Arizona Mechanical Insulation

National Labor Relations Board - Board Decisions

Nov 16, 2005

345 N.L.R.B. 1257 (N.L.R.B. 2005)

ARIZONA MECHANICAL INSULATION, LLC
345 NLRB No. 106
1257
Arizona Mechanical Insulation, LLC and Interna-
tional Association of Heat and Frost Insulators
and Asbestos Workers, Local 73, AFL–CIO.
Case 28–CA–18622(E)
November 16, 2005
DECISION AND ORDER
BY CHAIRMAN BATTISTA AND MEMBERS LIEBMAN
AND SCHAUMBER
On May 12, 2005, Administrative Law Judge Thomas
M. Patton issued the attached supplemental decision. The
General Counsel filed exceptions and a supporting brief,
the Applicant filed an answering brief, and the General
Counsel filed a reply brief.
The National Labor Relations Board has considered
the decision and the record in light of the exceptions and
briefs and has decided to affirm the judge’s rulings, find-
ings,1 and conclusions and to adopt the recommended
Order as modified below.2
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge as
modified and orders that the Applicant, Arizona Me-
chanical Insulation, LLC, Hereford, Arizona, shall be
awarded $9700.04 pursuant to its Equal Access to Justice
Act application.
John Giannopoulos, Esq., for the General Counsel.
Doug Tobler, Esq. (Hammond & Tobler, P.C.), of Phoenix,
Arizona, for the Respondent.
Don A. Peterson, of Phoenix, Arizona, for the Charging Party.
SUPPLEMENTAL DECISION
EQUAL ACCESS TO JUSTICE
THOMAS M. PATTON, Administrative Law Judge. On May 20,
2004, the National Labor Relations Board issued an Order in
this proceeding, dismissing the complaint (the Decision). On
June 8, 2004, the Respondent filed an application for an award
of attorney’s fees and expenses under the Equal Access to Jus-
tice Act (EAJA), 5 U.S.C. Section 504, and Section 102.143
through 102.155 of the Board’s Rules and Regulations. On June
15, 2004, the Board referred the matter to the undersigned for
further appropriate action.
The application is verified by Monica Schwarz, a member of
Arizona Mechanical Insulation, LLC (herein AMI), the Appli-
cant. The application includes a sealed envelope labeled “Con-

1 No exceptions were filed to the judge’s finding that the Applicant
is eligible to receive an award of fees and expenses.
2 The Applicant seeks an additional $1297.50 for attorneys’ fees in-
curred in responding to the General Counsel’s exceptions. We find that
the Applicant is entitled to these additional fees, and we shall add this
amount to the $8402.54 awarded by the judge for a total award of
$9700.04. DeBolt Transfer, 271 NLRB 299, 300 (1984) (amount of
recovery may include the time spent securing the right to the award).
fidential Financial Information” that was served in accordance
with Board Rule Section 102.147. Applicant’s motion to with-
hold the balance sheet from public disclosure pursuant to Board
Rule Section 102.147(g)(2) was granted on July 6, 2004.
The General Counsel filed a timely motion to dismiss the
application with supporting argument. The Applicant filed a
response to the motion with supporting argument and the Gen-
eral Counsel filed a reply. The motion to dismiss was denied.
The General Counsel then filed a timely answer to the applica-
tion and the Applicant filed a reply.
The General Counsel denies that the Applicant is EAJA eli-
gible and contends that an EAJA award should be denied on the
ground that the unfair labor practice proceeding was substan-
tially justified.
I. APPLICANT’S EAJA ELIGIBILITY
The standards for determining whether the Applicant is eli-
gible to receive an EAJA award are found in Board Rule Sec-
tion 102.143, which in relevant part provides:
(c) Applicants eligible to receive an award are as follows:
. . . .
(5) any other partnership, corporation, association, unit of
local government, or public or private organization with a
net worth of not more than $7 million and not more than
500 employees.
(d) For the purpose of eligibility, the net worth and number
of employees of an applicant shall be determined as of the
date of the complaint in an unfair labor practice proceed-
ing or the date of the notice of hearing in a backpay pro-
ceeding.
The verified application states that Applicant is a limited li-
ability corporation engaged in mechanical insulation; that at the
time the charge was filed Applicant had two employees; that
the employees were working in southern Arizona; that Appli-
cant has no affiliates; and that at the time the adversary adjudi-
cated proceeding was initiated Applicant’s net worth was less
than $7 million. The application asserts that Applicant qualifies
for an EAJA award. The financial information consists of a
balance sheet in typical form. It details the assets, liabilities,
and equity of the Applicant. The balance sheet is on an accrual
basis and reflects the situation as of March 31, 2003.
In her affidavit Monica Schwarz states, based on personal
knowledge, that the facts stated in the application and the bal-
ance sheet are true and accurate.
The General Counsel denies that the Applicant is eligible to
receive an EAJA award. The answer states:
[The statement] that the Applicant is an eligible party under
EAJA, is denied as the General Counsel is without sufficient
knowledge or information to form a belief as to the truth of
the allegation. In its application the Applicant has included a
statement that its net worth is less than seven million dollars,
and has provided a one-page balance sheet, which is under
seal by order of the ALJ, to substantiate its assertion. How-
ever, the balance sheet does not satisfy the evidentiary re-
quirements needed to properly authenticate such a document.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1258
The answer does not otherwise explain the denial of EAJA
eligibility. There is no showing of an objective basis for the
asserted lack of knowledge. The issue of EAJA eligibility was
not addressed in the motion to dismiss. In addition to the denial
of the Applicant’s statement regarding its EAJA eligibility, the
answer separately pleads, as an affirmative defense, “The ap-
plicant does not meet the eligibility requirements for an EAJA
award.” The General Counsel has provided no explication of
this affirmative defense.
In its reply to the answer, the Applicant’s attorney reviewed
the evidence it had submitted regarding the Applicant’s EAJA
eligibility and then objected to the answer as follows:
If General Counsel has some secret reason for believing that
the requirements have not been met, Applicant would be more
than willing to provide any additional information that Gen-
eral Counsel believes is necessary. In the absence of General
Counsel’s candor on this subject, it is impossible to satisfy its
unknown complaints.
The Applicant thus contends, in substance, that it was pro-
vided insufficient information to permit it to amend the applica-
tion, if Applicant’s assertion of EAJA eligibility was deficient.
See U.S. v. Hristov, 396 F.3d 1044 (9th Cir. 2005), and cases
cited therein. See also Scarborough v. Principi, 541 U.S. 401
(2004).
The answer does not sufficiently describe deficiencies re-
garding the Applicant’s EAJA eligibility. In this regard, Board
Rule Section 102.150(c) provides, “The answer shall explain in
detail any objections to the award requested and identify the
facts relied on in support of the General Counsel’s position.”
Because the answer does not comply with the requirements of
Section 102.150(c), I find that Applicant’s EAJA eligibility is
established.
Assuming, without deciding, that the merits of the EAJA eli-
gibility issue should be considered, I shall address matters that
may be raised on exceptions, to avoid the necessity of a remand
regarding this issue.
The somewhat cryptic assertion that the balance sheet does
not satisfy the evidentiary requirements needed to properly
authenticate such a document can be read as a contention that
there is a requirement that a document like the balance sheet be
self-authenticating. That is not an EAJA requirement and is not
a basis for dismissing the application.
The affidavit of Monica Schwarz, based on her personal
knowledge, that the balance sheet truthfully and accurately
states the facts regarding the Applicant’s business is sufficient
to authenticate the balance sheet. Because of her role in the
operation of AMI, Monica Schwarz was in a position to have
personal knowledge of the truth of the contents of the balance
sheet. She worked in the office in the Schwarz home and han-
dled business matters for AMI and her husband worked with
the tools. The balance sheet has been sufficiently authenticated
by Monica Schwarz. Fed. R. Evid. 901(b)(1); Shell Ray Mining,
297 NLRB 53 (1989).
The balance sheet is on an accrual basis and reflects the
situation as of March 31, 2003. Board Rule Section 102.143(d)
provides, “For the purpose of eligibility, the net worth and
number of employees of an applicant shall be determined as of
the date of the complaint in an unfair labor practice proceeding
. . . .” The rule does not require that the financial statement
reflect the net worth on a particular day, so long as the financial
statement and the other evidence show that the Applicant had a
net worth of not more than $7 million on the day the complaint
issued. Shell Ray Mining, supra. While the balance sheet shall
remain under seal, it is appropriate to disclose that the net
worth of the applicant, however measured, was less than 1 per-
cent of the $7 million EAJA limit on the day the charge was
filed.1 I conclude that the Applicant had a net worth of less than
$7 million on the day the complaint issued based on the balance
sheet, the verified application, the affidavit of Monica Schwarz,
the evidence regarding the operations of the Applicant in the
unfair labor practice case, the related findings in the Decision
and reasonable inference.
The application states that on the day the charge was filed
the Applicant had two employees. As noted above, the affidavit
of Monica Schwarz states, based on her personal knowledge,
that the application truthfully and accurately states the number
of employees. I conclude that the Applicant had no more than
500 employees on the day the complaint issued based on the
verified application, the affidavit of Monica Schwarz, the find-
ings in the Decision, the record of the hearing and reasonable
inference.
The Applicant could be given an opportunity to supplement
the application to state the precise net worth and number of
employees on the day the complaint issued, pursuant to Board
Rules Section102.147(f) and Section 102.152(a). That proce-
dure is not warranted because it is obvious that the Applicant is
EAJA eligible and the denial of knowledge and information by
the General Counsel does not appear to be reasonably based.
Based on the foregoing, I conclude that the evidence shows
that the Applicant is eligible for an EAJA award.
II. SUBSTANTIAL JUSTIFICATION
The Applicant is entitled to be reimbursed an award of attor-
ney’s fees and expenses unless the General Counsel has estab-
lished that the issuance of the complaint and the subsequent
litigation were substantially justified. The standards and author-
ity for determining whether the Applicant is entitled to an
EAJA award are summarized as follows in David Allen Co.,
335 NLRB 783, 784–785 (2001):
Under EAJA, a party who has prevailed in litigation before a
Federal government agency is entitled to an award of attor-
ney’s fees and expenses incurred in litigation unless the gov-
ernment can establish that its position was “substantially justi-
fied.” Blaylock Electric, 319 NLRB 928, 929 (1995). The
United States Supreme Court, in Pierce v. Underwood, 487
U.S. 552 fn. 2 (1988), defined the phrase “substantially justi-
fied” as meaning “justified to a degree that could satisfy a rea-
sonable person” or “justified if a reasonable person could
think it correct, that is, if it has a reasonable basis in law and
fact.” Further, the fact that the Government did not prevail on
the merits does not give rise to a presumption that its position

1 The measurement of net worth is discussed in American Pacific
Concrete Pipe, 271 NLRB 1171 (1984), reversed 788 F.2d 586 (9th
Cir. 1986).
ARIZONA MECHANICAL INSULATION, LLC 1259
was unreasonable, and the “substantially justified” standard
does not require the Government to establish that its decision
to litigate was based on substantial probability of prevailing.
Carmel Furniture Corp., 277 NLRB 1105, 1106 (1985). The
Government’s position can still be deemed reasonable in fact
and law notwithstanding that the General Counsel failed to es-
tablish a prima facie case. Id. However, where the General
Counsel presents evidence, which, if credited by the fact
finder, would constitute a prima facie case of unlawful con-
duct, the General Counsel’s position is deemed to be substan-
tially justified within the meaning of EAJA. SME Cement,
Inc., 267 NLRB 763 fn. 1 (1983). Credibility issues which are
not subject to resolution by the General Counsel in the inves-
tigative stage of a proceeding on the basis of documents or
other objective evidence are, in the first instance, the exclu-
sive province of the administrative law judge. Accordingly,
where the General Counsel is compelled by the existence of a
substantial credibility issue to pursue the litigation, and there-
after presents evidence which, if credited, would constitute a
prima facie case, the General Counsel’s case has a reasonable
basis in law and fact and is substantially justified. Barrett’s
Contemporary & Scandinavian Interiors, 272 NLRB 527
(1984).
The only violation alleged was that the Applicant refused to
execute or abide by a labor agreement negotiated in 2002 be-
tween Western Insulation Contractors Association (the Asso-
ciation) and International Association of Heat and Frost Insula-
tors and Asbestos Workers, Local 73, AFL–CIO (the Union).
The evidence did not establish that Applicant was bound by
group bargaining and the complaint was dismissed. The Gen-
eral Counsel contends that the agency’s position was substan-
tially justified.
The EAJA issue is whether the agency’s position that AMI
had made a binding commitment to group negotiations was one
“a reasonable person could think it correct, that is, if it has a
reasonable basis in law and fact.” Pierce v. Underwood, 487
U.S. 552 fn. 2 (1988).
The General Counsel and the Applicant each acknowledge
that the concurring opinion of Justice Stevens in Charles D.
Bonanno Linen Service, 454 U.S. 404, 419–420 (1982), sets
forth the standards for determining whether an employer or a
union has made a binding commitment to group negotiations.
See Detroit Newspaper Agency, 326 NLRB 782 (1998); Paint-
ers District Council 51 (Managanaro Corp.), 299 NLRB 618
(1990). In Bonanno Linen, Justice Stevens wrote:
The mere fact that an employer bargains in conjunction with
other employers does not necessarily mean that it must sign
any contract that is negotiated by the group. The Board re-
quires that, to be bound by the terms of group negotiation, the
members of an employer association must have indicated
from the outset an unequivocal intention to be bound in col-
lective bargaining by group rather than individual action, and
the union representing their employees must [have] been noti-
fied of the formation of the group and the delegation of bar-
gaining authority to it, and [have] assented and entered upon
negotiations with the group’s representative. (Internal quota-
tion marks and citations omitted.)
The decision dismissing the complaint includes the following
findings:
Monica Schwarz and representatives of five other employers
attended the initial July 29 meeting. The initial meeting was at
the union hall. Four of the six employers who participated in
the July 29 meeting were WICA members. The attendance
sheet that was signed by Schwarz at that meeting had
“WICA” written at the top. Schwarz credibly testified that
when she signed the attendance sheet she did not associate
WICA with Western Insulation Contractors Association and
that she was unfamiliar with the organization prior to the 2002
negotiations.
The General Counsel contends that if Monica Schwarz’ tes-
timony that she did not associate the WICA acronym with the
Association when she signed the initial attendance sheet had
not been credited, a violation would arguably have been found.
The General Counsel also points to the crediting of
Schwarz’s testimony that she was unfamiliar with the Associa-
tion prior to the 2002 negotiations. The Decision concludes that
the only probative evidence that AMI possessed information
regarding the identity of Western Insulation Contractors Asso-
ciation/WICA prior to the 2002 negotiations were the refer-
ences to that organization in the union agreements Monica
Schwarz signed in 1999.
The questions of Monica Schwarz’ mentally associating
WICA with the Association when she signed an attendance
sheet at the initial meeting and her familiarity with the Associa-
tion prior to the negotiations were not substantial credibility
issues. The testimony on these matters was of marginal signifi-
cance in determining whether the evidence as a whole met the
Bonanno Linen standards. David Allen Co, supra. I attached
little significance to those matters and neither was an important
factor in my concluding that AMI was not bound by group
action. Cf. Golden Stevedoring Co., 343 NLRB 115, 117
(2004). That testimony is not mentioned in the analysis portion
of the decision. The decision was based on the objective evi-
dence relevant to the issue of AMI’s intent to be bound by
group action.
The complaint alleged and the answer denied that AMI was a
member of the Association. Schwarz testified that AMI was
never a member of the Association. Bryan E. Rymer Jr., an
official of the Association and the chief negotiator was a wit-
ness for the General Counsel. Rymer testified that AMI was not
an Association member. There has been no showing that the
Government had substantial probative evidence that AMI was
an Association member.
The complaint alleged and the answer denied that in Sep-
tember 1999, when AMI entered into an interim agreement
with the Union, it agreed to be bound to future industry agree-
ments, which were negotiated between the Union and Associa-
tion. In fact, there was no basis to conclude that the terms of the
interim agreement included an agreement by AMI to be bound
to the 2002 Agreement. There has been no showing that the
Government had evidence to support such a contention. Indeed,
the Decision only assumes, without finding, that the other em-
ployers that participated in the 2002 negotiations were bound
by group action.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD1260
The General Counsel contends that evidence was presented
that a reasonable person might accept as adequate to support
the allegation that the applicant indicated an unequivocal inten-
tion to be bound by group bargaining. The “reasonable person”
standard is not a subjective test. The General Counsel must
show that the Government’s position had a “reasonable basis in
law and fact.” Pierce v. Underwood, 487 U.S. 552 fn. 2 (1988).
The position of the General Counsel is inconsistent with the
requirement that an employer’s intent to be bound by group
bargaining be clear and unequivocal. Moreover, the General
Counsel’s argument is inconsistent with the Court’s conclusion
that absent “an unequivocal commitment to be bound by group
action, an employer is free to withdraw from group negotiation
at any time, or simply to reject the terms of the final group
contract.” Charles D. Bonanno Linen Service, 454 U.S. 404,
419–420 (1982).
Much of the General Counsel’s argument on the EAJA ques-
tion amounts to a contention that the unfair labor practice case
was wrongly decided. In particular, the General Counsel con-
tends that the administrative law judge misread and misapplied
the case law relied on by the General Counsel. I find it unnec-
essary to expand on or further explain the Decision.
The General Counsel contends that if the Applicant had
made witnesses available during the investigation “perhaps a
complaint may not have issued.” General Counsel argues,
based on C.I. Whitten Transfer Co., 312 NLRB 28, 29 (1993),
“Respondent cannot now rely on its own lack of cooperation to
support its application for attorney’s fees pursuant to Equal
Access to Justice Act.” The General Counsel does not explain
how the decision to issue complaint could have been affected
by such witnesses.
On June 3, 2003, during the administrative investigation, the
investigator sent a letter to AMI that stated in part:
Along with providing a position statement and witnesses, you
may also submit any other evidence, affidavits, or documents
you consider relevant. However, providing affidavits not
taken by a Board Agent does not constitute full cooperation
within the meaning of the Equal Access to Justice Act. If you
choose not to reply to this request, the Regional Director will
make his decision based upon the evidence available. Accord-
ingly, I ask that you present the evidence requested and any
other evidence that you may wish to submit, including any
relevant witnesses for the purpose of giving affidavits, by the
close of business on June 18, 2003, so that the Regional Di-
rector may consider such evidence.
June 18, Monica Schwarz responded with a 3-page statement
of position and 15 pages of exhibits. Schwarz closed with the
following, “Feel welcome to contact me directly for additional
information or clarification. I can arrange to meet with you
personally to discuss the depth of our concerns further.” The
record does not indicate that there was further communication
with AMI before a decision was made to issue complaint. It
was a 4-hour drive from Hereford to Phoenix and Schwarz was
employed as a schoolteacher in Hereford. It was not unreason-
able for Schwarz to try initially to resolve the charge by mail.
In any event, the rationale of Whitten Transfer has little rele-
vance to the present case. Unlike the situation in Whitten Trans-
fer, AMI did not withhold evidence that was then disclosed at
the hearing to defeat the Government’s case. The dismissal of
the complaint against AMI was the consequence of an absence
of substantial probative evidence of a violation. A respondent is
not presumptively barred from receiving an EAJA award be-
cause respondent witnesses are not made available for affida-
vits taken by a Board agent.
In summary, the dismissal was not based on resolutions of
disputed issues of fact. Rather, the Decision was based on un-
controverted facts, which were known or should have been
known to the Government. The case did not turn on novel ques-
tions of law. The complaint was dismissed on the basis of set-
tled decisional authority. I find that General Counsel’s position
was not reasonable in law or fact and that there are no special
circumstances that would make an award unjust.
III. FEES AND COSTS
Board Rule Section 102.145 provides in relevant part that
awards will be based on rates customarily charged by attorneys,
subject to a limitation of $75 per hour, plus reasonable ex-
penses. The Applicant has submitted verified detailed billing
statements of its attorney. AMI has been charged at an hourly
rate of $250 per hour for attorney time and $200 for 1 hour of
paralegal time. AMI has also been billed for expenses of post-
age, FedEx delivery, photocopying, parking, processor fees for
subpoena service, messenger service, and online legal research.
The fees and expenses claimed were all incurred after the issu-
ance of the complaint. The original application was supple-
mented to include fees and expenses incurred in the prosecution
of the EAJA application, which are recoverable. See DeBolt
Transfer, 271 NLRB 299 (1984). The General Counsel has not
challenged the Applicant’s fees and expenses. I have reviewed
the fees and expenses sought and find that they are allowable
under Board Rule Section 102.145, subject to the $75 ceiling
on attorney fees.
The Applicant has not made a request to the Board, by appli-
cation for rulemaking or otherwise, for an increase in the al-
lowable hourly rate of $75. Absent such a request and a favor-
able ruling by the Board, I am without authority to consider the
Applicant’s request for attorney’s fees higher than the maxi-
mum provided by the EAJA and the Board’s Rules and Regula-
tions. Accordingly, I shall compute the Applicant’s attorney’s
fees and paralegal fees at the hourly rate of $75. The allowed
hourly rate is without prejudice to the Applicant to file a peti-
tion to raise the hourly rate, pursuant to Board Rule Section
102.146.
The attorney billing reflects the chargeable time in hours and
tenths of an hour. The following is a summary of the hours
billed, the allowable amounts based on an hourly rate of $75
and the expenses claimed relative to defending the issues raised
by the complaint and handling the EAJA application:
(1) Attorney time 74.4 hours $6330.00
(2) Paralegal time 1.0 hours 75.00
(3) Expenses 1997.54
Total $8402.54
ARIZONA MECHANICAL INSULATION, LLC 1261
ORDER
Arizona Mechanical Insulation, LLC shall be awarded
$8402.54 pursuant to its EAJA application, as supplemented.2

2 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.