On November 28, 2016, Judge Crabtree in the U.S. District Court for the District of Kansas ruled in favor of the U.S. Department of Labor and denied the motion for a preliminary injunction filed by the Market Synergy Group, Inc., challenging implementation of the Department’s conflict of interest rule and related exemptions.  Mkt. Synergy Grp., Inc. v. United States Dep’t of Labor, No. 16-CV-4083-DDC-KGS, 2016 WL 6948061 (D. Kan. Nov. 28, 2016).  The court held that Market Synergy was not likely to prove that:

  1. The Department provided insufficient notice that it would remove fixed indexed annuities (“FIAs”) from the scope of PTE 84-24 because the language of the proposed rulemaking provided the requisite notice and, even if it did not, it amounted to harmless error because commenters made the same comments Market Synergy makes in this action.
  2. The Department arbitrarily treated FIAs differently from all other fixed annuities because the Department provided a reasoned explanation for its decision to move FIAs from the scope of PTE 84-24 to better protect retirement investors.
  3. The Department failed to consider the detrimental effects of its actions on independent insurance agent distribution channels.  To the contrary, the Court found that the Department demonstrated its recognition of the effects that the final rule would have on the industry, but concluded that the need to protect consumers from conflicted investment advice outweighed those concerns.
  4. The Department exceeded its statutory authority by seeking to manipulate the financial product market instead of regulating fiduciary conduct because Congress had authorized the Department to grant exemptions, and it was therefore entitled to great deference.

The Court also noted that even if plaintiff had carried its burden to demonstrate its likely success on the merits, it had not satisfied any of the other requirements for a preliminary injunction: irreparable harm, balance of harms, and public interest.

This victory comes on the heels of the Department’s win in the District Court for the District of Columbia where the court also denied a challenge to the Department’s conflict of interest rule and related exemptions. See Nat’l Ass’n for Fixed Annuities v. Perez, No. CV 16-1035 (RDM), 2016 WL 6573480 (D.D.C. Nov. 4, 2016) (see our blog post here).  The rule and related exemptions also are facing challenges in the Northern District of Texas and District of Minnesota (see our blog post here).

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Photo of Russell Hirschhorn Russell Hirschhorn

“Russell has strong subject matter expertise.”

“Russ is extremely responsive and practical. He listens to the client perspective and is hands on and engaged, while also delegating work as appropriate.” 

-Chambers USA

Russell L. Hirschhorn is co-head of Proskauer’s premier ERISA Litigation Group…

“Russell has strong subject matter expertise.”

“Russ is extremely responsive and practical. He listens to the client perspective and is hands on and engaged, while also delegating work as appropriate.” 

-Chambers USA

Russell L. Hirschhorn is co-head of Proskauer’s premier ERISA Litigation Group, which is a significant component of the firm’s ERISA Practice Center and globally renowned Labor and Employment Law Department.  Russell’s practice focuses on employee benefits issues arising under the Employee Retirement Income Security Act of 1974 (ERISA), including class action and complex litigation, U.S. Department of Labor and Internal Revenue Service investigations, and counseling clients on best practices to avoid litigation.

Russell has more than two decades of experience representing plan sponsors, fiduciaries, trustees, and service providers across the country.  His work on behalf of clients has included all types of plans, including 401(k) plans, 403(b) plans, defined benefit plans, employee stock ownership plans, executive compensation plans, health and welfare plans, multiemployer plans, multiple employer plans, and severance plans.  And, it has included the full gamut of claims arising under ERISA, including excessive investment and plan administration fees and investment underperformance claims; cash balance plan litigation; claims for benefits; company stock fund cases; claims for delinquent contributions; ERISA § 510 claims; ERISA statutory claims; ESOP litigation; executive compensation claims; independent contractor claims; independent fiduciary representations; multiemployer fund litigation; plan service provider claims; recoupment of plan overpayments; retiree benefits claims; severance plan claims; and withdrawal liability claims.

Deeply dedicated to pro bono work, Russell has been recognized on several occasions for his commitment to pro bono work including by President George W. Bush in receiving the U.S. President’s Volunteer Service Award.  His pro bono work has included serving as lead litigation counsel in several impact litigations: on behalf of social security recipients whose benefits were unlawfully suspended based on an outstanding warrant, deaf and hard of hearing prisoners in Louisiana prisons seeking disability accommodations, and Swartzentruber Amish in upstate New York to obtain religious exemptions from certain building code requirements. Russell also was a principal drafter of several amicus briefs for the Innocence Project, a legal non-profit committed to exonerating wrongly convicted people.