The ongoing legal battle between Thrivent Financial for Lutherans and the Department of Labor over Labor’s fiduciary rule continues.
Thrivent has been fighting to halt the fiduciary rule’s anti-arbitration clause set out in the rule’s best-interest contract exemption, and filed a motion for preliminary injunction against the rule.
Labor filed on Oct. 13 a brief opposing Thrivent’s motion for a preliminary injunction, stating that the court “need not rule on this motion, but instead should grant the Department’s motion to stay the case.”
If the court does not stay the case, Labor argued, “there is no need for preliminary relief here, where summary judgment has been fully briefed and Plaintiff is concerned about an event that will occur in January 2018 at the earliest, if at all,” the brief states, referring to the impending 18-month delay by Labor of the rule’s Jan. 1 compliance date.
But Thrivent argued in its Oct. 18 reply brief that Labor “spends almost the entirety” of its opposition “attempting to convince the court that the harm currently sustained by Thrivent, and the further harm that Thrivent will incur when the anti-arbitration condition becomes applicable, is not really real.”
The attorneys for Thrivent further argued in the 23-page brief that with “respect to that harm, Thrivent’s opening brief details the numerous ways in which the anti-arbitration condition (1) currently and irreparably harms Thrivent, and (2) will further harm Thrivent if and when it becomes applicable.” The brief cites potential class-action lawsuits as one example of potential harm.
The anti-arbitration condition, the attorneys said, “is part of an existing regulation that is looming over Thrivent and is currently set to apply in less than two-and-a-half months.”
Industry officials expect Labor to officially delay the more onerous prohibited transaction exemptions of its fiduciary rule by 18 months — from Jan. 1, 2018 to July 1, 2019 — by the end of October.
The lawyers for Thrivent stated in their brief that “DOL primarily contends that Thrivent cannot establish irreparable harm because DOL has proposed an extension of the Jan. 1, 2018 applicability date, and thus ‘the arrival of the applicability date [is] neither certain ... nor imminent.’”
As a threshold matter, they continued, “DOL is again attempting to hold Thrivent to a ‘certainty of harm’ standard of its own creation. That is not the law. Thrivent must establish that ‘irreparable injury is likely in the absence of an injunction.’”
Labor has “expressly conceded that ‘[w]hether, and to what extent, there will be changes’ that affect the [BICE]’s anti-arbitration condition ‘is unknown,’” the attorney wrote.
“There is no evidence in the record supporting DOL’s remarkable assertion that the duly adopted regulations are unlikely to remain in place for the next two-and-a half months. And, particularly given that Thrivent is in this position due to DOL’s prior issuance of an unlawful regulation, Thrivent cannot simply take DOL’s speculative claims regarding future action at face value.”
Thrivent’s motion for a preliminary injunction should be granted, the attorneys concluded, and the court should “enjoin implementation and enforcement of the anti-arbitration condition of the BIC Exemption as to Thrivent until the conclusion of this litigation — whether as a result of a change in the BIC Exemption that truly moots this case or as a result of the court making a final determination on the merits of Thrivent’s challenge.”