Mary Smith v. Regional Transit Authority, e
827 F.3d 412
| 5th Cir. | 2016Background
- Plaintiffs are former NOPSI employees who retired while TMSEL operated New Orleans transit and participated in TMSEL’s retiree welfare benefit plan; they sued RTA, TMSEL, and insurers under ERISA and other theories.
- RTA is a statutorily created political subdivision authorized to contract with private entities to operate the transit system; TMSEL was incorporated in 1982 and, until 2012, was privately owned and contracted to operate the system under a Management Services Agreement (MSA).
- The RTA purchased the transit system in 1983; RTA, TMSEL and others executed a Benefits Agreement memorializing obligations to provide the same coverages and to assume preexisting §13(c) obligations.
- The MSA gave RTA extensive control (e.g., removal of managers, ownership of documents, audit rights), provided TMSEL’s funding came from RTA, and established that RTA retained authority over revenues; RTA acquired TMSEL in 2012.
- District court granted summary judgment holding the Plan is a “governmental plan” excluded from ERISA; it also dismissed successor liability and §1983 claims (statute of limitations) and limited additional discovery under Rule 56(d).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Plan is exempt from ERISA as a "governmental plan" | Plan is private because TMSEL employed and treated plaintiffs as private employees; Alley employment-focused test should control | RTA and TMSEL contend TMSEL is an agency/instrumentality of the RTA under IRS Revenue Ruling tests; Plan is governmental and outside ERISA | Plan is a governmental plan; summary judgment for defendants affirmed |
| Proper test for agency/instrumentality status | Adopt Alley test (focus on employment relationship) | Use Revenue Ruling 57-128 and 89-49 multi-factor tests emphasizing governmental purpose, control, funding, statutory authority | Revenue Ruling framework (refined by 89-49) is appropriate; factors favor finding TMSEL an RTA instrumentality |
| Successor liability for ERISA claims | RTA successor liable for predecessor ERISA violations | Successor liability depends on underlying ERISA liability; if plan is governmental, no ERISA liability exists | Dismissed — successor liability fails because no underlying ERISA liability (plan exempt) |
| §1983 claims and discovery under Rule 56(d) | §1983 claims timely or tolled; additional discovery would show factual disputes about governmental status | §1983 claims accrued in 2006 letter; one-year Louisiana limitations bar; plaintiffs failed to identify discovery likely to create material fact issues | §1983 claims time-barred; district court did not abuse discretion limiting discovery under Rule 56(d) |
Key Cases Cited
- National Labor Relations Bd. v. Nat’l Gas Util. Dist. of Hawkins Cty., 402 U.S. 600 (identifies test for "political subdivision")
- Rose v. Long Island R.R. Pension Plan, 828 F.2d 910 (2d Cir. 1987) (adopts IRS Revenue Ruling factors to assess agency/instrumentality status)
- Alley v. Resolution Trust Corp., 984 F.2d 1201 (D.C. Cir. 1993) (employment-relationship test for instrumentality status)
- Meredith v. Time Ins. Co., 980 F.2d 352 (5th Cir. 1993) (ERISA coverage turns on statutory definition, not parties’ characterization)
- Golden State Bottling Co. v. NLRB, 414 U.S. 168 (discusses successor liability principles)
- ACS Recovery Servs., Inc. v. Griffin, 723 F.3d 518 (5th Cir. 2013) (procedural guidance on challenging ERISA status at pleading/summary judgment stages)