Lindsay v. Mike-Sell's Inc. Mike-Sell's Potato Chip Co.
ENTRY AND ORDER DENYING MOTION FOR ATTORNEYS' FEES, COSTS AND OTHER EXPENSES 20 BY DEFENDANT-RESPONDENT MIKE-SELL'S POTATO CHIP COMPANY. Signed by Judge Thomas M. Rose on 11-13-2017. (de)
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
GAREY E. LINDSAY, Regional Director
of the Ninth Region of the National
Labor Relations Board, for and on Behalf
of the National Labor Relations Board,
Case No. 3:17-cv-126
Judge Thomas M. Rose
MIKE-SELL’S POTATO CHIP
ENTRY AND ORDER DENYING MOTION FOR ATTORNEYS’ FEES,
COSTS AND OTHER EXPENSES (DOC. 20) BY DEFENDANT-RESPONDENT
MIKE-SELL’S POTATO CHIP COMPANY
This case is before the Court on the Motion for Attorneys’ Fees, Costs, and Other
Expenses (Doc. 20) filed by Defendant-Respondent Mike-Sell’s Potato Chip Co. (“Mike-Sell’s”).
Mike-Sell’s contends that Plaintiff-Petitioner National Labor Relations Board (“NLRB”) and
Garey Lindsay, Eric Taylor, Linda Finch, and Naomi Clark, acting in their official capacities on
behalf of Region 9 of the NLRB (collectively with the NLRB, hereinafter referred to as
“Petitioner”) filed an unjustified Petition for 10(j) Injunction (the “Petition”) (Doc. 1) against
Mike-Sell’s for alleged violations of the National Labor Relations Act (“NLRA”), 29 U.S.C. §§
151-169. Mike-Sell’s argues it is therefore entitled to reimbursement of its attorneys’ fees, costs,
and other expenses incurred in defending against the Petition pursuant to 28 U.S.C. §§ 1920,
1927, 2412 and the Court’s inherent authority.
The Petition alleged that Mike-sell’s refused to bargain with the International Brotherhood
of Teamsters, General Truck Drivers, Warehousemen, Helpers, Sales and Service, and Casino
Employees, Teamsters Local Union No. 957 (the “Union”), despite an obligation to do so, before
selling four distribution routes for its products. Petitioner sought a preliminary injunction that
would require Mike-Sell’s to rescind the sale of the four routes, provide certain information to the
Union, and bargain with the Union pending the NLRB’s determination of whether Mike-Sell’s
violated the Act. After a hearing and full briefing by the parties, the Court found that, although
Petitioner established reasonable cause to believe that Mike-Sell’s violated the NLRA, entry of
the injunction would not be just and proper. (Doc. 18.)
Petitioner has filed an Opposition (Doc. 26) to Mike-Sell’s Motion for Attorneys’ Fees, in
response to which Mike-Sell’s filed a Reply (Doc. 27). This matter is therefore fully briefed and
ripe for review. As discussed below, upon consideration of the facts of this case along with the
applicable legal standard, Petitioner was substantially justified in bringing the Petition.
Accordingly, the Court DENIES the Motion for Attorney Fees (Doc. 20).
The Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412, provides that a court “shall
award to a prevailing party” its fees, costs and other expenses in a civil action brought by an
agency of the United States, “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). The EAJA is designed “to eliminate financial disincentives for those who would
defend against unjustified governmental action and thereby to deter the unreasonable exercise of
Government authority.” Ardestani v. I.N.S., 502 U.S. 129, 138 (1991) (citations omitted).
A party seeking an award of fees and expenses must file an application showing that it is
a prevailing party eligible to receive an award under the EAJA and the amount sought, including
an itemized statement showing the time expended and the rate at which fees and expenses were
computed. 28 U.S.C. § 2412(d)(1)(B). The government then has the burden of showing that its
position was substantially justified or that special circumstances make an award unjust.
Caremore, Inc. v. N.L.R.B., 150 F.3d 628, 629 (6th Cir. 1998); see also Pickering v. Mukasey,
306 F. App’x 246, 248 (6th Cir. 2009). The government’s position is substantially justified if it is
“‘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 (1988). “[A] position can be
justified even though it is not correct, and [. . .] can be substantially (i.e., 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. “A request for attorney’s fees should not result in a second major
litigation.” McQueary v. Conway, 614 F.3d 591, 602 (6th Cir.2010) (quoting Hensley v.
Eckerhart, 461 U.S. 424, 437 (1983)).
Under 28 U.S.C. § 1927, the Court may hold an attorney accountable for excessive fees
and expenses that a party incurs due to the attorney’s improper conduct. Specifically, Section
1927 provides that:
Any attorney or other person admitted to conduct cases in any court of the United
States or any Territory thereof who so multiplies the proceedings in any case
unreasonably and vexatiously may be required by the court to satisfy personally
the excess costs, expenses, and attorneys’ fees reasonably incurred because of such
28 U.S.C. § 1927. A district court also has inherent authority to sanction bad-faith conduct,
including by entering an award of attorneys’ fees and expenses against the offending party. First
Bank of Marietta v. Hartford Underwriters Ins. Co., 307 F.3d 501, 516 (6th Cir. 2002).
Petitioner does not dispute that Mike-Sell’s is a prevailing party and eligible for a fee
award under the EAJA. Instead, Petitioner argues that Mike-Sell’s application for a fee award
should be denied because Petitioner’s position was substantially justified. (Doc. 26 at PAGEID #
773.) As discussed below, even though the Court denied the Petition, it had a reasonable basis in
law and fact and therefore does not support an award of fees under the EAJA.
Petitioner brought this action under Section 10(j) of the NLRA, which permits the NLRB,
upon issuance of an administrative complaint alleging an unfair labor practice, to petition a
district court for “such temporary relief or restraining order as it deems just and proper.” 29
U.S.C. § 160(j). To be granted a preliminary injunction, the NLRB must carry two burdens. First,
it must establish that “reasonable cause” exists to believe unfair labor practices occurred. NLRB v.
Voith Indus. Servs., Inc., 551 F. App’x 825, 827 (6th Cir. 2014). Second, it must show that entry
of the injunction would be “just and proper.” Id.
In denying the Petition, the Court found that Petitioner met its initial burden of
establishing reasonable cause, but not that entry of the injunction would be “just and proper.” (Id.
at 14-19.) Thus, there is no question that Petitioner was substantially justified in its position at
least under the first prong of the standard. The only issue is the reasonableness of Petitioner’s
position that the injunction was just and proper. The mere fact that the Petition was denied does
not “raise a presumption that the [g]overnment position was not substantially justified.” Howard
v. Barnhart, 376 F.3d 551, 554 (6th Cir. 2004) (internal quotes omitted).
“The ‘just and proper’ inquiry ... turns primarily on whether a temporary injunction is
necessary ‘to protect the Board's remedial powers under the [NLRA].’” Ahearn v. Jackson Hosp.
Corp., 351 F.3d 226, 239 (6th Cir. 2003) (quoting Schaub v. Detroit Newspaper Agency, 154 F.3d
276, 279 (6th Cir.1998)). As the Court experienced first-hand, this determination is by no means
clear-cut, but involves the analysis of factual issues—some unresolved—and the weighing of
various factors relevant to protection of the NLRB’s remedial powers.
Petitioner argues that it was substantially justified in bringing the Petition based on its
concern that, if Mike-Sell’s were not enjoined, Union support would erode to the point that any
action taken by the NLRB would be ineffectual. Petitioner presented evidence that employees
were increasingly frustrated with the Union and its perceived futility for several reasons,
including the sale of distribution routes. (Doc. 17 at 50-66.) Petitioner feared that, if the sale of
the four routes was permitted to stand and Mike-Sell’s continued to sell more routes with
impunity, then employees would lose their jobs and/or withdraw their support for the Union. As
a result, by the time the NLRB ordered Mike-Sell’s to negotiate regarding the sale of the routes,
for example, the Union’s bargaining power would be greatly diminished.
Mike-Sell’s counters that the Sixth Circuit “does not consider harm to employees when
determining whether a § 10(j) injunction is just and proper.” (Doc. 27 at 7 (quoting Boren v.
Cont’l Linen Servs., Inc., 2010 WL 2901872, at *4 (W.D. Mich. July 23, 2010), citing NLRB v.
Automatic Sprinkler Corp. of Am., 55 F.3d 208, 214 n. 5 (6th Cir. 1995)).) In the same case,
however, the court acknowledges that the Sixth Circuit “will take into account erosion of
employee support, but only for the purpose of assessing whether the NLRB will retain its
remedial power.” Boren, 2010 WL 2901872 at *4. Thus, harm to employees and their resulting
frustration with the Union is relevant to the extent it could impact the effectiveness of future
negotiations between Mike-Sell’s and the Union. See also Muffley ex rel. N.L.R.B. v. Voith
Indus. Servs., Inc., 551 F. App’x 825, 835 (6th Cir. 2014) (“[I]nterim instatement—including the
unseating of current employees—may be a permissible exercise of discretion under § 10(j) when
it is reasonably necessary to preserve the Board's ability to remedy the unfair labor practices
once the administrative proceedings are concluded.”); Ahearn v. Jackson Hosp. Corp., 351 F.3d
226, 239 (6th Cir. 2003) (reinstatement of employees was “just and proper” where “multiple
terminations of striking employees directly following the end of the union strike would have an
inherently chilling effect on other employees”); Bloedorn v. Francisco Foods, Inc., 276 F.3d
270, 299 (7th Cir. 2001) (finding entry of a § 10(j) injunction just and proper where the erosion
of union support could render an NLRB order directing the employer to bargain with the union
Mike-Sell’s also argues that Petitioner’s fear that Mike-Sell’s would continue selling
routes was not well-founded. At the hearing, Mike-Sell’s presented evidence that it has no
intention of selling all of its distribution routes because of the pension liability that would be
triggered. (Doc. 17 at 128:7-19.) Petitioner was not aware of that fact until the hearing, however,
and argues it should not be held accountable for Mike-Sell’s withholding of information. Of
course, Mike-Sell’s represents that it would have provided the information, if only Petitioner had
asked for it. In the end, there is insufficient evidence to assign blame to either party for this
breakdown in communication. Based on the information that Petitioner did have, it was
reasonable to be concerned that Mike-Sell’s would sell additional routes. As the Court noted,
Mike-Sell’s sold more than 30 routes to independent distributors before its sale of the last four
routes at issue. (Doc. 18 at 18-19.) Petitioner notes that those last four routes were located near
Mike-Sell’s plant in Dayton, Ohio, while earlier sales were for routes farther away. The sale of
Dayton routes—which are less expensive to service and hence more profitable—suggested to
Union leadership that Mike-Sell’s intended to sell all of its routes. (Doc. 17 at 31.) That was not
an unreasonable inference.
Mike-Sell’s also argues that Petitioner’s position was unreasonable in light of the
hardship that the injunction would have imposed on Mike-Sell’s and its independent
distributors. (Doc. 18 at 16-17.) In response, Petitioner argues that the relief that it sought was
not unprecedented and the independent distributors should have been prepared for the
possibility of losing their routes since their contracts permitted termination upon only 30 days’
notice. Petitioner also was unaware of the hardship to the independent distributors until they
testified at the hearing. The Court agrees that the relief sought by the injunction was not so
extreme that Petitioner had no reason to believe that it might be entered. In other cases
involving the displacement of unionized employees, courts have issued Section 10(j)
injunctions that require the rescission of contracts and the rehiring of large numbers of
terminated union employees. See, e.g., Overstreet v. El Paso Disposal, L.P., 668 F. Supp. 2d
988, 1011 (W.D. Tex. 2009) (entering injunction under § 10(j) requiring reinstatement of fiftyfive striking employees rescission of unilateral changes to terms of employment).
Mike-Sell’s also argues that Petitioner should have recognized that its requested
injunction was fatally overbroad. (Doc. 20-1 at 18.) Indeed, in denying the Petition, the Court
noted that the injunction “would effectively provide all of the relief that [Petitioner] might
obtain from the Board.” (Doc. 18 at 15.) Petitioner’s aim, however, was to return the parties to
their pre-violation status quo, which is the relevant status quo for these purposes. Fleischut, 859
F.2d at 30 n. 3. Thus, there was a legal basis for breadth of the requested injunction. In addition,
the Court is not aware of any authority stating that Petitioner must demonstrate that it was
substantially justified in seeking 100% of its requested relief. This makes sense because, had the
Court granted Petitioner only a portion of its requested injunctive relief, Mike-Sell’s claim to be
a prevailing party under the EAJA would most certainly fail.
In the end, Petitioner brought this action based on a reasonable interpretation of the facts
before it, but its position became weaker after additional evidence was presented at the hearing.
The Court found for Petitioner under the “reasonable cause” prong, but against it under the “just
and proper” prong of the § 10(j) standard. Determination of whether an injunction would be
“just and proper” is fact-intensive and complex; it is the type of standard that could certainly
cause reasonable minds to differ. In addition, Petitioner’s legal claims have since been
vindicated—at least for the time being—by the administrative law judge’s decision in the
NLRB proceedings finding that Mike-Sell’s route sales and refusals to furnish information were
unfair labor practices. Mike-Sells Potato Chip Co. & Int'l Bhd. of Teamsters (Ibt), Gen. Truck
Drivers, Warehousemen, Helpers, Sales, & Serv., & Casino Employees, Teamsters Local Union
No. 957, 09-CA-184215, 2017 WL 3225835 (July 25, 2017). Considering the case as a whole,
as the Court must, Petitioner was substantially justified in bringing the Petition. Comm’r, I.N.S.
v. Jean, 496 U.S. 154, 161-62 (1990) (“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.”).
For the same reasons, Mike-Sell’s is not entitled to a fee award under 28 U.S.C. § 1927
or the Court’s inherent authority. There has been no showing that Petitioner’s counsel
“unreasonably and vexatiously” multiplied the proceedings in this case, as required under
Section 1927, or that they brought the Petition in bad faith. First Bank of Marietta, 307 F.3d at
516 (imposition of inherent power sanctions requires a finding of bad faith).
For the foregoing reasons, the Court DENIES Mike-Sell’s Motion for Attorneys’ Fees,
Costs, and Other Expenses (Doc. 20).
DONE and ORDERED in Dayton, Ohio, this Monday, November 13, 2017.
s/Thomas M. Rose
THOMAS M. ROSE
UNITED STATES DISTRICT JUDGE
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