Super-lawyer David Boies has been at the center of some of the biggest legal battles in recent American history, including Bush vs. Gore, U.S. vs. Microsoft and the fight about California’s Proposition 8 and gay marriage.
Now Treasurer Gina Raimondo has lured Boies to Rhode Island to join the legal team defending the state’s landmark pension overhaul; he’s even cut his fee from $1,250 an hour to just $50. The first major hearing before R.I. Superior Court Judge Sarah Taft-Carter is scheduled for Friday morning.
Boies is chairman of the law firm Boies, Schiller and Flexner LLP. He sat down Thursday with WPRI.com to discuss the reason he took the case, how he views the legal arguments, and why he thinks liberal Democrats should support the pension law. The transcript has been lightly edited for clarity.
Let’s dive right in on the legal issues. Judge Taft-Carter says employees and retirees have an implied contract right to their promised pension benefits. You think she’s wrong.
Yes. I think there’s a difference between a statute and a contract. But obviously my view doesn’t control; I’m just an advocate for one particular party. What matters is what the courts ultimately decide. And so what we’ll be doing in the course of the proceeding is each side will have an opportunity to set forth their arguments for why this is or is not a contract.
Do you think it’s already too far gone at the Superior Court level because of Taft-Carter’s decision about the implied contract, and it will have to go to a higher court?
No, I think that any decision at this stage is open to review, as a case progresses, if we are successful in convincing the court that there is a difference between a statute and a contract – particularly in the situation where you’re talking about financial matters.
There are serious questions, indeed serious constitutional questions, as to whether one legislature can in fact bind another legislature by in effect saying we’re going to make these promises that we’re not going to appropriate the money for, that you’re going to have to appropriate the money for later.
There are also just serious contract questions, as to whether and under what circumstances a statute can actually constitute a contract. We know what most contracts are: most contracts are where two parties sit down at a table, we bargain, they negotiate back and forth, they finally write something up, and both sides sign it. It’s a literal contract that you look at.
This of course is not that, and the question that the courts will have to resolve – the threshold question the court will have to resolve – is whether or not a statute like this could be considered a contract under normal contract law, and then they’ll have to consider the question as to whether one legislature can bind another legislature, particularly in financial and appropriation matters.
Do you think that’s an area that could be fruitful for this argument? I haven’t heard too much about that from our lawyers here so far – about past legislatures binding future ones. Can a legislature from the 1970s promise a pension now?
I think there are many good policy reasons why one legislature should not be able to bind another. There are a number of constitutional arguments why, as a constitutional matter, a legislature should not be able to bind a subsequent legislature. But again those are the kinds of things we’re going to have to go through.
If there is a contract right, however, do you think there’s then an argument that the state can change those benefits in an emergency?
Yes. The constitutional law is more developed in the federal context than it is under the Rhode Island constitution; I think if you look to federal impairment of contract cases as a guide, though, you will see that the law is quite well-established, that the legislature has the right to modify contracts and modify contractual obligations – in fact, that’s actually done quite regularly in a wide variety of contexts. And as a matter of public policy, I think that’s a critical power in a democracy. As a matter of constitutional law, that policy has been well-accepted for decades, maybe centuries.
I think the issue always is, when is an impairment so extreme and so unjustified that there are limits on the ability to impair a contract? Here, I think, the factual development will demonstrate that there is a very serious need to do this – that this is not something that has been done lightly without justification. It is, I think, a stereotypical case of where the legislature has not only the right but the responsibility to take action to preserve the public welfare.
It doesn’t help anybody if states and municipalities become insolvent. It certainly doesn’t help the citizens who depend on states and municipalities for services, and that includes many of our country’s most vulnerable citizens. And it doesn’t help the public employees, either – no employee is helped when their employer is insolvent. So I think that what the legislature has done has been to try and balance the kind of considerations that legislatures are supposed to balance. How do you deal with this financial crisis?
Now the plaintiffs here have sometimes said the state of Rhode Island is not insolvent enough to take these measures. We haven’t raised taxes to the absolute maximum – it’s not Greece yet here – and because of that there were other steps that could be taken; we could have done a special income tax to fund pensions – there were other ways, and the state hasn’t reached that level of crisis. Do you disagree with that?
I think if you look at the extent of the financial crisis it’s hard to say that this is not a serious issue. Taxes are already a lot higher in Rhode Island than they are in many other places in this country, and I think that trying to expect the legislature to raise taxes even further in this environment underscores the reason why one legislature should not be able to bind subsequent legislators. You can’t have a situation in which one legislature passes something that has to be funded in the future and then the subsequent legislature, when it’s trying to balance the needs of the people at that time and what’s best for all the citizens of the state, has that legislative judgment taken away from them because a prior legislature has already written a law that cannot be sustained in a different context.
And did so in a different time –
A different time, different circumstances – and different voters! If the voters when this passed originally said, OK, what we’re going to do is we’re going to set up a fund, and we’re going to tax people right now to put money into that fund and pay for it, that would be one thing. But the argument is that the legislature years ago passed a statute and now the current legislature can’t change that statute. That’s an extraordinary argument.
Do you think there’s a distinction between the base pension and the cost-of-living adjustments, the COLAs? One that will matter in this case?
I think probably at the end of the day, probably not, because the legislature has the ability to reform both of those elements. However, I think there are obviously policy distinctions between the two.
You told The New York Times you may – this was [reporter] Mary Williams Walsh’s words, not yours – you “could even ask to move the case into federal court.” How could that work? Can a state action –
No. No. That isn’t what I think. I don’t think that’s what I said. I think that what I said was that this case had been framed to be in state court.
You did say that in the article. But prior to that she said you may try to move this into federal court.
No, I’m sure I didn’t say that – the law is quite clear. The lower federal courts have no appellate jurisdiction over what happens in state courts.
That’s what I thought, yeah.
There’s a doctrine called the Rooker-Feldman doctrine – I guess Rooker’s one case and Feldman’s another case – but it’s quite clear that a case that is in state court can’t be removed, and this can’t be removed, unless it’s at the very beginning of a case – for example, if there’s diversity of citizenship or something like that. But leaving that aside, which is not relevant to this case, you can’t move a case to federal court except under very extraordinary circumstances.
Now what does happen is if there are federal issues in the case there’s ultimately an appeal from the Rhode Island Supreme Court to the United States Supreme Court, but only to the extent that there are federal issues that are implicated by the decision.
In other words, you can’t ask the U.S. Supreme Court to review decisions on state-law matters made by the Rhode Island Supreme Court.
There’s a heated debate going on in Rhode Island right now about whether the state should go into settlement negotiations with the retirees and the unions, the argument being that this always happens in large-scale litigation. Do you think that’s harmful, or do you think those should get started?
I don’t really have a view on that. That’s really something for the principals to address. I think that the retirement system that I represent has good legal arguments. On the other hand, as a matter of public policy, if they decide that they want to negotiate, they may decide now is the time, they may decide some other time’s the time, they may decide it’s not appropriate to negotiate over a statute that was passed by the legislature and signed by the governor. But those are all questions really for the principals of the case.
You’re famous as a champion of liberal legal causes – Al Gore’s presidential candidacy, gay marriage in California. Now you’re going up against unions to take away benefits from workers. Does that make you uncomfortable? Have you gotten pushback from your liberal friends?
Not really – remember, there are probably very few states that are more Democratic than Rhode Island, and probably few people in Rhode Island that are stronger Democrats than the treasurer here. This is not a liberal or conservative issue or a Republican or Democratic issue. This is an issue as to how do we reform state and municipal obligations so that everybody is protected – all the stakeholders, all the state and municipalities. That includes obviously the people who depends on the state and municipalities for services, but it also includes the employees.
One of the reasons why I think historically these questions have been left to the legislature and not the courts is because legislatures balance those kinds of political judgments. The legislature tries to figure out how, in a financial crisis, do you come up with a system that makes nobody perfectly well-off – it doesn’t protect anybody 100% – but it makes everybody as well as off as they can be under the circumstances. That’s the function of a legislature.
I think this kind of issue must be addressed, and it must be addressed by Democrats. It must be addressed by people who believe in government, who believe that government has a role, who believe that government is in fact part of the solution. Maybe sometimes it’s part of the problem, too, but it is certainly part of the solution. And government can’t be part of the solution unless government is solvent.
You’re one of the most accomplished lawyers in the country, but you’re here in Rhode Island to take a case at a rock-bottom fee on a very dull subject, at least when you get into the weeds of it. Why are you here?
If you think this is dull, you should see the Microsoft case – trying to program a personal computer!
But this is, I think, a critically important issue, not just for Rhode Island – although it is critically important for Rhode Island – but for the country. We have $5 trillion of unfunded obligations at the state and municipal level. If we can’t reform those obligations in some sensible way, it’s going to be a disaster for everybody. It’s going to be a disaster for everybody that depends on state and municipal services; it’s going to be a disaster for everybody that’s employed.
And if we can’t get together and do what the Rhode Island legislature did in a bipartisan way to solve this problem, what you’re going to do is you’re going to push people to the extremes. You’re going to get the kind of movement that you had, for example, in Wisconsin, which I was totally opposed to.
So people who are painting you and Gina Raimondo as Scott Walkers with a friendly face – that is not how you see it.
No. There was never an attack on unions here. In fact, I would say that this is the kind of action that’s necessary to preserve the accommodations to unions that have been made in the public sector. There is a tradition in a lot of the country of deep-seated suspicion to public-employee unions.
Many state don’t allow it.
Well exactly. That is not a sentiment that I share; I believe that public-employee unions play an important role. But that doesn’t mean that they, like any stakeholder, have the right to sit back and say all the pain and burden is going to fall on somebody else.
Amy Monahan, the professor who does a lot of work on pension law, studied a case in Minnesota where she said the court decided to defer to legislative decisions and allow a temporary reduction in COLAs. Although the different states’ legal decisions only hold within their own borders, do you think it affects the other 49?
It does. It clearly has a policy atmospheric effect. And clearly each state looks to other states to see how they’re dealing with these kinds of problems. And those precedents are important persuasive precedents. They are not legally controlling. Each state has the sovereign right to interpret its own laws its own way. But I think that these kind of decisions from other states inevitably influence courts in Rhode Island, and what the courts in Rhode Island do is inevitably going to impact what happens in other states.
That’s why I think this is such a critical issue, not just for the citizens of Rhode Island, but for citizens in the states around the country.
Do you do much litigation in state courts? I know you best from federal cases like Bush vs. Gore, though of course Prop 8 in California was a state issue.
And Bush v. Gore started out as a state case – and from my perspective should have remained there. (Laughs) •
(photo: Boies, Schiller and Flexner LLP)