Court voids `Wal-Mart law'

U.S. district judge says Md. violated federal authority


A federal judge in Baltimore struck down yesterday a pioneering state law that sought to require Wal-Mart Stores Inc. to boost spending for employee health care, saying the legislation violated a federal law that promotes uniform treatment of employers.

The ruling is expected to ripple across the country as the nation's largest retailer battles other states and localities considering similar legislation. In Maryland, the issue could galvanize both political parties during the coming elections.

Democratic leaders had claimed credit for helping working families by pushing the bill through the General Assembly, overriding a veto by Republican Gov. Robert L. Ehrlich Jr. in a January vote.

The governor told reporters yesterday that he felt vindicated by the court's decision and accused Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch of endorsing an anti-business bill that threatened to harm one of the state's largest employers.

"It's overreaching," he said. "It's irresponsible."

The contest in the courts will continue in the coming months. A spokesman for Maryland Attorney General J. Joseph Curran Jr. vowed to appeal the ruling to the 4th Circuit Court of Appeals in Richmond, Va.

Miller called the ruling a "minor setback" that could be remedied, if necessary, during next year's legislative session.

"What we'll do is look at the law and find out exactly what the judge said and see if we can craft a bill that comports with his decision but [achieves] the same goal," he said. "It's a good law. It's a fair law. And it's a law that needs to be enacted in every state in the union. This is certainly not the end."

Ehrlich's likely competitor in this fall's election, Baltimore Mayor Martin O'Malley, said: "I don't think that any corporation, no matter how large, how powerful or how connected to the Republican Party, ought to be able to push their health care costs off on the people of Maryland."

The Maryland Fair Share Health Care Fund Act requires that companies with more than 10,000 workers spend at least 8 percent of their payroll for employee health care or make up the difference in an equivalent payment to the state.

Of the four companies that size operating in the state, only Wal-Mart matched the criteria set out in the law, leading the company to charge that it had been singled out unfairly. The law was due to take effect in January 2007.

Lawyers for the state argued that Wal-Mart had options under the new law to pay a tax to the state, estimated at $6 million a year, in lieu of additional health care payments for employees.

That alternative meant the Maryland statute would not conflict with federal law, the state's lawyers claimed.

But in February, a trade group filed suit in federal court on behalf of the Wal-Mart to strike down the law as passed, saying federal rules don't allow states to spell out how companies allocate benefits.

In the 32-page decision released yesterday, U.S. District Court Judge J. Frederick Motz largely agreed, writing that his ruling adhered to "long established Supreme Court law that state laws which impose employee health or welfare mandates on employers are invalid under" the federal Employment Retirement Income Security Act of 1974, known as ERISA.

Motz, who was nominated to the bench by President Ronald Reagan in 1985, further ruled that the law harmed Wal-Mart by requiring the company to make reports to the state about its payroll and health care contributions, a requirement that was not imposed on other employers in the state.

Those problems were enough to doom the law, the judge ruled. But Motz separately concluded that Wal-Mart had not proved its case on another front - the argument that the retailer had been the victim of the kind of particular discrimination banned under the Constitution's equal protection clause.

"The Supreme Court has made it clear that equal protection is not a license for courts to judge the wisdom, fairness or logic of legislative choices," Motz wrote.

Michael Hayes, a professor of law at the University of Baltimore who specializes in unemployment law, said he wasn't surprised at the overall ruling because the Maryland statute conflicted with federal law.

"I thought under existing ERISA law that the opponents had a pretty good argument," Hayes said.

The law professor said the chances of the case being overturned in a higher court are slim.

"The attorney general's office made some good points," Hayes said. "It will still be a tough sell to the 4th Circuit. Most of the judges on the 4th Circuit are conservative."

Wal-Mart and its allies cheered yesterday's ruling, calling the overturned law onerous and misguided.

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