Golden Gate Restaurant v. City and County of S.F.

• Decision Date: 09 January 2008
• Docket Number: No. 07-17372.,No. 07-17370.,07-17370.,07-17372.
• Citation: 512 F.3d 1112
• Parties: GOLDEN GATE RESTAURANT ASSOCIATION, an incorporated non-profit trade association, Plaintiff-Appellee, v. CITY AND COUNTY OF SAN FRANCISCO, Defendant, and San Francisco Central Labor Council; Service Employees International Union, Healthcare Workers-West; Service Employees International Union, Local 1021; Unite Here!, Local 2, Defendant-Intervenors-Appellants. Golden Gate Restaurant Association, an incorporated non-profit trade association, Plaintiff-Appellee, v. City and County of San Francisco, Defendant-Appellant, and San Francisco Central Labor Council; Service Employees International Union, Healthcare Workers-West; Service Employees International Union, Local 1021; Unite Here!, Local 2, Defendant-Intemenors.
• Court: U.S. Court of Appeals — Ninth Circuit

512 F.3d 1112

GOLDEN GATE RESTAURANT ASSOCIATION, an incorporated non-profit trade association, Plaintiff-Appellee, v. CITY AND COUNTY OF SAN FRANCISCO, Defendant, and San Francisco Central Labor Council; Service Employees International Union, Healthcare Workers-West; Service Employees International Union, Local 1021; Unite Here!, Local 2, Defendant-Intervenors-Appellants.

Golden Gate Restaurant Association, an incorporated non-profit trade association, Plaintiff-Appellee, v. City and County of San Francisco, Defendant-Appellant, and San Francisco Central Labor Council; Service Employees International Union, Healthcare Workers-West; Service Employees International Union, Local 1021; Unite Here!, Local 2, Defendant-Intemenors.

No. 07-17370.

No. 07-17372.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted January 3, 2008.

Filed January 9, 2008.

Vince Chhabria, Office of the City Attorney, San Francisco, CA, for Defendant-Appellant.

Stacey M. Leyton, Stephen P. Berzon, Altshuler Berzon, San Francisco, CA, for Defendant-Intervenors-Appellants.

Richard C. Rybicki, Dickenson, Peatman & Fogarty, Napa, CA, Patrick Sutton, Dickenson, Peatman & Fogarty, Santa Rosa, CA, for Plaintiff-Appellee.

Before: GOODWIN, REINHARDT, and W. FLETCHER, Circuit Judges.

ORDER

W. FLETCHER, Circuit Judge:

Plaintiff Golden Gate Restaurant Association ("the Association") challenges certain provisions of the newly enacted San Francisco Health Care Security Ordinance ("the Ordinance"), contending that they are preempted by the federal Employee Retirement Income Security Act of 1974 ("ERISA"). Part of the. Ordinance was scheduled to go into effect on January 1, 2008. On December 26, 2007, the district court granted summary judgment for the plaintiff and enjoined the implementation and enforcement of the disputed provisions of the Ordinance.

Defendant City and County of San Francisco ("the City") and Defendant-Intervernor labor unions have appealed the judgment of the district court. They ask us to stay the judgment of the district court, thereby allowing the Ordinance to go into effect pending our decision on the merits of their appeal. For the reasons that follow, we grant the stay.

I. Procedural History

In July 2006, the San Francisco Board of Supervisors unanimously passed the San Francisco. Health Care Security Ordinance, and the mayor signed it into law.¹ The Ordinance has been codified as City and County of San Francisco Administrative Code, Sections 14.1 to 14.8. On November 8, 2006, the Golden Gate Restaurant Association filed a complaint against the City in district court, seeking a declaration that the Ordinance's employer spending requirement is preempted by federal law, and a permanent injunction prohibiting implementation and enforcement of the provisions related to the requirement. On March 1, 2007, the San Francisco Central Labor Council, Service Employees International Union (SEIU) Local 1021, SEIU United Healthcare Workers-West, and UNITE-HERE! Local 2 (collectively "Intervenors") moved to intervene as defendants. The court granted the motion on April 5, 2007.

On April 2, 2007, the City amended the Ordinance to defer implementation of the employer provisions until January 1, 2008 for employers with fifty or more employees, and until April 1, 2008 for employers with twenty to forty-nine employees. On July 13, 2007, the parties filed cross-motions for summary judgment. The district court heard oral argument on the motions on November 2, 2007. On December 26, 2007, the district court entered judgment for the Association, holding that the Ordinance's employer spending requirement is Preempted by ERISA.

On. December 27, 2007, the City and Intervenors appealed to this court. On the same day, the City filed emergency motions in the district court and in this court for a stay of the district court's judgment pending decision on the merits of their appeal. On December 28, the district court denied, the City's motion for a stay. The Association filed a memorandum in opposition to the motion for stay in this court on December 31, 2007. We heard oral argument in Pasadena, California, on January 3, 2008.

II. Standard for Granting Stay Pending Appeal

In Hilton v. Braunskill, 481 U.S. 770, 776, 107 S.Ct. 2113, 95 L.Ed.2d 724 (1987), the Supreme Court set forth "the factors regulating the issuance of a stay" as follows: "(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies." Consistent with these factors, we had previously articulated the standard for granting a stay pending appeal in Lopez v. Heckler, 713 F.2d 1432, 1435-36 (9th Cir.1983). See also L.A. Mem'l Coliseum Comm'n v. Nat'l Football League, 634 F.2d 1197, 1200-01 (9th Cir.1980).

In ruling on a motion for a stay pending appeal, we employ "two interrelated legal tests" that "represent the outer reaches of a single continuum." Lopez, 713 F.2d at 1435 (internal quotation marks omitted). "At one end of the continuum, the moving party is required to show both a probability of success on the merits and the possibility of irreparable injury." Id. We have recently applied, as an alternative test at this end of the continuum, a test originally formulated for granting a Preliminary. injunction: "(1) a strong likelihood of success on the merits, [and] (2) the possibility of irreparable injury to plaintiff if preliminary relief is not granted[.]" Natural Res. Def. Council, Inc. v. Winter, 502 F.3d 859, 862 (9th Cir.2007). "At the other end of the continuum, the moving party must demonstrate that serious legal questions are raised and that the balance of hardships tips sharply in its favor." Lopez, 713 F.2d at 1435. "These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Winter, 502 F.3d at 862. Further, we "consider `where the public interest lies' separately from and in addition to `whether the applicant [for stay] will be irreparably injured absent a stay[.]" Id. at 863 (quoting Hilton, 481 U.S. at 776, 107 S.Ct. 2113) (first alteration in Winter).

When the court decides the appeal of the district court's grant of summary judgment, it will review that decision de novo. Aguilera v. Baca, 510 F.3d 1161, 1165-67 (9th Cir.2007); Cleghorn v. Blue Shield of Cal., 408 F.3d 1222, 1225 (9th Cir.2005). We are mindful of that standard of review in determining the likelihood that the City and Intervenors will succeed on the merits of their appeal. Cf. Lopez, 713 F.2d at 1436.

The Association contends that the City must meet a higher standard than that articulated in Lopez and Winter because, in its view, a stay would change the status quo. We disagree that a higher standard applies.

First, the Supreme Court in Hilton did not include preservation of the status quo among the "factors regulating the issuance of a stay." See 481 U.S. at 776, 107 S.Ct. 2113; see also Abbassi v. INS, 143 F.3d 513, 514 (9th Cir.1998). Rather, the Court recognized that "the traditional stay factors contemplate individualized judgments in each case, [and] the formula cannot be reduced to a set of rigid rules." Hilton, 481 U.S. at 777, 107 S.Ct. 2113. Maintaining the status quo is not a talisman. As the Fifth. Circuit wrote in Canal Authority of Florida v. Callaway, 489 F.2d 567, 576 (5th Cir.1974):

It must not be thought . . . that there is any particular magic in the phrase `status quo.' The purpose of a preliminary injunction is always to prevent irreparable injury so as to preserve the court's ability to render a meaningful decision on the merits. It often happens that this purpose is furthered by preservation of the status quo, but not always. If the currently existing status quo itself is causing one of the parties irreparable injury, it is necessary to alter the situation so as to prevent the injury. . . . The focus always must be on prevention of injury by a proper order, not merely on preservation of the status quo.

See also Tanner Motor Livery, Ltd. v. Avis, Inc., 316 F.2d 804, 809 (9th Cir.1963) (observing that the principle that a preliminary injunction should preserve the status quo is "not to be understood as . [a] hard and fast rule[ ], to be rigidly applied to every case regardless of its peculiar facts").

Second, despite the Association's argument to the contrary, granting a stay in this case would, in a real sense, preserve rather than change the status quo. In the absence of the district court injunction on December 26, 2007, the provisions of the Ordinance that were scheduled to go into effect on January 1, 2008, would now be part of the status quo. As the D.C. Circuit has recognized, "it sometimes happens that the status quo is a condition not of rest, but of action, and the condition of rest is exactly what will inflict the irreparable injury upon complainant." Friends for All Children, Inc. v. Lockheed Aircraft Corp., 746 F2d 816; 830 n. 21 (D.C.Cir. 1984) (internal quotation marks omitted); see also Planned Parenthood of the Blue Ridge v. Camblos, 116 F.3d 707, 721 (4th Cir.1997) (Luttig, J.). Further, we note that several of our sister circuits, in reviewing preliminary injunctions enjoining implementation of new legislation, have granted motions for stays of those injunctions pending appeal without weighing whether a stay would disturb or preserve the status quo. See, e.g., Coal. to Defend Affirmative Action v. Granholm, 473 F.3d 237, 244-53 (6th Cir.2006); Camblos, 116 F.3d at 721.

III. The Ordinance

The Ordinance mandates that covered employers make "required health care expenditures to or on behalf of certain employees each quarter. S.F. Admin. Code § 14.3(a) (2007). "Covered employers" are...