DOL Files to Delay Fiduciary Rule

The nine plaintiffs in the Texas case are represented by former Labor Department solicitor Eugene Scalia, who's a partner in Gibson, Dunn & Crutcher's Washington office and a son of deceased Supreme Court Justice Antonin Scalia.

In a joint statement, the co-plaintiffs said: "We continue to believe that the Department of Labor exceeded its authority, and we will pursue all of our available options to see that this rule is rescinded." President Donald Trump's recent directive to the department to review the rule is "reflecting well-founded, ongoing and significant concerns about the rule, [and] is a welcome development."

Said Lynn in her ruling: "In contrast to the situations in the cases cited by Plaintiffs, in [the Employee Retirement Income Security Act] Congress did speak clearly, and assigned the DOL the power to regulate a significant portion of the American economy, which the DOL has done since the statute was enacted."

Congress, Lynn said, "gave the DOL broad discretion to use its expertise and to weigh policy concerns when deciding how best to protect retirement investors from conflicted transactions."

Trump signed an executive order on Feb. 3 directing the Labor Department to undertake an assessment of its fiduciary rule, and if it deems appropriate, a proposal to revise the rulemaking, which industry officials say would delay the rule's April 10 effective date. 

Acting Labor Secretary Ed Hugler said in a statement the same day that the DOL would "consider its legal options to delay the applicability of the date as we comply with the president's memorandum."