AMARILLO - The Department of Labor is seeking to transfer a “ESG Rule” lawsuit brought by more than two dozen attorneys general out of the Northern District of Texas, Amarillo Division.
The suit, Utah v. Walsh, was filed earlier this year and asserts claims under the Administrative Procedure Act against the DOL regarding the “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” (2022 rule).
According to the suit, the 2022 rule replaces two prior rulemakings and 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.
Court records show the DOL filed a motion to transfer on March 7, asserting the case belongs in D.C. or a venue where the plaintiffs are located.
“This lawsuit challenges a federal government regulation, promulgated in Washington, D.C., that clarifies the application of fiduciary duties for selecting investments and other investment courses of action under the Employee Retirement Income Security Act of 1974,” the motion states. “The case does not arise from any event or omission occurring in the Northern District of Texas, much less the Amarillo Division. No Plaintiff resides in this District or this Division. Nor does any Defendant.
“Plaintiffs’ decision to forum shop by filing in the Northern District—and, in particular, in the single judge Amarillo Division, which has no connection whatsoever to this dispute—undermines public confidence in the administration of justice.”
U.S. District Judge Matthew Kacsmaryk is the only judge for the Amarillo Division and is currently presiding over the case.
Court records further show the plaintiffs amended their complaint after the motion was filed and added an additional plaintiff, Alex Fairly, who resides in the Amarillo Division.
In their opposition filing, the plaintiffs assert that the addition of Fairly defeats the defendants’ motion to transfer.
“Fairly had not joined the case when the Defendants filed their motion, which allowed them to skirt the real reason they want this case transferred: they doubt that the Court will determine this case fairly,” the opposition filing states. “They couch their doubt in terms of ‘public perceptions’ of impartiality—but if reasonable members of the public believe the Court isn’t impartial, that is a basis for a recusal, not a change in venue.
“If there is evidence to support such an accusation, the Defendants should have the courage of their convictions and move to recuse. If they don’t, then their ‘public perception’ concerns amount to nothing more than an accusation of forum shopping, for which the transfer factors already account.”
The state of Texas is a plaintiff in the case. The plaintiffs argue that Texas resides in every place within its borders.
“This case was properly brought here, and Defendants offer no evidence to support their assertion that it should be elsewhere,” the filing states. “Defendant’s motion to transfer should be denied.”
The defendants filed a reply in support of their motion on March 14, arguing that the court should transfer the case “in the interests of justice and preventing Plaintiffs’ gamesmanship from undermining public confidence in the judicial system,” court records show.
“Plaintiffs have scrambled to address their venue problem by amending their complaint to add, for the first time, a new plaintiff who they allege resides in this District,” the reply states. “But Plaintiffs’ maneuvering underscores the lack of connection to this District and Division at the outset of the case while heightening the public perception that Plaintiffs’ choice of venue was, in fact, for the purpose of judge-shopping.”
Recently, both the House and Senate passed a resolution to overturn the DOL’s ESG rule, which President Biden vetoed yesterday.
Another lawsuit against the DOL pending at federal court in Milwaukee also argues that the ESG Rule violates ERISA and unlawfully politicizes the retirement system.
"...[It] puts the retirement savings of millions of Americans at substantial risk in service of a policy choice not found in ERISA or otherwise enacted by Congress," the suit claims.