In the month of June, no fewer than five lawsuits were filed challenging the Department of Labor’s authority to promulgate the final regulation broadening the definition of fiduciary. Three suits were filed in Texas, one was filed in the District of Columbia, and one was filed in Kansas.
All but one of the lawsuits seek to vacate the entire fiduciary regulation for failing to comply with the requirements of the Administrative Procedure Act, including because the regulation is “arbitrary, capricious, . . . or otherwise not in accordance with law” as that phrase is used in 5 U.S.C. § 706(2)(A).
In the author’s opinion, these lawsuits face an uphill battle, at least with regard to their 5 U.S.C. § 706(2)(A) attack, due to the standard of review applied by the Supreme Court. As the Court explained, “[t]he scope of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that of the agency.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983); see also Lawrence D. Rosenberg & Richard M. Re, Basic Legal Doctrines Frequently Arising in the D.C. Circuit.