Reliable Tile Co., Inc.

408 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Reliable Tile Co., Inc. and Tile Layers Local Union No. 19, Bricklayers and Allied Craftsmen of America, AFL-CIO. Case 20-CA-16909(E) 18 June 1986 SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN DOTSON AND MEMBERS DENNIS AND JOHANSEN On 7 August 1984 Administrative Law Judge Russell L. Stevens issued the attached supplemental decision. The General Counsel filed exceptions and a supporting brief. The Applicant filed limited ex- ceptions, a supporting brief, and an answering brief to the General Counsel's exceptions. 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 as modified and to issue the appropriate Order. On 27 February 1984, the Board issued a Deci- sion and Order in the underlying unfair labor prac- tice case." Thereafter, Reliable Tile Co. applied for an award of attorney's fees and expenses pursuant to the Equal Access to Justice Act (EAJA). 2 The judge found, and we agree, that the General Coun- sel's position in the underlying case with regard to Reliable was not "substantially justified" and that no special circumstances exist which would make an award unjust within the meaning of EAJA.3 Accordingly, we adopt the judge's recommenda- tion that the Applicant be awarded $8531.254 for attorney's fees and $383.76 for expenses.5 We dis- 1 268 NLRB 1147 The Board's order against Respondent Dependable Tile Co. was enforced, as modified, and the dismissal of the complaint against Respondent Reliable was affirmed in NLRB v. Dependable Tile Co., 774 F.2d 1376 (9th Cir 1985) 2 5 U.S.C § 504 (1982), amended by Pub L 99-80, 99 Stat. 183 (1985) 8 We agree with our dissenting colleague that neither a finding that the General Counsel's evidence was insufficient to prove the allegations in the complaint or the fact that the complaint was dismissed automatically leads to a conclusion that the General Counsel was not substantially justi- fied However, we find that under the circumstances of this case the Government's position did not have a substantial basis in law or fact Contrary to Member Johansen, we find that the evidence presented by the General Counsel did not warrant an inference that Reliable had not complied with the contract As the Union's 21 January letter was the only evidence presented to support the complaint against Reliable, we conclude that there was not a sufficient basis for the General Counsel to proceed against Reliable 4 The applicant has claimed $8531 25 for attorney's fees, not $8915 01 as found by the judge. It appears that in arriving at this figure, the judge inadvertently added the costs for fees with the costs for expenses a The General Counsel has excepted to the judge's conclusion that the application shows a fair and reasonable allocation of costs between Re- spondents Dependable and Reliable In adopting the judge 's recommen- dation, we agree with his finding that Reliable is not seeking payment of fees and expenses for which it was not responsible However, we do not agree, however, with the judge's recommendation that the sum for fees and expenses incurred in pur- suing the EAJA award be limited to $675. As the judge has stated, the Board, as well as the courts, has consistently awarded fees and expenses involved in the preparation of EAJA claims.6 In its 9 March 1984 EAJA application, the Applicant re- quested an award for fees and expenses related to the EAJA proceeding. The Applicant indicated that it did not know the exact total of all such fees and expenses, but estimated that as of the date of the application the claims amounted to $675. When the total fees and costs could be accurately com- puted and full documentation submitted , the Appli- cant requested leave to amend or supplement the application. In its limited exceptions to the judge's supplemental decision, the Applicant amended its earlier EAJA application to incorporate the fees and expenses incurred after the initial application was filed. We find that Applicant's claim for an additional $2825.37 for fees and expenses for time spent in pursuing an award under EAJA is reasonable.? ORDER The National Labor Relations Board orders that the Applicant, Reliable Tile Co., Inc., Sacramento, California, be awarded $8915.01 for fees and ex- penses involved in defending itself in the underly- ing unfair labor practice case and $3498.378 for fees and expenses incurred in connection with the EAJA proceedings. MEMBER JOHANSEN, dissenting. Contrary to my colleagues, I find that the Gen- eral Counsel was substantially justified in initiating and pursuing the unfair labor practice proceeding against Reliable Tile Co. The complaint alleged that as employer-members of the Associated Tile Contractors of Northern rely on his statement that "[t]he fact that Reliable paid part of Dependa- ble's costs for items that involved only Dependable and for part of which Reliable now seeks reimbursement, does not indicate an improper claim." Rather, we find that Applicant's claim covers prorated time spent on matters common to both Respondents and therefore does not appear un- reasonable or improper See B. J. Heating, 273 NLRB 329 (1984). 6 Debolt Transfer, 271 NLRB 299 (1984), Tyler Business Services v. NLRB, 695 F 2d 73 (4th Cir 1982); Photo Data Y. Sawyer, 533 F Supp 348 (D.C D.C. 1982). We note that Applicant has claimed fees and expenses involved in preparing two EAJA applications which were dismissed as premature Although we do not rely on the judge's conclusion that these costs should be awarded because the applications were filed in good faith, we do agree that, contrary to our dissenting colleague, these claims are re- coverable as the hours spent in preparing the earlier applications were utilized in the preparation of the application and amendment now before the Board 9 This award reflects the total of $675 claimed by Applicant in its 9 March 1984 application and an additional $2825.37 requested by the Ap- plicant in its amendment to the EAJA application 280 NLRB No. 45 RELIABLE TILE CO. California, Applicant Reliable and its co-Respond- ent in the underlying case, Dependable Tile Co. unlawfully refused to abide by the collective-bar- gaining agreement executed by the Union and the Association. The judge found that Dependable had violated Section 8(a)(5) and (1) of the Act but dis- missed the complaint against Reliable on the grounds that the General Counsel had not estab- lished a prima facie case. The Board adopted the judge's finding and held that although Dependable gave timely and unequivocal notice of withdrawal from multiemployer bargaining, its inconsistent ac- tions of paying association dues and participating in formal negotiations for a new contract nullified that withdrawal. The Board also adopted the judge's dismissal of the complaint against Reliable and his finding that there was no evidence in the record that Reliable had in fact failed to comply with the new contract.' Reliable subsequently filed an EAJA application. The judge recommended that Reliable be awarded the fees and expenses incurred in the unfair labor practice proceeding. The majority has adopted the judge's recommendation and also awards Reliable additional fees and expenses for costs associated with the preparation of the EAJA claims. I dis- agree and would deny Reliable's EAJA applica- tion. EAJA provides that a prevailing party may re- ceive an award for fees and expenses incurred in connection with an adversary adjudication involv- ing an administrative agency unless the position of the agency was "substantially justified." The agency can establish that its actions were substan- tially justified by showing that its case had a rea- sonable basis both in law and in fact.2 According to the legislative history of EAJA, the Govern- ment's failure to win does not raise a presumption that its position was not substantially justified3 nor is it necessary for the agency to establish "that its decision to litigate was based on a substantial prob- ability of prevailing."4 Moreover, as the Board has held, the Government's position might still be rea- sonable in fact and law even when the General 1 In agreement with the judge, the Board found that the only evidence with respect to Reliable was a letter from the Union to Reliable dated 21 January 1982. This letter stated that Reliable was covered by a newly ne- gotiated contract, demanded an accounting of all funds due from Reliable to specific industry trust funds since the effective date of the new con- tract, and noted that if no reply was received by 1 February the Union would assume Reliable did not intend to comply with the new contract. 2 S. Rep 96-253, 96th Cong 1st Seas 6 and 14 (1979 ), H. R. Rep 96- 1418; 96th Cong. 2d Seas 10 (1980). In amending the Act , Congress did not alter but merely clarified the definition "substantially justified" to mean more than "mere reasonableness." H R. Rep. 99-120, 99th Cong. 1st Sess 9 (1985). 3 S. Rep 96-253 at 7; H R. Rep 96-1418 at 11. 4 Id 409 Counsel has failed to establish a prima facie case.5 In assessing whether the General Counsel 's position was substantially justified, it is necessary to look at the evidence possessed by the General Counsel at the relevant times and the inferences that could be drawn from that evidence.6 In finding that the General Counsel was substan- tially justified in proceeding against Reliable, I find that there were factors from which it could have been inferred that Reliable had violated the Act notwithstanding the absence of other evidence of a failure to abide by the contract. As the record indi- cates, there was evidence introduced at the hearing that Dependable and Reliable by letters of 31 De- cember 1980 and 26 January 1981 had notified the Association and the Union that as of 31 March 1981 they would not be bound by a new contract. Despite their attempted withdrawals, both Depend- able and Reliable continued to negotiate through- out January, February, and March as members of the bargaining committee. On 7 April 1981 the Union and the Association met and reached agree- ment on a new 3-year contract . Dependable's presi- dent was not at the meeting and never agreed to nor signed the contract. Reliable's president was at the meeting but indicated that he was attending as an independent contractor rather than as a member of the Association's bargaining committee. In their answer to the complaint, Dependable and Reliable generally denied the allegation that they refused to abide by the collective -bargaining agreement and raised several affirmative defenses. These defenses included the contentions that the Respondents did not manifest an unequivocal intent to be bound by the group bargaining process, that their withdrawal from the multiemployer associa- tion was timely and they were not bound to the new contract, that because of unusual circum- stances the Respondents were free to withdraw from the Association after bargaining began and therefore were not bound to any subsequently en- tered into agreements, and that the Respondents "were free to implement terms and conditions uni- laterally . . . ." The answer was silent with respect to any contention that Reliable or Dependable had in fact complied with the contract. Looking at all the circumstances existing at the time the complaint was issued and at the time of the hearing, it would have been reasonable to infer from Reliable's letter of 26 January, its president's 5 Carmel Furniture Corp., 277 NLRB 1105 (1985), Barrett's Interiors, 272 NLRB 527 (1984); Hamel Forest Products, 270 NLRB 1078 (1984); Jim's Big M, 266 NLRB 665 (1983); Iowa Parcel Service, 266 NLRB 392 (1983), enfd. sub nom. Iowa Express Distribution Y, NLRB, 739 F.2d 1305 (8th Cir. 1984), cert. denied 105 S.Ct. 595 and 105 S Ct. 1385. ' See Bask Paint, 270 NLRB 514 (1984); Iowa Parcel Service, supra. 410 DECISIONS OF NATIONAL LABOR RELATIONS BOARD statement on 7 April, and its affirmative defenses that Reliable had refused to be bound by the con- tract. Reliable's 26 January letter clearly stated that it would not be a party to a new contract. The statement by Reliable's president that he was at- tending the 7 April meeting as an independent con- tractor and not as a member of the bargaining com- mittee implied that Reliable had not changed its mind with respect to its intention not to be bound by a new contract. Further it could reasonably be inferred from Reliable's affirmative defenses, which indicated that it did not consider itself bound by the contract but free to implement changes in terms and conditions of employment unilaterally, that Reliable was in fact not abiding by the con- tract. Finally, when considered with the above- mentioned factors, Reliable's failure to contend that it was complying with the contract and its further failure to respond to the Union's 21 January 1982 letter reasonably support finding a violation. In my view, the General Counsel's case had a substantial basis in fact and law.7 Based on evi- dence he had at the time and the inferences that could be drawn from the evidence, the General Counsel had grounds for a legal argument and it was reasonable for him to proceed with that argu- ment. Further, the fact that the General Counsel's evidence was deemed insufficient to prove the alle- gations against Reliable or that the complaint was ultimately dismissed does not automatically lead to a conclusion that the General Counsel was not sub- stantially justified in proceeding against Reliable." I therefore dissent from my colleagues' decision to award fees and expenses.9 7 In support of his position in the underlying unfair labor practice pro- ceeding, the General Counsel has cited several cases, including General Marine Transport Corp., 238 NLRB 1372 (1978), Hub Pharmacy, 216 NLRB 69 (1975); and Service Roofing Co., 173 NLRB 321 (1968). Al- though those cases may be distinguishable from the facts in this case, I find that they provided a substantial and legitimate basis on which the General Counsel was privileged to argue for a finding that Reliable had refused to abide by the contract. a See, e.g., Iowa Parcel Service, supra. a Even if I were to agree with my colleagues that the General Counsel was not substantially justified in proceeding against Reliable , I would not award coats for the two premature EAJA applications or fees and ex- penses associated with a 23 March 1983 settlement discussion. Sec. 102.148(a) of the Board's Rules and Regulations provide that "[aln appli- cation may be filed after entry of the final order establishing that the ap- plicant has prevailed in an adversary adjudication proceeding ...... Re- liable filed two premature applications before the entry of a final order and therefore before it could be ascertained with certainty that Reliable had prevailed in the underlying case Because both applications were properly dismissed as untimely, I would not reimburse Reliable for the costa of preparing and filing these applications . Further, I find that the Respondent's 23 March settlement offer not to file EAJA claims if the General Counsel agreed to the dismissal of the complaint against De- pendable and not to appeal the dismissal of the complaint against Reliable was improper and predictably unacceptable . I therefore would not grant fees and expenses incurred in pursuing this settlement offer. SUPPLEMENTAL DECISION (Equal Access to Justice Act) STATEMENT OF THE CASE RUSSELL L. STEVENS, Administrative Law Judge. On March 22, 1983 a trial of the above-captioned matter was held before me. At the close of the General Counsel's presentation, Respondent Reliable Tile Co., Inc. (Reli- able) moved for dismissal of the complaint on the ground that a prima facie case had not been presented against it. That motion orally was granted and later was reiterated in the written decision . On April 20, 1983, Reliable filed with the National Labor Relations Board (Board) in Washington, D.C. an application for award of fees and expenses under the Equal Access to Justice Act (EAJA), t and Section 102.143 of the Board's Rules and Regulations. By Order dated April 25, 1983, received by me on April 28, 1983, the Board referred Reliable's ap- plication to me for appropriate action . On April 21, 1983, the General Counsel moved to dismiss the application on the' ground that the administrative law judge's Supple- mental Order of March 22, 1983, was not a final order under EAJA. Following consideration of the General Counsel's motion and response of Reliable 's counsel, by Order dated May 11, 1983, I dismissed the application as having been untimely filed. On February 27, 1984, the Board issued its Decision and Order in the above-cap- tioned case,2 and by document dated March 9, 1984, Re- liable filed with the Board an application under EAJA for fees and expenses. By Order dated March 22, 1984, received by the me on March 26, 1984, Reliable's appli- cation was referred to me for appropriate action. By documents dated April 18, 1984, the General Counsel moved to dismiss Reliable's application on several grounds. Reliable's Counsel filed opposition to the Gen- eral Counsel's motion, by document dated May 4, 1984. By supplemental order dated June 7, 1984 , I denied the General Counsel's motion to dismiss. By document dated July 9, 1984, the General Counsel answered Reliable's application, and by document dated July 26, 1984, Coun- sel for Reliable replied to the General Counsel's answer. I. THE SUBSTANTIAL JUSTIFICATION ISSUE The General Counsel argues in its answer that Relia- ble's application is defective for several reasons . Most of those reasons have been discussed, wholly or partially, in earlier proceedings. Reiteration of detailed analysis of earlier arguments is not necessary. The General Coun- sel's principal argument is that there was substantial justi- fication for initiating and pursuing to litigation a case against Reliable. As earlier discussed by me, substantial justification for proceeding against Reliable did not exist prior to or at trial.3 In the earlier motion to dismiss, the General Counsel principally relied on General Marine Transports in sup- ' Pub. L. 96-481, 94 Stat. 2325. Y 268 NLRB 101 (1983) a See, e.g., the supplemental order of June 7, 1984 4 238 NLRB 1372 ( 1978). RELIABLE TILE CO. port of his position, but as shown in the Supplemental Order at page 4 thereof, that case is not applicable herein. In his answer to the application, the General Counsel argues, "this case turned primarily upon the in- terpretation of existing Board precedent ," and cited Hub Pharmacy5 and Service Roofing Co.6 However, neither case controls the issue herein. In Hub Pharmacy there were specific acts of repudiation of a contract by an em- ployer, and in Service Roofing Co., the employer told the union it was "going non-union" and would not sign a contract. In this case (Dependable Tile Co.), the only evi- dence adduced by the General Counsel was a letter from the Union to the Employer, which the Employer did not answer. The Board already has met and answered the General Counsel's claim of proof. It stated in footnote 1:7 The only evidence in the record concerning the matter was a letter from the Union to Reliable dated 21 January 1982 stating that Reliable was covered by the new contract , demanding an ac- counting of all funds due from Reliable to the in- dustry trust funds since the effective date of the new contract, and noting that if no reply was re- ceived by 1 February the Union would assume Reli- able did not intend to comply with the new con- tract. We agree with the judge, for the reasons ex- pressed in his oral dismissal of the allegations and in his written reaffirmation in his decision , that the complaint must be dismissed with respect to Reli- able Tile Co. The General Counsel argues, however, that Reliable's silence, alone, constituted proof that it "had refused to abide by the multiemployer agreement although there was no evidence of any unilateral changes by Respond- ent Reliable." That argument misses the point . If Reli- able had refused to abide by the contract , as alleged by the General Counsel, there would be proof of that fact from a number of sources, including the Union's own personnel and files, and reliance exclusively on a single, self-serving and self-generated letter would not be neces- sary. Direct evidence not having been offered, and no explanation of failure to make an offer having been made, it must be assumed that the letter must have been the only basis for proceeding against Reliable. Even the Union's letter of January 21 , 1984, is equivocal and in- conclusive. It states that, unless Reliable took certain ac- tions, "we shall assume that you do not intend to comply and will proceed accordingly." (Emphasis added.) There the matter rested until time of trial. Those facts, plus the fact that Reliable was dismissed from the case at the ear- liest possible moment, places the matter squarely within the heart of EAJA, which authorizes payment of fees and expenses to a prevailing party in the absence of the General Counsel's substantial justification of its position. The General Counsel's burden of proving substantial jus- tification in this case is not shown merely by presentation of a letter in which the Union assumes a self-imposed 216 NLRB 69 (1975). " 173 NLRB 321 (1968). 268 NLRB 1147 (1984) 411 intent that failure to reply will constitute Reliable's viola- tion of the Act. II. ALLEGED FAILURE TO COOPERATE The General Counsel argues that Reliable failed to co- operate during the investigation of the case "by failing to disclose the contention that Respondent Reliable had not refused to be bound by the collective- bargaining agree- ment between the Association and the Union." This argument was answered in the Supplemental Order of June 7, 1984: As pointed out by Reliable's Counsel, Reliable's answer to paragraph 12(b) of the complaint denied that Reliable had refused to abide by the collective- bargaining agreement . The matter thus was at issue on the pleadings, regardless of what may have oc- curred at the investigatory stage. Further, whatever Reliable may have stated prior to trial, there is no evidence that the statements misled or confused General Counsel. Even if Reliable was lying in wait with a defense not communicated to General Coun- sel, prudence on the part of General Counsel would dictate the necessity of estabishing prima facie, if possible, the elements of the offense charged, i.e., failure and refusal to abide by the agreement. If a prima facie case was not possible, the matter should have been dropped, so far as Reliable was con- cerned. This argument exposes what appears to be a funda- mental weakness of the General Counsel 's case. The con- tention is that, had Reliable fully cooperated in the Gen- eral Counsel's investigation, possibly a complaint would not have issued. However, the General Counsel had the period from February 11, 1982 (date of charge), until March 22, 1983 (date of trial), in which to prepare for trial, yet its proof fell far short of establishing a prima facie case. It appears that either (a) the investigation was incomplete, or (b) the decision to proceed to trial was made with knowledge that proof of the complaint allega- tion was extremely limited. In either event, an award of fees and expenses for preparation and trial of a highly questionable case is indicated . The question is heightened when the fact is considered that the General Counsel did not immediately pursue an interim appeal, even when such procedure was suggested , after Reliable was dis- missed from trial at close of the General Counsel's initial presentation. Possibly the case inadequately was pre- pared or presented, or possibly the General Counsel overlooked an obvious error, but if so, Reliable cannot be held responsible for such events. It would seem that, had there been a thorough investigation, evidence of that fact would have been presented, yet no such evidence is of record. It does not appear that any failure of Relia- ble's counsel fully to disclose its defenses, caused a com- plaint to issue when a complaint otherwise was not war- ranted. Finally, the General Counsel argues at some length that Dependable Tile Company and Reliable were in much the same position so far as the 8(a)(5) allgations were concerned, yet approximately 8 hours of trial time 412 DECISIONS OF NATIONAL LABOR RELATIONS BOARD were devoted to the case against Dependable. Clearly, the General Counsel had a good case against Dependa- ble, and proceeded accordingly. Equally clearly, the General Counsel had no case against Reliable, and very little time was required to ascertain that fact and to take Reliable off the floor. III. ALLEGEDLY INEQUITABLE CLAIM The General counsel argues that because the same counsel represented both Respondents, i.e., Dependable Tile Company and Reliable, it would be unjust to award fees and expenses to Reliable as a co-respondent because expenditure of time would have been the same for two respondents as for one. This argument ignores the facts of advocacy. Reliable was faced with an allegation brought through the weight of a strong Federal agency. It did not know the full extent of the government's investigation nor the evidence it had to support the allegation. Pretrial discovery was not available to it. Complete preparation was a prerequi- site for trial. Whether or not expenses were shared with a co-respondent is irrelevant. Reliable was fortunate in that it was able to avoid trial time and posttrial prepara- tion of arguments, but that, too, is irrelevant. What is rel- evant is the actual preparation and appearance time, and expenses, for which Reliable was responsible. There is no indication that Reliable is asking for payment of time and expenses that properly are not allocable to it. This argument is without merit. IV. RESPONDENT'S STATEMENT OF FEES The General Counsel argues that the application does not show a fair and reasonable allocation of costs be- tween Dependable and Reliable. Several specific charges are challenged as being unnecessary or unreasonable. Principally, the General Counsel objects to charges that, in his opinion, should not be allocated to Reliable be- cause most trial time and written arguments relate solely to Dependable. As discussed supra, this argument is not consistent with the trial work of attorneys. Reliable's counsel were required to prepare pretrial documents, confer with clients, research the law, confer with wit- nesses, and otherwise devote time to the case against both Respondents. Dependable and Reliable were in the argument together-they were charged with violations related to each other, and of the same nature. Counsel for Respondents did not know in advance of trial, the nature or extent of proof available to the General Coun- sel. It was necessary to go to trial completely armed and ready to defend both Respondents. The fact that the General Counsel did not have a case against Reliable was fortuitous for it and came as a surprise to me as well as to Reliable's counsel. That fact, however, did not di- minish or negate the work already done. The time had been spent, the witnesses had been prepared, and pretrial paperwork had been completed. The fact that during trial and posttrial periods Reliable no longer had to defend itself is irrelevant. The General Counsel argues that some posttrial and other costs are inappropriate be- cause they relate solely to Dependable. However, De- pendable and Reliable were co-respondents, and there is no apparent impediment to their allocation of costs be- tween them. Sharing of costs between co-respondents is a common practice. The fact that Reliable paid part of Dependable's costs for items that involved only Depend- able, and for part of which Reliable now seeks reim- bursement, does not indicate an improper claim. Reliable is not seeking payment of fees and expenses for which it was not responsible. The schedule of fees and expenses appended to Relia- ble's application has been carefully reviewed. Those fees and expenses are less than the billings made to Reliable, and are within amounts allowable under EAJA. There appears no basis on which a finding of inaccuracy or in- appropriateness can be made. V. ALLEGED DEFICIENCY OF APPLICATION The General Counsel argues that the application is de- ficient in that the applicant's employees are not properly described. As found in earlier proceedings, the record is quite clear that Reliable does not have more than 500 employees on its payroll," and has not had at anytime relevant herein. This argument is without merit. Fees and Expenses for Filing an Equal Access to Justice Act Claim The General Counsel argues, in the face of well-estab- lished precedent, that Reliable is not entitled to these fees and expenses. Fees and expenses for preparation of EAJA claims consistantly are awarded by courts9 and the Board.10 The General Counsel argues that EAJA claims earlier filed untimely are not allowable, but those efforts were made in good faith, so far as the record shows, and they were otherwise proper and culminated in the award herein recommended . No reason is shown for disallow- ing such amounts. Based on the foregoing and the record, it is recom- mended that an EAJA award be made to the Applicant, Reliable Tile Co., Inc. in the amount of $8915.01 for at- torneys fees, $383.76 for expenses, and a sum not to exceed $675 for fees and expenses incurred in pursuing an EAJA award. 8 NLRB Rules and Regulations, Sec 102.143(cX5) See, e g., Tyler Business Services v. NLRB, 695 F.2d 73 (4th Cir. 1982); Photo Data. v Sawyer, 533 F Supp. 348 (D C. D C. 1982). 10 Debolt Transfer, 271 NLRB 299 (1984)