The Department of Labor is urging the Fifth Circuit Court of Appeals to deny a recent request by the U.S. Chamber of Commerce and other groups to stop the fiduciary rule from becoming applicable while the case is on appeal. Plaintiffs in the case include the Securities Industry and Financial Markets Association, Financial Services Institute, Financial Services Roundtable, and others.
In a 30-page response filed on Wednesday, the DOL argued that the plaintiffs “are not entitled to the extraordinary relief they seek.”
“Plaintiffs’ arguments on the merits contradict the plain text of ERISA, which vests [DOL] with broad authority to classify individuals as ‘fiduciaries’ and to regulate their conduct accordingly,” said the DOL.
Adding, “Plaintiffs’ allegations of irreparable harm lack force in light of the recently issued nonenforcement policies, which substantially reduce the risk to plaintiffs while the [DOL] considers whether and for how long the fiduciary rule’s applicability date should be extended.”
The DOL’s temporary enforcement policy was issued in response to concerns expressed by financial services firms after it proposed extending the April 10 applicability date by 60 days. In addition, the IRS announced that they would halt excise taxes on prohibited transactions and related reporting requirements where the DOL’s temporary enforcement policy would apply.
Judge Barbara M.G. Lynn of the Northern District of Texas recently denied the plaintiffs’ motion to enjoin the rule pending appeal, stating that, “This court has already found plaintiffs’ position on the merits unpersuasive, two other district courts have reached the same conclusion in similar cases, and neither court has enjoined enforcement of the rules.”
Plaintiffs also requested expedited briefing as an alternative to injunctive relief. The DOL said that it does not believe expedition is advisable in light of the ongoing rulemaking, which could result in modifications to both the rule’s applicability date and the rule’s substantive provisions.