Pacific Coast Metal Trades District Council And Seattle Metal Trades Council

156 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Pacific Coast Metal Trades District Council and Se- attle Metal Trades Council and Foss Shipyard, a Division of Foss Launch & Tug Co. (A Dil- lingham Company). Case 19-CB-4024(E) June 15, 1989 SECOND SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND DEVANEY On January 15 , 1985, Administrative Law. Judge Jay R. Pollack issued the attached second supple- mental decision. The Union filed exceptions and a supporting brief, and the General Counsel filed an answering brief to the exceptions. 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 briefs and has decided to affirm the judge's rulings, findings, and conclusions and to adopt the recommended Order. In its August 22, 1984 decision, t the Board found that the record showed that the Applicants appeared " to be creatures of their affiliated local unions and trade councils and were substantially, if not completely, dependent on their members for their financial support. Thus, the evidentiary ques- tion remanded to the judge was whether the Appli- cants did in fact derive a majority of their financial support, either directly or indirectly from their members. If they did, the judge was to aggregate the Applicants' net worth with that of their member locals and trade councils in order to deter- mine the Applicants' eligibility under the Equal Access to Justice Act (EAJA).2 In accordance with the Board's remand, the judge in his second supplemental decision found that the record evi- dence showed the Applicants derived 100 percent of their revenue from their members by virtue of a per capita tax on the locals and a flat monthly fee from the trade councils. Further, because the Ap- plicants . refused to respond sufficiently to the judge's three evidentiary requests, which asked them to identify their member locals and trade councils and to provide net worth statements from those organizations, the judge found that the Ap- plicants had not established their eligibility to re- ceive an EAJA award and that therefore "the ap- plication must be dismissed."3 1 271 NLRB 1165 (1984). 2 5 U.S C. § 504, Pub. L. 96-481, 94 Stat. 2325 (1980). ® On October 9, 1984, the judge issued his first order requesting the Applicants to file certified statements or declarations regarding their claimed eligibility. After reviewing the submitted declaration from the Applicants' secretary-treasurer, the judge, on November 5, 1984 , issued a On December 11, 1985, subsequent to the reen- actment of EAJA,4 the Board issued a Notice to the Parties of Opportunity to Submit Statements of Position as to the applicability of the amendment concerning the eligibility of local unions and whether the assets of the locals should be com- bined with those of the Applicants' International or with other locals with which the Applicants may be affiliated.5 The Board referred to House Report 99-120 at page 17, that states: It is the Committee's intent that if the local union is considered to be a separate labor or- ganization for purposes of the Labor Manage- ment Reporting and Disclosure Act of 1959, it should be considered to be a separate organi- zation for purposes of EAJA as well, and the local's entitlement of fees should be deter- mined without regard to the assets and/or em- ployees of the International with which the local is affiliated. Both parties filed statements of position. The Ap- plicants contend that the committee statement con- cerning eligibility standards for local organizations applies equally to Councils such as the Applicants. The General Counsel notes that the House never addressed the problem, presented in the instant case, of a trades council and its affiliated members. The General Counsel does not take the position that the mere fact of affiliation of one labor organi- zation with another requires aggregation of those organizations' net worths or of the number of em- ployees for the purpose of determining eligibility under EAJA. Rather, the General Counsel's posi- tion is that aggregation is appropriate where, on the facts of a particular case, it is clear that a labor organization is controlled, directly or indirectly, by another labor organization. Notice to Show Cause Why the Application Should Not Be Dismissed. In response the Applicants submitted a memorandum. Thereafter on De- cember 7, 1984, the judge issued another order requesting the Applicants file affidavits, declarations, and documentary evidence necessary for their factual presentation. The Applicants submitted a copy of their constitu- tion along with the declaration that "they believed their supporting docu- ments previously submitted sufficiently supported their eligibility for an EAJA award." We note that the judge erroneously found that the Applicants in their response to the Notice to Show Cause conceded that the aggregate net worth of their affiliates exceeded EAJA standards . We agree with the Applicants' exception that their correct statement was "that if the total assets of all International Unions and local unions which had anything to do with the Council were aggregated, that amount would be in excess of the EAJA standard." Accordingly, the judge's error.stands corrected. 4 5 U.S.C. § 504 ( 1980), as amended'by Pub L. 99-80, 99, Stat. 183 (Aug 5, 1985). 5 Although the Board's notice referred to an amendment concerning the eligibility of local unions, the relevant passage , which the notice quoted, was not a statutory amendment but rather language from the House committee report, which did not refer to an amendment but to the application of two existing provisions in the EAJA. 295 NLRB No. 24 PACIFIC COAST DISTRICT COUNCIL (FOSS SHIPYARD) 157 We find merit in the General Counsel's position. Indeed, as the General Counsel points out, this has been the Board's consistent position. Our examina- tion of the legislative history of EAJA's reenact- ment convinces us that Congress did not intend to preclude aggregation as a means of determining a union's eligibility under EAJA. Instead, Congress meant only to ensure that a local union would not be ineligible for an EAJA award simply because it was affiliated with an International union. As the General Counsel notes, the House report's lan- guage does not address the issue presented in this case. Here -each Applicant is a trades council, not a local union, and the issue is whether, in determin- ing each Applicant's eligibility for an award under EAJA, the net worth of each Applicant should be combined with that of its constituent members, not with that of the International union or unions with which it is affiliated. Moreover, assuming the House report language applied to the circum- stances presented by this case, the Applicants, in their statement of position, have failed even to assert that they are considered to be separate labor organizations for the purpose of the Labor-Man- agement Reporting and Disclosure Act of 1959, which is the criterion specified in the House report.6 In their exceptions, the Applicants contend, inter alia, that their application should not be dismissed because the judge failed to grant them the opportu- nity to present evidence by not holding a hearing. We find no merit in this contention. When this matter was remanded to the judge, the Board did not specifically order him to hold a hearing, but directed him only to reopen the record and gather the evidence necessary to make a determination concerning "the Applicants eligi- bility for an award of fees and expenses under EAJA"-noting beforehand in its supplemental de- cision "that aggregation may be appropriate on the facts of this case." The method of gathering this evidence was not delineated by the Board. There- fore, it was within the judge's discretion whether to hold a hearing or to proceed by requesting the submission of evidence relevant to the issues for determination from the party or parties most likely to have access to such evidence. He chose the latter course, determining that, with respect to the EAJA standard of net worth, the Applicants bore the evidentiary burden, including the , burden of proving that aggregating the net worth of the Ap- plicants and their member local unions was unwar- ranted. 6 As to the weight to be accorded language in the House report con- cerning statutory provisions that were left unchanged in the reenactment of EAJA, see Pierce v. Underwood, 108 S.Ct. 2541, 2550-2551 (1988). We find that the judge , in placing the evidentia- ry burden on the Applicants to establish EAJA eli- gibility, acted not only in accordance with general jurisprudential principles and the Board's applica- ble Rules and Regulations, but on the statute's burden requirements as well . As a result we further find that the judge did not abuse his discretion in not holding a hearing. It is clear from the legisla- tive history that the statute places the evidentiary burden of meeting the eligibility standards for net worth (and, where pertinent, number of employees) on the party seeking relief under the statute. That Congress did not intend for fee awards to be auto- matic is established by the fact that the prevailing party is required to make an application for an award of fees and expenses, to meet certain net worth standards, and to comply with certain initial procedures as established by the agency involved.? Further, the legislative history also shows that it was Congress' belief that the allocation of the burden of proof should be on the party who has readier access to and knowledge of the facts in question. Thus, the burden of proving financial eli- gibility is clearly placed on the applicant. Only when the applicant has proven its eligibility, does the burden shift to the Government to prove that its action was "reasonable or substantially justified" or "that special circumstances" make an award unjust, because, at that point, the Government is the party in control of the evidence needed to prove the reasonableness of its action.8 9 See S. Rep. No. 253, 96th Cong , 1st Sess. (1979); H.R. Conf. Rep. No. 1434, 96th Cong., 2d Sess. 20 (1980); H.R. Rep. No. 1418, 96th Cong , 2d Seas 10 (1980), Pub. L. 96-481, p. 4984 (1980). See also the Board's Rules and Regulations, Sec. 102. 143 et seq. and, in particular, Sec. 102.147(f), which provides: (f) Each applicant, except a qualified tax-exempt organization or cooperative association, must provide with its application a detailed exhibit showing the net worth of the applicant and any affiliates (as defined in sec 102 143(g)) when the adversary adjudicative proceed- ing was initiated . The exhibit may be in any form convenient to the applicant that provides full disclosure of the applicant's and its affili- ates' assets and liabilities and is sufficient to determine whether the applicant qualifies under the standards in this part. The administra- tive law judge may require an applicant to file such additional infor- mation as may be required to determine its eligibility for an award. s See Equal Access to Justice: Hearings on S. 265 Before the House Subcommittee on Courts, Civil Liberties, and the Administration of Jus- tice of the House Committee on the Judiciary, 96th Cong ., 2d Sess., Ser. No. 62-23-28 (1980) (testimony of Senator DeConcini). See also United Church Board for World Ministries v. SEC., 649 F.Supp. 492, 496-497 (D D C 1988). In this case, the Board, in its Supplemental Decision and Order, found that the General Counsel had set forth the basis for the General Coun- sel's decision to go forward with the adversary adjudication in the under- lying unfair labor practice proceeding, in compliance with Sec. 102.152(a) of the Board's Rules. The Board further found that the judge erred in his (first) supplemental decision in striking the evidence submitted by the General Counsel in this regard . Consequently, the Board ordered the judge to accept the General Counsel's submitted evidentiary material into evidence and resolve any factual dispute in connection with the General Counsel's claim that adjudication of the complaint was substantially justi- fied, if it became necessary to decide that question. 158 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Here, the Applicants are the only parties who possess the financial and other data that would have enabled the judge to determine if their appli- cation for an EAJA award fulfilled the aforemen- tioned standards of EAJA under the terms of the Board's remand. If the Applicants had responded with at least a specific proffer of evidence suffi- cient to meet the judge's inquiries, it is possible the judge might have determined from their submis- sions that a hearing was necessary; but he was not afforded that opportunity. Thus, the judge was faced (as we are) with making his determination on the existing record, which in the Applicants' case he found wanting. On the merits, we find, as did the judge, that the Applicants, as creatures of their constituent locals and councils, derive substantially all of their finan- cial support from those constituents and that the Applicants, in turn, provide their member constitu- ents with collective-bargaining representation. In these circumstances, the Applicants' structure and function is analogous to that of a multiemployer collective-bargaining association whose individual members' assets and net worth are aggregated with the association's for the purpose of determining the association's eligibility for an EAJA award, when the organization is controlled directly or indirectly by its members. The nexus in both situations for finding the requisite control is twofold: (1) the degree of financial support received from the mem- bers of the organizations and (2) the bargaining function performed by each organization on behalf of its members. Here, it is apparent, on the basis of the record before us, that the Applicants, as collec- tive-bargaining representatives, cannot exist alone without their member local unions and affiliated councils. Therefore, the fact that the Applicants consist of trade councils and local unions who also belong to International unions does not logically entitle them to an exception to Section 102.143(g) of the Board's Rules and Regulations regarding ag- gregation of the net worth of applicants and their member entities. That being so, we find that the Applicants' exceptions are without merit. Accordingly, we shall dismiss the Applicants' ap- plication for an EAJA award. SECOND SUPPLEMENTAL DECISION Equal Access to Justice Act JAY R. POLLACK, Administrative Law Judge. On 22 March 1982 the National Labor Relations Board issued a Decision and Order " in the above-entitled proceeding af- firming my finding that Pacific Coast Metal Trades Dis- trict Council and Seattle Metal Trades Council , the Ap- plicants herein, had not engaged in unfair labor practices in violation of Section 8(b)(3) of the Act by refusing to execute a collective-bargaining agreement 'with Foss Shipyard, A Division of Foss Launch & Tug Co. (A Dil- lingham Company). Thereafter, the Applicants timely filed with the Board an application for attorneys ' fees and expenses pursuant to the Equal Access to Justice Act, Pub. L. 96-481, 94 Stat. 2325, 5 U.S.C. § 504 (1980), (EAJA), and Section 102.143 et seq. of the Board's Rules and Regulations. On 26 April 1982, pursuant . to Section 102.148(b) of the Board's Rules, the Board ordered that .the matter be re- ferred to me for appropriate action. On 11 January 1983 I issued a supplemental decision in which I found, inter alia, that pursuant to Section 102.143 of the Board's Rules the Applicants were eligible for an award under EAJA and ordered that the Applicants be awarded at- torneys' fees and expenses as provided in EAJA and Sec- tion 102. 145 of the Board's Rules. On 22 August 1984, the Board issued its Supplemental Decision and Order2 reversing and remanding the case for the purpose, inter alia, of seeking further evidence and making further find- ings and conclusions concerning the Applicants' EAJA eligibility.3 Following the Board's Order of 22 August 1984, I issued an order on 9 October, requiring the Applicants to file affidavits, certified statements or declarations under penalty of perjury, supplying information regarding their claimed eligibility for an award under EAJA. On 5 No- vember, the Applicants submitted a declaration of the secretary-treasurer of the Pacific Coast Metal Trades District Council . Upon review of this declaration and the Applicants' memorandum in support thereof, I ordered the Applicants to show cause why the instant Applica- tion should not be dismissed. On 6 December , the Appli- cants filed a Response to Order to Show Cause in which they stated, inter alia: Finally, we do concede that if the total assets of all International Unions and Local Unions which had anything to do with the Council were aggregated, that amount would be in excess of the EAJA stand- ards. We do not concede by this admission, howev- er, that any of the assets should be taken into ac- count in determining whether the Council itself ORDER The recommended Order of the administrative law judge is adopted and the application of Pacific Coast Metal Trades District Council and Seattle Metal Trades Council for an award under the Equal Access to Justice Act is dismissed. ' 260 NLRB 1117. .271 NLRB 1165. 3 The Board also ordered, in the event that it is determined that the Applicants are eligible for an EAJA award, that I accept into evidence certain attachments to the General Counsel's supplemental memorandum concerning whether the General Counsel was substantively justified in proceeding in the underlying case and to resolve any material factual dis- putes in connection with these issues. In view of the disposition of the eligibility issue, I need not reach the issue of substantial justification. PACIFIC COAST DISTRICT COUNCIL (FOSS SHIPYARD) 159 meets the EAJA standards. Please note that we do not concede that an International Union or a Local Union is a "member organization ." That is a matter which requires factual presentation. Thereafter on 7 December, I issued an order requiring the Applicants to file such affidavits, declarations, or documentary evidence necessary for their factual presen- tation. On 21 December the Applicants filed a response stating, "We believe our application with supporting documents sufficiently establishes that both applicants meet the EAJA standards." The only evidence submitted was a copy of the constitution of the Pacific Coast Metal Trades District Council (which had previously been sub- mitted). No other evidence concerning the "member or- ganization" or "factual presentation" issues raised by the 6 December submission was offered . On 4 January 1985, counsel for the General Counsel filed a motion to dismiss the application on the ground that the Applicants had not established that they meet the criteria for eligibility for an award under EAJA. Upon consideration of the entire record in this supple- mental proceeding, including the record in the underly- ing unfair labor practice case, I make the following find- ings and conclusions: Section 102.143(c)(5) of the Board's Rules provides as follows: (c) Applicants eligible to receive an award are as follows: (5) any other partnership , corporation, associa- tion, or public or private organization with a net worth of not more than $5 million and not more than 500 employees. In addition, Section 102.143(g) provides as follows: (g) The net worth and number of employees of the applicant and all of its affiliates shall be aggre- gated to determine eligibility . Any individual, cor- poration, or other entity that directly or indirectly controls or owns a majority of the voting shares or other interest of the applicant, or any corporation or other entity of which the applicant directly or in- directly owns or controls a majority of the voting shares or other interest, will be considered an affili- ate for purposes of this part, unless such treatment would be unjust and contrary to the purposes of the Equal Access to Justice Act (94 Stat. 2325) in light of the actual relationship between the affiliated enti- ties. In addition, financial relationships of the appli- cant other than those described in this paragraph may constitute special circumstances that would make an award unjust. In its 22 August 1984 decision, the Board held that the intent behind EAJA was to aid "truly small entities rather than those that are part of larger groups of affili- ated firms." 271 NLRB at 1166. Thus, the Board found that where the facts evince the requisite degree of direct or indirect financial control between a trade council and the labor organizations it represents for bargaining pur- poses, such an aggregation would not be unjust or con- trary to the purposes of EAJA. In applying the facts of this case to those principles , the Board stated that the member. local unions of the Applicants "may exert " suffi- cient direct or indirect control over the Applicants to be considered affiliates and to require that their net worth be aggregated with that of the Applicants for EAJA eli- gibility purposes . The Board stated, "Thus, the record suggests that the Applicants are merely creatures of the local unions and are substantially , if not completely, de- pendent on the local unions for their financial support." 271 NLRB at 1166. In remanding this case for further evidence on this issue , the Board stated, "If, on review of this evidence, the judge finds that the Applicants derive a majority of their financial support, either direct- ly or indirectly, from their member local unions, the Ap- plicants' net worth shall be combined with that of their member local unions to determine the Applicants' eligi- bility under EAJA." (271 NLRB at 1167, emphasis added.) The record reveals that the Applicants derive 100 per- cent of their revenues directly from their constituent labor organizations, i.e., local unions or trade councils.4 However, the Applicants have failed and refuse to name their constitutent labor organizations or to file any net worth statements setting forth the net worth of those or- ganizations. As noted earlier, the Applicants concede that the total net worth of its affiliates exceeds EAJA limits. To the extent that it may be argued that the pre- ceding concession includes the net worth of International unions, not included in the Board 's Order to aggregate the net worth of affiliates, that distinction is not material to the disposition of this matter. The burden of proof re- garding eligibility is on the Applicants and the failure to file a proper application revealing their total net worth would necessarily lead to dismissal of the application. See Sections 102.143, 102.147, and 102.153 of the Board's Rules. While the Applicants argued that local unions are not "member organizations," their evidence leads to a con- trary conclusion. The constitution of the Pacific Coast Metal Trades District Council indicates that it is char- tered by the Metal Trades Department of the AFL-CIO and that its "membership shall be confined to local unions affiliated with local Metal Trades Councils .. . whose members are employed in all metal trades indus- tries. . . ." Further all local unions or local Metal Trades Councils "affiliated" with the Pacific Coast Metal Trades District Council must pay an affiliation fee to maintain affiliation. The constitution further provides : "Any local union that becomes delinquent in the payment of the per capita tax shall be dropped as an affiliate . Any rights to a craft represented on the Executive Board and/or any rights to delegates to any affiliate board of the District Council shall cease upon such delinquency of any local 4 The money was derived on the basis of either a per capita tax in the amount of 20 cents per month per member employed under the agree- ment or a flat fee of $5 per month from certain councils. The maximum amount received from any one labor organization would probably not exceed $250 for any month. The Applicants do not receive any money from the International unions affiliated with its member organizations. 160 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD of such . International Union. Any organization who has become delinquent, in order to reaffiliate, must pay all back affiliation fees and per'capita tax owing the District Council based upon employed membership." Thus, under the District Council's own constitution , membership or affiliation is defined by the payment of fees by a local union or trade council paying per capita tax and/or affili- ation fee. Approximately 100 labor organizations paid fees to the District Council during the 12-month period prior to the issuance of the complaint in the underlying unfair labor practice case. To the extent that the Applicants argue that their local unions lack the necessary control for a finding of affili- ation within the intent of EAJA, the Board's decision of 22 August 1984 is the law of the case and therefore con- trolling on this issue. Applying the Board's remand order to the present record, I must combine the Applicants' net worth with that of their member local unions. The local unions, whose members work under the collective-bargaining agreements of the Pacific Coast Metal Trades District Council, and the trade councils (to which many of the local unions also belong) provide all the income of the District Council. The Board has already ordered that if a majority of such revenue was derived from the local unions, the net worth of the Applicants and the local unions must be combined -5 While the record does not contain the necessary financial data, ' the Applicants have conceded that the combined net worth of its affili- ated unions does not meet EAJA requirements. In any event, the Applicants have not established their eligibility to receive an award . Accordingly, pursuant to the Board's Order of 22 August 1984, the application must be dismissed. On the foregoing findings and conclusions and the entire record, I issue the following recommended' ORDER It is ordered that the application of Pacific Coast Metal Trades District Council and Seattle Metal Trades Council for an award under the Equal Access to Justice Act be, and it is dismissed. I In Carpenters Local 1361 (Atchinson Foundation), 272 NLRB 1118 (1984), the Board held that assets must be aggregated whenever there is direct or indirect control over an applicant by another entity and re- manded the case to the judge to determine whether the assets of an Inter- national union must be aggregated with the assets of an affiliated local union in determining EAJA eligibility. 6 As noted earlier, the Applicants were given at least three opportuni- ties to provide such information. ° All outstanding motions inconsistent with this recommended Order are denied. If no exceptions are filed as provided by Sec 102.46 of the Board's Rules and Regulations, the findings, conclusions, and recom- mended 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 purposes.