Young Adult Institute, Inc., dba YAI National Institute for People with Disabilities, et al. v. Joel M. Levy, et al.

State and federal law prohibit non-profit corporations from paying excessive or unreasonable executive compensation. This prohibition applies equally to deferred-compensation plans regulated under the Employee Retirement Security Income Act (ERISA). Petitioner Young Adult Institute (YAI) determined that the multi-million-dollar retirement package for its former CEO, Respondent Joel Levy, violated this rule. YAI thus reduced Levy’s remaining retirement benefits to a reasonable level. When Levy challenged this determination in federal court, YAI argued that his ERISA-regulated plan was unenforceable under state and federal common law because it violated the public policy against excessive compensation. The magistrate judge, the district judge, and the Second Circuit all rejected YAI’s public-policy argument as a matter of New York law, but none of them addressed this issue under federal common law, which categorically bars federal courts from enforcing contracts that call for illegal performance. The question presented is: Whether the decision below should be summarily reversed because it refused to decide YAI’s publicpolicy argument that arises under federal common law. (i)