Wright Electric v. Minnesota State Bd., Electric.

• Decision Date: 20 March 2003
• Docket Number: No. 02-2079.,02-2079.
• Citation: 322 F.3d 1025
• Parties: WRIGHT ELECTRIC, INC., a Minnesota corporation; William G. Vice, an individual; Billy Joe Porter, Appellants, v. MINNESOTA STATE BOARD OF ELECTRICITY; John Schultz, Executive Secretary of the Minnesota State Board of Electricity; City of W. St. Paul, Minnesota; Richard Bradley, Electrical Inspector of the City of West St. Paul, Minnesota, Appellees. International Brotherhood of Electrical Workers, AFL-CIO, Amicus of Behalf of Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

322 F.3d 1025

WRIGHT ELECTRIC, INC., a Minnesota corporation; William G. Vice, an individual; Billy Joe Porter, Appellants, v. MINNESOTA STATE BOARD OF ELECTRICITY; John Schultz, Executive Secretary of the Minnesota State Board of Electricity; City of W. St. Paul, Minnesota; Richard Bradley, Electrical Inspector of the City of West St. Paul, Minnesota, Appellees.

International Brotherhood of Electrical Workers, AFL-CIO, Amicus of Behalf of Appellees.

No. 02-2079.

United States Court of Appeals, Eighth Circuit.

Submitted: December 9, 2002.

Filed: March 20, 2003.

Rehearing and Rehearing En Banc Denied: April 23, 2003.^*

Counsel who presented argument on behalf of the appellant was Gregg J. Cavanagh, Maple Grove, MN.

Counsel who presented argument on behalf of the appellee was Michele M. Owen, St. Paul, MN.

Before McMILLIAN, FAGG and BYE, Circuit Judges.

McMILLIAN, Circuit Judge.

Wright Electric, Inc., and two of its employees, William G. Vice and Billy Joe Porter (collectively Wright Electric), appeal from a final judgment entered in the District Court¹ for the District of Minnesota in favor of the Minnesota State Board of Electricity (board), John Schultz, the executive secretary of the board, City of West St. Paul (city), and Richard Bradley, electrical inspector of the city (collectively the state). The district court rejected Wright Electric's request for declaratory and injunctive relief to bar enforcement of a state statute and rule, holding that they were not preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. We affirm.

BACKGROUND

Wright Electric is a licensed Minnesota electrical contractor that performs residential, commercial and industrial electrical work, using both licensed electricians and unlicensed workers. The board is the licensing authority that administers and enforces the Minnesota Electrical Act, Minn. Stat. § 326.01 et seq. The Act prohibits an unlicensed person from performing electrical work at job sites unless he or she is supervised by a licensed electrician. Id. § 326.242, subd. 5(a). The portion of the statute and rule at issue here, Minn.Stat. § 326.242, subd. 5(a) and Minn. R. 3800.3500(11A) (collectively the statute or the supervision ratio requirement), provide that a licensed electrician shall not supervise more than two unlicensed persons at a job site.

Since 1989 Wright Electric has had an apprenticeship training program. The program consists of classroom instruction and on-the-job training. The classroom instruction is provided by the Construction Education Foundation (foundation), an educational trust, and the Minnesota Chapter of Associated Builders and Contractors (ABC), a trade association representing construction contractors. ABC promotional materials noted that if companies joined the foundation and paid for employee apprenticeship classroom training through a foundation trust account, they may be able to establish an ERISA plan and thereby be "exempt from [supervision] ratios imposed by state and/or local governments." In 1998, Wright Electric joined the foundation and made quarterly contributions to its trust account. Although Wright Electric made quarterly contributions to its dedicated foundation account, it often ran the account at a deficit. When there was a deficit, the foundation billed Wright Electric for the shortfall and Wright Electric then made a lump sum payment out of its general assets.

The on-the-job training consisted of licensed electricians training and supervising unlicensed apprentices. In March 2000, Wright Electric was performing electrical work at a job site in the city. On March 8, 2000, Bradley cited Vice and Porter, who are licensed electricians, for violating the statute because they were supervising more than two unlicensed apprentices at the job site.

In June 2000, Wright Electric filed an action in the district court seeking declaratory and injunctive relief to bar enforcement of the statute on the ground that it was unenforceable because it was preempted by ERISA. In addition to alleging that the action was based on ERISA, Wright Electric alleged that the action was based on the Supremacy Clause, Article VI, Clause 2, of the United States Constitution. The district court granted the state's motion for summary judgment. The district court first held that it lacked subject matter jurisdiction because Wright Electric's apprenticeship training program was not an ERISA plan. The district court reasoned that the apprenticeship program did not qualify as an ERISA plan because, among other things, Wright Electric partially funded the program by lump sum payments from its general assets. See Massachusetts v. Morash, 490 U.S. 107, 115, 109 S.Ct. 1668, 104 L.Ed.2d 98 (1989).

Although the district court believed that it did not have subject matter jurisdiction, it nonetheless considered the preemption issue. The district court concluded that ERISA did not preempt the statute, relying, in part, on Willmar v. Elec. Serv., Inc. v. Cooke, 212 F.3d 533 (10th Cir.) (Willmar), cert. denied, 531 U.S. 979, 121 S.Ct. 428, 148 L.Ed.2d 436 (2000), in which the Tenth Circuit held that ERISA did not preempt a state law prohibiting a licensed electrician from supervising more than one unlicensed person. This appeal follows.

DISCUSSION

Subject Matter Jurisdiction

Initially, we must resolve whether the district court had subject matter jurisdiction, an issue we decide de novo. An ERISA plan participant, beneficiary, or fiduciary may bring a civil action under 29 U.S.C. § 1132(a)(3) to recover benefits or enforce rights under an employee benefit plan or to enforce ERISA. Wright Electric argues that the district court erred in requiring it to show that its apprenticeship program was an ERISA plan in order to establish subject matter jurisdiction. In Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d 254, 256 (8th Cir.1994) (Kulinski), this court held that "[w]here federal subject matter jurisdiction is based on ERISA, but the evidence fails to establish the existence of an ERISA plan, the claim must be dismissed for lack of subject matter jurisdiction." Wright Electric argues that Kulinski is not controlling. We agree. In Kulinski, the plaintiff, who was seeking severance benefits under an alleged ERISA plan, "base[d] his claim solely on ERISA and [j]urisdiction likewise [wa]s asserted only on the basis of ERISA." Id. at 258.

In contrast here, Wright Electric is not seeking enforcement of ERISA or plan terms. Rather, it is seeking to bar enforcement of a state statute. In its complaint, the company asserted that the district court had subject matter jurisdiction under 28 U.S.C. § 1331 because it was seeking declaratory and injunctive relief against state officials from enforcing a state statute on the ground that it was preempted by federal law, in violation of the Supremacy Clause of the United States Constitution. "It is beyond dispute that federal courts have jurisdiction over suits to enjoin state officials from interfering with federal rights." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n. 14, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983) (Shaw). In Shaw, the Supreme Court explained that "[a] plaintiff who seeks injunctive relief from state regulation, on the ground that such regulation is preempted by a federal statute which, by virtue of the Supremacy Clause, must prevail, thus presents a federal question which the federal courts have jurisdiction under 28 U.S.C. § 1331 to resolve." Id. Indeed, the Court noted that it "frequently ha[d] resolved preemption disputes in a similar jurisdictional posture." Id. (citing e.g., Ray v. Atlantic Richfield Co., 435 U.S. 151, 98 S.Ct. 988, 55 L.Ed.2d 179 (1978); Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 51 L.Ed.2d 604 (1977)).

In other words, a "`claim under the Supremacy Clause that a federal law preempts a state regulation is distinct from a claim for enforcement of that federal law.'" Burgio & Campofelice, Inc. v. New York State Dep't of Labor, 107 F.3d 1000, 1007 (2d Cir.1997) (Burgio) ( quoting Western Air Lines, Inc. v. Port Auth., 817 F.2d 222, 225 (2d Cir.1987)). "The coincidence that the federal law in question in this case contains its own preemption language, 29 U.S.C. § 1144, does not affect this distinction." Id.See also Associated Builders & Contractors Saginaw Valley Area Chapter v. Perry, 115 F.3d 386, 388-89 (6th Cir.1997) (holding that even though plaintiff was not an ERISA entity, court had subject matter jurisdiction to consider ERISA preemption issue because plaintiff was seeking "injunctive and declaratory relief from state regulation based on federal question jurisdiction"). Moreover, because its employees have been cited under the statute and the state represents it consistently enforces the statute, Wright Electric has standing to challenge enforcement of the state statute and rule. See Burgio, 107 F.3d at 1005.

Preemption

We now turn to the preemption issue. ERISA preempts "any and all State laws insofar as they may now or hereafter relate to an [ERISA covered] employee benefit plan." 29 U.S.C. § 1144(a). Wright Electric argues that the district court erred in holding that ERISA did not preempt the statute, relying on Boise Cascade Corp. v. Peterson, 939 F.2d 632 (8th Cir.1991) (Boise Cascade), cert. denied, 505 U.S. 1213, 112 S.Ct. 3014, 120 L.Ed.2d 887 (1992). In Boise Cascade, this court held that a state law regulating the supervision ratio of licensed pipefitters to unlicensed persons was preempted by ERISA. The state argues that the preemption analysis of Boise Cascade is no longer controlling in light of intervening Supreme Court cases, beginning with New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) (Travelers).

We agree with the state. See Southern California IBEW-NECA Trust Funds v. Standard Indus. Elect. Co. 247 F.3d...