The Department of Labor has asked the U.S. District Court Northern District of Texas to consolidate three lawsuits challenging its fiduciary rule.
Filed late Friday by the Department of Justice, the motion is not opposed by the plaintiffs – which include the U.S. Chamber of Commerce, the Indexed Annuity Leadership Council, the American Council of Life Insurers and the National Association of Insurance and Financial Advisors.
Two additional lawsuits challenging the DOL rule have been filed in District of Columbia District Court (by the National Association for Fixed Annuities) and in U.S. District Court for the District of Kansas (by Market Synergy Group).
In its response this morning, the Chamber of Commerce asked the court to schedule the cases as soon as possible. The first lawsuits were filed nearly three weeks ago, but so far, only one hearing date has been scheduled – Aug. 25 by the DC court.
“The Department itself estimated that the start-up cost of compliance for affected industries will be $5 billion,” the chamber response reads. “Expeditious resolution of these cases on summary judgment would … substantially avert these and other burdens on and costs to plaintiffs’ members and American consumers.”
If the Texas court grants the lawsuit consolidation, the plaintiffs retain the right to “separate briefs, oral arguments, and other litigation activities,” the government filing reads.
The Justice Department pointed out that all three complaints allege “substantially the same violations” of the Administrative Procedures Act and First Amendment, including that:
• The rule impermissibly broadens the definition of fiduciary investment advice under ERISA and the Internal Revenue Code,
• The new Best Interest Contract (BIC) Exemption is arbitrary and
• The DOL failed to provide sufficient notice and comment for certain items, and
• The rule and exemptions unconstitutionally burden commercial speech in violation of the First Amendment.
The primary difference is that the Chamber of Commerce lawsuit alone challenges the Principal Transactions Exemption on grounds similar to the challenges to the BIC Exemption. Likewise, it also raises a claim under the Federal Arbitration Act regarding a clause in both exemptions prohibiting class action waivers.
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]
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