Description: Challenge to the U.S. Department of Labor's amendment of the Investment Duties regulation governing private-sector benefit plans.
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Utah v. Walsh
Case Documents:
Filing Date Type File Action Taken Summary 10/26/2023 Notice of Appeal Download Notice of appeal filed by plaintiffs. Plaintiffs Appealed District Court’s Rejection of Challenge to Investment Duties Regulations. Twenty-seven states, two companies, an energy producers trade group, and two individual plaintiffs appealed a decision by the federal district court for the Northern District of Texas upholding the U.S. Department of Labor’s 2022 amendments of its Investment Duties regulation, which included provisions clarifying that employee benefit plan fiduciaries may consider environmental, social, and governance (ESG) factors such as climate change in risk and return analyses for investment decisions. 09/21/2023 Memorandum Opinion and Order Download Plaintiffs' motion for summary judgment denied and defendants' cross-motion for summary judgment granted. Federal Court Upheld ERISA Regulation Allowing Benefit Plan Fiduciaries to Consider ESG Factors. The federal district court for the Northern District of Texas ruled that the U.S. Department of Labor’s 2022 amendments of its Investment Duties regulation that governs private-sector employee benefit plans did not violate the Employee Retirement Income Security Act of 1974 (ERISA) or the Administrative Procedure Act. The 2022 amendments included provisions that clarified that fiduciaries could consider environmental, social, and governance (ESG) factors such as climate change in risk and return analyses for investment decisions. The court rejected the argument by 26 states and several private plaintiffs that ERISA’s plain text foreclosed consideration of such “non-pecuniary” factors. The court also concluded that the 2022 amendments were not “manifestly contrary to the statute.” In finding that the amendments were not arbitrary and capricious, the court noted that it was “not unsympathetic to Plaintiffs’ concerns over ESG investing trends,” but that the Department of Labor had provided the required “minimal level of analysis” from which the agency’s reasoning in support of the regulation could be discerned. 06/16/2023 Reply Download Reply filed in support of defendants' cross-motion for summary judgment. 06/09/2023 Reply Download Plaintiffs filed response to defendants' cross-motion for summary judgment and reply in support of plaintiffs' motion for summary judgment. 06/02/2023 Motion for Summary Judgment Download Memorandum filed in support of defendants' opposition to plaintiffs' motion for summary judgment and cross-motion for summary judgment. 05/16/2023 Motion for Summary Judgment Download Motion for summary judgment filed by plaintiffs. 04/12/2023 Amicus Brief Download Brief filed by amicus curiae J. Mark Iwry in support of defendants. 04/11/2023 Reply Download Reply filed by plaintiffs in support of motion for preliminary injunction. 03/28/2023 Opinion and Order Download Motion to transfer venue denied. Texas Federal Court Declined to Transfer Case Challenging Rules Allowing Benefit Plan Fiduciaries to Consider ESG Factors. The federal district court for the Northern District of Texas denied the U.S. Department of Labor’s motion to transfer a lawsuit challenging the agency’s amendment of its Investment Duties regulation that governs private-sector employee benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA). The amendments reversed and modified certain changes made during the Trump administration, including by providing that ERISA plan fiduciaries may consider factors such as the economic effects of climate change and other environmental, social, or governance (ESG) factors on investments. The Department of Labor’s motion argued that the proper court for the suit was either the federal district court for the District of Columbia, a district where one of the plaintiffs resides, or, at a minimum, a division in the Northern District of Texas in which more than one district judge sits. The district court found that venue was proper in the Northern District of Texas because an individual plaintiff (added in an amended complaint after the motion for transfer was filed) lived in Amarillo, Texas, and because Texas—which was one of the 25 state plaintiffs—“resides everywhere in Texas.” The court further found that the Department of Labor fell “well short” of meeting its burden of demonstrating that convenience of the parties and witnesses and the interest of justice required transfer to the District of Columbia. The court also found that the Department of Labor’s arguments that the plaintiffs were engaged in “judge-shopping” presented an “unprecedented and unworkable” standard for motions to transfer. 03/28/2023 Opposition Download Opposition filed by defendants to motion for preliminary injunction. 03/14/2023 Reply Download Reply filed in support of motion to transfer venue. 02/28/2023 Complaint Download First amended complaint filed. 02/28/2023 Opposition Download Opposition filed by plaintiffs to motion to transfer venue. 02/21/2023 Motion Download Motion for preliminary injunction filed. 02/07/2023 Motion Download Motion to transfer venue filed. 01/26/2023 Complaint Download Complaint filed. Lawsuit Said Department of Labor’s Investment Duties Rule Unlawfully Allowed Fiduciaries to Consider Nonpecuniary Factors Including Climate Change. Twenty-five states, an energy company and its subsidiary, an oil and gas trade group, and an individual plaintiff filed a lawsuit in the federal district court for the Northern District of Texas challenging a rule adopted by the U.S. Department of Labor in 2022 that amended the Investment Duties regulation governs private-sector employee benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA), replacing two rules promulgated by the Trump administration in late 2020. The plaintiffs alleged that the 2022 rule “undermines key protections for retirement savings of 152 million workers … in the name of promoting environmental, social, and governance (‘ESG’) factors in investing, including the Biden Administration’s stated desire to address climate change.” The plaintiffs asserted that the 2022 rule contravened ERISA’s “clear command that fiduciaries act with the sole motive of promoting the financial interests of plan participants and their beneficiaries” by authorizing fiduciaries to select investments “based on collateral benefits other than investment returns” and allowing the exercise of proxy rights to “promote non-pecuniary benefits or goals unrelated to [the] financial interests of the plan participants and beneficiaries.” The plaintiffs also contended that the major questions doctrine precluded the Labor Department from authorizing or mandating ERISA fiduciaries to consider nonpecuniary factors such as climate change. In addition, the plaintiffs asserted that the 2022 rule was an arbitrary and capricious exercise of administrative power.