Tag: Oregon

Kroger/Albertsons Ruling Provides Lessons for Merger Remedy Divestitures

On December 10, a federal court in Oregon issued a preliminary injunction against Kroger’s proposed $24.6 billion acquisition of Albertsons, which would have been the largest supermarket merger in US history (Albertsons terminated the merger agreement after the ruling).1 The Federal Trade Commission, the District of Columbia, and eight States filed the suit in February 2024, alleging that the transaction would substantially lessen competition in violation of Section 7 of the Clayton Act. The opinion by Judge Adrienne Nelson tackled a number of interesting antitrust issues, including the government’s allegation that the merger would reduce competition not only for grocery store sales but also for union grocery store labor. However, one of the most instructive aspects of the opinion is the court’s rejection of the defendants’ proposed divestiture package.

We have outlined the scope of the competitive problem that the divestiture needed to mitigate, the parameters of the proposed divestiture, and the deficiencies the court found. Companies assuming that divestitures will eliminate regulatory concerns about the anticompetitive impact of a transaction should examine whether there is a divestiture package that is commercially acceptable and that can account for the concerns Judge Nelson highlighted. The antitrust agencies and courts will almost certainly use this latest judicial decision as guidance when evaluating such proposals.

Competitive Problem

The government’s economic expert offered what the court found to be a persuasive market concentration analysis showing the merger would be presumptively anticompetitive in 1,574 local geographic markets for “supermarkets” and 1,785 local geographic markets for “large format stores” (i.e., traditional supermarkets and supercenters, natural and gourmet food stores, club stores, and limited assortment stores). The court also found evidence (ordinary course documents and witness testimony) of substantial head-to-head competition between the merging firms bolstered the government’s case. Finally, the court credited the government’s expert’s analysis showing that the loss of head-to-head competition would lead to price increases at numerous stores. The government thus put forth a multiprong prima facie showing that the merger would lessen competition substantially. On rebuttal, the defendants first sought to establish that competitive entry and merger efficiencies would mitigate the merger’s anticompetitive effects, but the court was not convinced. The defendants then attempted to show that their proposed divestiture remedy would solve the competitive concerns.

Divestiture Proposal

Defendants entered into an agreement — contingent on the merger closing — to divest 96 Kroger stores and 483 Albertsons stores to a third party. The proposed third-party divestiture buyer is primarily a wholesaler but has acquired retail chains in the past and currently operates approximately 25 stores. The divestiture package also included ownership of four store banners, a license to use two other banners in certain states, ownership of five private label brands, a temporary license to use two other brands, six distribution centers, and one dairy manufacturing plant. A transition services agreement provided the divestiture buyer the right to use certain of the defendants’ services, technology, and data for periods ranging from six months to four years.

Deficiencies

The court explained numerous ways in which the Kroger-Albertsons divestiture package was inadequate to sufficiently mitigate the anticompetitive effects of the merger and overcome the government’s showing of a substantial lessening of competition:

  • Many markets unaddressed – The court noted that 113 of the presumptively unlawful markets did not contain even a single store to be divested, meaning the divestiture would have done nothing to change the merger’s anticompetitive effects in those markets. (The high number of unaddressed markets was in part a function of the fact that the defendants’ economic expert utilized a market definition method and applied market concentration presumption thresholds that differed from those the government advanced and the court adopted.)
  • Many markets insufficiently addressed – Other markets contained divestiture stores, but those divestitures were insufficient to take away a presumption of harm. Crediting the government’s economic expert, the court noted that even if all the proposed divestitures were perfectly successful, the merger would still have been presumptively unlawful in 1,002 local supermarket markets and 551 large format store markets based on market concentration levels.
  • Risk of unsuccessful divestitures – The court also agreed with the government’s analysis showing that if divested stores were to lose sales or close, the number of presumptively problematic markets would rise significantly. For example, if the divested supermarkets were to lose 10 percent of their sales, the number of presumptively unlawful markets would increase from 1,002 to 1,035. If they lose 30 percent of their sales, the number would increase to 1,276.
  • Mixed and matched assets – The divestiture package did not represent an existing, standalone, fully functioning company but rather a mix of stores, banners, private labels, and other assets. This meant the buyer would have had to rebanner 286 of the 579 divested stores (and for some of these stores, the buyer would not be acquiring any banner currently used in the state). The court cited testimony from the government’s expert in retail operations and consumer shopping behavior, as well as other witnesses, explaining that rebannering is complicated and risky. The divestiture buyer also would have eventually lost access to many Kroger and Albertsons private label brands that customers are familiar with and would need to replace those with new private label products. The court noted witness testimony emphasizing the importance of private label brand equity and recounting the time required to launch a new private label brand.
  • Divestiture size – The court expressed concern that with only 604 total stores (25 existing stores plus the 579 divested stores), the divestiture buyer may not have replaced the competitive intensity lost from Kroger and Albertsons, each of which had thousands of stores.
  • Divestiture buyer’s experience – The court was concerned that the divestiture buyer had no experience running a large portfolio of retail grocery stores. The 579 divestiture stores included hundreds of pharmacies and fuel centers, whereas the buyer’s current 25 stores include only one pharmacy and no fuel centers. The court also noted that the buyer’s experience offering private label products was much more limited than what the divestiture stores demand and that the buyer currently lacks any retail media capabilities, which would have taken three years to set up.
  • Divestiture buyer’s track record – The buyer has made divestiture purchases in the past, which the court noted have not been successful. Specifically, the buyer acquired 334 retail grocery stores between 2001 and 2012, but only three remained under its operation by the end of 2012 (the rest were closed or sold off). The court also cited evidence that the buyer’s current stores are performing below expectations.
  • Transfer of employees – Approximately 1,000 Albertsons employees agreed to transfer to the divestiture buyer, including Albertsons’ current Chief Operating Officer, who had experience with prior divestiture integrations. The court found, however, that these transfers would not have fully mitigated the buyer’s inexperience and lack of success in grocery retail and could not overcome difficulties inherent in the selection of assets and structure of the transition services agreement in the divestiture package.
  • Divestiture buyer’s independence – The court viewed the transition services agreement as broad in services and time. It noted that the buyer would remain interdependent with the merged firm for many years. The court expressed particular concern over the fact that Kroger would have provided sales forecasting data and a base pricing plan to the buyer, which the buyer could have adjusted only by communicating with Kroger’s “clean room.”
1 Federal Trade Commission v. Kroger Co. & Albertsons Cos., Inc., 2024 WL 5053016, No. 3:24-cv-00347 (D. Or. Dec. 10, 2024).
©2024 Katten Muchin Rosenman LLP
For more on the FTC, visit the NLR Antitrust Trade Regulation section

Oregon Health Authority Adopts COVID-19 Vaccination and Masking Rules in Healthcare and K-12 Education

On January 31, 2022, the Oregon Health Authority (OHA) published permanent rules relating to COVID-19 vaccination and masking requirements in healthcare settings, just a few days after issuing similar rules for K-12 schools. The permanent rules replaced temporary rules that expire after 180 days.

The permanent rules for both healthcare and K-12 settings will “remain in effect unless the State Public Health Director or State Public Health Officer issues an order stating that the requirements . . . are no longer necessary to control COVID-19.” Under both rules, the factors that may lead to a loosening of restrictions or rescission of the permanent rules include the following:

  • “The degree of COVID-19 transmission”

  • “COVID-19 related hospitalizations and deaths”

  • “Disparate COVID-19 related health impacts on communities of color and tribal communities”

  • “Guidance from the U.S. Centers for Disease Control and Prevention”

  • “Proportion of the population partially or fully vaccinated”

The statewide temporary indoor mask mandate is set to expire on February 8, 2022. OHA is still reviewing public comments on a proposed permanent indoor mask mandate and expects to publish a permanent rule in the coming weeks. Healthcare and K-12 employers may want to revisit their COVID-19 policies and workplace practices to consider whether they are complying

© 2022, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For similar articles on public health, visit the NLR Health Care Law section.

Leave for Oregon’s Volunteer Emergency Responders During Unprecedented Wildfires

On September 9, 2020, Oregon Governor Kate Brown issued Executive Order No. 20-41 invoking the Emergency Conflagration Act Statewide in light of extreme fire danger. Governor Brown’s invocation of the Emergency Conflagration Act remains in effect until at least November 1, 2020, as wildfires continue to rage. More than 1 million acres of land have burned across Oregon since September 7, 2020. To put things in perspective the area burned is nearly five times the size of New York City.  According to Governor Brown, Oregon is facing an unprecedented level of uncontained fire. To put the flames out, Oregon will need all the help that it can get from its courageous firefighters and first responders.

Employers may want to be aware of their ability under Oregon law to grant unpaid leave requests for volunteer firefighters and other first responders who need to perform services to battle the wildfires and perform search and rescue efforts.

Pursuant to ORS 476.574, Oregon private and public employers may provide unpaid leave to employees who are volunteer firefighters, members of rural fire protection districts, or firefighters employed by a city or private firefighting service to perform service in accordance with Oregon’s Emergency Conflagration Act. Pursuant to ORS 404.250, Oregon private and public employers may also “[u]pon request of an employee who is a search and rescue volunteer accepted to participate in search and rescue activities by the sheriff … grant a leave of absence to the employee.”

If an employer provides unpaid leave to an employee who is a volunteer firefighter or search and rescue volunteer, the leave must extend “until release from such service permits the employee to resume the duties of employment.” Once granted leave, the employee has a right to reinstatement to his or her previous position or an equivalent position without loss of seniority, accrued leave, or other benefits. Employers may require employees taking leave for purposes under the act to use all of their available accrued vacation or other paid time off before extending unpaid leave.

Employers that permit employees to take unpaid leave for emergency response activities must follow the prescriptions of ORS 476.574 and ORS 404.250, as a failure to do so may be considered an unlawful employment practice under Oregon law. An aggrieved employee who claims an unlawful employment practice may file a complaint with the commissioner of the Oregon Bureau of Labor and Industries or may bring a civil action in circuit court. Aggrieved employees may be entitled to recover compensatory damages, back pay, costs, and attorney’s fees. Aggrieved employees may also be entitled to equitable relief, such as a reinstatement of employment.

In sum, employers of these covered individuals may want to be aware that Oregon law permits optional leave during this critical time. Employers that decide to provide leave may want to consider carefully their statutory obligations in order to avoid a violation resulting in an unlawful employment practice during the protected leave.

© 2020, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

For more on emergency unpaid leave, see the National Law Review Labor & Employment law section.

BOLI Issues Final Rules on Oregon’s Equal Pay Law

On November 19, 2018, the Oregon Bureau of Labor and Industries (BOLI) issued its final administrative rules relating to the state’s Equal Pay Law, which prohibits pay discrimination on the basis of protected class, as well as screening job applicants based on current or past compensation.

The rules establish definitions for several key words in the law, provide more concrete guidance on how to meet the law’s posting requirements, and seek to clarify certain provisions of the law related to screening job applicants based on salary history, determining whether employees perform work of comparable character, establishing bona fide factors that may justify paying employees performing work of comparable character at different compensation levels, explaining benefits as a component of compensation, and “red-circling” or freezing employee compensation in order to bring the pay of employees performing work of comparable character into alignment. Finally, the rules establish that an employer commits an unlawful compensation practice each time an employee is paid in violation of the Equal Pay Law.

Key Takeaways

  • Oregon Administrative Rule (OAR) 839-008-0005 provides that the Equal Pay Law’s prohibition on screening job applicants based on current or past compensation includes a prohibition on using anyinformation about an applicant’s past compensation, regardless of how the information was obtained, to determine a job applicant’s suitability or eligibility for employment. However, unsolicited disclosure of a job applicant’s past compensation (whether by the applicant or former employer) does not constitute a violation of the law, so long as the information is not considered by the employer making the hiring decision.

  • OAR 839-008-0010 expands upon the Equal Pay Law’s criteria for evaluating whether employees perform “work of comparable character” and thus should be paid the same absent the existence of one or more bona fide factors justifying any disparity. The rule provides that “work of comparable character” means work requiring substantially similar knowledge, skill, effort, responsibility, and working conditions in the performance of work, regardless of job description or title. BOLI’s new rule provides non-exhaustive lists of factors that may be considered in determining whether employees have substantially similar knowledge, skill, effort, responsibility, or working conditions. For example, the rule provides that “skill” considerations “may include, but are not limited to, ability, agility, coordination, creativity, efficiency, experience, or precision.”

  • OAR 839-008-0015 establishes criteria that may be used to evaluate whether bona fide factors explain pay differentials that would otherwise violate the Equal Pay Law. The law already broadly delineates what constitutes a “bona fide factor” (i.e., a seniority system; a merit system; a system measuring earnings by quantity or quality of production; differing workplace locations, travel, education, training, experience, or any combination of those factors). While the rule seeks to further explain and provide examples of those factors. For example, the rule provides that education considerations “may include, but are not limited to, substantive knowledge acquired through relevant coursework, as well as any completed certificate or degree program.” Training considerations “may include, but are not limited to, on-the-job training acquired in current or past positions as well as training acquired through a formal training program.”

  • OAR 839-008-0020 seeks to clarify benefits as a component of compensation under the Equal Pay Law. Specifically, the rule provides that (1) employees performing work of comparable character may be provided different benefits so long as the same benefit options are offered to all employees performing work of comparable character; and (2) if an employee declines a benefit, the full cost of the benefit offered to the employee may be used to calculate the total amount of compensation paid to the employee under the Equal Pay Law.

  • OAR 839-008-0025 clarifies that “red circling,” freezing, or otherwise holding an employee’s pay constant as other employees performing work of comparable character are brought into alignment is not considered a reduction in pay for the employee whose pay is frozen.

Questions Remain Unanswered

While the rules clarify some aspects of the Equal Pay Law, many questions remain unanswered for employers. This is particularly true when it comes to performing an equal pay analysis to (1) determine and rectify any pay disparities among comparable employees and (2) take advantage of the law’s affirmative defense to compensatory and punitive damages. No guidance is given, for example, as to how to account for the protected classes that are not self-evident or self-reported. And, while the rules provide some information as to what amounts to a “bona fide factor” justifying a pay disparity, the list remains exclusive and vaguely defined at best.

Next Steps for Employers

Oregon employers that have not yet done so may want to perform equal pay analyses of their workforces as soon as possible. While the Equal Pay Law has been in effect since October 2017, employees will be able to bring claims beginning January 1, 2019, which carry the possibility of economic, compensatory, and punitive damages, as well as attorneys’ fees.

 

© 2018, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

Privacy Hat Trick: Three New State Laws to Juggle

Nevada, Oregon and New Jersey recently passed laws focusing on the collection of consumer information, serving as a reminder for advertisers, retailers, publishers and data collectors to keep up-to-date, accurate and compliant privacy and information collection policies.

Nevada: A Website Privacy Notice is Required

Nevada joined California and Delaware in explicitly requiring websites and online services to post an accessible privacy notice. The Nevada law, effective October 1, 2017, requires disclosure of the following:

  • The categories of “covered information” collected about consumers who visit the website or online service;

  • The categories of third parties with whom the operator may share such information;

  • A description of the process, if any, through which consumers may review and request changes to their information;

  • A description of the process by which operators will notify consumers of material changes to the notice;

  • Whether a third party may collect covered information about the consumer’s online activities over time and across different Internet websites or online services; and

  • The effective date of the notice.

“Covered Information” is defined to include a consumer’s name, address, email address, telephone number, social security number, an identifier that allows a specific person to be contacted physically or online, and any other information concerning a person maintained by the operator in combination with an identifier.

Takeaway: Website and online service operators (including Ad Techs and other data collectors) should review their privacy policies to ensure they are disclosing all collection of information that identifies, can be used to contact, or that is combined with information that identifies consumers. Website operators should also be sure that they are aware of, and are properly disclosing, any information that is shared with or collected by their third-party service providers and how that information is used.

Oregon: Misrepresentation of Privacy Practices = Unlawful Trade Practice.

Oregon expanded its definition of an “unlawful trade practice”, effective January 1, 2018, to expressly include using, disclosing, collecting, maintaining, deleting or disposing of information in a manner materially inconsistent with any statement or representation published on a business’s website or in a consumer agreement related to a consumer transaction.The new Oregon law is broader than other similar state laws, which limit their application to “personal information”. Oregon’s law, which does not define “information”, could apply to misrepresentations about any information collection practices, even if not related to consumer personal information.

Takeaway: Businesses should be mindful when drafting privacy policies, terms of use, sweepstakes and contest rules and other consumer-facing policies and statements not to misrepresent their practices with respect to any information collected, not just personal information.

New Jersey: ID Cards Can Only be Scanned for Limited Purposes (not Advertising)

New Jersey’s new Personal Information and Privacy Protection Act, effective October 1, 2017, limits the purposes for which a retail establishment may scan a person’s identification card to the following:

  • To verify the authenticity of the card or the identity of the person paying for goods or services with a method other than cash, returning an item or requesting a refund or exchange;

  • To verify the person’s age when providing age-restricted goods or services to the person;

  • To prevent fraud or other criminal activity using a fraud prevention service company or system if the person returns an item or requests a refund or exchange;

  • To prevent fraud or other criminal activity related to a credit transaction to open or manage a credit account;

  • To establish or maintain a contractual relationship;

  • To record, retain, or transmit information required by State or federal law;

  • To transmit information to a consumer reporting agency, financial institution, or debt collector to be used as permitted by the Fair Credit Reporting Act and the Fair Debt Collection Practices Act; or

  • To record, retain, or transmit information governed by the medical privacy and security rules of the Health Insurance Portability and Accountability Act.

The law also prohibits the retention of information scanned from an identification card for verification purposes and specifically prohibits the sharing of information scanned from an identification card with a third party for marketing, advertising or promotional activities, or any other purpose not specified above. The law does make an exception to permit a retailer’s automated return fraud system to share ID information with a third party for purposes of issuing a reward coupon to a loyal customer.

Takeaway: Retail establishments with locations in New Jersey should review their point-of-sale practices to ensure they are not scanning ID cards for marketing, advertising, promotional or any other purposes not permitted by the New Jersey law.

Read more legal analysis at the National Law Review.

This post was written byJulie Erin Rubash of  Sheppard Mullin Richter & Hampton LLP.

Oregon Expands Effort to Achieve Equal Pay

This month, Oregon joined a number of other states, including California, Massachusetts, Maryland, and New York by strengthening existing equal pay laws. The new law, the Oregon Equal Pay Act of 2017 (“OEPA”), has three (3) central components:

  • Applying equal pay protections to disparities based on race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age;
  • Curbing an employer’s ability to obtain or rely upon an applicant’s prior compensation to determine his or her current compensation; and
  • Changing and substantially limiting the defenses available to employers sued for alleged equal pay violations.

The bulk of the OEPA’s substantive provisions is effective January 1, 2019.

Broadening Scope of Equal Pay Protections

The OEPA prohibits disparities in “wages or other compensation” between employees performing work of a “comparable character” based on race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability or age. Work is of a “comparable character” if it requires “substantially similar knowledge, skill, effort, responsibility and working conditions [.]” This is a substantial expansion of prior law, which only applied to sex-based pay disparities.

The OEPA also limits an employer’s ability to rely upon prior compensation by:

  • Making it unlawful to seek information about an applicant’s or employee’s compensation history; and
  • Prohibiting employers from screening job applicants or determining compensation based on a prospective employee’s current or past compensation.

However, these pay history restrictions do not apply “during a transfer, move or hire of [an] employee to a new position with the same employer.”

Limited Defenses to Equal Pay Claims

Under prior Oregon law, an employer could defend a sex-based pay disparity by demonstrating that it was based on (a) a seniority or merit system, or (b) good faith factors other than sex.

However, under the OEPA an employer can only pay differential wages for work of a comparable character if the disparity is attributable to “a bona fide factor that is related to the position in question and is based on” one or more of the following:

  • A seniority system;
  • A merit system;
  • A system that measures earnings by quantity or quality of production;
  • Workplace locations;
  • Travel, if travel is necessary and regular for the employee;
  • Education;
  • Training; or
  • Experience.

The employer must also demonstrate that the factor(s) creating the pay disparity account for the entirety of the differential.

Potential Limits on Remedies

In addition to back wages, employees bringing claims under the OEPA may also seek compensatory and punitive damages. However, the law limits remedies against employers that take specified steps to achieve pay equality.

Under the OEPA, a court “shall” disallow an award of compensatory or punitive damages if the employer shows that within three (3) years of the employee bringing the OEPA claim, the employer conducted a good faith equal pay analysis that: (a) was “[r]easonable in detail and scope in light of the size of the employer”; (b) related to the protected class at issue in the action (e.g., sex, age, race, etc.); and (c) “[e]liminated the wage differentials for the plaintiff and [] made reasonable and substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff.”

What This Means for Employers

Because the bulk of the OEPA changes are not yet effective, now is the time for employers to commence their compliance efforts including:

  • Reviewing job applications to ensure they do not seek prior compensation information;
  • Auditing compensation data to identify protected class-based disparities, if any. If this analysis reveals disparities, employers can avoid or limit future claims and damages by eliminating any identified differentials;
  • Training managers and human resources professionals regarding the permissible considerations when making compensation decisions, and how to document such decisions;
  • Revising employee job descriptions to ensure they reflect the substantive distinctions between positions – i.e., the fact that jobs are not of a “comparable character” is reflected in job descriptions; and
  • Revising employee reviews on which compensation decisions are based to ensure they reflect the considerations that are permissible grounds for a pay disparity under OEPA.
This post was written by Brian K. Morris of Polsinelli PC.

 

New Ridesharing Legislation in California and Oregon Highlights Insurance Uncertainty in Emerging Industries

Proskauer Law firm

Managing a company’s exposure to new types of risks is often a complicated endeavor.  We’ve previously reported on the uncertainty that can arise when existing coverage models are applied to a new risk—such as losses arising from data breaches and other cyber-attacks.  Applying existing coverage models to emerging industries presents similar challenges.  These challenges were highlighted recently in the years-long dispute over insurance of ridesharing companies, like Lyft and Uber, which recently reached some degree of closure in California with the enactment of new insurance legislation for these companies.

Ridesharing companies have arisen in the past few years as an alternative to traditional forms of transportation, such as taxis.  These companies neither employ the drivers nor own the cars used for transportation; they essentially serve as an online “middleman” connecting passengers with freelance drivers for hire and expressly disavow that they provide any sort of “transportation services.”  This new business model—blurring the lines between traditional services and social media—presented many questions as to liability and, consequently, risk management.  These questions were brought to the fore earlier this year, when the family of a six year old girl killed by a ridesharing driver sued the ridesharing company.  The company disclaimed liability on the basis that it is not responsible for the acts of its drivers, especially when the drivers do not have ridesharing passengers or are not en route to pick up one.

Many ridesharing drivers have relied primarily on their personal automobile policies, eschewing business coverage altogether, reportedlyat the recommendation of the ridesharing companies themselves.  While ridesharing companies have carried excess insurance policies to cover ridesharing accidents, the insurance industry took the position that these policies did not cover such accidents because there was no primary coverage.  In other words, because the only “primary” insurance policies were personal use automobile policies that did not cover commercial livery use, the excess insurance could not be triggered.

On September 17, 2014, California AB-2293 was enacted to address this uncertainty of coverage.  The statute was the result of discussions between legislators, ridesharing companies, insurers, and traditional taxi companies.  It requires ridesharing companies in the state to provide $100,000 in coverage for their drivers that takes effect the moment a driver connects to the ridesharing company’s dispatch software and increases to $1 million once the driver agrees to pick up a passenger.  It also states that a personal automobile insurer does not have the duty to defend or indemnify claims arising out of ridesharing, unless the policy expressly provides such coverage, and it requires ridesharing companies to disclose this fact to their drivers.

Whether other states will follow California’s lead remains to be seen.  Legislation addressing ridesharing has been introduced across the country, and as one Pennsylvania state legislator observed, “By far the biggest issue is insurance.”  In other states, regulators are addressing the possible insurance gap.  Just days after California’s new statute was enacted, Oregon’s State Insurance Division issued a consumer advisory, warning of the potential unavailability of insurance coverage under personal insurance policies for ridesharing and other services provided in the peer-to-peer marketplace.

As Oregon Insurance Commissioner Laura Cali observed in connection with ridesharing, “When a new industry emerges, it often creates unique insurance situations.”  New industries may exist under insurance uncertainty for years or decades before legislation, regulation, or litigation clarifies the issue.  It is therefore critical when expanding into a nascent industry to consider how the risks of that industry may be managed, under either new or existing types of insurance coverage.

ARTICLE BY

Shawn Ledingham
OF
Proskauer Rose LLP

Oregon’s Same-Sex Marriage Ban Unconstitutional, Judge Rules

Jackson Lewis Law firm

 

Oregon’s prohibition on same-sex marriage conflicts with the United States Constitution’s guarantee of equal protection, newly appointed U.S. District Court Judge Michael McShane has held in a case filed on behalf of four couples in Multnomah County. Geiger v. Kitzhaber, No. 6:13-cv-01834-MC (May 19, 2014).

Judge McShane explained the measure discriminates against same-sex couples. “The state’s marriage laws unjustifiably treat same-gender couples differently than opposite-gender couples. The laws assess a couple’s fitness for civil marriage based on their sexual orientation: opposite-gender couples pass; same-gender couples do not. No legitimate state purpose justifies the preclusion of gay and lesbian couples from civil marriage.”

A state Constitutional amendment, enacted pursuant to a 2004 ballot initiative organized and sponsored by the Defense of Marriage Coalition, had prohibited same-sex marriage, stating that only “marriage between one man and one woman shall be valid or legally recognized as a marriage.” This initiative and the subsequent Constitutional amendment were in response to the Multnomah County commissioner’s decision to issue marriage licenses to same-sex couples. During the Geiger litigation, Oregon’s Attorney General stated she found it impossible to legally defend the ban because “per- forming same-sex marriages in Oregon would have no adverse effect on existing marriages, and that sexual orientation does not determine an individual’s capacity to establish a loving and enduring relation- ship.” With Geiger, and the U.S. Supreme Court’s 2013 decision in United States v. Windsor invalidating the federal Defense of Marriage Act, same-sex marriage is valid under Oregon state and federal law.

Further, although Oregon enacted a domestic partnership law in 2008, the Family Fairness Act, granting domestic partners similar rights and privileges to those enjoyed by married spouses, the Legislature acknowledged domestic partnerships did not reach the magnitude of rights inherent in the definition of marriage. For example, same-sex couples in Oregon were not entitled to the rights or benefits under the federal Family and Medical Leave Act because Department of Labor guidance recognizes same-sex marriage only if valid under the employee’s state of residence. The DOL, however, has proposed a rule expanding the term “spouse” and, if implemented, will recognize same-sex marriages when recognized in the couple’s state of residence or if performed in a state recognizing same-sex marriage. According to the Secretary of Labor, “The basic promise of the FMLA is that no one should have to choose between succeeding at work and being a loving family caregiver. Under the proposed revisions, the FMLA will be applied to all families equally, enabling individuals in same-sex marriages to fully exercise their rights and fulfill their responsibilities to their families.” No changes have been proposed, however, for purposes of the Employment Retirement Income and Security Act (“ERISA”), the federal law governing employee benefit plans. The DOL counsels employers that, for purposes of ERISA, same-sex marriage should be recognized if valid in the state it is performed.

While Geiger will simplify the legal landscape, employers should review policies, procedures, and benefit plans closely to ensure that same-sex spouses are treated equally in all respects. In addition, Oregon law further prevents employment discrimination based on sexual orientation and family status. Requiring same-sex couples to “prove their status” or take other similar measures that are not required of opposite-sex couples may increase the risk of potential litigation under these laws.

Mei Fung So contributed to this article. 

ARTICLE BY

Scott Oborne
Bryan P. O’Connor
Roger S. Kaplan
 
OF
Jackson Lewis P.C.