George Harms Const. Co., Inc. v. Chao, 03-2215.

Citation371 F.3d 156
Decision Date09 June 2004
Docket NumberNo. 03-2215.,03-2215.
PartiesGEORGE HARMS CONSTRUCTION CO., INC., a New Jersey Corporation, Petitioner v. Elaine L. CHAO, Secretary of Labor, United States Department of Labor and Occupational Safety & Health Review Commission, Respondents.
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)

John F. Neary, (Argued), Roseland, for Petitioner.

Ronald J. Gottlieb, (Argued), United States Department of Labor, Office of the Solicitor, Washington, for Respondent, Secretary of Labor.

Before SCIRICA, Chief Judge, ROTH and McKEE, Circuit Judges.

OPINION OF THE COURT

SCIRICA, Chief Judge.

At issue is whether Petitioner George Harms Construction Company is entitled to relief under the excusable neglect standard of Fed.R.Civ.P. 60(b)(1), after it failed to timely file a notice of contest to Occupational Safety and Health Administration citations and a notice of penalty delivered by certified mail. We will vacate the Occupational Safety and Health Review Commission's final order and remand for a hearing on the merits of the OSHA citations.

I.

Congress enacted the Occupational Safety and Health Act to "assure so far as possible" safe working conditions for "every working man and woman in the Nation." 29 U.S.C. § 651(b). The Secretary of Labor is charged with enforcement of the Act. But the Secretary has delegated her enforcement duties to the Assistant Secretary for Occupational Safety and Health, who heads OSHA. Secretary's Order 5-2002, 67 Fed. Reg. 65008 (Oct. 22, 2002). OSHA inspects workplaces for violations. It may issue a citation for a violation, establish a date for abatement, and propose a civil penalty. 29 U.S.C. §§ 658, 659. An employer can contest the citation and proposed penalty before the Occupational Safety and Health Review Commission. 29 U.S.C. § 661. Under section 10(a) of the Act, an employer must file a notice of contest within 15 working days of receipt of the citation or the "the citation and the assessment, as proposed, shall be deemed a final order of the Commission and not subject to review by any court or agency." 29 U.S.C. § 659(a).

The Commission, an independent adjudicatory body separate from the Department of Labor, acts as a neutral arbiter in proceedings contesting OSHA citations. Cuyahoga Valley Ry. Co. v. United Transp. Union, 474 U.S. 3, 7, 106 S.Ct. 286, 88 L.Ed.2d 2 (1985) (per curiam). Assuming jurisdiction, an Administrative Law Judge of the Commission conducts a hearing and issues a report with his determination of the proceeding. 29 U.S.C. § 661(j). Within thirty days, the Commission may opt to review the ALJ's report. Id. If no Commissioner directs review, the ALJ's report becomes the Commission's final decision. Id. Judicial review may then be sought. 29 U.S.C. § 660.

II.

OSHA conducted an inspection of Harms Construction's work site in Clifton, New Jersey from November 29, 2001 to December 11, 2001. OSHA found two infractions.1 On December 13, 2001, OSHA sent citations to Harms Construction's post office address by certified mail, return receipt requested.2 Carol Pelsang, the Harms Construction employee responsible for handling mail, signed for receipt of the citations at least by December 31, 2001.3

Harms Construction did not file a notice of contest within 15 working days of receipt. On January 22, 2002, the citations became final orders of the Commission by operation of section 10(a) of the Act. 29 U.S.C. § 659(a). On February 28, 2002, more than a month after Harms Construction's notice of contest was due, OSHA issued Harms Construction a delinquency notice. On March 8, 2002, Edward Nyland, Harms Construction's President, telephoned OSHA Assistant Area Director Steve Kaplan, informing him he had no record of the citations but that he wanted an opportunity to contest and possibly settle the matter. Kaplan responded that the return receipt had been signed by an employee at Harms Construction. Kaplan recommended that Harms Construction petition OSHA for settlement. That same day, Nyland mailed a letter to the Commission requesting that Harms Construction be permitted to file a late notice of contest due to "clerical error" and that they try to settle the matter.

Nyland undertook an investigation to determine what transpired with the citations. He interviewed Pelsang, but she told him she had no recollection of the citations because of the passage of time and the volume of mail that she routinely handles. Nyland thoroughly searched his office and inquired whether any of Harms Construction's corporate officers or other employees had seen or were aware of the citations. But Nyland was unable to uncover any information that a Harms Construction employee knew anything about the citations.

Harms Construction's mailing procedure, according to Nyland, was for Pelsang to pick up the mail at the company's post office box. She was required to sign for all certified mail not marked "restricted delivery," place the mail in a mail handling box, and transport the mail back to Harms Construction's headquarters. Then, she would open, stamp, sort, and earmark the mail for delivery. If a letter did not identify the intended recipient, she would determine from prior management instructions who should get the mail. Pelsang had been instructed to deliver OSHA-related mail to Harms Construction's president. If uncertain it was OSHA-related, she was instructed to ask any corporate officer for assistance.

The matter was docketed before the Commission on March 14, 2002. On April 1, 2002, the Secretary filed a motion for a time extension to file her complaint in order to allow OSHA personnel to pursue settlement with Harms Construction. Three weeks later, on April 23, 2002, instead of filing a complaint, the Secretary filed a motion to dismiss the proffered notice of contest as untimely. Harms Construction cross-moved for excusal of its tardy notice of contest. It alleged, among other things, that service was improper, that it was entitled to relief under Fed.R.Civ.P. 60(b)(1) or equitable tolling, and that the Secretary had waived the right to challenge the timeliness of Harms Construction's notice of contest. On October 9, 2002, an Administrative Law Judge conducted hearings in connection with the Secretary's dismissal motion. At the hearing, OSHA Assistant Area Director Kaplan and Harms Construction President Nyland testified. Harms Construction did not call Pelsang to testify.

On February 3, 2003, the ALJ filed his decision and order granting the Secretary's dismissal motion. See Sec'y of Labor v. George Harms Constr. Co., No. 02-0371, 2003 OSAHRC LEXIS 19 (OSAHRC Feb. 3, 2003). Without Pelsang's testimony, the ALJ held that Harms Construction could not demonstrate excusable neglect. Id. at *5-6. He also determined that service was proper, that the Secretary's seeking of an extension to file her complaint to explore settlement did not constitute a waiver of her right to seek dismissal, and that Fed.R.Civ.P. 60(b)(6) should not apply. Id. at *7-10. Harms Construction's petition for discretionary review to the Commission, dated February 18, 2003, was not granted, and the ALJ's decision became the final order of the Commission.

Harms Construction appeals to vacate the Commission's order and remand for a hearing on the merits of the underlying citations. Harms Construction argues that it is entitled to the relief of "excusable neglect" under Fed.R.Civ.P. 60(b)(1), that service was improper, that the Secretary waived its challenge to the untimely notice of contest, that equitable tolling is warranted, and that relief should be granted under Fed.R.Civ.P. 60(b)(6). Not only does the Secretary dispute those claims, she also contends that section 10(a) of the Act, 29 U.S.C. § 659(a), precludes the Commission from considering the Fed.R.Civ.P. 60(b)(1) "excusable neglect" standard when a notice of contest is untimely filed.4

III.
A. The Commission's Authority to Consider Relief under Fed.R.Civ.P. 60(b)(1).

Under section 10(a), if an employer fails to timely contest a citation within 15 working days, "the citation and the assessment, as proposed, shall be deemed a final order of the Commission and not subject to review by any court or agency." 29 U.S.C. § 659(a). But section 12(g) of the Act provides that the "Commission is authorized to make such rules as are necessary for the orderly transaction of its proceedings. Unless the Commission has adopted a different rule, its proceedings shall be in accordance with the Federal Rules of Civil Procedure." 29 U.S.C. § 661(g). Fed.R.Civ.P. 60(b)(1) provides that "[o]n motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect...." Id.

Harms Construction contends the Commission should have found it was entitled to relief under the "excusable neglect" standard. The Secretary maintains that under section 10(a), citations that are not timely contested are "not subject to review by any court or agency," which precludes the Commission from applying Fed.R.Civ.P. 60(b)(1).

The Secretary acknowledges that her contention conflicts with J.I. Hass Co. v. OSHRC, 648 F.2d 190 (3d Cir.1981), in which we set aside a Commission order dismissing a late notice of contest and directed the Commission to consider whether the employer was entitled to relief under Fed.R.Civ.P. 60(b). Id. at 195. After examining Fed.R.Civ.P. 60(b)'s general applicability to Commission proceedings, we held Rule 60(b) authorizes the Commission to reconsider its final orders. Id. at 192-94. Although the Secretary contended that "since the notice of contest was not timely filed, the Commission never had jurisdiction in the first place," we held the Commission must have had jurisdiction at some point or "the citations would be final orders of a Commission which never had...

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