Stone & Webster Eng. Corp. v. Ilsley

• Decision Date: 03 August 1981
• Docket Number: Civ. No. H-80-598.
• Court: U.S. District Court — District of Connecticut
• Parties: STONE & WEBSTER ENGINEERING CORPORATION, Plaintiff, v. David B. ILSLEY; Robin W. Waller, Workmen's Compensation Commissioner, Second District, State of Connecticut; John A. Arcudi, Chairman, Board of Compensation Commissioners, State of Connecticut; Sprinkler Fitters Union Local 676; and National Automatic Sprinkler Industry Welfare Fund, Defendants.

518 F. Supp. 1297

STONE & WEBSTER ENGINEERING CORPORATION, Plaintiff, v. David B. ILSLEY; Robin W. Waller, Workmen's Compensation Commissioner, Second District, State of Connecticut; John A. Arcudi, Chairman, Board of Compensation Commissioners, State of Connecticut; Sprinkler Fitters Union Local 676; and National Automatic Sprinkler Industry Welfare Fund, Defendants.

Civ. No. H-80-598.

United States District Court, D. Connecticut.

August 3, 1981.

Mark E. Fuhrmann, Paul E. Knag, Cummings & Lockwood, Stamford, Conn., for plaintiff.

Christina G. Dunnell, Asst. Atty. Gen., State of Connecticut, Carl R. Ajello, Atty. Gen., Hartford, Conn., for defendants, Robin W. Waller and John A. Arcudi.

Carter LaPrade, Thompson, Weir & Barclay, New Haven, Conn., Sally M. Armstrong, O'Donoghue & O'Donoghue, Washington, D.C., for defendant, Nat'l Automatic Sprinkler Industry Welfare Fund.

Norman Zolot, Hamden, Conn., for defendant, Sprinkler Fitters Union Local 676.

RULING ON MOTIONS TO DISMISS AND CROSS-MOTIONS FOR SUMMARY JUDGMENT

CLARIE, Chief Judge.

The defendants' motions to dismiss were made pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure and the cross-motions of the parties for summary judgment are before the Court pursuant to Rule 56 of the Federal Rules of Civil Procedure. The principle issue before the Court, aside from the question of jurisdiction, is whether a Connecticut statute, which regulates the duration of payments made by an employer to an employee union welfare fund, is preempted by the Employee's Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1381. The fund is part of an employee's union benefit plan, as described in ERISA. The Court finds that it has subject matter jurisdiction and that the state statute interferes with a voluntary, social insurance program. Said program is part of a complex scheme of benefits which was established through collective bargaining. The Court finds that regulatory interference by the state is impermissible, in that the state statute is preempted by ERISA.

Jurisdiction

The defendants, Waller, Arcudi, Ilsley, and Sprinkler Fitters Union Local 676 have challenged the Court's jurisdiction in this case. They claim that only participants, beneficiaries, or fiduciaries are authorized to bring such an action. See 29 U.S.C. § 1132. They argue that Stone & Webster Engineering Corporation does not fit into any of these categories. However, this argument is misdirected, inasmuch as the plaintiff has alleged that it is being compelled, pursuant to a state statute, to make certain payments to a welfare fund. These payments represent a burden which is beyond the plaintiff's contractual obligations, as those obligations are stated in a collective bargaining agreement. See Ilsley v. Stone & Webster Engineering Corp., Dec. by Comp. Comm'r (July 18, 1980). The plaintiff claims that the welfare fund mentioned in the agreement is part of an employee benefit plan, and so is not subject to state regulation due to the preemption provision of ERISA. 29 U.S.C. § 1144. The presence of this issue makes it unnecessary to determine, at this time, whether the plaintiff has standing under 29 U.S.C. § 1132. This civil action arises under the Constitution of the United States, and jurisdiction exists pursuant to 28 U.S.C. § 1331. Billy Jack for Her, Inc. v. New York Coat, Suit, Dress, Rainwear & Allied Workers' Union, 511 F.Supp. 1180, 1187 (S.D.N.Y. 1981) ("any time a court finds preemption it should conclude that the action arises under federal law ... even in a case where the preemptive federal law provides the plaintiff with no right to relief."). See T. B. Harms Co. v. Eliscu, 339 F.2d 823, 827 (2d Cir. 1964).

Facts

The facts in this case are not in dispute. Defendant Ilsley began his employment with the plaintiff as a sprinkler fitter on January 9, 1979. On January 30, 1979, Ilsley was injured while at work, and thereafter he received Workmen's Compensation benefits from the plaintiff. The latter was bound by a collective bargaining agreement with the employee's union throughout this period. The agreement established various terms and conditions of employment for all sprinkler fitters, including Ilsley. One aspect of the agreement provided that the plaintiff make certain payments to a welfare fund, in order to furnish various life and health insurance benefits for the sprinkler fitter employees. See Plaintiff's Exhibit B at art. 19; Plaintiff's Exhibit C. The agreement further provided that the plaintiff's payments to the fund should be at the rate of seventy-five cents per hour "for all hours worked by all employees ...."

The plaintiff claims that, under the terms of the agreement, it need not make the further contributions on behalf of Ilsley, since he can not claim any "hours worked" subsequent to his injury. The defendants counter that a Connecticut statute requires that payments to such a welfare fund must continue even "while the employee is eligible to receive or is receiving workmen's compensation payments ...." Conn.Gen. Stat. § 31-51h. The plaintiff replies that the welfare fund is an "employee benefit plan," as defined by ERISA,¹ and so is shielded from state regulation by the preemption provision of ERISA. 29 U.S.C. § 1144(a).

On July 18, 1980, the Workmen's Compensation Commission considered, and rejected, the plaintiff's argument. The Commissioner found that, in the absence of direct conflict, the state and federal laws operated concurrently. Ilsley v. Stone & Webster Engineering Corp., Dec. by Comp. Comm'r at 7 (July 18, 1980). The plaintiff instituted this suit on October 2, 1980, and alleges that the state law cannot apply to employers who are subject to ERISA, due to the preemption provision of 29 U.S.C. § 1144(a).

Discussion of the Law

The preemption provision of ERISA is extremely broad in scope. That statute states, in pertinent part,

"Except as provided in subsection (b) of this section,² the provisions of this subchapter and subchapter III of this chapter 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 and not exempt under section 1003(b) of this title." 29 U.S.C. § 1144(a) (emphasis added).

The Second Circuit has recently held that the legislative history of section 1144(a) "leads us to conclude that the statute is as sweeping as it seems." Delta Air Lines, Inc. v. Kramarsky, 650 F.2d 1287 (2d Cir. 1981). This Court will view the issue at bar from the perspective demanded by Delta. It is this perspective, in part, which leads the Court to reject, at the outset, any suggestion that section 1144(a) applies more strongly to pensions than to welfare benefit plans. See contra, Memorandum of Defendants Waller and Arcudi at 9 (Mar. 30, 1981). Section 1144(a) applies to state laws which relate to any employee benefit plan, and the latter phrase clearly includes both employee welfare benefit plans" and "employee benefit pension plans." 29 U.S.C. § 1002(3).

I

The first significant issue before the Court is whether the statute at issue, Conn. Gen.Stat. § 31-51h, "relates to" the employee benefit plan maintained by the plaintiff. The defendants argue that section 31-51h "relates to" employers, rather than to the employee benefit plan; that an increase in employer obligations "in no way impacts upon the fund." In looking at the obverse side of this issue, the defendants assert that ERISA "does not purport to establish contribution levels, or even to set guidelines for the basis of contribution levels." The answers to these contentions depend upon an examination of the relevant statutes. The state statute at issue, Conn. Gen.Stat. § 31-51h, states, in pertinent part,

"(a) No employer ... shall cancel or withhold accident and health insurance or life insurance coverage of any employee or his dependents or cease to make payments or contributions at the regular hourly or weekly rate for fulltime employees for each week of disability to an employee's welfare fund as defined in subsection (h) of section 31-53 while the employee is eligible to receive or is receiving workers' compensation payments pursuant to chapter 568 ...."

It is quite apparent that this statute purports to regulate the duration of employer contributions to employee welfare funds. In the case at bar, the prescribed duration of employer contributions is embodied in a collective bargaining agreement, and as stated therein, employer contributions to the employee welfare fund need not continue while the employee is not actually working. This is not a "remote and peripheral" regulation of the benefit plan. See American Telephone & Telegraph Co. v. Merry, 592 F.2d 118, 121 (2d Cir. 1979). Section 31-51h fundamentally and directly alters the employer's negotiated obligations, as they are stated in Article 19 of the plan.³ The statute therefore regulates the benefits provided under the plan, and so it "relates to" the plan. Delta Air Lines, Inc. v. Kramarsky, 650 F.2d 1287, 1303 n.23 (2d Cir. 1981).

The United States Supreme Court has recently addressed the "relates to" issue, and has suggested an approach which seems even broader than that taken by the Second Circuit in Delta. The Supreme Court held that it is immaterial that a state statute intrudes indirectly,

"rather than directly, through a statute called `pension regulation.' ERISA makes clear that even indirect state action bearing on private pensions may encroach upon the area of exclusive federal concern. For purposes of the pre-emption provision, ERISA defines the term State to include: `a State, or any political subdivision thereof, or any agency or instrumentality of either, which purports to regulate, directly or indirectly, the terms and conditions of employee benefit plans covered by this title.' 29 U.S.C. § 1144(c)(2) (emphasis added by the Supreme Court). ERISA's authors clearly meant to preclude the States from

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