Document: 541 U.S. 1 RAYMOND B. YATES, M. D., P. C. PROFIT SHARING PLAN, ET AL.v.HENDON, TRUSTEE. No. 02-458. Supreme Court of United States. Argued January 13, 2004. Decided March 2, Enacted "to protect . the interests participants in employee benefit plans and their beneficiaries," 29 U. S. § 1001(b), Employee Retirement Income Security Act 1974 (ERISA) comprises four titles. Relevant here, Title I, 1001 et seq., mandates minimum participation, vesting, funding schedules for covered pension plans, establishes fiduciary conduct standards plan administrators. II, codified 26 C., amended various Internal Revenue Code (IRC) provisions pertaining to qualification special tax treatment, order, inter alia, conform I's standards. III, 1201 contains designed coordinate enforcement efforts different federal departments. IV, 1301 created Pension Benefit Guaranty Corporation an insurance program employees against loss "nonforfeitable" benefits upon termination lacking sufficient funds pay full. This case concerns definition coverage provisions, though those indicating who may participate ERISA-sheltered plan, inform each ERISA's I defines "employee plan" as "an welfare or both," 1002(3); "participant" encompass "any eligible receive a from plan," 1002(7); "employee" individual employed by employer," 1002(6); "employer" include person acting employer, interest 1002(5). Yates was sole shareholder president professional corporation that maintained profit sharing (Plan). From Plan's inception, at least one other than his wife Plan participant. The qualified favorable treatment under IRC 401. As required IRC, 401(a)(13), ERISA, 1056(d), contained antialienation provision. Entitled "Spendthrift Clause," provision stated, relevant part: "Except loans Participants [expressly provided Plan], no available hereunder will be subject assignment alienation." In December 1989, borrowed $20,000 another corporation's (which later merged into Plan), but failed make any monthly payments. November 1996, however, paid off loan full with proceeds sale house. Three weeks later, Yates's creditors filed involuntary petition him Chapter 7 Bankruptcy Code. Respondent Hendon, Trustee, complaint petitioners (the Yates, trustee), asking avoid repayment. Granting Hendon summary judgment, first determined repayment preferential transfer 11 547(b). That finding not challenged on appeal. then held trustee, could rely prevent recovering bankruptcy estate. holding dictated Sixth Circuit precedent, which self-employed owner plan's corporate sponsor "participate" ERISA therefore use enforce restriction beneficial plan. District affirmed same ground. Circuit's determination purposes obviated question whether, had such participant, would have been shielded Trustee's reach. Held: working business (here, corporation) qualify ERISA. If covers more her spouse, equal terms participants. Such owner, common employees, qualifies protections affords is governed rights remedies specifies. Pp. 12-24. (a) Congress intended owners Because definitions and, turn, are uninformative, looks instruction. See Nationwide Mut. Ins. Co. v. Darden, 503 318, 323. multiple textual indications provide, combination, "specific guidance," ibid., so there cause this resort law. enactment did change existing backdrop permitting shareholders, partners, proprietors tax-qualified plans. Rather, Congress' objective harmonize these longstanding provisions. related expressly contemplate participation Most notably, frees certain likely all responsibility requirements. 1101(a) §§ 414(q)(1)(A) 416(i)(1)(B)(i). also limited exemptions requirements ordinarily 1103(a) (b)(3)(A) 401(c)(1) (2)(A)(i), 1402(a) (c). Further, prohibited transaction exemptions, which, like indicate ERISA-qualified 1108(b)(1)(B) (d)(1) 401(c)(3). Exemptions order unnecessary if ERISA-protected place. Provisions IV corroborative. For example, does apply "established exclusively substantial owners," 1321(b)(9) (emphasis added), category includes shareholders partners ten percent greater ownership interest, 1322(b)(5)(A). But cover along employees. 1322(b)(5)(B). Particularly instructive, clarify key point missed several lower courts: Under wear two hats, i. e., he can entitled time, employer established 1301(b)(1) 401(c)(4). aim promote facilitate advanced Court's reading text. employer's opportunity personally gain serves incentive creation nonowner alike. Treating participant avoids anomaly controlled discrete regimes: federal-law governance employees; state-law owner. Excepting hardly consistent statutory goal "uniform national benefits," Patterson Shumate, 504 753, 765, generate administrative difficulties. A 1999 Department Labor advisory opinion (hereinafter Advisory Opinion 99-04A) accords comprehension Concluding Department's reflects "body experience informed judgment courts litigants properly guidance." Skidmore Swift & Co., 323 134, 140. 12-18. (b) rejects courts' position rank only participation. leading decision relied, large part, incorrect portion regulation, CFR 2510.3-3, states: "[T]he term `employee plan' [as used I] shall participants"; "[f]or section," "[a]n spouse deemed respect business" they own. (Emphasis added.) Courts Appeals do ERISA-governed apparently understood regulation provide generally applicable "employee," controlling purposes. 99-04A, interprets mean whose common-law addition individuals. agency view, overlooked Circuit, merits Judiciary's respectful consideration. Cf. Clackamas Gastroenterology Associates, Wells, 538 440, 448-449. Moreover, itself reveals definitional prescription's scope. prescription describes "employees" section defining plans." 2510.3-3. Accordingly, addresses what plans" I. Plans spouses, instructs, fall outside domain, while entirely within compass. mistakenly relied "anti-inurement" provision, 1103(c)(1), states assets inure employers. Correctly read, preclude It demands supply Its purpose law trusts discourage abuses self-dealing, imprudent investment, misappropriation assets, employers others. Those implicated paying basis non-owner expresses whether himself, handling repayments, engaged inconsistent anti-inurement issue yet reached below. 18-23. (c) Given undisputed fact honor loan's periodic requirements, questions should addressed remand: (1) Did 1996 close-to-bankruptcy despite prior defaults, become excluded estate (2) so, were repayments beyond reach power recover transfers? 24. 287 F. 3d 521, reversed remanded. GINSBURG, J., delivered Court, REHNQUIST, STEVENS, O'CONNOR, KENNEDY, SOUTER, BREYER, JJ., joined. SCALIA, post, p. 24, THOMAS, 25, concurring judgment. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR SIXTH CIRCUIT. James A. Holifield, Jr., argued briefs petitioners. Matthew D. Roberts States amicus curiae urging reversal. With brief Solicitor General Olson, Deputy Kneedler, Howard Radzely, Allen H. Feldman, Nathaniel Spiller, Ellen L. Beard. Mark Troutman respondent. John Walker, Jr.* JUSTICE GINSBURG Court. presents divided: Does (ERISA Act), 88 Stat. 832, amended, seq. answer, we hold, yes: ruling, reject position, taken case, 2 * 3 "requires administrators file reports Secretary Labor, vesting schedules, administrators, provides civil criminal Act." Nachman Corp. Corporation, 446 359, 361, n. (1980). parts Code, "amended [Internal Code] among things, set forth I." S., 1. "contains departments, further study [benefit plans]." "created (PBGC) `nonforfeitable' lack full." 361-362, Mead Tilley, 490 714, 717 (1989); Brief Amicus Curiae 2. 4 both ." 1002(3). omnibus former type ., beneficiaries benefit." 1002(7). "Employee," section, means 1002(6), directly indirectly relation B 5 Dr. Raymond corporation. 524 (CA6 2002); App. Pet. Cert. 10a. Profit Sharing (Profit administrator trustee. Ibid. Ibid.; 269a. 401 (IRC). 3d, 524; 71a-73a. stated alienation, either voluntarily involuntarily." 252a. 6 Money Purchase (Money Plan. Id., 268a-269a. agreement payments $433.85 over five-year period loan. payment. 524. June 1992, coinciding Plan-Profit merger, renewed five years. Again, made fact, repaid nothing until 1996. month, house totaling $50,467.46, principal due that, after repayment, amounted about $87,000. 39a. Plan, 12a; accord 300a. August 1998, respondent William T. complaint, pursuant 547(b) 550, capacity 1a-3a. asked "avoi[d] [Yates] [the Plan] amount $50,467.46 [to] orde[r] trustee,] [bankruptcy] trustee sum plus legal together costs 3a. On cross-motions ruled Trustee Hendon. 36a-50a. 8 547(b).1 41a-42a. "a sponsor[ed] "participate [therefore not] its Defendant Plan." 43a-44a. including SEC Johnston, 143 260 1998), Fugarino Hartford Life Accident 969 2d 178 1992). 9 9a-35a. Acknowledging conclusion, id., 19a, observed it bound precedent. According decisions, neither proprietor, Fugarino, 2d, 186, nor corporation, Agrawal Paul Revere 205 297, 302 (2000), 20a-21a. Applying concluded: 10 "The protected none money contributed `employee' ever part returned because ERISA." 20a. 521. adhered "published caselaw [holding] `a proprietor must considered ERISA.'" 525 (quoting 186). spendthrift clause sharing/pension appeals court accordingly ruled, "[was] enforceable 526. 46a-47a. 12 We granted certiorari, 539 957 (2003), view division Circuits Compare Agrawal, (sole plan); 186 participant); Kwatcher Massachusetts Serv. Employees Fund, 879 957, 963 (CA1 1989) Giardono Jones, 867 409, 411-412 (CA7 Peckham Board Trustees Int'l Brotherhood Painters Allied Trades Union, 653 424, 427-428 (CA10 1981) participant), Vega National Servs., Inc., 188 287, 294 (CA5 1999) (co-owner re Baker, 114 636, 639 1997) (majority Madonia Blue Cross Shield Virginia, 444, 450 (CA4 1993) participant).2 II 13 "participant," uninformative. (1992) ("ERISA's nominal `any employer' completely circular explains nothing." (citation omitted)). look ibid. text combine law.3 14 enacted permitted 19-20. Working since 1942. 1942, ch. 619, 165(a)(4), 56 862 (a exempt if, "the contributions discriminate favor officers, persons duties consist supervising work highly compensated employees"). Two decades still adoption, establish tax-favored commonly known "H. R. 10" "Keogh" Self-Employed Individuals Tax 1962, 76 809; 19. Thus, kinds contribute retirement 15 situation.4 14-16. partially otherwise mandatory 16 To illustrate, following Act's requirements: 17 "(1) unfunded primarily providing deferred compensation select group management 18 "(2) described 736 IRC], retired partner deceased partner's successor interest." 1101(a). 19 "highly employee" 5-percent time during year preceding year." 414(q)(1)(A). "5-percent owner," specifies, owns outstanding stock possessing total combined voting corporation" capital profits employer" definitions, some fit description employees." Similarly, agreements partners' successors surely involve participate. 20 These too, typically trust. 1103(a). requirement, apply, IRC]." 1103(b)(3)(A). 401(c)(1)(A) individual"; 401(c)(1)(B) define individual" "earned income" trade personal services taxpayer material income-producing factor." doubt encompasses partners. 21 Like although bars transactions between party 1106, permits, exceptions, conditions satisfied, 1108(b)(1). One condition "made 1108(b)(1)(B). just observed, see supra, 13-14, owners, shareholder-employees, goes exclude "owner-employees," defined exemption. 1108(d)(1). IRC's definition, owner-employees "who ow[n] [a] partnership" proprietors, shareholder-employees. sum, involving participants, explicit inclusion exclusion, assume — 22 17, 8. addition, "professional service employer[s]" 25 fewer active 1321(b)(13). medical practice up employer. 1321(c)(2)(A) proprietorship, partnership, owned individuals performance services"). significantly larger covering presumably protection. 23 dual status, (or member employer) Both describe partner. ("An entire unincorporated treated own partnership meaning IRC]."); 401(c)(4) [§ 401(c)(1)]."). descriptions anticipate employee. 453 (2003) (GINSBURG, dissenting) ("Clackamas readily acknowledges physician-shareholders `employees' purposes."). 24 statute's adequately informative, need conclude security participants.5 our 21-22. furthers Recognizing See, e. g., (because claims insurer preempted). goal, has emphasized, benefits." 765 (1992). difficulties uniformity goal. Madonia, ("Disallowing being `participants' result disparate employees' claims, thereby frustrating ensuring similar relating plans."). note finally Welfare Benefits Admin., Dept. BNA Rep. 559 99-04A). Confirming concludes: 27 "In whole, reveal clear Congressional design `working owners' `participant' operated satisfy complex rules `owner-employees' faithfully makes premium payable somehow transgress limitations intolerable conflict separate titles sort `absurd results' warned Mutual Insurance 318 (1992)." 560-561 (footnote omitted). 28 140 (1944). 1992 read rule out classification owns. "Employee complements 3(3) 1002(3), 7; provides, 30 "(b) without title chapter, fund program, apprenticeship training paragraph (d) section. so-called `Keogh' `H. 10' However, Keogh individuals, 31 "(c) Employees. section: 32 An business, incorporated unincorporated, wholly 33 partnership." 2510.3-3 added deleted). 34 185-186 ("As [the] regulatio[n], company's cannot Kwatcher, 961 ("By terms, unambiguously debars notwithstanding owns, shoulder (non-owner) employees."); Giardono, 412 ("[This] regulatio[n] exclude[s] unincorporated."). 35 Almost eight years implied misread regulation: "Th[e] limiting [in 2510.3-3(c)] threshold exists. beneficiary." 303. overrule earlier interpretation. (case below) ("[T]he three judge panel before appeal currently pending authority Fugarino."); ("the present preordained holding"). 36 Labor's opinion, follows: 37 clarified `[a]n spouse' `[a] spouse.' `one individuals' included 3(3). conclusion `self-employed themselves fully regulation." 561, added). 38 26, 449 (Equal Employment Opportunity Commission guidelines Americans Disabilities 1990 persuasive). 39 deleted), domain.6 hand, compass.7 Vega, ("We interpret determining existence plan."); 449-450 govern someone once established. perfect sense: established, anomalous benefitting sets obligations."). 40 Also denied status prohibits inuring ("A fundamental requirement `the never .'"); 960 ("Once found `employer' integument, 1103(c)(1)] 411 ("It `. .'"). 41 enumerated exclusive defraying reasonable expenses administering plan." 1103(c)(1). supplying 18-19, address Fifth Vega: [anti-inurement] refers congressional (and, obviously, [nonowner] .) revert employer; relate legitimate health claim happens stockholder even corporation." 293, 5. 42 based analogous 401(a)(2), bar owners. Conf. 93-1280, pp. 302-303 (1974); 29. Prudential Am. Doe, 206, 209 (CA8 1996). 43 categorical barrier Whether 8, below, express opinion. 44 45 reasons reversed, remanded proceedings consideration raised resolved. Specifically, given facts concerning loan, i.e., failure [Yates's] estate," 40a; "beyond Bankruptcy] [T]rustee's transfers," 47a? 46 ordered. Notes: E. Schmidtke J. Kayatta, UNUMProvident Section provides: subsection debtor property creditor; account antecedent debt owed made; "(3) insolvent; "(4) "(A) 90 days date filing petition; "(B) ninety petition, creditor insider; "(5) enables chapter title; "(C) received payment extent title." permits transfers "property transferred commencement proceedings." Begier IRS, 496 53, 58 (1990). divided "beneficiaries" 2002) beneficiary plan);Agrawal, beneficiary), Gilbert Alta Health 276 1292, 1302 (CA11 2001) beneficiary); Wolk UNUM Am., 352, 356 (CA3 (partner 208 1996) (controlling Robinson Linomaz, 365, 370 1995) (co-owners beneficiaries); Peterson American 48 404, 409 (CA9 beneficiary). States, curiae, urges treating acceptable solution. (The approach "has logical stopping point, allow anyone chooses, independent contractors [Nationwide (1992)]" "fails resolve unlike tie employee."); 24-25. presented it. CfNationwide (1992), 440 (finding clues absent, looked guidance). particular another. asAmicus 18, 9. suggest describedsupra, 13-15 page, isolation, compel reading. cf. 25-26 (THOMAS, judgment). guidance" adequate obviate expound agree See,e. Slamen 166 1102, 1105 where disability him); Watson, 161 593, 597 1998) 260, 262-263 (owner "perhaps" wife); Schwartz Gordon, 761 864, (CA2 1985) (self-employed contributor plan). treatment. 2510.3-3's preamble supports states, "According comments [concerning proposed 2510.3-3], excluding might raise problems 404(a)(1) disbursements `common law' Therefore, formerly appearing 2510.3-6 inserted restricted scope section." Fed. Reg. 34528 (1975) 47 uses sledgehammer kill gnat prescribed Corp., 533 218 (2001). dissented 257, remain authoritative interpretations implementing agency, reasonable, respect. Chevron Inc. Natural Resources Defense Council, 467 837 (1984). 49 signed Acting put forward "considered charged administration ERISA," interpretation (including Yates) (ERISA). 26. There official contrived litigation. General's relies issued ago, concluded 99-04A (Feb. 4, 1999), 559, 560 (1999). 50 interpretive certainly lengthy analysis says inevitable); binding us. Barnhart Thomas, 540 20, (2003). reverse basis. approach, denies many conclusive effect thrusts judicial interpretation, deprives agencies virtues: promptly, nationwide effect, (within bounds text) application ambiguous laws dictate. invites litigation circuits product (when announced Court) change. 51 52 reversed. persuasively Appeals' errors case. ante, not, find convincing reliance "indications," 12. word "working owners."* heavily 13-15, equally owners." 53 places weight exception exemption parties "`made employees.'" Ante, 1108(b)(1)(B)). notes "some `highly 15. true, numerous employees" usual, (and hence (1992)), owners" term. possible, then, merely attempting rather assuming "employees." Hence, tells us "intended 54 Since inconclusive, turn understanding "employee." 322-323. remand, direct Yates. surprised (corporation's respected); 448-449 (same), matter best resolved, instance, clearly exactly class members now categorically

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