Indianapolis Mack Sales And Service, Inc

136 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Indianapolis Mack Sales and Service, Inc and Inter- national Association of Machinists and Aero space Workers, District Lodge No 90 Case 25- CA-14790(E) December 30, 1988 SECOND SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND CRACRAFT On October 19, 1988, Administrative Law Judge Arline Pacht issued the attached supplemental order The Applicant filed exceptions with support- ing argument and the General Counsel filed an an swering 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 order and the record in light of the exceptions, ar- gument, and brief and has decided to affirm the judge's rulings, findings,' and conclusions2 and to adopt the recommended Order 3 SUPPLEMENTAL ORDER Equal Access to Justice Act STATEMENT OF THE CASE ARLINE PACHT, Administrative Law Judge Pursuant to the Equal Access to Justice Act (EAJA) Pub L 96- 481, 94 Stat 2325 and Sec 102 143 of the Board s Rules and Regulations, Respondent filed an application for award of fees and expenses and a motion to withhold confidential financial information from disclosure in public record of proceeding on June 23 1988 i As the prevailing party, Respondent contends in its ap plication that the General Counsels position at each phase of this proceeding lacked substantial justification On August 12, counsel for the General Counsel (the General Counsel) filed a motion to dismiss application for attorney s fees and expenses which the Respondent answered on September 15 These pleadings raise the fol lowing issues 1 Whether the General Counsels position was sub stantially justified throughout the entire unfair labor practice proceeding 2 Whether some of the fees claimed are unreasonable 3 Whether fees may be claimed above $75 an hour 2 ORDER The recommended Order of the administrative law judge is adopted and the application of the Ap- plicant, Indianapolis Mack Sales and Service, Inc, Indianapolis, Indiana, for attorney's fees and ex penses under the Equal Access to Justice Act is denied ' Under the Equal Access to Justice Act attorneys fees will be award ed to prevailing parties unless the Government can show that its position was substantially justified In Pierce v Underwood 487 US 552-553 (1988) the Court defined substantially justified as justified in sub stance or in the main-that is justified to a degree that could satisfy a reasonable person The Court further stated that this interpretation of the phrase is equivalent to the reasonable basis both in law and fact formally adopted by the majority of courts of appeals We note that the judge s discussion in The Substantial Justification Issue section of her decision fully comports with the Court s definition 2 In adopting the judge s decision we do not rely on her finding that the General Counsels persistence in litigating this matter influenced the Board to refrain from adopting the Graneto Datsun rule as binding prece dent in all autodealer successor cases 2 The Applicant filed a petition for rulemaking to increase maximum rate for attorney fees and a motion to strike portions of the General Counsel s answering brief that did not address the substantial justification issue In light of our decision to deny the application for attorney fees and expenses the petition and motion are moot Walter Steele Esq for the General Counsel Stuart A Williams and Patrick F Kilker Esqs (Eckert Seamans Cherin & Mellott), of Pittsburgh Pennsylva nia, for the Respondent I THE SUBSTANTIAL JUSTIFICATION ISSUE The EAJA provides that attorney fees may be award ed to eligible parties who prevail in cases tried before ad ministrative agencies unless the Government establishes that its litigation position was substantially justified Although these words of art are not defined in the EAJA, the legislative history of the statute offers the fol lowing commentary The test of whether or not a Government action is substantially justified is essentially one of reason ableness Where the Government can show its case had a reasonable basis in law and fact no award will be made , 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 substantial probability of prevailing H R Rep No 1418 96th Cong, 2d Sess 10 (1980) quoted in Shellmaker Inc 267 NLRB 20 (1983) The Board further illuminated the concept of substantial justi fication in Lion Uniform, 285 NLRB 249, 254 at fn 33 (1987) stating ' An itemization of fees and expenses was attached to Respondent s ap plication as Exh B Exh A Respondents financial statement was for warded in a sealed envelope labeled Confidential Financial Informa tion 2 The General Counsel contends and Respondent concedes that it may not claim fees and expenses incurred during the initial investigation of the charge Accordingly Respondent reduces its claim by $546 25 292 NLRB No 28 INDIANAPOLIS MACK SALES The General Counsel will be found to have acted with substantial justification in issuing a complaint whenever the General Counsel possesses, at the time the complaint is issued, evidence that could reasonably lead an administrative law judge to find a violation and does not possess evidence that clear ly would defeat an allegation that the charged party has violated the law II THE FIRST DECISION As a prelude to applying the foregoing standards to the question of substantial justification in this matter, a careful review of each phase of the litigation is in order The complaint in this case issued on August 23, 1982 alleging that Respondent was a successor to Mack Trucks, Inc, that after hiring a majority of its predeces sor's mechanics and receiving a demand for recognition and bargaining from District Lodge 90 IAM, which pre viously represented these employees, Respondents refus al to recognize and bargain with the Union violated Sec tion 8(a)(1) and (5) of the Act In its answer, Respondent denied the substantive allegations, including the appro priateness of the unit At the hearing before me the General Counsel ad duced evidence that established that the Respondent had hired a representative complement of its predecessor s service department employees who had been in a sepa rate unit covered by a separate bargaining agreement for many years The Respondent contended that a unit of mechanics, which did not include parts department em ployees, was inappropriate When I incorrectly denied Respondents request to present evidence of the appro priate unit question, Respondent failed to make an offer of proof to preserve its position and did not further con test the issue either at the hearing or in its posttrial brief In the initial decision which issued on May 31, 1983 I found that the Respondent was a successor and had hired a repesentative complement of represented employ ees at the time the Union demanded recognition and bar gaining Accordingly I concluded that the Company s refusal to bargain with the Union violated the Act The Respondent excepted, inter alia to my finding that a unit of service department employees was appro pnate contending instead that both parts and service personnel had to be included in a single unit In making this argument the Respondent relied on Graneto Datsun 203 NLRB 550 (1973) which holds that a unit of service and parts department employees is appropriate unless it is demonstrated that no substantial community of interest exists between them In a responsive brief the General Counsel asserted that the Graneto Datsun rule arose in the context of an initial unit determination and did not apply to a succes sorship Rather, she maintained that where as here there was an incumbent union the Board and the courts agree that the proper test is whether the preexisting unit re mained intact and substantially unchanged, citing as au thority cases such as Saks Fifth Avenue, 247 NLRB 1047 (1980), affd 634 F 2d 681 (2d Cir 1980) White Westing house Corp 229 NLRB 667 (1977), affd 604 F 2d 689 (D C Cir 1979) Zayre Corp 170 NLRB 1751 (1968) affd 424 F 2d 1159 (5th Cir 1970) 137 The Board affirmed my decision on September 24 1984 (Chairman Dotson dissenting) concluding that in light of the service department employees 18 year bar gaining history and common work interests this group constituted an appropriate unit Indianapolis Mack Sales, 272 NLRB 690 fn 4 (1984) The Board denied Respond ent s motion to reopen the record to adduce evidence on the appropriate unit issue principally on the ground that Respondent had failed to make an offer of proof at the hearing Id On September 25, 1986, the U S Court of Appeals for the Seventh Circuit (Judge Cudahy dissenting) denied the Board s petition for enforcement (802 F 2d 280 (7th Cir 1986)) In remanding the case, the court stated that because the unit determination question arose in a succes sorship, this did not in itself justify a departure from the Board s Graneto Datsun rule Id at 285 The court then instructed the Board to articulate its reasons for modify ing or repudiating Graneto Datsun or, otherwise, deter mining on the basis of substantial evidence whether the specific facts in the case demonstrated that the parts and service department employees did not share a substantial community of interest Id The Parties Contentions Respondent now contends that because the General Counsel failed to present evidence on the appropriate unit question particularly regarding the community of interests shared by the parts and service department em ployees, the investigation was inadequate and the Gov ernment was not substantially justified in issuing the original complaint In taking this position Respondent argues that because the Board ultimately adopted the cir curt court s ruling as law of the case, it serves as a start ing point against which all the General Counsels prior positions must be judged In short, Respondent maintains that the court s reversal proves that the General Counsel proceeded to litigation on an erroneous notion of the controlling precedent Respondent is mistaken however, for the doctrine of law of the case looks to future actions in a case it does not operate retroactively Moreover it applies only to issues that were decided See generally Moore, Federal Practice § 0 404 (2d ed 1981) Here the appellate court remanded the case so that the Board might determine whether to modify its position with respect to the Gran eto Datsun rule Therefore, until the Board gave the matter further consideration the question of that rule s application to the instant case was unresolved More over the fact that the court of appeals subsequently re versed the Board and relied on a precedent other than those which guided the Governments position does not mean that the General Counsels case was not reasonably grounded in law As the General Counsel argues in the motion to dis miss from the time that this case was initiated the Gov ernment s litigation theory was based on the widely ac cepted precedent cited above The General Counsel cited these same precedents in his brief to the Board, thereby indicating that they were not relied on as mere after 138 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD thoughts The cases on which the General Counsel relied provided a sound legal basis for his theory of the case Further, the General Counsel contends that consistent with these cases, the evidence gathered during the inves tigation of the charge and presented during the Govern ment s case in chief established that the Union had repre sented service and parts employees for 18 years in sepa rate units, that the Respondent retained the predecessor s departmental structure and made no significant changes in the work performed by the service employees The General Counsel contends, and I agree that this evi dence was sufficient to establish a prima facie case that the unit remained intact and continued to be appropriate had I properly reached that issue in my initial decision Consequently, I conclude that the General Counsel s case was supported by sufficient facts As the General Counsel points out, it was the Re spondent s burden to prove that substantial changes oc curred in its operation that rendered a separate service department unit inappropriate However, the Respondent failed to present any evidence regarding the appropriate unit question either during the investigation or at trial 3 Consequently, information was not made available to the General Counsel during the investigation or at the first hearing that might have disproved the contention that a seperate unit of service department employees continued to be appropriate so as to undermine the reasonableness of the Governments position See Iowa Express Distribu tion v NLRB 739 F 2d 1305, 1312 (8th Cir 1984), cert denied 469 U S 1088 (1984) In excepting to my decision, Respondent cited the Graneto Datsun rule for the fist time as authority for its argument that I had erred in finding a separate unit of service department employees appropriate As noted above the General Counsel countered and the Board agreed, that Graneto Datsun was inapplicable The Board also relied on Saks Fifth Avenue, a case cited by the Gen era] Counsel as authority for finding the service depart ment employees continued to be an appropriate unit 272 NLRB 690 fn 4 supra It is important to bear in mind that prior to the court of appeals opinion in this matter the applicability of Graneto Datsun to unit determinations with regard to an auto dealer successor was far from settled law Where the law is uncertain, it cannot be argued that the General Counsel was unreasonable in contending that Graneto Datsun was limited to initial unit determinations By the same token simply because the court of appeals deter mined that the record was deficient it does not follow that the Respondent is blameless and the General Court sel at fault for failing to present evidence on the appro priate unit question It is one thing for an appellate body to find that additional factfinding is warranted and quite another to conclude that the General Counsel is respon Bible for that deficiency Indeed the dissenting member of the appellate court panel agreed with the Board that the Respondent was derelict in failing to make an offer 3 Although what occurred during the investigation in this matter is dehors the record I infer that the General Counsels account inaccurate because Respondent did not deny his descnptio is in its response to the motion to dismiss of proof and that there was no record evidence to cast doubt on the appropriateness of the bargaining unit 802 F 2d at 286 Accordingly, I conclude that the General Counsel liti gated this case in good faith in reliance on a well estab lished legal theory and with factual evidence that rea sonably could lead to the conclusion that the Respondent violated the law This is sufficient to preclude a recovery of attorneys fees under EAJA at least through these early stages of the proceeding Derickson Co 270 NLRB 516 fn 1 (1984) III THE SECOND DECISION In remanding this case for action consistent with its opinion, the court did not state that the Board was re quired to apply its Graneto Datsun rule to all auto dealer unit determinations Correctly construed the court simply stated that the Board must not depart from its rule without articulating its reasons for modifying, repu diating, or applying it on the basis of a more fully devel oped record Thereafter, pursuant to the Board s request the parties filed statements of position The Respondent urged among other matters that the General Counsel had failed to adduce evidence at the first trial consistent with the court of appeals opinion and, therefore deserved no second bite of the apple to cure its error Alternatively the Respondent requested that another hearing be held to receive evidence as to the appropriateness of separate parts and service departments units Respondent then re cited the evidence it would adduce at a rehearing that al legedly would prove the appropriateness of a compre hensive unit In the Governments position paper, the General Counsel urged the Board to adhere to the previously cited line of cases including White Westinghouse supra Saks Fifth Avenue supra and Zayre Corp supra Fur ther the General Counsel argued that in light of the fact that the record showed an 18 year separate bargaining history and contained no evidence that job skills and job classifications had altered, the record did not need to be reopened Alternatively the General Counsel stated that he would not oppose reopening the record for the re ceipt of further evidence on the appropriate unit issue I find that the General Counsels position was consistent with the apellate court s remand because it had not fore closed the Board from modifying or repudiating Graneto Datsun Without reaching any conclusion on the legal contro versy the Board found that it could not resolve the matter without further factfinding and remanded the case for a supplemental hearing Thus the Board left open the possibility that it might modify or repudiate the Graneto Datsun rule or find the rule inapplicable if sufficient evi dence established that the two groups of employees properly constituted separate units Given the Board s si lence on this matter, the General Counsel was free to continue his efforts to argue that the Graneto Datsun rule was an inapplicable precedent in the successor context The Respondent points out that its position statement to the Board contained a statement of alleged facts INDIANAPOLIS MACK SALES which if investigated, would establish that the parts and service department employees shared a significant com munity of interest Even if the General Counsel had as sumed prior to the resumption of the hearing that all the alleged facts were true he could reasonably take the po sition that he, too, had evidence that would prove suffi cient to establish a prima facie case that a separate unit of service employees which remained intact also was ap propriate See NLRB v Lyon & Ryan Ford 647 F 2d 745, 752 (7th Cir 1981) As the Board recently stated, weighing facts and drawing inferences is the exclusive province not of the General Counsel but of the judge and requires submission of the case to the factfinding process of litigation See Lathers Local 46 (Building Con tractors), 289 NLRB 505 (1988) The General Counsel did not prevail because I found the Respondents factual evidence more weighty in light of the court of appeals' opinion, and not because the General Counsel failed to advance "in good faith a legal position that at least made the question of success a close one under then existing law Dickerson Co supra at 516 fn 1 Consequently, I am persuaded that the General Counsels position was substantially justified at this juncture Moreover, at the supplemental hearing held on August 10 and 11 1987 and in its brief to me, the General Counsel presented evidence that supplemented that of fered during the first trial As I stated in the supplemen tal decision At the original hearing, the General Counsel es tablished that the Respondent continued the prede censor s business at the same location, retained the same departmental structure and began operations with a representative complement of mechanics [who] continued to perform the same func tions, using the same functions, using the same skills with the same tools as they had in the past At the present hearing the General Counsel further proved that the parts employees performed different tasks then did the merchanics and were paid ac cording to a lower wage scale Collective bargain ing agreements also were introduced which showed that separate contracts were concluded for the two units over several decades Without more such evi dence might be considered sufficient for a prima facie showing that the two units continued intact The Respondent then adduced evidence showing a sig nificant community of interest between the two groups consistent with the allegations in its position paper to the Board In a supplemental decision issued on November 27, 1987, I noted that the court of appeals remanded this case so that the Board might clarify its position regard mg the applicability of the Graneto Datsun doctrine in 139 this successorship situation or alternatively to determine whether the Respondents service and parts departments should be segregated for reasons other than bargaining history alone I further ruled that the Respondent must affirmatively prove that a substantial community of inter est exists between the two units before they are joined for collective bargaining purposes Based on evidence adduced by the Company on remand, I found that in the special circumstances of this case, the Respondent had proven that a substantial community of interest bound the parts and service employees into one appropriate unit I also concluded that the parties' collective bargain ing history suggested that the units had been joined in a de facto merger Thereafter the General Counsel excepted to the sup plemental decision, arguing that I had incorrectly applied the merger doctrine, that the facts of record did not sup port the conclusion that a combined unit was appropriate and that the Respondent was incorrect in asserting that it did not bear the burden of proving that a community of interest exists before separate units are joined under a successorship The Board issued a Supplemental Decision and Order on May 26, 1988, affirming my decision with some mode fications Indianapolis Mack Sales, 288 NLRB 1123 (1988) Specifically although choosing not to rely on my discussion of de facto merger, the Board agreed that given the particular facts of this case a separate service department unit was not appropriate and dismissed the complaint Although the General Counsel did not finally prevail, he was successful in persuading the Board to disavow re liance on a merger theory and to expressly confirm that the Respondent bore the burden of proof Moreover, it is fair to infer that the General Counsels persistence in liti gating this matter influenced the Board to refrain form adopting the Graneto Datsun rule as binding precedent in all auto dealer successor cases Accordingly I conclude that the General Counsels positions throughout this pro ceeding were reasonably based on law and fact and were substantially justified It follows that an award of fees and expenses is not warranted 4 Therefore I issue the following recommended ORDER The General Counsels motion to dismiss is granted and Respondents application for award of fees and ex penses is denied " Given the foregoing resolution of the substantial justification issue I find it unnecessary to reach the remaining arguments and issues raised by the Respondents application and the General Counsel s motion to dis miss Similarly it is not necessary to resolve Respondents motion to withhold confidential financial information The financial data submitted by the Respondent shall remain under seal pending the outcome of this matter