Federal Court Decision Again Denies Fiduciary Rule Injunction

The U.S. Circuit Court of Appeals for the District of Columbia has flatly denied to grant an emergency preliminary injunction prior to its hearing of an appeal by the National Association for Fixed Annuities (NAFA), which is seeking to bar the implementation of the Department of Labor (DOL) conflict of interest rule via the federal courts. 

The U.S. District Court for the District of Columbia has already rejected the claims of the anti-fiduciary rule lawsuit filed by NAFA, which had asked the court for “declaratory, injunctive, and other appropriate relief” that would have halted the implementation of the DOL rulemaking.

The underlying suit seeks relief under the Regulatory Flexibility Act (RFA), suggesting the DOL conflict of interest rule, with its sweeping advice reforms, moves far too quickly to install overly broad restrictions to currently accepted business practices. “Specifically, in promulgating the Rule and the Exemptions, the Department exceeded the authority granted to it by Congress under ERISA, the Code, and Reorganization Plan No. 4 of 1978,” the suit contends. “In addition, the Rule and the Exemptions are arbitrary and capricious, not in accordance with law, impermissibly vague, and otherwise promulgated in violation of federal law.”

NAFA’s arguments did not succeed before the district court, and now it appears the challenge may do no better before the appeals court. This week the appeals court essentially rebuked NAFA’s request for an emergency injunction to halt the rulemaking from taking effect next April. The denial comprises just a few short sentences, in fact, suggesting NAFA has no claim to an injunction. 

“Upon consideration of the emergency motion for an injunction pending appeal, the opposition thereto, and the reply, it is ordered that the emergency motion for an injunction pending appeal be denied,” the appellate judges write. “The appellant has not satisfied the stringent requirements for an injunction pending appeal. See Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008); D.C. Circuit Handbook of Practice and Internal Procedures 33 (2016).”

It remains to be seen whether the NAFA appeal will do any better during the actual trail, but the initial denial of preliminary injunction shows it will not be an easy task. A variety of arguments were leveled before the district court, but clearly they did not prevail, given that the D.C. District Court opposed NAFA’s dual requests for preliminary injunction and summary judgment. Instead, the court actually granted the DOL’s cross-motion for summary judgment, which argued naturally that all of the tenets of the rulemaking fit squarely within the DOL’s existing authority.