Leeward Auto Wreckers, Inc.

National Labor Relations Board - Board Decisions

Apr 7, 1987

283 N.L.R.B. 574 (N.L.R.B. 1987)

574 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Leeward Auto Wreckers, Inc. and United Steelwork-
ers.of America, AFL-CIO, CLC. Case 37-CA-
1969(E)
7 April 1987
SUPPLEMENTAL DECISION AND
ORDER
BY CHAIRMAN DOTSON AND MEMBERS
JOHANSEN AND BABSON
On 9 April 1985 Administrative Law Judge Jay
R. Pollack issued the attached supplemental deci-
sion . The General Counsel filed exceptions and a
supporting brief, and the Applicant filed cross-ex-
ceptions, a supporting brief, and a brief in answer
to the General Counsel's exceptions."
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,2 and conclusions only to the extent con-
sistent with this Supplemental Decision and Order.
In his initial decision in this case, the judge rec-
ommended the dismissal of the complaint allega-
tions which alleged that the Respondent-Applicant
had violated Section 8(a)(5) and (1) of the Act by
failing to notify the Union of its decision to lay off
all unit employees in May 1982, and by thereafter
assigning nonunit employees to perform the bar-
gaining unit work and subcontracting out such
work without giving notice to, or bargaining with,
the Union.3 On the question of the lack of layoff
notification, the judge found that the Respondent-
Applicant had provided the Union with proper
notice as required under the contract. The judge
also found that the Respondent-Applicant's unilat-
eral decision to subcontract out the bargaining unit
i The Applicant also filed a "Seventh Motion to Amend EAJA Appli-
cation for Fees and Expenses ," and a motion , with accompanying memo-
randum, to augment the record to include an exhibit attached to its
answer to the General Counsel's exceptions, and to correct its answering
brief. In view of our decision, we find it unnecessary to rule on the Ap-
phcant's motions.
2 The General Counsel asserts, in essence, that the judge's findings of
fact and conclusions of law, particularly in regard to the Applicant's net
worth statement, are the result of bias . After a careful examination of the
entire record, we are satisfied that the General Counsel's assertion is
without merit.
In view of the finding herein that the General Counsel was substantial-
ly justified in issuing the complaint and continuing to litigate the underly-
ing unfair labor practice proceeding through the filing of a posttrial brief
to the judge, we find it unnecessary to pass on the General Counsel's
contention that the Applicant failed to comply with the Board's Rules
and Regulations in its application for fees and expenses.
a The judge, however, found merit to the complaint allegation that the
Respondent-Applicant violated Sec. 8(aXS) and (1) of the Act when it
bargained directly with an employee, rather than with his Union, over
the employee 's terms and conditions of employment, and issued an order
directing it to cease and desist from engaging in such conduct.
work and to assign such work to nonunit employ-
ees was not unlawful under the Board's holding in
Westinghouse Electric Corp., 150 NLRB 1576
(1965).4 No exceptions were filed to the judge's de-
cision and it was_ subsequently adopted by the
Board in an unpublished order dated 13 December
1983.
The Applicant then filed the instant application
for an award of attorney's fees and expenses under
the Equal Access to Justice Act (EAJA) and, fol-
lowing an evidentiary hearing, the judge issued the
attached supplemental decision. In that decision,
the judge found, and we agree, that the General
Counsel was substantially justified in issuing the
complaint and proceeding to hearing in this case.5
The record in this regard reveals that following the
filing of the charge by the Union, the General
Counsel obtained information from union officials
and employees, in the form of affidavits and writ-
ten statements, which supported its assertion that
the Applicant unilaterally laid off all bargaining
unit employees, subcontracted out the bargaining
unit work, assigned unit work to nonunit employ-
ees, and negotiated directly with an employee, in-
stead of with the Union, concerning his terms and
conditions of employment, in an attempt to under-
mine the Union's representative status and to estab-
lish a nonunion shop.
Following receipt of the Union's evidence, the
General Counsel sought to obtain a statement of
position from the Applicant concerning the above
allegations and, with this in mind, met with its
president and owner, Sakae Fujimoto, and its labor
consultant, Michael McGuire. Although it was af-
forded a full and fair opportunity to fully state its
position and to provide the General Counsel with
any and all evidence it had in support thereof or
which might otherwise have a bearing on the issues
raised by the charge, the Applicant provided the
General Counsel only with an affidavit from Fuji-
moto responding solely to the "direct dealing" alle-
gation, and did not provide a written statement of
its position concerning the other allegations despite
promising to do so. Instead, the Applicant, through
4 The Board in the Westinghouse case held that an employer's failure to
notify and bargain with a union over such a decision will not violate the
Act if the employer can show that its decision (1) was motivated solely
by economic considerations , (2) comported with its customary business
operations, (3) did not vary significantly in kind or degree from an estab-
lished past practice, (4) had no demonstrable adverse impact on unit em-
ployees, and (5) the union had an opportunity to bargain over the deci-
sion in prior bargaining sessions. The judge found that the Applicant's
decision in this case satisfied all the above criteria
5 We believe that Congress, in reviewing the Equal Access to Justice
Act, 5 U.S C. § 504 ( 1982), as amended by Pub L No 99-80, 99 Stat.
183 (Aug. 5, 1985), did not alter, but merely clarified the definition of
"substantially justified." "Substantially justified" means more than "mere
reasonableness." H.R. Regs. 99 -120, p. 9.
283 NLRB No. 85
LEEWARD AUTO WRECKERS
McGuire, orally expressed its belief that its unilat-
eral decision to subcontract out the 'unit work and
to assign nonunit employees to perform that work
was not unlawful because its contract with the
Union did not prohibit it from doing so and be-
cause, in its view, the Union waived its right to
object to its actions by failing to obtain, during
recent contract negotiations, a restriction on that
conduct in the contract. However, at no time
during the precomplaint investigation did the Ap-
plicant assert, or present evidence to show, that the
Union was properly notified of the layoff before it
went into effect, and that its unilateral decision to
subcontract out the bargaining unit work and to
have unit work performed by nonunit employees
during the layoff was motivated by economic con-
siderations, accorded with its usual method of op-
erations, and was consistent with an established
past practice. As the judge correctly notes, that
evidence, which the Applicant had in its possession
prior to the hearing, was withheld from the Gener-
al Counsel during the investigation and not pro-
duced until the Applicant presented its rebuttal ' evi-
dence on the fourth day of hearing. In view of the
Applicant's apparent failure to cooperate fully with
the General Counsel's investigation of the case, the
General Counsel had no alternative but to rely on
the limited information obtained during that inves-
tigation in determining whether or not to issue a
complaint. On the basis of that information, it 'was
not unreasonable for the General Counsel to infer
that the Applicant's -conduct, as described in the
charge, was unlawful . For this reason and as previ-
ously stated, we conclude, in agreement with the
judge,' that the General - Counsel was substantially
justified in issuing the complaint and in proceeding
to a hearing in this case.
However, we do not agree with the judge that
the General Counsel was required to stop prosecut-
ing the case after the Applicant, produced evidence
on the fourth day which demonstrated that it had a
past practice of subcontracting and of assigning
nonunit employees to perform unit work during
layoffs, that the Union had acquiesced in` that prac-
tice, and that its actions in this regard were moti-
vated solely by economic considerations. Although
the introduction of that evidence clearly had' the
effect of weakening the Government's case against
the Applicant, the General Counsel was, neverthe-
less under no obligation to withdraw its, case at
that point since the General Counsel could not
have known, prior to the issuance of the judge's
decision, what, if any, weight he would give to the
Applicant's documentary evidence and the testimo-
ny of its witnesses vis-a-vis that produced by the
575
General Counsels More importantly, the judge's
finding that the Applicant had a valid , defense
under the Board 's Westinghouse decision was not
based solely on the documentary evidence pro-
duced by the Applicant on the fourth day but
rather rested also on his decision to resolve certain
conflicts in testimony in the Applicant's favor.?
For example, in concluding that the Applicant's as-
signment of unit work to nonunit employees, after
laying off all unit employees, was consistent with
an established past practice, the judge found it nec-
essary to reject Fujimoto's testimony that such as-
signments of work occurred only when unit em-
ployees were unavailable to perform such work
due to absenteeism. In rejecting Fujimoto's testimo-
ny in this regard, the judge was also implicitly re-
jecting the testimony of Union Representative Sid
Lampley and employee Kevin Kekahuna that was
corroborative of Fujimoto's testimony on this issue.
Clearly, had such testimony been credited,, it would
have been supportive of the General Counsel's po-
sitionn on this crucial question. Likewise, the judge's
finding, that the Union had been afforded an op-
portunity to bargain over the Applicant's decision
to subcontract out bargaining unit work and to
assign such work to nonunit employees, was based
in part on his crediting Fujimoto's and McGuire's
testimony over Lampley's testimony on this issue.
The- judge's comment, that no reasonable attorney
could have expected to prevail on this issue on the
basis of Lampley's testimony, has no relevance
'here since it is the trier of fact, and not the General
Counsel, which must determine whether a particu-
lar witness' testimony is worthy of belief or should
be discounted.
In view of the above facts, we conclude that the
General Counsel was substantially justified in con-
tinuing to litigate the case to the close of hearing
and in filing a posttrial brief with the judge. Ac-
cordingly, we shall dismiss the Applicant's applica-
tion for an EAJA award.
ORDER
It is ordered that the application of the Appli-
cant, Leeward' Auto Wreckers, Inc., Honolulu,
Hawaii, for an award under the Equal Access to
Justice Act is dismissed.
6 In this regard we note that following the close of the General Coun-
sel's case-in-chief, the Applicant moved for dismissal of the complaint.
The judge, however, denied the motion and, in doing so, expressed his
reservation only concerning the merits of the "direct dealing" allegation
which, as noted, he found to be meritorious.
' The Board has denied EAJA awards in cases when credibility resolu-
tions were necessary for a determination of the issues raised by a com-
plaint. Barrett's Interiors, 272 NLRB 527 (1984); WE Cement, Inc., 267
NLRB 763 (1983).
576 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Alan D. Longman, Esq. and Marcie B. Axelrad, Esq., for
the General Counsel.
Jared H. Jossem, Esq. and Perry W. Confalone, Esq. (Tor-
kildson, Katz Jossem, Fonseca & Moore), of Honolulu,
Hawaii, for the Applicant.
SUPPLEMENTAL DECISION
(Equal Access to Justice Act)
JAY R. POLLACK, Administrative Law Judge. I heard
this case under the Equal Access to Justice Act, Pub. L.
96-481, 94 Stat. 2325 (EAJA) and Section 102.43 of the
Board's Rules and Regulations in trial at - Honolulu,
Hawaii, on November 27- and 28, 1984. The case arose as
follows:
On November 10, 1983, I issued a decision in which I
concluded that Leeward Auto Wreckers, Inc. (the Re-
spondent and the Applicant) had violated Section 8(a)(5)
and (1) of the National Labor Relations Act (the Act),
by bargaining directly with an employee concerning
wages, benefits,' and other conditions of employment, and
bypassing United Steelworkers of America, AFL-CIO,
CLC (the Union) as the exclusive bargaining representa-
tive. More importantly, I dismissed the central allega-
tions of the complaint that the Applicant had: (a) unilat-
erally laid off bargaining unit employees without prior
notice to or bargaining with the Union; (b) unilaterally
transferred work to supervisors and other nonbargaining
unit employees without prior notice to or bargaining
with the Union; and (c) unilaterally subcontracted out
bargaining unit work without prior notice to or bargain-
ing with the Union. No exceptions were filed to my deci-
sion and, on December 13, 1983, the Board issued an un-
published order adopting my findings and conclusions.
Thereafter, on January 12, 1984, the Applicant filed
with the Board an Application for fees and expenses pur-
suant to the Equal Access to Justice Act, Pub. L. 96-
481, 94 Stat. 2325, and Section 102.43 of the Board's
Rules and Regulations, and a motion to withhold confi-
dential financial information from public disclosure. On
January 15 the Board referred this matter to me for ap-
propriate action. The Applicant seeks-legal fees and ex-
penses in the amount of $47,040.28, as of March 27, 1985.
The General Counsel contends, in substance, that the
Applicant is not an eligible party under EAJA; that the
Applicant is not a prevailing party; that the position of
the General Counsel was substantially justified; that spe-
cial circumstances make the granting of an award unjust;
and that the fees and expenses claimed are in excess of
what could reasonably be awarded in this case.
On consideration of the entire record in this supple-
mental proceeding, including the record in the underly-
ing unfair labor practice case, and the briefs of the par-
ties, I make the following findings and conclusions.
1. THE APPLICANT'S ELIGIBILITY
Section 504 of EAJA limits eligibility to, inter alia, a
corporation, partnership, association, or organization
whose net worth did not exceed $5 million and who had
no more than 500 employees at the time the adversary
adjudication was initiated." Section 102.43(g) of the
Board's Rules and Regulations provides:
(g) The net worth and number of employees of
the applicant and all of its affiliates shall be aggre-
gated to determine eligibility. Any individual, cor-
poration, or other entity that directly or indirectly
controls or owns a majority of the voting shares or
other interest of the applicant, or any corporation
or other entity of which the applicant directly or in-
directly owns or controls a majority of the voting
shares or other interest, will be considered an affili-
ate for purposes of this part, unless such treatment
would be unjust and contrary to the purposes of the
Equal Access to Justice' Act (94 Stat. 2325) in light
of the actual relationship between the affiliated enti-
ties. In addition, financial relationships of the appli-
cant other than those described in this paragraph
may constitute special circumstances that would
make an award unjust.
The Applicant's records indicate that at the time of the
issuance of the instant complaint, January 31, 1983, it
employed less than 15 employees and had a net worth of
less than $ 1 million .2 The record reveals that during the
normal course of its business the Applicant delivered,
without charge, certain auto parts to Ace Towing Serv-
ice, a business owned and operated by Hisako Fujimoto,
wife of Sakae Fujimoto, the Applicant's president and
sole stockholder. However, neither the Applicant nor
Sakae Fujimoto owns voting shares or any other interest
in Ace Towing Service, and neither Ace Towing Service
nor H. Fujimoto owns voting shares or any other inter-
est in the Applicant.3 The amount of moneys involved
with the auto parts given by the Applicant to Ace
Towing Service would not affect the Applicant's eligibil-
ity under EAJA. In any event, the combined net worth
of the Fujimotos, and all their businesses, Ace Towing
Service, Leeward Auto Wreckers, and Fujimoto Truck-
ing, falls far below the EAJA eligibility standards. Ac-
cordingly, I find that the Applicant is an eligible party
under EAJA.
The Applicant contends that it is "engaged in a highly
competitive business in which it must bid for contracts
from the County of Honolulu but that public disclosure
of [its] confidential financial position could undermine
[its] capacity to compete for work." The General Coun-
sel asserts that the Applicant "has failed to show that
public disclosure is not required in the public interest."
Based on the evidence of the Applicant's financial posi-
tion already in the underlying, unfair labor practice case,
the competitive nature of the Applicant's business, and
the fact that the Applicant falls so deeply below the' eli-
" See Sec. 102 43(c)(5) of the Board 's Rules and Regulations.
2 The Applicant's net worth was arrived at by using the cost of acqui-
sition rather than the depreciated value of assets listed in the net„worth
exhibit See W. C. McQuaide, Inc., 270 NLRB 1197 (1984); Stucco Stone
Products, 270 NLRB 1195 (1984)
a Although an evidentiary hearing was conducted pursuant to a re-
quest by the General Counsel, the General Counsel did not seek to liti-
gate its allegations that Ace Towing Service was an affiliate of the Apph-
cant or to litigate any other aspect of the Applicant's EAJA eligibility.
LEEWARD AUTO WRECKERS
gibility requirements, I find that further disclosure is not
required in the public interest. I, therefore, grant the Ap-
plicant's motion to withhold from public disclosure the
net worth exhibit filed with the application. However, I
note that the granting of this motion is not determinative
of the availability of the documents under the Freedom
of Information Act. See Section 102.147(g)(2) of the
Board's Rules.
II. PREVAILING PARTY
Under Section 102.143(b) of the Board' s Rules, a pre-
vailing party is a respondent in an unfair labor practice
case "who prevails in that proceeding, or in a significant
and discrete substantive portion of that proceeding, and
who otherwise meets the eligibility requirements" for an
award under EAJA.
The complaint, as amended, alleged in substance that
the Applicant violated Section 8(a)(5) of the Act and, de-
rivatively, Section 8(a)(1) by engaging in the following
conduct: (1) about May 1, 1982, laying off bargaining
unit employees without prior notice to or bargaining
with the Union; (2) about July 1, 1982, transferring bar-
gaining unit work to supervisors and nonbargaining 'unit
employees, without prior notice to or bargaining with
the Union; (3) about June `1, 1982, subcontracting out
bargaining unit work without prior notice to or bargain-
ing with the Union; and (4) about October 4, 1982, di-
rectly dealing with an employee concerning rates of pay
and other conditions of employment and, in that manner,
bypassing the Union as the exclusive bargaining repre-
sentative.
As stated earlier, I dismissed the first three allegations
and found a violation with respect to the fourth. The
first three allegations, if found meritorious, would have
required a remedy of reinstatement and backpay for at
least some bargaining unit employees. During the unfair
labor practice hearing, the parties engaged in good-faith
negotiations in an attempt to settle the case. However,
negotiations broke down over cost items. The General
Counsel succeeded in proving only one separate and dis-
tinct allegation. That allegation, direct dealing, did not
involve an economic remedy but solely the posting of a
notice. It was clearly not the central issue in the case and
ranked last in significance of the issues presented.
The central issues in the case involved the alleged uni-
lateral use of subcontractors and supervisors to perform
bargaining unit work. The Applicant prevailed on these
issues as well as the issue of the alleged unilateral layoff.
Comparing the allegations of the complaint with the
result obtained by the Applicant, I find the General
Counsel's argument that the Applicant was not a prevail-
ing party to be without merit.
The. General Counsel's contention that because I found
a violation of Section 8(a)(5) the Applicant did not pre-
vail in a significant and 'discrete substantive portion of
the proceeding is at odds with the express language of
the Board's Rules. The Board's Rules are designed to
prevent the Government from including in a valid com-
plaint additional allegations that' are not substantially jus-
tified. The position urged by the General Counsel would
permit the Government to throw into a complaint any
and all allegations involving the same section of the Act
577
without justification and still escape the provisions of
EAJA. The Board's Rules are designed, in accordance
with EAJA, to require substantial justification for each
significant and discrete substantive portion of the com-
plaint. Of course, there are times when allegations are so
entwined that they cannot be subjected to separate analy-
sis under EAJA. However, that clearly is not the case
here.
The General Counsel relies on the unreported case of
Okeh Caterers, JD-(SF)-34-83, to support his argument
that the Applicant was not a prevailing party. First,' the
case has no precedential value because no exceptions
were filed and thus the Board adopted pro forma the
judge's decision. Second, the facts are so clearly distin-
guishable that the case is of no value in the instant pro-
ceeding. In Okeh Caterers, Administrative Law Judge
Jerrold Shapiro, in dismissing an EAJA claim involving
an allegation that an employer illegally solicited em-
plyees' grievances, noted that the solicitation allegation
was "part and parcel" of a further meritorious allegation
that the employer had illegally interrogated employees.
Thus, Judge Shapiro reasoned, "it was necessary for Re-
spondent to . . . defend against this allegation of illegal
interrogation" and he found that "it would be inequitable
to award Respondent expenses for litigating the solicita-
tion of grievances allegation even if the General Counsel
had no reasonable basis in law for including it in the
complaint."
In the instant case, the layoff, transfer of bargaining
work, and subcontracting .were not part and parcel of
the direct dealing allegation. If the General Counsel only
alleged the meritorious direct dealing allegation, the Ap-
plicant would not have had to defend the other allega-
tions. Moreover, 1 ,have no doubt that the case would
have settled if only the direct dealing allegation had been
alleged. , To defend the direct dealing case, the Applicant
would have had to cross-examine one General Counsel
witness and offer testimony of one of its own witnesses.
Such a trial would have lasted less than 1 day. To liti-
gate the three central allegations of the complaint re-
quired 6 days of trial (4 full and 2 partial days of trial).
In addition to an increase in the number of witnesses,
there was a necessity for documentary evidence not re-
quired for ' litigation of the direct dealing violation. Fur-
ther, there would have been no monetary risk to the Ap-
plicant if only the' direct dealing violation had been al-
leged. The direct dealing allegation might have been part
and parcel of the central allegations (layoff, subcontract-
ing, and supervisory performance of work) but the re-
verse is not true. The central allegations were not part
and parcel of the direct dealing allegation and the Gen-
eral Counsel needed separate and distinct justification for
their inclusion in the complaint.
III. SUBSTANTIAL JUSTIFICATION
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
578 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
the test is one of reasonableness. When 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), revd. 71,0 F.2d 748 (11th Cir. 1983);
Shellmaker, Inc,, 267 NLRB 20 (1983). The Government
is not required to establish that its decision to litigate was
based on a substantial probability of prevailing. Wolf
Street Supermarket, 266 NLRB 665 fn. 1 (1983); Hamel
Forest Products, 270 , NLRB 1078 (1984). EAJA was not
intended to stifle the -reasonable regulatory effects of
Federal agencies. Wyandotte Savings Bank v. 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 Government
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 circumstances.
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
standards in - such a manner as to not interfere with, the
General Counsel's vigorous enforcement of the labor
laws. 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).- Since October 1, 1981, the
Board has granted an award in only one EAJA case,
Debdlt Transfer, 271 NLRB 299 (1984). In that case, the
General- Counsel's position was characterized as "betting
on a long shot."
In the instant case, the General Counsel argues that his
"decision, to- issue complaint and proceed to trial fall well
within permissible standards for government action."
The General Counsel argues that the Applicant's suc-
cessful defense regarding its past practice of subcontract-
ing and using supervisors to perform bargaining unit
work "was not `developed' nor even apparent until well
into trial. [The Applicant] failed to raise the defense at
any, stage of the investigation, pre-trial period or in the
pleadings." Thus, the, General Counsel argues that "the
Regional Director was justified in issuing complaint and
going to, trial based on the facts available to him prior to
the hearing."
The Applicant argues that the General Counsel was on
notice that the issues of subcontracting and management
performance of unit work were. fully negotiated during
contract negotiations and that the, Union failed to exact a
concession on those matters. Further, the Applicant
argues that the General Counsel was on notice that a
prior history of subcontracting and management per-
formance of unit work existed on the ground that the
bargaining that took place revealed the past practices
and that such bargaining would not have occurred in the
absence of such past practices. The Applicant argues that
"General Counsel cannot argue- substantial justification
`based on the facts available to him prior to the hearing'
... where [the Applicant] put the General Counsel on
notice that the Union adamantly sought to prohibit, by
contracted amendment, subcontracting and management
performance of unit work, and where the General Coun-
sel's own agents were aware of those matters and dis-
charged the General Counsel' s case."
The Applicant presented evidence that prior to the is-
suance of the underlying complaint, it cooperated with
the Regional Director's investigation of the underlying
unfair labor practice charge. According to Michael
McGuire, a labor consultant who represented the Appli-
cant during the times material to the complaint allega-
tion, he informed the Board investigator "that there
could be no refusal to bargain violation regarding trans-
fer of bargaining unit work because the Union conceded
those issues during our negotiations." The General Coun-
sel presented evidence from the investigator, that
McGuire had urged the following defenses: (1) that there
was no prohibition against subcontracting in the contract
executed by the parties; (2) that there was no clause in
the contract that prohibited managerial employees from
performing unit work; (3) that the issue of the subcon-
tracting and management, personnel performing unit
work was presented to the Union and that the Union
waived any right to claim a violation of the Act because
the contract did not prohibit such practices; and (4) that
the Board should defer to the grievance and arbitration
processes of the bargaining agreement under its Collyer
doctrine.4 -
Apparently, McGuire did not inform the investigator
that,the Applicant had a past practice of subcontracting
and using management personnel to perform unit work
nor did McGuire present any evidence of such past prac-
tices, That evidence was not offered in the record until
the fourth day of trial.5
The legal principles which controlled the outcome of
the instant case came from the Board's decision in Wes-
tinghouse Electric, Corp., 150 NLRB 1574 (1965). In Wes-
tinghouse, the Board, in holding that an employer did not
violate Section 8(a)(5) and (1) by failing to notify and
consult with the, union before subcontracting work,
stated at 1576-
4 Collyer Insulated Mire, 192 NLRB 837 (1971).
G Jared Jossem, the Applicant's trial attorney, testified that he did not
see the canceled checks showing such past practices until the second day
of trial.
LEEWARD AUTO WRECKERS
Thus, it is wrong to assume that, in the absence of
an existing contractual issue, it is a per se unfair
labor practice in all situations for an employer to let
out unit work without consulting the unit bargain-
ing representative. As the Supreme Court has indi-
cated in broader context, even where a subject of
mandatory bargaining is involved, there may be
"circumstances which the Board could or should
accept to excuse or justify unilateral action."
In Westinghouse, the Board based its dismissal on these
factors: Consistency with past practices and normal
method of operation, absence of a demonstrated adverse
effect on the unit employees, and ability of the union to
have negotiated about this type of practice during past
negotiations. See New Orleans Board of Trade, 125
NLRB 1258, 1259 (1965).
The facts and reasoning that caused me to dismiss the
General Counsel's allegations were as follows: The Re-
spondent, motivated solely by economic concerns, laid
off its entire work force. Respondent had insufficient
current assets to meet its current liabilities. Moreover, its
customer, Hawaiian Western Steel, also laid off its em-
ployees and ceased purchasing from Respondent. Al-
though nonunit personnel performed work for Respond-
ent, none of these persons were paid and there is insuffi-
cient evidence that there existed a sufficient amount of
work to permit the recall of any employees. During the
four periods of layoff in 1981, Respondent's managerial
and nonunit employees performed bargaining unit work.
Although none of the 1981 layoffs involved a complete
shutdown, managerial employees did perform work usu-
ally performed by unit employees. Also during the 1981.
layoffs, subcontractors, independent contractors, nonunit
employees, and employees hauled cars for Respondent
on a piece rate basis. Thus, Respondent's transfer of the
work to nonunit personnel and independent contractors
was consistent with its past practice and normal method
of operation. Further,, the evidence reveals that the
Union had knowledge' of such past practices as it specifi-
cally demanded that 'such practices cease . The Union
proposed contract language to end these practices, but
faced a staunch refusal, by Respondent. Finally, the
Union reluctantly conceded to Respondent's position and
withdrew its contract' proposals. Thus, the evidence es-
tablishes that the Union had an opportunity to bargain
about the performance of bargaining unit work by non-
unit personnel and acceded to Respondent's demand to
continue its past practices. Respondent's, unilateral ac-
tions initially had no adverse impact on the unit employ-
ees. It was the economic layoff and not the transfer of
work that caused the employees to lose work opportuni-
ties. However, at some later stage there apparently
would have been sufficient work to allow the 'recall of
some employees but for the transfer of work. However,
this effect of Respondent's action differs only in degree
from what took place during, the layoffs in 1981. The
Union had its opportunity to bargain in January 1982 to
prevent such a recurrence but acceded to Respondent's
position. It appeared to me that the General Counsel was
seeking by way of this complaint that which the Union
was unable to obtain in negotiations. Under all of these
579
circumstances, I found that the Applicant had not violat-
ed Section 8(a)(5) and (1) of the Act, as alleged in the
complaint. See Rochester Telephone Corp., 1190 NLRB
161, 164 (1974); see also General Electric Co., 240 NLRB
703, 708 (1979).
I found the case relied on by the General Counsel to
be inapposite: Talbert Mfg. Co., 264 NLRB 1051 (1982);
Garland Distributing Co., 234 NLRB 1275 (1978); and
Whitehead Bros. Co., 263 NLRB 895 (1982). In the Tal-
bert case, the foremen performed production work
during a layoff, which work was of a type and extent
they had not previously done. Further, the employer and
union had bargained about the question of foremen doing
bargaining unit work and had reached tentative agree-
ment on a proposal that would have prohibited foremen
from doing the work they did during the layoff. In the
Garland case, the transfer of work to a nonunit employee
violated an express provision of the existing collective-
bargaining agreement . In Whitehead Bros., the subcon-
tracting of work was inconsistent with past practice and
the union had no opportunity to bargain about the sub-
ject in prior negotiations. As discussed above, the facts
of the instant case required a determination that no viola-
tion of the Act had been established.
I found that the General Counsel had not sustained his
burden of proof regarding the layoff allegation for the
following reasons:
Uncontradicted evidence reveals that Respondent
gave notice of the layoff to the Union steward.
Such notice comported' with the contract require-
ment that notice of large scale layoffs be given to
the Union Unit Committee.6 Although the contract
required 30-day notice, the General Counsel failed
to establish that the notice was less than 30 days or
otherwise was insufficient to give the Union a rea-
sonable opportunity to bargain over Respondent's
decision. Moreover, the undisputed evidence of-
fered by Respondent reveals that in May, shortly
after the layoffs, Respondent discussed these matters
with Union Representative John Rusen. Rusen
agreed to contact Respondent over possible accom-
modations to allow Respondent to recall the em-
ployees. However, Rusen did not further pursue the
matter. In any event, the General Counsel has failed
to establish that Respondent did not give the Union
an adequate opportunity to bargain over the layoff
or the effects of the layoff, as alleged in the com.
plaint. Accordingly, I shall recommend that this al-
legation of the complaint be dismissed.
6 The General Counsel argues that Respondent did not prove
that the Union steward was part of the Union Unit Committee.
Obviously, the General Counsel has the burdens of proof reversed.
Based on the record before me, it was clear that the
Applicant had a valid defense. Thus, the General Coun-
sel argues that his complaint was substantially justified
"based on the information in possession at the time" the
complaint issued. Based on the lenient standard used by
the Board, the instant complaint would be found by the
Board to be substantially justified when issued. However,
580 DECISIONS OF THE NATIONAL' LABOR RELATIONS BOARD
during the litigation it become apparent that the- Appli-
cant had a valid defense and the complaint was ground-
less about the allegations at issue. Notwithstanding the
existence of a controlling defense, the General Counsel
continued to pursue this litigation.
In Spencer v. NLRB, 712 F.2d '539- (D.C. Cir. 1983),
the United States Court of Appeals for the District of
Columbia Circuit in discussing the Government's obliga-
tion to accede to the other party as soon as it becomes
apparent that its litigation stance is not substantially justi-
fied, stated:
It seems clear that, if the government does not
immediately accede to the plantiff's demand, but in-
stead initially opposes his claims and then at some
later stage (e.g., in a pre-trial settlement) surrenders,
the United States will be liable for attorneys' fees
regardless of which theory is applied. Under such
circumstances, not only will the government have
acted unreasonably, but it will have adopted (at
least briefly) a litigation position lacking substantial
justification. For strong indications of Congress'
intent that fees be awarded under these circum-
stances, see H.R.Rep. No. 1418, supra note 20, at 11;
S.Rep. No. 253, supra note 20, at 7. But see Alspach
v. District Director Of Internal ' Revenue, -527 F.Supp.
at 229 (finding the litigation position of the IRS to
have, been "substantially justified" when it initially
resisted a clearly meritorious suit to enjoin it from
collecting a tax, but surrendered 1 month after it
had located and reviewed the taxpayer's file). The
only question open to serious dispute is whether the
governmentshould be obligated to pay fees when it
surrenders at the very outset of litigation. [Id., at
555-556 fn. 58].
The Court of Appeals for the Second Circuit in Envi-
ronment Defense Fund v. Watt, 722 F.2d 1081, 1086 (2d
Cir. 1983), agreed with the District of Columbia Circuit's
view in Spencer v. NLRB:
We' find it incumbent upon the government to aban-
don its opposition to the other party as soon as it
becomes apparent that its litigation stance is not
substantially justified. See Ellis v. United States, 711
F.2d 1571, 1576-1577 (Fed. Cir. 1983).6
6 We would thus agree with the analysis of the government's
litigation position in Operating Eng'rs Local Union No. 3 Y. Bohn,
541 F.Supp . 486 (D . Utah 1982). In that case, plaintiffs sued to
enjoin performance of work under a road construction contract
which stated incorrect wage rates. Nine days later, defendants
agreed to modify the contract , and a formal modification was ap-
proved the following month . On grounds that "[o]nce the action
was filed , the government acted almost immediately to concede all
the substantive relief plaintiff sought," id. at 496, the court found
the government's litigation position to be substantially justified. We
do not, as discussed supra, express any view on that court's inter-
pretations of the-word "position."
In Tyler Business Services v. NLRB, 695 F .2d 73, 75-76
(4th: Cir. 1982), the United States Court of Appeals for
the - Fourth Circuit in applying EAJA to proceedings
both on- the agency level and on judicial review stated:
The House report on the Act states that in regard
to review of agency adjudications, the government
must "make a positive showing that its position and
actions during the course of the proceedings- were sub-
stantially justified."9 The report states this standard
should also apply in reviewing the government's
position in judicial proceedings . 1 ° For -example, the
government's preliminary decision to institute an
administrative proceeding may not justify an award
of attorney 's fees . This circumstance , however,
would not preclude an award , if at 'subsequent
stages of the administrative process or upon judicial
review it appears that the government's position at
these levels of litigation was not substantially justi-
fied.
9 H.R. Rep . No. 1418, 96th Cong., 2d Sess. 13 (1980), reprinted
in 1980 U.S Code Cong & Ad. News 4992 (Emphasis added).
io See id. at 18, reprinted in 1990 U.S. Code Cong. & Ad. News
4997.
The Tyler case was cited with approval by the United
States Court of Appeals for the Fifth Circuit in Natchez
Coca-Cola Bottling 'Co. v. NLRB, 750 F.2d 1350 at 1352
(5th Cir. 1985). -
The General Counsel contends that the Board has re-
jected the view of the circuit courts and that I am bound
by the Board's decision unless and until reversed by the
United States Supreme, Court. The General Counsel cites
International Maintenance supra, for this proposition.
However, the International Maintenance case simply did
not address the issue presented here. In International
Maintenance, the administrative law judge held that the
General Counsel was substantially justified in issuing the
unfair labor practice complaint because there existed a
close question of law and fact concerning the superviso-
ry status of an employee and because the General Coun-
sel had proffered prima facie evidence regarding the al-
leged discriminatory discharge -of two employees. The
judge further recommended a rule that failure to cooper-
ate fully in the investigatory stages of an unfair labor
practice case would be per se sufficient to deny an appli-
cation under the "special circumstances" safety valve.
The Board, however, expressly declined to enact such a
rule:
Nor do we find it appropriate to enact a rule, as
suggested by the administrative law judge, that
would automatically bar an applicant from receiv-
ing benefits under the Equal Access to Justice Act
for failing to cooperate in the investigatory stages
of an unfair labor practice proceeding. [Id. at 1136
fn. 2]
The issue presented here, whether the Government
must abandon its position when it becomes apparent that
its position is not substantially justified,, was never dis-
cussed by -.either the administrative law judge or the
Board in the International Maintenance case.
As a last resort, -the General Counsel argues in his
posthearing brief that had I resolved credibility disputes
in his favor he would have prevailed and thus, he was
substantially justified under Board law. It is true under
LEEWARD AUTO WRECKERS
Board cases the General Counsel has avoided EAJA
awards when credibility resolutions were ultimately de-
cided against the General Counsel. See, e.g., SME
Cement, 267 NLRB 763 (1983); Barrett's Interiors, 272
NLRB 527 (1984). However, that portion of the instant
case that involved a credibility resolution, the testimony
of Sid Lampley, union representative , on which the Gen-
eral Counsel attempts to rely, was a dispute which no
reasonable attorney could expect to be resolved in the
General Counsel's favor.6 Sid Lampley,, the General
Counsel's witness, had no bargaining notes, and no expla-
nation for 'the resolution of the bargaining impasse. All
Lampley did was deny the testimony of the Applicant's
witnesses, but was unable to offer any affirmative evi-
dence of what occurred. Under these circumstances, the
testimony of Respondent's witnesses, buttressed by bar-
gaining notes , had to prevail over Lampley's testimony.
More importantly, based on the record evidence, the
General Counsel would not have prevailed even if Lam-
pley's vague testimony had been credited. The Applicant
did not need to prove that the Union waived its right to
bargain over these changes but only that the Union had
an opportunity to do so. The General Counsel's wit-
nesses admitted that the Union attempted to obtain lan-
guage prohibiting such practices and did not obtain the
desired contract language. -
IV. SPECIAL CIRCUMSTANCES
The General Counsel contends that because Respond-
ent failed to bring pivotal facts to his attention during
the precomplaint investigation under the "special circum-
stances" safety valve no award should be granted.
During the EAJA proceedings; the Applicant estab-
lished that following the close of the unfair labor prac-
tice hearing, the Applicant's trial attorney wrote the
Acting Regional Director attempting to settle the case.
In this letter, dated July 21, 1983, the attorney set forth
the weakness of the General Counsel's case and prepared
a settlement that reflected those matters. On August 25
the Regional Attorney wrote a reply in which he stated
that the Applicant should have made its evidence avail-
able prior to the issuance of complaint. He further indi-
cated that the proposed settlement was acceptable to the
Regional Office but would not be approved without the
Union's concurrence.
Notwithstanding the evidence disclosed at trial, and
the review of this matter by the Regional Attorney, the
General Counsel continued to prosecute the case.
As previously noted, the Board in International Main-
tenance declined to enact a rule that an applicant failed
to cooperate in the investigative stages of an unfair labor
practice proceeding be automatically barred from an
s My credibility resolution reads as follows:
The above recitation of facts is based on the credited testimony of
McGuire and Fujimoto Although Lampley denies such an exchange
toolk place, he could give no other explanation for the breakoff in
negotiations or the subsequent change resulting in a contract. Fur-
ther, Lampley had only a vague recollection of the negotiations and
no notes from which to refresh his memory. McGuire was a much
more reliable witness regarding negotiations and' had bargaining
notes which he used to refresh his memory. Finally, admissions in
the testimony of Alensonorin [Union president] corroborate
McGuire's version of these events.
581
award under EAJA. However, the failure of the employ-
er in International Maintenance to offer certain evidence
in the investigation of that case affected the denial of an
EAJA award. In that case the General Counsel was sub-
stantially justified in proceeding to complaint and trial
based on the evidence of the charging party. In Dan-
zansky-Goldberg Chapels, 272 NLRB 903, 906 (1984), the
judge emphasized the importance of the Respondent's
cooperation, commenting that:
It is that cooperation that has made some of the
issues raised by the EAJA application so close. The
issues in this proceeding would have been much
easier to resolve-in the General Counsel's favor-
if during the General Counsel's investigation of the
charges, the Company had withheld information
from him regarding the basis for its behavior.
It is not inconsistent with the policies of EAJA to dis-
allow costs for expenses incurred because the respond-
ent-applicant did not cooperate in the precomplaint in-
vestigation. It is reasonable to assume that the govern-
ment would not have prosecuted the case if it had
known litigation would be unsuccessful. Thus, it follows
that a respondent-applicant should not be rewarded for
costs that it incurred solely as a result of its own litiga-
tion strategy, i.e., choosing to go to litigation rather than
cooperating in the investigation. However, a respondent-
applicant's failure to cooperate or failure to fully cooper-
ate in the investigation does not absolve the Government
of all responsibility. The Government must still be sub-
stantially justified at all stages of the proceeding, i.e., the
Government must withdraw its opposition, to the, re-
spondent-applicant when the Government's position
clearly becomes frivolous, unreasonable, or groundless.
Thus, the Board cases of International Maintenance and
Danzansky-Goldberg are reconcilable with the court cases
of Spencer v. NLRB, ED.F. v. Watt, and Tyler Business
Services
The issue becomes whether the Government should be
assessed costs ab initio because it did not withdraw im-
mediately or whether costs should accrue as of the day it
became clear that the Government's position ' was frivo-
lous, unreasonable, or groundless. In my view, the best
policy would be to commence costs as of the day it
became clear that Government's position was groundless,
if the Government did not withdraw within a reasonable
period of time. If the Government withdrew within a
reasonable period of time, no costs should be'assessed. It
is reasonable to allow the Government some time to
carefully consider the evidence and make a reasoned de-
termination about whether to withdraw or proceed. If
the Government withdraws within a reasonable period of
time, the costs seem attributable to the respondent-appli-
cant's failure to cooperate in the investigation rather than
the Government's litigation position. However, if the
Government continues to proceed it is no longer justified
and should be billed for costs. Assessing costs ab initio
would not in my view encourage proper governmental
action any better than assessing costs as of the day it
became clear that the Government's position was no
longer substantially justified. To award costs ab initio
582 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
would, however , encourage respondent-applicants not to
cooperate in the investigation . In the instant case, I am
not willing to infer that the Government would have
prosecuted the case even if it was aware of the respond-
ent-applicant's defense prior to trial . Finally, the rule
proposed herein , in my view , would encourage a re-
spondent to attempt good faith settlement negotiations, in
which its defenses may be revealed , rather than waiting
to present them at trial.
I believe the special circumstances doctrine aids the
General Counsel to the extent that costs should not be
assessed until it became clear , during the trial, that the
Government 's position was no longer justified . Special
circumstances, however, do not absolve the General
Counsel from costs for continuing to prosecute the case
and filing - a posttrial brief, after it became clear that the
Government's position was frivolous, unreasonable, or
groundless.
To the extent that my decision appears in conflict with
that of the courts in Spencer Y. NLRB and E.D.F. v.
Watt, I note that both those decisions dealt - with the
question of an applicant that had to sue the Government
in order to obtain certain relief. Here the Government
sued the applicant in part because the applicant did not
make-the Government aware of its defense until some-
time during the litigation. Thus neither Spencer nor Watt
presented the issue of what effect the applicant's failure
to cooperate in the precomplaint investigation should
have on an award under EAJA. For the reasons ex-
pressed above, I find that granting an award from the
date that it became clear the Government 's position was
no longer justified is consistent with the rationale of the
Spencer and Watt cases , i.e., to award prevailing private
parties the fees they incurred in combatting unreasonable
arguments advanced by- the Government, while denying
fees incurred in defeating substantial arguments. Cf.
Goldhaber v. Foley, 698 F.2d 193 , 197 (3d Cir. 1983)
(holding that EAJA must be interpreted so as to charge
the Government with that portion of the expenses attrib-
utable to its unjustifiable positions). See also Ellis v. U.S.,
supra at 1576. -
V. THE ISSUES TO WHICH THE APPLICANT DID NOT
PREVAIL
The General Counsel alleges that the award should be
reduced because the Applicant did not prevail concern-
ing the direct dealing ' allegation . Further, the General
Counsel seeks to reduce any award because the Appli-
cant was unsuccessful in urging certain defenses that
were applicable to both the successful and unsuccessful
portions of the case.'
An applicant may not be compensated under EAJA
for fees and expenses incurred in litigating matters in
which the Government's position was substantially justi-
fied, as-it would contravene the purposes of EAJA to re-
quire the Government to bear the expense of defending
its 'reasonable positions . Matthews v. U.S., 713 F.2d 677,
684 (11th Cir. 1983); Goldhaber v. Foley, supra.
In Hensley v. Eckerhart, 461 U.S. 424, 435-436 (1983),
the United States Supreme Court addressed the question
of whether a partially prevailing plaintiff may recover
fees for time spent on unsuccessful claim s. The Court
held that the Congressional intent to limit awards, under
the Civil Rights Attorney 's Fees Awards Act of 1979, 42
U.S.C. § 1988 ,7 to prevailing parties, requires that unre-
lated claims be treated as if they had been raised in sepa-
rate lawsuits, and therefore no fee may be awarded for
services on the unsuccessful claims . In situations where a
lawsuit cannot be viewed as a series of discrete claims,
however, the -court "should focus on the significance of
the overall relief obtained by the plaintiff in relation to
the hours reasonably expended on the litigation." A
plaintiff's attorney who obtains "excellent results " is enti-
tled to a "fully compensatory fee." This normally will in-
clude all hours expended in the litigation and should not
be reduced "simply because the plaintiff failed to prevail
on every contention raised in the lawsuit."
Further the Court stated:
There is no precise rule or formula for making these
determinations . " The district court may attempt to
identify specific hours that should be eliminated, or
it may simply reduce t-he amount to account for the
limited success . The court necessarily has discretion
in making this equitable judgment. This discretion,
however, must be exercised in light of the consider-
ations we have identified . [Id. at 436-437.1
Applying the Hensley principles to this case , the Appli-
cant is clearly not entitled to fees for time spent on the
direct dealing allegation on which it was unsuccessful.
The Applicant has reduced its claim for an award by a
factor of 10 percent to account for this portion of the
case . The trial time expended on this issue occurred prior
to the time for which I am granting the award , i.e., prior
to the date at trial on which - the Applicant's exculpatory
evidence was offered . In view of this fact and the rela-
tively small amount of time devoted at trial (and, there-
fore, in the transcript) and the brief to this allegation, the
10-percent reduction appears reasonable.
The Applicant denied jurisdiction in its answer 'to the
complaint . The Applicant 's defense as to jurisdiction ex-
tended the time necessary for trial . However, that oc-
curred prior to the period for which an award is being
granted. Therefore , no further reduction in the award is
necessary.
The Applicant unsuccessfully urged that the case be
deferred pursuant to the Board 's policy enunciated in
Collyer Insulated Wire, supra. The Applicant 's Collyer de-
fense was unsuccessful . That defense was applicable to
both the prevailing and unprevailing allegations of the
complaint . It would have been a valid defense to the al-
legations on which the Applicant prevailed. It was not
valid regard the allegation on which the Applicant did
not prevail . However, if only the direct dealing charge
was alleged against the Applicant , it is highly, probable
the Collyer defense would not have been raised. It was
not unreasonable for the, Applicant to raise the Collyer
defense with regard to the allegations on which it pre-
' Although the case involved the Civil Rights Attorney's Fees Awards
Act, the Court said that the standards established are "generally applica-
ble" to any case where Congress has authorized an award of fees to a
prevailing party . See fn. 7
LEEWARD AUTO WRECKERS 583
vailed. If the direct dealing allegations had not been in-
cluded in this case, or if the direct dealing allegation had
not been sustained, deferral to arbitration would have
been a meritorious defense. Further, considering the Ap-
plicant's high degree of success, the award of fees should
not be diminished because of a defense reasonably assert-
ed, but not responsible for the ultimate successful out-
come of the case. Thus, I will not reduce the award
based on the Applicant's failure to prevail on its Collyer
defense.
VI. REASONABLE FEES AND EXPENSES
Pursuant to Section 102.145(c) of the Board's Rules,
the judge shall consider the following factors in deter-
mining the reasonableness of fees:
(1) If the attorney, agent, or expert witness is in prac-
tice, his or her customary fees for similar services or, if
an employee of the applicant, the fully allocated cost of
the services.
(2) The prevailing rate for similar services in the com-
munity in which the attorney, agent, or expert witness
ordinarily performs services.
(3) The time actually spent in the representation of the
applicant.
(4) The time reasonably spent in light of the difficulty
or complexity of the issues in the adversary adjudication
proceeding,
The customary fees of Jared Jossem, the Applicant's
lead attorney and trial attorney was $125 per hour. Jos-
sem's time was computed at $75 per hour for purposes of
the EAJA application pursuant to the Board's Rules.
The customary fee for Perry Confalone, a law clerk and
now an attorney, was computed at $65, an hour and later
$75 an hour. The rates billed for the attorneys appear to
conform to the prevailing rates in Honolulu, Hawaii,
where they practice. The Applicant has submitted
records establishing the actual time spent in the underly-
ing proceeding and in the EAJA prosecution. The Gen-
eral Counsel takes issue with the reasonableness of, the
time and expenses.
The Applicant seeks total fees and expenses of
$47,040.28.8 That amount is a result of the deduction of
certain fees attributable to the unsuccessful defense of the
direct dealing allegation (on which the General Counsel
prevailed) and certain charges attributable to a law clerk.
Further, the application was amended at various times to
include additional time spent in prosecuting the applica-
tion.
a. The General Counsel contends that the Applicant's
claim of 10-1/4 hours for, trial preparation should be re-
duced to 8 hours, apparently o'n the ground that the Ap-
plicant called only three witnesses to 'testify. This ap-
proach does not take into account the quality and nature
of trial preparation. Further, in view of the importance
of the case to the Applicant-a monetary remedial order
most likely would have forced the Applicant out of busi-
ness-the amount of time spent on trial preparation does
not appear unreasonable.
b. The General Counsel contends that the time allotted
for a trial day should be limited to 1 hour in excess of
8 As of March 27, 1985.
actual ' court time . I do not find any basis for so reducing
the award . It appears reasonable that in excess of actual
trial the Applicant's attorney would spend time review-
ing the day's proceedings with his client and preparing
for the next day. Sessions with clients and witnesses
before and after the actual court time for that day appear
to be reasonable and necessary.
c. The General Counsel contends that the time claimed
for brief writing is excessive . The brief was researched
and written by a law clerk and the General Counsel con-
tends that extra time was taken because of the clerk's in-
experience. I find some merit in this contention. Further,
the trial attorney apparently did not give the' law clerk
the -benefit of his pretrial research.
The General Counsel further argues that the Appli-
cant's manner of preparing the' posttrial brief increased
costs. The Applicant did not purchase a copy of the trial
transcript (saving in excess of $1000) and utilized the
General Counsel's copy of the transcript. This approach
required more extensive notes, and therefore more time,
than if the Applicant had purchased its own copy of the
transcript, - However overall, the Applicant decreased
rather than increased the cost of the brief by not pur-
chasing a copy of the transcript. The General Counsel
cannot be heard to complain about this departure from
the standard procedure which inured to his benefit.
In sum, because the trial attorney did not give the law
clerk the benefit of his prior research and because the
law clerk was inexperienced, I have _ reduced the claim
for preparing-the brief by 20 percent. See Kutska V. Cali-
fornia State College, 564 F.2d 108 (3d Cir. 1977); Action
on Smoking v. CAB, 724 F.2d 211 (D.C. Cir. 1984). The
Government need not pay for the law clerk's learning
experience . Further, the attorney for Applicant admitted
that on occasion time spent by a new attorney or clerk is
written off the client's bill as "education." My reduction
of the claim is similar to such action by the law firm.
d. The General' Counsel contends that the Applicant
should be awarded only 4 hours at $50 per hour for
prosecuting the instant application . I find that argument
to be totally without merit. The Application is entitled to
a reasonable award for costs in presenting its EAJA
claim. Further, the prolonged nature of this litigation
was caused by the General Counsel.9 The hearing was at
the request of the General Counsel, who resisted all at-
tempts to narrow the scope of the hearing or to resolve
matters without a hearing. The Applicant could not
abandon its application but rather had to respond to the
General Counsel's motion. It would be unjust to deny an
award for such action,
I note that the General Counsel has no deterrent in
EAJA for prolonging the litigation and delaying the
award. There is no provision in EAJA. for interest or
any other sanction if the Government delays. Interest
9 For example, after the General Counsel's motion to dismiss the appli-
cation was denied, the General Counsel filed two mo"for reconsider-
ation. Second, the General Counsel refused the Applib'atit's offer to cor-
rect an alleged error in service Third, the General Coun'sel' requested a
hearing but refused to follow the rules for such a request even after being
so ordered by the judge. Fourth , the General Counsel has requested time
extentions for the filing of papers and briefs amounting to 9 weeks.
584 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
does not run until there is a judgment against the Gov-
ernment . Thus , it appears to be in the General Counsel's
interest to delay these proceedings . At least the General
Counsel's conduct in this case strongly suggests such an
approach. It is the Applicant, not the General Counsel,
who has been prejudiced by the delay. It would further
unjustly penalize the Applicant to impose the arbitrary
and unreasonable limits on the EAJA award proposed by
the General Counsel.
As the 'United States Court of Appeals for the Third
Circuit in Bagby v. Beal, 606 F.2d 411 (3d Cir. 1979)
stated:
If an attorney is required to spend time litigating his
fee claim , yet not be compensated for that time, the
attorney's effective rate for all the hours expended
on the case will be correspondingly decreased.
[Quoting Prandini v. National Tea Co., 585 F.2d 47,
53 (3d Cir. 1978).]
e. The General Counsel contends that since no excep-
tions were filed by any party, the Applicant should not
be entitled to fees for work performed after my decision.
However, it appears to me that time spent reviewing the
decision with the client and efforts made to convince the
General Counsel not to appeal the decision , are reason-
able expenses related to the litigation . Contrary to the
General Counsel, I do not find such to be "make work"
claims.
f. The General Counsel objects to the referral of the
EAJA case to the same administrative law judge that
dismissed the underlying complaint allegations . Section
102.148(b) 'of the Board 's Rules mandates that an applica-
tion be referred by the Board to the judge who heard
the adversary adjudication on which the application is
based . That rule is in accord with EAJA, which requires
the application be submitted to the "adjudicative officer
of that agency." 5 U.S.C. § 504(a)(1) and (2). The pur-
pose of referral to the same judge who heard the case is
that he or she is more alert to the merits of the applica-
tion with respect to such issues as partially prevailing
parties, substantial justification and reasonableness of
time and expenses to various aspects of the litigation.
The General Counsel expressly denied that he wanted to
disqualify the judge. In any event, to the extent that the
General Counsel 's objection is viewed as an attempt to
disqualify the judge, the General Counsel did not comply
with the Board's Rules for requesting disqualification of
a judge. Section 102 .37 of the Board's Rules ; see also Top
Form Mills, 273 NLRB 1246 fn. 1 (1984).
g. The General Counsel further objects to my limiting
of the EAJA hearing to, specific issues . Section 102.153
of the Board's Rules attempts to avoid prolonged EAJA
proceedings by providing that "An evidentiary hearing
shall be held only where necessary for resolution of ma-
terial lissues of fact ." Further the Board's `Rule provides
that:
A request that the administrative law judge order
further proceedings shall specifically identify the
disputed issues and the evidence sought to be ad-
duced, and shall explain why the additional pro-
ceedings are necessary to resolve the issues.
In the light of the,Board's Rules the General Counsel
cannot complain that the evidentiary hearing was limited
by his own failure to make a specific request to litigate
further matters.
h. The General Counsel 's other arguments are specious
and not worthy of further consideration.
VII. THE APPLICANT'S REQUEST FOR AN ADDITIONAL
AWARD
The Applicant seeks an additional award to compen-
sate for the delay in this proceeding caused by the Gen-
eral Counsel. See National Ass. of Concerned Vets v. Sec-
retary of Defense; 675 F.2d 1319 at 1335 (D.C. Cir. 1982).
The additional award-, requested represents 11 percent
simple interest of the original fee award . However, as
mentioned earlier, EAJA does not provide for prejudg-
ment interest. Further, as an exception to sovereign im-
munity, EAJA has been strictly construed. See Monark
Boat Co., 262 NLRB,994 (1982), affd. 708 F.2d 1322 (8th
Cir. 1983). Accordingly, no interest payment will be
awarded. -However, the General Counsel's conduct in
prolonging these EAJA proceedings as well as in the un-
derlying litigation10 has been considered and has in
effect, resulted in an award greater than would be nor-
mally granted in a case of this nature.
Based on the above findings and conclusions, I shall
recommend that the Applicant be ' awarded fees and ex-
penses, including time spent pursuing recovery of its ap-
plication under EAJA:11
[Recommended Order for dismissal omitted from pub-
lication.]
10 The General Counsel prolonged the underlying litigation by inad-
vertently failing to comply with Sec. 102.118 of the Board's Rules in not
submitting to the Applicant' s trial attorney all the statements of one of
his witnesses and by attempting to litigate matters dismissed from the
case by the Regional Director. Further, during settlement discussions of
the underlying case, the General Counsel urged the Applicant to bypass
its own attorney and negotiate a settlement with the Union.
11 All outstanding motions inconsistent with this recommended Order
are denied.