Berlin v. Department of Labor, 2014 U.S. App. LEXIS 21964

Background

In 2013, statutory sequestration required across-the-board spending cuts; OMB calculated a 5% cut to the Department of Labor’s Management Salaries and Expenses account.
The Department subdivided that account into nine subaccounts (including "Adjudication") and applied the same percentage cut to each subaccount, as required by 2 U.S.C. § 906(k)(2).
The Adjudication subaccount’s budget allocation method and high share of nondiscretionary costs (salaries, rent) produced a 5.5‑day furlough for Administrative Law Judges (ALJs).
The Department filed with the MSPB under 5 U.S.C. § 7521 to authorize the <30‑day furlough; an ALJ initially reduced the furlough to four days based on ALJs’ "special status."
On review the full MSPB reinstated the Department’s 5.5‑day furlough, finding the action supported by neutral, department‑wide budget decisions and ‘‘sound business reasons’’ and not motivated to impair ALJs’ judicial independence.
The Federal Circuit reviews whether the MSPB’s ‘‘good cause’’ determination was arbitrary, capricious, unsupported by substantial evidence, or procedurally defective; it affirms the MSPB.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the MSPB erred in finding "good cause" under 5 U.S.C. § 7521 for a 5.5‑day furlough	ALJs: Department imposed longer furloughs on ALJs than many other employees without adequate justification — violates ALJs' special status and interferes with judicial independence	Department: furlough was the result of neutral, statute‑based sequester implementation (equal % cut to subaccounts) and sound business judgment; not targeted at ALJs	Held: Affirmed. Substantial evidence supports MSPB that neutral, statutory implementation and budget constraints constituted good cause and did not impair independence
Whether disparate furlough lengths alone show improper treatment of ALJs	ALJs: longer furloughs vs. other units shows disparate treatment needing remedy	Department: differences stem from neutral allocation of mandatory cuts and varying shares of nondiscretionary costs, not ALJ status	Held: Difference in duration not improper absent evidence the furlough decision relied on or targeted ALJ status
Whether MSPB abused discretion by denying broad discovery requests	ALJs: needed discovery to show improper motives and disparate treatment	MSPB/Dept: requests were overbroad, not particularized, and record showed neutral statutory scheme	Held: No abuse. Discovery denials were not harmful or required given neutral, documented sequester rationale
Whether exclusion of testimony from current ALJs was improper	ALJs: testimony about mission impact and public perception relevant to independence	Dept/MSPB: testimony was cumulative, speculative, and unnecessary to evaluate statutory/financial decisions	Held: No abuse. Testimony excluded as speculative or irrelevant to the good‑cause analysis; exclusion not harmful

Key Cases Cited

Abrams v. Social Security Administration, 703 F.3d 538 (Fed. Cir. 2012) (definition of substantial evidence standard)
Brennan v. Department of Health & Human Services, 787 F.2d 1559 (Fed. Cir. 1986) (agency actions that interfere with ALJ quasi‑judicial functions are not good cause)
Ramspeck v. Federal Trial Examiners Conference, 345 U.S. 128 (1953) (agency may have good cause even without ALJ misconduct under good behavior standard)
Long v. Social Security Administration, 635 F.3d 526 (Fed. Cir. 2011) (deference to MSPB’s interpretation of "good cause")
Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (agency deference framework)
NLRB v. Bell Aerospace Co., 416 U.S. 267 (1974) (case-by-case adjudication and deference to agency fact‑finding)
Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993) (disparate‑treatment requires trait to have played a role in employer decision)
Curtin v. Office of Personnel Management, 846 F.2d 1373 (Fed. Cir. 1988) (harmful abuse of discretion standard for overturning MSPB procedural rulings)