E.C.C.O. III Enterprises, Inc.

Plain-English summary

E.C.C.O. III Enterprises sought attorney fees and expenses after an earlier decision affirmed all five contested citation items but reduced three classifications from willful to serious. The judge first found the application deficient because the company did not provide the required detailed net-worth exhibit as of the date of its notice of contest and did not clearly state its employee count as of that date. She also held that E.C.C.O. was not a prevailing party because no citation item was dismissed, all items remained serious, and the $23,000 assessed penalty exceeded twice the company's final $10,000 settlement offer. Finally, the Secretary's case was substantially justified because the evidence supported litigating the serious, repeated, and willful allegations even though the willful classifications were not sustained. The EAJA application was denied.

Decision snapshot

• Cited standard(s): The public release does not identify the underlying safety standards by number.
• Outcome: Procedural. The application for attorney fees and expenses was denied.
• Key point: Reduced classifications alone do not make an employer a prevailing party when every citation item remains affirmed, and an EAJA applicant must document eligibility as of the notice-of-contest date.

Full text (OSHRC public release)

                               UNITED STATES Of AMERICA

OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION
One Lafayette Centr8
1120 20th Street, N.W. -9th Floor
Washington, DC 200364419

SECRETARY OF LABOR
Complainant,
v. OSHRC DOCKET
NO. 924638
E.C.C.O. III ENTERPRISES, INC.
Respondent.

                  NOTICE OF DOCKETING
            OF ADMINIST&YIIVE LAW JUDGE’S DECISION

The Admhistrative
------ - Law
----- Judge’s
-- ReDort in the above referenced case was
docketed &th the (Iommission % l&&&r
v-w---- ---- ---
6,1 199iI - The-decision
_ _ __ --- --~ - - of the Judee
31 become-a fir&l order of the Commission on January 5, 1995 unless a ”
Commission member--- directs
_~ _ review of the decision on or before that date. ANY
PARTY DESIRING REVIEW OF THE JUDGE’SD&ISION BY THE
COMMISSION MUST FILE A PETITION FOR DISCRETIONARY REVIEW.
Any such petition should be received by the Executive Secretary on or before
December 27, 1994 in order to permit sufficient time for its review. See
Commission Rule 91, 29 C.F.R. 2200.91.
AU further pleadings or communications regarding this case shall be
addressed to:
Executive Secretary
Occupational Safety and Health
Review Commission
1120 20th St. N.W., Suite 980
Washington, D.C. 20036-3419

Petitioning parties shall also mail a copy to:
Daniel J. Mick, Esq.
Counsel for Regional Trial Liti ation
Office of the Solicitor, U.S. DOc
Room S4004
200 Constitution Avenue, N.W.
Washington, D.C. 20210
If a Direction for Review is issued by the Commission, then the Counsel for
Regional Trial Litigation will represent the Department of Labor. Any party
havmg questions about review nghts may contact the Commission’s Executive
Secretary or call (202) 6063400.
FORTHE CQB&@SSION fi /

Date: December 6, 1994
Docket No. 92-0638

NOTICE IS GIVEN TO THE FOLLOWING:

Daniel J. Mick, Esq.
Counsel for Regional Trial Litigation
Office of the Solicitor, U.S. DOL
Room S4004
200 Constitution Ave., N.W.
Washington, D.C. 20210

Patricia Rodenhausen, Esq.
Regional Solicitor
Office of the Solicitor, U.S. DOL
201 Varick St., Room 707
New York, NY 10014

Ronald G. Dunn, Esquire
Gleason, Dunn, Walsh & O’Shea
11 North Pearl Street
Albany, New York 12207

Barbara Hassenfeld-Rutberg
Administrative Law Judge
Occupational Safety and Health
Review Commission
Room 420
McCormack Post Office and Courthouse
Boston, MA 0210!9-4501
 UNtTED STATES of AMERCA
OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION
JOHN W. McCORMACK POST OFFICE AND COURTHOUSE
ROOM 420
BOSTON, MASSACHUSElTS 02lO9-4501

PHONE: FAX:
COM (617) 223-9746 COM (617) 223-GW
FTS(617) 223-9746 FTS (617) 223-dOC4

SECRETARY OF LABOR :
Complainant ..

V . OSHRC Docket No. 92-0638
E.b.C.0. III ENTERPRISES, INC., 1
Respondent ..

         This proceeding arises under the Occupational S&etv and Health Act of 1970,29

U.S.C. $5 651-678 (1970) (“the Act”). It relates to a De&n and Order issued by Judge
Richard Gordon which became a Final Order of the Occupational Safety and Health
Review Commission (“Commission”) on September 2, 1993 in this matter resolving the
merits of the case.
Respondent E.C.C.O. III Enterprises, Inc. (“ECCO”) has submitted an Application
for award of attorney fees and other expenses under the Equal Access to Justice Act
(%4JA”), 5 U.S.C. 5 504, made applicable to Commission proceedings by 29 C.F.R. Part
2204.
ECCO is a corporation claiming it was the “prevailing party” as defined by EAJA
and has met the requirements as an “eligible party”. Under EAJq an eligible party who is
the prevailing party is entitled to an award of attorney fees and other expenses unless the
Secretary of Labor (“Secretary”) meets his burden that his position was “substantially
justified”. .
On April 7,1992, the Secretary filed the instant complaint against the respondent
in Docket No. 92-0638. The complaint amended the citations and alleged three of the
items to be repeat violations; thus, there were five violations in two citations: citation 1,
item I alleged a serious-repeat violation; citation 1, item 2 alleged a serious violatio%
citation 2, item 1 alleged a serious-repeat-wilEA violation; citation 2, item 2 alleged a
serious-wilkl violation; and citation 2, item 3 alleged a serious-repeat&Uful violation.
 According to the AfIidavit filed in the matter pending herein by Barnett Silverstein,
attorney for the complainant, there were three settlement offers made by the respondent.
The first one was on April 21, 1992, when respondent’s counsel suggested settling this
matter by reducing serious-repeat citation 1, item 1 and its proposed $4,000.00 penalty to
non-serious with a zero penalty; deleting serious citation 1, item 2 and its proposed
$4,000.00penalty; deleting serious-repeat-willful citation 2, item 1 and its proposed
penalty; deleting serious-willful citation 2, item 2 and its proposed $35,000.00
$35,OOO.OO
penalty; and reducing serious-repeat-willful citation 2, item 3 and its proposed $35,000.00
penalty to a serious violation with a penalty of 50% of what a serious violation would
have been.
On September 8, 1992, respondent’s counsel offered to settle this case for
$4,000.00 if three of the five cited violations would be withdrawn and the remaining two
items would be reclassified as per respondent counsel’s suggestion of April 2 1, 1992. On
September 9, 1993, respondent’s counsel raised its final settlement offer to $lO,OOO.OO
provided three of the five items were withdrawn and the remaining two items would be
reclassified as serious.
No settlement was reached and the hearing on this case was held before Judge
Gordon on September 22 and 23, 1992,and continued on January 26,27, and 28, 1993.
He affirmed all items including the items amended to “repeat” in both citations of the
Secretary’s complaint, except he changed the “serious-willful” characterization of the three
items on citation 2 to “serious”. Thus, citation 1, item 1 was affirmed as a serious-repeat
violation; citation 1, item 2 was timed as a serious violation; citation 2, item 1 was
affirmed as a serious-repeat violation; citation 2, item 2 was af5rmed as a serious
violation; and citation 2, item 3 was affirmed as a serious-repeat violation. Judge Gordon
also adopted the Secretary’s proposed penalties for citation 1 and assessed $4,000.00 for
each item of citation 1 for a total of $8000.00. For citation 2, he assessed $S,OOO.OO
for
each item for a total of $15,000.00 in penalties, thereby reducing the original proposed
penalties for the “willful” classifications of that citation. Thus, for both citations, the total
of the monetary penalties assessed was $23,000.00.
For the purpose of eligibility, EAJA requires a corporate applicant to state that it
employs no more than 500 employees and to provide a .m exhibit showing a net
worth of not more than $7 million (emphasis added). Both requirements of the number of
.
employees and the net worth must be stated &the date the notxe of contest W-
(emphasis added). 29 C.F.R.§$jZ204.105 and 2204.202. Here, in its Application, ECCO
merely stated that it has “at all relevant times” employed fewer than five hundred
employees. Respondent’s net worth exhibit dated September 23,1993 from Anchin, Block

                                            2

& Anchin does not comply with the requirements of EAJA as it fails to provide a detailed
.
&&& showing the Et wad of the respondent m of the da& of the mce of contest.
Because of these deficiencies, there is not the proper evidence upon which a finding can
be made as to whether or not the respondent is an “eligible party” to receive an award of
attorney fees and other expenses. Even if respondent provided the necessary
documentation to make a finding that it is an “eligible party”, I find that ECCO would still
not be eligible for an award of attorney fees as it is not the “prevailing party”.
Respondent claimed to be the “prevailing party” and cited as its authority,
. .
ler Contfacw Corporatrpn 11 OSHC 1841, 1845 (1984) wherein the
Commission held that “the party seeking fees need not have prevailed as to the central
issue in the case but only as to a&Crete shtive portion of the proceeding”
. (emphasis
added). Also, the United States Supreme Court has held that the standard for determining
whether a party is a prevailing party is that the plaintiffs may be considered “prevailing
parties” for attorney’s fee purposes if they succeed on any significant issue in the litigation
which achieves some of the benefits the parties sought in bringing suit. I&l&y v.
m, 103 S.Ct. 1933, 1939 (1983).
. .
In HP. Fo wler Contracting Corpat, Fowler was found by the Commission to
be the prevailing party in a discrete substantive portion of that proceeding. In that case,
there was a settlement agreement wherein one will%1item was withdrawn, two wiW1
items were reclassified as serious, the total penalty was reduced, and five other items were
affirmed. The Commission stated that “Under these circumstances, we conclude that,
t&n CISa wkk, the withdrawal of one willfi~litem, the downgrading of two others, and .
the concomitant substantial reduction in total penalties, constitute a discrete substantive
portion of the proceeding on which Fowler prevailed” (emphasis added).
The present case is clearly distinguishable from Fowler in several respects. In the
instant case, respondent’s Answer denied all five items and even in its settlement offers, it
wanted items dismissed. In the decision rendered by Judge Gordon, no items were
dismissed; thus, the respondent did not prevail on any of these significant issues.
Therefore, it cannot be held that taken as a whole, that the respondent prevailed on a
discrete substantive portion of the proceedings; indeed, the m succeeded on the
significant issues in the litigation.
Furthermore, there was a hearing and a decision in this case as all efforts to settle
failed as distinguished Corn Fowl where there was a settlement and one willful item was
actually withdrawn by the complainant. Finally, in the instant case, the only position
taken by the complainant not fLIly sustained and upheld was the “serious-willfX’
classification of the second citation items which the judge changed to *‘serious”.

                                            3

Respondent, however, did not prevail on any single item as no item was dismissed, the
assessed penalties were more than double the respondent’s final settlement offer, and were
of amounts consistent with the findings of serious violations.
The respondent’s position herein that it is the “prevailing party” cannot escape
comparison to a criminal defendant claiming to be a prevailing party if he is charged with
murder in the first degree, and after a trial is found guilty of murder in a lesser degree or
of voluntary manslaughter. In the criminal instance, the defendant’s intent and state of
mind are the key issues determining the outcome, but the charges are all felonies and thus
of a serious nature. Here, all the items of the citations were found to be “serious”, albeit
not also “willfW as alleged in citation 2, and what was at issue for a finding of a “willfW
characterization of the violations also involved the respondent’s intent and state of mind.
In consideration of the above factors, I find the complainant to be the “prevailing
Party” l

         Even if ECCO had been found to be the prevailing party, which it is not, the

complainant here was substantially justified in pursuing its complaint. The phrase
“substantially justified” means justified in substance or in the main, i.e., justified to a
degree that could satisfjl a reasonable person. pierce v. Underwo&, 487 U.S.552, 564;
108 S.Ct. 2541,255O (1988). The complainant presented witnesses who had attested to
the “wi11fi#’nature of the citation 2 serious items; however, despite those witnesses,
Judge Gordon found “serious” violations. A review of the facts of the record clearly
establishes that the complainant’s position in issuing the citations, amending three items to
“repeat” in the complaint and litigating the issues was substantiaIly justified. Indeed, the
. . .
decision affirmed the senou n-e of all the items of et-s I and 2 . Therefore, I find
the complainant was substantially justified in bringing its citations and complaint.

         In conclusion, I find that the complainant was the prevailing party, and

additionally, it met its burden of proof that its position was “substantially justified” in
bringing the action. Accordingly, ECCO’s Application for an award of attorney fees and
other expenses under EAJA is denied,
It is so ORDERED.

                                BARBARA L. HASSENFELD-IkUTBERG
                                Judge, OSHRC

Dated: December 1, 1994
Boston, MA