Smith v. Reg'l Transit Auth.

• Decision Date: 23 June 2014
• Docket Number: No. 13–30647.,13–30647.
• Citation: 756 F.3d 340
• Parties: Mary SMITH; Pamela Bagneris Batiste; Robert Bookman; Kenneth Bourgeois; James Brown, Jr.; et al, Plaintiffs–Appellants, v. REGIONAL TRANSIT AUTHORITY; Transit Management of Southeast Louisiana, Incorporated, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

756 F.3d 340

Mary SMITH; Pamela Bagneris Batiste; Robert Bookman; Kenneth Bourgeois; James Brown, Jr.; et al, Plaintiffs–Appellants,

v.REGIONAL TRANSIT AUTHORITY; Transit Management of Southeast Louisiana, Incorporated, Defendants–Appellees.

No. 13–30647.

United States Court of Appeals,Fifth Circuit.

June 23, 2014.

James M. Garner, Esq., Howard Taney Boyd, III, Sher Garner Cahill Richter Klein & Hilbert, L.L.C., New Orleans, LA, for Plaintiffs–Appellants.

Howard Shapiro, Esq., Proskauer Rose, L.L.P., Robert Wilkinson Rachal, Senior Counsel, Michael D'LaShaun Spencer, Proskauer Rose, L.L.P., New Orleans, LA, for Defendants–Appellees.

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

Before HIGGINBOTHAM, DAVIS, and HAYNES, Circuit Judges.

HAYNES, Circuit Judge:

The principal question before the district court was whether the employers' pension benefit plan in this case is a “governmental plan” within the meaning of section 3(32) the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1002(32). The Plaintiffs–Appellants (the “Plaintiffs,” collectively) are approximately forty former employees of New Orleans Public Service, Inc. and retirees of Transit Management of Southeast Louisiana, Inc. They filed suit claiming denial of medical insurance, Medicare premiums, and deductible reimbursements. The district court held that the pension benefit plan was a “governmental plan” exempt from ERISA and granted RTA and TMSEL's (the “Defendants,” collectively) motion to dismiss for lack of subject matter jurisdiction. Because we conclude that the district court employed the wrong procedural mechanism for analyzing this case, we vacate the judgment and remand this case to the district court.

I.

Prior to 1983, the New Orleans transit system was operated by New Orleans Public Service, Inc. (“NOPSI”), a private company. In the late 1970s and early 1980s, the system converted to a publicly held system, owned by the Regional Transit Authority (“RTA”) and operated by Transit Management of Southeast Louisiana, Inc. (“TMSEL”). As a result of the change in ownership and management, all employees of NOPSI became employees of TMSEL. At the time the RTA purchased the transit system, NOPSI, the transit union, and the City of New Orleans had a preexisting agreement pursuant to the Urban Mass Transportation Act of 1964, which provided for “fair and equitable arrangements” for employee benefits. In March 1983, the RTA and TMSEL, as successors to NOPSI, agreed that they would continue to provide the same benefits employees enjoyed under the preexisting agreement.

In June 1983, the RTA completed the purchase of the transit system from NOPSI. At the same time, the RTA, TMSEL, and NOPSI entered into an additional agreement, “The Employee and Retiree Pension and Welfare Benefit Agreement” (the “Benefit Agreement”) which specifically recognized the RTA and TMSEL's benefit obligations. The RTA became the sponsor of the Plan, and TMSEL became the administrator. The Benefit Agreement provided that each employee transferred from NOPSI to the RTA or TMSEL would continue to receive the same coverage and benefit levels they received as an employee of NOPSI. The Benefit Agreement also made the RTA and TMSEL responsible for making any payments due for any benefits of the former NOPSI employees, and established a funding structure to ensure that the pension benefits were maintainable.

At the time of the purchase and agreements, the RTA was considered a public entity—a “political subdivision” of the state of Louisiana ¹—and TMSEL was a privately owned corporation, created in 1983 by an agreement between the RTA and ATE Management and Service Company to operate the transit system. In 2004, the Louisiana State Legislature designated TMSEL as a political subdivision for litigation purposes. SeeLa.Rev.Stat. Ann. § 13:5102. In 2009, TMSEL ceased operations and no longer provided services to the RTA. From 2009–12, the public transportation was instead operated by a separate private corporation.² In 2012, the RTA became 100% owner of TMSEL.

The Plaintiffs are retired former employees of NOPSI and/or TMSEL. According to the Plaintiffs, from the system's private-to-public conversion in 1983 until March 2006, the RTA administered the Employee Benefit Plan (“the Plan”) consistent with the Benefit Agreement: it provided premium-free medical insurance, life insurance, supplemental Medicare payments, and reimbursed Medicare premiums. However, the Plaintiffs allege that, in March 2006, the RTA and/or TMSEL stopped providing Medicare premiums and deductible reimbursements to retirees and began charging premiums for medical insurance. The Plaintiffs aver they were originally told the changes were temporary, but that they have continued until the present day.

In December 2012, the Plaintiffs filed suit against the RTA as plan sponsor under § 1002(16)(B), and TMSEL as plan administrator under § 1002(16)(A), alleging that the Defendants violated ERISA when they implemented the changes to the benefit plan. The Plaintiffs sought to collect the same welfare benefits they had received from NOPSI. The complaint alleges that the RTA and/or TMSEL wrongfully denied ERISA welfare and retirement benefits in violation of 29 U.S.C. § 1132(a)(1)(B), and that the RTA and/or TMSEL breached their fiduciary duties under ERISA in violation of § 1132(a)(2). The Defendants filed a motion to dismiss the complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). The Defendants asserted that the benefit plan fell within the “governmental plan” exemption to ERISA, and that ERISA provided the only basis for subject matter jurisdiction.³See29 U.S.C. § 1003(b)(1) (“The provisions of [the coverage] subchapter shall not apply to any employee benefit plan if such plan is a governmental plan.”). The district court granted the Defendants' motion. The Plaintiffs appealed.

II.

We have previously suggested that the “governmental plan” exemption implicates our subject matter jurisdiction such that claims concerning such a plan should be dismissed under Rule 12(b)(1). Shirley v. Maxicare Tex., Inc., 921 F.2d 565, 567 (5th Cir.1991). In Shirley, we held that because a benefits plan was a “governmental plan” exempt from ERISA's requirements, the district court lacked jurisdiction to order arbitration. Id. at 566–67 (citing § 1003(b)). However, more recent developments in Supreme Court case law and our en banc decision in ACS Recovery Services, Inc. v. Griffin, 723 F.3d 518 (5th Cir.2013) (en banc), cert denied, ––– U.S. ––––, 134 S.Ct. 618, 187 L.Ed.2d 400 (2013), make Shirley inapplicable to our decision today.

The Supreme Court has repeatedly instructed that we must avoid conflating the question of whether we have subject matter jurisdiction to consider a claim with the determination of whether the plaintiff has stated a valid claim for relief. See Arbaugh v. Y & H Corp., 546 U.S. 500, 510–11, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006); see also Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 160–61, 130 S.Ct. 1237, 176 L.Ed.2d 18 (2010) (explaining that the word “jurisdiction” refers to a court's adjudicatory authority and therefore only properly applies to specific delineations of that authority). For instance, the Court in Arbaugh rejected the argument that proving a defendant is an “employer” for purposes of Title VII was necessary to establish subject matter jurisdiction. Arbaugh, 546 U.S. at 508, 514–16, 126 S.Ct. 1235. In so concluding, the Court applied a “readily administrable bright line” standard for determining whether a statute's provision is an element of a plaintiff's claim for relief or a jurisdictional requirement. Id. This standard turns on whether Congress has specifically designated a statutory limitation on coverage as jurisdictional. Id. at 516, 126 S.Ct. 1235 (“[W]hen Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character.”). Applying this standard, the Court focused primarily on the definition of “employer” in 42 U.S.C. § 2000e(b), explaining that the statute's text did not “clearly stat[e]” that the defendant must fall within the definition of “employer” in order for there to be federal jurisdiction to consider the claim. Arbaugh, 546 U.S. at 515, 126 S.Ct. 1235. The Court also observed that the definition of “employer” was not located in Title VII's jurisdictional provision, but rather “appeared in a separate provision that does not speak in jurisdictional terms or refer in any way to the jurisdiction of the district courts.” Id. (citation and internal quotation marks omitted).

Later in Reed Elsevier, the Court reiterated the importance of “using the term ‘jurisdictional’ only when it is apposite.” 559 U.S. at 161, 130 S.Ct. 1237. The Court held that the Copyright Act's requirement that holders register their works before suing for copyright infringement was not a jurisdictional limitation, in part because the registration requirement does not “clearly state[ ]” that it is jurisdictional and therefore should not be treated as such. Id. at 163–66, 130 S.Ct. 1237; see also17 U.S.C. § 411(a).

In accord with the Court's direction, last year in Griffin we rejected our prior precedent that a failure to state a valid claim for equitable relief under ERISA deprived the court of subject matter jurisdiction. 723 F.3d at 522–23 (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) ( “Dismissal for lack of subject-matter jurisdiction because of the inadequacy of the federal claim is proper only when the claim is so insubstantial, implausible, foreclosed by prior decisions of [the Supreme Court], or otherwise completely devoid of merit as not to involve a federal controversy.” (citation and internal quotation marks omitted))). We noted that whether a...