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06/22/2018

Department of Labor Denies FOIA Appeal After Nearly Four Years, and Unilaterally Narrows the Scope of the Request, Despite OGIS Intervention

The Department of Labor (“DOL”) recently denied CoA Institute’s long-pending Freedom of Information Act (“FOIA”) appeal concerning records of consultations between DOL and the Office of the White House Counsel (“OWHC”) on any documents containing “White House equities.”  CoA Institute filed its request on November 26, 2013 and its appeal on September 25, 2014.  After attempting to contact a responsible DOL official on over fifteen occasions, either through email or by voice message, CoA Institute finally asked the Office of Government Information Services (“OGIS”) to intervene in October 2017.  Despite DOL’s promise to try to issue a determination this past March, its appeal decision only arrived last week—forty-five months after CoA Institute’s appeal was submitted and long past the applicable FOIA deadlines.

“White House equities” review and FOIA politicization

In March 2014, CoA Institute published a report revealing the existence of a non-public memorandum from then-White House Counsel Gregory Craig that directed department and agency general counsels to send to the White House for consultation all records involving “White House equities” when collected in response to any sort of document request.  This secret memo stood in stark contrast to President Obama’s January 2009 directive on transparency, as well as Attorney General Holder’s March 2009 FOIA memo.  Although originally praised as setting the bar for open government, the Washington Post eventually described the Obama Administration as one of the most secretive governments in American history.

As part of the system of politicized FOIA review established under the “White House equities” policy, whenever a requester sought access to records deemed politically sensitive, potentially embarrassing, or otherwise newsworthy, the agency processing the request would forward copies of those records to a White House attorney for pre-production review.  Not only did the entire process represent an abdication of agency responsibility for the administration of the FOIA, but it severely delayed agency compliance with the FOIA’s deadlines.  As we have previously suggested, “White House equities” review likely continues under the Trump Administration.

DOL’s deficient processing of CoA Institute’s FOIA request

In this case, CoA Institute’s request sought all records reflecting “White House equities” consultations.  DOL released fifty-seven (57) pages of records with various pieces of information withheld under Exemptions 5 and 6, mostly personally identifying information—such as the names of lower-level DOL employees—or substantive portions of the agency’s conversations with White House attorneys.  Interestingly, DOL never indicated which privileges it sought to apply with Exemption 5.  (CoA Institute argued against the application of the attorney-client, attorney work product, and deliberative process privileges in its appeal.)

Most egregiously, DOL unilaterally limited the scope of its search to include only records reflecting White House review of FOIA requests, rather than the wide range of record requests covered by the Craig Memo:

DOL based its narrowing on stray language in CoA Institute’s request for a public interest fee waiver.  But there is no authority to support an agency limiting the subject-matter scope of a FOIA request based on a fee waiver argument.  A fee waiver request should only impact a requester’s obligations to pay any applicable fees.

DOL’s incorrect appeal decision . . . overdue by over three-and-an-half years

DOL’s appeal determination is troubling.  The agency again chose to ignore the plain language of the Craig Memo, which was cited by CoA Institute and establishes the clear scope of “White House equities” review.  Once more, DOL relied on CoA Institute’s fee waiver request.  But that language simply cannot justify limiting a search to White House consultations on “FOIA requests.”  As some type of consolation, DOL suggested that CoA Institute submit a new request.

After admitting that it had applied the deliberative process privilege, DOL summarily upheld its use of Exemption 5, describing the White House’s pre-production clearance of agency records to be part of DOL’s deliberative processes.  DOL also refused to release the names of the lower-level employees who were involved in “White House equities” consultations, arguing that there was no public interest in the disclosure of their identities.

Concluding thoughts on OGIS and its lack of enforcement power

Congress created OGIS to help mediate disputes between requesters and agencies.  OGIS is meant to provide an alternative to litigation.  Yet OGIS lacks any sort of enforcement authority, and it can only intervene if an agency and the requester voluntarily submit to the mediation process.  Thus, even if OGIS “resolves” a dispute, it has no power to hold the parties to their agreement.  Agencies suffer no consequences for disregarding the outcome of OGIS mediation.  This is a tremendous flaw in how OGIS is designed.

As this email chain demonstrates, CoA Institute asked OGIS to intervene in October 2017; OGIS closed its case in February 2018, following DOL’s commitment to trying to finish its adjudication of CoA Institute’s appeal by March 26, 2018.  That date came and went.

This is not the first time OGIS mediation has proven ineffectual and an agency has refused to honor the promises it made as part of the dispute resolution process.  CoA Institute is currently litigating another FOIA suit against the Department of Treasury over records reflecting the “sensitive review” process, which subjects certain FOIA requesters—such as representatives of the news media—to extra scrutiny.  Treasury and CoA Institute agreed to a series of scheduled interim productions; Treasury missed every one of those deadlines, and it only began to release records once CoA Institute filed a lawsuit.  This is an unacceptable practice, and Congress should look to reform the OGIS process.

Ryan Mulvey is Counsel at Cause of Action Institute

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02/16/2018

CoA Institute Files Opening Brief in Appeal of Decision that Imperils Low Cost Children’s Clothing to Families

Washington, D.C. – Cause of Action Institute (“CoA Institute”) today filed its opening brief in the Court of Appeals for the D.C. Circuit challenging a district court ruling issued last September that wrongly found that consignors who also volunteer at children’s clothing consignment events must be considered employees under the Fair Labor Standards Act (“FLSA”).

In 2013, the U.S. Department of Labor (“DOL”) sent our client, Rhea Lana Riner, a letter claiming that her company was in violation of the FLSA regarding minimum wages and overtime pay.  The government threatened steep fines if Rhea Lana did not comply.

CoA Institute Counsel Josh Schopf: “The FLSA is a decades-old law intended to protect vulnerable workers from exploitation. That is clearly not happening at Rhea Lana’s events, and the district court acknowledged that fact. Yet the court sided with the government anyway, attacking a business model that provides hardworking families and communities with affordable children’s clothing and goods. We prevailed once on appeal, and we hope to do so again.”

The brief states:

These are not unprotected workers lacking in bargaining power or workers toiling away for long hours in sub-standard conditions.  Common sense dictates that this activity does not require remediation of the type contemplated by the FLSA…

The District Court even acknowledged that Rhea Lana’s did not exploit any of the consignor/volunteers, yet somehow the court still accepted the DOL’s claims that the agency’s determination was consistent with the purposes of the FLSA.

The brief urges the Court to reverse the judgment of the lower court and declare that consignor/volunteers at these events are not Rhea Lana’s employees.

Case background:

Rhea Lana founded her clothing consignment business in her living room more than two decades ago. Since the company’s humble beginnings, Rhea Lana, Inc. has expanded as a franchise with dozens of locations across 21 states.

Rhea Lana’s semi-annual, consignment events allow families to consign their used children’s items and receive 70% of the proceeds. The events also allow families to save money by giving them the opportunity to purchase discounted goods. At the end of the event, consignors can collect their unsold goods or elect to donate them to charity. This model allows Rhea Lana’s customers to provide high quality items for their children at a price they can afford.

Yet in 2013, the U.S. Department of Labor conducted an audit, and sent Rhea Lana an enforcement letter claiming that her company was in violation of the FLSA regarding minimum wages and overtime pay.

With the help of CoA Institute, Rhea Lana fought back. Her company’s complaint was initially dismissed in 2014 for lack of a reviewable agency action.  On appeal, however, the Court of Appeals held that the government’s letter to Rhea Lana was subject to judicial review.  In September 2017, the district court ruled in favor of the government on the merits. CoA Institute continues to represent Rhea Lana in appealing the district court’s decision to the D.C. Circuit.

Watch a video about Rhea Lana’s story here.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org.

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10/17/2017

Examiner: Company battles Labor Department for right to keep ‘volunteer’ workers

Company battles Labor Department for right to keep ‘volunteer’ workers

by Sean Higgins | 

Consignment store Rhea Lana said Tuesday it would appeal a federal court ruling that sided with the Labor Department and ruled that the company is run by employees who must be paid, and are not volunteers as the company insists.

Rhea Lana will appeal a D.C. District Court ruling from last month that the company says would undermine its entire business model if it were upheld… Read the full article at Washington Examiner

 

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10/17/2017

CoA Institute to Appeal Ruling that Children’s Clothing Consignment Volunteers Must be Considered Employees

Washington, DC – Cause of Action Institute (“CoA Institute”) today announced it will appeal a ruling by the district court that wrongly found that volunteers at Rhea Lana’s children’s clothing consignment events must be considered employees under the Fair Labor Standards Act.

Cause of Action Institute Vice President Julie Smith: “The district court reached the wrong conclusion in taking an outdated view of a decades-old law intended to protect vulnerable individuals and groups from exploitation. The court freely conceded that Rhea Lana’s labor practices are not designed to exploit anybody. We continue to believe that the Department of Labor has overstepped its authority. The federal government should not attack a business model that provides hardworking families with affordable children’s clothing.”

Rhea Lana Riner: “Individuals should be free to volunteer their time for their own benefit. The Labor Department’s crusade to classify volunteers as employees has put my business and livelihood in jeopardy. If everyone is satisfied, why would the federal government need to intervene?”

Case background:
Rhea Lana founded her clothing consignment business in her living room more than a decade ago. Since the company’s humble beginnings, Rhea Lana, Inc. has expanded as a franchise with 80 locations across 24 states.

In 2013, the U.S. Department of Labor conducted an audit, and sent Rhea Lana a letter claiming that her company was in violation of the Fair Labor Standards Act regarding minimum wages and overtime pay.  The government claimed that volunteers who help at the consignment events must be classified as “employees.”

Rhea Lana’s complaint was initially dismissed in 2014 for lack of a reviewable agency action.  On appeal, however, the Court of Appeals held that the government’s letter to Rhea Lana was subject to judicial review.  Last month, the district court ruled in favor of the government. CoA Institute will represent Rhea Lana in her appeal of the district court’s decision.

Rhea Lana Inc., et al. v. Department of Labor, No, 14-0017, U.S. District Court for the District of Columbia

Watch a short video about Rhea Lana’s story here

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

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12/21/2016

SiriusXM’s Kent Klein interviews CoAI Assistant VP Henry Kerner on Obama admin Hatch Act violations

henry_siriusxm

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12/15/2016

Is Sec. Perez Campaigning on the Taxpayer’s Dime?

Washington D.C. – Cause of Action Institute (“CoA Institute”) today sent a Freedom of Information Act (“FOIA”) request to the U.S. Department of Labor investigating whether recent outreach by Secretary Tom Perez to voting members of the Democratic National Committee (“DNC”) regarding his political future could be in violation of the Hatch Act. The Hatch Act explicitly prohibits federal employees from using their official authority for the purpose of affecting the results of an election.

Secretary Perez reportedly emailed DNC party chairs Wednesday morning and asked them to join him on a conference call this afternoon. During that call Sec. Perez announced his candidacy for DNC Chairman. Such outreach raises the possibility that Perez may be attempting to advance his political campaign while serving in his current government role.

Following the conference call, CoA Institute requested all communications surrounding this outreach to better understand whether Sec. Perez has used taxpayer resources, such as government issued computers, office space, mobile devices, staff, or email systems to promote his campaign.

CoA Institute Assistant Vice President Henry Kerner: “The law is clear: public officials paid by taxpayers cannot use their position to engage in political activities. The Obama administration’s unprecedented history of Hatch Act violations threatens to undermine this important protection. Americans have a right to know if Sec. Perez used taxpayer-funded resources to further his own political campaign.”

There have been three previous high-profile Hatch Act violations during the Obama administration. Just a few months ago in July of this year, Department of Housing and Urban Development Secretary Julian Castro was found to have violated the Hatch Act when he openly endorsed Hillary Clinton’s candidacy for president during a Yahoo News interview. Before that, in 2012, Secretary of Health and Human Services Kathleen Sebelius was also found to have violated the Hatch Act when she delivered the keynote speech at a gala calling on attendees to reelect President Obama. And prior to that, Secretary Perez’s predecessor at the Labor Department, Hilda Solis, resigned after word came out that she had solicited campaign contributions from a subordinate employee.

These were historic violations, as no Cabinet secretary in any prior administration had been found in violation of the Hatch Act since its enactment under Franklin Delano Roosevelt. Yet, neither Ms. Sebelius nor Mr. Castro suffered any consequences for these violations.

The full FOIA can be found here

 

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05/27/2015

Cause of Action Asks Federal Court To Reconsider Complaint Filed By Small Business Owner Who Is Being Wrongly Targeted By The Federal Government

This week, Cause of Action filed an opening brief on behalf of Rhea Lana, Inc. and Rhea Lana’s Franchise Systems, Inc. in Rhea Lana v. U.S. Department of Labor (No. 15-5014). The case is now pending in the United States Court of Appeals for the D.C. Circuit.

In a nutshell, Rhea Lana’s is appealing from the district court’s dismissal of its case on procedural grounds. The brief we’re filing explains why the district court erred, and why Rhea Lana’s complaints against the Department of Labor are ready for the district court to consider on the merits. Here is some key background on the case.

Rhea Lana’s is a family-owned business that organizes consignment sales of children’s clothing in 24 states. Rhea Lana’s, like other consignment industry participants, gives its consignors the opportunity to volunteer at consignment events to set up, write price tags, check inventory, and help with sales.

Consignors are typically young stay-at-home mothers, working mothers, and retired grandmothers, and many of them are also interested in shopping at the sales where they contribute clothing. Volunteering gives them the opportunity to shop early and a higher likelihood of selling their own items — not to mention the chance to build friendships with other moms. In short, volunteering is a “win-win” for all concerned.

The Department of Labor, though, wants to put a stop to it. In 2013, the Department notified Rhea Lana’s that its volunteers are actually employees under the Fair Labor Standards Act (FLSA), and are therefore entitled to back wages. The Department also informed Rhea Lana’s that if it doesn’t start treating its volunteers like employees, which would put Rhea Lana’s at a major competitive disadvantage in the industry, Rhea Lana’s would be liable for statutory penalties. Even worse, the Department sent a letter to Rhea Lana’s volunteers telling them that they have a right to sue Rhea Lana’s themselves. Tellingly, none have taken up that offer.

Rhea Lana’s sued the Department, arguing that due process and basic principles of federal administrative law ought to prevent the government from punishing entrepreneurship, undermining the culture of volunteerism, and depriving mothers of the opportunities that volunteering affords.

The United States District Court for the District of Columbia dismissed Rhea Lana’s complaint on November 21, 2014.  Even though the Department has told Rhea Lana’s that it is in violation of the FLSA and liable for penalties if it doesn’t change its business model, the district court held that there hasn’t been any “final agency action” by the Department that’s ready for judicial review.

As Cause of Action’s opening brief shows, though, that’s completely mistaken: The Department’s letters determine Rhea Lana’s rights, effectively order Rhea Lana’s to conduct its business differently, and change Rhea Lana’s legal position for the worse.  That’s all that Rhea Lana’s needed to show, and all that’s required for the district court to reach the merits and decide whether the Department’s bullying can stand.

Looking ahead, the Department’s response brief is due on July 6, 2015. Rhea Lana’s has requested oral argument.

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