Yesterday, a group of plaintiffs (including a trade association, the Arkansas Chamber of Commerce, the Coalition for a Democratic Workplace, the National Association of Manufacturers, and a law firm) filed suit in the United States District Court for the Eastern District of Arkansas against the U.S. Department of Labor challenging the DOL’s Final Persuader Rule that was promulgated last week (a link to our One Minute Memo regarding the Final Rule is available here).
The lawsuit, Associated Builders and Contractors of Arkansas v. Perez (Case No. 4:16-cv-169), is the first of several likely suits challenging the Final Rule. The Complaint contains seven grounds to attack the new Rule:
- The DOL exceeded its statutory authority because the new limits on the “advice” exemption conflict with and thereby violates the plain language and legislative intent of the Labor-Management Reporting and Disclosure Act’s exemption from reporting “advice.”
- The Final Rule is arbitrary and capricious under the Administrative Procedure Act.
- The Final Rule violates the First Amendment because it infringes on the rights of freedom of speech and association by arbitrarily narrowing the definition of advice that will be considered exempt from public reporting under the LMRDA.
- The Final Rule violates due process rights under the Fifth Amendment because it is too vague and does not give fair notice as to what conduct could subject plaintiffs to criminal penalties under the LMRDA (specifically, employers and their potential advisors will be left to guess at the meaning of the new reporting requirements because the Final Rule is confusing and open-ended with regard to potential persuader activity).
- The Final Rule violates the National Labor Relations Act because the U.S. Supreme Court has held that Section 8(c) of the NLRA precludes all regulation of non-coercive speech about unionization.
- The Final Rule infringes upon attorney-client confidentiality because it blurs the line between advice and reportable persuader activity.
- The Final Rule violates the Regulatory Flexibility Act of 1960 and the Small Business Regulatory Enforcement Fairness Act of 1996, which require agencies to analyze the impact of their regulatory proposals.
The suit seeks a preliminary injunction to enjoin the Final Rule’s implementation, a declaratory judgment declaring the Final Rule invalid, an order vacating the Final Rule and permanently enjoining it from being implemented, and the plaintiffs costs and attorneys’ fees under the Equal Access to Justice Act. It was assigned to Judge Kristine G. Baker, who was appointed to the bench by President Obama in 2012. We will keep you apprised of further developments as they occur.