The Department of Justice, on behalf of the Labor Department, asked U.S. District Court Judge Susan Richard Nelson on Tuesday to stay the current court case filed against Labor’s fiduciary rule by Thrivent Financial for Lutherans.
But Mark Johnson, an attorney at Greene Espel representing Thrivent, told the judge Friday that the case should move ahead.
The same day, Judge Daniel Crabtree, in the case brought by Market Synergy in Kansas against DOL’s fiduciary rule, denied the plaintiffs’ motion for summary judgment.
The original decision in the Market Synergy case was for a motion for preliminary injunction. The ruling issued Friday was Crabtree’s decision on the parties’ motions for summary judgment.
In the Market Synergy ruling Friday, “the court heavily relied on its previous decision to find once again that the previous administration followed the law in promulgating the fiduciary rule,” said Thomas Clark, a lawyer with The Wagner Law Group. “However, the positive decision for the rule will not have a long-term effect if Trump’s DOL continues to move forward with delay in attempt to repeal or rewrite” the rule.
In the Thrivent case, DOJ cited the Labor Department’s review of the fiduciary rule under the recent directive by President Donald Trump, as well as Labor’s recent filing with the Office of Management and Budget to delay the rule’s April 10 compliance date.
“In light of the potential for change to the rulemaking, there is good cause to continue the March 3, 2017 summary judgment hearing and stay proceedings pending the outcome of the Department’s review,” the DOJ attorneys wrote.
Thrivent became the sixth plaintiff to lob a complaint against Labor’s fiduciary rule when the insurer filed a suit in late September challenging the class-action waiver requirement under the rule’s best interest contract exemption, or BICE.
Compliance with BICE doesn’t kick in until Jan. 1, 2018.
The Thrivent suit “concerns one condition of an administrative exemption issued by the Department of Labor that is not scheduled to become applicable to Plaintiff and the rest of the financial services industry until January 1, 2018,” the DOJ wrote.
But Thrivent attorney Johnson asserted that “the mere possibility that future administrative actions could moot Thrivent’s claims is not sufficient to support a stay.”
Further, he argued, Trump's directive “does not instruct DOL to change the provisions challenged in this litigation (and such a hypothetical instruction would be of questionable validity under the Administrative Procedure Act in any case). Instead, it directs DOL to ‘prepare an updated economic and legal analysis’ on specified topics related to the Fiduciary Duty Rule, and to consider revising or rescinding the rule in light of the results of that analysis.”
Next up will be a ruling by Nelson on whether to grant the government’s request to pause the proceedings.
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