Carmel Furniture Corp.

CARMEL FURNITURE CORP. 1105 Carmel Furniture Corp. and Local 1010, United In- dustrial Workers of the United Industrial Workers of the United Furniture Workers of America, AFL-CIO. Case 21-CA-22510(E) 17 December 1985 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS AND BABSON On 30 January 1985 Administrative Law Judge Earldean V.S. Robbins issued the attached supple- mental decision. The Applicant 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 briefs and has decided to affirm the judge's rulings, findings,' and conclusions and to adopt the recom- mended Order. ORDER The recommended Order of the administrative law judge is adopted and the application of the Ap- plicant, Carmel Furniture Corp., Los Angeles, California, for attorney's fees and expenses under the Equal Access to Justice Act is denied. 1 We find that the General Counsel was "substantially justified" under the Equal Access to Justice Act, as amended, in issuing and prosecuting the unfair labor practice complaint in this proceeding We believe that Congress, in amending the Act, did not alter, but merely clarified, the definition of "substantially justified," which means more than " mere rea- sonableness " H R Rep 99-120 at 9. SUPPLEMENTAL DECISION (Equal Access to Justice Act) EARLDEAN V. S. ROBBINS, Administrative Law Judge. On June 29, 1984, I issued my decision in the above-enti- tled proceeding finding that the General Counsel had not made out a prima facie case as to any allegation of the complaint and dismissing the complaint in its entirety. No exceptions were filed and on August 7, 1984, the Board adopted my decision dismissing the complaint in its entirety. On September 4, 1984 Respondent filed with the Board an application for award of attorney fees and re- lated costs pursuant to the Equal Access to Justice Act (EAJA)1 and Section 102.143 et seq. of the Board's Rules and Regulations. On September 7, 1984, pursuant to Section 102.148(b) of the Board's Rules, the Board or- dered that the matter be referred to me for appropriate action. On September 12 the General Counsel filed a motion to dismiss application for an award of fees and expenses under the Equal Access to Justice Act which sets forth both substantive and procedural grounds for dismissal. The General Counsel contends (1) that the ap- plication is fatally deficient on its face in that it does not include a detailed statement of Respondent's net worth as of October 26, 1983, the date the complaint issued, but rather includes a statement of net worth as of February 29, 1984; and (2) that the General Counsel's position in the underlying litigation was substantially justified. The General Counsel also urges that even if its positions above are rejected, the application should be dismissed as to the claimed expenses which are clearly attributable to the investigatory phase of the case. On September 24 Re- spondent filed its response to the General Counsel's motion in which it urges that Section 102.143 of the Board's Rules does not require the statement of net worth to be as of the date of the issuance of the com- plaint, but, nevertheless, included in its response a state- ment of net worth as of October 31, 1983. Respondent also responded to the General Counsel's other argu- ments. EAJA provides that an award shall be made to an eli- gible, prevailing party unless the position of the agency was "substantially justified" and "special circumstances" do not render an award unjust.2 The Act does not define "substantially justified," however the legislative history characterizes it thusly. The test of whether or not a Government action is substantially justified is essentially one of reason- ableness. Where the Government can show that its case had a reasonable basis both in law and fact, no award will be made. In this regard, the strong de- terrents to contesting Government action require that the burden of proof rest with the Government. This allocation of the burden, in fact, reflects a gen- eral tendency to place the burden of proof on the party who has readier access to and knowledge of the facts in question. The committee believes that it is far easier for the Government, which has control of the evidence, to prove the reasonableness of its action than it is for a private party to marshal the facts to prove that the Government was unreason- able. The standard, however, should not be read to raise a presumption that the Government position was not substantially justified, simply because it lost the case. Nor, in fact, does the standard require the Government to establish that its decision to litigate was based on a substantial probability of prevailing. H.R. Rep. No. 1418, 96th Cong., 2d Sess. 10 (1980) reprinted in 5 U.S. Code Cong. & Ad. News 4984, 4989. See Enerhaul, Inc., 263 NLRB No. 121 (1982), slip op. at 2. See also S. Rep. No. 253, 96th Cong., 2d Sess. 6-7 (1980). 1 Pub. L. 96-481, 94 Stat. 2325, 5 U.S C § 504 (1980). 2 5 U.s C. § 504(a)(1), 5 U S C § 504(b)(1)(B). 277 NLRB No. 119 1106 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The meaning of "substantially justified" was further clarified in Iowa Parcel Service, 266 NLRB 392 (1983), wherein the Board adopted the following language of the administrative law judge at 392-393: The burden of establishing substantial justification is on the Government and the test of whether or not governmental action is substantially justified is one of reasonableness. The Government, to defeat an award, must establish that its position had a reason- able basis in fact and law. However, the fact that the Government lost its case does not give rise to any presumption that its position was unreasonable and the "substantially justified" standard does not "require the Government to establish that its deci- sion to litigate was based on a substantial probabili- ty of prevailing."5 Moreover, as the Board has re- cently pointed out, the Government's position might still be deemed reasonable in fact and law notwithstanding that the General Counsel failed to establish a prima facie case.6 5 S. Rept. No 96-253, 96 Cong., 1st sess 6-7, 14-15 (1979); H R Rept No 96-1418, 96th Cong, 2d sess 10-11 (1980), Spencer v NLRB, 111 LRRM 2065, 2066 (D C. Cir. 1982) 6 See Enerhaul, Inc., 261 NLRB 890 (1982) In the underlying unfair labor practice case the Gener- al Counsel alleged that Respondent violated Section 8(a)(3) and (1) of the National Labor Relations Act by discharging four employees because they engaged in union activities. In support of this allegation the General Counsel adduced evidence from the alleged discrimina- tees that the supervisor who made the discharges made statements which, if credited, would tend to establish an- tiunion animus on his part and that he had discharged them because of their union activities. However I cred- ited Respondent's witnesses, including the organization coordinator for the Union's parent organization who was also the trustee of the Union, that Respondent invited the Union to organize its plant and that the supervisor was told this was what Respondent wanted and was instruct- ed that, in order to facilitate the Union 's organizational campaign, he was to hire the union organizer who would later apply for employment at Respondent's plant. In view of this credibility finding I concluded that it was improbable that the supervisor would have made the statements attributed to him or discharged the alleged discriminatees because of their union activities. Accord- ingly, I did not credit the General Counsel's witnesses with regard to these statements, and in view of my credi- bility resolutions, I found that the General Counsel had not made out a prima facie case. In its response to the General Counsel's motion to dis- miss, Respondent argues that no substantial justification exists to prosecute the underlying case herein . In support thereof, Respondent argues that (1) the Region did not consider it was justified enough to file exceptions with the Board and that lack of justification was also indicat- ed when the Regional Director canceled the original trial date with only two working day's notice; (2) both Respondent and the union leadership requested that the charges be dismissed; (3) the Region was advised by both Respondent and the Union that Respondent invited the Union to organize its employees, making such discharges for Union reasons inherently improbable, and (4) the only credibility conflict was between union representa- tives and if the matter had been investigated properly it would easily have been ascertained that the business agent filing the unfair labor practice charges herein did so without sufficient knowledge and thus, Respondent argues, there were no issues of credibility requiring a trial. I reject this argument. If I had discredited Respond- ent's witnesses that the supervisor knew Respondent wanted its employees to be represented by the Union and had invited the Union to embark on the organizational campaign, and had credited the employee witnesses as to the statements allegedly made by the supervisor, the question of unlawful motivation would have been a close one despite Respondent's invitation to the Union. Thus this matter presented credibility issues appropriate for resolution after a hearing before an administrative law judge. Accordingly, I find that the General Counsel had a reasonable basis both in law and fact, and therefore had substantial justification, for issuing the complaint in this matter and for prosecuting it through the hearing stage. In view of this finding, I do not reach the other conten- tions set forth in the General Counsel's motion. On the foregoing finding and conclusions, the record in the underlying unfair labor practice case, and the pleadings herein, and pursuant to Section 102.153 of the Board's Rules and Regulations, I issue the following rec- ommended3 ORDER IT IS ORDERED that the application of the Applicant, Carmel Furniture Corporation, Los Angeles, California, for an award under the Equal Access to Justice Act be dismissed. 3 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 1