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Alabama Education Ass'n v. Chao

March 27, 2008

ALABAMA EDUCATION ASS'N, ET AL., DELAWARE FEDERATION OF TEACHERS, ET AL., PLAINTIFFS,
v.
ELAINE L. CHAO, SECRETARY, U.S. DEPARTMENT OF LABOR, IN HER OFFICIAL CAPACITY, DEFENDANT,



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

MEMORANDUM OPINION

After 40 years of a consistent interpretation of the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. § 401 et seq. ("LMRDA"), that excluded all public sector unions from its coverage, the Department of Labor ("DOL") changed its mind. The D.C. Circuit Court of Appeals held that DOL had failed to give a reasoned explanation for its sudden change of heart. Ala. Educ. Ass'n v. Chao, 455 F.3d 386 (D.C. Cir. 2006). On remand, DOL defends a new Policy Statement*fn1 as providing that reasoned explanation against challenges advanced by the Alabama Education Association and other State Education Associations ("SEAs") and the Delaware Federation of Teachers and other State Federations of Teachers ("SFTs"). The challenges raise serious issues and might convince the Court, were it the decisionmaker. The Court's role, however, is much more limited: if the Secretary presents a reasoned analysis for her choice between two permissible interpretations of a statutory ambiguity, her policy choice must be upheld. That is the situation here.

The LMRDA requires labor unions to file extensive financial reports annually with DOL. Excluded from this and other statutory requirements is "[a] labor organization composed entirely of employees of the governmental entities excluded by section 3(e)." 29 C.F.R.§ 451.3(a)(4) (2008). As a result, public sector unions at all levels have been free of LMRDA obligations since the statute was adopted in 1959. In October 2003, the Secretary read a decision of the Ninth Circuit, Chao v. Bremerton Metal Trades Council, AFL-CIO, 294 F.3d 1114 (2002), as giving her authority to expand the coverage of the LMRDA to intermediate-level public sector unions that are affiliated with national unions composed, in part, of private sector employees, regardless of whether the intermediate union is composed solely of public sector employees. Rebuffed by the D.C. Circuit because Bremerton was being mis-read, the Secretary reconsidered and "determined that the purposes of the LMRDA are better served by basing coverage . . . on the fact that the intermediate labor organization is under the jurisdiction and control of another labor organization covered by the Act." See Secretary's Mem. in Opp'n to Pls.' Second Mots. for Summ. J. ("Sec.'s Opp'n") [Dkt. #50] at 2. After all, "it is difficult to understand what practical objections could be lodged against the adoption of a policy that increases labor organization reporting and disclosure." Id. at 3.*fn2

I. BACKGROUND FACTS

This case is again before the Court on summary judgment cross motions, this time in light of (i) the Court of Appeals' intervening decision remanding the matter to the DOL for a reasoned explanation of the DOL's 2003 decision to change its interpretation of § 3(j)(5) of the LMRDA; and (ii) the DOL's subsequent issuance of a "Policy Statement; Interpretation."

LMRDA § 3(i) provides that for LMRDA purposes:

"Labor organization" means a labor organization engaged in an industry affecting commerce and includes any organization of any kind, any agency, or employee representation committee, group, association, or plan so engaged in which employees participate and which exists for the purpose in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours, or other terms or conditions of employment, and any conference, general committee, joint or system board, or joint council so engaged which is subordinate to a national or international labor organization, other than a State or local central body.

29 U.S.C. § 402(i). The Second Clause is at issue in this case. Section 3(j)(5), 29 U.S.C. § 402(j), which is a companion definition clause to the Second Clause, provides that "[a] labor organization shall be deemed to be engaged in an industry affecting commerce" if it --is a conference, general committee, joint or system board, or joint council, subordinate to a national or international labor organization, which includes a labor organization engaged in an industry affecting commerce within the meaning of any of the preceding paragraphs of this subsection, other than a State or local central body. 29 U.S.C. § 402(j)(5).*fn3 From the outset, DOL interpreted these provisions to exempt conferences, etc., composed entirely of public sector local unions, although subordinate to a national or international union that was covered by the LRMDA, such as, in this case, the National Education Association ("NEA") and the American Federation of Teachers ("AFT").

In October 2003, DOL announced that it was changing its interpretation of § 3(j)(5) to bring it into line with "the holding of the U.S. Court of Appeals for the Ninth Circuit in Chao v. Bremerton Metal Trades Council, AFL-CIO, 294 F.3d 1114 (2002)." See 68 Fed. Reg. 58,374, 58,383-84 (Oct. 9, 2003). Under the changed interpretation, all purely public sector intermediate conferences, etc., that are subordinate to a covered national or international union that includes a private-sector local union became LMRDA-covered labor organizations. See id. at 58,38384.

When the SEAs and SFTs challenged the new regulation, this Court held that DOL's changed interpretation was impermissible because it was contrary to the plain meaning of the statute and its legislative history and purpose. See Mem. Op. [Dkt #35]. On appeal, the D.C. Circuit stated that, although "the SEAs and the SFTs well may have the better reading of the statute," the question was a "close" one that was not properly before the Court. See Ala. Educ. Ass'n, 455 F.3d at 396. That was so because "from a purely grammatical standpoint" the DOL's changed interpretation of § 3(j)(5) is a permissible one, and "we have made clear that an agency's interpretation of a statute is entitled to no less deference [under Chevron, U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984)] simply because it has changed over time." Id. (internal quotations omitted). "Rather," said the Court of Appeals, "the question raised by the change [in interpretation] is whether the Department has supported its new reading of § 3(j)(5) with a 'reasoned analysis' sufficient to command our deference under Chevron." Id. Such a reasoned analysis was missing because [i]n responding to comments submitted by the NEA and the AFL-CIO, the Department relied upon the Ninth Circuit's decision in Bremerton, but did not acknowledge or seem to realize that the court there did not face the question at issue here, that is, whether a body that does not represent statutory "employees" or deal with statutory "employers" may be subject nonetheless to the LMRDA. For the Department to claim it revised its reading of § 3(j)(5) in order to "adopt the . . . 'holding' of Bremerton," 67 Fed. Reg. at 79,284, therefore, does not contribute anything toward the reasoned analysis required of it.

Id. at 397. Accordingly, the Court of Appeals reversed the grant of summary judgment to the SEAs and SFTs, but remanded to DOL to provide the necessary reasoned analysis.

On January 26, 2007, DOL published a Policy Statement in the Federal Register "in response to the remand order." Policy Statement, 72 Fed. Reg. 3735 (Jan. 26, 2007); 2007 WL 186395 (F.R.). The Secretary adhered to the position first articulated in October 2003 and determined that the clause, "which includes a labor organization engaged in an industry affecting commerce within the meaning of any of the preceding paragraphs of this subsection," in § 3(j)(5), "modifies 'national or international labor organization'" and not "'conference' and other listed intermediate bodies." Id. ("The Department's LMRDA Rulemaking"). The result of DOL's re-asserted interpretation "is that intermediate bodies that are subordinate to a national or international labor organization that includes a covered labor organization will be covered by the LMRDA, even if the intermediate body is composed of solely public sector local labor unions not covered by the Act." Id. ("Explanation for the Department's Revised Interpretation of Section 3(j)(5)"). DOL gave three reasons for its interpretation.

First, the Department has selected a policy alternative that is consistent with the terms of the statute and promotes Congress's purposes in enacting the LMRDA . . .[by] advanc[ing] the twin Congressional goals that labor organizations' financial conditions and operations should be subject to public disclosure to benefit employees*fn4 that participate in those organizations, and that the definition of "labor organizations" covered by the LMRDA should be interpreted broadly to advance union democracy, financial transparency, and integrity.

Second, the expanded coverage . . . promotes disclosure of financial disbursements and receipts to and from structurally related labor organizations, thus enhancing employees' ability to understand the overall operation of labor organizations in general, as well as identify any potential financial irregularities in ...


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