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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_1577%3A4

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1991
- **Citation:** 499 U.S. 931

## Text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_1577%3A4. Public record. Not legal advice.