Minn. Chamber Commerce v. City of Minneapolis, A18-0771

• Court: Minnesota Court of Appeals
• Writing for the Court: BJORKMAN, Judge
• Citation: Minn. Chamber Commerce v. City of Minneapolis, 928 N.W.2d 757 (Minn. App. 2019)
• Decision Date: 29 April 2019
• Docket Number: A18-0771
• Parties: MINNESOTA CHAMBER OF COMMERCE, et al., Respondents, National Federation of Independent Business, Plaintiff, v. CITY OF MINNEAPOLIS, Appellant.

928 N.W.2d 757

MINNESOTA CHAMBER OF COMMERCE, et al., Respondents,

National Federation of Independent Business, Plaintiff,

v.CITY OF MINNEAPOLIS, Appellant.

A18-0771

Court of Appeals of Minnesota.

Filed April 29, 2019

BJORKMAN, Judge

These related appeals concern a City of Minneapolis ordinance that requires employers to provide sick-and-safe leave. Respondents Minnesota Chamber of Commerce, et al. (the chamber) contend that state law conflicts with and impliedly preempts the ordinance. Appellant City of Minneapolis challenges the district court’s ruling that application of the ordinance to employers located outside the city violates the extraterritoriality doctrine. We affirm the district court’s determination that state law does not preempt the ordinance. But because we conclude that the ordinance does not have extraterritorial operation, we reverse in part, vacating the permanent injunction against the city enforcing the ordinance against employers located outside of the city.

FACTS

On May 31, 2016, the city enacted the sick-and-safe-leave ordinance (ordinance), Minneapolis, Minn., Code of Ordinances (MCO) §§ 40.10-.310 (2017), in order "to safeguard the public welfare, health, safety and prosperity of the people of ... the City." MCO § 40.30(e). The ordinance generally defines an employee as "any individual employed by an employer ... who perform[s] work within the geographic boundaries of the City for at least eighty (80) hours in a year" (80-hour threshold). MCO § 40.40. The ordinance defines an employer as "a person or entity that employs one (1) or more employees." Id.¹

The key provisions of the ordinance require employers to provide employees "one (1) hour of sick and safe time for every thirty (30) hours worked up to a maximum of forty-eight (48) hours in a ... year." MCO § 40.210(a). The leave must be paid unless the employer has five or fewer employees. MCO § 40.220(g)-(h). Leave may be used for the employee’s or a family member’s needs related to health, domestic abuse, sexual assault, stalking, and school, daycare, and workplace closings. MCO § 40.220(b)(1)-(6). The ordinance requires employers to track the accrual and use of leave time. MCO § 40.270. The ordinance was to take effect on July 1, 2017, with limited enforcement during the first year. MCO § 40.90.

In October 2016, the chamber initiated this action, seeking declaratory relief and a temporary injunction prohibiting the city from enforcing the ordinance. The district court granted the chamber partial temporary relief, concluding that the chamber was unlikely to prevail on its preemption claims but likely to prevail on its claim that the ordinance impermissibly operates outside "the geographic borders of the City." Applying the severability doctrine, the district court upheld the ordinance and issued a temporary injunction that enjoined the city from enforcing the ordinance "against any employer resident outside the geographic boundaries of the City" until after adjudication of the case on its merits.

Both parties appealed. This court affirmed the district court’s preliminary rulings as within its discretion. Minn. Chamber of Commerce v. City of Minneapolis , No. A17-0131, 2017 WL 4105201, at *2-4, *6 (Minn. App. Sept. 18, 2017), review denied (Minn. Nov. 28, 2017). We upheld the district court’s reliance on the extraterritoriality doctrine to temporarily enjoin the city from enforcing the ordinance as to employers that resided outside of the city. Id . at *5.

In 2018, the city amended the ordinance to address the district court’s concerns about its geographic reach. As amended, the ordinance provides that sick-and-safe leave only accrues for hours an employee works "within the geographic boundaries of the City." MCO 40.210(a) (2018). And sick-and-safe leave may only be used "when the employee is scheduled to perform work within the geographic boundaries of the City." MCO 40.220(k) (2018).

Both parties moved for summary judgment. The district court again rejected the chamber’s argument that state law conflicts with or impliedly preempts the ordinance. But the court granted the chamber’s motion as to the ordinance’s extraterritorial operation, subject to the severability doctrine. The district court "enjoined [the city] from enforcing the Ordinance against any employer resident outside the geographic boundaries of the City of Minneapolis." The city appealed, and the chamber filed a cross-appeal.

ISSUES

I. Does state law preempt the ordinance?

II. Does the ordinance violate the extraterritoriality doctrine because it applies to employers that are located outside of the city?

ANALYSIS

I. State law does not preempt the ordinance.

The City of Minneapolis is a home-rule charter city. Accordingly, in municipal matters, the city has "all the legislative power possessed by the legislature of the state, save as such power is expressly or impliedly withheld." Bolen v. Glass , 755 N.W.2d 1, 4-5 (Minn. 2008) (quotation omitted). Among these broad powers is the power to enact ordinances "to promote the health, safety, and welfare of residents." Builders Ass’n of Minn. v. City of St. Paul , 819 N.W.2d 172, 180 (Minn. App. 2012).

A state statute may preempt a municipal ordinance (1) expressly, (2) by "[implied] preemption, when a city ordinance attempts to regulate conduct in a field that the state legislature intended the state law to exclusively occupy," or (3) because the two conflict. State v. Kuhlman , 722 N.W.2d 1, 4 (Minn. App. 2006), aff’d , 729 N.W.2d 577 (Minn. 2007). Whether state law preempts a municipal ordinance is a legal question that we review de novo. Bicking v. City of Minneapolis , 891 N.W.2d 304, 312 (Minn. 2017).

No state statute expressly preempts the ordinance. But the chamber argues that the ordinance is void under the theories of conflict preemption and implied preemption. We address each argument in turn.

A. The ordinance does not conflict with state law.

Although numerous Minnesota statutes touch on the topic of employee leave, the chamber points to just one to support its conflict argument. Minn. Stat. § 181.9413 (sick-leave statute) addresses in general terms an employee’s entitlement to sick leave, requiring employers to permit employees to use their sick-leave benefits to care for relatives who are ill or injured, and to use such benefits for "safety leave," even if the employer’s policy does not permit such use. Minn. Stat. § 181.9413(b). Notably, the sick-leave statute does not mandate that sick leave be provided, much less require a certain number of leave days or that any part of the leave be paid. And it "does not prevent an employer from providing greater sick leave benefits than are provided for under this section." Id . (g). The chamber contends that the ordinance conflicts with the sick-leave statute because the statute "expressly permits employers of any size not to provide sick and safe leave." We are not persuaded.

In Mangold Midwest Co. v. Village of Richfield , our supreme court articulated four "general principles" that govern our conflict analysis. 274 Minn. 347, 143 N.W.2d 813, 816-17 (1966) ; see Bicking , 891 N.W.2d at 313 (accord). First, conflict generally exists "only when both the ordinance and the statute contain express or implied terms that are irreconcilable with each other." Mangold , 143 N.W.2d at 816. Under the second and third conflict principles, a "conflict exists where the ordinance permits what the statute forbids," and "[c]onversely, a conflict exists where the ordinance forbids what the statute expressly permits." Id . (emphasis omitted). Finally, "no conflict exists where the ordinance, though different, is merely additional and complementary to or in aid and furtherance of the statute." Id. at 817. The Mangold court applied the second conflict principle, concluding that a municipal ordinance that prohibited most businesses from selling groceries on Sundays did not conflict with a state statute that prohibited all Sunday grocery sales because "the ordinance does not permit, authorize, or encourage violation of the statute." Id . at 819.

This court recently applied the Mangold conflict principles in a case that challenged the city’s minimum-wage ordinance. Graco, Inc. v. City of Minneapolis , 925 N.W.2d 262, 267–71 (Minn. App. 2019), pet. for review filed (Minn. Mar. 22, 2019).² We first considered how the minimum-wage statute operates to determine whether it is prohibitive or permissive. Because the minimum-wage statute bars employers from paying less than the legislatively set minimum wage, we concluded it is prohibitive, and then considered whether the ordinance expressly permitted employers to pay lower wages. Id . at 267–68.

We conclude the second conflict principle governs our analysis of the sick-and-safe-leave ordinance. While the sick-leave statute is couched in terms of what an employee may do (use employer-provided personal sick leave to care for relatives and for safety reasons), it operates to prohibit employers from denying an employee’s request to use leave under such circumstances. The ordinance requires all but the smallest employers to provide a minimum amount of paid sick-and-safe leave. The statute is silent as to whether such leave must be paid, or even provided to employees in the first place. Because the ordinance does not permit conduct that the sick-leave statute forbids, there is no conflict. Employers are able to comply with both the statute and the ordinance.

Relying on Bicking , the chamber argues that conflict exists because the ordinance "adds requirements for small employers that the Legislature has chosen not to impose." See 891 N.W.2d at 313. We addressed this same argument in Graco , and rejected it. Graco , 925 N.W.2d at 268–70. In Bicking , the supreme court held that a proposed Minneapolis charter amendment requiring police officers to obtain professional liability insurance conflicted with a statute requiring municipalities to defend and indemnify their officers...