The Department of Justice has requested a stay in the lawsuit against the Labor Department's fiduciary rule
brought by Thrivent Financial, just one week after another court denied the department's request for a stay against the rule in a separate case.
A letter from Galen N. Thorp, one of the DOJ attorneys defending the rule against industry lawsuits, to Minnesota district court judge Susan Richard Nelson on Feb. 15 asks for a stay in legal proceedings "pending the results of the review directed by the President."
President Donald J. Trump in early February
directed the Department of Labor to review the rule, which requires brokers and advisers to give retirement investment advice that's in clients' best interests.
Mr. Thorp proposed reporting back to the court on May 15 to "update the Court on the Department's actions and address whether a continued stay is warranted."
RULE CHANGE?
The letter infers the new administration may change the fiduciary rule, and it may not make sense to fight over a regulation that could be changed in the future, Merril Hirsh, a partner at law firm Troutman Sanders, said.
"It's not unusual to request a stay if the agency is considering doing something different," said Mr. Hirsh, a former trial attorney at the Justice Department.
An oral argument in the Thrivent suit — Thrivent Financial for Lutherans v. Edward C. Hugler et al — is currently scheduled for Mar. 3.
The request comes exactly one week after Judge Barbara M.G. Lynn in Texas
denied plaintiffs' motion for a stay in what has been considered the most significant of several lawsuits filed against the rule, and ruled in favor of the DOL.
While the Minnesota judge in the Thrivent case "isn't bound by what a judge in Texas does," it could persuade the judge's decision to grant or not grant the stay, Mr. Hirsh said.
The DOL has
won three legal battles against its fiduciary rule to date.
The challenge brought by Thrivent, an organization that provides financial services to Christians, is "probably the most narrowly tailored lawsuit" of the bunch, said Duane Thompson, senior policy analyst at fi360 Inc., a fiduciary consulting firm.
Whereas the Texas suit, for example, wanted to effectively "throw out everything" about the fiduciary rule, Thrivent is challenging the rule's best-interest contract exemption by seeking an injunction against its class-action provision.
