Hovey Electric, Inc.

HOVEY ELECTRIC, INC. 511 Hovey Electric, Inc. and United Construction Work- ers, Local #18, Christian Labor Association of the United States of America and Local 131, In- ternational Brotherhood of Electrical Workers, AFL–CIO. Cases 7–CA–40164(E) and 7–CB– 11532(E) January 18, 2000 BY CHAIRMAN TRUESDALE AND MEMBERS LIEBMAN AND BRAME SUPPLEMENTAL DECISION AND ORDER On August 27, 1999, Administrative Law Judge Bruce D. Rosenstein issued the attached supplemental decision. Applicant Hovey Electric, Inc. (Hovey) filed exceptions, a supporting brief, an answering brief, and a reply brief. The General Counsel filed cross-exceptions, a supporting brief, and an answering brief. The National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The Board has considered the supplemental decision and the record in light of the exceptions and briefs and has decided to affirm the judge’s rulings, findings, and conclusions, as explained below, and to adopt the rec- ommended Order. In sections B and C of the supplemental decision, the judge found, in accordance with the General Counsel’s position, that he was substantially justified in issuing the complaint in this case and pursuing the complaint allega- tions.1 In section D of the supplemental decision, how- ever, the judge rejected certain of the arguments the General Counsel advanced in support of his position. For the reasons stated in sections B and C of his sup- plemental decision, we agree with the judge that the Gen- eral Counsel was substantially justified in issuing and pursuing the complaint allegations against Hovey.2 Given that the judge’s findings in section D of his sup- plemental decision have no bearing on the result in this case, we find it unnecessary to pass on them. ORDER The recommended Order of the administrative law judge is adopted, and the application is denied. Donna M. Nixon Esq., for the General Counsel. David J. Masud, Esq., of Saginaw, Michigan, for the Respon- dent-Employer. . 1 The complaint alleged in substance that Hovey violated the Act by granting recognition to, and entering into a contract containing a union- security clause with, the Christian Labor Association (CLA) at a time when the CLA did not represent a majority of Hovey’s employees. The complaint further alleged that Hovey violated the Act by withholding dues and initiation fees from employees’ wages and transmitting them to the CLA. 2 Member Brame notes that Respondent Hovey did not except to the judge’s failure to make an explicit finding that the General Counsel was substantially justified in filing exceptions to his original decision in this case. Curtis R. Witte, Esq., of Grand Rapids, Michigan, for the Respondent-Christian Labor Organization Ted Iorio, Esq., of Grand Rapids, Michigan, for the Charging Party. SUPPLEMENTAL DECISION AND ORDER BRUCE D. ROSENSTEIN, Administrative Law Judge. On Octo- ber 28, 1997, the Regional Director for Region 7 of the Na- tional Labor Relations Board (the Board) issued a consolidated complaint and notice of hearing (the complaint), based on charges filed by Local 131, International Brotherhood of Elec- trical Workers, AFL–CIO (the Charging Party or IBEW), which alleged that Hovey Electric, Inc. (Respondent Hovey or Hovey) has engaged in certain violations of Section 8(a)(1), (2), and (3) of the National Labor Relations Act (the Act), and that the United Construction Workers, Local #18, Christian Labor Association of the United States of America (Respondent CLA or CLA), has engaged in certain violations of Section 8(b)(1)(A) and (2) of the Act. Respondent Hovey and Respon- dent CLA denied the commission of any unfair labor practice, and a hearing was held before me in Kalamazoo, Michigan, on January 28, 1998. The General Counsel, Respondent Hovey and Respondent CLA, thereafter, filed posthearing briefs. On June 15, 1998, I issued a decision finding that Respondents Hovey, and CLA entered into a valid 8(f) collective-bargaining agreement on August 13, 1997, that was later converted into a valid 9(a) collective-bargaining agreement on October 16, 1997. Accordingly, I held that Respondent Hovey did not en- gage in violations of Section 8(a)(1), (2), and (3) of the Act1 and that Respondent CLA did not engage in violations of Sec- tion 8(b)(1)(A) and (2) of the Act. Therefore, I dismissed the complaint in its entirety. The General Counsel filed exceptions and a supporting brief, and Respondent Hovey and Respondent CLA filed answering briefs. On April 30, 1999, the Board affirmed my decision in Hovey Electric Inc., 328 NLRB 273. Thereafter, on May 28, 1999, Respondent Hovey and Respon- dent CLA filed with the Board separate applications for attor- ney’s fees and expenses pursuant to the Equal Access to Justice Act, 5 U.S.C. § 504 (1982) (EAJA), and Section 102.143 of the Board’s Rules and Regulations. Respondent CLA filed an amendment to that application on June 1, 1999. The Board issued an order referring the matter to me on June 1, 1999. The IBEW filed comments on Respondent Hovey and Respondent CLA applications for attorney’s fees and expenses on June 25, 1999. The General Counsel filed a motion to dismiss Respon- dent Hovey and Respondent CLA applications for attorney’s fees and expenses on June 29, 1999. By letter dated July 14, 1999, Respondent Hovey filed an opposition to the comments filed by the IBEW. On July 15, 1999, Respondent CLA filed an opposition to the General Counsel’s motion to dismiss and on July 19, 1999, Respondent Hovey also filed an opposition to the General Counsel’s motion to dismiss. 1 At the commencement of the hearing, the General Counsel amended the complaint to remove from the affirmative action section the requirement for reinstatement of Gregory Crawford. Accordingly, I approved a non-Board settlement resolving the issues surrounding the termination of Crawford. Additionally, I approved an informal Board settlement with the posting of a notice regarding the independent viola- tions of Sec. 8(a)(1) of the Act alleged in par. 9 of the complaint. 330 NLRB No. 76 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 512 A. Propriety of an Award EAJA, as applied through Section 102.143 of the Board’s Rules and Regulations, provides that a “respondent in an adver- sary adjudication who prevails in the proceeding, or in a sig- nificant and discrete substantive portion of that proceeding” and who meets certain eligibility requirements relating to net worth, corporate organization, number of employees, etc., is eligible to seek reimbursement for certain expenses incurred in connection with that proceeding. Section 102.144 states that a reimbursement of such expenses will be awarded “unless the position of the General Counsel over which the party has pre- vailed was substantially justified.” To meet this burden, the General Counsel must establish that he was substantially justi- fied at each stage of the proceeding, i.e., at the time of the issu- ance of the complaint, taking the matter through hearing, and in filing exceptions to the judge’s decision. An examination of the circumstances and evidence available to the General Coun- sel at these junctures is required in order to determine whether the General Counsel has carried his burden. In order to determine whether the General Counsel has satis- fied this test, it is necessary first to identify what constitutes substantial justification. The Board has stated that substantial justification does not mean substantial probability of prevailing on the merits,2 and that it is not intended to deter the agency from bringing forward close questions or new theories of the law.3 The Supreme Court has defined the phrase “substantial justification” under EAJA as “justified to a degree that could satisfy a reasonable person” or having a “reasonable basis both in law and fact.” Pierce v. Underwood, 487 U.S. 552, 565 (1988). Thus in weighing the unique circumstances of each case, a standard of reasonableness will apply. B. The Collective-Bargaining Agreement The Board has held that an employer cannot recognize a un- ion as the exclusive collective-bargaining representative of its employees by executing a 9(a) agreement without a showing that the union enjoys majority support. John Deklewa & Sons, 282 NLRB 1375 (1987), enfd. sub. nom. Iron Workers Local 3 v. NLRB, 843 F.2d 770 (3d Cir. 1988). In executing the subject collective-bargaining agreement on August 13, 1997, the parties agreed to a recognition clause in article I of the agreement that provides: Subsequent to proof having been submitted to the Employer by the Union that the majority of his employees are members of the Union, the Employer recognizes the Union as the sole bargaining representative of his employees, exclusive of of- fice help, superintendents and foremen having authority to hire and discharge or to effectively recommend such action, in all matters pertaining to their employment and working condi- tions. The language in the recognition clause is not unlike the lan- guage found by the Board in Goodless Electric Co., 321 NLRB 64 (1996), enfd. denied 124 F.3d 322 (1st Cir. 1997), Decora- tive Floors, Inc., 315 NLRB 188 (1984), and Golden West Electric, 307 NLRB 1494 (1992), that establishes a 9(a) bar- gaining relationship. The General Counsel, before the issuance of the complaint, was in possession of a sworn affidavit signed 2 Jim’s Big M, 266 NLRB 665 (1983). 3 Laborers Funds of Northern California, 302 NLRB 1031 (1991); Craig & Hamilton Meat Co., 276 NLRB 974 (1985). on October 9, 1997, by CLA Representative Michael Koppenol. In paragraph 8 of the affidavit, Koppenol states that On or about August 10, 1997, I received in the mail a full con- tract draft from Masud, which I read over and signed on Au- gust 11, 1997. I noticed that Masud had included 9(a) recog- nition language, although we had talked about an 8(f) con- tract. As of August 11, 1997, I had not yet met any of the bargaining unit employees of Hovey, and I had no evidence of majority support for CLA from those employees. I previously found, after hearing the testimony of Hovey and CLA witnesses, that the parties’ August 13, 1997 collective- bargaining agreement was entered into and maintained under Section 8(f) of the Act and remained an 8(f) agreement until October 16, 1997, when it was converted to a 9(a) agreement. I now conclude, however, based on the above evidence in the possession of the General Counsel before the complaint issued that it was not unreasonable for him to have determined that the recognition clause in the parties’ agreement contained 9(a) language. Accordingly, I find that when the General Counsel issued the complaint its position was “substantially justified” concerning the 9(a) language in the parties’ agreement. Thus, it was reasonable for the General Counsel to have alleged in paragraphs 13 and 14 of the complaint that Respondent Hovey granted recognition premised on Section 9(a) of the Act to Re- spondent CLA at a time that Respondent CLA did not represent a majority of employees in the unit and was not the lawfully recognized exclusive collective-bargaining representative of Hovey’s employees C. The Union-Security Clause The parties’ agreement at article II, section 2, provides that: Each employee covered by this Agreement who is not a full member of the Union on the effective date of this Agreement, has the right to a “grace period” of twenty-nine (29) days in which to choose his/her status. It is undisputed that the parties’ agreement was implemented with retroactive effect so the effective date was April 1, 1997. The Board has held that an agreement that permits employ- ees less than 30 days to join is invalid and unenforceable. Ned West, Inc., 276 NLRB 32 (1985). I previously found that the parties’ agreement was made ret- roactive to April 1, 1997, solely to permit Hovey to make a lump-sum contribution to the pension plan for each employee based on the hours worked from April 1 to June 30, 1997. I now find, however, that it was not unreasonable for the General Counsel to have concluded at the issuance of the complaint that the union-security clause shortened the agreed-on grace period required under the agreement. In this regard, since the General Counsel was relying on the August 13, 1997 execution date to commence the time for employees to fulfill their obligations to the CLA, it had a reasonable basis to conclude that the union- security clause did not provide the full grace period to employ- ees. Indeed, the General Counsel’s investigation established that union dues and initiation fees were withheld on August 30, 1997, only 17 days after the August 13, 1997 execution date of the parties’ agreement, a period well in advance of the 30 days that was provided to employees in the parties’ agreement.4 4 As found above, the General Counsel was “substantially justified” in concluding that the parties’ collective-bargaining agreement was premised on Sec. 9(a) of the Act. HOVEY ELECTRIC, INC. 513 Under these circumstances, I find that the General Counsel was “substantially justified” in issuing the complaint and in- cluding paragraphs 11 through 14 therein. In this regard, Re- spondent CLA received aid, assistance, and support from Re- spondent Hovey, notwithstanding that it did not represent an uncoerced majority of Hovey’s employees. D. The 8(a)(1), (2), and (3) Allegations of the Complaint The General Counsel asserts in its motion to dismiss that at the issuance of the complaint it had a reasonable basis for con- cluding that Supervisor Jeff Willi told employees that Hovey would pay extra wages to employees to cover CLA union dues and initiation fees. Moreover, during the investigation of the subject charges, two employees, Noll Coffinger and Robert Klein, gave affidavits as to their account of these statements and testified at trial to making the statements. The General Counsel concludes that these statements establish that Hovey was providing unlawful assistance to the CLA. The General Counsel further argues that at the issuance of the complaint it had a reasonable basis for concluding that em- ployees who had engaged in union activity were discriminato- rily coerced and interrogated by the Employer, and that one employee was terminated to discourage employees from engag- ing in concerted activities, in violation of Section 8(a)(1) and (3) of the Act. While the General Counsel acknowledges that the majority of the testimony to support these allegations was excluded from the hearing, because of independent settlement agreements, Hovey Electric, Inc., supra, fn. 2, it now wants to bootstrap that testimony to support its arguments that it was “substantially justified” in pursuing those allegations in the complaint.5 First, I find that the General Counsel did not have a reason- able basis to pursue the unlawful assistance allegation because the complaint did not allege that the statements attributed to Willi violated the Act.6 Second, as it relates to the 8(a)(1) and (3) allegations, the Board affirmed my determination to exclude any testimony regarding the complaint allegations referenced in footnote 2 of my decision.7 5 The General Counsel concedes that offers of proof were made at the trial, which I rejected, as not being relevant to the nature of the parties’ collective-bargaining relationship. It should be further noted that the General Counsel did not file an appeal to my approval of either settlement agreement under Sec.102.26 of the Board’s Rules and Regu- lations. Likewise, it is noteworthy that the alleged 8(a)(1) and (3) conduct alleged in pars. 9 and 15 of the complaint, all took place at a time after the execution of the 8(f) agreement on August 13, 1997. 6 See fn. 2 of the Board’s Hovey Electric, Inc. decision. 7 See fn. 1 of the Board’s Hovey Electric, Inc. decision. Under these circumstances, I find that the General Counsel is precluded from attempting to use any evidence or testimony from the settlement agreements to now support its arguments that at the issuance of the complaint it had a reasonable basis to proceed on the 8(a)(1) and (3) allegations. Likewise, I find that since the General Counsel did not allege the statements attrib- uted to Willi violated the Act, it cannot now use such evidence to support the unlawful assistance argument made in its posthearing brief. In regard to the Section 8(a)(1) and (3) alle- gations, the settlement agreements removed those allegations from the complaint and the General Counsel cannot use those allegations to now attempt to argue that the original complaint allegations were justified. CONCLUSIONS OF LAW 1. On October 28, 1997, the date on which the complaint in the underlying unfair labor practice proceeding was issued, Hovey Electric Inc., was a corporation with fewer than 500 employees and a net worth of less than $7 million. 2. Hovey and CLA prevailed in a significant and discrete substantive portion of the underlying unfair labor practice pro- ceeding, which was an adversary adjudication. 3. The General Counsel’s position in issuing the subject complaint was “substantially justified.” On these findings of fact and conclusions of law and on the entire record, I issue the following recommended8 ORDER The General Counsel’s motion to dismiss Hovey’s and CLA’s applications for an award of attorney’s fees and ex- penses under the Equal Access to Justice Act is granted. There- fore, the applications are dismissed. 8 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.