Opposition Brief — Lennes v. Boise Cascade Corp.

(3) ! Supreme Sour, Ue

No. 91-707 | et

In The | NOY 27 398) |

Supreme Court of the United Shoe ow cain |

October Term, 1991

JOHN B. LENNES, JR., COMMISSIONER OF THE

DEPARTMENT OF LABOR AND INDUSTRY, STATE OF

MINNESOTA,

-and-

MINNESOTA MECHANICAL

ASSOCIATION, INC.,

CONTRACTORS

Petitioners,

VS.

BOISE CASCADE CORPORATION, A DELAWARE

CORPORATION, BE&K CONSTRUCTION COMPANY, A

DELAWARE CORPORATION, CHARLES L. LEE, RELCO

UNISYSTEMS CORPORATION, A MINNESOTA

CORPORATION, FORREST DAHMES, MID-STATES

MECHANICAL SERVICES, INC., A MINNESOTA

CORPORATION AND KRISTINE SOUTHARD,

Respondents.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the Eighth Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

LOWELL J. NOTEBOOM

Counsel of Record

ROBERT P. THAVIS

LEONARD, STREET AND DEINARD

Attorneys for Respondents Relco

Unisystems Corporation, Forrest

Dahmes, Mid-States Mechanical

DAVID P. PEARSON

Counsel of Record

LLOYD W. GROOMS

THOMAS H. BOYD

WINTHROP & WEINSTINE

Attorneys for Respondents Boise

Cascade Corporation, BE&K

Construction Company and Charles

L. Lee

3200 Minnesota World Trade Center

30 East Seventh Street ~

St. Paul, Minnesota 55101

(612) 290-8400

Services, Inc. and Kristine

Southard

Suite 2300

150 South Fifth Street

Minneapolis, Minnesota 55402

(612) 335-1500

QUESTIONS PRESENTED

1. Does the Employee Retirement Income Security Act

(‘‘ERISA’’) preempt a state-mandated ratio of apprentices to

journeymen for apprenticeship training programs which are

employee welfare benefit plans under ERISA?

2. Does ERISA’s ‘‘savings clause’’ protect from preemption

a ratio of apprentices to journeymen promulgated as a general

state regulation applied to all ERISA apprenticeship training plans?

ul

TABLE OF CONTENTS

Gusstions Pressel 5 .«...oks desc casa eee

Table of Caombegis... ....« si ccksacuknee eee

Babe of Cietes .... 66k oe roi eee

Cpisions Qelew 6... oc 6dakeSS acento s eee eee

Constitutional and Statutory Provisions Involved .......

Comte of the Cae... oe cee nee

Summary of Aceumnelll ois oss he eee

Reasons for Dewyian the Wt .o6is6 cS

A.

The Supreme Court Has Articulated a Clear Standard

for ERISA Poesia. «oc chive a eee ee ese

The Circuit Courts Have Uniformly Adhered to the

Supreme Court Standards of Broad ERISA

Preemimtion.. .... 605d see

The Eighth Circuit Properly Applied Well-Settled

ERISA Preemption Standards to the Preempt Rule.

ea eenepeaeecns €.9 € 6 8 GB 2D GE'S 8ST. S EE Ree Se ee ee ee

Page

12

16

Petitioners Have Mischaracterized the Legal |

Standards of ERISA Preemption, and Have Failed

to Demonstrate Any Justification for Granting the

Potitiom.. ... ous s cu dhavaeeae eee

ul

Contents

Page

1. The Eighth Circuit’s Decision Does Not Destroy

the State’s Regulatory Authority by Improperly

Limiting the Exercise of Traditional Police

RE RR re Pes al w'a Sak es FS 6 view 8 20

2. There is No Regulatory Black Hole......... 22

3. Petitioners Have Misstated the Law and this

Court’s Decisions in an Attempt to Create a New

Legal Structure for ERISA Preemption. .... 24

E. The Rule Is Not ‘‘Saved’’ by Either ERISA or the

National Apprenticeship Act. .................. 26

re haha vacs ceed Sdvawevavc 30

TABLE OF CITATIONS

Cases Cited:

Alessi v.. Raybestos-Manhattan Inc., 451 U.S. 504 (1981)

ec ES Tek te 8, 20, 21, 23

Authier v. Ginsburg, 757 F.2d 796 (6th Cir. 1985), cert.

ES ) 13

Baxter v. Lynn, 886 F.2d 182 (8th Cir. 1989)........... 8, 13

Blue Cross & Blue Shield v. Dept. of Banking, 791 F.2d 1501

| ee ee 12

Caterpillar Inc. v. Williams, 482 U.S. 386 (1987)........ 8

iv

Contents

Page

City of Canton, Ohio v. Harris, 489 U.S. 378 (1989).... 27

Clark v. Coats & Clark, Inc., 865 F.2d 1237 (11th Cir. 1989)

Lee AMR as, APN Roa EE gh NP RL Sy ot BRE OI NAc AL Ne Sad 13

Delta Air Lines v. August, 450 U.S. 347 (1981)......... 27

Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208 (8th Cir.

1981), cert. denied, 454 U.S. 988 (1981) ........... 13

Duigan v. United States, 274 U.S. 195 (1927)........... 27

Electrical Joint Apprentice Committee v. McDonald, Nos.

90-15095, 90-15395, 1991 WL 227779 (9th Cir. Nov. 8,

DS os ee cans aoraee eee eee eee a eoieiee iS, 26, 29

FMC Corp. v Holliday, 885 F.2d 79 (3rd Cir. 1989), vacated

on other grounds, 111 S. Ct. 403 (1990) ...........

Se nS ae Sete Aton ray yrire gee RR Fe 8, 10, 11, 13, 15, 18

Fort Halifax Packing Co. v. Coyne, 482 U.S. | (1987) ..

RE aN han PRE E RE eR OP aCe Mel aes Rehan Oe te 17, 2%. 25. 2

Gahn v. Allstate Life Ins. Co., 926 F.2d 1449 (Sth Cir. 1991)

PLES RAE EEE On AOE de REE ae 12

General Electric Co. v. New York Dept. of Labor, 891 F.2d

25 (2d Cir. 1989), cert. denied, 110 S. Ct. 2603 (1990)

Pe eee Sahai Oe Geek a Re ae ee a Re 8, 13, 14

Gibson v. Prudential Ins. Co. of America, 915 F.2d 414 (9th

oe FRR resapeene pig te PRN pel Ede omd Fadey arti gtae WU Naraige Bee Mat yuna ama 13

Vv

Contents

Page

Gilbert v. Burlington Indus., Inc., 765 F.2d 320 (2d Cir. 1985),

alt’s mem... 677 U.S, SS Cee 5 eo esa 12, 14

GranFinanciera, S.A. v. Nordberg, 109 S. Ct. 2782 (1989)

ee a an tetera as ate Fs Sy a SE al wo 5 27

Holland v. Burlington Indust., Inc., 772 F.2d 1140 (4th Cir.

1985), aff'd mem., 477 U.S. 901 (1986) and cert. denied,

SEF CED Sie Clee a ee oe ee eee 14

Howard v. Gleason Corp., 901 F.2d 1154 (2nd Cir. 1990)

5 a at al 6 sk alee SO ek ene re 13

Hydrostorage Inc. v. North California Boilermakers Local

Joint Apprenticeship Committee, 891 F.2d 719 (9th Cir.

1989), cert. denied, 111 S. Cr. 72 (1990)........ 8, 14, 15

Ingersoil-Rand Co. v. McClendon, 111 S. Ct. 478 (1990)

bcos Vis a cle 0, 4, 13, 22, 26 2

In re Life Ins. Co. of North America, 857 F.2d 1190 (8th

Cw TURD es vo so ck eee kc ee oe eee 13

iron Workers Pension Fund v. Terotechnology, 891 F.2d 548

(Sth Cir. 1990), cert. denied, 110 S. Ct. 3272 (1990)

sn 6 4G dd Dlite oee bikie Oe Ee ee hare aie oe 14

Local Union 598, Plumbers & Pipefitters Industry

Journeyman & Appentices Training Fund v. J.A. Jones

Construction Co., 846 F.2d 1213 (9th Cir. 1988), aff'd

mom., 456 U.S. GEl CGO ik orcaecdie eee 14, 23

Mackey v. Lanier Collections Agency & Serv., Inc., 486 U.S.

as CEU kok See ee eee S, 0. 2. a 2

vi

Contents

Matter of Dyke, 943 F.2d 1435 (Sth Cir. 1991) ......... 13

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987)

ieee d cakes Onn ne eee Re eee ee ee 12

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987)......

Seek ES LON a 2 oe eee 8, 12, 13

Salomon v. Transamerica Occidental Life Ins. Co., 801

3» £2 fe a, | eA heey 13

Savings & Profit Sharing Fund of Sears Employee v. Gago,

rige we B . Fe. os Ae, | Speer enepy eae ayen perenne 13

Settles v. Golden Rule Ins. Co., 927 F.2d 505 (10th Cir.

SED Swink cdieaveeuesbees oo ele 12

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) ......

Ss, 9, 0, 32, 13. 14, 1, 44. 17,48, 2, 2 oe a oe ae

Standard Oil Co. of Cal. v. Agsalud, 633 F.2d 760 (9th

Cir. 1990), aff'd mem., 454 U.S. 801 (1981)........ 13

Straub v. Western Union Tel. Co., 851 F.2d 1262 (10th

Ct FED sxc os ce dai veka es cae 13

Wadsworth v. Whaland, 562 F.2d 70 (Ist Cir. 1977), cert.

Geneed., 425 0.3. Fae itsree ss ca ves oe 13

Statutes Cited:

Employee Retirement Income Security Act (‘‘ERISA’’),

an U.S. 86 VOR OC OUR os ccc sucueieee ee passim

Vil

Contents

Page

National Apprenticeship Act of 1927 (the ‘‘Fitzgerald Act’’),

ee as 0 EE hi eee See eae aise 6, 26, 27, 28

ahs Ee a eh Celie eebesa ae Seek 7

PN: SI ie i ne vane cee eneebe cere 2

United States Constitution Cited:

Supremacy Clause, Article VI, clause 2 ................ 2

Rules Cited:

" Wei. KR. BR SE SD ovine ok ee vidceteusas 2

Minn. R. $§ 5230.0250-5230.1270 Pak ae oe caus cane aieele 23

Other Authorities Cited:

Ses © ee WN gn os oa vce eee secunpevctauweiens 9

Fee Se me OS: rer rr ies eee 28

pe a PEST TT TET OCT eee Teer re 29

No. 91-707

In The

Supreme Court of the United States

October Term, 1991

JOHN B. LENNES, JR., COMMISSIONER OF THE

DEPARTMENT OF LABOR AND INDUSTRY, STATE OF

MINNESOTA,

-and-

MINNESOTA MECHANICAL CONTRACTORS

ASSOCIATION, INC.,

Petitioners,

VS.

BOISE CASCADE CORPORATION, A DELAWARE

CORPORATION, BE&K CONSTRUCTION COMPANY, A

DELAWARE CORPORATION, CHARLES L. LEE, RELCO

UNISYSTEMS CORPORATION, A MINNESOTA

CORPORATION, FORREST DAHMES, MID-STATES

MECHANICAL SERVICES, INC., A MINNESOTA

CORPORATION AND KRISTINE SOUTHARD,

Respondents.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the Eighth Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

Respondents respectfully request this Court deny the Petition

for Writ of Certiorari seeking review of the Eighth Circuit’s

opinion in this case. That opinion is reported at 939 F.2d 632.

nN

OPINIONS BELOW

The decision of the United States Court of Appeals for the

Eighth Circuit is published at 939 F.2d 632 (July 29, 1991). The

decision of the United States District Court for the District of

Minnesota is published at 735 F. Supp. 1434 (April 27, 1990).

The Report and Recommendations of the United States Magistrate,

rendered on March 30, 1990, were not published.

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

This case involves the Supremacy Clause, Article VI, clause

2 of the United States Constitution; the Employee Retirement

Income Security Act (‘‘ERISA’’), 29 U.S.C. §§ 1003(a), 1144(a),

and 1144(d); Minnesota Statutes § 326.48, and Minnesota Rules

$§ 5230.0040 tc 5230.0110.

STATEMENT OF THE CASE'

This case arises out e* the avowed efforts of the State of

Minnesota to regulate t. training of pipefitter apprentices,

including training provided as a benefit by ERISA welfare plans.

Respondents provide on-the-job training benefits to their

apprentice employees through employee benefit plans which are

governed by ERISA. The State of Minnesota has adopted a rule

1. Respondents object to Petitioners’ Statement of Facts regarding the need,

purpose and etfect of the apprentice journeyman ratio rule in dispute in this

case and the development and operation of apprentice training programs in

Minnesota. Finally, Respondents note that Petitioners seek certiorari of the denial

of Petitioners’ motion for summary judgment and the factual assertions in

Respondents’ affidavits were assumed to be true. Petitioners’ Appendix

(hereinafter referred to as ‘*Pet. App.”’) at p. 39a. Accordingly, the facts

contained therein, and not the Petitioners Statement of the Facts, must be

accepted as the facts of this case.

which is intended to directly regulate these apprentice training

plans, including how and to whom the training is provided. The

Eighth Circuit struck down the Minnesota rule on the grounds

it is preempted by ERISA. There is no reason for the Supreme

Court to review this decision which is a straightforward application

of well-settled ERISA preemption principles.

Respondents all have comprehensive apprenticeship training

programs for their high pressure pipefitter apprentice employees.

These comprehensive training programs provide both on-the-job

training and formal classroom instruction. The benefit these plans

provide is training which includes on-the-job instruction by more

experienced employees who are licensed pipefitters. On-the-job

training is a critical part of Respondents’ training programs.

Historically, Respondents determined the ratio of journeymen to

apprentice pipefitters on each pipefitting jobsite on a project by

project basis.

On January 22, 1990, the Minnesota Department of Labor

and Industry (‘‘Department’’), by order of the Department’s

Commissioner (‘‘Commissioner’’) adopted a new rule which, for

the first time, established a 3:1 (ratio of licensed pipefitters to

pipefitter apprentices on all high-pressure piping job sites in

Minnesota (the ‘‘Minnesota rule’’).* The rule is not, as Petitioners

claim, a benign ‘‘jobsite ratio,’’ which is integral to the licensing,

but not the training, of pipefitters. The clear and stated purpose

of the rule is to regulate the training of pipefitter apprentices in

2. The new rule is unprecedented in Minnesota and is unique to the entire

United States. Minnesota is one of only tive states in the nation which even

licenses high-pressure pipefitters. Only one other state in the nation imposes

any ratio, and that state, New Mexico, permits three apprentices per journeyman.

The ratio of licensed pipefitters to pipefitter apprentices on a given jobsite has

never been regulated by the state, but has instead always been left to the employer,

or to collective bargaining.

Minnesota. See Pet. App. at pp. 78a-79a. This controversy

concerns the Department’s authority, in light of federal ERISA

preemption standards, to regulate the manner in which apprentice

pipetitters are trained by employers who provide training benefits

in the context of employee welfare benefit plans governed by

ERISA. The district court explicitly recognized that ‘‘the 3-to-1

rule is an effort by Minnesota to regulate the training of apprentice

pipefitters and will necessarily affect pipefitter training programs.”’

Pet. Appat-p. 24a. The Eighth Circuit also concluded the purpose

of the rule is to regulate training, and succinctly stated, ‘‘[t}his

case arises out of the efforts of the State of Minnesota to regulate

the training of pipefitter apprentices.’’ Pet. App. at p. 3a. Thus,

while Petitioners desperately attempt to portray the rule as

pertaining to occupational licensing, in fact this controversy turns

on the question of the state’s power to regulate ERISA training

piais.

Petitioners have agreed that Respondents’ pipefitter

apprenticeship training programs are ‘‘employee welfare benefit

plans’’ as defined by ERISA, as they must since the ERISA

definition of an employee welfare benefit plan specifically includes

‘‘apprenticeship or other training programs.’’ 29 U.S.C. § 1002(1).

Accordingly, at each level of judicial review the question in this

case has been relatively simple: whether the state can impose the

ratio rule, which ‘‘relates to’’ the ERISA benefit plans of

Respondents (and other employers), in light of tha broad sweep

of ERISA preemption which is intended to make ERISA plans

exclusivelysa-—tederal concern.

Both the district court and the Eighth Circuit have, in fact,

expressly recognized that the rule does directly affect the terms

and conditions of Respondents’ ERISA plans. In its opinion, the

district court explicitly acknowledged this substantial impact in

finding that the rule ‘‘limits the number of participants in the

training program and affects how training can be done. It also

wn

imposes higher cost on plan administrators who must hire more

journeymen to supervise their apprentices .. . it does affect the

form and amount of training received by each participant.’ Pet.

App. at pp. 27a-30a.

In determining the rule was preempted, the Eighth Circuit

held that the rule sought to and did materially affect Respondents’

ERISA training plans: ‘‘{[T]he minimum jobsite ratio directly

affects an ERISA plan: it regulates, and was clearly intended to

regulate, certain terms and conditions of apprenticeship programs

by establishing the manner in which employers can train and

employ both journeymen and apprentice pipefitters.’’ Pet. App.

at p. 12a.

Despite Petitioners’ exaggerated claims, this is a

straightforward case in which the Eighth Circuit applied ERISA’s

clear statutory mandate and weil-settled legal precedent to preempt

a State law which directly relates to employee welfare benefit plans

governed by ERISA.

SUMMARY OF ARGUMENT

Petitioners seek review of the Eighth Circuit’s decision below

on fundamentally three grounds. First, Petitioners contend that

the Supreme Court should grant review to resolve an alleged

conflict among the decisions of this Court and purported confusion

among the circuit courts as to whether ERISA preempts generally

applicable state statutes which are traditional exercises of state

police power. Petitioners suggest that generally applicable state

Statutes and state statutes which do not require the creation of

an ERISA plan are not preempted by ERISA. In fact, there is

no conflict among the decisions of the Supreme Court and no

confusion or uncertainty on the part of the circuit courts

concerning the scope of ERISA preemption. Moreover, the

arguments advanced by Petitioners are not new. On the contrary,

ae

these theories were asserted years ago and have been uniformly

and consistently rejected by the Supreme Court and the circuit

courts. The uniformity with which this Court and the circuit courts

have articulated and applied the well-settled principles of ERISA-

preemption conclusively establish that there is no need to review

the Eighth Circuit’s decision in this case.

Second, Petitioners argue that the Eighth Circuit incorrectly

applied existing legal precedent in concluding that the rule is

preempted by ERISA. While Petitioners seeks to justify their

claims through the use of inflated rhetoric, the Eighth Circuit’s

decision is an application of established preemption principles to

a rule which is clearly preempted under the ERISA preemption

standards anticipated by this Court. The Eighth Circuit concluded

that the rule before it was intended to regulate and did regulate

the terms and conditions of Respondents’ ERISA plans after

carefully analyzing applicable ERISA preemption precedent from

the Supreme Court and the circuit courts. Therefore, the decision

below is not a departure from, or in conflict with, established

legal precedent in the area of ERISA preemption, but instead

represents a proper application of these principles to the case before

it.

Finally, Petitioners argue that the state law at issue here is

saved from preemption by the existence of a federal statute, the

Fitzgerald Act. A cursory glance at the Fitzgerald Act reveals the

frivolous nature of this argument. First, the Fitzgerald Act is

inapplicable to Respondents’ ERISA plans. Second, the Fitzgerald

Act is only four sentences in length and has no substantive,

provisions at all. It is simply a general policy statement

acknowledging the benefits of apprentice programs. The Act was

enacted some 37 years before ERISA and cannot be viewed as

a congressional limitation on the scope of ERISA. Neither the

Fitzgerald Act, nor the federal regulations promulgated under it

establish any substantive regulations or mandate a specific ratio

of apprentices to journeymen for apprenticeship training programs.

While the state may serve as an agent for the federal government

in verifying compliance with certain federal standards in registering

apprenticeship training programs with the United States

Department of Labor, nothing in the federal law even hints at

the ratio rule which is at issue here. Therefore, where, as here,

the state imposes as a matter of state law requirements not

mandated by federal law, those requirements are subject to

preemption. The federal exemption argument made by Petitioners

is therefore without merit.

REASONS FOR DENYING THE WRIT’

A. The Supreme Court Has Articulated a Clear Standard for

ERISA Preemption.

Section 514(a) of ERISA provides, in relevant part, that

ERISA ‘‘shall supersede any and all State laws insofar as they

may now or hereafter relate to any employee benefit plan... .”’

29 U.S.C. § 1144(a) (1985). ERISA defines employee welfare

benefit plans as any ERISA ‘“‘plan, fund or program’’ providing

‘*apprenticeship or other training programs.’’ 29 U.S.C. § 1002(1).

The United States Supreme Court has taken a broad and expansive

view of ERISA’s preemptive effect. The United States Supreme

Court has, time and time again, and with remarkable consistency,

held that ERISA preempts all state laws which ‘‘relate to”’

3. The following section sets forth the substantive reasons why the petition

should be denied. As a threshold matter, however the procedural posture of

the case does not lend itself to review. The decision of the Eighth Circuit does

not represent a final judgment in this case. The district court granted Petitioners’

mouon tor summary judgment. The Eighth Circuit reversed that decision. A

final judgment has not been entered in the district court. In cases in which

judgment is not final, this court has generally not exercised its appellate

jurisdiction under 28 U.S.C. § 1254. Accordingly, the Court should decline

to review this case.

employee benefit plans.

The ‘‘relates to’’ language of Section 514(a) is so broad that

it has been recognized as an example of the maximum extent of

federal preemption. See Caterpillar Inc. v. Williams, 482 U.S.

386 (1987). The United States Supreme Court has further

recognized that the ERISA preemption clause is ‘‘conspicuous

for its breadth’’ and ‘‘establishes as an area of exclusive federal

concern the subject of every State law that ‘relate(s) to’ an

employee benefit plan governed by ERISA.’’ FMC Corp. v.

Holliday, 111 S. Ct. 403, 407 (1990). The principle that the broad

scope of ERISA preempts all state laws which ‘‘relate to’’ employee

benefit plans has been so frequently enunciated by this Court and

the circuit courts that it is now ‘‘black letter law.’’ See, e.g., Alessi

v. Ravbestos-Manhattan, Inc., 451 U.S. 5C4 (1981); Shaw v. Delta

Air Lines, Inc., 463 U.S. 85 (1983); Pilot Life Ins. Co. v. Dedeaux,

481 U.S. 41 (1987); Baxter v. Lynn, 886 F.2d 182 (8th Cir. 1989);

General Elec. Co. v. New York State Dept. of Labor, 891 F.2d

25 (2nd Cir. 1989), cert. denied, 110 S. Ct. 2603 (1990);

Hyvdrostorage Inc. v. Northern Cal. Boilermakers Joint

Apprenticeship Comm., 891 F.2d 719 (9th Cir, 1989), cert. denied,

111 S. Ct. 72 (1990). It is this **black letter law’’ that the Eighth

Circuit properly applied in this case.

In Shaw v. Delta Air Lines, Inc,, 463 U.S. 85 (1983), the

Supreme Court’s most significant decision in this area, the Court

carefully articulated the scope and limits of ERISA preemption.

At issue in Shaw were two New York state statutes of general

application. The laws did not directly affect the administration

ot employee benefit plans, but they did regulate eligibility for

and participation in such plans. In Shaw, the Supreme Court held

that ERISA preempts not only statutes which expressly conflict

or compete with the provisions of ERISA, but it also preempts

those statutes which do not conflict with ERISA, and even statutes

which address issues not covered by ERISA at all, if these state

laws ‘‘relate to’? ERISA benefit plans.

In reviewing the scope of § 514(a)’s preemption of all state

laws which ‘‘relate to‘‘ ERISA plans, the Supreme Court first

noted that the scope of a federal law’s preemption of a state statute

is determined by ascertaining congressional intent in enacting the

federal law at issue. Looking first to congressional intent as

reflected in the language of ERISA‘s preemption clause, the

Supreme Court applied the Black’s Law Dictionary definition of

‘‘relate,’’ and refused to accept the claim (made again now by

Petitioners) that the ‘‘relate to’’ phrase should be narrowly

interpreted: **A law ‘relates to’ an employee benefit plan, in the

normal sense of the phrase, if it has a connection with or reference

to such a plan.’’ /d. at 96-97 (footnotes -omitted) (citations

omitted). The Supreme Court then expressly rejected the argument

that ERISA preempted only state laws which deal with the specific

subject matter regulated by ERISA.

In 1988, the Supreme Court reiterated the ERISA preemption

principles enunciated in Shaw. In Mackey v. Lanier Collections

Agency & Serv., Inc., 486 U.S. 825 (1988), the Court held that

state statutes which, like the rule in the instant case, are specifically

designed to affect ERISA employee welfare benefit plans are

subject to ERISA preemption without the need for any further

analysis. /d. at 829-830. The state law at question in Mackey was

a state garnishment statute of general application that contained

an express exception for monies held in an employee benefit plan.

The Court held that the statute’s provision which exempted ERISA

plan funds from the effect of the statute was preempted because

it was ‘designed to affect’? employee benefit plans. The Court

stated that, ‘*. . . since our decision in Shaw. . . we have virtually

taken it for granted that state laws that are ‘specifically designed

to affect employee benefit plans’ are preempted under § 514(a)

....’ The Court further stated that, ‘‘The pre-emption provision

fof § 514(a)] . . . displace{s] all state laws that fall within its sphere,

10

even including state laws that are consistent with ERISA’s

substantive requirements . . . legislative ‘good intentions’ do not

save a State law within the broad preemptive scope of § 514(a).”’

[d. (internal citations omitted). The Mackey standard of ERISA

preemption, which requires even less analysis than the ‘‘relates

to’’ standard, applies to any state law which expressly references

to an ERISA plan, or is specifically designed to effect an ERISA

plan. Mackey does not displace or narrow the Shaw ‘relates to’’

standard; instead it simply provides an alternative threshold

analysis for state laws that are clearly preempted on their face

because they make reference to or are designed to affect ERISA

plans.

In the 1990 Term, the Supreme Court once again applied

the Shaw and Mackey preemptions standards in /ngersoll-Rand

Co. v. McClendon, 111 S. Ct. 478 (1990), and in FMC Corp.

v. Holliday, 111 S. Ct. 403 (1990). In /ngersoll-Rand, as it has

so Often done in the past, the Court reaffirmed the basic principle

of ERISA preemption articulated in Shaw and refined in

subsequent cases. In striking down a Texas employment discharge

provision on the grounds it was expressly preempted by ERISA,

the Court reiterated that the ‘‘relates to’’ standard established

in Shaw is the basic principle of ERISA preemption. The Court

also recognized and then applied the ERISA preemption standard

articulated in Mackey: state laws which make reference to or which

are specifically designed to affect emplovee benefit plans are

preempted under Section 514(a) of ERISA. The Court explicitly

acknowledged that while the statute at issue in Mackey did not

regulate the terms or conditions of ERISA-covered plans, the

statute was nonetheless preempted because the state statute made

reference to employee benefit plans. The Court also emphasized

that preemption occurs ‘‘even if the law is not specifically designed

to affect such plans, or the affect is only indirect.”’ 111 S. Ct.

at 483.

1]

In /ngersoll-Rand the Court further held that one of the

paramount purposes of the ERISA preemption statute is to prevent

inconsistent or conflicting state regulation of ERISA plans. The

Court reasoned as tollows:

... Section 514(a) was intended to ensure that

plans and plan sponsors would be subject to a

uniform body of benefit law; the goal was to

minimize administrative and financial burden of

complying with the conflicting directives among

States or between States and the Federal

Government. Otherwise, the inefficiencies created

could work to the detriment of plan beneficiaries.

Allowing state actions like the one at issue here

would subject plans and plan sponsors to burdens

not unlike those that Congress sought to foreclose

through Section 514(a). Particularly disruptive is

the potential for conflict in substantive law. . .

Such an outcome is fundamentally at odds with

the goal of uniformity that Congress sought to

implement.

ld. at 484 (citations omitted).

The well-settled principles of ERISA preemption were

similarly articulated in FMC Corp. v. Holliday, 111 S. Ct. 403

(1990). The Court reiterated that state laws of general application,

as well as those laws specifically designed to affect employee benefit

plans, must give way before ERISA’s broad preemptive scope.

‘‘We made clear in Shaw v. Delta Airlines, supra, that a law relates

to an employee welfare plan if it has ‘a connection with or reference

to such a plan’ ”’ and, ‘‘we have not hesitated to apply ERISA’s

preemption clause to state laws that risk subjecting plan

administrators to conflicting state regulations.’’ /d. at 407-408.

}2

—

The essential rationale which was initially articulated by Shaw

and which continues to be the law is clear: to achieve Congress’

purpose, ERISA’s broad preemptive scope must be read to

preempt all state laws whlch directly or indirectly relate to, (even

if not in conflict with), ERISA plans, including state laws of

general application. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41

(1987); Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987).

B. The Circuit Courts Have Uniformly Adhered to the Supreme

Court Standards of Broad ERISA Preemption.

The circuit courts have consistently applied the ERISA

preemption principles enunciated by the United States Supreme

Court. A survey of the circuit court decisions reveals no contusion

or uncertainty. On the contrary, there is remarkable consistency

in the application of ERISA preemption law to a wide variety

of state laws, rules and regulations. The circuit courts have

properly followed the Supreme Court by holding that the broad

scope of ERISA preempts generally applicable statutes, preempts

laws which are traditional exercises of state police power, and

is not limited in scope to only those state laws which are intended

to directly effect ERISA plans. See Gahn v. Allstate Life Ins.

Co., 926 F.2d 1449 (Sth Cir. 1991) (ERISA preemption of state

‘abuse of rights’’ doctrine, a law of general application); Settles

v. Golden Rule Ins. Co., 927 F.2d 505 (10th Cir. 1991) (ERISA

preemption of state wrongful death law); Blue Cross & Blue Shield

v. Dept. of Banking, 791 F.2d 1501 (11th Cir. 1986) (ERISA

preemption of state law of general applicability — Unclaimed

Property Act); Gilbert v. Burlington Indus., Inc., 765 F.2d 320,

327 (2d Cir. 1985), (°°. . . we made clear that to avoid preemption

it is not sufficient that the state statute represent the exercise of

a traditional police power.’’), aff’d mem., 477 U.S. 901 (1986).

The uniformity with which the Supreme Court’s ERISA

preempuon principles have been applied is readily demonstrated

a

13

ee

The Shaw ‘‘relates to’’ test has been explicitly adopted by the

First, Third, Fourth, Fifth, Sixth, Seventh, Tenth and Eleventh

Circuits. See, e.g., Wadsworth v. Whaland, 562 F.2d 70, 76-77,

n. 31 (1st Cir. 1977), cert. denied, 435 U. S. 980 (1978); FMC

Corp. v. Holliday, 885 F.2d 79, 85 (3rd Cir. 1989), vacated on

other grounds, 111 S. Ct. 403 (1990); Salomon v. Transamerica

Occidental Life Ins. Co., 801 F.2d 659, 661 (4th Cir. 1986); Matter

of Dvke, 943 F.2d 1435, 1447 n. 31 (Sth Cir. 1991); Authier v.

Ginsburg, 757 F.2d 796, 799 (6th Cir. 1985), cert. denied, 474

U.S. 888 (1985); Savings & Profit Sharing Fund of Sears Employee

v. Gago, 717 F.2d 1038, 1040 (7th Cir. 1983); Straub v. Western

Union Tel. Co., 851 F.2d 1262 (10th Cir. 1988); Clark v. Coats

& Clark, Inc., 865 F.2d 1237, 1242-45 (11th Cir. 1989). The Eighth

Circuit, in a long line of cases, likewise has held that ERISA

preempts state laws, including generally applicable state laws,

which directly or indirectly ‘‘relate to’’ employee benefit plans.

See, e.g., Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208,

1214-15 (8th Cir. 1981), cert. denied, 454 U.S. 988 (1981); Baxter

v. Lynn, 888 F.2d 182, 185 (8th Cir. 1989); /n re Life Ins. Co.

of North America, 857 F.2d 1190, 1194 (8th Cir. 1988).

While the Second and Ninth Circuits at one time seemingly

articulated a more stringent preemption standard, these circuit

courts have now abandoned that standard and have applied the

Supreme Court mandated ‘‘relates to’’ test. See Howard v. Gleason

Corp., 9O1 F.2d 1154, 1157 (2nd Cir. 1990); Gibson v. Prudential

Ins. Co. of America, 915 F.2d 414, 416 (9th Cir. 1990). The

Supreme Court, and every circuit court, uniformly agree that state

laws which, directly or indirectly, regulate the terms or condiuons

ot ERISA plans, including laws of general application, are

preempted. See Shaw, 463 U.S. 85 (1983); Pilot Life Ins. Co.

v. Dedeaux, 481 U.S. 41 (1987); Standard Oil Co. of Cal. vy.

Agsalud, 633 F.2d 760 (9th Cir. 1990), aff’d mem., 454 U.S. 801

(1981); Baxter v. Lynn, 886 F.2d 182 (8th Cir. 1989); General

Electric Co. v. New York Dept. of Labor, 89\ F.2d 25 (2d Cir

14

1989), cert. denied, 110 S. Ct. 2603 (1990); /ron Workers Pension

Fund v. Terotechnology, 891 F.2d 548 (Sth Cir. 1990), cert. denied,

110 S. Ct. 3272 (1990); Holland v. Burlington Indust., Inc., 772

F.2d 1140 (4th Cir. 1985), aff’d mem., 477 U.S. 901 (1986), and

cert. denied, 477 U.S. 903 (1986).

These same principles of ERISA preemption have been

specifically applied to state laws regarding apprentice training

programs. The Ninth Circuit has on three occasions preempted

laws dealing directly with apprenticeship training programs in the

two cases that have come before this Court, the Court affirmed

one decision and declined to review the other, thus demonstrating

that the Eighth Circuit properly found the Minnesota rule is

preempted by ERISA. In Local Union 598, Plumbers & Pipefitters

Industry Journeyman & Appentices Training Fund v. J. A. Jones

Construction Co., 846 F.2d 1213 (9th Cir. 1988), aff’d mem.,

488 U.S. 881 (1988), the Ninth Circuit invalidated a state

‘prevailing benefit’? law applicable to apprentices, concluding

that it related to, and purported to regulate the terms of,

appellants’ apprenticeship training programs. The court noted that

ERISA’s preemption provision is so broad as to be ‘‘virtually

unique,’’ and that ‘‘[s]tatutes regulating contributions to ERISA

plans have consistently been held preempted.’’ /d. at 1218. It also

rejected the defense that the state law was an exercise of traditional

police puwer, noting that to escape preemption the law ‘‘must

also affec «se plan ‘in too tenuous, remote, or peripheral a manner

tO warrant a finding that the law ‘‘relates to’’ the plan.’ ’’ /d.

at 1221 (quoting Gilbert, 765 F.2d at 327, and Shaw, 463 U.S.

at 100, n. 21).

Subsequently, in Hydrostorage Inc. v. North California

Boilermakers Local Joint Apprenticeship Committee, 891 F.2d

719 (9th Cir. 1989), cert. denied, 111 S. Ct. 72 (1990), the Ninth

Circuit struck down a California law which required Hydrostorage,

a company that had no ERISA plan, to participate in an apprentice

a

15

training program and conform to certain journeyman-apprentice

jobsite ratios. The Ninth Circuit applied the Shaw principles to

preempt the state-mandated apprentice ratio rule. The legal

conclusion reached in Hydrostorage, a case which this Court

declined to review, has direct applicability here: ratio requirements

for apprenticeship training programs are not free from preemption

as ‘‘local concerns’’ or traditional exercises of police power, but

relate to and regulate ERISA plans, and are therefore preempted

by ERISA. Just as the employer who had no ERISA plan could

not be compelled by a state to adopt a training ratio, so too,

Respondents cannot be compelled by Minnesota to adopt such

a ratio as part of their ERISA plans.

Finally, in Electrical Joint’ Apprentice Committee vy.

McDonald, Nos. 90-15095, 90-15395, 1991 WL 227779 (9th Cir.

Nov. 8, 1991),* the Ninth Circuit once again invalidated on ERISA

preemption grounds a state law which related to apprenticeship

training programs. In reaching its conclusion, the circuit court

both applied Hydrostorage and invoked the Eighth Circuit decision

in this case as supporting authority.

Thus, the Supreme Court and the circuit courts have carefully

developed a uniform body of ERISA preemption law in which

Shaw is the keystone. Clarity and consistency, not confusion and

consternation, mark this area of the law. The Supreme Court

reaffirmed these basic principles and the underlying rationale for

ERISA preemption in /ngersoll-Rand and Holliday in the 1990

Term. More specifically, the decisions in McDonald,

Hydrostorage, J.A. Jones and the decision in this case demonstrate

4+. The state law at issue in McDonald was a prevailing wage statute

applicable to all contractors on public works projects which provided exceptions

for certain-apprenticeship programs, but not for other programs. The court

concluded that the law required sponsors of ERISA apprenticeship programs

to comply with state imposed standards, and thus the law was preempted.

16

that both the Ninth Circuit and the Eighth Circuit — the only

circuit courts which have carefully addressed ERISA preemption

principles in the context of state laws relating to apprenticeship

training programs have reached uniform and consistent conclusions

based on the same, well-settled ERISA preemption principles

established by this Court in Shaw and its progeny.

C. The Eighth Circuit Properly Applied Well-Settled ERISA

Preemption Standards to the Preempt Rule.

The parties have stipulated, and the district court and the

Eighth Circuit found, that Respondents’ apprenticeship training

programs are ‘‘employee welfare benefit plans’’ falling within the

scope of ERISA. Therefore, the only question presented to the

Eighth Circuit in this case was whether the rule’s ratio requirement

‘‘relates to’’ Respondents’ apprenticeship training programs.

Minnesota’s rule is not a law of general application which

affects the entire population. Rather, Minnesota‘s rule applies

only to on-the job training of high pressure pipefitter apprentices.

The rule is intended to, and does regulate and establish certain

standards for on-the-job training of apprentice pipefitters. Since

on-the-job training is a benefit governed by ERISA, and since

the rule requires Respondents to change their plans to conform

to the state-mandated ratio, it is both expressly directed toward,

and specifically designed to affect Respondents’ employee benefit

plans. It is therefore clearly preempted by ERISA.

The Eighth Circuit recognized the purpose and effect of the

rule in reaching the conclusion that the rule was preempted by

ERISA:

“We conclude that the minimum jobsite ratio rule

‘‘relates to’’ employee benefit plans covered by

ERISA, that is, plaintiffs’ apprenticeship

17

programs, within the meaning of ERISA’s Section

514(a). See Hydrostorage, 891 F.2d at 729-31. The

minimum jobsite rule was specifically designed to

affect employee benefit plans. The very purpose

of the minimum jobsite ratio rule was to require

plaintiffs and other employers to train their

apprentices in accordance with the minimum

jobsite ratio rule. Application of the minimum

jobsite ratio rule would also have exposed plaintiffs

and other employers to conflicting or inconsistent

state and local regulations. ‘‘{[W]here a ‘patchwork

scheme of regulation would introduce considerable

inefficiencies in benefit program operation,’ [the

Supreme Court has] applied the preemption clause

to insure that benefit plans will be governed by

only a single set of regulations.”’

See Pet. App. at pp. 10a-lla (citations omitted).

Petitioners’ hyperbolic claim that the Eighth Circuit’s decision

represents a radical extension of established preemption principles

is not borne out by either the facts of this case or the Eighth

Circuit’s decision. In reaching its decision, the Eighth Circuit

acknowledged the distinction between an employee benefit plan

and a ‘“‘benefit,’’ a distinction critical to the Supreme Court’s

decision in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987).

Then, the Eighth Circuit explicitly recognized and applied the

ERISA preemption standards established by the Supreme Court

in Shaw, and it fully recognized the proper limits on ERISA

preemption. Pet. App. at pp. 8a-9a. Thus, the legal framework

in which the Eighth Circuit analyzed the rule is, without question,

squarely within established precedent.

The Eighth Circuit’s application of these legal principles to

the rule further demonstrates that its decision is consistent with,

18

not a departure from, existing case law. In reaching the conclusion

that the rule ‘“‘relates to’” employee benefit plans covered by

ERISA, and not merely benefits, the Eighth Circuit emphasized

that the rule ‘twas specifically designed to affect employee benefit

plans.’’ Pet. App. at p. lla. The very purpose of the rule, the

Eighth Circuit concluded, was to regulate the-manner in which

Respondents and other employers trained their apprentices in

training programs undisputedly covered by ERISA. In addition,

the Eighth Circuit found that the rule would have exposed

Respondents and other employers to conflicting or inconsistent

state and local regulations, the very evil which the Supreme Court

has recognized as one of the underlying purposes served by broad

preemption. In recognizing this important purpose of ERISA

preemption, the Eighth Circuit relied on and applied the rationale

stated in this Court’s decision in Shaw and followed in Holliday.

See Pet. App. at p. Ila.

Petitioners suggest the Eighth Circuit ignored the limits of

ERISA preemption. This claim, like petitioners’ other rhetoric,

finds no basis in the court‘s decision. In fact, the Eighth Circuit

carefully considered this very question in light of applicable

Supreme Court precedent. The Eighth Circuit, citing Shaw,

articulated the proper limits of ERISA preemption, acknowledging

that the ratio rule would not be preempted if it affected

respondents‘ apprenticeship programs in ‘‘too tenuous, remote,

or peripheral a manner to warrant a finding that the [rule] ‘relates

to’ the plan{s].’” See Pet. App. at p. 8a. Clearly, the Eighth Circuit

understood-the proper limits of ERISA preemption, and it correctly

applied these principles in conciuding that:

We agreed that the minimum jobsite ratio rule is

an exercise of tradi:.onal state regulatory power

over occupational training. However, we cannot

agree that its effect on the apprenticeship programs

is sO tenuous, remote or peripheral to allow us to

19

conclude it does not ‘“‘relate to’’ them. The

minimum jobsite ratio rule directly affects an

ERISA plan; it regulates, and was clearly intended

to regulate, certain terms and conditions of the

apprenticeship programs by establishing the

manner in which employers can train and employ

both journeymen and apprentice pipefitters.

See Pet. App. at p. 12a (emphasis added). Accordingly, while

the Eighth Circuit acknowledged petitioners’ claim that the ratio

rule was ‘‘an occupational training requirement,’’ the rule

nevertheless ‘’related to’’ respondents“ training plans, and therefore

was preempted. /d.

The Eighth Circuit’s decision represents a straightforward

application of ERISA preemption principles. It does not signify

conflict among the circuit courts in this area of the law. On the

contrary, the Eighth Circuit’s decision falls squarely within well-

established precedent and demonstrates the uniformity with which

the Supreme Court, the circuit courts and, specifically, the Eighth

Circuit have developed and applied ERISA preemption law.

Therefore, review of the Eighth Circuit’s decision by this Court

is not warranted.

D. Petitioners Have Mischaracterized the Legal Standards of

ERISA Preemption, and Have Failed to Demonstrate Any

Justification for Granting the Petition.

In their desperate attempt to create an issue worthy of this

Court’s consideration, petitioners have resurrected arguments to

limit the scope of ERISA preemption which were long ago rejected

by this Court and the circuit courts. For well over a decade the

Supreme Court and the circuit courts have consistently rejected

the notion that ERISA preemption does not extend to traditional

exercises of police power, that ERISA, preempts only state laws

20

which regulate ERISA plans and does not preempt laws of general

applicability, that laws which directly affect ERISA plans are

preempted while those which indirectly affect ERISA plans are

not, and that the purpose of a state law determines whether it

is preempted by ERISA. Based on this sound and well-settled

authority, petitioners’ arguments must fail.

1. The Eighth Circuit’s Decision Does Not Destroy the

State’s Regulatory Authority by Improperly Limiting the

Exercise of Traditional Police Power.

Petitioners claim the Eighth Circuit failed to recognize the

‘‘constitutional balance between the states and the federal

government,’’ and thus erroneously extended ERISA preemption

into an area of state regulation. Petitioners’ Brief (hereinafter

referred to as ‘‘Pet. Brief’’) at p. 9. The Supreme Court and the

circuit courts have carefully considered and have aiready resolved

the balance between the broad sweep of ERISA preemption and

traditional state regulatory power. In Alessi v. Ravbestos-

Manhattan Inc., 451 U.S. 504 (1981), the Supreme Court rejected

the same objections raised here to ERISA preemption — a

traditional exercise of police power; a law relating only indirectly

to ERISA plans; a law intended to protect the interests of citizens

of a state. In A/essi, the Court reviewed a New Jersey workers’

compensation law. In this case, its first analysis of ERISA

preemption, the Supreme Court began by resolving the same

concern which petitioners now raise, some ten years later, that

ERISA preemption ‘‘must be guided by respect for the separate

spheres of governmental authority preserved in our federalist

system.’”’ /d. at 522. The Supreme Court unanimously held the

state law governing workers’ compensation awards, ‘‘which

obviously are subject to the State’s police power,’’ was preempted

by ERISA because the law at least indirectly ‘‘related to’’ plans

governed by ERISA. /7/d. at 524.

tell

21

As the Supreme Court made clear in A/essi, the question is

not the purpose of the state law, but whether its application relates

to an ERISA plan: ‘‘ Whatever the purpose or purposes of the

New Jersey statute, we conclude it relate{s} to pension plans

governed by ERISA... ”’

It is of no moment that New Jersey intrudes

indirectly, through a workers’ compensation law

rather than directly, through a statute called

‘*Pension Regulation.’” ERISA makes clear that

even indirect state action bearing on private

pensions may encroach upon the area of exclusive

federal concern .... ERISA’s authors clearly

mean to preclude the State’s from avoiding through

form the substance of the preemption provision.

Id. at 524-25 (emphasis added). Therefore, the Minnesota rules’

alleged goal of regulating occupational training provides no defense

to ERISA preemption, even if it falls within an area traditionally

reserved to the states.

Petitioners seek to justify their claim that the entire regulatory

scheme of state government will collapse as a result of this decision

by alleging that the rule is a law of ‘‘general application.’’

Petitioners purport that, ‘‘If the state law applies generally, then

it does not have a ‘connection with or reference to’ ERISA plans

and is not preempted,’’ Pet. Brief at p. 19 (emphasis added). In

fact, the rule is not a law of ‘‘general application.’’ Furthermore,

petitioners’ analysis has no basis in the iaw and is exactly contrary

to the clearly stated decisions of this Court.

In Shaw, the Supreme Court considered whether ERISA

preempts only laws which are specifically designed to affect or

directly affect employee benefit plans. The Court confirmed that

laws of general application, and statutes which address matters

>9

not covered by ERISA at all, are preempted by the broad scope

ot ERISA preemption. Shaw, 463 U.S. at 96-100. In Mackey v.

Lanier Collections Agency & Service, Inc., 486 U.S. 825 (1988),

the Court again emphasized that the preemption provision of

ERISA displaces ‘tall state laws’’ falling within its sphere, and

that ‘‘legislative good intentions’’ do not save a state law within

the scope of ERISA preemption. /d. at 829-830. The Court

reiterated in /ngersoll-Rand Co. v. McClendon, 111 S. Ct. 478

(1990), that even if a law is not specifically intended to regulate

ERISA plans, or even if the effect is only indirect, a law is

nevertheless preempted if it ‘relates to’’ an employee benefit plan.

Id. at 483. The circuit courts, like the Supreme Court, have

consistently held that state laws of general application which are

admittedly traditional exercises of police power are nevertheless

preempted if they relate to an ERISA plan. Neither this rule nor

the Eighth Circuit’s decision present any new questions concerning

either the issue of federalism or the scope of ERISA preemption

which justify granting the petition.

2. There is No Regulatory Black Hole.

Petitioners, in a desperate attempt to demonstrate this case

warrants Supreme Court review, predict the Eighth Circuit’s

decision will create ‘‘a regulatory black hole of mammoth

proportions.’ Pet. Brief at p. 15. This argurnent, a blatant attempt

to raise hysteria by alleging the collapse of state regulations, is

without merit. The Eighth Circuit’s decision does not implicate,

and respondents have not challenged, the authority of Minnesota

to license pipefitters or any other occupation.* The Eighth Circuit,

5S. Petitioners would have the Court believe that Minnesota's licensing

system and its regulatory structure for high pressuring piping are ‘‘in jeopardy’’

by the decision of the Eighth Circuit in this case. Pet. Brief at p. 10. These

assertions are false. The new rule does not atfect the ability of the Departiuent

to license pipefitters, and the Eighth Circuit’s invalidation of the rule does not

(Cont'd)

23

in concluding the Department acted impermissibly in attempting

to regulate ERISA plans, did not destroy the state’s power to

license Occupations, nor dld it, as petitioners claim with their vastly

intlated rhetoric, *‘sweep away all state laws that protect employees

cane Ot. Gef at p. 15.

Petitioners’ claim that the Eighth Circuit’s decision will

destroy traditional state and local government police power flies

in the face of scores of federal court decisions which have

preempted state regulations under ERISA. For example, there

is no evidence to support, or any reason to believe, that the

Supreme Court’s decision in Shaw, which preempted certain

antidiscrimination statutes, destroyed the power of New York to

enact and enforce antidiscrimination legislation. Similarly, the

decision of the Ninth Circuit in J.A. Jones, which invalidated

a state prevailing wage law relating to apprenticeship programs,

did not destroy the ability of California to enact and enforce labor

legislation or-prevailing wage laws. And the Supreme Court’s

decision in A/essi, which invalidated a state law concerning the

integration of workers’ compensation awards and private pension

plan benefits, did not preclude New Jersey from enacting and

enforcing workers’ compensation laws. If ERISA preemption did

in fact pose such a dire threat to the traditional exercise of state

police power, then this police power would have collapsed long

(Cont'd)

undermine the Department’s comprehensive regulatory scheme for licensing

pipefitters or controlling the installation and operation of piping work in

Minnesota. The installation and operawon of high-pressure piping is subject

to the detailed requirements of Minnesota’s Power Piping Code, Minn. R.

$§ §230.0250-5230.1270, and the oversight of the Code Enforcement Division

ot the Department. The Code Enforcement Division must review and approve

the plans tor each proposed high pressure piping installation, issue a permit

tor the installation work betore any work may begin and inspect the pipefitting

work performed throughout the installation process. Then the entire piping

system is subject to a final inspection.

24

ago with the enactment of ERISA preemption. Obviously, this

has not occurred. Far from leavii 4 a regulatory black hole, the

Eighth Circuit’s decision has simply prevented the Department

from improperly intruding into the regulation of ERISA plans.

3. Petitioners Have Misstated the Law and this Court’s

Decision in an Attempt to Create a New Legal Structure for

ERISA Preemption.

In their zeal to demonstrate the significance of this case,

Petitioners have distorted and misstated ERISA preemption

principles and the holdings of this Court in several decisions.

Purporting to rely on Mackey, Ingersoll-Rand, and Fort Halifax,

Petitioners have created, out of whole cloth, a new ‘‘structure’”’

for ERISA preemption. Petitioners claim that in Fort Halifax

and /ngersoll-Rand this Court ‘‘emphasized’’ there are two

categories of laws which are not preempted by ERISA: first, those

statutes that do not require the establishment of an ongoing ERISA

plan; second, tho$e statutes which are ‘‘generally applicable’ and

make no reference to, or that function irrespective of, the existence

of an ERISA plan. Pet. Brief at p. 20. Petitioners’ analysis and

purported statements of the law are simply wrong.

First, Petitioners have turned the Court’s decision in /ngersoll-

Rand on its head. The Court found the Texas statute at issue

expressly referred to, and was indeed ‘‘premised on,’’ the existence

of a pension plan. Therefore, under the Mackey preemption

standard, the law was automatically subject to preemption. Mackey -

and /ngersoll-Rand stand for the proposition that state laws which

make reference to ERISA plans are preempted without the need

for any further analysis. See Mackey, 486 U.S. at 829-830;

Ingersoll-Rand, 111 S. Ct. at 483.

While /ngersolil-Rand made it clear that state laws which make

reference to ERISA plans are preempted, the Court did not

2s

Suggest, as Petitioners claim that ERISA only preempts state laws

which make reference to ERISA plans. /ngersoll-Rand did not

overrule Shaw, and the decision does not stand for the proposition

that laws which make no reference to or function irrespective of

ERISA plans are exempt from preemption. To the contrary, both

Mackey and Ingersoll-Rand recognized that laws which relate to,

but which may not make specific reference to, ERISA plans, are

preempted under ERISA. Therefore, it is a sufficient, but not

a necessary condition, for preemption that a state law make

reference to an ERISA plan. As Shaw and its progeny have

unequivocally established, a statute which makes no reference to

an ERISA plan may nevertheless be preempted because it ‘‘relates

to’’ such a plan.

Second, Petitioners’ analysis of Fort Halifax and _ its

implications is similarly misplaced. To suggest, as Petitioners do,

that Fort Halifax stands for the broad proposition that state laws

which do not require the establishment of an ongoing plan are

not preempted by ERISA, or that ERISA preempts only laws

which require creation of a plan, is a gross mischaracterization

of the Court’s decision. The Supreme Court did not hold, and

has never held, that state laws which do not require the

establishment of an ongoing ERISA plan are immune from

preemptuon.

In Fort Halifax, 482 U.S. 1_ (1987), the Supreme Court

rejected an ERISA challenge to a Maine statute which required

employers to provide a one-time severance payment to employees

in the event of a plant closing. The basis for the Supreme Court’s

conclusion was that while the Maine statute ‘‘related to’’ employee

benefits, it did not relate to the appellant’s employee benefit p/an

because the appellant had no ERISA plan. Id. at 17-18. Hence,

the question in Fort Halifax was whether the Maine statute

required the appellant to create an ERISA plan. The Supreme

Court found it did not because the obligation imposed by the

26

Maine statute was a one-time obligation which, therefore, required

no continuing plan. /d. at 12-14. Fort Halifax turned on the

absence of an ERISA plan rather than the failure of the statute

to ‘‘relate to existing plans.’’ Petitioners agree that Respondents

have ERISA plans, and, unlike the statute at issue in Fort Halifax,

it must be conceded that the rule is an ongoing requirement for

apprentice training programs. Accordingly, Fort Halifax has no

applicability to this case.°

Finally, Petitioners suggest that state laws which ‘‘function

irrespective of’’ the existence of an ERISA plan and which apply

to all employers are not preempted. This argument constitutes

yet another misstatement of the law. The Supreme Court and

the circuit courts have repeatedly held that laws which apply

uniformly to employers and which are not intended to regulate

ERISA plans are nevertheless preempted under the broad scope

of ERISA preemption as defined by this Court in Shaw. Moreover,

Respondents and other employers in Minnesota who train

apprentice pipefitters have ERISA plans. Therefore, the ratio rule

does not operate irrespective of ERISA plans. Indeed, as the Eighth

Circuit concluded, the rule relates to and is intended to regulate

the ERISA plans of employers who have training programs for

pipefitter apprentices in Minnesota. Hence, Petitioners’ argument

is both flawed and wholly irrelevant for this case.

E. The Rule Is Not *‘Saved’’ by Either ERISA or the National

Apprenticeship Act.

Petitioners now argue for the first time in this case that the

ratio rule promulgated by the Department, is a ‘‘federal law’’ un- |

der the National Apprenticeship Act of 1937 (the ‘‘Fitzgerald Act’’)

6 Moreover, the Supreme Court distinguished its decision in Fort Halifax

trom other cases where similar statutes were invalidated because they related

to existing ERISA plans. Fort Halifax, 482 U.S. at 17-18.

27

26 U.S.C. § 50 (1988), and is therefore saved from preemption.

Petitioners have never before raised this argument, and the Eighth

Circuit did not rule on this question.’ Therefore, the Court need

not consider this issue.

As the Supreme Court stated in Duigan v. United States,

274 U.S. 195 (1927) ‘‘[t]his court sits as a court of review. It is

only in exceptional cases coming here from the federal courts that

questions not pressed or passed below are reviewed.’’ /d. at 200.

See also, GranFinanciera, S.A. v. Nordberg, 109 S. Ct. 2782

(1989); City of Canton, Ohio v. Harris, 489 U.S. 378, 386 n.

5 (1989) (the Court declined to determine issue because Petitioner

failed to assert it as a ‘‘distinct ground’’ for recovery and court

of appeals had not passed upon issue); Delta Air Lines v. August,

450 U.S. 347, 362 (1981) (the Court refused to consider a question

not raised in the court of appeals because it was ‘‘not properly

before’’ the Court).

Notwithstanding their failure to raise the issue previously,

Petitioners now claim that the Department must be allowed to

promulgate the rule because to hold otherwise ‘‘prevents the states

from doing what the Fitzgerald Act regulations require... ”’

Pet. Brief at p. 27. Petitioners’ arguments are disingenuous because

they effectively ask the Court to ignore both the purposes and

the express language of the Fitzgerald Act and ERISA.

In the first instance, the Fitzgerald Act does not even apply

in this case. The Fitzgerald Act is simply a policy statement for

promotion of voluntary apprenticeship programs which seek to

7

7. Petitioners’ only previous mention of the Fitzgerald Act before the Eighth

Circuit was as a footnote to their argument that the National Labor Relations

Act does not preempt substantive state regulation. Significantly, because of its

holding that the ratio is preempted under ERISA, the Eighth Circuit did not

rule on this question.

28

be registered with the United States Department of Labor for

federal contracts, grants and agreements. 29 C.F.R. § 29.2(K).

As Petitioners admit, Minnesota’s apprenticeship registration

program, which exists under authority delegated by the Fitzgerald

Act, is ‘‘voluntary.’’ Petitioners concede that ‘‘employers remain

free to establish any apprenticeship or training program they please

...’ Pet. Brief at 5. The Minnesota rule, however, applies to

all training programs. Indeed, Respondents have not sought to

register their ERISA apprentice training plans with the State of

Minnesota. Thus, the Fitzgerald Act is irrelevant to Respondents’

plans and, hence, this case.

The Fitzgerald Act itself does not transform this state rule

into a federal law. As noted, the Fitzgerald Act is simply a policy

statement and contains no substantive requirements. The Fitzgerald

Act and its regulations are not mandatory but merely voluntary

and apply only to those parties who seek certification of their

apprenticeship programs for federal pursposes. More importantly,

under the Fitzgerald Act there are no mandator numeric ratios

of apprentice to journeyman in apprentice training programs and

the state is not empowered by the Act to establish such mandated

ratios. Petitioners themselves have admitted that ‘‘the Fitzgerald

Act contemplates voluntary subscription to raiios.’’ See, supra,

n. 7 (emphasis added). The ratio rule is clearly not a requirement

of the Fitzgerald Act. Thus, preemption of the ratio rule does

not ‘‘prevent Minnesota from doing what the Fitzgerald Act

encourages,’’ namely, to review apprenticeship programs for the

purpose of federal certification.‘ Preemption of the rule only

8. In addition, the state may not promulgate rules which conflict with

the tederal program. In Electrical Joint Apprenticeship Committee v. Frank

McDonald, Nos. 90-15095, 90-15395, 1991 WL 227779 (9th Cir. Nov. 8, 1991).

The apprenticeship program of Respondent BE&K Construction Company

is based on an Associated Builders and Contractors apprentice program which

(Cont'd)

29

prevents the state trom doing that which is prohibited by ERISA.

Finally, the ERISA savings clause provides that ‘‘[nJothing

in this chapter shall be construed to alter, amend, modify,

invalidate, impair or supersede any law of the United States, . . .

any rule or regulation issued under such law.’’ 29 U.S.C.

§ 1144(d). On its face, the saving language applies only to federal,

not state, laws. The rule is, without question, a state law.

Moreover, Section 514(d) is not intended to provide a general

exemption from preemption, but instead explicitly provides a well

detined and limited set of areas which are exempt from ERISA

preemption. The ERISA savings clause does not encompass state

regulations of apprenticeship training programs. As this Court

stated in Shaw, ‘‘[t]he combination of Congress’ enactment of

514(a)’s all inclusive preemption provision and its enumeration

of narrow, specific exemptions to that provision militate against

expanding Section 514(d) into a more general savings clause.’’

463 U.S. at 104. Therefore, the ERISA savings clause, by its terms

and in accordance with this Court’s prior interpretations of that

clause, does not apply to the rule at issue here.

(Cont'd)

has received Bureau of Apprenticeship Training approval and Respondent Boise

Cascade Corporation is a signatory to a labor agreement that provides tor an

apprenticeship training program for apprentice employees. See Pet. App. at

p. 44a. Thus, according to both the Fitzgerald Act, 29 C.F.R. § 29.10(a), and

McDonald, 1991 WL 227779, at *4, the state’s attempt to impose a ratio on

these programs is preempted by ERISA.

a

30

CONCLUSION

For the reasons stated above, Respondents respectfully request

that the Court deny the petition for a writ of certiorari.

Respectfully submitted,

DAVID P. PEARSON

Counsel of Record

LLOYD W. GROOMS

THOMAS H. BOYD

WINTHROP & WEINSTINE

Attornevs for Respondents

Boise Cascade Corporation,

BE&K Construction Company

and Charles L. Lee

LOWELL J. NOTEBOOM

Counsel of Record

ROBERT P. THAVIS

LEONARD, STREET AND

DEINARD

Attorneys for Respondents

Relco Unisystems Corporation,

Forrest Dahmes, Mid-States

Mechanical Services, Inc.

and Kristine Southard