New Jersey Carpenters & the Trustees Thereof Ex Rel. Chatten v. Tishman Construction Corp.

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 13-3005
_____________
NEW JERSEY CARPENTERS AND THE TRUSTEES
THEREOF, as assignees of Edward Chatten and other
similarly situated workmen,
Appellant
v.
TISHMAN CONSTRUCTION CORPORATION OF NEW
JERSEY
_____________
On Appeal from the United States District Court
for the District of New Jersey
(No. 2-13-cv-00379)
District Judge: Honorable Susan D. Wigenton
_____________
Submitted Pursuant to Third Circuit LAR 34.1(a)
February 14, 2014
Before: McKEE, Chief Judge, CHAGARES, and
SHWARTZ, Circuit Judges.
(Filed: July 28, 2014)
Seth Ptasiewicz, Esq.
99 Wood Avenue South
Metro Corporate Campus I, Suite 307
Iselin, NJ 08830
Counsel for Appellants
Gregory R. Begg, Esq.
Alexander X. Saunders, Esq.
Peckar & Abramson
70 Grand Avenue
River Edge, NJ 07661
Counsel for Appellee
____________
OPINION
____________
CHAGARES, Circuit Judge.
In this case, we must decide whether the New Jersey
Prevailing Wage Act, N.J. Stat. Ann. § 34:11-56.25, et seq.
(“PWA”) is completely preempted by either the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. § 1001, et seq., or the Labor Management Relations
Act (“LMRA”), 29 U.S.C. § 141, et seq. Because we
conclude that neither statute completely preempts the PWA,
the District Court was without jurisdiction to dismiss the
plaintiffs’ complaint. We will therefore vacate the judgment
of the District Court and remand the action with instructions
to remand it to state court.
I.
A.
The PWA provides that laborers on certain public
works projects are to be paid the prevailing wage. N.J. Stat.
Ann. § 34:11-56.27. It was enacted to “establish a prevailing
wage level for workmen engaged in public works in order to
safeguard their efficiency and general well-being and to
protect them as well as their employers from the effects of
serious and unfair competition resulting from wage levels
detrimental to efficiency and well-being.” Id. § 34:11-56.25;
see also Best v. C&M Door Controls, Inc., 981 A.2d 1267,
1271 (N.J. 2009). A “public work” falls within the PWA if it
is “paid for in whole or in part out of the funds of a public
body” (except work done pursuant to rehabilitation
programs), or if at the time of entering into the contract, the
property where the labor is performed is owned or
substantially leased by a public body. N.J. Stat. Ann. §
34:11-56.26(5). The PWA applies to all contracts where the
2
total value of the project exceeds $14,187.00 if the work is
being done for, or on the premises of, any municipality, or
$2,000.00 if the work is being done for, or on the premises of,
any other public entity. N.J. Admin. Code § 12:60-1.4(b)
(2009).
The “prevailing wage” is defined as the “wage rate
paid by virtue of collective bargaining agreements [“CBAs”]
by employers employing a majority of workers of that craft or
trade subject to said [CBAs], in the locality in which the
public work is done.” N.J. Stat. Ann. § 34:11-56.26(9). It is
set every two years by the New Jersey Commissioner of
Labor and Workforce Development (“Commissioner”). Id. §
34:11-56.30. To set the prevailing wage rate for each
locality, the Commissioner references the rates paid in
various CBAs — cash and benefits (including employer
contributions) — in different parts of the state. Id. The
prevailing wage must be specified in the contract between the
awarding entity and contractor or subcontractor. Id. § 34:11-
56.28. The actual amount of compensation cannot be below
the prevailing wage rate, but may exceed it. Id.
The prevailing wage schedule that the Commissioner
publishes for each locality contains a wage rate per hour and a
fringe benefit rate per hour. Employers may count certain
types of fringe benefits bestowed upon employees against the
fringe benefit rate per hour. Employers providing benefits
worth less than the fringe benefit rate per hour (or no benefits
at all) must pay the balance to the employee in cash. The
PWA does not mandate any specific types of fringe benefits,
nor does it mandate that an employer provide fringe benefits
at all.
In addition, the PWA requires that every contractor
and subcontractor keep a record detailing the worker’s name,
his or her craft or trade, and actual hourly rate of wages paid
to each worker. Id. § 34:11-56.29. The employer must
preserve these records for two years. Id.
If a worker believes that he or she has been paid less
than the prevailing wage, that worker may file a complaint
with the Commissioner, who has the authority to investigate
and administratively sanction violators. Id. §§ 34:11-56.34;
3
34:11-56.35. Such worker may also initiate a civil action to
recover the full amount of the prevailing wage (less any
wages actually received), regardless of any contract to the
contrary. Id. § 34:11-40. The right to prevailing wages is
inalienable, as “any agreement between such workman and
the employer to work for less than such prevailing wage shall
be no defense to the action.” Id. Workers may bring this
civil action themselves or “may designate an agent or
representative to maintain” such an action on their behalf. Id.
B.
We take the following facts from the plaintiffs’
complaint, which we assume to be true for the purposes of a
motion to dismiss. Phillips v. Cnty. of Allegheny, 515 F.3d
224, 231 (3d Cir. 2008). The workers at issue in this case
were carpenters hired to work on the Revel Casino Project in
Atlantic City, New Jersey. They contend that the Revel
Casino Project is a “public work” within the meaning of the
PWA because it received financial assistance in the form of
incentives, tax exemptions, and tax reimbursements from the
New Jersey Economic Development Authority (“EDA”).
They claim that the EDA is a “public body” within the
meaning of the Act. See N.J. Stat. Ann. § 34:11-56.26(4).
The carpenters contend that their employer,
Simon/Watt, did not pay them fringe benefits as required by
the PWA. They assigned these claims for unpaid prevailing
wages to the plaintiffs, who describe themselves as employee
benefit plans within the meaning of ERISA and trust funds
within the meaning of the LMRA. The plaintiffs allege that
the defendant, Tishman Construction Corp. of New Jersey,
was the general contractor and/or construction manager on
the Revel Casino Project and subcontracted certain carpentry
work to Simon/Watt.
The plaintiffs initially brought suit in New Jersey state
court, alleging violations of the EDA Act and PWA. 1 The
1
The EDA Act simply requires that the New Jersey
Economic Development Authority adopt rules requiring
workers to be paid at least the prevailing wage (as defined by
the Commissioner pursuant to the PWA) in connection with
4
defendant removed the case to federal court, asserting subject
matter jurisdiction pursuant to the “complete preemption”
doctrine. It contended that the complaint was completely
preempted pursuant to ERISA § 502(a), 29 U.S.C. § 1132(a),
because the plaintiffs’ cause of action was actually one to
collect benefits due. The defendant also claimed that the
plaintiffs’ claims were preempted by § 301 of the LMRA, 29
U.S.C. § 185, because resolution of the dispute involved
interpretation of a CBA. After removal, the plaintiffs moved
to remand, and the defendant moved to dismiss.
The District Court agreed with the defendant’s
characterization of the action and held that the plaintiffs’
claims were completely preempted under ERISA § 502(a). It
concluded that the action was properly removed because the
plaintiffs “are ERISA participants seeking rights under an
ERISA plan.” Appendix (“App.”) 15a. Although it did not
directly address LMRA complete preemption, the court also
noted that the complaint “seeks interpretation of the collective
bargaining agreement.” Id.
The District Court also concluded that the action was
expressly preempted by ERISA § 514, 29 U.S.C. § 1144, and
dismissed the complaint. It reasoned that because the
plaintiffs themselves were employee benefit plans and
fiduciaries within the meaning of ERISA, and because they
sought to collect fringe benefits, their claims “relate[d] to” an
ERISA-governed benefit plan and were preempted. Id. The
plaintiffs timely appealed.
II.
We have jurisdiction over the final decision of the
District Court pursuant to 28 U.S.C. § 1291. Our review of
the District Court’s grant of a motion to dismiss based on
ERISA preemption is plenary. Pryzbowski v. U.S.
EDA projects (provided certain conditions are met). N.J.
Stat. Ann. § 34:1B-5.1. In other words, it governs the scope
of projects that are subject to the PWA. For our purposes, the
substantive analysis is the same as that of the PWA: if the
EDA Act applies, then the defendant owed the plaintiffs
compensation as defined by the PWA.
5
Healthcare, Inc., 245 F.3d 266, 268 (3d Cir. 2001). To
survive a motion to dismiss pursuant to Fed. R. Civ. P.
12(b)(6), a plaintiff must allege “enough facts to state a claim
to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A complaint has facial
plausibility when there is enough factual content “that allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). A court must accept all factual
allegations in the complaint as true and draw all reasonable
inferences in favor of the plaintiff. Phillips, 515 F.3d at 231.
III.
Before we can reach the issue of whether the plaintiffs’
claims are expressly preempted by ERISA § 514, we must
first determine whether there is subject matter jurisdiction
over the plaintiffs’ PWA claims in federal court. Complete
preemption under § 502(a) is a “jurisdictional concept,”
whereas express preemption under § 514 is a “substantive
concept governing the applicable law.” In re U.S. Healthcare,
Inc., 193 F.3d 151, 160 (3d Cir. 1999). Because subject
matter jurisdiction involves “a court’s power to hear a case,”
we have an “independent obligation to determine whether
subject-matter jurisdiction exists.” Arbaugh v. Y & H Corp.,
546 U.S. 500, 514 (2006) (quotation marks omitted).
A cause of action does not typically “arise under”
federal law unless a federal question appears on the face of a
well-pleaded complaint. Franchise Tax Bd. of Cal. v. Constr.
Laborers Vacation Trust for S. Cal., 463 U.S. 1, 8 (1983).
The existence or expectation of a federal defense is
insufficient to confer federal jurisdiction. Pryzbowski, 245
F.3d at 271. There exists a “narrow exception” to the well-
pleaded complaint rule for instances where Congress “has
expressed its intent to completely pre-empt a particular area
of law such that any claim that falls within this area is
necessarily federal in character.” U.S. Healthcare, 193 F.3d
at 160 (quotation marks omitted).
While other types of preemption operate only as
federal defenses to state law claims, complete preemption
“operates to confer original federal subject matter jurisdiction
6
notwithstanding the absence of a federal cause of action on
the face of the complaint.” Id. The Supreme Court has
recognized the “complete preemption” doctrine in only three
instances: § 301 of the LMRA, see Avco Corp. v.
Machinists, 390 U.S. 557 (1968); § 502(a) of ERISA, see
Metro. Life Ins. Co. v. Taylor, 481 U.S. 58 (1987); and §§ 85
and 86 of the National Bank Act, see Beneficial Nat’l Bank v.
Anderson, 539 U.S. 1 (2003). The former two are relevant
here.
A.
We begin with ERISA § 502(a), the only ground for
complete preemption that the District Court found. ERISA
provides for uniform federal regulation of pension benefit
plans and welfare benefit plans. 29 U.S.C. § 1002(3).
Congress enacted ERISA to ensure that benefit plan
administration was subject to a single set of regulations and to
avoid subjecting regulated entities to conflicting sources of
substantive law. N.Y. State Conference of Blue Cross & Blue
Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 657 (1995).
These concerns generally arise only when the provision of
benefits requires “an ongoing administrative program.” Fort
Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 11 (1987).
ERISA included “expansive” preemption provisions, see
ERISA § 514, 29 U.S.C. § 1144, “which are intended to
ensure that employee benefit plan regulation would be
exclusively a federal concern,” Aetna Health, Inc. v. Davila,
542 U.S. 200, 208 (2004) (quotation marks omitted).
Congress preempted “state laws relating to plans, rather than
simply to benefits.” Fort Halifax, 482 U.S. at 11.
ERISA’s civil enforcement mechanism, § 502(a), “is
one of those provisions with such extraordinary pre-emptive
power that it converts an ordinary state common law
complaint into one stating a federal claim for purposes of the
well-pleaded complaint rule,” and permits removal. Aetna
Health, 542 U.S. at 209 (quotation marks omitted). We have
held that a claim is completely preempted, and thus
removable, under ERISA § 502(a) only if: (1) the plaintiff
could have brought the claim under § 502(a); and (2) no other
independent legal duty supports the plaintiff’s claim. Pascack
Valley Hosp. Inc. v. Local 464A UFCW Welfare
7
Reimbursement Plan, 388 F.3d 393, 400 (3d Cir. 2004); see
also Aetna Health, 542 U.S. at 210. Because the test is
conjunctive, a state-law cause of action is completely
preempted only if both of its prongs are satisfied. See
Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321,
328 (2d Cir. 2011).
The defendant contends that the suit is preempted
because the plaintiffs seek to collect “delinquent fund
contributions.” Defendant’s Br. 15. It contends that this
cause of action overlaps with two portions of ERISA’s
comprehensive enforcement scheme: § 502(a)(1)(B), which
allows a participant or beneficiary to recover benefits due
“under the terms of his plan,” and § 502(a)(3), which allows a
participant, beneficiary, or fiduciary to seek equitable relief in
order to enforce any provision of a plan. 29 U.S.C. § 1132(a).
According to the defendant, because the remedies that the
PWA offers mirror or supplement those that are provided for
in ERISA’s comprehensive enforcement scheme, ERISA
completely preempts the PWA.
We disagree. Turning to the Pascack Valley test’s
second prong, courts have held that a legal duty is
“independent” if it is not based on an obligation under an
ERISA plan, or if it “would exist whether or not an ERISA
plan existed.” Marin Gen. Hosp. v. Modesto & Empire
Traction Co., 581 F.3d 941, 950 (9th Cir. 2009). In other
words, if the state law claim is not “derived from, or
conditioned upon” the terms of an ERISA plan, and
“[n]obody needs to interpret the plan to determine whether
that duty exists,” then the duty is independent. Gardner v.
Heartland Indus. Partners, LP, 715 F.3d 609, 614 (6th Cir.
2013); accord Stevenson v. Bank of N.Y. Co., Inc., 609 F.3d
56, 62 (2d Cir. 2010).
The PWA creates just such an independent legal duty.
The defendant’s duty to pay prevailing wages derives from
the PWA, not any ERISA plan. No interpretation of any
ERISA plan is necessary in order to determine whether the
carpenters were paid prevailing wages. The defendant would
be required to pay prevailing wages regardless of whether any
ERISA plan existed.
8
The PWA’s independence is best understood by
looking to the what the plaintiffs must prove to prevail. To
determine whether the defendant is liable, a court must
simply compare the amount that the carpenters were paid to
the amount that they were owed under the PWA. If there is a
deficiency, the defendant can make it up through cash, even if
the deficiency concerns the benefit prong of the PWA. No
reference to any ERISA plan is necessary. The statute simply
requires that the Commissioner set a prevailing wage, and
that employers engaged in public works projects pay it.
As such, the PWA is a law that regulates wages.
“States have traditionally regulated the payment of wages,”
not the federal government. Massachusetts v. Morash, 490
U.S. 107, 119 (1989). Congress did not intend for ERISA to
displace statutes that govern wages. See Keystone Chapter,
Associated Builders & Contractors, Inc. v. Foley, 37 F.3d
945, 959 (3d Cir. 1994). State actions to recover unpaid
wages generally are not expressly preempted by ERISA,
much less completely preempted. Cf. id. (viewing the
Pennsylvania Prevailing Wage Act as an instance of wage
regulation and concluding that it was not expressly preempted
by ERISA § 514).
Pascack Valley provides an illustration of a similar
independent duty. There, a hospital brought suit in state court
against an ERISA plan for breach of contract. Pascack
Valley, 388 F.3d at 395. The hosptial contended that it was
not paid the proper amount for services rendered pursuant to
the terms of a contract that was separate from any ERISA
plan. Id. at 396. The plan removed the case to federal court,
contending that the breach of contract claim was actually for
benefits owed pursuant to an ERISA plan, and therefore
completely preempted by ERISA § 502(a). Id. at 397. We
held that removal was improper because resolution of the
hospital’s claim turned on the terms of an agreement that was
separate from the ERISA plan. Id. at 402. In order to resolve
the dispute, a court simply needed to compare the prices
provided for in the agreement to the amounts that the hospital
was paid. No analysis of the plan’s terms was required. This
was sufficient to create an independent legal duty, even
though the patients who received services at the hospital
9
received them pursuant to the terms of the plan. Id. at 403-
04.2
As the obligation to pay prevailing wages is an
independent legal duty, the second prong of the Pascack
Valley test is not met.3 Therefore, the plaintiffs’ claims are
not completely preempted by ERISA § 502(a), and that
section cannot provide the basis for federal court jurisdiction.4
2
The District Court in this case also found the fact that one of
the parties in this case was an ERISA plan was significant.
We rejected a similar argument in Pascack Valley. There, the
plan argued that removal was proper because suits between
plans and third parties that implicate benefit administration
necessarily “arise under ERISA’s federal common law.”
Pascack Valley, 388 F.3d at 399 (quotation marks omitted).
We held that it was not the identity of the parties to the
dispute that mattered, but whether the federal common law of
ERISA provided an “element — essential or otherwise” of the
plaintiff’s state law claim. Id. Our focus was on the nature of
the cause of action, not the identity of the parties.
3
Because we conclude that the defendant cannot meet the
second prong of the test, we need not decide whether it could
have met the first prong.
4
As we conclude that the District Court was without
jurisdiction to consider whether the PWA is expressly
preempted by ERISA § 514, we have no occasion to address
that portion of the District Court’s opinion. See Dukes v.
U.S. Healthcare, Inc., 57 F.3d 350, 355 (3d Cir. 1995)
(“When the doctrine of complete preemption does not apply,
but the plaintiff’s state claim is arguably preempted under §
514(a), the district court, being without removal jurisdiction,
cannot resolve the dispute regarding [express] preemption.”).
Upon remand to state court, the defendant may still raise
express preemption as a defense to the plaintiffs’ PWA claim.
We note, however, that we have held that Pennsylvania’s
PWA, which is substantially similar to the New Jersey PWA,
was not expressly preempted, and that every other Court of
Appeals to answer this question with respect to similar PWAs
has found them not expressly preempted. See Keystone
Chapter, 37 F.3d at 945; see also Associated Builders &
Contractors, Saginaw Valley Area Chapter v. Perry, 115 F.3d
386, 392-93 (6th Cir. 1997) (Michigan PWA not preempted
10
B.
The District Court did not decide whether removal was
proper under LMRA § 301, or whether the LMRA completely
preempted the plaintiffs’ claims. The failure to reach the
LMRA issue does not necessarily preclude us from
addressing it on appeal. See Norfolk S. Ry. Co. v. Basell
USA Inc., 512 F.3d 86, 97 (3d Cir. 2008). It is appropriate
for us to reach an issue that the district court did not if “the
issues provide purely legal questions, upon which an
appellate court exercises plenary review.” Hudson United
Bank v. LiTenda Mortg. Corp., 142 F.3d 151, 159 (3d Cir.
1998). Had the District Court reached these issues, our
review would have been plenary. See Kline v. Sec. Guards,
Inc., 386 F.3d 246, 251 n.3 (3d Cir. 2004) (exercising plenary
review over the question of whether removal was proper
under LMRA § 301).
LMRA § 301 provides exclusive federal jurisdiction
for suits concerning “violation of contracts between an
employer and a labor organization.” 29 U.S.C. § 185(a).
Similar to ERISA § 502(a), LMRA § 301 converts state
causes of action into federal ones and allows removal “when
the heart of the state-law complaint is a clause in the
collective bargaining agreement.” Caterpillar Inc. v.
Williams, 482 U.S. 386, 394 (1987) (quotation marks
omitted). “[T]he pre-emptive force of § 301 is so powerful as
to displace entirely any state cause of action for violation of
contracts between an employer and a labor organization. Any
such suit is purely a creature of federal law, notwithstanding
the fact that state law would provide a cause of action in the
absence of § 301.” Franchise Tax Bd., 463 U.S. at 23
(quotation marks and footnote omitted).
LMRA § 301 completely preempts a state cause of
action only when the resolution of said action is “substantially
dependent upon analysis of the terms of an agreement made
by ERISA); Burgio & Campofelice, Inc. v. NYS Dep’t of
Labor, 107 F.3d 1000 (2d Cir. 1997) (New York); WSB
Elec., Inc. v. Curry, 88 F.3d 788 (9th Cir. 1996) (California);
Minn. Chapter of Associated Builders & Contractors, Inc. v.
Minn. Dep’t of Labor & Indus., 47 F.3d 975 (8th Cir. 1995)
(Minnesota).
11
between the parties in a labor contract.” Allis-Chalmers
Corp. v. Lueck, 471 U.S. 202, 220 (1985); see also Lingle v.
Norge Div. of Magic Chef, Inc., 486 U.S. 399, 413 (1988)
(“[A]n application of state law is pre-empted by § 301 of the
Labor Management Relations Act of 1947 only if such
application requires the interpretation of a collective-
bargaining agreement.”). By contrast, when resolution of the
state law claim is “independent” of a CBA and does not
require construing one, the state law claim is not preempted
by § 301. Lingle, 486 U.S. at 410; accord Antol v. Esposto,
100 F.3d 1111, 1117 (3d Cir. 1996).
The plaintiffs’ claim under the PWA is not preempted
by the LMRA because it exists independent of any CBA.
Proving a PWA violation does not require any reference to or
analysis of any CBA. It simply requires comparing the wages
that plaintiffs were paid to those provided in the PWA. This
is a factual question that, just as it does not turn on the
interpretation of any ERISA plan, does not turn on the
interpretation of any CBA. The carpenters’ right to
prevailing wages is grounded in the PWA and would exist
even in the absence of any CBA.
Although the amount owed to the employees under the
PWA may be the same amount owed by virtue of their CBA,
such “parallelism” does “not render the state-law analysis
dependent upon the [CBA] analysis.” Kline, 386 F.3d at 254
(quotation marks omitted). The Supreme Court has explicitly
held that even if dispute resolution pursuant to a CBA and a
state law would require addressing “precisely the same set of
facts, as long as the state-law claim can be resolved without
interpreting the agreement itself, the claim is ‘independent’ of
the agreement for § 301 pre-emption purposes.” Lingle, 486
U.S. at 410.
Furthermore, Ҥ 301 cannot be read broadly to pre-
empt nonnegotiable rights conferred on individual employees
as a matter of state law.” Livadas v. Bradshaw, 512 U.S. 107,
123 (1994). The right to prevailing wages is just such an
inalienable right. See N.J. Stat. Ann. § 34:11-56.40 (allowing
workers to bring private actions to recover wages under the
PWA and providing that “any agreement between such
workman and the employer to work for less than such
12
prevailing wage shall be no defense to the action.”); accord
Cipparulo v. David Friedland Painting Co., 353 A.2d 105,
106 (N.J. Super. Ct. App. Div. 1976). “[Section] 301 pre-
emption merely ensures that federal law will be the basis for
interpreting collective-bargaining agreements, and says
nothing about the substantive rights a State may provide to
workers when adjudication of those rights does not depend
upon the interpretation of [CBAs].” Lingle, 486 U.S. at 409.
The plaintiffs have asserted a substantive right under the New
Jersey PWA to be paid prevailing wages. This right is not
preempted by the LMRA.5
IV.
For the foregoing reasons, we will vacate the District
Court’s order dismissing the case and remand the action with
instructions for the District Court to remand the action to state
court.
5
Because we hold that the neither ERISA nor the LMRA
completely preempts the PWA in these circumstances, and
that the District Court lacked removal jurisdiction over the
plaintiffs’ claims, we will not opine on any of the other
arguments raised by either party, such as whether the
workers’ claims were properly assignable to the plaintiff
funds. Such questions may be properly raised in the New
Jersey state court upon remand.
13