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National Association of Manufacturers v. Perez

United States District Court, D. Columbia.

May 7, 2015

National Association of Manufacturers, et al., Plaintiffs,
v.
Thomas Perez, Secretary, U.S. Department of Labor, et al., Defendants

For NATIONAL ASSOCIATION OF MANUFACTURERS, VIRGINIA MANUFACTURERS ASSOCIATION, Plaintiffs: Christopher J. Lalak, Peter N. Kirsanow, LEAD ATTORNEYS, PRO HAC VICE, BENESCH, FRIEDLANDER, COPLAN & ARANOFF LLP, Cleveland, OH; Maynard A. Buck, Patrick O. Peters, LEAD ATTORNEYS, PRO HAC VICE, BENESCH, FRIEDLANDER, COPLAN & ARANOFF, Cleveland, OH; Gregory F. Jacob, O'MELVENY & MYERS, LLP, Washington, DC.

For THOMAS E. PEREZ, In His Official Capacity as Secretary, United States Department of Labor, UNITED STATES DEPARTMENT OF LABOR, PATRICIA A. SHIU, In her Official Capacity as Director, Office of Federal Contract Compliance Programs, United States Department of Labor, Employment Standards Administration, OFFICE OF FEDERAL CONTRACTS COMPLIANCE PROGRAMS, United States Department of Labor, Employment Standards Administration, MICHAEL J. HAYES, In His Official Capacity as Director Office of Labor-Management Standards, United States Department of Labor, OFFICE OF LABOR-MANAGEMENT STANDARDS, United States Department of Labor, Defendants: Adam D. Kirschner, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Washington, DC.

MEMORANDUM OPINION

Amit P. Mehta, United States District Judge.

I. INTRODUCTION

On May 20, 2010, the U.S. Department of Labor promulgated a new federal regulation entitled " Notification of Employee Rights under Federal Labor Laws," which this opinion shall refer to as the " Posting Rule." The Department of Labor developed the Posting Rule in response to an Executive Order issued by the President under the Procurement Act. The Posting Rule requires as a condition of nearly all federal contracts that contractors post workplace notices informing their employees of their rights under the National Labor Relations Act. Contractors subject to the Posting Rule must display such notices in the same manner that they do other notices--physically, electronically, or both. The failure to post can result in cancellation, termination or suspension of the present contract (or part of the contract), or debarment from government contracting.

This case presents constitutional and statutory challenges to the Posting Rule. Plaintiffs National Association of Manufacturers and Virginia Manufacturers Association are trade groups that represent government contractors. They filed suit urging the Court to enjoin the Posting Rule, contending that (1) the rule compels speech in violation of the First Amendment; (2) the President and the Department of Labor lacked the authority to promulgate the rule under the Procurement Act; (3) the rule is an arbitrary and capricious construction of the Procurement Act; and (4) the rule is preempted by the National Labor Relations Act.

The court concludes that these challenges to the Posting Rule are without merit. The court, therefore, denies Plaintiffs' Motion for Summary Judgment and grants Defendants' Motion for Summary Judgment.

II. BACKGROUND

A. Creation and Content of the Posting Rule

1. Executive Order 13496

The Posting Rule has its origin in Executive Order (E.O.) 13496, signed by President Obama on January 30, 2009. Exec. Order No. 13496, 74 Fed.Reg. 6107 (Jan. 30, 2009). Invoking his authority under " the Constitution and the laws of the United States of America, including the Federal Property and Administrative Services Act, 40 U.S.C. 101 et seq.," also known as the Procurement Act, the President instituted a requirement that every government contract, unless exempted, include provisions mandating that federal contractors and subcontractors post a notice " describ[ing] the rights of employees under Federal labor laws." Id. at 6107-08. The President's stated goal for E.O. 13496 was " to promote economy and efficiency in Government procurement." Id. at 6107. The Executive Order explained that " [w]hen the Federal Government contracts for goods or services, it has a proprietary interest in ensuring that those contracts will be performed by contractors whose work will not be interrupted by labor unrest." Id. The President concluded:

The attainment of industrial peace is most easily achieved and workers' productivity is enhanced when workers are well informed of their rights under Federal labor laws, including the National Labor Relations Act . . . . Relying on contractors whose employees are informed of such rights under federal labor laws facilities the efficient and economical completion of the Federal Government's contracts.

Id.

2. The Posting Rule

President Obama tasked the Secretary of Labor with implementing E.O. 13496 and drafting the required notice. Id. The Secretary delegated this task to the Office of Labor-Management Standards within the Department of Labor, which developed the Posting Rule through an informal notice-and-comment rulemaking process. See generally " Notification of Employee Rights Under Federal Labor Laws," 75 Fed.Reg. 28,368 (May 10, 2010), ECF No. 16-2. A final version of the Posting Rule was issued on May 10, 2010. Id.; see also 29 C.F.R. § 471.

The Posting Rule requires federal government contractors and subcontractors to post a notice " in conspicuous places in and about [their] plants and offices where employees covered by the National Labor Relations Act engage in activities relating to the performance of the contract, including all places where notices to employees are customarily posted both physically and electronically." 29 C.F.R. § 471, Subpt. A, App. A. The workplace notice, entitled " Employee Rights Under the National Labor Relations Act" (" the Notice" ), consists of three sections, which generally describe (1) collective bargaining rights of employees under the NLRA; (2) anti-union actions that are illegal for employers to perform; and (3) coercive actions that are illegal for unions to use. Id. Text at the bottom of the Notice encourages employees who believe their rights have been violated to contact the National Labor Relations Board. Id. The lower left-hand side of the Notice states: " This is an official Government Notice and must not be defaced by anyone." Id. The lower right-hand side of the Notice features the words " U.S. Department of Labor" and bears the agency's seal. Id.; see also OFFICE OF LABOR-MGMT. STANDARDS, Exec. Order 13496: Notification of Emp. Rights Under Fed. Labor Laws , U.S. DEP'T OF LABOR, http://www.dol.gov/olms/regs/compliance/EO13496.htm (last visited May 7, 2015) (providing copies of the Notice in multiple languages) [hereinafter Notice Posting Example ]. A copy of the Notice is appended to this opinion as Exhibit A.

The Notice does not include every recognized labor right. For instance, as Plaintiffs complain, the Notice does not mention an employee's right to object to payment of dues in excess of the amounts required for representational purposes (a right recognized by the Supreme Court in Commc'ns Workers of Am. v. Beck, 487 U.S. 735, 108 S.Ct. 2641, 101 L.Ed.2d 634 (1988)); an employee's right to decertify a union; or an employee's right to refuse to pay dues to a union in a right-to-work state. Pls.' Mem. of the Nat'l Ass'n of Mfrs. and Va. Mfrs. Ass'n in Supp. of their Mot. for Summ. J., ECF No. 16-1 at 3 [hereinafter Pls.' Mem.]. During the rulemaking process, the Department of Labor received comments that the Notice was underinclusive in its description of employee rights, particularly " rights associated with an anti-union position." See 75 Fed.Reg. at 28,372. The Department of Labor rejected revising the Notice to acknowledge such rights, " because of space limitations and because of the policy choice, as expressed in Executive Order 13496, to revoke a more explicit notice to employees of Beck rights." Id. at 28,379.

If a contractor refuses to comply with the Posting Rule, it may be subject to a wide range of sanctions, including conciliation efforts (a simple correction of the violation and a written promise not to violate the Rule again); cancellation, termination, or suspension of a contract (or part of a contract); or an order of partial or full debarment from contracts with one or more federal agencies. 29 C.F.R. § § 471.12-471.14. Cancellation, termination, suspension, and debarment cannot be used as punishments if the contracting agency objects or if the contractor has not been given an opportunity for a hearing. 29 C.F.R. § 471.14.

B. Procedural History

Plaintiff National Association of Manufacturers is the largest manufacturing association in the United States, representing both small and large employers. Compl. ¶ 3, ECF No. 1. Plaintiff Virginia Manufacturing Association is a member of the National Association of Manufacturers and advocates on behalf of constituent manufacturer-members contributing to the Virginia economy. Compl. ¶ 4. On December 18, 2013, Plaintiffs filed a complaint alleging that the Posting Rule and the corresponding Notice promulgated by Defendants--the Department of Labor and various offices and officials within the agency[1]--were unlawful, and requesting that the Posting Rule be preliminarily and permanently enjoined. Compl. at 12-13.

On May 1, 2014, the parties filed Cross-Motions for Summary Judgment. See Pls.' Mot. for Summ. J., ECF No. 16; Pls.' Mem.; Defs.' Mot. and Mem. for Summ. J., ECF No. 17 [hereinafter Defs' Mem.]. The court held oral argument on the motions on March 27, 2015.

III. STANDARD OF REVIEW

Summary judgment will only be granted if the movant can show that " there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In making this determination, the court reviews all " [u]nderlying facts and inferences . . . in the light most favorable to the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute is " genuine" only if a reasonable fact-finder could find for the nonmoving party, while a fact is " material" only if it is capable of affecting the outcome of litigation. Id. at 248. A non-material factual dispute is insufficient to prevent the court from granting summary judgment. Id.

Because the court here is reviewing the administrative record, the typical summary judgment standards established in Federal Rule of Civil Procedure 56 are not fully applicable. See Stuttering Found. of Amer. v. Springer, 498 F.Supp.2d 203, 207 (D.D.C. 2007). Instead of resolving factual issues, the district court is tasked with " determin[ing] whether or not as a matter of law the evidence in the administrative record permitted the agency to make the decision it did." Id. (quoting Occidental Eng'g Co. v. INS, 753 F.2d 766, 769-70 (9th Cir. 1985)). On cross-motions for summary judgment, " each side concedes that no material facts are at issue," although this applies " only for the purposes of [each side's] own motion" and does not mean that " a party [has] waive[d] the right to a full trial on the merits." Sherwood v. Wash. Post, 871 F.2d 1144, 1148 n.4, 276 U.S.App.D.C. 404 (D.C. Cir. 1989) (quoting McKenzie v. Sawyer, 684 F.2d 62, 68 n.3, 221 U.S.App.D.C. 288 (D.C. Cir. 1982), abrogated on other grounds by Berger v. Iron Workers Reinforced Rodmen, Local 201, 170 F.3d 1111, 335 U.S.App.D.C. 179 (D.C. Cir. 1999)); see also Hodes v. U.S. Dep't of Treasury, 967 F.Supp.2d 369, 373 (D.D.C. 2013). As described by the Court of Appeals, " when a party seeks review of agency action under the APA, the district judge sits as an appellate tribunal" and " [t]he 'entire case' on review is a question of law." Am. Bioscience Inc. v. Thompson, 269 F.3d 1077, 1083, 348 U.S.App.D.C. 77 (D.C. Cir. 2001) (footnote and citations omitted).

IV. ANALYSIS

A. First Amendment Challenge to the Posting Rule

The court begins with Plaintiffs' challenge to the Posting Rule under the First Amendment. Plaintiffs contend that the Posting Rule violates their members' " right to refrain from speaking" by requiring their members, as a condition of contracting with the federal government, to display what they say is a Notice biased in favor of unionization. Pls.' Mem. at 6. They characterize the posting requirement as " present[ing] federal contractors with an offer they can't refuse: either post a list of rights slanted in favor of unionization or subject yourself to sanctions up to and including debarment from federal contracts." Id. at 7. In short, ...


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