United States District Court, S.D. Indiana, Indianapolis Division
ORDER ON MOTIONS FOR SUMMARY JUDGMENT (DKTS. 92,
EVANS BARKER, JUDGE UNITED STATES DISTRICT COURT
Social Security Administration (SSA) and its acting
Commissioner Nancy A. Berryhill, Defendants here, enforce a
policy by which the amounts of Plaintiffs' Social
Security retirement benefits are reduced because they also
receive benefits from two Canadian social security plans, the
Canada Pension Plan (CPP) and the Québec Pension Plan
(QPP). Plaintiffs object to those reductions, which is the
gist of this litigation. By crossmotions for summary
judgment, see Fed. R. Civ. P. 56(a), the parties
respectively seek judgment in their favor based on our
determination of a single issue: Are those reductions lawful?
conclude that they are.
material facts are few and undisputed. The twelve named
Plaintiffs are each dual citizens of the United States and
Canada. They instituted this action on their own behalf and
on behalf of the class of all persons whose Social Security
retirement benefits are reduced because of their or their
spouses' receipt of CPP/QPP benefits. Dkt. 129
(certifying Fed.R.Civ.P. 23 class). Plaintiffs or their
spouses spent part of their working careers in Canada and
part in the United States. While working in Canada, they paid
social security taxes to Canada and not to the United States;
while working in the United States, they paid social security
taxes to the United States and not to Canada. (Both parties
acknowledge this fact but neither has included it in their
fact statements under S.D. Ind. L.R. 56-1(a). We take it from
the operative complaint. Dkt. 65. ¶¶ 47-48, 57- 58,
65-66, 71-72, 78, 84-85, 90-91, 95, 100-02, 105-08, 111-14,
120-22. A plaintiff is bound by her complaint allegations as
judicial admissions, even at summary judgment. Soo Line
R.R. Co. v. St Louis Sw. Ry. Co., 125 F.3d 481, 483 (7th
Cir. 1997) (citations omitted). And a judicially admitted
fact is “withdraw[n] . . . from contention.”
Keller v. United States, 58 F.3d 1194, 1198 n.8 (7th
Cir. 1995) (internal quotation marks and citation omitted).)
Plaintiffs' or their spouses' work stints in each
country were sufficient to qualify them to receive retirement
benefits from each country's social security system
independently. SSA reduces Plaintiffs' U.S. benefit
payments based on their receipt of benefit payments from
an action for judicial review of SSA's adverse benefit
decisions. See 42 U.S.C. § 405(g). Exhaustion
of administrative remedies has been judicially waived. Dkt.
82. Each side has moved for summary judgment in its favor.
Dkt. 92 (Plaintiffs), Dkt. 94 (Defendants). We resolve these
judgment is appropriate when there is no genuine dispute as
to any material fact and the movant is entitled to judgment
as a matter of law. Fed.R.Civ.P. 56(a). Questions of
statutory interpretation upon undisputed facts are
particularly suited for summary judgment. See, e.g., LTV
Steel Co. v. Nw. Eng'g & Constr., Inc., 41 F.3d
332, 334 (7th Cir. 1994); Shefts v. Petrakis, 954
F.Supp.2d 769, 773-74 (C.D. Ill. 2013).
a general rule, workers in the United States are taxed to
support the payment of social security benefits to the
retired and to individuals with disabilities.”
Eshel v. Comm'r, 831 F.3d 512, 514 (D.C. Cir.
2016). Employment taxed to support Social Security is
“covered” employment; employment exempt from
Social Security taxes (or “contributions, ” as
they are often called) is “noncovered”
employment. Stroup v. Barnhart, 327 F.3d 1258, 1259
(11th Cir. 2003) (Cudahy, J.). See I.R.C. §
3101(a) (imposing Federal Insurance Contributions Act (FICA)
tax on “wages” from “employment”);
id. § 3121(a) (defining “wages” for
purposes of FICA); 42 U.S.C. § 409(a) (defining
“wages” identically in relevant respects for
purposes of Social Security); I.R.C. § 3121(b) (defining
“employment” for purposes of FICA); 42 U.S.C.
§ 410(a) (defining “employment” identically
for purposes of Social Security). A retired worker is
entitled to Social Security retirement benefits based on the
number of calendar quarters during which she earned wages
from employment subject to Social Security contribution
requirements over the course of her career, provided she has
accrued a minimum number of quarters of coverage.
See 42 U.S.C. §§ 402(a), 414(a).
preserve the progressive nature of the Social Security system
by ensuring that the formula [SSA] uses to calculate benefits
does not advantage high-income workers who split their
careers between covered and non-covered employment over those
who paid Social Security taxes for their entire careers[,
]” Congress wrote into the Social Security Act
(“the Act”), 42 U.S.C. ch. 7, a “windfall
elimination provision” (WEP), “which reduces the
benefits received by certain individuals who also receive
pensions for work that did not require them to pay [S]ocial
[S]ecurity taxes.” Hawrelak v. Colvin, 667
Fed.Appx. 161, 162 (7th Cir. 2016) (mem.) (citing inter
alia Stroup, 327 F.3d at 1259). As explained in the
conference report of the Social Security Amendments of 1983,
Pub. L. No. 98-21, sec. 113, 97 Stat. 65, 76-79, the statute
which added the WEP,
Social security benefits are determined through a formula
based on average lifetime earnings in jobs covered by Social
Security. The benefit formula is weighted so that persons
with low average life-time earnings receive a proportionally
higher rate of return on their contributions to Social
Security than workers with relatively high average lifetime
Workers with short periods of covered work also receive this
advantage, because their few years of earnings are averaged
over a 35-year period to determine their average monthly
covered earnings on which the benefit is based.
This high rate of return for persons who have spent a short
period of time in covered employment is what is often
characterized as a “windfall” benefit.
H.R. Rep. No. 98-47, at 120 (1983) (Conf. Rep.)
(capitalization regularized), as reprinted
in 1983 U.S.C.C.A.N. 404, 409.
provides that a worker's Social Security retirement
benefits are to be reduced according to a certain formula if
the worker “becomes eligible . . . for a monthly
periodic payment . . . which is based in whole or in part
upon his earnings for service which did not constitute
‘employment' as defined in section 410 of this
title for purposes of this subchapter [42 U.S.C. §§
401-434, title II of the Act] (hereafter . . . referred to as
‘noncovered service')[.]” 42 U.S.C. §
415(a)(7)(A). The WEP contains three exclusions, one of which
is relevant here: the WEP does not apply to “a payment
by a social security system of a foreign country based on an
agreement concluded between the United States and such
foreign country pursuant to section 433 of this
title[.]” Id. § 415(a)(7)(A)(II).
are two questions presented in this case: Does the WEP
generally reach Plaintiffs' CPP/QPP benefits and, if so,
are Plaintiffs' CPP/QPP benefits specifically excluded
from its reach? In other words, (1) Does SSA err in holding
that Plaintiffs' CPP/QPP benefits are payments
“based in whole or in part upon . . . earnings for
service which did not constitute ‘employment' as
defined in section 410, ” 42 U.S.C., section 210 of the
Act? And, if not, (2) Does the SSA err in holding that
Plaintiffs' CPP/QPP benefits are not payments “by a
social security system of a foreign country based on an
agreement concluded between the United States and such
foreign country pursuant to section 433, ” 42 U.S.C.,
section 233 of the Act?
discerning Congress's intent behind the cited provisions
of the Act, “[t]he starting point is the existing
statutory text[.]” Lamie v. U.S. Tr., 540 U.S.
526, 534 (2004). To support and confirm our reading of that
text, we rely in part on the conference report of section
210(a)(C) “because it is the most persuasive evidence
of congressional intent besides the statute itself.”
Resolution Tr. Corp. v. Gallagher, 10 F.3d 416, 421
(7th Cir. 1993). Similarly, the goal of treaty interpretation
is “‘to ascertain the intent of the parties'
by looking to the document's text and context.”
Lozano v. Montoya Alvarez, 572 U.S. 1, 11 (2014)
(quoting United States v. Choctaw Nation, 179 U.S.
494, 535 (1900)). Agreements established under section 233 of
the Act are interpreted along the same lines. Eshel,
931 F.3d at 518.
Does SSA err in holding that Plaintiffs' CPP/QPP benefits
are payments “based in whole or in
part upon . . . earnings for service which did not constitute
‘employment' as defined in” section 210 of
210 of the Act sets forth the definition of
“employment” for the purposes of title II of the
Act, that is, the definition of covered employment. 42 U.S.C.
§ 410(a). That point bears repeating. Section 210 does
not define “employment” as an abstract concept or
a dictionary entry, detached from coverage by Social Security
taxes, compare id. with I.R.C. §
3121(b) (identical definitions of “employment”),
elsewhere divided into the species “covered
employment” and “noncovered employment.”
Recall that the WEP glosses “service which did not
constitute ‘employment'” within the meaning
of section 210 as “noncovered service.” 42 U.S.C.
§ 415(a)(7)(A). As the WEP thus recognizes, section 210
sets forth the definition of “employment” as
covered employment, that is, employment subject to Social
Security contribution requirements. See, e.g., Martin v.
Soc. Sec. Admin., Comm'r, 903 F.3d 1154, 1163 (8th
Cir. 2018) (glossing “‘employment' as defined
in section 410, ” 42 U.S.C. § 415(a)(7)(A), as
“[covered employment]”); Newton v.
Shalala, 874 F.Supp. 296, 298 (D. Or. 1994) (glossing
“earnings for service which did not constitute
‘employment, '” 42 U.S.C. §
415(a)(7)(A), as “[i.e., earnings not subject to Social
Security tax]”), aff'd sub nom. Newton v.
Sec'y of Health & Human Servs., 70 F.3d
1114 (9th Cir. 1995) (mem.); Paruch v. Harris, 520
F.Supp. 1, 2 (E.D.N.Y. 1980) (Section 210 “defin[es]
employment is service to an American employer anywhere or
service to any employer in America. See 42 U.S.C.
§ 410(a)(A)-(B). Plaintiffs' service to Canadian or
other foreign employers in Canada obviously does not qualify.
But section 210 also provides that “[t]he term
‘employment' means . . . any service, of whatever
nature, . . . if it is service, regardless of where or by
whom performed, which is designated as employment or
recognized as equivalent to employment under an agreement
entered into under” section 233 of the Act.
Id. § 410(a)(C).
233 of the Act authorizes the President
to enter into agreements establishing totalization
arrangements between [the U.S. social security system] and
the social security system of any foreign country, for the
purposes of establishing entitlement to and the amount of
old-age, survivors, disability, or derivative benefits based
on a combination of an individual's periods of coverage