In our May 2008 issue (and again in our December 2008 update), we discussed the potential impact of same-sex marriage on employee benefit plans following the California Supreme Court’s May 15, 2008, landmark decision, In Re Marriage Cases, invalidating the requirement under California law (from Proposition 22) that only a man and a woman can enter into a valid marriage. This article provides an update on the status of same-sex marriages (and other marriage equivalents) in California and other jurisdictions.

Background
Same-Sex Marriage in California

When the In Re Marriage Cases holding was issued, California was only the second state in the country to allow same-sex marriage. Over 18,000 same-sex marriages were performed in California between June 17, 2008, through November 4, 2008 (“the 2008 window”), prior to the passage of Proposition 8 (“Prop 8”), the ballot initiative which amended the California Constitution to provide that only marriage between a man and a woman is valid and recognized in California.

Opponents of Prop 8 filed suit to challenge its validity and effect on the marriages performed during the 2008 window. In Strauss v. Horton, the California Supreme Court upheld Prop 8, but ruled that the same-sex marriages performed in California during the 2008 window are valid.

A challenge to Prop 8 was also filed in the United States District Court for the Northern District of California in the Perry v. Schwarzenegger case. On August 4, 2010, the federal district court overturned Prop 8, holding that it violated both the Due Process and Equal Protection clauses of the Fourteenth Amendment of the US Constitution. The district court judge (Judge Walker) issued an injunction against enforcing Prop 8, but that injunction was stayed by the Ninth Circuit Court of Appeals on August 16, 2010, pending appeal of the case.

All of the State officials named in the suit declined to appeal the case, but official proponents of the proposition and the deputy clerk-recorder of Imperial County and that County’s Board of Supervisors filed a motion to intervene. On January 4, 2011, the Ninth Circuit dismissed the Imperial County appeal/intervener for lack of standing. However, because there is uncertainty about whether the proponents’ appeal should be dismissed for procedural reasons, the Ninth Circuit requested guidance from the California Supreme Court on the issue of whether the backers of a challenged initiative had a “particularized interest in the initiative’s validity” (i.e., any legal authority) that would permit them to defend the measure when State officials refuse to do so. On February 16, 2011, the California Supreme Court agreed to address this question on an expedited basis.¹ The Ninth Circuit stayed the appeal on Perry pending the California Supreme Court’s determination.

Same-Sex Marriage & Marriage Equivalents in Other States

In the meantime, six other states and the District of Columbia have legalized same-sex marriages. Massachusetts was the first state to permit same-sex marriages in 2004, followed by Connecticut (2008), Iowa and Vermont (2009), and New Hampshire and the District of Columbia (2010).² Most recently, on June 24, 2011, Governor Cuomo signed a bill legalizing same-sex marriage which will permit same-sex couples to wed in New York beginning July 24, 2011.

The Attorneys General of Maryland, New Mexico, Rhode Island and Wyoming have issued opinions declaring that their states can recognize same-sex marriages performed in other states/jurisdictions. Earlier this month, the Wyoming Supreme Court decided in Christensen v. Christensen that Wyoming state courts have the ability to hear divorce proceedings for same-sex marriages performed in other states.

Several states provide “marriage equivalent” status to same-sex couples that is intended to be the equivalent of state-level spousal rights. New Jersey (2007), Illinois (2011), and Delaware and Hawaii (2012) provide civil unions to same-sex couples. Nevada (2009), Oregon (2008) and Washington (2007/2009) provide domestic partnerships.³

DOMA

On September 21, 1996, President Clinton signed the Defense of Marriage Act (“DOMA” or the “Act”) into law. Section 3 of DOMA defines the words “marriage” and “spouse” for federal purposes:

In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word ‘marriage’ means only a legal union between one man and one woman as husband and wife, and the word ‘spouse’ refers only to a person of the opposite sex who is a husband or a wife.⁴Accordingly, all provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code (“Code”), and any regulations promulgated under those laws which reference a person’s marital status, must be read in a manner consistent with Section 3 of DOMA. As discussed in detail in our May 2008 issue, employee benefits plans that do not address the potential conflict (if any) between the state and federal definition of “spouse” and “marriage” may run the risk of inadvertently violating DOMA and possibly losing their tax-qualified status. Plan sponsors and administrators of health and welfare plans should also be aware of any applicable state laws which may require equal treatment of same-sex couples with respect to documentation requirements, or premium payments and coverage. For example, states that provide marriage equivalent status for same-sex couples often prohibit a plan from requesting proof of domestic partnership documentation if proof of marriage documentation is not required of an opposite-sex couple in order to receive coverage.

After the passage of DOMA in 1996, there have been several attempts to repeal the Act in Congress and to challenge the Act’s constitutionality in the federal court system. Most recently, on February 23, 2011, US Attorney General Holder announced that the Department of Justice would no longer defend Section 3 of DOMA in court after President Obama concluded that given a number of factors, including a documented history of discrimination, classifications based on sexual orientation should be subject to a more heightened standard of scrutiny and failing to meet that standard, Section 3 as applied to same-sex couples who are legally married under state law violates the Equal Protection clause of the Fifth Amendment of the US Constitution. Speaker of the House John Boehner announced on March 4, 2011 that the House would defend DOMA in court in place of the Department of Justice.

On March 16, 2011, the Respect for Marriage Act, which would repeal DOMA as it applies to federal law but would not require any state to recognize same-sex marriages, was introduced in both houses of Congress.

In a recent decision, In re Balas Bankruptcy, on June 13, 2011, 20 federal bankruptcy judges from the Central District of California (the nation’s largest federal bankruptcy court) joined together in declaring that Section 3 of DOMA is unconstitutional. Although the holding is limited to bankruptcy proceedings, it may have a farther reaching impact by adding weight to two other federal court rulings in Massachusetts that challenge the constitutionality of DOMA, and are now winding their way through the appeals process.⁵

Conclusion

As more states move toward legalizing same-sex marriages (or providing marriage equivalents to same-sex couples), the workability and restrictions of DOMA require an increased awareness on the part of benefit plan administrators and fiduciaries. Many plan sponsors have already amended their plans to address whether and how to recognize same-sex relationships. Plan sponsors who have employees in the states mentioned above and who have not amended their plans should be aware of whether and/or how the extension of benefits (or lack thereof) to an employee’s same-sex spouse (or spouse equivalent) is affected by DOMA or state law (when applicable) and be prepared to act accordingly as the legal landscape regarding this issue changes.

 

_______________

¹ Oral arguments are slated for September 2011, with a decision possibly by the end of this year.

² On May 6, 2009, Maine passed a bill legalizing same-sex marriage which Main residents voted to reverse in November 2009.

³ California also provides domestic partnerships to same-sex couples (and opposite sex couples age 62+). Other states (or jurisdictions within such states), such as Colorado, Maine and Wisconsin, provide some state-level rights to same-sex couples.

⁴ Section 2 of DOMA excludes same-sex marriages from the state acts that other states have to recognize under the Full Faith and Credit Clause of the US Constitution.

⁵ In Gill v. Office of Personnel Management the court found that Section 3 of DOMA violates the equal protection guarantee under the Fifth Amendment of the US Constitution. In Massachusetts v. United States Department of Health and Human Services the court found that Section 3 of DOMA violates the Tenth Amendment (involving the division of authority between federal and state governments) and falls outside Congress’ authority under the Spending Clause of the US Constitution.