Opinion
No. 11-288.
September 1, 2011.
R. JOSEPH BARTON, KAREN L. HANDORF, COHEN MILSTEIN, SELLERS TOLL PLLC, Washington, DC, RENEA HICKS, LAW OFFICE OF RENEA HICKS, Austin, TX, DAVID WEISER, KATOR, PARKS WEISER, PLLC, Austin, Texas.
JEREMY D. WRIGHT, Counsel of Record, KATOS, PARKS WEISEB, PLLC, Washington, DC, MARC I. MACHIZ, COHEN MILSTEIN, SELLERS TOLL PLLC, Philadelphia, PA.
QUESTION PRESENTED
The Employee Retiree Income Security Act covers any plan "to the extent that" it provides retirement income. The court below found that a portion of the benefit plan before it "undoubtedly produces income" to retirees, but determined that because the "primary thrust" of the plan as a whole was other than to provide income, no part of the plan is covered by the Act. Did the court below err in ignoring Congress's definition of a pension plan and instead relying on an extra-statutory test of its own device?
PARTIES
The Plaintiffs-Appellants below, who are Petitioners before this Court, are the following: Donald O. Boos, Raymond D. Johnson, Wanda N. Myers and all other persons similarly situated.
The Defendants-Appellees below, who are the Respondents before this Court, are the following: ATT, Inc., BellSouth Corporation and the BellSouth Telephone Concession Plan.
TABLE OF CONTENTS
QUESTION PRESENTED ................... i
PARTIES ............................. ii
TABLE OF AUTHORITIES ................ iv
OPINIONS BELOW ....................... 2
JURISDICTION.......................... 2
STATUTORY PROVISION INVOLVED ......... 2
STATEMENT ............................ 3
REASONS FOR GRANTING THE PETITION .... 6
CONCLUSION........................... 16
APPENDICES
Appendix A: Opinion, Boos v. ATT, Inc., 643 F.3d 127 (5th Cir. 2011)................................. la
Appendix B: Order, Boos v. ATT, Inc., 704 F. Supp. 2d 600 (W.D. Tex. 2011)........................... 15a
Appendix C: Judgment of the District .Court................ 62a
TABLE OF AUTHORITIES
Page(s)
CASES
Anderson v. Suburban Teamsters of N. Ill. Pension Fund Bd. of Trs., 588 F.3d 641 (9th Cir. 2009) ................ 7, 10
Boggs v. Boggs, 520 U.S. 833 (1997) ............................. 4
Brown v. Gardner, 513 U.S. 115 (1994) ............................ 12
Chevron U.S.A. Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837 (1984) ........................... 13
In re Lucent Death Benefits ERISA Litig., 541 F.3d 250 (3d Cir. 2008) ................. 7, 9
John Hancock Mut. Life Ins. Co. v. Harris Trust Sav. Bank, 510 U.S. 86 (1993) .......................... 10-12
Kemp v. IBM Corp., 109 F.3d 708 (11th Cir. 1997) ................... 8
Massachusetts v. Morash, 490 U.S. 107 (1989) ............................ 12
McBarron v. S T Indus., Inc., 771 F.2d 94 (6th Cir. 1985) ................. 7, 10 Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359 (1980) ............................. 4
Raymond B. Yates, M.D., P. C. Profit Sharing Plan v. Hendon, 541 U.S. 1 (2004)................................ 13
Rombach v. Nestle USA, Inc., 211 F.3d 190 (2d Cir. 2000) .............. 7, 9, 14
Williams v. Wright, 927 F.2d 1540 (11th Cir. 1991) ............... 7, 8
STATUTES AND REGULATIONS
Employee Retirement Income Security Act of 1974, Pub.L. No. 93-406, 88 Stat. 829 (codified as amended in scattered sections of Titles 5, 18, 26, 29, and 42 of the U.S. Code) .................................. passim
28 U.S.C. § 1254(1) ............................. 2
29 U.S.C. § 1002(1) ............................. 8
29 U.S.C. § 1002(2)(A) ....................... 2, 4
29 U.S.C. § 1101(b)(2)(B) ...................... 11
29 U.S.C. § 1132(e)(1) .......................... 4
26 C.F.R. § 1.132-2(a)(2) ....................... 5
OTHER AUTHORITIES
DOL ERISA Op. No. 92-12A, 1992 WL 86486 (Apr. 20, 1992) ............ 12
DOL Info. Letter, 1999 ERISA LEXIS 11 (Mar. 26, 1999) ...... 13
PETITION FOR A WRIT OF CERTIORARI
Donald O. Boos, Raymond D. Johnson, Wanda N. Myers and all other persons similarly situated hereby petition this Court for a writ of certiorari to the United States Court of Appeals for the Fifth Circuit.
OPINIONS BELOW
The decision of the Fifth Circuit, Pet. App. A at la, is reported as Boos v. ATT, Inc., 643 F.3d 127 (5th Cir. 2011). This case arose in the court below on appeal of a summary judgment entered by the United States District Court for the Western District of Texas. The trial court's decision, Pet. App. B at 15a, is reported at Boos v. ATT, Inc., 704 F. Supp. 2d 600 (W.D. Tex. 2011).
JURISDICTION
The decision of the Fifth Circuit affirming the trial court's grant of summary judgment was entered on June 3, 2011. This petition, accordingly, is filed within the time allowed by law. Petitioners invoke the jurisdiction of this Court pursuant to 28 U.S.C. § 1254(1).
STATUTORY PROVISIONS INVOLVED
Title 29, United States Code, Section 1002(2)(A) provides:
Except as provided in subparagraph (B), the terms "employee pension benefit plan" and "pension plan" mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program —
(i) provides retirement income to employees, or
(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond. . . .
STATEMENT
Petitioners Donald Boos, Raymond Johnson, Wanda Myers, and class representative Barbara Phillips are all retirees of BellSouth Corporation. Like all other such retirees, Petitioners were promised, as part of their retirement compensation, that they would receive lifetime free local telephone service. Retirees (and employees) who live within BellSouth's service area simply are not billed for these services; retirees like Petitioners, who live outside BellSouth's service area, are reimbursed for telephone services purchased from other companies. Thus, Petitioners have received what BellSouth refers to as "Out-of-Region Telephone Concession benefits" or "OOR Concession benefits."
Pet. App. A at 2a-3a; Pet. App. B at 25a.
Pet. App. A at 5a.
Pet. App. A at 2a; Pet. App. B at 25a.
After ATT, Inc. acquired BellSouth, Petitioners learned that ATT intended to modify the OOR Concession benefits to eliminate reimbursement payments to retirees. Seeking to preserve those benefits for themselves and all others retirees similarly situated, Petitioners filed a class action in district court. Jurisdiction arose in the district court under 29 U.S.C. § 1132(e)(1).
Congress enacted the Employee Retirement Income Security Act of 1974 (ERISA) in response to a growing concern that American workers were not receiving the pension benefits that they had been promised. "ERISA is a comprehensive and reticulated statute" covering employee benefits, expressing "the congressional mandate for their uniform and comprehensive regulation." ERISA provides broad protection to benefits that fall within the statutory definition of an "employee pension benefit plan" or "pension plan."
Nachman Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 361 (1980).
Boggs v. Boggs, 520 U.S. 833, 836 (1997).
See Pub.L. No. 93-406, 88 Stat. 829 (codified as amended in scattered sections of Titles 5, 18, 26, 29, and 42 of the U.S. Code).
In order to achieve that goal, ERISA broadly defines a pension plan subject to the Act (unless specifically excepted) as "any plan, fund or program" established or maintained by an employer "to the extent that" it "provides retirement income to employees." Despite the explicit statutory mandate that "any plan" is a covered pension plan "to the extent [it] provides retirement income," the court below disregarded the statute in concluding that the OOR Concession did not fall within ERISA's protections.
29 U.S.C. § 1002(2)(A). The statutory exceptions enumerated in ERISA do not apply to the benefits at issue in this case. See Pet. App. A at 4a ("The parties agree that Concession is not a welfare plan. Therefore, the only question before us is whether Concession, in part or in whole, is a pension plan").
The court below recognized that "for OOR. retirees, [the OOR] Concession undoubtedly produces [retirement] income." Nonetheless, the court found that the OOR Concession was not covered by ERISA's definition of a "pension plan." The court viewed the OOR Concession to be merely part of a broader set of local telephone benefits provided to retirees. Instead of focusing on the benefit that was provided to out-of-region retirees, the court considered this benefit as part of the benefit provided to in-region retirees.
Pet. App. A at 13a.
Id. at 12a.
Id.
By regulation, the discounted telephone service benefit is not treated as gross income for in-region retirees. See 26 C.F.R. § 1.132-2(a)(2).
Viewing the in-region discount and the OOR reimbursement as one program, the court found that the "primary thrust" of the program was not to provide income, and that income provided by the OOR Concession was merely "incidental to the benefit." The court did not, however, identify any statutory anchor for its "primary thrust" or "incidental to the benefit" test. Thus, rather than hew to Congress's determination that benefits are protected by ERISA "to the extent that" they provide retirement income, the court below saw fit to devise its own extra-statutory test. Finding that the OOR Concession benefits did not meet its "primary thrust" test, the court concluded that Petitioners' ERISA claims' failed.
Pet. App. A at 12a.
Id.
REASONS FOR GRANTING THE PETITION
This case presents questions of substantial public importance concerning the scope of ERISA's protection of benefit plans that "undoubtedly produce" retirement income. The Fifth Circuit's extra-statutory "primary thrust" test flouts Congress's unambiguous and explicit terms and undermines the central purpose of ERISA. The decision of the court below conflicts with decisions from at least five other circuits, is inconsistent with the guidance previously provided by this Court and is irreconcilable with the Department of Labor's instruction. Review by this Court is necessary to provide uniformity on this issue of nationwide significance, so that all workers, retirees, and employers will be able to rely on a consistent understanding of the scope and breadth of ERISA's protections.
Id. at 13a.
1. The decision of the court below conflicts with decisions issued by other courts of appeals. Indeed, all other circuits that have addressed the question of which benefits are covered by ERISA's statutory definitions have recognized that "the words `to the extent that' clearly indicate that Congress intended to allow any plan or part of a plan" to be governed by ERISA. Unlike the court below, these courts did not look to the "primary thrust" of the benefit, but instead focused solely on the benefit at issue and, to the extent that the benefit fit within ERISA's definition, accorded it ERISA's protections.
McBarron v. S T Indus., Inc., 771 F.2d 94, 98 (6th Cir. 1985); see also Anderson v. Suburban Teamsters of N. Ill. Pension Fund Bd. of Trs., 588 F.3d 641, 651 (9th Cir. 2009); In re Lucent Death Benefits ERISA Litig., 541 F.3d 250, 254-56 (3d Cir. 2008); Rombach v. Nestle USA, Inc., 211 F.3d 190, 193-94 (2d Cir. 2000); Williams v. Wright, 927 F.2d 1540, 1547-49 (11th Cir. 1991).
For example, the Eleventh Circuit found that portions of a benefit plan that provided "retirement income" were covered by ERISA as a pension plan, although other portions of the same plan were not. The benefit plan at issue, set out in a letter from the President of a company to a single employee, was comprised of monetary payments, insurance coverage, country club membership, and other benefits. The court concluded that those portions of the plan that provided "retirement income" met the statutory definition of a "pension plan," but that those benefits that did not provide retirement income, such as insurance coverage, were not protected as a pension plan. Thus, rather than seeking to ascertain the "primary thrust" of the benefit package, the Eleventh Circuit concluded that "to the extent" any portion of the benefits met the statutory definition of a pension plan, that portion of the benefits fell within ERISA's protections. The Eleventh Circuit rejected a party's attempt to focus the analysis beyond the terms of the statutory definition.
Williams, 927 F.2d at 1547-49.
Id. at 1550.
See Kemp v. IBM Corp., 109 F.3d 708, 713 (11th Cir. 1997) ("non-ERISA benefits do not fall within ERISA's reach merely because they are included in a multibenefit plan along with ERISA benefits").
Similarly, in a case involving ERISA's parallel provision concerning employee welfare plans, the Second Circuit found that a portion of a benefits program that provided disability benefits was subject to ERISA's welfare plan requirements "to the extent that" the benefit met the ERISA definition of a welfare plan. Here again, the court did not seek to ascertain the "primary thrust" of the benefit, but instead confined itself to Congress's definition and concluded that the portion of the plan that met that definition was covered by ERISA.
Like the statutory definition of a "pension plan," ERISA's definition of a "welfare plan" includes "any plan, fund, or program . . . to the extent that such plan, fund, or program was established or is maintained for the purpose of providing . . . medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment." 29 U.S.C. § 1002(1) (emphasis added).
See Rombach, 211 F.3d at 193-94 ("under the plain language of the statute, `to the extent' that Nestle's Pension Plan provides benefits that are triggered by disability, that portion of the plan is a welfare plan").
More recently, the Third Circuit determined that ERISA requires a court to analyze portions of employee benefit plans "to the extent that" they meet the statutory definitions. The court stated, "the fact that a welfare benefit appears in a larger plan that also provides pension benefits does not change the character of that welfare benefit." The court concluded that a death benefit, even though a portion of a larger pension plan, was nonetheless a welfare benefit and was thus covered as such under ERISA's provisions for welfare benefits.
See In re Lucent Death Benefits ERISA Litig., 541 F.3d at 254-56.
Id. at 255.
The Sixth Circuit has also found that ERISA requires that portions of a benefit plan must be parsed "to the extent that" those portions meet the statutory definitions. The court concluded that a portion of a benefits plan was a welfare plan to the extent that portion met the statutory definition of a welfare plan. The court reversed the district court's finding that the disability portion of the overall "Master Hourly Retirement Plan" was covered by ERISA's pension plan definition, rather than the welfare plan definition.
See McBarron, 771 F.2d at 98 (6th Cir. 1985).
Finally, the Ninth Circuit has also held that "to the extent that" a portion of a benefit fits the ERISA definition of a "welfare plan," that portion is covered by the Act's welfare plan provisions. The court stated that "[t]he `to the extent' language evidences Congress's intent that the definition encompass any portion of a plan in which the employee's disability triggers the right to the benefit."
Anderson, 588 F.3d at 651 (9th Cir. 2009) (emphasis in original).
Unlike the court below, these courts have consistently and properly focused on the statutory language to ascertain the scope of ERISA's coverage. Only the Fifth Circuit has seen fit to devise its own extra-statutory test; i.e., only the Fifth Circuit has concluded that benefits are covered by ERISA only if the "primary thrust" of the benefit package as a whole constitutes retirement income. Review by this Court is necessary to resolve this split among the circuits and to conform the law in the Fifth Circuit to that universally accepted in all the other circuits that have addressed the issue.
2. In addition to conflicting with the decisions of all the other circuits that have addressed this issue, the decision of the court below defies the guidance provided by this Court. In John Hancock Mut. Life Ins. Co. v. Harris Trust Sav. Bank, this Court considered the phrase "to the extent that" in the context of a definition provided in a separate section of ERISA. A "guaranteed benefit policy" is defined as "an insurance policy or contract to the extent that such policy or contract provides for benefits the amount of which is guaranteed by the insurer." Such policies are exempt from ERISA's fiduciary standards.
510 U.S. 86 (1993).
29 U.S.C. § 1101(b)(2)(B) (emphasis added).
The Court considered whether a group annuity contract met the terms of the statutory exemption where the contract included guaranteed benefits. The Court focused on the phrase "to the extent," finding that the inclusion of guaranteed benefits did not exempt the entire contract:
Congress did not say a contract is exempt "if" it provides for guaranteed benefits; it said a contract is exempt only "to the extent" it so provides. Using these words of limitation, Congress apparently recognized that contracts may provide to some extent for something other than guaranteed benefits, and expressly declared the exemption unavailable to that extent.
Harris Trust, 510 U.S. at 104-05 (emphasis in original).
There is no reason to assume that Congress intended the phrase "to the extent that" to have a different meaning in the context of the fiduciary provisions of ERISA than it has in the definition of a pension plan. This Court's construction of the phrase "to the extent that" in the definition of a "guaranteed benefit policy" should have had compelling force in the court below. Review by this Court is thus necessary to align the court below with this Court's holding in Harris Trust.
Where Congress uses a phrase repeatedly in different places in a statute "there is a presumption that a given term is used to mean the same thing throughout a statute." Brown v. Gardner, 513 U.S. 115, 118 (1994).
3. The decision of the court below also conflicts with guidance provided by the Department of Labor. Because the Department of Labor is authorized to interpret the coverage provisions of Title I of ERISA, its views are entitled to substantial deference. In ERISA Advisory Opinion 92-12(A), the Department stated that "use of the phrase `to the extent' indicates that it is possible for an entity to provide a combination of both benefits described in section 3(1) and benefits not described in that section."
See Massachusetts v. Morash, 490 U.S. 107, 116 (1989).
DOL ERISA Op. No. 92-12A, 1992 WL 86486, *1 (Apr. 20, 1992).
The Department later confirmed that "[c]ombining ERISA-covered . . . benefits and other non-covered benefits in a single plan does not alter a plan's covered status under Title I of ERISA." The Department stated that "ERISA coverage provisions, do not offer employers an opportunity to alter the status under ERISA Title I of any non-covered type of benefit simply by adding such benefit to an ERISA-covered plan for their employees."
DOL Info. Letter, 1999 ERISA LEXIS 11, *9 (Mar. 26, 1999) (citing ERISA Advisory Opinion 92-12A).
Id.
Consistent with this Court's construction in Harris Trust, and the decisions of all the circuits to have addressed the issue (other than the court below), the Department of Labor has found that a portion of a benefit is covered "to the extent that" the portion meets ERISA's definition of a pension plan. As the administrative agency charged with implementing Title I of ERISA, the Department's construction is entitled to Chevron deference. Review by this Court is necessary to ensure that the Department's statutory role in enforcing and implementing ERISA is respected.
See Raymond B. Yates, M.D., PC. Profit Sharing Plan v. Hendon, 541 U.S. 1, 24 (2004) (Scalia, J., concurring) (citing Chevron U.S.A. Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837 (1984)).
4. The decision of the court below undermines the uniform procedures and pension benefit protections sought by Congress when enacting ERISA and creates chaos and uncertainty for workers, retirees, and employers.
The comprehensive regulation of employee benefits under ERISA provides certainty and predictability. The name or title given to a benefit is not controlling — it is the nature of the benefit promised or received that determines whether the benefit is covered by ERISA or provisions of ERISA governing pension plans. Congress provided a simple mechanism for determining which benefits were protected as pension plans under ERISA with a clear, expansive definition.
See, e.g., Rombach v. Nestle USA, Inc., 211 F.3d 190, 194 (2d Cir. 2000) ("it does not matter that Nestle called the disability retirement pension portion of its plan a `pension benefit' and made it part of its master `pension plan.' Its meaning and function remained clear; it was a benefit triggered by disability. And, under the plain language of the statute, `to the extent' that Nestle's Pension Plan provides benefits that are triggered by disability, that portion of the plan is a welfare plan under § 1002(1)").
By eschewing Congress's plain language and devising its own extra-statutory standard, the court below has created confusion and uncertainty where Congress envisioned clarity and uniformity. The "primary thrust" test necessitates resolution of the threshold question, "primary thrust of what?" Is it the entire retirement benefit package? Solely the benefit in dispute? Or the benefit in dispute as it pertains to a particular class of retirees? Litigants will seek to define an outcome-determinative scope of the inquiry, and courts, unaided by any statutory standards, will struggle to resolve this question. Congress, however, has defined the proper scope of a court's inquiry: "to the extent that" the plan at issue provides retirement income, then it falls within ERISA's protections for pension plans.
Further, if federal (or perhaps even state) courts are to look at the overarching goal of a plan or benefit in order to determine whether the "primary thrust" of the plan or benefit at issue is an ERISA pension plan, the uniformity and predictability of the system would be lost.
One court might view the "primary thrust" of a retirement plan that includes a pension benefit, a welfare benefit, and a benefit not covered by ERISA to be providing retirement income. A second court might conclude that the inclusion of benefits not covered by ERISA means that the "primary thrust" of the retirement plan renders the entire plan outside the purview of ERISA. A third court might look only at the welfare portion of the benefit as the issue under review, and disregard the remainder of the plan. With modern retirement benefit packages including numerous benefits of various types, there are any number of ways of defining the "plan" under a court's review, let alone determining the "primary thrust" of the plan.
The decision of the court below invites this chaotic analysis, upsetting decades of consistent reliance on the straight-forward statutory language. Now, an employer cannot know whether an employee benefit is covered under ERISA or subject to various state laws. A retiree cannot know if a benefit is subject to ERISA's protections. Under the decision of the court below, all is left to a court's determination of the scope of the "plan" under review, and a judge's or panel's subjective determination of the "primary thrust" of that plan.
The court below erred in disregarding the plain language of the statute, in contrast to the decisions of all other courts of appeals, the administrative construction of the Department of Labor, and the guidance provided by this Court. This Court must exercise its authority to ensure that ERISA's objective and plain statutory definitions are heeded.
CONCLUSION
For the foregoing reasons, the petition for a writ of certiorari to the United States Court of Appeals for the Fifth Circuit should be granted.