P. Gioioso & Sons, Inc. v. Occupational Safety & Health Review Commission

United States Court of Appeals
For the First Circuit

No. 10-2418

P. GIOIOSO & SONS, INC.,

Petitioner,

v.

OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION;
HILDA L. SOLÍS, SECRETARY OF LABOR,

Respondents.

PETITION FOR REVIEW OF A FINAL ORDER OF
THE OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION

Before

Lynch, Chief Judge,
Torruella and Thompson, Circuit Judges.

Matthew Watsky, for petitioner.
Scott Glabman, Senior Appellate Attorney, U.S. Department of
Labor, with whom M. Patricia Smith, Solicitor of Labor, Joseph M.
Woodward, Associate Solicitor for Occupational Safety and Health,
and Heather R. Phillips, Counsel for Appellate Litigation, was on
brief for respondents.

March 28, 2012
 TORRUELLA, Circuit Judge. The Occupational Safety and

Health Administration ("OSHA") fined Petitioner P. Gioioso & Sons,

Inc. ("Gioioso") $33,700 for violations of safety regulations

relating to the excavation of a trench. Gioioso contested the fine

at a hearing before an administrative law judge ("ALJ"), who

confirmed the fine. Gioioso requested review by the Respondent,

the Occupational Safety and Health Review Commission ("OSHRC"),

which upheld the ALJ's decision. Gioioso now petitions this Court

for review of OSHRC's order. Finding no error, we deny the

petition for review.

I. Facts and Procedural History

A. Regulatory Scheme Regarding Trenches

We first lay the relevant regulatory foundation. Federal

safety regulations require that any excavation at least five feet

deep in potentially unstable soil be "protected" from cave-ins

using approved protective measures such as shoring or trench boxes.

See 29 C.F.R. § 1926.652(a)(1) (the "cave-in provision"). In

addition, any trench with a depth of four feet or more must have a

ladder or other safe means of egress positioned within twenty-five

feet of where employees in the trench are working. See id.

§ 1926.651(c)(2) (the "ladder provision"). All excavations,

protective systems, and adjacent areas must be inspected by a

"competent person" before the start of work and as needed

throughout a shift. Id. § 1926.651(k)(1) (the "inspection

-2-
provision"). A "competent person" is defined as one "who is

capable of identifying existing and predictable hazards" and who

has the authority to eliminate them. Id. § 1926.650(b).

B. Safety Violations at the Work Site

We now dig into the evidence presented before the ALJ.

Gioioso is a public works contractor that constructs and installs

water supply and sewer pipes. As part of its work, Gioioso

performs excavations to remove and replace old utility pipes. On

July 10, 2009, Gioioso's employees were performing trenching work

to install water service lines at a site in Boston, Massachusetts.

An OSHA compliance officer, Sean Henrikson ("Henrikson"),

was assigned to inspect the Gioioso work site. That morning, while

walking to work, Henrikson observed employees in a trench at the

site. Henrikson reported this to his supervisor, who ordered him

to inspect the site. When Henrikson returned around noon to

perform the inspection, he saw a Gioioso employee climbing out of

an unprotected trench that appeared to be roughly six feet deep.

Later that day, around 1:00 P.M., from roughly fifty yards away,

Henrikson observed a Gioioso employee, later identified as Robert

Bruni ("Bruni"), climb out of the east end of a second trench

located near the first trench. Henrikson walked to the second

trench and observed equipment operator Gregory Perreira

("Perreira") standing next to the trench and foreman José Ourique

("Ourique") digging with a shovel in the east end of the trench.

-3-
Henrikson observed that the trench was unprotected and that it rose

to the top of Ourique's head. Henrikson identified himself and

instructed Ourique to exit the trench. Ourique did so by climbing

over what Henrikson identified as a box containing electrical

wiring.1

The site superintendent, Joseph Zenga ("Zenga"), arrived

at the scene roughly five minutes later. According to Henrikson,

Zenga told him that he had not inspected the trench or measured it

before any employees entered it. Henrikson spoke with Ourique,

who, according to Henrikson, said that he was not the "competent

person" at the site and that he had not measured the trench.

Henrikson also spoke with Perreira, who said that Zenga came by the

trench six to eight times per day, roughly once every twenty to

thirty minutes. Furthermore, Perreira told Henrikson that Zenga

had been by the trench earlier in the day while Ourique was in it,

but that Zenga did not say anything to Ourique or to anyone else

regarding trench protection.

Henrikson then measured the trench to be roughly 20 feet

long and 68 inches deep at the east end, the deepest end. The

trench was 51 inches wide. There was a trench box at the site, but

it would not have fit into the trench due to the presence of

1
Gioioso contends that the box contained non-hazardous wiring for
telecommunications. The dispute over the contents of the box does
not affect our decision.

-4-
utility lines. Henrikson also observed that there were no shoring

materials at the site.

C. Procedural History

Based on his observations of the site on July 10, 2009,

Henrikson recommended that OSHA issue citations to Gioioso. OSHA

cited Gioioso for violation of the "cave-in provision," 29 C.F.R.

§ 1926.652(a)(1), due to the lack of protection in the trench.

Furthermore, because OSHA had previously cited Gioioso for

violations of this provision, this citation was designated a

"Repeat Citation." OSHA also issued "Serious Citations" for

violations of the "ladder provision," id. § 1926.651(c)(2), and the

"inspection provision," id. § 1926.651(k)(1). Gioioso contested

the citations and the proposed penalties. The parties appeared at

a hearing before the ALJ on June 2, 2010.

The citations initially erroneously stated that three

employees were in the trench; the parties later stipulated that

Ourique was in the trench, and OSHA notified Gioioso prior to the

hearing that it would try to prove that a second employee was

exposed to the cited hazards. At the hearing, both Perreira and

Ourique testified that Bruni had not been in the deep end of the

trench, as Henrikson claimed, but rather in the shallow end.

Ourique testified that he was the competent person at the site,

contradicting Henrikson's claim that Ourique had told him he was

not the competent person. Perreira testified that he "may have"

-5-
told Henrikson that Zenga, the superintendent, came by the site

every twenty to thirty minutes, but that if he had, this was not

true. The ALJ determined based on their answers and their demeanor

that neither Ourique nor Perreira were reliable witnesses, and thus

chose to credit Henrikson's testimony over theirs.

Gioioso did not dispute that Ourique was in the deep end

of the trench when Henrikson observed him. However, Gioioso argued

that it should not be held liable because Ourique's conduct was the

result of unpreventable employee misconduct ("UEM"). To prove a

UEM defense, an employer must show that it: "(1) established a work

rule to prevent the reckless behavior and/or unsafe condition from

occurring, (2) adequately communicated the rule to its employees,

(3) took steps to discover incidents of noncompliance, and (4)

effectively enforced the rule whenever employees transgressed it."

P. Gioioso & Sons, Inc. v. Occupational Safety & Health Review

Comm'n, 115 F.3d 100, 109 (1st Cir. 1997) ("Gioioso I"). Gioioso

presented evidence on all four of these factors, but the ALJ found

Gioioso's evidence to be insufficient to sustain the UEM defense.

First, Gioioso presented evidence -- specifically, a

single-page document listing excavation procedures -- to show that

it had established work rules to prevent the cited violations.

However, the ALJ found that the fact that two employees were

digging in an unprotected trench, including a foreman (Ourique),

suggested that Gioioso's rules were not effective.

-6-
 Second, Gioioso presented evidence that it had

communicated its rules to its employees. Gioioso's Safety

Director, John Condlin ("Condlin"), testified that Gioioso conducts

"tool box talks" at work sites and conducts safety meetings in the

office for foremen and supervisors. Condlin testified that Ourique

attended a safety meeting on June 4, 2009, and a tool box talk on

July 2, 2009, at which trenching safety was discussed. Gioioso

also introduced into evidence documents showing the agendas for

those two events and that Ourique attended them. However, the ALJ

noted that despite attending these meetings, Ourique did not follow

Gioioso's safety rules on July 10, 2009. The ALJ also faulted

Gioioso for not presenting documentation regarding other safety

meetings and tool box talks where trench safety had been discussed.

Third, Gioioso presented evidence to show that it took

steps to discover noncompliance. Condlin testified that he visited

work sites, sometimes unannounced, to make sure that the work crews

complied with safety regulations; Condlin also testified that

representatives of Gioioso's insurers sometimes conducted

inspections. However, the ALJ pointed out that Zenga, the site

superintendent, had observed Ourique in the trench but had never

said anything to him or to anyone else about trench protection.

The ALJ also noted that Gioioso did not present any documentary

evidence of the site visits about which Condlin testified.

-7-
 Finally, Condlin testified that Ourique had been

disciplined for being in the trench without protection. He also

testified about other instances in which Gioioso had disciplined

employees for safety violations or had stopped work until safety

measures could be implemented. However, the ALJ again emphasized

that at least three safety violations occurred at the Gioioso site

on July 10, 2009. The ALJ also pointed to Condlin's concession

that Zenga had not been disciplined for the July 10, 2009 incident

or for another incident involving an unprotected trench that

occurred on April 24, 2009. The ALJ further noted that Gioioso had

failed to present documentation regarding any disciplinary actions

it had taken in the previous two years.

Based on the above-mentioned testimony and evidence, the

ALJ affirmed the citation for violation of the "cave-in provision,"

29 C.F.R. § 1926.652(a)(1). The ALJ also affirmed the "repeat"

violation citation in light of Gioioso's previous citations for

violation of the "cave-in provision." The ALJ further affirmed the

"serious" citations for violation of the "ladder provision," id.

§ 1926.651(c)(2), and the "competent person" provision, id.

§ 1926.651(k)(1). Finally, the ALJ affirmed the fines proposed by

OSHA for these violations.

Gioioso appealed the ALJ's decision to OSHRC. OSHRC

declined to review the decision, at which point the ALJ's decision

-8-
became a final order. See 29 U.S.C. § 661(j); 29 C.F.R.

§ 2200.90(d). Gioioso now petitions this Court for review.

II. Discussion

A. Applicable Law and Standard of Review

In order to establish a violation of a safety or health

standard, OSHA must prove: (1) that the cited standard applies; (2)

that there was a failure to comply with the standard; (3) that

employees had access to the violative condition; and (4) that the

employer had actual or constructive knowledge of the violation.

N&N Contractors, Inc. v. OSHRC, 255 F.3d 122, 125-26 (4th Cir.

2001). Final orders of the Commission are subject to the general

judicial review provisions of the Administrative Procedure Act, 5

U.S.C. §§ 701-706. See Gioioso I, 115 F.3d at 107-08. We will

uphold agency determinations unless they are "arbitrary,

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

with law." 5 U.S.C. § 706(2)(A).

In conducting our review, we defer to the agency's

reasonable interpretation of the Occupational Safety and Health

("OSH") Act and its governing regulations. See Beaver Plant

Operations, Inc. v. Herman, 223 F.3d 25, 29 (1st Cir. 2000). The

OSH Act also directs that "[t]he findings of the Commission with

respect to questions of fact, if supported by substantial evidence

on the record considered as a whole, shall be conclusive." 29

U.S.C. § 660(a); see also Gioioso I, 115 F.3d at 108. This

-9-
deferential standard governs even where, as here, the Commission

does not hear the case itself but instead adopts an ALJ's findings.

Modern Cont'l/Obayashi v. OSHRC, 196 F.3d 274, 280 (1st Cir. 1999).

Under this deferential standard, we must "accept reasonable factual

inferences drawn by the Commission." Donovan v. Daniel Constr.

Co., 692 F.2d 818, 820 (1st Cir. 1982) (citations omitted). We

also give great deference to credibility determinations by the ALJ.

See Gioioso I, 115 F.3d at 108.

B. Actual or Constructive Knowledge of Violation

Gioioso argues that it was inappropriate to impose

sanctions because OSHA failed to show that Gioioso had actual or

constructive knowledge of Ourique's violations. Gioioso contends

that because Ourique was the "competent person" on the site, and

because he himself violated Gioioso's rules, his knowledge of the

violation cannot be imputed to Gioioso. However, Henrikson

testified that Ourique told him he was not the competent person.

The ALJ chose to credit Henrikson's testimony, and we defer to the

ALJ's credibility determination. See Gioioso I, 115 F.3d at 108.

Moreover, an employer can be charged with constructive

knowledge of a safety violation that supervisory employees know or

should reasonably know about. See Cent. Soya de P.R., Inc. v.

Sec'y of Labor, 653 F.2d 38, 40 (1st Cir. 1981) (where two

supervisors in charge of facility knew of hazard, "the knowledge of

these supervisory employees [was] properly imputed to the

-10-
employer"); Simplex Time Recorder Co. v. Sec'y of Labor, 766 F.2d

575, 589 (D.C. Cir. 1985) (finding employer had constructive

knowledge of a "readily apparent" safety violation that

"indisputably should have been known to management"). Here,

Henrikson testified that Perreira told him that Zenga, the site

superintendent, came by the trench roughly every twenty or thirty

minutes and had been by the trench at one point while Ourique was

in it. Thus, it is reasonable to infer that Zenga knew of

Ourique's presence in the unprotected trench. Since Zenga was the

site superintendent, Gioioso had constructive knowledge of the

violation.

C. Unpreventable Employee Misconduct

Gioioso argues that the ALJ misapplied the law regarding

the UEM defense. We bypass the argument on the first two prongs

and turn to the third prong. We find no error in the ALJ's ruling

on the third prong of the UEM defense, which is supported by

substantial evidence.

As to the third prong of the defense -- that the employer

took steps to discover noncompliance -- Gioioso argues that the

ALJ's decision was contrary to the record evidence. Gioioso

contends that the ALJ did not factor in Condlin's testimony that he

or Gioioso's insurers conducted inspections of work sites. Gioioso

also points out that Zenga was only minutes away from the trench in

which Ourique was working, and contends that this showed that

-11-
Gioioso took steps to discover noncompliance by having supervisors

nearby.

However, Zenga's failure to do anything after seeing

Ourique in the unprotected trench supports a finding of a

deficiency in Gioioso's efforts to discover incidents of

noncompliance. Moreover, as the ALJ noted, Gioioso did not present

any documentary evidence of safety inspections by Condlin or by

representatives of Gioioso's insurers. It is not error for an ALJ

to "count[] the absence of documentation against the proponent of

[a UEM] defense." Gioioso I, 115 F.3d at 110.

We need go no further. Substantial evidence shows that

Gioioso failed to satisfy the third prong of the UEM defense.

Accordingly, we do not need to consider Gioioso's objections to the

ALJ's ruling on the fourth prong.

D. Whether Substantial Evidence Supports the Decision Below

In its final offensive, Gioioso attacks various factual

findings by the ALJ. First, Gioioso attacks the ALJ's reliance on

Henrikson's testimony. Gioioso argues that it was wrong to credit

Henrikson's account of statements made by Ourique and Perreira

because this testimony was inadmissible hearsay. Gioioso also

argues that Henrikson's testimony about what he saw at the site was

unreliable because he initially observed the trench from fifty feet

away. Furthermore, Gioioso contends that, contrary to Henrikson's

-12-
testimony that there was no safe means of exiting the trench, a

photograph he took at the site showed a ladder on site.

The hearsay attack bogs down in the trenches of waiver

rules and the Federal Rules of Evidence. First, Gioioso waived its

challenge to this testimony by not objecting at the hearing before

the ALJ. See Fed. R. Evid. 103(a)(1) (objection not made at trial

is not preserved on appeal); 29 C.F.R. § 2200.71 (Federal Rules of

Evidence applicable to ALJ hearings). See also Capeway Roofing

Sys. v. Chao, 391 F.3d 56, 62 (1st Cir. 2004) (hearsay objection to

statement made to OSHA inspector waived on appeal because it was

not made at the hearing). Moreover, any statements made by Ourique

and Perreira to Henrikson were not hearsay because they were

statements by Gioioso's employees within the scope of their

employment. See Fed. R. Evid. 801(d)(2)(D) (statement not hearsay

if it is "offered against an opposing party" and "was made by

[that] party's agent or employee on a matter within the scope of

that relationship and while it existed"); Astra Pharm. Prods., Inc.

v. Occupational Safety & Health Review Comm'n, 681 F.2d 69, 73 n.8

(1st Cir. 1982) (statements by company's employees to OSHA

inspector not hearsay under Fed. R. Evid. 801(d)(2)(D)).

As for Gioioso's attacks on Henrikson's credibility, we

see no reason not to accord the ALJ's credibility determination our

traditional deference. See Gioioso I, 115 F.3d at 108. There is

no reason to believe that Henrikson could not have made an accurate

-13-
observation of the trench from fifty feet away. Finally, as OSHRC

points out, the photograph to which Gioioso refers shows a ladder

on the site in a truck; a ladder in a truck is of course no use to

workers at the bottom of a trench.

In addition to challenging the finding of liability,

Gioioso attacks the amount of the penalties imposed. Gioioso

claims that the ALJ improperly assessed a higher penalty than was

warranted because she credited Henrikson's speculation that the box

Ourique had to step on to exit the trench contained electrical

wiring. However, the danger the ALJ pointed to in her decision was

the danger of slipping and falling, not of electrocution. There

is no evidence that the fine was based in any way on the type of

wiring in the box.

Gioioso also alleges it was prejudiced by the fact that

the original OSHA citation mentioned three employees in the trench.

However, the ALJ properly found that this citation error was

harmless because OSHA notified Gioioso prior to the hearing that it

would only try to prove that two employees were in the trench.

Finally, Gioioso complains that the repeat citation for violation

of the "cave-in provision" was incorrect because the citation does

not recite the earlier violation upon which it was based. However,

the ALJ properly found that Gioioso was not prejudiced by this

error because the parties stipulated to the earlier violation two

weeks before the hearing.

-14-
 III. Conclusion

Since we find that substantial evidence supports the

decision below, we deny the petition for review.

Denied.

-15-