The past year has seen a new star become fixed in the judicial firmament. The US District Court for the Northern District of Texas, Amarillo Division, has found new prominence, most recently retaining a challenge 26 states filed against a US Department of Labor (DOL) rule permitting consideration of environmental, social, and governance (ESG) factors by investment managers.

Judge Kacsmaryk’s March 28 ruling in State of Utah v. Martin J. Walsh, Secretary of Labor keeps the case in Amarillo. Below, we will discuss this decision and two major policy-related decisions which preceded it, one related to mifepristone and the second permitting “nationwide injunctions.” Finally, we will touch on how Amarillo has become such a popular location for public policy challenges.

Utah v. Walsh Background

Utah v. Walsh involves a challenge to a DOL regulation entitled “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.” (We’ve blogged about DOL’s efforts in this space here.) DOL intended this rule to permit consideration of “climate change and other environmental, social, and governance factors” by plan investors “as they make decisions about how to best grow and protect” retirement savings.

Twenty-six states and several other parties challenged the DOL’s “Investment Duties Rule,” clarifying the duties of fiduciaries to Employment Retirement Income Security Act of 1974 (ERISA) employee benefits plans concerning the appropriate selection of investments. After the case was filed, defendants moved to transfer the case to the US District Court for the District of Columbia or a district court where a plaintiff resided. The plaintiffs in turn amended their complaint to add the State of Oklahoma and Alex L. Fairly, an Amarillo, Texas, resident, as plaintiffs. The plaintiffs allege that the rule violates the Administrative Procedure Act (APA) because it exceeds DOL’s statutory authority and is thereby arbitrary and capricious.

The March 28 decision revolves solely on whether the plaintiffs’ challenge should continue in Amarillo or whether it should be transferred to a jurisdiction like Washington, DC, federal court.

The issue before the court relates to “venue,” which means where a case is heard. Court challenges to a particular venue place the burden on the party seeking to move the case to “establish good cause for the transfer based on convenience and justice.” Here, the court declined to transfer the case for three primary reasons:

• First, two plaintiffs — the State of Texas and a newly-added Amarillo resident ― had ties to the forum.

• Second, defendants did not identify witnesses of physical evidence located outside of the district which would be unavailable if the case proceeded there.

• Finally, the court rejected defendants’ main argument – that the plaintiffs filed in Amarillo based on “judge shopping” which can be seen by the significant number of other recent policy challenges filed there. The court held that it would not consider Plaintiffs’ “subjective motivations for choosing the forum” so long as the venue was otherwise proper. Accordingly, this case will proceed in Amarillo.

Other Recent ND Texas Decisions

Defendants’ argument that the plaintiffs are choosing Amarillo as a forum for policy challenges is worth evaluating as the DOL ESG challenge is not the only major policy case pending there. Our health care colleagues have repeatedly blogged (see here and here) about the case Alliance for Hippocratic Medicine v. US Food and Drug Administration, which is also pending in the court. Alliance for Hippocratic Medicine challenges FDA’s approvals of the drugs Mifeprex and generic mifepristone, drugs commonly used for reproductive health, specifically for “medication abortion.” A motion seeking a nationwide injunction to preclude the sale remains pending.

Why are these major public policy cases pending in Amarillo? Generally, depending on the subject matter, major policy cases are filed in courts in Washington, DC, New York, California, or Delaware. Administrative, constitutional, and patent disputes are frequently resolved in Washington; banking and corporate disputes are often filed in New York or Delaware; and tech and environmental cases are frequently filed in California.

Legal scholars point to two factors driving the choice by conservative states to file in Amarillo:  

• First, Amarillo has one federal judge, Matthew Kacsmaryk, a Trump appointee who ordered the federal government to reinstate the Trump Administration’s “Remain in Mexico” policy (later overturned by the US Supreme Court, as we discussed here), and a number of other conservative-leaning decisions on hot-button issues. (See here.)

• Second, appeals from the Northern District of Texas are heard by the US Court of Appeals for the Fifth Circuit, which has a track record of issuing conservative-leaning decisions including its recent en banc affirmance of an injunction in Feds for Medical Freedom v. Biden precluding the Biden Administration’s vaccine mandate for federal workers from taking effect.