Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 1 of 17 PageID 10273 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA, et al., v. Plaintiffs, EDWARD C. HUGLER, ACTING SECRETARY OF LABOR, and UNITED STATES DEPARTMENT OF LABOR, Defendants. Civil Action No. 3:16-cv-1476-M Consolidated with: 3:16-cv-1530-C 3:16-cv-1537-N DEFENDANTS OPPOSITION TO PLAINTIFFS MOTIONS FOR INJUNCTION PENDING APPEAL
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 2 of 17 PageID 10274 TABLE OF CONTENTS TABLE OF CONTENTS... i TABLE OF AUTHORITIES... ii INTRODUCTION... 1 BACKGROUND... 1 ARGUMENT... 3 I. Plaintiffs Have Not Shown Likelihood of Success on the Merits.... 3 II. Plaintiffs Have Not Established That Irreparable Harm Is Likely to Occur in the Next Few Weeks... 6 III. The Public Interest Weighs Strongly Against an Injunction... 9 CONCLUSION... 11 i
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 3 of 17 PageID 10275 TABLE OF AUTHORITIES Cases Page(s 35 Bar & Grille, LLC v. City of San Antonio, 943 F. Supp. 2d 706 (W.D. Tex. 2013... 9 Am. Hosp. Ass n v. Harris, 625 F.2d 1328 (7th Cir. 1980... 6, 8 Aransas Project v. Shaw, No. C-10-75, 2010 WL 2787832 (S.D. Tex. July 14, 2010... 5 Bennett v. Donovan, 703 F.3d 582 (D.C. Cir. 2013... 10, 11 Chamber of Commerce v. Hugler, _ F. Supp. 3d _, 2017 WL 514424 (Feb. 8, 2017...2, 5, 10 Def. Distributed v. U.S. Dep t of State, 838 F.3d 451 (5th Cir. 2016... 3, 9 Elite Rodeo Ass n v. Prof l Rodeo Cowboys Ass n, 159 F. Supp. 3d 738 (N.D. Tex. 2016... 3, 6 Elrod v. Burns, 427 U.S. 347 (1976... 8 Fantasy Ranch, Inc. v. City of Arlington, No. 3:03-CV-0089-R, 2004 WL 2974269 (N.D. Tex. Dec. 20, 2004... 6 Frew v. Gilbert, No. 3:93CV65, 2000 WL 33795091 (E.D. Tex. Oct. 10, 2000... 4, 5 FTC v. Standard Oil Co., 449 U.S. 232 (1980... 10 Hohe v. Casey, 868 F.2d 69 (3d Cir. 1989... 8 In re Westwood Plaza Apts., 150 B.R. 163 (Bankr. E.D. Tex. 1993... 4 Janvey v. Alguire, 647 F.3d 585 (5th Cir. 2011... 3 Johnson v. New Orleans Jazz & Heritage Found., Inc., No. 99-1409, 1999 WL 299017 (E.D. Tex. May 10, 1999... 6, 7 KH Outdoor, L.L.C. v. Trussville, 458 F.3d 1261 (11th Cir. 2006... 8 La Union Del Pueblo Entero v. FEMA, 141 F. Supp. 3d 681 (S.D. Tex. 2015... 9 Mack Trucks, Inc. v. EPA, 682 F.3d 87 (D.C. Cir. 2012... 9 Market Synergy Group, Inc. v. U.S. Dep t of Labor ( Market Synergy I, No. 16-4083, 2016 WL 6948061 (D. Kan. Nov. 28, 2017...2, 5, 11 Market Synergy Group, Inc. v. U.S. Dep t of Labor ( Market Synergy II, No. 16-4083, 2017 WL 661592 (D. Kan. Feb. 17, 2017...2 ii
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 4 of 17 PageID 10276 Nat l Ass n of Fixed Annuities v. Perez ( NAFA I, No. 16-1035, 2016 WL 6573480 (D.D.C. Nov. 4, 2016...2, 5 Nat l Ass n of Fixed Annuities v. Perez ( NAFA II, No. 16-1035, 2016 WL 6902113 (D.D.C. Nov. 23, 2016...2, 4, 9, 11 Nat l Ass n of Fixed Annuities v. Perez, No. 16-5345 (D.C. Cir. Dec. 15, 2016...2 Nken v. Holder, 556 U.S. 418 (2009... 3, 4, 8 Reliable Automatic Sprinkler Co. v. Consumer Prod. Safety Comm n, 324 F.3d 726 (D.C. Cir. 2003... 11 Ruiz v. Estelle ( Ruiz I, 650 F.2d 555 (5th Cir. 1981... 4 Ruiz v. Estelle ( Ruiz II, 666 F.2d 854 (5th Cir. 1982... 4, 5 Texans for Free Enter. v. Tex. Ethics Comm n, 732 F.3d 535 (5th Cir. 2013... 8 Texas v. Seatrain Int l, S.A., 518 F.2d 175 (5th Cir. 1975... 9, 10 United States v. Emerson, 270 F.3d 203 (5th Cir. 2001... 6 Winter v. Nat l Res. Def. Council, Inc., 555 U.S. 7 (2008... 3, 6 Statutes & Regulations 9 U.S.C. 2... 2 29 U.S.C. 1132... 8 29 U.S.C. 1203...8 29 U.S.C. 1204... 8 29 C.F.R. 2570.35... 8 45 Fed. Reg. 28,545 (Apr. 29, 1980...8 71 Fed. Reg. 17,917 (Apr. 7, 2006...8 81 Fed. Reg. 20,946 (Apr. 8, 2016... 2, 10 81 Fed. Reg. 21,002 (Apr. 8, 2016... 2, 3 82 Fed. Reg. 9,675 (Feb. 7, 2017... 2, 10 iii
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 5 of 17 PageID 10277 82 Fed. Reg. 12,319 (Mar. 2, 2017... passim Reorg. Plan No. 4 of 1978, 105 (codified at 5 U.S.C. App. 1...8 Dep t of Labor, Field Assistance Bulletin 2017-01 (Mar. 10, 2017...3, 7, 8, 9 iv
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 6 of 17 PageID 10278 INTRODUCTION This Court has already granted summary judgment to DOL on all grounds in this case, declining to enjoin the challenged rulemaking under ERISA regarding fiduciary investment advice. Plaintiffs now ask for the extraordinary remedy of an injunction pending appeal. Plaintiffs motions should be denied out of hand, as they provide no reason to suggest that their claims are any more likely to prevail on appeal than on summary judgment. And there is more: the extraordinary relief Plaintiffs request is unnecessary, as DOL is already considering accommodations that could provide relief to Plaintiffs and the rest of the industry. Specifically, DOL is reviewing public comments responding to its own proposal as to whether, and for how long, to defer the applicability date of the rulemaking in light of the President s direction to DOL to examine and potentially rescind or revise the rulemaking. These are, of course, the central questions Plaintiffs present in their injunction motions. DOL has also tempered any uncertainty regarding the rulemaking s applicability date by issuing a formal policy of temporary non-enforcement of the rulemaking. The policy covers any gap period in which the rule may become applicable before a delay is implemented and, if DOL s decision is not to delay the rule, the policy provides for a reasonable period of time for compliance after such a decision. DOL has broad discretion, well-recognized by the courts, to balance competing interests through rulemaking under ERISA. This Court should give DOL time to exercise that discretion through the ordinary administrative process to ensure that DOL s ultimate decision with respect to this rulemaking serves and is made on the basis of information from the entire affected public, not just a handful of disappointed litigants. BACKGROUND DOL s final rule and accompanying exemptions regarding fiduciary investment advice is set to become applicable April 10, 2017, with a further transition period until January 1, 2018 for 1
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 7 of 17 PageID 10279 certain exemption provisions. See, e.g., Final Rule, Definition of the Term Fiduciary ; Conflict of Interest Rule Retirement Investment Advice, 81 Fed. Reg. 20946, 20992-93 (Apr. 8, 2016; Best Interest Contract Exemption, 81 Fed. Reg. 21002, 21069-70, 21084 (Apr. 8, 2016. The rulemaking has already been upheld by this Court as within DOL s authority. See ECF Nos. 43, 137; Chamber of Commerce v. Hugler, _ F. Supp. 3d _, 2017 WL 514424 (Feb. 8, 2017. 1 On February 3, 2017, the President directed the Secretary of Labor to examine the Fiduciary Duty Rule and to prepare an updated economic and legal analysis of the Rule in regard to, inter alia, three enumerated considerations. See Mem. on Fiduciary Duty Rule, 82 Fed. Reg. 9675 (Feb. 7, 2017. The President further directed that if the Secretary make[s] an affirmative determination as to any one of the [enumerated] considerations, or for any other reason after appropriate review, he shall publish for notice and comment a proposed rule rescinding or revising the Rule, as appropriate and as consistent with law. Id. DOL has initiated a notice-and-comment process to assist in the review as directed by the President. See Proposed Rule, Definition of Term Fiduciary; Conflict of Interest Rule Retirement Investment, 82 Fed. Reg. 12319, 12323 (March 2, 2017. Concurrently, DOL also proposed extending the April 10, 2017 applicability date for the rulemaking, and is reviewing comments received through March 17, 2017 on that proposal. See id. at 12320. To minimize public uncertainty, on March 10, 2017, DOL also announced a temporary policy of non- 1 Indeed, courts have granted summary judgment to DOL in two other cases challenging the same rulemaking. See Market Synergy Group, Inc. v. U.S. Dep t of Labor ( Market Synergy II, No. 16-4083, 2017 WL 661592 (D. Kan. Feb. 17, 2017; Nat l Ass n of Fixed Annuities v. Perez ( NAFA I, No. 16-1035, 2016 WL 6573480 (D.D.C. Nov. 4, 2016. In both of these cases, the courts also denied plaintiffs motions for injunctions pendente lite. See Market Synergy Group, Inc. v. U.S. Dep t of Labor ( Market Synergy I, No. 16-4083, 2016 WL 6948061 (D. Kan. Nov. 28, 2017 (denying preliminary injunction; Nat l Ass n of Fixed Annuities v. Perez ( NAFA II, No. 16-1035, 2016 WL 6902113 (D.D.C. Nov. 23, 2016, aff d, No. 16-5345 (D.C. Cir. Dec. 15, 2016 (denying injunction pending appeal. A summary judgment decision is pending in Thrivent Financial for Lutherans v. Perez, No. 16-3289 (D. Minn., which challenges only one exemption condition under the Federal Arbitration Act, 9 U.S.C. 2. 2
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 8 of 17 PageID 10280 enforcement. See Field Assistance Bulletin 2017-01 ( Bulletin (attached as Appendix A. Under that policy, DOL will focus on compliance assistance and will not initiate enforcement actions regarding any gap period in which the rulemaking may become applicable before a delay is implemented and, if DOL s decision on the proposal is not to delay the rule, the policy provides for a reasonable period of time for compliance after such a decision is published. See id. 2 ARGUMENT Injunctive relief is an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief. Winter v. Nat l Res. Def. Council, Inc., 555 U.S. 7, 22 (2008. Plaintiffs bear the burden of showing that they satisfy each of [the four injunction] elements. Def. Distributed v. U.S. Dep t of State, 838 F.3d 451, 456-57 (5th Cir. 2016. 3 They must therefore establish: (1 a substantial likelihood of success on the merits, (2 a substantial threat of irreparable injury if the injunction is not issued, (3 that the threatened injury if the injunction is denied outweighs any harm that will result if the injunction is granted, and (4 that the grant of an injunction will not disserve the public interest. Janvey v. Alguire, 647 F.3d 585, 595 (5th Cir. 2011. Plaintiffs have not carried their burden for this extraordinary and drastic remedy. Elite Rodeo Ass n v. Prof l Rodeo Cowboys Ass n, 159 F. Supp. 3d 738, 743 (N.D. Tex. 2016. I. PLAINTIFFS HAVE NOT SHOWN LIKELIHOOD OF SUCCESS ON THE MERITS. To begin, Plaintiffs cannot make the requisite strong showing that [they are] likely to succeed on the merits on appeal. Nken v. Holder, 556 U.S. 418, 434 (2009. The Chamber 2 DOL s temporary enforcement policy also stated that if DOL decided not to delay the rule, it will treat the 30-day cure period established in the two contract exemptions for furnishing disclosure, see, e.g., 81 Fed. Reg. at 21085, as available to entities that did not provide the disclosures to retirement investors as of April 10, 2017. 3 Hereinafter, internal citations, quotations, and alterations are omitted unless otherwise indicated. 3
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 9 of 17 PageID 10281 Plaintiffs do not even attempt to meet this traditional standard, id., even though [l]ikelihood of success remains a prerequisite in the usual case[.] Ruiz v. Estelle ( Ruiz II, 666 F.2d 854, 856 (5th Cir. 1982. Instead, they attempt to rely on an alternative substantial case on the merits standard that does not apply here. See Chamber Br. at 15. 4 That standard applies only where the movant shows a serious legal question is involved and the balance of equities... is... heavily tilted in [its] favor. Ruiz v. Estelle ( Ruiz I, 650 F.2d 555, 565-66 (5th Cir. 1981 (emphasis added. Neither condition is present here. First, as set forth below, Plaintiffs have not shown that any of the other elements favors an injunction, much less that those elements are heavily tilted in Plaintiffs favor. In particular, Plaintiffs have not met the heavy burden of demonstrating that little if any harm will befall other interested persons or the public and that the[y], in contrast, will suffer irreparable injury if denied preliminary relief. NAFA II, 2016 WL 6902113, at *2; accord Ruiz I, 650 F.2d at 565. For this reason alone, Plaintiffs cannot avail themselves of the lower standard. Ruiz I, 650 F.2d at 565. Second, Plaintiffs conclusory arguments fail to show that their claims raise serious legal questions as that phrase is understood for purposes of the alternative injunction standard. See generally Chamber Mem. at 15-16. Given the uniform court decisions upholding the rulemaking, it is not the case, and thus Plaintiffs have not argued, that the courts ha[ve] yet to address th[ese] question[s] or that the courts that have are split. In re Westwood Plaza Apartments, Ltd., 150 B.R. 163, 168 (Bankr. E.D. Tex. 1993. Nor are the legal issues novel : in rejecting each of Plaintiffs claims, this Court employed traditional tools of statutory interpretation and applied wellsettled principles of administrative and constitutional law. See Frew v. Gilbert, No. 3:93CV65, 2000 WL 33795091, at *2 (E.D. Tex. Oct. 10, 2000 (no serious legal question where matter 4 While the ACLI Plaintiffs argue both the traditional standard and the substantial case on the merits standard, ACLI Mem. 7 n.3, they fail to meet the higher traditional burden for the same reasons as they fail to meet the lower standard. 4
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 10 of 17 PageID 10282 meaningful to the public nevertheless involved nothing more than the court s application of basic rules of contract interpretation and construction. In any event, Plaintiffs fail to satisfy even the alternative standard, which still requires Plaintiffs to demonstrate that their claims have patent substantial merit. Ruiz II, 666 F.2d at 857. Plaintiffs ha[ve] not presented any new arguments that call into question this Court s prior ruling ; instead, every claim Plaintiffs re-raise in their injunction motions has been expressly considered and resoundingly rejected. Aransas Project v. Shaw, No. C-10-75, 2010 WL 2787832, at *1 (S.D. Tex. July 14, 2010. Specifically: Both this Court and the NAFA court held that there is no serious dispute that the Rule s fiduciary definition comports with the statutory text. Chamber, 2017 WL 514424, at *9 (quoting NAFA I, 2016 WL 6573480, at *15. Both courts easily dispensed with Plaintiffs argument, see Chamber Mem. at 15, that DOL overstepped its exemption authority with respect to IRAs. See Chamber, 2017 WL 514424, at *15-18 (rejecting Plaintiffs argument that rulemaking would be a new expansion of DOL s authority without congressional authorization; NAFA I, 2016 WL 6573480, at *22 ( Congress unambiguously granted [DOL] broad authority to adopt conditional... exemption[s], including under title II.. Both courts explicitly rejected Plaintiffs claim that [t]he Rule creates a private right of action. See Chamber, 2017 WL 514424, at *21 ( The DOL has not created a private cause of action, nor has it violated [Alexander v. Sandoval, 532 U.S. 275 (2001] ; NAFA I, 2016 WL 6573480, at *27 (same. This Court determined that Plaintiffs Federal Arbitration Act claim is altogether without merit. Chamber, 2017 WL 514424, at *42. As to Plaintiffs claim that DOL failed to consider certain factors with respect to annuities, ACLI Mem. 10-12, this Court was unpersuaded by Plaintiffs assertion that the new rules reduce consumer access to FIAs or variable annuities, Chamber, 2017 WL 514424, at *14 and found that DOL comprehensively assessed existing annuity regulations, id. at *26; see also Market Synergy I, 2016 WL 6948061, at *19, *24 (same. Finally, this Court denied Plaintiffs First Amendment claim on at least four independent grounds. See Chamber, 2017 WL 514424, at *38 (waiver; id. at *39-41 (regulation of conduct, not speech; id. at *41 (even if speech regulation, only misleading advice and statements ; id. (failed to meet facial challenge standard. 5
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 11 of 17 PageID 10283 Under these circumstances, Plaintiffs have not shown likely success, or even a substantial case, on the merits. For this reason alone, Plaintiffs motions should be denied and consideration of the remaining three criteria... is unnecessary. Fantasy Ranch, Inc. v. City of Arlington, Texas, No. 3:03-0089, 2004 WL 2974269, at *1 (N.D. Tex. Dec. 20, 2004. II. PLAINTIFFS HAVE NOT ESTABLISHED THAT IRREPARABLE HARM IS LIKELY TO OCCUR IN THE NEXT FEW WEEKS Plaintiffs must also show, not just a possibility of irreparable harm, Winter, 555 U.S. at 22, but a likelihood that irreparable harm will occur. United States v. Emerson, 270 F.3d 203, 262 (5th Cir. 2001 (emphasis in original. Speculative injury is not sufficient. Id. And this element must be satisfied by independent proof. Elite Rodeo Ass n, 159 F. Supp. 3d at 744. Plaintiffs primarily rely on the notion that the industry s final preparations for the applicability date and the immediate aftermath of applicability will constitute irreparable harm. 5 See Chamber Br. 5-12; ACLI Br. 4-5. But where DOL is poised through the administrative process to address the applicability date of the rulemaking, which is the very basis for Plaintiffs claimed need for an immediate injunction, and where DOL has provided sufficient assurances to the industry as to how it will proceed in the meantime, they cannot establish irreparable harm. It is speculative whether the industry will actually incur the costs they posit. And any cognizable harm is outweighed by the other injunction factors here. Indeed, Plaintiffs concede that the industry has already done much preparing to comply. Bleier Decl. 7 (Mar. 7, 2017, ECF No. 144-3; see also id. 21 ( Companies... [are] beginning 5 Plaintiffs cannot claim that the preparation and compliance costs already incurred constitute irreparable harm for a forward-looking injunction. See Bleier Decl. 7; cf. Am. Hosp. Ass n v. Harris, 625 F.2d 1328, 1331 (7th Cir. 1980; Johnson v. New Orleans Jazz & Heritage Found., No. 99-1409, 1999 WL 299017, at *5 (E.D. Tex. May 10, 1999. Thus, neither industry speculation in June 2016 about the expected costs over the now-past year, see Pls. App x Exs. 3 & 4(A (both filed in Market Synergy I, nor the rulemaking s estimate of industry costs for the first year equate to incremental costs likely to accrue over the next few weeks. 6
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 12 of 17 PageID 10284 to put into place compliance regimes that hit all accounts. ; Creative One Comment, Feb. 21, 2017 at 6, ECF No. 144-3 ( We estimate that we have spent over a million dollars... preparing to be compliant by the applicability date[.]. And they say that the industry will wait until April 10 to begin in earnest implementing the infrastructure and making the [necessary] changes. Id. 6 Thus, by Plaintiffs own evidence, the industry expects that final preparations can be done within thirty days, or with some other reasonable accommodation from DOL. Therefore, because a meaningful delay of the applicability date is a realistic possibility and because of DOL s March 10, 2017 temporary non-enforcement policy, it is reasonable to expect that most (if not all of the portion of the industry that has expressed compliance concerns will await DOL s decision rather than incur additional incremental costs. If DOL delays the applicability date, Plaintiffs object that it might be too short. See Chamber Suppl. Br., ECF No. 151 at 3. But Plaintiffs have not shown that DOL will fail to take those concerns into account. See 82 Fed. Reg. at 12321 (inviting comments regarding whether a different delay period would best serve the interests of investors and the industry.. And even if DOL decides not to delay, there is no reason to expect the industry to take any significant action before that decision. At worst, the industry would be in no worse a position than it is today, likely having at least thirty days to come into compliance. See, e.g., Bulletin, at 3 (representing that a reasonable period will be provided to come into compliance and applying the exemptions thirty-day cure periods for disclosures to this situation. 7 6 See also id. 8 ( Most members... have yet to commit to one option or the other. ; id. 12 ( Firms are holding back from making this fundamental compliance decision[.] ; Tripses Decl. 7 (Mar. 9, 2017, ECF No. 144-3 (anticipating that beginning on April 10, 2017, tens of thousands of independent agents will start exiting the [independent distribution] channel. 7 Plaintiffs err in suggesting that the Bulletin is primarily concerned with mailing timely disclosures. Chamber Br. at 3 n.6; Chamber Suppl. Br. at 4; ACLI Br. at 2 n.1. Instead, it addresses all requirements that would become applicable at that point. See Bulletin, at 3 ( the applicable conditions of the rule or PTEs, including sending out 7
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 13 of 17 PageID 10285 Plaintiffs concern that the Bulletin does not completely address the full scope of enforcement risk is overstated. See Chamber Suppl. Br. at 3-4. With DOL s emphasis on compliance assistance, see Bulletin at 2, the industry has little reason to expect the Treasury Department to take another approach. See 29 U.S.C. 1203(a, 1204(a; Reorg. Plan No. 4 of 1978, 105 (codified at 5 U.S.C. App. 1 ( [I]n enforcing such excise taxes... the Secretary of the Treasury shall be bound by the regulations, rulings, opinions, and exemptions issued by the Secretary of Labor. (emphasis added. Nor is attempted private enforcement likely for any transactions that take place during this limited period because actions under 29 U.S.C. 1132 are limited to employee benefit plans (as opposed to IRAs to which fiduciary duties already apply. 8 Moreover, DOL retains authority to provide additional retroactive relief. See Bulletin at 3 (stating that if there is a need for other temporary relief, including prohibited transaction relief, EBSA will consider taking such additional steps as necessary ; see also 29 C.F.R. 2570.35(d (providing the information necessary for DOL to grant an individual retroactive exemption; see, e.g., PTE 80-26, Class Exemption for Certain Interest Free Loans to Employee Benefit Plans, 45 Fed. Reg. 28545 (Apr. 29, 1980, as amended, 71 Fed. Reg. 17917 (Apr. 7, 2006 (granting retroactive relief. Even if Plaintiffs assertions could amount to some cognizable harm, 9 they do not outweigh required disclosures (emphasis added. As this Court is aware, the contract condition of two of the new prohibited transaction exemptions does not even go into effect until 2018. 8 Plaintiffs claim that they would be harmed if subject to the reasonable compensation requirement and best interest standard for IRA accounts, Chamber Suppl. Br. at 4-5, but those standards already apply to employee benefit plans, and Plaintiffs identify no basis for claiming harm when they already profess to act in investors best interest. 9 The existence of some unrecoverable compliance costs, even if irreparable, does not always justify injunctive relief; otherwise, any challenger to any major regulatory action would be entitled to an injunction pending appeal. See Am. Hosp. Ass n, 625 F.2d at 1331. Similarly, the mere presence of a First Amendment claim should not establish irreparable harm. See Nken, 556 U.S. at 434 (irreparable injury must be likely ; Elrod v. Burns, 427 U.S. 347, 374 (1976 ( such injury was both threatened and occurring at the time of respondent s motion ; see also KH Outdoor, LLC v. City of Trussville, 458 F.3d 1261, 1272 (11th Cir. 2006; Hohe v. Casey, 868 F.2d 69, 72-73 (3d Cir. 1989. Because the Court concluded, inter alia, that no protected speech was implicated here, this case is unlike Texans for 8
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 14 of 17 PageID 10286 the other injunction factors here. See Def. Distributed, 838 F.3d at 458 (upholding denial of injunction where other factors outweighed the irreparable harm to plaintiffs; Texas v. Seatrain Int l S.A., 518 F.2d 175, 180-81 (5th Cir. 1975 (looking to magnitude of the injury to conclude that movant s irreparable harm did not significantly outweigh other interests; 35 Bar & Grille, LLC v. City of San Antonio, 943 F. Supp. 2d 706, 712 (W.D. Tex. 2013 (denying injunction despite irreparable harm to First Amendment interests; see also NAFA II, 2016 WL 6902113, at *4 (reaching same conclusion for this rulemaking. Plaintiffs have not shown that any nonspeculative harms they might suffer outweigh the harm to others if an injunction were granted. III. THE PUBLIC INTEREST WEIGHS STRONGLY AGAINST AN INJUNCTION Finally, and perhaps most importantly, Plaintiffs solo effort to short-circuit the ongoing notice-and-comment process would deprive the rest of the interested public of its opportunity to weigh in on the future of the rulemaking and would preempt the agency s decision-making process. DOL has issued a proposal and is currently engaged in public notice-and-comment to elicit feedback as to whether it should delay the applicability date and, if so, for how long. See 82 Fed. Reg. at 12319. DOL intends to issue a decision on the... proposal in advance of... April 10. Bulletin at 1. Rather than allow the notice-and-comment process to run its course, Plaintiffs requested relief would harm the public by depriving other interested parties of the opportunity to participate in that process. See Mack Trucks, Inc. v. EPA, 682 F.3d 87, 95 (D.C. Cir. 2012 ( The notice-and-comment process is generally presumed to serve the public interest.. It would deprive the agency of the benefit of the very process it initiated to ensure that any delay of the rulemaking is in the public interest. See La Union del Pueblo Entero v. FEMA, 141 F. Supp. 3d 681, 691 (S.D. Tex. 2015 (notice and comment allow[s] the agency to benefit from the expertise and input of Free Enter. v. Texas Ethics Comm n, 732 F.3d 535, 538 (5th Cir. 2013, which relied on the fact that every federal court to address the question had concluded that speech rights were implicated. 9
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 15 of 17 PageID 10287 the parties who file comments with regard to the proposed rule. And it would den[y] the agency an opportunity... to apply its expertise to determine what course of action is appropriate with respect to the rulemaking. FTC v. Standard Oil Co., 449 U.S. 232, 242 (1980. As DOL s March 2, 2017 proposal reflects, the cost-benefit analysis is more complex than Plaintiffs simplistic dichotomy between immediate implementation or non-implementation, and depends on factors such as length of a possible delay and what portions of the rule may be ultimately delayed. See 82 Fed. Reg. 12320-21 (requesting comment on whether the benefits of the proposed 60-day delay... justify its costs, whether [DOL] should delay applicability of all, or only part, of the final rule s provisions and exemption conditions, and whether a different delay period would best serve the interests of investors and the industry. Given this, and DOL s longstanding expertise in this area, see Chamber, 2017 WL 514424, at *14, the public interest requires that the agency determine, through the nuanced, comprehensive notice-and-comment process involving all those affected by the rule, whether delay is appropriate and, if so, for how long. Plaintiffs request for an injunction, on the other hand, ignores all interests but their own. 10 Congress delegated to DOL the authority to make the determinations at issue. See Chamber, 2017 WL 514424, at *3, *9. DOL is tasked with balancing industry costs and consumer access against the significant and ongoing harm conflicted advice can pose to retirement investors. See 82 Fed. Reg. at 12323. The fact that DOL is considering delaying the applicability date is precisely why the Court should not step in. See Seatrain Int l, 518 F.2d at 180 ( [A] court should take no action calculated to interfere seriously with an agency s ability to apply its expertise to solve those technical and complex regulatory problems which have been entrusted to it. ; Bennett 10 See, e.g., 82 Fed. Reg. at 12323 (noting in delay proposal that the 2016 rulemaking found widespread harm caused by conflicted advice, and inviting comments to help DOL understand how any changes have impacted these harms to consumers; see also 81 Fed. Reg. at 20949 n.8 (Apr. 8, 2016 (concluding that on-going conflicts of interest in the retirement-investment market may cost investors hundreds of billions of dollars. 10
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 16 of 17 PageID 10288 v. Donovan, 703 F.3d 582, 589 (D.C. Cir. 2013 ( [I]t is the prerogative of the agency to decide in the first instance how best to provide relief.. Here, an injunction would improperly intrude[] into the agency s decision-making process. Reliable Automatic Sprinkler Co., Inc. v. Consumer Prod. Safety Comm n, 324 F.3d 726, 732 (D.C. Cir. 2003. That process should be allowed to proceed to its conclusion. 11 CONCLUSION Plaintiffs motions for an injunction pending appeal should be denied. Dated: March 17, 2017 Of Counsel: NICHOLAS C. GEALE Acting Solicitor G. WILLIAM SCOTT Associate Solicitor EDWARD D. SIEGER Senior Attorney THOMAS TSO Counsel for Appellate and Special Litigation MEGAN HANSEN Attorney for Regulations United States Department of Labor Office of the Solicitor Respectfully submitted, JOYCE R. BRANDA Deputy Assistant Attorney General JOHN R. PARKER United States Attorney JUDRY L. SUBAR Assistant Director Civil Division, Federal Programs Branch /s/ Galen N. Thorp GALEN N. THORP (VA Bar # 75517 EMILY NEWTON (VA Bar # 80745 Trial Attorneys United States Department of Justice Civil Division, Federal Programs Branch 20 Massachusetts Ave. NW, Room 6140 Washington, D.C. 20530 Tel: (202 514-4781 / Fax: (202 616-8460 galen.thorp@usdoj.gov emily.s.newton@usdoj.gov Counsel for Defendants 11 Indeed, an injunction could inject more uncertainty into the situation. Two other district courts and the D.C. Circuit have denied temporary injunctive relief, NAFA II, 2016 WL 6902113, at *1, aff d, No. 16-5345 (D.C. Cir. Dec. 15, 2016 (denying injunction pending appeal; Market Synergy I, 2016 WL 6948061, at *1 (denying preliminary injunction, and two other circuits are set to rule on the merits of the rulemaking. An injunction granted as to the Plaintiffs here would risk conflicting injunctions. 11
Case 3:16-cv-01476-M Document 152 Filed 03/17/17 Page 17 of 17 PageID 10289 CERTIFICATE OF SERVICE On March 17, 2017, I electronically submitted the foregoing document with the clerk of court for the U.S. District Court for the Northern District of Texas, using the electronic case filing system of the court. I hereby certify that I have served the plaintiff electronically or by another manner authorized by Federal Rule of Civil Procedure 5(b(2. /s/ Galen N. Thorp GALEN N. THORP 12
Case 3:16-cv-01476-M Document 152-1 Filed 03/17/17 Page 1 of 1 PageID 10290 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA, et al., v. Plaintiffs, EDWARD C. HUGLER, ACTING SECRETARY OF LABOR, and UNITED STATES DEPARTMENT OF LABOR, Defendants. Civil Action No. 3:16-cv-1476-M Consolidated with: 3:16-cv-1530-C 3:16-cv-1537-N [PROPOSED] ORDER The Court, having considered Plaintiffs Motions to Enjoin the Fiduciary Rule Pending Appeal, ECF Nos. 144, 155, together with Plaintiffs Supplemental Memorandum of Law, ECF No. 151, and Defendants opposition thereto, ECF No. 152, it is hereby ORDERED that Plaintiffs motions are DENIED. IT IS SO ORDERED. Dated: THE HONORABLE BARBARA M.G. LYNN