McCarthy v. Commonwealth, Department of Transportation
2010 Pa. Commw. LEXIS 600
| Pa. Commw. Ct. | 2010Background
- Department suspension of McCarthy Tire Service Co.'s inspection certificate for fraudulent recordkeeping by an employee (Krolikowski) tied to a December 4, 2008 covert inspection; employee's certification was expired; the inspection report named another inspector (Rollman) to conceal who performed the inspection.
- Notice of violations issued February 4, 2009 to McCarthy, Krolikowski, and Rollman; hearing held February 19, 2009 resulting in sanctions against Krolikowski and McCarthy, not Rollman.
- May 5, 2009, Department suspended McCarthy's official inspection certificate for one year and imposed a $2,500 fine under 67 Pa.Code § 177.602(a)(iii) due to fraudulent recordkeeping; Department justified suspension by McCarthy’s knowledge and responsibility.
- McCarthy appealed; de novo trial court reversed and set aside suspension, finding no knowledge of violation and noting absence of management at inspection; Department appealed.
- Appellate court reviews de novo suspensions for error of law and evidence; department must consider 67 Pa.Code § 177.602(b) points option; court must review whether the Department’s reasons align with the facts; court affirmed trial court’s modification of sanction.
- Regulatory framework imposes strict liability on station owners for employee actions within scope of employment; fraudulent recordkeeping defined as falsifying inspection records; prior cases discuss when points may be used in lieu of suspension and limits on de novo court modifications
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court could modify suspension to points | McCarthy argues trial court correctly used Strickland to require consideration of points. | Department argues suspension is appropriate; points require knowledge not shown here. | Yes; court affirmed modification to points where factual findings differed and Strickland requirement applied. |
| Whether owner is strictly liable for employee fraudulent recordkeeping | Owner's knowledge not established; strict liability should not extend without knowledge. | Owner strictly liable for every violation by an employee acting within scope and must defend by showing outside scope or lack of knowledge. | Owner bears strict liability for fraudulent recordkeeping within scope; knowledge defenses limited to §177.602(b) considerations. |
| Whether Department properly applied §177.602(b) point option | Department adequately considered points but failed to show knowledge basis; waiver not correctly asserted. | Department attempted to justify not using points on knowledge and responsibility grounds. | Department must show consideration of §177.602(b); here its reasons were not adequately supported by the record, allowing modification. |
| Whether the de novo court could revise the Department's penalty after differing findings | Trial court's findings should govern; deviation from Department’s conclusions permitted under Kobaly. | Court should defer to Department's penalty unless justified by different findings under Kobaly. | Trial court could modify penalty when it made different findings of fact and law; affirmed. |
| Compliance with notice/due process in allegations of fraudulent recordkeeping | Notice addressed to Rollman, not Krolikowski, raising due process concerns. | De novo hearing cures notice defects; waiver not properly raised here. | Not dispositive; court did not resolve waiver issue on appeal. |
Key Cases Cited
- Department of Transportation, Bureau of Traffic Safety v. Stahl, 75 Pa.Cmwlth. 18 (1983) (imposes strict liability on station owners for employee acts within scope of employment)
- Strickland v. Department of Transportation, 132 Pa.Cmwlth. 605 (1990) (points in lieu of suspension must be considered; owner’s lack of knowledge can be relevant)
- Department of Transportation, Bureau of Traffic Safety v. Verna, 23 Pa.Cmwlth. 260 (1976) (de novo review cannot alter Department's penalty beyond its legal framework)
- Department of Transportation, Bureau of Traffic Safety v. Kobaly, 477 Pa. 525 (1978) (trial court may modify Department penalty after differing findings of fact and law)
- Department of Transportation, Bureau of Traffic Safety v. McCartney, 2 Pa.Cmwlth. 540 (1971) (precedent on penalties and deference to Department's sanctioning decisions)
- Department of Transportation v. Cormas, 32 Pa.Cmwlth. 1 (1977) (abuse of discretion in reversing Department penalty; limits on modification)
- Sutton v. Department of Transportation, 541 Pa. 35 (1995) (de novo hearing cures procedural defects in notice)