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FEINSTEIN v. LEWIS

October 12, 1979

BARRY FEINSTEIN, et al., Plaintiffs, against ALBERT B. LEWIS, Superintendent of Insurance of the State of New York, et ano., Defendants.


The opinion of the court was delivered by: WERKER

This action for injunctive and declaratory relief raises the issue of whether an employee welfare plan established pursuant to a collective bargaining agreement between a public employer and a union for the benefit of public employees is exempt from the provisions of Title I of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 Et seq. *fn1" There being no material issues of fact, and the Court having duly considered all of the legal arguments, judgment is rendered for the defendants.

BACKGROUND

Plaintiffs are trustees of four employee welfare funds *fn2" (the "Plans") which were established in accordance with collective bargaining agreements entered into between Local Union 237 (the "Union"), affiliated with the International Brotherhood of Teamsters, and each of four employers, the Town of Babylon, the Town of Islip, the Plainview-Old Bethpage Central School District, and the Brentwood School District. All of the employees covered by the four Plans are employed by one of these towns or school districts, and the Plans are exclusively funded by contributions from the employers. Each Plan is administered by a separate board of trustees comprised of six members, *fn3" three of whom are appointed by the Union and three of whom are appointed by the respective employer. In the event of a deadlock between the Union and employer trustees, the matter is submitted to arbitration.

 In 1973, each of the Plans filed a registration statement with the Insurance Department of the State of New York pursuant to the provisions of the New York State Insurance Law. Thereafter, the Plans filed periodic reports and continued to comply with the state requirements. In 1975, however, ERISA came into effect and each of the Plans ceased complying with the Insurance Law and began complying with the reporting, disclosure and auditing provisions of ERISA.

 In March 1975, plaintiffs sought an advisory opinion from the United States Department of Labor as to whether the Plans were exempt from or governed by ERISA. Plaintiffs did not receive a response to their request.

 In December 1978, the New York Insurance Department notified the Plans that they had not been complying with the Insurance Law and requested that annual reports for the years 1976, 1977 and 1978 be filed "without delay." In response, plaintiffs advised the Insurance Department that the Plans had been complying with ERISA, but the Insurance Department nevertheless continued to insist upon compliance with the New York statutory scheme.

 On March 7, 1979, plaintiffs again requested an advisory opinion from the Department of Labor. Plaintiffs did not receive a response, and after the commencement of this lawsuit, the request was withdrawn.

 On April 10, 1979, and again on April 25, 1979, the Insurance Department informed plaintiffs that it would commence proceedings against the trustees of the Plans to fine them up to $ 2,500 each and/or to remove them from office.

 On April 27, 1979, plaintiffs filed the instant complaint naming as defendants Albert B. Lewis, Superintendent of Insurance of the State of New York, and Ray Marshall, United States Secretary of Labor. The complaint seeks a judgment declaring Article III-A of the New York State Insurance Law illegal and inoperative as to plaintiffs, compelling defendant Marshall to enforce the provisions of ERISA and to issue regulations and advisory opinions defining the coverage of ERISA, and enjoining defendant Lewis from enforcing the provisions of Article III-A of the Insurance Law against the Plaintiffs.

 On April 27, 1979, plaintiffs sought by order to show cause an order temporarily restraining defendant Lewis from commencing or maintaining any legal or administrative action to remove or fine the plaintiffs. With the consent of defendant Lewis, temporary relief was granted pending resolution of the merits of this suit.

 In June 1979, the Department of Labor responded to plaintiffs' request, which had been withdrawn, for an advisory opinion. In a letter addressed to plaintiffs' counsel, the Department of Labor concluded that the subject Plans were "governmental plans" within the meaning of section 3(32) of ERISA, 29 U.S.C. § 1002(32), and therefore excluded from coverage under Title I of ERISA by virtue of section 4(b)(1), 29 U.S.C. § 1003(b)(1). The letter is reprinted at 244 Pens. Rep. (BNA), at R-3 (1979).

 In July 1979, the defendant Marshall moved to dismiss the complaint as to him on the grounds of lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted.

 DISCUSSION

 ERISA sets forth a comprehensive scheme for the protection of employee benefit plan participants and their beneficiaries. The provisions of Title I of ERISA apply generally to "any employee benefit plan . . . established or maintained (1) by any employer . . .; or (2) by any employee organization . . .; or (3) by both." ERISA § 4(a), 29 U.S.C. § 1003(a). Specifically excluded from coverage under Title I of ERISA, however, is an employee benefit plan that is also a "governmental plan," ERISA § 4(b), 29 U.S.C. § 1003(b), which is defined as "a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision ...


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