Merit Construction Alliance v. City of Quincy , 759 F.3d 122 ( 2014 )

United States Court of Appeals
For the First Circuit
No. 13-2189
MERIT CONSTRUCTION ALLIANCE ET AL.,
Plaintiffs, Appellees,
v.
CITY OF QUINCY,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Thompson and Selya, Circuit Judges,
and McConnell,* District Judge.
James S. Timmins, City Solicitor, for appellant.
Christopher N. Souris and Krakow & Souris, LLC on brief for
New England Regional Council of Carpenters, amicus curiae.
Christopher C. Whitney, with whom Scott K. Pomeroy and Pierce
Atwood LLP were on brief, for appellees.
Maurice Baskin and Littler Mendelson, P.C. on brief for
Associated Builders and Contractors, Inc., amicus curiae.
July 16, 2014
*
Of the District of Rhode Island, sitting by designation.
SELYA, Circuit Judge. This case presents not one, but
two, questions of considerable import, each of which implicates the
Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.
§§ 1001-1461. The first concerns whether the reach of ERISA's
preemption provision, 29 U.S.C. § 1144(a), extends to a municipal
ordinance mandating the establishment of a specific type of
apprentice training program. The second concerns the scope of
ERISA's fee-shifting provision, 29 U.S.C. § 1132(g)(1). After
careful consideration, we conclude that the district court answered
the first question correctly, but not the second. Accordingly, we
affirm in part, reverse in part, and remand for reconsideration of
the fee award.
I. BACKGROUND
In 2012, defendant-appellant City of Quincy (the City)
solicited bids for a construction project at a middle school.
Would-be bidders were required to certify compliance with the
City's euphemistically named Responsible Employer Ordinance (the
Ordinance). Pertinently, the Ordinance demands that bidders on
municipal public works projects "engage[] in a bona fide apprentice
training program" registered with the Massachusetts Department of
Labor Standards. Quincy, Mass., Code § 15.26.010(C); see Mass.
Gen. Laws ch. 23, §§ 11H, 11I (providing relevant definitions).
The Ordinance further mandates that at least one apprentice have
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graduated from the program in the twelve months immediately
preceding the bid. See Quincy, Mass., Code § 15.26.010(C).
This bidding condition brought with it a legal cloud; a
federal district court had ruled that ERISA preempted a similar
ordinance passed in Fall River, Massachusetts. See Util. Contrs.
Ass'n of New Eng., Inc. v. City of Fall River, No. 10-10994, 2011
WL 4710875, at *7 (D. Mass. Oct. 4, 2011). Merit Construction
Alliance (the Alliance), a trade association of construction
companies, asked whether the City would continue to enforce its
apprentice training requirement. When the City responded
affirmatively,1 the Alliance, joined by two of its members
(Grasseschi Plumbing & Heating, Inc. and D'Agostino Associates,
Inc.), and a Grasseschi employee (David Ross), sued the City in the
federal district court. Among other things, the complaint sought
injunctive and declaratory relief on the ground that ERISA
preempted the Ordinance's apprentice training requirement.2
1
The City's affirmative response indicated that it would
suspend enforcement of the graduation requirement in connection
with this bid solicitation. Because of the limited nature of the
suspension, we think that it is appropriate to include the
graduation requirement in the overall preemption calculus.
2
The plaintiffs initially challenged several other provisions
of the Ordinance. The City agreed not to enforce some of these
provisions, and the litigation narrowed to focus on two provisions:
the Ordinance's residency requirement and its apprentice training
requirement. Eventually, the City conceded the former issue and,
thus, this appeal concerns only the latter.
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The district court granted a preliminary injunction
barring enforcement of the apprentice training requirement, based
largely on its earlier decision in the Fall River case. See Merit
Constr. All. v. City of Quincy (Merit I), No. 12-10458, 2012 WL
1357656, at *2, *4 (D. Mass. Apr. 18, 2012). Summary judgment in
favor of the plaintiffs followed apace. See Merit Constr. All. v.
City of Quincy (Merit II), No. 12-10458, 2013 WL 396123, at *3 (D.
Mass. Feb. 1, 2013).
To the victor belong the spoils, and the next stage of
the battle involved attorneys' fees. The district court granted
the plaintiffs' motion for fees and awarded them the amount of
$81,007.85. See Merit Constr. All. v. City of Quincy (Merit III),
No. 12-10458, 2013 WL 3984596, at *3 (D. Mass. Aug. 2, 2013). The
City unsuccessfully sought reconsideration of the fees order. See
Merit Constr. All. v. City of Quincy (Merit IV), No. 12-10458, 2013
WL 4446935, at *3 (D. Mass. Aug. 21, 2013). This timely appeal
followed.
II. ANALYSIS
In this venue, the City for the first time questions the
plaintiffs' standing to sue. Because this challenge implicates
subject matter jurisdiction, we are obligated to address it despite
its lateness. See Am. Fiber & Finishing, Inc. v. Tyco Healthcare
Grp., LP, 362 F.3d 136, 138-39 (1st Cir. 2004) ("[I]t is firmly
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settled that challenges to federal subject matter jurisdiction may
be raised for the first time on appeal.").
The Constitution limits federal-court jurisdiction to
actual cases and controversies. See U.S. Const. art. III, § 2. In
line with this limitation, a litigant seeking to enlist federal
court jurisdiction must demonstrate his standing to bring suit: he
must have "such a personal stake in the outcome of the controversy
as to assure that concrete adverseness which sharpens the
presentation of issues." Baker v. Carr, 369 U.S. 186, 204 (1962).
When an unincorporated association seeks to open the
doors of a federal court, it must demonstrate that "(a) its members
would otherwise have standing to sue in their own right; (b) the
interests it seeks to protect are germane to the organization's
purpose; and (c) neither the claim asserted nor the relief
requested requires the participation of individual members in the
lawsuit." Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333,
343 (1977). For an individual to have standing, he must establish
injury in fact, causation, and redressability. See Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
The first element of this triad inquires into the
existence of "an invasion of a legally protected interest which is
(a) concrete and particularized and (b) actual or imminent, not
conjectural or hypothetical." Id. at 560 (internal quotation marks
and citations omitted). The second element asks whether the
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alleged injury is "fairly traceable to the challenged action of the
defendant." Id. (internal quotation mark and alterations omitted).
The third element asks whether it is "likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
decision." Id. at 561 (internal quotation marks omitted).
The Alliance's members pass this tripartite test with
flying colors. Among their ranks are contractors that neither
maintain apprentice training programs nor satisfy the Ordinance's
graduation quota. Those members suffer injury because they want to
bid on public works projects in Quincy but are constrained from
doing so by the strictures of the Ordinance. If the plaintiffs
prevail, the Ordinance will be declared null and void, thus
removing the injury-causing obstruction to their bidding
eligibility.
Similarly, the Alliance meets the criteria for
associational standing. At least some of its members have
individual standing, and preserving its members' bidding
capabilities closely relates to its raison d'être. To cinch
matters, nothing about an ERISA preemption challenge calls for
enlisting the participation of individual Alliance members. See
Retail Indus. Leaders Ass'n v. Fielder, 475 F.3d 180, 187 (4th Cir.
2007).
The City, in effect, attempts to confess and avoid. It
disputes none of the conclusions recounted above but, rather, tries
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to graft a requirement of an ERISA-covered apprentice training
program onto the test for constitutional standing. This is pie in
the sky: the City offers no authority for the proposition that the
Constitution imposes any such requirement.
Of course, ERISA's statutory enforcement provision
contemplates the existence of an ERISA plan. See 29 U.S.C.
§ 1132(a)(3). But the question of standing that the City raises
here is constitutional in nature, and we see no reason that such a
condition is necessary to render this action an actual case or
controversy within the meaning of Article III. See Wright
Electric, Inc. v. Minn. State Bd. of Elec., 322 F.3d 1025, 1028-29
(8th Cir. 2003) (holding that plaintiff need not "show that its
apprenticeship program was an ERISA plan in order to establish
subject matter jurisdiction"). We therefore hold that the Alliance
has standing to challenge the Ordinance on the ground of ERISA
preemption.
Having determined that an actual case and controversy
exists, we proceed to chew on the meat of the appeal: preemption
and attorneys' fees. We address these subjects sequentially.
A. Preemption.
The City assigns error to the district court's ruling
that ERISA preempts the Ordinance's apprentice training
requirement. Since this ruling was made on summary judgment, our
review is plenary. See Geshke v. Crocs, Inc., 740 F.3d 74, 76 (1st
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Cir. 2014); see also Carpenters Local Union No. 26 v. U.S. Fid. &
Guar. Co., 215 F.3d 136, 139 (1st Cir. 2000).
"ERISA is a comprehensive statute designed to promote the
interests of employees and their beneficiaries in employee benefit
plans." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983).
Enacted in part "to safeguard employees from the abuse and
mismanagement of funds that had been accumulated to finance various
types of employee benefits," the statutory scheme "sets forth
reporting and disclosure obligations for plans, imposes a fiduciary
standard of care for plan administrators, and establishes schedules
for the vesting and accrual of pension benefits." Massachusetts v.
Morash, 490 U.S. 107, 112-13 (1989).
When considering a claim of preemption, "our task is to
ascertain Congress' intent in enacting the federal statute at
issue." Shaw, 463 U.S. at 95. With respect to ERISA, this intent
is express, if somewhat "opaque." De Buono v. NYSA-ILA Med. &
Clinical Servs. Fund, 520 U.S. 806, 809 (1997). By its terms and
subject to exemptions not relevant here, ERISA "supersede[s] any
and all State laws insofar as they may now or hereafter relate to
any employee benefit plan." 29 U.S.C. § 1144(a).
The Supreme Court has distilled the statute's "relate to"
language into two independently sufficient alternatives: "a
connection with or reference to" an ERISA plan will result in
preemption. Shaw, 463 U.S. at 97. Under this two-sided rubric,
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ERISA's preemptive reach "is clearly expansive." N.Y. State Conf.
of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S.
645, 655 (1995). But the Court has nevertheless cautioned against
"an uncritical literalism" in applying this test, warning that
"infinite connections" cannot supply the measure of preemption.
Id. at 656. Thus, we must consider "the objectives of the ERISA
statute as a guide to the scope of the state law that Congress
understood would survive." Id. In the process, we must remain
mindful that ERISA was not intended to supersede the state's
historic police powers unless such supersession "was the clear and
manifest purpose of Congress." Id. at 655 (internal quotation mark
omitted).
The battle here, as waged by the parties, focuses on the
"connection with" component of the two-sided ERISA preemption
calculus. The district court concluded that the Ordinance's
requirement that "every bidder . . . have an apprenticeship program
meeting Massachusetts standards" supplied the requisite connection.
Merit II, 2013 WL 396123, at *2. We share this view.
To begin, it is important to note that programs
"established or . . . maintained for the purpose of providing
. . . apprenticeship or other training" qualify as ERISA employee
welfare benefit plans. 29 U.S.C. § 1002(1). Thus, ERISA will
preempt the Ordinance's operation if and to the extent that the
Ordinance bears a sufficient connection to such programs.
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Of course, not every conceivable connection will support
preemption. For example, state laws that merely exert an "indirect
economic influence" on a plan do "not bind plan administrators to
any particular choice" and, thus, do not come within ERISA's
preemptive reach. Cal. Div. of Labor Standards Enforcement v.
Dillingham Constr., Inc., 519 U.S. 316, 329 (1997) (internal
quotation marks omitted). On the other hand, "state statutes that
'mandate[] employee benefit structures or their administration'
. . . amount[] to 'connection[s] with' ERISA plans" and are
therefore preempted. Id. at 328 (final alteration in original)
(quoting Travelers, 514 U.S. at 658).
The path from influence to coercion amounts to a
continuum and it is not always a simple task to determine where
along this continuum a particular state law falls. See Travelers,
514 U.S. at 668; see also Samuel C. Salganik, Note, What the
Unconstitutional Conditions Doctrine Can Teach Us About ERISA
Preemption: Is It Possible To Consistently Identify "Coercive" Pay-
or-Play Schemes?, 109 Colum. L. Rev. 1482, 1515-19 (2009). This
case, however, does not greatly tax our capacity for discernment:
the Ordinance categorically requires all contractors on Quincy
public works projects to operate a Massachusetts-approved
apprentice training program. See Quincy, Mass., Code
§ 15.26.010(C). Incorporating the state's standards imposes a raft
of stringent conditions on would-be bidders including, among
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others, documentation of the program's terms and conditions, see
453 Mass. Code Regs. 7.03(8)(b); the location of the program's
apprentice activities, see id. 7.03(8)(e); training and
instruction, see id. 7.04(1)(b)(1)-(4); wage rates, see id.
7.04(1)(b)(5); recordkeeping, see id. 7.04(1)(b)(23), 7.13;
instructor qualifications, see id. 7.04(2); apprentice enrollment,
see id. 7.07(1); reporting, see id. 7.07(2); and termination, see
id. 7.08(3). For good measure (or bad measure depending on one's
point of view), the Ordinance separately requires a defined
graduation rate. See Quincy, Mass., Code § 15.26.010(C).
With such a compendium of stipulations in place, we have
no difficulty concluding that the Ordinance goes far beyond simply
influencing ERISA apprentice training programs. It mandates an
employee benefit structure and specifies how that structure must be
administered. This is simply too intrusive to withstand ERISA
preemption.
The City balks. It asserts that even if its Ordinance
constitutes a mandate, that should not be the end of the matter.
In support, it suggests that "[t]he key distinction is between a
statute that mandates or effectively mandates an aspect of law with
which ERISA is concerned . . . and a statute that does not."
Assoc'd Builders & Contrs. v. Mich. Dep't of Labor & Econ. Growth,
543 F.3d 275, 280 (6th Cir. 2008). ERISA is a statute concerned
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with funding, its thesis runs, and local regulation of apprentice
training standards is too remote to warrant ERISA preemption.
This assertion is true as far as it goes, but it does not
take the City very far. ERISA "has more than one purpose." Simas
v. Quaker Fabric Corp., 6 F.3d 849, 856 (1st Cir. 1993). In
addition to funding concerns, "[t]he uniformity of regulation
gained by employers under ERISA was assuredly part of the
legislative balancing of interests and trade-offs." Id.The Ordinance plainly disturbs that balance. Let us
offer an example. Although the Ordinance requires the graduation
of at least one apprentice within the previous twelve months, see
Quincy, Mass., Code § 15.26.010(C), Fall River's counterpart
ordinance required the graduation of at least two apprentices per
year for the three years prior to a bid, see Util. Contrs. Ass'n,
2011 WL 4710875, at *7. Accordingly, compliance with the City's
formula would not effect compliance with Fall River's; and so the
Ordinance would "requir[e] the tailoring of plans and employer
conduct to the peculiarities of the law of each jurisdiction."
Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142 (1990). Such a
result would be "fundamentally at odds with the goal of uniformity
that Congress sought to implement" through the enactment of ERISA.
Id.There is yet another reason why the City's argument does
not work. The Dillingham Court, while finding no preemption there,
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was careful to distinguish situations in which an "apprenticeship
program is required by [state] law to meet [the state's]
standards." 519 U.S. at 332. The Ordinance trips this snare: it
not only mandates the standards that apprentice training programs
must follow but also mandates that employers actually have such
programs in place as a condition of bidding. This dual mandate
goes too far: not even "discharging all of its apprentices will
release an employer or a program from the reach" of the Ordinance.
Assoc'd Builders, 543 F.3d at 282. Because the Ordinance
unqualifiedly demands the maintenance of a specific type of
apprentice training program as a condition of bidding, it exceeds
the boundaries of what ERISA allows. See Minn. Chapter of Assoc'd
Builders & Contrs., Inc. v. Minn. Dep't of Pub. Safety, 267 F.3d
807, 818 (8th Cir. 2001).
In an effort to change the trajectory of the debate, the
City seeks to wrap itself in the mantle of the Court's statement
that "an employee benefit program not funded through a separate
fund is not an ERISA plan." Dillingham, 519 U.S. at 326 (emphasis
in original). Such a plan can be used to comply with the Ordinance
and, in the City's view, the availability of this non-ERISA avenue
to compliance ought to pretermit a finding that the Ordinance
relates to ERISA plans.
This is anfractuous reasoning. "[W]hether a State
requires an existing plan to pay certain benefits, or whether it
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requires the establishment of a separate plan where none existed
before, the problem is the same." Fort Halifax Packing Co. v.
Coyne, 482 U.S. 1, 13 (1987). A plan administrator put to such a
choice is still "[f]aced with the difficulty or impossibility of
structuring administrative practices according to a set of uniform
guidelines." Id.The lesson of Fort Halifax is pertinent here. To comply
with the Ordinance, an employer with an ERISA-governed apprentice
training program either would have to modify that program to
provide apprentices on Quincy-based projects with special benefits
or would have to establish and coordinate a separate plan into
which such apprentices would be funneled. Either way, the
employer's hope of uniform administration would be dashed by the
Ordinance's demands. Such balkanization of benefit administration
is exactly the sort of outcome ERISA was designed to prevent. The
upshot is to defenestrate the City's insistence that we attach
decretory significance to an employer's ability to comply with the
Ordinance by means of a non-ERISA plan. See Minn. Chapter of
Assoc'd Builders, 267 F.3d at 817; cf. Egelhoff v. Egelhoff ex rel.
Breiner, 532 U.S. 141, 150-51 (2001) (holding that an ability to
opt out of a state law does not save the law from preemption).
The decision in Golden Gate Restaurant Ass'n v. City &
County of San Francisco, 546 F.3d 639 (9th Cir. 2008), loudly
bruited by the City, is not to the contrary. There, the Ninth
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Circuit held that requiring a certain level of health-care
expenditures — which might, but need not, be spent through an ERISA
plan — did not trigger ERISA preemption. See id. at 646, 661. But
the court did not purpose to lay down a blanket rule that whenever
compliance can come through a non-ERISA option, ERISA preemption is
unavailable. Instead, the court recognized that state laws that
"required employers to have [benefit] plans, and . . . dictated the
specific benefits employers were to provide through those plans"
would be preempted. Id. at 655.
The City next contends that the Fitzgerald Act, 29 U.S.C.
§ 50, somehow aids its cause. That contention is fruitless. While
the Fitzgerald Act "recognized pre-existing state efforts in
regulating apprenticeship programs," Dillingham, 519 U.S. at 330,
nothing in that statute indicates a congressional intention to
sanction local efforts to mandate state-approved apprentice
training programs.
Looking for comfort in any quarter, the City proposes an
analogy to the Supreme Court's statement that a state "may force
the employer to choose between providing disability benefits in a
separately administered plan and including the state-mandated
benefits in its ERISA plan." Shaw, 463 U.S. at 108. That
pronouncement has no traction here: it is anchored in a statutory
exemption from ERISA for plans "maintained solely for the purpose
of complying with . . . disability insurance laws." 29 U.S.C.
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§ 1003(b)(3). No comparable exemption anchors the City's proposed
analogy.
Scraping the bottom of the barrel, the City asseverates
that in passing the Ordinance, it merely acted as a participant in
the market for construction services. This role, it says,
immunizes its actions from ERISA preemption. See Cardinal Towing
& Auto Repair, Inc. v. City of Bedford, 180 F.3d 686, 691 (5th Cir.
1999) (holding that "when a state or municipality acts as a
participant in the market and does so in a narrow and focused
manner consistent with the behavior of other market participants,
such action does not constitute regulation subject to preemption");
see also Reeves, Inc. v. Stake, 447 U.S. 429, 436 (1980) (drawing
distinction "between States as market participants and States as
market regulators" for Commerce Clause purposes).
This asseveration stalls before it starts. The City
failed to raise this issue in its summary judgment papers and,
"[i]f any principle is settled in this circuit, it is that, absent
the most extraordinary circumstances, legal theories not raised
squarely in the lower court cannot be broached for the first time
on appeal." Teamsters Union, Local No. 59 v. Superline Transp.
Co., 953 F.2d 17, 21 (1st Cir. 1992). The market participation
theory is, therefore, not properly before us.3
3
To be sure, the City protests that its market participation
theory surfaced during the preliminary injunction proceedings. But
"[t]he district court was under no obligation to rummage through
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We summarize succinctly. ERISA specifically includes
apprentice training programs in its definition of employee welfare
benefit plans. A state-law mandate regarding the structure or
administration of such plans falls within the ambit of ERISA's
preemption provision. The Ordinance comprises such a mandate
because it dictates the establishment of an employee benefit
structure and sets the standards governing that structure. Even
though a non-ERISA option might be available for compliance with
the Ordinance, the availability of such an option does not save the
Ordinance: its mandate still has the effect of destroying the
benefit of uniform administration that is among ERISA's principal
goals.
That ends this aspect of the matter. We conclude that
ERISA preempts the Ordinance and affirm the district court's grant
of summary judgment.
B. Attorneys' Fees.
This leaves the issue of attorneys' fees. After entering
summary judgment, the district court, responding to the plaintiffs'
motion, awarded the plaintiffs attorneys' fees totaling $81,007.85
under ERISA's fee-shifting provision, 29 U.S.C. § 1132(g)(1), and
[the City's] preliminary injunction filings" when contemplating
summary judgment. CMM Cable Rep, Inc. v. Ocean Coast Props., Inc.,
97 F.3d 1504, 1526 (1st Cir. 1996). The dispositive circumstance
is that the City failed, directly or indirectly, to advance a
market participation defense in response to the summary judgment
motion. See id.-17-
the Fees Act, 42 U.S.C. § 1988. The City conceded below that a
portion of this award ($20,725) corresponded to the plaintiffs'
successful efforts in striking the residency requirement from the
Ordinance and, thus, was properly awarded under 42 U.S.C. § 1988.4However, the district court did not make such a differentiation;
rather, it awarded a global amount that covered both work done in
attacking the residency requirement and work done in attacking the
apprentice training requirement. See Merit III, 2013 WL 3984596,
at *2-3. While the district court indicated that both 42 U.S.C.
§ 1988 and 29 U.S.C. § 1132(g)(1) were in play, it did not break
down the fee award along those lines. See id.ERISA's fee-shifting provision permits a district court
to "allow a reasonable attorney's fee and costs of action" for an
"action under this subchapter . . . by a participant, beneficiary,
or fiduciary." 29 U.S.C. § 1132(g)(1). The City contends that the
district court lacked authority to make any fee award under this
provision. Its objections are twofold. First, it asserts that the
plaintiffs' action was not an "action under this subchapter."
Second, it asserts that no plaintiff qualifies as a "participant,
beneficiary, or fiduciary" of an ERISA plan as that phrase is used
in the fee-shifting statute.
4
The plaintiffs have not agreed that their fees for work in
connection with the residency requirement are limited to this
amount. That issue remains open for exploration on remand. See
text infra.
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Here, too, a procedural obstacle looms. The City
advanced these objections for the first time in its motion for
reconsideration of the fee award. To succeed on such a motion,
"the movant must demonstrate either that newly discovered evidence
(not previously available) has come to light or that the rendering
court committed a manifest error of law." Calderón-Serra v.
Wilmington Trust Co., 715 F.3d 14, 20 (1st Cir. 2013) (internal
quotation mark omitted). We review the denial of such a motion for
abuse of discretion. See id.This obstacle is formidable — but it is not
insurmountable. Although a district court has substantial
discretion in evaluating a motion for reconsideration, "substantial
discretion is not unbridled discretion." Weinberger v. Great N.
Nekoosa Corp., 925 F.2d 518, 528 (1st Cir. 1991). As here, a
manifest error of law may outstrip the boundaries of even that wide
discretion. See, e.g., Max's Seafood Café ex rel. Lou-Ann, Inc. v.
Quinteros, 176 F.3d 669, 678-79 (3d Cir. 1999); Edward Gray Corp.
v. Nat'l Union Fire Ins. Co., 94 F.3d 363, 367-69 (7th Cir. 1996).
As we explain below, we think that this is the unusual case in
which the error was so manifest that the motion for reconsideration
should have been granted.
With respect to the City's first point — whether a
preemption challenge qualifies as an "action" for the purposes of
29 U.S.C. § 1132(g)(1) — the district court acknowledged that the
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question is "close." Merit IV, 2013 WL 4446935, at *2.5 This is
an accurate characterization, but we do not need to pursue the
question: regardless of whether this case qualifies as the type of
"action" necessary to engage the gears of ERISA's fee-shifting
provision, we cannot discern an appropriate "participant,
beneficiary, or fiduciary" to whom fees could lawfully be awarded.
As both the plaintiffs and the district court concede,
the only possibility is plaintiff Ross. But there is a rub: Ross
is not a participant, beneficiary, or fiduciary of any ERISA
apprentice training program.
Ross's standing as an eligible "participant" relies
instead upon his status as a participant in his employer's 401(k)
plan — a plan that is wholly unrelated to the contested apprentice
training requirement. Such reliance depends, in turn, upon reading
the ERISA fee-shifting statute in the broadest possible sense. On
that virtually limitless view, the "participant, beneficiary, or
fiduciary" described in the statute need not have any nexus to a
relevant ERISA plan: any ERISA plan will do.
5
The district court speculated that the action might be
viewed as one to "enforce" ERISA's preemption provision. Merit IV,
2013 WL 4446935, at *2. This speculation is puzzling in light of
the district court's earlier holding (in the Fall River case) that
the preemption challenge was not "an action or [a] request [for]
relief under the civil enforcement section of ERISA." Util.
Contrs. Ass'n, 2011 WL 4710875, at *3; see Richard H. Fallon, Jr.
et al., Hart and Wechsler's The Federal Courts and the Federal
System 712 (6th ed. 2009) (stating that preemption challenges to
state law are routinely allowed "without express statutory
authorization").
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We are confident that the text of the statute is not
elastic enough to allow so expansive an interpretation. The
plaintiffs offer no case law or legislative history for the
extraordinary proposition that Congress intended participation in
a single (unrelated) ERISA plan to confer an unfettered right to
collect attorneys' fees in any ERISA action. This lack of
authority is unsurprising: under the so-called American rule,
litigants are generally responsible for the remuneration of their
own lawyers. See Alyeska Pipeline Serv. Co. v. Wilderness Soc'y,
421 U.S. 240, 247 (1975). Fee-shifting statutes depart from this
norm and, thus, must be strictly construed. See MR Crescent City,
LLC v. Draper (In re Crescent City Estates, LLC), 588 F.3d 822, 826
(4th Cir. 2009). The plaintiffs' proposed interpretation of 29
U.S.C. § 1132(g)(1) contravenes these tenets. As such, Ross's
participation in an unrelated 401(k) plan is manifestly
insufficient to ground an award of fees in this case.
As a fallback, the plaintiffs urge us to affirm the full
fee award under the Fees Act, 42 U.S.C. § 1988. This statute
authorizes a court to award attorneys' fees to "the prevailing
party" in an action to enforce a discrete set of civil rights
statutes. Although ERISA is not one of those civil rights
statutes, the plaintiffs say that the issue of ERISA preemption is
bound up with their victory regarding the Ordinance's residency
requirement — and the fees related to preemption of the apprentice
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training requirement should follow suit. Cf. Wagenmann v. Adams,
829 F.2d 196, 225 (1st Cir. 1987) (holding that "an award of fees
for time spent on all aspects" of the case was proper under section
1988 where the non-civil rights claims "were sufficiently
interconnected with the [civil rights] claims").
The district court explicitly declined to consider this
argument because it premised its fee award in significant part on
the ERISA fee-shifting provision. See Merit III, 2013 WL 3984596,
at *2. Since the court awarded the full amount that the plaintiffs
requested, it did not need to (and did not) articulate what portion
of the award was attributable to that provision and what portion
was attributable to section 1988. See id. at *2-3.
We are cognizant that the trial judge's "intimate
knowledge of the nuances of the underlying case uniquely positions
[her] to construct a condign award." Gay Officers Action League v.
Puerto Rico, 247 F.3d 288, 292 (1st Cir. 2001). With this
prudential principle in mind, we think it appropriate here to allow
the district court to consider, in the first instance, whether any
fees beyond the $20,725 conceded by the City are awardable under 42
U.S.C. § 1988(b) and, if so, in what amount. Accordingly, we set
aside the fee award and remand to the district court for further
consideration.
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III. CONCLUSION
We need go no further. For the reasons elucidated above,
we affirm the district court's grant of summary judgment, but
reverse the fee award and remand to the district court for further
proceedings consistent with this opinion.
Affirmed in part, reversed in part, and remanded. No costs.
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