Retail Industry Leaders Ass'n v. Fielder

• Citation: 435 F.Supp.2d 481
• Decision Date: 19 July 2006
• Docket Number: Civil No. JFM-06-316.
• Parties: RETAIL INDUSTRY LEADERS ASSOCIATION v. James D. FIELDER, Jr., Maryland Secretary of Labor, Licensing, and Regulation.
• Court: U.S. District Court — District of Maryland

Page 481

435 F.Supp.2d 481

RETAIL INDUSTRY LEADERS ASSOCIATION v. James D. FIELDER, Jr., Maryland Secretary of Labor, Licensing, and Regulation.

Civil No. JFM-06-316.

United States District Court, D. Maryland.

July 19, 2006.

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Paul Blankenstein, Eugene Scalia, William J. Kilberg, Gibson Dunn and Crutcher LLP, Washington, DC, for Retail Industry Leaders Association.

Gary W. Kuc, Margaret Ann Nolan, Steven M. Sullivan, State of Maryland Office of the Attorney General, Baltimore, MD, Kathryn M. Rowe, Robert A. Zarnoch, State of Maryland Office of the Attorney General, Annapolis, MD, for James D. Fielder, Jr., Maryland Secretary of Labor, Licensing, and Regulation.

OPINION

MOTZ, District Judge.

Retail Industry Leaders Association ("RILA"), a trade association of which Wal-Mart Stores, Inc. ("Wal-Mart") is a member, has brought this action for declaratory and injunctive relief against James Fielder, Jr., in his official capacity as Maryland Secretary of Labor, Licensing, and Regulation ("the Secretary").¹ RILA seeks a declaration that the Maryland Fair Share Health Care Fund Act ("the Act" or "the Fair Share Act"), Md. Code Ann., Lab. & Empl. § 8.5-101 et seq., is preempted by the federal Employment Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA"), and that the Act violates the Equal Protection Clause of the U.S. Constitution.²

RILA has filed a motion for summary judgment, and the Secretary has filed a motion to dismiss or for summary judgment. RILA's motion will be granted, and the Secretary's motion will be denied.

I.

On January 12, 2006, the Maryland General Assembly enacted the Fair Share Act, which is scheduled to become effective January 1, 2007. Md.Code Ann., Lab. & Empl. § 8.5-103(a)(1). The Act applies only to non-governmental employers of 10,000 or more people in the State. Id. § 8.5-102. It requires that a for-profit employer that "does not spend up to 8% of the total wages paid to employees in the State on health insurance costs shall pay to the Secretary an amount equal to the difference between what the employer spends for health insurance costs and an amount equal to 8% of the total wages paid to employees in the State." Id. § 8.5-104(b). For non-profit employers, the benchmark is 6%. Id. § 8.5-104(a). The Act also requires an employer to report annually its total number of employees in the state, the amount spent'by the employer on health insurance costs, and the percentage of payroll spent by the employer on health insurance costs. Id. § 8.5-103. The Act defines "health insurance costs" as "the amount paid by an employer to provide health care or health insurance to employees in the State to the extent the costs may be deductible by an employer under federal tax law." Id. § 8.5-101(d)(1).

There are four non-governmental employers of 10,000 or more people in Maryland: Johns Hopkins University ("Johns Hopkins"), Northrop Grumman Corp. ("Northrop Grumman"), Giant Food Inc. ("Giant Food"), and Wal-Mart. When enacting the law, the Maryland General Assembly anticipated that only Wal-Mart would be affected by the Act's spending requirement.³ Johns Hopkins is a nonprofit institution that meets the lower 6% standard the legislature set for non-profits. Northrop Grumman successfully lobbied for a provision in the Act that permits employers to exclude, for purposes of calculating the percentage of payroll spent on health care, compensation paid to its employees above the median household income in Maryland. Id. § 8.5-103(b). This exclusion permits Northrop Grumman to meet the requirement. Giant Food, which actively lobbied for enactment of the legislation, spends substantially in excess of 8% of the total wages it pays to employees in Maryland on health insurance costs. On the other hand, according to the declaration submitted by Gregory Goggans, Wal-Mart's Director of United States Benefits Design, "Wal-Mart has never [since July 2003] made contributions to the health care plans offered to its Maryland employees that were equal to or greater than 8% of the `total compensation' (as that term is defined in the Act) paid to Maryland employees." Goggans Decl. 113, RILA Mot. for Summ. J. ex. D.⁴

II.

As a preliminary matter, the Secretary challenges RILA's standing to bring this action. Standing is an aspect of the "case or controversy" requirement which limits the reach of federal jurisdiction under Article III of the U.S. Constitution. Essentially, the question of standing is based on "whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Allen v. Wright, 468 U.S. 737, 750-51, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) (quoting Warth Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)). The burden of showing standing lies with the party invoking federal jurisdiction. Marshall v. Meadows, 105 F.3d 904, 906 (4th Cir.1997). Standing encompasses both a constitutional aspect drawn directly from the Constitution, and a prudential aspect drawn from the self-imposed limitations on the federal judiciary. Allen, 468 U.S. at 751, 104 S.Ct. 3315; see also Burke v. City of Charleston, 139 F.3d 401, 405 (4th Cir. 1998).

An association may have standing in its own right, based on injuries suffered to the association itself, or through "associational standing," by which it asserts the rights of its members. RILA does not contend that it has itself been injured by passage of the Fair Share Act. Rather, it argues that it has associational standing to litigate the interests of its members. As articulated by the Supreme Court in Hunt v. Washington State Apple Advertising Commission, an association has standing to assert the rights of its members if: (1) the association's members would have standing to sue in their own right, (2) the interests the association seeks to protect are "germane to the organization's purpose," and (3) the claim asserted and the relief requested do not require the participation of individual members in the lawsuit. 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977).

A.

In order to meet the first Hunt requirement, it is not necessary that all of an association's members would have standing to sue in their own right. It is sufficient if any one of the members could institute the action on its own behalf. See, e.g., Lujan v. Defenders of Wildlife, 504 U.S. 555, 563, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); Warth, 422 U.S. at 511. To establish its own constitutional standing, an individual member would have to satisfy three elements: "(1) that ... [it] personally has suffered actual or threatened injury that is concrete and particularized, not conjectural or hypothetical; (2) that the action fairly can be traced to the challenged action; and (3) that the injury is likely to be redressed by a favorable decision from the court." Burke, 139 F.3d at 405; see also Lujan, 504 U.S. at 560-61, 112 S.Ct. 2130; Allen, 468 U.S. at 751, 104 S.Ct. 3315.

The second and third of these three elements require no discussion. The injuries alleged by RILA on behalf of its members are unquestionably fairly traceable to the Act whose validity it challenges, and these injuries would be redressed by this court's granting of the declaratory and injunctive relief. See Warth, 422 U.S. at 515. Therefore, the only individual standing requirement that needs to be addressed is whether a RILA member has "suffered an actual or threatened injury that is both concrete and particularized."

RILA asserts that at least one of its members — Wal-Mart — meets this element. According to RILA, Wal-Mart faces three different types of actual or threatened injury, any one of which is concrete and particularized. RILA's position is correct in all respects.

First, the Act mandates that an employer subject to its terms must report on an annual basis information such as the number of employees, the amount spent in the preceding year on health insurance in Maryland, and the percentage of payroll that amount constitutes. Md.Code Ann., Lab. & Empl. § 8.5-103. Although the time and cost incurred in meeting this reporting requirement is somewhat trivial since ERISA imposes similar obligations, unquestionably it is both a concrete and particular burden to be required to file a report that need not be filed if the Act is unlawful.

Second, as long as the validity of the Act remains undetermined, Wal-Mart will be required to alter the administration of its ERISA plan by allocating health care expenditures in Maryland in a way that ensures that the 8% spending requirement set by the Act is met. Again, this burden is not hypothetical. It is concrete and particular, as required for purposes of establishing constitutional standing.

Third, the record establishes that Wal-Mart is affected by the Act's spending requirement. As stated above, RILA has submitted the declaration of Gregory Goggans, Wal-Mart's Director of United States Benefits Design, who states under the penalty of perjury that since 2003 "Wal-Mart has never made contributions to the health care plans offered to its Maryland employees that were equal to or greater than 8% of the `total compensation' (as that term is defined in the Act) paid to Maryland employees." Goggans Decl. ¶ 3.

The Secretary argues that Goggans' averment is questionable, pointing to a statement made by Frank Boston, an attorney for Wal-Mart, during a committee hearing prior to the passage of the Act, to the effect that Wal-Mart's contribution to health care benefits "could be at 10 or 12 percent." Senate Finance Committee meeting on Senate Bill 790, 2005 Leg., 420th Sess. 60 (Md. Mar. 2, 2005), Sec'y Mot. to Dismiss ex. 2. The Secretary has, however, taken Boston's statement out of context. Just before Boston spoke, Lisa Woods, Wal-Mart's National Director of Benefits, testified that Wal-Mart's employee health care expenditures "fall between 7 and 8 percent" of payroll. Id....