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DOL’s Stay Request Rejected

The Department of Labor (DOL) has managed to keep its perfect record intact — losing another request to grant a stay in a pending case regarding the fiduciary rule.

The suit, filed last fall by Thrivent Financial for Lutherans in the U.S. District Court for the District of Minnesota, claimed that the requirements of the Best Interest Contract Exemption (the BICE) would, “by its terms and in its effect, require Thrivent either to cease conducting certain business that is beneficial to its Members or to abandon its longstanding commitment to resolving Member disputes amicably and through private, one-on-one mediation and arbitration.”

In their request, the DOL asked for a stay of proceedings and the continuance of the currently scheduled March 3, 2017 summary judgment hearing. The request noted that if a hearing is necessary on the request, they proposed that it occur on March 3, 2017 in lieu of the previously scheduled hearing.

As it had in its previous stay requests in other jurisdictions, the DOL argued that a stay was appropriate because the subject matter of this litigation may soon be substantially revised or even rescinded. Specifically, they cited President Trump’s Feb. 3, 2017 memorandum to the Secretary of Labor directing the Secretary to “examine the Fiduciary Duty Rule” and to “prepare an updated economic and legal analysis” of the Rule, as well as the direction to make an affirmative determination as to its effect on various areas potentially impacted by the regulation, the DOL said it was carefully reviewing the issues raised, “with the immediate goal of deciding the best course of action to implement it.” The request also cited the “Delay of Applicability Date” filed with the Office of Management and Budget on Feb. 9 for interagency review in preparation for publication in the Federal Register.

Thrivent pushed back, pointing out that this court had previously required the party seeking a stay to demonstrate that it will suffer a “specific hardship or inequity if he or she is required to go forward,” and that the DOL hadn’t done that. Moreover, Thrivent argued that the request was based on the “mere possibility of change to the Fiduciary Duty Rule, and that such highly speculative actions are insufficient under this and other courts’ precedent,” and that “the delay and uncertainty caused by a stay would not only harm its interests but the Court’s interest in judicial efficiency, as a later decision by the Secretary of Labor to not change the Rule would require Plaintiff to seek emergency, expedited relief.”

However, Judge Susan Nelson opted to dismiss the request, noting that while she had the discretion to honor it, “…considerations of fairness to the opposing party mandate a presumption in favor of denying a motion to stay.” She went on to acknowledge that the presumption “…may be overcome based on proper facts, but the burden of doing so rests with the movant,” and that “Mere speculation about the possibility of administrative action — especially when compounded by uncertainty regarding what form that action might take — does not discharge that burden.”

Of course, while the DOL’s attempts to obtain stays in these two cases has fallen on deaf ears, it’s undefeated at trial.