Opposition Brief — New York State Departmet of Labor v. General Electric Co.

Supreme Court,

FI] LED

|

| MAY 2]

No. 89-1590

IOSEPH F. SPANIOL, JR.

a,

wT.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

NEW YorRK STATE DEPARTMENT OF LABOR; THOMAS F.

HARTNETT, Commissioner of Labor of the State of

New York; CHARLES DROBNER, Director of Public

Works, New York State Department of Labor; ROBERT

ABRAMS, Attorney General of the State of New York,

: Petitioners,

GENERAL ELECTRIC COMPANY,

Respondent.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

BRIEF OF RESPONDENT

GENERAL ELECTRIC COMPANY IN OPPOSITION

JAMES S. FRANK *

VIRGIL B. DAY

Marc S. WENGER

NEIL A. CAPOBIANCO

VEDDER, PRICE, KAUFMAN,

KAMMHOLZ & Day

One Dag Hammarskjold Plaza

New York, New York 10017

(212) 223-1892

Counsel for Respondent

General Electric Company

May 11, 1990 * Counsel of Record

BEST AVAILAE

WILSON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

PY

QUESTION PRESENTED

Are the provisions of the New York prevailing wage

law which require that GE provide its employees with

locally determined employee welfare and pension benefits

preempted by ERISA?

(i)

TABLE OF CONTENTS

eg Eg ey ae

gg 8 | - .

ADDITIONAL STATUTORY PROVISIONS _IN-

cc aipacdnedecusiwaveasecsixeseieenertesvees Randicesas

DAM eeemeeiee OF FEE CASE. .................0...0ccccccccereseoeso:

A. Fringe Benefits Regulated By New York’s Pre-

os wanauandsvienetvtunadieces

B. GE Employee Benefit Plans .....0000..00......000000000....

C. Department of Labor Enforcement.......................

D. This Action—Motion for Preliminary Injunc-

te a Re

i ag ES 8 8).

REASONS FOR DENYING THE WRIT.......................

I. THERE ARE NO SPECIAL OR IMPORTANT

REASONS TO GRANT CERTIORARI IN

a sevsh pace cose

II. THE COURT OF APPEALS CORRECTLY

DECIDED THAT THE MANDATED BENE-

FIT PROVISIONS OF NEW YORK’S PRE-

VAILING WAGE LAW RELATE TO EM-

PLOYEE BENEFIT PLANS AND ARE PRE-

EMPTED BY ERISA ......... = nore ANA = a OF Re

A. Section 220 Undermines ERISA’s Goal Of

Promoting The Cost-Efficient Administra-

tion Of Uniform Benefits .................................

B. Section 220 Regulates GE’s Benefit Contri-

bution Levels And Requires GE To Provide

A Locally Determined Level Of Benefits .......

(iii)

11

11

iv

TABLE OF CONTENTS—Continued

Page

C. Section 220 Requires GE To Implement An

Ongoing Administrative Scheme .................. 19

D. The Department’s Effort To Treat The Man-

dated Benefit Requirement Of Section 220

As A Wage Statute Is Contrary To The Stat-

utory Definition Of “Supplements”

RII cticctissssceestcisencisseicionintuscubvcartomsnntheciphapicneioannies 23

APPENDIX

$A A A

v

TABLE OF AUTHORITIES

Cases Page

Action Elec. Contractors Co. v. Goldin, 64 N.Y.

2d 213, 474 N.E.2d 601, 485 N.Y.S.2d 241

"5 | 5 SMERandes bets Manin te ales senenie rer eer ae 8, 13, 16, 17

A.L. Blades & Sons, Inc. v. Roberts, 136 A.D.2d

926, 524 N.Y.S.2d 912 (4th Dep’t), appeal de-

nied, 72 N.Y.2d 803, 528 N.E.2d 520, 532 N.Y-.S.

ae I D ovtrecissose erncrcecce nen 3, 13, 16-17

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

“2: | } SeePRCene ein arreers Bains Ae Ma AP oes nn IRS 41, 13,17, 2

Arcudi v. Stone & Webster Eng’g Corp., 463 U.S.

\ Eh) | eset cS Mae NS Reet ensor 15

Atkin v. Kansas, 191 U. S. ar SEE cciccaenenee 10

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

5) Aaa eter ak mere CLs 12, 13, 14, 19, 20, 21, 23

Gilbert v. Burlington Indus. Inc., 477 U.S. 901

}) } Eee eran ea meen etd eid ap Bay Sera Ob 9, 22

Gilbert v. Burlington Indus. Inc., 765 F.2d 320

(2d Cir 1985), aff'd mem., 477 U.S. 901 (1986).. 9, 10,

23

Hewlett-Packard v. Barnes, 425 F. Supp. 1294

(N.D. Cal. 1977), aff’d, 571 F.2d 502 (9th Cir.),

cert. denied, 439 U.S. 831 (1978) ........................ 15

Hughes v. Alexandria Scrap Corp., 426 U.S. 794

| 1 |} acne a nee TEA OS avi ete WG Re erly nd SEN 10

Hydrostorage, Inc. v. Northern California Boiler-

makers Local Joint Apprenticeship Comm., 891

ie Be: Bio: BS Ap) : eee 8, 15

Local Union 598, Plumber & Pipefitters Indus.

Journeymen & Apprentices Training Fund v.

J.A. Jones Constr. Co., 109 S. Ct. 210 (1988) 7, 8, 15,

17, 19

Local Union 598, Plumber & Pipefitters Indus.

Journeymen & Apprentices Training Fund v.

J.A. Jones Constr. Co., 846 F.2d 1213 (9th

Cir.), aff'd mem., 109 S. Ct. 210 (1988) 8, 15, 18-19

Martori Bros. Distributors v. James-Massenqale,

781 F.2d 1349 (9th Cir.), cert. denied, 479 U.S.

| ss sats ig ca Scan esc cake ede ees 19-20

vi

TABLE OF AUTHORITIES—Continued

Page

Massachusetts v. Morash, 109 S. Ct. 1668 (1989).. 22

Metropolitan Life Ins. Co. v. Massachusetts, 471

U.S. 724 (1985) ... wincicedesscamesmessiuaca te ee

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) .. 11, 12,

13, 16

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) .. 10, 11,

13, 15, 16, 20, 21

Stone & Webster Eng’g Corp. v. Ilsley, 518 F.

Supp. 1297 (D. Conn. 1981), aff’d, 690 F.2d 323

(2d Cir. 1982), aff’d mem. sub nom. Arcudi v.

Stone & Webster Eng’g Corp., 463 U.S. 1220

(1983) uatletelodadhe Dele ee, . 15

White v. Massachusetts Council of Constr. Em-

ployers, Inc., 460 U.S. 204 (1983)... 10

Wisconsin Dep't of Indus., Labor and Human Re-

lations v. Gould Inc., 475 U.S. 282 (1986)... 10

Statutes, Rules, and Regulations

29 C.F.R. § 2510.8-1 (1987)................................. 22

Davis-Bacon Act

40 U.S.C.A. § 276a et seq. (West 1986) 21

Employee Retirement Income Security Act of 1974

29 U.S.C.A. § 1002(1-3) (West Supp. 1990) 16, 22

29 U.S.C.A. § 1002(2)(A) (West Supp. 1990)... 2

29 U.S.C.A. § 1002(3) (West Supp. 1990) 2

29 U.S.C.A.§ 1144(a) (West 1985) ...... 11, 17,18

29 U.S.C.A. $ 1144(c) (West 1985) Zz 1¢

29 U.S.C.A. § 1144(d) (West 1985) 21

N.Y. LAB. LAW

$ 198-c (McKinney 1986) ....... = % oe

§ 220 (McKinney 1986 & Supp. 1990) passim

§ 220(3) (McKinney 1986) ae ; 2,3

$ 220(3)-a(a) (McKinney 1986) 2, 20

$ 220(3)-a(c} (McKinney 1986) 2, 20

§ 220(5) (a) (McKinney 1986) 3

§ 220(5) (b) (McKinney Supp. 1990) . 3, 22

§ 220(5) (c) (McKinney 1986) .. : 3

vii

TABLE OF AUTHORITIES—Continued

Page

§ 220(5) (d) (McKinney 1986) 00. 3,18

§ 220(6) (McKinney 1986)... . £2

§ 220(7) (McKinney 1986) _.... HPA IV ERE RAR oT . 2,20

§ 220(8) (McKinney Supp. es fon oe 2,4

§ 220(9) (McKinney 1986) ..........0 2

Oe es Se Oe oe Deen 3

N.Y. WorK. Comp. LAW §§ 200-242 (McKinney

UE ae I IE se ccc Oe ee . 16

WASH. REV. CODE ANN. § 39.12.010 et seq. (1972). f 19

Miscellaneous

120 CONG. REc. 29197 (1974) om 12

H.R. CoNF. REP. No. 1280, 93rd Cong., 2d ‘Seas.

SEIN oo cekdtackoeetouns Sone ae iasice rc pantenseseraeetninie ee. 12

N.Y. CONST. art. 1, $17 : 3

S. CONF. REP. No. 1090, 93rd Cong., 2d ‘Sess.

(1974) ROA Nee eS ARRON scdsaddatesdiinasteeancatee aa 12

IN THE

Siren Court of the United States

OCTOBER TERM, 1989

No. 89-1590

NEW YORK STATE DEPARTMENT OF LABOR; THOMAS F.,

HARTNETT, Commissioner of Labor of the State of

New York; CHARLES DROBNER, Director of Public

Works, New York State Department of Labor; ROBERT

ABRAMS, Attorney General of the State of New York,

. Petitioners,

GENERAL ELECTRIC COMPANY,

Respondent.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

BRIEF OF RESPONDENT

GENERAL ELECTRIC COMPANY IN OPPOSITION

General Electric Company (“GE”) hereby opposes the

petition for a writ of certiorari filed by the New York

State Department of Labor (‘Department’’).'

1 Respondent General Electric Company has the following sub-

sidiaries (other than wholly-owned subsidiaries) and affiliates, not

including subsidiaries whose shares or debt securities are not pub-

licly held: General Electric Capital Corporation; General Electric

Credit Corporation; General Electric Credit International, N.V.;

General Electric Overseas Capital Corporation; and RCA Corpora

tion. The New York Apparatus Service Center, which performed

the work involved in this action, is a corporate “subentity” of GE.

a a a

2

ADDITIONAL STATUTORY PROVISIONS INVOLVED

In addition to the statutory provisions reproduced in

the Department’s appendix at 37a-40a, further applicable

statutory provisions are reproduced in the appendix an-

nexed hereto.” The relevant federal statutory provisions

also include §$ 3/(2)(A), 3(3), and 514(c) of the

Employee Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C.A. $$ 1002(2) (A), 1002(3), and

1144(c) (West 1985 & Supp. 1990). The relevant New

York State statutory provisions also include N.Y. LAs.

LAW S$ 198-c, 220(8), 220(3)-a(a), 220(3)-a(c),

220(6), 220(7), 220(8), and 220(9) (McKinney 1986

& Supp. 1990).

STATEMENT OF THE CASE

ERISA heralded the emergence of a comprehensive and

pervasive federal interest in uniform regulation and pro-

tection of employee benefit plans. When this interest was

created in 1974, it necessarily required the displacement

of state action in the field of private employee benefit

plans. Thus, Congress’ express desire to preempt all state

laws left no room for traditional exercises of state power

in this field, including the fringe benefit provisions of

New York’s prevailing wage law.

A. Fringe Benefits Regulated By New York’s Prevailing

Wage Law

Prior to the enactment of ERISA, the New York Leg-

islature in 1956 amended the State’s Prevailing Wage

Law (“Section 220”) to require for the first time that

contractors provide prevailing fringe benefits to their

employees as determined by the State Commissioner of

Labor (“Commissioner”). The stated purpose of the 1956

amendment was to equalize the labor costs of public work

* References to petitioners’ appendix are cited as “———a”’: refer-

ences to the Joint Appendix filed in the Court of Appeals are cited

as “JA =

3

contractors and to have the Commissioner, not the con-

tractor, determine the level of health and pension benefits

to be provided employees (7a-8a).* See Action Elec. Con-

tractors Co. v. Goldin, 64 N.Y.2d 218, 221-22, 474 N.E.2d

601, 604-05, 485 N.Y.S.2d 241, 244-45 (1984) (“Action

Electric’); A.L. Blades & Sons, Inc. v. Roberts, 136

A.D.2d 926, 524 N.Y.S.2d 912 (4th Dep’t), appeal de-

nied, 72 N.Y.2d 803, 528 N.E.2d 520, 532 N.Y.S.2d 368

(1988) (“A.L. Blades’). For this purpose all fringe bene-

fits were statutorily denominated “supplements,” N.Y.

Lap. LAW § 220(38) (McKinney 1986), which in turn

were defined as “any payments which are not ‘wages’.”

N.Y. Las. LAw § 220(5)(b) (McKinney Supp. 1990)

(emphasis added).

Section 220 measures supplements by their cost to the

employer, not their “value to the employee” (8a), and an

employer can satisfy its statutory obligation only by pro-

viding the locally prevailing benefits or by giving its em-

ployees the exact cash cost in lieu of the benefit. Action

Electric, 64 N.Y.2d at 218, 474 N.E.2d at 602, 485

N.Y.S.2d at 242. Under 1983 amendments to Section 220,

the determination was de facto given over to unions as

the statute now mandates adoption of union wages and

benefits for each locality (N.Y. Las. LAw § 220(5) (a)

(McKinney 1986) as well as adoption of the union defini-

tion of locality (N.Y. Las. LAw § 220(5)(d) (McKinney

1986) ).*

3 Neither the historic objectives of the originally enacted prevail-

ing wage law, 1897 N.Y. Laws ch. 415, nor the 1938 incorporation of

the then existing statutory provisions into the state constitution,

N.Y. Const. art. I, § 17, are implicated by the Court of Appeals’

decision herein.

4 Since 1983, wages and supplements have been adopted directly

from the collective bargaining agreements of employers employing

at least 30% of the workers in a particular trade in the relevant

locality. N.Y. Las. Law § 220(5) (a,c) (McKinney 1986).

4

B. GE Employee Benefit Plans

GE is a party to a collective bargaining agreement

with Local 3 of the International Brotherhood of Electri-

cal Workers (‘‘Local 3’), which agreement establishes

terms and conditions of employment and provides for an

extensive package of employee fringe benefits provided

through eleven nationally administered employee benefit

plans (JA 4a-6a, 95a-96a, 104a-107a). GE’s employee

benefit plans are subject to ERISA and provide GE em-

ployees with substantial pension, disability, medical,

training, and job and income security benefits. The bene-

fits provided by the plans apply as equally as possible to

all GE employees, regardless of the state or locality in

which the employees are working (4a).

Pursuant to the provisions of GE’s ERISA plans, GE,

as administrator of the plans, uniformly administers and

applies the terms and provisions of each plan to all par-

ticipants therein throughout the United States (JA 105a-

106a). Uniform administration reduces administrative

costs and time delays and provides a greater level of

benefits to participants for each dollar contributed to

the plans (JA 105a-106a).

C. Department of Labor Enforcement

In January 1987, GE commenced transformer mainte-

nance and repair work for the Long Island Rail Road

(“LIRR”) in Kings, Queens, Nassau, and Suffolk Coun-

ties pursuant to a public work contract (5a). On April

6, 1988, the Commissioner cited GE for violating Section

220 and, without a hearing, ordered the LIRR to with-

hold $241,117 in payments owed GE (5a-6a).° GE was

5 GE’s request for a hearing (see N.Y. Lan. Law & 220(8)

(McKinney Supp. 1990)) has not been granted by the Department.

Subsequent to the initial withholding, the Department ordered an

additional $435,001 withheld for allegedly unpaid supplements.

After the Court of Appeals’ decision and the District Court’s Feb-

ruary 1, 1990 direction to the Department to commence a hearing

5

held responsible for the difference between the cost of

prevailing benefits and GE’s cost for providing such bene-

fits under its plans, plus interest and penalties (5a).°

The benefits provided by the GE plans are “different

from, and in some cases [cost] less than those which the

state claims are due under Section 220” (5a). However,

GE received no credit for its cost of providing benefits

which were not deemed to be “prevailing benefits” by the

Commissioner (5a).

In effect, the Department has determined that GE must

modify its plans as well as its recordkeeping procedures

solely with respect to employees assigned to work on pub-

lie work projects, thus undermining the distinct advan-

tazes derived from standardized administration of em-

ployee benefit plans (JA 108a-109a). Section 220 requires

GE, as plan administrator, to modify the plan’s eligibility

determinations, calculation of benefit levels, disburse-

ments, monitoring of the availability of funds, record-

keeping, and reporting (JA 109a).

D. This Action—Motion for Preliminary Injunction

On July 22, 1988, GE moved for a preliminary injunc-

tion to restrain the state from enforcing the withholding

notice, from prosecuting GE for its alleged violations, and

from enforcing any of the provisions of Section 220 pend-

ing a prior hearing (6a; JA la-14a). The District Court

denied GE’s motion on the law holding that ERISA does

within 6 weeks, the Department, on March 2, 1990 agreed to release

the $676,118 which had been withheld from GE upon GE’s posting

of a bond and agreement to defer the hearing pending review by

this Court.

6 On April 19, 1988, GE was served with a “Notice of Labor Law

Investigation Findings” (‘Notice’) (JA &8la-&86a) and ordered to pay

the wages and supplements determined by the Commissioner, post

on the job site all such wage and supplement rates, and maintain

records showing the hours and days worked by each worker and

the cost of supplements paid or provided (JA 82a). The Notice

threatens GE with both civil and criminal penalties (JA 82a),

6

not preempt Section 220 (33a-35a). The Court of Ap-

peals vacated and remanded, holding that the supplement

provisions of Section 220 are preempted by ERISA (3a).’

This holding was based on the Court’s finding that:

Section 220 intrudes into [three] preempted areas.

Ex-locality employers such as GE are required either

to bring their pension and welfare plans into con-

formity with those prevailing in the locality (as the

prevailing plans are determined to exist by a State

fiscal officer on the basis of job classifications made

by the Department of Labor) or to make up the

difference through cash payments to their employees.

The employer is required to keep, and on request to

file with the State, sworn schedules of supplements

and wages and to make its books and records per-

taining to wages, supplements and hours of labor

available for inspection by a State fiscal officer. In

the event the employer fails to bring a plan into

conformity with a similar plan prevailing in the

locality, the employee may be required to accept cash

payments based on what the employer’s cost would

have been to accomplish conformity, paymen‘s that

may be of lesser value to the employee than the un-

paid benefits would have been.

(10a-lla) (citations omitted).

The Court of Appeals also focused on the conflicting

regulations imposed on GE by the differences between the

New York regulatory philosophy and the congressional

philosophy embodied in ERISA.

The Supreme Court holds that under ERISA, “pri-

vate parties, not the Government, control the level

of benefits.” The New York courts hold that under

section 220, “the Commissioner of Labor, not the

7 The Court of Appeals also remanded the issue of whether the

1983 amendments to Section 220 constitute an unlawful delegation

of legislative power in violation of the due process clause (6a). The

District Court is presently considering cross-motions for summary

judgment on a supplemented record on this and other issues.

7

contractor, determine|s] the supplements to be pro-

vided.”” These courts are adjudicating in the same

area but reaching inconsistent results, and that is

exactly what ERISA was designed to prevent.

(9a) (citations omitted).

SUMMARY OF ARGUMENT

The Court should deny the petition for certiorari be-

cause there are no special or important reasons for grant-

ing it and, in any event, the issue of ERISA preemption

was correctly decided by the Court of Appeals. The issue

of ERISA preemption of state prevailing wage laws

which regulate contribution levels has recently been set-

tled by this Court. Local Union 598, Plumbers & Pipe-

fitters Indus. Journeymen & Apprentices Training Fund

v. J.A. Jones Constr. Co., 109 S. Ct. 210 (1988) (“J.A.

Jones”). In relying on J.A. Jones and other applicable

ERISA preemption decisions of this Court, the Court of

Appeals correctly held that the supplement provisions of

Section 220 relate to ERISA plans. As revealed by the

legislative history, ERISA’s sweeping preemption clause

was intended to achieve cost-efficient administration of

plans through uniform aational regulation, a purpose

that is fundamentally at odds with Section 220’s goal of

equalizing the costs of providing benefits. GE must also

implement an ongoing administrative scheme to comply

with Section 220 and keep benefit records in a different

form and manner than those normally maintained by GE.

Since New York’s prevailing wage law prescribes the

type and amount of an employer’s benefit contributions,

the rules under which the plan operates, and the nature

and amount of benefits provided, it relates to employee

benefit plans and is therefore preempted by ERISA.

8

REASONS FOR DENYING THE WRIT

I. THERE ARE NO SPECIAL OR IMPORTANT REA-

SONS TO GRANT CERTIORARI IN THIS CASE

Rule 10.1 of the Rules of this Court provides that re-

view on a writ of certiorari is a matter of judicial dis-

cretion which will only be granted for special and im-

portant reasons. In the instant case, no such reasons

exist as the issue presented has already been settled by

this Court. Contrary to the Department’s assertion (Pet.

12), ERISA preemption of state prevailing wage laws is

not a novel issue for the Court. J.A. Jones, 109 S. Ct.

210. In J.A. Jones this Court affirmed, without opinion,

the decision of the Ninth Circuit Court of Appeals which

held that the Washington State prevailing wage statute,

that required employers to maintain a certain level of

contributions to employee benefit plans, was preempted

by ERISA. Jd. The Department’s mischaracterization of

this Court’s summary affirmance in J.A. Jones as a de-

nial of certiorari (Pet. 12) leads it to incorrectly assert

that “this Court has not yet addressed the viability of

[prevailing wage| laws under ERISA’s preemption pro-

vision” (Pet. 12). Since the issue has been settled by

this Court in a way contrary to the position urged by

the Department, the petition does not raise any issues

warranting review.

Moreover, the Court of Appeals’ holding—that the

mandated supplement provisions of New York’s prevail-

ing wage law clearly relate to the ERISA plans of em-

ployers in GE’s position and are therefore preempted by

ERISA—coincides with decisions of the Ninth Circuit

holding that prevailing wage laws that mandate a con-

tribution level are preempted by ERISA. See J.A. Jones,

846 F.2d 1213 (9th Cir.), aff'd mem., 109 S. Ct. 210

(1988); Hydrostorage, Inc. v. Northern California Boil-

ermakers Local Joint Appren‘iceship Comm., 891 F.2d

719, 729 (9th Cir. 1989) (‘“‘Hydrostorage”’) (“{a] law

purports to regulate a plan [and is therefore preempted |

9

if it attempts to reach in one way or another the terms

and conditions of employee benefit plans’’).*

In addition, the Department’s primary argument for

overturning the Court of Appeals’ decision, that Section

220 requires no more than the payment of the cash

equivalent of the cost difference in benefits and is exempt

from preemption as a payroll practice, is foreclosed by

this Court’s decision in Gilbert v. Burlington Indus., Inc.,

477 U.S. 901 (1986), aff'g, 765 F.2d 320 (2d Cir. 1985)

(“Gilbert”), in which this Court summarily affirmed a

Court of Appeals decision holding N.Y. Las. Law § 198-c

(McKinney 1986) preempted by ERISA. Gilbert, 765

F.2d 320. The statute at issue in Gi/bert provides that

an employer who fails to pay the amount necessary to

provide benefits or furnish “supplements” is guilty of

a misdemeanor, N.Y. LAB. LAW § 198-c(1) (McKinney

1986), and defines supplements almost identically to Sec-

tion 220. Given the parallelism between Section 198-c

and Section 220, the Department’s repeated reference to

Section 220 supplements as a wage provision, notwith-

standing the legislature’s definition to the contrary (.e.,

non-wages), is no more than a disguised attempt to re-

litigate the preemption issue decided in Gilbert. Having

determined that claims for “supplements” under Section

198-c are preempted by ERISA, it would be anomalous

for this Court to now reject the state legislature’s lan-

guage and conclude that Section 220’s supplement pro-

visions are wage payment practices.

Despite the Supreme Court decisions settling these is-

sues, the Department relies upon the state’s asserted in-

terest in prevailing wage laws as a reason for granting

8 As both circuit courts that have had occasion to address ERISA

preemption of state prevailing wage laws agree that state statutes

aimed either at enforcing the terms of an ERISA plan or compelling

nonsignatory employers to join or comply with such plans are pre-

empted by ERISA, there is no conflict among the circuits within

the meaning of Supreme Court Rule 10.1(a).

10

its petition (Pet. 9-11). In this regard, the Department’s

reliance on Hughes v. Alexandria Scrap Corp., 426 U.S.

794 (1976) (“Hughes”), and White v. Massachusetts

Council of Constr. Employers, Inc., 460 U.S. 204 (1983),

wherein commerce clause challenges to state proprietary

activities were rejected, is misplaced because GE has not

brought a commerce clause challenge. More importantly,

what the commerce clause would permit New York to do

in the absence of ERISA is an entirely different ques-

tion from that posed herein. Wisconsin Dep’t of Indus.,

Labor and Human Relations v. Gould Inc., 475 U.S. 282,

290 (1986). Similarly, Hughes specifically held that

“(njothing in the purposes animating the Commerce

Clause prohibits a State, in the absence of congressional

action, from participating im the market and exercising

the right to favor its own citizens over others.” Hughes,

426 U.S. at 810 (emphasis added). Since here, there is

a direct congressional mandate to preempt the type of

state action exemplified by Section 220, pre-ERISA de-

cisions are of no avail to the Department.’

The Department’s invocation that “New York’s pre-

vailing wage law is an exercise of the State’s traditional

authority” (Pet. 14) fails to acknowledge that in order

for preemption to be avoided, the exercise of state power

“must also affect the plans ‘in too tenuous, remote or

peripheral a manner.’” Gilbert, 765 F.2d at 327 (quot-

ing Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100 n.21

(1983) ). Given Section 220’s requirement that benefits

be paid or provided in addition to those required by GE’s

collective bargaining agreement, the Department can

hardly claim that Section 220 “has only a peripheral ef-

fect on benefit plans” (Pet. 14). Exercises of state au-

thority are preempted if they relate to ERISA plans

whether or not such authority is traditionally exercised

®To the extent that the Department also relies upon Atkin v.

Kansas, 191 U.S. 207 (1903), that case upheld a state prevailing

wage statute which did not require fringe benefits long before

ERISA preemption was the law of the land.

11

by the state. Metropolitan Life Ins. Co. v. Massachusetts,

471 U.S. 724, 736 (1985) (“Metropolitan Life’).

Accordingly, there are no special or important reasons

for granting the Department’s petition for a writ of

certiorari.

II. THE COURT OF APPEALS CORRECTLY DECIDED

THAT THE MANDATED BENEFIT PROVISIONS

OF NEW YORK’S PREVAILING WAGE LAW RE-

LATE TO EMPLOYEE BENEFIT PLANS AND ARE

PREEMPTED BY ERISA

A. Section 220 Undermines ERISA’s Goal Of Promoting

The Cost-Efficient Administration Of Uniform Ben-

efits

As this Court has recognized on numerous occasions,

Section 514(a) of ERISA, 29 U.S.C.A. § 1144(a) (West

1985), was intended to have a sweeping preemptive ef-

fect in the employee benefit plan field because Congress

intended ERISA to occupy and regulate the field. See,

e.g., Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-46

(1987) (“Pilot Life’); Shaw v. Delta Air Lines, Inc.,

463 U.S. 85, 98-100 (1983) (“Shaw’’).

In Pilot Life, this Court summarized its teachings on

the scope of ERISA preemption as follows:

[T]he express pre-emption provisions of ERISA are

deliberately expansive, and designed to “establish

pension plan regulation as exclusively a federal con-

cern.” Alessi v. Raybestos-Manhattan, Inc., 451 US

504, 523, 68 L Ed 2d 402, 101 S Ct 1895 (1981).

As we explained in Shaw v. Del’a Air Lines, Inc.,

463 US 85, 98, 77 L Ed 2d 490, 103 S Ct 2890

(1983):

“The bill that became ERISA originally con-

tained a limited preemption clause, applicable

only to state laws relating to the specific sub-

jects covered by ERISA. The Conference Com-

mittee rejected those provisions in favor of the

12

present language, and indicated that section’s

pre-emptive scope was as broad as its language.

See HR Conf Rep No. 93-1280, p 383 (1974) ;

S Conf Rep No. 93-1090, p 383 (1974).”

The House and Senate sponsors emphasized both the

breadth and importance of the pre-emption provi-

sions. Representative Dent described the “reserva-

tion to Federal authority the sole power to regulate

the field of employee benefit plans” as ERISA’s

“crowning achievement.” 120 Cong Rec 29197

(1974). Senator Williams said:

“Tt should be stressed that with the narrow ex-

ceptions specified in the bill, the substantive and

enforcement provisions of the conference sub-

stitute are intended to preempt the field for Fed-

eral regulations, thus eliminating the threat of

conflicting or inconsistent State and local regu-

lation of employee benefit plans. This principle

is intended to apply in its broadest sense to all

actions of State or local governments, or any

instrumentality thereof, which have the force or

effect of law.”

Pilot Life, 481 U.S. at 45-46.

This Court has further stated that:

It is thus clear that ERISA’s preemption provision

was prompted by revognition that employers estab-

lishing and maintaining employee benefit plans are

faced with the task of coordinating complex admin-

istrative activities. A patch-work scheme of regula-

tion would introduce considerable inefficiencies in

benefit program operation, which might lead those

employers with existing plans to reduce benefits. and

those without such plans to refrain from adopting

them.

Fert Halifax Packing Co. v. Coyne, 482 U.S. 1, 11

(1987) (“Fort Halifax’).

1 At the time of ERISA’s passage, Representative Dent stated

that “with the preemption of the field [of employee benefit plans],

13

The Court of Appeals’ holding, that Section 220 falls

within the class of state laws preempted by ERISA, is

entirely consistent with and indeed mandated by this

Court’s teachings on the broad scope of ERISA preemp-

tion.

Relying on relevant Supreme Court precedent, the

Court of Appeals found that Section 220 relates to

ERISA plans in several respects. Initially, the Court of

Appeals recognized the fundamental conflict between

ERISA’s goal of promoting the cost-efficient administra-

tion of employee benefit plans and Section 220’s regula-

tion of the cost of benefits:

The Supreme Court holds that under ERISA, “pri-

vate parties, not the Government, control the level

of benefits.” Alessi v. Raybestos-Manhattan, Inc.,

451 U.S. 504, 511 (1981). The New York courts

hold that under section 220, “the Commissioner of

Labor, not the contractor, determine/s] the supple-

ments to be provided.” A.L. Blades & Sons, Ine. v.

Roberts, supra, 136 A.D.2d at 927. These courts are

adjudicating in the same area but reaching incon-

sistent results, and that is exactly what ERISA was

designed to prevent. See statements of Senator Wil-

liams and Congressman Dent quoted in Pilot Life

Ins. Co. v. Dedeaux, 481 U.S. 41, 46 (1987). and

Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 99

(1983).

(8a-9a). Thus, while ERISA aims to reduce the cost of

administering employee benefit plans to enable employers

to provide greater benefits, Fort Halifax, 482 U.S. at 12,

Section 220’s supplement provisions were designed to

equalize labor costs to remove a perceived unfair ad-

vantage of contractors who had to pay less for fringe

benefits. Action Electric, 64 N.Y.2d 213, 474 N.E.2d

601, 485 N.Y.S.2d 241.

we round out the protection afforded participants by eliminating

the threat of conflicting and inconsistent State and local regulation.”

Fort Halifax, 482 U.S. at 9.

14

Having found that “Section 220 measures supplements

by their cost to the employer, not their ‘value to the em-

ployee’”’ (8a), the Court of Appeals recognized that the

state statute operates primarily to increase the cost of

providing benefits and is incompatible with ERISA. As

an employer with employees in many states, the most

efficient way for GE to provide benefits to those employ-

ees is to establish a uniform administrative scheme which

provides a set of standard procedures to guide disburse-

ment of benefits. Fort Halifax, 482 U.S. at 9. ERISA

recognizes that the most cost-efficient way of providing

benefits is through uniform national plans. Thus, GE

has implemented the benefit programs which Congress

sought to encourage. Section 220, on the other hand, re-

quires daily recalculation of the benefits owed and thus

undermines ERISA’s purpose of encouraging the estab-

lishment of nationwide plans which provide benefits effi-

ciently by permitting uniform administration. By man-

dating the costs to be borne by employers providing

ERISA benefits, Section 220 frustrates ERISA’s goal of

promoting efficient administration of uniform benefits

and discriminates against employers such as GE who are

able to provide an extensive array of benefit plans at

lower costs than small local plans.'' In effect, the De-

partment’s Notice (JA 8la-86a} punishes GE for doing

what ERISA was designed to encourage—providing more

comprehensive benefits at lower cost. Essentially, Section

220 taxes away al! of GE’s cost savings achieved through

nationally established and administered benefit plans.

Accordingly, the Court of Appeals correctly held that the

basic purposes of ERISA and the supplement provisions

of Section 220 are fundamentally incompatible.

11 Section 220 requires that the economic efficiencies achieved by

GE through its uniform administration of the GE plans be for-

feited for GE employees assigned to work on the LIRR project

(JA 109a). This is inconsistent with the congressional goal of

promoting standardized administration of employee benefit plans.

15

B. Section 220 Regulates GE’s Benefit Contribution

Levels And Requires GE To Provide A Locally De-

\ termined Level Of Benefits

In addition to demonstrating the fundamental conflict

between the purposes of Section 220 and ERISA, the

Court of Appeals found that Section 220 relates to

ERISA plans in three prohibited areas: the statute pre-

scribes the type and amount of an employer’s contribu-

tions to a plan, the rules and regulations under which a

plan operates, and the nature and amount of the benefits

provided thereunder (10a).

State statutes regulating contributions to ERISA plans

have consistently been held preempted. J.A. Jones, 109

S. Ct. 210 (1988); Hydrostorage, 891 F.2d at 129-130;

Stone & Webster Eng’g Corp. v. Ilsley, 518 F. Supp.

1297, 1300-01 (D. Conn. 1981), aff'd, 690 F.2d 323

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

Webster Eng’g Corp., 463 U.S. 1220 (1983) (“Stone &

Webster”); Hewlett-Packard v. Barnes, 425 F. Supp.

1294, 1297-1300 (N.D. Cal. 1977), aff'd, 571 F.2d 502

(9th Cir.), cert. denied, 439 U.S. 831 (1978) (“Hewlett-

Packard’). In doing so, the courts have rejected the con-

tention that various state laws relating only to the level

of contributions to an ERISA plan, rather than to the

composition or administration of benefits, are not sub-

ject to preemption. J.A. Jones, 846 F.2d at 1218-1219;

Stone & Webster, 518 F. Supp. at 1301; Hewlett-Packard,

425 F. Supp. at 1297-1300. Thus, if a state statute is

designed to increase either an “employer’s negotiated

obligations” or ‘the cost which is to be borne by the em-

ployer,” the statute is preempted by ERISA. Stone &

Webster, 518 F. Supp. at 1301.

In urging that Section 220 is not preempted, he De-

partment has overlooked precedent from this Court hold-

ing that state laws relate to employee benefit plans if

they mandate benefits of the type ERISA covers. Met-

ropolitan Life, 471 U.S. at 739; Shaw, 463 U.S. at 97.

16

In this case, the Department seeks to hold GE liable un-

der Section 220 because of insufficient expenditures for

pension, health welfare, apprenticeship training, annu-

ity, vacation, holiday, and dental benefits (JA 8la-86a).

These types of benefits are expressly covered by ERISA,

29 U.S.C.A. § 1002(1-3) (West Supp. 1990), and may

nct be regulated by the states. Pilot Life, 481 U.S. at

47-48. Since none of the ERISA exemptions (e.g., laws

which regulate insurance, cf. Metropolitan Life, 471 US.

724) apply in this case, Section 220’s relation to employee

benefit plans required the Court of Appeals’ holding that

the statute was preempted by ERISA.

Similarly the Department has ignored this Court’s

finding in Shaw, 463 U.S. 85, that the provisions of New

York’s Disability Benefits Law, N.Y. Work. Comp. LAW

$$ 200-242 (McKinney 1965 & Supp. 1990), which re-

quired employers to pay specific benefits to employees,

clearly related to benefit plans. Jd. at 97.'° Here Section

220 relates to employee benefit plans because it requires

employers to provide specific ongoing benefits to employees.

While the New York Court of Appeals has interpreted

Section 220 to allow employers the option of satisfying

their Section 220 obligations by paying the ‘“‘cash equiv-

alent” of a supplement, the court did not modify the

statutory obligation that an employer provide fringe ben-

efits based on prevailing practices in a locality. Action

Electric, 64 N.Y.2d 213, 474 N.E.2d 601, 485 N.Y.S.2d

241. In any event, the cash equivalent op‘ion increases

costs for providing certain plan benefits and requires all

contractors to comply with a particular level of contri-

butions set by the Department for a locality based on the

state legislature’s intent to impose fixed cost levels for

providing benefits to employees. A.L. Blades, 1386 A.D.2d

12 While ERISA’s exemption of state disability insurance laws

saved the statute in Shaw from preemption, ERISA contains no

exemption designed to save Section 220 from preemption.

17

926, 524 N.Y.S.2d 912. The cash equivalent option is

merely an enforcement tool which does not affect the un-

derlying obligation to provide health, welfare, and pen-

sion benefits on a locality by locality basis. Here the

problem was extreme. Since the LIRR work was per-

formed in two adjacent localities, GE had varying ob-

ligations to provide varying benefits each day it per-

formed work on the project (JA 123a-125a). Even if

the cash equivalent option were viewed as an indirect

regulation of contribution levels to employee benefit plans,

it would nevertheless run afoul of ERISA’s broad pre-

emption clause. 29 U.S.C.A. § 1144(¢e) (2) (West 1985).

As this Court observed in Alessi v. Raybestos-Manhattan,

Inc., 451 U.S. 504 (1981) (“Alessz’’) :

It is of no moment that [the state] intrudes indi-

rectly, through a workers’ compensation law rather

than directly, through a statute called “pension reg-

ulation.”” ERISA makes clear that even indirect

state action bearing on private pensions may en-

croach upon the area of exclusive federal concern

ERISA’s authors clearly meant to preclude

the States from avoiding through form the substance

of the pre-emp'ion provision.

Id. at 525 (emphasis added).

While the cash equivalent option, added by judicial

interpretation in Action Electric over the objection of

the Department, was not part of the Washington pre-

vailing wage law at issue in J.A. Jones, the essential

issue is the same: whether state laws which require

equivalence between benefits provided by national ERISA

plans and lovally prevailing benefits relate to those ERISA

plans. The option of providing a variable, added pay-

ment directly to employees does not take Section 220 out

of the scope of the congressional intent to leave ERISA

plans totally free from state regulation. 29 U.S.C.A.

18

8 1144(a) (West 1985). Otherwise every local jurisdic-

tion could require employers to pay locally prevailing

benefits and the congressional goal of freeing employers

who maintain ERISA plans from inconsistent state and

local regulation would be frustrated.

The State’s imposition of daily and recurring added

costs to providing benefits is one evil that Section 514 (a)

was enacted to proscribe. The magnitude of the evils to

uniform plan administration caused by the Section 220

locality comparisons can not be overstated. Simply put,

they completely frustrate the congressional purpose of

encouraging the establishment of uniform national bene-

fit plans. If ERISA does not preempt the supplement

provisions of Section 220, every county in the state, or

the nation for that matter, could assess a different cost

to interstate ERISA plans based on local practice. To

make matters worse, the scope of the “locality” under

Section 220 is not determined by the state, but rather

by unions who engage in collective bargaining. N.Y. Las.

LAW § 220(5) (d) (McKinney 1986).

Clearly Congress did not intend to allow this type of

state interference with benefit plans. Section 514(a) was

enacted with the broad “relates to” test to preclude local

regulation of ERISA plans. If Section 220 is not pre-

empted, any tax, fee, or obligation imposed on plan con-

tributions or benefits mandated by a state—if payable

in cash by the employer maintaining an ERISA plan—

would be outside the scope of Section 514(a) preemption.

Since Section 220 mandates the provision of a locally

determined level of employee benefits or their cost equiv-

alent, it relates to GE’s ERISA plans and is a type of

regulation that is indistinguishable from the Washington

statute which also mandated a locally determined level

of employer contributions to an ERISA plan. J.A. Jones,

19

846 F.2d at 1214. The mechanism by which an added

payment is exacted is not the issue. Rather, it is the in-

trusion by the state into the level of contributions which

is prohibited. Since the State has taken the position that

GE has not spent enough on its benefit plans, Section 220

“relates to”? GE’s employee benefit plans.

Thus the Department’s attempt to require GE to pro-

vide additional benefits is no more justified than the pen-

sion fund’s claim in J.A. Jones for additional monies for

the added value of prevailing benefits. Compare N.Y.

Las. LAW § 220 (McKinney 1986 & Supp. 1990) with

WASH. REv. CoDE ANN. § 39.12.010 et seg. (1972).

C. Section 220 Requires GE To Implement An Ongoing

Administrative Scheme

Section 220 requires considerably more administration

than a one-time, lump-sum payment triggered by a single

event. Cf. Fort Halifax, 482 U.S. at 12. It requires GE

to implement an ongoing administrative program to mon-

itor and record the cost of benefits provided to employees

in order to determine whether additional benefits or pay-

ments are required on any given workday for the supple-

ments included on the prevailing wage schedule for each

work site {JA 82a). When a worker is transferred from

one locality to another, GE must recalculate the difference

between its benefit costs and the cost of the prevailing

supplements (JA 123a-125a).

As the Court of Appeals stated:

there is not even unity as between Nassau Suffolk

Counties on the one hand and Kings Queens Coun-

ties on the other. Moreover, GE cannot eliminate

the differences by single cash payments, as in Fort

Halifax Packing Co. v. Coyne, supra, 482 U.S. at 12;

Martori Bros. Distributors v. James-Massengale, 781

F.2d 1349, 1358 (9th Cir.), cert. denied, 479 U.S.

20

949 (1986); it is required to make continuous cal-

culations, adjustments and payments.

(9a) .'*

To comply with Section 220 and the Department’s No-

tice herein, GE must establish an ongoing administrative

scheme to determine whether a particular worker is em-

ployed on the LIRR project, the amount of supplements

provided, the occupations of the workers, and their hours

of employment (JA 82a). In addition the plans must

keep records on the number of hours worked by each

employee on the project for the week. They also have to

make regular disbursements to employees and keep ap-

propriate records to comply with the statute." See Fort

Halifax, 482 U.S. at 9. Since GE must adopt financial

coordination and control mechanisms to meet Section

220’s periodic demands, Section 220 directly affects ad-

ministration of GE’s employee benefit plans. Jd. at 12.

ERISA’s comprehensive preemption of state law was

meant to preclude this sort of interference with the ad-

ministration of employee benefit plans so that employers

would not have to administer their plans differently in

13 Even if the requirements of Section 220 were uniform through-

out the state, GE would still be subject to different contribution

requirements in different states (Pet. 10 n.7). Obiigating an em-

ployer to satisfy a wide variety of state prevailing wage laws makes

administration of a nationwide plan more difficult. Shaw, 463 U.S.

at 105 n.25.

14 The Department’s portrayal of the recordkeeping requirements

(N.Y. LAB. LAW §&§ 220(3)-a(a, c), (6), (7) (McKinney 1986)) as

de minimis is inconsistent with its citation of GE for violating such

requirements (JA 8la-82a). Section 220 requires GE to keep records

in a different form and manner from those normally maintained by

GE (JA 108a). A state law requiring an employer to keep records

of its benefit plans clearly “relates to” those plans. Thus the record-

keeping requirement by itself is sufficient to warrant preemption as

Congress intended that benefit administrators be required to comply

only with federal recordkeeping provisions. Fort Halifax, 482 U.S.

at 9.

21

each state in which they have employees. Fort Halifax,

482 U.S. at 10."

The Department’s assertion that Section 220 “mir-

ror{s] similar federal requirements embodied in such

laws as the Davis-Bacon Act, 40 U.S.C.A. § 276a et seq.”

(Pet. 10) is of no avail. First, Section 220 is not a

mirror of Davis-Bacon. More importantly, Davis-Bacon

is a federal statute and ERISA does not preempt federal

statutes. 29 U.S.C.A. § 1144(d) (West 1985).'* The de-

sirability of uniform administration of national plans

would be severely undercut by the need to comply with a

patchwork of conflicting state prevailing wage laws. By

establishing benefit plan regulation as exclusively a fed-

eral concern, Congress intentionally “minimized the need

for interstate employers to administer their plans differ-

ently in each State in which they have employees.” Shaw,

463 U.S. at 105.

Section 220 requires GE to accommodate conflicting

regulatory schemes by devising and operating inefficient

local systems for providing employee benefits. Alessi, 451

U.S. 504.7 This was precisely the burden that ERISA

preemption was intended to avoid. Fort Halifax, 482

U.S. at 10.

15 As this Court has previously recognized, this type of situation

produces considerable inefficiencies which an employer might choose

to offset by lowering benefit levels or eliminating benefits not re-

quired by any state. Fort Halifax, 482 U.S. at 13; Shaw, 463 U.S.

at 105 n.25.

16 While Section 514(d) of ERISA may operate to exempt from

reemption those provisions of state laws upon which federal laws

depend for their enforcement, Shaw, 463 U.S. at 104, Davis-Bacon

does not depend on New York’s prevailing wage law for its enforce-

ment.

17 As in Alessi, where this Court struck down a New Jersey stat-

ute that prohibited offsetting worker compensation payments

against pension benefits, Section 220 prohibits GE from substituting

one form of supplement for another since the Department ignores

the costs which GE expends on benefits which are not deemed to be

prevailing (5a).

22

D. The Department’s Effort To Treat The Mandated

Benefit Requirement Of Section 220 As A Wage

Statute Is Contrary To The Statutory Definition

Of “Supplements”

Recoznizing that state regulation of employee benefits

is prohibited (Pet. 14), the Department strains to depict

Section 220’s regulation of contractors’ benefit costs as

a wage provision. Relying on Massachusetts v. Morash,

109 S. Ct. 1668 (1989) (“Morash”), the Department

asserts that “{t]he cash payments required by the pre-

vailing wage law are functionally identical to vacation

pay, holiday pay, premium pay or any other typical wage

payment” (Pet. 15). The Department neglects to men-

tion, however, that the payments required by Section 220

in this case involved contribution levels for pension,

health ‘welfare, apprenticeship training, annuity, dental,

and like benefits (JA 83a-86a, 123a-125a). Such benefits

are expressly covered by ERISA. 29 U.S.C.A. § 1002 (1-3)

(West Supp. 1990); 29 C.F.R. § 2510.3-1(a) (2) (1987).

While the Department asserts that the payments required

by Section 220 are “functionally identical’ to wage pay-

ments (Pet. 15), Section 220 itself defines “supplements”

as “any payments which are not ‘wages.’” N.Y. LAR.

LAW § 220(5) (b) (McKinney Supp. 1990). In contrast,

the Massachusetts statute at issue in Morash specifically

stated that “[t]he word ‘wages’ shall include any holiday

or vacation payments. .. .” Morash, 109 8. Ct. at 1670

n.l. Since supplements under Section 220 are not wages,

wages are not involved on this appeal.’®

18 GE’s providing of fringe benefits to its employees does not con-

stitute a payroll practice under 29 C.F.R. § 2510.3-1(b). Payroll

practices cover overtime and shift premiums as well as payments

of compensation out of an employer’s general assets during periods

the employee does not perform his or her employment duties. 29

C.F.R. § 2510.3-1(b) (1987). As noted above, to conclude otherwise

would conflict with this Court’s decision in Gilbert, 477 U.S. 901,

that N.Y. LAB. Law § 198-c (McKinney 1986), which defines supple-

ments in the same fashion as Section 220, was preempted by ERISA.

Se

23

Contrary to what the Department seems to be urging,

ERISA preemption does not depend on whether an em-

ployer’s fringe benefit plans are funded or unfunded.

Fort Halifax, 482 U.S. at 17-18; Gilbert, 765 F.2d 320.

ERISA protects employee expectations of benefits even

when such benefits are paid out of general assets. Fort

Halifax, 482 U.S. at 18. Whether the funds to pay a bene-

fit come from a trust fund or from the company’s general

assets, the funds must be provided through an ongoing

administrative scheme. A. far as ERISA is concerned,

there is no difference between providing benefits directly

to the employee out of general assets and providing bene-

fits out of general assets to a trust fund which pays it to

the employee, as long as an ongoing administrative scheme

is required.

CONCLUSION

For all the foregoing reasons, respondent respectfully

requests that the petition for a writ of certiorari be

denied.

Respectfully submitted,

JAMES S. FRANK *

VIRGIL B. Day

MARC S. WENGER

NEIL A. CAPOBIANCO

VEDDER, PRICE, KAUFMAN,

KAMMHOLZ & Day

One Dag Hammarskjold Plaza

New York, New York 10017

(212) 223-1892

Counsel for Respondent

General Electric Company

May 11, 1990 * Counsel of Record

~

APPENDIX

la

APPENDIX

ADDITIONAL RELEVANT STATUTORY PROVISIONS

Section 3(2)(A) of the Employee Retirement Income

Security Act of 1974 (“ERISA”), 29 U.S.C.A. § 1002 (2)

(A) (West Supp. 1990), provides:

§ 1002. Definitions

For purposes of this subchapter:

(2)(A) Except as provided in subparagraph (B),

the terms “employee pension benefit plan” and “pen-

sion plan” mean any plan, fund, or program which

was heretofore or is hereafter established or main-

tained by an employer or by an employee organiza-

tion, or by both, to the extent that by its express

terms or as a result of surrounding circumstances

such plan, fund, or program—

(i) provides retirement income to employees,

or

(ii) results in a deferral of income by employ-

ees for periods extending to the termination of

covered employment or beyond,

regardless of the method of calculating the contri-

butions made to the plan, the method of calculating

the benefits under the plan or the method of dis-

tributing benefits from the plan.

Section 3(3) of ERISA, 29 U.S.C.A. § 1002(3) (West

Supp. 1990), provides:

§ 1002. Definitions

For purposes of this subchapter:

(3) The term “employee benefit plan” or “plan”

means an employee welfare benefit plan or an em-

ployee pension benefit plan or a plan which is both

2a

an employee welfare benefit plan and an employee

pension benefit plan.

Section 514(c) of ERISA, 29 U.S.C.A. § 1144(c) (West

1985), provides in relevant part:

§ 1144. Other laws

(ec) Definitions

For purposes of this section:

(1) The term “State law” includes all laws, de-

cisions, rules, regulations, or other State action hav-

ing the effect of law, of any State. * * *

(2) The term “State” includes a State, any politi-

eal subdivisions thereof, or any agency or instru-

mentality of either, which purports to regulate, di-

rectly or indirectly, the terms and conditions of em-

ployee benefit plans covered by this subchapter.

Section 198-c of New York Labor Law (McKinney 1986)

provides:

1. In addition to any other penalty or punishment

otherwise prescribed by law, any employer who is

party to an agreement to pay or provide benefits or

wage supplements to employees or to a third party or

fund for the benefit of employees and who fails, neg-

lects or refuses to pay the amount or amounts neces-

sary to provide such benefits or furnish such supple-

ments within thirty days after such payments are re-

quired to be made, shall be guilty of a misdemeanor,

and upon conviction shall be punished as provided

in section one hundred ninety-eight-a of this article.

Where such employer is a corporation, the president,

secretary, treasurer or officers exercising correspond-

ing functions shall each be guilty of a misdemeanor.

2. As used in this section, the term “benefits or wage

supplements” includes, but is not limited to, reim-

bursement for expenses; health, welfare and retire-

3a

ment benefits; and vacation, separation or holiday

pay.

Section 220(3) (second undesignated paragraph) of New

York Labor Law (McKinney 1986) provides in rele-

vant part:

The supplements, as hereinafter defined, to be pro-

vided to laborers, workmen or mechanics upon such

public works, shall be in accordance with the prevail-

ing practices in the locality, as hereinafter defined.

Serving laborers, helpers, assistants and apprentices

** * shall be provided supplements in accordance with

the prevailing practices as hereinafter defined. * * *

The supplements, as hereinafte: defined, to be pro-

vided to laborers, workmen or mechanics upon any

material to be used upon or in connection therewith,

shall be in accordance with the prevailing practices

in the same trade or occupation in the locality within

the state where such public work on, about or in

connection with which such labor is performed in its

final or completed form is to be situated, erected or

used. Such contracts shall contain a provision that

each laborer, workman or mechanic, employed by

such contractor, subcontractor or other person about

or upon such public work, shall be provided the sup-

plements as required in this article.

Section 220(3) (fourth undesignated paragraph) of New

York Labor Law (McKinney 1986) provides:

Any person or corporation that wilfully pays or pro-

vides after entering into such contract, less than

such stipulated wage scale or supplements as estab-

lished by the fiscal officer shall be guilty of a mis-

demeanor and upon conviction shall be punished for

such first offense by a fine of five hundred dollars

or by imprisonment for not more than thirty days,

or both fine and imprisonment; for a second offense

by a fine of one thousand dollars, and in addition

thereto the contract on which the violation has oc-

ee

4a

curred shall be forfeited; and no such person or cor-

poration shall be entitled to receive any sum nor shall

any officer, agent or employee of the state, municipal

corporation or commission or beard appointed pur-

suant to law pay the same or authorize its payment

from the funds under his charge or control to any

person or cor; eration for work done upon any con-

tract, on whicss tne contractor has been convicted

for second offense in violation of the provisions of

this section.

Section 220(3)-a(a) of New York Labor Law (Mc-

Kinney 1986) provides in relevant part:

* * * it shall be the duty of the fiscal officer * * *

to make a determination of the schedules of wages

and supplements to be paid or provided, as the case

may be, therefor. The contractor and every sub-

contractor on public works contracts shall post in a

prominent and accessible place on the site of the

work a legible statement of all wage rates and sup-

plements as specified in the contract to be paid or

provided, as the case may be, for the various classes

of mechanics, workingmen, or laborers employed on

the work. The contractor and every sub-contractor

shall keep original payrolls or transcripts thereof,

subscribed and affirmed by him as true under the

penalties of perjury, showing the hours and days

worked by each workman, laborer or mechanic, the

occupation at which he worked, the hourly wage

rate paid and the supplements paid or provided, on

the site of the work where the contractor or sub-

contractor maintains no regular place of business in

New York state and where the amount of the con-

tract is in excess of twenty-five thousand dollars.

All other contractors or sub-contractors shall pro-

duce within five days on the site of the work and

upon formal order of the commissioner or his desig-

nated representative such original payrolls or tran-

5a

scripts thereof, subscribed and affirmed by him as

true under the penalties of perjury, as may be

deemed necessary to adequately enforce the provi-

sions of this article. The original payrolls or tran-

scripts shall be preserved for three years from the

date of completion of the work on the awarded con-

wach.” ” *

Section 220(3)-a(c) of New York Labor Law (McKinney

1986) provides:

The fiscal officer may require any person or corpora-

tion performing such public work to file with the

fiscal officer within ten days of receipt of said re-

quest, payroll records, sworn to as to their validity

and accuracy, requested by the fiscal officer, for said

public work or any public or private work performed

by said person or corporation during the same period

of time as said public work. In the event said per-

son or corporation fails to provide the requested in-

formation within the allotted ten days, the fiscal

officer shall, within fifteen days, order the depart-

ment of jurisdiction to immediately withhold from

payment to said person or corporation up to twenty-

five percent of the amount, not to exceed one hundred

thousand dollars, to be paid to said person or corpo-

ration under the terms of the contract pursuant to

which said public work is being performed. Said

amount withheld shall be immediately released upon

receipt by the department of jurisdiction of a notice

from the fiscal officer indicating that the request for

records had been satisfied.

Section 220(6) of New York Labor Law (McKinney

1986) provides:

The fiscal officer, may, and on the written request of

any interested person shall, require any person or

corporation performing such public work to file with

such fiseal officer schedules of the supplements to be

6a

provided and wages to be paid to such laborers, work-

men or mechanics. Any such person or corporation

shall, within ten days after the receipt of written

notice of such requirement, file with the fiscal officer

such schedules of wages and supplements. An em-

ployer may contest a determination by the fiscal offi-

cer under paragraphs a and c of subdivision five of

this section. The employer must alleze and prove by

competent evidence, that the actual percentage of

workers, laborers or mechanics is below the required

thirty per centum and during the pendency of any

such contest and until final determination thereof,

the work in question shall proceed under the rate

established by the fiscal officer.

Section 220(7) of New York Labor—Law (McKinney

1986) provides:

Compliance investigations. The fiscal officer as herein

defined shall on a verified complaint in writing of

any person interested or of any employee organiza-

tion pursuant to subdivision eight-d, and may on

his own initiative cause a compliance investigation

to be made to determine whether the contractor or

a subcontractor has paid the prevailing rate of wages

and prevailing practices for supplements in the same

trade or occupation in the locality within the state

where such public work is being performed, or the

hours of labor performed by the workmen, laborers

and mechanics employed on such public work, or both.

The fiseal officer or his agents, examiners and in-

spectors may examine or cause to be examined the

books and records pertaining to the rate of wages

pa‘d and supplements provided to the laborers, work-

men and mechanics on said public work and the

hours of labor performed by such laborers, workmen

and mechanics on said public work. The fiscal officer

in such investigation shall be deemed to be acting

in a judicial capacity, and shall have the right to

Ta

issue subpoenas, administer oaths and examine wit-

nesses. The enforcement of a subpoena issued under

this section shall be regulated by the civil practice

law and rules. Such fiscal officer shall make an order

or determination not later than six months after the

filing of such verified complaint.

Section 220(8) of New York Labor Law (McKinney

Supp. 1990) provides in relevant part:

Hearings. Before issuing an order or determination

as provided in subdivision seven, the fiscal officer

shall order a hearing thereon at a time and place

to be specified, and shall give notice thereof, to-

gether with a copy of such complaint or the pur-

pose thereof, or a statement of the facts disclosed

upon such investigation, which notice shall be served

personally or by mail on any person or corporation

affected thereby; such person or corporation shall

have an opportunity to be heard in respect to the

matters complained of at the time and place specified

in such notice, which time shall be not less than five

days from the service of the notice personally or by

mail. * * * Such hearing shall be expeditiously con-

ducted and upon such hearing the fiscal officer shall

determine the issues raised thereon and shall make

and file an order in the office of the fiscal officer

stating such determination, and forthwith serve a

copy of such order, with a notice of the filing thereof,

upon the parties to such proceeding, personally or by

mail. Such order shall direct payment of wages or

supplements found to be due, including interest at the

rate of interest then in effect as prescribed by the

superintendent of banks pursuant to section four-

teen-a of the banking law per annum from the date

of the underpayment to the date of the payment,

provided, however, that such interest rate shall not

apply to subdivision eight-c of this section.

8a

In addition to directing payment of wages or sup-

plements including interest found to be due, such

order may direct payment of a further sum as a

civil penalty in an amount not exceeding twenty-

five percent of the total amount found to be due.

In assessing the amount of the penalty, due consid-

eration shall be given to the size of the employer’s

business, the good faith of the employer, the gravity

of the violation, the history of previous violations

and the failure to comply with recordkeeping or

other non-wage requirements. * * *

Section 220(9) of the New York Labor Law (McKinney

1986) provides:

When a final determination has been rendered, any

person, or corporation that wilfully refuses there-

after to pay the rate of wages or to provide the sup-

plements determined to be prevailing, or wilfully

employs on such public work, laborers, workmen or

mechanics more than the hours per day determined

by said order until modified by order of the fiscal

officer or court and thereby violates the provisions

of this section shall be guilty of a misdemeanor and

upon conviction shall be punished, for a first offense

by a fine of five hundred doilars or by imprisonment

for not more than thirty days, or by both such fine

and imprisonment; for a second offense by a fine of

one thousand dollars, and in addition thereto the con-

tract on which the violation has occurred shall be

forfeited; and no such person or corporation shall be

entitled to receive any sum nor shall any officer,

agent or employee of the state or of a municipal

corporation pay the same or authorize its payment

from the funds under his charge or control to any

such person or corporation for work done upon any

contract, on which the contractor has been convicted

of second offense in violation of the provisions of this

section.