John Edward Price, John Bernard Nelson and Franklin R. Sears v. W. Willard Wirtz, Secretary of Labor, United States Department of Labor

412 F.2d 647, 71 L.R.R.M. (BNA) 2354

Opinions

JOHN R. BROWN, Chief Judge:

The question here is whether, under LMRDA,¹ an attorney engaging in “persuader” ² activities for an employer must report not only his receipts and disbursements in connection with such persuader clients but also all his receipts and related disbursements for non-persuader labor relations advice and service for non-persuader clients. The District Court answered in the affirmative. But in the meantime this Court in Fowler,³ Part VII, by a divided Court⁴ rendered a negative reply.

Because of the importance of the question, internal differences within the Court, and a conflict between Fowler and the Fourth Circuit’s decision in Douglas ⁵ we put the Price case before the Court en banc.⁶

This narrow question involves the construction of § 203(b) and (c) of the LMRDA, 29 U.S.C.A. § 433(b), (c).⁷ After full reconsideration of the issues involved, we now reject our earlier position in Part VII of Fowler and adopt the view taken by the Fourth Circuit in Douglas. Thus we affirm the decision of the District Court in this case.

Section 203(b) of the LMRDA imposes certain reporting obligations upon persons who enter into persuader arrangements with an employer (see note 2, supra). Specifically, once a persuader undertakes an agreement or arrangement of this nature, he must file both “30 day” and annual reports with the Secretary of Labor. The “30 day” reports must be filed with respect to each agreement or arrangement and must set forth the terms of the agreement or arrangement. The annual reports are to be filed with respect to each fiscal year during which payments were made as a result of an agreement of arrangement. It is the annual report which precipitates the problem here. For these reports must contain “a statement (A) of [the Persuader’s] receipts of any kind from employers on account of labor relations advice or services, designating the sources thereof, and (B) of [the Persuader’s] disbursements of any kind, in connection with such services and the purposes thereof.” (29 U.S.C.A. § 433 (b), note 7, supra.)

These words — comprehensive, sweeping and plain enough — do not create the problem. The problem comes from § 203(c) (see note 7, supra) and more specifically from the phrase “by reason of”. This section provides that no person shall be required to file a report covering services “by reason of” such person performing non-persuader labor relations activities. These are defined as the giving or agreeing to give advice to an employer or representing or agreeing to represent an employer before a court, agency or arbitration tribunal, or engaging or agreeing to engage in collective bargaining on behalf of an employer with respect to certain subjects or the negotiation of an agreement or any question arising thereunder.

As the parties square off, the Attorney-litigants recognize that with respect to all labor relations work done during the year for persuader clients a full report must be filed. But with respect to non-persuader clients they contend that nothing need be reported. The Government, on the other hand, urges that the annual report of one purposefully engaging in a single persuader activity must then report for all labor clients — persuader or non-persuader — all receipts received from each of them on account of labor relation advice or services and disbursements of any kind — persuader or non-persuader — in connection with such services.⁸ The Fourth Circuit in Douglas adopted the Government’s view. In Fowler, Part VII, a panel of this Court held against the Government. The full Court thus faces a clear choice.

The Attorney-litigants urge broadly that § 203(c) exempts from any reporting anything pertaining to non-persuader labor activities for non-persuader clients. The Government, on the other hand, contends that the effect of § 203(c), and particularly the phrase “by reason of,” ⁹ is merely to specify those activities or arrangements which will not “trigger” the reporting requirements of subsection (b), even though such activities or arrangements could be construed to have an object of indirectly “persuading” employees. The phrase “by reason of” is then transmuted to read, “no person need file a report because of his giving or agreeing to give advice * *

As we side with the Fourth Circuit’s view, we draw freely on the Douglas opinion. The Court first points out that the “annual report must designate the source and amount of ‘receipts of any kind from employers on account of labor relations advice or services’, § (b) (A)” and then goes on to emphasize that “highly relevant is the reference to ‘advice’ ”, 353 F.2d at 32. Since the definition of a persuader in § 203(b) (1)-(2) ¹⁰ does not include one who gives labor relation “advice,” the Court quite naturally emphasized that “the language literally requires a report of payments for other advice * * * Conversely, the Court went on, unless “ * * * ‘advice’ in [§ 203(c)] embraces independent advice, it has no meaning whatsoever.” Here the meaning of “advice” as used in § 203(c) becomes important, and all would agree with the Court that as “the word appears in § (c), it plainly refers to advice apart from the statutory * * * ” persuader activities.¹¹ When that same meaning is needed to give sense or purpose to its use in § 203(b), it leads to the conclusion that disclosure for all labor relation clients is the price the Attorney-persuader must pay if he wishes to engage in those activities. The legislative judgment that one who engages in the persuader business must be subjected to the pressure of revealing publicity is amply justified by the difficulty in distinguishing between those activities that are persuader activities and those that are not, and by the opportunity for misleading concealment of the true nature of such Attorney’s work in situations involving intricate corporate conglomerate associates or, equally pressing, industry-wide labor controversies. Behind this judgment, of course, was the congressional conviction that quite without regard to the motives or methods of particular individuals engaging in it, the persuader business was detrimental to good labor relations and the continued public interest. Since a principal object of LMRDA was neutralizing the evils of persuaders, it was quite legitimate and consistent with the Act’s main sanction of goldfish-bowl publicity¹² to turn the spotlight on the lawyer who wanted not only to serve clients in labor relations matters encompassed within § 203(c) but who wanted also to wander into the legislatively suspect field of a persuader.¹³

Accepting this reading does not make § 203(c) useless. Rather, sweeping as is § (b), the purpose of § 203(c) was “to make explicit what was already implicit in § 203(b), to guard against misconstruction of § 203(b). * * * and § 203(c) was inserted * * * to remove from the coverage of § 203(b) those grey areas where the giving of advice and participation in legal proceedings and collective bargaining could possibly be characterized as exerting indirect persuasion * * Fowler, Part VI, 372 F.2d at 330.

Like the Fourth Circuit, we think this reading is supported, if not compelled, by the legislative history¹⁴ of the Act. The distinction between the usual practice of labor relations law and persuader activities was emphasized, and additional stress was placed upon the persuader’s responsibilities under the Act, including the duty to report.¹⁵ Very pointed was the Senate report concerning the predecessor of § 203(b) and (c) as enacted in 1959. After stating that a persuader would be required to file a detailed report, it graphically contrasted this with the non-persuader attorney:

“ * * * An attorney or consultant who confines himself to giving legal advice, taking part in collective bargaining and appearing in court or administrative proceedings would not be included among those required to file reports under this subsection [§ (b) ]. Specific exemption for persons giving this type of advice is contained in subsection (c) of section 103.”¹⁶ (Emphasis added.) And, from the succeeding portion set out in Fowler, Part V, it was made doubly clear. The “committee did not intend to have the reporting requirements of the bill apply to attorneys * * * [who] do not engage in activities of the type listed in section 103(b) [now 203(b) ].” 372 F.2d at 327.¹⁷

Nor does the single excerpt from the Senate report relied on by the majority in Fowler, Part VII, 372 F.2d at 334, require a contrary conclusion. In full context the descriptive phrase “a report covering” does not diminish the persuader’s duty to report non-persuader fees and disbursements.¹⁸

It boils down to this. As long as the attorney limits himself to the activities set forth in § 203(c), he need not report. Engaging in such advice or collective bargaining does not give rise to a duty to report. No report is set in motion “by reason of” his doing those things. What sets the reporting in motion is performing persuader activities. Once that duty arises, § 203(c) does not insulate from reporting the matters in § 203(b) for non-persuader clients.

The upshot is that in affirming the District Court in Price we overrule the contrary result in Fowler, Part VII. Affirmed.

Footnotes

1

. Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C.A. § 401 et seq.

2

. A “persuader” is any person who enters into an “agreement or arrangement with an employer” an object of which is (1) to persuade employees as to the exercise or manner of exercising their collective bargaining rights, or (2) to supply the employer with information regarding cer tain activities of employees or a labor organization. See LMRDA § 203(b) (1)-(2), 29 U.S.C.A. § 433(b) (1)-(2), quoted in notes 6, 9, infra.

3

. Wirtz v. Fowler, 5 Cir., 1966, 372 F.2d 315. That case, of course, involved many other LMRDA issues. Only Part VII of Fowler, 372 F.2d at 333, is here involved.

4

. The identity of the anonymous dissenter, Part VII, 372 F.2d at 333 n. 42 is, of course, now revealed.

5

. Douglas v. Wirtz, 4 Cir., 1965, 353 F.2d 30, cert. denied, 1966, 383 U.S. 909, 86 S.Ct. 893, 15 L.Ed.2d 665.

6

. By the order granting rehearing en banc without oral argument in Price (No. 22630), the Court stayed the mandate in Fowler pending this en banc decision and invited full briefs on this issue from counsel in Fowler. Separate briefs were not filed, the attorney-litigants preferring to collaborate in a single brief.

7

. The relevant sections with italics highlighting the critical portions, provide:

“(b) Every person who pursuant to any agreement or arrangement with an employer undertakes activities where an object thereof is, directly or indirectly- — •

(1) to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing; or

(2) to supply an employer with information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding; shall file within thirty days after entering into such agreement or arrangements a report with the Secretary, signed by its president and treasurer or corresponding principal officers, containing the name under which such person is engaged in doing business and the address of its principal office, and a detailed statement of the terms and conditions of such agreement or arrangement. Every suoh person shall file annually, with respect to each fiscal year during which payments were made as a result of such an agreement or arrangement, a report with the Secretary, signed by its president and treasurer or corresponding principal officers, containing a statement (A) of its receipts of any hind from employers on account of labor relations advice or services, designating the sources thereof, and (B) of its disbursements of any kind, in connection with such services and the purposes thereof. In each such case such information shall be set forth in such categories as the Secretary may prescribe.

“(c) Nothing in this section shall be construed to require any employer or other person to file a report covering the services of such person by reason of his giving or agreeing to give advice to such employer or representing or agreeing to represent such employer before any court, administrative agency, or tribunal of arbitration or engaging or agreeing to engage in collective bargaining on behalf of such employer with respect to wages, hours, or other terms or conditions of employment or the negotiation of an agreement or any question arising thereunder.”

29 U.S.C.A. § 433(b), (c).

8

. The Government stresses that fee reporting encompasses both “advice or services”, § 203(b) note 7, supra, whereas disbursements are limited to those “in connection with such services”. We find it unnecessary to evaluate this.

9

. In Fowler, 372 F.2d 325-326, the Court discussed the competing readings of this phrase.

10

. “Every person who pursuant to any agreement or arrangement with an employer undertakes activities where an object thereof is, directly or indirectly—

(1) to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing; or

(2) to supply an employer with information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding.” LMRDA § 203 (b). See notes 2, 7, supra.

11

. Quotations in this paragraph are found in Douglas, 353 F.2d at 32.

12

. The “fact [is] that the potent weapon to Congress was flaring publicity.” Fowler, Part VII, 372 F.2d at 334.

13

. This was a legislative judgment, wholly unrelated to notions of professional ethics, the legitimate practice of law, as to which this' opinion casts no aspersions. As Fowler makes clear, conduct subject to federal regulation under LMRDA is a matter of tbe congressional legislative structure, not the current reading of what the lawyer may ethically or legitimately do. E.g., 372 F.2d 326, 330-331.

14

. As the legislative history is discussed in great detail in Fowler, Part V, 372 F.2d 326 et seq., it is unnecessary to review it at length here.

15

. See, e.g., the following concerning § 103, the forerunner to § 203(c), which originated in the Kennedy-Ives Bill. This bill passed the Senate but not the House in 1958. S. 3974, 85th Cong., 2d Sess. (1958). The Senate Committee stated:

“Section 103(b) requires a labor-relations consultant to file a financial report upon his labor-relations activities if he undertakes to influence or affect employees in the exercise of the rights guaranteed by the National Labor Relations Act or to provide an employer with paid informers or any agency engaged in the business of violating such rights. Since attorneys at law and other responsible labor-relations advisors do not themselves engage in influencing or affecting employees in the exercise of their rights under the National Labor Relations Act, an attorney or other consultant who confined himself to giving advice, taking part in collectively bargaining and appearing in court and administrative proceedings nor [sic] would such a consultant be required to report. Although this would be the meaning of the language of sections 103(a) and (b) in any event, a proviso to section 103 (b) guards against misconstruction.” S.Rep.No.1684, 85th Cong., 2d Sess., 8-9 (1958). (Emphasis added.)

This is set forth in Fowler Part V, 372 F.2d at 327 n. 25, and in Douglas, 353 F.2d at 33.

16

. S.Rep.No.187, 86th Cong., 1st Sess. 12 (1959), U.S. Code Cong. & Admin. News (1959), p. 2328. This too, was quoted in Fowler, Part V, 372 F.2d at 327.

17

. Quoting S.Rep.No.187, 86th Cong., 1st Sess. 40 (1959); U.S. Code Cong. & Admin.News (1959), p. 2356.

18

. “Section 103(c) : Provides that no employer nor any other person shall be required to file a report covering the giving of advice by such person to such employer, representing the employer before any court, administrative, [sic] agency or arbitration tribunal, or engaging in collective bargaining on behalf of such employer. The committee did not intend to have the reporting requirements of the bill apply to attorneys and labor relations consultants who perform an important and useful function in contemporary labor relations and do not engage in activities of the types listed in section 103(b).”

S.Rep.No.187, 86th Cong., 1st Sess. 41 (1959); 1 Leg.Hist. (NLRB) 436.