author: Justice Ginsburg Justice Scalia, Justice Thomas,

text:
    RAYMOND B. YATES, M. D., P. C. PROFIT SHARING PLAN, et al. v. HENDON, TRUSTEE
    No. 02-458.
    Argued January 13, 2004
    Decided March 2, 2004

      James A. Holifield, Jr., argued the cause and filed briefs for petitioners.

      Matthew D. Roberts argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Olson, Deputy Solicitor General Kneedler, Howard M. Radzely, Allen H. Feldman, Nathaniel I. Spiller, and Ellen L. Beard.

      C. Mark Troutman argued the cause for respondent. With him on the brief was John A. Walker, Jr.

         Mark E. Schmidtke and William J. Kayatta, Jr., filed a brief for UNUMProvident Corporation as amicus curiae urging reversal.

   Justice Ginsburg

delivered the opinion of the Court.

This case presents a question on which federal courts have divided: Does the working owner of a business (here, the sole shareholder and president of a professional corporation) qualify as a “participant” in a pension plan covered by the Employee Retirement Income Security Act of 1974 (ERISA or Act), 88 Stat. 832, as amended, 29 U. S. C. § 1001 et seq. The answer, we hold, is yes: If the plan covers one or more employees other than the business owner and his or her spouse, the working owner may participate on equal terms with other plan participants. Such a working owner, in common with other employees, qualifies for the protections ERISA affords plan participants and is governed by the rights and remedies ERISA specifies. In so ruling, we reject the position, taken by the lower courts in this case, that a business owner may rank only as an “employer” and not also as an “employee” for purposes of ERISA-sheltered plan participation.

I

A

Enacted “to protect . . . the interests of participants in employee benefit plans and their beneficiaries,” 29 U. S. C. § 1001(b), ERISA comprises four titles. Title I, 29 U. S. C. § 1001 et seq., “requires administrators of all covered pension plans to file periodic reports with the Secretary of Labor, mandates minimum participation, vesting and funding schedules, establishes standards of fiduciary conduct for plan administrators, and provides for civil and criminal enforcement of the Act.” Nachman Corp. v. Pension Benefit Guaranty Corporation, 446 U. S. 359, 361, n. 1 (1980). Title II, codified in various parts of Title 26 of the United States Code, “amended various [Internal Revenue Code] provisions . . . pertaining to qualification of pension plans for special tax treatment, in order, among other things, to conform to the standards set forth in Title I.” 446 U. S., at 361, n. 1. Title III, 29 U. S. C. § 1201 et seq., “contains provisions designed to coordinate enforcement efforts of different federal departments, and provides for further study of [benefit plans].” 446 U. S., at 361, n. 1. Title IV, 29 U. S. C. § 1301 et seq., “created the Pension Benefit Guaranty Corporation (PBGC) and a termination insurance program to protect employees against the loss of ‘nonforfeitable’ benefits upon termination of pension plans that lack sufficient funds to pay such benefits in full.” 446 U. S., at 361-362, n. 1. See also Mead Corp. v. Tilley, 490 U. S. 714, 717 (1989); Brief for United States as Amicus Curiae 2.

This case concerns the definition and coverage provisions of Title I, though those provisions, indicating who may participate in an ERISA-sheltered plan, inform each of ERISA’s four titles. Title I defines the term “employee benefit plan” to encompass “an employee welfare benefit plan or an employee pension benefit plan or a plan which is both ....” 29 U. S. C. § 1002(3). The same omnibus section defines “participant” as “any employee or former employee of an employer, ... who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer ... , or whose beneficiaries may be eligible to receive any such benefit.” §1002(7). “Employee,” under Title I’s definition section, means “any individual employed by an employer,” § 1002(6), and “employer” includes “any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan,” § 1002(5).

B

Dr. Raymond B. Yates was the sole shareholder and president of Raymond B. Yates, M. D., P. C., a professional corporation. 287 F. 3d 521, 524 (CA6 2002); App. to Pet. for Cert. 10a. The corporation maintained the Raymond B. Yates, M. D., P. C. Profit Sharing Plan (Profit Sharing Plan or Plan), for which Yates was the administrator and trustee. Ibid. From the Profit Sharing Plan’s inception, at least one person other than Yates or his wife was a participant. Ibid.; App. 269a. The Profit Sharing Plan qualified for favorable tax treatment under § 401 of the Internal Revenue Code (IRC). 287 F. 3d, at 524; App. 71a-73a. As required by both the IRC, 26 U. S. C. § 401(a)(13), and Title I of ERISA, 29 U. S. C. § 1056(d), the Plan contained an antialienation provision. That provision, entitled “Spendthrift Clause,” stated in relevant part: “Except for ... loans to Participants as [expressly provided for in the Plan], no benefit or interest available hereunder will be subject to assignment or alienation, either voluntarily or involuntarily.” App. 252a.

In December 1989, Yates borrowed $20,000 at 11 percent interest from the Raymond B. Yates, M. D., P. C. Money Purchase Pension Plan (Money Purchase Pension Plan), which later merged into the Profit Sharing Plan. Id., at 268a-269a. The terms of the loan agreement required Yates to make monthly payments of $433.85 over the five-year period of the loan. Id., at 269a. Yates failed to make any monthly payment. 287 F. 3d, at 524. In June 1992, coinciding with the Money Purchase Pension Plan-Profit Sharing Plan merger, Yates renewed the loan for five years. App. 269a. Again, he made no monthly payments. In fact, Yates repaid nothing until November 1996. 287 F. 3d, at 524. That month, he used the proceeds from the sale of his house to make two payments totaling $50,467.46, which paid off in full the principal and interest due on the loan. Ibid. Yates maintained that, after the repayment, his interest in the Profit Sharing Plan amounted to about $87,000. App. to Pet. for Cert. 39a.

Three weeks after Yates repaid the loan to the Profit Sharing Plan, on December 2, 1996, Yates’s creditors filed an involuntary petition against him under Chapter 7 of the Bankruptcy Code. Id., at 12a; accord App. 300a. In August 1998, respondent William T. Hendon, the Bankruptcy Trustee, filed a complaint, pursuant to 11 U. S. C. §§ 547(b) and 550, against petitioners Profit Sharing Plan and Yates, in his capacity as the Plan’s trustee. App. la-3a. Hendon asked the Bankruptcy Court to “avoi[d] the . . . preferential transfer by [Yates] to [the Profit Sharing Plan] in the amount of $50,467.46 and [to] orde[r] [the Plan and Yates, as trustee,] to pay over to the [bankruptcy] trustee the sum of $50,467.46, plus legal interest..., together with costs ....” Id., at 3a. On cross-motions for summary judgment, the Bankruptcy Court ruled for Trustee Hendon. App. to Pet. for Cert. 36a-50a.

The Bankruptcy Court first determined that the loan repayment qualified as a preferential transfer under 11 U. S. C. § 547(b). App. to Pet. for Cert. 41a-42a. That finding was not challenged on appeal. The Bankruptcy Court then held that the Profit Sharing Plan and Yates, as trustee, could not rely on the Plan’s antialienation provision to prevent Hendon from recovering the loan repayment. As “a self-employed owner of the professional corporation that sponsored] the pension plan,” the Bankruptcy Court stated, Yates could not “participate as an employee under ERISA and ... [therefore could not] use its provisions to enforce the restriction on the transfer of his beneficial interest in the Defendant Plan.” Id., at 43a-44a. In so ruling, the Bankruptcy Court relied on Circuit precedent, including SEC v. Johnston, 143 F. 3d 260 (CA6 1998), and Fugarino v. Hartford Life & Accident Ins. Co., 969 F. 2d 178 (CA6 1992).

The District Court affirmed the Bankruptcy Court’s judgment. App. to Pet. for Cert. 9a-35a. Acknowledging that other Courts of Appeals had reached a different conclusion, id., at 19a, the District Court observed that it was bound by Sixth Circuit precedent. According to the controlling Sixth Circuit decisions, neither a sole proprietor, Fugarino, 969 F. 2d, at 186, nor a sole owner of a corporation, Agrawal v. Paul Revere Life Ins. Co., 205 F. 3d 297, 302 (2000), qualifies as a “participant” in an ERISA-sheltered employee benefit plan. App. to Pet. for Cert. 20a-21a. Applying Circuit precedent, the District Court concluded:

“The fact Dr. Yates was not qualified to participate in an ERISA protected plan means none of the money he contributed to the Plan as an ‘employee’ was ever a part of an ERISA plan. The $50,467.46 he returned to the Plan was not protected by ERISA, because none of the money he had in the Plan was protected by ERISA.” Id., at 20a.

The Sixth Circuit affirmed the District Court’s judgment. 287 F. 3d 521. The Court of Appeals adhered to its “published caselaw [holding] that ‘a sole proprietor or sole shareholder of a business must be considered an employer and not an employee... for purposes of ERISA.’ ” Id., at 525 (quoting Fugarino, 969 F. 2d, at 186). “[T]he spendthrift clause in the Yates profit sharing/pension plan,” the appeals court accordingly ruled, “[was] not enforceable by Dr. Yates under ERISA.” 287 F. 3d, at 526. The Sixth Circuit’s determination that Yates was not a “participant” in the Profit Sharing Plan for ERISA purposes obviated the question whether, had Yates qualified as such a participant, his loan repayment would have been shielded from the Bankruptcy Trustee’s reach. See App. to Pet. for Cert. 46a-47a.

We granted certiorari, 539 U. S. 957 (2003), in view of the division of opinion among the Circuits on the question whether a working owner may qualify as a participant in an employee benefit plan covered by ERISA. Compare Agrawal, 205 F. 3d, at 302 (sole shareholder is not a participant in an ERISA-qualified plan); Fugarino, 969 F. 2d, at 186 (sole proprietor is not a participant); Kwatcher v. Massachusetts Serv. Employees Pension Fund, 879 F. 2d 957, 963 (CA1 1989) (sole shareholder is not a participant); Giardono v. Jones, 867 F. 2d 409, 411-412 (CA7 1989) (sole proprietor is not a participant); Peckham v. Board of Trustees of Int’l Brotherhood of Painters and Allied Trades Union, 653 F. 2d 424, 427-428 (CA10 1981) (sole proprietor is not a participant), with Vega v. National Life Ins. Servs., Inc., 188 F. 3d 287, 294 (CA5 1999) (co-owner is a participant); In re Baker, 114 F. 3d 636, 639 (CA7 1997) (majority shareholder is a participant); Madonia v. Blue Cross & Blue Shield of Virginia, 11 F. 3d 444, 450 (CA4 1993) (sole shareholder is a participant).

II

A

ERISA’s definitions of “employee,” and, in turn, “participant,” are uninformative. See Nationwide Mut. Ins. Co. v. Darden, 503 U. S. 318, 323 (1992) (“ERISA’s nominal definition of ‘employee’ as ‘any individual employed by an employer’ is completely circular and explains nothing.” (citation omitted)). We therefore look to other provisions of the Act for instruction. See ibid. ERISA’s text contains multiple indications that Congress intended working owners to qualify as plan participants. Because these indications combine to provide “specific guidance,” ibid., there is no cause in this case to resort to common law.

Congress enacted ERISA against a backdrop of IRC provisions that permitted corporate shareholders, partners, and sole proprietors to participate in tax-qualified pension plans. Brief for United States as Amicus Curiae 19-20. Working shareholders have been eligible to participate in such plans since 1942. See Revenue Act of 1942, ch. 619, § 165(a)(4), 56 Stat. 862 (a pension plan shall be tax exempt if, inter alia, “the contributions or benefits provided under the plan do not discriminate in favor of employees who are officers, shareholders, persons whose principal duties consist in supervising the work of other employees, or highly compensated employees”). Two decades later, still prior to ERISA’s adoption, Congress permitted partners and sole proprietors to establish tax-favored pension plans, commonly known as “H. R. 10” or “Keogh” plans. Self-Employed Individuals Tax Retirement Act of 1962, 76 Stat. 809; Brief for United States as Amicus Curiae 19. Thus, by 1962, working owners of all kinds could contribute to tax-qualified retirement plans.

ERISA’s enactment in 1974 did not change that situation. Rather, Congress’ objective was to harmonize ERISA with longstanding tax provisions. Title I of ERISA and related IRC provisions expressly contemplate the participation of working owners in covered benefit plans. Id., at 14-16. Most notably, several Title I provisions partially exempt certain plans in which working owners likely participate from otherwise mandatory ERISA provisions. Exemptions of this order would be unnecessary if working owners could not qualify as participants in ERISA-protected plans in the first place.

To illustrate, Title I frees the following plans from the Act’s fiduciary responsibility requirements:

“(1) a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees; or
“(2) any agreement described in section 786 of [the IRC], which provides payments to a retired partner or deceased partner or a deceased partner’s successor in interest.” 29 U. S. C. § 1101(a).

The IRC defines the term “highly compensated employee” to include “any employee who ... was a 5-percent owner at any time during the year or the preceding year.” 26 U. S. C. § 414(q)(l)(A). A “5-percent owner,” the IRC further specifies, is “any person who owns . . . more than 5 percent of the outstanding stock of the corporation or stock possessing more than 5 percent of the total combined voting power of all stock of the corporation” if the employer is a corporation, or “any person who owns more than 5 percent of the capital or profits interest in the employer” if the employer is not a corporation. §416(i)(l)(B)(i). Under these definitions, some working owners would fit the description “highly compensated employees.” Similarly, agreements that make payments to retired partners, or to deceased partners’ successors in interest, surely involve plans in which working partners participate.

Title I also .contains more limited exemptions from ERISA’s fiduciary responsibility requirements. These exemptions, too, cover plans that ordinarily include working owners as participants. To illustrate, assets of an employee benefit plan typically must be held in trust. See 29 U. S. C. § 1103(a). That requirement, however, does not apply, inter alia, “to a plan . . . some or all of the participants of which are employees described in section 401(c)(1) of [the IRC].” § 1103(b)(3)(A). IRC § 401(c)(1)(A) defines an “employee” to include “a self-employed individual”; and IRC §§ 401(c)(1)(B) and (2)(A)(i), in turn, define “a self-employed individual” to cover an individual with “earned income” from “a trade or. business in which personal services of the taxpayer are a material income-producing factor.” This definition no doubt encompasses working sole proprietors and partners. 26 US. C. §§ 1402(a) and (c).

Title I also contains exemptions from ERISA’s prohibited transaction provisions. Like the fiduciary responsibility exemptions, these exemptions indicate that working owners may participate in ERISA-qualified plans. For example, although Title I generally bars transactions between a plan and a party in interest, 29 U. S. C. § 1106, the Act permits, among other exceptions, loans to plan participants if certain conditions are satisfied, § 1108(b)(1). One condition is that loans must not be “made available to highly compensated employees ... in an amount greater than the amount made available to other employees.” § 1108(b)(1)(B). As just observed, see supra, at 13-14, some working owners, including shareholder-employees, qualify as “highly compensated employees.” Title I goes on to exclude “owner-employees,” as defined in the IRC, from the participant loan exemption. § 1108(d)(1). Under the IRC’s definition, owner-employees include partners “who ow[n] more than 10 percent of either the capital interest or the profits interest in [a] partnership” and sole proprietors, but not shareholder-employees. 26 U. S. C. § 401(c)(3). In sum, Title I’s provisions involving loans to plan participants, by explicit inclusion or exclusion, assume that working owners — shareholder-employees, partners, and sole proprietors — may participate in ERISAqualified benefit plans.

Provisions of Title IV of ERISA are corroborative. Brief for United States as Amicus Curiae 17, and n. 8. Title IV does not apply to plans “established and maintained exclusively for substantial owners,” 29 U. S. C. § 1321(b)(9) (emphasis added), a category that includes sole proprietors and shareholders and partners with a ten percent or greater ownership interest, § 1322(b)(5)(A). But Title IV does cover plans in which substantial owners participate along with other employees. See § 1322(b)(5)(B). In addition, Title IV does not cover plans established by “professional service employer[s]” with 25 or fewer active participants. § 1321(b)(13). Yates’s medical practice was set up as a professional service employer. See § 1321(c)(2)(A) (a “professional service employer” is “any proprietorship, partnership, corporation . . . owned or controlled by professional individuals . . . the principal business of which is the performance of professional services”). But significantly larger plans — plans covering more than 25 employees — established by a professional service employer would presumably qualify for protection.

Particularly instructive, Title IV and the IRC, as amended by Title II, clarify a key point missed by several lower courts: Under ERISA, a working owner may have dual status, i. e., he can be an employee entitled to participate in a plan and, at the same time, the employer (or owner or member of the employer) who established the plan. Both Title IV and the IRC describe the “employer” of a sole proprietor or partner. See 29 U. S. C. § 1301(b)(1) (“An individual who owns the entire interest in an unincorporated trade or business is treated as his own employer, and a partnership is treated as the employer of each partner who is an employee within the meaning of section 401(c)(1) of [the IRC].”); 26 U. S. C. § 401(c)(4) (“An individual who owns the entire interest in an unincorporated trade or business shall be treated as his own employer. A partnership shall be treated as the employer of each partner who is an employee within the meaning of [§ 401(c)(1)].”). These descriptions expressly anticipate that a working owner can wear two hats, as an employer and employee. Cf. Clackamas Gastroenterology Associates, P. C. v. Wells, 538 U. S. 440, 453 (2003) (Ginsburg, J., dissenting) (“Clackamas readily acknowledges that the physician-shareholders are ‘employees’ for ERISA purposes.”).

In sum, because the statute’s text is adequately informative, we need not look outside ERISA itself to conclude with security that Congress intended working owners to qualify as plan participants.

Congress’ aim is advanced by our reading of the text. The working employer’s opportunity personally to participate and gain ERISA coverage serves as an incentive to the creation of plans that will benefit employer and nonowner employees alike. See Brief for United States as Amicus Curiae 21-22. Treating working owners as participants not only furthers ERISA’s purpose to promote and facilitate employee benefit plans. Recognizing the working owner as an ERISA-sheltered plan participant also avoids the anomaly that the same plan will be controlled by discrete regimes: federal-law governance for the nonowner employees; state-law governance for the working owner. See, e. g., Agrawal, 205 F. 3d, at 302 (because sole shareholder does not rank as a plan participant under ERISA, his state-law claims against insurer are not preempted). ERISA’s goal, this Court has emphasized, is “uniform national treatment of pension benefits.” Patterson v. Shumate, 504 U. S. 753, 765 (1992). Excepting working owners from the federal Act’s coverage would generate administrative difficulties and is hardly consistent with a national uniformity goal. Cf. Madonia, 11 F. 3d, at 450 (“Disallowing shareholders ... from being plan ‘participants’ would result in disparate treatment of corporate employees’ claims, thereby frustrating the statutory purpose of ensuring similar treatment for all claims relating to employee benefit plans.”).

We note finally that a 1999 Department of Labor advisory opinion accords with our comprehension of Title I’s definition and coverage provisions. Pension and Welfare Benefits Admin., U. S. Dept. of Labor, Advisory Opinion 99-04A, 26 BNA Pension and Benefits Rep. 559 (hereinafter Advisory Opinion 99-04A). Confirming that working owners may qualify as participants in ERISA-protected plans, the Department’s opinion concludes:

“In our view, the statutory provisions of ERISA, taken as a whole, reveal a clear Congressional design to include ‘working owners’ within the definition of ‘participant’ for purposes of Title I of ERISA. Congress could not have intended that a pension plan operated so as to satisfy the complex tax qualification rules applicable to benefits provided to ‘owner-employees’ under the provisions of Title II of ERISA, and with respect to which an employer faithfully makes the premium payments required to protect the benefits payable under the plan to such individuals under Title IV of ERISA, would somehow transgress against the limitations of the definitions contained in Title I of ERISA. Such a result would cause an intolerable conflict between the separate titles of ERISA, leading to the sort of‘absurd results’ that the Supreme Court warned against in Nationwide Mutual Insurance Co. v. Darden, 503 U. S. 318 (1992).” Id., at 560-561 (footnote omitted).

This agency view on the qualification of a self-employed individual for plan participation reflects a “body of experience and informed judgment to which courts and litigants may properly resort for guidance.” Skidmore v. Swift & Co., 323 U. S. 134, 140 (1944).

B

The Sixth Circuit’s leading decision in point — its 1992 determination in Fugarino — relied, in large part, on an incorrect reading of a Department of Labor regulation, 29 CFR § 2510.3-3. The Fugarino court read the Department’s regulation to rule out classification of a working owner as an employee of the business he owns. Entitled “Employee benefit plan,” the regulation complements §3(3) of ERISA, 29 U. S. C. § 1002(3), which defines “employee benefit plan,” see supra, at 7; the regulation provides, in relevant part:

“(b) Plans without employees. For purposes of title I of the Act and this chapter, the term ‘employee benefit plan’ shall not include any plan, fund or program, other than an apprenticeship or other training program, under which no employees are participants covered under the plan, as defined in paragraph (d) of this section. For example, a so-called ‘Keogh’ or ‘H. R. 10’ plan under which only partners or only a sole proprietor are participants covered under the plan will not be covered under title I. However, a Keogh plan under which one or more common law employees, in addition to the self-employed individuals, are participants covered under the plan, will be covered under title I. .. .
“(c) Employees. For purposes of this section:
“(1) An individual and his or her spouse shall not be deemed to be employees with respect to a trade or business, whether incorporated or unincorporated, which is wholly owned by the individual or by the individual and his or her spouse, and
“(2) A partner in a partnership and his or her spouse shall not be deemed to be employees with respect to the partnership.” 29 CFR §2510.3-3 (2003) (emphasis added and deleted).

In common with other Courts of Appeals that have held working owners do not qualify as participants in ERISA-governed employee benefit plans, the Sixth Circuit apparently understood the regulation to provide a generally applicable definition of the term “employee,” controlling for all Title I purposes. Fugarino, 969 F. 2d, at 185-186 (“As a result of [the] regulatio[n], a plan whose sole beneficiaries are the company’s owners cannot qualify as a plan under ERISA. Further, an employer cannot ordinarily be an employee or participant under ERISA.” (citation omitted)). See also Kwatcher, 879 F. 2d, at 961 (“By its terms, the regulation unambiguously debars a sole shareholder... from ‘employee’ status, notwithstanding that he may work for the corporation he owns, shoulder to shoulder with eligible (non-owner) employees.”); Giardono, 867 F. 2d, at 412 (“[This] regulatio[n] exclude[s] from the definition of an employee any individual who wholly owns a trade or business, whether incorporated or unincorporated.”).

Almost eight years after its decision in Fugarino, in Agra-wal, the Sixth Circuit implied that it may have misread the regulation: “Th[e] limiting definition of employee [in §2510.3-3(c)] addresses the threshold issue of whether an ERISA plan exists. It is not consistent with the purpose of ERISA to apply this limiting definition of employee to the statutory definitions of participant and beneficiary.” 205 F. 3d, at 303. The Circuit, however, did not overrule its earlier interpretation. See 287 F. 3d, at 525 (case below) (“[T]he three judge panel before which this appeal is currently pending has no authority to overrule Fugarino.”); Agrawal, 205 F. 3d, at 302 (“the decision in the present case is preordained by the Fugarino holding”).

The Department of Labor’s 1999 advisory opinion, see supra, at 17, interprets the “Employee benefit plan” regulation as follows:

“In its regulation at 29 C. F. R. 2510.3-3, the Department clarified that the term ‘employee benefit plan’ as defined in section 3(3) of Title I does not include a plan the only participants of which are ‘[a]n individual and his or her spouse . . . with respect to a trade of business, whether incorporated or unincorporated, which is wholly owned by the individual or by the individual and his or her spouse’ or ‘[a] partner in a partnership and his or her spouse.’ The regulation further specifies, however, that a plan that covers as participants ‘one or more common law employees, in addition to the self-employed individuals’ will be included in the definition of ‘employee benefit plan’ under section 3(3). The conclusion of this opinion, that such ‘self-employed individuals’ are themselves ‘participants’ in the covered plan, is fully consistent with that regulation.” Advisory Opinion 99-04A, at 561, n. 7 (emphasis added).

This agency view, overlooked by the Sixth Circuit, see Brief for United States as Amicus Curiae 26, merits the Judiciary’s respectful consideration. Cf. Clackamas Gastroenterology Associates, P. C., 538 U. S., at 449 (Equal Employment Opportunity Commission guidelines under the Americans with Disabilities Act of 1990 are persuasive).

The Department’s regulation itself reveals the definitional prescription’s limited scope. The prescription describes “employees” only “[f]or purposes of this section,” supra, at 19 (emphasis deleted), i. e., the section defining “employee benefit plans.” Accordingly, the regulation addresses only what plans qualify as “employee benefit plans” under Title I of ERISA. Plans that cover only sole owners or partners and their spouses, the regulation instructs, fall outside Title I’s domain. Plans covering working owners and their non-owner employees, on the other hand, fall entirely within ERISA’s compass. See Vega, 188 F. 3d, at 294 (“We . . . interpret the regulatio[n] to define employee only for purposes of determining the existence of an ERISA plan.”); Ma donia, 11 F. 3d, at 449-450 (“[T]he regulation does not govern the issue of whether someone is a ‘participant’ in an ERISA plan, once the existence of that plan has been established. This makes perfect sense: once a plan has been established, it would be anomalous to have those persons ben-efitting from it governed by two disparate sets of legal obligations.”).

Also in common with other Courts of Appeals that have denied participant status to working owners, the Sixth Circuit’s leading decision mistakenly relied, in addition, on ERISA’s “anti-inurement” provision, 29 U. S. C. § 1103(c)(1), which prohibits plan assets from inuring to the benefit of employers. See Fugarino, 969 F. 2d, at 186 (“A fundamental requirement of ERISA is that ‘the assets of a plan shall never inure to the benefit of any employer____’ ”); Kwatcher, 879 F. 2d, at 960 (“Once a person has been found to fit within the ‘employer’ integument, [§ 1103(c)(1)] prohibits payments to him from a qualified plan.”); Giardono, 867 F. 2d, at 411 (“It is a fundamental requirement of ERISA that ‘. . . the assets of a plan shall never inure to the benefit of any employer . . . .’”).

Correctly read, however, the anti-inurement provision does not preclude Title I coverage of working owners as plan participants. It states that, with enumerated exceptions, “the assets of a plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan.” 29 U. S. C. § 1103(c)(1). The provision demands only that plan assets be held for supplying benefits to plan participants. . Like the Department of Labor regulation, see supra, at 18-19, the anti-inurement provision does not address the discrete question whether working owners, along with nonowner employees, may be participants in ERISA-sheltered plans. As the Fifth Circuit observed in Vega:

“Th[e] [anti-inurement] provision refers to the congressional determination that funds contributed by the employer (and, obviously, by the [nonowner] employees ...) must never revert to the employer; it does not relate to plan benefits being paid with funds or assets of the plan to cover a legitimate pension or health benefit claim by an employee who happens to be a stockholder or even the sole shareholder of a corporation.” 188 F. 3d, at 293, n. 5.

ERISA’s anti-inurement provision is based on the analogous exclusive benefit provision in the IRC, 26 U. S. C. § 401(a)(2), which has never been understood to bar tax-qualified plan participation by working owners. See H. R. Conf. Rep. No. 93-1280, pp. 302-303 (1974); Brief for United States as Amicus Curiae 29. The purpose of the anti-inurement provision, in common with ERISA’s other fiduciary responsibility provisions, is to apply the law of trusts to discourage abuses such as self-dealing, imprudent investment, and misappropriation of plan assets, by employers and others. See, e. g., Prudential Ins. Co. of Am. v. Doe, 76 F. 3d 206, 209 (CA8 1996). Those concerns are not implicated by paying benefits to working owners who participate on an equal basis with nonowner employees in ERISA-protected plans.

In sum, the anti-inurement provision, like the Department of Labor regulation, establishes no categorical barrier to working owner participation in ERISA plans. Whether Yates himself, in his handling of loan repayments, see supra, at 8, engaged in conduct inconsistent with the anti-inurement provision is an issue not yet reached by the courts below, one on which we express no opinion.

For the reasons stated, the judgment of the Court of Appeals for the Sixth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion, including consideration of questions earlier raised but not resolved. Specifically, given the undisputed facts concerning Yates’s handling of the loan, i.e., his failure to honor the periodic repayment requirements: (1) Did the November 1996 elose-to-bankruptcy repayments, despite the prior defaults, become “a portion of [Yates’s] interest in a qualified retirement plan . . . excluded from his bankruptcy estate,” App. to Pet. for Cert. 40a; and (2) if so, were the. repayments “beyond the reach of [the Bankruptcy] [T]rustee’s power to avoid and recover preferential transfers,” id., at 47a?

It is so ordered.

Justice Scalia,

concurring in the judgment.

The Court uses a sledgehammer to kill a gnat — though it may be a sledgehammer prescribed by United States v. Mead Corp., 533 U. S. 218 (2001). I dissented from that case, see id., at 257, and remain of the view that authoritative interpretations of law by the implementing agency, if reasonable, are entitled to respect. Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984).

In the present case the Solicitor General of the United States, in a brief signed by the Acting Solicitor of Labor, has put forward as the “considered view of the agency charged by Congress with the administration and enforcement of Title I of ERISA,” an interpretation of the relevant terms of that Act which would allow working owners (including sole owners, such as Dr. Yates) to be plan participants under the Employee Retirement Income Security Act of 1974 (ERISA). Brief for United States as Amicus Curiae 26. There is no doubt that this position is the official view of the Department of Labor, and that it has not been contrived for this litigation. The Solicitor General’s brief relies upon a Department of Labor advisory opinion, issued more than five years ago, which concluded that “the statutory provisions of ERISA, taken as a whole, reveal a clear Congressional design to include ‘working owners’ within the definition of ‘participant’ for purposes of Title I of ERISA.” Pension and Welfare Benefits Admin., U. S. Dept. of Labor, Advisory Opinion 99-04A (Feb. 4,1999), 26 BNA Pension and Benefits Rep. 559, 560 (1999).

The Department’s interpretive conclusion is certainly reasonable (the Court’s lengthy analysis says that it is inevitable); it is therefore binding upon us. See Barnhart v. Thomas, 540 U. S. 20, 26 (2003). I would reverse the judgment of the Sixth Circuit on that basis. The Court’s approach, which denies many agency interpretations their conclusive effect and thrusts the courts into authoritative judicial interpretation, deprives administrative agencies of two of their principal virtues: (1) the power to resolve statutory questions promptly, and with nationwide effect, and (2) the power (within the reasonable bounds of the text) to change the application of ambiguous laws as time and experience dictate. The Court’s approach invites lengthy litigation in all the circuits — the product of which (when finally announced by this Court) is a rule of law that only Congress can change.

Justice Thomas,

concurring in the judgment.

I agree with the Court that the judgment of the Court of Appeals should be reversed. The Court persuasively addresses the Court of Appeals’ many errors in this case. See ante, at 18-23. I do not, however, find convincing the Court’s reliance on textual “indications,” ante, at 12. The text of the Employee Retirement Income Security Act of 1974 (ERISA) is certainly consistent with the Court’s interpretation of the word “employee” to include so-called “working owners.” Ibid. However, the various Title I exemptions relied upon so heavily by the Court, see ante, at 13-15, are equally consistent with an interpretation of “employee” that would not include all “working owners.”

As an example, the Court places weight on the exception to the exemption from 29 U. S. C. § 1106, which bars loans made to parties in interest that are “‘made available to highly compensated employees ... in an amount greater than the amount made available to other employees.’” Ante, at 15 (quoting 29 U. S. C. § 1108(b)(1)(B)). The Court notes that “some working owners . . . qualify as ‘highly compensated employees.’” Ante, at 15. That may be true, but there are surely numerous “highly compensated employees” who would both be “employees” under the usual, common-law meaning of that term (and hence “employees” under ERISA, see Nationwide Mut. Ins. Co. v. Darden, 503 U. S. 318 (1992)), and would also not be considered “working owners” as the Court uses the term. It is entirely possible, then, that Congress was merely attempting to exclude these individuals from § 1106, rather than assuming that all “working owners” were “employees.” Hence, the existence of this exception tells us nothing about whether Congress “intended working owners” to be “employees” under ERISA. Ante, at 12.

Since the text is inconclusive, we must turn to the common-law understanding of the term “employee.” Darden, supra, at 322-323. On remand, then, I would direct the Court of Appeals to address whether the common-law understanding of the term “employee,” as used in ERISA, includes Dr. Yates. I would be surprised if it did not, see In re Baker, 114 F. 3d 636, 639 (CA7 1997) (corporation’s separate legal existence from shareholder must be respected); Madonia v. Blue Cross & Blue Shield of Virginia, 11 F. 3d 444, 448-449 (CA4 1993) (same), but this is a matter best resolved, in the first instance, by the court below.

       Section 547(b) provides:
      “Except as provided in subsection (c) of this section, the trustee may avoid any transfer of an interest of the debtor in property—
      “(1) to or for the benefit of a creditor;
      “(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
      “(3) made while the debtor was insolvent;
      “(4) made—
      “(A) on or within 90 days before the date of the filing of the petition; or
      “(B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and
      “(5) that enables such creditor to receive more than such creditor would receive if—
      “(A) the ease were a case under chapter 7 of this title;
      “(B) the transfer had not been made; and
      “(C) such creditor received payment of such debt to the extent provided by the provisions of this title.”
      This provision permits the bankruptcy trustee to avoid certain transfers of “property that wo.uld have been part of the [bankruptcy] estate had it not been transferred before the commencement of bankruptcy proceedings.” Begier v. IRS, 496 U. S. 53, 58 (1990).

       The Courts of Appeals are also divided on whether working owners may qualify as “beneficiaries’* of ERISA-sheltered employee benefit plans. Compare 287 F. 3d 521, 525 (CA6 2002) (case below) (sole shareholder is not a beneficiary of an ERISA-qualified plan); Agrawal, 205 F. 3d, at 302 (sole shareholder is not a beneficiary), with Gilbert v. Alta Health & Life Ins. Co., 276 F. 3d 1292, 1302 (CA11 2001) (sole shareholder is a beneficiary); Wolk v. UNUM Life Ins. of Am., 186 F. 3d 352, 356 (CA3 1999) (partner is a beneficiary); Prudential Ins. Co. of Am. v. Doe, 76 F. 3d 206, 208 (CA8 1996) (controlling shareholder is a beneficiary); Robinson v. Linomaz, 58 F. 3d 365, 370 (CA8 1995) (co-owners are beneficiaries); Peterson v. American Life & Health Ins. Co., 48 F. 3d 404, 409 (CA9 1995) (partner is a beneficiary). The United States, as amicus curiae, urges that treating working owners as “beneficiaries” of an ERISA-qualified plan is not an acceptable solution. Brief for United States as Amicus Curiae 9 (The beneficiary approach “has no logical stopping point, because it would allow a plan to cover anyone it chooses, including independent contractors excluded by [Nationwide Mut. Ins. Co. v. Darden, 503 U. S. 318 (1992)]” and “fails to resolve participation questions for pension plans which, unlike welfare plans, tie coverage directly to service as an employee.”); id,., at 24-25. This issue is not presented here, and we do not resolve it.

       Cf. Nationwide Mut. Ins. Co. v. Darden, 503 U. S. 318 (1992), and Clackamas Gastroenterology Associates, P. C. v. Wells, 538 U. S. 440 (2003) (finding textual clues absent, Court looked to common law for guidance).

         A particular employee benefit plan may be covered by one title of ERISA, but not by another. See Brief for United States as Amicus Curiae 18, n. 9.

       We do not suggest that each provision described supra, at 13-15 and this page, in isolation, would compel the Court’s reading. But cf. post, at 25-26 (Thomas, J., concurring in judgment). In combination, however, the provisions supply “specific guidance” adequate to obviate any need to expound on common law. See Darden, 503 U. S., at 323.

       Courts agree that if a benefit plan covers only working owners, it is not covered by Title I. See, e. g., Slamen v. Paul Revere Life Ins. Co., 166 F. 3d 1102, 1105 (CA11 1999) (sole shareholder is not a participant where disability plan covered only him); In re Watson, 161 F. 3d 593, 597 (CA9 1998) (sole shareholder is not a participant where retirement plan covered only him); SEC v. Johnston, 143 F. 3d 260, 262-263 (CA6 1998) (owner is not a participant where pension plan covered only owner and “perhaps” his wife); Schwartz v. Gordon, 761 F. 2d 864, 867 (CA2 1985) (self-employed individual is not a participant where he is the only contributor to a Keogh plan). Such a plan, however, could qualify for favorable tax treatment. See Brief for United States as Amicus Curiae 18, n. 9.

       Section 2510.3-3’s preamble supports this interpretation. The preamble states, in relevant part:
      “According to the comments [concerning proposed §2510.3-3], a definition of ‘employee’ excluding self-employed individuals might raise problems under section 404(a)(1) with respect to disbursements to self-employed individuals from ‘Keogh’ or ‘H. R. 10’ plans covering both self-employed individuals and ‘common law’ employees. Therefore, the definition of ‘employee’ formerly appearing in proposed §2510.8-6 has been inserted into §2510.8-8 and restricted in scope to that section.” 40 Fed. Reg. 34528 (1975) (emphasis added).

      The Court does not clearly define who exactly makes up this class of “working owners,” even though members of this class are now considered categorically to fall under ERISA’s definition of “employee.”


source: Caselaw Access Project

author: Justice Breyer Justice Stevens,

license: Public Domain

text:
    BALDWIN v. REESE
    No. 02-964.
    Argued December 8, 2003
    Decided March 2, 2004

      Hardy Myers, Attorney General of Oregon, argued the cause for petitioner. With him on the briefs were Peter Shepherd, Deputy Attorney General, Mary H. Williams, Solicitor General, and Janet A. Klapstein and Robert B. Rocklin, Assistant Attorneys General.

      Dennis N. Balske, by appointment of the Court, 540 U. S. 806, argued the cause for respondent.

       Briefs of amici curiae urging reversal were filed for the State of Indiana et al. by Stephen R. Carter, Attorney General of Indiana, and Gary Damon Secrest, Deputy Attorney General, and by the Attorneys General for their respective States as follows: William H. Pryor, Jr., of Alabama,
        Bill Lockyer of California, Ken Salazar of Colorado, M. Jane Brady of Delaware, G. Steven Rowe of Maine, Mike McGrath of Montana, Matt McNair of Nebraska, Brian Sandoval of Nevada, Wayne Stenehjem of North Dakota, Jim Petro of Ohio, W. A. Drew Edmondson of Oklahoma, D. Michael Fisher of Pennsylvania, Lawrence E. Long of South Dakota, Greg Abbott of Texas, Mark L. Shurtleff of Utah, William Sorrell of Vermont, Christine O. Gregoire of Washington, Darrell V. McGraw, Jr., of West Virginia, and Patrick J. Crank of Wyoming; and for the Criminal Justice Legal Foundation by Kent S. Scheidegger.

   Justice Breyer

delivered the opinion of the Court.

Before seeking a federal writ of habeas corpus, a state prisoner must exhaust available state remedies, 28 U. S. C. § 2254(b)(1), thereby giving the State the “ ‘ “opportunity to pass upon and correct” alleged violations of its prisoners’ federal rights.’ ” Duncan v. Henry, 513 U. S. 364, 365 (1995) (per curiam) (quoting Picard v. Connor, 404 U. S. 270, 275 (1971)). To provide the State with the necessary “opportunity,” the prisoner must “fairly present” his claim in each appropriate state court (including a state supreme court with powers of discretionary review), thereby alerting that court to the federal nature of the claim. Duncan, supra, at 365-366; O’Sullivan v. Boerckel, 526 U. S. 838, 845 (1999). This case focuses upon the requirement of “fair presentation.”

I

Michael Reese, the respondent, appealed his state-court kidnaping and attempted sodomy convictions and sentences through Oregon’s state court system. He then brought collateral relief proceedings in the state courts (where he was represented by appointed counsel). After the lower courts denied him collateral relief, Reese filed a petition for discretionary review in the Oregon Supreme Court.

The petition made several different legal claims. In relevant part, the petition asserted that Reese had received “ineffective assistance of both trial court and appellate court counsel.” App. 47. The petition added that “his imprisonment is in violation of [Oregon state law].” Id., at 48. It said that his trial counsel’s conduct violated several provisions of the Federal Constitution. Ibid. But it did not say that his separate appellate “ineffective assistance” claim violated federal law. The Oregon Supreme Court denied review.

Reese ultimately sought a federal writ of habeas corpus, raising, among other claims, a federal constitutional claim that his appellate counsel did not effectively represent him during one of his direct state-court appeals. The Federal District Court held that Reese had not “fairly presented” his federal “ineffective assistance of appellate counsel” claim to the higher state courts because his brief in the state appeals court had not indicated that he was complaining about a violation of federal law.

A divided panel of the Ninth Circuit reversed the District Court. 282 F. 3d 1184 (2002). Although the majority apparently believed that Reese’s petition itself did not alert the Oregon Supreme Court to the federal nature of the appellate “ineffective assistance” claim, it did not find that fact determinative. Id., at 1193-1194. Rather, it found that Reese had satisfied the “fair presentation” requirement because the justices of the Oregon Supreme Court had had “the opportunity to read ... the lower [Oregon] court decision claimed to be in error before deciding whether to grant discretionary review.” Id., at 1194 (emphasis added). Had they read the opinion of the lower state trial court, the majority added, the justices would have, or should have, realized that Reese’s claim rested upon federal law. Ibid.

We granted certiorari to determine whether the Ninth Circuit has correctly interpreted the “fair presentation” requirement.

II

We begin by assuming that Reese’s petition by itself did not properly alert the Oregon Supreme Court to the federal nature of Reese’s claim. On that assumption, Reese failed to meet the “fair presentation” standard, and the Ninth Circuit was wrong to hold the contrary.

We recognize that the justices of the Oregon Supreme Court did have an “opportunity” to read the lower court opinions in Reese’s case. That opportunity means that the judges could have read them. But to say that a petitioner “fairly presents” a federal claim when an appellate judge can discover that claim only by reading lower court opinions in the case is to say that those judges must read the lower court opinions — for otherwise they would forfeit the State’s opportunity to decide that federal claim in the first instance. In our view, federal habeas corpus law does not impose such a requirement.

For one thing, the requirement would force state appellate judges to alter their ordinary review practices. Appellate judges, of course, will often read lower court opinions, but they do not necessarily do so in every case. Sometimes an appellate court can decide a legal question on the basis of the briefs alone. That is particularly so where the question at issue is whether to exercise a discretionary power of review, i. e., whether to review the merits of a lower court decision. In such instances, the nature of the issue may matter more than does the legal validity of the lower court decision. And the nature of the issue alone may lead the court to decide not to hear the case. Indeed, the Oregon Supreme Court is a court with a discretionary power of review. And Oregon Rule of Appellate Procedure 9.05(7) (2003) instructs litigants seeking discretionary review to identify clearly in the petition itself the legal questions presented, why those questions have special importance, a short statement of relevant facts, and the reasons for reversal, “including appropriate authorities.”

For another thing, the opinion-reading requirement would impose a serious burden upon judges of state appellate courts, particularly those with discretionary review powers. Those courts have heavy workloads, which would be significantly increased if their judges had to read through lower court opinions or briefs in every instance. See National Center for State Courts, State Court Caseload Statistics 2002, pp. 106-110 (Table 2) (for example, in 2001, Oregon appellate courts received a total of 5,341 appeals, including 908 petitions for discretionary review to its Supreme Court; California appellate courts received 32,273, including 8,860 discretionary Supreme Court petitions; Louisiana appellate courts received 13,117, including 3,230 discretionary Supreme Court petitions; Illinois appellate courts received 12,411, including 2,325 discretionary Supreme Court petitions).

Finally, we do not find such a requirement necessary to avoid imposing unreasonable procedural burdens upon state prisoners who may eventually seek habeas corpus. A litigant wishing to raise a federal issue can easily indicate the federal law basis for his claim in a state-court petition or brief, for example, by citing in conjunction with the claim the federal source of law on which he relies or a case deciding such a claim on federal grounds, or by simply labeling the claim “federal.”

For these reasons, we believe, that the requirement imposed by the Ninth Circuit would unjustifiably undercut the considerations of federal-state comity that the exhaustion requirement seeks to promote. We consequently hold that ordinarily a state prisoner does not “fairly present” a claim to a state court if that court must read beyond a petition or a brief (or a similar document) that does not alert it to the presence of a federal claim in order to find material, such as a lower court opinion in the case, that does so.

Ill

Reese argues in the alternative that it is wrong to assume that his petition by itself failed to alert the Oregon Supreme Court to the federal nature of his “ineffective assistance of appellate counsel” claim. We do not agree.

Reese must concede that his petition does not explicitly say that the words “ineffective assistance of appellate counsel” refer to a federal claim. The petition refers to provisions of the Federal Constitution in respect to other claims but not in respect to this one. The petition provides no citation of any case that might have alerted the court to the alleged federal nature of the claim. And the petition does not even contain a factual description supporting the claim. Cf. Gray v. Netherlands, 518 U. S. 152, 163 (1996); Duncan, 513 U. S., at 366.

Reese asserts that the petition nonetheless “fairly presents” a federal “ineffective assistance of appellate counsel” claim for two reasons. First, he says that the word “ineffective” is a term of art in Oregon that refers only to federal-law claims and not to similar state-law claims, which, he adds, in Oregon are solely referred to as “inadequate assistance” claims. And thus the Oregon Supreme Court should have known, from his use of the word “ineffective,” that his claim was federal.

Reese, however, has not demonstrated that Oregon law uses the words “ineffective assistance” in the manner he suggests, that is, as referring only to a federal-law claim. See, e. g., Lichau v. Baldwin, 166 Ore. App. 411, 415, 417, 999 P. 2d 1207, 1210, 1211 (2000) (using “ineffective assistance” to refer to violations of the Oregon Constitution), rev’d in part, 333 Ore. 350, 39 P. 3d 851 (2002). Indeed, Reese’s own petition uses both phrases — “ineffective assistance” and “inadequate assistance” — at different points to refer to what is apparently a single claim.

Second, Reese says that in Oregon the standards for adjudicating state and federal “inadequate/ineffective appellate assistance” claims are identical. He adds that, where that identity exists, a petitioner need not indicate a claim’s federal nature, because, by raising a state-law claim, he would necessarily “fairly present” the corresponding federal claim.

However, the Ninth Circuit did not address this argument, and our reading of the briefs filed in the Ninth Circuit leads us to conclude that Reese did not there seek consideration of the argument in that court. Indeed, the argument first made its appearance in this Court in Reese’s brief on the merits. Under this Court’s Rule 15.2, “a nonjurisdictional argument not raised in a respondent’s brief in opposition to a petition for a writ of certiorari may be deemed waived.” Caterpillar Inc. v. Lewis, 519 U. S. 61, 75, n. 13 (1996) (internal quotation marks omitted). This argument falls squarely within the rule. The complex nature of Reese’s claim and its broad implications suggest that its consideration by the lower courts would help in its resolution. Hence, without expressing any view on the merits of the issue, we exercise our Rule 15.2 discretion and deem the argument waived in this Court. See, e.g., Roberts v. Galen of Va., Inc., 525 U. S. 249, 253-254 (1999) (per curiam); South Central Bell Telephone Co. v. Alabama, 526 U. S. 160, 171 (1999); cf. Sprietsma v. Mercury Marine, 537 U. S. 51, 56, n. 4 (2002).

For these reasons, the judgment of the Ninth Circuit is

Reversed.

Justice Stevens,

dissenting.

It is appropriate to disregard this Court’s Rule 15.2 and permit respondents to defend a judgment on grounds not raised in the brief in opposition when the omitted issue is “predicate to an intelligent resolution of the question presented.” Ohio v. Robinette, 519 U. S. 33, 38 (1996) (internal quotation marks omitted). I would do so in this case. Respondent satisfactorily demonstrates that there is no significant difference between an ineffective-assistance-of-appellate-counsel claim predicated on the Oregon Constitution and one based on federal law. Brief for Respondent 29-35; see also Guinn v. Cupp, 304 Ore. 488, 495-496, 747 P. 2d 984, 988-989 (1988) (in banc). It is therefore clear that the state courts did have a fair opportunity to assess respondent’s federal claim. Accordingly, I would affirm the judgment of the Court of Appeals.