On Feb. 22, two Wisconsin-based 401(k) plan participants filed suit against the U.S. Department of Labor in the U.S. District Court for the Eastern District of Wisconsin over the agency’s Dec. 1, 2022, environmental, social and governance retirement investing rule, entitled “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.” As you may recall, this final rule included a SWACCA-supported repeal of the Financial Factors Rule that returns DOL’s Employee Benefits Security Administration regulations to the old “economically equivalent” tiebreaker standard for selecting between investments that offer equivalent risks and returns. The final rule also affirms the position that SWACCA and its allies have advocated throughout their two-year advocacy campaign; that the creation of union jobs and contributions to the plan are collateral benefits plan trustees may consider when selecting between two equivalent investments.
The individual plaintiffs in the case, represented by the Wisconsin Institute for Liberty, are seeking a preliminary and permanent injunction blocking DOL from enforcing the new rule. They claim the rulemaking is arbitrary and capricious, violates the Administrative Procedure Act and runs afoul of ERISA.
The lawsuit is similar to a separate complaint filed in late January by 25 Republican attorneys general in U.S. District Court in Amarillo, Texas, also seeking to block DOL from enforcing the new rule. The Wisconsin case is Braun v. Walsh, E.D. Wis., No. 2:23-cv-00234.