Plaintiffs in the successful lawsuit that overturned the U.S. Department of Labor’s fiduciary rule—including the Financial Services Institute (FSI) and the Securities Industry and Financial Markets Association (SIFMA)—are now asking the court to deny a request from the AARP and three states for a rehearing.
The court filing seeks to derail the effort by the AARP and California, New York and Oregon, whol last week asked the Fifth Circuit to reconsider its decision to vacate the DOL’s rule. The DOL rule, which requires all financial professionals who work with retirement accounts to provide conflict-free, fiduciary advice, disappears in May because of the court’s decision. The court ruled that the DOL had exceeded its authority by attempting to regulate the brokerage industry and its commission-based compensation.
In addition to asking for an expedited rehearing, AARP and the states asked to join the case as defendants in anticipation that the DOL will not fight for the fiduciary rule, they said. They are also asking that all judges of the Fifth Circuit hear the case. The three-judge panel that vacated the DOL rule did so on a 2-1 vote.
But FSI, Sifma and the other eight plaintiffs who won their legal battle to kill the DOL rule are fighting the call for a rehearing.
In a motion filed with the Fifth Circuit Court of Appeals in Dallas on Monday, the plaintiffs asked the court to reject the motions.
“AARP and the states of California, New York, and Oregon have delayed until the last moment to file intervention motions to seek rehearing,” the plaintiffs said in their motion, filed by attorneys including Eugene Scalia—the son of deceased Supreme Court Justice Antonin Scalia—of Gibson, Dunn & Crutcher. “Their delay is unjustifiable and compels denial of their motions.”
The AARP and states “have had ample opportunity to intervene in the multiple cases challenging the so-called 'fiduciary rule' in district courts around the country, in appeals in two other circuits courts, and in this appeal, which was decided by this court more than a month ago. And they have been on notice for more than a year that the government, under presidential direction, was reevaluating its approach to the fiduciary rule,” the plaintiffs' motion said.
The AARP and states are arguing that the Fifth Circuit’s ruling ran counter to several previous federal court decisions favoring retirement savings protections, including a decision by the U.S. District Court for the Northern District of Texas and a decision by the Tenth Circuit Court of Appeals.
In its 16-page filing, AARP wrote that “the [Fifth Circuit] decision creates an irreconcilable intra-circuit split ... and conflicts with Supreme Court precedent.”
In addition, AARP’s filing said, “The panel’s decision also presents an exceptionally important issue because it robs workers, retirees, and their families of crucial protections for their retirement investments.”