Lubbock Judge Grants Motion to Halt Persuader Rule

On June 27, 2016, in National Federation of Independent Business et al. v. Perez, et al., the U.S. District Court for the Northern District of Texas (Lubbock Division) granted Plaintiffs’ Motion for a Preliminary Injunction, thereby enjoining the U.S. Department of Labor (DOL) from implementing and enforcing its revised persuader rule on a national basis. The Court found that Plaintiffs’ challenge to the new rule, which was set to become effective July 1, 2016, has a substantial likelihood of success on the merits and that Plaintiffs have shown that they would be irreparably harmed if the rule was not enjoined.   

This lawsuit was filed on March 31, 2016, by Plaintiffs the National Federation of Independent Business, the Lubbock Chamber of Commerce, the Texas Association of Business, the National Association of Home Builders, and the Texas Association of Builders.  Ogletree Deakins represents the Plaintiffs in this case.  The State of Texas along with nine other states intervened in support of Plaintiffs’ position.

The DOL’s new rule significantly revised and expanded the reporting and disclosure requirements imposed on employers and advisors (including consultants and lawyers) under the Labor-Management Reporting and Disclosure Act (LMRDA). If implemented, the DOL’s new rule would require employers and consultants to report and disclose direct or indirect communications that have an object to persuade employees with regard to union organizing—including what was formerly considered exempt “advice” provided to management by consultants, including lawyers.

Plaintiffs contend that the DOL’s new rule violates the LMRDA, the First and Fifth Amendments to the U.S. Constitution, and the Regulatory Flexibility Act. 

Since the DOL promulgated its new rule, three separate legal challenges have been filed in federal district courts in Little Rock, Arkansas, Minneapolis, Minnesota, and Lubbock, Texas. The U.S. District Court for the District of Minnesota issued a decision in Labnet, Inc. v. U.S. Department of Labor on June 22, 2016, holding that while Plaintiffs there had a substantial likelihood of success on the merits of their claim, their motion for a preliminary injunction was denied because, according to the Court, Plaintiffs had failed to make a sufficient showing of irreparable harm. 

Lead counsel representing Plaintiffs in the Lubbock case is Jeffrey C. Londa, a shareholder in Ogletree Deakins’ Houston office.  Mr. Londa made the following comments following receipt of the Court’s Order:  “We are gratified by the Judge’s decision.  DOL’s new rule is not only confusing, vague, and unwarranted.  It constitutes a blatant overreach by the Administration designed to assist unions by making it more difficult for employers to obtain professional, including legal, assistance when exercising their constitutional right to oppose unionization.  I want to thank our clients for having the courage to oppose DOL’s efforts.  I also want to thank Ogletree Deakins shareholder Christopher C. Murray and our local Lubbock lawyer, Fernando Bustos, for their contributions to our cause.”