State v. U.S. the Dep't of Labor

306 F. Supp. 3d 1180
CourtDistrict Court, E.D. California
DecidedJanuary 24, 2018
DocketNo. 2:13–cv–02069–KJM–DB
StatusPublished
Cited by3 cases

This text of 306 F. Supp. 3d 1180 (State v. U.S. the Dep't of Labor) is published on Counsel Stack Legal Research, covering District Court, E.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State v. U.S. the Dep't of Labor, 306 F. Supp. 3d 1180 (E.D. Cal. 2018).

Opinion

Kimberly J. Mueller, UNITED STATES DISTRICT JUDGE

The State of California ("State") has sought a federal grant for two state transit projects. The United States Department of Labor ("DOL") has refused to certify the State to receive the grant funds. The State argues this refusal of certification was arbitrary and capricious under the Administrative Procedure Act ("APA"). Although the court previously resolved the parties' cross motions for summary judgment, largely in the State's favor, one question remains: Whether DOL can properly base *1182its refusal to certify the State to receive grant funds based on an intervening state law's changes to pension benefit provisions affecting certain employees that work for Monterey-Salinas Transit ("MST"). As explained below, the court grants judgment for the State on this remaining issue.

I. BACKGROUND

The parties dispute the adequacy of the statutory interpretation in which the DOL engaged to deny the State's request for funding under § 13(c)(1) of the Urban Mass Transportation Act of 1964, 49 U.S.C. § 5301(a) ("UMTA"). The court has provided an extensive background section in its summary judgment order, see Order Aug. 22, 2016, ECF No. 121 ("SJ Order"), at 2-10, and so summarizes only relevant background information here.

A. UMTA

Congress enacted UMTA in 1964 to revamp deteriorating transit systems throughout the nation. 49 U.S.C. § 5301(a). UMTA created a federal agency, now called the Federal Transit Administration ("FTA"), to disburse funds for large-scale urban rail projects: Transit systems apply for funds related to specific transit projects and the FTA grants funds, subject to certain conditions. Id. § 5301(b)(1)-(8). UMTA sparked a national shift towards public operation of mass transportation systems. See Jackson Transit Auth. v. Local Div. 1285, Amalgamated Transit Union , 457 U.S. 15, 17, 102 S.Ct. 2202, 72 L.Ed.2d 639 (1982) ; Kramer v. New Castle Area Transit Auth. , 677 F.2d 308, 310 (3d Cir. 1982) (UMTA was force behind "[t]he whole move away from private transit systems and into public systems" by providing "the financial support to allow the changeover to public transportation companies").

During the legislative process, transit labor unions raised concerns about UMTA's potential impact on transit employees' rights. The unions feared local governments would use the newfound federal funding to assume operation of transit entities, and states would either restrict or outright prohibit public employers from bargaining collectively with their employees. Indeed, the National Labor Relations Act, intended to safeguard collective bargaining rights, applied (and continues to apply) only to private employees. Against this backdrop, labor unions warned UMTA could eradicate employees' hard-earned and bargained-for labor rights, conditions and benefits.

To address this concern, Congress drafted § 13(c), which frames the dispute here. See 49 U.S.C. § 5333(b) ; see also Jackson Transit , 457 U.S. at 17, 102 S.Ct. 2202 ("To prevent federal funds from being used to destroy the collective-bargaining rights of organized workers, Congress included § 13(c) in the Act."). Before a local government agency receives federal funds for a particular transit system, § 13(c) requires that agency to make "arrangements" to protect the rights and employment status of its employees. Id. The DOL is charged with certifying that the arrangements between the government agency and the affected transit employees are "fair and equitable" and that they meet the following five statutory conditions: (1) Preserve the rights, benefits, and privileges transit employees have under existing collective bargaining agreements; (2) continue these employees' collective bargaining rights; (3) protect employees' positions from worsening after the federally funded project ends; (4) assure priority reemployment status should the employees lose their jobs; and (5) offer paid training or retraining programs. Id. § 5333(b)(1)-(2).

The DOL may refuse to certify a state agency if existing state laws threaten any *1183of the five requirements. A denial of certification blocks the applicant from receiving funds. As relevant here, the DOL denied the State's request for funding for MST based on the first requirement, identified above, finding a particular state law changed, rather than preserved, certain employees' pension rights in violation of § 13(c)(1). See MST Decision, ECF No. 88-5, at 8.

B. MST's Collective Bargaining Agreement

MST is the consolidated transportation services agency for Monterey County, California. This order pertains only to MST's "classic employees": Employees hired after January 1, 2013. Since 1983, MST and the Amalgamated Transit Union ("ATU") have entered into collective bargaining agreements that protect MST employees' labor rights. See Administrative Record ("AR") 50, ECF No. 100. As relevant here, a particular ATU-MST agreement was in force when, in December 2012, the State applied for UMTA funding. AR 50-51 (listing effective dates of ATU's agreement with MST as October 1, 2010 through September 30, 2013). The existing ATU-MST agreement memorialized certain pension rights for MST's classic employees. As relevant here, the agreement defines how MST will calculate a pension using the employee's final salary and the years the employee worked; it also demarcates a 36-month period during which MST classic employees can purchase "airtime." AR 793-94, 829-31.

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306 F. Supp. 3d 1180, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-v-us-the-dept-of-labor-caed-2018.