Airlines For America v. City and County of San Francisco

CourtDistrict Court, N.D. California
DecidedFebruary 25, 2025
Docket3:21-cv-02341
StatusUnknown

This text of Airlines For America v. City and County of San Francisco (Airlines For America v. City and County of San Francisco) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Airlines For America v. City and County of San Francisco, (N.D. Cal. 2025).

Opinion

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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Airlines For America v. City and County of San Francisco, Counsel Stack Legal Research, https://law.counselstack.com/opinion/airlines-for-america-v-city-and-county-of-san-francisco-cand-2025.