Trump Labor Board Appointee Is Probed by DOJ Over Ethics Allegations

(Bloomberg Law) -- National Labor Relations Board member William Emanuel, a Republican appointed by former President Donald Trump, recently was questioned by the U.S. Justice Department over allegations from the NLRB inspector general that he participated in five labor law cases involving a company or companies in which he owned stock, according to eight sources briefed on the matter.

U.S. Attorney General Merrick Garland chose not to pursue the case, which in effect punted the matter back to the federal labor board, three of the sources said. The NLRB is now determining how to handle four prior rulings in which NLRB Inspector General David Berry has determined that Emanuel had a conflict of interest that should’ve prompted him to recuse himself, according to one of the sources. A fifth case flagged by Berry hasn’t been decided and remains pending before the board.

It wasn’t immediately clear which company or companies Emanuel owned stocks in. It also wasn’t immediately clear which cases Berry said may have been compromised.

“At all times during my term on the NLRB, I made decisions based solely on the merits of the matters before me and without any knowing conflict of interest,” Emanuel said in a statement emailed to Bloomberg Law by a representative Friday.

Most of the sources who spoke with Bloomberg Law, including current and former government officials, did so on condition of anonymity because they didn’t have approval to disclose private conversations.

Although the significance of the allegations will hinge on which cases are affected, the investigation could reignite an ethics saga that’s pitted Trump’s Republican NLRB appointees against unions and Democrats. This latest chapter comes two days before Democrats take control of the NLRB, which has a five-member panel that adjudicates disputes involving union organizing and collective bargaining law, including accusations of businesses interfering with workers’ rights.

The Senate recently confirmed President Joe Biden‘s two nominees to the board, both of whom have a background as union-side attorneys. The second to join the board, David Prouty, was set to be sworn in Saturday, which will give Democrats a majority.

Emanuel, in his statement, said he “cooperated fully” with the inspector general’s inquiries into “certain mutual funds” purchased last year through a financial adviser. The inquiries, Emanuel said, focused on whether certain stocks within those mutual funds required him to seek a waiver to vote on certain cases.

“At no time was I aware of the names of the many individual stocks held in these sector mutual funds,” he said in the statement. “In all but one instance the small dollar amounts that could be attributed to me through the fund’s holdings of individual stocks did not exceed levels that would have required me to seek a waiver had I held the stocks individually. When this issue was called to my attention, my advisor immediately sold these sector mutual funds.”

His statement didn’t identify the names of individual stocks that attracted scrutiny from the agency’s watchdog, nor did it specify which NLRB cases were in question.

The Justice Department didn’t respond to multiple requests for comment. An NLRB spokeswoman declined to comment. Berry, the inspector general, said he couldn’t confirm or deny the existence of any open investigation when reached by phone Thursday.

A ‘Vindictive Response’

Brendan McCormick, senior director of communications with the law firm Venable LLP who represents Emanuel, said Friday that neither Emanuel nor his representatives had communicated with DOJ.

“No one representing Mr. Emanuel spoke with DOJ,” he said.

One source told Bloomberg Law that Emanuel or his attorney had corresponded and cooperated with DOJ. A second source who was briefed on the matter said the Justice Department’s decision was based on Emanuel’s “cooperation.”

Rep. Bobby Scott (D-Va.), chair of the House labor committee, who had previously subpoenaed the NLRB over potential ethical conflicts, said the allegations raised questions about Emanuel’s integrity.

“For the second time in his tenure, the Inspector General has notified Congress that Member Emanuel participated in cases where he had a conflict of interest,” Scott said in a statement Friday. “For years, my Committee has raised serious concerns about Member Emanuel’s conflicts of interest and how those conflicts have real world implications for workers.”

Emanuel, who has served on the board since 2017, came under scrutiny early in his tenure for participating in a landmark case linked to his former law firm, Littler Mendelson. In that case, Hy-Brand Industrial Contractors, the board invalidated its decision because of Emanuel’s involvement, nullifying a decision that loosened the standard by which employers could be held legally liable for labor violations by franchisees and contractors.

The NLRB last year released a rule that achieved largely the same result, after a lengthy process prompted by Emanuel’s perceived conflict of interest in the case.

Berry in 2018 released a scathing report on a “serious and flagrant” problem with the board’s ethics procedures, in that members can participate in decisions that indirectly help former clients, as long as the client isn’t a party in the case. Some labor lawyers disagreed with Berry’s analysis, saying it would prevent qualified lawyers from serving on the board, but it’s provided ammunition for Democratic lawmakers, including Sen. Elizabeth Warren (Mass.), who called on Emanuel to resign in 2018.

Roger King, a senior labor and employment counsel at the HR Policy Association, said he’d discussed with Emanuel the watchdog’s allegations.

“This appears to be a vindictive response from the inspector general and the ethics officer, given their previously rejected attempt to impeach member Emanuel’s ethics credibility on the joint employer issue,” said King, who is friends with Emanuel. “At best, this is a highly technical matter involving an investment decision made by Member Emanuel’s financial adviser, unbeknownst to him. When it was brought to member Emanuel’s attention he immediately corrected it.”

In 2019, then-Chair John Ring, a Republican who remains on the board, released a revised ethics policy that gave members authority to insist on participating in cases, even when internal ethics officials determine they may have a conflict of interest.

Ring said last year he would ask DOJ to review the ethics reforms in response to confusion over the role of the Office of Government Ethics in adjudicating disputes. Ring didn’t transmit the request to DOJ’s Office of Legal Counsel until Jan. 19, 2021, his last day as chairman. DOJ has yet to disclose publicly the results of that review.

—With assistance from Josh Eidelson (Bloomberg News)

To contact the reporters on this story: Ben Penn in Washington at bpenn@bloomberglaw.com; Ian Kullgren in Washington at ikullgren@bloombergindustry.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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