Docket No. 86-0978

SECRETARY OF LABOR,

Complainant,

CENTRAL BRASS MANUFACTURING

Co.,

Respondent.

OSHRC Docket Nos. 86-0978 &

86-1610

DECISION AND ORDER

BEFORE: FOULKE, Chairman; MONTOYA and WISEMAN, Commissioners.

BY THE COMMISSION:

At issue in this case is whether Administrative Law Judge Edwin G. Salyers erred in his award of attorney fees and expenses to Respondent, Central Brass Manufacturing Co. ("Central Brass"). We find that the judge erred in certain aspects of his methodology and we adjust the award accordingly.

On June 25, 1986, the Secretary of Labor issued two citations to Central Brass.[[1/]] These citations alleged various violations of the noise, lead and silica dust standards. Several items were withdrawn by the Secretary before the hearing. Others were either withdrawn at the hearing by the Secretary, disposed of after trial, or conceded by Central Brass. After the judge's decision became final, Central Brass applied for attorney fees under the Equal Access to Justice Act, ("the EAJA"), 5 U.S.C. § 504. The company sought a total of $79,438.50 in attorney fees and $7,918.63 in expert witness fees and expenses. On several items where the applicant prevailed, Judge Salyers determined that the Secretary's position was substantially justified and denied recovery. On five items, however, the judge determined that the Secretary's position was not substantially justified and that recovery under the EAJA was appropriate.

The judge awarded a total of $13,250 to cover fees and expenses associated with these items. For those items withdrawn by the Secretary before the hearing, the judge awarded Respondent $7500 in attorney fees [[2/]] after pro rating the total hours claimed, for the period of time before the withdrawal, by the percentage of items eligible for an award. For the item that went to hearing, the judge awarded $3750 in attorney fees. This included 36 hours for time spent in connection with the hearing and 14 hours allocated to time spent obtaining a deposition. The judge also awarded a total of $2000 to cover the applicant's expenses for the various items.

The Secretary filed a petition for review with the Commission objecting to the award. The case was directed for review by former Chairman E. Ross Buckley. The primary issues on review before the Commission are whether the judge erred in the following respects: (1) by pro rating the applicant's total attorney fees and expenses for the items withdrawn before the hearing on the assumption and without specific evidence that the amount of time spent on each citation item was the same; (2) by awarding fees for time spent obtaining a deposition; and (3) by including in the award fees and expenses incurred before the citations were issued. Neither party disputes the judge's determination of which citation items were eligible for an award under the EAJA.

At the outset, Central Brass contends that, in reviewing an EAJA award made by an administrative law judge, the Commission must affirm the judge unless it finds that the judge abused his discretion. In support of its position, the applicant points out that the "abuse of discretion" standard is used by appellate courts when reviewing attorney's fee awards made in the district courts. Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 1941 (1983). We disagree.

The portion of the EAJA that entitles parties to recover costs and fees from the federal government after judicial proceedings is codified at 28 U.S.C. § 2412. In Pierce v. Underwood, 437 U.S. 552, 108 S.Ct. 2541 (1988), the Supreme Court held that appellate review of EAJA awards made in the district courts, under 28 U.S.C. § 2412, are to be conducted under the "abuse of discretion" standard. In reaching this conclusion, the Court noted that administrative proceedings under the EAJA are governed by 5 U.S.C. § 504 and that, under 5 U.S.C. § 504(c)(2), appellate courts must use the "substantial evidence" test as their standard of review of EAJA awards made by administrative agencies.[[3/]]

However, the Review Commission is an administrative agency, not an appellate court. There is nothing in the EAJA to indicate any standard of review for internal agency review of EAJA awards made by the agency's administrative law judges. Absent authority to the contrary, the Administrative Procedure Act ("APA") in 5 U.S.C. § 557(b), which normally governs our proceedings, sets forth our standard of review of EAJA applications decided by Commission judges. The APA permits de novo review. Accordingly, we reject the applicant's contention that we must apply an "abuse of discretion standard," and hold that judges' awards under the EAJA are to be reviewed by the Commission de novo.

In its application, Central Brass' attorneys claimed to have spent approximately 400 hours on the case before the Secretary withdrew four of the items for which the judge granted an award under the EAJA. The judge noted that these four items represented approximately one quarter of the items contained in the citations. After pro rating the 400 hours spent up until that point, he determined that the applicant was entitled to be compensated for 100 hours of attorney fees at the statutory rate of $75 per hour, for a total of $7500 for that portion of the application.

The Secretary makes three arguments in support of her contention that this portion of the award was improper. First, she contends that the judge erred by including attorney fees incurred before the notice of contest was filed, and therefore, before the "adversary adjudication" began. Second, the Secretary argues that the judge erred by pro rating the total hours by the percentage of items eligible for an award. She claims that such a purely mathematical approach fails to consider the difficulty of the issues, the degree of success obtained, and other factors properly considered when determining a fee award under the EAJA. Third, the Secretary contends that the application was not sufficient because it failed to distinguish the hours expended on the items on which the applicant prevailed and, therefore, included hours spent on items found ineligible for an award. The Secretary argues that this inadequacy should preclude an award for those items withdrawn before the hearing.

We first address the Secretary's claim that attorney fees for work done prior to the notice of contest are not recoverable.

The Secretary properly notes that the EAJA only allows the recovery of fees connected with an adversary adjudication. Under the Occupational Safety and Health Act of 1970 (OSH Act), she continues, Commission jurisdiction, and therefore the adversary adjudication, does not begin until the employer files its notice of contest. Therefore, she argues, the applicant is entitled to recover only fees and expenses incurred after the notice of contest was filed. We disagree.

The EAJA allows for the recovery of fees "in connection with" an adversary adjudication. 5 U.S.C. § 504(a)(1). Notwithstanding the Commission's procedural rule requiring the filing of a complaint, the reality is that the citation initiates the Secretary's action against the employer. While it might choose not to contest the matter, the employer certainly considers itself to be in an adversarial situation upon receipt of the citation. After the citation is received, the employer can be expected to consult its attorney prior to filing its notice of contest. These early expenses are "in connection with" the adversary adjudication. If the employer prevails, and a judge determines that the Secretary was not substantially justified in issuing all or part of the citation, the employer should be eligible to recover legal expenses incurred from the receipt of the citation. Accordingly, we hold that, for purposes of the EAJA, the adversary adjudication normally begins with the issuance of the citation.[[4/]]

Central Brass' application states that 11.25 hours of attorney time was expended between receipt of the citation and its filing of the notice of contest. Insofar as they can be allocated to compensable citation items, these expenses are recoverable.

The application also includes 22.5 attorney hours spent before the citation was issued. Most of these hours involved issues surrounding the inspection: propriety and scope of inspection and closing conferences. We have found nothing to support a holding that, as a general proposition, expenses incurred during a consensual inspection are "in connection with" an adversary adjudication. Before the issuance of a citation, the Secretary of Labor takes no official position contrary to the defensible rights of the applicant. Therefore, it cannot be said that the Secretary has taken an "adversarial position." In the usual situation, only upon issuance of the citation do the Secretary and the employer assume an adversarial posture.

While we hold that, as a general rule, the adversary adjudication begins upon issuance of the citation, we can envision situations where the adversary adjudication may begin at an earlier stage of the proceedings. If, for example, the employer retains legal counsel to stop an allegedly illegal inspection and successfully contends before the Commission that the inspection was illegal and without substantial justification, the adversary adjudication could be held to have begun with the inspection. In such a situation, legal expenses incurred in challenging the inspection, before the issuance of the citation, could prove to be compensable.

We next consider the Secretary's contention that Central Brass should be denied any award because its application was not sufficiently detailed to allow the Commission to allocate attorney time to specific violations. The 15 different violations alleged against Central Brass can be broken into three categories: noise, silica dust, and lead. Of these, both of the silica items were vacated and are eligible for a fee award, three of the nine lead items are eligible, and none of the noise items are subject to recovery. The time sheets submitted by the applicant largely failed to separate the time spent by these categories. It may not have been possible to allocate the time spent on every activity spent in defense. Telephone calls, client meetings and other such billable hours would have, of necessity, included time spent on each of the categories. Where possible, however, an effort should have been made to indicate the general categories on which the time was spent. The time sheets detail the general activities to which the hours were devoted but fail, with minor exceptions, to allocate the hours to any specific category of violation.

The Secretary argues that these deficiencies require a denial of an award. We disagree.

When an application does not provide sufficient detail to allow a determination of those hours specifically spent on the eligible items, a total denial of an award is generally not appropriate. Such a total denial is reserved for the most severe situations, for example, where the applicant declines to proffer any substantiation in the form of affidavits or timesheets, where the application is grossly or intolerably exaggerated or manifestly filed in bad faith, or where a party has unreasonably prolonged the litigation. Zabkowicz v. West Bend Co. Div. Dart Industries, 789 F. 2d 540, 550 (7th Cir. 1986); Action on Smoking & Health v. C.A.B., 724 F. 2d 211, 220 (D.C. Cir. 1984) ; Jordan v. Department of Justice, 691 F.2d 514, 518 (D.C. Cir. 1982). We find nothing in the record to support a total denial of fees.

We find that the time sheets included in the application meet the minimally acceptable standard for recovery under the EAJA. The sheets, while detailing the type of activity (i.e. telephone calls, meetings, and letter writing) almost totally failed to designate the items or category of violation to which those hours were devoted. Fortunately for the applicant, the particular nature of this case made it possible for us to make a reasonable allocation of hours.

However, when an applicant prevails on only some of the claims involved in an adversary adjudication, it is necessary to determine whether the claims upon which the applicant prevailed are related to those on which it lost. When the claims involve a common core of facts or involve related legal theories, the necessary commingling of effort by lawyers working on those items makes it difficult, if not impossible, to separate the labor that went into the various items. Hensley v. Eckerhart 461 U.S. at 435-6, 103 S.Ct. at 1940-1. In such situations, we must look at the level of the applicant's overall success in determining the fee award on those items on which the fee applicant prevailed. Hensley v. Eckerhart, 461 U.S. at 435, 103 S.Ct. at 1940. In many cases, however, especially where the type of violations involved are more diverse and unrelated, an appropriate allocation may not be possible without a more detailed breakdown than that submitted here. In such an instance, the applicant might well find its award substantially reduced as a result of the deficiencies. Hensley v. Eckerhart, 461 U.S. at 433, 103 S.Ct. at 1939.

Here, while the time sheets submitted generally fail to identify the items or even the general categories in which time was spent, a certain amount of hours can be allocated to the general categories. For example, 34.75 hours are listed in a manner that clearly indicated that they were devoted to the noise violations. Because these violations are not subject to an EAJA award, those hours must be excluded from consideration. On the other hand, 2.25 hours were specifically allocated to the silica violations. The judge found both silica items eligible for an EAJA award, and they should be specifically included in any award.[[5/]] According to our calculation, approximately 330 pre-hearing attorney hours, including 11.25 attorney hours spent between receipt of the citation and filing of the notice of contest, remain that cannot be specifically allocated to any of the categories.

In arriving at the award appropriate for this portion of the application, the judge made a pro rata apportionment based on the percentage of the items he found eligible for the award. As the Secretary properly argues, an award based on such a pro rata apportionment is not appropriate. Hensley v. Eckerhart, 461 U.S. at 435, n.11, 103 S.Ct. at 1940, n.11. Rather, the judge must determine the "lodestar" (hourly fee X reasonable hours expended). Action on Smoking & Health v. C.A.B., 724 F.2d at 221. When determining the "lodestar" the judge should consider the complexity and novelty of the issues based on his own knowledge, experience and expertise of the time required to complete similar activities. See William B. Hopke Co., 12 BNA OSHC 2158, 2160, 1986-87 CCH OSHD ¶ 27,729 at p. 36,257 (Docket No. 81-206, 1986).

Considering that all of the citation items were of substantially equal difficulty and accounting for the fraction of the total items eligible for an award, we find that one fourth of these unallocated 330 hours, or 82.5 hours, are compensable under the EAJA. At the statutory rate of $75 per hour, we award $6187.50 for this portion of the application.[[6/]] In addition, we will allow the 2.25 hours specifically allocated to the silica items for an additional $168.75.

III

In response to an item that alleged that Central Brass failed to provide preassignment physicals to employees exposed to airborne concentrations of lead, the employer took the deposition of a nurse to establish that the preassignment physicals were given. Having found that the item qualified for an EAJA award, the judge included in his award compensation for 14 hours of attorney time and $182 in costs associated with the deposition. The Secretary raises two arguments in support of her contention that no award should have been made to reimburse costs associated with the deposition.

First, the Secretary contends that the deposition was not necessary to the preparation of the applicant's defense. The Secretary argues that the information obtained in the deposition could have been obtained, at significantly lower expense, by making a request for medical records or by simply asking the nurse for an affidavit. Moreover, the Secretary argues that even though it was mentioned in his decision, the judge only superficially relied on the deposition.

We find no merit in these arguments. The contention that Central Brass could have successfully defended itself in a less expensive manner is an argument made with the advantage of hindsight. The record establishes both that the nurse was a first-hand witness to the facts underlying portions of Central Brass' defense of the charge and that she was not able to testify at the hearing. While the applicant could have subpoenaed the relevant medical records, it is possible that the records would have left unanswered questions that still would have required the nurse's testimony. Moreover, there is no evidence that the cost involved in obtaining, examining and introducing into evidence all of the necessary medical records would have been substantially less than that of obtaining the nurse's deposition.

Had Central Brass merely sought to admit an affidavit into evidence, the Secretary would have had grounds to object to its admission into evidence based on the failure to accord her an opportunity to cross-examine the affiant.[[7/]]

Finally, contrary to the Secretary's argument, we find that the judge significantly relied on the deposition in his decision to vacate the item. Specifically, the judge relied on the nurse's deposition in concluding that the undisputed evidence established that all employees were given pre-employment examinations.

The Secretary also argues that those sections of the EAJA applicable to administrative proceedings do not allow for the recovery of costs incurred during the taking of a deposition. This argument highlights the difference between the fee recovery provisions governing judicial and administrative proceeding. The Secretary notes that 28 U.S.C. § 2412(d)(1)(A), a part of the EAJA applicable to judicial proceedings, provides for the recovery of "fees and other expenses, in addition to any costs awarded under subsection (a)." Subsection (a) of 28 U.S.C. §2412 specifies that the costs enumerated under 28 U.S.C. §1920 are recoverable when a party prevails against the United States during judicial proceedings. Section 1920 allows recovery for the costs of a deposition. Leonard v Argento, 699 F.2d 874, 900 (7th Cir. 1983). Thus, the Secretary reasons, the costs of depositions incurred during such judicial proceedings are recoverable, through incorporation by reference, under a specific provision of the EAJA.

The Secretary claims that such costs are not recoverable under the EAJA after administrative proceedings because 5 U.S.C. § 504(b)(1)(A), which sets forth the fees and costs recoverable, contains no similar provision. The Secretary points out that, as a matter of statutory construction, when two sections of a statute are almost identical and one includes a provision excluded from the other, it can be presumed that Congress acted purposely in creating the difference. Russello v. United States, 464 U.S. 16, 104 S. Ct. 296 (1983). Therefore, the Secretary concludes that the lack of a provision specifically including the costs of depositions incurred during administrative proceedings indicates that such costs were not intended to be recoverable under the EAJA. The Secretary's argument is flawed.

The purpose of 28 U.S.C. § 1920 is to set forth the court costs that may be imposed upon the parties to a suit. Under 28 U.S.C. § 2412(a), which predates the EAJA, these costs may be assessed against the United States whenever a party prevails against it, regardless of whether the position of the United States was substantially justified.

Under the EAJA, however, attorney fees are additionally recoverable only when the position of the United States was not substantially justified. When drafting the EAJA, Congress sought to preserve the existing law which made section 1920 costs assessable against the government whenever a party prevailed against it. H.R. Rep. No. 96-1418, 96th Cong., 2d Sess. 17 (1980), reprinted in 1980 U.S. Code Cong. & Ad. News 4996. The specific reference to section 2412(a) in 28 U. S. C. § 2412(d)(1)(A) preserves this distinction. Thus, those expenses listed under section 1920 continue to be available to any party prevailing against the United States. Additionally, under the EAJA, attorney fees and other expenses are available "in addition to" those costs set forth under section 1920 whenever the position of the United States is found to lack substantial justification.

Outside of the EAJA, there are no statutory provisions similar to either section 1920 or section 2412(a) that would allow costs to be assessed against the United States after administrative proceedings. Therefore, unlike the situation with the judicially applicable portion of the EAJA, there is no need to distinguish those costs available under the EAJA from those available outside of that statute.

Accordingly, despite the Secretary's arguments, the difference in the language between 28 U.S.C. § 2412(d)(1)(A) and 5 U.S.C. § 504(b)(1)(A) need not be explained as an intentional attempt to exclude certain costs from those recoverable under the administrative portion of the EAJA. Indeed, it is unlikely that Congress had such an intention. In examining the scope of recoverable expenses under Title VII (Civil Rights) actions, 42 U.S.C. § 2000e-5(k), the Seventh Circuit stated that "[i]f this fee-shifting statute did not provide for an award of expenses, 'it would fall short of its goal' of encouraging the prosecution of Title VII claims." Zabkowicz v. West Bend Co., Div. Dart Industries, 789 F.2d at 553; see also Henry v. Webermeier, 738 F.2d 188, 192 (7th Cir. 1984). Applying such logic here, it could be said that if Congress intended the EAJA to exclude the costs of such items as depositions from the administrative portion of the EAJA, it would have fallen short of its goal of encouraging small employers to defend their rights against unjustified governmental action.

Based on the time sheets submitted by the applicant, the judge determined that Central Brass's attorneys spent 14 hours in activities pertaining to the deposition. We find no error in that allocation. Accordingly, based on the hourly rate of $75 per hour, we find that the applicant is entitled to recover $1050 in attorney fees for this portion of its application.

In his decision, Judge Salyers included 36 hours of attorney time to cover time involved litigating and briefing the one item that went to hearing that he found eligible for an award. The Secretary objects to the award on the grounds that it was made without explanation by the judge or itemization by the applicant.

Our examination of the time sheets reveals that approximately 190 hours were expended preparing, litigating, and briefing the seven items that went to hearing. Considering the difficulty of the recoverable item and the degree of success it represents, we conclude that the judge's award was not unreasonable and we will not disturb it. Therefore, based on the statutory rate of $75 per hour, we award $2700 for this aspect of the application.

Similarly, we find no error in the judge's award of expenses. The applicant claimed a total of $7,918.63 in expenses, including expert witness fees. The judge awarded a total of $2,000 in expenses, including $182 connected with the nurse's deposition and $760 in expert witness fees attributable to the silica charge that went to hearing. We find the judge's assessment to be reasonable and we approve that portion of the award.

Finally, we note that the application listed 18.85 hours specifically applicable to the preparation of the initial EAJA application filed before the judge. The judge failed to discuss this aspect of the application. However, hours spent preparing an application for attorney fees under the EAJA are compensable. See Lee v. Johnson, 799 F.2d 31 (3d Cir. 1986); Barriger v. Bowen, 673 F.Supp. 1167 (N.D.N.Y., 1987). Therefore, compensation for the 18.85 hours spent preparing this EAJA application at the statutory rate of $75 ($1,413.75) will be included in the award.

Accordingly, the judge's decision granting Central Brass an award under the EAJA is modified. We award Central Brass $11,520 in attorney fees and $2,000 in expenses for a total award of $13,520.

Edwin G. Foulke, Jr.
Chairman

Velma Montoya
Commissioner

Donald G. Wiseman
Commissioner

Dated: November 15, 1990

CENTRAL BRASS MANUFACTURING CO.,

Applicant,

SECRETARY OF LABOR,

Respondent.

OSHRC Docket Nos.

86-0978 and 86-1610

(Consolidated)

DECISION AND ORDER

SALYERS, Judge: Central Brass Manufacturing Co. (hereinafter "applicant") was inspected on two occasions by the Secretary of Labor in 1986 under the provisions of the Occupational Safety and Health Act (29 U.S.C. § 651, et seq.). Following these inspections, the Secretary issued several citations alleging violations of the Act in cases numbered 86-0978 and 86-1610. These citations were contested by applicant and were consolidated for trial. Prior to trial applicant withdrew its notice of contest with respect to all items in Docket No. 86-1610, and these items became final orders of the Review Commission by operation of law.

Case No. 86-978 was heard by the undersigned on March 10 and 11, 1987, in Cleveland, Ohio. At the time of trial the parties announced settlement of a number of items which had been resolved through negotiations. All items not disposed of by the parties were resolved by a decision rendered on October 16, 1987. Neither party petitioned for review of this decision nor did the Review Commission call the case for review on its own volition. Accordingly, the decision in Case No. 86-0978 has now become a final order.

Applicant seeks to recover its attorney's fees and costs pursuant to the Equal Access to Justice Act, 5 U.S.C. § 504 [[1/]] (hereinafter the "Act"); to wit, $79,438.50 in attorney's fees and $7,918.63 in expert witness fees and expenses. Both parties have filed briefs and affidavits in support of their respective positions. [[2/]]

To establish eligibility under the Act, a party must show it meets certain criteria with regard to net worth and number of employees. In the case of a corporation, the net worth must not exceed $7,000,000 and the number of employees cannot exceed 500. This requirement has been satisfied by affidavits attached to respondent's petition [[3/]] and has not been challenged by the Secretary. Respondent, because of its size and financial circumstances, meets the basic eligibility requirements of the Act.

The following items were withdrawn or conceded by the parties prior to or at the commencement of trial (Tr. 5-10):

Serious Citation No. 1

Items 1 (a) and 1(b) alleged violation of 29 C.F.R. § 1910.95(b)(1) and .95(i)(2)(i) (exposure of employees to noise levels in excess of permissible limits and failure to institute administrative or engineering controls).

Disposition

Withdrawn by Secretary after negotiation with applicant on March 4, 1987.

"Other" Citation No. 2

Items 2(a) and 2(b) alleged violation of 29 C.F.R. § 1910.1000(c) and .1000(e) (exposure of employees to silica in excess of PEL and failure to protect same through use of administrative or engineering controls).

Disposition

Withdrawn by Secretary after negotiations with applicant on February 23, 1987.

Item 3(a) alleged violation of 29 C.F.R. § 1910.1025(d)(6)(ii) (failure to monitor employees exposed to lead above action level).

Disposition

Withdrawn by Secretary at trial.

Item 3(b) alleged violation of 29 C.F.R. § 1910.1025(d)(6)(iii) (failure to monitor employees exposed to lead above PEL).

Disposition

Notice of contest withdrawn by applicant at trial (Tr. 9) becomes final order of Review Commission by operation of law.

Item 4(b), sub-items (a) through (g) of 29 C.F.R. § 1910.1025(f)(3)(ii) (failure to perform fit test on various employees exposed to lead at intervals of six months).

Disposition

Secretary concedes at trial sub-items (a), (b) and (d). Applicant concedes sub-items (c), (e), (f) and (g) (Tr. 9).

Item 6 alleged violation of 29 C.F.R. § 1910.1025(l)(1)(ii) (failure to institute training program for employees subject to lead exposure).

Disposition

Withdrawn by Secretary after negotiations with applicant on March 9, 1987.

The following items were not resolved by the parties and were disposed of after trial as follows:

Serious Citation No. 1

Item 2(a) alleged violation of 29 C.F.R. § 1910.1025(g)(1) (failure to use protective work clothing by employee exposed to lead above permissible exposure Iimit).

Disposition

Affirmed and $280 penalty imposed.

Item 2(b) alleged violation of 29 C.F.R. § 1910.1025(i)(3)(i) (failure to require employees exposed to lead to shower at end of work shift).

Disposition

Vacated on grounds that the test result of compliance officer was not representative.

Item 2(c) alleged violation of 29 C.F.R. § 1910.1025(i)(4)(i) (failure to provide lunchroom facilities for employees exposed to lead in excess of permissible exposure limits).

Disposition

Affirmed with penalty of $400 assessed.

"Other" Citation No. 2

Item 1 alleged violation of 29 C.F.R. § 1910.95(c)(1) (failure to institute and maintain a continuing and effective hearing conservation program).

Disposition

Affirmed as de minimis.

Item 3 (c) alleged violation of 29 C.F.R. § 1910.1025(d)(8)(i) (failure to notify employees exposed to lead of monitoring results).

Disposition

Affirmed as de minimis.

Item 4 (a) alleged violation of 29 C.F.R. § 1910.1025(f)(3)(ii) (failure to perform fit tests for respirators at time of initial fitting of employees exposed to lead in excess of PEL).

Disposition

Affirmed.

Item 5 alleged violation of 29 C.F.R. §1910.1025(j)(3)(i)(B) (failure to provide employees with medical examinations prior to assignment to an area in which airborne concentrations of lead are at or above the action level).

Disposition

Vacated.

The Act speaks in terms of the "prevailing party." In this case each party prevailed as to some items and lost as to others. The Review Commission has made it clear that a party may recover even if the party prevailed only is to a "discrete, substantive portion" of the case. H. P. Fowler Contracting Corp., 84 OSAHRC 54/C12, 11 BNA OSHC 1814, 1983-84 CCH OSHD ¶ 26,830 (No. 30-3699, 1984), including aspects of the case that were settled by agreement of the parties. KDK Upset Forging, Inc., 1986-87 CCH OSHD ¶ 27,612 (No. 81-1932, 1987). The Act specifies, however, that a prevailing party may be denied recovery where the "position of the agency was substantially justified." The term "substantially justified" is explained in the Act's legislative history as follows:

The test of whether or not a Government action is substantially justified is essentially one of reasonableness. Where the Government can show that its case had a reasonable basis both in law and fact, no award will be made.

The standard, however, should not be read to raise a presumption that the Government position was not substantially justified, simply because it lost the case. Nor, in fact, does the standard require the Government to establish that its decision to litigate was based on a substantial probability of prevailing. S. Rep. No. 96-253, 96th Cong., 1st Sess. 6-7 (1979)

The House Judiciary Committee report also includes the following elaboration:

The standard and burden of proof adopted in [EAJA] represents an acceptable middle ground between an automatic award of fees and the restrictive standard proposed by the Department of Justice [that would permit fees to be awarded only where the government action was arbitrary, frivolous, unreasonable, or groundless]. It presses the agency to address the problem of abusive and harassing regulatory practices. It is intended to caution agencies to carefully evaluate their case and not to pursue those which are weak or tenuous. At the same time, the language of the section protects the government when its case, though not prevailing, has a reasonable basis in law and fact. H. R. Rep. No. 96-1418, 96th Cong., 2d Sess. at 13014

The legislative history of the Act, as originally adopted, indicates that Congress did not intend an automatic award of fees in every instance where the government loses a case. The Act was intended to deter the government from instituting legal proceedings which were not sound in law and fact and to compensate defendants for expenses incurred in litigating such unjustified government actions. It was not intended, however, to deter the government from bringing legitimate enforcement actions even if the possibility exists that some or all of the case may be lost due to the vicissitudes of litigation.

In 1985 amendments to the Act were made by the 99th Congress to extend and improve the Act as originally adopted. One of the principal areas which Congress deemed the courts were overlooking in implementing the Act related to narrow construction of the clause, "position of the agency." In adopting the amendments, Congress added the clause, "substantially justified on the basis of the administrative record, as a whole," and mandated that this clause be construed to encompass all agency action leading to litigation and not solely to the Government's position after litigation was instituted. Congress also mandated that the term "substantially justified" required a construction of more than "mere reasonableness." See House Judiciary Report 99-120, page 9, dated May 15, 1985, and directed the term must "be decided on a case by case basis due to the wide variety of factual contexts and legal issues which make up government disputes." Id. at pg 10. While Congress did make it clear that the Secretary's position must be examined, the 85 amendments did not significantly alter the test for "substantially justified". The test remains one of "reasonableness". Where it appears the Secretary's position has a sound foundation in both law and fact, no award should be made.

In keeping with the foregoing, the Secretary's position in this case both before and during litigation will be scrutinized to determine if it was "substantially justified"; i.e., was reasonably based on law and fact. The case will be viewed in terms of those items that were withdrawn by the Secretary and those items which were resolved through the litigation process.

Items Withdrawn by the Secretary

Prior to trial the parties engaged in extensive settlement discussions and negotiations in an effort to resolve all items upon which agreements could be reached. As a result of these efforts, the Secretary agreed to withdraw items 1(a) and 1(b) of serious Citation No. 1 which deals with alleged infractions of 29 C.F.R. § 1910.95, the standard dealing with occupational noise exposure.

The Secretary has submitted an affidavit of Rachael Fish, the compliance officer who conducted the inspection in this case, which sets forth the procedures followed in her inspection. This affidavit (Ex. J-53) reflects the sampling techniques employed by Fish were in accordance with accepted standards utilized in conducting such investigations and that the results of her testing indicated one molder, one shakeout operator, and one lathe operator were exposed to sound levels in excess of permissible limits set forth in the standard. The affidavit of Christopher J. Carney, the attorney representing the Secretary, reflects that during settlement discussions between the parties conducted shortly before trial, the attorney for applicant submitted documentation not previously disclosed to the Secretary which tended to support applicant's argument that the noise overexposure reported by Compliance Officer Fish may have resulted from the failure of the involved employees to follow applicant's work rules and might, therefore, support a defense of "isolated incidence of employee misconduct" (Ex. J-53). Based upon this new evidence, and in the interest of compromise and settlement, counsel for the Secretary agreed to dispose of serious Citation No. 1, items (a) and (b), short of litigation.

The actions of the Secretary with respect to serious Citation No. 1, items (a) and (b), at all stages of the proceeding were "substantially justified". The affidavit of Fish supports a conclusion that the charges relating to overexposure to noise were based upon a careful inspection of applicant's operations by a professional industrial hygienist who conducted her inspection in accordance with recognized and accepted procedures and concluded that the noise standard had been breached. The action of the Secretary in bringing the charges was based upon the facts collected by Fish and was, therefore, fully Justified. The action of Secretary's counsel in disposing of these items after new evidence was presented was an appropriate and reasonable response and does not undermine the facts which formed the basis for instituting the charges. Applicant is not entitled to an award with regard to serious Citation No. 1, items (a) and (b).

The withdrawal of "other" Citation No. 2, items 2(a) and 2(b), concerning exposure of employees silica and items 3(a) and 6 concerning exposure of employees to lead presents a somewhat different situation. The affidavit of Fish recites that she conducted monitoring and determined that one sandblaster was overexposed to silica. She further affies that interviews of employees disclosed there "inadequate training as to the hazards associated with lead contamination." While these sketchy facts might serve as a basis upon which to conclude that the Secretary was justified in bringing these charges, they are undermined by the failure of Carney's affidavit to deal directly with the reasons why the Secretary withdrew these items. Carney's affidavit is not informative with respect to the reasons for the Secretary's withdrawal of these items except to recite the decision was made "after it was determined it would be unlikely for the Secretary to prevail at hearing" and that decision "was not based on the conclusion the Secretary was not substantially justified in issuing these citations." Such generalized statements without further amplification suggest the underlying basis of the Secretary's charges may have been weak or tenuous. The Act and the Review Commission's regulations place the burden of persuasion on the Secretary to show why an award should not be made to a prevailing party. In this instance, the Secretary's failure to deal directly with the reasons for withdrawal has created a presumption that the underlying basis for the charges may not have been justified. Under these circumstances, applicant is entitled to an award for items 2(a), 2(b), 3(a) and 6.

Item 4(b) alleging a failure to perform fit tests at six-month intervals on various employees exposed to lead resulted in concession by both parties. The Secretary conceded three sub-items, and applicant conceded four. It is concluded that neither party prevailed as to this item, and no award will be made.

Items Resolved by the Litigation Process

As a result of litigation, the Secretary prevailed on two out of three serious items and three out of four items classified as "other" than serious. [[4/]]

Item 2(b) of serious Citation No. 1 charged a failure by the applicant to assure that employees exposed to lead above the permissible exposure limit took showers at the end of each work shift. This item was based on a determination by the Secretary's hygienist that one employee in applicant's polishing department (Ruben Spurlock) who was overexposed to lead did not shower at the end of his work shift. The fact that Spurlock was overexposed to lead was conceded by the applicant and was corroborated by applicant's own independent consultant. At the hearing, however, applicant introduced two exhibits in support of its claim that Spurlock's Sample was atypical. These exhibits tended to show that the test results obtained with respect to Spurlock were not representative of the polishing department as a whole and the item was vacated on this basis. This result does not establish that the Secretary's position had no basis in fact or law or that the Secretary's position was not "substantially justified." What it does reflect is a posthearing assessment by the court after all the evidence was received that the Secretary's evidence did not preponderate over that produced by applicant at trial. Such a result does not merit an award.

Item 5 of "other" Citation No. 2 charged applicant with a failure to provide medical examinations to employees assigned to an area in which they were exposed to lead at or above the action level. The evidence at trial established that all employees hired during the four and a half years preceding the hearing had received the required medical examinations. At hearing the Secretary contended that employees hired earlier than four and a half years were not given the required examinations but produced no testimony or other evidence to support this claim. [[5/]] It further appears the Secretary's agents could have ascertained the pertinent facts during the investigation stage of the proceeding with the exercise of diligence. In this instance, the court found the Secretary did not make a prima facie case and it clearly appears that the Secretary's position was without substantial justification Accordingly, applicant is entitled to fees and expenses as to item 5.

Determination of Award

Applicant is not entitled to recover fees and expenses with respect to any of the serious items contained in Citation No. 1. These were the significant items of the case and contained the most important issues to be decided. Recovery is limited to the charges contained in "other" Citation No. 2, items 2(a), 2(b), 3(a) and 6, which charges were withdrawn by the Secretary prior to trial and to item 5, which was litigated and lost by the Secretary for failure to make out a prima facie case. It is readily apparent that the total fees and expenses sought by applicant must be substantially reduced to reflect a reasonable amount which comports with those items upon which applicant is entitled to recover.

The affidavit of Mark V. Webber sets forth the attorney hours expended on a daily basis but does not allocate these hours on an item by item basis. It is impossible to allocate costs as to each item with any degree of precision. Accordingly, it is necessary to arrive at some basis upon which reasonable allocation can be made.

With regard to those items withdrawn by the Secretary prior to trial for which "substantial justification" was not established ("other" Citation No. 2, items 2(a), 2(b), 3(a) and 6), recovery will be limited to a pro rata share of the hours expended by applicant up to the time of the Secretary's withdrawal. Webber's affidavit reflects approximately 400 hours were devoted to the case up to the point of withdrawal. A total of 15 items were included in the citations (5 serious and 10 "other"). Applicant is eligible to recover on four of these items or, roughly, 25 percent of the total. Accordingly, applicant is entitled to a pro rata share of 100 hours computed at an hourly rate of $75.00, the maximum amount allowed by the statute, for a total of $7,500.00.

Applicant is entitled to recover with respect to only one item ("other" Citation No. 2, item 5) of the seven litigated by the parties. While a similar method to that employed above has been considered for this item, it is possible to isolate to some extent the hours expended by applicant in defending against this charge. Webber's affidavit reflects the expenditure of 14 hours directly attributable to taking the deposition of nurse Selvaggio (See Webber's affidavit for entries made on February 26 and 27, 1987, and March 4, 9, 13 and 25, 1987). An additional 36 hours will be allowed to cover the time involved in litigating and briefing this item for a total of 50 hours. An award of $3,750.00 will be made to cover attorney's fees for Citation No. 2, item 5.

In addition to attorney's fees, applicant has incurred expenses which can be attributed to the allowed items. The affidavit of Webber reflects costs of $182.00 in connection with the deposition of nurse Selvaggio arid $760.00 in expert fees attributable to the silica charge. Applicant will be allowed a total of $2,000.00 to cover the foregoing items and other attendant administrative costs and expenses.

ORDER

It is hereby ORDERED:

Applicant is awarded a total of $13,250.00 to cover fees and expenses incurred in connection with Citation No. 2, items 2(a), 2(b), 3(a), 5 and 6.

EDWIN G. SALYERS
Judge

Date: July 20, 1988

FOOTNOTES:

[[1/]] These citations pertain to Docket No. 86-978. Before the judge, No. 86-978 was consolidated with another docket number, 86-1610, involving unrelated citations. Central Brass withdrew its notice of contest in No. 86-1610, and the company's EAJA application does not involve that case. Nevertheless, the parties and the judge have continued to use both docket numbers to identify the EAJA case.

[[2/]] The judge allowed 100 hours at the statutory rate of $75 per hour.

[[3/]] Although 5 U.S.C. §504(c)(2) originally required that judicial review of agency awards use the "abuse of discretion" standard, that section was amended in 1985 to both preclude the United States from seeking judicial review of an agency award and to impose the "substantial evidence" test as the standard of review on those appeals taken by fee applicants.

[[4/]] The Secretary calls our attention to White v. United States, 740 F.2d 836 (11th Cir. 1984). In that case the court observed that the EAJA allows for recovery of fees incurred "during" adversary adjudications. However, the court did not limit recovery to those costs incurred "during" the adversary adjudication. Rather, it held that the first of any recoverable fees are the costs of preparing and filing the petition or complaint that commences the civil action. Therefore, even if we held that the adversary adjudication begins with the filing of the notice of contest, under White, the costs associated with the preparation and filing of the notice of contest would be recoverable.

[[5/]] We also note that 14 hours were allocated to the disputed deposition. The award status of these hours will be discussed infra.

[[6/]] We note that, like the judge, we find one fourth of the unallocatable hours to be compensable. However, our award is based on our determination of the relative difficulty and complexity of the items, and the degree of success obtained, not on a pro rata apportionment of the fees. While the facts of this case result in an award equivalent to a pro rating of the total hours expended, in other situations we may find awards significantly above or below a pro rata apportionment to be appropriate.

[[7/]] In this regard, it should be noted that Commission Rule 69, 29 C.F.R. § 2200.69, expressly gives opposing parties the right to cross-examine any witness whose testimony is introduced by an adverse party.

[[1/]] The Act provides:

An agency that conducts an adversary adjudication shall award, to a prevailing party other than the United States, fees and other expenses incurred by that party in connection with that proceeding, unless the adjudicative officer of the agency finds that the position of the agency was substantially justified or that special circumstances make an award unjust. Whether or not the position of the agency was substantially justified shall be determined on the basis of the administrative record, as a whole, which is made in the adversary adjudication for which fees and other expenses are sought.

[[2/]] Applicant opposes the filing of the Secretary's affidavits on grounds that these affidavits were untimely filed. After due consideration, applicant's motion is denied. All briefs, reply briefs, and affidavits are received and have been considered in conjunction with my deliberations.

[[3/]] Applicant has filed a motion to withhold disclosure of the financial information contained in the affidavit of Richard A. Chandler. This motion has been granted by separate order of the undersigned, and the record has been sealed with respect to this document (Ex. J-56).

[[4/]] Two of the "other" items (one involved a failure to notify employees of monitoring results and the other a failure to provide yearly audiograms and training concerning hearing protection) were downgraded to "de minimis" but were affirmed. This change in characterization does not diminish the fact that the Secretary had justification for litigating her position but only that the violations were considered by the court to be technical in nature rather than having a direct bearing on safety and health.

[[5/]] It is noted that applicant found it necessary to take the deposition of Judy Selvaggio, the nurse who administered the examinations, to defend against this charge.