Carpenters v. Tishman Constr. Corp.

• Decision Date: 14 February 2014
• Docket Number: No. 13–3005.,13–3005.
• Court: U.S. Court of Appeals — Third Circuit
• Parties: NEW JERSEY CARPENTERS AND THE TRUSTEES THEREOF, as assignees of Edward Chatten and other similarly situated workmen, Appellant v. TISHMAN CONSTRUCTION CORPORATION OF NEW JERSEY.

760 F.3d 297

NEW JERSEY CARPENTERS AND THE TRUSTEES THEREOF, as assignees of Edward Chatten and other similarly situated workmen, Appellant

v.TISHMAN CONSTRUCTION CORPORATION OF NEW JERSEY.

No. 13–3005.

United States Court of Appeals, Third Circuit.

Submitted Pursuant to Third Circuit

LAR 34.1(a) Feb. 14, 2014.

Filed: July 28, 2014.

Seth Ptasiewicz, Esq., Iselin, NJ Counsel for Appellants.

Gregory R. Begg, Esq., Alexander X. Saunders, Esq., Peckar & Abramson, River Edge, NJ, Counsel for Appellee.

Before: McKEE, Chief Judge, CHAGARES, and SHWARTZ, Circuit Judges.

OPINION

CHAGARES, Circuit Judge.

In this case, we must decide whether the New Jersey Prevailing Wage Act, N.J. Stat. Ann. § 34:11–56.25, et seq. (“PWA”) is completely preempted by either the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., or the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 141, et seq. Because we conclude that neither statute completely preempts the PWA, the District Court was without jurisdiction to dismiss the plaintiffs' complaint. We will therefore vacate the judgment of the District Court and remand the action with instructions to remand it to state court.

I.

A.

The PWA provides that laborers on certain public works projects are to be paid the prevailing wage. N.J. Stat. Ann. § 34:11–56.27. It was enacted to “establish a prevailing wage level for workmen engaged in public works in order to safeguard their efficiency and general well-being and to protect them as well as their employers from the effects of serious and unfair competition resulting from wage levels detrimental to efficiency and well-being.” Id.§ 34:11–56.25; see also Best v. C & M Door Controls, Inc., 200 N.J. 348, 981 A.2d 1267, 1271 (2009). A “public work” falls within the PWA if it is “paid for in whole or in part out of the funds of a public body” (except work done pursuant to rehabilitation programs), or if at the time of entering into the contract, the property where the labor is performed is owned or substantially leased by a public body. N.J. Stat. Ann. § 34:11–56.26(5). The PWA applies to all contracts where the total value of the project exceeds $14,187.00 if the work is being done for, or on the premises of, any municipality, or $2,000.00 if the work is being done for, or on the premises of, any other public entity. N.J. Admin. Code § 12:60–1.4(b) (2009).

The “prevailing wage” is defined as the “wage rate paid by virtue of collective bargaining agreements [“CBAs”] by employers employing a majority of workers of that craft or trade subject to said [CBAs], in the locality in which the public work is done.” N.J. Stat. Ann. § 34:11–56.26(9). It is set every two years by the New Jersey Commissioner of Labor and Workforce Development (“Commissioner”). Id. § 34:11–56.30. To set the prevailing wage rate for each locality, the Commissioner references the rates paid in various CBAs—cash and benefits (including employer contributions)—in different parts of the state. Id. The prevailing wage must be specified in the contract between the awarding entity and contractor or subcontractor. Id. § 34:11–56.28. The actual amount of compensation cannot be below the prevailing wage rate, but may exceed it. Id.

The prevailing wage schedule that the Commissioner publishes for each locality contains a wage rate per hour and a fringe benefit rate per hour. Employers may count certain types of fringe benefits bestowed upon employees against the fringe benefit rate per hour. Employers providing benefits worth less than the fringe benefit rate per hour (or no benefits at all) must pay the balance to the employee in cash. The PWA does not mandate any specific types of fringe benefits, nor does it mandate that an employer provide fringe benefits at all.

In addition, the PWA requires that every contractor and subcontractor keep a record detailing the worker's name, his or her craft or trade, and actual hourly rate of wages paid to each worker. Id. § 34:11–56.29. The employer must preserve these records for two years. Id.

If a worker believes that he or she has been paid less than the prevailing wage, that worker may file a complaint with the Commissioner, who has the authority to investigate and administratively sanction violators. Id. §§ 34:11–56.34; 34:11–56.35. Such worker may also initiate a civil action to recover the full amount of the prevailing wage (less any wages actually received), regardless of any contract to the contrary. Id. § 34:11–40. The right to prevailing wages is inalienable, as “any agreement between such workman and the employer to work for less than such prevailing wage shall be no defense to the action.” Id. Workers may bring this civil action themselves or “may designate an agent or representative to maintain” such an action on their behalf. Id.

B.

We take the following facts from the plaintiffs' complaint, which we assume to be true for the purposes of a motion to dismiss. Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d Cir.2008). The workers at issue in this case were carpenters hired to work on the Revel Casino Project in Atlantic City, New Jersey. They contend that the Revel Casino Project is a “public work” within the meaning of the PWA because it received financial assistance in the form of incentives, tax exemptions, and tax reimbursements from the New Jersey Economic Development Authority (“EDA”). They claim that the EDA is a “public body” within the meaning of the Act. SeeN.J. Stat. Ann. § 34:11–56.26(4).

The carpenters contend that their employer, Simon/Watt, did not pay them fringe benefits as required by the PWA. They assigned these claims for unpaid prevailing wages to the plaintiffs, who describe themselves as employee benefit plans within the meaning of ERISA and trust funds within the meaning of the LMRA. The plaintiffs allege that the defendant, Tishman Construction Corp. of New Jersey, was the general contractor and/or construction manager on the Revel Casino Project and subcontracted certain carpentry work to Simon/Watt.

The plaintiffs initially brought suit in New Jersey state court, alleging violations of the EDA Act and PWA.¹ The defendant removed the case to federal court, asserting subject matter jurisdiction pursuant to the “complete preemption” doctrine. It contended that the complaint was completely preempted pursuant to ERISA § 502(a), 29 U.S.C. § 1132(a), because the plaintiffs' cause of action was actually one to collect benefits due. The defendant also claimed that the plaintiffs' claims were preempted by § 301 of the LMRA, 29 U.S.C. § 185, because resolution of the dispute involved interpretation of a CBA. After removal, the plaintiffs moved to remand, and the defendant moved to dismiss.

The District Court agreed with the defendant's characterization of the action and held that the plaintiffs' claims were completely preempted under ERISA § 502(a). It concluded that the action was properly removed because the plaintiffs “are ERISA participants seeking rights under an ERISA plan.” Appendix (“App.”) 15a. Although it did not directly address LMRA complete preemption, the court also noted that the complaint “seeks interpretationof the collective bargaining agreement.” Id.

The District Court also concluded that the action was expressly preempted by ERISA § 514, 29 U.S.C. § 1144, and dismissed the complaint. It reasoned that because the plaintiffs themselves were employee benefit plans and fiduciaries within the meaning of ERISA, and because they sought to collect fringe benefits, their claims “relate[d] to” an ERISA-governed benefit plan and were preempted. Id. The plaintiffs timely appealed.

II.

We have jurisdiction over the final decision of the District Court pursuant to 28 U.S.C. § 1291. Our review of the District Court's grant of a motion to dismiss based on ERISA preemption is plenary. Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 268 (3d Cir.2001). To survive a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), a plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A complaint has facial plausibility when there is enough factual content “that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A court must accept all factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Phillips, 515 F.3d at 231.

III.

Before we can reach the issue of whether the plaintiffs' claims are expressly preempted by ERISA § 514, we must first determine whether there is subject matter jurisdiction over the plaintiffs' PWA claims in federal court. Complete preemption under § 502(a) is a “jurisdictional concept,” whereas express preemption under § 514 is a “substantive concept governing the applicable law.” In re U.S. Healthcare, Inc., 193 F.3d 151, 160 (3d Cir.1999). Because subject matter jurisdiction involves “a court's power to hear a case,” we have an “independent obligation to determine whether subject-matter jurisdiction exists.” Arbaugh v. Y & H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006) (quotation marks omitted).

A cause of action does not typically “arise under” federal law unless a federal question appears on the face of a well-pleaded complaint. Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 8, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). The existence or expectation of a federal defense is insufficient to confer federal jurisdiction. Pryzbowski, 245 F.3d at 271. There exists a “narrow exception” to the well-pleaded complaint rule for instances where Congress “has expressed its intent to completely pre-empt a particular area of law such that any claim that falls within this area is necessarily federal in...