United States Court of Appeals,
Fifth Circuit.
No. 94-40728.
Virginia HIGHTOWER, et al., Plaintiffs-Appellees,
v.
TEXAS HOSPITAL ASSOCIATION, et al., Defendants,
Memorial Hospital Foundation of Palestine, Inc., dba Memorial Hospital, Anderson County Memorial Hospital Retirement Plan, aka The Texas Association Retirement Plan for Member Hospitals—Anderson County Memorial Hospital, Defendant-Appellant.
Sept. 28, 1995.
Appeal from the United States District Court for the Eastern District of Texas.
Before DAVIS and JONES, Circuit Judges, and COBB, District Judge.1
PER CURIAM:
Employees of Anderson County Memorial Hospital brought suit as
class-member plaintiffs against Memorial Hospital Foundation of
Palestine, Inc. to recoup approximately $750,000 of surplus funds
created by the Foundation's termination of the Anderson County
Memorial Hospital Retirement Plan. The district court granted
partial summary judgment for the Employees on the grounds that the
Foundation maintained the Plan and, therefore, any termination of
the Plan was subject to the provisions of the Employee Retirement
Income Security Act of 1974, 29 U.S.C. sections 1001 et seq. The
district court then certified its order granting partial summary
judgment to this court pursuant to 28 U.S.C. section 1292. For the
1 District Judge for the Eastern District of Texas, sitting by designation.
1 reasons stated herein, we AFFIRM IN PART and REVERSE IN PART.
BACKGROUND
This action arises out of the termination of the Anderson
County Memorial Hospital Retirement Plan (Plan). Anderson County
(County), a governmental entity in the state of Texas, established
this Plan in 1969 for the benefit of the employees of Anderson
County Memorial Hospital (Hospital). The Plan remained intact
until September 22, 1988, when the County leased the Hospital to
the Memorial Hospital Foundation of Palestine, Inc. (Foundation).
The Foundation became the employer of all Hospital employees
effective on the Commencement date of the lease. Thus the
employees ceased being government employees on that date. The
lease also stated that the Foundation would assume responsibility
for the Hospital employees' retirement plan.
The Foundation itself did not actively participate in or take
control over the Plan at any time after the execution of the lease;
those duties remained with the Plan administrator. Approximately
six weeks after the commencement date of the lease, the Foundation
terminated the existing Plan and created a new employee retirement
system. At termination, the Plan had a surplus of approximately
$750,000 after each beneficiary was paid. The Foundation then
transferred the surplus to its operating account. The dispute
centers on who is entitled to the $750,000 surplus generated by the
termination of the pension fund. If the plan is governed by the
Employee Retirement Income Security Act of 1974 (ERISA), the
employees may be entitled to receive the surplus. On the other
2 hand, the Foundation may be entitled to keep the pension surplus
benefits if the plan continues to be considered a governmental
plan, exempt from ERISA coverage.
The parties agree that the Plan qualifies as an employee
pension benefit plan under 29 U.S.C. section 1002(2)(A). Not
surprisingly, plaintiffs contend that once the Foundation assumed
control over the Hospital, all of its employees, and the Plan, the
governmental plan exemptions, 29 U.S.C. sections 1003(b)(1),
1321(b)(2), no longer applied. As such, the Plan became subject to
ERISA and plaintiffs assert that the Foundation terminated the Plan
in violation of Titles I and IV of ERISA. 29 U.S.C. § 1001 et
seq.; 29 U.S.C. § 1301 et seq. Conversely, the Foundation
maintains that the Plan remained, at all times, a governmental plan
exempt from ERISA coverage, and it further contends the exemptions
applied even after the execution of the Hospital lease that made
all of the Hospital employees Foundation employees.
The employees/beneficiaries of the Plan filed a class action
suit against the Foundation. The district court partially granted
plaintiffs' Motion for Summary Judgment finding that the Foundation
maintained the Plan. The court held that, by maintaining the Plan,
the Foundation's actions served to extinguish the governmental plan
exemption, 29 U.S.C. section 1321(b)(2). The court also concluded
that Title I, section 1003(b)(1), is inapplicable because of
clearly expressed legislative intent to the contrary. The district
court then, sua sponte, certified its order for appeal to this
court pursuant to the provisions of 28 U.S.C. section 1292.
3 STANDARD OF REVIEW
28 U.S.C. section 1292(b) provides that this court may review
controlling questions of law presented by an interlocutory appeal
of a district court's partial summary judgment order. Original
jurisdiction arises from the necessary analysis of the federal
questions involving the interpretation and application of 29 U.S.C.
sections 1002(32), 1003(b)(1) and 1321(b)(2) of ERISA. See 29
U.S.C. § 1132(e); 28 U.S.C. § 1331. A district court's grant of
summary judgment is reviewed de novo. Makedwde Publishing Co. v.
Johnson, 37 F.3d 180, 181 (5th Cir.1994). A de novo review
requires that we apply the same standard as the district court when
deciding whether summary judgment was properly granted. Id.
Summary judgment is appropriate when the movant is able to
demonstrate that the pleadings, affidavits, and other evidence
available to the court establish that there are no genuine issues
of material fact, and that the moving party is entitled to summary
judgment as a matter of law. Fed.R.Civ.P. 56(c); See Celotex
Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S.Ct. 2548, 2552, 91
L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); and Matsushita
Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574,
585-88, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986).
The Court must view the evidence introduced and all factual
inferences from the evidence in the light most favorable to the
party opposing summary judgment. Eastman Kodak v. Image Technical
Services, 504 U.S. 451, 456-58, 112 S.Ct. 2072, 2077, 119 L.Ed.2d
4 265 (1992); Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356. A
party opposing summary judgment may not rest on mere conclusory
allegations or denials in its pleadings. Fed.R.Civ.P. 56(e); see
also Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir.), cert.
denied, --- U.S. ----, 113 S.Ct. 82, 121 L.Ed.2d 46 (1992).
DISCUSSION
Title I of ERISA, 29 U.S.C. section 1001 et seq., explains
the various substantive and procedural requirements of the statute.
This remedial statute was enacted to encourage the establishment
and growth of private pension plans and to protect the participants
in those plans. 29 U.S.C. § 1001(c); see generally, Nachman Corp.
v. Pension Benefit Guar. Corp., 446 U.S. 359, 361-362, 100 S.Ct.
1723, 1726, 64 L.Ed.2d 354 (1980).
Although recognized as a "comprehensive and reticulated
statute,"2 Congress excluded certain plans from ERISA coverage.
See 29 U.S.C. § 1003(b)(1); 29 U.S.C. § 1321(b). 29 U.S.C.
section 1003(b)(1) excluded governmental plans from ERISA coverage
under Title I. For purposes of Title I, section 1002(32) defined
"governmental plan" as "a plan established or maintained for its
employees by the Government of the United States, by the government
of any State or political subdivision thereof, or by any agency or
instrumentality of any of the foregoing." 29 U.S.C. § 1002(32).
ERISA also excluded certain plans from Title IV coverage.
See 29 U.S.C. § 1321(b)(2). In relevant part, section 1321(b)(2)
states that ERISA coverage does not apply to any plan "established
2 Nachman Corp., 446 U.S. at 361, 100 S.Ct. at 1726.
5 and maintained for its employees by the Government of the United
States, by the government of any State or political subdivision
thereof, or by any agency or instrumentality of any of the
foregoing...." 29 U.S.C. § 1321(b)(2).
The parties agree that upon the Plan's inception, it qualified
as an exempt governmental plan not subject to ERISA's coverage
provisions. Therefore, before the Foundation and the County
executed the lease agreement, the Hospital's employees were covered
by an exempt governmental plan as defined by Title I and Title IV
of ERISA. See 29 U.S.C. § 1002(32); 29 U.S.C. § 1321(b)(2). The
Foundation, however, contends that the district court erred in
determining that it maintained the plan for purposes of removing
the Title IV, 29 U.S.C. 1321(b)(2), ERISA governmental plan
exemption. The Foundation also asserts that the district court
ignored the plain meaning of the Title I, 29 U.S.C. section
1002(32), definition of a governmental plan. We disagree.
When courts interpret statutes, the initial inquiry is the
language of the statute itself. United States v. James, 478 U.S.
597, 604, 106 S.Ct. 3116, 3120, 92 L.Ed.2d 483 (1986); United
States v. Barlow, 41 F.3d 935, 942 (5th Cir.1994), cert. denied, --
- U.S. ----, 115 S.Ct. 1389, 131 L.Ed.2d 241 (1995). We look at
the language of the statute as well as the design, object and
policy in determining the plain meaning of a statute. Crandon v.
United States, 494 U.S. 152, 158, 110 S.Ct. 997, 1001, 108 L.Ed.2d
132 (1990); United States v. Mathena, 23 F.3d 87, 92 (5th
Cir.1994). The statute must be read as a whole in order to
6 ascertain the meaning of the language in context of the desired
goals envisioned by Congress. See King v. St. Vincent's Hosp., 502
U.S. 215, 221, 112 S.Ct. 570, 574, 116 L.Ed.2d 578 (1991); and see
Mathena, 23 F.3d at 92. Only if the language is unclear do we turn
to the legislative history. Toibb v. Radloff, 501 U.S. 157, 162,
111 S.Ct. 2197, 2200, 115 L.Ed.2d 145 (1991).
1. ERISA's Goals and Congressional Intent
ERISA was enacted to improve the "fairness and effectiveness
of qualified retirement plans in their vital role of providing
retirement income." H.R.Rep. No. 93-807, 1974 U.S.Code Cong. &
Ad.News pp. 4639, 4670, 4676. One of the many concerns leading up
to the enactment of ERISA was the misuse of pension funds and the
resulting loss of benefits enured to the employees/beneficiaries of
these retirement plans. H.R.Rep. No. 93-807, 1974 U.S.Code Cong.
& Ad.News at 4681. The misuse of employee retirement plans is well
documented and provided the impetus for the enactment of ERISA.3
Congress created ERISA "to curb abuses which were rampant in
the private pension system." Roy v. Teachers Ins. and Annuity
Ass'n, 878 F.2d 47, 49 (2d Cir.1989) (citing H.R.Rep. No. 533, 93d
3 Congressional debate over the enactment of this statute included numerous tales of pension plan failures and the plight of thousands of victims with nonexistent or insolvent retirement funds. See, e.g. 120 Cong.Rec. 29194 (1974) (remarks of Rep. Biaggi), reprinted in III Legislative History of the Employee Retirement Income Security Act of 1974 at 4639 (1976) [hereinafter cited as "Leg.His."]; Id. at 29195 (remarks of Rep. Thompson), reprinted in III Leg.His. 4665; Id. at 29206 (remarks of Rep. Brademas), reprinted in III Leg.His. 4694; Id. at 29213 (remarks of Rep. Ford), reprinted in III Leg.His. 4711; Id. at 29934-35 (remarks of Sen. Javits), reprinted in III Leg.His. 4747.
7 Cong., 2d Sess., reprinted in 1974 U.S.Code Cong. & Admin.News
4639) (emphasis original). Although applying ERISA to public
pension plans was considered, Congress was reluctant to interfere
with the administration of public retirement plans due to the
resulting federalism implications. H.R.Rep. No. 533, 1974 U.S.Code
Cong. & Ad.News at 4647; See generally Alley v. Resolution Trust
Corp., 984 F.2d 1201, 1206 (D.C.Cir.1993); Roy, 878 F.2d at 49;
Rose v. Long Island R.R. Pension Plan, 828 F.2d 910, 914 (2d
Cir.1987), cert. denied, 485 U.S. 936, 108 S.Ct. 1112, 99 L.Ed.2d
273 (1988); Feinstein v. Lewis, 477 F.Supp. 1256, 1261
(S.D.N.Y.1979), aff'd, 622 F.2d 573 (2d Cir.1980).
2. The Plan's Status After the Lease
The Second Circuit has explained that Congress' goals in
enacting ERISA, coupled with federalism concerns, require that
"when a pension plan has been established by a governmental entity
for its employees and the governmental entity's status as employer
has not changed, the plan must be exempt from ERISA as a
governmental plan." Roy, 878 F.2d at 50 (emphasis added). It
follows that, in order to protect employees of publicly operated
pension plans, once a governmental entity relinquishes
responsibility for providing a retirement plan to a private entity,
that private entity operates or maintains the existing pension
plan, or any newly created pension plan, subject to the provisions
of ERISA.
In this case, we need only look to the lease agreement to
determine whether the Plan remained exempt under Title IV. The
8 lease agreement between the Foundation and the County states that
"[f]ollowing the Commencement Date, Lessee [Foundation] shall
assume the retirement system for hospital employees, and shall
thereafter continue to offer some form of retirement benefit."
Lease para. 5.4. Consequently, once the lease was executed, the
Foundation assumed responsibility for the pension plan for the
"hospital employees," i.e., the Foundation's employees.
According to the district court, the Foundation, therefore,
assumed the maintenance of the Plan for purposes of Title IV from
the date of Commencement of the lease. The Foundation argues that
this language did not require it to "maintain" the Plan; that it
never executed the Adoption Agreement contemplated by the Plan
itself for substitution of a new employer; and it did not
"maintain" the Plan in any administrative fashion, but solely took
steps to terminate the Plan and capture the surplus assets. While
acknowledging the Foundation's limited involvement with the Plan
after the Commencement Date, we nevertheless conclude that the
Foundation misperceives the implication of the Lease Agreement for
the Title IV exemption. Following the Commencement Date, when the
Foundation took over the hospital, the lease agreement did not
require the Foundation to "maintain" the Plan, but required it to
"assume" the Plan, with whatever consequence might result. More
significantly, by requiring the Foundation to assume the Plan, the
County gave up its role in the Plan. After the commencement date,
the County no longer "maintained" the Plan, hence the Plan no
longer qualified for the governmental entity exemption.
9 The Foundation urges us to take a functional view of its
actions and determine that the steps it took to terminate the Plan,
pay off the beneficiaries and pocket the surplus assets were not
"maintenance." Terminating a plan, the Foundation argues, cannot
be characterized as administration of the Plan. If the Foundation
did not "maintain" the Plan, the Plan was only "maintained" by the
County and never ceased to qualify for the governmental exemption.
We disagree. The cases the Foundation cites hold that an employer
which administers a plan owes its beneficiaries no fiduciary duty
in deciding whether to terminate or amend the plan. See e.g.,
Musto v. American General Corp., 861 F.2d 897, 912 (6th Cir.1988),
cert. denied, 490 U.S. 1020, 109 S.Ct. 1745, 104 L.Ed.2d 182
(1989); Cunha v. Ward Foods, Inc., 804 F.2d 1418, 1432-33 (9th
Cir.1986). None of them directly interprets when a governmental
entity ceases to "maintain" a plan for purposes of the exemption.
But in each case, the "employer" was the company, and, like the
Foundation here, decided to terminate the plan. Moreover, the
decision to wind up the plan was not the only option open to the
Foundation under the Lease Agreement. The County placed no strings
on the Foundation's "assumption" of the Plan. The pertinent
inquiry is not so much what the Foundation did as what it was
permitted to do by the Lease Agreement.
Put another way, the Lease Agreement might have directed the
Foundation to terminate the Plan as quickly as possible and retain
any surplus assets. Alternatively, the County might have directed
the Foundation through the Lease Agreement to keep hands off the
10 plan and allow the formal plan administrator, First City, Texas, to
perform its duties as long as assets remained. Whether or not
assumption of responsibility for the Plan might have been allocated
differently between the County and Foundation so as to preserve the
governmental exemption is not before us, and we do not address this
issue.
It is this court's opinion that the result reached herein
comports with the general goals of the statute and further protects
the employees of the pension plan. To hold otherwise could well
frustrate the goals, intent and purposes of ERISA. The statute was
designed to prevent the known past abuses and possible future
mismanagement of employee retirement plans. Government plans
received an exemption from ERISA because of their ability to tax
and thereby avoid the pitfalls of underfunding. See H.R.Rep. No.
533, 93d Cong., 2d Sess., reprinted in 1974 U.S.Code Cong. &
Admin.News 4639. Once the Foundation executed the lease, the
County no longer had responsibility to maintain the Plan or the
ability to tax to avoid possible Plan underfunding.
This court finds that under the facts before us, once the
Foundation assumed control of a previously exempt pension plan and
the employees of that Plan through the Lease Agreement, that Plan
lost its exempt status and became a covered plan subject to the
provisions of Title IV of ERISA.
3. Does Title I Apply?
In the analysis of this case, we confront a common problem
raised by the legislative construction of ERISA. Congress intended
11 to create a "governmental plan" exemption to leave the states some
control over their own retirement plans. 29 U.S.C. § 1003(b)(1).
Title I of ERISA, 29 U.S.C. section 1002(32), defines governmental
plan as "any plan established or maintained for its employees by
... the government of any state or political subdivision thereof."
(emphasis added).
The Foundation contends that the Plan was "established" by
the County and, therefore, falls under the Title I exemption
regardless of whether or not it maintained the Plan. Appellees
assert, on the other hand, that a literal application of this
provision would have effects contrary to the goals of ERISA and
should not be condoned. Specifically, if the disjunctive criteria
are employed, then a plan once established by the County would
remain exempt from ERISA even after being transferred to private
hands.
No federal court has yet decided to enforce the Title I
exemption based on fulfillment of only one of the "established or
maintained" criteria. The Second Circuit closely explored the
statute and its history for a clue to Congress' intent and then
veered into a finding that the Plan in that case had been both
established and maintained by the governmental unit. Rose v. Long
Island R.R. Pension Plan, 828 F.2d 910, 918-921 (2d Cir.1987); see
also Roy, supra. The discussion in Rose is nevertheless helpful,
for it shows that although no legislative history explains the use
of "or" in the formula for the Title I exemption, Congress
deliberately used conjunctive criteria in some portions of the
12 statute, e.g. the "established and maintained" requirements of
Title II and IV governmental plan exemptions,4 but not in others.
See 29 U.S.C. § 1002(1) (definition of "welfare plan"); id. §
1002(16)(B) (definition of "plan sponsor"); and id. § 1002(40)(A)
(definition of "multiple employer welfare arrangement").
The starting point of statutory construction is the text of
the statute and, if it is clear, that is also the end of the
construction. Here the language is clearly disjunctive. Some
cases have, however, substituted "or" for "and," or vice versa,
where literalism would have defeated the legislative purpose. See
United States v. Moore, 613 F.2d 1029, 1039-40 and nn. 84-86
(D.C.Cir.1979) (collecting cases), cert. denied, 446 U.S. 954, 100
S.Ct. 2922, 64 L.Ed.2d 811 (1980); but compare Crooks v.
Harrelson, 282 U.S. 55, 51 S.Ct. 49, 75 L.Ed. 156 (1930).
The exception to the rule is urged on us by appellees, but we
find it unpersuasive for several reasons. First, as Rose pointed
out, a judicially imposed conjunctive construction could also be
inconsistent with the apparent legislative purpose. If a private
concern transferred a plan to a government entity, the plan, not
having been established and maintained by the government, would not
be exempt from ERISA. Rose, 828 F.2d at 920. Second, Congress
used both conjunctive and disjunctive requirements in various ERISA
provisions, leading to the inference that the use of "or" does not
always yield a plainly absurd meaning. In this case, for instance,
application of "or" in no way undermines the legislative purpose to
4 See 26 U.S.C. § 414(d) and 29 U.S.C. § 1321(b)(2).
13 protect governmental employee plan beneficiaries while exempting
governmental plans from ERISA regulation. As the Foundation
observes, none of the actions it took to terminate and wind up the
Plan implicate the Title I provisions.
On balance, we conclude that applying "or" in the text of the
Title I exemption effects no such absurd result that we should
override the language Congress chose. Consequently, we must
reverse this aspect of the district court's decision.
CONCLUSION
For the foregoing reasons, in this case we find that once the
Foundation executed the lease agreement with the County, assumed
control of the pension plan and became the employer of the
Hospital's employees, the governmental exemption Title IV no longer
applied, and the Plan was subject to Title IV. On the other hand,
because the County established the Plan, the Plan remained exempt
under Title I even after the County ceased to "maintain" the Plan
by transferring control to the Foundation.
The summary judgment granted by the district court is
therefore AFFIRMED IN PART and REVERSED IN PART.
COBB, District Judge, concurring in part and dissenting in part:
I concur with analysis and holding of the court concerning
Title IV and dissent from majority's Title I analysis and holding.
It is true that no federal court has yet decided to enforce
the Title I exemption based on fulfillment of only one of the
"established or maintained" criteria. However, at least three
circuits have recognized that a literal reading of the language in
14 Title I's governmental exemption leads to very anomalous results.
See Alley, 984 F.2d at 1205 & n. 11; Silvera v. Mutual Life
Insurance Company of New York, 884 F.2d 423, 425-426 (9th
Cir.1989); Rose, 828 F.2d at 919-920.
I agree the starting point of statutory construction is the
text of the statute and, if Congress' intent is clear in the plain
language of the statute, that is also the end of the construction.
Here the plain language is disjunctive but Congress' intent is
certainly less than lucid. Interpreting section 1002(32) either in
the disjunctive or conjunctive presents serious problems when
considered with the general purpose of the governmental exemption
and the statute as a whole.
Rose explains why the use of conjunctive or disjunctive
construction for Title I's governmental exemption provisions leads
to results inconsistent with the apparent legislative purpose of
ERISA. See Rose, 828 F.2d at 919-920. The court recognized the
difficulty in interpreting section 1002(32). It noted that
adopting the literal meaning of "established or maintained" under
section 1002(32) would enable a private entity, lacking the
government-backed security of taxing powers, to take over a
governmental plan without subjecting itself to the requirements of
ERISA. Id. at 919.
Alternatively, if the "established and maintained" language of
section 1321(b)(2) was adopted, a governmental entity could not
take over a private pension plan and qualify for an ERISA
exemption. Id. at 920. Both interpretations lead to results
15 contrary to the stated goals of the statute. Although the court
did not reach the merits of this statutory quandary, Rose
recognized that "the status of the entity which currently maintains
a particular pension plan bears more relation to Congress' goals in
enacting ERISA and its various exemptions, than does the status of
the entity which established the plan." Id. at 920; see also
Alley v. Resolution Trust Corp., 984 F.2d 1201, 1205 n. 11
(D.C.Cir.1993) (adopting a similar test based on "the core concern
for ERISA purposes—the nature of an entity's relationship to and
governance of its employees.") The Alley court also used this test
to determine whether the Federal Asset Disposition Association was
an "agency or instrumentality" for purposes of Title I's
governmental exemption. (citing Rose, 828 F.2d at 918); and see
Silvera v. Mutual Life Insurance Co. of New York, 884 F.2d 423,
425-426 (9th Cir.1989) (Holding " "Congress, in exempting
governmental plans, was concerned more with the governmental nature
of public employees and public employers than with the details of
how a plan was established or maintained.' ") (quoting Rose, 828
F.2d at 920 (quoting Feinstein, 477 F.Supp. at 1262)).
As stated above, the legislative history and purpose of this
statute is improve the "fairness and effectiveness of qualified
retirement plans in their vital role of providing retirement
income." H.R.Rep. No. 93-807, 1974 U.S.Code Cong. & Ad.News 4670,
4676. The main concern of Congress was to create legislation that
would curb the misuse of pension funds and the resulting loss of
benefits which had enured to the employees/beneficiaries of private
16 retirement plans. H.R.Rep. No. 93-807, 1974 U.S.Code Cong. &
Ad.News at 4681; and see Roy, 878 F.2d at 49 (citing H.R.Rep. No.
Admin.News 4639).
With the prevailing goals of ERISA at issue, the lease
executed between the Foundation and the County should be
dispositive. Paragraph 5.3 of the lease provides that "[e]ffective
the Commencement date, Lessee [Foundation] shall assume sole
responsibility for hiring, promotion, discharge, setting of wage
scales and rates, supervision of employees, and, without regard to
when they arise, workers' compensation claims, employee grievances,
and disciplinary actions." Without question, the execution of this
lease made the Foundation the employer of the Hospital employees.1
As such, the governmental status of the pension plan has
changed. Once the Foundation executed the lease, thereby assuming
responsibility for the employees and the Plan, the Plan should have
ceased to be a governmental plan for purposes of Title I. The
lease specifically called for the Foundation to assume the status
of employer of the hospital employees and assume responsibility for
their pension plan. The Hospital employees could then no longer be
considered governmental employees. For these reasons, the Plan
could no longer remain exempt from the Title I provisions of ERISA.
Being persuaded that the Second Circuit's analysis in Rose,
1 Paragraph 5.2 also provides that "[l]essee [Foundation] shall supervise, manage and operate the hospital and its financial and fiscal affairs in a manner consistent with all applicable federal, state, and local laws and ordinances and in accordance with the terms of this agreement."
17 that "the status of the entity which currently maintains a
particular pension plan bears more relation to Congress' goals in
enacting ERISA and its various exemptions, than does the status of
the entity which established the plan" is more in keeping with the
purposes of ERISA, I would hold that the use of "or" in Title I
does not, in this case, exempt the Plan before us from ERISA.
Rose, 828 F.2d at 920. At least two other circuit courts have also
recognized the Rose analysis quoted here and found it a better test
for governmental exemption status under Title I. Alley, 984 F.2d
at 1205 & n. 11; Silvera, 884 F.2d at 425-426.2
In the case sub judice, the Foundation assumed control over
the Plan and the Hospital employees when it executed the lease.
Reviewing the Foundation's status with respect to the Plan and its
employees does more to implement Congress' goals in enacting ERISA
and its various exemptions, than does the County's status as the
governmental entity which "established or maintained" the Plan. I
would hold the governmental exemption under Title I for this Plan
ceased to applicable once the Foundation executed the lease and
assumed control over the Plan. For these reasons, I respectfully
dissent from the court's holding reversing the district court's
holding as to Title I.
2 The Supreme Court has also recognized that the statute does not clearly set out ERISA's coverage provisions. See Massachusetts v. Morash, 490 U.S. 107, 115, 109 S.Ct. 1668, 1673, 104 L.Ed.2d 98 (1989) (finding it necessary to "look to the provisions of the whole law, and its object and policy" in determining the scope of employee welfare benefit plans under section 1002(3)).