On November 16, 2016, United States District Court Judge Sam R. Cummings held that the Department of Labor’s Persuader Advice Exemption Rule (“Persuader Rule”) is unlawful, and he issued a nationwide permanent injunction barring its implementation and enforcement. In the Order arising from the United States District Court for the Northern District of Texas, Judge Cummings also granted summary judgment in favor of the several states and business groups who challenged the Persuader Rule and denied the United States Department of Labor’s (“DOL”) cross-motion for summary judgment. Notably, Judge Cummings acknowledged in a footnote that his prior preliminary injunction Order is currently on interlocutory appeal before the United States Court of Appeals for the Fifth Circuit, which appears to be a likely destination for this Order as well.
The case in the Northern District of Texas represents just one of several lawsuits in multiple jurisdictions raising challenges to the Persuader Rule. In one such lawsuit brought in the United States District Court for the Eastern District of Arkansas, Maynard, Cooper & Gale, P.C. joined with various other U.S. law firm members of the Employment Law Alliance, a global law firm network, in filing an amicus curiae brief to explain the adverse impact that the Persuader Rule would have on employers. Briefly, the DOL’s new Persuader Rule would trigger reporting obligations both for employers and their attorneys when attorneys directly or indirectly engage in activities or advice related to persuading employees to exercise or not exercise their rights to union representation and collective bargaining. Based on the nature and scope of those reporting obligations, employers and law firms across the country have been worried that implementation of the Persuader Rule would place law firms that are advising clients as to labor matters in the position of either violating their ethical duty to maintain client confidentiality by disclosing information deemed confidential under the various Rules of Professional Conduct adopted in each state, or risk criminal prosecution. Faced with such risks, implementation of the Persuader Rule could lead to some firms exiting labor advice practices entirely.
Judge Cummings’s Order makes permanent his prior preliminary injunction that prevented implementation of the Persuader Rule and, pending the results of any appeal, ensures that an employer's arrangements with its attorneys who provide union avoidance advice will remain protected from disclosure to the public. Without such an injunction, many labor lawyers will be forced to decline representation on matters where compliance with the Persuader Rule will force them to disclose information protected under the attorney-client privilege. As a practical matter, this permanent injunction means that employers may continue to work with their attorneys of choice on union avoidance matters.
However, in light of the already pending appeal and the other ongoing cases raising challenges to the Persuader Rule, Judge Cummings’s permanent injunction Order likely will not be the final word on this issue. Maynard, Cooper & Gale will continue to monitor developments in this area and our Labor & Employment attorneys are ready to answer any questions that you may have.