Texas Court Narrows Circle of ‘Friends’ in Fiduciary Case

By Nevin Adams • September 07, 2016 • 0 Comments
Apparently the Texas judge presiding over the challenge to the Labor Department’s fiduciary regulation only wants so much help in considering the issues.

District Judge Barbara M.G. Lynn has issued an order stating that she will only consider amicus curiae (“friend of the court”) briefs filed by the Financial Planning Coalition (FPC) and the American Association for Justice (AAJ) – both of which are supportive of the Labor Department’s fiduciary regulation.

Such filings, by a party with strong interest in or views on the subject matter of an action, but not a party to the action, are common, both to indicate support for a particular position, and in some cases to offer alternative factors in support of a position for judicial consideration.

Judge Lynn is well within her rights to do so and, according to the order she apparently feels that the parties directly involved “are represented by sophisticated counsel, and the court has granted generous page allocations for briefing.”

Indeed, three separate suits challenging the Labor Department regulation have been combined in the hearing scheduled for Nov. 17 in the Northern District of Texas, with a large number of plaintiffs, including the American Council of Life Insurers, the National Association of Insurance and Financial Advisors (NAIFA) and six NAIFA chapters in Texas, the Indexed Annuity Leadership Council (IALC), and several providers of these insurance products, the Chamber of Commerce of the United States of America, the Financial Services Institute, Inc., the Financial Services Roundtable, the Greater Irving-Las Colinas Chamber of Commerce, the Humble Area Chamber of Commerce DBA Lake Houston Area Chamber of Commerce, the Insured Retirement Institute, the Lubbock Chamber of Commerce, the Securities Industry and Financial Markets Association, and the Texas Association of Business.

No Repeats

Judge Lynn apparently felt that the Financial Planning Coalition’s motion should be granted because its proposed brief provides a unique perspective as “the lone amicus representative of financial professionals in the United States already operating under a fiduciary standard.” Consequently, she said that not only is it “able to provide a practical perspective different from that of the parties,” the coalition’s “brief does not repeat arguments made by either party.”

As for the American Association for Justice’s motion, Judge Lynn explained that “AAJ’s brief focuses on a narrow legal issue related to the Federal Arbitration Act and does not repeat arguments made by other parties.” Essentially, the 23-page brief takes the position that the contract requirements in the Best Interest Contract Exemption and the Principal Transactions Exemption do not violate the Federal Arbitration Act.