SF Domestic Partner Rule Does Not Contradict State Law

July 31, 2003 (PLANSPONSOR.com) - California's domestic partnership registration law does not preempt a San Francisco ordinance requiring city contractors to provide nondiscriminatory benefits to employees with registered domestic partners.

>The US 9th Circuit Court of Appeals 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, according to Washington-based legal publisher BNA.

>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

>Ohio-based employer 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 US Constitution, ERISA, and California law. A judge in the US 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 Inc. v. San Francisco, 9th Cir., No. 02-16480, 7/29/03.