DOL Pulls Back on Anti-Arbitration

Roughly two weeks after announcing its intention to back off on support of a provision in the Best Interest Contract Exemption (BICE) restricting class litigation waivers, the Labor Department has announced changes in its position in another case.

In a motion filed with Judge Susan Nelson (Thrivent Fin. for Lutherans v. Acosta, D. Minn., No. 0:16-cv-03289, letter to the district judge 7/14/17), the Labor Department has proposed “a manner in which to resolve this action,” specifically a suit filed by Thrivent Financial for Lutherans opposing the implementation of the fiduciary rule.

The Labor Department has withdrawn its cross-motion for summary judgment in the Thrivent case, noting its stance that it was no longer defending “the one regulatory provision challenged in this action—the application of Best Interest Contract (“BIC”) Exemption § II(f)(2) to arbitration agreements.”

The Labor Department also renewed a request to stay of litigation, noting that the agency was currently reviewing its fiduciary rule in accordance with President Trump’s Feb. 3 directive.

That said, if the court chose not to stay the case, the DOL said that it wouldn’t oppose the court’s granting summary judgment to Thrivent, vacating the BICE as applied to arbitration agreements entered into by the financial firm. The Labor Department also noted that since the court’s Feb. 21, 2017 denial of a stay, “circumstances have changed, further justifying a stay of this litigation,” and said that the Department “no longer defends the arbitration-restricting condition, and therefore does not intend to enforce the provision. And unless Plaintiff amends its contracts to include the limitation, no mechanism for private enforcement of the provision is apparent.”

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