WLF pushes Minn. federal court to strike down U.S. Department of Labor’s ‘persuader rule’

By Jessica Karmasek | Sep 19, 2016

WASHINGTON (Legal Newsline) - A D.C.-based public interest law firm is urging a Minnesota federal court to strike down the U.S. Department of Labor’s so-called “persuader rule,” arguing the new rule is unconstitutional and makes it “impractical” for any consultant, including any law firm, to continue to provide labor-relations advice or services to clients.

“This expanded definition of persuaders, which simultaneously shrinks the definition of exempt ‘advice,’ places a heavy new content-based and viewpoint-based burden on speech that would push Section 203 well over the edge of constitutionality,” the Washington Legal Foundation wrote in its brief, filed in the U.S. District Court for the District of Minnesota.

Section 203 of the Labor Management Reporting and Disclosure Act of 1959 is a federal law that basically requires employers to report each time they engage a consultant to persuade employees on how to use their collective bargaining rights.

Employers and consultants tend to engage in persuader activities during union campaigns to persuade employees not to unionize.

WLF argues in its brief, filed in Labnet Inc. v. Department of Labor, that the DOL has “significantly altered” its interpretation of Section 203 with its persuader rule.

The rule, or Persuader Advice Exemption Rule, effectively eliminates the “advice exemption” under the LMRDA.

The new rule requires that employers and the consultants they hire file reports not only for direct persuader activities -- i.e. consultants talking to workers -- but also for indirect persuader activities -- consultants scripting what managers and supervisors say to workers.

In its brief, WLF contends the Minnesota federal court previously erred by holding at the preliminary injunction stage that the plaintiffs’ facial challenge to the persuader rule can succeed only by showing that the rule would be invalid in all of its applications.

In June, the court declined to temporarily block the new rule but said it was “likely invalid.”

The foundation, which regularly advocates in support of free speech rights, filed a brief supporting the plaintiffs’ motion for final summary judgment Friday.

WLF argues the rule is not a mere disclosure requirement, but a form of “compelled, controversial speech” and is aimed at suppressing the viewpoint of “specific speakers with whom it disagrees.”

“The speakers are employers who in virtually every case do not want their employees to unionize. Those speakers view unionization as bad for employers, bad for employees, bad for the economy, and bad for the country,” WLF wrote in its 16-page brief.

“Section 203 applies on its face only to employers and places a burden on their speech. When state action specifically targets speakers and their viewpoint, the First Amendment mandates strict scrutiny.”

But the rule cannot possibly survive such scrutiny, WLF argues, because it fails to directly advance any compelling government interest and its mandates are not the least-restrictive means of advancing the rule’s supposed objective.

WLF, in its brief, contends the Minnesota federal court should follow the example of a Texas federal court in “properly” applying strict scrutiny.

In June, Senior Judge Sam R. Cummings for the U.S. District Court for the Northern District of Texas issued an order in National Federation of Independent Business v. Perez temporarily blocking the rule.

In his ruling -- which came less than a week after the Minnesota federal court’s initial ruling -- Cummings blasted the DOL for not conducting any studies or independent analysis on the new rule, which, according to the department, took effect April 25. The rule was to be applicable to arrangements, agreements and payments made on or after July 1.

The Texas judge said the rule, which mostly applies to labor lawyers, creates “substantial potential conflicts” for attorneys, imposes “content-based burdens” on speech and cannot survive strict scrutiny.

“The federal rules governing who must file disclosure reports -- and what they must disclose -- have been in force for over half a century. DOL’s latter-day gambit would overturn longstanding bipartisan consensus and dramatically expand reporting requirements,” WLF General Counsel Mark Chenoweth said in a statement Friday.

“The agency’s effort to create leverage against law firms and others who counsel the management side of labor disputes runs headlong into First Amendment limits on compelled speech.”

Last month, WLF filed a similar brief in an Arkansas federal court, urging it to join the Northern District of Texas in striking down the rule.

Arkansas Attorney General Leslie Rutledge, along with nine other state attorneys general, filed a similar amicus brief in the Arkansas federal lawsuit in April.

“For more than half a century, attorney-client communications relating to labor relations issues have been exempted from disclosure,” Rutledge said in a statement. “However, the new Persuader Advice Exemption Rule would overturn this long-standing precedent.

“The Department of Labor’s extreme interpretation will require disclosure to the government of the legal advice being provided to business, large and small, on very sensitive matters such as union elections. I am proud to lead my colleagues in this effort and urge the court to enjoin this rule, which will hit small businesses disproportionately hard.”

Rutledge was joined by attorneys general from Alabama, Arizona, Michigan, Nevada, Oklahoma, South Carolina, Texas, Utah and West Virginia.

Office of Labor-Management Standards Director Michael Hayes has said the rule is simply about disclosure.

“More disclosure here means more peaceful and stable labor-management relations,” Hayes said in a statement. “With workers having a better understanding of the true source of persuader communications, worker-supervisor and other workplace relationships are likely to proceed more smoothly no matter what is decided regarding union representation.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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