Court Opinion

ID: 159621
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:28:45+00
Date Added: 2024-06-11T17:24:34.490921
License: Public Domain

F I L E D
                                                        United States Court of
                                                                Appeals
                                                             Tenth Circuit
                             PUBLISH
                                                            MAY 16 2000
                 UNITED STATES COURT OF APPEALS

                          TENTH CIRCUIT
                                                          PATRICK FISHER
                                                                Clerk

WILLMAR ELECTRIC SERVICE,
INC., A Minnesota Corporation,

          Plaintiff-Appellant,

v.                                        No. 99-1221

M. MICHAEL COOKE, as Executive
Director of Colorado Department
of Regulatory Agencies; BRUCE
DOUGLAS, as Director of the
Colorado Division of
Registrations; GEORGE
WATERHOUSE, as Program
Administrator of the Colorado
State Electrical Board;
LARRY A. DEPUTY, RICK FILSON,
KENNETH MACKEY, TIMOTHY MILLER,
BRIAN MURRAY, DONALD R. CLARK,
ROLF PHILIPSEN, ROBERT SAINT,
and TIMOTHY THOMPSON, as
Members of the Colorado State
Electrical Board,

         Defendants-Appellees.

INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS; IBEW LOCAL
NO. 12; IBEW LOCAL NO. 68;
IBEW LOCAL NO. 113; and
IBEW LOCAL NO. 969,

         Amici Curiae.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF COLORADO
                     (D.C. No. 98-WY-939-WD)
Lawrence W. Marquess (Darin Mackender with him on the briefs),
Otten, Johnson, Robinson, Neff & Ragonetti, P.C., Denver, Colorado,
appearing for plaintiff-appellant.

Denise DeForest (Ken Salazar, Attorney General, with her on the
brief), Assistant Attorney General, Business and Licensing Section,
Denver, Colorado, appearing for defendants-appellees.

Terry R. Yellig, Sherman, Dunn, Cohen, Leifer & Yellig, P.C.,
Washington, D.C., and Walter C. Brauer, III, Brauer, Buescher,
Valentine, Goldhammer & Kelman, P.C., Denver, Colorado, filed a
brief on behalf of amici curiae.

Before BRISCOE and McKAY, Circuit Judges, and BROWN*, District
Judge.

BROWN, District Judge.

     The issue in this appeal is whether the Employee Retirement

Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.,

preempts   a   Colorado   statute   requiring   apprentices   performing

electrical work in Colorado to be supervised on a one-to-one basis

by licensed journeyman electricians.      The district court held that

the Colorado law was not preempted.         We exercise jurisdiction

pursuant to 28 U.S.C. § 1291, and affirm.

     *
       Honorable Wesley E. Brown, Senior District Judge for the
District of Kansas, sitting by designation.

                                    2
                                             I.

        Plaintiff Willmar Electric Service, Inc., is a large multi-

state contractor that performs work in numerous states, including

Colorado.      As of September 1, 1998, Willmar employed 60 journeyman

electricians       and    90      apprentice       electricians.           Willmar      has

established and maintains a regular training program in which all

of its apprentice electricians are required to participate.                             The

apprentices must complete a formal education program and receive

practical on-the-job training and experience while working.                           Every

apprentice is required to complete 100 hours of training and

education      each      year.         Willmar     utilizes,       and     requires     its

apprentices to utilize, the “Wheels of Learning” training program,

which    was   developed       by     the   National     Center      for    Construction

Education and Research (“the Center”), a nonprofit organization

that    provides      training        to   construction      and   maintenance        craft

workers throughout the country.                    The training is extensive and

requires participants to pass written and performance tests to

progress through the program.                     The training is provided by a

Willmar    employee       or     an    employee     of   a   local    chapter    of     the

Associated Builders and Contractors who has been certified as an

instructor by the Center.              The on-the-job training and experience

in electrical work is a necessary and integral part of the program.

Individuals cannot participate in the program unless they are

employed in an apprentice capacity and are performing work under

                                              3
the supervision of a journeyman electrician.

       The program is funded through contributions to trust funds

maintained by the Center, the Construction Education Foundation of

Minnesota and the Construction Education Foundation of Wisconsin.

The latter two groups are Center-accredited, nonprofit corporations

that       provide   education   and     training       for   construction   and

maintenance craft workers in Minnesota and Wisconsin, respectively.

The costs and expenses of operating the apprenticeship program,

including all direct training expenses, are paid from the trust

funds.

       Willmar’s apprenticeship and training program is an employee

welfare benefit plan covered by ERISA.                See 29 U.S.C. § 1002(1).

       Colorado       dictates   certain         standards     for   apprentice

electricians as part of the state’s regulation of professional and

occupational licensing. At the time relevant to this suit, section

12-23-110.5(1) of the Colorado Revised Statutes provided:

                Any person may work as an apprentice but shall
                not   do   any   electrical wiring for the
                installation   of electrical apparatus or
                equipment for light, heat, or power except
                under    the   supervision   of   a   licensed
                electrician.      The degree of supervision
                required shall be no more than one licensed
                electrician to supervise no more than one
                apprentice at the jobsite.

C.R.S.      §   12-23-110.5(1)   (West       1998)1   (emphasis   added).    The

       1
        This provision was amended by the Colorado legislature in
1999 and now provides that “[t]he degree of supervision required
shall be no more than one licensed electrician to supervise no more

                                         4
defendants, as members of the Colorado State Electrical Board, are

responsible for enforcing this statute.

      On January 6, 1998, Willmar Electric was cited by an inspector

from the Colorado State Electrical Board for violating the statute

by    failing    to   maintain   a   one-to-one   ratio    of   journeyman

electricians to apprentices at a jobsite. The apprentices who were

working for Willmar on that project were active participants in the

Willmar apprenticeship training program.          Willmar subsequently

filed a complaint for declaratory and injunctive relief in the U.S.

District Court for the District of Colorado, asserting that the

Colorado statute was preempted by ERISA and was unenforceable. The

district court granted summary judgment to the defendants, finding

the   Colorado   statute   was not preempted because it “makes no

reference to ERISA and any relationship it may have to ERISA is at

most peripheral.”      Aplt. App., Exh. 13 at 10.         Willmar appeals,

arguing that the district court misapplied the relevant law.

      We review a grant of summary judgment de novo, applying the

same legal standard used by the district court under Fed.R.Civ.P.

56(c). See Richmond v. ONEOK, Inc., 120 F.3d 205, 208 (10th Cir.

1997). "Summary judgment is appropriate if 'there is no genuine

issue as to any material fact and ... the moving party is entitled

than three apprentices at the jobsite.” C.R.S. § 12-23-110.5(1)
(West Group 2000). The change in the Colorado law does not appear
to render the instant controversy moot because Willmar is subject
to an ongoing penalty for its violation of the predecessor statute.

                                     5
to a judgment as a matter of law.'" Id. (quoting Rule 56(c)).

                                    II.

            ERISA is a comprehensive statute designed to promote the

interests of employees and their beneficiaries in employee benefit

plans.        Shaw v. Delta Airlines, Inc., 463 U.S. 85, 90 (1983).

Among other things, it sets various uniform standards, including

rules        concerning     reporting,       disclosure,   and   fiduciary

responsibility for pension benefit and welfare benefit plans.          Id.

at 91.        Section 1144(a) of Title 29 U.S.C. provides that, with

certain exceptions, ERISA “shall supersede any and all State laws

insofar as they may now or hereafter relate to any employee benefit

plan....”

        In Shaw the Supreme Court said that a law “relates to” an

employee benefit plan “if it has a connection with or reference to

such a plan.”       Id., 463 U.S. at 96-97.        The Colorado statute at

issue here clearly does not make reference to2 an ERISA plan; the

preemption       question   thus turns on whether the statute has a

“connection with” such a plan.           In New York State Conf. Of Blue

Cross and Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645,

656 (1995), the Court observed that “connections” with something

       A state law has "reference to" ERISA plans where it acts
        2

immediately and exclusively upon ERISA plans or where the existence
of ERISA plans is essential to the law's operation. California
Div. Of Labor Stds. Enforcement v. Dillingham Constr., N.A., Inc.,
519 U.S. 316, 325 (1997). Neither of these conditions is present
in this case.

                                         6
may be infinite, and the term therefore provides no real gauge to

the scope of preemption.         Instead, the Court said it would look to

the objectives of ERISA as a guide to the scope of the state law

that Congress understood would survive, as well as to the effect of

the state law on ERISA plans.

        The principal object of ERISA is to protect plan participants

and beneficiaries.      Boggs v. Boggs, 520 U.S. 833, 845 (1997.          In

California Div. of Labor Stds. Enforcement v. Dillingham Constr.,

N.A., Inc., 519 U.S. 316 (1997), the Court explained:

              “In enacting ERISA, Congress’ primary concern
              was   with    the   mismanagement   of   funds
              accumulated to finance employee benefits and
              the failure to pay employee benefits from
              accumulated    funds.     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.”

Id. at 326-27 (quoting Massachusetts v. Morash, 490 U.S. 107, 115

(1989)).      In Travelers the Court also observed that “[t]he basic

thrust of the preemption clause ... was to avoid a multiplicity of

regulation in order to permit the nationally uniform administration

of employee benefit plans.”         Travelers, 514 U.S. at 657.       Because

of this goal, the Court noted, in several cases ERISA had been

found    to   preempt   “state    laws   that   mandated   employee   benefit

structures or their administration.”            Id. at 658.

        Like the instant case, Dillingham, supra, dealt with a state

                                         7
law’s effect on an apprenticeship training program that was part of

an   ERISA    plan.         In   Dillingham,        a    California   law   required

contractors on public projects to pay apprentices the prevailing

journeyman wage unless the apprentice was from a program approved

by the state.    Id., 519 U.S. at 319-20.                A subcontractor who hired

apprentices through an unapproved program challenged the law,

arguing it was preempted by ERISA.              In addressing this claim, the

Supreme Court first stated that 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

State were not to be superseded by the Federal Act unless that was

the clear and manifest purpose of Congress.’” Id at 325. The Court

noted that apprenticeship training standards and the wages paid on

public works had long been regulated by the States.                     Id. at 330.

Although this fact alone would not prevent preemption, the Court

concluded    that     the    California       law       was   far-removed   from   the

objectives of ERISA:

             The wages to be paid on public works projects
             and the substantive standards to be applied to
             apprenticeship training programs are, however,
             quite remote from the areas with which ERISA
             is    expressly    concerned  --   “reporting,
             disclosure, fiduciary responsibility, and the
             like.” A reading of [§ 1144(a)] resulting in
             the   pre-emption of traditionally state-
             regulated substantive law in those areas where
             ERISA    has    nothing   to  say   would   be
             “unsettling.” Given the paucity of indication
             in ERISA and its legislative history of any
             intent on the part of Congress to pre-empt
             state apprenticeship training standards, or

                                          8
          state prevailing wage laws that incorporate
          them, we are reluctant to alter our ordinary
          “assumption that the historic police powers of
          the State were not to be superseded by the
          Federal Act.”

Id. at 330-31 (citations omitted).        Thus, the apprentice wage law

did not regulate an area that Congress intended ERISA to cover. As

for the effects of the law, the Court noted that it did not bind

ERISA plans to anything because a contractor could still hire

apprentices from an unapproved program -- it just had to pay a

higher   wage.      Thus,   “the   effect    of   [the   law]    on   ERISA

apprenticeship programs ... is merely to provide some measure of

economic incentive to comport with the State’s requirements....”

Id. at 332.      In this respect, the Court said, the law was “no

different from myriad state laws in areas traditionally subject to

local regulation, which Congress could not possibly have intended

to eliminate.”    Id. at 334 (quoting Travelers, supra).

                                   III.

     As Dillingham pointed out, apprenticeship training standards

are matters traditionally regulated by the States.             The Colorado

statute at issue in this case falls within that sphere.                 The

appropriate   degree   of   supervision     required     for    apprentices

performing electrical work is a matter related to occupational and

public safety and, as such, has traditionally been subject to the

state’s police powers.      Cf. DeBuono v. NYSA-ILA Med. & Clinical

Serv. Fund, 520 U.S. 806, 814 (1997) (the historic police powers of

                                     9
the State include the regulation of matters of health and safety).

The subject of the Colorado law, like the California statute in

Dillingham, is outside the area of ERISA’s concerns -- i.e.,

reporting, disclosure and fiduciary requirements put in place to

protect employee benefits.     Nothing in ERISA’s legislative history

suggests that Congress intended to preempt apprenticeship training

standards.   Dillingham, 519 U.S. at 331.

     Despite these factors, Willmar advances several reasons why it

believes the Colorado statute should be preempted.               First, it

points out that other courts have found similar ratio requirements

to be preempted.   Citing Boise Cascade Corp. v. Peterson, 939 F.2d

632 (8th Cir. 1991) and Associated Builders and Contractors v.

Perry, 817 F.Supp. 49 (E.D. Mich. 1992).                We agree with the

district court, however, that these cases are not persuasive

because they preceded the Supreme Court’s delineation of the limits

of ERISA preemption in cases such as Travelers, Boggs, Dillingham,

and DeBuono.      Although Willmar correctly points out that the

Supreme   Court   has   not   overruled   its   early    ERISA   precedents

(including those upon which Boise Cascade and Associated Builders

were based), a proper assessment of ERISA preemption now must take

into account the limits recently recognized by the Court.               Cf.

DeBuono, 520 U.S. at 812-13 (criticizing court of appeals for

adhering to expansive interpretation of “relate to” and failing to

give effect to Travelers’ rejection of a strictly literal reading).

                                    10
Dillingham is particularly instructive here insofar as it suggests

that ERISA’s objectives are not interfered with by state regulation

of substantive apprentice training standards.         Boise Cascade and

Associated Builders did not take these limits into account, and we

cannot consider them to be reliable authorities on the question

presented.

     Willmar next argues that the Colorado law “relates to” an

ERISA plan because the one-to-one ratio requirement “results in an

artificial   limit   on   the   number   of   apprentices   that   may   be

trained....”   Aplt. Br. at 14.    There is no direct restraint in the

Colorado law on the number of apprentices that may be trained.

Rather, the limit to which Willmar refers is the economic burden of

requiring one-to-one supervision of apprentices. The Supreme Court

has recognized that laws of general applicability inevitably affect

ERISA plans, sometimes by increasing costs, but that fact alone

does not warrant a finding that Congress necessarily intended to

displace regulation of an area traditionally regulated by the

States. Thus, in Mackey v. Lanier Collection Agency & Serv., Inc.,

486 U.S. 825 (1998), the Court held that ERISA did not preempt a

general state garnishment statute despite the fact that the law’s

application imposed increased administrative costs and burdens on

benefit   plans.     Similarly, in Travelers, the Court found no

preemption of a state law that imposed a surcharge on patients with

certain kinds of insurance, despite the fact that the law increased

                                   11
the cost of benefits under some ERISA plans.              See Travelers, 514

U.S. at 662.      And in Dillingham the Court found that the economic

effect   of   a   state   law   governing    apprentice    wages   was   not   a

sufficient basis for preemption.            We see no material difference

between these cases and the instant case, and we likewise conclude

that the economic effect of the Colorado ratio requirement is not

sufficient to warrant preemption.

     Willmar also contends the Colorado law should be preempted

because it invades the federal province of benefit plans and

improperly “dictates to the contractor the ‘teacher-to-student’

ratio that must be used in the apprenticeship program....”               Aplt.

Br. at 14.        An examination of the objectives of ERISA and the

effects of the Colorado law persuades us that this is not the type

of regulation Congress had in mind in the preemption clause.               The

primary effect of the ratio requirement is to indirectly increase

the cost of apprentice training.            In this respect it is directly

analogous to the apprentice wage law at issue in Dillingham.3                  In

requiring such supervision the Colorado law neither mandates nor

     3
       Willmar argues Dillingham is factually distinguishable
because the state law in that case “did not bind ERISA plans to
anything.” See Dillingham, 519 U.S. at 332. We cannot agree that
this purported distinction warrants a different result in this
case. In Dillingham if the contractor chose to hire an apprentice
from a non-approved program, it was compelled by state law to pay
journeyman’s wages. In our view this is comparable to the manner
in which the Colorado law affects the Willmar training program --
it does not prevent training, but it increases the cost associated
with doing so.

                                      12
limits the granting of benefits to employees.             Cf. Travelers, 514

U.S. at 664 (the law did “not impose the kind of substantive

coverage requirement binding plan administrators that was at issue

in Metropolitan Life.”).         The law is neutral in that it applies

with   equal   force    to    ERISA     and   non-ERISA   plan    training    of

apprentices.       Its subject matter falls within the apprenticeship

training standards traditionally regulated by state law.                     All

factors considered, we cannot accept Willmar’s argument that the

Colorado law encroaches upon the subject of welfare benefit plan

regulation.        It is more properly characterized as addressing

occupational and public safety, a matter traditionally governed by

state law.     We find it implausible that Congress could have

intended for such a regulation to be superseded by ERISA merely

because its application has some impact on an ERISA plan.                    See

Dillingham, supra.       Cf. Shea v. Esensten,            F.3d         , 2000 WL

336674, *6 (8th Cir., Mar. 31, 2000) (state regulation of ethical

responsibilities of physicians was not preempted by ERISA); Boyle

v. Anderson, 68 F.3d 1093, 1110 (8th Cir. 1995) (nothing in ERISA

indicates Congressional intent to preempt state’s general heath

care regulations).

       Willmar’s    final    argument    is   that   preemption   is    required

because the Colorado law interferes with uniform administration of

benefit plans. Willmar points out that various states have varying

laws on the degree of supervision required for apprentices.                  The

                                        13
result of this, according to Willmar, is that it is “forced either

to restructure its apprenticeship and training program to comply

with the most stringent applicable ratio requirement or adopt a

different program for use in each state.”     Aplt. Rep. Br. at 8.

Willmar argues this is contrary to Congress’ intent in the ERISA

preemption clause “to ensure that plans and plan sponsors would be

subject to a uniform body of benefits law,” to “minimize the

administrative and financial burden of complying with conflicting

directives among States,” and to prevent conflicts in substantive

law from “requiring the tailoring of plans and employer conduct to

the peculiarities of the law of each jurisdiction.” See Travelers,

514 U.S. at 656-57.   Although it is true that different apprentice

supervision standards may have some effect on administration of

Willmar’s benefit plan, we cannot say this is enough to overcome

the presumption that Congress did not intend to supersede state

regulation of this area of law.    A similar effect on uniform plan

administration would assuredly arise from the apprentice wage law

in Dillingham and the state tax at issue in DeBuono, but the

Supreme Court found no grounds for preemption in those cases.     We

conclude that the Colorado law is “one of ‘myriad state laws’ of

general   applicability   that    impose   some   burdens   on   the

administration of ERISA plans but nevertheless do not ‘relate to’

them within the meaning of the governing statute.”     DeBuono, 138

L.Ed.2d at 30.   See also Travelers, 514 U.S. at 661 (there is no

                                  14
preemption "if the state law has only a tenuous, remote, or

peripheral connection with covered plans, as is the case with many

laws of general applicability").   ERISA therefore does not preempt

the Colorado apprentice supervision requirement.

                               IV.

     The judgment of the district court is AFFIRMED.

                               15