Opinion ID: 736908
Heading Depth: 1
Heading Rank: 3

Heading: ERISA Pre-emption

Text: 29 We now turn to the question whether if (as the State contends) it used a total package approach in applying the prevailing wage law here, ERISA preempts that law. 30 ERISA subjects to federal regulation plans providing employees with certain fringe benefits. It is a comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans. The statute imposes on benefit plans requirements regarding participation, funding and vesting, and sets uniform standards for reporting, disclosure and fiduciary responsibility. ERISA does not mandate that employers provide any particular benefits. Shaw, 463 U.S. at 91, 103 S.Ct. at 2896-97. Under ERISA, private parties, not the Government, control the level of benefits. Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 511, 101 S.Ct. 1895, 1900, 68 L.Ed.2d 402 (1981). 31 Section 514(a) of ERISA promotes uniform regulation of employee benefits plans by preempting, with certain exceptions not relevant here, any and all State laws insofar as they may now or hereafter relate to any employee benefit plan covered by ERISA. 29 U.S.C. § 1144(a). The goal of that section was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government. Otherwise, the inefficiencies created could work to the detriment of plan beneficiaries. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142, 111 S.Ct. 478, 484, 112 L.Ed.2d 474 (1990). 32 The preemption language of ERISA § 514(a) is deliberately expansive. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987). Pre-emption does not occur, however, if the state law has only a 'tenuous, remote, or peripheral' connection with covered plans, Shaw [463 U.S. at 100 n. 21, 103 S.Ct. at 2901 n. 21], as is the case with many laws of general applicability.... District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125, 130 n. 1, 113 S.Ct. 580, 583 n. 1, 121 L.Ed.2d 513 (1992). Moreover, in cases like this one, where federal law is said to bar state action in fields of traditional state regulation, we have worked on the assumption that the historic police powers of the states were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress. New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, ----, 115 S.Ct. 1671, 1676, 131 L.Ed.2d 695 (1995) (internal citations and quotation marks omitted). See Massachusetts v. Morash, 490 U.S. 107, 119, 109 S.Ct. 1668, 1675-76, 104 L.Ed.2d 98 (1989) (The States have traditionally regulated the payment of wages....); GE II, 936 F.2d at 1455 (state enjoys authority to set prevailing wage or hour restrictions on public works projects). Thus, the Supreme Court recently held that a prevailing wage statute that merely alters the incentives, but does not dictate the choices, facing ERISA plans was no different from myriad state laws in areas traditionally subject to local regulation, which Congress could not possibly have intended to eliminate. California Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., --- U.S. ----, ----, 117 S.Ct. 832, 842, 136 L.Ed.2d 791 (1997) (holding that ERISA does not preempt California's prevailing wage act which requires payment of prevailing wages to employees in apprenticeship programs that have not received state approval but allows payment of lower apprenticeship wages to employees in state-approved programs). Ultimately, the intent of Congress controls our preemption analysis. Cipollone v. Liggett Group, Inc., 505 U.S. 504, 515-17, 112 S.Ct. 2608, 2617, 120 L.Ed.2d 407 (1992). 33 The outer edges of ERISA preemption are difficult to discern from the limiting phrase relates to. Construction of this language can easily extend too far. A unanimous Supreme Court has quite recently admonished that we simply must go beyond the unhelpful text and the frustrating difficulty of defining its key term, and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive. Travelers, 514 U.S. at ----, 115 S.Ct. at 1677. Turning to the legislative history of the statute, the Travelers court found that 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 benefit plans. Id. at ----, 115 S.Ct. at 1677-78. The Court then analyzed its prior treatment of the provision, concluding that two kinds of state laws relate to ERISA for preemption purposes: those that mandat[e] employee benefit structures or their administration, and those that provid[e] alternative enforcement mechanisms. Id. at ----, 115 S.Ct. at 1678.
34 As stated earlier, the district court ruled that ERISA preempts the prevailing wage law based on our holding in GE I. In response to the State's arguments that it had modified the enforcement policy under scrutiny in GE I, the district court stated that the GE I court was not concerned with the details of the State's policy and did not explicitly consider the use of the line-item approach. 914 F.Supp. at 936. But in GE I, we set forth a detailed version of what is now the first part of the Travelers test. We said that a state law purports to regulate, directly or indirectly, the terms and conditions of employee benefit plans whenever it prescribes either the type and amount of an employer's contributions to a plan, the rules and regulations under which the plan operates, or the nature and amount of the benefits provided thereunder. GE I, 891 F.2d at 29 (internal citations omitted). Applying that test, we found that DOL's then-current enforcement approach intruded upon all three of these preempted areas. Id. at 29-30. However, we think a different conclusion would result under the State's total package approach, which it claims to be benefit neutral. 35 The State claims that under its new approach, an employer need not establish or contribute to any particular type of pension or welfare plan in any particular amount. According to the affidavit submitted to the district court by DOL's attorney, an employer may provide supplemental benefits in any form or combination so long as the sum total is not less than locally prevailing benefits. Burgio's total liability would thus be the same whether the subcontractor had bargained to provide benefits exclusively through ERISA plans, exclusively through non-ERISA plans, through additional cash wages, or through some combination of the three. Where a legal requirement may be easily satisfied through means unconnected to ERISA plans, and only relates to ERISA plans at the election of an employer, it 'affect[s] 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, 103 S.Ct. at 2901 n. 21. Keystone Chapter, Assoc. Builders and Contractors, Inc. v. Foley, 37 F.3d 945, 960 (3d Cir.1994), cert. denied, 514 U.S. 1032, 115 S.Ct. 1393, 131 L.Ed.2d 244 (1995). Under such an enforcement scheme, it is no longer true that under section 220, 'the Commissioner of Labor, not the contractor, determine[s] the supplements to be provided.'  GE I, 891 F.2d at 28 (quoting A.L. Blades, 136 A.D.2d at 927, 524 N.Y.S.2d 912). 36 The State further argues that the law does not in any way affect the administration or regulation of ERISA benefit plans. While a contractor or subcontractor must produce records showing that it has paid the prevailing wage rates and paid or provided supplements, it need not maintain such records in any particular form. See N.Y.Lab. Law § 220(3-a)(a). We think preemption does not occur where a state law places on ERISA plans administrative requirements so slight that the law creates no impediment to an employer's adoption of a uniform benefit administration scheme. Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 14, 107 S.Ct. 2211, 2219, 96 L.Ed.2d 1 (1987). In sum, if the State's factual contentions are correct, as we must assume in reviewing this award of summary judgment to Burgio, the State's total package approach avoids those conflicting directives which we found required preemption in GE I. 37 The district court buttressed its contrary conclusion with an analysis of this court's decision in GE II, 936 F.2d at 1460-61, where following the remand in GE I we upheld against an ERISA preemption challenge the application of Labor Law § 220 to enforce non-ERISA benefits such as vacation and holiday pay. But in that case, we were not presented with, and thus did not decide, whether a total package enforcement policy of the prevailing wage law would be preempted by ERISA. 38 We recognize that Burgio argues that the State's enforcement approach had not changed fundamentally when it made its claim against Burgio here. It is for that reason, as already indicated, that we remand to the district court to determine whether DOL did actually employ its new approach here.
39 Nor does the prevailing wage law fail Travelers ' second preemption test by creating an alternative enforcement mechanism for ERISA plan obligations. Burgio contends that Labor Law § 223 creates such a mechanism by adding to the remedies available for recovery of unpaid ERISA contributions. 40 This court recognized that alternative enforcement mechanisms could provide a ground for preemption in Gilbert v. Burlington Industries, Inc., 765 F.2d 320 (2d Cir.1985), aff'd. mem. sub nom., Roberts v. Burlington Industries, Inc., 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 558 (1986). In that case, we rejected state law claims seeking to enforce a severance pay policy determined earlier to constitute an ERISA plan, on the grounds that such claims would determine whether any benefits are paid, and directly affect the administration of benefits under the plan. Id. at 327. Some five years later, the Supreme Court struck down on a similar theory a Texas law which purport[ed] to provide a remedy for the violation of a right expressly guaranteed by [ERISA] § 510 and exclusively enforced by § 502(a). Ingersoll-Rand, 498 U.S. at 145, 111 S.Ct. at 486. The Court reasoned that the  'carefully integrated civil enforcement provisions found in § 502(a) ... provide strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.'  Id. at 144, 111 S.Ct. at 485 (quoting Pilot Life, 481 U.S. at 54, 107 S.Ct. at 1556-57). Most recently, relying on Ingersoll-Rand, we struck down on preemption grounds a New York State law which would have made the 10 largest shareholders of a corporation liable for unpaid contributions to corporate ERISA funds. Romney v. Lin, 94 F.3d 74, 80-83 (2d Cir.1996), petition for reh'g denied, 105 F.3d 806 (2d Cir.1997). The Romney court found that an action brought by a plan fiduciary to recover delinquent payments fell within the scope of the civil enforcement mechanism of ERISA, § 502(a), which  'Congress intended ... to be the exclusive remedy for rights guaranteed under ERISA....'  94 F.3d at 80 (quoting Ingersoll-Rand, 498 U.S. at 144, 111 S.Ct. at 485-86). 41 These cases are inapposite. Burgio's obligation does not arise under ERISA or a collective bargaining agreement providing for ERISA benefits, but directly under Labor Law § 223. The monies that have been withheld from Burgio are not owed to an ERISA plan, to whom the sub-subcontractor failed to pay contributions, but to individual workers. See N.Y.Lab. Law § 220(3) (second undesignated paragraph). DOL, not the ERISA plans, will collect the monies due and disburse them to those workers. DOL has apparently received assignments from many of the aggrieved workers directing that any monies determined to be due by DOL's action be paid directly to the union funds. However, the State avers that it no longer honors such assignments and that all payments would be made directly to the affected workers, a factual contention that Burgio disputes. If the facts are as the State contends, the ERISA plans will not recover delinquent obligations via the state statute. The State's enforcement action would therefore not fall within the scope of ERISA's civil enforcement mechanism. This, too, is a factual matter for resolution in the district court. 42 Finally, Burgio argues that application of the prevailing wage law against a general contractor, regardless of the enforcement policy, puts the contractor into an untenable position. If the general contractor complies with the State's notices and pays workers directly the amounts that the subcontractor should have paid to a union benefit fund, the latter remain unpaid pursuant to the terms of the collective bargaining agreement with the subcontractor. In that case, the union funds could then make a claim against the general contractor under the general contractor's payment bond. This court held open the possibility of such a claim in Bleiler v. Cristwood Const., Inc., 72 F.3d 13, 16 (2d Cir.1995). Burgio argues that this potential double liability doesn't make much sense. 43 Burgio's argument is speculative at best. Also, we note that the prevailing wage law does not place a contractor's surety in any different position with respect to ERISA and non-ERISA benefit plans, and therefore does not, it seems to us, relate to ERISA for preemption purposes. Finally, since both actions implicated in Burgio's double liability scenario arise under state law, Burgio's grievance lies with the New York State Legislature, which enacted the laws. An ERISA preemption action is not the appropriate vehicle by which to decide such matters, particularly since Burgio cannot, as a non-signatory to the collective bargaining agreements with the unions, be held liable to the benefit plans as an employer under ERISA. See 29 U.S.C. §§ 1002(5), 1145; Bleiler, 72 F.3d at 15-16.
44 Finally, our conclusion that New York's prevailing wage law, if a total package approach is used, is not preempted accords with decisions of other circuits that have considered similar state laws. See WSB Electric, Inc. v. Curry, 88 F.3d 788, 794-96 (9th Cir.1996); Keystone, 37 F.3d at 956-64; see also Minnesota Chapter of Assoc. Builders and Contractors, Inc. v. Minnesota Dept. of Labor, 47 F.3d 975, 978-80 (8th Cir.1995). But see Assoc. Builders and Contractors v. Perry, 869 F.Supp. 1239 (E.D.Mich.1994). In Keystone, the Third Circuit upheld Pennsylvania's prevailing wage statute against a preemption challenge, finding that: 45 [u]nder at least one reasonable interpretation of the Act and regulations, an interpretation the Agency is free to adopt, the Act and regulations merely require that the Secretary set a prevailing wage that consists of a cash component and may include a benefits component. Employers must pay the cash component of the wage in cash, but they may pay the benefits component either in benefits or cash. Any benefits they provide, regardless of type, would count toward the benefits component. 46 37 F.3d at 956. The court then engaged in a thorough analysis of such a program, concluding that it would not relate to employee benefit plans in more than a tenuous, remote and peripheral manner. Id. at 963. We see no reason to treat differently the total package approach put forward by the State here.