Chao v. Occupational Safety and Health Review, 03-60958.

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtDeMoss
Citation401 F.3d 355
PartiesElaine CHAO, Secretary, Department of Labor, Petitioner-Cross-Respondent, v. OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION, Respondent, and Erik K. Ho; Ho Ho Ho Express, Inc.; and Houston Fruitland, Inc., Respondents-Cross-Petitioners.
Docket NumberNo. 03-60958.,03-60958.
Decision Date21 February 2005

Charles Franklin James, Ann S. Rosenthal (argued), Howard M. Radzely, U.S. Dept. of Labor, Washington, DC, for Petitioner-Cross-Respondent.

Ray H. Darling, Executive Secretary, Occupational Safety Health Admin., Washington, DC, for Respondent.

Tom M. Davis, Jr., Davis, Oretsky & Guilfoyle, Houston, TX, Michael H. Rubin (argued), McGlinchey Stafford, Baton Rouge, LA, for Respondents-Cross-Petitioners.

James B. Coppess, AFL-CIO, Washington, DC, for American Fed. of Labor and Congress of Indus. Organizations, Amicus Curiae.

Thomas Herman Strong, Ronald Wayne Taylor, Venable, Baltimore, MD, for Associated Builders & Contractors, Inc., Amicus Curiae.

On Petition for Review of an Order of the Occupational Safety and Health Review Commission.

Before BARKSDALE, GARZA and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

This appeal stems from a final order of Respondent Occupational Safety and Health Review Commission (the "Commission"), which vacated in part citations issued by Petitioner-Cross-Respondent Elaine Chao, Secretary of Labor (the "Secretary"), against Respondents-Cross-Petitioners Eric K. Ho ("Ho"), et al. (together, "Ho Respondents"). For the following reasons, we DENY the petitions for review and AFFIRM the decision of the Commission.


The penalties assessed by the Secretary and mostly affirmed by the Administrative Law Judge ("ALJ") and the Commission against Ho for various violations of the Occupational Safety and Health Act, 29 U.S.C. §§ 651-678 ("OSH Act"), and associated safety and health regulations all concern his behavior as proprietor of a worksite where workers were exposed to asbestos in the course of a project to renovate a building. On October 27, 1997, Ho individually purchased a defunct hospital and medical office building in Houston to develop the property as residential housing. Ho knew there was asbestos onsite. He was also aware that any alteration to asbestos-containing materials was to be handled by personnel licensed and registered with the Texas Department of Health ("TDH"). Ho instead hired Manuel Escobedo ("Escobedo") and Corston Tate ("Tate"), whose work he had previously used, to do the renovations. Escobedo hired 11 Mexican nationals, who were illegal immigrants, to assist. Renovations, including the removal of asbestos, started in January 1998.

At most, the workers were occasionally given dust masks not suitable for protection against asbestos. They were not issued protective clothing. Ho also did not provide a respiratory protection program, conduct medical surveillance, conduct asbestos monitoring, implement adequate ventilation or debris removal, inform the workers of the presence and hazards of asbestos, or provide any training whatsoever. There is no dispute that Ho was aware of the worksite conditions; he visited almost every day.

On February 2, 1998, a city inspector visited the worksite. After observing the conditions, he issued a stop-work order citing the possibility of exposure to asbestos, requiring that city approval be given before work could resume. Ho then began negotiating with a licensed contractor, Alamo Environmental ("Alamo"), to remove the asbestos. Alamo prepared an abatement estimate in accordance with Occupational Safety and Health Administration ("OSHA"), amongst other federal, guidelines. On March 27, 1998, Ho notified Alamo by fax that he agreed to their proposal.

However, during this period of negotiation, Ho had resumed work at the site under the same conditions, except that he directed all work be performed at night. The workers ate, and some lived, at the site. The workers had no potable water and only one portable toilet. Tate sometimes allowed workers to leave the property to use the restroom at a nearby commercial establishment; and Tate would purchase and bring back food for the workers when they gave him money. Ho continued to visit the worksite and was aware of these conditions.

Asbestos removal continued in this fashion until March 10, 1998. On March 11, 1998, as Ho had directed, daytime work resumed at the site. Ho had been informed that either the sprinkler system or fire hydrant valves had not been turned off and thus remained available for use. To wash out the building, Ho directed Tate to tap into an unmarked valve believed to be a water line. It turned out to be a gas line. An explosion later occurred when Tate started his truck; it injured Tate and two workers. On March 12, 1998, workers were summoned to Ho's office where they were given releases to sign, acknowledging receipt of $1000 as full payment for their work, and acknowledging receipt of $100 to release Ho from any claims that might arise from the explosion and fire. The releases were written in English, but an interpreter translated them for the workers.

After the explosion, TDH conducted an investigation. Samples of debris and the ambient air at the worksite showed levels of asbestos in excess of federal and state standards. The state notified Ho that the site remained unsafe and needed to be sealed by qualified personnel. Again, Ho used the same workers to install plywood over the windows and did not give them any protective equipment.

OSHA also conducted an investigation. As a result, the Secretary issued a total of 10 serious and 29 willful violations against Ho Respondents; these charges included 11 willful violations of 29 C.F.R. § 1926.1101(h)(1)(i) for failing to provide respirators to 11 employees removing asbestos and 11 willful violations of 29 C.F.R. § 1926.1101(k)(9)(i) and (viii) for failing to train the 11 employees on the hazards of asbestos and safety precautions. The Secretary also charged Ho Respondents with willfully violating the OSH Act's general duty clause, 29 U.S.C. § 654(a)(1), by ordering Tate to tap into the unmarked pipeline. Ho was also convicted of criminal violations of the Clean Air Act ("CAA"). This Court upheld his conviction. United States v. Ho, 311 F.3d 589, 611 (5th Cir.2002).

Ho conceded before the ALJ that he violated the asbestos respirator and training standards. Ho argued that he was not subject to the OSH Act's requirements because he was not engaged in a business affecting interstate commerce and that the corporate Ho Respondents should be dismissed because they were not employers of the employees engaged in asbestos removal. He also challenged the per-employee citations of the respirator and training violations. Finally, Ho contended he did not violate the general duty clause of the OSH Act, or if he had violated it, that such violation was not willful.

The ALJ ruled that Ho's construction activities affected interstate commerce and Ho was liable for the OSH Act violations. He also found the corporate Ho Respondents liable as alter egos of Ho and under the "sham to perpetuate a fraud" doctrine because Ho exercised control over both corporations and used them to obtain funds to purchase and renovate the property. The ALJ determined the respirator and training violations were willful and upheld all 22 violations. The ALJ found also that Ho had violated the general duty clause of the OSH Act but that it could not be characterized as a willful violation because the Secretary failed to show that Ho actually knew of the danger or had a heightened awareness of the illegality of his conduct.

On review, the Commission affirmed that Ho was subject to the OSH Act and that Ho's violations of the respirator and training standards were willful. A divided Commission ruled that such violations were to be cited on a per-instance, not a per-employee, basis because it felt that the regulations plainly imposed a duty on employers to have a single training program and to provide respirators to the employees as a group. It thus vacated all but two of those citations. The Commission also concluded the record did not support the ALJ's finding that the corporate Ho Respondents were liable because these entities' primary business activities had nothing to do with the hospital renovation and they did not exist as mere business conduits for Ho's own purposes.1 The Commission affirmed the ALJ's finding that the general duty violation committed by Ho was not willful. The Commission also increased all the citations affirmed to their maximum penalties because of Ho's lack of good faith. The Secretary timely filed her petition for review, and the Ho Respondents timely filed their cross-petition.


Whether the Commission's factual finding that Ho's illegal asbestos abatement activities at the hospital worksite affected interstate commerce was supported by substantial evidence.

The OSH Act applies to employers, defined as "person[s] engaged in a business affecting commerce who ha[ve] employees." 29 U.S.C. § 652(5) (1970). By enacting the OSH Act, Congress intended to exercise the full extent of the authority granted by the Commerce Clause. Austin Road Co. v. OSHRC, 683 F.2d 905, 907 (5th Cir.1982). "Accordingly, an employer comes under the aegis of the [OSH] Act by merely affecting commerce; it is not necessary that the employer be engaged directly in interstate commerce." Id. (citations omitted).

The Secretary bears "the burden of showing that the employer's activities affect interstate commerce." Id. at 907. This burden is "modest, if indeed not light." Id. On appeal, this Court only reviews the Commission's findings of fact to ensure they are "supported by substantial evidence in the record considered as a whole." Id. at 908; see also 29 U.S.C. § 660(a). Substantial evidence is "such relevant evidence as a...

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