IES Residential Inc. v. Department of Labor and Industrial Relations ( 2021 )

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Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
06-JAN-2021
08:15 AM
Dkt. 54 MO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
IES RESIDENTIAL, INC.,
Appellant-Appellant
v.
DIRECTOR, DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS,
Appellee-Appellee
APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
(CIVIL NO. 16-1-0385)
MEMORANDUM OPINION
(By: Ginoza, Chief Judge, Leonard and Nakasone, JJ.)
In this secondary agency appeal, Appellant-Appellant
IES Residential, Inc. (IES) appeals from the November 7, 2016
Circuit Court of the First Circuit1 (circuit court) Final
Judgment in favor of Appellee-Appellee Director, Department of
Labor and Industrial Relations (Director), and against IES,
pursuant to the circuit court's Order Affirming Hawaii Labor
Relations Board's Decision Dated February 3, 2016 (Order), and
the Hawaii Labor Relations Board's (Board) Findings of Fact,
Conclusions of Law and Decision and Order Dated February 3, 2016
(Board Decision).
On appeal, IES contends that the circuit court erred in
affirming the Board Decision to uphold a Hawaii Occupational
Safety and Health Division (HIOSH) citation against IES for
violating Fall Protection requirements, by (1) failing to define
"supervisor," (2) deferring to the Board's determination that IES
1
The Honorable Rhonda A. Nishimura presided .
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employee Peter Lee (Lee) acted in a supervisory capacity and
imputing Lee's knowledge to IES without an evidentiary basis, (3)
failing to address and relying on the Board's "numerous
misstatements of the record,"2 (4) deferring to the Board's
"misapplication" of the employee misconduct defense, and (5)
holding IES "strictly liable" for the "unforeseeable misconduct
of rogue employees."
For the reasons discussed below, we affirm.
I. Background
On December 14, 2012, HIOSH inspectors observed four
IES employees3 installing a photovoltaic system on a roof 18 feet
above ground without being properly secured in a personal fall
arrest system. HIOSH inspectors conducted an inspection with
Lee, who presented himself as the "foreman."4
IES's fall protection policy, also called the 100% tie
off rule, requires that employees tie off to a fall arrest system
every time they are on a roof more than six feet above ground.
IES's policy states that violations "will result in immediate
suspension or termination of employment." IES did not suspend or
terminate the four employees, contrary to its written
disciplinary policy.
As a result of the violation, on April 3, 2013, HIOSH
issued a citation for a "serious" violation of 29 Code of Federal
Regulations (CFR) § 1926.501(b)(13),5 and a penalty of $825.00.
2
IES's third point of error does not set forth the "numerous
misstatements of the record" that IES complains of, as required by Hawai #i
Rules of Appellate Procedure (HRAP) Rule 28(b)(4). Rule 28(b)(4)(ii) and
(iii) require that a point of error identify where in the record the alleged
error occurred, where it was objected to, or the manner in which the alleged
error was brought to the attention of the lower court. Accordingly, we will
not address this point of error. See HRAP Rule 28(b)(4)("Points not presented
in accordance with this section will be disregarded[.]").
3
The four IES employees at the job site were Joshua Like ( Like),
Nicholas Kam (Kam), Christian Bernard (Bernard), and Lee.
4
At the December 5, 2013 Board hearing, HIOSH inspector Timothy
Scalzone testified that Lee identified himself as the "foreman."
5
29 CFR § 1926.501(b)(13) provides,
(continued...)
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IES contested the citation, and the Board conducted an
evidentiary hearing on December 5 and 12, 2013. The following
witnesses testified at the Board hearing: (1) HIOSH compliance
officer Timothy Scalzone (Scalzone), (2) IES's Hawai#i division
manager Daniel Marsh (Marsh), (3) IES's Hawai#i division
assistant manager Christopher Woytus (Woytus), (4) Occupational
Safety and Health Act (OSHA) employer outreach trainer James
Johnson (Johnson), and (5) IES's Vice President of Safety and
Operations James Allen (Allen). Following the evidentiary
hearing, the Board affirmed the citation and the penalty in the
Board Decision issued on February 3, 2016. IES appealed to the
circuit court, which affirmed the Board's Decision, following a
hearing.
II. Standard of Review
Appellate court review of a circuit court's review of an
administrative decision is a secondary appeal. The standard
of review is one in which this court must determine whether
the circuit court was right or wrong in its decision,
applying the standards set forth in HRS § 91-14(g) (1993) to
the agency's decision.
Kilakila #O Haleakalâ v. Bd. of Land & Nat. Res., 138 Hawai#i 383,
395-96, 382 P.3d 195, 207-08 (2016) (internal quotation marks and
citations omitted). Hawai#i Revised Statutes ("HRS") §
91-14(g)(2012) provides:
Upon review of the record the court may affirm the
decision of the agency or remand the case with instructions
for further proceedings; or it may reverse or modify the
decision and order if the substantial rights of the
petitioners may have been prejudiced because the
administrative findings, conclusions, decisions, or orders
are:
(1) In violation of constitutional or statutory
provisions; or
(2) In excess of the statutory authority or
jurisdiction of the agency; or
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(...continued)
Residential construction. Each employee engaged in
residential construction activities 6 feet (1.8m) or more
above lower levels shall be protected by guardrail systems,
safety net system, or personal fall arrest system unless
another provision in paragraph (b) of this section provides
for an alternative fall protection measure . . . .
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(3) Made upon unlawful procedure; or
(4) Affected by other error of law; or
(5) Clearly erroneous in view of the reliable,
probative, and substantial evidence on the whole
record; or
(6) Arbitrary, or capricious, or characterized by
abuse of discretion or clearly unwarranted
exercise of discretion.
"Under HRS § 91-14(g), conclusions of law are
reviewable under subsections (1), (2), and (4); questions
regarding procedural defects are reviewable under subsection (3);
findings of fact are reviewable under subsection (5); and an
agency's exercise of discretion is reviewable under subsection
(6)." Kilakila, 138 Hawai#i at 396, 382 P.3d at 208 (internal
quotation marks and citations omitted). Under the clearly
erroneous standard, the appellate court must sustain the findings
of fact "unless the court is left with a firm and definite
conviction that a mistake has been made." Bumanglag v. Oahu
Sugar Co., Ltd., 78 Hawai#i 275, 279, 892 P.2d 468, 472 (1995)
(block format and citation omitted).
"Pursuant to HRS § 91-14(g) an agency's conclusions of
law are reviewed de novo. A conclusion of law that presents
mixed questions of fact and law is reviewed under the clearly
erroneous standard because the conclusion is dependent upon the
facts and circumstances of the particular case." Kilakila, 138
Hawai#i at 396, 382 P.3d at 208 (internal quotation marks and
citations omitted). "Where both mixed questions of fact and law
are presented, deference will be given to the agency's expertise
and experience in the particular field and the court should not
substitute its own judgment for that of the agency." Dole Hawaii
Div.-Castle & Cooke, Inc. v. Ramil, 71 Haw. 419, 424, 794 P.2d
1115, 1118 (1990) (citation omitted).
III. Discussion
In the first and second points of error, IES contends
that the circuit court erred in failing to define the term
"supervisor," in deferring to the Board Decision that Lee acted
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in a supervisory capacity, and by imputing Lee's knowledge to IES
without an evidentiary basis.
To establish an occupational safety violation, there
are four elements that the Director must prove by a preponderance
of the evidence: "(1) the cited standard applies, (2) there was
a failure to comply with the cited standard, (3) an employee had
access to the violative condition, and (4) the employer knew or
should have known of the condition with the exercise of due
diligence." Dir. Dep't of Labor & Indus. Relations v.
Permasteelisa Cladding Technologies, Ltd., 125 Hawai#i 223, 227,
257 P.3d 236, 240 (App. 2011)(quoting Dir. Dep't Labor & Indus.
Relations v. Maryl Pac. Constructors, Inc., OSAB 2001-18, 2002 WL
31757252, at *6 (June 13, 2002)). IES challenges the fourth
element, claiming that while Lee was a "lead man," Lee was not a
"supervisor" for purposes of imputing his knowledge to IES.
The Board Decision stated in pertinent part,
4. The employer knew or should have known of the
condition with the exercise of due diligence.
Lee, the project "lead" at the Alewa Work Site,
admitted to [HIOSH compliance officer] S[c]alzone that the
four men should have been tied-off. This Board has applied
the well-settled federal OSHA precedent that the actual
knowledge of a supervisory or management person can be
imputed to the employer. Director v. Dorvin D. Leis Co.,
Inc., Board Case No. OSH 2013-28, Order No. 582 (2014)
(citing A.P. O'Horo Company, Inc., 14 BNA OSHC 2004, 2007
(No. 85-369 1991) (A.P. O'Horo); Dover Elevator Company,
Inc., 16 BNA OSHC 1281 (No. 91-862 1993). In addition, all
four men on the roof on December 14, 2012 (Kam, Bernard,
Like and Lee) admitted to Woytus that they knew they were
violating [IES]'s Fall Protection Policy which included a
100% tie-off rule applicable to the conditions (18 feet
above the ground) at the Alewa Work Site. It is clear that
[IES] and its workers knew of the dangers of working on a
roof that was 18 feet above the ground.
Thus, the Board finds that the Director has met its
burden of proving by a preponderance of the evidence that
[IES] knew or should have known of the hazardous condition
with the exercise of due diligence . . . .
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(Footnote omitted)6 (Emphasis and italics in original.) In its
review of the Board Decision, the circuit court ruled, "With
regard to the knowledge element the court accepts the Labor
Board's determination that Lee acted in a supervisory capacity
and his knowledge could be imputed to [IES] to establish the
knowledge element of [Director's] prima facie case."
The Board's determination as to this issue is a mixed
question of fact and law. Where mixed questions of fact and law
are presented, "deference will be given to the agency's expertise
and experience in the particular field[.]" Dole Hawaii, 71 Haw.
at 424, 794 P.2d at 1118 (citation omitted). IES managers Woytus
and Marsh testified before the Board that Lee, as the "lead man,"
was responsible for ensuring that the workers followed safety
procedures at the work site. The Board Decision noted that Lee's
position as "lead man" at the work site was not disputed by IES,
and that Johnson, the fall protection trainer, testified that IES
designated a "lead man" for every installation job "whose
responsibility was to identify safety concerns and to monitor
safety compliance." HIOSH inspector Scalzone testified that Lee
informed him that he had the authority to "order a worker to tie
off if [the worker] was not tied off." IES Vice President Allen
testified that Lee's resume indicated that Lee received training
as a competent person in fall protection and "the competent
person on the project has the ability to stop work at any time."
Allen also testified that as the lead man, Lee was responsible
for safety at the job site and could stop an individual from
working if that individual was in violation of the fall
protection rule. IES assistant manager Woytus testified that Lee
was responsible for understanding that the employees had to
properly wear and connect all fall protection equipment, and that
every employee had to comply with the fall protection
requirements. IES manager Marsh testified that the lead man has
6
In the footnote, the Board explained that because the state
structure is modeled after the federal OSHA, citing Permasteelisa, 125 Hawai #i
at 228, 257 P.3d at 241, it looked to interpretation of the parallel federal
law for guidance.
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the "ultimate responsibility to make sure that everyone stays
compliant on the job site."
Regardless of IES's characterization of Lee as a "lead
man," rather than a "supervisor," the record contains substantial
evidence to support the Board's determination that Lee acted in a
supervisory capacity and to impute Lee's knowledge to IES. See
HRS § 91-14(g)(5). IES's argument that a definition of
"supervisor," was required, is without merit. The circuit court
was correct in affirming the Board's determination that Lee acted
in a supervisory capacity and his knowledge could be imputed to
IES to establish that IES knew or should have known of the
hazardous condition with the exercise of due diligence. See
Kilakila, 138 Hawai#i at 395, 382 P.3d at 207.
In the fourth point of error, IES contends that the
circuit court erred in deferring to the Board's "misapplication"
of the employee misconduct defense. IES claims that it was
entitled to the affirmative defense of employee misconduct, which
requires that the employer establish that,
(1) the employer has established work rules designed to
prevent the violation; (2) it has adequately communicated
these rules to its employees; (3) it has taken steps to
detect and correct violations, especially if there were
incidents of prior non-compliance; and (4) it has
effectively enforced the rules when violations have been
discovered.
Dir. Dep't of Labor & Indus. Relations v. Kiewit Pac. Co., Case
No. OSAB-94-009 (OSHCO ID C6595), 1996 WL 33347449, at *3
(citation omitted). The Board found that IES failed to meet
Element 3 and Element 4 of this defense. In its review of the
Board Decision, the circuit court ruled, "With regard to the
third element of [IES's] affirmative defense of employee
misconduct the Court accepts the Labor Board's determination that
[IES] did not conduct adequate field inspections of its work
sites."
Element 3 required that IES show that it has "taken
steps to detect and correct violations[.]" Id. As to Element 3,
the Board Decision stated,
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The Board finds that [IES] failed to meet the
requirement in Element 3 because of its failure to conduct
adequate field inspections of the work being performed by
its workers. While the testimony presented by Johnson,
Woytus, and Marsh all described field inspection work
performed after December 14, 2012, there is no clear
evidence of a systematic field inspection program in effect
prior to December 14, 2012, the date of the violations
discovered by HIOSH at the Alewa Work Site. It is apparent
that [IES's] realization of the need to perform frequent on-
site inspections came after the occurrence on December 14,
2012 at the Alewa Work Site.
The Board specifically evaluated and weighed the testimonies of
Woytus, Marsh, and Johnson, in rendering its finding that there
was insufficient evidence regarding inspections prior to the
December 14, 2012 violations. The Board also noted the testimony
of Allen, regarding inspections in June, August and November
2012, in finding that "Allen's work site inspections [of] three
in six months were clearly infrequent events."
The Board's determination that Element 3 of the
employee misconduct defense was not established, is a mixed
question of fact and law. The record contains substantial
evidence to support the Board's determination that IES failed to
conduct "adequate" or "systematic" field inspections to detect
violations of its fall protection program prior to December 14,
2012. The circuit court was correct in affirming the Board's
determination that IES failed to take adequate steps to detect
and correct violations. See Kiewit, id. at *3; Kilakila, 138
Hawai#i at 395, 382 P.3d at 207.
Element 4 of the employee misconduct defense required
that IES establish that it has "effectively enforced the rules
when violations have been discovered." Kiewit, id. As to this
element, the Board Decision stated,
The Board finds that [IES] failed to enforce its Fall
Protection Policy for fall protection violations that
occurred on December 14, 2012. There is no dispute that the
Fall Protection Policy was violated, but [IES] nevertheless
chose not to enforce the disciplinary aspects of the policy,
and Kam, Bernard, Like, and Lee were all retained by [IES].
Although Kam, Bernard, Like, and Lee were given corrective
counseling for their failure to comply with the 100% tie-off
rule, none of them were suspended or terminated as required
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by the Fall Protection Policy. The disciplinary aspect of
the Fall Protection Policy states in "bold" print:
VIOLATION:
Working outside the warning area without an
appropriate fall protection device for any length of
time will result in immediate suspension or
termination of employment. (Emphasis in italics)
. . . .
The reasons cited by [IES] for its decision not to
enforce the disciplinary aspect of the Fall Protection
Policy (i.e., suspension or termination of the four workers)
are inadequate and questionable . . . .
. . . In this case, [IES's] Fall Protection Policy was
disregarded and violated at all three levels of the company:
(i) at the worker level where all four workers violated the
100% tie-off rule, (ii) at the field-supervisory level when
Lee violated the tie-down rules and allowed other workers to
violate the same, and (iii) at the top-management level when
the [IES's] executive office allowed the four workers to
violate its Fall Protection Policy and avoid the policy-
mandated discipline.
. . . .
Therefore, the Board finds and concludes that [IES]
has not met the requirement of Element #4 and cannot
successfully assert the "employee misconduct" defense
because Respondent failed to enforce its Fall Protection
Policy for the violations that occurred on December 14,
2012, at the Alewa Work Site.
(bolding and italics in original). In its review of the Board
Decision, the circuit court ruled,
With regard to the fourth element of [IES's] affirmative
defense of employee misconduct the Court accepts the Labor
Board's determination that [IES] did not enforce its
disciplinary policy. The Court defers to the Labor Board's
interpretation and finding that [IES's] disciplinary policy
for fall protection violations is unequivocal and [IES] has
not produced any evidence or case law to show that it had
the discretion to deviate from it.
IES argues that post-violation disciplinary actions are
irrelevant to the employee misconduct defense because they could
not have contributed to the workers' violative conduct on the day
of the HIOSH inspection. Because the Hawaii Occupational Safety
and Health Law is patterned after the federal Occupational Safety
and Health Act, the Board and the courts have looked to
interpretations of the analogous federal laws by the federal
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courts and the Occupational Safety and Health Review Commission
(Review Commission) for guidance. See Permasteelisa, 125 Hawai#i
at 228, 257 P.3d at 241 (citing French v. Hawaii Pizza Hut, Inc.,
105 Hawai#i 462, 467, 99 P.3d 1046, 1051 (2004)); Kiewit, id. at
*3. Review Commission precedent "allows consideration of both
pre- and post-inspection discipline." Sec'y of Labor v. Sunland
Construction, Inc., 24 O.S.H. Cas. (BNA) 1831, 2013 WL 4732427,
at *9 (July 16, 2013); Sec'y of Labor v. Quinlan Enterprises, 24
O.S.H. Cas. (BNA) 1154, 2013 WL 5505283, at *11 (July 22, 2013).
The Board rejected IES's argument below, stating, "For [IES] to
argue that all post-violation acts are irrelevant is bad policy
and not in the interest of the promotion of proper worker
safety." See Dir. Dep't of Labor & Indus. Relations v. Buck
Roofing Co., Inc., Case No. OSAB 95-069 (OSHCO No. C8955) (Rep.
No. 103896007), 1998 WL 2026978, at *2 (1998) (considering only
post-violation disciplinary action and finding "that Respondent's
'disciplinary' actions had no punitive effect because the
employees were allowed to finish the project.").
IES also argues that as the employer, it "has the
discretion to enforce its own policies as it determines to be
appropriate under the circumstances," and that there were no
legal requirements under the HIOSH statute and regulations to
suspend or terminate employees who violate its safety rules. "To
prove that its disciplinary system is more than a 'paper
program,' an employer must present evidence of having actually
administered the discipline outlined in its policy and
procedures." Sec'y of Labor v. Precast Serv., Inc., 17 O.S.H.
Cas. (BNA) 1454, 1995 WL 693954, at *2 (Nov. 14, 1995) (emphasis
added). "Adequate enforcement is a critical element of the
[employee misconduct] defense." Id. IES's strict disciplinary
policy called for immediate suspension or termination upon
violation of its fall protection policy. IES failed to do either
after the December 14, 2012 violation. IES's decision to not
follow its policy and exercise discretion instead, foreclosed it
from establishing the employee misconduct defense.
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The Board's determination that Element 4 of the
employee misconduct defense was not established, is a mixed
question of fact and law. The record contains substantial
evidence to support the Board's determination that IES did not
enforce its own policies as required for the defense to apply.
The circuit court was correct in affirming the Board's
determination that IES did not effectively enforce its rules when
violations were discovered. See Kiewit, 1996 WL 33347449 at *3;
Kilakila, 138 Hawai#i at 395, 382 P.3d at 207.
Finally, in the fifth point of error, IES contends that
the circuit court erred in holding IES "strictly liable" for the
"unforeseeable misconduct of rogue employees." Because the
circuit court was correct in affirming the Board's determination
that Lee's knowledge of the violation was imputed to IES, IES is
not being held "strictly liable," and this argument is without
merit.
IV. Conclusion
Based on the foregoing, the Circuit Court of the First
Circuit's November 7, 2016 Final Judgment and Order Affirming
Hawaii Labor Relations Board's Decision, and the Hawaii Labor
Relations Board's February 3, 2016 Findings of Fact, Conclusions
of Law and Decision and Order, are affirmed.
DATED: Honolulu, Hawai#i, January 6, 2021.
On the briefs: /s/ Lisa M Ginoza
Chief Judge
Mark G. Valencia,
Michael R. Marsh, /s/ Katherine G. Leonard
(Case Lombardi & Pettit) Associate Judge
for Appellant-Appellant.
/s/ Karen T. Nakasone
Herbert B.K. Lau, Associate Judge
Deputy Attorney General,
for Appellee-Appellee.
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