Engfer v. Gen. Dynamics Advanced Information Sys., Inc., A13–0872.

• Decision Date: 09 September 2015
• Docket Number: No. A13–0872.,A13–0872.
• Citation: 869 N.W.2d 295
• Parties: Thomas V. ENGFER, Respondent, v. GENERAL DYNAMICS ADVANCED INFORMATION SYSTEMS, INC., Respondent. Department of Employment and Economic Development, Appellant.
• Court: Minnesota Supreme Court

869 N.W.2d 295

Thomas V. ENGFER, Respondent

v.GENERAL DYNAMICS ADVANCED INFORMATION SYSTEMS, INC., Respondent.

Department of Employment and Economic Development, Appellant.

No. A13–0872.

Supreme Court of Minnesota.

Sept. 9, 2015.

Howard L. Bolter, Bolter Law, LLC, Edina, MN, for respondent Thomas V. Engfer.

Lee B. Nelson, Munazza Humayun, Minnesota Department of Employment and Economic Development, Saint Paul, MN, for appellant.

OPINION

DIETZEN, Justice.

Respondent Thomas V. Engfer ended his employment with General Dynamics Advanced Information Systems, Inc., in December 2011. Thereafter, Engfer applied for and received state unemployment benefits from appellant Department of Employment and Economic Development (DEED), and supplemental unemployment benefits through a plan offered by General Dynamics. DEED subsequently reviewed the SUB plan payments, determined that the payments counted as “wages” under Minn.Stat. § 268.035, subd. 29(a) (2014),¹ and concluded that Engfer had been overpaid state unemployment benefits. An unemployment-law judge (ULJ) affirmed DEED's overpayment determination. The court of appeals reversed, concluding that the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 –1461 (2012), preempts a timing provision in Minn.Stat. § 268.035, subd. 29(a)(13), which requires that a SUB plan “provide supplemental payments only for those weeks the applicant has been paid regular, extended, or additional unemployment benefits” in order for the supplemental payments to be excluded from the definition of “wages.” The court of appeals therefore concluded that Engfer was entitled to keep the state unemployment benefits. We affirm the decision of the court of appeals.

Thomas Engfer was laid off by his employer General Dynamics Advanced Information Systems as part of a workforce reduction. When Engfer's employment ended, he was offered the opportunity to participate in a SUB plan established by General Dynamics. The weekly SUB plan payments were intended to supplement Engfer's weekly state unemployment benefits, and when combined, equaled 100 percent of his normal weekly gross pay prior to termination. The SUB plan required Engfer to apply and be found eligible for state unemployment benefits and to contact General Dynamics' plan management firm on a weekly basis to confirm his continued eligibility for those benefits. According to the plan, Engfer would receive SUB plan payments, even when ineligible for state unemployment benefits, in three separate circumstances: (1) during the 1–week “waiting period” for state unemployment benefits, (2) if he had insufficient earnings for state benefits, and (3) if his state benefits expired first. The SUB plan provided 26 weeks of payments, after which Engfer would continue to receive his state unemployment benefits.

Engfer established a benefit account with DEED on December 18, 2011. He began receiving benefits under the SUB plan immediately and state unemployment benefits after the 1–week waiting period. He received $597 every week in state unemployment benefits and $2,369 every 2 weeks in SUB plan payments. The SUB plan payments continued through July 5, 2012, and ended before Engfer's eligibility for state unemployment benefits expired. Engfer received a total of $31,398 in payments from the SUB plan.

In January 2013, DEED relied upon the definition of “wages” in Minn.Stat. § 268.035, subd. 29(a), to conclude that Engfer was not eligible for state unemployment benefits during the period he was receiving supplemental payments through the SUB plan. Because the SUB plan paid benefits during weeks in which plan participants were not eligible to receive state unemployment benefits—specifically, the 1–week waiting period—DEED determined that the SUB plan payments do not qualify for the exclusion from “wages” under the Minnesota unemployment statutes. See Minn.Stat. § 268.035, subd. 29(a)(13) (stating that “wages” do not include “payments made to supplement unemployment benefits under a plan established by an employer” if the plan meets certain conditions, including the condition that the plan provides supplemental payments only for those weeks the applicant has been paid unemployment benefits). Therefore, DEED notified Engfer that he had been overpaid $10,746 in state unemployment benefits. See Minn.Stat. § 268.085, subd. 3(a)(2) (2012) (providing generally that applicants are not eligible to receive unemployment benefits for weeks they have received payments that are considered “wages” equal to or in excess of their unemployment benefit amount).

Engfer appealed the overpayment determination, and a ULJ affirmed. Engfer requested reconsideration, but did not challenge the ULJ's conclusion that, under Minn.Stat. § 268.035, subd. 29(a)(13), the SUB plan payments qualify as “wages.” Instead, Engfer argued that the SUB plan was not valid under ERISA, 29 U.S.C. §§ 1001 –461. The ULJ again affirmed, concluding that whether the SUB plan was valid under ERISA was not relevant to the determination of whether the plan provisions affected Engfer's eligibility for state unemployment benefits.

The court of appeals reversed the ULJ's decision in a divided decision, concluding that ERISA preempts the timing provision in Minn.Stat. § 268.035, subd. 29(a)(13), which provides that, in order for SUB plan payments to be excluded from the definition of “wages,” “[t]he plan must provide supplemental payments only for those weeks the applicant has been paid regular, extended, or additional unemployment benefits.” Engfer v. Gen. Dynamics Adv. Info. Sys., Inc., 844 N.W.2d 236, 241 (Minn.App.2014). The dissent concluded that the provision is not preempted by ERISA. 844 N.W.2d at 244 (Schellhas, J., dissenting). We granted review to resolve the ERISA preemption issue.

I.

DEED argues that the court of appeals erred in concluding that ERISA preempts what we refer to as “the timing provision” of Minn.Stat. § 268.035, subd. 29(a)(13), which provides that, in determining eligibility for state unemployment benefits, SUB plan payments are excluded from the definition of “wages” only if, among other conditions, the plan “provide[s] supplemental payments only for those weeks the applicant has been paid regular, extended, or additional unemployment benefits.” Specifically, DEED argues that the timing provision does not “relate to any employee benefit plan” under 29 U.S.C. § 1144(a), and therefore the timing provision is not preempted by ERISA. Alternatively, DEED argues that the General Dynamics plan is exempt from ERISA coverage under 29 U.S.C. § 1003(b) because the plan is maintained solely for the purpose of complying with applicable unemployment compensation laws. Engfer responds that the court of appeals correctly ruled that there was no overpayment of state unemployment benefits because ERISA preempts the timing provision.

This appeal concerns the interpretation and application of the ERISA preemption clause, which provides:

Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.

29 U.S.C. § 1144(a). To resolve the preemption question, we will first address whether the timing provision in Minn.Stat. § 268.035, subd. 29(a)(13), “relate[s] to” an “employee benefit plan” under ERISA. 29 U.S.C. § 1144(a). We then will address whether the General Dynamics plan is exempt from ERISA coverage under 29 U.S.C. § 1003(b).

Statutory interpretation is a question of law that we review de novo. In re Welfare of J.J.P., 831 N.W.2d 260, 264 (Minn.2013). Our goal in interpreting a state statute is to ascertain and effectuate the intent of the Legislature. Minn.Stat. § 645.16 (2014). When interpreting a statute, we give words and phrases their plain and ordinary meaning. Staab v. Diocese of St. Cloud, 813 N.W.2d 68, 72 (Minn.2012). Further, we read the statute as a whole and give effect to all of its provisions. Our first step is to examine the language of the statute to determine whether it is ambiguous. Premier Bank v. Becker Dev., LLC, 785 N.W.2d 753, 759 (Minn.2010). Statutory language is ambiguous only if, as applied to the facts of the particular case, it is susceptible to more than one reasonable interpretation. Am. Family Ins. Grp. v. Schroedl, 616 N.W.2d 273, 277 (Minn.2000). If the statutory language is unambiguous, we must enforce the plain meaning of the statute and not explore the spirit or purpose of the law. Premier Bank, 785 N.W.2d at 759.

Our approach in interpreting a statute enacted by Congress is the same. We first examine the language of the statute and give the words used their ordinary meaning. Lawson v. FMR LLC, ––– U.S. ––––, 134 S.Ct. 1158, 1165, 188 L.Ed.2d 158 (2014). When a statute's language is plain, the sole function of the courts is to enforce the statute according to its terms. Sebelius v. Cloer, ––– U.S. ––––, 133 S.Ct. 1886, 1896, 185 L.Ed.2d 1003 (2013). We must presume that “a legislature says in a statute what it means and means in a statute what is says.” Conn. Nat'l Bank v. Germain, 503 U.S. 249, 253–54, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992). Thus, when the words of the statute are unambiguous, the first step is also the last, and “judicial inquiry is complete.” Rubin v. United States, 449 U.S. 424, 430, 101 S.Ct. 698, 66 L.Ed.2d 633 (1981).

A.

We begin our analysis with the state statutory provision. The Minnesota Unemployment Insurance Law provides temporary partial wage replacement to workers who are unemployed through no fault of their own. Minn.Stat. § 268.03, subd. 1 (2014). An applicant is not eligible for state unemployment benefits for any week he or she receives “wages” from his or her employer after completion of employment.See Minn.Stat. § 268.085, subd. 3(a)(2) (2012). The term “wages” is defined...