K-Bar-B Youth

National Labor Relations Board - Board Decisions

Oct 30, 1998

327 N.L.R.B. 66 (N.L.R.B. 1998)

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 66
Broadway, Inc., d/b/a K-BAR-B Youth Ranch and
Gail Padgett. Case 15–CA–14035(E)
October 30, 1998
SUPPLEMENTAL DECISION AND ORDER
BY MEMBERS LIEBMAN, HURTGEN, AND
BRAME
On June 10, 1998, Administrative Law Judge William
N. Cates issued the attached supplemental decision. The
Respondent filed exceptions, a supporting brief, and a
petition to increase attorney fees. The General Counsel
filed an answering brief, and the Respondent filed a reply
to the General Counsel’s answering brief.
The National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the supplemental decision
and the record in light of the exceptions and briefs1 and
has decided to affirm the judge’s rulings, findings, and
conclusions and to adopt the recommended Order.2
ORDER
The National Labor Relations Board adopts the rec-
ommended Order of the administrative law judge and
orders that the application for an award of attorney’s fees
and expenses under the Equal Access to Justice Act be
denied.

SUPPLEMENTAL DECISION AND ORDER
[EQUAL ACCESS TO JUSTICE ACT]
WILLIAM N. CATES, Associate Chief Judge. On March 6,
1998, the National Labor Relations Board (the Board) issued its
Decision and Order in the above-entitled unfair labor practice
proceeding as 325 NLRB 409. My underlying Bench Decision
in the case was adopted wherein I concluded the General Coun-
sel (Government) failed to show, as alleged, that Broadway,
Inc. d/b/a K-BAR-B Youth Ranch (Company) discharged its
employees William Pellegrin, Jennifer Pellegrin, Tia Water-
man, and suspended its employee Aimee Rojas because of a
belief, albeit mistaken, that they were engaged in protected
concerted activities.1
Thereafter on April 3, 1998, the Company filed an Applica-
tion For and Memorandum in Support of Request for Costs and
Fees Pursuant to the Equal Access to Justice Act (EAJA), Pub.
L. 96–481, 94 Stat. 2325 and Section 102.143 of the Board’s
Rules and Regulations. On that same date, the Board referred
the above-entitled matter to me for further appropriate action,
but retained before it the Company’s Petition to Increase Attor-
ney’s Fees for Costs and Fees.

1 In its reply brief the Respondent moved to strike the General Coun-
sel’s answering brief as being violative of Sec. 102.46(j) of the Board’s
Rules and Regulations. We deny the Respondent’s motion to strike as
lacking in merit.
2 In view of our agreement with the judge’s finding that the Respon-
dent is not entitled to recover fees and expenses under the Equal Access
to Justice Act, we need not address its petition for an increase in the
amount of fees recoverable.
In finding that the General Counsel was “substantially justified” in
issuing complaint, Member Hurtgen notes that there was circumstantial
evidence to raise a credibility issue concerning Executive Director
Speed’s explanation of her motivation for firing employees. There was
a reasonable chance that such evidence could undermine Speed’s oth-
erwise uncontradicated testimony. Absent such evidence, there would
likely have been no reasonable basis for issuance of a complaint.
1 The Board found it unnecessary to rely on my alternative rationale
that even if the “sick out” was found to be protected concerted activity,
the employees conduct was indefensible.
A. Brief Review of the Facts
A brief review of the facts, as determined in my Bench Deci-
sion, is helpful at this point.2 It was established management
was notified on the evening of May 22, 1996, that certain em-
ployees had concerns regarding overtime pay they had not re-
ceived which the employees felt they were entitled to. Thereaf-
ter, Company Supervisor (and Charging Party) Padgett spoke
about the concerns with Company Executive Director Mary
Speed, who did not seriously contest or dispute the overtime
problem. Speed promised Padgett the matter would be cleared
up and the employees would be paid their overtime on their
next 2-week pay period. This resolution of the overtime prob-
lem was related by Supervisor Padgett to certain of the alleged
discriminatees.
Sometime late during the evening (after 11 p.m.) of May 22,
1996, or very early (before 1 a.m.) May 23, 1996, the four-
named discriminatees notified the Company they were sick and
would not, and did not, report for their regularly scheduled
work assignments on May 23, 1996.
These May 22–23, 1996 events gave rise to the question:
“Was there a conspiracy to call in sick and engage in a work
stoppage to protest the overtime situation?”
I concluded in my Bench Decision the four alleged discrimi-
natees were, as they testified, sick and unable to report for
work. Specifically I found “they were not withholding their
services to protest the failure to adequately or properly pay
overtime the employees perceived and perhaps the Company
acknowledged that they were entitled to.”
I further addressed the question: “Did the Company mistak-
enly believe the employees were engaged in a concerted work
stoppage in order to protest work-related grievances and dis-
charged the employees for that reason?” I concluded the Com-
pany clearly perceived the employees were engaged in con-
certed activities. The credited evidence establishes Company
Executive Director Speed was informed on the evening of May
22, 1996, that the four alleged discriminatees had at approxi-
mately 11 p.m. been laughing, partying, and going out for
Cokes. Shortly after 11 p.m. the Company received word these
same four alleged discriminatees had called in sick and that
there had been “some discussion among them about calling in
sick.” I found the Company “perceived” the four alleged dis-
criminatees “had engaged in concert or were acting in concert.”
I concluded; however, the Company, Executive Director Speed
in particular, did not perceive that the four alleged discrimina-
tees concerted conduct was “protected” by the Act. Executive
Director Speed testified, and I credited her testimony, that “she
believed they [the four alleged discriminatees] were engaging
in a sick-out and that was the only reason [for discharging
them]; she had no other motive for taking the action [she did]
against them.”
I concluded Executive Director Speed, based on her credited
testimony, was not unlawfully motivated when she discharged
2 All essential facts are detailed in my original Bench Decision and I
have not attempted to fully summarize the facts in this Supplemental
Decision.
327 NLRB No. 20
K-BAR-B YOUTH RANCH 67
the four alleged discriminatees. I based my conclusion “on the
fact that she [Executive Director Speed] had information that
the employees in question were conducting themselves [party-
ing] in a manner that perhaps was inconsistent with the reasons
[being sick] they had called in [to the Company].”
B. The Company’s Theory
The Company advances a threefold theory in support of its
request for fees and costs. First, the Company contends the
Government had access to and was in possession of unem-
ployment compensation hearing transcripts in which the alleged
“discriminatees” stated under oath they had not conspired to
protest working conditions. Counsel for the Company argues
the Government was on notice as a result of the transcripts of
the unemployment compensation hearings the “alleged dis-
criminatees” were not protesting “anything.” The transcripts of
the unemployment compensation hearings for Padgett, William
Pellegrin, and Tia Waterman disclaim any protest of pay or
working conditions or of any conspiracy to engage in any such
protest. Counsel for the Company argues that because the
Government was aware the Company was not engaged in a
labor dispute with its employees at the time of what it terms the
employees “sick-out” the Government knew there was no
nexus between the employees’ dismissal and any unlawful
motivation (or animus) on the part of the Company. Counsel
for the Company argues the Government possessed no informa-
tion to establish that the person (namely, Executive Director
Speed) making the decision to terminate (and suspend) the
employees believed the employees were engaging in any “pro-
tected” concerted activities. The Company argues the Govern-
ment had uncontroverted statements from an eye witness who
saw the alleged discriminatees laughing, joking, and cutting up
within minutes of a series of calls to the Company in which it
was alleged they were sick. Counsel for the Company argues
all the Government had regarding wrongful motive on the part
of the Company was “a mere inference of pretext” on the part
of the Company’s official responsible for terminating (and
suspending) the employees in question.
The second theory of justification the Company advances for
fees and costs is the Government had access to and was in pos-
session of unemployment compensation transcripts in which the
Charging Party admitted under oath that any complaints about
working conditions had been resolved prior to the alleged con-
certed activity on the part of the alleged discriminatees. Coun-
sel for the Company argues that counsel for the Government
“obviously in an excess of zeal” to prosecute ignored the
Charging Party’s (Gail Padgett’s) sworn unemployment com-
pensation hearing testimony that she had communicated Com-
pany Executive Director Speed’s resolution of the overtime
dispute to alleged discriminatee William Pellegrin.
The third reason the Company advances as justification for
its request for litigation costs and fees is that Counsel for the
Government had both an affidavit and a written statement from
a witness whose testimony proved to the Judge the terminations
were not in retaliation for any protest the alleged discriminatees
may have participated in or been involved with. Counsel for
the Company argues “[t]he fact that this critical witness’s tes-
timony was truthful and unassailable ab initio is evidence by
General Counsel’s inability to generate one substantive ques-
tion in cross-examination of this witness at trial.” Counsel for
the Company further argues Counsel for the Government pos-
sessed no information that Company Executive Director Speed,
at the time she decided to terminate the employees, believed
they were engaging in protected concerted activities. Counsel
for the Company argues “General Counsel was well aware,
prior to proceeding to trial, that the case was reduced to a mere
inference of pretext” and nothing more.
C. Government’s Motion to Dismiss
Counsel for the Government’s Motion to Dismiss is prem-
ised on the assertion the Government’s position was “substan-
tially justified” based upon the record in the underlying unfair
labor practice trial and evidence contained in the Government’s
investigative file.
Counsel for the Government notes Congress characterized
the “substantially justified” standard as one of reasonableness.
Counsel for the Government argues where the Government can
show its case had a reasonable basis both in law and fact no
award should be made. Counsel for the Government notes
Congress emphasized no adverse inferences were to be drawn
from the fact the Government did not prevail in the adversary
adjudication. Counsel for the Government points out the stan-
dard of reasonable justification does not require the Govern-
ment to establish its decision to litigate was based even on a
substantial probability of prevailing in the adjudication of the
matter. Counsel for the Government argues the Congressional
history of the EAJA requires only that “an agency could show
its decision to go forward was reasonable, without establishing
that prospectively there had been a substantial probability it
would win.”
Counsel for the Government also argues an award is to be
denied where “special circumstances make an award unjust.”
Counsel for the Government notes that the Congressional
Committee Reports explain the meaning of this particular pro-
vision as follows:

This “safety valve” helps to ensure that the Government is not
deterred from advancing in good faith the novel but credible
extensions and interpretations of the law that often underline
vigorous enforcement efforts. It also gives the Court discre-
tion to deny awards where equitable considerations dictate an
award should not be made.

Counsel for the Government asserts that particularly in cases
involving credibility issues the reasonableness standard is to be
applied in light of the statutory division of functions under the
Act when the General Counsel is assigned the duty to investi-
gate all charges, to issue complaints, and to prosecute such
complaints before the Board. Counsel for the Government
points out that often in investigating unfair labor practice
charges bonifide credibility conflicts arise. Counsel for the
Government notes if a charging party is credited a prima facia
case can be established; however, if the responding party and
its witnesses are believed no violation would be established.
Counsel for the Government argues that in cases in which
credibility conflicts cannot be resolved administratively on the
basis of objective evidence it is both proper and reasonable for
the government to present such credibility issues to a judge and
the Board to resolve.
Counsel for the Government argues a credibility determina-
tion was necessary regarding the Company’s reason for termi-
nating the alleged discriminatees herein. Counsel for the Gov-
ernment contends the Company asserts that notwithstanding the
concerted nature of the actions of its employees in calling in
sick en mass, the reasons for Company Executive Director
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 68
Speed to disbelieve the authenticity of the sick-out and the
widespread employee contempt and verbal protests regarding
pay irregularities that occurred the day prior to the sick-out the
Government was not “substantially justified” in proceeding.
Counsel for the Government argues this contention of the
Company cannot be supported by the facts. Counsel for the
Government argues circumstantial evidence indicated the allege
discriminatees were terminated or suspended based on the
Company’s “perception” the employees were engaging in pro-
tected concerted activity. Counsel for the Government notes it
was only after the Judge determined, based on a credibility
resolution, that the Company (Executive Director Speed in
particular) did not link the employees job related protests to the
concerted activity that the complaint was dismissed and the
dismissal was upheld by the Board.
Counsel for the Government argues that although the Com-
pany was victorious there is nothing in the record to suggest the
Government’s position at trial was not “substantially justified.”
Counsel for the Government notes the Company’s first argu-
ment that the transcripts of the hearings with the State agency
involving unemployment compensation for the employees un-
dermined the Government’s position is misplaced because the
issues in unemployment hearings are not the same as those in
unfair labor practice proceedings. Counsel for the Government
notes the outcome of an unemployment compensation hearing
in no way constitutes Res judicata before a judge or the Board.
Counsel for the Government further argues even if some of the
testimony in the unemployment hearings could have had a bear-
ing on the allegations in the Board case the substance of the
testimony illicited in no way rendered the theories of the Gov-
ernment as lacking foundation. Counsel for the Government
notes the Company contends the named discriminatees testified
at the unemployment proceedings they called in sick because
they were physically ill. Counsel for the Government notes it
was the Government’s position the Company did not believe
the employees were ill and the Company retaliated for its mis-
taken belief that the employees were engaged in protected con-
certed activity. Counsel for the Government therefore argues
the previous testimony of the employees does not undermine
the theory advanced by the Government.
Second, counsel for the Government notes the Company ar-
gued its application for fees and costs should be granted on the
basis the Charging Party admitted the work place disputes were
resolved. Counsel for the Government argues this cannot be
borne out by the record facts. Counsel for the Government
notes the Charging Party testified she told her son, William
Pelligrin, that Company Executive Director Speed told her she
would talk to another company official and they would work
the overtime problems out. Charging Party Padgett testified
she felt really good at the prospect of being paid what she was
owed. Counsel for the Government argues this testimony does
not suggest that Padgett, and the other employees, were satis-
fied with the Company’s response to the workplace overtime
pay dispute. Counsel for the Government argues however, that
the critical question is not how the employees interpreted Com-
pany Executive Director Speed’s response to their overtime
problems, but rather, how the Company (specifically Executive
Director Speed) interpreted what the employees were doing
when they called in sick that formed the basis of the Govern-
ment’s case. Counsel for the Government argued that the
Company (Executive Director Speed in particularly) believed
the employees to be acting in concert in protest of working
conditions.
Finally, counsel for the Government addresses the Com-
pany’s contention the Government had statements by Company
Executive Director Speed that she did not believe the employ-
ees who engaged in the sickout were actually physically ill.
Counsel for the Government argues Speed admitted she did not
believe the employees were ill and then “searched” for another
explanation coming up with the “prank explanation” as to why
the employees absenced themselves from work. Counsel for
the Government argues that the Judge believed Speed’s expla-
nation does not negate the fact the Government was substan-
tially justified in proceeding to trial with this case. Counsel for
the Government points out the Judge believed Company Execu-
tive Director Speed’s testimony despite the circumstantial evi-
dence to the contrary. Counsel for the Government argues this
was obviously to the benefit of the Company but hardly sug-
gests the Government’s case was fatally flawed from its incep-
tion. Counsel for the Government argues a review of the record
evidence will lead to a finding the Government’s complaint in
this matter was substantially justified and although the Com-
pany may be entitled to a favorable ruling on the underlying
facts in the unfair labor practice case it not entitled to expenses,
costs, and fees, thus the Company’s application for costs and
fees must be dismissed.
D. Company’s Response to Government’s Motion
On May 20, 1998, the Company filed a response to govern-
ment’s counsel’s Motion to Dismiss. Counsel for the Company
argues that the Government in its Motion to Dismiss “even now
persists in substituting policy for law and prosecutorial zeal for
reason and facts.” Counsel for the Company asserts “[b]esides
being casual and generally non-responsive, the General Coun-
sel’s arguments for dismissal are simply wrong.” Counsel for
the Company argues it is not necessary that the unemployment
compensation hearings records operate as Res judicata as to the
Board’s proceedings but that such should have, and did serve
as, valid impeachment materials against the Government’s case
and the facts therein were, without question, known to the Gov-
ernment prior to its proceeding to trial herein. Second, counsel
for the Company argues “for the General Counsel to hide be-
hind a ‘credibility-call’ shield here is disingenuous at best.”
Finally, counsel for the Company again points out that counsel
for the Government did not extensively cross-examine one of
its critical witnesses. Thus, he argues, such further establishes
the validity of Company Executive Director Speed’s credibility
which credibility was known to the Government during the
investigative stages of the case. Counsel for the Company as-
serts counsel for the Government failed to establish the Gov-
ernment’s position was substantially justified.
E. Company’s Eligibility
The Company contends, and the Government does not chal-
lenge, it qualifies as a tax-exempt organization under Section
501(c)(3) of the IR Code (26 U.S.C. § 501(c)(3)). The applica-
ble subsection of the Equal Access to Justice Act (See, EAJA 5
U.S.C. § 504(b)(1)(B)) reads in pertinent part:

(B) “party” means a party, as defined in section 551(3) of this
title [5 USCS § 551(3)], who is (i) an individual whose net
worth did not exceed $2,000,000 at the time the adversary ad-
judication was initiated, or (ii) any owner of an unincorpo-
rated business, or any partnership, corporation, association,
K-BAR-B YOUTH RANCH 69
unit of local government, or organization, the net worth of
which did not exceed $7,000,000 at the time the adversary ad-
judication was initiated, and which had not more than 500
employees at the time the adversary adjudication was initi-
ated; except that an organization described in section
501(c)(3) of the internal revenue code of 1954 (26 U.S.C.
501(c)(3)) [26 USCS § 501(c)(3) exempt from taxation under
section 501(a) of such code [26 USCS § 501(a)], or a coop-
erative association as defined in section 15(a) of the Agricul-
tural Marketing Act (12 U.S.C. 1141j(a)) [12 USCS §
1141j(a)], may be a party regardless of the net worth of such
organization or cooperative association; [Emphasis added.]

I find the Company qualifies under the Equal Access to Jus-
tice Act on the basis of its tax-exempt status as described
above.
E. Prevailing Party
The Company contends it is a prevailing party. Section
102.143(b) of the Board’s Rules and Regulations defines a
prevailing party, in part, as a “respondent in an adversary adju-
dication who prevails in that proceeding . . . is eligible to apply
for an award of fees and other expenses allowable under the
provisions of Section 102.145 of the Rules.” I find the Com-
pany herein is a prevailing party.
F. Substantial Justification
Section 504(a)(1) of the Equal Access to Justice Act, 5
U.S.C. § 504 et seq., provides that the adjudicating agency

shall reward to a prevailing party other than the United States,
fees and other expenses incurred by that party in connection
with that proceeding, unless the adjudicative officer of the
agency finds that the position of the agency as a party to the
proceeding was substantially justified or that special circum-
stances make an award unjust.

Section 102.144 of the Board’s Rules and Regulations provides
in full with respect to standards for awards that:

(a) An eligible applicant may receive an award for
fees and expenses incurred in connection with an adver-
sary adjudication or in connection with a significant and
discrete substantive portion of that proceeding, unless the
position of the General Counsel over which the applicant
has prevailed was substantially justified. The burden of
proof that an award should not be made to an eligible ap-
plicant is on the General Counsel, who may avoid an
award by showing that the General Counsel’s position in
the proceeding was substantially justified.
(b) An award will be reduced or denied if the appli-
cant has unduly or unreasonably protracted the adversary
adjudication or if special circumstances make the award
sought unjust.

As has often been noted, the Supreme Court set forth the
standards for determining substantial justification in Pierce v.
Underwood, 487 U.S. 552 (1988). The Court stated, “substan-
tially justified” means “justified to a degree that could satisfy a
reasonable person” or as having a “reasonable basis both in fact
and law.”
G. Analysis and Conclusions
Simply stated the Government’s theory of a violation of the
National Labor Relations Act, as amended, (the Act) in the
underlying unfair labor practice case was factually sufficient,
legally sound and substantially justified. The Government’s
theory, as alleged, was that the Company discharged (and sus-
pended) the alleged discriminatees because of a belief, albeit
mistaken, that the alleged discriminatees were engaged in pro-
tected concerted activity. The reasonableness of the Govern-
ment’s theory of the case did not rest on whether the alleged
discriminatees were actually sick, as testified to in the unem-
ployment hearings, or whether their overtime concerns had
been resolved; but, rather whether the Company “perceived”
the alleged discriminatees were engaging in protected concerted
activity. It is how the Company interpreted what its employees
were doing when they called in sick and the Company’s re-
sponse thereto that formed the crux of the Government’s case.
The overtime concerns, the en mass sick-out and the timing of
the adverse actions against the alleged discriminatees clearly
established the reasonableness of the Government’s case. It
was only with the crediting of Company Executive Director
Speed’s testimony that she did not link the alleged discrimina-
tees job related protests to their concerted activity that the
Company prevailed and the complaint was dismissed. I spe-
cifically reject, as patently without merit, the Company’s con-
tention the Government’s position could somehow not be sub-
stantially justified because of the manner or degree of cross-
examination by Government counsel of one of the Company’s
witnesses.
It is recommended that the Company’s Application for Costs
and Fees be, as urged by the Government, dismissed.3
ORDER
It is ordered that the application be dismissed.4

3 I find it unnecessary to address any assertion the Government may
be making that special circumstances exist herein to dismiss the Com-
pany’s application within the “safety valve” intention of Congress that
reasonable law enforcement efforts not be chilled.
4 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.