Humphreys, Hutcheson and Moseley v. Donovan

• Decision Date: 20 February 1985
• Docket Number: No. 83-5564,83-5564
• Parties: 118 L.R.R.M. (BNA) 2770, 53 USLW 2426, 102 Lab.Cas. P 11,371 HUMPHREYS, HUTCHESON AND MOSELEY, Plaintiff-Appellant, v. Raymond J. DONOVAN, Secretary of Labor, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1211

755 F.2d 1211

118 L.R.R.M. (BNA) 2770, 53 USLW 2426,

102 Lab.Cas. P 11,371

HUMPHREYS, HUTCHESON AND MOSELEY, Plaintiff-Appellant, v. Raymond J. DONOVAN, Secretary of Labor, Defendant-Appellee.

No. 83-5564.

United States Court of Appeals Sixth Circuit.

Argued Aug. 1, 1984.

Decided February 20, 1985.

James V. Doramus, James F. Neal, Neal & Harwell, Nashville, Tenn., Frank P. Pinchak (argued), Chattanooga, Tenn., for plaintiff-appellant.

R. John Seibert, June R. Carbone, Dept. of Justice, Washington, D.C., Joe B. Brown, U.S. Atty., Margaret Huff, Asst. U.S. Atty., Nashville, Tenn., for defendant-appellee.

Before KEITH and CONTIE, Circuit Judges, BROWN, Senior Circuit Judge.

BAILEY BROWN, Senior Circuit Judge.

This appeal involves sections 203 ¹ and 204 ² of Title II of the Labor Management Reporting and Disclosure Act of 1959 (hereinafter referred to as "Act" or "LMRDA"). ³ The issue on appeal is whether plaintiff attorneys who made speeches urging their client's employees to vote against union representation (and who were, therefore, "persuaders") were required by section 203(b) of the LMRDA to make the reports described by that provision. When the Secretary called upon plaintiff attorneys to make the reports contemplated by section 203(b), they filed an action for declaratory relief and an injunction and the Secretary filed a counterclaim for an order requiring the attorneys to make the reports. In an extensive and careful opinion, Humphreys, Hutcheson & Moseley v. Donovan, 568 F.Supp. 161 (M.D.Tenn.1983), the district court held that the plaintiff attorneys must comply with all of the disclosure requirements of section 203 and granted summary judgment for the Secretary.

I.

The facts in this case are undisputed. Humphreys, Hutcheson and Moseley ("HH & M") is a law firm that practices labor law in Chattanooga, Tennessee. In 1977, HH & M was retained by Southern Silk Mills, Inc. to represent it during an election conducted by the NLRB. Before the election, two of the firm's partners, William P. Hutcheson and Ray H. Moseley, made speeches to Southern Silk's employees urging them to reject representation by the Amalgamated Clothing and Textile Workers Union ("Union" or "ACTWU"). ⁴ Before he began his speech, Moseley was identified as an attorney in the law firm representing Southern Silk. In his speech to the workers, Moseley rendered an account of an unlawful strike against Kayser-Roth Corporation involving the same Union. ⁵ After describing the violence that accompanied the Kayser-Roth strike, Moseley urged the assembled employees to vote against the Union. ⁶ Hutcheson also described the Kayser-Roth strike violence and exhorted the employees to reject union representation.

On September 7, 1978, the Department of Labor ("Department"), through its Nashville, Tennessee office, contacted HH & M by mail, stating that it had received an inquiry regarding the firm's persuader activities during the Southern Silk Mills election. The Department informed HH & M that because Mr. Moseley and Mr. Hutcheson had attempted to persuade the employees to reject the Union, the firm must disclose its agreement with Southern Silk pursuant to section 203 of the LMRDA. The Department also instructed HH & M that it must file an annual financial report, Form LM-21, reporting inter alia "receipts and disbursements of any kind in connection with labor relations advice and services."

II.

HH & M contends that the statute properly interpreted does not require it to file the reports contemplated by section 203(b) and that if it does, the statute is unconstitutional. The Secretary, of course, contends the contrary. We approach the issues as did the parties.

A.

Under LMRDA section 203, a person who agrees to engage or who engages in persuader activities must file a thirty day report and an annual report. The Secretary has authorized the use of Form LM-20 for the thirty day report, 29 C.F.R. Sec. 406.2 (1984), and Form LM-21 for the annual report, 29 C.F.R. Sec. 406.3(a) (1984). The annual report is more comprehensive than the thirty day report. The annual report requires the persuader to disclose all receipts from all employers on account of labor relations advice or services and the persuader must designate the source of these receipts. In addition, the persuader must reveal all of his disbursements made in connection with his labor relations advice and services, and the persuader must specify the purpose for these disbursements.

HH & M has stipulated that it has acted as a persuader, yet it contends that the firm should be excused from filing the reports, especially the annual report. HH & M first argues that section 203(b) of the statute is inapplicable to the firm because it did not act as a covert middleman. It is undisputed that the HH & M partners identified themselves as attorneys representing Southern Silk management before speaking to its employees. HH & M contends that the LMRDA is aimed at covert management middlemen who engage in activities such as spying, bribery and influence peddling rather than at persuaders who openly engage in "legitimate" persuasive activities such as the speeches given by the partners of the firm who were disclosed persuaders.

When enacting the LMRDA, Congress did not distinguish between disclosed and undisclosed persuaders or between legitimate and nefarious persuasive activities. Rather, Congress determined that persuasion itself was a suspect activity and concluded that the possible evil could best be remedied through disclosure. It was hoped that persuasive activity would be curbed by subjecting persuaders to glaring publicity. We agree with the summation of congressional intent set forth by the Fifth Circuit in Price v. Wirtz, 412 F.2d 647 (5th Cir.1969) (en banc):

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 goldfishbowl publicity to turn the spotlight on the lawyer who wanted not only to serve clients in labor relations matters encompassed within Sec. 203(c) but who wanted also to wander into the legislatively suspect field of a persuader.

Id. at 650 (footnotes omitted). We find the fact that the attorneys identified themselves to the Southern Silk employees did not remove them from the ambit of LMRDA section 203(b).

B.

Appellant contends that even if it is required to file the reports contemplated by section 203(b), that section 203(c) relieves its persuader-attorneys from the necessity of reporting information regarding the clients for whom it performs no persuader services. Section 203(c) ⁷ exempts persons advising an employer or representing an employer before a court, agency or administrative tribunal and persons engaging in negotiations or arbitration on behalf of an employer from the reporting requirements of section 203(b). This court agrees with the majority of courts ⁸ that find the purpose of section 203(c) is to clarify what is implicit in section 203(b)--that attorneys engaged in the usual practice of labor law are not obligated to report under section 203(b). ⁹

We determine that section 203(c) means that as long as an attorney confines himself to the activities set forth in section 203(c), he need not report, but if he crosses the boundary between the practice of labor law and persuasion, he is subject to the extensive reporting requirements. As the Fifth Circuit stated in Price v. Wirtz, 412 F.2d 647, 651 (5th Cir.1969) (en banc):

It boils down to this. As long as the attorney limits himself to the activities set forth in Sec. 203(c) [rendering advice and representing a client in proceedings or in bargaining], 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, Sec. 203(c) does not insulate from reporting the matters in Sec. 203(b) for non-persuader clients.

Once HH & M's partners engaged in persuasion and the duty to report arose, section 203(c) ceased to shield the persuader attorneys' law firm from reporting the matters described in section 203(b) regarding their non-persuader clients.

C.

The appellant contends that even if it is subject to the reporting requirements of section 203, the requested information is protected by the attorney-client privilege recognized in section 204. ¹⁰ This is an issue of first impression. ¹¹ Appellant contends that the attorney-client privilege codified in LMRDA section 204 is broader than the traditional attorney-client privilege. We find to the contrary, that in section 204 Congress intended to accord the same privilege as that provided by the common-law attorney-client privilege.

1.

On March 22, 1958, Senator John F. Kennedy introduced S. 1555. As introduced by Senator Kennedy, S. 1555 contained no provision codifying the attorney-client privilege. Senator Kennedy believed that attorneys were adequately protected under the provision in his bill that eventually became LMRDA section 203. Senator Goldwater, however, vigorously advocated an amendment to S. 1555 that would codify...