Willmar Electric Service, Inc. v. Cooke , 212 F.3d 533 ( 2000 )

F I L E D
United States Court of
Appeals
Tenth Circuit
PUBLISH
MAY 16 2000
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
PATRICK FISHER
Clerk
WILLMAR ELECTRIC SERVICE,
INC., A Minnesota Corporation,
Plaintiff-Appellant,
v. No. 99-1221
M. MICHAEL COOKE, as Executive
Director of Colorado Department
of Regulatory Agencies; BRUCE
DOUGLAS, as Director of the
Colorado Division of
Registrations; GEORGE
WATERHOUSE, as Program
Administrator of the Colorado
State Electrical Board;
LARRY A. DEPUTY, RICK FILSON,
KENNETH MACKEY, TIMOTHY MILLER,
BRIAN MURRAY, DONALD R. CLARK,
ROLF PHILIPSEN, ROBERT SAINT,
and TIMOTHY THOMPSON, as
Members of the Colorado State
Electrical Board,
Defendants-Appellees.
INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS; IBEW LOCAL
NO. 12; IBEW LOCAL NO. 68;
IBEW LOCAL NO. 113; and
IBEW LOCAL NO. 969,
Amici Curiae.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 98-WY-939-WD)
Lawrence W. Marquess (Darin Mackender with him on the briefs),
Otten, Johnson, Robinson, Neff & Ragonetti, P.C., Denver, Colorado,
appearing for plaintiff-appellant.
Denise DeForest (Ken Salazar, Attorney General, with her on the
brief), Assistant Attorney General, Business and Licensing Section,
Denver, Colorado, appearing for defendants-appellees.
Terry R. Yellig, Sherman, Dunn, Cohen, Leifer & Yellig, P.C.,
Washington, D.C., and Walter C. Brauer, III, Brauer, Buescher,
Valentine, Goldhammer & Kelman, P.C., Denver, Colorado, filed a
brief on behalf of amici curiae.
Before BRISCOE and McKAY, Circuit Judges, and BROWN*, District
Judge.
BROWN, District Judge.
The issue in this appeal is whether the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.,
preempts a Colorado statute requiring apprentices performing
electrical work in Colorado to be supervised on a one-to-one basis
by licensed journeyman electricians. The district court held that
the Colorado law was not preempted. We exercise jurisdiction
pursuant to 28 U.S.C. § 1291, and affirm.
*
Honorable Wesley E. Brown, Senior District Judge for the
District of Kansas, sitting by designation.
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I.
Plaintiff Willmar Electric Service, Inc., is a large multi-
state contractor that performs work in numerous states, including
Colorado. As of September 1, 1998, Willmar employed 60 journeyman
electricians and 90 apprentice electricians. Willmar has
established and maintains a regular training program in which all
of its apprentice electricians are required to participate. The
apprentices must complete a formal education program and receive
practical on-the-job training and experience while working. Every
apprentice is required to complete 100 hours of training and
education each year. Willmar utilizes, and requires its
apprentices to utilize, the “Wheels of Learning” training program,
which was developed by the National Center for Construction
Education and Research (“the Center”), a nonprofit organization
that provides training to construction and maintenance craft
workers throughout the country. The training is extensive and
requires participants to pass written and performance tests to
progress through the program. The training is provided by a
Willmar employee or an employee of a local chapter of the
Associated Builders and Contractors who has been certified as an
instructor by the Center. The on-the-job training and experience
in electrical work is a necessary and integral part of the program.
Individuals cannot participate in the program unless they are
employed in an apprentice capacity and are performing work under
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the supervision of a journeyman electrician.
The program is funded through contributions to trust funds
maintained by the Center, the Construction Education Foundation of
Minnesota and the Construction Education Foundation of Wisconsin.
The latter two groups are Center-accredited, nonprofit corporations
that provide education and training for construction and
maintenance craft workers in Minnesota and Wisconsin, respectively.
The costs and expenses of operating the apprenticeship program,
including all direct training expenses, are paid from the trust
funds.
Willmar’s apprenticeship and training program is an employee
welfare benefit plan covered by ERISA. See 29 U.S.C. § 1002(1).
Colorado dictates certain standards for apprentice
electricians as part of the state’s regulation of professional and
occupational licensing. At the time relevant to this suit, section
12-23-110.5(1) of the Colorado Revised Statutes provided:
Any person may work as an apprentice but shall
not do any electrical wiring for the
installation of electrical apparatus or
equipment for light, heat, or power except
under the supervision of a licensed
electrician. The degree of supervision
required shall be no more than one licensed
electrician to supervise no more than one
apprentice at the jobsite.
C.R.S. § 12-23-110.5(1) (West 1998)1 (emphasis added). The
1
This provision was amended by the Colorado legislature in
1999 and now provides that “[t]he degree of supervision required
shall be no more than one licensed electrician to supervise no more
4
defendants, as members of the Colorado State Electrical Board, are
responsible for enforcing this statute.
On January 6, 1998, Willmar Electric was cited by an inspector
from the Colorado State Electrical Board for violating the statute
by failing to maintain a one-to-one ratio of journeyman
electricians to apprentices at a jobsite. The apprentices who were
working for Willmar on that project were active participants in the
Willmar apprenticeship training program. Willmar subsequently
filed a complaint for declaratory and injunctive relief in the U.S.
District Court for the District of Colorado, asserting that the
Colorado statute was preempted by ERISA and was unenforceable. The
district court granted summary judgment to the defendants, finding
the Colorado statute was not preempted because it “makes no
reference to ERISA and any relationship it may have to ERISA is at
most peripheral.” Aplt. App., Exh. 13 at 10. Willmar appeals,
arguing that the district court misapplied the relevant law.
We review a grant of summary judgment de novo, applying the
same legal standard used by the district court under Fed.R.Civ.P.
56(c). See Richmond v. ONEOK, Inc., 120 F.3d 205, 208 (10th Cir.
1997). "Summary judgment is appropriate if 'there is no genuine
issue as to any material fact and ... the moving party is entitled
than three apprentices at the jobsite.” C.R.S. § 12-23-110.5(1)
(West Group 2000). The change in the Colorado law does not appear
to render the instant controversy moot because Willmar is subject
to an ongoing penalty for its violation of the predecessor statute.
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to a judgment as a matter of law.'" Id. (quoting Rule 56(c)).
II.
ERISA is a comprehensive statute designed to promote the
interests of employees and their beneficiaries in employee benefit
plans. Shaw v. Delta Airlines, Inc., 463 U.S. 85, 90 (1983).
Among other things, it sets various uniform standards, including
rules concerning reporting, disclosure, and fiduciary
responsibility for pension benefit and welfare benefit plans. Id.
at 91. Section 1144(a) of Title 29 U.S.C. provides that, with
certain exceptions, ERISA “shall supersede any and all State laws
insofar as they may now or hereafter relate to any employee benefit
plan....”
In Shaw the Supreme Court said that a law “relates to” an
employee benefit plan “if it has a connection with or reference to
such a plan.” Id., 463 U.S. at 96-97. The Colorado statute at
issue here clearly does not make reference to2 an ERISA plan; the
preemption question thus turns on whether the statute has a
“connection with” such a plan. In New York State Conf. Of Blue
Cross and Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645,
656 (1995), the Court observed that “connections” with something
A state law has "reference to" ERISA plans where it acts
2
immediately and exclusively upon ERISA plans or where the existence
of ERISA plans is essential to the law's operation. California
Div. Of Labor Stds. Enforcement v. Dillingham Constr., N.A., Inc.,
519 U.S. 316, 325 (1997). Neither of these conditions is present
in this case.
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may be infinite, and the term therefore provides no real gauge to
the scope of preemption. Instead, the Court said it would look to
the objectives of ERISA as a guide to the scope of the state law
that Congress understood would survive, as well as to the effect of
the state law on ERISA plans.
The principal object of ERISA is to protect plan participants
and beneficiaries. Boggs v. Boggs, 520 U.S. 833, 845 (1997. In
California Div. of Labor Stds. Enforcement v. Dillingham Constr.,
N.A., Inc., 519 U.S. 316 (1997), the Court explained:
“In enacting ERISA, Congress’ primary concern
was with the mismanagement of funds
accumulated to finance employee benefits and
the failure to pay employee benefits from
accumulated funds. To that end, it
established extensive reporting, disclosure,
and fiduciary duty requirements to insure
against the possibility that the employee’s
expectation of the benefit would be defeated
through poor management by the plan
administrator.”
Id. at 326-27 (quoting Massachusetts v. Morash, 490 U.S. 107, 115
(1989)). In Travelers the Court also observed that “[t]he basic
thrust of the preemption clause ... was to avoid a multiplicity of
regulation in order to permit the nationally uniform administration
of employee benefit plans.” Travelers, 514 U.S. at 657. Because
of this goal, the Court noted, in several cases ERISA had been
found to preempt “state laws that mandated employee benefit
structures or their administration.” Id. at 658.
Like the instant case, Dillingham, supra, dealt with a state
7
law’s effect on an apprenticeship training program that was part of
an ERISA plan. In Dillingham, a California law required
contractors on public projects to pay apprentices the prevailing
journeyman wage unless the apprentice was from a program approved
by the state. Id., 519 U.S. at 319-20. A subcontractor who hired
apprentices through an unapproved program challenged the law,
arguing it was preempted by ERISA. In addressing this claim, the
Supreme Court first stated that where “federal law is said to bar
state action in fields of traditional state regulation ... we have
worked on the ‘assumption that the historic police powers of the
State were not to be superseded by the Federal Act unless that was
the clear and manifest purpose of Congress.’” Id at 325. The Court
noted that apprenticeship training standards and the wages paid on
public works had long been regulated by the States. Id. at 330.
Although this fact alone would not prevent preemption, the Court
concluded that the California law was far-removed from the
objectives of ERISA:
The wages to be paid on public works projects
and the substantive standards to be applied to
apprenticeship training programs are, however,
quite remote from the areas with which ERISA
is expressly concerned -- “reporting,
disclosure, fiduciary responsibility, and the
like.” A reading of [§ 1144(a)] resulting in
the pre-emption of traditionally state-
regulated substantive law in those areas where
ERISA has nothing to say would be
“unsettling.” Given the paucity of indication
in ERISA and its legislative history of any
intent on the part of Congress to pre-empt
state apprenticeship training standards, or
8
state prevailing wage laws that incorporate
them, we are reluctant to alter our ordinary
“assumption that the historic police powers of
the State were not to be superseded by the
Federal Act.”
Id. at 330-31 (citations omitted). Thus, the apprentice wage law
did not regulate an area that Congress intended ERISA to cover. As
for the effects of the law, the Court noted that it did not bind
ERISA plans to anything because a contractor could still hire
apprentices from an unapproved program -- it just had to pay a
higher wage. Thus, “the effect of [the law] on ERISA
apprenticeship programs ... is merely to provide some measure of
economic incentive to comport with the State’s requirements....”
Id. at 332. In this respect, the Court said, the law was “no
different from myriad state laws in areas traditionally subject to
local regulation, which Congress could not possibly have intended
to eliminate.” Id. at 334 (quoting Travelers, supra).III.
As Dillingham pointed out, apprenticeship training standards
are matters traditionally regulated by the States. The Colorado
statute at issue in this case falls within that sphere. The
appropriate degree of supervision required for apprentices
performing electrical work is a matter related to occupational and
public safety and, as such, has traditionally been subject to the
state’s police powers. Cf. DeBuono v. NYSA-ILA Med. & Clinical
Serv. Fund, 520 U.S. 806, 814 (1997) (the historic police powers of
9
the State include the regulation of matters of health and safety).
The subject of the Colorado law, like the California statute in
Dillingham, is outside the area of ERISA’s concerns -- i.e.,
reporting, disclosure and fiduciary requirements put in place to
protect employee benefits. Nothing in ERISA’s legislative history
suggests that Congress intended to preempt apprenticeship training
standards. Dillingham, 519 U.S. at 331.
Despite these factors, Willmar advances several reasons why it
believes the Colorado statute should be preempted. First, it
points out that other courts have found similar ratio requirements
to be preempted. Citing Boise Cascade Corp. v. Peterson, 939 F.2d
632 (8th Cir. 1991) and Associated Builders and Contractors v.
Perry, 817 F.Supp. 49 (E.D. Mich. 1992). We agree with the
district court, however, that these cases are not persuasive
because they preceded the Supreme Court’s delineation of the limits
of ERISA preemption in cases such as Travelers, Boggs, Dillingham,
and DeBuono. Although Willmar correctly points out that the
Supreme Court has not overruled its early ERISA precedents
(including those upon which Boise Cascade and Associated Builders
were based), a proper assessment of ERISA preemption now must take
into account the limits recently recognized by the Court. Cf.
DeBuono, 520 U.S. at 812-13 (criticizing court of appeals for
adhering to expansive interpretation of “relate to” and failing to
give effect to Travelers’ rejection of a strictly literal reading).
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Dillingham is particularly instructive here insofar as it suggests
that ERISA’s objectives are not interfered with by state regulation
of substantive apprentice training standards. Boise Cascade and
Associated Builders did not take these limits into account, and we
cannot consider them to be reliable authorities on the question
presented.
Willmar next argues that the Colorado law “relates to” an
ERISA plan because the one-to-one ratio requirement “results in an
artificial limit on the number of apprentices that may be
trained....” Aplt. Br. at 14. There is no direct restraint in the
Colorado law on the number of apprentices that may be trained.
Rather, the limit to which Willmar refers is the economic burden of
requiring one-to-one supervision of apprentices. The Supreme Court
has recognized that laws of general applicability inevitably affect
ERISA plans, sometimes by increasing costs, but that fact alone
does not warrant a finding that Congress necessarily intended to
displace regulation of an area traditionally regulated by the
States. Thus, in Mackey v. Lanier Collection Agency & Serv., Inc.,
486 U.S. 825 (1998), the Court held that ERISA did not preempt a
general state garnishment statute despite the fact that the law’s
application imposed increased administrative costs and burdens on
benefit plans. Similarly, in Travelers, the Court found no
preemption of a state law that imposed a surcharge on patients with
certain kinds of insurance, despite the fact that the law increased
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the cost of benefits under some ERISA plans. See Travelers, 514
U.S. at 662. And in Dillingham the Court found that the economic
effect of a state law governing apprentice wages was not a
sufficient basis for preemption. We see no material difference
between these cases and the instant case, and we likewise conclude
that the economic effect of the Colorado ratio requirement is not
sufficient to warrant preemption.
Willmar also contends the Colorado law should be preempted
because it invades the federal province of benefit plans and
improperly “dictates to the contractor the ‘teacher-to-student’
ratio that must be used in the apprenticeship program....” Aplt.
Br. at 14. An examination of the objectives of ERISA and the
effects of the Colorado law persuades us that this is not the type
of regulation Congress had in mind in the preemption clause. The
primary effect of the ratio requirement is to indirectly increase
the cost of apprentice training. In this respect it is directly
analogous to the apprentice wage law at issue in Dillingham.3 In
requiring such supervision the Colorado law neither mandates nor
3
Willmar argues Dillingham is factually distinguishable
because the state law in that case “did not bind ERISA plans to
anything.” See Dillingham, 519 U.S. at 332. We cannot agree that
this purported distinction warrants a different result in this
case. In Dillingham if the contractor chose to hire an apprentice
from a non-approved program, it was compelled by state law to pay
journeyman’s wages. In our view this is comparable to the manner
in which the Colorado law affects the Willmar training program --
it does not prevent training, but it increases the cost associated
with doing so.
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limits the granting of benefits to employees. Cf. Travelers, 514
U.S. at 664 (the law did “not impose the kind of substantive
coverage requirement binding plan administrators that was at issue
in Metropolitan Life.”). The law is neutral in that it applies
with equal force to ERISA and non-ERISA plan training of
apprentices. Its subject matter falls within the apprenticeship
training standards traditionally regulated by state law. All
factors considered, we cannot accept Willmar’s argument that the
Colorado law encroaches upon the subject of welfare benefit plan
regulation. It is more properly characterized as addressing
occupational and public safety, a matter traditionally governed by
state law. We find it implausible that Congress could have
intended for such a regulation to be superseded by ERISA merely
because its application has some impact on an ERISA plan. See
Dillingham, supra. Cf. Shea v. Esensten, F.3d , 2000 WL
336674, *6 (8th Cir., Mar. 31, 2000) (state regulation of ethical
responsibilities of physicians was not preempted by ERISA); Boyle
v. Anderson, 68 F.3d 1093, 1110 (8th Cir. 1995) (nothing in ERISA
indicates Congressional intent to preempt state’s general heath
care regulations).
Willmar’s final argument is that preemption is required
because the Colorado law interferes with uniform administration of
benefit plans. Willmar points out that various states have varying
laws on the degree of supervision required for apprentices. The
13
result of this, according to Willmar, is that it is “forced either
to restructure its apprenticeship and training program to comply
with the most stringent applicable ratio requirement or adopt a
different program for use in each state.” Aplt. Rep. Br. at 8.
Willmar argues this is contrary to Congress’ intent in the ERISA
preemption clause “to ensure that plans and plan sponsors would be
subject to a uniform body of benefits law,” to “minimize the
administrative and financial burden of complying with conflicting
directives among States,” and to prevent conflicts in substantive
law from “requiring the tailoring of plans and employer conduct to
the peculiarities of the law of each jurisdiction.” See Travelers,
514 U.S. at 656-57. Although it is true that different apprentice
supervision standards may have some effect on administration of
Willmar’s benefit plan, we cannot say this is enough to overcome
the presumption that Congress did not intend to supersede state
regulation of this area of law. A similar effect on uniform plan
administration would assuredly arise from the apprentice wage law
in Dillingham and the state tax at issue in DeBuono, but the
Supreme Court found no grounds for preemption in those cases. We
conclude that the Colorado law is “one of ‘myriad state laws’ of
general applicability that impose some burdens on the
administration of ERISA plans but nevertheless do not ‘relate to’
them within the meaning of the governing statute.” DeBuono, 138
L.Ed.2d at 30. See also Travelers, 514 U.S. at 661 (there is no
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preemption "if the state law has only a tenuous, remote, or
peripheral connection with covered plans, as is the case with many
laws of general applicability"). ERISA therefore does not preempt
the Colorado apprentice supervision requirement.
IV.
The judgment of the district court is AFFIRMED.
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