Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio.
Speaker 1: The Supreme Court has ruled that US Bank won't have
Speaker 1: to face a lawsuit challenging steep losses to its pension
Speaker 1: plan because the planned participants who filed suit have nothing
Speaker 1: to gain or lose through the case. It was a
Speaker 1: five to four decision along familiar ideological lines. My guest
Speaker 1: is Robert Hockett, a professor at Cornell Law School. Bob
Speaker 1: tell us about the issue behind this case. So the
Speaker 1: issue here was whether a couple of pensioners who hold
Speaker 1: stakes in the particular pension had standing to sue those
Speaker 1: who were managing the pension for having lost a great
Speaker 1: deal of money out of the pension right through excessively
Speaker 1: reckless and or insufficiently careful investment activity. And normally, if
Speaker 1: you were a shareholder in a particular fund such that
Speaker 1: your own payout was a function of the value of
Speaker 1: the fund itself, it would be very clear right that
Speaker 1: you've lost money at the fund lost money, and that
Speaker 1: you had gained money at the fund gained money. But
Speaker 1: because these are pensioners who have basically fixed income rights
Speaker 1: in the investment trust, their income is the same right
Speaker 1: no matter what the value of the pension, at least
Speaker 1: assuming that the pension kind of continues in existence and
Speaker 1: has not gone bankrupt, right and in other ways, in
Speaker 1: more or less ordinary times, quite irrespective of the value
Speaker 1: of the fund, the pensioners have the same rights to
Speaker 1: the same income because these are essentially debt liabilities that
Speaker 1: the fund owes to the pensioners, right, rather than equity liabilities.
Speaker 1: So the question really is whether the pensioners have standing
Speaker 1: to sue UH in light of some loss of value
Speaker 1: on the part of the fund, because legally speaking, the
Speaker 1: obligations that are owed to the pensioners are not contingent
Speaker 1: on the value of the fund. Right, strictly speaking, the
Speaker 1: fund has to pay the fixed obligation, whether it be
Speaker 1: worth five billion dollars or a hundred billion dollars. Right,
Speaker 1: So again, in sort of strictly legal terms, nothing sort
Speaker 1: of changes for the pensioners just cause the pension itself
Speaker 1: might change in value. But you know, you of course
Speaker 1: know by now, I mean the questions are almost never
Speaker 1: strictly legal or strictly theoretical in cases like this, because
Speaker 1: of course we're really dealing with the reality of which
Speaker 1: risk matters. In other words, a pensioner's likelihood of actually
Speaker 1: receiving what she is owed is not only a function
Speaker 1: of the legal obligations of the fund manager. It's also
Speaker 1: a function of the financial health of the fund. If
Speaker 1: the fund, in other words, is in the vicinity of insolvency,
Speaker 1: then the risk that the pensioners don't end up being
Speaker 1: paid grows appreciably right if not indeed enormously in some cases.
Speaker 1: And so what that means, in turn is that there
Speaker 1: really is a particular danger to which the pensioners are
Speaker 1: subject if the fund is mismanaged, and if it loses
Speaker 1: value massively and thus endures a sort of significant rise
Speaker 1: in the likelihood that it will ultimately fail and go
Speaker 1: bankrupt and not be able to pay out its liabilities.
Speaker 1: And how is the Supreme Court treating this issue of
Speaker 1: standing in recent years when it comes to standing all
Speaker 1: rights on some very curious developments in the Supreme Court
Speaker 1: over the last thirty years where standing doctrine is concerned. So,
Speaker 1: by way of very very brief background, um, the way
Speaker 1: we tend to operate under the Article three of our
Speaker 1: Constitution is essentially just sort of treat our courts as
Speaker 1: deciders of what we oftentimes call actual cases or controversies. Right.
Speaker 1: In other words, some actual material state has to be
Speaker 1: at stake in a lawsuit. We don't typically think of
Speaker 1: our courts as entities that sort of just declare what
Speaker 1: the law is, just as as if they were professors. Right. Um,
Speaker 1: they don't simply uh answer theoretical questions or sort of
Speaker 1: way in theoretical questions. Uh. They decide actual cases and controversies.
Speaker 1: And so if you, June had a beef with with me, bob, um,
Speaker 1: let's say, with respect to my theory of relative theory
Speaker 1: of relativity, you and I have a just agreement or
Speaker 1: the theory of relativity. Um, you know, this is not
Speaker 1: an actual case or controversy between us. It's simply a
Speaker 1: disagreement on the theory of relativity. So you wouldn't really
Speaker 1: have standing to sue me, and you wouldn't have a
Speaker 1: cause of action against me either in a case like that.
Speaker 1: On the other hand, if I do something to sort
Speaker 1: of deprive you of something to which you're entitled, if
Speaker 1: I steal from you, for example, if I harm you
Speaker 1: in any particular way, then of course you do have
Speaker 1: standing to sue. We have an actual material dispute rather
Speaker 1: than to say, theoretical dispute, and so the courts are
Speaker 1: situated to decide it. Now, that's a pretty easy distinction
Speaker 1: to draw, right that. The somewhat harder part sometimes can
Speaker 1: be a circumstance in which the disagreement that we're talking
Speaker 1: about is definitely over something concrete and real, it's not
Speaker 1: really theoretical. However, in some cases, the concrete or real
Speaker 1: thing might not be an actually occurred harm or actually
Speaker 1: a current harm, but might be a substantial rise in
Speaker 1: the likelihood of harm. Right. In other words, the sort
Speaker 1: of risk of harm might rise significantly. And so the
Speaker 1: question then for a court to sort of figure out
Speaker 1: is do we think of a risk, right that sort
Speaker 1: of increases the likelihood of a physical harms happening, or
Speaker 1: at actual concrete harms occurring. Should we think about a
Speaker 1: theoretical thing, kind of like the theory of relativity, or
Speaker 1: should we think of it as itself a real thing?
Speaker 1: Right that, basically, you know, risk is a real thing,
Speaker 1: it's not just theoretical. And you know, historically we've tended
Speaker 1: to answer that question in the affirmative that basically the
Speaker 1: risk is a real thing. And so if I do
Speaker 1: something that subjects you to significant risk, or that actually,
Speaker 1: you know, lowers the expected value of some asset that
Speaker 1: you hold, like the pension benefit, that's a concrete harm
Speaker 1: as far as the law is concerned. And that's the
Speaker 1: way it has typically been in our legal history. Starting
Speaker 1: in the nineteen eighties and proceeding on to the nine
Speaker 1: nineties right down to the present, the Supreme Court seems
Speaker 1: to have been really kind of keen on limiting people's
Speaker 1: access to the courts. And one way of doing that,
Speaker 1: of course, is to shrink the number of things that
Speaker 1: count as concrete or actual non theoretical harms. The more
Speaker 1: such things they can remove from the class of actual
Speaker 1: concrete harms, the harder it gets for you or me
Speaker 1: to get into court, because the harder it gets for
Speaker 1: you or me to establish that we have standing, that
Speaker 1: we actually have an actual case or controversy that is
Speaker 1: sort of amenable to judicial decision or adjudication. So, in
Speaker 1: a sense, you can view this particular case, this particular
Speaker 1: decision by the Supreme Court is simply the latest in
Speaker 1: this rather distressing, from my point of view, long line
Speaker 1: of decisions that have sort of progressively narrowed the doorway
Speaker 1: for you and I to get access to justice in
Speaker 1: the courts, basically simply by defining in a sense out
Speaker 1: of existence certain harms that previously would have been treated
Speaker 1: as actual harms and would have been defined as harms
Speaker 1: and us would have qualified us to get into court
Speaker 1: withstanding to sue. So in this particular case, you it's
Speaker 1: it's quite transparent. In Kavanaugh's rather surprisingly school boyish opinion
Speaker 1: for the majority, tell us more about Kavanaugh's opinion for
Speaker 1: the Conservative majority in the case, he says, you know, look,
Speaker 1: this is a fixed liability and the part of the
Speaker 1: pension um that's owed to these pensioners um. That means that,
Speaker 1: at least legally speaking, uh, they basically enjoy the same
Speaker 1: benefit through the pension if they win this suit as
Speaker 1: if they lose this suit. Right, the outcome of the suit,
Speaker 1: in other words, doesn't change the liability that the pension
Speaker 1: fund owes to the pensioners. Therefore, it makes no difference
Speaker 1: whether they're in the suit or not, and therefore they
Speaker 1: don't have standing. Right. But again, the problem with that
Speaker 1: line of reasoning is it completely ignores the fact that
Speaker 1: there are two determinants of harm here, right. One is
Speaker 1: the legal obligation of the pension fund, which is admittedly
Speaker 1: invariant as between the circumstance in which the plaint iss
Speaker 1: win and the circumstances which they lose. But the other determinant,
Speaker 1: again is the actual likelihood of being hey right, the
Speaker 1: actual risk of the funds turning out not to be
Speaker 1: able to pay what it oes and thus going bankrupt.
Speaker 1: And that's just completely ignored. It's treated this so we're
Speaker 1: just a non existent issue. It's almost as there were
Speaker 1: there were sort of a blind spot where the color
Speaker 1: orange and Justice Kavanaugh was wearing orange glasses and so
Speaker 1: he just couldn't see it. It's just sort of not
Speaker 1: there as far as he is concerned. And in that sense,
Speaker 1: this is a sort of garden variety, you know, once
Speaker 1: again narrowing the doorway standing determination by the Supreme Court.
Speaker 1: So you know, if you I think what this means
Speaker 1: really is there's sort of two reasons to bases on
Speaker 1: which to be sort of really disturbed about this decision.
Speaker 1: The first is what I just mentioned, that it is
Speaker 1: just yet another one of these cases that sort of
Speaker 1: narrows the doorway, makes it less and less possible for
Speaker 1: you or me uh to get redress in the courts
Speaker 1: of law, which are there to provide us with redress.
Speaker 1: And secondly um it sort of carries on with this
Speaker 1: tendency among some judges to treat risk as we're something
Speaker 1: that's not real, as though it were as theoretical as
Speaker 1: the theory of quantum mechanics or something, so that disputes
Speaker 1: over risks are no different than disputes in Parisian cafes
Speaker 1: over you know, the truth or falsehood of the theory
Speaker 1: of quantum mechanics or the theory of relativity or what
Speaker 1: have you. And risk is not like that, right. The
Speaker 1: only proof you need of that is just to look
Speaker 1: at our financial markets, right. I mean, basically, every price
Speaker 1: associated with every asset in any financial market is itself
Speaker 1: partly a function of the risk that attaches to that asset.
Speaker 1: In other words, we deal not in value but in
Speaker 1: expected value when we're talking about financial assets, and that
Speaker 1: means we're treating risk as something real. We're treating risk,
Speaker 1: in other words, as something with a dollar value. Right.
Speaker 1: A riskier asset is something that all else being equal,
Speaker 1: you pay less for, and a less risky asset, all
Speaker 1: else being equally you pay more for right, it's dollar valued.
Speaker 1: What could be more concrete or real than that in
Speaker 1: a modern economy? Um, And so when Justice Kathina sort
Speaker 1: of pretends like, well, the only things that are concrete
Speaker 1: are this really primitive things like you know, clubs and
Speaker 1: baseball bats and fists in your nose and stuff. But
Speaker 1: but you know, risk is just not real. I mean,
Speaker 1: it's it's, first of all, again very primitive. It's a
Speaker 1: very sort of pre modern way of thinking of the
Speaker 1: world or thinking of things. But it's also completely obtuse
Speaker 1: to pretty much everything that gets done in our economy,
Speaker 1: pretty much every decision that stated in our economy, because
Speaker 1: every decision made in our economy is at least partly
Speaker 1: made on the basis of perceived or even measurable risks.
Speaker 1: You look at this and you say, well, it's just
Speaker 1: an issue of standing. Why is it a five to
Speaker 1: four split along ideological lines? Give us another explanation of
Speaker 1: why this split the justices along ideological lines? Sure? Yeah, so, Um.
Speaker 1: The reason that this tends that that the standing question
Speaker 1: tends to divide the court belonging at theological lines, and
Speaker 1: tence sort of invites the five four type decisions that
Speaker 1: we see so much of these days is precisely that
Speaker 1: it's primarily political and judicial conservatives who have been sort
Speaker 1: of who have been the primary drivers, you might say,
Speaker 1: of this long term trend over the last thirty years
Speaker 1: or so within the Supreme Court to narrow the gates
Speaker 1: through which people can get um in order to get
Speaker 1: access to justice. In other words, conservatives for the last
Speaker 1: three years or so seemed to be really reluctant to
Speaker 1: let people have access to the courts um. And so,
Speaker 1: you know, the whole history of the conservative legal movement
Speaker 1: over the last thirty years or so is in a
Speaker 1: sense a sort of history of systematic, uh diminishment of
Speaker 1: the grounds on the basis of which you can get
Speaker 1: justice in a court of law. And if you think
Speaker 1: about it, this kind of hangs together rather nicely, right
Speaker 1: with the sentence, the way in which conservatives and political
Speaker 1: campaigns and then their rhetoric in congression and legislatures and
Speaker 1: so forth, are always demonizing the quote unquote the trial lawyers.
Speaker 1: You know, they're always upset about lawyers, they seem to
Speaker 1: and they're always on about unelectric judges, and you know,
Speaker 1: there's that tendency for them to demonize the courts and
Speaker 1: and and and the legal process and the law itself.
Speaker 1: There's this kind of inherent suspicion that they seem to
Speaker 1: have UM. And so I think, you know, if you
Speaker 1: look at the way they've sort of changed standing doctrine
Speaker 1: over the years, if you also look at the doctrine
Speaker 1: surrounding the circumstances that determining the circumstances under which there
Speaker 1: are private rights of action that individuals can bring into court,
Speaker 1: you know, as distinguished from regulators uh sort of uh
Speaker 1: initiating process in the court about UM. If you look
Speaker 1: at UM, you know, the grounds on which people even
Speaker 1: are deemed as having causes of action under particular bodies
Speaker 1: of law, the regulatory law or other. The trend is
Speaker 1: pretty much the same, you know, all of those different
Speaker 1: realms UM when it comes to conservative the judges or
Speaker 1: lawyers or legislators on the one hand, and non conservative
Speaker 1: judges or lawyers or or or politicians on the other hand.
Speaker 1: In general, those who are not conservative seem to be
Speaker 1: more friendly to the idea of giving people access to justice,
Speaker 1: making sure that people have access to the courts, making
Speaker 1: sure that people can vindicate their rights and enforce their
Speaker 1: rights in courts of law. That's what the courts are for,
Speaker 1: after all. And then it seems that what the conservatives
Speaker 1: are sort of all about is sort of progressively taking
Speaker 1: all of that stuff away, sort of diminishing. So let
Speaker 1: me ask you this. The circuit courts were split before
Speaker 1: this decision. Does this mean that those courts will now
Speaker 1: have to follow this decision? Yeah, the short answer is yes, um.
Speaker 1: And the slightly longer answer is that mainly yes. So
Speaker 1: so to explain, I mean, the reason that the short
Speaker 1: answer is yes is that, yeah, that's that's typical ground
Speaker 1: on which the Supreme Court to science to hear a case. Right,
Speaker 1: it has discretion to not to hear cases or to
Speaker 1: go ahead and hear them. And what are the principal
Speaker 1: reasons are basically on which the Supreme Court will go ahead, um,
Speaker 1: and grant the so called rite of sertuary and thus
Speaker 1: hear a case and decide it is the so called
Speaker 1: circuit split. Right, if there's a significant split between circuits
Speaker 1: in the country, then to sort of resolve the ambiguity,
Speaker 1: the Supreme Court will take the case and sort of
Speaker 1: you know, weigh in and settle it once and for all.
Speaker 1: And that's the way it's supposed to work, that theory,
Speaker 1: and in general that's the reality as well. The one
Speaker 1: sense in which you might hedge this, and hence the
Speaker 1: slightly longer answer, um, is that you know, if this
Speaker 1: decision is as controversial as it seems to me it
Speaker 1: ought to be, um, and hence remains a kind of
Speaker 1: contested territory for a while, then circuits that are that
Speaker 1: do not find this opinion persuasive or congenial or consistent
Speaker 1: with principles of justice will look for grounds on which,
Speaker 1: to quote unquote, distinguish this decision from later cases that
Speaker 1: might come up. Right. In other words, other cases might
Speaker 1: come up that are similar to this one in some
Speaker 1: respects while also differing from it in other respects. And
Speaker 1: if it's plausible to sort of single out the differing
Speaker 1: respects in any particular case as legally relevant or salient,
Speaker 1: then you might, as a circuit court come come down
Speaker 1: in a way that's not in a sense consistent with
Speaker 1: this Supreme Court decision. But but on the other end,
Speaker 1: kind it is right, um, because you can sort of say, well, look,
Speaker 1: if this particular case before us were identical in every
Speaker 1: relevant respect to the case that was before the Supreme Court.
Speaker 1: In this decision, then yes, we would be bound by
Speaker 1: that Supreme Court decision. But again, at this case before
Speaker 1: us differs in some legally relevant respect or seemingly salient
Speaker 1: or important respect from the case that was before the
Speaker 1: Supreme Court, then we can plausibly argue that that Supreme
Speaker 1: Court decision doesn't actually apply here. It's about a different
Speaker 1: sort of issue than this issue, um, and therefore we
Speaker 1: can come down differently, even if it's superficially looks like
Speaker 1: it is a decision that is intentioned with that Supreme
Speaker 1: Court decision, and whether that happens is pretty much just
Speaker 1: a matter of, you know, just sort of what happens
Speaker 1: out there in the world. That's the sort of function
Speaker 1: of what sorts of disputes or cases or controversies arise
Speaker 1: if anybody brings them to court, and then whether they
Speaker 1: get past the disreport up to the circuit court in
Speaker 1: the territory in question. Thanks Bob. That's Robert Hacket, a
Speaker 1: professor at Cornell Law School. And that's it for the
Speaker 1: edition of Bloomberg Law. I'm June Grosso. Thanks so much
Speaker 1: for listening, and remember to tune to The Bloomberg Law
Speaker 1: Show weeknights at ten pm Eastern, right here on Bloomberg Radio.