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Fiduciary Litigation: Another One Bites the Dust

Plaintiffs seeking to obtain an emergency injunction blocking the Department of Labor’s (DOL) fiduciary regulation were rebuffed again by the U.S. Court of Appeals for the Fifth Circuit.

The denial kept the DOL’s fiduciary litigation streak unblemished.

Not that the judges minced words explaining their decision, choosing simply to categorically deny:

  • The emergency motion for injunction pending appeal

  • The opposed alternative motion to expedite appeal

  • The opposed emergency motion for injunction pending appeal.

Last month plaintiffs in the case, including the U.S. Chamber of Commerce, the Financial Services Institute and the Securities Industry and Financial Markets Association, had asked for a ruling by Judge Barbara M.G. Lynn citing “…their urgent need for relief” — to which she responded with a resounding “no” — a not unexpected response considering her previous ruling in the case.

That ruling came on the same day that the Department of Justice had asked the court to hold off making its decision, citing President Trump’s Feb. 3 administrative memorandum directing the DOL to reevaluate the likely impact of the rule, noting that “it would not serve judicial economy to issue a ruling at this point.”

The case is Chamber of Commerce v. U.S. Dep’t of Labor, 5th Cir., No. 17-10238, order denying emergency motions 4/5/17.

The DOL recently pushed the April 10 applicability date of the fiduciary rule back the widely anticipated 60 days to June 9, and they did provide some additional compliance space on the Best Interest Contract (BIC) Exemption, though the practical impact of the DOL’s positioning is that the new fiduciary rule will become applicable after the 60-day delay, and the BIC Exemption and the Principal Transactions Exemption will be available as of that date, even though these exemptions will “only” require fiduciaries to adhere to the Impartial Conduct Standards for covered transactions.