Grason Elec. Co. v. N.L.R.B., 89-70470
| Citation | 951 F.2d 1100 |
| Decision Date | 18 December 1991 |
| Docket Number | No. 89-70470,89-70470 |
| Parties | 139 L.R.R.M. (BNA) 2215, 60 USLW 2495, 120 Lab.Cas. P 11,041 GRASON ELECTRIC COMPANY, Amos J. Walker, Inc., Rex Moore Electrical Co., Inc., et al., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Wendy A. Cheit and Mark R. Thierman, Thierman, Cook, Brown & Prager, San Francisco, Cal., for petitioners.
Corinna Lothar Metcalf, N.L.R.B., Washington, D.C., for respondent.
On Application for Enforcement of an Order of the National Labor Relations Board.
Before GOODWIN, THOMPSON and O'SCANNLAIN, Circuit Judges.
Six employer members of a multiemployer association (hereinafter NECA) were prevailing parties in an unfair labor practice case brought against them by the National Labor Relations Board. They challenge the Board's refusal to award attorney fees under the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504(a)(1) (1988).
The statute provides that "[a]n agency that conducts an adversary adjudication shall award, to a prevailing party other than the United States, fees and other expenses...." The statute goes on to provide that the award shall be granted unless "the position of the agency was substantially justified or that special circumstances make an award unjust." 5 U.S.C. § 504(a)(1). Thus, the agency does not have discretion to deny attorney fees; the award is mandatory unless an exception applies or unless a party fails to qualify. In response to this petition for review, the Board argues that these petitioners fall within an exception and therefore are not entitled to any attorney fees.
The EAJA grew out of Congress' concern that the high costs of litigation might deter small entities from vindicating their rights when faced with adverse action by a federal agency. See H.R.Rep. No. 1418, 96th Cong., 2d Sess. (1980) reprinted in 1980 U.S.Code Cong. & Admin.News 4953, 4984, 4988-89. To further its purpose, the Act specifies that it applies only to businesses whose net worth does not exceed $7 million and which do not employ more than 500 people. 5 U.S.C. § 504(b)(1)(B). The statute further provides that "[a]fter consultation with the Chairman of the Administrative Conference of the United States, each agency shall by rule establish uniform procedures for the submission and consideration of applications for an award of fees and other expenses." 5 U.S.C. § 504(c)(1).
The NLRB regulations provide that "[t]he net worth and number of employees of the applicant and all of its affiliates shall be aggregated to determine eligibility." 29 C.F.R. § 102.143(g) (1991) (emphasis added). The regulation further states that "financial relationships of the applicant other than those described in this paragraph may constitute special circumstances that would make an award unjust." Id.
Here, the Board argues that because the litigation was financed by all NECA members, not just the parties to this appeal, the Board should aggregate the assets of all NECA companies in determining eligibility. Each of the parties to this appeal would individually qualify for fees under the Act. But because NECA refused to provide financial data for all 48 NECA members, the Board assumed that if aggregated, the total assets would exceed $7 million and found that the petitioners had failed to establish their eligibility.
Petitioners argue that the Board exceeded its statutory authority in issuing this regulation, because the statute makes no mention of aggregating affiliates for purposes of the maximum dollar and work force limits on eligibility. Petitioners further argue that the Board's approach to other financial relationships also exceeds the statutory authority, because the Board misinterprets the meaning of "special circumstances." Finally, petitioners argue that even if the regulation is valid, it does not permit aggregation in this case, because the six parties do not meet the regulation's definition of affiliates. Accordingly, petitioners assert that the financial relationship in this case does not constitute a special circumstance that would make an award "unjust."
The Board affirmed the conclusion of the Administrative Law Judge which aggregated the net worth of the NECA members. Because it affirmed on this ground, the Board declined to reach the ALJ's conclusions that the General Counsel had not been substantially justified in issuing the complaint. (The complaint was issued on the basis of a bureaucratic failure to correct a defective computer-generated list of potential violators.)
The Board argues that since it only addressed the "special circumstances" prong of 5 U.S.C. § 504(a)(1) below, the "substantial justification" issue is not ripe. The Board's reliance on the ripeness doctrine is misplaced.
The purpose of the ripeness doctrine is "to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties." Abbott Laboratories v. Gardner, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967). The doctrine is concerned with "the fitness of [an] issue[ ] for judicial decision and the hardship to the parties of withholding court consideration." Id. at 149, 87 S.Ct. at 1515.
This case involves an agency pressing groundless claims without checking the facts and maintaining these claims even after being notified of its error. This case does not turn on a fact-intensive investigation of whether "substantial" justification underlay the Board's decision to press its claims against petitioners. In this case, there was no justification.
Thus, the substantial justification issue here poses no problem of fitness for judicial review, nor of entanglement with the Board's policy-making. The ripeness doctrine does not apply.
In reaching its decision, the ALJ (and the Board in affirming the ALJ) relied on the "other financial relationships" language of the NLRB regulation, not the regulatory language concerning specific affiliates. Accordingly, we need not reach the petitioners' arguments that the parties here do not meet the definition of "affiliates" under the regulation.
The ALJ held that the net worth of all 48 NECA members should be aggregated for purposes of determining eligibility for attorney fees, based on the members' "joint participation in the conduct which gave rise to the adversary adjudication and the joint participation in the litigation (and payment thereof)." The ALJ found that even though the NECA members were not affiliates, their net worth should be pooled because they had combined their resources to finance this litigation. (The six small employers sought the help of their association to defend the unwarranted claims.) The ALJ held that Congress' purpose was only to provide fees to parties who could not easily afford legal services. Because NECA was able to afford legal services by pooling its resources, the ALJ held that it would be "unjust" to award the six employers attorney fees.
1. Special Circumstances
Petitioners argue that the legislative history, as well as case law, show that the statute's "special circumstances" language was intended to refer only to substantive issues, not financial eligibility. This argument has merit.
The House Report discusses the "special circumstances" language only in the context of legal issues. The Judiciary Committee discusses the test of substantial justification and states that if the government fails to make this showing, "fees should be awarded unless some other circumstances make an award unjust." 1980 U.S.Code Cong. & Admin.News at 4992. The Committee goes on to state that that language Id. at 4993.
The Report nowhere mentions financial circumstances, other than those spelled out in the statute, as a "special circumstance" that could defeat an award. Indeed, the Report expresses Congress' concern about "the natural reluctance of agencies to award fees against themselves," id. at 4993, and explains that this concern led Congress to reject a purely discretionary standard for awarding fees. Id. at 4992-93.
The only two Ninth Circuit cases cited by either party discuss "special circumstances" in the context of legal issues. See Animal Lovers Volunteer Ass'n v. Carlucci, 867 F.2d 1224, 1226 (9th Cir.1989) (); United States v. Gavilan Joint Community College Dist., 849 F.2d 1246, 1249 (9th Cir.1988) (). However, neither of these cases raised the issue of "unusual financial" circumstances. In both cases, the "special circumstances" language was raised in the context of legal questions. While these cases do not hold that a court could never find a financial situation to be a "special circumstance," they addressed the matter only as a question involving the strength of the government's case.
The Board admits that there is a "dearth of case law" interpreting the "special circumstances" exception. It cites two of its own cases that aggregated assets. But they did so under the specific "affiliate" provisions of...
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