labnet v. dol persuader pi opinion
TRANSCRIPT
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
1/34
UNITEDSTATESDISTRICTCOURT
DISTRICTOFMINNESOTA
LABNET INC., d/b/a Worklaw Network;
SHAWE & ROSENTHAL LLP; ALLEN,NORTON & BLUE, P.A.; COLLAZO
FLORENTINO & KEIL LLP; DENLINGER,
ROSENTHAL & GREENBERG; KAMER
ZUCKER ABBOTT; KEY HARRINGTON
BARNES, P.C.; LEHR MIDDLEBROOKS
VREELAND & THOMPSON, P.C.; NEEL
HOOPER & BANES, P.C.; SEATON,
PETERS & REVNEW, P.A.; SKOLER,
ABBOTT & PRESSER, P.C.; and UFBERG
& ASSOCIATES, LLP,
Plaintiffs,
v.
UNITED STATES DEPARTMENT OF
LABOR; THOMAS E. PEREZ, in his official
capacity as Secretary of Labor; and
MICHAEL J. HAYES, in his official capacity
as Director, Office of Labor-Management
Standards,
Defendants.
Case No. 16-CV-0844 (PJS/KMM)
ORDER
DouglasP.Seaton,ThomasR.Revnew,andTaraCraftAdams,SEATON,
PETERS&REVNEW,P.A.;EricHemmendinger,MarkJ.Swerdlin,andParkerE.
Thoeni,SHAW&ROSENTHALLLP,forplaintiffs.
ElisabethLayton,UNITEDSTATESDEPARTMENTOFJUSTICE;AnnM.
Bildtsen,
UNITED
STATES
ATTORNEYS
OFFICE,
for
defendants.
PlaintiffLabnet,Inc.(Labnet)isanassociationoflawfirmsthatrepresent
managementinlaborandemploymentmatters. Theremainingplaintiffsaremembers
ofLabnet. Plaintiffsbringthisactiontoenjointheimplementationofarulerecently
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 1 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
2/34
promulgatedbydefendantUnitedStatesDepartmentofLabor(DOL)underthe
LaborManagementReportingandDisclosureActof1959(LMRDA),29U.S.C.401
etseq.
ThismatterisbeforetheCourtonplaintiffsmotionforatemporaryrestraining
orderor,inthealternative,apreliminaryinjunctionorastay. TheCourtconcludesthat
plaintiffsarelikelytosucceedintheirclaimthatportionsofthenewruleconflictwith
theLMRDA. ButtheCourtneverthelessdeclinestoenjoinorstaythenewruleafter
weighingthe
factors
identified
by
the
Eighth
Circuit
in
DataphaseSystems,Inc.v.CL
Systems,Inc.,640F.2d109(8thCir.1981)(enbanc).
I. BACKGROUND
CongressenactedtheLMRDAtoprotectemployeesrightstoorganize,choose
theirownrepresentatives,bargaincollectively,andotherwiseengageinconcerted
activitiesfortheirmutualaidorprotection.... 29U.S.C.401(a). Tothatend,the
LMRDAimposescertaindisclosureandreportingobligationsonunionsandemployers,
aswellasonpersonswhoareretainedbyemployerstoengageinpersuaderactivities
concerningemployeescollectivebargainingrights. (Typically,suchpersonsare
lawyersorlaborrelationsconsultants.) Specifically,203(b)oftheLMRDA,29U.S.C.
433(b),provides,inrelevantpart:
-2-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 2 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
3/34
Everypersonwhopursuanttoanyagreementor
arrangementwithanemployerundertakesactivitieswhere
anobjectthereofis,directlyorindirectly
(1)topersuadeemployeestoexerciseornotto
exercise,orpersuadeemployeesastothe
mannerofexercising,therighttoorganizeand
bargaincollectivelythroughrepresentativesof
theirownchoosing....
shallfilewithinthirtydaysafterenteringintosuch
agreementorarrangementareportwiththeSecretary...
containing...adetailedstatementofthetermsand
conditionsofsuchagreementorarrangement....
Inadditiontothereportthatmustbefiledwithin30daysafterenteringintoa
persuaderagreement,consultantsmustalsofileanannualreportforanyyearinwhich
theyreceivepaymentsundersuchanagreement:
Everysuchpersonshallfileannually,withrespecttoeach
fiscalyearduringwhichpaymentsweremadeasaresultof
suchanagreementorarrangement,areportwiththe
Secretary...containingastatement(A)ofitsreceiptsofany
kindfromemployersonaccountoflaborrelationsadviceor
services,designatingthesourcesthereof,and(B)ofits
disbursementsofanykind,inconnectionwithsuchservices
andthepurposesthereof....
29U.S.C.433(b)(2). DOLinterprets203(b)torequireconsultantstoincludeintheir
annualreportsnotonlyinformationaboutemployersforwhomtheyengagedin
persuaderactivity,butalsoinformationaboutallotheremployersforwhomthey
-3-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 3 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
4/34
providedadviceorservicesconcerninglaborrelations,evenifthatadviceandthose
servicesdidnotinvolvepersuaderactivity.
Thereportingobligationin203(b)issubjecttoacrucialqualificationa
qualificationthatisthefocusofDOLsnewrule,andthusofthislawsuit. Under
203(c)oftheLMRDA,29U.S.C.433(c),themeregivingofadvicedoesnottrigger
anobligationtoreport:
Nothinginthissectionshallbeconstruedtorequireany
employerorotherpersontofileareportcoveringthe
servicesof
such
person
by
reason
of
his
giving
or
agreeing
to
giveadvicetosuchemployer....
Therearetwopossiblewaystounderstand203(c):
First,Congresscouldhaveviewedthepersuaderactivitycoveredby203(b)and
theadvicecoveredby203(c)asmutuallyexclusivecategories. Underthisview,
203(c)wouldnotbeexemptingadvicefromthereportingrequirementsof203(b);
instead,advicewouldnotbecoveredby203(b)inthefirstplace. Thisunderstanding
ofthestatutedeprives203(c)ofanyindependentforce,however. Section203(c)
wouldhavenopurpose,otherthanthebeltandsuspendersfunctionofemphasizingor
clarifyingwhatisalreadyprovidedin203(b). Inotherwords,underthis
understanding,the
elimination
of
203(c)
from
the
LMRDA
would
have
no
substantive
impactwhatsoever.
-4-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 4 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
5/34
Second,Congresscouldhaveviewedadviceasatypeofpersuaderactivity.
Underthisview,203(c)providesanexemptioni.e.,203(c)recognizesthatadvice
canbepersuaderactivityandexemptssuchadvicefromthereportingrequirements
thatwouldotherwiseapplyunder203(b). Thisunderstandingofthestatuteobviously
gives203(c)animportantfunctioninlimitingthescopeof203(b). Anddeleting
203(c)fromtheLMRDAwouldthushaveamajorsubstantiveimpact.
TheEighthCircuitlongagoadoptedthislatterunderstandingof203(c)that
is,the
understanding
that
203(c)
exempts
advice
that
is
persuader
activity
from
the
reportingrequirementsthatwouldotherwiseapplytothatadviceunder203(b). See
Donovanv.RoseLawFirm,768F.2d964,973(8thCir.1985)([W]edonotagreewiththe
Fourth,Fifth,Sixth,andSeventhCircuitsthatthelegislativehistoryoftheLMRDA
supportstheviewthat203(c)ismerelyaprovisotomakeexplicittheimplicit
triggeringrequirementof203(b).). Andforoverahalfcentury,DOLs
understandingofthestatutehasbeenthesame. DOLhasdescribed[t]hevery
purposeoftheadviceexemption(203(c))asremov[ing]from[203(b)s]coverage
certainactivitythatotherwisewouldhavebeenreportable. IntlUnion,UnitedAuto.,
Aerospace&Agric.ImplementWorkersofAm.v.Dole,869F.2d616,618(D.C.Cir.1989)
(emphasisadded). Obviously,advicecannototherwise...[be]reportableunlessitis
possibleforadvicetobepersuaderactivitycoveredby203(b).
-5-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 5 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
6/34
Indeterminingwhatpersuaderactivityconstitutesadviceandthusfalls
within203(c)sexemptionDOLhaslongappliedabrightlineacceptorrejecttest.
81Fed.Reg.15,935. So,forexample,apolicyorspeechthataconsultantprovidestoan
employerforuseinpersuadingemployeesisdeemedtobenonreportableadviceso
longastheemployerisfreetoacceptorrejecttheconsultantswork. 81Fed.
Reg.15,936. Andsince1989,DOLhastakenthepositionthat,asapracticalmatter,the
acceptorrejectstandardgenerallylimitsreportableactivitytothatwhichinvolves
directcontact
between
the
consultant
and
employees.
81
Fed.
Reg.
15,926,
15,936.
Withtheexceptionofabriefperiodin2001,DOLhasfollowedtheacceptor
rejectstandardsince1962. 81Fed.Reg.15,93536. Duringthistime,thereportingof
persuaderactivitieshasbecomeuncommon,becausepersuadersonlyrarelyhavedirect
contactwithemployees. 81Fed.Reg.15,931. Atthesametime,employershave
increasinglycometorelyonoutsideconsultantsandlawyerstohelpthemconductanti
unionizationcampaigns. 81Fed.Reg.15,931. DOLestimatesthatemployersuse
consultantstoengageinsuchindirectpersuasioninover70percentofunion
organizingcampaigns. 81Fed.Reg.15,926,15,961. AsdescribedbyDOL:
Theconsultanthasnodirectcontactwithemployees,butit
directsacampaign,
often
formulaic
in
its
design
and
implementation,fortheemployertopersuadeemployeesto
voteagainstunionrepresentation. Underthisarrangement,
theconsultantoftenscriptsthecampaign,includingdrafting
letters,flyers,leaflets,andemailsthattheemployer
-6-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 6 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
7/34
distributestoitsemployees,writingspeechesthat
managementgivestoemployeesinmandatorymeetings,
providingstatementsforsupervisorstouseinmeetingsthey
arerequiredtoholdwithemployeeswhoreporttothem,
ofteninoneononesettings,andcontrollingthetiming,
sequence,andfrequencyofeachoftheseevents.
81Fed.Reg.15,926.
Inanefforttorequiredisclosureofmoreofthisindirectpersuaderactivity,DOL
promulgatedanewruleentitledInterpretationoftheAdviceExemptioninSection203(c)
oftheLaborManagementReportingandDisclosureAct,81Fed.Reg.15,923(Mar.24,2016).1
1Theofficialcitationforthisruleis81Fed.Reg.15,923. SeeInterpretationofthe
AdviceExemptioninSection203(c)oftheLaborManagementReportingandDisclosureAct,
https://federalregister.gov/a/201606296. ToretrievetheruleinWestlaworLexis,
however,thecitationis81Fed.Reg.15,924. (Thesedatabasesapparentlydonotinclude
thetitlepage.)
Theactualtextofthenewrule,ascodifiedintheCodeofFederalRegulations,
doesnotsetforthDOLsnewinterpretationofadvice. Instead,theregulationsdirect
theuse
of
new
reporting
forms.
See
81
Fed.
Reg.
16,020
21.
Essentially,
then,
the
substanceofthenewruleisembodiedintheformsandthedirectionsthatDOL
providesaboutfillingouttheforms. TheseformsincludetheLM10(foremployersto
reportarrangementsforpersuaderactivities),theLM20(forconsultantstoreport
persuaderactivities),andtheLM21(forconsultantsannualreports).
DOLrevisedboththeLM10andtheLM20toreflectitsnewinterpretationof
thescopeofthereportingobligationunder203(b)and(c). DOLhasnotyetrevised
theLM21,however. Instead,DOLintendstoaddresstheLM21inaseparate
rulemaking,
81
Fed.
Reg.
16,000,
and
DOL
has
announced
that,
for
the
time
being,
it
willnotrequirecompliancewiththoseportionsoftheLM21thatrequirereportingof
informationrelatingtoemployersforwhomtheconsultantdidnotengageinany
persuaderactivity,seeU.S.DeptofLabor,FormLM21SpecialEnforcementPolicy
(Apr.13,2016),
(continued...)
-7-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 7 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
8/34
Thenewruledispenseswiththelongstandingacceptorrejecttest. 81Fed.
Reg.15,937. Instead,DOLnowdefinesadviceasanoralorwrittenrecommendation
regardingadecisionoracourseofconduct. 81Fed.Reg.15,939.
Moreover,DOLhasabandoneditslongstandinginterpretationoftheLMRDA
andnowinsiststhatsomethingdonebyaconsultantcannotbebothpersuaderactivity
andadvice. Asnoted,thisconflictswiththeEighthCircuitsunderstandingofthe
statute,andDOLspositionisdifficulttounderstand: If,forexample,aconsultantgives
adviceto
an
employer
about
how
to
persuade
its
employees
to
vote
against
union
representation,theconsultantisobviouslyengaginginpersuaderactivity,andthe
consultantisjustasobviouslygivingadvice. YetDOLnowinsiststhatpersuader
activityandadvicearedistinctcategorieswithnooverlap:
Advicedoesnotincludepersuaderactivities,i.e.,actions,
conduct,orcommunicationsbyaconsultantonbehalfofan
employerthatareundertakenwithanobject,directlyor
indirectly,topersuadeemployeesconcerningtheirrightsto
organizeorbargaincollectively.
81Fed.Reg.15,937.
1(...continued)
https://www.dol.gov/olms/regs/compliance/ecr/lm21_specialenforce.htm.
-8-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 8 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
9/34
DOLthenproceedsfromthispremisetoidentifyfivegeneralcategoriesof
reportableactivityi.e.,activitiesthat,inDOLsview,arepersuaderactivityand
thereforecannotpossiblybeadvice:2
(1) Aconsultantengagesindirectcontactorcommunicationwithany
employee,withanobjecttopersuadesuchemployee;or
(2) Aconsultantwhohasnodirectcontactwithemployeesundertakesthe
followingactivitieswithanobjecttopersuadeemployees:
(a) [p]lans,directs,orcoordinatesactivitiesundertakenbysupervisors
orotheremployerrepresentatives,includingmeetingsand
interactionswith
employees;
(b) providesmaterialorcommunicationstotheemployer,inoral,
written,orelectronicform,fordisseminationordistributionto
employees;
2TherevisedLM20formforreportingpersuaderactivities(whichisattachedin
anappendixtothenewrule)furtherbreaksthesecategoriesdowninto13separate
activities.
81Fed.
Reg.
16,051.
The
activities
are
(1)
drafting,
revising,
or
providing
writtenmaterialsforpresentation,dissemination,ordistributiontoemployees;
(2)drafting,revising,orprovidingaspeechforpresentationtoemployees;(3)drafting,
revising,orprovidingaudiovisualormultimediapresentationsforpresentation,
dissemination,ordistributiontoemployees;(4)drafting,revising,orprovidingwebsite
contentforemployees;(5)planningorconductingindividualemployeemeetings;
(6)planningorconductinggroupemployeemeetings;(7)trainingsupervisorsor
employerrepresentativestoconductindividualorgroupemployeemeetings;
(8)coordinatingordirectingtheactivitiesofsupervisorsoremployerrepresentatives;
(9)
establishing
or
facilitating
employee
committees;
(10)
developing
employerpersonnelpoliciesorpractices;(11)identifyingemployeesfordisciplinaryaction,
reward,orothertargeting;(12)conductingaseminarforsupervisorsoremployer
representatives;and(13)speakingwithorotherwisecommunicatingdirectlywith
employees. TheLM10formforemployerscontainsanidenticallist,exceptthatitomits
(12)(theseminaractivity). 81Fed.Reg.16,038.
-9-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 9 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
10/34
(c) conductsaseminarforsupervisorsorotheremployer
representatives;or
(d) developsorimplementspersonnelpolicies,practices,oractionsfor
theemployer.
81Fed.Reg.15,938. ThefirstcategorysimplyrestatesDOLslongstanding
interpretationthatdirectcontactwithemployeesisreportableactivity;theremaining
fourcategoriesrepresentDOLsattempttonarrowtheadviceexemptioninorderto
capturemoreindirectpersuaderactivity.
Ifaconsultant
engages
in
any
of
these
activities
with
the
requisite
intent,
then
DOLconsiderstheactivityreportable,withoutanyneedeventoaskwhetherthe
activitywouldalsoconstituteadvice. See81Fed.Reg.15,969(Theanalysishastwo
parts: (a)Didtheconsultantengageinthedirectandindirectcontactactivities
identifiedintheinstructions;and(b)didtheconsultantdosowithanobjecttopersuade
employees?);seealso81Fed.Reg.15,937(Thisrulerestoresthefocusofsection203
persuaderreportingtowhetheraconsultantsactivities...haveanobjecttopersuade
employeesabouttheirunionrepresentationandcollectivebargainingrights.).
-10-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 10 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
11/34
II. ANALYSIS
A. StandardofReview
Acourtmustconsiderfourfactorsindecidingwhethertograntapreliminary
injunctionorstaytheenforcementofaregulation:3 (1)themovantslikelihoodof
successonthemerits;(2)thethreatofirreparableharmtothemovantiftheinjunctionis
notgranted;(3)thebalancebetweenthatharmandtheinjurythatgrantingthe
injunctionwillinflictontheotherparties;and(4)thepublicinterest. SeeDataphaseSys.,
Inc.v.CLSys.,Inc.,640
F.2d
109,
114
(8th
Cir.
1981)
(en
banc).
Preliminary
injunctions
areextraordinaryremedies,andthepartyseekingsuchreliefbearstheburdenof
establishingitsentitlementtothereliefundertheDataphasefactors. SeeWatkinsInc.v.
Lewis,346F.3d841,844(8thCir.2003).
Inordinarycases,apartyseekingapreliminaryinjunctionneednotshowthatit
ismorelikelythannottosucceed;instead,apartyneedshowonlyafairchanceof
prevailingonthemerits. SeePlannedParenthoodMinn.,N.D.,S.D.v.Rounds,530F.3d
724,733(8thCir.2008)(enbanc);DataphaseSys.Inc.,640F.2dat11314. Whenaparty
seekstoenjoinastatuteorregulation,however,thepartymustestablishalikelihoodof
successonthemeritsthatis,agreaterthanfiftypercentchanceofprevailing. See
3Asplaintiffsnote,whenapartychallengesaregulationunderthe
AdministrativeProcedureAct,theappropriatereliefisnotapreliminaryinjunctionbut
ratherastay. See5U.S.C.705. Thepartiesagreethattherelevantfactorsandanalysis
arethesameineithercase.
-11-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 11 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
12/34
Rounds,530F.3dat73233&n.6. Thisstricterstandardreflectstheideathat
governmentalpoliciesimplementedthroughlegislationorregulationsdeveloped
throughpresumptivelyreasoneddemocraticprocessesareentitledtoahigherdegreeof
deferenceandshouldnotbeenjoinedlightly. Id.at732(quotingAblev.UnitedStates,
44F.3d128,131(2dCir.1995)).
B. LikelihoodofSuccess
1. CountI:ContrarytoStatute
Plaintiffschallenge
the
new
rule
under
the
Administrative
Procedure
Act
(APA),5U.S.C.706,allegingthatthenewruleiscontrarytotheplainmeaningof
203(c)oftheLMRDA. DOLhastheauthoritytoissue,amend,andrescindrulesand
regulationsthatprescribetheformandpublicationofreportsrequiredbytheLMRDA
andthatarenecessarytopreventtheevasionofthereportingrequirements. 29U.S.C.
438. Thepartiesagreethat,becauseDOLpromulgatedthenewruleunderthis
rulemakingauthority,itsinterpretationofthestatutemustbeexaminedunderChevron,
U.S.A.,Inc.v.NaturalResourcesDefenseCouncil,Inc.,467U.S.837(1984).
ThefirststepunderChevronistodeterminewhetherthestatutorylanguage
clearlyresolvestheissue. Id.at842. IfCongresssintentisclear,thentheinquiryends.
Id.at84243. Ifthestatuteissilentorambiguous,however,thenthecourtmust
-12-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 12 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
13/34
determinewhethertheagencysanswerisbasedonapermissibleconstructionofthe
statute. Id.at843.
Asageneralmatter,theCourtagreeswithDOLthatitspreviousinterpretation
of203(b)and203(c)wasunderinclusive. Inotherwords,theCourtagreesthatanact
canconstitutepersuaderactivityandnotconstituteadviceeventhoughtheactdoes
notinvolvedirectcontactwithemployees. UnderDOLslongstandinginterpretationof
theLMRDA,somepersuaderactivitythatwasreportableunder203(b),andnot
exemptunder
203(c),
nevertheless
went
unreported.
Thus,
the
Court
rejects
any
suggestionthatDOLcannotchangeitsinterpretationoftheLMRDAtorequire
reportingofpersuaderactivitythatdoesnotinvolvedirectcontactwithemployees.
TheCourtagreeswithplaintiffs,however,thatDOLsnewruleconflictswith
203(c)atleastinsomeofitsapplicationsbecauseitrequiresaconsultanttofilea
reportcoveringtheservicesofsuchpersonbyreasonofhisgivingoragreeingtogive
adviceto[an]employer.... TheproblemisnotwiththemannerinwhichDOL
formallydefinesadvice. Again,DOLnowdefinesadvicetomeananoralor
writtenrecommendationregardingadecisionoracourseofconduct,whichisa
perfectlyreasonablewaytodefinetheterm. 81Fed.Reg.15,939. Theproblemisthat
DOLdoesnotapplyitsowndefinitionofadvice. Instead,DOLrequiresreportingof
-13-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 13 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
14/34
activitythatisadviceunderanyreasonableinterpretationofthatwordincluding
DOLs.
AttherootofDOLsproblemisitsinsistencethatpersuaderactivityandadvice
aremutuallyexclusivecategories. Asalreadynoted,thisisnotwhattheEighthCircuit
believes,andthisCourthasdifficultyunderstandinghowthiscouldbetrue. Giving
adviceisunquestionablyanactivity,andthatactivitycanunquestionablybe
performedwiththeintenttoindirectlypersuadeemployeestoexerciseornotto
exercise,or
persuade
employees
as
to
the
manner
of
exercising,
the
right
to
organize
andbargaincollectivelythroughrepresentativesoftheirownchoosing.... 29U.S.C.
433(b)(1).
Inreversingapositionthatithasmaintainedforoverahalfcenturyandin
denyingtheveryexistenceofwhattheD.C.Circuitdescribedastheoverlaparea,
InternationalUnion,869F.2dat618DOLhaspainteditselfintoacorner. Bystarting
withthepremisethat,ifsomethingispersuaderactivity,itcannotpossiblybeadvice,
DOLendsupstrugglingmightilytodefineasnonadviceactivitythatanyreasonable
personwoulddefineasadvice. Andinthecourseofthatstruggle,DOLendsup
drawinglinesthataresimplyincoherent.
Take,forexample,ahypotheticalthattheCourtposedtoDOLatthehearingon
plaintiffsmotion: Alawyerwritesthefollowinglettertoaclient: Iadviseyouto
-14-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 14 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
15/34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
16/34
incoherenceofthepositionthatshewassenttodefend. Itisdifficulttounderstand
whyitwouldmatterwhether,inalettertoanemployer,aconsultantsays:
! Iadviseyoutogiveyouremployeesaonehourpaidlunchbreakin
ordertopersuadethemnottounionize.
! Iadviseyoutoadoptthefollowingpolicyinordertopersuadeyour
employeesnottounionize: Effectiveimmediately,employeeswillbe
givenaonehourpaidlunchbreak.
! Iadviseyoutoadopttheattachedpolicyinordertopersuadeyour
employeesnottounionize. (Theattachmentisasheetofpaperthat
reads: Effectiveimmediately,employeeswillbegivenaonehourpaid
lunchbreak.)
Inallthreecases,thelawyerisbothgivingadvice(asanyreasonableperson
woulddefinethatterm)andengaginginpersuaderactivity. YetDOLwoulddeemthe
firstlettertoconstitute(only)nonreportableadviceandthethirdlettertoconstitute
(only)reportablepersuaderactivityandtheCourtdoesnotknowwhatDOLwould
thinkofthesecondletter.
TheCourtandDOLsattorneyhadsimilardifficultyfiguringouthowDOLs
newinterpretationof203(c)wouldapplyinothercontexts. Forexample,DOLs
attorneysuggested(withoutbeingquitesure)thatitwouldbereportablepersuader
activityandthereforenotadvicetoadviseaclienttodistributeaflyertoemployees
statingthattheclientsindustryiscurrentlyinarecessionandthatunionizedfirmstend
tofailatafasterratethannonunionizedfirms. HrgTr.52. TheCourtcannot
-16-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 16 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
17/34
understandhowthisscenarioisdistinguishableinanymaterialwayfromadvisinga
clienttoadoptamoregenerouslunchpolicy,whichDOLadmitsisnonreportable
advice.
Likewise,DOLhadtroubleexplainingwhenandwhyrevisinganemployer
drafteddocumentisreportableunderitsinterpretationof203(c). HrgTr.5759.
Supposethatanemployerasksitsattorneytoeditadraftofamemorandumthatthe
employerintendstosendtoitsemployeestopersuadethemnotunionize. Ifthe
attorneycorrects
spelling
errors,
has
the
attorney
engaged
in
reportable
persuader
activity? Whatiftheattorneycorrectsgrammaticalmistakes? Suggestsreplacing
passiveverbswithactiveverbs,sothatthedocumentwillbemorepersuasive?
Suggestsafontthatiseasierontheeyes,sothatemployeeswillbemorelikelytoread
thedocument? Suggestsinsertingonewordinonesentence? Suggestsinsertingafew
wordsinafewsentences? Suggestsinsertingafewsentences? Itseemsprettyclearthat
DOLconsiderscorrectingspellingerrorstobenonreportableadvice,andadding
wordsorsentencestobereportablepersuaderactivity,butitisnotatallclearhowDOL
comestothisconclusion.
DOLcontendsthatitsinterpretationof203(c)issoundnotwithstandingthefact
thatithasdifficultyapplyingthatinterpretationtocertainhypotheticalscenarios. But
theCourtsquestionsdidnotinvolveexoticscenariosoroutliercases;theCourtasked
-17-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 17 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
18/34
DOLaboutthesortofbreadandbutterworkthatlawyersperformforclientsevery
singleday. DOLsdifficultyansweringtheCourtsquestionsreflectsnottheinevitable
ambiguitiesthatarisewhenapplyingareasonablyclearprincipletomarginalcases,but
rathertheuntenabilityofDOLscentralpositionthatpersuaderactivitycanneverbe
advice,andadvicecanneverbepersuaderactivity.
Proceedingfromthatflawedpremise,DOLcategorizesconductthatclearly
constitutesadviceasreportablepersuaderactivity. Forexample,alawyerwhomerely
advisesaclient
to
adopt
anew
policyor
merely
advises
aclient
to
add
asentence
to
a
memorandumtoitsemployeeshasdoneonethingandonethingonly: giventhe
clientadvice. Under203(c),thegivingofadvicetoanemployercannot,byitself,
triggerthereportingrequirement. ButunderDOLsnewinterpretation,thegivingof
whatanyreasonablepersonwoulddefineasadvicedoes,byitself,triggerthe
reportingrequirement. TheCourtthereforeconcludesthatplaintiffshaveastrong
likelihoodofsuccessontheirclaimthatthenewruleconflictswiththeplainlanguage
ofthestatute.4
4
Plaintiffs
also
contend
that
the
new
rule
requires
attorneys
to
discloseconfidentialinformationandthereforeconflictswith29U.S.C.434. Forthereasons
explainedatthehearing,however,theCourtinterprets434toapplyonlyto
informationprotectedbytheattorneyclientprivilege(ratherthantoallinformation
thatcouldbeconsideredconfidential),andtheCourtdoesnotagreethatthenewrule
requiresthedisclosureofprivilegedinformation. HrgTr.1424.
-18-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 18 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
19/34
TheCourtemphasizesthatitdoesnotholdthatthewordadvicein203(c)is
clearinallofitsapplicationsandthusthatthereisnoroomforDOLtoengagein
interpretation. Rather,theCourtholdsthatthewordadviceisclearinsomeofits
applicationsi.e.,thattherearecertainactivities(suchasadvisingaclienttoadda
sentencetoamemorandum)thatinvolvethegivingofadviceunderanyreasonable
interpretationofthewordandthatDOLsnewregulationconflictswith203(c)
becauseitrequiressomeofthoseactivitiestobereported.
2.
CountII:
First
Amendment
Plaintiffsnextcontendthatthenewruletargetsantiunionspeechandtherefore
unconstitutionallydiscriminatesonthebasisofviewpointandcontent. SeeReedv.Town
ofGilbert,Ariz.,135S.Ct.2218,222930(2015)(describingthedistinctionbetween
contentandviewpointdiscrimination). TheCourtdisagrees.
Theruledoesnotdiscriminatebasedonviewpoint;instead,theruleappliesto
bothpro andantiunionspeech,asdoestheLMRDAitself. LiketheLMRDA,therule
requiresreportingofactivitiesthathaveasanobjecttopersuadeemployeestoexercise
ornottoexercise,orpersuadeemployeesastothemannerofexercising,therightto
organizeandbargaincollectivelythroughrepresentativesoftheirownchoosing....
29U.S.C.433(b)(1);81Fed.Reg.16,038(LM10trackingstatutorylanguage);81Fed.
Reg.16,051(LM20trackingstatutorylanguage). IftheLMRDAitselfdoesnot
-19-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 19 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
20/34
unconstitutionallydiscriminateonthebasisofviewpointandplaintiffscomplaint
doesnotallegethatitdoesthenplaintiffsareunlikelytobeabletoestablishthatthe
newruleunconstitutionallydiscriminatesonthebasisofviewpoint.
Plaintiffspointtothediscussionofantiunionactivitiesinthepreambletothe
ruleasproofthattherulediscriminatesonthebasisofviewpoint. Butthecontention
thatastatuteisviewpointbasedsimplybecauseitsenactmentwasmotivatedbythe
conductofthepartisansononesideofadebateiswithoutsupport. Hillv.Colorado,
530U.S.
703,
724
(2000);
seealsoPhelpsRoperv.Nixon,
545
F.3d
685,
691
(8th
Cir.
2008)
(Theplainmeaningofthetextcontrols,andthelegislaturesspecificmotivationfor
passingalawisnotrelevant,solongastheprovisionisneutralonitsface.),overruled
onothergroundsbyPhelpsRoperv.CityofManchester,Mo.,697F.3d678(8thCir.2012)(en
banc). Thenewruledoesnot,therefore,regulateonthebasisofviewpoint.
Plaintiffsarecorrect,however,thatthenewruleliketheLMRDA
itselfregulatesonthebasisofcontent. SeeReed,135S.Ct.at2230(aspeech
regulationtargetedatspecificsubjectmatteriscontentbasedevenifitdoesnot
discriminateamongviewpointswithinthatsubjectmatter). Butitdoesnotfollowthat
thenewrule(ortheLMRDA5)mustwithstandstrictscrutiny. Instead,becausethenew
5PlaintiffshavenotallegedthattheLMRDAisunconstitutional. IftheLMRDAis
aconstitutionalcontentbasedstatute,thenthenewruleislikelyaconstitutional
contentbasedregulation.
-20-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 20 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
21/34
ruleimposesdisclosureobligations,itissubjecttotheexactingscrutinystandard. See
CitizensUnitedv.Fed.Elec.Commn,558U.S.310,36667(2010)(applyingexacting
scrutinytodisclosurerules);Minn.CitizensConcernedforLife,Inc.v.Swanson,692F.3d
864,87475(8thCir.2012)(enbanc)(althoughlawsthatburdenpoliticalspeechare
ordinarilysubjecttostrictscrutiny,disclosurelawsareinsteadsubjecttoexacting
scrutiny).6 Underthisstandard,theremustbeasubstantialrelationbetweenthe
disclosurerequirementandasufficientlyimportantgovernmentalinterest. Citizens
United,558
U.S.
at
366
67.
Applyingexactingscrutiny,courtshaveuphelddisclosurerequirements
imposedonelectionrelatedcontributionsandexpenditures. Id.;Buckleyv.Valeo,424
U.S.1,6061(1976). Plaintiffscontendthatthiscaseisdistinguishablefromelection
casesbecausethegovernmentalinteresthereisweaker. Inelectioncases,thereisa
stronginterestinknowingwhohascontributedtoacandidate,becausethecandidate
maybebeholdentothosecontributors. Andthereisastronginterestinknowingwho
isbehindanadvertisementorotherdirectcontactwithvoters. Inthiscase,plaintiffs
say,thereisnosimilarinterestindisclosingtheidentityofconsultants. Employerspay
consultantsfortheirservices,andthusarenotbeholdentotheminthewaythatelected
6Plaintiffsargumentthatstrictscrutinyappliestodisclosurerequirementsthat
arecontentbasedisplainlyincorrect;theSupremeCourthasappliedexactingscrutiny
todisclosurelawsthatareexplicitlycontentbased. SeeCitizensUnited,558U.S.at366
67(upholdingdisclosurelawaimedatelectioneeringcommunications).
-21-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 21 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
22/34
officialsarebeholdentocontributors. Andconsultantshavenodirectcontactwith
employees;anemployerwhospeakstoitsemployeesisspeakingonitsownbehalf
(evenifaconsultantdraftedthespeech),justasacandidateforofficeisspeakingonhis
orherownbehalf(evenifacampaignaidedraftedthespeech).
Inupholdingdisclosurerequirementsregardingelections,however,theSupreme
Courthasnottakensuchalimitedviewofthegovernmentinterestsatstake. In
additiontorecognizingthevalueofdeterringcorruptionandprovidingvoterswith
informationabout
third
parties
to
whom
acandidate
might
be
beholden,
the
Supreme
Courthasalsorecognizedthatidentifyingthesourceoffundsallowsvoterstoplace
eachcandidateinthepoliticalspectrummorepreciselythanisoftenpossiblesolelyon
thebasisofpartylabelsandcampaignspeeches. Buckley,424U.S.at67;seealsoid.at81
(Thecorruptionpotentialofthese[independent]expendituresmaybesignificantly
different,buttheinformationalinterestcanbeasstrongasitisincoordinatedspending,
fordisclosurehelpsvoterstodefinemoreofthecandidatesconstituencies.). Beyond
that,theSupremeCourthasrecognizedtheinterestofshareholdersinevaluating
whethertheircorporationspoliticalspeechadvancesthecorporationsinterestin
makingprofits.... CitizensUnited,558U.S.at370.
Inotherwords,disclosureisvaluablenotsimplybecauseitdeterscorruption,
butalsobecauseitprovidesinformationabouttheviewsofcandidatessupporters,
-22-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 22 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
23/34
whichinturnprovidesafullercontextforunderstandingtheviewsofthecandidates
themselves. Further,thegovernmentalinterestindisclosureextendsbeyondthe
politicalarena;disclosureisalsovaluableinenablingshareholderstoexercisetheir
rightsasstakeholdersinabusinessthatmakespoliticalcontributions.
Theinterestshereareanalogous. Asthegovernmentargues,employeesare
betterequippedtoassessanemployersunionrelatedmessageiftheyknowthatthe
messagehasbeenscriptedbyathirdparty. Forexample,employerscommonlyargue
thata
union
is
athird
party
that
employees
do
not
need
to
further
their
interests,
81
Fed.Reg.15,932,andthattheemployerlacksthefinancialresourcestodealwitha
union,81Fed.Reg.15,92627. Knowingthatmessagesfromanemployeroriginated
withathirdpartywhowaspaidbytheemployertohelpinfluencetheemployeesgives
thoseemployeesafullercontextinwhichtoevaluatetheemployersarguments. Such
transparencyenablestheelectoratetomakeinformeddecisionsandgiveproper
weighttodifferentspeakersandmessages. CitizensUnited,558U.S.at371;cf.
Humphreys,Hutcheson&Moseleyv.Donovan,755F.2d1211,1215(6thCir.1985)(rejecting
argumentthatdisclosureofdirectcontactpersuaderactivitywasnotrequiredwhere
identityofpersuaderwasalreadymadeknowntoemployees).
Forthesereasons,plaintiffshavefailedtoestablishthattheyarelikelytosucceed
ontheirFirstAmendmentclaims.
-23-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 23 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
24/34
3. CountIII:VoidforVagueness
Plaintiffsnextcontendthatthenewruleisvoidforvagueness. SeeFCCv.Fox
TelevisionStations,132S.Ct.2307,2317(2012)(lawsmustbesufficientlyclearsoasto
provideregulatedpartiesnoticeoftheirobligationsandpreventarbitraryand
discriminatoryenforcement). Again,theCourtdisagrees.
TheCourthasfoundthataspectsofthenewrulearelikelyinvalidbecausethey
requirethereportingofadvicethatisexemptfromdisclosureunder203(c). TheCourt
hasalso
questioned
the
manner
in
which
DOL
has
construed
the
term
advice,
pointingoutthatDOLmakesdistinctionsbetweenactivitiesthatarematerially
indistinguishableandstrugglestoplacecertaincommonactivitiesononesideorthe
otheroftheuntenabledividethatithascreatedbetweenpersuaderactivitiesand
advice. ButtheCourtscriticismshouldnotbeconfusedwithafindingthattherule
itselfisimpermissiblyvague.
Tothecontrary,theapplicationofthenewruleappearsratherstraightforward.
Asexplainedabove,theruleisessentiallyembodiedintherevisedLM10andLM20
formsandtheircorrespondinginstructions. Theformsaskfilerstoindicatewhether
anyactivitieswereundertakenwiththerequisiteintent,andthenprovideadetailedlist
ofthirteendifferentactivitiesfromwhichtochoose. Thedescriptionsoftheactivities
arefairlyconcreteandeasytounderstand. Fillingouttheformissimplyamatterof
-24-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 24 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
25/34
checkingtheboxnexttotheactivityoractivitiesthatthefilerperformed(or,ifthefiler
isanemployer,contractedfor)withtherequisiteintent.
PlaintiffscontendthattheruleisneverthelessvaguebecauseDOLprovideslittle
guidanceindeterminingwhenanactivityisperformedwiththerequisiteintentto
persuade. Butaregulationisnotvaguebecauseitmayattimesbedifficulttoprovean
incriminatingfact;rather,aregulationisvaguewhenitisunclearastowhatfactmust
beproved. Id. Here,itisclearwhatfactmustbeproved: thefilersmentalstate. Cf.
MasterPrintersofAm.v.Donovan,751
F.2d
700,
711
(4th
Cir.
1984)
(rejecting
vagueness
challengetoLMRDAbecausethewordpersuadeissufficientlyclear).
PlaintiffsfaultDOLforsayingthatwhethersuchanintentionwillbefound
dependsonallofthesurroundingfactsandcircumstances. Thatis,however,simply
anotherwayofsayingthatitmayattimesbedifficulttoproveanincriminating
fact.... Legalconsequencesoftenturnonsubjectiveintent,anddecidingwhetherthe
requisiteintentwaspresentalmostalwaysturnsonananalysisofthesurroundingfacts
andcircumstances. Forexample,manycriminallawsrequireproofofamentalstate
that,intheabstract,soundsquitevague. See,e.g.,21U.S.C.841(a)(1)(proscribing
possessionofcontrolledsubstanceswithintenttodistribute);seealsoUnitedStatesv.
Williams,553U.S.285,304306(2008)(rejectingvaguenesschallengetolawproscribing
thepanderingofmaterialinamannerthatreflectsthebelief,orthatisintendedto
-25-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 25 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
26/34
causeanothertobelievethatitischildpornography). Thisdoesnotmeanthatthose
lawsarevoidforvagueness. SeeWilliams,553U.S.at304(perfectclarityandprecise
guidancehaveneverbeenrequiredevenofregulationsthatrestrictexpressiveactivity
(citationandquotationsomitted)).
Insum,theCourtfindsthatplaintiffsareunlikelytosucceedininvalidatingthe
newruleonvaguenessgrounds.
4. CountIV:ArbitraryandCapricious
Plaintiffsnext
challenge
the
new
rule
as
arbitrary
and
capricious.
See
5U.S.C.
706(2)(A). Inparticular,plaintiffscontendthatDOLdidnotconsiderallrelevantdata
becausetheagencydidnotconductanyofitsownresearchbeforeadoptingthenew
rule. Instead,DOLreliedontheresearchofthirdparties,andDOLconsidered
approximately9,000commentsontheproposedrule. 81Fed.Reg.15,931,15,945,
15,962.
Plaintiffsdonotciteanyauthorityforthepropositionthatagenciesarerequired
toconducttheirownresearchratherthanrelyonthirdpartyresearch. Instead,
plaintiffsmerelydisagreewiththeweightthatDOLchosetogivetothirdparty
research. TheAPAdoesnotauthorizeaCourttosubstituteitsjudgmentforthatofthe
agency,however. SeeFCCv.FoxTelevisionStations,Inc.,556U.S.502,51314(2009).
-26-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 26 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
27/34
Plaintiffsarenotlikelytosucceedinestablishingthatthenewruleisarbitraryor
capricious.
5. CountV:Overbroad
Plaintiffsnextchallengeasoverbroadtheannualreportingobligationestablished
bytheLM21. UnliketheLM20,theLM21goesbeyondrequiringdisclosures
concerningpersuaderactivities;itrequiresconsultantstoreportallreceiptsfromall
clientsinconnectionwithalllaborrelationsadviceandservices,regardlessofwhether
theadvice
or
services
were
for
the
purpose
of
persuading
employees.
In
other
words,
if
aconsultantengagesinpersuaderactivitiesforoneclient,theLM21requiresthe
consultanttoreportonallclientsforwhomitprovidedanytypeoflaborrelations
adviceorservicesevenclientsforwhomitdidnotperformanypersuaderactivities.
InDonovanv.RoseLawFirm,768F.2d964(8thCir.1985),theEighthCircuit
rejectedDOLsattempttoenforcecompliancewiththesebroadreportingrequirements,
findingitextraordinarilyunlikelythatCongressintendedconsultantstohaveto
reportactivitiesonbehalfofemployerswhowerenotthemselvesrequiredtomakeany
reportundertheLMRDA. Id.at975. AstheEighthCircuitnoted,however,fourother
circuitshadpreviouslyupheldDOLsbroadviewoftheLM21reportingrequirements.
Id.at967. SofarastheCourtisaware,thiscircuitsplitpersiststothisday.
-27-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 27 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
28/34
RelyingonRoseLawFirm,plaintiffsarguethat,eveniftheyarerequiredto
complywiththerestofthenewrule,theyshouldnotberequiredtocomplywiththe
expansiveLM21reportingrequirements. TheCourtneednotaddressplaintiffsclaim
atthistime,however. Asnotedabove,DOLhasissuedaSpecialEnforcementPolicy
underwhichitwillnotrequirecompliancewiththoseportionsoftheLM21that
requirereportingofinformationregardingemployersforwhomtheconsultantdidnot
engageinanypersuaderactivity. Asaresult,evenifplaintiffseventuallysucceedon
theirclaim
(which
seems
likely
in
light
of
RoseLawFirm),
plaintiffs
are
not
currently
facinganythreatofirreparableharm.
6. CountVI:RegulatoryFlexibilityAct
Finally,plaintiffsallegethatDOLviolatedtheRegulatoryFlexibilityAct
(RFA),5U.S.C.601etseq. TheRFArequiresagenciestoprepareaninitialandthen
afinalregulatoryflexibilityanalysisdescribingtheimpactofaproposedruleonsmall
entities. 5U.S.C.603,604. Iftheagencycertifiesthattherulewillnothavea
significantimpactonasubstantialnumberofsmallentities,theagencyneednot
performthisanalysis. 5U.S.C.605(b). Asmallentitythatisadverselyaffectedbya
rulemaybringanactionundertheAPAforjudicialreviewoftheagencyscompliance
withtheRFA. 5U.S.C.611(a)(1).
-28-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 28 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
29/34
DOLcertifiedthatthenewrulewillnothaveasignificanteconomicimpactona
substantialnumberofsmallentities. 81Fed.Reg.16,015. Plaintiffs(whoallegethat
theyaresmallentitieswithinthemeaningoftheRFA)contendthatDOLscertification
isarbitraryandcapriciousbecauseDOLsfindingconflictswiththepublishedanalysis
ofathirdpartyandbecauseDOLfailedtoaccountforthecostoffilingtheLM21.
TheD.C.CircuitrecentlyexplainedtheinteractionbetweentheAPAsarbitrary
andcapriciousstandardandtheRFA:
TheAPAs
arbitrary
and
capricious
standard
requires
that
agencyrulesbereasonableandreasonablyexplained.
UnderStateFarm,wemustassess,amongotherthings,
whethertheagencydecisionwasbasedonconsiderationof
therelevantfactors.MotorVehicleMfrs.Assn,Inc.v.State
FarmMut.Auto.Ins.Co.,463U.S.29,43,103S.Ct.2856,77L.
Ed.2d443(1983)(internalquotationmarksomitted). The
RegulatoryFlexibilityActmakestheinterestsofsmall
businessesarelevantfactorforcertainrules. Therefore,
theAPAtogetherwiththeRegulatoryFlexibilityActrequire
thatarulesimpactonsmallbusinessesbereasonableand
reasonablyexplained. Aregulatoryflexibilityanalysisis,for
APApurposes,partofanagencysexplanationforitsrule.
SeeSmallRefinerLeadPhaseDownTaskForcev.EPA,705F.2d
506,539(D.C.Cir.1983)(areviewingcourtshouldconsider
theregulatoryflexibilityanalysisaspartofitsoverall
judgmentwhetheraruleisreasonable);seealsoThompsonv.
Clark,741F.2d401,405(D.C.Cir.1984)(Thus,ifdatainthe
regulatoryflexibilityanalysisordataanywhereelseinthe
rulemakingrecorddemonstrates
that
the
rule
constitutes
suchanunreasonableassessmentofsocialcostsandbenefits
astobearbitraryandcapricious,therulecannotstand.)
(citationomitted).
-29-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 29 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
30/34
NatlTel.CoopAssnv.FCC,563F.3d536,54041(D.C.Cir.2009).Judicialreviewunder
thisstandardisnarrowandhighlydeferential. Id.at541.
Underthisdeferentialstandard,theCourtcannotfindthatplaintiffsarelikelyto
succeedindemonstratingthattheruleissuchanunreasonableassessmentofsocial
costsandbenefitsastobearbitraryandcapricious.... Plaintiffsrelyalmostentirely
onanarticleinwhichtheauthorDianaFurchtgottRoth,theformerchiefeconomistof
DOLcontendsthatthecostofcomplyingwiththenewrulecouldreach$7.5to
$10.6billion
in
the
first
year
and
$4.3
to
$6.5
billion
per
year
thereafter.
TheCourtisnotinapositiontoengageinadetailedanalysisoftheassumptions
behindtheseconclusions,butsufficeittosaythatmanyofthoseassumptionsseem
problematic. Forexample,FurchtgottRothmakesassumptionsaboutthenumberof
employerswhoreceiveatleast$2,500worthoflegaladvice(apparentlyofanykind)
andthenassumesthateveryoneofthoseemployerswillincurcompliancecostsatan
hourlyrateof$104.33everyyearwhetherornottheyfaceaunionizationdrive.
Assumingthateveryemployerwhoreceivesanykindoflegaladvicewillincur
LMRDAcompliancecostsappearsatoddswiththelimitedscopeoftheLMRDA,which
appliesonlytoemployerswhoengageconsultantstohelppersuadeemployees
regardingtheirunionizationrights. FurchtgottRothalsoassumesthatlawfirmsand
consultingfirmswilleachspendatotalof200hoursfamiliarizingthemselveswith
-30-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 30 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
31/34
LM20andLM21inthefirstyearand50hoursperyearthereafter. Theseestimates
striketheCourtashighlyinflated. Inshort,theanalysisinthearticledoesnotconvince
theCourtthatplaintiffsarelikelytosucceedinshowingthatDOLsRFAanalysiswas
arbitraryandcapricious.
Finally,totheextentthatplaintiffsarefaultingDOLforfailingtoaccountforthe
costoffilingtheLM21,theirchallengeisprematurebecausetheLM21willbethe
subjectofaseparaterulemaking. 81Fed.Reg.16,000;seeNatlTel.CoopAssn,563F.3d
at541
42
(agency
could
permissibly
postpone
consideration
of
certain
costs
that
would
beassociatedwithaseparaterulemaking).
C. IrreparableHarm
Plaintiffshaveshownalikelihoodofsuccessononeoftheirclaimsspecifically,
theirclaimthatthenewrulerequiresthereportingofsomeactivitiesthatareexempt
fromdisclosureunder203(c). Plaintiffsonlyclaimofirreparableharm,however,is
thattheywillbeforcedtoguessaboutwhatactivityisrequiredtobereported,withan
incorrectguesscarryingcriminalpenalties. See29U.S.C.439. ButtheCourthas
foundthatplaintiffsareunlikelytosucceedinestablishingthattheruleisvoidfor
vagueness. Moreover,criminalpenaltiesdonotattachunlesstheviolationiswillful,
meaningthatitwascommittedinknowingorrecklessdisregardofthelaw. 29U.S.C.
439(a);UnitedStatesv.Briscoe,65F.3d576,587(7thCir.1995). Theexistenceofa
-31-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 31 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
32/34
scienterrequirementhelpstomitigateanyproblemswithvagueness. Hillv.Colorado,
530U.S.703,732(2000).
Evenifplaintiffshadmadeastrongershowingofvagueness,theyhaveoffered
littleinthewayofevidencethattheyarelikelytosufferirreparableharm. Essentially,
theirevidenceislimitedtoastatementintheircomplaintsupportedbyanaffidavit
attestingthatthestatementistruethattheyintendtocontinueadvisingtheirclientsin
waysthatarelikelytotriggerthereportingrequirement. Compl.36. TheCourt
assumes,for
the
sake
of
argument,
that
this
is
an
assertion
that
plaintiffs
plan
to
engage
inactivitiesthatwillhavetobereportedunderthenewruleeventhoughthose
activitiesconstituteadvicethatisexemptedfromdisclosureunder203(c).
Nevertheless,plaintiffshavenotmadeaparticularlycompellingshowingofirreparable
harm. TheyhavenotshownthattheirFirstAmendmentrightswillbeviolated,northat
theywillbeforcedtoviolatetheattorneyclientprivilege,northattheywillbeforcedto
violatetherulesofprofessionalconduct. Theyalsohavenotshownthattheywillhave
toidentifyclientsforwhomtheyhavenotengagedinanypersuaderactivities;DOLhas
suspendedtheenforcementofthatportionoftheLM21.
Atworst,plaintiffsarefacedwiththeprospectoffillingoutsomeformsthatthey
shouldbeexemptfromhavingtofilloutunder203(c). Eventhatharmisuncertain,
however,giventhatplaintiffshavenotdescribedwithanyspecificitytheactivitiesin
-32-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 32 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
33/34
whichtheyintendtoengage. Inshort,plaintiffsshowingofirreparableharmisboth
minimalandspeculative.
D. BalanceofHarmsandthePublicInterest
Thereisinherentharminenjoininganagencyfromenforcingaregulationthat
hasbeenpromulgatedpursuanttoauthoritydelegatedfromCongress. Althoughthe
Courthasfoundthatthenewruleislikelyinvalidinsomerespects,plaintiffsminimal
showingofathreatofirreparableharmisnotsufficienttowarranttheextraordinary
reliefof
apreliminary
injunction.
This
is
especially
true
because
the
rule
plainly
has
multiplevalidapplications;asnoted,DOLhasidentifiedthirteentypesofconductto
whichtheruleapplies,onlysomeofwhichseemtorequirethereportingofadvicethat
isexemptunder203(c). Anorderstayingenforcementoftheentirerulewould
thereforepreventDOLfromrequiringdisclosureofinformationthatithastheright
(indeed,astatutorymandate)toobtain.
Underthecircumstanceswhenplaintiffshavelaunchedafacialchallengetoa
newregulation,whenitappearsthattheregulationspotentiallyvalidapplicationsmay
outnumberitspotentiallyinvalidones,andwhenthereisonlyaminimalthreatof
irreparableharmtheCourtconcludesthatitispreferabletolettheregulationtake
effectandleaveplaintiffstoraisetheirargumentsinthecontextofactualenforcement
-33-
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 33 of 34
-
7/25/2019 Labnet v. DOL Persuader PI Opinion
34/34
actions. TheCourtthereforedeniesplaintiffsmotionforapreliminaryinjunctionor
stay.
ORDER
Basedontheforegoing,andonallofthefiles,records,andproceedingsherein,
ITISHEREBYORDEREDTHATplaintiffsmotionforatemporaryrestrainingorder,
or,inthealternative,forapreliminaryinjunctionorstay[ECFNo.13]isDENIED.
LETJUDGMENTBEENTEREDACCORDINGLY.
Dated:June
22,
2016 s/Patrick
J.
Schiltz
PatrickJ.Schiltz
UnitedStatesDistrictJudge
34
CASE 0:16-cv-00844-PJS-KMM Document 61 Filed 06/22/16 Page 34 of 34