Carthage Heating & Sheet Metal Co.

120 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Carthage Heating & Sheet Metal Co. and Local Union No. 36, Sheet Metal Workers Interna- tional Association, AFL-CIO. Case 17-CA- 11741(E) 7 December 1984 SUPPLEMENTAL DECISION AND ORDER BY MEMBERS ZIMMERMAN, HUNTER, AND DENNIS On 25 June 1984 Administrative Law Judge Ben- jamin Schlesinger issued the attached supplemental decision. Applicant Carthage Heating & Sheet Metal Co. filed exceptions and a supporting brief. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the supplemental deci- sion and the record in light of the exceptions and brief and has decided to affirm the judge's rulings, findings, and conclusions' and to adopt the recom- mended Order. ORDER It is ordered that the application of the Appli- cant Carthage Heating & Sheet Metal Co., Carth- age, Missouri, for an award under the Equal Access to Justice Act be dismissed and that the Applicant's motion for a protective order prohibit- ing public disclosure of its financial statement be granted. ' Member Dennis does not rely on the judge's citation to the unpub- lished judge's decision in Capitol Boiler Works, JD-179-83 SUPPLEMENTAL DECISION ON APPLICATION FOR AWARD OF ATTORNEYS FEES AND EXPENSES BENJAMIN SCHLESINGER, Administrative Law Judge. On July 25, 1983,' Local Union No. 36, Sheet Metal Workers, International Association, AFL-CIO (the Union) filed an unfair labor practice charge alleging that Carthage Heating & Sheet Metal Co. (the Applicant) had violated certain provisions of the National Labor Rela- tions Act (the Act). On September 8, the Regional Di- rector for Region 17 issued a complaint, alleging that the Applicant failed and refused to bargain collectively with the Union in violation of Section 8(a)(1) and (5) and Sec- tion 8(d) of the Act. A hearing was scheduled to take place on October 17. However, on October 13, the Re- gional Director issued an order dismissing the complaint, withdrawing the notice of hearing, and closing the pro- ceeding. All dates refer to the year 1983, unless otherwise stated On November 14, the Applicant filed an application for award of fees under the Equal Access to Justice Act, Public Law 96-481, 94 Stat: 2325 (the EAJA) and Sec- tion 102.143 of the Board's Rules and Regulations and an application for permission to furnish its financial state- ment in a sealed envelope as confidential financial infor- mation. By order of the-Board, dated November 18, the application was referred to the Chief Administrative Law Judge for appropriate action, and by order dated May 23, 1984, the application was assigned , to me. On December 1, 1983, General Counsel moved to dis- miss the application on three grounds: (1) the Applicant is not a prevailing party within the meaning of 5 U S.C.A. § 504(a)(1) of the EAJA; 2 (2) special circum- stances in this proceeding make an award unjust,' and (3) the Applicant failed to provide an itemized statement for services' incurred solely in connection with the in- stant unfair labor practice complaint proceeding In Section 202(a) of the EAJA, the Congress fOund that certain individuals, partnerships, corporations, and labor and other organizations may be deterred from seek- ing review of, or defending against, unreasonable gov- ernmental action because of the expense involved in se- curing the vindication of their rights in civil actions and in administrative proceedings Thus, Congress expressed in Section 202(b) that it was the purpose of the EAJA to diminish the deterrent effect of seeking review of or de- fending against governmental action by providing , in specified situations for an award of attorney's fees, expert witness fees, and other costs against the United States. The Committee on Small Business ' in its report, H. Rep. 96-1005, part 1, 96th Cong. 2d Session, at page 5, noted that the legislation was intended to respond to a chronic problem small business owners have in contest- ing or challenging the unreasonable exercise of govern- mental authority because of the time and expense re- quired to challenge the vast resources of the Federal Gbveinment. The report noted: "It is expected that this bill will cause agencies to be more deliberate in their reg- ulatory activity" Furthermore, the committee noted at page 7: In cases involving Government action, small business does not have the resources to defend itself _against unjustified claims. FUrther, the costs of vin- dicatkin routinely 'exceed the amounts at stake. Lastly; the Government does not have the econom- ic' incentive or disincentive to closely evaluate the reasonableness of its case before proceeding. For these reasons it appears that the American Rule [that each party must bear his/her own cost of lin- •gation] is inappropriate in actions involving the Government and individuals or small business. 2 Sec 504(a)(1) provides An agency that conducts an adversary adjudication shall award, to a prevailing party other than the United States, fees and other ex- penses Incurred by that party in connection with that proceeding unless the adjudicative officer of the agency finds that the position of the agency as party to the proceeding was substantially justified or that special circumstances make an award unjust 3 Ibicl 273 NLRB No. 22 CARTHAGE HEATING CO. 121 And at page 8, the committee wrote: It must be noted that the real aim of this legisla non is not to spend great sums to pay the costs of fighting unwarranted Federal action. Rather, it is intended that the act will force the Federal depart- ments and agencies to substantially improve the quality of their enforcement and other proceedings. But let there be no mistake, your committee clearly intends that where a small business or individual prevails against the Government either in toto or in substance, reasonable costs and fees shall be paid to him unless the Government can show that its action was substantially justified. Thus, the essence of the EAJA . is not only to reim- burse those who have been taken advantage of because of the greater resources, and expertise of the United States but also to deter the United States from taking ad- vantage of small business and other prganizations by en- suring that the Government carefully reviews and evalu- ates those matters ,which it ultimately. seeks to litigate. The Act provides that any person is entitled to file a charge alleging-the commission of unfair labor practices. Upon filing, the General Counsel must conduct an inves- tigation to ascertain whether a 'complaint should issue. In accord with the General Counsel's fixed procedures, both the charging and the charged party are entitled to submit evidence in ,support of their respective positions, and the General Counsel will frequently take investiga- tory affidavits from witnesses who may be helpful in re- solving,factual disputes Only when the .General Counsel is satisfied that there is reasonable cause, to believe that a violation has occurred will a complaint issue. But, before a complaint issues, the charged ,, party will be given a final opportunity, to avoid a formal .proceeding by enter- ing into a settlement agreeinent. The Applicant seeks to be reimbursed for 30.95 hours of work, but its , services total 35 60' hours,4 of which 14.50 hours were performed prior to September 8, the date the complaint. issued. Because no adversary pro- ceeding had commenced prior to that date, these could not be allowed. As stated above, the purpose of the EAJA is to prevent governmental abuse . of its power by commencing legal proceedings without justification while permitting the Government' to analyze its claim to ensure that there is substantial justification for it. The Applicant, in effect, seeks partial expenses solely because the General Counsel was doing what the Act entrusted him and required him to do. Under no reading of the EAJA can such expenses be justified. In addition, the Applicant's expenses appear to include services related to its Federal court action and the Union's counterclaims, discussed below, as , well as services rendered in the prep- aration of a letter citing legal authorities why the unfair labor practices complaint should not have issued, which letter arguably should have been prepared and filed prior to the issuance of the complaint If the sole issue on this motion were the validity of the Applicant's specification 4 Affidavit of Donald W Jones, dated November 10, 1983 Additional- ly, the Applicant seeks expenses for the preparation and prosecution of its EAJA application of services rendered, I would grant the General, Coun- sel's motion to dismiss, permitting the Applicant to amend its application to set forth only those legal serv- ices rendered in connection with the unfair ,labor prac- tice proceeding. However, I conclude that the Applicant has made no showing that it is the prevailing party in this proceeding and that the General Counsel's motion has merit. 5 The unfair labor practice complaint alleged that the Appli- cant violated Section 8(a)(5) and (1) and Section 8(d) of the Act by failing since about January 26, 1983, to comply with two collective-bargaining agreements which required the Applicant to make payment to vari- ous fringe benefit funds, including the Union's and its In- ternational's industry funds, on behalf of various employ- ees who were employed within the units represented by the Union. The complaint alleged that the Applicant did riot make contributions on behalf of its employees who were not members of the Union. The Applicant's answer denied the substantive allega- tions of the complaint and further contended that the complaint should be dismissed because . (1) Since Febru- ary, the Union and the employees engaged in a strike which constituted a substantial and material breach justi- fying the Applicant in rescinding the agreement, a recis- sion in which the Union acquiesced, and the Applicant was thereby released from any further .obligations under any agreement since February; (2) all employees from whom the Applicant failed to make contributions were expressly exempted from coverage pursuant to an agree- ment made about April 19, 1982, between the Applicant and the Union's agent, (3) in the event that neither item (1) or (2) applies, then the Applicant had . no duty to bar- gain in good faith with the Union since February, be, cause the strike was in violation and a repudiation of the collective-bargaining agreement; (4) the payment of con- tributions was a nonmandatory subject of bargaining be- cause the Applicant hUcl no duty to bargain in good faith with the Union since February, because the strike was in violation and a repudiation of the collective-bargaining agreement; (4) the payment of contributions was a non- mandatory subject of bargaining because -the Applicant had no authority or control or right to, participate in the selection of employer trustees, a violation of Section 302 of the Act; (5) similarly, contributions to the industry promotion funds are not mandatory subjects of bargain- ing under Section 8(a)(5) of the Act; and (6) the Union committed various acts constituting a refusal to bargain under Section 8(b)(3) of the Act and, therefore, it would be unfair and inequitable , to require the Applicant to make the contributions complained of or otherwise to be found in violation of the Act. The- litigation of this complaint and the answer, includ- ing the above defenses, were avoided by the settlement agreement entered into by the Applicant and the Union; but,: in order to understand that agreement, it is neces- sary to digress and refer to a civil action brought by the Applicant against the Union in , the Circuit Court of 5 The General Counsel's motion was suppcirted by documentary evi- dence, to which the Applicant took no exception I have treated this motion as one for summary judgment . 122 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Greene County, Missouri, which action was subsequently removed by the Union to - the United States District Court for the Western District of Missouri, bearing .Case 83-3505-CV-S-4. The Applicant's . petition alleged three causes of action First, it sought a declaratory judgment concerning -whether it was covered by a collective-bar- gaining agreement with the Union, whether it was bound by ' that agreement and to what extent; and whether it was bound by an arbitration award rendered pursuant to the agreement, -which award required the Applicant to pay $10,500 to -the Union's apprenticeship committee. The Applicant, contended that it was not bound by the agreement or, alternatively, was bound only as to three union members so long as they worked for the Appli- cant. Alternatively, the Applicant claimed that it was not bound by the agreement for essentially the same reasons expressed in its answer to the unfair labor practice com- plaint and that the arbitration award was illegal, void, and unenforceable because it constituted a penalty, con- trary to the common law of the State of -Missouri and Federal common law under Section 301 of the Act. Second, realleging all of the allegations of the first cause of action, it attacked various procedural irregularities, concerning the arbitration hearing and award and sought to set aside the -award. Third, it alleged that the Union, by its actions in fostering the strike and not giving proper ‘8(d) notices, should be required to pay $90,000 in damages. The date that this action was commenced is not clear, but it must have been after the award was rendered; and the award ,was mailed to the Applicant on July, 1. Fur- thermore, the Union filed two counterclaims to the Ap- plicant's _petition, but when and what they alleged is not in the record: What is in the record is the parties' z three- page settlement agreement, which is dated September 27 and which explains the desire of both parties Ito settle all claims, disputes, and matters which had been raised in the Board proceeding and the civil action,. including the Union's two counterclaims. From my perspective, not having heard any evidence involving any of the' plead- ings capsulized above -and not knowing what were the "gut" issues which separated the parties so grievously, .it is difficult to assess just what results the parties sought, what their thought processes were, where they felt them- selves vulnerable, and where they felt their strengths lay. Settlements are reached by sometimes strange and ob- scure methods. It is because the parties are so intimately familiar with the result they desire to reach that, tradi- tionally, both employers and unions have been averse to the notion of compulsory arbitration, feeling that no arbi- trator could conceivably fathom all issues with the depth of understanding that the parties possess. • . Perhaps that is the beauty of the collective-bargaining process, the promotion of which is _perhaps the Act's prime purpose and which the Act fosters to enable the parties to sit down- and thrash- out their problems face to face, frankly, and with open minds. More often than not, a settlement is the result of compromise. It has been said, but sadly I do not know to whom to attribute it, that the best settlement, is one in which neither side is happy. Certainly, there is "give and take," and the parties' set- tlement agreement herein is no exception. First, pursuant to the thought expressed in the pream- ble, all legal proceedings were to be withdrawn. The Union was to request from the arbitrators that their award against the Applicant be withdrawn. The settle- ment was conditioned on the arbitrators approving the withdrawal. The Applicant was to move for the dismis- sal of its civil action with prejudice, and the Union was to take similar action with respect to its counterclaims. The Union was to request withdrawal of its unfair labor practice charge, and the settlement was conditioned on the -Regional Director's approval of the withdrawal re- quest. Second, in addition to wiping clean the slate Of legal actions, the slate of past claims was also to be erased. No moneys were due from the -Applicant prior to September 27 and the collective-bargaining agreement was rescind- ed as of February 15. However, the subsisting union col- lective-bargaining agreements immediately became .bind= ing on the Applicant and the Applicant also 'agreed to be bound by the next union agreement- with the Southwest Missouri Chapter of the Sheet Metal Contractors' Asso- ciation, sight unseen, and agreed to continue the other of its agreements for the term of that Association agree- ment However, if the Applicant were not a member of the Association, it need not make' contributions to the in- dustry funds but would 'pay the amount in additional wages to the employees as would havelbeen due as con- tributions to the funds. The settlement also Provided other modifications to' the agreements, apparently to suit the Applicant's personal needs. • In sum, there is in the settlement agreement something for everyone. The - liability of the Applicant, if any, for money due from February to September 27 'was extin- guished. But new obligations, not in being in February, arose The remedy which the Board may have ordered was only partly extinguished, because, if it were found that the Applicant refused to bargain in good faith, it would have been ordered to do so It is true 'that certain specific relief was avoided, but the Union appears to have traded the past 7-month liability for a longer and more stable relationship. And that is what the -Act is all about. Faced with an all-ecompassing agreement which reconciled the parties' positions, little would be gained by the Regional Director by not acceding to the parties' wishes and refusing to approve the Union's' Withdrawal requested I might add that, had I been assigned to hear this unfair labor practice proceeding and been given set- tlement agreement, I would have without hesitation ap- proved the settlement, even unilaterally if the Regional Director had refused to go- along with it, because the purposes of the Act are clearly effectuated by the avoid- ance of a hearing and the accompanying long delays which, unfortunately, presently plague, this Agency, by the stabilization of industrial relations, and by the promo- tion of collective bargaining Clearly, then, the approval of the settlement and dis- missal of the complaint, for those who are aware of the workings and thinking of the Board, are not admissions that the Applicant was correct all along and that its de- fenses to the unfair labor practice complaint were legally justified. Rather, in the' broader view, the dismissal repre- CARTHAGE HEATING CO 123 sents not a decision on the merits but an encouragement of the process of private settlement of disputes through collective bargaining and without governmental interfer- ence The parties know far better what they want than even we administrator and administrative law judge sup- posedly expert in labor relations The Act can ask no more than the parties engage in collective bargaining, and the public's right and interest are protected and en- hanced by the Regional Director's final order dismissing the complaint In these circumstances, the Applicant cannot show that it prevailed in the underlying proceeding Rather, the Applicant acknowledged the Union as the represent- ative of its employees, agreed to be bound by the union agreements, and agreed to make contributions to the fringe benefit programs That is hardly consistent with its defense to the unfair labor practice complaining that the agreement was rescinded by the Union's unlawful acts Indeed, if the Applicant had prevailed, the complaint would have been dismissed No order would have issued requiring the Applicant to comply with the very same agreement which, by the settlement, has been resurrected and, certainly, no order would have issued requiring the Applicant to comply with the following agreement, which is not in esse It is true that the Applicant may have finally entered into an agreement protecting what it wanted m the first place, but not in this adjudicative pro- ceedmg This is not to say, either, that the Respondent lost and the Government won In the present posture, neither won nor lost, but clearly a prime purpose of the Act, the promotion of collective bargaining, was well served I 4. For the foregoing reasons, I conclude that the Appli- cant is not a prevailing Party- within the meaning of the EAJA See generally Capitol Boiler Works, JD-179-83 6 On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed7 ORDER 1 The application of Carthage Heating and Sheet Metal Co for attorneys' fees and expenses under the Equal Access to Justice Act is dismissed 2 The Applicant's motion for a protective order pro- hibiting public disclosure of its financial statement is granted 6 Because I find that the Applicant was not the prevailing party herein, there ls no need to dispose of the other ground of the General Counsel's motion to dismiss 7 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 I • . - 7