Amicus Curiae Brief — Operating Engineers & Participating Employers Pre-Apprentice v. Weiss Bros. Construction Co.

4)

= No. 90-1191

= 2 In the Supreme Court

6 OF THE

2 i

United States

OCTOBER TERM, 1990

OPERATING ENGINEERS & PARTICIPATING EMPLOYERS

PRE-APPRENTICE, APPRENTICE AND JOURNEYMAN

AFFIRMATIVE ACTION TRAINING FUND, AND

THE OPERATING ENGINEERS JOINT APPRENTICESHIP

COMMITTEE re

FOR NORTHERN CALIFORNIA,

Petitioners,

VS.

WEISS Bros. CONSTRUCTION CO. DBA WEISSCAL, et al.,

Respondents.

On Petition for Writ of Certiorari

to the Court of Appeal

of the State of California

MOTION FOR LEAVE TO FILE

AMICUS CURIAE BRIEF AND

AMICUS CURIAE BRIEF IN SUPPORT

OF PETITION FOR WRIT OF CERTIORARI

CARPENTERS JOINT

APPRENTICESHIP AND TRAINING

COMMITTEE FUND FOR SOUTHERN

CALIFORNIA

BY

GERALD V. SELVO

DECARLO, CONNOR & SELVO

A Professional Corporation

900 So. Virgil Avenue

Suite 320

Los Angeles, CA 90020-9990

(213) 738-7959

Bowne of Los Angeles, Law Printers (213) 627-2200

WJ

i

TABLE OF CONTENTS

Ce ee at aeuneawee hs

MOTION FOR LEAVE TO FILE BRIEF AMICUS

CURLAE IN SUPPORT OF PETITIONER’S PE-

TITION FOR WRIT OF CERTIORARI........

BRIEF OF CARPENTERS JOINT APPRENTICE-

SHIP AND TRAINING COMMITTEE FUND AS

AMICUS CURJAE IN SUPPORT OF PETITION

FOR WRIT OF CERTIORARI ................

I

AMICUS AND ITS INTEREST .................

II

RE ye eee ee eee ee te eee ee

A. THE COURT SHOULD ISSUE CERTIO-

RARI iN THIS CASE IN ORDER TO SET-

TLE AN IMPORTANT QUESTION OF

FEDERAL LAW, A QUESTION UPON

WHICH THE UNITED STATES CIRCUIT

COURTS OF APPEAL HAVE DIFFERED

B. THE CASE INVOLVES THE FUNDAMEN-

TAL AND IMPORTANT QUESTION OF

THE CIRCUMSTANCES UNDER WHICH

ERISA COVERAGE ATTACHES TO A RE-

LATIONSHIP BETWEEN AN EMPLOYER

AND AN INDEPENDENTLY EXISTING

NN nr ig ch hac cae ceeieesss

C. THE COURT OF APPEALS UNCRITI-

CALLY APPLIED THE HYDROSTORAGE

DECISION TO THIS CASE ..............

il

TABLE OF CONTENTS

Page

D. WHETHER “APPRENTICESHIP STAN-

DARDS” CONSTITUTE AN ERISA PLAN

IS A FACTUAL QUESTION THAT CAN BE

RESOLVED ONLY BY A REVIEW OF ALL

RELEVANT FACTS RESPECTING THE

PARTICULAR EMPLOYER INVOLVED .. 9

E. COMPLIANCE WITH APPRENTICESHIP

STANDARDS PURSUANT TO CALIFOR-

NIA LABOR CODE SECTION 1777.5 DOES

NOT CREATE A COMPULSORY ERISA

PLAN RELATIONSHIP FOR THE IN-

VOLVED EMPLOTVER ....cesccescccscess 10

1. The Court of Appeals Applied ERISA’s

Definitions Selectively ...............45. 10

bo

Multiple Employer Trust Cases Establish

That Intent is the Touchstone For Deter-

mining Whether Subscribing Employers

Have Created An ERISA Plan.......... ll

III

CONCLUSION 2. ccvcn vseusuad bene eenpaueeena 16

ili

TABLE OF AUTHORITIES

Cases

Credit Managers Association v. Kennesaw Life &

Accident Insurance Co., 809 F.2d 617 (9th Cir.

ESE es eee. eee 9,13

Donovan v. Dillingham, 668 F.2d 1169 (11 Cir. 1982),

modified en bane, 688 F.2d 1367 (11th Cir. 1982)

NTC ESOS: aa 12, 13, 14

Ed Miniat, Inc. v. Globe Life Insurance Group, Inc.,

S06 F.2d 732 (7th Cir. 1986) ............005. 13

Fort Halifax Packing Company v. Coyne, 482 U.S. 1

SE Ee 12

Hydrostorage v. Northern California Boilermakers,

891 F.2d 719 (9th cir. 1989), cert. denied, 111

S. Ct. 403, 112 L.Ed.2d 46 (1990) ........... passim

Kanne v. Connecticut General Life Insurance Co.,

eR a | ree 9

Matthew 25 Ministries, Inc. v. Corcoran, 771 F.2d 21

A a eee 14

Operating Engineers Apprentice Training Fund v.

Wersscal, 221 Cal.App.3d 867, 270 Cal.Rptr. 786

a ee 7,8

Taggart Corp. v. Life and Health Benefits Adminis-

tration, Inc., 617 F.2d 1208 (5th Cir. 1980), cert.

denied sub nom. Taggart Corp. v. Efros, 450

eis ce pd n kw ke N OS OWA Oe 12, 13, 14

Turnbow v. Pacific Mutual Insurance Co., 765 P.2d

ee 14

Wisconsin Education Association Insurance Trust v.

Iowa State Board of Public Education, 804 F.2d

ee 15

iv

Statutes

Employee Retirement Income Security Act of 1974,

29 U.S.C. § 1001, et seq. (“ERISA”) ......--- passim

ERISA Section 3(5), 29 U.S.C. § 1003(5) ..... 10

Fitzgerald Act, 29 U.S.C. § 50, et seq. ....-- +s: 4, 6, 16

Labor Management Relations Act of 1974, as

amended, Section 302(c) (6), 29 U.S.C.

§ 186(e) (6) 0... cece cece cece ene eeeeesccces 3

California Labor Code § 1777.5 ......---- 2,3, 4, 7, 8, 10

Regulations

99 C.F.R. 2510.3-1(j) 2... cece eee eee eee eenes 11

No. 90-1191

In the Supreme Court

OF THE

United States

OCTOBER TERM, 1990

OPERATING ENGINEERS & PARTICIPATING EMPLOYERS

PRE-APPRENTICE, APPRENTICE AND JOURNEYMAN

AFFIRMATIVE ACTION TRAINING FUND, AND

THE OPERATING ENGINEERS JOINT APPRENTICESHIP

COMMITTEE

FOR NORTHERN CALIFORNIA,

Petitioners,

VS.

WEISS Bros. CONSTRUCTION CO. DBA WEISSCAL, et al.,

Respondents.

On Petition for Writ of Certiorari to the

Court of Appeal of the State of California

MOTION FOR LEAVE TO FILE BRIEF AMICUS

CURIAE IN SUPPORT OF PETITION FOR WRIT

OF CERTIORARI

Carpenters Joint Apprenticeship and Training Commit-

tee Fund for Southern California (‘‘Fund’’) hereby moves

the Court for leave to file an amicus curiae brief in

support of Petitioner’s Petition for a writ of certiorari in

this matter. Fund has requested consent of all respon-

dents to file this amicus brief. Petitioners have consented.

2

Respondents have informed Fund that they are willing to

consent to the filing of only one amicus brief supporting

the petition. Numerous amici wish to file briefs in support

of the petition. Accordingly, Fund files this Motion.

This Motion is based upon the facts and legal conclu-

sions of the underlying case. The decision that is the

subject of the petitioned-for writ ruled that the Employee

Retirement Income Security Act of 1974, 29 U.S.C. See-

tion 1001 et seq., preempted Petitioner’s contract action

against the respondent contractor and associated persons

and entities. One petitioner is, like Fund, a Taft-Hartley

trust fund financing apprenticeship benefits. The other is

a related joint apprenticeship committee. Respondent

Weissea!l is a contractor who was performing “public

works” for the State of California. California Labor Code

Section 1777.5 required Respondent to provide appren-

ticeship training on the one project involved. Weisscal

entered into an agreement with Petitioners to this end,

through a form provided by California, known as a DAS-

7. This form contractually bound Weisscal to comply with

Petitioner's general financing and training requirements.

When Weisscal failed to comply with its contractual

contribution and training obligation Petitioners filed a

contractual action in state court seeking to collect con-

tractual liquidated damages or “pay-in-lieu”, and unpaid

contributions. The court sustained Weisscal’s demurrer

to the complaint on the basis that 2RISA completely

preempted the Petitioners’ causes of action.

Movant Fund operates under California Labor Code

Section 1777.5 and the court’s decision has significant

consequences for the Fund itself and the employers, labor

organizations and joint labor-management organizations

affiliated with the Fund. These entities are obliged to and

Ee

3

do provide financing and training for carpenter craft

apprentices over the entire Southern California area.

BRIEF OF CARPENTERS JOINT APPRENTICESHIP

AND TRAINING COMMITTEE FUND AS AMICUS

CURIAE IN SUPPORT OF PETITION FOR WRIT

OF CERTIORARI

I.

AMICUS AND ITS INTEREST

Carpenters Joint Apprenticeship and Training Commit-

tee Fund for Southern California (“Fund”) is an express

trust fund subject to the Employee Retirement Income

Security Act of 1974, 29 U.S.C. § 1001, et seq. (“ER-

ISA”), established and existing for the purpose of receiv-

ing contributions, holding them in trust, and paying the

expenses of a carpenter craft apprenticeship training

program in eleven Southern California counties, i.e., Los

Angeles, Orange, San Bernardino, Riverside, Imperial,

Ventura, Santa Barbara, San Luis Obispo, Kern, Inyo,

and Mono. The Fund is constituted pursuant to Section

302(c) (6) of the Labor-Management Relations Act of

1947, as amended, 29 U.S.C. § 186(c) (6), and is com-

monly referred to as a Taft-Hartley Trust. Representa-

tives of the Carpenters’ Union sit as labor Trustees on the

Fund, as well as an equal number of management Trust-

ees. The Fund actually provides and pays for classrooms

and certain other training provided to carpenter craft

apprentices in the eleven Southern California counties

involved. The fund operates in conjunction with the

Carpenters Joint Apprenticeship Trust Committee

(“Committee”), the body charged under California Labor

Code § 1777.5 with approving public works contractor

applications to train carpenter craft apprentices in its

geographic areas, arranging for the dispatch of same, and

4

administering Carpenter Apprentice Standards. Under

§ 1777.5 the contractor contributes to the Fund “in the

same amount or upon the same basis and in the same

manner as the other contractors do”, or makes payments

to the California Apprenticeship Council (“CAC”), a

state apprenticeship agency constituted in compliance

with federal apprenticeship law.

The court below has dismissed as ERISA preempted an

action undertaken by a similar “Fund” and a Training

Committee (“Committee”) to recover liquidated dam-

ages, “pay-in-lieu” and/or delinquent apprenticeship con-

tributions from a contractor that had executed a training

agreement with the Committee pursuant to California

Labor Code § 1777.5. The Fund’s interest in this proceed-

ing is in part financial — the loss of contributions from

employers who obtain apprentices from the associated

Committee and who pay the Fund for the costs of their

formal training by virtue of the state laws involved in this

case. Employers who are not signatory to collective bar-

gaining agreements with the Carpenters’ Union or to

subscription agreements with the Fund pay into the Fund

pursuant to these state laws.

In addition, the Fund desires a settled delineation of

the scope and extent of preemption of the state appren-

ticeship laws that are, by virtue of the Fitzgerald Act, 29

U.S.C. §50, et seq., a primary reason for the Fund’s

existence. Brief of amicus curiae is desirable in this

matter because the scope of ERISA preemption of state

apprenticeship laws and enforcement mechanisms is

largely undetermined and is of critical importance to

every state apprenticeship agency and ERISA apprentice-

ship fund, as well as to the United States Bureau of

Apprenticeship Standards, the federal agency that ap-

proves state apprenticeship programs.

)

ERISA preemption of state public works “fair labor”

laws is a developing area of critical financial and practical

importance to multiple entities and persons, both private

and public. The decision below is also significant to the

larger question of ERISA preemption of state laws in

general, the subject of many recent Supreme Court

decisions.

II.

ARGUMENT

A. THE COURT SHOULD ISSUE CERTIORARI IN

THIS CASE IN ORDER TO SETTLE AN IMPOR.

TANT QUESTION OF FEDERAL LAW, A QUES-

TION UPON WHICH THE UNITED STATES

CIRCUIT COURTS OF APPEAL HAVE

DIFFERED

The Court should issue certiorari in this case because

the Court of Appeals has decided an important question

of federal law which has not been, but should be, settled

by this Court. That question is whether “apprenticeship

standards” are ERISA plans vis-a-vis an employer com-

pelled by state prevailing wage law to comply with them

on discrete state public works projects. Both the Califor-

nia Supreme Court and the court in Hydrostorage v.

Northern California Boilermakers, 891 F.2d 719 (9th Cir.

1989), cert. denied, U.S. —., 111 8. Ct. 403, 112 L.

Ed. 2d 46 (1990), the linechpin of the decision here, have

reached their decision on this question in a way that

conflicts with the decisions of various United States

Circuit Courts of Appeal, including the Ninth Circuit

itself. A difference in opinion exists between the Fifth

Cireuit and the Seventh, the Ninth and the Eleventh

concerning the fundamental question of what action by an

6

individual employer is required to create an ERISA plan

as to that employer.

B. THE CASE INVOLVES THE FUNDAMENTAL

AND IMPORTANT QUESTION OF THE CIR-

CUMSTANCES UNDER WHICH ERISA COVER-

AGE ATTACHES TO A_ RELATIONSHIP

BETWEEN AN EMPLOYER AND AN INDEPEN-

DENTLY EXISTING ERISA PLAN

The decision in this case has important consequences

for not only California’s public work’s prevailing wage

law, but for similar prevailing wage laws in as many as 28

other states operating under the National Apprenticeship

Act, 29 U.S.C. § 50.

Case law discloses that an employer’s intention to

assume responsibility, as revealed by all relevant sur-

rounding circumstances, determines whether that em-

ployer has so associated itself with an existing ERISA

plan that the relationship between the plan and the

employer is governed by ERISA. The fundamental ques-

tion is whether the employer has evidenced an intent to

indefinitely continue providing ERISA-covered benefits.

Absent an express statement otherwise, the employer's

lack of involvement either directly or indirectly in the

ownership, control, or administration of the plan indi-

cates that the employer has not assumed the responsibil-

ity for continuing ERISA covered benefits, and the

association is not one governed by ERISA.

The Court of Appeals and the /HHydrostorage court

neither considered nor applied applicable guiding princi-

ples developed in the most analogous line of cases; those

involving multiple employer trusts providing welfare ben-

efits of a type covered by ERISA.

7

Plaintiffs in this case did not pursue defendant under

Erisa, but rather under state law. They have never sought

in any fashion to subject defendant to any of the stric-

tures of ERISA. Defendant never complied in any signifi-

cant way with the obligations imposed by state law, and

certainly never undertook any effort to comply with ER-

ISA as to its relationship with the plaintiffs and the

apprenticeship program in general. Defendant is not try-

ing to protect from complicating and restrictive state

regulation a program of benefits that it has established or

maintained for the good of its employees. Rather, defen-

dant is trying to invalidate a contract that it entered into

with the state and plaintiffs that was wholly beneficial to

its employees, the industry, the state, and, under the

Fitzgerald Act, the United States. These circumstances

call for application of ERISA’s public policy against

permitting purely commercial interests to exploit its pre-

emption provisions solely for personal economic gain.

C. THE COURT OF APPEALS UNCRITICALLY AP-

PLIED THE HYDROSTORAGE DECISION TO

THIS CASE

The court of Appeals characterized this case as pos-

sessing “great similarity” to Hydrostorage in that “Both

cases involve the attempt to enforce section 1777.5 and

bind a non-signatory employer to the terms of a collec-

tively bargaining apprenticeship trust tund and stan-

dards covered by ERISA”. Operating Engineers

Apprentice Training Fund v. Weisscal, 221 Cal.App.3d

867, 879, 270 Cal.Rptr. 786, 993 (1990). The court in fact

did little more than recount almost verbatim the Hydros-

torage decision.

A key element of the court’s decision is its application

of the Hydrostorage determination that the apprenticeship

“standards” involved in Hydrostorage were an ERSIA

8

plan.’ While the Hydrostorage court engaged in some

factual analysis of the standards, unlike the Appellate

Court here, it did not analyze the relationship of the

involved employer to those standards in a sufficiently

substantive manner for ERISA purposes.

The Hydrostorage court’s determination that the in-

volved apprentice standards were an ERISA plan was

absolutely critical to the disposition of that case. The

district court had not decided that the standards were an

ERISA plan. Rather it decided only that the “Apprentice-

ship Program” was such a plan, without specifying what it

meant by that term. 891 F.2d at 727. The circuit court

decision on the standards was de novo.

Because § 1777.5 compels a contractor to comply with

applicable apprenticeship standards, both the Hydros-

torage court and the Appellate Court concluded that it

compelled participation in an ERISA “plan”. Committee

does not take issue with the proposition that ERISA

preempts a state law that compels participation in an

ERISA plan. Committee argues that the apprenticeship

standards here and in Hydrostorage are not ERISA plans

‘The instant cage was decided on a demurrer to the complaint, and

the Hydroslorage decision did not issue until briefing had concluded.

Weisscal called the case to the attention of the court and the parties

filed supplemental briefs on Hydroslorage’s “analytical impact”.

Weisscal, 221 Cal.App.3d at 873, 270 Cal.Rptr. at 789. Unlike the

Hydrostorage court, the Court of Appeals did not review in detail or

at all the apprenticeship standards actually involved in this case.

These standards were not presented in their entirety to the trial court

until after the demurrer was sustained, in a motion for reconsidera-

tion. While both excerpts from and the complete Standards were

contained in the record on appeal, nothing in the opinion indicates

that the Court of Appeals actually reviewed the Standards or the

extent to which they were incorporated by reference in the DAS-7

agreement.

9

vis-a-vis the involved employers, and that “apprenticeship

standards” are not per se ERISA ylans for all those who

have a relationship with them, as the Appellate Court

necessarily held in this case.

D. WHETHER “APPRENTICESHIP STANDARDS”

CONSTITUTE AN ERISA PLAN IS A FACTUAL

QUESTION THAT CAN BE RESOLVED ONLY

BY A REVIEW OF ALL RELEVANT FACTS RE.

SPECTING THE PARTICULAR EMPLOYER

INVOLVED

The existence of an ERISA plan is a question of fact to

be answered in light of all the surrounding circumstances

from the point of view of a reasonable person. Kanne v.

Connecticut General Life Insurance Co., 859 F.2d 96, (9th

Cir. 1989), citing Credit Managers Association v. Kennesaw

Life & Accident Insurance Co, 809 F.2d 617, 625 (9th Cir.

1987).

In Credit Managers, a case involving insurance policies

and an association of unrelated employers, the court

reversed entry of a summary judgement determination

that ERISA plans,were not involved because of the

existence of factual questions with respect to the individ-

ual,employers. In Kanne the existence of language within

the plan documents stating that it was an ERISA plan

was a relevant factor.

10

E. COMPLIANCE WITH APPRENTICESHIP STAN-

DARDS PURSUANT TO CALIFORNIA LABOR

CODE SECTION 1777.5 DOES NOT CREATE A

COMPULSORY ERISA PLAN RELATIONSHIP

FOR THE INVOLVED EMPLOYER

1. The Court of Appeals Applied ERISA’s Definitions

Selectively.

The Hydrostorage court (and the Court of Appeals by

outright adoption) utilized a very literal, definitional type

approach in deciding that the Apprenticeship Standards

were an ERISA plan. They treated the question as a

unitary one not dependent upon the relationship of the

particular employer to the standards. In doing so, how-

ever, they omitted and ignored critical language from the

relevant ERISA definitions and caselaw.

The Hydrostorage court quoted part of ERISA’s defini-

tion of an employee welfare benefit plan in its analysis of

why the Standards were a plan. 891 F.2d at 727. It

omitted the words ‘to the extent that such plan fund or

program was established or is maintained [to provide

benefits for participants or their beneficiaries ]”’.

While the court determined that the Standards were

established by the Committee and that the Committee was

“an employer or...employee organization, or... both”,

it did not examine ERISA’s definition of employer and

how that definition limits the definition of an employee

welfare berefit plan.

Under ERISA an employer is defined as “‘any person

acting directly as an employer, or indirectly in the inter-

est of an employer, in relation to an employee benefit

plan...”. ERISA Section 3(5), 29 U.S.C. §1003(5).

Since the definition of employee welfare benefit plan

incorporates the definition of employer, the terms “acting

(ae EEE OOOO

ale 1]

...1n relation to” limit not only the definition of an

ERISA employer, but also the definition of a welfare plan.

To paraphrase ERISA’s definitions then, an employer

is an employer with respect to what is in general an

ERISA plan only if it acts directly or indirectly as an

employer in relation to the plan, by establishing or main-

taining it.

2. Multiple Employer Trust Cases Establish That

Intent Is The Touchstone For Determining

Whether Subscribing Employers Have Created

An ERISA Plan.

What qualifies as acting in relation to a plan? It is not

enough that an ERISA plan is “establish[ed] or main-

tain{ed]” by some unrelated party for those verbs are

themselves contained in the definition of plans, and the

terms “acting in relation to” would be redundant. ERISA

is a “reticulated” statute, and none of its provisions have

thus far been determined to be redundant, though not a

model of legislative drafting.

Committee submits that the answer lies, at least partly,

in the intention of the specific employer involved. This is

one of the “surrounding circumstances” that must be

reviewed to determine whether an ERISA plan is in-

volved, vis-a-vis the specific employer.

This issue has been intensively addressed in the con-

text of cases involving health insurance obtained through

“multiple employer” trusts, and the Department of Labor

has issued regulations concerning same. See 29 C.F.R.

2510.3-1(j). These cases provide useful guidance because

they involve employers who “subscribe to” an arrange-

ment with an outsider that is in the business of providing

ERISA-type benefits. Unlike this case, however, the em-

ployers in multiple employer trust cases are not under a

12

direct legal compulsion to subscribe. As a result, their

action in “voluntarily” subscribing tends to indicate more

of a “commitment” to providing such benefits on a contin-

uing basis than does mere compliance with a law requir-

ing subscription as to a discrete prevailing wage project.

See generally, Fort Halifax Packing Company v. Coyne,

482 U.S. 1 (1987).

Perhaps the seminal case in the multiple employer trust

area is Taggart Corp. v. Life and Health Benefits Adminis-

tration, Inc., 617 F.2d 1208 (5th Cir. 1980), cert. denied

sub nom. Taggart Corp. v. Efros, 450 U.S. 1030 (1981). In

Taggart the court found that neither a trust providing

group insurance to small employers nor an individual

employer’s subscription to that insurance constituted a

“plan, fund, or program” within the meaning of ERISA,

because the employer “neither directly nor indirectly

owns, controls, administers or assumes responsibility for

the policy or its benefits”. Taggart, 617 F.2d at 1211. The

court referred to the history, structure and purposes of

ERISA to reject the Secretary of Labor’s assertion that

an individual employer’s naked act of subscribing to the

trust was itself the creation of a plan. Such trusts do not

provide benefits gratuitously, of course, so employers

must make payments to such trusts. The courts have not

viewed such payments as per se establishing or maintain-

ing an ERISA plan, however.

Taggart was foliowed by Donovan v. Dillingham, 668

F.2d 1169 (11th Cir. 1982), modified en banc, 688 F.2d

1367 (11th Cir. 1982). The Eleventh Circuit was created

out of the Fifth and the Dillingham court initially held

that the Taggart decision was controlling precedent. In its

en banc decision, however, the court reverséd, itself, par-

tially adopted the Secretary’s theory, and limited Taggart.

However, the court did not agree with the Secretary's

13

contention that “establishing” a plan meant nothing more

than an ultimate decision by an employer to provide a

benefit covered by ERISA. Dillingham, 688 F.2d at 1372.

Dillingham makes clear that the relationship of the

individual employer to what is in general an ERISA plan

is critical. The court did not determine “how many sub-

seribers established or maintained plans”. It specifically

noted that it was not clear from the record that all

subscribers had established an employee benefit plan.

Dillingham, 688 F.2d at 1374 & n.15.

In section III of its en banc opinion the Dillingham

court recounted numerous facts indicating that many of

the subscriber employers, employee organizations, or

both, were “committed to providing benefits to employees

or members...on a continuing basis”, and “anticipated

continuing furnishing of such benefits”. 688 F.2d at 1374.

The court thereby placed great emphasis on the intention

of the subscribing party. Accord, Ed Miniat, Inc. v. Globe

Life Insurance Group, Inc., 805 F.2d 732 (7th Cir. 1986),

Credit Managers Association v. Kennesaw Life and Acci-

dent Insurance Co., 809 F.2d 617 (9th Cir. 1987).

As for structural elements, the Dillingham court held

that a plan is established under ERISA if from the

surrounding circumstances a reasonable person could

ascertain the intended benefits, a class of beneficiaries,

the source of the financing, and procedures for receiving

benefits. 688 F.2d at 1372-73- While these structural

elements are necessary for a plan to exist, they are not

sufficient, for the commitment to provide the benefits on a

continuing basis must also exist.

One court has harmonized Taggart and Dillingham by

observing that Taggart, like Dillingham, in fact requires

that the employer intend to guarantee continuation of the

14

benefits. Turnbow v. Pacific Mutual Insurance Co., 765

P.2d 1160 (Nev. Sup. Ct. 1988). The employer here

obviously had no intent to continue or guarantee any

apprenticeship benefit beyond the one specific public

works job involved.

In both Taggart and Dillingham the defendants were

seeking to avoid ERISA coverage. The Dillingham court

applied ERISA’s purpose to “protect working men and

women from abuses in the administration and investment

of private retirement plans and employee welfare plans”

to find the arrangements there within ERISA’s scope.

Dillingham, supra, 688 F.2d at 1370.

In Matthew 25 Ministries, Inc. v. Corcoran, 771 F.2d 2)

(2d Cir. 1985), Matthew failed in its attempt to gain

ERISA coverage in order to avoid regulation by

New York State. The court closely examined ERISA’s

definitions, in the same manner as the Hydrostorage court.

Matthew claimed it was an “employer” within the mean-

ing of ERISA, as an “association of employers” acting “in

the interest of an employer ...in relation to an employee

benefit plan”. The court held that this wasn’t enough, that

Matthew first had to show that its trust was “established

or maintained” by its individual employer members. The

court made this statement even though the subscribing

employers were paying Matthew for providing benefits. It

held that Matthew had failed to “disclose what role, if

any, its mixed-bag group of enrollees plays in the manage-

ment of its trust’’, and therefore failed to show that it was

covered by ERISA. Matthew, 771 F.2d 22. The court cited

Taggart for this proposition, among other cases. The

evident policy advanced in Matthew was to prevent what

are functionally insurance companies from escaping state

insurance regulation by simply marketing their product

15

as an ERISA plan through a “multiple employer trust”

arrangement.

Wisconsin Education Association Insurance Trust v.

Iowa State Board of Public Education, 804 F.2d 1059 (8th

Cir. 1986), supports the view that ERISA does not govern

the relationship between Weisscal and the Apprenticeship

Standards here. The court in Wisconsin, relying on ER-

ISA’s definitions, found no ERISA coverage because the

solely-union sponsored Trust covered employees that

were not members of the union, even though it provided

coverage only to employees of school districts having

collective bargaining agreements with a union sponsor of

the Trust.

The situation here is similar because Weisscal is not a

“union employer” and its employees in general are not

union members, although particular apprentices who

might be dispatched might be. Rather than finding that

the union-management sponsored plan in this case is not

in general an ERISA plan, it is far more reasonable to

determine that neither it nor the apprentice standards

themselves are an ERISA plan vis-a-vis Weisseal.

16

ITT.

CONCLUSION

The Court should review this case to establish a uni-

form approach towards ERISA coverage and preemption

in “subscription” situations. The state interests involved

are substantial and worthy of protection as furthering

explicit federal policy under the Fitzgerald Act. Em-

ployer intention to create or maintain a plan in subscrip-

tion situations, as disclosed by all surrounding

circumstances should be the touchstone for ERISA cover-

age and preemption. The limited and circumscribed sub-

scription to apprenticeship standards that occurred here

due solely to state law does not disclose the requisite

employer intention. ERISA coverage and preemption

should net be found in these circumsiances.

Dated: February 20, 1991

Respectfully submitted,

DE CaRLvo, CONNOR & SELVO

A Professional Corporation

By:

Gerald V. Selvo

Attorneys for Carpenters Joint

Apprenticeship and Training

Committee Fund for Southern

California