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Minnesota Chamber of Commerce v. City of Minneapolis

Court of Appeals of Minnesota

April 29, 2019

Minnesota Chamber of Commerce, et al., Respondents,
v.
City of Minneapolis, Appellant. National Federation of Independent Business, Plaintiff,

          Hennepin County District Court File No. 27-CV-16-15051

          Christopher K. Larus, George B. Ashenmacher, Robins Kaplan LLP, Minneapolis, Minnesota (for respondents)

          Susan L. Segal, Minneapolis City Attorney, Sara J. Lathrop, Sarah C.S. McLaren, Assistant City Attorneys, Minneapolis, Minnesota (for appellant)

          Susan L. Naughton, League of Minnesota Cities, St. Paul, Minnesota (for amicus curiae League of Minnesota Cities)

          Justin D. Cummins, Cummins & Cummins, LLP, Minneapolis, Minnesota; and

          Sherry J. Leiwant (pro hac vice), A Better Balance, New York, New York (for amici curiae SEIU Local 26, TakeAction Minnesota, Centro de Trabajadores Unidos en la Lucha, A Better Balance)

          Joseph G. Schmitt, Veena A. Iyer, Courtney Blanchard, Nilan Johnson Lewis PA, Minneapolis, Minnesota (for amicus curiae Minnesota Management Attorneys Association)

          Considered and decided by Bjorkman, Presiding Judge; Connolly, Judge; and Florey, Judge.

         SYLLABUS

         1. Minneapolis's sick-and-safe-leave ordinance does not conflict with Minn. Stat. § 181.9413 (2018), and is not impliedly preempted by state law governing employer-provided leave, by requiring private employers to provide sick-and-safe leave.

         2. Minneapolis's sick-and-safe-leave ordinance does not operate extra-territorially because it only requires employers to (1) allow employees to accrue leave during the hours they work in the city and (2) permit employees to use their leave on days they are scheduled to work in the city.

          OPINION

          BJORKMAN, JUDGE

         These related appeals concern a City of Minneapolis ordinance that requires employers to provide sick-and-safe leave. Respondents Minnesota Chamber of

         Commerce, et al. (the chamber) contend that state law conflicts with and impliedly preempts the ordinance. Appellant City of Minneapolis challenges the district court's ruling that application of the ordinance to employers located outside the city violates the extraterritoriality doctrine. We affirm the district court's determination that state law does not preempt the ordinance. But because we conclude that the ordinance does not have extraterritorial operation, we reverse in part, vacating the permanent injunction against the city enforcing the ordinance against employers located outside of the city.

          FACTS

         On May 31, 2016, the city enacted the sick-and-safe-leave ordinance (ordinance), Minneapolis, Minn., Code of Ordinances (MCO) §§ 40.10-.310 (2017), in order "to safeguard the public welfare, health, safety and prosperity of the people of . . . the City." MCO § 40.30(e). The ordinance generally defines an employee as "any individual employed by an employer . . . who perform[s] work within the geographic boundaries of the City for at least eighty (80) hours in a year" (80-hour threshold). MCO § 40.40. The ordinance defines an employer as "a person or entity that employs one (1) or more employees." Id.[1]

         The key provisions of the ordinance require employers to provide employees "one (1) hour of sick and safe time for every thirty (30) hours worked up to a maximum of forty-eight (48) hours in a . . . year." MCO § 40.210(a). The leave must be paid unless the employer has five or fewer employees. MCO § 40.220(g)-(h). Leave may be used for the employee's or a family member's needs related to health, domestic abuse, sexual assault, stalking, and school, daycare, and workplace closings. MCO § 40.220(b)(1)-(6). The ordinance requires employers to track the accrual and use of leave time. MCO § 40.270. The ordinance was to take effect on July 1, 2017, with limited enforcement during the first year. MCO § 40.90.

         In October 2016, the chamber initiated this action, seeking declaratory relief and a temporary injunction prohibiting the city from enforcing the ordinance. The district court granted the chamber partial temporary relief, concluding that the chamber was unlikely to prevail on its preemption claims but likely to prevail on its claim that the ordinance impermissibly operates outside "the geographic borders of the City." Applying the severability doctrine, the district court upheld the ordinance and issued a temporary injunction that enjoined the city from enforcing the ordinance "against any employer resident outside the geographic boundaries of the City" until after adjudication of the case on its merits.

         Both parties appealed. This court affirmed the district court's preliminary rulings as within its discretion. Minn. Chamber of Commerce v. City of Minneapolis, No. A17-0131, 2017 WL 4105201, at *2-4, *6 (Minn.App. Sept. 18, 2017), review denied (Minn. Nov. 28, 2017). We upheld the district court's reliance on the extraterritoriality doctrine to temporarily enjoin the city from enforcing the ordinance as to employers that resided outside of the city. Id. at *5.

         In 2018, the city amended the ordinance to address the district court's concerns about its geographic reach. As amended, the ordinance provides that sick-and-safe leave only accrues for hours an employee works "within the geographic boundaries of the City." MCO 40.210(a) (2018). And sick-and-safe leave may only be used "when the employee is scheduled to perform work within the geographic boundaries of the City." MCO 40.220(k) (2018).

         Both parties moved for summary judgment. The district court again rejected the chamber's argument that state law conflicts with or impliedly preempts the ordinance. But the court granted the chamber's motion as to the ordinance's extraterritorial operation, subject to the severability doctrine. The district court "enjoined [the city] from enforcing the Ordinance against any employer resident outside the geographic boundaries of the City of Minneapolis." The city appealed, and the chamber filed a cross-appeal.

         ISSUES

         I. Does state law ...


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