Noel Produce, Inc.

NOEL _PRODUCE 769 Noel Produce, be. rand General Teamsters Local No. 174, affiliated with International Brother- hood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. Case 19-CA-15720(E) 14 December 1984 SUPPLEMENTAL DECISION AND ORDER BY MEMBERS ZIMMERMAN, HUNTER, AND DENNIS . On 3 May 1984, Administrative Law Judge Wil- liam J Pannier III , issued the attached decision. The Applicant, Noel Produce, Inc., filed excep- tions and a supporting brief and the General Coun- sel filed a reply brief. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and briefs and has decided to affirm the judge's rulings, findings, and conclusions and to adopt the recommended Order. The judge correctly found that the Applicant is ineligible for an award of attorney fees under the Equal Access to Justice Act (EAJA) because the aggregate net worth of the Applicant and its parent company concededly exceeds $5 million„ 1 Appli- cant contends that we have exceeded our adminis- trative authority by adopting Section 102.143(g) of the Board's Rules and Regulations, which requires that the net worth of an applicant be consolidated with that of its affiliates in determining eligibility. Section 102.143(g) is merely an adoption of the rule recommended by the Administrative Confer- ence of the United States which received and con- sider6d comments on the validity of the rule. Al- though EAJA is silent on the matter, the require- ment implements the purpose of that Act, which sought to establish "financial criteria which limit the bill's application to those persons and small businesses for whom costs may be a deterrent to vindicating their rights." 2 Parties that meet the eli- gibility standard only because of technicalities of legal or corporate form, while having access to a large pool of resources from affiliated companies, do not fall within this group of intended benefici- aries. Moreover, in our attempt to ensure that the rule does not eliminate deserving applicants, Sec- tion 102.143(g) provides that in limited circum- stances net worth will not be consolidated where "such treatment would be unjust and contrary to In such circumstances, the 13orcl finds It unnecessary to pass on the judge's discussion of whether the General Counsel was "substantially jus- tified" in including an 8(a)(5) allegation in the complaint 2 HR Rep No 96-1418, at 15 (1980) the purposes of the Equal Access to Justice Act . . . in light of the actual relationship between the affiliated entities." The Respondent does not set forth any basis warranting a finding that applying the affiliation rule to it would be unjust and con- trary to the purposes of the Equal Access to Jus- tice Act. ORDER It is hereby ordered that the application of Noel Produce, Inc., Kent, Washington, for an award under the Equal Access to Justice Act be dis- missed. SUPPLEMENTAL DECISION (Equal Access to Justice Act) STATEMENT OF THE CASE WILLIAM J. PANNIER III, Administrative Law Judge. On January 20, .1984, 1 I issued a Decision in which I concluded that Applicant Noel Produce, Inc. had violat- ed Section 8(a)(1) of the National Labor Relations Act, 29 U.S.C. § 151 et seq. by having engaged in certain un- lawful conduct prior to March 31, but had not commit- ted certain other unlawful conduct alleged to have oc- curred between that date and May 5. Further, in the ab- sence of any credible evidence of objectionable conduct between those two dates, I concluded that there was no basis for'setting aside a second or rerun election conduct- ed on May 5 and, accordingly, no basis for considering whether or not a bargaining order would be warranted under Section 8(a)(5) of the Act, as was sought in the complaint. No exceptions were filed and the Board adopted my findings and conclusions. Thereafter, Applicant filed Respondent's "Application for Attorneys Fees, Costs and Expenses Pursuant to the Equal Access to Justice Act," based on the fact that it prevailed on that portion of the complaint that had al- leged a violation of Section 8(a)(5) of the Act. That ap- plication has been referred to me by the Board for ap- propriate action. 2 The General Counsel has filed an answer to the application for an award and a motion for judgment on the pleadings. While the General Counsel advances several arguments in support of its motion, it suffices to dispose of this matter, in its entirety, on the basis that Applicant does not satisfy at least one criterion to be eligible to receive such an award. I also grant the motion on the basis that the General Counsel's position with respect to the 8(a)(5) allegation was reasonable in law and fact, and that there had been substantial justifi- cation for including that allegation in the complaint. 2 Unless stated otherwise, all dates occurred in 1984 2 Referred also was a motion to withhold information from public dis- closure In light of my disposition infra, it is unnecessary to rule on that motion 273 NLRB No. 104 770 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Analysis The Board's Rules and Regulations Section 102.143(c)(5) recite that to be eligible for an award, an applicant that is a corporation, such as Applicant, must have a "net worth of not more than $5 million." Further, Section 102.143(g) of the Board's Rules and Regulations provides: The net worth . . of the applicant and all of its affiliates shall be aggregated to determine eligibility. Any individual, corporation, or other entity that di- rectly or indirectly controls or owns a majority of the voting shares or other interest of the applicant . . will be considered an affiliate for purposes of this part, unless such treatment would be unjust and contrary to the purposes of the Equal Access to Justice Act (94 Stat. 2325) in light of the actual re- lationship between the affiliated entities. In its application, Applicant states that Noel, Inc. is its parent company and, further, . . because Noel, Inc., as a corporate entity having a total net _worth which exceeds $5 million, does in fact control or own a majonty of the voting shares or other interest of the Applicant, the aggre- gate "affiliated" net worth of the Applicant is caused to exceed the corporate net worth eligibility requirement established by the NLRB Rules and Regulations . . . . Applicant sets forth no circumstances that would render application of the affiliate rule "unjust and contrary to the purposes .of the Equal Access to Justice Act" within the meaning of Section 102.143 (g) of the Board's Rules and Regulations. Instead, Applicant argues that this con- cept of affiliated corporate net worth is one that is con- trary to the provisions of the Equal Access to Justice Act, being no more than the product of "the Board's 'bunker' mentality." Whether or not the affiliate concept embodied in Rule 102.143(g) is the product of "bunker' mentality" is really not an issue that I am free to resolve. I am bound by Board law and certainly by the Board's Rules and Regu- lations. Therefore, as Applicant and its affiliate conced- edly have a net worth in excess of $5 million, I grant the General Counsel's motion on the ground that Applicant is not eligible, for that reason, to receive an award. Ordinarily, that conclusion would end all further dis- cussion. However, certain statements that have been made give rise to doubt concerning' whether there is a true understanding of the legal principles that governed the proper method of analyzing the 8(a)(5) issue present- ed in the 'underlying proceeding. While I am not obliged to do so, in the interest (PP clarifying the situation, and in view of the assertions made in conjunction with the affil- iate concept, it does seem that some benefit might be de- rived from an explanation of the method of analysis that would have ensued had I credited the testimony regard- ing statements purportedly made between March 31, when the first representation election was conducted, and May 5, when the second or rerun election was con- ducted. • As set forth in greater detail in my decision, On vari- ous occasions prior to March 31 Applicant:s ,general manager had made threats of closure if the employees se- lected a bargaining representative and, on one occasion, unlawfully had interrogated a job applicant concerning union sympathies. Also prior to March 31, Applicant's officials had promised wage increases and, further, had announced and granted a general wage ,increase, all in violation of Section 8(a)(1) of the Act. Following the filing of objections to the first election, based on Appli- cant's preelection conduct, that election was set aside pursuant to a stipulation of the parties. With regard to the alleged conduct between March 31 and the second or rerun election on May 5, by the time that the General Counsel and the Charging Party!- Petitioner had rested there was testimony that alp-proxi- mately a week after the first election, Applicant's general manager had convened a meeting of ethployees and had warned them "that if the place went union, that Noel would never agree to a contract with the union." 'More- over, there was testimony that on the day of the 'elec- tion, prior to its commencement, the general manager had told an employee, Keith A. Maunu, that if the em- ployees selected representation in the election, a contract would never be reached or ratified by Applicant and, further, that all wages would be frozen until a contract was reached. I did not credit this testimony. Yet, "the General Counsel cannot himself resolve credibility issues." Charles H McCauley Associates, 269 NLRB 791 (1984) Indeed, I did credit Maunu's testimony concern- ing an earlier conversation with the general manager and, based on the available information, there was no reason for the General Counsel to believe that Maunu's account of the later conversation was not worthy of belief. Applicant points out, in the application, that this testi- mony was not corroborated. But there was no way for there to be corroboration of Maunu's testimony, short of an admission by the general manager that he had made the statements on May 5 attributed to him by Maunu. For, according to Maunu, only the two Of them had been present during that conversation. True, only Gary Fisher was called to describe the general manager's pur- ported remarks at the general meeting with employees. But, as I stated expressly in my decision, I did not credit Fisher because "I was not impressed by [his],demeanor;" not because there was no corroboration for his account, although I pointed out that that was the fact. Had I be- lieved Fisher, corroboration of his testimony would -not have been necessary for me to conclude that the general manager had made the threat to the assembled employ- ees that day. See, e.g., C. P. & W. Printing Ink Co., 238 NLRB 1483 (1978). In addition, it is worth noting that this testimony by Fisher, and by Maunu s well, never was denied. Finally, in this area, the general manager had made threats to employees prior to March 31. The nature of those threats had differed from those attributed to him 'after March 31. Yet, his pre-March 31 willingness to resort to threats, to deter employees from selecting a ■ NOEL PRODUCE 771 bargaining representative,. tended to support the General Counsel's position that he likely would have continued making threats, even if of a different consequ'ence, prior to the rerun election. In sum, there is nothing either argued by Applicant or contained in the record of this proceeding that would controvert a conclusion that, by the time that the Gener- al Counsel and the Charging Party had rested, there was a substantial basis in fact for believing that Applicant had engaged in objectionable and unlawful conduct between the elections. Had Maunu and Fisher been credited, then analysis would have progressed to the issue of the effects of the general manager's statements upon the laboratory conditions for conducting a rerun election: Clearly, had Maunu and Fisher been credited, there would have been a reasonable basis in fact and law for contending that the second election should have been set aside. Fisher's testi- mony ,showed that all employees had been warned that no contract would be reached even if they did elect a bargaining representative and, inferentially, that it would be futile for them to exercise their statutory right to do so. Maunu's testimony showed that Applicant was not reluctant to repeat this threat and to reinforce it with a further threat: that employee wages would effectively be frozen until a contract was reached. True, had he been credited, Maunu's testimony showed no more than that the general manager's threat not to increase wages had been made to but a single em- ployee. Yet, it had been made against a background of pre-March 31 threats to several employees and, also, of pre-March 31 wage increases to all unit employees. Those wage increases served to demonstrate the "fist inside [Applicant's] velvet glove" NLRB v. Exchange Parts Co., 375 U.S. 405, 409 (1964). And, had Maunu been credible, it had been that fist that the general man- ager had unsheathed on May 5 by warning that Appli- cant would exercise its power over wages to freeze them, perhaps permanently, if the employees chose to elect a representative. Consequently, had the general manager made the remarks described by Maunu, those comments "were likely to be rapidly disseminated around a plant during the struggle of organization" Bausch & Lomb Optical Co. v NLRB, 217 F.2d 575, 576 (2d Cir 1954). In sum,. had the testimony of the General Counsel's witnesses been credited, there was a reasonable basis for concluding that the second or rerun election would have been set aside, since Applicant had been renewing its threatening statements during the period between elec- tions and those statements, particularly the threat de- scribed by Fisher, had been known to a substantial number of employees who were scheduled to vote in the second election. If, in fact, the second election had been set aside, analysis then would have proceeded to the question of whether a bargaining order should issue and, concomitantly, to the issue of whether it should be con- cluded that Applicant had violated Section 8(a)(5)' of the Act by having rejected the demand for recognition that had been tendered to it. Contrary to the implication in the application, the de- termination of whether to issue a bargaining order would not have been confined to unlawful conduct occurring between the two elections Rather, all of Applicant's conduct, from the very beginning of the organizing cam- paign, would have been evaluated in making that deter- mination. See, e g., NLRB v. Anchorage Times Publishing Co, 637 F.2d 1359, 1364 (9th Cir. 1981); Maxwell's Plum v. NLRB, 481 F 2d 75, 79 fn. 3 (2d Cir. 1973). Moreover; in doing so, a number of indicia would have been consid- ered the seriousness or gravity of the nature of the unfair labor practices committed, 3 the swiftness or sud- denness with which they were committed on learning of the existence of the organizing campaign, 4 the duration or period of time over which they were committed, 5 the number of employees affected by them, 6 the level of su- pervision which had committed them, 7 and the likeli- hood of their repetition should another rerun election be directed.5 Here, as set forth in greater detail in my decision, Ap- plicant commenced committing unfair labor practices even before the representation petition' had been filed. It then continued committing them over the entire course of the period prior to the first election. Had Maunu been fully credited, his testimony concerning the May 5 com- ments by the general manager would have shown that Applicant had continued committing unfair labor prac- tices up to the very day of the second election. All unit employees had received wage increases and, had Fisher been credited, all of them directly had heard the threat that it 'would be futile to exercise their right to elect a bargaining representative as no contract with it would ever be reached by Applicant. Moreover, a number of employees had been subjected, on an individual basis, to separate unlawful remark's by Applicant. Most of the unfair labor practices had been committed by Applicant's general manager. However, the an- nouncement of wage increases, as well as apparently the decision to grant them, had been made by its owner. Among the unfair labor practices committed were sever- al threats to close if the employees selected a bargaining representative. Such threats are of the type to which em- ployees "are particularly sensitive," NLRB v. Gissel Packing, supra, 395 U.S. at 619, and "are not easily erased from the minds of employees" Tr-City Paving, 205 NLRB 174 (1973) Moreover, against a background of those types of threats and of illegally granted wage in- creases, threats that wage increases will no longer be granted until a contract is reached, when coupled with threats never to reach or ratify a contract if a bargaining representative is selected, are equally likely to dissipate majority support and to linger in employees' memories. Finally, had Maunu and Fisher been credited and had 3 See, e g, NLRB v Jamaica Towing, 632 F 2d 208, 212-213 (2d Cif 1980), NLRB v Gissel Packing Go, 395 U S 575 (1969) • 4 See, e g, Wright Plastic Products, 247 NLRB 635 (1980) 5 See, e g, Rapid Mfg Go, 239 NLRB 465. 467 (1978), enf dented 612 F 2d 144 (3d Or 1979), Warehouse Groceries Management, 254 NLRB 252, 256 (1981) 6 See, e g, NLRB v Henry Colder Go, 447 F 2d 629, 631 (7th Or 1971), Hedstrom Co v NLRB, 629 F 2d 305, 312 (3d Or 1980) 7 See, e g, Midland Ross Corp v NLRB, 617 F 2d 977, 987 (3d Or 1980), Wright Plastic Products, supra 8 See, e g, Apple Tree Chevrolet, 251 NLRB 666, 669 (1980), Chandler Motors, 236 NLRB 1565, 1567 (1978) 772 DECISIONS OF NATIONAL LABOR ,RELATIONS BOARD the second election been set aside, then the likelihood of conducting yet a third election with even some assurance that , Applicant would not once more interfere . with the laboratory conditions for conducting it becomes quite remote. In sum, operating of necessity from the premise that his witnesses would be credited, Charles H McCauley Associates, supra, and had the second election been set aside, there was ample justification for the General Counsel to assert that a bargaining order should be sought and "his position [in that regard] was reasonable in law and fact." Board's Rules and Regulations, Section 102.144(a). However, before departing this subject, one final point is worthy of note - As I pointed out in my decision, the alleged violation of Section 8(a)(5) of the Act and the .concomitant bar- gaining order remedy were sought on behalf of a joint representative whereas the authorization cards designat- ed only a single labor organization. Nevertheless, as I noted in footnote 8 of my decision, while there is at least one Board decision concluding that cards authorizing a single representative will not support a bargaining order issued on behalf of a joint representative, there is also at least one other Board decision, issued within a 3-week period of the above-referred to one, that gives rise to an argument that the Board might allow single representa- tive cards to support a bargaining order for a different entity in certain circumstances Neither decision sets meaningful guidelines for its application, cf.. World Wide Press, 242 NLRB 346, 365 (1979), with the result that it is not possible to conclude that the General Counsel acted without substantial basis in pressing the issue for possible clarification. Moreover, even if the Board would not have been willing to issue a bargaining order on behalf of the joint representative, a bargaining order still could have issued on behalf of the labor organization designated on the cards, notwithstanding the absence, of a demand for recognition made solely on its behalf See, e.g , Grandee Beer Distributors, 247 NLRB 1280 fn. 5 (1980). .Therefore, "the presence or absence of a prima facie case is not determinative of whether or not an applicant is entitled to an EAJA award. " Jim's Big M, 266 NLRB 665 fn. 1 (1983). The General Counsel had a reasonable basis in fact for arguing that its witnesses should be cred- ited Had Fisher and Mauna been credited fully, the General Counsel had a reasonable basis in fact. and law for asserting that the second or rerun election of May 5 should have been set aside in the circumstances. Had that election been .set aside, the General Counsel had a rea- sonable basis in fact and law for contending that a bar- gaining order should issue. ORDER It is ordered that Respondent's aplication for attorneys fees, costs, and expenses pursuant to the Equal Access to Justice Act be, and it is, dismissed. s