No. __________
__________________________________________________
In The
Supreme Court of the United States
October Term, 1995
____________________
STATE OF CALIFORNIA, DIVISION OF LABOR
STANDARDS ENFORCEMENT, DIVISION OF
APPRENTICESHIP STANDARDS,
DEPARTMENT OF INDUSTRIAL RELATIONS;
COUNTY OF SONOMA,
Petitioners, v.
DILLINGHAM CONSTRUCTION, N.A., INC.;
MANUEL. J ARCEO, dba SOUND SYSTEMS MEDIA,
Respondents. ____________________
Petition For Writ Of Certiorari To The
United States Court Of Appeals For The
Ninth Circuit
____________________
PETITION FOR WRIT OF
CERTIORARI
____________________
JOHN M. REA, Chief Counsel, H. THOMAS CADELL, JR.,
(Counsel of Record) Chief Counsel,
VANESSA L. HOLTON, RAMON
YUEN-GARCIA,
Asst. Chief Counsel, Counsel,
FRED D. LONSDALE, Sr. Counsel,
JAMES D. FISHER, Counsel,
SARAH COHEN, Counsel,
State of California State of California
Department of Industrial Division
of Labor
Relations
Standards Enforcement
Office of the Director 45 Fremont Street,
Legal Unit Suite
3220
45 Fremont Street, Suite 450 San
Francisco, CA 94105
San Francisco, CA 94105 (Mailing
Address:
(Mailing Address: P.O. Box 420603,
P.O. Box 420603, San Francisco, CA
94142)
San Francisco, CA 94142) (415) 975-2060
(415) 972-8900
Counsel for State Petitioners Counsel for State Petitioners
Department of Industrial Division of Labor
Standards
Relations Division of Enforcement and County of
Apprenticeship Standards Sonoma
Petitioners State of California, encompassing its Department of
Industrial Relations, Division of Labor Standards Enforcement and Division of
Apprenticeship Standards and the County of Sonoma respectfully pray that a writ
of certiorari issue to review the judgment of the United States Court of Appeals
for the Ninth Circuit, entered in the above action on June 7, 1995.
OPINIONS BELOW
The opinion of the United States Court of Appeals for the Ninth Circuit is
reported at 57 F.3d 712 (9th Cir. 1995) and is reprinted in the appendix to this
certiorari petition ("App.") at App. 1-22. The Order of the Court of Appeals
denying California's Petition for Rehearing and Suggestion for Rehearing En Banc
is reprinted at App. 53-54. The opinion of the United States District Court for the
Northern District of California granting California's Motion for Summary
Judgment is reported at 778 F. Supp. 1522 (N.D. Cal. 1995) and is reprinted at
App. 23-52.
JURISDICTION
The Ninth Circuit issued its decision and judgment herein on June 7,
1995. A timely Petition for Rehearing and Suggestion for Rehearing En Banc was
denied on July 19, 1995. An Application for Extension of Time to File Petition
for Writ of Certiorari was filed September 28, 1995 and Justice Sandra Day
O'Connor extended the time to file to and including November 16, 1995. This
Court has jurisdiction under 28 U.S.C. Section 1254(1).
STATUTES INVOLVED
The relevant statutes are reproduced in the appendix at App. 55-63. The
relevant federal statutory provisions are Section 514(a) and (d), 29 U.S.C.
Sections 1144(a) and 1144(d) of the Employee Retirement Income Security Act of
1974 ("ERISA"), 29 U.S.C. Section 1001 et seq., and the National Apprenticeship
("Fitzgerald") Act 29 U.S.C. Section 50. The relevant California statutory
provision is California Labor Code Section 1777.5.
STATEMENT OF THE CASE
California has a prevailing wage law which sets the minimum wages on a
trade by trade basis that must be paid to workers on public works projects in the
state. This law is modeled after and was passed in the same year as the Davis-
Bacon Act, 29 U.S.C. Section 276a, which sets the minimum wages that must be
paid on federal public works projects. O.G. Sansone Co. v. Dept. of Transportation,
55 Cal.
App. 3d 434, 448, 127 Cal. Rptr. 799 (1976). Like the Davis-Bacon Act, the
California law allows a lower minimum wage for registered apprentices in
apprenticeship programs approved as meeting the standards of the federal
Fitzgerald Act. Under California law, as under the Davis-Bacon Act, the specific
prevailing wage for apprentices is set at less than that for fully trained workers in
the trade and varies with the apprentices' level of progress through the multi-year
apprenticeship program. Cal. Lab. Code Section 1777.5.
The County of Sonoma requested bids for the construction of its County
Male Adult Detention Facility, a public works project for which state, but not
federal, prevailing wages were required under the California Labor Code. In early
1987 Dillingham was awarded the construction project and became the general
contractor for the detention facility. Dillingham eventually subcontracted the
audio security wiring work to Sound Systems Media.
After it began work on the detention facility in January, 1988, Sound
Systems'
employees changed their collective bargaining representative and Sound Systems
entered a new employer group. Sound Systems entered into a collective bargaining
agreement with the new union in which it agreed to use apprentices to be provided
by the nascent Joint Apprenticeship and Training Committee (hereinafter "the
Committee") established by that union and employer group. That Committee,
however, had no working apprenticeship training program.
The Committee sought approval of its proposed standards to set up a new
program from the California Apprenticeship Council, the agency recognized by the
federal Bureau of Apprenticeship and Training as the body with authority to
approve apprenticeship programs in California for federal purposes, including
the Davis-Bacon Act. 29 C.F.R. Section 29.12. The program's approval was
pending when Sound Systems began working on this project for the County of
Sonoma.
Notwithstanding the fact the Committee's standards had not been
approved, beginning in June, 1988, Sound Systems began paying certain
employees, whom it
would later call "apprentices," what it designated an apprentice wage rate. This
was contrary to the California law which restricted the apprentice wage rate on
public works to registered apprentices in approved training programs.
It is undisputed that Sound Systems employed no registered apprentices
and in fact it had no apprentice agreements for these employees in its possession
during the job. Payroll records filed with the California Division of Labor
Standards Enforcement, and sworn to by Sound Systems, listed no employees
designated as "apprentices." App. 5-6, 28 n.3. Moreover, Sound Systems
volunteered at the trial level that these individuals designated as "apprentices"
received no training.
This "apprentice" wage paid by appellant was lower than the journey
level
specified in the prevailing wage determination issued by the Department for this
public work. As a result, the Department issued a "Notice to Withhold" directing
Sonoma County to withhold monies from Dillingham based on Sound Systems'
failure to pay the prevailing wage in accord with California Labor Code Section
1771 because an alleged apprentice rate was paid to non apprentices. The
contractors filed this action May 1, 1990 in the district court seeking declaratory
relief and the recovery of monies withheld.
Cross motions for summary judgment were filed before the district
court.
The district court rejected appellants' Employee Retirement Income
Security Act (ERISA) and National Labor Relations Act, 29 U.S.C. Section
151 (NLRA) preemption arguments, 1 dismissed their motion for summary
judgment and
granted defendants' motion, App. 39-40, 48. The district court held that, because
California's regulation of apprenticeship programs is part of a cooperative state-
federal effort for the formulation and promotion of apprenticeship programs, it is
saved from preemption by the federal Fitzgerald Act, 29 U.S.C. Section 50, as
incorporated in ERISA's Savings Clause, 29 U.S.C. Section 1144(d).
On June 7, 1995, the Ninth Circuit reversed the district court, holding that
the restriction of the apprentice prevailing wage to workers were registered
apprentices was preempted by ERISA. The Ninth Circuit based its holding on the
following grounds: 1) California's application of its prevailing wage law to allow
payment of the lower apprentice rate only to employees in "approved" programs had
the effect
and possibly the aim of encouraging participation in state approved ERISA plans
while discouraging participation in unapproved ERISA plans. 2) California law
was not saved from preemption by the ERISA Savings Clause because, while the
Fitzgerald Act does provide for state approval of apprenticeship programs, it
does not depend on state law for enforcement, does not mandate apprenticeship
programs and does not seek to discourage other types of training programs. In
the view of the Ninth Circuit the Fitzgerald Act would not be impaired by the
preemption of this California law.
On June 21, 1995 California filed a timely Petition for Rehearing and
Suggestion for Rehearing En Banc asking the court of appeals to consider the
conflict between its decision and the decision of the Eighth Circuit in Minnesota
Chapter ABC v. Minnesota, 47 F.3d 975 (8th Cir. 1995). The petition also asked
the court to consider the conflict between its decision and the California
Supreme Court's decision in Southern California ABC v. California
Apprenticeship Council,
4 Cal. 4th 422, 14 Cal. Rptr. 491 (1992), which upheld the state approval process
from an ERISA preemption challenge inso far as that process did not impose
standards
not found in the federal Fitzgerald Act and which was based in part on the district
court decision just reversed. Finally, the court was asked to consider the effect
of this Court's then very recent decision New York State Conference of Blue Cross
and Blue Shield Plans, et al. v. Travelers, ___ U.S. ___, 115 S. Ct. 1671 (1995)
which had not been briefed. The court denied the Petition for Rehearing and
Suggestion for Rehearing En Banc on July 19, 1995.
REASONS FOR GRANTING THE WRIT
For over 39 years before ERISA, California had adopted as a precondition
for a lower apprentice wage on public works the same requirements - state
approval of
the apprenticeship program and state registration of apprentices - used by the
federal government as the precondition for lower apprentice wages on federal
public
works. Like the federal government, California recognized that unless an
apprenticeship program is actually providing effective training to beginning
workers, there is no justification for paying those workers less than the legally
required minimum prevailing wage. Reduced to its essence, the Ninth Circuit
held that a state may not, under ERISA, craft its use of its state prevailing
wage law so that it will be consistent with the federal goal of encouraging
apprenticeship program standards which meet federal standards. Dillingham
results in workers
being paid a wage rate, which is set lower than the prevailing journey rate, as if
they were also receiving training meeting federal standards, on a state-funded
public
work without any obligation that these workers receive any training. The same
wage payment at the apprentice rate by the same contractor on a federally funded
public work to workers not registered in an apprentice plan approved by the state
as meeting federal standards would bring civil, and possible criminal, sanctions.
This petition seeks certiorari on the question of whether ERISA preempts
California's long standing policy of restricting the prevailing apprentice wage
rate on state public works to registered apprentices, just as the comparable
federal DavisBacon prevailing wage rules do for the same apprentices in the same
trades in the same labor market on federal public works. Dillingham's conclusion
that ERISA requires this change in long standing rules governing prevailing wages
on public works is in error. First, ERISA's Savings Clause protects this state law
from preemption as in furtherance of the Fitzgerald Act's articulated purpose.
Second, ERISA's Preemption Clause does not reach state regulation of apprentices'
wages because such wage laws concern wages paid by contractors to apprentices
and do not directly "relate to" apprenticeship plans, only some of which are
covered by ERISA.
I. Conflict Exists Within The Circuits On The Breadth Of The Savings Clause
Of
ERISA.
There is a direct conflict between the decision of the Ninth Circuit in this
case and the Eighth Circuit decision in Minnesota Chapter ABC v. Minnesota, 47 F.3d
975
(8th Cir. 1995). That conflict concerns an important question of national significance
as to whether the Savings Clause of ERISA, 29 U.S.C. Section 1144(d), protects from
preemption a prevailing wage law that provides tailored wage rates only for
registered apprentices in apprenticeship programs approved as meeting the
standards of the Fitzgerald Act. Unless this Court resolves this conflict, contractors,
apprentices and state and local public agencies in different states with similar state
statutes2 will face uncertainty and conflicting directives concerning the use of
apprentices on public works projects.
The states of California and Minnesota have regulated apprenticeship since
1852 and 1939, respectively. Under the current Secretary of Labor regulations
promulgated in 1977 and through the present, both states have been approved by the
Bureau of Apprenticeship and Training of the Department of Labor ("BAT") as State
Apprenticeship Council ("SAC") states.3 State Apprenticeship Council states are,
under BAT regulations, authorized to approve apprenticeship programs for "federal
purposes," to register apprentices, and to work to encourage inclusion of federal
minimum standards in programs under the Fitzgerald Act, 29 U.S.C. Section 50, and
its regulations, 29 C.F.R. Section 29.1 et seq. "Federal purposes" include determining
whether a worker may be paid at an apprentice rate on federal public works. 29
C.F.R. Section 5.5(a)(4). Those regulations restrict approval of training programs to
those that are extensive, sophisticated and formal enough to be "apprenticeship."
The prevailing wage laws of California and Minnesota provide that all
contractors on public works pay their workers the prescribed minimum wage
deemed prevailing at the journey (fully trained) level in the location and for the
trade or craft in which the work is performed. These laws parallel the federal
DavisBacon law, which similarly sets the craft specific minimum wages paid on
federal public works projects. One of the purposes of such prevailing wage laws is
to assure that on public works projects that are awarded to the lowest bidder the
contractors will not compete by reducing the wages and quality of labor on the
project.
Universities Research Ass'n, Inc. v. Contu, 450 U.S. 754 (1981); Lusardi Const. Co. v.
Aubry, 1 Cal. 4th 976, 4 Cal. Rptr. 2d 837 (1992).
The prevailing wage laws of both California and Minnesota provide as well
that workers who are registered as apprentices and are receiving training in
apprenticeship programs registered with the respective state in accord with
federal law may be paid a specially tailored apprentice wage. This apprentice
specific rate parallels the exception to the federal Davis-Bacon Act's requirement
of journey level wages likewise limited to apprentices registered in state4
approved apprenticeship programs. The apprentice specific rate lowers the
prevailing wage to a percentage of the journey level rate which is appropriate to
the apprentice's training level. The apprentice rate is denied for workers receiving
training, even informal apprenticeship, when the training program will not commit
to the state to
deliver the training at the level set by the federal standards, or to the apprentice by
registering him or her as such in a program. Both commitments were lacking in
Dillingham.
In Minnesota ABC, the Eighth Circuit held that the apprentice specific rate
in the Minnesota prevailing wage law, allowing contractors to pay apprentices in
approved programs at less than the prevailing wage, was "saved" from
preemption under ERISA, 29 U.S.C Section 1144(d), because preemption of
that law would impair the Fitzgerald Act. The Fitzgerald Act provides that:
[t]he Secretary of Labor is authorized and directed to formulate and promote
the
furtherance of labor standards necessary to safeguard the welfare of
apprentices, to extend the application of such standards by encouraging the
inclusion thereof in contracts of apprenticeship, to bring together employers and
labor for the formulation of programs of apprenticeship, to cooperate with State
agencies engaged in the formulation and promotion of standards of
apprenticeship....
Section 514(d) of ERISA, 29 U.S.C. Section 1144(d) provides that "[n]othing in this
subchapter shall be construed to alter, amend, modify, invalidate, impair or
supersede any of the laws of the United States...or any rule or regulation issued
under such law."
The Eighth Circuit reasoned that preemption of Minnesota's regulation,
MINN. R. 5200.1070 (1993 and Supp. I 1994) would "impair" the cooperative state
jurisdiction over apprenticeship programs envisioned by the Act. One purpose
the Act is to promote and encourage apprenticeship, and labor standards in
apprenticeship, in cooperation with the states. Consistent with this purpose,
the federal Bureau of Apprenticeship and Training has promulgated federal
apprenticeship regulations under the Act to provide national standards for
apprentice agreements and program approval. As the Eighth Circuit recognized
in Minnesota ABC, the purpose of the Act and regulations would be impaired if
a state were not permitted to set an appropriate wage to be paid by
contractors employing apprentices on state funded public works.
Such an apprentice specific wage rate may in fact be essential for
contractors to be able to use apprentices economically on public works because
apprentices lack the training to be as productive as journey level workers whose wage
they would
otherwise receive. The failure to recognize the costs to contractors who voluntarily
assume training responsibilities at the higher, and more costly, level of apprenticeship
meeting the federal standards will, in the public construction sector, where lowest
bidder rules universally apply, result in contractors avoiding the commitment to
multi-year apprenticeship meeting the federal standard, fearing
that any added costs will cost them work because they will be at a disadvantage in
bidding on public works.
The Ninth Circuit in Dillingham, unlike the Eighth Circuit, took an
extraordinarily narrow view of both the Fitzgerald Act and the Savings Clause of
ERISA, holding that the preemption of California Labor Code Section 1777.5's
restriction of an apprentice specific wage to registered apprentices on state-
sponsored publicworks, as applied, would not impair the operation of the Fitzgerald
Act. The Ninth Circuit reasoned that because the Act, unlike Title VII, does not
preserve non-conflicting state laws and "does not contemplate enforcement
mechanisms," preemption of California Labor Code Section 1777.5 does not impair
this federal law.
App. at 17. In so holding, the Ninth Circuit adopted and quoted from the Tenth
Circuit opinion in National Elevator Industry, Inc. v. Calhoon, 957 F.2d 1555
(10th Cir. 1992), which stated that "[The Fitzgerald Act] merely seeks to
facilitate development of apprenticeship programs - it does not mandate
apprenticeship programs or seek to discourage other training programs." Id. at
1562.
The Ninth Circuit erred by construing the Savings Clause of ERISA too
narrowly. The Ninth Circuit said, in essence, that because the Fitzgerald Act
does
not mandate contractors to participate in apprenticeship, and does not order states to
foster apprenticeship it is not the kind of "law of the United States ... or any rule or
regulation" to be saved. This holding is premised on a top down view of federalism
which presumes that cooperative partnerships between the states and the federal
government are not worth saving. The Ninth Circuit restricts the state laws which
can be saved to those which either are themselves coerced by the federal
government, or which offer to deputize the state in a joint venture to coerce
the
private sector. Such a restrictive interpretation of the Savings Clause puts at risk the
general run of laws in broad areas of benefits and health touched by ERISA, where
cooperative federalism is increasingly the federal goal and where congressional
reforms and block grants should allow the private sector and the state to
voluntarily
enter into partnerships.5
There is nothing in the ERISA Savings Clause that suggests that only
certain kinds of federal statutory schemes are to be saved. Section 1144(d) says
that ERISA "shall not be construed to alter, amend, modify, invalidate, impair, or
supersede any laws of the United States..." (emphasis added). Although the leading
case protecting a state law under this section dealt with a law that was coercive,
Shaw v. Delta Air
Lines, 463 U.S. 63, 100-106 (1983), in neither that opinion nor in the text of ERISA
is there a proviso restricting this clause to coercive laws. The federal government
cannot effectively encourage states to promote apprenticeship standards, meeting
federal basic standards, if ERISA is read as preempting states when they voluntarily
adopt those standards as their definition of "apprentice" on state public works.
Aside from misreading ERISA's federal law Savings Clause, the Ninth
Circuit narrowly and selectively read the congressional intent set out expressly in
the text of the Fitzgerald Act. While the Ninth Circuit recognized that Congress
noted and approved of a cooperative state-federal venture in the Fitzgerald Act, it
missed an expression of intent equally worth saving: The promotion and the
furtherance of labor standards necessary to safeguard the welfare of apprentices
and the extension of "the application of such standards by encouraging the inclusion
thereof in contracts of apprenticeship." The Ninth Circuit's narrow reading of the
congressional mandate does not square with the fact that "contracts of
apprenticeship" are, by the Secretary of Labor's own definition,6 multi-year
educational endeavors, encompassing the apprentices' work on private, state-
funded and federally funded work in a trade or craft, and not a transient
arrangement entered into for one federal public works job, and then discarded. It
is paradoxical that the only role Dillingham saves for the state under the Act is to
extend labor standards on federal projects by reviewing and approving programs
for BAT, and registering those programs' apprentices for BAT, so that federal
public
works can preserve apprentices' labor standards on federal jobs, in precisely the
ways that the state may not on its own. Indeed, many states may no longer choose
to volunteer for such a job, and instead may wash their hands of any so limited a
role in promoting apprenticeship.
The Ninth Circuit's holding sets in motion a labor market distortion
ruinous to the congressional goals of the Fitzgerald Act. The Ninth Circuit's rule
creates an economic disincentive for contractors to enter into apprenticeship
agreements that meet the federal standards for training. If any worker can be paid
the lower apprentice wage on public works just because the worker is ensconced in
a generic unapproved program which is less costly because it has no objective
training standards, is thrown together for a single contract, lacks outside
schooling or safety training, and allows an unlimited number of apprentices to
work regardless of whether journey level workers are present to provide on-the-
job training - but is covered by ERISA7 - then contractors have an economic
incentive to move to such cheaper programs and away from federally approved
apprenticeship. By restricting the apprentice wage to apprentices in programs
approved as meeting the federal standards for apprenticeship, the federal goal of
minimum apprenticeship standards
is protected.
States will also pull back from apprenticeship because they will be
concerned that the lack of any objective standards for who can be paid an
apprentice wage rate will undercut the prevailing wage law completely. Cf.
Building and Const. Trades v. Donovan, 712 F.2d 611, 625 (D.C. Cir. 1983) (prevailing
wage laws can be subverted by arbitrary classifications). Restricting the reduced
apprenticeship wage to registered apprentices in approved plans is needed to
protect the regulation of the journeylevel prevailing wage for the same reasons
that the Davis-Bacon regulations restrict
the availability of apprentice wages on federal public works to registered
apprentices in plans approved by the state. The real (non ERISA related) problem is
that if the state allows anyone to be called an "apprentice" at the contractor's
option, then there is no longer a prevailing wage which can be enforced at the
journey level. Ethical contractors will lose bids to those willing to style all
workers "apprentices" and pay the lowest wage, getting around the prevailing wage
law. The most logical way out
of the dilemma is to restrict the apprentice-specific wage to those to whom the
nation-wide definition, in the Secretary of Labor's regulations, applies -
apprentices registered in programs which meet the federal standards, and have the
approval to show it. Contractors must be able to bid on public works without
concern that a competitor will have an unfair advantage in the bid process by using
phony apprentices.
The Ninth Circuit also creates another disincentive for states to promote
apprenticeship. Although apprentices registered in state approved programs are, by
definition, less skilled than the journey level workers, they are at least overseen by
journey level workers on the state job and participate in ongoing classroom
instruction, 29 C.F.R. Section 29.5(b)(9). This is not true for "apprentices" in ad hoc
informal programs. If the apprentice wage is not restricted to registered apprentices
in programs with some minimum guarantee of standards, the states have lost an
important guarantee of adequate quality of craft8 work on public works projects. For
the state to encourage apprenticeship and allow less skilled workers on public works
projects, the state must be convinced that the apprentices are workers whom the
contractor has a self-interest in teaching to work up to high standards because the
contractor must live with the consequences of his teaching beyond this one job
which happens to be public works.
A rule like the Ninth Circuit's which commands states to allow apprentice
wages to those not registered in programs that are approved as meeting federal
standards, while state approval continues to be required on federal Davis-Bacon
construction in the same state, runs against Congress's intent in ERISA of
protecting employers from "conflicting and inconsistent state and local regulation"
of such plans, to the degree that the apprenticeship programs are covered by ERISA.
Travelers, at 1677-1678. Since federal Davis-Bacon rules restrict the wage break
to registered apprentices in approved programs, a different rule for state projects
would create the absurd situation that ERISA, in the name of simplicity and
uniformity, creates one set of rules for a contractor working on a federal
courthouse or jail and another set of rules when that same contractor goes across
the street to wire the sound security system in the county jail, as here.
The Ninth Circuit has taken an unnecessarily narrow view of the ERISA
Savings Clause which, as discussed above, leads to results which are counter to the
intent of Congress in passing ERISA and the Fitzgerald Act. The Eighth Circuit's
Minnesota ABC contrary view creates no such anomalies. This Court should grant
certiorari in order to resolve this direct conflict between the Circuits and, as will be
discussed below, effectuate the intent of Congress which this Court has recently
emphasized is the touchstone for understanding the limits of ERISA preemption.
II. The Ninth Circuit's Conclusion That Congress Invalidated California's
Longstanding System Of Setting Prevailing Wages For Apprentices On Public
Projects When It Enacted ERISA Is Based On The "Unhelpful" Approach To
ERISA Preemption Specifically Disapproved In New York State Conference
of Blue Cross and Blue Shield et al. v. Travelers, 115 S. Ct. 1671 (1995).
The Ninth Circuit in this case erred not only in its application of ERISA's
Savings Clause but also in disregarding entirely an opinion, New York State
Conference of Blue Cross and Blue Shield et al. v. Travelers, 115 S. Ct. 1671
(1995),
decided two months before Dillingham in which this Court "recognize[d] that our
prior attempt to construe the phrase 'relate to' does not give ... much help," 115 S.
Ct. at 1677, and announced a new orientation in determining the reach of ERISA
preemption.9
Specifically, the Ninth Circuit's decision concluded that Section 514(a) of
ERISA, declaring preempted "all state laws insofar as they ... relate to any
employee benefit plan," is applicable here even though the statute preempted is a
law of general application which applies without regard to whether the
apprenticeship program in question is an ERISA-covered plan or not; even though
the statute
applies to contractors, not plans; even though assuring effective apprenticeship
training of young people has long been understood to be a traditional concern of
state governments; and even though the statute, which governs only contracting
by state entities, does not effect any employer who does not choose to do
business with
the state or its subdivisions. App. 15. In ruling that the law "relates to" ERISA plans
the Ninth Circuit made no attempt to inquire into whether its ruling serves the
overall purposes of ERISA and of ERISA preemption, nor did the court below
inquire into whether there was any indication that Congress in 1974 had intended to
displace states from their traditional role of assuring both adequate training and fair
labor standards for apprentices working on state-funded projects.
Just last term, however, in Travelers this Court rejected such "uncritical
literalism" in applying Section 514(a) of ERISA. 115 S. Ct. at 1677. First, Travelers
noted that "[i]f 'relate to' were taken to the furthest reaches of indeterminacy, then for
all practical purposes preemption would never run its course." Id. At the same time,
Travelers recognized that it is apparent both from statutory terms of limitation and
"the presumption against preemption," id., that ERISA does not displace states'
authority to legislate whenever there is some impact on an employee benefit plan.
Because of "the unhelpful text [of Section 514(a)] and the frustrating difficulty of
defining its key term," id., Travelers superseded this Court's "prior attempt to construe
the phrase 'relate to'" with a new mode of analysis based on "looking ... to the
objectives of the ERISA statute as a guide to the scope of the state law that Congress
understood would survive." Id.
Because the Ninth Circuit's text-centered approach to ERISA preemption is in
tension with Travelers, this case presents the opportunity to spell out the
implications of the objective intent-oriented approach to ERISA preemption beyond
the narrow health-cost containment context there presented.
Like Travelers, this is not a case in which the ERISA preemption question
can be answered simply on the basis that the state law in question expressly makes
a "reference to" ERISA plans. See Travelers, 115 S. Ct. at 1677. The only
requirement for taking advantage of the sub-journey level apprentice wage on
California public works projects is that the apprentice in question be registered
with the state through a recognized apprenticeship program meeting federally-
specified criteria. Apprenticeship programs, both as commonly understood, and as
described in 29
C.F.R. Section29.3-29.6, do not pay prevailing wages to any workers employed on
public works. Contractors do. Thus, laws that set prevailing wages for public
works projects do not deal with the administrative or financial workings of benefit
plans at all. It is true, of course, that providing for a lower apprenticeship wage on
public works projects only for registered apprentices may have the effect of
encouraging employers to employ registered apprentices so that they will be able
to save money. But Travelers makes clear, at the least, that as the form of state
involvement becomes one not of mandating a preference for one employee benefit
plan over another, but of creating economic incentives that may affect employer
preferences, the presumption against preemption becomes stronger.
Although the Ninth Circuit apparently assumed that all the state-certified
apprenticeship programs are ERISA-covered plans, and that the reference in the
state law to such programs is therefore a reference to ERISA plans, in fact no such
identity exists. Rather, as the United States Secretary of Labor previously
explained to this Court in another case holding a state law preempted by ERISA
because of ERISA's coverage of "apprenticeship or other training programs," Section
3(1)(A), 29 U.S.C. Section 1002(1)(A), Department of Labor regulations make clear
that "neither on-the-job training nor classroom training paid for out of an
employer's general assets is an ERISA plan." Lennes v. Boise Cascade Corp., No. 91-
707, Brief for the
UnitedStates as Amicus Curiae on the Petition for Writ of Certiorari at 9, citing 29
C.F.R. Section 2510.3-1(b)(3)(iv); 40 Fed. Reg. 24, 643; 29 C.F.R. Section 2510.3-1(b); 29
C.F.R.Section 2510.3-1(k); ERISA Advisory Opinions Nos. 76-01 and 83-32A; and
Massachusetts v. Morash, 490 U.S. 107 (1989).10 Consequently, it is "not the case"
that "any law relating to apprenticeship or training necessarily relates to covered plans
only." Id. at 15. Rather, a state law that refers to apprenticeship plans generally
"affects many programs not subject to ERISA," Id., and therefore cannot be deemed
preempted as a law that singles out ERISA plans for special treatment. Compare
Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 829 (1988).
The question, here, as in Travelers, is whether the available legislative
and historical materials as a whole indicate that the California apprentice
prevailing wage provisions, typical of the majority of states, are within the "scope
of state law that Congress understood would survive." Travelers, 115 S. Ct. at
1677. There are at least two reasons, which the Ninth Circuit did not look at here,
and will not look at in the future under its analytical model for preemption, for
finding that the law invalidated below is not a statute of the kind Congress
intended to preempt.
First, as Travelers recognized, Congress's basic objective in enacting
ERISA's preemption provision was to eliminate conflicting regulation of pension
and
welfare benefit plans, not to supersede the historic powers of the states beyond
the degree necessary to accomplish that uniformity. 115 S. Ct. at 1680 ("nothing in
the language of the Act or the context of its passage indicates that Congress chose
to displace general health care regulation, which historically has been a matter of
local concern").
Nothing in ERISA regulates substantively either wages (prevailing or
otherwise) or the operative aspects of apprenticeship programs (such as the
content of the training provided, the number of years apprentices serve, the ratio
of journeypersons to apprentices, the procedural rules governing discharge from
apprenticeship programs, etc.). On the other hand, like health care, both wages and
the supervision and support of apprenticeship programs have been "historically ...
matter[s] of local concern," in the sense that state and local involvement in these
areas was, at the time ERISA was passed, widespread and detailed.
In this instance, voiding California's authority to limit the application of
special apprenticeship wages to registered apprentices not only interferes with
the state's wage-setting authority on public works projects with respect to
apprentices, but also eliminates any meaningful ability to establish wages for any
workers on public works projects. See p. 17, supra, (explaining that under the
decision below, contractors can successfully evade the prevailing wage laws
entirely by designating any workers they please as apprentices).
Like both general wage regulation and the state's own public works, the
governance of the substantive aspects of apprenticeship, has always been an area
in which the states have been heavily involved11. Education generally, has always
been largely the province of state law, and apprenticeship programs developed
initially as simply one way among many to provide young people with the
training to succeed in the adult world of work. The history of apprenticeship
particularly demonstrates that the states had long regulated both the wages
and the working and training conditions of apprentices. As we have seen,12 the
federal Fitzgerald Act, enacted in 1937, was intended to build upon this major
state role in delineating apprenticeship training and labor standards.
Given this historical, statutory, and regulatory background, neither
Section514(a) nor ERISA's lack of substantive attention to apprenticeship can
sensibly be understood as evidencing an Congressional intention to preclude
states from attending to and supporting effective and successful on-the-job
training of youngpeople13. Rather, the more appropriate conclusion is that
Congress assumed that ERISA was not disturbing the long-standing
arrangements for substantive encouragement of basic and adequate
apprenticeship standards by states, which
prevailed under the Fitzgerald Act.14 This conclusion is reinforced by the fact
that during consideration of ERISA and after its passage, those who would be most
likely to know of Congress's intent in passing ERISA continued to assume that the
federal state partnership remained a key component of the federal regulation of
apprenticeship under the congressional mandate found in the Fitzgerald Act, and
did not assume that the Secretary of Labor's state partners had lost
authority.15
Second, where states wish to have effective prevailing wage laws,
they have no practical way of avoiding some impact on apprenticeship plans. As
explained previously, supra, pp. 16-18, the only real choice such states have is
between discouraging apprenticeship on public works by failing to provide a
lower-thanjourney person wage rate; permitting employers to pay apprentice
wage to anyone they please, thereby undermining the prevailing wage system
entirely; or providing some basis for specifying who may be paid at the lower,
apprentice wage rate - namely, workers who are receiving actual training on a
long-term basis. As noted previously, this same practical situation has
resulted, on federal public works projects, in provisions regarding
apprenticeship wages substantially identical to those here at issue. 29 C.F.R.
Section 5.5(a)(4). To the extent that the policy of simplicity and uniformity
behind ERISA preemption informs the debate, that policy suggests that
preemption should not result in mandating different rules regarding who is an
apprentice, paid at apprenticeship wage rates, with state public works
projects on one side and federal or joint federal state ones on the other. Nor is there
any basis for supposing that in enacting ERISA Congress intended to preclude the
states from reaching the practical solutions to public contracting issues permitted to
the federal government.
CONCLUSION
For the reasons stated above, this Petition for a Writ of Certiorari to the
United States Court of Appeals for the Ninth Circuit should be granted.
Dated: November 16, 1995, San Francisco, California
Respectfully
submitted,
JOHN M. REA, Chief Counsel, H. THOMAS CADELL, JR.,
(Counsel of Record) Chief Counsel,
VANESSA L. HOLTON,
RAMON YUEN-GARCIA,
Asst. Chief Counsel,
Counsel,
FRED D. LONSDALE, Sr. Counsel,
JAMES D. FISHER, Counsel,
SARAH COHEN, Counsel,
State of California State of
California
Department of Industrial Division
of Labor
Relations
Standards Enforcement
Office of the Director 45
Fremont Street,
Legal Unit Suite
3220
45 Fremont Street, Suite 450 San
Francisco, CA 94105
San Francisco, CA 94105 (Mailing
Address:
(Mailing Address: P.O. Box
420603,
P.O. Box 420603, San Francisco, CA
94142)
San Francisco, CA 94142) (415) 975-2060
(415) 972-8900
Counsel for State Petitioners Counsel for State
Petitioners
Department of Industrial Division of Labor
Standards
Relations Division of Enforcement and
County of
Apprenticeship Standards Sonoma
------------------------
1 The district court ruled that since state enforcement of
minimum apprenticeship standards constitute a valid "minimum
employment standard" they are not preempted by the NLRA under
Metropolitan Life Insurance Co. v.
Massachusetts, 471 U.S. 724 (1985) and Fort Halifax Packing Co., Inc. v. Coyne,
482 U.S. 1 (1987). The Ninth Circuit did not reach this issue.
2 Thirty-two states have prevailing wage laws.
Twenty-eight states with prevailing wage laws restrict their sub-
journey apprentice-specific wage to apprentices in programs registered with or
approved by the state or BAT. The rule for four states is unclear.
Of those twenty-eight states, twenty-two states make this
distinction by statute, rule or regulation. Arkansas Dep't of Labor Prevailing
Wage Regulations Section 3.103 (Rev. 1994); CAL. LAB. CODE Section 1777.5
(West 1995); CONN. AGENCIES REGS. Section 31-60-8 (1995); Delaware
Prevailing Wage Regulations, Section III(D)(1), (2) (Amended Sept. 15, 1995);
HAW. ADMIN. RULES tit. 12, Section 22-6 (Effective July 27, 1981); KY. REV.
STAT. ANN. Section 337.520(5) (Baldwin 1982); 803 KY. ADMIN. REG. 1:020
(Effective Oct. 2, 1974); MD. STATE FIN. & PROC. CODE ANN. Section 17-201(b),
205(b), 208(e) (1988); MINN. R. 5200.1070 (1995); MO. CODE REGS. tit. 8, Section
30.030; NEV. REV. STAT. Section 338.080(2) (1985); N.J. ADMIN. CODE tit. 12,
Section 60-7.1, 7.3(c) (1995); New Mexico Rules & Regs. Under the Public Works
Minimum Wage Act pt. VI, 6.2, 6.4 (Dep't Lab. Sept. 1989); N.Y. LAB. LAW Section
231(7)(a) (McKinney 1986); OHIO REV. CODE ANN. Section
4115.05 (Baldwin 1985); OHIO ADMIN. CODE Section 4101:9-4-16 (1995); OKLA.
STAT. tit. 40, Section 196.1, 196.2(9), 196.6(A) (1991); OR. ADMIN. R. 839-16-060
(Effective Nov. 10, 1994); 34 PA. CODE Sections 9.103(9), 83.5 (1975 and 1979);
Rhode Island Rules & Regs. Relating to Prevailing Wages Section 5 (1995); TENN.
CODE
ANN. Section 12-4-401, et seq. (1975); TENN. COMP. R. & REGS. Section 0800-
3-2-.01 (Effective April 26, 1987); WASH. REV. CODE Section 39.12.021
(1991); WIS. ADMIN. CODE & IND. 92.02 (Oct. 1990); WYO. STAT. Section 27-4-
403(c) (1977 and Supp. 1995). The remaining six states make this distinction
by what ERISA's preemption
clause would characterize as "other state action having the effect of law." See, e.g.,
Alaska Wage & Hour Admin. Pamphlet No. 600: Laborers' & Mechanics' Minimum
Rates of Pay (Dep't Labor effective Dec. 1, 1995); Commonwealth of Massachusetts,
Executive Office of Labor, Division of Apprentice Training, Minimum Wage Rates
for Apprentices Employed on Public Works Projects (Rev. Nov. 9, 1995);
Michigan Wage & Hour Division Policy Concerning Disputes Regarding
Classifications: Act 166, C. 4.08 (Rev. July 1994); Montana Dep't of Labor &
Industry Prevailing Wage Requirements, Section A (effective July 1, 1994).
3 The following twenty-seven states are SAC states:
Arizona, California, Connecticut, Delaware, Florida, Hawaii, Kansas,
Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Montana,
Nevada, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oregon,
Pennsylvania, Rhode Island, Vermont, Virginia, Washington and Wisconsin.
The
District of Columbia, Puerto Rico and the Virgin Islands are also SACs. U.S. Dep't of
Lab., Employ. & Training Admin.: Bureau of Apprenticeship & Training, Directory
(Jan. 1995).
4 In California, and the other SAC states listed in footnote 3. Where states
do not participate under the Fitzgerald Act, the federal BAT does the approvals, under
the same substantive standards. 29 C.F.R. Section 29.12, App. 84.
5 Examples of laws implicated include the Job Training Partnership Act, 29
U.S.C. Sections 1501 et seq., the Carl Perkins Vocational and Applied Technology
Education Act, 20 U.S.C. Sections 2301 et seq., and School to Work Opportunities
Program, 20 U.S.C. Sections 6101 et seq. which assist the states, working in
partnership with private industry and others, to create "state plans" to provide
financial and technical support to encourage the vocational education and training
of students and workers. State participation is voluntary, like the Fitzgerald Act,
and the states are free to create their own criteria to determine which programs to
support. 20 U.S.C. Section 2323, 20 U.S.C. Section 6143(d).
6 29 C.F.R. Sections 29.2(e), 29.5, App. 65, 72-75.
7 Although, in order to be covered by ERISA, a plan need not even be a
formal written plan, Donovan v. Dillingham, 688 F.2d 1367 (11th Cir. 1988), a one-
page trust form would allow a contractor to draft a minimally adequate plan to
bring the temporary "apprenticeship" arrangement under ERISA. The plan need not
comply with all of ERISA's requirements. Id. Benefit levels for welfare benefits
can
be changed at any time. McGann v. H&H Music Co., 946 F.2d 401 (5th Cir. 1991), cert.
denied, 113 S. Ct. 482 (1992). Welfare benefit plans permit employers to be their
own plan trustees, and no minimum funding is required by ERISA, unlike pension
plans.
8 Construction work that is unskilled is done by laborers. Workers who do
the skilled craft work must be paid the journey level rate for that craft, except for
apprentices. It is the opportunity to have the craft work done by the unskilled at the
modest apprentice rate which will threaten the quality of the work done.
9 Petitioners specifically brought Travelers to the Ninth Circuit's
attention in their Petition for Rehearing and Suggestion for Rehearing In Banc.
10 As that Brief also noted, "[c]ongress included apprenticeship programs ...
in the definition of 'employee welfare benefit plan' because it was concerned with
regulating trust funds established in providing training." Id. at 16. Here, the state
law in question has no bearing on the financial aspects of providing apprenticeship
training.
11 It is important to note that, as Morash observed, interpreting ERISA to
federalize an area of traditional state concern - there vacation wages, here wages
and apprenticeship regulation - is to redirect disputes arising in those areas from
state to federal dispute-resolution fora. California currently asserts jurisdiction
over complaints by its 40,000 to 50,000 apprentices against their apprenticeship
programs, Cal. Lab. Code Section 3078(h), and accepts their wage complaints against
employers under general wage dispute statutes. Cal. Lab. Code Section 229. If all
aspects of apprenticeship programs, including the wages paid to apprentices, are, as
the
opinion below implies, governed solely by federal law, the necessary effect is "vastly
[to] expand the jurisdiction of the federal courts, providing a federal forum for any
employee with a vacation grievance." Morash, 490 U.S. at 118-119.
12 See, e.g., TO SAFEGUARD THE WELFARE OF APPRENTICES:
HEARINGS ON H.R. 6025 BEFORE A SUBCOMM. OF THE COMM.
ON LABOR, 75th Cong., 1st Sess. (1937); HOUSE COMM. ON
LABOR, SAFEGUARD THE
WELFARE OF APPRENTICES, H.R. Rep. No. 945, 75th Cong., 1st Sess. (1937) App.
107; 81 Cong. Rec. 6631 (1937). (Discussion between Representative
Fitzgerald and Reps. Hoffman and Ditter) App. 111; G. ABBOTT, The Child and
the State, Vol. I (1938).
13 Rules pertaining to public contracting, like wage and apprenticeship
rules, are within an area of traditional state concern as to which it is at least
unlikely the Congress intended widespread preemption. Cf. Building & Construction
Trades
Council v. Associated Builders & Contractors, 113 S. Ct. 1190 (1993).
14 Both Electrical Joint Apprenticeship Comm. v. MacDonald, 949
F.2d 270 (9th Cir. 1991), cert. denied, 505 U.S. 1204, 112 S. Ct. 2991 (1992)
and Southern
California ABC v. California Apprenticeship Council, 4 Cal. 4th 422, 14 Cal. Rptr. 491
(1992) addressed the impairment of the Fitzgerald Act's aim of promotion of
apprenticeship standards in the context of state approval of apprentice program
standards. In brief, both decided (So. Cal. ABC relying, in part, on the district court
opinion here) that ERISA preemption of state authority to approve would impair
the Fitzgerald Act, and therefore preemption is prevented by the Savings Clause,
whereas preemption of state requirements in excess of the Secretary of Labor's
regulations would not.
In this case, no party has contended that the state laws applied in
certifying the program in issue here in any way went beyond the requirements that
the state
was required to follow for federal recognition. Consequently, the issue of
ERISA preemption's effect on state authority to impose requirements
exceeding those in the federal regulations is not presented here.
15 See statements re substantive role of the states by the Secretary of
Labor, charged with primary responsibility for enforcing both ERISA and the Fitzgerald
Act
in the Federal Register preceding the current final rule of 29 C.F.R. Section29, 38 Fed.
Reg. 13,894 (1973) (to be codified at 29 C.F.R. pt. 29) (proposed May 25, 1973); 40 Fed.
Reg. 11,340 (1975) (to be codified at 29 C.F.R. pt. 29) (proposed Mar. 10, 1975); 42 Fed.
Reg. 10,138-10,139 (1977) (to be codified at 29 C.F.R. pt. 29), reprinted in App. 93-
106, Oversight Hearings on the National Apprenticeship Training Act, 1983: Hearings
before the Subcomm. on Employment Opportunities of the Comm. on Education
and Labor, H.R., 98th Cong., 1st Sess. (1984); GAO Report, Apprenticeship
Training Administration, Use and Equal Opportunity (1992); Lyndon B. Johnson
School of Public Affairs, Coordination of State and Federal Apprenticeship
Administration, Volume 2, (1980).