Conkright v. Frommert: Supreme Court Takes An ERISA Mulligan (Again)

Posted on June 28, 2010 by Kendall Gray

A mulligan, in a game, happens when a player gets a second chance to perform a certain move or action. The practice is also sometimes referred to as a "do-over."

--Wikipedia

Alas, dear reader.  Here is where you get to find out what an ERISA geek I am.  I've worked in this area since about 1998, that fateful weekend when I made a note book of all the Supreme Court ERISA cases and studied them.  

'Cuz that's how I roll.

So, imagine how my heart went pitter pat when the Supreme Court released Conkright v. Frommert a few weeks ago and delved into the "abuse of discretion" standard of review for ERISA benefit determinations.

(Just a minute.  I need to take a moment to gather myself.  I'm all verklempt.  Talk amongst yourselves.)

Conkright is a lesson in how loose lips from prior opinions sink ships for clients and counsel looking for legal standard they can follow.  More precisely, it is a lesson in how mushy judicial language and multi-prong balancing tests create problems -- lawsuits born of ambiguity -- that some later court has to clean up.

After the jump, I'll explain why Conkright is an ERISA Mulligan that was needed to clean up its prior, imprecise opinion.  And as a bonus, I'll explain that it's at least the second such Mulligan the Supreme Court has needed in this area. 

Most ERISA plans vest plan administrators with "discretion" in interpreting the plan and deciding whether to award benefits.  Courts must defer to that discretion.  Not every disagreement is ought to even wind up in court, let alone stay there long.

Easy, right? 

Not so much.

Firestone Tire & Rubber Co. v. Bruch was necessary to establish that, yes, Virginia, the administrator really does have discretion when the plan document says so.  So, these ERISA benefit disputes need not clog the courts.  If they are appealed, they can be handled as administrative actions.  Tie goes to the runner.  If the administrator's decision has support in the evidence, the court must defer.  Done, right? 

Not exactly.

The Court later granted certiorari in Metropolitan Life v. Glenn.  There, the plan administrator was also the insurer and operated under a structural conflict of interest, no matter how small, in determining any individual claim for benefits.  Does deference still apply?

The court's solution was to come up with an indecipherable Rube Goldberg machine of multi-factor balancing prongs to determine whether the administrator's decision was still entitled to deference.  The outcome of any benefit dispute could end up depending more on which district judge or which panel one drew rather than on the administrative record or the plan terms.  Deference in theory became de novo in practice

So, among its other tasks in Conkright, the Court needed a Mulligan to re-cast its holding in Glenn.  You can almost hear the Court express, "what we meant to say was . . . ."  Observe:

This Court addressed the standard for reviewing the decisions of ERISA plan administrators in Firestone, 489 U. S. 101. . . . We recognized that, under trust law, the proper standard of review of a trustee’s decision depends on the language of the instrument creating the trust. See id., at 111–112. If the trust documents give the trustee “power to construe disputed or doubtful terms, . . .the trustee’s interpretation will not be disturbed if reasonable.” Id., at 111. . . .

We expanded Firestone’s approach in Metropolitan Life Ins. Co. v. Glenn, 554 U. S. ___ (2008). . . . We held that, when the terms of a plan grant discretionary authority to the plan administrator, a deferential standard of review remains appropriate even in the face of a conflict. See id., at ___ (slip op., at 9).

(Emphasis added).

Oh.  But of course.  That's what Glenn meant.  I'm glad Chief Justice Roberts cleared that up for me.

It reminds me very much of Aetna Life Inc. v. Davila, the Court's last ERISA Mulligan.  Pilot Life was clear: no state law claims when your ERISA benefits are denied or delayed.  But then came the murky "Travelers Trilogy" and then Pegram--all full of Souterese about how preemption or managed care worked without discernable rules or holdings.  So, the court needed a Mulligan in Davila--"what we meant to say . . . . ."

At argument, when the plaintiffs put their gloss on Pegram, Justice Souter (the author) was left to sputter, "That's not what Pegram means at all."  And when they tried to explain why Justice Souter's opinion in Traveler's changed ERISA preemption, Justice O'Connor (the author of Pilot Life) was heard to remark, "That train already left the station in Pilot Life."  And the Mulligan opinion in Davila announced that the train had, indeed, already left the station:

[A]ny state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore pre-empted.

I'm glad Justice Thomas finally told me what all that Souterese meant. 

But in the interim, fertilized by all that Souterese, there was no end of clever lawyering to try and avoid preemption.  Not that I'm complaining.
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Salazar v. Buono: Something Only A Lawyer Could Believe

Posted on April 29, 2010 by Kendall Gray

I can no longer find the quote, but I heard it said somewhere that the definition of a "legal fiction" is "something only a lawyer could believe."  I could not avoid that impression upon reading Salazar v. Buono (pdf), decided Tuesday by the Supreme Court of the United States. 

At issue?  According to Justices Kennedy and Alito: two lengths of four inch pipe, painted white and arranged in the shape of a cross, erected 10 miles from the nearest highway in a portion of the Mojave desert owned by the federal government that exceeded the combined area of the Nation's five smallest states and that was "likely . . . seen by more rattlesnakes than humans." The pipe sparked four lower court opinions to the effect that such pipes "establish" a religion, which, once established could not be cured by Congress passing a law to transfer the land into private hands for continued maintenance as a monument to "the Great War."

Why?  According to Justice Scalia: Because Mr. Buono was "deeply offended by the display of a Latin Cross on government-owned property" but had "no objection to Christian symbols on private property."

Hemmed in as they were by Mr. Buono's first final judgment, for which Supreme Court review was never sought, the Supreme Court could not reach the merits of whether such a display "established" a religion or whether Mr. Buono's "deep offense" was a sufficient injury to "make a federal case" out of it.  Nevertheless, the Court devoted 71 pages of judicial contretemps in six opinions concerning whether Mr. Buono's Constitutional right not to be "deeply offended" survived the Congressional transfer of the land to the Veterans of Foreign Wars. 

And they remanded to the District Court for further proceedings on the transfer of the land with the lengths of four inch pipe.

Now, don't get me wrong.  I don't discount real establishment clause issues as unimportant or simplistic.    I was at just such an argument the very day this case came out.  But is Buono how we should be expending our judicial resources as Plaintiffs or as Defendants or as Courts?  Especially in a case where no Establishment Clause precedent is even possible?

Chief Justice Roberts' concurring opinion said it best.  This is not surprising, because it was also the shortest.  I reproduce it here in full:

At oral argument, respondent’s counsel stated that it “likely would be consistent with the injunction” for the Government to tear down the cross, sell the land to the Veterans of Foreign Wars, and return the cross to them,with the VFW immediately raising the cross again. Tr. of Oral Arg. 44. I do not see how it can make a difference for the Government to skip that empty ritual and do what Congress told it to do—sell the land with the cross on it. “The Constitution deals with substance, not shadows.” Cummings v. Missouri, 4 Wall. 277, 325 (1867).

(Emphasis added).

For all the post-opinion-learned-head-cogitation on my television, there is very little "there" there.  Whether one's own culture war scruples emphasize "establishment" or "free exercise," the substance of those protections is cheapened for both sides when the alleged injury and the substantive controversy are something only a lawyer could believe. 

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