In W.G. Clark Construction Company, the Supreme Court of Washington reversed a trial court’s ruling that ERISA preempted state laws designed to ensure that workers on public projects are paid. In doing so, the Court unanimously overturned the state’s precedent on the matter, to join what the Court found to be a national consensus.
At issue was whether the Employee Retirement Income Security Act of 1974 preempts chapters 39.08 and 60.28 under the Revised Code of Washington, both of which ensure that workers on public projects are paid, without regard to the method of payment. At the heart of this issue was a collective bargaining agreement in which a subcontractor had agreed to compensate workers, in addition to paying their wages, by making contributions to trusts that provided health, retirement, and other benefits. The subcontractor became insolvent and failed to contribute nearly $65,000 required under that agreement.
After being served with a lien, W.G. Clark, the contractor, filed for declaratory judgment in King County Superior Court. W.G. Clark moved for summary judgment, arguing that ERISA preempted the Trusts’ claims under chapters 39.08 and 60.28. As far as W.G. Clark was concerned, it had no obligations to these workers under ERISA, and these state laws are preempted because they seek to enforce such obligations by requiring trust contributions for benefits pursuant to a collective bargaining agreement. W.G. Clark cited Washington precedent in support of its position: Puget Sound Electrical Workers Health & Welfare Trust Fund v. Merit Company (1994), as well as Local Union No. 46 v. Trig Electric Construction Company (2000).
The problem was that, in Standard Industrial Electric Company, the Ninth Circuit Court of Appeals later held that state laws like chapters 39.08 and 60.28 are not preempted by ERISA because such laws have only a “tenuous connection to ERISA plans.” The Ninth Circuit joined what was a growing consensus among state and federal courts across the country, following the U.S. Supreme Court’s ruling in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Company.
Of course, this meant that the Trusts filed a separate action in the U.S. District Court of the Western District of Washington.
The outcome on this question of ERISA preemption depended on whether it was tried in state or federal court. And so, the Court stepped in to resolve the conflict, which it found had caused “blatant forum shopping” and “inconsistent and unjust results for parties in Washington.”
As the Court noted, Merit and Trig Electric were reasonable interpretations of U.S. Supreme Court precedent back in the day. But the Ninth Circuit and many other federal and state courts have since held, against the backdrop of the U.S. Supreme Court’s ERISA jurisprudence, that there is no preemption of a state law with general application that protects workers on public projects and that has “nothing to do” with ERISA. In retrospect, the Supreme Court of Washington’s decision was long overdue.