DOL Foe Demands Injunction Against Arbitration Ban
Thrivent Financial for Lutherans is planning to file a preliminary injunction against a clause within the Department of Labor’s fiduciary rule that bans class-action waivers, the National Law Journal writes.
The rule, which purports to require retirement account advisors to put clients’ interests first and went into partial effect in June, includes a clause banning advisors from forcing clients to sign away their right to class action suits. A lawyer for Thrivent, which is among several plaintiffs challenging the rule in the courts, has sent a letter to Judge Susan Richard Nelson of the U.S. District Court for the District of Minnesota indicating the firm would seek an injunction specifically targeting the arbitration clause, according to the publication. This spring, Thrivent argued that the DOL’s ban on class action waivers violated the Federal Arbitration Act.
The DOL itself has already argued earlier this summer for vacating the prohibition on class-action waivers in the U.S. Court of Appeals for the Fifth Circuit, while asking the court to uphold the rule against legal challenges.
But Thrivent’s lawyer writes in a letter to the court that the DOL’s public statement about its intent to not enforce the anti-arbitration condition isn’t enough, the National Law Journal writes. The regulation would remain in effect and require Thrivent to certify with state regulators that it’s complying with the rule, the lawyer writes, according to the publication.
A mere statement also provides no guarantees that the Treasury Department wouldn’t go after Thrivent by enforcing the rule, according to the lawyer’s letter cited by the National Law Journal.
The DOL has already proposed to push back the final compliance deadline originally scheduled for January by 18 months. Experts say the delay is likely to come along with a major overhaul of the rule.
In response to Thrivent’s petition the DOL told Nelson in a letter Wednesday — first revealed by FA-IQ sister publication Ignites — that the anti-arbitration provision “will likely be mooted in the near future.”