Class actions post-DOMA—Questions remain

By Kristin Casler with insights by LAURA J MAECHTLEN, Partner, Seyfarth Shaw LLP, San Francisco --

The demise of the Defense of Marriage Act (DOMA) restriction of the institution of marriage to heterosexual unions was not the last chapter in same-sex couples’ quest for equality. Questions remain to be litigated, particularly those involving the workplace, and employers must stay on high alert lest their benefit plans or policies run afoul of emerging law.

Recently, a federal judge in California threw out class claims by same-sex domestic partners of public employees seeking long-term care benefits (Dragovich v. the U.S. Department of the Treasury, No. C-10-01564 [N.D. Cal. Dec. 4, 2014]). Judge Claudia Wilken found that the barriers to benefits faced by all class members mirrored those faced by individuals involved in heterosexual domestic partnerships. When Dragovich began, same-sex spouses and registered domestic partners of public employees in California were not eligible for long-term care benefits. The Health Insurance Portability and Accountability Act (HIPPA) restricted such benefits to heterosexual married couples under DOMA. The Dragovich court certified the class and granted summary judgment to the plaintiffs seeking state benefits.

Windsor and Perry

While the defendants’ appeal was pending in the Ninth Circuit U.S. Court of Appeals, the U.S. Supreme Court ruled in United States v. Windsor (133 S. Ct. 2675 [2013]) that the DOMA heterosexual-only marriage provision was unconstitutional. It also let stand the California Supreme Court’s ruling in Hollingsworth v. Perry (133 S. Ct. 2652 [2013]), that the state’s ban on same-sex marriage was unconstitutional. The Ninth Circuit then vacated summary judgment in Dragovich, and remanded the case to the Northern District of California.

On remand, Judge Wilken granted summary judgment for the state and federal defendants. She reasoned that, because the DOMA no longer limits benefits to heterosexual unions, and same-sex couples in California can choose to marry, the plaintiffs are on equal footing with heterosexual domestic partners. The judge also denied the plaintiffs’ motion to file a supplemental complaint for alleged Title VII violations based on the increased costs associated with the “unlawfully” delayed enrollment in the long-term care plan. Judge Wilken said such claims would be premised on multiple, complicated individualized inquiries not appropriate for this class action. She declined to comment on whether the Title VII claim could be filed as a new complaint or whether it would be appropriate for class treatment.

Title VII challenges on the horizon

Laura J. Maechtlen, a partner at Seyfarth Shaw LLP in San Francisco, said it is unclear what specific Title VII claims the Dragovich plaintiff class might assert, but open questions regarding whether Title VII requires equal employment benefits for same-sex married couples may be litigated in other cases and situations. Maechtlen said potential theories articulated for that include one of “relational” discrimination, in which the plaintiffs’ bar argues that Title VII prohibits not just discrimination against an employee based on a protected characteristic, but also discrimination based on an employee’s characteristic in relation to another person—in essence, discrimination against an employee simply because of the same-sex relationship. Examples from race-discrimination case law include Parr v. Woodmen of the World Life Insurance Corp. (791 F.2d 888, 889-92 [11th Cir. 1986]) (finding that a white man denied a job because of his marriage to a black woman could state a claim under Title VII); see also id. at 892 (“Where a plaintiff claims discrimination based upon an interracial marriage or association, he alleges, by definition, that he has been discriminated against because of his race.”) (emphasis in original); and McGinest v. GTE Serv. Corp. (360 F.3d 1103, 1118 [9th Cir. 2004]) (applying Title VII to discrimination based on an employee’s interracial friendships).  

In addition, plaintiffs might argue that restricting spousal health coverage to employees married to a different-sex spouse violates Title VII’s prohibition on impermissible sex stereotyping Maechtlen said.  The theory arises from Price Waterhouse v. Hopkins (490 U.S. 228, 239 [1989]), in which the U.S. Supreme Court held that Title VII bars discrimination based on gender stereotypes, in other words, “failing to act and appear according to expectations defined by gender”—a form of sex discrimination that has since been described as “sex stereotyping.” Plaintiffs will argue that evidence of gender stereotyping is simply one way of proving sex discrimination. And, plaintiffs have attempted to argue that same-sex married employees discriminated against on the basis of sexual orientation could establish violations of Title VII based on the sex-stereotyping theory that men and women should be sexually attracted to (and should marry) individuals of the opposite gender, Maechtlen said.

The impact for employers

Employee-benefit-plan sponsors must monitor these class-action developments. Maechtlen said the plaintiffs’ bar has been actively attacking plan limitations on benefits for same-sex spouses. Depending on the outcome of this litigation, sponsors may need to amend multiple plans and provisions that relate to marital status.

Employers in states that are new to legalized same-sex marriage also need to stay on top of changes in the law. The changes may impact not only employee benefits but other terms and conditions of employment from a number of different angles, including discrimination based on sex, sexual orientation, gender or marital status.  Claims could be viable if one group is treated differently based on any protected status, Maechtlen said.

Employers should be aware that they are not immune from claims if they impermissibly deny certain benefits to gay or *** employees, either in jurisdictions that expressly protect employees from discrimination based on sexual orientation and/or gender identity and expression, or in claims that are enforced by the Equal Employment Opportunity Commission, Maechtlen said.

“Not only is the plaintiffs’ bar becoming more creative and successful with these claims, but also local, state and federal law has continued to expand to protect rights for gay and *** employees,” Maechtlen said.  “Therefore, employers should audit not only their provision of benefits, but also their policies applicable to married couples.”

Indeed, an employee’s designation as a person married with a “spouse” impacts numerous employment-related issues, such as:

• Whether and how employer policies or benefit plans that contain a definition of “spouse” should be applied to same-sex couples
• Whether state or federal COBRA continuation coverage for "spouses" applies
• Whether an employer is required to recognize same-sex marriages from other states in applying employer policies or benefit plans
• Whether state laws prohibiting discrimination or granting employment protections based on “marital status” are applicable.

Many avenues for new developments in same-sex-employment  law remain open. From class actions like Dragovich to individual discrimination claims, corporate counsel must be mindful of the possibilities and keep company policies and practices in line with changing laws.