# Amicus Curiae Brief — Golden Gate Restaurant Ass'n v. City & County of San Francisco

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0619%3A10

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2010
- **Citation:** 561 U.S. 1024

## Text

FILED

(4-) JUL 10 2009

OFFICE OF THE CLERK
No. 08-1515 SUPREME COURT, U.S.
“2 ia

IN THE

Supreme Court of the Hnited States

GOLDEN GATE RESTAURANT ASSOCIATION,

Petitioner,
Vv.

CITY AND COUNTY OF SAN FRANCISCO, et al.,
Respondents.

On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Ninth Circuit

BRIEF FOR THE
RETAIL INDUSTRY LEADERS ASSOCIATION AND
THE CHAMBER OF COMMERCE OF THE UNITED
STATES OF AMERICA AS AMICI CURIAE
IN SUPPORT OF PETITIONER

ROBIN S. CONRAD’ WILLIAM J. KTLBERG
SHANE B. KAWKA Counsel of Record
NATIONAL CHAMBER THOMAS G. HUNGAR

LITIGATION CENTER, INC. THOMAS M. JOHNSON, JR.
1615 H Street, N.W. GIBSON, DUNN & CRUTCHER LLP
Washington, D.C. 20062 1050 Connecticut Avenue, N.W.
(202) 463-5337 Washington, D.C. 20036

(202) 955-8500

Counsel for Amici Curiae

QUESTION PRESENTED

“The purpose of ERISA is to provide a uniform
regulatory regime over employee benefit plans. To
this end, ERISA includes expansive pre-emption
provisions, sce ERISA § 514, 29 U.S.C. § 1144, which
are intended to ensure that employee benefit plan
regulation would be ‘exclusively a federal concern.”
Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004)
(internal citation omitted). In the decision below, the
Ninth Circuit upheld the San Francisco Health Care
Security Ordinance, which requires employers to
spend specific minimum amounts on employee
health care or else pay an equivalent amount to the
City of San Francisco. The Ordinance applies only to
employees who work within a discrete geographic
area and forces employers to create, maintain, and
disclose individualized records on covered employees.

The question presented is whether ERISA § 514,
29 U.S.C. § £144, which was designed to ensure na-
tionwide, uniform administration of employee benefit
plans, preempts state or local laws that mandate
minimum employer contributions for employee
health care, and dictate recordkeeping, reporting,
and disclosure requirements associated with those
contributions.

il

TABLE OF CONTENTS

Page
Fe BTS Iss ovéckcccvassccesnasevsovecsensencaseesa i
fe) FL ew Nhe y , 8) yy | .- nnnnneree lv
INTEREST OF AMICI CURIAE ..........20ccccsccssscoveveess 1
SUMMARY OF ARGUMENT. ........c0:.sscssesscvcerccscceveeses 2
PN RDA T ie ere Pet ORM DE MRA oR ERoE RP 5

I. CERTIORARI IS WARRANTED BECAUSE
THE DECISION BELOW CONFLICTS WITH
‘THIS COURT’S ERISA JURISPRUDENCE. ...........5

A. THE DECISION BELOW CONFLICTS
WITH THIS COURT’S PRECEDENTS
REGARDING “REFERENCE To”
I oor cas sede ha eadanenaonks 6

B. THE DECISION BELOW CONFLICTS
WITH THIS COURT’S PRECEDENTS
REGARDING “CONNECTION WITH”
I ais eacaa du iv susan 3

C. UNDER THIS COURT’S PRECEDENTS,
NON-ERISA ALTERNATIVES DO NoT
SAVE A LAW FROM PREEMPTION. ............ 16

Il. CERTIORARI IS WARRANTED BECAUSE
TIE DECISION BELOW CONFLICTS WITH
THE DECISION OF THE FOURTH CIRCUIT
I a a 17

A. THE ORDINANCE INTERFERES WITH
UNIFORM PLAN ADMINISTRATION IN
THE SAME MANNER AS’ THE
I EN NU 6 eso cticecevincncksvacaoandedcceesses 18

B. THE FOURTH CIRCUIT’S HOLDING
Dip Not DEPEND ON AN ABSENCE
OF NON-ERISA ALTERNATIVES. ............. 20

iil

IIl. CERTIORARI IS WARRANTED TO RE-
SOLVE AN IMPORTANT, RECURRING
QUESTION OF FEDERAL LAW CON-
COIS Bea vcd ncisusncsaxscccceeew nee aa

CAPITA FU OMI v5.05 ss nsdnuraunespio te ersedereueusaeanea ene 24

1V

TABLE OF AUTHORITIES

Page(s)

CASES
Aetna Health Inc. v. Davila,

EE SID csc cc scsccsccssvessvecscesesvcccccsessece i. oe
Alessi v. Raybestos-Manhattan, Inc.,

Er 8
California Div. of Labor Standards

Enforcement v. Dillingham Constr.,

N. A., Inc.,

re » ae > ee”) |
Curtiss-Wright Corp. v. Schoonejongen,

EE MED sss ccccssonccassossccescsccscscessceccosecoes 15

De Buono v. NYSA-ILA Med. & Clinical

Servs. Fund,

Cs 21
District of Columbia v. Greater

Washington Board of Trade,

MD oss cs cccenscessevcccccscvovcesesevecee 2,5, 6
Egelhoff v. Egelhoff,

BE PERE GMI E) .00..ceccccccccrccvesseed, Lo, 14, 16, 19
Fed. Express Corp. v. Holowechki,

Se 10
Fort Halifax Packing Co. v. Coyne,

IE, BIE Pocceccccsssvevecccvecscese 3, 8, 9, 10, 12, 17
Ingersoll-Rand Co. v. McClendon,

AQB U.S. 133 (1990) ..cccccccecsesesessessceseeeveceeees 7, 12, 15

Local Union 598, Plumbers & Pipefitters

Indus. Journeymen & Apprentices

Training Fund v, J.A. Jones Constr. Co.,

846 F.2d 1213 (9th Cir. 1988),

summarily affd, 488 U.S. 881 (1988).................... 8
Loren v. Blue Cross & Blue Shield,

a EO) 13

Vv

N.Y.S. Conference of Blue Cross & Blue
Shield Plans v. Travelers Ins. Co.,

RG G70. GG 6 Bi ccenccncnccsccnccacseccscossscenes ll, 15, 21
Retail Indus. Leaders Ass'n v. Fielder,
475 F.3d 180 (4th Cir. 2007)........... 2,4, 13, 17, 18,

19, 20, 21, 22

Retail Indus. Leaders Ass’n v. Suffolk

County,

497 I. Supp. 2d 403 (I.D.N.Y. 2007)
Shaw v. Delta Air Lines, Inc.,

FF is a a iat nctinkcacdvesevicccincnsecescsbuscsersneanes 2,5
Standard Oil Co. v. Agsalud,

633 F.2d 760 (9th Cir. 1980),

summarily affd, 454 U.S. 801 (1981).................. 16
FEDERAL STATUTES
BE Ty Ak Oh EB Pitiarccvisdentaistdvstitpetensicnniesitemeamel 6
BE UAE A © DB iitetiectcsnsrtessmneniaren 9, 10
OP BRA We IG Bi hivstdstichorssxesasteoecemcaoeeee 1]
BO UT.G, © ATA O aD vic cseicscccccvcoesscecssisssrorssrtacoccun i,5
STATE STATUTES
114.5 MASS. CODE REGS. 16.03 (2009)................. 23
Fs EER, TOO Be BR isaicctins datetaseveatisicsanchseseconienl 6
TOE + PUI, CAI BR iiak cs hcscccceicintescchseccesscebacsetan 10
VT. STAT. ANN. tit. 21, § 2003 (2009)..................... 23
OTHER AUTHORITIES
Employee Benefits Sec. Admin., U.S.

Dep’t of Labor, Field Assistance

Bulletin 2004-1 (Apr. 7, 2004) ....0......0......ccceeceeee eee 6

J. Contreras & O. Lobel, Wal-Martization
and the Fair Share Health Care Acts,
19 St. ‘Thomas L. Rev. 105 (2006)............ ele

BRIEF FOR THE RETAIL INDUSTRY
LEADERS ASSOCIATION AND THE
CHAMBER OF COMMERCE OF THE UNITED
STATES OF AMERICA AS AMICI CURIAE
IN SUPPORT OF PETITIONER

INTEREST OF AMICI CURIAE'

The Retail Industry Leaders’ Association
(“RILA”) is an international alliance of employers,
including retailers, product manufacturers, and ser-
vice providers, that promotes consumer choice and
economic freedom through government advocacy and
industry leadership. Its members, which include the
largest and fastest-growing retail companies in the
industry, account for over $1.5 trillion in annual
sales, provide millions of jobs, and operate more than
100,000 stores, manufacturing facilities, and distri-
bution centers both domestically and globally.

‘The Chamber of Commerce of the United States
of America (the “Chamber”) is a nonprofit corpora-
tion and is the world’s largest business federation.
The Chamber represents an underlying membership
of more than three million companies and profes-
sional organizations of every size, in every industry
sector, and from every region of the country. An im-
portant function of the Chamber is to represent the

1 Pursuant to this Court’s Rule 37.2(a), counsel of record re-

ceived timely notice of amici’s intent to file this brief, and let-
ters of consent from all parties to the filing of this brief have
been submitted to the Clerk. Pursuant to this Court’s Rule
37.6, amici state that this brief was not authored in whole or in
part by counsel for any party, and that no person or entity other
than amici or their counsel made a monetary contribution to
the preparation or submission of this brief.

2

interests of its members in matters before Congress,
the Executive Branch, and the courts. To that end,
the Chamber regularly files amicus curiae briefs in
cases raising issues of vital concern to the Nation’s
business community.

RILA and the Chamber are both committed to
protecting their members’ ability to establish and
administer health plans on a uniform, company-wide
basis, and therefore oppose laws such as the San
Francisco Health Care Security Ordinance that con-
flict with the federal policy embodied in ERISA.
RILA was the plaintiff in two previous cases involv-
ing similar laws that were struck down by the courts.
Retail Indus. Leaders Ass’n v. Fielder, 475 F.3d 180
(4th Cir. 2007); Retail Indus. Leaders Ass’n v. Suffolk
County, 497 F. Supp. 2d 403 (E.D.N.Y. 2007). The
Chamber filed amicus briefs in the Fielder case be-
fore both the district court and the court of appeals.

The decision below conflicts with Fielder and
Suffolk County and, therefore, threatens the uniform
administration of ERISA plans. RILA and the
Chamber filed amicus briefs in this case urging the
Ninth Circuit to affirm the district court’s decision
holding the Ordinance preempted, and also in sup-
port of en banc rehearing.

SUMMARY OF ARGUMENT

{. Certiorari is warranted because the Ninth
Circuit’s decision directly conflicts with this Court’s
ERISA jurisprudence. Under this Court’s test in
Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983), the
San Francisco Ordinance has both an impermissible
“reference to” and “connection with” employers’ exist-
ing ERISA plans.

The Ordinance impermissibly “refer[s] to” ERISA
plans under this Court’s decision in District of Co-

3

lumbia v. Greater Washington Board of Trade, 506
U.S. 125 (1992), because its health-care spending op-
tions specifically include covered plans, and because
it requires employers to measure compliance by re-
ferring to their current levels of ERISA benefits. The
decision below cannot be reconciled with Greater
Washington Board of Trade. In addition, the Ordi-
nance “refer[s] to” an ERISA plan through the City-
payment option, which is itself a covered plan under
this Court’s decision in Fort Halifax Packing Co. v.
Coyne, 482 U.S. 1 (1987), and not, as the Ninth Cir-
cuit concluded, a non-ERISA alternative.

Contrary to the Ninth Circuit’s holding, the Or-
dinance also has an impermissible “connection with”
ERISA plans under this Court’s precedents because,
whether or not it offers non-ERISA means of compli-
ance, it still interferes with uniform plan administra-
tion. In enacting ERISA, “Congress intended pre-
emption to afford employers the advantages of a uni-
form set of administrative procedures governed by a
single sct of regulations.” Fort Halifax, 482 U.S. at
11. State laws that threaten that goal of uniformity
are therefore preempted, because “[r]equiring ERISA
administrators to master the relevant laws of 50
states and to contend with litigation would under-
mine the congressional goal of minimizing the ad-
ministrative and financial burdens on plan adminis-
trators—burdens ultimately borne by the beneficiar-
ies.” Eygelhoff v. Egelhoff, 532 U.S. 141, 149-50
(2001) Ginternal quotation marks omitted).

The decision below conflicts with this Court’s
recognition of ERISA preemption’s core purpose of
uniform plan administration. By sustaining the Or-
dinance even though it mandates minimum health-
care payments and recordkeeping requirements for
employers who do business in San Francisco, the

4

Ninth Circuit’s decision fosters the creation of a
patchwork regulatory scheme for plan administra-
tors and thereby creates the very burdens foreseen
in, and forbidden by, Fort Halifax and Egelhoff. Cer-
tiorari should therefore be granted to correct the
Ninth Circuit's erroneous departure from _ this
Court’s precedents.

II. Certiorari is also warranted to resolve the
conflict between the Fourth and Ninth Circuits over
whether ERISA preempts required-contribution laws
like the Ordinance that require employers to make
locale-specific per-employee expenditures on health
care. In Fielder, the Fourth Circuit held that ERISA
preempted a similar required-contribution law be-
cause the law’s locale-specific minimum-spending
and recordkeeping requirements “would hamper
Wal-Mart’s ability to administer its employee benefit
plans in a uniform manner across the nation.” 475
F.3d at 187. In particular, the Fourth Circuit recog-
nized that a “proliferation of similar laws in other
jurisdictions would force Wal-Mart or any employer
like it to monitor these varying laws and manipulate
its healthcare spending to comply with them.” Id. at
197.

Contrary to the Ninth Circuit’s reasoning,
Fielder cannot be distinguished on the ground that
the Maryland law at issue there effectively left em-
ployers with no alternative to altering or amending
existing ERISA plans. The Fourth Circuit squarely
held that, whether or not there were non-ERISA al-
ternatives to compliance, required-contribution laws
are preempted because they act directly on ERISA
plans by increasing the burdens on plan administra-
tors who must monitor and coordinate all employee
health-care costs.

5

Iif. Finally, certiorari is warranted because this
case presents a recurring issue of substantial impor-
tance—whether ERISA preempts laws like the Ordi-
nance that mandate employer-funded health care.
Given the current economic constraints on state and
local budgets, the temptation to transfer to employ-
ers the costs of providing health care to the unin-
sured is certain to continue. A multiplicity of such
state and local laws, however, would eviscerate
ERISA’s guarantee of uniform plan administration.
And the resulting increase in compliance, monitor-
ing, and litigation costs would ultimately result in
increased expense to beneficiaries as well.

ARGUMENT

I. CERTIORARI IS WARRANTED BECAUSE THE
DECISION BELOW CONFLICTS WITH THIS
CouRT’s ERISA JURISPRUDENCE.

ERISA broadly preempts all laws that “relate to”
a covered employee benefit plan. 29 US.C.
§ 1144(a). Under this Court’s precedents, a state or
local law “relate[s] to” a plan if it has a forbidden
“connection with” or “reference to” a plan. Shaw, 463
U.S. at 97. A state or local requirement impermissi-
bly “refers to” a plan if the law on its face concerns
ERISA plans, or if the employer must consult its ex-
isting benefit plans to measure compliance. Greater
Wash. Bd. of Trade, 506 U.S. at 130. To determine
whether a law has a “connection with” a plan, this
Court looks to “the objectives of the ERISA statute as
a guide to the scope of the state law that Congress
understood would survive, as well as to the nature of
the effect of the state law on ERISA plans.” Califor-
nia Div. of Labor Standards Enforcement v. Dilling
ham Constr., N. A., Inc., 519 U.S. 316, 325 (1997) (in-
ternal quotation marks omitted).

6

A. THE DECISION BELOW CONFLICTS WITH
THIS COURT’S PRECEDENTS REGARDING
“REFERENCE TO” ERISA PLANS.

1. The Ninth Circuit’s decision conflicts with
longstanding and straightforward precedent from
this Court concerning what constitutes a “reference
to” an ERISA plan. Under the terms of the Ordi-
nance, an employer’s compliance is determined by
reference to its “health-care expenditures,” which ex-
pressly include: “payments by a covered employer to
a third party for the purpose of providing health care
services for covered employees,” and “contributions
by such employer on behalf of its covered employees
to a health savings account.” S.F. Admin. Code
§ 14.1(b)(7)(a), (c). Employers undoubtedly establish
ERISA plans when they make payments to a third-
party insurer or to health savings accounts.? There-
fore, the Ordinance on its face refers to ERISA plans,
and assesses compliance by reference to employers’
expenditures through such plans. Accordingly, con-
trary to the Ninth Circuit’s holding below, the Ordi-
nance “specifically refers to welfare benefit plans
regulated by ERISA and on that basis alone is pre-
empted.” Greater Wash. Bd. Of Trade, 506 U.S. at
130.

2 As the Department of Labor has noted, health savings ac-
counts are ERISA plans unless “the establishment of the HSAs
is completely voluntary on the part of the employees.” See Em-
ployee Benefits Sec. Admin., U.S. Dep’t of Labor, Field /ssis-
tance Bulletin 2004-1 (Apr. 7, 2004). In addition, an emp.oyee
can only establish a health savings account if he or she is al-
ready enrolled in a “high-deductible health plan,” which, if pro-
vided by an employer, is itself an ERISA plan. Id.; sce also 26
U.S.C. § 223(c)(1).

7

In Greater Washington Board of Trade, a District
of Columbia law required employers to provide
health benefits “equivalent to the existing health in-
surance coverage of [an] employee” while the em-
ployee was injured and on workers’ compensation.
Id. at 128 (internal citation omitted). The law was
preempted because it referred to ERISA plans on its
face, as demonstrated by the fact that employers
measured compliance by reference to the benefit lev-
els provided under their existing plans. See id. The
Ordinance is preempted for the same reason: It re-
fers to ERISA plans, and employers determine their
legal obligations by consulting their expenditures
made through those plans. If those plan expendi-
tures are (in San Francisco’s judgment) insufficient,
payments to the City are compulsory. The decision
below and Greater Washington Board of Trade are in
direct conflict.’

The Ninth Circuit concluded that Greater Wash-
ington Board of Trade was inapplicable because the
D.C. law at issue there measured compliance by re-
ferring to health-care benefits, whereas the Ordi-
nance measures compliance by referring to health-
care payments. Pet. App. 34a-35a. That purported

3 “Reference to” preemption results, as well, from the central
role that benefit plans would play in the City’s enforcement of
the Ordinance. Most employers offer health care through
ERISA-regulated plans. Enforcement of the Ordinance there-
fore will involve the City in examining employers’ health plans,
and—whern non-compliance is alleged—in charging that em-
ployer contributions to the plans are insufficient to discharge
obligations under the Ordinance. Cf. Ingersoll-Rand Co. v.
McClendon, 498 U.S. 133, 140 (1990) (when a plaintiff must
“plead” an ERISA plan as part of a cause of action, the action
“relatefs] to” the plan, “{blecause the court’s inquiry must be
directed to the plan”).

8

distinction, however, has no basis in this Court’s
precedents and collapses under scrutiny. A health-
care “benefit” to an employee is a health-care “pay-
ment” by the employer, either to a private health in-
surer or directly to the provider or employee. There
can be no health-care “benefit” without a correspond-
ing employer “payment.”

Indeed, this Court summarily affirmed a decision
rejecting this very distinction, holding that “laws
that create funding requirements for employee bene-
fit plans” are laws that “relate to” a plan, and
“(s]tatutes regulating contributions to ERISA plans
have consistently been held preempted.” Local Un-
ton 598, Plumbers & Pipefitters Indus. Journeymen
& Apprentices Training Fund v. J.A. Jones Constr.
Co., 846 F.2d 1213, 1218 (9th Cir. 1988), susnmarily
affd, 488 U.S. 881 (1988); see also id., 846 F.2d at
1219 (“this ‘contribution/benefit’ dichotomy, while
perhaps superficially appealing, is unsupported by
the law”). The judgment below cannot be reconciled
with this Court’s summary affirmance in Local Un-
ton 598. Upholding the Ninth Circuit’s spurious dis-
tinction between benefits and payments would per-
mit states to avoid ERISA preemption by elevating
form over function, which this Court has expressly
forbidden. See Alessi v. Raybestos-Manhattan, Inc.,
451 U.S. 504, 525 (1981) (““ERISA’s authors clearly
meant to preclude the States from avoiding through
form the substance of the pre-emption provision.”).

Moreover, the Ninth Circuit’s holding that stat-
utes mandating employer “payments,” rather than

“benefits,” are not preempted, conflicts with this
Court’s definition of an ERISA plan in Fort Halifax
Packing Co. v. Coyne, 482 U.S. 1 (1987), and with the
text of ERISA itself. ERISA defines an employee
welfare benefit plan, in relevant part, as

9

any plan, fund, or program ... established or
maintained by an employer ... for the pur-
pose of providing for its participants or their
beneficiaries, through the purchase of insur-
ance or otherwise ... benefits in the event of
sickness.

29 U.S.C. § 1002(1) (emphasis added).

In Fort Halifax, this Court made clear that, un-
der the statute, an employer establishes or main-
tains an ERISA plan whenever the employer “as-
sumes ... responsibility to pay benefits on a regular
basis,” and “faces . . . periodic demands on its assets
that create a need for financial coordination and con-
trol.” 482 U.S. at 12 (emphasis added). In short, the
obligation to make regular, periodic payments for
employee benefits, plus the duty to monitor those
payments, are the quintessential hallmarks of an
ERISA-covered plan. See id. Therefore, the Ninth
Circuit’s insistence that a statute must expressly
mandate specific “benefits” to have an impermissible
“reference to” an ERISA plan conflicts directly with
this Court’s holding in Fort Halifax.

2. The Ninth Circuit’s decision also conflicts
with Fort Halifax in concluding that the Ordinance’s
creation of a City-run health benefits program, to the
extent it is funded by private employers for the bene-
fit of private employees, is not an ERISA plan. Pet.
App. 15a. The City-payment option is a “plan” under
Fort Halifax because it requires employers to make
regular payment. for employee benefits provided by
the City, and to monitor, record, and disclose those
payments. Because the City-payment option is an
ERISA plan, the Ordinance impermissibly “refer|s]
to” a covered plan for that reason as well.

10

To be sure, the requirement of a “one-time, lump-
sum payment triggered by a single event,” such as
severance pay, neither “establishes, nor requires an
employer to maintain,” an ERISA plan because it “re-
quires no administrative scheme whatsoever to meet
the employer’s obligations.” Fort Halifax, 482 U.S. at
12. But the Ordinance requires employers to make
regular quarterly payments to the HAP, not mere
one-time, lump-sum payments. See S.F. Admin.
Code § 14.3(a). In addition, in connection with these
payments, an employer must determine each em-
ployee’s eligibility for the HAP, apply exemptions for
“managerial,” “supervisory,” and “confidential” em-
ployees, monitor the total hours that each employee
works, calculate the total health-care expenditures
required by the HAP for each employee, and main-
tain records establishing that the required payments
were made each quarter. See Pet. App. 132a-133a;
143a-144a. That takes planning and an ongoing ad-
ministrative scheme; it is done “for the purpose of
providing for its participants or their beneficiaries

benefits in the event of sickness” (29 U.S.C.
§ 1002(1)); it is, therefore, a covered plan.4

In effect, the City has mandated that employers
whose voluntary ERISA plans do not meet the City’s
standards must participate in an ERISA plan that
does—namely, the City’s plan. If the City had in-

4 This conclusion finds additional support in the Department of
Labor’s position as amicus before the Ninth Circuit that the
City-payment option qualifies as a “plan.” The Ninth Circuit
erred by extending no deference to the Secretary’s interpreta-
tion of ERISA. See, e.g., Fed. Express Corp. v. Holowecki, 128 S.
Ct. 1147, 1156 (2008) (extending Skidmore deference to position
taken by EEOC in policy memorandum issued after this Court
granted certiorari).

11

stead required such employees to participate in a
health insurance program provided by a specified
private insurer, it would be perfectly clear that the
City was mandating participation in an ERISA plan.
The result does not change merely because the City
itself (rather than a private insurer) operates the
mandatory plan.

The court of appeals reasoned that the City-
payment option is not an ERISA plan because it af-
fords employers no more than a “modicum of discre-
tion” over plan assets, and therefore presents little
opportunity for employers to engage in mismanage-
ment. Pet. App. 19a-20a. Nothing in the text of
ERISA or in Fort Halifax, however, requires an em-
ployer to exercise a threshold level of discretion to
operate an ERISA plan. On the contrary, employee
welfare benefit plans (such as health-care plans)
generally do not consist of an employer-managed
trust fund and are exempt from ERISA’s vesting,
minimum-participation, and minimum-funding re-
quirements. See 29 U.S.C. § 1051(1). But they are
nevertheless covered plans.

It is true, of course, that an employer who elects
the City-payment option is not responsible for the
ultimate distribution of benefits once it makes pay-
ments to the City. This would also be true, however,
under a private insurance agreement—once an em-
ployer paid the required premiums, the insurer
would be responsible for administering the plan ac-
cording to the terms of the policy. The only differ-
ence here is that the Ordinance requires employers
to designate the City as the insurer of the plan—a
difference that weighs in favor of, not against, a hold-
ing of preemption. Cf N.Y.S. Conference of Blue
Cross & Blue Shield Plans v. Travelers Ins. Co., 514
U.S. 645, 664 (1995) (suggesting that a law that “re-

12

quire[s] plans to deal with only one insurer, or to in-
Sure against an entire category of illnesses they
might otherwise choose to leave without coverage,”
would violate ERISA); Egelhoff, 532 U.S. at 150
(state law dictating choice of beneficiary preempted
by ERISA).

B. THE DECISION BELOW CONFLICTS WITH
THIS COURT’S PRECEDENTS REGARDING
“CONNECTION WITH” ERISA PLANS.

The judgment below also conflicts with this
Court’s precedents holding that ERISA preempts
state and local laws that have a “connection with”
ERISA plans. The “connection with” inquiry centers
on “the objectives of the ERISA statute” as well as
“the nature of the effect of the state law on ERISA
plans.” Dillingham, 519 U.S. at 325. The test, there-
fore, is whether the law at issue interferes with
ERISA’s objectives. The court of appeals erroneously
overlooked this Court’s clear holding that among
ERISA’s principal objectives is “to provide a uniform
regulatory regime over employee benefit plans.”
Aetna Health, 542 U.S. at 208.

Uniform plan administration serves multiple
salutary purposes. First, it benefits the employer, or
plan sponsor, by “minimizling] the administrative
and financial burden of complying with conflicting
directives among States or between States and the
Federal Government.” IJngersoll-Rand, 498 U.S. at
142. Second, uniformity inures to the benefit of
beneficiaries, as higher administrative costs can
cause “employers with existing plans to reduce bene-
fits, and those without such plans to refrain from
adopting them.” Fort Halifax, 482 U.S. at 11. Third,
elimination of inconsistent state regulation improves
federal oversight of the “administrative integrity” of
plan operations. /d. at 15.

13

The decision below ignores the reality that the
Ordinance violates the objectives of uniform regula-
tion set forth in Aetna Health and other precedents
of this Court by mandating health-care benefit levels
and imposing administrative requirements on San
Francisco employers. Contrary to what the Ordi-
nance presumes, employers do not ordinarily allocate
health-care costs on a per-employee, per-location ba-
sis. Rather, employers generally provide company-
wide coverage in order to reduce costs and diversify
risk. The premiums that employers pay insurers are
based on the overall profile of the insured group, and
are not divided up to correspond to hours worked or
the place of residence of each insured. Alterna-
tively, in the case of self-insurance, payments reflect
the actual cost of health-care services—and again are
not fixed according to how many hours an employee
worked or where the employee lived. Therefore, the
Ordinance’s threshold requirement that employers
allocate health-care expenditures to specific employ-
ees in a specific location will, by itself, require em-
ployers to create a special pool of funds for San Fran-
cisco employees that is separate from the rest of the
employees covered by the company plan. For this
reason alone, the law is preempted.

Moreover, the efficiencies that result from a uni-
form plan-—efficiencies that ERISA protects—are de-
feated when individual localities are permitted to re-

5 See, e.g., Fielder, 475 F.3d at 194 (noting that “Wal-Mart
does not presently allocate its contributions to ERISA plans or
other healthcare spending by State, and so the [Maryland] Fair
Share Act would require it to segregate a separate pool of ex-
penditures for Maryland employees”).

6 See, e.g., Loren v. Blue Cross & Blue Shield, 505 F.3d 598,
601 (6th Cir. 2007) (describing self-insured plans).

14

place actuarially-based calculations and market-
determined pricing with government-imposed man-
dates. The need to monitor expenditures in multiple
jurisdictions is squarely at odds with ERISA’s pur-
pose of establishing a uniform system of plan regula-
tion. And as this Court has held, a crucial purpose of
ERISA preemption is to prevent employers from hav-
ing to deal with the difficulties inherent in complying
with the idiosyncratic requirements of 50 states and
countless municipalities.

In Egelhoff, this Court held preempted a Wash-
ington law that revoked a former spouse’s status as a
plan beneficiary following a divorce, even if the for-
mer spouse remained the named beneficiary on
ERISA plan documents. See 532 U.S. at 144-45. Be-
cause this law “interfere[d] with nationally uniform
plan administration,” it had an impermissible “con-
nection with” an ERISA plan. /d. at 148. In particu-
lar, if the law were upheld, multiple other jurisdic-
tions might enact similar laws, each with its own pe-
culiar rules for determining beneficiary status—-even
though ERISA specifically provides that the partici-
pant or the plan shall dictate the choice of benefici-
ary. See id. at 147-48. Therefore, this Court held
that “[rlequiring ERISA administrators to master
the relevant laws of 50 States and to contend with
litigation would undermine the congressional goal of
‘minimizling] the administrative and financial bur-
den[s]’ on plan administrators—burdens ultimately
borne by the beneficiaries.” Jd. at 149-50 (alterations
in original and internal citation omitted).

The Ninth Circuit disregarded this Court’s
precedents in failing to acknowledge that the same
holds true under the Ordinance. ERISA “does not
create any substantive entitlement to employer-
provided health benefits or any other kind of welfare

15

benefits,” Curtiss-Wright Corp. v. Schoonejongen, 514
U.S. 73, 78 (1995); rather, it leaves the decision
whether and when to provide benefits in the hands of
employers and clears the way for uniform plan ad-
ministration. The Ordinance, by contrast, disrupts
plan uniformity by requiring employers to subsidize
benefits (through health-care payments) in a particu-
lar locality that the employer would not otherwise
provide. That is true whether the employer satisfies
its obligations by purchasing additional benefits for
employees through a private insurer, or by purchas-
ing the bundle of benefits provided by San Francisco
under the HAP. Under the decision below, employ-
ers would need to contend with a multiplicity of simi-
lar laws in other states and localities, each with their
unique funding mandates and administrative re-
quirements. Egelhoff forecloses and directly conflicts
with this result,”

’ The Ninth Circuit nonetheless asserted that the Ordinance
does not have a prohibited “connection with” an employer's
ERISA plans because it merely influences employer conduct and
has no effect on the plan itself. See Pet. App. 3la, 32a. This
scholastic distinction—much like the benefit/payment dichot-
omy—makes no practical difference and is unsupported by
precedent. Employers act as plan sponsors and administrators,
and laws that mandate or proscribe an administrator’s conduct
necessarily have a direct effect on a plan. Indeed, this Court
has made clear that Congress intended through ERISA “to en
sure that plans and plan sponsors would be subject to a uniform
body of benefits law[,]” and to eliminate “the potential for con-
flict in substantive law . . . requiring the tailoring of plans and
employer conduct to the peculiarities of the law of each jurisdic-
tion.” Travelers, 514 U.S. at 656-57 (quoting Ingersoll-Rand,
498 U.S. at 142) (emphasis added).

16

C. UNDER THIS COURT’S PRECEDENTS,
NON-ERISA ALTERNATIVES DO NOT
SAVE A LAW FROM PREEMPTION.

Contrary to the Ninth Circuit’s conclusion, the
Ordinance is not. saved from preemption merely be-
cause there are purportedly non-ERISA alternatives
for complying with the law. Pet. App. 29a-30a. As
an initial matter, as explained above, the City-
payment option—the primary alternative offered by
the Ordinance to modification of an existing plan—is
not a non-ERISA alternative, but is instead an
ERISA plan in its own right. Even leaving that point
aside, the practical effect of the Ordinance and oth-
ers like it on plan administration would still create
the prohibited “connection with” an ERISA plan.

The Washington law in Egelhoff, for example,
contained a provision that allowed employers to ex-
pressly “opt out” of the state-law rule by modifying
their plan documents. 532 U.S. at 151. Neverthe-
less, this Court held that the existence of a statutory
“opt out” did not save the law from preemption, be-
cause employers were still required to “maintain a
familiarity with the laws of all 50 States so that they
can update their plans as necessary to satisfy the
opt-out requirements of other, similar statutes.” Jd.
If the City-payment option were allowed to stand,
employers would need to monitor the laws of all 50
states and make ongoing adjustments to ensure that
their existing ERISA benefit levels complied with a
myriad of state and local minimum-contribution re-
quirements.

Similarly, in Standard Oil Co. v. Agsalud, 633
F.2d 760 (9th Cir. 1980), summarily affd, 454 U.S.
801 (1981), the State of Hawaii passed a law requir-
ing employers to include a litany of specific benefits

17

in their health-care plans. The court of appeals held
the law preempted by ERISA, and this Court sum-
marily affirmed. In describing the decision, this
Court explained in Fort Halifax that the Hawaii law
was preempted because an employer’s efforts to
structure its existing plan to conform with the re-
quirements of a single state would create the “diffi-
culty or impossibility of structuring administrative
practices according to a set of uniform guidelines.”
Fort Halifax, 482 U.S. at 13 (explaining Agsalud). In
addition, “if Hawaii could demand the operation of a
particular benefit plan, so could other States, which
would require that the employer coordinate perhaps
dozens of programs.” /d. This interference with uni-
form plan administration is the very essence of a
prohibited “connection with” an ERISA plan. Be-
cause the Ninth Circuit’s decision conflicts with mul-
tiple decisions of this Court regarding what consti-
tutes a “connection with” an ERISA plan, certiorari
should be granted.

II. CERTIORARI IS WARRANTED BECAUSE THE
DECISION BELOW CONFLICTS WITH THE
DECISION OF THE FOURTH CIRCUIT IN
FIELDER.

In Fielder, the Fourth Circuit correctly applied
this Court’s precedents in concluding that required-
contribution laws have a_ probibited “connection
with” covered plans because they violate the core
purpose of ERISA preemption: “establishing uniform,
nationwide regulation of employee benefit plans.”
475 F.3d at 191. By upholding the Ordinance, a local
law that mandates particular levels of employee
health care and a host of specific recordkeeping re-
quirements, the Ninth Circuit created a direct con-
flict with Fielder.

18

A. THE ORDINANCE INTERFERES WITH
UNIFORM PLAN ADMINISTRATION IN THE
SAME MANNER AS THE MARYLAND LAW.

In Fielder, the Fourth Circuit held that ERISA
preempted the Maryland Fair Share Health Care
Fund Act, which like the Ordinance required covered
employers (namely, Wal-Mart) to make minimum
health-care expenditures for employees or pay the
difference to the government, and required covered
employers to track expenditures with respect to
those employees. See 475 F.3d at 183, 186-87.

The Ninth Circuit distinguished Fielder on the
ground that the Maryland law did not provide em-
ployers with any genuine alternative to modifying
their benefit plans. Pet. App. 38a-39a. The court of
appeals reasoned that employers in Maryland re-
ceived no benefit from electing to make payments to
the State and therefore would be unlikely to choose
that option, whereas employers who elect the City-
payment option under the Ordinance can enroll eli-
gible employees in the ILAP, which provides employ-
ees with government-insured health care. See id.

The Fourth Circuit’s judgment, however, was
not dependent on the conclusion that Wal-Mart had
no meaningful alternative to altering its ERISA plan.
Rather, the court stated that even if there were “a
meaningful avenue by which Wal-Mart could incur
non-ERISA healthcare spending, we would still con-
clude that the Fair Share Act had an impermissible
‘connection with’ ERISA plans.” Fielder, 475 F.3d at
196. As the Court explained, “|t]he undeniable fact
is that the vast majority of any employer’s healthcare
spending occurs through ERISA plans .. . and any
attempt to comply with the Act would have direct ef-
fects on the employer’s ERISA plans.” Jd. Therefore,

19

filf Wal-Mart were to attempt to utilize non-
ERISA health spending options to satisfy the
Fair Share Act, it would need to coordinate
those spending efforts with its existing
ERISA plans. ... From the employer’s per-
spective, the categories of ERISA and non-
ERISA healthcare spending would not be iso-
lated, unrelated costs. Decisions regarding
one would affect the other and thereby vio-
late ERISA’s preemption provision.

Id. at 196-97.

In reaching this result, the Fourth Circuit relied
on this Court’s rejection in Egelhoff of Washington
State’s compelled-beneficiary law. As was true in
Egelhoff, upholding the Fair Share Act would lead to
other jurisdictions enacting similar required-
contribution laws, which would “deny Wal-Mart the
unitorm nationwide administration of its healthcare
plans by requiring it to keep an eye on conflicting
state and local minimum spending requirements and
adjust its healthcare spending accordingly.” Jd. at
197. And as in Egelhoff, the existence of an “opt out”
provision did not save the Fair Share Act from pre-
emption, because the law still “required plan admin-
istrators to ‘maintain a familiarity with the laws of
all 50 States so that they can update their plans as
necessary to satisfy the opt-out requirements of
other, similar statutes.” Fielder, 475 F.3d at 197
(quoting Egelhoff, 532 U.S. at 151).

The Ordinance has the same impermissible con-
sequences as the Maryland law. As in Maryland, the
“undeniable fact” is that most San Francisco employ-
ers provide health care through ERISA plans. And
as in Maryland, the undeniable effect of the Ordi-
nance will be to increase the costs and burdens of

20

administering those plans—by requiring employers
to: (1) coordinate their existing ERISA spending with
additional spending to _ satisfy the minimum-
contribution requirement; (2) maintain and disclose
records regarding the spending required by the law;
(3) monitor and comply with the laws of other juris-
dictions; and (4) segregate and calculate the per-
employee and per-location costs of providing health
care. See, e.g., id. at 194 (noting that Maryland law
interfered with plan uniformity by forcing an em-
ployer to “segregate a separate pool of expenditures”
for a specific location). Given the threat posed. by re-
quired-contribution laws to uniform plan administra-
tion, and their resulting “connection with” ERISA
plans, Fielder cannot be distinguished on the basis
that the Ordinance provides for purportedly non-
ERISA alternatives to compliance.
B. ‘THE FOURTH CiRCUIT’S HOLDING DID
Not DEPEND ON AN ABSENCE OF NON-
ERISA ALTERNATIVES.

To be sure, the Fourth Circuit in Fielder con-
cluded that, under the Maryland law, no rational
employer would choose to pay the State rather than
alter or amend an existing ERISA plan. See 475
F.3d at 193. But this factual finding that the Mary-
land law was an effective mandate on employers
was by no means necessary to the Fourth Circuit’s
analysis.

On the contrary, the “no rational employer”
framework derives from a “trilogy” of Supreme Court
decisions involving state laws that lay at the peripb-
ery of ERISA preempiion because they either regu-
lated third parties (rather than employers them-
selves) or otherwise had only an indirect economic

21

effect on ERISA plans. When a law exerts only a
“remote,” “tenuous,” or “indirect” economic influence
on a plan—for example, by regulating insurers that
do business with ERISA plans—it is not preempted
unless the influence is so “prohibitive” that it effec-
tively compels an employer to adopt a particular
benefit or select a particular insurer. Travelers, 514
U.S. at 645, 661. As the Fourth Circuit recognized in
Fielder, however, ERISA preemption of the Mary-
land law did not depend on any such “indirect” effect;
rather, a law that mandates employer health-care
contributions “directly regulates employers’ structur-
ing of their employee health benefit plans.” Fielder,
475 F.3d at 195 (rejecting application of “trilogy”
cases) (emphasis in original).

By concluding that the Ordinance survives pre-
cinption merely because it provides a supposed non-
ERISA alternative, the Ninth Circuit converted one
test for preemption—useful in cases of indirect regu-
lation—into the sole criterion for whether a state or
local law should be upheld. As the Court in Fielder
recognized, however, no inquiry into the degree of
economic coercion exerted by a state or local law is
required when the law acts directly on employers
and disrupts uniform plan administration. Rather,

8 See Tvavelers, 514 U.S. at 645 (statute requiring hospitals
to collect surcharges from patients not insured by Blue
Cross/Blue Shield was not preempted unless the surcharges
were so “prohibitive” as to effectively require ERISA plans to
provide insurance through the Blues); De Buono v. NYSA-ILA
Med. & Clinical Servs. Fund, 520 U.S. 806, 809-10 (1997) (tax
on hospitals and other health care providers for gross receipts
of patient services not preempted by ERISA); Dillingham, 519
U.S. at 332-33 (no preemption of reduced minimum-wage incen-
tive for employers to participate in a state-approved apprentice-
ship program).

22

required-contribution laws, by their very nature,
dictate choices that ERISA leaves within the hands
of employers and plan administrators. As a result,
they interfere with uniform plan administration,
have a forbidden “connection with” a plan, and there-
fore are preempted.

In short, the decision below cannot be reconciled
with the Fourth Circuit’s holding in Fielder. This
Court should grant certiorari to resolve the conflict.

Ill. CERTIORARI IS WARRANTED TO RESOLVE
AN IMPORTANT, RECURRING QUESTION OF
FEDERAL LAW CONCERNING ERISA.

The Ninth Circuit’s decision presents an impor-
tant and recurring issue of federal law: whether
ERISA preempts required-contribution laws like the
Ordinance that require employers to make minimum
health-care payments on behalf of employees. Be-
cause the Ninth Circuit’s decision will frustrate un1-
form plan administration—the critical purpose un-
derlying ERISA preemption—certiorari is warranted.

The threat of conflicting state and local regula-
tions is not merely hypothetical. On the contrary, in
addition to Maryland and San Francisco, other states
and localities have already considered or adopted
similar employer-contribution mandates. See
Fielder, 475 F.3d at 184. For example, Suffolk
County, New York, enacted an ordinance that re-
quired covered employers to pay health care costs of
at least $3.00 per hour for each covered employee.
See Retail Indus. Leaders Ass’n v. Suffolk County,
497 F. Supp. 2d 403, 406 (E.D.N.Y. 2007) (holding
ordinance preempted by ERISA). As was true under
the Ordinance, the Suffolk County ordinance re-
quired employers to track health-care expenditures
for Suffolk County employers, record the dates and

23

hours worked of covered employees, and file annual
reports with the county Department of Labor. See
id.

Massachusetts and Vermont have also enacted
similar required-contribution laws, each with their
own specific minimum-payment and administrative
requirements. See, e.g., 114.5 MASS. CODE REGS.
16.03 (2009); VT. STAT. ANN. tit. 21, § 2003 (2009).
In addition, similar proposals have been introduced
in most other states. See J. Contreras & O. Lobel,
Wal-Martization and the Fair Share Health Care
Acts, 19 St. Thomas L. Rev. 105, 136 (2006) (collect-
ing proposals).

Under the Ninth Circuit’s reasoning, such state
and local laws would be permitted to stand alongside
the Ordinance, and employers would be forced to
comply with differing minimum-payment and re-
cordkeeping requirements in numerous states, citics,
and counties across the Nation. Each additional ju-
risdiction that enacts such a law would force employ-
ers to segregate and track separate pools of expendi-
tures for each jurisdiction and each covered em-
ployee. The resulting aggregate burden on plan uni-
formity, and the monitoring and compliance burdens
on plan administrators, would be enormous. There-
fore, this Court should grant certiorari to prevent the
pernicious effect that the Ninth Circuit’s decision
will otherwise have on uniform plan administration.

24

CONCLUSION

For the foregoing reasons, the petition for a writ
of certiorari should be granted.

Respectfully submitted.

ROBIN S. CONRAD WILLIAM J. KILBERG
SHANE B. KAWKA Counsel of Record
NATIONAL CHAMBER THOMAS G. HUNGAR

LITIGATION CENTER, INC. THOMAS M. JOHNSON, JR.
1615 H Street, N.W. GIBSON, DUNN & CRUTCHER LLP
Washington, D.C. 20062 1050 Connecticut Avenue, N.W.
(202) 463-5337 Washington, D.C. 20036

(202) 955-8500

Counsel for Amici Curtae

July 10, 2009

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0619%3A10. Public record. Not legal advice.