Ironworkers Dist. Council of the Pacific Northwest v. Woodland Park Zoo Planning & Development

• Decision Date: 02 September 1997
• Docket Number: No. 38165-2-I,38165-2-I
• Citation: 87 Wn.App. 676,942 P.2d 1054
• Court: Washington Court of Appeals
• Parties: , 4 Wage & Hour Cas.2d (BNA) 193, Pens. Plan Guide (CCH) P 23938X IRONWORKERS DISTRICT COUNCIL OF THE PACIFIC NORTHWEST, Appellant, v. WOODLAND PARK ZOO PLANNING & DEVELOPMENT, an Agency of the City of Seattle, Engineers-Contractors, Inc., a Washington corporation, Respondents, and Sybor Erectors Steel, Inc., a Washington corporation, Defendant, and Continental Insurance Company, a foreign corporation, Respondent.

Page 676

87 Wn.App. 676

942 P.2d 1054, 4 Wage & Hour Cas.2d (BNA) 193,

Pens. Plan Guide (CCH) P 23938X

IRONWORKERS DISTRICT COUNCIL OF THE PACIFIC NORTHWEST, Appellant, v. WOODLAND PARK ZOO PLANNING & DEVELOPMENT, an Agency of the City of Seattle, Engineers-Contractors, Inc., a Washington corporation, Respondents and Sybor Erectors Steel, Inc., a Washington corporation, Defendant and Continental Insurance Company, a foreign corporation, Respondent.

No. 38165-2-I.

Court of Appeals of Washington Division 1.

Sept. 2, 1997.

Mel R. Kang, Schwerin, Burns, Campbell & French, Seattle, for Appellant

Tyler B. Ellrodt, Barbara H. Schuknecht, McNaul, Ebel, Nawrot, Helgren & Vance, Seattle, for Respondents.

Richard H. Robblee, Rinehart, Robblee & Hannah, Seattle, for Amicus Rebound.

Jeff B. Kray, Office of the Attorney General, Olympia, for Amicus Dept. of Labor.

WEBSTER, Judge.

A union council seeks to enforce Washington's prevailing wage statute against a general contractor and its surety to collect wages in the amount of employee benefit contributions that an insolvent subcontractor failed to make to the pension plans of members of a local union. It seeks to obtain these funds by foreclosing a lien against the contractor's bond and retainage, both of which are required by Washington statutes. This case presents the question of whether the Federal Employee Retirement Income Security Act of 1974 (ERISA) preempts the Council's action.

We hold that ERISA does not preempt Washington's prevailing wage statute because the statute does not require the establishment or funding of ERISA benefit plans. It merely considers the usual benefits paid in the locality in calculating the rate of prevailing wages. Because the Council brings this action to collect wages due under the prevailing wage statute, it does not utilize the public works lien statutes to fund a pension benefit plan. Accordingly, we distinguish Puget Sound Electrical Workers Health & Welfare Trust Fund v. Merit Co., 123 Wash.2d 565, 870 P.2d 960 (1994), in which the Supreme Court held that ERISA preempted a trust fund's collection of a subcontractor's unpaid benefit contributions from the general contractor's bond and retained percentage because the public works lien statutes expanded liability to ensure the funding of ERISA plans. We reverse.

FACTS

The Woodland Park Zoo constructed an Asian rain forest Because the Zoo is an agency of the City of Seattle, the contractors were subject to Washington's prevailing wages on public works statute, RCW chapter 39.12. The prevailing wage for ironworkers was $27.42 per hour, calculated based on wages of $18.46 per hour and benefits of $8.96 per hour. Sybor agreed to pay the wages portion directly to the ironworkers and pay the benefits portion to a variety of ERISA trust funds on the workers' behalf.

exhibit in 1993. It retained Engineers-Contractors, Inc. (ECI) as the general contractor. Continental Insurance Company issued ECI a surety bond under Washington's public works bond statute. See RCW ch. 39.08. Sybor Erectors Steel (Sybor), a subcontractor, employed members of Ironworkers Local 86 on the project.

Sybor paid the ironworkers' wages, but failed to make payments to the trust funds before filing for bankruptcy. In March 1994, the trust funds and the Ironworkers District Council of the Pacific Northwest (Council) gave notice of a claim of lien against the bond and retained percentage to the Zoo, Sybor, ECI, and Continental, citing the state statutes relating to contractor's bonds and retained percentages. See RCW 39.08.030; 60.28.010. Coincidentally, the Washington Supreme Court filed a decision that same day determining that ERISA preempts an ERISA trust fund's action to collect unpaid contributions to the plan under Washington's public works lien statutes. See Merit, 123 Wash.2d 565, 870 P.2d 960. The Council later amended the lien notice, omitting all references to the trust funds and adding a reference to RCW 39.12.050, the prevailing wage statute.

The Council filed this action against the Zoo, ECI, Sybor, and Continental "to collect unpaid wages consisting of the value of unpaid fringe benefit contributions" owed to Sybor's employees in violation of the prevailing wage statute. The trial court granted ECI and Continental's motion

for summary judgment on the grounds that ERISA preempted the claims.

DISCUSSION

Standard of Review

Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c). The appellate court reviews the summary judgment order de novo, considering the evidence in the light most favorable to the non-moving party. Kruse v. Hemp, 121 Wash.2d 715, 722, 853 P.2d 1373 (1993).

ERISA Preemption

ERISA is a comprehensive federal statute that regulates employee pension and welfare plans. Cutler v. Phillips Petroleum, 124 Wash.2d 749, 756, 881 P.2d 216 (1994). Congress enacted ERISA to protect employee benefit plan participants and their beneficiaries. Boggs v. Boggs, --- U.S. ----, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997). The statute imposes participation, funding, and vesting requirements for pension plans and sets uniform standards regarding reporting, disclosure, and fiduciary responsibility. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137, 111 S.Ct. 478, 481-82, 112 L.Ed.2d 474 (1990). It also provides exclusive remedies for an employer's failure to make fund contributions. Pilot Life Ins. v. Dedeaux, 481 U.S. 41, 54, 107 S.Ct. 1549, 1556-57, 95 L.Ed.2d 39 (1987).

To guarantee uniformity in the enforcement of employee benefit plans by avoiding a multiplicity of regulation, ERISA contains a broad preemption provision. Pilot Life, 481 U.S. at 46, 107 S.Ct. at 1552. It provides that ERISA supersedes state laws that "relate to" employee benefit plans. 29 U.S.C. 1144(a).

Until recently, the leading case interpreting the preemption provision was Shaw v. Delta Air Lines, 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). Shaw held that '[a] law 'relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan." Id. at 96-97, 103 S.Ct. at 2900. Under this broad definition, a law may "relate to" a benefit plan even if it is not specifically designed to affect such plans or if it affects the plan only indirectly. Pilot Life, 481 U.S. at 47, 107 S.Ct. at 1552-53. A law may be preempted even if it is consistent with ERISA's requirements. Metropolitan Life Ins. v. Massachusetts, 471 U.S. 724, 739, 105 S.Ct. 2380, 2388-89, 85 L.Ed.2d 728 (1985). Shaw recognized, however, that "[s]ome state actions may affect employee benefit plans in too tenuous, remote, or peripheral a manner to warrant a finding that the law 'relates to' the plan." 463 U.S. at 100 n. 21, 103 S.Ct. at 2901 n. 21.

In the U.S. Supreme Court's earlier ERISA preemption cases, the court did not need to rely on the expansive character of ERISA's literal language to find preemption because the laws in those cases had a clear "connection with or reference to" ERISA plans. De Buono v. NYSA-ILA Medical & Clinical Services Fund, --- U.S. ----, ----, 117 S.Ct. 1747, 1751, 138 L.Ed.2d 21 (1997). The Supreme Court confronted the more difficult question of whether Congress intended ERISA's "relates to" language to modify the usual presumption that Congress does not intend to supplant state law in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins., 514 U.S. 645, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). The court determined that it did not, acknowledging that its prior cases construing the language were not particularly helpful in determining when ERISA preemption applied. Id. at 655, 115 S.Ct. at 1676-77. The court concluded that courts "must go beyond the unhelpful text and the frustrating difficulty of defining its key term, and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive." Id. at 656, 115 S.Ct. at 1677. The Supreme Court has since reaffirmed this approach, recognizing that Travelers changed the requisite ERISA preemption analysis, in California Division of Labor Standards Enforcement v. Dillingham Construction, --- U.S. ----, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997), and De Buono, --- U.S ---, 117 S.Ct. 1747, 138 L.Ed.2d 21.

Prevailing Wages on Public Works Statute

We first consider whether ERISA preempts Washington's prevailing wages on public works statute, the law that the Council seeks to enforce. The statute requires that workers on public work projects receive compensation at or above the prevailing rate of wage. RCW 39.12.020. The statute's purpose is to protect local workers from contractors' practice of recruiting cheap labor from other areas. Everett Concrete v. Department of Labor and Indus., 109 Wash.2d 819, 824, 748 P.2d 1112 (1988). The Department of Labor and Industries's industrial statistician establishes the prevailing rate of wage, which is the "rate of hourly wage, usual benefits, and overtime paid in the locality ... to the majority of workers ... in the same trade or occupation." RCW 39.12.015; 39.12.010.

The respondents contend that the Ninth Circuit has already determined that ERISA preempts Washington's prevailing wage statute in Local Union 598, Plumbers & Pipefitters Industry Journeymen & Apprentices Training Fund v. J.A. Jones Construction, 846 F.2d 1213 (9th Cir.1988), aff'd, 488 U.S. 881, 109 S.Ct. 210, 102 L.Ed.2d 202 (1988). In J.A. Jones, an employee welfare benefit plan brought an action against several contractors for failure to make contributions due an ERISA fund under Washington's prevailing wage statute. The contractors moved to dismiss the action, contending that, to the extent the prevailing wage law applies to employee benefit plans, it is preempted by ERISA. "For purposes of the well-pleaded complaint rule applicable to ...