Stapleton v. Advocate Health Care Network, 76 F. Supp. 3d 796

Background

Plaintiffs are current and former employees of Advocate Health Care Network, a large Illinois non-profit hospital system affiliated with two Christian denominations; they challenge Advocate’s defined‑benefit pension plan under ERISA.
Plaintiffs allege numerous ERISA violations (vesting rules, reporting, funding, trust form, procedures, fiduciary breaches) and seek damages, declaratory and injunctive relief; alternatively they seek a declaration that ERISA’s church‑plan exemption is unconstitutional.
Advocate moved to dismiss under Rules 12(b)(6) and 12(b)(1), asserting the pension plan is an ERISA “church plan” exempt from ERISA and that the exemption is constitutional.
Key statutory issue: whether a plan must both be “established and maintained” by a church under 29 U.S.C. §1002(33)(A), or whether §1002(33)(C)(i) permits a plan merely “maintained by” a church‑affiliated organization to qualify even if not established by a church.
The court held at the pleading stage that Advocate’s plan does not qualify as a church plan because Congress’s text and legislative history require that a church establish the plan (with §33(C)(i) only easing the maintenance element), and therefore denied the motion to dismiss.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Advocate’s pension plan is an ERISA "church plan" exempt from ERISA	The plan is not a church plan because Advocate (not a church) established it; ERISA applies	The plan qualifies under §1002(33)(C)(i) because a plan "maintained by" a church‑affiliated organization is included in the church‑plan definition	Court held plan is not a church plan; §33(C)(i) modifies only the maintenance element and does not eliminate the requirement that a church establish the plan
Whether the court should dismiss for lack of subject‑matter jurisdiction rather than on the merits	Not argued as primary; plaintiffs invoke federal question jurisdiction under ERISA	Advocate argued dismissal for lack of jurisdiction if plan is exempt	Court treated the question as a merits pleading issue (12(b)(6)), rejecting a jurisdictional framing and denying dismissal on pleadings
Whether IRS letter ruling supporting Advocate is entitled to deference	N/A for plaintiffs	Advocate relied on an IRS letter stating the plan is a church plan	Court declined to afford deference to the IRS letter beyond its persuasive value and found it unpersuasive because it relied on the same flawed statutory reading
Whether to reach plaintiffs’ Establishment Clause challenge to the church‑plan exemption	Plaintiffs alternatively argued the exemption is unconstitutional	Advocate argued the exemption is constitutional	Court avoided the constitutional question because it resolved the statutory issue against Advocate; did not decide constitutionality

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: factual allegations must state a plausible claim)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
Arbaugh v. Y&H Corp., 546 U.S. 500 (2006) (distinguishing merits questions from jurisdictional requirements)
Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247 (2010) (scope questions are merits, not jurisdiction)
Hallinan v. Fraternal Order of Police Chicago Lodge No. 7, 570 F.3d 811 (7th Cir. 2009) (procedural posture on motions to dismiss)
NewPage Wisconsin Sys. Inc. v. United Steel, 651 F.3d 775 (7th Cir. 2011) (district court is proper forum for ERISA scope disputes)
Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (ERISA’s purpose to protect plan participants)
Lockheed Corp. v. Spink, 517 U.S. 882 (1996) (ERISA does not require employers to create plans but protects promised benefits)
Skidmore v. Swift & Co., 323 U.S. 134 (1944) (agency letter rulings entitled to respect to extent they have persuasive power)
Russello v. United States, 464 U.S. 16 (1983) (give effect to differences in statutory language)