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ASSOCIATED BUILDERS & CONTRS. v. CURRY

July 14, 1992

ASSOCIATED BUILDERS AND CONTRACTORS, etc., et al., Plaintiff (s),
v.
JAMES CURRY, etc., et al., Defendant (s). WALTHER ELECTRIC COMPANY, etc., et al., Plaintiff (s), vs. JAMES CURRY, etc., et al., Defendant (s).



The opinion of the court was delivered by: FERN M. SMITH

 INTRODUCTION

 This Order addresses the merits of motions for summary judgment in the two above-captioned cases.

 In the first action, the Golden Gate Chapter of the Associated Builders and Contractors (ABC) seeks summary judgment granting injunctive relief against California State Labor Commissioner James Curry and California Director of Industrial Relations Ronald T. Rinaldi ordering that ABC's various federally-approved "training programs" for construction trades be treated as "apprenticeship programs" for purposes of state public works contracts and/or to bar application of California's prevailing wage statute to its training programs. As grounds for the injunction, ABC asserts that state authority is preempted by three federal statutes, the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1381 (ERISA), the Fitzgerald Act, 29 U.S.C. §§ 50-50b and the National Labor Relations Act, 29 U.S.C. §§ 151-168 (NLRA). ABC also contends that the state's apprenticeship-approval system, as applied, violates the equal protection clause of the Fourteenth Amendment.

 In the second action, Walther Electric Company seeks similar relief against the same defendants on the same general grounds. The facts differ materially in some respects as described below.

 The parties to both cases agree that no material facts are in dispute. Because the legal issues in both cases overlap substantially, this Order addresses the legal issues jointly.

 The Court makes three major findings regarding plaintiffs' ERISA arguments:

 (1) Plaintiffs' "training programs," approved pursuant to the Davis-Bacon Act, are not legally equivalent to "apprenticeship programs" approved pursuant to the Fitzgerald Act and the California Apprenticeship Act.

 (2) For this reason, the California Apprenticeship Act and regulations thereunder do not "relate to" or "purport to regulate" plaintiffs' training programs and are not, as plaintiffs contend, preempted by ERISA.

 (3) California's prevailing wage law mandates that contractors pay journeyman wages to enrollees in their "training programs" when employing them on state public works projects, but does not thereby "relate to" or "purport to regulate" plaintiffs' training programs and is not preempted by ERISA.

 For the reasons stated herein, plaintiffs' contentions regarding preemption by the Fitzgerald Act and the NLRA are similarly without merit. The Court therefore grants summary judgment for the defendants in both actions.

 FACTUAL BACKGROUND

 A. ABC v. Curry

 In the early 1980s, ABC set out to establish training programs in several job classifications, including electrical, plumbing, insulation, carpenters, cement masons, heating and air conditioning, sheetmetal and operating engineers. Between 1982 and 1985, the United States Department of Labor's Bureau of Apprenticeship Training (BAT), a subdivision of the Employment and Training Administration (ETA), approved ABC's various programs as "training programs" for purposes of the employment of enrollees on federal works projects pursuant to the provisions of the Davis-Bacon Act, 40 U.S.C. section 276a and regulations thereunder (29 C.F.R. Part 5).

 In 1987, finding the ABC training programs deficient in the areas of documenting the selection and training of trainees, completion rates, *fn1" and equal opportunity employment, BAT imposed a moratorium on new enrollments. This restriction remained in effect until August of 1990.

 In November 1989, meanwhile, ABC applied to have its training programs approved as California-recognized apprenticeship programs under the California Apprenticeship Act, California Labor Code Division 3, Chapter 4, sections 3070 et seq. and its implementing regulations, Cal. Code Regs., tit. 8, §§ 200 et seq. State approval of apprenticeship programs authorizes program sponsors to pay enrollees employed on state public works projects the prevailing wage for apprentices (Labor Code section 1777.5); without approval, sponsors must pay enrollees the prevailing wage for journeymen under California's prevailing wage statute (Labor Code section 1771) when employing them on state public works projects. Section 1777.5, in effect, authorizes a limited and carefully-regulated exception to California's prevailing wage law for state-funded projects.

 The California Apprenticeship Council (CAC), which is located within the California Department of Industrial Relations's Division of Apprenticeship Standards (DAS) exercises approval authority over apprenticeship programs pursuant to the Fitzgerald Act, 29 U.S.C. § 50 and 29 C.F.R. §§ 29.12. The federal regulations establish criteria under which BAT may recognize an appropriate state agency as a "state apprenticeship agency" or "stated apprenticeship council" (SAC) for the purpose of registering local apprenticeship programs for federal purposes. 29 C.F.R. § 29.12. The CAC has at all times relevant to this action been formally recognized by the BAT as authorized to register and approve apprenticeship programs pursuant to the Fitzgerald Act and its regulations. *fn2"

 Under the authority of the California Apprenticeship Act, the CAC promulgates rules and regulations establishing minimum standards of wages, hours, and working conditions for apprentices. See Cal. Code Regs. tit. 8 (§§ 200 et seq.). Section 212 of the regulations provides that "apprenticeship programs shall be established by written standards approved by the Chief of DAS" and sets forth a detailed list of program standards that must be provided for before the program is approved. Cal. Code Regs. tit. 8, § 212.

 ABC's application for state approval did not go smoothly. After DAS requested a substantial amount of additional information in support of the application, ABC abandoned the application process.

 Meanwhile, in 1990, while the federal restriction on new enrollments to its training programs was still in effect, ABC applied to BAT to have one or more programs approved as "apprenticeship programs" for federal purposes under the Fitzgerald Act, 29 U.S.C. §§ 50 et seq. and its implementing regulations at 29 C.F.R. Part 29. BAT found the programs deficient under the standards promulgated under the Fitzgerald Act and on that basis returned the application to them, identifying the deficiencies in the program. *fn3"

 In December of 1990, ABC filed this lawsuit.

 B. Walther Electric v. Curry

 As relevant here, Walther Electric differs from ABC in that Walther Electric sought approval as an apprenticeship program for state purposes from the CAC and obtained preliminary approval from the Chief of DAS. Other state-approved apprenticeship programs in the area appealed that decision to the CAC.

 On October 1, 1990, the CAC issued a written opinion reversing the DAS Chief's preliminary approval on the following grounds: (1) that Walther Electric had failed to show the need for a new program, citing California Labor Code section 3075; *fn4" and (2) that approval of Walther Electric's program as a "joint" program was improper under the standards articulated in the federal Fitzgerald Act regulations, because the employee committee member was not a "bona fide employee representative." The CAC also noted evidence that some members of the committee were not qualified to serve in a supervisory capacity. The CAC remanded the program to the DAS Chief for further action. The record contains no information as to the outcome of further proceedings, if any.

 Walther Electric then sought and obtained, on November 30, 1990, registration of its program by the BAT as a training program under the Davis-Bacon Act and its accompanying regulations.

 On February 22, 1991, Walther Electric and the Walther Electric Training Committee filed this lawsuit.

 DISCUSSION

 A. Issues Presented On These Motions

 1. ERISA Preemption : Whether ERISA's preemption provision entitles the ABC and Walther Electric training programs to state approval (or to use apprentice wage levels without state approval) because the programs have secured federal approval as "training programs" under the Davis-Bacon Act.

 2. Fitzgerald Act Preemption : Whether the Fitzgerald Act preempts California's apprenticeship program approval requirements.

 3. NLRA Preemption : Whether Labor Code section 1777.5 violates and is preempted by the NLRA by its reference to "the joint apprenticeship committee administering the apprenticeship standards of the draft or trade in the area of the site of the public work" (emphasis added).

 4. Fourteenth Amendment Equal Protection : Whether the equal protection clause of the Fourteenth Amendment requires state approval -- and access to section 1777.5's exception to the prevailing-wage statute -- for Davis-Bacon Act training programs.

 The Court addresses each of these issues in turn.

 B. ERISA Preemption

 This Court recently found that ERISA does not preempt California's laws establishing and enforcing minimum apprenticeship standards. In Dillingham Constr. N.A., Inc. v. County of Sonoma, 778 F. Supp. 1522 (N.D. Cal. 1991).

 There, the Court agreed that the apprenticeship program at issue was an "employee welfare benefit plan" within the meaning of ERISA section 1002(1), 29 U.S.C. § 1992(1) and that ERISA's preemption clause, 29 U.S.C. § 1144(a), reached the state laws at issue. Dillingham, 778 F. Supp. 1527 at 1527-28 , citing Hydrostorage, Inc. v. Northern California Boilermakers, 891 F.2d 719 (9th Cir. 1989), cert. denied, ____ U.S. ____, 111 S. Ct. 72 (1990).

 The Court further found, however, that ERISA's savings clause, 29 U.S.C. § 1144(d), preserved the provisions of the Fitzgerald Act, 29 U.S.C §§ 50. Following the Ninth Circuit's analysis in Electrical Joint Apprenticeship Committee v. MacDonald, 949 F.2d 270 (9th Cir. 1991), cert. denied, ____ U.S. //--, 60 U.S.L.W. 3858 (June 22, 1992), the Court concluded that state approval functions adopted pursuant to the Fitzgerald Act and its implementing regulations (specifically, 29 C.F.R. § 29.12) and approved by the BAT thereunder are not preempted by ERISA. State approval functions that lie outside the "Fitzgerald Act spotlight" (see Dillingham, 778 F. Supp. ...


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