1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 AIRLINES FOR AMERICA, Case No. 21-cv-02341-EMC
8 Plaintiffs, ORDER DENYING DEFENDANT'S 9 v. MOTION TO DISMISS
10 CITY AND COUNTY OF SAN FRANCISCO, Docket No. 76 11 Defendants. 12 13 14 15 I. INTRODUCTION 16 Plaintiff Airlines for America (“A4A”) filed this action against Defendant City and County 17 of San Francisco (the “City”) alleging that San Francisco’s Healthy Airport Ordinance (“HAO”) is 18 preempted by three federal statutes and that the HAO violates the Contracts Clauses of the state 19 and federal constitutions. Dkt. 1 (“Complaint” or “Compl.”). A4A is a trade organization whose 20 member airlines include Alaska Airlines, Inc.; American Airlines, Inc.; Delta Air Lines, Inc.; 21 FedEx Corporation; Hawaiian Airlines, Inc.; JetBlue Airways Corp.; Southwest Airlines Co.; and 22 United Airlines, Inc. Id. ¶ 17. The HAO requires airlines at San Francisco International Airport 23 (“SFO” or “Airport”) to “either provide [certain employees] with minimum health benefits, or pay 24 money on behalf of those workers to a City-administered health care reimbursement fund (the 25 “City Option” or “City Fund”).” Dkt. 76 at 2. 26 Now pending before the Court is the City’s partial motion to dismiss three of A4A’s claims 27 and A4A’s request for monetary relief for lack of associational standing. Dkt. 76 (Defendant’s 1 Employee Retirement Income Security Act of 1974 (“ERISA”), violation of the Contracts Clause 2 of the United States Constitution, and violation of the Contracts Clause of the California 3 Constitution. Dkt. 1. For the following reasons, the Court DENIES the City’s partial motion to 4 dismiss. 5 II. BACKGROUND 6 A. Factual Background 7 The City owns and operates San Francisco International Airport (“SFO” or the “Airport”). 8 In 1970, San Francisco created the San Francisco Airport Commission (“Commission”) to operate 9 and oversee SFO. Compl. ¶ 45; Dkt. 24 (“Answer”) ¶ 45. The Commission is in “charge of the 10 construction, management, supervision, maintenance, extension, operation, use and control of all 11 property, as well as the real, personal and financial assets which are under the Commission's 12 jurisdiction.” S.F. Charter § 4.115. The City manages SFO as a self-sustaining enterprise fund 13 department and the City’s taxpayers do not fund the airport. Dkt. 41-4 (“Kone Decl.”) ¶ 9. SFO 14 competes with Oakland International Airport and San Jose International Airport for domestic 15 service in the Bay Area. Dkt. 41-3 (“Bumen Decl.”) ¶ 5. 16 In 1999, the City introduced the Quality Standards Program (“QSP”) at SFO, which 17 establishes contractual requirements for employers at the Airport, including minimum hiring and 18 compensation standards for certain covered employees providing services to the Airport. Dkt. 41- 19 5 (“Ogletree Decl.”) ¶ 3 & Ex. 1. Under the QSP, “Covered Employees” are defined as employees 20 who: (1) “require the issuance of an Airport badge with Airfield Operations Area (“AOA”) access 21 and work in and around the AOA in the performance of their duties”; or (2) “are directly involved 22 in passenger and facility security and/or safety, including but not limited to checkpoint screening, 23 passenger check-in, skycap and baggage check-in and handling services, custodial services, and 24 AOA perimeter control.” Id., Ex. 5 at 82. Since 1999, the QSP has expanded to cover various 25 airline employees, and its requirements have also expanded to include specified standards for 26 safety, health, hiring, training, equipment, compensation, and benefits for Covered Employees. 27 See id., Exs. 2, 4, & 5. In 2009, the City amended the QSP to incorporate the City’s Health Care 1 12Q, which requires employers to offer to their Covered Employees certain minimum medical 2 insurance coverage. Id., Ex. 3 at 54. 3 In 2010, the City, through the Commission, entered into two-dozen Lease and Use 4 Agreements (“LUAs”) for ten-year terms starting in 2011 (“2011 LUAs”) with different airlines, 5 including all of the members of A4A. Answer ¶ 47. These LUAs obligate each signatory airline 6 to pay substantial amounts to SFO for their use of terminal and airfield facilities and in turn it 7 obligates the City to manage and operate the Airport to use “commercially reasonable efforts” to 8 maximize non-airline revenues. Kone Decl. ¶¶ 5, 6. When each of the member airlines entered 9 into their new LUAs effective July 1, 2011, they agreed to comply with SFO’s Rules and 10 Regulations, which included the QSP and the HCAO. Bumen Decl. ¶ 13 & Ex. 1 § 1001. 11 Importantly, the member airlines agreed to “comply fully with and be bound by all of the 12 provisions” of the HCAO, “as set forth in San Francisco Administrative Code Chapter 12Q, 13 including the remedies provided, and implementing regulations, as the same may be amended 14 from time to time.” Id., Ex. 1 § 1813A. Neither A4A nor any of its member airlines have ever 15 challenged the QSP or HCAO until A4A commenced this action. Id. ¶ 13. 16 In November 2020, the City’s legislative branch, the Board of Supervisors (the “Board”) 17 enacted the Healthy Airport Ordinance (“HAO” or the “Ordinance”), which amends the HCAO, 18 Chapter 12Q of the Administrative Code, to create additional standards for minimum medical 19 insurance coverage to be offered to Covered Employees under the QSP. Dkt. 41-6 (“Powell 20 Decl.”) at 4–18 (“HAO”). Specifically, the HAO requires certain SFO employers to (1) offer at 21 least one “platinum” healthcare plan, meaning a plan that provides a level of coverage designed to 22 provide benefits that are actuarially equivalent to at least 90% of the full actuarial value of the 23 benefits provided, HAO § 1(a); (2) cover all services described in the California Essential Health 24 Benefit Benchmark Plan, HAO § 3 (amending S.F. Admin. Code § 12Q.3(d)(1)(A)); (3) offer 25 these plans to all Covered Employees as well as each employee’s spouse and dependents, HAO § 26 3 (amending S.F. Admin. Code § 12Q.3(d)(1)); and (4) absorb 100% of the plans’ costs, with no 27 cost-sharing between employer and employee, HAO § 3 (amending S.F. Admin. Code § 1 The City amended the HAO in 2021, and it went into effect on March 21, 2021. Powell 2 Decl. at 20–25 (“Amended HAO”) § 1(c). The Amended HAO permits employers to offer 3 additional, specified healthcare plans. Id. § 2 (amending S.F. Admin. Code § 12Q.3(d)). Section 4 5 of the Amended HAO also states that “[i]n undertaking the adoption and enforcement of this 5 ordinance, the City is undertaking only to promote the general welfare.” Id. § 5. 6 The HAO’s findings acknowledge that an “average of nearly 58 million people normally 7 travel through the Airport each year.” HAO § 2(a). It also states that the implementation of the 8 QSP successfully assisted in the recruitment of high-quality employees and the reduction of 9 employee turnover” by 34% thereby improving the safety and security at the Airport. Id. § 2(c). 10 The HAO explains that the “individual health benefits provided to QSP-covered employees are 11 critical to the health, well-being, and financial security of those employees,” and that “health 12 benefits not only enhance QSP employee recruitment and retention and reduce employee 13 absences; employee access to health care also reduces the spread of infectious disease.” Id. § 2(e). 14 The HAO notes that “some QSP-covered employees do not receive health benefits because their 15 CBA [collective bargaining agreement] waives the health benefit requirement” and “escalating 16 health care costs are undermining the effectiveness of these health benefits for QSP-covered 17 employees.” Id. § 2(g).
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 AIRLINES FOR AMERICA, Case No. 21-cv-02341-EMC
8 Plaintiffs, ORDER DENYING DEFENDANT'S 9 v. MOTION TO DISMISS
10 CITY AND COUNTY OF SAN FRANCISCO, Docket No. 76 11 Defendants. 12 13 14 15 I. INTRODUCTION 16 Plaintiff Airlines for America (“A4A”) filed this action against Defendant City and County 17 of San Francisco (the “City”) alleging that San Francisco’s Healthy Airport Ordinance (“HAO”) is 18 preempted by three federal statutes and that the HAO violates the Contracts Clauses of the state 19 and federal constitutions. Dkt. 1 (“Complaint” or “Compl.”). A4A is a trade organization whose 20 member airlines include Alaska Airlines, Inc.; American Airlines, Inc.; Delta Air Lines, Inc.; 21 FedEx Corporation; Hawaiian Airlines, Inc.; JetBlue Airways Corp.; Southwest Airlines Co.; and 22 United Airlines, Inc. Id. ¶ 17. The HAO requires airlines at San Francisco International Airport 23 (“SFO” or “Airport”) to “either provide [certain employees] with minimum health benefits, or pay 24 money on behalf of those workers to a City-administered health care reimbursement fund (the 25 “City Option” or “City Fund”).” Dkt. 76 at 2. 26 Now pending before the Court is the City’s partial motion to dismiss three of A4A’s claims 27 and A4A’s request for monetary relief for lack of associational standing. Dkt. 76 (Defendant’s 1 Employee Retirement Income Security Act of 1974 (“ERISA”), violation of the Contracts Clause 2 of the United States Constitution, and violation of the Contracts Clause of the California 3 Constitution. Dkt. 1. For the following reasons, the Court DENIES the City’s partial motion to 4 dismiss. 5 II. BACKGROUND 6 A. Factual Background 7 The City owns and operates San Francisco International Airport (“SFO” or the “Airport”). 8 In 1970, San Francisco created the San Francisco Airport Commission (“Commission”) to operate 9 and oversee SFO. Compl. ¶ 45; Dkt. 24 (“Answer”) ¶ 45. The Commission is in “charge of the 10 construction, management, supervision, maintenance, extension, operation, use and control of all 11 property, as well as the real, personal and financial assets which are under the Commission's 12 jurisdiction.” S.F. Charter § 4.115. The City manages SFO as a self-sustaining enterprise fund 13 department and the City’s taxpayers do not fund the airport. Dkt. 41-4 (“Kone Decl.”) ¶ 9. SFO 14 competes with Oakland International Airport and San Jose International Airport for domestic 15 service in the Bay Area. Dkt. 41-3 (“Bumen Decl.”) ¶ 5. 16 In 1999, the City introduced the Quality Standards Program (“QSP”) at SFO, which 17 establishes contractual requirements for employers at the Airport, including minimum hiring and 18 compensation standards for certain covered employees providing services to the Airport. Dkt. 41- 19 5 (“Ogletree Decl.”) ¶ 3 & Ex. 1. Under the QSP, “Covered Employees” are defined as employees 20 who: (1) “require the issuance of an Airport badge with Airfield Operations Area (“AOA”) access 21 and work in and around the AOA in the performance of their duties”; or (2) “are directly involved 22 in passenger and facility security and/or safety, including but not limited to checkpoint screening, 23 passenger check-in, skycap and baggage check-in and handling services, custodial services, and 24 AOA perimeter control.” Id., Ex. 5 at 82. Since 1999, the QSP has expanded to cover various 25 airline employees, and its requirements have also expanded to include specified standards for 26 safety, health, hiring, training, equipment, compensation, and benefits for Covered Employees. 27 See id., Exs. 2, 4, & 5. In 2009, the City amended the QSP to incorporate the City’s Health Care 1 12Q, which requires employers to offer to their Covered Employees certain minimum medical 2 insurance coverage. Id., Ex. 3 at 54. 3 In 2010, the City, through the Commission, entered into two-dozen Lease and Use 4 Agreements (“LUAs”) for ten-year terms starting in 2011 (“2011 LUAs”) with different airlines, 5 including all of the members of A4A. Answer ¶ 47. These LUAs obligate each signatory airline 6 to pay substantial amounts to SFO for their use of terminal and airfield facilities and in turn it 7 obligates the City to manage and operate the Airport to use “commercially reasonable efforts” to 8 maximize non-airline revenues. Kone Decl. ¶¶ 5, 6. When each of the member airlines entered 9 into their new LUAs effective July 1, 2011, they agreed to comply with SFO’s Rules and 10 Regulations, which included the QSP and the HCAO. Bumen Decl. ¶ 13 & Ex. 1 § 1001. 11 Importantly, the member airlines agreed to “comply fully with and be bound by all of the 12 provisions” of the HCAO, “as set forth in San Francisco Administrative Code Chapter 12Q, 13 including the remedies provided, and implementing regulations, as the same may be amended 14 from time to time.” Id., Ex. 1 § 1813A. Neither A4A nor any of its member airlines have ever 15 challenged the QSP or HCAO until A4A commenced this action. Id. ¶ 13. 16 In November 2020, the City’s legislative branch, the Board of Supervisors (the “Board”) 17 enacted the Healthy Airport Ordinance (“HAO” or the “Ordinance”), which amends the HCAO, 18 Chapter 12Q of the Administrative Code, to create additional standards for minimum medical 19 insurance coverage to be offered to Covered Employees under the QSP. Dkt. 41-6 (“Powell 20 Decl.”) at 4–18 (“HAO”). Specifically, the HAO requires certain SFO employers to (1) offer at 21 least one “platinum” healthcare plan, meaning a plan that provides a level of coverage designed to 22 provide benefits that are actuarially equivalent to at least 90% of the full actuarial value of the 23 benefits provided, HAO § 1(a); (2) cover all services described in the California Essential Health 24 Benefit Benchmark Plan, HAO § 3 (amending S.F. Admin. Code § 12Q.3(d)(1)(A)); (3) offer 25 these plans to all Covered Employees as well as each employee’s spouse and dependents, HAO § 26 3 (amending S.F. Admin. Code § 12Q.3(d)(1)); and (4) absorb 100% of the plans’ costs, with no 27 cost-sharing between employer and employee, HAO § 3 (amending S.F. Admin. Code § 1 The City amended the HAO in 2021, and it went into effect on March 21, 2021. Powell 2 Decl. at 20–25 (“Amended HAO”) § 1(c). The Amended HAO permits employers to offer 3 additional, specified healthcare plans. Id. § 2 (amending S.F. Admin. Code § 12Q.3(d)). Section 4 5 of the Amended HAO also states that “[i]n undertaking the adoption and enforcement of this 5 ordinance, the City is undertaking only to promote the general welfare.” Id. § 5. 6 The HAO’s findings acknowledge that an “average of nearly 58 million people normally 7 travel through the Airport each year.” HAO § 2(a). It also states that the implementation of the 8 QSP successfully assisted in the recruitment of high-quality employees and the reduction of 9 employee turnover” by 34% thereby improving the safety and security at the Airport. Id. § 2(c). 10 The HAO explains that the “individual health benefits provided to QSP-covered employees are 11 critical to the health, well-being, and financial security of those employees,” and that “health 12 benefits not only enhance QSP employee recruitment and retention and reduce employee 13 absences; employee access to health care also reduces the spread of infectious disease.” Id. § 2(e). 14 The HAO notes that “some QSP-covered employees do not receive health benefits because their 15 CBA [collective bargaining agreement] waives the health benefit requirement” and “escalating 16 health care costs are undermining the effectiveness of these health benefits for QSP-covered 17 employees.” Id. § 2(g). Because the Airport employees, including those who work for airlines, 18 are an essential workforce during the coronavirus disease of 2019 (“COVID-19”) pandemic, the 19 HAO states that employees “working at the Airport who perform services that directly impact 20 safety and/or security at the Airport are at considerable risk of contracting and spreading COVID- 21 19 due to the nature of their work duties.” Id. § 2(h). The findings also acknowledge that “[m]any 22 Airport workers are people of color, who may be especially vulnerable to contracting COVID-19 23 and to suffering greater health consequences from the virus.” Id. § 2(j). 24 As a result, the findings conclude, “[a]ccess to affordable family health benefits is central 25 to achieving the goals of the QSP” because “[p]rotecting the health of employees and their 26 families is important to the City’s proprietary interests as owner and operator of the Airport, 27 including its interest in attracting and retaining high-quality employees whose work impacts safety 1 and restoring public confidence in the safety of air travel.” Id. § 2(k). 2 There are two options to comply with the HAO. Employers, including airlines, can either 3 offer health plan benefits meeting certain enhanced requirements to each Covered Employee and 4 their dependents or make monetary contributions for the Covered Employee to a City fund (the 5 “City Option” program). HAO § 3 (amending S.F. Admin. Code § 12Q.3(d)). The City Option 6 requires employers who do not offer the requisite health plan to pay $9.50 per employee per hour 7 into a Health Access Program (“HAP”) account established under Section 14.2 of the San 8 Francisco Administrative Code. HAO § 3 (amending S.F. Admin. Code § 12Q.3(d)(2)). Covered 9 Employees can access the money contributed to the City Option program through Medical 10 Reimbursement Accounts (“MRAs”). Docket No. 41-7 (“Cao Decl.”) ¶¶ 4–6. 11 If any employer fails to comply with its obligations under the HAO for Covered 12 Employees, the City can enforce the HAO by: (1) charging a violator for any amounts that should 13 have been paid into a HAP account along with a simple annual interest rate of 10%, S.F. Admin. 14 Code § 12Q.5(f); (2) requiring a violator to pay the City liquidated damages of up to $100 for each 15 one-week pay period for each employee, S.F. Admin Code § 12Q.5.1(4); (3) canceling any 16 contract the City has with the employer, S.F. Admin. Code § 12Q.5(f)(4); (4) barring the employer 17 from entering into any future contracts with the City for three years, S.F. Admin. Code § 18 12Q.5(f)(5); and (5) instituting a civil action against the employer, in which the prevailing party 19 will be entitled to all costs and expenses, S.F. Admin. Code § 12Q.5(f)(6). Separately, for a 20 violation of any requirement of the QSP, “the Airport Director may elect to impose a fine equal to 21 $1,000 per violation / employee, per day.” Dkt. 41-5 at 84. This provision has been in effect 22 since 2000, although in 2016 the provision was amended to increase the fine from $200 to $1,000. 23 See Ogletree Decl., Ex. 2 at 10 (2000 QSP provision); id., Ex. 5 at 4 ¶ 5 (2016 proposed revisions 24 to the QSP). 25 On March 19, 2021, the Commission and the airlines chose not to execute new 10-year 26 LUAs due to the complications from the COVID-19 pandemic and instead agreed to 27 “modifications” of their prior 2011 LUAs. Dkt. 42-3 (“2021 LUAs”). The modifications, among 1 reservation of the rights of the City and the Signatory Airlines with respect to any legal challenges 2 involving the HAO. Id. 3 B. Procedural Background 4 On March 31, 2021, ten days after the HAO went into effect on March 21, 2021, A4A filed 5 its Complaint against the City and the San Francisco Office of Labor Standards Enforcement 6 (“OLSE”), alleging that three federal statutes preempt the HAO and that the HAO violates the 7 Contracts Clauses of the state and federal constitutions. See Compl. The three federal statutes 8 asserted as a basis for preemption are the Airline Deregulation Act of 1978, the Employee 9 Retirement Income Security Act of 1974 (ERISA), and the Railway Labor Act. On April 26, 10 2021, the City filed its answer to the Complaint. Dkt. 24. On August 3, 2021, the Court agreed to 11 the parties’ proposal that the case should be bifurcated to first resolve on summary judgment the 12 threshold issue to A4A’s preemption claims—the City’s market participant defense. Dkt. 36. On 13 August 13, 2021, A4A voluntarily dismissed OLSE as a defendant. Dkt. 38. 14 On December 31, 2021, the City filed its motion for summary judgment and A4A filed its 15 cross-motion for partial summary judgment on the market participant issue. See Dkts. 41, 42. On 16 April 5, 2022, the Court granted the City’s motion. Dkt. 52. On September 20, 2023, A4A 17 appealed to the Ninth Circuit. Dkt. 58. On August 29, 2023, the Ninth Circuit reversed and 18 remanded the Court’s decision, finding that the City was acting as a regulator, not a market 19 participant, when it enacted the HAO and thus not subject to the market participant exception to 20 federal preemption. See Airlines for Am. v. City & Cnty. of San Francisco, 78 F.4th 1146 (9th Cir. 21 2023). 22 On June 12, 2024, the Court granted the parties’ stipulation of dismissal with prejudice of 23 A4A’s claim for a violation of the Airline Deregulation Act of 1978. Dkt. 71. Consequently, the 24 remaining claims include preemption by ERISA and the Railway Labor Act as well as violations 25 of the Contracts Clause of the U.S. and California constitutions. 26 On July 29, 2024, the City filed the instant partial motion to dismiss certain of A4A’s 27 claims and request for monetary relief. Dkt. 76. The motion challenges A4A’s standing as to its 1 Contracts Clause of the California and U.S. Constitutions. 2 III. LEGAL STANDARD 3 To assert associational standing, a party must show “(a) its members would otherwise have 4 standing to sue in their own right; (b) the interests it seeks to protect are germane to the 5 organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the 6 participation of individual members in the lawsuit.” Hunt v. Washington State Apple Advertising 7 Comm’n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977); see also AlohaCare v. 8 Hawaii, 572 F.3d 740, 747 (9th Cir. 2009) (stating the same). 9 “[T]he associational standing test’s third prong is a prudential [rather than constitutional] 10 one.” United Food & Com. Workers Union Loc. 751 v. Brown Grp., Inc., 517 U.S. 544, 555 11 (1996). That is, “the third prong of the associational standing test is best seen as focusing on 12 …matters of administrative convenience and efficiency, not on elements of a case or controversy 13 within the meaning of the Constitution.” Id. at 557. 14 IV. DISCUSSION 15 The City argues that A4A lacks associational standing to bring certain of its claims and to 16 seek monetary relief on behalf of its member airlines. Dkt. 84 at 6 (Defendant’s Reply). The City 17 does not dispute A4A’s ability to establish the first and second prongs of the Hunt test. Instead, 18 the City asserts that A4A cannot satisfy the third prong as to the claims and request for monetary 19 relief at issue “because each requires the participation of A4A’s member airlines in the lawsuit.” 20 Dkt. 76 at 4 (Defendant’s Mot.). 21 For the following reasons, A4A has associational standing to assert its claims regarding 22 ERISA preemption and violations of the state and federal Contracts Clauses as well as to request 23 monetary relief. 24 A. Employee Retirement Income Security Act of 1974 (Preemption) 25 A4A argues that the HAO “violates ERISA’s preemption provision because it will force 26 airlines that operate at SFO to establish new ERISA plans, or to alter or terminate existing ERISA 27 plans to separately pay certain benefits that the HAO requires.” Dkt. 1 at 29. 1 categories of state laws that ERISA preempts:
2 [First,] ERISA pre-empts a state law if it has a ‘reference to’ ERISA plans. To be more precise, where a State’s law acts 3 immediately and exclusively upon ERISA plans or where the existence of ERISA plans is essential to the law’s operation, that 4 ‘reference’ will result in pre-emption. Second, ERISA pre-empts a state law that has an impermissible ‘connection with’ ERISA plans, 5 meaning a state law that governs a central matter of plan administration or interferes with nationally uniform plan 6 administration. 7 577 U.S. 312, 319–20 (2016) (internal citations omitted, emphasis added). 8 A4A asserts that it has associational standing to assert its ERISA preemption claims under 9 both categories. 10 1. ‘Reference To’ Challenge 11 29 U.S.C. § 1144(a) prohibits any state or local law that “relate[s] to any employee benefit 12 plan” under ERISA. Regarding this provision of the ERISA preemption clause, the City concedes 13 that A4A has associational standing to pursue “a facial challenge based solely on the text of the 14 HAO.” Dkt. 84 at 15. Here, A4A does not assert an as-applied challenge, and it is hard to 15 conceive of any such challenge under the “reference to” prong which turns on the language of the 16 challenged law and not on particular facts. Hence, the challenge is facial. 17 2. ‘Connection With’ Challenge 18 As stated, ERISA also preempts “a state law that has an impermissible ‘connection with’ 19 ERISA plans, i.e., a law that governs, or interferes with the uniformity of, plan administration.” 20 Gobeille v. Liberty Mut. Ins. Co., 577 U.S. 312, 319-20 (2016). 21 A4A alleges that the HAO forces airlines to modify ERISA plans or collective bargaining 22 agreements (“CBAs”), in violation of the ERISA preemption clause. See Dkt. 83 at 16. The City 23 argues that such a claim runs afoul of the third prong of the Hunt test because it requires 24 individualized proof from the member airlines regarding the member airlines’ health plans and 25 respective CBAs. See Dkt. 84 at 15-16. Relying on N.H. Motor Transp. Ass’n v. Rowe, 448 F.3d 26 66, 72 (1st Cir. 2006), A4A responds that it can prevail on its claim if it “can show that the HAO 27 effectively coerces even one airline to adopt a specific scheme of coverage.” Dkt. 83 at 24. Under 1 airline to show that ERISA preempts the HAO as to all member airlines. 2 Based on A4A’s theory and the reasoning in Rowe, A4A has associational standing to 3 bring its ERISA preemption claim on behalf of its members. While Rowe does not bind the Court, 4 the reasoning in the case is instructive. There, the First Circuit held that trade associations 5 representing air and motor carriers had associational standing to allege that the Federal Aviation 6 Administration Authorization Act (“FAAAA”) preempted certain provisions of a Maine tobacco 7 delivery law. Rowe, 448 F.3d 66 (1st Cir. 2006), aff'd, 552 U.S. 364, 128 (2008). The Rowe court 8 sought to protect the purpose of the FAAAA which is to “encourag[e] uniformity in carrier 9 regulation.” Id. at 73. The court reasoned that judging preemption “on a carrier-specific basis” 10 would result in a “‘patchwork’ of state laws applying to some carriers and not to others, depending 11 on which carriers proceeded to litigation.” Id. (quoting H.R. CONF. REP. 103-677, 86, 1994 12 U.S.C.C.A.N. 1715, 1758). Such a result would “undermine” the purpose of the FAAAA. Rowe, 13 448 F.3d at 73. Thus, the Court held that “if a state law is preempted as to one carrier, it is 14 preempted as to all carriers.” Id. at 72. 15 Just as the FAAAA exists to encourage uniformity in carrier regulation, ERISA exists to 16 ensure the “uniformity of” ERISA “plan administration.” Gobeille, 577 U.S. 312, 320. 17 Consequently, “depending on which carriers proceed[] to litigation” and judging preemption “on a 18 carrier-specific basis” would frustrate the purpose of the preemption clause. Rowe, 448 F.3d at 73. 19 Therefore, a uniform determination regarding ERISA preemption best preserves the purpose of 20 ERISA because it would be untenable for ERISA preemption to apply to one airline and not 21 another. 22 Applied here, A4A may rely on a theory that “if [the HAO] is preempted as to one carrier, 23 it is preempted as to all carriers.” Id. at 72. Proving such a theory poses no associational standing 24 issues related to individualized proof because A4A’s claim would require participation from only 25 one member airline. See Hunt, 432 U.S. at 343 (holding that a party lacks association standing to 26 bring a claim if doing so would “require[] the participation of individual members in the lawsuit”). 27 Therefore, A4A has associational standing to pursue its ERISA preemption claim under the 1 20 (2016) (internal citations omitted). 2 The Court recognizes that “representational standing may be improper in a particular case 3 because of some hardship imposed on a defendant in conducting discovery.” Rowe, 448 F.3d at 4 73. To mitigate any discovery-related hardship on the City, the Court modified the scheduling 5 order and adopted the City’s proposed schedule from the parties’ January 14, 2025 joint case 6 management statement. See Dkt. 97. Further, the parties are ordered to meet and confer on their 7 discovery disputes and submit a joint statement within two weeks of this order. In the meet and 8 confer, A4A is to identify its ‘test’ case for the single member airline it intends to use to prove its 9 ‘connection with’ argument. Additionally, A4A is to identify any documents it intends to rely on 10 to prove its claims and A4A shall ensure the expeditious production of these documents to the 11 City. A4A must cooperate in obtaining relevant documents in the possession of its constituent 12 members and facilitate the production of such documents. 13 Accordingly, the Court DENIES the City’s motion to dismiss this claim. 14 B. Contracts Clause (state and federal) 15 The Contracts Clause of the U.S. Constitution states that “[n]o state shall . . . pass any . . . 16 Law impairing the Obligation of Contracts.” U.S. Const. art. I, § 10, cl. 1. The Contracts Clause 17 of the California Constitution provides that a “law impairing the obligation of contracts may not 18 be passed.” Cal. Const. art. I, § 9. The Contracts Clauses are “[t]he same provision, in substance.” 19 Robinson v. Magee, 9 Cal. 81, 82-83 (1858). 20 A4A alleges that the HAO violates the Contracts Clauses because it “substantially impairs 21 A4A’s members’ collective bargaining agreements with their employees.” Dkt. 1 at 30. It 22 requires modification of their CBAs (a contract) with employees. A4A argues that proving these 23 claims does not require individualized proof from its member airlines. The City argues that 24 whether the HAO substantially impairs a fundamental aspect of its contractual relationship with its 25 employees and affects key terms of its member airline’s collective bargaining agreement (“CBA”) 26 depends on the terms of the relevant CBA “and whether and to what extent the HAO’s 27 requirements impair the airline’s ability to comply with the CBA.” Dkt. 84 at 17. 1 Contracts Clause claims concern a showing of a qualitative, rather than financially quantitative, 2 impairment of existing contracts. Dkt. 99 at 35-36 (Hearing Tr. at 35:20-36:16) That is, A4A’s 3 claims concern whether the HAO substantially impairs A4A’s members’ CBAs and does not seek 4 to quantify that magnitude of financial impairment. In the hearing, A4A noted that the member 5 airlines CBAs are publicly available. Id. at 16 (Hearing Tr. at 16:13). Under this particular theory 6 to which A4A has committed, the Contracts Clause claims do not require individualized proof of 7 e.g., the magnitude of the financial impact under a particular CBA. Therefore, A4A has 8 associational standing to bring these claims as characterized by A4A on behalf of its member 9 airlines. 10 C. Monetary Relief 11 A4A seeks an order that the City “disgorge to A4A or A4A’s member airlines any fees, 12 contributions, fines, penalties, or other monetary payments which Defendants have collected or 13 received from A4A’s members pursuant to the HAO.” Dkt. 1 at 32. 14 The City contends that calculating the disgorgement amount requires individualized proof 15 from each member airline regarding 1) the number of covered employees, 2) the hours those 16 employees worked, and 3) the amounts employees withdrew from the City fund for health 17 expenses. Dkt. 84 at 7. Conversely, A4A argues that such disgorgement does not require 18 individualized proof because the City possesses records of “how much has been paid into the City 19 fund and by whom.” Dkt. 83 at 29. 20 While many courts have found that claims for monetary relief involve individualized 21 proof, there is no “per se rule against granting an association standing to seek money damages.” 22 United Union of Roofers, Waterproofers, & Allied Trades No. 40 v. Ins. Corp. of Am., 919 F.2d 23 1398, 1400 (9th Cir. 1990). Determining whether a party has associational standing to seek 24 monetary relief on behalf of its members depends on whether “individual…members will have to 25 participate at the proof of damages stage.” Id. If “it is clear that individual…members will have 26 to” do so, then the party does not have associational standing to seek monetary relief for its 27 members because the party would be unable to “overcome the third hurdle placed before it by 1 Here, calculating the disgorgement amount will not require complicated individualized 2 || proof from each member airline. This calculation is a simple accounting question involving 3 identifying the airlines that have deposited money into the City fund, how much they have each 4 || deposited, and how much those airline employees have withdrawn. Allowing A4A to bring this 5 claim on behalf of its members does not impose a discovery-related hardship on the City because 6 || the City possesses the information necessary to calculate the disgorgement figure. Thus, because 7 the third prong of the Hunt test is a prudential one that “focus[es] on ...matters of administrative 8 || convenience and efficiency,” A4A has associational standing to seek such disgorgement from the 9 || City based on the deposits and withdrawals from the City fund. United Food, 517 U.S. 557. 10 Therefore, the Court DENIES the City’s motion to dismiss as to this claim. 11 V. CONCLUSION 12 For the aforementioned reasons, the Court DENIES the Defendant’s partial motion to 5 13 || dismiss certain of Plaintiffs claims and its request for monetary relief. Should A4A deviate from 14 || its stated theories or should the City face actual hardship in obtaining the discovery it needs, the 3 15 Court may revisit the associational standing issue. 16
= 17 IT IS SO ORDERED. 18 19 Dated: February 25, 2025 20 21 EDWARD M. CHEN 22 United States District Judge 23 24 25 26 27 28