510 A.2d 1054 (Me. 1986), Director of Bureau of Labor Standards v. Fort Halifax Packing Co.

Citation510 A.2d 1054
Opinion JudgeROBERTS,
Party NameDIRECTOR OF BUREAU OF LABOR STANDARDS, et al. v. FORT HALIFAX PACKING COMPANY.
AttorneyJames E. Tierney, Atty. Gen., William H. Laubenstein, III, Thomas D. Warren (orally), Asst. Attys. Gen., Augusta, for Director of Bureau of Labor Standards. Martha E. Geores, Lewiston, for Raymond Bourgoin. Curtis, Thaxter, Lipez, Stevens, Broder & Micoleau, Sidney St. F. Thaxter, II (orally), Po...
Judge PanelBefore McKUSICK, C.J., and NICHOLS, ROBERTS, GLASSMAN and SCOLNIK, JJ.
Case DateJune 02, 1986
CourtSupreme Judicial Court of Maine

Page 1054

510 A.2d 1054 (Me. 1986)

DIRECTOR OF BUREAU OF LABOR STANDARDS, et al.

v.

FORT HALIFAX PACKING COMPANY.

Supreme Judicial Court of Maine.

June 2, 1986

Page 1055

Argued Nov. 15, 1985.

Page 1056

James E. Tierney, Atty. Gen., William H. Laubenstein, III, Thomas D. Warren (orally) Asst. Attys. Gen., Augusta, for Director of Bureau of Labor Standards.

Martha E. Geores, Lewiston, for Raymond Bourgoin.

Curtis, Thaxter, Lipez, Stevens, Broder & Micoleau, Sidney St. F. Thaxter, II (orally), Portland, for Fort Halifax Packing.

Perkins, Thompson, Hinckley & Keddy, Linda D. McGill, Richard G. Moon, John H. Rich, III, Portland, for amici curiae, Chamber of Commerce of the U.S. of America and Maine Chamber of Commerce and Industry.

Before McKUSICK, C.J., and NICHOLS, ROBERTS, GLASSMAN and SCOLNIK, JJ.

ROBERTS, Justice.

Fort Halifax Packing Company (hereafter Halifax) appeals from a judgment rendered in the Superior Court, Kennebec County, granting severance pay in varying amounts to over 80 of its employees pursuant to 26 M.R.S.A. § 625-B (Pamph.1985). 1 On appeal Halifax claims that the Maine severance pay statute is preempted by both the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (1985) (hereafter ERISA) and the National Labor Relations Act, 29 U.S.C. §§ 157 and 158 (1985) (hereafter NLRA). Halifax also raises issues concerning the constitutionality of the severance pay statute, the propriety of the trial justice's denial of a jury trial, the appropriateness of several findings of fact and the necessity of arbitration. Although we modify the trial justice's calculation of severance pay owing to ten employees, we affirm the judgment of the Superior Court in all other respects.

  1. Facts & Procedural Background

    Halifax began packaging and processing poultry in Winslow in 1972 when it purchased the assets of Ralston Purina, a corporation that had conducted similar operations on the site since 1961. On May 23, 1981 Halifax ceased processing operations at the Winslow plant and laid off all of its workforce except several maintenance men and clerical employees.

    At the time of the closing, Halifax had over 100 individuals on the payroll. These employees worked (1) directly in the processing plant, (2) on "live-haul" duty, 2 (3) as

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    supervisory or administrative employees, or (4) in one of the Corbett Brothers feed mills. 3 Many of the employees who worked directly in the plant were represented by Local 385 of the Amalgamated Meat Cutters & Butcher Workmen of North America (hereafter Local 385) and had a contract with Fort Halifax. This contract had effective dates from June 2, 1979 to June 2, 1982 and contained no provision for severance pay. In fact, at the time of the closing Halifax had no contract or agreement regarding severance pay that governed any of the employees delineated above.

    Following the closing, Halifax met with officials of the State of Maine and union representatives to discuss the possibility of reopening the plant. Specifically in the fall of 1981 Halifax suggested that reopening was possible and sought concessions from Local 385 in the form of amendments to the union contract. The amendments, inter alia, sought to add a severance pay provision to the contract that would shield Halifax from severance pay liability for union members under 26 M.R.S.A. § 625-B in the event that the plant reopened. Although Local 385 signed the agreement on November 1, 1981, Halifax never resumed operations before the expiration date of the proposed amendments, June 2, 1984.

    Prior to the signing of the amendments, on October 30, 1981 eleven employees of the plant filed suit against Halifax in Superior Court seeking severance pay pursuant to 26 M.R.S.A. § 625-B. A few days later the Director of the Bureau of Labor Standards also commenced an action to enforce the provisions of Maine's severance pay law as to all Halifax employees pursuant to 26 M.R.S.A. § 625-B(5). 4 At a trial held in the Superior Court without a jury, the trial justice found that Halifax was liable for severance pay and provided a precise computation of the amounts owing to eligible individuals.

  2. ERISA Preemption

    As its first contention on appeal, Halifax in conjunction with amici, 5 argues that it is not liable for severance pay under 26 M.R.S.A. § 625-B because that statute is preempted by ERISA. For the reasons set forth below, we disagree. It is through operation of the supremacy clause of the United States Constitution that federal law preempts conflicting state law. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 210-211, 6 L.Ed. 23 (1824). A conflict warranting preemption may be direct in that the state regulation obviously contradicts federal regulation, or it may arise from congressional intent, either express or implied, to occupy a particular area. McDermott v. State of Wisconsin, 228 U.S. 115, 132-134, 33 S.Ct. 431, 435-436, 57 L.Ed. 754 (1913); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380, 2393, 85 L.Ed.2d 728 (1985) (citing Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 1189, 55 L.Ed.2d 443 (1978)). Preemption, however, is not a favored concept, and federal regulation will be deemed to be preemptive of state regulatory powers only if grounded in "persuasive reasons--either

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    the nature of the regulated subject matter permits no other conclusion or that Congress has unmistakably 'so ordained.' " Alessi v. Raybestos-Manhattan, Inc. 451 U.S. 504, 522, 101 S.Ct. 1895, 1905, 68 L.Ed.2d 402 (1981) (quoting Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963)).

    As the preamble to the Act indicates, ERISA was enacted in 1974 for the purpose of regulating private employee benefit plans established and maintained by employers and employee organizations. 29 U.S.C. § 1001(a) (1985). See also Hutchinson & Ifshin, Federal Preemption of State Law Under the Employee Retirement Income Security Act of 1974, 46 U.Chi.L.Rev. 23 (1978). Prior to ERISA's passage regulation of privately created employee benefit plans was generally confined to state laws that were not uniquely adapted to protect the participants of such plans. Hutchison, 46 U.Chi.L.Rev. at 25. Growth in size of employee benefit plans and a concomitant increase in loss of benefits by employees compelled Congress to establish uniform disclosure, reporting, vesting and funding standards meant to ensure that employees would not lose benefits in plans created by employers or employee organizations. See generally H.R.Rep. No. 533, 93d Cong., 2d Sess. (1973), U.S. Code Cong. & Admin.News 1974, p. 4639. Essentially, ERISA is concerned with regulating two types of privately created employee benefit plans--pension plans that provide for retirement or deferred income (29 U.S.C. § 1002(2)) and welfare benefit plans that provide for medical, sickness, accident and other non-pension fringe benefits (29 U.S.C. § 1002(1)). 6 The Act specifically states that its requirements are meant to cover those plans created by employers and employee organizations. 29 U.S.C. § 1003(a). 7

    With an eye towards making regulation of private employee benefit plans exclusively a federal concern, ERISA also contains an express preemption provision which provides:

    Except as provided in subsection (6) of this section, the provisions of this title and title IV shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title....

    29 U.S.C. § 1144. Thus, in this case we must address the question of whether in light of the ERISA's purposes and the existence of an express preemption provision Congress has "unmistakably ... ordained" preemption of Maine's severance pay law.

    In Shaw v. Delta Airlines, 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983), the Supreme Court gave a rather broad construction

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    to the "relate to" language in ERISA's preemption provision. In Shaw the Court held that Section 1144 not only preempts state laws dealing with the subject matters covered by ERISA, e.g. reporting, disclosure, and fiduciary responsibility, but also those state laws that have "a connection with or reference to" employee benefits plans covered by the statute. Id. at 97, 98. Inasmuch as Maine's severance pay law does not attempt to regulate the reporting, disclosure, and fiduciary subjects covered by ERISA, our statute will be preempted only if it can be said to have "a connection with or reference to" employee benefit plans that are within ERISA's coverage.

    Our inquiry in this regard is made simple by the fact that the Maine severance pay statute does not affect employee benefit plans that are within ERISA's regulatory reach. Title 29 U.S.C. §§ 1003(a) and 1002(1) make it clear that the employee benefit plans intended for coverage under ERISA are those created by employers or employee organizations. Thus, the preemptive effect of section 1144 is on those State laws that affect plans created by either of these private parties. 8 In this case the severance pay liability created by Section 625-B is not a plan created by an employer or employee organization. Instead, it is a state created fringe benefit passed within the police power for the purpose of dealing with the economic dislocation that accompanies the shut-down of large establishments. Inasmuch as Section 625-B does not implicate a plan created by an employer or employee organization, it cannot be said to be preempted by ERISA.

    Moreover, Section 625-B contains an explicit provision that totally eliminates state regulation if a plan covering severance pay is created by an employer or employee organization. Specifically, Section 625-B(3)(B) provides: "There shall be no liability for severance pay to an eligible employee if: ... [t]he employee is covered by an express contract...

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