Judge Backs S.F. Law on Partners’ Benefits

A federal judge Friday upheld a landmark ordinance requiring companies that do business with the city to offer benefits to domestic partners of employees, but exempted airlines from the regulation.

The ruling is the first significant legal hurdle passed by San Francisco’s much-watched ordinance, which is unique in the nation and demands that domestic partners of unmarried employees be offered the same benefits extended to married workers’ spouses.

Two air transport trade groups filed suit against San Francisco last May, arguing that airlines are nationwide businesses regulated by federal law and should not be affected by local statutes.

In her 96-page ruling, U.S. District Judge Claudia Wilken agreed with the airlines about who can regulate them but said San Francisco’s ordinance accomplishes “a legitimate local public interest, to combat discrimination on the basis of sexual orientation.”

Both city officials and airline representatives said Friday that they had won.

“This is a major victory for human rights,” said City Atty. Louise Renne. “Equal benefits have now survived a significant constitutional challenge, and they will endure. The airlines may claim they are beyond the reach of local law, but they clearly are not beyond the reach of history.”

Brendan Dolan, attorney for the Air Transport Assn. of America and the Airline Industrial Relations Conference, called the decision “a complete and total victory for us.”

“We sued on behalf of the airlines to challenge the application of the ordinance to them,” Dolan said. “The court has said you can’t apply this lawfully to a nationwide industry.”

Civil rights and gay rights organizations predicted Friday that many other cities will follow San Francisco’s lead in requiring companies that want municipal contracts to offer health, pension and other benefits to unmarried partners of employees.

“There’s been interest in this kind of ordinance ever since San Francisco enacted theirs,” said Jenny Pizer, a managing attorney with the Lambda Legal Defense and Education Fund. “People recognized how exciting and important that ordinance is, and folks have been waiting for the courts to rule.”

But even if other cities do not follow San Francisco’s lead, gay rights activists expect more and more corporations to offer domestic benefits voluntarily “because it’s the right thing to do and because it attracts and keeps the best employees,” said Kim Mills, a spokeswoman for the Human Rights Campaign in Washington. “The trend generally in the workplace is for businesses to institute domestic partner benefits.”

Before San Francisco’s law was enacted in June 1997, 500 companies nationwide offered domestic partner benefits, said Deputy City Atty. Marc Slavin. Since then, 1,600 more companies have offered such benefits “as a result of this law.”

“Additionally, we have created a market in the insurance industry for domestic partnership benefits,” Slavin said. “Before the law was enacted, only a handful of insurance companies would underwrite this kind of coverage. Now there are hundreds.”

Indeed, hundreds of corporations from Adobe Systems to Xerox Corp. now offer domestic partner benefits, usually including health insurance coverage, according to the National Gay and Lesbian Task Force.

The list includes representatives of nearly every segment of U.S. industry, from booksellers to banks to hospitals to newspapers to law firms to pharmaceutical companies.

Dozens of cities--including Berkeley, San Diego and Santa Cruz--also have enacted domestic partner benefit laws. So have scores of universities and several prominent nonprofit organizations, including Greenpeace International, United Way and the Los Angeles Philharmonic.

Both the city and county of Los Angeles offer benefits to same-sex partners, but neither has gone as far as San Francisco in requiring firms with municipal contracts to expand their benefits programs as well.

“We have it for employees, but we don’t require it for contractors,” said Judy Hammond, a spokeswoman for Los Angeles County. “That’s not an issue I’ve heard raised.”

Calling the court decision “wonderful” and declaring that “it will definitely embolden me,” Los Angeles Councilwoman Jackie Goldberg said she would research whether a similar law might make sense for the city.

Because Los Angeles is so much bigger than San Francisco, with so many more contractors, Goldberg said she could not endorse the idea off the bat, without first researching the consequences. Yet philosophically, she said, requiring contractors to offer such benefits appeals to her.

“If they are getting public dollars, there ought to be some rules about how they treat their employees,” said Goldberg, the council’s only openly gay member.

The airlines sued San Francisco last May, after a showdown between the Board of Supervisors and United Airlines. United wanted a lease to build a kitchen facility at San Francisco International Airport.

The board eventually approved the lease, but only after United agreed to undertake a good-faith review of the ordinance. After United’s review, the company decided not to comply. The industry associations subsequently filed suit.

Federal Express, which wants to lease a new cargo facility being built at the airport, obtained a temporary restraining order that allows it to skirt the ordinance. A hearing for a permanent order is set for later this month.

But Dolan, who represents both Fed Ex and United as members of the two trade groups, contends that the hearing is now moot because Friday’s ruling covers Fed Ex also.

In the lawsuit the airlines argued that, because of their nationwide status, they are protected by the federal Airline Deregulation Act and the commerce clause of the U.S. Constitution.

The “extraordinarily broad reach” of the San Francisco law also led to the suit by the airlines, which oppose “any effort to require the airlines to do something systemwide, whether it’s extend domestic partner benefits or paint the tails of planes a particular color,” Dolan said.

Slavin, however, said the ruling allows San Francisco “to require companies that do business with us to offer equal benefits to employees who work in the city, who work on city-owned property outside city limits or who work anywhere in the country on contracts involving the city.”

The difference between the airlines and, say, a company that sells paper or uniforms to San Francisco is the relationship the two types of firms have with the city.

“It is only when the city does something that typical consumers do not do, like run an airport, that they may not pick and choose whom they will do business with,” said Matt Coles of the American Civil Liberties Union.

“When they buy things or contract for ordinary services, they can,” he said.