SCOTUS scuppers the CalSavers challenge | AMERICAN SOCIETY OF PENSION PROFESSIONALS & ACTUARIES

Despite a request and an apparent review of that request, the nation’s highest court decided not to hear a case challenging the state-run CalSavers IRA program for private sector workers.

The original costumefiled in the U.S. District Court for the Eastern District of California in 2018 by the Howard Jarvis Taxpayers Association, asserted that the California Secure Choice Retirement Savings Trust Act “violates the Supremacy Clause of the United States Constitution because it is expressly preempted by the employee Retirement Income Security Act of 1974…” Without this preemption, the lawsuit asserts that “…these non-government employee funds will have none of the ERISA protections intended for them by the federal government since 1974.” Therefore, plaintiffs asserted that CalSavers is ultra vires (beyond the powers) and sought a declaration that CalSavers is “null.”

This lawsuit was dismissed with leave to amend – and modified and reclassifiedthe plaintiffs’ argument that ERISA outranked CalSavers was supported by the Ministry of Justice. But when the district court reconsidered the refiled arguments it had already heard – well, Nothing has changed. Plaintiffs therefore appealed to the United States Court of Appeals for the Ninth Circuit. Trump’s Labor Department joined this appeal with a “friend of the court” brief in June 2020stating that he had an interest in “whether state laws are preempted, in properly interpreting the scope of preemption to delineate the roles of federal and state authority over establishing or maintaining regimes of employment-based pensions, and maintaining uniform national standards for the administration of the plans”. — an interest he called “increased” in the case “because the law is among the first of several similar state laws.”

Or that was the position of the ministry until February 2021when Biden’s Labor Department, citing the “change in administration,” said the Acting Labor Secretary had “reconsidered the matter and hereby notifies the Court that he no longer wishes to participate as a ‘amicus in this case and which he does not support on either side. This was followed by a Ninth Circuit ruling in May 2021 determining that CalSavers was not preempted by ERISA, leaving the plaintiffs to ask review by the highest court in the land.

Then, last November, the Supreme Court reached out to CalSavers and California Treasurer Fiona Ma (“in her official capacity as chair of the California Secure Choice Retirement Savings Investment Board”) to seek a response to the HJTA’s October 12 petition. for a writ of certiorari.

That said, and despite the arguments put forward,[1] the highest court in the land has now “denied certiorari” – that is, it has essentially refused to hear the case – which leaves the decision of the lower court[2]—and CalSavers[3]-intact.

Footnotes

[1] “Here, California is inserting itself into this area pre-empted by the federal government and imposing its own mandates and rules that conflict with the structure of ERISA. This deprives employers and employees of their rights under federal law.

[2] The Ninth Circuit ruling said, “We believe the preemption challenge fails. CalSavers is not an ERISA plan because it is established and maintained by the state, not by employers; it does not require employers to manage their own ERISA plans; and it has no impermissible reference or connection to ERISA. CalSavers also does not interfere with the main objectives of ERISA. As a result, ERISA is not ahead of California law.

[3] “It’s great that this matter is finally behind us after nearly four years, but we’ve never let it slow us down,” Chief Executive Katie Selenski said in a press release. Selenski reported that more than 30,000 employers have signed up since the program launched on July 1, 2019, and more than 233,000 workers are saving with funded accounts totaling more than $186 million. “We are laser-focused on attracting tens of thousands more employers this year before and after the June compliance deadline and supporting hundreds of thousands more savers as they begin their savings journey. “Selensky said.

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