SECRETARY OF LABOR |
|
Complainant, |
|
v. |
OSHRC DOCKET No. 02-2129 |
SAIPAN KOREAN HOTEL, |
|
Respondent. |
|
REMAND
ORDER
Before: RAILTON,
Chairman; STEPHENS and ROGERS, Commissioners.
BY THE
COMMISSION:
Respondent
filed a Petition for Discretionary Review of the judge’s decision and order in
the above-referenced case, which Chairman Railton
directed for review on April 30, 2004. In his decision, Administrative Law
Judge Robert A. Yetman rejected respondent’s timely
filed application for attorney fees and expenses pursuant to the Equal Access
to Justice Act (EAJA), 5 U.S.C. § 504, finding that respondent was a prevailing
party, but that the Secretary was substantially justified in pursuing the case.
In its Petition, respondent correctly notes that the judge did not discuss the
record evidence, contained in numerous affidavits, supporting his conclusion
that the Secretary had a “reasonable basis” for her assertion that respondent
provided housing to its employees as a “formal or de facto” condition of
employment, which is a jurisdictional prerequisite to the cited standard. After
citing applicable precedent on the legal issues, the judge summarily stated that
“[t]he opposing theories presented by both parties appear to be sound and well
supported within their respective memoranda . . . , [that] [i]t
is not necessary . . . to decide which side would have ultimately prevailed in
this complex issue[,]” and that “[b]ased upon the
submission of both parties it is concluded that the Secretary was substantially
justified in initiating this action in fact and law.” Nor, as respondent
argues, did the judge specify the factual basis for his conclusion that the
Secretary was substantially justified in classifying the hotel as a “temporary
labor camp.” Noting the complexity of the issue and quality of the parties’
legal arguments, the judge simply observed that both parties’ sought support
for their conflicting interpretations of the issue from many of the same
circuit court decisions and OSHA interpretive letters and memoranda, none of
which he either cited or identified.
In
these circumstances the Commission finds that the judge’s decision fails to set
forth the requisite evidentiary basis for his conclusion that the Secretary
established “substantial justification” for the jurisdictional basis of the
citation. See First Nat’l Bank of Circle, 732 F.2d 1444, 1447-48 (9th
Cir. 1984) (holding that trial court must explain basis of decision denying
EAJA fees beyond merely stating that “the legal position of [the government]
was defensible, asserted in good faith, and substantially justified”);
Administrative Procedure Act, 29 U.S.C. § 557(c)(A); Commission rule 90(a), 29
C.F.R. §2200.90(a).
Accordingly,
we remand this case to the judge for issuance of a decision consistent with
this opinion.
So Ordered.
/s/
W.
Scott Railton
Chairman
/s/
James
M. Stephens
Commissioner
/s/
Thomasina
V. Rogers
Commissioner
Dated: May 3,
2004
|
|
Complainant, |
|
v. |
|
SAIPAN KOREANA HOTEL, and their
successors, |
OSHRC DOCKET
NO. 02-0929 |
Respondent. |
|
DECISION AND ORDER
Respondent,
Saipan Koreana Hotel, seeks attorney fees and expenses in accordance with the
Equal Access to Justice Act, 54 U.S.C. ' 504
(AEAJA@) and implementing
regulations set forth at 29 C.F.R. '2204.101,
et seq., for costs incurred in its defense against the Occupational
Safety and Health Administration (OSHA).
BACKGROUND
On August 30, 2002, a compliance officer employed
by the Occupational Safety and Health Administration (hereinafter AOSHA@ or AComplainant@)
inspected the Respondent=s facilities located at Chalan Kanoa, Saipan,
Commonwealth of the Northern Mariana Islands (CNMI). Respondent states that it
is a corporation organized and existing under the laws of CNMI and engaged in
the hotel business for tourists and other visitors to Saipan. At the time of
the inspection, Respondent employed ten employees; four of whom resided on the
sixth floor of the hotel. The compliance officer obtained a tap water sample
from one of the rooms occupied by the employees which, upon analysis, revealed
that the sample was contaminated with fecal coliform (e. coli bacteria). Four
additional water samples collected from the hotel were similarly contaminated
by fecal coliform. A citation was issued to Respondent alleging one serious
violation of 29 C.F.R. ' 1910.142(c)(1) on the ground that Respondent
failed to provide an adequate and convenient water supply for purposes of
drinking, cooking, bathing and laundry to its employees. A penalty in the
amount of $750 was proposed for the alleged violation.
Respondent filed a timely notice of contest to the
citation and, in answer to the complaint filed by Complainant with this
Commission, Respondent generally denied the allegations and affirmatively
stated, inter alia, that Complainant had no jurisdiction over the hotel
and the conditions described in the citation Ado
not constituted (sic) violations@ of the
standard cited. Respondent also requested that the complaint be dismissed.
(Respondent=s answer filed with the Commission on January 17,
2003). By electronic mail dated September 16, 2003, Respondent, through
its representative, notified OSHA that Respondent Aremediated the water problem by removing the water
from the tank, and then having the tank cleaned, sanitized and
chlorinated . . . @ The
record reveals that the hotel was equipped with a large water tank on the roof
of the hotel which supplied water to the entire building. On September 30,
2003, Complainant filed a motion to dismiss the complaint and citation. By
motion dated October 2, 2003, Respondent filed a motion for summary
judgment in its favor. By order dated October 15, 2003, Complainant=s motion to dismiss was granted and Respondent=s motion for summary judgment was denied on the ground
that a case or controversy that needed to be litigated no longer existed. That
order became a final order of the Commission on November 21, 2003. On
December 19, 2003, Respondent filed a timely application for attorney
fees. (29 CFR ' 2200.302(a)) seeking $4,358@ in legal fees based upon the statutory hourly rate of
$125 per hour. Complainant opposes the application for fees on the grounds that
(a) Respondent is not the prevailing party, (b) Complainant was substantially
justified in bringing the action, (c) special circumstances make an award
unjust and (d) the fees claimed are unreasonable.
DISCUSSION
The Equal Access to Justice Act (EAJA) applies to
proceedings before the Commission through section 10(c) of the Occupational
Safety and Health Act of 1970 (Act), 29 U.S.C. ' 651,
et seq. The purpose of the EAJA is to ensure that an eligible applicant
is not deterred from seeking review of, or defending against, unjustified
actions by the Secretary. K.D.K. Upset Forging, Inc., 12 BNA OSHC 1857,
1859, 1986 CCH OSHD & 27,612 (No. 81-1932, 1986). An award is made to
an eligible applicant who is the prevailing party if the Secretary=s action is found to be without substantial
justification and there are no special circumstances which make the award
unjust. Asbestos Abatement Consultation & Engineering, 15 BNA OSHC
1252, 1991 CCH OSHD & 28,628 (No. 87-1522, 1991). While the applicant
has the burden of proving eligibility, the Secretary has the burden of
demonstrating that her action was substantially justified, 29 C.F.R. ' 2204.106(a). However, EAJA does not allow
routine award of attorney=s fees and expenses to a prevailing party. There is no
presumption that the Secretary=s position was not
substantially justified, simply because she lost the case. Moreover, the Act
does not require that the Secretary=s
decision to litigate be based on substantial probability of prevailing. S
& H Riggers & Erectors, Inc. V. OSHRC, 672 F.2d 426, 430 (5th
Cir. 1982).
ELIGIBILITY
To be eligible for costs pursuant to EAJA, an
applicant must establish that on the date that it filed its notice of contest,
it was a Apartnership corporation, association, or public or
private organization that has a net worth of not more than seven million
dollars and employs not more than 500 employees.@
29 C.F.R. ' 2204.105. Respondent=s petition provides documentation establishing its net
worth as $3,375,000 as well as the assertion that Athe company employed 10 employees@ at the time that the notice of contest was filed.
Complainant does not dispute Respondent=s
eligibility under the Act. Accordingly, Respondent=s petition establishes its eligibility at the time of
its notice of contest.
PREVAILING PARTY
To be considered as a prevailing party within the
meaning of the Act, the record must establish that Respondent succeeded on any
significant issue involved in the case and achieved some benefit which it
sought in pursuing litigation. K.O.K. Upset Forging, Inc., 12 BNA OSHR
1856, 1857 (1986). It is not necessary for Respondent to have prevailed on all
issues but only as to a Adiscrete substantive portion of the proceeding.@ H.P. Fowler Contracting Corp., 11 BNA OSHC
1841, 1845 (1984).
Respondent asserts that it is the Aprevailing party@ with
respect to item 1 of the citation because the Secretary withdrew that item from
the matters to be tried at the hearing. Thus, according to Respondent, it has
prevailed on a Adiscrete substantive portion of the proceeding@ by achieving that which it sought in pursuing
litigation; that is, the dismissal of item 1 of the citation. Complainant,
however, disputes that Respondent constitutes a prevailing party within the
meaning of the Act. According to Complainant, Respondent has not achieved its
primary purpose in filing its notice of contest nor has it accrued tangible
benefits as a result of Complainant=s
dismissal of the action. The essence of the jurisdictional dispute between the
parties is whether Respondent hotel constitutes a temporary labor camp by
virtue of the fact that employees resided at the hotel as part of the terms of
their employment. According to both parties, the Secretary must establish that
the Hotel was a temporary labor camp in order to prevail under the standard
cited. Indeed, the theory presented by Respondent in its motion for summary
judgment was offered in support of the conclusion that the hotel was not a
temporary labor camp within the meaning of the cited standard and therefor, the
citation should be dismissed due to Complainant=s
failure to establish the jurisdictional requirements for the citation. Thus,
according to Complainant, Respondent has failed to achieve that which it sought
to achieve by filing its notice of contest; that is, a determination that the
hotel is not a temporary labor camp. However, in its answer to the complaint
filed in this matter, Respondent listed eleven affirmative defenses in addition
to its general denial of the allegations. For all the grounds listed in its
answer, including lack of jurisdiction, Respondent=s prayer for relief demanded that the citation and
complaint be dismissed. Although Respondent may have preferred to obtain a
judgment in its favor with respect to the jurisdictional issue, it is clear
that Respondent was seeking dismissal of the matter. Since this is precisely
what occurred in this case, Respondent must be considered as the prevailing
party.
SUBSTANTIAL JUSTIFICATION
As an eligible prevailing party, Respondent may be
entitled to an award of attorney fees and expenses unless the Secretary
establishes that her position was substantially justified in pending litigation
or the record shows special circumstances which makes an award unjust. AThe test of whether the Secretary=s action is substantially justified is essentially one
of reasonableness in law and fact.@ Mautz
& Orem, Inc., 16 BNA OSHC 1006, 1991-1993 CCH OSHD & 29,986, p. 41,066 (No. 89-1366, 1993). The
Secretary must show that there is a reasonable basis for the facts alleged; for
the theory she propounds; and that the facts alleged will reasonably support
the legal theory advanced. See Gaston v. Bowen, 854 F.2d 379, 380 (10th
Cir. 1988). The fact that the Secretary may have lost as to these items does
not mean that her position in pursing them in litigation was not substantially
justified. S & H Riggers & Erectors, Inc. v. OSHRC, supra, at
430. In cases before the Commission, facts need to be proved by only a
preponderance of the evidence, not by clear and convincing evidence or beyond a
reasonable doubt. The EAJA should not be read to deter the Secretary from
pursuing in good faith cases which are reasonable in advancing the objective of
workplace safety and health, if such cases are reasonably supportable in fact
and law. The facts forming the basis of the Secretary=s position need not be uncontradicted. If reasonable
persons fairly disagree whether the evidence establishes a fact in issue, the
Secretary=s evidence can be said to be substantial. The phrase Asubstantially justified@
means Ajustified in substance or in the main . . ., that is,
justified to a degree that could satisfy a reasonable person. This
interpretation of the phrase accords with related uses of the term >substantial= and is
equivalent to the >reasonable basis both in law and fact= formulation adopted by the vast majority of courts of
appeals.@ Pierce v. Underwood, 108 S. Ct. 2541, 2543
(1988).
As stated previously, a major issue addressed by each
party is whether the hotel constitutes a temporary labor camp as a
jurisdictional prerequisite for the standard cited. Both parties have submitted
extensive and learned memoranda of law with respect to both sides of this
complex issue. Complainant states that some of the employees who resided at the
hotel were nonresident workers and the housing provided by Respondent was a
condition of employment. Therefor, the hotel accommodations fall within the
jurisdiction of the Nonresident Workers Act. Title 3 ' 4411, et seq., of the CNMI Code. Since the
housing was a condition of employment, it also falls within the coverage of the
OSH Act. (Citing Frank Diehl Farms v. Secretary of Labor, 696 F.2d 1325,
11th Cir. 1983). Complainant seeks support for her theory from other
circuit court decisions as well as OSHA interpretive letters and memoranda.
Respondent, on the other hand, vigorously disputes Complainant=s argument and, by citing many of the same cases and
memoranda relied upon by Complainant, arrives at a conclusion diametrically
opposed to Complainant=s.
The opposing theories presented by both parties appear
to be sound and well supported within their respective memoranda of law. It is
not necessary, however, to decide which side would have ultimately prevailed in
this complex issue. Pursuant to an application for attorney fees under EAJA, it
is only necessary to determine whether the Secretary was substantially
justified in bringing the action; that is, has Complainant established that
there was a reasonable basis for the facts alleged, for the theory propounded
and whether the facts reasonably support that theory. See Gaston v. Bowls,
supra.
Based upon the submission of both parties
it is concluded that the Secretary was substantially justified in initiating
this action in fact and law. The Secretary, however, was confronted with more
practical consideration in exercising its prosecutorial discretion to dismiss
this case. Upon being notified by Respondent on September 16, 2003, that
the alleged violative condition had been abated and, thus, the hazard to which
employees had been exposed was no longer present, Complainant was faced with
the decision as to whether further litigation was economically justified.
Complainant=s opposition to the application for attorney fees
includes the affidavit of Frank Strasheim, the Regional Administrator for OSHA=s Region IX. Mr. Strasheim states that he is
responsible for worksite inspections for the Northern Mariana Islands to ensure
compliance with the Act. He, apparently, made the decision to terminate this
litigation. His reasons for that decision are set forth in his affidavit as
follows:
AAfter learning that the employees of the Saipan
Koreana Hotel were being exposed to contaminated water in the employer provided
housing in which they lived and in their workplace, my primary concern was to
ensure that the contamination was removed from the Saipan Koreana=s water system as quickly as possible.
After learning that Saipan Koreana Hotel had taken
effective action to clean its water system to ensure that the water was no
longer contaminated, I considered whether to continue the litigation against
the Hotel.
As part of the consideration of whether to continue
the litigation against the Saipan Koreana Hotel, I also considered amending the
citation to include a violation of 29 C.F.R. ' 1910.141(b),
OSHA=s sanitation standard, which requires that potable
water be provided in the workplace. This proposed amended citation would have
been based on the fact that the Saipan Koreana Hotel had a single water system,
so that contaminated water would have been the only water available in both the
employer provided housing within the hotel as well as the rest of the hotel
which comprised the employees= workplace.
OSHA does not maintain an office on Saipan, so the
consideration of whether to amend the citation and continue with the litigation
was heavily influenced by the enormous costs that would be incurred.
After considering the fact that the Saipan Koreana
Hotel had satisfactorily abated the violation, thus eliminating the danger
faced by its employees= due to their exposure to water contaminated with
fecal matter, I concluded that the enormous costs associated with the continued
litigation of this case could not be justified and that the citation should be
withdrawn and the case dismissed.@
Thus, on September 30, 2003, two weeks after
being informed by Respondent that the hazardous condition had been corrected,
the Secretary filed a motion to dismiss the matter. In light of the distances
between Saipan and San Francisco and the costs associated with litigation,
Complainant=s decision to withdraw the case from further
litigation is reasonable.
The remaining issue is whether Complainant was
unreasonably tardy in deciding to dismiss the action and notifying Respondent
that the Secretary would no longer pursue litigation. Respondent=s submission indicates that two hours and fifty four
minutes of attorney time was devoted to the defense of this case between
September 17, 2003 and September 26, 2003, inclusive. If Complainant was
unreasonably tardy in making the decision to withdraw after being notified that
the hazard had been abated and filing the motion to dismiss, Respondent would
be entitled to attorney fees expended during the period deemed to be
unreasonable. However, given the complexities of the issues involved as well as
the location
of
the personnel involved in the decision making process, it is concluded that a
two-week period for a governmental law enforcement agency to decide to withdraw
litigation after being informed that employees were no longer at risk from a
hazardous condition is not an unreasonable period of time. Accordingly,
Respondent=s petition for attorney fees pursuant to the Equal
Access to Justice Act is DENIED.
FINDINGS OF FACT
Findings of fact relevant and necessary to a
determination of all issues have been made above,
Fed. R. Civ. P. 52(a). All proposed findings of fact
inconsistent with this decision are hereby denied.
CONCLUSIONS OF LAW
1. Respondent
meets the eligibility requirements for recovering attorney fees in this matter
pursuant to the EAJ Act.
2. Respondent
is a prevailing party within the meaning of the EAJ Act.
3. Complainant=s legal and factual positions were substantially
justified up to and including the date that Complainant=s motion to dismiss this matter was granted.
4. Respondent
is not entitled to the award of attorney fees.
ORDER
Respondent=s
petition for attorney fees is DENIED.
/s/
Robert
A. Yetman
Judge,
OSHRC
Dated: March
23, 2004