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

• Decision Date: 27 December 2022
• Docket Number: 2:20-cv-00953-KJM-DB
• Parties: Amalgamated Transit Union, International, et al., Plaintiffs, v. United States Department of Labor, et al., Defendants, And Cross-Claims.
• Court: U.S. District Court — Eastern District of California

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

United States District Court, E.D. California

December 27, 2022

ORDER

In October 2021, the United States Department of Labor publicized its intent to deny all future federal mass transit funds to local transit agencies throughout California. That announcement was the latest in a long series of heavily litigated disputes between the state, local transit agencies, unions representing transit employees, and the Department of Labor. In a previous order, this court preliminarily enjoined the Department from putting its 2021 policy into practice. California now asks the court to set aside the Department's decision formally under the Administrative Procedure Act (APA) and to make the injunction permanent.

As explained in this order, the Department had no authority to issue the broad, prospective decision it did in 2021. Congress clearly limited the Department to making decisions, one at a time, about specific funding applications by specific transit agencies and their employees. The

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Department also reached the conclusions incorporated in its 2021 decision after an arbitrarily truncated process. As a result, it overlooked important parts of the problem and relied on unpersuasive and arbitrary reasoning. Under the APA, therefore, its decision must be set aside.

I. BACKGROUND

Historically, private companies owned and operated local mass transit systems. Kramer v. New Castle Area Transit Auth., 677 F.2d 308, 309 (3d Cir. 1982). “[A]s late as 1960, 95% of transit companies in the nation were privately owned and operated.” Id. But mass transit facilities in many American cities then began to deteriorate. See Urban Mass. Transportation Act of 1964 (UMTA), Pub. L. No. 88-365 § 2(a)(2), 78 Stat. 302, as amended by Pub. L. No. 89-562, 80 Stat. 715 (1966).^[1] Roads were growing more congested. Id. Development was uncoordinated. Id. Many private mass transit companies found themselves in precarious financial conditions. Jackson Transit, 457 U.S. at 17 (citing S. Rep. No. 88-82, 88th Cong., 1st Sess. at 4-5, 19-20 (Mar. 28, 1963)). Congress was concerned that the vitality of American cities was in jeopardy. UMTA § 2(a)(2). It decided federal funds were “essential” to the solution of these problems. Id. § 2(a)(3). It thus passed the UMTA to distribute federal money to state and local governments for operating and improving their mass transit systems. See Kramer, 677 F.2d at 309.

Congress was concerned about the potential side effects of making available billions of federal dollars, including the incentives state and local governments might have to acquire private transit companies. See H.R. Rep. No. 88-204, 88th Cong., 1st Sess. at 2 (April 9, 1963). Public acquisitions of private transit companies might lead to adverse consequences for people who worked at a transit company where the employees were members of a union. “If, for example,

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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.” Jackson, 457 U.S. at 17. One catalyst for this concern was the acquisition of a private transit company by a Miami-area government a few years before. Loc. Div. 589, Amalgamated Transit Union, AFL-CIO, CLC v. Com. of Mass., 666 F.2d 618, 628 n.26 (1st Cir. 1981) (citing and summarizing legislative history). After the acquisition, the transit agency's employees lost their collective bargaining rights, as state law prevented the local government from bargaining. See id. Many other states' laws “forbade collective bargaining by public employers,” Amalgamated Transit Union Int'l, AFL-CIO v. Donovan, 767 F.2d 939, 942 (D.C. Cir. 1985), so labor officials and lawmakers were concerned that federal funding might set off a series of similar acquisitions with similarly adverse labor consequences, see Loc. Div. 589, 666 F.2d at 628 n.26 (citing legislative history).

Labor leaders also worried that if the federal government spent large amounts of money to modernize transit systems around the country, jobs might be automated away. See, e.g., Testimony of Bernard Cushman, General Counsel, Amalgamated Association of Street, Electric Railway & Motor Coach Employees of American, AFL-CIO in Hearings before a Subcommittee of the Senate Committee on Banking and Currency on S. 9 and S. 917, 88th Cong., 1st Sess., at 328-30, 369-71 (Mar. 5, 1963). These leaders and the Administration urged Congress to take care of these workers “who might be hurt.” Id. at 372.

These concerns prompted Congress to adopt an amendment to the UMTA, “[t]o prevent federal funds from being used to destroy the collective-bargaining rights of organized workers.” Jackson Transit, 457 U.S. at 17. That amendment, which eventually became section 13(c), see Id. at 17 & n.1, provides today that “the interests of employees affected by [federal financial] assistance shall be protected under arrangements the Secretary of Labor concludes are fair and equitable.” 49 U.S.C. § 5333(b)(1). The agreement granting federal assistance must “specify the

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arrangements,” id., and section 13(c) requires those arrangements “include provisions that may be necessary for” six purposes:

(A) the preservation of rights, privileges, and benefits (including continuation of pension rights and benefits) under existing collective bargaining agreements or otherwise;

(B) the continuation of collective bargaining rights;

(C) the protection of individual employees against a worsening of their positions related to employment;

(D) assurances of employment to employees of acquired public transportation systems;

(E) assurances of priority of reemployment of employees whose employment is ended or who are laid off; and

(F) paid training or retraining programs.

Id. § 5333(b)(2).^[2]

Legislators in both houses debated these provisions vigorously. Some who opposed them saw them as an intrusion into local governance. They believed section 13(c) would force states and local governments to acquiesce to the demands of a federal regulator or preempt state law entirely. See, e.g., 109 Cong. Rec. 5414-16 (Apr. 2, 1963) (remarks of Senators Goldwater and Tower); 110 Cong. Rec. 14978-79 (June 25, 1964) (remarks of Congressman Griffin); H.R. Rep. No. 88-204 at 22-30 (minority views). These concerns seemed founded in part on trends in the U.S. Supreme Court's cases of that era. Just a few years earlier, for example, the Court had held California was required to comply with federal labor laws in its capacity as a railroad operator despite state laws to the contrary. See generally California v. Taylor, 353 U.S. 553 (1957). The proponents of section 13(c) on the other hand, along with the Secretary of Labor, its original

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drafter, argued the section would not supersede state law. See Local Div. 589, 666 F.2d at 62833 (collecting and summarizing legislative history).

In the Senate, these debates culminated in a last-minute floor amendment championed by Senator Wayne Morse of Oregon. See 109 Cong. Rec. 5670-85 (Apr. 4, 1963); see also Henny Willis, “Morse Loses Last of Many Battles,” Eugene Register-Guard (Jul. 22, 1974) (remembering Morse, “the old ‘Tiger of the Senate,'” as an attorney, law school dean, skilled orator and one of only two Senators who opposed the 1964 Gulf of Tonkin Resolution). Senator Morse portrayed section 13(c) as a hard-fought compromise with a limited scope and an attempt to prevent federal funds from upsetting the status quo. See, e.g., 109 Cong. Rec. 5672-73 (Apr. 4, 1963).

The UMTA was passed in 1964. Public acquisitions of private transit companies accelerated. “By 1978, local publicly owned transit systems received 90% of the revenues from all transit operations; accounted for 91% of total vehicle miles operated and 91% of all linked passenger trips; and owned or leased 87% of total transit vehicles.” Kramer, 677 F.2d at 309.

As more transit agencies came within government control, federal courts were asked to intervene in disputes about the protections in section 13(c). Courts hesitated to insert themselves into the Secretary's decisions under section 13(c). In the late 1960s, for example, several railroad employees and a union local sued in federal court to stop the Secretary of Labor from certifying an arrangement under section 13(c). See Kendler v. Wirtz, 388 F.2d 381, 382 (3d Cir. 1968).^[3]The district court dismissed the complaint, and the Third Circuit affirmed. See id. “[I]t would not be appropriate for a court to substitute its judgment for the Secretary's judgment that railroad

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employees are afforded fair and equitable protection by the arrangements that have been made for their benefit.” Id. at 384. A district court in Georgia reasoned similarly not quite ten years later. See City of Macon v. Marshall, 439 F.Supp. 1209, 1218-23 (M.D. Ga. 1977).

Federal courts also confronted one of the disputes at the center of the congressional debates: whether section 13(c) preempts or supersedes state law. In 1981, in an opinion by then-judge Stephen Breyer, the First Circuit held “the specific detailed assurances given by a union and a transit authority to the Labor Department under [section 13(c)] do not invalidate a state law to the contrary.” See Local Div. 589, 666 F.2d at 636. The next year, the Supreme Court held that section 13(c) does not create a federal cause of action for breaches of section 13(c) arrangements. See Jackson Transit, 457 U.S. at 29. It relied extensively on that section's legislative history, which it described as “explicit” and “absolutely clear” in demonstrating Congress “did not intend to create a body of federal law applicable to labor regulations.” Id. at 27, 29.

The six requirements Congress listed in...