Dallas federal Judge Barbara M.G. Lynn announced Thursday that she intends to rule by next week on the U.S. Chamber of Commerce-led lawsuit against the Department of Labor fiduciary rule.
The judge took the unusual step of issuing a one-sentence notice to the parties that the long-awaited ruling is coming.
“The Court expects to issue its opinion on the parties’ Cross-Motions for Summary Judgment no later than February 10, 2017,” the notice reads.
Industry opponents of the DOL rule have been patiently waiting for good news via two routes: either a rule delay from the Trump administration, or a pro-Chamber ruling from Judge Lynn.
To date, industry opponents have lost two cases in Washington, D.C. and Kansas courts. But observers who sat in on the Nov. 17 hearing in the U.S. District Court Northern District of Texas courtroom say they are more confident of a favorable ruling from Judge Lynn.
The U.S. Chamber of Commerce and the American Council of Life Insurers were the lead plaintiffs in the Dallas lawsuit, which was consolidated from three complaints filed in June.
DOL officials and public interest groups say the rules, which impose a fiduciary standard of care on financial advisors dealing with retirement accounts, are necessary to protect retirement investors from high commissions.
Critics say the DOL is trying to force the industry to move from a commission- to a fee-based model. The rules are scheduled to begin taking effect April 10, 2017.
'Only Congress Can Do That'
Opponents claim only Congress can establish a private right of action, or the right for people to sue, as individuals or as a class, under an existing law. In a 2001 Supreme Court decision, Alexander v. Sandoval, the high court wrote: “like substantive federal law itself, private rights of action to enforce federal law must be created by Congress.” That case is cited in the lawsuits brought against the DOL.
The DOL denies that the rule “creates” a new private right of action. The case hinges on how the courts view the rule’s Best Interest Contract Exemption, which enables advisors to receive commission-based compensation that the rule otherwise prohibits as long as they adhere to rigorous disclosure standards and sign a contract with clients.
Other plaintiffs in the Northern District lawsuit include the Indexed Annuity Leadership Council, and the National Association of Insurance and Financial Advisors.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]
© Entire contents copyright 2017 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.