Other lawsuits have largely relied on the notion that the Labor Department overreached in creating the rule. The Dallas plaintiffs also use those arguments, but are the only ones to mention First Amendment obstacles.
Labor Department lawyers argued the fiduciary rule only governs conduct, not speech. Even if it did regulate speech, they said, it only covers misleading and conflicted statements, which are not protected by the First Amendment.
U.S. District Judge Barbara Lynn pressed the government on its position, saying the fiduciary rule appears to regulate more than just misleading speech.
"They can recommend any products they like, as long as they're not recommending products that aren't in the investor's best interest," Labor Department defense attorney Emily Newton responded.
The agency estimates bad advice will cost investors $95 billion over the next 10 years if the fiduciary rule is not implemented.
The lead plaintiff's attorney in the case is Eugene Scalia, who has successfully argued for corporations and trade groups in other high-profile cases. Earlier this year he convinced a federal judge to strike down MetLife Inc's designation as a financial company that is "systemically important," which would subject it to tougher regulation.
His father was the late U.S. Supreme Court Justice Antonin Scalia, a conservative who often sided with big business in landmark cases that protected or created corporate rights.
Lawyers said the outcome of the various fiduciary-rule proceedings is far from clear. If the judge in Dallas decides in Wall Street's favor, it could create a split among circuit courts. That might put the case on a path to the Supreme Court, which currently has a vacant seat.
The court may or may not accept the case. Advisors to President-elect Donald Trump have indicated he will appoint a justice who wants to abolish the rule.
This article was provided by Reuters.