Keeping Tabs on the Ninth Circuit
May 07, 2021 - This Week at the Ninth

This Week at the Ninth: Preemption, New and Old

This Week at the Ninth: Preemption, New and Old

This week, the Ninth Circuit resolves a novel preemption challenge to California’s CalSavers retirement scheme, and revisits a well-tread preemption question on Nevada homeowner’s association liens. 


The Court holds ERISA does not preempt a California law that creates CalSavers, a state-managed individual retirement account program for eligible employees of certain private employers that do not provide their employees with a tax-qualified retirement savings plan.

Panel: Judges Hurwitz, Bress, and Corker (E.D. Tenn.), with Judge Bress writing the opinion.

Key Highlight: “CalSavers is not an ERISA plan because it is established and maintained by the State, not employers; it does not require employers to operate their own ERISA plans; and it does not have an impermissible reference to or connection with ERISA. Nor does CalSavers interfere with ERISA’s core purposes. ERISA thus does not preclude California’s endeavor to encourage personal retirement savings by requiring employers who do not offer retirement plans to participate in CalSavers.”

Background: The California Legislature created the CalSavers program to encourage greater retirement savings among employees whose employers do not offer retirement plans. Its automatic enrollment requirement applies only to employees over the age of 18 at nongovernmental employers with five or more employees in California. Employers are exempt only if they provide an “employer-sponsored retirement plan” or an “automatic enrollment payroll deduction IRA” that “qualifies for favorable federal income tax treatment.” Covered employers must register with the state, provide contact information for their eligible employees, and set up system for remitting their employees’ contributions to the CalSavers Trust. Howard Jarvis Taxpayers Association and two of its employees filed suit, alleging that the federal Employee Retirement Income Security Act preempts CalSavers. The district court granted California’s motion to dismiss, concluding that ERISA does not preempt CalSavers.

Result: The Ninth Circuit affirmed. As a threshold matter, the Court concluded that Congress’s repeal of a 2016 Department of Labor rule that sought to exempt CalSavers from ERISA did not answer the preemption question. While the repeal rejected the notion of automatic exemption, it did not purport to decide how preemption overall should play out in court.  And even if the safe harbor provision did not apply to CalSavers, the Court needed to decide whether CalSavers is an ERISA plan in the first place.

First, the Court said, CalSavers does not create an ERISA plan because does not order anyone to create an ERISA “employee benefit plan,” as ERISA defines that term. As relevant here, an “employee benefit plan” means an “employee pension benefit plan,” which in turn is defined as a plan “established or maintained by an employer” that provides retirement income. CalSavers is not subject to the same analysis as many other plans, the Court reasoned, because it is not “established or maintained by an employer.” ERISA defines “employer” as “any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan.” California does not employ CalSavers participants, the Court pointed out, nor does it act in the interest of an employer. To the contrary, “employers have no say over how CalSavers is operated; they did not create it, nor do they control it.” Nor do employers subject Calsavers establish or maintain that program, which in every relevant sense is run by the state. California created it, determines edibility, enrolls participants, and acts as the sole fiduciary over the trust. Administrative duties imposed on employers do not rise to the level of maintenance, the Court said.

Second, the Court held that CalSavers does not “relate to” an ERISA plan by impermissibly referring to such plans.  Employers who provide their employees with ERISA-governed retirement plans are not subject to CalSavers at all. And while CalSavers may incentivize employers to cancel their existing ERISA plans or offer competitive plans, such competition is not prohibited under the federal statute. And CalSaver’s express mention of ERISA came only in an “effort to wall off ERISA plans from its ambit.” For these reasons, CalSavers was not preempted.


The Court holds that the Federal Foreclosure Bar preempts Nevada’s homeowner’s association foreclosure law, and warns litigants not to repeatedly pursue the same legal issues on appeal.

Panel: Judges Paez, VanDyke, and Gleason (D. Alaska) with Judge VanDyke writing the opinion.

Key Highlight: “While Nevada law generally gives delinquent HOA dues superpriority over other lienholders, it does not take priority over federal law.”

Background: Christopher Haberman and Renee Houston took out a $219,200 loan on their Las Vegas home in 2005. Fannie Mae purchased the loan, which was secured by a deed that was eventually assigned to Nationstar Mortgage. When the homeowners failed to pay HOA dues, the Independence II Homeowners’ Association foreclosed on the property and sold it to Millikan Avenue Trust, which ultimately conveyed the property to Saticoy Bay. Nationstar sought to quiet title and obtain a declaration that Fannie Mae’s Deed was not extinguished by the HOA foreclosure sale. The district court granted summary judgment to Nationstar on the ground that the Federal Foreclosure Bar prevented the extinguishment of Fannie Mae’s Deed. 

Result: The Ninth Circuit affirmed. Noting that “the arguments espoused by Saticoy … have all been foreclosed by Ninth Circuit and Nevada Supreme Court precedent,” and the Court’s “brooding sense of déjà vu all over again,” the Court revisited the interaction of the Federal Foreclosure Bar and Nevada’s HOA law, which authorizes HOAs to foreclose on a “superpriority lien.” First, the Court explained that Nationstar had standing to assert the Federal Foreclosure Bar on Fannie Mae’s behalf, and that Nationstar’s claims were timely because they fell within the applicable six-year statute of limitations. Next, the Court held that the Foreclosure Bar applied here because Fannie Mae owned the deed and had an agency relationship with the beneficiary of record. Nevada’s statute of frauds defense was unavailable to third parties to the original contract, Nevada recording statutes require Fannie Mae to be identified as the beneficiary of record on the deed, and, in any event, Saticoy had constructive notice of Fannie Mae’s interest in the Deed. Finally, the Court held that the Federal Foreclosure Bar preempts the Nevada HOA law. “As with most questions in this case, that too has already been clearly and repeatedly answered,” the Court said, citing multiple decisions reaching that conclusion. In parting, the Court noted that Saticoy has previously had similar arguments rejected by the Ninth Circuit, and has been cautioned “against pursuing non-meritorious appeals.” The Court ordered Saticoy to show cause why it “should not be sanctioned for these practices.”