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

MOTION FILED

MAY 10 1999

No. 89-1590

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

NEW YORK STATE DEPARTMENT OF LA ly [AS |]

HARTNETT. Commissioner of Labs State «

New York: CHARLES DROBNER, Dii' of P

Works, New York State Department of Lib Ro

ABRAMS, Attorney General of the S f New York,

PP?

(; \ | i \ | {

Ri

On Petition for Writ of Certiorari to the United states

Court of Appeals for the Second Circuit

MOTION OF THE BUILDING AND

CONSTRUCTION TRADES DEPARTMENT, AP L-CIO

FOR LEAVE TO FILE A BRIEF AMICUS CURIAE

AND

AND

BRIEF AMICUS CURIAE OF THE BUILDING

CONSTRUCTION TRADES DEPARTMENT, APL-CIO,

IN SUPPORT OF THE PETITIONERS

LAURENCE J. C¢

TERRY YELLIG R

SHERMAN, DUNN, CO \

LEIFER & YELI P¢ >

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1125 15 St) NW \

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IN THE

Siypreme Court of the United States

OCTOBER TERM, 1989

No. 89-1590

EW YORK STATE DEPARTMENT OF LABOR, THOMAS

HARTNETT, Commissioner of Labor of the State

F’.

of

New York: CHARLES DROBNER, Director of Public

Works, New York State Department of Labor; Ron!

s

ABRAMS, Attorney General of the State of New York,

Petitioners,

v.

GENERAL ELECTRIC COMPANY,

On Petition for Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

MOTION OF THE BUILDING AND

CONSTRUCTION TRADES DEPARTMENT, AFL-CIO,

FOR LEAVE TO FILE A BRIEF AMICUS CURIAE

T

R

Y

INTEREST OF THE BUILDING AND

CONSTRUCTION TRADES DEPARTMENT

FACTS AND QUESTIONS

OF LAW DEVELOPED BY THE pi rp

TABLE OF CONTENTS

TABLE OF AUTHORITIES

INTEREST OF THE BUILDING AND CONSTRUC-

TION TRADES DEPARTMENT 2

SUMMARY OF REASONS FOR REVIEW Z

REASONS FOR REVIEW 3

CONCLUSION 1]

ii

TABLE OF AUTHORITIES

CASES:

Action Electrical Contractors Co. v. Goldin, 485

ee. Fe: |} ene

AEtna Life Insurance Co. v. Borges, 869 F.2d 142

EAE SAAR. BED svcccssticecdescshneeikid eee

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

(1981). disséssdekdeshianeresaeioedemeat aaa ee

Brang Co. “State University Const. Fund, 365

N.Y.S.2d 914 CREP vnncnexsistioeteae ;

Calder v. Bull, 3 U.S. (3 Dall. ) 388 a 798) . Fe

Campbell v. City of New York, 244 N.Y. 317

CDE D cicxenvcvcvennynvainveucccudsoveunckscdormuibdancenenamnnnus

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

(1987) ooo cccc cc ccee cece cc ceee cc eeeeeeeeee

Hewlitt-Packard Co. v, Barnes, 571 F. 2d 502 (9th

Cir. 1978) _

Massachusetts v. Morash, 490 U.S. ——, 104

L.Ed.2d 98 (1989) ssounes

Metropolitan Life Ins. Co. v. Massachusetts, 471

U.S, T24 (19BB) 22..2......00c..ccccssceseccnecccccececevecerseses-

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

Schultz v. Nat. Coalition of Hispanic M.H.H.S.

Org., 678 F. Supp. 936 (D.D.C. 1988)

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

Silverman v. Browning, 414 F. Supp. 80 (D. Conn.

) 1976) ,

Texas v. White, 74 U.S. (7 Wall.) 700 (1869)

| Train v. Colorado Public Interest Research Group,

426 U.S. 1 (1976)

United States v. American Trucking Ass’ns., 310

U.S. 534 (1940)

Universities Research Assoc. v. Coutu, 450 U.S.

754 (1981)

STATUTES:

29 U.S.C. §§ 1021-31

29 U.S.C. $$ 1051-86

29 U.S.C. §§ 1104-14

Davis-Bacon Act, 40 U.S.C. § 276a, et seq. (1986)

ol

t

~]

qn

L986) passim

LEGISLATIVE MATERIALS

5S. Rep. No. 963, 88th Cong., 2d Sess. (1964) 8

IN THE

Supreme 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, Atcorney General of the State of New York,

Petitioners,

Vv.

GENERAL ELECTRIC COMPANY,

Respondent.

On Petition for Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

BRIEF AMICUS CURIAE OF THE BUILDING AND

CONSTRUCTION TRADES DEPARTMENT, AFL-CIO,

IN SUPPORT OF THE PETITIONERS

The Building and Construction Trades Department,

AFL-CIO, (the “Department’’) submits this brief amicus

curiae to urge the Court to review the decision below

that ERISA preempts a New York prevailing wage law

that does not require an employer to establish, maintain,

or modify an employee benefit plan, or even to

fringe benefits to its employees.

INTEREST OF THE BUILDING AND

CONSTRUCTION TRADES DEPARTMENT

The nature and purpose of the Department ar

forth in the accompanying Motion for leave to file

brief. As set forth herein, the Department submits

+ ih n > sy ] ‘1 —se ,« . ‘ s crwm 1 + ‘ +

the decision below will have a significan

iv@i st t

1} + 400) ; . *l- Cc Aye rh > ++ +t ye

upon construction workers for whose benefi state pre

a Tt

vailing wages laws have been enacted. The result of th

decision below is the effective nullification of New Y:

“7

entire preva

_ 1 1. | r«< > ’ . ‘ > ~ . . tT. > r< Be sd

similar negative impact on the prevailing wage laws

‘ ] } |

over 30 other states that consider the 1 f

,

benefits in their wage calculations

SUMMARY OF REASONS FOR REVIEW

Ntoatpe havea ty lit] =

otatles nave aqivionally § ¢

7

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‘

etermined the

-70cr 1 ¢ 1 1 ‘ ay =o , eL- .

wages that are paid on state-funded public works p

ects. New York Labor Law Section 220 McKinney

( ar a . ly -"Vc¢ ] . +}

1986) is such a prevailing wage law, which includes t}

ra)y) Lins h Teen and fy} ve, } not worarilinag +)

value of cash wages and fringe benefits prevailing in the

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app 1caDle irisd 1oOn The highes Cou! lT New Yu rv

~ : ———ee ’ : ore) n haln +¢ha4d : ‘ ca300

has interpreted Section 220 and held that its require-

: ‘ ‘ } > ith Nal rs ‘ ha ; ]

ments can be satisfied with cash wages, and that it does

ye ,117° Qn +r! , . ~~ ve | Ing ‘ TT}

not require an employer to provide tringe benefits. Thi

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court below has reinterpreted New York law, seeming

ey i a . . 4B. 4k > + ] . lL, ] ] ~<

without regard to the Tenth Amendment, and held it pre-

" 1h ° AB 2 , ] Lelawm L es ]

empted under ERISA. In so holding, the court ignored

it WT 1 ]<] 19] law and micint , ‘Ot 1 +h ] .

Its OWN Geclslonal laW and misinterpreted tne decisions

Oo! this (Court The qecision pvpelow we0)pardizes tne ng-

; he ls , , | Ase -) ] . n a 4

standing policy of New York and a majority of the

states to provide a minimum level of compensation

pubiie works projects.

ing wage law. The decision portends

REASONS FOR REVIEW

1

costs for those contractors will be significantly lower

than the labor costs prevailing for local contractors. The

result will be to place those local contractors, which are

contractually required to provide fringe benefits to their

workers, at a competitive disadvantage in bidding on

public works projects. This is exactly what the legisla-

ture sought to prevent when it amended the New York

prevailing wage statute to include the value of supple-

ments in the calculation of the value of the prevailing

wage.

The effect of the decision below is to allow nonlocal

and nonunion contractors to pay their employees a total

compensation package substantially lower in value than

the prevailing rate, in contravention to the state’s long-

standing policy “to insure that workmen on public proj-

ects will receive an adequate wage,” and to afford “pro-

tection to a contractor by giving him some foreknowledge

of potential labor costs when bidding on such projects.”

Brang Co. v. State University Const. Fund, 365 N.Y.S.24

914 (1975+. See Campbell v. City of New York, 244

N.Y. 317 (1927).

Judicial analysis of ERISA’s preemption provision, 29

U.S.C. $1114, begins with the presumption that state

laws are not preempted by federal statute in the absence

of persuasive evidence to the contrary. Metropolitan Life

Ins. Co. v. Massachusetts, 471 U.S. 724, 741 (1985);

Alessi v. Rayhestos-Manhattan, 451 U.S. 504, 522 (1981).

Having concluded that ERISA’s preemption provision is

‘not a model of legislative drafting,” Metropolitan Life,

471 U.S. at 739, this Court consistently turns to the leg-

islative history of ERISA for guidance.”

2 The Court has on numerous occasions expressed its general dis-

satisfaction with any “plain meaning” rule: “When aid to construc-

tion of the meaning of words, as used in the statute, is available,

there certainly can be no ‘rule of Jaw’ which forbids its use, however

clear the words may appear on ‘superficial examination.’ Train

Colorado Public Interest Research Group, 426 U.S. 1, 10 (1976)

Most recently, the Court has highlighted that ERISA

preemption reflects Congressional “concern about the ef-

fect of state regulation on the administration of benefit

programs,” Fort Halifax Packing Co. v. Coyne, 482 US.

1, 10 (1987). “The focus of the statute thus is on the

administrative integrity of benefit plans. . . .” Fort

Halifax, 482 U.S. at 15. The Court held that ERISA

does not preempt a state statute that “creates no impedi-

ment to an employer’s adoption of a uniform benefit ad-

ministrative scheme * * * [or that] presents no risk

either that an employer will evade or that a state will

dislodge otherwise applicable federal regulatory require-

ments,’ Fort Halifax, 482 U.S. at 14-17. Thus, “the

cases stressing the broad reach of the ERISA preemp-

tion clause also stress that common sense should not be

left at the courthouse door.” Schu/tz v. Nat. Coalition

of Hispanic M.H.H.S. Org., 678 F. Supp. 936, 938

(D.D.C. 1988

The preemption of state law under ERISA is a valid

exercise of Congress’ power under the Commerce Clause *

and does not violate the Tenth Amendment to the Con-

stitution. However, the necessary predicate to determin-

ing whether ERISA preempts a state law is a determi-

nation of the meaning of the state law. And, the inter-

pretation of state law has long been recognized as being

committed to the states under the Tenth Amendment.

See Calder v. Bull, 3 U.S. (3 Dall.) 388 (1798). ‘“Ab-

sent proof of prejudice or abuse of discretion, the state

courts must be presumed to act in good faith and with

judicial wisdom. " Silverman v. Browning, 414 F.

Supp. 80, 88 (D. Conn.), aff'd, 429 U.S. 876 (1976

Notwiths*anding the foregoing, in the instant case, the

Second Circuit has seemingly rejected the interpretation

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equalize contractors’ minimum labor costs,” 485 N.Y.S.2d

at 245, rather than any prohibition against an employer

paying its employees in cash the total dollar value of the

prevailing wage package.

Rather than deferring to the State’s interpretation of

its own statute, the Second Circuit assumed the role of

interpreter of New York law. In so doing, the Second

Circuit blinked past the Tenth Amendment and the es-

tablished principles that “the preservation of the states,

and the maintenance of their governments, are as much

within the design and care of the Constitution as the

preservation of the Union and the maintenance of the

Na‘ional government.” Texas v. White, 74 U.S. (7 Wall.)

700, 725 (1869).

Recently, this Court stressed that “ERISA preemption

analysis ‘must be guided by respect for the separate

spheres of governmental authority preserved in our fed-

eralist system.’ If a state creates no prospect of conflict

with a federal statute, there is no warrant for disabling

it from attempting to address uniquely local social and

economic problems.” Fort Halifax, 482 U.S. at 19 ‘cita-

tions omitted!. In Fort Halifar, this Court saved from

ERISA preemption a state statute, because it “neither

establishe[d], nor require/d| an employer to maintain”

an employee benefit plan. /d., 482 U.S. at 6. The “focus

of {ERISA} is on the administrative integrity of benefit

plans.” /d., 482 U.S. at 15. And, “|p!reemption ensures

that the administrative practices of a benefit plan will

be governed by only a single set of regulations.” Jd.,

482 U.S. at 11.

The court below held Section 220 preempted, even

though New York’s highest court holds that an employer

ean satisfy Section 220 without establishing, maintaining,

or in any way involving itself or its employees with a

fringe benefit plan. Section 220 is nothing more than a

9

York’s prevailing wage law does not attempt to regulate

the administration of any employee benefit plan. Conse-

quently, the New York prevailing wage law does not

present any of the risks that ERISA preemption was in-

tended to address, and under Morash and Fort Halifax

should not be preempted.

This conclusion is not altered by the fact that the New

York law gives employers the options of meeting the

Statutory requirement by providing “a combination of

cash and benefits, or by an equivalent benefit plan” in

addition to allowing cash payments directly to employees.

Action Electrical, 485 N.Y.S.2d at 242. As stated, by

Judge Pratt in his dissenting opinion below:

The fact that employers may choose to comply with

the law by providing a different benefit plan or a

combination of benefits and cash rather than by sim-

ply paying the additional costs as wages, does not

render the statute preempted.

891 F.2d at 30 (Pratt, J. dissenting), citing Shaw v.

Delta Air Lines, Inc., 263 U.S. 85 (1983). To hold

otherwise would yield the truly absurd result that an

otherwise valid requirement that a public works con-

tractor pay certain monies directly to his employees

would be held preempted, because the state law gave

the contractors more options, instead of fewer.

In Rehaldo v. Cuomo, 749 F.2d 133 (2d Cir. 1984),

the Second Circuit held that a New York law regulat-

ing hospital rates was not preempted under ERISA.

In so holding, the Second Circuit ‘“‘analogized to State

labor laws that govern working conditions and labor

costs,” id. 749 F.2d at 138, to conclude that a state stat-

ute is not preempted that “does not affect the structure,

the administration, or the type of benefits provided by an

ERISA plan... .” Jd., 749 F.2d at 139. Then, in AEtna

Life Insurance Co. v. Borges, 869 F.2d 142, 145 (2d Cir.

1989), the Second Circuit reiterated the point:

11

CONCLUSION

Due to the detrimental effect this decision will have on

prevailing wage laws throughout the nation, and because

there is no evidence that Congress ever intended to pre-

empt the long-standing policy of New York and more

than thirty other states to provide for fair bidding and a

minimum level of total compensation on public works

projects, the Building and Construction Trades Depart-

ment urges this Court to review the decision below.

Respectfully submitted,

LAURENCE J. COHEN GERALD M. FEDER

TERRY R. YELLIG DAVID R. LEVIN *

SHERMAN, DUNN, COHEN, FEDER & ASSOCIATES

LEIFER & YELLIG, P.C. Suite 600

Suite 291 1350 Connecticut Ave., N.W.

1125 15vh Street, N.W. Washington, D.C. 20036

Washington, D.C. 20005 (202) 955-8305

(202) 785-9300

Attorneys for the Building and

Construction Trades Department, AFL-CIO

Dated: May 10, 1990 * (Counsel of Record)