# Amicus Curiae Brief — Lennes v. Boise Cascade Corp.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1992
- **Citation:** 505 U.S. 1213

## Text

OCTOBER TERM, 1991

JOHN B. LENNES, JR., COMMISSIONER,
DEPARTMENT OF LABOR AND INDUSTRY,
STATE OF MINNESOTA, ET AL., PETITIONERS

VU.

BOISE CASCADE CORPORATION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

KENNETH W. STARR
Solicitor General

MAUREEN E. MAHONEY
Deputy Solicitor General

CHRISTOPHER J. WRIGHT
Assistant to the Solicitor General
Department of Justice
MARSHALL J. BREGER Washington, D.C. 20530
Solicitor of Labor 202) 514-2217
STEVEN J. MANDEL
Deputy Associate Solicitor
ELLEN L. BEARD
Attorney

Department of Labor
Washington, D.C. 20210

QUESTION PRESENTED

Whether the Employee Retirement Income Security
Act of 1974 (ERISA), which supersedes state laws inso-
far as they “relate to” employee benefit plans, 29 U.S.C.
1144 (a), including certain “apprenticeship or other train-
ing programs,” 29 U.S.C. 1002(1), preempts the applica-
tion of a Minnesota occupational licensing law limiting
the number of apprentice pipefitters at a jobsite.

(1)

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TABLE OF CONTENTS

Page
Statutory and regulatory provisions involved .................. 1
SE SNR a ee a eS LO 2
a casienlagegeninnnunetainennsnaientiones 6
EE 18
EE DPE RR la
TABLE OF AUTHORITIES
Cases:
Aetna Life Ins. Co. Vv. Borges, 869 F.2d 142 (2d
Cir.), cert. denied, 493 U.S. 811 (1989) ~........... 14
Alessi Vv. Raybestos-Manhattan, Inc., 451 U.S. 504
Neen anne ee tlladacasanie 13

Begnaud Vv. White, 170 F.2d 323 (6th Cir. 1948)... 12
Electrical Joint Apprenticeship Comm. Vv. Mac-
Donald, 949 F.2d 270 (9th Cir. 1991), petition

for cert. pending, No. 91-1416 _.......0-...... 16, 17
Firestone Tire & Rubber Co. v. Neusser, 810 F.2d
I a lieainldsemionernes 14
Fort Halifax Packing Co. v. Coyne, 482 U.S. 1
ERE a EE Sa ee Oe a 4,13
FMC Corp. V. Holliday, 111 S. Ct. 403 (1990)........ 13
Hughes Tool Co. v. Trans World Airlines, Inc., 409
ERISA tere ae SNE eae 12

Hydrostorage, Inc. v. Northern Cal. Boilermakers
Local Joint Apprenticeship Comm., 891 F.2d 719
(9th Cir. 1989), cert. denied, 111 S. Ct. 72
ER ie I an OE 16-17

(a TOR CB cA es SCE 13, 14
Kennedy Vv. Silas Mason Co., 334 U.S. 249 (1948).. 6
Lane Vv. Goren, 743 F.2d 1387 (9th Cir. 1984) ........ 14, 15
Local 598 v. J.A. Jones Constr. Co., 846 F.2d 1213

(9th Cir.), aff’d mem., 488 U.S. 881 (1988).... 16,17
Mackey v. Lanier Collections Agency & Serv., Inc.,

ny A es cccvensvennionpminnenne 13, 14, 15
Massachusetts v. Morash, 490 U.S. 107 (1989)....8, 9, 10

(111)

IV

Cases—Continued : Page

Metropolitan Life Ins. Co. V. Massachusetts, 471

Se My ED chilis nitcdaisdaeccantitiotlemebiiemmmacans 13
National Elevator- Indus., Inc. v. Calhoon, 957

PG BEBE CUO: Civ. LODB) 2... cccccccccrccccceccscccssncseeees 16,17
Pilot Life Ins. Co. Vv. Dedeaux, 481 U.S. 41 (1987)... 15
Rebaldo v. Cuomo, 749 F.2d 133 (2d Cir. 1984),

cert. denied, 472 U.S. 1008 (1985) 0.000000... 14, 15
Shaw V. Delta Air Lines, Inc., 463 U.S. 85 (1983)..4, 5, 13,
14, 18

Sommers Drug Stores Co. Employee Profit Shar-

ing Trust v. Corrigan Enterprises, Inc., 793 F.2d

1456 (5th Cir. 1986), cert. denied, 479 U.S.

UE ED csranshieelissiicbandcbacanipanieicuadintdaptaiienes 14
Vetter v. Frosch, 599 F.2d 630 (5th Cir. 1979).... 12

Statutes and rule:

Act of Oct. 14, 1969, Pub. L. No. 91-86, 88 Stat.

SES ae ERE Mc RR Be Re RE Loo ES i 10
Employee Retirement Income Security Act of

1974, 29 U.S.C. 1001 et seq.:

§ 3(1), 29 U.S.C. 1002 (1) ............. 1, 3, 7, 10, 11, 12, la
§ 3(1) (A), 29 U.S.C. 1002 (1) (A) -.......2........ 7,10, 11
§ 3(1) (B), 29 U.S.C. 1002 (1) (B) ....-02 ee... 7,10
§ 602 (a), 29 U.S.C. 1182 (a) .......20. ee. 9
By Be I, BEI cocbnewcccccrc cere cscsnecerscreenssnnescees 9
§ 514(a), 29 U.S.C. 1144(a) _...1, 4, 5, 7, 138, 15, 17, la
§ 614(d), 29 U.S.C. 1144 (d) ..........n.. ee eee 18

Labor-Management Relations Act, 1947, 29 U.S.C.
141 et seq.:

§ 302 (c), 29 U.S.C. 186 (c) ........... Sainniasoealia 1, 3, 7,9, 10
§ 302 (c) (6), 29 U.S.C. 186 (c) (6) 2.0. 7,10
§ 302 (c) (7), 29 U.S.C. 186 (c) (7) .......2.-2.22.------ 7,10

Labor-Management Reporting and Disclosure Act
of 1959, Pub. L. No. 86-257, § 505, 73 Stat. 537-

RR eee EES ae ee ee 10
National Apprenticeship Act of 1937, 29 U.S.C.
Ie i cwababens 2,18
29 C.F.R.:
I 2,18

i ee 2a

Statutes and rule—Continued : Page
EE ES a eae nee eT esr BALD 8
Section 2610.3-1 (b) (8) Civ) ..............2.0..ccccceeee-e0s 8
Ey RE Real ee a SR I 8
Miscellaneous:

ERISA Advisory Opinion No. 76-01 2.22.02... &
ERISA Advisory Opinion No. 83-32A _................... 8,11
a RINE CAE ARCA Re ns SN PE Ee x
a I -cceicesicdsnstichancbicctacninctnintiesdenddsbimabasamldmaiian 8

1B James W. Moore et al., Moore’s Federal Prac-
SE GND senor icktiipteterdccieiiebirtaaee: 12

6 James W. Moore et al., Moore’s Federal Practice
GE Gi SE chtrinmerninceccsctniosiactainas en 12

Iu the Supreme Court of the United States

OCTOBER TERM, 1991

No. 91-707

JOHN B. LENNES, JR., COMMISSIONER,
DEPARTMENT OF LABOR AND INDUSTRY,
STATE OF MINNESOTA, ET AL., PETITIONERS

Vv.

BOISE CASCADE CORPORATION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

This brief is submitted in response to the Court’s invi-
tation to the Solicitor General to express the views of the
United States.

STATUTORY AND REGULATORY
PROVISIONS INVOLVED

The pertinent portion of ERISA’s preemption provi-
sion, Section 514(a), 29 U.S.C. 1144(a); the definition
of “employee welfare benefit plan” set out in Section 3(1)
of ERISA, 29 U.S.C. 1002(1); the pertinent portion of
Section 302(c) of the Labor-Management Relations Act,
29 U.S.C. 186(c), which is cross-referenced in Section
3(1) of ERISA; and the portions of the Secretary of
Labor’s regulatory definition of “employee welfare benefit
plan” relating to apprenticeship programs and scholar-
ship funds are reprinted in the appendix to this brief.

(1)

2
STATEMENT

1. For many years, Minnesota has regulated high pres-
sure pipefitting. The reason is simple: improperly in-
stalled piping can explode and cause serious injury to both
workers and the public. The State’s regulatory scheme (1)
requires pipefitters to satisfy occupational licensing re-
quirements, and (2) establishes a code of technical safety
standards enforced through issuance of state permits and
inspections. Under these regulations, pipefitters must be
licensed to install high-pressure piping, and unlicensed
apprentices must work under the supervision of a licensed
journeyman. An employer who hires unlicensed pipe-
fitters is not required to establish an apprenticeship
training program, but apprentices must register with the
State and take the state licensing examination after four
years of experience in the trade. Pet. App. 3a-5a.

Minnesota also has a separate regulatory scheme gov-
erning apprenticeship programs, which are approved by
the State if they meet specified standards. That regula-
tory regime, which implements the National Apprentice-
ship Act of 1987 (the “Fitzgerald Act”), 29 U.S.C. 50,
administered by the U.S. Department of Labor, is purely
voluntary. Minnesota’s voluntary apprenticeship stand-
ards for pipefitters have traditionally included a mini-
mum jobsite ratio of journeymen to apprentices, in ac-
cordance with Department of Labor regulations. See 29
C.F.R. 29.5(b) (7). Any employer may establish an ap-
prenticeship program; historically, however, only unions
and unionized employers did so. Most pipefitter appren-
tices in Minnesota participated in those union-sponsored
programs. Pet. App. 4a-5a, 18a.

In the mid-1980s, non-union employers began estab-
lishing apprenticeship training programs that did not
comply with the State’s voluntary standards, including
the jobsite ratios. In response, the State in 1990 promul-
gated a mandatory rule—the “three-to-one rule”—requir-
ing employers using unlicensed pipefitters to employ one
licensed pipefitter for the first trainee and a ratio of three
licensed pipefitters for each additional trainee. Pet. App.
4a-6a.

3

2. Respondents include four companies, Boise Cascade
Corporation, BE&K Construction Company, Relco Uni-
systems Corporation, and Mid-States Mechanical Services,
Inc., that employ and train pipefitters within Minnesota.
Each employer has established (or proposed) an appren-
ticeship program that provides classroom instruction and
on-the-job training for apprentice pipefitters. None of
these programs has been approved by the State, and re-
spondents typically employ a much higher ratio of ap-
prentices to journeyman pipefitters than permitted by
the State’s three-to-one rule. Pet. App. 2a, 18a-19a & n.6.

To comply with Minnesota’s new rule, respondents
would have to incur significant expense for the obvious
reason that journeyman pipefitters must be paid higher
wages than apprentices. The four companies, joined by
three apprentice pipefitters, accordingly brought suit in
federal district court against the Commissioner of Minne-
sota’s Department of Labor and Industry. The action
sought an injunction against enforcement of the three-
to-one rule on the ground that it is preempted by ERISA
and the National Labor Relations Act (NLRA). The
Minnesota Mechanical Contractors Association intervened
as a defendant in support of the State. Pet. App. 28a,
38a n.3, 43a-45a.

3. Respondents filed a motion for a preliminary in-
junction, and the State filed a motion for summary judg-
ment. The district court did not rule on the preliminary
injunction motion; instead, the court granted summary
judgment in favor of the State based upon its conclusion
that the three-to-one rule is not preempted by federal
law. For purposes of the State’s summary judgment mo-
tion, the parties stipulated that respondents’ pipefitter
apprenticeship programs are “employee welfare benefit
plan[s]” as defined in Section 3(1) of ERISA, 29 U.S.C.
1002(1). Pet. App. 44a." In light of the parties’ stipula-

1 ERISA defines an “employee welfare benefit plan” to inciude
(A) “apprenticeship or other training programs” and (B) “any
benefit described” in Section 302(c) of the Labor-Management Re-
lations Act (LMRA), 29 U.S.C. 186(c). Section 302(c) of the
LMRA in turn refers to ‘trust fund[s] established * * * for the

4

tion, the district court did not consider whether respond-
ents’ programs were subject to coverage under ERISA.

Instead, the only ERISA question presented to the
district court was whether Minnesota’s three-to-one rule
“relates to” an employee benefit plan within the meaning
of ERISA’s preemption provision, Section 514(a), 29
U.S.C. 1144(a). That section provides that ERISA “super-
sede{s! any and all state laws insofar as they may now
or hereafter relate to any employee benefit plan” covered
by ERISA. The district court recognized that ERISA
preemption is broad and not limited to laws specifically
designed to affect employee benefit plans. It noted that
the test established by this Court provides that a state
law “relates to” an employee benefit plan under Section
514(a) of ERISA “in the normal sense of the phrase, if
it has a connection with or reference to such a plan.”
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983) ;
see Pet. App. 28a. The district court added, however,
that ERISA does not preempt ali state laws that merely
“affect” employee benefit plans, particularly in areas of
traditional state regulation such as occupational training
and public safety. Pet. App. 23a-24a.

Reviewing the case under the analytical framework of
Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987),
the district court concluded that the three-to-one rule was
not preempted. The court reasoned that Minnesota’s rule
neither requires employers to establish employee benefit
plans, nor is specifically designed to affect such plans,
and it neither alters the terms of eligibility or the
amount of benefits available to plan participants, nor im-
poses any funding, vesting, reporting, or enforcement re-
quirements that would interfere with ERISA’s substan-
tive provisions. Pet. App. 27a. The court recognized that
the jobsite ratio would have what it termed an “incidental
effect” on existing apprenticeship plans because the rule
would limit the number of participants and affect how

purpose of * * * defraying costs of apprenticeship or other train-
ing programs.”

5

on-the-job training could be done. Jd. at 272-28a. Never-
theless, the district court found that requirement to be
comparable to other state occupational licensing require-
ments, such as years of experience and passing an ex-
amination, that ERISA would not preempt. Jd. at 30a.
Accordingly, the district court concluded that the rule
was not preempted by Section 514(a) of ERISA because
it is ‘a rule of general application concerning a subject
traditionally reserved to the states which has no implica-
tions for ERISA’s regulatory concerns and only an inci-
dental effect on the administration of training programs.”
[bid.*

3. The Eighth Circuit reversed. The court held that
the jobsite ratio rule is preempted by ERISA because it
“relates to” the apprenticeship training programs pro-
vided by the four respondent companies. Unlike the dis-
trict court, the court of appeals concluded that the three-
to-one rule was specifically designed to affect employee
benefit plans because its purpose is to require employers
to train apprentices in the manner the rule prescribes.
Pet. App. 10a-lla. In the court of appeals’ view, “the
fact that the minimum jobsite ratio rule is part of an
apprenticeship program and thus part of an employee
benefit ‘plan’ under ERISA, [and] not merely an em-
ployee benefit, distinguishes the present case from Fort
Halifax.” Id. at 10a. The court also noted that the Min-
nesota rule could expose employers to conflicting or in-
consistent state and local regulation, which ERISA pre-
emption was designed to avoid. Jd. at lla.

The court therefore determined that the effect of the
three-to-one rule on apprenticeship plans was more than
“incidental,” and could not be characterized as “tenuous,
remote, or peripheral” under Shaw, 468 U.S. at 100 n.21,
so as to permit the conclusion that the rule does not

* The district court went on to conclude that the three-to-one rule
is not preempted by the NLRA. Pet. App. 3la-34a. The court of
appeals, which held that the three-to-one rule is preempted by
ERISA, did not address the NLRA question. Nor do we.

6

“relate to” employee benefit plans. Pet. App. 12a. In-
stead, the court concluded that “(t]he 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 establish-
ing the manner in which employers can train and employ
both journeymen and apprentice pipefitters.” Ibid.

DISCUSSION

We do not believe that, in its present posture, this
case is suitable for review. As we explain below, it is
likely that further development of the record will estab-
lish that the apprenticeship programs operated by re-
spondents are not covered by ERISA. If the programs are
not subject to ERISA, then the Minnesota rule is not
preempted insofar as it relates to those programs. This
potentially dispositive threshold issue was not addressed
by either the parties or the courts, because the issue of
statutory coverage was conceded for purposes of the
State’s motion for summary judgment. In our view, this
Court should decline to reach the question whether Min-
nesota’s assertion of regulatory authority is improper,
since resolution of this preemption issue may be unneces-
sary. Cf. Kennedy v. Silas Mason Co., 334 U.S. 249
(1948) (declining review on the merits where the record
on summary judgment was incomplete).

In any event, we do not share the State’s view that a
pressing need exists for this Court to reconsider the
general framework for analyzing ERISA preemption
questions. This is the first decision to address preemption
of jobsite supervisory ratios or other training require-
ments contained in state occupational licensing laws.
Not only is the issue quite fresh in the lively world of
ERISA-related litigation, but the lower courts’ erroneous
assumption that ERISA covered these programs may well
have skewed their analysis of the preemption issue. The
upshot is this: in its present posture, this case does not

7

present an appropriate occasion for a fundamental recon-
sideration of this Court’s approach to ERISA preemption.

1. a. Section 3(1) of ERISA, 29 U.S.C. 1002(1), de-
fines an “employee welfare benefit plan” as “any plan,
fund or program * * * established or maintained by an
employer or by an employee organization, or by both
* * * for the purpose of providing for its participants or
their beneficiaries” certain enumerated benefits. Included
among the benefits listed in Section 3(1)(A) are “ap-
prenticeship or other training programs” and “scholar-
ship funds.” Section 3(1)(B) further provides that a plan
providing “any benefit described” in Section 302(c) of
the Labor-Management Relations Act (LMRA), 1947, 29
U.S.C. 186(¢), is covered by ERISA. Section 302(c) (6),
in turn, defines benefits to include “a trust fund estab-
lished * * * for the purpose of * * * defraying costs of
apprenticeship or other training programs” and Section
302(c) (7) includes a “trust fund” established to provide
“scholarships.”

ERISA’s preemption provision, Section 514(a), 29
U.S.C. 1144(a), provides that ERISA “shall supersede
any and all State laws insofar as they * * * relate to any
employee benefit plan” covered by ERISA. The statutory
language establishes that the Minnesota rule is not pre-
empted unless respondents’ apprenticeship programs are
“employee benefit plans” within the meaning of ERISA.
Such a showing is a threshold prerequisite to preemption
under Section 514 (a).

b. In this case, it appears that neither the parties nor
the courts below conducted any inquiry inte coverage.
They simply assumed, based on the statutory definition,
that any “apprenticeship or other training program”’ is
an employee benefit plan covered by ERISA. That as-
sumption is wrong. The Secretary’s coverage regulations
and advisory opinions carve out a large exemption that
may well include all of the pipefitter training programs
operated by respondents.

First, the regulations exclude from coverage employee
benefit plans that provide compensation for on-the-job

8

training. See 29 C.F.R. 2510.3-1(b) (3) (iv) (excluding
“(p]ayment of compensation on account of periods of time
during which an employee performs little or no productive
work while engaged in training”). As the Secretary ex-
plained in proposing that exclusion, “[a]lthough section
3(1) of [ERISA] could be read to include job-skill train-
ing within the term ‘welfare plan,’ such training is virtu-
ally inseparable from an employee’s normal duties for
which compensation is paid, and therefore is not treated
as an employee benefit plan.” 40 Fed. Reg. 24,643 (1975).
That regulatory exclusion is just one part of a broader
coverage exclusion for a variety of “payroll practices”
(such as overtime pay, sick pay, and vacation pay) which
amount to nothing more than payment of ordinary com-
pensation out of the employer’s general assets. 29 C.F.R.
2510.3-1(b). Indeed, another part of the payroll practices
regulation (the exclusion of vacation pay) has been up-
held by this Court. Massachusetts v. Morash, 490 U.S.
107 (1989). Accordingly, in the Secretary of Labor’s
view, on-the-job training does not normally constitute an
ERISA plan.

Second, the Secretary’s regulations exclude various plans
that provide for classroom instruction. Specifically, the
regulations exclude so-called “{u]nfunded scholarship pro-
grams,” including “tuition and education expense refund
program(s], under which payments are made solely from
the general assets of an employer or employee organiza-
tion.” 29 C.F.R. 2510.3-1(k); see 40 Fed. Reg. 34,527
(1975). The Department of Labor has also issued an
advisory opinion stating that an in-house professional de-
velopment program maintained by an accounting firm to
provide continuing education for its licensed accountants,
financed by the firm’s general assets, is not an employee
welfare benefit plan as defined in ERISA. ERISA Ad-
visory Opinion No. 83-32A; see also ERISA Advisory
Opinion No. 76-01 (tuition refunds to bank employees
paid from the bank’s general assets do not constitute a
covered plan). Accordingly, in the Secretary’s view, un-

9

funded classroom training programs, whether provided
directly by an employer or purchased from an educational
institution, do not constitute ERISA plans.

If neither on-the-job training nor classroom training
paid for out of an employer’s general assets is an ERISA
plan, then an unfunded program providing both types of
training is plainly not an ERISA plan either. On the
other hand, apprenticeship programs and scholarship pro-
grams that are separately funded—such as joint appren-
ticeship trusts and scholarship trusts established under
Section 302(c) of the LMRA—are covered by ERISA.
The rationale for such a distinction is explained in
Massachusetts v. Morash, 490 U.S. at 112-119. In Morash,
the Court approved the Secretary’s similar determination
that only funded—and not unfunded—vacation pay ar-
rangements were covered by ERISA. The Court stated
that “[i]n enacting ERISA, Congress’ primary concern
was with the mismanagement of funds accumulated to
finance employee benefits and the failure to pay employees
benefits from accumulated funds.” Jd. at 115. The exist-
ence of separate plan assets makes funded plans suscepti-
ble to the kinds of fiduciary abuses that ERISA was de-
signed to prevent. The Court accordingly upheld the Secre-
tary’s payroll practice regulation insofar as it excluded
unfunded vacation benefits from coverage.

In reaching that conclusion, the Court also noted that
“the extension of ERISA to claims for vacation benefits
would vastly expand the jurisdiction of the federal courts,
providing a federal forum for any employee with a vaca-
tion grievance.” 490 U.S. at 118-119. Similarly, if all
employer-provided training is covered by ERISA, em-
ployees would have the right to bring benefit claims or
fiduciary breach claims in federal court under Section
502(a) of ERISA, 29 U.S.C. 1132(a), each time their
employer denied them an opportunity to attend a training
course. ERISA was not intended to sweep so broadly;
the Secretary quite properly exercised her rulemaking
authority under Section 505 of ERISA, 29 U.S.C. 1135,

10

to define the proper scope of the term “employee welfare
benefit plan.”

As this Court has recognized, the Secretary’s coverage
regulations are entitled to deference. Massachusetts v.
Morash, 490 U.S. at 115-118. Excluding unfunded ap-
prenticeship and scholarship programs from ERISA cov-
erage is a permissible interpretation of the statutory
language and is fuily consistent with Congress’s intent.
The LMRA was amended in 1959 to permit employers
and unions to establish joint trust funds “for the pur-
pose of * * * defraying costs of apprenticeship or other
training programs.” Labor-Management Reporting and
Disclosure Act of 1959, Pub. L. No. 86-257, § 505, 73
Stat. 537-539, adding Section 302(c) (6) of the LMRA,
29 U.S.C. 186(c) (6). The language incorporated in the
ERISA definition, “apprenticeship or other training pro-
grams,” mirrors that employed in the LMRA. This con-
gruence of language suggests that Congress was referenc-
ing the form of separately funded apprenticeship and
training trusts traditionally sponsored by unions. Simi-
larly, Section 3(1) of ERISA refers to “scholarship
funds,” while Section 302(c) (7) allows a union to estab-
lish a “trust fund” to provide “scholarships.” See Pub. L.
No. 91-86, 83 Stat. 183 (1969). Accordingly, both the
statutory language and its enactment history support the
Secretary’s regulations limiting ERISA coverage to ap-
prenticeship programs and scholarship programs that are
separately funded.*

3In Massachusetts Vv. Morash, the Court rejected the argument
that the reference to “vacation benefits” in Section 3(1)(A) of
ERISA must include unfunded programs because the cross-reference
to Section 302(c) of the LMRA in Section 3(1)(B) already covered
funded vacation plans (since Section 302(c)(6) mentions “a trust
fund established” to provide “‘pooled vacation” benefits). The Court
instead recognized that Congress was “not concerned with duplica-
tion” in drafting Section 3(1). 490 U.S. at 114 n.9. Similarly, the
fact that the cross-reference to Section 302(c) of the LMRA in
Section 3(1)(B) brings funded apprenticeship and scholarship pro-
grams within ERISA’s coverage does not preclude the Secretary’s

11

ec. In this case, the court of appeals’ decision is silent
as to the funding status of the apprenticeship and train-
ing programs operated by the four employer respondents.
However, the record includes affidavits submitted by each
respondent describing its program. Those affidavits reveal
that three of the four employers do not sponsor a funded
apprenticeship training program. Relco and Mid-States
simply provide on-the-job training and pay for classroom
instruction to prepare apprentice pipefitters for the state
licensing examination. See Affidavits of Loren Corle,
owner of Relco (Jan. 19, 1990), and Kent Durenberger,
President of Mid-States (Jan. 19, 1890). Boise Cascade
had proposed, but not implemented, an apprenticeship
training program while this case was pending before the
district court. See Affidavit of Bob Anderson, Public
Affairs Manager (Jan. 22, 1990). Based on affidavits
presented to the district court, it seems clear that none
of those three employers currently offers an apprenticeship
training program that is an employee benefit plan under
Section 3(1) of ERISA, as construed by the Secretary.

For a number of years, BE&K has offered an extensive
apprenticeship program covering a variety of trades.
BE&K typically includes in its contracts a ten-cent per
payroll hour charge earmarked to pay for training and
educating its employees, and maintains an in-house account
that it calls the BE&K Training and Education Fund.
See Affidavit of W. Douglas Cross, Vice-President of
Operations (Jan. 22, 1990). It does not appear that this
is a trust fund within the meaning of ERISA. In ERISA
Advisory Opinion No. 83-32A, the Department of Labor
determined that a similarly financed plan was excluded

interpretation of “apprenticeship or other training programs” and
“scholarship funds” in Section 3(1)(A). To the contrary, reading
Section 3(1) as a whole supports the Secretary’s decision that only
funded apprenticeship and scholarship plans are subject to ERISA.

4 We were informed that Boise Cascade has not implemented the
proposed apprenticeship program described in its filing in the dis-
trict court, but instead is currently considering offering apprentice-
ship training through a union fund.

12

from coverage. That opinion involved an accounting firm
whose branch offices contributed a percentage of their net
fees to their national office, which used the funds to pro-
vide continuing education programs. The Department
concluded that earmarking revenues in this manner does
not involve a “trust arrangement,” subject to ERISA’s
coverage. There is, accordingly, substantial reason to
doubt whether the BE&K program is covered; and further
factual development in the district court would be neces-
sary to resolve that issue.

In short, it is not apparent that any of the four em-
ployers sponsor apprenticeship programs that constitute
“employee welfare benefit plans” within the meaning of
Section 3(1) of ERISA. In light of the threshold cover-
age question, review of the preemption issue presented by
petitioners is not warranted at this time.®

2. a. With respect to the question presented, petition-
ers recognize that this Court has repeatedly held that a

5It appears that the coverage issue may be raised by petitioners
on remand. Petitioners apparently conceded ERISA coverage only
for the purpose of their own summary judgment motion, Pet. App.
44a, and all that has happened in this case thus far is that the
district court granted summary judgment in favor of the State,
despite that concession, and the court of appeals reversed. Respond-
ents did not move for summary judgment. In any event, as a general
rule, concessions that a party makes in support of its own motion
for summary judgment do not carry over and support a cross-motion
for summary judgment by the opposing party. 6 James W. Moore
et al., Moore’s Federal Practice { 56.13, at 56-176 to 56-177 (2d ed.
1988); Vetter v. Frosch, 599 F.2d 630, 632 (5th Cir. 1979);
Begnaud v. White, 170 F.2d 323, 327 (6th Cir. 1948). Accordingly,
it appears that the district court, on remand, may take evidence
and decide the coverage issue on the merits. Similarly, the court of
appeals has discretion to reconsider the preemption question in light
of the coverage issue. 1B James W. Moore et al., Moore’s Federal
Practice © 0.404[1], at 117-124 (2d ed. 1983). This Court would be
free to consider both the coverage and preemption issues (assuming
both were preserved) if certiorari were granted following an appeal
from a judgment on remand. ZId. at § 0.404[4.-6], at 140-141;
Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363, 365-
366 n.1 (1973).

13

state law “relates to” an employee benefit plan under
Section 514(a), and is therefore preempted, “if it has a
connection with or reference to such a plan.” Shaw, 463
U.S. at 96-97; Ingersoll-Rand Co. v. McClendon, 111 S. Ct.
478, 483 (1990). Petitioners contend that the result in
this case “demonstrates that this formulation of ERISA
preemption doctrine simply does not provide the lower
courts with sufficient guidance.”’ Pet. 17. In their view, a
new test should be formulated that limits the effect of
Section 514(a). Regardless of whether a new “test” is
needed, this case does not, in any event, present an appro-
priate occasion on which to reconsider this Court’s inter-
pretation of Section 514 (a).

By preempting state laws “insofar as they relate
to” ERISA plans, Congress broad'y shielded such plans
from state regulation. Under Section 514/a), preemption
is not limited to ‘“‘state laws specifically designed to affect
employee benefit plans” or to “state laws dealing with the
subject matters covered by ERISA—reporting, disclosure,
fiduciary responsibility, and the like.” Shaw, 463 U.S. at
98; FMC Corp. v. Holliday, 111 S. Ct. 403, 408 (1990).
The purpose of the state law is not dispositive; ERISA
preempts state laws that intrude either directly or in-
directly upon the area of exclusive federal concern. Alessi
v. Raybestos-Manhattan, Inc., 451 U.S. 504, 524-525
(1981) ; Metropolitan Life Ins. Co. v. Massachusetts, 471
U.S. 724, 739 (1985). Preemption is virtually required
if the state law makes a specific “reference to” ERISA
plans or is “specifically designed to affect’? such plans.
Mackey v. Lanier Collections Agency & Serv., Inc., 486
U.S. 825, 829 (1988) ; Ingersoll-Rand, 111 8S. Ct. at 483.
Even if the state law does not expressly refer to substan-
tive matters regulated by ERISA, preemption is neverthe-
less required if the State thereby subjects employers and
plan administrators to conflicting state regulations bur-
dening the administration of nationwide plans. FMC, 111
S. Ct. at 408; Fort Halifax, 482 U.S. at 10.

Contrary to petitioners’ assertions, however, not all
state laws imposing additional costs or administrative

*# &

14

burdens on employee benefit plans are preempted. Mackey,
486 U.S. at 831; Ingersoll-Rand, 111 S. Ct. at 483. “Some
state actions may affect employee benefit plans in too
tenuous, remote, or peripheral a manner to warrant a
finding that the law ‘relates to’ the plan.” Shaw, 463
U.S. at 100 n.21.° In general, courts have declined to
preempt “laws of general application—often traditional
exercises of state power or regulatory authority—whose
effect on ERISA plans is incidental.” Aetna Life Ins. Co.
v. Borges, 869 F.2d 142, 146 (2d Cir.), cert. denied, 493
U.S. 811 (1989). This exception to the general rule of
preemption ‘follows as a matter of common sense from
the fact that ERISA plan members and managers are
bound to engage in myriad transactions that Congress
never considered when it drafted $514. A preemption
provision designed to prevent state interference with fed-
eral control of ERISA plans does not require the creation
of a fully insulated legal world that excludes these plans
from regulation of any purely local transaction.” Rebaldo
v. Cuomo, 749 F.2d 133, 188 (2d Cir. 1984), cert. denied,
472 U.S. 1008 (1985).7 Ultimately, however, the fact that

6 Applying this exception, courts have found no ERISA preemp-
tion of state laws involving matters as varied as garnishment of
welfare plan benefits to collect debts of plan participants (Mackey) ;
escheat of uncollected ERISA benefit checks to a State (Aetna Life
Ins. Co. V. Borges, 869 F.2d 142 (2d Cir.), cert. denied, 493 U.S. 811
(1989) ); a city income tax of general application affecting employee
contributions to benefit plans (Firestone Tire & Rubber Co. Vv.
Neusser, 810 F.2d 550 (6th Cir. 1987)); a State law imposing
fiduciary duties on corporate officers for the benefit of shareholders,
including ERISA plans (Sommers Drug Stores Co. Employee Profit
Sharing Trust v. Corrigan Enterprises, Inc., 793 F.2d 1456 (5th Cir.
1986), cert. denied, 479 U.S. 1034, 1089 (1987)); a law prescribing
hospital rates for inpatient care, including the rates charged to
plans (Rebaldo v. Cuomo, 749 F.2d 133 (2d Cir. 1984), cert. denied,
472 U.S. 1008 (1985)); and application of a state fair employment
practices law to a plan in its capacity as an employer (Lane Vv.
Goren, 743 F.2d 1337 (9th Cir. 1984) ).

T Accordingly, this Court has assumed that ERISA plans are
subject to many “run-of-the-mill state-law claims such as unpaid

15

a state law is one of general application representing a
traditional exercise of state authority will not insulate
it from preemption if the law significantly affects employee
benefit plans. See, e.g., Pilot Life Ins. Co. v. Dedeaux,
481 U.S. 41 (1987) (preempting a state common law
action for improper processing of a claim for benefits from
an ERISA plan).

Whether a state law “relate[s] to” an employee benefit
plan in a manner that requires preemption is admittedly
not always easy to determine. But Section 514(a) does
not create the “regulatory ‘black hole’ of maramoth pro-
portions” that petitioners allege. Pet. 15. That allegation,
and the hypothetical examples supporting it, are based in
part on petitioners’ misunderstanding cf the scope of the
definition of “employee welfare benef.t plan.” For exam-
ple, petitioners’ charge that most state rules governing
nursing trainees would be preempted under the logic of
the court of appeals’ decision, Pet. 14, is incorrect if only
funded apprenticeship programs are subject to ERISA.

Moreover, the court of appeals’ overbroad assumptions
about ERISA coverage also appear to have skewed its
preemption analysis. For instance, when the court of
appeals concluded that “[t]he minimum jobsite rule was
specifically designed to affect employee benefit plans,” Pet.
App. lla, so as to be automatically preempted under
Mackey, it erroneously assumed that any law relating to
apprenticeship or training necessarily relates to covered
plans only. That is not the case. Although the Minnesota
rule was plainly designed to affect on-the-job supervision
and training of unlicensed pipefitters, such training will
often occur outside the context of an ERISA plan.

rent, failure to pay creditors, or even torts committed by an ERISA
plan.” Mackey, 486 U.S. at 833. The lower courts similarly have
assumed that ERISA would not preempt “state Jaws and municipal
ordinances regulating zoning, health, and safety” (Lane v. Goren,
743 F.2d at 1340); “labor laws that govern working conditions and
labor costs” (Rebaldo v. Cuomo, 749 F.2d at 138) ; and “rent control
laws that determine what employee benefit plans pay or receive for
rental property” (ibid.),

16

These coverage-related factors—that the three-to-one rule
affects many programs not subject to ERISA and that
Congress included apprenticeship and scholarship pro-
grams in the definition of “employee welfare benefit plan”
because it was concerned with regulating trust funds
established to provide training—should have been con-
sidered in the preemption analysis under the standards
formulated by this Court.

On the record as it now exists, however, it is difficult to
determine under those standards whether the three-to-one
rule is preempted insofar as it affects employee benefit
plans covered by ERISA. For that reason as well as the
fact that the coverage issue was not addressed by the
lower courts, this case is not a suitable vehicle for recon-
sidering the standards established by this Court to deter-
mine whether a state law “relate[s] to” an ERISA plan.

b. Nor do we discern any pressing need to review this
case. In particular, there is no conflict in the circuits
regarding ERISA preemption of state apprenticeship
regulations. This is the first case specifically to ad-
dress state jobsite supervisory ratios or other training
standards contained in state occupational licensing
laws. In relaied cases, the Ninth and Tenth Circuits
have struck down certain rules involving apprenticeship
programs imposed on public works contractors by state
prevailing wage and benefit laws. Thus, in Electrical
Joint Apprenticeship Comm. v. MacDonald, 949 F.2d 270
(9th Cir. 1991), petition for cert. pending, No. 91-1416
(filed Feb. 3, 1992), and National Elevator Indus., Inc. v.
Calhoon, 957 F.2d 1555 (10th Cir. 1992), the preempted
state laws required employers to participate in state-
approved apprenticeship programs in order to avoid hav-
ing to pay full journeyman wages to all employees work-
ing on state public works projects. Similarly, in Local
598 Vv. J.A. Jones Constr. Co., 846 F.2d 1213 (9th Cir.),
aff’'d mem., 488 U.S. 881 (1988), the preempted state law
compelled employers with state public works contracts to
contribute to apprenticeship training funds at a state-
mandated level. In Hydrostorage, Inc. v. Northern Cal.

a

17

Boilermakers Local Joint Apprenticeship Comm., 891 F.2d
719 (9th Cir. 1989), cert. denied, 111 S. Ct. 72 (1990),
the preempted state law required employers with public
works contracts to: (1) establish or join apprenticeship
programs complying with state-approved apprenticeship
standards; (2) employ apprentices in a state-mandated
minimum ratio; and (3) contribute to apprenticeship and
other trust funds (or pay an equal amount to the State).*

While consistent with the decision below in that the
Ninth and Tenth Circuits held in each case that state laws
relating to apprenticeship programs were preempted, those
decisions do not show that ERISA preemption is so broad
that this Court must reconsider its construction of Section
514(a). In the cases decided by the Ninth and Tenth
Circuits, the preempted state law required the employer
to establish, join, or contribute to a funded apprenticeship
plan as a condition for receiving state public works con-
tracts. Thus, the laws in question appeared to have a
close relationship to plans covered by ERISA.

Nor do the decisions in the other cases compel the con-
clusion that the three-to-one rule is preempted insofar as
it affects funded plans in Minnesota, since the relationship
of the three-to-one rule to apprenticeship training pro-
grams is somewhat more attenuated. First, the Minnesota
rule does not require employers to hire any apprentices
at all; an employer would be in full compliance if it used
only licensed journeyman pipefitters. Second, the rule
does not require employers to establish or maintain any
kind of structured or formalized apprenticeship training
program; it requires only that unlicensed pipefitters be
supervised on the job by a certain ratio of licensed pipe-
fitters to ensure that their work is performed properly.

8 Each of the decisions of the Ninth and Tenth Circuits involved
funded apprenticeship programs. In National Elevator Industry,
Hydrostorage, and Local 598, the state law affected traditional
apprenticeship programs operated by unions. See 957 F.2d at 1558;
891 F.2d at 728; and 846 F.2d at 1217. In Electrical Joint Appren-
ticeship Comm., the apprenticeship funds were administered by an
employer trade association. See 949 F.2d at 272.

18

Third, the rule does not require any employer to establish
or contribute to a separate apprenticeship or training
fund, which, as we have stated, is a requisite for coverage

under ERISA.®
CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

KENNETH W. STARR

Solicitor General
MAUREEN E. MAHONEY
Deputy Solicitor General
MARSHALL J. BREGER CHRISTOPHER J. WRIGHT
Solicitor of Labor Assistant to the Solicitor General

STEVEN J. MANDEL
Deputy Associate Solicitor

ELLEN L. BEARD
Attorney
Department of Labor

JUNE 1992

® Contrary to petitioners’ argument, Pet. 26-30, the Fitzgerald
Act, 29 U.S.C. 50, and ERISA’s savings clause for other fed-
eral laws, 29 U.S.C. 1144(d), have no bearing on this case. In
promulgating its jobsite ratio for pipefitters, Minnesota did not
purport to act under the authority of the Fitzgerald Act, but rather
acted under the authority of its state occupational licensing law for
pipefitters. Moreover, the State’s mandatory jobsite ratio goes
beyond anything required by the voluntary federal regulations,
which merely provide for registered apprenticeship programs to
set out a specific ‘numeric ratio of apprentices to journeymen, con-
sistent with proper supervision, training, safety, and continuity of
employment, and applicable provisions in collective bargaining agree-
ments.” 29 C.F.R. 29.5(b)(7). Thus, preemption of the State’s
three-to-one rule would in no manner impair the operation of the
voluntary federal program. See generally Shaw, 463 U.S. at 100-
104. Indeed, the employers here did not even have state-registered
voluntary apprenticeship programs.

APPENDIX

Section 514(a) of ERISA, 29 U.S.C. 1144(a), provides
in pertinent part:

Except as provided in subsection (b) of this sec-
tion, the provisions of this [title] and [title IV] shall
supersede any and all State laws insofar as they
may now or hereafter relate to any employee benefit
plan described in section 1003(a) of this title and
not exempt under section 1003(b) of this title.

Section 3(1) of ERISA, 29 U.S.C. 1002(1), provides:

The terms “employee welfare benefit plan” and
“welfare plan” mean any plan, fund, or program
which was heretofore or is hereafter established or
maintained by an employer or by an employee or-
ganization, or by both, to the extent that such plan,
fund, or program was established or is maintained
for the purpose of providing for its participants or
their beneficiaries, through the purchase of insur-
ance or otherwise, (A) medical, surgical, or hospital
care or benefits, or benefits in the event of sickness,
accident, disability, death or unemployment, or vaca-
tion benefits, apprenticeship or other training pro-
grams, or day care centers, scholarship funds, or
prepaid legal services, or (B) any benefit described
in section 186(c) of this title (other than pensions
on retirement or death, and insurance to provide
such pensions).

Section 302(c) of the Labor-Management Relations
Act, 29 U.S.C. 186(c), provides, in pertinent part:

* * * * *

(6) * * * a trust fund established by such repre-
sentative for the purpose of pooled vacation, holiday,
severance or similar benefits, or defraying costs of

apprenticeship or other training programs .
(7) * * * a pooled or individual trust fund estab-

(la)

2a

lished by such representative for the purpose of
(A) scholarships * * *.

29 C.F.R. 2510.3-1, “employee welfare benefit plan,”
provides in pertinent part:

* * * * *

(b) Payroll practices. For purposes of title I of
the Act and this chapter, the terms “employee wel-
fare benefit plan” and “welfare plan” shall not
include—

(3) Payment of compensation, out of the employ-
er’s general assets, on account of periods of time
during which the employee, although physically and
mentally able to perform his or her duties and not
absent for medical reasons (such as pregnancy, a
physical examination or psychiatric treatment) per-
forms no duties; for example—

* * * * *

(iv) Payment of compensation on account of pe-
riods of time during which an employee performs
little or no productive work while engaged in train-
ing * * -.

(k) Unfunded scholarship programs. For pur-
poses of title I of the Act and this chapter, the terms
“employee welfare benefit plan” and “welfare plan”
shall not include a scholarship program, including
a tuition and education expense refund program,
under which payments are made solely from the
general assets of an employer or employee organi-
zation.

YoU. S. GOVERNMENT PRINTING OFFicE; 1992 312324 45457

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_2940%3A5. Public record. Not legal advice.