Judge Rules for Labor Department Over Chamber of Commerce In Fiduciary Rule Lawsuit

February 9, 2017
By David Lee

DALLAS (CN) — A Texas federal judge Wednesday rejected the national Chamber of Commerce’s challenge of the Department of Labor’s Obama-era rule that imposes fiduciary duties on retirement investment advisers.

U.S. District Judge Barbara M.G. Lynn granted summary judgment to the Department of Labor and denied summary judgment to the Chamber of Commerce of the United States. Lynn concluded the Department of Labor did not exceed its authority.

“Congress gave the DOL broad discretion to use its expertise and to weigh policy concerns when deciding how best to protect retirement investors from conflicted transactions,” Lynn’s 81-page opinion states. “Although BICE [the best interest contract exemption] may cover more advisers and institutions and its conditions may be more onerous than past exemptions, it does not follow that the DOL’s rules are within the orbit of the cases plaintiffs cite, nor that the DOL’s use of exemptive authority is unreasonable.”

The chamber sued the Labor Department in June 2016, claiming the fiduciary rule “creates sweeping changes” that make saving for retirement harder because advisers who work on small business plans will have no choice but to stop servicing such plans. They claimed the fiduciary rule violated the Administrative Procedure Act and the First Amendment.

The Labor Department conceded that the rule change would impose costs on advisers but said the costs “will be significantly outweighed” by the “enormous benefit” to retirement investors, according to its August 2016 motion for summary judgment.

Lynn concluded that Congress “did speak clearly” when it assigned the DOL power to “regulate a significant portion of the American economy” under the Employee Retirement Income Security Act.

The judge was not convinced the fiduciary rule violates the First Amendment by regulating the speech of investment professionals.

“The court finds the rules regulate professional conduct, not commercial speech, and therefore any incidental effect on speech does not violate the First Amendment,” Lynn wrote. “Under the professional speech doctrine, the government may regulate a professional-client relationship, as a ‘professional’s speech is incidental to the conduct of the profession,’ and the First Amendment ‘does not prevent restrictions directed at commerce or conduct from imposing incidental burdens on speech.’ Hines v. Alldredge, 783 F.3d 197, 201–02 (5th Cir. 2015).”

Lynn’s ruling came hours after Department of Labor attorneys asked the judge to delay her ruling for approximately one month as it reviews the fiduciary rule. President Donald Trump directed the agency to review it on Feb. 3.

In a statement Wednesday, the chamber lauded Trump’s decision to reconsider as “reflecting well-founded, ongoing and significant concerns” about the fiduciary rule.

“We continue to believe that the Department of Labor exceeded its authority, and we will pursue all of our available options to see that this rule is rescinded,” the chamber said.

From Courthouse News.


Trade Groups, Chamber of Commerce Fight New OSHA Rule

January 9, 2017
By David Lee

OKLAHOMA CITY (CN) — The Chamber of Commerce and other business groups sued the Department of Labor, claiming a new OSHA rule requiring employers to submit injury and illness reports for posting on a publicly available website constitutes unconstitutional forced speech.

Lead plaintiff National Association of Home Builders of the United States and seven other groups sued the secretary of labor and the Occupational Safety and Health Administration on Jan. 4 in Federal Court.

They say the “Improve Tracking of Workplace Injuries and Illnesses” final rule announced in May 2016 is “arbitrary, capricious and otherwise contrary to the law:” that it exceeds the agency’s authority under the Occupational Safety and Health Act of 1970 and runs afoul of the Administrative Procedure Act. The rule took effect on Jan. 1.

“The Rule violates the First Amendment by compelling companies to submit their confidential and proprietary information for publication on a publicly available online database,” the 31-page complaint states. “There is no evidence that publication of this information will have any effect on workplace safety and health. The limited authority given OSHA by Congress to require employers to collect and maintain injury and illness data cannot be read to allow the Agency to force employers to make public this information in violation of their constitutional rights.”

The new rule does three things.

Certain employers are required to submit the records electronically to OSHA for public posting.

Employers must establish “reasonable” procedures for employees to report on-the-job injuries.

And it gives OSHA more authority to punish employers for discriminating and retaliating against employees for reporting injury or illness.

The plaintiffs say all three parts of the rule are illegal.

They say OSHA does not have authority to create the public database, that the “reasonable” procedures requirement is arbitrary and capricious under the APA and that the OSH Act expressly provides redress for work injury retaliation.

The business groups also say that employers’ Fifth Amendment rights are violated by the rule’s failure to give them “adequate notice” of what constitutes “reasonable” reporting procedures that subject employers to penalties without due process.

NAHB chairman Ed Brady said the business groups have “vigorously opposed this rule from the start and cannot allow this type of regulatory overreach to occur.”

He said the injury and illness disclosure requirement subjects businesses to “significant representational harm” without evidence it would reduce on-the-job injuries or illnesses.

“OSHA has not justified any of the rule’s requirements with any real benefits analysis and has relied entirely on anecdotal information,” Brady said in a statement. “This is entirely insufficient and cannot be allowed to stand and potentially serve as a precedent for other Agency rules. Workplace safety is of the utmost concern of our members, however this rule is unlawful and does not serve its intended purpose of improving workplace safety.”

Plaintiffs include the Chamber of Commerce of the United States; Oklahoma State Home Builders Association; the State Chamber of Oklahoma; the National Chicken Council; the National Turkey Federation; and the U.S. Poultry & Egg Association.

They seek declaratory judgment and want the rule set aside, plus costs of suit.

They are represented by Sam Fulkerson with McAfee Taft in Oklahoma City.

From Courthouse News.

Texas Judge Blocks Obamacare Rule on Sex-Related Surgeries

January 3, 2017
By David Lee

WICHITA FALLS, Texas (CN) – Citing the Hobby Lobby ruling, a Texas federal judge on Saturday blocked a rule change by the Obama administration that would prohibit physicians from citing religious concerns to refuse to perform abortions or gender-reassignment surgeries.

U.S. District Judge Reed O’Connor issued a nationwide preliminary injunction, finding the rule change to the Affordable Care Act contradicts law, exceeds statutory authority and “likely violates the Religious Freedom Restoration Act as applied to private plaintiffs.”

The rule change was to take effect Sunday.

Texas, Wisconsin, Nebraska, Kentucky, Kansas and physicians’ groups Franciscan Alliance, Specialty Physicians of Illinois and Christian Medical and Dental Associations sued the U.S. Department of Health and Human Services on Aug. 23 in Federal Court, claiming the determination of gender under the law has become a “state of mind” instead of a “biological fact.”

They claim it violates the “medical judgment and conscience rights” of doctors, who could be forced to perform sex-reassignment surgeries.

Judge O’Connor concluded that the rule change “places substantial pressure on plaintiffs to perform and cover and transition and abortion procedures.”

“Private plaintiffs’ long-held view that such procedures are immoral and inappropriate in every circumstance is now at odds with the rule’s interpretation of sex discrimination because it requires them to remove the categorical exclusion of transitions and abortions (a condition they assert is a reflection of their religious beliefs and an exercise of their religion) and conduct an individualized assessment of every request for those procedures,” the 46-page opinion states.

Citing the U.S. Supreme Court’s 2014 ruling in Burwell v. Hobby Lobby, O’Connor wrote: “A law that ‘operates so as to make the practice of … religious beliefs more expensive’ in the context of business activities imposes a burden on the exercise of religion. Accordingly, the Rule imposes a substantial burden on private plaintiffs’ religious exercise.” (Citing the U.S. Supreme Court ruling in Braunfeld v. Brown, 366 U.S. 599, 605 (1961)).

O’Connor says the federal government has “numerous less restrictive means available to provide access and coverage for transition and abortion procedures” and failed to show how exempting private plaintiffs’ religious beliefs would “frustrate the goal of ensuring ‘nondiscriminatory access to health care and health coverage.’”

Texas Attorney General Ken Paxton said Sunday the rule change would be costly to states as it would force the Employees Retirement System of Texas to cover gender-reassignment and abortion procedures for its 500,000 participants. He said a doctor who morally objects to the procedures and refers a patient to another doctor may violate the rule.

“This striking example of federal overreach under Obamacare would force many doctors, hospitals and other health care providers in Texas to participate in sex-reassignment surgeries and treatments, even if it violates their best medical judgment or their religious beliefs,” Paxton said in a statement.

Ezra Young, at attorney with the Transgender Legal Defense and Education Fund, said he expected O’Connor to be reversed on appeal to the Fifth Circuit.

“Judge O’Connor’s conclusion that transgender people and persons who have had abortions are somehow excepted from protection is deeply troubling, legally specious, and morally repugnant,” Young said Saturday.

O’Connor ruled four months after he blocked an earlier Obama administration order to allow transgender students to use bathrooms and locker rooms consistent with their gender identity.

Texas, 12 other states and two school districts had challenged the measure that allowed students to disregard the gender listed on their birth certificate and use the restroom of the sex with which they identified.

Judge O’Connor, 51, was appointed to the federal bench by President George W. Bush on June 27, 2007 and approved by the Senate on Nov. 16 that year.

From Courthouse News.