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COURTS

Labor Department wins a fiduciary rule challenge, asks for stay in another

The Labor Department prevailed in another courtroom challenge to its fiduciary rule on Feb. 17 when U.S. District Court Judge Daniel Crabtree in Topeka, Kan., granted it summary judgment in a lawsuit filed by insurance agency Market Synergy Group.

The challenge centered on how fixed-indexed annuities would fare under the new rule's standards for best interest contract exemptions as well as the Department of Labor's rulemaking authority overall.

Mr. Crabtree noted in his order that his reasons were the same as when he denied the group's motion for preliminary injunction on Nov. 28. “First, the court determined that plaintiff is not likely to prevail on the merits of its claims that the DOL violated” two federal regulatory process laws. “The court also found that plaintiff could not establish irreparable harm, that the balance of equities tips in its favor or that an injunction is in the public interest,” Mr. Crabtree said.

The Department has won favorable court rulings in similar District Court challenges in Dallas and Washington. Since then, the White House on Feb. 3 issued an executive memorandum that DOL reconsider the fiduciary rule, and DOL proposed Feb. 9 to delay the rule's April 10 applicability date.

The Department of Labor is now seeking a stay in another fiduciary rule challenge in District Court in St. Paul, Minn. “In light of the potential for change to the rulemaking, there is good cause to … stay proceedings pending the outcome of the department's review,” Department of Justice attorney Galen Thorp, DOL's representative in the case, wrote to District Court Judge Susan Richard Nelson.