The Little Guy Myth: The Fair Act's Victimization of Small Business

By Peters, Melissa A. | William and Mary Law Review, May 2001 | Go to article overview

The Little Guy Myth: The Fair Act's Victimization of Small Business


Peters, Melissa A., William and Mary Law Review


Big business dominates the media. We are inundated with news of billion-dollar mergers and corporate takeovers, but that is not the American Dream. For many years, the United States has had a love affair with small business. Americans may shop in megamalls and Super Wal-Marts, but they admire and respect the entrepreneurial spirit embodied in the many small businesses that increasingly drive our economy.(1) The passion and concern the public has for small businesses, particularly entrepreneurs, is unparalleled.(2)

One significant example of such passion and concern is the proposed Fair Access to Indemnity Act (FAIR Act), which seeks to award attorneys' fees to small businesses that prevail against the Occupational Safety and Health Administration (OSHA) and the National Labor Relations Board (NLRB) in litigation. Significantly, the Act is not reciprocal in that the agencies are not entitled to attorneys' fees when they prevail against the guilty small business. Although proponents claim that the rationale behind the FAIR Act is to "even the playing field" between large government agencies and small businesses, this Note illustrates that the true rationale is the clandestine desire to give small businesses advantages that are perhaps unwarranted.

If it seems equivocal that small businesses are well protected and cared for, one need only look at the legislation supporting small businesses within the last fifteen years. The first section of this Note focuses on the enactment and development of the Equal Access to Justice Act (EAJA)(3) as a way to "protect" small business employers from incurring legal costs in litigation against government agencies.(4) The second section analyzes the sentiment surrounding the EAJA's failure, and the more extreme bill that has been proposed to increase such "protection."(5) In particular, the FAIR Act takes a stronger stance than the EAJA because it awards attorneys' fees to prevailing small businesses, even when the government agencies may have been justified in bringing the claim. Assessing the language used in support of the bill reveals that many people in this country believe that small businesses are not well protected. Such a notion is completely ill founded, and, furthermore, the proponents of the FAIR Act are aware of the shaky foundation upon which their argument rests.

The third and fourth sections explain the true rationale underlying legislation such as the FAIR Act: the political ideal that small businesses are evidence of the American Dream. The third section dispels the myth that small businesses are "victims" of governmental abuse in need of further protection.(6) Finally, the fourth section asserts that if the public wants further protection for small firms, an argument not without merit, it should honestly advocate such a policy without relying on the "victim" theory that corrupts bills such as the FAIR Act.(7)

THE BEGINNING OF THE TREND

The prevailing scheme regarding attorneys' fees in this country is the American rule, which states that each party is accountable for paying his own legal fees regardless of who is vindicated.(8) Despite the longevity of the rule, many judicially created and statutory exceptions exist.(9) These exceptions exemplify the various arguments against the American rule, and suggest why it is the minority rule among industrialized democracies.(10) In 1980, Congress passed the EAJA, a pivotal exception to the American rule, on behalf of small businesses.(11) When first enacted, the Act was experimental; it became permanent in August 1985.(12) The EAJA awards small businesses and individuals attorneys' fees when they prevail against government agencies, unless the government proves it is "substantially justified" in its position.(13)

The EAJA qualifies as an "extreme" exception when one considers the pervasive doctrine of governmental immunity: "Traditionally, the United States [government] was even less vulnerable to an award of attorneys' fees than a private litigant. …

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The Little Guy Myth: The Fair Act's Victimization of Small Business
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