W.G. Clark Constr. Co. v. Pac. Nw. Reg'l Council of CarpentersW.G. Clark Constr. Co. v. Pac. Nw. Reg'l Council of Carpenters
Since then, however, courts across the country (including federal courts here in the Ninth Circuit) have analyzed the United States Supreme Court‘s developing ERISA
FACTS
The basic facts of this case are largely undisputed. In 2010, the University of Washington contracted with W.G. Clark Construction Co. for a student housing construction project. W.G. Clark subcontracted certain scaffolding work on the project to Paramount Scaffold, Inc. Paramount entered into a collective bargaining agreement with the Pacific Northwest Regional Council of Carpenters (Union) to provide laborers for the scaffolding work. As is common in this type of labor agreement, Paramount agreed to compensate the laborers for their work in two ways: by paying wages and by making contributions to certain trusts that provide benefits to the laborers, their dependents, and their beneficiaries (collectively the Trusts).1
In June 2012, the Trusts and the Union reported that Paramount had failed to make $64,905.48 in required payments to the Trusts for work performed by the Union laborers. Later records indicate that Paramount was insolvent. The Trusts and the Union issued a notice of claim on lien on the student housing project pursuant to
W.G. Clark filed for declaratory judgment in King County Superior Court, requesting that the lien be released. W.G. Clark moved for summary judgment, arguing that ERISA preempted any claims the Trusts might have under
The King County Superior Court judge granted summary judgment to W.G. Clark, ruling that our state precedent is clear that such state law claims are preempted by ERISA. The judge acknowledged that the outcome would have been different in federal court and lamented, “Ultimately, this is going to have to get resolved one way or another .... [F]rom my perspective, it‘s broken.” Clerk‘s Papers at 465.
In light of the judge‘s decision in the King County Superior Court case, United States District Court Judge Ricardo Martinez ruled that he had no choice but to dismiss the federal case. Nonetheless, he pointed out the serious consequences of the existing conflict between the state and federal courts on this issue:
The situation is unfortunate, because diverging results in state and federal court inevitably perpetuate the practice of forum shopping. As in the present case, Defendants acknowledge they filed a “preemptive declaratory judgment action” (Dkt. # 22, p. 5) in Superior Court in order to receive a favorable ruling. Such action constitutes blatant forum shopping, which is highly discouraged.
Br. of the Appellant Carpenters Trusts, Ex. 1, at 7-8.
ISSUE
Should we adopt the reasoning of the federal courts and hold that under current United States Supreme Court precedent, ERISA does not preempt the Trusts’ chapters 39.08 and 60.28 RCW claims?
ANALYSIS
ERISA is a set of federal laws that regulates pension and welfare plans. Merit, 123 Wn.2d at 568. Congress passed ERISA in 1974 with two goals in mind: “to protect plan participants and beneficiaries from abuses and mismanagement in the administration of employee pension and benefit plans” and “to protect plan administrators from the ‘burden that would be imposed by a patchwork scheme of regulation.‘” Haw. Laborers’ Trust Funds v. Maui Prince Hotel, 81 Haw. 487, 493, 918 P.2d 1143 (1996) (quoting Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11-12, 107 S. Ct. 2211, 96 L. Ed. 2d 1 (1987)). The second goal was addressed through ERISA‘s preemption clause, which provides that ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” covered under ERISA.
At issue in this case is whether ERISA preempts claims made under two Washington state laws:
As described above, the workers on this project did not receive the compensation they were owed in the form of payments to the Trusts that provide the workers with various health and retirement benefits, but the superior court ruled that under this court‘s precedent in Merit and Trig Electric, the Trusts’ claims under chapters 39.08 and 60.28 RCW are preempted by ERISA. The Trusts appeal that ruling, arguing that chapters 39.08 and 60.28 RCW are not preempted by ERISA under current federal jurisprudence and that Washington courts should adopt the reasoning of the federal courts. We agree. First, we agree with the reasoning of the federal courts, which have concluded that current United States Supreme Court case law requires that we begin our ERISA preemption analysis with a presumption that state law is not preempted, and that laws of general applicability with only “a tenuous, remote, or peripheral connection with ERISA plans” are not preempted. See Standard Indus., 247 F.3d at 927 (citing District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130 n.1, 113 S. Ct. 580, 121 L. Ed. 2d 513 (1992)). Second, we recognize the need to address the current conflict between state and federal courts in Washington, which has resulted in blatant forum shopping and created inconsistent and unjust results for parties in Washington.
I. We Agree with the National Consensus That These State Laws Are Not Preempted by ERISA under Current United States Supreme Court Case Law
ERISA preemption is a matter of federal law. Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 830, 108 S. Ct. 2182, 100 L. Ed. 2d 836 (1988). On matters of federal law, we are bound by the decisions of the United States Supreme Court. Home Ins. Co. of N.Y. v. N. Pac. Ry., 18 Wn.2d 798, 808, 140 P.2d 507 (1943). Decisions of the federal circuit courts are “entitled to great weight” but are not binding. Id. In Merit, we cited four federal circuit court opinions to support our interpretation of United States Supreme Court case law on ERISA preemption. See Merit, 123 Wn.2d at 572. But two of these cases were later expressly overruled, and the other two involved statutes that—unlike those at issue here—expressly referred to benefit trust funds. See Standard Indus., 247 F.3d at 929 (expressly overruling two of the cases cited in Merit); Merit, 123 Wn.2d at 572-73 (describing the statutes considered in two of the federal circuit cases as expressly referring to ERISA plans); Carpenters Local Union No. 26 v. U.S. Fid. & Guar. Co., 215 F.3d 136, 142 (1st Cir. 2000) (describing the reasoning of the earlier First Circuit case as relying on the fact that the statute “‘expressly single[d] out ERISA plans for special treatment‘” (alteration in original) (quoting McCoy v. Mass. Inst. of Tech., 950 F.2d 13, 19 (1st Cir. 1991))). Therefore, it is appropriate for us to consider current federal circuit court case law on ERISA preemption in our analysis.
Courts throughout the country—both state and federal—have reached a consensus that under the United States Supreme Court‘s ruling in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645, 115 S. Ct. 1671, 131 L. Ed. 2d 695 (1995), ERISA does not preempt state lien statutes that are generally designed to ensure that workers are paid for their work and do not specifically target benefit trust funds. See generally Forsberg v. Bovis Lend Lease, Inc., 2008 UT App 146, ¶ 32 n.19, 184 P.3d 610 (reviewing the history of this issue and noting that although prior to Travelers, many courts had concluded that this type of claim was preempted by ERISA, “[t]he only post-Travelers case we have found that holds ERISA preempts a mechanics’ lien statute of general application is [Trig Electric].“); Cent. Laborers’ Pension Fund v. Nicholas & Assocs., Inc., 2011 IL App (2d) 100125, ¶¶ 32-45, 956 N.E.2d 609, 353 Ill. Dec. 747 (noting that Trig Electric now represents the “minority view” on this issue and citing no other courts that currently adhere to its approach), cert denied, 132 S. Ct. 2380 (2012).
The Ninth Circuit Court of Appeals’ analysis in Standard Industrial is representative of these cases, and we find its reasoning persuasive. The court started with the presumption laid out by the United States Supreme Court “‘that Congress did not intend ERISA to preempt areas of “traditional state regulation” that are quite remote from the areas with which ERISA is expressly concerned.‘” Standard Indus., 247 F.3d at 928-29 (quoting Rutledge v. Seyfarth, Shaw, Fairweather & Geraldson, 201 F.3d 1212, 1217 (9th Cir. 2000)). The court then turned to the test laid out by the United States Supreme Court: a state law “‘relates to‘” ERISA—and is thus preempted—if it has a “‘connection with‘” or a “‘reference to‘” ERISA plans. Id. at 925 (quoting Geweke Ford v. St. Joseph‘s Omni Preferred Care Inc., 130 F.3d 1355, 1358 (9th Cir. 1997)). “A statute has an impermissible ‘reference to’ an employee benefit plan if it acts immediately and exclusively upon the plans or if the plans are essential to the law‘s operation.” Id. (quoting Egelhoff v. Egelhoff, 532 U.S. 141, 147, 121 S. Ct. 1322, 149 L. Ed. 2d 264 (2001)). A statute has a “‘connection with‘” ERISA if it “‘implicates an area of core ERISA concern’ and jeopardizes national uniformity in plan administration.” Id. (quoting Egelhoff, 532 U.S. at 147).
Applying this rule to a state law that required public works projects to issue payment bonds to ensure workers are paid for their labor, the court concluded that the law had neither a “‘connection with‘” nor a “‘reference to‘” ERISA plans. Id. at 925-26 (quoting Geweke Ford, 130 F.3d at 1358). The court reasoned that such laws do not require the establishment of a separate plan or impose any reporting, disclosure, funding, or vesting requirements for ERISA plans. Id. at 925. The court also pointed out that the statute functions irrespective of any ERISA plans. Id. at 926. It is simply a general law that ensures workers receive payment for their work on public projects and has no special applicability to ERISA plans. Ultimately, the court concluded that “the effect of this state regulated relationship
This reasoning is sound and we now adopt it. These statutes are in place to ensure that workers on public projects are paid for their work. They apply generally to all workers on public projects, regardless of the type of work they perform or how they are paid. The laws have nothing to do with regulating how pension plans operate and thus do not encroach on ERISA‘s territory.
II. These State Claims Are outside ERISA‘s Scope and Thus Are Not Alternative Enforcement Mechanisms
Generally, state statutes that provide plans and participants with alternative mechanisms for enforcing ERISA obligations are preempted. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 144, 111 S. Ct. 478, 112 L. Ed. 2d 474 (1990) (explaining that Congress intended for Section 502(a) of ERISA,
More fundamentally, the argument that these statutes are alternative enforcement mechanisms fails because state lien claims that apply to third parties are outside the scope of ERISA and thus not preempted. See Bellemead, 11 F. Supp. 2d at 517. ERISA regulates the responsibilities of employers and those administering pension plans with the goal of “protect[ing] plan participants and beneficiaries from abuses and mismanagement in the administration of employee pension and benefit plans.” Maui Prince Hotel, 81 Haw. at 493. Here, W.G. Clark is not an employer or plan administrator and thus is not subject to ERISA obligations. W.G. Clark contends that since it has no obligations under ERISA, state law cannot impose any similar obligations. But the state laws at issue do not assign any ERISA-like obligations to W.G. Clark. The state law has nothing to do with the administration or management of a pension plan. It simply provides a mechanism to ensure that all workers on public projects are paid the amounts they are owed. Ensuring workers are paid for their work does not fall within the scope of ERISA.
Because we hold that ERISA does not preempt the Trusts’ claims, we do not reach their argument that to hold otherwise would violate their due process and equal protection rights.
III. Stare Decisis
Finally, we take this opportunity to clarify how we apply the doctrine of stare decisis when the United States Supreme Court provides additional guidance or clarifies the proper analytical approach for a federal issue. Generally, under stare decisis, we will not overturn prior precedent unless there has been “a clear showing that an established rule is incorrect and harmful.” In re Rights to Waters of Stranger Creek, 77 Wn.2d 649, 653, 466 P.2d 508 (1970). However, this court must have the flexibility to consider emerging United States Supreme Court case law when considering earlier decisions on federal issues. As the First Circuit
stare decisis is neither a straightjacket nor an immutable rule; it leaves room for courts to balance their respect for precedent against insights gleaned from new developments, and to make informed judgments as to whether earlier decisions retain preclusive force.
U.S. Fid. & Guar. Co., 215 F.3d at 142. The court observed that there are “‘relatively rare‘” occasions when a court should eschew prior precedent in deference to intervening authority. Id. at 141 (quoting Williams v. Ashland Eng‘g Co., 45 F.3d 588, 592 (1st Cir. 1995)). We agree. The doctrine of stare decisis should not keep this court from fully considering all United States Supreme Court guidance on federal issues, even when the newer cases have not directly overruled or superseded prior cases. See id. at 141-42.
Thus, we can reconsider our precedent not only when it is has been shown to be incorrect and harmful but also when the legal underpinnings of our precedent have changed or disappeared altogether. See United States v. Gaudin, 515 U.S. 506, 521, 115 S. Ct. 2310, 132 L. Ed. 2d 444 (1995) (declaring that stare decisis may yield when a precedent‘s “underpinnings [have been] eroded[] by subsequent decisions of [the] Court“); Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833, 854-55, 112 S. Ct. 2791, 120 L. Ed. 2d 674 (1992) (observing that review of a precedent might be justified when “related principles of law have so far developed as to have left the old rule no more than a remnant of abandoned doctrine“).
CONCLUSION
Merit was a reasonable interpretation of United States Supreme Court precedent in 1994, but the United States Supreme Court has since narrowed its ERISA preemption doctrine. Since the last time we considered the rule in Trig Electric, other jurisdictions, including the Ninth Circuit Court of Appeals, have consistently held that these types of state claims are not preempted by ERISA. Not only is their reasoning persuasive, but the existing split encourages litigants to engage in blatant and harmful forum shopping. We take this opportunity to update our approach to ERISA preemption in light of these developments. We reverse the trial court‘s summary judgment ruling and remand for further proceedings in accordance with this opinion.
OWENS, J.
WE CONCUR:
MADSEN, C.J.
STEPHENS, J.
WIGGINS, J.
GONZALEZ, J.
FAIRHURST, J.
GORDON McCLOUD, J.