Saipan Koreana Hotel

Plain-English summary

OSHA cited Saipan Koreana Hotel under a temporary labor camp water-supply standard after finding contaminated water in employee housing, then withdrew the citation after the condition was corrected. The hotel sought attorney's fees under the Equal Access to Justice Act, and the judge twice denied the request after finding the Secretary's position substantially justified. On review, the Secretary withdrew that objection and conceded that the hotel was entitled to a fee award. The Commission remanded for the judge to decide the reasonable portion of eight disputed hours and the supplemental fees incurred during the fee litigation. It directed the judge to clarify the Secretary's proposed payment, recognized that the hotel was entitled to reasonable fees through the Secretary's concession, and limited the attorney rate to $125 per hour.

Decision snapshot

• Cited standard(s): 29 C.F.R. § 1910.142(c)(1)
• Outcome: The case was remanded to determine the amount of the hotel's EAJA fee award.
• Key point: Once entitlement was conceded, the remaining inquiry was the reasonableness of the original and supplemental fee requests, including fees incurred litigating the fee claim itself.

Full text (OSHRC public release)

Saipan Koreana Hotel, Docket No. 02-2129

SECRETARY OF LABOR,

Complainant,

v.

OSHRC Docket No. 02-2129

SAIPAN KOREANA HOTEL,

Respondent.

APPEARANCES:

Howard M. Radzely, Esq., Joseph M. Woodward, Esq., Daniel J. Mick, Esq., Peter J. Vassalo, Esq.,

U.S. Department of Labor, Washington, D.C.

For the Complainant

Joseph E. Horey, Esq., O’Connor Berman Dotts & Banes, Saipan, MP

For the Respondent

DECISION AND REMAND

Before: RAILTON, Chairman, and ROGERS, Commissioner.

BY THE COMMISSION:

This case arises under the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504,
and is before the Commission a second time on review. In two decisions, one on remand
from the Commission, Judge Robert A. Yetman rejected an application for EAJA fees
filed by Saipan Koreana Hotel (Saipan) based on his finding that the Secretary was
substantially justified in issuing Saipan a citation under a temporary labor camp standard
set forth at 29 C.F.R. § 1910.142(c)(1).

For the following reasons, we remand the case to the judge for further proceedings
in a manner consistent with this opinion.

Background

On November 21, 2002, OSHA issued a citation to Saipan, a hotel located in the
Northern Mariana Islands, for its failure to provide an adequate water supply for
employees who lived and worked on the hotel’s premises. The Secretary alleged that
Saipan had violated the temporary labor camp standard set forth at section
1910.142(c)(1), which requires that “[a]n adequate and convenient water supply…be
provided in each camp for drinking, cooking, bathing and laundry purposes.” A penalty
of $750 was proposed for the alleged violation.

On September 30, 2003, the Secretary filed a motion to dismiss and withdrew her
complaint due to Saipan’s abatement of the cited condition. Soon after, on October 2,
2003, Saipan filed a motion for summary judgment. On October 22, 2003, the judge
granted the Secretary’s motion to dismiss and denied Saipan’s motion for summary
judgment because he found that there was no longer a case or controversy to be litigated.
Saipan did not petition for review of the judge’s decision.

On December 19, 2003, Saipan filed a timely application for EAJA fees that
included a claim for attorney’s fees devoted to the preparation of Saipan’s summary
judgment motion. On March 31, 2004, the judge rejected Saipan’s application,
concluding that while Saipan was a prevailing party and was eligible for EAJA fees, the
Secretary was substantially justified in proceeding with the case through the time that her
motion to dismiss was granted. The judge’s decision was petitioned for review by
Saipan. On remand from the Commission, the judge again held that the Secretary was
substantially justified. Saipan petitioned for review a second time and the case was
directed for review by Chairman W. Scott Railton.

Following the issuance of the Commission’s briefing notice, the Secretary notified
the Commission that she was formally withdrawing her substantial justification objection
to Saipan’s fee application, thereby conceding that Saipan is entitled to a fee award. The
Secretary, however, retained her objection on reasonableness grounds to a fee award for
the eight hours on October 1 through 3, 2003, which Saipan attributes in part to the
preparation of its summary judgment motion. According to the Secretary, Saipan’s work
on the motion was unreasonable because the Secretary had filed her motion to dismiss
several days before the summary judgment motion was filed. The eight hours for which
Saipan claims compensation also includes attorney work time to study the motion to
dismiss. In addition, Saipan has requested attorney’s fees incurred as a result of its efforts
on review with regard to both of the judge’s decisions.

Discussion

As the Secretary now concedes that Saipan is entitled to an EAJA award, the only
issue remaining in this case is the final amount of that award.

This inquiry requires the
resolution of two specific issues, neither of which was addressed by the judge. We find
that a remand of these issues, set forth below, is appropriate under the circumstances. See
Commission Rule of Procedure 92(c), 29 C.F.R. § 2200.92(c) (“The Commission will
ordinarily not review issues that the Judge did not have the opportunity to pass upon”).

The first issue – the Secretary’s continuing objection to the eight hours of
attorney’s fees claimed by Saipan from October 1 through October 3, 2003 – was never
reached by the judge because he concluded that an EAJA award was not appropriate.
With substantial justification no longer at issue, the judge must now assess the
reasonableness of Saipan’s request for these fees. This determination, the basis of which
should be fully articulated by the judge on remand, is governed by Commission EAJA
Rule 106(b), 29 C.F.R. § 2204.106(b), which provides that “[a]n award will be reduced or
denied if the applicant has unduly or unreasonably protracted the proceeding.” See also
EAJA, 5 U.S.C. § 504(b)(1)(A) (“fees and other expenses” defined as those that are
“reasonable”).

In resolving this question, we see no basis for the judge to reject as unreasonable
Saipan’s request for fees for the brief amount of time spent on October 1, 2003, reviewing
the Secretary’s motion to dismiss. Indeed, it would be difficult to characterize counsel’s
review of any motion filed by an opposing party, particularly one that could result in
ending the case, as “unduly or unreasonably” protracting a proceeding. We do note,
however, that the judge should determine from Saipan precisely what portion of the eight
hours identified on its invoice for the dates in question is directly attributable to its review
of the Secretary’s motion, and what portion is directly attributable to its preparation of its
summary judgment motion.

The second issue remanded to the judge for disposition is the reasonableness of
Saipan’s supplemental requests, filed both before the judge and the Commission, for fees
accrued since Saipan petitioned for review of the judge’s first decision rejecting its EAJA
application. The judge had no reason to address the supplemental fee requests filed with
him because he concluded that Saipan was not entitled to an EAJA award in the first
place. As the Secretary now concedes that an award should be granted, Saipan is also
“entitled to reasonable attorneys’ fees and expenses for the fee litigation itself.” Timothy
Victory , 18 BNA OSHC 1023, 1027, 1995-97 CCH OSHD ¶ 31,431, p. 44,450 (No. 93-3359, 1997).

In resolving this question, we note that the judge should seek clarification of the
current record. Although the Secretary states in her letter brief to the Commission that
she is willing to pay Saipan an award in the amount of $12,256.37, she provides no
explanation for how this amount was calculated or what specific fees it covers. As the
amount is more than that sought by Saipan in its original EAJA application, the Secretary
is apparently willing to compensate Saipan for some unspecified portion of the
supplemental fees it has requested. In a subsequent brief filed with the Commission, the
Secretary does raise an objection to the supplemental fees which Saipan claims have
accrued from March 2004 to the present. Given her objection, together with the
Secretary’s failure to detail how she arrived at the award amount previously identified in
her letter brief, it is simply not clear how much and for what the Secretary is willing to
pay Saipan.

Once the judge has obtained clarification from the Secretary as to what portion of
Saipan’s supplemental fees she objects to and what timeframe the proffered $12,256.37
amount covers, he can then assess the reasonableness of Saipan’s requests for
supplemental fees, including any future requests that may be filed. The judge should
specifically address the Secretary’s allegation that, “by spurning settlement and pressing
[the] issue [of substantial justification],” Saipan has unreasonably protracted this
proceeding. See Commission EAJA Rule 106(b). We note, however, that Saipan was
justified in challenging the issue of substantial justification up until the Secretary
conceded the point before the Commission in her letter brief of July 15, 2005. Thus,
Saipan is at least entitled to an award of reasonable attorney’s fees incurred from the time
that it petitioned for review of the judge’s first EAJA decision up until the Secretary’s
concession. See Timothy Victory , 18 BNA OSHC at 1027.

As with Saipan’s fee request for the eight hours spent on its summary judgment
motion, the judge should fully explain the basis for his determinations with regard to
Saipan’s supplemental fee requests. Moreover, the judge should proceed in a manner that
minimizes, to the extent possible, the accrual of additional attorney’s fees for Saipan. See
Hensley v. Eckerhart , 461 U.S 424, 437 (1983) (“a request for attorney’s fees should not
result in a second major litigation”). Finally, we note that in calculating the final amount
of Saipan’s award, the judge is limited to compensating Saipan for its attorney’s fees at an
hourly rate of $125, not the hourly rate of $230 Saipan currently seeks. See Commission
EAJA Rule 107(b), 29 C.F.R. § 2204.107(b), (“An award for the fee of an
attorney…under these rules shall not exceed $125 per hour….).

Order

Accordingly, we remand this case for further proceedings in a manner consistent
with this opinion.

SO ORDERED.

_/s/___

W. Scott Railton

Chairman

__/s/________

Thomasina V. Rogers

Commissioner

Dated: February 2, 2006  

SECRETARY OF LABOR,  

Complainant,  

v.  

SAIPAN KOREANA HOTEL,

and its successors,  

Respondent.  

OSHRC

Docket No. 02-2129

DECISION AND ORDER ON REMAND

In this Equal Access to Justice Act matter, 54 U.S.C. § 504 (EAJA), Respondent seeks
attorney fees incurred in the defense against a citation issued by the Occupational Safety and
Health Administration (OSHA). By decision dated March 23, 2004, it was found that
Respondent was eligible to recover fees pursuant to the EAJA and was a prevailing party within
the meaning of the statute.

However, Respondent's application for fees was denied on the
ground that Complainant was substantially justified in fact and law in bringing the action against
Respondent. 2004 CCH OSHD ¶ 32, 717.

Since the citation and complaint were dismissed upon Complainant's motion without an
evidentiary hearing,

the EAJA claim was decided based upon information contained in
Respondent's application for fees and reply with supporting documentation, Respondent's brief
in support of its motion for summary judgment and Complainant's opposition to the application
for fees. In its petition for

discretionary review, Respondent asserts that "[t]he Commission should review the decision
because it raises an important issue of law whether the Secretary is exceeding her lawful
authority by inspecting residences rather than workplaces and citing them as 'temporary labor
camps' when they are, in fact, permanent housing for year-round workers. It raises the issue, in
other words, of whether OSHA has stepped beyond its proper role as workplace regulator, and
begun operating as a de facto housing authority as well."

Although an application for attorney fees under EAJA is reviewed by the Commission de
novo; see Central Brass Mfg. , 1987-90 CCH OSHD ¶ 29,144 (1990); Administrative
Procedures Act , 5 U.S.C. § 556(a), (e) and 55(b), the matter has been remanded for an analysis
of the "requisite evidentiary basis for [the] conclusion that the Secretary established 'substantial
justification' for the jurisdictional basis for the citation." In this instance, the Secretary issued
one citation to Respondent alleging a violation of a temporary labor camp standard requiring an
adequate water supply suitable, inter alia , for drinking. (29 CFR 1910.142(c)(1).

A brief review of the facts is required. Respondent, Saipan Koreana Hotel, is a
corporation organized under the laws of the Commonwealth of Northern Mariana Islands
engaged in the hotel business catering to tourists and other visitors to the Island of Saipan.
The hotel constitutes a workplace and Respondent acknowledges that the Secretary of
Labor has jurisdiction over "the workplace or environment where work is performed"
pursuant to 29 U.S.C. 657(a)(1). (Application for attorney fees unnumbered page 4). On
August 30, 2002, a compliance officer employed by the Occupational Safety and Health
Administration (OSHA) inspected Respondent's facilities located at Chalan Kanoa,
Saipan. The record reveals that the hotel had a central potable water supply in a tank
located on the roof of the hotel. All water supplied to the hotel was stored in the tank
prior to distribution throughout the hotel. The compliance officer collected four water
samples, which, when tested, indicated that the water supplied to the hotel was
contaminated with fecal coliform (e. coli bacteria). Although it is not clear where within
the hotel the water samples were obtained, it is agreed by the parties that at least one
sample was obtained from a room occupied by an employee living on the sixth floor of
the hotel. However, the water supply was contaminated throughout the hotel due to the
centrally located water tank. Indeed, Respondent informed OSHA that the contamination
had been eliminated by draining and sanitizing the water tank.

At the time of the inspection, Respondent employed ten employees; four of whom
resided rent free on the sixth floor of the hotel. The other employees lived in private or rented
apartments away from Respondent's worksite. In an affidavit dated October 2, 2003, Charlotte
Tenepere, Respondent's General Manager (Exhibit A to Respondent's motion for summary
judgment) states that some employees are employed on one-year renewable contracts. It appears
that these employees are immigrant nonresidents of Saipan. According to Ms. Tenepere's
affidavit dated February 4, 2004 (attached as Exhibit B to Respondent's Reply in Support of
Attorney Fees), during the year 2000 to February 4, 2004, Respondent employed, during various
periods, twenty employees. Eight of these employees were immigrant nonresidents of Saipan.
Also attached to Respondent's aforesaid "Reply" are nine affidavits executed by Respondent's
employees. Four employees state they are nonresident workers, three of whom are citizens of
the Philippines and one a citizen of the Republic of China. Five other employees have an
immigration status of resident worker and are citizens of Bangladesh, Federated States of
Micronesia or the Philippines and one is a citizen of the United States. Of these employees,
three nonresident workers and three resident workers lived at the hotel on the date of their
affidavits. The remaining employees lived away from the hotel.

Although both parties acknowledge that the entire hotel constitutes a "worksite" within
the meaning of the Act, Complainant, for reasons which are not set forth in the record, issued a
citation to Respondent for failing to provide an adequate and convenient water supply to a
temporary labor camp (employer provided rooms) based upon the finding that the rooms
occupied by nonresident employees were supplied with contaminated water. The citation did not
address the contaminated water hazard to which employees were exposed throughout the rest of
the hotel. As stated previously, this matter has been remanded for an analysis of the
jurisdictional basis for the citation alleging that the rooms occupied by employees constituted a
temporary labor camp.

In support of its position that employer-supplied housing within the hotel does not
constitute a temporary labor camp within the meaning of the cited standard, Respondent makes
the following arguments:

(b)         Contrary to 29 U.S.C. 657(a)(1) which grants the Secretary jurisdiction over
workplace or environments where work is performed, no work was performed on
behalf of Respondent within the rooms occupied by employees. The employees
who live in the hotel clean their own rooms. Hotel employees clean rooms
occupied by guests, not rooms occupied by employees.

(d)         Residence in Respondent's hotel is not a condition of employment. Respondent
imposes no requirement that its employees live at company supplied housing, nor
is there any kind of practical necessity forcing employees to live in the hotel
because adequate and affordable housing is available within the community.

(f)          The rooms occupied by employees do not meet the definition of a temporary
labor camp within the meaning of the standard cited because it is permanent
housing for year round employees. The employees are not temporary migrant
workers.

Complainant, on the other hand, argues that there was substantial justification for
issuing the citation to Respondent pursuant to the temporary labor camp standard by
virtue of the fact that Respondent exposed its employees to contaminated water in the
apartments supplied by Respondent. First, argues Complainant, the housing provided by
Respondent was a condition of their employment (Complainant's brief pg. 6) and,
therefore, falls within the coverage of the standard. According to Complainant, "[w]orker
housing is a condition of employment when there is either a formal requirement that the
employee reside in employer provided housing in order to be employed, or practical,
economical, geographical or physical necessity" leads to the result that employer housing
is a condition of employment. (Complainant's brief, pg. 6, citing Frank Diehl Farms v.
Secretary of Labor , 696 F.2d 1325, 1332-33). Complainant further asserts (1) there was a
formal requirement that nonresident employees must live in housing provided by
Respondent unless said employees chose to live in government approved self-arranged
housing or (2) as a matter of practical and economic realities existing on the island of
Saipan, it was necessary for nonresident employees to live in employer supplied housing.
(Complainant's brief, pg. 6). Nonresident workers housing at the hotel was a condition of
employment, according to Complainant, because the practical realities of the housing
situation on Saipan "effectively requires that most, if not all, of Saipan Koreana's
nonresident workers live in employer provided housing." Ibid., p. 7, citing Frank Diehl
Farms, supra, at 1333.

According to Complainant, the Nonresident Workers Act, Title 3 § 4411, et seq. of
the Commonwealth Code (Northern Mariana Islands of which Saipan is a member)
requires employers seeking to hire nonresident workers to submit to the Chief of Labor a
fully executed employment contract with the nonresident employee which must include
provisions relating to lodgings.

Unless the nonresident worker voluntarily decides to
reside in self-arranged housing and provides verification thereof for approval by the Chief
of Labor, the employer must provide housing to the nonresident workers. These
assertions are not challenged by Respondent.

Complainant relies upon the affidavit of Charlotte Tenepere to establish that some
employees who were provided housing at the hotel were nonresident workers with one
year renewable contracts. Complainant reasons that since these employees "did not opt
for, or could not obtain, government approved self-arranged housing," it logically follows
that Respondent provided the housing in accordance with the requirements of the
Nonresident Workers Act, supra . Moreover, Complainant points to an OSHA Regional
Instruction dated October 3, 1999, wherein OSHA determined that "[t]he present situation
in the NMI is that the infrastructure and employee housing is inadequate to accommodate
the number of temporary workers currently working in the NMI." (San Francisco
Regional Instruction CPL 2.10205) as support for the conclusion that sufficient numbers
of government approved affordable self-arranged housing units were not available to
temporary

nonresident workers on Saipan. Since the workers were earning low wages,
argues Complainant, they were extremely limited in securing affordable housing. Thus,
Respondent was required to provide housing for these employees. Indeed, Complainant
asserts that seventy-five percent of the employees (six of eight employees) were housed
in the hotel due to the unavailability of affordable housing.

Finally, Complainant asserts that the provisions of the temporary labor camp
standards (29 CFR §1910.142) are not limited to migrant or agricultural housing. In
support of this conclusion, Complainant points to an OSHA interpretive memorandum
which states "there is no language in 1910.142 to restrict the application of this standard
to migrant housing. Similar housing for the use of other kinds of workers would be
subject to the same standard and should meet the same specifications" (OSHA Standards
Interpretation and Compliance Letter dated 7/23/1981) (Exhibit G to Complainant's
Memorandum).

In its reply to the Secretary's opposition to Respondent's application for fees,
Respondent reemphasizes the points that affordable housing was available to nonresident
workers on the island of Saipan. Moreover, there was no requirement established by
Respondent that employees must reside at the hotel. Thus, in accordance with the
teachings of Frank Diehl Farms, supra ; residing at the hotel was not a condition of
employment. Moreover, there is nothing "temporary" about the housing that Respondent
offers to its employees. Respondent cites the OSHA Field Operations Manual, Chapter
XI, Section (A)(2)(a)(1989) which defines "temporary labor camp" as "[f]arm housing
directly related to the seasonal or temporary employment of migrant farm workers."
Respondent also relies upon an OSHA Interpretive Memorandum dated February 21,
1978, which states "housing which is occupied by the same workers year round is
considered permanent; housing which is occupied only periodically or by different
workers during a year is considered temporary." Thus, argues Respondent, since the
nonresident workers were residing at the hotel on a permanent basis, their quarters may
not be considered as a temporary labor camp within the meaning of the cited standard.

As previously stated, attorney fees may be awarded to Respondent in the event that
the Secretary fails to establish that her factual and legal litigation positions were
"substantially justified." The test of whether the Secretary's action is substantially
justified is essentially one of reasonableness in law and fact. Mautz Orem Inc. , 16 BNA
OSHR 1006; 1991-1993, CCH OSHD ¶ 29,986 (1993). In Gaston v. Baven, 854 F.2d
379, 380, the Tenth Circuit Court of appeals stated:

[T]he reasonableness test breaks down into three parts; the
government must show that there is a reasonable basis . . .
for the facts alleged . .  that there exists a reasonable basis in
law for the theory it propounds; and that the facts alleged
will reasonably support the legal theory advanced." See also
Mautz Orem Inc., supra.

In this case, there appears to be agreement between the parties that contaminated
water was provided throughout the hotel including rooms occupied by employees.
Moreover, there is no dispute that Respondent employed nonresident immigrant workers,
some of whom resided at the hotel, and those workers are subject to the requirements of
the Nonresident Workers Act of the Commonwealth of Northern Mariana Islands. Thus,
an employment contract between Respondent and the nonresident employees which
included provisions for lodging was required to be submitted to the Chief of Labor, Island
of Saipan, for approval. In the event that adequate housing was not available on the
island, Respondent, pursuant to the Nonresident Worker Act, was required to provide
housing to nonresident workers. Whether sufficient and adequate housing was available
away from the hotel is a disputed question of fact. Complainant relies upon an OSHA
instruction to support her conclusion that adequate housing was not available.
Respondent relies upon employee affidavits that adequate housing was available away
from the hotel for nonresident workers. However, based upon the position taken by the
Department of Labor (OSHA Instruction dated October 5, 1999) that adequate housing
was not available to nonresident workers, it is concluded that the Secretary was
substantially justified in pursuing that position in this litigation.

Respondent also asserts that the housing offered to nonresident workers at the hotel
was not "temporary housing"; thus, the rooms provided to nonresident workers do not
constitute a "temporary labor camp" within the meaning of the standard cited. Moreover,
according to Respondent, the employees performed no work on behalf of Respondent in
the rooms provided and the employees were permanent residents. These points are also
disputed by Complainant. First, Complainant argues that the nonresident workers were
employed based upon a one-year renewable contract. Thus, the employment and the
housing arrangement were temporary in nature. Moreover, the fact that no work was
performed in the rooms is of no consequence since the term "temporary labor camp"
within the meaning of the standard is not restricted to migrant or agricultural workers
(OSHA Compliance letter dated 7/23/81). Although the aforesaid facts and the legal
conclusions drawn by the parties are in dispute, it is clear that there was substantial
justification for the Secretary to rely upon the facts as interpreted by the Secretary to
arrive at legal conclusions underlying this litigation.

Based upon the foregoing, it is concluded that Complainant's litigation position in
this case was based upon ascertainable facts and published governmental positions
including, significantly, regulations promulgated by the Commonwealth of Northern
Mariana Islands. It cannot be said that the alleged facts relied upon by Complainant do
not support, in general terms, the theory of law advanced by Complainant. This is not to
say that Complainant would have prevailed in this matter had it been litigated in its
entirety. Whether the Secretary would have prevailed on the facts and legal theory relied
upon in pursuing this case is not the test to be applied in awarding attorney fees. See S
and H Riggers and Erectors, Inc. , 672 F.2d 426 (5 th Cir. 1982). The test is one of
reasonableness in law and fact. Based upon the submissions of the parties, as set forth
above, it is concluded that there is a reasonable basis for the facts alleged by the Secretary
as well as the legal theory advanced and the facts reasonably support the legal theory.
Thus, the Secretary was substantially justified in pursuant this litigation.

Finally, the Secretary asserts that an additional legal theory was contemplated at
the time that the decision to dismiss this matter was made. In his affidavit in support of
the Secretary's Opposition to the Award of Attorney Fees, OSHA's Regional
Administrator, the person responsible for dismissing the case, stated that he considered
amending the citation to allege a violation of 29 CFR § 1910.141(b), the general
sanitation standard, alleging that contaminated water was present throughout the entire
workplace (the hotel) to which employees were exposed. Pursuant to Rule 15, Fed. R.
Civ. P., it is likely that the proposed amendment would have been granted. In that event,
the temporary labor camp issue would have been eliminated from the litigation and, based
upon the facts alleged, it is likely that the Secretary would have prevailed on the merits.
Thus, the Secretary would have been substantially justified in pursuing that legal theory.

CONCLUSION

For the reasons set forth above as well as the decision dated March 23, 2004, it is
concluded that the position of the Secretary of Labor in this litigation was substantially
justified and Respondent's application for attorney fees is DENIED.

_/s/_____

Robert A. Yetman

Judge, OSHRC

Dated: November 12, 2004