[ v39 p476 ]
39:0476(39)AR
The decision of the Authority follows:
39 FLRA No. 39
FEDERAL LABOR RELATIONS AUTHORITY
WASHINGTON, D.C.
NATIONAL TREASURY EMPLOYEES UNION
CHAPTER 61
(Union)
and
U.S. DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
ALBANY DISTRICT
(Agency)
0-AR-1740
DECISION
February 12, 1991
Before Chairman McKee and Members Talkin and Armendariz.
I. Statement of the Case
This matter is before the Authority on exceptions to the award of Arbitrator Susan T. MacKenzie filed by the Agency under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Rules and Regulations. The Union filed an opposition to the exceptions.
A grievance was filed contesting the Agency's denial of the grievant's request to advertise his outside employment as an attorney. The Arbitrator found that the denial, which was based on an Agency regulation, violated the grievant's rights under the U.S. Constitution and sustained the grievance. The Arbitrator ordered the Agency to review its regulation barring advertising by attorneys who have been given permission for outside employment, and to afford the Union an opportunity to meet and discuss the regulation.
We conclude, for the following reasons, that the Agency has failed to demonstrate that the award is deficient under section 7122(a) of the Statute.
II. Background and Arbitrator's Award
The grievant, an Estate Tax Attorney for the Agency, received permission from the Agency to practice law outside of his Government employment. Subsequently, the grievant sought permission to advertise his outside legal services. His request was denied based on section 225.2 of the Agency's Rules of Conduct (hereinafter "the rule"), which precludes the advertising of outside legal activities by Agency attorneys. Award at 5-6. 1/
The Arbitrator concluded that the grievance was arbitrable. The Arbitrator noted that the parties defined the term "grievance" as encompassing "'any complaint' concerning 'any claimed violation, misinterpretation or misapplication of any law, rule or regulation affecting conditions of employment.'" Id. at 11. The Arbitrator concluded that the U.S. Constitution was an "applicable law" under that definition. Id.
As to the merits of the grievance, the Arbitrator found that the Agency had "a compelling interest in ensuring that the outside employment and activities of employees do not undermine public confidence in the integrity, efficiency and fairness of the Agency." Id. at 13. The Arbitrator further found that the Agency had the right to "promulgate . . . reasonable rules in furtherance" of this responsibility, as long as such rules were consistent with law, rule, regulations, and the parties' agreement. Id.
The Arbitrator concluded, however, that the "nature and content of the advertising for which grievant sought approval was similar if not parallel to the form and content of advertising which the Supreme Court . . . held was within the scope of First Amendment protection" in Bates v. State Bar of Arizona, 433 U.S. 350 (1977) (Bates), where, according to the Arbitrator, the Supreme Court held that "such advertising was . . . commercial speech of public concern which served individual and societal interests." Id. at 14. The Arbitrator stated that in "the absence of any authority demonstrating that the Court's holding in Bates is not applicable" to the grievance, "the advertising which grievant sought to have approved falls within the scope of protected speech under the First Amendment." Id.
The Arbitrator held that a determination was necessary as to whether "the blanket prohibition against advertising . . . serves a compelling governmental interest sufficient to override grievant's First Amendment rights." Id. at 15. The Arbitrator concluded that the grievant's rights under the First Amendment were violated "[b]ecause the record proof falls short of supporting the assertion of an overriding interest of the Agency in restricting constitutionally protected activity[.]" Id. at 17.
As a remedy, the Arbitrator directed the Agency "to review and afford the Union an opportunity to meet and consult on Rule 225.2(2) and reformulate its provisions consistent with the constitutional bar to a blanket prohibition on advertising by attorneys." Id. Finally, the Arbitrator rejected the Union's request that she retain jurisdiction over the matter in order to entertain a request for attorney's fees, because she concluded that there was no basis for the payment of such fees.
III. Positions of the Parties
A. The Agency's Exceptions
The Agency filed 10 exceptions to the Arbitrator's award. In the first seven exceptions, the Agency asserts that the Arbitrator's award is contrary to law because, according to the Agency, the issue in this case is controlled by the Supreme Court's decision in Connick v. Myers, 461 U.S. 138 (1983) (Connick) rather than Bates.
The Agency asserts that the Arbitrator's holding that the "grievant's speech was a matter of public concern because it involved advertising by an attorney, an issue the Court found to be of public interest in Bates . . . is contrary to the Court's holding in Connick." Brief in Support of Exceptions at 11. According to the Agency, Connick holds that in "public employment cases . . . only speech involving matters of public concern warrants constitutional protection[,]" and that in "distinguishing between constitutionally protected and unprotected speech, the Court asked whether the public employee is speaking as a citizen or as an employee." Id. at 10.
The Agency asserts that as the grievant was merely seeking to advertise his legal services in order to enhance his personal financial situation, "the grievant's proposed advertising hardly touches at all on the societal interests discussed in Bates." Id. at 12. The Agency concludes, quoting Connick, that this matter "is most accurately characterized as an employee grievance concerning internal office policy." Id. (quoting 461 U.S. at 154). The Agency concludes that because the grievant's right to advertise is not protected "under Connick's analysis of the First Amendment rights of public employees[,] . . . the Agency's blanket prohibition on advertising outside legal employment or activities passes constitutional muster, and the Arbitrator's contrary conclusion is incorrect." Id.
The Agency further argues that, even if the grievant's speech is protected under Connick, its regulation is permissible because it "bears a reasonable relationship to legitimate management objectives . . . ." Id. at 13 (emphasis omitted). The Agency asserts that although the employee's sole interest in advertising is financial, the Agency's "particular interests lie in promoting the efficiency of a voluntary tax system, and in assuring fairness, competence and quality performance in all dealings with the public." Id. at 15. The Agency also asserts, in this regard, that although the grievant may seek to limit his outside practice to uncontested divorces which have no tax consequences, the rules of the legal profession preclude him from "advertis[ing] that his field of practice is so limited. . . ." Id. at 18. The Agency asserts that its regulation is intended to "prevent any conflict with a position of the [Agency], and to avoid any violation" of the rules of the legal profession. Id. at 19.
In its eighth and ninth exceptions, the Agency argues that, even if Bates applies, the Arbitrator incorrectly interpreted Bates. The Agency argues that, as Bates addressed commercial speech, the test set forth for determining the constitutionality of regulations addressing commercial speech set forth in Central Hudson Gas & Elec. Corp. v. Public Serv. Comm., 447 U.S. 557, 566 (1980) (Central Hudson Gas), applies. The Agency asserts that, under the Central Hudson Gas test, its "ban on advertising outside legal employment was constitutionally permissible in view of the substantial interests of the [Agency], the narrow scope of the prohibition, applying only to the area of outside employment which posed greatest risk to the [Agency's] mission, and the personal, remunerative nature of the proposed commercial speech." Brief in Support of Exceptions at 27.
Finally, in its tenth exception, the Agency asserts that the Arbitrator exceeded her remedial authority by requiring the Agency "to meet with the Union to reformulate [its] Rule in accordance with applicable law." Id. at 28. The Agency contends that if the rule is not constitutional, it has the right "to choose the method by which the constitutional prohibitions will be overcome, unless the Union initiates bargaining over the issue." Id. at 29. The Agency concludes that "the appropriate remedy would be to direct the Agency to reformulate [the regulation] in conformity with the First Amendment . . . ." Id.
B. The Union's Opposition
The Union asserts that the Arbitrator correctly determined that the Agency's regulation "violated the grievant's rights under the collective bargaining agreement and applicable laws, rules and regulations." Opposition at 7. The Union argues that Bates "is clearly the dispositive case in this matter since the Court held that the form and content" of legal advertising "was commercial speech of public concern[,]" and the Arbitrator "properly distinguishe[d] Connick because the Court found that the employee in that instance was not speaking on a matter of public concern." Id. at 9.
The Union contends that "[a]ll arguments . . . by the Agency to justify a blanket prohibition on advertising are merely an attempt to re-argue the merits of its position" before the Arbitrator and that the Agency failed to present any "rational justification" for its arguments. Id. at 11. Although the "Union agrees that the [Agency] has a compelling interest in ensuring that the outside employment of [its] employees does not conflict with the mission of the Agency[,]" the Union maintains that once the Agency permits its employees to engage in outside legal activities, the employees are governed by the rules of the jurisdiction in which they choose to practice. Id. at 11-12.
The Union also argues that, as the Agency determined that the grievant's "legal practice would not present a real or apparent conflict of interest" when it permitted him to practice law outside his employment with the Agency, the Agency cannot now assert that "advertising his legal services will . . . place [the grievant] in a position of conflict . . . ." Id. at 15 (emphasis in original). The Union concludes that the Arbitrator properly found that "the Agency did not present any rational justification for imposing the blanket prohibition" on legal advertising. Id. at 17.
Finally, the Union argues that the Arbitrator's award directing the Agency "to review, and afford the Union an opportunity to meet and discuss" the rule "is consistent with the remedial authority of arbitrators[,]" particularly as the Agency agreed that the Rule involves "a condition of employment subject to negotiation." Id. at 18.
IV. Analysis and Conclusions
We note, at the outset, that the Agency's claim that the Arbitrator incorrectly applied constitutional law in sustaining the grievance is properly before the Authority. Under section 7122(a)(1) of the Statute, the Authority reviews arbitrators' awards to ascertain whether they are contrary to any law, rule, or regulation. As we have previously held, "law" includes the U.S. Constitution. See Panama Canal Commission and International Organization of Masters, Mates and Pilots, Marine Division, ILA, AFL-CIO, Panama Canal Pilots Branch, 33 FLRA 15, 21 (1988).
A. The First Nine Exceptions
The Arbitrator determined, and the Union agrees, that the grievance should be analyzed pursuant to the Supreme Court's decision in Bates. The Agency asserts that, as the grievant is a Federal employee, the grievance should be analyzed under the Court's decision in Connick. The Agency asserts, in the alternative, that if Bates applies, the Arbitrator interpreted Bates incorrectly. To evaluate these claims it is necessary, first, to set forth the Court's holdings in Bates and Connick.
In Bates, the Court held, as relevant here, that a disciplinary rule of the Supreme Court of Arizona prohibiting attorneys from advertising their services, including the prices at which those services were offered, violated the First Amendment. The Court considered, and rejected, arguments that such advertisements would: (1) adversely affect the professionalism of attorneys, the quality of legal services, and the administration of justice; (2) be inherently misleading; (3) result in undesirable economic effects; and (4) be difficult to enforce. The Court held that although the advertisements involved commercial speech, that speech "was entitled to the protection of the First Amendment." Bates, 433 U.S. at 363. The Court noted, in this regard, that "the consumer's concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue[,]" and that commercial speech "serves individual and societal interests in assuring informed and reliable decisionmaking." Id. at 364 (citations omitted). The Court held that the state could not "prevent the publication in a newspaper of appellants' truthful advertisement concerning the availability and terms of routine legal services." Id. at 384.
The Court also held, however, that there were "'commonsense differences' between commercial speech and other varieties." Id. at 381 (quoting Virginia Pharmacy Board v. Virginia Consumer Council, 425 U.S. 748, 771 n.24 (1976)). In particular, the Court held that as "advertising is linked to commercial well-being, it seems unlikely that such speech is particularly susceptible to being crushed by overbroad regulation." 433 U.S. at 381. Accordingly, the Court held that the constitutionality of a regulation involving commercial speech must be challenged on the basis of its application to particular speech, and not on the basis that it "might be applied unconstitutionally in circumstances other than those before the court." Id. at 380. The Court also noted that advertising that was "false, deceptive, or misleading" was subject to restraint, that reasonable restrictions could be placed on the "time, place, and manner of advertising[,]" and that advertising concerning "transactions that are themselves illegal obviously may be suppressed." Id. at 384.
In Connick, the Court addressed the issue of "whether the First and Fourteenth Amendments prevent the discharge of a state employee for circulating a questionnaire concerning internal office affairs." Connick, 461 U.S. at 140. The Court noted, at the outset, that "a State cannot condition public employment on a basis that infringes the employee's constitutionally protected interest in freedom of expression." Id. at 142 (citations omitted). The Court noted also that its task was "to seek 'a balance between the interests of the [employee], as a citizen, in commenting upon matters of public concern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees." Id. (quoting Pickering v. Board of Education, 391 U.S. 563, 568 (1968) (Pickering)). The Court held that "[w]hether an employee's speech addresses a matter of public concern must be determined by the content, form, and context of a given statement, as revealed by the whole record[,]" 461 U.S. at 147-48, and that:
When employee expression cannot be fairly considered as relating to any matter of political, social, or other concern to the community, government officials should enjoy wide latitude in managing their offices, without intrusive oversight by the judiciary in the name of the First Amendment.
Id. at 146.
Having considered both decisions, we conclude, for the following reasons, that neither case, standing alone, is dispositive in this case.
First, advertising by attorneys constitutes commercial speech. See Bates, 433 U.S. at 363-64. See also Peel v. Attorney Registration and Disciplinary Comm'n of Illinois, 110 S. Ct. 2281, 2287 (1990) (Peel) (citing Bates, Court stated that "advertising by lawyers was a form of commercial speech entitled to protection by the First Amendment."); Shapero v. Kentucky Bar Ass'n, 108 S. Ct. 1916, 1921 (1988) (Shapero) ("Lawyer advertising is in the category of constitutionally protected commercial speech."); Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 637 (1985) (Zauderer) (in addressing whether state properly could discipline attorney for advertising, Court stated that although "the precise bounds of the category of expression that may be termed commercial speech[]" may be "subject to doubt, . . . it is clear enough that the speech at issue in this case--advertising pure and simple--falls within those bounds.").
Second, the grievant in this case sought and was denied permission to engage in commercial speech. We note that the record does not disclose an actual proposed advertisement by the grievant and, in fact, it appears that the grievant submitted only a request to advertise, as opposed to a request to publish a specific advertisement.
See Award at 7 (the grievant submitted a form "requesting permission to advertise a legal service, dealing with the procurement of uncontested divorces[.]"); Attachment 5 to Exceptions (grievant's request for permission to advertise stated that grievant intended to "advertise a legal service in one or more local newspapers[]" and that the "legal service consists of the procurement of an uncontested divorce."). Based on the record as a whole, however, it is clear, and we assume for the purposes of this decision, that the contested advertisement was intended solely to publicize the grievant's practice of law and solicit clients for that practice. See Award at 14 (grievant requested "to advertise his availability to process uncontested divorces at a specified fee . . . ."); Opposition at 4 (the grievant "believes that in order to attract his own clients, he must advertise his legal services."). As such, and as there is no contrary indication in the record, we conclude that the advertisement concerned "only commercial speech, that is, expression related solely to the economic interests of the speaker and its audience." Central Hudson Gas, 447 U.S. at 561 (citations omitted).
Third, although Bates addressed the rights of attorneys to engage in commercial speech and the extent to which a governmental entity could regulate that speech, and the grievant is an attorney who sought, and was denied, permission to engage in commercial speech on the basis of a Government regulation, Bates and subsequent cases relying on Bates address governmental regulation of attorneys as attorneys. See also Peel; Shapero; Zauderer; In re R.M.J., 455 U.S. 191 (1982); and Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447 (1978). Here, the Government seeks to regulate the commercial speech of attorneys as Government employees. As such, it is appropriate, in our view, to recognize "the dual role of the public employer as a provider of public services and as a government entity operating under the constraints of the First Amendment." Rankin v. McPherson, 483 U.S. 378, 384 (1987) (Rankin). See also Williams v. Internal Revenue Service, No. 90-5078 (D.C. Cir. Nov. 20, 1990) (Williams) (discipline of Agency attorney for attempting to prosecute a class action, without obtaining prior approval under an Agency regulation, did not violate attorney's right to free association).(2) Consequently, although Bates would appear to apply to the case now before us, we are unable to conclude that Bates is dispositive.
Fourth, for similar reasons, we conclude that Connick is not dispositive. Although it is clear that, as pointed out by the Agency, Connick addressed the First Amendment rights of public employees, Connick did not address the rights of public employees in the context of commercial speech. Instead, Connick addressed the rights of public employees to participate in and speak on matters of noncommercial, public interest. See Connick, 461 U.S. at 145-46 (in addressing discharge of a state employee for circulating a questionnaire concerning internal office affairs, the Court stated that "speech on public issues occupies the 'highest rung of the hierarchy of First Amendment values,' and is entitled to special protection.") (quoting NAACP v. Claiborne Hardware Co., 458 U.S. 886, 913 (1982) and Carey v. Brown, 447 U.S. 455, 467 (1980)). Similarly, other cases relied on by the Agency in this connection address the constitutional rights of public employees in a noncommercial speech context only. See Rankin, 483 U.S. at 386 (Court held that county employee's remark about an attempt to shoot the President "plainly dealt with a matter of public concern."); Pickering, 391 U.S. at 571 (in addressing discharge of a teacher for writing a letter to a local newspaper concerning proposed tax increases, Court noted that "the question whether a school system requires additional funds is a matter of legitimate public concern . . . .").
As noted previously, the Supreme Court has recognized that there are "'commonsense differences' between commercial speech and other varieties." Bates, 433 U.S. at 381 (citation omitted). In particular, commercial speech "occurs in an area traditionally subject to government regulation," and the "Constitution therefore accords a lesser protection to commercial speech than to other constitutionally guaranteed expression." Central Hudson Gas, 447 U.S. at 562-633 (citations omitted). See also Zauderer, 471 U.S. at 637 (the protection afforded commercial speech by the Constitution is "somewhat less extensive than that afforded 'noncommercial speech.'") (citations omitted). Moreover, the tests for determining the constitutionality of regulatory restrictions on commercial speech differ from the tests applicable to restrictions on other speech. Compare Central Hudson Gas, 447 U.S. at 566 with Rankin, 483 U.S. at 388.
In addition to the differences between commercial and noncommercial speech, however, there are differences between the First Amendment rights of public employees and those of other persons:
The repeated emphasis in Pickering on the right of a public employee "as a citizen, in commenting upon matters of public concern," was not accidental. This language, reiterated in all of Pickering's progeny, reflects both the historical evolvement of the rights of public employees, and the common-sense realization that government offices could not function if every employment decision became a constitutional matter.
Connick, 461 U.S. at 143 (footnotes omitted).
Bates addressed only the commercial speech of nonpublic employees and Connick addressed only the noncommercial speech of public employees. The protections afforded speech under the First Amendment differ based on whether the speech is commercial and whether the speaker is a public employee. We conclude, therefore, that neither Bates nor Connick is dispositive here. Neither party provides, and research fails to disclose, judicial precedent discussing the commercial speech rights of public employees. As such, it is appropriate and necessary, in our view, to analyze the grievant's rights in this case in a manner which preserves, to the extent possible, what appear to be the significant elements of both the commercial and the public-employee speech cases.
We note, in this regard, as does the Agency, that subsequent to the Court's decision in Bates, the Court set forth the following analytical framework to be used in commercial speech cases:
In commercial speech cases, then, a four-part analysis has developed. At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.
Central Hudson Gas, 447 U.S. at 566. See also Posadas de Puerto Rico Assoc. v. Tourism Co., 478 U.S. 328, 340 (1986) (Posadas de Puerto Rico) ("Under Central Hudson, commercial speech receives a limited form of First Amendment protection so long as it concerns a lawful activity and is not misleading or fraudulent. Once it is determined that the First Amendment applies to the particular kind of commercial speech at issue, then the speech may be restricted only if the government's interest in doing so is substantial, the restrictions directly advance the government's asserted interest, and the restrictions are no more extensive than necessary to serve that interest.")(citation omitted).
In our view, the four-prong test set forth in Central Hudson Gas for determining the constitutionality of regulations involving the type of speech involved in this case provides sufficient flexibility so as to encompass the grievant's status as a Federal employee. In particular, two prongs of the test relate to the nature and extent of the governmental interest in regulating commercial speech, and the extent to which the disputed regulation directly advances that interest. We find no reason, and none is asserted, that the Agency's interest as employer, and the grievant's status as public employee, may not be considered in applying these prongs. We will, therefore, apply the Central Hudson Gas four-prong test, with due regard for the Agency's interests, in this case.
The first prong of Central Hudson Gas requires a determination as to whether the commercial speech concerns a lawful activity and whether it is misleading or fraudulent. It is clear, and not disputed, that the grievant's legal services, and the grievant's advertisement thereof, are not fraudulent and involve lawful activities.
Moreover, we reject the Agency's contention that the proposed advertisement would be misleading because the rules of the legal profession preclude the grievant from advertising his availability to provide services involving uncontested divorces. We note, at the outset, that it is not clear that professional rules applicable in the jurisdiction in which the grievant practices law constitute rules or regulations within the meaning of section 7122(a) of the Statute. See Veterans Administration, Leavenworth, Kansas and American Federation of Government Employees, Local 85, 34 FLRA 898, 902 (1990) (the Code of Professional Responsibility for Arbitrators of Labor-Management Disputes is not a law, rule, or regulation, within the meaning of section 7122(a), on which exceptions to arbitration awards may be predicated).
More importantly, however, the Agency has not demonstrated that the disciplinary rules applicable in the jurisdiction in which the grievant practices prohibit the grievant's advertisement of legal services in connection with uncontested divorces. In fact, the "only services that lend themselves to advertising are the routine ones: the uncontested divorce, . . . and the like . . . ." Bates, 433 U.S. at 372. See also Zauderer, 471 U.S. at 638 ("rules preventing attorneys from using nondeceptive terminology to describe their fields of practice are impermissible[.]") (citations omitted). Although the Agency asserts that the grievant could not advertise "uncontested divorces without tax consequences . . . ," without violating applicable rules, there is no evidence that the grievant sought permission for such an advertisement. Exceptions at 18. Instead, the grievant sought permission to advertise his availability to provide legal services in connection with uncontested divorces. See Attachment 5 to Exceptions (grievant stated his intention "to advertise a legal service in one or more local newspapers. The legal service consists of the procurement of an uncontested divorce."). The Agency does not assert, or establish, that such an advertisement is impermissible. Moreover, there is no indication in the record that the grievant sought to advertise that he was a specialist in the area of uncontested divorces, or held special certifications to practice law in that area. See generally Peel, 110 S. Ct. at 2287-92. Accordingly, we reject the Agency's argument that the grievant's proposed advertisement is prohibited because the grievant has not been certified as a specialist with respect to uncontested divorces. See id. at 2289 n.12 (Court noted that American Bar Association Model Rule of Professional Conduct 7.4 does not prohibit an attorney from advertising that his or her practice "is limited to" or is "concentrated in" an area of the law).
With respect to the latter point, we note, as we did previously, that it is not apparent that the grievant ever offered, or the Agency ever reviewed, an actual proposed advertisement and no such advertisement is before us in the record of this case. The issue before us, therefore, is not whether the Agency properly denied the grievant permission to advertise based on the wording of an advertisement or the extent to which an actual advertisement allegedly was inconsistent with applicable rules in the jurisdiction in which the grievant practices law. Instead, the Agency denied the grievant permission to advertise at all, without regard to the content of the advertisement.
We note also, in this regard, that the Agency first asserts that the "grievant may limit his work to uncontested divorces without tax consequences but he could not advertise that his field of practice is so limited without violating" a disciplinary rule of the legal profession. Exceptions at 18. The Agency also asserts, however, that the grievant's proposal to "advertise 'uncontested divorces' for a fee . . . would mislead and not inform the public of the crucial fact that grievant was not prepared to consider any matter remotely involving taxes." Id. at 24. That is, the Agency asserts both that the grievant's advertisement is too narrow (for the disciplinary rule) and not narrow enough (to avoid being misleading).
It is clear that, consistent with the Agency's actions and arguments, as well as the blanket ban on advertising in the Agency's rule, the Agency's position is that there is no advertisement the grievant could propose which would be both consistent with applicable rules and not misleading. We cannot, on the basis of the record before us, sustain this argument. See Bates, 433 U.S. at 374 ("Advertising does not provide a complete foundation on which to select an attorney. But it seems peculiar to deny the consumer, on the ground that the information is incomplete, at least some of the relevant information needed to reach an informed decision."). See also Peel, 110 S. Ct. at 2292 (Court stated that even if it assumed that inclusion of attorney's certification by National Board of Trial Advocacy on business stationery "may be potentially misleading to some consumers, that potential does not satisfy the State's heavy burden of justifying a categorical prohibition against the dissemination of accurate factual information to the public."). We conclude that under the first test in Central Hudson Gas, the grievant's proposed advertising is not unlawful, fraudulent, or misleading.
The next two prongs in the Central Hudson Gas test require determinations of (1) whether the governmental interest in restricting the commercial speech is "substantial[;]" and (2) whether the restrictions "directly advance[] the asserted governmental interest." Central Hudson Gas, 447 U.S. at 566. See also Zauderer, 471 U.S. at 638 ("Commercial speech that is not false or deceptive and does not concern unlawful activities, . . . may be restricted only in the service of a substantial governmental interest, and only through means that directly advance that interest."). As noted earlier in this decision, it is appropriate, in our view, to consider, in applying these prongs of the test, the fact that the grievant is a Federal employee and is subject to the Agency's rule prohibiting advertisement only because the grievant is the Agency's employee.
The Agency asserts that the following interests are served by its rule:
Rule 225.2(2) was written to address the substantial interests of the Service, foremost of which is the public's right to competent and full legal representation on all matters including tax questions, and not the least of which is the impact or potential impact of the public's views of such outside legal practice by Service employees.
Exceptions at 19. See also id. at 25 (Agency asserts that "[f]oremost" among the objectives of the rule is "that the public be well-served."). The Agency also asserts that in adopting the rule, the Agency "sought to restrict the underlying conduct, outside legal employment, by the least intrusive means." Id. at 19.
With respect to the Agency's interest in restricting the grievant's speech, we note, in agreement with both parties and the Arbitrator, the Agency's compelling interest in adopting rules of conduct for its employees to ensure that their outside employment does not conflict with the Agency's mission. See Opposition at 11 (Union "agrees that the [Agency] has a compelling interest in ensuring that the outside employment of [Agency] employees does not conflict with the mission of the Agency."). We conclude, without hesitation, that the Agency's interest in eliminating or reducing such conflicts is substantial. See Williams, No. 90-5078, slip op. at 4 (court noted the Agency's "interest in efficiency and avoiding the appearance of impropriety.").
We note also, however, that the Agency has already approved the grievant's request to engage in outside employment. That is, the Agency has already determined that the conduct about which the speech is involved--the grievant's outside practice of law--does not present a conflict or apparent conflict of interest.
The Agency asserts, in this regard, that this case involves a "mixed question of speech and conduct." Exceptions at 25. We agree, noting that the disputed rule conditions the approval of employee attorney requests to practice law outside the Agency on the ban on advertising. As noted previously, the Agency has substantial interests in restricting, or regulating, the conduct involved here. The Agency does not specify, however, and it is not clear from the record, how the ban on speech would restrict the conduct. Put simply, we are unable to determine the connection between the Agency's interests in eliminating or reducing conflicts, or appearances of conflicts, of interest and the Agency's ban on otherwise protected commercial speech involving conduct which, consistent with the Agency's own actions here, does not present such a conflict.
Moreover, although we find the Agency's interest in advancing the public's right to competent and full legal representation laudable, we fail to discern, and the Agency has failed to establish, how a ban on advertising previously-approved activities furthers that interest. Presuming that the grievant's proposed advertising would be effective in attracting clients, a ban on that advertising reasonably would affect the quantity of the grievant's outside practice. Nothing supports a conclusion, however, that the ban would affect the grievant's competence as an Agency or a private attorney, or the public's right to competent representation. Moreover, as the grievant noted expressly in his request for permission to advertise that he would not "in any manner advertise or make it known that [he] work[ed] for the Service . . . ," the Agency does not assert, and it is not otherwise clear, how the ban would affect the Agency's interest in the public's views of outside legal practice by its attorneys. Attachment 5 to Exceptions. Finally, even if the grievant's advertisement would increase the number of clients the grievant could not represent, because of a conflict or the appearance of a conflict of interest, there is no assertion that the grievant would not act ethically in advising any potential client that the grievant was unable to provide legal services if providing such services would result in such a conflict. See Bates, 433 U.S. at 379 ("We suspect that, with advertising, most lawyers will behave as they always have: They will abide by their solemn oaths to uphold the integrity and honor of their profession and of the legal system.").
Accordingly, with respect to the second and third prongs of the Central Hudson Gas test, we conclude that the Agency has not demonstrated substantial interests in restricting the grievant's speech. Even assuming that the Agency's interests in regulating the grievant's speech are substantial, however, we are unable to conclude that the regulation directly advances those interests.
In reaching our conclusion, we acknowledge the need, in cases involving public employees, to balance the grievant's interests "against 'the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees." Rankin, 483 U.S. at 388 (quoting Pickering, 391 U.S. at 568). Indeed, consistent with the Agency's interests as employer, it is not necessary, in applying the second and third prongs of the Central Hudson Gas test, that the Agency demonstrate interests as substantial as those otherwise required. Nevertheless, the Agency has not demonstrated how the blanket ban on the advertising involved here affects its interests as employer or promotes the efficiency of its public services so as to outweigh the grievant's First Amendment rights to engage in commercial speech. The Agency has not, in this connection, identified how the blanket ban would further its asserted interests in the public's perception of the Agency, eliminate or reduce conflicts of interest or the appearance of such conflicts, or safeguard and promote its interests in the public's access to full and competent representation.
In view of our determinations regarding the second and third prongs of the Central Hudson Gas test, it is not necessary to address the fourth prong of the test. Nevertheless, we conclude that even assuming that the Agency has established a substantial interest in banning the commercial speech involved here and that the regulation directly advances that interest, the Agency has not demonstrated that its rule is no more extensive than necessary to serve its interest. The rule bans all advertising of all attorney employees relating to all outside legal activities in all circumstances. Neither the particular work performed by particular attorneys, nor the particular advertisement proposed, is relevant for purposes of the rule. To find that the rule is not more extensive than necessary, therefore, requires a determination that nothing short of a complete ban would suffice to protect the Agency's interests. There is no basis on which to make that determination in this case.
We note, in this regard, that the Arbitrator rejected the Agency's contention that advertising by the grievant constituted a "clear inference of real or apparent conflict of interest." Award at 15. In fact, the Arbitrator found that the "Agency did not show what harm, if any, could redound to the Agency by such advertising . . . ." Id. at 16. There is similarly nothing in the record before us which demonstrates that the Agency has a need to ban either all advertising by all attorneys or the grievant's proposed advertising in this case. We emphasize again that the Agency's rule permits the outside practice of law. As such, a ban on all commercial speech involving conduct which has been approved by the Agency is, in our view, more extensive than necessary. See Peel, 110 S. Ct. at 2291 (Court found rule restricting attorney advertising "'broader than reasonably necessary to prevent the' perceived evil.") (citations omitted).
Finally, with respect to the latter point, we note the Agency's argument that, consistent with the Court's decision in Posadas de Puerto Rico, it is "constitutionally acceptable to ban advertising as a lesser restriction when the alternative was to ban the underlying conduct[.]" Exceptions at 26. In Posadas de Puerto Rico, the Court upheld certain regulations restricting the advertising of gambling to the public in Puerto Rico. 478 U.S. at 348. The Court held, applying the four-prong Central Hudson Gas test, that as relevant here, the "interest at stake . . . is the reduction of demand for casino gambling by the residents of Puerto Rico." Id. at 341. Noting the Puerto Rico Legislature's "belief that '[e]xcessive casino gambling among local residents . . . would produce serious harmful effects on the health, safety and welfare of the Puerto Rican citizens," the Court held that the "Puerto Rico Legislature's interest in the health, safety, and welfare of its citizens constitutes a 'substantial' governmental interest." Id. In applying the third prong of the Central Hudson Gas test, the Court held also that the challenged regulations directly advanced the government's asserted interest. Finally, stating that the Puerto Rico Legislature "surely could have prohibited casino gambling by the residents of Puerto Rico altogether[,]" the Court held that "the greater power to completely ban casino gambling necessarily includes the lesser power to ban advertising of casino gambling[.]" Id. at 346.
As stated previously, we conclude that even assuming that the Agency has a substantial interest in banning the grievant's commercial speech involved in this case, the ban does not directly advance the interests asserted by the Agency. We find nothing in Posadas de Puerto Rico which would lead us to a contrary conclusion. As such, the Court's discussion of the fourth prong of the Central Hudson Gas test is not relevant here. Moreover, the Agency does not assert, and we have no other basis on which to conclude, that the underlying conduct involved in this case (the restricted and regulated outside practice of law) is so akin to the underlying conduct (casino gambling) involved in Posadas de Puerto Rico that, even in the absence of our conclusions regarding the second and third prongs of the Central Hudson Gas test, the Court's discussion of the fourth prong mandates a conclusion that the Arbitrator's award conflicts with law.
In sum, we conclude, under the Central Hudson Gas test, and consistent with the Agency's status as public employer, that the Agency has not shown that the Arbitrator violated applicable law by holding that the grievant's First Amendment rights were violated by the Agency's refusal to permit him to advertise his previously-approved outside practice of law.
B. The Tenth Exception
Finally, the Agency excepts to the Arbitrator's "remedy," which "directs the Agency to meet with the Union to reformulate [its rule concerning lawyer advertising] in accordance with applicable law." Exceptions at 28. The Agency asserts that if the rule is not constitutional, "it is the Agency's right to chose [sic] the method by which the constitutional objections will be overcome, unless the Union initiates bargaining over the issue." Id. at 29. The Agency acknowledges, in this regard, that its rule "is a condition of employment subject to negotiation." Id. at 27.
In our view, the Agency misinterprets the Arbitrator's award. The award states that "[t]he Agency is directed to review, and afford the Union an opportunity to meet and discuss Rule 225.2(2) and reformulate its provisions consistent with the constitutional bar to a blanket prohibition on all advertising of legal services by attorneys." Award at 18. Nothing in the award requires the Agency to reformulate, or propose reformulation of, the rule in a particular way. Instead, consistent with the Agency's acknowledgement that the regulation constitutes a condition of employment which is subject to bargaining, the parties are free, under the award, to pursue their interests through bargaining. Accordingly, we reject the Agency's exception that the Arbitrator exceeded her authority by requiring the Agency to allow the Union to participate in the reformulation of the rule concerning advertising.
V. Decision
The Agency's exceptions are denied.
FOOTNOTES:
(If blank, the decision does not
have footnotes.)
1. Section 225.2 of the Agency's Rules provides:
Outside employment and legal activities may be approved provided that employees may not advertise nor be affiliated with a firm and the activity is not remotely involved with tax law. For example, adoptions, title searchs [sic], law clerkships, and all legal services to immediate family are not considered to be involved with tax law.
Award at 5-6.
2. The court stated that the Agency rule involved in Williams was Rule 222.5. Slip op. at 2. As the court did not quote the rule, however, and as the copy of the Agency's rules provided in the record of this case does not contain a rule so numbered, we are unaware of the wording of the rule in dispute in that case. Attachment 2 to Exceptions.