National Association for Fixed Annuities v. United States Department of LaborNational Association for Fixed Annuities v. United States Department of Labor
recommended protocols that constitute the core of the NIST Study.” Id. ¶ 26. If the factual content of the NIST Study were publicly disclosed, Palmer explains, it “would effectively release many of the NIST Study’s recommendations, as well as the substance of the vulnerability analysis that [the Office of the Chief Information Officer] submitted to the Commission for its determination on whether to accept those recommendations.” Id. ¶ 27. “The factual descriptions expose the Commission to risk of a security breach of its network and information technology systems.” Id.
Palmer’s Declaration clearly estаblishes that the factual portions of the NIST Study are “inextricably intertwined” with its deliberative elements. Mead Data Cent., 566 F.2d at 260. It also sets forth with “reasonable specificity” why those factual portions cannot be segregated. Armstrong v. Exec. Office of the President, 97 F.3d 575, 578-79 (D.C. Cir. 1996). Accordingly, the court rejects Plaintiffs’ argument that Defendant has not met its duty of segregability.
V. CONCLUSION
For the foregoing reasons, the court grants Defеndant’s Motion for Summary Judgment and denies Plaintiffs’ Cross-Motion for Summary Judgment. A separate final order accompanies this Memorandum Opinion.
MEMORANDUM OPINION AND ORDER
This case is before the Court on plaintiff the
I. BACKGROUND
The statutory and regulatory background to NAFA’s challenge to the three rules is discussed in depth in the Court’s opinion granting summary judgment in favor of the defendant. See Nat’l Ass’n for Fixed Annuities v. Perez, 217 F.Supp.3d 1, 2016 WL 6573480 (D.D.C. Nov. 4, 2016) (“NAFA I”); Dkt. 46. The Court will assume a familiarity with that background here, as well as familiarity with the challenges raised in NAFA’s complaint.
After extensive briefing and oral argument, the Court issued an opinion on November 4, 2016, denying NAFA’s motions for a preliminary injunction and for summary judgment and granting the Department’s motion for summary judgment. Dkt. 46. That same day, the Court entered final judgment in favor of the Department. Dkt. 47. On November 14, 2016, NAFA filed a notice of appeal, a motion for a preliminary injunction to prevent the new rules from taking effect “until at least ten months (or as much as two years) following the final disposition of th[e] litigаtion,” Dkt. 49 at 3, and a motion seeking either an “expedited status conference” or “expedited relief” on NAFA’s renewed motion for a preliminary injunction, Dkt. 50. The following day, the Court ordered that the Department respond to NAFA’s renewed
II. ANALYSIS
“A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, 555 U.S. 7, 24 (2008). To secure a preliminary injunction, a plaintiff “must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Id. at 20. Before the Supreme Court’s decision in Winter, courts in this circuit applied a “sliding-scale” approach to the preliminary injunction analysis under which “a strong showing on one factor could make up for a weaker showing on another.” Sherley v. Sebelius, 644 F.3d 388, 392 (D.C. Cir. 2011). Since Winter, the D.C. Circuit has hinted on several occasions that “a likelihood of success is an independent, free-standing requirement for a preliminary injunction,” id. at 393 (quoting Davis v. Pension Benefit Guar. Corp., 571 F.3d 1288, 1296 (2009)), but it “has not yet needed to decide the issue,” League of Women Voters of United States v. Newby, 838 F.3d 1, 7 (D.C. Cir. 2016). As explained below, this case once again fails to squarely present the question whether the sliding scale apрroach has survived Winter; under either approach, NAFA is not entitled to a preliminary injunction.
If the sliding-scale approach is no longer available, little analysis is necessary. The Court has not only already concluded that NAFA is unlikely to prevail on the merits, but has rejected NAFA’s claims in a final judgment. See NAFA I, 217 F.Supp.3d at 58, 2016 WL 6573480, at *42. With that prong decided against it, NAFA cannot prevail under an approach that requires that the movant independently satisfy each of the four requirements for issuance of a preliminary injunction.
But, even assuming that the sliding-scale approach remains available, NAFA has failed to carry its burden of demonstrating entitlement to a preliminary injunction. The sliding-scale aрproach does not dispense with any of the four factors, but rather asks whether, “taken together,” all four factors “weigh in favor of the injunction.” Davis, 571 F.3d at 1292. The movant, as a result, need not “show a 51% likelihood of success” on the merits, “if each of the other three factors ‘clearly favors’ granting the injunction.” Id. (quoting Wash. Met. Area Transit Comm’n v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977)). The Court must still, however, consider the movant’s likelihood of success on the merits in that overall balance. This means that, if the movant has merely demonstrated that “a serious legal question is presented,” it bears the heavy burden of demonstrating that “little if any harm will befall other interested persons or the public” and that the movant, in contrast, will suffer irreparable injury if denied preliminary relief. Holiday Tours, 559 F.2d at 844.
Applying this standard, the Court concludes that NAFA’s motion fails for three reasons:
First, NAFA faces a particularly heavy burden because the Court has already held that NAFA’s challenges fail on the merits. The Court, accordingly, is not engaged in
Second, this not a case in which other interested parties or the public will suffer “little if any harm” if the new rules are enjoined pending apрeal. The fundamental premise of the challenged rules is that those who provide investment advice to ERISA plans and IRAs on a commission basis have a conflict of interest and that, absent further protections, the plan and IRA owners who they advise will suffer economic losses. It was for this reason that the Department rejected requests—similar to the request that NAFA now makes—that the transition period extend over a period of two to three years. See Final BIC Exemption, 81 Fed. Reg. 21,002-01, 21,070 (Apr. 8, 2016). Although the Department did agree that certain requirements would not take effect until January 1, 2018, it required that “certain core protections”—most notably, the requirement that financiаl institutions and advisors abide by the duties of prudence and loyalty—go into effect on April 20, 2017, in order to address “concerns about ongoing economic harm to [r]etirement [i]nvestors.”
NAFA disputes that consumers are likely to be harmed by “conflicts of interest” in the sale of fixed indexed annuities, “given the extensive state regulation that has always been in place,” Dkt. 54 at 3, and, indeed, it goes a step further and argues that “low and middle-income individuals” will likely be harmed by the new rules because their “needs will go underserved or unserved” due to the new rules, Dkt. 49 at 6. Those contentions are unconvincing. State insurance regulators focus on the “suitability” of the products sold by insur-ance
Third, NAFA’s showing of irreparable injury is insufficient to overcome its failure tо demonstrate a likelihood of success on the merits or that others will suffer little or no injury from issuance of an injunction. The D.C. Circuit “has set a high standard for irreparable injury.” Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 297 (D.C. Cir. 2006). The injury must be unrecoverable; it must be “both certain and great; [and] it must be actual and not theoretical.” Wisc. Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985) (per curiam); see also Nat’l Mining Ass’n v. Jackson, 768 F.Supp.2d 34, 52–53 (D.D.C. 2011); see also United States Ass’n of Reptile Keepers, Inc. v. Jewell, 103 F.Supp.3d 133, 163 (D.D.C. 2015) (injury must be “imminent, serious and unrecoverable”). In a case in which the district court has already concluded that the plaintiff’s claims lack merit and in which others will be harmed by the issuance of an injunction, only the most extraordinary showing of irreparable injury will suffice.
Much of NAFA’s claim of irreparable injury turns on the contentions that the new rules will require a fundamental restructuring of the fixed indexed annuities industry and that many of the new requirements are unworkable. See Dkt. 49 at 13, 17. The Court does not doubt that the new rules will result in significant changes in how the industry operates. It is unclear, however, whether NAFA’s more dramatic predictions will occur. NAFA argues, for example, that many financial institutions will conclude that they can no longer sell fixed indexed annuities through independent insurancе agents because those agents are not sufficiently subject to their control. Id. at 14–15. The Court, however, has already rejected NAFA’s contention that an insurance company must supervise sales made by independent agents of the products of other companies; rather, each company must only ensure compliаnce with the new rules for sales of their own products. See NAFA I, 217 F.Supp.3d at 52–53, 2016 WL 6573480, at *37. It argues that “thousands of independent agents will leave the business,” Dkt. 49 at 13, but that contention is both speculative and in tension with at least some of NAFA’s own evidence, compare Dkt. 5-8 at 4 (First Foguth Decl. ¶ 13) (small insurance-only company likely to go out of business) with Dkt. 49-3 at 3 (Second Foguth Decl. ¶ 9) (declarant “will obtain a ... securities license .... to ensure compliance with the rule”). It argues that many Insurance Marketing Organizations (“IMOs”) “will go out of business” and that “there will be massive layoffs at other IMOs that are able to remain open.” Dkt. 49 at 15 (quoting Dkt. 49-1 at 9 (Second Marrion Decl.
This is not to suggest that NAFA members will be unaffected by the approaching applicability dates in April 2017 and January 2018, or even that some or all of NAFA’s predictions will not come to pass. For present purposes, however, NAFA bears the burden of demonstrating that the irreparable injury that it posits is both certain and imminent. See Wisc. Gas Co., 758 F.2d at 674; Reptile Keepers, 103 F.Supp.3d at 163. Applying that demanding standard, the Court can conclude that the fixed indexed annuity industry will certainly incur substantial compliance costs; that business practices will change when the new rules take effect; and that those involved at various levels of the fixed indexed annuities industry will sustain economic losses from, for example, receiving lower commissions or facing altered competition in the marketplace. Those types of costs, however, even if irreparable, are not sufficient to overcome the substantial weight that the Court must accord to the fact that it has already concluded that NAFA’s claims fail on the merits and the Department’s reasonable conclusion that retirement investors will likely be harmed if the rules do not take effect over the next several months. Indeed, a contrary conclusion would mean that, in most challenges to significant regulatory actions, the challenging party would be entitled to an injunction рending appeal, even if the district court had already concluded that the challenge is without merit and others would be harmed by the requested relief. That is not the law.
Finally, invoking this Court’s decision in Shapiro v. U.S. Dep’t of Justice, No. 13-555-RDM, 2016 WL 3023980 (D.D.C. May 25, 2016), NAFA argues that it is entitled to an injunction because “its members will effectively be deprived of appellate review if an injunction is not granted.” Dkt. 54 at 1–2. Shapiro, however, presented a different question from the question presented here. In that case, the Court ordered that the FBI produce certain records pursuant to FOIA. The Court agreed to stay that order, however, because the FBI maintained that the records were exempt from disclosure under FOIA, and thus disclosure of the records would moot any appeal of this Court’s decision. 2016 WL 3023980, at *7. That decision was consistent with the “routine[ ]” practice in FOIA cases of issuing stays “where the release of documents would moot a defendant’s right to appeal.” People for the Am. Way Found. v. U.S. Dep’t of Educ., 518 F.Supp.2d 174, 177 (D.D.C. 2007). Here, in contrast, NAFA does not seek to stay an order of this Court and, more importantly, it does contend (and cannot contend) that an injunction is necessary to preserve the jurisdiction of the Court of Appeals. Rather, its assertion that it will “effectively be deprived of appellate review” can only be understood to mean that its members will sustain certain losses or injuries if the Court does not grant preliminary relief. That contention, however, is no different than the contention that NAFA’s members will suffer the types of irreparable injury discussed above.
* * *
Weighing all four preliminary injunction factors together, the Court con-cludes
CONCLUSION
Plaintiffs motion for an expedited decision, Dkt. 50, is hereby GRANTED, and its motion for an injunction stаying the April 10, 2017 partial applicability date is DENIED.
SO ORDERED.
RANDOLPH D. MOSS
United States District Judge