Retail Industry Leaders Ass'n v. Suffolk County
| Decision Date | 14 July 2007 |
| Docket Number | No. 06 CV 00531(ADS)(ETB).,06 CV 00531(ADS)(ETB). |
| Citation | 497 F.Supp.2d 403 |
| Parties | RETAIL INDUSTRY LEADERS ASSOCIATION, Plaintiff, v. SUFFOLK COUNTY, Steve Levy in his official capacity as County Executive of Suffolk County, Suffolk County Department of Labor, and Robert W. Dow, Jr. in his official capacity as Commissioner of Labor of Suffolk County, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Gibson Dunn & Crutcher, New York, NY (Marshall R. King, of Counsel), for the Plaintiff.
Christine Malafi-Suffolk County Attorney, Hauppauge, NY, by: Brian P Callahan, Assistant County Attorney, John Richard Petrowski, Assistant County Attorney, for the Defendants.
Meyer, Suozzi, English & Klein, P.C., New York, NY (Patricia McConnell, of Counsel), Amicus Curiae on behalf of the Defendants, for Health and Welfare Council of Long Island, Medicaid Matters!Maryland and Nassau Suffolk Hospital Council.
Cleary Gottlieb Steen & Hamilton LLP, Amicus Curiae on behalf of the Defendants, New York, NY, for the City Council of the City of New York.
On February 7, 2006, Retail Industry Leaders Association ("RILA" or the "Plaintiff") filed a complaint against Suffolk County, Steve Levy ("Levy"), the Suffolk County Department of Labor (the "Suffolk DOL"), and Robert W. Dow, Jr. ("Dow") (collectively the "Defendants"). On September 28, 2006, the Plaintiff filed an amended complaint seeking a declaratory judgment that the Suffolk County Fair Share for Health Care Act is preempted by the Employee Retirement Income Security Act ("ERISA"); violates the Fourteenth Amendment's Equal Protection clause; and violates New York's wage and hour law.
Presently before the Court are the following motions: (1) the Plaintiffs motion for summary judgment seeking a declaratory judgment that the Suffolk County Fair Share for Health Care Act is preempted by ERISA and conflicts with New York's Minimum Wage Act; and (2) the Defendants' cross-motion for summary judgment seeking dismissal of the Plaintiffs complaint and a declaration that the Suffolk County Fair Share for Health Care Act is valid and enforceable. The Plaintiff also moves for leave to file a brief submitted by the United States Department of Labor in Retail Industry Leaders Ass'n v. Fielder, 475 F.3d 180 (4th Cir.2007), as well as leave to file a copy of the Fourth Circuit's decision. Finally, the Health and Welfare Council of Long Island, Nassau Suffolk Hospital Council, Medicaid Matters! Maryland, and the Council of the City of New York move to file amicus briefs on behalf of the Defendants.
The following facts are taken from the parties' submissions to this Court, including the Plaintiffs Rule 56.1 statement and the Defendants' counter-statement. The facts set forth are undisputed.
On October 25, 2005, Steve Levy, as Suffolk County Executive, signed into law the Suffolk County Fair Share for Health Care Act, Suffolk County, N.Y., Reg. Local Law §§ 325-1 to 7 (2005) (the "Act"). As originally enacted, the Act required certain large retail stores selling groceries, to make "health care expenditures" for their employees equivalent to not less than $3.00 per hour worked by their employees in Suffolk County. Covered employers who failed to make the mandated expenditures were required to make up the shortfall and pay civil penalties to Suffolk County. Covered employers were further required to file reports annually with the Suffolk DOL detailing (1) "health care expenditures over the prior year; (2) payroll records indicating name, address, job title; and (3) dates and hours worked of each employee during the reporting period." The Act exempted covered employees who had entered into a collective bargaining agreement with a labor union. (Plt. Rule 56.1 statement § 1; Defs. counter-statement § 1; Suffolk County Reg. Local Law § 325-1,3,4).
The Plaintiff, RILA, is a trade association representing retailers, manufacturers and service suppliers. More than 400 companies are members of RILA and members operate in all 50 states and employ more than 5 million American workers. Wal-Mart Stores, Inc. ("Wal-Mart") is a member of RILA and operates stores in Suffolk County.
On February 7, 2006, the Plaintiff filed a complaint against the Defendants seeking to enjoin enforcement of the Act, contending that it was preempted by ERISA and by the National Labor Relations Act because it only imposed requirements on employers who declined to enter collective bargaining agreements.
On April 4, 2006, the Suffolk County Legislature adopted amendments to the Act. The Legislature replaced the $3.00 per hour worked health care expenditure requirement with a "public health cost rate." The legislature also repealed the exemption for unionized employers. The amendments further removed the requirement that employers who failed to make the expenditures make up the shortfall. Instead, the amendments provide that employers pay a civil penalty to Suffolk County.
The Act, as amended, requires that covered employers make minimum "employee health care expenditures" equivalent to the "public health care cost rate multiplied by the total number of hours worked" by their employees in Suffolk County. The Act provides that the "public health care cost rate shall be a rate that approximates the cost to the public health care system of providing health care to one uninsured employee." The Act requires that the Suffolk DOL publish the official public health care cost rate by October 1 of each year. (Plt. Rule 56.1 statement § 3; Defs. counter-statement § 3).
Employees covered by the Act include any person working for a covered employer on a full-time, part-time or seasonal basis. The Act excludes managerial, supervisory and confidential employees. The Act prohibits covered employers from "deduct[ing] any payment made pursuant to [the Act] from an employee's wages, salaries, or other compensation" or "reduc[ing] any employee's wages, salaries, or other compensation in order to finance compliance with [the Act]." (Plt. Rule 56.1 statement § 6; Defs. counter-statement § 6; Suffolk County Reg. Local Law § 325-2,3).
The Act defines "health care services" as "primary or secondary medical care or service" and includes, "but are not limited to, inpatient and outpatient hospital services, surgical and medical services, laboratory, diagnostic and x-ray services, prescription drug coverage, annual physical examinations, preventative services, mental health services, substance abuse treatment, vision care, and medical savings accounts." (Plt. Rule 56.1 statement § 7; Defs. counter-statement § 7; Suffolk County Reg. Local Law § 325-2).
The Act defines "health care expenditures" as "any amount paid by a covered employer to employees or to another party for the purpose of providing health care services or reimbursing the cost of such services for employees or family of employees." The Act further defines four alternative categories of "health care expenditures" that satisfy employers' payment obligations: "(i) contributions by a covered employer to a health savings account, as defined under Section 223 of the United States Internal Revenue Code or to any other account having substantially the same purpose or effect without regard to whether such contributions qualify for tax deduction or are excludable from employee income; (ti) reimbursement by a covered employer of health care expenses incurred by its employees or the family of its employees, whether or not the employees had any preexisting entitlement to such reimbursement under any plan, fund or program maintained by the employer; (iii) expenditures made by a covered employer to operate a work place health clinic or to provide any health-related services to employees in the workplace; and (iv) contributions by a covered employer to any federally qualified health center or other community center." Any covered employer whose health care expenditures fall short of the Act's requirements must pay a penalty equal to the shortfall. (Plt. Rule 56.1 statement §§ 7,8; Defs. counter-statement §§ 7,8; Suffolk County Reg. Local Law § 325-2).
Pursuant to the Act, a "covered employer" is defined as "any person that operates at least one retail store located in Suffolk County where groceries or other foods are sold for off-site consumption and where either (1) twenty-five thousand square feet or more of the store's selling area floor space is used for the sale of groceries or other foods for off-site consumption, or (2) 3% or more of the store's selling area floor space is used for the sale of groceries or other foods for off-site consumption and the store contains at least 100,000 square feet of selling area floor space, or (3) [the retail store] had total annual revenues of $1 billion or more in the most recent calendar year and the sale of groceries comprise more than 20% of a company's revenue." The Act includes an express statement of legislative intent to address "double digit increases in Medicaid costs" and "growth in Medicaid spending." (Plt. Rule 56.1 statement § 10; Defs. counter-statement § 10; Suffolk County Reg. Local Law § 325-2).
The Suffolk DOL has authority to enforce the Act by investigating violations, holding administrative hearings and ordering the payment of civil penalties. The Act further requires covered employers to file annual reports regarding the number of hours worked by employees and the employer's health care expenditures.
As all parties concede, the Act expressly acknowledges a legislative intent to protect small retailers in Suffolk County from large employers who do not provide health care for employees. Specifically, the Act states that "historically, most retail employers in Suffolk County have...
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