[Congressional Record Volume 143, Number 119 (Wednesday, September 10, 1997)]
[Extensions of Remarks]
[Pages E1720-E1721]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF THE FAIR ACCESS TO INDEMNITY AND REIMBURSEMENT [FAIR] 
                                  ACT

                                 ______
                                 

                         HON. HARRIS W. FAWELL

                              of illinois

                    in the house of representatives

                     Wednesday, September 10, 1997

  Mr. FAWELL. Mr. Speaker, I rise today to introduce a bill which will 
level the playing field

[[Page E1721]]

for small businesses as they face an aggressive National Labor 
Relations Board [NLRB] with vast expertise and resources. The Fair 
Access to Indemnity and Reimbursement Act--the FAIR Act--is about being 
fair to small businesses. It is about giving small entities, including 
labor organizations, the incentive they need to fight meritless claims 
brought against them by an intimidating bureaucracy which often 
strongarms those who have limited resources to defend themselves.
  The FAIR Act amends the National Labor Relations Act to provide that 
a small business or labor organization which prevails in an action 
against the NLRB will automatically be allowed to recoup the attorney's 
fees and expenses it spent defending itself. The FAIR Act applies to 
any employer who has not more than 100 employees and a net worth of not 
more than $1.4 million. It is these small entities which are most in 
need of the FAIR Act's protection.
  Mr. Speaker, the FAIR Act ensures that those with modest means will 
not be forced to capitulate in the face of frivolous actions brought by 
the NLRB, while making the agency's bureaucrats think long and hard 
before they start an action against a small business. By granting 
attorney's fees and expenses to small businesses who know the case 
against them is a loser, who know that they have done nothing wrong, 
the FAIR Act gives these entities an effective means to fight against 
abusive and unwarranted intrusions by the NLRB. A government agency the 
size of the NLRB--well-staffed, with numerous lawyers--should more 
carefully evaluate the merits of a case before bringing a complaint 
against a small business, which is ill-equipped to defend itself 
against an opponent with such superior expertise and resources. The 
FAIR Act will provide protection for an employer who feels strongly 
that its case merits full consideration. It will ensure the fair 
presentation of the issues.
  The FAIR Act says to the NLRB that if it brings a case against a 
little guy it had better make sure the case is a winner, because if the 
Board loses, if it puts the small entity through the time, expense and 
hardship of an action only to have the business or labor organization 
come out a winner in the end, then the Board itself will have to 
reimburse the employer for its attorney's fees and expenses.
  The FAIR Act's 100-employee/$1.4 million net worth eligibility limits 
represent a mere 20 percent of the 500-employee/$7 million net worth 
limits that are in the Equal Access to Justice Act [EAJA]--an act 
passed in 1980 with strong bipartisan support to level the playing 
field for small businesses by awarding fees and expenses to parties 
prevailing against agencies. Under the EAJA, however, the Board--even 
if it loses its case--is able to escape paying fees and expenses to the 
winning party if the Board can show it was substantially justified in 
bringing the action.

  When the EAJA was made permanent law in 1985, the Congress made it 
clear in committee report language that the NLRB should have to meet a 
high burden in order to escape paying fees and expenses to winning 
parties. Congress said that for the agency to be considered 
substantially justified it must have more than a reasonable basis for 
bringing the action. Unfortunately, however, courts have undermined 
that 1985 directive from Congress and have interpreted substantially 
justified to mean that the Board does not have to reimburse the winner 
if it had any reasonable basis in law or fact for bringing the action. 
The result of all this is that the Board easily is able to win an EAJA 
claim and the prevailing business is almost always left high and dry. 
Even though the employer wins its case against the Board, the Board can 
still avoid paying fees and expenses under the EAJA if it meets this 
lower burden. This low threshold has led to egregious cases in which 
the employer has won its NLRB case--or even where the NLRB has 
withdrawn its complaint after forcing the employer to endure a costly 
trial or changed its legal theory in the middle of its case--and the 
employer has lost its followup EAJA claim for fees and expenses.
  Since a prevailing employer faces such a difficult task when 
attempting to recover fees under the EAJA, very few even try to 
recover. For example, Mr. Speaker, in fiscal year 1996, the NLRB 
received only eight EAJA fee applications, and awarded fees to a single 
applicant--for a little more than $11,000. In fiscal year 1995, the 
Board received only nine fee applications from prevailing parties and 
awarded fees to only four applicants totaling less than $50,000. 
Indeed, during the 10-year period from fiscal year 1987 to fiscal year 
1996, the NLRB received a grand total of 100 applications for fees. 
This small number of EAJA awards arises in an overall context of 
thousands of cases each year. In fiscal year 1996 alone, for example, 
the NLRB received nearly 33,000 unfair labor practice charges and 
issued more than 2,500 complaints, 2,204 of them settled at some point 
post-complaint.
  The NLRB understandably argues the lack of successful EAJA claims is 
due to it carefully issuing only worthy complaints--those it is 
substantially justified in bringing. Does anyone believe this? Of 2,500 
complaints last year the Board was unreasonable one time? In fact, Mr. 
Speaker, employers who have prevailed against the Board recognize the 
long odds of winning, and high expense of undertaking, additional EAJA 
litigation. Since it is clear the EAJA is underutilized at best, and at 
worst simply not working, the FAIR Act imposes a flat rule: If you are 
a small business, or a small labor organization, and you prevail 
against the Board, then you will automatically get your attorney's fees 
and expenses.
  The FAIR Act adds to new section 20 to the National Labor Relations 
Act. Section 20(a) simply states that a business or labor organization 
which has not more than 100 employees and a net worth of not more than 
$1.4 million and is a prevailing party against the NLRB in 
administrative proceedings shall be awarded fees as a prevailing party 
under the EAJA without regard to whether the position of the Board was 
substantially justified.

  The FAIR Act awards fees and expenses in accordance with the 
provisions of the EAJA and would thus require a party to file a fee 
application pursuant to existing NLRB EAJA regulations, but the 
prevailing party would not be precluded from receiving an award by any 
burden the NLRB could show. If the Board loses an action against the 
small entity, the Board pays the fees and expenses of the prevailing 
party.
  Section 20(b) of the FAIR Act applies the same rule regarding the 
awarding of fees and expenses to a small employer or labor organization 
engaged in a civil court action with the NLRB. This covers situations 
in which the party wins a case against the Board in civil court, 
including a proceeding for judicial review of Board action. The section 
also makes clear that fees and expenses incurred appealing an actual 
fee determination under section 20(a) would also be awarded to a 
prevailing party without regard to whether or not the Board could show 
it was substantially justified.
  In adopting EAJA case law and regulations for counting number of 
employees and assessing net worth, an employer's eligibility under the 
FAIR Act is determined as of the date of the complaint in an unfair 
labor practice proceeding or the date of the notice in a backpay 
proceeding. In addition, in determining the 100-employee limit, the 
FAIR Act adopts the NLRB's EAJA regulations, which count part-time 
employees on a proportional basis.
  Mr. Speaker, the FAIR Act will arm small entities--businesses and 
labor organizations alike--with the incentive to defend themselves 
against the NLRB. The FAIR Act will help prevent spurious lawsuits and 
ensure that small employers have the ability to effectively fight for 
themselves when they have actions brought against them by a vast 
bureaucracy with vast resources.
  If the NLRB wins its case against a small employer than it has 
nothing to fear from the FAIR Act. If, however, the NLRB drags an 
innocent small employer through the burden, expense, heartache and 
intrusion of an action that the employer ultimately wins, reimbursing 
the employer for its attorney's fees and expenses is the very least 
that should be done. It's the FAIR thing to do. I urge my colleagues in 
the House to support this important legislation and look forward to 
working with all Members in both the House and Senate in passing this 
bill.

                          ____________________