Craig & Hamilton Meat Co., Inc.

National Labor Relations Board - Board Decisions

Sep 30, 1985

276 N.L.R.B. 974 (N.L.R.B. 1985)

974 DECISIONS OF NATIONAL LABOR- RELATIONS BOARD
Craig &- Hamilton Meat Company , Inc. and General
Teamsters Local 439 , International Brotherhood
of -Teamsters , Chauffeurs , Warehousemen and
Helpers - of America . Case 32-CA-5273(E).
.30 September 1985
SUPPLEMENTAL DECISION AND
ORDER
BY CHAIRMAN DOTSON AND MEMBERS
DENNIS AND JOHANSEN
On 21 December 1984 Administrative Law
Judge Jay • R. Pollack issued the attached supple-
mental decision. The - Applicant 'filed exceptions
and a supporting brief; and the General Counsel
filed an answering brief in support. of the judge's
supplemental decision.
The National-Labor Relations Board has delegat-
ed its authority in -.this proceeding to a three-
member panel.
The Board has considered the supplemental deci-
sion` 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 recom-
-mended Order.'
ORDER
The National Labor Relations Board adopts the
recommended Order of the - administrative law
judge and orders that the application of the Appli-
cant, Craig & Hamilton Meat' Company, Inc.,
Stockton,- California, for an award under the Equal
Access to Justice Act is dismissed.
i In agreeing with the judge that the General Counsel 's prima facie
case (271' NLRB 853 ( 1984)) was substantially justified , we believe that in
revising the Equal Access to Justice Act, 5 US C § 504 (1982), as
amended by Pub L 99-80, 99 Stat 183 (1985 ), Congress did not alter,
but merely clarified , the definitions of "substantially justified " "Substan-
tially justified" means more than " mere reasonableness " H R Rep 99-
120 at 9 ( 1985).. •
SUPPLEMENTAL DECISION
(Equal Access to Justice-Act)'-
JAY R. POLLACK, Administrative. Law Judge. On 31
July 1984 the National Labor Relations . Board issued a
Decision and Order in the above-entitled proceeding
(271 NLRB 853 (1984)) adopting- my recommended
Order; dismissing the complaint in its entirety.
Thereafter, on -30 August 1984, Craig & Hamilton
Meat Company; Inc.' (the Applicant) filed with the
Board in Washington, D.C., an Application for an
Award-',of Fees and 'Other Expenses pursuant to the
-Equal Access to Justice Act, Pub. L. 96-481, 94 Stat.
2325 and Section 102.143 of the Board's Rules and Regu-
lations, '-and a Motion to Withhold Information from
Public Disclosure. On 17 September 1984 the Board re-
ferred-this matter to me for appropriate action.
On 26 September 1984 the General Counsel filed a
motion to dismiss the application and' the Applicant filed
a timely opposition thereto. Thereafter, on .16 April I
denied the motion to dismiss without prejudice to the
General Counsel to include in his answer to the applica-
tion the defenses raised in the motion to dismiss.-On 15
November the General Counsel filed her answer to the
application. The Applicant filed no further reply.
The gravamen of the General Counsel's answer'is that
the General Counsel's position in the underlying unfair
-labor practice case was substantially justified:'
The Applicable Law - • -
EAJA provides that an administrative agency award
to a prevailing party certain expenses incurred in connec-
tion with an. adversary adjudication,, unless the.agency
finds the position of the Government -is "substantially
justified." Although EAJA is silent on the.meaning of
the "substantially justified" standard, the Board has held
the test is one of reasonableness. Where the Government
can show that its case had a reasonable basis both in law
and fact, no award will be made. Enerhaul,. Inc., 263
NLRB 890 (1982), reversed 710 F.2d 748 (11th Cir.
1983); Shellmaker, Inc., 267 NLRB 20 (1983).. The Gov-
ernment is not required to establish that its decision to
litigate was based on a substantial probability of prevail-
ing. Wolf Street Supermarket, 266 NLRB •665 (1983);
Hamel Forest Products, 270 NLRB 1078 (1984). EAJA
was not intended to stifle the reasonable regulatory ef-
fects of Federal agencies. Wyandotte Savings Bank Y.
NLRB, 682 F.2d -119, 120 (6th Cir. 1982).. Similarly,
EAJA was not intended to deter the Government from
advancing in good faith a close question of law or fact.
Shellmaker, supra; Derickson Co., 270 NLRB.-516 (1984).
Further EAJA was not intended to foreclose -the Gov-
ernment from exploring novel or close questions of law.
Thus, EAJA provides that the Government should not
be held liable where "special circumstances -make the
award unjust." The legislative history of EAJA explains
the purpose of the "safety valve" of special circum-
stances.. -
This "safety valve" helps to ensure that the. Gov-
ernment is not deterred from advancing in, good
faith the novel but credible extensions and interpre-
tations of the law that often gives the courts discre-
tion to deny awards where equitable considerations
dictate an award should not be made. (S. Rep. 96-
253, 96 Cong., 1st Sess. at 6; H. Rep.`96-1418, 96
Cong., 2d Sess. 11, reprinted, in 1980 U.S. Code
Cong. & Ad. News 4984, 4990.)
The Board has utilized a case-by-case approach in ana-
lyzing EAJA cases. It has interpreted the reasonableness
standard in such a manner as to not interfere with the
i In view of the disposition of the case , the other issues raised by the
General Counsel 's answer need not be addressed Further , in view of the
disposition of the case , the Applicant 's motion to withhold the financial
information filed with its application is granted
276 NLRB No. 103
CRAIG & HAMILTON MEAT CO. - 975
General Counsel's vigorous enforcement of the labor
law. Shellmaker, supra, and Derickson Co., supra (close
questions of law and fact); Iowa Parcel Service, 266
NLRB 392 (1983) (a novel but credible extension and in-
terpretation of the law); Charles-H. McCauley Associates,
269 NLRB 791 (1984) (a credibility question which was
ultimately' decided against the General Counsel); _ and
International Maintenance Systems, 267 NLRB 1136
(1983) (failure of the applicant to cooperate in the pre-
complaint investigation).
The Underlying Litigation
In the underlying unfair labor practice case, the Gen-
eral Counsel alleged that the Applicant violated Section
8(a)(5) and (1) of the National Labor Relations Act by
failing and refusing to furnish General Teamsters Local
439, International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America (the Union) with
requested information allegedly relevant to the Union's
performance of its collective-bargaining function. The
Applicant admitted that it failed to furnish the informa-
tion at issue. The Applicant's defense, accepted by the
judge and the Board, was that it had not placed the fi-
nancial status of the Company in issue and, therefore, the
information requested by the Union was not relevant to
the negotiation at issue. There was no dispute as to the
applicable law but rather as to the application of the law
to the facts of this case.
In Truitt Mfg. Co., 351 U.S. 149 (1956), the Supreme
Court held that financial information is relevant to nego-
tiations in which an employer claims a financial inability
to' pay a union wage demand. Following Truitt, the
Board and the courts have held that an employer is not
obligated to demonstrate that it is unable to raise wages
unless it first claims such an inability. Pine Industrial Re-
lations Committee, 118 NLRB 1055 (1957), enfd. 263 F.2d
483 (D.C. Cir. 1959); Furniture Workers v. NLRB, 388
F.2d 880, 882 (4th Cir. 1967); N. Y Printing Pressmen v.
NLRB, 538 F.2d 496 (2d Cir. 1976).
The Board has expanded the application of Truitt to
situations where the employer has not specifically
claimed poverty but has in some manner expressed an in-
ability to afford the union's demands. For example, in
Taylor Foundry Co.,2 the Board found that the respond-
ent-employer's assertion that it would have to go out of
business if it gave a wage increase "amounted to a clear
claim of financial inability." In Western Wirebound Box
Co.,3 the Board expanded Truitt to require an employer
to supply figures to justify its claimed fear of a competi-
tive disadvantage if it met the union's demands. In Steel-
workers (Stanley Artex Windows) v. NLRB,4 Chief Justice
Burger, then writing for the United States Court of Ap-
peals for the District of Columbia, stated:
The Company asserts " that a claim of inability to
pay is not shown when the Company merely claims
that the increases will prevent it from competing.
But the inability to compete is merely the explana-
8 141 NLRB 765 (1963), enfd 338 F.2d 1003 (5th Cir . 1964).
3 145 NLRB 1539 (1964), enfd. 356 F.2d 88 (9th Cir. 1966)
- 4 401 F 2d 434 (D.C Cir. 1968)
tion of the reason why. the Company could not
afford an economic benefit.
Inability to pay a union demand need not'be expressed
in any set formula before the obligations set forth in
Truitt come into play. For example, in Milbin Printing,'
the Board held that an employer had not claimed finan-
cial inability by his statements during negotiations that
his desire to maintain a "proper balance" for his business
did not permit him to "reach the union 's numbers." The
Court of Appeals for the Second Circuit reversed, stat-
ing that the plain english meaning of the employer's
words was an inability to pay. The court found that the
employer had clearly raised the issue of its ability to
afford the union's demands . The court said that the
Board interpreted the employer 's remarks to mean that
he "wouldn't" pay the union's demands but that the em-
ployer had really said he "couldn't" pay.' However, in
,Yore Cinema Corp., 254 NLRB 1288 (1981), the Board
adopted an administrative law judge's conclusion that the
offer of reduced wages is not the equivalent of a plea of
inability to pay. The judge stated:
The General' Counsel cited no case , and my own re-
search turned up' none, which would establish that
an employer's offer which might reduce earnings or
which might otherwise inure to the employer's ben-
efit brings a case within the ambit of Truitt.
Applying the above case law to the facts of the instant
case, I found the issues to be whether the Applicant
made the type of claim that it would be required to sub-
stantiate and whether the items requested by the Union
were relevant to that claim . The Applicant's explanation
of its wage and benefit package was based on two points.
First, the Applicant claimed- that its position in the
market was changing and as a result it had less need for
skilled employees. Second, the Applicant bluntly stated it
did not believe that the employees' services were worth
more than it was offering to pay. The second of these
explanations clearly raised no obligation to furnish finan-
cial information. The Applicant simply stated it
"wouldn't" pay what the Union requested and was seek-
ing a bargain more to its benefit. As stated above, the
offer of reduced wages did not bring the case within the
ambit of Truitt.
The General Counsel argued that the Applicant's as-
sertion that its competitors would force it to become
more of a jobber than a processor equates with an inabil-
ity to pay claim apparently because such a change would
have a negative financial impact. The Applicant claimed
that due to competition the nature of its business would
change, i.e., the Applicant would reduce its processing of
beef operations and to a larger extent simply deliver the
products as a jobber. Accordingly, the Applicant
claimed its labor needs would change, i.e., it would re-
218 NLRB 223 (1975), reversed . and remanded sub nom NY. Print-
ing Pressmen v. NLRB, 538 F . 2d 496 (2d Cir 1976).
6 538 F.2d at 501 . Compare United Fire Proof Warehouse Co. Y NLRB,
356 F 2d 494, 498 (7th Cir. 1966) (where the Board found • that the em-
ployer said he "can't" and the Court found that the employer said he
"won't")
976 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
quire more unskilled- workers. However, the Union did
not request that the Applicant substantiate these claims.
Rather, the Union requested specific information con-
cerning the Applicant's financial status "before it could
agree to such financial concessions."
In my decision I stated that the case would have been
different if the-Union had requested that the Applicant
substantiate its claims regarding its changing role in the
industry. However, the information requested by the
Union was not relevant to the Applicant's bargaining
stance. It was this deficiency in the case that resulted in
my dismissal of the case. While the General Counsel fo-
cused on the Applicant's assertions during bargaining, he
assumed that the information requested was relevant to
"supporting and verifying '[the Applicant's] -economic
claims that future economic circumstances compel
present wage concessions in order to remain competi-
tive." The information requested was relevant to the Ap-
plicant's general financial health. -However, the Appli-
cant did not put its. financial health in issue , rather it
placed its changing role from processor to jobber in
issue . The requested information apparently was not in-
tended to and did not pertain to the claim advanced by
the Applicant during negotiations.
In conclusion I found the Union's request did not meet
the Applicant's assertions ' regarding its competitors' op-
erations or its change in 'operation from processing to
jobbing. The information requested would not reasonably
be expected to show the accuracy or inaccuracy of the
Applicant's claims. Thus, the information could `not be
said to be relevant to the instant negotiations. It follows
that the Applicant could not be found to have violated
its statutory obligation to bargain in good faith by failing
to provide the information requested. _ Thus, I recom-
mended dismissal of the case.
sIn adopting and affirming my findings and conclusions,
the Board noted 271 NLRB 853 fn. 1 (1984):
Counsel for the General Counsel contends that, in
finding that the Respondent had no statutory obli-
gation toI furnish information requested by the
Union, the judge relied on limited portions of letters
the Respondent sent the Union during collective
bargaining and ignored others. Counsel for the Gen=
eral Counsel cites , inter alia , an excerpt from the
Respondent's 27 October 1983 letter to the Union
stating that the Company does "not intend to be an-
other of the 800,000 business casualties this year."
Removed from context, this statement appears to
support the General Counsel's contention that the
Respondent had put its general financial condition
at issue in resisting the Union's collective-bargaining
demands. However, the portion of the-letter where
the sentence appears focuses on the Respondent's
resolve to "gird for the continuing tough competi-
tion ahead," and is therefore expressing the Re-
spondent's concern over potentially harmful conse-
quences that would be felt by its business if it failed
to respond to industry trends by" redirecting its re-
sources from meat processing to jobbing. Thus,
-placed in context, this.and other language contained
in collective-bargaining correspondence generated
by the Respondent and cited by the General-Coun-
sel in his brief support the judge's conclusion that
information sought by the Union does not pertain to
claims advanced by the Respondent during negotia-
tions. Accordingly,, we adopt the judge's conclusion
that the Respondent has not violated Sec. 8(a)(5) of
the Act by refusing to supply such information.
The Merits of the Application
In my view , under the Board 's reasonableness stand-
ard, the • General Counsel should not be assessed costs in
this case . This was a close case and the Government's
position , although not prevailing, was advanced in good
faith and reasonable both in law_ and fact . The General
Counsel's argument that the Applicant 's position in nego-
tiations equated with a claim of inability to pay, although
rejected by the Board, was not an unreasonable interpre-
tation of the facts and the law. Sometimes the line be-
tween an inability to pay and a resolve-not to pay is very
difficult to draw . Compare Milbin Printing ,- supra, and
United Fire Proof Warehouse, supra . In the instant case,
the argument advanced by the General Counsel made
the question of success a close one under existing law.
This is sufficient to support a fmding of substantial justi-
fication within the Board 's interpretation of EAJA. Ac-
cordingly , I shall recommend that the instant application
be dismissed. _
On the foregoing findings and conclusions, the record
in the underlying unfair labor practice case, and the
pleadings herein, and pursuant to Section 102 . 153 of the
Board's Rules and Regulations , I issue the following rec-
ommended7
ORDER
It is recommended that the application of the-Appli-
cant, Craig & Hamilton Meat Company, Inc., Stockton,
California, for an award under the Equal Access to Jus-
tice Act be dismissed.
T 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