Barry Senter
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The Supreme Court will soon determine whether to grant a Petition for Writ of Certiorari filed by the Golden Gate Restaurant
Assn. that seeks review of a decision from the Ninth Circuit Court of Appeals, Golden Gate Restaurant Ass'n v. City and County of San Francisco, 546 F.3d 639 (9th Cir. 2008).
This case challenges the employer-mandated spending requirement in San Francisco's Health Care Security Ordinance on the basis
that the Ordinance is preempted by ERISA. The employer-mandated spending requirement requires covered employers to contribute
to their own programs for their employees' healthcare or to contribute required amounts to the city, which are used to finance
San Francisco's Health Access Program or HRAs for employees of covered employers.
SPENDING REQUIREMENT
In 2006, the San Francisco Health Care Security Ordinance was signed into law. The Ordinance contains two key components,
including an employer-mandated healthcare spending requirement, and a universal healthcare program funded, in part, by these
employer contributions. As of January 1, 2009, the employer-mandated spending requirement requires covered employers with
20 or more employees to make healthcare expenditures of $1.23 per hour (expenditure increases for private employers with 100
or more employees) on behalf of each covered employee working more than 10 hours per week. 
Janet Farrer
|
After the Ordinance passed, the Golden Gate Restaurant Assn. challenged the employer-mandated spending requirement, arguing
that the mandate is preempted by ERISA. On December 26, 2007, a federal judge in the Northern District of California in Golden Gate Restaurant Ass'n v. City and County of San Francisco granted summary judgment in favor of the restaurant association, striking down the employer-mandated spending requirement
of the Ordinance.
The court held that the funding requirement of the Ordinance was preempted by ERISA because it had an impermissible connection
with employee welfare benefit plans.
After the federal district court decision was issued, the City of San Francisco appealed the decision to the Ninth Circuit
Court of Appeals. In an opinion published on September 30, 2008, the Ninth Circuit overruled the lower-court decision holding
that ERISA does not preempt the employer-mandated spending requirement contained in the Ordinance.
The restaurant association then filed a petition for rehearing en banc, which was ultimately denied. The dissent to the denial
for the petition for rehearing, however, notes that the decision puts the Ninth Circuit in conflict with the Fourth Circuit
decision, Retail Indus. Leaders Ass'n v. Fielder, 473 F. 3d 180 (4th Cir. 2007), which struck down a comparable law in Maryland in 2007 on the grounds that such law was preempted
by ERISA.
Seeking to present the City of San Francisco from implementing the employer-mandated spending requirement, the restaurant
association filed an emergency motion with the Supreme Court in March 2009, which was later denied, meaning that the employer
spending requirement continues to be in effect. In response to the Ninth Circuit's decision, the restaurant association filed
a Petition for Writ of Certiorari on June 8, 2009, asking the Supreme Court to overturn the Ninth Circuit's ruling holding
that the Ordinance was not preempted by ERISA.
This column is written for informational purposes only and should not be construed as legal advice.
Barry Senterfitt is a managing shareholder at Greenberg Traurig, LLP, Austin, Texas.
Janet Farrer is an associate at Greenberg Traurig LLP, Austin, Texas.
