Merit Construction Alliance et al v. City of Quincy

Filing 34

Judge Rya W. Zobel: Memorandum of Decision entered denying 21 Motion for Partial Summary Judgment; granting 23 Motion for Partial Summary Judgment. The parties shall prepare an order for final judgment. (Urso, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

CIVIL ACTION NO. 12-10458-RWZ

MERIT CONSTRUCTION ALLIANCE, et al.
v.
CITY OF QUINCY

MEMORANDUM OF DECISION
February 1, 2013

ZOBEL, D.J.
The City of Quincy requires all contractors bidding on city construction projects
to maintain an apprenticeship program approved by the Massachusetts Division of
Apprentice Training. Plaintiffs challenge that requirement as preempted by the
Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. The
parties now cross-move for partial summary judgment.
I.

Background
The background facts are explained in the court’s previous order on plaintiffs’

motion for a preliminary injunction. Briefly, plaintiffs are two construction companies, a
trade association of construction companies, and a construction worker. They originally
sued Quincy to challenge a number of city regulations imposing prerequisites on
bidders for public works projects. Most of those claims are being settled, leaving only
the present dispute over Quincy’s apprenticeship requirement.

II.

Legal Standard
Summary judgment will be granted if there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(a). The court must view the record in the light most favorable to the nonmovant and
draw all justifiable inferences in that party’s favor. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986). Where the parties cross-move for summary judgment, the court
applies this standard to each motion. See Atlantic Fish Spotters Ass’n v. Evans, 321
F.3d 220, 224 (1st Cir. 2003).
III.

Analysis
ERISA preempts all state laws “insofar as they may now or hereafter relate to

any employee benefit plan.” 29 U.S.C. § 1144. The term “employee benefit plan”
includes employer-administered apprenticeship programs. 29 U.S.C. § 1002(1).
However, ERISA only covers benefit programs that the employer finances through a
separate fund; “an employee benefit program not funded through a separate fund is not
an ERISA plan.” Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., 519
U.S. 316, 326 (1997).
A state law “relates to” an ERISA plan (and so is preempted) if it “has a
connection with or reference to such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85,
97 (1983). This standard sets a two-prong test: the state law is preempted either if it
has a “reference” to an ERISA plan, or if it has a “connection with” such a plan. A state
law has reference to an ERISA plan if it “acts immediately and exclusively upon ERISA
plans,” or if “the existence of ERISA plans is essential to the law’s operation.”
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Dillingham, 519 U.S. at 325. Separately, a state law has a connection with ERISA plans
if it “mandate[s] employee benefit structures or their administration.” Id. at 328 (quoting
N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514
U.S. 645, 658 (1995)).
The parties agree that Quincy’s apprenticeship requirement has no reference to
an ERISA plan, because it applies to both ERISA and non-ERISA apprenticeship
programs (that is, both separately-funded and non-separately-funded programs). See
id. at 325 (finding no reference where “approved apprenticeship programs need not
necessarily be ERISA plans”). Therefore, the only question is whether Quincy’s
apprenticeship requirement has a “connection with” ERISA apprenticeship programs.
It does. Quincy’s regulation requires bidders to “maintain or participate in a bona
fide apprentice training program . . . that is approved by the [Massachusetts] Division of
Apprentice Training.” Docket # 26, Ex. B, at 1.1 First, then, Quincy requires its bidders
to have an apprenticeship program. But cf. Simas v. Quaker Fabric Corp. of Fall River,
6 F.3d 849, 852 (1st Cir. 1993) (“[A] state statute that obligates an employer to
establish an employee benefit plan is itself preempted even though ERISA itself neither
mandates nor forbids the creation of plans.”) Second, Quincy requires bidders’
apprenticeship programs to be approved by the Massachusetts Division of Apprentice
Training. That necessitates compliance with a number of state regulations, including
substantive training standards, program performance standards, and recordkeeping
1

This version of the regulation, proffered in the original complaint and as an
exhibit to Quincy’s motion from summary judgment, dates to 2000. The record also
reflects an updated version of the regulation from 2010 with slightly different wording.
See Docket # 23, Ex. A. The differences are insignificant.
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standards. See 453 Mass. Code Regs. § 7.01 et seq. So Quincy’s regulation effectively
makes Massachusetts standards mandatory for its bidders’ apprenticeship programs,
including any ERISA apprenticeship programs. By setting compulsory standards that
apply to ERISA apprenticeship programs, Quincy’s regulation “mandate[s] employee
benefit structures [and] their administration.” Dillingham, 519 U.S. at 328 (quoting
Travelers, 514 U.S. at 658). It is therefore preempted for its “connection with” ERISA
plans.
The contrast between this case and Dillingham is instructive. In Dillingham, the
Supreme Court considered a California statute allowing contractors to pay a lower
wage to workers in approved apprenticeship programs but not unapproved
apprenticeship programs. The Court found ERISA did not preempt the California statute
because the statute only gave employers an economic incentive to use approved
apprenticeship programs; its strictures were not mandatory. See id. at 330-34. The
Court emphasized in upholding the statute that “[n]o apprenticeship program is
required by California law to meet California’s standards.” Id. at 332.
Here, on the other hand, Quincy’s regulation requires every bidder to have an
apprenticeship program meeting Massachusetts standards. The regulation thus has a
connection with the ERISA apprenticeship programs it governs. See Minn. Chapter of
Associated Builders & Contractors v. Minn. Dep’t of Pub. Safety, 267 F.3d 807, 814-18
(8th Cir. 2001); Simas, 6 F.3d at 852 (“By preventing states from imposing divergent
obligations, ERISA allows each employer to create its own uniform plan . . . capable of
applying uniformly in all jurisdictions where the employer might operate.”); Utility
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Contractors Ass’n of New Eng. v. City of Fall River, Civil Action No. 10-10994-RWZ,
2011 WL 4710875 at *7 (D. Mass. Oct. 4, 2011) (“Fall River . . . not only requires
bidders and contractors to operate such a program, but also requires approval by the
state . . . . Such an apprenticeship program mandate is preempted by ERISA.”).
Quincy emphasizes that neither of the construction companies appearing as
plaintiffs actually operates an ERISA apprenticeship program. The plaintiffs finance
their apprenticeship programs from their general assets, not from separate funds. But
the test for ERISA preemption is not whether the regulation has a connection with
ERISA plans operated by these plaintiffs, but whether it has a connection with ERISA
plans generally. Because the regulation sets mandatory standards that apply to ERISA
programs as well as non-ERISA programs, it is preempted.
Quincy’s apprenticeship requirement is substantively identical to the one this
court struck down sixteen months ago. See Fall River, 2011 WL 4710875 at *7. Now as
then, ERISA preempts mandatory apprenticeship program requirements.
IV.

Conclusion
Plaintiffs’ motion for partial summary judgment (Docket # 23) is ALLOWED.

Quincy’s motion for partial summary judgment (Docket # 21) is DENIED. The parties
shall prepare an order for final judgment.

/s/Rya W. Zobel
RYA W. ZOBEL
UNITED STATES DISTRICT JUDGE

February 1, 2013
DATE

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