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.
No. 13-3005.
United States Court of Appeals, Third Circuit.
July 28, 2014.
760 F.3d 297
Submitted Pursuant to Third Circuit LAR 34.1(a) Feb. 14, 2014.
Gregory R. Begg, Esq., Alexander X. Saunders, Esq., Peckar & Abramson, River Edge, NJ, Counsel for Appellee.
Before: McKEE, Chief Judge, CHAGARES, and SHWARTZ, Circuit Judges.
CHAGARES, Circuit Judge.
In this case, we must decide whether the New Jersey Prevailing Wage Act,
I.
A.
The PWA provides that laborers on certain public works projects are to be paid the prevailing wage.
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.”
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.
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
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 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),
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 inter-
The District Court also concluded that the action was expressly preempted by ERISA § 514,
II.
We have jurisdiction over the final decision of the District Court pursuant to
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 notwithstanding the absence of a federal cause of action on the face of the complaint.”
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.
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 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.
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
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.
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 hospital 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 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
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.”
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 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
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, “§ 301 cannot be read broadly to preempt 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
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.