Permanent Pause to Persuader Rule: Texas Court Issues Permanent Nationwide Injunction
On November 16, 2016, in National Federation of Independent Business v. Perez, No. 5:16-cv-00066, a federal judge in Texas issued a permanent injunction preventing the Department of Labor (the “DOL”) from enforcing its new interpretation of the Labor-Management Disclosure Act’s “Persuader Rule.” The new DOL interpretation would have required far more expansive public disclosure by law firms and others regarding work they perform for employers in conjunction with certain labor relations activities, including union organizing and collective bargaining.
By granting summary judgment to the plaintiffs, which include ten states and various business groups challenging the new Rule, Judge Sam R. Cummings converted the nationwide preliminary injunction he granted in June into a permanent injunction. The preliminary injunction blocked the implementation of the new Rule, which was finalized by the DOL in March and scheduled to go into effect on July 1.
The DOL’s new Rule attempted to narrow the so-called “advice exemption” by changing the long-standing definitions of reportable “persuader activity” and non-reportable “advice.” The previous iteration of the Rule only required such reporting when an advisor made direct contact with an employer’s employees, regardless of the persuasive purpose of the advice. Under the now permanently-enjoined rule, any legal or other advice that is designed to “indirectly persuade” employees regarding union organizing or their rights to engage in collective bargaining would have been publicly reportable by both employers and their legal advisors. Moreover, in accordance with the DOL’s interpretation, many run-of-the-mill employment-related undertakings, like the modification of employee handbooks, under certain circumstances, could have been considered “persuader activity.”
Shortly after the new Rule’s publication, several states, associations, and other entities filed lawsuits against the DOL, seeking to enjoin the Rule on a variety of legal theories, particularly that the new Rule exceeds the scope of the DOL’s authority pursuant to the Labor-Management Disclosure Act and conflicts with existing state rules governing the professional conduct of lawyers. These lawsuits were filed in the District of Minnesota, the Eastern District of Arkansas, and the Northern District of Texas.
On June 27, 2016, in Texas, Judge Cummings issued a nationwide preliminary injunction, enjoining the implementation of the DOL’s new Rule days before it was scheduled to take effect. Judge Cummings explained that the Rule is defective to its core because it, among other things, eliminates the Labor-Management Disclosure Act’s advice exemption and, therefore, is arbitrary and capricious and constitutes an abuse of discretion. Plaintiffs separately moved for summary judgment in August and September, seeking a nationwide permanent injunction.
In the latest ruling, Judge Cummings granted those summary judgment motions and converted the preliminary injunction preventing the implementation of the new Rule into a permanent injunction with nationwide effect, noting that the new Rule should be held unlawful and set aside. Earlier in the week, Judge Cummings issued a show cause order asking the parties for additional briefing over the issue of whether the government owes attorneys’ fees and costs.
The outgoing Obama administration DOL may appeal the ruling, like it also appealed the ruling issuing the nationwide preliminary injunction. However, the changing of presidential administrations in January makes it extremely unlikely that the new Persuader Rule will be implemented in its current form, regardless of any future steps in the litigation.