Attorneys General Appeal for Right to Intervene in Support of DOL Fiduciary Guidance

The states’ Attorneys General of California, New York, and Oregon yesterday (May 16) filed an appeal of their recent setback in litigation over the Department of Labor (DOL) fiduciary investment advice guidance. The U.S. Fifth Circuit Court of Appeals ruled in March 2018 that the DOL’s fiduciary guidance had gone beyond the agency’s authority and vacated—essentially nullified—the DOL’s final regulations and related exemptions in their entirety.

Background and New Filing

When the DOL failed to appeal this ruling, these three states and the American Association of Retired Persons (AARP) filed a motion on April 26 seeking the right to intervene in support of the DOL fiduciary guidance on the grounds that investors and the states would be harmed by the Appeals Court’s action vacating it. On May 2, this joint request for the right to intervene in support of the guidance was denied by the Fifth Circuit Court.

Yesterday (May 16, 2018) was the deadline for an appeal of this denial, and as noted earlier, the three Attorneys General did file another appeal yesterday asking the Fifth Circuit Court of Appeals to reconsider its May 2 decision. This appeal, however, does not include the AARP.

Possible Consideration by Full 15-Member Appeals Court

The March ruling that vacated the DOL fiduciary guidance was rendered by a three-judge panel, rather than the full membership of judges (15) on the Fifth Circuit Appeals Court. The states would ultimately prefer to make their case for retaining the DOL fiduciary guidance before the entire 15-member Appeals Court. The Attorneys General wrote in their filing, “If the panel declines to reconsider its order denying intervention, the States ask that the Court direct the Clerk to permit the filing of a petition seeking review of that order by the full Court.”

What Next?

If this attempt by the states to intervene on behalf of the fiduciary guidance fails, it appears that the only step that could be taken to preserve the fiduciary guidance would be for the DOL itself to appeal to the U.S. Supreme Court.  Given the DOL’s decision not to appeal at the Circuit Court level, there is no reason to believe it would do so.