Landmark Industries, Inc.

LANDMARK INDUSTRIES 911 Landmark Industries, Inc. and Upholsterers' Inter- national Union of North America, Local 15, AFL-CIO. Case 21-CA-22391(E) 10 March 1986 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS AND BABSON On 20 December 1985 Administrative Law Judge Earldean V.S. Robbins issued the attached supplemental decision. The Applicant filed excep- tions. 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 has decided to affirm the judge's rulings, findings, i 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 application of the Appli- cant, Landmark Industries, Inc., Los Angeles, Cali- fornia, for an award under the Equal Access to Justice Act is dismissed. I Based on the record, we agree with the judge that the General Coun- sel's position was substantially justified . We believe that Congress, in re- vising the Equal Access to Justice Act, 5 U.S.C. § 504 (1982), as amend- ed by Pub. L. 99-80, 99 Stat. 183 (1985), did not alter but merely clari- fied the definition of "substantially justified ." "Substantially justified" means more than "mere reasonableness." H.R. Rep. 99-120 at 9 (1985). SUPPLEMENTAL DECISION Equal Access to Justice Act EARLDEAN V.S. ROBBINS, Administrative Law Judge. On 27 June 1985 I issued my decision in the above-enti- tled proceeding finding that the Respondent, Landmark Industries, Inc.," had not refused to bargain collectively in good faith with the Union in violation of Section 8(a)(1) and (5) of the Act. No exceptions were filed and on 29 July 1985 the Board adopted my decision dismiss- ing the complaint in its.entirety. On 23 July 1985 the Respondent filed with the Board an application for an award of attorney fees and expenses under the Equal Access to Justice Act. Subsequently, the General Counsel filed a motion to dismiss this applica- tion, asserting that it was premature , because it was filed 6 days prior to the Board's Order adopting my recom- mended Order. On 30 July 1985 the Board, pursuant to r Respondent's name has been changed to Sealy Furniture-Western. 278 NLRB No. 129 Section 102. 148(b) of the Board's Rules, issued an order referring this matter to me for appropriate action. There- after, on 27 August 1985, Respondent filed a motion for leave to refile the application for an award of attorneys fees and expenses and memorandum of points and au- thorities in opposition to the General Counsel's motion to dismiss. By supplemental order dated 29 August 1985 the Board. granted Respondent leave to refile its applica- tions and referred the matter to me for appropriate action. 2 On 25 September 1985 the General Counsel filed a motion to dismiss the refiled application contending: (1) that the General Counsel was substantially justified in having issued the complaint and having proceeded to a hearing; and (2) that the application is defective in that it fails to fully document the fees and expenses incurred solely in an "adversary adjudication" pursuant to Section 102.147(h) of the Board's Rules and Regulations. The Equal Access to Justice Acta (EAJA) provides that an award should be made to an eligible, prevailing party unless the position of the agency was "substantially justified" and "special circumstances" do not render an award unjust.4 The EAJA does not define substantially justified, however, its 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 this 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 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 fact 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's 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), re- printed in 5 U.S. Code Cong. & Ad. News, 4984, 4989. See Enerhaul, 263 NLRB 890 (1982). See also S. Rep. No. 253, 96th Cong., 2d Sess. 6-7 (1980). The meaning of "substantially justified " was further clarified in Iowa Parcel Service, 266 NLRB 392, 392-393 i On 16 August 1985 the Board issued an order denying Respondent's petition to increase the maximum rate for attorneys' fees. ' 5 U.S.C. § 504 (1982), as amended by Pub. L. 99-80, 99 Stat. 183 (Aug. 5, 1985). 4 5 U.S.C. § 504(axl); 5 U.S.C. § 504 (b)(1)(B). 912 DECISIONS OF NATIONAL LABOR RELATIONS BOARD (1983), wherein the Board adopted the following lan- guage of the administrative law judge: 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." s 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 S S. Rept. No. 96-253, 96th Cong., 1st Seas. 6-7, 14-15 (1979); H.R. Rept. No. 96-1418, 96th Cong., 2d Sess. 10-11 (1980); Spen- cer Y. NLRB, 111 LRRM 2065 , 2066 (D.C. Cir. 1982). a See Enerhaul, Inc., 261 NLRB 890 (1982). In the underlying unfair labor practice case the Gener- al Counsel alleged that Respondent engaged in bad-faith bargaining with the Union in violation of Section 8(a)(5) and (1) of the National Labor Relations Act. Specifical- ly, the General Counsel contended that statements made by Respondent President Jerry Bertram to Union Busi- ness Manager Raymond E. Valdez constituted an at- tempt to "drive a wedge" between the Union and the employees; and that Respondent's bad faith was evi- denced by its conduct at the bargaining table which, though not itself alleged as evidence of bad-faith bargain- ing, when coupled with Bertam's statements, demon- strate that Respondent had no serious intent to reach an agreement. In support of this contention the General Counsel ad- duced evidence which, if credited, would have estab- lished that (1) during negotiations subsequent to the strike Bertram told Valdez he had lost close to $ 100,000 since the strike began and that these losses would have to be recouped through benefit concessions in the con- tract-specifically mentioning vacations, holidays and pension possibilities; (2) although the Union made a number of concessions, Respondent never made any counteroffers; (3) when Valdez asked Bertram what it would take to settle the strike, Bertram said Valdez should have thought of that before calling the strike, that Respondent's strike losses were so large it would be im- possible to recoup them through concessions in a collec- tive-bargaining agreement; (4) that Bertram also told Valdez there was no way the Union would ever come back into the plant; and (5) after the Union had made nu- merous concessions Bertram, for the first time, demanded changes in the seniority and union-security provisions so that striker replacements would not be required to join the Union. Essentially the General Counsel argued that this conduct, when coupled with Respondent's adamant insistence that the piecework provision of the contract be modified, and Bertram's poststrike suggestions to Valdez that the Union disclaim any interest in representing the employees, indicated an intent on the part of Respondent not to reach an agreement. Although I was not persuaded by this argument, I do not ford it unreasonable. Critical to my fording that Re- spondent's conduct was not violative of the Act was my conclusion that Valdez' testimony was not completely credible and that Respondent's proposed modification of the piecework provision was proferred and pursued in good faith. Had I credited Valdez, and concluded to the contrary as to Respondent's piecework position, infer- ences adverse to Respondent's position could reasonably have been drawn which would have adequately support- ed the General Counsel's position and the question of Respondent's bad faith would have been a close one. Ac= cordingly, I find that the General Counsel had a reasona- ble basis both in law and fact , and therefore had substan- tial 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 contentions set forth in the General Counsel's motion. On these findings of fact and conclusions of law and on the entire record, I issue the following recommend- ed5 ORDER It is ordered that the application of the applicant Landmark Industries, Inc. for an award under the Equal Access to Justice Act is dismissed. a 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- posm.