Hightower v. Texas Hosp. Ass'n

• Decision Date: 28 September 1995
• Docket Number: No. 94-40728,94-40728
• Parties: Pens. Plan Guide P 23916A Virginia HIGHTOWER, et al., Plaintiffs-Appellees, v. TEXAS HOSPITAL ASSOCIATION, et al., Defendants, Memorial Hospital Foundation of Palestine, Inc., dba Memorial Hospital, Anderson County Memorial Hospital Retirement Plan, aka The Texas Association Retirement Plan for Member Hospitals--Anderson County Memorial Hospital, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 443

65 F.3d 443

Pens. Plan Guide P 23916A

Virginia HIGHTOWER, et al., Plaintiffs-Appellees, v. TEXAS HOSPITAL ASSOCIATION, et al., Defendants Memorial Hospital Foundation of Palestine, Inc., dba Memorial Hospital, Anderson County Memorial Hospital Retirement Plan, aka The Texas Association Retirement Plan for Member Hospitals--Anderson County Memorial Hospital Defendant-Appellant.

No. 94-40728.

United States Court of Appeals Fifth Circuit.

Sept. 28, 1995.

Deborah G. Hankinson, William L. Banowsky, Sharon M. Fountain, Alison Roseman, Thompson & Knight, Dallas, TX, for Memorial Hosp.

Cecil A. Ray, Jr., Dallas, TX, Kirk P. Watson, Whitehurst, Harkness & Watson, P.C., Austin, TX, for Hightower, et al.

Appeal from the United States District Court for the Eastern District of Texas.

Before DAVIS and JONES, Circuit Judges, and COBB, District Judge. ¹

PER CURIAM:

Employees of Anderson County Memorial Hospital brought suit as class-member plaintiffs against Memorial Hospital Foundation of Palestine, Inc. to recoup approximately $750,000 of surplus funds created by the Foundation's termination of the Anderson County Memorial Hospital Retirement Plan. The district court granted partial summary judgment for the Employees on the grounds that the Foundation maintained the Plan and, therefore, any termination of the Plan was subject to the provisions of the Employee Retirement Income Security Act of 1974, 29 U.S.C. sections 1001 et seq. The district court then certified its order granting partial summary judgment to this court pursuant to 28 U.S.C. section 1292. For the reasons stated herein, we AFFIRM IN PART and REVERSE IN PART.

BACKGROUND

This action arises out of the termination of the Anderson County Memorial Hospital Retirement Plan (Plan). Anderson County (County), a governmental entity in the state of Texas, established this Plan in 1969 for the benefit of the employees of Anderson County Memorial Hospital (Hospital). The Plan remained intact until September 22, 1988, when the County leased the Hospital to the Memorial Hospital Foundation of Palestine, Inc. (Foundation). The Foundation became the employer of all Hospital employees effective on the Commencement date of the lease. Thus the employees ceased being government employees on that date. The lease also stated that the Foundation would assume responsibility for the Hospital employees' retirement plan.

The Foundation itself did not actively participate in or take control over the Plan at any time after the execution of the lease; those duties remained with the Plan administrator. Approximately six weeks after the commencement date of the lease, the Foundation terminated the existing Plan and created a new employee retirement system. At termination, the Plan had a surplus of approximately $750,000 after each beneficiary was paid. The Foundation then transferred the surplus to its operating account. The dispute centers on who is entitled to the $750,000 surplus generated by the termination of the pension fund. If the plan is governed by the Employee Retirement Income Security Act of 1974 (ERISA), the employees may be entitled to receive the surplus. On the other hand, the Foundation may be entitled to keep the pension surplus benefits if the plan continues to be considered a governmental plan, exempt from ERISA coverage.

The parties agree that the Plan qualifies as an employee pension benefit plan under 29 U.S.C. section 1002(2)(A). Not surprisingly, plaintiffs contend that once the Foundation assumed control over the Hospital, all of its employees, and the Plan, the governmental plan exemptions, 29 U.S.C. sections 1003(b)(1), 1321(b)(2), no longer applied. As such, the Plan became subject to ERISA and plaintiffs assert that the Foundation terminated the Plan in violation of Titles I and IV of ERISA. 29 U.S.C. Sec. 1001 et seq.; 29 U.S.C. Sec. 1301 et seq. Conversely, the Foundation maintains that the Plan remained, at all times, a governmental plan exempt from ERISA coverage, and it further contends the exemptions applied even after the execution of the Hospital lease that made all of the Hospital employees Foundation employees.

The employees/beneficiaries of the Plan filed a class action suit against the Foundation. The district court partially granted plaintiffs' Motion for Summary Judgment finding that the Foundation maintained the Plan. The court held that, by maintaining the Plan, the Foundation's actions served to extinguish the governmental plan exemption, 29 U.S.C. section 1321(b)(2). The court also concluded that Title I, section 1003(b)(1), is inapplicable because of clearly expressed legislative intent to the contrary. The district court then, sua sponte, certified its order for appeal to this court pursuant to the provisions of 28 U.S.C. section 1292.

STANDARD OF REVIEW

28 U.S.C. section 1292(b) provides that this court may review controlling questions of law presented by an interlocutory appeal of a district court's partial summary judgment order. Original jurisdiction arises from the necessary analysis of the federal questions involving the interpretation and application of 29 U.S.C. sections 1002(32), 1003(b)(1) and 1321(b)(2) of ERISA. See 29 U.S.C. Sec. 1132(e); 28 U.S.C. Sec. 1331. A district court's grant of summary judgment is reviewed de novo. Makedwde Publishing Co. v. Johnson, 37 F.3d 180, 181 (5th Cir.1994). A de novo review requires that we apply the same standard as the district court when deciding whether summary judgment was properly granted. Id. Summary judgment is appropriate when the movant is able to demonstrate that the pleadings, affidavits, and other evidence available to the court establish that there are no genuine issues of material fact, and that the moving party is entitled to summary judgment as a matter of law. Fed.R.Civ.P. 56(c); See Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); and Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-88, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986).

The Court must view the evidence introduced and all factual inferences from the evidence in the light most favorable to the party opposing summary judgment. Eastman Kodak v. Image Technical Services, 504 U.S. 451, 456-58, 112 S.Ct. 2072, 2077, 119 L.Ed.2d 265 (1992); Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356. A party opposing summary judgment may not rest on mere conclusory allegations or denials in its pleadings. Fed.R.Civ.P. 56(e); see also Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 82, 121 L.Ed.2d 46 (1992).

DISCUSSION

Title I of ERISA, 29 U.S.C. section 1001 et seq., explains the various substantive and procedural requirements of the statute. This remedial statute was enacted to encourage the establishment and growth of private pension plans and to protect the participants in those plans. 29 U.S.C. Sec. 1001(c); see generally, Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 361-362, 100 S.Ct. 1723, 1726, 64 L.Ed.2d 354 (1980).

Although recognized as a "comprehensive and reticulated statute," ² Congress excluded certain plans from ERISA coverage. See 29 U.S.C. Sec. 1003(b)(1); 29 U.S.C. Sec. 1321(b). 29 U.S.C. section 1003(b)(1) excluded governmental plans from ERISA coverage under Title I. For purposes of Title I, section 1002(32) defined "governmental plan" as "a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing." 29 U.S.C. Sec. 1002(32).

ERISA also excluded certain plans from Title IV coverage. See 29 U.S.C. Sec. 1321(b)(2). In relevant part, section 1321(b)(2) states that ERISA coverage does not apply to any plan "established and maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing...." 29 U.S.C. Sec. 1321(b)(2).

The parties agree that upon the Plan's inception, it qualified as an exempt governmental plan not subject to ERISA's coverage provisions. Therefore, before the Foundation and the County executed the lease agreement, the Hospital's employees were covered by an exempt governmental plan as defined by Title I and Title IV of ERISA. See 29 U.S.C. Sec. 1002(32); 29 U.S.C. Sec. 1321(b)(2). The Foundation, however, contends that the district court erred in determining that it maintained the plan for purposes of removing the Title IV, 29 U.S.C. 1321(b)(2), ERISA governmental plan exemption. The Foundation also asserts that the district court ignored the plain meaning of the Title I, 29 U.S.C. section 1002(32), definition of a governmental plan. We disagree.

When courts interpret statutes, the initial inquiry is the language of the statute itself. United States v. James, 478 U.S. 597, 604, 106 S.Ct. 3116, 3120, 92 L.Ed.2d 483 (1986); United States v. Barlow, 41 F.3d 935, 942 (5th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1389, 131 L.Ed.2d 241 (1995). We look at the language of the statute as well as the design, object and policy in determining the plain meaning of a statute. Crandon v. United States, 494 U.S. 152, 158, 110 S.Ct. 997, 1001, 108 L.Ed.2d 132 (1990); United States v. Mathena, 23 F.3d 87, 92 (5th Cir.1994). The statute must be read as a whole in order to ascertain the meaning of the language in context of the desired goals envisioned by Congress. See King v. St. Vincent's Hosp., 502 U.S. 215, 221, 112 S.Ct. 570, 574, 116 L.Ed.2d 578 (1991); and see Mathena, 23 F.3d at 92. Only if the language is unclear do we turn to the legislative history. Toibb v. Radloff, 501 U.S. 157, 162, 111 S.Ct. 2197, 2200, 115 L.Ed.2d 145 (1991).

1. ERISA's Goals and...