Southern Cal. Ch. of Associated Builders etc. Com. v. California Apprenticeship Council

• Decision Date: 24 December 1992
• Docket Number: No. S024685,S024685
• Citation: 4 Cal.4th 422,841 P.2d 1011,14 Cal.Rptr.2d 491
• Parties: , 841 P.2d 1011, 61 USLW 2401, 16 Employee Benefits Cas. 1171 SOUTHERN CALIFORNIA CHAPTER OF ASSOCIATED BUILDERS AND CONTRACTORS, INC., JOINT APPRENTICESHIP COMMITTEE, Plaintiff and Respondent, v. CALIFORNIA APPRENTICESHIP COUNCIL, Defendant and Appellant; Department of Industrial Relations, Division of Apprenticeship Standards, Defendant and Respondent; RIVERSIDE AND SAN BERNARDINO ELECTRICAL JOINT APPRENTICESHIP AND TRAINING COMMITTEES, Real Party in Interest and Appellant.
• Court: California Supreme Court

Page 491

14 Cal.Rptr.2d 491

4 Cal.4th 422, 841 P.2d 1011, 61 USLW 2401,

16 Employee Benefits Cas. 1171

SOUTHERN CALIFORNIA CHAPTER OF ASSOCIATED BUILDERS AND CONTRACTORS, INC., JOINT APPRENTICESHIP COMMITTEE, Plaintiff and Respondent, v. CALIFORNIA APPRENTICESHIP COUNCIL, Defendant and Appellant Department of Industrial Relations, Division of Apprenticeship Standards, Defendant and Respondent RIVERSIDE AND SAN BERNARDINO ELECTRICAL JOINT APPRENTICESHIP AND TRAINING COMMITTEES, Real Party in Interest and Appellant.

No. S024685.

Supreme Court of California In Bank.

Dec. 24, 1992.

John K. Van de Kamp and Daniel E. Lungren, Attys. Gen., Edmond B. Mamer, Jack T. Kerry and Jack Newman, Deputy Attys. Gen., for defendant and appellant.

Stanton, Kay & Watson, Lawrence H. Kay, William L. Porter, Kirk M. Prindle, Altshuler, Berzon, Nussbaum, Berzon & Rubin, Peter D. Nussbaum, Daniel T. Purtell, Carr, McClellan, Ingersoll, Thompson & Horn, Paul V. Simpson, San Francisco, Schmeltzer, Aptaker & Shepard, Gary L. Lieber, Scott Robins, Henry A. Platt, Washington, D.C., Littler, Mendelson, Fastiff & Tichy, Arthur Mendelson, James P. Baker and Sue Means, San Francisco, as amici curiae on behalf of, defendant and appellant.

Hill, Farrer & Burrill and Ronald W. Novotny, Los Angeles, for real party in interest and appellant.

Thierman, Cook, Brown & Prager, Mark R. Thierman, John W. Prager, Jr., Margaret Wilson and George P. Parisotto, San Francisco, for plaintiff and respondent.

John M. Rea, Vanessa L. Holton and David Allen Kizer, San Francisco, for defendant and respondent.

PANELLI, Justice.

This case arises out of a request by the Joint Apprenticeship Committee of the Southern California Chapter of Associated Builders and Contractors, Inc. (hereafter ABC-JAC), a nonunion group of contractors, for state approval of an apprenticeship program to be operated in certain areas of the state where programs affiliated with unions, the Riverside and San Bernardino Electrical Joint Apprenticeship and Training Committees and the Orange County Electrical Joint Apprenticeship and Training Committee (hereafter existing programs), are already operating. The existing programs objected to approval of the ABC-JAC program. The request for approval was ultimately denied by the state administrative authorities on the ground that the operation of the new program would violate title 8, California Code of Regulations, section 212.2, subdivision (a) (hereafter section 212.2(a)), which prohibits the approval of new programs that adversely affect existing programs. During writ proceedings in the superior court, the question of preemption by the Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1001 et seq.) (hereafter ERISA) of certain state laws and regulations relating to the approval process for apprenticeship programs was raised.

We granted review in this case and limited the issues to be considered in order to address the question of "the effect of [ERISA] on the power of the California Apprenticeship Council and the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations to approve or disapprove apprenticeship programs." We subsequently requested briefing on the following related issue: "Assuming that the question of whether the California Apprenticeship Council and the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations retain all or some of their powers to approve or disapprove apprenticeship programs is answered in the affirmative, is [title] 8[,] California Code of Regulations, section 212.2, subdivision (a) preempted by [ERISA]?" Thus, we must consider the relationship between ERISA preemption and the federal and state laws and regulations that govern apprenticeship training programs.

We conclude that the state's general authority to approve apprenticeship programs falls within the scope of ERISA's preemption clause, but that this authority is saved from preemption by virtue of the general savings clause of that statute and the fact that it is explicitly provided for in the federal laws and regulations governing apprenticeship programs. We also conclude that section 212.2(a) falls within the scope of ERISA's preemption clause. Moreover, this subdivision, to the extent that it sets forth a requirement for approval of apprenticeship programs that is completely independent of those set forth by federal laws and regulations, does not fall within the scope of ERISA's general savings clause and, thus, cannot be relied upon by the state to deny Fitzgerald Act (29 U.S.C. § 50 et seq.) approval to the ABC-JAC program or any other apprenticeship program.

I. BACKGROUND

A. The Request for Approval and the Proceedings Below

The Southern California Chapter of the Association of Building Contractors, Inc. (hereafter ABC) is an association of nonunion contractors. The ABC decided to sponsor an apprenticeship program for the training of construction electricians. As is customary, the ABC established a joint apprenticeship training committee (hereafter JAC) to administer the program and created a trust to provide funding for the program through contributions from participating ABC employers.

In April 1988, the ABC-JAC sought state approval of its new program, which was to be operated in three counties of the state where existing, union-affiliated programs were already operating. While neither federal nor state approval is required for a sponsor to operate an apprenticeship program, strong financial incentives exist at both the state and federal levels for sponsors to obtain approval. For example, only apprentices participating in an approved apprenticeship program may be paid wages lower than the applicable journeyman wage on federal and state public works projects. (29 C.F.R. § 29.2(k) (1992); Lab.Code, § 1777.5.) As the Ninth Circuit has observed: "In order for such an apprenticeship program to work, it is essential that the employer be able to pay lesser wages to the apprentices while they are in training." (Electrical Joint Apprenticeship Com. v. MacDonald (9th Cir.1991) 949 F.2d 270, 274 [hereafter MacDonald ], cert. denied 505 U.S. 1204, 112 S.Ct. 2991, 120 L.Ed.2d 869.) In California, additional financial incentives exist in the form of direct financial subsidies for training provided by approved programs. (Lab.Code, §§ 3074, 3074.7; Ed.Code, § 8152.) Finally, an apprentice who completes an approved training program obtains a certificate of completion naming him or her a skilled journeyman in the chosen trade, and hence increases his or her marketability as well as the marketability of his or her employer contractor. (Cal.Code Regs., tit. 8, § 224.)

After reviewing the proposed standards ¹ for the ABC-JAC program, the Chief of the Division found that the proposed program met all relevant requirements and approved the ABC-JAC program.

The existing programs objected to approval of the ABC-JAC program primarily on the grounds that there was no need for the program (Lab.Code, § 3075) and that the operation of the new program would adversely affect the existing prevailing conditions in the area in violation of section 212.2(a). As provided for under California law, the existing programs appealed the decision of the Chief of the Division to the California Apprenticeship Council (hereafter Council). (See, post, at p. 497 of 14 Cal.Rptr.2d, p. 1017 of 841 P.2d.)

The Council reversed the decision on the ground that the difference in wages and fringe benefits between the ABC-JAC program and the existing programs would adversely impact the existing programs, especially with respect to their ability to compete for private projects.

In December 1988, the ABC-JAC sought a writ of mandate in the superior court to direct the Council to vacate its decision. In April 1989, the superior court granted the first petition for writ of mandate, ruling that the Council did not have before it substantial evidence of any threat to the existing programs posed by competition from the ABC-JAC program. The superior court also rejected the argument that sections 208, 212, and 212.2 of Title 8 of the California Code of Regulations, which set forth requirements for program approval and for compensation of apprentices, were preempted under ERISA, finding that to rule otherwise would impair the enforcement of the federal apprenticeship laws and regulations.

The Council conducted further proceedings in light of the superior court's writ. In July 1989, without taking any further evidence, the Council ruled again--this time upholding the decision approving the ABC-JAC program.

The existing programs then sought a writ of mandate from the superior court, contending the Council had misinterpreted the court's instructions. In October 1989, the superior court agreed with the existing programs and remanded the matter yet again to the Council, directing it to prepare a written report stating the basis for its most recent decision in favor of the ABC-JAC program.

In January 1990, the Council issued a written decision, in which it returned to its original position and reversed the decision approving the ABC-JAC program.

In February 1990, the ABC-JAC sought a third writ of mandate from the superior court. In March 1990, the superior court granted the petition for the third writ of mandate, reversing the Council yet again.

The existing programs and the Council timely appealed. The Court of Appeal affirmed the decision of the superior court and ruled in the alternative in pertinent part that: 1) the Council's decision, reversing approval of the ABC-JAC program on the basis of section 212.2(a), was preempted by ERISA and 2) the decision was not supported by substantial evidence. In deciding the ERISA issue, the Court of Appeal wrote: "We cannot reconcile the Council's position, that it retains the power under state law to prevent employee benefit plans from providing benefits...