1997 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

6-10-1997

Ferguson Elec Co Inc v. Foley

Precedential or Non-Precedential:

Docket 95-7454,95-7464

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Recommended Citation

"Ferguson Elec Co Inc v. Foley" (1997). 1997 Decisions. Paper 126.

http://digitalcommons.law.villanova.edu/thirdcircuit_1997/126
Filed June 10, 1997 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

Nos. 95-7454 and 95-7464 

FERGUSON ELECTRIC CO., INC., 

A Connecticut Corporation 

v. 

THOMAS P. FOLEY, in his Official Capacity as the 

Secretary of Labor and Industry for the Commonwealth of 

Pennsylvania; ROGER C. BITZEL, in his Official Capacity 

as the Director of the Prevailing Wage Division, 

Department of Labor and Industry for the Commonwealth 

of Pennsylvania; ROBERT S. BARNETT, in his Individual 

and Official Capacity as the Secretary of Labor and

Industry for the Commonwealth of Pennsylvania; JOHNNY 

J. BUTLER, Secretary of Labor and Industry; ROBERT 

RISALITI, Acting Director of the Prevailing Wage Division 

Thomas P. Foley; Roger C. Bitzel; 

Robert S. Barnett; Johnny J. Butler; 

Robert Risaliti; *Robert Moore, 

 Appellants at No. 95-7454 

Ferguson Electric Co., Inc., 

 Appellant at No. 95-7464 

On Appeal from the United States District Court 

for the Middle District of Pennsylvania 

(D.C. Civil Action No. 93-cv-01977) 

_________________________________________________________________ 

*[Pursuant to F.R.A.P. Rule 12(a)] 
Argued May 2, 1996 

Before: SCIRICA, ROTH and GODBOLD,** Circuit Judges

(Filed June 10, 1997) 

SUSAN J. FORNEY, ESQUIRE 

 (ARGUED) 

Office of Attorney General 

 of Pennsylvania 

Department of Justice 

Strawberry Square, 15th Floor 

Harrisburg, Pennsylvania 17120 

 Attorney for Appellants/ 

 Cross-Appellees, Thomas P. Foley, 

 Roger C. Bitzel, Robert S. Barnett, 

 Johnny J. Butler, Robert Risaliti, 

 and Robert Moore 

DAVID A. FLORES, ESQUIRE 

 (ARGUED) 

Harmon & Davies 

2306 Columbia Avenue 

Lancaster, Pennsylvania 17603 

 Attorney for Appellee/ 

 Cross-Appellant, 

 Ferguson Electric Co., Inc. 

_________________________________________________________________ 

**The Honorable John C. Godbold, United States Circuit Judge for the 

Eleventh Judicial Circuit, sitting by designation. 

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IRWIN W. ARONSON, ESQUIRE 

 (ARGUED) 

Handler, Gerber, Johnston & 

 Aronson 

150 Corporate Center Drive 

P.O. Box 98 

Camp Hill, Pennsylvania 17001-0098 

 Attorney for Amicus Curiae 

 Appellant/Cross-Appellee, 

 Pennsylvania State Building and 

 Construction Trades Council 

OPINION OF THE COURT 

SCIRICA, Circuit Judge. 

The issue on appeal is whether certain Pennsylvania

prevailing wage and apprenticeship requirements are

preempted by the Employee Retirement Income Security Act 

of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461. Since oral 

argument, the same issue was addressed by the United 

States Supreme Court in California Div. of Labor Standards

Enforcement v. Dillingham Construction, N.A., Inc., 117 S. 

Ct. 832 (1997). Accordingly, we hold ERISA does not

preempt Pennsylvania's prevailing wage and apprenticeship 

requirements insofar as they restrict the payment of 

apprentice wages to apprentices registered in approved 

programs. We will reverse. 

I.

A.

In 1961, Pennsylvania adopted the Prevailing Wage Act, 

which provides that "[n]ot less than the prevailing

minimum wages . . . shall be paid to all workmen employed 

on public work." 43 Pa. Cons. Stat. § 165-5. The purpose of 

the Act was "to protect workers employed on public projects 

from substandard wages by insuring that they receive the 

prevailing minimum wage." Keystone Chapter, Associated

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Builders and Contractors, Inc. v. Foley, 37 F.3d 945, 950 

(3d Cir. 1994)(quoting Lycoming County Nursing Home

Assoc., Inc. v. Pennsylvania, 627 A.2d 238, 242 (Pa. 

Commw. Ct. 1993)), cert. denied, 115 S. Ct. 1393 (1995). 

The prevailing minimum wage is determined by the 

Secretary of Labor and Industry,1 who also investigates 

charges of wage act violations. 43 Pa. Cons. Stat. §§ 165-7, 

165-11. An intentional violation of the wage act results in 

the contractor's bar from public contracts for three years. 

43 Pa. Cons. Stat. § 165-11(e). The contractor may also be 

liable to the Commonwealth for damages for underpayment 

of wages due under the contract. 43 Pa. Cons. Stat. § 165- 

11(f). 

Pennsylvania law permits an exception to the mandatory 

prevailing wage rate for apprentices in approved 

apprenticeship programs. The Pennsylvania Apprenticeship 

and Training Act permits the payment of "apprentice wage 

rates" which may be lower than the prevailing rate 

minimums. 34 Pa. Code § 83.5(b)(5)(i) ("The progressively 

increasing schedule of apprentice wage rates shall be 

expressed in terms of percentages of the journeyperson 

hourly rate.").2 To prevent abuses of the apprenticeship 

system, the Pennsylvania Apprenticeship and Training Act 

created a State Apprenticeship and Training Council to set 

standards for apprenticeship programs.3 43 Pa. Cons. Stat. 

§§ 90.3, 90.4. 

_________________________________________________________________ 

1. The prevailing minimum wage varies depending on the "locality in 

which the public work is to be performed" and the "craft or classification 

of all workmen needed to perform public work contracts." 43 Pa. Cons. 

Stat. § 165-7. 

2. The regulations accompanying the Prevailing Wage Act specifically 

allow for the hiring of apprentices on public works projects. 34 Pa. Code 

§ 9.103(9) ("[A]pprentices shall be limited to numbers in accordance with 

a bona fide apprenticeship program registered with and approved by The 

Pennsylvania Apprenticeship and Training Council . .. ."). 

3. The Apprenticeship and Training Council is a State Apprenticeship 

Agency empowered to regulate apprenticeship programs under federal 

law. See 29 C.F.R. § 29.3(a) (1996). The Council approves only those 

apprenticeship programs which are "organized, written plan[s]" providing 

for the "employment and training of the apprentice in a skilled trade," 

"instruction in technical subjects related to the trade," and a 

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B.

Ferguson Electric Company contracted with the 

Schuylkill County Redevelopment Authority to provide 

electrical work for a public works project. Ferguson used 

nonunion labor and enrolled its apprentices in an 

apprenticeship program sponsored by the Keystone Chapter 

of the Associated Builders and Contractors, an employer's 

association. Ferguson is a member of the Associated

Builders and Contractors, and its apprenticeship program 

had been approved by the Apprenticeship and Training 

Council. After Ferguson submitted apprenticeship 

agreements to the Council for approval in June 1992, its 

apprentices started working for apprentice wages. But the 

Council did not approve the agreements until January 

1993. 

Because Ferguson started paying apprentice wages prior 

to receiving Council approval, the Pennsylvania Department 

of Labor and Industry asked the Schuylkill County 

Redevelopment Authority to withhold its invoice payments. 

Then, in April 1993, the Department initiated an 

administrative proceeding against Ferguson under the 

Prevailing Wage Act for: (1) paying apprentice wages to 

employees before receiving Council approval; and (2) 

employing too many apprentices in violation of a state jobsite apprentice-to-journeyman ratio rule. The Department 

sought monetary penalties and a ban on Ferguson's 

participation in public works projects for three years. 

Denying any violation, Ferguson brought this federal 

action alleging the state officials colluded with the 

_________________________________________________________________ 

"progressively increasing schedule" of wages. 34 Pa. Code § 83.5(a),(b)(1), 

(b)(4),(b)(5). Apprenticeship programs must limit the "ratio of apprentices 

to journeymen [to] be consistent with proper supervision, training, and 

continuity of employment." 34 Pa. Code § 83.5(b)(7). 

Apprentices must be individually registered with the Council. Such 

registration is effected by submitting apprenticeship agreements to the 

Council for approval. 34 Pa. Code § 83.3(b). An "apprenticeship 

agreement" is the agreement between the apprentice and his employer 

which contains the terms and conditions of the employment and training 

of the apprentice. 34 Pa. Code § 83.2. 

 5 
International Brotherhood of Electrical Workers and the 

Foundation for Fair Contracting to prosecute it and other 

non-union contractors while ignoring the wage act 

violations of union contractors, thereby violating Ferguson's 

due process rights. Ferguson also claimed the Prevailing 

Wage Act was preempted by ERISA. Ferguson sought 

damages and injunctive relief that would have prohibited 

defendants from prosecuting their administrative action 

against it or interfering with its attempt to bid on public 

works contracts. 

Both parties moved for summary judgment. Abstaining

on all but the ERISA preemption issue,4 the district court 

held the state prevailing wage and apprenticeship laws were 

preempted insofar as they require a minimum journeymanto-apprentice ratio and may forbid the retroactive approval 

of apprentices. Both sides appealed.5 

II.

The district court had jurisdiction under 28 U.S.C.

§§ 1331 and 1343. See Keystone Chapter, Associated

Builders and Contractors, Inc, 37 F.3d at 953. We have 

jurisdiction under 28 U.S.C. §§ 1291 and 1292(a)(1). 

We review summary judgment decisions under a plenary 

standard. See Waldron v. SL Indus., Inc., 56 F.3d 491, 496 

(3d Cir. 1995). We must apply the same test as the district 

court and therefore must view the evidence in the light 

most favorable to the nonmovant and affirm only if"there 

is no genuine issue as to any material fact and . . . the 

moving party is entitled to a judgment as a matter of law." 

Fed. R. Civ. P. 56(c); see also Waldron, 56 F.3d at 496. 

_________________________________________________________________ 

4. The district court abstained under Younger v. Harris, 401 U.S. 37 

(1971). 

5. On appeal, defendants challenge the district court's decision to not 

abstain from deciding Ferguson's ERISA preemption claim as well as the 

judgment of preemption. Ferguson challenges the district court's failure 

to hold the Prevailing Wage Act is entirely preempted by ERISA insofar 

as it applies to apprenticeship programs. 

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III. 

After oral argument, we took the case under advisement 

awaiting the Supreme Court decision in California Division

of Labor Standards Enforcement v. Dillingham Construction,

N.A., Inc., 117 S. Ct. 832 (1997). Dillingham Construction 

employed apprentices on a California public works contract. 

The apprentices were enrolled in an apprenticeship 

program which did not receive state approval until after 

they started working. The Division of Apprenticeship 

Standards of the California Department of Industrial 

Relations issued a notice of noncompliance to Dillingham 

for violating California's prevailing wage law, and the 

county was ordered to withhold Dillingham's payments. 

Dillingham filed suit to prevent the state from interfering 

with its contract. It alleged ERISA preempted enforcement 

of the prevailing wage law because the law related to the 

apprenticeship program, which was an ERISA plan. 

The Supreme Court granted certiorari in Dillingham on 

the following issue: 

Did Congress intend, in enacting ERISA, to pre-empt

states' traditional regulation of wages, apprenticeships, 

and state-funded public works construction when 

expressed in a state prevailing wage law that restricts 

contractors' payment of lower apprentice specific wages 

to apprentices duly registered in programs approved as 

meeting federal standards? 

Examining "the objectives of the ERISA statute," the Court 

found no preemption. Id. at 838. 

ERISA was enacted to provide uniform federal regulation 

of employee benefit plans. See Keystone Chapter,

Associated Builders and Contractors, Inc., 37 F.3d at 954. 

To further this goal, ERISA preempts "any and all State 

laws insofar as they may now or hereafter relate to any 

employee benefit plan . . . ." 29 U.S.C. § 1144(a). Ferguson 

contends Pennsylvania's apprenticeship scheme is 

preempted by ERISA because it "relates to" the Associated 

Builders and Contractors apprenticeship program, which is 

an "employee benefit plan" under ERISA. 6 A "law `relate[s] 

_________________________________________________________________ 

6. The term "employee benefit plan" includes "any plan, fund, or program 

which was heretofore or is hereafter established or maintained by an 

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to' a covered employee benefit plan . . . `if it [1] has a 

connection with or [2] reference to such a plan.' "

Dillingham, 117 S. Ct. at 837 (quoting District of Columbia

v. Greater Washington Bd. of Trade, 506 U.S. 125, 129 

(1992)). 

A law has a "connection with" ERISA plans if it dictates 

the choices faced by ERISA plans. It is not enough if the 

law merely provides economic incentives to ERISA plans 

but does not "bind [them] to anything." Dillingham, 117 S. 

Ct. at 841. The apprenticeship scheme in Pennsylvania 

does not bind ERISA plans to anything, but merely provides 

economic incentives to encourage apprenticeship programs 

to obtain state approval. In Pennsylvania, as in California, 

"[i]f a contractor chooses to hire apprentices for a public 

works project, it need not hire them from an approved 

program (although if it does not, it must pay these

apprentices journeyman wages)." Id. Like California's 

program, Pennsylvania's apprenticeship scheme does not 

have a "connection with" ERISA. See id. at 842 ("We could 

not hold preempted a state law in an area of traditional 

state regulation based on so tenuous a relation without 

doing grave violence to our presumption that Congress 

intended nothing of the sort."). 

Apprenticeship laws make "reference to" ERISA plans

where "approved apprenticeship programs need . . . 

necessarily be ERISA plans." Id. at 838. Where 

apprenticeship laws are "indifferent to the funding, and 

attendant ERISA coverage, of apprenticeship programs," 

they do not make "reference to" ERISA plans. Id. at 839. In 

Dillingham, the Court held California's prevailing wage law 

and apprenticeship requirements did not make "reference 

to" ERISA plans because apprenticeship programs need not 

necessarily be ERISA plans; apprenticeship programs could 

be maintained by a single employer and their costs could 

_________________________________________________________________ 

employer or by an employee organization, or by both, to the extent that 

such plan, fund, or program was established or is maintained for the 

purpose of providing for its participants or their beneficiaries . . . 

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

§ 1002(1),(3) (emphasis added). It is uncontested that the Associated 

Builders and Contractors apprenticeship program is an ERISA plan. 

 8 
be defrayed out of the employers' general assets."Benefits 

paid out of an employer's general assets present[ ] risks 

indistinguishable from `the danger of defeated expectations 

of wages for services performed,' a hazard with which 

ERISA is unconcerned." Id. (quoting Massachusetts v.

Morash, 490 U.S. 107, 115 (1989)). 

Similarly, in Pennsylvania, an apprenticeship program 

may be approved regardless of its funding source and 

whether it is maintained by a single employer. See 34 Pa. 

Code § 83.2 (allowing a "person, association, committee, or 

organization" to "sponsor" an apprenticeship program); 

§ 83.5 (setting standards for apprenticeship programs 

without limiting the acceptable funding sources or 

sponsors). Like California's prevailing wage law, 

Pennsylvania's apprenticeship scheme does not make 

"reference to" ERISA.7 

IV. Conclusion 

ERISA does not preempt Pennsylvania's prevailing wage 

and apprenticeship requirements insofar as they restrict 

the payment of apprentice wages to apprentices registered 

in approved programs. It is immaterial that the 

apprenticeship program in this case, the Associated

Builders and Contractors program, is an ERISA plan. The 

apprenticeship program's choices were not dictated by 

Pennsylvania law. For the foregoing reasons, we will reverse 

the judgment of the district court and direct the district 

court to enter judgment in favor of defendants.8 

_________________________________________________________________ 

7. Ferguson contends this case is distinguishable from Dillingham

because the latter "hinged on the fact that California's apprenticeship 

standards were `substantially similar' to [federal apprenticeship 

standards]." But the Court only mentioned the similarity in passing in a 

footnote and declined to resolve the issue of whether "uniformity of 

substantive standards" is even possible. Dillingham, 117 S. Ct. at 842 

n.10. More importantly, the laws in California and Pennsylvania do not 

materially differ in any way relevant to this issue. In both states, the 

"apprenticeship standards are not mandatory." Id.

8. The district court reached Ferguson's preemption claim only after 

denying defendants' motion to abstain. Defendants originally appealed 

the abstention decision but did not brief the issue in their supplemental 

briefs submitted after the Dillingham decision. As we are ruling in 

defendants' favor, we see no reason to address the abstention issue. 

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A True Copy: 

Teste: 

Clerk of the United States Court of Appeals

for the Third Circuit

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