Permanent Injunction Issued Holding DOL Amended Persuader Rule Unlawful

In a two page Order issued yesterday, Senior District Court Judge Sam R. Cummings of the U.S. District Court for the Northern District of Texas ruled that the Department of Labor’s (“DOL”) controversial new Persuader Rule issued in March 2016, and its new Advice Exemption Interpretation, are “unlawful,” and Judge Cummings made permanent his earlier June 27^th Preliminary Injunction Order.

The Rule and Interpretation, which now appear to be permanently struck down, would have imposed dramatic changes in longstanding precedents, by requiring public financial disclosure reports concerning payments that employers make in connection with “indirect persuader activities” that were not reportable under the long standing rules, but that would have, if the new rule had not been struck down, would have, for the first time, been considered reportable as persuader activity.

Judge Cummings Has Adopted The Preliminary Injunction And Made it Permanent

In a brief two page Order, Judge Cummings has adopted and incorporated the findings and conclusions in his earlier Preliminary Injunction, in which the Court concluded:

[The DOL is] hereby enjoined on a national basis from implementing any and all aspects of the United States Department of Labor’s Persuader Advice Exemption Rule (“Advice Exemption Interpretation”), as published in 81 Fed. Reg. 15,924, et seq., pending a final resolution of the merits of this case or until a further order of this Court, the United States Court of Appeals for the Firth Circuit or the United States Supreme Court.  The scope of this injunction is nationwide.

District Court Order Provides Employers Comprehensive Victory

The Court’s Order here gives employers a comprehensive victory, finding that the employers and organizations that brought the lawsuit had succeeded in establishing:

• The DOL exceeded its authority in promulgating its new Advice Exemption Interpretation in the new Persuader Rule;
• The new Advice Exemption Interpretation is arbitrary, capricious and an abuse of discretion;
• The new Advice Exemption Interpretation violates free speech and association rights under the First Amendment;
• The new Advice Exemption Interpretation is unconstitutionally vague; and
• The new Advice Exemption Interpretation violates the Regulatory Flexibility Act.

This Injunction Appears Likely to Stand

While it is theoretically possible that the DOL could appeal from the issuance of the Permanent Injunction, given the election of Donald J. Trump and the Republican’s continued majority in both the Senate and the House, it appears unlikely that such an appeal will be pursued or that the new Congress would be supportive of the objectives of the now repudiated rule.