Opinion ID: 2519953
Heading Depth: 2
Heading Rank: 3

Heading: El Capitan

Text: In El Capitan, the employees were union members entitled to fringe benefit contributions under a collective bargaining agreement. After their employer failed to make contributions to the employees' trust funds in excess of $121,000, the funds' administrator recorded trust fund liens under former section 3111 [8] against El Capitan Development Company's real property, on which the employees had performed work. The administrator alleged that because the unpaid contributions were due on account of work performed on El Capitan's property, section 3111 created liens on that property. ( El Capitan, supra, 53 Cal.3d at p. 1046, 282 Cal.Rptr. 277, 811 P.2d 296.) We held that the action under section 3111 was preempted under ERISA (29 U.S.C. § 1144(a)). ( El Capitan, supra, 53 Cal.3d at p. 1056, 282 Cal.Rptr. 277, 811 P.2d 296.) In our 1991 decision, we recognized the broad scope of the key term, relate to, in ERISA's preemption clause (29 U.S.C. § 1144(a)), based on congressional intent and high court decisions. ( El Capitan, supra, 53 Cal.3d at pp. 1047-1049, 282 Cal.Rptr. 277, 811 P.2d 296.) We concluded that [a]ll that is necessary to invoke ERISA's statutory preemption provision is that the state law in question `relate to' an ERISA plan. ( Id. at p. 1047, 282 Cal.Rptr. 277, 811 P.2d 296.) The state law in question was section 3111, which we concluded provid[ed] an additional method of funding, a lien against real property.... ( El Capitan, supra, 53 Cal.3d at p. 1052, 282 Cal.Rptr. 277, 811 P.2d 296.) We determined that section 3111 `relates to' such plans by creating a mechanism for enforcing an employer's contribution obligations that Congress did not provide. ( El Capitan, supra, 53 Cal.3d at pp. 1047-1048, 282 Cal.Rptr. 277, 811 P.2d 296.) Relying on Pilot Life, supra, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39, and Iron Workers Pension Fund v. Terotechnology (5th Cir.1990) 891 F.2d 548, we emphasized that section 3111 was preempted because this provision purported to regulate ERISA plans through a new cause of action or remedy not provided under ERISA, the state's lien laws. ( El Capitan, supra, 53 Cal.3d at pp. 1048, 1051, 1052, 1054, 1055, 282 Cal.Rptr. 277, 811 P.2d 296.) `The expectations that a federal common law of rights and obligations under ERISA-regulated plans would develop, ... would make little sense if the remedies available to ERISA participants and beneficiaries under [29 U.S.C. § 1132(a)] could be supplemented or supplanted by varying state laws.' ( El Capitan, supra, 53 Cal.3d at p. 1053, 282 Cal.Rptr. 277, 811 P.2d 296, quoting Pilot Life, supra, 481 U.S. at p. 56, 107 S.Ct. 1549.) This recognition that section 3111 if applied, would regulate the conditions under which the terms of an ERISA plan might be enforced supported our conclusion that the section related to such plans and thus was preempted. ( El Capitan, supra, 53 Cal.3d at pp. 1048, 1051, 1054, 282 Cal.Rptr. 277, 811 P.2d 296.) We also rejected the argument that section 3111 was not preempted because it was a generally applicable mechanism for enforcing judgments. (See Mackey, supra, 486 U.S. 825, 108 S.Ct. 2182 [general state garnishment statute not preempted].) We explained that [s]ection 3111 gives a trust fund a right to a lien against the property of third parties, such as El Capitan, that the fund would not, and does not, have under ERISA.... Therefore, section 3111 cannot be upheld under Mackey as it creates a new substantive right against the property of a third party that is not created by ERISA and, thus, goes beyond being a mere means of enforcing a judgment. ( El Capitan, supra, 53 Cal.3d at p. 1055, 282 Cal.Rptr. 277, 811 P.2d 296.) We also rejected the contention that section 3111 only affected an employee benefit plan in a `tenuous, remote, or peripheral' manner; rather, the provision had the substantive effect of making an additional entity liable to the trust fund for contributions. ( El Capitan, supra, 53 Cal.3d at p. 1056, 282 Cal.Rptr. 277, 811 P.2d 296.) Contrary to Storke's contention, El Capitan does not compel the conclusion that section 3110 is preempted. In that decision, we explained the differences between sections 3110 and 3111, though both provide mechanic's lien remedies. ( El Capitan, supra, 53 Cal.3d at p. 1049 & fn. 3, 282 Cal.Rptr. 277, 811 P.2d 296.) We stated that in contrast to persons seeking a mechanic's lien remedy under section 3110, ERISA plans do not provide labor and materials for a construction project. ( El Capitan, supra, 53 Cal.3d at p. 1049, 282 Cal.Rptr. 277, 811 P.2d 296.) But because section 3111 would treat ERISA plans the same as persons who provide labor and materials by giving these plans a mechanic's lien remedy unavailable under ERISA, we concluded section 3111 would single out ERISA plans for special treatment and thus relates to these plans. ( El Capitan, supra, 53 Cal.3d at p. 1049, 282 Cal.Rptr. 277, 811 P.2d 296; Mackey, supra, 486 U.S. at p. 829, 108 S.Ct. 2182.) Though we recognized in El Capitan that by providing a new cause of action or remedy section 3111 purported to regulate ERISA plans ( El Capitan, supra, 53 Cal.3d at p. 1051, 282 Cal.Rptr. 277, 811 P.2d 296), our holding that section 3111 was preempted relied heavily on the fact that the section is designed to affect [ERISA plans] specifically. ( El Capitan, supra, 53 Cal.3d at p. 1049, 282 Cal.Rptr. 277, 811 P.2d 296.) We observed that the high court has `virtually taken it for granted that state laws which are specifically designed to affect employee benefit plans are pre-empted under § 514(a).' ( Ibid., quoting Mackey, supra, 486 U.S. at p. 829, 108 S.Ct. 2182.) We emphasized that unlike section 3110, [s]ection 3111 is specifically for the use of express trust funds established pursuant to collective bargaining agreements. ( El Capitan, supra, 53 Cal.3d at p. 1049, fn. 3, 282 Cal.Rptr. 277, 811 P.2d 296.) [9] We conclude that section 3110 does not constitute an alternative enforcement mechanism subject to ERISA preemption. (See U.S. Fidelity, supra, 215 F.3d 136; see also Standard Industrial, supra, 247 F.3d 920.) In U.S. Fidelity, the First Circuit Court of Appeals held that a Massachusetts bond statuterequiring a general contractor to post a bond to secure payment for a subcontractor's fringe benefit contributionswas not preempted by ERISA. After noting the changed legal landscape of ERISA preemption jurisprudence ( U.S. Fidelity, supra, 215 F.3d at p. 138), U.S. Fidelity concluded the bond statute did not constitute an alternative enforcement mechanism: Those state laws which touch upon enforcement but have no real bearing on the intricate web of relationships among the principal players in the ERISA scenario (e.g., the plan, the administrators, the fiduciaries, the beneficiaries, and the employer) are not subject to preemption on this basis. [Citation.] It follows that a state statute which only creates claims against a surety does not constitute an impermissible alternative enforcement mechanism as that term is used in ERISA jurisprudence. ( Id. at p. 141.) U.S. Fidelity deemed the state bond statute a law of general applicability ( id. at p. 145), and recognized the statute regulates an area of the law traditionally thought to be the states' preserve: enforcing contracts under state law for the citizenry's protection. [Citations.] ( Id. at p. 141.) Likewise, we conclude that section 3110 is a statute that has no real bearing on the intricate web of relationships among the principal players in the ERISA scenario.... ( U.S. Fidelity, supra, 215 F.3d at p. 141.) As a remedial statute of general applicability, section 3110 does not regulate the relationship between ERISA plans and participants or beneficiaries. (See ante, 8 Cal.Rptr.3d at pp. 264-265, 82 P.3d at pp. 290-291.) Plaintiffs here are laborers and their union that seek to secure a mechanic's lien on Storke's real property for full payment for their labor. They are neither suing or being sued in an effort to enforce the terms of an ERISA plan. (See Laborers' Trust Funds v. Maui Prince Hotel (Hawai`i 1996) 81 Hawai`i 487, 918 P.2d 1143, 1154 ( Maui Prince Hotel ) [state lien law not preempted because it merely provides a `remedy available to a certain class of creditors that transcends ERISA obligations and concerns'].) Neither the plan, nor its administration and management, nor the benefits it provides, are implicated except insofar as it may be the recipient of any amounts recovered under the lien. To the extent the mechanic's lien remedy could be interpreted as regulating relationships between an ERISA plan and a third party, the relationships are too tenuous, remote, or peripheral to be preempted by ERISA. ( Standard Industrial, supra, 247 F.3d at p. 929.) The high court's decision in Mackey, supra, 486 U.S. 825, 108 S.Ct. 2182, further helps distinguish this case from El Capitan. While the high court held that Georgia's general garnishment law was not preempted, it concluded that the state's antigarnishment provision that expressly referred to, and applied solely to, ERISA employee benefit plans was subject to ERISA preemption. ( Mackey, supra, 486 U.S. at p. 829, 108 S.Ct. 2182.) The antigarnishment provision protected ERISA welfare benefit plans, but not non-ERISA plans, from garnishment. ( Id. at p. 830 & fn. 4, 108 S.Ct. 2182.) As the high court explained, It is this `singling out' that pre-empts the state statute. ( Id. at p. 838, fn. 12, 108 S.Ct. 2182.) On the other hand, the court concluded the general garnishment law was among those state-law methods for collecting money judgments [that] 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 p. 834, 108 S.Ct. 2182.) [10] Storke asserts that the multiplicity and inconsistency of the lien laws from state to state, and the variety of conditions that they impose on employers, their benefit plans and third parties are precisely the burdens that Congress intended for ERISA's preemption provision to avoid. We are unpersuaded. First, Storke fails to identify any specific material differences between our state lien law and any from other jurisdictions. Second, and more importantly, the high court has explained that a state law that increases the cost of providing benefits to covered employees will have some effect on the administration of ERISA plans, but that simply cannot mean that every state law with such an effect is pre-empted by the federal statute. ( De Buono, supra, 520 U.S. at p. 816, 117 S.Ct. 1747, fn. omitted.)