Financial industry associations awaiting a decision on their appeal to kill the U.S. Department of Labor’s controversial fiduciary rule may be waiting a good deal longer than originally anticipated.
There is growing industry consensus that the Fifth Circuit Court of Appeals in New Orleans may be shelving its appeal decision to give the DOL time to conduct its review of the rule. The DOL’s extension for review runs until July 1, 2019.
“It strikes me that the court will want to delay issuing a ruling that would disrupt the DOL’s regulatory re-review, which could make the court’s decision moot,” Bruce L. Ashton, a partner with Drinker, Biddle & Reath in Los Angeles in LA, told Financial Advisor magazine.
“That’s the speculation,” add one of the 22 plaintiffs seeking to force the DOL to vacate its fiduciary rule.
“Courts simply don’t like to be put in the position where their decision is made moot by other events,” said Ashton.
Ashton said President Trump’s memorandum directing the DOL to conduct a review, DOL’s extensions and the agency’s expressed desire to coordinate its review and rules with the Securities and Exchange Commission would all be factors in the Fifth Circuit Court of Appeals decision on whether or not to postpone its deliberation of the case.
Federal appeals courts do not have deadlines and may delay rulings indefinitely, Ashton said.
After losing a string of lawsuits to overturn the DOL’s fiduciary rule in several states, industry opponents were confident of a win in the Fifth Circuit. The appeals court heard arguments July 31 and many industry experts predicted a ruling by February.
Plaintiffs include the U.S. Chamber of Commerce, American Council of Life Insurers, the Financial Services Institute, National Association of Insurance and Financial Advisors, the Insured Retirement Institute, SIFMA and many others -- 22 plaintiffs in all.
The industry plaintiffs were consolidated from three lawsuits, each filed in 2016 in U.S. District Court for the Northern District of Texas. The plaintiffs lost each of their federal cases and they then filed appeals that went to the Fifth Circuit.