City Cannot Mandate that Church Provide Benefits for Partners

February 10, 2004 (— A federal judge ruled that an ordinance requiring employers receiving certain housing and community development funds to extend benefits to employees' domestic partners is preempted by the Employee Retirement Income Security Act (ERISA).

>In the case Catholic Charities of Maine Inc. v. Portland, D. Maine, US District Judge D. Brock Hornby of the US District Court for the District of Maine ruled against the city’s claim that the ordinance was not preempted because it merely conditioned receipt of housing and community development funds on employers offering domestic partner coverage.

>In May 2001, Portland enacted an ordinance requiring the city to provide benefits to employees with domestic partners, and it was later extended in June 2002 to require that agencies receiving federal housing and community development money offer domestic partners the same benefits as spouses.  

Catholic Charities, a non-profit, had been receiving  housing and community development funds, but refused to comply with the ordinance once it had been extended.  The group, the social-service arm of the Roman Catholic Church, maintained that to comply with the two-year-old ordinance would violate Roman Catholic doctrine opposing homosexual behavior, cohabitation by unmarried couples, and premarital sex.   So, on   June 3, 2003, it filed a lawsuit against the city seeking a declaration that the ordinance was preempted by ERISA (see   Catholic Group Takes Domestic Partner Benefits Battle to Court).

>Also, Catholic Charities, on June 22, 2003, filed for a section 401(d) election with the IRS, wanting to change its benefit plans from “church plans” status, allowing them to be covered by ERISA.  

>The City of Portland claimed that the charity was unable to “opt in” to ERISA on its welfare benefit plans, but only for its pension plans and also argued that could not file an election on behalf of its welfare plans because the tax code expressly limits the definition of “church plan” to pension plans.

>The court rejected the first claim, going against a 1995 Department of Labor advisory opinion that stated only church pension plans can opt for ERISA coverage.   On the second claim the court admitted that there is some disagreement between ERISA and the tax code over whether church plan exemptions are limited to pension plans, but still disagreed with the city’s argument.

>In deciding the case, the court rejected Catholic Charities’ argument that the ordinance was unconstitutional as a violation of the equal protection clause, saying that the ordinance was neutral, and the court rejected the argument that the ordinance violated free speech by preventing the organization from sending a message about Roman Catholic teaching on nonfamily relationships, saying benefit plans should not serve as a vehicle for ideology.