Altor Inc v. Secretary Labor

• Court: Court of Appeals for the Third Circuit
• Decided: August 31, 2012
• Docket: 11-2718
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _____________

No. 11-2718 _____________

ALTOR, INC., and/or AVCON, INC., and/or VASILIOS SAITES, individually, and NICHOLAS SAITES, individually,

Petitioners,

v.

SECRETARY OF LABOR,

Respondent

_____________

No. 11-4077 _____________

Petitioner v.

ALTOR, INC., and/or AVCON, INC., and/or VASILIOS SAITES, individually, and NICHOLAS SAITES, individually,

Respondents

Appeal from the Occupational Safety and Health Review Commission

1 (Docket No. 99-0958) Before: Thomasina V. Rogers, Chairman, and Horace A. Thompson III & Cynthia L. Atwood, Commissioners _____________

Submitted Under Third Circuit LAR 34.1(a) July 9, 2012

Before: FUENTES, HARDIMAN, and ROTH, Circuit Judges

(Opinion Filed: August 31, 2012) _____________

OPINION OF THE COURT _____________

FUENTES, Circuit Judge.

Altor, Inc. (“Altor”) and Avcon, Inc. (“Avcon”) (collectively, “Appellants”) ask

this Court to reverse an Occupational Safety and Health Review Commission’s (the

“Commission”) April 26, 2011 decision and order. Appellants argue that the

Commission erred by (1) concluding that Altor and Avcon constituted a “single

employer” under the Occupational Safety and Health Act (the “OSH Act”), (2) assessing

separate penalties for six similar, willful fall protection violations; and (3) increasing an

Administrative Law Judge’s penalty assessment to the amount the Secretary initially

sought. For the reasons stated below, we will affirm. 1

I. 1 The Occupational Safety and Health Review Commission had jurisdiction under sections 10(a) and 10(c) of the OSH Act. 29 U.S.C. § 659(a), (c). We have jurisdiction pursuant to 28 U.S.C. § 660(a).

2 Because we write primarily for the parties, we set forth only the facts and history

relevant to our conclusion.

Altor and Avcon were New Jersey corporations engaged in the business of poured-

in-place concrete construction. Vasilios (“Bill”) Saites was the president and director of

both companies. He was also a minority shareholder (49%) in Avcon, and his wife,

Cornelia Saites, held a 51% majority in Avcon. The record does not indicate who owned

Altor. Bill Saites’ son, Nicholas (“Nick”) Saites, was an attorney licensed in New Jersey

who provided legal advice to both companies. Nick Saites was the director of Altor

during its incorporation, but relinquished that role. During the period relevant to this case,

Nick Saites was also a superintendent and worksite supervisor for Avcon.

In 1998, Altor contracted with Daibes Brothers, a general contractor, to do the

concrete work on a sixteen-story apartment building in Edgewater, New Jersey known as

the Mariner High Rise (the “Edgewater Project”). As director of both Altor and Avcon,

Bill Saites subcontracted a portion of Altor’s work to Avcon, signing the contract on

behalf of each company. Pursuant to the contract, Altor provided materials and supplies,

and Avcon, which had access to union labor, performed the labor at the Edgewater

Project. Altor remained responsible to Daibes Brothers for the concrete work under their

initial contract.

Shortly after Edgewater Project construction began, the Occupational Health and

Safety Administration (“OSHA”) began an inspection of the site. The OSHA inspectors

observed numerous fall protection, safety equipment, and administrative safety program

violations. OSHA thus issued citations to Bill and Nick Saites—individually and doing

3 business as Altor and/or Avcon—alleging willful, serious, and other than serious

violations of OSH Act standards, with proposed penalties totaling $424,000. 2 However,

a timely notice of contest was filed, and, by an amended complaint, Altor and Avcon

were added as individual respondents.

Altor, Avcon, Bill Saites, and Nick Saites appealed the citations to an ALJ. Since

the Secretary’s complaint did not allege that Altor was an employer of employees at the

Edgewater Project, Altor and Avcon must have been a “single employer” under the OSH

Act if they were to share liability for the violations. The ALJ found that evidence

established that Altor and Avcon were a single employer because the “companies [had]

interrelated and integrated operations with a common president, management,

supervision and ownership performing services at a common worksite.” App. 81.

Additionally, the ALJ affirmed the six willful fall protection violations and did not group

them together. However, the ALJ stated that the assessed penalty of $336,000 for the fall

protection violations was excessive and issued a combined penalty of $150,000 ($25,000

for each willful fall protection citation).

Appellants then appealed the ALJ’s decision to the Commission. The

Commission agreed with the ALJ that Altor and Avcon constituted a single employer. In

reaching this conclusion, the Commission found that the companies shared a common

workspace (the Edgewater Project), were “plainly interrelated and integrated,” and

“shared a common president, management, and supervision.” App. 13-14. The

2 OSH Act violations are characterized as “willful,” “repeated,” “serious,” or “not serious” (referred to by the Commission as “other than serious”). 29 U.S.C. § 666.

4 Commission also affirmed the ALJ’s refusal to group the six willful fall protection

violations. However, the Commission set aside the ALJ’s penalty assessment and

imposed the penalties originally proposed by the Secretary, $56,000 for each willful fall

protection citation, or a total of $336,000.

Appellants timely filed with this Court a petition for review of the Commission’s

order.

II.

On appeal, Altor and Avcon challenge both the Commission’s determination that

Altor and Avcon constitute a single employer under the OSH Act and its decision to

assess individual penalties for each of the six willful fall protection violations and to

increase the ALJ’s penalty assessment for these citations.

A.

It is well established that separate corporate entities can constitute a single

employer under the OSH Act. The Act defines “employer” as “a person engaged in a

business affecting commerce who has employees.” 29 U.S.C. § 652(5). It goes on to

define “person” as “one or more individuals, partnerships, associations, corporations,

business trusts, legal representatives, or any organized group of persons.” 29 U.S.C. §

652(4). Whether multiple entities constitute a single employer under the OSH Act is a

question of fact, and the Commission’s conclusion must be upheld if supported by

substantial evidence. See 29 U.S.C. § 660(a); Bianchi Trison Corp. v. Secretary, 409

5 F.3d 196, 204 (3d Cir. 2005); see also NLRB v. Al Bryant, Inc., 711 F.2d 543, 551 (3d Cir.

1983) (“The single employer question is primarily factual, and the Board’s conclusion

must be upheld if supported by substantial evidence.”). 3

We look to four factors to determine whether multiple separate entities in fact

constitute a single employer: (1) interrelated operations; (2) common management; (3)

centralized control of labor relations; and (4) common ownership. Al Bryant, 711 F.2d at

551. While no factor is dispositive, the first three are more significant. Id.

Altor and Avcon argue that they were separate entities because each company was

engaged in different aspects of the construction business. Altor and Avcon’s relationship,

however, exhibited a lack of arm’s length dealing, and the Commission properly

concluded that the companies were a single employer. First, the companies’ operations

were substantially interrelated. Avcon only performed work pursuant to contracts with

Altor, and Altor always remained responsible to the general contractors for Avcon’s work.

Further, Bill Saites signed contracts for both corporations, and the companies shared a

single-room office. Second, Bill Saites was the director and manager of both companies,

satisfying common management. Third, labor relations were centralized because Bill and

Nick Saites, as representatives for both Altor and Avcon, were the onsite supervisors at

3 The Commission “essentially adopted” the single employer test that was developed by the National Labor Relations Board (NLRB). See C.T. Taylor Co. v. Esprit Constructors, Inc., 2003 OHSHRC LEXIS 43, at *9-*10 (Apr. 26, 2003). Thus, it is instructive to look to NLRB cases to elucidate the single employer concept. Indeed, we have applied the NLRB’s test in a wide variety of employment and labor law contexts to determine whether separate entities constitute a single employer. See Pearson v. Component Tech. Corp., 247 F.3d 471, 486 (3d Cir. 2001) (citing cases applying this test in various employment contexts).

6 the Edgewater Project and had authority to terminate employees and to enforce safety

regulations. Fourth, the Saites family closely held control over Altor and Avcon, and this

constitutes common ownership. See NLRB v. Dane Cnty. Dairy, 795 F.2d 1313, 1322

(7th Cir. 1986) (“Familial control constitutes common ownership and control.”); accord

J.M. Tanaka Constr., Inc. v. NLRB, 675 F.2d 1029, 1035 (9th Cir. 1982).

Accordingly, we find that the Commission’s holding that Altor and Avcon

constituted a single employer is supported by substantial evidence.

B.

The Commission has wide discretion to assess penalties for OSH Act violations

within the Act’s statutory allowable range. See 29 U.S.C. § 666. Therefore, we will

overturn the Commission’s penalty assessment only for an abuse of discretion. See 29

U.S.C. § 666(j); Chao v. OSHRC, 401 F.3d 355, 376 (5th Cir. 2005) (“This Court reviews

the Commission’s determination of the amount of an OSH Act penalty for abuse of

discretion.”); Modern Cont’l Constr. Co. v. OSHRC, 305 F.3d 43, 53 (1st Cir. 2002).

The OSH Act permits the Commission to penalize willful violations with a fine of

between $5,000 and $70,000 for each violation. 4 29 U.S.C. § 666(a). The Commission

must “giv[e] due consideration to the appropriateness of the penalty with respect to the

4 The Secretary has the discretion to charge violations individually or to group them together in the first instance. But, the Commission is then obligated to assess the minimum penalty “for each willful violation” that is proved. 29 U.S.C. 666(a) (emphasis added). Insomuch as Altor and Avcon seek a reduction in their total penalty, the available relief is for the Commission to lower the penalty for each willful citation individually (rather than “grouping” the willful violations, as Appellants request).

7 size of the business of the employer being charged, the gravity of the violation, the good

faith of the employer, and the history of previous violations” when assessing a penalty

within the broad statutory range. 29 U.S.C. § 666(j). “The gravity of a particular

violation may warrant the assessment of a weighty penalty, even though the employer

may rate perfect marks on the other three criteria.” See Modern Cont’l Constr. Co. 305

F.3d at 53 (internal quotation marks omitted).

Altor and Avcon argue that the six willful fall protection violations should be

grouped together and that a lower penalty should be assessed because the companies had

less than 100 employees, their employees were only exposed to danger for three weeks,

no actual injuries occurred, and the companies did take some level of precaution to

prevent falls.

However, the Commission did not abuse its discretion in giving substantial weight

to the violations’ gravity and assessing a penalty at the upper end of the statutorily

allowable range. The six separate fall protections violations were all willful violations.

Though it focused its attention on the violations’ gravity, the Commission adequately

considered all of the relevant factors in assessing the penalty. The record indicates that

employees were regularly exposed to risks of falling over 79 feet, a fall that would likely

result in death. Accordingly, the Commission did not abuse its discretion in assessing the

penalty initially sought by the Secretary.

III.

For the foregoing reasons, we will affirm the Commission’s order.