# Petition for Writ of Certiorari — WSB Electric, Inc. v. Curry > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_1811%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1997 - **Citation:** 519 U.S. 1109 ## Text Suprame Qoust, 0.8. (\) FILED \ } “96 789 NOV 19 1996. NO: —pepmenF THE CUERI 2 In The Supreme Court of the United States October Term, 1996 + WSB ELECTRIC, INC. and J. R. ROBERTS CORPORATION, Petitioners, JAMES CURRY, IN HIS OFFICIAL CAPACITY AS THE LABOR COMMISSIONER OF THE STATE OF CALIFORNIA; RONALD RINALDI, DIRECTOR OF INDUSTRIAL RELATIONS FOR THE STATE OF CALIFORNIA, Respondents. ¢ Petition For Writ Of Certiorari To The United States Court Of Appeals For The Ninth Circuit ¢ PETITION FOR WRIT OF CERTIORARI « Mark R. THIERMAN, Esa.* Georce P. Parisotto, Esa. THIERMAN LAW FIRM 120 Green Street San Francisco, California 94111 Telephone: (415) 391-9200 Counsel for Petitioners WSB Electric, Inc. and J. R. Roberts Corporation *Counsel of Record COCKLE LAW BRIEF PRINTING CO., (800) 225-6964 OR CALL COLLECT (402) 342-2831 QUESTION PRESENTED Whether the California prevailing wage law, which denies credit against the total wage obligation for pay- ments of fringe benefits contributions over a “prevailing” state mandated amount, thereby effectively placing a cap on fringe benefits that public works contractors may pro- vide on behalf of employees in lieu of cash compensation, “relates to” or has a “connection” with employee welfare benefit plans and is therefore preempted by operation of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., where credit is allowed for fringe benefit contributions below the state mandated amount and the prevailing wage amount is based upon the “costs” of prevailing fringe benefit pro- grams plus wages. ii TABLE OF CONTENTS Page OCUBSTIONS PREGEIUEEO 6 occ ceccsvenvascssnvesets iv He tt Rk errr Ae ery er re 1 PEIe RIE soc dnodecddcviayeneeehcaseresespees 1 SEATS TVG Ge bv kinase cee eceep sche terns 2 STAT IMGMICE GP THEE CARS occ esccctevistvivcenes yp REASONS FOR GRANTING THE WRIT ........... 9 1. THE CALIFORNIA PREVAILING WAGE LAWS “RELATE TO,” AND IN FACT REGULATE, THE FUNDING OF AN EMPLOYEE BENEFIT PLAN AND ARE THEREFORE PREEMPTED BY BRIS os oc nv coneesnanheeaeau ves Ceeeneleeers nee es 11 A. The Prevailing Wage Laws Regulates And Purports To Regulate ERISA Plans By Requiring Employers To Calculate Their Wage Obligations By Reference To Other Existing, Or Prevailing, ERISA Plans Which The State Deems “Prevailing”.............. 13 B. The California Prevailing Wage Laws Are Preempited by ERISA Because They Create Ongoing Administrative Burdens For Public Warks (One QtOs coe sce cncscccncsciseasnne 23 CONCTAIGIIG «cc nscincevustacedisanersanaeneuenes 27 iii TABLE OF AUTHORITIES Page Cases ABC National Line Erection Apprenticeship Training Trust, 66 F.3d 343 (9th Cir. 1995)........cccseccees 25 Aloha Airlines, Inc. v. Ahue, 12 F.3d 1498 (9th Cir. ELEC AG Edd uweo cedex Vesdekhnys oes tcaneeecs 8 Associated Builders and Contractors v. Baca, 769 F.Supp. 1537 (N.D. Cal. 1991), aff’d. on other grounds sub nom. Chamber of Commerce v. Brag- don, 64 F.3d 497 (Sth Cir. 1995) ..........cceccvees 18 Associated Builders and Contractors v. Perry, 869 F. Supp. 1239 (E.D. Mich. 1994) .............. 18, 20, 22 City of Des Moines v. Master Builders of Iowa, 498 N.W.2d 702, 1 Wage & Hour Cas. 2d (BNA) 688 PE WSR eal gs W's as Ab oo 6 Odes cd 6K dss cae ci 20 Delta Air Lines v. Shaw, 463 U.S. 85 (1983)........... 12 District Council v. James McHugh Construction Co., 596 N.E.2d 19, 30 Wage & Hour Cas. (BNA) gf Me Se errs 20, 21 District of Columbia v. Greater Washington Board of A ee 9, 12, 20 Employee Staffing Services, Inc. v. Aubry, 20 F.3d ce hed y eke baegbhea abs easeaeed 8 FMC Corp. v. Holliday, 498 U.S. 52 (1990)............ 11 Fort Halifax Packing Company v. Coyne, 482 U.S. 1 PCL E chce se deuch wa tse 40 o¥isous Ver caveenesc 23, 26 iv TABLE OF AUTHORITIES - Continued Page General Electric v. Dept. of Labor, 891 F.2d 25 (2nd GE SEG evn cas edus bechesvackbetevsbawbacukeriede: 20 Greater Washington Board of Trade v. District of Columbia, 948 F.2d 1317 (D.C. Cir. 1991)........... 22 Ingersoll-Rand v. McClendon, 498 U.S. 133 (1990) ..12, 26 Keystone Chapter, Associated Builders and Contrac- tors v. Foley, 37 F.3d 945 (3rd Cir. 1994), cert. Geet... TES FB. CE TR CIP abscess cowcccedsebenass 21 Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. FRO (ERE 80 2 0 che snckessabvarsciwereickiedtatsink 12 Minnesota Chpt. of Associated Builders and Contrac- tors v. Minnesota Dept. of Labor, 47 F.3d 975 (8th CBs. FORD ohn Gowsivcs posgnsauyessaweceked uve ns oh 21 New York State Conference of Blue Cross and Blue Shield v. Travelers Insurance Company, __ U.S. wees Bs | ee ee ye %, 11, Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) ..... 12 State of California, etc. v. Dillingham Construction, FON. PGE dicnnckesedeskiecersevedess hanes a 9, 47, 25 STATUTES Federal Oe TEA BT 105 hhakduecasdtreveceureaerictete 1 a UDA, & Ts 0c be os bn Sudeewenses cesibeeacti 22 PF UDR. B Tei so vee eenie vada enses tees 2 11, 72 BUA 6. ee ee, 11 Vv TABLE OF AUTHORITIES - Continued Page California ee ee We re ark 6 hk ls ee ws bc 2,3 a OE co FR re eR any ee ee rn Tt 4 RAE SN E- AEEe 66 35 50a ou kaw e Kea Pee oe Keckeew es 7 ge + « & BRP hte rea weal nee grt ae 7 fg | 8 BS Sai Be en relay mae 17, 2 Michigan Mich. Comp. Laws § 408.551, et seq. ................ 19 REGULATIONS California Title 8, California Code of Regulations (“C.C.R.”) ae been cata eWettbebenadeenuewsieeseee 17 eee: NE, 655s opera roe N asin bh be eeesa eal 17 Pied A te ond 5 7605 1 0b 0kn tne keke eo Aer 17 Ee | er ee ere a, & 3, 14, 16, GS GAs 2 i inte ies veer eee 2 © Rie BS Rs ono os eee rik see vadaseasvees 17 ee A Peer rey re 5, 14, 15 © Bs 05s 60g Fone ns étigucbbevecustseucon 2, 4 PETITION FOR WRIT OF CERTIORARI Petitioners WSB Electric, Inc. and J. R. Roberts Cor- poration respectfully pray that a writ of certiorari issue to review the judgment of the United States Court of Appeals for the Ninth Circuit, entered in the above action on July 5, 1996. : ad OPINIONS BELOW The opinion of the United States Court of Appeals for the Ninth Circuit is reported at 88 F.3d 788 (9th Cir. 1996) and is reprinted in the appendix to the certiorari petition (“App.”) at App. la. The Order of the Court of Appeals denying Petitioners’ Petition for Rehearing and Sugges- tion for Rehearing En Banc is reprinted at App. 23a. The unpublished opinion of the United States District Court for the Northern District of California granting Respon- dents’ Motion for Summary Judgment is reprinted at App. 25a. JURISDICTION The Ninth Circuit issued its decision and judgment herein on July 5, 1996. A timely Petition for Rehearing and Suggestion for Rehearing En Banc was denied on August 19, 1996. This Court has jurisdiction pursuant to 28 U.S.C. § 1254(1). STATUTES INVOLVED The relevant statutes are reproduced in the appendix at App. 47a. The relevant federal statutory provisions are § 514(a), 29 U.S.C. § 1144(a) of the Employee Retirement income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq. The relevant California statutory provisions are California Labor Code § 1771, 1777.1 and 1775. The rele- vant California regulations interpreting Labor Code § 1771 are Title 8, California Code of Regulations (“C.C.R.”) §§ 16000, 16200, and 16203. + STATEMENT OF THE CASE Petitioners seek review of the California prevailing wage laws which improperly integrate fringe benefit con- tributions from existing “prevailing” benefit plans into the wage obligation of public works contractors. This action is similar to another case before the Court, State of California, etc. v. Dillingham Construction, No. 95-789 (argued Nov. 5, 1996), in that it represents another attempt by the State to coerce public works contractors into funding or creating benefit plans whose level of contributions are defined by the State. In this case, the state is attempting to regulate the funding aspects of a fringe benefit program covered by the Employee Retire- ment Income Security Act of 1974, ERISA. Currently, construction contractors who are awarded California public works contracts which are more than $1,000.00 must pay their employees “the general prevail- ing rate of per diem wages for work of a similar character in the locality in which the public work is performed{.]” Labor Code § 1771. The prevailing wage is defined by regulation as the “basic hourly rate being paid to a major- ity of workers engaged in the particular craft, classifica- tion or type of work within the locality and in the nearest labor market area.” 8 C.C.R. § 16000. In California, the prevailing wage is generally a “modal” rate, that single rate being paid to the greatest number of workers in the area.! General per diem wages set forth include the prevailing basic straight-time hourly rate of pay, the prevailing rate for holiday and overtime work, apprenticeship training contributions, and the pre- vailing rate of employer payments for fringe benefits, which includes contributions to plans providing health and welfare, and pension benefits, which are by defini- tion employee benefit plans regulated under ERISA.? 1 The “modal” rate, which is not an average rate, allows union wages to become the State’s prevailing wage, even if only a fraction of the workers are union or are paid union scale. For example, if one considers ten workers, two being paid $9.00 per hour, and the rest paid different and separate amounts between $6.00 and $8.00, the “prevailing” wage will be $9.06, since that amount is being paid to a greater number of workers (two) than any other amount, regardless of the fact that the average wage of the ten workers will be lower. Unions are exempt from antitrust and anti-collusion laws which pre- vent non-union employers from ever enjoying the modal rate. 2 Under 8 C.C.R. § 16000, “General Prevailing Rate of Per Diem Wages” is defined to include: (1) The prevailing basic straight-time hourly rate of pay; and (2) The prevailing rate for holiday and overtime work; and 4 All prevailing wage determination for public projects must separately siate, inter alia, the basic Straight time hourly rate and the prevailing contribution level, i.e., the prevailing employer payments for benefits. 8 C.C.R. § 16203 App. at 84a. Under the current system, a public works contractor is given a choice whereby he or she can either: a) pay the stated total hourly rate in cash; b) pay (3) (A) (B) (C) (D) (E) (F) (G) (H) (I) (J) (4) The prevailing rate of employer payments for any or all programs or benefits for employees, their families and dependents, and retirees which are of the types enumerated below: medical and hospital care, prescription drugs, dental care, vision care, diagnostic services, and other health and welfare benefits; retirement plan benefits; vacations and holidays with pay, or cash payments in lieu thereof; compensation for injuries or illnesses resulting from occupational activity; life, accidental death and dismemberment, and dis- ability or sickness and accident insurance; supplemental unemployment benefits; thrift, security savings, supplemental trust, and bene- ficial trust funds otherwise designated, provided all of the money except that used for reasonable adminis- trative expenses is returned to the employees; occupational health and safety research, safety train- ing, monitoring job hazards, and the like, as specified in the applicable collective bargaining agreement; See definition of “Employer Payments,” (3). other bona fide benefits for employees, their families and dependents, or retirees as the Director may deter- mine; and travel time and subsistence pay as provided for in Labor Code Section 1773.8. the basic straight time wage in cash and the remaining prevailing contribution level for legitimate fringe benefits on behalf of the employee; or c) pay the basic straight time wage in cash, a lesser amount than the prevailing contribution level to fringe benefits, and the remaining difference of the contribution level 1 cash. According to 8 C.C.R. § 16200(a)(3)(I), entitled (emphasis added): “Credit Available For Actual Payment of Fringe Benefit Costs up to the Prevailing Amount:” The contractor obligated to pay the full prevail- ing rate of per diem wages may take credit for amounts up to the total of all fringe benefit amounts listed as prevailing in the appropriate wage determination. This credit may be taken only as to amounts which are actual payments under Employer Payments Section 16000 (1) - (3). In the event the total of Employer Payments by a contractor for the fringe benefits listed as prevailing is less than the aggregate amount set out as prevailing in the wage determination, the contractor must pay the difference directly to the employee. No amount of credit for payments over the aggregate amount of employer pay- ments shall be taken nor shall any credit decrease the amount of direct payment of hourly wages of those amounts found to be prevailing for straight time or overtime wages. Employer Payments are expressly defined under 8 C.C.R. § 16000 to include: (1) The rate of contribution irrevocably made by a contractor or subcontractor to a trustee or to a third person pursuant to a fund, plan, or program for the benefit of employees, their families and dependents, or retirees; 6 (2) The rate of costs to the contractor or subcontractor which may be reasonably antici- pated in providing benefits to employees, their families and dependents, or to retirees pursuant to an enforceable commitment or agreement to carry out a financially responsible plan or pro- gram which was communicated in writing to the worker affected; and (3) The rate of contribution irrevocably made by the contractor or subcontractor for apprenticeship or other training programs authorized by Section 3071 and/or 3093 of the Labor Code. A contractor must therefore consider two separate items when paying the Prevailing wage: the basic hourly rate and the prevailing contribution level. While the regula- tions allow a contractor to take credits up to the prevail- ing contribution level against the total hourly prevailing wage rate, the contractor cannot take any credit what- soever against the basic straight time hourly wage for contributions that exceed the Prevailing contribution level. Any amounts which are contributed for fringe ben- efits that exceed the Prevailing contribution level are simply ignored in terms of calculating the total hourly Prevailing wage paid. Essentially, a contractor providing lower than the prevailing contribution level is required to pay additional cash wages or benefits in order to comply with this two-tier method while a contractor paying above the prevailing contribution level is not able to credit more than the Prevailing contribution level in determining the wages to be paid to his or her employees. | 7 If the basic hourly wage is not paid in cash, and the prevailing contribution level is not paid in a combination of either cash or fringe benefits, a contractor will be subject to statutory penalties. Besides the assessment of the purported back wages owed, the contractor will be subject to penalties in the amount of $50.00 per day for each worker who fails to receive the total hourly wage. Labor Code § 1775. In addition, willful violations of the prevailing wage laws may result in the debarment of a contractor from public works for a period of up to three years. Labor Code § 1777.1. Petitioners J.R. Roberts Corporation and WSB Elec- tric, Inc. brought this action in 1989 to enjoin the State from enforcing its prevailing wage laws. At that time, the State utilized the “line-by-line” method, whereby the total prevailing rate of per diem wages consisted of a : base cash wage, money paid directly to an employee by means of a payroll check with all proper deductions, and set amounts for specific fringe benefits (i.e., $2.50 per hour for health, $0.55 for pension). To comply with pre- vailing wage laws, a contractor had to either pay the entire amount, including the specific fringe benefit totals, in cash, or pay the base cash wage and receive credit for the balance based on contributions for the specific fringe benefits. Credit could not be taken, however, for contri- butions that exceeded the stated amounts for each speci- fic benefit. The District Court for the Northern District of Cali- fornia found the line-by-line method to be preempted by ERISA. During the course of the litigation, however, the State replaced the line-by-line fringe benefit requirement with the current method. Following an appeal of the District Court decision, the Ninth Circuit remanded the action for a determination as to whether the current method was also preempted. Cross motions for summary judgment were filed in the District Court. The District Court found against the Petitioners, ruling that ERISA did not preempt the pre- vailing wage laws because the statutes did not require the establishment of benefit plans or mandate benefit contri- butions and because they do not regulate the relationship between the employer and a benefit plan or regulate the relationship between the employer and employee with respect to a benefit plan. The Ninth Circuit affirmed the District Court deci- sion on July 5, 1996. Citing Employee Staffing Services, Inc. v. Aubry, 20 F.3d 1038 (9th Cir. 1994), the Circuit Court stated that the prevailing wage laws do “not force employers to provide any particular employee benefit or plans, to alter their existing plans, or even provide ERISA plans or employee benefits at all.” App. at 14a-15a. Based on this conclusion, the Ninth Circuit held that the pre- vailing wage laws do not “refer” to ERISA plans since an employer’s obligation to pay the prevailing wage does not depend upon the existence or operation of an ERISA plan. Reviewing the factors set forth in Aloha Airlines, Inc. v. Ahue, 12 F.3d 1498 (9th Cir. 1994), the Ninth Circuit held that the prevailing wage laws do not have a “con- nection” with ERISA plans since the state laws do not require the establishment of a separate ERISA plan. According to the appellate court, the fact that an employer must create a separate administrative scheme and may choose to limit funding to an ERISA plan based on the state prevailing wage law was seen by the Panel as too tenuous to support a determination that the laws are subject to preemption. On July 19, 1996, Petitioners filed a timely Petition for Rehearing and Suggestion for Rehearing En Banc, asking the Ninth Circuit to reconsider its decision based on the different interpretation of the scope of ERISA preemption found in Dillingham, and because the pre- vailing wage laws in fact “relate to” benefit plans since the laws not only depend on existing, favored, benefit plans to determine the prevailing contribution level, but also place limits on employer credits against the prevail- ing wage and necessitate the creation of an administra- tive scheme to determine a public works contractors’ entire obligation. The Petition was denied by the Ninth Circuit on August 19, 1996. S REASONS FOR GRANTING THE WRIT This case presents the opportunity to clarify the dis- tinction between the Supreme Court's decisions in New York State Conference of Blue Cross and Blue Shield v. Travelers Insurance Company, __ U.S. __, 115 S. Ct. 1671 (1996) and District of Columbia v. Greater Washing- ton Board of Trade, 506 U.S. 125 (1992), by defining the scope of preemption only to laws that regulate, or pur- port to regulate ERISA plans, especially since the laws in question concern the State control of the funding of a plan and are not laws of general application. The Ninth Circuit erred by concluding that the prevailing wage laws do not relate to ERISA plans because the state laws, 10 which cannot be described as a traditional minimum wage law or a law of general application, expressly relate to and regulate employee welfare benefit plans by requir- ing contributions and/or payments based on existing ERISA fringe benefit plans. The laws also place adminis- trative burdens on public works contractors to calculate the payment of direct cash wages by reference to other ERISA plans, thereby creating an incentive to vary exist- ing plans to fit State-mandated criteria. Further, the California laws are contrary to the underlying goal of ERISA which is to assure uniformity of law in the field of employee benefits, creates a disin- centive for employers to fund their cwn employee wel- fare benefit plans, and favors loc*‘ j':ms over national plans. Essentially, the State simply c*:.not determine the “prevailing” amount of contributions to fringe benefit plans, base the amount of direct cash wage on the exis- tence of these favored local ERISA plans, and then assume the position that this method of paying the pre- vailing wage does not relate to ERISA plans. The State’s attempt to favor certain ERISA plans over others cannot be concealed and flies in the fact of ERISA’s purpose: to create a uniform body of federal law governing employee welfare benefit plans 11 1. THE CALIFORNIA PREVAILING WAGE LAWS “RELATE TO,” AND IN FACT REGULATE, THE FUNDING OF AN EMPLOYEE WELFARE BENEFIT PLAN AND ARE THEREFORE PREEMPTED BY ERISA. The basic principles underlying the broad reach of ERISA preemption are well settled. ERISA is a compre- hensive federal statute whose purpose is to “protect the interest of employees in pension and welfare plans, and to protect employers from conflicting and inconsistent state and local regulation of such plans. To achieve this goal, Congress enacted ERISA’s expansive preemption provision, 29 U.S.C. § 1144(a), which provides that “the provisions of this subchapter . . . shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” This provision “is con- spicuous for its breadth. It establishes as an area of exclu- sive federal concern the subject of every state law that “relate[s] to” an employee benefit plan governed by ERISA.” FMC Corp. v. Holliday, 498 U.S. 52, 58 (1990). State law includes “all laws, decisions, rules, regulations, or other State action having the effect of law.” 29 U.S.C. § 1144(c)(1). “The basic thrust of the pre-emption clause . . . was to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee welfare benefit plans.” New York State Confer- ence of Blue Cross & Blue Shield Plans v. Travelers Insurance Company, __ U.S.__, 115 S. Ct. 1671, 1677-1678 (1995). Essential to any determination of ERISA preemption is whether a state law “relates to” an employee benefit plan. Under the preemption provision, a state law 12 on” “ “relates to’” an employee benefit plan, in the normal sense of the phrase, if it has either a connection with or a reference to such a plan. Delta Air Lines v. Shaw, 463 U.S. 85, 96-97 (1983); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987). “This reading is true to the ordinary meaning of ‘relate to,’ see Black’s Law Dictionary 1288 (6th ed. 1990), and thus gives effect to the ‘deliberately expansive’ language chosen by Congress.” District of Columbia v. Greater Washington Board of Trade, 498 U.S. 52, 58 (1992). A state law may be subject to preemption even though the law is not specifically designed to affect such plans, or the effect is only indirect. Ingersoll-Rand v. McClendon, 498 U.S. 133, 139 (1990). Further, preemption will occur even if the state law is “consistent with ERISA’s substantive requirements” or was enacted to “effectuate ERISA’s underlying purpose, Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739 (1985), or represent a traditional exercise of a state’s police power. Blue Cross, 115 S. Ct. at 1677. However, state laws which have only a “tenuous, remote, or peripheral” connection with ERISA plans, however, are not subject to preemp- tion. Shaw v. Delta Air Lines, 463 U.S. 85, 100 n.21. In deciding Ingersoll-Rand, the Supreme Court broadened the scope of the test for “related to” from “regulates and purports to regulate” to a more illusive “connection to” test. 498 U.S. at 139. However, if the law “regulates and purports to regulate,” an ERISA plan, then it must fall well within the definition of “relates to” under ERISA Section 514, 29 U.S.C. 1144 (a). If a state law does not “relate to” an ERISA plan, only then it must be determined whether or not the law has a “connection to” ERISA plans. Only if the statute fails the “regulates 13 and purports to regulate” test must the objectives of ERISA be examined “as a guide to the scope of the state law that Congress understood would survive.” Blue Cross, 115 S. Ct. at 1677. In Blue Cross, this Court found that a state law imposing ordinary hospital surcharges on the bills of insured patients did not have a “connection” with ERISA plans because the law neither mandated any changes in the administrative practices of the plan nor subjected the plans to conflicting regulations. Here, the state law mentions and limits direct contributions into an employee benefit plan based upon a state’s preference to impose a “prevailing” benefit plan on all government contractors. A. The Prevailing Wage Laws Regulates And Pur- ports To Regulate ERISA Plans By Requiring Employers To Calculate Their Wage Obliga- tions By Reference To Other Existing, Or Pre- vailing, ERISA Plans Which The State Deems “Prevailing.” The California prevailing wage laws “relate to” wel- fare plans for the purposes of ERISA preemption because they impose requirements on public works contractors that are premised on the existence of employee welfare benefit plans; under the decisions of this Court, preemp- tion is required. The amount of direct cash wages paid to employee is calculated by the State and can only be determined by the contractor with reference to payments for employee welfare benefit plans because the total hourly prevailing wage is based on the local prevailing rate of employer payments for benefit plans. However credit can only be taken for payments up to the allowed 14 maximum. The “General Prevailing Rate of Per Diem Wages” is defined under 8 C.C.R. § 16000 to include the “prevailing rate of employer payments for any or all pro- grams of benefits” which provide health and welfare, retirement, and other fringe benefits. Thus, to determine the total hourly prevailing wage, other employer payments made to other ERISA plans must be referenced.? The law therefore goes further than merely referring to benefits. Based on these ERISA plans, the State imposes the requirement that public works con- tractors must pay a base hourly rate in cash, and then either match the prevailing contribution level with simi- lar prevailing fringe benefits contributions or combine lesser contributions with additional cash wages. Under 8 C.C.R. § 16200(a)(3)(I), credit for employer payments, which are defined under 8 C.C.R. § 16000 to include “It}he rate of contribution irrevocably made by a contrac- tor or subcontractor to a trustee or to a third person pursuant to a fund, plan, or program for the benefit of employees .. . ” can only be taken up to the determined prevailing contribution level (”No amount of credit for 3 Of course, this is an omission in many cases since payments into certain plans are more a function of the age and health of the participants rather than the level of benefits offered. Especially in defined benefit pension plans, when Congress has chosen to limit contributions to 25% of pay, a state’s discouragement of payments up to the 25% limit may encourage plans to go unfunded or be under-funded, putting a burden on federal pension insurance regulated through the Pension Benefit Guarantee Corporation. 15 payments over the aggregate amount of employer pay- ments shall be taken nor shall any credit decrease the amount of direct payment of hourly wages of those amounts found to be prevailing for straight time or over- time wages”). By definition, this mandate regulates and purports to regulate ERISA plans. Under this system, the total hourly prevailing wage rate consists of an established direct cash wage compo- nent and a fringe benefit component which is determined by the prevailing rate of employer payments for any or all benefit programs, including those for health and wel- fare, retirement, and vacations and holiday. Contractors are allowed to take a credit for fringe benefits paid into an ERISA plan up to the total fringe benefit allowance level set by the State. The total hourly rate, and not simply the cash component, must be paid in direct cash wages unless the public works contractor decides to con- tribute all or a portion of the fringe benefit component to a bona fide fringe benefit. 8 C.C.R. § 16200(a)(3)(I); 8 C.C.R. § 16000, “Employer Payments.” Sirwe the amount of contributions that can be used as a credit against the total prevailing hourly wage is lim- ited to the fringe benefit component that the State deems prevailing, the State is again regulating an ERISA pro- gram because if the total amount of contributions for employee benefits in any combination exceed the prevail- ing contribution level, the excess amount cannot be deducted from the total prevailing hourly wage, which forces an employer to cut its benefit contributions to its 16 plans.* While an employee's direct cash wage is depen- dent on the public works contractor's decision to contrib- ute to employee welfare benefit plans, the total cash payment requirement is set by including the cost of bene- fits to other employers. If the contractor decides not to contribute to any plan, the total prevailing hourly wage must be paid in direct cash wages, which carries a signifi- cant tax burden.5 If the contractor decides to contribute only a portion of the prevailing contribution level to various plans, such as for health and welfare and train- ing, then only that portion can be credited against the total hourly wage and the difference between the contri- butions and the prevailing contribution level must be paid in direct cash wages along with the basic direct cash wage rate. If the contractor decides to contribute only the prevailing contribution level to employee welfare benefit plans, then only the basic hourly direct cash wage rate must be paid to the employee. Since public works con- struction is awarded to the lowest responsible bidder, the contractors are mandated to conform to State “benefit” payment levels. However, if a contractor decides to contribute more than the prevailing contribution level, he or she will not be given any credit whatsoever against the total hourly 4 Congress deliberately chose not to limit the costs an employer can pay for medical and other types of welfare plans, perhaps realizing the medical insurance protects the employee and preserves the social safety net for those not able to work. 5 Congress exempted employer contributions from that tax burden specifically to encourage them to establish plans. The State is now discouraging employers from taking advantage of that incentive by limiting the contractor’s contributions. ERR. NP Ae en oe ee eee SOON we Ae a inti et ae oe 17 wage rate for any contributions that exceed the prevailing contribution level. The employee must receive the basic hourly wage rate and the “excess” contributions are not considered toward compliance with the total hourly wage rate. Since the employee must be compensated in cash for contributions made on his or her behalf over the State mandated benefit level, the employer is discouraged from having a total fringe benefit package that exceeds state set maximums, even if ERISA would allow additional contributions. In addition, included within the fringe benefit com- ponent of the prevailing wage is the “prevailing” amount for contributions made to apprenticeship training trust funds, ERISA plans which provide the funding for apprenticeship and other training programs.® California Labor Code § 1777.5, 8 C.C.R. § 16200 (a)(3)(G). This contribution, taken from wage scales found in the ap- prenticeship standards of existing State-approved apprenticeship programs, must be paid to a State- approved program or, if apprentices are not utilized on the public works project, directly to the California Apprenticeship Council, the agency certified by the U.S. Department of Labor, Bureau of Apprenticeship and Training to regulate apprenticeship training in California. 8 C.C.R. §§ 230.1 and 230.2. The prevailing wage laws thereby affect the funding of ERISA plans by mandating a set contribution to a training trust fund in total disregard 6 This fact may have been inadvertently misstated by Counsel for the State of California during oral argument in the Dillingham case. In fact, 8 C.C.R. § 208 specifically regulates funding of apprenticeship programs. 18 for a specific program’s contribution rates as set forth in the program’s standards or the trust agreement of the training trust. Laws of this nature have been found to be preempted by ERISA. In Associated Builders and Contractors v. Baca, 769 F.Supp. 1537 (N.D. Cal. 1991), affd. on other grounds sub nom. Chamber of Commerce v. Bragdon, 64 F.3d 497 (9th Cir. 1995), the District Court ruled that the same laws at issue in this action were preempted by ERISA. The prevailing wage laws were incorporated into a local ordinance which conditioned the issuing of build- ing permits on private construction projects on the pay- ment of prevailing wages. The court found that: a) the laws related to ERISA plans because the definition of per diem wages necessitated reference to, and calculation of, fringe benefit contributions to ERISA plans (id. at 1547); b) contractors were forced to create an on-going adminis- trative scheme to calculate wages and benefits paid to individual workers and to determine the cash equivalent of provided benefits; c) employers were “forced to calcu- late wages and benefits on covered projects separately from other projects, creating an ongoing administrative system.” ( id. at 1547); and d) they imposed a dispropor- tionate impact on the benefits of various employees. The Court concluded that the “equivalent cost of fringe bene- fits to the employees may be of lesser value to the employees than the benefits themselves.” Id. at 1547. Baca was followed by the Eastern District of Michi- gan in Associated Builders and Contractors v. Perry, 869 F. Supp. 1239 (E.D. Mich. 1994), where the court found a pee NO SI POA I I ORE mm Sl a si aie a A, SNe em PE AES OE te. 19 that the Michigan prevailing wage laws,” which operates in the same manner as the California laws, was pre- empted by ERISA. Michigan prevailing wages and fringe benefit requirements are determined from a survey among local construction unions. Non-union contractors must utilize local union rates and job classification sys- tems. Contractors must make hourly calculations if they wish to obtain credit for existing fringe benefits paid on other than an hourly basis, which is generally found in collective bargaining agreements. The Michigan law fur- ther applies an “excess benefit cap,” which precludes a contractor from receiving credit for any fringe benefits that exceed the prevailing union fringe benefit rates. Con- tractors are also required to keep accurate records regard- ing wages and benefits paid to employees. The District Court first found that the excess benefit cap was preempted by ERISA as it first dictated and/or restricted an employer’s choice of ERISA benefit plans since employers are subject to “additional burdensome administrative calculations” and are “forbidden to substi- tute benefits under ERISA plans for cash wages above a certain benefit level.” Id. at 1246. Further, the court found the administrative requirements of the law, “establishing rules for the calculation of benefits to be paid, and impos- ing remedies for alleged misconduct arising from the administration of plans” (id. at 1249) related to ERISA plans “because it dictates and restricts the choices of ERISA plans with regard to reporting and administra- tion.” Id. at 1248. 7 Mich. Comp. Laws § 408.551, et seq. 20 Another ground for preemption was that the law’s administrative requirements impermissibly subjected ERISA plans to conflicting regulations. “In the instant case, various states could — under the defendant's ruling ~ enact differing prevailing wage laws with dissimilar administrative requirements. Allowing such laws to stand would ‘impair the ability of a[n ERISA] plan to function simultaneously in a number of states.’ [Citation]” Id. at 1249. Finally, the District Court, citing the Supreme Court's decision in District of Columbia, supra, v. Greater Wash- ington Board of Trade, supra, 498 U.S. 52, held that the Michigan law expressly referred to ERISA plans, and thus were subject to preemption, because prevailing fringe benefits were determined by reference to existing ERISA (union) plans and because all contributions were required to be made to an identified fund, plan, or program. Perry, 869 F. Supp. at 1250. See also General Electric v. Dept. of Labor, 891 F.2d 25, 27 (2nd Cir. 1989) (prevailing law that required employers “to bring their pensions and welfare plans into conformity with those prevailing in the locality . . . or to make up the difference to cash payments to their employees” preempted by ERISA); City of Des Moines v. Master Builders of Iowa, 498 N.W.2d 702, 1 Wage & Hour Cas. 2d (BNA) 688 (Iowa 1993) (city ordi- nance requiring the payment of “not less than the current applicable prevailing wage and fringe benefit, as pub- lished in the Federal Register” preempted by ERISA); District Council v. James McHugh Construction Co., 596 N.E.2d 19, 30 Wage & Hour Cas. (BNA) 1653 (Ill. App. Ct. 21 1992) (claim under Illinois Prevailing Wage Act for pre- vailing wages preempted by ERISA because amount of wages based on fringe benefit contributions). States may perform their traditional role of regulat- ing wages either by establishing a minimum wage only without reference to or credit for any fringe benefit con- tribution or adopting the federal Davis-Bacon system of measuring the “total package” or costs to employ, with- out a wage/fringe ratio limitation. In Keystone Chapter, Associated Builders and Contractors v. Foley, 37 F.3d 945 (3rd Cir. 1994), cert: den. 115 S. Ct. 1393 (1995), the Third Circuit held that Pennsylvania’s prevailing wage law, similar to California’s, did not relate to ERISA plans and therefore escaped preemption because the State adopted a “total package” approach which gave credit for any and all fringe benefit contributions. Since the employer was not required to establish an ERISA plan in order to com- ply with the law and no reference was made to any particular benefit or benefit contribution, the state could honestly state that “[t]he benefits component only relates to ERISA plans when an employer decides to satisfy it through contributions to ERISA plans instead of cash payments or contributions to non-ERISA benefits.” 37 F.3d at 960. See also Minnesota Chpt. of Associated Builders and Contractors v. Minnesota Dept. of Labor, 47 F.3d 975, 979-980 (8th Cir. 1995). However, this Court has rejected the notion that a state statute which relates to an ERISA covered plan might survive ERISA preemption merely because an employer has the option of avoiding the impact on its employee benefit plans by satisfying statutory obliga- tions, through non-ERISA alternatives. In District of 22 Columbia, supra, the Court found preempted by ERISA a District of Columbia law requiring employers providing health insurance coverage to provide equivalent health benefits for injured employees eligible for workers’ com- pensation benefits. ERISA specifically excludes workers’ compensation benefits from its preemption provisions. 29 U.S.C. § 1003(b)(3). The Court of Appeals in District of Columbia had found the statute preempted in part because “[b]y tying the benefit levels of workers’ com- pensation plans to those Provided in an ERISA covered plan, ‘the [statute] could have a serious impact on the administration and content of the ERISA covered plan.’ ” 506 U.S. at 129 (quoting Greater Washington Board of Trade v. District of Columbia, 948 F.2d 1317, 1325 (D.C. Cir. 1991)). The Supreme Court affirmed, holding that by “specifically referring to welfare benefit plans regulated by ERISA,” the statute was preempted. Id. at 130. The fact that the provision simply referred to an ERISA plan pro- vided the basis for preemption. “[A]ny state law impos- ing requirements by reference to such covered programs must yield to ERISA.” Id. at 130-131. As with the workers’ compensation law at issue in District of Colum- bia, the two-tier method refers to employee welfare plans and are subject to ERISA preemption because they impose requirement on public works contractors which are premised on the existence of such plans. According to the District Court in Perry, supra, 869 F. Supp. at 1246: The Keystone court did Precisely what the Supreme Court stated it could not do in Greater Washington: It engrafted a two-step analysis onto a one-step statute, first finding that the benefits component of the prevailing wage act had “some connection” to (i.e., was related to) 23 employee benefit plans, then finding no pre- emption because employers could comply with the law by not paying any benefits if they paid a sufficiently high cash wage. This court rejects the Keystone court’s two-step analysis. The only issue to be determined is whether the Cali- fornia prevailing wage “refers to” ERISA employee bene- fit plans, since this Court finds ERISA preemption of state laws impacting employee benefit plans notwithstanding that the law could be complied with through means out- side of ERISA. Therefore, there is no legal or logical basis to conclude that California’s prevailing wage laws, which specifically references employee benefit plans, should not be preempted by ERISA merely because an employer may have the “option” of ignoring its contributions to employee benefit plans and satisfying its obligations under the Act by paying benefit rates in wages. B. The California Prevailing Wage Laws Are Pre- empted By ERISA Because They Create Ongo- ing Administrative Burdens For Public Works Contractors. Courts “have not hesitated to enforce ERISA’s pre- emption provision where state law created the prospect that an employer’s ministrative scheme would be sub- ject to conflicting requirements.” Fort Halifax Packing Company v. Coyne, 482 U.S. 1, 10 (1987). California con- struction contractors working on public projects are con- tinually faced with “the task of coordinating complex administrative activities” based on the State’s “patch- work scheme of regulation” to the extent that contractors are subject to different laws regarding the calculation of 24 the value of their benefits when working across state, and even county, lines. Because the State’s prevailing wage law determines the value of benefits on a county-by- county basis, according to which collective bargaining agreement is in place, employers are subject to conflicting regulations with respect to the calculation of their own employee benefits even if one job may be in San Francisco and another in Fresno, since the total hourly prevailing wage is generally taken directly from the applicable col- lective bargaining agreement in force in that geographic location, non-union contractors are forced to calculate benefit levels according to trade union jurisdiction in connection with the specific type of work that an employee is performing on a state public works project. The effect of this law is especially egregious when employees perform different types of work on a single project since the contractor must pay the employee according to the collective bargaining agreement which claims the work. This type of on-the-job segmentation results in the requirement that an employer calculate each individual employee’s benefit level upon the intermittent changing of job classifications, an impossibility for a non- union, qualified pension plan under ERISA. Certainly, the administrative burdens of the two-tier method is obvious when a contractor must refer to its benefit plans (or even the lack of such plans) to determine the amount of cash wages that must be paid to employees. According to the District Court in Baca, interpreting the same laws at issue here: Complex calculations are required to determine the prevailing base wage that must be paid. The calculations can only be made after referencing 25 the dollar value of benefits paid. Thus, the wage requirement incorporates employee benefits into the prevailing wage statute. This incorporation can only be accomplished by requiring per diem wages that “refer to” and “regulate” employee benefit plans. Baca, 769 F.Supp. at 1547. The Ninth Circuit recognized the burdens demanded by the prevailing wage laws in ABC National Line Erec- tion Apprenticeship Training Trust, 68 F.3d 343 (9th Cir. 1995), where the court held that an apprenticeship train- ing trust fund has standing under ERISA to challenge California’s prevailing wage laws. The trust sought to preempt California Labor Code § 1777.5, which requires that public works contractors pay a training contribution (an Employer Payment under 8 C.C.R. § 16000 which can be credited against the total hourly prevailing wage) to either a State-approved apprenticeship program or the California Apprenticeship Council. Relying on Dil- lingham, the Court found that the California statute “related to” ERISA plans because it favored State approved ERISA plans over other ERISA plans and required contractors to either use an apprentice from a State-approved program or “utilize a complicated accounting system in order to pay into an unapproved program.” Line Erectors, 68 F.3d at 346. The court distin- guished the decision in Blue Cross, supra, 115 S. Ct. 1671 by finding that a common hospital surcharge on patients with commercial insurers did not equate with the prevail- ing wage requirement that forced public works contrac- tors to either utilize State-approved program or “undertake a complicated set-off procedure to equalize the payment.” Line Erectors, 68 F.3d at 346-347. 26 Without question, the California prevailing wage laws demand the creation of an administrative scheme that directly impacts ERISA plans. The focus of the laws are not on the base cash wage, but on the fact that the total wage required includes the cost of ERISA benefits plus the fact that the State limits credit for contributions to a benefit plan to the local prevailing benefit contribu- tion amount. To simply assert that ERISA plans are not implicated in this scheme is too narrow an interpretation of ERISA’s broad preemption provision and completely fails to even remotely address the most significant employer interests protected by ERISA. According to this Court in Fort Halifax, 482 U.S. at 11: ERISA’s preemption provision was prompted by recognition that employers establishing and maintaining employee benefit plans are faced with the task of coordinating complex adminis- trative activities. A patchwork scheme of regula- tions would introduce considerable inefficiencies in benefit program operation, which might lead those employers with existing plans to reduce benefits, and those without such plans to refrain from adopting them. The prevailing wage laws therefore contradict ERISA’s stated goal to ensure that plans and plan spon- sors be subject to a uniform body of benefits law. Inger- soll-Rand, 498 U.S. at 142. As such, the Ninth Circuit's decision must be reviewed and reversed. + Diknmsaai He Mia iN IME oie oe anise GR ANAA ERAT ta usec 27 CONCLUSION For the reasons stated above, this Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit should be granted. Dated: November 19, 1996, San Francisco, California Respectfully submitted, Mark R. THIERMAN* Georce P. Parisotto THIERMAN Law Firm 120 Green Street San Francisco, California 94111 Telephone: (415) 391-9200 Attorneys for Petitioners WSB Electric, Inc. and ]. R. Roberts Corporation la APPENDIX A FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT WSB E -ecrric, Inc. and J.R. Roserts CORPORATION, Plaintiffs-Appellants, - No. 94-16613 James Curry, in his official capacity as the Labor Commissioner of the State of California; RoNALD RINALDI, Director of Industrial Relations for the State of California, D.C. No. CV-90-00771-CW Defendants-Appellees. ed ].R. Roserts CORPORATION, Plaintiff-Appellant, = No. 94-16646 James Curry, Labor Commissioner of the State of D.C. No. California; RoNALD RINALDI, Director of Industrial Relations for the State of California, CV-90-01109-CW OPINION Defendants-Appellees. me me ee ee ee ee et eee ee eee” 2a Appeals from the United States District Court for the Northern District of California Claudia Wilken, District Judge, Presiding Argued and Submitted December 5, 1995 - San Francisco, California Filed July 5, 1996 Before: James R. Browning, William C. Canby, Jr., and Cynthia Holcomb Hall, Circuit Judges. Opinion by Judge Hall SUMMARY Labor and Employment/Compensation/ERISA The court of appeals affirmed < district court judg- ment. The court held the California prevailing wage pro- visions for public works contracts are not preempted by the Employee Retirement Income Security Act of 1974 (ERISA). Appellants WSB Electric, Inc. and J.R. Roberts Corp. are licensed contractors who perform public works con- tracts in California. They sued the California Department of Industrial Relations (DIR) and its officers, challenging the State’s enforcement of its prevailing wage law for public works contracts. The State’s prevailing wage law requires that public works contractors pay their employees a minimum wage, called the “prevailing rate of per diem wages.” The prevailing wage is determined on a county-by-county basis and is calculated by adding the basic hourly rate paid to the majority of workers in a particular job classification plus the prevailing costs to oe eT ———_ -- —— | 3a employers of fringe benefits provided in that locality. Under the “two-tier” approach, an employer must pay employees the prevailing wage, and it may do so through a combination of cash and benefits. To calculate the wage, the employer adds the hourly cash wage paid plus the total amount of employer contributions to benefit plans. If the sum falls short of the prevailing wage, the employer must make up the difference in cash. An “excess benefit cap” applies, whereby employers may not credit more than a fixed amount of benefits contributions toward the prevailing wage. WSB and Roberts claimed that the state law is preempted by ERISA because Califor- nia’s prevailing wage rate is measured by reference to the prevailing cash wage plus the prevailing benefits contri- butions of employers in a given locality. The district court found that ERISA does not preempt the prevailing wage statute. WSB and Roberts appealed. [1] The ERISA preemption clause establishes as an area of exclusive federal concern the subject of every state law that relates to an empioyee benefit plan governed by ERISA. [2] A state law relates to an ERISA employee benefit plan if it has either a “connection with” or “refer- ence to” such a plan. [3] Regulation of wages per se is not within ERISA’s coverage. [4] In this case, the prevailing wage law provi- sions at issue regulate wages generally, not wages that are part of a particular employee benefit plan. [5] California’s prevailing wage rate is measured by reference to prevailing cash wages and prevailing benefit contributions in a locality. Employee benefits and benefit plans are mentioned in the statute and regulations in two 4a different respects. Provisions require the DIR to consider the prevailing level of benefit contributions by employers in a given locality. [6] However, a statute “refers to” an ERISA plan and has some effect on the referenced plans. [7] The references to ERISA plans in the California pre- vailing wage law have no effect on any ERISA plans, but simply take them into account when calculating the cash wage that must be paid. The scheme does not force employers to provide particular employee benefits or plans, to alter their existing plans, or to even provide ERISA plans or employee benefits at all. [8] California’s prevailing wage law is concerned with guaranteeing a minimum cash wage for employees on public works con- tracts. Although the prevailing rate of per diem wages in a given locality is measured by reference to employers’ fringe benefit costs, those costs are calculated without regard to whether they consist of contributions to ERISA plans. Moreover, each individual employer’s obligation to pay the prevailing wage does not depend on the exis- tence or operation of that employer's ERISA plans. Thus, California’s prevailing wage law does not refer to ERISA plans sufficiently for a finding that it is preempted. [9] Under the two-tier approach, California’s prevail- ing wage law does not regulate the types of benefits of employee welfare benefit plans. [10] In addition, the two- tier scheme does not impose any additional burden on ERISA plans or require the employer to take any action with regard to those plans. [11] Employers can comply without adjusting their level of benefits contributions, [12] and the law does not require that employers main- tain a separate employee benefit plan. [13] Although Cali- fornia’s prevailing wage law may discourage employer es see 5a benefit contributions greater than the excess benefits cap, that effect is not sufficient by itself to find ERISA preemp- tion. [14] California is not telling employers how to writ their ERISA plans, nor is it conditioning some require- ment on how individual employers write their ERISA plans. Instead, it is telling employers that regardless of how they write their ERISA plans, or even whether they have ERISA plans at all, they must pay the prevailing wage, and they may do so through some combination of cash and benefits. Under either relevant test, California’s prevailing wage law does not have a sufficient connection to find that the statute is preempted. [15] California’s prevailing wage law does not refer to or have a connection with ERISA plans sufficient to find that it “relates to” such plans. The prevailing wage provisions of California’s statute are not preempted by ERISA. COUNSEL Mark R. Thierman and George P. Parisotto, Thierman Law Partnership, San Francisco, California, for the plain- tiffs-appellants. John M. Rea, Department of Industrial Relations, San Francisco, California, for the defendants-appellees. Marsha S. Berzon, Altshuler, Berzon, Nussbaum, Berzon & Rubin, San Francisco, California, for the intervenor- appellee. 6a OPINION HALL, Circuit Judge: Appellants WSB Electric and J.R. Roberts are licensed contractors who perform public works contracts in the state of California. They brought suit against the Califor- nia Department of Industrial Relations (“DIR”) and its officers challenging the state’s enforcement of its prevail- ing wage law for public works contracts, Cal. Labor Code § 1770 et seq. They claim that the state law is preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”) because California’s prevailing wage rate is measured by reference to the prevailing cash wage plus the prevailing benefits contributions of employers in a given locality. The district court found that ERISA does not preempt the prevailing wage statute, and appellants filed a timely appeal. We affirm. ! This case originally began in 1989, when both con- tractors filed separate actions to enjoin the DIR from enforcing California’s prevailing wage law for state pub- lic works projects. The state’s prevailing wage law requires that public works contractors pay their employees a minimum wage, called the “prevailing rate of per diem wages.” Cal. Labor Code §§ 1771 & 1773. This prevailing wage is determined on a county-by-county basis, and is calculated by adding the basic hourly rate paid to the majority of workers in a particular job classi- fication plus the prevailing cost to employers of fringe 7a benefits provided in that locality. In 1989, DIR enforced the prevailing wage law according to the “line-by-line” method. Under this approach, the total prevailing wages consisted of a base cash wage plus set amounts for speci- fic fringe benefits (i.e., $2.50 per hour for health, $0.50 for pension, etc.). To comply with the law, a public works contractor had to either pay the entire prevailing wage in cash, or pay the base cash wage and receive credit for the balance based on contributions for specific fringe bene- ” fits. The employer could not, however, take credit for fringe benefit contributions that exceeded the stated amount for each specific benefit. The district court found that this scheme was pre- empted by ERISA. Subsequently, the DIR adopted the current system, a “two-tier” approach, and we vacated the district court’s decision and remanded for further proceedings as to whether ERISA also preempts the “two- tier” approach. On remand, the district court granted the DIR’s motion for summary judgment, holding that ERISA does not preempt the two-tier approach. The contractors appealed, and that is the case before us now. Under the two-tier approach, the employer must pay employees the prevailing wage, and it may do so through a combination of cash and benefits. To calculate the wage, the employer adds the hourly cash wage paid plus the total amount of employer contributions to benefits plans, no longer considering each benefit separately. If this sum falls short of the prevailing wage, then the employer must make up the difference in cash. However, as before, the Labor Code also prescribes a minimum amount of cash wage that must be paid. Therefore, an “excess bene- fit cap” applies, whereby employers may not credit more 8a than a fixed amount of benefits contributions toward the prevailing wage. If the employer contributes more than the fixed amount for benefits, it is not credited in the prevailing wage calculation and the employer must make up any shortfall in cash. The district court’s decision regarding preemption is reviewed de novo. Aloha Airlines, Inc. v. Ahue, 12 F.3d 1498, 1500 (9th Cir. 1994). A grant of summary judgment is reviewed de novo. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. .995). We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether the district court correctly applied the relevant substantive law. Id. In this case, both sides con- cede that there are no disputed issues of fact; therefore, the only inquiry is whether the district court correctly applied the substantive law. [1] Congress enacted ERISA, 29 U.S.C. § 1001 et seq., as a comprehensive legislative scheme “to promote the interests of employees and their beneficiaries in employee benefit plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983). By enacting such a broad scheme, Congress also sought to protect employers by “eliminat- ing the threat of conflicting or inconsistent State and local regulation of employee benefit plans.” Id. at 99. To further this goal of nationwide consistency, Congress included a preemption clause,! section 514(a), which is “conspicuous ? Section 514(a) provides that ERISA “supersede[s] any and all State laws insofar as they may now or hereafter relate to any ae San Tana elle ——————————Eee————————eEeEeEeEeeowre—s ee 9a for its breadth. It establishes as an area of exclusive federal concern the subject of every state law that ‘relate[s] to’ an employee benefit plan governed by ERISA.” FMC Corp. v. Holliday, 498 U.S. 52, 58 (1990). ERISA’s preemption provision is not without limits, how- ever; we “must presume that Congress did not intend to preempt areas of traditional state regulation.” Metro- politan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 740 (1985). [2] A state law relates to an ERISA employee benefit plan “if it has a connection with or reference to such a plan.” Shaw, 463 U.S. at 97; New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Co., 115 S. Ct. 1671, 1677 (1995). ERISA preempts state laws that relate to employee benefit plans even if they only indi- rectly affect those plans. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139 (1990). Nevertheless, “[s]ome state actions may affect employee benefit plans in too tenuous, remote, or peripheral a manner to warrant a finding that the law ‘relates to’ the plan.” Shaw, 463 U.S. at 100 n. 21; Aloha Airlines, Inc. v. Ahue, 12 F.3d 1498, 1504 (9th Cir. 1993). A [3] It is well settled that wages are a subject of traditional state concern, and are not included in ERISA’s definition of “employee benefit plan.” Thus, regulation of employee benefit plan.” 29 U.S.C. § 1144(a); see also 29 U.S.C. § 1002(1) (defining employee benefit plans). 10a wages per se is not within ERISA’s coverage. Massa- chusetts v. Morash, 490 U.S. 107, 118 (1989) (holding that ERISA does not preempt a state law regulating vacation pay). No doubt is cast on this proposition by our recent decision in Dillingham Construction v. County of Sonoma, 57 F.3d 712 (9th Cir. 1995), cert. granted, __ U.S. __, 116 S. Ct. 1415, 134 L.Ed.2d 541 (1996). In Dillingham, the plain- tiffs challenged the apprenticeship program provisions of California’s prevailing wage law, Cal. Labor Code § 1777.5. We held that a statute regulating wages in an apprenticeship program was preempted by ERISA because the apprenticeship program itself was an employee welfare benefit plan. Id. at 718. Therefore, the prevailing wage law apprenticeship provisions directly “related to” an ERISA plan. Id. at 718-19; see also Inland Empire Chap. of Assoc. General Contractors v. Dear, 77 F.3d 296 (9th Cir. 1996) (holding that ERISA preempts Wash- ington’s prevailing wage law’s apprenticeship provisions for the reasons given in Dillingham). [4] Here, the prevailing wage law provisions at issue regulate wages generally, not wages that are part of a particular employee benefit plan. The question for deci- sion, then, is whether the statute’s effect on employee benefit plans is so attenuated that the statute cannot be said to “relate to” ERISA plans. A state law relates to an ERISA employee benefit plan if it has either “a connection with” or “reference to” such a plan. Shaw, 463 U.S. at 97; Travelers, 115 S. Ct. at Eee lla 1677 (1995); District of Columbia v. Greater Washington Bad. of Trade, 113 S. Ct. 580, 583 (1992). Few cases discuss the application of the “reference to” language from the Shaw test, and some courts seem to merge the two prongs. See NYS H.M.O. Conference v. Curiale, 64 F.3d 794, 800 n. 17 (2nd Cir. 1995). But in Travelers, the Supreme Court expressly applied a two-pronged analysis, holding first that the statute at issue did not “refer to” ERISA plans, and then concluding that it also did not have a sufficient “connection with” such plans to warrant preemption. Travelers, 115 S. Ct. at 1677. 1 The scope of the “reference to” language is open to varying interpretations. Some courts have found inat stat- utes which merely make mention of ERISA plans, or allude to them obliquely, are preempted under this prong of the Shaw test. E.g., Associated Builders & Contractors v. Baca, 769 F. Supp. 1537 (N.D. Cal. 1991)? (holding that California’s prevailing wage law as applied to private construction projects is preempted by ERISA because the prevailing wage rate is calculated in part by referring to the dollar value of benefits paid in the locality), aff'd on other grounds sub nom. Chamber of Commerce v. Bragdon, 64 2 But see Associated Builders and Contractors v. Curry, 797 F.Supp. 1528, 1537-38 (N.D.Cal.1992) (holding that the same California statute at issue in Baca is not preempted by ERISA, otherwise it “would vitiate, without any discernable [sic] legislative intent or purpose, the state's traditional power to regulate wages and to establish and enforce other labor standards”), vacated, 68 F.3d 342 (9th Cir.1995) (remanding for decision in light of Dillingham). 12a F.3d 497 (9th Cir. 1995) (holding that the NLRA preempts application of California’s prevailing wage law to private construction projects, and not reaching the question of ERISA preemption); Associated Builders & Contractors v. Perry, 869 F. Supp. 1239 (E.D. Mich. 1994) (holding that Michigan’s prevailing wage law, which operated similarly to California’s “two-tier” method, was preempted by ERISA). Appellants argue that under Greater Washington the prevailing wage law is preempted because the employer’s obligations are measured by reference to ERISA plan benefits. In Greater Washington, the pre- empted statute expressly referred to an ERISA covered plan - it required all employers who provide employee health insurance coverage, to also provide equivalent coverage for employees receiving worker’s compensation benefits. Greater Washington, 113 S. Ct. at 583-84. This statute referred to ERISA plans in the literal sense, in that it specifically mentioned a covered employee welfare plan (medical coverage). But more importantly, it referred to the level of benefits provided by a covered plan when prescribing the additional coverage required. That is, it imposed an obligation upon an employer that was “mea- sured by reference” to the level of benefit provided by that employer under an ERISA plan. Id. at 583-84. The Court explained that “any state law imposing require- ments by reference to such covered programs must yield to ERISA.” Id. at 584; see also Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 829-30 (holding that a state garnishment statute that expressly referred to ERISA plans and singled them out for different treatment under the law was preempted). ee 13a [5] California’s prevailing wage rate is measured by reference to prevailing cash wages and prevailing benefit contributions in a locality and, thus, would seem to fall under Greater Washington. Employee benefits and bene- fit plans are mentioned in the statute and regulations in two different respects. First, the calculation of per diem wages includes “employer payments for health and wel- fare, pension, vacation, travel time, and subsistence pay.” Cal. Labor Code § 1773.1. The regulation defining how the employer determines the amount of credit he can deduct for fringe benefit costs, Cal. Code Regs. tit. 8, § 16200(a)(2)(1), refers to “employer payments,” which include “{t]he rate of contribution irrevocably made by a contractor or subcontractor . . . pursuant to a fund, plan, or program for the benefit of employees. . . . “> Cal. Code Regs. tit. 8, § 16000 (definition of “Employer Payments”). Second, other provisions of the statutory scheme describe the method by which the DIR is to determine the prevail- ing wage in a particular area. These provisions require the DIR to consider the prevailing level of benefit contri- butions by employers in a given locality. Cal. Labor Code § 1773; Cal. Code Regs. tit. 8, § 16200; Cal. Code Regs. tit. 8, § 16000 (definition of “Prevailing Rate” and “General Prevailing Rate of Per Diem Wages”). [6] The Supreme Court, however, has never found a statute to be preempted simply because its text included 3 The regulations also include anticipated employer costs for providing benefits not administered by a fund, plan, or program. In other words, “employer payments” also includes the costs of benefits not provided through an ERISA plan. Cal. Code Regs. tit. 8, § 16000. l4a the word ERISA or explicitly mentioned a covered employee welfare benefit plan. See NYS H.M.O. Confer- ence, 64 F.3d at 799-800. Although the statutes the Supreme Court has held to be preempted did expressly refer to ERISA plans, they also had some effect on those plans. See, e.g., Greater Washington, 113 S. Ct. at 583 (not- ing that the Court of Appeals had found that the pre- empted statute “could have a serious impact on the administration and content of the ERISA-covered plan”). Therefore, a statute “refers to” an ERISA plan and is preempted if it mentions or alludes to ERISA plans, and has some effect on the referenced plans. See also Thiokol Corp. v. Roberts, 76 F.3d 751, 759-60 (6th Cir. 1996) (hold- ing that a state tax law is not preempted even though it specifically refers to employee benefits plans when defin- ing employee “compensation,” and noting that “statutes that refer to ERISA plans are struck down not because of the reference but because of their intended effect” on those plans); NYS H.M.O. Conference, 64 F.3d at 800 (“a state law has a reference to ERISA if its text mentions or alludes to ERISA plans, and if the law affects ERISA plans in some manner”). [7] The references to ERISA plans in the California prevailing wage law have no effect on any ERISA plans, but simply take them into account when calculating the cash wage that must be paid. At most, this scheme pro- vides examples of the types of employer contributions to benefits that are included in the wage calculation. The * Otherwise, with no guidance as to what constitutes an employee benefit, employers could devise all sorts of clever benefit plans - for example, air conditioning or heating in the workplace could be considered an employee benefit. 15a scheme does not force employers to provide any particu- lar employee benefits or plans, to alter their existing plans, or to even provide ERISA plans or employee bene- fits at all. See Employee Staffing Services, Inc. v. Aubry, 20 F.3d 1038, (9th Cir. 1994) (“In the case at bar, unlike Greater Washington, the state law does not tell employers how to write their ERISA plans.”). These provisions are enforced regardless of whether the individual employer provides benefits through ERISA plans, or whether the benefit contributions in a given locality are paid to ERISA plans. See, Travelers, 115 S. Ct. at 1677 (holding that a statute did not “refer to” ERISA plans because it operated regardless of whether the medical coverage was secured by an ERISA plan or otherwise). The Third and Eighth Circuits have both held that similar prevailing wage statutes were not preempted by ERISA. In Keystone Chapter of Assoc. Builders v. Foley, 37 F.3d 945 (3d Cir. 1994), cert. denied, 115 S. Ct. 1393 (1995), the Third Circuit rejected the argument that the mere mention of benefits or benefit plans in a statute automat- ically demands preemption. The court noted that the statute at issue did not premise any employer obligation on the existence of benefits plans, but instead merely took account of such plans if they happened to exist. Keystone, 37 F.3d at 957 (holding that ERISA does not preempt a prevailing wage statute that operates identically to Cali- fornia’s current “two-tier” approach); see also Minnesota Chapter of Assoc. Builders v. Minnesota Dept. of Labor, 47 F.3d 975 (8th Cir. 1995) (holding that ERISA does not preempt a prevailing wage statute similar to California’s, but which may not have an excess benefits cap). The Keystone court distinguished Greater Washington because l6a in that case the statute referred to ERISA plans as the basis for the rights it accorded, whereas in Pennsylvania's prevailing wage statute, which is similar to California's, an ERISA plan benefit is given only as an example of the factors that make up the prevailing wage. Id. at 957 n. 17; Minnesota Chapter, 47 F.3d at 980 (“ERISA does not require ‘a state to ignore the existence of ERISA benefits when considering overall remuneration to workers,’ and ‘a state can set a minimum cash wage, and allow an employer the option of paying part of that in benefits,’ without triggering ERISA preemption.”) (citation omit- ted); see also Thiokol, 76 F.3d at 753 & n. 1 (holding that a state tax law is not preempted, even though it bases an employer’s tax obligation upon employee compensation, which includes employers’ payments to retirement and health benefit plans). [8] California’s prevailing wage law is concerned with guaranteeing a minimum cash wage for employees on public works contracts. Furthermore, it takes into account those contractors who provide fringe benefits for their employees. Otherwise, these contractors would be unable to compete effectively for public works contracts against contractors who provide only a cash wage. Although the prevailing rate of per diem wages in a given locality is measured by reference to employers’ fringe benefit costs, these costs are calculated without regard to whether they consist of contributions to ERISA plans. Moreover, each individual employer’s obligation to pay the prevailing wage does not depend upon the existence or operation of that employer’s ERISA plans. Therefore, California’s prevailing wage law does not refer ——————————— 17a to ERISA plans sufficiently for us to find that it is pre- empted. 2 This court has defined a set of factors to consider when determining whether a state law relates to ERISA plans because it has a “connection with” such plans: (1) Whether the state law regulates the types of benefits of ERISA employee welfare benefit plans; (2) whether the state law requires the estab- lishment of a separate employee benefit plan to comply with the law; (3) whether the state law imposes reporting, disclosure, funding, or vesting requirements for ERISA plans; (4) whether the state law regulates certain ERISA relationships, including the relationships between an ERISA plan and employer and, to the extent an employee benefit plan is involved, between an employer and employee. Ahue, 12 F.3d at 1504 (holding that a state law requiring that employers cover the expense of federally mandated physicals for airline pilots is preempted by ERISA). [9] Under the two-tier approach, California’s prevail- ing wage law clearly does not regulate the types of bene- fits of employee welfare benefit plans; therefore, the first Ahue factor is not implicated. [10] Under Ahue factors (2) and (3) a state law may “relate to” ERISA plans if it requires establishment of a 18a separate employee benefit plan to comply with the law or if it imposes additional administrative requirements for ERISA plans. Ahue, 12 F.3d at 1504. Appellants confuse and combine these two factors when they argue that this statute is preempted because it imposes additional administrative burdens regarding benefits contributions on the employer. Because the two-tier scheme does not impose any additional burden on ERISA plans or require the employer to take any action with regard to those plans, we reject this argument. Relying on Perry and Baca, appellants contend that public works contractors will be required to create a separate administrative scheme in order to: (1) perform ongoing calculations of wages paid and cash equivalents of benefits provided; (2) keep track of the prevailing wage levels in different localities; and (3) maintain detailed payroll records showing hourly wage levels and benefit contributions. See Cal. Labor Code § 1776 for disclosure and reporting requirements. See Perry, 869 F. Supp. at 1248 (holding that similar calculations and reporting requirements would “impair the ability of a plan to function simultaneously in a number of states.”); Baca, 769 F. Supp. at 1547 (“employers will be forced to calculate wages and benefits on covered projects sep- arately from other projects, creating an ongoing adminis- trative system”). [11] None of these concerns satisfies either Ahue fac- tor (2) or (3). First, nothing in California’s scheme requires the establishment of a separate benefit plan in order to comply with the state law. California’s statute does not require public works contractors to modify their benefits plans at all. It simply requires that they pay 4 Se ke aly aaa” 19a minimum cash wage, regardless of the level of benefits provided. Employers can comply without adjusting their level of benefits contributions. [12] Furthermore, although the law may cause employers to maintain a separate administrative scheme to keep track of prevailing wage data for public works projects, it does not require that they maintain a separate employee benefit plan. They may choose to do so if they want to ensure that they contribute no more to employee benefits than the maximum credited under the excess benefit cap. But they are not required to do so. If their benefit contributions fall below the prevailing benefit rate, then they can make up the shortfall with cash wages, which would have no effect on their ERISA plans. Admittedly, if employers’ benefits contributions exceed the prevailing benefit rate, then they would quite likely adjust their contributions downward to reflect the prevailing rate. In that case, the prevailing wage law would have an incidental impact on ERISA plans. But this impact is indirect, and the choice of amount and type of benefits to provide remains with the private employers. Under Ahue factor (4) the main focus of appellants’ argument is that the excess benefits cap of the two-tier scheme discourages employers from making benefits con- tributions in excess of the prevailing benefit rate, thereby affecting the relationship between the employer and employees. They argue that the excess benefit cap creates an adverse economic impact on public works contractors, which discourages benefits contributions in excess of the cap. However, we have rejected this argument in Employee Staffing Services, Inc. v. Aubry, 20 F.3d 1038 (9th 20a Cir. 1994). We held that ERISA did not preempt a state law that required employers to provide separate workers’ compensation insurance even if they included coverage for work-related injuries under a comprehensive ERISA plan. The plaintiffs argued that the independent state requirement would have the economic effect of discour- aging them from providing “so rich an ERISA plan as they do now.” Id. at 1042. We rejected this argument pointing out that “[t]he economic effect of independent state requirements on employers’ incentives in drafting ERISA plans should be distinguished from the legal effect of state commands regarding ERISA plans.” Id.; Travelers, 115 S. Ct. at 1679 (“An indirect economic influen- ce... does not bind plan administrators to any particular choice and thus function as a regulation of an ERISA plan itself”); see also Lane v. Goren, 743 F.2d 1337, 1340 (9th Cir. 1984) (holding that California laws prohibiting employ- ment discrimination are not preempted by ERISA, and noting that merely increasing an ERISA plan’s opera- tional costs is too tenuous, remote or peripheral an effect to warrant a finding that the law relates to a covered plan). Any requirement that an employer spend a fixed amount on wages would reduce the general funds avail- : able for other methods of employee compensation. See Travelers, 115 S. Ct. at 1679 (“Even basic regulation of employment conditions will invariably affect the cost and price of services.”). But “ERISA does not preempt cash wage requirements unrelated to employee benefits, nor does it require the state to encourage benefits contribu- tions by reducing the minimum cash wage where an employer makes large benefits contributions.” Keystone, 37 F.3d at 959. : Ls Ea AD Aaa ECAR ie OBL a 2 a Ge ro 2la [13] Although California’s prevailing wage law may discourage employer benefit contributions greater than the excess benefits cap, this effect is not sufficient by itself to find ERISA preemption. After all, a cash-only prevailing wage law, which clearly would not be pre- empted, would more severely discourage benefits contri- butions than the current scheme. The economic effect of the current scheme is too tenuous, remote or peripheral to support a finding that the law “relates to” employee benefit plans. [14] In Employee Staffing we set forth a simplified test for determining whether a law “relates to” ERISA plans for preemption purposes: Is the state telling employers how to write their ERISA plans, or conditioning some requirement on how they write their ERISA plans? Or is it telling them that regardless of how they write their ERISA plans, they must do something else outside and independently of the ERISA plans? If the latter . . . there is no preemption. Employee Staffing, 20 F.3d at 1041. In the current case, California is not telling employers how to write their ERISA plans. Nor is it conditioning some requirement on how individual employers write their ERISA plans. Instead, it is telling employers that regardless of how they write their ERISA plans, or even whether they have ERISA plans at all, they must pay the prevailing wage, and they may do so through some combination of cash and benefits. Under either test as to whether a statute has a connection with ERISA plans, California’s prevailing wage law does not have a sufficient connection to find that the statute is preempted. 22a [15] In conclusion, California’s prevailing wage law does not refer to or have a connection with ERISA plans sufficient to find that it “relates to” such plans. Therefore, the prevailing wage provisions of California’s statute are not preempted by ERISA. Ill California’s prevailing wage law has some connec- tion to employee benefits and, therefore, has some con- nection, however indirect, to employee benefit plans. Nevertheless, we hold that this connection is not suffi- cient to find that the statute is preempted by ERISA. Therefore, we affirm the district court’s judgment that ERISA does not preempt California’s two-tier prevailing wage scheme. 23a APPENDIX B UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT WSB ELECTRIC, INC. and J.R. ROBERTS CORPORATION, Plaintiffs-Appellants, v. JAMES CURRY, in his official capacity as the Labor Commissioner of the State of California; RONALD RINALDI, Director of Industrial Relations for the State of California, No. 94-16613 D.C. CV-90-00771-CW Defendants-Appellees, and STATE BUILDING AND CONSTRUCTION TRADES COUNCIL OF CALIFORNIA, AFL-CIO; CARPENTERS- CONTRACTORS COOPERATION COMMITTEE, INC., Intervenors-Appellees. Nm Nem ee ee ee ee ee ee ee ee ee” ee See” Nee Ne ee 24a J.R. ROBERTS CORPORATION, Plaintiff-Appellant, ~ No. 94-16646 D.C. No. JAMES CURRY, Labor Commissioner of the State CV-90-01109-CW of California; RONALD RINALDI, ORDER Director of Industrial Relations (Filed for the State of California, Aug. 21, 1996) Defendants-Appellees, and STATE BUILDING AND CONSTRUCTION TRADES COUNCIL OF CALIFORNIA, AFL-CIO; CARPENTERS- CONTRACTORS COOPERATION COMMITTEE, INC., Intervenors-Appellees. Nome ee ee ee ee ee ee ee eee ee ee eet ee” Before: BROWNING, CANBY, and HALL, Circuit Judges The panel has voted to deny appellants’ 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 active judge has requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35. The petition for rehearing is DENIED and the sugges- tion for rehearing en banc is REJECTED. 25a APPENDIX C IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA WSB ELECTRIC, INC.; No. C 90-00771 CW J.R. ROBERTS CORP., No. C 90-01109 CW Plaintiffs, ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY V. JAMES CURRY, in his JUDGMENT AND official capacity as the GRANTING Labor Commissioner of the DEFENDANTS’ State of California; MOTION FOR RONALD T. RINALDI, SUMMARY JUDGMENT Director of Industrial Relations for the State of California, (Filed Aug 11, 1994) Defendants, and STATE BUILDING AND CONSTRUCTION TRADES COUNCIL OF CALIFORNIA, et al., Intervenors. / The cross-motions of Plaintiffs and Defendants for summary judgment were heard by this Court on July 8, 1994. Mark R. Thierman and George P. Parisotto of the Thierman Law Partnership appeared on behalf of Plain- tiffs WSB Electric Inc. and J.R. Roberts Corporation. 26a James D. Fisher of the California Department of Indus- trial Relations appeared on behalf of Defendants James Curry and Ronald T. Rinaldi. Having considered the papers filed by the parties and oral argument on the motion, and good cause appearing, the Court hereby DENIES Plaintiffs’ motion and GRANTS Defendant’s motion for the following rea- sons. A. Background and Procedural History Each Plaintiff is a California contractor which bids on public works contracts. In 1990, each sued the California Labor Commissioner and the Director of the California Department of Industrial Relations (“DIR”) under ERISA and § 1983 to enjoin the then-existing system of enforce- ment of the prevailing wage laws in California, and the actions were ordered related. The State Building and Construction Trades Council of California, AFL-CIO was permitted to intervene. While the actions were pending, the DIR changed its method of enforcement on an interim basis. ¢ § i . ! Judge John P. Vukasin entered summary judgment for Plaintiffs, finding the original enforcement scheme to be preempted by ERISA, although finding the § 1983 equal protection claims to be without merit. Judge Vukasin denied Plaintiffs’ motion for attorneys’ fees, however, as the action did not fall within the ERISA attorneys’ fees statute. The DIR adopted its interim enforcement method on a permanent basis in state regulations, but also pursued i aa 27a an appeal from the judgment against it. The Ninth Circuit vacated the judgment as moot and remanded for deter- mination of whether the new scheme is preempted. Plaintiffs now seek summary judgment that the new scheme is preempted by ERISA, and further that they are entitled to interim attorneys’ fees for the first phase of this case through the appeal. Defendants and Intervenor jointly oppose the motion and move for summary judg- ment in their favor. B. Statement of Facts and Issues The state of California requires that contractors on certain public works projects pay their employees at least the “general prevailing rate of per diem wages for work of a similar character in the locality.” California Labor Code § 1771. The Director of the DIR is charged with determining the prevailing wage in the relevant locality for each type of work needed to execute a public contract. Labor Code § 1773. The definition of “per diem wages” includes the amount of employer payments for certain benefits, as well as cash wages. Labor Code § 1773.1. Prior to October 1990, DIR enforced these statutes according to the “line by line” method. Under this approach, the DIR determined the prevailing rate of cash wages and of each specific benefit included in the statute; the total of all of these was considered the “prevailing wage.” To comply with the prevailing wage laws, a con- tractor could either pay at least the total amount of the prevailing wages in cash wages, or pay a combination of at least the prevailing cash wages plus countable benefit contributions adding up to at least the total amount of 28a prevailing wages. However, for each specified fringe ben- efit, only contributions up to the prevailing rates for that benefit were countable. Thus contractors were not enti- tled to any credit for benefits which were not prevailing benefits in the area or for benefit payments in excess of the prevailing rate for that benefit. This is the scheme which Judge Vukasin held was preempted by ERISA. The new scheme followed by DIR is dubbed the “two tier” system by Plaintiffs. Under this scheme, to be in compliance with the prevailing wage laws, a contractor could either pay at least the total amount of the prevail- ing wages in cash wages or pay a combination of at least the prevailing cash wages, plus benefit contributions adding up to at least the total amount of the prevailing wages. The difference from the “line by line” scheme is that legitimate statutory benefits contributions are count- able even if they exceed the prevailing rates for that specific benefit or are for different benefits than the pre- vailing benefits. This scheme thus interferes far less with the choice of benefits and allocation of funds to benefits. However, as with the “line by line” system, a contractor is still required to pay the prevailing cash wages; it is not entitled to a credit against the prevailing cash wages for benefit payments in excess of the prevailing rate for benefits. This is the scheme being challenged in this action. A third possible scheme, used in the federal Davis- Bacon Act, is the “total package” method. Under that method, to comply with the prevailing wage statute, a contractor could pay any combination of cash wages and benefit contributions, provided that the total adds up to the total prevailing wage determined by the government. ee — 29a In other words, contractors would be entitled to credits against the prevailing cash wage rate for benefit pay- ments in excess of the prevailing rate for benefits. The issue framed in these cross-motions is whether the “two tier” method is preempted by ERISA. Plaintiffs concede that the state may adopt prevailing wage laws which set a floor for the tier of combined wage and benefits payments (“total package”); they further con- cede, as they must, that the state may set a floor for the tier of cash wages alone, regardless of benefits. However, Plaintiffs argue that the state may not do both without running afoul of ERISA. C. Applicable Legal Standards Summary judgment is properly granted when there are no genuine and disputed issues of material fact; or, when viewing the evidence most favorably to the non- moving party, the movant is clearly entitled to prevail as a matter of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Eisenberg v. Insurance Co. of North America, 815 F.2d 1285, 1288-89 (9th Cir. 1987). This case is appropriate for disposition by summary judgment. There are no disputed facts. The parties seek a ruling on the legal issue of whether ERISA preempts the state’; prevailing wage law scheme. D. ERISA Preemption ERISA preempts “any and all State laws insofar as they ... relate to any employee benefit plan... ” 29 U.S.C. § 1144(a). The regulations construing ERISA 30a explicitly exclude wages from the definition of “employee benefit plan.” 29 C.F.R. § 2510 3 - 1. The scope of ERISA preemption under § 1144(a) is extremely broad, but not unlimited. In Massachusetts v. Morash, 490 U.S. 107 (1989), the Supreme Court held that a statute requiring employers to pay employees for unused accrued vacation time was not preempted by ERISA. It recognized that the definition of “employee benefit” was broad enough to encompass vacation benefits, such that the creation of a separate fund to pay vacation benefits would constitute an “employee benefit plan” and subject an employer to the regulatory provisions of ERISA. It held, however, that neither ordinary vacation benefit payments nor payment for unused vacation time constitute a “plan,” reasoning as follows: The interpretation of § 3(1) is governed by the familiar principles that . . . “in expounding a statute, we [are] not . . . guided by a single sentence ... but look to the provisions of the whole law, and to its object and policy. [citations omitted] In enacting ERISA, Congress’ primary concern was with the mismanagement of funds accumulated to finance employee benefits and the failure to pay employees benefits from accu- mulated funds. [citation omitted] To that end, it established extensive reporting, disclosure and fiduciary duty requirements to insure against the possibility that the employee’s expectation of the benefit would be defeated through poor management by the plan administrator. Because ordinary vacation payments are typically fixed, due at known times, and do not depend on contingencies outside the employee’s control, Pe nam: —_———_"---- a 3la they present none of the risks that ERISA is intended to address. If there is a danger of de- feated expectations, it is no different from the danger of defeated expectations of wage for ser- vices performed — a danger Congress chose not to regulate in ERISA. 490 U.S. at 112-15. The Court also relied upon the Secre- tary’s definition of “benefits,” noting that deference is due his reasonable views, and quoting the following from 40 Fed.Reg. 24642-24643 (1975): [P]aid vacations . . . are not treated as employee benefit plans because they are associated with regular wages or salary, rather than benefits triggered by contingencies such as hospitaliza- tion. Moreover, the abuses which created the impetus for the reforms in Title I were not in this area, and there is no indication that Con- gress intended to subject these practices to Title I coverage. 490 U.S. at 117. The promulgated regulations therefore provided that numerous “payroll practices” such as pay- ment of vacation benefits out of an employer’s general assets are not benefit plans within the meaning of ERISA. The Court noted that a contrary interpretation would have “profound consequences,” including that: [S]uch an interpretation would . . . displace the extensive state regulation of the vesting, fund- ing, and participation rights of vacation bene- fits; because ERISA’s vesting and funding requirements do not apply to welfare benefit plans [citations omitted], employees would actually receive less protection if ERISA were applied to ordinary vacation wages paid from the employer’s general assets. [citation omitted] 32a The States have traditionally regulated the pay- ment of wages, including vacation pay. Absent any indication that Congress intended such far- reaching consequences, we are reluctant to so significantly interfere with “the separate spheres of governmental authority preserved in our federalist system.” Fort Halifax Packing Co. v. Coyne, 482 U.S. at 19. 490 US. at 118-19. Obviously, payment of prevailing cash wages out of an employer's general assets without credit for higher than prevailing benefit contributions does not constitute a benefit plan within the meaning of ERISA. Plaintiff's argument is rather that such payment affects and therefore “relates to” their ERISA plans. This argu- ment must be evaluated, however, in light of the Supreme Court’s concern that the separate spheres of govern- mental authority be preserved. The Ninth Circuit has recently set forth a comprehen- sive ERISA preemption analysis in Aloha Airlines, Inc. . Ahue, 12 F.3d 1498 (9th Cir. 1993), affirming the district court’s grant of summary judgment that Hawaii's statute requiring employers to pay the cost of medical examina- tions mandated by federal law was preempted by ERISA. The court found that the primary purpose of ERISA is “to promote the interests of employees and their beneficiaries in employee benefit plans,” quoting Shaw v. Delta AirLines Inc., 463 U.S. 85, 90 (1983). Congress also intended to safeguard employers’ interests by “eliminating the threat of conflicting and inconsistent State and local regulation of employee benefit plans.” Id. at 91. To ensure unifor- mity, ERISA includes “one of the broadest preemption clauses ever enacted by Congress.” PM Group Life Ins. v. Western Growers Assur. Trust, 953 F.2d 543, 545 (9th Cir. 33a 1992). The threshold question in a preemption inquiry is whether the state law “relates to” an employee welfare benefit plan, i.e. “has a connection with or reference to such a plan.” Shaw, 463 U.S. at 97. If so, it is preempted even if it was “not specifically designed to affect such [a] plan{], or the effect is only indirect.” Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990). On the other hand, the law does not “relate to” ERISA plans if its effect on such plans is “tenuous, remote, or peripheral.” Shaw, 463°U.S. at 100 n.21. In determining whether a state law “relates to” an ERISA plan, the following factors must be consid- ered: (1) whether the state law regulates the types of benefits of ERISA employee welfare benefit plans (Shaw, 463 U.S. at 96-97 (state law requir- ing pregnancy benefits “relates to” ERISA plan); Standard Oil Co. v. Agsalud, 633 F.2d 760, 766 (9th Cir. 1980), aff'd mem., 454 U.S. 801 (1981) (state law requiring alcohol and drug abuse treatment benefits “relates to” ERISA employee benefit plan)); (2) whether the state law requires the establishment of a separate employee benefit plan to comply with the law (Fort Halifax, 482 U.S. at 12-13 (state law requiring companies to make a onetime, lump-sum severance payment when closing plants does not “relate to” an ERISA plan, since the law does not require establishment or maintenance of a plan)); (3) whether the state law imposes reporting, dis- closure, funding, or vesting requirements for ERISA plans [citation omitted]; and (4) whether the state law regulates certain ERISA relation- ships, including the relationships between an ERISA plan and employer and, to the extent an employee benefit plan is involved, between the 34a employer and employee (General Am. Life Ins. Co. v. Castonguay, 984 F.2d 1518, 1521-22 (9th Cir. 1993) (statute subjecting trustees to personal lia- bility for actions performed while discharging their responsibility to trust is preempted by ERISA as applied to contract entered into by trustees for ERISA trust)). 12 F.3d at 1504. Applying that test to the Hawaii statute, the court held it did “relate to” ERISA plans. The statute would require the plaintiff employer either to modify its existing health benefit plan to pay for medical examina- tions mandated by federal law, or to create a separate plan to provide for such benefits. Thus the statute either (1) regulated the benefits in the existing plan or (2) required the creation of a separate plan. Furthermore, the statute also (3) imposed reporting requirements to show that the obligation was met. Finally, the statute (4) regu- lated the relationship between the employer and its employee benefit plan and between the employer and employees mandated to have medical examinations. Accordingly, the statute directly affected and thus related to the ERISA plan. Furthermore, it did not represent a regulation of traditional state authority. Therefore, it was preempted. Applying the Aloha test to the instant prevailing wage statute and enforcement scheme, no ERISA preemp- tion can be found. The statute does not (1) regulate the types of benefits in ERISA plans, or (2) require the cre- ation or maintenance of a separate benefit plan, inasmuch as a contractor may comply with the law without having a plan at all, simply by paying cash wages in the amount designated as the prevailing wage. As long as the ee ee ee eee 35a employer chooses the latter option, the statute (3) imposes no requirements on a benefit plan and (4) does not regulate the relationship between the employer and a benefit plan or regulate the relationship between the employer and employee with respect to a benefit plan. Furthermore, even if the employer chooses to have an ERISA plan, the statute does not regulate the types or amounts of the benefits in the plan or the relationship between the employer and employee with respect to the benefit plan, nor does it impose any requirements on the plan itself. At most, the statute may have an indirect effect on the amount of benefits by discouraging payment of higher than prevailing rates of benefits among those employers who seek to comply precisely and not exceed compliance with the statute. However, the choice of the amount of benefits remains fully with the private parties. If the employer seeks credit against the full prevailing wage for benefit payments. The statute requires mainte- nance of records demonstrating compliance, but that obligation falls on the employer, not the ERISA plan, and any effect on the plan is too tenuous, remote or periph- eral to support preemption. Finally, the sole purpose and primary effect of the statute is to set a floor for total compensation and for cash wages, which is a traditional exercise of state authority. The Ninth Circuit has recently restated the essence of its ERISA preemption analysis in a very simple test. In Employee Staffing Services Inc. v. Aubry, 20 F.3d 1038 (9th Cir. 1994), deciding that a workers compensation statute was not preempted by ERISA, the court posed the issue as follows: 36a Is the state telling employers how to write their ERISA plans, or conditioning some requirement on how they write their ERISA plans? Or is it telling them that regardless of how they write their ERISA plans, they must do something else outside and independently of the ERISA plans? If the latter, as here, there is no preemption. 20 F.3d at 1041. In the instant prevailing wage laws, the state of California is telling employers that regardless of how they write their ERISA plans, or even whether they have ERISA plans, they must pay prevailing cash wages and prevailing total compensation. Accordingly, there is no preemption. The Court notes that the system Plaintiffs concede would not be preempted, the “total package” system, when combined with minimum wage laws, which Plain- tiffs do not and cannot argue are preempted by ERISA, is legally and logically no different from the “two tier” scheme challenged here. The minimum wage laws also set a floor for cash wages, and thus would discourage payment of benefits exceeding the difference between the total prevailing wage and the minimum wage. The chal- lenged second tier of the instant statute merely raises that minimum wage higher than the cash wages Plaintiffs wish to pay. In addition, Plaintiffs’ argument for preemption is that their ERISA plans are affected in that the statute creates a disincentive for them to maintain the benefits at their current level. However, an ordinary prevailing wage statute which does not involve any credit for benefits paid, and which Plaintiffs concede would not be pre- empted, creates a greater disincentive than that of which | 37a Plaintiffs complain. Thus, Plaintiffs’ argument would sweep far too broadly if given its full effect. The conflicting authority does not persuade this Court otherwise. The case of General Electric v. Dept. of Labor, 891 F.2d 25 (2nd Cir. 1989) involved a prevailing wage statute very similar to the “line by line” scheme that Judge Vukasin held preempted. The majority held the statute was preempted by ERISA under the teachings of Alessi v. Raybestos-Manhattan Inc., 451 U.S. 504, 511 (1981) (state statute prohibiting ERISA pension plans from reducing pension benefits by amount of workers’ compensation award preempted by ERISA; ERISA leaves to the private parties, not the Government, the deter- mination of the level of benefits to be paid). A state law relates to a benefit plan if it prescribes either (1) the type and amount of an employer’s contributions to a plan, (2) the rules and regulations under which a plan operates, or (3) the nature and amount of benefits provided under a plan. The majority held that this prevailing wage law intruded into all three of these preempted areas as fol- lows: (1) employers must either bring their plans into conformity with the prevailing plans or make up the difference in cash payments; (2) employers must make records demonstrating compliance available to the state; and (3) the employee may be required to accept cash payments which may be of lesser value than the unpaid benefits would have been. Circuit Judge George C. Pratt wrote a well-reasoned dissent, opining that ERISA preemption is not so broad as to invalidate a state law which neither purports to regu- late employee benefits plans nor affects a plan’s primary administrative functions. The types of statutes properly 38a held preempted are those that provide an alternative cause of action to employees to collect benefits protected by ERISA, refer specifically and apply solely to ERISA plans, or interfere with the calculation of benefits owed to an employee. Laws of general application and traditional exercises of state power, whose economic and administra- tive effects on benefits plans are incidental to their pri- mary objectives, are generally not preempted. The challenged prevailing wage law did not interfere with any of the primary administrative functions of ERISA plans, affect the structure or administration of benefit plans, determine an employee's eligibility for benefits, or control the type or level of benefits provided. Rather, it sought to equalize the minimum labor costs for employers bidding on public works contracts, a valid exercise of the state’s traditional regulatory authority. fudge Pratt stated: [W]here a law claimed to be superseded by ERISA “is an exercise of a State’s police powers,” the law should not be held preempted “unless this conclusion is unavoidable.” Rebaldo v. Cuomo, 749 F.2d 133, 138 (2nd Cir. 1984), cert. denied, 472 U.S. 1008 (1985). While preemption may be an unavoidable conclusion where a state law explicitly singles out ERISA plans for differ- ent treatment, [citation omitted] or directly alters the calculation or payment of benefits under ERISA-covered pension plans, see Alessi ..., or creates a cause of action to enforce a right granted by ERISA, [citation omitted], no such problem is presented by the statute before us. The fact that employers may choose to com- ply with the law by providing a different bene- fits plan or a combination of benefits and cash — 39a rather than simply paying the additional costs as wages, does not render the statute pre- empted. See Shaw v. Delta Air Lines Inc, 463 U.S. 85, 108 (1983) (while a state may not require employers to alter their ERISA plans, it is not preempted from giving them that option as a means of complying with state law). 891 F.2d at 30-31. While the prevailing wage law requires an employer to satisfy certain administrative respon- sibilities such as making its records available for inspec- tion, and this may increase the cost of operating the benefit plan, this is “merely incidental” to the law’s pri- mary goal of equalizing labor costs. In short, “New York's prevailing wage statute is a law of general application whose tangential effects on employee benefit plans are negligible and wholly incidental to the law’s primary purpose” and therefore is not preempted by ERISA. Id. at 31. The Court finds the reasoning of the dissent in Gen- eral Electric more persuasive than that of the majority. The majority fails to take into account the difference between regulating benefit plans and regulating wages in such a way that the employer has the choice of complying either through its ERISA benefit plan or in some other way. In Shaw v. Delta AirLines, the Supreme Court held that an employer’s choice to provide a benefit plan cannot deprive the state of enforcement authority it would other- wise have. At issue there was a state disability law and an ERISA plan which contained disability benefits but did not comply with the state law. ERISA expressly exempts “any employee benefit plan . . . maintained solely for the 40a purpose of complying with applicable disability insur- ance laws.” The employer argued, however, that by choosing to provide disability insurance benefits in its ERISA plan and not in a separate plan, it could deprive the state of its traditional authority. The Supreme Court disagreed, stating as follows: Congress surely did not intend, at the same time it preserved the role of state disability laws, to make enforcement of those laws impossible. A State may require an employer to maintain a disability plan complying with state law as a separate administrative unit... . The fact that state law permits employers to meet their state- law obligations by including disability insur- ance benefits in a multi-benefit ERISA plan .. . does not make the state law wholly unenforce- able as to employers who choose that option. In other words, while the State may not require an employer to alter its ERISA plan, it may force the employer to choose between providing dis- ability benefits in a separately administered plan and including the state-mandated benefits in its ERISA plan. 463 U.S. at 108. This analysis applies equally to state prevailing wage laws. The Northern District of California has split on whether to follow the majority or the dissent in General Electric. Judge Charles A. Legge followed the majority in Associated Builders & Contractors v. Baca, 769 F. Supp. 1537 (N.D.Cal. 1991), holding that a county ordinance which required in private contracts the payment of prevailing wages, as defined by Labor Code § 1773 ... was pre- empted both by the NLRA, because it impermissibly 4la interfered in the collective bargaining process between private parties, and by ERISA. However, this case is distinguishable because there the ordinance applied to private rather than state-funded contracts, thus eliminat- ing the important factor of the state’s traditional exercise of the authority to set wages for state-funded projects. The reasoning of the General Electric majority was expressly rejected by Judge Fern M. Smith in Associated Builders and Contractors v. Curry, 797 F.Supp. 1528 (N.D.Cal. 1992). In holding that California’s prevailing wage law was not preempted by ERISA as applied to trainee employees employed by public works contractors, Judge Smith started with the presumption that in enact- ing ERISA, “Congress did not intend to preempt areas of traditional regulation.” Martori Bros. Distributors v. James- Massengale, 791 F.2d 799 (9th Cir.), cert. denied 479 U.S. 949, 1018 (1986), quoting Metropolitan Life Ins. v. Massa- chusetts, 471 U.S. 724 (1985). The statute at issue fell into such an area: The manifest purpose of § 1771 is to guarantee that public works contractors pay prevailing wages to their employees and do not compete in bidding on public works projects based on lower-than-prevailing wage rates. §§ 1773 and 1773.1 are designed to level the playing field among bidders on public works projects by counting payments for prevailing benefits toward the determination of prevailing wages. If only straight-time pay counted towards prevail- ing wages, bidders who paid prevailing benefits would be placed at a competitive disadvantage in bidding . . . vis-a-vis bidders who offered no benefits. On the other hand, by including the value of prevailing “employer payments” for 42a benefits, the statutes do not mandate that bid- ders provide such benefits, only that they pro- vide the value thereof. 797 F.Supp. at 1536-1537. Judge Smith rejected the reason- ing that incorporation of prevailing benefits into deter- mination of prevailing wages “relates to” employee benefit plans, finding the reasoning of the dissent in General Electric more persuasive. As set forth in ABC v. Curry, the statute challenged here is clearly within the traditional exercise of the ~tate’s authority and should be held preempted only if that conclusion is inescapable. It is not. The fact that employers can comply fully with the statute without hav- ing an ERISA plan at all is enough to demonstrate that the statute does not relate to ERISA plans. The employer’s choice to have such a plan and to take a credit based on the plan under the statute cannot deprive the state of its traditional authority. Shaw, 463 U.S. at 108. The opposite result is not dictated by District of Columbia v. Washington Board of Trade, 113 S.Ct. 580 (1992), in which the Supreme Court ruled that ERISA preempted a District of Columbia mandate that employers which provide health coverage to employees extend equivalent coverage to employees receiving workers compensation. There an employer’s obligation to provide workers com- pensation benefits was computed by reference to that employer’s obligations under its own ERISA plan. The state was not telling the employer to provide workers compensation “outside and independently” of its ERISA plan, but by direct reference to its ERISA plan. The stat- ute was not of general applicability to all employers, but only to those employers who had ERISA plans. Here, in Ea errr ree 43a contrast, the law is of equal applicability to employers with and without ERISA plans. Further, the statutory reference is not to the employer’s own ERISA plan, but to the prevailing level of benefits in the area. The Supreme Court has specified that the preemption language “related to any employee benefit plan” is intended to distinguish between relating to a benefit plan and other- wise relating to benefits. Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987). The cases relied on by Plaintiffs to overcome the argument that prevailing wage laws are a traditional exercise of state power are inapposite since both involve attempts directly to regulate ERISA plans. Local Union 598, Plumbers & Pipefitters Industry Journeymen and Apprentices Training Fund v. ].A.Jones Construction Com- pany, 846 F.2d 1213 (9th Cir. 1988), aff'd summ., 488 U.S. 881 (1988) (statute requiring contributions to employee benefit plans at or above the prevailing level preempted by ERISA); Hydrostorage Inc. v. Northern California Boiler. makers, 891 F.2d 719 (9th Cir. 1989), cert. denied 498 US. 822 (1990) (statute requiring contributions to apprentice- ship program plans preempted by ERISA). Plaintiffs mistakenly assert that this statute, as it is currently enforced, “restricts” the amount of benefits an employer may pay and requires employers to “vary the[ir] benefit plans to fit State-mandated criteria.” If this were true, the statute might be preempted by ERISA. However, it is not. The statute compels only the payment of wages, not the restriction of benefits. Whether to offer any benefits, which benefits to offer, and at what level to fund the benefits remain fully private choices. 44a Plaintiffs also argue that the statute discriminates against ERISA plans which pay higher than prevailing benefit levels. They analogize to cases involving prevail- ing wage laws which mandate higher wages for ap- prentices enrolled in non-state approved ERISA apprenticeship programs than for apprentices enrolled in state-approved programs. The difference is apparent. A state may not treat employers differently based on their choice of ERISA apprenticeship plans, requiring them to pay different wages, in an attempt to regulate ERISA apprenticeship~ plans and coerce participation in those approved by the state. Here, however, the statute treats all employers the same, regardless of whether they have ERISA plans at all and regardless of the terms of such plans, by requiring all employers to pay the same wages | (or more if they choose), at least the prevailing cash wage | and at least the prevailing full compensation. Therefore, this Court holds that the prevailing wage statute, as enforced by the “two tier scheme,” is not preempted by ERISA. It is therefore unnecessary to address Defendants’ argument that ERISA preemption should not apply to publics works at all, except to state that the argument lacks merit. Building and Construction Trades Council v. Associated Builders and Contractors, 113 S.Ct. 1190 (1993) is inapplicable to the instant case. There the Supreme Court held only that a bid specification is generally a proprietary, not a regulatory, action. How- ever, statutes and implementing regulations clearly are regulatory. Defendants make much of the public policies effectuated by the prevailing wage statutes; their contra- dictory argument that the statutes constitute no more iia aaa a 45a than the acts of a party in the marketplace are wholly unpersuasive. E. Attorneys’ Fees Plaintiffs move for interim attorneys’ fees on the grounds that they were prevailing parties on appeal, arguing that this action was a “catalyst” for the state’s change from the “line by line” to the “two tier” system. Defendants oppose the motion on the grounds, inter alia, that Judge Vukasin correctly held that, even as prevailing parties, Plaintiffs were not entitled to fees under ERISA § 1132(g) because they are not participants, beneficiaries nor fiduciaries of an ERISA plan. Plaintiffs have attempted no showing here that they are participants, beneficiaries or fiduciaries of an ERISA plan, and under the statutory definitions of ERISA, they clearly are not. See 29 U.S.C. §§ 1002(a) (7), (8), (14), (16), (21). Plaintiffs argue that their action benefitted partici- pants, but the statute limits its scope to actions brought by participants, beneficiaries or fiduciaries, and Plaintiffs cite no authority that an action brought by another party which may benefit a participant meets this statutory requirement. Plaintiffs further seem to argue that they are entitled to attorneys’ fees under 42 U.S.C. § 1988, despite the court’s rejection of their § 1983 equal protection claim, because they prevailed on their ERISA claim. It is appar- ent that § 1988 was not intended to provide for attorneys’ fees in all federal question litigation, and Plaintiffs have articulated no more limited theory supporting their 46a motion. Accordingly, Plaintiffs have not demonstrated entitlement to attorneys’ fees. F. Conclusion Therefore, for the foregoing reasons, Plaintiffs, motion for summary judgment is DENIED in its entirety. However, since the Court finds that the challenged statu- tory scheme is not preempted by ERISA, Defendants’ motion for summary judgment is hereby GRANTED. IT IS SO ORDERED. Dated: Aug. 11, 1994 /s/ Claudia Wilken CLAUDIA WILKEN UNITED STATES DISTRICT JUDGE Copies mailed to counsel as noted on the following page ee ee su Net tt 47a APPENDIX D TITLE 29. LABOR CHAPTER 18. EMPLOYEE RETIREMENT INCOME SECURITY PROGRAM PROTECTION OF EMPLOYEE BENEFIT RIGHTS REGULATORY PROVISIONS Administration and Enforcement 29 USCS § 1144 (1996) § 1144. Other laws (a) Supersedure; effective date. Except as provided in subsection (b) of this section, the provisions of this title and title IV shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 4(a) [29 USCS § 1003(a)] and not exempt under section 4(b) [29 USCS § 1003(b)]. This section shall take effect on January 1, 1975. (c) 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 political subdivisions thereof, or any agency or instrumentality of either, which purports to regulate, directly or indirectly, the terms and conditions of employee benefit plans cov- ered by this title. (d) Alteration, amendment, modification, invalida- tion, impairment, or supersedure of any law of the United 48a States prohibited. Nothing in this title shall be construed to alter, amend, modify, invalidate, impair, or supersede any law of the United States (except as provided in sections 111 and 507(b) [29 USCS §§ 1031, 1137(b)]}) or any rule or regulation issued under any such law. LABOR CODE DIVISION 2. Employment Regulation and Supervision PART 7. PUBLIC WORKS AND PUBLIC AGENCIES CHAPTER 1. Public Works ARTICLE 2. Wages California Labor Code § 1771 (1996) § 1771. Requirement of prevailing local rate for work under contract Except for publ [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386018_1811%3A1. Public record. Not legal advice.