DOL Taking Block Of Persuader Rule To 5th Circuit
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By Braden Campbell
Law360, New York (January 13, 2017, 4:49 PM EST) -- The Department of Labor is appealing a November decision permanently blocking a controversial rule requiring businesses that ask for advice on responding to union campaigns to report when they do so, according to an appeal notice filed Thursday with a Texas federal court.
The agency will ask the Fifth Circuit to review U.S. District Judge Sam R. Cummings’ decision to grant a request by a collection of states and business groups to block the so-called persuader rule on the grounds that it exceeded the DOL’s authority under the Labor Management Reporting and Disclosure Act of 1959.
The DOL previously appealed Judge Cummings’ June preliminary block of the rule to the Fifth Circuit. The court dismissed that appeal as moot last month.
The rule would have expanded a provision of the LMRDA requiring that companies tell regulators when they hire consultants to speak to workers. Had the rule taken effect, companies would have been required to inform regulators every time they sought external advice, regardless of whether consultants had direct contact with employees. Consultants, usually lawyers, would also have been required to inform regulators when they provided advice.
Business and attorneys’ groups condemned the final rule after its March unveiling, the former arguing that the rule discourages them from seeking advice over privacy concerns and the latter arguing that it poses ethical and legal issues by requiring attorneys to disclose whom they advise in violation of attorney-client privilege.
Coalitions from both opponent groups filed suits in Arkansas, Minnesota and Texas seeking to block the rules before their late April effective date.
In their Northern District of Texas challenge, the National Association of Home Builders, the National Federation of Independent Business and two Texas-based business groups argued that the rule violates the First and Fifth amendments, the Administrative Procedures Act, the Labor Management Reporting and Disclosure Act and the Regulatory Flexibility Act. Texas and nine other states later joined the suit as intervenors.
The groups said the new rule is “expansive and vague,” does not mesh with the LMRDA’s language, runs counter to a decades-old policy covering what kind of activities need to be reported and leaves employers and attorneys uncertain about what kind of counsel activities do not need to be reported, according to the complaint.
Judge Cummings cited many of these arguments in his June decision to issue a preliminary injunction. Among the arguments he cited were that the rule undermines the attorney-client relationship, eliminates a clause in the LMRDA exempting advice-only consulting from disclosure and chills free speech by discouraging companies from seeking legal advice. Judge Cummings cited his June analysis in his November order making the injunction permanent.
Ogletree Deakins Nash Smoak & Stewart PC’s Jeffrey C. Londa, who represents the business groups, told Law360 on Friday that he’s skeptical about how far the appeal might go and noted that the government did not inform his side of its plans to file an appeal.
“We will have to wait to see if the new administration actually follows through with an appeal,” Londa said.
A representative of the Department of Justice declined to comment Friday.
President-elect Donald Trump has criticized the Obama administration for what he considers its overzealous rule-making in the past but has not opined on the persuader rule specifically, though many speculate he is not among its fans. The Minnesota federal judge hearing another challenge to the rule stayed that case in December, saying “there is significant reason to believe that the new administration will withdraw the persuader rule — or at least decline to defend the validity of the persuader rule in its current form."
The business groups are represented by Jeffrey C. Londa and Christopher C. Murray of Ogletree Deakins Nash Smoak & Stewart PC, Charles C. High Jr. and Clara B. Burns of Kemp Smith LLP and Fernando M. Bustos of Bustos Law Firm PC.
The federal government is represented by Benjamin C. Mizer, John R. Parker, Ann Haag, Tami C. Parker, Judry L. Subar and Daniel M. Reiss of the U.S. Department of Justice and M. Patricia Smith, Beverly I. Dankowitz, Clinton Wolcott and Adam R. Pulver of the U.S. Department of Labor.
The states are represented by their respective attorneys general and led by Michael Christopher Toth of the Texas attorney general’s office.
The case is National Federation of Independent Business et al. v. Perez et al., case number 5:16-cv-00066, in the U.S. District Court for the Northern District of Texas.
--Additional reporting by Vin Gurrieri and Kevin Penton. Editing by Sara Ziegler.
Law360, New York (January 13, 2017, 4:49 PM EST) -- The Department of Labor is appealing a November decision permanently blocking a controversial rule requiring businesses that ask for advice on responding to union campaigns to report when they do so, according to an appeal notice filed Thursday with a Texas federal court.
The agency will ask the Fifth Circuit to review U.S. District Judge Sam R. Cummings’ decision to grant a request by a collection of states and business groups to block the so-called persuader rule on the grounds that it exceeded the DOL’s authority under the Labor Management Reporting and Disclosure Act of 1959.
The DOL previously appealed Judge Cummings’ June preliminary block of the rule to the Fifth Circuit. The court dismissed that appeal as moot last month.
The rule would have expanded a provision of the LMRDA requiring that companies tell regulators when they hire consultants to speak to workers. Had the rule taken effect, companies would have been required to inform regulators every time they sought external advice, regardless of whether consultants had direct contact with employees. Consultants, usually lawyers, would also have been required to inform regulators when they provided advice.
Business and attorneys’ groups condemned the final rule after its March unveiling, the former arguing that the rule discourages them from seeking advice over privacy concerns and the latter arguing that it poses ethical and legal issues by requiring attorneys to disclose whom they advise in violation of attorney-client privilege.
Coalitions from both opponent groups filed suits in Arkansas, Minnesota and Texas seeking to block the rules before their late April effective date.
In their Northern District of Texas challenge, the National Association of Home Builders, the National Federation of Independent Business and two Texas-based business groups argued that the rule violates the First and Fifth amendments, the Administrative Procedures Act, the Labor Management Reporting and Disclosure Act and the Regulatory Flexibility Act. Texas and nine other states later joined the suit as intervenors.
The groups said the new rule is “expansive and vague,” does not mesh with the LMRDA’s language, runs counter to a decades-old policy covering what kind of activities need to be reported and leaves employers and attorneys uncertain about what kind of counsel activities do not need to be reported, according to the complaint.
Judge Cummings cited many of these arguments in his June decision to issue a preliminary injunction. Among the arguments he cited were that the rule undermines the attorney-client relationship, eliminates a clause in the LMRDA exempting advice-only consulting from disclosure and chills free speech by discouraging companies from seeking legal advice. Judge Cummings cited his June analysis in his November order making the injunction permanent.
Ogletree Deakins Nash Smoak & Stewart PC’s Jeffrey C. Londa, who represents the business groups, told Law360 on Friday that he’s skeptical about how far the appeal might go and noted that the government did not inform his side of its plans to file an appeal.
“We will have to wait to see if the new administration actually follows through with an appeal,” Londa said.
A representative of the Department of Justice declined to comment Friday.
President-elect Donald Trump has criticized the Obama administration for what he considers its overzealous rule-making in the past but has not opined on the persuader rule specifically, though many speculate he is not among its fans. The Minnesota federal judge hearing another challenge to the rule stayed that case in December, saying “there is significant reason to believe that the new administration will withdraw the persuader rule — or at least decline to defend the validity of the persuader rule in its current form."
The business groups are represented by Jeffrey C. Londa and Christopher C. Murray of Ogletree Deakins Nash Smoak & Stewart PC, Charles C. High Jr. and Clara B. Burns of Kemp Smith LLP and Fernando M. Bustos of Bustos Law Firm PC.
The federal government is represented by Benjamin C. Mizer, John R. Parker, Ann Haag, Tami C. Parker, Judry L. Subar and Daniel M. Reiss of the U.S. Department of Justice and M. Patricia Smith, Beverly I. Dankowitz, Clinton Wolcott and Adam R. Pulver of the U.S. Department of Labor.
The states are represented by their respective attorneys general and led by Michael Christopher Toth of the Texas attorney general’s office.
The case is National Federation of Independent Business et al. v. Perez et al., case number 5:16-cv-00066, in the U.S. District Court for the Northern District of Texas.
--Additional reporting by Vin Gurrieri and Kevin Penton. Editing by Sara Ziegler.
