DOL Seeks Pause of Fiduciary Rule Stay Appeal

Department of Labor had filed notices of appeal in September 2024 regarding two federal court rulings that had stayed implementation of the expanded fiduciary rule. 

The Department of Labor Tuesday filed a motion in the U.S. 5th Circuit Court of Appeals to delay its appeals in two court cases about the department’s 2024 Retirement Security Rule fiduciary rule, saying the new administration and agency officials need time to onboard and familiarize themselves with the cases.

In the Unopposed Motion to Hold Consolidated Appeals in Abeyance, the government noted that the parties opposing the rule, often called the fiduciary rule, led by the American Council of Life Insurers and the Federation of Americans for Consumer Choice, do not oppose the motion.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

Notices of appeal had been filed by the DOL in September 2024 in U.S. District Court for the Northern District of Texas and U.S. District Court for the Eastern District of Texas, Tyler Division, with a full appeal to the U.S. 5th Circuit Court of Appeals pending after two district court rulings stayed the effective date of the fiduciary rule regulation. 

“To allow new DOL officials sufficient time to become familiar with the issues in these cases and determine how they wish to proceed, the government respectfully moves to place these consolidated appeals in abeyance, with status reports due at 60-day intervals,” the agency said.

“In the event this Court denies the motion for an abeyance, all parties jointly request a one-week extension, to and including February 21, 2025, for appellees to file their response briefs,” the filing continued.

History of the Fiduciary Rule Battle

The 2024 fiduciary rule was the DOL’s second attempt in the past decade to bring retirement investment advice, including individual retirement account rollovers and small employer-plan advisement, under fiduciary obligation. The rule had been finalized with a September 23, 2024, start date but hit legal roadblocks from complaints filed by industry firms and member organizations. 

The Northern District of Texas put a national stay on the rule in a July 26, 2024, opinion in American Council of Life Insurers v. DOL. One day prior to that ruling, the Eastern District of Texas had also granted a stay for the plaintiffs in a separate caseFederation of Americans for Consumer Choice Inc. et al. v. DOL et al

In 2018, the 5th Circuit, which hears appeals from federal courts in Louisiana, Mississippi and Texas, invalidated a DOL fiduciary rule in Chamber of Commerce v. U.S. Department of Labor. The DOL argued that the rule currently being challenged is different, in part because it more clearly addresses when retirement plan rollover advice and annuity sales fall under fiduciary guidance. 

U.S. District Judge Reed C. O’Connor, however, presiding in the Northern District of Texas, wrote in granting the stay that Chamber played a role in his decision. 

“As a whole, Defendants’ arguments [against the lawsuit] are nothing more than an attempt to relitigate  the Chamber decision,” O’Connor wrote. “Because the Fifth Circuit’s Chamber decision unambiguously forecloses all of Defendant’s arguments, the Court need not repeat why those arguments fail here.”

Daniel Aronowitz Nominated to Head EBSA

President Donald Trump’s nomination of Aronowitz, an expert on fiduciary liability insurance, was received in the Senate on Tuesday.

Daniel Aronowitz, president of Encore Fiduciary, was nominated on Tuesday to become the next assistant secretary of labor and lead the Employee Benefits Security Administration.

Daniel Aronowitz

The nomination was received in the Senate and referred to the Committee on Health, Education, Labor and Pensions. The same committee, which had scheduled a confirmation hearing for today on former Representative Lori Chavez-DeRemer, Trump’s nominee for secretary of labor, this morning postponed that hearing to February 19 due to a snowstorm in Washington, D.C.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

Aronowitz’s nomination comes after Lisa Gomez, the previous assistant secretary of labor for employee benefits security, resigned from her post with the change in administration.

EBSA is responsible for enforcement of the Employee Retirement Income Security Act and related laws and regulations, along with protecting employer-based retirement, health and welfare benefits for workers and retirees. The EBSA head must be confirmed by the full Senate.

Aronowitz has 30 years of experience in the professional liability industry as a coverage lawyer and underwriter. He is a graduate of the Ohio State University and Vanderbilt University Law School and has achieved the RPLU+ designation from the Professional Liability Underwriting Society.

Aronowitz co-authored an op-ed in PLANADVISER, a sister publication of PLANSPONSOR, last month, discussing the high frequency of ERISA excessive fee class action lawsuits that have come out in the last year.

His firm has tracked ERISA-related litigation for about a decade, and he has served as president of Encore Fiduciary for more than 13 years.

«