Structural Grouting Systems Excavating, Inc.

Plain-English summary

A judge entered a $60,500 default judgment after Structural Grouting Systems missed one pretrial telephone conference and did not answer a show-cause order. The employer had timely sought Commission review, but its petition was inadvertently never circulated before the default became final. The Commission corrected that oversight, directed review, and found the default procedurally defective because the show-cause order was not sent by certified mail and gave the pro se employer only two days to submit an affidavit. It also found no contumacious conduct or prejudice from the single missed call, which the employer attributed to a telephone-forwarding problem. The default was vacated and the case was remanded for proceedings on the merits.

Decision snapshot

• Cited standard(s): None specified in this default-relief order.
• Outcome: The default judgment and $60,500 penalty were vacated, and the case was reinstated and remanded.
• Key point: Missing one conference does not justify dismissal without proper notice, a reasonable chance to respond, and evidence of contumacious conduct or prejudice.

Full text (OSHRC public release)

Structural Grouting Systems Excavating, Inc., Docket No. 03-1913

SECRETARY OF LABOR,

Complainant,

v.

OSHRC Docket No. 03-1913

STRUCTURAL GROUTING SYSTEMS
EXCAVATING, INC.,

Respondent.

RELIEF FROM FINAL ORDER

DIRECTION FOR REVIEW AND REMAND ORDER

Administrative Law Judge G. Marvin Bober issued a default judgment against
Structural Grouting Systems Excavating, Inc., (SGS) which, in the absence of a direction for
review by any member of the Commission, became a final order of the Commission on
September 9, 2004. The judge had affirmed citations for alleged serious and willful
violations of standards under the Occupational Safety and Health Act of 1970 (the Act), 29
U.S.C. §§ 651-78, and affirmed the proposed penalty of $60,500. For the following reasons,
we hereby grant relief under the Federal Rules of Civil Procedure, Rule 60(a), and direct
review of the case. We also vacate the default judgment and remand the case to the judge,
ordering him to reinstate the case for further proceedings on the merits of the citation
allegations in a manner consistent with this opinion.

PROCEDURAL BACKGROUND

Following issuance of the citation on September 18, 2003, and timely-filed notice of
contest, the parties participated in settlement discussions characterized in a June 3, 2004
letter from the Secretary to the judge as “hopeful of reaching settlement in the near future.”
On July 6, 2004, the judge scheduled another of numerous pre-trial telephone conferences to
be held on July 9, 2004, at 9:00 am.

On July 14, the judge issued an “Order to Show Cause” pursuant to Rule 41 of the
Commission Rules of Procedure, 29 C.F.R § 2200.41, for Respondent’s “fail[ure] in his
responsibility to be available for the pre-trial telephone conference.” The judge ordered that
Respondent “shall no later than 5:00 p.m. EST on July 16, 2004, provide in affidavit form a
statement as to reason(s) the Respondent should not be declared to be in default and the
Citation and Notification of Penalty issued December 15, 2003 (sic), should not be
affirmed.”

The Certificate of Service stated that the Order “was mailed to the parties . . . by
first class mail on July 14, 2004.” Underneath that statement, the words “VIA
FACSIMILE” are printed, but there is no facsimile transmission sheet or verification report
in the file, as there is for a different document sent by facsimile. Also printed above the
Respondent’s address on the Certificate of Service, are the words “FEDERAL EXPRESS.”
There is no verification in the file of Respondent’s receipt via any means of the Order to
Show Cause.

On July 27, 2004, the judge sent to the parties a Notice of Decision and copy of his
Decision and Order on Default Judgment for SGS’ failure to respond to the show cause
order. The notice stated that an aggrieved party may file a petition for discretionary review
by the Commission: with the judge within ten days from the date of the notice, or thereafter
with the Commission’s Executive Secretary within twenty days of the date of the Executive
Secretary’s notice of docketing. SGS timely requested such review by letter addressed to
the judge dated August 2, 2004, and received by the Chief Administrative Law Judge’s
office on August 5, 2004. SGS manager John A. Calarco, appearing pro se, explained in the
petition that he was “aware and available” for the July 9, 2004 telephone conference but that
the phone call was mistakenly picked up by his recorder rather than being forwarded to his
cell phone in the field. The judge submitted his Decision and Order on Default Judgment to
the Commission’s Executive Secretary on August 6, 2004, which became a final order of the
Commission on September 9, 2004 pursuant to section 12(j), 29 U.S.C. §661(j), of the Act.
This matter has only recently come to the Commission’s attention.

DISCUSSION

A. The Petition for Discretionary Review

Federal Rules of Civil Procedure, Rule 60(a), provides for relief from a final
judgment or order as follows:

Clerical mistakes in judgments, orders or other parts of the record and
errors therein arising from oversight or omission may be corrected by the court
at any time of its own initiative or on the motion of any party and after such
notice, if any, as the court orders.

It is apparent here that SGS’ timely-filed petition for review was inadvertently never
considered by the Commission. SGS’ petition was not timely circulated to the Commission,
and the Commission’s consequent failure to consider it constitutes an error arising from
oversight that the Commission can remedy under Rule 60(a). See Voegele Co., Inc. , 7 BNA
OSHC 1713, 1714 n.2, 1979 CCH OSHD ¶ 23,860, p. 28,938 n.2 (No. 76-2199, 1979)
(finding case properly before Commission pursuant to Rule 60(a), where late direction for
review resulted from reliance on erroneously stamped final order date), aff’d , 625 F.2d 1075
(3 rd Cir. 1980); In re American Precision Vibrator Co. , 863 F.2d 428 (5th Cir. 1989)
(finding court authorized, pursuant to Rule 60(a), to enter second order effectively vacating
prior dismissal of appellant's bankruptcy petition, where first order was direct result of
district court's clerical mistake in failing to timely docket appellant's response to dismissal
motion). Accordingly, we hereby grant SGS’ petition for discretionary review, and address
the merits of its petition below.

B. The Decision and Order on Default Judgment

Commission Rule 41 governs the imposition of sanctions providing, in relevant part,
as follows.

(a) Sanctions . When any party has failed to plead or otherwise proceed
as provided by these rules or as required by the Judge, he may be declared to
be in default either: (1) on the initiative of the Commission or Judge, after
having been afforded an opportunity to show cause why he should not be
declared to be in default; or (2) on the motion of a party.

. . .

(d) Show cause orders. All show cause orders issued by the
Commission or Judge under paragraph (a) of this section shall be served upon
the affected party by certified mail, return receipt requested.

As recently reiterated in Daniel Koury Construction, Inc ., 20 BNA OSHC 2089, 2090
(No. 04-1300, 2004), “Commission precedent recognizes the appropriateness of sanctions
‘to ensure compliance with prehearing procedures and to adjudicate cases fairly and
efficiently,’ but prohibits imposition of ‘a sanction that is too harsh under the circumstances
of the case.’” (Citations omitted). “Dismissal of a citation for noncompliance with
prehearing orders is generally permissible only where ‘the record shows contumacious
conduct by the noncomplying party or prejudice to the opposing party.’” Id. (citations
omitted). In that case, we vacated a default judgment under circumstances almost identical
to those present here.

As in the Koury case, we find that the judge’s dismissal of the citation here was both
procedurally and substantively flawed. As a procedural matter, the judge erred on two
counts. First, he failed to comply with the Commission Rules of Procedure, Rule 41(a)(1),
by sending the Order to Show Cause by means other than certified mail, return receipt
requested, and there is no indication in the file whether Respondent ever, in fact, received it.
In addition, that Order mandated a response from a pro se party in affidavit form within two
days. Rule 41(a) requires not just that a show cause order be sent; the party must be
afforded an opportunity to show why default is not warranted. We find that the two-day
response time provided in the judge’s order for this pro se respondent was patently
inadequate and unreasonable. In these circumstances, the judge effectively provided SGS
no opportunity to respond at all. See Richard A. Pulaski Construction Co., Inc. , 1995-97
CCH OSHD ¶ 30,811 (No. 94-1973, 1995) (reversing and remanding dismissal of notice of
contest for failure to telephone judge for scheduled prehearing conference where employer
not provided opportunity to show cause and reasons for missing phone call deemed
sufficient). See also Amsco Inc., 19 BNA OSHC 2189, 2191-92 (No. 02-0220, 2003)
(vacating default sanction where counsel missed a single pre-hearing teleconference).

Substantively, the judge made no finding that Respondent’s failure to be present for a
single telephone conference was contumacious and, on this record, we find that he could
not. Thus, Respondent apparently participated in prior telephone conferences and settlement
discussions and, as stated in his Petition before the Commission, was “aware and available”
for the missed call but experienced a glitch in his telephone answering system. Although
Respondent’s failure to contact the judge soon thereafter may have been thoughtless and
inconvenient, we find that it falls far short of the type of “serious, repeated, contumacious,
extreme, or otherwise inexcusable” conduct that would warrant dismissal. Bachier-Ortiz v.
Colon-Mendoza , 331 F.3d 193, 195 (1 st Cir. 2003) (per curiam). Nor do we see any basis to
establish that the Secretary suffered prejudice from this single missed telephone conference.

In these circumstances we conclude that the judge abused his discretion in dismissing
the case. Accordingly, we vacate the judge’s August 6, 2004 Decision and Order on Default
Judgment, and order that the case be remanded to the judge for reinstatement and
proceedings on the merits of the citation in a manner consistent with this opinion.

So Ordered.

/s/ ___

W. Scott Railton

Chairman

/s/ ___

Thomasina V. Rogers

Commissioner

/s/ ___

James M. Stephens

Commissioner

Dated: April 11, 2005

SECRETARY OF LABOR,

Complainant,

v.

OSHRC Docket No. 03-1913

STRUCTURAL GROUTING SYSTEMS
EXCAVATING, INC.,

Respondent.

DECISION AND ORDER ON DEFAULT JUDGEMENT

On July 6, 2004, an order notified all parties including the Respondent of a pre-trial
telephone conference to be held on Friday, July 9, 2004 at 9:00 a.m. EDT. The Respondent
failed to notify the undersigned of its unavailability for the pre-trial telephone conference,
and thus failed in its responsibility to this Court.

Thereafter, the undersigned on July 14, 2004, issued an order requiring the
Respondent to provide in affidavit form a statement as to reason(s) the Respondent should
not be declared to be in default and the Citation and Notification of Penalty issued September
18, 2003, should not be affirmed.

The Respondent did not file a reply.

DISCUSSION AND CONCLUSION

The Respondent has failed to comply with the Order To Show Cause and is declared to be in
default.

IT IS ORDERED that Default Judgement is GRANTED.

IT IS FURTHER ORDERED that the Citation and Notification of Penalty issued September
18, 2003, is affirmed in its entirety.

/s/

G. Marvin Bober

Administrative Law Judge

Dated: August 6, 2004

Washington, D.C.