Court Opinion

ID: 7717
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:30:42+00
Date Added: 2024-06-11T08:49:47.817086
License: Public Domain

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.

533, 93d Cong., 2d Sess., reprinted in 1974 U.S.Code Cong. &

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)).

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