I suspect that no one understands as well as an ERISA litigator the extent to which the rules governing judicial decision making either determine the outcome of a dispute or, at a minimum, dictate a specific and limited range of potential outcomes as well as establish the respective odds of each. In the context of denial of benefit claims under ERISA, there is simply no question that the determination of the standard of review for the dispute – whether it is discretionary review or instead de novo review – effectively dictates either the outcome of the case or the odds of any of a limited number of potential outcomes occurring. In fact, whether evaluating the strength of a potential case as a plaintiff’s lawyer for a participant or the strength of the defense as counsel to a plan administrator, the standard of review to be applied by the court is the first issue considered.

When the Supreme Court suggests in Loper Bright Enterprises v. Raimondo that it is simply resetting the rules of the road, or in the hackneyed metaphor, establishing the strike zone for calling balls and strikes, by replacing Chevron deference with a different decision making hermeneutic, ERISA litigators know that they are doing a lot more than that, and instead are altering outcomes in future regulatory disputes in predictable ways, simply by changing the rules for judicial decision making.

In the context of ERISA, I generally don’t believe uncertainty is beneficial to participants, plan sponsors or plan fiduciaries, and the increased questioning of the validity of regulatory initiatives that will be ushered in by the new approach to testing regulations doesn’t benefit any of those three groups. As I discussed in Robert Steyer’s article in Pension & Investments titled “The Litigation Floodgates Are Expected To Open. How The Supreme Court’s Chevron Deference Ruling Expands Judges’ Roles” over the long holiday weekend:

Replacing regulators’ expertise in highly technical matters with judges who lack such expertise is “not a recipe for predictability,” said Stephen Rosenberg, a partner with The Wagner Law Group.

“From here out, essentially any complex regulatory action or detailed, complicated body of rules is and will be only tentative, subject to whatever any particular judge believes is appropriate, in terms of whether the statutory language allows for the action or regulation,” Rosenberg said.

I expanded on this view in Robert’s subsequent article, “Defined Contribution Is Rife With Legal And Management Challenges. Post-Chevron, It Could Get Worse,” when I explained:

The Supreme Court’s majority opinion said scrapping the Chevron deference would create more predictability for businesses because they wouldn’t be whipsawed by the changing policies of changing political administrations — an assertion that ERISA attorney Stephen Rosenberg said is misguided.

“The implicit and explicit suggestion that doing away with it will improve the ability of regulated actors to understand their responsibilities and project out what their legal obligations are, seems to me to be wildly inaccurate in the context of entities operating under ERISA,” said Rosenberg, a partner in the Wagner Law Group.

“Predictability, uniformity and consistency are a tremendous boon to the regulated entities that make up the ERISA marketplace,” Rosenberg said.

“That is going to be a lot harder to do if, as is now going to be the case, the meaning or enforceability of a given regulatory initiative is always in doubt and its long-term viability can never be assumed,” he said. “I don’t personally see the unpredictability that will be ushered in by the court’s decision as any type of a boon to any of the players in the ERISA universe.”

There are plenty of regulations and agency action that are poorly conceived, and quite often unlikely to be what Congress actually would have intended if it had, collectively, ever actually formed an opinion (it’s kind of a ridiculous legal fiction to act as though Congress formed some form of “intent” with regard to a particular regulatory approach to the operational details of the legislation it enacts). Either way, though, the uncertainty of this new approach isn’t the best fit for the operational realities of ERISA plans.

One of the more interesting things to me about the demise of Chevron deference in the context of ERISA is it’s impact on the private attorney general aspect of ERISA, where so much of the change in standards for fiduciary conduct is driven not by governmental action, but instead by the class action bar (and the settlements and court rulings that the suits they file trigger). Does decreasing the ability of the Department of Labor to regulate the conduct of ERISA plans and their fiduciaries just increase the already outsized significance in this area of the class action bar? Time will tell, but you can tell by the fact that I ask the question, what I think the answer will likely turn out to be.