Petition for Writ of Certiorari — Howard Jarvis Taxpayers Association, et al., Petitioners v. The California Secure Choice Retirement Savings Program, et al.

App. 1

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

HOWARD JARVIS TAXPAYERS

ASSOCIATION; JONATHAN MARK

COUPAL; DEBRA A. DESROSIERS,

Plaintiffs-Appellants,

No. 20-15591

D.C. No.

2:18-cv-01584MCE-KJN

v.

CALIFORNIA SECURE CHOICE

RETIREMENT SAVINGS PROGRAM;

JOHN CHIANG, California State

Treasurer,

OPINION

Defendants-Appellees.

Appeal from the United States District Court

for the Eastern District of California

Morrison C. England, Jr, District Judge, Presiding

Argued and Submitted February 8, 2021

San Francisco, California

Filed May 6, 2021

Before: Andrew D. Hurwitz and Daniel A. Bress,

Circuit Judges, and Clifton L. Corker,* District Judge.

Opinion by Judge Bress

* The Honorable Clifton L. Corker, United States District

Judge for the Eastern District of Tennessee, sitting by designation.

App. 2

SUMMARY**

Employee Retirement Income Security Act

Affirming the district court’s dismissal, the panel

held that ERISA does not preempt a California law

that creates CalSavers, a state-managed individual

retirement account program for eligible employees of

certain private employers that do not provide their

employees with a tax-qualified retirement savings

plan.

The panel held that Congress’s repeal of a 2016

Department of Labor rule that sought to exempt

CalSavers from ERISA under a safe harbor did not

resolve the preemption question. Further, even if

ERISA’s safe harbor did not apply to CalSavers, the

panel would still need to determine whether CalSavers

otherwise qualified as an ERISA program.

The panel concluded that CalSavers is not an

ERISA plan because it is established and maintained

by the State, not employers; it does not require employers to operate their own ERISA plans; and it does not

have an impermissible reference to or connection with

ERISA. Nor does CalSavers interfere with ERISA’s

core purposes. Accordingly, ERISA does not preempt

the California law.

** This summary constitutes no part of the opinion of the

court. It has been prepared by court staff for the convenience of

the reader.

App. 3

COUNSEL

Laura E. Dougherty (argued), Jonathan M. Coupal,

and Timothy A. Bittle, Howard Jarvis Taxpayers

Foundation, Sacramento, California, for PlaintiffsAppellants.

Sharon L. O’Grady (argued), Deputy Attorney General;

Paul Stein, Supervising Deputy Attorney General;

Thomas S. Patterson, Senior Assistant Attorney General; Office of the Attorney General, San Francisco,

California; R. Bradford Huss, Joseph C. Faucher, and

Angel L. Garrett, Trucker Huss APC, San Francisco,

California; for Defendants-Appellees.

Peter K. Stris, Rachana A. Pathak, Douglas D. Geyser,

and John Stokes, Stris & Maher LLP, Los Angeles,

California; Barbara R. Van Zomeren, Ascensus LLC,

Brainerd, Minnesota; for Amicus Curiae Ascensus

LLC.

Dara S. Smith, and William Alvarado Rivera, AARP,

Foundation Washington, D.C.; Jeffrey Lewis, Erin Riley,

and Rachel E. Morowitz, Keller Rohrback LLP, Seattle,

Washington; for Amici Curiae AARP, AARP Foundation, California Hispanic Chamber of Commerce,

Small Business California, Small Business Majority,

Unidosus, United Ways of California, and Western

Center on Law and Poverty.

Ellen F. Rosenblum, Attorney General, Office of the

Attorney General, Salem, Oregon; Kwame Raoul, Attorney General; Jane Elinor Notz, Solicitor General;

Sarah A. Hunger, Deputy Solicitor General; Office of

App. 4

the Attorney General, Chicago, Illinois; for Amici Curiae States of Illinois and Oregon.

OPINION

BRESS, Circuit Judge.

This case presents a novel and important question

in the law governing retirement benefits: whether the

federal Employee Retirement Income Security Act of

1974 (ERISA), 29 U.S.C. § 1001, et seq., preempts a

California law that creates a state-managed individual

retirement account (IRA) program. The program,

CalSavers, applies to eligible employees of certain private employers in California that do not provide their

employees with a tax-qualified retirement savings

plan. Eligible employees are automatically enrolled

in CalSavers, but may opt out. If they do not, their employer must remit certain payroll deductions to

CalSavers, which funds the employees’ IRAs. California manages and administers the IRAs and acts as the

program fiduciary. Citing a need to encourage greater

savings among future retirees, other States have enacted similar state-managed IRA programs in recent

years. To our knowledge, this is the first case challenging such a program on ERISA preemption grounds.

We hold that the preemption challenge fails.

CalSavers is not an ERISA plan because it is established and maintained by the State, not employers; it

does not require employers to operate their own ERISA

plans; and it does not have an impermissible reference

to or connection with ERISA. Nor does CalSavers

App. 5

interfere with ERISA’s core purposes. ERISA thus does

not preclude California’s endeavor to encourage personal retirement savings by requiring employers who

do not offer retirement plans to participate in CalSavers. We therefore affirm the judgment of the district

court.

I

A

In 2017, the California Legislature enacted the

CalSavers Retirement Savings Trust Act, which implemented the CalSavers program (previously known as

“California Secure Choice”). See Cal. Gov’t Code

§ 100000, et seq. CalSavers is a state-run IRA savings

program for certain private employees. See id. §§ 100002,

100004, 100008. Its objective is to encourage greater

retirement savings among employees whose employers

do not offer retirement plans. See Savings Arrangements Established by States for Non-Governmental

Employees, 81 Fed. Reg. 59464, 59464–65 (Aug. 30,

2016) (describing how California and other states have

enacted “automatic enrollment” programs to “encourage employees to establish tax-favored IRAs funded by

payroll deductions”).

CalSavers’s automatic enrollment requirement

applies only to an “Eligible employee” of an “Eligible

employer.” Cal. Gov’t Code §§ 100000(c)–(d), 100032.

Eligible employees are defined as California employees

who are at least eighteen years old and employed by

an eligible employer. Id. § 100000(c); Cal. Code Regs.

App. 6

tit. 10, § 10000(l), (n). Eligible employers are defined as

non-governmental employers with five or more employees in California. Cal. Gov’t Code § 100000(d); Cal.

Code Regs. tit. 10, § 10000(m). The sole exclusion is

for an “Exempt Employer,” Cal. Code Regs. tit. 10,

§ 10000(q), that provides either an “employer-sponsored

retirement plan” or an “automatic enrollment payroll

deduction IRA” that “qualifies for favorable federal income tax treatment.” Cal. Gov’t Code § 100032(g)(1).

Compliance with CalSavers is mandatory for nonexempt eligible employers, who must register with the

CalSavers program. Id. § 100032(b)–(d); Cal. Code

Regs. tit. 10, § 10002. Exempt employers may, but are

not required to, inform the CalSavers Administrator of

their exemption. Cal. Code Regs. tit. 10, § 10001(d). Eligible employers who later become ineligible (for example, those who later create their own ERISA plans)

must inform the CalSavers Administrator within 30

days of their change in status. Id. § 10001(c). Exempt

employers are “prohibited from participating in the

Program.” Id. § 10002(d).

CalSavers describes itself as “a state-administered program, not an employer-sponsored program.”

Cal. Gov’t Code § 100034(b). To that end, CalSavers

forbids employers from taking a variety of actions. Employers may not “[r]equire, endorse, encourage, prohibit, restrict, or discourage employee participation in”

CalSavers. Cal. Code Regs. tit. 10, § 10003(d)(1). Nor

may employers advise employees regarding CalSavers

contribution rates or investment decisions or “[e]xercise any authority, control, or responsibility regarding”

App. 7

the program. Id. § 10003(d)(2), (4). Employers “are

prohibited from contributing to a Participating Employee’s Account.” Id. § 10005(c)(1). Employers also

“shall not have any liability for an employee’s decision

to participate in, or opt out of, the program”; “shall not

be a fiduciary, or considered to be a fiduciary over the

trust or the program”; “shall not be liable as plan sponsors”; and “shall not bear responsibility for the administration, investment, or investment performance of

the program.” Cal. Gov’t Code § 100034(a), (b).

Anticipating the legal challenge we address here,

the statute creating CalSavers maintains that “the

roles and responsibilities of employers” have been defined “in a manner to keep the program from being

classified as an employee benefit plan subject to the

federal Employee Retirement Income Security Act

[(ERISA)].” Cal. Gov’t Code § 100043(b)(1)(C). CalSavers imposes three basic duties on eligible employers.

They must first register for CalSavers by providing

their basic identification and contact information. Cal.

Code Regs. tit. 10, § 10002(f ). Within thirty days of registration, they must provide CalSavers with certain

contact and identifying information for their eligible

employees. Id. § 10003(a). They must also set up “a

payroll deposit retirement savings arrangement,” Cal.

Gov’t Code § 100032(b), through which they can remit

employees’ contributions to the CalSavers Trust. Cal.

Code Regs. tit. 10, § 10003(c). Regulations set a 5% default rate of contribution, though employees may adjust their rate. Id. § 10005(a)(1), (b)(1). An eligible

employer that “fails to allow its eligible employees to

App. 8

participate” in CalSavers is subject to penalties. Cal.

Gov’t Code § 100033(b).

After an eligible employer registers with CalSavers, the CalSavers Administrator delivers to all eligible

employees an information packet describing the program. Cal. Code Regs. tit. 10, § 10004(a). Upon receiving the information packet, employees have thirty days

to opt out; otherwise, they are automatically enrolled

in CalSavers. Id. § 10004(b). Employees may opt out

electronically, by telephone, or by mail. Id. § 10004(d);

see also Cal. Gov’t Code § 100032(f )(1). Even after enrollment, employees may opt out of CalSavers at any

time. Cal. Code Regs. tit. 10, § 10004(d). Employees’

contributions are made to a Roth IRA, id. § 10005(a)(3),

but employees may choose to recharacterize all or

some of their contributions to a traditional IRA, id.

§ 10005(c)(4). They may roll over or transfer funds into

their CalSavers IRA at any time. Id. § 10007(b).1

The statute and regulations also describe how eligible employers can become ineligible for CalSavers,

and how employees can make changes to their CalSavers accounts. For example, if an eligible employer later

adopts its own “employer-sponsored retirement plan”

or qualifying “automatic enrollment payroll deduction

IRA,” CalSavers no longer applies. Cal. Gov’t Code

§ 100032(g)(1)–(2). Eligible employees are also given

guidance on how they may withdraw their CalSavers

1

We grant California’s request for judicial notice of background materials on the CalSavers website.

App. 9

contributions. See id. § 100014(b)(4). Any individual

who is over eighteen can also choose to participate in

CalSavers “outside of an employment relationship

with an Eligible Employer.” Cal. Code Regs. tit. 10,

§ 10006(a).

The Act that implemented CalSavers also created

a nine-member California Secure Choice Retirement

Savings Board, a public body “within state government,” that is charged with managing and administering the CalSavers Retirement Savings Trust. Cal.

Gov’t Code §§ 100002, 100004. The Board is authorized

to fund the Trust with the contributions received from

employers through employee payroll deductions, invest the Trust funds (or delegate investment to private

money managers), and pay operating costs using Trust

funds. See id. § 100004.

California is phasing in CalSavers according to

the size of an employer’s workforce. Id. § 100032(b)–

(d); Cal. Code Regs. tit. 10, § 10002(a)(1)–(3). As of

October 12, 2020, California reports that 4,324 employers had registered for CalSavers and nearly 90,000

California workers had enrolled. Approximately 36% of

eligible employees have opted out.

Several other states and the City of Seattle have

adopted government-run auto-enrollment IRA programs like CalSavers. See Colorado Secure Savings

Program Act, Colo. Rev. Stat. Ann. §§ 24-54.3-101, et

seq.; Connecticut Retirement Security Exchange,

Conn. Gen. Stat. Ann. §§ 31-418, et seq.; Illinois Secure

Choice Savings Program Act, 820 Ill. Comp. Stat. Ann.

App. 10

§§ 80/1, et seq.; Maryland Small Business Retirement

Savings Program, Md. Code Ann., Lab. & Empl. §§ 12401, et seq.; New Jersey Secure Choice Savings Program Act, N.J. Stat. Ann. §§ 43:23-13, et seq.; Oregon

Retirement Savings Plan, Or. Rev. Stat. Ann.

§§ 178.200, et seq.; Seattle Retirement Savings Plan,

Seattle Mun. Code §§ 14.36.010, et seq.; see also 81 Fed.

Reg. at 59464–65 (describing programs in different

states); State-Facilitated Retirement Savings Programs: A Snapshot of Program Design Features, State

Brief 20-02, Georgetown Univ. (Aug. 31, 2020),

https://cri.georgetown.edu/wp-content/uploads/2018/12/

CRI-State-Brief-20-02.pdf (last accessed Apr. 1, 2021).

B

Howard Jarvis Taxpayers Association and two of

its employees (collectively, “HJTA”) filed this action

against the CalSavers program and the Chairman of

the CalSavers Board in his official capacity. HJTA alleged that ERISA preempts CalSavers and that

CalSavers should also be enjoined under California

Code of Civil Procedure Section 526a as a waste of taxpayer funds.

HJTA is a public interest organization that seeks

to promote taxpayer rights. But it filed this challenge

in its capacity as a California employer. HJTA alleged

that it meets the definition of an eligible employer and

does not operate its own employee retirement program.

HJTA therefore has standing to bring this action, and

the controversy is ripe because HJTA plausibly alleges

App. 11

that it will soon be subject to CalSavers. See, e.g.,

Leeson v. Transam. Disability Income Plan, 671 F.3d

969, 978–79 (9th Cir. 2012); Inland Empire Chapter of

Associated Gen. Contractors of Am. v. Dear, 77 F.3d 296,

299 (9th Cir. 1996). The HJTA employees also have

standing as future participants in what they claim is

an ERISA plan. See 29 U.S.C. § 1132(a)(3); Leeson, 671

F.3d at 978–79.

The district court granted California’s motion to

dismiss, concluding that ERISA does not preempt

CalSavers. The district court also declined to exercise

supplemental jurisdiction over HJTA’s state law claim.

HJTA timely appealed to this Court, and we review the

district court’s ruling on preemption de novo. HickcoxHuffman v. US Airways, Inc., 855 F.3d 1057, 1060 (9th

Cir. 2017).2

II

ERISA preempts “any and all State laws insofar

as they may now or hereafter relate to any employee

benefit plan” that ERISA covers. 29 U.S.C. § 1144(a). Is

CalSavers such a law? No court has yet addressed

whether a state-administered IRA program like

CalSavers falls within ERISA’s ambit. The issue

2

After supporting HJTA in the district court, the Department of Labor (DOL) initially filed an amicus brief supporting

HJTA on appeal. Later, and after a change in presidential administrations, DOL informed us that it no longer wished to participate as amicus and does not support either side. Several

organizations and the States of Oregon and Illinois have filed

amicus briefs supporting California.

App. 12

initially seems close because ERISA’s preemption provision is expansive, and CalSavers concerns benefits in

a general sense. But closer inspection of the governing

precedents and CalSavers’ design shows that HJTA’s

broad ERISA preemption challenge to CalSavers cannot be sustained.

A

We first address a threshold question relating to

whether Congress has already resolved this issue

when it rejected a 2016 Department of Labor rule that

sought to exempt CalSavers from ERISA under a safe

harbor. We hold that Congress’s repeal of that rule does

not provide an answer to the preemption question.

DOL has issued regulations exempting certain

types of plans from ERISA. See 29 U.S.C. § 1135 (authorizing the Secretary of Labor to “prescribe such regulations as he finds necessary or appropriate to carry

out the provisions of this subchapter”); 29 C.F.R.

§§ 2510.3-1(j), 2510.3-2(b), (d); see generally Sgro v.

Danone Waters of N. Am., Inc., 532 F.3d 940, 942 (9th

Cir. 2008); Stuart v. UNUM Life Ins. Co. of Am., 217

F.3d 1145, 1149 (9th Cir. 2000). If a plan or program is

exempt from ERISA under a safe harbor, there is no

need to determine whether ERISA preempts the law

authorizing it.

In 1975, DOL promulgated a regulation exempting certain IRA payroll deduction programs from

ERISA. See 29 C.F.R. § 2510.3-2(d). For an IRA program to qualify for the 1975 Safe Harbor, it must meet

App. 13

four criteria: (i) “[n]o contributions are made by the

employer”; (ii) “[p]articipation is completely voluntary

for employees”; (iii) the employer’s “sole involvement”

is “without endorsement to permit the sponsor to publicize the program to employees or members, to collect

contributions through payroll deductions,” and “to remit them to the sponsor”; and (iv) the employer receives “no consideration . . . other than reasonable

compensation” for the cost of completing payroll deductions. Id. (emphasis added).

DOL has taken the position that the “completely

voluntary” requirement in the 1975 Safe Harbor

“mean[s] that the employee’s enrollment in the program must be self-initiated,” i.e., that “the decision to

enroll in the program must be made by the employee,

not the employer.” 81 Fed. Reg. at 59465. We have also

held that when benefit coverage is “automatic for all

[eligible] employees,” “it [i]s not ‘completely voluntary’ ”

under the 1975 Safe Harbor. Qualls ex rel. Qualls v.

Blue Cross of Cal., Inc., 22 F.3d 839, 844 (9th Cir. 1994).

In a 2016 rulemaking, DOL concluded that staterun IRA programs like CalSavers, which require automatic participant enrollment with “opt-out” rights,

were not “completely voluntary” and thus did not fall

within the 1975 Safe Harbor. 81 Fed. Reg. at 59465.

But DOL at the same time recognized that “states

have a substantial government interest to encourage

retirement savings in order to protect the economic

security of their residents.” Id. at 59464. The question

remained, however, whether ERISA would preempt

CalSavers and other like programs. DOL took no

App. 14

position on that question in its 2016 rulemaking. See

id. at 59467 (“The safe harbors in this section should

not be read as implicitly indicating the Department’s

views on the possible scope of [29 U.S.C. § 1144(a)].”).

But DOL recognized that “uncertainty” over ERISA

preemption “has created a serious impediment to

wider adoption of state payroll deduction savings programs.” Id. at 59465.

To “remove [that] uncertainty” and promote staterun IRA programs, DOL in 2016 added a new safe harbor exemption, entitled “Savings Arrangements Established by States for Non-Governmental Employees.” 81

Fed. Reg. 59464; see also 29 C.F.R. § 2510.3-2(h) (2016).

The 2016 Safe Harbor was intended to ensure that

state-run IRA programs, including CalSavers, would

be treated as outside ERISA. See 81 Fed. Reg. 59466.

For a program to qualify for the 2016 Safe Harbor, employee participation need only be “voluntary” (as opposed to “completely voluntary”), and the state had to

assume fiduciary and administrative responsibility. Id.

But the 2016 Safe Harbor was short-lived. Less than a

year after its enactment, Congress repealed it by joint

resolution under the Congressional Review Act. Pub.

L. No. 115-35, 131 Stat. 848 (2017).

HJTA thus argues that Congress “specifically disavowed CalSavers by expressly repealing the 2016

DOL regulation that was designed to authorize

CalSavers itself.” We think, however, that this argument reads too much into Congress’s rejection of the

2016 Safe Harbor. As we explained above, DOL in 2016

did not take the position that state IRA programs were

App. 15

preempted under ERISA absent an exemption. It

merely sought to “remove uncertainty” about that

question, so that states could avoid the costs and delay

of ERISA preemption litigation (like this one). 81 Fed.

Reg. at 59466.

We can at most conclude from Congress’s repeal of

the 2016 regulation that Congress rejected the notion

that CalSavers should be automatically exempt from

an ERISA preemption analysis. Nothing about the repeal forecasts any answer, much less any definitive answer, on whether ERISA preempts programs like

CalSavers. That issue was left to the courts to resolve.

And that means we must address the ERISA preemption question that the 2016 Safe Harbor might have

obviated or made easier.

There is one more preliminary item before we do

so, however. Assuming for a moment that CalSavers

does not fall within the 1975 Safe Harbor because it is

not “completely voluntary,” does that mean CalSavers

is then covered by ERISA and preempted? In prior

cases, we have made statements such as the following:

“Unless all four of the [1975 Safe Harbor] requirements are met, the employer’s involvement in a group

insurance plan is significant enough to constitute an

‘employee benefit plan’ subject to ERISA.” Qualls, 22

F.3d at 843; see also, e.g., Sarraf v. Standard Ins. Co.,

102 F.3d 991, 993 (9th Cir. 1996) (“Because [the employee organization] is not exempted by the regulation,

its involvement in the plan is significant enough to

make the plan an ‘employee benefit plan’ subject to

ERISA.”); Pacificare Inc. v. Martin, 34 F.3d 834, 837

App. 16

(9th Cir. 1994) (“A plan failing to meet any one of these

[safe harbor] criteria cannot be excluded from ERISA

coverage.”). Do these statements mean that if a plan

fails to meet the 1975 Safe Harbor, it is then an ERISA

plan that ERISA preempts?

The answer is no. In Stuart v. UNUM Life Insurance Co. of America, 217 F.3d 1145 (9th Cir. 2000), we

clarified that while “[a] program that satisfies the [safe

harbor] regulation’s standards will be deemed not to

have been ‘established or maintained’ by the employer[,] [t]he converse, however, is not necessarily

true; a program that fails to satisfy the regulation’s

standards is not automatically deemed to have been

‘established or maintained’ by the employer, but, rather, is subject to further evaluation under the conventional tests.” Id. at 1153 n.4 (quoting Johnson v. Watts

Regulator Co., 63 F.3d 1129, 1133 (1st Cir. 1995)). In

other words, “[t]he fact that [a] plan is not excluded

from ERISA coverage by this regulation does not compel the conclusion that the plan is an ERISA plan.” Id.

(quoting Gaylor v. John Hancock Mut. Life Ins. Co., 112

F.3d 460, 463 (10th Cir. 1997)); see also Cline v. Indus.

Maint. Eng’g & Contracting Co., 200 F.3d 1223, 1230

(9th Cir. 2000) (considering the safe harbor criteria

only after determining that the plan at issue fell

“within the definition of ” an ERISA plan).

This means that even if the 1975 Safe Harbor does

not apply to CalSavers, we would still need to find that

CalSavers “otherwise qualifies as an ERISA program,”

Johnson, 63 F.3d at 1133, or “relate[s] to” ERISA, 29

U.S.C. § 1144(a), to conclude that ERISA preempts it.

App. 17

We therefore need not decide whether the 1975 Safe

Harbor would exempt CalSavers from ERISA because

we hold that CalSavers is not an ERISA plan in the first

place. Nor does it “relate to” ERISA plans by imposing

administrative obligations on employers in California

that, like HJTA, do not offer employer-sponsored retirement plans. We now turn to an explanation of these

points.

B

ERISA’s preemption provision applies to “any and

all State laws insofar as they may now or hereafter

relate to any employee benefit plan,” as defined in

ERISA. 29 U.S.C. § 1144(a). While the preemption provision is “clearly expansive,” the Supreme Court has

cautioned that its “relate to” language cannot be read

“to extend to the furthest stretch of indeterminacy,” because it would then lack any limiting principle at all.

N.Y. State Conf. of Blue Cross & Blue Shield Plans v.

Travelers Ins. Co., 514 U.S. 645, 655 (1995).

States are not precluded from adopting a law just

because it has something to do with “benefits” in a

loose sense, no matter how detached the law is from

ERISA’s text and recognized objectives. To have “workable standards” and avoid near constant preemption

(“a result [that] no sensible person could have intended”), the Supreme Court has therefore rejected

“ ‘uncritical literalism’ in applying [ERISA’s preemption] clause.” Gobeille v. Liberty Mut. Ins. Co., 577 U.S.

312, 319 (2016) (quotations omitted).

App. 18

ERISA applies to “plans, rather than simply to

benefits.” Fort Halifax Packing Co. v. Coyne, 482 U.S. 1,

11 (1987). That demarcation forms the basis for the Supreme Court’s cases distinguishing state laws that fall

within ERISA’s preemptive reach from those that are

beyond it. To this end, the Court has identified “two

categories of state laws that ERISA pre-empts.” Id.

“First, ERISA pre-empts a state law if it has a ‘reference to’ ERISA plans.” Id. (citing Travelers, 514 U.S. at

656). “Second, ERISA pre-empts a state law that has

an impermissible ‘connection with’ ERISA plans,

meaning a state law that ‘governs . . . a central matter

of plan administration’ or ‘interferes with nationally

uniform plan administration.’ ” Id. (quoting Egelhoff v.

Egelhoff, 532 U.S. 141, 148 (2001)). HJTA has not

shown that either test is satisfied.

1

If CalSavers “creates an ERISA plan,” then it “almost certainly makes an impermissible ‘reference to’

an ERISA plan.” Golden Gate Rest. Ass’n v. City & Cty.

of San Francisco, 546 F.3d 639, 648 (9th Cir. 2008). But

CalSavers does not order anyone to create an ERISA

“employee benefit plan,” as ERISA defines that term

and as precedent elucidates that concept.

ERISA’s preemption provision precludes state

laws that “relate to any employee benefit plan.” 29

U.S.C. § 1144(a). An “employee benefit plan” means

either an “employee welfare benefit plan” or an “employee pension benefit plan.” Id. § 1002(3). “Employee

App. 19

pension benefit plan” is the type of plan potentially relevant to CalSavers. ERISA defines such a plan as “any

plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by

an employee organization, or by both, to the extent

that by its express terms or as a result of surrounding

circumstances[,] such plan, fund, or program” provides

retirement income or results in deferral income by employees. Id. § 1002(2)(A) (emphasis added).

HJTA contends that CalSavers is an ERISA plan

because it satisfies the four-factor test in Donovan v.

Dillingham, 688 F.2d 1367 (11th Cir. 1982). Under the

Donovan test, an ERISA plan is established “if from

the surrounding circumstances a reasonable person

can ascertain [1] the intended benefits, [2] a class of

beneficiaries, [3] the source of financing, and [4] procedures for receiving benefits.” Id. at 1373.

We have used the Donovan factors as a benchmark

for assessing whether a de facto plan is an ERISA plan.

See, e.g., Winterrowd v. Am. Gen. Annuity Ins. Co., 321

F.3d 933, 939 (9th Cir. 2003); Modzelewski v. Resolution

Tr. Corp., 14 F.3d 1374, 1376 (9th Cir. 1994); but see

Golden Gate, 546 F.3d at 652 (questioning whether the

Donovan factors are compatible with later Supreme

Court precedent on whether an informal policy is an

ERISA plan). But we have never suggested that the

Donovan factors are the “be all and end all” for whether

an arrangement is an ERISA plan. That is because the

Donovan factors presume the existence of a threshold

requirement for ERISA plans: that they be “established or maintained by an employer.”

App. 20

As we explained in Golden Gate, “satisfying the

Donovan criteria was a necessary but not sufficient

condition for the creation of an ERISA plan.” 546 F.3d

at 652. Donovan is concerned with ascertaining

whether a de facto plan is an ERISA plan, once an

employer decides to provide ERISA-type benefits to its

employees. See id. (noting that Donovan and its progeny “all involve some type of unwritten or informal

promise made by an employer to its employees”). But

Donovan itself made clear that its criteria only come

into play when “an employer or employee organization

is the person that establishes or maintains the plan,

fund, or program.” 688 F.2d at 1371 (emphasis added).

The issue here is thus not whether, had an employer set up an IRA program on its own, that program

would be subject to ERISA. That assumes away the

central question in this appeal, which is whether a

state-run IRA program like CalSavers is “established

or maintained by an employer.” The answer to that

question is “no.”

2

The ERISA-required “employer” that supposedly

“established or maintained” CalSavers could only be

one of two entities. The first, of course, is the State. But

it seems quite clear that although California “established or maintained” CalSavers, it did not do so in

the capacity of an “employer.” The “established or

maintained” requirement, we have explained, “appears

designed to ensure that the plan is part of an

App. 21

employment relationship.” Charles Schwab & Co. v.

Debickero, 593 F.3d 916, 921 (9th Cir. 2010) (quoting

Peckham v. Gem State Mut. of Utah, 964 F.2d 1043,

1049 (10th Cir. 1992)). And ERISA defines “employer”

as “any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an

employee benefit plan.” 29 U.S.C. § 1002(5). California

does not employ CalSavers participants, who are by

definition not governmental employees. Cal. Gov’t

Code § 100000(c)(1), (d). California is thus not “acting

directly as an employer” through CalSavers or the

CalSavers Trust.

Nor is California acting “indirectly in the interest

of an employer” through CalSavers. 29 U.S.C.

§ 1002(5). CalSavers does not purport to provide ready

access to IRAs on behalf of California employers. See

Bleiler v. Cristwood Constr., Inc., 72 F.3d 13, 15 (2d Cir.

1995) (explaining that “indirectly” requires “some type

of agency or ownership relationship or an assumption

of the employer’s functions with regard to the administration of an ERISA plan”); Greenblatt v. Delta

Plumbing & Heating Corp., 68 F.3d 561, 575 (2d Cir.

1995) (“It is clear that the ‘in the interest of ’ language

encompasses those who act for an employer or directly

assume the employer’s duty to make plan contributions.”). Nor, by its design, does CalSavers represent

employers in any relevant sense. CalSavers instead

steps in where the State regards eligible California

employers as having failed to provide their workers

with desirable retirement savings options.

App. 22

We have previously held that “a trust was not an

ERISA plan because it recruited ‘heterogeneous, unrelated employers.’ ” Moideen v. Gillespie, 55 F.3d 1478,

1481 (9th Cir. 1995) (quoting Credit Managers Ass’n of

S. Cal. v. Kennesaw Life & Acc. Ins. Co., 809 F.2d 617,

625 (9th Cir. 1987)). The employers who are subject to

CalSavers are heterogeneous and unrelated, and California has not “recruited” them at all. Indeed, employers have no say over how CalSavers is operated; they

did not create it, nor do they control it.3

If California is not the ERISA “employer,” the only

other entities who could fit that bill are those eligible

employers who are subject to CalSavers. These entities

are, of course, “employers.” HJTA argues that CalSavers effectively requires these employers to “establish or

maintain” ERISA plans by conscripting them into participating in CalSavers and imposing certain obligations on them. But this argument is faithful neither to

CalSavers’ operation nor ERISA.

There is scant case law on when an employer’s required participation in a government-mandated, government-run benefits program nonetheless leads to

the employer “establishing or maintaining” an ERISA

3

HJTA’s reliance on Kanne v. Connecticut Gen. Life Ins. Co.,

867 F.2d 489 (9th Cir. 1988) (per curiam), is therefore unavailing.

In Kanne, construction employers created an association to administer a health plan for their employees. Id. at 491. We held

that the association qualified as an ERISA “employer,” which “includes a group or association of employers acting for an employer

in such capacity.” Id. at 493 (quoting 29 U.S.C. § 1002(5)) (emphasis removed). CalSavers is not “acting for” eligible employers, nor

is it a “group or association of employers.”

App. 23

plan. But the “establishment” of an ERISA plan requires both a “decision to extend benefits” and some

“[a]cts or events that record, exemplify or implement

the decision,” such as “financing or arranging to finance or fund the intended benefits” or “establishing a

procedure for disbursing benefits.” Donovan, 688 F.2d

at 1373; see also, e.g., Cinelli v. Sec. Pac. Corp., 61 F.3d

1437, 1442 (9th Cir. 1995). Addressing another provision of ERISA that involves “maintain[ing]” a plan,

courts have relied on dictionary definitions to explain

that “maintain” means to “care[ ] for the plan for purposes of operational productivity.” Medina v. Catholic

Health Initiatives, 877 F.3d 1213, 1226 (10th Cir.

2017); see also Sanzone v. Mercy Health, 954 F.3d 1031,

1041–42 (8th Cir. 2020) (similar).

The closest precedent we have to the present case

is Golden Gate Restaurant Association v. City & County

of San Francisco, 546 F.3d 639 (9th Cir. 2008). Golden

Gate involved a city ordinance that created a city-run

“Health Access Plan” (HAP) for low-income residents

to obtain health coverage. Id. at 642–43. Under the

HAP, employers were required to spend a certain

amount on healthcare each quarter, either by making

payments into their own employee health plans or

by making a payment directly to the city (the “Citypayment option”). Id. at 643–46. Eligible employees

could then enroll in the HAP and would be eligible for

city-managed medical reimbursement accounts. Id. at

645.

We held that the City-payment option did not create an ERISA plan. Id. at 648–52. While employers

App. 24

were required to comply with certain “administrative

obligations” under the HAP—such as tracking employee hours, maintaining certain records, and the

like—“[t]his burden [wa]s not enough, in itself, to make

the payment obligation an ERISA plan.” Id. at 650. We

explained that in the context of a government-sponsored benefit in which an employer has mandatory

back-end responsibilities, “an employer’s administrative duties must involve the application of more than a

modicum of discretion in order for those administrative duties to amount to an ERISA plan.” Id.

Because the employer could “make no promises to

its employees with regard to the HAP or its coverage”

and the city was not “act[ing] as the employer’s agent

entrusted to fulfill the benefits promises the employer

made to its employees,” we concluded in Golden Gate

that the “the City, rather than the employer, establishes and maintains the HAP.” Id. at 654. Consistent

with case law interpreting “establish” and “maintain,”

Golden Gate stands for the proposition that an employer’s non-discretionary administrative obligations

under a government-mandated benefit program do not,

without more, “run the risk of mismanagement of

funds or other abuse” by employers, which is ERISA’s

focus. Id. at 651.

Golden Gate’s holding was informed by ERISA’s

basic objectives, which serve as a “guide to the scope of

the state law that Congress understood would survive”

ERISA’s preemption provision. Gobeille, 577 U.S. at

320 (quoting Cal. Div. of Lab. Standards Enf ’t v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 325 (1997)).

App. 25

ERISA “seeks to make the benefits promised by an

employer more secure by mandating certain oversight

systems and other standard procedures.” Id. at 320–21;

see also Fort Halifax, 482 U.S. at 16 (“Only ‘plans’ involve administrative activity potentially subject to employer abuse.”). When employers merely perform

mandatory administrative functions in a government

benefits scheme that do not require the employer to exercise “more than a modicum of discretion,” Golden

Gate, 546 F.3d at 650, the employer does not “establish

or maintain” an ERISA “plan” because the employer is

not engaging in the type of conduct that ERISA seeks

to regulate.

Applying these principles, we conclude that in

every relevant sense, it is the State that has established CalSavers and the State that maintains it—and

not eligible employers. California created CalSavers.

California determines the eligibility for both employers and employees. Cal. Code Regs. tit. 10, § 10000(l)–

(n). California enrolls eligible employees. Id. § 10004.

Individuals can elect to participate in CalSavers outside of the employment relationship by enrolling and

making contributions via electronic funds transfer or

personal check. See Cal. Code Regs. tit. 10, § 10006.

California acts as the sole fiduciary over the trust and

program, with the Board making all investment decisions (or delegating investment strategy to private

managers). Cal. Gov’t Code §§ 100002(d)–(e), 100004,

100034. And California is “free to change the kind and

level of benefits as it sees fit.” Golden Gate, 546 F.3d at

654. All of this confirms that “the [State], rather than

App. 26

the employer, establishes and maintains” CalSavers.

Id.

That CalSavers imposes certain administrative duties on eligible employers does not mean that eligible

employers complying with those obligations “establish

or maintain” ERISA plans. The role for eligible employers is limited to registering for the program; evaluating

employee eligibility according to non-discretionary criteria; providing the State with employee identification

and contact information; and processing specified payroll deductions according to set formulae. Cal. Code

Regs. tit. 10, §§ 10002, 10003(a)–(c). The types of determinations employers must make under CalSavers are

essentially mechanical, such as which of their employees are eighteen or older, how many people they employ, and so on. See id. §§ 10000(l)–(m), 10001, 10002.

It is of course true that if the State mandated that

private employers provide certain retirement benefits

to their employees, this would violate ERISA. See Fort

Halifax, 482 U.S. at 16 (agreeing that requiring employers to create benefit plans “would permit States to

circumvent ERISA’s pre-emption provision, by allowing them to require directly what they are forbidden to

regulate”). The considerations would also likely be different if employers were making discretionary judgments within a state-mandated benefits scheme.

But California has not done anything like this in

CalSavers. HJTA cites no authority suggesting that

the non-discretionary administrative involvement that

CalSavers requires of employers is enough to mean the

App. 27

employers have thereby “established or maintained”

ERISA plans. As we explained in Golden Gate, “[m]any

federal, state and local laws, such as income tax withholding, social security, and minimum wage laws, impose similar administrative obligations on employers;

yet none of these obligations constitutes an ERISA

plan.” 546 F.3d at 650.

In suggesting that employers have a more substantive role in CalSavers, HJTA misstates the statutory scheme. HJTA claims, for example, that under

CalSavers “the employer is managing the employee’s

money.” But it is the CalSavers Board that does this.

Cal. Gov’t Code §§ 100002(d)–(f ), 100010. And employers are prohibited from “[e]xercis[ing] any authority,

control, or responsibility regarding the Program,” except for specifically identified administrative duties.

Cal. Code Regs. tit. 10, § 10003(d)(4).

HJTA also asserts that under CalSavers, employers are “obligated” to provide their employees with

“guidance and opinions” and are “mandated to endorse

CalSavers.” But again, CalSavers in fact disallows

this. Under CalSavers, eligible employers “shall not”

“[r]equire, endorse, encourage, prohibit, restrict, or discourage employee participation in the Program.” Id.

§ 10003(d)(1). Nor may they “[p]rovide Participating

Employees . . . advice or direction regarding investment choices, Contribution Rates, participation in

Automatic Escalation, or any other decision about the

Program.” Id. § 10003(d)(2). The CalSavers scheme

does not give employers the expansive, discretionary

role that HJTA suggests. Cf. Simas v. Quaker Fabric

App. 28

Corp. of Fall River, 6 F.3d 849, 853 (1st Cir. 1993) (holding that ERISA preempted state law that required employers to make eligibility determinations “likely to

provoke controversy and call for judgments based on

information well beyond the employee’s date of hiring

and termination”). While some employers may find

CalSavers irritating or even burdensome, that does

not make their involvement in CalSavers tantamount

to establishing or maintaining an ERISA plan. See

Golden Gate, 546 F.3d at 650.4

Finally, HJTA errs in claiming that CalSavers forces

employers to create ERISA plans because it is the

employer’s initial decision not to offer a tax-qualified

retirement savings program that then requires it to

comply with CalSavers. While HJTA’s lack of a retirement plan made it subject to CalSavers, it does not follow that HJTA thereby “established or maintained” an

ERISA plan. That a regulated entity is complying with

a mandatory state scheme does not mean the entity

“establishes or maintains” the program established by

that scheme. In no sense does an eligible employer

“establish or maintain” an ERISA plan through its

4

HJTA argues that small employers subject to CalSavers

may inadvertently establish ERISA plans if they drop below five

employees. This argument is not persuasive. There is no basis for

HJTA’s claim that it will be “tricky” for employers to know

whether they have fewer than five employees. See Cal. Code Regs.

tit. 10, § 10001(a) (method of calculating number of employees).

And if an employer’s average number of employees falls below five

for a calendar year, that does not mean its compliance with

CalSavers then produces an ERISA plan; it merely means the

employer is no longer subject to CalSavers. See id. § 10001(b).

App. 29

decision not to establish such a plan, which is what

triggers CalSavers’ application.

3

Having concluded CalSavers is not an ERISA plan

and does not require employers to establish or maintain one, we now turn to whether CalSavers otherwise

“relates to” ERISA benefit plans because it has a forbidden “reference to” or “connection with” such plans.

Rutledge v. Pharm. Care Mgmt. Ass’n, 141 S. Ct. 474,

479 (2020). We hold that HJTA’s preemption challenge

fails under these tests.

A state law impermissibly “refers to” ERISA “if it

‘acts immediately and exclusively upon ERISA plans

or where the existence of ERISA plans is essential to

the law’s operation.’ ” Id. at 481 (quoting Gobeille, 577

U.S. at 319–20). A state law has an impermissible

“connection with” ERISA if it “governs a central matter of plan administration or interferes with nationally

uniform plan administration,” such as “by requiring

payment of specific benefits or by binding plan administrators to specific rules for determining beneficiary

status.” Id. at 480 (quoting Gobeille, 577 U.S. at 320)

(citations omitted).

HJTA has not shown that CalSavers runs afoul of

ERISA in these ways. CalSavers specifically exempts

those employers that “provide[ ] an employer-sponsored

retirement plan” or “an automatic enrollment payroll

deduction IRA” if “the plan or IRA qualifies for favorable federal income tax treatment under the federal

App. 30

Internal Revenue Code.” Cal. Gov’t Code § 100032(g)(1);

see also Cal. Code Regs. tit. 10, § 10000(q) (including in

the definition of “Exempt Employer” any employer that

“maintains or contributes to a Tax-Qualified Retirement Plan”); id. § 10000(z) (defining “Tax-Qualified

Retirement Plan”). HJTA thus forthrightly acknowledges that employers who provide their employees

with ERISA-governed retirement plans are not subject

to CalSavers.

What this means is that CalSavers does not “act

on ERISA plans at all, let alone immediately and exclusively.” Golden Gate, 546 F.3d at 657. CalSavers

does not regulate ERISA plans or the benefits provided

under them. Employers that offer such plans are not

“force[d] . . . to provide any particular employee benefits or plans, to alter their existing plans, or to even

provide ERISA plans or employee benefits at all.” WSB

Elec., Inc. v. Curry, 88 F.3d 788, 793 (9th Cir. 1996); see

also Golden Gate, 546 F.3d at 655 (holding that the

HAP was not “in connection with” ERISA because it

did not “require any employer to provide specific benefits through an existing ERISA plan or other health

plan”). If an employer has an existing ERISA plan or

later chooses to adopt one, CalSavers has nothing to

say about those plans or their administration. Nothing

in law supports HJTA’s effort to recast ERISA’s

preemption provision as a sword that would allow employers who do not offer their own retirement plans to

App. 31

thereby deprive their employees of the ability to participate in a state-run IRA savings program.5

HJTA maintains that CalSavers nonetheless

“competes with” ERISA plans and will “frustrate, not

encourage the formation of ” ERISA plans. Even if this

were true, it does not matter. The Supreme Court has

been clear that “ERISA does not pre-empt” state laws

that “merely increase costs or alter incentives for

ERISA plans without forcing plans to adopt any particular scheme of substantive coverage.” Rutledge, 141

S. Ct. at 480 (citing Travelers, 514 U.S. at 668). It may

be that CalSavers will incentivize employers to cancel

their existing ERISA plans, lead them to create ERISA

plans to compete with CalSavers, or otherwise influence the benefits employers offer. But these forms of

5

In its since-withdrawn amicus brief, the DOL agreed that

employers with “ERISA-covered retirement plans are exempt

from CalSavers.” But it asserted in a footnote that employers that

offer a non-automatic IRA retirement program may be covered by

ERISA but “may also” be subject to CalSavers, because CalSavers

provides that “[a]n employer-provided payroll deduction IRA program that does not provide for automatic enrollment” is not exempt from CalSavers. We have no occasion to consider this issue

because HJTA does not offer its employees any ERISA-governed

plan at all. We express no opinion on whether ERISA would

preempt CalSavers insofar as it applies to employers with existing ERISA plans, assuming such a circumstance exists. We also

reject as speculative HJTA’s claim that California has set itself

up as an “alternative adjudicator of ERISA compliance” in assessing employer exemption from CalSavers. We do not have before us a dispute between an employer and the State over whether

an employer is exempt from CalSavers. We therefore do not opine

on the preemption implications, if any, that such a situation could

present.

App. 32

“ ‘indirect economic influence’ d[o] not create an impermissible connection between” CalSavers and ERISA

because CalSavers “d[oes] not ‘bind plan administrators to any particular choice.’ ” Id. (quoting Travelers,

514 U.S. at 659).

This leaves HJTA arguing that ERISA preempts

CalSavers because it is “ERISA-regarding,” in that

California law keys eligibility for CalSavers on

whether an employer offers an ERISA plan. But that

argument relies on the very “uncritical literalism” that

the Supreme Court has rejected in interpreting

ERISA’s preemption provision. Gobeille, 577 U.S. at

319.

As we have previously explained, and as remains

true today, “[t]he Supreme Court . . . has never found a

statute to be preempted simply because its text included the word ERISA or explicitly mentioned”

ERISA plans. WSB Elec., Inc., 88 F.3d at 793; see also

Hattem v. Schwarzenegger, 449 F.3d 423, 432 (2d Cir.

2006); NYS Health Maint. Org. Conf. v. Curiale, 64 F.3d

794, 800 (2d Cir. 1995). Although the Supreme Court

has held that ERISA preempted state statutes when

they “expressly refer[red] to ERISA plans,” these state

laws “also had some effect on those plans.” WSB Elec.,

Inc., 88 F.3d at 793. Because CalSavers does not act on

ERISA plans or ERISA benefits, we do not see how

CalSavers’ explicit effort to wall off ERISA plans from

its ambit could somehow turn out to be the very feature

that leads to preemption. Nothing in principle or precedent supports such a strange result.

App. 33

Mackey v. Lanier Collection Agency & Service, Inc.,

486 U.S. 825 (1988), on which HJTA relies, is not to the

contrary. In Mackey, the Supreme Court held that

ERISA preempted a Georgia law that specifically exempted ERISA benefits from state garnishment procedures. Id. at 828–29. But the law in Mackey did more

than just expressly refer to ERISA plans: it “solely

applie[d]” to ERISA plans and “single[d] out ERISA

employee welfare benefit plans for different treatment.” Id. at 829–30. That is, by exempting ERISA

benefits from what was a generally applicable garnishment scheme that could otherwise apply to ERISA

benefits, see id. at 830, the Georgia exception “act[ed]

immediately and exclusively upon ERISA plans,” Dillingham, 519 U.S. at 325 (describing the state law in

Mackey in these terms).

The effective ERISA reference in the CalSavers

exemption, by contrast, confers no such “special treatment” on ERISA benefits because it does not operate

on those benefits at all. Mackey, 486 U.S. at 838 n.12.

Unlike the Georgia garnishment exception in Mackey,

CalSavers was not “specifically designed to affect employee benefit plans.” Id. at 829 (quoting Pilot Life Ins.

Co. v. Dedeaux, 481 U.S. 41, 47–48 (1987)).

CalSavers is instead more akin to the exemption

at issue in Washington Physicians Service Ass’n v.

Gregoire, 147 F.3d 1039 (9th Cir. 1998), as amended on

denial of reh’g and reh’g en banc (Aug. 24, 1998). In

Gregoire, a statute that regulated “health plan[s]” excluded employer-sponsored plans from its ambit. Id. at

1043. We rejected a preemption challenge similar to

App. 34

the one HJTA raises here because the law did not “operate directly” on ERISA plans. Id. at 1044. “In plain

English,” we explained, if the employer were to operate

its own ERISA health benefit plan, “the Act would not

apply at all, and [the employer] could structure its

benefits in any way it chose.” Id. at 1043. The same reasoning follows for CalSavers: if an employer offers its

own retirement plan, CalSavers does not apply. And

CalSavers does not otherwise address how the employer may structure its retirement benefits.

HJTA’s reliance on District of Columbia v. Greater

Washington Board of Trade, 506 U.S. 125 (1992), is also

misplaced. In Greater Washington, the Supreme Court

held that ERISA preempted a District of Columbia law

that required employers who provided health insurance to their employees under an ERISA welfare benefit plan to provide “equivalent” coverage for injured

employees eligible for workers’ compensation, who

were subject to plans exempted from ERISA. Id. at

126–28. In effect, the D.C. law required employers to

extend their ERISA-governed health plans to another

class of claimants. See Curiale, 64 F.3d at 800.

Because the D.C. law in Greater Washington applied only to employers with ERISA-governed plans,

506 U.S. at 130, “the existence of ERISA plans [wa]s

essential to the law’s operation,” Dillingham, 519 U.S.

at 325 (describing Greater Washington). That is not the

case here because CalSavers operates where employers do not offer ERISA retirement plans. Unlike the

D.C. law in Greater Washington, CalSavers “does not

tell employers how to write their ERISA plans.” WSB

App. 35

Elec., Inc., 88 F.3d at 793–94 (quoting Employee Staffing Servs., Inc. v. Aubry, 20 F.3d 1038, 1041 (9th Cir.

1994)). Moreover, while the D.C. law “impose[d] requirements by reference” to ERISA-covered plans,

Greater Washington, 506 U.S. at 130–31, CalSavers ensures that employers with ERISA plans are not subject

to additional requirements. In fact, employers who already offer qualifying plans do not even have to notify

California of their exemption from CalSavers. Cal.

Code Regs. tit. 10, § 10001(d).

Our decision in WSB Electric is instructive here.

In that case, California passed a prevailing wage law,

which required public works contractors to pay a minimum wage to their employees. Id. at 790. To comply,

the contractor had to either pay the entire prevailing

wage in cash or pay a base cash wage and receive credit

for certain benefit contributions. Id. The law expressly

referred to ERISA plans in determining how much

credit the employer could receive for the benefit contributions. Id. at 793. But we rejected the argument that

a reference to ERISA plans, standing alone, meant that

the California wage law was preempted, because “[t]he

references to ERISA plans in the California prevailing

wage law have no effect on any ERISA plans.” Id.

HJTA’s preemption challenge similarly identifies no effect on existing ERISA plans.

Finally, HJTA argues that multi-state employers

will be forced to comply with “differing pension plan

requirements in different states,” contrary to ERISA’s

purpose of ensuring uniform rules for plan administration. But HJTA once again misstates what CalSavers

App. 36

requires. Employers’ own retirement plans remain

subject to one uniform law: ERISA. The ministerial obligations CalSavers imposes on eligible employers do

not resemble the establishment or maintenance of an

ERISA plan. And while HJTA protests that every state

may now enact its own version of CalSavers, subjecting

multi-state employers to many sets of laws, that circumstance is merely a function of our federal system,

little different than the varying state laws in other

areas to which employers are already subject.

There is, to be sure, an important policy debate

here. California steadfastly maintains that CalSavers

is needed to address a serious shortfall in retirement

savings that, if not addressed, will impose significant

costs on the State years down the line. HJTA seemingly believes that state-run IRA programs reflect

too great a role for government in private decisionmaking, while imposing too many costs on employers.

But these are issues for California’s lawmakers and

those who elect them, or for Congress should it choose

to take up this issue. The question for us is whether

Congress has already outlawed CalSavers. For the reasons we have explained, HJTA’s ERISA preemption

challenge fails.

***

The judgment of the district court is therefore

AFFIRMED.

App. 37

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

HOWARD JARVIS

TAXPAYERS ASSOCIATION,

JONATHAN COUPAL, and

DEBRA DESROSIERS,

Plaintiffs,

No. 2:18-cv-01584MCE-KJN

MEMORANDUM

AND ORDER

(Filed Mar. 10, 2020)

v.

THE CALIFORNIA SECURE

CHOICE RETIREMENT SAVINGS PROGRAM and JOHN

CHIANG, in his official capacity

as Chair of the CALIFORNIA

SECURE CHOICES RETIREMENT SAVINGS INVESTMENT BOARD,

Defendants.

The Howard Jarvis Taxpayers Association (“HJTA”)

and individually named HJTA employees Jonathan

Coupal and Debra Desrosiers (“HJTA Employees”)

(collectively, “Plaintiffs”) filed this action against the

California Secure Choice Retirement Savings Program

(“CalSavers” or “the Program”) and California State

Treasurer John Chiang (collectively, “Defendants”) contending that the Employee Retirement Income Security

Act (“ERISA” or “the Act”) preempts the Program.

Plaintiffs’ Complaint was dismissed with leave to

amend. Mem. and Order, ECF No. 24 (“Prior Order”).

App. 38

They subsequently filed the First Amended Complaint

(“FAC”) requesting two forms of relief: first, a declaratory judgment that CalSavers is preempted by ERISA;

and second, an injunction pursuant to California Code

of Civil Procedure § 526a to permanently enjoin spending of taxpayer funds on the Program. Presently before

the Court is Defendants’ second Motion to Dismiss

(“Present Motion”) pursuant to Federal Rules of Civil

Procedure 12(b)(1) and 12(b)(6), contending, in part,

that CalSavers is not an ERISA plan and thus is not

preempted. ECF No. 30.

While Plaintiffs were given an opportunity to

amend their complaint, this matter again coalesces

around the single narrow question addressed in the

Prior Order: does CalSavers, a state-mandated autoenrollment retirement savings program, create an

“employee benefit plan,” such that it is preempted by

ERISA? For the reasons set forth below, this Court

again finds that it does not and therefore GRANTS Defendants’ Motion to Dismiss.1

BACKGROUND2

Congress enacted ERISA in 1974 “to promote the

interests of employees and their beneficiaries in

1

Because oral argument would not have been of material assistance, the Court ordered this matter submitted on the briefs.

E.D. Local Rule 230(g).

2

Except where noted otherwise, the following recitation of

facts is taken from this Court’s Prior Order (ECF No. 24) as well

as the parties’ pleadings on this Motion.

App. 39

employee benefit plans” and to “eliminate the threat of

conflicting or inconsistent State and local regulation of

employee benefit plans.” Operating Eng’rs Health &

Welfare Trust Fund v. JWJ Contracting Co., 135 F.3d

671, 676 (9th Cir. 1998) (quoting Shaw v. Delta Air

Lines, Inc., 463 U.S. 85, 90, 99 (1983)); see also ERISA,

88 Stat. 832, as amended, 29 U.S.C. §§ 1001–1461.

While ERISA does not require employers to provide

any minimum set of benefits to employees, if such

plans are “established or maintained . . . by any employer,” they must conform to various reporting and fiduciary requirements of the Act. N.Y. State Conference

of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,

514 U.S. 645, 651 (1995). Regarding ERISA’s effect on

State statutes, it “supersede[s] any and all State laws

insofar as they may now or hereafter relate to any employee benefit plan. . . .” 29 U.S.C. § 1144(a).

Defendants contend that in recent years a growing

number of citizens lack sufficient retirement income.

In response, several states began exploring state-run

retirement savings programs. In 2012, the California

Legislature passed the California Secure Choice Retirement Savings Trust Act, which created the CalSavers

program to address the lack of retirement savings for

many of the state’s citizens. Cal. Gov’t Code §§ 100000–

100050. CalSavers creates a State-sponsored retirement

savings plan for California employees who do not have

access to an employer-provided plan. Id. § 100000(b)–

(d). The Program is designed and implemented by the

California Secure Choice Retirement Savings Investment Board (the “Board”) and contributions are placed

App. 40

in the California Secure Choice Retirement Savings

Trust (the “Trust”), which is administered by the

Board. Id. §§ 100002(e), 100004.

The Program requires an “Eligible employer”3 to

“allow employee participation in the [CalSavers] program” via payroll deductions if that employer does

not offer a retirement savings program of its own. Id.

§ 100032(b)–(d). Eligible employers must automatically enroll their employees and remit payroll deductions to the Program “unless the employee elects not to

participate.” Id. § 100032(f )(1). That is, employees of

Eligible employers are automatically enrolled, but can

“opt out” of CalSavers if desired.

Plaintiffs filed their Complaint on May 31, 2018

(ECF No. 1), and Defendants moved to dismiss on July

25, 2018 (“Prior Motion”). ECF No. 9. Subsequently,

this Court granted the Prior Motion, finding that: (1)

the HJTA had standing as an “Eligible employer” but

the HJTA Employees lacked standing as California

taxpayers; (2) the case is ripe for adjudication; (3)

CalSavers is not entitled to the exemptions set forth in

a 1975 regulatory safe harbor (“1975 Safe Harbor”);

and (4) CalSavers is not preempted by ERISA because

3

“Eligible employer” is defined as “a person or entity engaged

in a business, industry, profession, trade, or other enterprise in

the state, whether for profit or not for profit, excluding the federal

government, the state, any county, any municipal corporation, or

any of the state’s units or instrumentalities, that has five or more

employees and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement.” Id.

§ 100000(d)(1).

App. 41

it does not govern a central matter of an ERISA plan’s

administration, nor does it interfere with nationally

uniform plan administration. See generally Prior Order, ECF No. 24.

While this Court granted the Prior Motion with

one final leave to amend, it noted that amendment

would inevitably be futile as CalSavers is not subject

to preemption under ERISA. Plaintiffs nonetheless

filed the FAC on April 11, 2019, alleging similar claims

to those in their original Complaint. ECF No. 25. Subsequently, Defendants moved to dismiss via the Present Motion on May 28, 2019, and this matter has been

fully briefed. ECF Nos. 30, 37, 38. On September 13,

2019, the United States filed a Statement of Interest

opposing Defendants’ Present Motion, and both Plaintiffs and Defendants filed responses. ECF Nos. 43, 47,

48.

STANDARD

A. Rule 12(b)(1)

Federal courts are courts of limited jurisdiction

and are presumptively without jurisdiction over civil

actions. Kokkonen v. Guardian Life Ins. Co. of Am., 511

U.S. 375, 377 (1994). The burden of establishing the

contrary rests upon the party asserting jurisdiction. Id.

Because subject matter jurisdiction involves a court’s

power to hear a case, it can never be forfeited or

waived. United States v. Cotton, 535 U.S. 625, 630

(2002). Accordingly, lack of subject matter jurisdiction

may be raised by either party at any point during the

App. 42

litigation, through a motion to dismiss pursuant to

Federal Rule of Civil Procedure 12(b)(1). Arbaugh v.

Y&H Corp., 546 U.S. 500, 506 (2006); see also Int’l Union of Operating Eng’rs v. Cty. of Plumas, 559 F.3d

1041, 1043–44 (9th Cir. 2009). Indeed, “courts have an

independent obligation to determine whether subject

matter jurisdiction exists, even in the absence of a

challenge from any party.” Id.; see Fed. R. Civ. P.

12(h)(3) (requiring the court to dismiss the action if

subject matter jurisdiction is lacking).

There are two types of motions to dismiss for lack

of subject matter jurisdiction: a facial attack, and a factual attack. Thornhill Publ’g Co. v. Gen. Tel. & Elec.

Corp., 594 F.2d 730, 733 (9th Cir. 1979). Thus, a party

may either make an attack on the allegations of jurisdiction contained in the nonmoving party’s complaint,

or may challenge the existence of subject matter jurisdiction in fact, despite the formal sufficiency of the

pleadings. Id.

When a party makes a facial attack on a complaint, the attack is unaccompanied by supporting evidence, and it challenges jurisdiction based solely on

the pleadings. Safe Air for Everyone v. Meyer, 373 F.3d

1035, 1039 (9th Cir. 2004). If the motion to dismiss constitutes a facial attack, the Court must consider the

factual allegations of the complaint to be true, and determine whether they establish subject matter jurisdiction. Savage v. Glendale High Union Sch. Dist. No.

205, 343 F.3d 1036, 1039 n.1 (9th Cir. 2003). In the case

of a facial attack, the motion to dismiss is granted only

if the nonmoving party fails to allege an element

App. 43

necessary for subject matter jurisdiction. Id. However,

in the case of a factual attack, district courts “may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary

judgment.” Safe Air for Everyone, 373 F.3d at 1039.

In the case of a factual attack, “no presumptive

truthfulness attaches to plaintiff ’s allegations.” Thornhill, 594 F.2d at 733 (internal citation omitted). The

party opposing the motion has the burden of proving

that subject matter jurisdiction does exist, and must

present any necessary evidence to satisfy this burden.

St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir.

1989). If the plaintiff ’s allegations of jurisdictional

facts are challenged by the adversary in the appropriate manner, the plaintiff cannot rest on the mere assertion that factual issues may exist. Trentacosta v.

Frontier Pac. Aircraft Ind., Inc., 813 F.2d 1553, 1558

(9th Cir. 1987) (quoting Exch. Nat’l Bank of Chi. v.

Touche Ross & Co., 544 F.2d 1126, 1131 (2d Cir. 1976)).

Furthermore, the district court may review any evidence necessary, including affidavits and testimony,

in order to determine whether subject matter jurisdiction exists. McCarthy v. United States, 850 F.2d 558,

560 (9th Cir. 1988); Thornhill, 594 F.2d at 733. If the

nonmoving party fails to meet its burden and the court

determines that it lacks subject matter jurisdiction,

the court must dismiss the action. Fed. R. Civ. P.

12(h)(3).

App. 44

B. Rule 12(b)(6)

On a motion to dismiss for failure to state a claim

under Rule 12(b)(6), all allegations of material fact

must be accepted as true and construed in the light

most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996).

Rule 8(a)(2) “requires only ‘a short and plain statement of the claim showing that the pleader is entitled

to relief ’ in order to `give the defendant fair notice of

what the . . . claim is and the grounds upon which it

rests.’ ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007) (quoting Conley v. Gibson, 355 U.S. 41, 47

(1957)). A complaint attacked by a Rule 12(b)(6) motion

to dismiss does not require detailed factual allegations.

However, “a plaintiff ’s obligation to provide the

grounds of his entitlement to relief requires more than

labels and conclusions, and a formulaic recitation of

the elements of a cause of action will not do.” Id. (internal citations and quotations omitted). A court is not required to accept as true a “legal conclusion couched as

a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (quoting Twombly, 550 U.S. at 555. “Factual

allegations must be enough to raise a right to relief

above the speculative level.” Twombly, 550 U.S. at 555

(citing 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004) (stating that the pleading must contain something more

than “a statement of facts that merely creates a suspicion [of ] a legally cognizable right of action”)).

Furthermore, “Rule 8(a)(2) . . . requires a showing,

rather than a blanket assertion, of entitlement to

App. 45

relief.” Twombly, 550 U.S. at 555 n.3 (internal citations

and quotations omitted). Thus, “[w]ithout some factual

allegation in the complaint, it is hard to see how a

claimant could satisfy the requirements of providing

not only ‘fair notice’ of the nature of the claim, but also

‘grounds’ on which the claim rests.” Id. (citing Wright

& Miller, supra, at 94, 95). A pleading must contain

“only enough facts to state a claim to relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . have

not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.” Id.

However, “[a] well-pleaded complaint may proceed

even if it strikes a savvy judge that actual proof of

those facts is improbable, and ‘that a recovery is very

remote and unlikely.’ ” Id. at 556 (quoting Scheuer v.

Rhodes, 416 U.S. 232, 236 (1974)).

C. Leave to Amend

A court granting a motion to dismiss a complaint

must then decide whether to grant leave to amend.

Leave to amend should be “freely given” where there is

no “undue delay, bad faith or dilatory motive on the

part of the movant, . . . undue prejudice to the opposing

party by virtue of allowance of the amendment, [or] futility of the amendment. . . .” Foman v. Davis, 371 U.S.

178, 182 (1962); Eminence Capital, LLC v. Aspeon, Inc.,

316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman

factors as those to be considered when deciding

whether to grant leave to amend). Not all of these factors merit equal weight. Rather, “the consideration of

prejudice to the opposing party . . . carries the greatest

App. 46

weight.” Id. (citing DCD Programs, Ltd. v. Leighton,

833 F.2d 183, 185 (9th Cir. 1987)). Dismissal without

leave to amend is proper only if it is clear that “the

complaint could not be saved by any amendment.”

Intri-Plex Techs. v. Crest Group, Inc., 499 F.3d 1048,

1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411

F.3d 1006, 1013 (9th Cir. 2005); Ascon Props., Inc. v.

Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989)

(“Leave need not be granted where the amendment

of the complaint . . . constitutes an exercise in futility. . . .”)).

ANALYSIS4

As stated in this Court’s previous Order, “the heart

of the parties’ dispute lies in [the] preemption arguments.” Prior Order, ECF No. 24, at 12:14. Generally,

ERISA shall “supersede any and all State laws insofar

as they may now or hereafter relate to any employee

benefit plan. . . .” 29 U.S.C. § 1144(a) (emphasis added).

In the FAC, Plaintiffs reallege that CalSavers creates

an employee benefit plan preempted by ERISA. The

Court first addresses whether CalSavers is an

4

As a preliminary matter, Plaintiffs ask the Court to reconsider whether the HJTA Employees have individual taxpayer

standing. FAC ¶ 29. As this Court previously discussed, individuals

cannot assert taxpayer standing to gain access to Federal Court.

See Valley Forge Christian Coll. v. Ams. United for Separation of

Church and State, Inc., 454 U.S. 464, 477 (1982); DaimlerChrysler

Corp. v. Cuno, 547 U.S. 332, 346 (2006).

App. 47

employee benefit plan, then turns to an analysis of

whether CalSavers relates to an ERISA plan.5

A. CalSavers is Not an Employee Benefit

Plan Under ERISA.

The term “employee benefit plan” is defined as “an

employee welfare benefit plan or an employee pension

benefit plan or a plan which is both an employee welfare benefit plan and an employee pension benefit

plan.” 29 U.S.C. § 1002(3). An “employee pension plan”

is “any plan, fund, or program . . . established or maintained by an employer” that provides retirement income to employees. 29 U.S.C. § 1002(2)(A)(i). The Court

5

The Court is cognizant that Defendants assert two additional arguments. First, they contend that CalSavers establishes

an individual retirement account (“IRA”) exempt from ERISA.

Defs.’ Mot. Dismiss, ECF No. 30, at 6:6–7; see Cal. Gov’t Code

§ 100008. “[F]ederal regulations clarify that so long as the involvement of an employer or employee organization is strictly limited, the term[ ] ‘employee pension benefit plan’ . . . shall not

include an [IRA] described in section 408(a) of the [Internal Revenue] Code. . . .” Charles Schwab & Co., Inc. v. Debickero, 593

F.3d 916, 919 (9th Cir. 2010) (citing 29 C.F.R. § 2510.3–2(d)(1))

(internal quotation marks omitted). Second, they again contend

that CalSavers is subject to the exemptions afforded by the 1975

Safe Harbor, which exempts certain IRA plans. Defs.’ Mot. Dismiss, ECF No. 30, at 11–12. However, the parties again dispute

whether an employee’s participation is “completely voluntary,” a

question considered by the Court in its Prior Order. Prior Order,

ECF No. 24, at 12–13. For the reasons outlined in that order, the

Court again declines to hold that CalSavers is entitled to the exemptions set forth in the 1975 Safe Harbor. No further analysis

is warranted on either question, however, because ERISA coverage depends upon the level of employer involvement in employee

benefit plans, which means neither of these issues is dispositive.

App. 48

will first discuss whether the Board and Trust are employers under ERISA, then turn to whether CalSavers

is established or maintained by an employer.

1. The Board and Trust Are Not Employers Under ERISA Because They

Do Not Act Directly or Indirectly in

the Interest of an Employer.

As defined in ERISA, an “employer” means “any

person acting directly as an employer, or indirectly in

the interest of an employer, in relation to an employee

benefit plan; and includes a group or association of employers acting for an employer in such capacity.” 29

U.S.C. § 1002(5). The parties concede that actual employers are “employers” under ERISA, but Plaintiffs

further assert that the Board and Trust are employers

“because a ‘trust’ is a ‘person’ who is ‘acting . . . indirectly in the interest of an employer.’ ”6 FAC ¶ 20.

Plaintiffs primarily rely on Kanne v. Conn. Gen.

Life Ins. Co., where construction industry employers

established a trust pursuant to ERISA requirements

and offered group health insurance benefits to employees that were administered by an employer association. 867 F.2d 489, 491 (9th Cir. 1988). The court held

that the association administering the trust could “be

6

The Court notes that Plaintiffs broadly refer to both the

Board and Trust as ERISA employers, but their analysis is limited to the Trust only. Compare FAC ¶ 20, with Pls.’ Opp., ECF

No. 37, at 12–13.

App. 49

an ERISA employer” under the definition laid out in

29 U.S.C. § 1002(5). Id. at 493.

Plaintiffs’ use of Kanne, however, is unpersuasive.

As Plaintiffs point out, the Ninth Circuit did not analyze whether the trust was an ERISA employer and as

such, Kanne does not provide any insight as to whether

the Trust here is an “employer.” Pls.’ Opp., ECF No. 37,

at 13:22–24. Furthermore, unlike the trust in Kanne,

which was administered by an association of employers, the Trust in this case is administered by the statecreated Board, not a group of employers. As such, the

Court declines to find that the Board and Trust are

“employers” under ERISA. The analysis does not end

here, as the Court must still determine whether

CalSavers is “established or maintained” by actual employers.

2. Actual Employers Neither Establish

nor Maintain CalSavers.

A plan, fund, or program under ERISA must be

established or maintained by an employer.7 29 U.S.C.

§ 1002(2)(A). The Ninth Circuit has held that “an

7

Plaintiffs and the United States ask the Court to find that

CalSavers constitutes an ERISA plan under the test set forth in

Donovan v. Dillingham, 688 F.2d 1367 (11th Cir. 1982). See FAC

¶ 20; U.S. Statement of Interest, ECF No. 43, at 10 n.2. However,

as the Court previously discussed, the Ninth Circuit has declined

to apply Donovan to government mandates on employers and has

expressed hesitation in applying the test where “employers made

no promises whatsoever to its employees. . . .” Prior Order, ECF

No. 24, at 15; see also Golden Gate Rest. Ass’n v. City & Cty. of

S.F., 546 F.3d 639, 652 (9th Cir. 2008).

App. 50

employer’s administrative duties must involve the application of more than a modicum of discretion in order

for those duties to amount to an ERISA plan.” Golden

Gate, 546 F.3d at 652. An employer’s decision in exercising ministerial duties does not rise to the level of

discretion required to be an ERISA fiduciary. Az. State

Carpenters Pension Tr. Fund v. Citibank, 125 F.3d 715,

722 (9th Cir. 1997). Additionally, an employer who

makes no promises to its employees regarding an employee benefit plan or its coverage is not considered to

have established or maintained such plans. See Golden

Gate, 546 F.3d at 654.

Plaintiffs argue that even if the Board and Trust

are not “employers” under ERISA, CalSavers requires

thousands of actual employers to create their own separate ERISA plans. Pls.’ Opp., ECF No. 37, at 19:3–10.

The Court disagrees. See Cal. Gov’t Code § 100034(b)

(“The [P]rogram is a state-administered program, not

an employer-sponsored program.”). Actual employers

have no discretion in the administration of CalSavers

and do not make any promises to employees: employers simply remit payroll deducted payments to the Program and otherwise have no discretion regarding the

funds. Cal. Gov’t Code § 100000(h); see Golden Gate,

546 F.3d at 650 (“It is within the exercise of [ ] discretion that an employer has the opportunity to engage

in the mismanagement of funds and other abuses

with which Congress was concerned when it enacted

ERISA.”).

Plaintiffs also refer to the phrase “maintenance

mode” on the CalSavers website as an admission that

App. 51

each actual employer will be maintaining its own

ERISA plan. Pls.’ Opp., ECF No. 37, at 18:28. However,

the term “maintenance mode” is limited to “submitting

contributions and adding new employees.” Ex. E, FAC.

The role of actual employers in CalSavers is limited to

providing a roster of eligible employees, providing contact information of eligible employees, making payroll

deductions, and remitting such deductions. See Golden

Gate, 546 F.3d at 651 (finding ERISA did not preempt

city ordinance requiring employers to track employees’

hours, calculate payment amounts, and remit payments to healthcare programs). Such ministerial duties do not rise to the level of an employee benefit plan

established or maintained by actual employers.

Based on the foregoing, CalSavers is not an ERISA

plan as defined in 29 U.S.C. § 1002(2)(A) because it is

not a plan which is established or maintained by an

employer. The only question that remains is whether

CalSavers is preempted by ERISA because it “relates

to” an ERISA plan.

B. CalSavers Does Not Relate to an ERISA

Plan.

A state law is preempted by ERISA if it “relates

to” an employee benefit plan. 29 U.S.C. § 1144(a). A law

“relates to” an ERISA plan if it has a connection with

or reference to such a plan.8 Cal. Div. of Labor Stds.

8

Plaintiffs assert that CalSavers’ express reference to

ERISA, even in an attempt to avoid ERISA preemption, is “no less

of a preempting reference.” Pls.’ Opp., ECF No. 37, at 21:8–9; see

App. 52

Enf ’t v. Dillingham Constr. N.A., 519 U.S. 316, 324

(1997). The Court first examines whether CalSavers

has a reference to an ERISA plan, then turns to

whether CalSavers has a connection with such a

plan.

1. CalSavers Does Not Have an Impermissible “Reference To” ERISA Plans.

A state law has an impermissible “reference to” an

ERISA plan if “(1) the law ‘acts immediately and exclusively upon ERISA plans,’ or (2) ‘the existence of

ERISA plans is essential to the law’s operation.’ ”

Golden Gate, 546 F.3d at 657 (citing Dillingham, 519

U.S. at 325). Plaintiffs argue that the Program’s reliance on the existence or non-existence of ERISA plans

constitutes an impermissible reference. Pls.’ Opp., ECF

No. 37, at 21:18–25. While CalSavers applies only

when actual employers do not have an existing ERISA

or employer-sponsored retirement plan, the Program

does not interfere with existing ERISA or retirement

plans provided by actual employers. Cal. Gov’t Code

§ 100032(g)(1) (“An employer that provides an employer-sponsored retirement plan . . . shall be exempt

from the requirements of [CalSavers].”); see Golden

Gate, 546 F.3d at 659 (“Where a law is fully functional

even in the absence of a single ERISA plan, . . . it does

also D.C. v. Greater Wash. Bd. of Trade, 506 U.S. 125, 129 (1992).

However, recent Supreme Court cases have rejected such a broad

and literal application of ERISA preemption. See Travelers, 514

U.S. at 655; Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936, 943

(2016).

App. 53

not make an impermissible reference to ERISA

plans.”). Therefore, CalSavers does not have an impermissible “reference to” ERISA plans.

2. CalSavers Does Not Have an Impermissible “Connection With” ERISA

Plans.

A state law has an impermissible “connection

with” ERISA if that law “ ‘governs . . . a central matter

of plan administration’ or ‘interferes with nationally

uniform plan administration.’ ” Gobeille, 136 S. Ct. at

943 (quoting Egelhoff v. Egelhoff, 532 U.S. 141, 148

(2001)). This Court previously found that “because the

Program only applies to employers without existing

retirement plans, no ERISA plans are ‘governed’ or ‘interfered’ with because of the statute.” Prior Order, ECF

No. 24, at 14:2–4.

Plaintiffs, as well as the United States, ask this

Court to reconsider its prior determination in light of

the Supreme Court’s holding in Gobeille. In that case,

a Vermont statute required health insurers, including

ERISA plans, to disclose “payments relating to health

care claims and other information relating to health

care services” for a state database. Id. at 940. The

Court held the statute was preempted by ERISA because the disclosure requirement interfered with the

nationally uniform plan administration and regulatory reporting domain of ERISA. Id. at 946.

Gobeille differs from the present matter because

CalSavers does not impose additional reporting

App. 54

requirements on existing ERISA plans. The information provided by participating employers does not

interfere with ERISA’s regulatory domain because reporting is only required where no ERISA or any other

employer-sponsored retirement plan exists. There are

no additional burdens or requirements imposed by

CalSavers on existing ERISA or employer-sponsored

retirement plans which interfere with ERISA’s regulatory domain or govern any central matter of plan administration. See S. Cal. IBEW-NECA Trust Funds v.

Std. Indus. Elec. Co., 247 F.3d 920, 925 (9th Cir. 2001)

(“California’s statute . . . imposes no new reporting,

disclosure, funding, or vesting requirements for ERISA

plans. [Nor does it] tell employers how to write ERISA

benefit plans or how to determine ERISA beneficiary

status. . . .”). As such, there is no impermissible “connection with” an ERISA plan which results in the

preemption of CalSavers.

In sum, the Court finds that CalSavers is neither

an employee benefit plan nor does it relate to an

ERISA plan. On these grounds, the Court concludes

that CalSavers is not preempted by ERISA and accordingly, Defendants’ Present Motion is GRANTED.9

9

Under Federal Rule of Evidence 201, a court may take judicial notice of matters which are “not subject to unreasonable

dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and

ready determination by resort to sources whose accuracy cannot

reasonably be questioned.” Fed. R. Evid. 201(b); Lee v. City of Los

Angeles, 250 F.3d 668, 688 (9th Cir. 2001). For purposes of the

Present Motion, Defendants’ Requests for Judicial Notice, ECF

Nos. 31 and 39, are GRANTED.

App. 55

CONCLUSION

For all the foregoing reasons, Defendants’ Motion

to Dismiss (ECF No. 30) is GRANTED.10 Because

CalSavers is not subject to preemption under ERISA

and Plaintiffs’ FAC is substantially similar to their

original Complaint, the Court further finds that

providing Plaintiffs leave to amend would be futile.

Accordingly, Plaintiffs’ claims are hereby DISMISSED

without leave to amend. The Clerk of the Court is directed to enter judgment in favor of Defendants and to

close the case.

IT IS SO ORDERED.

Dated:

March 10, 2020

/s/ Morrison C. England, Jr.

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT

JUDGE

10

The Court declines to exercise supplemental jurisdiction

over the remaining state law claim.

App. 56

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

HOWARD JARVIS TAXPAY- JUDGMENT IN A

ERS ASSOCIATION, ET AL.,

CIVIL CASE

v.

CASE NO: 2:18–CV–

CALIFORNIA SECURE

CHOICE RETIREMENT

SAVINGS PROGRAM,

ET AL.,

01584–MCE–KJN

(Filed Mar. 10, 2020)

Decision by the Court. This action came before the

Court. The issues have been tried, heard or decided by

the judge as follows:

IT IS ORDERED AND ADJUDGED

THAT JUDGMENT IS HEREBY ENTERED

IN ACCORDANCE WITH THE COURT’S ORDER FILED ON 3/10/2020

Keith Holland

Clerk of Court

ENTERED:

March 10, 2020

by: /s/ H. Huang

Deputy Clerk

App. 57

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

HOWARD JARVIS

TAXPAYERS ASSOCIATION,

JONATHAN COUPAL, and

DEBRA DESROSIERS,

Plaintiffs,

No. 2:18-cv-01584MCE-KJN

MEMORANDUM

AND ORDER

(Filed Mar. 29, 2019)

v.

THE CALIFORNIA SECURE

CHOICE RETIREMENT SAVINGS PROGRAM and JOHN

CHIANG, in his official capacity

as Chair of the CALIFORNIA

SECURE CHOICES RETIREMENT SAVINGS INVESTMENT BOARD,

Defendants.

The Howard Jarvis Taxpayers Association (“HJTA”)

and individually named HJTA employees Jonathan

Coupal and Debra Desrosiers (“HJTA Employees”)

(collectively, “Plaintiffs”) filed this action against the

California Secure Choice Retirement Savings Program

(“CalSavers” or “the Program”) and California State

Treasurer John Chiang (“Treasurer”) (collectively, “Defendants”) contending that the Employee Retirement

Income Security Act (“ERISA” or “the Act”) preempts

the Program. Plaintiffs’ Complaint requests two forms

of relief: first, a declaratory judgment that CalSavers

is preempted by ERISA; and second, an injunction

App. 58

pursuant to California Code of Civil Procedure Section

526a to permanently enjoin spending of taxpayer

funds on the Program. Presently before the Court is

Defendants’ Motion to Dismiss (ECF No. 9) pursuant

to Federal Rules of Civil Procedure 12(b)(6) and

12(b)(1),1 contending, in part, that: (1) Plaintiffs lack

standing; (2) the case is not ripe because CalSavers is

not yet accepting enrollments; and (3) the CalSavers

program does not create an ERISA plan and thus is not

preempted. The motion has been fully briefed.

This case presents novel legal questions concerning state-mandated retirement savings accounts.

While the matter implicates a significant body of judicial and regulatory interpretations of ERISA, it nevertheless coalesces around a single narrow question:

does CalSavers, a state-mandated auto-enrollment retirement savings program, create an “employee benefit

plan,” such that it is preempted by ERISA? For the reasons set forth below, this Court finds that it does not

and therefore GRANTS Defendants’ Motion to Dismiss.2

BACKGROUND

Congress enacted ERISA in 1974 “to promote the

interests of employees and their beneficiaries in

1

All further references to “Rule” or “Rules” are to the Federal

Rules of Civil Procedure unless otherwise noted.

2

Because oral argument would not have been of material

assistance, the Court ordered this matter submitted on the briefs.

E.D. Cal. Local R. 230(g).

App. 59

employee benefit plans” and to “eliminate the threat of

conflicting or inconsistent State and local regulation of

employee benefit plans.” Bd. of Trs. of the Glazing

Health & Welfare Tr. v. Chambers, 903 F.3d 829, 845

(9th Cir. 2018) (citations omitted); see also ERISA, 88

Stat. 832, as amended, 29 U.S.C. §§ 1001–1461. While

ERISA does not require employers to provide any minimum set of benefits to employees, if such plans are

“established or maintained . . . by any employer,” they

must conform to various reporting and fiduciary requirements of the Act. Chambers, 903 F.3d at 845 (citing 29 U.S.C. § 1003(a)). Regarding ERISA’s effect on

State statutes, it “supersedes any and all State laws

insofar as they may now or hereafter relate to any employee benefit plan. . . .” Chambers, 903 F.3d at 837 (internal citations and quotation omitted) (emphasis

added).

The term “employee benefit plan” is “defined only

tautologically in the [ERISA] statute . . . being described as ‘an employee welfare benefit plan or employee pension benefit plan or a plan which is both an

employee welfare benefit plan and an employee pension benefit plan.’ ” Fort Halifax Packing Co. v. Coyne,

482 U.S. 1, 8-9 (1987) (citing 29 U.S.C. § 1002(3)). The

lack of a definition of “employee benefit plan” led the

Department of Labor (“DOL”)3 to “clarify the limits” of

an employee pension benefit plan for purposes of

ERISA. Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992,

1003–04 (9th Cir. 2010). This clarification came in the

3

The DOL Secretary is empowered to enact regulations to

carry out the provisions of ERISA. 29 U.S.C. § 1135.

App. 60

form of a regulatory safe harbor in 1975 (“1975 Safe

Harbor”), which exempted certain Individual Retirement Account (“IRA”) plans. 29 C.F.R. § 2510.3-2(d);

Daniels-Hall, 629 F.3d at 999. Under the 1975 Safe

Harbor, employer payroll deductions for remittance to

an employee’s IRA are exempted from ERISA if:

(i) No contributions are made by the employer or employee association;

(ii) Participation is completely voluntary for

employees or members;

(iii) The sole involvement of the employer or

employee organization is without endorsement to permit the sponsor to publicize the

program to employees or members, to collect

contributions through payroll deductions or

dues checkoffs and to remit them to the sponsor; and

(iv) The employer or employee organization

receives no consideration in the form of cash

or otherwise, other than reasonable compensation for services actually rendered in connection with payroll deductions or dues

checkoffs.

29 C.F.R. § 2510.3-2(d)(1). “[A]n employer that qualifies for the [1975 Safe Harbor] is considered not to have

established or maintained an employee pension benefit

plan . . . [and] would therefore not be considered an

employee pension benefit plan” for purposes of ERISA.

Daniels-Hall, 629 F.3d at 1003–04. Significant to the

Court’s analysis here, discussed infra, is that the term

App. 61

“completely voluntary” is undefined within the 1975

Safe Harbor.

Defendants contend that in recent years a growing

number of citizens lack sufficient retirement income.

In response, several states began exploring state-run

retirement savings programs. In 2012, the California

Legislature passed the California Secure Choice Retirement Savings Trust Act, which created the CalSavers program to address the lack of retirement savings

for many of the state’s citizens. Cal. Gov’t Code

§§ 100000–100050. CalSavers creates a State-sponsored retirement savings plan for California employees

who do not have access to an employer-provided plan.

Cal. Gov’t Code § 100000(a), (c)–(d). The Program requires an “Eligible employer4 to “allow employee participation in the [CalSavers] program” via payroll

deductions if that employer does not offer a retirement

savings program of its own. Cal. Gov’t Code

§ 100032(b)–(d). Eligible employers must automatically enroll their employees and remit payroll deductions to the Program “unless the employee elects not to

participate.” Cal. Gov’t Code § 100032(f )(1). That is,

4

“Eligible employer” is defined as “a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding

the federal government, the state, any county, any municipal corporation, or any of the state’s units or instrumentalities, that has

five or more employees and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement.” Cal. Gov’t Code § 100000(d)(1).

App. 62

employees of Eligible employers are automatically enrolled, but can “opt out” of CalSavers if desired.

Faced with concerns that state-mandated retirement savings programs with “opt out,” as opposed to

“opt in,” enrollments may not be “completely voluntary” as contemplated in the 1975 Safe Harbor, the

DOL issued additional regulatory guidance in 2016

(“2016 Safe Harbor”) establishing ERISA exemptions

for state-sponsored auto-IRAs. See 81 FR 59464 (entitled “Savings Arrangements Established by States for

Non-Governmental Employees”). The preamble to the

2016 Safe Harbor explained:

With regard to the 1975 IRA Payroll Deduction Safe Harbor’s condition requiring that an

employee’s participation be “completely voluntary,” the Department intended this term to

mean that the employee’s enrollment in the

program must be self-initiated. In other

words, under the safe harbor, the decision to

enroll in the program must be made by the

employee, not the employer. If the employer

automatically enrolls employees in a benefit

program, the employees’ participation would

not be “completely voluntary” and the employer’s actions would constitute the “establishment” of a pension plan, within the

meaning of ERISA. . . . This is true even if the

employee can affirmatively opt out of the program.

81 FR 59464, 59465 (emphasis added). The 2016 Safe

Harbor set up a “voluntary” participation standard for

“state required and administered programs,” such that

App. 63

“automatic enrollment arrangements with employee

opt-out features” would be expressly exempt from

ERISA. 80 FR 72006, 72009. That the 2016 Safe Harbor

would have exempted CalSavers from ERISA’s provisions is undisputed. However, under the Congressional

Review Act, Congress passed legislation in 2017 repealing the 2016 Safe Harbor, which the President

signed into law.5 Subsequent to the repeal of the 2016

Safe Harbor, California has continued in its efforts to

implement the CalSavers program, which gave rise to

this current action.

Plaintiffs filed their Complaint on May 31, 2018

(ECF No. 1), which Defendants moved to dismiss via

the present Motion on July 25, 2018. ECF No. 9. After

consideration of the Parties’ briefs, the Court ordered

supplemental briefings concerning interpretations of

the 1975 Safe Harbor’s “completely voluntary” requirement and how, if at all, this requirement applies to

CalSavers, as well as how the principals of conflict and

field preemption may apply in the ERISA context. ECF

No. 19. Plaintiffs and Defendants filed their supplemental briefs on November 15, 2018. ECF Nos. 21 and

22.

5

See 115 P.L. 35, 131 Stat. 848 (“Congress disapproves the

rule submitted by the Department of Labor relating to ‘Savings

Arrangements Established by States for Non-Governmental Employees’ [ ] and such rule shall have no force or effect.”) (citation

omitted).

App. 64

STANDARD

A. Rule 12(b)(1)

Federal courts are courts of limited jurisdiction

and are presumptively without jurisdiction over civil

actions. Kokkonen v. Guardian Life Ins. Co. of Am., 511

U.S. 375, 377 (1994). The burden of establishing the

contrary rests upon the party asserting jurisdiction. Id.

Because subject matter jurisdiction involves a court’s

power to hear a case, it can never be forfeited or

waived. United States v. Cotton, 535 U.S. 625, 630

(2002). Accordingly, lack of subject matter jurisdiction

may be raised by either party at any point during the

litigation, through a motion to dismiss pursuant to

Federal Rule of Civil Procedure 12(b)(1). Arbaugh v.

Y&H Corp., 546 U.S. 500, 506 (2006); see also Int’l Union of Operating Eng’rs v. Cnty. of Plumas, 559 F.3d

1041, 1043-44 (9th Cir. 2009). Lack of subject matter

jurisdiction may also be raised by the district court sua

sponte. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574,

583 (1999). Indeed, “courts have an independent obligation to determine whether subject matter jurisdiction exists, even in the absence of a challenge from any

party.” Id.; see Fed. R. Civ. P. 12(h)(3) (requiring the

court to dismiss the action if subject matter jurisdiction is lacking).

There are two types of motions to dismiss for lack

of subject matter jurisdiction: a facial attack, and a

factual attack. Thornhill Publ’g Co. v. Gen. Tel. & Elec.

Corp., 594 F.2d 730, 733 (9th Cir. 1979). Thus, a party

may either make an attack on the allegations of

App. 65

jurisdiction contained in the nonmoving party’s complaint, or may challenge the existence of subject matter jurisdiction in fact, despite the formal sufficiency of

the pleadings. Id.

When a party makes a facial attack on a complaint, the attack is unaccompanied by supporting evidence, and it challenges jurisdiction based solely on

the pleadings. Safe Air for Everyone v. Meyer, 373 F.3d

1035, 1039 (9th Cir. 2004). If the motion to dismiss constitutes a facial attack, the Court must consider the

factual allegations of the complaint to be true, and determine whether they establish subject matter jurisdiction. Savage v. Glendale High Union Sch. Dist. No.

205, 343 F.3d 1036, 1039 n.1 (9th Cir. 2003). In the case

of a facial attack, the motion to dismiss is granted only

if the nonmoving party fails to allege an element necessary for subject matter jurisdiction. Id. However, in

the case of a factual attack, district courts “may review

evidence beyond the complaint without converting the

motion to dismiss into a motion for summary judgment.” Safe Air for Everyone, 373 F.3d at 1039.

In the case of a factual attack, “no presumptive

truthfulness attaches to plaintiff ’s allegations.” Thornill, 594 F.2d at 733 (internal citation omitted). The

party opposing the motion has the burden of proving

that subject matter jurisdiction does exist, and must

present any necessary evidence to satisfy this burden.

St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir.

1989). If the plaintiff ’s allegations of jurisdictional

facts are challenged by the adversary in the appropriate manner, the plaintiff cannot rest on the mere

App. 66

assertion that factual issues may exist. Trentacosta v.

Frontier Pac. Aircraft Ind., Inc., 813 F.2d 1553, 1558

(9th Cir. 1987) (quoting Exch. Nat’l Bank of Chi. v.

Touche Ross & Co., 544 F.2d 1126, 1131 (2d Cir. 1976)).

Furthermore, the district court may review any evidence necessary, including affidavits and testimony, in

order to determine whether subject matter jurisdiction

exists. McCarthy v. United States, 850 F.2d 558, 560

(9th Cir. 1988); Thornhill, 594 F.2d at 733. If the nonmoving party fails to meet its burden and the court determines that it lacks subject matter jurisdiction, the

court must dismiss the action. Fed. R. Civ. P. 12(h)(3).

B. Rule 12(b)(6)

On a motion to dismiss for failure to state a claim

under Rule 12(b)(6), all allegations of material fact

must be accepted as true and construed in the light

most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).

Rule 8(a)(2) “requires only ‘a short and plain statement

of the claim showing that the pleader is entitled to relief ’ in order to ‘give the defendant fair notice of what

the . . . claim is and the grounds upon which it rests.’ ”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)

(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A

complaint attacked by a Rule 12(b)(6) motion to dismiss does not require detailed factual allegations.

However, “a plaintiff ’s obligation to provide the

grounds of his entitlement to relief requires more than

labels and conclusions, and a formulaic recitation of

the elements of a cause of action will not do.” Id.

App. 67

(internal citations and quotations omitted). A court is

not required to accept as true a “legal conclusion

couched as a factual allegation.” Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at

555). “Factual allegations must be enough to raise a

right to relief above the speculative level.” Twombly,

550 U.S. at 555 (citing 5 Charles Alan Wright & Arthur

R. Miller, Federal Practice and Procedure § 1216 (3d

ed. 2004) (stating that the pleading must contain

something more than “a statement of facts that merely

creates a suspicion [of ] a legally cognizable right of action”)).

Furthermore, “Rule 8(a)(2) . . . requires a showing,

rather than a blanket assertion, of entitlement to relief.” Twombly, 550 U.S. at 555 n.3 (internal citations

and quotations omitted). Thus, “[w]ithout some factual

allegation in the complaint, it is hard to see how a

claimant could satisfy the requirements of providing

not only ‘fair notice’ of the nature of the claim, but also

‘grounds’ on which the claim rests.” Id. (citing Wright

& Miller, supra, at 94, 95). A pleading must contain

“only enough facts to state a claim to relief that is plausible on its face.” Id. at 570. If the “plaintiffs . . . have

not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.” Id.

However, “[a] well-pleaded complaint may proceed

even if it strikes a savvy judge that actual proof of

those facts is improbable, and ‘that a recovery is very

remote and unlikely.’ ” Id. at 556 (quoting Scheuer v.

Rhodes, 416 U.S. 232, 236 (1974)).

App. 68

C. Leave to Amend

A court granting a motion to dismiss a complaint

must then decide whether to grant leave to amend.

Leave to amend should be “freely given” where there is

no “undue delay, bad faith or dilatory motive on the

part of the movant, . . . undue prejudice to the opposing

party by virtue of allowance of the amendment, [or] futility of the amendment. . . .” Foman v. Davis, 371 U.S.

178, 182 (1962); Eminence Capital, LLC v. Aspeon, Inc.,

316 F.3d 1048, 1052 (9th Cir. 2003) (listing the Foman

factors as those to be considered when deciding

whether to grant leave to amend). Not all of these factors merit equal weight. Rather, “the consideration of

prejudice to the opposing party . . . carries the greatest

weight.” Id. (citing DCD Programs, Ltd. v. Leighton,

833 F.2d 183, 185 (9th Cir. 1987)). Dismissal without

leave to amend is proper only if it is clear that “the

complaint could not be saved by any amendment.”

Intri-Plex Techs. v. Crest Group, Inc., 499 F.3d 1048,

1056 (9th Cir. 2007) (citing In re Daou Sys., Inc., 411

F.3d 1006, 1013 (9th Cir. 2005); Ascon Props., Inc. v.

Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989)

(“Leave need not be granted where the amendment of

the complaint . . . constitutes an exercise in futility. . . .”)).

ANALYSIS

A. Standing

Defendants move under both Rules 12(b)(1) for

lack of subject matter jurisdiction and 12(b)(6) for failure to state a claim, asserting that Plaintiffs lack

App. 69

Article III and ERISA standing. Article III standing,

unlike statutory standing, is a jurisdictional requirement that Plaintiffs, as the parties invoking federal

jurisdiction in this matter, have the burden of establishing. Lujan v. Defenders of Wildlife, 504 U.S. 555,

561 (1992). It requires not only an injury in fact, but

also a causal connection between Defendants’ conduct

and a showing that action by the Court can redress

that injury:

First, the plaintiff must have suffered an “injury in fact” – an invasion of a legally protected interest which is (a) concrete and

particularized, and (b) “actual or imminent,

not conjectural or hypothetical.” . . . Second,

there must be a causal connection between

the injury and the conduct complained of-- the

injury has to be “fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third

party not before the court.” . . . Third, it must

be “likely,” as opposed to merely “speculative,”

that the injury will be “redressed by a favorable decision.”

Id. at 560-61 (internal citation and formatting omitted).

Here, HJTA asserts standing as an employer of

California workers, as well as associational standing

based on its members. ECF No. 16 at 2, 10. HJTA Employees allude to standing as California taxpayers. Id.

at 5. Conversely, Defendants contend that each Plaintiff lacks standing because CalSavers is not open for

App. 70

enrollment and therefore no injury could have been

caused by the Program.6 ECF No. 9 at 9. As to HJTA’s

associational standing, Defendants argue that the issues presented in this case are not germane to HJTA’s

purpose as an organization (i.e., taxpayers’ rights).

ECF No. 18 at 4–5. Finally, Defendants additionally

argue that HJTA Employees lack standing because

even if CalSavers creates an ERISA plan, they are not

“participants” in the plan because they are not enrolled. Id. at 10–11.

As to the HJTA Employees, the Court finds that

they lack standing. They are not yet participating in

an ERISA plan, and their potential injuries, if any, are

too remote to confer standing. See Miller v. Rite Aid

Corp., 504 F.3d 1102, 1105–06 (9th Cir. 2007) (“civil action under ERISA may be brought by a ‘participant’ in

or ‘beneficiary’ of an ERISA plan . . . [and] [w]e have

repeatedly held that whether a living party is a ‘participant’ or ‘beneficiary’ is determined as of the time

the lawsuit is filed.”) (emphasis added). Also, Plaintiffs

cannot assert taxpayer standing to gain access to Federal Court. DaimlerChrysler Corp. v. Cuno, 547 U.S.

332, 346 (2006).

Turning to HJTA’s contentions regarding associational standing, the Court agrees with Defendants that

the issues presented in this case are not germane to

HJTA’s purpose such that it would be able to assert

standing on behalf of its members. However, the Court

6

Enrollment was projected to begin by the end of 2018 or

early 2019. ECF No. 9 at 4.

App. 71

nonetheless further finds that HJTA does have standing as an “Eligible employer” under the Program. If

CalSavers does not create an ERISA plan, HJTA lacks

ERISA standing—however, if the Program does create

an ERISA plan, HJTA has both Article III and statutory standing as a potential plan fiduciary. The arguments concerning HJTA’s ERISA standing thus

intertwine with the ultimate preemption questions of

this case, and touch upon substantive elements of

HJTA’s claims. Precedent supports treating these situations as “nonjurisdictional” because HJTA’s “statutory standing or lack thereof under ERISA does not

affect whether the Court has subject matter jurisdiction . . . [w]hether [a plaintiff ] is a [plan] participant

for purposes of ERISA is a substantive element of his

claim, not a prerequisite for subject matter jurisdiction.” Leeson v. Transamerica Disability Income Plan,

671 F.3d 969, 971 (9th Cir. 2012). Accordingly, for present purposes, the Court finds that HJTA has standing

as a potential ERISA plan fiduciary.

B. Ripeness

The doctrine of ripeness is also a jurisdictional

concept designed “to prevent the courts, through premature adjudication, from entangling themselves in abstract disagreements” that do not yet rise to the level

of a concrete case or controversy. Thomas v. Union Carbide Agric. Prod. Co., 473 U.S. 568, 580 (1985). Whereas

standing is concerned with whether the right party is

suing, ripeness hinges on whether the lawsuit is

brought at the proper time. See id. (citing Regional Rail

App. 72

Reorg. Act Cases, 419 U.S. 102, 140 (1974)). “A claim is

not ripe for adjudication if it rests upon ‘contingent future events that may not occur as anticipated, or indeed may not occur at all.’ ” Texas v. U.S., 523 U.S. 296,

300 (1998), citing Thomas, 473 U.S. at 580–81. The

ripeness inquiry has thus been characterized as

“standing on a timeline” in which the key determination is whether the case and controversy is such that

judicial intervention is necessary. Bova v. City of

Medford, 564 F.3d 1093, 1096 (9th Cir. 2009). Consequently, while ripeness and standing are related concepts and tend to significantly overlap, particularly in

pre-enforcement challenges to laws and regulations,

they still should be addressed separately. See, e.g.,

Eternal Word Tel. Network, Inc. v. Sebelius, 935

F. Supp. 2d 1196, 1213 (N.D. Ala. 2013).

Defendants contend that this case is not ripe because enrollments have not yet occurred, CalSavers’

Board of Directors has not published final regulations,

and HJTA would not be subject to CalSavers’ requirements for at least 36 months given its current number

of employees. ECF No. 9 at 8. Plaintiffs of course disagree, pointing to the 2012 statute that created

CalSavers and which provides that the Program “is

approved by the Legislature and implemented as of

January 1, 2017.” Cal. Gov’t Code § 100046 (emphasis

added). Plaintiffs have the better argument. CalSavers

was enacted in 2012, is “implemented” as of 2017, and

is on the eve of enrolling its first participants. Its most

contentious requirement—the mandatory auto-enrollment feature—is already established. Furthermore, if

App. 73

CalSavers creates an ERISA plan, the harm to HJTA

in becoming a forced fiduciary would be “reasonable

and imminent, and not merely theoretically possible.”

ProtectMarriage.com – Yes on 8 v. Bowen, 752 F.3d 827,

838–39 (9th Cir. 2014); see also Gobeille v. Liberty Mut.

Ins. Co., 136 S. Ct. 936, 945 (2016) (“[a] plan need not

wait to bring a pre-emption claim until confronted with

numerous inconsistent obligations and encumbered

with any ensuing costs.”). Therefore, the Court finds

that this case is ripe for adjudication.

C. Preemption

The heart of the parties’ dispute ultimately lies in

their preemption arguments. The Court first addresses

the 1975 Safe Harbor’s application to CalSavers, then

turns to an analysis of preemption in the ERISA context.

1. CalSavers is not entitled to the exemptions set forth in the 1975 Safe

Harbor.

If CalSavers meets the requirements of the 1975

Safe Harbor, ERISA does not preempt it. The 1975 Safe

Harbor outlined four requirements for ERISA exclusion of employer payroll deduction IRAs: (1) no employer contributions are allowed; (2) employee

participation must be “completely voluntary”; (3) the

employer cannot endorse the program; and (4) the employer cannot receive compensation from the program.

29 C.F.R. § 2510.3-2(d). Only one of these factors—

App. 74

whether CalSavers is completely voluntary—is at issue here.

Plaintiffs contend that if employers automatically

enroll their employees into CalSavers, as is mandated

by the California law, the Program is not completely

voluntary and thus establishes an ERISA plan. ECF

No. 16 at 15–16. Indeed, the preamble to the 2016 Safe

Harbor explained that the new regulation was necessary because state-mandated IRAs with auto-enrollment features would fall outside the provisions of the

1975 Safe Harbor. 81 FR 59464, 59465. This arises

from the DOL’s 2016 interpretation that “completely

voluntary” under 1975 Safe Harbor requires that the

employee initiate participation. Yet, no other authorities support this interpretation of “completely voluntary” with regard to state action; Plaintiffs did not give

any, and simply rely upon the 2016 Safe Harbor to support this premise. See ECF No. 16 at 15. An agency’s

interpretation of its own regulation is given significant

deference. See Udall v. Tallman, 380 U.S. 1, 16 (1965)

(“[w]hen the construction of an administrative regulation rather than a statute is in issue, deference [to the

agency charged with its administration] is even more

clearly in order.”). However, in repealing the 2016 Safe

Harbor pursuant to the Congressional Review Act,

Congress repealed the DOL’s interpretation of the matters at issue here, making determining congressional

intent more difficult.

That said, based on the record as a whole, the

Court declines to hold that CalSavers is subject to the

exemptions afforded by the 1975 Safe Harbor. But that

App. 75

does not end the Court’s analysis if resort to a safe harbor is unnecessary in the first place. Accordingly, it

must still examine Plaintiff ’s claims under traditional

federal preemption principles.

2. Regardless of Whether CalSavers is

Covered by the 1975 Safe Harbor, it

is Still Not Preempted by ERISA.

The Ninth Circuit has recently held that “under

the modern approach a state law is not preempted

merely because it has a literal ‘connection with’ an

ERISA plan. . . . Instead, the law must actually ‘govern[ ] . . . a central matter of plan administration’ or

‘interfere[ ] with nationally uniform plan administration.’ ” Chambers, 903 F.3d at 847 (citation omitted)

(citing Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936,

943 (2016)) (emphasis in original). Neither of these

prohibited actions occur as a result of CalSavers.

Here, Eligible employers are required to adhere to

the administrative requirements of CalSavers, but because the Program only applies to employers without

existing retirement plans, no ERISA plans are “governed” or “interfered” with because of the statute. See

Cal. Gov’t Code § 100032(g)(1) (“An employer that provides an employer-sponsored retirement plan . . . shall

be exempt from the requirements of [CalSavers].”). The

primary purposes of ERISA are to (1) protect the interests of employees in receiving the benefits promised by

an employer and (2) protect employers from the burdens of meeting multiple regulatory requirements for

App. 76

managing ERISA plans. Chambers, 903 F.3d at 845.

Yet, Eligible employers are not required to make any

promises to employees—they simply remit payroll deducted payments to the Program and otherwise have

no discretion regarding the funds. Such ministerial duties fall outside of scope of conduct that Congress intended to regulate in enacting ERISA. See Golden

Gate Rest. Ass’n v. City & Cty. of S.F., 546 F.3d 639, 650

(9th Cir. 2008) (“It is within the exercise of [ ] discretion

that an employer has the opportunity to engage in the

mismanagement of funds and other abuses with which

Congress was concerned when it enacted ERISA.”).

Defendants cite several cases tending to show that

state mandates concerning employee benefits are not

preempted if the law does not force employers to create

or alter ERISA plans. In Golden Gate, the court upheld

a San Francisco ordinance requiring employers within

the city to make minimum health care expenditures on

behalf of their employees. 546 F.3d at 642. Employers

who met minimum spending requirements via other

methods (such as existing ERISA plans) were not required to make additional payments, but employers

who did not were required to make payments to a Cityadministered health care program. Id. at 643–46. The

ordinance required employers to track workers who

performed qualifying work within the city, to include

the number of hours worked and calculations on previously paid health care expenditures. Id. at 651. In finding that the ordinance did not create an ERISA plan,

the court provided that, “[a]n employer’s administrative obligations under the City-payment option do not

App. 77

run the risk of mismanagement of funds or other

abuse . . . [and that] . . . maintaining these records

amount[ed] to nothing more than the exercise of ‘a

modicum of discretion.’ ” Golden Gate, 546 F.3d at 651.

In Fort Halifax Packing Co. v. Coyne, 482 U.S. 1

(1987), the Court found that a Maine statute requiring

employers who closed factories within the State to give

one-time severance payments to impacted employees

did not “relate to any employee benefit plan,” and thus

was not preempted by ERISA. The Court reasoned, “[i]f

a State creates no prospect of conflict with a federal

statute, there is no warrant for disabling it from attempting to address uniquely local social and economic

problems.” Id. at 19.

While Plaintiffs rely on Donovan v. Dillingham,

688 F.2d 1367, 1373 (11th Cir. 1982) to support the contention that CalSavers falls within ERISA’s provisions,

this reliance is misplaced. The Donovan court provided

that, a “plan, fund, or program under ERISA is established if from the surrounding circumstances a reasonable person can ascertain the intended benefits, a class

of beneficiaries, the source of financing, and procedures

for receiving benefits.” Id. at 1373. However, the Ninth

Circuit declined to apply this test when considering

government mandates on employers, stating that “[w]e

would be very hesitant to hold that the Donovan criteria apply to statutory administrative burdens imposed

on an employer where, as here, that employer has

made no promises whatsoever to its employees. . . .”

Golden Gate, 546 F.3d at 652. This Court holds the

same hesitation here.

App. 78

Finding that ERISA preempts CalSavers would

be out-of-step with the underlying purposes of the Act.

CalSavers does not govern a central matter of an

ERISA plan’s administration, nor does it interfere with

nationally uniform plan administration. On this basis,

the Court finds that CalSavers is not preempted by

ERISA. Accordingly, Defendants’ Motion to Dismiss is

GRANTED.7, 8

CONCLUSION

For all the foregoing reasons, Defendants’ Motion

to Dismiss (ECF No. 9) is GRANTED. Because CalSavers is not subject to preemption under ERISA, the

Court further finds that providing Plaintiffs leave to

amend would be futile. Accordingly, Plaintiffs’ claims

are hereby DISMISSED with one final leave to amend.

The Court is very aware of the importance of this case

and considered granting this motion without leave to

amend. However, notwithstanding the Court’s concern,

allowing one final opportunity to amend may be in the

7

Under Federal Rule of Evidence 201, a court may take judicial notice of matters which are “not subject to reasonable dispute in that it is either (1) generally known within the territorial

jurisdiction of the trial court or (2) capable of accurate and ready

determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b); Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). For purposes of the present

Motion, Defendants’ Requests for Judicial Notice (“RJN”), ECF

Nos. 10 and 23, and Plaintiffs’ RJN, ECF No. 17, are GRANTED.

8

Defendants raise other contentions that Plaintiffs’ claims

are barred by the Eleventh Amendment. ECF No. 9 at 2, 19-20.

However, given the ruling on Defendants’ Motion, the Court finds

it unnecessary to address these arguments.

App. 79

parties’ best interest. Plaintiffs will have twenty (20)

days from the date this order is electronically filed to

file an amended complaint. If no amended complaint

is filed within said time period, this case will be dismissed without leave to amend with no further notice

to the parties.

IT IS SO ORDERED.

Dated:

March 28, 2019

/s/ Morrison C. England, Jr.

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT

JUDGE

App. 80

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

HOWARD JARVIS TAXPAYERS ASSOCIATION;

et al.,

Plaintiffs-Appellants,

v.

No. 20-15591

D.C. No.

2:18-cv-01584-MCE-KJN

Eastern District of

California, Sacramento

ORDER

CALIFORNIA SECURE

(Filed Jun. 15, 2021)

CHOICE RETIREMENT

SAVINGS PROGRAM;

JOHN CHIANG,

California State Treasurer,

Defendants-Appellees.

Before: HURWITZ and BRESS, Circuit Judges, and

CORKER,* District Judge.

Judges Hurwitz and Bress voted to deny the petition for rehearing en banc, and Judge Corker so recommended. The petition for rehearing en banc was

circulated to the judges of the Court, and no judge requested a vote for en banc consideration. Fed. R. App.

P. 35. The petition for rehearing en banc is DENIED.

* The Honorable Clifton L. Corker, United States District

Judge for the Eastern District of Tennessee, sitting by designation.

App. 81

29 U.S.C. § 1002 (1)(2)(5)(9)(32)

(1) The terms “employee welfare benefit plan” and

“welfare plan” mean any plan, fund, or program which

was heretofore or is hereafter established or maintained by an employer or by an employee organization,

or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose

of providing for its participants or their beneficiaries,

through the purchase of insurance or otherwise, (A)

medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death

or unemployment, or vacation benefits, apprenticeship

or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefit described in section 302(c) of the Labor

Management Relations Act, 1947 [29 USCS § 186(c)]

(other than pensions on retirement or death, and insurance to provide such pensions).

...

(2)

(A) Except as provided in subparagraph (B), the

terms “employee pension benefit plan” and “pension

plan” mean any plan, fund, or program which was

heretofore or is hereafter established or maintained by

an employer or by an employee organization, or by

both, to the extent that by its express terms or as a

result of surrounding circumstances such plan, fund,

or program—

(i)

provided retirement income to employees, or

App. 82

(ii) results in a deferral of income by employees

for periods extending to the termination of covered

employment or beyond, regardless of the method

of calculating the contributions made to the plan,

the method of calculating the benefits under the

plan or the method of distributing benefits from

the plan. A distribution from a plan, fund, or program shall not be treated as made in a form other

than retirement income or as a distribution prior

to termination of covered employment solely because such distribution is made to an employee

who has attained age 62 and who is not separated

from employment at the time of such distribution.

(B) The Secretary may by regulation prescribe

rules consistent with the standards and purposes of

this Act providing one or more exempt categories under which—

(i)

severance pay arrangements, and

(ii) supplemental retirement income payments,

under which the pension benefits of retirees or

their beneficiaries are supplemented to take into

account some portion or all of the increases in the

cost of living (as determined by the Secretary of

Labor) since retirement, shall, for purposes of this

title, be treated as welfare plans rather than pension plans. In the case of any arrangement or payment a principal effect of which is the evasion of

the standards or purposes of this Act applicable to

pension plans, such arrangement or payment shall

be treated as a pension plan. An applicable voluntary early retirement incentive plan (as defined in

section 457(e)(11)(D)(ii) of the Internal Revenue

Code of 1986 [26 USCS § 457(e)(11)(D)(ii)])

App. 83

making payments or supplements described in

section 457(e)(11)(D)(i) [26 USCS § 457(e)(11)(D)(i)]

of such Code, and an applicable employment retention plan (as defined in section 457(f )(4)(C) of

such Code [26 USCS § 457(f )(4)(C)]) making payments of benefits described in section 457(f )(4)(A)

of such Code [26 USCS § 457(f )(4)(A)], shall, for

purposes of this title, be treated as a welfare plan

(and not a pension plan) with respect to such payments and supplements.

(C)

A pooled employer plan shall be treated as—

(i) a single employee pension benefit plan or single pension plan; and

(ii) a plan to which section 210(a) [29 USCS

§ 1060(a)] applies.

...

(5) The term “employer” means any person acting directly as an employer, or indirectly in the interest of an

employer, in relation to an employee benefit plan; and

includes a group or association of employers acting for

an employer in such capacity.

...

(9) The term “person” means an individual, partnership, joint venture, corporation, mutual company, jointstock company, trust, estate, unincorporated organization, association, or employee organization.

...

App. 84

(32) The term “governmental plan” means a plan established or maintained for its employees by the Government of the United States, by the government of

any State or political subdivision thereof, or by any

agency or instrumentality of any of the foregoing. The

term “governmental plan” also includes any plan to

which the Railroad Retirement Act of 1935 or 1937 applies, and which is financed by contributions required

under that Act and any plan of an international organization which is exempt from taxation under the provisions of the International Organizations Immunities

Act (59 Stat. 669). The term “governmental plan” includes a plan which is established and maintained by

an Indian tribal government (as defined in section

7701(a)(40) of the Internal Revenue Code of 1986 [26

USCS § 7701(a)(40)]), a subdivision of an Indian tribal

government (determined in accordance with section

7871(d) of such Code [26 USCS § 7871(d)]), or an

agency or instrumentality of either, and all of the participants of which are employees of such entity substantially all of whose services as such an employee

are in the performance of essential governmental

functions but not in the performance of commercial

activities (whether or not an essential government

function)[.]

(29 U.S.C. § 1002 (LexisNexis, Lexis Advance through

Public Law 117-26, approved July 6, 2021, excepting

Part V of Subtitle A of Title 10, as added by Public Law

116-283 (effective 1/1/2022) and Public Law 117-2).)

App. 85

115 P.L. 35

Adopted, May 17, 2017

Reporter

115 P.L. 35; 131 Stat. 848; 2017 Enacted H.J. Res. 66;

115 Enacted H.J. Res. 66

UNITED STATES PUBLIC LAWS > 115th Congress – 1st Session > PUBLIC LAW 115-35 > [H.J.

Res. 66]

Synopsis

JOINT RESOLUTION

Disapproving the rule submitted by the Department of

Labor relating to savings arrangements established by

States for non-governmental employees.

Text

Resolved by the Senate and House of Representatives

of the United States of America in Congress assembled,

That Congress disapproves the rule submitted by

the Department of Labor relating to “Savings Arrangements Established by States for Non-Governmental

Employees” (published at 81 Fed. Reg. 59464 (August

30, 2016)), and such rule shall have no force or effect.

Speaker of the House of Representatives.

Vice President of the United States and President of

the Senate.

App. 86

81 FR 59464, 59476-59477

(August 30, 2016)

List of Subjects in 29 CFR Part 2510

Accounting, Employee benefit plans, Employee Retirement Income Security Act, Pensions, Reporting, Coverage.

•

For the reasons stated in the preamble, the

Department of Labor amends 29 CFR part

2510 as set forth below:

o

•

PART 2510 – DEFINITIONS OF

TERMS USED IN SUBCHAPTERS C,

D, E, F, G, AND L OF THIS CHAPTER

1. The authority citation for part 2510 is revised to read as follows:

o

Authority: 29 U.S.C. 1002(2), 1002(21),

1002(37), 1002(38), 1002(40), 1031, and

1135; Secretary of Labor’s Order No. 12011, 77 FR 1088 (Jan. 9, 2012); Sec.

2510.3-101 also issued under sec. 102 of

Reorganization Plan No. 4 of 1978, 5

U.S.C. App. at 237 (2012), E.O. 12108, 44

FR 1065 (Jan. 3, 1979) and 29 U.S.C. 1135

note. Sec. 2510.3-38 is also issued under

sec. 1, Pub. L. 105-72, 111 Stat. 1457 (1997).

•

2. In § 2510.3-2, revise paragraph (a) and

add paragraph (h) to read as follows:

o

§ 2510.3-2 Employee pension benefit

plans.

App. 87

•

(a) General. This section clarifies

the terms “employee pension benefit

plan” and “pension plan” for purposes

of title I of the Act and this chapter

by setting forth safe harbors under

which certain specific plans, funds

and programs would not constitute

employee pension benefit plans when

the conditions of this section are satisfied. The safe harbors in this section should not be read as implicitly

indicating the Department’s views on

the possible scope of section 3(2). To

the extent that these plans, funds

and programs constitute employee

welfare benefit plans within the

meaning of section 3(1) of the Act and

§ 2510.3-1 of this part, they will be

covered under title I; however, they

will not be subject to parts 2 and 3 of

title I of the Act.

•

(h) Certain State savings programs.

*****

•

(1) For purposes of title I of the

Act and this chapter, the terms

“employee pension benefit plan”

and “pension plan” shall not include an individual retirement

plan (as defined in 26 U.S.C.

7701(a)(37)) established and

maintained pursuant to a State

App. 88

payroll deduction savings program, provided that:

•

(i) The program is specifically established pursuant

to State law;

•

(ii) The program is implemented and administered

by the State establishing

the program (or by a governmental agency or instrumentality of the State),

which is responsible for investing the employee savings

or

for

selecting

investment alternatives for

employees to choose;

•

(iii) The State (or governmental agency or instrumentality of the State)

assumes responsibility for

the security of payroll deductions and employee savings;

•

(iv) The State (or governmental agency or instrumentality of the State)

adopts measures to ensure

that employees are notified

of their rights under the program, and creates a mechanism for enforcement of

those rights;

App. 89

•

(v) Participation in the

program is voluntary for

employees;

•

(vi) All rights of the employee, former employee, or

beneficiary under the program are enforceable only

by the employee, former employee, or beneficiary, an

authorized representative

of such a person, or by the

State (or governmental

agency or instrumentality of

the State);

•

(vii) The involvement of

the employer is limited to

the following:

•

(A) Collecting employee

contributions through

payroll deductions and

remitting them to the

program;

•

(B) Providing notice

to the employees and

maintaining records regarding the employer’s

collection and remittance of payments under the program;

•

(C) Providing information to the State (or

governmental agency or

App. 90

instrumentality of the

State) necessary to facilitate the operation of

the program; and

•

(D) Distributing program information to

employees from the

State (or governmental

agency or instrumentality of the State) and permitting the State (or

governmental agency or

instrumentality of the

State) to publicize the

program to employees;

•

(viii) The employer contributes no funds to the program and provides no bonus

or other monetary incentive

to employees to participate

in the program; [*59477]

•

(ix) The employer’s participation in the program is required by State law;

•

(x) The employer has no

discretionary authority, control, or responsibility under

the program; and

•

(xi) The employer receives

no direct or indirect consideration in the form of cash

or otherwise, other than

App. 91

consideration (including tax

incentives and credits) received directly from the

State (or governmental

agency or instrumentality of

the State) that does not exceed an amount that reasonably

approximates

the

employer’s (or a typical employer’s) costs under the

program.

•

(2) A State savings program

will not fail to satisfy the provisions of paragraph (h)(1) of this

section merely because the program –

•

(i) Is

directed

toward

those employers that do not

offer some other workplace

savings arrangement;

•

(ii) Utilizes one or more

service or investment providers to operate and administer

the

program,

provided that the State (or

governmental agency or instrumentality of the State)

retains full responsibility

for the operation and administration of the program;

or

•

(iii) Treats employees as

having automatically elected

App. 92

payroll deductions in an

amount or percentage of

compensation, including any

automatic increases in such

amount or percentage, unless the employee specifically elects not to have

such deductions made (or

specifically elects to have

the deductions made in a

different amount or percentage of compensation allowed

by the program), provided

that the employee is given

adequate advance notice of

the right to make such elections and provided, further,

that a program may also

satisfy this paragraph (h)

without requiring or otherwise providing for automatic

elections such as those described in this paragraph

(h)(2)(iii).

•

(3) For purposes of this section,

the term State shall have the

same meaning as defined in section 3(10) of the Act.

Signed at Washington, DC, this 24th day of August,

2016.

App. 93

Phyllis C. Borzi,

Assistant Secretary, Employee Benefits Security Administration, U.S. Department of Labor.

29 CFR 2510.3-2(d)

(d) Individual Retirement Accounts. (1) For purposes

of title I of the Act and this chapter, the terms “employee pension benefit plan” and “pension plan” shall

not include an individual retirement account described

in section 408(a) of the Code, an individual retirement

annuity described in section 408(b) of the Internal Revenue Code of 1954 (hereinafter “the Code”) and an individual retirement bond described in section 409 of

the Code, provided that—

(i) No contributions are made by the employer or employee association;

(ii) Participation is completely voluntary for employees or members;

(iii) The sole involvement of the employer or employee organization is without endorsement to permit

the sponsor to publicize the program to employees or

members, to collect contributions through payroll deductions or dues checkoffs and to remit them to the

sponsor; and

(iv) The employer or employee organization receives

no consideration in the form of cash or otherwise, other

than reasonable compensation for services actually

App. 94

rendered in connection with payroll deductions or dues

checkoffs.

(29 C.F.R. § 2510.3-2 (Lexis Advance through the July

19, 2021 issue of the Federal Register, with the exception of the amendments appearing at 86 FR 37676, 86

FR 37901, and 86 FR 37918).)

29 CFR 2509.99-1(d)

(d) Employer Limitations on the number of IRA

sponsors offered under the program. The Department

recognizes that the cost of permitting employees to

make IRA contributions through payroll deductions

may be significantly affected by the number of IRA

sponsors to which the employer must remit contributions. It is the view of the Department that an employer may limit the number of IRA sponsors to which

employees may make payroll deduction contributions

without exceeding the limitations of 29 CFR 2510.32(d), provided that any limitations on, or costs or assessments associated with an employee’s ability to

transfer or roll over IRA contributions to another IRA

sponsor is fully disclosed in advance of the employee’s

decision to participate in the program. The employer

may select one IRA sponsor as the designated recipient

for payroll deduction contributions, or it may establish

criteria by which to select IRA sponsors, e.g., standards

relating to the sponsor’s provision of investment education, forms, availability to answer employees’ questions, etc., and may periodically review its selectees to

App. 95

determine whether to continue to designate them.

However, an employer may be considered to be involved in the program beyond the limitations set forth

in 29 CFR 2510.3-2(d) if the employer negotiates with

an IRA sponsor and thereby obtains special terms and

conditions for its employees that are not generally

available to similar purchasers of the IRA. The employer’s involvement in the IRA program would also

be in excess of the limitations of the regulation if the

employer exercises any influence over the investments

made or permitted by the IRA sponsor.

(29 C.F.R. § 2509.99-1 (Lexis Advance through the July

19, 2021 issue of the Federal Register, with the exception of the amendments appearing at 86 FR 37676, 86

FR 37901, and 86 FR 37918).)

App. 96

California Government Code § 100000(d)

(d)(1) “Eligible employer” means a person or entity

engaged in a business, industry, profession, trade, or

other enterprise in the state, whether for profit or not

for profit, excluding the federal government, the state,

any county, any municipal corporation, or any of the

state’s units or instrumentalities, that has five or more

employees and that satisfies the requirements to establish or participate in a payroll deposit retirement

savings arrangement.

(2) Upon a positive determination pursuant to subdivision (a) of Section 100046, eligible employer means

an employer of a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the

Welfare and Institutions Code.

(3) “Eligible employer” does not include an employer

that provides a retirement savings program as described in subdivision (g) of Section 100032.

California Government Code § 100004(c)

(c) Moneys in the program fund may be invested or

reinvested by the Treasurer or may be invested in

whole or in part under contract with the board of a California public retirement system, with private money

managers, or in myRAs, or a combination thereof, as

determined by the board.

App. 97

California Government Code §§ 100010(a)(8) and

(a)(12)

(a) The board shall have the power and authority to

do all of the following:

...

(8) Retain and contract with the board of a California

public retirement system, private financial institutions,

other financial and service providers, consultants, actuaries, counsel, auditors, third-party administrators,

and other professionals as necessary.

...

(12) Collaborate and cooperate with the board of a

California public retirement system, private financial

institutions, service providers, and business, financial,

trade, membership, and other organizations to the extent necessary or desirable for the effective and efficient design, implementation, and administration of

the program and to maximize outreach to eligible employers and eligible employees.

California Government Code § 100034(b)

(b) Employers shall not be a fiduciary, or considered

to be a fiduciary, over the trust or the program. The

program is a state-administered program, not an

employer-sponsored program. If the program is subsequently found to be preempted by any federal law

or regulation, employers shall not be liable as plan

App. 98

sponsors. An employer shall not bear responsibility for

the administration, investment, or investment performance of the program. An employer shall not be liable

with regard to investment returns, program design,

and benefits paid to program participants.

California Government Code § 100036

The state shall not have any liability for the payment

of the retirement savings benefit earned by program

participants pursuant to this title. The state, and any

of the funds of the state, shall have no obligation for

payment of the benefits arising from this title.

California Government Code § 100043

(a) The board shall not operate the program if the

IRA arrangements offered fail to qualify for the favorable federal income tax treatment ordinarily accorded

to IRAs under the Internal Revenue Code, or if it is determined that the program is an employee benefit plan

under the federal Employee Retirement Income Security Act.

(b)(1) Prior to opening the program for enrollment,

the board shall report to the Governor and Legislature

the specific date on which the program will start to enroll program participants and that the following prerequisites and requirements for the program have

been met:

App. 99

(A) The program is structured in a manner to keep

the program from being classified as an employee benefit plan subject to the federal Employee Retirement

Income Security Act.

(B) The payroll deduction IRA arrangements offered

by the program qualify for the favorable federal income

tax treatment ordinarily accorded to IRA arrangements under the Internal Revenue Code.

(C) The board has defined in regulation the roles and

responsibilities of employers in a manner to keep the

program from being classified as an employee benefit

plan subject to the federal Employee Retirement Income Security Act.

(D) The board has adopted a third-party administrator operational model that limits employer interaction

and transactions with the employee to the extent feasible.

(2) The report required by paragraph (1) shall be submitted in compliance with Section 9795.

California Government Code § 100046

The CalSavers Retirement Savings Program is approved by the Legislature and implemented as of January 1, 2017. The board shall consider and utilize the

following parameters in designing the program:

(a) The board shall include a provider of in-home supportive services, as regulated by Article 7 (commencing

App. 100

with Section 12300) of Chapter 3 of Part 3 of Division

9 of the Welfare and Institutions Code in the program

if the board determines, and the Director of the State

Department of Social Services and the Director of the

Department of Finance certify, in writing, all of the following:

(1) The inclusion meets all state and federal legal requirements.

(2) The appropriate employer of record has been

identified for the purpose of satisfying all the program’s employer requirements.

(3) The payroll deduction, described in Section

12302.2 of the Welfare and Institutions Code, can be

implemented at reasonable costs.

(4) The inclusion does not create a financial liability

for the state or employer of record.

(b) The board shall structure the program so as to ensure the state is prohibited from incurring liabilities

associated with administering the program and that

the state has no liability for the program or its investments.

(c) The board shall determine necessary costs associated with outreach, customer service, enforcement,

staffing and consultant costs, and all other costs necessary to administer the program.

(d) The board shall consult with employer representatives to create an administrative structure that

facilitates employee participation while addressing

App. 101

employer needs, including, but not limited to, clearly

defining employers’ duties and liability exemption pursuant to Section 100034.

(e) The board shall include comprehensive worker

education and outreach in the program, and the board

may collaborate with state and local government agencies, community-based and nonprofit organizations,

foundations, vendors, and other entities deemed appropriate to develop and secure ongoing resources for

education and outreach that reflect the cultures and

languages of the state’s diverse workforce population.

(f) The board shall include comprehensive employer

education and outreach in the program, with an emphasis on employers with fewer than 100 employees,

developed in consultation with employer representatives, with the integration of the following components:

(1) A program internet website to assist the employers of participating employees.

(2) A toll-free help line for employers with live and

automated assistance.

(3)

Online internet web training.

(4)

Live presentations to business associations.

(5) Targeted outreach to small businesses with 10 or

less employees.