Court Opinion

ID: 4243201
Source: CourtListenerOpinion
Date Created: 2018-02-07 22:00:16.398258+00
Date Added: 2024-06-11T13:47:31.403179
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 17-1537

                 A.C. CASTLE CONSTRUCTION CO., INC.

                            Petitioner,

                                 v.

              R. ALEXANDER ACOSTA, Secretary of Labor;
                      U.S. DEPARTMENT OF LABOR,

                            Respondents.

               PETITION FOR REVIEW OF AN ORDER OF
      THE OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION

                               Before

                   Torruella, Lipez, and Kayatta,
                           Circuit Judges.

     James F. Laboe, with whom Orr & Reno, P.A. was on brief, for
petitioner.
     Amy S. Tryon, Senior Attorney, U.S. Department of Labor, with
whom Nicholas C. Geale, Acting Solicitor of Labor, Ann S.
Rosenthal, Associate Solicitor for Occupational Safety and Health,
and Charles F. James, Counsel for Appellate Litigation, were on
brief, for respondents.

                          February 7, 2018
            KAYATTA, Circuit Judge.               General contractor A.C. Castle

Construction Co., Inc. appeals fines imposed by the Occupational

Safety and Health Administration ("OSHA") for violations related

to   an   accident      at    a   construction        worksite      in     Massachusetts.

A.C. Castle argues, among other things, that OSHA wrongly held it

responsible for the acts and omissions of a subcontractor.                             For

the reasons below, we affirm.

                                           I.

            Two roofers fell over twenty feet and sustained serious

injuries     at    a     residential        construction            site     in     Wenham,

Massachusetts on October 2, 2014, when a spruce board used for

scaffolding       snapped         in    half.         OSHA     inspectors         promptly

investigated      the        worksite    and    the     two    employers          involved:

A.C. Castle,      the        general     contractor,          and    Provencher        Home

Improvements ("PHI"), the sole proprietorship of Daryl Provencher

and the only subcontractor on the job.                   The Secretary of Labor,

charged with enforcing the Occupational Safety and Health Act

of 1970, 29 U.S.C. §§ 651-678 (the "OSH Act"), subsequently cited

both   A.C. Castle       and      PHI   under   the    OSH    Act.         The    Secretary

proffered two alternative theories for citing both companies,

rather than just the roofing subcontractor PHI: first, that under

Occupational Safety and Health Review Commission ("Commission")

precedent, the two companies constituted a single employer; and,

second, that under the common law agency test set forth by the

                                          - 2 -
United States Supreme Court in Darden, Daryl Provencher was a

supervisory employee of A.C. Castle.          See Nationwide Mut. Ins. Co.

v. Darden, 503 U.S. 318 (1992).              Under either legal test, the

constructive or actual knowledge that Provencher possessed of the

worksite violations would be imputed to A.C. Castle. See Empire

Roofing Co. Se., 25 BNA OSHC 2221, 2222 (No. 13-1034, 2016); Cent.

Soya de P.R., Inc. v. Sec'y of Labor, 653 F.2d 38, 40 (1st Cir.

1981).

             A.C. Castle and Provencher challenged the citations.

Following a three-day testimonial hearing, the Administrative Law

Judge ("ALJ") determined that Provencher and A.C. Castle "acted as

a single employer in the worksite" and that Provencher "was a

supervisory employee working for A.C. Castle."             In so ruling, the

ALJ did not rest on her finding that Provencher was an employee of

A.C. Castle as an independent and sufficient basis upon which to

justify the citation of A.C. Castle.           Instead, she relied on that

finding to provide support for the conclusion that A.C. Castle and

PHI could be treated as a single employer.           The ALJ also rejected

A.C. Castle's argument that it did not have fair notice that it

would be treated as a single employer with PHI.               Regarding the

substance    of   the   citations,    the    ALJ   found   that   A.C. Castle

willfully failed to ensure that the scaffolding was adequate to

support     the   intended   load,   and     assessed   penalties   totaling

$173,500.     The claims against Provencher were dismissed as moot

                                     - 3 -
because of his death after the hearing but before the ALJ ruled.

After the Commission declined A.C. Castle's petition for review,

A.C. Castle filed this appeal.

                                        II.

           The citations of A.C. Castle hinged on a finding that

A.C. Castle was "the employer of the affected workers at the site."

Allstate Painting & Contracting Co., 21 BNA OSHC 1033 (Nos. 97-

1631 & 97-1722, 2005); see also 29 U.S.C. § 658(a).                       The ALJ

reached this finding after properly placing the burden of proof on

the Secretary. See Allstate, 21 BNA OSHC 1033. In now challenging

that   finding     on    appeal,       A.C. Castle     raises     three   issues:

(1) whether substantial evidence supports the ALJ's conclusion

that   Provencher       was   a   supervisory     employee      of   A.C. Castle,

(2) whether the ALJ erred in treating A.C. Castle and PHI as a

single employer, and (3) whether the Secretary of Labor violated

A.C. Castle's right to fair notice in treating PHI and A.C. Castle

as a single employer where before it had not.                   We address these

issues in turn.

                                         A.

           Brian    LeBlanc       is    the    owner   and   sole    manager   of

A.C. Castle, which has its principal place of business at LeBlanc's

home in Danvers, Massachusetts.           A.C. Castle normally operates as

a general contractor and claimed no direct employees of its own at

the time of the OSHA investigation.                LeBlanc was friends with

                                       - 4 -
Provencher, who was the sole proprietor of PHI, a construction

subcontracting company based at Provencher's home in Beverly,

Massachusetts.     LeBlanc and Provencher had been friends for over

thirty years at the time of the OSHA investigation.                   In 2015,

ninety-five percent of Provencher's income came from A.C. Castle.

Provencher estimated that generally around seventy-five percent of

his projects came from A.C. Castle, as he occasionally performed

work for other general contractors.

             The   ALJ   found   that       Provencher   was   employed       by

A.C. Castle as a supervisor of the workers on the Wenham job site.

In reaching this conclusion, the ALJ applied the common law agency

test set forth by the Supreme Court in Darden.              See Darden, 503
U.S.    at   324–24.     A.C. Castle    argues    that   the   record    lacks

substantial evidence to support the ALJ's conclusion in applying

that test, as evidenced by the ALJ's failure to consider many of

the Darden factors, and an undue reliance on facts that are typical

of     the   relationship   between     a     general    contractor     and   a

subcontractor.

             Darden's test is as follows:

             In determining whether a hired party is an
             employee under the general common law of
             agency, we consider the hiring party’s right
             to control the manner and means by which the
             product is accomplished. Among the other
             factors relevant to this inquiry are the skill
             required; the source of the instrumentalities
             and tools; the location of the work; the
             duration of the relationship between the

                                  - 5 -
            parties; whether the hiring party has the
            right to assign additional projects to the
            hired party; the extent of the hired party’s
            discretion over when and how long to work; the
            method of payment; the hired party’s role in
            hiring and paying assistants; whether the work
            is part of the regular business of the hiring
            party; whether the hiring party is in
            business; the provision of employee benefits;
            and the tax treatment of the hired party.

Darden, 503 U.S. at 323–24 (internal quotation marks and citation

omitted).

            In applying this multifactor test,

            [A]ll of the incidents of the relationship
            must be assessed and weighed with no one
            factor being decisive.     However, in most
            situations, the extent to which the hiring
            party controls the manner and means by which
            the worker completes her tasks will be the
            most important factor in the analysis.

Alberty-Vélez v. Corporación de P.R. Para La Difusión Pública, 361
F.3d 1, 7 (1st Cir. 2004) (internal quotation marks and citations

omitted).

            The ALJ properly focused on the most important factor,

control, finding that LeBlanc "exercised an unusual amount of

control over Mr. Provencher's actions, atypical of a traditional

contractor/subcontractor relationship."      In expanding on this

finding, the ALJ also looked at the source of instruments and

tools, the assignment of work, the length of the relationship, and

the hiring of other workers.    Specifically, the ALJ stated:

            Mr. LeBlanc and Mr. Provencher had a thirty-
            year working relationship.       Mr. LeBlanc

                                - 6 -
            scheduled the roofing projects and told
            Mr. Provencher in what order they were to be
            done,   which    necessarily    determined   the
            location of the work.      Mr. LeBlanc arranged
            for the building materials to be delivered to
            the   worksites     and   provided    the   dump
            truck . . . . He also arranged for the only
            safety training provided to the roofing crew
            and provided Mr. Provencher with a copy of
            A.C. Castle's safety program and instructed
            him to implement it.          Mr. LeBlanc told
            Mr. Provencher when he needed to hire more
            employees to complete the contracted roofing
            projects on time.      Mr. Provencher paid the
            roofing crew members on Fridays, after he
            received      payment     from      Mr. LeBlanc.
            Mr. Provencher did not have a business license
            and could not bid on projects; he was
            dependent on A.C. Castle for the great
            majority of his work. Mr. LeBlanc conducted
            spot     inspections     on    Mr. Provencher's
            worksites and instructed him to abate specific
            safety infractions.

            LeBlanc also appears to have directed Provencher to

double up the spruce planks sold at the hardware store when used

as scaffolding (a direction ignored on the day of the accident).

LeBlanc gave Provencher (who had no credit cards or money on hand)

interest-free loans to purchase equipment and materials, which

LeBlanc docked in $500 increments from amounts otherwise due to

Provencher.    LeBlanc influenced when that equipment needed to be

replaced.     For example, he told Provencher he "probably need[ed]

new ladders" and then loaned the funds to buy them.          LeBlanc also

let Provencher purchase materials on A.C. Castle's account at the

local   hardware   store,   where   A.C. Castle   received   a   discount.

Provencher could not complete purchases on A.C. Castle's account

                                    - 7 -
without    the   clerk     first     calling   LeBlanc    for   authorization.

A.C. Castle      also     provided    tee-shirts    and    sweatshirts    with

A.C. Castle's logo for Provencher and other PHI workers to wear.

            LeBlanc was also involved in the hiring and firing of

PHI's workers.          On several occasions when PHI needed to hire

workers, LeBlanc placed ads in the newspaper on Provencher's behalf

because, without a credit card, Provencher could not do so himself.

Provencher would inform LeBlanc when he had trouble with worker

attendance. He would ask LeBlanc for help firing absentee workers,

saying on one occasion to LeBlanc, "You need to get rid of this

guy."     LeBlanc would also suggest to Provencher how large a crew

he would need to hire for a given project.

            A.C. Castle argues that the foregoing findings describe

only the close coordination often necessary between a general

contractor and a subcontractor.          Certainly, it is fair to say that

such coordination often exists between such entities.              After all,

a principal role of the general contractor is to coordinate the

work of the subcontractors.            Here, though, we have a recurring

relationship with one general contractor and one subcontractor in

which the general exercises control not only over the timing and

scope of the work, but also over the details of how the work is

performed, and over many internal operations of the subcontractor,

particularly the managing of personnel and equipment.

                                       - 8 -
          A.C. Castle correctly points out that the evidence was

not one-sided.   Provencher provided many of the tools Provencher

and PHI workers used, did some small amount of work for other

parties, signed contracts as a subcontractor for each job, was not

paid in the form of a salary, and received an IRS Form 1099 rather

than a W-2.   In nevertheless deciding that all of the evidence

collectively described a principal-agent relationship, the ALJ

considered how A.C. Castle itself portrayed the relationship in

dealing with regulators and customers.   For each building permit,

A.C. Castle was required to submit an affidavit stating who held

the workers' compensation insurance for the project.     The form

affidavit gave LeBlanc a choice:   "I am an employer with [blank]

employees," or "I am a general contractor and I have hired the

sub-contractors listed on the attached sheet."    In the forms on

record, LeBlanc did not identify himself as a general contractor

or Provencher as a subcontractor. Instead, he checked the employer

box and filled in the number of workers.   LeBlanc also made sure

that his customers understood that all the workers on the project

were his employees.   To that end, he prohibited Provencher from

describing himself to the customer as a subcontractor.    And, as

noted, A.C. Castle furnished the workers with tee-shirts bearing

A.C. Castle's name, and placed A.C. Castle signs at each worksite.

The ALJ found LeBlanc's insurance affidavits, as confirmed by his

representations to customers, to be credible descriptions of his

                              - 9 -
relationship with Provencher, and his attempts to recant those

statements not credible.

              A.C. Castle's         representations     were,     in    substance,

representations that he controlled Provencher as an employee, not

as an independent subcontractor.               We see no error in the weight

the ALJ gave to those representations in making the fact-intensive

conclusion      that     the    relationship       between      A.C. Castle    and

Provencher, for purposes of this case, is best seen as that of

employer and employee.          And with those representations added to

the   other    facts     in   the    record    elucidating   their     distinctive

relationship, there is enough to provide substantial evidence for

the ALJ's conclusion.

                                          B.

              The ALJ might well have concluded her analysis after

determining that Provencher was a supervisory employee of A.C.

Castle. After all, the only other workers involved at the worksite

were those whom Provencher in turn supervised, and who were

presented     as    A.C. Castle       employees    in   A.C. Castle's     various

representations.         And that was, in substance, what the Secretary

argued.     Instead, the ALJ essentially gave A.C. Castle a second

bite at the apple by also assessing the relationship between

A.C. Castle        and   Provencher      under    the   Commission's       "single

employer" test.

                                        - 10 -
           That   test    appears    to      have   originated     in   Advance

Specialty Co., 3 BNA OSHC 2072 (No. 2279, 1976).              In that case,

the Commission pointed to the practice of the National Labor

Relations Board in treating as a single entity two businesses where

there is "a combination of most or all of the following factors:

a common worksite, a common president or management, a close

interrelation and integration of operations, and a common labor

policy."    Id.   at     *3.   Without       explanation,    the    Commission

reformulated that test to hold that "when . . . two companies share

a common worksite such that the employees of both have access to

the same hazardous conditions, have interrelated and integrated

operations, and share a common president, management, supervision

or ownership, the purposes of the [OSH Act] are best effectuated

by the two being treated as one."            Id. at *4.     The Commission's

reformulation, unlike the NLRB formulation of its rule, seems to

require that all three (rather than a combination of most) factors

be satisfied in order to treat two employers as one. Nevertheless,

the Commission itself has since described its rule as "essentially

adopt[ing] the 'single employer' concept of the [NLRB]."                  C.T.

Taylor Co., 20 BNA OSHC 1083 (Nos. 94-3241 & 94-3327, 2003).               One

reviewing court has presumed the two tests to be the same, see

Altor, Inc. v. Sec'y of Labor, 498 Fed. Appx. 145, 148 n.3 (3d

Cir. 2012), while another has pointed out their differences, see

Solis v. Loretto-Oswego Residential Health Care Facility, 692 F.3d

                                    - 11 -
65, 74 (2d Cir. 2012), as well as the predominance of a four-

factor version of the test in other statutory contexts, id. at 73–

74 (referencing the Labor Management Relations Act, the Fair Labor

Standards Act, and the Age Discrimination in Employment Act (citing

Pearson v. Component Tech. Corp., 247 F.3d 471, 486 (3d Cir. 2001)

(collecting cases))).

             For our purposes, we can ignore any uncertainty about

the precise nature of the test, as the ALJ employed the three-

factor formulation in a straightforward fashion, and neither party

challenges the ALJ's stated formulation. Rather, the parties train

their arguments on whether the ALJ properly found all three factors

to   be   present   to   the    extent   that    they     warranted   treating

A.C. Castle as the employer of the affected workers.              Our role in

assessing those arguments is limited.             We ask only whether the

ALJ's findings of fact are supported by substantial evidence

considering the record as a whole, 29 U.S.C. § 660(a); P. Gioioso

& Sons, Inc. v. Occupational Safety & Health Review Comm'n, 675
F.3d 66,   72   (1st   Cir.   2012),   and    whether    the   findings   are

arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with the law,         5 U.S.C. § 706(2)(A); Capeway Roofing

Sys., Inc. v. Chao, 391 F.3d 56, 58 (1st Cir. 2004).               With these

standards in mind, we turn to the ALJ's precise findings and

A.C. Castle's critique of those findings.

                                   - 12 -
                            1.    Common Worksite

            The ALJ found that A.C. Castle and PHI shared as a common

worksite the Parsons Hill Road home roofing site where the accident

occurred. A.C. Castle argues that the common worksite test directs

our attention to the "business address" of the two entities, rather

than to the location at which their employees worked.                           While a

shared headquarters or business address generally satisfies the

common   worksite      factor,    A.C. Castle       points      to   no    precedent

indicating that a common business address or headquarters is

necessary to satisfy this factor. And to rule that it is essential

would rewrite the test as stating "common business address" rather

than   "common    worksite,"      which    is    the     term   used      in    Advance

Specialty. 3 BNA OSHC 2072, at *4.           Given the Act's focus on worker

safety, see 29 U.S.C. § 651, it is not unreasonable to look to the

location    at   which   the     employees      worked    and   were      exposed    to

workplace hazards, i.e., the "worksite," not just the "business

address."    For this reason, we find nothing arbitrary, capricious,

abusive, or violative of the law in the ALJ's finding that the

construction site was the relevant site in applying the common

worksite test.

            At the same time, we agree with A.C. Castle that in cases

involving    general     contractors      and    subcontractors,          the    common

worksite factor as construed by the ALJ in this case will almost

always be satisfied.       In our view, though, all this means is that

                                     - 13 -
in this industry this factor carries with it less probative force

than it otherwise might in decreeing two companies to be one and

the same.   And the other prongs of the test ensure that this factor

alone is not dispositive.

            A.C. Castle   also   argues   that   even   the   construction

worksite was not common in this case because LeBlanc was not at

the site when the accident occurred, and thus he was not exposed

to the hazardous conditions.      But LeBlanc had been to the site to

secure and arrange the work, and A.C. Castle points to no precedent

holding that workers from each entity must be at the site at the

time the violation occurred, or directly exposed to the risk.

Also, Provencher supervised the roofing crew that set up the faulty

scaffolding apparatus at the worksite, and was himself physically

present at the site shortly before the accident.               As we have

explained above, the ALJ reasonably treated him as an employee of

A.C. Castle.      So in that sense, A.C. Castle was present at the

worksite.

             2.   Interrelated and Integrated Operations

            The same factual findings employed in deeming Provencher

to be a supervisory employee of A.C. Castle make clear that the

operations of A.C. Castle and Provencher's sole proprietorship

were integrated to a degree well beyond what one would expect to

find in the customary relationship between a general contractor

and a subcontractor.      The integration of their operations also

                                 - 14 -
notably included the pertinent subject of workplace safety:               PHI

had no safety program of its own, and LeBlanc arranged for and at

times paid for PHI workers to receive OSHA trainings hosted at

LeBlanc's home.       LeBlanc gave Provencher a binder containing A.C.

Castle's safety policies and instructed Provencher to follow its

dictates.    See C.T. Taylor, 20 BNA OSHC at 1087 ("[T]reating these

two companies as one is an effective way of addressing the fact

that, on this particular occasion, Taylor and Esprit handled safety

matters as one company.")

            As   we    have    already    discussed,   A.C. Castle     fairly

protests that any integration was not complete.              PHI did some work

for other general contractors.            There was no common payroll or

benefits system.        Provencher had his own workers' compensation

insurance for his workers, and he had his own CPA.             So, too, it is

fair to say that some degree of direction is customarily given by

general contractors to their subcontractors.             For all of these

reasons, we agree that this factor weighed only lightly in favor

of a single employer finding.            But, as with the common worksite

factor, we see no abuse of discretion in finding that the weight

of this factor, while small and likely insufficient in the normal

case   of   construction      general    contractors   and    subcontractors,

nevertheless incrementally added to the balance building in the

direction of the ALJ's finding.

                                    - 15 -
                 3.     Common Management or Supervision

            It is the final factor that provides the added heft

necessary to tilt the balance in favor of the ALJ's single employer

determination. As we have explained, the ALJ found that Provencher

was a supervising employee of A.C. Castle.            Whether that finding

by itself might have justified holding A.C. Castle liable, as

argued by the Secretary, we need not decide.            The ALJ made more

modest use of her finding that Provencher was A.C. Castle's

supervisory employee, using it to support the conclusion that there

was common management or supervision.            And certainly it provides

strong support for that conclusion, as it leaves a single line of

management running from LeBlanc through Provencher to the workers

supervised by Provencher.         In short, the ALJ effectively found not

a single employer merely because two employers acted as one;

rather, she effectively found that there was only one employer.

And,   as   explained    above,    substantial   evidence   supported   that

conclusion.     We therefore find no reason to upset the ALJ's

conclusion on the single employer test.

                                      C.

            Because OSHA had previously treated PHI and A.C. Castle

as distinct entities, A.C. Castle says it lacked fair notice that

                                    - 16 -
OSHA would treat it as the employer of the PHI workers in this

instance.    We reject this argument.

             The fair notice rule applies in scenarios in which OSHA

informs a company (or suggests to it) "that its procedures or

processes are safe and satisfactory," but then issues a citation

for the "same procedures in a later inspection."             Trinity Marine

Nashville, Inc. v. Occupational Safety & Health Review Comm'n, 275
F.3d 423, 430 (5th Cir. 2001).          Here, OSHA did not represent to

A.C. Castle that any particular process or procedure complied with

its rules.      Instead, upon learning new information about the

relationship between A.C. Castle and PHI, OSHA found it appropriate

to cite the two companies together for violations related to the

October 2014 accident.        Neither the Commission's single employer

test nor the Darden common law test were a secret to A.C. Castle.

And the very fact that those inquiries are so fact-intensive means

that for a given worksite inspection, the Secretary of Labor may

or may not have grounds to treat two ostensibly distinct companies

as one. Thus, we agree with the ALJ that A.C. Castle's fair notice

argument has no merit.

                                     III.

             A.C. Castle     also   challenged    before     the    ALJ,   and

challenges    on   appeal,   the    Secretary's   claim    that    A.C. Castle

willfully violated a rule requiring that any scaffold component be

capable of supporting its own weight and at least four times the

                                    - 17 -
maximum intended load (Citation 2, Item 1:              violation of 29 C.F.R.

§ 1926.451(a)(1)).     A violation of an OSHA rule is "willful" when

the relevant company actor exhibits "plain indifference" toward a

safety requirement or when he or she has evidenced a state of mind

such that, lacking actual knowledge of a given rule, if he or she

were informed of the requirement, "he [or she] would not care."

Brock v. Morello Bros. Const., Inc., 809 F.2d 161, 164 (1st Cir.

1987); see also Kaspar Wire Works, Inc., 18 BNA OSHC 2178 (No. 90-

2775, 2000).

             Provencher,     the   supervisor      of     the   roofing      crew,

purchased    the   rough     spruce     planks   that    did    not   meet    OSHA

regulations.    The planks were incapable of supporting their weight

and   four    times   the     maximum     intended      load,   as    29     C.F.R.

§ 1926.451(a)(1) required.         Provencher claimed not to know that

these planks were identified by the hardware store he and LeBlanc

patronized as "not for stagin[g]," and thus were not graded for

use in scaffolding.         And Provencher seemed not to care that the

planks were of a quality insufficient to support the weight

required.     He admitted that even if he had known that the boards

he purchased for the scaffolding were not suitable for use as

staging -- which would have indicated to him that they could not

support the required load -- he may have used them anyway.                    This

admission demonstrates sufficient indifference to the requirements

of 29 C.F.R. § 1926.451(a)(1) to constitute willfulness under the

                                      - 18 -
rule set forth in Brock.        Moreover, the evidence that Provencher

used these planks for over twenty years, that the receipts from

the   hardware    store    always     showed   that    they    were    "not   for

stagin[g]," and that LeBlanc knew Provencher used these planks for

scaffolding and apparently instructed Provencher to double them

up, supports the ALJ's conclusion that the "willful" standard has

been met.

                                       IV.

            For   the     foregoing    reasons,   we    deny    A.C.    Castle's

petition for review.

                                      - 19 -