DONALD K. NELSON CONSTRUCTION, INC.
OSHRC Docket No. 4309
Occupational Safety and Health Review Commission
January 13, 1976
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Before: BARNAKO, Chairman; MORAN and CLEARY, Commissioners.
COUNSEL:
Henry C. Mahlman, Assoc. Regional Solicitor
Bruce E. Coke, for the employer
OPINION:
DECISION
BY THE COMMISSION: A decision of Review Commission Judge Erwin L. Stuller, dated August 27, 1974, is before this Commission for review pursuant to 29 U.S.C. § 661(i).
This action is based upon a citation issued under the Occupational Safety and Health Act of 1970 n1 alleging a violation of 29 U.S.C. § 654(a)(2) for failure to comply with an occupational safety standard promulgated thereunder which is codified in 29 C.F.R. § 1926.651(i)(1). The merits of the case were never reached since the Judge determined that respondent failed to properly contest the citation within 15 working days. 29 U.S.C. § 659(a) and (c).
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n1 29 U.S.C. § § 651 et seq. 84 Stat. 1590, hereinafter referred to as the Act.
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The citation was sent by certified mail on May 1, 1973, but for reasons not disclosed at the hearing it was never received by respondent. On May 10, 1973, the official [*2] who mailed the letter containing the citation retrieved it, n2 from the post office and personally delivered it to the residence of Mr. Nelson, president of the respondent corporation where it was received by Nelson's wife. Mr. Nelson was not present at the residence on the date of delivery. There was no evidence showing Mrs. Nelson to be either an officer or agent of the corporation.
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n2 The envelope had no marks other than the address and transmittal slip. Thus the reasons for its non-delivery are unascertainable.
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On May 21, 1973, Mr. Nelson, on behalf of respondent, orally contested the citation. n3 It is admitted that there was no written notice of contest within the 15 day period from receipt of the notification of proposed penalties.
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n3 On that date Mr. Nelson visited the office of the official who issued the citation. He demanded to see the file and to be informed as to how the penalty was computed. The official testified that twice during this meeting he told Mr. Nelson that if he wished to contest the action he must do so in writing, but that Mr. Nelson did not indicate such a desire during the conversation. However, in an affidavit the official stated that later that day Mr. Nelson called back and stated he wished to contest.
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29 U.S.C. § 659(a) provides as follows:
"If, after an inspection or investigation, the Secretary issues a citation under section 658(a) of this title, he shall, within a reasonable time . . . notify the employer by certified mail of the penalty, if any, proposed to be assessed under section 666 of this title and that the employer has fifteen working days within which to notify the Secretary that he wishes to contest the citation or proposed assessment of penalty." (Emphasis added).
The question to be resolved is whether the citation and notification of proposed penalty were properly served in this case. Complainant contends that the method of service provided in 29 U.S.C. § 659(a) is not necessarily exclusive. He suggests that an alternative method may be used if service by certified mail cannot be effected. We agree that under these circumstances an alternative means of service can be employed. The means chosen, however, must conform to generally applied requirements to assure that in all cases the citation and notification of proposed penalty are promptly received by a person responsible [*4] for taking appropriate action thereon.
Complainant in this case chose personal service as an alternative method of notifying the respondent. It follows that such service at a bare minimum must conform to Rule 4(d), Federal Rules of Civil Procedure. Such service best assures prompt notification to a responsible person.
Respondent is a corporation and therefore Rule 4(d)(3) applies. n4 The wife of a corporation's president is not within the class of persons upon whom personal service may be made under Rule 4(d)(3). The service must therefore be held invalid. Mendoza v. City of Miami, 483 F. 2d 430 (5th Cir. 1973); Cohen v. Newsweek Inc., 312 F. 2d 76 (8th Cir. 1963).
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n4 Rule 4(d)(3) provides, in pertinent part:
Service shall be made . . . upon a domestic or foreign corporation . . . by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the defendant.
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Complainant contends, in effect, that the above rule should not be applied in this case since respondent received actual notice of the citation and proposed penalty and no prejudice occurred. He argues that the method of service utilized was therefore proper in the instant case.
We disagree, That respondent received actual notice in this case was purely fortuitous. Rules governing service are designed to apply generally to all cases in order that an objective determination of the adequacy of service may be made. Acceptance of the complainant's argument would mean that service rules need not be followed so long as service is actually received at any time by the party to whom directed. Such a holding would be contrary to both the intent of Rule 4(d) and the purposes of the Act which contemplates that citations be expeditiously served upon a proper official so that abatement can be rapidly accomplished. A general rule governing the alternative method of personal service utilized here is therefore necessary to achieve this important goal. Complainant's case by case approach is thus rejected in favor [*6] of the requirements of Rule 4(d) of the Federal Rules of Civil Procedure where personal service is substituted for the service requirement of 29 U.S.C. § 659(a).
In view of the above disposition, we do not reach the issue of whether an oral notice of contest is valid. We note, however, that the complainant argues that such a notice of contest is invalid even if he receives actual notice of respondent's intent to contest. Complainant claims that the confusion which can result from an oral notice of contest in some cases dictates that we should hold them ineffective in all cases.
These same arguments militate against accepting complainant's claim that service of a citation is adequate so long as the person to whom it is directed actually receives it. Complainant's position with respect to the validity of oral notices of contest points up the need for general rules governing both service and notice. Such rules cannot be established in the vacuum of individual cases.
Because the citation and notification of proposed penalty were not validly served, they are hereby vacated.
DISSENTBY: CLEARY
DISSENT:
CLEARY, Commissioner, DISSENTING:
I must register my dissent from the vacation of the citation and [*7] proposed penalty.
I.
On August 27, 1974, Administrative Law Judge Stuller issued his decision holding that the respondent's notice of contest was insufficient because it was not written and that personal delivery of a citation and notification of proposed penalties is sufficient under the Occupational Safety and Health Act of 1970 (29 U.S.C. § 651 et seq., hereinafter "the Act"). The Judge held the citation and proposed penalties to be final orders of the Commission. On September 19, 1974, review was directed on the service issue and the method of contest.
On or before May 1, 1973, respondent's workplace, a construction site, was inspected by John L. Mitchell, a Compliance Safety and Health Officer of the Occupational Safety and Health Administration (OSHA), United States Department of Labor. On May 1, the Area Director, Charles F. Hines, executed a citation and a notification of proposed penalty, with a cover letter. These were sent by certified mail from Mr. Hines' office on May 3, (Tr. 16) and were properly addressed.
On May 10, Mr. Hines discovered that the Post Office had attempted to deliver, but had not delivered, the citation and proposed penalty notices. [*8] The record does not disclose why the Post Office never delivered the material. Mr. Hines retrieved the brown envelope which contained them from the Post Office, and went to the residence of Donald K. Nelson. The respondent is a corporation sole. Mr. Nelson owned all the stock of the corporation, and was its president and general manager. His home was also the office of the corporation. Mr. Hines handed the material to Mrs. Nelson, who placed it in her husband's mail stack on his desk. Mr. Nelson was not home at that time.
The majority's unexplained conclusion that the receipt of actual notice by Mr. Nelson was "purely fortuitous" is incorrect. n1 It is hardly turning the wheel of fortune to expect that Mrs. Nelson would deliver to her husband business materials personally served upon her at their home (which served as the corporation's office). The same can be said for expecting that delivery might be accomplished by Mrs. Nelson's leaving the materials on a mail stack on her husband's desk.
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n1 When a judge need write no opinion, his judgment may be faulty. Forced to reason his way step by step and set down these steps in black and white, he is compelled to put sait on the tail of his reasoning to keep it from fluttering away. . . .
Lasky, "A Return to the Observatory Below the Bench," 19 S.W.L.J. 679 (1965), quoted in Leflar, Appellate Judicial Opinions (1974).
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Here, there was an actual receipt and delivery of a citation in a manner calculated to give reasonable actual notice. For the reasons noted in Part III herein, that is all that is necessary.
II.
In pertinent part, section 10(a) states:
If, after an inspection or investigation, the Secretary issues a citation under section 9(a), he shall, . . . notify the employer by certified mail of the penalty, if any, proposed to be assessed under section 17 . . . [emphasis added].
The Secretary argues that personal delivery of the citation and notification of proposed penalty, coupled with actual notice thereof, is sufficient delivery. The majority agrees, again without supportive discussion, that personal delivery may be used if delivery by certified mail cannot be effected. I join in that conclusion, but it is important to explain why we have implied an exception to section 10(a) of the Act.
Clearly, the objective of Congress was to insure that employers receive reasonable notice of citations and proposed penalties. Certified mail is certainly an efficacious method to accomplish this purpose. But [*10] I view the Congressional purpose as permitting the use of a superior manner of notice, such as personal delivery. n2 Legal precedents under other statutory schemes are consistent with this analysis.
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n2 Another Congressional objective was plainly to provide an easily ascertainable basis for determining the deadlines for the employer to indicate a contest under section 10(a) (fifteen-working days from the receipt of the Secretary's notices) and abatement of violations of the Act. But personal delivery alone will not accomplish this purpose. There must be some reliable means for determining the date of receipt by the employer. Certified mail accomplishes this purpose by providing for a return receipt indicating the time and fact of receipt by the employer. 39 CFR 168.1. Here, I am satisfied that the sworn affidavit and testimony of Mr. Hines is reliable evidence of the fact and date of receipt by the respondent. Mr. Nelson's home was the corporate seat of the respondent. The date of receipt can therefore be reliably fixed as May 10, 1974. Even if we were to view the date of receipt as being May 21 (when Mr. Nelson appeared in Mr. Hines' office with the materials in hand), this would not change the result. (See part IV herein.)
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In Olin Industries v. N.L.R.B., 192 F.2d 799 (5th Cir. 1951), unfair labor practice charges were served by ordinary mail in violation of Board regulations requiring either personal service, registered mail, telegraph, or service at the principal office or place of business. The Court held that this harmless error would be disregarded. "The use of ordinary mail rather than registered mail presents a mere technical defect in the service of the charge which is not a pleading." 192 F.2d at 799. Compare United States v. Islip Machine Works, Inc., 179 F. Supp. 585, 588 (E.D.N.Y. 1959). Clearly, if a usually inferior mode of notice can substitute for the stated means, so may a superior form of notice. As to the likelihood of prejudice in the abstract, see Berger v. commissioner of Internal Revenue, 404 F.2d 668, 673 (3d Cir. 1968) (deficiency in personal delivery could not be rationally suggested). Cf. Commissioner of Internal Revenue v. Stewart, 186 F.2d 239 (6th Cir. 1951); Tenzer v. Commissioner of Internal Revenue, 285 F.2d 956 (9th Cir. 1960); Boren v. Riddell, 241 [*12] F.2d 670 (9th Cir. 1957).
Similarly, under a provision of the Miller Act (40 U.S.C. § 270b(a)), the courts have consistently held that even though the statute requires service by registered mail or service in the manner by which United States marshals serve summons, service by ordinary mail, United States ex rel. Twin County Transit Mix, Inc. v. R. P. McTeague Constr. Corp., 264 F. Supp. 619 (E.D.N.Y. 1967), or personal delivery not conforming to the service of process requirements of the Federal Rules, McWaters & Bartlett v. United States, 272 F.2d 291 (10th Cir. 1959) are permissible. See generally, Fleisher Engineering & Constr. Co. v. United States ex rel. Hallenbeck, 311 U.S. 15, 19 (1940; 78 ALR 2d 429, 432-433. Cf. National State Bank of Newark v. Terminal Constr. Corp., 217 F. Supp. 341, 355 (D.N.J. 1963), aff'd per Curiam 328 F.2d 315 (3d Cir. 1964) (Capehart Act bond).
Accordingly, I agree with the majority to the extent that it holds personal service to be permissible as an alternative delivery method when service by certified mail cannot be effected or has proved unavailing.
III.
But it does not follow that "such service at [*13] a bare minimum must conform to Rule 4(d) [of the] Federal Rules of Civil Procedure."
That rule applies only to the service of complaints and summons incidental thereto. A citation is not a summons as defined by Fed. R. Civ. P. 4(b), n2a nor is it either a complaint or a pleading as contemplated by Fed. R. Civ. P. 7(a), 8(a) and 10(a) or by Commission Rules 30, or 31. Indeed, our rules of procedure specifically distinguish between citations and complaints: Commission Rules 33(a)(1) and (3) require that a complaint be filed no later than twenty days after receipt of a notice of contest to a citation, and allows a complaint to amend a citation.
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n2a See section 9(a) of the Act, 29 U.S.C. section 658, describing the elements of a citation.
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An N.L.R.B. unfair labor practice charge, which is somewhat analogous to a citation, is not a pleading. Olin Industries v. N.L.R.B., 192 F.2d 799 (5th Cir. 1951). Like the OSHA citation, it "merely set in motion the machinery of an inquiry . . . and does not even serve the [*14] purpose of a pleading." N.L.R.B. v. Indiana & Michigan Electric Co., 318 U.S. 9, 18 (1943) (per Jackson, J.). Similarly, in Berger v. Commissioner of Internal Revenue, 404 F.2d 668, 673 (3d Cir. 1968), the nature of another preliminary notice was defined:
A deficiency notice, unlike a complaint in a civil action, is not a legal process or pleading even though it is a prerequisite to the subsequent litigation before the Tax Court. . . .
The majority's imposition of inapplicable process-serving rules creates an anomaly. Presumably, enforcement officers issuing citations must now be "little U.S. marshals" as well as safety experts. This is unrealistic. Citations are drafted and mailed or delivered by non-lawyers acting with necessary dispatch. Cf. National Realty & Constr, Co., Inc. v. O.S.H.R.C., 489 F.2d 1257, 1264 (D.C. Cir. 1973). My colleagues take no notice that their holding will perhaps retard the delivery of citations with "reasonable promptness." This impedes the attainment of prompt abatement that is expected under the Act. Buckley & Co., Inc. v. Secretary of Labor, 507 F.2d 78 (3d Cir. 1975); Brennan v. O.S.H.R.C. and Kesler & Sons Constr. [*15] Co., 513 F.2d 553 (10th Cir. 1975); Dunlop v. Haybuster Mfg., No. 75-1086 (8th Cir., October 20, 1975). n3
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n3 The majority opinion Leaves its sweep to conjecture. By its logic, Mr. Nelson's wife would not be permitted to sign the certified mail receipt, a result as nonsensical as this one. It does not mention, for example, who, except for a United States marshal, would be authorized to serve citations as if they were process, nor does it intimate whether compliance personnel need or could be made a "person specially appointed" within the meaning of Fed. R. Civ. P. 4(a) and (c). Presumably, these uncertainties will persist until resolved by the case-by-case method eschewed by the majority.
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Rather than import the ill-fitting and inapplicable service-of-process provisions of the Federal Rules, I would adhere to well-settled legal principles of administrative and constitutional law suitable to our administrative process, and apply them in light of the remedial statutory purpose of the Act.
The basic inquiry should [*16] be whether the method of delivery was "a form of notice reasonably calculated to give a [proper representative of an employer] n4 knowledge of proceedings and an opportunity to be heard." N.L.R.B. v. O'Keefe & Merritt Mfg., 178 F.2d 445, 447 (9th Cir. 1949). See also N.L.R.B. v. Clark, 468 F.2d 459, 464-465 (5th Cir. 1972). As explained in Part I, this requirement was met here.
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n4 In Buckley & Co., Inc. v. O.S.H.R.C., 507 F.2d 78 (3d Cir, 1975), Rev'g Buckley & Co., Inc., 6 OSAHRC 575, 1 BNA OSHC 1535, CCH 1973-74 OSHD Para. 17,338 (No. 1342, February 21, 1974) the Third Circuit noted the Federal Rules argument, 507 F.2d at 80, but decided the case without reference to requirements for service of process Rather, it held that in light of the statutory purpose, the proper person did not receive notice. Here the proper person did receive notice, and the statutory purpose has been fully served.
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Moreover, without regard to the applicability of the Federal Rules, the actual receipt by Mr. [*17] Nelson of seasonable written notice satisfies the purpose of section 10(a) and is dispositive. In Fleisher, a statute required either registered mail or formal process service by a United States marshal as alternate forms of notice. The Supreme Court held that ordinary mail, coupled with actual receipt, fulfilled the purposes of the Miller Act and was valid notice:
[Thus, t]he condition [of timely written notice] as thus expressed was fully met. Then the statute goes on to provide for the mode of service of the notice. "Such notice shall be served by mailing the same by registered mail, postage prepaid", or "in any manner" in which the United States marshal "is authorized by law to serve summons". We think the purpose of this provision as to manner of service was to assure receipt of the notice, not to make the described method mandatory so as to deny right of suit when the required written notice within the specified time had actually been given and received. In the face of such receipt, the reason for a particular mode of service fails. It is not reasonable to suppose that Congress intended to insist upon an idle form. Rather, we think that Congress intended to provide [*18] a method which would afford sufficient proof of service when receipt of the required written notice was not shown.
311 U.S. at 19. See also United States ex rel. Birmingham Slag Co. v. Perry, 115 F.2d 724 (5th Cir. 1940). Indeed, the general rule of administrative adjudication is that at least a finding of prejudice must precede the vacation of a citation and proposed penalties for the breach of a procedural rule. United States v. Pierce Auto Lines, Inc., 327 U.S. 515, 530 (1946); Accu-Namics, Inc. v. O.S.H.R.C., 515 F.2d 828, 833-834 (5th Cir. 1975); Brennan v. O.S.H.R.C. and Bill Echols Trucking Co., 487 F.2d 230, 236 (5th Cir. 1973). Our process should deal with matters of substance and should not "be trivialized by formal objections that have no substantial bearing on the ultimate rights of parties." Market Street Railway Co. v. Freight Commission of California, 324 U.S. 548, 562 (1945). It is therefore incorrect to hold, as the majority would, that under the facts of this case rigid adherence to the Federal Rules is necessary. Whether Mrs. Nelson was an officer, managing or general agent is simply not the point. Here, it is enough that the [*19] citation was brought to the attention and active consideration of those responsible for direction of the cited employer's business affairs. See e.g., N.L.R.B. v. McGahey, 233 F.2d 406, 409 (5th Cir. 1956).
IV.
Because I conclude that the service here was valid, I proceed to consider the oral notice of contest issue.
On May 21, approximately ten days after the delivery of the materials, and with them in hand, Mr. Nelson went to OSHA's offices to discuss the case: ". . . I wanted to know how they would arrive at a penalty such as this, and for what reasons." n5 In the presence of Compliance Officer Mitchell and Mr. Hines, Mr. Nelson asked Mr. Hines how the penalty was computed. Mr. Nelson had information that a competitor of his, Timberline Construction Company, had been cited for a similar alleged violation of 29 CFR § 1926.651(i)(1), but the proposed penalty had been only $30. Mr. Nelson asked to see the penalty worksheet and computations. After some deliberation, Mr. Hines refused to allow Mr. Nelson to see the worksheets, unless a notice of contest was filed. Mr. Hines explained twice how a notice of contest had to be filed.
A. I told him it was a very simple [*20] procedure. . That all that would be required would be a memo, a note, a letter, advising me in writing that he was contesting. I did that on two occasions.
Mr. Nelson was twice asked if he wanted to file a notice of contest, and both times, Mr. Nelson indicated that he did not. Mr. Nelson's main concern was gaining access to the penalty worksheet. Mr. Hines explained briefly how the penalty was computed:
A. He was informed as to how we arrived at the proposed penalties, that they are based on the probability of an injury, also the extent of the injury, and the extent of the exposure. Those facts he was furnished. He was also furnished information as to credits that we provide for history, for size, and for good faith; and in the non-serious category, of the 50 percent abatement credit. n6
Though Mr. Nelson indicated that he did not wish to file a notice of contest, Mr. Hines explained the procedures anyway, and because Mr. Hines' understanding of OSHA's administrative procedures led him to believe that the respondent's file could not be disclosed unless a notice of contest was filed. The exchanges appear to have been heated. Mr. Nelson's voice was raised and at one [*21] point Mr. Hines remarked that he would not show Mr. Nelson "all of my aces." The meeting lasted about 15 to 20 minutes, but toward the end Mr. Nelson declared that he would consult an attorney and sue in Federal court to gain access to the files.
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n5 The proposed penalty was $150.
n6 The violation was termed non-serious.
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But, from Mr. Hines' affidavit it also appears that late that day, Mr. Nelson indicated to Mr. Hines by telephone "that he would contest the matter." According to Mr. Hines:
I responded by saying that if that was his desire, he send to my office a letter or memorandum notifying me that he was contesting the citation and/or notification of proposed penalty. He stated that he had an attorney and fully intended to take advantage of his services.
There were here no deceptive practices or other special circumstances that may have caused Mr. Nelson not to follow the contest procedure. Cf. Atlantic Marine, Inc. v. O.S.H.R.C., No. 75-1244 (5th Cir., December 8, 1975). Yet, no written notice of [*22] contest was received within the fifteen-working day period following the personal delivery of the cover letter, the citation, and the notification of proposed penalty. The first indication in writing that respondent wished to contest the matter came on July 5, 1973, through its attorney.
The Secretary of Labor his adopted pursuant to section 8(g)(2) of the Act a rule, 29 CFR § 1903.17(a), reading as follows:
Any employer to whom a citation or notice of proposed penalty has been issued may, under Section 10(a) of the Act, notify the Area Director in writing that he intends to contest . . . . Such notice of intention to contest shall be postmarked within 15 working days of the receipt by the employer of the notice of the proposed penalty. [Emphasis added.]
It is clear that the regulation requires that the notice of contest be written.
This rule carries out the Secretary of Labor's duties under section 10(a) of the Act concerning the handling of notices of contest. It directly addresses the matter in issue and should be controlling. Brennan v. O.S.H.R.C. and Bill Echols Trucking Co., 487 F.2d at 233. See Brennan v. Gilles & Cotting, Inc., 504 F.2d [*23] 1255, 1260 n.2 and accompanying text (4th Cir. 1974). Cf. Paul v. United States, 371 U.S. 245, 255 (1963); United States v. Nixon, 418 U.S. 683, 94 S.Ct. 3090, 3101 (1974).
Also, the regulation applies and necessarily interprets section 10(a) of the Act. n7 It was adopted on September 4, 1971. It is a contemporaneous construction of section 10(a) by those "charged with the responsibility of setting its machinery into motion." Udall v. Tallman. 380 U.S. 116 (1965). As such it is in any event entitled to considerable weight. The Budd Co. v. O.S.H.R.C., 513 F.2d 201 (3d Cir. 1975) (per curiam).
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n7 The Act does not expressly require a written notice of contest. Section 10(a) only requires an employer to "notify the Secretary that he wishes to contest . . . ."
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The Secretary's regulation reflects justifiable concern for the enforcement of the Act. The requirement of a writing is tangible evidence of an employer's intentions; the potential for confusion, so evident here, would be drastically [*24] reduced if the writing requirement is enforced. Moreover, the receipt by the Secretary of a writing from the employer is an effective and accurate method for determining when notices must be transmitted to the Commission (29 CFR § 2200.32) and when a complaint must be filed (29 CFR § 2200.33(a)(1)). Permitting oral notices of contest could open a "Pandora's Box" in litigation. n8 See United States v. Isabella, 251 F.2d 223 (2d Cir. 1958) (oral notice of appeal); Smith v. United States, 425 F.2d 173 (9th Cir. 1970) (same); United States ex rel. Excavation Constr., Inc. v. Glenn-Stewart-Pinckney Builders & Developers, Inc., 388 F. Supp. 289, 296 (oral Miller Act notice insufficient). Indeed the Commission's own Rule 32 n9 clearly anticipates that notices of contest be made in writing. See also Commission Rule 33(a)(1).
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n8 Note that a timely notice of contest is a jurisdictional requirement. Florida East Coast Properties, Inc., No. 2354 (February 5, 1974).
n9 Rule 32 (29 CFR § 2200.32) states:
The Secretary shall, within 7 days of receipt of a notice of contest, transmit the original to the Commission, together with copies of all relevant documents. [Emphasis added.]
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In my view, this oral notice of contest was therefore ineffective. In any event, it is concluded that Mr. Nelson did not intend, within the fifteen working day period prescribed by the Act to contest the citation. I note parenthetically that this fact distinguishes Turnbull Millwork Co., No. 7413 (December 15, 1975). Rather, the record is clear that Mr. Nelson's sole aim was to reduce or avoid the penalty. But Mr. Nelson well understood the requirement for a writing.
I would therefore hold that the citation and notification of proposed penalties became a final order of the Commission by operation of law.