Rollins v. Dignity Health

• Decision Date: 26 July 2016
• Docket Number: No. 15-15351,15-15351
• Citation: 830 F.3d 900
• Parties: Starla Rollins, on behalf of herself, individually, and on behalf of all others similarly situated, Plaintiff-Appellee, v. Dignity Health, a California non-profit corporation; Herbert J. Vallier, an individual, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

830 F.3d 900

Starla Rollins, on behalf of herself, individually, and on behalf of all others similarly situated, Plaintiff-Appellee

v.Dignity Health, a California non-profit corporation; Herbert J. Vallier, an individual, Defendants-Appellants.

No. 15-15351

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 8, 2016 San Francisco, California

Filed July 26, 2016

Lisa S. Blatt (argued), Elisabeth S. Theodore, and William C. Perdue ; Arnold & Porter LLP, Washington, D.C.; Barry S. Landsberg, Harvey L. Rochman, and Joanna S. McCallum ; Manatt, Phelps & Phillips, LLP, Los Angeles, California; David L. Shapiro, Cambridge, Massachusetts; Charles M. Dyke, Nixon Peabody LLP, San Francisco, California; for Defendants-Appellants.

Ron Kilgard (argued) and Laurie Ashton, Keller Rohrback LLP, Phoenix, Arizona; Lynn L. Sarko, Havila C. Unrein, and Matthew M. Gerend ; Keller Rohrback LLP, Seattle, Washington; Bruce Rinaldi, Karen L. Handorf, and Michelle C. Yau ; Cohen Milstein Sellers & Toll, PLLC, Washington, D.C.; for Plaintiff-Appellee.

Shay Dvoretzky and Emily J. Kennedy, Jones Day, Washington, D.C., for Amici Curiae Alliance Defending Freedom and Thomas More Society.

David Cortman, Erik Stanley, and Jordan Lorence, Washington, D.C., as and for Amicus Curiae Alliance Defending Freedom.

Mark E. Chopko, Marissa Parker, and Brandon Riley, Stradley Ronon Stevens & Young LLP, Washington, D.C.; Lisa Gilden, The Catholic Health Association of the United States, Washington, D.C.; James F. Sweeney and John M. Cox ; Sweeney, Greene & Roberts, LLP, Elk Grove, California; for Amici Curiae The Catholic Health Association of the United States, and The Alliance of Catholic Health Care.

G. Daniel Miller, Conner & Winters, LLP, Washington, D.C.; Laurence A. Hansen and Hugh S. Balsam, Locke Lord LLP, Chicago, Illinois; for Amici Curiae Guidestone Financial Resources of the Southern Baptist Convention, The Pension Boards—United Church of Christ, Inc., and The Church Alliance.

Michael Reiss and John A. Goldmark, David Wright Tremaine LLP, Seattle, Washington; Howard Shapiro, Robert Rachal, and Stacey Cerrone ; Proskauer Rose LLP, New Orleans, Louisiana; for Amicus Curiae Providence Health & Services.

James A. Sonne, Stanford Law School Religious Liberty Clinic, Stanford, California, for Amicus Curiae Becket Fund for Religious Liberty.

Mary Ellen Signorille, AARP Foundation Litigation, Washington, D.C., for Amicus Curiae AARP.

Andrew L. Seidel, Madison, Wisconsin, as and for Amicus Curiae Freedom From Religion Foundation.

Daniel Mach, Washington, D.C., as an for Amicus Curiae American Civil Liberties Union Foundation.

Elizabeth O. Gill, San Francisco, California, as and for Amicus Curiae ACLU Foundation of Northern California, Inc.

Richard B. Katskee and Gregory M. Lipper, Washington, D.C., as and for Amicus Curiae Americans United for Separation of Church and State.

Ronald Dean, Law Office of Ronald Dean, Pacific Palisades, California; Karen W. Ferguson, Pension Rights Center, Washington, D.C.; Norman P. Stein, Philadelphia, Pennsylvania; for Amicus Curiae Pension Rights Center.

Before: A. Wallace Tashima and William A. Fletcher, Circuit Judges and Robert W. Gettleman,^* Senior District Judge.

OPINION

W. FLETCHER, Circuit Judge:

Plaintiff-Appellee Starla Rollins filed this putative class action against her former employer, Defendant-Appellant Dignity Health, its Chief Human Resources Officer, unnamed members of its Retirement Subcommittee, and other unnamed fiduciaries (collectively “Dignity Health”), alleging that Dignity Health has not maintained its pension plan in compliance with the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq . Dignity Health concedes it has not complied with ERISA, but contends its plan qualifies for ERISA's church-plan exemption. See id. §§ 1002(33), 1003(b)(2). The district court held that a pension plan must have been established by a church, or by a convention or association of churches, to qualify as a church plan. Because the district court found that Dignity Health's pension plan was not established by a church, or by a convention or association of churches, the court awarded partial summary judgment to Rollins, ruling that Dignity Health's pension plan must comply with ERISA. We accepted jurisdiction in this interlocutory appeal to address whether the district court was correct to hold that a church plan must be established by a church or by a convention or association of churches. We affirm the district court's answer to that question and remand for further proceedings.

I. Background

Because this appeal comes to us from the district court's award of summary judgment to Rollins, we relate the facts in the light most favorable to Dignity Health. See Nolan v. Heald Coll. , 551 F.3d 1148, 1150 (9th Cir. 2009). In the early 1980s, the Sisters of Mercy Congregations in Auburn, California and Burlingame, California (the “Sponsoring Congregations”) each established nonprofit hospital systems. In 1986, the Sponsoring Congregations merged the two systems to form Catholic Healthcare West (“CHW”). Employees in the CHW system received pension benefits through seven plans, separately maintained either by a Sponsoring Congregation, by an individual hospital, or by CHW. On January 1, 1989, the Sponsoring Congregations, the hospitals, and CHW merged these plans into a single pension plan (the “Plan”). On July 20, 1992, CHW's board of directors adopted a retroactive resolution to treat the Plan as a church plan. CHW's name was later changed to “Dignity Health” as a result of corporate restructuring.

From 1986 to 2012, Plaintiff Starla Rollins worked as a billing coordinator for San Bernardino Community Hospital, which became affiliated with CHW and adopted the Plan in August 1998. On November 20, 1998, Rollins was sent a summary plan description, notifying her that CHW considers the Plan to be a church plan and therefore exempt from ERISA. Rollins became a participant in the Plan on January 1, 1999. She will be eligible for pension benefits from the Plan when she reaches retirement age.

Rollins filed this putative class action against Dignity Health, alleging that Dignity Health has violated numerous ERISA requirements. The complaint alleges, first, that the Plan is not a church plan and, second, that ERISA's church-plan exemption is unconstitutional. Rollins seeks declaratory relief, money damages, statutory penalties, injunctive relief, and attorney's fees.

Dignity Health concedes that the Plan does not comply with ERISA, but contends that the Plan need not do so because it qualifies for the church-plan exemption under 29 U.S.C. § 1002(33)(C)(i) (for convenience, “subparagraph (C)(i)”). Dignity Health contends that under subparagraph (C)(i) a church plan need not have been established by a church or by a convention or association of churches (for convenience, “church”) if it is maintained by a church-controlled or church-affiliated organization whose principal purpose or function is to provide benefits to church employees (for convenience, “principal-purpose organization”).

The district court granted partial summary judgment against Dignity Health, holding that, to qualify for the church-plan exemption under subparagraph (C)(i), a plan must be established by a church and maintained either by a church or by a principal-purpose organization. See Rollins v. Dignity Health , 59 F.Supp.3d 965 (N.D. Cal. 2014) ; see Rollins v. Dignity Health , 19 F.Supp.3d 909 (N.D. Cal. 2013). The district court did not reach the question whether the church-plan exemption is constitutional.

The district court certified its order for interlocutory appeal because the question whether a plan must have been established by a church to qualify as a church plan under § 1002(33)(C)(i) is “a controlling question of law as to which there is substantial ground for difference of opinion and [because] an immediate appeal from the order may materially advance the ultimate termination of the litigation.” See 28 U.S.C. § 1292(b). We accepted jurisdiction. The district court stayed proceedings pending appeal.

II. Standard of Review

We review de novo rulings on cross-motions for summary judgment. Trunk v. City of San Diego , 629 F.3d 1099, 1105 (9th Cir. 2011). “Summary judgment is appropriate when, with the evidence viewed in the light most favorable to the non-moving party, there are no genuine issues of material fact, so that the moving party is entitled to a judgment as a matter of law.” Grenning v. Miller-Stout , 739 F.3d 1235, 1238 (9th Cir. 2014) (citation and internal quotation marks omitted); Fed. R. Civ. P. 56(a).

III. Discussion

Congress enacted ERISA to protect “the interests of participants in employee benefit plans and their beneficiaries by setting out substantive regulatory requirements for employee benefit plans and to provide for appropriate remedies, sanctions, and ready access to the Federal courts.” Aetna Health Inc. v. Davila , 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (citations and internal quotation marks omitted). ERISA does not require employers to create benefit plans or require the provision of specific benefits once a plan is created. However, ERISA does seek “to ensure that employees will not be left empty-handed once employers have guaranteed them certain benefits.” Lockheed Corp. v. Spink , 517 U.S. 882, 887, 116 S.Ct. 1783, 135 L.Ed.2d 153 (1996). Church plans are exempt from ERISA's regulatory requirements unless the church waives the exemption. 29 U.S.C. §§ 1003(b)(2), 1321(b)(3) ; see 26 U.S.C. § 410(d).

For the reasons that follow, we agree with the district court that, in order to qualify for the church-plan exemption under subparagraph (C)(i), a plan must have been established by a church and maintained either by a church or by a principal-purpose organization.

A. Statutory Text

In interpreting a statute, “[w]e look first at the plain language, examining not only the...