Gobeille v. Liberty Mutual: An Opportunity for the Supreme Court to Correct the Problems of ERISA Preemption
The U.S. Supreme Court has asked the Solicitor General whether the Court should grant certiorari in Gobeille v. Liberty Mutual Insurance Company. If the Court hears Gobeille, the Court will confront an important choice for the future of preemption under the Employee Retirement Income Security Act of 1974 (ERISA). Gobeille can be decided incrementally, as an elaboration at the margins of the Court’s current ERISA preemption case law. However, Gobeille is also an opportunity for the Court to correct the fundamental problems of its current ERISA preemption jurisprudence. While incrementalism has its virtues, on balance, it would be better for the Court to use Gobeille to correct the basics of ERISA preemption.
The Court’s current ERISA preemption case law suffers from three fundamental shortcomings. First, unlike the lower courts and commentators, the Supreme Court has not acknowledged the tension between the Court’s seminal ERISA preemption decision in Shaw v. Delta Air Lines, Inc. and its subsequent decision in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co. Second, per Travelers, the Court has read ERISA’s preemption clause, ERISA § 514(a), as nothing more than a codification of traditional, deferential preemption standards. This reading of § 514(a) is textually unpersuasive and renders ERISA §§ 514(b)(2)(A) and 514(b)(4) redundant. Section 514(a) is better read as establishing a presumption for preemption. Third, Travelers asserts that the presumption against ERISA preemption applies with particular force to state regulation of an area like health care “which historically has been a matter of local concern.” This judge-made rule also runs afoul of §§ 514(b)(2)(A) and 514(b)(4) which specifically exempt from ERISA preemption state banking, securities, insurance and criminal laws, but no other state laws.
The mischief caused by these three shortcomings manifests itself in Gobeille. Gobeille thus presents a problem and represents an opportunity. The Court could decide Gobeille as an incremental application of the Court’s existing ERISA preemption case law. Under this approach, the controlling issue for the high court to review will be the scope of “reporting” for ERISA preemption purposes. Notwithstanding the virtues of modest decision making, such judicial modesty in Gobeille will merely defer the Court’s confrontation with the fundamental problems of its ERISA preemption case law.
In a forthcoming article in the Cornell Law Review Online (available in draft on SSRN), I argue that it would be best for the Court to grant cert in Gobeille and use that decision to correct the underlying problems of ERISA preemption. Specifically, the Court should acknowledge the tension between Shaw and Travelers by reconsidering the statute afresh. As part of such reconsideration, the Court should construe ERISA § 514(a) as creating a presumption for preemption. Such a construction of § 514(a) respects the text of the statute without yielding to the potential indeterminacy of the statute’s broad language. Finally, the Court should jettison the notion that traditional areas of state law as defined by the Court are immune from ERISA’s more expansive than usual preemption and should instead acknowledge what the statute says: Per §§ 514(b)(2)(A) and 514(b)(4), the areas immunized from ERISA’s more stringent preemption are – and are only – state banking, securities, insurance, and criminal laws.
While the Court will understandably be tempted to decide Gobeille in a more modest fashion, there are situations which require fundamental reassessment of existing law. ERISA preemption is today such a situation and Gobeille would be a good vehicle for undertaking the necessary reassessment.