Washington Supreme Court says ERISA
doesn’t preempt construction lien laws
OLYMPIA, Wash. — The Wash-
ington Supreme Court ruled March 20
that ERISA laws regulating Taft-Hart-
ley pension and welfare plans do not
preempt state lien laws when it comes
to collecting unpaid or delinquent ben-
efits for union construction workers on
publicly-funded projects.
Taft-Hartley plans are multi-em-
ployer pension plans collectively bar-
gained by a union and a group of em-
ployers, usually in a related industry.
Such plans are governed by a trust —
half of whose trustees are appointed
by the employers, and half by the
union.
The state of Washington enacted
laws a century ago designed to ensure
that construction workers on public
projects were paid for their work. Gen-
eral contractors are required to obtain
a surety bond and withhold a certain
percentage of the contract amount as a
guaranty that taxpayers won’t be on
the hook for unpaid claims. If workers
aren’t paid correctly, liens can be
placed on the project to ensure pay-
ment. Taft-Hartley trust funds in the
state of Washington have routinely as-
serted such claims on behalf of their
participants.
However, in 1994, a contractor
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(Merit Co.) challenged the lien law. It
went all the way to the Washington
Supreme Court, which held that
ERISA (Employee Retirement Income
Security Act) preempted state lien
claims.
It upheld that decision in another
case in 2000.
“Taft-Hartley trusts in Washington
basically were left without a state
court remedy,” said Jeff Maxwell, an
attorney with the Seattle-based law
firm Ekman Thulin, P.S. Maxwell ar-
gued the most recent case before the
Supreme Court on behalf of the Car-
penters Trusts of Western Washington.
Maxwell said Washington’s federal
courts stepped in to help protect the
trusts’ rights to file claims. But the pro-
tection was not complete, as some
sureties and general contractors be-
came savvy enough to seek declara-
tory relief in state court, which, when
reduced to judgment, forced the fed-
eral courts to dismiss the trusts’
claims.
“Such actions resulted in increased,
scorched-earth litigation tactics and
raised costs for all involved,” Maxwell
said.
The case that led to the Supreme
Court reversal involved Carpenters
Union members working for Califor-
nia-based Paramount Scaffold Inc. on
a student housing project at the Uni-
versity of Washington. W. G. Clark
Construction was the general contrac-
tor on the project.
While the project was ongoing, the
Carpenters Trusts of Western Wash-
ington discovered Paramount had
failed to make $64,905 in required
payments to its employees’ health and
welfare plans. The Carpenters Trusts
sued Paramount. The scaffolding com-
pany became insolvent, so the trusts
served liens on W.G. Clark, the univer-
sity, and the insurance company that
issued the performance bond. [Litiga-
tion against Paramount Scaffold and
its purported successor is ongoing.]
W.G. Clark ran directly to state
court for declaratory relief, knowing it
likely would receive a favorable ruling
based on the ERISA preemption.
Which it did.
Meantime, the union trusts filed a
separate action in federal court. How-
ever, in light of the decision in state
court, the federal court judge had no
choice but to dismiss the case.
The trusts then mounted an appeal,
asking the Washington Supreme Court
to overturn its 2000 decision that
ERISA preempted state claims. The
case was accepted on direct review,
briefed, and argued before the justices
on Jan. 14. After a short nine weeks,
on March 20, the Supreme Court is-
sued a unanimous opinion, holding
that claims under state statutes were
not preempted by ERISA.
“This is a huge victory for all Taft-
Hartley trusts in Washington and bene-
fits thousands of Washington work-
ers,” Maxwell said. “Routine claims
on project bonds and retained percent-
age can be made for delinquent fringe
benefit contributions of a subcontrac-
tor, and can now again be enforced in
a simple action in state court.”
Maxwell said the decision should
allow trusts and general contractors to
work together to obtain payment by
joint check and actually lessen the
amount of liens on the bonds, “all
while ensuring union construction
workers get paid the benefits that are
due.”
“We view it as a win-win for every-
one,” he said, while acknowledging
that sureties and general contractors
haven’t yet come around to that view-
point.
The Oregon School Employees Association was a first-time participant at the
25th annual Labor Bowl for MDA. Pictured above right to left are Mike Ali,
Wendy Warner, Kirk Wilkins (wearing hat), Robert Bowles, Lawrence
Rajotte, Scott George (holding bowling ball), Cheri Arthur and Trish
Callaway. The union sponsored two teams and together raised $500 for MDA.
“We had so much fun,” said George, vice president of the union’s Executive
Board. “Look for more next year!”
Union members raise
$11,000 for MDA
Union members raised $11,000 at
the 25th annual Muscular Dystrophy
Labor Bowl, held April 13 at Sunset
Lanes in Beaverton. Since its inception
in 1989, union members have donated
$362,025 to MDA.
Money is raised through pledges and
from a silent auction and goes to buy
wheelchairs and braces for children, as
well as for research and summer camps.
Muscular dystrophy is a hereditary con-
dition marked by a progressive weak-
ening and wasting of the muscles over
time.
This year’s event brought 71 bowlers
from 13 labor organizations, as well as
from Northwest Priority Credit Union.
The top individual fundraiser was Cal
Eddy, a retired Portland firefighter and
member of Local 43. He raised $1,230.
Rick Brandt of Machinists Lodge 1005
captured the men’s high series trophy,
and Marilyn Rae of United Food and
Commercial Workers (UFCW) Local
555 took home women’s high series
hardware. A low score trophy went to
Lois Brumfield of Letter Carriers
Branch 82. Score totals were not avail-
able. Each winning bowler took home a
$50 gift card. For his efforts, Eddy re-
ceived a round of golf and dinner for
two at Chinook Winds, plus a $25. gift
card to the gift shop.
Unions represented at the MDA
Bowl were National Association of Let-
ter Carriers Branches 82 and 1104; the
Northwest Oregon Labor Council; Fire
Fighters Local 43; Machinists Lodges
63, 1005, and 1432; UFCW Local 555;
Plumbers and Fitters Local 290; Amer-
ican Federation of Teachers Local
6732; the Oregon School Employees
Association; Labor’s Community Serv-
ice Agency; Hillsboro Classified
United Local 4671; and NW Priority
Credit Union.
P ROUDLY S ERVING
P ORTLAND W ORKERS
F OR O VER 32 Y EARS
MAY 2, 2014
NORTHWEST LABOR PRESS
PAGE 13