A Minnesota federal judge has issued a preliminary injunction against the Labor Department's fiduciary rule, but also has granted a stay in the case.
In a
Nov. 3 decision, U.S. District Judge Susan Richard Nelson held that Thrivent Financial for Lutherans had demonstrated that it would suffer irreparable harm under the provision of the DOL fiduciary rule that allows class-action lawsuits by investors.
Thrivent argued in its suit, which was
filed in September 2016, that it could be penalized by the DOL for offering its current line of insurance products because its contracts with clients prevent them from joining class actions. Ms. Nelson ruled that the class-action provision of the DOL rule could not be enforced against Thrivent until the conclusion of the litigation.
At the same time, she granted a stay in the case that the DOL requested. The agency is reviewing the rule, which requires brokers to act in the best interests of their clients in retirement accounts. The
reassessment of the rule, ordered by President Donald J. Trump, could lead to major revisions in its enforcement mechanisms, including the class-action piece. In fact, DOL
signaled in August that it would no longer defend the class-action provision.
"Staying this matter will allow the administrative process to fully develop, possibly resolving this dispute, and thereby promoting judicial economy," Ms. Nelson wrote in her opinion. "Moreover, in light of Thrivent's injunctive relief, Thrivent will not be prejudiced by the entry of a stay at this time."
The rule also is the target of a lawsuit by industry opponents that is now being considered by the Fifth Circuit Court of Appeals in New Orleans. It's not clear when a ruling will be handed down in that case.
The DOL rule was
partially implemented in June. Last week, the DOL sent to the Office of Management and Budget a
final rule to delay implementation of the remaining parts of the measure from Jan. 1, 2018, to July 1, 2019. The OMB must approve the delay and send it back to DOL, which will then release it publicly.
