Hess Mechanical Corp v. NLRB

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

HESS MECHANICAL CORPORATION,

Petitioner,

v. No. 96-1538

NATIONAL LABOR RELATIONS BOARD,

Respondent.

On Petition for Review of an Order

of the National Labor Relations Board.

(5-CA-24162)

Argued: March 7, 1997

Decided: April 21, 1997

Before WILKINSON, Chief Judge, and RUSSELL and HALL,

Circuit Judges.

_________________________________________________________________

Reversed and remanded by published opinion. Chief Judge Wilkinson

wrote the opinion, in which Judge Russell and Judge Hall joined.

_________________________________________________________________

COUNSEL

ARGUED: Maurice Baskin, VENABLE, BAETJER, HOWARD &

CIVILETTI, L.L.P., Washington, D.C., for Petitioner. Nancy Kessler

Platt, NATIONAL LABOR RELATIONS BOARD, Washington,

D.C., for Respondent. ON BRIEF: John C. Hardwick, Jr., VEN-

ABLE, BAETJER, HOWARD & CIVILETTI, L.L.P., Washington,

D.C., for Petitioner. Frederick L. Feinstein, General Counsel, Linda

Sher, Associate General Counsel, Margery E. Lieber, Assistant Gen-

eral Counsel for Special Litigation, Abby Propis Simms, Supervisory

Attorney, NATIONAL LABOR RELATIONS BOARD, Washington,

D.C., for Respondent.

_________________________________________________________________

OPINION

WILKINSON, Chief Judge:

On March 8, 1994, the Region 5 Director of the National Labor

Relations Board issued a complaint on behalf of the Board's General

Counsel against Hess Mechanical Corporation. The complaint alleged

that Hess had violated sections 8(a)(1) and 8(a)(3) of the National

Labor Relations Act, 29 U.S.C. § 158(a)(1) & (3), by telling

employee Richard Darr not to talk about the union to which he

belonged and by terminating him for engaging in union activities.

Hess prevailed on the merits of the case, but its request for attor-

ney's fees and expenses pursuant to the Equal Access to Justice Act

(EAJA), 5 U.S.C. § 504, was denied by the Board. Hess appeals the

denial, contending that the General Counsel's legal position was not

"substantially justified." We agree. The General Counsel's case is

notable for its flimsiness. The evidence at the time the complaint was

filed indicated that Hess fired Darr for one reason only -- poor per-

formance. Accordingly, we set aside the Board's denial of fees and

remand to the Board for the determination of an appropriate fee award

to Hess.

I.

Richard Darr is a member of the Sheet Metal Workers' Interna-

tional Association (the union). Hess Mechanical Corporation is a non-

union construction contractor. In November 1993, Hess hired Darr

and Ken Burk, another union member, to work on a project at the

National Institutes of Health. The company hired both men with full

knowledge of their long-term union membership. When Darr began

work, he received a copy of Hess' employment policy, which states

that new hires are subject to a 90-day probation period during which

they will be fired if they "do not have the ability to perform the work

or show a lack of interest or motivation."

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Only two days after Darr began work, John Blotner, Darr's fore-

man, began receiving complaints that Darr was not properly perform-

ing his duties and was not getting along with co-workers. In response

to these complaints, Blotner reassigned Darr several times to different

tasks. Each reassignment was followed by further complaints about

Darr's bad attitude, his poor productivity, and his adverse impact on

the productivity of other employees. Both Blotner and Russell Long,

the project superintendent, personally observed Darr's failure to pro-

duce. Blotner noted that Darr was installing approximately half the

amount of air duct that other workers were hanging under the same

working conditions.

On December 3, 1993, Blotner and Long gave Darr a verbal warn-

ing about his unacceptable performance. Even after a second verbal

warning, co-workers continued to complain about Darr's work. Con-

sequently, on December 17, 1993 Long provided Darr with a written

warning which stated, "John Blotner and myself have spoke[n] to

Richard on more than one occasion about his productivity. I have also

received complaints from other lead mechanics about the same prob-

lem. This kind of substandard work will not be tolerated." Although

advised that he was free to disagree with the warning statement, Darr

checked and signed the box on the warning indicating that he agreed

with it. Darr's performance failed to improve, and on January 5, 1994,

he was fired. The written termination notice indicates that he was

fired for poor performance after previous warnings.

On January 18, 1994, the union filed an unfair labor practice

charge with the NLRB, claiming that Hess had fired Darr for engag-

ing in union activities. Darr supplied the Board with an affidavit in

which he claimed that he had talked to co-workers about the union

and had given several employees union cards to sign. Darr further

alleged that Blotner twice told him not to talk about the union and that

Long informed him that he was being fired for discussing the union

with other employees.

Hess submitted a statement denying any knowledge of Darr's

alleged union activities and stating that Darr was terminated solely for

substandard performance. Hess attached to the statement a copy of the

written warning Darr had signed. At the Board's request, the company

also provided a list of thirty-five employees discharged in 1993 for

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performance-related reasons. In addition, the Board and Hess each

took affidavits from six employees which corroborated Darr's poor

job performance. The employees generally indicated that they were

unaware of any union activity; only two were able to state that they

had heard Darr talk about the union.

On March 8, 1994, the Region 5 Director filed a complaint on

behalf of the Board's General Counsel. The complaint asserted that

Hess had violated sections 8(a)(1) and 8(a)(3) of the National Labor

Relations Act by instructing Darr not to speak with employees about

the union and by firing him for union activities. After a one-day hear-

ing, an administrative law judge recommended that the complaint be

dismissed in its entirety. Reviewing the litany of complaints about

Darr's work and his failure to improve despite several warnings, the

ALJ concluded that Hess had terminated Darr for substandard perfor-

mance "in strict accordance with valid, established company policy."

The ALJ found that the only evidence that Darr had engaged in or

was fired for union activity was Darr's own uncorroborated testi-

mony. The ALJ also noted that while Burk testified that he spent 80

percent of his work day openly discussing the union with other

employees, he was never subjected to any adverse company action.

The General Counsel filed no exceptions to the ALJ's decision,

which the Board affirmed. Hess then applied for attorney's fees and

costs pursuant to the Equal Access to Justice Act, 5 U.S.C. § 504,

contending that the General Counsel's position was not "substantially

justified" because Darr's claims were uncorroborated and the pre-

complaint evidence demonstrated that Darr was fired for poor perfor-

mance rather than union activity. A second ALJ denied the request,

concluding that the case depended on credibility determinations that

could be resolved only after a hearing. The Board affirmed, and Hess

appeals.

II.

Under the EAJA, a prevailing party in an adjudication before a fed-

eral agency is entitled to attorney's fees and costs unless "the position

of the agency was substantially justified or [ ] special circumstances

make an award unjust." 5 U.S.C. § 504(a)(1). The test for substantial

justification is one of reasonableness -- did the agency's position

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have a "reasonable basis both in law and fact," or was it "justified to

a degree that could satisfy a reasonable person." Pierce v.

Underwood, 487 U.S. 552, 565 (1988). This standard allows the gov-

ernment some leeway in litigation without permitting it to adopt posi-

tions arbitrarily. The government has the burden of proving

substantial justification, Tyler Business Services v. NLRB, 695 F.2d

73, 75 (4th Cir. 1982), but a Board decision regarding an EAJA award

is entitled to deference if it is based upon substantial evidence, 5

U.S.C. § 504(c)(2).

In a suit alleging retaliation for union activity, the General Counsel

has the burden of proving that the adverse action was based, in whole

or in part, on anti-union animus. NLRB v. Transportation Manage-

ment Corp., 462 U.S. 393, 401-02 (1983) (adopting analytic frame-

work of the NLRB in Wright Line, 251 N.L.R.B. 1083 (1980)). Even

if the General Counsel sustains his burden of proof, the employer can

avoid liability by demonstrating that it would have taken the same

action regardless of any improper motive. Id.

A.

The Board first argues that the General Counsel acted reasonably

in issuing the complaint because the case could not have been

resolved without the ALJ's determination as to Darr's credibility.

"The General Counsel was . . . substantially justified in proceeding

with the case through issuance of the ALJ's decision. No evidence

was produced at the hearing which sufficiently established the

Employer's defense without the need for any credibility resolutions

to be made."

We disagree. We are hard pressed to determine how the ALJ could

have credited Darr's testimony in the face of overwhelming evidence

that Hess harbored no anti-union animus and had fired Darr solely for

poor performance. Hess hired Darr and Burk with full knowledge of

their long-standing union membership. Burk testified that he spent 80

percent of his work day openly organizing, yet he admits that Hess

never took action against him as a result. The best and only evidence

the Board can find to corroborate Darr's testimony is isolated state-

ments in two employee affidavits which suggest that Darr spoke with

some employees about the union. Although the Board now relies on

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these statements, the Board's own estimate of their probative value is

clear from its failure to introduce them at the hearing. However, even

assuming Darr did conduct union activity, his testimony was still the

only evidence that Hess either was aware of the alleged activity or

fired Darr because of it.

Undisputed evidence established that Darr's performance was inad-

equate and that his discharge was entirely in accordance with valid

company policy. The record is replete with statements from Darr's

co-workers criticizing his poor work habits. One stated that Darr

"seemed not to care about his work" and "didn't do a good job." Oth-

ers voiced similar concerns. "There was a lot of complaints about the

work wasn't getting done fast enough" because of Darr; he "was hold-

ing up the work." "People still complained after several warnings."

"Richard has the attitude like an `I don't care' attitude. . . . We like

to do our work, and we like to take pride in our work. Of course, we

have to get our work done. This wasn't happening." Illustrating

Darr's poor productivity, Blotner testified:

[F]or example, we had teams working on the floor. And you

have two guys, let's say they are hanging six VAV boxes

and the trunk lines in a day and you got somebody doing

half of that work under the same conditions. There is really

no reason for that. There is going to be a slight difference

in there because something might be in the way of some-

body, but that is not acceptable to hang half of the amount

under the same conditions that the other guys are working.

In short, Darr simply was not pulling his own weight. The employ-

ment policy which Darr received stated that new employees who did

not perform adequately would be fired. Furthermore, Darr himself

acknowledged in writing that he had been warned about his lack of

productivity more than once. Despite the warnings, Darr's perfor-

mance never improved. The General Counsel never disputed Darr's

substandard productivity, the warnings he received, or Hess' estab-

lished employment policy. In light of this record, we do not see how

the ALJ could have accepted Darr's testimony that he was fired for

union activities. Even if Darr's testimony had been fully credited,

Hess could not have been held liable because the undisputed evidence

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abundantly demonstrated that Hess would have fired Darr regardless

of any anti-union sentiment.

B.

The Board further asserts that the pre-complaint evidence support-

ing Hess was insufficient to warrant dismissal of the unfair labor

practice charge. "[P]rior to issuance of[the] Complaint, the General

Counsel was left with conflicting evidence about the extent of Darr's

organizing activities, and with less than conclusive evidence about the

Employer's proffered reason for the discharge."

To the contrary, the weakness of the General Counsel's case was

obvious even before the complaint was filed. Darr's affidavit was the

only pre-complaint evidence that Hess was aware of Darr's alleged

union activities or that the company fired him because of those activi-

ties. The General Counsel also faced uncontroverted evidence which

supported Hess' defense. The written warning signed by Darr, the list

of employees terminated due to poor performance, and the employee

affidavits establishing Darr's lack of productivity indicated that Hess

would have fired Darr in any event, and the General Counsel had no

evidence to suggest otherwise.

The Board's assertion that the pre-complaint evidence was not

"conclusive" misses the mark. The point is that the relevant evidence

before the General Counsel was substantial, and all of it indicated that

Hess had a valid defense. Under such circumstances, no reasonable

party would have proceeded with the complaint without further inves-

tigation to ensure that the defense could be challenged. The record is

devoid of any indication, for example, that the General Counsel ever

questioned Darr regarding his poor performance or verified Darr's

claim that he gave union cards to several workers. Additional inquiry

in this case, of course, would have uncovered only mounting evidence

favoring Hess. The EAJA does not tell an agency how to handle a

case, but the General Counsel cannot decline to conduct further

inquiry and then plead his own failure to investigate as reason to con-

clude that his position was substantially justified.

In sum, we cannot find substantial evidence in the record to support

the Board's determination that the General Counsel was substantially

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justified in filing the complaint against Hess. Given the deference due

the Board and the significance of its statutory mission, we do not

casually intervene in a collateral dispute over fees and costs. We also

do not think that the government's loss of a case routinely means that

its position was substantially unjustified. As exemplified in the EAJA

and Fed. R. Civ. P. 11, however, the processes of litigation presup-

pose some reasonable investigation before the filing of a complaint.

As the Supreme Court has noted in the context of Rule 11, "[b]aseless

filing puts the machinery of justice in motion, burdening courts and

individuals alike with needless expense and delay. Even if the care-

less litigant quickly dismisses the action, the harm. . . has already

occurred." Cooter & Gell v. Hartmarx Corp. , 496 U.S. 384, 398

(1990).

In this case, the General Counsel went forward with a complaint

on the basis of a single, uncorroborated affidavit and in the face of

a wall of adverse evidence. In a civil action with a similar record, this

would border on conduct sanctionable under Rule 11. It certainly can-

not meet the higher standard imposed by Pierce v. Underwood, where

the Court explicitly warned that "[t]o be`substantially justified'

means, of course, more than merely undeserving of sanctions for friv-

olousness." Pierce, 487 U.S. at 566. Finally, we note that the failure

of courts to enforce the EAJA would only benefit parties who seek

to drive up company costs by forcing them to defend against meritless

unfair labor practice charges. To hold this complaint "substantially

justified" would condone the conversion of Board processes into a

mechanism of harassment.

III.

For the foregoing reasons, we set aside the Board's denial of fees

and remand to the Board for the determination of an appropriate fee

award to Hess.

REVERSED AND REMANDED

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