JANEEN MEDINA, individually, and on behalf of all others similarly situated, and on behalf of the CHI Plans, Plaintiff - Appellant,
v.
CATHOLIC HEALTH INITIATIVES; GERALDINE BEDNASH; MAUREEN COMER; RICHARD CORRENTE; DAVID R. EDWARDS; KATHERINE GRAY; BARBARA HAGEDORN; JAMES HAMILL; ANTOINETTE HARDY-WALLER; PHYLLIS HUGHES; DONALD JONES; ANDREA J. LEE; DAVID R. LINCOLN; KEVIN E. LOFTON; CHRISTOPHER R. LOWNEY; ELEANOR F. MARTIN; MARY MARGARET MOONEY; LILLIAN MURPHY; MARY JO POTTER; PATRICIA SMITH; EDWARD SPEED; DEAN SWINDLE; PATRICIA G. WEBB; JOHN AND JANE DOES, 1-10, whose true names are unknown, Defendants - Appellees. AMERICAN ASSOCIATION OF RETIRED PERSONS; FREEDOM FROM RELIGION FOUNDATION; PENSION RIGHTS CENTER; AMERICANS UNITED FOR SEPARATION OF CHURCH AND STATE; AMERICAN CIVIL LIBERTIES UNION; GUIDESTONE FINANCIAL RESOURCES OF THE SOUTHERN BAPTIST CONVENTION; THE PENSION BOARDS-UNITED CHURCH OF CHRIST, INC.; CHURCH ALLIANCE; THE CATHOLIC HEALTH ASSOCIATION OF THE UNITED STATES, Amici Curiae.
APPEAL
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
COLORADO (D.C. NO. 1:13-CV-01249-REB-KLM)
Ron
Kilgard, Keller Rohrback L.L.P., Phoenix, Arizona (Lynn
Lincoln Sarko, Laura R. Gerber, Havila C. Unrein, and Matthew
M. Gerend, Keller Rohrback L.L.P., Seattle, Washington, and
Laurie B. Ashton, Keller Rohrback L.L.P., Phoenix, Arizona,
and Karen L. Handorf, Michelle C. Yau, and Mary J.
Bortscheller, Cohen Milstein Sellers & Toll, PLLC,
Washington, D.C., with him on the briefs), Phoenix, Arizona,
for Plaintiff-Appellant
Lars
C. Golumbic (Sarah M. Adams and Sean C. Abouchedid, with him
on the brief), Groom Law Group, Chartered, Washington, D.C.,
for Defendants-Appellees.
William Alvarado Riveria and Mary Ellen Signorille, AARP
Foundation Litigation, Washington, D.C., on the brief for
Amicus Curiae AARP.
Andrew
L. Seidel, Freedom from Religion Foundation, Madison,
Wisconsin, on the brief for Amicus Curiae Freedom from
Religion Foundation.
Curtis
L. Kennedy, Denver Colorado, Norman P. Stein, Philadelphia,
Pennsylvania, and Karen W. Ferguson, Pension Rights Center,
Washington, D.C. on the brief for Amicus Curiae Pension
Rights Center.
Daniel
Mach, American Civil Liberties Union Foundation, Washington,
D.C., and Richard B. Katskee and Bradley Girard, Americans
United for Separation of Church and State, Washington, D.C.,
on the brief for Amici Curiae Americans United for Separation
of Church and State and American Civil Liberties Union.
G.
Daniel Miller, Conner & Winters, LLP, Washington, D.C.,
and Laurence A. Hansen and Hugh S. Balsam, Locke Lord LLP,
Chicago, Illinois, on the brief for Amici Curiae GuideStone
Financial Resources of the Southern Baptist Convention, The
Pension Boards-United Church of Christ, Inc., and The Church
Alliance.
Mark
E. Chopko, Marissa Parker and Brandon Riley, Stradley Ronon
Stevens & Young, LLP, Washington, D.C., and Lisa J.
Gilden, The Catholic Health Association of the United States,
Washington, D.C., on the brief for Amicus Curiae The Catholic
Health Association of the United States.
Before
TYMKOVICH, Chief Judge, BACHARACH, and MORITZ, Circuit
Judges.
TYMKOVICH, Chief Judge.
The
Employee Retirement Income Security Act of 1974, 29 U.S.C.
§ 1001, et seq. (ERISA), generally exempts from its
requirements "church plans"-employee-benefit plans
established and maintained by churches for their employees.
ERISA also extends that church-plan exemption to so-called
principal-purpose organizations. A principal-purpose
organization is a church-affiliated organization whose
principal purpose is administering or funding a benefit plan
for the employees of a church or a church-affiliated
nonprofit organization.
Catholic
Health Initiatives (CHI) is a Denver-based nonprofit
organization created to carry out the Roman Catholic
Church's healing ministry. To do so, CHI operates 92
hospitals and numerous other healthcare facilities in 18
states. CHI offers a retirement plan for its employees, with
more than 90, 000 participants and beneficiaries, and nearly
$3 billion in plan assets. The CHI plan is administered by
the CHI and Affiliates Defined Benefit Plan Subcommittee
(Subcommittee), whose members are appointed and removed by
CHI's Board of Stewardship Trustees.
The
district court held that CHI's plan was a church plan
that qualified for the ERISA exemption. On appeal, we agree,
concluding that CHI's plan satisfies the statutory
requirements for the church-plan exemption: CHI is a
tax-exempt organization associated with a church, and the
Subcommittee is a proper principal-purpose organization that
is also associated with a church. The ERISA exemption,
moreover, does not run afoul of the United States
Constitution's Establishment Clause.
I. Background
As
explained above, federal law exempts church plans from
certain federally mandated reporting and funding
requirements. The agencies administering ERISA consider the
CHI retirement plan to be a church plan, because CHI and the
Subcommittee are controlled by or associated with the
Catholic Church and the Subcommittee is a principal-purpose
organization.
Janeen
Medina, [1] a CHI employee, filed a class action,
alleging that CHI's retirement plan fails to satisfy the
statutory criteria for the church-plan exemption. She
contends that, since the plan does not qualify for the
exemption, CHI should have complied with the reporting and
funding requirements of ERISA. Medina also argues the
individual defendants who administer the plan breached their
fiduciary duties by failing to comply with ERISA. And, Medina
argues, even if the CHI plan did qualify as a church plan,
the exemption would violate the Establishment Clause of the
United States Constitution.
The
district court concluded CHI's plan satisfied the
criteria for ERISA's church-plan exemption and dismissed
her other statutory and constitutional claims.
While
this appeal was pending, the Supreme Court resolved one of
the issues before us, holding that an employee-benefit plan
need not be established by a church to qualify for
ERISA's church-plan exemption, provided it satisfies the
other statutory criteria. Advocate Health Care Network v.
Stapleton, 137 S.Ct. 1652 (2017). According to the
Court, because Congress expanded "the category of plans
'established and maintained by a church' to
'include' plans 'maintained by'
principal-purpose organizations, those plans . . . are exempt
from ERISA's requirements.'" Id. at
1659. The fact that CHI's plan was not established by a
church therefore does not preclude its eligibility for the
church-plan exemption.
Two
issues remain for our consideration. First, Medina contends
CHI's plan is not a church plan because it fails to
satisfy the statutory criteria, which require the plan to be
maintained by a principal-purpose organization associated
with a church, for the employees of an organization
associated with a church. She also argues the district court
erred in concluding there were no genuine disputes of
material fact on this point. Second, Medina contends applying
the exemption to CHI's plan would violate the
Establishment Clause of the United States Constitution.
We
affirm the well-reasoned and thorough decision of the
district court, in an opinion that follows similar analytical
lines. We find CHI's plan satisfies the relevant
statutory criteria and qualifies as a church plan, and the
district court did not err in concluding there were no
genuine disputes of material fact. Nor does applying the
exemption to CHI's plan violate the Establishment Clause.
Supreme Court precedent allows Congress to provide a
religious accommodation by exempting religious organizations
from regulatory schemes, especially where subjecting the
religious organization to the regulatory scheme would raise
constitutional questions.[2]
II.
Analysis
Medina
contends that CHI's plan is not a church plan because it
fails to satisfy the statutory criteria, and that the
district court erred in concluding there were no genuine
disputes of material fact regarding whether the plan
satisfied the statutory criteria for the exemption. She also
argues applying the exemption to CHI's plan would violate
the Establishment Clause.
We
address each argument in turn and conclude that CHI's
plan does not violate either ERISA or the Constitution.
A.
Statutory Framework
The
Supreme Court's recent opinion in Advocate
explains the statutory scheme at issue. "ERISA generally
obligates private employers offering pension plans to adhere
to an array of rules designed to ensure plan solvency and
protect plan participants. But in enacting the statute,
Congress made an important exception. '[C]hurch
plan[s]' have never had to comply with ERISA's
requirements." Id. at 1656 (citation omitted)
(quoting 29 U.S.C. § 1003(b)(2)).
As
Advocate makes clear, two types of organization
qualify for the church-plan exemption: churches and so-called
principal-purpose organizations.
ERISA
has always provided that "church plan" includes
"a plan established and maintained . . . for its
employees . . . by a church or by a convention or association
of churches." 29 U.S.C. § 1002(33)(A).
A 1980
amendment to ERISA expanded that definition to include
principal-purpose organizations. That is, the church-plan
exemption 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.
29 U.S.C. § 1002(33)(C)(i).
Crucially,
for purposes of this definition, an "employee of a
church" includes "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). That is, "employee of a
church" is not limited to church employees, but includes
employees of nonprofit organizations associated with a
church, such as CHI claims to be.
Advocate
rejected the view that the church-plan exemption only applied
to plans established by churches. Hospital employees had
argued that their employers' pension plans did not fall
within the church-plan exemption because those plans were not
established by a church, but rather by a principal-purpose
organization. The Supreme Court disagreed, holding that
"[u]nder the best reading of the statute, a plan
maintained by a principal-purpose organization . . .
qualifies as a 'church plan, ' regardless of who
established it." 137 S.Ct. at 1663. As Medina concedes,
this issue is now resolved in favor of CHI. Resp. to Supp.
Auth. at 1.
Advocate
did not provide guidance on the major issue remaining in this
case: whether CHI's internal benefits committee qualifies
as a principal-purpose organization. The Court expressly
declined to address the scope of a "principal-purpose
organization, " what the requisite level of association
with a church was, or whether an internal benefits committee
could qualify. 137 S.Ct. at 1657 n.2, 1658 n.3. We confront
those questions today, and decide whether CHI's plan
satisfies the statutory criteria for the church-plan
exemption.
The
statute imposes a three-step inquiry for entities seeking to
use the church-plan exemption for plans maintained by
principal-purpose organizations:
1. Is the entity a tax-exempt nonprofit organization
associated with a church?
2. If so, is the entity's retirement plan maintained by a
principal-purpose organization? That is, is the plan
maintained by an organization whose principal purpose is
administering or funding a retirement plan for entity
employees?
3. If so, is that principal-purpose organization itself
associated with a church?
Under
this framework, to qualify for the church-plan exemption, CHI
must receive an affirmative answer to all three inquiries.
Note
that both the principal-purpose organization and the
entity whose employees the plan benefits must be associated
with a church. First, the principal-purpose organization must
be associated with a church. The church-plan exemption
includes "a plan maintained by a [principal-purpose
organization] . . . if [the principal-purpose organization]
is controlled by or associated with a church or a convention
or association of churches." 29 U.S.C. §
1002(33)(C)(i).
Second,
the definition of principal-purpose organization requires
that the entity whose plan it is administering be associated
with a church. A principal-purpose organization is one whose
"principal purpose or function . . . 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." 29 U.S.C.
§ 1002(33)(C)(i) (emphasis added). And 29 U.S.C. §
1002(33)(C)(ii)(II) explains that "employee of a
church" includes employees of tax-exempt organizations
"controlled by or associated with a church or a
convention or association of churches."
In
short, a principal-purpose organization, by definition, is
one that administers a retirement or welfare plan for a
church or a tax-exempt organization "associated with a
church." And that principal-purpose organization can
only qualify for the church-plan exemption if the
principal-purpose organization itself is "associated
with a church."
1.
Step One: Is the Entity a Tax-Exempt Nonprofit Organization
...