Far from announcing a brave new line for ascertaining ERISA preemption, the post-1997 cases show only a willingness to place more emphasis on the presumption against preemption and on the underlying purposes of the ERISA statute–both of which give the States wider, but hardly unreviewable, berth in regulating the area. The last thing, indeed, that a purpose-driven approach to statutory construction guarantees is clarity. The key effect of permitting judges to generalize from the purposes of a statute, as opposed to just its text, is to give them more rather than less discretion in construing a law’s scope.
The Sixth Circuit opinion in Associated Builders candidly discusses the shortcomings of the intentionalist model of statutory construction while also providing important comment on the Court’s understanding of several seminal Surpreme Court preemption cases.
At issue was a longstanding injunction against the enforcement of Michigan’s statutory requirements on the training and supervision of apprentice electricians. Did ERISA preemption enforcement of the statutes?
ERISA Section 3(1) defines an “employee welfare benefit plan” as:
“Any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants . . . (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds or prepaid legal services . . . .” 29 U.S.C. § 1002(1) (emphasis added).
A Little Background On The Issue
The Supreme Court took a look at this preemption issue in Cal. Div. of Labor Stds. Enforcement v. Dillingham Constr., N.A., 519 U.S. 316, 323 (U.S. 1997). That case involved a statute similar to Michigan’s, and since it held the key to resolving the Sixth Circuit case, it’s worth a quick review.
Under both the Davis-Bacon Act and California’s prevailing wage law, public works contractors may pay less than the prevailing journeyman wage to apprentices in apprenticeship programs that meet standards promulgated under the National Apprenticeship Act, 29 U.S.C.S. § 50; 29 C.F.R. § 29.5(b)(5) (1996); Cal. Lab. Code § 1777.5 (1997).
Now, an apprenticeship program could be sponsored by an individual employer, an individual labor union, a group of employers, a group of labor organizations, or by a joint management-labor venture.
So, #1 if an employer’s plan qualified under ERISA Section 3(1) (see above), and #2 if the California statute required payment of a prevailing wage on public works projects, could the plan sponsor object that ERISA preempted the state law?
A Little More Background
The employer appeared to have a good shot at the issue in Dillingham given the many preemption cases where the Supreme Court had found that state laws impermissibly burdened ERISA plans.
But the tide was turning in the late 1990’s. New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995) had sounded the clarion call.
The Court observed:
A law that does not refer to ERISA plans may yet be pre-empted if it has a “connection with” ERISA plans. Two Terms ago, we recognized that an “uncritical literalism” in applying this standard offered scant utility in determining Congress’ intent as to the extent of § 514(a)’s reach. Travelers, 514 U.S. at 656. Rather, to determine whether a state law has the forbidden connection, we look both to “the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive,” ibid., as well as to the nature of the effect of the state law on ERISA plans, 514 U.S. at 658-659.
The Travelers Analogy
So much in law is accomplished by analogy. Here, the Court in Dillingham held that the case was more like Travelers than like other cases were state statutes were preempted.
Like New York’s surcharge requirement, the apprenticeship portion of the prevailing wage statute does not bind ERISA plans to anything. No apprenticeship program is required by California law to meet California’s standards. . .
The effect of the prevailing wage statute on ERISA-covered apprenticeship programs in California is substantially similar to the effect of New York law on ERISA plans choosing whether to provide health insurance benefits in New York through the Blues, or through a commercial carrier. The prevailing wage statute alters the incentives, but does not dictate the choices, facing ERISA plans. In this regard, it is “no different from myriad state laws in areas traditionally subject to local regulation, which Congress could not possibly have intended to eliminate.”
Back To The Present
With that background, the issue before the Sixth Circuit was really fairly simple to resolve. The state had waited quite a few years to ask that the injunction against enforcement of the statutes be dissolved, and that delay had to be addressed (and it was, favorably to the state).
There was, however, a distinction that had to be considered. Unlike the statute in Dillingham, which merely offered an incentive to some apprenticeship programs, Michigan’s statute imposes requirements on all apprenticeship programs, the so-called ratio and equivalency requirements. (see Note below for more detail)
So the Michigan statute did mandate something. Would this be a significant difference?
Checklist Of Preemption Factors
No, said the Sixth Circuit. The Court’s reasoning provides helpful development of the post-Traveler’s limitations on preemption.
#1 States have long regulated apprenticeship standards and training or that this topic of regulation falls well within their traditional police powers.
#2 The policies underlying the ratio and equivalency rules-the safety of electrical apprentices and appropriate standards of electrical apprenticeship-are “quite remote from the areas with which ERISA is expressly concerned.”
#3 What triggers ERISA’s potential application to these laws is not the existence of an apprenticeship training program, but the existence of a separate fund to support the training program. Yet the allegedly preempted laws concern substantive apprenticeship training standards, not matters directly related to the fund, prompting us to wonder why Congress would want the States’ public-safety authority to regulate substantive apprenticeship training standards to turn on how those plans are financed.
#4 On the preemption theory, ERISA would prevent the States from regulating the safety of apprentices and the standards of electrical apprenticeship, even though ERISA does not regulate these matters either.
#5 Were it otherwise, ERISA might preempt all sorts of laws of general applicability that affect ERISA plans, a view that would preempt a slew of state laws regulating not just apprenticeship standards but also the medical profession, day care centers and the practice of law.
#6 Other courts have held likewise. See, Willmar Elec. Serv. v. Cooke, 212 F.3d 533 (10th Cir. Colo. 2000) andWright Elec., Inc. v. Minn. State Bd. of Elec., 322 F.3d 1025, 1031 (8th Cir. Minn. 2003).
Note: The Sixth Circuit noted a contrary opinion, Minnesota Chapter of Associated Builders and Contractors, Inc. v. Minnesota Department of Public Safety, 267 F.3d 807 (8th Cir. 2001), where the Eighth Circuit held that ERISA preempts a Minnesota statute that resembles Michigan’s.
Little “Bright-Line” Guidance – In addressing the delay in the request that the injunction be dissolved, the Court stated that:
. . . while one could imagine a State responding more quickly to these changes in the law than Michigan did, there are practical reasons for excusing the delay. The district court issued the underlying injunction in 1992, and the first Supreme Court decisions suggesting a new way of viewing ERISA preemption cases came in 1997 when the Court decided Travelers, De Buono and Dillingham. But even the most sophisticated reader of ERISA case law could not claim with a straight face that a red light on regulating apprentice training before 1992 suddenly became green after 1997. In construing the “relate to” scope of preemption, the pre-1992 cases are as context-specific and as short on bright-line guidance as the post-1997 cases.
Ratio and Equivalency Requirements. The ratio requirement provides that all apprentice electricians working in Michigan must register with the State’s electrical administrative board and that the ratio of electrical journeymen or master electricians to registered-apprentice electricians at a job site must be one-to-one. The equivalency requirement provides that all apprentice electricians working in the State must participate in a training program approved by the board–i.e., a program with requirements “equivalent” to those imposed by the U.S. Department of Labor Bureau of Apprenticeship and Training.
Scalia’s Explanation Of Preemption Curtailment – From his concurring opinion in Dillingham:
I think it would greatly assist our function of clarifying the law if we simply acknowledged that our first take on this statute was wrong; that the “relate to” clause of the pre-emption provision is meant, not to set forth a test for pre-emption, but rather to identify the field in which ordinary field pre-emption applies–namely, the field of laws regulating “employee benefit plan[s] described in section 1003(a) of this title and not exempt under section 1003(b) of this title,” 29 U.S.C. § 1144(a).
Our new approach to ERISA pre-emption is set forth in John Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. 86, 99, 126 L. Ed. 2d 524, 114 S. Ct. 517 (1993): “We discern no solid basis for believing that Congress, when it designed ERISA, intended fundamentally to alter traditional pre-emption analysis.” I think it accurately describes our current ERISA jurisprudence to say that we apply ordinary field pre-emption, and, of course, ordinary conflict pre-emption. See generally Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248, 78 L. Ed. 2d 443, 104 S. Ct. 615 (1984) (explaining general principles of field and conflict pre-emption); Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 91 L. Ed. 1447, 67 S. Ct. 1146 (1947) (field pre-emption); Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-143, 10 L. Ed. 2d 248, 83 S. Ct. 1210 (1963) (conflict pre-emption). Nothing more mysterious than that; and except as establishing that, “relates to” is irrelevant