The Employee Benefits Jurisprudence of Justice Anthony Kennedy

As is tradition for the Newsletter, when there is a changing of the guard at the U.S. Supreme Court, we pause to reflect on the employee benefits jurisprudence of the outgoing Justice.  Sometimes that body of work takes the form of majority opinions and other times it can be a particularly interesting dissent or concurrence.

Before we embark on that journey, we would do well to pause on big picture issues and context. Justice Kennedy was elevated to the court from the Ninth Circuit. At the time, he became the third Justice who came to the court from the American West, joining Justice O’Connor and Chief Justice Rehnquist. In addition to his judicial duties he also taught at the McGeorge School of Law in Sacramento, where he grew up. His confirmation was from a decidedly different era and was non-controversial. However, he was in fact the third nominee for the seat vacated by Justice Powell. The prior two nominees for that seat were Robert Bork and Douglas Ginsberg, both of whom had their confirmation issues.

He was not without a sense of humor or appreciation of the occasional uncertainties of sitting on the high court. There are confirmed accounts of a 1992 interview in which Justice Kennedy was said to have been looking out the window at the Court at rival groups of protestors on the last day of a Court session and mused, “Sometimes you don’t know if you’re Caesar about to cross the Rubicon or Captain Queeg cutting your own tow line.” He also once noted that one of the things being on the Court that he missed was the ability to associate with true friends, many of which he grew up with and were parents of children with whom his own children grew up. As many jurists know, being a judge can be a bit isolating.

Many forget that Justice Kennedy was originally a conservative appointee. Others who came along later, some of whom were more conservative or more liberal, created an environment where he and Justice O’Connor appeared to occupy the ideological center. At times that was likely an accurate description, particularly in more recent years when the somewhat cynical phrase “the usual five against the usual four” was born. Partially, because of that status as one not often on the ideological edge and partially because Justice O’Connor was very active and interested in benefits cases, there are many true benefit cases in which he was the voice of the majority opinion or author of a strong dissent. Some were journeyman efforts to resolve questions that just needed an answer.

One of these journeyman cases was Gravel v. Central Pension Fund of the International Union of Operating Engineers, 571 U.S. 177 (2014). There, the question arose in an ERISA context and is important to ERISA litigators, but it was broader in scope. Specifically, when a decision on the merits is issued and the fee and cost application follows, when does the time for appeal begin to run on the merits decision?  Justice Kennedy, writing for the majority, found that a decision on the merits is a final order for 28 U.S.C § 1291 purposes even if fees and costs are yet to be determined.

Another majority decision Justice Kennedy authored was the more recent Gobeille v Liberty Mutual Insurance Company, ___ U.S. ___, 136 S.Ct. 936 (2016) decision arising in the more modern era of health care reform.  Vt. Stat. Ann., Tit.18, §9410(a)(1) required reporting of payments for health care expenses. Those requirements were imposed on all entities that paid for health care expenses. Liberty Mutual challenged application of the statute to its own self-insured plan. Justice Kennedy, writing for a 7-2 majority, found the Vermont statute preempted as to self-insured ERISA plans.

Somewhat more intriguing were his earlier preemption decisions for the majority, which truly could have gone either way.   Boggs v. Boggs, 520 U.S. 833 (1997) is an example. Boggs was part of a series of decisions in that zone where family law and ERISA collide. The Court found that ERISA preempts Louisiana community property law purporting to allow a non-participant spouse to transfer an interest in an undistributed pension plan by will. This, however, was a 5-4 decision and the dissenters were Justices Breyer, O’Connor, Rehnquist, and Ginsberg. This was obviously not a “usual five against the usual four” sort of decision and it turned in part upon one’s views of when the ERISA anti-alienation provision became operative and whether one’s views of property rights were formed in community property states.

Perhaps more intriguing was Mackey v Lanier Collections Agency and Service, 486 U.S. 825 (1988). There the Court found that there was no preemption of garnishment of welfare plans as ERISA Section 206(d) did not apply. In dissent, Justice Kennedy, joined by Justices Blackmun, O’Connor, and Scalia concluded there was nothing in ERISA 514(a) authorizing a distinction between pension and welfare plans and that the existence of the QDRO preemption exception in ERISA Section 514(a)(7) strongly suggested that no such distinction was appropriate.

There is little question that the retirement of Justice Kennedy represents the end of an era on the Court. The Justices who represented a degree of Western perspective on the Court are all gone now. The confirmation process applied to his successor also signals the probable end of an era, and a change of direction, but one with an uncertain course.

As was the case with others before him, the editorial board acknowledges Justice Kennedy’s contribution to the development of ERISA jurisprudence. We all look forward with interest toward how the newly configured court will address benefits issues in the context of a far more mature body of benefits law than that which existed when Justice Kennedy took the bench.

James M. Nelson, Greenberg Traurig