This week the National Association for Fixed Annuities (NAFA) Board of Directors announced it is withdrawing its appeal to the U.S. Circuit Court of Appeals for the District of Columbia of an unsuccessful lawsuit challenging the Department of Labor fiduciary rule expansion.
The lawsuit had previously experienced multiple defeats before the district court, and the DC Circuit Court had flatly denied to grant an emergency preliminary injunction prior to its hearing of the appeal of the matter by NAFA. Because of this, prior to the show-stopping decision by the 5th U.S. Circuit Court of Appeals to entirely vacate the fiduciary rule expansion, it appeared the NAFA challenge would do no better before the higher court. In fact, the D.C. Circuit strongly rebuked NAFA’s request for an emergency injunction to halt the rulemaking from taking effect next April. The denial comprised just a few short sentences, suggesting NAFA had no reasonable claim to an injunction.
Now that’s all history, and in a new filing with the U.S. Court of Appeals for the D.C. Circuit, NAFA and the United States Department of Justice agree to a voluntary dismissal of the appeal. NAFA directly acknowledges its decision comes on the heels of the March 15 ruling by the 5th Circuit, which again, surprisingly vacated the fiduciary rule in its entirety.
“We are very pleased the Fifth Circuit understood the harms the fiduciary rule created for middle-American retirement savers. This ruling vindicates both NAFA’s and the Fifth Circuit plaintiffs’ chief concerns, and, as a result, we see no reason to continue to pursue our litigation in another federal circuit court,” explains NAFA Executive Director Chip Anderson.
Here’s how NAFA summarizes the complex legal story leading up to this point: “NAFA brought its challenge to the fiduciary rule nearly two years ago in the D.C. District Court, while the Chamber of Commerce and several other trade organizations brought a similar challenge in the Northern District of Texas. The lower courts in both cases ruled in favor of DOL (upholding the rule), but, on appeal, the Chamber prevailed in the Fifth. NAFA believes the Fifth Circuit decision renders its case moot.”
Anderson adds that NAFA “will focus our energies on promoting insurance regulations that properly recognize differences among financial products and the way those products are delivered.” He indicates NAFA will “continue to engage with industry stakeholders, the NAIC, and other state and federal policymakers.”