The first decision in the three pending lawsuits against the DOL’s overhaul to the LMRDA’s “Persuader” reporting requirements came down yesterday. The District Court for the District of Minnesota’s decision in Labnet Inc. d/b/a Worklaw Network et al v. U.S. Department of Labor et al., Case No. 16-cv-00844 (D. Minn., June 22, 2016), holds that:
plaintiffs are likely to succeed in their claim that portions of the new rule conflict with the LMRDA. But the Court nevertheless declines to enjoin or stay the new rule after weighing the factors identified by the Eighth Circuit….
The Court found that the plaintiffs were likely to prevail on the first count of their suit — that the new interpretation conflicts with Section 203 of the LMRDA. Specifically, the Court found flawed DOL’s effort to properly define the categories of behavior that are and are not reportable under the new standard:
By starting with the premise that, if something is persuader activity, it cannot possibly be advice, DOL ends up struggling mightily to define as non‐advice activity that any reasonable person would define as advice. And in the course of that struggle, DOL ends up drawing lines that are simply incoherent.
The Court noted the inability of the DOL’s counsel at oral argument to properly characterize hypothetical examples posed by the Court.
Notwithstanding the Court’s critical findings on this count, the Court nevertheless decided that there was no risk of irreparable harm in allowing the attempted enforcement of the rule during the pendency of the litigation. Therefore, the Court declined to enjoin the new rule.
More troubling for employers and their counsel may be that the Court also rejected the remaining arguments made by the plaintiffs: that the new rule violates attorney-client privilege and the First Amendment; is vague, overbroad, arbitrary and capricious; and that it violates the Regulatory Flexibility Act. The two other suits, and motions for injunctive relief, remain pending in Texas and Arkansas.