Dake Structural And Rebar Co.

DAKE STRUCTURAL & REBAR CO 649 Dake Structural and Rebar Company and Interna- tional Association of Bridge, Structural and Or- namental Iron Workers Local No 10, AFL- CIO Case 17-CA-13288(E) April 13, 1989 DECISION AND ORDER By CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND HIGGINS On December 2, 1988, Administrative Law Judge Bernard Ries issued the attached decision on application for attorney's fees and expenses under the Equal Access to Justice Act (EAJA) The Ap- plicant, Dake Structural and Rebar Company, 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 application of Dake Structural and Rebar Company, Springfield, Mis- souri, for an award under the Equal Access to Jus- tice Act is dismissed 1 In light of our agreement with the judge that the Applicants claim for an award under EAJA should be denied we find it unnecessary to pass on the judges findings with respect to the validity of certain amounts set out in the Applicant s claim for attorney s fees and expenses Naomi L Stuart Esq, for the General Counsel Donald W Jones Esq (Hulston Jones & Sullivan) of Springfield Missouri for the Applicant A review of the record discloses that this is a case in which Region 17 issued, withdrew, issued again and then finally withdrew and dismissed, a simple complaint containing a single substantive allegation The Applicant seeks reimbursement of $3 586 87 for legal fees and ex penses incurred in the processing of this unlitigated case plus $350 for responding to the General Counsel s motion to dismiss, claiming that it is a prevailing party small enough in size and wealth to be eligible for such reimbursement under the terms of the EAJA, and further asserting that the General Counsels position throughout the proceeding was not substantially justified, as re quired by the EAJA 2 In her motion to dismiss the application, the General Counsel advances several arguments, some having to do with the technical adequacy of the application itself, others relating to whether this is the sort of case which Congress believed warranted the reimbursement of a pri vate litigant for unjustifiable Governmental conduct I shall deal seriatim with those arguments that seem to meet discussion 1 EAJA, as amended, limits reimbursement to rela tively small private litigants-in the case of a corpora tion, its net worth at the time the adversary adjudica tion was initiated' may not exceed $7 million, and its employee complement more than 500 employees 5 U S C § 504(c)(1)(B) The applicable Board Rules and Regulations (R&R) provide that each application shall include a statement that the applicants net worth does not exceed $7 million and, as well, a detailed exhibit showing the net worth of the applicant and any affiliates when the adversary adjudicative proceeding was initiat ed The exhibit may be in any convenient format but must provide full disclosure of the applicants and its of filiates assets and liabilities and [be] sufficient to deter mine whether the applicant qualifies under the pertinent standards In the motion to dismiss the General Counsel points out that the documents filed by the Applicant-a balance sheet, a statement of income, and a statement of retained earnings all for the period ending October 31, 1986-are accompanied by the following, and, in my experience, highly unusual statement in the cover letter from the certified public accountant, dated June 11, 1987 DECISION AND ORDER Equal Access to Justice Act BERNARD RIES Administrative Law Judge This pro ceeding arises under the Equal Access to Justice Act (EAJA), 5 U S C § 504, pursuant to an application for the recovery of fees and expenses timely filed on Febru ary 9, 1988, by Dake Inc a corporation with offices in Springfield Missouri On March 3 1988, the General Counsel filed a motion to dismiss the application and on March 17 Applicant filed a response to the motion to dismiss t 1 With its application Applicant also filed a motion to withhold confi dential financial information from public disclosure The General Counsel has not opposed that motion and it is granted Management has elected to omit substantially all of the disclosures and the statement of changes in fi nancial position required by generally accepted ac The formal record shows that this matter was officially assigned to me for disposition on April 1 1988 By virtue however of one of the admin istrative lapses which this Division experiences with remarkable infre quency I did not receive a copy of the assignment or the relevant papers until October 26 1988 As amended in 1985 5 U S C § 504 (a)(1) provides An agency that conducts an adversary adjudication shall award t) a prevailing party other than the United States fees and other ex penses incurred by that party in connection with that proceeding unless the adjudicative officer of the agency finds that the position of the agency was substantially justified or that special circumstances make an award unjust Whether or not the position of the agency was substantially justified shall be determined on the basis of the ad ministrative record as a whole which is made in the adversary adju dication for which fees and other expenses are sought 293 NLRB No 82 650 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD counting principles If the omitted disclosure were included in the financial statements they might in fluence the user s conclusions about the Company's financial position , results of operations, and changes in financial position Accordingly, these financial statements are not designed for those who are not informed about such matters The General Counsel argues in her motion that this amounts to a 'complete disclaimer of the accuracy and reliability of the financial information submitted and ne gates the Applicant s assertion that it is an eligible claim ant, leaving the record devoid of the dependable infor mation which the Board s R&R contemplate 3 In its response to the motion to dismiss , Applicant does very little to rectify the apparent absence of a de tailed exhibit which constitutes full disclosure," as re quired by the Board It merely points out that the appli cation included an affidavit by Glen Dake, the president of Dake, Inc , that applicant has a net worth of substantially less than the $7 000,000 00 current amount and it proffers, as part of the response, that counsel having "fully investigated the matter, gives his assur ance that there is no question whatsoever of the appli cant being eligible for an award of fees' under EAJA Not only does the Applicant fail to meet the argument regarding the accountants disclaimer as made by the General Counsel, but it submits no other documentation, not even the financial documents which were presum ably prepared for the following fiscal year ending Octo ber 1, 1987, which might be of some assistance 4 What does appear in this sparse record would lead one to believe that it is extremely unlikely that the Appli cants had a net worth of $7 million in April 1987 How s I note that the accountants also make the point of saying that the documents submitted are based on information which is the represents tion of management We have not audited or reviewed the accompanying financial statements and accordingly do not express an opinion or any other form of assurance on them 4 The General Counsel also claims that the application is deficient in that it does not comply with the Board s Rules that there must be shown (1) that net worth which obtained as of the date when the adversary adjudicative proceeding was initiated which in this case would have been the issuance of the first complaint on April 3 1987 and (2) disclo sure of the net worth of any affiliates as defined in Sec 102 143 of R&R As to ( 1) there can be no argument that the General Counsel is not literally correct the net worth figures that were presented related to a time preceding the initiation-of proceeding date by 6 months If the bal ance sheet filed with the application did not seem so incomplete then it might be assumed that the net worth shown-far less than $7 million- could not reasonably have increased to that amount in 6 months The problem is it is incomplete As for (2) I read the Board s Rule only to require data as to affili ates that qualify as such under the Board s definition a judgment of fact that the applicant must itself make There are hints but no positive evi dence in this record that this Applicant has such affiliates However it should be noted that in counsel s affidavit in support of the Applicant s response to the General Counsel s motion for summary judgment counsel makes reference to Glen Dake and his company and Steel Erectors of Springfield Inc and avers that the net worth of these two companies combined would be substantially less than $5 000 000 00 and Affiant be lieves that they would be less than $1 000 000 00 This may be regarded as an apparent concession of affiliation which would bung Sec 102 143 into play 5 It may be worth noting that the complaints issued and withdrawn in this proceeding alleged and the answers admitted that Respondent Dake Structural and Rebar Company was a corporation doing busi ever, a panel of the Board has described the net worth showing as jurisdictional and, in so doing has even re fused to accept an acknowledgement by counsel for the General Counsel that she was satisfied as to the appli cant s eligibility under the EAJA Industrial Security Services, 289 NLRB 459 (1988) (Member Babson dissent ing) In the same case, the Board refused to rely on a balance sheet to which an accountant had appended a letter declaring that the statement was prepared by the applicant s management and that the accounting firm had reviewed it in a fashion that was "substantially less in scope than an examination in accordance with generally accepted auditing standards " The Board found this to be inadequate and remanded for the purpose of receiving additional evidence with respect to eligibility What the applicant eventually produced on remand was an affida vit by the same accountant which, based on unidentified unaudited financial statements ' and general accounting principles of certified public accountants, concluded that the applicant had a net worth of less than $1 5 mil lion This submission also was rejected by the administra tive law judge and the Board, and the application was denied It seems very clear that the net worth' statement proffered here is scarcely the detailed exhibit affording full disclosure' which the Board s R&R require Fur thermore, although the Applicants pleadings demon strate complete familiarity with the Board's require ments the only effort made by the Applicant to respond to the General Counsels assertion of these plain defects was to have its counsel give an affidavit alleging famili anty with the Dake operations and actual knowledge that the Applicant did not have a net worth of $7 mil lion Although the record such as it is gives every im pression that the Applicant did not have the preclusive net worth at the pertinent time, I must pay heed to the specific requirements of the R&R, as applied in Industrial Security Services Corp, supra And although the R&R provide that I may" require an applicant to file addi tional eligibility information I am dubious about the prospect of deriving any useful data from the entry of such an order-if the best we could get from counsel for applicant (who is manifestly conversant with the Board s R&R), as a response to the General Counsel's well taken points in her motion to dismiss, was the assurance by counsel that everything was all right I am doubtful about the value of still further inquiry As the Board de Glared in Kut Kwick Corp, 273 NLRB 838 fn 1 (1984) 'It is the Applicant's burden to comply with the EAJA filing requirements, and its attempt to unduly delay this proceeding contravenes the Board s policy of disposing of fee proceedings with dispatch and minimum cost Nonetheless, what evidence there is regarding the size of Dake s operations makes it seem so unlikely that there is a net worth of $7 million involved that I might he in clined to give the Applicant another opportunity to dem ness in Springfield Missouri The Applicant however identifies itself as Dake Inc d/b/a Dake Structural & Rebar Company a Missouri cor poration The General Counsel makes no comment on these incon sistencies DAKE STRUCTURAL & REBAR CO onstrate eligibility, were it not for the conclusion which follows 2 I conclude, on the merits, that the General Counsel has established that its position throughout this proceed- ing was "substantially justified '8 The undisputed evidence shows that on October 8, 1985, Dake, Inc, signed a stipulation binding itself to the terms and conditions contained in the collective bargain ing agreement then in effect between Local 10 and the Builders Association of Missouri, to expire on March 31, 1987 On February 10, 1987,' the Union filed a charge alleging that since on or about January 12, Dake Struc tural and Rebar Company had violated Section 8(a)(5) by refusing to furnish to the Union information neces sary and relevant to the Union s performance of its func- tions as bargaining representative " On April 3, Region 17 issued a complaint based on the charge, which itself was founded on a letter written to Dake by Union Attorney Joseph W Moreland on Janu- ary 12 The letter informed Dake that the Union had been advised that a business organization called Steel Erectors of Springfield was engaged in substantially the same business as your company is and is operating from the same premises " The letter continued, The purpose of this letter is to inquire as to the nature and relationship between" the two companies The letter ended with a description of the matter as one of "sub stantial concern" to the Union and a request for a reply very soon " The letter also noted that the Union "might need to submit a more detailed questionnaire later " According to an affidavit given by Local 10 Assistant Business Agent Ray E Meadows to a Board agent on March 6, 1987, Glen Dake and two young men were seen working on a jobsite in or about September 1986 Dake allegedly told Meadows that he "started this com pany by the name of Springfield Steel Erectors, ' but did not have much left to do and would get out of that non union business Meadows also stated however, that for the 4 months preceding the making of the affidavit, Dake had been using "nonunion people and this Steel Erectors to work the jobs in the area At the same time, he has been laying off our people Meadows also asserted that both companies are in the same building using the same yard and the same equipment," and that in a conversa tion with Dake the latter had said that he was operating both a union and a nonunion shop in order to break' another contractor who was also performing work in both guises On January 26 without having responded to More lands request for information, Dake, Inc, Dake Struc tural and Rebar Co, and any claimed alter egos or affili ates' sent to the Union a notice of termination of the agreement due to expire on March 31 and, as well, sent a copy to the Builders' Association of Missouri The letter also notified the addressees that our company will be I reject however the General Counsels contention that the Appli cant is not a prevailing party as contemplated by the EAJA That the dismissal of a complaint by the General Counsel even when induced solely by the Charging Party s withdrawal of the charge qualifies a re spondent as a prevailing party was settled in Shrewsbury Motors 281 NLRB 486 (1986) 7 Unless otherwise indicated all dates hereafter refer to 1987 651 represented in future negotiations with Ironworkers' Local 10 by the Springfield Contractor's Association On February 10, as noted above, the Union filed the charge regarding the refusal to satisfy the January 12 re quest for information On March 5, Attorney Jones wrote to Moreland on behalf of Dake s January 26 notice of termination, to Jones' surprise that the Union had failed to indicate any desire for bargaining dates, and to the fact that the Union had filed a charge based on a request made directly to Dake instead of to Jones, Dake's bargaining agent Jones further requested that the Union withdraw the charge and stated that if there was "any information that you require from Dake, I will see that he gets the information to me so that we can pro vide it to you, to the extent that you are entitled to have it, at our first bargaining session " On March 12, Moreland sent a letter to Jones, reiterat ing the request, stating that he was not involved in any forthcoming negotiations, and further stating that he would "be pleased to give consideration to withdrawing the unfair labor practice charge upon receipt of the in- formation requested " Thereafter in March, April, and May, the parties exchanged letters and Dake's proposals relating to the negotiation of a new agreement On April 3, Region 17 issued a complaint based on the February 10 charge The complaint set out the relation ship between the Union and Dake, the gist of the Janu ary 12 letter request, the assertion that the information requested was "necessary for, and relevant to, the Union's performance of its function as the exclusive col lective bargaining representative of the Unit' and the fact that the Respondent had failed and refused to fur nish the information, thereby violating Section 8(a)(5) and (1) of the Act On February 20, the Board had issued its decision in John Deklewa & Sons, 287 NLRB 1375 (1987), establish ing new principles construing Section 8(f) of the Act On March 26, the General Counsel promulgated guidelines to field personnel regarding the application of Deklewa, the memorandum provided, inter alia, that issues relating to the existence under Section 8(f) of such obligations as the duty to supply information should be submitted to the Advice section of the General Counsels office In addition, in May, the Union and the Respondent both filed new charges against each other, and the Union also filed a petition for an election in a unit of Respondent's employees The Region submitted all three complaint cases to Advice and, on June 5, issued an order with drawing the April 3 complaint In the meantime, in an unusual move, the Respondent, on May 29, had filed with the Board an i 1 page Motion for Summary Judgment with two affidavits and numer ous documents attached In view of the withdrawal of the complaint by the Region, the Board notified Re spondent by letter dated June 9 that its motion was moot and no further action on it was contemplated On October 31 as the General Counsel represents in her present motion, Advice instructed the Region to dis miss the two new charges and to reissue the complaint in the original case The reissuance was accomplished on November 18 On November 27, Respondent resubmitted 652 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD to the Board its earlier motion for Summary Judgment and attachments covered by a six page motion, the Gen eral Counsel filed an opposition On December 10, the Board issued an Order Trans ferring Proceeding to the Board and Notice to Show Cause Why the Respondents Motion for Summary Judg ment Should Not Be Granted On December 23 in a letter to the Region, the Union withdrew the charge, ex pressing pique at having to wait nearly a year, after making a simple straightforward request for informs tion, only to be faced with a Notice to Show Cause by Christmas Eve, and noting that so much has changed in the last year that we do not much care anymore whether we get the information and we do not care at all to continue to play this game The case was then re manded to the Region by the Board and, on January 11, 1988 the Region approved the withdrawal request and dismissed the complaint In Pierce v Underwood, 487 U S 552 (1988), the Su preme Court considered the meaning of the term sub stantially justified as used in that portion of the EAJA which applies to judicial civil actions to which the United States is a party (28 U S C § 2412(d)) There is no reason to believe that the Court would reach a differ ent result under 5 U S C § 504, which applies the EAJA to administrative agencies In Pierce, the Court pointed out that the word sub stantial can have "two quite different-indeed, almost contrary-connotations one being considerable in amount large (as in the statement, He won the election by a substantial majority ) and the other being in substance or in the main (as in What he said was substantially true ) After reviewing other statutory con structions of similar terms, the Court concluded (at 564- 565) We are of the view, therefore, that as between the two commonly used connotations of the word substantially the one most naturally conveyed by the phrase before us here is not justified to a high degree but rather justified in substance or in the main -that is justified to a degree that could satis fy a reasonable person That is no different from the reasonable basis both in law and fact formulation adopted by the Ninth Circuit and the vast majority of other Courts of Appeals that have addressed this issue The Court went on expressly to reject the contention that the test must be more than mere reasonableness and it noted that a position can be justified even though it is not correct, and we believe it can be substantially (i e for the most part) justified if a reasonable person could think it correct, that is if it has a reasonable basis in law and fact' (Id 566 fn 2 )8 It seems unexceptionable that the Agency satisfied the foregoing test in this case At the time that the Region issued its first complaint on April 3 the Board had held 8 In so holding the Court implicitly disagreed with the Board s posi tion as stated in University of New Haven 279 NLRB 294 (1986) that the 1985 EAJA amendments made it clear that substantially justified means more than mere reasonableness in Deklewa that parties to an 8(f) agreement (assuming that is what the agreement was here) will be required by virtue of Section 8(a)(5) and Section 8(b)(3) to comply with that agreement unless the employees vote, in a Board conducted election, to reject (decertify) or change their bargaining representative supra at 30 (emphasis added) In W B Skinner Inc, 283 NLRB 989 (1987), issued soon after Deklewa, the Board held that, indeed, the latter case operated so as to bring into play the ordi nary 8(a)(5) rules pertaining to the furnishing of informa tion In NLRB v Acme Industrial Co, 385 US 432 437 (1967) the Supreme Court painted those rules with a broad brush, applying a discovery type standard in re quiring an employer to provide information to a union whose request was prompted by a belief that the employ er was engaged in subcontracting contrary to the bar gaining agreement It was enough said the Court, that the Board was acting upon the probability that the de sired information was relevant, and that it would be of use to the union in carrying out its statutory duties and responsibilities' Unlike so called core information such as wages and benefits of the unit employees, which is considered presumptively relevant, a union s request for information relating to other employers has been held to require a showing of relevancy, Curtiss Wright Corp v NLRB, 347 F 2d 61, 69 (3d Cir 1965) although the standard of relevancy is the `liberal one prescribed in Acme Industrial, see Press Democrat Publishing Co v NLRB 629 F 2d 1320 1323 (9th Cir 1980) In the instant case the Union had evidence that the Applicant was engaged in work apparently covered by the bargaining contract but was performing that work under a different trade name Such conduct could cer tainly violate the collective bargaining agreement, as well as the NLRA, Boyd Mulford Construction, 277 NLRB 1631 1634 (1986) and could be the basis for make whole relief The Union s request gave rise to the general obligation of an employer to provide information that is needed by the bargaining representative for the proper performance of its duties Acme Industrial supra at 435-436 Although the Union in the person of the as sistant business agent had obtained considerable informa tion from Dake as of the time that it posted its January 12 letter more specific and comprehensive information could have proved useful-in determining what the situ ation was at the present time in discerning what Dake thought the future would hold in deciding whether it made sense to file a grievance under the exisiting agree ment and in considering whether any contract proposals should be prepared to more specifically deal with this development Cf Walter N Yoder & Sons 270 NLRB 652(1984)9 Instead the Respondent totally ignored the request for about 7 weeks until Attorney Jones on March 5 wrote Attorney Moreland that he would have Dake provide the requested information to the extent that you are en 8 As set out earlier even after Deklewa Dake was inviting the Union to meet and bargain and proposals were made by Dake As late as May 19 Jones wrote to Moreland in an effort to schedule a bargaining meet mg DAKE STRUCTURAL & REBAR CO titled to have at the first bargaining session But that was no answer at all, it not only was an unacceptably de layed failure to respond to a simple request but it did not even promise to in fact comply with the Applicants bargaining obligation at some point in the future 10 Thus, I feel comfortable in concluding, in the words of the Supreme Court in Pierce v Underwood, supra, that the least that could be said of the Region s April decision was that a reasonable person could think it correct The same holds true of the October reissuance of the complaint The violation which arguably flowed from the Applicant s earlier failure to comply with its 8(a)(5) obligations had not been remedied It has long been set tled that the duties imposed by the Act are designed to vindicate public rights, not private ones, Phelps Dodge Corp v NLRB, 313 U S 177 193 (1941), and the passage of time and changes in circumstances here did not render moot the violation alleged 11 3 Finally, certain comments are in order about the amount of the fees and expenses claimed A substantial portion-about 15 or more hours-of the 39 3 hours originally claimed in the application is based on the time spent in preparing the motions-original and supplemental-for summary judgment filed by the Appli 10 The cases cited by Applicant at 4 of its Supplemental Motion for Summary Judgement as standing for the proposition that [l]onger delays than [between January 12 and March 5] have been found not violative of the Act on many occasions (l) in fact involve shorter delays or (2) are completely distinguishable on their facts Moreover the end date of the present period as noted extends far beyond March 5 11 Even a defendants voluntary termination of wrongful conduct will justify dismissal on the grounds of mootness only if subsequent events make it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur US v Concentrated Phosphate Export Assn 393 U S 199 203 (1968) 653 cant In a case like this one and on the basis of conten tions such as those made by the Applicant I regard it as totally unreasonable to think that the Board would sera ously consider granting a Motion for Summary Judge ment Accordingly, even if I were find that the position of the General Counsel was not substantially justified, I would consider the hours spent on these quixotic of forts to be so far beyond the pale as to constitute unpro ductive, and therefore unclaimable, worktime Photo Data v Sawyer, 533 F Supp 348, 353 (D D C 1982) I note also that the original February 3 application in cludes in the 39 3 hours (at $75 per hour) a provision of 5 hours as `Anticipated further fees and also includes $75 for anticipated future expenses It is unclear whether counsel had these provisions in mind in arguing, in his affidavit of March 9 that it is reasonable to add an ad ditional $350 00 because of the requirement that affiant respond to the Motion to Dismiss herein Conclusion In Pierce v Underwood supra, the Court stated that, in enacting the EAJA Congress was providing for reim bursement in a very small category of cases " This is not one of them Accordingly, I issue the following recom mended12 ORDER It is ordered that the application of Dake Inc, for an award under the Equal Access to Justice Act be denied 12 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