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(A version of this article will appear in the California
Construction Law Reporter, published by the West Group.)
By James E. Acret
Union
workers employed by a subcontractor on a residential construction
project recorded a mechanic's lien for $33,236.56 when fringe
benefits required by their collective bargaining agreement
were not paid. The workers and the union filed a foreclosure
suit. The trial court held that the mechanic's lien remedy
was pre-empted by ERISA and sustained a demurrer without
leave to amend. The Court of Appeals reversed. Betancourt
v. Storke Housing Investors, 94 Cal.App.4th 709, 114
Cal.Rptr.2d 551 (2001).
The
trial court relied on the California Supreme Court's decision
in Carpenters So. Cal. Admin. Corp. v. El Capitan Development
Co., 53 Cal.3d 1041 (1991). Since the El Capitan decision,
the U.S. Supreme Court has narrowed the field of laws pre-empted
by ERISA. 29 USC §1144 (a) states that ERISA "shall
supersede any and all state laws insofar as they may…
relate to any employee benefit plan…."
The U.S.
Supreme Court now holds that §1144 (a) pre-empts only
state laws that affect the nature of employee benefit plans
and the objectives of ERISA. Furthermore, pre-emption applies
only when a state law acts immediately and exclusively upon
ERISA plans and when the existence of ERISA plans is essential
to the operation of the state law. The high court assumes
that ERISA does not pre-empt areas of traditional state
regulation.
Wages are of traditional state concern and are
not included in ERISA's definition of an employee benefit
plan. Here, the workers and their union rely on Civil Code
§3110, which relates to wages, rather than on §3111,
which grants lien rights specifically to fringe benefit
trusts. (The trust is not a party to this action.) This
distinguishes the present case from El Capitan, in
which trust funds were plaintiffs and were, therefore, pursuing
a remedy that was viewed as creating an alternative funding
mechanism specifically related to ERISA.
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To learn more about Thelen Reid's Construction and Government Contracts Department, click here. For more information about books and other legal materials written by James Acret, click here and enter "Acret" in the Search Products Field. To learn more about topics covered in this article, contact Paul Berning at (415) 369-7229 or at pwberning@thelen.com.
©2002 Thelen Reid Brown Raysman & Steiner LLP
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