If you thought all the fiduciary rule litigation was over, think again.
Turns out that litigation pending in the U.S. District Court for the District of Minnesota is still, well – pending.
The case – Thrivent Financial for Lutherans initially brought suit challenging a requirement contained in the fiduciary regulation that Thrivent claimed would effectively prohibit it from requiring individual arbitration to resolve disputes with its members – came to a halt last November when Judge Susan Nelson of the U.S. District Court for the District of Minnesota granted Thrivent’s motion (Thrivent Fin. for Lutherans v. Acosta, 2017 BL 396118, D. Minn., No. 0:16-cv-03289-SRN-DTS, order granting preliminary injunction 11/3/17) for a preliminary injunction – but also granted the Labor Department’s request to temporarily halt the proceedings.
Thrivent had asked the court to declare the requirement in violation of the APA and the FAA, and enter a permanent injunction prohibiting its enforcement. The anti-arbitration provision at issue seeks to restrict financial advisers from requiring retirement savers to waive their right to class litigation, and is part of the fiduciary regulation’s Best Interest Contract Exemption (BICE).
At the time, Nelson explained that halting the case would allow the administrative process to fully develop, possibly resolving the dispute in a more economical and efficient way.
Further Developments
Since then, of course, the U.S. Court of the Appeals for the 5th Circuit has weighed in – albeit in a different jurisdiction, in a different case, and with a different group of plaintiffs – ruling that the Labor Department exceeded its authority in crafting the fiduciary rule, and rejecting it “in toto,” though the filing that finally put the matter to rest didn’t occur until June 21.
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Then last week, Judge Barbara M.G. Lynn – who in February 2017 upheld the fiduciary rule that the 5th Circuit reversed upon appeal – issued an order directing “any party seeking further relief in this action” to notify the court of that intent in writing by July 12. The order concluded by noting that, “If no notice is received, the case will be dismissed with prejudice and without further notice.”
Stay, Still
That apparently drew the notice of both the (still pending litigants) Labor Department and Thrivent, both of whom filed a “joint status report” that agreed “that a continued stay of proceedings is appropriate and anticipate providing a subsequent report to the Court on September 4, 2018.” The status report cited the 5th Circuit’s decision, the June 21 filing, and Judge Lynn’s order.
“Based on the foregoing, the parties agree that the stay of proceedings should continue for the present time and anticipate providing a subsequent report to the Court on September 4, 2018. The parties will inform the Court of any substantive updates in the meantime,” the status report concludes.
Stay tuned.
