THELTON E. HENDERSON, JUDGE, UNITED STATES DISTRICT COURT.
Defendants' motion to dismiss came before the Court on November 4, 2013. Having considered the parties' arguments and the papers submitted, the Court now DENIES Defendants' motion for the reasons set forth below.
Defendant Dignity Health ("Dignity")
Rollins alleges that Dignity's Plan violates the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq. Dignity contends that its Plan need not comply with ERISA because it is a "church plan," which the statute explicitly exempts from its requirements. Rollins maintains that the Plan does not qualify as a church plan as defined by ERISA and in the alternative, if the Plan is exempt, such an exemption violates the Establishment Clause of the First Amendment and is therefore void. Id. ¶¶ 162-164.
On behalf of herself and others similarly situated, Rollins seeks declaratory relief
Dismissal is appropriate under Federal Rule of Civil Procedure 12(b)(6) when a complaint's allegations fail "to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). In ruling on a motion to dismiss, a court must "accept all material allegations of fact as true and construe the complaint in a light most favorable to the nonmoving party." Vasquez v. Los Angeles County, 487 F.3d 1246, 1249 (9th Cir.2007). To survive a motion to dismiss, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
Enacted in 1974, ERISA was designed to ensure that employees actually receive the benefits they are promised by establishing, among other requirements, minimum funding standards and disclosure obligations for employee benefits plans. Pub. L. No. 94-406, 88 Stat. 829 (1974), codified at 29 U.S.C. §§ 1001 et seq. ERISA explicitly exempted "church plans" from its requirements and explained "the term `church plan' means [] a plan established and maintained for its employees by a church or by a convention or association of churches." 29 U.S.C. § 1002(33)(A) (1976). The statute permitted a church plan to also cover employees of church agencies, but the permission was to sunset in 1982. Id.
In 1980, ERISA was amended to eliminate the 1982 deadline and to include other clarifications. The relevant statutory section, 29 U.S.C. § 1002(33), now reads as follows:
29 U.S.C. § 1002(33).
According to Rollins, despite the language in section C(i), which permits church-associated organizations to maintain church plans, section A still demands that only a church may establish a church plan. Although Rollins also disputes whether Dignity is a church-associated organization under section C(i), the Court first addresses, and finds dispositive, her argument that Dignity is not a church, and as such cannot establish a church plan, and therefore that Dignity's Plan is not a "church plan" under the statute.
Dignity does not contend that it is a church or that its Plan was started by a church. Rather, relying primarily on section C, it argues that the ERISA statute allows a plan to qualify as a church plan regardless of what entity established the plan, so long as the plan is maintained by a tax-exempt non-profit entity "controlled by or associated with a church or a convention or association of churches." 29 U.S.C. § 1002(33)(C)(i). Because it is a tax-exempt entity associated with the Roman Catholic Church, and its Plan is maintained by a subcommittee associated with the Roman Catholic Church, Dignity argues that, as a matter of law, its Plan qualifies as a church plan.
Thus, the primary question before the Court is whether the ERISA statute requires a church plan to have been established by a church, or whether the statute merely requires that a church plan be maintained by a tax-exempt organization controlled by or associated with a church.
At the outset, the Court notes that although Dignity argues that "three decades of agency interpretations" — specifically a series of Internal Revenue Service ("IRS") private letter rulings ("PLRs") — support its position that to
When interpreting a federal statute, a court's goal is to "ascertain[] the intent of Congress" and "giv[e] effect to its legislative will." In re Ariz. Appetito's Stores, Inc., 893 F.2d 216, 219 (9th Cir.1990). "The preeminent canon of statutory interpretation requires us to presume that the legislature says in a statute what it means and means in a statute what it says there." BedRoc Ltd., LLC v. United States, 541 U.S. 176, 183, 124 S.Ct. 1587, 158 L.Ed.2d 338 (2004) (internal quotation marks omitted). In construing the provisions of a statute, a court should thus "first look to the language of the statute to determine whether it has a plain meaning." Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir.2009). To the extent a statute is not "plain," a court may look to the traditional canons of statutory interpretation and to the statute's legislative history. Nw. Forest Res. Council v. Glickman, 82 F.3d 825, 830-31 (9th Cir.1996).
The Court's inquiry into whether a plan qualifies as a church plan begins with the text of section A, which, again, states:
29 U.S.C. § 1002(33)(A) (emphasis added). A straightforward reading of this section is that a church plan "means," and therefore by definition, must be "a plan established... by a church or convention or association of churches."
Complicating the inquiry, however, is section C, which states:
29 U.S.C. § 1002(33)(C) (emphasis added). Dignity contends that section C(i) includes within the category of plans "established and maintained ... by a church" — "a plan maintained by a [church-associated] organization;" therefore, any plan that is maintained by a church-associated organization is a church plan, regardless of whether the plan was established by a church or convention or association of churches. Mot. at 17-18. Although Dignity's proposed reading of the statute is not unreasonable on its face, it violates long-held principles of statutory construction and therefore cannot be the meaning of the statute.
To begin, Dignity's reading violates a "cardinal principle of statutory construction... to give effect, if possible, to every clause and word of a statute rather than to emasculate an entire section." Bennett v. Spear, 520 U.S. 154, 173, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (internal citations and quotation marks omitted). If, as Dignity argues, all that is required for a plan to qualify as a church plan is that it meet section C's requirement that it be maintained by a church-associated organization, then there would be no purpose for section A, which defines a church plan as one established and maintained by a church. In 1980, Congress amended the church plan exemption portion of the statute to add the language in section C relied upon by Dignity. At the same time, Congress chose to retain the language in section A, that the "[t]he term `church plan' means a plan established and maintained by a church." To completely ignore the language of section A — language that Congress actively retained — violates the principle to give effect to every clause and word and the related principle "not to interpret a provision in a manner that renders other provisions of the same statute inconsistent, meaningless or superfluous." In re HP Inkjet Printer Litig., 716 F.3d 1173, 1184 (9th Cir.2013).
Dignity's reading not only renders section A meaningless, but also disregards the limiting language of section C(i), that to maintain a church plan, an organization must not only be associated with the church, but it must have as its "principal purpose or function ... the administration or funding of a [benefits] plan or program... for the employees of a church." Dignity is a healthcare organization; its mission is the provision of healthcare, not the administration of a benefits plan. While its Retirement Plans Sub-Committee's purpose is plan administration, the statute does not say that the organization may have a subcommittee who deals with plan administration. Rather, the statute dictates that organization itself must have benefits plan administration as its "principal purpose," which Dignity plainly does not.
Furthermore, Dignity's suggested interpretation would reflect a perfect example of an exception swallowing the rule. While the amended section C(i) does permit church plans to include plans maintained
The canon expressio unius est exclusio alterius also militates against Dignity's interpretation of the statute. The canon instructs that "where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (citation omitted). Based on this canon, we must presume that Congress acted intentionally in using the words "establish and maintain" in section A as something only a church can do, as opposed to the use of only the word "maintain" in section C(i) to refer to the capabilities of church-associated organizations. To assert that any church-associated organization can establish its own church plan fails to appreciate the distinction drawn by Congress through its purposeful word choice.
Moreover, the use of the word "maintain by an organization" in section C(i) mirrors the word "maintain" in the preceding clause, "a plan established and maintained by a church." This repetition of the word "maintain" without the word "establish" suggests that only the category of "who may maintain a church plan" is being expanded upon in section C(i), not the category of "who may establish a church plan."
At oral argument, Dignity also relied on section C(ii), which allows employees of church-associated organizations to be covered by a church plan, to support its position. Dignity argued that because it is associated with a church and its employees can be covered by a church plan, that its Plan is a church plan. That an established church plan may include employees of a church-associated organization, however, does not mean that an associated organization may establish a church plan. Section C(ii) merely explains which employees a church plan may cover — once a valid church plan is established. It does nothing more.
The Court holds that notwithstanding section C, which permits a valid church plan to be maintained by some church-affiliated organizations, section A still requires that a church establish a church plan. Because the statute states that a church plan may only be established "by a church or by a convention or association of churches," only a church or a convention or association of churches may establish a church plan. 29 U.S.C. 1002(33)(A). Dignity's effort to expand the scope of the church plan exemption to any organization maintained by a church-associated organization stretches the statutory text beyond its logical ends.
The Court acknowledges that the position it takes here runs contrary to several cases outside this circuit that have considered the church plan exemption and have held that it applies to plans established by church-affiliated entities. Although those cases are not binding authority, the Court has nevertheless examined each contrary case and is not convinced by the reasoning the cases employed.
Initially, the Court notes that the contrary cases themselves differ in their interpretations of the statutory text. Several cases to have explored the issue appear to have read section C(i)'s language on who
As explained in detail above, the Court is not persuaded by these flawed approaches. Rather, it adheres to the principle that Congress "says in a statute what it means and means in a statute what it says there." BedRoc Ltd., LLC, 541 U.S. at 183, 124 S.Ct. 1587 (internal quotation marks omitted). If Congress intended to alter the types of entities that can establish a church plan, such amendment would have been made to section A, which again, clearly states that a church plan is one "established and maintained ... by a church or by a convention of association of churches." The Court is not compelled by the legal gymnastics required to infer from section C's grant of permission to church associations to maintain a church plan, or its broad view of which employees may be covered by a church plan — that a church plan may be established by any entity other than a church or a convention or association of churches as set forth in section A.
Although the text is conclusive, the Court notes that legislative history also strongly supports its reading. The history explains that the purpose behind section C was only to permit churches to delegate the administration of their benefits plans to specialized church pension boards without losing their church plan status; it was not to broaden the scope of organizations who could start a church plan.
Prior to the amendment, because the statute read that a church plan was one "maintained by a church or by a convention or association of churches," churches whose plans were managed by pension boards were concerned about their status. To ensure they could maintain the exemption, leaders of several large church organizations wrote to and testified before Congress about their concerns.
In response to the churches' concerns, Sen. Herman E. Talmadge of Georgia introduced legislation as far back as 1978, with language substantially identical to the language currently in section C(i), to ensure that "a plan funded or administered through a pension board ... [would] be
When seeking to add the language about the church plan exemption reflected in section C into S. 1076, Sen. Talmadge explained to the Senate Finance Committee that the purpose of his proposal was to expand the church plan definition to include "church plans which rather than being maintained directly by a church are instead maintained by a pension board maintained by a church." Senate Committee on Finance, Executive Session Minutes, June 12, 1980, at 40. In turn, a Press Release documenting the Senate Finance Committee's favorable report on the legislation that same day stated that the Committee had "agreed that the current definition of church plan would be continued.... The definition would be clarified to include plans maintained by a pension board maintained by a church." Press Release, United States Senate Committee on Finance (June 12, 1980).
Likewise, once the provision was incorporated into H.R. 3904, the Senate Labor and Human Resources Committee noted on August 15, 1980, that pursuant to the amended bill, the definition of a church plan "would be continued" and only "clarified to include plans maintained by a pension board maintained by a church." Senate Labor and Human Resources Committee Report on H.R. 3904, August 15, 1980. The same position was echoed in the House by Representative Ullman in his comments on August 25, 1980, just weeks before the bill's passage. 126 Cong. Rec. H23049 (daily ed. Aug. 25, 1980). The legislative history thus demonstrates that section C(i) was only intended to permit church pension boards to administer church plans; it was never contemplated to be so broad as to permit any church-affiliated agency to start its own plan and qualify for ERISA exemption as a church plan.
In sum, both the text and the history confirm that a church plan must still be established by a church. Because Dignity is not a church or an association of churches, and does not argue that it is, the Court concludes that Dignity does not have the statutory authority to establish its own church plan, and is not exempt from ERISA as a matter of law. Defendants' motion to dismiss on this ground is thereby DENIED.
Consequently, the Court refrains from ruling on Rollins's constitutional claim which is premised on a finding that Dignity's plan is exempt from ERISA. For the same reason, the Court also declines to consider Dignity's argument that its exemption from ERISA eliminates the Court's subject matter jurisdiction over this suit. In its reply brief, Dignity also argued that the Court lacks subject matter jurisdiction "because courts may not entangle themselves in a church's affairs."
For the foregoing reasons, Defendants' motion to dismiss is DENIED.
