Associated Buil. and Contrac., Sout. Cal. v. Nunn

• Decision Date: 16 January 2004
• Docket Number: No. 02-56735.,02-56735.
• Citation: 356 F.3d 979
• Parties: ASSOCIATED BUILDERS AND CONTRACTORS OF SOUTHERN CALIFORNIA, INC., a California corporation, Plaintiff-Appellant, v. Henry P. NUNN, III, an individual in his official capacity as Chief, Division of Apprenticeship Standards; Chuck Cake, an individual in his official capacity as Director of The Department of Industrial Relations and Administrator of Apprenticeship of the State of California; Jeannie Holmes, an individual, in her official capacity as Chairperson, California Apprenticeship Council, a public body of the State of California, Defendants-Appellees, State Building and Construction Trades Council of California, AFL-CIO, Defendant-intervenor-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

356 F.3d 979

ASSOCIATED BUILDERS AND CONTRACTORS OF SOUTHERN CALIFORNIA, INC., a California corporation, Plaintiff-Appellant, v. Henry P. NUNN, III, an individual in his official capacity as Chief, Division of Apprenticeship Standards; Chuck Cake, an individual in his official capacity as Director of The Department of Industrial Relations and Administrator of Apprenticeship of the State of California; Jeannie Holmes, an individual, in her official capacity as Chairperson, California Apprenticeship Council, a public body of the State of California, Defendants-Appellees State Building and Construction Trades Council of California, AFL-CIO, Defendant-intervenor-Appellee.

No. 02-56735.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 8, 2003.

Filed January 16, 2004.

As Amended February 17, 2004.

COPYRIGHT MATERIAL OMITTED

Dennis B. Cook, Ronald W. Brown, and Jessavel Y. Wong, Sacramento, CA, for the plaintiff-appellant.

John M. Rea, Steven A. McGinty, and John A. Siqueiros, California Department of Industrial Relations, Los Angeles, CA, for the defendants-appellees.

Stephen P. Berzon, Scott A. Kronland, and Linda Lye, San Francisco, CA, for the intervenor-appellee.

John J. Davis, Jr. and Michael T. Anderson, San Francisco, CA, for the amici curiae.

Appeal from the United States District Court for the Central District of California; Alicemarie H. Stotler, District Judge, Presiding. D.C. No. CV-02-00131-AHS.

Before REINHARDT, FERNANDEZ, and RAWLINSON, Circuit Judges.

REINHARDT, Circuit Judge.

By participating in a federal-state partnership that regulates apprenticeship standards, California encourages employers and unions to support training and education programs for citizens who seek access to the building construction trades and other skilled jobs. Although the goal of California's apprenticeship programs is to promote economic opportunity, its regulations have caused considerable concern to the employers affiliated with the Associated Builders and Contractors of Southern California, Inc. ("Associated Builders"). In February 2002, Associated Builders sought an injunction to prevent California officials from implementing amendments to 8 Cal.Code Regs. § 208(b)-(c), the subsections of California's regulations that establish minimum wages and benefits on public and private construction projects for state-registered apprentices.

Associated Builders argues that these provisions, as amended, are preempted by the Employee Retirement Income Security Act ("ERISA"), 88 Stat. 829, codified as amended at 29 U.S.C. § 1001 et seq., and by the National Labor Relations Act ("NLRA"), 49 Stat. 449, codified as amended at 29 U.S.C. § 151 et seq. The district court denied Associated Builders' motion for a preliminary injunction. It determined that Associated Builders had little likelihood of success on the merits on its facial challenge to these provisions because they are part of the same regulatory scheme that the Supreme Court held not to be preempted by ERISA, California Div. of Labor Standards v. Dillingham, 519 U.S. 316, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997) ("Dillingham I"), and that the Ninth Circuit, on remand, held not to be preempted by the NLRA. Dillingham v. Sonoma County, 190 F.3d 1034 (9th Cir. 1999) ("Dillingham II").

The parties stipulated to the entry of a final judgment based upon the district court's order denying the preliminary injunction. Pursuant to Fed.R.Civ.P. 65(a)(2), the district court entered a final judgment, which Associated Builders appeals. We find that §§ 208(b)-(c), as amended, are not preempted by either ERISA or the NLRA.

I. BACKGROUND

Since the founding of the American republic, states have regulated training programs for individuals seeking to enter skilled crafts, in order to prevent their exploitation by employers. See generally W.J. Rorabaugh, The Craft Apprentice: From Franklin to the Machine Age in America (1986). California has regulated apprenticeships since at least 1858, when the legislature enacted a statute that, among other provisions, required masters to offer apprentices a basic education. 1858 Cal. Stat., ch. 182, pp. 134-37, codified in Cal. Civ.Code §§ 264-274 (subsequently repealed and superseded by 1937 Cal. Stat., ch. 90).

California and other states were encouraged to take additional steps to regulate apprenticeships in 1937, when Congress passed the National Apprenticeship Act, 50 Stat. 664, codified as amended at 29 U.S.C. § 50 et seq. Known as the Fitzgerald Act, this legislation directs the Secretary of Labor "to cooperate with State agencies engaged in the formulation and promotion of standards of apprenticeship...." 29 U.S.C. § 50. In response to this federal encouragement, California passed the Shelley-Maloney Apprentice Labor Standards Act in 1939, which created the regulatory framework that governs apprenticeship in the state to this day. 1939 Cal. Stat., ch. 220, codified as amended at Cal. Lab.Code § 3070 et seq. (2003).

The goals of California's regulatory scheme are to "foster, promote, and develop the welfare of the apprentice and industry, improve the working conditions of apprentices, and advance their opportunities for profitable employment...." Cal. Lab. Code § 3073 (2003). California fulfills these goals by offering a variety of incentives to encourage apprenticeship programs to seek state approval, which can be obtained if the programs comply with specified state standards. 8 Cal.Code Regs. § 212. Among the incentives that state-approved programs receive are direct financial assistance and automatic certification for relevant federal programs. Cal. Lab.Code § 3074; 29 C.F.R. § 29.12. Additionally, apprentices who enroll in state-sponsored programs (referred to as "registered" apprentices in the California Code) receive a journeyman's certificate upon completion of their training. Contractors who hire apprentices from these state-approved programs receive certain benefits as well. See Southern Cal. Chapter of Assoc. Builders and Contractors, Inc. v. Cal. Apprenticeship Council, 4 Cal.4th 422, 428-29, 432-35, 14 Cal.Rptr.2d 491, 841 P.2d 1011 (1992) (explaining how California's apprenticeship regulations work). Participation in the regulatory scheme is entirely voluntarily, however. California does not prohibit apprenticeship training programs from operating without state approval, and employers are not required to hire apprentices from state-approved programs or indeed to hire any apprentices at all.

For building contractors, a major benefit of hiring registered apprentices is that they can pay them a special rate for work that they perform on public construction projects. Cal. Lab.Code § 1777.5. This rate is typically lower than the journeyman rate, which is otherwise the required minimum for such projects under California's prevailing wage law. Cal. Lab.Code § 1771.¹ The special apprenticeship rate is set pursuant to 8 Cal.Code Regs. § 208(b), which is one of the two provisions of the California apprenticeship regulations that Associated Builders claims is preempted.

The other provision that Associated Builders challenges is 8 Cal.Code Regs. § 208(c), which establishes the rates that contractors are to pay to registered apprentices on private construction projects. Whereas the 2002 amendments did not substantially modify § 208(b), they re-calibrated the wage requirements for registered apprentices on private construction jobs that are set forth in § 208(c) in order to reflect the varied market conditions throughout California. Under § 208(c), as amended, a building construction contractor has two alternatives if it employs registered apprentices on private construction jobs. The first alternative is to pay registered apprentices a state-defined percentage of the prevailing per diem compensation package² for journeymen in the relevant craft and geographical area. This percentage progressively increases from 40 to 80 percent over the period of an apprentice's training program. 8 Cal. Code Regs. §§ 208(c)(1)-(5).³ The second alternative is for a contractor to provide the same compensation package to registered apprentices on private projects that it pays for public work jobs in the same craft and locality. 8 Cal.Code Regs. § 208(c)(6). Like the rest of California's apprenticeship regulatory scheme, § 208(c) is entirely voluntary. It does not impose any obligations on contractors who do not employ apprentices from state-approved apprenticeship programs.

Two types of apprenticeship programs can qualify for state approval. Joint apprenticeship programs are collaborative ventures between unions and employers. Unilateral programs are run by employers with no union involvement. Cal. Lab.Code § 3075; 8 Cal.Code Regs. §§ 205(g), 206(a)-(b). At the time this lawsuit was filed, there were 28 state-approved unilateral apprenticeship programs, enrolling approximately 5,400 apprentices. Associated Builders sponsors three of these programs, which collectively enroll fewer than 600 apprentices.

Joint apprenticeship programs train a larger proportion of California's registered apprentices. At present, there are 195 active state-approved joint apprenticeship programs in the building and construction trades, enrolling over 43,500 apprentices. Among the sponsors are the California State Pipe Trades Joint Apprenticeship Committee and the Plumbers and Steamfitters Local 159 Joint Apprenticeship and Training Committee, the amici curiae who urge affirmance of the district court's ruling. The majority of unionized apprentices in state-approved programs are represented by the unions affiliated with the State Building and Construction Trades Council of California, AFL-CIO, whose motion to intervene as a defendant was granted by the district court.

II. ANALYSIS

By entering a final judgment pursuant to Fed.R.Civ.P. 65(a)(2), the district court consolidated its preliminary injunction ruling with its decision on the merits. In...