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The DOL is removing documents it once filed in court to support the fiduciary rule’s anti-arbitration condition, which is intended to prevent investors from pursuing class litigation against financial advisers ( Thrivent Fin. for Lutherans v. Acosta , D. Minn., No. 0:16-cv-03289, letter to the district judge 7/14/17 ).
The move comes almost two weeks after the Labor Department announced that it will no longer defend the validity of the best-interest-contract exemption’s condition restricting class litigation waivers as it applies to arbitration agreements. That announcement could have a major effect in a case brought by Thrivent Financial for Lutherans, a financial advisory firm that accused the agency of exceeding its statutory authority by attempting, with its new fiduciary rule, to force all disputes into federal court rather than allowing for alternative dispute resolution methods.
In light of the DOL’s change in position, the agency withdrew its cross-motion for summary judgment in the Thrivent case, the agency said in a letter filed July 14. The DOL also renewed a request to stay of litigation, the agency said. A previous request to stay the case was denied by the court earlier this year.
The DOL is currently reviewing its fiduciary rule in line with President Donald Trump’s directive. The department no longer defends the rule’s anti-arbitration condition and won’t enforce it either, the letter said.
In the event the court doesn’t stay the case, the agency said that it wouldn’t oppose the court’s granting summary judgment to Thrivent, vacating the best-interest-contract exemption as applied to arbitration agreements entered into by the financial firm, the letter said.
Thrivent already said it will oppose a renewed request to stay the case as “inappropriate.” The DOL’s change of position supports an entry of judgment in Thrivent’s favor, not an indefinite stay of this matter, according to the firm. Staying the case would only “prolong Thrivent’s business uncertainty about its compliance obligations, in a manner that would be highly prejudicial to Thrivent,” the company said in a letter filed in court earlier this month.
The DOL didn’t immediately respond to Bloomberg BNA’s request for comments.
Cozen O’Connor and Greene Espel PLLP represent Thrivent. The Department of Justice, Civil Division, represents the DOL.
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