Temp Tech Industries, Inc. v. N.L.R.B.
| Decision Date | 08 March 1985 |
| Docket Number | No. 83-3308,83-3308 |
| Citation | 756 F.2d 586 |
| Parties | 118 L.R.R.M. (BNA) 3004, 102 Lab.Cas. P 11,396 TEMP TECH INDUSTRIES, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. |
| Court | U.S. Court of Appeals — Seventh Circuit |
J. Charles Sheerin, Chicago, Ill., for petitioner.
John P. Coyle, N.L.R.B., (Elliot Moore, NLRB) Washington, D.C., for respondent.
Before ESCHBACH and COFFEY, Circuit Judges, and DUPREE, Senior District Judge. *
Temp Tech Industries, Inc. ("Company") seeks review of an order of the National Labor Relations Board ("Board") dismissing its application for costs and attorney's fees under the Equal Access to Justice Act, 5 U.S.C. Sec. 504 (1982). We find that the Board did not abuse its discretion in dismissing the application. Thus, we deny the petition for review.
On June 30, 1981, the Board's General Counsel issued a complaint against the Company. The complaint charged that the Company, through its president, violated Sec. 8(a)(1) of the National Labor Relations Act ("NLRA"), 29 U.S.C. Sec. 158(a)(1) (1982) by soliciting employee grievances against the Company, 1 offering to negotiate individually with employees to discourage employee participation in a strike, and informing employees that there would be no further negotiations if a strike commenced. The complaint further charged that the Company discharged employee Bernard Szkolny for engaging in protected activity, in violation of Sec. 8(a)(1) and (3) of the NLRA, 29 U.S.C. Sec. 158(a)(1) and (3) (1982). Finally, the complaint charged that the Company violated Sec. 8(a)(1) and (5) of the NLRA, 29 U.S.C. Sec. 158(a)(1) and (5) (1982), by engaging in bad-faith bargaining, and alleged, inter alia, that the Company had failed to designate a negotiator with sufficient authority to engage in meaningful bargaining.
A hearing was held before an administrative law judge ("ALJ"). The ALJ concluded that the president's threat to absent himself from the bargaining table had violated Sec. 8(a)(1), and granted the General Counsel's motion to withdraw the allegation that the president had also solicited grievances and offered to bargain individually with employees. The ALJ also concluded that the Company had engaged in dilatory, bad-faith bargaining in violation of Sec. 8(a)(1) and (5), but did not find that the Company had refused to designate a representative with sufficient authority to bargain collectively. Finally, the ALJ found that employee Szkolny had been fired for assaulting another employee who violated the picket line and that Szkolny's conduct was sufficiently egregious to warrant his discharge. The ALJ therefore concluded that the Company did not violate Sec. 8(a)(1) and (3) by discharging Szkolny.
The proceeding was transferred to the Board, where neither the Company nor the General Counsel filed exceptions. The Board adopted the ALJ's order in full and, on the Board's application, we issued an order summarily enforcing the Board's order against the Company. NLRB v. Temp Tech Industries, Inc., No. 83-1841 (7th Cir. June 28, 1983).
On August 26, 1982, the Company filed an application with the Board for attorney's fees and costs under the Equal Access to Justice Act ("EAJA"), 5 U.S.C Sec. 504 (1982) 2 alleging that it was a prevailing party in the proceeding before the ALJ within the meaning of 5 U.S.C. Sec. 504(a)(1), and that the Board's position was not substantially justified. Specifically, the Company alleged that the General Counsel had introduced no evidence in support of certain factual allegations underlying the Sec. 8(a)(1) and Sec. 8(a)(5) charges, and thus that the Company had prevailed on those allegations. The Company further alleged that it had prevailed on the Sec. 8(a)(3) charge and, moreover, that the position of the General Counsel in issuing the complaint was not substantially justified because the Company had offered to settle before the hearing, and because the General Counsel knew that it lacked evidence to support its allegations, and also knew that Szkolny was not a credible witness.
The General Counsel moved to dismiss the Company's application on grounds that, with the exception of the issue of employee Szkolny's discharge, the Company was not the prevailing party on a "significant and discrete substantive portion of [the] proceeding" as required by the Board's Rules and Regulations, Series 8, as amended, 29 C.F.R. Sec. 102.444(a) (1984). The General Counsel further argued that his position in litigating Szkolny's discharge was substantially justified because the ALJ's resolution of the issue turned on an assessment of Szkolny's credibility as a witness. Finally, the General Counsel argued that the Company was not a prevailing party on any issue other than the discharge, and that it would be unjust within the meaning of the EAJA and the Board's Rules and Regulations, 29 C.F.R. Sec. 102.444(b) (1984), to award the Company fees for litigating conduct subsequently found to have violated the NLRA. 3
On December 10, 1982, the ALJ issued a Supplemental Decision granting the General Counsel's motion to dismiss the Company's application. The ALJ concluded that the Company had prevailed only on the issue of Szkolny's discharge, and that the General Counsel's position on that issue was substantially justified because the resolution of the issue turned on credibility. The ALJ found that the factual allegations on which the Company prevailed did not constitute "significant and discrete substantive portion[s]" of the proceeding: the allegation concerning whether the Company had designated a bargaining representative in good faith was but one aspect of a course of conduct alleged to have constituted bad-faith bargaining, and the allegations concerning the president's offers to employees were based on events occurring during a meeting at which the president also threatened the employees in violation of the Act. The ALJ also concluded that the EAJA was not designed to test the complaint-issuing discretion of the Regional Director, and thus refused to consider the Company's allegations concerning the settlement offer.
The Company filed exceptions to the ALJ's order. On May 4, 1983, the Board adopted the ALJ's findings and conclusions in a Supplemental Decision and Order, and dismissed the application. This court granted the Company's motion for leave to appeal by order of December 28, 1983, see 5 U.S.C. Sec. 504(c)(2) (1982).
The EAJA, 5 U.S.C. Sec. 504(a)(1), directs that when an agency (as defined in 5 U.S.C Sec. 500(a)(1) (1982)) conducts an adversary adjudication and loses, the agency shall award fees and other expenses incurred by the prevailing party in connection with that proceeding. The agency can avoid the imposition of fees and costs only by demonstrating that its position as a party to the proceeding was "substantially justified," or that special circumstances exist that would make such an award unjust. We may modify the Board's determination not to make an award only if we find that the Board abused its discretion. 5 U.S.C. Sec. 504(c)(2).
The EAJA directs each administrative agency to establish by rule uniform procedures for the submission and consideration of fee applications. 5 U.S.C. Sec. 504(c)(1). Under the Board's rules, when a party in an adversary proceeding prevails only in part, any recoverable fees and expenses must be incurred in connection with "a significant and discrete portion of that proceeding." 29 C.F.R. Sec. 102.144(a) (1984). The Company does not directly challenge the Board's finding that it prevailed only on the issue of Szkolny's discharge. Rather, it argues that it should recover fees for the entire proceeding because the General Counsel's decision to issue a complaint and to refuse the company's settlement offer was not substantially justified. Although there is a split of authority concerning whether the government need justify both its underlying conduct and its litigation position, see Part B, infra, our research has disclosed no case in which the question of substantial justification was reached on issues where it had not been shown that the party applying for fees prevailed. Accordingly, we consider the Company's arguments concerning substantial justification only as they concern the issue of Szkolny's discharge.
The Company does not appear to be arguing that the ALJ erred in determining that the General Counsel's position in the hearing regarding Szkolny's discharge had a basis in fact and law. Rather, the Company takes issue with the ALJ's ruling that the EAJA was not intended as a vehicle to test the complaint-issuing or settlement posture of an agency. The Company argues that the weaknesses of the General Counsel's case concerning the discharge should have been apparent before the hearing, and should have led the General Counsel to decide not to prosecute the unlawful termination charge. Alternatively, the Company contends that these same weaknesses should have led the General Counsel to accept its settlement offer.
The statute requires that the government establish that its "position" is substantially justified, but the courts are divided over the proper definition of the term "position." Some courts follow the "underlying action" theory, which focuses on the governmental action which precipitated the litigation. See, e.g., Rawlings v. Heckler, 725 F.2d 1192 (9th Cir.1984); Natural Resources Defense Council, Inc. v. EPA, 703 F.2d 700 (3d Cir.1983); Lonning v. Schweiker, 568 F.Supp. 1079 (E.D.Pa.1983); Watkins v. Harris, 566 F.Supp. 493 (E.D.Pa.1983); Community Health Services, Inc. v. Califano, 563 F.Supp. 1368 (W.D.Pa.1983); Environmental Defense Fund, Inc. v. Watt, 554 F.Supp. 36 (E.D.N.Y.1982), aff'd on other grounds, 722 F.2d 1081 (2d Cir.1983); MacDonald v. Schweiker, 553 F.Supp. 536 (E.D.N.Y.1982); Cornella v. Schweiker, 553 F.Supp. 240 (D.S.D.1982) (dicta), rev'd on other...
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