Arizona Mechanical Insulation

ARIZONA MECHANICAL INSULATION, LLC 345 NLRB No. 106 1257 Arizona Mechanical Insulation, LLC and Interna- tional Association of Heat and Frost Insulators and Asbestos Workers, Local 73, AFL–CIO. Case 28–CA–18622(E) November 16, 2005 DECISION AND ORDER BY CHAIRMAN BATTISTA AND MEMBERS LIEBMAN AND SCHAUMBER On May 12, 2005, Administrative Law Judge Thomas M. Patton issued the attached supplemental decision. The General Counsel filed exceptions and a supporting brief, the Applicant filed an answering brief, and the General Counsel filed a reply brief. The National Labor Relations Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge’s rulings, find- ings,1 and conclusions and to adopt the recommended Order as modified below.2 ORDER The National Labor Relations Board adopts the rec- ommended Order of the administrative law judge as modified and orders that the Applicant, Arizona Me- chanical Insulation, LLC, Hereford, Arizona, shall be awarded $9700.04 pursuant to its Equal Access to Justice Act application. John Giannopoulos, Esq., for the General Counsel. Doug Tobler, Esq. (Hammond & Tobler, P.C.), of Phoenix, Arizona, for the Respondent. Don A. Peterson, of Phoenix, Arizona, for the Charging Party. SUPPLEMENTAL DECISION EQUAL ACCESS TO JUSTICE THOMAS M. PATTON, Administrative Law Judge. On May 20, 2004, the National Labor Relations Board issued an Order in this proceeding, dismissing the complaint (the Decision). On June 8, 2004, the Respondent filed an application for an award of attorney’s fees and expenses under the Equal Access to Jus- tice Act (EAJA), 5 U.S.C. Section 504, and Section 102.143 through 102.155 of the Board’s Rules and Regulations. On June 15, 2004, the Board referred the matter to the undersigned for further appropriate action. The application is verified by Monica Schwarz, a member of Arizona Mechanical Insulation, LLC (herein AMI), the Appli- cant. The application includes a sealed envelope labeled “Con- 1 No exceptions were filed to the judge’s finding that the Applicant is eligible to receive an award of fees and expenses. 2 The Applicant seeks an additional $1297.50 for attorneys’ fees in- curred in responding to the General Counsel’s exceptions. We find that the Applicant is entitled to these additional fees, and we shall add this amount to the $8402.54 awarded by the judge for a total award of $9700.04. DeBolt Transfer, 271 NLRB 299, 300 (1984) (amount of recovery may include the time spent securing the right to the award). fidential Financial Information” that was served in accordance with Board Rule Section 102.147. Applicant’s motion to with- hold the balance sheet from public disclosure pursuant to Board Rule Section 102.147(g)(2) was granted on July 6, 2004. The General Counsel filed a timely motion to dismiss the application with supporting argument. The Applicant filed a response to the motion with supporting argument and the Gen- eral Counsel filed a reply. The motion to dismiss was denied. The General Counsel then filed a timely answer to the applica- tion and the Applicant filed a reply. The General Counsel denies that the Applicant is EAJA eli- gible and contends that an EAJA award should be denied on the ground that the unfair labor practice proceeding was substan- tially justified. I. APPLICANT’S EAJA ELIGIBILITY The standards for determining whether the Applicant is eli- gible to receive an EAJA award are found in Board Rule Sec- tion 102.143, which in relevant part provides: (c) Applicants eligible to receive an award are as follows: . . . . (5) any other partnership, corporation, association, unit of local government, or public or private organization with a net worth of not more than $7 million and not more than 500 employees. (d) For the purpose of eligibility, the net worth and number of employees of an applicant shall be determined as of the date of the complaint in an unfair labor practice proceed- ing or the date of the notice of hearing in a backpay pro- ceeding. The verified application states that Applicant is a limited li- ability corporation engaged in mechanical insulation; that at the time the charge was filed Applicant had two employees; that the employees were working in southern Arizona; that Appli- cant has no affiliates; and that at the time the adversary adjudi- cated proceeding was initiated Applicant’s net worth was less than $7 million. The application asserts that Applicant qualifies for an EAJA award. The financial information consists of a balance sheet in typical form. It details the assets, liabilities, and equity of the Applicant. The balance sheet is on an accrual basis and reflects the situation as of March 31, 2003. In her affidavit Monica Schwarz states, based on personal knowledge, that the facts stated in the application and the bal- ance sheet are true and accurate. The General Counsel denies that the Applicant is eligible to receive an EAJA award. The answer states: [The statement] that the Applicant is an eligible party under EAJA, is denied as the General Counsel is without sufficient knowledge or information to form a belief as to the truth of the allegation. In its application the Applicant has included a statement that its net worth is less than seven million dollars, and has provided a one-page balance sheet, which is under seal by order of the ALJ, to substantiate its assertion. How- ever, the balance sheet does not satisfy the evidentiary re- quirements needed to properly authenticate such a document. DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1258 The answer does not otherwise explain the denial of EAJA eligibility. There is no showing of an objective basis for the asserted lack of knowledge. The issue of EAJA eligibility was not addressed in the motion to dismiss. In addition to the denial of the Applicant’s statement regarding its EAJA eligibility, the answer separately pleads, as an affirmative defense, “The ap- plicant does not meet the eligibility requirements for an EAJA award.” The General Counsel has provided no explication of this affirmative defense. In its reply to the answer, the Applicant’s attorney reviewed the evidence it had submitted regarding the Applicant’s EAJA eligibility and then objected to the answer as follows: If General Counsel has some secret reason for believing that the requirements have not been met, Applicant would be more than willing to provide any additional information that Gen- eral Counsel believes is necessary. In the absence of General Counsel’s candor on this subject, it is impossible to satisfy its unknown complaints. The Applicant thus contends, in substance, that it was pro- vided insufficient information to permit it to amend the applica- tion, if Applicant’s assertion of EAJA eligibility was deficient. See U.S. v. Hristov, 396 F.3d 1044 (9th Cir. 2005), and cases cited therein. See also Scarborough v. Principi, 541 U.S. 401 (2004). The answer does not sufficiently describe deficiencies re- garding the Applicant’s EAJA eligibility. In this regard, Board Rule Section 102.150(c) provides, “The answer shall explain in detail any objections to the award requested and identify the facts relied on in support of the General Counsel’s position.” Because the answer does not comply with the requirements of Section 102.150(c), I find that Applicant’s EAJA eligibility is established. Assuming, without deciding, that the merits of the EAJA eli- gibility issue should be considered, I shall address matters that may be raised on exceptions, to avoid the necessity of a remand regarding this issue. The somewhat cryptic assertion that the balance sheet does not satisfy the evidentiary requirements needed to properly authenticate such a document can be read as a contention that there is a requirement that a document like the balance sheet be self-authenticating. That is not an EAJA requirement and is not a basis for dismissing the application. The affidavit of Monica Schwarz, based on her personal knowledge, that the balance sheet truthfully and accurately states the facts regarding the Applicant’s business is sufficient to authenticate the balance sheet. Because of her role in the operation of AMI, Monica Schwarz was in a position to have personal knowledge of the truth of the contents of the balance sheet. She worked in the office in the Schwarz home and han- dled business matters for AMI and her husband worked with the tools. The balance sheet has been sufficiently authenticated by Monica Schwarz. Fed. R. Evid. 901(b)(1); Shell Ray Mining, 297 NLRB 53 (1989). The balance sheet is on an accrual basis and reflects the situation as of March 31, 2003. Board Rule Section 102.143(d) provides, “For the purpose of eligibility, the net worth and number of employees of an applicant shall be determined as of the date of the complaint in an unfair labor practice proceeding . . . .” The rule does not require that the financial statement reflect the net worth on a particular day, so long as the financial statement and the other evidence show that the Applicant had a net worth of not more than $7 million on the day the complaint issued. Shell Ray Mining, supra. While the balance sheet shall remain under seal, it is appropriate to disclose that the net worth of the applicant, however measured, was less than 1 per- cent of the $7 million EAJA limit on the day the charge was filed.1 I conclude that the Applicant had a net worth of less than $7 million on the day the complaint issued based on the balance sheet, the verified application, the affidavit of Monica Schwarz, the evidence regarding the operations of the Applicant in the unfair labor practice case, the related findings in the Decision and reasonable inference. The application states that on the day the charge was filed the Applicant had two employees. As noted above, the affidavit of Monica Schwarz states, based on her personal knowledge, that the application truthfully and accurately states the number of employees. I conclude that the Applicant had no more than 500 employees on the day the complaint issued based on the verified application, the affidavit of Monica Schwarz, the find- ings in the Decision, the record of the hearing and reasonable inference. The Applicant could be given an opportunity to supplement the application to state the precise net worth and number of employees on the day the complaint issued, pursuant to Board Rules Section102.147(f) and Section 102.152(a). That proce- dure is not warranted because it is obvious that the Applicant is EAJA eligible and the denial of knowledge and information by the General Counsel does not appear to be reasonably based. Based on the foregoing, I conclude that the evidence shows that the Applicant is eligible for an EAJA award. II. SUBSTANTIAL JUSTIFICATION The Applicant is entitled to be reimbursed an award of attor- ney’s fees and expenses unless the General Counsel has estab- lished that the issuance of the complaint and the subsequent litigation were substantially justified. The standards and author- ity for determining whether the Applicant is entitled to an EAJA award are summarized as follows in David Allen Co., 335 NLRB 783, 784–785 (2001): Under EAJA, a party who has prevailed in litigation before a Federal government agency is entitled to an award of attor- ney’s fees and expenses incurred in litigation unless the gov- ernment can establish that its position was “substantially justi- fied.” Blaylock Electric, 319 NLRB 928, 929 (1995). The United States Supreme Court, in Pierce v. Underwood, 487 U.S. 552 fn. 2 (1988), defined the phrase “substantially justi- fied” as meaning “justified to a degree that could satisfy a rea- sonable person” or “justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact.” Further, the fact that the Government did not prevail on the merits does not give rise to a presumption that its position 1 The measurement of net worth is discussed in American Pacific Concrete Pipe, 271 NLRB 1171 (1984), reversed 788 F.2d 586 (9th Cir. 1986). ARIZONA MECHANICAL INSULATION, LLC 1259 was unreasonable, and the “substantially justified” standard does not require the Government to establish that its decision to litigate was based on substantial probability of prevailing. Carmel Furniture Corp., 277 NLRB 1105, 1106 (1985). The Government’s position can still be deemed reasonable in fact and law notwithstanding that the General Counsel failed to es- tablish a prima facie case. Id. However, where the General Counsel presents evidence, which, if credited by the fact finder, would constitute a prima facie case of unlawful con- duct, the General Counsel’s position is deemed to be substan- tially justified within the meaning of EAJA. SME Cement, Inc., 267 NLRB 763 fn. 1 (1983). Credibility issues which are not subject to resolution by the General Counsel in the inves- tigative stage of a proceeding on the basis of documents or other objective evidence are, in the first instance, the exclu- sive province of the administrative law judge. Accordingly, where the General Counsel is compelled by the existence of a substantial credibility issue to pursue the litigation, and there- after presents evidence which, if credited, would constitute a prima facie case, the General Counsel’s case has a reasonable basis in law and fact and is substantially justified. Barrett’s Contemporary & Scandinavian Interiors, 272 NLRB 527 (1984). The only violation alleged was that the Applicant refused to execute or abide by a labor agreement negotiated in 2002 be- tween Western Insulation Contractors Association (the Asso- ciation) and International Association of Heat and Frost Insula- tors and Asbestos Workers, Local 73, AFL–CIO (the Union). The evidence did not establish that Applicant was bound by group bargaining and the complaint was dismissed. The Gen- eral Counsel contends that the agency’s position was substan- tially justified. The EAJA issue is whether the agency’s position that AMI had made a binding commitment to group negotiations was one “a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact.” Pierce v. Underwood, 487 U.S. 552 fn. 2 (1988). The General Counsel and the Applicant each acknowledge that the concurring opinion of Justice Stevens in Charles D. Bonanno Linen Service, 454 U.S. 404, 419–420 (1982), sets forth the standards for determining whether an employer or a union has made a binding commitment to group negotiations. See Detroit Newspaper Agency, 326 NLRB 782 (1998); Paint- ers District Council 51 (Managanaro Corp.), 299 NLRB 618 (1990). In Bonanno Linen, Justice Stevens wrote: The mere fact that an employer bargains in conjunction with other employers does not necessarily mean that it must sign any contract that is negotiated by the group. The Board re- quires that, to be bound by the terms of group negotiation, the members of an employer association must have indicated from the outset an unequivocal intention to be bound in col- lective bargaining by group rather than individual action, and the union representing their employees must [have] been noti- fied of the formation of the group and the delegation of bar- gaining authority to it, and [have] assented and entered upon negotiations with the group’s representative. (Internal quota- tion marks and citations omitted.) The decision dismissing the complaint includes the following findings: Monica Schwarz and representatives of five other employers attended the initial July 29 meeting. The initial meeting was at the union hall. Four of the six employers who participated in the July 29 meeting were WICA members. The attendance sheet that was signed by Schwarz at that meeting had “WICA” written at the top. Schwarz credibly testified that when she signed the attendance sheet she did not associate WICA with Western Insulation Contractors Association and that she was unfamiliar with the organization prior to the 2002 negotiations. The General Counsel contends that if Monica Schwarz’ tes- timony that she did not associate the WICA acronym with the Association when she signed the initial attendance sheet had not been credited, a violation would arguably have been found. The General Counsel also points to the crediting of Schwarz’s testimony that she was unfamiliar with the Associa- tion prior to the 2002 negotiations. The Decision concludes that the only probative evidence that AMI possessed information regarding the identity of Western Insulation Contractors Asso- ciation/WICA prior to the 2002 negotiations were the refer- ences to that organization in the union agreements Monica Schwarz signed in 1999. The questions of Monica Schwarz’ mentally associating WICA with the Association when she signed an attendance sheet at the initial meeting and her familiarity with the Associa- tion prior to the negotiations were not substantial credibility issues. The testimony on these matters was of marginal signifi- cance in determining whether the evidence as a whole met the Bonanno Linen standards. David Allen Co, supra. I attached little significance to those matters and neither was an important factor in my concluding that AMI was not bound by group action. Cf. Golden Stevedoring Co., 343 NLRB 115, 117 (2004). That testimony is not mentioned in the analysis portion of the decision. The decision was based on the objective evi- dence relevant to the issue of AMI’s intent to be bound by group action. The complaint alleged and the answer denied that AMI was a member of the Association. Schwarz testified that AMI was never a member of the Association. Bryan E. Rymer Jr., an official of the Association and the chief negotiator was a wit- ness for the General Counsel. Rymer testified that AMI was not an Association member. There has been no showing that the Government had substantial probative evidence that AMI was an Association member. The complaint alleged and the answer denied that in Sep- tember 1999, when AMI entered into an interim agreement with the Union, it agreed to be bound to future industry agree- ments, which were negotiated between the Union and Associa- tion. In fact, there was no basis to conclude that the terms of the interim agreement included an agreement by AMI to be bound to the 2002 Agreement. There has been no showing that the Government had evidence to support such a contention. Indeed, the Decision only assumes, without finding, that the other em- ployers that participated in the 2002 negotiations were bound by group action. DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1260 The General Counsel contends that evidence was presented that a reasonable person might accept as adequate to support the allegation that the applicant indicated an unequivocal inten- tion to be bound by group bargaining. The “reasonable person” standard is not a subjective test. The General Counsel must show that the Government’s position had a “reasonable basis in law and fact.” Pierce v. Underwood, 487 U.S. 552 fn. 2 (1988). The position of the General Counsel is inconsistent with the requirement that an employer’s intent to be bound by group bargaining be clear and unequivocal. Moreover, the General Counsel’s argument is inconsistent with the Court’s conclusion that absent “an unequivocal commitment to be bound by group action, an employer is free to withdraw from group negotiation at any time, or simply to reject the terms of the final group contract.” Charles D. Bonanno Linen Service, 454 U.S. 404, 419–420 (1982). Much of the General Counsel’s argument on the EAJA ques- tion amounts to a contention that the unfair labor practice case was wrongly decided. In particular, the General Counsel con- tends that the administrative law judge misread and misapplied the case law relied on by the General Counsel. I find it unnec- essary to expand on or further explain the Decision. The General Counsel contends that if the Applicant had made witnesses available during the investigation “perhaps a complaint may not have issued.” General Counsel argues, based on C.I. Whitten Transfer Co., 312 NLRB 28, 29 (1993), “Respondent cannot now rely on its own lack of cooperation to support its application for attorney’s fees pursuant to Equal Access to Justice Act.” The General Counsel does not explain how the decision to issue complaint could have been affected by such witnesses. On June 3, 2003, during the administrative investigation, the investigator sent a letter to AMI that stated in part: Along with providing a position statement and witnesses, you may also submit any other evidence, affidavits, or documents you consider relevant. However, providing affidavits not taken by a Board Agent does not constitute full cooperation within the meaning of the Equal Access to Justice Act. If you choose not to reply to this request, the Regional Director will make his decision based upon the evidence available. Accord- ingly, I ask that you present the evidence requested and any other evidence that you may wish to submit, including any relevant witnesses for the purpose of giving affidavits, by the close of business on June 18, 2003, so that the Regional Di- rector may consider such evidence. June 18, Monica Schwarz responded with a 3-page statement of position and 15 pages of exhibits. Schwarz closed with the following, “Feel welcome to contact me directly for additional information or clarification. I can arrange to meet with you personally to discuss the depth of our concerns further.” The record does not indicate that there was further communication with AMI before a decision was made to issue complaint. It was a 4-hour drive from Hereford to Phoenix and Schwarz was employed as a schoolteacher in Hereford. It was not unreason- able for Schwarz to try initially to resolve the charge by mail. In any event, the rationale of Whitten Transfer has little rele- vance to the present case. Unlike the situation in Whitten Trans- fer, AMI did not withhold evidence that was then disclosed at the hearing to defeat the Government’s case. The dismissal of the complaint against AMI was the consequence of an absence of substantial probative evidence of a violation. A respondent is not presumptively barred from receiving an EAJA award be- cause respondent witnesses are not made available for affida- vits taken by a Board agent. In summary, the dismissal was not based on resolutions of disputed issues of fact. Rather, the Decision was based on un- controverted facts, which were known or should have been known to the Government. The case did not turn on novel ques- tions of law. The complaint was dismissed on the basis of set- tled decisional authority. I find that General Counsel’s position was not reasonable in law or fact and that there are no special circumstances that would make an award unjust. III. FEES AND COSTS Board Rule Section 102.145 provides in relevant part that awards will be based on rates customarily charged by attorneys, subject to a limitation of $75 per hour, plus reasonable ex- penses. The Applicant has submitted verified detailed billing statements of its attorney. AMI has been charged at an hourly rate of $250 per hour for attorney time and $200 for 1 hour of paralegal time. AMI has also been billed for expenses of post- age, FedEx delivery, photocopying, parking, processor fees for subpoena service, messenger service, and online legal research. The fees and expenses claimed were all incurred after the issu- ance of the complaint. The original application was supple- mented to include fees and expenses incurred in the prosecution of the EAJA application, which are recoverable. See DeBolt Transfer, 271 NLRB 299 (1984). The General Counsel has not challenged the Applicant’s fees and expenses. I have reviewed the fees and expenses sought and find that they are allowable under Board Rule Section 102.145, subject to the $75 ceiling on attorney fees. The Applicant has not made a request to the Board, by appli- cation for rulemaking or otherwise, for an increase in the al- lowable hourly rate of $75. Absent such a request and a favor- able ruling by the Board, I am without authority to consider the Applicant’s request for attorney’s fees higher than the maxi- mum provided by the EAJA and the Board’s Rules and Regula- tions. Accordingly, I shall compute the Applicant’s attorney’s fees and paralegal fees at the hourly rate of $75. The allowed hourly rate is without prejudice to the Applicant to file a peti- tion to raise the hourly rate, pursuant to Board Rule Section 102.146. The attorney billing reflects the chargeable time in hours and tenths of an hour. The following is a summary of the hours billed, the allowable amounts based on an hourly rate of $75 and the expenses claimed relative to defending the issues raised by the complaint and handling the EAJA application: (1) Attorney time 74.4 hours $6330.00 (2) Paralegal time 1.0 hours 75.00 (3) Expenses 1997.54 Total $8402.54 ARIZONA MECHANICAL INSULATION, LLC 1261 ORDER Arizona Mechanical Insulation, LLC shall be awarded $8402.54 pursuant to its EAJA application, as supplemented.2 2 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses.