Appendix — California Division of Apprenticeship Standards v. Hydrostorage, Inc.

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89-1985 FILE

No. JUN 14 1999

JOSEPH F. SPANIOL, J

IN THE CLERK

Supreme Court of the United States

OCTOBER TERM, 1989

CALIFORNIA DIVISION OF APPRENTICESHIP STANDARDS;

GAIL W. JESSWEIN, Chief of the Division of Appren-

ticeship Standards; CALIFORNIA APPRENTICESHIP COUN-

CIL; and NORTHERN CALIFORNIA BOILERMAKERS LOCAL

JOINT APPRENTICESHIP COMMITTEE,

. Petitioners,

HYDROSTORAGE, INC.,

Respondent.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DAVID A. ROSENFELD JOHN M. REA

875 Battery Street, 3d FI. (Counsel of Record)

San Francisco, CA 94111 JAMES D. FISHER

CALIFORNIA DEPARTMENT OF

INDUSTRIAL RELATIONS

P.O. Box 603

San Francisco, CA 94101

(415) 737-2900

Attorney for California

State Petitioners

MARSHA S. BERZON

ROBERT C. BELL, JR.

177 Post Street, Suite 300

San Francisco, CA 94108

LAURENCE GOLD

(Counsel of Record)

815 16th St., N.W.

Washington, D.C. 20006

(202) 637-5390

Attorneys for Northern

California Boilermakers

Local Joint Apprenticeship

Committee

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

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TABLE OF CONTENTS

Page

Opinion of the United States Court of Appeals for the

Un TO eo iiesereuiuaeeabinnenne la

Opinion of the United States District Court for the

Northern District of California ..............0......00000000....... 29a

Judgment of the United States Court of Appeals for

RIS Sa ae IS tei irre ea 45a

Order of the United States Court of Appeals for the

Ninth Circuit Denying a Petition for Rehearing ........ 46a

Statutory Provisions Involved _0000.00000.....cccecceecce cece 48a

APPENDIX A

UNITED STATES COURT OF APPEALS

NINTH CIRCUIT

Nos. 88-2798, 88-2800, 88-2802, 88-2966,

88-2968 and 88-2969

HYDROSTORAGE, INC., a Tennessee Corporation,

Plaintiff-A ppellee,

NORTHERN CALIFORNIA BOILERMAKERS LOCAL JOINT

APPRENTICESHIP COMMITTEE, an unincorporated asso-

ciation; DIVISION OF APPRENTICESHIP STANDARDS; GAIL

W. JESSWEIN, in his capacity as Chief of the Division

of Apprenticeship Standards; CALIFORNIA APPRENTICE-

SHIP COUNCIL,

Defendants-A ppellants.

Appeal from the United States District Court

for the Northern District of California

Argued and Submitted May 8, 1989

Decided Dec. 6, 1989

John M. Rea, Chief Counsel, Dept. of Indus. Relations,

Miles Washington, Deputy Atty. Gen., David A. Rosen-

feld, Van Bourg, Weinberg, Roger & Rosenfeld, and

Marsha S. Berzon, Altshuler & Berzon, San Francisco,

Cal., for defendants-appellants.

Karen E. Ford, Littler, Mendelson, Fastiff & Tichy,

San Francisco, Cal., for plaintiff-appellee; James P.

Baker, San Francisco, Cal., on brief.

Before WALLACE and NOONAN, Circuit Judges, and

BURNS,* District Judge.

WALLACE, Circuit Judge:

In these consolidated appeals, the Northern California

Boilermakers Joint Local Apprenticeship Committee,

California Apprenticeship Council, and California Divi-

sion of Apprenticeship Standards (collectively Boiler-

makers) appeal from the district court’s summary

judgment in favor of Hydrostorage, Inc. (Hydro-

storage). The district court enjoined the enforcement of

an administrative order against Hydrostorage, concluding

that such enforcement was preempted by the Employee

Retirement Income Security Act (ERISA), 29 U.S.C.

§1144(a), and by the National Labor Relations Act

(NLRA), 29 U.S.C. § 151 et seg. On appeal, Boilermak-

ers argue that the district court (1) lacked subject mat-

ter jurisdiction, (2) erred in failing to abstain under

either the Younger or Pullman doctrines, and (3) erred

in granting summary judgment based on ERISA and

NLRA preemption. The district court exercised juris-

diction under 28 U.S.C. § 1331. We have jurisdiction

over this timely appeal pursuant to 28 U.S.C. § 1291.

We affirm.

This case arises out of California’s efforts to regulate

apprenticeship on public works projects. Cailifornia’s

general administrative framework for regulating ap-

prenticeships is complex. The California Apprenticeship

Council (Council) is a six-member entity created by state

statute and empowered to issue rules and regulations es-

tablishing minimum standards of wages, hours, and

* Honorable James M. Burns, United States District Judge, Dis-

trict of Oregon, sitting by designation.

working conditions for apprentices. Cal. Labor Code

§§ 3070, 3071 (West Supp.1989). The Council is located

in the Division of Apprenticeship Standards (Division),

which in turn is part of California’s Department of In-

dustrial Relations. /d. The Director of Industrial Rela-

tions serves as the Administrator of Apprenticeship (Ad-

ministrator), in which capacity he or his delegees carry

out such duties as investigating and determining charges

of alleged violations of the terms of apprenticeship agree-

ments. Cal. Labor Code §§ 3072, 3081 (1971); 8 Cal.

Code § 202 (1988). A determination by the Administrator

may be appealed to the Council. Cal. Labor Code § 3082

(West Supp.1989) ; 3 Cal.Code Reg. § 203 (1988).

The Division approves written apprenticeship standards

which are submitted to it, if those standards conform to

the Council’s minimum requirements. Cal. Labor Code

§ 3073 (West Supp.1989) ; 8 Cal.Code Reg. § 212 (1988).

Standards of apprenticeship may be submitted for ap-

proval by any “apprenticeship program sponsor,” which

includes joint apprenticeship committees, unilateral labor

or management apprenticeship committees, or individual

employers. Cal. Labor Code § 3075 (West Supp.1989).

For the craft of boilermaker, the Council in May 1974

approved a set of apprenticeship standards contained in

a document entitled “Boilermakers Standards of Ap-

prenticeship for Field Construction and Repair in Eight

Western States Area” (Standards). Subsequent to 1974,

the Standards were amended to implement an equal em-

ployment opportunity program approved by the Division.

An employer in California may gain the right and

responsibility to train Boilermaker apprentices in either

of two ways. Employers who are signatory to the collec-

tive bargaining agreement with the relevant union—the

International Brotherhood of Boilermakers, Iron Ship-

builders, Blacksmiths, Forgers and Helpers (Union)—

become bound to the Standards by virtue of a clause in

the collective bargaining agreement which so stipulates.

On the other hand, employers who are not parties to the

collective bargaining agreement (such as non-union con-

tractors or contractors signatory to some other collective

bargaining agreement) must apply to a local joint ap-

prenticeship committee for approval to train on public

workers projects in accordance with the Standards. Cal.

Labor Code § 1777.5 (West Supp.1989) ; 8 Cal.Code Reg.

§$ 229 (1988). Contractors approved to train by the joint

apprenticeship committee are sent a certificate of ap-

proval.

Hydrostorage, a Tennessee corporation, is not a signa-

tory to the Union’s collective bargaining agreement. Hy-

drostorage is a contractor engaged in the construction of

water storage facilities. Much of Hydrostorage’s work

consists of public works projects. In the fall of 1986,

Hydrostorage was awarded a public works contract to

construct a water storage tank for the Lathrop County

Water District in Lathrop, California (Lathrop project).

The State of California imposes certain conditions re-

lating to apprentices upon contractors and subcontractors

who perform contracts awarded by the state or its politi-

cal subdivisions. See Cal. Labor Code § 1777.5 (West

Supp.1989).1 Under section 1777.5 of the California

1 Section 1777.5 of the Labor Code provides in part:

Every ... apprentice [employed on a public works project]

shall be paid the standard wage paid to apprentices under the

regulations of the craft or trade at which he is employed, and

shall be employed only at the work of the craft or trade to

which he is registered.

Only apprentices . . . who are in trainirg under apprentice-

ship standards and written apprentice agreements . . . are eligi-

ble to be employed on public works. The employment and training

of each apprentice shall be in accordance with the provisions of

the apprenticeship standards and apprentice agreements under

which he is training.

When the contractor to whom the contract is awarded by the

state or any political subdivision, or any subcontractor under

him, in performing any of the work under the contract or sub-

contract, employs workmen in any apprenticeable craft or

Labor Code, contractors, with certain exceptions not

relevant to this case, must (1) “apply to the joint ap-

prenticeship committee administering the apprenticeship

trade, the contractor and subcontractor shall apply to the joint

apprenticeship committee administering the apprenticeship

standards of the craft or trade in the area of the site of the

public work for a certificate approving the contractor or sub-

contractor under the apprenticeship standards for the employ-

ment and training of apprentices in the area or industry af-

fected; provided, however, that the approval as established by

the joint apprenticeship committee or committees shall be sub-

ject to the approval of the Administrator of Apprenticeship.

The joint apprenticeship committee or committees, subsequent

to approving the subject contractor or subcontractor, shall ar-

range for the dispatch of apprentices to the contractor or sub-

contractor in order to comply with this section. There shall

be an affirmative duty upon the joint apprenticeship committee

or committees administering the apprenticeship standards of

the craft or trade in the area of the site of the public work to

ensure equal employment and affirmative action in apprentice-

ship for women and minorities. Contractors or subcontractors

shall not be required to submit individual applications for ap-

proval to local joint apprenticeship committees provided they

are already covered by the local apprenticeship standards. The

ratio of apprentices to journeymen who shall be employed in

the craft or trade on the public work may be the ratio stipu-

lated in the apprenticeship standards under which the joint

apprenticeship committee operates, but in no case shall the

ratio be less than one apprentice for each five journeymen,

except as otherwise provided in this section.

The contractor or subcontractor, if he is covered by this sec-

tion, upon the issuance of the approval certificate, or if he has

been previously approved in such craft or trade, shall employ

the number of apprentices or the ratio of apprentices to jour-

neymen stipulated in the apprenticeship standards. Upon

proper showing by thé ¢-entractor that he employs apprentices

in such craft or trade us the state on all of his contracts on

an annual average of not less than one apprentice to each five

journeymen, the Division of Apprenticeship Standards may

grant a certificate exempting the contractor from the 1-to-5

ratio as set forth in this section. This section shall not apply

to contract of general contractors involving less than thirty

thousand dollars ($30,000) or 20 working days or to contracts

standards of the craft or trade in the area of the site of

the public work for a certificate approving the contractor

or subcontractor under the apprenticeship standards for

the employment and training of apprentices in the area

or industry affected”; (2) employ apprentices in a ratio

of no less than one apprentice for every five journeymen;

and (3) “contribute to the fund or funds in each craft or

trade in which [the contractor] employs journeymen or

apprentices on the public work in the same amount or

upon the same basis and in the same manner as the other

contractors do.” Jd. As for the contribution requirement,

if apprenticeship “trust fund administrators are unable

to accept [the] funds, contractors not signatory to the

trust agreement” must pay “a like amourit to the Cali-

fornia Apprenticeship Council.” Jd.

The Northern California Boilermakers Local Joint

Apprenticeship Committee (Committee) administers the

approved apprenticeship standards for the boilermaker

craft in the Lathrop area. The Committee is composed of

of specialty contractors not bidding for work through a gen-

eral or prime contractor, involving less than two thousand dol-

lars ($2,000) or fewer than five working days.

A contractor to whom the contract is awarded, or any sub-

contractor under him, who, in performing any of the work

under the contract, employs juourneymen or apprentices in any

apprenticeable craft or trade and who is not contributing to a

fund or funds to administer and conduct the apprenticeship

program in any such craft or trade in the area of the site of

the public work, to which fund or funds other contractors in

the area of the site of the public work are contributing, shall

contribute to the fund or funds in each craft or trade in which

he employs journeymen or apprentices on the public work in

the same amount or upon the same basis and in the same man-

ner as the other contractors do, but where the trust fund ad-

ministrators are unable to accept such funds, contractors not

signatory to the trust agreement shall pay a like amount to

the California Apprenticeship Council. The contractor or sub-

contractor may add the amount of such contributions in com-

puting his bid for the contract.

equal numbers of persons appointed by labor and manage-

ment. See Cal. Labor Code § 3075 (West Supp.1989).

For willful noncompliance with section 1777.5’s require-

ments, a contractor is subject to civil penalties and debar-

ment from bidding on public works contracts for one year.

Id. § 1777.7. The parties do not dispute that section

1777.5 applies to the Lathrop project, or that Hydrostor-

age neither applied to the Committee for a certificate of

approval nor employed any apprentices on the project.

On September 25, 1986, the Committee filed a complaint

regarding the Lathrop project with the Division. The

Division investigated the allegations and issued an ad-

ministrative complaint against Hydrostorage on January

26, 1987. The administrative complaint alleged that Hy-

drostorage had violated section 1777.5 by failing to (1)

apply for permission to employ and train apprentices,

(2) make timely contributions to the apprenticeship trust

fund, and (3) employ apprentices in the legally required

ratio. The complaint was scheduled to be heard before a

hearing officer on May 14, 1987.

On May 13, one day before the administrative hearing

was scheduled to take place, Hydrostorage filed an action

in federal court, seeking a declaration that section 1777.5

was preempted by ERISA and the NLRA. Hydrostorage

also sought a preliminary injunction against the admin-

istrative proceedings. At a hearing on May 13, 1987,

the district judge refused to issue a temporary restrain-

ing order (TRO) against the administrative hearing. The

administrative hearing took place as scheduled on the fol-

lowing day.

After various motions were filed in the federal action,

the district court entered an order of abstention on Sep-

tember 25, 1987, based upon the existence of pending

state judicial or administrative proceedings.

Two days later, on September 27, 1987, the administra-

tive determination was issued. The Director of the Divi-

sion found that Hydrostorage had willfully violated sec-

tion 1777.5 “by failing to apply to the [Committee] for

approval to train apprentices in the Lathrop Project

[and] by failing to employ the mandatory ratio of ap-

prentices to journeymen on the Lathrop project.” The

Director ordered Hydrostorage barred from bidding on

public works contracts for one year and assessed a civil

penalty. Id.

Although the administrative complaint had alleged that

Hydrostorage had violated section 1777.5 by “failling]

to make timely contributions to the training fund or the

California Apprenticeship Counsel,” the Division found

no willful violation of this charge. Instead, the Division

regarded Hydrostorage’s contributions to the Council, a

state agency, as sufficient to satisfy the statutory require-

ment.

Hydrostorage filed a timely administrative appeal of

the determination to the Council’s Appeal Board. See id.

$ 3082. The Council issued its decision on January 28,

1988, reversing the administrator’s determination that

Hydrostorage had willfully failed to train apprentices in

the required ratio, but affirmed the determination that

Hydrostorage had willfully failed to apply for approval to

train apprentices. ;

Hydrostorage then returned to federal district court.

On March 3, 1988, Hydrostorage filed an amended com-

plaint in its original action and again sought a TRO, this

time to prevent the Council’s decision from being en-

forced. Hydrostorage also filed a second federal action

alleging virtually identical claims and asserting subject

matter jurisdiction under both diversity and federal ques-

tion statutes. In the second action, Hydrostorage sought

an injunction as well as a writ of mandate pursuant to

California Code of Civil Procedure § 1094.5, which per-

mits review in state court of final administrative orders.

See Cal. Civil Proc.Code § 1094.5 (West Supp. 1989).

A hearing on the TRO application was held on March

8, 1988, before the district judge presiding over Hydro-

storage’s original action. The judge denied Hydrostor-

age’s request for a TRO, stayed the effect of the Council’s

administrative order, ordered Hydrostorage’s two actions

consolidated, and scheduled a hearing on Hydrostorage’s

motion for summary judgment for April 15.

After the hearing, on May 4, 1988, the district court,

in a published opinion and order, granted Hydrostorage’s

motion for summary judgment in the consolidated cases.

Hydrostorage, Inc. v. Northern California Boilermakers

Local Joint Apprenticeship Committee, 685 F.Supp. 718

(N.D.Cal.1988). The court’s ruling was based on two

independent grounds: the administrative order was pre-

empted both by ERISA and by the NLRA. /7d. at 720-25.

The court was careful not to rule on whether section

1777.5 was preempted by either ERISA or the NLRA.

See id. at 723 (“The Court has not been asked to strike

down §1777.5 nor does it do so by this order which

holds only that as applied in this case it is preempted

by ERISA.” (emphasis added); id. at 725 (“Because

application of the [administrative] determination and

order would in this case have th[e] effect [of requiring

Hydrostorage to become a party to a collective bargaining

agreement] it is barred by the NLRA....”). From

this summary judgment, the Committee, Division, and

Council filed separate timely appeals, which were consoli-

dated.

Boilermakers first argue that the district court lacked

subject matter jurisdiction. This issue presents a ques-

tion of law which we review de novo. Guadamuz v.

Bowen, 859 F.2d 762, 766 (9th Cir.1988).

The district court did not explain why it had subject

matter jurisdiction under 28 U.S.C. § 1331, but merely

cited footnote 14 of Shaw v. Delta Air Lines, Inc., 463

10a

U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983) (Shaw).

685 F.Supp. at 719. Shaw involved a challenge to two

New York statutes governing pregnancy benefits on the

grounds that they were preempted by ERISA. Shaw, 463

U.S. at 88, 103 S.Ct. at 2895. Plaintiffs were employers

who maintained ERISA employee benefit plans which

provided certain medical and disability benefits. Jd. at

92, 103 S.Ct. at 2897. In a footnote, the Court explained:

The Court’s decision today in Franchise Tax Board

v. Construction Laborers Vacation Trust [463 U.S.

1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) ], does not

call into question the lower courts’ jurisdiction to

decide these cases. Franchise Tax Board was an

action seeking a declaration that state laws were not

preempted by ERISA. Here, in contrast, companies

subject to ERISA regulation seek injunctions against

enforcement of state laws they claim are pre-empted

by ERISA, as well as declarations that those laws

are pre-empted.

It is beyond dispute that federal courts have juris-

diction over suits to enjoin state officials from inter-

fering with federal rights. See Ex parte Young, 209

U.S. 128, 160-62 [28 S.Ct. 441, 454-55, 52 L.Ed. 714]

(1908). A plaintiff who seeks injunctive relief from

state regulation, on the ground that such regulation

is preempted by a federal statute which, by virtue

of the Supremacy Clause of the Constitution, must

prevail, thus presents a federal question which the

federal courts have jurisdiction under 28 U.S.C.

§ 1331 to resolve. This Court, of course, frequently

has resolved pre-emption disputes in a similar juris-

dictional posture.

Id. at 96 n. 14, 103 S.Ct. at 2899 n. 14 (citations omit-

ted) (emphasis in original).

The Council attempts to distinguish Shaw by arguing

that unlike the plaintiffs there, Hydrostorage is not an

lla

“employer” within the meaning of ERISA. See 29 U.S.C.

§ 1002(5) (defining “employer” for ERISA purposes as

“any person acting directly as an employer, or indirectly

in the interest of an employer, in relation to an employee

benefit plan”). This argument suggests that footnote 14

distinguishes Franchise Tax Board v. Construction Labor-

ers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77

L.Ed.2d 420 (1983), as turning on the presence in Shaw

of “companies subject to ERISA regulation.” Shaw, 463

U.S. at 96 n. 14, 103 S.Ct. at 2899 n. 14. The Council

further argues that because Hydrostorage is not an ‘“em-

ployer” under ERISA, it cannot state a claim under 29

U.S.C. § 1132(a), which authorizes various persons to

bring civil actions for ERISA violations. 29 U.S.C.

§ 1132(a) (authorizing actions to enforce ERISA by

Secretary of Labor, and by participants, fiduciaries, or

beneficiaries of ERISA trusts); see also Fentron Indus-

tries, Inc. v. National Shopmen Pension Fund, 674 F.2d

1300, 13805 & n. 6 (9th Cir.1982) (employers may also

sue under 29 U.S.C. § 1182). Nor, according to the Coun-

cil, is Hydrostorage either a “participant” or a “bene-

ficiary” of an ERISA fund, as those terms are defined

by statute. 29 U.S.C. § 1002(2)(B)(7) & (8). Thus,

argues the Council, the district court lacked subject mat-

ter jurisdiction.

The Council misconceives the nature of ‘his action and

the meaning of the Shaw footnote. This is not an action

brought directly under 29 U.S.C. § 1132(a). It is an

action for injunctive and declaratory relief from state

regulation based on federal question jurisdiction, 28

U.S.C. § 1831. See New Orleans Public Service, Inc. v.

New Orleans, 782 F.2d 1236, 1240-41 (5th Cir.), (New

Orleans), amended, 798 F.2d 858 (1986), cert. denied,

481 U.S. 1023, 107 S.Ct. 1910, 95 L.Ed.2d 515 (1987).

As the Court in Shaw asserted, “[a] plaintiff who seeks

injunctive relief from state regulation, on the ground

that such regulation is preempted by a federal statute

which, by virtue of the Supremacy Clause of the Con-

12a

stitution, must prevail, . . . presents a federal question

which the federal courts have jurisdiction under 28

U.S.C. § 1831 to resolve.” 463 U.S. at 96 n. 14, 103 S.Ct.

at 2899 n. 14 (emphasis added); see also Lawrence

County v Lead-Deadwood School District No. 40-1, 469

U.S. 256, 259 n. 6, 105 S.Ct. 695, 697 n. 6, 83 L.Ed.2d

635 (1985). This rule has been applied in numerous

cases in this and other circuits. See, e.g., Martori Brothers

Distributors v. James-Massengale, 781 F.2d 1349, 1353

(9th Cir.) (Martori), amended, 791 F.2d 799, cert. de-

nied, 479 U.S. 949, 107 S.Ct. 435, 93 L.Ed.2d 385 (1986) ;

Southern Pacific Transportation Co. v. Public Utilities

Commission, 716 F.2d 1285, 1288 (9th Cir.1983), cert.

denied, 466 U.S. 936, 104 S.Ct. 1908, 80 L.Ed.2d 457

(1984); Colonial Penn Group, Inc. v. Colonial Deposit

Co., 834 F.2d 229, 236-87 (1st Cir.1987) ; New Orleans,

782 F.2d at 1240-41; Aluminum Co. of America v. Utili-

ties Commission of North Carolina, 713 F.2d 1024, 1028

(4th Cir.1983), cert. denied, 465 U.S. 1052, 104 S.Ct.

1326, 79 L.Ed.2d 722 (1984); Pacific Merchant Shipping

Association v. Aubry, 709 F.Supp. 1516, 1521-22 (C.D.

Cal.1989). Here, Hydrostorage is seeking, among other

remedies, injunctive relief from regulation, arguing that

the underlying state statutes are preempted under the

supremacy clause by ERISA. In a case such as this, the

supremacy clause and the federal statute provide subject

matter jurisdiction under 28 U.S.C. § 1831. We conclude

that the district court had jurisdiction under 28 U.S.C.

§ 1331.

III

The Council next argues that the district court should

have abstained from exercising jurisdiction under either

the Pullman or Younger abstention doctrines. The Coun-

cil argues that this court “has the authority to apply the

doctrine of abstention regardless of whether the issue

was raised before the District Court or even before this

Court.” We agree. See Bellotti v. Baird, 428 U.S. 132,

143-44 n. 10, 96 S.Ct. 2857, 2864-65 n. 10, 49 L.Ed.2d 844

13a

(1976) (abstention may be properly raised sua sponte) ;

Richardson v. Koshiba, 693 F.2d 911, 915 (9th Cir. 1982)

(though neither party briefed issue of Pullman absten-

tion, panel raised it at oral argument and disposed of

case on this ground). But we are not required to do so

since it does not implicate our subject matter jurisdiction.

See Ohio Bureau of Employment Services v. Hodory, 431

U.S. 471, 479-80, 97 S.Ct. 1898, 1903-04, 52 L.Ed.2d 513

(1977); Universal Amusement Co. v. Vance, 587 F.2d

159, 163 n. 6 (5th Cir.1978) (en banc) (“Appellant did

not raise the question of Younger abstention [on appeal],

and that issue, being nonjurisdictional, is thus not before

this court.”), aff'd, 445 U.S. 308, 100 S.Ct. 1156, 63

L.Ed.2d 413 (1980) (per curiam) ; Schachter v. Whalen,

581 F.2d 35, 36 n. 1 (2d Cir.1978) (“Younger absten-

tion goes to the exercise of equity jurisdiction, not to the

jurisdiction of the federal district court as such to hear

the case.’’).

Although the district court abstained under Younger

pending completion of the state administrative proceed-

ings, it heard and decided Hydrostorage’s motion for sum-

mary judgment after the Council’s decision was rendered.

None of the appellants argued in the district court for

abstention under Younger or Pullman after the Covncil

decided Hydrostorage’s administrative appeal. Under

these circumstances, when the district court did not con-

sider the issue, we decline to address abstention on ap-

peal. See Greater Los Angeles Council on Deafness, Inc.

v. Zolin, 812 F.2d 1108, 1115-16 n. 19 (9th Cir.1987)

(since party did not raise abstention issues in trial court,

appellate court need not consider them on appeal).

Boilermakers next argue that the district court erred

in concluding that ERISA preempts the administrative

order in this case. We review a summary judgment de

novo. Rutledge v. Arizona Board of Regents, 859 F.2d

14a

732, 734 (9th Cir.1988) ; General Motors Corp. v. Cali-

fornia State Board of Equalization, 815 F.2d 1305, 1309

(9th Cir.1987) (summary judgment based on ERISA-

preemption reviewed de novo), cert. denied, —— USS.

, 108 S.Ct. 1122, 99 L.Ed.2d 282 (1988}. Because

there are no contested issues of fact, we need decide only

whether the substantive law was applied correctly. Mar-

tori, 781 F.2d at 1351.

ERISA is a “comprehensive remedial statute ‘designed

to protect the interest of employees in pension and wel-

fare plans, and to protect employers from conflicting and

inconsistent state and local regulation of such plans.’ ”

Local Union 598, Plumbers & Pipefitters Industry Jour-

neymen & Apprentices Training Fund v. J.A. Jones Con-

struction Co., 846 F.2d 1218, 1217 (9th Cir.), (Jones),

aff'd, US. , 109 S.Ct. 210, 102 L.Ed.2d 202

(1988), quoting Scott v. Gulf Oil Corp., 754 F.2d 1499,

1501 (9th Cir.1985). The statute “sets forth reporting

and disclosure obligations for plans, imposes a fiduciary

standard of care for plan administrators, and establishes

schedules for the vesting and accrual of pension benefits.”

Massachusetts v. Morash, —— U.S. ——, 109 S.Ct. 1668,

1677-72, 104 L.Ed.2d 98 (1989) (Morash).

ERISA governs “employee benefit plans,” which are

statutorily defined as plans that are either an “employee

welfare benefit plan,” an “employee pension benefit plan,”

or both. 29 U.S.C. § 1002(3) ; Morash, 109 S.Ct. at 1672.

The statute defines “employee welfare benefit plan” as

follows:

any plan, fund, or program which was heretofore or

is hereafter established or maintained by an em-

ployer only by an employee organization, or by both,

to the extent that such plan, fund, or program was

established or is maintained for the purpose of pro-

viding for its participants or their beneficiaries,

through the purchase of insurance or atherwise, (A)

15a

medical, surgical, or hospital care or benefits, or

benefits in the event of sickness, accident, disability,

death or unemployment, or vacation benefits, appren-

ticeship or other training programs, or day care cen-

ters, scholarship funds, or prepaid legal services... .

29 U.S.C. § 1002(1) (emphasis added).

ERISA contains a very broad preemption clause. Sec-

tion 514(a) of ERISA, as codified at 29 U.S.C. § 1144(a),

provides that ERISA “shall supersede any and all State

laws insofar as they may now or hereafter relate to any

employee benefit plan described in section 1003(a) of

this title... .” 29 U.S.C. § 1144(a) (emphasis added).

“State laws” are defined as “all laws, decisions, rules,

regulations, or other State action having the effect of law,

of any State.” 29 U.S.C. §1144(c) (1). A “state” is

defined as ‘“‘a State, any political subdivisions thereof, or

any agency or instrumentality of either, which purports

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

tions of employee benefit plans covered by this subchap-

ter.” 29 U.S.C. § 1144(c) (2).

Several exceptions exist to ERISA’s broad preemption

clause. Only one such exception is relevant to this case,

however: ERISA’s so-called “savings clause.” Section

514(d) of ERISA, codified at 29 U.S.C. § 1144(d), pro-

vides that “[n]Jothing in this subchapter shall be con-

strued to alter, amend, modify, invalidate, impair, or

supersede any law of the United States... or any rule

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

§ 1144(d).

Applying these statutory provisions, the district court

held that the Council’s order was preempted by ERISA.

685 F.Supp. at 723. The district court first reasoned that

“the Apprenticeship Program under the Boilermakers col-

lective bargaining agreement” constituved an ERISA em-

ployee welfare benefit plan. Jd. at 721: Next, the court-

determined that administrative order against Hydrostor-

16a

age was preempted under section 514(a), 29 U.S.C.

§1144(a). Jd. Finally, the court held that the adminis-

trative order was not saved by section 514(d), ERISA’s

Savings clause. Jd. at 723.

On appeal, Boilermakers have challenged each of these

steps in the district court’s analysis. We address them in

turn.

We first consider whether this case involves an “em-

ployee benefit plan,” a necessary predicate for the appli-

eability of ERISA. The parties do not contend that any

“employee pension benefit plan” is involved here. Instead,

they properly focus on whether there is an “employee wel-

fare benefit plan.” To answer this question, we must con-

sider whether this case involves a “plan, fund, or program

. established or maintained by an employer or by an

employee organization, or by both, . . . for the purpose of

providing for its participants . . . apprenticeship or other

training programs.” 29 U.S.C. §1002(1) (emphasis

added).

ERISA does not define the terms “plan,” “fund,” “pro-

gram,” or “apprenticeship training program.” See Mor-

ash, 109 S.Ct. at 1672. Regulations issued by the Secre-

tary of Labor under authority delegated by statute sim-

ilarly fail to define these terms. See 29 C.F.R. § 2510.3-1

(1988); 29 U.S.C. § 1135. Moreover, of the very few

reported decisions involving ERISA and apprenticeship

funds or programs, none defines or analyzes the term “ap-

prenticeship training program.” In the absence of such

guidance, we “must give effect to [the statute’s] plain

language unless there is good reason to believe Congress

intended the language to have some more restrictive

meaning.” Shaw, 463 U.S. at 97, 103 S.Ct. at 2900; see

also id. at 97 n. 16, 103 S.Ct. at 2900 n. 16 (quoting

Black’s Law Dictionery definitions in determining the

meaning of phrase “relates to” in ERISA’s preemption

clause).

17a

The district court applied the plain meaning of the stat-

ute. In explaining why this case involved an employee

welfare benefit plan, the district court wrote:

There can be no question that the Apprenticeship

Program under the Boilermakers collective bargain-

ing agreement falls within the literal scope of [29

U.S.C. § 102(1)’s] definition. It comprises a plan,

fund, and program maintained by employers and the

bargaining representative of their employees to pro-

vide its participants with apprenticeship training.

That the Apprenticeship Fund itself may also be

governed to an extent by other federal laws, as [the

Division] argues, in no way takes the Apprenticeship

Program out of the statutory definition.

685 F.Supp. at 721 (footnote omitted). It is unclear to

us precisely what the district court meant by the “Ap-

prenticeship Program.” This term conceivably could en-

compass the apprenticeship trust fund, the Standards, and

even the Committee.

A “fund” has been defined as “[a]n asset or group of

assets set aside for a specific purpose,” or “[a] sum of

money or other liquid assets set apart for a specific pur-

pose, or available for the payment of debts or claims.”

Black’s Law Dictionary 606 (5th ed. 1979). A “plan”

has been described as “a method of design or action, pro-

cedure, or arrangement for accomplishment of a particu-

lar act or object. [A] [mlJethod of putting into effect an

intention or proposal.” Jd. at 1036 (citation omitted).

Although Black’s Law Dictionary does not supply a defi-

nition of “program,” another prominent dictionary de-

fines a program as a “plan of procedure,” “schedule or

system under which action may be taken toward a desired

goal,’ or “proposed project or scheme.” Webster’s Third

New International Dictionary 1812 (1971).

We recently held that an apprenticeship training fund

is an employee welfare benefit plan under ERISA. Jones,

846 F.2d at 1217 (“Since the [local apprenticeship fund]

18a

is established to provide ‘apprenticeship or other training

programs,’ it is an ‘employee welfare benefit plan’ within

the meaning of ERISA.’’). The parties agree that the

Boilermakers’ apprenticeship trust fund (Fund) qualifies

as an ERISA employee benefit plan. -

A more difficult question is whether the Standards con-

stitute an “employee welfare benefit plan,” i.e., a “plan”

or “program” which was “established or maintained by

an employer or by an employee organization, or by both,

.. . for the purpose of providing for its participants .. .

apprenticeship or other training programs.” 29 U.S.C.

§$ 1002(1). We conclude that the Standards satisfy this

definition. The Standards consist of a detailed, 16-page

document which specifies the duties and procedure of the

Committee, the minimum qualifications of apprentices, the

maximum ratio of apprentices to journeymen on job loca-

tions, the terms and conditions of apprenticeships, and the

hours and wages of apprentices. The Standards also pro-

vide for supplemental instruction as well as period exam-

ination of apprentices. The Standards clearly embody “a

method of design or action, procedure, or arrangement for

accomplishment of a particular . . . object,” in this case

the training of apprentices. Black’s Law Dictionary 1036

(5th ed. 1979). In addition, there is no question that the

Standards were established “for the purpose of providing

for its participants . . . apprenticeship or other training

programs.” 29 U.S.C. § 1002(1}. The Standards’s stated

purpose is “the training of Boilermakers, skilled in all

phases of the erection and repair industry, who will be a

credit to the industry.” Finally, the Standards were es-

tablished by the Committee, an entity created by the col-

lective bargaining agreement and composed of equal num-

bers of representatives of labor and management. As

such, the Committee qualifies as “an employer or. .

employee organization, or... both.” Jd.

The Standards are an integral part of a larger “pro-

gram” established for the purpose of providing “appren-

19a

ticeship .. . training.” Jd. Thus, both the Fund and the

Standards fall within the definition of an “employee wel-

fare benefit plan” under ERISA.

We need not decide whether the Committee itself, whose

functions include the formulation and administration of

the Standards, is also part of the employee welfare bene-

fit plan. The Division strenuously argues that while the

Fund is an ERISA plan, the Committee is not. The res-

olution of this issue has no bearing on our decision. Since

the Standards and Fund constitute an ERISA plan, this

case clearly falls within the coverage of ERISA.

The Division argues, however, that we should eschew

a literal interpretation of ERISA’s definition and defer

instead to Congress’s broader purpose behind the statute.

While the Supreme Court has recognized that various

provisions in ERISA are “ ‘perhaps . . . not a model of

legislative drafting,’” Puot Life Insurance Co. v. De-

deaux, 481 U.S. 41, 46, 107 S.Ct. 1549, 1552, 95 L.Ed2d

39 (1987) (Pilot Life) (referring to preemption and in-

surance savings clauses), quoting Metropolitan Life In-

surance Co. v. Massachusetts, 471 U.S. 724, 739, 105

S.Ct. 2380, 2388, 85 L.Ed.2d 728 (1985) (Metropolitan

Life), and that in particular the term “employee benefit

plan” is “defined only tautologically in the statute,”

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 8, 107

S.Ct. 2211, 2216, 96 L.Ed.2d 1 (1987) (Coyne), it also

frequently has looked to the plain meaning of statutory

language. See id. at 7-8, 107 S.Ct. at 2215-2216; Metro-

politan Life, 471 U.S. at 740, 105 S.Ct. at 2389; Shaw,

463 U.S. at 97 & n. 16, 103 S.Ct. at 2900 & n. 16. In

addition, the Division acknowledges that ERISA’s leg-

islative history fails to address what “plan, fund or pro-

gram” means in the context of apprenticeship training

programs. Perhaps the reason for this is that Congress,

in enacting ERISA, focused on the regulation of employee

pension benefit plans and spent little time considering

employee welfare benefit plans. See Brummond, Federal

20a

Preemption of State Insurance Regulation Under ERISA,

62 Iowa L.Rev. 57, 113-22 (1976).

The Division’s argument is essentially one for statu-

tory revision and is properly directed to the Legislative

Branch. See Shaw, 468 U.S. at 106, 103 S.Ct. at 2904

(“To the extent that our construction of ERISA causes

any problems in the administration of stave fair employ-

ment laws, those problems are the result of congressional

choice and should be addressed by congressional action.’’).

The statute is clear on its face. Our commission is to

follow its precepts. We are not allowed to amend the

statute though the Division’s suggested interpretation.

We conclude that the Standards and Fund are an ERISA

plan.

We must next consider whether the Council’s order falls

under ERISA’s preemption clause, which preempts “any

and all State laws insofar as they may now or hereafter

relate to any employee benefit plan.” 29 U.S.C. § 1144(a).

In recent years, the Supreme Court has examined the

scope of ERISA preemption on numerous occasions. See,

e.g., Morash, 109 S.Ct. 1668; Mackey v. Lanier Collections

Agency & Service, 486 U.S. 825, 108 S.Ct. 2182, 100

L.Ed.2d 836 (1988) (Mackey); Coyne, 482 U.S. 1, 107

S.Ct. 2211; Pilot Life, 481 U.S. 41, 107 S.Ct. 1549;

Metropolitan Life Insurance Co. v. Taylor, 481 U.S.

58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987); Metro-

politan Life, 471 U.S. 724; 105 S.Ct. 2380; Shaw,

463 U.S. 85, 103 S.Ct. 2890; Alessi v. Raybestos-Man-

hattan, Inc., 451 U.S. 504, 101 S.Ct. 1895, 68 L.Ed.2d

402 (1981) (Alessi). The Court has stated that “the ex-

press preemption provisions of ERISA are deliberately

expansive, and designed to ‘establish pension plan regula-

tion as exclusively a federal concern.’” Pilot Life, 481

U.S. at 45-46, 107 S.Ct. at 1551-52, quoting Alessi, 451

U.S. at 523, 101 S.Ct. at 1906.

There is no question that the Council’s administrative

order against Hydrostorage constitutes a “state law”

2la

within the meaning of ERISA. See 29 U.S.C. §$ 1144

rules, regulations, or other State action having the effect

of law, of any State”). The Council’s order has the effect

of law in California. Furthermore, the Council comes

within ERISA’s definition of a “state” because it is in-

cluded within “a State, and political subdivisions thereof,

or any agency or instrumentality of either, which pur-

ports to regulate, directly or indirectly, the terms and

conditions of employeee benefit plans covered by this

subchapter.” 29 U.S.C. § 1144(c) (2).

More difficult is the issue of whether the administrative

order “relates to” an ERISA employee benefit plan. We

have required that a state law both “relate to,” 29 U.S.C.

§ 1144(a), and “purport[] to regulate, directly or in-

directly,” 29 U.S.C. § 1144(¢c), an employee welfare ben-

efit plan in order for it to be preempted. Jones, 846 F.2d

at 1218; Martori, 781 F.2d at 1356. “‘A law “relates

to” an employee benefit plan, in the normal sense of the

phrase, if it has a connection with or reference to such

a plan.’” Shaw, 463 U.S. at 96-97, 103 S.Ct. at 2899-

900. A law purports to regulate a plan if it attempts

to reach in one way or another the terms and conditions

of employee benefit plans. Jones, 846 F.2d at 1218; Lane

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

Boilermakers argue that section 1777.5 does not “re-

late to’ or “purport to regulate’ an ERISA plan. The

district court reasoned that the Council’s order “relates

to” an ERISA plan because it “compel[s] Hydrostor-

age to participate in and contribute to the Boilermakers

Apprenticeship Program” and because section 1777.5,

upon which the order was based, “establishes the manner

in which contractors must participate in the Apprentice-

ship Program and fund its costs.” 685 F.Supp. at 721.

As for our additional requirement that the challenged

state law “purport[] to regulate, directly or indirectly”

an[{] ERISA plan, the district court concluded that “there

22a

can be no question but that § 1777.5 regulates appren-

ticeship program([s].” Jd. at 721 n. 6. Although we

disagree with some of the district court’s reasoning, we

agree with its conclusion that the administrative order

against Hydrostorage falls under ERISA’s preemption

clause.

First, the order clearly “relates to” the Standards,

which are part of an ERISA plan. Hydrostorage was

sanctioned for failing to apply to the Committee for

permission to train apprentices on the Lathrop project.

The very purpose of requiring Hydrostorage to apply was

so that Hydrostorage would become bound by the Stand-

ards, an ERISA plan. Hydrostorage would have been re-

quired to sign a DAS-7 form entitled “Agreement to.

Train Apprentices.” By signing a DAS-7 form, Hydro-

storage would agree “to train apprentices in the des-

ignated occupation in accordance with the apprenticeship

standards and apprenticeship agreement and to comply

with the provisions thereof.” The “apprenticeship stand-

ards” in this case are the Standards, an ERISA plan.

Thus, the order undoubtedly “relates to” an ERISA

plan in the sense that the order has a “connection with

or reference to” the Standards.

Second, we conclude that the administrative order pur-

ports to regulate, indirectly or directly,” an ERISA plan.

Again, the order’s purpose is to require Hydrostorage

and other contractors on public works projects to become

bound by the Standards, an ERISA plan. See Metropol-

itan Life, 471 U.S. at 739, 105 S.Ct. at 2388 (Massa-

chusetts law requiring ERISA plans to provide minimum

coverage for mental health care expenses “bears indirectly

but substantially” on plans since “it requires them to

purchase the mental-health benefits specified in the stat-

ute’). The order is designed to enforce the terms of an

ERISA plan. The same is true of the statute upon which

the order was based, California Labor Code § 1777.5.

Section 1777.5 is aimed at enforcing the terms of an

23a

ERISA plan, the Standards, and compelling nonsignatory

contractors to join or comply with such plans. The un-

derlying statute is therefore one which is specifically de-

signed to affect employee benefit plans. See Mackey, 108

S.Ct. at 2185 (“[WJe have virtually taken it for granted

that state laws which are specifically designed to affect

employee benefit plans are preempted under § 514(a).”)

(citations and internal quotations omitted). We there-

fore conclude that the administrative order falls within

ERISA’s preemption clause.

The Committee argues, however, that section 1777.5

does not “purport to regulate” because it “applies only

when the state is purchasing services in the market-

place, and simply expresses a decision as to the terms

upon which the state chooses to do business.” In essence,

the Committee argues that California is acting as a

“marketplace participant,” not a regulator. The Com-

mittee relies on a series of dormant commerce clause

cases which discuss the market participant theory.

There are two reasons why we reject the Committee’s

“market participant” argument. First, as the Supreme

Court observed in rejecting a similar argument in a case

involving NLRA preemption, Wisconsin Department of

Industry, Labor and Human Relations v. Gould, 475

U.S. 282, 106 S.Ct. 1057, 89 L.Ed.2d 223 (1986), “the

‘market participant’ doctrine reflects the particular con-

cerns underlying the Commerce Clause, not any general

notion regarding the necessary extent of state power in

areas where Congress has acted.” Jd. at 289, 106 S.Ct.

at 1062; see also id at 290, 106 S.Ct. at 1063 (“What

the Commerce Clause would permit States to do in the

absence of the NLRA is... an entirely different ques-

tion from what States may do with the Act in place.’’).

Second, California in this case is not acting merely as a

“market participant” rather than a regulator. The state’s

involvement does not end with the awarding of the con-

tract. Section 1777.5 is aimed at regulating contractors

24a

who work on public contracts. The Division, part of a

state agency, monitors and enforces violations of section

1777.5. This amounts to regulation, not merely ‘market

participation.”

Finally, Boilermakers argue that section 1777.5 is

saved from preemption by section 514(d) of ERISA,

codified at 29 U.S.C. §1144(d), which provides that

“(njothing in this subchapter shall be construed to alter,

amend, modify, invalidate, impair, or supersede any law

of the United States ... or any rule or regulation issued

under any such law.” Boilermakers argue that the ad-

ministrative-erder is saved in light of the Fitzgerald Act,

29 U.S.C. § 50 et seq., which provides:

The Secretary of Labor is authorized and directed to

formulate and promote the furtherance of labor stand-

ards necessary to safeguard the welfare of appren-

tices, to extend the application of such standards by

encouraging the inclusion thereof in contracts of ap-

prenticeship, to bring together employers and labor

for the formulation of programs of apprenticeship, to

cooperate with State agencies engaged in the formula-

tion and promotion of standards of apprenticeship. ...

29 U.S.C. § 50. These apprenticeship standards are set

forth at 29 C.F.R. § 29.1-19.13 (1988). The regulations

provide “a detailed regulatory scheme defining apprentice-

ship programs and their requirements, and establish a

review, approval, and registration process for proposed

apprenticeship programs administered by State Appren-

ticeship Councils under the aegis of the United States De-

partment of Labor.” Siuslaw Concrete Construction Co. v.

Washington, Department of Transportation, 784 F.2d 952,

956 (9th Cir.1986).

Boilermakers argue that section 514(d), which saves

“any rule or regulation issued under any [law of the

United States],” saves section 1777.5 from preemption be-

25a

cause section 1777.5 promotes and encourages the spread

of approved apprenticeship programs established under

the auspices of the Fitzgerald Act and the regulations of

the Secretary of Labor.

The district judge addressed Boilermakers’ argument

at length, see 685 F.Supp. at 721-23, concluding that “[bly

no stretch of the imagination could § 1777.5 be considered

a State law the preemption of which would impair federal

law.” Id. at 722. The court reasoned:

The Fitzgerald Act merely directs the Secretary of

Labor “to formulate and promote the furtherance of

labor standards .. . to safeguard the welfare of ap-

prentices” and related objectives. 29 U.S.C. § 50.

The implementing regulations state that their pur-

pose is “to set forth labor standards to safeguard the

welfare of apprentices, and to extend the application

of such standards by prescribing policies and pro-

cedures concerning the registration, for certain Fed-

eral purposes, [of] acceptable apprenticeship pro-

grams.” 29 C.F.R. § 29.1(b). Thus the regulations

relate only to eligibility for federal registration.

Neither they nor the Act itself contemplate enforce-

ment mechanisms; Section 29.11 merely provides for

the voluntary adjustment of complaints before either

federal or state agencies. Assuming § 1777.5 was

adopted in furtherance of the objectives of the Fitz-

gerald Act, it clearly is not an enforcement mechan-

ism of federal law and to the extent orders under this

section are preempted by ERISA, federal law is not

impaired.

Id. We adopt the district court’s reasoning.

As they did in the district court, Boilermakers seek to

invoke the Supreme Court’s decision in Shaw to support

their claim that section 514(d) saves the administrative

order and California Labor Code § 1777.5 from preemp-

tion. In Shaw, appellants argued that section 514(d)

26a

saved a New York human rights law which forbid dis-

crimination in employee benefit plans on the basis of preg-

nancy. 463 U.S. at 100-06, 103 S.Ct. at 2901-04. Appel-

lants in Shaw argued that preemption of the New York

statute would “impair” or “modify” Title VII of the fed-

eral Civil Rights Act of 1964. Jd. at 100-01, 103 S.Ct.

2901-02. The Court accepted this argument, but only

insofar as the New York law prohibited employment prac-

tices that were also unlawful under Title VII. See also id.

at 108-04, 103 S.Ct. at 2903-04 (New York statute not

saved to the extent that it “prohibit[s] conduct that fed-

eral law permit[s]” since Title VIJ “in no way depends

on such extensions for its enforcement”). The Court’s

holding in Shaw that parts of the state law were saved

rested on (1) the presence in Title VII of a clause explic-

itly preserving nonconflicting state laws, and (2) Title

VII’s requirement that a claimant, before filing a charge

with the federal Equal Employment Opportunity Com-

mission (EEOC), first pursue available state administra-

tive remedies. Jd. at 101-02, 103 S.Ct. at 2902-03. The

Court concluded:

Given the importance of state fair empioyment laws

to the federal enforcement scheme, preemption of the

Human Rights Law would impair Title VII to the ex-

tent that the Human Rights Law provides a means of

enforcing Title VII’s commands. Before the enact-

ment of ERISA, an employee claiming discrimination

in connection with a benefit plan would have had his

complaint referred to the New York State Division of

Human Rights. If ERISA were interpreted to pre-

empt the Human Right Law entirely with respect to

covered benefit plans, the State no longer could pro-

hibit the challenged employment practice and the state

agency no longer would be authorized to grant relief.

The EEOC thus would be unable to refer the claim to

the state agency. This would frustrate the goal of

encouraging joint state/federal enforcement of Title

VII; an employee’s only remedies for discrimination

ean ell

27a

prohibited by Title VII in ERISA plans would be fed-

eral ones. Such a disruption of the enforcement

scheme contemplated by Title VII would, in the words

of § 514(d), “modify“ and “impair” federal law.

Id. at 102, 103 S.Ct. 2902 (emphasis added) (footnote

omitted). The Court’s conclusion clearly rested upon the

fact that the New York law functioned as an enforcement

mechanism for Title VII. That is simply not the case here.

The Fitzgerald Act does not articulate a “goal of encour-

aging joint state/federal enforcement.” Nor does the

Fitzgerald Act contain any clause which preserves state

laws. See also 685 F.Supp. at 722 (rejecting attempt to

rely on Shaw).

We reject Boilermakers’ argument that the Fitzgerald

Act embodies a project in “cooperative federalism” which

will be “impaired” or “modified” within the meaning of

section 514(d) if the administrative order against Hydro-

storage were preempted by ERISA. This argument relies

on an overbroad reading of Shaw and on dicta in an out-

of-circuit decision. See Rebaldo v. Cuomo, 749 F.2d 133,

139-40 (2d Cir.1984) (Van Graafeiland, Jr., “writing

only for himself and not his colleagues” on issue of whether

state law which panel concluded was not preempted under

section 514(a) would also be saved under section 514(d),

if it had been preempted). cert. denied, 472 U.S. 1008, 105

S. Ct. 2702, 86 L.Ed.2d 718 (1985). As the Court in-

structed in Shaw, ERISA’s structure and legislative his-

tory “caution against applying [section 514(d)] too ex-

pansively.” 463 U.S. at 104, 103 S.Ct. at 2903. ‘While

§ 514(d) may operate to exempt provisions of state law,

upon which federal laws depend for their enforcement, the

combination of Congress’ enactment of an all-inclusive pre-

emption provision and its enumeration of narrow, specific

exceptions to that provision makes us reluctant to expand

§$ 514(d) into a more general saving clause.”” Jd. We con-

clude that the Council’s order is not saved from preemption

by section 514(d) of ERISA. We also hold that as applied

28a

in the Council’s order, section 1777.5 is not saved from

ERISA preemption. However, like the district court, we

do not address whether section 1777.5 in its entirety is

preempted by ERISA. 685 F.Supp. at 723.

Because we affirm the district court’s judgment on the

grounds that the Council’s order is preempted by ERISA,

we need not reach the issue of NLRA preemption.

AFFIRMED.

29a

APPENDIX B

UNITED STATES DISTRICT COURT

N.D. CALIFORNIA

No. C-87-2401-WWS, C-88-0804-W WS

HYDROSTORAGE, INC., A Tennessee corporation,

Plaintiff,

NORTHERN CALIFORNIA BOILERMAKERS LOCAL JOINT

APPRENTICESHIP COMMITTEE, an unincorporated

association ; et al.,

Defendants.

ILYDROSTORAGE, INC.,

Petitioner,

DIVISION OF APPRENTICESHIP STANDARDS; GAIL JESSWEIN

in his capacity as Chief Of The Division of Apprentice

ship Standards; CALIFORNIA APPRENTICESHIP COUNCIL;

and BOILERMAKERS LOCAL JOINT APPRENTICESHIP COM-

MITTEE, Respondents.

May 4, 1988

Karen E. Ford, Littler, Mendelson, Fastiff & Tichy,

San Francisco, Cal., for Hydrostorage, Inc.

John Rea, Dept. of Industrial Relations, San Francisco,

Cal., for State defendants,

30a

Julian O. Standen, Deputy Atty. Gen., San Francisco,

Cal., for Susan Hamilton & R.T. Rinaldi.

Dalvin J. Abe, Deputy Atty. Gen., San Francisco, Cal.,

for California Apprenticeship Council.

David A. Rosenfeld, Van Bourg, Weinberg, Roger &

Rosenfeld, San Francisco, Cal., for Boilermaker Joint Ap-

prenticeship Committee.

MEMORANDUM OF OPINION AND ORDER

SCHWARZER, District Judge.

In these consolidated actions, Hydrostorage, Inc., seeks

injunctive and other relief against the California Division

of Apprenticeship Standards (“DAS”), the Northern Cali-

fornia Boilermakers Local Joint Apprenticeship Commit-

tee (“JAC”), and other defendants to prevent the enforce-

ment against Hydrostorage of an order of DAS issued

pursuant to California Labor Code § 1777.5.

Hydrostorage initially sought to enjoin the DAS hearing

on an administrative complaint filed against it by JAC

for noncompliance with § 1777.5. The Court declined re-

lief without prejudice, pending the issuance by DAS of a

final order. A propoced order was issued on September 25,

1987, by a hearing officer. With minor modifications not

relevant to the disposition of this matter,’ the DAS Appeals

Board affirmed the order on January 28 1988, and the

California Apprenticeship Council (“CAC”) concurred.

The order became effective March 1, 1988. Hydrostorage

has exhausted its administrative remedies.

In the determination and order issued by DAS upon the

complaint, it found that Hydrostorage was required to

apply to the JAC for approval to train apprentices and to

pay training fund contributions to the appropriate fund

or CAC. The order imposes a civil penalty on Hydrostor-

1In substance, the Appeals Board eliminated one of the findings

of willfulness,

3la

age and denies it the right to seek any public works con-

tract in California for a period of one year.

On March 3, 1988, Hydrostorage filed a new complaint

for injunctive and other relief against enforcement of the

order. It also filed an amended complaint in its original

action seeking similar relief. Both plaintiff and defendants

have moved for summary judgment. Counsel have had an

opportunity to argue and comment on the Court’s proposed

ruling and their voluminous submissions have been con-

sidered. No material facts are in dispute and the matter

is ripe for decision.

Jurisdiction -

Hydrostorage seeks relief against enforcement of an

order by DAS under § 1777.5 alleging preemption by the

Employee Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. § 1001, et seg. and the National

Labor Relations Act (“NLRA”), 29 U.S.C. § 151. The

complaint presents a federal question of which this Court

has jurisdiction under 28 U.S.C. § 1331. Shaw v. Delta

Air Lines, Inc., 463 U.S. 85, 96 n. 14, 103 S8.Ct. 2890, 2899

n. 14, 77 L.Ed.2d 490 (1983).

The Statutory Scheme and the Material Facts

Labor Code § 1777.5 imposes certain requirements on

every contractor performing contracts awarded by the

State of California or its political subdivisions.? In sub-

stance, it requires that the contractor:

2 Section 1777.5 states in relevant part:

When the contractor to whom the contract is awarded by the

state or any political subdivision, or any subcontractor under

him, in performing any of the work under the contract or sub-

contract, employs workmen in any apprenticeable craft or

trade, the contractor and subcontractor shall apply to the joiat

apprenticeship committee administering the apprenticeship

standards of the craft or trade in the area of the site of the pub-

lic work for a certificate approving the contractor or subcon-

tractor under the apprenticeship standards for the employment

i ae

32a

1. Obtain a certificate from a joint apprentice-

ship committee approving the contractor under the

and training of apprentices in the area or industry affected;

provided, however, that the approval as established by the joint

apprenticeship committee or committees shall be subject to the

approval of the Administrator of Apprenticeship. The joint

apprenticeship commitee or committees, subsequent to approv-

ing the subject contractor or subcontractor, shall arrange for

the dispatch of apprentices to the contractor or subcontractor in

order to comply with this section. There shall be an affirma-

tive duty upon the joint apprenticeship committee or commit-

tees administering the apprenticeship standards of the craft or

trade in the areas of the site of the public work to ensure

equal employment and affirmative action in apprenticeship for

women and minorities. Contractors or subcontractors shall not

be required to submit individual applications for approval to

local joint apprenticeship committees provided they are already

covered by the local apprenticeship standards. The ration of

apprentices to journeymen who shall be employed in the craft

or trade on the public work may be the ratio stipulated in the

apprenticeship standards under which the joint apprenticeship

committee operates, but in no case shall the ratio be less than

one apprentice for each five journeymen, except as otherwise

provided in this section.

The contractor or subcontractor, if he is covered by this sec-

tion, upon the issuance of the approval certificate, or if he has

been previously approved in such craft or trade, shall employ

the number of apprentices to journeymen stipulated in the ap-

prenticeship standards. Upon proper showing by the contrac-

tor that he employs apprentices in such craft or trade in the

state on all of his contracts on an annual average of not less

than one apprentice to each five journeymen, the Division of

Apprenticeship Standards may grant a certificate exempting

the contractor from the 1-to-5 ratio as set forth in this section.

* * * *

A contractor to whom the contract is awarded, or any sub-

contractor under him, who, in performing any of the work

under the contract, employs journeymen or apprentices in any

apprenticeable craft or trade and who is not contributing to a

fund or funds to administer and conduct the apprenticeship

program in any such craft or trade in the area of the site of

38a

apprenticeship standards for employment and train-

ing of apprentices in the applicable craft;

2. Employ not less than one apprentice for each

five journeymen employed in that craft on the public

work; and

3. Contribute to an appropriate fund to admin-

ister and conduct the apprenticeship program in that

craft.°

Under § 1777.7, willful noncompliance with § 1777.5

renders a contractor ineligible to bid on any public works

project for one year and subjects him to a civil penalty.

Hydrostorage is a contractor engaged in the construc-

tion of water storage facilities. A large part of its work

consists of public works contracts. The project giving

rise to the instant controversy was a contract to con-

struct water storage tanks for the Lathrop Water Dis-

trict. The work performed fell within the jurisdiction

of the International Brotherhood of Boilermakers, Iron

the public work, to which fund or funds other contractors in

the area of the site of the public work are contributing, shall

contribute to the fund or funds in each craft or trade in which

he employs journeymen or apprentices on the public work in

the same amount or upon the same basis and in the same man-

ner as the other contractors do, but where the trust fund ad-

ministrators are unable to accept such funds, contractors not

signatory to the trust agreement shall apply a like amount to the

California Apprenticeship Council. The contractor or subcon-

tractor may add the arnount of such contributions in compvt-

ing his bid for the contract. The Division of Labor Standards

Enforcement is authorized to enforce the payment of such

contributions to the fund or funds as set forth in Section 227.

The body awarding the contract shall cause to be inserted in

the contract stipulations to effectuate this section. Such stipu-

lations shall fix the responsibility of compliance with this sec-

tion for all apprenticeable occupations with the prime con-

tractor.

3 Section 1777.5 provides for certain exemptions and alternatives

not relevant here.

84a

Shipbuilders, Blacksmiths, Forgers and Helpers (“Boile

makers”), a labor organization within the meaning |

the NLRA, 29 U.S.C. § 152(5). It is not disputed th

$ 1777.5 applies to the project, that Hydrostorage did n

seek a certificate of approval, and.that it employed |

apprentices on the project.

During the relevant period, a collective bargainir

agreement was in effect »etween the Boilermakers ar

numerous employers, but not Hydrostorage. The agre

ment provided for the establishment and operation of ¢

Appenticeship Committee and an Apprenticeship Fur

and specified contributions to be paid by each employ

to the Fund.* On September 25, 1986, the JAC, create

pursuant to the collective bargaining agreement, filed tl

complaint with DAS leading to these proceedings, char

ing Hydrostorage with failure to apply for a certifica

of approval, failure to employ apprentices, and failu:

to contribute to the appropriate fund.

ERISA Preemption

ERISA subjects to federal regulation “employee we

fare benefit plans.” It “is a comprehensive statute d

signed to promote the interests of employees and the

beneficiaries in employee benefit plans.” Shaw, 463 U.

at 90, 103 S.Ct. at 2896. The term “employee welfa:

benefit plan” is defined to “mean any plan, fund, or pr

gram ... maintained by an employer or by an employ

organization, or by both, to the extent that... [it] w:

established or is maintained for the purpose of providir

4 Detailed provisions for the operation of the apprenticeship p)

gram are contained in a document entitled Boilermaker Standar

of Apprenticeship for Field Construction and Repair of Eig

Western States Area (as revised March 27, 1974). Artile XX

provides that “any expenses incurred for the administration of tl

training program .. . shall be borne by the fund that has be

established,” that being the fund provided for in the collective bs

gaining agreement.

rel-

de-

eir

Ss.

are

ro-

yee

vas

ing

pro-

ards

ight

XVI

this

een

Bar-

35a

for its participants . . . apprenticeship or other training

programs.” 29 U.S.C. § 1002(1).

There can be no question that the Apprenticeship Pro-

gram under the Boilermakers collective bargaining agree-

ment falls within the literal scope of this definition. It

comprises a plan, fund, and program maintained by em-

ployers and the bargaining representative of their em-

ployees to provide its participants with apprenticeship

training.© That the Apprenticeship Fund itself may also

be governed to an extent by other federal laws, as DAS

argues, in no way takes the Apprenticeship Program out

of the statutory definition.

Section 514(a) of ERISA states that the act “shall

supersede any and all State laws insofar as they may

now or hereafter relate to any employee benefit plan.”

29 U.S.C. § 1144(a). “State law” is defined to consist of

“all laws, decisions, rules, regulations or other State ac-

tion having the effect of law.” 29 U.S.C. § 1144(¢) (1).

“State” is defined as including “a State ... or any

[state] agency . . . which purports to regulate, directly

or indirectly, the terms and conditions of e:nployee bene-

fit plans.” 29 U.S.C. § 1144(c) (2). Under these provi-

sions, preemption depends on “whether the [state law]

‘relate[s] to’ employee benefit plans within the meaning

of § 514(a).” Shaw, 463 U.S. at 96, 103 S.Ct. at 2899."

5 Counsel for the JAC conceded as much at the hearing (Tr. 8,

lines 11-17).

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

1349, 1356 (9th Cir.1986), the court held that for a state law to be

preempted it must “both ‘relate[]’ to an ERISA plan and ‘pur-

port[? to regulate, directly or indirectly’ ERISA plans.” The Su-

preme Court did not articulate such a two-pronged test in Shaw or

elsewhere. It is apparently derived from two decisions of the Sec-

cond Circuit. Stone & Webster Engineering Corp. v. Ilsley, 690

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

& Webster Engineering Corp., 463 U.S. 1229, 1038 S.Ct. 3564 77

36a

“Congress used the words ‘relate to’ in § 514(a) in

their broad sense.” Shaw, 463 U.S. at 950, 103 S.Ct. at

2900. “A law ‘relates to’ an employee benefit plan, in

the normal sense of the phrase, if it has a connection

with or reference to such a plan.” Id. at 97, 103 S.Ct. at

2900. The DAS’s determination and order issued under

Section 1777.5 compel Hydrostorage to participate in

and contribute to the Boilermakers Apprenticeship Pro-

gram, an ERISA benefit plan. Thus they relate to an

ERISA plan. See generally Hewlett-Packard Co. v.

Barnes, 425 F. Supp. 1294 (N.D.Cal. 1977), aff'd, 571

F.2d 502 (9th Cir.), cert. denied, 489 U.S. 831, 99 S.Ct.

108, 58 L.Ed.2d 125 (1978); Standard Oil Co. of Cali-

fornia v. Agsalud, 633 F.2d 760, 763 (9th Cir. 1980).

Moreover, the statute establishes the manner in which

contractors must participate in the Apprenticeship Pro-

gram and fund its costs. Thus, the statute regulates mat-

ters that are regulated by ERISA. See, e.g., 29 U.S.C.

$§ 1082, 1102-1104; Martori Bros. Distributors, 781 F.2d

at 1357-58; Scott v. Gulf Oil Corp., 754 F.2d 1499, 1505

(9th Cir. 1985). °

L.Ed.2d 1405 (1983); Rebaldo v. Cuomo, 149 F.2d 133, 137 n. 1

(2d Cir.1984). See also Lane v. Goren, 743 F.2d 1337, 1839 (9th

Cir.1984).

A close reading of § 514 casts doubt on this interpretation. Sec-

tion 514 preempts “any and all State laws insofar as they may...

relate to any employee benefit plan.” Section 514(c)(1) defines

“state law” as “includ[ing] all laws, decisions, rules, regulations, or

other State action having the effect of law.” The reference to regu-

lation of plans appears only in § 514(c) (2) defining “state” to in-

clude “a State, any political subdivision there, or any agancy or

instrumentality of either which purports to regulate... the terms

and conditions of employee benefit plans.” Had Congress intended

to limit preemption to those state laws that “regulate,” it would

presumably have included in subsection (c)(1) the words found in

subsection (c) (2).

In any event, there can be no question but that § 1777.5 regulates

apprenticeship program.

PD Olan 5 Wow

37a

ERISA therefore preempts the DAS determination and

order issued under § 1777.5 unless it is saved by § 514(d)

which states

Nothing in this subchapter shall be construed to

alter, amend, modify, invalidate, impair or supersede

any law of the United States ... or any rule or

regulation issued under any such law.

Defendants argue that § 1777.5 was adopted pursuant to

the Fitzgerald Act, 29 U.S.C. § 50, et seq., and the regu-

lations issued by the Secretary of Labor under the Act,

29 C.F.R. Part 29. Because federal law encourages the

states to promote and regulate apprenticeship programs,

they argue, “state law becomes a way to-put into effect

federal law. Thus, to interfere with that state law would

necessarily ‘alter. .., modify ..., impair... any law

of the United States.’”» JAC Memo at 6. Their argu-

ment rests on Shaw in which the Supreme Court applied

§ 514(d) to save from preemption so much of the New

York Human Rights Law as prohibits discriminatory em-

ployment practices that are also prohibited by Title VII

of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq.

In Shaw, the Court had before it a state anti-

discrimination law which, under the express provisions of

Title VII, provided the enforcement mechanism for fed-

eral antidiscrimination law. As the Court put it,

Title VII requires recourse to available state ad-

ministrative remedies. When an employment prac-

tice prohibited by Title VII is alleged to have oc-

curred in a State . . . which prohibits the practice

and has established an agency to enforce the prohibi-

tion, the [EEOC] refers the charges to the state

- agency. The EEOC may not actively process the

charges “before the expiration of sixty days after

proceedings have been commenced under, the State

463 U.S. at 101-02, 103 S.Ct. at 2902. The Court con-

cluded that “Given the importance of state fair employ-

38a

ment laws to the federal enforcement scheme, pre-emption

of the Human Rights Law would impair Title VII to the

extent the Human Rights Law provides a means for en-

forcing Title VII’s commands.” Id. at 102, 103 S.Ct. at

2902. However insofar as state law imposed obligations

beyond those imposed by federal law, ERISA preemption

would not impair Title VII and therefore § 514(d) will

not preclude preemption.

By no stretch of the imagination could § 1777.5 be con-

sidered a state law the preemption of which would im-

pair federal law. The Fitzgerald Act merely directs the

Secretary of Labor “to formulate and promote the fur-

therance of labor standards .. . to safeguard the welfare

of apprentices” and related objectives. 29 U.S.C. § 50.

The implementing regulations state that their purpose is

“to set forth labor standards to safeguard the welfare of

apprentices, and to extend the application of such stand-

ards by prescribing policies and procedures concerning

the registration, for certain Federal purposes, [of] ac-

ceptable apprenticeship programs.” 29 C.F.R. § 29.1(b).

Thus the regulations relate only to eligibility for federal

registration. Neither they nor the Act itself contem-

plate enforcement mechanisms; Section 29.11 merely pro-

vides for the voluntary adjustment of complaints before

either federal or state agencies. Assuming § 1777.5 was

adopted in furtherance of the objectives of the Fitzgerald

Act, it clearly is not an enforcement mechanism of fed-

eral law and to the extent orders under this section are

preempted by ERISA, federal law is not impaired.

Defendants also argue that footnote 24 of Shaw saves

the DAS order on the theory that preemption would im-

pair operation of the Fitzgerald Act insofar as the Act

encourages states to give broader protection to appren-

tices than federal law may require. To begin with, the

Fitzgerald Act contains no saving clause for state laws.

Shaw concerned Title VII, which does contain such a

clause. See Title VII, § 708, 42 U.S.C. § 2000e-7. More-

39a

over, even with respect to Title VII, the Court said that

it does no more than “simply [leave state antidiscrimina-

tion laws] where they were before the enactment of Title

VII.” Shaw, 463 U.S. at 103 n.24, 103 S.Ct. at 2903

n.24. The same is true here.

Finally, the lack of merit of defendants’ argument is

confirmed by comparing the Fitzgerald Act and the im-

plementing regulations with ERISA, which shows that

the former do not deal with the basic subject matter of

ERISA, i.e., plan management and distribution of bene-

fits. Specifically, the regulations are silent with respect

to creation of or contributions te apprenticeship funds.

Thus, there is no apparent conflict between regulations

establishing standards for the welfare of apprentices and

ERISA regulation of the administration of employee ben-

efit plans which would invoke § 514(d). Presumably this

was Congress’s view when it included apprenticeship pro-

grams in ERISA without evident concern about conflict

with the Fitzgerald Act.

Accordingly it must be concluded that § 514(d) does not

save the order issued under § 1777.5 from ERISA pre

emption.”

It may, at first blush, seem odd, and perhaps farfetched,

that ERISA should be held to preempt state law provisions

and orders requiring public works contractors to partici-

pate in apprenticeship programs. However, as the Court

stated in Shaw, “To give § 514(d) the broad construction

advocated by [defendants] would defeat the intent of Con-

gress to provide comprehensive pre-emption of state law.”

Id. at 106, 103 S.Ct. at 2904-05. Moreover, on examina-

tion, the program. the state imposes on contractors falls

squarely within the purposes of ERISA as recently articu-

lated by the Supreme Court:

7In view of this conclusion, it is unnecessary to consider whether

§ 1777.5 and §1777.7 are also preempted as being enforcement

schemes. See Pilot Life Insurance Co. v. Dedeauz, U.S. .

107 S.Ct. 1549, 95 L.Ed.2d 39 (1987).

40a

These statements reflect recognition of the adminis-

trative realities of employee benefit plans. An em-

ployer that makes a commitment systematically to pay

certain benefits undertakes a host of obligations, such

as determining the eligibility of claimants, calculating

benefit levels, making disbursements, monitoring the

availability of funds for benefit payments and keeping

appropriate records in order to comply with appli-

cable reporting requirements. The most efficient way

to meet these responsibilities is to establish a uniform

administrative scheme, which provides a set of stand-

ard procedures to guide processing of claims and dis-

bursement of benefits. Such a system is difficult to

achieve, however, if a benefit plan is subject to differ-

ing regulatory requirements in differing States. A

plan would be required to keep certain records in some

States but not in others; to make certain benefits

available in some States but not in others; to process

claims in a certain way in some States but not in

others; and to comply with certain fiduciary stand-

ards in some States but not in others.

We have not hestitated to enforce ERISA’s pre-

emption provision where state law created the pros-

pect that an employer’s administrative scheme would

be subject to conflicting requirements.

Fort Halifax Packing Co., Inc. v. Coyne,

107 S.Ct. 2211, 2216, 96 L.Ed2d 1 (1987).*

Defendants concede that the Boilermakers Apprentice-

ship Fund is subject to ERISA as well as the Labor-

Management Relations Act, 29 U.S.C. § 186(c) (6), but

argue that the JAC is a separate entity. The argument,

of course, misconceives the issue which is that state law

US. —,

8 The Boilermakers Fund is identified in the collective bargaining

agreement as the Nine Western States Area Apprenticeship Fund.

Thus contributions are obviously made by employers in different

states.

4la

requires public works contractors to participate in an

ERISA-type benefit program and contribute to an ERISA

fund.

The holding that the DAS determination and order

under § 1777.5 are preempted by ERISA should not be

taken as denigrating the desirability of apprenticeship

programs, invalidating the State’s policy to promote such

programs, and denying state authority to regulate the

conditions of employment of apprentices. The Court

recognizes that federal policy favors “the formulation of

programs of apprenticeship,” as reflected in the Fitz-

gerald Act, 29 U.S.C. § 50, et seg.

The Court has not been asked to strike down § 1777.5

nor does it do so by this order which holds only that as

applied in this case it is preempted by ERISA. In light

of what has been said here about the Fitzgerald Act and

the implementing regulations, the State may be able to

adopt standards to safeguard the welfare of apprentices

that do not run afoul of ERISA. In any event, that is

not an issue that need be decided here.

NLRA Preemption

It is not disputed that in order to participate in the

apprenticeship program mandate by the DAS order,

Hydrostorage would have to execute an Agreement to

Train Apprentices. Under the terms of that Agreement,

Hydrostorage would become bound by the Apprenticeship

Standards and Apprenticeship Agreement which are a

part of the Boilermakers collective bargaining »zreement

as Appendix D.

Under Appendix D, the employer agrees, among other

thing, to be bound by the agreement and declaration of

trust establishing the Boilermakers Area Apprenticeship

Funds and any amendments, and to make contributions

to the Funds as required by the JAC. The collective bar-

gaining agreement itself contains provisions respecting

42a

the employment of apprentices, including rates of pay and

the minimum ratio of apprentices to journeymen. by

signing the Agreement to Train Apprentices, the em-

ployer apparently becomes bound by these provisions.

Thus, by requiring Hyrostorage to execute the Boiler-

makers Agreement to Train Apprentices, the order would

make it an involuntary party to Appendix D and certain

other provisions of the collective bargaining agreement,

although it had no part in the negotiation of that agree-

ment and has not accepted it. It would, moreover, be sub-

ject not only to those agreements but also to any future

changes that may be negotiated by the union and the em-

ployer parties.°®

The Supreme Court has only recently summarized the

controlling principles:

Last Term, in Metropolitan Life Ins. Co. v. Massa-

chusetts, 471 U.S. 724 [105 S.Ct. 2380, 85 L.Ed.2d

728] (1985), we again noted: “The Court has articu-

lated two distinct NLRA preemption principles.” Jd.

at 748 [105 S.Ct. at 2394]. See also Belknap, Inc. v.

Hale, 463 U.S. 491, 498-499 [103 S.Ct. 3172, 3176-

3177, 77 L.Ed.2d 798] (19838). The first, the so-called

Garmon pre-emption, see San Diego Building Trades

Council v. Garmon, 350 U.S. 236 [’v S.Ct. 773, 3

L.Ed.2d 775] (1959), prohibits States from regulat-

ing “activity that the NLRA protects, prohibits, or

arguably protects or prohibits.” Wisconsin Dept. of

® Section 1777.5 provides that “where the trust fund administra-

tors are unable to accept such funds, contractors not signatory to

the trust agreement shall pay a like amount to the California Ap-

prenticeship Council.” None of the parties contends that this ex-

ception applies here. But even if it did and if it gave Hydrostorage

an option to make its contribution to the CAC, Hydrostorage would

still be required under § 1777.5 “to apply to the joint apprenticeship

committee administering the apprenticeship standards of the

craft,” in this case the Boilermakers. And that application, as has

been seen, has the effect of making it an involuntary party to sub-

stantial portions of the collective bargaining agreement.

Bien Pitt Con nee es es

ete te CE a a ee

Wa veth ReaD

48a

Industry v. Gould Inc., ante [475 U.S.] at 286 [106

S.Ct. 1057, 89 L.Ed.2d 223 (1986)]. The Garmon

rule is intended to preclude state interference with

the National Labor Relations Board’s interpretation

and active enforcement of the “integrated scheme of

regulation” established by NLRA. Ante, at 289 [106

S.Ct. at 1062]. See Metropolitan Life Ins. Co. v.

Massachusetts, 471 U.S., at 748, and n. 26 [105 S.Ct.

at 2394 and n. 26]. ... Although the labor-manage-

ment relationship is structured by the NLRA, certain

areas intentionally have been left “ ‘to be controlled

by the free play of economic forces.’” Machinists,

427 U.S., at 140 [96 S.Ct. at 2553], quoting NLRB

v. Nash-Finch Co., 404 U.S. 138, 144 [92 S.Ct. 373,

377, 30 L.Ed.2d 328] (1971). The Court recognized

in Machinists that “ ‘Congress has been rather spe-

cific when it has come to outlaw particular economic

weapons,’ ” 427 U.S., at 143 [96 S.Ct. at 2555], quot-

ing NLRB v. Insurance Agents, 361 U.S. 477, 498

[80 S.Ct. 419, 421, 4 L.Ed.2d 454] (1960), and that

Congress’ decision to prohibit certain forms of eco-

nomic pressure while leaving others unregulated rep-

resents an intentional balance “ ‘between the uncon-

trolled power of management and labor to further

their respective interests.’” Machinists, 427 U.S. at

146 [96 S.Ct. at 2556], quoting Teamsters v. Morton,

377 U.S. 252, 258-259 (85 S.Ct. 1253, 1257-1258, 12

L.Ed.2d 280] (1964). States are therefore prohib-

ited from imposine additional restrictions on eco

nomic weapons of self-help, such as strikes or lock-

outs, see 427 U.S., at 147 [96 S.Ct. at 2556], unless

such restrictions presumably were contemplated by

Congress.

Golden State Transit Corp. v. Los Angeles, 475 U.S. 608,

613-15, 106 S.Ct. 1395, 1398-99, 89 L.Ed.2d 616 (1986).

44a

By requiring Hydrostorage to become a party to certain

provisions of the Boilermakers collective bargaining

agreement, DAS is intruding into the area of collective

bargaining from which Congress under the NLRA has

excluded it. As the Court explained in Golden State:

“The NLRA requires an employer and a union to bargain

in good faith, but it does not require them to reach agree-

ment.” Jd. at 616, 106 S.Ct. at 1899-1400. It is clear

that a state cannot penalize an employer for not necoming

a party to a collective bargaining agreement, in whole or

in part, which it did not voluntarily negotiate.

Because application of the DAS determination and

order would in this case have that effect, it is barred by

the NLRA independent of ERISA preemption.

Conclusion

For the reasons stated, the motion of Hydrostorage for

summary judgment is granted. Defendants are perma-

nently enjoined from enforcing the DAS determination

and order against Hydrostorage in connection with the

Lathrop project.

Defendants’ motions for summary judgment are denied.

IT IS SO ORDERED. |

soit

45a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

88-2798, 88-2800,

88-2802, 88-2966

88-2968, 88-2969

CV-87-2401-WWS

CV-88-804-WWS

HYDROSTORAGE, INC., a Tennessee Corporation,

Plaintiff-A ppellee,

vs.

NORTHERN CALIFORNIA BOILERMAKERS LOCAL JOINT AP-

PRENTICESHIP COMMITTEE, an unincorporated associa-

tion; DIVISION OF APPRENTICESHIP STANDARDS; GAIL

W. JESSWEIN, in his capactity as Chief of the Division

of Apprenticeship Standards, CALIFORNIA APPRENTICE-

SHIP COUNCIL,

Defendants-Appellants.

Appeal from the United States District Court

for the Northern District of California

(San Francisco)

JUDGMENT

This cause came on to be heard on the Transcript of

the Record from the United States District Court for the

Northern District of California (San Francisco) and was

duly submitted.

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the judgment of

the said District Court in this Cause be, and hereby is

affirmed.

Filed and entered 12-06-89.

»”

46a

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Nos. 88-2798, 88-2800,

88-2802, 88-2966,

88-2968, 88-2969

D.C. Nos.

CV-87-2401-WWS

CV-88-804-WWS

HYDROSTORAGE, INC., a Tennessee Corporation,

Plaintiff-Appellee,

vs.

NORTHERN CALIFORNIA BOILERMAKERS LOCAL JOINT AP-

PRENTICESHIP COMMITTEE, an unincorporated associa-

tion; DIVISION OF APPRENTICESHIP STANDARDS; GAIL

W. JESSWEIN, in his capacity as Chief of the Division

of Apprenticeship Standards; CALIFORNIA APPRENTICE-

SHIP COUNCIL,

Defendants-A ppellants.

Appeal from the United States District Court

for the Northern District of California

ORDER DENYING REHEARING

[Filed Mar. 16, 1990]

Before: WALLACE and NOONAN, Circuit Judges,

and BURNS§S,* District Judge.

* Honorable James M. Burns, United States District Judge, Dis-

trict of Oregon, sitting by designation.

~ ~~ <a la tt ta sti

47a

The panel as constituted above has voted to deny the

petition for rehearing and to reject the suggestion for

rehearing en banc.

The full court has been advised of the suggestion for

rehearing en banc, and no judge of the court has re-

quested a vote on the suggestion for rehearing en banc.

Fed. R. App. P. 35(b).

The petition for rehearing is denied, and the sugges-

tion for rehearing en banc is rejected.

48a

APPENDIX E

1. The relevant provisions of the Employee Retirement

Income Security Act of 1974, 29 U.S.C. § 1001 et seq..

are as follows: :

Section 3(1), 29 U.S.C. § 1002(1) :

For purposes of this subchapter:

(1) The terms “employee welfare benefit plan”

and “welfare plan” mean any plan, fund, or pro-

gram which was heretofore or is hereafter estab-

lished or maintained by an employer or by an em-

ployee organization, or by both, to the extent that

such plan, fund, or program was established or is

maintained for the purpose of providing for its par-

ticipants or their beneficiaries, through the purchase

of insurance or otherwise, (A) medical, surgical, or

hospital care or benefits, or benefits in the event of

sickness, accident, disability, death or unemployment,

or vacation benefits, apprenticeship or other training

programs, or day care centers, scholarship funds, or

prepaid legal services, or (B) any benefit described

in section 186(c) of this title (other than pensions

on retirement or death, and insurance to provide such

pensions).

Section 514, 29 U.S.C. § 1144:

(a) Supersedure; effective date

Except as provided in subsection (b) of this sec-

tion, the provisions of this subchapter and subchap-

ter III of this chapter shall supersede any and all

State laws insofar as they may now or hereafter

relate to any employee benefit plan described in sec-

tion 1003(a) of this title and not exempt under sec-

tion 1003(b) of this title. This section shall take

effect on January 1, 1975.

49a i

(ce) Definitions

For purposes of this section:

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

sions, rules, regulations, or other State action having

the effect of law, of any State. A law of the United

States applicable only to the District of Columbia

shall be treated as a State law rather than a law of

the United States.

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

cal 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 benefits covered by this subchapter.

(d) Alteration, amendment, modification, invalida-

tion, impairment, or supersedure of any law of

the United States prohibited

Nothing in this subchapter shall be construed to

alter, amend, modify, invalidate, impair, or super-

sede any law of the United States (except as pro

vided in sections 1031 and 1137(a) of this title)

or any rule or regulation issued under any such law.

2. Section 1 of the National Apprenticeship Act of

1937 (“Fitzgerald Act’), 29 U.S.C. §50, provides as

follows:

The Secretary of Labor is authorized and directed

to formulate and promote the furtherance of labor

standards necessary to safeguard the welfare of ap-

prentices, to extend the application of such standards

by encouraging the inclusion thereof in contracts of

apprenticeship, to bring together employers and

labor for the formulation of programs of apprentice-

ship, to cooperate with State agencies engaged in the

formulation and promotion of standards of appren-

ticeship, and to cooperate with the Secretary of Edu-

cation in accordance with section 17 of title-20. For

50a

the purposes of this chapter the term “State” shall

include the District of Columbia.

3. The relevant provisions of the California Labor

Code are as follows:

$ 1777.5. Employment of registered apprentices;

wages; standards; number; apprenticeable

craft or trade; exemptions; contributions

Nothing in this chapter shall prevent the employ-

ment of properly registered apprentices upon public

works.

Every such apprentice shall be paid the standard

wage paid to apprentices under the regulations of

the craft or trade at which he is employed, and shall

be employed only at the work of the craft or trade to

which he is registered.

Only apprentices, as defined in Section 3077, who

are in training under apprenticeship standards and

written apprentice agreements under Chapter 4

(commencing at Section 3070), Division 3, of the

Labor Code, are eligible to be employed on public

works. The employment and training of each ap-

prentice shall be in accordance with the provisions

of the apprenticeship standards and apprentice

agreements under which he is training.

When the contractor to whom the contract is

awarded by the state or any political subdivision, or

any subcontractor under him, in performing any of

the work under the contract or subcontract, employs

workmen in any apprenticeable craft or trade, the

contractor and subcontractor shall apply to the joint

apprenticeship committee administering the ap-

prenticeship standards of the craft or trade in the -

area of the site of the public work for a certificate

approving the contractor or subcontractor under the

apprenticeship standards for the employment and

training of apprentices in the area or industry af-

fected; provided, however, that the approval as es-

5la

tablished by the joint apprenticeship committee or

committees shall be subject to the approval of the

Administrator of Apprenticeship. The joint ap-

prenticeship committee or commttees, subsequent to

approving the subject contractor or subcontractor,

shall arrange for the dispatch of apprentices to the

contractor or subcontractor in order to comply with

this section. There shall be an affirmative duty upon

the joint apprenticeship committee or committees

administering the apprenticeship standards of the

craft or trade in the area of the site of the public

work to ensure equal employment and affirmative ac-

tion in apprenticeship for women and minorities.

Contractors or subcontractors shall not be required

to submit individual applications for approval to local

joint apprenticeship committees provided they are

already covered by the local apprenticeship stand-

ards. The ratio of apprentices to journeymen who

shall be employed in the craft or trade on the public

work may be the ratio stipulated in the apprentice-

ship standards under which the joint apprenticeship

committee operates, but in no case shall the ratio be

less than one apprentice for each five journeymen,

except as otherwise provided in this section.

The contractor or subcontractor, if he is covered

by this section, upon the issuance of the approval

certificate, or if he has been previously approved in

such craft or trade, shall employ the number of ap-

prentices or the ratio of apprentices to journeymen

stipulated in the apprenticeship standards. Upon

proper showing by the contractor that he employs

apprentices in such craft or trade in the state on all

of his contracts on an annual average of not less

than one apprentice to each five journeymen, the

Division of Apprenticeship Standards may grant a

certificate exempting the contractor from the 1-to-5

ratio as set forth in this section. This section shall

not apply to contracts of general contractors involv-

52a

ing less than thirty thousand dollars ($30,000) or

20 working days or to contracts of specialty con-

tractors not bidding for work through a general or

prime contractor, involving less than two thousand

dollars ($2,000) or fewer than five working days.

“Apprenticeable craft or trade,” as used in this

section, shall mean a craft or trade determined as

an apprenticeable occupation in accordance with

rules and regulations prescribed by the Apprentice-

ship Council. The joint apprenticeship committee

shall have the discretion to grant a certificate, which

~~~shall be subject to the approval of the Administrator

of Apprenticeship, exempting a contractor from the

1-to-5 ratio set forth in this section when it finds

that any one of the following conditions is met:

(a) In the event unemployment for the previous

three-month period in such area exceeds an average

of 15 percent, or

(b) In the event the number of apprentices in

training in such area exceeds a ratio of 1 to 5, or

craft or trade is replacing at least one-thirtieth of

its journeymen annually through apprenticeship

training, either (1) on a statewide basis, or (2) on

a local basis.

(d) If assignment of an apprentice to any work

performed under a public works contract would cre-

ate a condition which would jeopardize his life or the

life, safety, or property of fellow employees or the

public at large or if the specific task to which the

apprentice is to be assigned is of such a nature that

training cannot be provided by a journeyman.

When such exemptions are granted to an organiza-

tion which represents contractors in a specific trade

from the 1-to-5 ratio on a local or statewide basis

cena eevee beak athe Sv ee I Rane, ni te

58a

the member contractors will not be required to sub-

mit individual applications for approval to local joint

apprenticeship committees, provided they are already

covered by the local apprenticeship standards.

A contractor to whom the contract is awarded, or

any subcontractor under him, who, in performing

any of the work under the contract, employs journey-

men or apprentices in any apprenticeable craft or

trade and who is not contributing to a fund or funds

to administer and conduct the apprenticeship pro-

gram in any such craft or trade in the area of the

site of the public work, to which fund or funds other

contractors in the area of the site of the public work

are contributing, shall contribute to the fund or

funds in each craft or trade in which he employs

journeymen or apprentices on the public work in the

Same amount or upon the same basis and in the

same manner as the other contractors do, but where

the trust fund administrators are unable to accept

such funds, contractors not signatory to the trust

agreement shall pay a like amount to the California

Apprenticeship Council. The contractor or subcon-

tractor may add the amount of such contributions in

computing his bid for the contract. The Division of

Labor Standards Enforcement is authorized ww en-

force the payment of such contributions to the fund

or funds as set forth in Section 227.

The body awarding the contract shall cause to be

inserted in the contract stipulations to effectuate

this section. Such stipulations shall fix the responsi-

bility of compliance with this section for all appren-

ticeable occupations with the prime contractor.

All decisions of the joint apprenticeship committee

under this section are subject to the provisions of

Section 3081.

54a

$ 1777.7. Noncompliance with § 1777.5 denial of

right to bid on contracts; withholding civil

penalty from progress payments; proce-

dure

(a) In the event a contractor willfully fails to

comply with the provisions of Section 1777.5, such

contractor shall:

(1) Be denied the right to bid on any public

works contract for a period of one year from the

date the determination of noncompliance is made by

the Administrator of Apprenticeship; and

(2) Forfeit as a civil penalty in the sum of fifty

dollars ($50) for each calendar day cf noncompli-

ance. Notwithstanding the provisions of Section

1727, upon receipt of such a determination the

awarding body shall withhold from contract progress

payments then due or to become due such sum.

(b) Any such determination shall be issued after

a full investigation, a fair and impartial hearing,

and reasonable notice thereof in accordance with rea-

sonable rules and procedures prescribed by the Cali-

fornia Apprenticeship Council.

(ec) Any funds withheld by the awarding body

pursuant to this section shall be deposited in the

General Fund if the awarding body is a state en-

tity, or in the equivalent fund of an awarding body

if such awarding body is an entity other than the

state.

The interpretation and enforcement of Sections

1777.5 and 1777.7 shall be in accordance with the

rules and procedures of the California Apprentice-

ship Council.

55a

§ 3070. Apprenticeship council; composition; ap-

pointment; terms; compensation; traveling

expenses

There is in the Division of Apprenticeship Stand-

ards the California Apprenticeship Council, which

shall be appointed by the Governor, composed of six

representatives each from employer and employee

organizations, respectively, geographically selected,

and of two representatives of the general public. The

Director of Industrial Relations, or his or her per-

manent and best qualified designee, and the Superin-

tendent of Public Instruction, or his or her perma-

nent and best qualified designee, and the Chancellor

of the California Community Colleges, or his or her

permanent and best qualified designee, sha!l also be

members of the California Apprenticeship Council.

The chairman shall be elected by vote of the Cali-

fornia Apprenticeship Council. Beginning with ap-

pointments in 1985, three representative each of em-

ployers and employees, and one public representative

shal] serve until January 15, 1989. In 1987, three

representatives each of the employers and employees,

and one public representative shall serve until Janu-

ary 15, 1991. Any member whose term expires on

January 15, 1986, shall continue to serve until Janu-

ary 15, 1987. Thereafter each member shall serve

for a term of four years. Any member appointed to

fill a vacancy occurring prior to the expiration of the

term of his or her predecessor shall be appointed for

the remainder of that term. Each member of the

council shall receive the sum of fifty dollars ($50)

for each day of actual attendance at meetings of the

council, for each day of actual attendance at hearings

by the council or a committee thereof pursuant to

Section 3082, and for each day of actual attendance

at meetings of other committees established by the

council and approved by the Director of Industrial

56a

Relations, together with his or her actual and neces-

sary traveling expenses incurred in connection there-

with.

§ 3071. Powers and duties of council -

The California Apprenticeship Council shall meet

at the call of the Director of Industrial Relations and

shall aid him or her in formulating policies for the

effective administration of this chapter.

Thereafter, the California Apprenticeship Council

shall meet quarterly at a designated date and special

meetings may be held at the call of the chairman.

The California Apprenticeship Council shall issue

rules and regulations which establish standards for

minimum wages, maximum hours, and working con-

ditions for apprentice agreements, hereinafter in this

chapter referred to as apprenticeship standards,

which in no case shall be lower than those prescribed

by this chapter; and shall issue rules and regulations

governing equal opportunities in apprenticeship, af-

firmative action programs which include women and

minorities in apprenticeship, and other on-the-job

training, and criteria for selection procedures with a

view particularly toward eliminating criteria not

relevant to qualification for training employment or

more stringent than is reasonably necessary. The

California Apprenticeship Council shall make bien-

nial reports through the Director of Industrial Rela-

tions of its activities and findings to the Legislature

and to the public.

§ 3075. Apprenticeship program sponsors; approval

of programs; joint sponsorship; composition

of joint committees

An apprenticeship program sponsor may be a joint

apprenticeship committee, unilateral management or

labor apprenticeship committee, or an individual em-

57a

ployer. Programs may be approved by the chief in

any trade in the state or in a city or trade area,

whenever the apprentice training needs justifies the

establishment. Where a collective bargaining agree-

ment exists, a program shall be jointly sponsored

unless either party to the agreement waives its right

to representation in writing. Joint apprenticeship

committees shall be composed of an equal number of

employer and employee representatives.

§ 3075.1. Apprenticeship as form of on-the-job

training

It is the public policy of this state to encourage the

utilization of apprenticeship as a form of on-the-job

training, when such training is cost-effective in de-

veloping skills needed to perform public services.

State and local public agencies shall make a diligent

effort to establish apprenticeship programs for ap-

prenticeable occupations in their respective work

forces. In furtherance of this policy, public agencies

shall take into consideration (a) the extent to which

a continuous supply of trained personnel is readily

available to public agencies to meet their skill re-

quirements in the various occupations which are

determined to be apprenticeable, and (b) the appli-

cation of established programs in the private sector,

where appropriate. Public sector apprenticeship pro-

grams should be fully compatible with affirmative

action goals for the participation of minorities and

women in apprenticeship programs.

§ 3076. Function of committees

The function of a joint apprenticeship committee,

when specific written authority is delegated by the

parent organizations represented, shall be to estab-

lish work processes, wage rates, working conditions

for apprentices, the number of apprentices which

58a

shall be employed in the trade under apprentice

agreements, and aid in the adjustment of apprentice-

ship disputes in accordance with standards for ap-

prenticeship set up by the California Apprenticeship

Council. Disciplinary proceedings resulting from dis-

putes shall be duly noticed to the involved individuals.

§ 3076.3. Program sponsors; duties

Program sponsors shall establish selection pro-

cedures which specify minimum requirements for

formal education or equivalency, physical examina-

tion, if any, subject matter of written tests and oral

interviews, and any other criteria pertinent to the

selection process; shall specify the relative weights

of all factors which determine selection to an ap-

prenticeship program; shall submit in writing to

the chief an official statement of each selection pro-

cedure including the filing date and location of the

program sponsor; shall make a copy of the selection

procedures available to each applicant; shall provide

in writing to each applicant not selected an official

explanation setting forth the reason or reasons for

the nonselection, copies of which shall be retained as

a public record in the files of the program sponsor for

a period of five years; and shall implement affirma-

tive action programs for minorities and women in

accordance with the rules, regulations, and guide-

lines of the California Apprenticeship Council.

§ 3077. Apprentice and apprenticeship agreement

defined; term of apprenticeship

The term “apprentice” as used in this chapter,

means a person at least 16 years of age who has

entered into a written agreement, in this chapter

called an “apprentice agreement,” with an employer

or program sponsor. The term of apprenticeship for

each apprenticeable occupation shall be approved by

59a

the chief, and in no case shall provide fur less than

2,000 hours of reasonably continuous employment for

such person and for his or her participation in an

approved program of training through employment

and through education in related and supplemental

subjects.

§ 3078. Apprenticeship agreement; required provi-

sions

Every apprentice agreement entered into under

this chapter shall directly, or by reference, contain:

(a) The names of the contracting parties.

(b) The date of birth of the apprentice.

which the apprentice is to be taught, and the time at

which the apprenticeship will begin and end.

(d) A statement showing the number of hours to

be spent by the apprentice in work and the learning

objectives to be accomplished through related and

supplemental instruction, except as otherwise pro-

vided under Section 3074. These exceptions shall be

subject to the appeal procedures established in Sec-

tions 3081, 3083, and 3084. A minimum of 144 hours

of related and supplemental instruction for each year

of apprenticeship is recommended; however, related

instruction may be expressed in terms of units or

other objectives to be accomplished. In no case shall

the combined weekly hours of work and required re-

lated and supplemental instruction of the apprentice

exceed the maximum number of hours of work pre-

scribed by law for a person of the age of the ap-

prentice.

(e) A statement setting forth a schedule of the

processes in the trade or industry divisions in which

the apprentice is to be taught and the approximate

time to be spent at each process.

60a

(f) A statement of the graduated scale of wages

to be paid the apprentice and whether the required

schooltime shall be compensated.

(g) A statement providing for a period of proba-

tion of not more than 1,000 hours of employment and

not more than 72 hours of related instruction, during

which time the apprentice agreement may be termi-

nated by the program sponsor at the request in writ-

ing ot either party, and providing that after the pro-

bationary period the apprentice agreement may be

terminated by the administrator by mutual agree-

ment of all parties thereto, or canceled by the ad-

ministrator for good and sufficient reason.

(h) A provision that all controversies or differ-

ences concerning the apprentice agreement which

cannot be adjusted locally, or which are not covered

by collective-bargaining agreement, shall be submit-

ted to the administrator for determination as pro-

vided for in Section 3081.

(i) A provision that an employer who is unable to

fulfill his or her obligation under the apprentice

agreement may, with approval of the administrator,

transfer the contract to any other employer if the

apprentice consents and the other employer agrees

to assume the obligation of the apprentice agreement.

(j) Such additional terms and conditions as may

be prescribed or approved by the California Ap-

prenticeship Council, aot inconsistent with the pro-

visions of this chapter.

(k) A clause providing that there shall be no lia-

bility on the part of the other contracting party for

an injury sustained by an apprentice engaged in

schoolwork at a time when the employment of the

apprentice has been temporarily or permanently ter-

minated.

6la

§ 3079. Approval and execution of agreement;

agreement binding during majority of ap-

prentice

Every apprentice agreement under this chapter

shali be approved by the local joint apprenticeship

committee or the parties to a collective bargaining

agreement or, subject to review by the council, by

the administrator where there is no collective bar-

gaining agreement or joint committee, a copy of

which shall be filed with the California Apprentice-

ship Council. Every apprentice agreemeni shall be

signed by the employer, or his agent, or by a pro-

gram sponsor, as provided in Section 3080, and by the

apprentice, and if the apprentice is a minor, by the

minor’s parent or guardian. Where a minor enters

into an apprentice agreement under this chapter for

a period of training extending into his or_her ma-

jority, the apprentice agreement shall likewise be

binding for such a period as may be covered during

the apprentice’s majority.

4. The relevant Department of Labor regulations, 29

C.F.R. § 29.1 et seg., are as follows:

§ 29.1 Purpose and scope.

(a) The National Apprenticeship Act of 1937,

section 1 (29 U.S.C. 50), authorizes and directs the

Secretary of Labor “to formulate and promote the

furtherance of labor standards necessary to safeguard

the welfare of apprentices, to extend the application

of such standards by encouraging the inclusion

thereof in contracts of apprenticeship, to bring to-

gether employers and labor for the formulation of

programs of apprenticeship, to cooperate with State

agencies engaged in the formulation and promotion of

standards of apprenticeship, and to cooperate with

the Office of Education under the Department of

Health, Education, and Welfare * * *.” Section 2 of

62a

the Act authorizes the Secretary of Labor to “publish

information relating to existing and proposed labor

standards of apprenticeship,” and to “appoint na-

tional advisory committees * * *.” (29 U.S.C. 50a).

(b) The purpose of this part is to set forth labor

standards to safeguard the welfare of apprentices,

and to extend the application of such standards by

prescribing policies and procedures concerning the

registration, for certain Federal purposes, or accept-

able apprenticeship programs with the U.S. Depart-

ment of Labor, Employment and Training Adminis-

tration, Bureau of Apprenticeship and Training.

These labor standards, polices and procedures cover

the registration, cancellation and deregistration of

apprenticeship programs and of apprenticeship agree-

ments; the recognition of a State agency as the ap-

propriate agency for registering local apprenticeship

programs for certain Federal purposes; and matters

relating thereto.

§ 29.3 Eligibility and procedure for Bureau regis-

tration of a program.

(a) Eligibility for various Federal purposes is

conditioned upon a program’s conformity with ap-

prenticeship program standards published by the

Secretary of Labor in this part. For a program to

be determined by the Secretary of Labor as being in

conformity with these published standards the pro-

gram must be registered with the Bureau or regis-

tered with and/or approved by a State Apprentice-

ship Agency or Council recognized by the Bureau.

Such determination by the Secretary is made only by

such registration.

(b) No apprenticeship program or agreement shall

be eligible for Bureau registration unless (1) it is in

conformity with the requirements of this part and

a TS

63a

the training is in an apprenticeable occupation having

the characteristics set forth in § 29.4 herein, and (2)

it is in conformity with the requirements of the De-

partment’s regulation on “Equal Employment Oppor-

tunity in Apprenticeship and Training” set forth in

29 CFR Part 30, as amended.

this section, apprentices must be individually regis-

tered under a registered program. Such registration

may be effected:

(1) By filing copies of each apprenticeship agree-

ment; or

(2) Subject to prior Bureau approval, by filing a

master copy of such agreement followed by a listing

of the name, and other required data, of each indi-

vidual when apprenticed.

(d) The names of persons in their first 90 days of

probationary employment as an apprentice under an

apprenticeship program registered by the Bureau or

a recognized State Apprenticeship Agency, if not in-

dividually registered under such program, shall be

submitted immediately after employment to the Bu-

reau or State Apprenticeship Agency for certification

to establish the apprentice as eligible for such pro-

bationary employment.

(e) The appropriate registration office must be

promptly notified of the cancellation, suspension, or

termination of any apprenticeship agreement, with

cause for same, and of apprenticeship completions.

(f) Operating apprenticeship programs when ap-

proved by the Bureau shall be accorded registration

evidenced by a Certificate of Registration. Programs

approved by recognized State Apprenticeship Agen-

cies shall be accorded registration and/or approval

evidenced by a similar certificate or other written

64a

indicia. When approved by the Bureau, national ap-

prenticeship standards for policy or guideline use

shall be accorded certification, evidenced by a certifi-

cate attesting to the Bureau’s approval.

(g) Any modification(s) or change(s) to regis-

tered or certified programs shall be promptly sub-

mitted to the registration office and, if approved, shall

be recorded and acknowledged as an amendment to

such program.

(h) Under a program proposed for registration by

an employer or employers’ association, where the

.tandards, collective bargaining agreement or other

ins‘rument, provides for participation by a union in

any manner in the operation of the substantive mat-

ters of the apprenticeship program, and such partici-

pation is exercised, written acknowledgement of union

agreement or “no objection” to the registration is

required. Where no such participation is evidenced

and practiced, the employer or employers’ association

shall simultaneously furnish to the union, if any,

which is the collective bargaining agent of the em-

ployees to be trained, a copy of its application for

registration and of the apprenticeship program. The

registration agency shall provide a reasonable time

period of not less than 30 days nor more than 60

days for receipt of union comments, if any, before

final action on the application for registration and/or

approval.

(i) Where the employees to be trained have no

collective bargaining agent, an apprenticeship pro-

gram may be proposed for registration by an em-

ployer or group of employers.

§ 29.4 Criteria for apprenticeable occupations.

An apprenticeable occupation is a skilled trade

which possesses all of the following characteristics:

Matin iat asi

65a

(a) It is customarily learned in a practical way

through a structured, systematic program of on-the-

job supervised training.

(b) It is clearly identified and commonly recog-

nized throughout an industry.

skills and knowledge which require a minimum of

2,000 hours of on-the-job experience.

(d) It requires related instruction to supplement

the on-the-job training.

§ 29.5. Standards of apprenticeship.

An apprenticeship program to be eligible for regis-

tration/approval by a registration/approval agency,

shall conform to the following standards:

(a) The program is an organized written plan

embodying the terms and conditions of employment,

training, and supervision of one or more apprentices

in the apprenticeable occupation, as defined in this

part, and subscribed to by a sponsor who has under-

taken to carry out the apprentice training program.

(b) The program standards contain the equal op-

portunity pledge prescribed in 29 CFR 30.3(b) and,

when applicable, an affirmative action plan in accord-

ance with 29 CFR 30.4, a selection method author-

ized in 29 CFR 30.5, or similar requirements ex-

pressed in a State Plan for Equal Employment Oppor-

tunity in Apprenticeship adopted pursuant to 29 CFR

Part 30 and approved by the Department, and pro-

visions concerning the following:

(1) The employment and training of the appren-

tice in a skilled trade;

(2) A term of apprenticeship, not less than 2,000

hours of work experience, consistent with training

requirements as established by industry practice;

66a

(3) An outline of the work process in which the

apprentice will receive supervised work experience

and training on the job, and the allocation of the

approximate time to be spent in eaeh major process;

(4) Provision for organized, related and supple-

mental instruction in technical subjects related to the

trade. A minimum of 144 hours for each year of

apprenticeship is recommended. Such instruction may

be given in a classroom through trade or industrial

courses, or by correspondence courses of equivalent

value, or other forms of self-study approved by the

registration/approval agency.

(5) A progressively increasing schedule of wages

to be paid the apprentice consistent with the skill

acquired. The entry wage shall be not less than the

minimum wage prescribed by the Fair Labor Stand-

ards Act, where applicable, unless a higher wage is

required by other applicable Federal law, State law,

respective regulations, or by collective bargaining

agreement ;

(6) Periodic review and evaluation of the appren-

tice’s progress in job performance and related in-

struction; and the maintenance of appropriate prog-

ress records;

(7) The numeric ratio of apprentices to journey-

men consistent with proper supervision, training,

safety, and continuity of employment, and applicable

provisions in collective bargaining agreements, except

where such ratios are expressly prohibited by the

collective bargaining agreements. The ratio language

shall be specific and clear as to application in terms

of jobsite, work force, department or plant;

(8) A probationary period reasonable in relation

to the full apprenticeship term, with full credit given

for such period toward completion of apprenticeship ;

67a

(9) Adequate and safe equipment and facilities

for training and supervision, and safety training for

apprentices on the job and in related instruction;

(10) The minimum qualifications required by a

sponsor for persons entering the apprenticeship pro-

gram, with an eligible starting age not less than 16

years;

(11) The placement of an apprentice under a writ-

ten apprenticeship agreement as required by the

State apprenticeship law and regulation, or the Bu-

reau where no such State law or regulation exists.

The agreement shall directly, or by reference, incor-

porate the standards of the program as part of the

agreement;

(12) The granting of advanced standing or credit

for previously acquired experience, training, or skills

for all applicants equally, with commensurate wages

for any progression step so granted ;

(18) Transfer of employer’s training obligation

when the employer is unable to fulfill his obligation

under the apprenticeship agreement to another em-

ployer under the same program with consent of the

apprentice and apprenticeship committee or program

sponsor ; -

(14) Assurance of qualified training personnel and

adequate supervision on the job;

(15) Recognition for successful completion of ap-

prenticeship evidenced by an appropriate certificate;

(16) Identification of the registration agency;

(17) Provision for the registration, cancellation

and deregistration of the program; and requirement

for the prompt submission of any modification or

amendment thereto;

(18) Provision for registration of apprenticeship

agreements, modifications, and amendments; notice

68a

to the registration office of persons who have success-

fully completed apprenticeship programs; and notice

of cancellations, “uspensions and terminations of ap-

prenticeship agreements and causes therefor;

(19) Authority for the termination of an appren-

ticeship agreement during the probationary period

by either party without stated cause;

(20) A statement that the program will be con-

ducted, operated and administered in conformity with

applicable provision of 29 CFR Part 30, as amended,

or a State EEO in apprenticeship plan adopted pur-

suant to 29 CFR Part 30 and approved by the De-

partment;

(21) Name and address of the appropriate au-

thority under the program to receive, process and

make disposition of complaints;

(22) Recording and maintenance of all records

concerning apprenticeship as may be required by the

Bureau or recognized State Apprenticeship Agency

and other applicable law.

§ 29.6 Apprenticeship agreement.

The apprenticeship agreement shall contain ex-

plicitly or by reference:

(a) Names and signatures of the contracting

parties (apprentice, and the program sponsor or

employer), and the signature of a parent or guardian

if the apprentice is a minor.

(b) The date of birth of apprentice.

registration agency.

(d) A statement of the trade or craft in which

the apprentice is to be trained, and the beginning

date and term (duration) of apprenticeship.

ee erie eer es fe. Re ee

69a

(e) A statement showing (1) the number of hours

to be spent by the apprentice in work on the job, and

(2) the number of hours to be spent in related and

supplemental instruction which is recommended to

be not less than 144 hours per year.

(f) A statement setting forth a schedule of the

work processes in the trade or industry divisions in

which the apprentice is to be trained and the approxi-

mate time to be spent at each process.

(g) A statement of the graduated scale of wages

to be paid the apprentice and whether or not the

required school time shall be compensated.

(h) Statements providing:

(1) For a specific period of probation during

which the apprenticeship agreement may be termi-

nated by either party to the agreement upon written

notice to the registration agency;

(2) That, after the probationary period, the agree-

ment may be cancelled at the request of the appren-

tice, or may be suspended, cancelled, or terminated

by the sponsor, for good cause, with due notice to the

apprentice and a reasonable opportunity for correc-

tive action, and with written notice to the apprentice

and to the registration agency of the final action

taken.

(i) A reference incorporating as part of the

agreement the standards of the apprenticeship pro-

gram as it exists on the date of the agreement and

as it may be amended during the period of the agree

ment.

(j) A statement that the apprentice will be ac-

corded equal opportunity in all phases of apprentice-

ship emplcyment and training, without discrimination

because of race, color, religion, national origin, or sex.

70a

(k) Name and address of the appropriate author-

ity, if any, designated under the program to receive,

process and make disposition of controversies or dif-

ferences arising out of the apprenticeship agreement

when the controversies or differences cannot be ad-

justed locally or resolved in accordance with the

established trade procedure or applicable collective

bargaining provisions.

§ 29.12 Recognition of State agencies.

(a) The Secretary’s recognition of a State Ap-

prenticeship Agency or Council (SAC) gives the SAC

the authority to determine whether an apprenticeship

program conforms with the Secretary’s published

standards and the program is, therefore, eligible for

those Federal purposes which require such a de-

termination by the Secretary. Such recognition by

the SAC shall be accorded by the Secretary upon sub-

mission and approval of the following:

(1) An acceptable State apprenticeship law (or

Executive order), and regulations adopted pursuant

thereto;

(2) Acceptable composition of the State Appren-

ticeship Council (SAC) ;

(3) An acceptable State Plan for Equal Oppor-

tunity in Apprenticeship;

(4) A description of the basic standards, criteria,

and requirements for program registration and/or

approval; and

(5) A description of policies and operating prc-

cedures which depart from or impose requirements

in addition to those prescribed in this part.

(b) Basic requirements. Generally the basic re-

quirements under the matters covered in paragraph

(a) of this section shall be in conformity with ap-

ve x Paden ces

A Ban A SABO tt ls aR ot i Bi AE es pew teat a oe Ta Ta + bball eee ete, theta he

relia cate B a ete NE A Ee he in Bt Sener Nee SPIE seth hoc Sie nanan wry ts ate ae

Tla

plicable requirements as set forth in this part. Ac-

ceptabie State provisions shall:

(1) Establish the apprenticeship agency in: (i)

The State Department of Labor, or (ii) in that

agency of State government having jurisdiction of

laws and regulations governing wages, hours, and

working conditions, or (iii) that State agency pres-

ently recognized by the Bureau, with a State official

empowered to direct the apprenticeship operation;

(2) Require that the State Apprenticeship Council

be composed of persons familiar with apprenticeable

occupations and an equal number of representatives

of employer and of employee organizations and may

include public members who shall not number in

excess of the number named to represent either em-

ployer or employee organizations. Each representa-

tive so named shall have one vote. Ex officio mem-

bers may be added to the council but they shall have

no vote except where such members have a vote ac-

cording to the established practice of a presently

recognized council. If the State official who directs

the apprenticeship program is a member of the coun-

cil, provision may be made for the official to have a

tie-breaking vote;

(3) Clearly delineate the respective powers and

duties of the State official and of the council;

(4) Clearly designate the officer or body authorized

to register and deregister apprenticeship programs

and agreements;

(5) Establish policies and procedures to promote

equality of opportunity in apprenticeship programs

pursuant to a State Plan for Equal Employment Op-

portunity in Apprenticeship which adopts and imple-

ments the requirements of 29 CFR Part 30, as

amended, and to require apprenticeship programs to

72a

operate in conformity with such State Plan and 29

CFR Part 30, as amended;

(6) Prescribe the contents of apprenticeship agree-

ments;

(7) Limit the registration of apprenticeship pro-

grams to those providing training in “apprenticeable”’

occupations as defined in § 29.4;

(8) Provide that apprenticeship programs and

standards of employers and unions in other than the

building and construction industry, which jointly

form a sponsoring entity on a multistate basis and

are registered pursuant to all requirements of this

part by any recognized State Apprenticeship Agency /

Council or by the Bureau, sha!l be accorded registra-

tion or approval reciprocity by any other State Ap-

prenticeship Agency/Council or office of the Bureau

if such reciprocity is requested by the sponsoring

entity;

(9) Provide for the cancellation, deregistration

and/or termination of approval of programs, and for

temporary suspension, cancellation, deregistration

and/or termination of approval of apprenticeship

agreements; and

(10) Provide that under a program proposed for

registration by an employer or employers’ associa-

tion, and where the standards, collective bargaining

agreement or other instrument provides for partici-

pation by a union in any manner in the operation of

the substantive matters of the apprenticeship pro-

gram, and such participation is exercised, written

acknowledgment of union agreement or “no objec-

tion” to the registration is required. Where no such

participation is evidenced and practiced, the employer

or employers’ association shall simultaneously furnish

to the union, if any, which is the collective bargain-

ing agent of the employees to be trained, a copy of

73a

its application for registration and of the apprentice-

ship program. The State agency shall provide a rea-

sonable time period of not less than 30 days nor

more than 60 days for receipt of union comments, if

any, before final action on the application for regis-

tration and/or approval.

ticeship Agency/Council desiring recognition shall

submit to the Administrator, BAT, the documenta-

tion specified in § 29.12(a) of this part. A currently

recognized Agency/Council desiring continued recog-

nition by the Bureau shall submit to the Adminis-

trator the documentation specified in § 29.12(a) of

this part on or before July 18, 1977. An extension

of time within which to comply with the requirements

of this part may be granted by the Administrator for

good cause upon written request by the State agency

but the Administrator shall not extend the time for

submission of the documentation required by § 29.12

(a). The recognition of currently recognized Agen-

cies/Councils shall continue until July 18, 1977 and

during any extension period granted by the Ad-

ministrator.

(d) Appeal from denial of recognition. The denial

by the Administrator of a State agency’s application

for recognition under this part shall be in writing

and shall set forth the reasons for the denial. The

notice of denial shall be sent to the applicant by

certified mail, return receipt requested. The appli-

cant may appeal such a denial to the Secretary by

mailing or otherwise furnishing to the Adminis-

trator, within 30 days of receipt of the denial, a

notice of appeal addressed to the Secretary and set-

ting forth the following items:

(1) A statement that the applicant appeals to

the Secretary to reverse the Administrator’s deci-

sion to deny the application;

74a

(2) The date of the Administrtor’s decision and

the date the applicant received the decision;

(3) A summary of the reasons why the applicant

believes that the Administrator’s decision was in-

correct ;

(4) A copy of the application for recognition and

subsequent modifications, if any;

(5) A copy of the Administrator’s decision of de-

nial. Within 10 days of receipt of a notice of appeal,

the Secretary shall assign an Administrative Law

Judge to conduct hearings and to recommend findings

of fact and conclusions of law. The proceedings shall

be informal, witnesses shall be sworn, and the parties

shall have the right to counsel and of cvoss-examina-

tion.

The Administrative Law Judge shall submit the

recommendations and conclusions, together with the

entire record to the Secretary for final decision. The

Secretary shall make his final decision in writing

within 30 days of the Administrative Law Judge’s

submission. The Secretary may make a decision

granting recognition conditional upon the perform-

ance of one or more actions by the applicant. In the

event of such a conditional decision, recognition shall

not be effective until the applicant has submitted to

the Secretary evidence that the required actions have

been performed and the Secretary has communicated

to the applicant in writing that he is satisfied with

the evidence submitted.

(e) State apprenticeship programs. (1) An ap-

prenticeship program submitted for registration with

a State Apprenticeship Agency recognized by the

Bureau, for Federal purposes, be in conformity with

the State apprenticeship law, regulations, and with

the State Plan for Equal Employment Opportunity

75a

in Apprenticeship as submitted to and approved by

the Bureau pursuant to 29 CFR 30.15, as amended;

(2) In the event that a State Apprenticeship

Agency is not recognized by the Bureau for Federal

purposes, or that such recognition has been with-

drawn, or if no State Apprenticeship Agency exists,

registration with the Bureau may be requested. Such

registration shall be granted if the program is con-

ducted, administered and operated in accordance with

the requirements of this part and the equal oppor-

tunity regulation in 29 CFR Part 30, as amended.

5. Section 212 of Title 8 of the California Code of

Regulations, 8 C.C.R. § 212, provides as follows:

Apprenticeship programs shall be established by

written standards approved by the Chief DAS. The

standards shall be approved only when they cover all

work performed within the apprenticeable occupa-

tion, conform to applicable law, and contain:

(a) Evidence of:

(1) work site facilities and equipment sufficient

to train the apprentice (s) ;

(2) skilled workers as trainers at the work

site(s) ;

(3) adequate arrangements for related and sup-

plemental instruction pursuant to Labor Code Sec-

tion 3074;

(4) ability to offer training and supervision in all

work processes of the apprenticeable occupation (s) ;

(5) provisions for evaluation of on-the-job train-

ing and related and supplemental instruction;

(b) A statement of the:

(1) occupation (s) ;

CARE Eve we

76a

(2) party or parties to whom the standards apply

an‘ the geographic area;

(3) definition and duties of the apprentice;

(4) working conditions of the apprentice;

(5) current applicable journeyman wage or wages;

(6). ratio or number of apprentices to be employed

and the method of determining such ratio;

(7) mechanism that will be used to provide ap-

prentices with reasonably continuous employment in

the event of a lay-off or the inability of an employer

to provide training in all work processes as outlined

in the standards;

(8) requirement for incorporating the provisions

of the standards into the apprentice agreement.

(ec) Provisions for:

(1) establishment of an apprenticeship committee

if applicable;

(2) administration of the standards;

(3) establishment of rules and regulations govern-

ing the program;

(4) determining the qualifications of employers if

other than single employer programs;

(5) determining the qualificctions of apprentice

applicants;

(6) an apprentice worksite job progress and re-

lated and supplemental instruction record system;

7) graduated minimum wage schedules to be paid

during the term of training, and applied uniformly

to all employers subject to the standards, as applica-

ble;

77a

(A) wage progression schedule shall be in accord-

ance with the collective bargaining agreement, if con-

tained therein;

(B) where the program is not subject to collective

bargaining, the wage progression schedule shall be

determined by the program sponsor in consultation

with the Division of Apprenticeship Standards and

shall in no case be less than ten percent (10%) per

year, when the entry wage is based on fifty percent

(50%) of the current journeyman wage.

(8) discipline of apprentices and including provi-

sions for fair hearings;

(9) termination or recommendation of cancella-

tion of apprentice agreements;

(10) recommending issuance of State Certificates

of Completion of Apprenticeship pursuant to Sec-

tion 224 of this Chapter;

(11) revision of standards;

(12) training and education of the apprentice in

first aid, safe working practices and in the recogni-

tion of occupational health and safety hazards;

(13) fair and impartial treatment of applicants

for apprenticeship, selected through uniform selection

procedures, which shall be an addendum to the stand-

ards, pursuant to Section 215 of this Chapter;

(14) mobility between employers when essential

to provide exposure and training in various work

processes in the apprenticeable occupation;

(15) approval of the standards by the Chief DAS.

(d) The names and signatures of the parties.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.