules of Civil Procedure. Accordingly, respondent's motion to dismiss the amended citations and notification of proposed penalty herein should be granted.

While the foregoing conclusion moots the other issues in this case, I address myself to the other issues while this matter is before me. Respecting the second issue, complainant has not shown by a preponderance of the evidence that respondent, by its notice of contest, contested only the proposed penalties and not the alleged violations contained in the three citations. The notice of contest dated August 6, 1973, referred to the citations for three violations and protested "any penalties" [*29] (Case File, Item 3). It did not explicitly contest the violations, but rather itemized them in terms of the corrections made of them by respondent or the general contractor, thus tending to acknowledge or concede their existence in fact. On these facts, complainant contends that a final order of the Commission has attached with respect to the violations because they were not clearly contested by respondent under section 10 of the Act. Complainant cites Brennan v. OSHRC and Bill Echols Trucking Company, 487 F.2d 230 (1973), as the principal legal authority supporting its position (Complainant's Brief, pp. 3-5).

The factual basis for the no-contest inference reasonably drawn by the Court in Echols is indeed similar to the case a bar. But the Echol case is distinguishable from this case in at least two important respects: (1) the notice of contest in Echols was written by an attorney, a fact emphasized by the Court in its opinion; and (2) the notice of contest here specifically related two of the violations to the general contractor and not to the respondent.

While only limited weight can be accorded Mr. Rizzo's after the fact testimony at the hearing that his notice [*30] of contest was intended to say that "we're not at fault with these violations that they're citing us for" (Tr. 147), Mr. Rizzo's statements that he had no legal training and did not understand the legal significance of the papers in this matter he had received as of October 19, 1973 (Affidavit, Case File, Item 7) stand unrebutted of record. In an earlier citation in January 1973, involving the same worksite, which was issued to Masoncraft, Inc., Mr. Rizzo had paid the $250.00 fine under protest without contesting and without benefit of legal counsel (Tr. 147-150).

In these circumstances, and bearing in mind the purposes and due process procedures of the Act, I would accord respondent the benefit of the doubt on this issue, this requiring a decision on the merits with respect to both the alleged violations and the proposed penalties, assuming jurisdiction.

Respecting the alleged violations, complainant has sustained its burden of proof. Citation number 1 alleged that on June 27, 1973, at the workplace, the legs of the patent scaffold were not securely braced to prevent displacement. It was alleged that the legs were placed within 2 inches of the edge of the unprotected open sided [*31] floor. The evidence of record establishes that the cited scaffold, of steel tubular construction, was located about six inches from the outer edge of the fourth floor on the west side of the building under construction, and that it was used by block layers employed by the firm headed by Mr. Rizzo (Tr. 45-46, 63-64, 94-96, 103, 181). One man usually worked on a scaffold with about 40 blocks (weighing about five pounds a piece) and mortar (Tr. 124-125).

At the time of the inspection, Mr. Carmany, the compliance officer, observed two legs of the cited scaffold within 2-3 inches from the outer edge of the open-sided fourth floor without being secured or tied to prevent any movement due to jarring or other force. Mr. Carmany considered the unsecured position of the scaffold dangerous because a slight jarring could cause one of the outer legs of the scaffold to go off the edge, tilt the scaffold and perhaps cause injury to the man working on the scaffold (Tr. 178-179). Mr. Rizzo conceded the condition could be dangerous, and that the scaffold was tied back with heavy wire at Mr. Carmany's suggestion (Tr. 151-152).

Foreman Spence testified that the cited scaffold was 3 to 4 feet from [*32] the edge of the open-sided fourth floor; that it was not used by employees under his supervision when it was close to the edge, and that the photograph of the alleged scaffold (C-3) was not the same scaffold he had seen with Mr. Carmany on the date of inspection (Tr. 357-359; 367-370). However, Mr. Carmany testified that the scaffold in the photograph C-3, which he took, is the scaffold he saw and cited. The fact that the plumber, Mr. Warrington, who was on the inspection tour with Mr. Carmany, also recalled seeing the same unsecured scaffold approximately six inches from the edge of the fourth floor (Tr. 45-46) tends to corroborate Mr. Carmany's testimony. Similarly, the fact that Mr. Spence and Mr. Rizzo agreed to secure the scaffold at Mr. Carmany's suggestion tends to discount Mr. Spence's statement that the scaffold was not in a usable position and may have been pushed in that position temporarily (Tr. 367-368).

Respondent counsel contends that the cited standard did not clearly require respondent to tie back the legs of the scaffold in the circumstances herein and that without such notice employers cannot fairly be penalized for failure to take such action (Respondent's [*33] Brief, pp. 13-14; Tr. 188-191). Compliance officer Carmany testified that the scaffold would have met the requirements of the cited standard "had it not bee . . . in the precarious position of those two supporting legs, so close to the outer perimeter of that floor" (Tr. 188-189). He was concerned "that someone may jar this scaffold even a slight amount and cause one of these legs to go off the edge. . ." (Tr. 178). The normal standard for interpretation of a regulation is that it be reasonable and consistent with the purpose of the regulation. Secretary of Labor v. Occupational Safety and Health Review Commission and Gerosa, Incorporated, Docket No. 73-1428, U.S.C.A. 2d (February 11, 1974). Given the precarious position of the scaffold here (2-6 inches from the unguarded outer edge of the fourth floor), it was reasonable and consistent with the cited standard's requirement that the legs be "securely and rigidly braced to prevent swaying and displacement" to require that the legs of the scaffold be tied to the building so as to secure them from any movement resulting from anyone jarring or hitting the scaffold. While this procedure was followed by respondent in this instance [*34] only after Mr. Carmany and suggested it, Mr. Rizzo was well aware of and, at other times, had followed the practice of wiring scaffolds to buildings (Tr. 153-154), presumably pursuant to the tie-in requirements specified for tube scaffolds at 29 CFR 1926.451(c)(12) of (d)(7).

On balance, there is a preponderance of evidence of record that the cited scaffold controlled by Masoncraft, Inc. violated the standard set forth at 29 CFR 1926.451(a)(15) by reason of its being insufficiently secured to prevent displacement. The violation was reasonably deemed serious since there was a substantial probability that death or serious physical harm could result to an employee falling from such a scaffold should it be accidently displaced so close to the edge of the unprotected fourth floor. Because of the proximity of Foreman Spence to the cited scaffold both before and at the time of inspection, he and his employer, Mr. Rizzo, must reasonably be deemed to have known or could have, with the exercise of reasonable diligence, known of the presence of the violation.

The alleged second violation, consisting of the two standards 29 CFR 1926.500(d)(1) and 1926.500(b)(8), concerned open-sided floors [*35] unguarded by standard railings and unguarded and uncovered floor holes. Mr. Carmany's testimony that there was no outer perimeter protection for the open-sided fourth floor in the area in which Masoncraft, Inc. employees were exposed stands unrebutted (Tr. 182). Mr. Spence was well aware of this condition, but believed it was partly the responsibility of the general contractor, Mr. Ambach (Tr. 182, 350-351), and did not permit employees under his supervision to get close to the edge (Tr. 351); but one of these employees (Mr. Easom) testified that in his work as a laborer he came as close to the edge of the fourth floor as he could without stepping off (Tr. 113-114).

Mr. Carmany further testified that there was an open hole two feet wide by eight feet long in the floor about 3-4 feet from the landing for the hoist car at the fourth floor level; that employees (including Mr. Easom) maneuvering equipment off of the hoist passed within 2-3 feet of this floor opening; and that a fall through this hole would have been for a distance of over 9 feet (Tr. 184, C-4). Foreman Spence was also aware of this condition and, in fact, had earlier approached the general contractor, Mr. Ambach, [*36] to correct the missing planking which was his responsibility (Tr. 353-354). Mr. Spence further stated that he had these holes covered with plywood whenever he saw them, but that such plywood covers were frequently removed by other crafts, as may have been the case here, although he could not remember having seen this hole before the inspection (Tr. 354-356). Mr. Warrington testified that the particular unguarded hole cited on the fourth floor could have been there as long as a month (Tr. 93). Without doubting the credibility of Mr. Spence, a preponderance of the evidence of record shows violations of the cited standards and the serious nature of those violations, which were known to Mr. Rizzo or his foreman.

The third citation alleged violations of the following standards dealing with material hoists:

29 CFR 1926.552(b)(2)

"All entrances of the hoistways shall be protected by substantial gates or bars which shall guard the full width of the landing entrance. All hoistway entrance bars and gates shall be painted with diagonal contrasting colors, such as black and yellow stripes."

29 CFR 1926.552(b)(3)

"Overhead protective covering of 2-inch planking, 3/4 inch plywood, or other [*37] solid material of equivalent strength, shall be provided on the top of every material hoist cage or platform."

29 CFR 1926.552(b)(5)(ii)

"When a hoist tower is not enclosed, the hoist platform or car shall be totally enclosed (caged) on all sides for the full height between the floor and the overhead protective covering with 1/2-inch mesh of No. 14 U.S. guage wire or equivalent. The hoist platform enclosure shall include the required gates for loading and unloading. A 6 foot-high enclosure shall be provided on the unused sides of the hoist tower at ground level."

The citation alleged violations of these standards in that:

"Hoistway entrances at all floor levels were not protected by gates or bars. Overhead protective covering of two inch planking, 3/4 inch plywood, or of equivalent strength, was not provided on the total top of the material hoist cage. The hoist tower, which was not enclosed, did not have the hoist car totally enclosed (caged) on all sides for the full height between the floor and the overhead protective covering. The hoist platform did not have the required gates for loading and unloading."

In support of those allegations, the compliance officer (Mr. Carmany) [*38] testified that at the time of his inspection there were only two sides to the hoist car, both gates were missing, and the overhead protection on the car was only half there, the hinged overhead screen having been turned back even though that was not required by the height of the load on the car (Tr. 183, 338-340, C-2 and 5). Also, the hoistway entrances at all floor levels were unprotected (Tr. 183). Masoncraft, Incorporated's foreman (Mr. Spence) indicated that he was aware of these conditions, but that he considered them the responsibility of the general contractor (Tr. 183-184). Mr. Carmany's testimony was sustained under vigorous cross-examination (Tr. 196-208).

Mr. Spence testified that he was not close enough to the hoist to observe the ceiling of the car and that he did not know about its missing gates (Tr. 351), but Mr. Spence also indicated that while he could have been in a position to see the hoist car, he did not see it and guessed that he "wasn't observing it enough" (Tr. 351). Mr. Spence further stated that he had seen the gates off before, but that they had been put back on, particularly whenever he saw it and told the employees to close the gates (Tr. 364-365). [*39]

However, Mr. Rizzo testified that one of the car gates was broken and was being repaired and that the general contractor had the contractual obligation to furnish the hoist and operator (Tr. 157-161).

Employee Easom, who had used the hoist, stated that the hoist and car had been in the condition described by Mr. Carmany since May, and that he believed Mr. Spence and everyone on site saw it in that condition (Tr. 111-112, 129). Mr. Warrington confirmed that the gates were not on the car because they needed adjustment and that they had been off a week, more or less (Tr. 49-50). While he could not say whether or not Mr. Spence saw the car in that condition, he asserted that Mr. Spence worked in that general area.

On balance, there is a preponderance of evidence of record that the employees of Masoncraft, Inc. were exposed to conditions that constituted violations of the cited standards in citation number 3 and which were serious violations, given the substantial probability of serious physical harm resulting from a fall from the ungated hoist car or materials falling through the half-open top of the car.

The violations discussed above were grouped into three serious citations for [*40] the purpose of calculating penalties. In each citation complainant began with an unadjusted proposed penalty of $1,000 based on the gravity of the violation, from which 20% was deducted for respondent's good faith (cooperation and prompt abatement), 10% for the relatively small size of respondent's business (under 20 employees on site), and 20% for no past history of record. This resulted in a proposed penalty of $500.00 for each of the three citations. The OSHA Area Director noted that although Masoncraft, Inc. had been previously cited under the Act, no change in the deduction for history was made when the name of respondent was amended largely due to the good faith and size of business shown herein (Tr. 265-266, 300).

I would reduce the amount of penalty proposed for citation number 1 (scaffold violation) to $250 in appropriate recognition of respondent's good faith in immediate abatement of a condition which, but [*41] for the scaffold's promximity to the edge of the open-sided floor, was already in compliance with the cited standard.

Findings of Fact

The record herein as a whole contains reliable, probative and substantial evidence to support the following findings of fact:

1. Complainant issued citations numbered 1, 2, and 3, and the related notification of proposed penalty on August 2, 1973, to Mr. Vincent Rizzo, President, Rizzo Construction Company, as respondent herein (Citations, and Notification, Case File, Items 1, and 2).

2. Vincent Rizzo signed a notice of contest herein on August 6, 1973, which was received by the complainant on August 17, 1973, which notice advised that the correct name of the company on the cited jobsite was Masoncraft, Inc., rather than Vincent Rizzo Construction Company (Notice of Contest, Case File, Item 3).

3. By letter dated September 6, 1973, complainant filed its complaint in this matter which, in effect, amended the citations herein by substituting Vincent Rizzo, d/b/a Vincent Rizzo Construction Company or Masoncraft, Inc., as respondent (Complaint, Case File, Item 5).

4. Vincent Rizzo Construction Company is a Delaware corporation incorporated [*42] on October 20, 1986 (Respondent's Exhibit R-2). Vincent Rizzo is an officer of this corporation (Tr. 139).

5. Masoncraft, Inc., is a Delaware Corporation incorporated on March 25, 1963 (Respondent's Exhibit R-3). Vincent Rizzo is President of this corporation and he and his wife own 51% of the corporation's stock (Tr. 136-137).

6. Complainant issued to Masoncraft, Inc. on March 2, 1973, a previous citation under the Act for three non-serious violations at the same workplace herein, namely, Henlopen Condominium, Lake Avenue and Boardwalk, Rehoboth Beach, Delaware.

7. Masoncraft, Inc., by Vincent Rizzo as President of said corporation, was the mason contractor at the aforestated workplace (Letter dated November 15, 1972, Respondent's Exhibit R-1; Tr. 137, 142).

8. Masoncraft, Inc., but not Vincent Rizzo Construction Co. or Vincent Rizzo individually reported an earned income from construction work at the cited workplace during 1973 (Tr. 139, 144). Vincent Rizzo did no business in his own name or as trader in or under any other name during 1973 (Tr. 143). Other than salary as an officer and employee of Masoncraft, Inc., Vincent Rizzo received no income from nor participated [*43] in any other business during 1973 (Tr. 388-389).

9. Vincent Rizzo and his eldest son, direct the day to day affairs of Masoncraft, Inc., including authority to hire and fire employees; Vincent Rizzo and his wife signed the paychecks for the corporation's employees; and Mr. Rizzo visited the workplace at least once a week and personally had discussions with complainant's agents concerning the citations herein (Tr. 137-141).

10. The notice of contest herein dated August 6, 1973, was on Masoncraft, Inc., letterhead and was signed by Vincent Rizzo, who is not a lawyer and without legal training, and indicated that the firm had been cited for three violations and that they "protest any penalties" for the reasons that each of the alleged violations was corrected promptly, and two of the violations were within the jurisdiction or responsibility of the general contractor (Notice of Contest, Case File, Item 3; Respondent's affidavit, Case File, Item No. 7).

11. Masoncraft, Inc. received and used materials from outside the State of Delaware in connection with the Henlopen condominium project, which is the workplace cited herein (Tr. 139-140).

12. On June 27, 1973, the date complainant's [*44] agents inspected the cited workplace, Masoncraft, Inc. had 17 employees working on the fourth and fifth floors of said workplace (Tr. 342-343).

13. On the date of inspection, Masoncraft, Inc., controlled a steel tubular scaffold which was situated 2-6 inches from the open-sided unguarded outer edge of the fourth floor, west side of the building; the legs of the scaffold were plumb and braced with metal cross braces, but not otherwise secured or braced to prevent displacement; a mortar pan and construction blocks were on the scaffold, but no employees were observed using it (Tr. 45-46, 63-64, 94-96, 103, 151-152, 178-181; Complainant's Exhibit C-3).

14. On the date of inspection, employees of Masoncraft, Inc. were working in an area on the fourth floor of the building at the cited workplace in close proximity to the outer edge of the floor which was unguarded and to at least one unguarded, uncovered floor hole (Tr. 13, 113-114, 182-184, Complainant's Exhibits C-3 and C-4); respondent's foreman had previously approached the responsible general contractor to correct the missing floor planking and to furnish perimeter guard rails and, as a general practice, had floor holes covered [*45] with plywood whenever he observed them, although other craft employees frequently removed the covers (Tr. 350-356).

15. On the date of inspection, the cited materials hoist at the workplace herein was used by employees of Masoncraft when its car gates on two sides were missing, its car overhead protective covering was only half in place, and the entrances to the hoist at all floor levels were unprotected (Tr. 111-112, 183-184, 338-340). The conditions of the hoist car, with the possible exception of the position of the overhead covering, had existed for a substantial period of time (at least, a week), although respondent's foreman, who worked in the area, had the side gates put on whenever he observed them missing and Masoncraft, Incorporated's bid made the elevator and operator the responsibility of the general contractor (Tr. 49-50, 111-112, 157-161, 351, 364-365, Respondent's Exhibit R-1).

16. In determining the proposed penalty for each of the violations alleged in the three citations herein, complainant considered the gravity of the violation (serious), the size of respondent's business (relatively small), respondent's good faith and history of violations (one) under the [*46] Act (Tr. 265-266, 300).

Conclusions of Law

1. The respondent herein, Vincent Rizzo, d/b/a Vincent Rizzo Construction Company or Masoncraft, Inc., not being engaged in a business affecting commerce and having no employees, is not an employer within the meaning of section 3(5) of the Act. Therefore, complainant's pending motion to dismiss should be granted for lack of a proper party respondent.

2. Masoncraft, Inc. is a Delaware corporation engaged in a business affecting commerce, with employees, and, therefore, an employer within the meaning of section 3(5) of the Act.

3. On June 27, 1973, Masoncraft, Inc. violated section 5(a)(2) of the Act and the occupational safety and health standards alleged in citation numbers 1, 2, and 3 issued on August 2, 1973, as amended.

4. The aforecited violations were serious within the meaning of section 17(j) of the Act, and the proposed penalty of $500.00 each for citation numbers 2 and 3, respectively, are appropriate under section 17(b) and (j) of the Act.

5. The proposed penalty of $500.00 for the violation set forth in citation Number 1 is not appropriate and should be reduced to $250.00 under Section 17(b) and (j) of the Act. [*47]

Order

Based on the foregoing Findings of Fact and Conclusions of Law and the record as a whole, good cause appearing, it is hereby ORDERED, that respondent's motion to dismiss complainant's citations numbers 1, 2 and 3, as amended and the notification of proposed penalty, all issued on August 2, 1973, be and hereby are dismissed.

DONALD K. DUVALL, Judge, OSHRC

Dated: September 25, 1974