A U.S. District judge last week struck down a portion of the plan that required businesses with 20 or more workers to either supply health coverage or pay into the city program, the Los Angeles Times said.

"We are appealing and we believe that we'll be successful on appeal," the city's health benefits program manager, Tangerine Brigham, told the Times.

The Golden Gate Restaurant Association fought the program, saying federal law requires consistent healthcare coverage of employees regardless of where they live, the Times said.