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ANSWER TO COMPLAINTCase No. 13-C-1450 TEH

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MORGAN, LEWIS &BOCKIUS LLP

ATTORNEYS AT LAW

SAN FRANCISCO

MORGAN, LEWIS & BOCKIUS LLPNicole A. Diller (SBN 154842)Roberta H. Vespremi (SBN 225067)[email protected]@morganlewis.comOne Market, Spear Street TowerSan Francisco, California 94105-1126Telephone: 415.442.1000Facsimile: 415.442.1001

MORGAN, LEWIS & BOCKIUS LLPCharles C. Jackson (appearance pro hac vice)Allyson N. Ho (appearance pro hac vice)[email protected]@morganlewis.com77 West Wacker Drive, Fifth FloorChicago, Illinois 60601Telephone: 312.324.1000Facsimile: 312.324.1001

Attorneys for Defendants Dignity Health, Herbert J.Vallier, and the Members of the Dignity HealthRetirement Plans Sub-Committee (erroneously namedas the Members of the Dignity Retirement Committee)

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

STARLA ROLLINS on behalf of herself,individually, and on behalf of all otherssimilarly situated,

Plaintiff,

v.

DIGNITY HEALTH, a California non-profitcorporation, HERBERT J. VALLIER,an individual, the members of the DignityRetirement Committee, and JOHN andJANE DOES, each an individual, 1-20,

Defendants.

Case No. 13-C-1450 TEH

DEFENDANTS’ ANSWER TOPLAINTIFF’S COMPLAINT

Case3:13-cv-01450-TEH Document86 Filed01/13/14 Page1 of 28

1 ANSWER TO COMPLAINTCASE NO. 13-C-1450 TEH

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Defendants Dignity Health, Herbert J. Vallier, and the members of the Dignity Health

Retirement Plans Sub-Committee (erroneously named as the members of the Dignity Retirement

Committee) (collectively, “defendants”) respond to the allegations contained in the complaint

filed by plaintiff Starla Rollins as follows:

Answering the first, unnumbered paragraph of the complaint, defendants admit that

Rollins filed this action, which purports to assert claims on behalf of a class as defined in the

complaint, but deny that Rollins states a claim or that any portion of the complaint is suitable for

class treatment under Rule 23 of the Federal Rules of Civil Procedure. Except as expressly

admitted, defendants deny the allegations of the first unnumbered paragraph.

I. INTRODUCTION1

1. Answering paragraph 1 of the complaint, defendants admit that Dignity Health

operates hospitals and health care centers in California, Arizona, and Nevada, as well as other

states, all of which aim to provide “good healthcare” in accordance with the principles of the

Catholic Health Ministry, Dignity Health’s Statement of Common Values (“SCVs”), and the

United States Conference of Catholic Bishops’ Ethical and Religious Directives for Catholic

Healthcare Services (“ERDs”), as applicable. Rollins’ statement of what “this case is about” is an

expression of Rollins’ opinion as to which no response is required. Except as expressly admitted,

defendants deny the allegations of paragraph 1.

2. Answering paragraph 2 of the complaint, defendants state that the allegations

contained in paragraph 2 are legal conclusions that require no response.

3. Answering paragraph 3 of the complaint, defendants admit that Rollins purports to

bring this action on behalf of participants and beneficiaries of Dignity Health’s defined benefit

plans, excepting high-level personnel and Plan fiduciaries, but defendants deny that this action is

suitable for class treatment. The only benefit plan maintained for Dignity Health employees and

their beneficiaries that falls within this definition is the Dignity Health Pension Plan (the “Plan”).

1 Defendants’ Answer incorporates all or portions of headings contained in Rollins’ Complaint forease of reference. Defendants do not construe such captions to constitute allegation of fact, but tothe extent the Court deems the complaint’s headings to contain factual contentions to whichdefendants must respond, defendants deny such allegations.



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On that basis, defendants deny all allegations as to any other benefit plans maintained for Dignity

Health employees or their beneficiaries and respond to the remaining allegations as to the Plan.

Defendants further deny the allegations of the second sentence of paragraph 3. In response to the

third sentence of paragraph 3, defendants state that plans for which Dignity Health or another

sponsoring employer elected ERISA coverage under Section 410(d) of ERISA fall within that

statute’s governance scheme, while other plans established by Dignity Health, including the Plan

in which Rollins participates, meet ERISA’s church plan exemption. Except as expressly

admitted, defendants deny the allegations of paragraph 3.

4. Answering paragraph 4 of the complaint, defendants admit that Dignity Health as a

corporate entity is not directly controlled by the Roman Catholic Church. Except as expressly


5. Answering first paragraph contained in paragraph 5 of the complaint, defendants

admit that Dignity Health as a corporate entity is not directly controlled by the Roman Catholic

Church. Except as expressly admitted, defendants deny the allegations of the first paragraph of

paragraph 5 and answer the remaining subparagraphs as follows:

A. Employees. Defendants admit that Catholic faith is not a requirement for

employment at Dignity Health and that some of its personnel became Dignity Health employees

in connection with partnering between Dignity Health and previously unaffiliated community

hospitals. Except as expressly admitted, defendants deny the allegations of paragraph 5(A).

B. Medical Procedures. Defendants admit that at least some of Dignity Health’s

community hospitals perform direct sterilizations and that the Catholic Church generally does not

sanction such procedures. By way of further answer, defendants aver that, over the past thirty

years, the Sisters of the Sponsoring Congregations that founded Dignity Health concluded that in

a number of geographic areas, the viability of the organization and the Sponsoring

Congregations’ ability to spread their healing ministry would be strengthened by collaborating

with non-Catholic community hospitals. These non-Catholic hospitals joined Dignity Health

under a protocol that required them to follow Catholic Church teachings on abortions, assisted

suicide, and several other procedures, but allowed them to provide some family planning services



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not approved by the Church. Under the supervision and approval of the local bishops in the

diocese where each community hospital is located, the community hospitals were brought into the

Dignity Health system under a community hospital model that allows Dignity Health to spread its

healing ministry and provide needed health care services to, among others, underserved

populations. Except as expressly admitted, defendants deny the allegations of paragraph 5(B).

C. Spiritual Guidance. Defendants admit that Dignity Health respects the diversity of

its patients’ faiths and considers spiritual care an important facet of healing, all in accordance

with the tenets of the Catholic Health Care ministry. Except as expressly admitted, defendants

deny the allegations of paragraph 5(C).

D. Growth Model. Defendants admit that Dignity Health has partnered with non-

Catholic community hospitals as part of its healing ministry. Defendants aver that Dignity

Health’s Sponsoring Congregations believe that the viability of Dignity Health’s ability to spread

its healing ministry would best be strengthened by collaborating with non-Catholic community

hospitals in areas in which Catholic healthcare facilities are not present. Except as expressly

admitted, defendants deny the allegations of paragraph 5(D).

6. Answering paragraph 6 of the complaint, defendants incorporate by reference their

responses to paragraph 5 and its subparagraphs. Except as expressly admitted, defendants deny

the allegations of paragraph 6.

7. Answering paragraph 7 of the complaint, defendants lack sufficient knowledge and

belief to respond to Rollins’ state of knowledge and, on that basis, deny the allegations of

paragraph 7.

8. Answering paragraph 8 of the complaint, defendants admit that the Dignity Health

Pension Plan (the “Plan”) is maintained as a church plan under ERISA section 4(b)(2).

Defendant further aver that Catholic Healthcare West (“CHW”), Dignity Health’s former name,

received four favorable private letter rulings (“PLRs”) from the Internal Revenue Service

affirming the Plan’s status as a church plan. Except as expressly admitted, defendants deny the

allegations of paragraph 8.



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9. Answering paragraph 9 of the complaint, defendants deny the allegations of

paragraph 9.


contained in paragraph 10 are legal conclusions that require no response. To the extent an answer

is required, defendants deny the allegations of paragraph 10.

11. Answering paragraph 11 of the complaint, defendants deny the allegations of the

first sentence of paragraph 11 and respond that the remaining allegations are legal conclusions

that require no response.

12. Answering paragraph 12 of the complaint, defendants admit that Rollins purports

to seek the relief referenced in her allegations but deny that Rollins is entitled to that relief or any

relief whatsoever.

II. JURISDICTION AND VENUE

13. Answering paragraph 13 of the complaint, defendants admit that the referenced

sections provide federal jurisdiction over matters arising under ERISA but deny that the Plan is an

ERISA plan. Except as expressly admitted, defendants deny the allegations of paragraph 13.

14. Answering paragraph 14 of the complaint, defendants admit that Dignity Health’s

headquarters are within this district. Defendants further admit that the referenced section of

ERISA provides nationwide service of process but deny that the Plan is an ERISA plan. Except

as expressly admitted, defendants deny the allegations of paragraph 14.


paragraph 15.

16. Answering paragraph 16 of the complaint, defendants admit that venue is proper in

this district because Dignity Health is headquartered in this district. Except as expressly


17. Answering paragraph 17 of the complaint, defendants admit that venue is proper in

this district. Except as expressly admitted, defendants deny the allegations of paragraph 17.



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III. PARTIES


Community Hospital of San Bernardino previously employed Rollins. Defendants further admit

that Rollins is a participant in the Plan and is vested in the Plan under its terms. Except as

expressly admitted, defendants deny the allegations of paragraph 18.

19. Answering paragraph 19 of the complaint, defendants admit that Dignity Health is

a California non-profit corporation headquartered in San Francisco, California and offers

participation in the Plan to eligible employees. The Plan is maintained by the Dignity Health

Retirement Plans Sub-Committee. Except as expressly admitted, defendants deny the allegations

of paragraph 19.


paragraph 20.

21. Answering paragraph 21 of the complaint, defendants admit that the Retirement

Plans Sub-Committee maintains the Plan. Except as expressly admitted, defendants deny the


22. Answering paragraph 22 of the complaint, defendants are without knowledge or

information sufficient to form a belief as to Rollins’ understanding relating to the fictitiously

named defendants John and Jane Does 21-40 and therefore deny the allegations contained in

paragraph 22.

IV. THE CHURCH PLAN EXEMPTION

A. The Adoption of ERISA.

23. Answering paragraph 23 of the complaint, defendants state that the legislative and

sociological bases for the adoption of ERISA are matters of history, as to which Rollins’

allegations are incomplete. Except as expressly admitted, defendants deny the allegations of

paragraph 23.


sociological bases for the adoption of ERISA are matters of history, as to which Rollins’



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allegations are incomplete. Except as expressly admitted, defendants deny the allegations of

paragraph 24.

25. Answering paragraph 25 of the complaint, defendants state that the scope and

coverage of ERISA is reflected in the statute and implementing regulations and Rollins does not

fully summarize the body of law by her allegations. Except as expressly admitted, defendants

deny the allegations of paragraph 25.

B. The Church Plan Exemption in 1974.

26. Answering paragraph 26 of the complaint, defendants admit that ERISA contains

statutory and regulatory exemptions, including exempting governmental plans and church plans

from its governance. Except as expressly admitted, defendants deny the allegations of paragraph

26.


contained in paragraph 27 and its attached footnote 1 are incomplete characterizations of law.

Except as expressly admitted, defendants deny the allegations of paragraph 27.


contained in paragraph 28 are incomplete characterizations of law. Except as expressly admitted,


C. The Church Plan Exemption in 1980


faith-based community’s concerns regarding the original statutory text of ERISA’s church plan

definition are matters of history, as to which Rollins’ allegations are incomplete. Except as


30. Answering paragraph 30 of the complaint, defendants admit that the

Multiemployer Pension Plan Amendments Act of 1980 amended ERISA’s definition of a church

plan in response to, without limitation, concerns raised by the faith-based community regarding

that definition. Except as expressly admitted, defendants deny the allegations of paragraph 30.



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31. Answering paragraph 31 of the complaint, defendants admit that Congress

included modified ERISA’s church plan definition and assert that the modification speaks for

itself. Except as expressly admitted, defendants deny the allegations of paragraph 31.

32. Answering paragraph 32 of the complaint, defendants admit that Rollins quotes a

portion of the 1980 amendments. Except as expressly admitted, defendants deny the allegations

of paragraph 32.


paragraph 33.


paragraph 34.


paragraph 35.


paragraph 36.

V. DIGNITY HEALTH

A. Dignity’s Operations.

37. Answering paragraph 37 of the complaint, defendants deny that Rollins has

accurately alleged the number of states in which Dignity Health operates. Defendants admit the

remaining allegations of paragraph 37.

38. Answering paragraph 38 of the complaint, defendants admit the allegations of

paragraph 38.


currently employs roughly 60,000 people.

40. Answering paragraph 40 of the complaint, defendants admit that in 1986, two

separate congregations of the Sisters of Mercy joined their hospitals together to form CHW.

Defendants further respond that in 1988, the Adrian Dominican Sisters brought their two

hospitals into the CHW network in recognition of the value to be brought to their health care

ministry from being part of a larger health system. For the same reasons, throughout the late 20th



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century, various other congregations joined their hospitals with CHW. Each of these hospitals

conformed to Catholic teachings and values and was sponsored by an Order of Women Religious

of the Catholic Church. Defendants further admit that, beginning in the 1990s, the members of

the Sponsoring Congregations concluded that the viability of CHW and the ability to continue to

spread its healing ministry required collaboration with non-Catholic community hospitals,

including some of the hospitals referenced in paragraph 40 of the complaint. Defendants deny

that all of the hospitals referenced in paragraph 40 of the complaint are non-Catholic community

hospitals. The development of CHW’s collaboration with these community hospitals was

conducted with the oversight of Catholic Bishops, who approved the incorporation of community

hospitals. Except as expressly admitted, defendants deny the allegations of paragraph 40.


includes non-Catholic community hospitals. Defendants deny that Dignity Health’s community

hospitals do not adhere to the moral and doctrinal teaching of the Catholic Church and aver that

these hospitals adhere to the SCVs, which, with limited exceptions, closely reflect the teaching of

the ERDs. Except as expressly admitted, defendants deny the allegations of paragraph 41.

42. Answering paragraph 42 of the complaint, defendants admit that in 2012 U.S.

HealthWorks joined the Dignity Health system. Defendants deny that U.S. HealthWorks does not

adhere to the moral and doctrinal teaching of the Catholic Church and aver that these healthcare

facilities adhere to the SCVs, which, with limited exceptions, closely reflect the teaching of the

ERDs. Except as expressly admitted, Dignity defendants deny the allegations of paragraph 42.


issues revenue bonds. Defendants further admit that Dignity Health invests its assets in

accordance with its strategic asset allocation plan. Except as expressly admitted, defendants deny



currently has a Board of Directors and an Executive Leadership Team among its governance and

leadership structures. Except as expressly admitted, defendants deny the allegations of paragraph

44.



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45. Answering paragraph 45 of the complaint, defendants admit that two members of

Dignity Health’s Board of Directors are Sisters of the Sponsoring Congregations and that the

Executive Leadership Team currently has no members who are clergy or women religious.



provides competitive compensation for its job positions, including to members of its executive

team. Defendants further admit that Rollins accurately repeats Dignity Health’s executive

compensation disclosures. Except as expressly admitted, defendants deny the allegations of

paragraph 46.

47. Answering paragraph 47 of the complaint, defendants admit that the Catholic

Church does not directly control Dignity Health, but aver that certain Dignity Health assets are

considered stable patrimony by virtue of the Sponsoring Congregations’ interests in those assets.


48. Answering paragraph 48 of the complaint, defendants admit that in line with

Catholic teaching, Dignity Health does not discriminate against those of other faiths in its hiring

practices. Except as expressly admitted, defendants deny the allegations of paragraph 48.


Church does not directly control Dignity Health but aver that certain Dignity Health assets are




does not impose religious beliefs or practices on its patients. In accord with the Catholic values

of inclusion and Dignity Health’s mission to perform a healing ministry based on the life and

works of Jesus, Dignity Health does not restrict its healing ministry to those only of the Catholic

faith and assists in facilitating all patients’ spiritual care as part of the healing process. Except as




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51. Answering paragraph 51 of the complaint, defendants deny that at least 21 Dignity

Health facilities provide family planning services not condoned by the Church. Except as



complies with all federal and state regulations and reporting requirements applicable to it.

Defendants further admit that Dignity Health at times shares its consolidated financial statements

and other financial information to rating agencies and the public in connection with, among other

things, the issuance of tax-exempt revenue bonds. Except as expressly admitted, defendants deny


B. Dignity’s Pension Plan.

53. Answering paragraph 53 of the complaint, defendants admit that the Plan is a non-

contributory defined benefit pension plan that covers most of Dignity Health’s employees. The

Dignity Health Retirement Plans Sub-Committee maintains the Plan. Except as expressly


54. Answering paragraph 54 of the complaint, defendants admit that, from time to

time, Dignity Health makes amendments to the Plan and has frozen certain formulae and replaced

them with others, but deny that any such changes to formulae have applied to Rollins. Except as


55. Answering paragraph 55 of the complaint, defendants deny the allegations in

paragraph 55.

1. The Plan Is A Defined Benefit Plan.

56. Answering paragraph 56 of the complaint, defendants admit that the Plan is a

defined benefit pension plan, but deny that Dignity Health established it. The Plan is maintained

by the Dignity Health Retirement Plans Sub-Committee. Defendants further admit that the Plan

provides retirement income to participants and beneficiaries following the termination of

participants’ employment. Except as expressly admitted, defendants deny the allegations of

paragraph 56.



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57. Answering paragraph 57 of the complaint, defendants admit that the Plan is a

defined benefit plan and is not an individual account plan or defined contribution plan. Except as


2. The Sponsor and Fiduciaries of the Dignity Plans.


offers participation in the Plan to eligible employees. Except as expressly admitted, defendants

deny the allegations of paragraph 58.


paragraph 59.


paragraph 60.

61. Answering paragraph 61 of the complaint, defendants aver that the Dignity Health

Retirement Plans Sub-Committee is the primary fiduciary of the Plan. Except as expressly



paragraph 62.

63. Answering paragraph 63 of the complaint, defendants admit that the Dignity

Health Retirement Plans Sub-Committee is the primary fiduciary of the Plan and has

discretionary authority and control over the Plan and its administration. Except as expressly



paragraph 64.


maintains that the Plan is a church plan exempt from ERISA. Defendants further admit that

Dignity Health has elected ERISA coverage for some of its employee benefit plans. Except as




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3. The Dignity Pension Plans Disclosure Of Information.

66. Answering paragraph 66 of the complaint, defendants admit that Rollins requested

a statement of her benefit entitlement under the Plan. Except as expressly admitted, defendants

deny the allegations contained in paragraph 66.

67. Answering paragraph 67 of the complaint, defendants admit that Rollins made a

written request for certain documents pertaining to the Plan. Except as expressly admitted,

defendants deny the allegations contained in paragraph 67.

68. Answering paragraph 68 of the complaint, defendants deny that they have not

responded to Rollins’ requests, but rather have provided her with the requested documentation to

the extent it exists.

4. The Dignity Plan Church Plan Status.


paragraph 69.

a. Types of Plans May Qualify as Church Plans.


paragraph 70 and its subparts.


paragraph 71.

72. Answering paragraph 72 of the complaint, defendants deny that the quote

accurately reflects the text of ERISA section 3(33)(A).

73. Answering paragraph 73 of the complaint, deny the allegations of paragraph 73.

74. Answering paragraph 74 of the complaint, defendants admit that the quoted text

accurately excerpts a portion of ERISA section 3(33)(C)(i). Except as specifically admitted,



operates hospitals and other healthcare facilities in connection with its goal of spreading the

healing ministry of Jesus. Except as specifically admitted, defendants deny the allegations of

paragraph 75.



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76. Answering paragraph 76 of the complaint, defendants admit that Dignity Health is

a church ministry rather than a church. Defendants aver that certain Dignity Health assets are


Except as specifically admitted, defendants deny the allegations of paragraph 76.

77. Answering paragraph 77 of the complaint, defendants admit the first sentence of

that paragraph and deny the second sentence. Except as specifically admitted, defendants deny



Church does not directly control Dignity Health, but aver that certain Dignity Health assets are


Footnote 2 attached to paragraph 78 states a legal proposition, as to which no response is

required. Except as specifically admitted, defendants deny the allegations of paragraph 78.


paragraph 79.

80. Answering paragraph 80 of the complaint, defendants aver that Rollins’ allegations

are an overly simplistic, and therefore erroneous, summary of the principles and tenets of the

Catholic Health Ministry and the Roman Catholic Church’s position on healthcare issues.

Defendants admit that Dignity Health does not discriminate against employees based on religious

faith, but deny that that facet of its hiring policies contradict the Catholic faith. Defendants

further incorporate by reference their response to paragraph 5(B). Except as expressly admitted,



provides non-denominational chapels in some of its facilities and permits its patients to contact

spiritual advisors of their choice, and deny that such spiritual assistance conflicts with the ERDs,

the SCVs, or any other part of the Catholic Health Ministry. Catholic health care does not

distinguish itself through proselytism; indeed, the Church explicitly discourages the practice, with

chaplains of other faiths welcomed and often hired to work in the pastoral care departments of

Catholic hospitals. Defendants further admit that the Women Religious sponsors of Dignity



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Health have chosen to grow their healing ministry by, among other things, partnering with non-

Catholic community hospitals. Dignity Health requires that these community hospitals abide by

the SCVs that closely reflect the ERDs and which are approved by the Sponsoring Congregations.

The SCVs require all community hospitals to respect the dignity of their patients by requiring

reverence at every stage of life’s journey, from conception to natural death. Community hospitals

must consider professional spiritual care, encompassing the full range of spiritual services, as

essential to their service. The SCVs further establish the need for ideals of Dignity,

Collaboration, Justice, Stewardship, and Excellence within the community hospitals. Except as



paragraph 82.


paragraph 83 and aver that the Plan is a church plan as defined in ERISA section 3(33)(C).


paragraph 84 and aver that the Plan is a church plan as defined in ERISA section 3(33)(C).

b. Church Plan Status under ERISA Section 3(33)(B)(ii).

85. Answering paragraph 85 of the complaint, defendants admit that many Plan

participants are non-clergy healthcare workers. Except as expressly admitted, defendants deny



paragraph 86.


paragraph 87.

c. The Establishment Clause of the First Amendment of the Constitution.


paragraph 88.



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VI. CLASS ALLEGATIONS


to bring this action individually and as a class action on behalf of the class defined in paragraph

89, but deny that any class may be certified under Rule 23. Except as expressly admitted,


A. Numerosity.

90. Answering paragraph 90 of the complaint, defendants admit that Dignity employs

approximately 60,000 individuals. Except as expressly admitted, defendants deny the allegations

of paragraph 90.

91. Answering paragraph 91 of the complaint, defendants deny that Rollins has

accurately alleged the number of states in which Dignity Health operates, but admits that it

employs individuals across at least 16 states. Except as expressly admitted, defendants deny the


B. Commonality.

92. Answering paragraph 92 of the complaint, defendants deny that the issues

regarding liability in this case present common questions of law and fact. Defendants deny the

remaining allegations contained in paragraph 92.

93. Answering paragraph 93 of the complaint, defendants deny that the issues

regarding relief are common to the members of the purported class. Defendants deny the


C. Typicality.

94. Answering paragraph 94 of the complaint, defendants deny that Rollins’ claims are

typical to the claims of the other members of the purported class. Defendants deny the remaining

allegations contained in paragraph 94.

95. Answering paragraph 95 of the complaint, defendants deny that Rollins’s claims

are typical to the claims of the other members of the purported class. Defendants deny the




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96. Answering paragraph 96 of the complaint, defendants deny the allegations

contained in paragraph 96.

D. Adequacy.

97. Answering paragraph 97 of the complaint, defendants lack sufficient information

or belief as to the truth of the allegations of that paragraph and, on that basis, deny the allegations

of paragraph 97.

98. Answering paragraph 98 of the complaint, defendants lack sufficient information

or belief as to the truth of the allegations of that paragraph and, on that basis, deny the allegations

of paragraph 97.


paragraph 99.


paragraph 100.

E. Rule 23(b)(1) Requirements.


paragraph 101.


paragraph 102.

F. Rule 23(b)(2) Requirements.


paragraph 103.

G. Rule 23(b)(3) Requirements.

104. Answering paragraph 104 of the complaint, defendants deny that a class action is

superior to other available methods for the adjudication of Rollins’ Complaint. Defendants aver

that the allegations contained in paragraph 104 and its subparts are legal conclusions that require

no response. Defendants deny the remaining allegations of paragraph 104 and its subparts.



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VII. CAUSES OF ACTION

COUNT I(Claim for Equitable Relief Pursuant to ERISA Section 502(a)(3) Against Defendant

Dignity)

105. Answering paragraph 105 of the complaint, defendants incorporate by reference

their responses contained to the prior paragraphs as if those responses were fully set forth here.

106. Answering paragraph 106 of the complaint, defendants admit that Rollins seeks

declaratory relief under Count I but deny that Rollins is entitled to the relief sought. Except as


107. Answering paragraph 107 of the complaint, defendants admit that Rollins seeks an

order directing defendants to treat the Plan as an ERISA plan, but deny that Rollins is entitled to

the relief sought. Except as expressly admitted, defendants deny the allegations of paragraph 107.


paragraph 108 of the complaint.

COUNT II(Claim re Reporting and Disclosure Against Defendant Dignity and/or the Members of the

Dignity Retirement Committee)



A. Summary Plan Descriptions

110. Answering paragraph 110 of the complaint, defendants deny that they have not

provided Rollins with the advisement of her rights under the Plan in the manner required by law.

111. Answering paragraph 111 of the complaint, defendants deny that Dignity Health or

members of the Dignity Health Retirement Plans Sub-Committee have violated ERISA section

104 because the Plan has at all times been exempt from ERISA requirements under ERISA

section 4(b)(2). Defendants state that the remaining allegations contained in paragraph 111 are

legal conclusions that require no response. To the extent an answer is required, defendants deny




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B. Annual Reports

112. Answering paragraph 112 of the complaint, defendants admit that they have not

filed an annual report with respect to the Plan, but aver that they had no duty to do so because the

Plan is exempt from ERISA requirements under ERISA section 4(b)(2). Except as expressly



paragraph 113.

C. Summary Annual Reports.


furnished Rollins with a Summary Annual Report, but aver that they had no duty to do so because

the Plan is exempt from ERISA requirements under ERISA section 4(b)(2). Except as expressly



paragraph 115.

D. Notification of Failure to Meet Minimum Funding.


furnished Rollins with a Notice with respect to the Plan, but aver that they had no duty to do so

because, among other things, the Plan is exempt from ERISA requirements under ERISA section

4(b)(2). Except as expressly admitted, defendants deny the allegations of paragraph 116.


paragraph 117.


paragraph 118.

119. Answering paragraph 119 of the complaint, defendants admit that ERISA section

302 does not apply to the Plan. Except as expressly admitted, defendants deny the allegations of

paragraph 119.



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E. Funding Notices


furnished Rollins with a Funding Notice with respect to the Plan, but aver that they had no duty to

do so because, among other things, the Plan is exempt from ERISA requirements under ERISA

section 4(b)(2). Except as expressly admitted, defendants deny the allegations of paragraph 120.

121. Answering paragraph 121 of the complaint, defendants admit that at all relevant

times the Dignity Health Retirement Plans Sub-Committee or its predecessor committee has been

the administrator of the Plan. Except as expressly admitted, defendants deny the allegations of

paragraph 121.


paragraph 122.

F. Pension Benefit Statements

123. Answering paragraph 123 of the complaint, defendants admit that the Plan is not

subject to ERISA section 105(a)(1). Except as expressly admitted, defendants deny the


124. Answering paragraph 124 of the complaint, defendants admit that at all relevant

times the Dignity Health Retirement Plans Sub-Committee or its predecessor committee has been

the administrator of the Plan. Except as expressly admitted, defendants deny the allegations of

paragraph 124.


paragraph 125.

COUNT III(Claim re Minimum Funding Against Defendant Dignity)



127. Answering paragraph 127 of the complaint, defendants admit that ERISA provides

minimum funding standings for plans governed by ERISA, but deny that those requirements



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apply to the Plan. Except as expressly admitted, defendants deny the allegations of paragraph

127.


paragraph 128.


paragraph 129.


paragraph 130.

COUNT IV(Claim re Written Instrument Against Defendant Dignity)




writing requirements, but deny that the requirements set forth in paragraph 132 apply to a plan

established under 26 U.S.C. § 403(b). Except as expressly admitted, defendants deny the


133. Answering paragraph 133 of the complaint, defendants deny that Dignity Health

has not established written documents in compliance with all applicable legal requirements.


paragraph 134.

COUNT V(Claim re Establishing a Trust Against Defendant Dignity)




contained in paragraph 136 are legal conclusions that require no response.

137. Answering paragraph 137 of the complaint, defendants admit that the Plan’s assets

are held in trust and deny the allegations that the trust does not comply with all applicable

requirements. Except as expressly admitted, defendants deny the allegations of paragraph 137.



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paragraph 138.

COUNT VI(Claim for Penalties Against Defendant Dignity and/or the members of the Dignity

Retirement Committee)



140. Answering paragraph 140 of the complaint, defendants admit that ERISA

502(a)(1)(A) permits certain claims for relief in the ERISA context, but deny that Rollins may

assert such claims against defendants. Except as expressly admitted, defendants deny the


141. Answering paragraph 141 of the complaint, defendants admit that ERISA

502(c)(3) permits certain claims for relief in the ERISA context, but deny that Rollins may assert

such claims against defendants. Except as expressly admitted, defendants deny the allegations of

paragraph 141.


their answer to paragraph 141.


their answer to paragraph 141.


paragraph 144.


paragraph 145.

COUNT VII

(Claim re Fiduciary Duty Against All Defendants)





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to bring her claim under ERISA section 502(a)(2) but deny that such a claim may be brought

against the Plan. Except as expressly admitted, defendants deny the allegations of paragraph 147.

A. Duty of Prudence and Loyalty

148. Answering paragraph 148 of the complaint, defendants admit that Rollins quotes

portions of ERISA section 404, but deny that ERISA applies to the Plan. Except as expressly


149. Answering paragraph 149 of the complaint, defendants deny all allegations of

paragraph 149 and aver that defendants had no authority to enforce any provision of ERISA with

respect to the Plan, which is exempt from ERISA.

150. Answering paragraph 150 of the complaint, defendants admit that they could not

and did not “enforce” the ERISA provisions in connection with the Plan because the Plan is

exempt from ERISA requirements under ERISA section 4(b)(2). Defendants further aver that at

all times the appropriate defendants ensured that the Plan was lawfully administered. Except as



paragraph 151.


paragraph 152.

B. Alleged Prohibited Transactions.


certain prohibited transaction provisions, but deny that ERISA applies to the Plan and further

deny that defendants engaged in any wrongdoing whatsoever.






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156. Answering paragraph 156 of the complaint, defendants deny that they were parties

in interest with respect to the Plan pursuant to ERISA because the Plan is exempt from ERISA

requirements under ERISA section 4(b)(2). Defendants state that the remaining allegations of

paragraph 156 are legal conclusions that require no response. To the extent an answer is required,



paragraph 157.


paragraph 158.


paragraph 159.


paragraph 160.


paragraph 161.

COUNT VIII(Claim re Establishment Clause of the First Amendment of the Constitution)



163. Answering paragraph 163 of the complaint, defendants admit that, in an effort to

provide the highest quality care to its patients, Dignity Health attempts to identify, develop, and

retain the top talent in the field without respect to its employees’ religion. Except as expressly

admitted, defendants deny the allegations of paragraph 163 and it subparts. Defendants further

state that the allegations of paragraph 163 are legal conclusions that require no response.



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164. Answering paragraph 164 of the complaint, defendants acknowledge that Rollins

seeks declaratory relief from the Court, but deny she is entitled to such relief.

VIII. PRAYER FOR RELIEF

165. Defendants deny that Rollins is entitled to any of the relief sought in each and

every paragraph of the Prayer for Relief, or to any relief whatsoever, on behalf of herself or any

other person(s).

DEFENSES AND AFFIRMATIVE DEFENSES

Without assuming the burden of proof on any matters that would otherwise rest with

Rollins and the purported class members, and expressly denying any and all wrongdoing,

defendants allege the following affirmative defenses. Defendants presently have insufficient

knowledge or information to form a belief as to whether there are additional affirmative defenses

than those stated below. Therefore, defendants expressly reserve the right to assert additional

affirmative defenses:

FIRST DEFENSE(Failure To State A Claim)

Reserved for Purposes of Appeal

The complaint fails in its entirety for failure to state a claim for which relief can be

granted.

SECOND DEFENSE(Subject Matter Jurisdiction-Plan Is Exempt From ERISA)

This Court does not have subject matter jurisdiction over the claims made by Rollins and

each purported class member in the complaint, in whole or in part, because the Plan about which

Rollins and each purported class member complain is exempt from ERISA requirements under

ERISA section 4(b)(2).

THIRD DEFENSE(Subject Matter Jurisdiction-Ecclesiastical Abstention Doctrine)

This Court lacks subject matter jurisdiction over the claims made by Rollins and each of

purported class member in the complaint, in whole or in part, under the ecclesiastical abstention



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doctrine because the Court may not unduly interfere with the relationship between Dignity Health

and the Roman Catholic Church.

FOURTH DEFENSE(Church Autonomy)

Rollins’ claims, and the claims of each purported class member, are barred, in whole or in

part, by the church autonomy doctrine grounded in the First Amendment of the United States

Constitution.

FIFTH DEFENSE(Reliance on IRS Private Letter Rulings)

Rollins’ claims, and the claims of each purported class member, fail because the Plan

received four favorable PLRs from the IRS affirming its status as a church plan and defendants

are entitled to rely upon that Plan-specific ruling. The Plan-specific PLRs either negate Rollins’

claims, and the claims of each purported class member, and/or equitable principles preclude her

and each purported class member from recovering anything under them.

SIXTH DEFENSE(Claims Not Ripe)


part because defendants have requested a Private Letter Ruling from the Internal Revenue Service

concerning the continued status of the Plan as a church plan after Dignity Health’s January 2012

restructuring and until that letter is issued, Rollins’ claims, and the claims of each purported class

member, are not yet ripe.

SEVENTH DEFENSE(Statute of Limitations)


part, by the applicable statute of limitations.



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EIGHTH DEFENSE(No Private Cause of Action)


part, because the statutes she and each purported class member seek to enforce are not privately

enforceable.

NINTH DEFENSE(Standing)


part, because Rollins and each purported class member lack standing under Article III, Section 2

of the United States Constitution as neither she nor any purported class member has suffered any

injury from the alleged conduct.

TENTH DEFENSE(Injunctive Relief Inappropriate/Equity Defense)

Rollins’ claims, and the claims of each purported class member, for injunctive,

declaratory, or other equitable relief are barred because such relief is not appropriate under the

circumstances and equity precludes Rollins and each purported class member from receiving any

relief under the circumstances.

ELEVENTH DEFENSE(Settlor Function)

To the extent that Rollins’ claims, and the claims of each purported class member, raise

issues of plan design, amendment or termination, defendants are immune from fiduciary breach

under the settlor function doctrine.

TWELFTH DEFENSE(Free Exercise Clause of First Amendment Rights)

Rollins’ claims, and the claims of each purported class member, are barred because the

Free Exercise Clause of the First Amendment to the United States Constitution supports or

requires ERISA’s church plan exemption and the Plan meets the requirements of that exemption.



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DB1/ 77057899.1

WHEREFORE, defendants pray for a judgment against Rollins as follows:

a. An order declaring and adjudging that the Plan is a church plan under ERISA

section 3(33); 29 U.S.C. § 1002(33), and therefore are exempt from ERISA’s requirements;

b. An order declaring and adjudging that ERISA’s church plan exemption as applied

to Dignity Health does not violate the Establishment Clause of the First Amendment.

c. An order awarding costs to defendants; and

d. Any such other and further relief as the Court deems just and proper.

Dated: January 13, 2014 MORGAN, LEWIS & BOCKIUS LLP

By /s/ Nicole A. DillerNicole A. DillerRoberta H. [email protected]@morganlewis.comOne Market, Spear Street TowerSan Francisco, California 94105-1126Telephone: 415.442.1000Facsimile: 415.442.1001

Charles Jackson (appearance pro hac vice)Allyson N. Ho (appearance pro hac vice)[email protected]@morganlewis.com77 West Wacker Drive, Fifth FloorChicago, Illinois 60601Telephone: 312.324.1000Facsimile: 312.324.1001

Attorneys for Defendants Dignity Health,Herbert J. Vallier, and the Members of theDignity Health Retirement Plans Sub-Committee (erroneously named as theDignity Retirement Committee)


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