Pension & Benefits News Appeal of ERISA preemption decision mooted by Nevada’s repeal of statute
Wednesday, March 18, 2020

Appeal of ERISA preemption decision mooted by Nevada’s repeal of statute

By Pension and Benefits Editorial Staff

The repeal by the Nevada legislature of a statute found by a federal trial court to be preempted by ERISA rendered moot an appellate challenge to the trial court’s ruling, according to the U.S. Court of Appeals in San Francisco (CA-9).

Nevada lien collection. Nevada Senate Bill 223, passed by the Nevada legislature in 2015, amended state vicarious liability and lien collection laws to impose certain administrative requirements on labor union trusts when they pursue debt collection on behalf of union members.

Ruling in an action filed by some of the trusts, a federal district court determined that ERISA preempted the statute. The new law, the court determined, regulated the relationships between ERISA plans and employees (Bd. Of Trs. Of the Glazing Health & Welfare Tr. v. Chambers, 168 F. Supp. 3d 1320 (D. Nev. 2016).

After the Nevada Labor Commissioner appealed the lower court’s ruling, the Nevada legislature repealed S. 223, replacing it with different legislation. The four provisions that the district court had determined were preempted by ERISA are not in the new legislation and the ERISA plans are not mentioned.

After a three-judge panel of the Ninth Circuit concluded the appeal was not rendered moot by the legislative reversal (Bd. Of Trs. Of the Glazing Health & Welfare Tr. v. Chambers, 903 F.3d 829 (9th Cir. 2018)), the Ninth Circuit voted to rehear the appeal en banc.

Effect of legislative action. The en banc panel concluded that the appeal was moot. It explained that when a legislature repeals or amends legislation, such an act creates a presumption that litigation challenging the legislation is moot, unless there is a reasonable expectation that the legislative body is likely to enact the same or substantially similar legislation in the future. (The appellate court overruled in relevant part any of its own prior cases that suggested a different analysis.)

In this instance, the court determined, there is no evidence in the record indicating a reasonable expectation that the Nevada legislature is likely to enact the same or similar legislation in the future. In fact, the court noted, in repealing the challenged legislation, the Nevada legislature appears to have acted in good faith to correct deficiencies in the law as cited by the lower court. The Nevada Legislative Counsel’s Digest, which accompanied the replacement legislation, specifically cited the district court’s decision, explaining that the new legislation was written to avoid ERISA preemption concerns.

The Ninth Circuit therefore dismissed the appeal as moot and remanded to the district court with instructions to vacate the judgment.

Source: Board of Trustees of the Glazing Health and Welfare Trust v. Chambers (CA-9).

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