State of California v. United States Department of Labor et al

Filing 136

ORDER signed by District Judge Kimberly J. Mueller on 1/24/2018 GRANTING 99 Motion for Partial Summary Judgment on the DOLs § 13(c)(1) denial as to MST classic employees. Given this order, the State has prevailed on all issues. CASE CLOSED. (Hunt, G)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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STATE OF CALIFORNIA, et al.,

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Plaintiffs,

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No. 2:13-cv-02069-KJM-DB

v.

ORDER

UNITED STATES THE DEPARTMENT
OF LABOR, et al.,
Defendants.

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The State of California (“State”) has sought a federal grant for two state transit

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projects. The United States Department of Labor (“DOL”) has refused to certify the State to

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receive the grant funds. The State argues this refusal of certification was arbitrary and capricious

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under the Administrative Procedure Act (“APA”). Although the court previously resolved the

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parties’ cross motions for summary judgment, largely in the State’s favor, one question remains:

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Whether DOL can properly base its refusal to certify the State to receive grant funds based on an

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intervening state law’s changes to pension benefit provisions affecting certain employees that

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work for Monterey-Salinas Transit (“MST”). As explained below, the court grants judgment for

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the State on this remaining issue.

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I.

BACKGROUND

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The parties dispute the adequacy of the statutory interpretation in which the DOL

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engaged to deny the State’s request for funding under § 13(c)(1) of the Urban Mass

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Transportation Act of 1964, 49 U.S.C. § 5301(a) (“UMTA”). The court has provided an

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extensive background section in its summary judgment order, see Order Aug. 22, 2016, ECF

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No. 121 (“SJ Order”), at 2-10, and so summarizes only relevant background information here.

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A.

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UMTA
Congress enacted UMTA in 1964 to revamp deteriorating transit systems

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throughout the nation. 49 U.S.C. § 5301(a). UMTA created a federal agency, now called the

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Federal Transit Administration (“FTA”), to disburse funds for large-scale urban rail projects:

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Transit systems apply for funds related to specific transit projects and the FTA grants funds,

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subject to certain conditions. Id. § 5301(b)(1)-(8). UMTA sparked a national shift towards

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public operation of mass transportation systems. See Jackson Transit Auth. v. Amalgamated

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Transit Union, 457 U.S. 15, 17 (1982); Kramer v. New Castle Area Transit Auth., 677 F.2d 308,

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310 (3d Cir. 1982) (UMTA was force behind “[t]he whole move away from private transit

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systems and into public systems” by providing “the financial support to allow the changeover to

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public transportation companies”).

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During the legislative process, transit labor unions raised concerns about UMTA’s

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potential impact on transit employees’ rights. The unions feared local governments would use the

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newfound federal funding to assume operation of transit entities, and states would either restrict

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or outright prohibit public employers from bargaining collectively with their employees. Indeed,

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the National Labor Relations Act, intended to safeguard collective bargaining rights, applied (and

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continues to apply) only to private employees. Against this backdrop, labor unions warned

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UMTA could eradicate employees’ hard-earned and bargained-for labor rights, conditions and

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benefits.

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To address this concern, Congress drafted § 13(c), which frames the dispute here.

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See 49 U.S.C. § 5333(b); see also Jackson Transit, 457 U.S. at 17 (“To prevent federal funds

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from being used to destroy the collective-bargaining rights of organized workers, Congress
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included § 13(c) in the Act.”). Before a local government agency receives federal funds for a

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particular transit system, § 13(c) requires that agency to make “arrangements” to protect the rights

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and employment status of its employees. Id. The DOL is charged with certifying that the

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arrangements between the government agency and the affected transit employees are “fair and

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equitable” and that they meet the following five statutory conditions: (1) Preserve the rights,

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benefits, and privileges transit employees have under existing collective bargaining agreements;

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(2) continue these employees’ collective bargaining rights; (3) protect employees’ positions from

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worsening after the federally funded project ends; (4) assure priority reemployment status should

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the employees lose their jobs; and (5) offer paid training or retraining programs. Id. § 5333(b)(1)-

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(2).

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The DOL may refuse to certify a state agency if existing state laws threaten any of

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the five requirements. A denial of certification blocks the applicant from receiving funds. As

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relevant here, the DOL denied the State’s request for funding for MST based on the first

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requirement, identified above, finding a particular state law changed, rather than preserved,

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certain employees’ pension rights in violation of § 13(c)(1). See MST Decision, ECF No. 88-5, at

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8.

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B.

MST’s Collective Bargaining Agreement
MST is the consolidated transportation services agency for Monterey County,

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California. This order pertains only to MST’s “classic employees”: Employees hired after

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January 1, 2013. Since 1983, MST and the Amalgamated Transit Union (“ATU”) have entered

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into collective bargaining agreements that protect MST employees’ labor rights. See

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Administrative Record (“AR”) 50, ECF No. 100. As relevant here, a particular ATU-MST

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agreement was in force when, in December 2012, the State applied for UMTA funding. AR

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50-51 (listing effective dates of ATU’s agreement with MST as October 1, 2010 through

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September 30, 2013). The existing ATU-MST agreement memorialized certain pension rights for

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MST’s classic employees. As relevant here, the agreement defines how MST will calculate a

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pension using the employee’s final salary and the years the employee worked; it also demarcates

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a 36-month period during which MST classic employees can purchase “airtime.” AR 793-94,
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829-31. Airtime is a time credit that adds fictitious years to the true years an employee has

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worked before retiring; airtime can be used to increase the calculation of an employee’s pension.

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AR 794; see 26 U.S.C. § 415(n)(3)(C) (explaining how these “permissive service credits” are

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calculated); see also SJ Order at n.2.

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C.

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California Law
The DOL refused to certify the State’s receipt of funds to benefit MST in part

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because a state law passed in 2012, the California Public Employees Pension Reform Act

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(“PEPRA”), changed the airtime rights provision applicable to MST classic employees under the

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bargaining agreement in place at the time. PEPRA was touted as a “sweeping reform” that

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limited pension benefits for state employees, increased the retirement age for public employees,

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required state employees to pay for half of their pension costs, and stopped abusive pension

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practices. Press Release, Office of Gov. Edmund G. Brown, Jr. (Aug. 28, 2012).1 This court has

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discussed PEPRA in more detail in three prior orders and incorporates those discussions by

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reference here. See SJ Order at 3; California v. U.S. Dep’t of Labor, 76 F. Supp. 3d 1125, 1130

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(E.D. Cal. 2014) (“Remand Order”), order enforced sub nom, California v. U.S. Dep’t of Labor,

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155 F. Supp. 3d 1089 (E.D. Cal. 2016) (“Enforcement Order”).

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The provisions of PEPRA that matter here shortened the time during which MST

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classic employees could exercise their bargained-for right to purchase airtime, by nine months.

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See Cal. Gov’t Code § 7522.46 (public employees may no longer purchase airtime in calculating

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their retirement benefits if calculation based on a percentage of his or her pre-retirement

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compensation). PEPRA defines airtime by reference to the federal Internal Revenue Code. See

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id. § 7522.46(a) (citing 26 U.S.C. § 415(n)(3)(C)). Under PEPRA, applications for airtime credit

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were no longer accepted after January 1, 2013. The preexisting ATU-MST bargaining

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agreement, however, gave MST classic employees the right to buy airtime through September

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2013. The DOL cites this change as evidence the State did not “preserve” MST classic

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employees’ existing pension rights, as § 13(c)(1) requires.

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At the time this order was filed, this press release was available at the following link:
https://www.gov.ca.gov/news.php?id=17694.
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D.

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Procedural History
Soon after PEPRA’s passage, the State applied for federal funding under UMTA to

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benefit MST and one other state transit agency, Sacramento Regional Transit District (“SacRT”).

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SJ Order at 2. The DOL refused to certify the State’s request for funding to benefit either agency,

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citing as the basis both §§ 13(c)(1) (requiring “preservation” of employees’ bargained for rights)

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and 13(c)(2) (requiring “continuation” of these rights). See MST Decision at 8. The State

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successfully challenged the DOL’s decisions under the APA in this court in 2013, and the court

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remanded the matter to the DOL for reconsideration. See Remand Order at 1089; Enforcement

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Order at 30. In 2015, the DOL on remand again refused to certify either agency. Again the State

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sought relief in this court.

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In early 2016, the DOL and the State cross-moved for summary judgment on the

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DOL’s § 13(c)(1) and 13(c)(2) certification denials as to both transit agencies. ECF No. 99; ECF

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No. 104. The court resolved the parties’ dispute in favor of the State except with respect to the

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issue now before the court: The DOL’s § 13(c)(1) analysis as to MST classic employees. SJ

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Order at 51. This issue has now been joined by the State’s supplementation of its complaint to

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clarify that it also challenges the DOL’s § 13(c)(1) certification denial as to MST’s classic

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employees. See First Am. Supp. Compl. Id. ¶¶ 81, 109-111, ECF No. 122 (filed Aug. 29, 2016).

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The parties have briefed the issue, disputing the standard § 13(c)(1) imposes and whether

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PEPRA’s airtime provision precludes satisfaction of that standard. See ECF Nos. 123, 124, 128,

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129.

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II.

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SUMMARY JUDGMENT: ADMINISTRATIVE REVIEW
When a plaintiff challenges a federal agency’s actions under the APA, the district

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court does not identify and resolve factual disputes; the court instead determines whether the

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administrative record supported the agency’s decision as a matter of law. Occidental Eng’g Co.

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v. Immigration and Naturalization Serv., 753 F.2d 766, 769 (9th Cir. 1985). The court examines

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the information the agency had before it and determines whether the agency’s decision was

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“arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law.” See

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George v. Bay Area Rapid Transit, 577 F.3d 1005, 1011 (9th Cir. 2009).
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The court reviews both the path an agency took to arrive at a decision and the

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decision itself. Allentown Mack Sales & Serv., Inc. v. Nat’l Labor Relations Bd., 522 U.S. 359,

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374 (1998) (the APA “establishes a scheme of reasoned decisionmaking”) (citation and quotation

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marks omitted); CHW W. Bay v. Thompson, 246 F.3d 1218, 1223 (9th Cir. 2001) (“[review under

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the APA] focuses on the reasonableness of an agency’s decision-making processes.”). Courts

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may set aside agency decisions that, although legally sound, “are not supported by the reasons

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that the agencies adduce.” Allentown, 522 U.S. at 374; Motor Vehicle Mfrs. Ass’n of U.S., Inc. v.

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State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50 (1983). Here, the State challenges the DOL’s

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interpretation of § 13(c)(1) and the DOL’s process and reasoning as arbitrary and capricious.

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III.

DISCUSSION

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The parties dispute what § 13(c)(1) requires. The DOL based its certification

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denial, in part, on its interpretation of § 13(c)(1) as prohibiting “any change” to MST classic

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employees’ existing pension benefits. See ECF No. 128 at 3 (arguing PEPRA’s airtime provision

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changed MST classic employees’ benefits, warranting §13(c)(1) certification denial). The State

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maintains that § 13(c)(1) prohibits certification only if the State “substantially reduces” MST

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employees’ pension rights. ECF No. 124 at 3. The DOL contends the State’s position contradicts

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§ 13(c)(1)’s plain language.

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When a court reviews an agency’s legal interpretation, the first step involves

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assessing the statute’s plain meaning, which binds both the court and the agency. United States v.

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Mead Corp., 533 U.S. 218, 227–28 & n.6 (2001); Chevron, U.S.A., Inc. v. Nat. Res. Def. Council,

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Inc., 467 U.S. 837, 842-43 (1984). If a statute is ambiguous, the court must decide what level of

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deference to afford the agency’s interpretation. See Mead, 533 U.S. at 227-28.

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This court previously deemed ambiguous § 13(c)(1)’s terms “preserve” and

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“existing.” See SJ Order at 48-49. The court also previously explained why it did not extend

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Chevron deference to the DOL’s interpretation of these ambiguous terms. Id. at 18; Remand

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Order, 76 F. Supp. 3d at 1137. The court finds no basis to reconsider either determination. See

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United States v. Lummi Nation, 763 F.3d 1180, 1185 (9th Cir. 2014) (explaining when a court

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makes a decision in a final order, the court must generally avoid revisiting that decision later on
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in the same case); cf. United States v. Cuddy, 147 F.3d 1111, 1114 (9th Cir. 1998) (district court

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may depart from law of case if first decision was clearly erroneous; if law, evidence, or other

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circumstances changed in meantime; or if applying law of case would work manifest injustice).

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If deference is warranted, it is under the lesser Skidmore standard, under which the court can

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review the DOL’s assessment “with anything from great respect to indifference” depending on

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how well-reasoned it is. See Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). The court next

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construes § 13(c)(1)’s ambiguities as relevant here.

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A.

Section 13(c)(1) Test

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Section 13(c)(1) requires the agency applying for a federal grant to establish

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provisions necessary for the “preservation” of rights, privileges, and benefits under existing

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collective bargaining agreements. 49 U.S.C. § 5333(b)(2)(A). What constitutes an “existing

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agreement” and what it means to “preserve” that right are not obvious from the face of the statute.

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See SJ Order at 48-49. This court previously has resolved the ambiguity concerning what

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constitutes “existing agreements,” concluding the term refers to agreements existing when a

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transit agency applies for federal funds. Id. at 49. The court must now determine what it means

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to “preserve” rights under those existing agreements.

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The statute’s words are always the starting point. Caraco Pharm. Labs., Ltd. v.
Novo Nordisk A/S, 566 U.S. 399, 412 (2012). Section 13(c) provides, in relevant part:
(1) As a condition of financial assistance . . . the interests of
employees affected by the assistance shall be protected under
arrangements the Secretary of Labor concludes are fair and
equitable. . . .
(2) Arrangements under this subsection shall include provisions that
may be necessary for—

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(A) the preservation of rights, privileges, and benefits (including
continuation of pension rights and benefits) under existing
collective bargaining agreements or otherwise;

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(B) the continuation of collective bargaining rights;

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(C) the protection of individual employees against a worsening of
their positions related to employment;

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(D) assurances of employment to employees of acquired public
transportation systems;
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(E) assurances of priority of reemployment of employees whose
employment is ended or who are laid off; and

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(F) paid training or retraining programs.
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49 U.S.C. § 5333(b)(1)-(2).
Unless Congress says otherwise, statutory terms carry their ordinary meanings.

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Roberts v. Sea-Land Servs., Inc., 566 U.S. 93, 100 (2012). At the time the UMTA was enacted,

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“preserve,” as used in subsection (2)(A) above, could have had multiple “ordinary” meanings.

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“Preserve” could plausibly have meant “to keep from harm, damage, danger, evil; protect; save,”

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Webster’s New World Dictionary of the American Language 1153 (college ed. 1962); but it also

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could have meant “to “maintain” or “retain” as in to “preserve silence,” Webster’s New Collegiate

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Dictionary 668 (2d. ed. 1955); or it could have meant to “keep in existence or intact; as in to

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preserve records,” Webster’s International Dictionary of the English Language 1956 (2d ed.

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1955). In other words, the term is ambiguous.

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The State and the DOL interpret this ambiguous term differently. The DOL

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subscribes to a rigid definition, explaining that “preservation of rights” means “an employer

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cannot change rights.” MST Decision at 9; see also ECF No. 128 at 4-5 (standing by its position;

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rejecting the State’s argument that certain changes are permissible). Interpreted as the DOL

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would have it, the provision would effectively bar improving those rights as well. The State

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argues instead that changing an employee’s existing bargained-for rights violates § 13(c)(1) only

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if the change “substantially reduces” those rights. ECF No. 124 at 2.

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Contextually, neither reading holds up. See Robinson v. Shell Oil Co., 519 U.S.

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337, 341 (1997) (explaining context matters, both “the specific context in which that language is

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used and the broader context of the statute as a whole”). The State’s proposed “substantially

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reduced” language is statutorily indefensible: The text does not support a construction using the

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verb “reduced” or the strength of the adjective “substantially.” The State’s reading counters

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§ 13(c)(1)’s purpose to preserve and protect existing agreements.

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The DOL’s interpretation on the other hand is too rigid. To construe § 13(c)(1)’s
obligation to “preserve” rights as completely prohibiting an employer’s “changing” rights at all
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goes too far. As noted, Congress intended to financially support mass transportation, but worried

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that public ownership of transit agencies would threaten rights private employees had previously

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won. Jackson, 457 U.S. at 23-24. Congress included § 13(c) in UMTA to “prevent federal funds

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from being used to destroy the collective-bargaining rights of organized workers[.]” Id. at 17.

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Section 13(c) was meant as a “tool to protect [transit workers’] collective-bargaining rights . . . by

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ensuring that state law preserved their rights before federal aid could be used to convert private

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companies into public entities.” Id. at 27-28 (citing Sen. Morse’s remarks, 109 Cong.Rec. 5673

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(1963)). This context suggests Congress expected collective-bargaining rights could be lost, and

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possibly vanish immediately, during the private-to-public shift. This context reveals the purpose

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of using the word “preserve” in § 13(c)(1) was to prevent eradication of transit employees’ rights

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or worsening of transit employees’ positions; there is no indication the goal was to freeze the

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employees’ rights indefinitely. The DOL’s rigid interpretation thus clashes with Congress’s

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intent, a result the rules of statutory interpretation disfavor. Util. Air Regulatory Grp. v. E.P.A.,

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134 S. Ct. 2427, 2442 (2014).

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Contextually then, the “preservation” language appears to prohibit only those

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changes that harm or diminish bargained-for rights. This reading, in turn, allows for changes that

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are either neutral or positive. See SJ Order at 50 (explaining why “Section 13(c)(1) cannot be

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interpreted to prohibit every “change” to a collective bargaining agreement, even changes without

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any meaningful effect.”). One may argue if Congress meant to prohibit only negative changes, it

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would have said so. Congress did use “worsening” in a later provision. 49 U.S.C.

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§ 5333(b)(2)(C) (requiring that individual employees be protected against “worsening of their

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positions . . .”). Using “worsening” in one provision and “preserving” in another could suggest

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the latter term prohibits any changes, not just changes that harm existing rights.

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Scrutinizing each word in isolation, however, can lead a reader astray. See, e.g.,

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United States v. X-Citement Video, Inc., 513 U.S. 64, 69-70 (1994). What matters under

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§ 13(c)(1), as adopted by Congress, is the nature and degree of changes employers make to their

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employees’ existing rights. Hence, a contextually sound statutory reading is that changing an

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employee’s existing bargained-for rights violates § 13(c)(1) only if the change is negative,
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meaning it eliminates, reduces, or limits those rights, as well as meaningful, as in a change that is

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neither trivial nor purely semantic.

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In sum, the court interprets § 13(c)(1) to provide that the DOL may deny

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certification where a state entity seeks funding for a transit project, but has not protected the

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affected transit entity’s employees against meaningful negative changes to rights and benefits

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conferred by their then-existing collective-bargaining agreements. Id. Applying this standard,

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the court assesses whether PEPRA’s airtime provision has a meaningfully negative effect on

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MST’s classic employees. If it does, then the DOL’s refusal to certify the State under § 13(c)(1)

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was proper.

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B.

PEPRA’s Airtime Changes
The State, on MST’s behalf, applied for grant funding in December 2012. ECF

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No. 9-2 at 105-07, AR 157-59. So, the existing agreement at the time was the ATU-MST

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collective bargaining agreement in effect from October 1, 2010 through September 30, 2013. See

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AR 50-51. The parties agree the existing bargaining agreement allowed MST classic employees

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to purchase airtime through September 2013. ECF No. 124 at 2 nn.5-6. The parties also agree

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PEPRA’s reduction of that period by nine months is the only change relevant to the court’s

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current narrow inquiry. H’rg Tr., ECF No. 134, at 16:19-25 (DOL’s counsel’s effective

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concession that only provision directly relevant here is PEPRA’s airtime provision); see also Cal.

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Gov’t Code § 7522.46 (airtime provision). While DOL still argues the impact of PEPRA’s

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airtime provision on MST classic employees should be examined in aggregation with other

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changes PEPRA’s enactment caused, see Tr. at 17:5-17, the court is not persuaded. Given that

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only the airtime provision directly impacts MST classic employees’ bargained-for rights, and the

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absence of authority to support DOL’s position regarding its aggregation argument, the court

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examines the airtime provision by itself. More narrowly, then, did the nine-month reduction in

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time meaningfully and negatively impact MST classic employees’ existing bargained-for pension

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rights or benefits? To answer this question, the court first determines how much deference to

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give the DOL’s exercise of discretion to subject PEPRA’s airtime provision to § 13(c)(1)’s

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preservation of benefits requirement.
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The DOL contends PEPRA’s elimination of MST classic employees’ airtime

Deference to the DOL

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purchasing power for a nine month period warranted a § 13(c)(1) certification denial. Because

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the DOL’s decision reflects a discretionary application of law, the court reviews the decision

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under Skidmore “with anything from great respect to indifference” depending on how well-

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reasoned it is. Skidmore, 323 U.S. at 140. As explained below, the DOL applied the incorrect

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legal standard, based its denial on several irrelevant PEPRA provisions, and did not rationally

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connect PEPRA’s alleged impact to the DOL’s conclusion. See AR 68-69.

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First, the DOL’s inaccurate interpretation of § 13(c)(1) colors its analysis. Instead

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of examining the nature and meaningfulness of PEPRA’s effect on MST employees’ pension

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rights, the DOL broadly relied on the basic fact that PEPRA “changed” government employee

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pension rights as proof that the State has not “preserved” existing rights. AR 69. As discussed

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above, however, a § 13(c)(1) analysis properly focuses on the nature and degree of change. The

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DOL’s decision recites various PEPRA provisions, including those reviewed below; the DOL

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labels these as barriers to § 13(c)(1) compliance, but does not explain how the changes in state

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law negatively and meaningfully impact MST classic employees’ rights. Id. Mere recitation of

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provisions is not reasoned decision making. See Motor Vehicle Mfrs. Ass’n, 463 U.S. at 52 (it is

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not enough for an “agency to merely recite [ ] terms . . . as a justification for its actions; rather,

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the “agency must explain the evidence which is available, and must offer a ‘rational connection

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between the facts found and the choice made’”) (internal citation omitted). The DOL also still

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has not addressed whether PEPRA bars MST from negotiating over the airtime changes to

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preserve employees’ rights during the term of the collective bargaining agreement by, for

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example, making offsetting contributions to a defined benefits plan. See SJ Order at 40 (noting

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DOL refuses to recognize MST’s ability to collectively bargain around PEPRA’s restrictions).

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Second, the DOL partially bases its decision on PEPRA provisions that DOL now

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effectively concedes do not apply to MST classic employees, as explained below. H’rg Tr. at

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16:19-25 (DOL’s counsel’s argument only that PEPRA’s airtime provision changed MST classic

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employees’ benefits); see also ECF No. 128 (briefing focused only on the airtime provision). For
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example, the DOL cites PEPRA’s change to the definition of pensionable compensation. AR 69.

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But this change does not apply to MST. See Cal. Gov’t Code § 31461 (enacting pension spiking

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ban on 1937 Act systems, a type of system that does not apply to any CalPERS participants,

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including MST employees); see also ECF No. 9-5 at 414 (administrative record defining Cal.

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Gov’t Code § 31461’s applicability). The DOL also condemned PEPRA’s cap on pensionable

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compensation. AR 69 (citing Cal. Gov’t Code § 7522.10(c)). But that too does not apply to

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classic employees at all, let alone MST’s classic employees. See Cal. Gov’t Code § 7522.10

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(impacts on retired annuitants; ban on double-dipping); id. §§ 7522.57(a)-(d) (ban on double-

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dipping); id. § 7522.72 (pension forfeiture due to felony conviction).

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Finally, the DOL offers new reasons for its decision on remand. For instance, the

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DOL cites the flood of government employees’ December 2012 applications to purchase airtime

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credits as evidence of PEPRA’s impact. ECF No. 128 at 5. But this finding does not appear

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anywhere in the DOL’s initial denial decision. See AR 68-69. The court cannot affirm the

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DOL’s decision based on post hoc rationalizations: The DOL must support its decision based on

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reasons articulated at the time of the first denial order. SJ Order at 51 (noting this concern); see

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also Citizens to Pres. Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971) (noting the Court has

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“viewed critically” an agency’s “post hoc rationalization.”), abrogated on other grounds by

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Califano v. Sanders, 430 U.S. 99 (1977); Food Mktg. Inst. v. Interstate Commerce Comm’n,

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587 F.2d 1285, 1290 (D.C. Cir. 1978) (“The agency’s action on remand must be more than a

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barren exercise of supplying reasons to support a pre-ordained result.”).

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In sum, the court does not defer to the DOL’s decision because it is not well
reasoned.

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2.

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Independently analyzing PEPRA’s airtime change leads to the conclusion it does

Independent Review

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not meaningfully and negatively impact MST classic employees’ existing pension rights.

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Airtime, and the ability to purchase it, is a significant pension benefit. The court thus rejects the

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State’s argument that § 13(c)(1) does not apply because PEPRA’s airtime provision effected only

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a de minimis change. ECF No. 124 at 2. Section 13(c)(1) protects a classic employee’s “rights,
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privileges, and benefits.” Even if airtime is considered a “benefit enhancement option,” it is still

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a benefit: The option to enhance a benefit is a benefit in and of itself.

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Completely eliminating one’s ability to purchase airtime would have a meaningful

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and negative impact on one’s pension benefits. See SJ Order at 3 n.2 (describing how airtime in

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general has a “significant” effect on retirement benefit calculations); Remand Order, 76 F. Supp.

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3d at 1138. But the relevant provision here is not so drastic. PEPRA reduced the timeframe

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during which MST classic employees could purchase airtime. It shortened the initial 36-month

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period by nine months. The employees still had 27 months to purchase the airtime to which they

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were entitled under the bargaining agreement. The change PEPRA effected did not reduce how

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much airtime employees could buy; it prompted them to buy it sooner. Also, the employees knew

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about the deadline well before it happened: PEPRA was enacted in September 2012 but went into

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effect on January 1, 2013, with four months’ notice. SJ Order at 3; ECF No. 124 at 4; ECF

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No. 128 at 5. And, as plaintiffs argue, MST and its employees could potentially offset any effect

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on benefits through local negotiations. The air time change was not sufficiently meaningful to

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trigger § 13(c)(1).

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In sum, PEPRA did not meaningfully and negatively impact rights the MST

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classic employees enjoyed under their existing collective bargaining agreements so as to warrant

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a § 13(c)(1) denial. The DOL misconstrued its statutory mandate to determine that the State had

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not “preserved” existing bargained-for rights. The court finds the DOL’s § 13(c)(1) denial was

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improper under the APA.

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C.

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Conclusion
The court GRANTS the State’s motion for partial summary judgment on the

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DOL’s § 13(c)(1) denial as to MST classic employees. Given this order, the State has prevailed

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on all issues.

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IV.

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REMEDIES
The State requests “a final declaratory judgment and permanent injunction

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preventing [the DOL] from using PEPRA to deny [§] 13(c) certification to any California transit

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agency grantee.” ECF No. 129 at 6. The “Supreme Court has cautioned that ‘injunctive relief
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should be no more burdensome to the defendant than necessary to provide complete relief to the

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plaintiffs’ before the court.” L.A. Haven Hospice, Inc. v. Sebelius, 638 F.3d 644, 664 (9th Cir.

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2011) (quoting Califano, 442 U.S. at 702). “This rule applies with special force where there is no

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class certification.” Id.

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Here, the State challenges the DOL’s denials of certification as to only two transit

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agencies: MST and SacRT. This is not a class action. The parties have made arguments

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particularized to the two agencies about the relevant collective bargaining agreements, on which

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the court has relied to reach its decision. The court finds no basis for awarding remedies

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extending beyond the two state transit agencies here.

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The court enjoins the DOL from relying on PEPRA, as currently enacted, to deny

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the State’s application for funding under either § 13(c)(1) or § 13(c)(2) to the extent the State

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intends those funds to benefit MST or SacRT.

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IT IS SO ORDERED.

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This resolves ECF No. 99.

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DATED: January 24, 2018.

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UNITED STATES DISTRICT JUDGE

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