Less than a week after asking for a stay in a federal court in a case involving the fiduciary regulation, the Labor Department has asked for another.
The suit, filed last fall by Thrivent Financial for Lutherans in the U.S. District Court for the District of Minnesota, claimed that the requirements of the Best Interest Contract Exemption (the “BICE”) would, “by its terms and in its effect, require Thrivent either to cease conducting certain business that is beneficial to its Members or to abandon its longstanding commitment to resolving Member disputes amicably and through private, one-on-one mediation and arbitration.”
Making similar arguments, the Labor Department had filed a request Feb. 8 for a stay in judgment in a case then pending in the U.S. District Court for the Northern District of Texas – only to have the judge issue her decision in favor of the Labor Department later that same day.
In their request, the Labor Department requested a stay of proceedings and the continuance of the currently scheduled March 3, 2017 summary judgment hearing. The request noted that if a hearing is necessary on the request, they proposed that it occur on March 3, 2017 in lieu of the previously scheduled hearing.
The Labor Department noted that, under the circumstances here, a stay of proceedings would make sense for the court and the parties, since it involved “one condition of an administrative exemption issued by the Department of Labor … is not scheduled to become applicable to Plaintiff and the rest of the financial services industry until January 1, 2018.” Citing President Trump’s Feb. 3, 2017 memorandum to the Secretary of Labor directing the Secretary to “examine the Fiduciary Duty Rule” and to “prepare an updated economic and legal analysis” of the Rule, as well as the direction to make an affirmative determination as to its effect on various areas potentially impacted by the regulation, the Labor Department said it was carefully reviewing the issues raised, “with the immediate goal of deciding the best course of action to implement it.” The request also cited the “Delay of Applicability Date” filed with the Office of Management and Budget on Feb. 9 for interagency review in preparation for publication in the Federal Register.
“In light of the potential for change to the rulemaking, there is good cause to continue the March 3, 2017 summary judgment hearing and stay proceedings pending the outcome of the Department’s review,” the request noted. Specifically, the Labor Department noted that:
- It would serve judicial efficiency not to rule on a matter that may no longer be at issue depending on the outcome of the administrative review.
- Plaintiff may be afforded another opportunity to seek an administrative change to the provision to which it objects as part of the review process.
- The Labor Department could act to revise or rescind the challenged provision.
Finally, the Labor Department noted that the plaintiff would not be unduly prejudiced by a stay because the provision it challenges will not be applicable for more than nine months in any event, concluding that “…there is time for this additional administrative process to run its course.”
The Labor Department proposed that an initial joint status report be due on May 15, 2017 to update the Court on the Department’s actions and address whether a continued stay is warranted.