Labor & Employment Law

SG urges no certiorari in San Francisco ERISA preemption case

The Solicitor General has filed a US Supreme Court brief recommending against granting certiorari in Golden Gate Restaurant Assoc v. City and County of San Francisco. [Details, all briefs]

The San Francisco Health Care Security Ordinance requires that covered employers make "required health care expenditures to or on behalf of" certain employees each quarter. "Covered employers" are employers engaging in business within the City that are either a) for profit, with an average of at least twenty employees during a quarter; or b) non-profit, with an average of at least fifty employees during a quarter.

The 9th Circuit held that this ordinance is not preempted by the Employee Retirement Income Security Act (ERISA). More specifically, the court concluded that 1) the ordinance does not create an ERISA plan; and 2) the ordinance does not "relate to" ERISA plans within the meaning of ERISA.

The 9th Circuit denied a petition for rehearing en banc in this case. Eight judges dissented, arguing that the panel decision creates a circuit split and undercuts the Supreme Court's ERISA preemption case law.

Official Question Presented:

San Francisco?s Health Care Security Ordinance-- a "pay-or-play" law--mandates either ongoing employer contributions at set minimum rates for employee health-benefits or equal payments to the City?s Health Access Program, along with extensive recordkeeping and reporting and disclosure requirements. In a decision directly conflicting with Supreme Court ERISA preemption decisions, the Ninth Circuit rejected petitioner?s ERISA-preemption challenge despite repeated amicus support by the Secretary of Labor. Identifying "an issue of exceptional national importance," an eight Judge dissenting opinion from denial of rehearing en banc, including Chief Judge Alex Kozinski, observed that the decision "creates a circuit split with the Fourth Circuit . . . , renders meaningless the [ERISA preemption] tests the Supreme Court set out in Shaw v. Delta Airlines..., and disregards the "need for nationally uniform plan administration." It also warned that the decision "will undoubtedly serve as a roadmap in jurisdictions across the country on how to design and enact a labyrinth of laws requiring employer compliance on health care expenditures, thereby creating the very kind of health care balkanization ERISA was intended to avoid."

The Question Presented is:

Whether ERISA section 514(a), 29 U.S.C. § 1144(a), preempts local laws mandating ongoing employer contributions for employee health-benefits, or alternative payments to a local government, and extensive recordkeeping and reporting and disclosure requirements, a question on which the courts of appeals are in conflict.

Solicitor General's basic arguments against granting certiorari:

1. Subject to exceptions not applicable here, ERISA preempts ?any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.?

2. The preemption issue does not warrant this Court?s review at this time for the same reasons that the Department of Labor has determined not to take regulatory action on the issue at this time.

3. a. Petitioner contends (Pet. 15-34) that the Court should grant review because the decision below purportedly conflicts with the Fourth Circuit? s decision in Retail Industry Leaders Ass?n v. Fielder, 475 F.3d 180 (2007). Although some of the reasoning contained in Fielder is in tension with reasoning in the decision below, the two cases do not present a direct conflict that warrants this Court?s review.

b. Contrary to petitioner?s contention, the decision below does not directly conflict with this Court?s ERISA decisions.

c. In any event, even had a square conflict materialized in the courts of appeals, review by this Court would not be warranted. As discussed above, the intervening enactment of comprehensive federal health care legislation has dramatically changed the landscape governing payment for health care, substantially reducing the importance of the question whether ERISA preempts state or local requirements and also giving rise to additional legal issues that have not been addressed by the federal Departments responsible for implementing the new legislation or by the courts. Accordingly, this Court?s review of the ERISA preemption issue is not warranted at this time.

Full post as published by Ross' Employment Law Blog on May 28, 2010 (boomark / email).