The all-but-imminent legal challenges to the Department of Labor’s fiduciary rule stand little chance of success, according to Labor Secretary Thomas Perez.
“If we get sued, we’ll be ready for it,” Perez said in a press conference with Democratic leaders in the House of Representatives on the day members passed a resolution of disapproval for the rule.
That resolution passed the House on nearly a party-line vote, with only one Republican voting against it, and no Democrats voting for it. If the Senate passes the resolution of disapproval, the White House has said President Obama will veto it.
Both chambers of Congress will need a two-thirds majority to override that certain veto. In the House, Republican opponents of the rule will need to pick up 56 more votes in addition to the 234 Republicans that voted for the resolution this week to override a presidential veto, assuming all members vote.
That will make the legislative effort to upend DOL’s rule all put impossible to execute.
But a legal challenge to the rule from industry stakeholders and business interest groups is “very likely,” said Brad Campbell, and ERISA attorney with Drinker Biddle and Reath, in a conference call to more than 1,300 advisors and retirement providers this week.
In the Democratic leadership press conference, Perez implied DOL considered the prospect of litigation against the rule in its rulemaking process.
“Not only is the final product a very good product, but the process leading to the product (the final rule) was an impeccable process and as a result, they (opponents of the rule) don’t have a legal leg to stand on in a lawsuit,” said Perez.
“I’d rather have them spend their time on compliance, rather than making it a full employment act for lawyers,” added Perez, introducing a touch of irony into the debate: Both opponents and secular analysts have said the final rule has the potential to be a boon for the plaintiffs’ bar.
Rep. Richard Neal, D-Massachusetts, was in attendance with Perez, Rep. Nancy Pelosi, D-California and minority leader in the House, and Rep. Steny Hoyer, D-Maryland and House Democratic Whip.
Neal’s presence was salient. Late last year, he co-sponsored legislation with Rep. Peter Roskam, R-Illinois, that proposed to defund DOL’s rule and replace it with a different fiduciary standard more favorable to industry.
Neal spoke about his satisfaction with the changes DOL made in the final rule from its proposed form, and said he would not vote for legislation advanced by Republicans to replace the rule.
“The process has been satisfied,” said Neal, referring to the extent that DOL addressed the concerns from industry and more than 100 Democratic lawmakers to the rule’s proposed form.
“There is another key component here today and the Secretary acknowledged that earlier at the caucus: there is still time for questions to be asked of the Secretary, and they will offer clarification,” added Neal.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
