Opinion
Civil Action No. 99-3333, Section: "R" (4).
December 11, 2000.
ORDER AND REASONS
Before the Court is a motion by defendants Commercial Life Insurance Company and UNUM Life Insurance Company of America (successor to Commercial Life) seeking a judicial determination whether the provisions of the Employee Retirement Income Security Act of 1974 govern the disability policy issued by UNUM to plaintiff Mark Fierro. Although defendants do not specify the basis for their motion, the Court interprets the motion as a motion for declaratory judgment pursuant to Federal Rule of Federal Procedure 57. See FED. R. Civ. P. 57. For the following reasons, the Court denies defendants' motion.
I. Background
This case arises out of plaintiff Mark Fierro's claim for disability benefits under a policy issued by UNUM Life Insurance Company (successor to Commercial Life). Sometime prior to July 19, 1995, plaintiff received a flier in the mail produced by Gilsbar, Inc., a privately held independent insurance broker/agency, encouraging him to increase the disability coverage he had under a disability insurance policy issued by Commercial Life Insurance Company. Eligibility for the additional coverage was contingent on his membership in the Louisiana State Bar Association. Interested in obtaining that additional coverage, plaintiff met with a Gilsbar insurance agent and completed a Commercial Life application for an individual policy. In the upper right corner of the application is the LSBA seal and the notation "Sponsored by the Louisiana State Bar Association." (Pl's Mem. Response Mot. Judicial Determination, Ex. B.)
Throughout the term of the policy, until he filed his claim for disability, plaintiff paid premiums directly to Gilsbar. Although plaintiff was employed as an attorney at Evans Company, the law firm provided no disability insurance, did not reimburse him for any premiums, and did not withhold any portion of his pay to remit premiums to the insurer. On September 1, 1998, plaintiff submitted a claim under his disability policy, which UNUM ultimately denied.
Defendants now move for a declaration that ERISA governs the disability policy. After observing that two other district courts concluded that ERISA governs this plan, they argue (1) that the policy complies with the statutory definition of an employee welfare benefit plan, (2) that the plan is not excluded from ERISA coverage pursuant to the Department of Labor regulations, and (3) that the plan was established or maintained by an employee organization for the purpose of providing certain benefits to its members.
II. Discussion
A. Declaratory Judgment Standard
The Declaratory Judgment Act, 28 U.S.C. § 2201, allows a federal court to issue declaratory relief solely "[i]n a case of actual controversy within its jurisdiction." 28 U.S.C. § 2201 (a). The Act's restriction of federal court jurisdiction to actual controversies extends to the constitutional limit of "cases and controversies" set forth in Article III. See U.S. CONST. art. III, § 2. See also Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239, 57 S.Ct. 461, 463 (1937); Middle S. Energy, Inc. v. City of New Orleans, 800 F.2d 488, 490. (5th Cir. 1986). As the Supreme Court has explained: "[T]he difference between an abstract question and a `controversy' contemplated by the Declaratory Judgment Act is necessarily one of degree," and a precise test to identify the existence of a "controversy" is difficult to establish. Maryland Cas. Co. v. Pacific Coal Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512 (1941). Nevertheless, the Supreme Court has held that declaratory relief is appropriate under the Declaratory Judgment Act when a substantial controversy of sufficient immediacy and reality exists between parties having adverse legal interests. See id. (citing Aetna, 300 U.S. at 239-42, 57 S.Ct. at 463); Louisiana Nev. Transit Co. v. Marathon Oil Co., 770 F. Supp. 325, 327 (W.D. La. 1991), aff'd, 985 F.2d 797 (5th Cir. 1993). The controversy must be "real and substantial . . . admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Aetna, 300 U.S. at 240-41, 57 S.Ct. at 464. For "[a] controversy, to be justiciable, [it] must be such that it can presently be litigated and decided and not hypothetical, conjectural, conditional or based upon the possibility of a factual situation that may never develop." Rowan Cos. v. Griffin, 876 F.2d 26, 28 (5th Cir. 1989) (quoting Brown Root, Inc. v. Big Rock Corp., 383 F.2d 662, 665 (5th Cir. 1967))
B. Applicability of ERISA
The Fifth Circuit has developed a three-part test to determine whether ERISA governs a particular benefit program. First, the Court must determine whether there is a "plan." 29 U.S.C. § 1002 (1). See also Hansen v. Continental Ins. Co., 940 F.2d 971, 976-77 (5th Cir. 1991). Second, the Court must resolve whether the Department of Labor regulations exclude the plan from ERISA coverage. See 29 C.F.R. § 2501.3-1 (j). See also Hansen, 940 F.2d at 976-77. Third, the Court must determine whether an employer or employee organization has established or maintained the plan. 29 U.S.C. § 1002 (1). See also Hansen, 940 F.2d at 978.
Notwithstanding the intricacies of this three-part test and defendants' analysis in accordance therewith, an assumption undergirding the analytical framework is the involvement of an employer or an employee organization. Absent the involvement of either, ERISA does not apply. Here, defendants neither argue that plaintiff's employer, Evans Company, was involved with the plan nor that LSBA or Gilsbar qualify as an employer for the purposes of ERISA. See 29 U.S.C. § 1002 (5) (defining employer). See also Department of Labor Opinion Letter, No. 87-01A, 1987 WL 68476, at *2 (Jan. 5, 1987) (opining that the Kansas Bar Association is not a bona fide association of employers).
Rather, defendants contend that LSBA is an employee organization. Accordingly, the Court will limit its consideration to whether LSDA is an "employee organization" for the purposes of ERISA to determine whether it is even necessary to address the Fifth Circuit's three-part test.
ERISA defines "employee organization" as:
[A]ny organization of any kind, or any agency or employee representation committee, association, group, or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning an employee benefit plan, or other matters incidental to employment relationships; or any employees' beneficiary association organized for the purpose in whole or in part, of establishing such a plan.29 U.S.C. § 1002 (4). By its terms, section 1002(4) provides two alternative measures to assess whether a particular organization qualifies as an employee organization under ERISA. First, any organization in which employees participate and that exists "for the purpose, in whole or in part, of dealing with employers concerning an employee benefit plan, or other matters incidental to employment relationships" qualifies. Id. Second, "any employees' beneficiary association organized for the purpose, in whole or in part, of establishing such a plan" qualifies. Id.
To qualify under the first alternative, LSDA must exist for the purpose of dealing with employers about employee benefit plans. The LSBA's articles of incorporation provide that its objects and purposes "shall be to regulate the practice of law, advance the science of jurisprudence, promote the administration of justice, uphold the honor of the Courts and of the profession of law, encourage cordial intercourse among its members, and, generally, to promote the welfare of the profession in the State." Articles of Incorporation of the Louisiana State Bar Association, art. III, § 1. While a generous interpretation of "promote the welfare of the profession" could encompass concerns about employment relationships, defendants do not even allege that LSBA exists for the purpose of dealing with employers about employee benefit plans or other matters incidental to employment relationships such as labor disputes, wages, hours of employment, or conditions of work. Indeed, an independent review of the LSBA's benefits and programs does not reveal any such evidence. Therefore, the Court finds that LSBA does not qualify as an employment organization under section 1002(4)'s first alternative.
To qualify under the second alternative, LSBA must be an employee's beneficiary association. Defendants appear to assert that LSBA so qualifies because "[m]embership is limited to members of the Louisiana State Bar Association and the purpose of Gilsbar, Inc. is, at least in part, to provide group benefits for attorneys engaged in active employment." (Defs.' Mem. Supp. Contention ERISA Applicable at 3.) In determining whether LSBA constitutes an employee's beneficiary association, the Court finds the four criteria identified by the Department of Labor in a series of opinion letters to be informative and persuasive:
1) [M]embership in the association is conditioned on employment status — for example, membership is limited to employees of a certain employer or union;
2) the association has a formal organization, with officers, by-laws or other indications of formality;
3) the association is organized for the purpose, in whole or in part, of establishing a welfare or pension plan, and
4) the association generally does not deal with employers.
Department of Labor Opinion Letter, No. 89-20A, 1989 WL 206424, at *2. See also Department of Labor Opinion Letter, No. 95-25A, 1995 WL 582729, at *2 (Oct. 3, 1995). Although Department of Labor opinion letters lack the force of law and, accordingly, do not warrant Chevron-style deference, they are "entitled to respect" to the extent they have the power to persuade. Christensen v. Harris County, 529, U.S. 576, ___, 120 S.Ct. 1655, 1662-63 (2000) (citing Skidmore v. Swift Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164 (1944)).
The Court finds the first criteria to be dispositive here. LSBA membership includes all persons licensed to practice law in Louisiana, including state and federal judges and faculty members of Louisiana law schools. See Articles of Incorporation of the Louisiana State Bar Association, art. IV, §§ 1-2. Accordingly, membership is a condition of licensing — e.g., being licensed to practice law in Louisiana —not a condition of employment status. Moreover, the Court notes that membership is accorded regardless of an individual's standing as an employer or an employee. Accord Opinion Letter, No. 87-01A, 1987 WL 68476, at *2 (opining that the Kansas Bar Association is not an employees' beneficiary association because "membership in KBA is not conditioned upon one's employment status but rather is open to both employers and employees"). Therefore, the Court finds that LSBA is not an employees' beneficiary association under ERISA.
Notwithstanding the foregoing analysis, defendants argue that two other federal district courts have already found that ERISA governs this plan. Specifically, they cite Bennett v. Gilsbar, Inc., No. 98-0033 (W.D. La. May 27, 1998), and Nelson v. New York Life Ins. Co., 1991 WL 213908 (E.D. La. Oct. 11, 1991) In both cases, however, the claimant's employer purchased insurance through USBA for the employee's benefit. This critical fact distinguishes both cases from the matter now before the Court because it introduced what is missing here, an employer's (or employee organization's) involvement in the plan. The Court notes further that while the Bennett court found in a footnote that USBA is an employee organization, it reached that summary conclusion after observing that LSBA membership is required. Bennett v. Gilsbar, Inc., No. 98-0033, at 3n.4. With respect, mandatory membership is irrelevant to either method of qualifying as an employee organization under section 1002(4). Therefore, having concluded that LSBA is not an employee organization, the Court finds that ERISA does not govern the plan for the purposes of plaintiff's claim.
III. Conclusion
For the foregoing reasons, the Court denies defendants' motion for declaratory judgment.