The U.S. Department of Labor asked the Fifth Circuit to dismiss two appeals defending a package of Biden-era investment advice regulations that had expanded the definition of a fiduciary under the Employee Retirement Income Security Act, which two Texas courts had blocked in 2024.

The federal government entered an unopposed motion to dismiss a consolidated appeal Monday in the dispute, which had previously been held in abeyance at the administration of President Donald Trump's request following the changeover in executive branch administrations in January.

In September 2024, the DOL under former President Joe Biden had appealed to the Fifth Circuit two Texas courts' decisions to block the regulations in summer 2024, occurring in two Administrative Procedure Act challenges to the rule that were led by the Federation of Americans for Consumer Choice Inc. and the American Council of Life Insurers. The suits were then consolidated on appeal. Additional industry groups including the Financial Services Institute and the Securities Industry and Financial Markets Association also joined as intervenor plaintiffs on appeal, represented by Gibson Dunn & Crutcher LLP attorneys including Eugene Scalia, who previously led the DOL during the first Trump administration.

Insurance industry groups sued in federal court after the DOL's Employee Benefits Security Administration in April 2024 finalized a rule and three sets of changes to ERISA-prohibited transaction exemptions to cover a wider range of investment advice given for a fee. The regulations would have newly expanded the reach of ERISA over many rollover transactions out of an employee 401(k) plan into an individual retirement account or annuity product.

The Federation of Americans for Consumer Choice was the first to file a challenge in federal court, followed by ACLI. Each suit employed a slightly different strategy to target the DOL's package of final regulations using the APA, but both challenges contended that the DOL strayed beyond its authority under ERISA with the regulations.

The court's move to strike down the DOL's fiduciary rule came after a previous effort to expand ERISA's fiduciary definition was also stopped in the courts, with the Fifth Circuit striking down a previous attempt to modernize the definition of an investment advice fiduciary in 2018.

A number of financial industry groups suing the DOL said in a joint statement provided to Law360 on Tuesday when asked for comment: "The DOL's fiduciary-only regulation resurrects a failed 2016 rule that prevented millions of consumers from accessing much-needed retirement financial guidance."

Maintaining the stay of the effective date "provides retirement savers with continued relief from these harmful consequences as the court considers the substantial legal issues we have raised regarding this ill-advised regulation," the groups said. The statement was jointly issued by the ACLI, the National Association of Insurance and Financial Advisors, the Insured Retirement Institute, the National Association for Fixed Annuities and Finseca, a group representing individuals in the financial security industry.

Spokespeople with the U.S. Department of Justice and the DOL didn't immediately respond to requests for comment Tuesday.

The DOL is represented by Michael Shih and Steven H. Hazel of the U.S. Department of Justice.

The industry groups are represented by David W. Ogden, Kelly P. Dunbar, Kevin M. Lamb and Andres C. Salinas of WilmerHale, by Michael A. Yanof of Nicolaides Fink Thorpe Michaelides Sullivan LLP, by Don Colleluori, Parker D. Young and Amber D. Reece of Figari & Davenport LLP and Eugene Scalia, Jason J. Mendro, Andrew G.I. Kilberg, Lochlan F. Shelfer and Russell H. Falconer of Gibson Dunn & Crutcher LLP.

The case is Federation of Americans for Consumer Choice Inc. v. LABR, case numbers 24-40637 and 24-10890, in the U.S. Court of Appeals for the Fifth Circuit.