1 UNITED STATES COURT OF APPEALS 1 FOR THE SECOND CIRCUIT 2 August Term, 2002 3 (Argued: November 20, 2002 ) (Decided: July 17, 2003) 4 Docket No. 02-6002 5

----------------------------------------------------------------- 6 PATRICK ELLIS, 7 Plaintiff-Appellant , 8

v. 9 ELAINE L. CHAO, Secretary, United States Department of Labor, 10 Defendant-Appellee
. 11

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BEFORE: F.I. PARKER, STRAUB, B.D. PARKER, Circuit Judges

. 13

Appeal from the judgment of the United States District Court 14 for the Southern District of New York (Sidney H. Stein, Judge ) 15 entered on December 10, 2001, denying plaintiff-appellant’s 16 motion for summary judgment and his motion to amend his 17 complaint, and granting defendant’s cross-motion for summary 18 judgment. Plaintiff-appellant now appeals seeking a declaratory 19 judgment invalidating a February 2000 Civil Service Employees 20 Association election, and an injunction compelling the Secretary 21 of Labor to file a suit to set aside the election and then 22 conduct and supervise a new one. Plaintiff-appellant also 23 challenges the district court’s denial of his motion to amend his 24 complaint. 251The CSEA is a union that primary represents state, county 24 and municipal employees within the State of New York. It has 25 approximately 191,000 members. 26 2

AFFIRMED IN PART, AND VACATED AND REMANDED IN PART. 1

JOSEPH P. CAREY, Joseph P. Carey, P.C., 2 Fishkill, New York (Annette G. Hasapidis, Law 3 Offices of Annette G. Hasapidis, South Salem, 4 New York, on brief), for Appellant
. 5 MICHAEL KRAUSS, Assistant United States 6 Attorney (James B. Comey, United States 7 Attorney for the Southern District of New 8 York and Jeffrey S. Oestericher, Assistant 9 United States Attorney, on brief ) New York, 10 New York, for Appellee
. 11

F.I. PARKER, Circuit Judge : 12 Appellant, Patrick Ellis (“Ellis”), appeals from a decision 13 of the United States District Court for the Southern District of 14 New York (Sidney H. Stein, Judge ) entered on December 10, 2001, 15 denying his motion for summary judgment and his motion to amend 16 his complaint, and granting the cross-motion for summary judgment 17 of appellee, Secretary of Labor Elaine L. Chao (the “Secretary”). 18 Ellis seeks a declaratory judgment invalidating a February 2000 19 election for Statewide Officers, Region Officers, and Statewide 20 Board of Directors of the Civil Service Employees Association 21 (the “CSEA” or the “union”) 1 , and an injunction compelling the 22 Secretary to file a suit to set aside the election and then 232The LMRDA has also been known as the Landrum-Griffin Act 23 and the Labor Reform Law. 24 3

conduct and supervise a new one. Ellis also challenges the 1 district court’s denial of his motion to amend his complaint. 2 We hold that the Secretary’s decision not to initiate suit was 3 not necessarily arbitrary and capricious, but that her Statement 4 of Reasons is not sufficient for this court to determine whether 5 or not it was arbitrary and capricious within the meaning of the 6 Labor-Management Reporting and Disclosure Act of 1959 (the 7 “LMRDA”). 2We further hold that the district court abused its 8 discretion when it denied Ellis’ motion to amend. We therefore 9 affirm the denial of summary judgment to Ellis, and vacate and 10 remand both the grant of summary judgment to the Secretary and 11 the district court’s denial of Ellis’ motion to amend. 12
I. BACKGROUND 13 Ellis, a self-described “dissident” member of the CSEA, ran 14 for state President of the CSEA against the incumbent president 15 in the union’s February 2000 election. Ellis, having lost, 16 challenged the election. After exhausting his internal union 17 remedies, he filed a complaint on June 22, 2000 with the 18 Secretary pursuant to Section 402(a) of the LMRDA, 29 U.S.C. 19 § 482(a). Section 402(a) allows a union member who has exhausted 20 the internal remedies provided by his union to file a complaint 21 with the Secretary alleging that a union election violated his 223 Ellis emphasizes that CSEA employees were used to count 20 the ballots. He claims that they were not properly supervised by 21 True Ballot. Ellis contends that this was particularly troubling 22 because he and the other candidates with whom he shared a slate 23 had indicated that a number of union staff positions would be 24 eliminated if they won office, and thus CSEA employees allegedly 25 had a vested interest in the outcome of the election. 26
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rights under the LMRDA. The Secretary is then required to 1 investigate the union member’s complaint. See29 U.S.C. §§ 2 482(b), 521. 3 In his complaint to the Secretary, Ellis alleged a broad 4 range of improprieties in how the election was conducted, 5 including, among other things, that: 1) union rules were violated 6 by the improper listing of another candidate; 2) another 7 candidate accepted improper campaign contributions; 3) an 8 excessive number of ballots were mailed; 4) some members received 9 the wrong ballot, no ballot, multiple ballots, and/or late 10 ballots; 5) True Ballot, the independent balloting agency 11 conducting the election, did not provide meaningful oversight of 12 the election process; 6) voted ballots were not properly handled 13 or secured; 37) ballots were improperly counted and inaccurately 14 tallied; 8) approximately 2,000 ballots in Ellis’ favor were 15 improperly discarded; and 9) the tallying process was not 16 properly managed. In addition, Ellis alleged that his right to 17 observe the ballot-counting process as required by the LMRDA was 18 194 See29 U.S.C. § 481(c) (“Adequate safeguards to insure a 18 fair election shall be provided, including the right of any 19 candidate to have an observer at the polls and at the counting of 20 the ballots.”); 29 C.F.R. § 452.107(a) (“[E]ach candidate must be 21 permitted to have an observer (1) at the polls and (2) at the 22 counting of the ballots. . . . If ballots are being counted at 23 more than one location or at more than one table at a single 24 location, a candidate is entitled to have as many observers as 25 necessary to observe the actual counting of ballots.” 26

5 Ellis had actually learned of the Secretary’s 27 determination more than two months earlier when he had called the 28 Department to inquire as to the status of his complaint. 29 5

denied. 4Ellis explained that election observers were restricted 1 to a roped-off area in one corner of the room in which ballots 2 were tallied, he was only allowed one observer, and he was not 3 able to monitor the tallying at the various tables where it was 4 taking place. Ellis also alleged that observers were not 5 permitted to speak to anyone in the room other than the CSEA’s 6 general counsel and a True Ballot representative. In addition, 7 he alleged that candidates were not permitted equal numbers of 8
observers. 9 In a letter dated October 6, 2000, the Department of Labor 10 officially informed Ellis that the Secretary had decided to 11 dismiss his complaint. 5The letter enclosed the Secretary’s 12 Statement of Reasons for Dismissing the Complaint (the “Statement 13 of Reasons”) which stated that the Secretary had investigated the 14 complaint and decided to dismiss it. The Statement of Reasons 15 explained that the vast majority of Ellis’ allegations had not 16 been substantiated, but that the Secretary had substantiated 176

Ellis’ allegation that observer rights guaranteed by the LMRDA 1 were violated. Nevertheless, the Statement of Reasons stated 2 that no further action would be taken by the Secretary. 3 Specifically, the Statement of Reasons explained that: 4 The investigation revealed that the union denied candidates 5 the right to effectively observe the election by adopting 6 rules that allowed a candidate to have only one observer at 7 the tally and restricting observers’ view of the process. 8 Observers were not able to see the names of the voters as 9 voter eligibility was checked and were not able to verify 10 the marks on the ballots to determine whether ballots were 11 being tallied correctly. However, the investigation did not 12 disclose evidence that this violation affected the election 13 outcome in any way. There is no evidence of any election 14 impropriety such as ineligible persons voting, ballot fraud 15 or tally irregularities. Consequently, there is no probable 16 cause to believe that this violation had an effect on the 17 outcome of the election. 18 The Statement of Reasons explained that, therefore, the 19 Department of Labor was “closing our file on this matter.” 20 Ellis contends that the Secretary’s refusal to file suit was 21 arbitrary and capricious because the Secretary found that 22 observer rights guaranteed by the LMRDA had been violatedbut 23 failed to challenge the CSEA election. The Secretary counters 24 that her Statement of Reasons satisfies the requirements of the 25 LMRDA and that her refusal to file suit was not arbitrary and 26 capricious. 27
II. DISTRICT COURT PROCEEDING 28 Ellis commenced this action on January 12, 2001 seeking an 29 order declaring that the improper restrictions on observers found 30 by the Secretary affected the outcome of the February 2000 316 Dunlopwas partially overruled on grounds not relevant to 23 this opinion by Local No. 82, Furniture & Piano Moving v. 24 Crowley, 467 U.S. 526, 550 n.22 (1984). 25
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election, setting aside the election, and requiring the Secretary 1 to conduct a new election under her supervision. After the 2 Secretary answered the complaint, the parties cross-moved for 3 summary judgment. While the cross-motions were pending, Ellis 4 moved to amend his complaint by adding five paragraphs, each of 5 which stated that the Secretary had failed to substantiate one of 6 his allegations. According to Ellis, this motion to amend was 7 motivated by the Secretary’s argument that by failing to 8 challenge the Secretary’s findings as to those allegations, Ellis 9 had admitted that the allegations were unfounded. 10 The district court denied Ellis’ motion to amend his 11 complaint as futile because the court determined that under 12 Dunlop v. Bachowski , 421 U.S. 560 (1975), 6it did not have the 13 power to inquire into the factual bases for the Secretary’s 14 conclusions. See Ellis v. Chao , No. 01 CIV. 0280(SHS), 2001 WL 15 1550809, at *3 (S.D.N.Y. Dec. 5, 2001). 16 The district court then considered the parties’ competing 17 motions for summary judgment, and found that there was no genuine 18 issue of material fact. The district court found the Statement 19 of Reasons sufficient to show that the Secretary did not act in 20 an arbitrary and capricious manner. It reasoned that improper 21 restrictions on election observers have never been found to per 227 Ellis does not challenge this ruling on appeal, although 24 he does argue that had he been able to properly observe the 25 election, he might have been able to present the Secretary with 26 evidence that his voters were denied equal protection as compared 27 to voters for the incumbent president. 28

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semandate the Secretary’s intervention. Id. at *4. 1 The district court also rejected Ellis’ argument that the 2 Secretary’s decision not to challenge the CSEA election violated 3 his right to equal protection as set forth in Bush v. Gore , 551 4 U.S. 98 (2000). It reasoned that there was “no evidence that the 5 Secretary’s actions had the effect of ‘valuing one person’s vote 6
over that of another.’” Ellis , 2001 WL 1550809, at *4 (quoting 7
Bush, 531 U.S. at 104-05)(internal formatting omitted). It also 8 questioned whether Bushwould apply to internal union elections. 7 9 Based on these conclusions, the district court granted the 10 Secretary’s motion for summary judgment and denied Ellis’ motion 11 for summary judgment. 12
III. DISCUSSION 13
A. The district court improperly granted summary judgment to 14 the Secretary, but properly denied summary judgment to 15 Ellis. 16 1. The Secretary must initiate suit under the LMRDA when 17 she finds that unlawful election irregularities may 18 have affected the election’s outcome. 19 20 Ellis argues that the Secretary’s decision not to challenge 21 the CSEA election was arbitrary and capricious. To evaluate this 22 argument, we must first determine under what circumstances the 239

Secretary is required to sue, so that we may evaluate whether or 1 not her decision not to sue may have been arbitrary and 2 capricious under the facts of this case. 3 The Secretary does not have unlimited discretion to decide 4 whether or not to bring an action challenging a union election. 5
In Heckler v. Chaney, 470 U.S. 821 (1985) , the Supreme Court 6 characterized the LMRDA as a statute that “quite clearly withdrew 7 discretion from the agency and provided guidelines for exercise 8 of its enforcement power.” Id. at 834. Thus, the Secretary’s 9 decision not to initiate suit is reviewable to determine whether 10 it is arbitrary and capricious. See Dunlop , 421 U.S. at 571-73. 11 The language of the LMRDA makes it clear that the Secretary 12 is sometimes required to file suit to set aside a union election. 13 The LMRDA states that “if [the Secretary] finds probable cause to 14 believe that a violation . . . occurred and has not been 15 remedied, [the Secretary] shall, within sixty days after the 16 filing of such complaint, bring a civil action . . . .” 29 17 U.S.C. § 482(b). The word “shall” indicates that under certain 18 conditions, the Secretary must initiate a civil action 19 challenging a union election. The Supreme Court has recognized 20 the mandatory nature of the provision. In Heckler, the Supreme 21 Court explained that in Dunlop , it had relied upon the court of 22 appeal’s analysis that “the language of the LMRDA indicated that 23 the Secretary was required to file suit if certain ‘clearly 2410

defined’ factors were present.” Heckler, 470 U.S. at 834 1 (quoting Bachowski v. Brennan , 502 F.2d 79, 87-88 (3d Cir. 2 1974)). 3 The Supreme Court has indicated that the Secretary need not 4 file suit to set aside an election if the suit would be futile or 5 merely “might be successful.” Dunlop , 421 U.S. at 574. Rather, 6 the Secretary need only sue when she subjectively thinks the suit 7 will be successful: 8 ‘As a matter of law the Secretary is not required to sue to 9 set aside the election whenever the proofs before him 10 suggest the suit might be successful. There remains in him 11 a degree of discretion to select cases and it is his 12 subjective judgment as to the probable outcome of the 13 litigation that must control.’ 14
Id . at 572 (quoting DeVito v. Shultz , 72 L.R.R.M. 2682, 2683 15 (D.D.C. 1969)(internal formatting omitted). However, it is 16 important to note that such a suit will succeed where a court 17 finds, upon a preponderance of the evidence, that the violation 18

“may have affected the outcome of an election.” 29 U.S.C. § 19 482(c)(emphasis added). Accordingly, Dunlopinstructs that the 20 Secretary must sue where she finds that the violation may have 21 affected the outcome of the election. This interpretation – that 22 the Secretary must sue whenever her investigation leads her to 23 conclude that the outcome of a union election may have been 24 affected by unlawful election irregularities – is consistent with 25 Dunlop’s assumption that if the Secretary did not sue it would be 26 either because “no violations occurred or . . . they did not 278 Arguably, Dunlopmight also seem to suggest that the 7 Secretary may only initiate suit when she determines that the 8 violation or violations “probably” affected the election’s 9 outcome. In Dunlopthe Supreme Court favorably cited Wirtz v. 10 Local 153, Glass Bottle Blowers Ass’n , 389 U.S. 463 (1968), 11 stating: 12
Bottle Blowersconstrued § 482(b) . . . as conferring upon 13 the Secretary discretion to determine both the probable 14 violation and the probable effect . ‘[T]he Secretary may not 15 initiate an action until [her] own investigation confirms 16 that a violation . . . probably infected the challenged 17 election.’ 18 Dunlop , 421 U.S. at 570 (quoting Bottle Blowers , 389 U.S. at 472) 19 (emphasis added). See also Hall v. Marshall , 476 F. Supp. 262, 20 265 (E.D. Pa. 1979), aff’d by Hall v. Marshall , 622 F.2d 578 (3rd 21 Cir. 1980) (citing Dunlopfor the proposition that “if [the 22 Secretary] finds probable cause to believe that Title IV has been 23 violated and that the violation probably affected the outcome of 24 the election, he may file suit against the union . . . .”). 25 However, the term “effect” is not synonymous with “infect,” 26 and the latter can simply mean to “invade.” SeeAmerican 27 Heritage Dictionary of the English Language, 4th Ed., Houghton 28 Mifflin Co. (2000). Moreover, the reference talks about the 29 election in general being “infected,” and not merely the result 30 or outcome of the election. But see Harrington v. Chao , 280 F.3d 31 50, 53 (1st Cir. 2002) (stating that “[i]f [the Secretary] 32 determines that there is probable cause to believe that . . . the 33 violation probably infected the outcomeof the election, she must 34 bring suit”) (emphasis added). Looking at the reference in 35 context of the decision as a whole, we think the reference to 36 Bottle Blowersmerely explains that the Secretary is to determine 37 what probably happened, and that the Secretary may not initiate 38 suit where she believes that the LMRDA was not violated. 39
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affect the outcome of the election.” Id . at 573. 8 1 Requiring the Secretary to initiate suit when she determines 2 that election procedures which violated the LMRDA may have 3 affected the outcome of an election is consistent with the 4 Secretary’s role in such litigation. The Secretary has exclusive 5 authority to bring suit to set aside elections which violate 612

Title IV of the LMRDA, the section of the LMRDA which regulates 1 union elections. See Local No. 82, Furniture & Piano Moving v. 2 Crowley, 467 U.S. 526, 549 (1984). A union member is not 3 permitted to initiate suit on his own behalf, but rather must 4 rely upon the Secretary to initiate suit to protect his rights. 5 In this manner, the “Secretary’s role [is] as lawyer for the 6 complaining union member.” Dunlop , 421 U.S. at 572. While the 7 Secretary does not have a “duty to indulge a client's usual 8 prerogative to direct his lawyer to file suit”, id. , she 9 nevertheless does have a duty to protect the union member’s 10 legitimate right to a fair election. 11 This interpretation is also consistent with the Secretary’s 12 own regulation, 29 C.F.R. § 452.5, which states that “[s]ince the 13 remedy under section 402 [of the LMRDA] is contingent upon a 14 finding by the court . . . that the violation ‘may have affected 15 the outcome of an election[,]’ the Secretary as a matter of 16 policy will not file suit to enforce the election provisions 17 unless the violations found are such that the outcome may have 18 been affected.” 29 C.F.R. § 452.5 (citing Dunlop , 421 U.S. at 19 570). 20 Finally, this interpretation is consistent with the standard 21 that must be met to set aside an election under the LMRDA. The 22 LMRDA states that “[i]f, upon a preponderance of the evidence 23 after a trial upon the merits, the court finds . . . that the 2413

violation of section 481 of this title may have affected the 1 outcome of an election, the court shall declare the election 2 . . . to be void and direct the conduct of a new election under 3 supervision of the Secretary . . . .” 29 U.S.C. § 482(c) 4 (emphasis added). See also Wirtz v. Hotel, Motel and Club Emp. 5 Union, Local 6 , 391 U.S. 492, 506-08 (1968) (new election 6 required where there was a logical inference that the violation 7 “may have affected” an election’s outcome and no “tangible 8 evidence” to contradict that inference). 9 To require the Secretary to satisfy a higher standard to 10 initiate suit than would need to be satisfied for the Secretary 11 to prevail in court would be to effectively re-write the 12 standard. This would be particularly problematic given that the 13 “may have affected” standard was the result of a deliberate 14 policy choice by Congress. In Hotel, Motel, and Club Employees , 15 the Supreme Court explained that: 16 The 'may have affected' language appeared in the bill passed 17 by the Senate, S.1555. The bill passed by the House, H.R. 18 8342, and the Kennedy-Ervin bill introduced in the Senate, 19 S. 505, required the more stringent showing that the 20 violation actually 'affected' the outcome. The difference 21 was resolved in conference by the adoption of the 'may have 22 affected' language. 23 391 U.S. at 505-06 (citations omitted). The House report 24 outlining the changes made by the conference committee was quite 25 clear on this point, explaining that “[i]n subsection (c) of 26 section 402, the conference substitute adopts the provision of 2714

the Senate bill that directs the court to set aside an election 1 if the violation ‘may have’ affected the outcome. Under the 2 House amendment an election could be set aside only if the 3 violation did affect the outcome.” H.R. Rep. No. 1147, 86th 4 Cong., 1st Sess. 35 (1959). 5 For the above reasons, we hold that the Secretary is 6 required to initiate suit under the LMRDA when she finds that 7 unlawful election irregularities may have affected the election’s 8 outcome. This is consistent with the Supreme Court’s view that 9 it is the Secretary’s “subjective judgment as to the probable 10 outcome of the litigation that must control” her decision as to 11 whether or not to file such a suit. Dunlop , 421 U.S. at 572. We 12 now turn to the Secretary’s Statement of Reasons to determine 13 whether or not her decision not to initiate suit in the case at 14 hand was arbitrary and capricious. 15 2. The Secretary’s Statement of Reasons is not sufficient 16 for this Court to determine whether or not her decision 17 not to initiate suit was arbitrary and capricious. 18 When the Secretary decides not to initiate suit, she must 19 provide a Statement of Reasons that sets forth the essential 20 facts upon which her inferences are based. Dunlop , 421 U.S. at 21 573-74 (“[A]lthough detailed findings of fact are not required, 22 the statement of reasons should inform the court and the 23 complaining union member of both the grounds of decision and the 24 essential facts upon which the Secretary’s inferences are 2515

based.”) A Statement of Reasons which rests on conclusory 1 statements is not sufficient

. See Donovan v. Local 6, Washington 2 Teachers’ Union, AFL-CIO, 747 F.2d 711, 719 (D.C. Cir. 1984) 3 (“The conclusory assertion that [there is] ‘no evidence’ . . . 4 simply is not ‘adequate to enable the court to determine whether 5 the . . . decision was reached for an impermissible reason or 6 for no reason at all.’”) (quoting Dunlop , 421 U.S. at 573); 7 Usery v. Local Union No. 639 International Brotherhood of 8 Teamsters Chauffeurs, Warehousemen and Helpers of America , 543 9 F.2d 369, 379 (D.C. Cir. 1976) (“Of course, the Secretary’s 10 reasons for certification cannot rest on unsubstantiated 11 conclusions . . . .”) 12 Such conclusory statements not only prevent the courts from 13 undertaking meaningful judicial review of the Secretary’s 14 decision, but also reduce the overall utility of the Statement of 15 Reasons itself. As Judge Friendly explained: 16 A written statement of reasons, almost essential if there is 17 to be judicial review, is desirable on many other grounds. 18 The necessity for justification is a powerful preventive of 19 wrong decisions. The requirement also tends to effectuate 20 intra-agency uniformity . . . . A statement of reasons may 21 even make a decision somewhat more acceptable to a losing 22 claimant. 23
SeeHenry J. Friendly, Some Kind of Hearing, 123 U. PA . L. REV . 24 1267, 1292 (1975)(exploring hearing requirements as they apply in 25 a variety of contexts)(footnotes omitted). Similarly, in Dunlop , 26 the Supreme Court explained that “a 'reasons' requirement 279We note that it is unclear from the record what the 25 official vote tally was. Ellis states at one point that he lost 26 by a vote count of 11,231 to 19,271, but then states that the 27 vote count in his favor dropped from 15,800 to 13,707 when the 28 2093 ballots at issue were rejected as junk without further 29 explanation. 30 16

promotes thought by the Secretary and compels him to cover the 1 relevant points and eschew irrelevancies, and . . . the need to 2 assure careful administrative consideration 'would be relevant 3 even if the Secretary's decision were unreviewable.’” 421 U.S. at 4 572 (quoting Bachowski , 502 F.2d at 88-89, n.14). See also Exxon 5 Pipeline Co. v. United States , 725 F.2d 1467, 1473 (D.C. Cir. 6 1984)(discussing the benefits of Statements of Reasons in 7 general). 8 In the case at hand, the entire text of the Statement of 9 Reasons is six single-spaced pages, most of which has little to 10 do with the Secretary’s decision not to bring suit. As 11 previously noted, the only part of the Statement of Reasons which 12 discusses why the Secretary decided not to sue despite finding a 13 violation of the LMRDA states that: 14 [T]he investigation did not disclose evidence that this 15 [observer] violation affected the election outcome in any 16 way. There is no evidence of any election impropriety such 17 as ineligible persons voting, ballot fraud or tally 18 irregularities. Consequently, there is no probable cause to 19 believe that this violation had an effect on the outcome of 20 the election. 21 The Statement of Reasons also never states the Secretary’s 22 conclusion as to what was the true vote tally for the election, 9 23 does not indicate whether the Secretary’s investigators tallied 2410 Compare Dunlop , 421 U.S. at 578-589 (appendix to the 20 opinion consisting of the Secretary’s Statement of Reasons in 21 that case, a statement which: 1) explained the scope and manner 22 of the Secretary’s investigation; 2) explained the rationale and 23 assumptions behind the investigation; and 3) provided tallies of 24 the maximum number of votes that might have been affected by each 25 violation found to have occurred). 26 17

the ballots themselves, makes no mention of Ellis’ allegation 1 that 2093 votes in his favor were improperly discarded, and never 2 makes any reference to the fact that CSEA employees and the 3 CSEA’s counsel participated in counting the ballots. 10Thus, the 4 Statement of Reasons’ explanation for the Secretary’s conclusion 5 as to the effect of the observer rights violation, and her 6 decision not to challenge the election, is obviously conclusory. 7 We find that the Statement of Reasons is not sufficient for 8 this Court to be able to determine whether the Secretary acted in 9 an arbitrary and capricious manner when she decided not to 10 challenge the CSEA election despite finding that observer rights 11 protected by the LMRDA were violated. The Secretary states that 12 there was no evidence that the observer rights violation had an 13 effect on the outcome of the election, but does not explain where 14 or to what extent she looked for such evidence. She merely 15 refers to an undefined “investigation.” The only reference to 16 how the investigation was conducted in regards to Ellis’ observer 17 rights violation allegation is in the cover letter accompanying 18 the Statement of Reasons. Even if we were to look at the cover 1911We do not reach the question of whether considering the 19 cover letter, which is not technically part of the Statement of 20 Reasons, would be within the proper scope of this Court’s review. 21

12 Presumably, the Secretary is referring to the sections as 22 numbered in the original legislation passed by Congress, and not 23 the sections as numbered in the United States Code, as 29 U.S.C. 24 § 402 is merely the definitions section for the LMRDA and does 25 not define what constitutes an investigation, and 29 U.S.C. § 601 26 was repealed long before October 2000 when the Statement of 27 Reasons was distributed. 28 18

letter, 11that letter merely states that the investigation was 1 conducted in accordance with sections 402 and 601 of the LMRDA. 12 2 Section 402 of the LMRDA, 29 U.S.C. § 482, merely states that the 3 Secretary “shall investigate” union member complaints but does 4 not state what such investigations can or should entail. See29 5 U.S.C. § 482(b). Section 601 of the LMRDA, 29 U.S.C. § 521, 6 states what the Secretary is empowered to do as part of her 7 investigation (e.g. , the Secretary “may enter such places and 8 inspect such records and accounts and question such persons as 9 [she] may deem necessary”), but does not say what the Secretary 10 must (or even should generally) do as part of an investigation. 11
See29 U.S.C. § 521. Accordingly, the Secretary’s reference to 12 those sections does not provide this Court with any meaningful 13 information about how the investigation was conducted in this 14

case. 15 Without more, we cannot know whether the Secretary was 16 acting in an arbitrary and capricious manner. She states that 17 she decided not to initiate suit because she did not find 1813 Ellis alleges that the “Secretary simply credited the 20 union’s claims that no (other) improprieties had occurred.” 21

14 The Statement of Reasons indicates that the Secretary’s 22 investigators counted the total number of ballots. This does not 23 indicate, however, that they checked the tallies. Similarly, the 24 Secretary’s statement that “[t]here is no evidence of . . . tally 25 irregularities” does not indicate that her investigators ever 26 personally checked those tallies. 27 19

evidence that the violation of the LMRDA affected the outcome of 1 the CSEA election, but we do not know where or the extent to 2 which she looked for such evidence. We simply cannot determine 3 whether or not the manner in which the Secretary acted was 4 arbitrary and capricious without first knowing in what manner the 5 Secretary acted. 13This is particularly true given that the 6 Secretary found a violation and thus there is at least some 7 reason to suspect that the election’s outcome may have been 8
affected. 9 The Statement of Reasons is also inadequate because it both 10 does not address Ellis’ allegation that 2093 ballots in his favor 11 were improperly excluded from the final vote tally, and does not 12 state the Secretary’s determination as to the final vote tally. 14 13 Unless the Secretary determined that there was a gap of more than 14 2093 votes between the candidates for CSEA president, she could 15 not reasonably have determined that excluding 2093 votes in 16 Ellis’ favor could not have affected the election. Accordingly, 17 she would have needed to assess the veracity of Ellis’ allegation 18 that 2093 votes were improperly excluded in order to know whether 1915 In her brief before this Court, the Secretary also refers 21 to her conclusion as a conclusion that “there was no probable 22 cause to believe that these restrictions may have affected the 23 outcome.” In determining whether her decision was arbitrary and 24 capricious we are limited to examining the conclusion described 25 in her Statement of Reasons, a conclusion which notably did not 26 include the words “may have.” 27 20

or not to initiate suit. The Statement of Reasons provides no 1 indication that she did so. 2 In addition, it is unclear from the Secretary’s Statement of 3 Reasons whether or not she applied the correct standard when 4 deciding not to initiate suit. The Secretary concluded that 5 “there is no probable cause to believe that this violation had an 6 effect on the outcome of the election.” 15Stating that there is 7 no probable cause to believe that something has happened is 8 different from stating that one does not believe that something 9 may have happened. The Secretary’s other stated reason for her 10 decision not to sue, that “the investigation did not disclose 11 evidence that this violation affected the outcome in any way,” 12 also does not indicate that she applied the correct standard. 13 The non-existence of specific evidence of an effect would not 14 preclude the Secretary from determining that an effect may have 15 occurred. In reaching her “subjective judgment as to the 16 probable outcome of the litigation,” Dunlop , 421 U.S. at 572, it 17 is not clear whether the Secretary considered that at trial 18 against the union, if she proved by the preponderance of the 19 evidence that the violation “may have affected” the outcome of 2021

the election, she would prevail in the absence of “tangible 1 evidence” to the contrary from the union. See29 U.S.C. § 2 482(c); Hotel, Motel, and Club Employees , 391 U.S. at 506-07. 3 As such, the Secretary may not have asked whether the observer 4 violations merely “may have affected” the outcome of the CSEA 5 election, but rather may have applied a more stringent standard. 6 However, even if we were to find that the Secretary applied the 7 correct standard, we would not affirm the grant of summary 8 judgment to the Secretary because of the Statement of Reasons’ 9 other defects. Accordingly, we need not decipher the Secretary’s 10 ambiguous wording to determine whether or not the Secretary 11 applied the correct standard. The Secretary will have the 12 opportunity to clarify what standard she used upon remand. 13 In sum, the district court erred in granting summary 14 judgment to the Secretary. On remand, a more in-depth Statement 15 of Reasons should be required from the Secretary so that the 16 district court may provide meaningful judicial review of her 17 determination. See Dunlop , 421 U.S. at 574 (“Where the statement 18 inadequately discloses his reasons, the Secretary may be afforded 19 opportunity to supplement his statement”); Brodsky v. Herman , 120 20 F. Supp. 2d 347, 350 (S.D.N.Y. 2000) (“If the court determines 21 that the Secretary's decision was arbitrary and capricious, the 22 Secretary may be ordered to reopen consideration of Plaintiff's 23 former complaint and to supplement her Statement”); Harrington v. 24
Chao , 280 F.3d 50, 61 (1st Cir. 2002). 2522 3. Ellis’ argument that the Secretary’s decision was 1 necessarily arbitrary and capricious because it 2 represents a change from her prior litigation positions 3 is unavailing. 4 Ellis’ argument that the Secretary’s decision was arbitrary 5 and capricious because it was contrary to her long-standing 6 litigation position fails because this Court has been presented 7 with no evidence that the Secretary’s position is inconsistent 8 with prior litigation positions taken by the Secretary of Labor. 9 In all three cases cited by Ellis to demonstrate such 10 inconsistency, the Secretary substantiated allegations of not 11 only violations of observer rights, but also of other election 12 improprieties. See Hodgson v. Local 734, Int’l Brotherhood of 13
Teamsters , 336 F. Supp. 1243 (N.D. Ill. 1972) (suit to set aside 14 an election in which observers were not able to effectively 15 observe, and the union failed to retain a number of ballots and 16 related papers recording who had voted); Hodgson v. United Mine 17
Workers , 344 F. Supp. 17 (D.D.C. 1972) (suit to set aside an 18 election in which restrictions on observers were only one of many 19 violations of the LMRDA that the Secretary had substantiated); 20 Marshall v. Laborers’ Local 135, Laborers Int’l Union, 106 21 L.R.R.M. 2500 (E.D. Pa. 1980) (suit to set aside an election 22 where, in addition to violations of observer rights, the 23 Secretary found significant physical evidence that ballot 24 tampering and manipulation had occurred). Accordingly, Ellis is 25 not entitled to summary judgment on this basis. 2623 Moreover, even if the Secretary could be said to be 1 departing from her prior positions, her decision would not 2 necessarily be arbitrary and capricious. Ellis cites precedent 3 from other circuits for the proposition that when an 4 administrative agency departs from its prior position a more in5 depth Statement of Reasons for its actions is required. See 6 Harrington v. Chao , 280 F.3d 50 (1st Cir. 2002); Doyle v. Brock, 7 821 F.2d 778 (D.C. Cir. 1987). However, neither case found that 8 a deviation was per searbitrary and capricious and we find no 9 reason to believe that it would be. Nevertheless, to the extent 10 that a more detailed Statement of Reasons might be necessary to 11 justify any inconsistent positions, the Secretary may address 12
that on remand. 13
4. Ellis’ argument that the Secretary’s decision was 14 necessarily arbitrary and capricious given that she 15 found that observer rights were violated is unavailing. 16 Ellis’ argument that the Secretary’s decision was arbitrary 17 and capricious because the Secretary simply could not have found 18 – given the lack of effective observers – that the violations did 19 not affect the election’s outcome also fails. We find no support 20 for Ellis’ suggestion that it would never be possible for the 21 Secretary to legitimately reach the conclusion that observer 22 violations occurred but could not have affected the outcome of a 23 given election. While we decline to speculate as to the various 24 circumstances under which such a conclusion would be reasonable, 2524

we have no reason to believe that such circumstances could not 1 exist. Accordingly, in order to determine whether the 2 Secretary’s determination was necessarily arbitrary and 3 capricious given her finding, we would need to determine whether 4 the Secretary’s factual basis was sufficient to support her 5 conclusion in this particular case. 6 A court may only consider challenges to the factual basis of 7 the Secretary’s decision in the “rare case” in which the 8 Secretary: 1) declares that she will no longer enforce Title IV 9 or “otherwise completely abrogate[s] [her] enforcement 10 responsibilities . . .”; or 2) prosecutes complaints “in a 11 constitutionally discriminatory manner;” or 3) makes decisions 12 that are “plainly beyond the bounds” of the LMRDA or “clearly 13 defiant” of it. Dunlop , 421 U.S. at 574. 14 Until we are able to determine that this is a “rare case” 15 within the meaning of Dunlop , we may not review the factual basis 16 for the Secretary’s decision. See Dunlop , 421 U.S. at 573 17 (stating that except in a rare case, judicial “review may not 18 extend to cognizance or trial of the complaining member’s 19 challenges to the factual bases for the Secretary’s conclusion 20 either that no violations occurred or that they did not affect 21 the outcome of the election.”). If the Secretary in fact acted 22 in an arbitrary and capricious manner, such actions could have 23 been “clearly defiant” of the Act. However, as discussed above, 2425

the Secretary’s Statement of Reasons is not sufficient for this 1 Court to determine whether or not she acted in an arbitrary and 2 capricious manner. Thus, we cannot know whether this case 3 presents such a “rare case,” and it would be premature for this 4 Court to consider the factual basis for the Secretary’s decision 5 without a more complete Statement of Reasons. Accordingly, the 6 district court did not err in denying summary judgment to Ellis 7 on the basis of the record then before the district court. 8
B. The district court abused its discretion in denying Ellis’ 9 motion to amend. 10 Ellis sought leave to amend his complaint, which the 11 district court denied as futile. We review the district court’s 12 denial for abuse of discretion. See Kropelniki v. Siegel , 290 13 F.3d 118, 130 (2d Cir. 2002). 14 Under Fed. R. Civ. P. 15(a), leave to amend a complaint 15 should be “freely given when justice so requires.” Id. However, 16 it is well established that leave to amend a complaint need not 17 be granted when amendment would be futile. See Foman v. Davis , 18 371 U.S. 178, 182 (1962); Jones v. New York State Div. of 19 Military & Naval Affairs , 166 F.3d 45, 50 (2d Cir. 1999) (holding 20 that “a district court may properly deny leave when amendment 21 would be futile.”) As previously explained, the district court 22 denied the motion to amend as futile because it found that it was 23 not permitted to consider the factual bases for the Secretary’s 2426

decision except insofar as they were stated in the Secretary’s 1
Statement of Reasons. 2 As we observed above, we may only look outside the four 3 corners of the Statement of Reasons to scrutinize the factual 4 basis of the Secretary’s decision in the “rare” case in which the 5 Secretary: 1) declares that she will no longer enforce Title IV 6 or “otherwise completely abrogate[s] [her] enforcement 7 responsibilities . . .”; or 2) prosecutes complaints “in a 8 constitutionally discriminatory manner;” or 3) makes decisions 9 that are “plainly beyond the bounds” of the LMRDA or “clearly 10 defiant” of it. Dunlop , 421 U.S. at 574. Ellis argues that 11 amendment would not have been futile because the Secretary acted 12 in an arbitrary and capricious manner and thus this is a “rare 13 case” within the meaning of Dunlop
. 14 If the Secretary in fact acted in an arbitrary and 15 capricious manner, such actions could have been “clearly defiant” 16 of the LMRDA and thus amendment would not have been futile. 17 However, as previously discussed, to determine whether the 18 Secretary acted in such a manner we must look to the Statement of 19 Reasons which, unfortunately, is inadequate for this Court to be 20 able to make that determination. Given that there is a 21 possibility that the Secretary has engaged in actions which are 22 “clearly defiant” of the LMRDA, however, amendment would not 23 necessarily have been futile and it was an abuse of discretion 2416 We note that the government also argues that the motion 12 was properly denied because Ellis’ additional allegations were 13 “far too conclusory.” Each of Ellis’ additional paragraphs 14 states that the Secretary failed to substantiate a particular one 15 of Ellis’ allegations. The Secretary seems to feel that the 16 additional allegations are “conclusory” because the amendments do 17 not allege additional facts that would allow this Court to 18 conclude that the Secretary acted in an irrational or arbitrary 19 manner in failing to substantiate those claims. However, these 20 proposed amendments merely state that certain of Ellis’ 21 allegations were not substantiated by the Secretary, which is not 22 disputed. 23 27

not to allow Ellis to amend his complaint to add the five 1 proposed paragraphs. 16 2
IV. CONCLUSION 3 For the reasons set forth above, we AFFIRM the denial of 4 summary judgment to Ellis, and VACATE and REMAND the grant of 5 summary judgment to the Secretary. We also VACATE and REMAND the 6 district court’s denial of Ellis’ motion to amend. On remand, 7 the district court should require a more substantive Statement of 8 Reasons from the Secretary explaining not only what the 9 Secretary’s ultimate determination was, but also the process that 10 led to, and the basis for, that decision. 11