High Court Denies Domestic Partner Case

March 24, 2004 (PLANSPONSOR.com) - Whether or not San Francisco was in violation of the commerce clause of the U.S. Constitution by requiring contractors to provide domestic partner benefits to employees is an issue that will not be taken up by the U.S. Supreme Court.

>Ohio-based S.D. Myers Inc had petitioned the Supreme Court after it was denied a contract with San Francisco because it refused to provide domestic partner benefits to its employees.   S.D. Myers contends the city sent notification to the contractor of being the lowest bidder on a particular project and withdrew its support for S.D. Myers’ bid since the company was in violation of a city ordinance requiring S.D. Myers to provide domestic partner benefits.

>The decision by the nation’s high court means a U.S. 9 th Circuit Court of Appeals ruling reached July 2003 will stand.   In that ruling, which reaffirmed a 2001 ruling by the same court, the appellate court found the city and county of San Francisco could use its contract power to impose its social policy in favor of domestic partners.

In the 2003 decision, the appeals court was asked to consider whether or not San Francisco’s requirement on city contractors to provide benefits to employees with registered domestic partners was in conflict with the state of California’s domestic partnership registration law.   The court found that the two laws regulate matters that are entirely distinct even though they both concern domestic partnerships.  In so holding, the appeals court found that the San Francisco ordinance, which was designed to prevent discrimination on the basis of sexual orientation, was not in conflict with the state registration law.

This is because the San Francisco ordinance is a “concrete” attempt to prevent the city from doing business with companies that discriminate on the basis of sexual orientation, while the California registration law simply governs the creation and registration of domestic partners, the court said. “The Registration Statute neither addresses discrimination on the basis of domestic partner status, nor regulates the provision of benefits to the domestic partners of employees,” Senior Circuit Judge Alfred Goodwin said in writing for the appeals court.

Refusal To Certify

S.D. Myers Inc was notified by the city of San Francisco that it was the lowest bidder on a contract to provide service for the city’s electrical transformers. The city informed the company that to receive the contract the company was required to “certify its willingness to comply” with Section 12B.1(b) of the city’s ordinance.

Section 12B.1(b) provides that a company contracting to do business on behalf of the city and county of San Francisco must provide nondiscriminatory employee benefits to any employee’s registered domestic partner.  S.D. Myers declined to certify its willingness to follow the ordinance, claiming that complying with the ordinance was contrary to the company’s religious and moral principles. After the company declined to follow the ordinance, the city rejected the company’s bid.

S.D. Myers then filed a lawsuit against San Francisco arguing that the ordinance was invalid because it violated the U.S. Constitution, the Employee Retirement Income Security Act (ERISA), and California law. Initially, a judge in the U.S. District Court for the Northern District of California found that the ordinance did not violate the Constitution or California law.

Additionally, the district court found that although it had ruled in a companion case that ERISA preempted the ordinance as to benefits provided through ERISA plans, the companion case ruling did not extend to S.D. Myers because the company lacked standing under ERISA to challenge the ordinance.

The case is S.D. Myers v. San Francisco .