American Pacific Pipe Co.

National Labor Relations Board - Board Decisions

Aug 23, 1984

271 N.L.R.B. 1171 (N.L.R.B. 1984)

AMERICAN PACIFIC PIPE CO.
American Pacific Concrete Pipe Company, Inc. and
General Truck Drivers, Warehousemen and
Helpers Union Local 467, International Broth-
erhood of Teamsters, Chauffeurs, Warehouse-
men and Helpers of America. Case 31-CA-
10098(E)
23 August 1984
SUPPLEMENTAL DECISION AND
ORDER
BY CHAIRMAN DOTSON AND MEMBERS
ZIMMERMAN AND DENNIS
On 27 April 19841 Administrative Law Judge
Clifford H. Anderson issued the attached decision.
The Respondent filed exceptions and a supporting
brief and the General Counsel filed an answering
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 briefs 2 and
has decided to affirm the judge's rulings, findings,
and conclusions3 and to adopt the recommended
Order.
ORDER
The recommended Order of the administrative
law judge is adopted and the application of Re-
spondent American Pacific Concrete Pipe Compa-
ny, Inc. for attorney fees and expenses under the
Equal Access to Justice Act is denied, and the con-
fidential financial statement attached to and incor-
porated in the Respondent's application for fees
shall be sealed and withheld from public disclosure,
under the provision of Section 102.147(g) of the
Board's Rules and Regulations.
i The judge inadvertently dated the decision 27 April 1983.
2 The Respondent has requested oral argument. The request is denied
as the record, exceptions, and briefs adequately present the issues and the
positions of the parties.
3 We agree with the judge's conclusion that the Respondent is ineligi-
ble for an award under the Equal Access to Justice Act; 5 U.S.C. §
504(EAJA); NLRB Rules and Regulations, § 102.143, because its net
worth, without considering depreciation, exceeded $5 million. See W C.
McQuaide. Inc., 270 NLRB 1197 (1984); 5 U.S.C. § 504(bb)I(B); NLRB
Rules and Regulations. § 102.143(c)(5).
We find it unnecessary to pass on the judge's suggestion that it is never
appropriate to defer ruling on an application for attorney's fees pending
conclusion of litigation of a backpay proceeding.
SUPPLEMENTAL DECISION
STATEMENT OF THE CASE
CLIFFORD H. ANDERSON, Administrative Law Judge.
Pursuant to a backpay specification in the above-cap-
tioned matter issued by the Regional Director for Region
271 NLRB No. 150
31 of the National Labor Relations Board on September
23, 1983, a trial is being conducted regarding the matters
raised by the backpay specification. The backpay matter
remains in litigation and the record is not as yet closed.
On January 31, 1984, counsel for the General Counsel
during the backpay specification litigation moved to
delete from the backpay specification all backpay
amounts owed Mr. Milton Womack. I approved that
motion without opposition on the same day. On March
1, 1984, American Pacific Concrete Pipe Company, Inc.
(Respondent) filed with the Board an application for an
award of fees and and other expenses pursuant to the
Equal Access to Justice Act (Pub. L. 96-81, Stat. 2325,
herein EAJA) with respect to the Womack allegation.
The Board on March 9, 1984, issued an order referring
the application to me for appropriate action. On March
29, 1984, the General Counsel filed a motion to dismiss
the application. Respondent, on April 2, 1984, filed an
amendment to its application alleging additional ex-
penses. Respondent has not however filed a response to
the General Counsel's motion to dismiss the application.'
This supplemental decision under the Equal Access to
Justice Act is issued pursuant to Section 102.153 of the
Board's Rules and Regulations and is based on the appli-
cation and the motion to dismiss.
Issues
Of the numerous issues raised by the General Counsel
in his motion, two threshold issues may be dealt with.
The first is whether or not my consideration of the issues
raised by the application2 should be deferred until all
issues outstanding in the backpay specification are re-
solved. The second issue is whether or not Respondent
qualifies for recovery under the Equal Access to Justice
Act in light of the net worth declarations contained in
the application, i.e., is applicant's net worth too large? 2
FINDINGS AND CONCLUSIONS
I. THE DEFERRAL ISSUE
The General Counsel concedes, and I agree, that Re-
spondent's application was timely filed with respect to
the Womack allegations. It is also true, as the General
Counsel avers, that the remainder of the issues raised by
the backpay specification< has not been fully litigated
nor decided. The General Counsel argues that the resolu-
tion of the current application should be deferred or held
in abeyance by me, pending conclusion of the backpay
specification litigation. Respondent has taken no position
with respect to this issue.
The Board's Rules and Regulations Sec. 102.150 provides that the
General Counsel may file a motion to dismiss the application and further
provides: "Within 15 days after service of any motion to dismiss, the ap-
plicant shall file a response thereto." While the General Counsel's motion
to dismiss contains a request for deferral, that request specifically did not
seek a delay in ruling on the motion. Further. the General Counsel could
not alter Applicant's rights under Sec. 102 150 in any event.
2 The General Counsel specifically conceded the application was
timely with respect to the Womack matter.
I The hearing in the matter is scheduled to reconvene on June 19,
1984.
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DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Without commenting on the merits of the General
Counsel's arguments that that instant matter should be
deferred pending resolution of the backpay specification
adjudication, I find that it was inappropriate for an ad-
ministrative law judge to defer a matter timely filed
under the Equal Access to Justice Act without a specific
rule and regulation, Board decision, or other clear state-
ment of policy allowing such a procedure. I find that the
need for speedy adjudication of matters placed in issue
before administrative law judges requires that I proceed
in due course, absent such guiding authority. If the Gen-
eral Counsel seeks to create a deferral policy, the matter
should be taken to the Board on exceptions to this deci-
sion. Accordingly, I find deferral is inappropriate and
shall deny the General Counsel's motion in this regard.
II. THE NET WORTH ARGUMENT
Section 504 (b)(l)(B) of the Equal Access to Justice
Act excludes from coverage any association or organiza-
tion whose net worth exceeded $5 million at the time the
adversary adjudication was initiated. The Board's Rules
and Regulations Section 102.143(c)(5) provides among
the eligible applicants to receive an award:
Any other partnership, corporation, association, or
public or private organization with a net worth of
not more than $5 million and not more than 500
employees.
Section 102.143(d) of the Board's Rules and Regulations
states:
For purposes of eligibility, the net worth and
number of employees of an applicant shall be deter-
mined as of the date of the complaint in an unfair
labor practice proceeding or the date of the notice
of hearing in a backpay proceeding.
Respondent is a corporation and is therefore subject to
the $5 million net worth limitation contained in the
quoted provisions. Respondent's application contains a
balance sheet which is asserted to be the last annual bal-
ance sheet prepared before the initiation of the backpay
proceeding. The balance sheet 4 indicates that the Appli-
cant's net worth for the appropriated period qualifies the
Applicant for EAJA awards. The General Counsel in its
motion to dismiss argues that the sealed exhibit submitted
by Respondent reveals that the Applicant's net worth
was calculated by deducting an "allowance for deprecia-
tion" for certain asset values. Further, the General Coun-
sel argues, if the "allowance for depreciation" is disal-
lowed, i.e., Respondent's assets are valued without de-
preciation, Respondent's net worth is too large for re-
covery under the Equal Access to Justice Act. 5
' Respondent as part of its application requested that the financial
statement identified herein as the balance sheet not be included in the
public record but rather be preserved from disclosure consistent with the
Board's Rule and Regulation, Sec. 102.147(g). The General Counsel op-
poses maintenance of a sealed exhibit in this case. In view of my ultimate
ruling in the matter, I grant the motion of Respondent. As a conse-
quence, the details of Respondent's net worth will be discussed only with
the specificity necessary to rule on the issues presented.
s While it is true that the balance sheet submitted by Respondent
speaks to October 31, 1982, and the backpay specification in the instant
Without going into greater detail regarding the sealed
exhibit, I find that if an allowance for depreciation is al-
lowed against certain fixed assets, Respondent is not dis-
qualified under the cited provisions for an Equal Access
to Justice Act award on the basis of its net worth. If
those assets must be evaluated without reduction of
value for depreciation, as contended by the General
Counsel, Respondent's application fails to qualify pursu-
ant to Rules and Regulations 102.143(c)(5) because it re-
flects a net worth in excess of $5 million.
No Board cases on this issue have been discovered.
The General Counsel, in support of his motion, cited the
decision of Administrative Law Judge Richard D. Ta-
plitz of Malcolm Boring Co., JD-80-82, which was
adopted by the Board in the absence of exceptions in an
unpublished decision dated May 5, 1982. In that decision
Judge Taplitz considered the issue presented here, i.e.,
whether or not depreciation should be allowed in evalu-
ating asset value for a net-worth calculation. A decision
by an administrative law judge approved without excep-
tions by the Board does not constitute either an opinion
of the Board or binding authority on other judges.
Therefore, Judge Taplitz' decision in Malcolm Boring has
essentially no precedential as opposed to persuasive
value in deciding the issue presented herein. In the ab-
sence of any controlling Board authority on the issue I
have considered the Taplitz decision for its analysis and
reasoning on the question. Based on the legislative histo-
ry of the EAJA as explicated in that decision, I am per-
suaded that the Equal Access to Justice Act and the
Board's Rules and Regulations require that depreciation
not be allowed to reduce an applicant's net worth for
purposes of qualifying for EAJA awards.
While the Equal Access to Justice Act does not con-
tain a definition of the term "net worth," the legislative
history is more forthcoming. Both House Report 96-
1418 (September 26, 1980) at 15 and Senate Report 96-
253 at 17 state:
Net worth is calculated by subtracting total liabil-
ities from total assets. In determining the cost of
assets, the cost of acquisition rather than fair market
value should be used.
The Administrative Conference of the United States had
occasion to discuss the term "net worth." In its proposed
draft of model regulations for the implementation of the
EAJA at Section 302(d)(l)(A) the conference states:
Each asset may be valued at the lower of either ac-
quisiton cost or fair market value as to the date on
which the proceeding was initiated.
Subsequently, and after receiving comments from various
agencies, the Administrative Conference of the United
matter issued on September 23, 1983, almost an entire year later, Re-
spondent did not address the General Counsel's motion to dimsiss or seek
to file other matter as provided in Board Rule 102.147(d). Respondent
cannot now supply more recent figures if the October 31, 1982 figures
fail to qualify the Applicant for an EAJA award. Thus, it must be as-
sumed that the October 31, 1982 balance sheet reflects the facts and fig-
ures necessary to determine the Applicant's net worth are at least as fa-
vorable to Respondent as more current figures may have been.
1172
AMERICAN PACIFIC PIPE CO.
States issued its Model Rules and some comments there-
on. That report stated at 14:
Valuation of assets: One controversial aspect of
the draft rule was its provision that determinations
of net worth may be based on either acquisition cost
or fair market value of assets. The exact meaning of
"net worth" is not described in the Act or the Con-
ference Report, although Committee reports on
S.265 state that acquisition cost should be used. We
interpreted this as a Congressional intent to permit a
low valuation, and provided for the use of fair
market value where that is lower. The American
Metal Stamping Association supported this ap-
proach, but NASA, the Treasury Department, the
Justice Department and HHS objected to it. NASA
believes all determinations should be based on fair
market value. The other agencies said the legislative
history of S.265 should be followed exactly; they
noted that acquisition cost would avoid the need for
appraisals and would also exclude adjustments to
basis for items like depreciation or capital additions.
As a compromise, DOE suggested that fair market
value be used only when it is lower and reasonably
provable. In revising the rule to give applicants
more flexibility in demonstrating their net worth,
we have eliminated the reference to any standard of
valuation. Applicants that are clearly eligible will
probably be able to demonstrate eligibility regard-
less of the standard used and should be permitted to
submit net worth information using whatever stand-
ard is convenient. Where there is a real question
about eligibility, applicants and agencies may take
into account the reference to acquisition cost in the
legislative history of S.265.; in most cases, we be-
lieve this will work to the applicant's benefit.
Neither the final draft model regulations of the Ad-
ministrative Conference of the United States nor the
Board's Rules and Regulations further define "net
worth" or set forth any criteria for evaluating it.
It is clear that many values may be assigned to a par-
ticular asset. Fair market-value appraisals of assets as of
the date that net worth is to be determined would be
ideal, but would involve complex and costly efforts to
acquire the information. Acquisition price with the pas-
sage of time may be either too high or too low depend-
ing (1) on the effects of inflation on replacement costs
and (2) of the effects of wear and tear or technological
obsolescence. Measures of valuation involving deprecia-
tion are specifically established or allowed by the Inter-
nal Revenue Service for purposes of income tax prepara-
tion. These methods, while permissible for tax calcula-
tion, do not necessarily reflect actual value of assets at
particular times. Given the numerous possible ways of
establishing value, it is appropriate to look closely to the
EAJA and its legislative history for its intended means of
establishing asset value. As Judge Taplitz said in Mal-
colm Boring, supra, slip op. at 4-5:
The EAJA was intended to give relief to small en-
terprises. In doing so the Act used the $5 million
net worth approach. The net worth is geared to the
size of the company and not to bookkeeping meth-
ods for tax purposes. As noted above there are a
number of problems in determining the value of
assets. In an EAJA case there is no sale of assets so
no purchase price can be used. Value can be deter-
mined by taking the cost of acquisition and deduct-
ing depreciation or adding appreciation but in either
case an appraisal would be required to determine
whether there was a depreciation or an appreciation
and the amount thereof. In many situations a great
deal of property would be involved and such an ap-
praisal could be an extremely cumbersome proce-
dure. The approach the legislature took in the
EAJA was to avoid the need to determine whether
property depreciated or appreciated. The legislative
history set forth above clearly establishes that both
the House and Senate intended that "in determining
the value of assets, the cost of acquisition rather
than fair market value should be used." The Admin-
istrative Conference of the United States in its origi-
nal draft of model rules was more equivocal. It pro-
posed that assets be valued at the lower of either
acquisition cost or fair market value. After further
consideration the Administrative Conference con-
cluded that where there was a real difference about
eligibility, applicants and agencies could take into
account the reference to acquistion cost in the legis-
lative history. The Board did not treat with that
problem in its rule.
The legislative history is clear and I believe that
it is binding on me. Value is determined by cost of
acquisition and is so evaluated the [applicant] does
not qualify for a relief under the EAJA because its
net worth exceed $5 million. I shall therefore rec-
ommend that the [Applicant's] application be
denied.
I have determined, in agreement with the General
Counsel, that depreciation is not permissible in evalua-
tion the Applicant's net worth. Given that finding, the
Applicant's balance sheet reflects a net worth iii excess
of $5 million. Accordingly, the Applicant is not eligible
for an award under EAJA. Therefore, I shall dismiss the
instant application.6
On these findings of fact and conclusions of law and
on the entire record, I issue the following recommend-
ed7
ORDER
The application of American Pacific Concrete Pipe
Company, Inc. for attorney's fees and expenses under the
Equal Access to Justice Act is hereby denied.
6 The General Counsel's motion to dismiss also asserts that the Appli-
cant's EAJA application was deficient for a number of other reasons.
Given the results, there is no need to rule on these additonal matters
7 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.
1173