Kaplan v. Saint Peter's Healthcare Sys.
| Decision Date | 30 April 2019 |
| Docket Number | Civil Action No. 13-2941 (MAS) (TJB) |
| Parties | LAURENCE KAPLAN, Plaintiff, v. SAINT PETER'S HEALTHCARE SYSTEM, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
This matter comes before the Court upon two motions: (1) Defendants'1 Motion to Dismiss and Strike (ECF No. 200) and (2) Plaintiff Laurence Kaplan's ("Plaintiff") Motion to Strike (ECF No. 202). Plaintiff opposed Defendants' motion (ECF No. 201), and Defendants replied (ECF No. 209). Defendants opposed Plaintiff's motion (ECF No. 208), and Plaintiff replied (ECF No. 210). Pursuant to 28 U.S.C. §§ 516 and 2403(a), the United States intervened and filed a Memorandum in Support of the Constitutionality of the ERISA2 Church Plan Exemption. (ECF No. 212.) Plaintiff subsequently filed a notice of supplemental authority. (ECF No. 213.) The Court has carefully considered the arguments and decides the matter without oral argument pursuant to LocalCivil Rule 78.1. For the reasons set forth herein, Defendants' Motion to Dismiss and Plaintiff's Motion to Strike are denied.
On May 7, 2013, Plaintiff initiated this putative class action lawsuit against SPHS and others arguing that the Saint Peter's Healthcare System Retirement Plan (the "SPHS Plan") was not a "church plan" and SPHS was violating provisions of ERISA by operating the SPHS Plan as a church plan. (See Compl. ¶ 4, ECF No. 1.) On March 31, 2014, the Court denied Original Defendants' Motion to Dismiss finding that, as a matter of law, the SPHS Plan is not a church plan, as defined in ERISA. Kaplan v. Saint Peter's Healthcare Sys. (Kaplan I), No. 13-2941, 2014 WL 1284854 (D.N.J. Mar. 31, 2014). On September 19, 2014, the Court granted Original Defendants' Motion to Certify the Court's March 31, 2014 Order for Interlocutory Appeal and to stay proceedings pending the appeal to the Third Circuit. (Sept. 19, 2014 Order, ECF No. 111.) The Third Circuit affirmed the Court's March 31, 2014 decision. Kaplan v. Saint Peter's Healthcare System (Kaplan II), 810 F.3d 175 (3d Cir. 2015). Defendants sought, and the Supreme Court granted, certiorari. Saint Peter's Healthcare Sys. v. Kaplan, 137 S. Ct. 546 (2016). The Supreme Court subsequently reversed the Third Circuit and held that "a plan maintained by a principal-purpose organization . . . qualifies as a 'church plan,' regardless of who established it." Advocate Health Care Network v. Stapleton, 137 S. Ct. 1652, 1663 (2017).
On July 25, 2018, the Honorable Tonianne J. Bongiovanni, U.S.M.J., granted Plaintiff's Motion to Amend. (Letter Order, ECF No. 192.) On August 8, 2018, Plaintiff filed an Amended Complaint. (Am. Compl., ECF No. 195.)
Plaintiff alleges that "[t]his case is about [SPHS's] failure to properly maintain its pension plan under ERISA." (Id. ¶ 6.) Specifically, Plaintiff alleges SPHS is "violating numerous provisions of ERISA—including, on information and belief, underfunding the [Plan] by over $130million—while erroneously claiming that the [SPHS] Plan is exempt from ERISA's protections because it is a 'church plan.'" (Id. ¶ 9.) Plaintiff alleges that due to SPHS's "failure to maintain an ERISA-compliant Plan backed by insurance, and because of [SPHS's] continuing refusal to adequately fund the [SPHS] Plan, there exists a substantial risk that the [SPHS] Plan will be unable to pay the accrued pension benefits to which Plaintiff[] and the other Class members are entitled." (Id. ¶ 15.)
Plaintiff alleges that the SPHS Plan is a "non-contributory defined benefit pension plan" that was established in 1974. (Id. ¶¶ 58, 69, 70.) Plaintiff further alleges that from 1974 until 2010, the SPHS Plan "was operated as an ERISA-covered plan[,]" and "was funded in accordance with ERISA, met ERISA reporting requirements, and paid premiums to the Pension Benefit Guarantee Corporation ("PBGC"), the federal agency that provides pension insurance to ERISA covered plans." (Id. ¶ 58.) Plaintiff avers that in 2006, SPHS determined that the SPHS Plan "was a church plan not subject to ERISA and sought a private ruling with the [Internal Revenue Service] confirming" the same. (Id. ¶ 60.) SPHS received a letter ruling from the Internal Revenue Service on August 13, 2013. (Id. ¶ 61.) Plaintiff alleges that as of December 31, 2016, the SPHS Plan was underfunded by more than $130 million. (Id. ¶ 68.) Plaintiff alleges that SPHS "funds the [SPHS Plan] and has the power to amend and terminate the [SPHS Plan]." (Id. ¶ 66.) SPHS named the Plan Committee as the plan administrator. (Id. ¶ 67.)
Plaintiff alleges that the SPHS Plan is an "'employee pension benefit plan' within the meaning of ERISA [S]ection 3(2)(A), 29 U.S.C. § 1002(2)(A)." (Id. ¶ 69.) Furthermore, the SPHS Plan is a "defined benefit plan within the meaning of ERISA Section 3(35), 29 U.S.C. § 1002(35)." (Id. ¶ 70.) Plaintiff avers that the SPHS Plan is not a church plan pursuant to "ERISA [S]ection3(33)(A)3 or [S]ection 3(33)(C)(i),4 29 U.S.C. §§ 3(33)(A) or (C)(i)." (Id. ¶ 84.) Plaintiff alleges that the SPHS Plan is not a church plan under ERISA Section 3(33)(A) because SPHS "is not a church or a convention or association of churches, and does not claim to be" any of the same. (Id.) Plaintiff alleges that ERISA Section 3(33)(c)(i) does not apply because the SPHS Plan is not maintained by a "principal purpose organization"5 as defined in the same section. (Id. ¶¶ 85-86.)
Plaintiff alleges that even if the SPHS Plan were maintained by a permissible entity under Section 3(33)(A), the SPHS Plan fails to meet the definition of a church plan for several other reasons. (Id. ¶¶ 88, 96, 101, 102.) Plaintiff also alleges that the church plan exemption as claimed by SPHS violates the Establishment Clause of the United States Constitution. (Id. ¶¶ 103-06.)
Plaintiff brings this action as a putative class action pursuant to Federal Rule of Civil Procedure 23.6 (Id. ¶ 107.) Plaintiff's putative class definition is "[a]ll participants or beneficiaries of any Plan operated as or claimed by [SPHS] to be a Church Plan of [August 8, 2018,]" excluding "any high level executive at [SPHS] or any employees who have responsibility or involvement in the administration of the plan, or who are subsequently determined to be fiduciaries of [the SPHS Plan], including the Individual Defendants." (Id.)
Plaintiff's Amended Complaint asserts fourteen counts. (See id. ¶¶ 123-278.) Counts I through VIII are asserted pursuant to various provisions of ERISA. (See id. ¶¶ 124-204.) Count IX seeks a declaration that the church plan exemption violates the Establishment Clause. (Id. ¶¶ 205-15.) Counts X through XIV are pled as "alternative claims for relief under State law in the event the Court determines that the [SPHS Plan] is a Church Plan exempt from ERISA." (Id. at 51 n.4.)
On September 7, 2018, Defendants moved to dismiss the Amended Complaint pursuant to Rule 12(b)(1) and Rule 12(b)(6). (Defs.' Mot. to Dismiss 2, ECF No. 200.) In the alternative, should any claims survive Defendants' Motion to Dismiss, Defendants move to strike paragraph 54 of the Amended Complaint. (Id.) On October 29, 2018, Plaintiff opposed Defendants' motions. (Pl.'s Opp'n Br., ECF No. 201.) On the same day, pursuant to Rule 12(f), Plaintiff moved to strike the Certifications of Garrick Stoldt and Monsignor John Fell and related exhibits attached toDefendants' motion. (Pl.'s Mot. to Strike, ECF No. 202.) On December 10, 2018, Defendants opposed Plaintiff's Motion. (Defs.' Opp'n Br., ECF No. 208.) On December 12, 2018, Defendants replied to Plaintiff's opposition. (Defs.' Reply Br., ECF No. 209.) On December 21, 2018, Plaintiff replied to Defendants' opposition. (Pl.'s Reply Br., ECF No. 210.) On February 8, 2019, pursuant to 28 U.S.C. §§ 2403(a) and 517, the United States filed a brief in support of the constitutionality of the church-plan exemption. (Intervenor's Br., ECF No. 212.) On March 28, 2019, Plaintiff filed a Notice of Supplemental Authority providing the Court with a copy of Cappello v. Franciscan Alliance, Inc., No. 16-290, 2019 WL 1382909 (N.D. Ind. Mar. 27, 2019).
Because federal courts are courts of limited jurisdiction, the party seeking to invoke the Court's jurisdiction bears the burden of proving the existence of subject matter jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Pursuant to Rule 12(b)(1), the Court's jurisdiction may be challenged either facially (based on the legal sufficiency of the claim) or factually (based on the sufficiency of a jurisdictional fact). Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). On a facial attack, the Court considers only the allegations of the complaint and documents referenced therein, construing them in the light most favorable to the plaintiff. Pearson v. Chugach Gov't Servs., Inc., 669 F. Supp. 2d 467, 469-70 (D. Del: 2009). On a factual attack, Mortensen v. First Fed. Saw & Loan Ass'n, 549 F.2d 884. 891 (3d Cir. 1977).
The "'irreducible constitutional minimum' of standing consists of three elements[:] [t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challengedconduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016), as revised (May 24, 2016). "Injury in fact is a constitutional requirement, and '[i]t is settled that Congress cannot erase Article III's standing requirements by statutorily granting the right to sue to a plaintiff who would not otherwise have standing.'" Id. at 1547-48 (quoting Raines v. Byrd,...
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