Warshauer v. Chao

Full title: MICHAEL J. WARSHAUER, Plaintiff, v. ELAINE L. CHAO, United States…

Court: United States District Court, N.D. Georgia, Rome Division

Date published: May 7, 2008

CIVIL ACTION FILE NO. 4:06-CV-0103-HLM (N.D. Ga. May. 7, 2008)

Opinion

CIVIL ACTION FILE NO. 4:06-CV-0103-HLM.

May 7, 2008

ORDER

HAROLD MURPHY, District Judge

Plaintiff brought this action to enjoin Defendant, the United States Secretary of Labor (the "Secretary"), from requiring Plaintiff to file a Form LM-10 Employer Report ("Form LM-10"), without the Secretary first complying with the notice and comment rule-making requirements of the Administrative Procedure Act ("APA"). This case is before the Court on Plaintiff's First Motion for Summary Judgment [88], and on the Secretary's Second Motion for Summary Judgment [89].

I. Evidentiary Issues

A. Affidavit of David Elbaor

Plaintiff submitted the affidavit of his counsel, Attorney David Elbaor, in support of his Motion for Summary Judgment. The affidavit states, in relevant part:

1. I am counsel for Plaintiff in civil action No. 4:06-CV-0103-HLM, Michael J. Warshauer v. Elaine L. Chao, U.S. Secretary of Labor.

2. On August 28, 2007 I caused Plaintiff's Request for Production of Documents, copy appended as Exhibit 1 to this Affidavit, to be served on counsel for the Defendant Secretary.

3. Defendant's counsel delivered more than 5,300 pages of documents in response to Plaintiff's Request for Documents.

4. The documents delivered from the Defendant were not organized by Request Number, but each is identified by Bates-stamp number.

5. None of the Defendant's more than 5,300 documents delivered to Plaintiff refute any paragraph in the Affidavits of F. Ray Marshall, William P. Hobgood, Thomas R. Donahue, and J. Ralph Beaird filed by Plaintiff in this action.

6. None of the Defendant's documents delivered to Plaintiff refute any statement by deponents F. Ray Marshall, William Hobgood, Thomas R. Donahue, and J. Ralph Beaird in their depositions taken by the Defendant in this action.

7. Except for letters sent to Plaintiff and Plaintiff's counsel in December 2000 from the Defendant's Cleveland office, and from the Defendant's Solicitor of Labor in October 2002, the Defendant's documents delivered to Plaintiff do not evidence any variance in any way from the Department's interpretation and enforcement of LMRDA Section 203(a)(1) as described in the Affidavits and deposition testimony of F. Ray Marshall, William P. Hobgood, Thomas R. Donahue, and J. Ralph Beaird.

(Aff. of David Elbaor ¶¶ 1-7.) The Court, in accordance with the Georgia Rules of Professional Conduct, generally frowns upon attorneys serving as both advocates and witnesses in the same case, as Attorney Elbaor clearly is attempting to do. In any event, Attorney Elbaor's Affidavit, for the most part, simply asserts facts that the Court can determine from other information available in the record. The Court therefore has not considered Attorney Elbaor's affidavit in connection with the Motions for Summary Judgment. The Court further observes that its ruling on the Motions for Summary Judgment would not have changed even if it had considered Attorney Elbaor's Affidavit.

B. Plaintiff's Objections to the Secretary's Exhibits

Plaintiff has objected to a number of the Secretary's Exhibits, arguing, among things, that the Secretary's Exhibits 9 through 12 are inadmissible hearsay. As a general rule, "inadmissible hearsay `cannot be considered on a motion for summary judgment.'"Macuba v. Deboer, 193 F.3d 1316, 1322 (11th Cir. 1999) (quotingGarside v. Osco Drug, Inc., 895 F.2d 46, 50 (1st Cir. 1990)). A court, however, may consider inadmissible hearsay in connection with a motion for summary judgment where that hearsay can be reduced to admissible form at trial. Lentz v. Hospitality Staffing Solutions, LLC, No. 1:06-CV-1893-WSD, 2008 WL 269607, at *3 (N.D. Ga. Jan. 28, 2008). Here, the Secretary's Exhibits all can be reduced to admissible form at trial. See Decl. of Kay Oshel Dated Apr. 28, 2008 ("Apr. 2008 Oshel Decl.") ¶¶ 3-6. The Court therefore overrules this Objection.

Plaintiff further objects to the Secretary's Exhibits 11 and 12 as irrelevant under Federal Rule of Evidence 402. Rule 402 provides: "All relevant evidence is admissible, except as otherwise provided by the Constitution of the United States, by Act of Congress, by these rules, or by other rules prescribed by the Supreme Court pursuant to statutory authority. Evidence which is not relevant is not admissible." Fed.R.Evid. 402. Federal Rule of Evidence 401, in turn, defines relevant evidence as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Fed.R.Evid. 401. At this point, the Court cannot determine that the Secretary's Exhibits 11 and 12 are irrelevant. The Court therefore will not disregard the Secretary's Exhibits 11 and 12 based on this argument.

Plaintiff also objects to the Secretary's Exhibits 10 and 11 as unduly prejudicial under Federal Rule of Evidence 403. Rule 403 provides: "Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence." Fed.R.Evid. 403. "Rule 403 is an extraordinary remedy which should be used only sparingly since it permits the trial court to exclude concededly probative evidence." United States v. Betancourt, 734 F.2d 750, 757 (11th Cir. 1984). The former United States Court of Appeals for the Fifth Circuit has recognized:

Of course, "unfair prejudice" as used in Rule 403 is not to be equated with testimony simply adverse to the opposing party. Virtually all evidence is prejudicial or it isn't material. The prejudice must be "unfair."

Dollar v. Long Mfg., N.C., Inc., 561 F.2d 613, 618 (5th Cir. 1977).¹

1 Opinions of the Fifth Circuit issued prior to October 1, 1981, the date marking the creation of the Eleventh Circuit, are binding precedent on this Court. Bonner v. City of Prichard, 661 F.2d 1206, 1209-11 (11th Cir. 1981) (en banc).

For purposes of ruling on the instant Motions for Summary Judgment, the Court cannot find that exclusion of the Secretary's Exhibits 10 and 11 under Rule 403 is warranted. The Court therefore will not exclude those Exhibits based on this argument.

Finally, Plaintiff objects to the Secretary's Exhibits 10 and 12 as improperly authenticated under Federal Rule of Evidence 902, which governs self-authentication of certain documents. Fed.R.Evid. 902. It is possible, however, that the Government can adduce sufficient evidence at trial to show that Rule 902 applies or to authenticate the exhibit in accordance with Federal Rule of Evidence 901. See Apr. 2008 Oshel Decl. ¶¶ 3-6. The Court therefore will not disregard the Secretary's Exhibits 10 and 12 based on this argument.

In sum, the Court rejects all of Plaintiff's challenges to the Secretary's Exhibits 9 through 12. The Court therefore will consider those Exhibits in connection with the instant Motions.

II. Procedural Background

On May 8, 2006, Plaintiff filed this lawsuit. (Docket Entry No. 1.) On that same day, Plaintiff filed a Motion for Temporary Restraining Order and/or Motion for Preliminary Injunction. (Docket Entry No. 2.)

Plaintiff initially sought to enjoin the Secretary from requiring Plaintiff to file a Form LM-10 Employer Report ("Form LM-10") by May 15, 2006. Plaintiff asserted challenges under the APA, (Compl. ¶¶ 33-36), and also contended that the Secretary's actions violated the Regulatory Flexibility Act ("RFA"), (id. ¶¶ 37-40). Plaintiff sought a temporary restraining order, a preliminary injunction, and a permanent injunction.

On May 12, 2006, the Court held a hearing with respect to Plaintiff's Motion for Temporary Restraining Order. During the hearing, counsel for the Secretary indicated that the Secretary had agreed not to take an enforcement action prior to July 5, 2006, against Plaintiff, his employees, partners, associates, or law firm for failure to file a Form LM-10. Based on that agreement, the Court entered an Order denying as moot Plaintiff's Motion for Temporary Restraining Order. (Order of May 12, 2006.) The Court deferred ruling on Plaintiff's Motion for Preliminary Injunction, and established a briefing schedule for that Motion. (Id.)

On August 17, 2006, the Court held a hearing to address Plaintiff's Motion for Preliminary Injunction. During the August 17, 2006, hearing, the Court heard testimony from Plaintiff and also heard arguments from counsel. On August 25, 2006, the Court entered an Order denying Plaintiff's Motion for Preliminary Injunction. (Order of Aug. 25, 2006.)

Plaintiff filed an interlocutory appeal from the Court's August 25, 2006, Order. (Docket Entry No. 24.) On November 16, 2006, the United States Court of Appeals for the Eleventh Circuit granted Plaintiff's motion for voluntary dismissal of his appeal. (Docket Entry No. 31.)

On January 24, 2007, the Secretary filed her first Motion for Summary Judgment. (Docket Entry No. 32.) On April 18, 2007, the Court entered an Order denying that Motion. (Order of Apr. 18, 2007.) Specifically, the Court concluded that a genuine dispute existed concerning whether the Secretary had changed her previous position concerning whether employers such as Plaintiff, who did not engage in persuader activity, were required to file Form LM-10, and that a genuine dispute also existed as to whether the Secretary had changed her previous interpretation of the de minimis rule. (Id. at 88-93.) In reaching this conclusion, the Court relied upon cases following the rule established by the United States Court of Appeals for the District of Columbia Circuit in Paralyzed Veterans of America v. D.C. Arena L.P., 117 F.3d 579 (D.C. Cir. 1997). (Id. at 90 n. 3.)

On March 20, 2008, Plaintiff filed his First Motion for Summary Judgment. (Docket Entry No. 88.) On that same day, the Secretary filed her Second Motion for Summary Judgment. (Docket Entry No. 89.) The Court finds that the briefing processes for the Motions are complete, and that the Motions therefore are ripe for resolution by the Court.²

2 As of the date of this Order, the Clerk's docket indicates that Plaintiff has not filed a reply brief in support of his First Motion for Summary Judgment. The time period for filing that reply brief, however, has expired, and the Clerk's docket does not indicate that Plaintiff has requested an extension of time to file his reply brief. The Court therefore finds that Plaintiff's First Motion for Summary Judgment is ripe for resolution by the Court.

III. Factual Background

A. Plaintiff's Circumstances

Harris v. Coweta County, Ga.433 F.3d 807811rev'd on other grounds127 S. Ct. 1769Jones v. Am. Gen. Life Ins. Co.370 F.3d 10651069Wooden v. Bd. of Regents of Univ. Sys. of Ga. 247 F.3d 1262 1271

Plaintiff is a licensed attorney, is a member in good standing of the State Bar of Georgia, and is a member in good standing and eligible to practice before the bar of this Court. (Aff. of Michael J. Warshauer ¶ 1) Plaintiff also is a member of the Academy of Railway Labor Attorneys, and the American Trial Lawyers Association, for which Plaintiff previously served as chair of the Railroad Law Section. (Warshauer Aff. ¶ 1; Aug. 17, 2006, Hr'g Tr. at 9-10.) Plaintiff has contributed a chapter concerning railroads and the Federal Employers Liability Act ("FELA") to a treatise published by West Publishing Company. (Aug. 17, 2006, Hr'g Tr. at 9-10.) Plaintiff also regularly presents lectures to railroad employees. (Id.)

Plaintiff is a founding partner and principal of the law firm of Warshauer, Thornton, and Easom, P.C., which has its offices at Suite 2700, 75 Fourteenth Street, N.E., Atlanta, Georgia. (Warshauer Aff. ¶ 2; Aug. 17, 2006, Hr'g Tr. at 5) Plaintiff's law firm employs approximately ten full-time staff, and is not dominant in its field of operations. (Warshauer Aff. ¶ 2.)

Plaintiff's law firm represents injured individuals in litigation under various circumstances. (Aug. 17, 2006, Hr'g Tr. at 4-5) Plaintiff's law firm specializes in several types of actions, including FELA lawsuits. (Id.) Plaintiff's law firm does not represent labor unions, and does not engage in labor lawwork. (Id. at 5; Warshauer Aff. ¶ 4.) Plaintiff's law firm has no commercial dealings with labor unions, does not participate in union elections in any manner, and has no commercial dealings with union- or labor-connected law firms. (Aug. 17, 2006, Hr'g Tr. at 6-8; Warshauer Aff. ¶ 4)

Plaintiff is an appointed designated legal counsel of the United Transportation Union ("UTU"). (Warshauer Aff. ¶ 3; Aug. 17, 2006, Hr'g Tr. at 8-9,) Plaintiff participates in the UTU's authorized activities, including sponsoring and attending UTU scheduled seminars, conventions, and meetings, and presenting lectures to UTU members and representatives on legal topics of interest, and being prepared to represent injured UTU members. (Warshauer Aff. ¶ 3; Aug. 17, 2006, Hr'g Tr. at 8-9.) Plaintiff does not conduct commercial business dealings with the UTU, its representatives, its benefit plans, or its related organizations. (Warshauer Aff. ¶ 4.)

Plaintiff's appointment as a designated legal counsel for the UTU requires Plaintiff to offer legal services to every union employee with a FELA case that is meritorious, regardless of size, at a reduced fee of twenty-five percent of the recovery. (Aug. 17, 2006, Hr'g Tr. at 11.) That rate is significantly lower than the usual market rate for similar work. (Id. at 11-12.) Some employees successfully negotiate rates for Plaintiff's services that are even lower than twenty-five percent of the recovery. (Id. at 16-18.) Such negotiations depend on the bargaining power of a given employee, not on the employee's status as a union officer or representative. (Id. at 18.)

As part of his work in FELA cases or railroad crossing cases, Plaintiff often may interview railroad employees or use railroad employees as consultants in connection with his investigation. (Aug. 17, 2006, Hr'g Tr. at 18-22.) Plaintiff often pays those employees certain sums in exchange for the employees' assistance; however, no prevailing market rate exists for such assistance. (Id. at 18-22, 25.) Some of those employees may not appear as witnesses for depositions or for trial, and their identities may not ordinarily be disclosed to opposing counsel. (Id.) According to Plaintiff, identifying those employees on Form LM-10 may result in the employees' suffering retaliation from their employers, and also may discourage those employees from providing assistance to Plaintiff. (Id. at 23. 44.) Plaintiff also contends that identifying those employees on Form LM-10 will require Plaintiff to divulge his strategies, even though opposing counsel would not be entitled to such information under applicable discovery rules. (Id.) Determining which employees are union officials or representatives often proves difficult. (Id. at 45.)

Plaintiff engages in normal business entertaining of clients and prospective clients in this District, consistent with applicable ethical guidelines for attorneys. (Warshauer Aff. ¶ 6; Aug. 17, 2006, Hr'g Tr. at 12-13.) As requested by the UTU, Plaintiff sponsors meetings and provides refreshments at UTU meetings at which Plaintiff makes presentations concerning legal topics. (Warshauer Aff. ¶ 6; Aug. 17, 2006, Hr'g Tr. at 12-13, 15, 45.) The majority of the individuals who attend such functions generally are affiliated in some way with the UTU; however, determining which of those individuals are union officials or representatives often proves difficult. (Aug. 17, 2006, Hr'g Tr. at 26-27, 40-41, 45.) According to Plaintiff, those functions likely would not qualify as "widely attended gatherings" for purposes of Form LM-10. (Id. at 40-41.)

According to the Secretary's March 7, 2006, website Advisory, Plaintiff, as a designated legal counsel, must file annual Form LM-10s reporting the date, amount, kind, and identity of the recipient for any direct or indirect benefit that Plaintiff or his law firm confers on any union, union official, or employee, regardless of purpose, if the dollar value of the benefit, either separately or in the annual aggregate, exceeds $250 in any fiscal year. (Warshauer Aff. ¶ 6.) The March 7, 2006, Advisory requires Plaintiff, in response to item 12 on Form LM-10, to "[e]xplain fully the circumstances of all payments, including the terms of any oral agreement or understanding pursuant to which they were made. Attach any additional narrative sheets that are necessary to fully explain the required information." (Id.)

Plaintiff has served as a designated legal counsel, or has been associated in a firm with a partner who served as a designated legal counsel, since 1989. (Aug. 17, 2006, Hr'g Tr. at 30-31.) Prior to 2001, Plaintiff had never heard of Form LM-10's requirements being imposed on a designated legal counsel, and the topic had not been addressed at Plaintiff's American Trial Lawyers Association meetings or through the Academy of Railroad Labor Attorneys. (Id. at 31-35.) Plaintiff was not aware of any designated legal counsel who suffered adverse consequences for failing to file Form LM-10. (Id.)

Plaintiff contends that the Form LM-10 reporting requirements and the "de minimis" rule will require Plaintiff's law firm to bear significant recordkeeping burdens. (Warshauer Aff. ¶ 9; Aug. 17, 2006, Hr'g Tr. at 42, 48-52.) Those burdens include a requirement that Plaintiff identify and record all attendees who appear at functions Plaintiff sponsors, that Plaintiff determine which of those attendees are union officers or representatives, and that Plaintiff record the amount spent on each attendee at any given gathering. (Warshauer Aff. ¶ 9; Aug. 17, 2006, Hr'g Tr. at 42, 48-52.) Plaintiff also is concerned that he must report the fee arrangements in cases in which he represents UTU members or in cases in which plaintiff-employees negotiate lower percentages for attorneys' fees, because Plaintiff does not believe that those percentages are consistent with the applicable market rates. (Aug. 17, 2006, Hr'g Tr. at 36-38.) Plaintiff further believes that he must report all payments made to employees or consultants who assist Plaintiff in the course of investigating or pursuing a case. (Id. at 38.)³ Plaintiff contends that complying with the reporting requirements will be virtually impossible, and will cost Plaintiff significant amounts of time and money. (Id. at 50-52.) Plaintiff contends that non-designated legal counsel will have an advantage over designated legal counsel because those attorneys need not comply with Form LM-10's reporting requirements. (Id. at 39-44.)

3 During the August 17, 2006, hearing, counsel for the Secretary stated counsel's belief that the percentage rates paid by UTU members who hire Plaintiff and the percentage rates paid by clients who negotiate lower rates with Plaintiff would not be reportable on Form LM-10, because such rates are the product of a bargaining relationship. (Aug. 17, 2006, Hr'g Tr. at 59, 61-62.) Counsel for the Secretary further expressed counsel's belief that Plaintiff need not disclose payments made to employees who serve as witnesses or consultants, because such payments are made as part of a market or bargaining transaction. (Id. at 62-63.)

B. Form LM-10 and Instructions

In 1963, the Secretary published Form LM-10 to implement the reporting requirements of Section 203 of the Labor Management Reporting and Disclosure Act ("LMRDA") of 1959, 29 U.S.C.A. § 433. (Compl. Ex. 1.) Since 1963, the published instructions for filing Form LM-10 expressly limited the requirements for filing the form to: "Only those employers as defined in the [LMRDA] who have been involved in certain financial transactions or arrangements with labor organizations, union officials, employees, or labor relations consultants, or who have made expenditures for certain objects relating to employees' or unions' activities." (Id.)

Since 1964, the Secretary's published Instructions for filing Form LM-10 excluded from the reporting requirements "[s]poradic or occasional gifts, gratuities, or favors of insubstantial value, given under circumstances and terms unrelated to the recipient's status in a labor organization;e.g., traditional Christmas gifts." (Compl. Ex. 1.) The Secretary's LMRDA Interpretative Manual referred to such exclusion as the "de minimis doctrine," which excludes from reporting requirements "trivial sums" and things of "nominal value," and which requires the reporting of each financial transaction or arrangement to be "considered on its own facts." (Id. Ex. 2.)

C. Website Advisories

In 2005 and 2006, the Secretary issued a series of announcements on her website, www.dol.gov/esa, called Form LM-10 (Employer Reports) Advisories. Specifically, in March 2005, the Secretary announced that an item qualified as de minimis, for Form LM-30 purposes, if it had a value of $25.00 or less. (Compl. Ex. 3.) On June 27, 2005, the Secretary announced on her website that employers, including law firms that were engaged in normal business entertaining such as providing lunch or similar benefits to union clients, must file a Form LM-10 reporting the expense if the lunch or benefit conferred had a value of $25.00 or greater. (Compl. Ex. 4.)

On July 19, 2005, the Secretary issued another website Advisory announcing that the Department of Labor "has not yet issued guidance on LM-10 (Employer Reports) reporting requirements but expects to do so in the near future." (Compl. Ex. 5.) The Secretary announced a "grace period" extending the time period for filing Form LM-10s covering the previous year until August 5, 2005. (Id.)

On November 7, 2005, the Secretary issued an Advisory on her website stating that the Secretary would not require Form LM-30 reporting of any benefit "with a value of $25 or less." (Compl. Ex. 6.)

On November 9, 2005, the Secretary issued another website Advisory announcing that all payments from any employer for the direct or indirect benefit of a union official or employee are reportable on Form LM-10. (Compl. Ex. 7.) The Secretary stated: "The fact that a payment is not made in relation to a direct employment relationship, or in the context of collective bargaining, is not relevant to whether the payment is reportable under section 203(a)(1)." (Id.)

On November 10, 2005, the Secretary published an Advisory on her website that contained a series of "Frequently Asked Questions." (Compl. Ex. 8.) The Advisory required LM-10 filers to report any payment, benefit, or thing "with an annual aggregate value of $250 or more" incurred directly or indirectly for the benefit of a union officer or employer. (Id.)

On March 7, 2006, the Secretary issued a website Advisory that described two exemptions from Form LM-10 reporting requirements: (1) a $20.00 exemption for "All Widely Attended Gatherings," and (2) a $125.00 exemption for "One or Two Widely-Attended Gatherings." (Compl. Ex. 9.) According to that website Advisory, employers must identify and keep record of each attendee at widely attended gatherings, and the records must detail "who is a union official" and whether "the [annual] benefit conferred on each individual exceeds $20 and the $125 exemption" does not apply. (Id.)

In her March 7, 2006, website Advisory, the Secretary stated that employers who conferred on union officials benefits having an annual aggregate value of greater than $250.00 in a fiscal year beginning on or before December 31, 2005, but who did not institute tracking procedures for those benefits, nonetheless must conduct a "diligent inquiry" and "reconstruct" records of such benefits conferred during 2005 and must file a Form LM-10 disclosing such benefits by March 31, 2006. (Compl. Ex. 9.) The Advisory also provided that Designated legal counsels are required to file Form LM-10, and that Form LM-10 and its contents, once filed, are public information. (Id.) Individuals may examine Forms LM-10 and purchase copies of those forms at the Department of Labor's Public Disclosure Room. (Id.) Copies also are available for viewing and printing on the Secretary's website. (Id.)

In the same Advisory, the Secretary encouraged Form LM-10 filers to provide comments in response to the Secretary'sNotice of Rulemaking published August 29, 2005, for proposed revisions to Form LM-30, which has a similar de minimis standard to Form LM-10. (Id.) The Secretary indicated that Form LM-30 and Form LM-10 have similar de minimis standards. (Id.) The Secretary's Advisory provided that: "Comments on the Form LM-30 rulemaking will be accepted until January 26, 2006." (Id.) On that same date, the Secretary announced in her website advisory that Forms LM-10s due to be filed by March 31, 2006, would be considered timely filed if filed on or before May 15, 2006. (Id.)

D. Objections to the Advisories

In January 2006, the United States Chamber of Commerce, the American Council of Life Insurers, the Securities Industry Association, the Investment Company Institute, the Investment Advisor Association, and the Society for Human Resource Management filed oppositions to the Secretary's advisories. (Compl. Ex. 10.)

E. Declaration of Kay S. Oshel Dated June 6, 2006

Kay S. Oshel is the Director of the Office of Policy, Reports and Disclosure, Office of Labor-Management Standards ("OLMS"), United States Department of Labor, Washington, D.C. (Decl. of Kay S. Oshel Dated June 6, 2006 ("Oshel June 2006 Declaration") ¶ 1.) According to Ms. Oshel, an employer who has provided payments to union officials must file Form LM-10. (Id. ¶ 3.) Ms. Oshel states that Form LM-10 has remained essentially unchanged since 1963, when the Department of Labor first approved it. (Id.) In November 2005, OLMS issued a Form LM-10 advisory on its website and in a "list serve" e-mail message. (Id.) The advisory included frequently asked questions. (Id.) To the extent that the frequently asked questions address a subject covered in the Interpretive Manual, the more recent guidance in the frequently asked questions states the Secretary's interpretation. (Id.)

Ms. Oshel attached as Exhibit 3 to her June 2006 declaration a copy of the frequently asked questions. Question 3 provides:

Q3: Are Form LM-10 reports required from attorneys who are designated legal counsel?

A3: Yes. Reports are required if the lawyer is an employer and makes a reportable payment.

Any entity that is an "employer" under the LMRDA and makes "any payment or loan, direct or indirect, of money or other thing of value (including reimbursed expenses), or any promise or agreement therefor, to any labor organization or officer, agent, shop steward, or other representative of a labor organization, or employee of any labor organization" (collectively referred to as "union officials") must file a report, unless a specific exemption is applicable. 29 U.S.C. § 433. Lawyers who are designated legal counsel for a union will in most, if not all, cases meet this definition. Designated legal counsel, i.e., lawyers recommended by the union to its members for representation in workers' compensation, personal injury, or other matters, have a relationship with the union by virtue of this designation. Thus, if the lawyer provides a gift, payment, loan, or other thing of value to a union official, a report is required even where the lawyer does not have a direct commercial relationship with the labor union of the official to whom it provided a gift, payment, or a loan. Union members have the right to evaluate whether a lawyer's presence on a list of designated legal counsel is based on merit rather than a financial relationship between the lawyer and union officials. Also see FAQ, Question 10.

(Oshel June 2006 Decl. Ex. 3 at 2.)

Question 3A addresses payments for services, such as legal services provided by a lawyer to a union official, and indicates that such payments usually are exempt from reporting as regular marketplace transactions. (Oshel June 2006 Decl. Ex. 3 at 2-3.) Question 24 asks whether reporting is required if reporting a transaction on the Form LM-10 would violate a confidentiality clause. The answer states:

There is no exemption for confidentiality clauses in the LMRDA. The only confidentiality recognized by the LMRDA is that of attorney-client privilege, contained in Section 204 of the LMRDA, which states that "nothing contained in this Act shall be construed to require an attorney who is a member in good standing of the bar of any State, to include in any report required to be filed pursuant to the provisions of this act any information which was lawfully communicated to such attorney by any of his clients in the course of a legitimate attorney-client relationship." 29 U.S.C. 434. If an employer believes that completing Form LM-10 will result in the disclosure of sensitive, confidential or proprietary information that could cause substantial harm to the employer's business interests, the issue should be discussed with OLMS prior to the filing of the report.

(Id. at 8.)

Exhibit 4 to Ms. Oshel's declaration provides some guidance as to whether an attorney would be considered an employer under the LMRDA. (Oshel June 2006 Decl. Ex. 4.) The relevant definition provides:

An attorney would be an employer under section (3) of the LMRDA if in connection with his practice (1) he engages in interstate commerce or renders services to clients engaged in interstate commerce or in industries affecting interstate commerce (e.g., certain labor unions), or if he makes frequent and continued use of the instrumentalities of commerce (e.g., telephone, telegram and mail messages across State lines), and (2) he has any employees for whom he makes withholdings under Internal Revenue laws or contributions under the Federal Insurance Contributions Act.

(Id.)

Exhibit 5 to Ms. Oshel's June 2006 Declaration consists of a report of criminal actions concerning corruption and union officials. (Oshel June 2006 Decl. Ex. 5.) In particular, the report states:

An investigation of corruption in the United Transportation Union (UTU) resulted in the conviction of four union officials who pled guilty to conspiring with others to violate federal mail and wire fraud statutes and interstate transportation in aid of racketeering through commercial state bribery by using their positions of authority to solicit and collect cash payments and other things of value from attorneys doing business or seeking to do business as Designated Legal Counsels of the UTU.

(Id.)

Exhibit 6 to Ms. Oshel's June 2006 Declaration is a letter from the Department of Labor's Solicitor's Office to Plaintiff's counsel, dated October 8, 2002. That letter states, in relevant part:

This is in response to your January 23, 2001, letter to Judith E. Kramer, then Acting Solicitor of Labor. . . . In your letter to Ms. Kramer, you expressed your objection to a letter from Mr. Jack Graczyk, Acting District Director Cleveland, Office of Labor-Management Standards (OLMS), determining that the Designated Legal Counsels (DLCs) of the United Transportation Union (UTU) are "employers" and, thus, required to submit Employer Report, Form LM-10 to the Department of Labor, pursuant to the employer reporting requirements of section 203(a)(1) of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA or Act), 29 U.S.C. § 433(a)(1). Your letter requests a meeting with Ms. Kramer to discuss this matter. Such a meeting is unlikely to resolve the issues presented by your letter since it appears that you have misperceived the basis for Mr. Graczyk's determination.

Section 203(a)(1) of the LMRDA requires "every employer" to file reports with the Department if in the preceding fiscal year they made or promised a payment or loan, direct or indirect, of money or other thing of value to a union or union official, except for payments or loans by financial or credit institutions and payments exempted in section 302(c) of the Labor Management Relations Act, 1947, as amended. Mr. Graczyk's determination is premised on the fact that the DLCs have made or promised various payments to the UTU, a labor organization, in connection with regional meetings conducted by the DLCs, that the DLCs pay a portion of the travel expenses incurred by the Director of the United Transportation Union Insurance Agency (UTUIA), that the DLCs pay certain credit card expenditures of the UTUIA's field supervisors, and that each DLC submits $8,000 to the UTU annually to cover certain seminar costs. Mr. Graczyk also noted that payments made by DLCs for UTUIA pass through UTU accounts. Your letter does not dispute any of these facts. Without regard to the reasons for these payments, and wholly apart from any question whether such payments are consistent with other laws, such payments are made or promised to a labor organization (UTU) and, therefore, must be reported under section 203(a)(1) of the LMRDA, if made by an employer. Payments made or promised to the UTU and the UTUIA, either directly or indirectly, by each DLC that is an "employer" within the meaning of section 3(e) of the LMRDA, must be disclosed on Employer Report, Form LM-10, in accordance with the statute and with Department of Labor Interpretive Regulations at 29 C.F.R. Part 405.

Section 3(e) of the LMRDA defines "employer" to mean:

any employer or any group or association of employers engaged in an industry affecting commerce, (1) which is, with respect to employees engaged in an industry affecting commerce, an employer within the meaning of any law of the United States relating to the employment of any employees or (2) which may deal with any labor organization concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work and includes any person acting directly or indirectly as an employer or as an agent of an employer in relation to an employee but does not include the United States or any corporation wholly owned by the Government of the United States or any State or political subdivision thereof.

29 U.S.C. § 402(e) (emphasis supplied). As we understand the facts, the DLCs generally are partners in various law firms, which presumably employ employees. For that reason, it would appear that the DLCs are "employers" within the meaning of any law of the United States relating to the employment of any employees and, thus, are "employers" for purposes of the reporting requirements of the Act.

Certain provisions of the LMRDA apply only to certain employers, or to certain employer activities. For example, section 101(a)(4) of the Act, 29 U.S.C. § 411(a)(4), provides that an "interested employer or employer association" may not finance a judicial action by a member against a labor organization. Officers and employees of a labor organization must report, under section 202 of the LMRDA, payments received from, or transactions involving "an employer whose employees such labor organization represents or is actively seeking to represent." 29 U.S.C. § 432(a)(2), (3). By contrast, the definition of "employer" in section 3(e) of the LMRDA is very broad in that it encompasses anyone considered to be an employer within the meaning of any law of the United States relating to the employment of any employees, including among others, the Railway Labor Act, the Fair Labor Standards Act, the Labor Management Relations Act, and the Internal Revenue Code. See 29 C.F.R. § 451.3(a)(3). In the absence of any indication that Congress intended to limit the application of the general statutory definition of the term "employer" in section 203(a)(1), section 3(e) controls and the broad definition applies. Nothing in your letter suggests that you would not agree that the DLCs are "employers" as defined by section 3(e). Accordingly, payments made to a labor organization by these employers must be reported under section 203(a)(1) of the LMRDA.

Your letter indicates a mistaken belief that the Department's position is that such payments must be reported because the DLC has engaged in activity that might fall within the reporting requirements of section 203(a)(2)-(5), or section 203(b) of the Act. No such assertion was made in Mr. Graczyk's letter and the Department is not aware of any facts that would implicate those sections of the Act. The requirements of section 203(a)(1) apply, however, without regard to the reason for payments made to a union and without regard to any activity in which the "employer" may or may not have engaged, other than the act of making, or promising to make, a payment to a labor organization.

Under these circumstances, your suggestion that the statutory requirement raises constitutional concerns is without merit. Several courts have rejected arguments that compelled disclosure under the reporting requirements of Title II of the LMRDA is a prior restraint on speech in violation of the First Amendment, see, e.g., Master Printers of America v. Donovan, 751 F.2d 700, 713 (4th Cir. 1984); that the provisions are unconstitutionally vague, id. at 710-13; Master Printers Ass'n v. Donovan, 532 F. Supp. 1140, 1148-51 (N.D. Ill. 1981), aff'd, 699 F.2d 370 (7th Cir. 1983), cert. denied, 464 U.S. 1040 (1984); or that the reporting requirements infringe on the First Amendment right of freedom of association. See, e.g., Humphreys, Hutcheson Mosley v. Donovan, 755 F.2d 1211 (6th Cir. 1985).

Nor do the decisions issued by the Supreme Court in United Transportation Union v. State Bar of Michigan, 401 U.S. 576 (1971) and Brotherhood of Railroad Trainmen v. Virginia Bar, 377 U.S. 1 (1964), support any assertion that the reporting required by section 203(a)(1) of the LMRDA raises First Amendment issues. These cases deal with First Amendment concerns implicated by state injunctions that "prevent efforts of a union to provide its members practical and economical access to courts to press work-related personal injury claims." Board of Ed. of City of New York v. Nyquist, 590 F.2d 1241, 1244 (2d Cir. 1979). Here, however, the Department is not attempting to enjoin or prohibit the DLCs from engaging in any activity. Rather, the Department is merely requesting that each DLC disclose, on Employer Report Form LM-10, any payments, loans, or other thing of value that he or she made or promised to the UTU and the UTUIA, as required by the Act.

I hope this letter clarifies the Department's position concerning the employer reporting requirements under section 203(a)(1) of the LMRDA and the DLC's reporting obligations under that provision.

(Oshel June 2006 Decl. Ex. 6.)

Exhibit 7 to Ms. Oshel's June 2006 Declaration is a notation that Plaintiff refused to file Form LM-10. That notation states, in relevant part:

Warshauer, in his letter of January 16, 2001, states that on the advice of counsel they have not filed the LM-10 report. He states, upon their research into the reporting requirements, it does not appear that they are in the class of employers required to file the form. He further states that they do not believe that any of their expenditures are reportable expenditures pursuant to the LMRDA. He cites Section 203(a)(1) and states that it appears the clear intend behind the disclosure provision is to ascertain any expenses that are designed to persuade employees in the exercise of any NLRA Section 7 rights. He adds that they do not become involved in labor issues and have no involvement at any level with union organizing or negotiations. He outlines their relationship and goals pursuant to the UTU and cites certain US Supreme Court decisions. In his concluding statement, he states, even assuming they are employers, none of their expenditures are of the sort that are required to be reported to comply with Section 203. He advises that any further communication should be made directly with retained legal counsel, DAVID ELBAOR at (202) 237-1600.

(Oshel June 2006 Decl. Ex. 7.)

Ms. Oshel attached as Exhibit 8 to her June 2006 Declaration the instructions for filing the Form LM-10. (Oshel June 2006 Decl. Ex. 8.)

Exhibit 9 to Ms. Oshel's June 2006 Declaration consists of previously-published guidance concerning the "de minimis" exception. (Oshel June 2006 Decl. Ex. 9.) That guidance provides, in relevant part:

We should all take cognizance of the "de minimis non curat lex" doctrine. This means that courts will not find persons guilty of acts involving trivial sums of money. For our purpose, therefore, when an employer picks up the lunch tab when he and the union officer have had lunch together, no report will be required from either. Likewise, a Christmas gift of nominal value would not require reports. However, when the "de minimis" point has been passed, reports are required. A gift of a car by the employer to the union leader will of course require a report. Each case, as it arises, must be considered on its own facts.

(Id.)

Exhibit 10 to Ms. Oshel's declaration sets forth the Secretary's current guidance for the de minimis exception. (Oshel June 2006 Decl. Ex. 10.) That guidance states, in relevant part:

We should all take cognizance of the "de minimis non curat lex" doctrine. This means that courts will not find persons guilty of acts involving trivial sums of money. The instructions for Form LM-30 provide that union officers or employees "do not have to report any sporadic or occasional gifts, gratuities, or loans of insubstantial value, given under circumstances unrelated to the recipient's status in a labor organization." Previous examples of "de minimis" situations were when an employer picked up the lunch tab when he and a union officer ate together or when an employer gave a union officer a Christmas gift of nominal value. A car was given as an example of a gift that would require a report. In order to provide more guidance on this issue, OLMS has determined that anything with a value of $25 or less will be considered "de minimis" and therefore not reportable if it is given under circumstances unrelated to the recipient's status in a labor organization as discussed below in Manual Entry 241.710.

(Id. at 1-2.) The guidance further provides, with respect to the term "unrelated to labor organization status":

A "de minimis" gift must be given under circumstances unrelated to the recipient's status in a labor organization in order to be subject to the exemption for reporting. For example, if an employer frequently provides a catered lunch during long meetings with various groups, a union officer would not have to report the receipt of such a lunch if it has a value of $25 or less.

(Id. at 2.)

Ms. Oshel attached a sample Form LM-10 completed by a law firm as Exhibit 11 to her declaration. (Oshel June 2006 Decl. Ex. 11.)

F. Oshel April 2008 Declaration

The Secretary also submitted the Oshel April 2008 Declaration in support of her Second Motion for Summary Judgment. That Declaration states that Exhibit 9 to the Secretary's brief in support of her Second Motion for Summary Judgment is a letter dated February 12, 1963 from the Department of Labor concerning the reporting requirements imposed by section 203(a)(1) of the LMRDA. (Oshel Apr. 2008 Decl. ¶ 3.) The Oshel April 2008 Declaration further states that Exhibit 10 to the Secretary's brief in support of her Second Motion for Summary Judgment is a copy of a "Guide for Employer Reporting" published in 1960. (Id. ¶ 4.) Additionally, the Oshel April 2008 Declaration indicates that Exhibit 11 to the Secretary's brief in support of her Second Motion for Summary Judgment consists of copies of various Form LM-10s filed by employers, and accepted by the Department of Labor, throughout the history of the LMRDA. (Id. ¶ 5.) Finally, the Oshel April 2008 Declaration states that Exhibit 12 to the Secretary's brief in support of her Second Motion for Investigation is a list of employers from which the Secretary sought Form LM-10s after learning that the employers had made payments to a labor organization officer or employee. (Id. ¶ 6.)

G. Affidavits Submitted by Plaintiff

Plaintiff submitted a number of affidavits in response to the Secretary's Second Motion for Summary Judgment. The affidavits presented include: (1) the affidavit and second affidavit of F. Ray Marshall, former United States Secretary of Labor; (2) the affidavit of J. Ralph Beaird, who previously held the positions of Assistant Solicitor of Labor for the United States Department of Labor (the "Labor Department") and Associate Solicitor of Labor for the Labor Department; (3) the affidavit and second affidavit of Thomas R. Donahue, former Assistant Secretary of Labor for the Labor Department; and (4) the affidavit and second affidavit of William P. Hobgood, former Assistant Secretary of Labor for the Office of Labor Management Standards at the Labor Department.

1. Affidavit and Second Affidavit of F. Ray Marshall

From 1977 to 1981, Mr. Marshall served as the United States Secretary of Labor. (Aff. of F. Ray Marshall ¶ 2.) As Secretary of Labor, Mr. Marshall was responsible for overseeing the Labor Department's enforcement of the LMRDA and the accompanying regulations. (Id. ¶ 3.) During his tenure as Secretary, Mr. Marshall became familiar with the scope and enforcement of section 203 of the LMRDA. (Id. ¶ 4.)

According to Mr. Marshall, during his tenure as Secretary, and, consistent with the interpretation and enforcement policies of prior Secretaries, "the phrase `persuader activity' used in enforcing § 203 was interpreted to mean activity undertaken to influence or affect employees in the exercise of their rights to organize into labor unions and to bargain collectively with employers." (Marshall Aff. ¶ 5.) Mr. Marshall recalls that during his tenure as Secretary, the sole controversies surrounding the application and enforcement of section 203's recordkeeping and reporting requirements centered on three questions:

(1) Whether an activity to be reportable under § 203(b) must involve direct contact with an employee for that activity to constitute `persuader' activity; (2) Whether indirect supportive activity, such as a communication written by an agent or attorney, but used by an employer, constitutes `persuader' activity; and (3) Whether an employer, agent, consultant or attorney, upon engaging in persuader activity, must file Forms LM-10 and LM-20 that report not only receipts and disbursements for that year directly involving persuader activity, but also report all receipts and disbursements `of any kind' for that year from all clients even if unrelated to persuader activity.

(Id. ¶ 6.) According to Mr. Marshall, he recalls no controversies arising under section 203(a) or section 203(a)(1), and he recalls no controversies concerning the Labor Department's interpretation of section 203(a)(1) limiting it to "employers making payments to influence or affect employees in the exercise of their organizing and bargaining rights." (Id. ¶ 7.)

According to Mr. Marshall, during his tenure as Secretary of Labor, the Labor Department "had never construed or enforced any part of LMRDA § 203, including § 203(a)(1), to impose recordkeeping and reporting requirements on employers not attempting to influence or affect employees in the exercise of their rights to organize and bargain collectively, nor did the Department interpret or enforce § 203(a) to require recordkeeping and reporting by persons who did not engage directly or indirectly in `persuader activity.'" (Marshall Aff. ¶ 8.) Mr. Marshall recalls that during his tenure as Secretary, the Labor Department based its interpretation and enforcement of section 203 limiting section 203's recordkeeping and reporting requirements to employers, their agents, and attorneys influencing or affecting the exercise of organizing and bargaining rights on the legislative history, context, and purpose of section 203(a)(1). (Id. ¶ 9.)

Mr. Marshall recalls that the Labor Department's interpretation, application, and enforcement of section 203 was consistent and uninterrupted, and that the interpretation and application of section 203 did not change during Mr. Marshall's tenure as Secretary. (Marshall Aff. ¶ 9.) Mr. Marshall contends that the Labor Department's interpretation and policy of limiting the application of section 203 "was not due to resource allocation, but was based instead on a reading and understanding of § 203(a)'s purpose as determine from its context and legislative history, as well as the consistent, uninterrupted public policy, interpretations, and application of that statute to the same effect by prior Secretaries of Labor from 1959 through my tenure." (Id. ¶ 10.)

Mr. Marshall asserts that before becoming aware of the instant litigation, he was not aware, and had never received official notice, that "donating or discounting the cost of services given to labor organizations for purposes unrelated to influencing or affecting the rights of employees to organize and bargain collectively would trigger recordkeeping and reporting requirements under § 203(a)(1)." (Marshall Aff. ¶ 12.) According to Mr. Marshall, he was not aware, prior to 2006, that the Department viewed section 203(a)(1)'s requirements as applying to every employer that made a payment or provided a benefit, regardless of purpose, to a labor union or its representatives or employees. (Id. ¶ 13.) Mr. Marshall states that, during his tenure as Secretary, and during his predecessors' tenures, the Labor Department "consistently interpreted the language in § 203(a)(1) referring to `any employer' and `any payment' in light of § 203's purpose, legislative history, and context to mean only those employers attempting to influence or affect the exercise of NLRA rights of employees to organize and bargain." (Id. ¶ 14.)

Mr. Marshall understands the latest postings and guidance to mean "that employers now must keep records and file LM-10 reports if they sponsor Christmas parties, social or education events, picnics, or similar social activities for their employees, or for activities which include unions and their representatives if the cost of any single activity or aggregate cost annually of several social activities exceeds $250." (Marshall Aff. ¶ 16.) According to Mr. Marshall, this position contradicts the Labor Department's previous position, which held that "employer-hosted events to foster harmonious labor relations and goodwill, or to promote educational efforts unrelated to their employees' exercise of NLRA rights are not reportable." (Id.)

Similarly, Mr. Marshall understands the Labor Department's current view of section 203(a)(1) to mean "that if union representatives or union employees attend these events, or if employers host events or social interaction with these representatives, the employers now must keep records and file reports of expenditures for such purposes, even though their sole purpose is to promote goodwill and harmonious labor relations, or to inform union representatives about new manufacturing processes or developments." (Marshall Aff. ¶ 17.) Mr. Marshall asserts that this view "runs contrary to the Department's position that such employee activities are not reportable under § 203(a)(1)." (Id.)

According to Mr. Marshall, the 2005 and 2006 postings and guidance from the Secretary concerning section 203's recordkeeping and reporting requirements "are substantive departures from more than 40 years of interpretation and enforcement policy." (Marshall Aff. ¶ 18.) Specifically, Mr. Marshall asserts that "[t]he expansion since 2005 of § 203's recordkeeping and reporting requirements to include any employer making an expenditure or payment for any purpose that confers a benefit on a union, its representatives or its employees runs contrary to, and departs from, the interpretation and application of § 203 that existed prior to and during my tenure as Secretary of Labor." (Id. ¶ 19.) Mr. Marshall further contends that the 2005 and 2006 postings and guidance "do not appear to be mere clarifications of existing Department interpretation and enforcement policy." (Id. ¶ 20.)

In his second affidavit, Mr. Marshall states that Exhibits 9 through 12 to the Secretary's Motion for Summary Judgment do not alter the statements that he made in his first affidavit or during his deposition testimony. (Second Aff. of F. Ray Marshall ¶ 3.) Specifically, Mr. Marshall asserts that the Secretary's Exhibit 9 "conforms to the Department's settled interpretation. . . . that LMRDA Section 203(a)(1)'s requirements, unless specifically excepted by statute, apply to employers making payments to representatives of the paying employer's employees." (Id. ¶ 4a.) Mr. Marshall further states: "[T]here is nothing in Exhibit 10 that contradicts the Department's settled interpretation and enforcement of the LMRDA's requirements." (Id. ¶ 4b.) Additionally, Mr. Marshall avers: "Defendant's Exhibit 11 shows only that employers between the years 1968 and 2002 filed Forms LM-10, not that the Department requested such filings, and not that such filings were correct or necessary under the Department's interpretation and enforcement of Section 203(a)(1) prevailing at the time of filing." (Id. ¶ 4c.) Finally, Mr. Marshall states that he has no recollection of the Department of Labor ever requesting that American Income Life Insurance file the Form LM-10 contained in the Secretary's Exhibit 11. (Id. ¶¶ 4d-6.)

2. Affidavit of J. Ralph Beaird

From 1960 through August 1962, J. Ralph Beaird served as the Assistant Solicitor of Labor for Labor Management Laws at the Labor Department. (Aff. of J. Ralph Beaird ¶ 3.) From September 1962 through September 1965, Mr. Beaird served as Associate Solicitor of the Labor Department. (Id.) From July 1966 through September 1967, Mr. Beaird served as the Associate Solicitor of the Labor Department. (Id.)

In 1965, the Georgetown Law Journal published "Reporting Requirements for Employers and Labor Relations Consultants in the Labor Management Reporting and Disclosure Act of 1959," which Mr. Beaird wrote. (Beaird Aff. ¶ 5.) According to Mr. Beaird, the article focuses on the legislative history and purpose of section 203 and the Labor Department's interpretation of, and enforcement policy for, that section. (Id.) Mr. Beaird opines that the article "accurately reflects the interpretation of LMRDA Section 203 prevailing at the time at the Department," including "the considerations and decision leading to the Department's incorporation of de minimus exception into the Form LM-10 that the Department published pursuant to regulation at the time." (Id. ¶ 6.)

3. Affidavit and Second Affidavit of Thomas R. Donahue

From February 1967 through January 1969, Thomas R. Donahue was the Assistant Secretary of Labor for Labor Management Relations at the Labor Department. (Aff. of Thomas R. Donahue ¶ 2.) As Assistant Secretary, Mr. Donahue was responsible for enforcing the LMRDA and for reporting to the Secretary concerning enforcement of the LMRDA. (Id. ¶ 2 [sic].)⁴

4 Mr. Donahue's Affidavit contains two paragraphs numbered "2."

During Mr. Donahue's tenure as Assistant Secretary, he implemented the Department's interpretation of LMRDA section 203, including section 203(a)(1), and oversaw the Department's enforcement of that section. (Donahue Aff. ¶ 3.) Mr. Donahue contends that, during his tenure as Assistant Secretary, "the Department's enforcement of § 203's record keeping and reporting requirements was consistent with § 203's interpretation and enforcement of those requirements by [his] predecessor in office," and Mr. Donahue made no changes to his predecessor's interpretation or applications of the record keeping or reporting requirements of section 203 or its subsections. (Id.)

According to Mr. Donahue, that interpretation held that the record keeping and reporting requirements of section 203 and section 203(a)(1) "are triggered only by a payment or activity intended to influence or affect employees in the exercise of their rights to organize and to bargain collectively," and that the requirements "are not triggered if there is no payment or activity intended to influence or affect employees in exercising their organizing or collective bargaining rights." (Donahue Aff. ¶ 5.) Mr. Donahue avers that, during his tenure as Assistant Secretary, he was not aware of a contradictory opinion or controversy surrounding that enforcement history or interpretation of section 203 or section 203(a)(1) by his predecessor. (Id.)

Mr. Donahue states that during his tenure as Assistant Secretary, and, to his knowledge, during the tenure of his predecessor:

[T]he Department never construed § 203(a)(1) and never enforced § 203(a)(1) to require employers, or attorneys, or service providers or vendors having business or professional relationships with unions, their representatives or employers or members to keep records or to report payments to, or benefits conferred on, unions, their representatives or employees or members (a) if those payments or benefits were made to unions or their representatives or their employees not having an existing or potential bargaining relationship with the employer, and (b) if those payments or benefits were not given to influence or affect an employer's employees in exercising their organizing or collective bargaining rights.

(Donahue Aff. ¶ 6.) Mr. Donahue asserts that, during his tenure as Assistant Secretary, "the historical uninterrupted focus of interpreting and enforcing the record-keeping and reporting under § 203(a)(1) was on the conduct rather than the status of a person making a payment or conferring a benefit." (Id. ¶ 7.) According to Mr. Donahue, "[w]ith respect to `persuader activity' that might occur as a result of employers hiring consultants and attorneys to contact the employer's employees or to coach the employer in making such contacts, the Department sought to ensure that attorneys just as non-attorneys would file LM 10 reports if those attorneys made payments or engaged in conduct for the purpose of influencing or affecting employees in the exercise of their organizing and bargaining rights." (Id. ¶ 7.)

According to Mr. Donahue, his decision to continue the historical interpretation and enforcement of section 203 "did not owe to issues of resource allocation within the Office of Labor Management Standards nor, to [his] knowledge, within the Department of Labor." (Donahue Aff. ¶ 8.)

Mr. Donahue further asserts that the entry in the Labor Department's interpretive manual concerning attorneys:

simply reflects the Department's view that an attorney, just as a non-attorney consultant or non-attorney persuader, who meets the definition of "employer" written in LMRDA § 3 and who makes payments or engages in activities to influence or affect employees in the exercise of their rights to organize or collectively bargain will be required as an "employer" to keep records and file reports of those payments or activities.

(Donahue Aff. ¶ 9.) According to Mr. Donahue, the entry concerning attorneys "has limited impact on § 203(a)(1)'s enforcement." (Id. ¶ 10.) Mr. Donahue further explains:

During my tenure it was understood that a person's mere status as an "employer" is not the triggering event for becoming subject to § 203's requirements. That triggering event to becoming subject to § 203(a)(1)['s] requirements is making a payment to or for, or making an agreement with, a union or its representatives who represent or would represent the employer's employees. The person's status as an "employer" became relevant only after the payment or agreement was made.

(Id.) According to Mr. Donahue:

During my tenure as Assistant Secretary nor [sic], to my knowledge, during the tenure of my predecessor, the Department never interpreted and never enforced § 203(a)(1) to require attorneys to keep records or file Forms LM-10 if those attorneys (a) only represent unions, their officers or employees or members, and (b) do not make payments or engage in conduct to influence or affect employees in the exercise of their rights to organize or bargain collectively, and (c) do not have employees who are or would be represented by a union. During my tenure and the tenure of my predecessor, the Department never regarded those attorneys as subject to § 203(a)(1) and record keeping requirements for it solely because those attorneys might make payments or confer benefits for unions, their officers or employees or members in connection with representing them.

(Id. ¶ 11.)

Mr. Donahue asserts that the June 5, 2006, Advisory's FAQs:

do not reflect, and substantially depart from, the Department's interpretation of § 203(a)(1) and its enforcement policy in place during my service as Assistant Secretary to the extent that the FAQs and, in particular FAQs 2, 3, 9 and 10, assert that § 203's record-keeping and reporting obligations exist for employers, and attorneys, who merely "have a relationship" or "have a business relationship," or have "commercial dealings" with a union, or its representatives or its employees and who make payments or confer benefits to them in connection with that "relationship" or "commercial dealings," or "business relationship."

(Donahue Aff. ¶ 12.) According to Mr. Donahue, during his tenure as Assistant Secretary:

[T]he Department never interpreted and never enforced § 203(a)(1) to require record-keeping and reporting of any and all payments for any and all purposes by an employer to a union or its representatives merely because the payer fit the LMRDA's definition of an employer. Likewise, the Department never interpreted nor enforced § 203(a)(1) as a general conflicts-of-interest reporting statute fro all businesses and employers doing business with labor unions. During my service and prior to it the Department uninterruptedly interpreted and enforced § 203(a)(1) requirements as applicable only to employers making payments or engaging in conduct, such as making agreements and promises, for the purpose of influencing or affecting employees in the exercise of their rights to organize and bargain collectively.

(Id. ¶ 13.) Mr. Donahue further recalls that:

[D]uring my tenure as Assistant Secretary the issue of attorneys being subject to § 203 involved only attorneys who were believed to be engaged in persuader activities. The issue under § 203 arose in these instances from attorneys having contact with employees or doing work for an employer in connection with attempting to persuade employees to not organize into unions or to influence or interfere with the employees in exercising their rights to organize and bargain collectively. The issue in these instances never involved attorneys who simply had unions, or their officers or employees or members as clients in personal injury actions and who, from time to time, sponsored activities or paid for social interactions with the clients or their unions, and the Department during my tenure never interpreted nor enforced § 203(a)(1) as applicable to such attorneys.

(Id. ¶ 14.)

In his second affidavit, Mr. Donahue states that the Secretary's Exhibits 9 through 12 do not cause him to change or retract any statement that he made in his earlier affidavit or in his deposition. (Second Aff. of Thomas R. Donahue ¶ 3.)

4. Affidavit and Second Affidavit of William P. Hobgood

From 1979 to 1981, William P. Hobgood served as the Assistant Secretary of Labor for the Office of Labor Management Standards at the Labor Department. (Aff. of William P. Hobgood ¶ 1.). As Assistant Secretary, Mr. Hobgood had responsibility for enforcing the LMRDA and for reporting to the Secretary concerning that enforcement. (Id. ¶ 2.) During his tenure as Assistant Secretary, Mr. Hobgood implemented the Labor Department's interpretation and enforcement policy for section 203 of the LMRDA, including section 203(a)(1) of that Act. (Id. ¶ 3.) According to Mr. Hobgood, his interpretation and enforcement of section 203's record-keeping and reporting requirements was consistent with his predecessor's interpretation and enforcement of those requirements. (Id. ¶ 4.)

During Mr. Hobgood's tenure as Assistant Secretary, the Labor Department interpreted section 203(a)(1)'s record-keeping and reporting requirements as being "triggered only by a payment or activity intended to influence or affect employees in the exercise of their rights to organize and bargain collectively." (Hobgood Aff. ¶ 5.) The Labor Department concluded that those requirements were not triggered "if there is no payment or activity intended to influence or affect employees in exercising their organizing or collective bargaining rights." (Id.) During his tenure as Assistant Secretary, Mr. Hobgood was not aware of a contradictory opinion or any controversy surrounding the enforcement and interpretation of section 203. (Id.)

According to Mr. Hobgood, during his tenure and during the tenure of his predecessor:

[T]he Department never construed § 203(a)(1) and never enforced § 203(a)(1) to require employers, or attorneys, or service providers or vendors having business or professional relationships with unions, their representatives or employees or members to keep records or to report payments to, and benefits conferred on, unions, their representatives or employees or members (a) if those payments or benefits were made to unions or their representatives or employees not having an existing or potential bargaining relationship with the employer, and (b) if those payments or benefits were not given to influence or affect an employer's employees in exercising their organizing or collective bargaining rights.

(Hobgood Aff. ¶ 6.) Mr. Hobgood asserts that "[t]his interpretation and enforcement of § 203(a)(1) conformed to the Department's interpretation of the several subsections of § 203 and the Department's understanding of the purposes given to Congress to each subsection." (Id. ¶ 7.) According to Mr. Hobgood, his decision to continue his predecessor's position concerning enforcement of, and interpretation of, section 203 "did not owe to issues of resource allocation within the Office of Labor Management Standards under my supervision nor, to my knowledge, within the Department of Labor." (Id.)

Mr. Hobgood states that the provision of the LMRDA interpretative manual concerning attorneys:

simply reflects the Department's view that an attorney, just as a non-attorney consultant or non-attorney persuader or management consultant, who meets the definition of "employer" written in LMRDA § 3 and who makes payments or engages in activities to influence or affect employees in the exercise of their rights to organize or collectively bargain, will be required as an "employer" to keep records and file reports of those payments or activities.

(Hobgood Aff. ¶ 8.) Mr. Hobgood contends that the entry:

has limited impact on § 203's enforcement because a person's status as an "employer" is not the triggering event for becoming subject to § 203's requirements. That triggering event is the making of a payment or agreement, or conferring a benefit, or engaging in certain activity for the purpose of influencing or affecting employees in exercising their rights to organize and bargain collectively. Only after the triggering event occurs was it relevant for purposes of applying § 203's record keeping and filing purposes to determine the status of the person; that is: Is the person who made the payment or agreement or who engaged in the activity an "employer" or not.

(Id. ¶ 9.) According to Mr. Hobgood, during his tenure as Assistant Secretary, the Labor Department never interpreted or enforced § 203(a)(1) as requiring attorneys to keep records or file Form LM-10 "if those attorneys only represent[ed] unions or their officers or employees and those attorneys [did] not make payments or engage in conduct to influence or affect employees in the exercise of their rights to organize or bargain collectively." (Id. ¶ 10.)

Mr. Hobgood asserts that the FAQs contained in the June 5, 2006, Advisory:

do not reflect, and substantially depart from, the Department's interpretation of § 203(a)(1) and its enforcement policy in place during my service as Assistant Secretary to the extent that the FAQs and, in particular FAQs 2, 3, 9 and 10, assert that § 203's record-keeping and reporting obligations exist for employers who merely "have a relationship" or "have a business relationship," or have "commercial dealings" with a union, or its representatives or its employees and who make payments or confer benefits to them in connection with that "relationship" or "commercial dealings," or "business relationship.

(Hobgood Aff. ¶ 11.) Mr. Hobgood further asserts:

During my service as Assistant Secretary, the Department never interpreted and never enforced § 203(a)(1) to require record-keeping and reporting of any and all payments for any and all purposes by an employer to a union or its representatives merely because the payer fit the LMRDA's definition of an employer. Likewise during my service, the Department never interpreted nor enforced § 203(a)(1) as a general conflicts-of-interest reporting statute, as now suggested by FAQs 2, 3, 9, and 10. During my service and that of my predecessor, the Department interpreted and enforced § 203(a)(1) requirements as applicable only to persons making payments or engaging in conduct for the purpose of influencing or affecting employees in the exercise of their rights to organize and bargain collectively.

(Id. ¶ 12.) According to Mr. Hobgood:

[T]he only instances of attorneys having to file Form LM-10 which arose during my tenure as Assistant Secretary involved attorneys who engaged in persuader activities by (a) advising employers on union avoidance campaigns; (b) coaching supervisors in making presentations to employees to influence their vote on organizing; and (c) speaking directly to employees to influence their vote on organizing or selecting union representatives. I recall that the controversy in these instances was whether the attorney engaging [in] such activities needed to file a Form LM-10 or whether the activities were exempt from reporting as attorney-client communications because they involved an attorney.

(Id. ¶ 13.)

In his second affidavit, Mr. Hobgood states that the Secretary's Exhibits 9 through 12 do not cause him to change or retract the statements that he made at his deposition in this case or in his first affidavit. (Second Aff. of William P. Hobgood ¶ 3.) According to Mr. Hobgood, several of the Form LM-10s included in the Secretary's Exhibit 11 were filed by employers who were engaged in persuader activities. (Id. ¶ 7.)

H. Deposition Testimony

Mr. Donahue testified that he made no changes to the Department of Labor's policy concerning Section 203 of the LMRDA during his tenure as Assistant Secretary, and that he is aware of no policy statements or official interpretations of Section 203(a)(1) issued during, before, or after his tenure as Secretary. (Dep. of Thomas R. Donahue at 35-36.) Mr. Donahue recalls that, during his tenure as Assistant Secretary, the Department of Labor interpreted Section 203(a)(1) as applying only to employers who engaged in persuader activity. (Id. at 37, 110.) Mr. Donahue, however, does not recall whether this interpretation was memorialized or reduced to writing. (Id. at 37, 66.) Mr. Donahue never directed that the Department refrain from investigating employers who were not engaged in persuader activity. (Id. at 38.) Mr. Donahue recalls no investigations, public issues, litigation, or enforcement actions concerning designated legal counsel during his tenure. (Id. at 39-40.) Mr. Donahue does not recall changes in policy in administering Section 203 occurring between his tenure and his predecessor's tenure. (Id. at 103.)

Mr. Hobgood testified that the issue of designated legal counsel never arose during his tenure at the Department of Labor. (Dep. of William P. Hobgood at 13, 42.) Mr. Hobgood does not recall ever issuing instructions not to accept Form LM-1 Os from employers who were not engaged in persuader activities. (Id. at 21.) Mr. Hobgood contends, however, that during his tenure, only those engaged in persuader activity were supposed to file Form LM-10. (Id. at 29, 40-42, 53, 58.) Mr. Hobgood does not recall that this interpretation was memorialized or reduced to writing. (Id. at 41, 53, 64, 73-74.) Although Mr. Hobgood recalls that a controversy arose as to whether attorneys engaged in persuader activities should have to file Form LM-10, he did not establish new policies with respect to an attorney's obligation to file a Form LM-10. (Id. at 34, 70-71.) Mr. Hobgood does not recall policy statements or official interpretations concerning Section 203(a) of the LMRDA issued during or before his tenure with the Department of Labor. (Id. at 40, 102.) Similarly, Mr. Hobgood recalls that, during his tenure with the Department of Labor, the Secretary never provided extensive guidance with respect to the "de minimis" rule. (Id. at 81, 85.)

Mr. Beaird does not recall whether the Department of Labor ever addressed LMRDA's coverage of designated legal counsel, or whether a written policy regarding designated legal counsel existed. (Dep. of J. Ralph Beaird at 10, 34.) Mr. Beaird does not recall whether a written policy existed stating that employers who did not engage in persuader activity were not required to file reports. (Id. at 16.) According to Mr. Beaird, during his tenure, the Secretary took the position that a de minimis exception would apply; however, this exception would depend on the circumstances, rather than a set dollar amount. (Id. at 15, 37.)

Mr. Marshall recalls that, during his tenure as Secretary, only employers who were engaged in persuader activity were required to file Form LM-10. (Dep. of F. Ray Marshall at 38-39, 160-62.) Mr. Marshall never communicated that position. (Id. at 39-40.) Mr. Marshall also is not aware of policy statements or official interpretations of Section 203(a)(1) of the LMRDA dealing with non-persuader employers or designated legal counsel. (Id. at 53.) Mr. Marshall did not direct the Department to reject Form LM-10s filed by employers who were not engaged in persuader activity, and did not direct the Department to refrain from investigating such employers. (Id. at 39, 59.) Mr. Marshall is not aware of public issues, investigations, or enforcement actions concerning designated legal counsel during his tenure as Secretary. (Id. at 71.) Finally, according to Mr. Marshall, replacing the "de minimis" facts and circumstances test with a flat dollar amount substantially changes the de minimis rule. (Id. at 164.)

IV. Summary Judgment Standard

A. In General

Federal Rule of Civil Procedure 56(c) authorizes summary judgment when "there is no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The party seeking summary judgment bears "the burden of demonstrating the satisfaction of this standard, by presenting `pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any' that establish the absence of any genuine, material factual dispute." Bochese v. Town of Ponce Inlet, 405 F.3d 964, 975 (11th Cir. 2005) (quoting Fed.R.Civ.P. 56(c)). Once the moving party has supported its motion adequately, the non-movant has the burden of showing summary judgment is improper by coming forward with specific facts that demonstrate the existence of a genuine issue for trial. Castleberry v. Goldome Credit Corp., 408 F.3d 773, 786 (11th Cir. 2005).

When evaluating a motion for summary judgment, the Court must view the evidence and all factual inferences in the light most favorable to the party opposing the motion. Harris, 433 F.3d at 811. The Court also must "construe `all reasonable doubts about the facts in favor of the non-movant.'" Michael Linet, Inc. v. Vill. of Wellington, Fla., 408 F.3d 757, 761 (11th Cir. 2005) (quoting Browning v. Peyton, 918 F.2d 1516, 1520 (11th Cir. 1990)). Further, "[i]ssues of credibility and the weight afforded to certain evidence are determinations appropriately made by a finder of fact and not a court deciding summary judgment." McCormick v. City of Fort Lauderdale, 333 F.3d 1234, 1240 n. 7 (11th Cir. 2003). Finally, the Court does not make factual determinations. Jones, 370 F.3d at 1069 n. 1 (citing Wooden, 247 F.3d at 1271 n. 9).

The Court further observes that the standard for a motion for summary judgment differs depending on whether the party moving for summary judgment also bears the burden of proof on the relevant issue. As the United States Court of Appeals for the Sixth Circuit has noted:

"When the moving party does not have the burden of proof on the issue, he need show only that the opponent cannot sustain his burden at trial. But where the moving party has the burden-the plaintiff on a claim for relief or the defendant on an affirmative defense-his showing must be sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party."

Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986) (quoting William W. Schwarzer, Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 487-88 (1984)). "Where the movant also bears the burden of proof on the claims at trial, it `must do more than put the issue into genuine doubt; indeed, [it] must remove genuine doubt from the issue altogether.'" Franklin v. Montgomery County, Md., Civil Action No. DKC 2005-0489, 2006 WL 2632298, at *5 (D. Md. Sept. 13, 2006) (quoting Hoover Color Corp. v. Bayer Corp., 199 F.3d 160, 164 (4th Cir. 1999)) (alteration in original).

B. On Cross-Motions for Summary Judgment

Where, as here, the parties file cross-motions for summary judgment, a court "`must consider each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.'" Franklin, 2006 WL 2632298, at *5 (quoting Rossingnol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003)). The Court applies the standards discussed above when ruling on the motions for summary judgment. Id. "The court must deny both motions if it finds there is a genuine issue of material fact, `[b]ut if there is no genuine issue and one or the other party is entitled to prevail as a matter of law, the court will render judgment.'" Id. (quoting 10A Charles Alan Wright, Arthur R. Miller Mary Kay Kane, Federal Practice and Procedure § 2720 (3d ed. 1983)).

Keeping the above standards in mind, the Court first addresses the Secretary's Second Motion for Summary Judgment, and then turns its attention to Plaintiff's First Motion for Summary Judgment.

V. The Secretary's Second Motion for Summary Judgment

A. Provisions of the LMRDA

Section 203(a)(1) of the LMRDA, 29 U.S.C.A. § 433(a)(1), requires a report from "[e]very employer who in any fiscal year made — (1) any payment or loan, direct or interest of money or other thing of value (including reimbursed expenses), or any promise or agreement therefor, to any labor organization or officer . . ." 29 U.S.C.A. § 433(a). Section 3(e) of the LMRDA, 29 U.S.C.A. § 402(e), defines an employer as

any employer or group or association of employers engaged in an industry affecting commerce (1) which is, with respect to employees engaged in an industry affecting commerce, an employer within the meaning of any law of the United States relating to the employment of any employees or (2) which may deal with any labor organization concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work, and includes any person acting directly or indirectly as an employer or as an agent of an employer in relation to an employee . . .

29 U.S.C.A. § 402(e). Further, Section 203(a) of the LMRDA provides an exception to the disclosure requirements for "payments of the kind referred to in section 186(c) of [the Labor Management Relations Act]." 29 U.S.C.A. § 433(a)(1)(B). Section 186(c) of the Labor Management Relations Act, in turn, excludes payments "with respect to the sale or purchase of an article or commodity at the prevailing market price in the regular course of business." 29 U.S.C.A. § 186(c).

Section 204 of the LMRDA exempts from disclosure attorney-client communications. 29 U.S.C.A. § 434. That section provides:

Nothing in this chapter shall be construed to require an attorney who is a member in good standing of the bar of any State, to include in any report required to be filed pursuant to the provisions of this chapter any information which was lawfully communicated to such attorney by any of his clients in the course of a legitimate attorney-client relationship.

29 U.S.C.A. § 434.

In 1963, the Department of Labor promulgated regulations to implement the LMRDA's disclosure requirements for employers. Those regulations specify: "On and after the effective date of this section, every employer required to file an annual report by section 203(a) of the Act and § 405.2 shall file such report on the United States Department of Labor Form LM-10 entitled, `Employer Report' in the detail required by the instructions accompanying such form and constituting a part thereof." 29 C.F.R. § 405.2. According to the Secretary, Form LM-10 has not undergone substantial revision since its creation in 1963.

B. Plaintiff's APA Claims

1. Notice and Comment Requirement

Plaintiff contends that the Secretary's interpretation of Form LM-10's filing requirements to require employers, such as Plaintiff, who do not engage in persuader activity to file the Form, is a new rule that changes the substantive state of the existing law, and that the notice and comment period consequently applies. Plaintiff also argues that for forty years, the Secretary used a de minimis exception that was flexible, and that never set a dollar threshold. Plaintiff further complains that the Secretary's website Advisories are substantive changes that require retroactive reporting, that are inconsistent with forty years' worth of prior interpretations.

"The APA requires all federal agencies to publish proposed rules in the Federal Register in order to provide the public with notice and an opportunity to comment." Vencor, Inc. v. Shalala, 988 F. Supp. 1467, 1471 (N.D. Ga. 1997). The APA "exempts interpretive rules and general statements of policy from the notice-and-comment requirements." Id.

Distinguishing between interpretative rules and substantive rules may prove difficult. Syncor Int'l Corp. v. Shalala, 127 F.3d 90, 93 (D.C. Cir. 1997); Iyengar v. Barnhart, 233 F. Supp. 2d 5, 14 (D.D.C. 2002). The United States Court of Appeals for the District of Columbia Circuit has observed:

Further confusing the matter is the tendency of courts and litigants to lump interpretative rules and policy statements together in contrast to substantive rules, a tendency to which we have ourselves succumbed on occasion. That causes added confusion because interpretative rules and agency statements are quite different agency instruments. An agency policy statement does not seek to impose or elaborate or interpret a legal norm. It merely represents an agency position with respect to how it will treat-typically enforce-the governing legal norm. By issuing a policy statement, an agency simply lets the public know its current enforcement or adjudicatory approach. The agency retains the discretion and the authority to change its position-even abruptly-in any specific case because a change in its policy does not affect the legal norm. We thus have said that policy statements are binding on neither the public, nor the agency. The primary distinction between a substantive rule-really any rule — and a general statement of policy, then, turns on whether an agency intends to bind itself to a particular legal position.

An interpretative rule, on the other hand, typically reflects an agency's construction of a statute that has been entrusted to the agency to administer. The legal norm is one that Congress has devised; the agency does not purport to modify that norm, in other words, to engage in lawmaking. To be sure, since an agency's interpretation of an ambiguous statute is entitled to judicial deference under Chevron, it might be thought that the interpretative rule-particularly if it changes a prior statutory interpretation as an agency may do without notice and comment — is, in reality, a change in the legal norm. Still, in such a situation the agency does not claim to be exercising authority to itself make positive law. Instead, it is construing the product of congressional law-making "based on specific statutory provisions." That is why we have said that "[t]he distinction between an interpretative rule and substantive rule . . . likely turns on how tightly the agency's interpretation is drawn linguistically from the actual language of the statute."

Syncor Int'l Corp., 127 F.3d at 93-94 (citations and footnotes omitted; alteration in original). The court explained further:

We should note, in order to be complete (although this variation is not implicated in the case before us), that an interpretative rule can construe an agency's substantive regulation as well as a statute. In that event, the interpretative rule is, in a sense, even more binding on the agency because its modification, unlike a modification of an interpretative rule construing a statute, will likely require a notice and comment procedure. Otherwise, the agency could evade its notice and comment obligation by "modifying" a substantive rule that was promulgated by notice and comment rulemaking.

A substantive rule has characteristics of both the policy statement and the interpretative rule; it is certainly in part an exercise of policy, and it is a rule. But the crucial distinction between it and the other two techniques is that a substantive rule modifies or adds to a legal norm based on the agency's own authority. That authority flows from a congressional delegation to promulgate substantive rules, to engage in supplementary lawmaking. And, it is because the agency is engaged in lawmaking that the APA requires it to comply with notice and consent.

Id. at 94-95.

One line of cases holds that an agency "may not adopt rules that reverse or depart radically from its own prior longstanding policy without invoking the notice-and-comment process." Vencor, Inc., 988 F. Supp. at 1471. Under that line of cases, when an agency adopts a new construction of an old rule that is different from the agency's previous interpretation of the rule or long-standing policy, the agency must use the notice-and-comment process of the APA. Id. at 1472; see also Alaska Prof'l Hunters Ass'n v. Fed. Aviation Admin., 177 F.3d 1030, 1034 (D.C. Cir. 1999) ("When an agency has given its regulation a definitive interpretation, and later significantly revises that interpretation, the agency has in effect amended its rule, something it may not accomplish without notice and comment."). Those cases hold that this requirement applies even where the rule that the agency purports to change is an interpretative rule. Monmouth Med. Ctr. v. Thompson, 257 F.3d 807, 814 (D.C. Cir. 2001); Iyengar, 223 F. Supp. 2d at 14.

As the Secretary correctly points out, that line of cases relies upon Paralyzed Veterans of America v. D.C. Arena L.P., 117 F.3d 579 (D.C. Cir. 1997). A conflict presently exists between courts that follow the Paralyzed Veterans view and courts that conclude that notice and comment rule-making is not required whenever an agency changes its policy. Chief Prob. Officers of Cal. v. Shalala, 118 F.3d 1327, 1337-38 (9th Cir. 1997) (collecting cases); White v. Shalala, 7 F.3d 296, 304 (2d Cir. 1993) ("an interpretative rule changing an agency's interpretation of a statute is not magically transformed into a legislative rule"). The Secretary argues that the United States Court of Appeals for the Eleventh Circuit has not yet adopted the rule set forth inParalyzed Veterans, and the Court's own research indicates that this contention is accurate. The Court concludes that, even if a change in a policy or interpretive rule had occurred, the Eleventh Circuit would decline to follow the rule adopted byParalyzed Veterans.

The Secretary argues, and the Court agrees, that the website Advisories are simply interpretative guidance provided by the Secretary, and thus ordinarily would not be subject to notice and comment rule-making. Further, for the reasons discussed infra Parts V.B.2.a. and b., the Secretary's interpretive guidance is consistent with the language of the statute. Consequently, the Court finds that the Secretary was not required to engage in notice and comment rule-making with respect to requiring designated legal counsel, or employers who are not engaged in persuader activity, to file Form LM-10, or with respect to providing dollar amounts as guidance for the de minimis rule. Plaintiff's APA claim alleging that the Secretary failed to engage in notice and comment rule-making consequently fails as a matter of law.

Moreover, even if the Court followed the Paralyzed Veterans approach, the Court concludes that the evidence in the record, viewed the evidence in the record in the light most favorable to Plaintiff, fails to support a determination that the Secretary departed from previously-established official policy concerning filing of Form LM-10 or the de minimis rule. Specifically, even though Plaintiff points to the testimony of former officials associated with the Department of Labor, none of those officials pointed to documentation or other evidence demonstrating that their interpretations of the Form LM-10 filing requirements were expressed in a legally binding fashion, such as in a regulation, policy statement, or interpretative guidance. Consequently, Plaintiff has failed to show that the views expressed by the former Department of Labor officials demonstrate a change in the Secretary's position with respect to who is an "employer" required to file Form LM-10 and keep records.

Further, the testimony presented by Plaintiff as to the Secretary's prior position concerning the de minimis rule does not create a genuine dispute concerning whether the Secretary was required to engage in notice and comment rule-making before providing the challenged de minimis interpretation in the FAQ. The challenged de minimis interpretation, which sets forth a $250 threshold for reporting, simply clarifies, rather than replaces, the facts and circumstances test used by the Secretary. Consequently, the Court cannot find that the Secretary has changed her interpretation of the de minimis rule simply by setting forth a $250 threshold for reporting. See Kujawski v. Chao, No. 07-CV-330-JPG, 2007 WL 3120068, at *11-12 (S.D. III. Oct. 24, 2007) (denying motion for preliminary injunction brought by designated legal counsel challenging, among other things, Secretary's adoption of $250 threshold for reporting, without engaging in notice and comment rulemaking).

In sum, the Court finds that the Secretary was not required to engage in notice and comment rule-making with respect to requiring designated legal counsel or employers who are not engaged in persuader activity to file Form LM-10, or with respect to the de minimis threshold. The Court therefore grants the Secretary's Motion for Summary Judgment as to Plaintiff's claims that the Secretary violated the APA by failing to engage in notice and comment rulemaking with respect to requiring designated legal counsel or other employers who are not engaged in persuader activities to file Form LM-10, or with respect to providing additional guidance concerning the de minimis rule.

2. Arbitrary and Capricious

The Secretary also moved for summary judgment with respect to Plaintiff's claim that the rules at issue are arbitrary and capricious. Plaintiff contends that the Secretary's current interpretation of the term "employer" for purposes of Form LM-10 filing is overly broad and is not supported by the legislative history or by a clear reading of Section 203 of the LMRDA. Plaintiff also contends that the Secretary's Advisories interpreting the term de minimis are arbitrary and capricious. For the following reasons, the Court rejects those arguments.

a. Employer

The scope of a court's review under the arbitrary and capricious standard is narrow. Puerto Rico Higher Educ. Assistance Corp. v. Riley, 10 F.3d 847, 850 (D.C. Cir. 1993). A court consequently cannot substitute its judgment for the agency's judgment. Id. A court, however, must determine that the agency examined the relevant data and provided a satisfactory explanation for its action. Id.

When determining whether the Secretary's broad interpretation of the term "employer" is arbitrary and capricious, the Court begins with the plain language of Section 203(a)(1) itself. CBS Inc. v. Prime Time 24 Joint Venture, 245 F.3d 1217, 1222 (11th Cir. 2001). If the language of Section 203(a)(1) is clear, the Court may not examine the statute's legislative history to determine what Congress meant. Id. Indeed, the law in this Circuit requires "that ambiguity in statutory language be shownbefore a court delves into legislative history." Id. at 1224 (emphasis in original). As the Eleventh Circuit has noted:

Any ambiguity in the statutory language must result from the common usage of that language, not from the parties' dueling characterizations of what Congress "really meant." Where the clear and unambiguous language of a statute provides a bridge to Congress' intent, we need not and will not wade into the brackish waters of legislative history.

Id. at 1225. Even if "the statutory language is not entirely transparent," the Court must apply canons of construction before examining a statute's legislative history. Id. at 1225-26.

An exception to the plain meaning rule arises "if giving the words of a statute their plain and ordinary meaning produces a result that is not just unwise but is clearly absurd." Merritt v. Dillard Paper Co., 120 F.3d 1181, 1188 (11th Cir. 1997). "That principle is the venerable one that statutory language should not be applied literally if doing so would produce an absurd result." Id.

The Court rarely applies the absurd result principle, however, bearing in mind that "the result produced by the plain meaning canon must be truly absurd before the principle trumps it."Merritt, 120 F.3d at 1188. As the Eleventh Circuit has recognized, it is irrelevant that the Court may not have made the same policy decision as Congress made if the matter had been the Court's to decide, so long as the Court "cannot say that it is absurd, ridiculous, or ludicrous for Congress to have decided the matter in the way the plain meaning of the statutory language indicates it did." Id. Indeed, the Eleventh Circuit has cautioned:

We should always remember when a party argues the absurd results exception that Congress often legislates at the macro level, not on a micro scale. General problems are given general solutions; and even where more specific solutions are possible, compromises are often struck. The language used may sweep too broadly in some respects affording protection and relief to some who are not truly deserving or aggrieved, and too narrowly in other respects failing to reach some who are more deserving or aggrieved. But that is the nature of a political process and of all worldly endeavors. Imperfection is not absurdity, but is inherent in humankind and all of our works.

CBS Inc., 245 F.3d at 1229.

Keeping the above principles in mind, the Court turns to the task of interpreting Section 203(a)(1). The Court begins with the plain language of that statute. Section 203(a) states, in relevant part:

Every employer who in any fiscal year made —

(1) any payment or loan, direct or indirect, of money or other thing of value (including reimbursed expenses), or any promise or agreement therefor, to any labor organization or officer, agent, shop steward or other representative of a labor organization, or employee of any labor organization, . . .

shall file with the Secretary a report, in a form prescribed by him, signed by its president and treasurer or corresponding principal officers showing in detail the date and amount of each such payment, loan, promise, agreement, or arrangement and the name, address, and position, if any, in any firm or labor organization of the person to whom it was made and a full explanation of the circumstances of all such payments, including the terms of any agreement or understanding pursuant to which they were made.

29 U.S.C.A. § 433(a). The Secretary argues, and the Court agrees, that the plain language of Section 203(a)(1) requiresemployers who make certain payments or loans to any labor organization or any officer, agent, shop steward, other representative, or employer of a labor organization, to file a report with the Secretary. Id. Section 203(a)(1), on its face, appears to apply to employers such as Plaintiff, even if the employers do not engage in persuader activity.

The Court also cannot accept Plaintiff's argument that Section 203(a)(1) applies only to employers who make payments or loansand who also engage in persuader activity. Section 203(a)(1), unlike Sections 203(a)(2) through (4), contains no language requiring that the payment or loan be connected to persuader activity. The Court must infer that Congress' decision to omit the language referring to persuader activity in Section 203(a)(1) was intentional. Barnhart v. Sigmon Coal Co., 534 U.S. 438, 452 (2002) ("[I]t is a general principle of statutory construction that when `Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.'") (quotingRussello v. United States, 464 U.S. 16, 23 (1983)) (internal quotation marks omitted). Consequently, the Court cannot find that Congress intended to apply Section 203(a)(1) only to employers, such as Plaintiff, who made payments or loans in connection with persuader activity.

Finally, Plaintiff's reliance on the legislative history underlying the LMRDA is misplaced. As the Court previously noted, the language of Section 203(a)(1) is plain. Consequently, the Court need not, and does not, consider the legislative history of the statute to interpret that statute.

The Court also finds that the "absurd results" exception does not apply in this case. As the Court previously noted, the "absurd results" exception rarely applies, because the plain language interpretation must produce a "truly absurd" result before this exception will apply. Merritt, 120 F.3d at 1188. The Court cannot find that the plain language interpretation of Section 203(a)(1) produces a "truly absurd" result in this case. Congress very well could have decided to require employers who made payments under Section 203(a)(1) to file reports with the Secretary, even though those employers did not engage in persuader activity. Although the Court might well have made a different determination if the matter had been left to the Court to decide, the Court "cannot say that it is absurd, ridiculous, or ludicrous for Congress to have decided the matter in the way the plain meaning of the statutory language indicates it did." Id. The Court therefore cannot apply the "absurd results" exception to avoid applying Section 203(a)(1)'s reporting requirements to employers, such as Plaintiff, who do not engage in persuader activity.

In sum, the Court finds that the plain language of Section 203(a)(1) requires employers who make payments or loans to certain labor organizations or to representatives, agents, officials, or employees of labor organizations to file reports with the Secretary, even if those employers do not also engage in persuader activity. The Secretary's recent interpretive guidance, which reflects this conclusion, is consistent with the plain language of the statute and with the language of 29 C.F.R. § 405.2, the regulation interpreting Section 203(a)'s reporting requirement.⁵ Consequently, the Court cannot find that the Secretary's interpretations indicating that employers such as Plaintiff, who make payments or loans to labor organizations or representatives of such organizations but who do not actually engage in persuader activity, are arbitrary and capricious.

5 29 C.F.R. § 405.2 states:

Every employer who in any fiscal year has made any payment, loan, promise, agreement, arrangement or expenditure of the kind described and required by section 203(a) of the Act to be reported, shall, as prescribed by the regulations in this part, file with the Office of Labor-Management Standards, within 90 days after the end of its fiscal years, a report signed by its president and treasurer, or corresponding principal officers, together with a true copy thereof, containing the detailed information required therein by section 203(a) of the Act and found by the Assistant Secretary under section 208 thereof to be necessary in such report.

29 C.F.R. § 405.2.

The Secretary's interpretations of Section 203(a)(1) are interpretive guidance and lack the force of law. Those interpretations therefore are not entitled to deference underChevron, U.S.A. v. Natural Resources Defense Counsel, 467 U.S. 837 (1984). Christenson v. Harris County, 529 U.S. 576, 587 (2000) ("Interpretations such as those in opinion letters-like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law-do not warrant Chevron-style deference."). Instead, interpretations contained in such formats "are entitled to respect under [the Supreme Court's] decision in Skidmore v. Swift Co., 323 U.S. 134," to "the extent that those interpretations have the `power to persuade.'" Id. Here, the Court finds that the interpretations of Section 203(a)(1) issued by the Secretary have the power to persuade, and are entitled to respect. Indeed, as previously noted, the Secretary's current interpretations of Section 203(a)(1) are consistent with the applicable statutes and accompanying regulations, as well as the Secretary's previously-published guidance concerning her interpretation of the terms. Under such circumstances, the Secretary's current interpretations of Section 203(a)(1) are entitled to respect.

The Court also cannot find that the Secretary's decision to enforce Section 203(a)(1) against employers who make payments or loans to labor organizations or representatives of such organizations, but who do not engage in persuader activity, is arbitrary and capricious simply because the Secretary had not previously enforced Section 203(a)(1) in such a fashion. Courts repeatedly have held that the Government cannot be estopped from enforcing a law, even if the Government did not enforce the law in the past. Washington Tour Guides Ass'n v. Nat'l Park Serv., 808 F. Supp. 877,882 (D.D.C. 1992) ("[T]he government cannot be estopped from fulfilling its duty to protect the public interest in accordance with specific regulations despite prior failure to enforce those regulations."); Moran Maritime Assocs. v. United States Coast Guard, 526 F. Supp. 335, 342 (D.D.C. 1981) ("[P]rior inaction by the Coast Guard does not now bar the agency from implementing the clear mandate of the regulation and its authorizing statute."),aff'd, 679 F.2d 261 (D.C. Cir. 1982); Pacific Shrimp Co. v. United States, 375 F. Supp. 1036, 1042 (W.D. Wash. 1974) ("An administrative agency charged with protecting the public interest, is not precluded from taking appropriate action nor can the principles of equitable estoppel be applied to deprive the public of a statute's protection because of mistaken action or lack of action on the part of public officials.").

Finally, for the reasons stated supra Part V.B.1., the Court finds that the Secretary's interpretations of the term "employer" to require employers such as Plaintiff, who make certain payments or loans but do not engage in persuader activity, to file Form LM-10, do not represent a change in official policy. However, even if the interpretations indeed represent a change in official policy, such a change would not mean that the interpretations are entitled to no respect. Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 417 (1993) ("The Secretary is not estopped from changing a view she believes to have been grounded upon a mistaken legal interpretation."). Instead, "the consistency of an agency's position is a factor in assessing the weight that position is due." Id. Under the circumstances presented here, "where the agency's interpretation of a statute is at least as plausible as competing ones, there is little, if any, reason not to defer to its construction." Id. The Court therefore concludes that the Secretary's current interpretations of the term "employer" are not arbitrary and capricious, even if those interpretations represent a change in agency policy.

In sum, the Court finds that the Secretary's interpretation of the term "employer," as used in Section 203(a)(1), to require employers such as Plaintiff, who do not engage in persuader activity, to file Form LM-10, is not arbitrary and capricious. The Secretary consequently is entitled to summary judgment in her favor with respect to this claim.

b. De Minimis

Plaintiff also contends that the Secretary's interpretation of the term "de minimis" to include a $250 threshold for Form LM-10 reporting is arbitrary and capricious. The Court applies the standards set forth supra Part V.B.2.a. when addressing this claim.

Section 203(a)(1) itself does not contain the term "de minimis." 29 U.S.C.A. § 433(a)(1). The Secretary, however, consistently has applied a "de minimis" requirement to determine whether a given employer is subject to the reporting requirements. The Secretary's former guidance suggested a facts and circumstances test to determine whether the "de minimis" rule applied. The Secretary's current interpretation adopting a $250 threshold reporting requirement as part of the "de minimis" test is not inconsistent with the previously-used facts and circumstances test. Instead, the current interpretation simply provides additional clarification of the previously-used test. The current interpretation is consistent with Section 203(a)(1) and the accompanying regulations, as well as the Secretary's previous published guidance concerning her interpretation of the term "de minimis." The Court therefore cannot find that the current interpretation advanced by the Secretary is arbitrary and capricious or is entitled to no respect.

Even if the Secretary has, as Plaintiff argues, changed her position concerning the term "de minimis," the fact that the Secretary may have changed her position does not make her current interpretation of the term arbitrary and capricious. As previously noted, "[t]he Secretary is not estopped from changing a view she believes to have been grounded upon a mistaken legal interpretation." Good Samaritan Hosp., 508 U.S. at 417. Although an interpretation that represents a change from previously-established policy may be entitled to less respect, in circumstances such as the ones presented by this case, "where [the Secretary's] interpretation of a statute is at least as plausible as competing ones, there is little, if any, reason not to defer to [her] construction." Id. The Court therefore finds that the Secretary's present interpretation of the term "de minimis" to include a $250 threshold reporting requirement is entitled to respect.

In sum, the Court cannot conclude that the Secretary's present interpretation of the term "de minimis" to include a $250 threshold for reporting on Form LM-10 is arbitrary and capricious. Consequently, no genuine dispute remains as to this claim, and the Secretary is entitled to summary judgment in her favor for this claim.⁶

6 For similar reasons, the Court concludes that Plaintiff's challenges to the Secretary's interpretive guidance concerning "widely attended gatherings" also fail.

3. RFA Claim

The Secretary also has moved for summary judgment with respect to Plaintiff's claim asserting a violation of RFA, 5 U.S.C.A. §§ 601- 612. 5 U.S.C.A. § 603 provides, in relevant part:

(a) Whenever an agency is required by section 553 of this title, or any other law, to publish general notice of proposed rulemaking for any proposed rule, or publishes a notice of proposed rulemaking for an interpretative rule involving the internal revenue laws of the United States, the agency shall prepare and make available for public comment an initial regulatory flexibility analysis. Such analysis shall describe the impact of the proposed rule on small entities. The initial regulatory flexibility analysis or a summary shall be published in the Federal Register at the time of the publication of general notice of proposed rulemaking for the rule. The agency shall transmit a copy of the initial regulatory flexibility analysis to the Chief Counsel for Advocacy of the Small Business Administration. In the case of an interpretative rule involving the internal revenue laws of the United States, this chapter applies to interpretative rules published in the Federal Register for codification in the Code of Federal Regulations, but only to the extent that such interpretative rules impose on small entities a collection of information requirement.

Id. § 603. Additionally, 5 U.S.C.A. § 604 requires an agency to provide a final regulatory flexibility analysis when the agency promulgates a final rule under 5 U.S.C.A. § 553. Id. § 604. 5 U.S.C.A. § 605(b) provides that the regulatory flexibility analysis requirement does not apply if the head of the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Id. 605(b). 5 U.S.C.A. § 606 states that RFA's requirements "do not alter in any manner standards otherwise applicable by law to agency action." Id. § 606. 5 U.S.C.A. § 609 provides for participation by small entities in rulemaking where the regulatory flexibility requirements apply. Id. § 609.

Under 5 U.S.C.A. § 610, an agency must review its rules periodically to determine the effect of such rules on small entities and the need for such rules. 5 U.S.C.A. § 610. 5 U.S.C.A. § 611 provides for judicial review of rules. Id. § 611. 5 U.S.C.A. § 612 gives the Chief Counsel for Advocacy of the Small Business Administration a right to intervene as amicus curiae in such judicial actions. Id. § 612. Under RFA's provisions, if a rule is subject to the APA's notice and comment requirements, then the Secretary is required to prepare a regulatory flexibility analysis and, if necessary, to comply with RFA's other provisions. 29 U.S.C.A. § 603.

Here, the Secretary argues that RFA does not apply because the rules at issue are interpretive rules, and the Secretary therefore was not required to engage in notice and comment rule-making. For the reasons stated supra Part V.A.1., no genuine dispute exists as to whether notice and comment rule-making applies or as to whether the rules at issue are interpretive rules. The RFA therefore does not apply to the interpretations at issue. See Central Texas Telephone Co-op., Inc. v. F.C.C., 402 F.3d 205, 214 (D.C. Cir. 2005) (noting that FCC was not required to issue impact statement under RFA, because rule at issue was interpretive rule).

Because the RFA does not apply to the interpretations at issue, Plaintiff's RFA claim fails as a matter of law. The Court consequently grants the Secretary's Second Motion for Summary Judgment as to Plaintiff's RFA claim.

C. Summary

In sum, the Court concludes that no genuine dispute remains with respect to any of Plaintiff's claims. The Court therefore grants the Secretary's Second Motion for Summary Judgment in its entirety.

VI. Plaintiff's First Motion for Summary Judgment

Plaintiff has filed his own Motion for Summary Judgment, arguing that he is entitled to summary judgment in his favor with respect to his claims. For the reasons discussed supra Part V., no genuine dispute remains with respect to any of Plaintiff's claims, and the Secretary therefore is entitled to summary judgment in her favor as to those claims. Under those circumstances, Plaintiff clearly cannot obtain summary judgment in his favor. The Court therefore denies Plaintiff's First Motion for Summary Judgment.

VII. Conclusion

ACCORDINGLY, the Court DENIES Plaintiff's First Motion for Summary Judgment [88], GRANTS the Secretary's Second Motion for Summary Judgment [89], and DISMISSES this case. The Court DIRECTS the Clerk to CLOSE this case.

IT IS SO ORDERED.