Brooks v. Chicago Housing Authority, 1990 U.S. Dist LEXIS 8233 (N.D. Ill. 1990); and Lovelace v. Prudential Insurance Company of America, LEXIS 14983 (S.D. Ohio, Sept. 27, 1991). In Livolsi, the court held that multi-employer welfare fund to which various employers, both private and public, contributed was not within the governmental plan exemption. The basis of the court's ruling was that the local governmental body had chosen a private welfare benefit plan for its employees and by accepting a private plan, it could not later complain that ERISA regulation of that plan invaded its sovereignty. Similarly, in Brooks, the court ruled, relying on Livolsi, that where the local government body voluntarily chose to participate in a private benefit plan for its employees, it could not claim the exemption. The court stated, "[A] whole plan should not be exempt from ERISA merely because a governmental body participates in the plan." In Lovelace, the court held that a health insurance plan was a governmental plan where all participants were local governmental entities, even though private employers were eligible to participate in the plan. All of these cases stand for the proposition that the participation by a non-governmental employer takes a plan out of the definition of governmental plan of § 1002(32).
Defendants rely on Feinstein v. Lewis, 477 F. Supp. 1256 (S.D.N.Y. 1979), aff'd in unpublished opinion, 622 F.2d 573 (2d Cir. 1980); Shirley v. Maxicare Texas, Inc., 921 F.2d 565 (5th Cir. 1991); Roy v. Teachers' Insurance and Annuity Association, 878 F.2d 47 (2d Cir. 1989); Brown v. Northwestern National Life Insurance Company, 1987 WL 18813 (E.D. La. 1987); and Lovelace. Feinstein is a lmost precisely on point. There the trustees of the plan sought to waive their exemption by complying with ERISA and ceasing to comply with the New York insurance law. The trustees filed a declaratory judgment action seeking to compel the Secretary of Labor to enforce ERISA against them and to enjoin the state authorities from enforcing the state law. The court ruled that the subject plans were governmental plans within the meaning of § 1002(32) and therefore excluded from ERISA regulation.
In Shirley, the court ruled it was error for the district court to take jurisdiction and order arbitration under a governmental plan and that the order for arbitration was void. There, as in Feinstein, the plan administrator sought to avoid the exemption, yet the court ruled that ERISA did not govern the plan. Both Roy and Brooks applied the governmental plan exemption to school districts.
Several of the opinions in the above-cited cases refer to the legislative history surrounding the enactment of ERISA. Nothing in that legislative history suggests that Congress intended to permit governmental employers to "opt in" to ERISA. Plaintiff relies on a statement of Senator Lloyd Bentsen in the legislative history, quoted in Feinstein, that state and local governments must be allowed to make their own determinations about the best methods of protecting the pension rights of state and local employees. In context, the statement was clearly made to justify the governmental plan exemption, however, not to suggest an opt-in provision. Neither do liberal construction rules change the result. The plain language of the statute exempts government plans. No liberal construction principle negates that.
It is concluded, therefore, that the Plan under which plaintiff seeks benefits is exempt from ERISA. Therefore, there is no federal question and this court lacks jurisdiction of the subject matter.
It is recommended that the court find that it lacks subject matter jurisdiction and dismiss the case without prejudice to refiling in the state court.
Written objection to any finding of fact, conclusion of law, or the recommendation for disposition of this matter must be filed with the Honorable Charles R. Norgle, Sr., within ten days after service of this Report and Recommendation. See Fed.R.Civ.P. 72(b). Failure to object will waive any such issue on appeal.
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