Amicus Curiae Brief — The ERISA Industry Committee, Petitioner v. City of Seattle, Washington

No. 21-1019

IN THE

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THE ERISA INDUSTRY COMMITTEE,

Petitioner,

v.

CITY OF SEATTLE,

Respondent.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

BRIEF OF THE

RETAIL LITIGATION CENTER, INC.

AND THE

RETAIL INDUSTRY LEADERS ASSOCIATION

AS AMICI CURIAE

IN SUPPORT OF THE PETITIONER

DEBORAH WHITE

RETAIL LITIGATION CENTER,

INC.

RETAIL INDUSTRY LEADERS

ASSOCIATION

99 M Street, S.E.

Washington, D.C. 20003

(202) 869-0088

deborah.white@rila.org

EUGENE SCALIA

Counsel of Record

JACOB T. SPENCER

PHILIP HAMMERSLEY

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 955-8500

escalia@gibsondunn.com

Counsel for Amici Curiae

QUESTION PRESENTED

Whether state and local play-or-pay laws that

require employers to make minimum monthly

healthcare expenditures for their covered employees

relate to ERISA plans and are thus preempted by

ERISA.

ii

TABLE OF CONTENTS

Page

INTEREST OF AMICI CURIAE ........................... 1

INTRODUCTION AND SUMMARY OF

ARGUMENT ..................................................... 2

ARGUMENT .......................................................... 4

I. THE COURT SHOULD GRANT REVIEW

TO RECONCILE CONFLICTING CIRCUIT

COURT DECISIONS ABOUT WHETHER

ERISA PREEMPTS PLAY-OR-PAY LAWS ......... 4

A. The Fourth Circuit held that

Maryland’s play-or-pay law was

preempted because it had an

impermissible “connection with”

ERISA plans ........................................... 4

B. The Ninth Circuit held that San

Francisco’s and Seattle’s play-orpay laws were not preempted

because they had no “connection

with” ERISA plans ................................. 7

C. The Fourth Circuit and Ninth

Circuit decisions are in direct

conflict on a discrete question

concerning the scope of ERISA’s

preemption clause ................................ 10

II. THE COURT SHOULD GRANT REVIEW

BECAUSE

PLAY-OR-PAY

LAWS

THREATEN ERISA’S IMPORTANT GOAL

OF UNIFORM PLAN ADMINISTRATION,

AS THE DEPARTMENT OF LABOR HAS

REPEATEDLY RECOGNIZED .......................... 13

iii

A. The decision below conflicts with

the Department of Labor’s

longstanding position that ERISA

preempts play-or-pay laws .................. 13

B. Whether play-or-pay laws are

preempted is a question of

“exceptional importance” that will

recur as states and municipalities

attempt to skirt ERISA........................ 19

CONCLUSION ..................................................... 21

iv

TABLE OF AUTHORITIES

Page(s)

CASES

Am. Hotel & Lodging Ass’n v. City of Seattle,

432 P.3d 434 (Wash. Ct. App. 2018) ................... 9

Fort Halifax Packing Co. v. Coyne,

482 U.S. 1 (1987) ............................................... 21

Golden Gate Rest. Ass’n v. San Francisco,

558 F.3d 1000 (9th Cir. 2009) ..................... 11, 20

Golden Gate Rest. Ass’n v. San Francisco,

546 F.3d 639 (9th Cir. 2008) ........................... 7, 8

Kirtsaeng v. John Wiley & Sons, Inc.,

568 U.S. 519 (2013) ............................................. 2

N.Y. State Conf. of Blue Cross & Blue Shield

Plans v. Travelers Ins. Co.,

514 U.S. 645 (1995) ..................................... 13, 20

Retail Indus. Leaders Ass’n v. Fielder,

475 F.3d 180 (4th Cir. 2007) ......................passim

Retail Indus. Leaders Ass’n v. Fielder,

435 F. Supp. 2d 481 (D. Md. 2006) ..................... 5

Retail Indus. Leaders Ass’n v. Suffolk County,

497 F. Supp. 2d 403 (E.D.N.Y. 2007) ..... 1, 19, 20

Shaw v. Delta Air Lines, Inc.,

463 U.S. 85 (1983) ............................................... 5

South Dakota v. Wayfair, Inc.,

138 S. Ct. 2080 (2018) ......................................... 1

Thole v. U.S. Bank N.A.,

140 S. Ct. 1615 (2020) ....................................... 18

v

ORDINANCES & STATUTES

29 U.S.C. § 207 ....................................................... 17

29 U.S.C. § 1002 ..................................................... 13

29 U.S.C. § 1136 ..................................................... 13

29 U.S.C. § 1144 ................................................. 5, 13

Md. Code, Health-Gen. § 15-142 (2007) .................. 5

Md. Code, Lab. & Empl. § 8.5-104 (2007) ................ 5

S.F. Admin. Code § 14.1 ........................................... 7

S.F. Admin. Code § 14.3 ........................................... 7

Suffolk County Reg. Local Law § 325-1 (2005) ..... 19

RULES

S. Ct. R. 37.2 ............................................................. 1

S. Ct. R. 37.6 ............................................................. 1

OTHER AUTHORITIES

Br. for the Sec’y of Labor as Amicus Curiae,

Golden Gate Rest. Ass’n v. San Francisco,

546 F.3d 639 (9th Cir. 2008)

(Nos. 07-17370, 07-17372) .........................passim

Br. for the Sec’y of Labor as Amicus Curiae,

Golden Gate Rest. Ass’n v. San Francisco,

558 F.3d 1000 (9th Cir. 2009)

(Nos. 07-17370, 07-17372) .............. 10, 11, 15, 19

Br. for the Sec’y of Labor as Amicus Curiae,

Retail Indus. Leaders Ass’n v. Fielder,

475 F.3d 180 (4th Cir. 2007)

(Nos. 06-1840, 06-1901) .................. 14, 15, 16, 17

vi

Br. for the Sec’y of Labor as Amicus Curiae,

Howard Jarvis Taxpayers Ass’n v. Cal.

Secure Choice Ret. Sav. Program,

997 F.3d 848 (9th Cir. 2021) (No. 20-15591) .... 14

Br. for the United States as Amicus Curiae,

District of Columbia v.

Greater Wash. Bd. of Trade,

506 U.S. 125 (1992) (No. 91-1326) .................... 14

Br. for the United States as Amicus Curiae,

Egelhoff v. Egelhoff ex rel. Breiner,

532 U.S. 141 (2001) (No. 99-1529) .................... 14

Br. for the United States as Amicus Curiae,

Golden Gate Rest. Ass’n v. San Francisco,

561 U.S. 1024 (2010) (No. 08-1515) ............ 11, 12

Editorial Board, Vote Yes on I-124 to Protect

Seattle Hotel Workers, Seattle Weekly (Oct.

21, 2016), https://bit.ly/34TIhFQ ........................ 9

Initiative Measure No. 124 ...................................... 9

Amy Joyce & Matthew Mosk, Unions Hope WalMart Bill Has Momentum; Other States

Consider Similar Measures, Wash. Post (Jan.

14, 2006), https://wapo.st/36nF7uA.................... 4

Off. of Lab. Standards Enf.,

San Francisco Healthy Airport Ordinance

(Amendment to Health Care Accountability

Ordinance) Implementation Guidance

(Apr. 30, 2021) ................................................... 20

Pet. for Writ of Cert.,

Thole v. U.S. Bank N.A., 140 S. Ct. 1615

(June 22, 2018) (No. 17-1712) ........................... 18

vii

Samuel C. Salganik, Note,

What the Unconstitutional Conditions

Doctrine Can Teach Us About ERISA

Preemption, 109 Colum. L. Rev. 1482 (2009) ..... 2

Seattle Off. of Lab. Standards,

Improving Access to Medical Care for Hotel

Employees Ordinance Questions and Answers

(June 22, 2020) .................................................. 17

Eric Shannon, Wash. Pol’y Ctr., Citizens Guide

to Seattle’s Initiative 124 (2016). ........................ 8

INTEREST OF AMICI CURIAE*

The Retail Industry Leaders Association (“RILA”)

is a public policy organization consisting of the country’s largest retailers. RILA’s members account for

more than $1.5 trillion in annual sales, employ millions of Americans, and operate more than 100,000

stores, manufacturing facilities, and distribution centers around the world. RILA has brought two lawsuits

successfully challenging play-or-pay laws, resulting in

the Fourth Circuit’s decision in Retail Industry Leaders Ass’n v. Fielder, 475 F.3d 180 (4th Cir. 2007), and

the district court decision in Retail Industry Leaders

Ass’n v. Suffolk County, 497 F. Supp. 2d 403 (E.D.N.Y.

2007).

In 2010 RILA established the Retail Litigation

Center, Inc. (“RLC”) as a separate association to provide courts with the retail industry’s perspective on

important legal issues, and to highlight the potential

industry-wide consequences of pending cases. Like

RILA, the RLC’s membership includes many of the

country’s largest and most innovative retailers. Since

its founding, the RLC has participated as an amicus

in nearly 200 judicial proceedings. Its briefs have

been cited favorably by multiple courts, including this

Court. See, e.g., South Dakota v. Wayfair, Inc., 138

* Pursuant to this Court’s Rule 37.6, counsel for amici states

that no counsel for a party authored this brief in whole or in part,

and no person or entity other than amici or its counsel made a

monetary contribution to fund this brief ’s preparation or submission. Consistent with Rule 37.2, amici notified counsel of record for all parties of its intent to file an amicus brief at least ten

days prior to the brief ’s due date. All parties have consented in

writing to the filing of this brief.

2

S. Ct. 2080, 2097 (2018); Kirtsaeng v. John Wiley &

Sons, Inc., 568 U.S. 519, 542 (2013).

Together, RILA and the RLC share a unique perspective on the question presented in the petition in

this case. Accordingly, amici appear here to explain

their members’ considerable interest in uniform application of the Employee Retirement Income Security

Act of 1972 (“ERISA”), and to provide their experienced insights on the application of the relevant

caselaw.

INTRODUCTION AND

SUMMARY OF ARGUMENT

This case is about “play-or-pay” laws, which typically require that an employer either “play” by providing a minimum level of healthcare benefits to its employees, or “pay” that minimum amount directly to its

employees or the state. Many states and municipalities across the country have enacted such laws or expressed an interest in doing so. See Samuel C. Salganik, Note, What the Unconstitutional Conditions

Doctrine Can Teach Us About ERISA Preemption, 109

Colum. L. Rev. 1482, 1484–85 (2009) (“in the past few

years, dozens of state governments have officially proposed [play-or-pay] schemes”); Pet. at 35–36.

Congress enacted ERISA in part to ensure that

employers could administer their employee benefit

plans on a nationwide basis without worrying about

inconsistent state and local requirements. The Ninth

Circuit’s decision upholding the City of Seattle’s playor-pay ordinance jeopardizes that important goal and

further cements a circuit split about the scope of

ERISA’s preemption clause. The Court should grant

review to address that split and answer the question

3

presented, which the Department of Labor has previously recognized is recurring and exceptionally important.

I. This Court should grant review to resolve the

circuit split on whether ERISA preempts play-or-pay

laws like the Seattle Ordinance. The Fourth Circuit,

in a case brought by RILA challenging a Maryland

law, held that the play-or-pay provision was

preempted because it had an impermissible “connection with” ERISA plans. The Ninth Circuit, by contrast, has on multiple occasions upheld similar laws

after concluding that they lacked any “connection

with” ERISA plans. Those decisions are in sharp conflict, as the Department of Labor—the agency tasked

with administrating ERISA—has previously explained.

II. This Court should also grant review because

the question presented is recurring and exceptionally

important. In the two most consequential play-or-pay

cases prior to this, the Department of Labor took the

position that ERISA preempted the challenged laws.

That conclusion is correct and rooted in ERISA’s first

principles—namely, that employers are free to choose

whether and how to offer employee health benefits,

without interference from state and local laws. The

Ninth Circuit’s approach defies those principles and

clashes with the Department of Labor’s longstanding

views. Prompt review is especially important because

other jurisdictions have expressed interest in enacting

play-or-pay laws. Absent intervention, this pressing

question will recur with increasing frequency.

4

ARGUMENT

I.

THE COURT SHOULD GRANT REVIEW TO

RECONCILE CONFLICTING CIRCUIT COURT

DECISIONS ABOUT WHETHER ERISA PREEMPTS

PLAY-OR-PAY LAWS.

When asked whether ERISA preempts a Maryland play-or-pay law for having a “connection with”

ERISA plans, the Fourth Circuit provided a clear answer—“yes.” And when the Ninth Circuit was asked

the same question about laws in San Francisco and

Seattle, it provided an equally clear answer—“no.”

Because these circuit decisions squarely conflict on an

important question under a statute that was enacted

in part to provide national uniformity, the Court

should grant the petition.

A.

The Fourth Circuit held that

Maryland’s play-or-pay law was

preempted because it had an

impermissible

“connection

with”

ERISA plans.

The Fourth Circuit adopted its position on the

question presented in litigation that was brought by

RILA, challenging a Maryland play-or-pay statute.

In 2006, at the urging of organized labor, the Maryland General Assembly enacted the Fair Share

Health Care Fund Act. See Amy Joyce & Matthew

Mosk, Unions Hope Wal-Mart Bill Has Momentum;

Other States Consider Similar Measures, Wash. Post

(Jan. 14, 2006), https://wapo.st/36nF7uA. That law’s

stated purpose was to ensure that the state’s large employers contributed their “fair share” towards their

employee’s healthcare costs. Retail Indus. Leaders

5

Ass’n v. Fielder, 475 F.3d 180, 183 (4th Cir. 2007). The

Fair Share Act pursued that goal by mandating that

a covered employer make per-employee expenditures

on health care that equaled at least eight percent of

the employee’s total wages. The employer could do so

either by spending that amount directly on employee

health care for its workers or by paying to the state

“an amount equal to the difference between what the

employer spends for health insurance costs and an

amount equal to 8% of the total wages paid to employees in the State.” Md. Code, Lab. & Empl. § 8.5-104(b)

(2007); see also Fielder, 475 F.3d at 185 (explaining

that the law was crafted so Wal-Mart was the only

employer subject to this minimum spending requirement). Any funds collected by the state were to be

used to support the Maryland Medical Assistance Program. See Md. Code, Health-Gen. § 15-142(f ) (2007).

RILA brought suit on behalf of its members challenging the Fair Share Act under ERISA’s preemption

clause. ERISA broadly preempts “any and all State

laws insofar as they may now or hereafter relate to any

employee benefit plan.” 29 U.S.C. § 1144(a) (emphasis

added). A law “relate[s] to” an ERISA plan “if it has a

connection with or reference to such a plan.” Shaw v.

Delta Air Lines, Inc., 463 U.S. 85, 97 (1983). RILA

argued that ERISA preempted the Fair Share Act because the Act had an impermissible “connection with”

ERISA plans. The district court agreed and granted

RILA’s motion for summary judgment. See Retail Indus. Leaders Ass’n v. Fielder, 435 F. Supp. 2d 481,

493–98 (D. Md. 2006).

On appeal, the Fourth Circuit described two ways

in which a state law can have an impermissible “connection with” an ERISA plan. First, a “state law has

6

an impermissible ‘connection with’ an ERISA plan if

it directly regulates or effectively mandates some element of the structure or administration of employers’

ERISA plans.” Fielder, 475 F.3d at 192–93 (footnote

omitted). And, second, even if “state law provides a

route by which ERISA plans can avoid the state law’s

requirements,” that law “might still be too disruptive

of uniform plan administration to avoid preemption.”

Id. at 193.

Consistent with those principles, the Fourth Circuit held that the Fair Share Act was preempted for

two independent reasons. The first was because “the

only rational choice employers ha[d] under the Fair

Share Act [wa]s to structure their ERISA healthcare

benefit plans so as to meet the minimum spending

threshold.” Fielder, 475 F.3d at 193. No reasonable

employer would opt to pay money to the state when it

could pay that same amount to its employees—doing

so could hurt employee morale and spark public condemnation. Id. Because the Maryland play-or-pay

law “effectively mandate[d] that employers structure

their employee healthcare plans to provide a certain

level of benefits, the Act ha[d] an obvious ‘connection

with’ employee benefit plans and so [was] preempted

by ERISA.” Id. at 193–94.

The second reason ERISA preempted the Fair

Share Act was because the Act violated ERISA’s

promise of uniformity. The Fourth Circuit made clear

that, even if—as Maryland claimed—some meaningful choice to administer benefits did exist, “[the court]

would still conclude that the Fair Share Act had an

impermissible ‘connection with’ ERISA plans.”

Fielder, 475 F.3d at 196. If a covered employer satisfied the spending requirement through non-ERISA

7

means, it would still “need to coordinate those spending efforts with its existing ERISA plans.” Id. at 196–

97. On top of that, “a proliferation of similar laws in

other jurisdictions” would force employers to “monitor

these varying laws and manipulate [their] healthcare

spending to comply with them, whether by increasing

contributions to its ERISA plans or navigating the

narrow regulatory channel between the Fair Share

Act’s definition of healthcare spending and ERISA’s

definition of an employee benefit plan.” Id. at 197.

These obligations would seriously disrupt “the uniform nationwide administration of [an employer’s]

healthcare plans.” Id.

For both alternative reasons, the Fourth Circuit

held that ERISA preempted the Fair Share Act.

B.

The Ninth Circuit held that San

Francisco’s and Seattle’s play-or-pay

laws were not preempted because

they had no “connection with” ERISA

plans.

The Ninth Circuit reached the opposite conclusion

with respect to the San Francisco play-or-pay law

challenged in Golden Gate Restaurant Ass’n v. San

Francisco, 546 F.3d 639 (9th Cir. 2008), and the Seattle Ordinance at issue here.

The San Francisco Ordinance required covered

employers to make “health care expenditures to or on

behalf of ” certain employees. S.F. Admin. Code

§ 14.3(a). The amount the employer owed varied depending on the number of hours each employee

worked, as well as whether the employer was a forprofit or non-profit entity. See id. §§ 14.1, 14.3. To

satisfy the expenditure requirement, the employer

8

could make payments to an ERISA plan or make an

equivalent payment to the City (or some combination

of both). Golden Gate, 546 F.3d at 645.

Although the challengers argued the law bore a

“connection with” ERISA plans, the Ninth Circuit upheld the Ordinance. The court recognized that ERISA

was designed “to provide a uniform regulatory regime

over employee benefit plans.” Golden Gate, 546 F.3d

at 655 (citation omitted). But the court concluded that

the Ordinance “[did] not require any employer to

adopt an ERISA plan,” or “to provide specific benefits

through an existing ERISA plan or other health plan.”

Id. at 655–56. Instead, it gave “[a]ny employer covered by the Ordinance” the option to “fully discharge

its expenditure obligations by making the required

level of employee health care expenditures, whether

those expenditures are made in whole or in part to an

ERISA plan, or in whole or in part to the City.” Id.

(emphasis added). For that reason, the panel concluded, the law “preserve[d] ERISA’s ‘uniform regulatory regime,’ ” id. (citation omitted), and avoided

preemption.

The Ninth Circuit reached the same result with

the Seattle play-or-pay ordinance at issue in this case.

The provision first appeared as a ballot initiative in

2016. Initiative Measure No. 124, which was drafted

and promoted by a local labor union, proposed an array of employment requirements on hotels operating

in the City. One requirement forced covered employers to provide monthly healthcare contributions if

they did not already provide a specified level of health

insurance benefits. See Eric Shannon, Wash. Pol’y

Ctr., Citizens Guide to Seattle’s Initiative 124, at 3

(2016). Although advocates portrayed Initiative 124

9

as necessary for hotel workers’ health and safety, it

included an exemption that enabled unionized employers to ignore many of its requirements. See Part

7, Initiative Measure No. 124. Even the Initiative’s

supporters recognized the “faintly disguised self-interest” animating the “union-exemption clause”—

namely, that “employers might find the law onerous,

leading them to encourage unionization in hopes of a

better deal.” Editorial Board, Vote Yes on I-124 to Protect Seattle Hotel Workers, Seattle Weekly (Oct. 21,

2016), https://bit.ly/34TIhFQ. Despite these concerns,

voters passed Initiative No. 124 by a popular vote.

That Initiative did not survive judicial scrutiny.

Hotel associations challenged the measure, which included provisions ranging from protections against

sexual assault and exposure to hazardous chemicals

to requirements governing worker compensation and

healthcare benefits, on the ground that it violated single-subject rules set forth in state statute and the

City’s charter. The Washington Court of Appeals

agreed that the Initiative violated those rules and

held that it was “invalid in its entirety.” Am. Hotel &

Lodging Ass’n v. City of Seattle, 432 P.3d 434, 445

(Wash. Ct. App. 2018).

Undeterred, the City broke the Initiative down

into single-subject ordinances and tried again. That

is how Seattle Municipal Code § 14.28, the ordinance

at issue here, came to be—as “the successor to Initiative Measure No. 124.” Pet. App. 5 n.2. And like its

predecessor, § 14.28 includes an exemption for unionized employers. See id. at 56. The relevant provisions

in the Code require non-exempt employers to make

monthly “healthcare expenditures” for each covered

employee. Id. at 29. Those expenditures can be made

10

through ERISA plans or as “compensation paid directly” to the employees. Id. at 29–30.

Relying on Golden Gate, the court below in this

case held that ERISA did not preempt the Seattle Ordinance. Pet. App. 2. The Ninth Circuit concluded

that the law was materially indistinguishable from

the one in Golden Gate, and thus summarily held in

an unpublished opinion that it “does not relate to any

employee benefit plan in a manner that triggers

ERISA preemption.” Id.

C.

The Fourth Circuit and Ninth Circuit

decisions are in direct conflict on a

discrete question concerning the

scope of ERISA’s preemption clause.

The decision of the Fourth Circuit in Fielder, and

the decisions of the Ninth Circuit in Golden Gate and

this case, directly conflict on the question of whether

play-or-pay laws have an impermissible “connection

with” ERISA plans—a circuit split that the Department of Labor and eight judges of the Ninth Circuit

have already recognized.

Shortly after the Golden Gate decision, the Labor

Department urged the Ninth Circuit to rehear the

case en banc precisely because the panel decision conflicted with the Fourth Circuit’s decision in Fielder.

See Br. for the Sec’y of Labor as Amicus Curiae at 1–

2, Golden Gate Rest. Ass’n v. San Francisco, 558 F.3d

1000 (9th Cir. 2009) (Nos. 07-17370, 07-17372), 2008

WL 6722745 (“DOL Golden Gate Rehearing Br.”) (“Rehearing en banc is also appropriate because the

panel’s decision conflicts with preemption principles

applied * * * by the Fourth Circuit in Retail Industry

Leaders Ass’n v. Fielder.”). The Department of Labor

11

correctly recognized that Fielder included two alternative holdings: one about the Fair Share Act’s mandate to provide benefits, and another about the Act’s

effect on uniform plan administration. Id. at 16. The

Secretary concluded that the Golden Gate decision

“conflict[ed] with the Fourth Circuit’s analysis of the

uniformity issue in Fielder.” Id.

When the Ninth Circuit rejected the Labor Department’s views and decided not to rehear Golden

Gate en banc, it prompted a forceful dissent that drew

attention to the newly formed circuit split. See Golden

Gate Rest. Ass’n v. San Francisco, 558 F.3d 1000, 1004

(9th Cir. 2009) (M. Smith, J., dissenting from the denial of rehearing en banc). Even assuming the San

Francisco law differed from Maryland’s in some respects, the dissenters said, the decisions nevertheless

“stand in clear opposition” and “create a circuit split,”

id. at 1007, on whether the play-or-pay laws were

preempted because of how they affect uniform plan

administration, see id. at 1006–07.

This Court sought the United States’s views on

whether to grant review in Golden Gate, and the Solicitor General (in a new presidential administration)

opposed certiorari principally on the ground that the

Affordable Care Act’s recent enactment could make

states and locales less likely to adopt mandates like

San Francisco’s, rendering review “premature at this

time.” Br. for the United States as Amicus Curiae at

8, Golden Gate Rest. Ass’n v. San Francisco, 561 U.S.

1024 (2010) (No. 08-1515), 2010 WL 2173776 (“Golden

Gate SG Br.”); id. at 8, 14, 17 (repeatedly stating that

review was not necessary “at this time”). Avowing

that the court of appeals’s “extensive analysis” and

“rejection” of the Department of Labor’s position had

12

caused it to “beg[i]n to reexamine” its repeatedly expressed views in the case, the government also

adopted the position that the Ninth Circuit’s decision

was merely “in tension” with Fielder and that “the two

cases do not present a direct conflict.” Id. at 12, 17.

The government explained that Fielder’s uniformity

analysis depended in part on the Fourth Circuit’s

“conclusion that the state-payment option was not a

realistic alternative.” Id. at 19. And because the San

Francisco law did offer a realistic alternative, the government reasoned, it was “not clear” the Fourth Circuit would find a law like San Francisco’s preempted.

Id.

In truth, the Fourth Circuit deliberately expressed that it “would still conclude” that ERISA

preempted the Act on uniformity grounds “even if ”

employers could satisfy the spending requirements by

non-ERISA means. Fielder, 475 F.3d at 196. Plainly,

the uniformity holding did not depend on the court’s

earlier determination that the Maryland law gave employers no meaningful alternatives. The Department

of Labor had it right the first time when it recognized

the split.1

The Ninth Circuit’s decision below further entrenches the circuit split. When presented with yet

1 It is of course true, as the United States pointed out in its

amicus brief, that the Court “reviews judgments, not statements

in opinions.” Golden Gate SG Br. at 19 (quoting Black v. Cutter

Labs., 351 U.S. 292, 297 (1956)). That casts no doubt on the existence of the circuit split here. The Fourth Circuit’s judgment

was that the district court appropriately granted summary judgment to RILA. The uniformity holding, an integral part of that

judgment, conflicts with the Ninth Circuit’s judgment that

ERISA does not preempt the San Francisco play-or-pay law.

13

another play-or-pay law, the court mechanically applied Golden Gate and concluded that the Seattle Ordinance was not preempted by ERISA. Pet. App. 3.

II. THE COURT SHOULD GRANT REVIEW BECAUSE

PLAY-OR-PAY

LAWS

THREATEN

ERISA’S

IMPORTANT

GOAL

OF

UNIFORM

PLAN

ADMINISTRATION, AS THE DEPARTMENT OF

LABOR HAS REPEATEDLY RECOGNIZED.

The purpose of ERISA’s preemption clause is to

“permit the nationally uniform administration of employee benefit plans.” N.Y. State Conf. of Blue Cross

& Blue Shield Plans v. Travelers Ins. Co., 514 U.S.

645, 657 (1995). The Ninth Circuit’s approach jeopardizes that critical goal and clashes with the Department of Labor’s repeatedly stated position on play-orpay laws.

Because the issue whether ERISA

preempts such laws presents a recurring question of

exceptional importance, the Court should grant review.

A.

The decision below conflicts with the

Department of Labor’s longstanding

position that ERISA preempts playor-pay laws.

ERISA vests the Secretary of Labor with the primary authority to administer and enforce Title I of its

provisions, 29 U.S.C. §§ 1002(13), 1136(b), which includes the preemption clause. The Department of Labor therefore routinely files amicus briefs setting forth

the Secretary’s views on whether ERISA preempts

various state and local laws, including its view that

play-or-pay laws impermissibly “relate to” “employee

benefit plan[s].” Id. § 1144(a). The Ninth Circuit’s approach is plainly inconsistent with that position.

14

For decades, the Department of Labor has filed

amicus briefs presenting the Secretary’s views about

whether ERISA preempts certain laws. These briefs,

filed across multiple presidential administrations,

regularly defend ERISA’s preemptive effect on state

and local laws that target employee benefit plans.

See, e.g., Br. for the Sec’y of Labor as Amicus Curiae

at 5–6, Howard Jarvis Taxpayers Ass’n v. Cal. Secure

Choice Ret. Sav. Program, 997 F.3d 848 (9th Cir.

2021) (No. 20-15591), ECF No. 10 (“HJTA Br.”); Br.

for the United States as Amicus Curiae at 7–9,

Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141 (2001)

(No. 99-1529), 2000 WL 1168615; Br. for the United

States as Amicus Curiae at 7–9, District of Columbia

v. Greater Wash. Bd. of Trade, 506 U.S. 125 (1992)

(No. 91-1326), 1992 WL 12012049. An overarching

principle advanced by the Department of Labor in

these briefs is that state or local laws that interfere

with the uniform administration of employee benefit

plans are preempted by ERISA. See, e.g., HJTA Br.

at 5 (arguing that the California statute is preempted

because it “interferes with nationally uniform plan administration of retirement benefits”).

So it should come as no surprise that the Department of Labor has weighed in similarly on play-or-pay

laws. In two of the most important play-or-pay cases

to date—Fielder and Golden Gate—the Secretary filed

amicus briefs urging the courts to find the laws

preempted. Br. for the Sec’y of Labor as Amicus Curiae, Golden Gate Rest. Ass’n v. San Francisco, 546

F.3d 639 (9th Cir. 2008) (Nos. 07-17370, 07-17372),

ECF No. 39 (“Golden Gate Panel Br.”); Br. for the Sec’y

of Labor as Amicus Curiae, Retail Indus. Leaders

15

Ass’n v. Fielder, 475 F.3d 180 (4th Cir. 2007) (Nos. 061840, 06-1901), ECF No. 128 (“Fielder Br.”).

The Department of Labor adopted that position

for two reasons:

First, the play-or-pay laws impermissibly regulated the provision of employee benefits. The Maryland law required covered employers to make

healthcare expenditures equal to eight percent of employee payroll. Fielder, 475 F.3d at 184. By doing so,

the Department of Labor reasoned, the law stripped

the “employer[’s] fundamental authority over

whether, and on what terms to sponsor a plan,”

Fielder Br. at 13—an outcome that ran afoul of

ERISA’s fundamental principle that employers may

choose to establish their own plan, “or even choose to

provide no benefits at all,” id. at 11; see also id. at 6

(“ERISA allows employers to determine whether and

when to establish health care benefit plans for their

employees and the level of benefits to be provided.”

(emphases added)). The San Francisco law likewise

“require[d] employers ‘to make reasonable health care

expenditures on behalf of their employees,’ and

thereby intrude[d] upon a core aspect of ERISA’s regulatory framework.” Golden Gate Panel Br. at 12 (citation omitted); see also Golden Gate Rehearing Br. at

8 (“The San Francisco law * * * plainly relates to

ERISA covered plans because whether and how much

an employer is required to pay into the City program

is directly related to whether the employer has an

ERISA plan and if so the level of benefits under that

plan.”). Both laws shared the fatal characteristic of

compelling employers to provide certain benefits.

16

Second, the play-or-pay laws prevented employers

from administering their benefit plans uniformly. “A

state law is * * * independently preempted if ‘it interferes with nationally uniform plan administration.’ ”

Golden Gate Panel Br. at 10 (quoting Egelhoff v.

Egelhoff ex rel. Breiner, 532 U.S. 141, 148 (2001)). The

San Francisco law imposed requirements on top of the

baseline benefits otherwise provided by the employer.

As a result, the law put employers in the very position

that ERISA was designed to prevent: They could either change the benefits plan so that all employees

across the country “receive benefits in the manner dictated by San Francisco,” id. at 26, or give only their

San Francisco employees “different or additional benefits” as required by law, id. Whichever path an employer chose, it “would have to adjust its administrative practices to reflect the unique administrative requirements, terms, and prohibitions of the San Francisco law.” Id. That obviously prevents employers

from administering benefit plans uniformly—and that

is just one city’s ordinance; the problem compounds

when other jurisdictions adopt similar laws. Id. at 27.

Maryland’s law suffered from the same problem: Insofar as employers provided healthcare through a nationwide ERISA plan, they would at minimum need to

coordinate those benefits with the spending required

by the Fair Share Act. See Fielder Br. at 21–22 (relying upon Fort Halifax Packing Co. v. Coyne, 482 U.S.

1, 13 (1987)). ERISA does not tolerate such disruption.

For each of those independently sufficient reasons, the Department of Labor determined that the

play-or-pay laws in Fielder and Golden Gate had a

“connection with” ERISA plans and were therefore

17

preempted under settled Supreme Court precedent.

See Golden Gate Panel Br. at 5; Fielder Br. at 9 & n.4.

The Secretary’s reasoning applies with equal force

to the Seattle Ordinance. Like the Fair Share Act and

the San Francisco law, the Seattle Ordinance forces

covered hotel employers to provide a minimum level

of benefits and thus “intrudes upon a core aspect of

ERISA’s regulatory framework.” Golden Gate Panel

Br. at 12. In addition, as was true in Fielder, there

are strong incentives to make the contributions

through an ERISA plan. Seattle’s non-ERISA option

allows employers to make direct payments in the form

of additional “ordinary income.” Seattle Off. of Lab.

Standards, Improving Access to Medical Care for Hotel Employees Ordinance Questions and Answers 10

(June 22, 2020). Of course, that income is subject to

taxes, whereas contributions made through thirdparty plans receive more favorable tax treatment. Id.

at 8. Employers that opt for the former option thereby

face a stigma as discussed in Fielder. A further disincentive to the non-ERISA option is that payments

made as regular compensation must be included in

the “regular rate of pay” used to determine the

amount of the “time-and-a-half ” payments due under

the Fair Labor Standards Act to employees working

more than 40 hours a week. See 29 U.S.C. § 207(e)

(defining the “regular rate” generally to include “all

remuneration for employment paid to, or on behalf of,

the employee” (emphasis added)). By increasing the

“regular rate,” the non-ERISA option could obligate

employers to make yet further payments, in the form

of increased overtime pay.

The Ordinance also unquestionably interferes

with ERISA’s uniformity goal. “The Supreme Court

18

has repeatedly stated that ERISA preempts state

laws that require plans ‘to calculate benefit levels’ in

one state based on conditions that differ from those in

other states.” Golden Gate Panel Br. at 24 (quoting

Travelers, 514 U.S. at 657–58). The Ordinance requires employers to do just that. Moreover, as in

Fielder and Golden Gate, the Seattle provision effectively forces covered employers either to abandon a

nationwide benefits plan or to “level-up” so that every

employee across the country receives at minimum the

amount of benefits that one city deems appropriate.

Either option impermissibly burdens an employer’s

ability to establish and administer a nationwide plan,

id. at 26, and thus triggers ERISA preemption.

By concluding otherwise, the decision from the

court below—and the Ninth Circuit’s approach more

generally—conflicts with the Department of Labor’s

traditional position about the legality of play-or-pay

laws. That conflict brings into focus the need for this

Court’s review. See, e.g., Thole v. U.S. Bank N.A., 140

S. Ct. 1615 (2020) (granting certiorari where court of

appeals rejected the Secretary of Labor’s longstanding

interpretation of ERISA); see also Pet. for Writ of Cert.

at 14–15, Thole v. U.S. Bank N.A., 140 S. Ct. 1615

(June 22, 2018) (No. 17-1712), 2018 WL 3142011 (discussing the importance of the question presented by

highlighting how the court of appeals’s decision was

inconsistent with the views of the Labor Department

as expressed “[i]n amicus briefs across multiple administrations”).

19

B.

Whether

play-or-pay

laws

are

preempted

is

a

question

of

“exceptional importance” that will

recur as states and municipalities

attempt to skirt ERISA.

The Secretary of Labor has stated that whether

ERISA preempts play-or-pay laws is “a recurring issue of exceptional importance.” Golden Gate Rehearing Br. at 7. Amici agree.

The issue the petition presents is not limited to

the Fourth and Ninth Circuits. For example, RILA

spent considerable time and resources challenging a

play-or-pay law on Long Island. In the mid-2000s,

Suffolk County adopted a “Fair Share” law which required retail grocery stores to make “health care expenditures” to their employees. Retail Indus. Leaders

Ass’n v. Suffolk County, 497 F. Supp. 2d 403, 406

(E.D.N.Y. 2007). The stated purpose was to “require

that all covered employers spend a minimum level of

funding on health care for employees.” Suffolk County

Reg. Local Law § 325-1(F) (2005). Like the Seattle

Ordinance, the law originally contained an express

carve out for unionized employers. Suffolk County,

497 F. Supp. 2d at 406 (discussing the exemption and

noting that it was removed through a subsequent

amendment).

The district court held that ERISA preempted the

county law. The court reasoned that, similar to the

Maryland law that RILA successfully challenged in

Fielder, the county law was expressly designed “to

mandate that covered employers * * * increase spending on healthcare coverage for Suffolk County employ-

20

ees.” Suffolk County, 497 F. Supp. 2d at 417. Moreover, the law “interfere[d] with employers’ administration of their ERISA plans because employers would

have to vary benefits for New York employees,” and it

“inhibit[ed] the administration of a uniform plan nationwide” and “disrupt[ed] uniform plan administration.” Id. at 418.

By all accounts, municipalities plan to replicate

laws like those at issue in Suffolk County, Fielder,

Golden Gate, and here. See Pet. at 35–36. San Francisco, for example, recently enacted another play-orpay measure—this one targeting airlines and airline

service providers. See generally Off. of Lab. Standards

Enf., San Francisco Healthy Airport Ordinance

(Amendment to Health Care Accountability Ordinance) Implementation Guidance (Apr. 30, 2021).

This ordinance requires covered employers either to

provide free health insurance or to pay an hourly

$9.50 per-employee tax (up to $380 a week) to fund the

City’s plan. Id. at 3. It is currently under judicial review.

Litigation about whether ERISA preempts such

play-or-pay laws thus threatens to explode in the coming years, further frustrating ERISA’s goal of “nationally uniform administration of employee benefit

plans.” Travelers, 514 U.S. at 657; see also, e.g.,

Golden Gate Rest. Ass’n, 558 F.3d at 1008 (M. Smith,

J., dissenting from the denial of rehearing en banc)

(“[M]ost importantly, I dissent because this case concerns an issue of exceptional national importance, i.e.,

national uniformity in the area of employer-provided

healthcare.”).

21

In short, inaction on the question presented would

leave employers scrambling to contend with the very

“patchwork scheme of regulation” that prompted Congress to enact ERISA in the first place. Fort Halifax

Packing Co. v. Coyne, 482 U.S. 1, 11 (1987). That

would impose substantial compliance costs on amici’s

members because, as new laws are enacted, employers

must recalibrate their benefit plans to account for variations in state and local laws. A proliferation of lawsuits like this would be sure to follow.

CONCLUSION

Now is an opportune time for the Court to decide

the question presented. There is an irreconcilable difference between the circuits on an exceptionally important question about a federal statute that affects

employers and employees across the nation. For the

forgoing reasons, amici respectfully ask this Court to

grant review and reverse the decision below.

Respectfully submitted,

DEBORAH WHITE

RETAIL LITIGATION CENTER,

INC.

RETAIL INDUSTRY LEADERS

ASSOCIATION

99 M Street, S.E.

Washington, D.C. 20003

(202) 869-0088

deborah.white@rila.org

EUGENE SCALIA

Counsel of Record

JACOB T. SPENCER

PHILIP HAMMERSLEY

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 955-8500

escalia@gibsondunn.com

Counsel for Amici Curiae

February 18, 2022