Am. Fed'n of Labor & Cong. of Indus. Organizations v. Nat'l Labor Relations Bd., Civ. No. 20-cv-0675 (KBJ)

• Decision Date: 07 June 2020
• Docket Number: Civ. No. 20-cv-0675 (KBJ)
• Citation: 466 F.Supp.3d 68
• Parties: AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS, Plaintiff, v. NATIONAL LABOR RELATIONS BOARD, Defendant.
• Court: U.S. District Court — District of Columbia

466 F.Supp.3d 68

AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS, Plaintiff,

v.NATIONAL LABOR RELATIONS BOARD, Defendant.

Civ. No. 20-cv-0675 (KBJ)

United States District Court, District of Columbia.

Signed June 7, 2020

Leon Dayan, Bredhoff & Kaiser, PLLC, Matthew Ginsburg, Washington, DC, for Plaintiff.

Helene Debra Lerner, Portia-Elaine S. Gant, Dawn Laura Goldstein, Molly Gallagher Sykes, Paul Augustus Thomas, Contempt, Compliance & Special Litigation Branch, Washington, DC, Tyler James Wiese, National Labor Relations Board, Minneapolis, MN, for Defendant.

MEMORANDUM OPINION

KETANJI BROWN JACKSON, United States District Judge

Administrative agencies have a duty to both notify the public before promulgating rules that potentially affect the substantive rights of regulated parties and review the solicited public feedback before finally adopting such significant policy changes. See Administrative Procedures Act ("APA"), Pub. L. 79-404, 60 Stat. 237 (1946) (codified as amended at 5 U.S.C. §§ 551 – 559, 701 – 706 ). The law presumes that an agency will engage in notice-and-comment rulemaking in nearly every instance in which a final rule is adopted. Thus, if an agency promulgates a rule without providing notice and receiving public comments, the agency must be prepared to demonstrate that the rule it intends to enforce is not actually subject to those APA prescriptions, because it satisfies one of the narrow exceptions to notice-and-comment rulemaking that are specifically identified in the APA. The instant case involves one of those statutory exceptions: notice-and-comment rulemaking is not required with respect to "rules of agency organization, procedure, or practice[.]" 5 U.S.C § 553(b)(A). This is generally and colloquially referred to as the APA exception for "procedural" rules. Mendoza v. Perez , 754 F.3d 1002, 1023 (D.C. Cir. 2014).

On December 18, 2019, the National Labor Relations Board ("NLRB" or "the Board") took the rare step of promulgating a rule that prescribes certain procedures that employers, employees, and labor unions have to implement with respect to the election of employee representatives for collective bargaining purposes. See 84 Fed. Reg. 69,524 (Dec. 18, 2019) (hereinafter "2019 Election Rule"). The undisputed purpose behind the 2019 Election Rule was to rescind certain election-related regulations that the Board had adopted in 2014: back then, the NLRB undertook notice-and-comment rulemaking to promulgate a rule that was primarily designed to effectuate "the essential principle that [union] representation cases should be resolved quickly and fairly[,]" 79 Fed. Reg. 74,308, 74,308 (Dec. 15, 2014), while the 2019 Election Rule sought to implement various pre-election and pre-certification safeguards in order to "promote[ ] efficiency and expeditious final resolution of the question of representation," 84 Fed. Reg. at 69,529 (emphasis in original).

Significantly for present purposes, when the NLRB reversed course and enacted the 2019 Election Rule, the agency took the position that the rule it was adopting was merely procedural in nature for the purpose of the APA, and as such, it promulgated the rule amendments without notifying the public of the new provisions of law that implemented this policy shift and without soliciting public comment about them. See 84 Fed. Reg. at 69,528. One of the labor organizations that has a significant interest in NLRB rulemaking—the American Federation of Labor and Congress of Industrial Organizations ("AFL-CIO")—has filed the instant lawsuit to challenge the 2019 Election Rule, and argues that the NLRB's rulemaking violates the APA in several respects. (See Compl., ECF No. 1, at 1.) The AFL-CIO's primary argument is that notice-and-comment rulemaking was required with respect to certain provisions of the 2019 Election Rule (see id. ¶¶ 43–50 (Count I)), and it further maintains that the 2019 Election Rule is both arbitrary and capricious (as a whole (see id. ¶¶ 51–59 (Count II)) and with respect to specific provisions (id. ¶¶ 60–69 (Count III))), and inconsistent with the National Labor Relations Act ("NLRA"), 29 U.S.C. §§ 151 – 69 (see id. ¶¶ 70–81 (Count IV)). Accordingly, the AFL-CIO seeks a declaration that the entire 2019 Election Rule violates the APA and a court order that vacates it. (See id. at 15 ("Prayer for Relief").)

Before this Court at present are the parties’ cross-motions for summary judgment (see Def.’s Mot. for Summ. J., ECF No. 22; Pl.’s Mot. for Summ. J., ECF No. 23), and also a threshold motion that the NLRB has filed, which argues that this matter must be transferred to the D.C. Circuit for lack of jurisdiction (see Def.’s Mot. to Transfer to the D.C. Cir. to Cure Want of Jurisdiction, ECF No. 15). Given the May 31, 2020, effective date of the challenged rule, this Court held a telephonic motions hearing on May 14, 2020, after which it took the motions under advisement, on an expedited basis. (See Minute Entry of May 14, 2020.) The Court then issued an Order on May 30, 2020, which GRANTED the AFL-CIO's motion for summary judgment, DENIED the Board's motion to transfer and cross-motion for summary judgment, and REMANDED the matter to the agency for reconsideration in light of this Court's ruling. (See Order of May 30, 2020, ECF No. 34.)

The present Memorandum Opinion explains the reasons for this Court's Order. In short, the Court has concluded that it has subject-matter jurisdiction to entertain the AFL-CIO's challenges under 28 U.S.C. § 1331, and that the instant case need not be transferred to the U.S. Court of Appeals for the District of Columbia Circuit, because the direct-review provision of the NLRA that channels review of certain NLRB actions directly to the courts of appeals does not apply to the agency action at issue here. With respect to the merits of the AFL-CIO's APA claims, this Court agrees that the challenged parts of the 2019 Election Rule do not qualify as procedural rules within the meaning of the APA's exception to notice-and-comment rulemaking, and the Court thus finds that those particular provisions were promulgated unlawfully and must be set aside.

I. BACKGROUND

A. The NLRB's General Authority To Regulate Labor Practices Under The National Labor Relations Act

The NLRB is an administrative agency that Congress created in 1935, when it enacted the National Labor Relations Act, 29 U.S.C. §§ 151 – 69, which is the primary federal statute that regulates private sector labor-employer relations in the United States. The text of the NLRA makes clear that Congress intended to "encourag[e] the practice and procedure of collective bargaining" and to "protect[ ] the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing[.]" Id. § 151. In furtherance of these goals, the statute expressly bestows upon the NLRB the power to engage in general and specific rulemaking, see id. §§ 156, 159(c)(1), and to adjudicate certain disputes that commonly arise between labor organizations, employees, and employers, see §§ 158, 159, 160.

The NLRA also plainly distinguishes between the NLRB's exercise of its powers with respect to addressing alleged unfair labor practices, on the one hand, and regulating collective bargaining practices (generally referred to as "representation"), on the other. Indeed, after establishing that employees have "the right to self-organization, to form, join, or assist labor organizations, to bargain collectively ... [and] to refrain from any or all of such activities[,]" id. § 157, the NLRA enumerates the various actions that constitute "unfair labor practices" on the part of both employers and employees in one section of the statute, see id. § 158, and separately addresses "representatives and elections" (i.e. , how representatives are chosen and representation elections are conducted) for collective bargaining purposes in another, see id. § 159.

In the unfair labor practice realm, the NLRA empowers the NLRB "to prevent any person from engaging in any unfair labor practice affecting commerce." Id. § 160(a). Such unfair labor practices include an employer's "interfere[nce] with the formation or administration of any labor organization," id. § 158(a)(2), or the refusal on the part of either an employer or a labor organization to engage in collective bargaining with the other, id. §§ 158(a)(5), (b)(3). And with respect to the employees’ selection of their representatives for collective bargaining purposes, the NLRA confers upon the NLRB, inter alia , the power to determine "the unit appropriate for the purposes of collective bargaining[,]" id. § 159(b), and to adjudicate any "question of representation affecting commerce[,]" id. § 159(c)(1)(B); see also 29 C.F.R. § 102.64 (2019) (explaining that "[a] question of representation exists if a proper petition has been filed concerning a unit appropriate for the purpose of collective bargaining or concerning a unit in which an individual or labor organization has been certified or is being currently recognized by the employer as the bargaining representative").

For present purposes, it is important to understand that the NLRA addresses the specific powers of the NLRB with respect to preventing unfair labor practices in section 160 of Title 29, which is entitled "[p]revention of unfair labor practices." See 29 U.S.C. § 160. The first four subsections of section 160 pertain to various aspects of the Board's authority with respect to responding to such practices. See, e.g., id. § 160(a) (the Board has general authority to address unfair labor practices "affecting commerce"); id. § 160(b) (the Board can issue a complaint and schedule a hearing when someone is accused of engaging in unfair labor practices); id. § 160(c) (the Board can take testimony, make findings, order the cessation of unfair labor practices, and take affirmative actions to effectuate the policies of the statute); id. §...