Academic journal article Brigham Young University Law Review

Golden Gate and the Ninth Circuit's Threat to ERISA's Uniformity and Jurisprudence

Academic journal article Brigham Young University Law Review

Golden Gate and the Ninth Circuit's Threat to ERISA's Uniformity and Jurisprudence

Article excerpt

I. INTRODUCTION

In March 2009, the Ninth Circuit Court of Appeals held1 that San Francisco's Health Access Program was not enacted in contravention to the Employee Retirement Income Security Act ("ERISA").2 Since the Program's enabling ordinance passes all of the tests describing laws not preempted3 by ERISA,4 die court held that the ordinance creates a permissible means for San Francisco to tax employers and create employee health benefits for its residents.5 Nevertheless, while applying its tests, die Ninth Circuit overlooked one of the main purposes of ERISA: "provid[ing] a uniform regulatory regime over employee benefit plans."6 Distracted by its responsibility to uphold and preserve state and local autonomy,7 the Ninth Circuit erred in its application of ERISA's tests to the point that it violated one of ERISA's primary purposes - uniformity.

II. BACKGROUND

A. The Impetus for ERISA

In the early 1960s, the once iconic American car manufacturer Studebaker met its demise.8 During its colossal fall, Studebaker "terminated its pension plan for more than 4,000 employees, leaving many without promised benefits and with no recourse after 20 or more years of work."9 This mismanagement of pension benefits became the impetus behind a bill proposed by Republican Senator Jacob Javits in 1967, which later became ERISA.10

Congress signed ERISA into law on Labor Day in 1974. " The primary concern in pushing the enactment was "the mismanagement of funds accumulated to finance employee benefits and the failure to pay employees benefits from accumulated funds."12 ERISA addressed that primary concern through the establishment of two objectives. First, it worked to protect employee benefits by establishing "extensive reporting, disclosure, and fiduciary duty requirements to insure against the possibility that the employee's expectation of the benefit would be defeated through poor management by the plan administrator."13 Second, to assure its success, ERISA insulated itself from any state meddling by eliminating all conflicting regulation among the states - establishing uniformity among benefit plans by preempting all other state laws.14 Although the first objective is probably more important because it directly addresses Congress's concerns about employee benefits, the second goal has become a more contentious point of law because it restricts state sovereignty in regards to state employee benefit legislation.

Nevertheless, Congress viewed the preemption, and the uniformity that it creates, as an absolute necessity for ERISA's success.15 Congress intended the preemption "to apply in its broadest sense to all actions of state or local governments, or any instrumentality thereof, which have the force or effect of law."16 Consequently, ERISA's preemption clause is "one of the broadest preemption clauses ever enacted by Congress."17 Unfortunately, enforcing ERISA's preemption and its consequential uniformity is easier said than done. Indeed, "[developing a rule to identify whether ERISA preempts a given state law - the first step in determining whether ERISA completely preempts the law - has bedeviled the Supreme Court."18

B. The Application of ERISA

Determining the extent of ERISA's preemption has created a complicated mix of tests. According to the statutory language, ERISA is supposed to preempt "any and all State laws insofar as they . . . relate to any employee benefit plan."19 However, determining the scope of the seemingly simple term "relate" has created several multi-part tests. First, the Supreme Court has broken down the analysis by ruling that a "law 'relate[s] to' a covered employee benefit plan for purposes of [ERISA] 'if it [1] has a connection with or [2] reference to such plan.'"20 Then, until Golden Gate, the Ninth Circuit used its own multi-factor test to find a "connection with" ERISA when:

(1) . . . the state law regulates the types of benefits of ERISA employee welfare plans;

(2) . …

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