Amicus Curiae Brief — Gobeille v. Liberty Mut. Ins. Co., 135 S. Ct. 885 (2014) (No. 14-181)

No. 14-181

In The

Supreme Court of the Anited States

«

ALFRED GOBEILLE, in His Official Capacity as

Chair of the Vermont Green Mountain Care Board,

Petitioner,

v.

LIBERTY MUTUAL INSURANCE COMPANY,

Respondent.

°

On Writ Of Certiorari To The

United States Court Of

For The Second Circuit

®

BRIEF OF PROFESSOR EDWARD A. ZELINSKY

AS AMICUS CURIAE IN SUPPORT

OF NEITHER PARTY

4

EDWARD A. ZELINSKY

BENJAMIN N. CARDOZO SCHOOL OF LAW

YESHIVA UNIVERSITY

Room 941

55 Fifth Avenue

New York, New York 10003

(212) 790-0277

zelinsky@yu.edu

i

TABLE OF CONTENTS

Page

pS eT TTS EE Oe ii

Interest of the Amicus Curiae ...................0..000000- 1

Summary of Argument .....................cscseceeseeeeeesees 1

PT incciisiideiicedettininniipdiheiiiaitiiiaabitiiiimimpaaialpinaiiaties 3

I. The Court should confront the tension

between Shaw and Travelers................0.... 3

II. ERISA §514(a) should be construed as

Ill. ERISA §§514(b)2)(A) and 514(b)(4)

exclusively define “matter[s] of local con-

li

TABLE OF AUTHORITIES

Page

CASES

Golden Gate Rest. Ass’n v. City & County of

San Francisco, 546 F.3d 639 (9th Cir. 2008)............ 4

LaRue v. DeWolff, Boberg & Assocs., 552 U.S.

RCT RE EEA TREES eee + Ae eee ne ean 1

Liberty Mut. Ins. Co. v. Donegan, 746 F.3d 497

ICIS ee Eon tear ny eee 3

N.Y. State Conf. of Blue Cross & Blue Shield

Plans v. Travelers Ins. Co., 514 U.S. 645

Suse sssccsinedineveiseninentuevtqunnicapmestennnmnmibnninniiiiiiads passim

Shaw v. Delta Air Lines, Inc., 463 U.S. 85

I hscctascieentcinaiiansabusienlinpenndinpadhaiiuiidaddsciabanis 2,3, 4, 5, 8

STATUTES

ERISA § 514(a), 29 U.S.C. § 1144(a)......000000000... passim

ERISA § 514(b)(2XA),

29 U.S.C. § 1144( bx 2A) 200. eeee eee 2, 5, 6, 7,8

ERISA § 514(b\(4), 29 U.S.C. § 1144(b)(4) ...2, 5, 6, 7, 8

Ve. ORs. Ame. GE. BB, B BED .nccccccccecccccsccccccosccssccccees 3,8

OTHER AUTHORITIES

Lawrence A. Frolik & Kathryn L. Moore, Law

OF EMPLOYEE PENSION AND WELFARE BENEFITS

RS SEIT EEE LO AS TONNES o ETO 4

John H. Langbein, et al., PENSION AND EMPLOY-

EE BENEFIT LAW (6th ed. 2015)................cccccceeeeceeeeees 4

ill

TABLE OF AUTHORITIES — Continued

Page

Edward A. Zelinsky, Gobeille v. Liberty Mutual:

An Opportunity to Correct the Problems of

ERISA Preemption, 100 CORNELL L.REV.

ONLINE ___ (2015) (forthcoming), available on

SSRN at papers.ssrn.com/sol3/papers.cfm?

Wbatract_ IS=m=BGOGESD 200 cccccccccoccoccosccccesccscocesccosees 4,5, 6

Edward A. Zelinsky, Travelers, Reasoned

Textualism and The New Jurisprudence of

ERISA Preemption, 21 Carpozo L. Rev. 807

Edward A. Zelinsky, The Defined Contribution

Paradigm, 114 YALE L. J. 451 (2004) ....0..... eee. 1

1

INTEREST OF THE AMICUS CURIAE

Edward A. Zelinsky is the Morris and Annie

Trachman Professor of Law of the Benjamin N.

Cardozo School of Law of Yeshiva University.’ He

teaches and writes in the area of employee benefits

and ERISA law, including the law of ERISA preemp-

tion. His ERISA-related writing has previously been

cited by this Court.’ As a teacher and a scholar, he

has an interest in the clarification and sound devel-

opment of the law of ERISA preemption.

*

SUMMARY OF ARGUMENT

This case is an opportunity for the Court

to correct the three fundamental problems of current

preemption jurisprudence under the Employee

' Professor Zelinsky wrote this amicus brief as one of

several projects he completed on a summer research grant from

the Cardozo Law School. The views expressed in this brief are

his personal views. Neither the Cardozo Law School nor Yeshiva

University expresses any opinion on the issues addressed in this

brief. No counsel for a party authored this brief in whole or in

part, and no counsel or party made a monetary contribution

intended to fund the preparation or submission of this brief. No

person other than the amicus curiae and Cardozo Law School

made a monetary contribution to its preparation or submission.

Both the petitioner and the respondent have, pursuant to

Supreme Court Rule 37.3, submitted letters to the Clerk

granting blanket consent for all amicus curiae briefs.

* LaRue v. DeWolff, Boberg & Assocs., 552 U.S. 248, 255

(2008) (citing Edward A. Zelinsky, The Defined Contribution

Paradigm, 114 YALE L. J. 451 (2004)).

2

Retirement Income Security Act of 1974 (ERISA).

First, unlike the lower courts and commentators, the

Supreme Court has yet to acknowledge the tension

between the seminal ERISA preemption decision in

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983), and

the subsequent decision in N.Y. State Conf. of Blue

Cross & Blue Shield Plans v. Travelers Ins. Co., 514

U.S. 645 (1995). Second, per Travelers, the Court has

read ERISA’s preemption clause, ERISA § 514(a), 29

U.S.C. § 1144(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(bX4), 29

U.S.C. §§ 1144(b)(2)A) and 1144(b)(4), redundant.

Section 514(a) is better read as establishing a pre-

sumption 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 con-

cern.” This judge-made rule also runs afoul of

§§ 514(b)(2A) and 514(b)(4) which specifically ex-

empt from ERISA preemption state banking, securi-

ties, insurance and criminal laws, but no other state

laws.

The Court should acknowledge the tension be-

tween Shaw and Travelers, should resolve that ten-

sion by declaring that ERISA § 514(a) establishes a

presumption for preemption, and should read ERISA

§§ 514(b)(2) and 514(b)(4) as they were written to

identify the only areas of state law protected from

3

that presumption. This framework should then be

used to determine whether ERISA preempts Vt. Stat.

Ann. tit. 18, § 9410 and the regulations thereunder.

e

ARGUMENT

I. The Court should confront the tension

between Shaw and Travelers.

The Court should acknowledge and confront the

tension between Shaw v. Delta Air Lines, Inc., 463

U.S. 85 (1983), and N.Y. State Conf. of Blue Cross &

Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645

(1995).

Shaw construes ERISA as preempting expansive-

ly. Under Shaw’s capacious standard, ERISA § 514(a),

29 U.S.C. § 1144(a), preempts any state law which

“has a connection with or reference to” an employee

benefit plan. Shaw, 463 U.S. at 96-97. In contrast,

Travelers defines ERISA preemption more restrictive-

ly. Under Travelers’ narrower construction of § 514(a),

ERISA does not preempt a state law merely because

of “an indirect economic effect on choices made by

insurance buyers, including ERISA plans.” Travelers,

514 U.S. at 659.

The tension between Shaw and Travelers has

been widely noted by the lower courts (including the

court below) and by commentators. See, e.g., Liberty

Mut. Ins. Co. v. Donegan, 746 F.3d 497, 506 (2d Cir.

2014) (Travelers “marked something of a pivot in

4

ERISA preemption.”); Golden Gate Rest. Ass’n v. City

& County of San Francisco, 546 F.3d 639, 654 (9th

Cir. 2008) (“We read Travelers as narrowing the

Court’s interpretation of the scope of § 514(a).”);

Edward A. Zelinsky, Gobeille v. Liberty Mutual: An

Opportunity to Correct the Problems of ERISA

Preemption, 100 CORNELL L.REV. ONLINE __ (2015)

(forthcoming), available on SSRN at papers.ssrn.com/

sol3/papers.cfm?abstract_id=2595589 (hereinafter,

Zelinsky, Gobeille); Edward A. Zelinsky, Travelers,

Reasoned Textualism and The New Jurisprudence of

ERISA Preemption, 21 CaArDozo L. REv. 807, 827

(1999) (hereinafter, Zelinsky, Travelers); Lawrence A.

Frolik & Kathryn L. Moore, LAW oF EMPLOYEE PEN.

SION AND WELFARE BENEFITS 209-210 (3rd ed. 2012);

John H. Langbein, et al., PENSION AND EMPLOYEE

BENEFIT LAW 767 (6th ed. 2015).

The split in the Second Circuit panel below

reflects the well-recognized tension between Shaw

and Travelers. The expansive construction of ERISA

§ 514(a) advanced by Shaw buttresses the conclusion

of the Second Circuit majority that ERISA preempts

the Vermont law and regulation at issue in this case.

In contrast, Travelers’ more restrictive approach to

ERISA preemption sustains the dissent below against

such preemption.

The tensions reflected in Chief Judge Jacobs’

opinion and Senior Judge Straub’s dissent will recur

until this Court confronts and resolves the tension

between the disparate approaches to § 514(a) ad-

vanced in Shaw and Travelers.

5

Il. ERISA §514(a) should be construed as

establishing a presumption for preemp-

tion.

Central to the tension between Shaw and Travelers

is Travelers’ reading of ERISA § 514(a) as a codifica-

tion of traditional, deferential preemption standards.

This reading of § 514(a) is unpersuasive and renders

redundant ERISA §§ 514(bX2XA) and 514(bX4). ERISA

Section 514(a) is better read as establishing a pre-

sumption for preemption.

The problems with construing ERISA § 514(a) as

embodying traditional preemption standards start

with the text of § 514(a) itself. While the conventional

judicial approach is a presumption against preemp-

tion, § 514(a) says nothing of the sort. Section 514(a)

broadly states that ERISA “shall supersede any and

all State laws insofar as they may now or hereafter

relate to any” employee benefit plan. This expansive

statutory language says nothing about a presumption

against preemption or about preserving state law.

The capacious language of § 514(a) contrasts with

other federal preemption statutes which carefully

preserve the prerogatives of the states. Zelinsky,

Gobeille, supra (contrasting ERISA § 514 with other

federal preemption clauses). As a textual matter, it is

not persuasive to read the sweeping language of

§ 514(a) as creating a presumption for the preserva-

tion of state law. Congress knows how to write a

statute preserving state law when it wants one.

6

ERISA Section 514(a) is not such a statute. Zelinsky,

Gobeille, supra.

ERISA §§ 514(b)(2XA) and 514(b)(4) compound

the textual difficulty of reading §514(a) as a pre-

sumption against preemption. Sections 514(b)\(2)(A)

and 514(b)(4) protect state insurance, banking, secu-

rities and criminal laws against the scope of § 514(a).

If § 514(a) simply embodies the traditional presump-

tion against preemption, from what are §§ 514(b)(2A)

and 514(b)\(4) protecting? Construing §514(a) as

creating the traditional presumption against preemp-

tion renders §§ 514(b)(2)(A) and 514(b)(4) redundant

since, under that construction, there is nothing from

which state banking, securities, insurance and crimi-

nal laws need relief.

As the Court observed in Travelers, an unquali-

fied statutory phrase like “relate to” can be “taken to

extend to the furthest stretch of its indeterminacy.”

Travelers, 514 U.S. at 656. However, there is an

alternative reading of ERISA § 514(a) which gives

content to that provision without reaching such

indeterminacy: construe § 514(a) as a presumption for

preemption. Zelinsky, Travelers, supra at 839.

Such an interpretation of ERISA § 514(a) also

gives substance to the exceptions created in

$§ 514(b\ 2X A) and 514(b)(4). If § 514(a) is understood

as replacing the traditional presumption against

preemption with a statutorily-mandated presumption

for such preemption, §§ 514(b)(2)(A) and 514(b)(4)

then relieve from this presumption for preemption

7

state insurance, banking, securities and criminal

laws. That relief restores these four categories of

state law back to the traditional presumption against

preemption.

There is, in short, a way to respect the text of

ERISA § 514(a) without yielding to either the prob-

lematic Shaw-based alternative of preemption with-

out limit or the equally problematic approach under

Travelers which deprives § 514(a) of any meaningful

content: construe § 514(a) as establishing a presump-

tion for preemption, a presumption from which state

banking, securities, insurance and criminal laws are

saved by §§ 514(b)(2)A) and 514(b)(4). See Zelinsky,

Travelers, supra at 832.

Ill. ERISA §§ 514(b)(2)(A) and 514(b)(4) exclu-

sively define “matter([s] of local concern.”

A central theme of Travelers is that ERISA

preemption is inappropriate for state regulation of

health care “which historically has been a matter of

local concern.” Travelers, 514 U.S. at 661. However,

ERISA §§ 514(b)(2)A) and 514(b)(4) outline the areas

of state law to be protected from § 514(a)’s preemptive

effect. Health care is not among these.

Postulating a judicially-determined sphere for his-

toric matters of local concern renders §§ 514(b)(2)(A)

and 514(b)(4) redundant. Nothing in these provisions

indicates that the statutory list — state banking,

securities, insurance and criminal laws — is merely

8

illustrative and may be augmented by other, judicially-

recognized areas to be immunized from § 514(a)’s

preemptive effect.

There may be a compelling case as a matter of

policy for Congress to add health care to the areas

protected from ERISA § 514(a)’s preemptive effect.

There is, however, no warrant under § 514 as it now

reads for the courts to reach that result in the teeth of

the statute. Zelinsky, Gobeille, supra.

Under this framework, ERISA § 514(a) creates a

presumption that the Vermont statute at issue in this

case, Vt. Stat. Ann. tit. 18, § 9410, is preempted since

that statute is not a state banking, securities, insur-

ance or criminal law. The next and controlling inquiry

is then whether Vermont can overcome that presump-

tion.

°

CONCLUSION

The Court should acknowledge the tension be-

tween Shaw and Travelers, should resolve that ten-

sion by declaring that ERISA § 514(a) establishes a

presumption for preemption, and should read ERISA

§§ 514(b)(2)(A) and 514(b)(4) as they were written to

identify the only areas of state law protected from

that presumption. This framework should then be

9

used to determine whether ERISA preempts the

Vermont statute and the regulations thereunder.

Respectfully submitted,

EDWARD A. ZELINSKY

BENJAMIN N. CARDOZO SCHOOL oF LAW

YESHIVA UNIVERSITY

Room 941

55 Fifth Avenue

New York, New York 10003

(212) 790-0277

zelinsky@yu.edu

September 1, 2015