Insight

Employers Claim Crucial Victory In Persuader Battle

Last week’s election of Donald Trump and the expected shift to a more business-friendly U.S. Department of Labor (USDOL) in the new year should resolve any doubt about the future of this rule.

Court Ruling Over Employers
Richard R. Meneghello

Richard R. Meneghello

December 7, 2016 12:00 AM

Today a federal court judge delivered what could be the final nail in the coffin for the controversial persuader rule, which sought to force attorneys and their clients to report in open records the details of their confidential attorney-client relationships, and which would have complicated employers’ efforts to seek legal counsel in opposing and dealing with unions. District Court Judge Sam R. Cummings, sitting in the Northern District of Texas, today granted a permanent injunction that will block the rule from going into effect on a nationwide basis.

Last week’s election of Donald Trump and the expected shift to a more business-friendly U.S. Department of Labor (USDOL) in the new year should resolve any doubt about the future of this rule. The new Secretary of Labor, following Trump’s direction, could simply decide to cease any ongoing litigation or existing appeals, and commence administrative proceedings to reverse course. For these reasons, it seems likely that employers may have seen the last of the persuader rule for the foreseeable future.

Background: USDOL’s Persuader Rule Tried To Tip The Scales In Favor Of Unions

By way of background, the Labor Management Reporting and Disclosure Act of 1959 (LMRDA) requires labor relations consultants and their clients to file reports about arrangements to persuade workers to reject unionization. However, the statute expressly carves out mere advice.

Due to this “advice exemption,” USDOL’s longstanding rule interpreting the statute has required reporting only in situations where employers engage consultants to persuade rank and file workers directly. Since 1962, USDOL has not attempted to regulate lawyers who offer advice and counsel, so long as their clients remain free to accept or reject the advice and so long as lawyers do not communicate directly with workers.

After more than 50 years under the old rule, USDOL’s new persuader rule would have changed all that. It would have mandated onerous reporting anytime a lawyer’s advice has a direct or indirect object of persuading employees. From the outset the agency has admitted that its motive is to boost union organizing.

The government’s theory is that by revealing the inner workings of the attorney-client relationship, including the amount of fees paid, unions will be able to use the information in their anti-employer propaganda and this in turn will discourage some employers from seeking legal counsel at all.

Court Ruling Permanently Blocks The Rule From Taking Effect

The dire impact the rule would have had on attorney-client relationships mobilized a coalition of businesses, state attorneys general, law firms, and bar associations to seek court orders blocking implementation. In June 2016, a federal court in Texas issued a temporary injunction halting the rule from taking effect, noting that the new rule would have unreasonably conflicted with state rules governing the practice of law.

At the time, the court said that the USDOL’s new persuader rule “is far too broad and captures much activity that the LMRDA intends to exclude.” “Here,” the court said, “USDOL replaced a longstanding and easily understandable bright-line rule with one that is vague and impossible to apply.” In conclusion, “USDOL’s new rule is not merely fuzzy around the edges. Rather, the new rule is defective to its core because it eliminates the LMRDA’s advice exemption.”

That victory was just the first, step, however. The parties continued to litigate the matter to determine whether the injunction would be permanent in nature, while the USDOL appealed the first decision to the Fifth Circuit Court of Appeals. After several months of intensive legal briefing and further argument, Judge Cummings agreed with the arguments set forth by the business groups and extended his initial injunction to apply on a permanent basis.

His ruling was merely two pages long, essentially stating that he agreed with the legal arguments set forth by the business advocacy organizations and state attorneys generals who fought against the rule. “The Court is of the opinion,” he said, “that the USDOL’s Persuader Advice Exemption Rule should be held unlawful and set aside…and the Court’s preliminary injunction preventing the implementation of that Rule should be converted into a permanent injunction with nationwide effect.”

What Now?

The victory is clear and all but absolute for employers. The persuader rule is almost certainly dead, and it is hard to envision a legal landscape where it will be resurrected. Although the USDOL is continuing to litigate an appeal of the initial court ruling, that appeal will not be decided before Donald Trump takes office as president. Given his avowed interest in boosting businesses and his oft-stated animosity towards business-encumbering regulations, many analysts predict that the Trump administration will simply drop the appeal once it controls the USDOL. Under directions from Trump, the new Secretary of Labor could simply decide to withdraw the appeal and commence administrative proceedings to reverse course. Such a maneuver would effectively kill the persuader rule once and for all.

We will continue to monitor these developments and provide updates should the situation merit further consideration. For now, however, employers (and their labor counsel) can breathe a sigh of relief.

For more information, follow the source link below.

Related Articles

Pennsylvania’s Best Lawyers 2022


by Best Lawyers

Our Pennsylvania’s Best Lawyers 2022 digital publication features top-ranked legal talent in Pennsylvania.

Pennsylvania’s Best Lawyers 2022

Washington, D.C. In the Law


by Gregory Sirico

We explore three legal cases in Washington, D.C.

Washington, D.C. In the Law

Trending Articles

Johnny Depp and Amber Heard: The Best Lawyers Honorees Behind the Litigation


by Gregory Sirico

Best Lawyers takes a look at the recognized legal talent representing Johnny Depp and Amber Heard in their ongoing defamation trial.

Lawyers for Johnny Depp and Amber Heard

The Real Camille: An Interview with Johnny Depp’s Lawyer Camille Vasquez


by Rebecca Blackwell

Camille Vasquez, a young lawyer at Brown Rudnick, sat down with Best Lawyers CEO Phillip Greer to talk about her distinguished career, recently being named partner and what comes next for her.

Camille Vasquez in office

Announcing The Best Lawyers in The United Kingdom™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from the United Kingdom.

The Best Lawyers in The United Kingdom 2023

Announcing The Best Lawyers in France™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from France.

Blue, white and red strips

Announcing The Best Lawyers in Germany™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from Germany.

Black, red and yellow stripes

Education by Trial: Cultivating Legal Expertise in the Courtroom


by Margo Pierce

The intricacies of complex lawsuits require extensive knowledge of the legal precedent. But they also demand a high level of skill in every discipline needed to succeed at trial, such as analyzing technical reports and deposing expert witnesses.

Cultivating Legal Expertise in the Courtroom

Announcing the 2022 Best Lawyers® in the United States


by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

Announcing The Best Lawyers in Belgium™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from Belgium.

Black, yellow and red stripes

Announcing the 2022 Best Lawyers™ in France


by Best Lawyers

The results include an elite field of top lawyers and firms, including our inaugural Best Lawyers: Ones to Watch recipients.

Announcing the 2022 Best Lawyers™ in France

We Are Women, We Are Fearless


by Deborah S. Chang and Justin Smulison

Athea Trial Lawyers is a female owned and operated law firm specializing in civil litigation, catastrophic energy, wrongful death and product liability.

Athea Trial Law Female Leadership and Success

Choosing a Title Company: What a Seller Should Expect


by Roy D. Oppenheim

When it comes to choosing a title company, how much power exactly does a seller have?

Choosing the Title Company As Seller

What If Johnny Depp and Amber Heard Had a Premarital Agreement?


by John M. Goralka

Oh, the gritty details we’re learning from the latest court battle between Johnny Depp and Amber Heard. This unfortunate airing of dirty laundry may have been avoided with a prenup. Should you think about getting one yourself?

What If Johnny Depp & Amber Heard Had Prenup?

Announcing the 2022 Best Lawyers™ in Germany


by Best Lawyers

The results include an elite field of top lawyers and firms, including our inaugural Best Lawyers: Ones to Watch recipients.

Announcing the 2022 Best Lawyers™ in Germany

U.K. Introduces Revisions to Right-to-Work Scheme and Immigration Rules


by Gregory Sirico

Right-to-Work Scheme and Immigration Rules in

What the Courts Say About Recording in the Classroom


by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

Destiny Fulfilled


by Sara Collin

Was Angela Reddock-Wright destined to become a lawyer? It sure seems that way. Yet her path was circuitous. This accomplished employment attorney, turned mediator, arbitrator and ADR specialist nonpareil discusses her career, the role of attorneys in society, the new world of post-pandemic work and why new Supreme Court Justice Ketanji Brown Jackson represents the future.

Interview with Lawyer Angela Reddock-Wright