In June 2016, the United States District Court for the Northern District of Texas entered a nationwide preliminary injunction against the Department of Labor’s new Persuader Rule, finding that the “DOL’s New Rule is not merely fuzzy around the edges. Rather, the New Rule is defective to its core because it entirely eliminates the LMRDA’s Advice Exemption.” National Federation of Independent Businesses et al. v. Perez, 5:16-cv-66 (N.D. Tex. June 27, 2016). Defendants in that case have filed an interlocutory appeal to the Fifth Circuit challenging the preliminary injunction order. For a more detailed discussion about the new Persuader Rule and the preliminary injunction, see our June 28th post.
On August 22, 2016, Plaintiffs, consisting of business federations, national trade associations, and other employer organizations, filed for summary judgment, seeking a judgment declaring the new Persuader Rule unlawful and a permanent injunction against Defendants on a nationwide basis preventing them from enforcing the rule.
On September 28, 2016, 10 states, who have intervened as Plaintiffs in the action, also filed a motion for summary judgment seeking a permanent injunction against the rule. The ten states include Alabama, Arkansas, Indiana, Michigan, Oklahoma, South Carolina, Texas, Utah, West Virginia, and Wisconsin. In their motion for summary judgment briefing, the states argue that the new rule unconstitutionally invades a state’s right to regulate the practice of law:
[T]he New Rule goes well beyond what Congress ever envisioned and presents the classic case of an administrative diktat in search of a problem that the law never sought to solve. In a time of labor relations far removed from the 1950’s, the New Rule turns LMRDA on its head and now functionally enjoins the guarantees of confidentiality, loyalty, and candor that are central to the very existence of attorney-client relationships. Though LMRDA expressly exempts from its scope an intent to interfere with the attorney-client relationship, the New Rule breaches that accord by classifying as public the information shared only between attorney and client, creating impossible circumstances of conflict, and transforming lawyers into vending machines of law rather than the confidants, counsellors, and advisors required by the cannons.
In its quest for “transparency,” the New Rule runs roughshod over the foundations of the legal profession and the fundamental right of everyone to be able to confidentially consult with counsel about anything. Intervenors joined this lawsuit because they possess a sovereign interest in regulating the practice of law within their borders, as well as the right of their judiciaries to promulgate and maintain the longstanding ethical responsibilities owed by attorneys to their clients, and the public at large. Intervenors are committed to protecting the sanctity of the attorney-client relationship—something that “has existed since time immemorial” and “was designed to protect the client against harassment in case somebody tried to compel him by process or otherwise to disclose conversations, confessions, and statements which might have been interchanged between lawyer and client.”
As previously discussed, given the ongoing litigation and appeals, the fate of the DOL’s new Persuader Rule remains uncertain, and it would be prudent for employers to continue to prepare for the possibility of enforcement of the new Persuader Rule in the future.