Amicus Curiae Brief — International Fidelity Insurance v. Board of Trustees of Operating Engineers Local 825 Fund Service Facilities

OO

m~ Supreme Court, U.S

“4 ) FIL ED

eal AUS 28 1997

No. 97-70

CLERK

In The

Supreme Court of the United States

th

October Term, 1996

INTERNATIONAL FIDELITY INSURANCE COMPANY, a

New Jersey Corportion,

Petitioner,

VS.

BOARD OF TRUSTEES OF OPERATING ENGINEERS

LOCAL 825 FUND SERVICE FACILITIES,

Respondent.

On Writ of Certiorari to the

Supreme Court of the State of New Jersey

BRIEF OF AMICI CURIAE

IN SUPPORT OF RESPONDENT

JAMES R. ZAZZALI

Counsel of Record

KENNETH I. NOWAK

EDWARD H. O’HARE

ZAZZALI, ZAZZALI, FAGELLA

& NOWAK

Attorneys for Amici Curiae

One Riverfront Plaza

Newark, New Jersey 07102

(201) 623-1822

utz

vents (800) 3 APPEAL « (800) 5 APPEAL « (800) BRIEF 21 M argsiat

i

QUESTION PRESENTED

Does the Employee Retirement Income Security Act of 1974

(“ERISA”) preempt provisions of the New Jersey Public Works

Bond Act, N.J.S.A. 2A:44-143 et seq., a generally applicable

State law that functions without any reference to ERISA, which

law requires contractors to post bonds for labor performed on

and material supplied to public works projects, so as to preclude

an ERISA fund from suing the surety on the bond.

ii

LIST OF PARTIES TO THE PROCEEDINGS BELOW

Amici curiae hereby rely upon and incorporate by reference

the List of Parties to the Proceedings Below set forth in the

Petition for Writ of Certiorari by petitioner International Fidelity

Insurance Company.

TABLE OF CONTENTS

Page

Nee eee lisbbeenes es | i

List of Parties to the Proceedings Below ............ ii

Ee ce G yeu k ck kcevseccccccecere ili

REE iv

I nice cic pccascseecceecess l

SS a a 2

PO NID cic cccccccesccces 3

Relevant Statutory Provisions Involved ............. 3

a 3

ie ob wa au idee 40 edhe >

This Honorable Court Should Deny Certiorari

Because Petitioner Fails To Offer Any Compelling

Reasons For Review Of The Decision Of The

Supreme Court Of New Jersey; The Preemption

Issue Raised In This Petition Has Been Determined

And Resolved By This Court And Has Been

Uniformly Followed By The Lower Federal Courts

EY nk uwees 64 vnedarissss 3

Deen cue eeeces 18

iv

Contents

Page

TABLE OF CITATIONS

Cases Cited:

Aetna Life Ins. Co. v. Borges, 869 F.2d 142 (2d Cir.), cert.

Gabad, GIS OS. Git CGE nce vvncssscceesecsi 8

Blieler v. Christwood Contacting Co., Inc., 72 F.3d 13

COG RU nb Ask 0065-0500 nk ended osha 17

Board of Trustees of Operating Engineers Local 825 Fund

Service Facilities v. International Fidelity Insurance

Co., 148 N.J. 561, 691 A.2d 339 (1997) .......... 2

Bricklayers Local 33 v. America’s Marble Source, 950 F.2d

SO Ge Ge Ne 600d 6d dee eneeeekns ntaedanes 6

California Div. of Labor Standards Enforcement v.

Dillingham Constr., N.A., Inc., 519 U.S. _, 117 S. Ct.

832, 136 L. Bd. 24791 (1997) ......05- 4, 6, 7, 8, 9, 10, 17

Carpenters Southern California Administrative Corp., v.

D&L Camp Construction, 738 F.2d 999 (9th Cir. 1984)

enceSS eee s SE506 dies as a ge hae ee 17

Carpenters Southern California Administrative Corp. v.

Majestic Housing, 743 F.2d 1341 (9th Cir. 1984) ... 17

Carpenters Local 261 Health and Welfare Fund v. National

Union Fire Insurance of Pittsburgh, Pa., 686 A.2d 1373

ce Re PE rer ree 13, 14, 17

v

Contents

Page

Central States Pension Fund v. Central Transport, Inc., ;

472 U.S. 559, 105 S. Ct. 2833, 86 L. Ed. 2d 447 (1985)

POT eT Tee eee ee ee eer CCE eT eee 15

Consumer Ben. Ass'n of U.S. v. Lexington Ins. Co., 731 F.

Sea. 3S1G CAE... TIPOS oc icc cscccccecccces 8

District of Columbia v. Greater Washington Board of

Trade, 506 U.S. 130, 113 S. Ct. 580, 121 L. Ed. 2d 513

GUE i ob Wa cab 54 0 be ee ER AE EES Red eh ban KKeS 15

Eacott v. Insurance Company of North America, 40 Conn.

Aad. TFT STS A.26 Fat CUFFS) ov csscvcseccseccs 14

Ferguson Electric Co., Inc. v. Foley, 115 F.3d 237 (3d Cir.

SOGE Kb Phere AS SNe b cn th on ad beneun des eease 8

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987)

Sces cued ee ues 6 iahon6a bs ueuarnsbeeeseerues 8, 15

Greenblatt v. Delta Plumbing & Heating Corp., 818 F.

Supp. 623 (S.D.N.Y. 1993) ......scecccccceees 13, 14, 17

Greenblatt v. Delta Plumbing & Heating Corp., 68 F.3d

- igs fe errr erie yee Ter ee 4,5, 14, 16

Hawaii Laborers Trust Funds v. Maui Prince Hotel, 81

Hawaii 487, 918 P.2d 1143 (Hw. 1996) .......... 14, 16

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.

Ct. 478, 112 L. Bd. 26 S74 (199G) ... weve cececs 9, 13,17

vi

Contents

Page

Local No. 46 Metallic Lathers Union v. Tratoros

Construction, Inc., 920 F. Supp. 55 (S.D.N.Y. 1996)

odpneessxeneunendcesb ae ewnns se URE ees 13, 17

Mackey v. Lanier Collection Agency and Service, Inc., 486

U.S. 825, 108 S. Ct. 2182, 100 L. Ed. 2d 836 (1988)

iv odb bnebesenese bs geeehaeeek cus eens 6, 10, 11

Maryland v. Louisiana, 451 U.S. 725, 101 S. Ct. 2114, 68

me 3 tS rer rer rr rrr 6

Massachusetts v. Morash, 490 U.S. 107, 109 S. Ct. 1660,

oe ae erro errr 7

Metropolitan Life Insurance Co. v. Massachusetts, 471

U.S. 724, 105 S. Ct. 2380, 85 L. Ed. 2d 728 (1985)

one Hd be ban &6 06 06h0 00 eae eee 18

Newark Laborers’ Pension-Welfare Funds v. Commercial

Union Ins. Co., 126 N.J. Super. 1, 312 A.2d 649 (App.

REED $6 004i ssepcerancupnes casera 12

New York Conference Blue Cross & Blue Shield Plans v.

Travelers Ins. Co., 514 U.S. 645, 117 S. Ct. 832, 131

L. Sk, SE GS CIGRS) cc cccccese 4, 5, 6, 7,8, 12, 13, 14, 17

Plumbers Local 458 Holiday Vacation Fund v. Howard

Immel, Inc., 151 Wis. 2d 233, 445 N.W. 2d 43 (App.

RN. BUDGE bes evwacayednceeuensens seenesnas 16

vii

Contents

Page

Puget Sound Electrical Workers Health and Welfare Trust |

Fund v. Merit Company, 870 P.2d 960 (Wash. 1994)

OE TE nd pe i emrey ST egere rts PTE ee 17

Ragan v. Tri-County Excavating, Inc., 62 F.3d 501 (3d

Ce FPS cc kvccchocvasvasicnbess 4, 5, 13, 14, 15, 16, 17

Seaboard Surety Co. v. Indiana State District Council of

Laborers and HOD Carriers Health and Welfare Fund,

645 N.E. 2d 1121 (Ind. Ct. App. 1995) ........... 14

Shaw v. Delta Airlines, Inc., 463 U.S. 85, 103 S. Ct. 2890,

77 L. Ed. 2d 490 (1985) .....ccccccccsccvecsvece 7,8

Trustees For Michigan Laborers’ Health Care Fund v.

Warranty Builders, Inc., 921 F. Supp. 471 (E.D. Mich.

CO cick pcwaw Veda cette avecdvedsresodge te 12, 13, 16

Trustees of Electrical Workers Health and Welfare Fund

v. Marjo, 988 F.2d 865 (9th Cir. 1993) .......++-- 17

United States, ex rel. Sherman v. Carter, 353 U.S. 210, 77

S. Ct. 793, 1 L. Ed. 2d 776 (1957) .....--eeeeeees 12

United Wire, Metal & Machine Health and Welfare Fund

y. Morristown Memorial Hospital, 995 F.2d 1179 (3d

Cir.), cert. denied, 510 U.S. 1031, 114.S. Ct. 651, 126

L, Bed, 2d SSZCIGGS) «occ cccccvcccccsesccscsess 6, 8

vill

Contents

Page

Statutes Cited:

Be Ce SUNN 8 vied Se cndassuislauecdwsiunen 4

Se ae PPI, SUS Sain adacxkaeneeteeane l

er i OILED vo <.046 404009 4050000b0vOa l

Pa EE. WA wck kev aen kh0un eehaeeedan 14

Oe es O PRIEIEAD 6:5 Kone e wac dan cdubiecees 16

rg | 2 io: SPR Perera airy rere ree poe 14

Pe rs eR ak ecco hee ke xas cuseavecbuans 6

Oe Un OG UUEP oc awcavcccene ‘eae pid cee neee whee 14, 15

Pe ese Ss Rea A sce canes heh baa BED eee. 3

Pedeedhs MOO NCRD OP OUR. is cine ideonnccisacesce i, 3, 8, 11

Rules Cited:

co | er ore 3

UD Sos PRT 8 ss-5 Sas ces Nivaduedcds wees 1

Fs es GO Oe ND so os 4h bb oe Ren bs Ree dbeReEKKeks 10

Contents

Other Authorities Cited:

H.R. Rep. No. 869, 96th Cong., 2d Sess., 1980

if Fated hh. err reer rr rer ee eee eee

Senate Committee on Labor and Human Resources, 96th

Cong., 2d Sess. S. 1076, Multi-employer Pension Plan

Amendments of 1980: Summary and Analysis of

Consideration (Comm. P. 1980) ............5005-

16

: — = el As

2 ey eg fe Se el laa Saga A en ae a

© eer . i

= | ——— a,

]

INTEREST OF AMICI CURIAE'

Amici curiae are various New Jersey non-profit multiemployer

fringe benefit trust funds, established and governed under the

provisions of the Employee Retirement Income Security Act

(“ERISA”) 29 U.S.C. § 1002(c)(1). The funds provide benefits to

covered employees of various labor organizations, and were

established pursuant to separate trust indentures as required by law,

29 U.S.C. § 1001 et seg. Pursuant to the provisions of collective

bargaining agreements between various unions and employers, each

employer is required to pay contributions to each of the funds

administered by the trustees of those funds as part of the

compensation package paid to the employees represented by the

various unions. These contributions enable the funds to provide

pension, medical, hospital, annuity, unemployment and other

benefits to covered employees.

The various funds provide such benefits to over 30,000

employees and approximately 70,000 additional dependents in the

State of New Jersey. The funds provide these benefits to employees

primarily in the construction and related industries.

For reasons not germane to the instant petition, there is a

continuing problem of delinquent contractors in the construction

industry. Numerous employers consistently fail or refuse to pay

1. This brief is submitted on behalf of the New Jersey State Carpenter

Benefit Funds, Carpenters Local No. 6 Benefit Funds, Laborers Local Union

Nos. 472 & 172 Welfare and Pension Funds, Teamsters Local No. 408 Welfare

and Pension Funds, and Laborers Local Union Nos. 72, 156, 569 & 711 Welfare

and Pension Funds.

This brief was not authored in whole or in part by counsel for a party. No

person or entity, other than amici curiae, its members, or counsel have made a

monetary contribution to the preparation or submission of this brief. Pursuant to

Rule 37 of the Rules of Court, petitioner and respondent have consented to the

filing of this brief on behalf of amici curiae. Their letters of consent have been

filed with the Clerk of the Court.

2

contributions due these funds. The failure to pay jeopardizes the

medical, hospitalization, pension and other benefits due to the

members, the beneficiaries of the trust, and undermines the financial

integrity of the funds.

As with any type of properly operated pension and welfare

fund, the various funds can remain financially sound only if they

collect the contributions that were determined to be necessary to

provide the benefits, and if they invest those contributions wisely.

If the contributions are not made as promised by the contracting

employers, then the funds have the highest fiduciary obligation to

pursue payment from any and all legitimate sources so as to ensure

that there are monies available when covered employees retire or

take ill.

Petitioner seeks to bar the trustees of benefit funds in New

Jersey from utilizing New Jersey's generally applicable bonding

Statute in order to pursue and collect monies owing as a result of

work performed by covered employees on public projects. Such a

result would preclude the trustees from discharging their obligations

and needlessly deprive the participants and their beneficiaries of

monies they worked for and that are rightfully theirs. Amici curiae

thus have a keen interest in the petition sub judice.

OPINIONS BELOW

Petitioner seeks review of the decision of the Supreme Court

of New Jersey reported at Board of Trustees of Operating Engineers

Local 825 Fund Service Facilities v. International Fidelity Insurance

Co., 148 N.J. 561, 691 A.2d 339 (1997), which is reprinted in

petitioner’s appendix at pp. A-1 through A-18. The decision of the

Appellate Division of the Superior Court of New Jersey in this

matter is reported at 287 N.J. Super. 498, 671 A.2d 596 (App. Div.

1996), and is reprinted in petitioner’s appendix at pp. A-19 through

A-31.

3

STATEMENT OF JURISDICTION

Petitioner contends that this Court should grant certiorari

pursuant to 28 U.S.C. § 1257(a) because the decision of the Supreme

Court of New Jersey rendered on April 9, 1997 involves a question

of whether a State statute is repugnant to the laws of the United

States.

RELEVANT STATUTORY PROVISIONS INVOLVED

The statute relevant to this matter, N.J.S.A. 2A:44-143 et seq.,

entitled the “New Jersey Public Works Bond Act” (“Bond Act”), is

reprinted in petitioner’s appendix at pp. A-32 through A-45.

STATEMENT OF THE CASE

Amici curiae hereby rely upon and incorporate by reference

the Statement of the Case set forth in the Brief in Opposition to the

Petition for Writ of Certiorari submitted by respondent Board of

Trustees of Operating Engineers Local 825 Fund Service Facilities.

LEGAL ARGUMENT

THIS HONORABLE COURT SHOULD DENY

CERTIORART BECAUSE PETITIONER FAILS TO OFFER

ANY COMPELLING REASONS FOR REVIEW OF THE

DECISION OF THE SUPREME COURT OF NEW

JERSEY; THE PREEMPTION ISSUE RAISED IN THIS

PETITION HAS BEEN DETERMINED AND RESOLVED

BY THIS COURT AND HAS BEEN UNIFORMLY

FOLLOWED BY THE LOWER FEDERAL COURTS AND

STATE COURTS. i

Review on a writ of certiorari is not a matter of right, but of

judicial discretion. Sup. Ct. R. 10. A petition for a writ of certiorari

will be granted only for compelling reasons. Jd.

4

Petitioner urges this Court to grant certiorari because there

purportedly exists conflicting authority on the issue presented for

review; namely, whether ERISA preempts a union benefit fund’s

action against a surety under a state law of general applicability

which does not refer to an ERISA plan. In particular, petitioner

posits that there is a “split of authority” among the courts that have

addressed the issue and, hence, there exists a compelling need to

have this Court render a conclusive pronouncement.

Petitioner further contends that this Court should grant

certiorari pursuant to 28 U.S.C. § 1257(a) because the decision

rendered by the Supreme Court of New Jersey is repugnant to the

laws of the United States. In particular, petitioner argues that the

Supreme Court of New Jersey wrongly held that the Bond Act is

not preempted by ERISA because its decision was based upon:

(i) a misinterpretation of two recent

decisions from this Court (New York

Conference Blue Cross & Blue Shield Plans

v. Travelers Ins. Co., 514 U.S. 645 (1995),

and California Div. of Labor Standards

Enforcement v. Dillingham Constr., N.A.,

Inc., 519 U.S. __, 117 S. Ct. 832, 136 L. Ed.

2d 791 (1997);

(ii) the misapplication of two decisions that are

readily distinguishable from the facts at issue

here (Greenblatt v. Delta Plumbing & Heating

Corp., 68 F.3d 561 (2nd Cir. 1995), and Ragan

v. Tri-County Excavating, Inc., 62 F.3d 501 (3d

Cir. 1995));

(iii) a decision to follow the reasoning of

several wrongly-decided cases that upheld state

Statutes against an ERISA preemption

challenge.

(Petition for Writ of Certiorari, at pp. 4-5).

5

For the reasons which follow, certiorari should be denied

because there is no compelling reason for this Court to review the

decision of the Supreme Court of New Jersey.

First, the decision of the Supreme Court of New Jersey

represents a proper application of preemption analysis to the federal

and state laws involved. The decision below correctly considered

and construed the scope of the preemption provision in ERISA,

the Congressional objectives in enacting ERISA, the language,

purpose and history of the state law involved, and the judicial

presumption against overly broad assertion of federal supremacy

over longstanding state laws in traditional areas of state regulation.

The analysis employed, and the result reached, by the Supreme

Court of New Jersey, are entirely consistent with this Court’s ERISA

preemption rulings. Also, the New Jersey Supreme Court’s

interpretation of Greenblatt and Ragan is identical to the

interpretation of those cases by the federal and state courts in those

respective circuits.

Second, the alleged split among courts regarding this issue is

more imagined than real. The petitioner fails, or simply refuses, to

recognize that bond laws which refer to ERISA plans are different

than those — such as the one involved here — which do not. To the

extent court decisions find preempted a bond law which does not

refer to an ERISA fund, those cases — of which there are only two

— predate this Court’s decision in New York Conference Blue Cross

& Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 117 S. Ct.

832, 131 L. Ed. 2d 695 (1995). Any residue of confusion or conflict

was resolved by this Court’s decision in Travelers, a case relied

upon by the Supreme Court of New Jersey. Travelers clarified this

Court’s prior ERISA preemption jurisprudence, and rendered a

conclusive heuristic determination of the issue presented. The two

cases cited by petitioner in support of its assertion that there is a

split of authority on the preemption issue were decided before

Travelers and cannot now be employed for the purpose of

demonstrating a divergence of authority. There is no compelling

reason for this Court to heed petitioner’s call for yet another ERISA

pronouncement; it already did so in Travelers.

6

In determining whether ERISA preempts a particular state law,

this Court has delineated a two-part analysis, infused by the judicial

presumption that Congress did not intend to supplant state laws.

Travelers, 115 S. Ct. at 1676; Maryland v. Louisiana, 451 U.S.

725, 746, 101 S. Ct. 2114, 2128, 68 L. Ed. 2d 576 (1981). The

ERISA preemption analysis first requires a court to examine the

text of the provision in question, 29 U.S.C. § 1144(a) (“Section

514(a)”), and if that is insufficient to resolve the matter, to look to

the purpose of the Act in which the provision occurs. Travelers,

115 S. Ct. at 1677.

ERISA’s preemption clause states, in pertinent part, that

“ERISA 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) (§ 514(a)). A state law “relates to” an ERISA plan for

purposes of § 514(a) if it either (a) “refers to” or (b) has a

“connection with” such a plan. California Labor Standards

Enforcement v. Dillingham Construction, N.A., Inc., 519 U.S. _,

117 S. Ct. 832, 837, 136 L. Ed. 2d. 791 (1997).

A state law or lawsuit “refers to” an ERISA plan not only if it

expressly imposes requirements upon ERISA plans, but also if it is

premised upon the existence of an ERISA plan, or if it acts

immediately and exclusively upon such plans, or if the ERISA plan

is essential to the law’s operations. Jd. 117 S. Ct. at 837-38. Thus,

a State law refers to an ERISA plan if the state law is specifically

designed to affect an ERISA plan, if it singles the plan out for

special treatment, or if the rights or duties it creates are unique to

such plans. Mackey v. Lanier Collection Agency and Service, Inc.,

486 U.S. 825, 108 S. Ct. 2182, 100 L. Ed. 2d 836 (1988); United

Wire, Metal & Machine Health and Welfare Fund v. Morristown

Memorial Hospital, 995 F.2d 1179, 1192 (3d Cir.), cert. denied,

510 U.S. 1031, 114S. Ct. 651, 126 L. Ed. 2d 332 (1993); Bricklayers

Local 33 v. America’s Marble Source, 950 F.2d 114 (3d Cir. 1991).

A state law also “relates to” an ERISA plan for purposes of

§ 514(a) if it has a “connection with” such a plan. Travelers, 115 S.

7

Ct. at 1677. However, unlike laws or suits which refer to an ERISA

plan as explained above, laws which have only a connection with an

ERISA plan are more amorphously defined. Where the state law does

not refer to a fund, plumbing the depths of “connection with” requires

a critical analysis of the purpose of ERISA and the mediacy of that

purpose with the state law. Travelers, 115 S. Ct. at 1677. An unchecked

concept of “connection with” which is universal in nature is as unhelpful

a measure of preemption as a notion of nearly infinite relations is to

“relates to.” Jd. When the state law does not “refer to” a trust fund,

courts must go beyond the unhelpful language of § 514(a) and look

instead at the objectives of ERISA as a guide to what state laws Congress

sought to supplant or to let stand.

ERISA is a comprehensive statute designed and intended to

promote and preserve the interests of employees and their

beneficiaries in employee welfare and pension funds. Shaw v. Delta

Airlines, Inc., 463 U.S. 85, 103 S. Ct. 2890, 77 L. Ed. 2d 490 (1985).

As this Court has repeatedly recognized and explained:

In enacting ERISA, Congress’ primary

concern was with the management of funds

accumulated to finance employee benefits

and the failure to pay employee benefits from

accumulated funds. To that end, it established

extensive reporting, disclosure, and fiduciary

requirements to ensure against the possibility

that the employee’s expectations of the

benefit would be defeated through poor

management by the plan administrator.

Massachusetts v. Morash, 490 U.S. 107, 115, 109 S. Ct. 1660,

1673, 104 L. Ed. 2d 98 (1989). In this Court’s most recent

exercise in ERISA preemption, this same concern was again

used as the guide in assessing, and denying, federal preemption.

Dillingham, 117 S. Ct. at 832, 838-39.

Congress also intended ERISA to protect the plans themselves

from being subjected to rules and regulations which would vary

8

from state to state, thereby burdening the plans with conflicting

requirements which would hinder and render more expensive the

operation of the plan. Fort Halifax Packing Co. v. Coyne, 482 U.S.

1, 9, 15 (1987); United Wire, supra; Consumer Ben. Ass'n of U.S.

v. Lexington Ins. Co., 731 F. Supp. 1510, 1515 (M.D. Ala. 1990).

What triggers ERISA’s preemption is not just any effect on a plan’s

administrative procedure, but a particular effect on the primary

administrative function of the plan, such as mandating benefits, or

determining eligibility for, or the amount of, a benefit. Shaw, 463

U.S. at 97; 103 S. Ct. at 2900; Aetna Life Ins. Co. v. Borges, 869

F.2d 142, 146-147 (2d Cir.), cert. denied, 493 U.S. 811 (1989).

Thus, state law has a connection with an ERISA plan if the law

dictates the choices faced and made by the plan. Dillingham, 117

S. Ct. at 841; Ferguson Electric Co., Inc. v. Foley, 115 F.3d 237,

240 (3d Cir. 1997).

And, as noted above, the analysis of the scope of a federal

law’s preemptive power will be guided by the historic precept that

the Court will never assume lightly that Congress has derogated

state regulation, but instead the Court will start its analysis with

the presumption that Congress did not intend to supplant state law.

Dillingham, 117 S. Ct. at 838; Travelers, 115 S. Ct. at 2378.

It is within the context of the objective of ERISA to protect

the plan participants’ expected benefits by means of regulation of

funding, fiduciary duty, and disclosure, combined with the

Congressional intent of establishing a uniform body of benefits

laws, that this Court has mapped out the course of federal pre-

emption of state laws.

There can be no sensible contention that the New Jersey Bond

Act “refers to” an ERISA plan. The Bond Act, N.J.S.A. 2A:44-

143, was enacted in 1918 as a general statute permitting any supplier

to a contractor of a public job to sue the surety on the bond. The

Act does not contain a reference to any ERISA plan, and confers

no special benefit to or unique status upon such plans. Indeed,

petitioner makes no claim that it does. If preemption exists, it is

not on the basis that the Bond Act refers to an ERISA plan.

9

Since the Bond Act does not refer to an ERISA plan, under

any possible conception, the analysis must be whether the Act is

connected with an ERISA plan.

Clearly the Bond Act imposes no financial or administrative

burdens upon an ERISA plan. On the contrary, petitioner claims

preemption precisely because the Bond Act supposedly supplements

a fund’s power to pursue monies owing to it. Nor does the Bond

act mandate any benefits, eligibility requirements, or coverage. The

Bond Act does not dictate any decisions or actions by the fund.

The Bond Act does not affect a fund’s administrative procedures,

nor burden it with obligations or duties. It merely permits a fund to

pursue a cause of action against a surety on a bond. Thus far, the

Bond Act has not touched any of the indicia of a “connection with”

an ERISA fund.

The courts have employed a further analysis to determine

whether a state law or claim has a connection with an ERISA plan.

That inquiry has focused on whether the law, or cause of action,

requires the existence of an ERISA plan for its being. For example,

in Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S. Ct. 478,

112 L. Ed. 2d 474 (1990), the Court found preempted a state-

recognized wrongful discharge suit which would allow recovery

when the plaintiff proves that the principal reason for his discharge

was the employer’s desire to avoid contributing to or paying benefits

under its pension plan. Jd. 498 U.S. at 140, 111 S. Ct. at 483.

Explaining why the suit was preempted, this Court noted that in

order to prevail, the plaintiff must plead, and the court must find,

that an ERISA plan exists and that the employer intended to avoid

its obligations under the plan. That is, “[b]ecause the court’s inquiry

must be directed to the plan, this judicially created cause of action

‘relates to’ an ERISA plan.” Jd. 498 U.S. at 140, 111 S. Ct. at 483.

There was no cause of action if there were no ERISA plan.

If the state law does not refer to an ERISA plan, and does not

require an ERISA plan as a sine qua non for its being, the law is

not preempted. For example, in Dillingham, the California law

10

required a public works contractor to pay its workers the local

prevailing wage, but permitted a lower wage for participants in a

state-approved apprenticeship program. The class of eligible

apprenticeship programs: was not confined to those covered by

ERISA. The Court expressly remarked that the California rule

functioned irrespective of the existence of an ERISA plan.

Dillingham, 117 S. Ct. at 839. Moreover, the Court emphasized

that the rate of wages to be paid on public jobs was quite remote

from the “reporting, disclosure, fiduciary responsibility” issues with

which ERISA is expressly concerned, and that wages on public

jobs — as well as regulations of apprenticeship programs — were

areas historically regulated by the states. Jd. at 840. In language

and meaning directly applicable to the instant case, the Court

observed that California has required prevailing wages on public

work projects for more than 40 years prior to the enactment of

ERISA, which further corroborates its existence independent of

ERISA. Id. Likewise, and as will be elaborated upon below, the

New Jersey Bond Act at issue here was enacted in 1918, more than

50 years before ERISA.

This Court’s preemption primer relating to state collection laws

was in Mackey. In that case, the Court ruled that of Georgia’s two

anti-garnishment statutes, the one which expressly referred to and

specifically prohibited the garnishment of ERISA plan benefits was

preempted by ERISA because it applied only to ERISA plans, while

the other Georgia garnishment law, which was of general application

and did not refer to a fund, was not preempted. The former law

was preempted because of its reference to a trust fund, making the

analysis manifestly evident. But, as to the latter more general law,

which simply provided for garnishment as a method of collection

and did not refer to or mention ERISA plans, the Court found that

it did not “relate to” ERISA benefit plans and therefore escaped

ERISA’s preemptive reach.

The Court noted that ERISA does not provide for a post-

judgment collection mechanism, and that Fed. R. Civ. P. 69(a) defers

to generalized state law to provide collection methods. Mackey,

1]

486 U.S. at 833. Accordingly, the Court concluded that while any

state law which “singles out” ERISA plans, whether by “express

reference” or for “special treatment”, would be preempted, a general

state-law method for collecting judgments must remain undisturbed

by ERISA. Mackey, 486 U.S. at 838 n. 12.

In short, a state law will be preempted if it expressly refers to

an ERISA plan, if it was enacted to apply to ERISA plans, if it

Singles out such plans for special treatment, if it mandates or

prohibits decisions by an ERISA plan, or if it acquired its existence

by virtue of — or necessitates interpretation of — an ERISA plan.

The state law at issue here does none of these. It is a law of general

applicability which long antedates ERISA, does not refer to ERISA,

does not impose duties on or bind ERISA plans, does not uniquely

treat or benefit such plans, and does not require an ERISA plan for

its existence.

The New Jersey Bond Act was enacted in 1918 as a law of

general applicability for the benefit of all suppliers of equipment,

machinery, material, fuels, and labor to public jobs. Specifically,

and in pertinent part, N.J.S.A. 2A:44-143 provides:

When public buildings or other public works

or improvements are about to be constructed,

erected, altered or repaired under contract,

at the expense of the State or any county,

municipality or school district thereof, the

board, officer, or agent contracting on behalf

of the State, county, municipality or school

district, shall require the usual bond, as

provided for by law, with good and sufficient

sureties, with an additional obligation for the

payment by the contractor, and by all

subcontractors, for all labor performed or

materials, provisions, provender or other

supplies, teams, fuels, oils, implements or

machinery used or consumed in, upon, for

12 a

or about the construction, erection, alteration

or repair of such buildings, works or

improvements.

This provision is noteworthy both for what it does and does

not contain. Enacted decades before ERISA was even a glimmer

in Congress’ eyes, the Bond Act delineates a risk-spreading form

of insurance for all suppliers to a public job site. It is not limited to

unions, or even labor, or even wages. It applies to providers of any

machine, material, fuel or labor. It contains a means of protecting

all who supply a public job.?

What the Bond Act does not contain, directly or indirectly, is

any reference to a trust fund. The words or concept of fringe benefit

fund, ERISA fund, employee trust fund or the like do not appear in

the statute. The New Jersey Public Bond Acct falls into that camp of

state bond laws of general application which have no reference to

a benefit fund, as opposed to those which expressly refer to such

funds.

Since the reevaluation of ERISA preemption undertaken in

Travelers, cases involving state laws requiring a surety bond have

uniformly held that the state laws are not preempted. For instance,

in Trustees For Michigan Laborers’ Health Care Fund v. Warranty

Builders, Inc., 921 F. Supp. 471 (E.D. Mich. 1996), the funds sued

2. The petitioner asserts that to include the duty to pay fringe benefits in a

surety bond would be unfair to the surety, which supposedly did not consider the

risk of such liability. But the benefits owing to laborers on a public job are

automatically included as a factor since such benefits are deemed a part of the

prevailing wage. See United States, ex rel. Sherman v. Carter, 353 U.S. 210, 77

S. Ct. 793, 1 L. Ed. 2d 776 (1957) (holding Miller Act provision insuring employer

payment of “sums justly due” for labor performed, not limited to wages). Sureties

in New Jersey were aware of the practice of including fringe benefits within

definition of wages. See Newark Laborers’ Pension-Welfare Funds v. Commercial

Union Ins. Co., 126 N.J. Super. 1,312 A.2d 649 (App. Div. 1973) (noting surety

had paid benefit contributions owed, and holding that costs and attorneys’ fees

were recoverable against surety in action to collect an employer’s delinquent

contributions).

13

the surety for contributions due by the contractor on a public works

job. A Michigan law required the contractor on a public job to obtain

a surety bond. The statute, similar in all respects to that in New

Jersey, was one of general applicability. Jd. at 477. The court found

that the law was not preempted. As the court explained, the action

to collect on the bond constitutes enforcement of the bond only,

and does not interfere with, single out, or uniquely apply to the

funds. Jd. at 477, 479. The law does not require any administrative

action by the funds, does not cause additional expenses, and applies

to the funds in the same manner as it applies to all suppliers on the

job. Id. at 479. To the extent the law provides an avenue of collection

beyond that contained in ERISA’s enforcement section, that is only

an incidental result of the state law. Jd. “This law does not effect an

ERISA plan in any meaningful way.” Jd.

In Ragan v. Tri-County Excavating, Inc., 62 F.3d 501 (3d Cir.

1995), decided four months after Travelers, the Third Circuit found

that a state cause of action on a bond is not preempted by ERISA.

Noting that the bond was one of general applicability which makes

no reference to an ERISA plan, and functions independent of an

ERISA fund, the Third Circuit reasoned that the fund’s suit against

the surety was not predicated on the existence of an ERISA plan.

In Ragan (unlike in Ingersoll-Rand), the cause of action was

founded upon the bond, thus there was no need to inquire into —

or even to determine — the fund’s status as an ERISA plan or not,

and the fund’s status as an ERISA plan was not critical to

establishing liability. Ingersoll-Rand, 498 U.S. at 139-40, 111 S.

Ct. at 482-84; Ragan, 62 F.3d at 511. That the sums collected in

the enforcement action on the bond may go to an ERISA plan’s

assets does not mean the suit is predicated upon ERISA, for if that

were the test, the preemption analysis would be simple, and the

numerous court analyses engaged in to date meaningless. Ragan,

62 F.3d at 512. See also Local No. 46 Metallic Lathers Union v.

Tratoros Construction, Inc., 920 F. Supp. 55 (S.D.N.Y. 1996) (suit

by ERISA fund against surety on bond required by state law is not

preempted under dictates of Travelers and Greenblatt); Carpenters

14

Local 261 Health and Welfare Fund v. National Union Fire

Insurance of Pittsburgh, Pa., 686 A.2d 1373 (Com. Ct. Pa. 1996)

(ERISA fund’s action against surety under state Public Works

Contractors Bond Act is not preempted); Seaboard Surety Co. v.

Indiana State District Council of Laborers and HOD Carriers

Health and Welfare Fund, 645 N.E. 2d 1121 (Ind. Ct. App. 1995)

(Indiana Public Works Act, which requires surety bond, not

preempted); Hawaii Laborers Trust Funds v. Maui Prince Hotel,

81 Hawaii 487, 918 P.2d 1143 (Hw. 1996); Eacott v. Insurance

Company of North America, 40 Conn. App. 777, 673 A.2d 587

(1996). There is no known post-7ravelers case which holds a state

bond act of general application to be preempted.

Nonetheless, the petitioner argues that insofar as the New

Jersey Bond Act creates an avenue of collection supplemental to

those prescribed in ERISA, it is preempted. This argument is

contrary to court decisions, flies in the face of common sense, and,

perhaps most important, is contradicted by ERISA’s purpose and

levislative hi

First of all, ERISA’s civil enforcement remedies (29 U.S.C.

§ 1132 and 1145) provide a cause of action by the ERISA funds

against an “employer.” ERISA defines an “employer” as “any person

acting directly as an employer, or indirectly in the interest of an

employer, in relation to an employee benefit plan.” 29 U.S.C.

§ 1002(5). A surety is simply not an employer. As the Third Circuit

stated, “[cJourts that have considered the matter have all but

unanimously held that sureties do not fall within this definition.”

Ragan, 62 F.3d at 512.’ As the Third Circuit explained, the surety

does not stand in an employment relationship with the funds or

participants, is not the agent of the employer, and is not acting in

3. At the time Ragan was decided, the only court to rule that a surety was

an employer was the Southern District in New York. Greenblatt v. Delta Plumbing

& Heating Corp., 818 F. Supp. 623, 629 (S.D.N.Y. 1993). However, on appeal

the Second Circuit reversed and, inter alia, expressly stated that the definition of

“employer” under ERISA “does not include a surety ...” Greenblatt v. Delta

Plumbing & Heating Corp., 68 F.3d 561, 575 (2d. Cir. 1995).

15

the interest of the employer. /d. at 512-13. The Third Circuit stressed

that the surety does not have an ownership, agency or employment

relationship with the fund or employer, and that the only relationship

which does exist is a contractual one based on the bond — not on

the collective bargaining agreement. Jd.

Second, Congress did not intend for ERISA to supersede any and

all state laws. This Court has repeatedly stressed that there is no ERISA

When Congress enacted 29 U.S.C. § 1145, one of the two

arms of ERISA’s civil enforcement scheme, the intent was to

Amendments of 1980: Summary and Analysis of Consideration

(Comm. P. 1980 at 43-44). One of the problems which the

clearly sought to address in enacting 29 U.S.C. § 1145 was the

problem create’ by employer delinquencies. Jd. Far from ever

intending to prevent trust funds from using neutral state statutes

that did not relate to employee benefit plans, the Congressional

record makes it clear that Congress did not intend to preclude use

of permitted state or federal remedies against delinquent employers.

: 16

As the House Report states: “The Committee amendment does not

change any other type of remedy permitted under State or Federal

Law with respect to delinquent multiemployer plan contributions.”

H.R. Rep. No. 869, 96th Cong., 2d Sess., 1980 U.S.C.C.A.N. 2993,

3038.

To preempt the use of a state bond law of general applicability

as a means of collecting monies owing to an ERISA fund would be

cruelly ironic, given ERISA’s fundamental goal of protecting

participants’ benefits and assets. Trustees of employee benefit plans

have a fiduciary duty to collect delinquent trust fund contributions,

and ERISA requires the trustees to discharge their duties solely in

the interests of the participants and beneficiaries. 29 U.S.C.

§ 1104(a)(1). If the trustees of funds in New Jersey may not seek

the aid of New Jersey’s generalized bonding statute in order to

pursue monies properly owing to the funds, the trustees would be

needlessly limited in discharging their obligations. More important,

law and deprive the participants and their beneficiaries of monies

that are properly theirs.

Third, the courts have made clear that a state law which merely

provides another means of collecting monies rightly belonging to

the fund does not preempt ERISA when the state law does not

interfere with ERISA’s own enforcement scheme (i.e., preemption

is triggered by a conflict or restriction, not a supplement.) Ragan,

62 F.3d at 512 (state claim preempted if it “conflicts” with ERISA);

Warranty Builders, Inc., 821 F. Supp. at 479; Hawaii Laborers’

Trust Fund, 918 P.2 at 1154; Plumbers Local 458 Holiday Vacation

Fund v. Howard Immel, Inc., 151 Wis. 2d 233, 445 N.W. 2d 43, 45

(App. Div. 1989).*

The petitioner asserts that at least some courts have found that

4. In Greenbian, the Second Circuit observed that the use of the state bond

law to sue a surety for monies owed to the ERISA fund was not a supplemental

remedy to ERISA’s enforcement provision because a suit against the surety was

not even an ERISA matter, the surety not being an employer. 68 F.3d at 576.

——

17

a state bond act of application is nonetheless preempted. To be

sure, two cases do hold that: Trustees of Electrical Workers Health

and Welfare Fund v. Marjo, 988 F.2d 865 (9th Cir. 1993) and Puget

Sound Electrical Workers Health and Welfare Trust Fund v. Merit

Company, 870 P.2d 960 (Wash. 1994). However, prior to Marjo,

the Ninth Circuit had twice found no preemption under identical

circumstances.’ The Ninth Circuit changed its mind in Marjo

because it construed this Court’s then recent holdings as establishing

a broader parameter of ERISA preemption. 988 F.2d at 867-68.

Whether the Ninth Circuit misread those cases or not, its holding

in Marjo is certainly wrong under Travelers and Dillingham. The

Ninth Circuit had it right the first two times. And in Puget, the

Supreme Court of Washington was simply following the Ninth

Circuit in Marjo. Most important, both Marjo and Puget are not

merely anomalies, they pre-date Travelers. There is no longer even

an argument for following them down a misguided path.‘

It must be reiterated that the New Jersey Bond Act does not

confer any special rights or preferable treatment on ERISA funds.

The Bond Act was enacted decades before ERISA and applies

equally as well to a wide variety of suppliers of a contractor on a

public job. The Bond Act reflects and arises from the historic state

regulation of public work projects. This history, and the intent of

the Bond Act, is wholly independent of and unrelated to ERISA or

5. Carpenters Southern California Administrative Corp. v. D&L Camp

Construction, 738 F.2d 999 (9th Cir. 1984); Carpenters Southern California

Administrative Corp. v. Majestic Housing, 743 F.2d 1341 (9th Cir. 1984).

6. The petitioner also argues that the Supreme Court of New Jersey erred

two cases dealt only with common law actions against a surety, not a state bond

act. That was, and is, a distinction without a difference. In Ingersoll-Rand, this

court made it clear that ERISA preemption analysis applies equally as well to

both state laws and state causes of action. Moreover, cases decided since Ragan

and Greenbiatt have aGc-oted and applied their reasoning to bond act suits. Blieler

« Christwood Contracting Co., inc., 72 F.3d 13 (2d Cir. 1996); Tratoros, supra;

Carpenters Local 26! . supra.

18

an ERISA fund. As this Court has recognized, the states possess

broad authority under their police powers to regulate the

employment relationship so as to protect workers within the state.

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

756, 105 S. Ct. 2380, 2398, 85 L. Ed. 2d 728 (1985). The New

Jersey Bond Act is nothing more than this state’s proper exercise

of its traditional and historic police powers in a manner of general

applicability, remote from ERISA’s shores.

CONCLUSION

For the reasons set forth above, amici curiae respectfully

requests that this Court deny the Petition for a Writ of Certiorari to

the Supreme Court of New Jersey.

Respectfully submitted,

JAMES R. ZAZZALI

Counsel of Record

KENNETH I. NOWAK

EDWARD H. O’HARE

ZAZZALI, ZAZZALI, FAGELLA

& NOWAK

Attorneys for Amici Curiae

One Riverfront Plaza

Newark, New Jersey 07102

(201) 623-1822