Skillin v. Rady Children's Hospital-San Diego
D071288
| Cal. Ct. App. | Dec 6, 2017Background
- Plaintiff David Skillin worked for Rady Children’s Hospital and had elected a fixed-dollar 403(b) contribution ($700 per pay period) before Rady adopted automatic-percentage contributions.
- Since at least 2009 Rady automatically enrolled new hires at a uniform percent (3%) unless they opted out; by 2014 Rady converted existing fixed-dollar elections to percentage-of-earnings deductions (Skillin was switched to an 18% deduction, later noted as 11%).
- Skillin sued in state court alleging California Labor Code violations for unauthorized wage deductions (Lab. Code §§ 221–224) and inaccurate wage statements (Lab. Code § 226) because Rady deducted more than his written authorization.
- Rady moved for summary judgment, arguing ERISA preemption under 29 U.S.C. § 1144(a) and § 1144(e); the trial court granted summary judgment based on § 1144(a) and rejected § 1144(e) preemption.
- The Court of Appeal affirmed, holding the state-law claims are preempted under ERISA § 514(e) (29 U.S.C. § 1144(e)), obviating the need to resolve § 514(a) preemption; the wage-statement claim was derivative and also preempted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether state-law wage-deduction and wage-statement claims are preempted by ERISA § 514(a) ("relate to" preemption) | Skillin: claims regulate payroll/wages, not plan administration, so no preemption | Rady: state rules affect plan funding/administration and thus are preempted | Not decided as dispositive—court affirmed on § 514(e) grounds though recognized § 514(a) could apply in some analyses |
| Whether state-law claims are preempted by ERISA § 514(e) (preemption of laws that prohibit/restrict automatic contribution arrangements) | Skillin: § 514(e) inapplicable; his situation isn’t an automatic contribution arrangement for new hires only | Rady: § 514(e) preempts state law because California’s written-authorization requirement would restrict automatic contribution arrangements | Held for Rady: § 514(e) preempts the Labor Code claims because applying state written-authorization rules would prohibit/restrict automatic contribution arrangements |
| Whether the wage-statement claim under Lab. Code § 226 survives independently | Skillin: wage statements failed to segregate unauthorized deductions and so claim should survive even if plan-related issues are involved | Rady: § 226 claim is derivative of the unauthorized-deduction claim and thus preempted if that claim is preempted | Held: § 226 claim is derivative of the wage-deduction claim and is likewise preempted under § 514(e) |
Key Cases Cited
- Massachusetts v. Morash, 490 U.S. 107 (1989) (ERISA does not regulate all aspects of wages; distinguishes wage regulation from ERISA plan regulation)
- New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995) (framework for ERISA § 514(a) "connection with" preemption analysis)
- California Division of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316 (1997) (distinguishes "reference to" and "connection with" preemption; state law not preempted when remote from ERISA concerns)
- Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936 (2016) (ERISA preemption promotes uniformity; preemption where state law directly regulates functions central to ERISA plans)
- Betancourt v. Storke Housing Investors, 31 Cal.4th 1157 (2003) (California case rejecting ERISA preemption where state law was of general application and remote from ERISA scheme)
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (2001) (summary judgment standard in California)