Sanzone v. Mercy Health et al

Filing 181

MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that plaintiffs Motion for Reconsideration and to Alter or Amend the Judgment 177 is denied. Signed by District Judge Catherine D. Perry on 10/29/18. (KJS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
SALLY SANZONE, et al.,
Plaintiffs,
v.
MERCY HEALTH, et al.,
Defendants.

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Case No. 4:16 CV 923 CDP

MEMORANDUM AND ORDER
Under Rule 59(e), Federal Rules of Civil Procedure, plaintiffs ask me to
reconsider my August 27, 2018, Memorandum, Order, and Judgment dismissing
their complaint in this matter for lack of subject-matter jurisdiction. Plaintiffs
make no legal or factual arguments convincing me that my prior decision was in
error. I am also not persuaded that I erred procedurally in my ruling. I will
therefore deny the motion to alter or amend judgment.
Under Rule 59(e), a court may alter or amend a judgment upon a motion
filed no later than twenty-eight days after entry of the judgment. Rule 59(e) gives
the court power to rectify its own mistakes following entry of judgment. White v.
New Hampshire Dep’t of Employment Sec., 455 U.S. 445, 450 (1982). Rule 59(e)
motions are limited, however, to correcting manifest errors of law or fact or to
present newly discovered evidence, United States v. Metro. St. Louis Sewer Dist.,

440 F.3d 930, 933 (8th Cir. 2006), and are reserved to provide relief in
“extraordinary circumstances.” Barnett v. Roper, 941 F. Supp. 2d 1099, 1104
(E.D. Mo. 2013). I have broad discretion in determining whether to grant a Rule
59(e) motion. Metro. St. Louis Sewer Dist., 440 F.3d at 933.
In their motion, plaintiffs argue that I erred in reviewing materials outside
the pleadings when considering defendants’ motion to dismiss and, further, that I
determined with finality a legal issue that was not presented to the Court. By
doing this, plaintiffs argue, I denied them the opportunity to not only present
evidence but to present their own legal argument on the issue of subject-matter
jurisdiction, and specifically, federal-question jurisdiction. Plaintiffs also contend
that I erred when I considered the substance of the church-plan-exemption question
by improperly conflating a merits determination with subject-matter jurisdiction.
For the following reasons, I disagree with plaintiffs’ assertions.
To frame the following discussion, it is important to set out the mandate
under which I operate when any case comes before me: “If the court determines at
any time that it lacks subject-matter jurisdiction, the court must dismiss the
action.” Fed. R. Civ. P. 12(h)(3). In fact, I am “obliged to inquire sua sponte
whenever a doubt arises as to the existence of federal jurisdiction.” Mt. Healthy
City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 278 (1977).
The rule, springing from the nature and limits of the judicial power of
the United States, is inflexible and without exception, which requires
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this court, of its own motion, to deny its own jurisdiction . . . in all
cases where such jurisdiction does not affirmatively appear in the
record on which, in the exercise of that power, it is called to act. . . .
[T]he first and fundamental question is that of jurisdiction[.] . . . This
question the court is bound to ask and answer for itself, even when not
otherwise suggested, and without respect to the relation of the parties
to it.
Great S. Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 453 (1900) (internal
quotation marks and citation omitted). See also Burris v. City of Little Rock, 941
F.2d 717, 721 (8th Cir. 1991) (although parties “apparently overlooked”
jurisdictional requirement in statute, court obliged to raise it sua sponte; case
remanded with instructions to dismiss for lack of subject-matter jurisdiction).
Here, the defendants invoked Rule 12(b)(1) to seek dismissal for lack of
subject-matter jurisdiction and they provided the Court with extrinsic evidence to
aid in its determination. When reviewing a 12(b)(1) motion, the Court is not
constrained to only the complaint and the materials necessarily embraced by it.
Indeed, given the unique nature of the jurisdictional question and the Court’s broad
power to decide its own right to hear a case, the Court may look to the entire
record in resolving the question of jurisdiction. Hughes v. City of Cedar Rapids,
Iowa, 840 F.3d 987, 998 (8th Cir. 2016); Osborn v. United States, 918 F.2d 724,
728 n.4, 729 (8th Cir. 1990). Accordingly, contrary to plaintiffs’ assertion, the
defendants did not act untoward in submitting materials outside the pleadings on
their motion. Nor was the Court amiss in reviewing the materials when
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considering defendants’ motion. Nothing precluded plaintiffs from submitting
extrinsic material on the question of jurisdiction and, indeed, plaintiffs themselves
referred to matters outside the pleadings, including exhibits submitted by the
defendants as well as declarations of church officials in other, unrelated matters.
When I considered defendants’ Rule 12(b)(1) argument, I carefully reviewed
plaintiffs’ complaint and the entirety of the record, which necessarily included the
additional material submitted by the defendants. Although the defendants limited
their jurisdictional argument to Article III standing, I am not so limited in my
review of a federal court’s jurisdictional authority. The failure of a party to urge a
specific objection to jurisdiction does not relieve this Court from the duty of
ascertaining from the record whether it can properly take jurisdiction of the suit.
Great S. Fire Proof Hotel, 177 U.S. at 453. See also Andrus v. Charlestone Stone
Prods. Co., 436 U.S. 604, 608 n.6 (1978); Crawford v. F. Hoffman-La Roche Ltd.,
267 F.3d 760, 764 n.2 (8th Cir. 2001). I therefore reject plaintiffs’ argument that I
erred when I considered a jurisdictional question not specifically raised by
defendants.
I also disagree with plaintiffs’ contention that I wrongfully determined the
merits of their claims. In their complaint, plaintiffs alleged that defendants
violated various provisions of ERISA that impose requirements relating to
reporting and disclosure, minimum funding, written instruments, trusts, future
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benefits, and fiduciary obligations. I did not decide the merits of these claims
because I did not have the jurisdiction to do so. In order to decide the merits of
plaintiffs’ ERISA claims, I must have first been presented with an ERISA plan.
For the reasons stated in my Memorandum and Order, the plan at issue here was
not an ERISA plan. Therefore, under well-established Eighth Circuit precedent, I
did not have subject-matter jurisdiction over plaintiffs’ ERISA claims. Because of
this determination, I had no choice but to dismiss plaintiffs’ ERISA claims for lack
of subject-matter jurisdiction. Fed. R. Civ. P. 12(h)(3).
I am aware of no authority, and plaintiffs cite to none, that requires me to
give notice to the parties before dismissing a case for lack of subject-matter
jurisdiction. See Fed. R. Civ. P. 12(h)(3) (“If the court determines at any time that
it lacks subject-matter jurisdiction, the court must dismiss the action.”). See also
Burris, 941 F.2d at 721 (although parties “apparently overlooked” jurisdictional
requirement in statute, court of appeals raised it sua sponte and remanded case
with instructions to dismiss for lack of subject-matter jurisdiction). Nevertheless,
the record in this case shows that plaintiffs had adequate notice that the case turned
on whether the Mercy Plan was an ERISA plan or a church plan exempt from
ERISA. Indeed, plaintiffs devoted seventeen pages of their brief to this precise
issue (ECF 160) and themselves cited Chronister v. Baptist Health, which
specifically held that if the plan at issue was “a church plan, no federal question
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would exist because the plan would not be covered by ERISA,” 442 F.3d 648, 651
(8th Cir. 2006) (internal quotation marks and citation omitted); and Harris v.
Arkansas Book Co., which specifically held that “[t]he existence of a plan is a
prerequisite to jurisdiction under ERISA,” 794 F.2d 358, 360 (8th Cir.1986). I
question, therefore, plaintiffs’ now-expressed surprise that I would address subjectmatter jurisdiction on the basis of whether the Mercy Plan was or was not an
ERISA plan.
Finally, plaintiffs contend that I blurred the line between defendants’ Rule
12(b)(6) and 12(b)(1) arguments and improperly decided the merits of the central
issue in the case – whether the Mercy Plan was an ERISA plan or an ERISAexempt church plan – in order to make a jurisdictional determination. Plaintiffs
urge me to apply law from the Second, Third, Fifth, Sixth, Seventh, Ninth, Tenth,
and Eleventh Circuits, which they contend holds that determining whether a plan is
an ERISA-exempt church plan is a merits question “unrelated to subject matter
jurisdiction.” (Pltfs.’ Memo. in Supp. of Mot. for Recon., ECF 178 at p. 4.) I am
bound by the law of the Eighth Circuit, however, see Hood v. United States, 342
F.3d 861, 864 (8th Cir. 2003), and applying that law shows that plaintiffs are
simply incorrect in their assertion.1

1

Although I appreciate that plaintiffs also ask me to look to Supreme Court precedent, and
specifically Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), to show that I erred in my
jurisdictional analysis, I disagree with their premise that Arbaugh applies to the circumstances of
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Under well-established and longstanding Eighth Circuit precedent, the
determination of whether a challenged plan is an ERISA plan is a prerequisite for
federal subject-matter jurisdiction premised on ERISA, “and if the evidence does
not show that the plan is an ‘ERISA plan,’ the court must dismiss the case.”
Bannister v. Sorenson, 103 F.3d 632, 636-37 (8th Cir. 1996) (remanding case to
district court with instructions to first determine “basic jurisdictional issue” of
whether challenged plan “is, or at the time of the events in question was, a ‘plan,
fund, or program’ within the meaning of ERISA.”). See also Harris, 794 F.2d at
360 (“The existence of a plan is a prerequisite to jurisdiction under ERISA.”);
Jader v. Principal Mut. Life Ins. Co., 925 F.2d 1075, 1076-77 (8th Cir.1991)
(remanding for determination of whether jurisdiction was lacking because there
was no ERISA plan); Eide v. Grey Fox Tech. Servs. Corp., 329 F.3d 600, 608 (8th
Cir. 2003) (Where “federal subject matter jurisdiction is based on ERISA, but the
evidence fails to establish the existence of an ERISA plan, the claim must be
dismissed for lack of subject matter jurisdiction.”).

this case. In Arbaugh, the Supreme Court determined that the employee-numerosity requirement
of a Title VII claim was an element of the claim to be analyzed under Rule 12(b)(6), and not a
jurisdictional fact. Here, however, it is well-established that the existence of an ERISA plan is a
jurisdictional fact required to be met before a federal court may consider an ERISA claim.
Further, unlike the lower-court decisions criticized in Arbaugh, I do not find my August 2018
Memorandum and Order to lack explicit consideration as to whether the case should be
dismissed for lack of subject-matter jurisdiction; nor would I describe it as an “unrefined
disposition” or a “drive-by jurisdictional ruling.” Arbaugh, 546 U.S. at 511.
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In Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d 254 (8th Cir. 1994),2 the
Eighth Circuit recognized that while other courts “have elected to treat the
existence or non-existence of an ERISA plan as going to the merits of the claim
rather than to jurisdiction, . . . [u]nder the law of our Circuit, however, the question
is jurisdictional, and if we do not find jurisdiction, we may not consider the merits
of [the ERISA] claim.” Id. at 256 (citing Jader, 925 F.2d at 1077). In Chronister,
a case cited favorably by plaintiffs in their brief opposing defendants’ motion to
dismiss, the Eighth Circuit determined initially whether it had subject-matter
jurisdiction over the action because a question existed as to whether the benefits
plan at issue was a church plan and thus exempt under ERISA. To determine this
threshold question, the court of appeals applied the then-relevant factors in
determining whether the plan was a church plan or an ERISA plan, thereby
engaging in what the plaintiffs here would describe as a merits determination
related to subject-matter jurisdiction. 442 F.3d at 653-54. In that case, the court
found subject-matter jurisdiction to be proper because the plan at issue was an
ERISA plan and not a church plan. Id. at 654.
Accordingly, in manner consistent with and as required by Eighth Circuit
precedent, I looked at the substance of the Mercy Plan to determine whether it was
an ERISA plan, and thus whether the Court had subject-matter jurisdiction over
2

Abrogated on other grounds by Ky. Ass'n of Health Plans, Inc. v. Miller, 538 U.S. 329, 341
(2003).
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plaintiffs’ ERISA claims. See Dakota, Minnesota & E. R.R. Corp. v. Schieffer, 711
F.3d 878, 882 (8th Cir. 2013). See also EFCO Corp. v. Iowa Ass'n of Bus. &
Indus., 447 F. Supp. 2d 985, 998 (S.D. Iowa 2006); Brand v. Kansas City
Gastroenterology & Hepatology, LLC, 547 F. Supp. 2d 1001, 1005 (W.D. Mo.
2008). Unlike the case in Chronister, however, but as was the case in Kulinski,
“[b]ecause there is no ERISA plan here, this is not an ERISA case, and federal
subject matter jurisdiction is absent.” Kulinski, 21 F.3d at 258.
To the extent plaintiffs also ask me to reconsider my jurisdictional analysis
on their Establishment Clause claim and supplemental state law claims, they make
no legal or factual arguments persuading me that my respective decisions were in
error or that my reasoning was flawed.
Therefore, upon reflection and research, I do not find that my earlier
decision was clearly erroneous or that it would work a manifest injustice. Nor do I
find that extraordinary circumstances exist to warrant the relief plaintiffs seek.
Accordingly,
IT IS HEREBY ORDERED that plaintiffs’ Motion for Reconsideration
and to Alter or Amend the Judgment [177] is denied.

_______________________________
CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 29th day of October, 2018.
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