Rollins v. Dignity Health, Case No. 13-cv-01450-TEH
| Decision Date | 26 November 2014 |
| Docket Number | Case No. 13-cv-01450-TEH |
| Court | U.S. District Court — Northern District of California |
| Parties | STARLA ROLLINS, Plaintiff, v. DIGNITY HEALTH, et al., Defendants. |
On July 22, 2014, the Court granted partial summary judgment for Plaintiff because the Court had previously concluded that ERISA's "church plan" exception only applied if a retirement plan was established by a church, and there was no genuine dispute as to the facts that Catholic Healthcare West was not a church and had established the plan at issue in this case. Defendants subsequently filed this motion to certify the Court's Order for interlocutory appeal and stay the case. Pursuant to Civil Local Rule 7-1(b), the Court finds this matter suitable for resolution without oral argument. For the reasons given below, the Court now GRANTS Defendants' motion, CERTIFIES its July 22, 2014 Order for interlocutory appeal, and STAYS all further proceedings pending the Ninth Circuit's decision whether or not to hear the appeal.
Plaintiff Starla Rollins ("Rollins") was employed as a billing coordinator by Defendant Dignity Health ("Dignity") from 1986 to 2012. Rollins challenges Dignity's practice of operating its employees' retirement savings plan ("the Plan") as a "church plan," exempt from the funding and disclosure requirements of the Employee Retirement Income Security Act ("ERISA"). Dignity has at all times argued that the Plan meets ERISA's definition of a church plan, as set out at 29 U.S.C. § 1002(33).
In December of 2013, the Court denied Dignity's motion to dismiss this action, holding that under ERISA's plain meaning, a plan must be "established by a church" to be considered a church plan, and Dignity had not argued that it could meet that definition. Rollins v. Dignity Health, No. 13-cv-1450 TEH, 2013 WL 6512682, at *7 (N.D. Cal. Dec. 12, 2013). Dignity moved to certify that decision for interlocutory appeal, which the Court denied in March of 2014, because it did not satisfy the requirements set out at 28 U.S.C. § 1292(b). Rollins v. Dignity Health, No. 13-cv-1450 TEH, 2014 WL 1048637, at *2 (N.D. Cal. Mar. 17, 2014).
In July of 2014, the Court granted Plaintiff's and denied Defendants' cross-motions for partial summary judgment. Rollins v. Dignity Health, No. 13-cv-1450 TEH, 2014 WL 3613096, at *1 (N.D. Cal. July 22, 2014). The Court reiterated its prior holding that a church plan must be established by a church. Id. at *6. The Court found that there was no genuine dispute as to the material facts that Defendants' predecessor, Catholic Healthcare West ("CHW"), established the Plan, and that CHW was not a church. Id. Accordingly, the Court held that the Plan was not an exempt church plan, and therefore was subject to ERISA's requirements. Id.
On October 27, 2014, Plaintiff brought motions for a permanent injunction and to certify a class. (Docket Nos. 180, 183). At a Case Management Conference held November 3, the Court stayed Plaintiff's motions and provided Defendants the opportunity to seek an appeal of the Court's prior order. (Docket No. 191). On November 10, 2014, Defendants brought this motion to certify the Court' s July 22, 2014 Order for interlocutory appeal. (Docket No. 197).
A party may bring an interlocutory appeal of a district court's order where the order "involves a controlling question of law as to which there is substantial ground for difference of opinion and [] an immediate appeal from the order may materially advance the ultimate termination of the litigation . . . ." 28 U.S.C. § 1292(b). "[T]his section [is] tobe used only in exceptional situations in which allowing an interlocutory appeal would avoid protracted and expensive litigation." In re Cement Antitrust Litig. (MDL No. 296), 673 F.3d 1020, 1026 (9th Cir. 1982).
Defendants seek to certify for appeal the question whether an ERISA church plan must be established by a church, or rather whether it is sufficient for a plan to have been established by an organization controlled by or associated with a church. "[A]ll that must be shown in order for a question to be 'controlling' is that resolution of the issue on appeal could materially affect the outcome of litigation in the district court." In re Cement Antitrust Litig., 673 F.3d at 1026.
The parties do not dispute that the question to be certified is a controlling question of law in this case. Based on its prior answer to the question, the Court entered partial summary judgment for Plaintiff on the issue of whether the Plan was subject to ERISA's requirements. Rollins, 2014 WL 3613096, at *6. Plaintiff has used the Court's Order as the basis for motions for a permanent injunction and for class certification, charting the litigation's current trajectory.
On the other hand, if the Court of Appeals were to reverse this Court's determination, the litigation would take a decidedly different path. First, unless the Court of Appeals also answers this subsequent question, the Court would need to determine whether Dignity or its predecessor was "associated with" or "controlled by" a church while it maintained the Plan. 29 U.S.C. § 1002(33)(C)(i). The Court may again find that the Plan is not a church plan, but if the Court finds that it is, it will need to inquire as to whether there is Article III standing for it to continue to hear the case, as Plaintiff's standing may depend on ERISA's application to the Plan. And, if the Court were to find that Plaintiff has standing, it would need to turn to Plaintiff's Establishment Clause challenge to the church plan exception itself. Each of these possible alternative trajectorieswould only be available if the Court of Appeals reverses this Court's interpretation of the statute.
The Court previously found that this question was not a "controlling question of law," because Defendants had not demonstrated what made this an "exceptional situation" justifying interlocutory appeal. Rollins, 2014 WL 1048637, at *2. Defendants have persuaded the Court that a different determination is now appropriate. The remaining issues to be decided in this case, and the attendant costs of discovery, will vary significantly depending on the resolution of this issue. As noted above, there are several different questions, many of them dispositive, that will need to be answered if the Court of Appeals reverses this Court's determination. Discovery for the question of whether Dignity was associated with or controlled by a church will almost certainly be different than class certification discovery, which will be different than discovery for Plaintiff's breach of fiduciary duty claims. Dignity estimates having to spend several thousand additional attorney hours, costing in excess of $500,000, to respond to the currently pending and expected discovery requests, in addition to incurring several hundred thousand dollars in attorneys' fees in responding to Plaintiff's currently pending motions. Rochman Decl. at 2 (Docket No. 198). These costs could be avoided, perhaps entirely, by a reversal at the Court of Appeals.
For these reasons, the Court now finds that this case presents an exceptional situation, such that appellate resolution of this question may avoid expensive and protracted litigation and could materially affect the outcome of the case.
The Court also finds that there are substantial grounds for disagreement here. One of the best indications that there are substantial grounds for disagreement on a question of law is that other courts have, in fact, disagreed. Couch v. Telescope, Inc. 611 F.3d 629, 633 (9th Cir. 2010); see also Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 688 (9th Cir. 2011) (); AsIs Internet Servs. v. Active Response Grp., No. 07-cv-06211-TEH, 2008 WL 4279695, at *3 (N.D. Cal. Sept. 16, 2008) ().
Here, two district courts have decided this issue explicitly in conflict with this Court's decision. In Overall v. Ascension Health, No. 13-cv-11396, 2014 WL 2448492 (E.D. Mich. May 19, 2014), the court noted that this Court had 2014 WL 2248492, at * 10. However, "under the rules of grammar and logic, A is not a 'gatekeeper' to C; rather if A is exempt and A includes C, then C is also exempt." Id. (internal quotation marks and citation omitted). The court went on to conclude that the plans in that case were church plans, exempt from ERISA. Id. at *15.
Similarly, in Medina v. Catholic Health Initiatives, No. 13-cv-01249-REB-KLM, 2014 WL 4244012 (D. Colo. Aug. 26, 2014), the court rejected this Court's interpretation and that of the magistrate judge in that case. The court found that "the plain language clearly supports the conclusion that a plan that meets the requirements of subsection (C)(i) putatively qualifies for the exemption—without further, separate proof of establishment by a church—if the remaining requirements of the statute are otherwise met." 2014 WL 4244012, at *2. "By reiterating the same 'established and maintained' language of subsection (A), subsection (C) affirms that 'established' and 'maintained' are not two distinct elements, but rather a singular requirement, a term of art, as used in the statute." Id. The court was presented with, and rejected, this Court's...
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