An association representing the restaurant industry has filed a petition for writ of certiorari before the U.S. Supreme Court to overturn a ruling by the U.S. Court of Appeals for the 9th Circuit upholding a law requiring employers in San Francisco to provide health insurance to their employees.
"One of the most important issues that we are debating in the country today is how health care is to be provided," said Jeff Tanenbaum, chairman of the labor and employment group in the San Francisco office of Nixon Peabody, who represents the Golden Gate Restaurant Association, which filed the petition on June 5. Golden Gate Restaurant Association v. City and County of San Francisco, No. 08-1515.
"This case comes down at a time when that debate is the focus of tremendous attention at the federal level. It is an issue that needs to be addressed at the federal level," he said.
The case involves San Francisco's "fair share" ordinance, which requires employers with at least 20 employees to provide health coverage for their San Francisco workers. If they do not comply, employers must pay a fee to support city health clinics.
On Sept. 30, 2008, the 9th Circuit reversed a lower court decision, holding that the ordinance was not pre-empted by the federal Employee Retirement Income Security Act of 1974 because it dealt with contributions, not benefits. The en banc 9th Circuit refused on March 9 to reconsider the ruling, with eight judges, including Chief Judge Alex Kozinski, dissenting. The dissent called the issue in the case one of "exceptional national importance" that threw the 9th Circuit into conflict with the 4th Circuit. The 4th Circuit struck down a similar law in Maryland in 2007 on the ground that it was pre-empted by ERISA. Retail Indus. Leaders Ass'n v. Fielder, 473 F. 3d 180 (4th Cir. 2007).
"It's one of the classic hallmarks of a case that's ripe for Supreme Court review," Tanenbaum said.
He said that 9th Circuit ruling also was inconsistent with U.S. Supreme Court precedent and is based on "a novel theory that there is a difference between a law that requires contributions versus a law that requires benefits to be provided. But there's not a logical distinction. You either provide coverage or pay into a government program. They're both the same."
Similar statutes are being considered in several other states that could create a set of "diverse and conflicting" requirements for employers, according to the petition.
Vince Chhabria, deputy city attorney of San Francisco, disagreed.
"That language is not consistent with the reality of employee benefits because if you look at the way things actually work, in comparison to the way the Golden Gate Restaurant Association tries to describe it, employers are subject to different regulatory requirements in different jurisdictions all the time," he said. "It's an inevitable consequence and an unsurprising consequence of doing business in multiple jurisdictions in the U.S."
Chhabria distinguished the 9th Circuit's decision from the 4th Circuit's opinion, which struck down the Maryland law because it required employers to pay a penalty to the state if they did not spend a percentage of their payroll on health care coverage for their employees. The San Francisco ordinance, in contrast, offers two choices that provide health care coverage to employees but requires no penalties.
"In San Francisco," Chhabria said, "the option of paying the city does not amount to throwing your money down a government black hole. It results in substantial benefits for your employees."
Chhabria also noted that congressional bills have been introduced that include health care coverage spending requirements for employers. If those bills pass, the issue of federal pre-emption of state laws under ERISA would be moot, he said.
"As we'll show in our opposition brief, it's relevant because it militates against Supreme Court intervention right now," he said. "Why would the court want to waste its time on a complicated ERISA preemption issue that could become moot?"
A response to the brief is due Aug. 24.
