Williams v. Ashland Engineering

• Court: Court of Appeals for the First Circuit
• Decided: January 31, 1995
• Docket: 94-2046
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                              _________________________

No. 94-2046

                           WILLIAM WILLIAMS, ETC., ET AL.,
                               Plaintiffs, Appellants,

v.

ASHLAND ENGINEERING CO., INC., ET AL.,
                                Defendants, Appellees.

                              __________________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                [Hon. Walter Jay Skinner, Senior U.S. District Judge]
                                          __________________________

                              __________________________

                                        Before

                       Selya, Boudin and Stahl, Circuit Judges.
                                                ______________

                              __________________________

               Robert O. Berger for appellants.
               ________________
               Bradford  R. Carver,  with whom Edward  F. Vena,  Michael S.
               ___________________             _______________   __________
          Levitz, and Vena, Truelove & Riley were on brief, for appellees.
          ______      ______________________

                              __________________________

                                   January 31, 1995

                              __________________________



SELYA,  Circuit  Judge.   We  are  reminded today  that
                    SELYA,  Circuit  Judge.
                            ______________

          malapropisms, despite their semantic shortcomings, often describe

          the  human condition  with  unerring accuracy.    There are,  for

          example, certain situations that  actually do evoke the sensation

          of "d j  vu all over  again."1  We explain below why  this appeal
              _______

          falls into that category.

                    In McCoy  v. Massachusetts Institute of Technology, 950
                       _____     _____________________________________

          F.2d 13  (1st Cir. 1991), cert.  denied, 112 S. Ct.  1939 (1992),
                                    _____  ______

          the fiduciary  of several union-sponsored employee  benefit plans

          brought  suit to  enforce a  lien  on real  property  owned by  a

          university.   He alleged that  an electrical contractor  hired to

          construct  improvements to  school  buildings had  employed union

          members  to do  the work;  that the  contractor, heedless  of its

          obligations under a collective bargaining agreement, neglected to

          defray the  workers' employee  benefit contributions; and  that a

          state  statute, Mass.  Gen. L.  ch. 254,  quoted in  the margin,2
                              
          ____________________

               1This  epigram is  often  attributed to  Lawrence P.  (Yogi)
          Berra, a man as famous  for mangling the English language  as for
          belting  baseballs.  Berra coined  many aphorisms    but not this
          one.    See  Ralph  Keyes,  Nice  Guys  Finish  Seventh; Phrases,
                  ___                 _____________________________________
          Spurious Sayings  and Familiar  Misquotations 152  (1992) (noting
          _____________________________________________
          that  "although this  is commonly  cited as  a `Berra-ism,'  Yogi
          Berra denies ever saying it").  The phrase's origin is unknown.

               2The statute provides in relevant part:

                         A  person  to whom  a  debt  is due  for
                    personal  labor  performed  in the  erection,
                    alteration, repair or  removal of a  building
                    or  structure  upon  land,  by virtue  of  an
                    agreement with, or by consent of, the owner .
                    .  .  shall  . .  .  have  a  lien upon  such
                    building or structure . . . .

                         For purposes of  this chapter, a  person

                                          2



authorized  the  fiduciary  to collect  unpaid  contributions  by

          asserting a mechanic's  lien against real property  that had been

          improved through  the plan participants'  labor.  See  McCoy, 950
                                                            ___  _____

          F.2d  at 15.    We held  that  the Employment  Retirement  Income

          Security  Act of 1974 (ERISA), 29 U.S.C.    1001-1461 (1988), and

          specifically,  ERISA    514(a), 29  U.S.C.    1144(a) (commanding

          that ERISA "shall  supersede any  and all State  laws insofar  as

          they  may now or hereafter relate to any employee benefit plan"),

          preempted use of the Massachusetts  mechanic's lien law to recoup

          the unpaid contributions.  See McCoy, 950 F.2d at 18-20.
                                     ___ _____

                    The  case at  bar is  hauntingly reminiscent  of McCoy,
                                                                     _____

          and,  thus, triggers the  sense of d j   vu.  Appellants  are the
                                             ________

          trustees  of certain funds (the  Funds) maintained by  Local 4 of

          the  International  Union  of  Operating Engineers  to  fuel  the

          union's employee benefit  plans.   In 1991, members  of Local  4,

          then employed directly or  indirectly by a subcontractor, Ashland

                              
          ____________________

                    shall  include any  employee of  any employer
                    and the  trustee or  trustees of any  fund or
                    funds, established pursuant to section 302 of
                    the Taft Hartley Law  (29 USC 186), providing
                    coverage or  benefits to  said  person.   The
                    trustee or trustees of any such fund or funds
                    shall have all the  liens under this  chapter
                    that any person has.  The trustee or trustees
                    shall  also have  the right  to enforce  said
                    liens pursuant to this chapter.

          Mass. Gen. L. ch. 254,   1 (1990).  The statute also specifically
          provides  that "the  trustee  or trustees  of  a fund  or  funds,
          described in section  one, providing coverage or  benefits to any
          person  performing   labor  under  a  written   contract  with  a
          contractor, or with a subcontractor of such contractor," may file
          a lien notice,  id.   4, and  enforce the lien by  a civil action
                          ___
          brought against the property owner, id.   5.
                                              ___

                                          3



Engineering   Company   (Ashland),   participated    in   ongoing

          construction  under  the  auspices   of  the  Massachusetts  Port

          Authority   (Massport).     A  collective   bargaining  agreement

          obligated Ashland to contribute  monies to the Funds commensurate

          with the number of hours each union member toiled on the Massport

          project.

                    In time, Ashland experienced financial problems, became

          delinquent  on  contributions to  the  Funds,  and abandoned  the

          Massport  project.   Noting  that  the  general contractor,  R.W.

          Granger and  Sons, Inc. (Granger), had  posted a performance-and-

          payment bond  underwritten by  United States Fidelity  & Guaranty

          Company (USF&G), the trustees sued Ashland, Granger, and USF&G in

          an effort to extract the unpaid employer contributions.

                    The trustees' amended complaint contained three counts:

          count  1 sought  to collect  payments due  from Ashland,  count 2

          sought  to  collect these  payments  from USF&G  by  invoking the

          Massachusetts  statute under which the bond had been posted,3 and
                              
          ____________________

               3The  bond statute  provides  in pertinent  part that,  when
          state officials  contract for construction  of public  buildings,
          they

                    shall  obtain  security by  bond  .  . .  for
                    payment by the contractor  and subcontractors
                    for   labor   performed   or  furnished   and
                    materials used  or employed  therein . .  . .
                    and  for  payment   by  such  contractor  and
                    subcontractors of any sums due trustees . . .
                    authorized  to collect such payments from the
                    contractor or subcontractors, based  upon the
                    labor  performed  or furnished  as aforesaid,
                    for health and  welfare plans,  supplementary
                    unemployment benefit plans  and other  fringe
                    benefits  which  are  payable  in   cash  and
                    provided   for   in   collective   bargaining

                                          4



count 3 sought  to reach an asset of  Ashland purportedly held by

          Granger   the bond   and to apply the proceeds to Ashland's debt.

                    Ashland did  not defend and,  therefore, count 1  is no

          longer velivolant.   On June  1, 1993, the  parties filed  cross-

          motions  for summary judgment on  the two remaining  counts.  The

          district court granted  the defendants' motions,  concluding that

          ERISA preempted the section  29 claim as it pertains  to employee

          benefit  plans, and that  Granger held none  of Ashland's assets.

          See  Williams v.  Ashland Eng'g Co.,  863 F.  Supp. 46  (D. Mass.
          ___  ________     _________________

          1994).   Following the entry of separate  judgments, the trustees

          appealed.

                    In  this   venue,  the  trustees   agree  that   brevis
                                                                     ______

          disposition  is warranted   the  record reveals no genuine issues

          of material fact   but they contend that the lower court ruled in

          favor of the wrong parties.  Affording plenary review, see, e.g.,
                                                                 ___  ____

          Mesnick v. General Elec. Co., 950  F.2d 816, 822 (1st Cir. 1991),
          _______    _________________

          cert. denied, 112 S. Ct. 2965 (1992); Garside v. Osco Drug, Inc.,
          _____ ______                          _______    _______________

          895 F.2d 46, 48 (1st Cir. 1990), we affirm.4

                    The  centerpiece of the trustees' appeal   count 2   is

          well   within  McCoy's   precedential  orbit.     In   McCoy,  we
                         _____                                   _____

          acknowledged that  Congress painted with  a broad  brush when  it

                              
          ____________________

                    agreements . . . .

          Mass. Gen. L. ch. 149,   29 (1990).

               4We eschew  any independent discussion of  count 3, inasmuch
          as we discern no error in the district court's stated reasons for
          granting  summary judgment on that  count.  See  Williams, 863 F.
                                                      ___  ________
          Supp. at 50.

                                          5



added  an  express preemption  clause to  the  ERISA canvas.   We

          described that clause as "sweeping" and "extensive in its scope."

          McCoy, 950 F.2d at 16.  We also noted that the Massachusetts lien
          _____

          law  at issue in McCoy  referred specifically to  the trustees of
                           _____

          employee  benefit  plans  and  purported to  grant  them  certain

          singular  rights.  In our  view, these features  rendered the law

          especially vulnerable  to preemption, for "[s]tate statutes which

          expressly  grant  preferential  benefits to  ERISA  plans  cannot

          withstand the preemptive  force of ERISA    514(a)."  Id.  at 20;
                                                                ___

          accord Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S.
          ______ ______    ______________________________________

          825, 829 (1988).  Thus, McCoy made clear that, at a bare minimum,
                                  _____

          state laws  which "specifically refer  to ERISA  plans and  grant

          them  special  treatment" are  preempted  regardless  of a  state

          legislature's good intentions or  a particular law's  consistency

          with  ERISA's  overall goals.   McCoy,  950  F.2d at  18 (quoting
                                          _____

          Mackey, 486 U.S. at 829-30).
          ______

                    The statute before us  today, Mass. Gen. L. ch.  149,  

          29, invites comparison  with the statute we  confronted in McCoy.
                                                                     _____

          Section  29  requires,  inter  alia, that  a  general  contractor
                                  _____  ____

          working on a  public project  furnish bond to  secure payment  of

          "any sums due trustees . . . for health and welfare plans."  Such

          plans come under  the protective umbrella that ERISA spreads over

          the workplace.  See 29 U.S.C.   1002(1)(B), (3) (defining covered
                          ___

          employee  welfare benefit plans); see also McCoy, 950 F.2d at 19-
                                            ___ ____ _____

          20.   Since  the statute  specifically refers  to ERISA-regulated

          employee benefit plans,  and provides them with a  special source

6



of  recovery for  unpaid employer  contributions, McCoy  governs.
                                                            _____

          Hence, the bond statute, as it applies to employee benefit plans,

          is preempted.

                    Appellants  balk at the  characterization of their case

          as McCoy redux.   They loose an avalanche of  arguments, but none
             _____

          is persuasive.  Only four of these arguments require comment.

                    First:  Appellants launch  a ferocious attack on McCoy,
                    First:
                    _____                                            _____

          intimating that it  is wrongly decided and, therefore,  should be

          limited to  its facts.  Statutes like  the mechanic's lien law or

          the bond law, they tell us, affect employee benefit plans in "too

          tenuous, remote, or peripheral a manner," Shaw v. Delta Airlines,
                                                    ____    _______________

          Inc., 463 U.S. 85, 100 n.21 (1983), to warrant a conclusion  that
          ____

          the statutes "relate to" such plans.  This attack is  wide of the

          mark.

                    First and foremost, we believe that our earlier opinion

          was   and is   clearly correct (that it is, so to speak, the real

          McCoy).     And  we  perceive  no  rational  basis  on  which  to
          _____

          distinguish between  the mechanic's lien  law and section  29 for

          the purpose of gauging ERISA's preemptive reach.

                    Because  the  two statutes  are  quite plainly  sisters

          under  the skin, there is  also a prudential  barrier that blocks

          the  path of appellants' attack.  In a multi-panel circuit, newly

          constituted panels are, for  the most part, bound by  prior panel

          decisions closely on point.  See, e.g., Jusino v. Zayas, 875 F.2d
                                       ___  ____  ______    _____

          986, 993 (1st Cir. 1989); Lacy v. Gardino, 791 F.2d 980, 985 (1st
                                    ____    _______

          Cir.), cert. denied, 479  U.S. 888 (1986).  In  this instance, we
                 _____ ______

7



are bound by McCoy.
                       _____

                    To  be   sure,  there   are  two  exceptions   to  this

          manifestation  of stare  decisis principles.   An  existing panel
                            _____  _______

          decision may be undermined by controlling authority, subsequently

          announced, such  as an opinion of  the Supreme Court, an  en banc

          opinion  of the circuit court,  or a statutory  overruling.  This

          exception is inapposite, for  nothing of the kind  has transpired

          here.   The second  exception pertains to  those relatively  rare

          instances  in   which  authority  that  postdates   the  original

          decision,  although not directly controlling, nevertheless offers

          a sound reason for  believing that the former panel, in  light of

          fresh  developments,  would  change  its collective  mind.    See
                                                                        ___

          generally Colby v. J.C. Penney Co., 811 F.2d 1119, 1123 (7th Cir.
          _________ _____    _______________

          1987) (discussing "complex relationship . . . between a court and

          its own previous decisions").

                    Appellants try to wriggle  through this loophole.  They

          suggest that a case recently decided by the Third Circuit casts a

          new  light  on ERISA  preemption  by  focussing on  "whether  the

          existence  of  ERISA plans  is necessary  for  the statute  to be

          meaningfully applied,"  Keystone Chapter, Etc. v.  Foley, 37 F.3d
                                  ______________________     _____

          945,  957 (3d  Cir. 1994),  and that  this shifted  focus renders

          McCoy obsolete.  However,  appellants mischaracterize the holding
          _____

          in  Keystone.   There, the  court reviewed  a state  minimum wage
              ________

          statute  that did  not refer  explicitly to  ERISA plans.   After

          finding  that the  statute failed  to single  out such  plans for

          special treatment,  the court invoked the  meaningfulness test to

8



determine  whether the statute might be said to "relate to" ERISA

          plans  despite the absence of an express  connection.  See id. at
                                                                 ___ ___

          954-57.  Since section 29 does single out ERISA plans for special

          swaddling, there is no need to consider the Keystone test in this
                                                      ________

          case.5

                    Second:  Next, the trustees contend that section 29 is,
                    Second:
                    ______

          in effect, a law regulating insurance and, therefore, is shielded

          from   preemption  by   ERISA      514(b)(2)(A),   29  U.S.C.    

          1144(b)(2)(A) (a  savings clause that, inter  alia, renders ERISA
                                                 _____  ____

          preemption inapplicable to "any law of any State which  regulates

          insurance").    This  contention  lacks   force.    In  order  to

          "regulate[] insurance"  within the  purview of this  exception, a

          law must not merely  have an impact on the insurance industry, or

          on   particular  insurance   products,  but   must   be  directed

          specifically toward  the business of  insurance.  See  Pilot Life
          ____________                                      ___  __________

          Ins.  Co. v. Dedeaux, 481  U.S. 41, 50  (1987); Metropolitan Life
          _________    _______                            _________________

          Ins.  Co. v. Massachusetts, 471 U.S. 724, 739-47 (1985).  Section
          _________    _____________

          29 does not satisfy this criterion for two reasons.

                    In  the first  place, although  surety bonds  often are

          furnished by insurers, surety  bonds are not insurance contracts,

          see Mass. Gen. L. ch. 175,   107, and they are not subject to the
          ___

          commonwealth's  insurance laws.    See Luso-Am.  Credit Union  v.
                                             ___ ______________________

          Cumis  Ins. Soc., Inc.,  616 F. Supp.  846, 848 (D.  Mass. 1985);
          ______________________
                              
          ____________________

               5Indeed, the  Keystone court itself  found McCoy to  be good
                             ________                     _____
          authority,  citing  it  with   approval  in  holding  that  ERISA
          preempted  a state  administrative  order  that did  specifically
          single  out ERISA-regulated  plans  for special  treatment.   See
                                                                        ___
          Keystone, 37 F.3d at 955.
          ________

                                          9



General Elec. Co. v. Lexington Contracting Corp., 292 N.E.2d 874,
          _________________    ___________________________

          876 (Mass. 1973).   In the second place, section 29 only requires

          the posting of an acceptable bond, not necessarily the posting of

          a bond  underwritten by an insurance  company.  A cash  bond or a

          bond  backed by, say, a  letter of credit,  surely would suffice.

          In  a  real sense,  then, section  29's  impact on  the insurance

          industry  is happenstance.    Consequently,  the  statute  cannot

          plausibly  be deemed to be  directed toward, or  to regulate, the

          business of insurance.

                    Third:    Appellants claim  that,  here,  preemption is
                    Third:
                    _____

          beside the point  because the bonding company  waived the defense

          by failing to  assert it in the pleadings.   This claim prescinds

          from USF&G's answer to  the trustees' complaint   an  answer that

          did  not  mention  preemption  in  so  many words,  but,  rather,

          contained a general denial and raised, as an affirmative defense,

          failure to state  a claim  upon which relief  could be  granted.6

          On the facts of this case, however, appellants' claim is composed

          of more bleat than wool.

                    Generally  speaking,   a  party  must   set  forth  all

          affirmative  defenses  in  the  pleadings, on  pain  of  possible

          forfeiture.    See  Fed. R.  Civ.  P.  8(c);7  see also  Conjugal
                         ___                             ___ ____  ________
                              
          ____________________

               6USF&G also raised a second affirmative defense  implicating
          appellants'  supposed noncompliance with  conditions precedent to
          recovery set  forth in  the  bond.   Given  the posture  of  this
          appeal, we need not discuss the second affirmative defense.

               7Rule 8(c)  requires parties, "[i]n pleading  to a preceding
          pleading,"  to  "set   forth  affirmatively"  various  enumerated
          defenses,  as well as "any other matter constituting an avoidance
          or  affirmative  defense."     While  preemption  is  not  listed

                                          10



Partnership v.  Conjugal Partnership, 22 F.3d 391,  400 (1st Cir.
          ___________     ____________________

          1994).    Here,  although  USF&G's answer  did  not  specifically

          mention  a preemption  defense,  it did  contain  a broader  Rule

          12(b)(6) defense  that  was capable  of encompassing  preemption.

          Cf.  McCoy,   950  F.2d  at   22-23  (upholding  preemption-based
          ___  _____

          dismissal pursuant to Rule  12(b)(6)).  The purpose of  Rule 8(c)

          is to  give the court and  the other parties fair  warning that a

          particular  line of defense will be pursued.  See, e.g., Blonder-
                                                        ___  ____  ________

          Tongue Labs., Inc.  v. Univ. of  Ill. Found., 402  U.S. 313,  350
          __________________     _____________________

          (1970);  Knapp Shoes, Inc. v.  Sylvania Shoe Mfg.  Corp., 15 F.3d
                   _________________     _________________________

          1222, 1226 (1st  Cir. 1994).   Hence,  a defendant  who fails  to

          assert an  affirmative defense  at all, or  who asserts  it in  a

          largely uninformative way, acts at his peril.  See, e.g., FDIC v.
                                                         ___  ____  ____

          Ramirez-Rivera, 869 F.2d 624, 626 (1st Cir. 1989).
          ______________

                    In determining whether  general, non-specific  language

          in a defendant's answer,  as was used here, suffices  to preserve

          an  affirmative  defense, an  inquiring  court  must examine  the

          totality of  the circumstances and make  a practical, commonsense

          assessment about whether  Rule 8(c)'s core purpose   to  act as a

          safeguard  against  surprise  and  unfair prejudice     has  been

          vindicated.  In this case, USF&G complied with the spirit, if not

          the  letter, of Rule 8(c).  Well  before the close of discovery  

          and  six  months prior  to the  filing  of the  cross-motions for

                              
          ____________________

          specifically in the enumeration, it is  a "matter constituting an
          avoidance,"  and, thus, ordinarily comes within  the ambit of the
          rule.  See, e.g., Keenan v. Dow Chem. Co., 717 F. Supp. 799, 808-
                 ___  ____  ______    _____________
          09 (M.D. Fla. 1989).

                                          11



summary judgment    USF&G wrote to  appellants and amplified  its

          position,  asseverating that  count 2  should be  dismissed under

          Rule  12(b)(6) because ERISA preempted section 29.  In the papers

          accompanying  the cross-motions for  summary judgment, both sides

          briefed the preemption issue.  Thus, no ambush occurred.

                    Where, as here, a plaintiff clearly anticipates that an

          issue  will be litigated, and is not unfairly prejudiced when the

          defendant actually raises it, a mere failure to plead the defense

          more particularly  will not  constitute a  waiver.   See Conjugal
                                                               ___ ________

          Partnership, 22 F.3d  at 401;  Lucas v. United  States, 807  F.2d
          ___________                    _____    ______________

          414, 418 (5th Cir. 1986).

                    Fourth:  Appellants' final attempt to resuscitate their
                    Fourth:
                    ______

          claim  against USF&G is hardly worth mentioning.  It involves the

          resupinate  assertion that  the Supremacy  Clause of  the Federal

          Constitution, U.S.  Const. art.  VI, cl.  2,  bars preemption  of

          section 29.  This assertion is doubly flawed.  For  one thing, it

          is new  to the case,  having been alluded  to, but  not developed

          below, and accordingly, it is procedurally defaulted.  See, e.g.,
                                                                 ___  ____

          McCoy, 950  F.2d at  22 ("It  is hornbook  law that  theories not
          _____

          raised  squarely in the district court cannot be surfaced for the

          first time on  appeal.").  For another  thing, it takes  a topsy-

          turvy view of preemption.   After all, when the  Supremacy Clause

          is implicated, federal law trumps state law, not vice versa.  See
                                                                        ___

          Florida  Lime & Avocado Growers, Inc. v.  Paul, 373 U.S. 132, 142
          _____________________________________     ____

          (1963).

                    We need  go no  further.  The  district court  astutely

12



concluded  that past  is  prologue, and  looked  to McCoy.    See
                                                              _____     ___

          Williams, 863  F. Supp.  at 48.   We  agree that McCoy  controls.
          ________                                         _____

          Hence, Mass.  Gen. L. ch.  149,   29,  as it applies  to employee

          welfare  benefit  plans, is  preempted by  ERISA    514(a).   The

          trustees' suit, therefore, fails.

Affirmed.
          Affirmed.
          ________

13