K And I Transfer & Storage, Inc. And City Cartage And Moving, Inc.

K & I TRANSFER & STORAGE 853 K and I Transfer & Storage, Inc., and City Cartage and Moving, Inc. and Chauffeurs, Teamsters and Helpers, Local Union No. 215, a/w Inter- national Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL- CIO. Cases 25-CA-14937(E), 25-RC-7844, and 25-RC-7845 June 15, 1989 SECOND SUPPLEMENTAL DECISION AND ORDER BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN AND CRACRAFT On December 11, 1985, the Board issued a Sup- plemental Decision and Order in which it adopted the recommended Order of the administrative law judge and dismissed the application of the Appli- cants, K and I Transfer & Storage, Inc., and City Cartage and Moving, Inc., Evansville, Indiana, for an award under the Equal Access to Justice Act.' Thereafter, the United States Court of Appeals for the Seventh Circuit remanded the proceeding to the Board on November 12, 1986,2 to provide the court with its "findings and reasons or basis therefor, on all material issues of fact, law, or dis- cretion presented on the record." The court noted further that the Board did not address the Appli- cants' claim regarding its application for fees in- curred in its opposition to the General Counsel's motion to amend the complaint. The court pointed out that it did not agree with the Board's view that this was a collateral contention that did not require discussion in the Board's Order. Finally, the court stated that it was also unwilling to hold that the Order "implicitly rejected" this contention. Thereafter, the Board accepted the remand and invited each party to file a statement of position. The General Counsel filed a statement,3 the Appli- cants did not. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has given full consideration to the views of the court, the General Counsel's statement of position, and the entire record in this proceeding and concludes, based on the totality of circum- stances, that the amendment alleging a violation of the Act based on unlawful interrogation of Appli- cants' employees by its counsel, subsequent to the issuance of the complaint and prior to the hearing, was not substantially justified. We shall therefore ' K & I Transfer & Storage, 277 NLRB 1063 (1985). Member Cracraft was not then a member of the Board. 2 K & I Transfer & Storage v. NLRB, 805 F.2d 749 (1986). a The Union concurred with the General Counsel's position that EAJA fees are not warranted in this case. grant Applicants' request for attorneys' fees and ex- penses limited to the sums the Applicants incurred pursuant to the General Counsel's amendment to the complaint at the hearing. The complaint issued on November 24, 1982, and was amended on November 30, 1982. A hearing scheduled for February 14, 1983, was postponed and rescheduled for April 18, 1983. Several hours before the hearing commenced, the General Coun- sel notified Applicants' counsel that the complaint would be amended. After introducing into evi- dence its pleadings and formal papers at the com- mencement of the hearing, the General Counsel moved to amend the complaint to add section 5(c), which alleged that, about February 1 and 14, 1983, the Applicants, acting through their attorneys, in- terrogated employees unlawfully concerning their union and concerted activities. The Applicants' counsel objected to the amend- ment on grounds that it had received notice of the amendment just prior to the commencement of the trial; no charge had been filed; there had been no investigation; it created an ethical problem for Ap- plicants' counsel in representing its client inasmuch as it was being accused of wrongdoing; this same issue had arisen before in this Region with this par- ticular counsel for the General Counsel and was a common trial tactic; that it is a denial of due proc- ess; that in each case of interrogation by Appli- cants' counsel, a Johnnie 's Poultry Co.4 warning was given to the employee; that Applicants would be forced to seek other counsel for this trial; that Applicants would claim surprise if amendments were allowed, and would ask that the case be ad- journed and postponed for a later date at which time Applicants could obtain other counsel to rep- resent them; that assertedly the General Counsel did not know which, if any, attorney actually was involved in the alleged misconduct; and that the professional Rules of Ethics in the State (Indiana) indicated it would be improper for Applicants' counsel to proceed with the case. When the judge asked counsel for the General Counsel, at the hearing, if he wished to adhere to his motion to amend, even if it involved a lengthy postponement, he answered, "Yes, sir, understand- ing that." The judge also asked counsel for the General Counsel about the importance of amending the pending complaint rather than proceeding on 4 146 NLRB 770 (1964). The Board and courts have held that an em- ployer may interrogate employees on matters involving their Sec. 7 rights without violating Sec. 8(a)(1), when the purpose is to (1) verify a union's claimed majority status to determine whether recognition should be extended, and (2) investigate the facts concerning issues raised in a complaint in which interrogation is necessary in preparing the employer's defense for trial of the case. NLRB No. 82 854 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD the proposed amendments in a separate proceeding, and counsel responded that under Board cases he was required to consolidate, unless there is some extraneous reason he should not . The judge also asked counsel for the General Counsel if the al- leged conduct had an important bearing on the bar- gaining order. Counsel for the General Counsel re- sponded that the nature of the conduct was 8(a)(1) conduct and supported a Gissel bargaining order5 alleging that, under the circumstances, a fair elec- tion could not take place . Counsel for the General Counsel contended that if he were not allowed to litigate this unfair labor practice and its bearing on employee free choice in a past or future election, he would be precluded from litigating an important part of this proceeding and this might tip the bal- ance one way or the other. In rebuttal, the Applicants' counsel made the fol- lowing contentions : that the original complaint al- ready had all the basic allegations in it that could support a bargaining order, so that the General Counsel presumably had a sufficient case before- hand; that the new allegations created ethical prob- lems for the counsel for the Applicants, requiring them to withdraw from the case ; and that with the advent of the Equal Access to Justice Act it may not necessarily be efficient for the Board to lump everything into one proceeding. Notwithstanding Applicants' argument, the judge granted the General Counsel's motion to amend and also granted Applicants' request for a 60-day continuance so that Applicants could obtain other counsel in light of the asserted ethical dilemma the amendment created for Applicants' counsel. There- after, Applicants filed with the Board a request for special permission to appeal the granting of the General Counsel's motion to amend. However, before the Board could rule on this request, the General Counsel moved to withdraw the amend- ment and the motion was granted by the judge. On July 19 and 21, 1983, the hearing continued and was completed . On September 12, 1984, the judge issued his decision recommending dismissal of the complaint in its entirety and severance of and continuance before the Board of the represen- tation case proceedings. Thereafter, the Applicants applied to the Board for • an award of fees under the Equal Access to Justice Act (EAJA).6 In his supplemental decision following the Re- spondent's filing of an application for award of fees and expenses the judge found that his findings and conclusions rested primarily on credibility determi- 5 NLRB v. Gissel Packing Ca, 395 U.S. 575 (1969). e EAJA, Pub L. 96-481 , 44 Stat 2325 ( 1980); Board's Rules and Regu- lations, Sec. 102 143 et seq. nations, and that, had contrary credibility resolu- tions been made, the result would have been differ- ent. The judge found that the Respondent did not threaten plant closure based on the testimony of the terminal manager, Robert McKay, which he credited over the testimony of employees Delong and Cundiff. Regarding the judge's conclusions that the institution of an incentive bonus plan was not an unlawful wage increase and that Healy's dis- charge was not for unlawful reasons , the judge stated that such conclusions rested on his findings that Applicants, at the time they took those ac- tions, did not have knowledge of their employees' union activities and had not displayed antiunion animus. Those findings, in turn, were premised on his decision to credit the testimony of McKay over that of Healy. In finding that Healy was a statutory supervisor at the time of his discharge, the judge stated that he rejected Healy's testimony and relied on the testimony of Applicants' witnesses. Con- cerning the conclusions pertaining to the less seri- ous allegations of violations of Section 8(a)(1) of the Act, the judge indicated that such conclusions were reached in reliance on the testimony of McKay. With respect to the refusal to bargain allegation, the judge found that the Union enjoyed a card ma- jority at the time of its demand, but that a bargain- ing order should not issue because the General Counsel failed to show that Respondent had en- gaged in conduct tending to preclude the holding of a fair election. Finally, the judge concluded that the General Counsel was substantially justified in prosecuting this case, and, therefore, denied the Applicants' ap- plication for award of fees and expenses under the Equal Access to Justice Act. The judge did not specifically address the issue of whether the Gener- al Counsel was substantially justified in amending the complaint to allege interrogation by the Appli- cants' counsel. In his statement of position, counsel for the Gen- eral Counsel contends that it is clear on the merits that the position of the General Counsel in propos- ing the amendment was substantially justified. As the General Counsel represented on the record, there was evidence from several employees of in- terrogation by one of the Applicants' two trial counsels, Michael Schiff, in support of what is commonly referred to as a "Johnnie's Poultry viola- tion."7 The General Counsel states that evidence for that allegation was discovered in trial prepara- tion around February 14, 1983. 'Supra. K & I TRANSFER & STORAGE The General Counsel contends that had the amendment been made in a more timely fashion and had the allegation been dismissed on the merits for whatever reason, it would be argued that the failure of the General Counsel to win one allega- tion of Section 8(a)(1) was not itself a victory by the Applicants so as to be "a significant and • dis- crete substantive portion of that proceeding."8 He contends further that, in the normal course of af- fairs, one allegation of an 8(a)(1) violation among other allegations in a case that must be tried is not a significant portion of the case for either side. According to the General Counsel, in this case, the significance of the allegations in the amendment came in large part from the procedural aspect in the timing of the amendment and the Applicants' action in obtaining a continuance and seeking to appeal. The Applicants prevailed on the procedural point when the General Counsel chose to concede the point and abandon the substantive merits. The General Counsel, on reconsideration during the continuance, decided that the purposes of the Act could best be served by withdrawing the amend- ment. It is the General Counsel's view that, while it may never be known whether the Applicants would have ultimately prevailed on either the pro- cedural or substantive aspects raised by the amend- ment had such aspects reached decision, the amendment and its withdrawal are not the kind of actions intended to be covered as a basis for the grant of fees under the EAJA or the Board's Rules and Regulations implementing same. Finally, the General Counsel contends that the application for fees insofar as it relates to the amendment should be denied. We find no merit in the General Counsel's posi- tion.9 We find that the Applicants are eligible to re- ceive an award under the Equal Access to Justice Act. 5 U.S.C. § 504 (1982), as amended by Pub. L. 99-80, 99 Stat. 183 (1985) (EAJA). We award the fees because counsel for the General Counsel did not sustain his burden of proof to show that his po- sition in issuing complaint on the Johnnie 's Poultry allegation was substantially justified. Under EAJA, an applicant is eligible for an award of fees and other expenses from a Govern- ment agency if it is a prevailing party in an adver- sary adjudication, unless the agency's position was substantially justified. 5 U.S.C. § 504(a)(1). The Board's implementing regulations provide that a s Board's Rules and Regulations, Sec. 102.143(b). s However, in all other respects we adopt the judge's findings that the General Counsel was substantially justified in issuing the unfair labor practice complaint. 855 party who prevails in a significant and discrete sub- stantive portion of an adversary adjudication is eli- gible to apply for an award of fees and expenses. See Section 102.143 (b) of the Board's Rules and Regulations. In the instant case, the General Counsel with- drew the Johnnie's Poultry allegation before the hearing commenced. The Board has held that a re- spondent is the prevailing party on allegations that the General Counsel withdraws, unless the with- drawal is based on a settlement or mutual adjust- ment of the issue. Shrewsbury Motors, 281 NLRB 486, 487-488 (1986). Based on Shrewsbury Motors, we conclude that the Applicants are prevailing par- ties concerning the Johnnie 's Poultry portion of the amended complaint. Having concluded that the Applicants are pre- vailing parties, we turn to whether they prevailed on a significant and discrete substantive portion of the proceeding. The amendment led the Applicants to file a request for special permission to appeal to the Board, caused a 3-month delay in the hearing, and would have required the Applicants to obtain different counsel if maintained . Further, the amend- ed allegation concerned an agent of the Applicants not alleged to have committed other unfair labor practices. Thus, there has already been additional cost resulting from the amendment and, had the parties litigated the amended allegation, there would have been preparation and litigation expense additional to that which was required absent the amendment. Consequently, we find the amended al- legation significant. See Temp Tech Industries, 266 NLRB 730 (1983), enfd. on other grounds 756 F.2d 586 (7th Cir. 1985). Given that the amended allega- tion arises from a totally separate set of facts from the other complaint allegations and concerned an agent not alleged to have committed other unfair labor practices, we find the Johnnie's Poultry allega- tion separable from the other allegations and there- fore a discrete portion of the proceeding.10 Once it is established that a party prevailed in a significant and discrete substantive portion of the proceeding, the General Counsel may still avoid imposition of EAJA fees by showing that he was substantially justified in pursuing the complaint al- legation. The burden is on the General Counsel to prove that his position was substantially justified. See Section 102.144(a) of the Board's Rules and Regulations. When, as here, the General Counsel withdraws a complaint allegation before the hear- ing commences and consequently the parties did 10 The court's opinion appears to treat the issue regarding the applica- tion for fees pertaining to the amended allegation as separable in remand- ing the case to the Board. 856 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD not litigate the facts pertaining to the allegation, the record from which a determination is made about substantial justification "consist[s] of the pleadings, affidavits and other supporting docu- ments filed by the parties in both the fee producing and the case on the merits." H.R. Report 99-120 at 13 (1985). The only evidence on which counsel for the General Counsel relied to sustain his burden to show substantial justification in this case was his representation on the record in the underlying case that he had evidence from several employees that the Applicants' attorneys had unlawfully interro- gated employees. The General Counsel's statement was not under oath nor subject to cross-examina- tion. It is apparent from the legislative history quoted in the previous paragraph that Congress en- visioned something more than a bare assertion in order to satisfy the General Counsel's substantial justification burden, e.g., affidavits or other sup- porting documents. Indeed, the General Counsel has recognized the need to open the Region's files to substantiate reasons for issuing complaint. See Best Bread Co., 276 NLRB 1298 (1985); see also Shrewsbury Motors, supra. We are compelled to conclude that the General Counsel's representation does not constitute evidence on which the Board may rely. Because counsel for the General Counsel failed to introduce evidence substantiating his claim per- taining to the complaint amendment, we believe that he has failed to satisfy his burden of proving substantial justification. We therefore find that the Applicants are entitled to attorney's fees and ex- penses incurred pursuant to the General Counsel's amendment of the complaint at the hearing. CONCLUSIONS OF LAW 1. The Applicants are prevailing parties meeting the eligibility standard of EAJA. 2. The Applicants are entitled to reasonable at- torney's fees and expenses limited to the sums the Applicants incurred pursuant to the General Coun- sel's amendment of the complaint at the hearing. ORDER On the filing of the Board's final decision with the Board's Director, Division of Administration, as required by Board Rule 102.155, the Board shall pay reasonable attorney's fees and expenses limited to the sums the Applicants incurred pursuant to the General Counsel's amendment of the complaint at the hearing, as determined at the compliance stage of this proceeding."" " As Applicants failed to file a statement of position, the Board is unable to determine the specific amount at this time . Sec. 102.145(b) of the Board's Rules provides that "No award for the attorney or agent fees under these rules may exceed $75 per hour."