Coastal Horizontal, Inc., d/b/a Coastal Power, Inc.

Plain-English summary

Coastal Horizontal, a Florida excavation contractor doing business as Coastal Power, was inspected by OSHA after a March 2000 dig in Navarre, Florida. OSHA issued a five-item serious citation with an $8,900 penalty and mailed it certified on April 28, 2000. Coastal received it on May 1, which gave the company until May 22 to contest, but it did not fax a contest letter until May 30, eight days late. The company blamed a mail mix-up: one employee took the certified citation off the mail clerk's desk and left it face-down on a rarely-occupied superintendent's desk, where it sat unnoticed for weeks. Judge Nancy J. Spies ruled this was not "excusable neglect" because Coastal had no orderly procedure for handling important certified mail, and a company's own sloppy internal mail routing is within its control and does not justify relief. She also rejected Coastal's argument that the OSH Act is unconstitutional, noting the Commission cannot decide constitutional questions the courts have not resolved. The motion to dismiss was granted, so the citation and the full $8,900 penalty became a final order.

Decision snapshot

• Cited standard(s): None enumerated in this order; the underlying citation was a five-item serious citation whose specific standards were not at issue.
• Outcome: Procedural. The Secretary's motion to dismiss the untimely notice of contest was granted; the citation and $8,900 penalty are affirmed as a final order.
• Key point: A late contest caused by a company's own disorderly mail-handling procedures is not excusable neglect under Rule 60(b), so the citation becomes final by operation of section 10(a) of the Act.

Full text (OSHRC public release)

____________________________________
Secretary of Labor,                  |
       Complainant,                 |
                                     |
               v.                   |                   OSHRC Docket No. 00-1022 (E-Z)
                                     |
Coastal Horizontal, Inc., d/b/a      |
 Coastal Power, Inc.,               |
       Respondent.                   |
____________________________________|

Appearances:

       Carla J. Gunnin, Esq.                            G. R. Erick Mead, Esq.
                U. S. Department of Labor                                Clark, Partington, Hart, Larry,
                                                                         Bond
               Office of the Solicitor                           & Stackhouse
               Birmingham, Alabama                               Pensacola, Florida
                        For Complainant                                  For Respondent

Before:                 Administrative Law Judge Nancy J. Spies

          ORDER AND DECISION DISMISSING LATE NOTICE OF CONTEST
       Coastal Horizontal, Inc., d/b/a Coastal Power, Inc. (Coastal), filed a notice of contest of
the citation and penalty issued by the Secretary on April 28, 2000. The Secretary contends that
the notice of contest was untimely and that the citation and penalty constitute a final order
pursuant to § 10(a) of the Occupational Safety and Health Act of 1970 (Act). She filed a motion
to dismiss. Coastal responded with a motion to set aside the default, and both parties filed further
support for their motions. A hearing on the issue was held on August 28, 2000, in Pensacola,
Florida. The parties argued their positions at the close of the hearing, and Coastal filed a post-
hearing brief. The case is ready for decision. For the reasons below, Coastal is not entitled to
relief from its untimely notice of contest.
                                              Background
       Following a March 9, 2000, Occupational Safety and Health Administration (OSHA)
inspection of a Coastal excavation operation in Navarre, Florida, the Secretary issued Coastal a
five-item serious citation with a recommended penalty of $8,900. The Jacksonville, Florida,
OSHA Area Office sent the citation by certified mail on April 28, 2000; and Coastal received it on

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May 1, 2000, as shown by a return receipt signed by G.O. Scruggs, a Coastal employee with
responsibility for handling Coastal's incoming mail (Exh. C-2; Tr. 20). Coastal was required to
notify the Secretary of an intent to contest within 15 working days of its receipt of the citation, or
by May 22, 2000.
        By letter, dated and telefaxed on May 30, 2000, Coastal contested the amount of the
proposed penalties only (Exh. C-3).
                                                  Discussion
        It is undisputed that Coastal filed its notice of contest to the proposed penalties 8 days after
the expiration of the 15 working-day period. The issue here is whether Coastal should be granted
relief from the effects of the untimely contest. An untimely filing may be excused where the delay
was caused by deception on the part of the Secretary or by the Secretary's failure to follow proper
procedures. Atlantic Marine, Inc. v. OSHRC, 524 F. 2d 476 (5th Cit. 1975). Relief can be obtained
under Rule 60(b)(1) of the Federal Rules of Civil Procedure, if an employer demonstrates that its late
filing resulted from mistake, inadvertence, surprise, or excusable neglect. Rule 60(b)(6) allows relief
based on mitigating circumstances, such as illness, absence, or a disability that prevents a party from
protecting its own interests. Under either theory, the employer has the burden of showing a sufficient
basis for relief. Roy Kay, Inc., 13 BNA OSHC 2021, 2022 (No. 88-1748, 1989); Branciforte
Builders, 9 BNA OSHC 2113 (No. 80-1920, 1981).
                                                  Misconduct
        Coastal does not allege any misconduct on the part of the Secretary (Tr. 7).1 There is no
evidence that OSHA officials made misrepresentations, engaged in misconduct, or failed to
comply with required procedures that would justify relief from the notice of contest becoming a
final order.
                                              Excusable Neglect
        Coastal contends that its failure to timely file a notice of contest was excusable neglect
because an employee misdirected the certified OSHA citation. Coastal's vice-president, Jennifer
Hamilton, testified that she had over-all responsibility for the mail and that the office normally

1
 Although Coastal's pre-hearing motion asserted that the OSHA compliance officer may have caused it some
confusion about whether a citation would be forthcoming, Coastal abandoned that position at the hearing. It is
noted that neither party called the compliance officer who was present at the hearing.

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received certified mail (Tr. 14). Scruggs signed and dated the return receipt for the OSHA
Citation and Notice of Penalty on May 1, 2000. Scruggs was an employee who distributed the
mail in the office (Tr. 20- 21). Vice-president Hamilton testified that another employee, Terrie
Clingle, admitted to her that she took that day's mail off Scrugg's desk and distributed it.
According to Hamilton, Clingle's responsibilities also included work with the mail but only after it
had been through proper channels (Tr. 14). Hamilton considered that all certified mail should first
come to her before being distributed within the office. When Clingle took the mail from Scrugg's
desk, she placed the certified OSHA citation on the field superintendent's desk, face downward
(Tr. 14). The field superintendent came into the office about every other week (Tr. 14).
Hamilton did not discover the citation until May 30, 2000, and on that date she called the OSHA
office and telefaxed the letter of contest (Tr. 15, 26).
        The Supreme Court discussed "excusable neglect" in Pioneer Investment Services Co. v.
Brunswick Associates Ltd. Partnership, 507 U. S. 380 (1993). The Court concluded that whether
a party's neglect of a deadline may be excused presents equitable questions from all the
surrounding circumstances, such as (Id. at 395):
        the danger of prejudice to the [opposing party], the length of the delay and its
        potential impact on judicial proceedings, the reasons for the delay, including
        whether it was within the reasonable control of the movant.

        Although Pioneer involved a Bankruptcy Act Rule, the United States Circuit Courts
generally have held that Pioneer's analysis of "excusable neglect" applies to Rule 60(b). Robb v.
Norfolk & Western Railway Co., 122 F. 3d 354, 361-62 (7th Cir. 1997). The first two Pioneer
factors would not prohibit granting relief. However, Coastal's reason for the delay (mishandling
the incoming mail) appears to have been firmly within its reasonable control. The Review
Commission consistently denies relief to employers whose procedures for handling important
documents are to blame for untimely contests of OSHA citations. Montgomery Security Doors &
Ornamental Iron, Inc., 18 BNA OSHC 2145, 2148 (No. 97-1906, 2000) (record showed a
breakdown of business procedures and delay unjustified even assuming it was due to employee
sabotage); NYNEX, 18 BNA OSHC 1944, 1947 (No. 95-1671, 1999) (no relief where employee
redirected certified mail since company was without adequate procedures); Louisiana-Pacific
Corp., 13 BNA OSHC 2020 (No. 86-1266, 1989) (change in management insufficient excuse for

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late filing); Stroudsburg Dyeing & Finishing Co., 13 BNA OSHC 2058 (No. 88-1830, 1989)
(employer failed to maintain orderly procedures for handling internal documents to keep citation
from getting into wrong hands); but see Russell B. Le Frois Builder, Inc., 18 BNA OSHC 1978
(No. 98-1099, 1999).2
        Coastal did not have an orderly office procedure for handling important mail. Vice-
president Hamilton testified that it was not unusual for her to go through the mail on Scruggs's
desk to take out appropriate mail when Scruggs was not at her desk (Tr. 22). Hamilton
speculates that Scruggs perhaps assumed that she (Hamilton) took the certified letter off of her
(Scruggs's) desk (Tr. 22). Scruggs could have followed up to make sure that Hamilton, the
proper person, actually received the certified mail. Coastal's procedures could predictably result
in misdirecting important mail within the company. The fact that another employee, who also had
mail handling responsibilities, delivered the citation to the wrong person does not rise to the level
of excusable neglect. Coastal failed to show "mistake, inadvertence, surprise or excusable
neglect"or any other mitigating circumstance to justify relief under Rule 60(b).
                                                Constitutionality
        Coastal argues that regardless of whether its notice of contest was timely, the citation
must fail because the Act is unconstitutional on its face and as applied. Coastal contends that
"[t]he infliction of [workplace] 'personal injuries and illnesses' . . . is not economic activity in any
sense," leaving Congress without authority to enact it under the Commerce Clause. In support of
its argument, Coastal cites U. S. v Lopez, 514 U. S. 549(1995) (Gun-Free School Zones Act of
1990 unconstitutional under commerce clause because Congress could not regulate gun
possession in a local school zone which was unrelated to commerce or economic activity)3 and U.
S. v. Morrison, __ U. S. __, 120 S. Ct. 1740 (2000) (civil remedy provisions for victims of

2
 The instant case is distinguishable from Russell B. Le Frois Builder where the Commission found excusable
neglect for an employer who picked up the mail at the post office box and the certified mail fell beneath the car
seat. In the instant case, the certified mail arrived at the employer's own office and entered its mail handling
process.
3
  The Court in Lopez noted that it upholds a wide variety of Congressional Acts regulating intrastate economic
activity affecting interstate commerce under the commerce clause. "Where economic activity substantially affects
interstate commerce, legislation regulating that activity will be sustained." Lopez at 4346.

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gender-motivated violence were unconstitutional because gender-motivated crimes of violence
were not in any sense economic activity to be regulated under the Commerce Clause).
        First, it is questionable whether Coastal can raise the issue of the Act's constitutionally. Its
untimely contest must be dismissed and the citation is a final order. That notwithstanding, the
Commission has long held that it lacks the authority to rule on questions of the constitutionality of
provisions of the Act on which no court has yet ruled. It can merely apply judicial precedent
regarding the constitutionality of the Act. Adams Steel Erection, Inc., 13 BNA OSHC 1073, 1075
(No. 77-3804, 1987). The courts apparently have not addressed the specific question of whether the
Act is a valid exercise of Congressional power under the commerce clause.4 Even could Coastal
properly raise it, the issue cannot be decided here.
                      FINDINGS OF FACT AND CONCLUSIONS OF LAW
        The foregoing decision constitutes the findings of fact and conclusions of law in
accordance with Rule 52(a), Fed. R. Civ.P.
                                                   ORDER
        The Secretary's motion to dismiss is GRANTED, and the April 28, 2000, citation and the
penalty of $8,900 are affirmed.
                                                                     /S/

                                                                     NANCY J. SPIES
                                                                     Judge
Date: October 11, 2000

4
  Multiple courts have held that by enacting the O.S.H. Act Congress intended to exercise the full extent of the
authority granted to it by the commerce clause of the Constitution. Austin Road v. Occupational Safety and Health
Review Commission, 683 F. 2d 905, 907 (5th Cir. 1982); Godwin v. Occupational Safety and Health Review
Commission, 540 F. 2d 1013, 1015 (9th Cir. 1976); U. S. v. Dye Construction Co., 510 F. 2d 78, 83 (10th Cir.
1975); Brennan v. Occupational Safety and Health Review Commission, 492 F.2d 1027 (2nd Cir. 1974).

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