Judge Thelton E. Henderson of the U.S. District Court for the Northern District of California previously ruled that Dignity Health’s retirement plan was not a “church plan” as defined by the Employee Retirement Income Security Act (ERISA) (see “Court Weighs in on Church Plan Issue”). Dignity’s proposed interlocutory appeal challenges the court’s interpretation of the portions of the ERISA statute governing the church plan exemption.
Henderson noted in his opinion that U.S. Code Section 1292(b) permits a district court to certify an order for interlocutory review where the order involves: (1) a “controlling question of law”; (2) “as to which there is substantial ground for difference of opinion”; and (3) where an immediate appeal may “materially advance the ultimate termination of the litigation.”
He first considered whether the issue Dignity seeks to appeal presents a “controlling question of law.” He noted that although there is no explicit definition for what constitutes a “controlling question of law,” examples include who are proper parties, whether a court has jurisdiction, and whether state or federal law should apply. For an issue to be considered “controlling,” its reversal need not terminate the litigation, but its resolution should “materially affect the outcome of litigation in the district court.
Henderson agreed with Dignity that an interlocutory appeal could significantly alter the course the litigation would take. However, he concluded that the issue proposed for appeal would not so materially affect the entire nature of the litigation, or its outcome, to justify interlocutory review.
Dignity asserts that the next step in this litigation would be to consider Dignity’s compliance with ERISA, and if the 9th Circuit were to later hold that Dignity is exempt from ERISA, that entire evaluation of Dignity’s ERISA compliance would have been unnecessary. Henderson said Dignity’s argument simplifies the myriad paths the litigation could take. He speculated if the 9th Circuit were to reverse, either on interlocutory appeal or in the regular course, on remand the court would be charged with applying the 9th Circuit’s interpretation of the statute to Dignity’s plan and again determining if Dignity’s plan is exempt. If Dignity’s plan were not exempt, the court would still have to consider Dignity’s ERISA compliance. If the Dignity plan was held to be exempt, the court would then have to consider the plaintiff’s claim regarding the constitutionality of such an exemption.
Citing a prior 9th Circuit case, Henderson said in his view, the issue Dignity raises “involves nothing as fundamental as the determination of . . . whether state or federal law should be applied.” According to Henderson, a difference in ruling on which law to apply could require a complete repeat of the litigation and a resulting duplication of efforts and waste of resources. Similarly, a different ruling as to whether a court has jurisdiction, could invalidate an entire district court proceeding. He said the matter at issue in the Dignity case is not of such high stakes.
Henderson concluded that at most, if this issue were presented on interlocutory appeal and was reversed, some time could be saved at the district court. He noted that the 9th Circuit has squarely rejected construing a question as controlling merely because “it is one the resolution of which may appreciably shorten the time, effort, or expense of conducting a lawsuit.”
He also concluded that given that the appeal could still be followed by further, more complicated litigation, there is no evidence an interlocutory appeal would even “materially advance the termination of the litigation”–§ 1292(b)’s third prong.
Dignity also argued that the issue is a controlling question of law because interlocutory review could also benefit other pending cases involving the same statutory provision (see “Church Plan Lawsuits Could Reverse 30 Years of Precedent”). Henderson rejected this argument “because those other cases Dignity refers to are outside this Circuit and the 9th Circuit’s ruling would not be controlling in those cases.”
The latest decision in Rollins v. Dignity Health is here.