Texas federal trial Judge Barbara M.G. Lynn ruledin favor Wednesday of the Labor Department in the casebrought by nine plaintiffs against Labor's fiduciary rule.

Lynn had promised a ruling by Friday. The nine plaintiffs,including the U.S. Chamber of Commerce, the Securities Industry andFinancial Markets Association and the Financial Services Institute,sued the DOL over its fiduciary rule in a Texas court.

The nine plaintiffs in the Texas case are represented by formerLabor Department solicitor Eugene Scalia, who's now a partnerin Gibson, Dunn & Crutcher's Washington office and a son ofdeceased Supreme Court Justice Antonin Scalia.

In a joint statement, the co-plaintiffs stated: “We continue tobelieve that the Department of Labor exceeded its authority, and wewill pursue all of our available options to see that this rule isrescinded.” President Donald Trump's recent directive to theDepartment to review the rule, is “reflecting well-founded, ongoingand significant concerns about the rule, is a welcomedevelopment.”

Said Lynn in her ruling: “In contrast to the situations in thecases cited by Plaintiffs, in [the Employee Retirement IncomeSecurity Act] Congress did speak clearly, and assigned the DOL thepower to regulate a significant portion of the American economy,which the DOL has done since the statute was enacted.”

Congress, Lynn said, “gave the DOL broad discretion to use itsexpertise and to weigh policy concerns when deciding how best toprotect retirement investors from conflictedtransactions.”

Lynn's opinion “is a complete vindication of [former LaborSecretary] Tom Perez, Phyllis Borzi, and the rest of Obama'sDepartment of Labor,” said Tom Clark, of counsel with The WagnerLaw Group, in a comment to ThinkAdvisor Wednesday.

“Even with the attempt to find a favorable venue in the NorthernDistrict of Texas, every district court to address these issues[has] now ruled in favor of positions taken by the previousadministration. That being said, the current administration and theDepartment of Labor still have the ability to seek a stay in theapplicability of the rule and to ultimately modify or repeal therule,” Clark pointed out.

While Lynn's ruling “might make that task harder and morepolitically distasteful, the new Department of Labor under Trump isstill in the driver's seat. However, I think it is fair to expectthat opinions such as this one will embolden supporters of thefiduciary rule who will ultimately seek to challenge the newDepartment of Labor in court. It seems the situation will getmessier before the industry has reliable clarity.”

Fred Reish, partner in Drinker Biddle & Reath's employeebenefits and executive compensation practice group in Los Angeles,agreed that even with Lynn's ruling, “It is still possible that theTrump DOL will take a different political position and delay andmodify or delay and kill the fiduciary rule. But, this is oneless reason that they can use for that purpose.”

Instead, DOL “will need to conclude that the fiduciary rulelimits access of plans and IRA owners to needed investment adviceand/or increases the cost of that advice by amounts that exceed anyoffsetting benefits of the rule,” Reish adds. “At this point, Ithink that there is distinct possibility that the DOL will makethose findings.”

Said Reish: “So, where are we? We are still waiting to seeif the DOL will delay the applicability date of the fiduciary rule.Once that happens, the next steps will unfold. I suspect that wewill be watching this in slow motion for at least anotheryear.”

Micah Hauptman, financial services counsel for the ConsumerFederation of America, added that Lynn's ruling is now “the thirdopinion that demolishes all of the industry opponents' arguments.The opinion chronicles how DOL engaged in a robust economicanalysis proving the need for the rule, shows that the DOL'sregulatory approach was the product of reasoned decisionmaking, andvalidates the DOL's analysis that the rule will benefit retirementsavers. It also refutes the industry lobbyists' claims that therule is somehow unworkable. The judge clearly was not buying theindustry lobbyists' sky-is-falling claims and nobody else shouldeither.”

The U.S. Justice Department on Wednesday, representing the LaborDepartment, asked Lynn to postpone issuing her ruling in the casebrought against Labor's fiduciary rule.

In the Wednesday filing,DOJ told Lynn that “it would not serve judicial economy to issue aruling at this point; nor would it be efficient for this Court, forthe Court of Appeals for this Circuit, or for the parties to beconfronted by a range of appellate issues at this time.”

DOJ cited that Labor is “carefully reviewing the issues raised”in President Donald Trump's Feb. 3 memorandum tellingLabor to review the fiduciary rule “with the immediate goal ofdeciding the best course of action to implement its spirit andintent.”

As noted by acting Labor Secretary Edward Hugler, Labor, DOJwrote, “is assessing its legal options for delaying theapplicability date (the first of which is April 10). Moreover, theoutcome of the department's review may differ in relevant ways fromthe April 8, 2016 rulemaking challenged by Plaintiffs.”

For example, DOJ continued, “although the department conductedan exhaustive regulatory impact analysis in this rulemaking, itscost-benefit analysis was challenged in this litigation and couldbe updated. The rulemaking may additionally be 'revised orrescinded.'”

Further, DOJ stated, “a judicial decision on a rulemaking ascomplex as this while the department is undertaking the examinationand potential promulgation of a proposal pursuant to thePresidential Memorandum can be expected to cause confusion with theaffected public, whether parties to this litigation or not.”

Therefore, DOJ said that “defendants respectfully request thatthe court stay the proceedings in this action pending the resultsof the review directed by the president.”

Defendants, rather, propose that an “initial joint status reportbe due on March 10, 2017, to update the court on the department'sactions and address whether a continued stay is warranted.”