ICI BENEFITS CONSORTIUM v. UNITED STATES DEPARTMENT OF LABOR

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

ICI BENEFITS CONSORTIUM, )

)

Plaintiff, )

)

v. ) No. 1:23-cv-00603-JPH-MG

)

UNITED STATES DEPARTMENT OF )

LABOR, )

JULIE SU in her official capacity as )

Acting Secretary of the United States )

Department of Labor, )

UNITED STATES OF AMERICA, )

)

Defendants. )

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

Independent Colleges of Indiana (ICI) is a group of 29 private colleges and

universities in Indiana. ICI and five of these schools formed the ICI Benefits

Consortium, which seeks to lower healthcare costs for school employees. To

ensure that its Health Benefit Plan qualified as a single employee welfare

benefit plan under the Employee Retirement Income Security Act (ERISA), the

Consortium sought an advisory opinion from the Department of Labor (DOL).1

When the DOL refused to provide an opinion, the Consortium brought this case

seeking a declaration that its Plan qualifies as a single plan under ERISA and

an injunction barring the DOL from saying otherwise. Defendants filed a

motion to dismiss. Dkt. [13]. Because the Consortium has not shown an

1 The Consoritum sues the Department of Labor, the Secretary of the Department,

Julie Su, and the United States. The Defendants will be referred to as the "DOL"

throughout this order.

injury in fact, it lacks standing to bring this case. The Consortium's complaint

is therefore DISMISSED without prejudice for lack of jurisdiction.

I.

Facts and Background

Because the DOL has moved for dismissal under Rule 12(b)(1), the Court

accepts and recites the Consortium's " well-pleaded facts as true." Choice v.

Kohn Law Firm, S.C., 77 F.4th 636, 638 (7th Cir. 2023).

ICI is a group of private colleges and universities in Indiana. Dkt. 1 at ¶

14. In 2019, ICI and five of these schools executed the ICI Benefits Consortium

Agreement and formed the ICI Benefits Consortium to implement its Health

Benefit Plan (the Plan). Id. at ¶ 16. The Consortium seeks confirmation that

the Plan is a multiple employer welfare arrangement (MEWA), which allows

multiple employers to combine to provide aggregated benefits to their

employees at a reduced cost. Id. at ¶ 32–39; dkt. 19 at 3. ERISA governs

certain MEWAs, including those that are an "employee welfare benefit plan."

Dkt. 1 at ¶ 30–31.

In April 2020, the Consortium sought an advisory opinion from the DOL

confirming that the Plan qualified under ERISA as a single employee welfare

benefit plan. Dkt. 1 at ¶ 1. The DOL responded that it could provide informal

views and would keep ICI's request for a formal review open but would not

issue a formal advisory opinion to the Consortium at that time. Id. at ¶ 41; see

dkts. 13-2 (email from DOL official); 13-3 (follow-up email from that same

official).2 The DOL explained that a pending lawsuit in the D.C. Circuit, New

York v. United States Department of Labor, No. 19-5125, could alter any

guidance provided. Dkts. 1 at ¶ 41; 13-2; 13-3.

The Consortium brought this case against the DOL and its Acting

Secretary, seeking a judgment declaring that (1) the Plan is a single employee

welfare benefit plan; (2) the Consortium is a "group or association of

employers"; (3) the Arrangement is a MEWA under ERISA; and (4) the Plan is a

single plan MEWA. Dkt. 1 at ¶ 49. The Consortium also seeks an injunction

prohibiting the Secretary of the DOL from determining that the Plan is not an

employee welfare benefit plan. Id. at ¶ 51–53. Defendants filed a motion to

dismiss arguing that the Consortium lacks standing to bring this case and

alternatively that the complaint fails to state a claim. Dkt. 13.

I.

Legal Standard

Defendants may move under Federal Rule of Civil Procedure 12(b)(1) to

dismiss claims for lack of subject-matter jurisdiction. When faced with a

12(b)(1) motion, the plaintiff "bears the burden of establishing that the

jurisdictional requirements have been met." Ctr. for Dermatology and Skin

Cancer, Ltd. v. Burwell, 770 F.3d 586, 588–89 (7th Cir. 2014). The Court

2 The DOL provided these emails along with their motion to dismiss. Dkt. 13. These

emails are discussed in the Consortium's complaint but were not included as exhibits.

See dkt. 1 at ¶ 41. "Documents attached to a motion to dismiss are considered part of

the pleadings if they are referred to in the plaintiff's complaint and are central to [its]

claim." Adams v. City of Indianapolis, 742 F.3d 720, 729 (7th Cir. 2014). Therefore,

the Court considers the attached emails from the DOL in evaluating the 12(b)(1)

motion.

accepts as true the well-pleaded factual allegations, drawing all reasonable

inferences in the plaintiff’s favor. Id.

III.

Analysis

A Rule 12(b)(1) motion challenges the Court's subject matter jurisdiction

and must be addressed as a threshold matter. Bazile v. Finance Sys. of Green

Bay, Inc., 983 F.3d 274, 277–78 (7th Cir. 2020). One jurisdictional

requirement is standing, and to "cross the standing threshold, the litigant must

explain how the elements essential to standing are met." Virginia House of

Delegates v. Bethune-Hill, 139 S. Ct. 1945, 1951 (2019).

The "irreducible constitutional minimum" of standing consists of three

elements: the plaintiff "must have suffered (1) an injury in fact, (2) that is fairly

traceable to the challenged conduct of the defendant, and (3) is likely to be

redressed by a favorable judicial decision." Spokeo v. Robins, 578 U.S. 330,

338 (2016). Standing "must be supported . . . with the manner and degree of

evidence required at the successive stages of the litigation." Apex Digital, Inc. v.

Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009) (quoting Lujan v.

Defenders of Wildlife, 504 U.S. 555, 561 (1992)). The plaintiff has the burden

of establishing these elements and therefore must "clearly allege facts

demonstrating each element." Spokeo, 578 at 338.3

3 The standing challenge here is a "facial" one, as opposed to a "factual" one. "Facial

challenges require only that the court look to the complaint and see if the plaintiff has

sufficiently alleged a basis of subject matter jurisdiction." Apex Digital, 572 F.3d at

443. A facial challenge requires the Court to take the allegations in the complaint as

true. Id. at 444. This case involves a facial challenge. See dkt. 14 at 11–12 (DOL

brief stating standard of review); dkt. 19 at 7 (Consortium brief describing this is a

The DOL argues that the Consortium lacks standing to sue because it

has not pled a concrete, actual, or imminent injury. Dkt. 14 at 24–28. It

contends that the risks and uncertainty that the Consortium says it faces

because of the DOL's failure to issue an advisory opinion are speculative and

hypothetical and therefore do not confer standing. Id. The Consortium

responds that "[t]he core issue is that the government refuses to advise the

Consortium on the state of the Arrangement and the Plan while its enforcement

priorities highlight MEWAs." Dkt. 19 at 9. More specifically, the Consortium

argues that two injuries confer standing: (1) if the DOL determines that the

Plan does not qualify as a single plan MEWA, the Consortium and its members

could face civil liability, including up to $2,586 in daily fines; and (2) it's a

"reasonable inference" that the lack of guidance from the DOL has hindered

other ICI member schools from joining the Consortium. Dkt. 19 at 8–9.

An injury in fact occurs when a plaintiff suffers "an invasion of a legally

protected interest that is concrete and particularized and actual or imminent,

not conjectural or hypothetical." Spokeo, 578 U.S. at 339. "Although

imminence is concededly a somewhat elastic concept, it cannot be stretched

beyond its purpose, which is to ensure that the alleged injury is not too

speculative for Article III purposes—that the injury is certainly impending."

Clapper v. Amnesty Int'l USA, 568 U.S. 398, 409 (2013). At the very least there

"facial" challenge). Therefore, rather than contesting the Consortium's evidence, the

DOL argues that even if the allegations in the Complaint here were true, they would be

"insufficient to establish injury in fact." Apex Digital, 572 F.3d at 443–44. The Court

likewise accepts the Consortium's factual allegations as true in evaluating the DOL's

motion.

must be a "substantial risk that the harm will occur." Dep't of Commerce v.

New York, 588 U.S. ---, 139 S. Ct. 2551, 2565 (2019).

The Consortium first argues that it faces a potential future injury

because of the DOL's refusal to issue an advisory opinion. If it "is mistaken

and has implemented a non-plan MEWA," then each member would be

required to prepare and submit separate filings and could be subject to

monetary fines. Dkt. 19 at 9. The DOL responds that fines would only be

levied if a "speculative" chain of events occur. Dkt. 14 at 25. First, the DOL

would need to issue an adverse advisory opinion deeming ICI's plan a non-plan

MEWA. Id. Next, the DOL would need to choose to investigate whether the

Consortium's members have violated their fiduciary duties. Id. Last, if the

DOL finds violations, it would need to choose to impose penalties on ICI's

members. Id.

The Consortium argues that the DOL's refusal to act exposes the

Consortium and its members "to unnecessary risk of multiple violations of

ERISA," but it alleges only that it "could face daily monetary penalties." Dkt. 1

at ¶¶ 7, 42 (emphasis added). It does not allege facts showing that this injury

is "certainly impending." Clapper, 568 U.S. at 410; dkt. 19 at 9 (Consortium

brief stating "if the Plan is a non-plan MEWA . . . .") (emphasis added). Nor

does it address the lengthy chain of events that would have to occur before

penalties would be imposed. See Clapper, 568 U.S. at 409–10 (noting that a

"highly attenuated chain of possibilities" does not rise to the level of a

cognizable future injury); see also O'Shea v. Littleton, 414 U.S. 488, 496–97

(1974) (describing a chain of events that would require plaintiffs violate a

challenged law, be charged under that law, held to answer, and tried in a

proceeding as too speculative to confer standing).

Nevertheless, the Consortium argues that the likelihood of harm is

heightened because the DOL has prioritized "policing" MEWAs through its

"National Enforcement Project." Dkt. 19 at 2, 5, 9. This "National Enforcement

Project" seeks to shut down "abusive" MEWAs and "to proactively identify

known fraudulent MEWA operators to ensure they do not terminate one MEWA

just to open another in a different state." Id. at 2 (quoting excerpts of the

enforcement directive from the DOL website). But those allegations aren't in

the complaint, and even if they were there's no indication that the

Consortium—a group of Indiana universities—would "terminate one MEWA just

to open another in a different state." See dkt. 1 at 4. Nor is there any

allegation that the Plan is fraudulent or abusive. See dkt. 19 at 5. Instead, the

Consortium has implemented what it believes to be a compliant MEWA, and it

requests that the DOL to "confirm" that view by issuing an advisory opinion.

Dkt. 1 at ¶ 2; see dkt. 19 at 9. Therefore, the existence of the Enforcement

Project does not "tie this theoretical harm to an actual and imminent threat of

enforcement." Wisconsin Right to Life, Inc. v. Schober, 366 F.3d 485, 490 (7th

Cir. 2004); see Clapper, 568 U.S. at 411 ("First, it is speculative whether the

Government will imminently target communications to which respondent are

parties.").

The Consortium has not shown there is a "substantial risk" of economic

harm resulting from government action by the DOL so this alleged injury is

insufficient to confer standing. See Dinerstein v. Google, LLC, 73 F.4th 502,

514 (7th Cir. 2023) (holding that "bare assertions of harm—unsupported by

any concrete details—do not suffice to allege a plausible, concrete injury").

The Consortium next argues that regardless of what the DOL does in the

future, the Consortium has already experienced a concrete injury because

"uncertainty surrounding the Plan's status caused by the Department

discourages other ICI members from joining the Consortium." Dkt. 19 at 9.

The Consortium argues that only 5 of its 29 member institutions have joined

the Consortium, despite "its strong early financial success." Dkt. 19 at 9. The

Consortium argues this creates a "reasonable inference" that the DOL's refusal

to issue an advisory opinion led to low membership because the "unconfirmed

status" of the Plan creates an "unnecessary risk." Id. at 9–10.

But this allegation is conclusory and speculative—it does not show that

the DOL's refusal to provide an advisory opinion is the reason that other

institutions have not joined the Consortium. Schober, 366 F.3d at 489 ("Mere

speculation is not enough to establish an injury in fact."). The Consortium

does not allege, for example, that any of its members that have not joined the

Plan have declined to do so because of the DOL's refusal to provide an advisory

opinion. Instead, it alleges only that the DOL's failure to act "deprives the

Consortium of an affirmative advisory opinion" to show other colleges or

universities, and that this "discourages other colleges and universities from

joining the Consortium." Dkt. 1 at ¶¶ 43–44.

Additionally, other institutions' failure to join is not redressable here.

The Court has "no way of knowing" how other institutions would proceed

following a ruling in the Consortium's favor, based on its allegations. Cabral v.

City of Evansville, 759 F.3d 639, 642 (7th Cir. 2014). Speculation on how

other institutions—nonparties to this action—would proceed "is not enough to

turn this into a case and controversy with a redressable injury." Id. at 642–43;

see ASARCO Inc. v. Kadish, 490 U.S. 605, 615 (1989) ("Whether the

association's claims of economic injury could be redressed by a favorable

decision in this case depends on the unfettered choices made by independent

actors not before the courts and whose exercise of broad and legitimate

discretion the courts cannot presume either to control or to predict.").

Moreover, the DOL has told the Consortium to rely on past guidance, and the

Consortium has not alleged that this isn't enough for its members to decide

whether to join the Plan. See dkt. 13-2 (noting Plans "are not required to

obtain an advisory opinion from the [DOL] to qualify"). As pled, this theory of

standing therefore "rest[s] on mere speculation about the decisions of third

parties." Dep't of Commerce, 139 S. Ct. at 2566. Therefore, the Consortium

has not established that it has standing to pursue this action.

IV.

Conclusion

Defendants’ motion to dismiss for lack of subject matter jurisdiction is

GRANTED. Dkt. [13]. The complaint is DISMISSED without prejudice.

Plaintiff shall have through April 28, 2024 to file a motion for leave to

amend their complaint. See, e.g., Runnion ex rel. Runnion v. Girl Scouts of

Greater Chicago & Nw. Indiana, 786 F.3d 510, 519 (7th Cir. 2015). If the

Consortium does not seek leave to amend, the Court will enter final judgment.

SO ORDERED.

Date: 3/28/2024 .

James Patrick Hanlon

United States District Judge

Southern District of Indiana

Distribution:

All electronically registered counsel.

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