Sheilar Smith, et al., on behalf of themselves and all others similarly situated and on behalf of the OSF plans, Plaintiffs-Appellants,
OSF HealthCare System, et al., Defendants-Appellees, and United States of America, Intervening-Appellee.
May 15, 2019
from the United States District Court for the Southern
District of Illinois. No. 3:16-cv-00467-SMY-Rp - Staci M.
WOOD, Chief Judge, and Easterbrook and Hamilton, Circuit
HAMILTON, CIRCUIT JUDGE
decisive issue in this appeal is whether the district court
abused its discretion in granting summary judgment for
defendants despite plaintiff's motion under Federal Rule
of Civil Procedure 56(d) to postpone a summary judgment
decision so that she could complete further discovery.
District courts have considerable discretion in such
case-management decisions, but that discretion is not
unlimited. The record here shows, unfortunately, that the
court's denial of plaintiff's Rule 56(d) motion was
an abuse of that discretion. The summary judgment motion was
filed long before discovery was to close; plaintiff was
pursuing discovery in a diligent, sensible, and sequenced
manner; and the pending discovery was material to the summary
judgment issues. The district court's explanation for
denying a postponement overlooked the court's earlier
case-management and scheduling decisions and took an unduly
narrow view of facts relevant to the case.
therefore vacate the grant of summary judgment and remand for
further proceedings consistent with this opinion. We explain
in Part I the role and definition of the ERISA exemption for
"church plans." In Part II, we summarize the
limited facts available to us about these parties and the
merits of their dispute. In Part III, we address the
standards for Rule 56(d) motions and potential reasons for
denying them. We do not decide the merits of the parties'
dispute, though we must discuss the merits along the way to
provide context for the Rule 56(d) issue.
ERISA and the Exemption for Church Plans
underlying issue in the case is whether the Employee
Retirement Income Security Act of 1974 ("ERISA"),
29 U.S.C. § 1001 et seq., applies at all to the pension
plans offered by defendant OSF HealthCare System, a religious
nonprofit organization that operates eleven hospitals in
Illinois and Michigan.
sets minimum standards for the pension and welfare benefit
plans offered by private employers. 29 U.S.C. §§
1001(a), 1002(1)-(2). Congress enacted ERISA in response to a
"rapid and substantial" increase in employee
benefit plans that were lacking in "adequate
safeguards"-with often-catastrophic results for
employees and their families-as employees and their
beneficiaries lost anticipated benefits because of unsound
and unstable plans, unfair vesting provisions, and
termination of plans before benefits had been funded. 29
U.S.C. § 1001(a).
Supreme Court has described ERISA as a
"'comprehensive and reticulated statute' with
'carefully integrated civil enforcement
provisions.'" LaRue v. DeWolff, Boberg &
As-socs., Inc., 552 U.S. 248, 258 (2008), quoting
Massachusetts Mutual Life Ins. Co. v. Russell, 473
U.S. 134, 146 (1985). At bottom, the goal of ERISA is to
ensure the delivery of promised benefits. To achieve that
goal, ERISA imposes minimum standards for benefit funding and
vesting, grievance and appeals processes, and fiduciary
duties. 29 U.S.C. §§ 1053, 1083, 1104, 1132.
Participants of benefit plans that are governed by ERISA have
the right to sue for benefits and breaches of fiduciary duty.
29 U.S.C. §§ 1132, 1109. If ERISA plans are
terminated without adequate funding, some payments of
benefits can be available through the Pension Benefit
Guaranty Corporation. 29 U.S.C. § 1302.
however, exempted certain categories of employee benefit
plans from ERISA. One is the "church plan"
exemption at issue here. 29 U.S.C. § 1003(b)(2). Since
enactment in 1974, ERISA has provided that it "shall not
apply to any employee benefit plan if... such plan is a
church plan (as defined in section 1002(33) of this
title)." Id. The definition in § 1002(33)
originally applied only to plans "established and
maintained" for the employees of churches or
associations of churches, so that it would not have applied,
for example, to hospitals affiliated with churches.
Advocate Health Care Network v. Stapleton, 137 S.Ct.
1652, 1656 (2017); 29 U.S.C. § 1002(33)(A). In 1980,
Congress amended the church plan exemption. Under the amended
version, the exemption extends not only to plans for
employees of churches but also to plans for employees of
church-affiliated organizations. 29 U.S.C. §
to this case, the amendment added the following language:
A plan established and maintained for its employees (or their
beneficiaries) by a church or by a convention or association
of churches includes a plan maintained by an organization,
whether a civil law corporation or otherwise, the principal
purpose or function of which is the administration or funding
of a plan or program for the provision of retirement benefits
or welfare benefits, or both, for the employees of a church
or a convention or association of churches, if such
organization is controlled by or associated with a church or
a convention or association of churches.
29 U.S.C. § 1002(33)(C)(i). That's "a
mouthful," as the Supreme Court said, but "to
digest it more easily, note that everything after the word
'organization' in the third line is just a
(long-winded) description of a particular kind of church-
associated entity." Advocate Health, 137 S.Ct.
at 1656. The Court referred to the church-associated entity
as a "principal-purpose organization/' id.,
and for clarity's sake, so do we.
Advocate Health, the issue was whether the church
plan exemption depends on who first established the plan. The
Supreme Court held: "Under the best reading of the
statute, a plan maintained by a principal-purpose
organization ... qualifies as a 'church plan,'
regardless of who established it." Id. at 1663.
The language in § 1002(33)(A) and (C)(i) thus makes the
church plan exemption available to pension plans and other
employee benefit plans established by church-associated
entities, such as church-associated hospitals, where the
plans are maintained by principal-purpose organizations.
Id. We now turn to the facts of this case, where the
central issues on the merits are who qualifies as a
principal-purpose organization and what it means to
"maintain" or "administer" an employee
The Parties, Their Pension Plans, and Their Dispute
Sisters of the Third Order of Saint Francis, a Roman Catholic
organization, founded the OSF HealthCare System in 1880. OSF
is a nonprofit Catholic healthcare system that provides free
or discounted care to indigent patients. The Sisters of the
Third Order of Saint Francis is the only member of OSF. The
Order maintains authority over the system through OSF's
governing documents and the canonical and civil guidelines
pertaining to church property. In 2014, OSF merged with
another Catholic hospital, St. Anthony's Health Center,
with the permission of the Holy See. Prior to the merger, St.
Anthony's was run by the Sisters of St. Francis of the
Martyr of St. George. We refer to these organizations
collectively as "OSF."
parties agree that OSF is associated with a church. OSF's
operation is intertwined with the Roman Catholic Church. For
example, among several other religious requirements not
relevant here, OSF must seek approval from the Church for
loan and debt financing, is subject to oversight by the
bishops of the dioceses in which it operates, and is
recognized by the Official Catholic Directory as a Catholic
St. Anthony offered pension plans to their employees before
the merger. After the merger, the OSF and St. Anthony's
pension plans remained distinct. The Plans have approximately
19, 285 participants between them. The Plans are now closed
to new participants and have stopped accruing further
benefits. The OSF plan has 17, 946 participants and the St.
Anthony's plan has 1, 339. Both plans are now
administered as ERISA-exempt church plans.
contends that the St. Francis Plan and the St. Anthony's
Plan are administered by the Sisters of the Third Order of
St. Francis Employees' Pension Plan Administrative
Committee and the Saint Anthony's Health Center
Retirement Committee, respectively, though the two have
identical memberships. (We refer to them as the
"Committees.") OSF contends that each Committee
qualifies as a principal-purpose ...