Chamber of Commerce v. U.S. Department of Labor (Fiduciary Rule Appeal)

Case Updates

The U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, and Securities Industry and Financial Markets Association released the following statement on a decision in favor of the plaintiffs by the Fifth Circuit regarding a legal challenge to the Department of Labor’s fiduciary rule:

“The court has ruled on the side of America’s retirement savers, preserving access to affordable financial advice. Our organizations have long supported the development of a best interest standard of care and the Securities and Exchange Commission should now take the lead on a clear, consistent, and workable standard that does not limit choice for investors.”

The majority of a Fifth Circuit panel agreed with the Chamber that the DOL vastly exceeded its authority under ERISA and invalidated both its sweeping and novel definition of fiduciary and also the DOL’s related exemptive rules that were tied to the fiduciary rule. The ruling is a significant victory for financial-services companies, insurance companies, and individuals saving for retirement who otherwise would face reduced investment choice and access to advice and increased costs.

Click here to view the order denying the Chamber's emergency motion for injunction pending appeal.

Click here to view the motion.

The U.S. Chamber, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, and Securities Industry and Financial Markets Association filed a notice of appeal to the Fifth Circuit challenging the Department of Labor’s (“DOL”) so-called “Fiduciary Rule.” Among other things, the Rule provides that exemptive relief will not be available if a financial firm or representative has an arbitration agreement with a customer that includes a class action waiver. The Chamber alleges that this prohibition of class waivers violates the FAA.

The co-plaintiffs issued the following statement on their notice of appeal:

“We remain confident in the merits and strength of our case and stand by our assertion that the Department of Labor exceeded its authority. We have long supported a best interest standard, adopted by the appropriate regulatory authority and across all individual investor accounts, not just retirement. This is a misguided rule that will harm retirement savers and financial services firms that provide needed assistance and options to their clients, including modest savers and small business employees. Further, the ‘private right of action’ mechanism creates unwarranted litigation risk for financial advisors, who will face the threat of meritless class action lawsuits challenging their every move.”

The five national co-plaintiffs filed the appeal in conjunction with the Greater Irving-Las Colinas Chamber of Commerce, Lake Houston Area Chamber of Commerce, Lubbock Chamber of Commerce, and Texas Association of Business.

Eugene Scalia, Jason J. Mendro, and Paul Blankenstein of Gibson, Dunn & Crutcher LLP served as counsel for the U.S. Chamber.