Shrewsbury Motors, Inc.

National Labor Relations Board - Board Decisions

Sep 16, 1986

281 N.L.R.B. 486 (N.L.R.B. 1986)

486 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Shrewsbury Motors, Inc. and Amalgamated Local
Union 355 . Case 22-CA-13424(E)
16 September 1986
DECISION AND ORDER
CHAIRMAN DOTSON AND MEMBERS JOHANSEN
AND STEPHENS
On 14 February 1986 Administrative Law Judge
David S . Davidson issued the attached decision.
The General Counsel filed exceptions and a sup-
porting brief, the Applicant, Shrewsbury Motors,
Inc., filed cross-exceptions, a supporting brief, and
an answering brief, and the General Counsel filed
an answering brief to the Applicant 's cross-excep-
tions.
The National Labor Relations Board has delegat-
ed its authority in this proceeding to a three-
member panel.
The Board has considered the decision and the
record in light of the exceptions and briefs and has
decided to affirm the judge 's rulings, findings, and
conclusions and to adopt the recommended Order.
ORDER
The National Labor Relations Board adopts the
recommended Order of the administrative law
judge and orders that the Applicant, Shrewsbury
Motors, Inc., Shrewsbury , New Jersey, shall be
awarded $6,879.36 pursuant to its EAJA applica-
tion plus any additional legal fees and expenses it
can demonstrate have been reasonably incurred in
pursuing recovery of attorney's fees under the
EAJA.
Jean Seibert Stucky, Esq., and Gary A. Carlson, Esq., for
the General Counsel.
Roger Meade, Esq. (Littler, Mendelson, Fastiff & Tichy),
of Baltimore, Maryland, for the Applicant.
DECISION
FINDINGS OF FACT
I. THE UNFAIR LABOR PRACTICE PROCEEDING
GIVING RISE TO THIS APPLICATION
On 18 October 1984 the Acting Regional Director for
Region 22 issued a complaint and notice of hearing in
Case 22-CA-13424. The complaint alleges that:
(a) As a consequence of the Applicant's successorship
to a previous employer, the Union was the exclusive bar-
gaining representative of the Applicant's employees in
two units , one of sales employees (unit A) and the other
of service and parts employees (unit B).
(b) The Applicant failed and refused to recognize and
bargain with the Union as the exclusive representative of
the employees in both units following bargaining request
on 17 and 21 May 1984.
(c) The Applicant thereby violated Section 8(aX5) and
(1) of the Act.2
Following issuance of the complaint, the Applicant
called the attention of the Region to a formal General
Counsel's advice memorandum in Derby of San Francisco,
Case 20-CA-19024, which it contended required dismis-
sal of the entire complaint. Thereafter a portion of the
case was submitted to the General Counsel's Division of
Advice. On 28 January 1985 the Acting Regional Direc-
tor notified counsel for the Union that the allegations of
the complaint with respect to the unit B employees were
being withdrawn based on the conclusion that at the
time of the refusal to bargain the Union had lost its ma-
jority support or the Applicant at least had a reasonable
good-faith doubt of the Union's majority among the em-
ployees in unit B. On the same day, the Acting Regional
Director issued an amended complaint reflecting with-
drawal of that allegation.
After one postponement the case was set for hearing
on 3 June 1985 . On 30 May 1985 counsel for the Appli-
cant was advised orally that the Regional Director in-
tended to withdraw the complaint and no hearing would
be held. On 14 June 1985 the Regional Director issued
an order withdrawing the first amended complaint and
notice of hearing and approving the Charging Party's re-
quest to withdraw the charge for the stated reason that
the Charging Party "was no longer interested in pursu-
ing this matter."
(Equal Access to Justice Act)
DAVID S. DAVIDSON, Administrative Law Judge. This
proceeding arises under the Equal Access to Justice Act,
5 U.S.C. § 504.1 The principal issues framed by the
pleadings are:
(1) Whether the Applicant is a prevailing party within
the meaning of that Act.
(2) Whether the position of the General Counsel was
substantially justified in the underlying unfair labor prac-
tice case.
(3) Whether the Applicant or the General Counsel
should be awarded extraordinary fees.
' The original Equal Access to Justice Act expired by its terms on 30
September 1984 , and was reenacted , as amended , with retroactive effect
Pub L No. 99-80; 99 Stat . 183 (Aug. 5, 1985).
II. THE APPLICATION FOR FEES AND EXPENSES
On 12 July 1985 the Applicant filed its application for
award of attorney's fees and expenses pursuant to the
Equal Access to Justice Act. On 7 August 1985 the Gen-
eral Counsel filed a motion to dismiss the application
which was denied by Order dated 29 August 1985.
Thereafter the General Counsel filed an answer to the
application, and the Applicant filed a response accompa-
nied by a request for oral argument and a motion to
compel production , which the General Counsel opposes.
P An additional allegation that the Applicant unilaterally changed
wages and benefits on 7 May 1984 was withdrawn by the Region
promptly on the Applicant 's submission of additional information after
the complaint issued . The Applicant does not seek reimbursement for fees
or expenses incurred in connection with this allegation of the complaint;
it is not at issue in this proceeding.
281 NLRB No. 81
SHREWSBURY MOTORS
In view of the disposition of the application below, the
Applicant's request for oral argument is denied. As the
General Counsel furnished the requested document
under the Freedom of Information Act shortly after the
motion to compel production was filed , that motion is
denied as moot.
Following receipt of the requested document, specifi-
cally the advice memorandum pertaining to the underly-
ing case, the Applicant filed its motion to receive evi-
dence, and for sanctions, pursuant to Rule 11 of the Fed-
eral Rules of Civil Procedure . Thereafter , the General
Counsel filed its opposition to that motion . Although
captioned an opposition to the Applicant 's entire motion,
it contains no argument relating to the receipt of the
advice memorandum, which the Applicant has proffered
with its motions. As that memorandum is offered in sup-
port of the Applicant 's basic EAJA claims, it, along with
the pleadings, will be considered as part of the record in
this case.
III. THE APPLICANT'S STATUS AS A PREVAILING
PARTY
The Applicant contends that it prevailed concerning
the alleged refusal to bargain for unit B when the first
amended complaint issued withdrawing that allegation,
and that it prevailed with respect to the alleged refusal
to bargain for unit A when the first amended complaint
was withdrawn.3
The General Counsel contends that the Applicant is
not a prevailing party with respect to either portion of
the complaint . With respect to unit B, she argues:
The Division of Advice , an arm of the General
Counsel, decided that certain allegations should be
dismissed . The Division of Advice routinely makes
similar decisions, and such a decision merely indi-
cates that there are internal differences of opinion
among the various representatives of the General
Counsel. In addition , the Acting Regional Director
dismissed those allegations very early in the history
of the case, and thus the Applicant cannot claim
that "substantial legal fees and expenses in pretrial
preparation" were incurred in connection with
those allegations.
The General Counsel is silent concerning the contents
of the letter from the Acting Regional Director to the
union attorney explaining the withdrawal of the allega-
tions as to unit B. That letter makes it clear that those
allegations were withdrawn on their merits . Whether at
the direction of the Division of Advice or sua sponte,
the withdrawal of the allegations represented a clear re-
versal of the Acting Regional Director's necessary con-
clusion at the time the initial complaint issued that there
was reasonable cause to believe that the Applicant's re-
fusal to bargain or unit B violated the Act . When the
Acting Regional Director withdrew those allegations,
the Applicant was placed in exactly the same position as
a There appears to be no dispute that each of these allegations consti-
tutes a significant and discrete substantive portion of the unfair labor
practice proceeding.
487
if those allegations had been dismissed on their merits
following a hearing . As the legislative history of the
Equal Access to Justice Act makes clear , Congress did
not intend to limit its application to those cases in which
an applicant receives a favorable decision after hearing.'
I find when the Acting Regional Director withdrew
the allegations that the Applicant refused to bargain for
unit B indicating as his reason in his letter to the Charg-
ing Party that the allegations lacked merit , the Applicant
became a prevailing party regarding that portion of the
original complaint that was a significant and discrete
portion of the proceeding.6
With respect to the remainder of the complaint, the
General Counsel contends that the Applicant did not
become a prevailing party when the Regional Director
honored the Charging Party 's request to withdraw the
charge, analogizing this case to cases in which com-
plaints were withdrawn on settlement or agreed on
means of disposing of the issues between the parties.6
Here, the General Counsel contends that a similar con-
clusion should follow because the Regional Director
properly exercised discretion on the Charging Party's de-
cision that it no longer desired to exercise its representa-
tion rights . At that point , the General Counsel contends
it became apparent to the Regional Director that there
could be no meaningful remedy in the unfair labor prac-
tice proceeding and that further litigation would be
pointless and wasteful.
The issue, however, is not whether the Regional Di-
rector properly exercised discretion in withdrawing the
complaint and permitting withdrawal of the charge.
Rather the issue is whether when that occurred the Ap-
plicant became a prevailing party . Again the action of
the Regional Director put the Applicant in exactly the
same position it would have occupied if there had been a
final order dismissing the complaint on its merits after a
hearing . In determining whether the Applicant prevailed,
the reasons for the Regional Director 's unilateral with-
drawal of the complaint are irrelevant, and making the
Applicant's status to recover fees depend on the subjec-
tive motivation of a charging party 's request to with-
draw distorts the purpose of the Act.7 Even if deemed a
* H.R. Rep . No. 96-1005, Part 1 at 9 (1980); H.R. Conf. Rep. No.
96-1434 at 21-22 (1980); H.R. Conf. Rep. No . 99-120 at 13 (1985). See
also Spencer v NLRB , 548 F. Supp . 256, 259 fn . 4 (D.D.C . 1982), affd. 712
F.2d 539 (D.C. Cir . 1983), cert . denied 466 U .S. 936 (1984); U.S. for
Heydt v. Citizens State Bank, 668 F .2d 444, 447 (8th Or. 1982); Dawson v.
Pastrick, 600 F.2d 70, 78 (7th Or. 1979); Williamson v. Secretary of
H. U.D., 553 F.Supp . 542, 544 (E.D.N.Y . 1982); U.S v. Pomp, 538 F.Supp.
513, 515 (M.D. Fla . 1982).
5 I am uncertain what conclusion the General Counsel intends me to
draw from her assertion that the Applicant cannot clam substantial fees
were incurred in connection with these allegations. Although the division
of fees between the branches of the unfair labor practice proceeding may
not be entirely clear from the schedule of fees and expenses submitted by
the Applicant , it is clear that the Applicant made more than a de minimis
expenditure in its successful effort to obtain withdrawal of the allegations
relating to unit B.
e Citing Carthage Heating Co., 273 NLRB 120 (1984); Duncan Crane
Service, JD(SF)-270-82 , Case 19-CA-13802(E); Cliff Industries, JD-10-
84, Case 4-CA-12008 (E), et al.
7 See Nadeau v. Helgemore , 581 F.2d 75, 280 (1st Cir. 1978).
488 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
prevailing party , an applicant may not recover unless the
General Counsel fails to show that pursuit of the com-
plaint to the point of withdrawal was substantially justi-
fied. If it was , there will be no recovery . If it was not,
the Applicant's opportunity to recover from the Govern-
ment what it has expended in defense should not be ex-
tinguished by the charging party's decision , for whatever
reason, that it wished the matter dropped.
The circumstances in the case relied on by the General
Counsel differ . There withdrawal did not place the appli-
cant in the same position as a final order dismissing the
complaint . In each case settlement or an alternative ar-
rangement reached placed obligations on the applicant
that it would not have had if the complaint was dis-
missed . The complaint was withdrawn as an element of a
compromise , not as a unilateral release of the applicant
from all obligations claimed in the complaint.
I find that the Applicant was a prevailing party with
respect to the allegations of the initial complaint and the
first amended complaint.
IV. THE GENERAL COUNSEL'S JUSTIFICATION FOR
THE POSITION TAKEN IN THE UNDERLYING UNFAIR
LABOR PRACTICE PROCEEDING
As provided in 5 U.S.C. § 504(axl), as amended:
An agency that conducts an adversary adjudicaton
shall award to a prevailing party other than the
United States, fees and other expenses incurred by
that party in connection with that proceeding,
unless the adjudicative officer of the agency fords
that the position of the agency was substantially jus-
tified or that special circumstances make an award
unjust. Whether or not the position of the agency
was substantially justified shall be determined on
the basis of the administrative record , as a whole,
which is made in the adversary adjudication for
which fees and other expenses are sought.
The amendments to Section 504(a )(1) in connection
with its reenactment in 1985 added the last sentence, and
in conjunction with Section 504(b)(1)(E) clarified what
Congress meant by "position of the agency."
The General Counsel contends that the Acting Re-
gional Director was substantially justified in issuing the
initial complaint and the first amended complaint because
the legal theories supporting the complaints were well
established and the General Counsel was at all times pre-
pared to adduce evidence in support of those allegations.
Pointing to the newly added last sentence of Section
504(a)(1), the General Counsel contends that the issue
must be decided on the pleadings in the underlying
unfair labor practice case-the initial complaint and
notice of hearing, the first amended complaint and notice
of hearing , and the order withdrawing first amended
complaint and notice of hearing and approval of with-
drawal of charge. The General Counsel contends that if
the pleadings are not sufficient to deny the application,
the issues can be resolved only in a hearing as there can
be no discovery of what is in the General Counsel's file,
but contends further that a hearing would be "time-con-
suming , expensive and futile."8
The committee on the judiciary of the House of Rep-
resentatives clearly was aware that EAJA claims would
be filed in cases like this, which never made it to hearing
and described the record on which the issue of substan-
tial justification should be determined:9
In cases where the private party is prevailing de-
fendant , the definition of "position of the United
States [or agency]" necessarily includes an evalua-
tion of the facts that led the agency to bring the
action against the private party to determine if the
agency or government action was substantially justi-
fied. To meet its burden of proof in these cases, the
agency must demonstrate to the court or adjudica-
tive officer that it was substantially justified.
When the case is litigated to a final decision by a
court or adjudicative officer (or even when the case
is settled after only some litigation procedures) the
evaluation of the government's position will be
straightforward, since the parties will have already
aired the facts that led the agency to bring the
action. No additional discovery of the government's
position will be necessary, for EAJA petition pur-
poses . Dougherty v. Lehman, 711 F.2d 555, 561-562
(3d Cir. 1983).
When the case is conceded on the merits,
dropped by the agency, or otherwise settled on
terms favorable to the private party before any of
the merits are heard, the court (or adjudicative offi-
cer) will again look to the record in the case to de-
termine whether the position of the government
was substantially justified. The record in this in-
stance will consist of the pleadings, affidavits, and
other supporting documents filed by the parties in
both the fee producing and the case on the merits.
Thus, the "substantial justification determination"
will not involve additional evidentiary proceedings
or additional discovery of agency files, solely for
EAJA purposes.
The Committee outlines the scope of this inquiry
in amendments to 5 U.S.C. § 504(aXl) and 28
U.S.C. § 2412 (d)(1)(B).
This constraint on discovery is reasonable be-
cause-as the Office of Advocacy of the Small
Business Administration stated:
In situations where a court or adjudicative offi-
cer does not hear the merits of the agency action
because the case is settled or otherwise disposed
of without a full trial , the agency can easily be
8 In their motion to dismiss, the General Counsel made an additional
argument based on the amendment to Sec 504(a)(1), contending that ab-
sence of evidence in the record to establish whether the allegations on
the complaint had merit constitutes special circumstance making an
award unjust However, it is clear from the legislative history that Con-
gress contemplated that awards would be made even when no evidentia-
ry hearing on the merits was held in the underlying adjudicatory pro-
ceeding The critical issue is not whether the allegations had merit but
whether the General Counsel was substantially justified in making them.
That can be shown without a hearing.
9 H R Rep. No 99-120 at 13-14 (1985)
SHREWSBURY MOTORS
evaluated by reference to the pleadings, affidavits
and other supporting documents filed by the par-
ties in both the merits and fees case . Thus, the
determination of the fees issue will be made with-
out any additional need for discovery. Several
courts have successfully followed this treatment
of the "position" issued in these circumstances in
the past.
As the Department of Justice told the Commit-
tee:
Under this provision, the court would decide
the substantial justification question based on the
record before it as argued in the pleadings, in-
cluding affidavits by both sides.
In the light of the amendment to Section 504(a)(1) and
the committee report, I not only agree with the General
Counsel that a hearing on the issue of "substantial justifi-
cation" would be wasteful, but I conclude that Congress
intended to eliminate hearings on that issue.' o
I also agree with the General Counsel that Congress
intended to bar discovery proceedings related to determi-
nation of this issue. But I cannot agree that Congress in-
tended as the only alternative that consideration be limit-
ed to the formal pleadings cited by the General Counsel
in this case. To do so would lead to one of two results in
cases such as this. One possible result is to accept as an
act of faith in every such case the assertions that legal
theory and evidence available to the General Counsel
substantially justified issuance of the complaint, preclud-
ing any "evaluation of the facts that led the agency to
bring the action.""' Such a result would be totally at
odds with the burden placed on the General Counsel
when a respondent prevails after hearing. t 2 The other
possible result is to conclude in every such case that the
General Counsel failed to meet the burden of proof since
the administrative record would provide no foundation
on which to base a conclusion that the actions were sub-
stantially justified. Neither of these results is acceptable.
I read the statute and the legislative history to provide
a middle ground. While Congress intended to preclude
discovery, it did not intend that an agency be permitted
to shield entirely the facts or the basis of its action. The
excerpt of the House report quoted above is specific that
in cases such as this the committee intended that the
record consist of "pleadings, affidavits and other support-
ing documents filed by the parties in both the fee produc-
ing [proceeding] and the case on the merits" (emphasis
added). While the agency may be protected against
having its files emptied and exposed through discovery
proceedings, it is not immune from the requirement that
it take the initiative to produce sufficient supporting ma-
terial from its files or through affidavit to establish sub-
stantial justification for its actions. It is left to the Gener-
al Counsel to decide in each case whether and how
10 See also statements of Senators Grassley and Heflin, 131 Cong. Rec.
S.9992, 9994.
11 H.R. Rep. No. 99-120, supra.
12 The Act places on the agency the burden of establishing that its ac-
tions were substantially justified. H.R. Rep. No. 96-1005, Part 1 (1980), at
10. Sec. 102.144 of the Board's Rules and Regulations.
489
much to provide from investigative files by way of affi-
davits and supporting documents in support of a claim of
substantial justification.'3 If the General Counsel decides
to file nothing or little, the Board may conclude that the
General Counsel's burden has not been met."
The General Counsel in this case not only has failed to
submit any affidavits or supporting documents from the
underlying case but in the answer provides almost noth-
ing to suggest the basis of the General Counsel's posi-
tion. With respect to the allegations of the first amended
complaint pertaining to unit A, in addition to her general
contention that the General Counsel was prepared to
adduce evidence to establish the violations under current
law, the General Counsel states only:
General Counsel has reason to believe that the Ap-
plicant does not dispute the facts underlying the al-
legations with respect to Unit A and that Applicant
intended to raise a discredited legal argument as a
defense... .
In the present case, in contrast, Respondent had
adamantly refused to engage in good faith bargain-
ing with respect to two units of employees; the pas-
sage of time could only lead to erosion of the
Union's support; and it is likely that the Board
would have issued a bargaining order on behalf of
the employees in at least one of the bargaining units
(Unit A) because there is no evidence that the em-
ployees in that unit had become disaffected with the
Union. Finally, the rationale underlying the issuance
of the complaint was wholly consistent with the
mainstream of Board law. See, Jax Mold & Ma-
chine, Inc., 255 NLRB 942 (1981) affd. 111 LRRM
2137 (11th Cir. 1982); Furr's Cafeterias, 251 NLRB
879, 911 (1980) enfd. 108 LRRM 2816 (5th Cir.
1981); Soule Glass & Glazing, 246 NLRB 792, 802
(1979), enforcement denied on other grounds, 652
F.2d 1055 (1st Cir. 1981); Terrell Machine Co., 173
NLRB 1480, 1481 (1969) enfd. 427 F.2d 1088 (4th
Cir. 1970); Celanese Corp. of America, 95 NLRB
644, 671-673 (1951).
The principle for which all the cited cases stand is that
a certified union on expiration of the certification year
enjoys a rebuttable presumption that its majority status
continues and that in order to rebut the presumption the
employer must affirmatively establish that at the time of
the refusal to bargain the union either no longer enjoyed
majority status or that the employer's refusal was based
13 See Best Bread Co., 276 NLRB 1298 (1985), in which the General
Counsel furnished affidavits from the investigatory file and the Board
found substantial justification.
14 It may be that in appropriate cases rather than furnishing the inves-
tigatory affidavits or documents , the General Counsel may furnish affida-
vita of agents prepared for the EAJA proceeding describing the facts de-
veloped during investigation without disclosing the identity of witnesses
or revealing other matters contained in original documents deemed sensi-
tive or confidential. Although an applicant may lose the opportunity to
challenge or test at a hearing the accuracy of such affidavits, the fact that
they are sworn and that collateral sanctions exist for any abuses may be
deemed to afford an applicant adequate protection . Because no support-
ing material of any kind was submitted by the General Counsel in this
case, it is unnecessary to reach that issue.
490 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
on a good-faith and reasonably founded doubt of the
union's continuing majority status.
Unlike the cited cases, as appears from the complaint,
this case involves the obligation of a successor employer
to recognize and bargain with the representative of the
predecessor's employees.
The principles applicable to this case, while related to
the Celanese line of cases , are derived from NLRB v.
Burns Security Services, 406 U.S. 272 (1972). There the
court stated:
Although a successor employer is ordinarily free
to set initial terms on which it will hire the employ-
ees of a predecessor , there will be instances in
which it is perfectly clear that the new employer
plans to retain all of the employees in the unit and
in which it will be appropriate to have him initially
consult with the employees ' bargaining representa-
tive before he fixes terms. In other situations, how-
ever, it may not be clear until the successor em-
ployer has hired his full complement of employees
that he has a duty to bargain with a union, since it
will not be evident until then that the bargaining
representative represents a majority of the employ-
ees in the unit as required by § 9(a) of the Act. [406
U.S. at 294-295.]
At least by 6 November 1984, when the Applicant
wrote a letter of position to the Regional attorney it
should have become clear to the Region that the Appli-
cant relied on the final sentence of the quoted portion of
the Burns decision, that it contended that in the sales unit
the Union never enjoyed a majority in the full comple-
ment of the predecessor's employees, and that it had set
forth supporting facts, which it contended were uncon-
tradicted. Despite the fact that the November 6 letter of
position was also attached to the application in this pro-
ceeding, the General Counsel in her answer has chosen
to ignore it, not controverting the facts alleged by Re-
spondent, not dealing with the legal arguments based on
successorship, and not choosing to indicate what legal
argument advanced by Respondent was discredited.15
In sum , the bald summary of contentions set forth in
the answer, accompanied by over broad citations and
considered in the light of the failure to set forth any facts
or to address any issues relating to the obligations of a
successor employer, is about as naked a claim of substan-
tial justification as one can imagine.
I conclude that the General Counsel has not carried
her burden of proving substantial justification for the is-
16 Although the Applicant in its letter acknowledged that the Board in
early cases had taken a restrictive view concerning when a successor at-
tains its full complement , contrary to one of the positions taken in the
Applicant's letter, the Applicant met those cases in two ways. First, it
argued that even under those cases and accepting the Union 's claim con-
cerning when it first demanded recognition , the full complement in the
sales unit was four of which only two were former employees at the time
the demand was made because the fourth employee had already been
hired to report for work at a later date . Second, it argued that in Jeffries
Lithograph Co., 265 NLRB 1499 (1982 ), the Board had taken a less re-
strictive view that would lead to the same result The General Counsel is
silent in this as in other respects
suance and prosecution of the allegations of the com-
plaints relating to unit A.16
With respect to the allegations relating to unit B, al-
though those allegations were ultimately withdrawn, the
General Counsel nonetheless contends that the General
Counsel was substantially justified in including them in
the complaint. The General Counsel repeats some of the
same arguments made with respect to unit A , but con-
tends additionally that submission of the case to the Di-
vision of Advice shows only that an issue may be novel,
complex, doubtful, or of broad legal significance and that
internal differences of opinion on an issue between repre-
sentatives of the General Counsel do not establish a lack
of substantial justification for pursuing that issue in an
adversary adjudication.
There is no question that as a general matter the latter
assertions are correct. However, the question is not
whether a disagreement between the Region and the Di-
vision of Advice shows lack of substantial justification,
but whether the General Counsel has shown that the
Acting Regional Director was substantially justified in is-
suing the complaint in the first instance.
The General Counsel contends further that the advice
memorandum in Derby, which the Applicant had relied
on, was not precedent , had no stare decisis persuasive-
ness, and in any event was not wholly pertinent, stating:
In that memorandum , the Division of Advice rea-
soned that the case did not involve an effort to
avoid good faith bargaining ; there was not causal
relationship between the unfair labor practices and
the Union's loss of support; and the Board would
not issue a remedial bargaining order on behalf of a
non-majority Union. In the present case, in contrast,
Respondent had adamantly refused to engage in
good faith bargaining with respect to two units of
employees; the passage of time could only lead to
erosion of the Union's support; and it is likely that
the Board would have issued a bargaining order on
behalf of the employees in at least one of the bar-
gaining units (Unit A) because there is no evidence
that the employees in that unit had become disaf-
fected with the Union.
The purported distinction regarding the service unit
appears to disappear when examined in the face of the
letter the Acting Regional Director wrote counsel for
the Union on 28 January 1985 to explain why he was
withdrawing the allegations concerning unit B:
The investigation failed to establish that the Em-
ployer, Shrewsbury Motors, Inc., refused to bargain
and to negotiate with your client, Amalgamated
Local Union 355, as collective bargaining represent-
ative of its parts and service employees as alleged in
part in the charge. The investigation disclosed that
on May 30, 1984, a majority of the employees in
16 Although I would conclude that the showing of substantial ,justifica-
tion in this case is inadequate under any proposed definition, I note that
the Board has held that in reenacting and amending the Equal Access to
Justice Act, Congress did not alter but merely clarified the definition of
"substantial justification." Best Bread Co, above at fn. 13.
SHREWSBURY MOTORS
that unit presented the Employer with a petition
stating that they no longer wished to be represented
by your client. Further, there is no evidence that
the Employer initiated or encouraged the circula-
tion of this petition among the employees . The Em-
ployer's May 17 and May 21, 1984 , refusals to rec-
ognize your client were unknown to the employees
and did not affect the loss of interest among the
parts and service employees. Thus , even assuming
the Employer 's May 17th and 21st conduct was un-
lawful, it did not taint the employees ' petition.
An Employer can rebut the presumption of con-
tinued majority status of a union by establishing
either that the union , in fact, no longer enjoyed the
support of a majority of unit employees ; or that the
employer's refusal to bargain was predicated on a
good faith and reasonably grounded doubt of the
union's continued majority status . Virginia Sports-
wear, -Inc., 226 NLRB 1296 , 1300 (1976). Your client
had lost its majority support in the unit or there
was at least a reasonable , good faith doubt of its
majority status among the parts and service employ-
ees contemporaneous with the refusal to bargain.
Further proceeding regarding Respondent 's refusal
to recognize and bargain with your client as repre-
sentative of the parts and service employees do not
appear to be warranted at this time.
If anything, comparing that letter to the advice memo-
randum in Derby, the case concerning unit B would
appear stronger for dismissal than in Derby.
Although the answer of the General Counsel makes
the point that the submission of the case for advice does
not negate substantial justification , nowhere does it make
an affirmative case that there was substantial justification
in the first place, other than in the cursory contentions
quoted above in connection with unit A. Unanswered
are: Why did the complaint issue initially when a few
months later the Acting Regional Director concluded
that further proceedings were not warranted ? Did any-
thing change between 18 October 1984 when the com-
plaint issued and 28 January 1985 when the allegations
regarding the service unit were withdrawn? Was there
new evidence brought to the attention of the Acting Re-
gional Director? Was the advice memo Derby not known
to him at the time the complaint issued? Did it represent
a change from earlier prosecutorial policy and case law?
The answer is silent regarding these questions or any
other matters, which might serve to show that the issu-
ance of the complaint was substantially justified even
though it was later withdrawn on its merits.
I find therefore that the General Counsel has failed to
prove that she was substantially justified in alleging that
Respondent refused to bargain with the Union as repre-
sentative of unit B.
V. THE FEES AND EXPENSES FOR WHICH APPLICANT
SHOULD BE REIMBURSED
The Applicant seeks reimbursement for fees for 84.5
hours of legal services and for expenses in the amount of
$541.86 incurred in defense of the complaint . The Appli-
491
cant seeks reimbursement for legal fees at actual hourly
rates billed , which exceeded $75 per hour.
The General Counsel contends that legal fees must be
limited to $75 per hour but does not contest the reason-
ableness of the number of hours billed or the expenses in-
curred . As provided in 5 U.S.C. § 504(bXl)(A), attorney
fees "shall not be awarded in excess of $75 per hour
unless the agency determines by regulation that an in-
crease in the cost of living or a special factor . . . justi-
fies a higher fee." Section 102.145(b) of the Board's
Rules and Regulations provides : "No award for the at-
torney or agent fees under these rules may exceed $75
per hour." Accordingly , the maximum hourly rate at
which fees may be reimbursed under EAJA is $75.17
In its motion for sanctions pursuant to Rule 11 the Ap-
plicant contends that the advice memorandum shows
that the position of the General Counsel taken in this
proceeding misrepresented the basis of the advice memo-
randum in this case , previously unavailable to the Appli-
cant, that the General Counsel advanced arguments that
are "not merely undefensible but wholly disingenuous,"
that the General Counsel 's position is wholly unsupport-
ed by law and fact, and that it is so indefensible as to
require sanctions to be imposed for the entire EAJA pro-
ceeding as well as continued prosecution of the unit A
allegations.
In her opposition to the motion , the General Counsel
contends that the Federal Rules of Civil Procedure do
not apply to Board proceedings, that there was no im-
propriety in her arguments seeking to justify the General
Counsel's actions, and that the Applicant's motion is "pa-
tently frivolous ." Therefore the General Counsel moves
for costs and reasonable attorney 's fees incurred in re-
sponding to the motion and preparing the opposition.
I am inclined to agree with the General Counsel that
Rule 11 is not applicable to Board proceedings. Al-
though Board procedures parallel district court proce-
dures in some respects , they are established by separate
rules and regulations , and in a number of important re-
spects deviate from them , most notably in the area of dis-
covery. Accordingly, I conclude that there is no basis
for relief for the Applicant under Rule 11.
Each party additionally brands the actions of the other
as patently frivolous and seeks relief under the holding of
Tiidee Products, 194 NLRB 1234 (1972).
I fmd no basis for recovery under Tiidee by either. Al-
though I deny Applicant's motion under Rule 11 on its
merits and reject the General Counsel 's defense against
the EAJA claim, being wrong on the merits is not the
same as being "patently frivolous."
With respect to the Applicant's motion, there is some
support for it in Tiidee and at least one circuit court deci-
sion, which indicates that the Federal Rules apply to the
extent practicable.' a It is certainly debatable whether the
Board has the authority to apply Rule 11 if it chose to
do so . Accordingly, I reject the General Counsel's re-
quest for costs and attorney's fees.
14 Landmark Industries, 276 NLRB 1468 (1985).
18 Frito Co. Y. NLRB, 330 F.2d 458 (8th Cir. 1964).
492 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
With respect to the General Counsel 's defense of the
EAJA claim , the underlying flaw is failure to carry the
burden placed on the General Counsel by EAJA. But
the failure of counsel to carry the General Counsel's
burden does not mean that the Applicant has carried the
substantial burden placed on it to establish that the Gen-
eral Counsel 's position was frivolous . Accordingly, the
Applicant 's motion for sanctions is denied.
Finally the Applicant states that it intends to make a
supplemental request for legal fees and expenses incurred
in connection with the application , presumably after pro-
ceedings on the basic claim have been concluded. The
General Counsel has stated no position in response. It ap-
pears that reimbursement for such fees and expenses is
contemplated under the Equal Access to Justice Act.
H.R. Rep. No. 96-1434 at 21; Tyler Business Services v.
NLRB, 695 F.2d 73, 77 (4th Cir. 1982). However, as the
Applicant's motion for sanctions pursuant to Rule 11
sought relief not provided by EAJA, there is no basis for
including fees and expenses attributable to the motion
among those for which the Applicant should be reim-
bursed.
Accordingly, I conclude that the Applicant should be
reimbursed $6337.50 for legal fees and $541.86 for ex-
penses incurred in the underlying unfair labor practice
case . In addition, the Applicant is to be reimbursed for
fees and expenses incurred in connection with the appli-
cation. If the Applicant and the General Counsel are
unable to agree on the amount of such additional fees
and expenses , the Applicant may submit a supplement to
its application within 30 days after entry of a final order
by the Board on this fee application.
CONCLUSIONS OF LAW
1. The Applicant is a prevailing party with respect to
the complaint and the first amended complaint and meets
the eligibility standards set forth in the Equal Access to
Justice Act.
2. The General Counsel has failed to establish that the
issuance of the complaint and the first amended com-
plaint and their continued prosecution were substantially
justified.
3. The Applicant is entitled to be reimbursed for rea-
sonable attorney 's fees and expenses incurred in connec-
tion with the underlying unfair labor practice proceeding
and the fee application as set forth in section V of the
decision above.
On these fmdings of fact and conclusions of law and
on the entire record , I issue the following recommend-
ed'9
ORDER
The Applicant's application for award of attorney's
fees and expenses pursuant to the Equal Access to Jus-
tice Act is granted in part and denied in part. The Appli-
cant is granted an award of $6879.36 plus such additional
legal fees and expenses as it can demonstrate have been
reasonably incurred in connection with its application
under the Equal Access to Justice Act.
19 If no exceptions are filed as provided by Sec 102 46 of the Board's
Rules and Regulations , the findings, conclusions, and recommended
Order shall, as provided in Sec . 102.48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur-
poses