Kut-Kwick Corp.

838 DECIS/ONS OF NATIONAL LABOR RELATIONS BOARD Kut-Kwick Corporation and Mark B. McCullum. Case 10-CA-19484(E) 14 December 1984 DECISION AND ORDER BY MEMBERS ZIMMERMAN, HUNTER, AND - DENNIS On 4 June 1984 Administrative Law Judge Hutton S. Brandon issued the attached supplemen- tal decision on application for attorney's fees and expenses under the Equal Access to Justice Act (EAJA). The Applicant, Kut-Kwick Corporation, 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 decision 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 recommended Order. ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Applicant, Kut-Kwick Corporation, Brunswick, Georgia, for an award under the Equal Access to Justice Act is dismissed. The Applicant excepts to the judge's failure to specifically rule on its "Request for Non-Production of Certain Information" On 13 March 1984 the General Counsel filed a motion to dismiss based in part on the Applicant's failure to furnish the net worth of the individual majority shareholder of its parent corporation On 23 March 1984 the Applicant, in response to the motion, contended that the contested information need not be produced as it was Irrelevant to its application and in contraven- tion of the Board's Rules and Regulations On 28 March 1984 the judge denied the General Counsel's motion to dismiss but specifically directed the Applicant to provide the contested information Rather than provide the Information, however, the Appli- cant filed with the judge a "Request for Non-Production of Certain In- formation," reiterating its contention that It should not be required to produce the information The judge dismissed the application on the basis of the filing deficiency without ruling on the Applicant's motion We find that the judge committed no prejudicial error in dismissing the application before ruling on the Applicant's motion The judge on 28 March 1984 unequivocally directed the Applicant to submit the contested information after considering the Applicant's contention that it was not required to do so The judge was not required to rule on this Issue a second time before issuing his decision It is the Applicant's burden to comply with the EAJA filing requirements, and its attempt to unduly delay this proceeding contravenes the Board policy of disposing of fee proceedings with dispatch and minimum cost SUPPLEMENTAL DECISION AND ORDER (Equal Access to Justice Act) HUTTON S. BRANDON, Administrative Law Judge. This is a supplemental proceeding under the Equal Access to Justice Act (EAJA) (Pub. L. 96-481; 94 Stat, 2325; 5 U.S.C. § 504), and Section 102.143 et seq. of the Board's Rules and Regulations. Kut-Kwick Corporation, herein called Applicant, filed on February 13, 1984, an application for an award of fees and expenses under EAJA seeking a total of $12,487.41 for cost in litigating a complaint issued in the underlying case on September 16, 1983. I issued a deci- sion on January 12 (JD-(At1)-1-84) in which I recom- mended that the Board issue an order dismissing the complaint. No exceptions were filed to the decision and the Board, on February 15, issued an order adopting the decision. By order dated February 23, the Board referred the application to me for appropriate action.2 The General Counsel, on March 13, pursuant to Sec- tion 102 15(a) of the Board's Rules, filed a motion to dis- miss the application on the grounds that the application: (1) failed to set forth sufficient information to establish that Applicant meets all requirements of eligibility be- cause it failed to specify the absence of affiliates other than those named and otherwise failed to establish the net worth of all affiliates; (2) failed to specify the catego- ry and Work locations of employees as required by Sec- tions 102.147(a) and 102.143(g); (3) failed to fully docu- ment the fees and expenses for which an award was sought; (4) improperly sought fees and expenses incurred prior to issuance of the complaint in the case; and (5) im- properly included fees and expenses incurred in the filing of the application. The General Counsel asserted as fur- ther grounds for dismissal that the General Counsel's po- sition in the underlying case was "substantially justified" On March 23, Applicant filed a reply to the General Counsel's motion supplying in part information relative to the alleged deficiencies claimed by the General Coun- sel and expressing a willingness to provide even further information if directed by me. On the same date, Appli- cant also filed a motion to supplement its application for fees adding $1995 for further expenses. By Order dated March 28, I granted the General Counsel's motion to dismiss to the extent of dismissing Applicant's claim for precomplaint legal fees. I denied the General Counsel's motion to dismiss in all other re- pects. By the same order, I granted Applicant's unop- posed nonconfidential motion to withhold information from public disclosure and Applicant's motion to supple- ment its application. The same order directed Applicant to supply within 14 days of the order further information with respect to its net worth to specifically include the net worth of the majority stockowner of Applicant's parent company, Torco, Inc. (Torco). Finally, the order All dates are in 1984 unless otherwise stated 2 The application was filed subsequent to the expiration of the period for filing exceptions under the Board's Rules, but 2 days prior to the date of the Board's Order adopted, in the absence of exceptions, the recom- mended Order in the initial decision In her motion to dismiss, the Gener- al Counsel noted the filing and order dates and stated she assumed the Board considered the filing as timely However, in her answer, the Gen- eral Counsel attacks the application as not filed in accordance with the Board's Rules at 20 CFR 102 "issued pursuant to 5 U S C 504(c)(i) " It is not clear from the memorandum accompanying her answer whether the General Counsel now contends the application was prematurely filed In any event, the Board having accepted the original filing ',nor to its entry of a final order, It must have considered it timely filed At that point in time the entry of the order was simply a ministerial act Accord- ingly, and in the absence of any showing of prejudice by the General Counsel, I conclude the application herein was not untimely filed 273 NLRB No. 112 KUT-KWICK CORP 839 - sua sponte extended the time for the General Counsel to file an answer in the matter to 30 days following service by Applicant on the General Counsel of the information required from the Applicant under the order. . • On April 13, pursuant to the March 28 order, Appli- cant submitted additional information, except that Appli- cant took the position that the personal net worth of the majority stockholder of Applicant's parent company was "unrelated to the two companies." Further, Applicant re- lated that such information regarding the net worth of the majority stockholder was not available to it. . On May 11, the General Counsel filed her answer con- tending, inter aim, that Applicant was ineligible inasmuch as Applicant had not demonstrated that its net worth, in- cluding the personal net worth of the majority stock- owner of Applicant's parent corporation, fell within the standards set by the BAJA. I concur in the General Counsel's position as set forth below and find it-unneces- sary to treat the other issues raised in the General Coun- sel's answer.3 On May 11, the General Counsel filed her answer con- tending, inter alia, that Applicant was ineligible inasmuch as Applicant had not demonstrated that its net worth, in- cluding the personal net worth of the majority stock- owner of Applicant's parent .corporation, fell within the standards set by the EAJA I concur in the General Counsel's position as set forth below and find it unneces- sary to treat the other issues raised in the General Coun- sel's answer.3 Section 102.143(g) provides. The net worth and number of employees of the ap- plicant and all of its affiliates shall be aggregated to determine eligibility. Any individual, corporation, or other entity that directly or indirectly controls or owns a majority of the voting shares or other inter- est of the applicant . . . will be considered an affili- ate 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 relationship between the affiliated enti- ties In addition, financial relationships of the appli- cant and other than those described in this para- graph may constitute special circumstances that would make an award unjust. This rule is identical to the model rule promulgated by the Administrative Conference of the United States which explains the rule as follows: The final model rule, accordingly, requires aggrega- tion of net worth . . . when an individual or entity 3 Such other issues argued by the General Counsel Include her claim that issuance of the underlying complaint was "substantially justified," the claim that Applicant's net worth statement is Inadequate even as en- larged by Applicant's responses to my March 28 order to establish eligi- bility, and the claim that Applicant's fees and expenses are unreasonable and not sufficiently detailed 3 Such other issues argued by the General Counsel Include her claim that issuance of the underlying complaint was "substantially justified," the claim that Applicant's net worth statement is inadequate even as en- larged by Applicant's responses to my March 28 order to establish eligi- bility, and the claim that Applicant's fees and expenses are unreasonable and not sufficiently detailed holds a majority interest in an ' applicant and when an applicant holds a majority interest in another entity, unless the adjudicative . officer determines that such treatment ,would be unjust in light of actual relationship between the affiliated entities. When an applicant owns less than 50% of an entity, we believe that the employees should not be aggre- gated and that inclusion of the interest itself (rather than the second entity's entire net worth) in the assets of the applicant will ordinarily be . adequate to reflect the applicant's net woith. 46 FR 39200 et seq. The rule, as explained, was applied in Glenmar Cines- tate, Inc., JD-171-83, adopted in the absence of excep- tions in an unpublished order of the Board dated May 24, 1983. There, Administrative Law Judge Gershuny in finding a majority stockholder in a parent corporation of an applicant to be an "affiliate" for purposes of the rule, stated (slip op., p. 3). The rules thus establishes two criteria relevant to the present case: first, it looks to control of majority ownership of an applicant's voting stock, rather than control of the applicant itself and, second, it looks not only to direct control of that majority in- terest, but to indirect control as well. As to the first element, the test is a simple one—only those owning or controlling more than 50% of the voting stock are to be considered an affiliate. As to the second element, the indirect control of that majority own- ership, the test may not be as simple as the inquiry may extend to majority ownership of an entity which has a majority—and thus a controlling—in- terest in the applicant Judge Gershuny went on to find. On this record, application of the rule is an uncom- plicated one. Farragut [corporate owner of appli- cant], with its 100% stock ownership, is an affiliate of applicant and Cook, [an individual], with his 51% stock ownership in Farragut, 'controls indirect- ly Farragut's ownership of Applicant's stock. Cook thus falls not only within the terms of the regula- tions, but within the spirit of the Act as well As to the latter, it milk be remembered that the purpose of the Act is the aid of truly small businesses, rather than those that are part of larger groups or affiliated firms. One has only to substitute the name of a mul- tinational corporate giant for that of Cook to see the importance of including as affiliates those who indirectly (through majority ownership of a parent) control a majority interest (or greater) of the party to the administrative proceeding. The application of Section 102.I43(g) to the instant case is as clear and uncomplicatd as it was in Glenmar Cinestate, Inc. Applicant is a wholly-owned subsidiary of Torco so that Torco is clearly an affiliate. The individual owner of Torco with his 100-percent stock ownership in Torco controls indirectly Torco's ownership of Appli- 840 DECISIONS OF NATIONAL LABOR RELATIONS BOARD cant. Applicant has not demonstrated how treatment of the hidividual owner as an affiliate is unjust or contrary to the purposes of the Act.-Accordingly, I am compelled to conclude that the individual owner of Torco is an af- filiate under the rule. It follows that Applicant has failed to establish its eligibility under the EAJA since its net worth statement 'does not include the personal net worth of its affiliate, the individual owner of Torco. Because Applicant has declined to provide information regarding the personal net worth of the individual, the application, I conclude, must be dénied.. ORDER4 It is ordered and directed .that the application for fees and expenses be denied. 4 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 • •