A federal judge has denied the Labor Department’s motion to move a suit involving the so-called ESG regulation from a federal court in Texas to Washington, DC.
U.S. District Judge Matthew J. Kacsmaryk denied the Department of Labor’s (DOL) motion (State of Utah et al. v. Walsh et al., case number 2:23-cv-00016, in the U.S. District Court for the Northern District of Texas), ruling that the agency fell "well short" of meeting its burden of “good cause” to establish that transfer to a different judicial venue would be “for the convenience of parties and witnesses, in the interest of justice.”
He noted that in making that determination there were four private interest factors and four public interest factors to be considered: (1) the relative ease of access to sources of proof; (2) availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; (4) other practical problems that make trial of a case easy, expeditious and inexpensive; (5) administrative difficulties flowing from court congestion; (6) local interest in having localized interests decided at home; (7) familiarity of the forum with the law that will govern the case; and (8) avoidance of conflict of laws problems or application of foreign law.
‘Texas Resides Everywhere in Texas’
While the DOL had argued that none of the plaintiffs who brought suit resided in the district where the suit was filed, Judge Kacsmaryk, acknowledging that the State of Texas was one of the original 25 states filing suit, noted that “Texas resides everywhere in Texas” — also commenting that one of the individual parties (an Amarillo, Texas resident — Alex L. Fairly — had been added[1] as a plaintiff subsequent to the filing of the original motion) did, in fact, live in the district and has “for the past 35 years.” The coalition, led by Texas Attorney General Paxton, had said in a press release that the 2022 Rule “undermines key protections for retirement savings of 152 million workers — approximately two-thirds of the U.S. adult population and totaling $12 trillion in assets — in the name of promoting environmental, social, and governance (‘ESG’) factors in investing, including the Biden Administration’s stated desire to address climate change.” The suit claimed that “the 2022 Rule oversteps the Department’s statutory authority under the Employee Retirement Income Security Act of 1974 (‘ERISA’), 29 U.S.C. § 1001 et seq., and is contrary to law” — and comments that “the 2022 Rule is also arbitrary and capricious.”
Judge Kacsmaryk noted that the only rationale provided for the change in venue by the DOL was that “the challenged policy ‘was conceived and promulgated in Washington, D.C. and the administrative record — upon which this APA case will be decided — is also located there” — and that as no witnesses or physical evidence outside the Texas district had been noted, nor had any specific witnesses unwilling to testify there, or any other practical problems noted, there was no justification for the move. Moreover, he commented that “the Court doubts the costs of attendance in the Amarillo Division weighs in favor of transfer when compared to Washington, D.C.” He went on to explain that there had been no allegations of case volumes (“docket congestion”) to warrant removal, and that “this is not the sort of ‘localized case’ where the citizens of Washington, D.C. have a greater ‘stake’ in the litigation than the residents of Amarillo.”
‘Judge-Shopping’
Judge Kacsmaryk noted that the DOL had accused the plaintiffs of “judge-shopping” and contend the practice "undermines public confidence in the judicial system, rewards gamesmanship, and overworks certain members of the judiciary at the expense of the random assignment system functioning as intended,” but rebuffed that notion, reminding that two of the named plaintiffs do, in fact, reside in that district. “Defendants do not explain how simply filing cases in a District where venue is proper and then prosecuting the case can be considered ‘manipulation of the assignment process,’” he wrote.
“Defendants made only minimal attempts to show good cause to transfer under the identified factors. And the Court has found that none of those factors weigh in favor of transfer. Thus, Defendants cannot show good cause by arguing transfer is warranted under a nonenumerated ninth factor: an amicus brief filed by a professor with a Twitter account.” He continued, “Section 1404 does not require the Court to guess as to Plaintiffs' subjective motivations for choosing the forum.”
“In sum,” Judge Kacsmaryk concluded, “Defendants propose an unprecedented and unworkable standard for motions to transfer that would turn Section 1404 analysis on its head. The Court rejects this approach and must therefore deny the Motion.”
Stay tuned.
Footnote
[1] The State of Oklahoma has now also joined in the suit.
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