Sprint(ing) Right to Federal Court to Protect Plans Against Preempted State Action

You know I think all things are about ERISA, and ERISA is about everything, don’t you? And of course, my view on this is even somewhat logical, and not just an outgrowth of my own personal interests. If you walk, talk, have health insurance, invest for retirement, have a pension or, even more so, work, you and your activities are governed, to a certain extent, day in and day out, by ERISA. That is, of course, an overstatement and oversimplification, but it drives home my point: ERISA regulated and governed activities that we interact with in day to day life are ubiquitous, even if most people are not aware of it.

I mention this because the Supreme Court issued a very interesting decision on Younger abstention Tuesday, in a case, Sprint Communications v. Jacobs, that concerned telecommunications and utility regulators, and had nothing to do with, and never mentioned, ERISA. And yet to me, if you think about it, the decision has a side to it that is very important to ERISA lawyers and particularly litigators, as well as to plan sponsors. In Sprint, the Court made clear that the reach of Younger abstention is very narrow, and it cannot be invoked to regularly deprive federal courts of their jurisdiction over issues governed by federal law, particularly where federal law preempts state action; further, the Court made clear that Younger abstention cannot prevent parties from seeking federal court protection of their federal rights in most cases involving civil remedies, and in particular in cases where state regulators take action that should be preempted by federal law.

I doubt that any statute has broader preemptive effects than ERISA, but at the same time, as noted above, ERISA touches a vast number of the day to day activities and financial interests of private citizens, even without many of them knowing it. This combination means that many state regulatory bodies can, accidentally or on purpose, act in ways that infringe on plan sponsors’ express rights under ERISA to be free of state regulation with regard to their employee benefit plans. Prior to the Supreme Court’s ruling two days ago in Sprint, there may have been some doubt, in at least some jurisdictions, over whether a federal court could act to protect that right while state regulators were proceeding with regard to an ERISA governed benefit plan. Sprint makes clear that the federal courts can intervene to protect the rights of plan sponsors to be free of state regulation, right from the get go, by enforcing ERISA preemption in the face of state regulatory action.