Ogletree Deakins Files Amicus Brief on Behalf of Three Leading National Associations in Golden Gate Restaurant Association v. San Francisco

DOWNLOAD: PDF Version of Amicus Brief

SAN FRANCISCO, CA – March 28, 2008 – On Friday, March 28, 2008, Ogletree Deakins filed a “friend of the court” brief with the U.S. Court of Appeals for the Ninth Circuit in a case that challenges the employer health care spending mandate in San Francisco’s Health Care Security Ordinance.  The brief was filed on behalf of three leading national associations — The Society for Human Resource Management, the International Franchise Association, and the National Association of Manufacturers.  It urges the appeals court to affirm a December 2007 ruling from a San Francisco federal court that the Ordinance is invalid.  The case is Golden Gate Restaurant Association v. San Francisco. 

The San Francisco Ordinance, which was adopted in 2007, requires most employers that do business in San Francisco to spend a minimum amount each calendar quarter on their San Francisco employees’ health care beginning in January, 2008.   In late December, a federal district court ruled that the Ordinance was not enforceable because it overstepped the City’s authority under a federal law that regulates employer-provided health care coverage, the Employee Retirement Income Security Act of 1974 (ERISA).  The Ninth Circuit Court of Appeals granted a request by the City to suspend the district court’s ruling, thereby allowing the Ordinance to go into effect in early January, 2008, while the City’s appeal is being considered.  In granting this request, the court of appeals said that the City has shown that a substantial likelihood that it will win its appeal.  The Ninth Circuit also ordered that the appeal would proceed on an expedited schedule and set up an accelerated timetable for filing briefs that contain the parties’ written arguments.   

While the Ordinance is in effect, an employer could be required to spend as much as $3,623.64 per year on health care for each “covered employee.”  The Ordinance treats an employee as a “covered employee” during a calendar quarter if the employee works 10 or more hours in San Francisco during a week in the calendar quarter.  The Ordinance also requires employers that do business in San Francisco to comply with specific notice requirements and to keep records showing that they are in compliance with the Ordinance’s spending requirements.

Employers generally contend that when Congress adopted ERISA in 1974, it prohibited state and local governments from requiring health care coverage for employees.  Federal courts around the country usually agree with this position.  In the last major show down over state-mandated health coverage, the U.S. Court of Appeals for the Fourth Circuit in Baltimore struck down Maryland’s “Fair Share Health Care Fund Act,” ruling that it could not be enforced because it is preempted by ERISA, which takes precedence over state law because it is a federal law. 

The Ninth Circuit’s decision allowing the Ordinance to go into effect came as a surprise to many.  The Ninth Circuit’s statement that the City is likely to win its appeal was taken as expressing the Ninth Circuit’s willingness to disagree with the Fourth Circuit.  Disagreements between federal appeals courts often are resolved by the Supreme Court. 

With such high stakes, the International Franchise Association, the Society for Human Resource Management, and the National Association of Manufacturers asked Tom Christina, a shareholder and employee benefits lawyer at the law firm of Ogletree Deakins, to file an amicus brief on their behalf with the U.S Court of Appeals for the Ninth Circuit.   The amicus brief notes that ERISA generally preempts state laws that relate to employer-sponsored benefit plans in the private sector, such as health plans for employees and their families.  By preempting state and local laws that mandate benefits coverage, ERISA leaves employers generally free to design their benefit plan offerings within their budgets in response to their perception of their employees’ preferences.

Christina, who is one of the small number of benefits lawyers nationwide who maintains a plan design and regulatory compliance practice, but also regularly litigates employee benefits issues in trial and appellate courts throughout the country, said “The Ninth Circuit’s ruling on the stay pending appeal in the Golden Gate Restaurant Association is very significant.  It could signal a major change in how courts decide whether state and local governments can mandate employer spending on benefits.” 

“This is a very important case,” said Doug Farmer, one of the founding shareholders of Ogletree Deakins’ San Francisco office.  “Industry groups, employers, and state and local governments will be watching the case closely because the Ninth Circuit’s ruling could influence other courts when they consider similar legislation across the country.”

Farmer added that he, Christina, and Tom McInerney recently presented a web-based program on compliance with the Ordinance that employers from across the country participated in.  “It was clear from the high turn out for the seminar and from the types of questions the participants submitted that employers have substantial concerns about the Ordinance,” Farmer said.

“We are honored that the Society for Human Resource Management, the International Franchise Association, and the National Association of Manufacturers chose Ogletree Deakins to represent them in this case,” McInerney added.  “Tom Christina was the right lawyer to present their views in a landmark ERISA case.  When the stakes in employee benefits litigation are high, clients appreciate having an advocate like Tom who knows ERISA from the ground up.”

The Society for Human Resource Management is the world’s largest association devoted to human resource management.  Representing more than 225,000 individual members, the Society’s mission is to serve the needs of HR professionals by providing the most essential and comprehensive resources available.  The National Association of Manufacturers is the oldest and largest broad-based industrial trade association and serves 14,000 companies in every industrial sector in every state.  The International Franchise Association was established in 1960, and is the preeminent voice and acknowledged leader for franchising worldwide.

To view a copy of the amicus brief filed by Ogletree Deakins challenging San Francisco’s Health Care Security Ordinance, click here.

About Ogletree Deakins

Ogletree Deakins is the nation’s third largest labor and employment law firm, representing management in all types of employment-related legal matters. The firm has more than 400 lawyers located in 33 offices across the country, including a new office in San Francisco. In addition to handling labor and employment law matters, the firm has thriving practices focused on business immigration, employee benefits, and workplace safety and health law.  Ogletree Deakins represents a diverse range of clients, including more than half of the Fortune 50 corporations in the U.S.

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