Loper Bright ruling: Impact on DC plan litigation in a post-Chevron world

The Loper Bright case made its way to the United States Supreme Court (the Court) with implications well beyond fishermen and fees for observers. In the lower courts, the opinions relied upon the 1984 case of Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. Ultimately, the Court departed from the Chevron case which previously held that where a statute is unambiguous as to what Congress intended, then Congress’s intent should be followed. However, when a statute is deemed to be ambiguous, then federal agencies may interpret the law, and courts are to defer to that interpretation unless the agency rule is “arbitrary or capricious in substance, or manifestly contrary to the statute.” 

The Court did not stop at Loper Bright. In the Corner Post, Inc. v. Board of Governors of the Federal Reserve System case, the Court issued another opinion in a matter related to debit cards, though the impact was not really on debit cards but was more impactful for a statute of limitations, which means the deadline for filing a lawsuit.

Implications for Plan Sponsors

There are four key implications from the overturning of the Chevron Doctrine. 

1. Loper Bright calls into question guidance from the Department of Labor (DOL). If the DOL only has the authority to issue guidance when Congress has specifically directed them to do so, there is a question as to the weight of the DOL guidance in other instances when Congress was not specific enough as to the need for guidance. 
2. The scope of both Loper Bright and Corner Post are limited to “final agency actions” which does not include informal guidance. Plan sponsors may expect to see more informal guidance such as interpretive guidance and opinion letters (for example, from 2013, the heavily relied upon Target Date Retirement Funds - Tips for ERISA Plan Fiduciaries).
3. There is a transfer of power from the executive branch to the judicial branch. For plan sponsors, this may create less clarity. The judicial branch (i.e., the courts) are often less consistent in their outcomes, as district courts and appellate courts may have conflicting outcomes.  For example, in a series of recent forfeiture cases, there are inconsistencies with respect to the results within a single district court. 
4. There is the opportunity for greater litigation when the Loper Bright case is combined with the implications from the Corner Post case. Litigants will include anyone who loses money from regulation and industry trade groups, which will likely be used to bring many lawsuits collectively on behalf of several organizations. 

Plan sponsors should consider keeping a close eye on how the outcome from Loper Bright may impact their retirement plans, participants, and compliance obligations. Download the full article to learn more about implications and action steps for plan sponsors.