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HIRSCH EX REL. NLRB v. CORBAN CORP.

June 16, 1997

PETER W. HIRSCH, Regional Director of the Fourth Region of the NATIONAL LABOR RELATIONS BOARD for and on behalf of the NATIONAL LABOR RELATIONS BOARD, Petitioner,
v.
CORBAN CORPORATION, INC., d/b/a ENCOR COATINGS, INC., Respondent.



The opinion of the court was delivered by: JOYNER

 JOYNER, J.

 JUNE 16, 1997

 On September 24, 1996, Peter W. Hirsch, Regional Director of the Fourth Region of the National Labor Relations Board, filed a petition for and on behalf of the National Labor Relations Board (the "Board") seeking interim injunctive relief pursuant to section 10(j) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 160(j), against Respondent Corban Corporation, Inc., d/b/a Encor Coatings, Inc. ("Encor"). The Board sought this relief pending its adjudication of an unfair labor practices complaint filed by Local 365, International Union of United Automobile, Aerospace and Agricultural Implementation Workers of America (the "Union") regarding Encor's discipline and discharge of Jeremiah Mahoney ("Mahoney"). Pursuant to an Order to Show Cause, this Court conducted an evidentiary hearing on October 10, 17 and 18, 1996. Based on the evidence presented at this hearing, pre-hearing and post-hearing memoranda, and proposed findings of fact and conclusions of law, this Court entered an Order on December 5, 1996, denying the relief sought by the Board. See Hirsch v. Corban Corporation, Inc., 949 F. Supp. 296 (E.D.Pa. 1996). The Union's underlying administrative unfair labor practices complaint was subsequently settled. Before the Court is Encor's Application for Attorneys' Fees and Costs Pursuant to the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412, to recover $ 62,908.90 in fees and costs incurred in connection with this action.

 I. Standard for An Award of Fees and Costs under the EAJA

 Section 2412(d)(1)(A) of title 28 of the United States Code provides that:

 
except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses ... incurred by that party in any civil action ... brought by or against the United States in any court having jurisdiction of that action, 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) (West 1994 & Supp. 1997). "Thus, eligibility for a fee award in any civil action requires: (1) that the claimant be a prevailing party; (2) that the government's position was not substantially justified; (3) that no special circumstances exist to make an award unjust; and, (4) pursuant to 28 U.S.C. § 2412(d)(1)(B), that any fee application be submitted to the court within 30 days of final judgment in the action and be supported by an itemized statement." Commissioner, Immigration and Naturalization Service v. Jean, 496 U.S. 154, 158, 110 L. Ed. 2d 134, 110 S. Ct. 2316 (1990). The only issue regarding Encor's eligibility in this case is whether the Board's position in seeking section 10(j) relief was substantially justified, which is "determined on the basis of the record (including the record with respect to the action ... by the agency upon which the civil action is based)." 28 U.S.C. § 2412(d)(1)(B).

 The Supreme Court has defined substantial justification under the EAJA as "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, 101 L. Ed. 2d 490, 108 S. Ct. 2541 (1988). As the Court explained, "a position can be justified even though it is not correct, and ... it can be substantially (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. The burden of demonstrating substantial justification rests with the government agency. Hanover Potato Products, Inc. v. Shalala, 989 F.2d 123, 128 (3d Cir. 1993). Thus, our Court of Appeals has held in light of Pierce that an agency satisfies its burden if it demonstrates that it had (1) a reasonable basis for the truth of the facts alleged; (2) a reasonable basis in law for the theory it propounded; and (3) a reasonable connection between the facts alleged and the legal theory advanced. Id. Finally, we are mindful that "while the parties' postures on individual matters may be more or less justified, the EAJA--like other fee-shifting statutes--favors treating a case as an inclusive whole, rather than as atomized line-items." Jean, 496 U.S. at 161-62; U.S. v. Eleven Vehicles, 937 F. Supp. 1143, 1152 (E.D.Pa. 1996)(quoting same).

 II. Application of the Standard to this Case

 In this case, in order to secure the section 10(j) relief requested, the Board was required to establish "reasonable cause" to believe that an unfair labor practice had occurred and that an injunction would be "just and proper." Pascarell v. Vibra Screw, 904 F.2d 874, 877 (3d Cir. 1990). The Board contended that there was reasonable cause to believe that Encor's management, knowing that Mahoney was the plant's lead Union activist, unlawfully singled Mahoney out for discipline, threatened him with discharge, and ultimately did discharge him just as the Union was returning from years of exile and the collective bargaining process was about to resume. *fn1" Thus, the Board sought section 10(j) relief temporarily reinstating Mahoney and rescinding the disciplinary measures imposed on him. The Board argued that such injunctive relief would be "just and proper" because it would cure the alleged "chilling effect" of Encor's actions on unionization at the plant and because the public's interest in peaceful labor negotiation would be served thereby.

 We denied the Board's petition because we found no reasonable cause to believe that Encor's management violated section 8(a)(3) by discharging Mahoney. Id. at 301-303. Rather, we found that the evidence established that Mahoney had been justifiably discharged for a costly paint-mixing error. Id. We did not decide whether there was reasonable cause to believe that Mahoney was disciplined and threatened with discharge because, assuming he had, Encor demonstrated that Mahoney "would have been discharged absent the protected conduct." Id. at 301 n. 4. We also held that, even if the Board had demonstrated reasonable cause, awarding the injunctive relief requested would not have been "just and proper" because: (1) we found insufficient evidence of chill among the plant's employees resulting from Mahoney's discharge, and (2) the public interest in peaceful labor negotiation would not have been served because Mahoney was not a member of the bargaining committee when he was terminated. Id. at 303-304.

 In the instant Application, Encor argues that these findings essentially mandate an award of fees and costs under the EAJA. According to Encor, the Board cannot meet its burden of establishing that its position was substantially justified, i.e. had a reasonable basis in law and fact, when we expressly found that there was no reasonable cause to believe that Mahoney's discharge violated section 8(a)(3). In short, having failed to satisfy its "relatively insubstantial burden" in the § 10(j) proceeding, the Board must now be "punished" for subjecting Encor to suit. Resp't's Mem. in Supp. of EAJA App. at 15.

 In response, the Board stresses that a position may be reasonable even if it is not correct and that, when viewed as a whole, the Board's position was substantially justified. First, the Board notes our finding that its legal theory was "clearly 'substantial and not frivolous,'" Hirsch, 949 F. Supp. at 299, and claims that this finding alone satisfies the second prong of the three-part Hanover test. The Board then argues that, based on the evidentiary record before the Court, it was at least substantially justified in maintaining (1) that there was reasonable cause to believe that Mahoney was ...


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