On April 6, 2016, the U.S. Department of Labor released its Final Rule addressing when a person providing services to an employee benefit plan or individual retirement account (IRA) is considered to be providing investment advice that is subject to ERISA's fiduciary standard. As discussed in our client alert, available here, the rule expanded the types of communications that are subject to the fiduciary standard, extended fiduciary obligations to IRAs, and added new and revised prohibited transaction exemptions, one of which is the Best Interest Contract Exemption.

The Final Rule and the Best Interest Contract Exemption have generated a firestorm of criticism by small and big businesses alike. To date, there have been five lawsuits filed against the U.S. Department of Labor and the Secretary of Labor challenging the validity and constitutionality of the New Rule and exemptions:

  • The National Association for Fixed Annuities filed suit in the U.S. District Court for the District of Columbia asserting claims under the Administrative Procedures Act, the Regulatory Flexibility Act and the Due Process Clause of the Fifth Amendment. The case is The National Association for Fixed Annuities v. Thomas E. Perez et al., Case No. 16-cv-1035. The case appears to be on a fast track as the court already scheduled briefing on NAFA's motion for a preliminary injunction and for summary judgment. Briefing is currently scheduled to conclude on those motions by August 5, 2016, and a hearing has been scheduled for August 25, 2016.

  • The U.S. Chamber of Commerce, along with a group of financial and business trade groups, filed suit in the U.S. District Court for the Northern District of Texas and asserts claims under the Administrative Procedures Act and First Amendment. The case is Chamber of Commerce of the U.S.A., et al. v. Thomas E. Perez et al., Case No. 16-cv-1476.

  • The American Council of Life Insurers and the National Association of Insurance and Financial Advisors filed suit in the U.S. District Court for the Northern District of Texas asserting claims under the Administrative Procedures Act and First Amendment. The case is American Council of Life Insurers, et al. v. U.S. Department of Labor, et al., Case No. 16-cv-1530.

  • The Indexed Annuity Leadership Council filed suit in the U.S. District Court for the Northern District of Texas asserting claims that the DOL exceeded its statutory authority, violations of the Administrative Procedures Act and the First Amendment. The case is Indexed Annuity Leadership Council v. Thomas E. Perez et al., Case No. 16-cv-1537.

  • Market Synergy Group Inc., a Kansas-based insurance firm, filed suit in the U.S. District Court for District of Kansas asserting claims under the Administrative Procedure Act and the Regulatory Flexibility Act. The case is Market Synergy Group Inc. v. U.S. Department of Labor, et al., Case No. 16-cv-40830.

Should a conflict develop among the lower courts (as in the case of challenges to the Affordable Care Act), Supreme Court review would become likely.