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4:10-cv-01564 #158

4:10-cv-01564 #158

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Published by Equality Case Files
Doc 158 - Federal Defendants' Brief regarding Windsor and Hollingsworth
Doc 158 - Federal Defendants' Brief regarding Windsor and Hollingsworth

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Published by: Equality Case Files on Feb 13, 2014
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04/23/2014

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 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STUART F. DELERY Assistant Attorney General KATHLEEN R. HARTNETT Deputy Assistant Attorney General ARTHUR R. GOLDBERG (DC Bar No. 180661) Assistant Branch Director JEAN LIN (NY Bar No. 4074530) Senior Trial Counsel United States Department of Justice Civil Division Federal Programs Branch 20 Massachusetts Ave., N.W. Washington, DC 20530 (202) 514-3716 (202) 616-8470 (Fax)  jean.lin@usdoj.gov Attorneys for Federal Defendants
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA (OAKLAND DIVISION)
MICHAEL DRAGOVICH, MICHAEL GAITLEY, ELIZABETH LITTERAL, PATRICIA FITZSIMMONS, CAROLYN LIGHT, CHERYL LIGHT, DAVID BEERS, CHARLES COLE, RAFAEL V. DOMINGUEZ, and JOSE G. HERMOSILLO, on behalf of themselves and all others similarly situated, Plaintiffs, v. UNITED STATES DEPARTMENT OF THE TREASURY, TIMOTHY GEITHNER, in his official capacity as Secretary of the Treasury, United States Department of the Treasury, INTERNAL REVENUE SERVICE, DOUGLAS SHULMAN, in his official capacity as Commissioner of the Internal Revenue Service, BOARD OF ADMINISTRATION OF CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM, and ANNE STAUSBOLL, in her official capacity as Chief Executive Officer, CalPERS, Defendants. Case No. CV 4:10-01564-CW FEDERAL DEFENDANTS’ BRIEF REGARDING
WINDSOR v. UNITED STATES
AND
 HOLLINGSWORTH v. PERRY 
 
Case4:10-cv-01564-CW Document158 Filed02/13/14 Page1 of 14
 
 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to this Court’s Orders of November 26, 2013 [Dkt. 148] and December 4, 2013 [Dkt. 151], Federal Defendants respectfully submit this brief regarding the import of the Supreme Court’s decisions in
Windsor v. United States
, 133 S. Ct. 2675 (2013), and
 Hollingsworth v. Perry
, 133 S. Ct. 2652 (2013), on this Court’s prior May 24, 2012 order [Dkt. 124] and judgment [Dkt. 125] as they relate to the domestic partner plaintiffs. At issue is § 7702B(f) of the Internal Revenue Code, 26 U.S.C. § 7702B(f), which  provides that enrollees in a state-maintained long-term care (“LTC”) plan can receive certain tax  benefits if the plan’s enrollment is limited to state employees, their spouses and other specified relatives not including domestic partners.
1
 Applying rational basis review, this Court previously held that the omission of domestic partners from the list of eligible family members in § 7702B(f) discriminated on the basis of sexual orientation in violation of equal protection  because, even though both same- and opposite-sex domestic partners are excluded from tax-favored § 7702B(f) plans, same-sex domestic partners in California could not become eligible for  participation in such LTC plans by marrying (whereas opposite-sex domestic partners could marry and become eligible). In
Perry
, the Supreme Court found a lack of appellate standing, thereby leaving intact the district court’s decision striking down California’s same-sex marriage ban, Proposition 8, as unconstitutional. Accordingly, same-sex couples can now marry in California. In
Windsor 
, the Supreme Court struck down Section 3 of the Defense of Marriage Act (“DOMA”), which limited marriage for federal law purposes to opposite-sex married couples, as unconstitutional. Accordingly, under federal law, the terms “spouse” and “marriage” now no longer preclude same-sex spouses. As a result of these rulings, same-sex domestic partners in California can  become eligible for tax benefits under § 7702B(f) by marrying—just as opposite-sex domestic
1
 
An enrollee may deduct the premiums for LTC insurance as an itemized deduction if the enrollee’s total annual medical expenses, inclusive of the LTC insurance premiums, exceed 10% of the enrollee’s gross adjustable income. 26 U.S.C. §§ 213(a), (d)(1), (d)(10). In addition, if and when the enrollee receives payments from the LTC plan, he or she can exclude the  payments from gross income.
 Id.
§§ 104(a)(3), 7702B(a)(2), (d).
 
Fed Defs’ Brief Regarding
Windsor
and
Perry
, Case No. CV 4:10-01564-CW Page 1
Case4:10-cv-01564-CW Document158 Filed02/13/14 Page2 of 14
 
 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28  partners in California can do. Because § 7702B(f) now clearly treats California same-sex and opposite-sex couples exactly the same, and because rational bases support the omission of domestic partners from the list of relationships in § 7702B(f), this Court should grant judgment in Federal Defendants’ favor on the domestic partner plaintiffs’ claims.
BACKGROUND
 Plaintiffs are five same-sex couples who reside in California—four of the couples are married, and one couple has a registered domestic partnership under California law but is not married. Each couple includes a spouse or partner who is a state employee eligible to enroll in the LTC insurance plan maintained by the California Public Employees’ Retirement System (“CalPERS”). At the time this suit was filed, each couple also included a spouse or partner who wanted to enroll in CalPERS’s LTC plan but could not do so, either because same-sex spouses were not recognized as spouses under federal law under Section 3 of DOMA, or because same-sex domestic partners were excluded from the list of relatives included in § 7702B(f). Plaintiffs  brought this class action raising equal protection and substantive due process challenges to Section 3 of DOMA, 1 U.S.C. § 7, and § 7702B(f) of the Internal Revenue Code, 26 U.S.C. § 7702B(f).
2
 Section 7702B was enacted by Congress in 1996 as part of the Health Insurance Portability and Accountability Act (“HIPAA”) to provide favorable tax treatment to LTC insurance plans that meet certain minimum requirements. Subsection 7702B(f) makes clear that enrollees in a state-maintained LTC plan can receive the same favorable tax treatments as do enrollees in a private, qualified § 7702B  plan, only if the state LTC plan’s coverage is limited to state employees, their spouses, and certain individuals who are related to the taxpayer as described in another part of the tax code.
See
26 U.S.C.
2
 
On July 15, 2011, this Court certified a class that includes “[p]resent and future CalPERS members who are in legally recognized same-sex marriages and registered domestic  partnerships together with their spouses and partners, who as couples and families are denied access to the CalPERS Long–Term Care Program on the same basis as similarly situated present and future CalPERS members who are in opposite-sex marriages, and their spouses.” [Dkt. 92] at 3.
 Fed Defs’ Brief Regarding
Windsor
and
Perry
, Case No. CV 4:10-01564-CW Page 2
Case4:10-cv-01564-CW Document158 Filed02/13/14 Page3 of 14

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