144 F. Supp. 3d 633
D. Del.2015Background
- ABC (Associated Builders & Contractors, Delaware Chapter) sued New Castle County (NCC) seeking an injunction against enforcement of County Code § 2.05.303.D.3.a, which conditions bidding on public construction contracts > $100,000 on contractors’ participation in approved apprenticeship programs.
- The Code requires bidders to certify participation in a Class A apprenticeship program or a program approved by the U.S. Dept. of Labor or a state apprenticeship agency; Class A status requires graduation of apprentices to journeyperson in 3 of the last 5 years.
- Delaware apprenticeship approval requires active enrolled apprentices within 12 months and cancellation after 180 days of inactivity; only 14 of 26 trade classifications currently have state-approved programs.
- ABC argues the County’s mandatory apprenticeship requirement is preempted by ERISA because apprenticeship programs can be ERISA-covered benefit plans; NCC and Trades Council moved to dismiss and defend under two main theories: (1) the requirement regulates traditional state apprenticeship matters not ERISA-controlled, and (2) NCC is acting as a market participant in its procurement.
- The court evaluated likelihood of success on ERISA preemption, irreparable harm, balance of harms, and public interest and concluded ABC failed to show likelihood of success or irreparable harm on the present record, denying injunctive relief but allowing ABC an opportunity to identify factual issues before dismissal.
Issues
| Issue | ABC's Argument | NCC/Intervenor's Argument | Held |
|---|---|---|---|
| Whether NCC’s apprenticeship bidding requirement is preempted by ERISA | The Code has a sufficient "connection with" ERISA plans because approved apprenticeship programs can be ERISA-covered plans, so ERISA preempts the County mandate | The Code regulates traditional state apprenticeship standards (applies to ERISA and non-ERISA programs alike), does not dictate funding/administration of ERISA plans, and thus does not fall within ERISA’s exclusive domain | Court: ABC failed to show likelihood of success on ERISA preemption; Code is not shown to be ERISA-preempted on this record |
| Whether the market-participant (procurement) exception applies | (Implicit) County procurement rules shouldn’t override federal preemption if they conflict with ERISA | NCC: As the project’s funder/owner, NCC is a market participant and its requirement is tailored to its proprietary interest in its own projects | Court: Market-participant/"specifically tailored" analysis favors NCC — Code applies only to NCC projects and is sufficiently tailored |
| Whether ABC will suffer irreparable harm absent injunctive relief | ABC members will lose work and competitive opportunity that money damages cannot remedy | NCC: The Code provides bidding conditions long in place; members’ choice not to participate does not establish irreparable harm | Court: ABC did not demonstrate irreparable harm on this record; factor favors defendants |
| Whether preliminary injunction should issue considering equities and public interest | ABC: competitive fairness and economic injury to members support injunction | NCC: Delaying project harms public interest in completing public works; public procurement interest supports enforcement | Court: Balance of harms and public interest are evenly weighted; when combined with failure on likelihood/irreparable harm, injunction denied |
Key Cases Cited
- Ferring Pharms., Inc. v. Watson Pharms., 765 F.3d 205 (3d Cir. 2014) (standard for preliminary injunction)
- Ferguson Elec. Co. v. Foley, 115 F.3d 237 (3d Cir. 1997) (ERISA preemption: "connection with" and "reference to" test)
- Dillingham Constr. v. California Div. of Labor Standards Enforcement, 519 U.S. 316 (U.S. 1997) (ERISA preemption framework)
- Merit Constr. Alliance v. City of Quincy, 759 F.3d 122 (1st Cir. 2014) (municipal apprentice-program mandate preempted by ERISA)
- Associated Builders & Contractors v. Michigan Dep’t of Labor & Econ. Growth, 543 F.3d 275 (6th Cir. 2008) (state apprenticeship standards outside ERISA’s core concerns)
- Building & Constr. Trades Council v. Associated Builders & Contractors, 507 U.S. 218 (U.S. 1993) (market-participant/procurement principles)
- Hotel Emps. & Rest. Emps. Union v. Sage Hospitality Res., 390 F.3d 206 (3d Cir. 2004) (two-step market-participant test)