Sanzone v. Mercy Health
Decision Date | 27 March 2020 |
Docket Number | No. 18-3574,18-3574 |
Citation | 954 F.3d 1031 |
Parties | Sally SANZONE, individually and behalf of all others similarly situated; Gene Grasle Plaintiffs - Appellants v. MERCY HEALTH; Mercy Health Benefits Committee Defendants - Appellees John Does, 1-10, Members of the Mercy Health Benefits Committee; Jane Does, 1-10, Members of the Mercy Health Benefits Committee Defendants Mercy Health Stewardship Committee Defendant - Appellee John Does, 11-20, Members of the Mercy Health Stewardship Committee; Jane Does, 11-20, Members of the Mercy Health Stewardship Committee; John Does, 21-40; Jane Does, 21-40 Defendants |
Court | U.S. Court of Appeals — Eighth Circuit |
Counsel who presented argument on behalf of the appellant was Karen L Handorf, of Washington, DC. The following attorneys also appeared on the appellant brief; Ron Kilgard, of Phoenix, AZ., Laura R. Gerber, of Seattle, WA.
Counsel who presented argument on behalf of the appellee was Jeffrey Richard Fink, of Saint Louis, MO. The following attorney also appeared on the appellee brief; Richard Joseph Pautler, of Saint Louis, MO.
Before SMITH, Chief Judge, WOLLMAN and ERICKSON, Circuit Judges.
Congress placed a religious exemption within the Employee Retirement Income Security Act of 1974 (ERISA). See 29 U.S.C. § 1002(33). The exemption covers retirement and pension plans of some religiously affiliated nonprofits. The central issue in this case is whether a multibillion dollar, religiously affiliated hospital’s plan falls within that exemption. Because we find that the plan at issue falls within the exemption, we affirm in part and reverse and remand in part.
Sally Sanzone worked as a registered nurse for Mercy Health ("Mercy") for more than 25 years. During that time, she participated in the Retirement Plan for Employees of the Sisters of Mercy of the Americas, St. Louis, which is now known as the Mercy Health MyRetirement Personal Pension Account Plan ("the Plan"). Sanzone claims that Mercy sponsors the Plan and that the Mercy Health Benefits Committee ("the Committee") administers the Plan.
Mercy is a nonprofit corporation organized under Missouri law. It was founded in 1986 by the Sisters of Mercy ("the Order"), a religious order established by the Catholic Church. It has grown substantially since its founding; at the time Sanzone filed her complaint, Mercy and its subsidiaries operated hospitals in four states, employed more than 40,000 people, possessed $6.4 billion in assets, and earned operating revenues of about $5.3 billion. Given that growth, the Order transferred sponsorship of Mercy to Mercy Health Ministry, which is a public juridic person1 recognized by the Catholic Church. Mercy is governed by its board of directors ("the Board"), which consists of 5 to 17 members, at least 4 of whom must be Catholic.
The Committee includes five members, four of whom are sisters of the Order. According to the complaint, the Committee has all discretionary powers and authority to carry out the Plan. Mercy tasked the Committee with providing fiduciary oversight and various administrative tasks. It also tasked the Committee with creating a funding policy and method for the Plan, but the Committee delegated that duty to a subcommittee of the Board. Between December 2010 and June 2016, the Committee met seven times.
Sanzone filed suit against Mercy, alleging violations of federal and state laws.2 Key here, she claimed that Mercy’s plan management disregards ERISA’s requirements. For example, ERISA requires covered plans to maintain certain funding levels and issue reports to beneficiaries. As of 2015, the Plan was underfunded by 29 percent, and in certain years, Mercy failed to make contributions to the Plan. Further, the Committee failed to provide summary plan descriptions, annual reports, notifications of failure to meet minimum funding, and other ERISA reports. Also, the Plan is not insured by the Pension Benefits Guaranty Corporation (PBGC).
In response, Mercy asserted that it does not have to comply with ERISA’s requirements because the Plan falls under ERISA’s church-plan exemption. ERISA does "not apply to any employee benefit plan if ... such plan is a church plan." 29 U.S.C. § 1003(b)(2). A church plan is "a plan established and maintained (to the extent required in clause (ii) of subparagraph (B)) for its employees (or their beneficiaries) by a church or by a convention or association of churches which is exempt from tax under section 501 of Title 26." Id. § 1002(33)(A). The provision is expanded by two other definitions. One is the definition of "[a] plan established and maintained ... by a church." Id. § 1002(33)(C)(i). Congress expanded that to include plans that are maintained by principal-purpose organizations:
A plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches includes a plan maintained by an organization, whether a civil law corporation or otherwise, the principal purpose or function of which is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits, or both, for the employees of a church or a convention or association of churches, if such organization is controlled by or associated with a church or a convention or association of churches.
Id. As the Supreme Court has noted, "[t]hat is a mouthful, for lawyers and non-lawyers alike." Advocate Health Care Network v. Stapleton , ––– U.S. ––––, 137 S. Ct. 1652, 1656, 198 L.Ed.2d 96 (2017). Put simply, a principal-purpose organization is one that has the primary purpose or function of administering or funding a plan for the employees of a church, and it must be controlled by or associated with a church. See id. at 1656–57.
Congress also expanded "employee of a church" to include "an employee of an organization, whether a civil law corporation or otherwise, which is exempt from tax under section 501 of Title 26 and which is controlled by or associated with a church or a convention or association of churches." 29 U.S.C. § 1002(33)(C)(ii)(II).3
Before the district court, Sanzone argued that the Plan was not a church plan and thus its failure to comply with ERISA violated the statute. In the alternative, Sanzone argued that the church-plan exemption violates the Establishment Clause. Mercy moved to dismiss. The district court dismissed the case for lack of jurisdiction. It found that there was no jurisdiction under ERISA because the Plan was a church plan and that Sanzone lacked standing to bring suit under the Establishment Clause. After dismissing all the federal claims, the court dismissed the remaining state law claims for lack of supplemental jurisdiction. See Gibson v. Weber , 431 F.3d 339, 342 (8th Cir. 2005) (). Sanzone now appeals.
"We review de novo the grant of a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1)." Branson Label, Inc. v. City of Branson , 793 F.3d 910, 914 (8th Cir. 2015) (quoting Great Rivers Habitat All. v. Fed. Emergency Mgmt. Agency , 615 F.3d 985, 988 (8th Cir. 2010) ). "We must accept all factual allegations in the pleadings as true and view them in the light most favorable to the nonmoving party." Great Rivers , 615 F.3d at 988 (quoting Hastings v. Wilson , 516 F.3d 1055, 1058 (8th Cir. 2008) ). Before we consider whether the Plan is a church plan, we address whether ERISA coverage is a jurisdictional issue or an element of a plaintiff’s claim.
Because it determined that the Plan was not covered by ERISA, the district court dismissed the case for lack of jurisdiction. In doing so, the court applied our precedent, which considered ERISA coverage as a jurisdictional issue. See, e.g. , Chronister v. Baptist Health , 442 F.3d 648, 654 (8th Cir. 2006) ( ). Sanzone argues that our precedent is superseded by the Supreme Court’s decision in Arbaugh v. Y&H Corp. , 546 U.S. 500, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006).
In Arbaugh , the Court considered "whether Title VII’s employee-numerosity requirement, 42 U.S.C. § 2000e(b), is jurisdictional or simply an element of a plaintiff’s claim for relief." Id. at 509, 126 S.Ct. 1235. Given that courts have "sometimes been profligate in [their] use of the term" "jurisdiction," the Court provided clarity. Id. at 510, 126 S.Ct. 1235. It stated that "[i]f the Legislature clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue." Id. at 515–16, 126 S.Ct. 1235 (footnote omitted). "But when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character." Id. at 516, 126 S.Ct. 1235.
"Applying that readily administrable bright line to [the] case," the Court noted that the relevant provision did "not speak in jurisdictional terms or refer in any way to the jurisdiction of the district courts." Id. at 515–16, 126 S.Ct. 1235 (quoting Zipes v. Trans World Airlines, Inc. , 455 U.S. 385, 394, 102 S.Ct. 1127, 71 L.Ed.2d 234 (1982) ). Further, the provision was "separate" from and not referred to by 28 U.S.C. § 1331 and Title VII’s jurisdictional provision, 42 U.S.C. § 2000e–5(f)(3). Arbaugh , 546 U.S. at 515, 126 S.Ct. 1235. Therefore, the Court determined that Congress did not deem the numerosity limitation jurisdictional and held that courts should not either. Id. at 516, 126 S.Ct. 1235.
Applying Arbaugh to ERISA, a number of our sister circuits have either reversed their prior position that ERIS...
To continue reading
Request your trial-
Howard Jarvis Taxpayers Ass'n v. Cal. Secure Choice Ret. Sav. Program
...productivity." Medina v. Catholic Health Initiatives , 877 F.3d 1213, 1226 (10th Cir. 2017) ; see also Sanzone v. Mercy Health , 954 F.3d 1031, 1041–42 (8th Cir. 2020) (similar).The closest precedent we have to the present case is Golden Gate Restaurant Association v. City & County of San F......
-
United States v. Hill
...opinion is "a logical subset of" another, "the only binding aspect of the decision is its specific result"); Sanzone v. Mercy Health , 954 F.3d 1031, 1039 (8th Cir. 2020) (holding that subsequent panels are not bound by prior panels’ dicta ).Rather than decide here whether, in light of Hern......
-
Dillard v. O'Kelley
...in the case and therefore not precedential ...." Obiter Dictum , Black's Law Dictionary (11th ed. 2019); accord Sanzone v. Mercy Health, 954 F.3d 1031, 1039 (8th Cir. 2020) (using the same definition to define dicta). However, the notion that recognition of a constitutional right, analytica......
-
Eggers v. Evnen
...not need to—resolve the equal protection claim, and its commentary concerning it is not binding precedent. See Sanzone v. Mercy Health, 954 F.3d 1031, 1039 (8th Cir. 2020) ("[W]e need not follow dicta." (quoting John Morrell & Co. v. Local Union 304A of United Food & Com. Workers, 913 F.2d ......