Amicus Curiae Brief — Local Union 598, Plumbers & Pipefitters Industry Journeymen & Apprentices Training Fund v. J. A. Jones Construction Co.

D Supreme Court, U.S.

FILED

No. 88-295 SEP 13 1988

JOSEPH F. SPANIOL, JR,

Bs CLERK

In the Supreme Court

OF THE

United States

OCTOBER TERM, 1988

LocAL UNION 598, PLUMBERS & PIPEFITTERS INDUSTRY

JOURNEYMEN & APPRENTICES TRAINING FUND,

Plaintiff-Appellant,

VS.

J.A. JONES CONSTRUCTION COMPANY; BECHTEL POWER

CORPORATION; and JOHNSON CONTROLS, INC.,

Defendants-Appellees.

On Appeal

From The United States Court Of Appeals

For The Ninth Circuit

MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAE

AND

BRIEF OF THE FOUNDATION FOR FAIR CONTRACTING

AS AMICUS CURIAE

* THOMAS E. STANTON

LAWRENCE H. Kay

BrucE K. LEIGH

STANTON, KAY & WATSON

150 Post Street, Suite 330

San Francisco, CA 94108

(415) 788-3496

Attorneys for The Foundation

for Fair Contracting

* Counsel of Record

BOWNE OF SAN FRANCISCO. INC. * 190 NINTH ST + SF. CA 94103 + (415) 864-2300

ea re

TABLE OF CONTENTS

Page

Motion for Leave to File Brief Amicus Curiae........... IV

Brief of the Foundation for Fair Contracting in Support of

Appellant’s Jurisdictional Statement ................. |

I nr I I onc eek occu naneusacdaanas l

ee er ree 2

PO SE ere eee eee Peer ee ree rere ere 3

A. Plenary Consideration is Warranted Because this

Court Has Not Yet Decided the Questions Raised by

iin a was be Cee eek Oh cae 3

B. Plenary Consideration is Further Warranted Because

the Decision Below and the Questions Raised on

Appeal Have Far-reaching Implications .......... 3

C. Plenary Consideration is Warranted also Because

Prior Decisions of this Court Suggest that the Deci-

sion Below Is in Error and Should Be Reversed.... 5

1. Decisions of this Court and of the Circuit Courts

Indicate that State Laws which Affect Employee

Benefit Plans Economically but which Do Not

Intrude into Matters Regulated by ERISA or

Preserved from State Regulation by ERISA Are

Not Preempted by ERISA .................. 6

2. Contrary to the Decision Below, Washington’s

Prevailing Wage Law, though Economically Ben-

efitting Employee Benefit Plans, Does Not

Intrude into Matters Preemptively Regulated by

ERISA or Intended by ERISA to Be Free from

Ce eer rere 10

3. Since Prevailing Wage Laws Do Not Intrude into

Matters Regulated by ERISA or Preserved from

State Regulation by ERISA, Preemption of such

Laws Would Nut “erve the Purposes Either of

ERISA or of Its P.emption Provision........ 11

fie IIS rarer Fae 20S eaters gS 12

ii

TABLE OF AUTHORITIES

Cases

Page

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (1981). 6,7

American Telephone and Telegraph Co. v. Merry, 592 F.2d

118 (2d Cie. BPR). . 02% pee eee 6

Fort Halifax Packing Co. v. Coyne, 482 U.S. ___., 96

L.Ed4.2d 1 (1967) 0... 0000025 cee 7. 11, 12

Hydrostorage, Inc. v. Northern California Boilermakers

Local Joint Apprenticeship Committee, 685 F. Supp. 718

(N.D. Cal. S50B) o.oo 05 v,4

Lane v. Goren, 743 F.2d 1337 (9th Cir. 1984) .......... 8, 10

Local Union 598, Plumbers & Pipefitters Industry Journey-

men & Apprentices Training Fund v. J.A. Jones Construc-

tion Co., 846 F.26 1213: (USRR) nc ins eaunneeeueees 3, 5, 10

Mackey v. Lanier Collection Agency, 486 U.S. ___., 100

L.Ed.2d 836 (1968)... 35 sca eee ee 6, 8,9, 10

Martori Bros. Distributors v. James-Massengale, 781 F.2d

1349 (9th Cir. 1986), cert. den., 107 S.Ct. 435, 670

Ob.) MUP )

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724

(1965)... << oncuss cus 5m eee ei en 6, 11

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. ___, 95 L.Ed.2d 39

(1987)... ooo so: bin 0. ieee ee 6,7,9

Rebaldo v. Cuomo, 749 F.2d 133 (2d Cir. 1984), cert. den.,

105 S.Ct. 2702 (89GS) «5.05 6 45a ee ee 8, 10

Shaw v. Delta Air Lines, 463 U.S. 85 (1983) .......... 6, 7,9

Stone & Webster Engineering Corp. v. Ilsley, 690 F.2d. 323

(2d Cir. 1982), affd mem. sub nom Arcudi v. Stone &

Webster, 463 U.S. 1220 (URS). 3. aoe eea eas 8

United States v. Binghamton Construction, 347 U.S. 171

Gb n> ) EPI 4

ili

TABLE OF AUTHORITIES

Statutes

Page

California Labor Code Secs. 1771 and 1773.1 ........... 4

California Labor Code Section 1777.5.................. 4

veneers ae, Se UI, BOG. 276... cc e cence 4

ERISA, 29 US.C. Secs. 1001 et seq. ............2..2.. V

ERISA, Sec. 206(d)(1), 29 U.S.C. Sec. 1056(d)(1) .... 10

eee, ee Sl, 2P UW. SOG. 1GB1. 0... ccc eas 10

ERISA, Sec. 514(a), 29 U.S.C. Sec. 1144(a).......... a6, 7

ERISA, Sec.514(c) (2), 29 U.S.C. Sec. 1144(c)(2) ..... 8

De ra ke 5 Spas ob bee wd de ead beens’ V

RE I a 4.5

eid both eebbpeawb enka puee duis 4,5

Rules of the United States Supreme Court

aan a a a a SP a iv, |

ES oS A ee iv

No. 88-295

In the Supreme Court

OF THE

United States

OCTOBER TERM, 1988

LocaL UNION 598, PLUMBERS & PIPEFITTERS INDUSTRY

JOURNEYMEN & APPRENTICES TRAINING FUND,

Plaintiff-Appellant.,

VS.

J.A. JONES CONSTRUCTION COMPANY; BECHTEL POWER

CORPORATION; and JOHNSON CONTROLS, INC.,

Defendants-Appellees.

MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAE

IN SUPPORT OF APPELLANT'S JURISDICTIONAL

STATEMENT

To the Honorable Chief Justice and Associate Justices of the

Supreme Court of the United States:

The Foundation For Fair Contracting (hereinafter, “the Foun-

dation”) hereby respectfully moves for an order granting leave to

file a brief amicus curiae in support of Appellant’s Jurisdictional

Statement in the above-titled case pursuant to Rule 36.1 and

Rule 42 of the Revised Rules of this Court. Consent of Appellees

has been requested and denied. Consent of Appellant has been

granted and filed with the Clerk.

In support of this motion, the Foundation states as follows:

1. The Foundation for Fair Contracting is a private, non-profit

organization, existing under the laws of the State of California,

whose membership consists of labor and management organiza-

tions in the construction industry throughout the 46 northern

California counties. Its members include the Operating Engi-

Vv

neers, Laborers, and Cement Masons local unions and the Associ-

ated General Contractors of California, the Underground

Contractors Association, and the Association of Engineering

Construction Employers. The purpose of the Foundation is to

monitor compliance with prevailing wage laws in California.

The problems and issues which have arisen in the above-titled

case are similar to problems and issues which labor and manage-

ment have faced in California, and the ruling by the Court of

Appeals for the Ninth Circuit on the question whether ERISA'

preempts Washington’s prevailing wage law, RCW 39.12, insofar

as it includes in its minimum wage calculation a specified portion

to be payable to an employee benefit fund, threatens to have

serious negative consequences for the prevailing wage law in

California and for the persons affected by that law.

California’s prevailing wage statute, like the Washington stat-

ute at issue here, is intended to prevent public works from

depressing the level of wages in the state, to encourage employ-

ment of local labor and discourage the import of low wage labor

from out of state, and to promote fairness in competition between

contractors bidding for public works contracts. As an incidental

effect, the statute also encourages employers on public works

contracts and in the construction industry generally to provide

employee fringe benefits. If the Ninth Circuit’s ruling in the case

here being appealed were to be left standing, the intent and

benefits of California’s prevailing wage law might be lost, even

though it, like RCW 39.12, does not purport to regulate, directly

or indirectly, the terms or conditions of any employee benefit plan

which might incidentally be benefitted by it.

Moreover, if the reasoning followed by the Ninth Circuit in its

decision below were to remain standing, California’s statute

regulating the employment of apprentices on public works

projects might also be set aside. See Hydrostorage, Inc. v. North-

ern California Boilermakers Local Joint Apprentice ship Commit-

tee, 685 F. Supp. 718, 726 (N.D. Cal. 1988) (enforcement of

'“ERISA” refers to the Employee Retirement Income Security Act

of 1974, Pub. L. No. 93-406, at 66 Stat. 829 (1974), as amended

(codified in scattered sections of 5, 18, 26, 29, and 31 U.S.C.)

vi

California Labor Code Section 1777.5—Employment of Regis-

tered Apprentices—denied in part because it requires public

works contractors to make payments to an apprenticeship

program).

As in the case on appeal here, so in the case cited above,

legitimate state purposes stand in danger of being defeated simply

because state laws which purport neither directly nor indirectly to

regulate the terms or conditions of employee benefit plans never-

theless benefit such plans economically. We believe the purposes

neither of ERISA’s preemption provision nor of ERISA would be

served by extending ERISA preemption to encompass such state

laws.

2. The Foundation seeks in its brief to address the question

presented by the Appellant: Did Congress intend ERISA to

preempt long-standing state prevailing wage laws which include in

their minimum wage calculation a specified portion payable to an

apprenticeship fund?

3. The Foundation, by virtue of the experience of its members

and its counsel in matters regarding both state prevailing wage

laws and employee benefit plans in the construction industry in

California, are particularly able to advise this Court as to the

operation and effect of such laws on the construction industry and

on employee benefit plans and as to the potential effect of the

decision by the Ninth Circuit in this case on California law and

on the interests affected by it.

vii

For the foregoing reasons the Foundation respectfully requests

that it be granted leave to file the accompanying brief as amicus

curiae in support of Appellant's Jurisdictional Statement.

Dated: September 13, 1988

Respectfully submitted,

* THomas E. STANTON

LAWRENCE H. Kay

Bruce K. LeiGu

Attorneys for Amicus Curiae

Foundation for Fair Contracting

* Counsel of Record

No. 88-295

In the Supreme Court

OF THE

United States

OcTOBER TERM, 1988

LocaL UNION 598, PLUMBERS & PIPEFITTERS INDUSTRY

JOURNEYMEN & APPRENTICES TRAINING FUND,

Plaintiff-Appellant,

VS.

J.A. JONES CONSTRUCTION COMPANY: BECHTEL POWER

CORPORATION; and JOHNSON CONTROLS, INC.,

Defendants-Appellees.

BRIEF OF THE FOUNDATION FOR FAIR CONTRACTING

AS AMICUS CURIAE IN SUPPORT OF

APPELLANT'S JURISDICTIONAL STATEMENT

NOW COMES The Foundation for Fair Contracting as ami-

cus curiae and submits this brief in support of Appellant's

Jurisdictional Statement in the above-titled action. This brief of

amicus curiae is submitted pursuant to Rule 36.1 of the Rules of

the Supreme Court and upon the attached motion for leave to file

this brief amicus curiae.

INTEREST OF AMICUS CURIAE

The interest of the Foundation for Fair Contracting is set forth

in the Foundation’s motion for leave to file this brief amicus

curiae.

tele

2

SUMMARY OF ARGUMENT

This Court should give plenary consideration to the question

brought by Appellants because it raises a substantial federal

question that has yet to be decided by this Court and that has far-

reaching implications, and because prior decisions by this Court

suggest that the decision below should be reversed.

1. As the Appellant has pointed out in its Jurisdictional

Statement, p. 5, this Court has not had occasion as yet to decide

either the question presented by this appeal: Did Congress intend

ERISA to preempt state minimum wage laws which include, in

calculating the minimum wage, a portion payable to an employee

benefit plan? or the question raised by the reasoning of the Court

below: Does a state law which affects only funding of welfare

benefit plans (as opposed to administration, benefits, reporting,

disclosure, or fiduciary responsibilities) fall within ERISA’s pre-

emptive reach?

2. Yet, the decision beiow, even if restricted in application to

similar prevailing wage laws, would affect such laws in some

twenty-three states and would affect not only apprenticeship plans

but all employee benefit plans because employer contributions to

all employee fringe benefit plans are included in calculating the

rate of prevailing wages. Moreover, broadly construed, the reason-

ing relied upon by the Court below to preempt Washington’s

prevailing wage law might result in preempting not only state

prevailing wage laws but any state law which, though not regulat-

ing the terms or conditions of an employee benefit plan, might

benefit such plans economically or for any purpose require em-

ployers to make payments to an employee benefit plan.

3. Decisions of this Court show that the decision below

should be reversed.

(a) Decisions by this Court and by the district courts

ind’cate that ERISA does not preempt state laws which

merely affect employee benefit plans economically but which

do aot intrude into matters preemptively regulated by ER-

iSA or intended by ERISA to be free from state regulation.

3

(b) The law at issue in this cause, though economically

benefitting employee benefit plans, does not intrude into

matters preemptively regulated by ERISA or intended by

ERISA to be free from state regulation. Contrary to the

decision of the Ninth Circuit below, Washington’s prevailing

wage law does not create “funding requirements” as that

term is used in ERISA; indeed, ERISA neither regulates nor

protects from state regulation the funding of employee wel-

fare benefit plans such as the apprenticeship pian which is

plaintiff-appellant here.

(c) Since prevailing wage laws do not intrude into matters

regulated by ERISA or preserved from state regulation by

ERISA, preemption of such laws would not serve the pur-

poses either of ERISA or of its preemption provision.

ARGUMENT

A. Plenary Consideration is Warranted Because this Court :

Has Not Yet Decided the Questions Raised by this Appeal

As Appellant has pointed out in its Jurisdictional Statement,

p. 5, this Court has not yet decided either the question presented

by this appeal: whether Congress intended ERISA to preempt

state minimum wage laws which include, in calculating the

minimum wage, a portion payable to an employee benefit plan; or

the question raised by the reasoning of the Court below: whether

a state law which affects only funding of welfare benefit plans (as

opposed to administration, benefits, reporting, disclosure, or fidu-

ciary responsibilities) falls within ERISA’s preemptive reach.

B. Plenary Consideration is Further Warranted Because the

Decision Below and the Questions Raised on Appeal Have

Far-reaching Implications

The Ninth Circuit in its decision below has held that “to the

extent the Washington prevailing wage statute requires employers

to maintain a certain level of contributions to employee benefit

plans, it is preempted by [ERISA] section 514(a).” Local Union

598, Plumbers & Pipefitters Industry Journeymen & Apprentices

Training Fund vy. J.A. Jones Construction Co., 846 F.2d 1213,

4

1221 (1988). However, said statute merely requires contractors

on public works to pay laborers wages “not less than the prevail-

ing rate of wage . . . in the same trade or occupation in the

locality” (RCW 39.12.020) and defines the “prevailing rate of

wage” in the locality as including the rate cf employer contribu-

tions for employee fringe benefits (RCW 39.12.010).

Washington’s prevailing wage statute is modeled on the federal

Davis-Bacon Act, 40 U.S.C. Sec. 276, and is similar to prevailing

wage laws in some twenty-two other states (Jurisdictional State-

ment, n. 4), including California. See Cal. Lat Code Secs. 1771

and 1773.1. Such laws meet legitimate, traditional state purposes

which Congress itself has recognized and supported in enacting

the Davis-Bacon Act. United States v. Binghamton Construction,

347 U.S. 171, 176-78 (1954). Such laws are intended to prevent

public works from depressing the level of wages in the state, to

encourage employment of local labor, to discourage the import of

low wage labor from out of state, and to promote fairness in

competition between contractors bidding for public works con-

tracts. As an incidental effect, the statute also encourages em-

ployers on public works contracts and in the construction industry

generally to provide employee fringe benefits. However, if the

ruling of the Ninth Circuit were left standing, the intent and

benefits of such laws, including California’s, might be lost, even

though such laws do not intrude into matters regulated by ERISA

or intended by ERISA to be free from state regulation and even

though the federal Davis-Bacon Act, which has similar purposes

and effects, would continue to apply to the same contractors on

federal public works.

Moreover, if the reasoning followed by the Ninth Circuit in its

decision below were to remain standing, California’s statute

regulating the employment of apprentices on public works

projects might also be set aside. See Hydrostorage, Inc. v. North-

ern California Boilermakers Local Joint Apprentice ship Commit-

tee, 685 F. Supp. 718, 726 (N.D. Cal. 1988) (enforcement of

California Labor Code Section 1777.5—Employment of Regis-

tered Apprentices—denied in part because it requires public

works contractors to make payments to an apprenticeship pro-

gram). If the reasoning on which the Ninth Circuit’s ruling is

5

based were to be followed, ERISA would appear to preempt not

only state prevailing wage laws but any state law which for any

reason would require employers to make payments to employee

benefit plans. This would mean that simply because an employee

benefit plan would receive such payments, California could not

require public works contractors, who benefit from the skilled

work force provided by state-approved apprenticeship plans, to

contribute to paying the costs of such plans.

C. Plenary Consideration is Warranted also Because Prior

Decisions of this Court Suggest that the Decision Below Is

in Error and Should Be Reversed

According to the holding of the Ninth Circuit in the decision

below, the Washington prevailing wage statute is preempted by

ERISA “to the extent [it] requires employers to maintain a

certain level of contributions to employee benefit plans.” Local

598 v. J.A. Jones, 846 F.2d at 1221. However, said statute merely

requires contractors on public works to pay laborers wages “not

less than the prevailing rate of wage . . . in the same trade or

occupation in the locality” (RCW 39.12.020) and defines the

“prevailing rate of wage” as including the rate of employer

contributions for employee fringe benefits (RCW 39.12.010). In

no way does that statute intrude into matters regulated by ERISA

or preserved from state regulation by ERISA. In prescribing a

minimum wage rate for employees on public works, it merely

benefits economically those employee benefit plans which, repre-

senting the interests of employees, become rightful claimants of

employer fringe benefit contributions. Therefore, the holding by

the Ninth Circuit below means that prevailing wage laws such as

Washington’s are preempted by ERISA simply because employ-

ers, for whatever reason, m2y be required to make payments to

employee benefit plans, t-:er#&y economically benefitting such

plans and so possibly afiectzg the level of benefits which they

may provide. See Local 598 v. J.A. Jones, 846 F.2d at 1219.

Decisions of this Court, however, indicate that ERISA does not

preempt a state minimum wage law which, in pursuit of tradi-

tional state purposes, so indirectly affects employee benefit plans.

6

1. Decisions of this Court and of the Circuit Courts

Indicate that State Laws which Affect Employee Benefit

Plans Economically but which Do Not Intrude into

Matters Regulated by ERISA or Preserved from State

Regulation by ERISA Are Not Preempted by ERISA

Section 514(a) of ERISA provides that “the provisions of this

subchapter ... shall supersede any and all State laws insofar as

they may now or hereafter relate to any employee benefit plan”

subject to ERISA. 29 U.S.C. Sec. 1144(a). This Court has

construed “relate to” in broad terms, so that—La] lawr€lates to’

an employee benefit plan, in the normal sense of the phrase, if it

has a connection with or reference to such a plan.” Shaw v. Delta

Air Lines, 463 U.S. 85, 97 (1983). However, this Court has also

advised that the scope of ERISA preemption is not unlimited. In

the interest of preserving our federal system, “the exercise of

federal supremacy is not lightly presumed.... Preemption of

state law by federal statute or regulation is not favored in the

absence of persuasive reasons—either that the nature of the

regulated subject matter permits no other conclusion, or that the

Congress has unmistakably so ordained.” Alessi v. Raybestos-

Manhattan, Inc., 451 U.S. 504, 522 (1981). In determining the

scope of federal preemption, “the purpose of Congress is the

ultimate touchstone.” Pilot Life Ins. Co. v. Dedeaux, 481 U.S.

—___., 95 L.Ed.2d 39, 46 (1987). Lower courts have been advised

by this Court to “begin with the language employed by Congress

[and to] presume that Congress did not intend to preempt areas

of traditional state regulation.” Metropolitan Life Ins. Co. v.

Massachusetts, 471 U.S. 724, 740 (1985). See, e.g., Mackey v.

Lanier Collection Agency, 486 U.S. ___, 100 L.Ed.2d 836, 851

(1988) (state general garnishment law as applied to employee

benefit plans is not preempted by ERISA); American Telephone

and Telegraph Co. v. Merry, 592 F.2d 118, 121 (2d Cir. 1979)

(state garnishment law employed to enforce alimony and support

orders is not preempted), cited in Shaw v. Delta Air Lines, 463

U.S. at 101, n. 21. Accordingly, in those decisions where this

Court has sought to determine the scope of ERISA preemption, it

has looked to the plain language of ERISA and its preemption

provision, to the underlying purpose of ERISA’s preemption

provision, and to the overall objectives of ERISA itself. (See, e.g.,

7

Fort Halifax Packing Co. v. Coyne, 482 U.S. __, 96 L.Ed.2d 1,

9 [1987]), and it has concluded that a state law which does not

implicate ERISA’s regulatory concerns or ERISA’s concern for

uniform regulation of employee benefit plans is not preempted by

ERISA. /d, 96 L.Ed.2d at 13.

In those cases where state law undeniably has intruded into

administration of employee benefit plans, this Court, following the

language of ERISA, Sec. 514(a), has been able to find preemp-

tion by ERISA simply by asking whether a state law “relates to”

employee benefit plans. See, e.g., Allessi v. Raybestos-Manhattan,

451 U.S. at 524; Shaw v. Delta Air Lines, 463 U.S. at 96; and

Pilot Life v. Dedeaux, 95 L.Ed.2d at 47. Even then this Court

warned that “[s]ome 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 v. Delta Air Lines,

463 US. at 101, n. 21. Accordingly, in those cases where state law

has been found to affect employee benefit plans but not to intrude

into matters regulated by ERISA or intended by ERISA to be

free from state regulation, this Court has begun to define the

limits to ERISA preemption and has found that it does not apply.

In Fort Halifax, 96 L.Ed.2d 1, this Court denied preemption by

examining the language of ERISA and its preemption provision

and the underlying purposes of both. The Court found: that

ERISA’s preemption provision applied only to state laws that

relate to employee benefit p/ans and not to laws that relate merely

to employee benefits (/d., 96 L.Ed.2d at 9); that the purpose of

ERISA’s preemption provision was to “eliminat[e] the threat of

conflicting or inconsistent State and local regulation of employee

benefit plans” in order “to afford employers [or plan trustees] the

advantages of a uniform set of administrative procedures governed

by a single set of regulations” (/d., 96 L.Ed.2d at 10 and 11); and

that the scope of that preemptive concern is limited to serving the

regulatory purposes of ERISA, which had been enacted to pro-

vide uniform reporting, disclosure, and fiduciary rules to govern

employee benefit plans and their administration. This Court

concluded that where state law implicated the concerns of neither

ERISA’s preemption provision nor the regulatory concerns of

8

ERISA itself, state law is not preempted by ERISA. /d, 96

L.Ed.2d at 13.

In Mackey v. Lanier Collection Agency, supra, this Cwurt

followed a similar procedure: to determine the scope of ERISA

preemption, it examined the content and structure of ERISA

itself. The Court found that Congress, in enacting ERISA, was

fully aware that employee benefit plans were affected by numer-

ous, if not innumerable, state laws and, in choosing to preemp-

tively legislate as to only certain matters, had acknowledged and

accepted prevailing state law affecting employee benefit plans as

to other matters. /d., 100 L.Ed.2d at 848-49. Such a conclusion

agrees with the language itself of ERISA’s preemption provision:

state law is superseded only by “the provisions” of ERISA, not by

the fact that it may affect employee benefit plans.

Decisions by the circuit courts have similarly defined the limits

of ERISA preemption in terms of the regulatory content and

purpose of ERISA. Paying heed to the language of ERISA, Sec.

514(c)(2), where Congress defined “State” for the purposes of

preemption of state law to include any agency or subdivision

thereof “which purports to regulate, directly or indirectly, the

terms and conditions of employee benefit plans” (emphasis ad-

ded), these courts have concluded that in order to fall under

ERISA preemption a state law must not only relate to or affect

employee benefit plans but also must purport to regulate in one

way or another these terms or conditions of such plans that

Congress intended ERISA to regulate or to preserve from state

regulation. See, e.g., Stone & Webster Engineering Corp. v. Ilsley,

690 F.2d 323, 329 (2d Cir. 1982), aff'd mem. sub nom Arcudi v.

Stone & Webster, 463 U.S. 1220 (1983) (“A state law ‘relates to’

an employee benefit plan and is subject to preemption whenever it

‘purports to regulate, directly or indirectly, the terms and condi-

tions of employee benefit plans”); Rebaldo v. Cuomo, 749 F.2d

133, 137 (2d Cir. 1984), cert. den., 105 S.Ct. 2702 (1985)

(“Thus, a state law must ‘purport to regulate, ... the terms and

conditions of employee benefit plans’ to fall within the preemption

provision”); Lane v. Goren, 743 F.2d 1337, 1339 (9th Cir. 1984)

(“before a court may find a state statute is superseded [by

ERISA],... the state statute must attempt to reach in one way

9

or another the ‘terms and conditions of employee benefit plans’’);

and Martori Bros. Distributors v. James-Massengale, 781 F.2d

1349, 1359 (9th Cir. 1986), cert. den., 107 S.Ct. 435, 670 (“a

state law must also ‘purport to regulate’ ERISA plans before it

can be held to be preempted”’).

As this Court and the circuit courts have frequently observed,

“ERISA is a comprehensive statute designed to promote the

interests of employees and their beneficiaries in employee benefit

plans;” and for that purpose ERISA “imposes participation,

funding, and vesting requirements on pension plans” and “sets

various uniform standards, including rules concerning reporting,

disclosure, and fiduciary responsibility, for both pension and

welfare benefit plans.” Shaw v. Delta Air Lines, 463 U.S. at 91.

ERISA also provides an exclusive scheme of civil enforcement of

plan rights and terms as well as of it own provisions. Pilot Life v.

Dedeaux, supra. In addition, although ERISA does not regulate

the substantive content of welfare benefit plans, ERISA’s pre-

emption provision has been construed to preserve such matters

from state regulation in the interest of preventing conflicting or

inconsistent state or local regulation of such matters, which thus

have been left to collective bargaining. Shaw v. Delta Air Lines,

supra. As a result, the Ninth Circuit in Martori Bros. Distributors,

781 F.2d at 1356-57, accurately concluded that ERISA preemp-

tion is limited to state laws that intrude into any of four areas, i.e.,

areas regulated by ERISA or intended by ERISA to be free from

state regulation:

“First, laws that regulate the type of benefits or terms of

ERISA plans. Second, laws that create reporting, disclosure,

funding, or vesting requirements for ERISA plans. Third,

laws that provide rules for the calculation of the amount of

benefits to be paid under ERISA plans. Fourth, laws and

common-law rules that provide remedies for misconduct

growing out of the administration of the ERISA plans.”

Following such reasoning, both this Court and courts below

have refused to find that ERISA preempts state laws which, short

of intruding into matters regulated by ERISA or preserved from

state regulation by ERISA, merely affect them economically. In

Mackey v. Lanier Collection Agency, 100 L.Ed.2d at 845, this

10

Court held Georgia’s general garnishment statute not preempted

by ERISA even though garnishment undeniably imposes admin-

istrative burdens and costs on such plans. So, too, the Second

Circuit in Rebaldo v. Cuomo, 749 F.2d at 138, held that a New

York law precluding self-insured employee benefit plans from

negotiating discounted rates with hospitals is not preempted by

ERISA even though it would have an economic impact on such

plans. And the Ninth Circuit in Lane v. Goren, 743 F.2d at 1340,

held that California’s employment discrimination law is not

preempted by ERISA even though it increases the costs of

operating such plans.

2. Contrary to the Decision below, Washington’s Prevail-

ing Wage Law, though Economically Benefitting Em-

ployee Benefit Plans, Does Not Intrude into Matters

Preemptively Regulated by ERISA or Intended by ER-

ISA to Be Free from State Regulation

The Ninth Circuit in its decision below held that Washington’s

prevailing wage statute is preempted by ERISA because it

“create[s] funding requirements for employee benefit plans.” It

reasoned that insofar as the statute may require employers to

maintain a certain level of contributions to employee benefit

plans, it must be preempted by ERISA because “[e]mployer

contributions are the fuel for benefit plans,” indeed, “the rate of

[employer] contribution rests at the very core of ERISA’s con-

siderations.” Local 598 v. J.A. Jones, 846 F.2d at 1218-19.

Yet, ERISA does not set “funding requirements” for employee

welfare benefit plans, such as the Appellant’s, at all; ERISA’s

“funding requirements” apply only to pension plans. ERISA, Sec.

301, 29 U.S.C. Sec. 1081. Nor, contrary to the Ninth Circuit’s

reasoning, does the fact that ERISA leaves employers’ obligations

to contribute to employee welfare benefit plans unregulated nec-

essarily mean that Congress intended that area to remain free of

state regulation. Here, as elsewhere, Congress may have intended

state law to remain valid. Compare Mackey v. Lanier Collection

Agency, 100 L.Ed.2d at 848 (state general garnishment law

reaches welfare benefit plans even though Sec. 206(d)(1) ex-

empts pension plans from the operation of such statutes). In fact,

Congress has left the question of employers’ funding obligations

1]

for welfare benefit plans to collective bargaining, an area where

state minimum wage laws have always remained in force. It is

only reasonable to conclude, therefore, that Congress did not

intend the matter to be free of state regulation but intended it to

be subject to the same federal and state laws which have always

regulated such matters. It is difficult to believe that Congress,

which enacted ERISA to coordinate with federal labor law, would

have intended that a minimum wage law which is not preempted

by the National Labor Relations Act (see Metropolitan Life Ins.

Co. v. Massachusetts, 471 U.S. at 755) should be preempted by

ERISA, when the matter at issue—wages and employer fringe

benefit contributions—is a matter not for ERISA regulation but

for collective bargaining.

3. Since Prevailing Wage Laws Do Not Intrude into Mat-

ters Regulated by ERISA or Preserved from State

Regulation by ERISA, Preemption of such Laws Would

Not Serve the Purposes Either of ERISA or of Its

Preemption Provision

The purpose of ERISA’s preemption provision has been to

eliminate the “threat of conflicting or inconsistent state and local

regulation of employee benefit plans.” Fort Halifax, 96 L.Ed.2d

at 10. But there is no such threat where state law does not intrude

upon matters regulated by ERISA or intended by ERISA to be

left unregulated by state or local law. As in Fort Halifax, supra,

so here, Washington’s prevailing wage law implicates neither the

regulatory concerns of ERISA nor the concerns of ERISA’s

preemption provision and therefore should not be preempted by

ERISA.

Congress has left the question of employers’ obligations for

employee welfare benefits to collective bargaining and has not

chosen to exclude state minimum wage or prevailing wage laws

from affecting such bargaining. Congress has enacted federal

minimum wage and prevailing wage laws and has permitted states

to do likewise. This Court has recently advised that “ERISA

preemption analysis ‘must be guided by respect for the separate

spheres of government authority preserved in our federalist sys-

tem.” and that “[i]f a State creates no prospect of conflict with

a federal statute, there is no warrant for disabling it from attempt-

12

ing to address uniquely local social and economic problems.” Fort

Halifax, 9% L.Ed.2d at 16. Here Washington's prevailing wage

law serves traditional state purposes which Congress itself has

recognized in enacting the Davis-Bacon Act and furthers the

purpose of ERISA of protecting the financial soundness of em-

ployee benefit plans without intruding into matters regulated by

ERISA or intended by ERISA to be free of state regulation.

CONCLUSION

For the reasons set forth hereinabove, this Court should give

plenary consideration to the question raised by Appellants.

Dated: September 13, 1988

Respectfully submitted,

* THomas E. STANTON

LAWRENCE H. Kay

Broce K. Leiu

Attorneys for Amicus Curiae

Foundation for Fair Contracting

* Counsel of Record