Persuader Rule Case Study

D. Is Persuader Rule Constitutional?
The main arguments against the Persuader Rule are that it (1) exceeds the DOL’s authority under the Labor-Management Reporting and Disclosure Act (LMRDA) by effectively eliminating the advice exception; (2) is arbitrary, capricious, and an abuse of discretion; (3) contains reporting requirements that are inconsistent with and undermine the attorney-client privilege and the confidentiality of the attorney-client relationship; (3) is unconstitutional; and (4) violates the Regulatory Flexibility Act.
1. Did the DOL lack the authority to change the advice exemption?
The plaintiffs argue that the DOL’s new rule conflicts with the plain language of the LMDRA. In Chevron, U.S.A., Inc. v. NRDC, Inc. , the court
Courts can overturn agency rules if they find the underlying rationale or factual assertions to be unreasonable. The DOL never sufficiently explains why it is abandoning the Advice Exemption that has been in place for over fifty years. The DOL alleges that they have interest in developing more “transparency” between unions and employers but this need for transparency would have existed during the entire lifetime of the LMRDA. The DOL’s does not appear to be aware of the fact that its longstanding policies may have produced serious reliance interests that have to be taken into account. In Encino Motorcars, the court held “because of decades of industry reliance on the DOL’s prior policy, the DOL’s explanation for reversing its prior position in a regulation fell short of the agency’s duty to explain why it deemed it necessary to overrule its previous position”. Similarly, the DOL fell short with their explanation as to why they are changing their position on a longstanding decision in regards to the advice exemption, the final result is that the new interpretation that is the Persuader Rule cannot carry the force of the law, and therefore does not receive the deference that comes
The basis for their argument is that by requiring lawyers to file detailed reports with the Department stating the identity of their employer clients, the nature of the representation and the types of legal task performed, and the receipt and disbursement of legal fees whenever the lawyer provides advice, the Proposed Rule could chill and seriously undermine the confidential client-lawyer relationship. The DOL states that “in the Department’s view, none of the information required to be reported under the Persuader rule is protected as a general rule by attorney client privilege. The DOL is incorrect in this view, because under Rule 1.05 of the Texas Disciplinary Rules of Professional Conduct and Rule 1.6 of the ABA’s Model Rules of Professional Conduct, confidential client information that an attorney is barred from disclosing includes both privileged and unprivileged information. Accordingly, the boundaries of an attorney’s duty of confidentiality exceed the boundaries of the common law attorney-client privileged that Congress codifies in Section 204 of the LMRDA. According to