K.D.K. Upset Forging, Inc.

Plain-English summary

OSHA cited K.D.K. for failing to post the required employee notice, then withdrew the citation before hearing. K.D.K. applied for $600 in attorney's fees under the Equal Access to Justice Act. The Commission held that K.D.K. was the prevailing party because withdrawal gave it the principal relief it sought and prevented the citation from carrying future legal and penalty consequences. The Secretary provided no affidavit or other evidence showing that the citation or claimed abatement representation was substantially justified. The Commission therefore found K.D.K. entitled to fees and costs and remanded for calculation of the proper award.

Decision snapshot

• Cited standard(s): 29 C.F.R. § 1903.2(a)(1)
• Outcome: Denial of EAJA application reversed; case remanded to determine the fee and cost award.
• Key point: Withdrawal can make an employer a prevailing party, and unsupported allegations do not establish substantial justification.

Full text (OSHRC public release)

Docket No. 81-1932

SECRETARY OF LABOR,

Complainant,

v.

K.D.K. UPSET FORGING, INC.,

Respondent.

OSHRC Docket No. 81-1932

DECISION

BEFORE: BUCKLEY, Chairman, RADER and WALL, Commissioners.

BY THE COMMISSION:

This case is before the Occupational Safety and Health Review Commission under 29
U.S.C. � 661(j), section 12(j) of the Occupational Safety and Health Act of 1970, 29
U.S.C. �� 651-678 ("the Act"). The Commission is an adjudicatory agency,
independent of the Department of Labor and the Occupational Safety and Health
Administration. It was established to resolve disputes arising out of enforcement actions
brought by the Secretary of Labor under the Act and has no regulatory functions. See
section 10(c) of the Act, 29 U.S.C. � 659(c).

The issue before the Commission is whether Administrative Law Judge Sidney J. Goldstein
erred in denying the employer's motion and application for attorneys' fees under the Equal
Access to Justice Act (EAJA), 5 U.S.C. � 504. For reasons that follow, we reverse the
judge and remand for a determination of the appropriate award.

I

Following an OSHA inspection, the Secretary issued K.D.K. Upset Forging, Inc., a citation
that alleged a violation of 29 C.F.R. � 1903.2(a)(1) on the grounds that the employer
failed to post an OSHA notice informing employees of their rights and obligations under
the Act. The citation stated that "immediate" abatement was required; no penalty
was proposed. K.D.K. filed a timely notice of contest. Further, in its answer to the
Secretary's complaint, K.D.K. denied that it had committed a violation. Thus, the only
controverted matter at issue was whether K.D.K. had failed to post the OSHA notice.
Abatement was an issue only if there was a violation.

Before the case proceeded to hearing, the Secretary filed a motion to withdraw the
citation. The motion gave two reasons:

1. Respondent has represented that abatement of the cited condition has been achieved.

2. Based upon this representation, Complainant has determined that the instant case is an
   improper vehicle for litigation.

K.D.K. did not respond to the motion, which was granted on May 18, 1982. K.D.K. then filed
a motion and application for attorneys' fees under the EAJA in the amount of $600.[[1]]
Portions of the application requested reimbursement for fees and expenses incurred before
October 1, 1981, the effective date of the EAJA.

Judge Goldstein rejected the application on the grounds that K.D.K. was not the prevailing
party and that the Secretary was substantially justified in issuing the citation. The
judge noted the representation in the motion to withdraw that the alleged violation had
been "abated," and relied on the citation's allegation that K.D.K. had not
posted the requisite OSHA notice before the inspection. The judge also observed that
K.D.K. did not allege that it was in compliance with the standard, or offer any reason for
its failure to comply.

II

Under the Equal Access to Justice Act, a private party that prevails against the federal
government in an administrative adjudication (including a contest of an OSHA citation) and
meets certain limits on net worth and number of employees, is entitled to an award of
attorney fees and other expenses, unless the position of the government as a party to the
proceeding was substantially justified or special circumstances make an award unjust. 5
U.S.C. �� 504(a)(1) & 504(b)(1)(B); H.P. Fowler Contracting Corp., 84 OSAHRC 9/A2,
11 BNA OSHC 1841, 1843, 1983-84 CCH OSHD �  26,830, p. 34,356 (No. 80- 3699, 1984).
The threshold issue in this case is whether the applicant was a "prevailing
party" in its dispute with the government. See 5 U.S.C. � 504(a)(1). Although the
term is not defined in the EAJA, an applicant is considered to be the "prevailing
party" for the purpose of attorneys' fees statutes if it has succeeded on any of the
significant issues involved in the litigation, and if, as a result of that success, the
applicant has achieved some of the benefit it sought in the litigation. Hensley v.
Eckerhart, 103 S.Ct. 1933, 1939 (1983); Busche v. Burke, 649 F.2d 509, 521 (7th Cir.
1981); H.P. Fowler Contracting Corp., 11 BNA OSHC at 1845, 1983-84 CCH OSHD at p. 34,358.

K.D.K. argues that it must be deemed the prevailing party because it achieved the
precise benefit it sought in filing its notice of contest: the vacation of the citation.
The Secretary, on the other hand, argues that abatement is the sine qua non of OSHA's
enforcement effort, that abatement was the objective he sought in litigation, and that the
citation was withdrawn only after achievement of that goal.

We find that K.D.K. showed that it was the prevailing party. First, K.D.K's primary
purpose in filing its notice of contest was to have the citation vacated. That purpose has
been achieved. Second, tangible benefits have accrued to K.D.K. as a result of the
withdrawal. With the citation withdrawn, K.D.K. has avoided an abatement order that could
be enforceable through failure-to-abate penalties under sections 10(b), 11(b) and 17(d) of
the Act, 29 U.S.C. �� 659(b), 660(b), 666(d). It has also avoided assessment of a
penalty, which is mandatory for a posting violation under section 17(i) of the Act, 29
U.S.C. � 666(i) (1982).[[2]] The withdrawn citation also cannot serve as a foundation for
a finding under section 17(a) of the Act, 29 U.S.C. � 666(a), that K.D.K.
"repeatedly" violated the standard, nor can it be considered as part of K.D.K.'s
history of previous violations under section 17(j) of the Act, 29 U.S.C. � 666(j) (1982).

Despite these benefits, the Secretary argues that he prevailed because the citation was
withdrawn only after he achieved his primary goal of abatement. Even assuming there was a
violation here, the Secretary's argument falls short for two reasons. First, that the
Secretary may have achieved his objective does not nullify the fact that K.D.K. achieved
its own. Even if abatement were the central issue, the Secretary's alleged success does
not of itself bar an employer from an award of fees if the employer was successful on any
significant issue that achieves some of the benefits the employer sought in contesting the
  citation. H.P. Fowler Contracting Corp., 11 BNA OSHC at 1875, 1983-84 CCH OSHD at
pp. 34,358. As our discussion above makes clear, K.D.K. was successful on the only
significant issues other than abatement.

Second, implicit in the Secretary's argument is the premise that for KDK to establish
it was the "prevailing party," K.D.K. must show that it did not abate. The only
way for K.D.K. to do this is to show either (1) that it was in violation of the standard
and remains so, or (2) that it is not and never was in violation. As to (1), the
fundamental absurdity of requiring an employer to prove its own misconduct to establish
itself as a "prevailing party" needs no elaboration. As to (2), requiring the
employer to prove its innocence would impermissibly shift to the employer the Secretary's
burden of showing that the citation was "substantially justified."

III

Because K.D.K. has established that it was the prevailing party, it is entitled to an
award of fees and costs unless the Secretary establishes that his position was
substantially justified or the record shows special circumstances which would make an
award unjust. Hocking Valley Steel Erectors, Inc., 83 OSAHRC 28/A2, 11 BNA OSHC 1492,
1983-84 CCH OSHD � 26,549 (No. 80- 1463, 1983); 29 C.F.R. � 2204.106(a)&(b).

The Secretary argues that the citation was substantially justified. On the assumption
that an employer's representation of "abatement" implies that a violative
condition existed, he contends that K.D.K.'s representation that it abated violated its
"pro forma" denial in its answer that a violation existed. Moreover, he argues,
his decision to withdraw should not be taken to imply that the citation was not
substantially justified. The Secretary observes that many considerations, such as
additional time and expense needed to pursue the matter, enter into a decision to
withdraw.

K.D.K. vigorously denies that it ever represented that it abated, and argues that it
was error for the judge to rely on the Secretary's unsupported allegation that abatement
had occurred. Moreover, K.D.K. argues, the judge improperly ignored its answer and
accepted at face value the allegations in the citation in finding that the citation was
substantially justified.

To determine whether the Secretary established that its position was substantially
justified, the Commission must look to the record. 29 C.F.R. � 2204, 307(a)(1). If the
Secretary's contentions are based on factual assertions not already supported by the
record, he may file supporting affidavits or request further proceedings to establish
those assertions. See 29 C.F.R. 2204.303(c).

The record lacks any evidence that would support a finding that the Secretary was
substantially justified in issuing the citation. Certainly, we cannot accept as true the
allegation of a violation in the citation and complaint since it was that allegation that
was controverted and at issue. What the Secretary needed but failed to produce was some
evidence that could support his claim that he was justified in believing that a posting
violation had existed. This could have been accomplished by submitting an affidavit from
the compliance officer regarding what he learned during the course of his inspection. Such
an affidavit would have gone far to show that the decision to issue the citation was
substantially justified.

Similarly, we cannot accept the Secretary's unsupported allegation that K.D.K.
represented that it had "abated" the violation. While such a representation may
have implied that a violative condition had once existed, K.D.K. denies ever having made
such a statement, and the Secretary has failed to introduce any evidence to support his
claim that the representation was made. Again, the Secretary could have submitted an
affidavit from the official to whom the representation was made. However, no attempt was
made to supplement the record.

Given the lack of evidence or supporting documentation, we can only conclude that the
Secretary failed to establish that his position in the case was substantially justified.

IV

Despite his failure to establish that his position was "substantially
justified," the Secretary argues that it would be exalting form over substance to
hold that, after expeditiously withdrawing the citation, he is liable for attorneys' fees.
The Secretary contends that such a holding would rob him of prosecutorial discretion,
compelling him to proceed to trial even when he has nothing more to gain. This, the
Secretary states, was not the intent of the EAJA.

Even when an applicant is the prevailing party and the government fails to establish
that its position was substantially justified, the adjudicative agency may deny an award
if special circumstances make an award unjust. 5 U.S.C. � 504(a)(1). We do not agree with
the Secretary that the withdrawal of the citation here qualifies as such a special
circumstance.

The purpose of the EAJA is to ensure that parties will not be deterred from defending
against unjustified government action because of the expense involved in securing the
vindication of their rights. H.R. Report No. 120, Part I, 99th Cong. 1st Sess. 4 (1985),
reprinted in 1985 U.S. Code Cong. & Ad. News 132, 133. To allow the Secretary to
withdraw without EAJA liability could subject an employer to substantial unrecoverable
costs, especially if withdrawal takes place after discovery. This would violate the spirit
of the EAJA and discourage employers from seeking vindication of their rights. Indeed, the
legislative history of the EAJA makes clear that it was never the intent of Congress to
apply the EAJA only to those proceedings litigated to a conclusion:

A party may be deemed prevailing if he obtains a favorable settlement of his case . .
.; if the plaintiff has sought a voluntary dismissal of a groundless complaint . . .; or
even if he does not ultimately prevail on all issues . . .

[Citations omitted.]

H.R. Rep. No. 1418, 96th Cong., 2d Sess. 11 (1980), reprinted in 1980 U.S. Code Cong.
& Ad. News 4990.

The Secretary's additional argument that finding him liable for fees after withdrawal
would encourage him to proceed to hearing lacks merit. First, if the citation was not
justified, prolonging the proceedings would only increase the potential EAJA award.
Second, if the Secretary had been justified in issuing the citation, but was to learn
later that his position lacks merit, his failure to terminate the case when the lack of
merit was discovered would subject him to EAJA liability for costs incurred from that
point forth. See Hocking Valley Steel Erectors, 11 BNA OSHC at 1497, 1983-84 CCH OSHD at
pp. 33,907. Obviously, then, the EAJA provides the Secretary with every reason to withdraw
a citation without substantial justification before a hearing begins. It also provides him
with a way of avoiding the payment of attorneys' fees: to withdraw once the lack of
substantial justification appears and to provide evidence that until the withdrawal
occurred, his position was substantially justified. Inasmuch as he has failed to present
such evidence here, however, his argument must be rejected.

V

Having found K.D.K to be the prevailing party, that the Secretary failed to establish that
his position was substantially justified, and that there are no special circumstances that
would render an award unjust, we find that K.D.K. is entitled to an award of fees and
costs under the EAJA. The case is remanded to Judge Goldstein for a determination of the
proper award. We would note that the Secretary argued that the EAJA does not contemplate
the recovery of costs incurred prior to October 1, 1981, the effective date of the EAJA.
Although the EAJA may have originally been ambiguous as to this point, it has been amended
to clarify that costs incurred before October 1, 1981 are recoverable. Pub. L. 99- 80 � 5
(August 5, 1985), 99 Stat. 186; H.R. Rep. 120, 99th Cong. 1st Sess. 21 (1985), reprinted
in 1985 U.S. Code Cong. & Ad. News 149.

Accordingly, the judge's decision is reversed. The case is remanded for a determination
of an appropriate award under the EAJA.

FOR THE COMMISSION

Ray H. Darling, Jr.

Executive Secretary

DATED: June 10, 1986

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FOOTNOTES:

[[1]] We would be remiss if we did not point out that this is a case that the parties
could and should have settled. Instead, significant time and effort of both parties and
the Commission have been expended unproductively.

[[2]] Previously codified at 29 U.S.C. � 666(h) (1976).