District Court Grants Motion For Preliminary Injunction in Persuader Rule Case

 
Wednesday, June 29, 2016
 
On June 27, 2016, the U.S. District Court for the Northern District of Texas (Lubbock Division) granted Plaintiffs’ Motion for a Preliminary Injunction in National Federation of Independent Business et al. v. Perez, et al.  This decision enjoins the U.S. Department of Labor (DOL) from nationally implementing and enforcing the persuader rule promulgated under the Labor-Management Reporting and Disclosure Act. 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.  Unless the ruling is overturned by the U.S. Court of Appeals for the Fifth Circuit or the U.S. Supreme Court, the new rule will not go into effect on July 1, 2016.

National Federation was filed on March 31, 2016, by 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. The State of Texas and 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 under the Labor Management Reporting and Disclosure Act (LMRDA). The court found that by requiring the disclosure of advice, including legal advice from attorneys to clients, the rule conflicts with attorney ethical rules.  It also concluded that the persuader rule violates the First Amendment rights to free speech and free association, and that it is impermissibly vague in violation of the Fifth Amendment right to due process.



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