Equal access to justice - sometimes

By G. Phillip Shuler

In 1982, Congress passed the Equal Access to Justice Act (EAJA) to alleviate the oftentimes-crushing financial impact upon small employers wrongfully accused by federal agencies of law violations.

The EAJA authorized such an employer to apply for an award of attorney's fees and expenses under the Act when it proved its innocence. The applicant must show that an agency was not substantially justified in prosecuting the matter. The burden then shifts to the agency to prove that it had "substantial justification" to proceed.

The National Labor Relations board adopted implementing regulations as provided in the EAJA. The act restricts the right to apply to individuals with a net worth of no more than $2 million; sole owners of an unincorporated business with a net worth of not more than $7 million; and any other entity, public or private, with a net worth not exceeding $7 million nor 500 employees.

This is consistent with congressional policy that the rights under the EAJA be restricted to smaller entities most deeply affected by inappropriate prosecutions. An award for attorney or agent fees may not exceed $75 per hour, but may include reasonable expenses of the attorney or agent customarily charged.

Even though customary fees for such services have, over the last two decades, increased, substantial payments are possible depending upon the amount of time and effort expended to achieve the successful result. Although the rules permit the board to reconsider new maximum rates for attorney fees, if an appropriate petition be filed, no effort has been made to accomplish this modification.

An application for the award of fees and expenses may be directed at improper action by the NLRB General Counsel for each of the steps in prosecution of the case. It can be in initiation of formal proceedings by issuance of compliant, proceeding to trial, in an appeal of an adverse decision by a judge, or, even after a case is won by the general counsel, in a back pay or other compliance proceeding.

A decision on an application for such relief is initially by a judge, usually the one who heard the principal case in the first place. Either the applicant or the general counsel may appeal a judge's adverse ruling to the full National Labor Relations Board. Its decision is generally final.

Most EAJA issues arising in NLRB proceedings involve an investigative decision by the general counsel, through its regional office, to issue compliant and go to trial on an unfair labor practice charge against an employer. After a decision by the judge that is adverse to the general counsel's case, it must decide whether it is justified to continue by appealing that decision.

Prior justification for action probably dissolved when the judge discredited the general counsel's witnesses. But even if the judge has agreed with general counsel, this is not necessarily dispositive of a company's ultimate remedy under the EAJA. If a company successfully reverses the judge's decision through an appeal, it may yet receive board agreement that there was never initial justification for the prosecution.

As the above explanation should make fairly clear, the road to justice under the EAJA is not smoothly paved, and there are many potholes to be avoided in the pursuit of its partial remedies. There are obvious impediments to convincing the NLRB that its constituent part was not "justified to a degree that could satisfy a reasonable person" or did not have "reasonable bases both in law and fact."

Pierce v. Underwood, 487 U.S. 552, 565 (1988). This is not a result that any agency wishes to reach, EAJA grew out of Congress's concern that high costs of litigation might deter small entities from vindicating their rights before a federal agency. Agencies apparently do not want to discourage their own prosecuting arms by subjecting them to belittlement for proceeding unreasonably, especially in retrospect. Thus, justice may be achieved for the small employer more rarely than generally.

An illustration is in a September 2003 case, Abell Engineering and Manufacturing Inc., 340 NLRB No. 19. This case involved the discharge of an employee previously active in an unsuccessful organizing attempt. Subsequently, he solicited another employee to resign from this employer and take a job with a union contractor.

The company fired him for this act of disloyalty. The initial legal issue had been whether or not this solicitation was protected activity under the National Labor Relations Act. The judge considered it simply an extension of prior union organizing activity which is protected and cannot be the basis for discharge.

The employer insisted, and the board ultimately agreed, that the man was fired for the one act of disloyalty, especially because the company had only three employees in the unit. Thus the activity was unrelated to prior organizing or to improving employee conditions. After its win, Abell duly filed an application for relief under the EAJA.

It was denied, first by the judge, and then by the board. The board held that, even though the compliant was dismissed, there had been a reasonable justification to proceed in the case. It pointed out that it had analyzed the case differently from either the parties or the judge so its ultimate finding could not have been anticipated.

Even though the general counsel proved to be wrong, it had not been unreasonable to extend certain doctrine to new factual scenarios. Thus, the employer had to pay to vindicate its discharge of a disloyal employee and then paid to lose his attempt to be reimbursed for some of these unjust expenses. The company probably enjoys no solace that the board's decision will not discourage regional offices from future attempts to extend current doctrine to new factual scenarios.

The above case illustrates a situation where the controlling issue was interpretation of law. Many NLRB cases involve, initially, credibility issues. These are resolved in the hearing before the judge, and probably represent the majority of cases where inappropriate action is taken by a regional office.

The investigative function that initiates agency action on a charge does not resolve credibility issues that are uniquely the purpose of a trail. Although documentary and other objective evidence may permit an investigative unit to determine the facts, sometimes it requires deciding who is telling the truth. In the latter event, general counsel must issue complaint and proceed to hearing.

If its witnesses be disbelieved, there is no violation. In these instances, the initial justification for proceeding has dissolved when a judge will not believe his witnesses. The responsibility of a "reasonable person" at that point is to abandon the prosecution. However, if the general counsel elects to appeal the judge's decision, it risks a finding that from that point forward there was not substantial justification to continue proceedings.

The board finds in such cases that, if the witnesses were believed, there would have been a violation, and no remedy appropriate under EAJA simply because the witnesses lied. However, once the judge in the case has removed that justification the general counsel does not continue "with justification."

An applicant should be successful for its continued attorney and expense costs from that point forward.

A small company forced to defend itself from an unjust complaint from the NLRB should, after successful defense, consider the possibilities of seeking relief from the costs of such litigation. Careful examination of the underlying facts and law, together with the interpretations and conclusions by the judge and board, give a fairly clear understanding by which the probabilities of success can be measured.

Although overall results seem less than anticipated when EAJA was passed, there are probably substantial meritorious claims never filed. Certainly the NLRB does not seek to encourage them.

Editor's Note: G. Phillip Shuler is a partner in the New Orleans office of Chaffe, McCall, Phillips, Toler & Sarpy.