A judge in Texas' Northern District federal court will hear arguments later this year in a case seeking to overturn the Department of Labor's fiduciary rule.
Judge Barbara Lynn of the district court in Texas' Northern District, which has sided against the DoL in recent cases, has set a date of Nov. 17 for a hearing where the groups looking to overturn the rule are expected to seek an injunction blocking its implementation.
From a darkness sweeping over the realm, to the right thing to do, advisors and experts debate the changes wrought by a new fiduciary rule.
Meanwhile, the department and the plaintiffs in three lawsuits that have been consolidated into a single challenge will be scrambling to put together briefs to meet the interim deadlines that Judge Lynn has set.
Summary judgment briefs from the plaintiffs, which include the Financial Services Institute, the Insured Retirement Institute, and other prominent business groups, are due Monday, July 18.
Legal experts say that the schedule is somewhat expedited for civil actions, though they note that the accelerated timetable isn't too surprising since the major facts in the case are not in dispute.
The court may split the various, accepting some and rejecting others, leaving no party satisfied with subsequent appeals from both sides.
"There is likely little need for discovery of facts, and so there's some logic to a relatively quick schedule for deciding the case on cross motions for summary judgment," says Patrick DiCarlo, an attorney with the law firm Alston & Bird.
Instead, the case is likely to turn on the process by which the Labor Department drafted the rule, as well as its legal authority to extend fiduciary responsibilities to advisers under existing statute.
Brendan McGarry, an attorney with Kaufman Dolowich Voluck, notes that both had sought an even more compressed schedule for the case. For the DoL, he notes that the fiduciary rule had been bound up closely with the White House following President Obama's endorsement of the measure. "So it makes sense for the defendants here to want to have these cases resolved while the current administration is in place," McGarry says.
"As for the plaintiffs, their best chance to put off or amend the implementation of the rule is now," he says. "If they were to wait, their arguments could suffer from the appearance of being merely stall tactics."
The Department of Labor did not immediately respond to a request for comment. A spokesman for one of the plaintiffs declined to comment on their legal strategy before the briefs are filed.
DiCarlo and McGarry both suggest that the date set for the oral arguments was likely the result of the schedule at the court, and neither believes the timing unduly favors one party over the other.
-
Some advisers may think the regulations won’t affect them. Here’s why they’re wrong.
June 14 -
The new regulations are “arbitrary and capricious," a trade organization asserts.
June 7 -
The U.S. Chamber of Commerce, SIFMA, FSI and other groups are asking a Texas court to vacate the Labor Department's new regulations less than a year before the rule goes into effect.
June 2
McGarry notes that the venue--Texas' Northern District--could be a hospitable environment for the plaintiffs, citing two recent cases involving other regulations in which the court has issued injunctions against the Department of Labor.
"It appears the plaintiffs in the instant case have done their homework and chosen their forum well," McGarry says.
Regardless of how the district court rules, it won't be the final word in the case, and the fiduciary regulation will likely remain a hot-button issue.
"I think we can expect an appeal from either side in the event of an unfavorable ruling," McGarry says.
He even envisions a scenario in which the court splits on the various motions each side presents, accepting some requests and rejecting others, leaving no party completely satisfied.
"It is entirely possible we see an appeal from both sides in the event the court decides the expected cross motions in part for each side," McGarry says. "This regulation impacts such a wide group of people and entities that I think neither side will go down without exhausting all available processes, including all avenues of appeal.
