Case Name: Michael J. Warshauer v. Hilda Solis, United States Secretary of Labor
Date Decided: August 3, 2009
Court: United States Court of Appeals, Eleventh Circuit
Judge: Judge Wilson
Citation: 2009 WL 2357378 (C.A.11)

Background:
Attorney for a labor union brought action under the Administrative Procedure Act (APA), challenging the Department of Labor’s (DOL) new interpretation of reporting provision of Labor-Management Reporting and Disclosure Act (LMRDA) to require DLC’s, designated legal counsel, to file annual reports of payments, over a designated dollar amount, to a union or union officer or employee.

Michael J. Warshauer (“Warshauer”), an attorney who specializes in Federal Employers Liability Act (“FELA”) claims. A rail labor union, the United Transportation Union (UTU) appointed him as a DLC. As a DLC, the UTU recommends Warshauer to its members for representation in workers’ compensation cases, personal injury cases, and other matters. Warshauer offers this legal counsel to UTU members at a reduced fee of 25%.

In October 2002, the DOL sent Warshauer a letter informing him that “payments made or promised to the UTU, either directly or indirectly, by each DLC that is an ‘employer’ within the meaning of section 3(3) of the LMRDA, must be disclosed on Employer Report in accordance with the statute.

Warshauer claimed he was not an ‘employer’ under §203 (a)(1) of the LMRDA.

The district court granted Hilda Solis’ motion for summary judgment. The court held that the website advisories regarding both coverage of DLC’s and the $250 threshold for reporting were interpretative guidance, not substantive rules, and thus, even if they departed from the Secretary’s prior interpretation, notice and comment rulemaking was not required. It also ruled that the Secretary’s interpretation of the term “employer” reflected the plain meaning of the statute and was not arbitrary and capricious.

Issue:
Did the district court err in awarding the Solis’ motion for summary judgment?

Held:
Warshauer first argues that (1) the Secretary’s (Solis) advisories requiring DLCs to file Form LM-10 depart from the plain language of the Act and statutory purpose as articulated in its legislative history.

This Court held however, that the plain language of §203(a) applies to all employers who made non-exempt payments. It does not contain any requirement that the employer participate in persuader or other labor relations activities. Therefore, Warshauer’s contention that he is not an “employer” as defined under the Act is rejected.

Second, Warshauer claimed that the advisories applying the Form LM-10 reporting requirements to DLCs and setting a numeric threshold for the de minimis exemption requires (1) notice and (2) comment rulemaking. Warshauer argued that the advisory applying Form LM-10 was a new rule change to the substantive state of the law. The Secretary argues that notice and comment is not required because the advisory is an interpretive rule merely stating what the DOL §203(a)(1) means.

This Court held that the rule applying the Form LM-10 reporting requirements to DLCs is an interpretive rule. It is relevant that the Secretary characterizes the rule as interpreting §203(a)(1), the Secretary’s interpretation is drawn directly from the plain language of the statute, and the rule only reminded affected parties of existing duties. It does not create a new law, right, duty, or have any effect independent of the statute.

Accordingly, this Court affirmed the lower court’s grant of summary judgment in favor of the Secretary.

Comment:
At issue, was whether the DOL’s secretary advisory, that Designated Legal Counsel report payments made to them,  was beyond the scope of the LMRDA.

When an agency, such as the DOL, proposes a new rule or duty pursuant to an act, they must provide a period to collect comment rulemaking and adequate notice to those affected by the rule changes. The purpose of the comment period is to allow those that will be affected by the new regulation to object to it and thus, provide a record for objections to be used in Court in the future. However, the DOL here did not make a new rule but merely an advisory or a “strong suggestion” that DLCs should submit a form outlining their earnings above a set amount.

This was found to be in the spirit of the LMRDA.

Steve Gordon
http://www.Gordon-Elias.com