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Air Transport Association of America, Inc. v. National Mediation Board

June 28, 2010

AIR TRANSPORT ASSOCIATION OF AMERICA, INC., ET AL., PLAINTIFFS,
v.
NATIONAL MEDIATION BOARD, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Paul L. Friedman United States District Judge

OPINION

This matter is before the Court on the parties' cross-motions for summary judgment. The Court heard oral argument on the motions on June 21, 2010. After careful consideration of the parties' papers and attached exhibits, the Final Rule and portions of the administrative record, the oral argument made by counsel in open court, and the relevant case law and statutes, the Court granted the defendants' motions, denied the plaintiffs' motions, and entered judgment for the defendants on June 25, 2010. This Opinion explains the reasoning underlying the Court's June 25 Order.

I. BACKGROUND

The National Mediation Board (the "Board"), the federal agency that oversees labor-management relations involving railroads and airlines, is required by the Railway Labor Act ("RLA") to investigate representation disputes "among a carrier's employees as to who are the representatives of such employees . . . and to certify to both parties, in writing . . . the name or names of the individuals or organizations that have been designated and authorized to represent the employees involved in the dispute, and to certify the same to the carrier." 45 U.S.C. § 152, Ninth. The Board may hold an election by secret ballot or use "any other appropriate method" to determine what representative, if any, the employees have selected. Id. The carrier is obligated to "treat" with the certified organization as the employee's bargaining representative. Id.

The Board's traditional policy in conducting elections, which had been in place for 75 years, required that a majority of all eligible voters in the craft or class must cast valid ballots in favor of representation (the "Original Rule") before the Board would certify the election. See Representation Election Procedure, 75 Fed. Reg. 26,062, 26,062 (May 11, 2010) (to be codified at 29 C.F.R. pts. 1202, 1206). This policy was based on the Board's construction of Section 2, Fourth of the RLA. Id.

On May 11, 2010, after an informal rulemaking process involving notice and comment, the Board issued a Final Rule which changed this policy (the "New Rule"). See 75 Fed. Reg. at 26,062. The New Rule amends the Board's rules to provide that, in representation disputes, a majority of the valid ballots that are actually cast will determine the craft or class representative. See id. at 26,062. It does not require that a majority of the craft or class participate in the election.

On May 17, 2010, plaintiff Air Transport Association of America, Inc. ("ATA") filed this lawsuit, asserting that the New Rule violates the RLA, 45 U.S.C. § 152, Fourth, and that it is arbitrary, capricious, and not in accordance with law under the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 551 et seq. Two days later, ATA moved for a preliminary injunction to enjoin the New Rule from going into effect as scheduled on June 10, 2010. At an initial status conference, the government agreed to stay the effective date of the New Rule until June 30, 2010, to permit the litigation before the Court to proceed at a more measured pace. In the time since ATA's complaint was filed, numerous parties have intervened on both sides of the case: the Chamber of Commerce and five individual Delta employees as plaintiffs, and the International Brotherhood of Teamsters, the Aircraft Mechanics Fraternal Association, and the United States Airline Pilots Association as defendants.

In connection with the motion for a preliminary injunction, ATA also filed a motion to take expedited discovery to support its contention that two members of the Board acted with unalterably closed minds regarding the New Rule and predetermined the outcome of the rulemaking process in violation of the APA. After hearing oral argument, the Court denied the motion. See Opinion and Order, Dkt. No. 44 (June 4, 2010). Thereafter, because the entire case would be resolved based on the administrative record, which was filed on June 14, 2010, the parties agreed to convert the briefing on ATA's motion for a preliminary injunction into cross-motions for summary judgment.

II. LEGAL FRAMEWORK

A. The Administrative Procedure Act

The National Mediation Board's rulemaking is subject to review under Section 706 of the Administrative Procedure Act. See, e.g., U.S. Airways, Inc. v. National Mediation Board, 177 F.3d 985, 989 & n.2 (D.C. Cir. 1999); Ry. Labor Executives' Ass'n v. National Mediation Board, 29 F.3d 655, 672-73 (D.C. Cir. 1994) (Randolph, J., concurring). The standard of review under Section 706 of the APA "is a highly deferential one. It presumes agency action to be valid." Humane Soc'y of the United States v. Kempthorne, 579 F. Supp. 2d 7, 12 (D.D.C. 2008) (quoting Ethyl Corp. v. EPA, 541 F.2d 1, 34 (D.C. Cir. 1976)). Nevertheless, a reviewing court must reject agency action if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Agency action is arbitrary and capricious if the agency relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983). If the agency has "considered the relevant factors and articulated a rational connection between the facts found and the choices made," its decision cannot be considered arbitrary and capricious. Balt. Gas & Elec. Co. v NLRB, 462 U.S. 87, 105 (1983); see also City of Portland v. EPA, 507 F.3d 706, 713 (D.C. Cir. 2007).

As explained in more detail below, one of the plaintiffs' principal arguments calls into question the Board's interpretation of the RLA. When the action under review involves an agency's interpretation of a statute that the agency is charged with administering, the Court applies the familiar analytical framework set forth in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). "Under step one of Chevron, [the court] ask[s] whether Congress has directly spoken to the precise question at issue, in which case [the court] must give effect to the unambiguously expressed intent of Congress." Sec'y of Labor, Mine Safety & Health Admin. v. National Cement Co. of California, Inc., 494 F.3d 1066, 1073 (D.C. Cir. 2007) (internal quotation marks and citation omitted); see also Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. at 842-43. In determining whether Congress has directly spoken to the precise question at issue, the Court should use all the "traditional tools of statutory construction," including textual analysis, structural analysis, and (when appropriate) legislative history. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. at 843 n.9; see also Bell Atlantic Tel. Co. v. FCC, 131 F.3d 1044, 1047 (D.C. Cir. 1997). If, after employing these tools, the Court concludes that "the statute is silent or ambiguous with respect to the specific issue . . . , [the Court] move[s] to the second step and defer[s] to the agency's interpretation as long as it is 'based on a permissible construction of the statute.'" Sec'y of Labor, Mine Safety & Health Admin. v. National Cement Co. of California, Inc., 494 F.3d at 1074 (quoting Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. at 843); see also In Defense of Animals v. Salazar, 675 F. Supp. 2d 89, 94 (D.D.C. 2009).

In the D.C. Circuit, Chevron step two review is similar to (but conceptually distinct from) the standard "'arbitrary and capricious' style analysis" described in the first paragraph of this subsection. Continental Airlines, Inc. v. DOT, 843 F.2d 1444, 1452 (D.C. Cir. 1988).*fn1 Thus, a "'reasonable' explanation of how an agency's interpretation serves the statute's objectives is the stuff of which a 'permissible' construction is made . . . ; an explanation that is 'arbitrary, capricious, or manifestly contrary to the statute,' however, is not." Northpoint Technology Ltd. v. FCC, 412 F.3d 145, 151 (D.C. Cir. 2005) (quoting Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. at 844). "'Reasonableness' in this context means . . . the compatibility of the agency's interpretation with the policy goals . . . or objectives of Congress." Continental Airlines Inc. v. DOT, 843 F.2d at 1452. As a result, "the critical point is whether the agency has advanced what the Chevron Court called 'a reasonable explanation for its conclusion that the regulations serve the . . . objectives [in question].'" Continental Airlines Inc. v. DOT, 843 F.2d at 1452; see also 1 RICHARD J. PIERCE, JR., ADMINISTRATIVE LAW TREATISE § 3.6 at 172-73 (4th ed. 2002) (under Chevron step two, courts must determine, among other things, "whether the agency adequately discussed the relationship between the interpretation and pursuit of the goals of the statute").*fn2

B. Summary Judgment

Summary judgment may be granted "if the pleadings, the discovery and disclosure materials on file, and any affidavits [or declarations] show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). In a case involving review of a final agency action under the Administrative Procedure Act, 5 U.S.C. § 706, however, the Court's role is limited to reviewing the administrative record, so the standard set forth in Rule 56(c) does not apply. See Catholic Health Initiatives v. Sebelius, 658 F. Supp. 2d 113, 117 (D.D.C. 2009); Cottage Health Sys. v. Sebelius, 631 F. Supp. 2d 80, 89-90 (D.D.C. 2009). "Under the APA, it is the role of the agency to resolve factual issues to arrive at a decision that is supported by the administrative record, whereas 'the function of the district court is to determine whether or not as a matter of law the evidence in the administrative record permitted the agency to make the decision it did.'" Catholic Health Initiatives v. Sebelius, 658 F. Supp. 2d at 117 (quoting Cottage Health System v. Sebelius, 631 F. Supp. 2d at 90). Summary judgment serves as "the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review," but the normal summary judgment standard does not apply. See id.; see also Fund for Animals v. Babbitt, 903 F. Supp. 96, 105 (D.D.C. 1995).

III. DISCUSSION

At issue in this case is the section of the Railway Labor Act that provides: "Employees shall have the right to organize and bargain collectively through representatives of their own choosing. The majority of any craft or class of employees shall have the right to determine who shall be the representative of the craft or class for the purposes of this [Act]."

45 U.S.C. § 152, Fourth ("Section 2, Fourth"). Plaintiffs assert that the New Rule is unlawful because: (1) it conflicts with the plain text of Section 2, Fourth; (2) it is an unreasonable interpretation of Section 2, Fourth; and (3) both the Rule and the process by which it was promulgated are arbitrary and capricious under the APA. The Court will address these arguments in turn.*fn3

A. Chevron Step One: The RLA Is Ambiguous

Plaintiffs argue that Section 2, Fourth unambiguously provides that a representative may be certified by the Board only if a majority of eligible employees in the craft or class vote in favor of union representation. See Complaint ¶ 2. They argue that the phrase "majority of any craft or class" does not mean "majority of voters," and therefore that determining a representative based only on the majority of votes cast does not ensure that the majority of the craft or class has exercised the right provided by Congress in Section 2, Fourth. In addition, according to plaintiffs, the phrase "right to determine" cannot be equated with a "right to participate." Rather than giving all members of the craft or class only the opportunity to vote, plaintiffs say that Section 2, Fourth requires that a majority of the craft or class affirmatively select the representative, if any, before the Board is empowered to certify that representative. Because the New Rule does not require that a majority of eligible employees select the representative, plaintiffs maintain that it conflicts with the plain meaning of the RLA.

Plaintiffs' interpretation of the statute reads strictness into the statutory text where none exists. Contrary to plaintiffs' reading, nothing in the statute unambiguously requires that a majority of all eligible voters select the representative of the employees. Nor by its terms does it even require that a majority of all eligible employees vote in order for the election to be valid. Indeed, Section 2, Fourth is completely silent as to how an employee may exercise his or her right to determine a representative. This silence creates ambiguity in the statute. The Court's conclusion that the statutory language is ambiguous is supported by the case law, the structure of the statute as a whole, and what minimal legislative history exists.

1. Virginian Railway and Subsequent Cases

The Supreme Court considered the statutory language at issue in Virginian Railway Co. v. System Federation No. 40, 300 U.S. 515 (1937), a decision which, although more than seventy years old, still guides analysis of the statute. In Virginian Railway, the petitioner challenged the certification of a union that obtained the majority of votes cast, but not a majority of the craft or class as a whole, arguing that a representative must be selected by a ...


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