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Saturday, November 16, 2019

Watchdog group sues DOL for records related to rollback of fiduciary rule

By Jessica Karmasek | Nov 2, 2017


WASHINGTON (Legal Newsline) - A newly formed watchdog group that has tasked itself with exposing unethical conduct within the Trump administration has filed a lawsuit in federal court against the U.S. Department of Labor, demanding the agency’s records related to a rollback of its much-maligned fiduciary rule.

American Oversight, which was formed in March to serve as a check on the current administration, claims it is non-partisan despite figures within the group having strong ties to Democrats.

“The Department of Labor’s attempts to roll back the overtime and fiduciary rules are yet additional examples of how the Trump administration has sided with well-connected businesses over the working Americans whose interests the president claims to represent,” said AO Executive Director Austin Evers, who most recently served as a senior counsel at the State Department.

“The public has a right to know why the Trump administration believes four million Americans should work for free, and why it’s okay for investment professionals to act in their own financial interests instead of their clients’. Since the administration is staying mum, American Oversight is suing to find out what’s been going on behind closed doors.”

According to AO’s eight-page complaint, filed in the U.S. District Court for the District of Columbia Oct. 24, it submitted a Freedom of Information Act request to the DOL regarding its fiduciary rule -- and overtime rule -- on July 21.

The fiduciary rule, released in April 2016, mandates financial professionals who service individual retirement accounts, including IRAs and 401(k) plans, to serve the “best interest” of the savers and disclose conflicts of interest.

Among the records the group seeks: all calendar entries -- both paper and electronic -- for any meetings pertaining to the development, implementation, evaluation, reconsideration and re-evaluation of the rule; all meeting agendas and lists of attendees for any meetings held regarding the rule; any and all materials distributed at those meetings -- even by non-DOL attendees; and copies of all correspondence -- including any official correspondence to or from the DOL, even to or from other federal agencies.

“DOL has not made determinations as to American Oversight’s FOIA requests described above, notwithstanding the obligation of the agency under FOIA to respond within 20 working days,” the group wrote in its complaint. “Through DOL’s failure to make determinations as to American Oversight’s FOIA requests within the time period required by law, American Oversight has constructively exhausted its administrative remedies and seeks immediate judicial review.”

AO, in its complaint, asks the federal court to order the DOL to conduct a search “reasonably calculated” to uncover all records responsive to its FOIA request; order the department to produce any and all non-exempt records; enjoin the DOL from continuing to withhold any and all non-exempt records; and award AO attorneys’ fees and other litigation costs.

In September, the DOL announced a proposal to delay full implementation of its fiduciary rule for 18 months.

The Office of Management and Budget, or OMB, approved the proposal delaying the remaining provisions of the rule. 

According to the DOL, the proposed extension delays from Jan. 1, 2018 to July 1, 2019 the special transition period for the rule’s best interest contract, or BIC, exemption, the principal transactions exemption and certain amendments to the prohibited transaction exemption.

In June, the DOL published a Request for Information, or RFI, related to the rule and whether to delay its full implementation.

“The RFI is an opportunity for the public to provide data and information that may be used to revise the rule and associated exemptions,” the department said in June 29 news release.

The DOL said public input would assist in “determining future actions on the rule and related exemptions.”

In April, the department released a measure officially delaying the implementation of the rule and its related exemptions by 60 days, until June 9.

But written disclosure requirements and the full BIC exemption were scheduled for Jan. 1, 2018 implementation.

In August, the DOL and its new secretary, R. Alexander Acosta, notified a federal court that it submitted to the OMB proposed amendments to three exemptions.

The proposed amendments included an “extension of transition period and delay of applicability dates” from Jan. 1, 2018 to July 1, 2019, according to an Aug. 9 filing in the U.S. District Court for the District of Minnesota.

The brief, two-page court filing -- a notice of administration action -- did not include any further explanation. The department’s news release also did not provide any explanation.

“Since taking office, both President Trump and Labor Secretary Acosta have sought to weaken and roll back the fiduciary and overtime rules put in place by President Obama,” according to an AO news release last week.

The case has been assigned to Judge Colleen Kollar-Kotelly.

The DOL could not immediately be reached for comment on the lawsuit.

AO has filed more than a dozen lawsuits against government agencies in the D.C. federal court since April, including the U.S. Department of Justice, U.S. Department of Commerce, U.S. Environmental Protection Agency, U.S. Department of Education and U.S. Department of the Treasury, among others.

Relying on FOIA and other public records laws, AO claims it does the job “that Congress refuses to do, exposing unethical conduct throughout this administration and demanding investigations.”

“We file open records requests and sue agencies to uncover misconduct that otherwise would not see daylight and harness the independent power of the courts to force the administration to obey the law,” according to its website.

From Legal Newsline: Reach Jessica Karmasek by email at

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Organizations in this Story

U.S. Department of LaborU.S. District Court for the District of Columbia