DOL Moves to Consolidate Three Cases Challenging the Fiduciary Rule
June 24, 2016 by Frank Klimko
DALLAS – The U.S. Department of Labor filed a motion seeking to consolidate the three federal lawsuits challenging the updated fiduciary rule into one single case. The plaintiffs said they are not opposed to the move, but a final order is pending.
The request was made to U.S. District Judge Barbara M.G. Lynn, chief judge of the U.S. District Court for the Northern District of Texas.
The DOL brief said moving the three separate lawsuits as a single piece of litigation would avoid needless duplication of efforts because they are raising essentially the same alleged errors.
“All three actions challenge the same agency rulemaking and present substantially the same legal issues,” the DOL brief said, “and consolidation will promote the just and efficient conduct of the litigation avoiding duplicative proceedings in this district.”
The three cases include the lawsuit filed by the U.S. Chamber of Commerce, the Insured Retirement Institute and seven other financial services groups. That lawsuit said the agency overstepped its authority in regulating retirement investment advice and expanding adviser oversight (Best’s News Service, June 2, 2016).
On June 8, the American Council of Life Insurers and the National Association of Insurance and Financial Advisors filed a second lawsuit and the third was filed on June 9 by the Indexed Annuity Leadership Council.
In their motion of response, the plaintiffs said they hoped for a quick resolution.
“Expeditious resolution of these cases on summary judgment would — if plaintiffs’ summary judgment motion is granted — substantially avert these and other burdens on and costs to plaintiffs’ members and American consumers,” said the motion, signed by plaintiff’s attorney Eugene Scalia, of Gibson, Dunn & Crutcher.
Under a proposed schedule, written briefs would be filed by Oct. 7 and oral arguments could be scheduled for mid- to late-October, the motion said.
The rule is to go into effect next April.
In a related matter, a “sit-in” staged by House Democrats over gun legislation delayed until late on June 22 a vote on a resolution to strike down the DOL rule. But it failed. House Republicans could not garner the two-thirds necessary to topple the president’s veto of the resolution that would have derailed implementation of the rule. With the failed vote, House staffers said they doubt there will be further House action on the rule this session.
National Association of Professional Insurance Agents National Vice President of Government Relations Jon Gentile expressed disappointment that the effort failed.
“The DOL fiduciary rules may make professional advice too expensive for millions of households and small businesses,” Gentile told Best’s News Service.
“In addition, the increased liability exposure for advisers would also increase the cost of services, causing some advisers to exit the market entirely or discontinue services for smaller accounts,” Gentile said.
(By Frank Klimko, Washington correspondent, BestWeek: Frank.Klimko@ambest.com)
