Rieth-Riley Construction Co. had employed union members from Operating Engineers' Local 324 under a collective bargaining agreement that required contributions to various benefit funds. After the agreement terminated in May 2018, the union refused to negotiate a new deal, but Rieth-Riley continued attempting to make contributions to the funds. The funds initially accepted the payments but later demanded written confirmation of compliance with fund policies, which Rieth-Riley refused to provide, leading to rejected contributions.
Circuit Judge Clay wrote that Plaintiffs' ERISA fiduciary duty claims necessarily depended on resolving whether federal labor law required the funds to accept contributions during ongoing negotiations. "Plaintiffs' ERISA claims can succeed 'only if' Defendants' 'conduct violates the NLRA,' rendering the NLRA issues 'anything but collateral,'" Clay explained. The court rejected arguments that Garmon only applied to state law claims, noting that the doctrine covers federal claims when they involve conduct "arguably subject" to the National Labor Relations Act.
The district court had dismissed both Rieth-Riley's complaint and a separate suit by individual employees, finding the ERISA claims were preempted under the Garmon doctrine. The court also denied motions for preliminary injunctive relief and leave to amend the complaint. Plaintiffs argued their claims fell under the independent federal remedy exception, but the appeals court found the labor law questions were central, not collateral, to their theory.
The ruling highlights ongoing tensions between ERISA fiduciary duties and labor law preemption in cases involving union benefit funds. Judge Hermandorfer's concurrence raised broader questions about Garmon's application following recent Supreme Court decisions on administrative law, suggesting the doctrine "squares poorly with jurisdictional first principles" while acknowledging it remains binding precedent.