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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0619%3A11

## Record

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

## Text

, FLED Of
a “
No. 08-1515 “UL 8 ~ 2009
THE CLERK
IN THE

Supreme Court of the United States

GOLDEN GATE RESTAURANT ASSOCIATION,
Petitioner,
V.

CITY AND COUNTY OF SAN FRANCISCO,
Respondent,

SAN FRANCISCO CENTRAL LABOR COUNCIL, et al.,
Intervenors/ Respondents.

On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Ninth Circuit

BRIEF OF AMICI CURIAE SOCIETY FOR
HUMAN RESOURCE MANAGEMENT,
NATIONAL FEDERATION OF INDEPENDENT
BUSINESS SMALL BUSINESS LEGAL
CENTER, AND NATIONAL ASSOCIATION OF
MANUFACTURERS IN SUPPORT OF
PETITION FOR WRIT OF CERTIORARI

Of Counsel: THOMAS M. CHRISTINA
Counsel of Record

OGLETREE, DEAKINS, NASH,
SMOAK & STEWART, P.C.

Suite 500

300 North Main Street

Greenville, SC 29601

KAREN R. HARNED

Executive Director

NATIONAL FEDERATION OF
INDEPENDENT BUSINESS
SMALL BUSINESS LEGAL

CENTER :
1201 F Street, N.W. (864) 271-1300
Suite 200 Counsel for Amici Curiae

Washington, 1I).C. 20004
(202) 314-2061

|Additional Counsel] Listed On Inside Cover]

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 — WASHINGTON, D.C. 20002

Of Counsel:

QUENTIN RIEGEL

Vice President, Litigation &
Deputy General Counsel

NATIONAL ASSOCIATION OF
MANUFACTURERS

1331 Pennsylvania Avenue, NW

6th Floor

Washington, DC 20004

(202) 637-3058

TABLE OF CONTENTS

Page
TABLE OF AUTHORITIBG...................... SSonanakenaie il
INTERESTS OF THE AMICI CURIAE.................. l
SUMMARY OF ARGUMENT. ..................cceceeeeeeeeee: 3
PATRAS UIMEEG DE csccsevescsncsscccssess sisuisscaiensnniahnesl caeduatabanetiuleepadadin 4

SAE ALIEN discaclvcnnasnceuduunnicensaevsitnespusasseiasokusteaiaoh 25

li

TABLE OF AUTHORITIES
Page(s)

CASES
Alessi v. Raybestos-Manhattan, Inc.,

ne a ns cuceuacensaneuucuces 2
Brown v. Ampco-Pittsburgh Corp.,

876 F.2d 546 (6th Cir. 1989) 0.0.0... cece eee eee eee 13
Brundage-Peterson v. Compcare Health

Services Ins. Co.,

877 F.2d 509 (7th Cir. 1989) ooo... cccc cece cecceeeeeeeees 9
Credit Managers Ass'n v. Kennesaw Life &

Accident Ins. Co.,

809 F.2d 617 (9t® Cir. 1987) ...........ccccecceseeecees 8, 9
Deibler v. United Food & Commercial

Workers’ Local Union 23,

973 F.2d 2OG (Sd Cir. 1002) ...ccccocccccscscccccces 12, 13
Donovan v. Dillingham,

688 F.2d 1367 (11t» Cir. 1982) ......... 9, 12, 13, 14
Ed Miniat, Inc. v. Globe Life Ins. Group, Inc.,

805 F.2d 732 (7% Cir. 1986).................c.ccccecceees 13
Elmore v. Cone Mills Corp.,

23 F.3d 855 (4% Gir. 1994) (en band) ......... 6.0008. 13

Fort Halifax Packing Co. v. Coyne,
en snc cscacuevoxaentabecensevs 10

il
Golden Gate Restaurant Association v. City
and County of San Francisco,
535 F.Supp.2d 968 (N.D. Cal. 2007)...........002... 20

Golden Gate Restaurant Association v. City
and County of San Francisco,
546 F.3d 639 (9th Cir. 2008).........0....00..000-- passim

Golden Gate Restaurant Association v. City
and County of San Francisco,
558 F.3d 1000 (9% Cir. 2009).............cc00s0+000 4,18

Grimo v. Blue Cross/Blue Shield of Vermont,
ee BT We” ee Co” 9

Gruber v. Hubbard,
me ee” Eo: ee ar 8

Guilbert v. Gardner,
SO Fk BO Ce Ck, FTP vnnce covkiccecndecinicce ee

Harris v. Arkansas Book Co.,
794 F.2d 358 (8t» Cir. 1986) 0.0.0.0... eeeeeeeeeee eee 13

Int'l. Association of Entrepreneurs v. Foster,
883 F. Supp. 1050 (E.D. Va. 1995) ................... 15

Inter-Modal Rail Employees Ass'n. v.
Atchison, Topeka & Santa Fe Ry.,
te re across fnetcedetlce 19

Kenney v. Roland Parson Contracting Corp.,
28 F.3d 1254 (D.C. Cir. 1994)............... sca 8, 13

Kidder v. H & B Marine, Inc., 932 F.2d 347
Rr a a ean neuennasocgincneiccunwsane 9g

Madonia v. Blue Cross & Blue Shield of
Virginia,
ED Fk BOE CA Coie. 1D ovine ccdccccocseccccscses 8,9

Massachusetts v. Morash,
ON Te RENT CI nv cccn ccs vaccncien veccsseseacesverete 10

Memorial Hospital System v. Northbrook Lufe
Ins. Co.,
904 F.2d 236 GP Cir. 1900) o.nn....ccesccsceccscccsscssses: 3

Patelco Credit Union v. Sahni,
962 F.3d BOT (O™ Cig. DOOD) oncccccccsscesccscsevcccsccons 10

Peckham v. Gem State Mut.,
964 F.2d 1043 (10t Cir. 1992)...................00 &, 13

Postma v. Paul Revere Life Ins.,
223 F.3d 533 (7 Cir. 2000)..............0..2-0.00 eee ee ee )

Randol v. Mid-West Nat'l Life Ins. Co.,
987 F.2d 1547 (11 Cir. 1998) ............ basis fer declining to apply Dillingham, as
it had in “he past. That departure from recently re-
affirmed precedent was based on nothing more than
the panel’s “doubt” that the Dil/ngham test should
be applied “to an employer's administrative
obligations imposed by a state or local law.” GGRA
II, at 652.4 However, any doubt on that score had

4 The GGRA II pane) also stated that it “shareld] the view
expressed by the Seventh Circuit in Sandstrom v. Cultor Food
Science, Inc., 214 F.3d 795 (7th Cir. 2000),” where in dictum the
Seventh Circuit stated that, “It is not clear that the approach

14

nothing to do with the precise question to be
considered, which was whether the Dillingham test
should be applied to an employer's choice of method
for discharging its “administrative obligations
imposed by a state or local law,” not to the
obligations themselves. GGRA IJ, at 652.

Furthermore, the statutory text demonstrates that
there is no basis for doubt that the definition of an
employee welfare benefit plan under ERISA § 3(1)
encompasses plans established or maintained merely
by employer contributions to provide medical
benefits in compliance with state law. ERISA §
4(b)(3) - provides that, subject to a handful of
statutory exceptions, Title I of ERISA applies
generally to all employee welfare benefit plans and
employee pension benefits as defined in Sections 3(1)
and 3(2) of the Act. One of those exceptions is that
Title I does not apply to “any employee benefit plan

. maintained solely for the purpose of complying
with applicable workmen's compensation laws.” 29
U.S.C. § 1003(b)(3). This exemption is unnecessary
(and its continuous presence in the text of the statute
ever since the Act was adopted in 1974 is
inexplicable) if an employer’s systematic payments to
a state workers’ compensation fund, undertaken
solely for the purpose of complying with applicable

taken in Dillingham is compatible with more recent decisions of
the Supreme Court, which emphasize different considerations
when asking whether an informal policy or arrangement is a
‘plan.” Jd. at 797 (citations omitted). Since there is nothing
“informal” about the terms of the City-payment option, it is
difficult to see what is the significance for this case of the doubt
expressed in the Sandstrom dictum.

15

workmen's compensation laws, cannot be an
employee benefit plan to begin with.

D. GGRA //s departure from a long-standing and
virtually unanimous body of prior case law and
regulatory authority is tremendously significant.
The question whether a plan, fund, or program is
“established or maintained” is implicated in literally
every case where Title I of ERISA provides a basis
for subject matter jurisdiction and/or a rule of
decision. See, e.g., Int’. Association of Entrepreneurs
v. Foster, 883 F.Supp. 1050, 1056 (E.D.Va. 1995) &
n.2 (federal court must determine whether plaintiffs
plan is covered by ERISA, even if that fact is not
outcome-determinative, because subject matter
jurisdiction depends on it). The establishment or
maintenance of a plan, fund, or program of some
kind by an employer or employee organization is a
prerequisite for finding that an employee benefit
plan exists. See ERISA § 3(3) (defining “employee
benefit plan” or “plan” to mean an employee welfare
benefit plan or an employee pension benefit plan)
and see also § 3(1) (defining “employee welfare
benefit plan”) and § 3(2) (defining “employee pension
benefit plan”). The existence of an employee benefit
plan is a prerequisite for the application of any
provision of Title I of ERISA, including the
jurisdictional provisions of Section 502, 29 U.S.C.
§ 1132. See ERISA § 4(a). Moreover, fundamental
rights and guarantees such as the right to elect post-
employment continuation coverage under’ an
employer-sponsored group health plan (popularly
referred to as “COBRA”) depends on_ the
establishment or maintenance of a plan. See, gen/y,
ERISA §§ 601 et seqg., and esp. § 607(1) (defining

16

“group health plan” as a subset of employee welfare
benefit plans).

II. Even if the Ninth Circuit were correct that an
employer's election of the City-payment option is not
the establishment or maintenance of an employee
benefit plan, the GGRA decision directly conflicts
with the Fourth Circuit’s decision in R/LA regarding
the application of this Court’s ERISA Section 514
jurisprudence. The very existence of that conflict
creates uncertainties about the design of employee
benefit plans that impinges on the ability of multi-
jurisdictional employers to continue to provide
employee health coverage and other benefits as they
have done in the past. Given the huge percentage of
Americans for whom the only source of health
coverage is an employer-sponsored plan, _ the
continuation of this uncertainty threatens a crucial
component of the existing health care delivery
system in the United States.

A. Despite minor variations in the surrounding
facts, both A/LA and GGRA rule on the same
question: is a state or municipal employer health
care spending mandate saved from preemption by
ERISA as a matter of law merely because it includes
a provision that the state or municipality
characterizes as allowing an employer to comply with
the spending requirement by a means other than an
ERISA-governed plan? |

In ARILA, the Fourth Circuit held that ERISA
§ 514(a) preempted Maryland’s Fair Share Health
Care Fund Act, 2006 Md. Laws 1, Md. Code Ann.,
Lab. & Empl. §§ 8.5-101 to 107 (2006) (“the

17

Maryland Fair Share Act”), on two bases. The
Maryland Fair Share Act imposed a_ spending
requirement on a covered employer by requiring the
employer to calculate the amount by which its health
care expenditures for its Maryland employees fell
short of 8% of its Maryland payroll, and to pay an
amount equal to the shortfall to the state. Under the
Maryland Fair Share Act, payments received by the
state could be spent only on the Maryland Medical
Assistance Program, which consisted of Maryland's
Medicaid and children's health programs. 475 F.3d
at 185, crting Md. Code Ann., Health-Gen. § 15°
142(f). As Respondents are expected to do here,
Maryland characterized the statute at issue in RILA
as offering a compliance option (payments to the
state) that did not require a covered employer to
establish or maintain an ERISA-governed plan. 475
F.3d at 190, 194-95.

The first basis on which the Fourth Circuit held
the Maryland Fair Share Act preempted by ERISA
was that the Act did not offer a genuine non-ERISA
alternative to complying with the minimum spending
mandate, and _ therefore “effectively requires
[covered] employers in Maryland .. . to restructure
their employee health insurance plans.” 475 F.3d at
183. Respondents likely will argue that GGFRA does
not conflict with A/LA because in GGRA, the Ninth
Circuit believed the Ordinance offered a genuine
non-ERISA compliance option.

However, GGRA and A/ZA are in direct and
irreconcilable conflict regarding the alternative basis
on which the Fourth Circuit held that the Maryland
Fair Share Act was preempted by ERISA. As

18

explained by Circuit Judge Smith in his dissent from
the Ninth Circuit’s denial of en banc review,

The Fielder court explained that even were
there a more "meaningful avenue" by which the
employer could make non-ERISA healthcare
payments, the Maryland statute was. still
impermissibly connected to ERISA plans. 475
F.3d at 196-97 ("If [the employer) were to
attempt to utilize non-ERISA health spending
options to [comply with the statute], it would
need to coordinate those spending efforts with

its existing ERISA plans. . . . Decisions
regarding one would affect the other and
thereby violate ERISA's, preemption

provision."). Covered employers under San
Francisco's Ordinance must coordinate their
non-ERISA payments with their ERISA plans
in the very manner the Fie/der court deemed
impermissible. GGRA //T, 558 F.3d at 1006-07.

B. The importance of resolving this conflict is
clear because it stems directly from employers’
reliance on the well-established principle that state
law cannot dictate benefit plan design. In Shaw v.
Delta Air Lines, Inc., 463 U.S. 85, 96, 97 (1983), this
Court established that for purposes of Section 514(a),
a state law “relates to” an employce benefit plan “if it
has a connection with or reference to such a plan.”
Id. (footnote omitted). It is generally understood that
under the “connection with” branch of Shaw, state
law cannot require that an employer design a new or
existing welfare benefit plan to coordinate its
functions with a state law, even if the state law does
not refer to the ERISA-governed plan.

19

Not unexpectedly, then, the conflict between A/LA
and GGRA I// regarding “connection with”
preemption under Shaw poses numerous practical
difficulties for any business with locations in San
Francisco and locations elsewhere. For example, it
has been reported that such employers face difficult
payroll tax and wage reporting issues that stem from
having one or more self-insured health plans for
employees not covered by the Ordinance and a
different arrangement to comply with the Ordinance
for covered employees. Pension and Benefits
Reporter, Vol. 36, No. 20 (BNA) (May 19, 2009)
(noting that such a scenario might fail to satisfy
certain nondiscrimination provisions essential to
favorable tax treatment of employer-provided
coverage under Section 105 of the Internal Revenue
Code). It is therefore essential that all parties
responsible for adopting, amending, and
administering those plans know as soon as possible
whether and to what extent state and local law may
apply either instead of or in addition to ERISA, so
that they may plan accordingly.

Resolving the conflict is important at a more
fundamental level, as well. ERISA’s broad
preemption provision was a key element by which
Congress established “[a] zone of employer autonomy
in the design and operation of employers' welfare
plans.” See E.A. Zelinsky, Maryland's "Wal-Mart"
Act: Policy and Preemption, 28 Cardozo L.Rev. 847,
869 (2006). Cf Inter-Modal Rail Employees Ass'n. v.
Atchison, Topeka & Santa Fe Ry. Co., 520 U.S. 510,
515 (1997) (ERISA's grant of employer's freedom to
amend plans prospectively encourages employer to

20

adopt more generous benefits at the outset). Yet, as
the District Court correctly found, the Ordinance
“interferels]) with preserving employer autonomy
over whether and how to provide employee health
coverage." Golden Gate Restaurant Association v.
City of San Francisco, 535 F. Supp.2d 968, 975 (N.D.
Cal. 2007). Thus, the conflicting approaches in
GGRA Iland RILA to the “connection with” branch
of this Court’s ERISA Section 514(a) preemption case
law creates an obstacle to the continuation and
growth of employer-sponsored group health plans,
particularly where the employer has employees both
within and outside the Ninth Circuit.

Removing this obstacle is an urgent matter
because employment-based coverage is_ the
predominant method for providing health coverage in
the United States. Almost 133 million Americans
currently obtain health coverage through plans
maintained by employers in the private sector. See
Statement of John J. Castellani, President, Business
Roundtable, speaking before the Senate Finance
Committee during a roundtable discussion on
healthcare coverage on May 5, 2009, available at
http://finance.senate.gov/sitepages/hearing050509. ht
ml. Sixty-two percent of Americans under age 65
receive health benefits through their employers or a
family member's employer. See, HRET/Kaitser
Family Foundation, 2008 Employer Health Benefits
Survey, http://ehbs.kff.org/pdf/7790.pdf.

III. The uncertainty engendered by the decision in
this case is especially problematic because of when it
arose—i.e., on the eve of a national consensus that
the federal government must devise a comprehensive

21

solution to the widespread lack of affordable health
coverage. See Roundtable to Discuss Reforming
America’s Health Care Delivery System: Hearing
Before S. Committee on Finance, 111th Cong. (April
Si, 2009), available at
http://finance.senate.gov/sitepages/hearing042109.ht
m; and Roundtable Discussion on “Expanding Health
Care Coverage”: Hearing Before S. Committee on
Finance, 111% Cong. (May 12, 2009), available at
http://finance.senate.gov/sitepages/hearing050509. ht
ml. Unless that uncertainty is resolved by this
Court, it will impede Congress’s ability to arrive ata
workable solution.

A. Employer-provided health coverage is so
entrenched as part of our current system that any
reform of health care coverage in the United States
inevitably will involve employer’sponsored group
health plans covered by Title I of ERISA, at least as
a transitional measure. This conclusion is evident
from both of the reform measures adopted by the
111tt Congress to date, each of which uses ERISA-
governed group health plans as vehicles for providing
coverage to those who otherwise might be uninsured.

The Children’s Health Insurance Program
Reauthorization Act of 2009, Pub. Law 111°3 (Feb. 4,
2009) (“CHIPRA”), authorizes states to offer
federally funded premium subsidies to defray the
cost of covering targeted low-income children under
certain group health plans maintained by their
parents’ employers. See 42 USC § 1397ee(c)(10)(A),
as added by Pub. Law 111-3, Tit. III, Subtitle A,
§ 301(a)(1) (Feb. 4, 2009). CHIPRA also amended
Section 7014) of ERISA to require employer’

22,

sponsored group health plans to provide special
enrollment rights based on changes in eligibility for
the premium subsidies, and to require employers to
give employees written notice of the potential
opportunity for premium subsidies in the states in
which the employees reside. Pub. Law 111-3, Tit. IT],
Subtitle B, § 311(b)()(A).5

The American Recovery and Reinvestment Act of
2009, Pub. L. 111-5 (Feb. 17, 2009) (“ARRA”),
requires employer-sponsored group health plans,
including those governed by ERISA, to treat
“assistance eligible individuals” who pay 35% of a
plan’s monthly premium for’ continued post-
employment coverage as if they had paid 100% of 2° >
required monthly premium~ under _ specified
conditions. ARRA, Title II, § 3001(a)Q1). Prior to
the ARRA, federal law did not impose continuation
coverage requirements on group health plans
sponsored by relatively small employers, leaving the

* CHIPRA also includes an affirmation of the Senate’s intention

to enact legislation in 2009 that “improves access to affordable

and meamrgful health insurance coverage for employees of
small businesses and individuals by . . . facilitating pooling
mechanisms, 49cluding pooling across state lines; and providing
assistance to small businesses and individuals, including
financial assistance and tax incentives, for the purchase of
private insurance coverage.” /d., § 622(b)(3) (emphases added).

The linkage between financial assistance to small businesses
and improving the insurance opportunities of the employees of
small business demonstrates a commitment to the continued
use of ERISA-governed plans as instruments of coverage
reforms. The commitment to pooling across state lines
demonstrates that Congress continues to think, as it has since
1974, that state laws which could impede the continued vitality
of emp!loyer-sponsored plans should be displaced by federal law.

23
matter entirely to state law. ERISA § 601(b), 29
USC § 1161(b). By contrast, the premium subsidy
provisions of ARRA apply to employer-sponsored
group health plans that are required by state law to
provide post-employment continuation coverage.

Similarly, other federal initiatives currently under
consideration also would act through employer-
provided group health plans to change how health
care 1s financed and provided in the United States.
For example, the initial drafts of the “Affordable
Health Choices Act” proposed by the Senate Health,
Education, Labor and Pensions (“HELP”) Committee
in June 2009, would amend ERISA to prohibit pre-
existing condition exclusions, abolish limits on
annual or lifetime benefits, extend to 26 the age at
which a dependent may be covered, limit which
employers may adopt self-insured plans, and
mandate employers cover employees or pay a
penalty.

B. Continued uncertainty about the scope of state
and municipal authority to mandate employer-
sponsored health care expenditures is~ an
impediment to reaching a resolution on national
health care reform. If state and local governments
may attach health care financing obligations to
employment, the advocates of any federal initiative
that will be implemented via employer-provided
group health plans must decide whether and to what
extent to propose that state and local mandates be
taken into account in defining an employer's federal
obligations. At the same time, if ERISA does
preempt state and local measures such as the San
Francisco HCSO, the advocates of allowing the states

24

to function as laboratories for the improvement of
health care delivery and finance would be required to
include a cut-back on the scope of ERISA preemption
in measures they advocate.

At best, the uncertainty over what the law
currently allows in the way of state and local
mandates will waste valuable legislative time and
energy on debate over whether and how to limit state
and local authority, or whether and how to
accommodate its unpredictable future exercise m
federal legislation. At worst, the uncertainty could
impede the compromises, splinter the coalitions, and
prevent the formation of the consensus necessary to
enact any meaningful health care reform. This is so
because the decision in GGRA /7 completely unravels
the legislative compromises reached at the national
level in 1974 that allowed Congress to pass ERISA.
Cf Michael S. Gordon, Jntroduction- The Social
Policy Origins of ERISA, in Employee Benefits Law
(S.J. Sacher and J.I. Singer, eds., ABA, 2d ed. 2000)
at xc—cii (ERISA would not have been adopted if it
had not been premised on preserving employer
autonomy over plan adoption and plan design).

Thus GGRA II leaves Congress with an
unpalatable choice if it wants to harness employer-
provided group health plans successfully as an
engine of national health care reform: it either must
revisit the controversies surrounding ERISA
preemption that it resolved thirty-five years ago
while simultaneously trying to reconcile all of the
contemporary issues that have made _ reform
legislatively unobtainable until now, or it must
abandon any hope of a nationally uniform solution to

25

what a national constituency clearly believes is a
national crisis. Moreover, the conflict between the
Ninth and the Fourth Circuits will act as an
impediment to fashioning a successful bill regardless
of whether it favors state employer mandates or
leaves no room for them. Proponents of either
position will be forced to guess which of the GGRA JT
or the A/LA decisions represents the true state of the
law in order to know whether their bills must
contain a provision augmenting or reducing the scope
of federal preemption under ERISA.

As the leading historian of ERISA has noted,
giving ERISA broad preemptive effect was essential
to its adoption. "The desire for federal preemption
was a key factor — perhaps, the key factor — in
creating the coalition that pushed ERISA through
Congress." J.A. Wooten, A Legislative and Political
History of ERISA Preemption, Part I, 14 J. of
Pension Benefits 10 (2006). That compromise came
only after a protracted, hard-fought battle that
lasted many years. There is no reason to believe that
the rematch forced on Congress by the decision in
this case will be any less contentious than the
original battle.

CONCLUSION
The petition should be granted.
Respectfully submitted,

Thomas M. Christina
(Counsel of Record)

26

Ogletree, Deakins, Nash,
Smoak & Stewart, P.C.
Suite 500

300 North Main Street
Greenville, SC 29601
(864) 271-1300

Counsel for Amici Curiae

Of Counsel

Karen R. Harned, Esq.

Executive Director

National Federation of

Independent Business
Small Business Legal

Center

1201 F Street, N.W.

Suite 200

Washington, D.C. 20004

Ph. (202) 314-2061

Fax (202) 554-5572

Of Counsel

Quentin Riegel, Esq.

Vice President, Litigation
& Deputy General Counsel
National Association of
Manufacturers

1331 Pennsylvania
Avenue, NW, 6th Floor
Washington, DC 20004-
1790

PH:. (202) 637-3058

FAX (202) 637-3024

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0619%3A11. Public record. Not legal advice.