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State v. United States Department of Labor

United States District Court, E.D. California

April 24, 2014



KIMBERLY J. MUELLER, District Judge.

This matter is before the court on plaintiffs' motion to supplement the administrative record and for limited discovery. (ECF No. 18.) Specifically, plaintiffs ask the court to supplement the administrative record with documents that, plaintiffs assert, support their claim in this action brought under the Administrative Procedure Act (APA). Plaintiffs claim that the U.S. Department of Labor's decision refusing to certify various grants of federal funds for local transit projects because it determined California's Public Employee Pension Reform Act of 2013 ("PEPRA") undermines collective bargaining rights of transit employees was arbitrary and capricious in violation of 5 U.S.C. § 706 of the APA. Defendants oppose the inclusion of most of plaintiffs' documents, but do not oppose the admission of some. The court heard oral argument on plaintiffs' motion on February 14, 2014. Stephen B. Higgins and Kathleen E. Kraft appeared for plaintiffs, and Susan K. Ullman appeared for defendants. As discussed at the hearing, the parties filed a joint report listing the specific documents plaintiffs request and defendants' position in response. (ECF No. 34.) For the following reasons, plaintiffs' motion is GRANTED IN PART and DENIED IN PART.


This case is about a dispute between the U.S. Department of Labor ("the DOL"), a federal agency tasked by Congress to protect the collective bargaining rights of workers, and California transit agencies, over California's recently enacted statute known as PEPRA, designed to reform California's public-employee pension system. Through plaintiffs' motion to supplement the administrative record, plaintiffs ask the court to consider documents outside the record to support plaintiffs' APA challenge. To frame the analysis of plaintiffs' pending motion, it is necessary to briefly summarize the underlying dispute.

A. Section 13 of the Urban Mass. Transit Act

An employer who receives federal funds for an urban mass transportation project must first receive certification from the DOL that the federally funded transit project preserves and continues the collective bargaining rights of employees. This process is known as "Section 13 certification." Specifically, section 13(c) of the Urban Mass. Transportation Act of 1964, 49 U.S.C. § 5333(b) (UMTA), provides that before federal funds may be awarded to a state or locally owned transit system the DOL must first conclude the "arrangements... are fair and equitable" to "the interests of employees affected" by the federal funds. Amalgamated Transit Union Int'l, AFL-CIO v. Donovan, 767 F.2d 939, 940 n.1 (D.C. Cir. 1984). Thus, the Federal Transit Administration ("the FTA") cannot award federal funds to a state or local transportation agency for a particular transit project unless and until the DOL certifies the labor arrangement does not undermine "the continuation of collective bargaining rights, " and the proposal "preserv[es]... [the] rights, privileges, and benefits (including continuation of pension rights and benefits) under existing collective bargaining agreements or otherwise." 49 U.S.C. § 5333(b)(2)(A), (B).

B. California's Public Employees' Pension Reform Act of 2013 ("PEPRA")

In 2012, California's Governor signed the PEPRA into law "to reform California's public employee pension systems and to bring the staggering cost of funding such systems under fiscal control." (Compl. ¶ 6, ECF No. 1.) Under PEPRA, new employees must contribute at least 50 percent of the normal costs of their defined benefit plan, and PEPRA establishes a cap on the amount of compensation that can be used to calculate a retirement benefit (among other reforms). See CAL. GOV'T CODE §§ 7522.30(a), 7522.10(c).

C. Procedural History

In September 2012, plaintiffs Sacramento Regional Transit District ("SacRT") and California Department of Transportation ("CalTrans"), applied for funds from the FTA to fund two projects: Phase 2 of the South Sacramento Corridor Light Rail Extension Project and the Monterey-Salinas Transit Mobility Project. In December 2012, the Amalgamated Transit Union ("ATU") filed objections to Section 13 certification with the DOL, arguing PEPRA "require[s] participating employers to unilaterally implement changes to retirement benefits without first bargaining with their employee representative(s)." (Administrative Record ("A.R.") 212, ECF No. 9-2.) The DOL then informed plaintiffs that ATU's objections precluded immediate certification, and asked that ATU and plaintiffs negotiate. After negotiations between plaintiffs and ATU did not result in agreement, in April 2013, the DOL set a briefing schedule on whether PEPRA precluded Section 13(c) certification.

In September 2013, the DOL refused to grant Section 13(c) certification. The DOL concluded "PEPRA makes significant changes to pension benefits that are inconsistent with section 13(c)(1)'s mandate to preserve pension benefits under existing collective bargaining agreements and section 13(c)(2)'s mandate to ensure continuation of collective bargaining rights." (Compl., Ex. A, 2, ECF No. 1.) Accordingly, the FTA denied plaintiffs' two grant applications.

Through this action, plaintiffs challenge the decisions of the DOL, denying Section 13 certification and withholding federal funds, on several grounds. Importantly for the pending motion, plaintiffs assert the decisions were arbitrary and capricious, in violation of § 706(2)(A) of the APA, were in excess of DOL's statutory authority in violation of § 706(2)(C), and DOL prejudged the issues and exhibited bias in violation of due process.

Defendants have lodged the administrative record with the court. (ECF Nos. 9-2, 9-3, 9-4, 9-5.) Therein, the Custodian of Records for the DOL's Office of Labor Management Standards certified the administrative record:

Pursuant to 5 U.S.C. § 706, I hereby certify to the best of my knowledge and belief that the documents annexed hereto constitute a true and correct copy of the administrative record related to the proceedings at issue in the above-captioned case. Privileged documents, including those reflecting internal agency deliberations, are not part of this administrative record.

(ECF No. 9-2.)

As noted, the parties have filed a joint report identifying the documents the parties dispute or agree should be added to the administrative record. (ECF No. 34.)

Defendants have also filed a motion to dismiss, or, in the alternative, for summary adjudication (ECF No. 9-1), which the court will decide after ruling on plaintiffs' motion to supplement the administrative record.


In evaluating a challenge to agency action, the APA directs courts "to review the whole record or those parts of it cited by a party." 5 U.S.C. § 706(2)(F). Thus, the court must review "the full administrative record that was before the [agency] at the time [it made its] decision." Citizens to Preserve Overton Park v. Volpe ( Overton Park ), 401 U.S. 402, 420 (1971), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99 (1977). "[T]he focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court." Camp v. Pitts, 411 U.S. 138, 142 (1973).

"[T]he general rule [is] that review of agency action is limited to the administrative record." Animal Def. Council v. Hodel, 840 F.2d 1432, 1438 (9th Cir. 1988), amended, 867 F.2d 1244 (9th Cir. 1989). Supplementation of the administrative record "decidedly is the exception not the rule." Motor & Equip. Mfrs. Ass'n, Inc. v. EPA, 627 F.2d 1095, 1104 n.18 (D.C. Cir. 1979). Thus, federal "district courts are permitted to admit extra-record evidence" only in the following "limited circumstances":

(1) if admission is necessary to determine "whether the agency has considered all relevant factors and has explained its decision, "
(2) if "the agency has relied on documents not in the record, "
(3) "when supplementing the record is necessary to explain technical terms or complex subject matter, " or
(4) "when plaintiffs make a showing of agency bad faith."

Lands Council v. Powell, 395 F.3d 1019, 1030 (9th Cir. 2005) (quoting Sw. Ctr. for Biological Diversity v. U.S. Forest Serv., 100 F.3d 1443, 1450 (9th Cir. 1996)). "These limited exceptions operate to identify and plug holes in the administrative record, " and "are narrowly construed and applied." Id. (citing Camp, 411 U.S. at 142-43).

As the Ninth Circuit explains, "[t]he scope of these exceptions permitted by our precedent is constrained, so that the exception does not undermine the general rule." Id. "Were the federal courts routinely or liberally to admit new evidence when reviewing agency decisions, it would be obvious that the federal courts would be proceeding, in effect, de novo rather than with the proper deference to agency processes, expertise, and decision-making." Id.


A. Parties' Positions

Plaintiffs seek admission of various categories of documents to supplement the certified administrative record. Specifically, plaintiffs seek admission of correspondence addressing the impact of PEPRA on Section 13(c) certification of separate transit projects (including projects in Los Angeles and Orange Counties), certain electronic correspondence pertaining to the challenged decisions, documents pertaining to other Section 13(c) disputes in other states that enacted new public pension reform laws (Ohio, Massachusetts, and New Jersey), and internal agency memoranda. Plaintiffs also request defendants provide a privilege log, and that the court grant plaintiffs leave to conduct discovery. Plaintiffs argue their requests are warranted because the administrative record submitted by the agency does not include these items and they "have reasonable, non-speculative grounds to support their belief that Defendants considered the[se] [items] in reaching the challenged decisions." (Mot. to Supplement A.R. 9:16-20, ECF No. 18-1.) Plaintiffs also contend the "documents that Plaintiffs have identified rebut any presumption of regularity that would typically be afforded to the Record, " because these documents evince the "importance of the PEPRA-13(c) issue and the appearance that the challenged decisions may have been affected by partisan considerations." ( Id. at 12:7-11.)

Defendants oppose the admission of most of the documents plaintiffs identify. Defendants counter the admission of documents pertaining to the Los Angeles and Orange County transit projects and Section 13(c) certification in other states indicate, at most, the DOL was "grappling with similar issues" in other locations, not that it "pre-judged the decisions" challenged in this case. (Opp'n 8, ECF No. 24.) The other documents, defendants argue, should not be admitted because they were not before the agency at the time it made the decisions to deny Section 13(c) certification. Defendants argue plaintiffs have not met their burden for seeking discovery because plaintiffs "do not identify a relevant factor' that DOL did not consider, ... nor do they make a showing of agency bad faith." ( Id. at 14:25-15:7.) Further, defendants argue internal agency memoranda are properly excluded from the administrative record, citing Portland Audubon Soc'y v. Endangered Species Comm., 984 F.2d 1534, 1549 (9th Cir. 1993) (reasoning documents that "concern... the internal deliberative processes of the agency" are properly excluded from the administrative record). Defendants also argue the agency need not provide a privilege log under Cook Inletkeeper v. U.S. E.P.A., 400 F.Appx. 239, 240 (9th Cir. 2010) (denying the petitioners' "motion to require preparation of a privilege log."). Finally, defendants do not oppose the admission of correspondence between political officials: (1) a letter from California Governor Brown to then-acting Secretary of Labor Harris, (2) a letter from Governor Brown to President of the United States, Barack Obama, and (3) a letter from defendant, Secretary of ...

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