STATE OF HAWAII

HAWAII LABOR RELATIONS BOARD

CASE NO.: OSH 2011-19

ORDER NO. 695

ORDER DENYING RESPONDENT 1 ST GREEN SOLUTIONS, LLC'S MOTION TO

DISMISS COMPLAINANT DIRECTOR OF THE DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS' CITATION AND NOTIFICATION OF PENALTY, ISSUED 09/14/11, FILED JANUARY 29, 2014, AND DENYING MOTION TO DISMISS COMPLAINANT DIRECTOR OF THE DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS' CITATION AND NOTIFICATION OF PENALTY, ISSUED 09/14/11, FOR FAILURE TO PROSECUTE, FILED MAY 11, 2015; NOTICE OF THIRD INITIAL/SETTLEMENT CONFERENCE

In the Matter of

DIRECTOR, DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS,

Complainant,

and

1 ST GREEN SOLUTIONS, LLC,

Respondent.

ORDER DENYING RESPONDENT 1 ST GREEN SOLUTIONS, LLC'S MOTION TO DISMISS COMPLAINANT DIRECTOR OF THE

DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS' CITATION AND NOTIFICATION OF PENALTY, ISSUED 09/14/11, FILED JANUARY 29, 2014, AND

DENYING MOTION TO DISMISS COMPLAINANT DIRECTOR OF THE DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS' CITATION AND NOTIFICATION OF

PENALTY, ISSUED 09/14/11, FILED MAY 11, 2015 FOR FAILURE TO PROSECUTE; NOTICE OF THIRD INITIAL/SETTLEMENT CONFERENCE

I. PROCEDURAL AND FACTUAL BACKGROUND

If it should be determined that any of these Findings of Fact should have been set forth as Conclusions of Law, then they shall be deemed as such.

I do hereby certify that this is a full, 'me anc correct copy of the origin' o le in this G:fi ,

Hawa Labor Relations Board

EFiled: Sep 30 2015 04:47PM HAST Transaction ID 57945580

Case No. OSH 2011-19

A. Factual Background

This case involves an incident on May 6, 2011 involving Mr. Rick Sparacio (Mr. Sparacio), the managing member of ls` GREEN SOLUTIONS, LLC (ls` Green). Mr. Sparacio was severely injured by an electrical power surge during a performance of electrical work while conducting a power assessment in a building located at 200 South High Street, Wailuku, Hawaii (Building). ls` Green is a limited liability company, and it is alleged that Mr. Sparacio as the owner of ls` Green, does not receive a salary or receive direction from an employer and is, according to P` Green, not an employee of 1s t Green.

B. The Complaint and 1s t Green's Motion to Dismiss

On November 7, 2011, the Board received from Complainant DIRECTOR, DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS (Director or DLIR) a Notice of Contest regarding a Citation and Notification of Penalty (Citation) issued to ls t Green on September 14, 2011, resulting from Inspection Number 313082570 which was conducted on May 23, 2011 to June 21, 2011 (Inspection) by the DLIR's Occupational Safety and Health Division (HIOSH). The Director cited a "serious" violation of 29 CFR § 1910.332(b)(1) [refer to HAR § 12-89-11], 29 CFR § 1910.333(c)(2) [refer to HAR § 12-89.1], 29 CFR § 1910.334(c)(3) [refer to HAR § 12-89.1], 29 CRF § 1910.335(a)(1)(i) [refer to HAR § 12-89.1] and 29 CFR § 1910.335(a)(1)(v) [refer to HAR § 12-89.1], and assessed a total penalty of $4,500.00. 1s` Green contested the Citations by letter to HIOSH dated September 30, 2012.'

On February 7, 2012, 1s` Green filed RESPONDENTS' MOTION TO DISMISS CITATIONS (1st Green's Motion to Dismiss) asserting that the allegations contained in the Citation failed to state a claim upon which relief could be granted; and that judgment on the pleadings was therefore appropriate and should be entered in P` Green's favor. Mr. Sparacio signed the P t Green's Motion to Dismiss and claimed the following:

1st Green Solutions, LLC has no employees. I am self-employed which the OSHA Act does not cover. All my income comes from personal investment funds. There is no OSHA issue and any labeling of panel would be required by the owner of the equipment to protect his employees. Due to this fact, I request immediate dismissal of the inspection listed above.

On February 9, 2012, the Director filed DIRECTOR'S MEMORANDUM IN OPPOSITION TO RESPONDENT'S MOTION TO DISMISS CITATIONS, and on March 5, 2012, the Board held a hearing on the 1s t Green's Motion to Dismiss. The Director was represented by Herbert Lau, Deputy Attorney General, and neither Mr. Sparacio nor a representative of 1s t

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Green attended the hearing despite the Board's repeated attempts to contact Mr. Sparacio. The Board proceeded with the hearing and received oral arguments from Mr. Lau and took the matter under advisement.

On November 1, 2013, the Board issued Order No. 530 which denied the 1s t Green's Motion to Dismiss and noticed the Second Initial Conference/Settlement Conference for December 11, 2013. In finding for the Director on the 1st Green's Motion to Dismiss, the Board carefully analyzed the definition of "employee" in Hawaii Revised Statutes (HRS) Chapter 396, Hawaii's Occupational Safety and Health Law, which states as follows:

"Employee" means every natural person who is required or directed or permitted or suffered by any employer to engage in any employment, or to go to work or be at any time in any place of employment.

The Board found that HRS § 396-3 does not expressly include, or exclude, limited liability companies from the scope of the definitions of "employer," "employment," or "place of employment" and that the definition of "employee" includes Mr. Sparacio because he was performing authorized activities in furtherance of the company's business. 1s t Green met the definition of "employer" to the extent it has a "natural person in service," who was Mr. Sparacio, having "direction, management, control, or custody of any employment, place of employment, or any employee." Lastly, since there was no Hawaii case law dealing with the issue of whether a limited liability company is an "employer" for HIOSH purposes, the Board took note of an analogous case, Chung v. Animal Clinic, Inc., 63 Haw. 642 (1981), where the Hawaii Supreme Court found the shareholder of a corporation to be an employee for purposes of workers' compensation. The Board found that Respondent had not met its burden, as the party moving for dismissal, of proving that dismissal is appropriate.

On November 27, 2013, Michael Carroll, Esq. and Kristin Shinkawa, Esq. entered their appearance in this case as attorneys for 1s t Green. On December 6, 2013, Mr. Carroll submitted the Initial Conference Statement for 1S t Green (1s t Green's IC Statement). In 1s t Green's IC Statement, Pt Green informed the Board that Mr. Sparacio and 1S t Green filed a complaint, Civil No. 13-1-0521 (Circuit Court Action), in the Circuit Court of the Second Circuit against the State of Hawaii and the County of Maui" involving the same incident that is the subject of the Citation. In addition, 1' Green's IC Statement requested the Board to summarily dismiss the Citation"' or stay the case pending the results of the Circuit Court Action.

C. 2nd and 3rd Motions to Dismiss

On January 29, 2014, 1st Green filed RESPONDENT 1 ST GREEN SOLUTIONS, LLC'S MOTION TO DISMISS COMPLAINANT DIRECTOR OF THE DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS' CITATION AND NOTIFICATION OF PENALTY,

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ISSUED 09/14/11 (2n d Motion to Dismiss). The 2n d Motion to Dismiss gave three reasons why the 2nd Motion to Dismiss should be granted: (1) Mr. Sparacio was not an employee of 1s t Green and that citations only concern incidents involving employees; (2) the cause of the injuries was the Building's failure to provide the required and customary safety systems to provide notice of high voltage; and (3) the Director cannot prove that 1s t Green committed any of the alleged violations. 1st Green also seeks in the 2nd Motion to Dismiss that the matter be "stayed pending the results of the civil lawsuit filed by [ 1S t Green] against the State and County." (At page 11 of P t Green's Memorandum in Support of the 2" d Motion to Dismiss). 1s t Green stated that it was in the process of requesting information from the State relating to the incident which had not yet been produced, and that Pt Green intended to conduct formal discovery in the event the dispute could not be settled with the Director.

On April 28, 2014, the Board held a hearing on the 2nd Motion to Dismiss and took this matter under advisement.

On May 11, 2015, 1s t Green filed RESPONDENT 1 ST GREEN SOLUTIONS, LLC'S MOTION TO DISMISS COMPLAINANT DIRECTOR OF THE DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS' CITATION AND NOTIFICATION OF PENALTY, ISSUED 09/14/11 (3 rd Motion to Dismiss). The 3rd Motion to Dismiss raises the same arguments set forth in the 2nd Motion to Dismiss and claimed for the first time that the Citation should be dismissed because the Director "has not undertaken any efforts to litigate this matter or pursue the Citation against 1GS for over a year.'"" In its 3rd Motion to Dismiss P t Green stated the following:

It is unduly prejudicial to 1GS to have this matter remain open indefinitely, and given the delay in any enforcement action, it would be highly prejudicial to reactivate it now after this long hiatus. Further, dismissal for failure to prosecute is an appropriate means to allow the Board to manage its docket and encourage parties to expeditiously resolve their dispute.

On May 12, 2015, the Director filed DIRECTOR'S POSITION IN RESPONSE TO RESPONDENT'S MOTION TO DISMISS FOR FAILURE TO PROSECUTE FILED ON MAY 11, 2015. On May 18, 2015, 1St Green filed RESPONDENT 1 ST GREEN SOLUTIONS, LLC'S REPLY MEMORANDUM IN SUPPORT OF MOTION TO DISMISS COMPLAINANT DIRECTOR OF THE DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS' CITATION AND NOTIFICATION OF PENALTY, ISSUED 09/14/11, FOR FAILURE TO PROSECUTE.

On July 22, 2015, the Board heard oral arguments on the 3r d Motion to Dismiss. During the argument and in response to a question from Board Member Rock Ley, counsel for 1s t Green informed the Board that 1s t Green no longer seeks a stay of the proceedings in this case as

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previously requested back in November of 2013 and again in January of 2014. Although it was unclear to the Board why 1s t Green preferred to move forward with this case instead of the Civil Court Action, Mr. Carroll stated for the first time that P t Green wished to proceed forward with the case before the Board and orally withdrew the request for a stay of the proceedings.

II. CONCLUSIONS OF LAW, DISCUSSION, AND ORDER

If it should be determined that any of these Conclusions of Law should have been set forth as Findings of Fact, then they shall be deemed as such.

A. Legal Standards for a Motion to Dismiss

The Board adheres to the legal standards used by the courts for motions to dismiss under the Hawaii Rules of Civil Procedure (HRCP) Rule 12(b).

Regarding a motion to dismiss brought under HRCP Rule 12(b)(6) for failure to state a claim, "[d]ismissal is warranted only if the claim is clearly without any merit; and this want of merit may consist in an absence of law to support a claim of the support made, or of facts sufficient to make a good claim, or in the disclosure of some fact which will necessarily defeat the claim." Justice v. Fuddy, 125 Hawaii 104, 108, 253 P.3d 665, 669 (App. 2011) (citing Rosa v. CWJ Contractors, Ltd., 4 Haw. App. 210, 215, 664 P.2d 745, 749 (1983)). "A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his or her claim that would entitle him or her to relief. We must therefore view a plaintiff's complaint in a light most favorable to him or her in order to determine whether the allegations contained therein could warrant relief under any alternative theory." Fuddy, 125 Hawaii at 107-108, 253 P.3d at 668-669; Young v. Allstate Ins. Co., 119 Hawaii 403, 412, 198 P.3d 666, 675 (2008).

B. Discussion, Conclusions and Order

1. 2nd Motion to Dismiss

The 2nd Motion to Dismiss is based on the same arguments and alleged facts as the P t Motion to Dismiss, namely that Mr. Sparacio is not an employee of 1st Green; and, therefore, the

Citation is improper under the HIOSH laws which are only applicable to employees and employers. The Board finds that P t Green has failed to raise in the 2nd Motion to Dismiss any new grounds, new facts or new law that warrant a reversal of Order No. 530 which denied the 1S t Motion to Dismiss. As such, the 2nd Motion to Dismiss is hereby denied.

2. 3rd Motion to Dismiss

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The 3rd Motion to Dismiss raises the same arguments that were made in the 1st and 2nd Motions to Dismiss, with the addition of the claim that this case should be dismissed for lack of prosecution. For the same reasons that the Board denied the l' and 2n d Motions to Dismiss, the Board denies the 3rd Motion to Dismiss with respect to its arguments regarding Mr. Sparacio's employment status with 1s t Green.

Regarding the lack of prosecution claim that is raised by 1s t Green, the Board takes note that for the better part of this case ls t Green has pushed for a settlement of this dispute, which the Board does not object to, and requested a stay of these proceedings as the parties discussed settlement and litigated in the circuit court action. While 1s t Green has the prerogative to change its litigation strategy and ask this Board to "move the case forward," the Board takes exception with 1st Green's suggestion that any delay in these proceedings is the fault of the Board or the Director.

The Board reminds P t Green that the stay was requested by 1s t Green in November of 2013 and again in January of 2014, not the Director or the Board. Furthermore, 1s t Green failed to file any document with the Board to indicate a change of mind and desire to proceed forward with the case at hand. Accordingly, the Board was under the impression that P t Green was proceeding forward with the ircuit court action, and that, apart from a possible settlement of the parties, there was no urgency with the case before the Board. In fact, if the Board Member had not raised the question, there was no indication 1s t Green would have informed the Board of its desire to withdraw its request for the stay.

For these reasons, the Board denies the 3 1-d Motion to Dismiss and herein gives notice to the parties of a third initial/settlement conference to set the case for a hearing on the merits.

NOTICE OF THIRD INITIAL/SETTLEMENT CONFERENCE

NOTICE IS HEREBY GIVEN that pursuant to HRS § 89-5(i)(4) and (5) , and Hawaii Administrative Rules (HAR) § 12-42-47, the Board will conduct a third initial/settlement conference in this matter on October 7, 2015, at 9:00 a.m., in the Board's hearing room located at 830 Punchbowl Street, Room 434, Honolulu, Hawaii, 96813. The purpose of the third initial/settlement conference is to discuss the possible settlement of the disputes in this case and to set the matter for a final hearing on the merits if the case cannot be settled. All parties have the right to appear in person and to be represented by counsel or a representative.

Any party not residing on the island of Oahu may appear telephonically at the initial/settlement conference by calling Ms. Nora Ebata at (808) 586-8610, (808) 586-8847 (TTY), or 1 (888) 569-6859 (TTY islands of Hawaii, Kauai, or Maui) to make the necessary arrangements no later than ten days prior to the initial/settlement conference.

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Auxiliary aids and services are available upon request by calling Ms. Ebata at the above listed telephone numbers. A request for reasonable accommodations shall be made no later than ten working days prior to the needed accommodation.

DATED: Honolulu, Hawaii, September 30, 2015.

HAWAII LABOR RELATIONS BOARD

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M. KOMATSUBARA, Chair

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HAMA' SESNITA A.D. MOEPONO, Member otmmoso

e224'7 ROCK B. LEY, Member

Copies to:

Michael Carroll, Esq., Attorney for 1s t Green Herbert Lau, Esq., Deputy Attorney General

OSH 2011-19 — Director, DLIR and 1st Green Solutions, LLC — Order Denying Motions to Dismiss and Notice of Third Prehearing/Settlement Conference.

Order No.: 695

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ENDNOTES

i The Board notes that Mr. Sparacio specifically contested three of the Citation items and the total amount of the penalty by his letter to HIOSH dated September 30, 2011, and all five of the Citation items and the penalty by letter to HIOSH dated October 6, 2011.

1" Green's IC Statement stated that the Civil Court Action is against the County of Hawaii. The Board believes that this is incorrect and that the County of Maui is in fact the defendant in the Civil Court Action.

iii At that time, 1" Green did not have before the Board a motion to seek dismissal of the Citations or the Complaint.

iv At page 2 of 1" Green's Memorandum in Support of the 3/ Motion to Dismiss:. '

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