no. 16-15588 in the united states court of appeals for...

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No. 16-15588

IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

THE BOARD OF TRUSTEES OF THE GLAZING HEALTH AND WELFARE TRUST, et al.,

Plaintiffs – Appellees,

v.

SHANNON CHAMBERS, NEVADA LABOR COMMISSIONER, IN HER OFFICIAL CAPACITY,

Defendant – Appellant.

On Appeal from the United States District Court for the District of Nevada

No. 2:15-cv-01754-KJD-VCF

Hon. Kent J. Dawson

APPELLEES’ PETITION FOR REHEARING EN BANC

Daryl E. Martin Wesley J. SmithCHRISTENSEN JAMES & MARTIN

7440 W. Sahara Ave. Las Vegas, NV 89117 Telephone: (702) 255-1718

Counsel for Appellees Painters & Glaziers Joint Trust Funds and Employee Painters’ Trust

Adam P. Segal Bryce C. Loveland BROWNSTEIN HYATT FARBER

SCHRECK, LLP 100 N. City Pkwy, Ste 1600 Las Vegas, NV 89106 Telephone: (702) 382-2101

Counsel for Appellees Plumbers Joint Trust Funds

Case: 16-15588, 10/18/2018, ID: 11052232, DktEntry: 61-1, of 25

TABLE OF CONTENTS

Page

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INTRODUCTION AND RULE 35(B)(1) STATEMENT ............................................................ 1

ARGUMENT ................................................................................................................................. 2

A. The panel majority’s decision ignores established mootness doctrine ......................... 2

B. ERISA reference preemption is eliminated by the panel majority’s decision .............. 5

1. Reference preemption is alive and well ............................................................. 6

2. Senate Bill 223 acts immediately and exclusively on ERISA plans ................ 11

3. Senate Bill 223 “acts upon” ERISA benefit plans in areas of federal concern ..................................................................................................... 16

CONCLUSION ............................................................................................................................ 17


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TABLE OF AUTHORITIES

Page(s)

Cases

Board of Trs. of the Glazing Health and Welfare Trust v. Shannon Chambers, 168 F. Supp. 3d 1320 (D. Nev. 2016) ..................................................................................2, 11

California Div. of Labor Standards Enforcement v. Dillingham, 519 U.S. 316 (1997) .................................................................................................1, 6, 7, 8, 14

Chemical Prod. & Distributors v. Helliker, 463 F.3d 871 (9th Cir. 2006) .................................................................................................1, 4

City of Mesquite v. Aladdin’s Castle, Inc., 455 U.S. 283 (1982) ...............................................................................................................1, 4

Gobeille v. Liberty Mut. Ins. Co., 136 S.Ct. 936 (2016) ..........................................................................................1, 6, 7, 8, 11, 17

Golden Gate Restaurant Ass’n v. City and County of San Francisco, 546 F.3d 639 (9th Cir. 2008) ...........................................................................................1, 6, 10

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 ..............................................................................................................................6

John Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. 86 (1993) .....................................................................................................................8

Kremens v. Bartley, 431 U.S. 119 (1977) ...............................................................................................................1, 4

Lane v. Goren, 743 F.2d 1337 (9th Cir. 1984) .................................................................................................10

Log Cabin Republicans v. United States, 658 F.3d 1162 (9th Cir. 2011) ...............................................................................................1, 4

Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825 (1988) ...........................................................................................1, 6, 7, 8, 10, 11

McBride v. PLM Int’l, Inc., 179 F.3d 737 (9th Cir. 1999) ...................................................................................................11

N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995) ...................................................................................................................8


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Native Vill. of Noatak v. Blatchford, 38 F.3d 1505 (9th Cir. 1994) .............................................................................................1, 3, 4

Qwest Corp. v. City of Surprise, 434 F.3d 1176 (9th Cir. 2006). Dis. Op. 60 and 60 ...................................................................4

Shaw v. Delta AirLines, Inc., 463 U.S. 85 (1983) ...............................................................................................................9, 11

So. Cal. IBEW-NECA Trust Funds v. Standard Indus. Elec. Co., 247 F.3d 920 (9th Cir. 2001) .............................................................................................10, 14

Tobler & Oliver Const. Co. v. Bd. of Trs. of Health & Ins. Fund for Carpenters Local Union No. 971, 84 Nev. 438, 442 P.2d 904 (1968) ...........................................................................................13

Trs. of Bricklayers & Allied Craftsmen Local No. 3 Health & Welfare Trust v. Reynolds Elec. & Eng’g Co., 747 F. Supp. 606 (D. Nev. 1990), aff’d sub nom. Trs. of Bricklayers & Allied Craftsman, Local 3 Health & Welfare Trust v. Structures Mideast Corp., 958 F.2d 378 (9th Cir. 1992) ..........................................................................................................13

Trs. of the Constr. Indus. and Laborers Health and Welfare Trust v. Hartford Fire Ins. Co., 578 F.3d 1126 (9th Cir. 2009) .................................................................................................13

WSB Electric, Inc. v. Curry, 88 F.3d 788 (9th Cir. 1996) .............................................................................................1, 9, 10

Statutes

29 U.S.C. § 1132(g)(2) ..................................................................................................................13

29 U.S.C. § 1144(a) ...............................................................................................................5, 8, 11

29 U.S.C. § 1144(b)(2)(A) ...............................................................................................................8

Other Authorities

2017 Leg., 2017 Reg. Sess. (Nev. 2017) .........................................................................................3

Federal Rule of Appellate Procedure 35(b)(1) .................................................................................1

Federal Rule of Civil Procedure 52(a)(6) ......................................................................................12

Hearing on SB 223 Before the S. Comm. on Commerce, Labor & Energy, 78th Leg. at 21-22 (Nev., March 9, 2015) .......................................................................................15

Senate Bill 223.. ........................................................................................................................ 1-20


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Senate Bill 338 .........................................................................................................................2, 3, 5


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Introduction and Rule 35(b)(1) Statement.

Review en banc is necessary for two reasons. First, this case is of singular

importance to ERISA benefit plans, which provide pension and health and welfare

benefits to millions of Americans. If the panel majority’s opinion stands, it will

have enormous practical implications and potentially allow state legislatures to

unfairly target and create exclusive discriminatory obligations on ERISA benefit

plans.

Second, the panel majority’s opinion is at irreconcilable odds with decisions

of the United States Supreme Court (City of Mesquite v. Aladdin’s Castle, Inc., 455

U.S. 283 (1982); Kremens v. Bartley, 431 U.S. 119 (1977)), and with this Court’s

own decisions in Log Cabin Republicans v. United States, 658 F.3d 1162 (9th Cir.

2011), Chemical Prod. & Distributors v. Helliker, 463 F.3d 871 (9th Cir. 2006)

and Native Vill. of Noatak v. Blatchford, 38 F.3d 1505 (9th Cir. 1994) pertaining to

mootness. The opinion is also at odds with Supreme Court precedent (Gobeille v.

Liberty Mut. Ins. Co., 136 S.Ct. 936 (2016); California Div. of Labor Standards

Enforcement v. Dillingham, 519 U.S. 316 (1997); Mackey v. Lanier Collection

Agency & Service, Inc., 486 U.S. 825 (1988)) and this Court’s decisions in Golden

Gate Restaurant Ass’n v. City and County of San Francisco, 546 F.3d 639 (9th Cir.

2008) and WSB Electric, Inc. v. Curry, 88 F.3d 788 (9th Cir. 1996) pertaining to

ERISA reference preemption.


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Argument.

A. The panel majority’s decision ignores established mootness doctrine.

The panel majority and the dissent agree that there’s a split in this Circuit on

the mootness doctrine. However, as the majority points out, “We are, or course,

bound to follow the rule established by the Supreme Court, not inconsistent circuit

precedent.” Maj. Op. 25 (citing Hart v. Massanari, 266 F.3d 1155, 1171 (9th Cir.

2001)). Analyzing Supreme Court precedent and decisions from this Court, the

dissent properly concluded that this case is moot and therefore this Court has no

constitutional basis on which to reach the merits.

The subject of this appeal, Senate Bill 223 (SB 223), was passed in Nevada’s

2015 legislative session. In response, the Plaintiffs/Appellees filed suit in federal

district court, seeking declaratory judgment that SB 223 was preempted by ERISA.

After reviewing the evidence and oral argument, the District Court ruled that SB

223 was preempted by ERISA in its entirety. Board of Trs. of the Glazing Health

and Welfare Trust v. Shannon Chambers, 168 F. Supp. 3d 1320, 1325 (D. Nev.

2016). At the next legislative session in 2017, Nevada repealed SB 223 and

enacted Senate Bill 338 (SB 338), which became effective on July 1, 2017.

Senate Bill 338 was passed in direct response to the District Court’s order

that SB 223 is preempted. In fact, the introductory digest of the Legislative

Counsel Bureau included in the enacted version of SB 338 specifically identifies


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the District Court’s ruling by name and citation stating that SB 338 was passed to

avoid the ERISA preemption problems created by SB 223. Legislative Counsel’s

Digest, SB 338, 2017 Leg., 2017 Reg. Sess. (Nev. 2017).

Nevada passed SB 338 after briefing on this appeal concluded.

Plaintiffs/Appellees then brought a Motion to Dismiss Appeal based on mootness.

Defendant/Appellant acknowledged that SB 338 mooted nearly all aspects of this

appeal, but opposed the motion based on a single change made in both SB 223 and

SB 338 regarding the statute of limitations.

The panel majority denied Plaintiffs/Appellees’ Motion to Dismiss, applying

a standard that is inconsistent with Supreme Court precedent and several cases

from this Court. Dissenting, Judge Wallace explained that:

Five of the six challenged SB 223 provisions have no analogue in the new SB 338—they were repealed entirely and that repeal was made retroactive to the enactment of SB 223. The sixth provision—SB 223’s provision shortening the limitations period for actions against a general contractor to one year—was replaced with a new provision providing for a two-year limitations period. The result is a complete statutory overhaul by the Nevada Legislature—the law that prompted Plaintiffs’ preemption challenge is no longer on the books. Nor is there any indication the Legislature is “virtually certain,” or even likely, to reenact SB 223.

Dis. Op. 55-56 (quoting Native Vill. of Noatak, 38 F.3d at 1510). Therefore, Judge

Wallace concluded, “this case is moot under our Noatak line of cases, and [] we

have no power to reach the merits.” Dis. Op. 56.

Judge Wallace addresses the panel majority’s opinion on mootness point-by-

point, explaining that the panel majority drew the wrong lessons from the Supreme


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Court’s City of Mesquite, 455 U.S. 283. In that case, “it was the City’s blatant

‘repeal-reenact’ gamesmanship that drove the Court’s holding that repeal of the

objectionable law did not moot the case.” Dis. Op. 57. That limited exception does

not exist here, where there’s absolutely no evidence or history of the type of

“‘repeal-reenact’ machinations engaged in by the city council in City of Mesquite.”

Dis. Op. 57-58.

The majority simply flipped the mootness rule on its head with its decision.

As explained in the dissent:

According to the majority, City of Mesquite holds that statutory change only moots a case if there is “certainty” that the repealed law will not be reenacted, Maj. Op. at 20 and 24, while the line of cases upon which I rely advance the inverse proposition—that statutory change moots a case unless it is “virtually certain” the repealed law will be reenacted.

Dis. Op. 58.

The line of cases referred to are Ninth Circuit cases interpreting City of

Mesquite, which, as the dissenter points out, “should be followed absent an en banc

decision to the contrary.” Dis. Op. 59. These cases include Noatak, Helliker, Log

Cabin Republicans and Qwest Corp. v. City of Surprise, 434 F.3d 1176 (9th Cir.

2006). Dis. Op. 60 and 60 n.1. These cases are in line with City of Mesquite and

also another Supreme Court case, Kremens v. Bartley, 431 U.S. 119 (1977), which

articulate the rule that statutory change is usually enough to render a case moot.


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For these reasons, the dissenting opinion concluded that the Nevada Legislature’s

repeal of SB 223, and its replacement with SB 338, renders this case moot.

As even the panel majority points out: “To avoid mootness, ‘an actual

controversy must be extant at all stages of review, not merely at the time the

complaint is filed.’” Maj. Op. 17 (quoting Arizonans for Official English v.

Arizona, 520 U.S. 43, 67 (1997)). This Court does not have the constitutional

authority to decide moot cases. Dis. Op. 55 (citing Foster v. Carson, 347 F.3d 742,

747 (9th Cir. 2003)). Instead, as the dissent concludes, “the correct course of action

is to vacate the district court’s judgment and remand with instructions to dismiss

the case as moot.” Dis. Op. 64.

B. ERISA reference preemption is eliminated by the panel majority’s decision.

The majority’s decision also eradicates ERISA reference preemption as

defined by the Supreme Court. If left alone, it leaves state legislatures within the

Ninth Circuit free to unfairly target and exclusively discriminate against ERISA

benefit plans contrary to Congressional legislative intent. See 29 U.S.C. § 1144(a).

Senate Bill 223 was passed by the Nevada Legislature in 2015 with the

intent to and effect of exclusively targeting ERISA benefit plans and for no other

purpose. Far from being a statute of “general applicability,” it sought to impose

requirements on plans, signatory contractors and plan administrators, but no one


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else. This imposition of exclusive requirements on ERISA plans and ERISA-

governed relationships requires complete preemption.

The majority’s opinion brushes this issue aside, stating that although ERISA

plans are specifically mentioned, they are not “acted upon” by the legislation in an

area of federal concern. Maj. Op. 36. Not only is this the improper standard for

determining ERISA preemption as defined by the Supreme Court, but it is also not

true.

1. Reference preemption is alive and well.

As recently as 2016, the Supreme Court reiterated that “the Court’s case law

to date has described two categories of state laws that ERISA

pre-empts”: (1) if the state law has a “reference to” ERISA plans; and (2) if the

state law has an impermissible “connection with” ERISA plans. Gobeille, 136

S.Ct. at 943.

“A law has the forbidden reference where it acts immediately and

exclusively upon ERISA plans, as in Mackey . . . or where the existence of such

plans is essential to its operation, as in, e.g., [District of Columbia v.] Greater

Washington Bd. of Trade, [506 U.S. 125 (1992)], and Ingersoll-Rand Co. v.

McClendon, 498 U.S. 133 [(1990)].” Dillingham, 519 U.S. at 317; see also

Gobeille, 136 S.Ct. at 943 (same quote); Golden Gate, 546 F.3d at 657 (same

quote).


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In Mackey, the Georgia legislature had singled out ERISA benefit plans for

different treatment under state garnishment procedures. The Supreme Court ruled

that specific targeting of ERISA plans is preempted. Mackey, 486 U.S. at 829 and

838 n.12 (“any state law which singles out ERISA plans, by express reference, for

special treatment is pre-empted. See Part II, supra. It is this ‘singling out’ that pre-

empts the Georgia antigarnishment exception”).

Mackey has never been overturned by the Supreme Court and remains

binding precedent on this issue. Moreover, this very principle of reference

preemption was discussed by the Supreme Court as recently as 2016, confirming it

is still the law. Gobeille, 136 S.Ct at 943; see also Dillingham, 519 U.S. at 324

(discussing same).

The panel majority ignores Supreme Court precedent, claiming that the

“modern approach” for reference preemption requires an “obstacle to ERISA’s

objectives or inva[sion of] the federal field.” Maj. Op. 36. Specifically, the panel

majority relies on two presumptions: (1) that state law directed at an area of

traditional state concern is not preempted (citing N.Y. State Conf. of Blue Cross &

Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654-55 (1995)); and (2)

principles of field and conflict preemption apply (citing a single paragraph from

John Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. 86, 99

(1993)). Maj. Op. 34-35.


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There are several problems with the majority’s narrowly tailored approach to

ERISA’s broad preemptive standard. See 29 U.S.C. § 1144(a). First, Travelers

dealt with a statute of general applicability, so it lacked “reference preemption” as

was the case in Mackey or this case. Second, John Hancock was focused on

ERISA’s saving’s clause (29 U.S.C. § 1144(b)(2)(A)), not the initial two factors

for determining ERISA preemption. Neither of these cases overturned or eroded

the Supreme Court’s and this Court’s established method for determining ERISA

preemption of examining the two factors of “reference to” and “connection with”

preemption.

Moreover, the majority’s analysis of “reference to” preemption equates it to

“connection with” preemption. As explained in Gobeille, “connection with”

preemption occurs when a state law “‘governs a central matter of plan

administration’ or ‘interferes with nationally uniform plan administration.’” 136

S.Ct. at 943 (quoting Egelhoff v. Egelhoff, 532 U.S. 141 (2001)).

The majority’s version of ERISA preemption, therefore, effectively deletes

“reference to” preemption in favor of only “connection with” preemption, ignoring

Supreme Court precedent, which has never overturned Mackey on this issue. See,

e.g., Dillingham, 519 U.S. at 317 and 324 (citing Mackey). This plainly conflicts

with Congress’ intent, turning 29 U.S.C. § 1144(a) into a mere conflict preemption


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statute, despite the Supreme Court’s instructive legislative history analysis in Shaw

v. Delta AirLines, Inc., 463 U.S. 85 (1983):

Nor, given the legislative history, can [ERISA] § 514(a) be interpreted to pre-empt only state laws dealing with the subject matters covered by ERISA—reporting, disclosure, fiduciary responsibility, and the like. The bill that became ERISA originally contained a limited pre-emption clause, applicable only to state laws relating to the specific subjects covered by ERISA. The Conference Committee rejected these provisions in favor of the present language, and indicated that the section’s pre-emptive scope was as broad as its language. . . . Statements by the bill’s sponsors during the subsequent debates stressed the breadth of federal pre-emption.

463 U.S. at 98-99 (citation omitted).

Ignoring the teachings of Shaw, the panel majority references this Court’s

cases in an effort to support its incorrect position. See Maj. Op. 45-53 (citing

Golden Gate; So. Cal. IBEW-NECA Trust Funds v. Standard Indus. Elec. Co., 247

F.3d 920 (9th Cir. 2001); WSB Elec. Inc. v. Curry, 88 F.3d 788 (9th Cir. 1996); and

Lane v. Goren, 743 F.2d 1337 (9th Cir. 1984)). However, those cases don’t support

the majority’s position.

For example, the majority relies heavily on WSB Electric, where this Court

determined that a state prevailing wage law was not preempted by ERISA. That

case has no bearing on this one, however, where the legislation at issue did not

target ERISA benefit plans and had no effect on them. 88 F.3d at 793. It was a


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statute of general applicability that simply took fringe benefit plans into account

when calculating the cash wage that must be paid by contractors. Id.

Similar to the prevailing wage law in WSB Electric, in Golden Gate, a City

ordinance required employers working within its jurisdiction to pay minimum

healthcare expenditures for their employees. 546 F.3d at 644. In analyzing

“reference to” preemption, this Court determined the ordinance was not preempted

because it “does not act on ERISA plans at all, let alone immediately and

exclusively.” 546 F.3d at 657. Lane v. Goren similarly involved an

antidiscrimination statute of general applicability.

Standard Industrial was different in that it actually involved a state law

enacted prior to ERISA. Obviously, such a law “could not have intended in 1971 to

refer specifically to an ERISA plan . . . which it fails to do on its face.” 247 F.3d at

926 (citing Dillingham, 519 U.S. at 330).

Like the other state and city laws previously mentioned, each of the laws at

issue were laws of general applicability. There’s no mention in any of the cases

relied on by the majority that the laws at issue singled out ERISA plans for special

treatment like the Georgia legislature did in Mackey or the Nevada Legislature did

with SB 223.

Ultimately, Mackey is still binding precedent on this Court. Like the Georgia

statute at issue in Mackey, SB 223 attempts to regulate ERISA benefit plans,


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administrators and signatory contractors differently under state collection and lien

laws. Specific targeting and unequal treatment of ERISA plans is precisely why

Mackey has never been overturned in a post-Travelers era. It’s also one major

reason why 29 U.S.C. § 1144(a) was passed in the way that it was, to avoid this

very type of discrimination against ERISA plans. See Shaw, 463 U.S. at 98-99.

2. Senate Bill 223 acts immediately and exclusively on ERISA plans.

The District Court found that SB 223 referred “exclusively, to ERISA

benefit trusts,” was “specifically design[ed] to affect employee benefit plans” and

“creat[es] new duties and relationships between the contractors and ERISA

fiduciaries.” Chambers, 168 F. Supp. 3d at 1322-24. Among these duties are new

reporting requirements, which may alone require preemption. McBride v. PLM

Int’l, Inc., 179 F.3d 737, 745 (9th Cir. 1999). Just two years ago, in Gobeille, 136

S.Ct. at 945, the Supreme Court held that a state law compelling reporting beyond

ERISA’s already-extensive requirements—even reporting that merely parallels the

requirements of ERISA—“intrudes upon a central matter of plan administration

and interferes with nationally uniform plan administration” and is therefore

preempted. ERISA preempts state laws that regulate plan administration (like

reporting requirements) even if the state law exercises a traditional state power. Id.

at 946 (citing Egelhoff, 532 U.S. at 151-52).


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Federal Rule of Civil Procedure 52(a)(6) requires a reviewing court to base

its decision on the trial court’s factual findings unless they are clearly erroneous.

Yet, the majority never attempts to show that the District Court got its facts wrong.

To avoid reference preemption, the majority ignores the factual record below and

instead performs its own superficial analysis of each of the offending sections of

SB 223, claiming that Sections 1(2) and 4(7) don’t act exclusively on ERISA plans

and although Sections 4(8) and 5 do act exclusively, they avoid the federal field

occupied by ERISA. Maj. Op. 46-49. Not only is this the incorrect standard under

established Supreme Court precedent as mentioned previously, it’s simply not true.

The text of the bill shows it was intended to regulate ERISA benefit plans.

Section 1(2) purports to limit the types of damages that must be paid by an original

contractor, but only for claims brought by a “health or welfare fund or any other

plan for the benefit of employees in accordance with a collective bargaining

agreement.” The preempted law’s effectiveness and impact depend entirely on the

existence of ERISA benefit plans, without which the law has no impact at all.

Section 3(2) (which is completely ignored by the panel majority in the

reference preemption portion of its opinion), likewise purports to limit the form of

damages that may be collected by redefining “fringe benefit” to exclude interest,

liquidated damages, attorney’s fees and costs, all of which are routinely sought by


13

ERISA benefit plans because such forms of damages automatically accrue under

the express terms of ERISA. See 29 U.S.C. § 1132(g)(2).1

Section 4 of SB 223 requires that contractors participating in “a health or

welfare fund or any other plan for the benefit of employees” provide certain

information to the plans, even when not required by ERISA or by the written terms

of each ERISA benefit plan. Section 5 requires the “administrator of a Taft-Hartley

trust” to provide notice of nonpayment to original contractors. No non-ERISA

person is subject to this special notice requirement.

1 The majority states this Court’s own per curiam opinion in 2009 is the reason attorney’s fees and other 29 U.S.C. § 1132(g)(2) damages were allowed and that SB 223 is simply a legislative response to this Court’s opinion. Maj. Op. 11 (citing Trs. of the Constr. Indus. and Laborers Health and Welfare Trust v. Hartford Fire Ins. Co., 578 F.3d 1126, 1129 (9th Cir. 2009)). This subtle attempt to show an equitable basis for the majority’s conclusions perhaps to possibly rectify some past wrong by this Court is an improper basis for determining mootness or ERISA preemption.

Further, it’s factually incorrect. All forms of damages, including § 1132(g)(2) damages, were always available under the literal text of the Nevada statute prior to SB 223. Benefit plans have used § 608.150 to collect such damages from original contractors long before this Court’s ruling in Hartford Fire. See Tobler & Oliver Const. Co. v. Bd. of Trs. of Health & Ins. Fund for Carpenters Local Union No. 971, 84 Nev. 438, 440-43, 442 P.2d 904, 905-07 (1968); Trs. of Bricklayers & Allied Craftsmen Local No. 3 Health & Welfare Trust v. Reynolds Elec. & Eng’g Co., 747 F. Supp. 606, 609 n. 12 (D. Nev. 1990) (general contractor liable under § 608.150 for contributions, interest, liquidated damages, attorney’s fees, costs, and audit fees), aff’d sub nom. Trs. of Bricklayers & Allied Craftsman, Local 3 Health & Welfare Trust v. Structures Mideast Corp., 958 F.2d 378 (9th Cir. 1992). Thus, contrary to the majority’s opinion, the law relating to damages available under § 608.150 was settled long before 2009 and SB 223 was not enacted as a legislative response to this Court’s opinion in the Hartford Fire case.


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The last two SB 223 provisions, in particular, show the Nevada Legislature’s

intent to create an integrated scheme under which, in exchange for requiring

ERISA plans to give notice to subcontractors and original contractors of claims,

pursuant to Section 5 of the bill, subcontractors would be required to share

information about their projects with the plans themselves.

These provisions show the Nevada Legislature intended the law to “act

upon” ERISA benefit plans in an exclusive and immediate manner.

The panel majority fails to discuss or even mention the compelling

legislative history of SB 223 showing the Nevada Legislature’s clear intent to act

on and affect ERISA benefit plans.2 The legislative history of SB 223 reflects the

Nevada Legislature’s intent to target ERISA plans by making them second class

claimants under Nevada Revised Statute 608.150.

For example, testimony on SB 223 was dominated by contractor groups and

their attorneys who expressed displeasure with the ERISA plans’ lawful use of

Nevada Revised Statute 608.150 and Nevada Revised Statute Chapter 108 to

collect fringe benefit contributions from original contractors and property owners

2 When deciding ERISA preemption issues courts routinely review legislative history. See, e.g., Dillingham, 519 U.S. at 330 (reviewing California’s history of legislating prevailing wages, apprenticeship standards, and public works); Standard Indus., 247 F.3d at 926 (looking at timing of legislation to determine if the state legislature could have intended to specifically reference an ERISA plan).


15

whose subcontractors are in arrears with ERISA plans. During a Senate committee

hearing, a witness from the Associated General Contractors, an industry

association representing employers in the building and construction trades,

specifically pointed out that SB 223 was intended to insulate higher-tiered

contractors from being held vicariously liable to ERISA trust funds for fringe

benefit contributions that their lower-tiered subcontractors did not pay in

accordance with the terms of collective bargaining agreements. See Minutes of

Hearing on SB 223 Before the S. Comm. on Commerce, Labor & Energy, 78th

Leg. at 21-22 (Nev., March 9, 2015).

One witness in particular pointed to a demand made by the Glaziers Joint

Trust Funds, who are plaintiffs/appellees in the instant action, for payment under

Nevada Revised Statute 608.150. Id. at 18. Several witnesses directly referenced

claims by ERISA plans in their testimony on the bill. See id. at 22, 24, 25. Exhibits

supplied to the Committee likewise reflected that it was ERISA plans that were

making demand for payment under Nevada Revised Statute 608.150, and thus they

were the target of the bill. It is unmistakable that the Nevada Legislature intended

to uniquely affect ERISA plans’ use of Nevada Revised Statute 608.150 and

Nevada Revised Statute Chapter 108 as a tool for collecting from original

contractors and property owners who are vicariously liable for their

subcontractors’ indebtedness for labor.


16

Indeed, the explanation offered on the Senate Floor to Amendment No. 458

(to SB 223) stated that the amendments were directed toward “health or welfare

fund[s] or any other plan for the benefit of employees” and “Taft-Hartley trust[s].”

S. Daily Journal at 185 (Nev., April 17, 2015) (Remarks by Sen. Settelmeyer on

Amend. No. 458). The bill statement read on final passage mirrors the statement on

the amendment. See S. Daily Journal at 414 (Nev., April 20, 2015) (Remarks by

Sen. Hardy on SB 223, as amended).

Testimony in the Assembly also reflected the Legislature’s intent to target

ERISA plans. See video from the hearing available online at

http://nvleg.granicus.com/MediaPlayer.php?view_id=14&clip_id=4485 (April 27,

2015, Hearing on SB 223). During the Assembly hearing, just as in the Senate,

witnesses and legislators discussed concerns regarding collections against

subcontractors, higher-tiered contractors, and property owners by ERISA plans for

fringe benefit contributions due to those plans. No other lower-tiered / higher-

tiered relationship was discussed other than those involving ERISA plans.

In passing SB 223, the Nevada Legislature targeted ERISA plans in an

exclusive and immediate manner. No other rational conclusion can be drawn from

the legislative record or the final text of SB 223.

3. Senate Bill 223 “acts upon” ERISA benefit plans in areas of federal concern.


17

Even if the panel majority’s opinion contained the correct standard for

reference preemption (it doesn’t), SB 223 certainly “acts upon” ERISA benefit

plans in areas of federal concern. As outlined above, SB 223 sought to limit

damages a plan may obtain, impose notice obligations on plan administrators and

impose information disclosure obligations on signatory contractors who contribute

to ERISA benefit plans. Each of these items affect areas of federal concern under

ERISA; specifically, by targeting the types of reporting, disclosure, and fiduciary

responsibilities regulated by ERISA. Gobeille, 136 S.Ct. at 945.3 The fact that SB

223 is a collection statute of general state concern doesn’t change this.

Conclusion.

Given the enormous implications of this case and that the panel majority’s

opinion is in conflict with Supreme Court precedent and other decisions of this

Court on mootness and ERISA preemption, the Court should reconsider the

majority’s opinion. ERISA employee benefit plans, particularly pension plans, are

underfunded in retirement savings. Any judicial decision that makes it more

difficult for these plans to pay benefits should be viewed with careful scrutiny.

3 It’s worth mentioning again that this analysis is virtually identical to the “connection with” analysis that the panel majority claims is still a separate factor from “reference to” for determining preemption (as it must under Gobeille). Compare Maj. Op. § IV(D), with Maj. Op. § IV(E).


18

The majority’s opinion throws open the door to state legislatures to impose

exclusive obligations on ERISA benefit plans. This is dangerous precedent with

potentially devastating consequences to ERISA plans that so many Americans

depend on for their health benefits and retirement savings. For these reasons, the

Plaintiffs/Appellees respectfully request this Court grant their Petition for

Rehearing En Banc.

DATED this 18th day of October, 2018.

CHRISTENSEN JAMES & MARTIN

By: /s/ Daryl E. MartinDaryl E. Martin, Esq. (6735) Wesley J. Smith, Esq. (11871) 7440 W. Sahara Avenue Las Vegas, Nevada 89117 Telephone: (702) 255-1718 Facsimile: (702) 255-0871 Attorneys for Painters & Glaziers Joint Trust Funds and Employee Painters’ Trust

BROWNSTEIN HYATT FARBER

SCHRECK, LLP

By: /s/ Bryce C. LovelandAdam P. Segal, Esq. (6120) Bryce C. Loveland, Esq. (10132) 100 North City Parkway, Suite 1600 Las Vegas, Nevada 89106 Telephone: (702) 382-2101 Facsimile: (702) 382-8135 Attorneys for Plumbers Joint Trust Funds


19

Certificate of Compliance Pursuant to Ninth Circuit Rules 35-4 and 40-1 for Case Number 16-15588

I certify that pursuant to Circuit Rules 35-4 or 40-1, the attached petition for rehearing en banc:

Contains 4,183 words (petitions and answers must not exceed 4,200 words), and is prepared in a format, type face, and type style that complies with Fed. R. App. P 32(a)(4)-(6).

or

Is in compliance with Fed. R. App. P. 32(a)(4)-(6) and does not exceed 15 pages.

Signature of Attorney /s/ Bryce C. Loveland Date October 18, 2018


20

CERTIFICATE OF SERVICE

I am employed by Brownstein Hyatt Farber Schreck, counsel for certain of

the Appellees. I certify that I electronically filed the foregoing Appellees’ Petition

for Rehearing En Banc with the Clerk of the Court for the United States Court of

Appeals for the Ninth Circuit by using the appellate CM/ECF system on October

18, 2018. All participants in the case who are registered CM/ECF users, including

counsel for the Appellant, will be served by the appellate CM/ECF system.

/s/ Ebony S. Davis Employee of Brownstein Hyatt Farber Schreck, LLP

17532298


__________________________________________________________________ No. 16-15588

__________________________________________________________________ IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT _____________________________________________________________

THE BOARD OF TRUSTEES OF THE GLAZING HEALTH AND WELFARE TRUST, ET AL

Plaintiffs/Appellees, v.

SHANNON CHAMBERS, in her official capacity as Nevada Labor Commissioner, Defendant/Appellant

__________________________________________________________________ On Appeal from the United States District Court District of Nevada,

No. 2:15-cv-01754-KJD-VCF Hon. Kent J. Dawson

__________________________________________________________________ APPELLANTS’ RESPONSE BRIEF

TO PLAINTIFFS’-APPELLEES’ PETITION FOR REHEARING EN BANC

__________________________________________________________________ Adam Paul Laxalt (Bar No. 12426) Attorney General Gregory L. Zunino (Bar No. 4805) Bureau Chief Melissa L. Flatley (Bar No. 12578) Deputy Attorney General OFFICE OF THE ATTORNEY GENERAL 100 North Carson Street Carson City, Nevada 89701 (775) 684-1100 Counsel for Appellant Shannon Chambers

Case: 16-15588, 12/21/2018, ID: 11130292, DktEntry: 66, Page 1 of 14

i

TABLE OF CONTENTS

PAGE

STANDARD FOR DECISION ................................................................................. 1

ARGUMENT AND AUTHORITIES ........................................................................ 2 I. The Opinion is Consistent with the Supreme Court’s Decisions on Mootness ............................................................................................. 2 II. The Opinion is Consistent with the Decisions of the Supreme Court and the Circuit on ERISA Preemption. ......................................... 4 CONCLUSION .......................................................................................................... 6

STATEMENT OF RELATED CASES ..................................................................... 8

CERTIFICATE OF COMPLIANCE ......................................................................... 9

CERTIFICATE OF SERVICE ................................................................................10


ii

TABLE OF AUTHORITIES

PAGE

CASES Ascaro LLC v. Atl. Richfield Co., 866 F.3d 1108, 1118 (9th Cir. 2017) ...................................................................... 6 Board of Trustees of Glazing Health v. Chambers, 903 F.3d 829, 858 (9th Cir. 2018) (Wallace, J., dissenting) ................................... 3 California Div. of Labor Standards Enforcement v. Dillingham Const., N.A., Inc., 519 U.S. 316, 324–35 (1997), @ Maj.Op. 943 ...................................................... 4 Carreras v. City of Anaheim, 768 F.2d 1039, 1047 (9th Cir. 1985) ...................................................................... 2 Chemical Producers and Distributors Ass’n v. Helliker, 463 F.3d 871 (9th Cir. 2006) .................................................................................. 3 City of Mesquite v. Aladdin’s Castle, Inc., 455 U.S. 283, 289, n.10 (1982) ............................................................................... 2 Gobeille v. Liberty Mutual Ins. Co., 136 S. Ct. 936, (2016) ............................................................................................. 4 Golden Gate Restaurant Ass’n v. City and County of San Francisco, 546 F.3d 639 (9th Cir. 2008) .................................................................................. 5 Heiniger v. City of Phoenix, 625 F.2d 842, 843–44 (9th Cir. 1980) .................................................................... 6 Jacobus v. Alaska, 338 F.3d 1095, 1102 (9th Cir. 2003) ...................................................................... 2 Log Cabin Republicans v. U.S., 658 F.3d 1162 (9th Cir. 2011) ................................................................................ 3


iii

Native Village of Noatak v. Blatchford, 38 F.3d 1505, 1510 (9th Cir. 1994) ........................................................................ 3 New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656 (1995) ....................................................................................... 4 Southern California IBEW-NECA Trust Funds v. Standard Indus. Elec Co., 247 F.3d 920, 929 (9th Cir. 2001) ......................................................................... 5 Thalheimer v. City of San Diego, 645 F.3d 1109, 1125 (9th Cir. 2011) ...................................................................... 2 Waks v. Empire Blue Cross/Blue Shield, 263 F.3d 872, 874 (9th Cir. 2001) .......................................................................... 6

STATUTES 29 U.S.C. §1144 ......................................................................................................... 4

RULES Fed. R. App. P. Rule 35(a) ......................................................................................... 1 Fed. R. App. P. Rule 35(b)(1)(B)............................................................................... 1 FRCP 52(a)(6) ............................................................................................................ 6


1

Defendant/Appellant (Shannon Chambers), by and through counsel, Nevada

Attorney General Adam Paul Laxalt, Bureau Chief Gregory L. Zunino and Deputy

Attorney General Melissa L. Flatley, respectfully submits this brief pursuant to this

Court’s direction to respond to Plaintiff-Appellees’ Petition for Rehearing En

Banc, filed with this Court on October 18, 2018.

STANDARD FOR DECISION

The standard for rehearing en banc is set out in Rule 35 of the Federal Rules

of Appellate Procedure. Rule 35 provides that rehearing en banc is not favored and

ordinarily will not be granted by a United States Court of Appeals unless the

decision in question conflicts with other decisions of that Court or the United

States Supreme Court, or presents a question of exceptional importance. Fed. R.

App. P. Rule 35(a). The rule provides only one example of a question of

exceptional importance, namely a question on which a panel decision conflicts

with the authoritative decisions of other United States Courts of Appeal on the

same question. Fed. R. App. P. Rule 35(b)(1)(B).

As a practical matter, then, a decision should never raise a question of

exceptional importance if the applicable law is well settled, or if the question itself

has no bearing upon actual rights or obligations. Here, as it pertains to the question

of mootness, the law is relatively well settled and has no bearing upon actual rights

or obligations. And as it pertains to questions about the scope of ERISA


2

preemption, the law is beyond dispute. Accordingly, there is no basis upon which

to grant rehearing en banc.

ARGUMENT AND AUTHORITIES

This case is not in conflict with the decision of any other court on the issues

of mootness or ERISA preemption, nor does it present an issue of exceptional

importance as contemplated by Rule 35. The standard for rehearing en banc has

not been satisfied.

I. The Opinion is Consistent with the Supreme Court’s Decisions on Mootness.

A legislative change adopted in direct response to an adverse decision of a

district court does not render the case moot “because of the well-settled principle

that a defendant’s voluntary cessation of a challenged practice does not deprive a

federal court of its power to determine the legality of a practice.” Thalheimer v.

City of San Diego, 645 F.3d 1109, 1125 (9th Cir. 2011), citing Jacobus v. Alaska,

338 F.3d 1095, 1102 (9th Cir. 2003) (quoting Carreras v. City of Anaheim, 768

F.2d 1039, 1047 (9th Cir. 1985)). Only in rare cases will such a case be rendered

moot on the basis of a showing that “subsequent events made it absolutely clear

that the allegedly wrongful behavior could not reasonably be expected to recur.”

City of Mesquite v. Aladdin’s Castle, Inc., 455 U.S. 283, 289, n.10 (1982).

The dissent in this case identified three 9th Circuit cases that promote a

different standard purportedly adopting a presumption of mootness when there has


3

been a statutory change that seeks to remedy the alleged wrong. This conflicting

standard would hold “that statutory change moots a case unless it is ‘virtually

certain’ the repealed law will be reenacted.” Board of Trustees of Glazing Health v.

Chambers, 903 F.3d 829, 858 (9th Cir. 2018) (Wallace, J., dissenting), citing

Native Village of Noatak v. Blatchford, 38 F.3d 1505, 1510 (9th Cir. 1994).

Chemical Producers and Distributors Ass’n v. Helliker, 463 F.3d 871 (9th Cir.

2006) and Log Cabin Republicans v. U.S., 658 F.3d 1162 (9th Cir. 2011) follow

from this decision.

Appellees recycle the dissent’s argument as their justification for requesting

rehearing en banc. But they ignore that the opinion of the panel majority gives

effect to all of the Ninth Circuit precedent, including the controlling precedent of

City of Mesquite, and further distinguishes the Noatak line of case from

Thalheimer and its predecessors. Construed in its entirety, the body of relevant

precedent provides ample support for the Court’s decision here. Moreover, the

question of mootness is peripheral to the core dispute in this case. As such, the

question of mootness is academic, while the core dispute underscores a recurring

real-world problem for state governments. Because the Court’s decision draws

from a vast body of undisputed federal case law addressing the scope of ERISA

preemption, Appellees cannot reasonably argue that the Court’s analysis of ERISA


4

preemption deviates from applicable legal standards, or that there is anything less

than a unanimous consensus about those standards.

II. The Opinion is Consistent with the Decisions of the Supreme Court and the Circuit on ERISA Preemption.

A state law “reference to” ERISA plans does not alone conflict with

ERISA. Although the earliest applications of ERISA preemption applied a

superficial analysis with a focus upon the “relate to” clause of §514(a) of ERISA,

29 U.S.C. §1144—meaning that a mere reference in state law to an ERISA

governed entity could summarily trigger fatal judicial scrutiny at the federal

level—the Supreme Court recognized that this “uncritical literalism” could not be

sustained. Gobeille v. Liberty Mutual Ins. Co., 136 S. Ct. 936, (2016), citing New

York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,

514 U.S. 645, 656 (1995). Under modern standards of federalism and

constitutional jurisprudence, the federal courts will not invalidate the state law at

issue unless it “act[s] immediately and exclusively on ERISA plans” or makes the

existence of ERISA plans essential to the law’s operation. California Div. of Labor

Standards Enforcement v. Dillingham Const., N.A., Inc., 519 U.S. 316, 324–35

(1997), @ Maj.Op. 943.

While the U.S. Supreme Court has not addressed the concept of reference

preemption since its decision in Dillingham, the Ninth Circuit has developed the

reasoning of that decision with its own body of case law interpreting ERISA.


5

Beginning with Southern California IBEW-NECA Trust Funds v. Standard Indus.

Elec Co., 247 F.3d 920, 929 (9th Cir. 2001), the Court has expressly backed away

from the “previously expansive preemption language prior to Travelers.” And it

has further identified “no fewer than six different tests used since Travelers to

determine whether a state statute was pre-empted by ERISA.” Id. at 927, n.12. The

“central element” of all six tests is to determine whether the state law claim “bears

on an ERISA governed relationship.” Id.

And despite its recognition of six different tests on the subject of ERISA

preemption, the Court’s decisions are consistent. In fact, the Court’s analysis in

this case is similar to that used in Golden Gate Restaurant Ass’n v. City and

County of San Francisco, 546 F.3d 639 (9th Cir. 2008), where the Court

considered whether a challenged state law concretely impacted ERISA plans—just

as the Court has done multiple times before.1 Although Appellees apparently

disagree with this well-established approach to ERISA preemption analysis, they

fail to identify an “intracircuit conflict” susceptible to resolution through en banc

review.

According to Appellees, the District Court correctly concluded that Nevada

Senate Bill 223 (SB 223) was preempted by ERISA because of the state law’s

1 Interestingly, the Petition for Rehearing En Banc in Golden Gate Restaurant raised many of the same arguments raised in the Appellees Petition here. The Golden Gate Restaurant petition was denied; so should Appellees’ petition in the present case.


6

express reference to “Taft-Hartley trusts.” Petition for Rehearing at 11. But such a

superficial test for assessing the potential interplay between state law and ERISA is

precisely the type of “uncritical literalism” that the Supreme Court and this Circuit

have rejected. In short, the District Court’s analysis ignored this Court’s more

nuanced standards for evaluating ERISA preemption.

The Appellees also criticize the Court’s analysis of SB 223, taking the

position that the Court should have deferred to the District Court’s findings of fact.

A challenge of this nature is not a proper basis for a petition for rehearing en banc,

but Appellant will respond in an abundance of caution. The standard of review of a

motion for summary judgment is de novo. Ascaro LLC v. Atl. Richfield Co., 866

F.3d 1108, 1118 (9th Cir. 2017). Any findings of fact in an order granting

summary judgment are not entitled to deference. Heiniger v. City of Phoenix, 625

F.2d 842, 843–44 (9th Cir. 1980). The “clearly erroneous” standard of FRCP

52(a)(6) is inapplicable. Id. Additionally, ERISA preemption is a question of law.

Waks v. Empire Blue Cross/Blue Shield, 263 F.3d 872, 874 (9th Cir. 2001). The

panel majority properly reconsidered each portion of SB 223 in its analysis of

ERISA preemption.

CONCLUSION

In support of their petition for rehearing en banc, Appellees advance little

more than a policy argument—that states will unfairly target ERISA plans in the


7

absence of a federal judiciary that mechanically strikes down any state law which

makes a passing reference to ERISA plans. Aside from the hyperbole, such a

policy argument raises no question of “exceptional importance” warranting

rehearing en banc. To say that the Court’s decision has “enormous” policy

implications, or is of “singular importance” to ERISA benefit plans, says nothing

about whether it conflicts with existing law on the subject of ERISA preemption. It

is the burden of the petitioner for a rehearing en banc to demonstrate that the

decision of a panel from the Ninth Circuit presents an issue of exceptional

importance. Appellees have failed to meet their burden.

Respectfully submitted this 21st day of December 2018.

ADAM PAUL LAXALT Attorney General

By: s/Melissa L. Flatley MELISSA L. FLATLEY Deputy Attorney General


8

STATEMENT OF RELATED CASES

The undersigned asserts that to the best of his knowledge, there are no other

related cases pending in the Ninth Circuit Court of Appeals.

Respectfully submitted this December 21, 2018.




9

CERTIFICATE OF COMPLIANCE PURSUANT TO FED. R. APP. 32(a)(7)(C) and CIRCUIT RULE 32-1 FOR CASE NUMBER 16-15588

Pursuant to Ninth Circuit Rule 32(a)(5), I certify that the attached answering

brief is proportionately spaced, has a typeface of 14 points or more and contains

2264 words.

Respectfully submitted this 21st day of December 2018.




10

CERTIFICATE OF SERVICE

I hereby certify that I electronically filed the foregoing with the Clerk of the

Court for the United States Court of Appeals for the Ninth Circuit by using the

appellate CM/ECF system on December 21, 2018.

Participants in the case who are registered CM/ECF users will be served by

the appellate CM/ECF system.

Adam P. Segal, Esq. [email protected] Bryce C. Loveland, Esq. [email protected] Brownstein Hyatt Farber Schreck, LLP 100 North City Parkway, Suite 1600 Las Vegas, Nevada 89106-4614 Telephone: (702) 382-2101 Counsel for Appellees Plumbers Joint Trust Funds Daryl E. Martin, Esq. [email protected] Wesley J. Smith, Esq. [email protected] Christensen James & Martin 7440 West Sahara Avenue Las Vegas, Nevada 89117 Telephone: (702) 255-1718 Counsel for Appellees Painters & Glaziers Joint Trust Funds and Employee Painters’ Trust s/ Sandra Geyer Sandra Geyer, an employee of the office of the Nevada Attorney General


mailto:[email protected]




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