B. J. Heating & Air Conditioning, Inc.

B J HEATING, INC 329 B. J. Heating & Air Conditioning, Inc. and Sheet Metal Workers' Union, Local No. 162, Sheet Metal Workers' International Association, AFL-CIO. Case 20-CA-16621(E) 14 December 1984 SECOND SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS- ZIMMERMAN AND HUNTER On 13 July 1984 Administrative Law Judge Rus- sell L. Stevens issued the attached second supple- mental decision. The Applicant filed exceptions and a supporting brief and the General Counsel filed an answering brief in support of the judge's second supplemental decision. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. • The Board has considered the second supplemen- tal decision and the record in light of the excep- tions and briefs and has decided to affirm the judge's rulings, findings,' and conclusions 2 and to adopt the recommended Order. ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the application of the Appli- cant, B. J. Heating & Air Conditioning, Inc., Woodland, California, for an award under the Equal Access to Justice Act be dismissed. 1 The judge creates a misimpression by stating that "severance and subsequent dismissal of the case were based upon refusal of witnesses to appear at trial in answer to subpoena" Actually, the General Counsel was unsuccessful in his attempts to serve subpoenas, and therefore needed witnesses could not be produced at the trial 2 Because Member Hunter agrees that the General Counsel's handling of this case was substantially justified and that the Applicant is not enti- tled to an award of fees and expenses under the Equal Access to Justice Act, he finds It unnecessary to pass on the question of whether the Appli- cant has adequately demonstrated its eligibility for an award SUPPLEMENTAL DECISION (Equal Access to Justice Act) STATEMENT OF THE CASE RUSSELL L. STEVENS, Administrative Law Judge. This matter arose from preliminary proceedings and trial in three cases consolidated December 30, 1981, by the Re- gional Director for Region 20 of the National Labor Re- lations Board (the Board). Cases 20-CA-16449 and 20- CA-16451 involved Perrin Heating and Air Condition- ing, River City Mechanical and Sheet Metal Workers Union Local 162, Sheet Metal Workers International As- sociation, AFL-CIO (the Union). Case 20-CA-16621 in- volved B. J. Heating & Air Conditioning, Inc. (B.J.) and the Union. At trial on August 31, 1982, prior to taking any testimony and prior to introduction of substantive evidence, the General Counsel moved to sever Case 20- CA-16621 from the other two cases, and that motion was granted by the administrative law judge (judge). The complaint in Case 20-CA-16621 later wa'S with- drawn by the aforesaid Regional Director for Region 20. On October 12, 1982, B. J. Heating & Air Condition- ing, Inc. (Applicant) filed with the Board an application for award of fees and expenses under EAJA 1 and the Board's Rules and Regulations, 2 alleging entitlement to an award following withdrawal of the complaint against it. On October 18, 1982, the Board referred the applica- tion to , me for appropriate action. On November 10, 1982, counsel for the General Counsel moved to dismiss the application, and set forth nine separate reasons in support of the motion. The first- reason urged by the General Counsel was that the application was not timely filed. On November 29, 1982, Applicant filed a response to the General Counsel's motion to dismiss. On January 11, 1983, I issued a supplemental decision dismissing the application - for lack of jurisdiction because it had not been timely filed The remaining eight arguments' ad- vanced by the General Counsel were not reached by the dismissal, as they were procedural in nature. On January 26, 1984, the Board reversed the dismissal, held that the application lithely was filed, and remanded the matter to me for further action, including the issuance of a deci- sion on the merits of the application. On March 6, 1984, Applicant filed a Motion for Sum- mary Judgment, --and on March 8, 1984, the General Counsel filed a response opposing Applicant's motion. Because of several apparent discrepancies and uncertain- ties disclosed by the record, I held an informal confer- ence of the parties on April 16, 1984. Iri response to an Order dated April '16, 1984, issued following the confer- ence, Applicant stibmitted explanatory material on April 27, 1984, and General Counsel submitted a supplemental memorandum in support of the Motion to Dismiss, dated June 15, 1984 The Order of April 16, 1984, provided, inter aim, that Applicant had 15 days in which to submit its affidavit response to the General Counsel's supple- mentary support of its motion to dismiss the application. That response, dated July 3, 1984, was filed July 5, 1984 Findings and conclusions relative to Applicant's Motion for Summary Judgment, and to the General Counsel's eight arguments in support of the motion to dismiss, are discussed below. I. MOTION FOR SUMMARY JUDGMENT Applicant argues "By failing to file an answer to the application within 30 days of the Board's January 26, 1984 order denying the Motion to Dismiss, the General Counsel has consented to the award requested by the Applicant herein." That argument is based on an erroneous presumption. The Board's Order to this judge did not deny the Genet- 1 Equal Access to Justice Act, 5 USCA §504 2 Sec 102 143 et seq 273 NLRB No. 49 330 DECISIONS OF NATIONAL LABOR RELATIONS BOARD al Counsel's Motion to dismiss. The Order remanded "this proceeding," "for such further action as is required in light of our decision to accept as timely filed the ap- plication of' the Applicant, "including the issuance of a decision on the merits of the application." - Whether or not further proceedings ensue after the General Counsel's motion is disposed of is irrelevant to' the proceedings herein. The only matter presently before this judge is the General Counsel's argument relative to items 2 through 9, set forth in the motion to dismiss. Applicant's Motion for Summary Judgment is denied. II. ELIGIBILITY REQUIREMENTS The General Counsel argues that the application does not show the net ' worth of 'Applicant as of Dec&nber 30, 1981, the date of the complaint, as required by Section 102 143(d) of the -Board's rules; that the application does not shomi the number of Applicant's employee on De- cember 30, 1981, as required by Section 102 143(d) of the Board's' rules, and that the application does not include accompanying notes and the accOuntant's review report referred to in Applicant's financial statement, as required by Section 102.147 of the Board's rules. Section 102.144(6 provides that, for the purpose of eligibility, the net worth and number of employees' of an applicant shall be determined as of the date of the com- plaint in an unfair labor practice proceeding. The date of the complaint in this proceeding is December 30, 1981. Applicant's balance sheet, submitted with the applica- tion, is dated March 31, 1982, 3 months after the date of the complaint., Total assets are shown as $442,744. Total stockholders' equity is shown as $296,221 Total cost of property and equipment is shown as $295,256, with a net value of $90,412. Nothing in the record casts doubt on those figures, and no reason is shown for assuming that Applicant's net worth changed so .greatly (more than $4.5 million) within a 3-month period as to place Appli- cant outside the purview of EAJA So far as the number of employees is concerned, it is apparent from the complaint and Applicant's balance sheet that far fewer than the 500 criteria of EAJA were employed as of December 30, 1981. As of March 31, 1982, Applicant's cash totaled $60,063, and its total re- ceivables were $114,196. A weekly payroll for 500 em- ployees, even at the minimum wage of less than $4 per hour, would be far more than Applicant's total cash on hand Further,- the application states, as required by Sec- tion 102.147(a) of EAJA, that Applicant employed 12 full- and part-time employees as of October 7, 1982. There is nothing in the record to indicate or show a pre- cipitous drop in the employee complement within the 3- month period just prior to March 31, 1982, and the infer- ence is drawn that, as of December 30, 1981, Applicant had employees totaling substantially fewer than 500 If there was any doubt concerning Applicant's eligibility on the basis of net worth or number of employees, that doubt could be resolved pursuant to Board rules 3 There is no such doubt 3 Sec 102 147(f) and Sec 102 152(a) So far as failure of the application to include the ac- countant's notes and review report is concerned, there is no basis in the record to indicate that the balance sheet is not within the 'requirements of EAJA and Board rules. Section 102 147(0 provides, inter aim, that the financial statement "may be in any form convenient to the appli- cant that provides full disclosure of the applicant's and its affiliates' assets and liabilities and is sufficient to deter- mine whether the applicant qualifies under the standards in this part." The General Counsel's arguments relative to this issue are found to be without merit. III. FEES FOR WORK ON OTHER CASES The General Counsel argues that, the application "clearly contravenes the stated purposes of EAJA," in that it claims fees related to other litigation and matters between the parties In the application, Applicant claims fees for time de- voted 'to an RM petition, and to cases consolidated with Case 20-CA-16621 In its explanatory memorandum of April 27, 1984,4 Applicant's counsel states, inter alia: In view of the Region's consolidation of these cases, there were certain portions Of pre-trial prepa- ration that were common to all three 'respondents. Accordingly, all time spent on trial preparation ac- tivities that were in the common benefit of all three respondents were billed out at 1/3 the total costs for each respondent. For example, on August 9, 1983, 4 8 hours were spent reviewing case files and conducting research on legal defenses available to all three respondents For billing purposes, each re- spondent was billed 1/3 the total, or 1 6 hours This method of proration is reflected in the Documenta- tion of Fees and Expenses attached as Exhibit D to the Application for Award of Fees and Expenses Under the Equal Access to Justice Act in B J Heat- ing & Air Conditioning, Inc (Sheet Metal Workers Union, Local No. 162) in Case No. 20-CA-16621. It is also reflected in the Amended Documentation of Fees and Expenses—B.J Heating & Air Condi- tioning, attached hereto and incorporated herein by reference. All other expenses listed were attributa- ble solely to work on Case No 20-CA-16621 and were billed 100% to B.J. Heating & Air Condition- ing. It appears that Applicant is not claiming fees for time spent on other cases that were not related to Case 20- CA-16621 It is clear from affidavits submitted by the General Counsel (discussed infra), and from Applicant's explanation, that the claim by Applicant covers prorated time spent on matters that were common' to all three Re- spondents involved in the consolidated cases. This claim does not appear unreasonable or improper. The General 4 The General Counsel states in the supplemental memorandum of June 15 that Applicant's explanatory memorandum was not received by the General Counsel Applicant's letter of June 20, 1984. remedies that matter • B J HEATING, INC 331 Counsel's argument on this point is found to be without merit. IV. EXCESSIVE FEES As discussed during the informal conference of April 16, 1984, Exhibit D ,attached to the application for fees award was not clear and readily understandable. The re- vised claim submittea , by Applicant on April 27, 1984, which accords with Applicant's oral explanation of April 16, 1984, indicates that the amounts claimed are on the basis of $75 per hour as permitted by EAJA, or on lesser computations if actual billings to clients were at less than $75 per hour. The General Counsel's argument that fees in excess of $75 per. hour are claimed by Applicant is not supported by the record. V. FEES AND EXPENSES INCURRED PRIOR TO OCTOBER 1, 1981 Applicant claims $60 for time expended on RM mat- ters on August 14 and 26, 1981. The General Counsel submitted lengthy argument against such fees, contend- ing, "it is clear that Congress did not intend to apply the statute retroactively so as to include fees and expenses incurred before the effective date of the statute," while acknowledging that EAJA is silent so far as that 'proposi- tion is concerned. The General Counsel makes the same argument that was made in Tyler Business Services v NLRB. 5 There, the U.S. Court of Appeals for the Fourth Circuit stated, inter aim. The Act's test for recovery of attorney's fees is whether the case was pending on or after 'October 1, 1981, and not when the fees were incurred. The Supreme Court previously has approved fee awards for work performed before the effective date of the applicable authorizing statute. See Hutto v. Finney, 437 U.S. 678, 694 n. 23 (1978) (Civil Rights -Attor- ney's Fees Awards Act); Bradley v. School Board of the City of Richmond, 416 US 696 711-21. (1974) (Educational Acts Amendments of 1972). Because the statutes involved in ,those cases and the Equal Access to Justice Act address similar concerns, the rationale of Bradley and Hutto applies here. See Un- derwood v. Pierce, No. 79-1318-HP, slip op: at 7-8 (C D. Cal Mar. 25, 1982); Photo Data, Inc. v. Sawyer, 533 F Supp. 348, 351-52 (D D C 1982) The test, therefore, is whether or not the case for which Applicant claims fees and expenses, i.e., Case 20-CA- 16621, was pending as of October 1, 1981 It was not so pending—it was issued December 30, 1981, when it was consolidated with Cases 20-CA-16449 and 20-CA- 16451, neither of which involved Applicant. This argument by the General Counsel is meritorious, and the amount of $60, discussed above, is not eligible for an award under EAJA.6 5 iii LRRM 3001, 3003 (4th Cm 1982) 6 Moholland v Schweiker, 546 F Supp 383 (1982) , ,VI. FEES AND EXPENSES INCURRED PRIOR TO DECEMBER 30, 1981 Applicant claims fees and expenses totaling $668 in- curred prior to December 30, 1981, for preparing one letter concerning an RM petition and for conferences with B. J. Heating personnel and NLRB representatives. The General Counsel argues that "only fees and ex- penses that are incurred in 'adversary adjudication' are feaoverable, and that; under Section 102.143(a) of the Board's Rules and Regulations, "adversary adjudication" begins with the issuance of a complaint. The General Counsel's summary of pertinent portions of Board rules is correct The language -of the rules is plain. No fees or expenses incurred prior to issuance of a complaint are eligible for award The General Counsel is required by law to investigate all charges, and there is no basis on which to conclude that fees and expenses in- curred during the investigatory stage of the controversy were intended by Congress to be cornpensable. This argument by the General Counsel has merit, and the above-mentioned $668 portion of Applicant's claim is found not to be eligible for award.7 VII FEES AND EXPENSES INCURRED IN DRAFTING THE EAJA APPLICATION Applicant seeks an award of no less than $1576 for fees and expenses "according 'to proof incurred in the within application." General Counsel argues that no fees and expenses in- curred "after the adversary 'adjudication has been com- pleted" are eligible for award. . The General Counsel's position is considered incor- rect, since denial of such fees and expenses would have the effect of discouraging litigants who have established eligibility for an award from filing claims. 8 Claiming such an award, however, properly is for consideration only after an award has been made. The claim is not sub- ject to a motion to dismiss. As found below, General Counsel was justified in proceeding herein, and the appli- cation is found to be without merit. Therefore, this por- tion of the claim for .no more than $1576 is found to be an includable item in the total claim, but not eligible for an award because Applicant is not entitled to any of the fees and expenses set forth in the application VIII FAILURE TO SHOW HOW APPLICANT "PREVAILED" The General Counsel argues that "Respondent has failed to identify the Particulars in which it has prevailed and has failed to identify the positions of the General Counsel which were not substantially justified" This argument is without merit. The application de- votes approximately five of its pages, to a detailed review of the history of the case and, in another four pages states with considerable particularity the basis for See, for a summary of this Issue, Administrative Law Judge Shapiro's decision in Evergreen Lumber Co, JD-(SF)-108-83, adopted by the Board December 7, 1983, in the absence of exceptions 8 Tyler Business Services, supra 332 DECISIONS OF NATIONAL LABOR RELATIONS BOARD concluding that the case was initiated and pursued with- out "substantial justification." The issue of "substantial justification" is a separate matter, which is discussed below. SUBSTANTIAL JUSTIFICATION - It is noted at the outset, that this motion to dismiss raises a two-faceted issue One facet relates to the inves- tigative stage of the controversy; the other relates , to the litigation stage. The Government's position must he found to have been substantially justified at both stages, in order for the General Counsel to prevail in this motion.9 So far as the investigative stage is concerned, it is quite clear that the General Counsel proceeded in a 'rea- sonable manner. The investigation was exhaustive and detailed." Possible violations of the Act reasonably dis- closed by the investigation were not novel or unusual— they included several possible 8(a)(1) violations (interro- gations, circulation of unlawful petitions, and unlawful solicitation of employees) and 8(a)(5) violations (discon- tinuance of contractual contributions to trust funds). B.J.'s attorneys were present during much of the investi- gative stage (taking of affidavits), and during several ne- gotiations involved in the three consolidated cases There is no indication of any surprise on the part of, or of any advantage taken of, or of any false or misleading state- ments by investigators addressed to, B.J or its attorneys. There is no indication, however slight, that the General Counsel's attorneys or investigators were motivated by antagonism, dislike; or vindictiveness so far as B.J. or its representatives were concerned. Issuance of a complaint based on the investigation was reasonable and proper. So far as the litigation stage is concerned, there is no 'indication that the General Counsel's initial severance, and later dismissal, of the case against B.J. improperly was motivated or was . based on last-minute recognition that a prima facie case was out of grasp. Counsel for the General Counsel , represented at trial, and later in memo- randa, that severance and subsequent dismissal of the case against B.J. were based upon refusal of witnesses to appear at trial 'in answer to subpoena. A copy of the sub- poena for David Gladwill was submitted to the judge by 9 Moholland v Schweiker, supra '° The record Includes pretrial affidavits of B J s president and several of B J employees, as well as extensive documentary evidence such as letters and statements counsel for the General Counsel, pursuant to the judge's request for subpoena copies. Gladwill was a key witness for the General Counsel's case Without witnesses, a case could not be made Pretrial affidavits, of which there were many, cannot be used as substantive proof of viola- tions of the Act. If there had been no pretrial investiga- tion, subsequent failure to litigate-the issues possibly may have provided the predicate for an award. However, that is net this case. Possibly the General Counsel could have gone further,, and asked a U.S. district court to enforce the subpoenas. However, that would have involved lengthy and costly procedures, and it muk be assumed, in light of the General Counsel's generally reasonable ap- proach to the case, that good reason existed for abandon- ing further efforts . to get witnesses, whose affidavit evi- dence already had been obtained, to trial. There is no evidence that the General Counsel acted arbitrarily or improperly during the litigation stage of these proceed- ings. Applicant's principal argument is that, had the case gone to trial, it would have prevailed on the merits. That may be true, but it is beside the point. The question is whether or not the General Counsel substantially was justified in initiating action against B.J. and in pursuing that action to the point of trial As noted above, such justification is apparent The General Counsel's eviden- tiary support disintegrated through , no fault of his own, and that fact cannot now be used to negate the' justifica- tion that existed prior to that time Based on the foregoing, it is concluded that there was reasonable basis and substantial justification, both in law and in fact, for the General Counsel's pretrial and trial conduct. It will, therefore, be recommended that the ap- plication be denied. On these findings of fact and conclusions of law and on' the entire record, I issue the following recommend- ed" ORDER It is ordered that the application of B. J. Heating & Air Conditioning, Inc. for an award of fees and expenses under the Equal Access to Justice Act is denied. " 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