Amalgamated Transit Union, Int'l v. United States Dep't of Labor

• Decision Date: 19 December 2021
• Docket Number: 2:20-cv-00953-KJM-DB ORDER
• Court: U.S. District Court — Eastern District of California
• Parties: Amalgamated Transit Union, International, et al., Plaintiffs, v. United States Department of Labor, et al., Defendants, And Cross-Claims.

Amalgamated Transit Union, International, et al., Plaintiffs,
v.
United States Department of Labor, et al., Defendants,

And Cross-Claims.

No. 2:20-cv-00953-KJM-DB ORDER

United States District Court, E.D. California

December 19, 2021

ORDER

The U.S. Department of Labor recently determined it will not certify transportation grants to California transit agencies, given the Department's current position that California's Public Employees' Pension Reform Act prevents a “continuation of collective bargaining rights, ” as required by the Urban Mass. Transportation Act. The Department's decision, if it stands, will take effect starting on December 27 of this year, when several California grant applications seeking billions of dollars in funding will be ready for a certification decision. More denials of certification will follow, affecting many more billions in grants. The State of California seeks to stay or enjoin the operation of the Department's recent determination to not certify the State's transportation grants. California has raised at least serious merits questions in its challenge to the Department's determination. And the State and its transportation agencies undeniably will suffer

1

irreparable harm if the court does not enjoin the Department as requested. California's motion is granted, as explained below.

I. BACKGROUND

In the first half of the Twentieth Century, mass transit systems were run by private companies more commonly than they are today. See Jackson Transit Auth. v. Amalgamated Transit Union, 457 U.S. 15, 17 (1982). As zoning and development practices changed, and as more people began driving, many transit companies found themselves in precarious financial situations. See Id. In the 1960s, Congress began offering federal money to local governments to acquire failing private transit companies so that the government entities could continue offering mass transit as a service. See Id. At the same time, Congress was concerned transit workers could lose collective bargaining rights. “If, for example, state law forbade collective bargaining by state and local government employees, the workers might lose their collective-bargaining rights when a private company was acquired by a local government.” Id.

Congress's solution was a provision commonly known as section 13(c) of the Urban Mass. Transportation Act of 1964 (UMTA), now codified at 49 U.S.C. § 5333(b). Under that section, “[a]s a condition of financial assistance” from the federal government, “the interests of employees affected by the assistance shall be protected under arrangements the Secretary of Labor concludes are fair and equitable.” 49 U.S.C. § 5333(b)(1). Section 13(c) lists several “provisions” that these “arrangements” must include. See Id. § 5333(b)(2). One of these provisions is “the continuation of collective bargaining rights.” Id. § 5333(b)(2)(B). This requirement is usually cited as section 13(c)(2) of the UMTA.

Today, when a state or local government applies for federal transit funding, the application and any arrangements under section 13(c) are referred to the Department of Labor and its Office of Labor-Management Standards. See 29 C.F.R. § 215.2; Secretary's Order No. 8-2009, § 5.A(4), 74 Fed.Reg. 58835, 58835-36 (Nov. 13, 2009). If a labor organization represents the applicant's employees, the Department refers the application to that organization, which can object. See Id. § 215.3(d)(1). If the Department finds the objections “sufficient, ” a term defined in the regulations, it may send the parties to negotiations. See Id. § 215.3(d)(2)-(3),

2

(6). If negotiations are unsuccessful, the parties forward their competing proposals to the Department, which decides whether to certify the application. See Id. § 215.3(d)(6)-(7).

About nine years ago, a Sacramento-area transit agency applied for federal funds to defray the costs of extending its light rail system. See California v. U.S. Dep't of Lab., 76 F.Supp.3d 1125, 1131 (E.D. Cal. 2014). Many of the agency's employees were represented by a local division of the Amalgamated Transit Union (ATU), and the union objected to the transit agency's application. See Id. at 1131, 1138. The union argued a recently enacted state statute, the California Public Employees' Pension Reform Act or “PEPRA, ” prevented a “continuation of collective bargaining rights” under section 13(c)(2). See Id. For example, the law required all employees hired after January 1, 2013 to pay for at least half of any defined-benefit pension plans. See Cal. Gov't Code § 7522.30(a). In the past, the Sacramento transit agency had not required its employees to help fund its pension plan. See 76 F.Supp.3d at 1129-30. After unsuccessful negotiations, in 2013, the Department of Labor agreed with the union's position and denied certification. See Id. at 1131-32. Three similar applications by another local California transit agency, Monterey Salinas Transit, met a similar fate the same year. See Id. at 1133-34.

The two transit agencies challenged the Department's decisions under the Administrative Procedure Act (APA) in this court in 2013. See generally Compl., California v. U.S. Dep't of Lab., No. 13-2069 (E.D. Cal. Oct. 4, 2013), ECF No. 1. The agencies contended the Department had acted arbitrarily and without authority in violation of the Administrative Procedure Act, among other claims. See generally Id. While the case was pending, California made a temporary exception to its pension reform law for employees “whose interests are protected” under section ///// ///// ///// ///// /////

3

13(c). See Cal. Gov't Code § 7522.02(a)(3);^[1] see also 2013 Cal. Legis. Serv. Ch. 527 (A.B. 1222) (West).

This court granted summary judgment in the agencies' favor in 2014. See generally California, 76 F.Supp.3d 1125. The court found the Department had relied primarily on a legal analysis, and that analysis was faulty. See Id. at 1141-44. For example, the Department had relied heavily on a 1985 circuit court opinion, but it had not considered many differences between the state law in that case and the California law in question. See Id. at 1142-43 (discussing Amalgamated Transit Union v. Donovan, 767 F.2d 939 (D.C. Cir. 1985)). Nor did the Department's legal reasoning take account of longstanding Supreme Court authority that describes pension regulations as a permissible “backdrop” to collective bargaining under federal labor law. Id. at 1143 (quoting Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 21 (1987)). The Department had also impliedly and incorrectly assumed that California's reforms foreclosed bargaining over pensions. See Id. Although the state's reforms did place limits on the types of defined benefit plans a public employer could put up for negotiation, the state had not forbidden bargaining over defined contribution plans, see id., another common type of pension plan that “dominate[s] the retirement plan scene today, ” id. at 1129 n.2 (quoting LaRue v. DeWolff, Boberg & Assocs., Inc., 552 U.S. 248, 255 (2008)).

The court remanded the two transit agencies' applications to the Department for further proceedings “consistent with” the court's order. See Id. at 1148. The Department initially filed an appeal, but dismissed that appeal voluntarily. See Order, California v. U.S. Dep't of Lab., No. 15-15385 (9th Cir. Aug. 12, 2015), Dkt. No. 19. In 2015, the Department issued two new

4

decisions on remand, in which it again rejected the applications. See State of California v. United States Dep't of Lab., 155 F.Supp.3d 1089, 1097-98 (E.D. Cal. 2016) (summarizing the new decisions). The two transit agencies returned to this court to challenge those decisions. See Id. at 1098-99.

In 2016, this court again granted summary judgment to the transit agencies. See generally California v. U.S. Dep't of Lab., No. 13-2069, 2016 WL 4441221 (E.D. Cal. Aug. 22, 2016). Although the Department had supported its decisions on remand with lengthy explanations, those explanations were often self-contradictory and arbitrarily one-sided. See, e.g., id. at *13-17. In addition, as it had done before, the Department had relied primarily on a legal analysis rather than subject matter expertise or insights drawn from practice. See, e.g., id. at *21, *28. A few ancillary disputes remained unresolved, so the court permitted supplemental briefing and did not immediately consider what remedy was appropriate. See Id. at *35. The court ultimately entered judgment in favor of the two transit agencies and closed the case in 2018. See generally California v. U.S. Dep't of Labor, 306 F.Supp.3d 1180 (E.D. Cal. 2018). The court enjoined the Department of Labor from relying on the California pension reforms to deny applications for federal funding by the two plaintiff transit agencies. See Id. at 1190. The court did not extend that injunction to other transit agencies. See Id. The case was not a class action, and the court's reasoning was specific to the two plaintiff transit agencies. See Id. The Department again pursued an appeal, which it again dismissed voluntarily. See Order, California v. U.S. Dep't of Labor, No. 18-15509 (9th Cir. Dec. 19, 2018), Dkt. No. 33.

In the months and years that followed, several other California transit agencies submitted applications for federal funding, and the Department of Labor certified those applications over the ATU's objection. See Letter from Arthur Rosenfeld to Robert Molofsky (June 14, 2019), Mot. Ex. B, ECF No. 73-2. The Department explained that it had “independently reexamined the scope of its authority under section 13(c) and the best way to provide fair and equitable employee protective arrangements.” Id. at 4. It concluded that section 13(c) was intended to give the Secretary of Labor “discretion” and “flexibility” and that in California's case, the disputed pension reforms did not “substantially affect transit employees' benefits under existing...