New York City "Equal Benefits" Law Preempted

An important recent case from New York's high court considers the preemptive effective of state and federal laws on a city requirement that city agencies not contract with contractors that failed to provide their employees' domestric partners with employment benefits equal to those provided to employees' spouses. Council of City of New York v. Bloomberg, __N.E.2d__, 21006 WL 346293 (N.Y. Feb. 14, 2006). 

In 2004, the Equal Benefits Law (NYC Admin Code S 6-126) was passed over the Mayor's veto.  The Mayor then unsuccessfully sought a temporary restraining order, asserting that the law was preempted by the General Municipal Law and the City Charter relating to municipal contracting as well as by the federal ERISA statute, and was invalid as curtailing the Mayor's powers without a referendum in violation of the Municipal Home Rule Law and City Charter.  The City Council in turn sued the mayor in an article 78 proceeding in the nature of mandamus to compel implementation and enforcement of the Equal Benefits Law.

A majority of the NY Court of Appeals concluded that Equal Benefits Law conflicted with the state's competitive bidding statute (rejecting the City Council's claim that the requirements imposed were "de minimis" on affected contractors, and that home rule powers allowed departure from generally applicable provisions of General Municipal Law s 103 which requires that municipalities contract with the lowest responsible bidder). The majority also found that the Equal Benefits Law was preempted by ERISA [relating to employee benefit plans] except to the extent that it governed benefits falling outside of ERISA's scope, rejecting the argument that a "market participant" theory should be incorporated into that statute as a way of permitting governments to use their marketplace powers to implement preferred policies.  Accordingly an action in the nature of mandamus could not lie to require the Mayor to engage in an unlawful act.

Justice Rosenblatt dissented, in an opinion joined by Chief Justice Kay and Justice Ciparick.  The dissent focused on the procedural dimensions of NY law, contending that the Mayor could not challenge the validity of the Equal Benefits Law as part of the article 78 proceeding, but should have executed the law until a court declared it invalid (which might have occurred had he continued to pursue a declaratory judgment action).  The dissent accordingly did not reach the preemption issues the majority found dispositive.