Dillingham Const. N.A., Inc. v. County of Sonoma
| Decision Date | 07 June 1995 |
| Docket Number | No. 92-15247,92-15247 |
| Citation | 57 F.3d 712 |
| Parties | , 130 Lab.Cas. P 57,917, 19 Employee Benefits Cas. 1409, 2 Wage & Hour Cas.2d (BNA) 1291, Pens. Plan Guide P 23913H DILLINGHAM CONSTRUCTION N.A., INC., a California Corporation; Manuel J. Arceo, dba Sound Systems Media, Plaintiffs-Appellants, v. COUNTY OF SONOMA; Division of Labor Standards Enforcement; Department of Industrial Relations, Division of Apprenticeship Standards, et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Richard N. Hill, Littler, Mendelson, Fastiff, Tichy & Mathiason, San Francisco, CA, for plaintiffs-appellants.
Ramon Yuen-Garcia, Dept. of Labor Standards Enforcement and John M. Rea, Dept. of Indus. Relations, San Francisco, CA, for defendants-appellees.
Appeal from the United States District Court for the Northern District of California.
Before: CANBY, and BRUNETTI, Circuit Judges, and JONES, * District Judge.
The issue presented in this case is whether ERISA preempts the application of a state prevailing wage law that requires payment of prevailing wages to employees in apprenticeship programs that have not received state approval but allows the payment of lower apprenticeship wages to employees participating in state approved programs. We hold that it does.
As described by the district court, California's administrative framework for regulating apprenticeships is complex. Rules and regulations establishing minimum standards of wages, hours and working conditions for apprentices are created by the California Apprenticeship Council ("CAC") which is located within the Division of Apprenticeship Standards ("DAS"). The California Code of Regulations provides that "[a]pprenticeship programs shall be established by written standards approved by the Chief of DAS" and sets forth a detailed list of program standards that must be covered before the program is approved. Cal.Code Regs. tit. 8, Sec. 212.
The CAC exercises approval authority over apprenticeship programs pursuant to the Fitzgerald Act, 29 U.S.C. Sec. 50 and its implementing regulations, 29 C.F.R. Secs. 29.1-29.13. The federal regulations establish criteria under which a state agency may be recognized as the appropriate agency for registering local apprenticeship programs for federal purposes. 29 C.F.R. Sec. 29.12.
Section 1771 of the California Labor Code requires state public works contractors to pay their employees "prevailing wages." 1
Contractors who are awarded public works projects agree to pay prevailing wages to all their construction employees at the journeyman level in specified trades. Public works contractors that employ apprentices can pay them an amount lower than the prevailing journeyman wage so long as those apprentices are part of an approved apprenticeship program under California Labor Code section 1777.5. 2
Until employees on a public works project are enrolled in an apprenticeship program whose training and education standards meet state-established minimums, the prevailing wage statute requires that they be paid at higher, journeyman rates.
Dillingham Construction was awarded a state public works contract to construct a detention facility in Sonoma County. The detention facility project was a public works project within the meaning of California Labor Code Sec. 1720. Dillingham Construction subcontracted electric work to Sound Systems Media, a sole proprietorship of Manuel Arceo. Arceo was a member of the International Brotherhood of Electric Workers ("IBEW").
When Sound Systems began work on the job, it paid its employees in accordance with the collective bargaining agreement between the IBEW Local 202 and the National Electric Contractors Association which included a scale for apprentice electronic technicians and required Sound Systems to make contributions to the Northern California Sound and Communications Joint Apprenticeship Training Committees ("JATC"), a state approved JATC. JATCs are the source of the apprentices and provide for their training. However, after the job began, the IBEW Local 202 withdrew its representation of Sound System's electronics technician employees, leaving Sound Systems without a collective bargaining agreement to establish compensation. About a month after the IBEW's withdrawal, Sound Systems joined the Northern California Electrical Sound Communications Association ("NCESCA"), a multi-employer association of electrical contractors. NCESCA signed a collective bargaining agreement with the National Electronic Systems Technicians Union ("NESTU") which provided wage scales for all employees, including apprentices and covered Sound Systems' electronic technicians. NESTU was associated with the Electronic and Communications JATC, a new JATC which had not been approved by the State when Sound Systems began relying on it for apprentices. (State approval was later received but is not retroactive.) Sound Systems paid its employees in compliance with this collective bargaining agreement. In some instances, the rates under the collective bargaining agreement were less than the state prevailing wage rates.
After an investigation, the California Division of Labor Standards Enforcement issued a Notice Withholding Payment from Dillingham Construction with Sonoma County due to Sound System's failure to pay some of its workers prevailing wage rates in violation of California Labor Code Sec. 1771. Dillingham Construction is liable for the acts of its subcontractors under California Labor Code Sec. 1775.
Dillingham does not dispute that Sound Systems paid some of its workers less than the prevailing wages for journeymen, but claims that those workers were "apprentices" and that Sound Systems was entitled to pay them less than journeyman prevailing wage rates pursuant to the NESTU collective bargaining agreement. However, it is uncontested that the "apprentices" did not come from a state approved JATC.
In this action, the plaintiffs Dillingham Construction and Sound Systems Media (collectively referred to as "Dillingham") sought a declaratory judgment that the enforcement of California's journeyman prevailing wage rate pursuant to California Labor Code sections 1773-1777.1 was preempted by the National Labor Relations Act ("NLRA"), 29 U.S.C. Secs. 151-158 and the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Secs. 1001-1461, and that by attempting to enforce it, the State interfered with rights established under federal labor law, in violation of 42 U.S.C. Sec. 1983.
On cross motions for summary judgment, the district court held that the California prevailing wage law is not preempted by the NLRA or ERISA and granted summary judgment in favor of the Division of Labor Standards Enforcement, the County of Sonoma, and the Division of Apprentice Standards (collectively referred to as "the State").
A grant of summary judgment is reviewed de novo. Hydrostorage Inc. v. Northern Cal. Boilermakers Local Joint Apprenticeship Comm., 891 F.2d 719, 726 (9th Cir.1989), cert. denied, 498 U.S. 822, 111 S.Ct. 72, 112 L.Ed.2d 46 (1990). The parties agree that there are no disputed issues of material fact. Therefore, we need only determine whether the district court correctly applied the relevant law. Id.
The district court had jurisdiction pursuant to 28 U.S.C. Sec. 1331. The appeal was timely, and we have jurisdiction under 28 U.S.C. Sec. 1291. We reverse.
The state argues that because Dillingham voluntarily agreed to perform the contract in conformity with the requirements of the state prevailing wage law and apprenticeship standards, it is estopped from challenging the state laws on constitutional grounds. This issue was not raised before the district court and we refuse to consider it for the first time on appeal. International Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1404 (9th Cir.1985).
We first consider the issue of ERISA preemption. "ERISA is a comprehensive remedial statute designed to protect the interests of employees in pension and welfare plans, and to protect employers from conflicting and inconsistent state and local regulation of such plans." Electrical Joint Apprenticeship Committee v. MacDonald, 949 F.2d 270, 272 (9th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 2991, 120 L.Ed.2d 869 (1992) (quotations and citations omitted).
We have addressed the issue of ERISA preemption in relation to state apprenticeship programs in Hydrostorage, 891 F.2d 719, and MacDonald, 949 F.2d 270.
In Hydrostorage, the plaintiff was awarded a public works contract to construct a water storage tank for a county water district. The California Apprenticeship Council found the plaintiff in violation of California Labor Code section 1777.5, which required a contractor on a public works project to apply for a certificate of approval from a JATC, employ apprentices at a specified ratio and contribute to an appropriate fund. An administrative order was issued barring Hydrostorage from future public works contracts. The district court held that enforcement of the order was preempted by ERISA but the court did not strike down section 1777.5 as a whole, but only its application. We affirmed.
In MacDonald, we held that ERISA preempted Nevada's enforcement of its prevailing wage statute. Like California's prevailing wage law, Nevada requires payment of prevailing wages on state public works projects but allows lower apprentice wages to be paid to apprentices from programs approved by the Nevada State Apprenticeship Council. In MacDonald, the plaintiff was required to pay prevailing wages to apprentices employed from an apprenticeship program which had received federal but not state approval. We found this application of Nevada's prevailing wage statute to be preempted by ERISA because the...
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