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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1997
- **Citation:** 522 U.S. 861

## Text

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

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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386013_1041%3A3. Public record. Not legal advice.