Opinion ID: 670809
Heading Depth: 1
Heading Rank: 4

Heading: Third-Party Beneficiary Claim Under California Law

Text: 21 Article 16.4 of the subcontract between Mark and Stark provided that [l]abor benefits will be paid under a joint check agreement between [Mark, Stark] & the appropriate agency. [ER at 69]. The Trust Funds' complaint asserts a claim under Cal.Civ.Code Sec. 1559 6 seeking to enforce the rights of the Trust Funds as third-party beneficiaries to the subcontract between Mark and Stark. The district court held that this claim was preempted by ERISA. 22 We agree with the district court. As in Marjo, the Trust Funds are attempting to use the California third-party beneficiary statute to enforce the terms of a plan, and the statute merely supplements the ERISA remedy noted above. Therefore, the state third-party beneficiary remedy is preempted by ERISA. 23 The Trust Funds' strongest argument to the contrary is that the statute is identical in nature to the general Georgia garnishment statute that the Supreme Court held in Mackey was not preempted by ERISA. In Mackey, a collection agency sought to garnish the vacation and holiday plan benefits of plan members against whom it had obtained money judgments. The trustees of the benefit plan argued that a Georgia statute specifically prohibiting the garnishment of ERISA-covered employee benefit plans barred the collection agency from doing so. The Supreme Court first held that the antigarnishment statute was preempted by ERISA because of the statute's express reference to ERISA plans. Mackey, 486 U.S. at 830, 108 S.Ct. at 2186. 24 The Court then rejected the trustees' argument that the Georgia general garnishment statute was also preempted by ERISA. The Court reasoned that ERISA clearly contemplated the enforcement of money judgments against benefit plans but that it did not provide an enforcement mechanism; consequently, state-law methods for collecting money judgments must, as a general matter, remain undisturbed by ERISA; otherwise, there would be no way to enforce such a judgment won against an ERISA plan. Id. at 834, 108 S.Ct. at 2187-88. The Court also noted that, under Georgia law, 25 garnishment is a procedural mechanism for the enforcement of judgments. Georgia's statute that provides for garnishment creates no substantive causes of action, no new bases for relief, or any grounds for recovery; the Georgia garnishment law does not create the rule of decision in any case affixing liability. Rather under Georgia law, postjudgment garnishment is nothing more than a method to collect judgments otherwise obtained by prevailing on a claim against the garnishee. 26 Id. at 834-35 n. 10, 108 S.Ct. at 2187-88 n. 10 (emphasis added; citation omitted). 27 Neither of these two anti-preemption rationales applies here. As noted above, ERISA already provides a mechanism for trust funds to collect unpaid benefits. Furthermore, the California third-party beneficiary statute is not simply a procedural mechanism for the enforcement of judgments; it creates a separate substantive cause of action that a trust fund may bring to obtain such a judgment in the first place. For this reason, the California third-party beneficiary statute cannot be brought under the authority of Mackey. Iron Workers Mid-South Pension Fund v. Terotechnology Corp., 891 F.2d 548, 556 (5th Cir.), cert. denied, 497 U.S. 1024, 110 S.Ct. 3272, 111 L.Ed.2d 782 (1990).