Lindsay ex rel. Nat'l Labor Relations Bd. v. Mike-Sell's Potato Chip Co.
| Decision Date | 13 November 2017 |
| Docket Number | Case No. 3:17-cv-126 |
| Parties | GAREY E. LINDSAY, Regional Director of the Ninth Region of the National Labor Relations Board, for and on Behalf of the National Labor Relations Board, Petitioner, v. MIKE-SELL'S POTATO CHIP COMPANY, Respondent. |
| Court | U.S. District Court — Southern District of Ohio |
This case is before the Court on the Motion for Attorneys' Fees, Costs, and Other Expenses (Doc. 20) filed by Defendant-Respondent Mike-Sell's Potato Chip Co. ("Mike-Sell's"). Mike-Sell's contends that Plaintiff-Petitioner National Labor Relations Board ("NLRB") and Garey Lindsay, Eric Taylor, Linda Finch, and Naomi Clark, acting in their official capacities on behalf of Region 9 of the NLRB (collectively with the NLRB, hereinafter referred to as "Petitioner") filed an unjustified Petition for 10(j) Injunction (the "Petition") (Doc. 1) against Mike-Sell's for alleged violations of the National Labor Relations Act ("NLRA"), 29 U.S.C. §§ 151-169. Mike-Sell's argues it is therefore entitled to reimbursement of its attorneys' fees, costs, and other expenses incurred in defending against the Petition pursuant to 28 U.S.C. §§ 1920, 1927, 2412 and the Court's inherent authority.
The Petition alleged that Mike-sell's refused to bargain with the International Brotherhood of Teamsters, General Truck Drivers, Warehousemen, Helpers, Sales and Service, and Casino Employees, Teamsters Local Union No. 957 (the "Union"), despite an obligation to do so, before selling four distribution routes for its products. Petitioner sought a preliminary injunction that would require Mike-Sell's to rescind the sale of the four routes, provide certain information to the Union, and bargain with the Union pending the NLRB's determination of whether Mike-Sell's violated the Act. After a hearing and full briefing by the parties, the Court found that, although Petitioner established reasonable cause to believe that Mike-Sell's violated the NLRA, entry of the injunction would not be just and proper. (Doc. 18.)
Petitioner has filed an Opposition (Doc. 26) to Mike-Sell's Motion for Attorneys' Fees, in response to which Mike-Sell's filed a Reply (Doc. 27). This matter is therefore fully briefed and ripe for review. As discussed below, upon consideration of the facts of this case along with the applicable legal standard, Petitioner was substantially justified in bringing the Petition. Accordingly, the Court DENIES the Motion for Attorney Fees (Doc. 20).
The Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412, provides that a court "shall award to a prevailing party" its fees, costs and other expenses in a civil action brought by an agency of the United States, "unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. § 2412(d)(1)(A). The EAJA is designed "to eliminate financial disincentives for those who would defend against unjustified governmental action and thereby to deter the unreasonable exercise of Government authority." Ardestani v. I.N.S., 502 U.S. 129, 138 (1991) (citations omitted).
A party seeking an award of fees and expenses must file an application showing that it is a prevailing party eligible to receive an award under the EAJA and the amount sought, including an itemized statement showing the time expended and the rate at which fees and expenses werecomputed. 28 U.S.C. § 2412(d)(1)(B). The government then has the burden of showing that its position was substantially justified or that special circumstances make an award unjust. Caremore, Inc. v. N.L.R.B., 150 F.3d 628, 629 (6th Cir. 1998); see also Pickering v. Mukasey, 306 F. App'x 246, 248 (6th Cir. 2009). The government's position is substantially justified if it is "'justified in substance or in the main'—that is, justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552, 565 (1988). "[A] position can be justified even though it is not correct, and [. . .] can be substantially (i.e., for the most part) justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact." Id. at 566 n. 2. "A request for attorney's fees should not result in a second major litigation." McQueary v. Conway, 614 F.3d 591, 602 (6th Cir.2010) (quoting Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)).
Under 28 U.S.C. § 1927, the Court may hold an attorney accountable for excessive fees and expenses that a party incurs due to the attorney's improper conduct. Specifically, Section 1927 provides that:
Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.
28 U.S.C. § 1927. A district court also has inherent authority to sanction bad-faith conduct, including by entering an award of attorneys' fees and expenses against the offending party. First Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 501, 516 (6th Cir. 2002).
Petitioner does not dispute that Mike-Sell's is a prevailing party and eligible for a fee award under the EAJA. Instead, Petitioner argues that Mike-Sell's application for a fee award should be denied because Petitioner's position was substantially justified. (Doc. 26 at PAGEID #773.) As discussed below, even though the Court denied the Petition, it had a reasonable basis in law and fact and therefore does not support an award of fees under the EAJA.
Petitioner brought this action under Section 10(j) of the NLRA, which permits the NLRB, upon issuance of an administrative complaint alleging an unfair labor practice, to petition a district court for "such temporary relief or restraining order as it deems just and proper." 29 U.S.C. § 160(j). To be granted a preliminary injunction, the NLRB must carry two burdens. First, it must establish that "reasonable cause" exists to believe unfair labor practices occurred. NLRB v. Voith Indus. Servs., Inc., 551 F. App'x 825, 827 (6th Cir. 2014). Second, it must show that entry of the injunction would be "just and proper." Id.
In denying the Petition, the Court found that Petitioner met its initial burden of establishing reasonable cause, but not that entry of the injunction would be "just and proper." (Id. at 14-19.) Thus, there is no question that Petitioner was substantially justified in its position at least under the first prong of the standard. The only issue is the reasonableness of Petitioner's position that the injunction was just and proper. The mere fact that the Petition was denied does not "raise a presumption that the [g]overnment position was not substantially justified." Howard v. Barnhart, 376 F.3d 551, 554 (6th Cir. 2004) (internal quotes omitted).
"The 'just and proper' inquiry ... turns primarily on whether a temporary injunction is necessary 'to protect the Board's remedial powers under the [NLRA].'" Ahearn v. Jackson Hosp. Corp., 351 F.3d 226, 239 (6th Cir. 2003) (quoting Schaub v. Detroit Newspaper Agency, 154 F.3d 276, 279 (6th Cir.1998)). As the Court experienced first-hand, this determination is by no means clear-cut, but involves the analysis of factual issues—some unresolved—and the weighing of various factors relevant to protection of the NLRB's remedial powers.
Petitioner argues that it was substantially justified in bringing the Petition based on itsconcern that, if Mike-Sell's were not enjoined, Union support would erode to the point that any action taken by the NLRB would be ineffectual. Petitioner presented evidence that employees were increasingly frustrated with the Union and its perceived futility for several reasons, including the sale of distribution routes. (Doc. 17 at 50-66.) Petitioner feared that, if the sale of the four routes was permitted to stand and Mike-Sell's continued to sell more routes with impunity, then employees would lose their jobs and/or withdraw their support for the Union. As a result, by the time the NLRB ordered Mike-Sell's to negotiate regarding the sale of the routes, for example, the Union's bargaining power would be greatly diminished.
Mike-Sell's counters that the Sixth Circuit "does not consider harm to employees when determining whether a § 10(j) injunction is just and proper." (Doc. 27 at 7 (quoting Boren v. Cont'l Linen Servs., Inc., 2010 WL 2901872, at *4 (W.D. Mich. July 23, 2010), citing NLRB v. Automatic Sprinkler Corp. of Am., 55 F.3d 208, 214 n. 5 (6th Cir. 1995)).) In the same case, however, the court acknowledges that the Sixth Circuit "will take into account erosion of employee support, but only for the purpose of assessing whether the NLRB will retain its remedial power." Boren, 2010 WL 2901872 at *4. Thus, harm to employees and their resulting frustration with the Union is relevant to the extent it could impact the effectiveness of future negotiations between Mike-Sell's and the Union. See also Muffley ex rel. N.L.R.B. v. Voith Indus. Servs., Inc., 551 F. App'x 825, 835 (6th Cir. 2014) (); Ahearn v. Jackson Hosp. Corp., 351 F.3d 226, 239 (6th Cir. 2003) (); Bloedorn v. Francisco Foods, Inc., 276 F.3d 270, 299 (7th Cir. ...
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