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William C. McNeill, III, State Bar No. 64392 Claudia Center, State Bar No. 158255 Elizabeth Kristen, State Bar No. 218227 LEGAL AID SOCIETYEMPLOYMENT LAW CENTER 180 Montgomery Street, Suite 600 San Francisco, CA 94104 Telephone: (415) 864-8848 Facsimile: (415) 593-0096 Email: wmcneill@las-elc.org ccenter@las-elc.org ekristen@las-elc.org Daniel S. Mason, State Bar No. 54065 Patrick Clayton, State Bar No. 240191 Zelle Hofmann Voelbel & Mason LLP 44 Montgomery Street, Suite 3400 San Francisco, CA 94104 Telephone: (415) 693-0700 Facsimile: (415) 693-0770 Email: pclayton@zelle.com Attorneys for Plaintiffs 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 RESPONSIVE BRIEF OF PLAINTIFF CLASS RE SUBSEQUENT LEGAL DEVELOPMENTS

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Table of Contents
INTRODUCTION………………………………………………………………………………….1 ARGUMENT……………………………………………………………………………………....3 I. California Law Permits the Domestic Partner Class Members to Access the CalPERS Long-Term Care Plan, to the Extent Permitted by Federal Authority…………………………………………………………………..3 The Return of Marriage Equality to California Does Not Extinguish the Injury Caused by the Challenged Exclusion of Registered Domestic Partners From the CalPERS Plan……………………………………………….…4 This Court Should Reaffirm Its Holding that the Exclusion of Registered Domestic Partners From the Array of Permitted Relations is an Unconstitutional Classification Based on Sexual Orientation…………………….8 This Court Should Further Hold that the Federal Defendants’ Exclusion of the Gay and Lesbian Class Members Who are Registered Domestic Partners From the Term “Spouse” Is Unconstitutional and Is an Unreasonable Construction of the Statute……………………………………….15 The Court Should Hold a Hearing or Settlement Conference on Further Remedies………………………………………………………………..15

II.

III.

IV.

V.

CONCLUSION……………………………………………………………………………….....15

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Cases Albright v. Oliver, 510 U.S. 266 (1994)………………………………………………………………….….......6 Cenance v. Bohn Ford, Inc., 621 F.2d 130 (5th Cir. 1980), aff’d in pertinent part, Ford Motor Credit Co. v. Cenance, 452 U.S. 155 (1981)………………………………….14 Chevron, USA, Inc. v. National Resources Defense Counsel, Inc., 467 U.S. 837 (1984)……………………………………………………………………14-15 City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432 (1985)……………………………………………………………………11, 12 Dragovich v. U.S. Dep’t of Treas., 764 F. Supp. 2d 1178 (N.D. Cal. 2011)…………………………………………………..….5 Dragovich v. U.S. Dep’t of Treas., 848 F. Supp. 2d 1091 (N.D. Cal. 2012)……………………………………………………10 Dragovich v. U.S. Dep’t of Treas., 872 F. Supp. 2d 944 (N.D. Cal. 2012)…………………………………………...9, 10, 11, 13 Estate of H.H. Weinert v. Comm’r, 294 F.2d 750 (5th Cir. 1961)………………………………………………………….……14 Golinski v. U.S. Office of Personnel Management, 824 F. Supp. 2d 968 (N.D. Cal. 2012)……………………………………………………..14 Hernandez v. New York, 500 U.S. 352 (1991)………………………………………………………………………..10 Hollingsworth v. Perry, 133 S. Ct. 2652 (2013)…………………………………………………………………1, 4, 8 Holmes v. Jennison, 39 U.S. 540 (1804)…………………………………………………………………………..7 In re Marriage Cases, 43 Cal. 4th 757 (2008)……………………………………………………………………….8 Pacific Shores Properties, LLC v. City of Newport Beach, 730 F.3d 1142 (9th Cir. 2013)……………………………………………………………...10 Personnel Adm’r of Massachusetts v. Feeney, 442 U.S. 256 (1979)………………………………………………………………………..10

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Romer v. Evans, 517 U.S. 620 (1996)…………………………………………………………………….11,12 Shelley v. Kraemer, 334 U.S. 1 (1948)…………………………………………………………………………..14 Skidmore v. Swift & Co., 323 U.S. 134 (1944)………………………………………………………….…………….14 SmithKline Beecham Corp. v. Abbott Laboratories, 740 F.3d 471 (2014)………………………………………………………………………..12 Strauss v. Horton, 46 Cal. 4th 364 (2009)…………………………………………………………………passim Sweatt v. Painter, 339 U.S. 629 (1950)………………………………………………………………………..14 Texaco, Inc. v. Short, 454 U.S. 516 (1982)…………………………………………………………………………6 U.S. Steel Corp. v. Multistate Tax Commission, 434 U.S. 452 (1978)…………………………………………………………………………6 U.S. v. Bauer, 84 F.3d 1549 (9th Cir. 1996)……………………………………………………………….10 United States v. Windsor, 133 S. Ct. 2675 (2013)…………………………………………..…………………….passim Statutes 1999 Cal. Stat. 4157, ch. 588 (AB 26)…………………………………………………………8 2003 Cal. Stat. 3081, ch. 421 (AB 205)……………………………….…………… 1, 8, 12, 14 2013 Cal. Stat., ch. 768 (AB 373)……………………………………………………………...4 26 U.S.C. § 152(d)(2)…………………………………………………………………………..9 26 U.S.C. § 7702B(f)…………………………………………………………………..…passim 26 U.S.C. § 7702B(f)(2)(C)(ii)…………………………………………………………………1 Cal. Fam. Code § 297.5(a)…………………………………………………………………….14 Cal. Fam. Code § 297.5(j)…………………………………………………………………….14

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Cal. Fam. Code § 300(a)………………………………………………………………………..7 Cal. Fam. Code § 306…………………………………………………………………………..7 Cal. Fam. Code § 350(a)………………………………………………………………………..7 Cal. Fam. Code § 352…………………………………………………………………………..7 Cal. Fam. Code § 354(a),(b)……………………………………………………………………7 Cal. Fam. Code § 357(c)………………………………………………………………………..7 Cal. Fam. Code § 358…………………………………………………………………………..7 Cal. Fam. Code § 359(a)……………………………………………………………………….7 Cal. Fam. Code § 400…………………………………………………………………………..7 Cal. Fam. Code § 420(a)……………………………………………………………………….7 Cal. Fam. Code § 422…………………………………………………………………………..8 Cal. Fam. Code § 423…………………………………………………………………………..8 Cal. Fam. Code § 426(a) to (c)…………………………………………………………………7 Cal. Fam. Code § 426(d)……………………………………………………………………….7 Cal. Gov’t Code § 21661 (2014)……………………………………………………………….4 Cal. Gov’t Code § 22771……………………………………………………………………….4 Conn. Pub. Act 09-13 (S.B. 899) (2009)………………………………………………….3, 5, 6 Defense of Marriage Act§ 3………………………………………………………………….....2 Del. H.B. 75 (2013)………………………………………………………………………..3, 5, 6 N.H. Ch. 59 (2009)……………………………………………………………………...…...3, 6 Proposition 8 (Cal. Constn. Article I, § 7.5)………………………………………………..…..8 Wash. State Referendum 74 (2012)…………………………………………………….…....3, 6 Legislative Materials House Comm. On the Judiciary, Report to Accompany Defense of Marriage Act,

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H.R. Rep. No. 104-664 at 11 (July 9, 1996)………………………………………………..10 Assembly Committee On Public Employees, Retirement And Social Security, Report on AB 373 (Mullin, Apr. 10, 2013)…………………………………..……..…….....4 Regulations and Agency Guidelines

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Revenue Ruling 2013-17, 2013 WL 4607583 (IRS RRU Aug. 30, 2013)……………………...……………………………………..passim Letter from Pamela Wilson Fuller, Senior Technician Reviewer, IRS (August 30, 2011)…………………………………………………………………...……..13 U.S. Dep’t of Labor, Employee Benefits Security Administration, Guidance to Employee Benefit Plans on the Definition of “Spouse” and “Marriage” Under ERIS and the Supreme Court’s Decision in United States v. Windsor (Sept. 18, 2013)……………………………………………….....13 Additional Authorities Amy S. Elliot, "IRS Memo Indicates Civil Unions Are Marriages for Tax Purposes," 133 Tax Notes 794 (2012)…………………………………………….13 CalPERS, Facts at a Glance………………………………………………………….............…7 City and County of San Francisco, Office of the County Clerk……………………….……….8 Contra Costa County, Clerk Recorder……………………………………………………….…8 County of Alameda, Clerk-Recorder's Office……………………………………………..……8 County of Marin, Marriage License………………………….....................................................8 County of Santa Clara, Office of the Clerk Recorder, Website on Marriage License Fees………….............................................................................................8 Los Angeles County, Registrar-Recorder/County Clerk, Marriage License…………...............8 San Mateo County, Assessor-County Clerk-Recorder……………………………………...….8 Williams Institute, Documenting Discrimination on the Basis of Sexual Orientation and Gender Identity in State Employment, Estimates of LGBT Public Employees (Sept. 2009)………………………………………...7 Williams Institute, Gallup Special Report: New Estimates of the LGBT Population in the United States (Feb. 2013)………………………………………....7 Kristin E. Hickman, “Unpacking the Force of Law,” 66 Vand. L. Rev. 465 (2013)……………………………………………………………....15

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Long-Term Care Program LTC4 Product Pricing (Nov. 19, 2013)…………………………...15 Single Policy Annual Premiums Comparison among LTC1, LTC2, LTC3 and LTC4 based on $200 Daily Benefit Amount……………………………...…....15

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INTRODUCTION This case is brought on behalf of a certified class of California gay and lesbian CalPERS members and their same-sex spouses and partners who are denied equal access to the CalPERS Long-Term Care Plan. Remaining at issue is whether the class members who are registered domestic partners of California gay and lesbian public employees and retirees may constitutionally be excluded by the Federal Defendants from enrolling in the CalPERS Long-Term Care Plan, where 26 U.S.C. section 7702B(f) permits an array of family members to participate, including “spouses.” The Federal Defendants argue that the exclusion is not unconstitutional, as the plaintiff couples in the class who are in registered domestic partnerships may now marry and access the Plan, following the Supreme Court’s decisions in United States v. Windsor, 133 S. Ct. 2675 (2013) and Hollingsworth v. Perry, 133 S. Ct. 2652 (2013). The return of marriage equality to California does not alter the unconstitutional nature of the exclusion of domestic partners from the list of permitted family members set forth in section 7702B(f). As in the prior proceedings before this Court, the Federal Defendants cannot provide a permissible basis for excluding domestic partners from the laundry list of relations permitted to join state-sponsored long-term care plans. Of course, the animus expressed toward gays and lesbians, and their relationships, during the 1996 legislative session which adopted section 7702B(f), and through to the 2004 session which amended the provision at issue, is insufficient to establish a constitutionally sufficient basis. The exclusion is irrational and motivated by animus; the Court was correct in striking the exclusion. Further, consistent with equal protection, and in this context, the term “spouse” found in 26 U.S.C. section 7702B(f)(2)(C)(ii) should be read to include the registered domestic partner class members as legal “spouses.” As the Plaintiffs have explained, as a result of the history of discrimination against gays and lesbians, and the concomitant evolution of California state law, the registered domestic partner class members are in relationships that are recognized by the state of California as identical to marriages with respect to all rights, obligations, and remedies. 2003 Cal. Stat. 3081, ch. 421 (AB 205); Strauss v. Horton, 46 Cal. 4th 364, 403-04, 410-12, 482-83

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(2009). That this parallel form of state-recognized relationship was established, and has a label other than marriage, is the result of this history of discrimination in relationship recognition, a history that has shaped the lives and choices of the California gay and lesbian couples who make up the certified class in this case. Indeed, Section 3 of the Defense of Marriage Act, which was struck down by the Supreme Court in Windsor, was adopted not only for the express purpose of barring federal recognition of married gay couples, but also for the purpose of barring recognition of gay couples in other legal relationships such as domestic partnerships. It is arbitrary for the Federal Defendants to treat one group of couples more favorably than another that is identically situated for all purposes relevant to the classification. This Court previously described Plaintiffs’ argument on the scope of the word “spouse” as seeking an advisory opinion, but this is no longer the case. In Revenue Ruling 2013-17, the Federal Defendants have declared: “For Federal tax purposes, the term ‘marriage’ does not include registered domestic partnerships, civil unions, or similar formal relationships recognized under state law that are not denominated as a marriage under that state’s law, and the terms ‘spouse,’ ‘husband and wife,’ ‘husband,’ and ‘wife’ do not include individuals who have entered into such a formal relationship.” 2013 WL 4607583 (IRS RRU Aug. 30, 2013). They take the same position in this litigation. But in the context of the CalPERS Long-Term Care Plan, and the gay and lesbian class members who are in registered domestic partnerships, such a construction is irrational and violates the Constitution’s guarantee of equal protection. Nor is the constitutional violation resolved by directing the domestic partner couples to marry in order to access the CalPERS Plan. Many class member couples who are in domestic partnerships may choose to marry, now that this status is available to them. But the “unmarried” gay and lesbian couples who are in registered domestic partnerships with the state have already taken all steps required under state law to access all of rights, privileges, and obligations of marriage. Such an additional relationship recognition process is not demanded by the State of California for these couples to be treated in all legal matters identically to married couples. Similarly situated heterosexual couples have never been expected or required to secure repeated

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forms of relationship recognition from the state, as they have never been excluded from marriage. On a practical level, some class members who are in registered domestic partnerships face barriers to marriage. Couples that include a retired state or local worker may no longer live in California or another marriage equality state, and travel to a location with access to marriage may be onerous or undesirable. Some couples may be unable to consent to marry, due to the failing capacity of one partner. Some couples may experience difficulty with the prerequisites of marriage due to age or disability, including the requirement of appearing before a county clerk in person with picture identification to obtain a marriage license. Even couples who do not face these particular barriers may find the mandated elements of marriage – the in-person application, license fees of up to $100, a ceremony before a lawful officiant, and registration – frustrating when they have already completed the process for domestic partnership, a status deemed by the California Supreme Court to be equivalent for all purposes under state law.1 Consistent with the principles of equal protection, the Court should again order that the gay and lesbian class members who are in registered domestic partnerships be granted access to the CalPERS plan. ARGUMENT I. California Law Permits the Domestic Partner Class Members to Access the CalPERS Long-Term Care Plan, to the Extent Permitted by Federal Authority.

In 2013, the California Legislature enacted the Public Employees’ Long-Term Care Act,

1

As described further herein, other states with comparable domestic partnership or civil union statuses and which now have marriage equality, including Connecticut, Delaware, New Hampshire, and Washington state, enacted legislation to automatically “convert” or “merge” these relationships into marriage. Conn. Pub. Act 09-13 (S.B. 899) (2009), § 12, at http://www.cga.ct.gov/2009/act/Pa/pdf/2009PA-00013-R00SB-00899-PA.PDF; Del. H.B. 75 (2013), at § 6 (adding Tit. 13, § 218(c)), at http://legis.delaware.gov/LIS/lis147.nsf/vwLegislation/HB+75/$file/legis.html?open; N.H. Ch. 59 (2009), § 457:46(II), at http://alicelaw.org/uploads/asset/asset_file/1392/2009_New_Hampshire_Chapter_59.pdf; Wash. State Referendum 74 (2012), § 10 (adding § (3)(a) to chap. 26.60.100), at http://apps.leg.wa.gov/rcw/default.aspx?cite=26.60&full=true#26.60.060. Connecticut and New Hampshire further recognize as “marriage” relationships such as those of the California class members who are in registered domestic partnerships. Conn. Pub. Act 09-13, § 1; N.H. Ch. 59 at § 457:45; see also Del. H.B. 75 at § 1 (adding subsection (e) to Tit. 13, § 101). The federal government is now recognizing all of these converted relationships as marriages post-Windsor, but not the class members here.
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which amended the California law discussed by the Federal Defendants. As amended, the statute permits the enrollment of members “and their spouses, domestic partners, parents, siblings, adult children, and spouses’ parents,” “[e]xcept as prohibited by the Internal Revenue Code, including, but not limited to, Section 7702B(f)(2) of Title 26 of the United States Code, or any other authority that governs eligibility for a federally qualified state long-term care plan.” Cal. Gov’t Code § 21661(e) (2014) (amended by Stats. 2013, ch. 768 (AB 373)); see also Report of Assembly Committee On Public Employees, Retirement And Social Security (Apr. 10, 2013), p. 1 (“[T]his bill … [a]llows same-sex spouses and domestic partners, if permitted under the Internal Revenue Code and applicable law, to participate in the CalPERS LTC Program.”). The law further provides a definition of “domestic partners” – “adults in a domestic partnership as defined in [Cal. Gov’t Code section] 22771” and of “spouses” – “parties in a marital relationship recognized under the Internal Revenue Code, including, but not limited to, Section 7702B(f)(2) of Title 26 of the United States Code, or any other applicable authority that governs eligibility for a federally qualified state long-term care plan.” Cal. Gov’t Code § 21661(a)(2), (4) (2014). Thus, contrary to the Federal Defendants’ argument at pages 4 to 5 of their brief, there is no state law bar to this Court granting the domestic partner class members access to the CalPERS Long-Term Care Plan, should it conclude that the Constitution requires that such class members be included (whether as “spouses” and/or as domestic partners). II. The Return of Marriage Equality to California Does Not Extinguish the Injury Caused by the Challenged Exclusion of Registered Domestic Partners From the CalPERS Plan.

Following the Supreme Court’s decisions in Windsor and Perry, the Federal Defendants argue that the Court should dismiss the claims brought on behalf of Plaintiffs and class members who are registered domestic partners with the State of California, as they “can become eligible for tax benefits under § 7702B(f) by marrying.” Federal Defendants’ Brief, p. 1. As a result of this change in circumstance, the Federal Defendants aver, “§ 7702B(f) now clearly treats California same-sex and opposite-sex couples exactly the same[.]” Id. at p. 2. This position ignores the legal history of discrimination in relationship recognition and its present effects, which have

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shaped the lives and choices of the California gay and lesbian couples who comprise the certified class. The exclusion of the domestic partner class members from the CalPERS Plan cannot be disconnected from this history, simply because marriage equality has returned to California.2 Of course, many class member couples who are in domestic partnerships may choose to marry, now that this status is available to them. But it is inconsistent with equal protection to require such couples to marry before they may access the CalPERS Plan. Such an additional relationship recognition process is not demanded by the State of California for these couples to be treated in all legal matters identically to married couples. Moreover, similarly situated heterosexual couples have never been expected or required to secure repeated forms of relationship recognition from the state, as they have never been excluded from marriage. Of note, several other states with domestic partnership or civil union statuses for gay and lesbian couples comparable to California’s domestic partnership law, and which now have marriage equality, have automatically “converted” or “merged” these relationships into marriage.3 Also converted into
2

The Federal Defendants also misstate the nature of the exclusion. It is not that the plaintiff class members seek the “same favorable tax treatments as do enrollees in a private … plan,” Federal Defendants’ Brief, p. 2. Rather, the plaintiff class members seek to join a particular long-term care plan, the CalPERS plan. See Declaration of Christopher Pederson, Docket No. 111-15, ¶¶ 2, 6-7; Joint Declaration of Rafael V. Dominguez and Jose G. Hermosillo, Docket No. 111-16, ¶¶ 9-12; Joint Declaration of Michael Dragovich and Michael Gaitley, Docket No. 111-17, ¶¶ 5, 7, 13-15; Joint Declaration of Leslie Cooley and Kristine Jensen, Docket No. 111-19, ¶¶ 13-18; Joint Declaration of David Beers and Charles Cole, Docket No. 111-20, ¶¶ 8-11. This Court has already rejected the Federal Defendants’ position that alternatives in the private market are relevant to the equal protection analysis. Dragovich v. U.S. Dep’t of Treas., 764 F. Supp. 2d 1178, 1186 (N.D. Cal. 2011) (“The CalPERS LTC Program, however, offers a number of advantages over private policies, including lower rates, inflation protection, and restrictions on premium increases. Furthermore, Federal Defendants mischaracterize the injury as the inability to obtain insurance. The injury is the denial of equal access to the CalPERS LTC Program. ‘When the government erects a barrier that makes it more difficult for members of one group to obtain a benefit than it is for members of another group ... [t]he ‘injury in fact’ in an equal protection case of this variety is the denial of equal treatment resulting from the imposition of the barrier, not the ultimate inability to obtain the benefit.’”). 3 Conn. Pub. Act 09-13, § 12 (“Two persons who are parties to a civil union established pursuant to sections 46b-38aa to 46b-38oo, inclusive, of the general statutes, as amended by this act, that has not been dissolved or annulled by the parties or merged into a marriage by operation of law under section 11 of this act as of October 1, 2010, shall be deemed to be married under chapter 815e of the general statutes, as amended by this act, on said date and such civil union shall be merged into such marriage by operation of law on said date.”); Del. H.B. 75 at § 6 (adding Tit. 13, § 218, with subsection (c) stating: “Subject to subsection (d) of this section [regarding pending dissolution proceedings], on July 1, 2014, two persons who are parties to a civil union entered into pursuant to this chapter, which civil union has not been converted to a marriage pursuant to subsection (b) of this section, shall be deemed married under chapter 1 of this title and such civil union shall be automatically converted to a marriage by operation of law.”);
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marriages by these laws are such analogous relationships entered into outside of the State.4 Pursuant to Revenue Ruling 2013-17, the Federal Defendants are treating individuals it deems “married,” including the individuals in these converted or merged relationships, more favorably than the registered domestic partner class members here. The equal treatment required by the Constitution should not turn on such formulaic distinctions. See Albright v. Oliver, 510 U.S. 266, 303 (1994) (Stevens, J., dissenting, with Blackmun, J.) (bulwarks of protections such as the Due Process clause “guarantee not particular forms of procedure, but the very substance of individual rights to life, liberty, and property”); Texaco, Inc. v. Short, 454 U.S. 516, 537 n.32 (1982) (“[I]n reviewing state action in this area ... we look to substance, not to bare form, to determine whether constitutional minimums have been honored.”) (citation omitted); U.S. Steel Corp. v. Multistate Tax Commission, 434 U.S. 452, 470 (1978) (“Can it be supposed that the constitutionality of the act depends on the mere form of the agreement? We think not. The Constitution looked to the essence and substance of things, and not to mere form. It would be but an evasion of the

N.H. Ch. 59 (2009), § 457:46(II) (“Two persons who are parties to a civil union established pursuant to RSA 457-A that has not been dissolved or annulled by the parties or merged into a marriage in accordance with paragraph I by January 1, 2011 shall be deemed to be married under this chapter on January 1, 2011 and such civil union shall be merged into such marriage by operation of law on January 1, 2011.”); Wash. State Referendum 74 (2012), § 10 (adding § (3)(a) to chap. 26.60.100 “Except as provided in (b) of this subsection [regarding dissolution proceedings], any state registered domestic partnership in which the parties are the same sex, and neither party is sixty-two years of age or older, that has not been dissolved or converted into a marriage by the parties by June 30, 2014, is automatically merged into a marriage and is deemed a marriage as of June 30, 2014.”). 4 Conn. Pub. Act 09-13, § 1 (“A marriage, or a relationship that provides substantially the same rights, benefits and responsibilities as a marriage, between two persons entered into in another state or jurisdiction and recognized as valid by such other state or jurisdiction shall be recognized as a valid marriage in this state, provided such marriage or relationship is not expressly prohibited by statute in this state.”); N.H. Ch. 59 (2009), § 457:45 (“A civil union legally contracted outside of New Hampshire shall be recognized as a marriage in this state, provided that the relationship does not violate the prohibitions of this chapter.”); see also Del. H.B. 75 at § 1 (adding subsection (e) to Tit. 13, § 101: “For all purposes of the laws of this State, two persons of the same gender who are parties to a legal union other than a marriage (whether designated as a civil union, a domestic partnership or another relationship) established in another jurisdiction shall be afforded and shall be subject to the same rights, benefits, protections, responsibilities, obligations and duties as are afforded and imposed upon married spouses (whether derived from statutes, administrative rules or regulations, court rules, governmental policies, common law, court decisions, or any other provisions or sources of law, including in equity) if: (1) such legal union was validly entered into in such other jurisdiction; (2) such legal union would not be prohibited as a marriage by reason of subsection (a) of this section; and (3) such legal union affords and imposes on such individuals under the laws of the jurisdiction establishing such union substantially the same rights, benefits, protections, responsibilities, obligations and duties as a marriage.”).
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constitution to place the question upon the formality with which the agreement is made.”) (quoting from Holmes v. Jennison, 39 U.S. 540, 573 (1804)). Moreover, among the thousands of couples who comprise the class are those in registered domestic partnerships who face barriers to marriage.5 Couples that include a retired state or local worker may no longer live in California or another marriage equality state, and travel to a location with access to marriage may be onerous or undesirable. Some couples may be unable to consent to marry, due to the failing capacity of one partner. Cal. Fam. Code §§ 300(a), 352. Some couples may experience difficulty with the prerequisites of marriage due to age or disability, including the requirement of appearing before a county clerk in person with picture identification to obtain a marriage license.6 Even couples who do not face these particular barriers are subject to the mandated elements of marriage – the in-person application, license fees of up to $100, a ceremony before a lawful officiant, and registration7 – despite having already completed the
5

CalPERS has more than 1.6 million members. CalPERS, Facts at a Glance, at http://www.calpers.ca.gov/eip-docs/about/facts/facts-at-a-glance.pdf. The Williams Institute reports that 4 percent of Californians identify as LGBT, and estimates that there are 192,985 LGBT local and state workers in California. Gallup Special Report: New Estimates of the LGBT Population in the United States, at http://williamsinstitute.law.ucla.edu/research/census-lgbt-demographics-studies/gallup-lgbt-popfeb-2013/ (Feb. 2013); Documenting Discrimination on the Basis of Sexual Orientation and Gender Identity in State Employment, Estimates of LGBT Public Employees, Table 3A, at http://williamsinstitute.law.ucla.edu/wp-content/uploads/1_LGBTWorkforce1.pdf. (Sept. 2009) 6 Cf. Cal. Fam. Code § 426(a) to (c) (personal appearance may be waived if person solemnizing the marriage “physically presents an affidavit to the county clerk explaining the reason for the inability to appear,” [t]he affidavit is signed under penalty of perjury by the person solemnizing the marriage and by both parties,” and “[t]he signature of any party to be married who is unable to appear in person before the county clerk is authenticated by a notary public or a court prior to the county clerk issuing the marriage license.”); id. at 426(d) (“Sufficient reason includes proof of hospitalization, incarceration, or any other reason proved to the satisfaction of the county clerk.”). 7 Cal. Fam. Code §§ 300(a) (requiring consent, marriage license, and “solemnization as authorized by this division”), 306 (“a marriage shall be licensed, solemnized, and authenticated, and the authenticated marriage license shall be returned to the county recorder of the county where the marriage license was issued”), 350(a) (“Before entering a marriage, … the parties shall first obtain a marriage license from a county clerk.”), 354(a), (b) (“Each applicant for a marriage license shall be required to present authentic photo identification acceptable to the county clerk as to name and date of birth. A credible witness affidavit or affidavits may be used in lieu of authentic photo identification. … [I]f the clerk deems it necessary, the clerk may examine the applicants for a marriage license on oath at the time of the application. The clerk shall reduce the examination to writing and the applicants shall sign it.”), 357(c) (describing notice of “obligation of the person solemnizing their marriage to return the marriage license to the recorder’s office within 10 days after the ceremony”), 358 (describing brochure(s) containing “statutorily required information for marriage license applicants”), 359(a) (“[A]pplicants to be married shall first appear together in person before the county clerk to obtain a marriage license.”), 400 (describing persons authorized to solemnize marriages), 420(a) (“parties shall declare, in the physical
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process for a status deemed by the California Supreme Court to be equivalent for all legal purposes under state law. These circumstances are not the making of the plaintiff class members, but are the results of the history of unconstitutional discrimination against gay and lesbian couples with respect to relationship recognition.8 III. This Court Should Reaffirm Its Holding that the Exclusion of Registered Domestic Partners From the Array of Permitted Relations is an Unconstitutional Classification Based on Sexual Orientation.

Given that the return of marriage equality to California does not extinguish the harms flowing from the history of unlawful discrimination, this Court should reaffirm its holding that the

presence of the person solemnizing the marriage and necessary witnesses, that they take each other as husband and wife”), 422 (required statement of person solemnizing marriage), 423 (“person solemnizing the marriage shall return the marriage license, endorsed as required in Section 422, to the county recorder of the county in which the license was issued within 10 days after the ceremony”); City and County of San Francisco, Office of the County Clerk, Fees – Marriage Licenses & Domestic Partnerships, at http://www.sfgov2.org/index.aspx?page=43 (fee for marriage license is $101.00); Los Angeles County, Registrar-Recorder/County Clerk, Marriage License, at http://www.lavote.net/clerk/marriages.cfm (fee for marriage license is $90.00); County of Santa Clara, Office of the Clerk Recorder, at http://www.sccgov.org/sites/rec/Marriage%20Licenses/Pages/Applying-for-a-Marriage-License.aspx (fee for marriage license is $80); County of Marin, Marriage License, at http://www.marincounty.org/depts/ar/divisions/recorder/marriage-license (fee for marriage license is $84.00); County of Alameda, Clerk-Recorder’s Office, Applying for a Marriage License, at http://www.acgov.org/auditor/clerk/ml.htm (fee for marriage license is $81.00); San Mateo County, Assessor-County Clerk-Recorder & Chief Elections Officer, Records & Fees, Applying for a Marriage License, at http://www.smcare.org/clerk/marriage/obtain_license.asp (fee for marriage license is $79.00); Contra Costa County, Clerk Recorder, http://www.ccclerkrec.us/connect/site/index.jsp?menuItemId=12 (fee for marriage license is $86.00). 8 This history is well known to the parties and the Court. Prior to 2000, California provided no relationship recognition at all to same-sex couples. In 2000, a state-wide registry granting limited rights to gay and lesbian couples (and heterosexual couples with one partner over the age of 62) went into effect. 1999 Cal. Stat. 4157, ch. 588 (AB 26). In 2003, the State passed the Domestic Partner Rights and Responsibilities Act, which afforded the rights and obligations of marriage to domestic partners; this legislation went into effect on January 1, 2005. 2003 Cal. Stat. 3081, ch. 421 (AB 205). More than three years later, the California Supreme Court ruled that the exclusion of gay and lesbian couples from the institution of marriage violated the state Constitution, and same-sex couples were permitted to legally marry in California for the first time. In re Marriage Cases, 43 Cal. 4th 757 (2008). Four and a half months later, this decision was overturned by the voters. Proposition 8 (adding section 7.5 to Article I of the California Constitution). Thereafter, registered domestic partnership remained the sole form of relationship recognition available to gay and lesbian couples for nearly five years. In 2009, the California Supreme Court emphasized that gay and lesbian couples in domestic partnerships are entitled under the state Constitution to all of the rights of marriage. Strauss, 46 Cal. 4th at 403-04, 410-12 (2009); see also id. at 482-83 (Werdeger, J., concurring). Prior to the 2013 Supreme Court decision in Windsor, 133 S. Ct. 2675, which struck down a portion of the Defense of Marriage Act (DOMA), the federal government refused to recognize the relationships of gays and lesbians, whatever the status under state laws. In mid2013, following the Supreme Court’s decision in Perry, 133 S. Ct. 2652, marriage again became available to gay and lesbian couples in California.
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exclusion of registered domestic partners from the array of relations permitted under section 7702B(f) is an unconstitutional classification based on sexual orientation. As this Court noted, the challenged provision, 7702B(f), was adopted in 1996, the same year as the enactment of the DOMA. Dragovich v. U.S. Dep’t of Treas., 872 F. Supp. 2d 944, 946-47 (N.D. Cal. 2012). Section 7702B(f)(2) disqualifies a state-maintained plan from favorable tax treatment if it provides coverage to individuals other than those specified under its subparagraph (C). The list of eligible individuals includes state employees and former employees, their spouses, and individuals bearing to the employees or spouses which is described in subparagraphs (A) through (G) of 26 U.S.C. § 152(d)(2). Id. at 947. Section 152(d)(2), (A) through (G), lists these “qualifying relatives”: a child or a descendant of a child; a brother, sister, stepbrother, or stepsister; the father or mother, or an ancestor of either; a stepfather or stepmother; a son or daughter of a brother or sister of the taxpayer; a brother or sister of the father or mother of the taxpayer; and a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. In borrowing from section 152(d)(2), Congress declined to carry over subparagraph (H). Had subparagraph (H) been carried over, “registered domestic partners of California public employees would have qualified as individuals eligible to enroll in the CalPERS long-term care plan.” Id. Congress discussed registered domestic partnership laws prior to and during 1996, when the exclusion challenged here was passed. For example, these discussions occurred after the District of Columbia established a domestic partnership registry in April 1992. Congress reacted to the new law by barring any local or federal funding to implement, enforce or administer the registry. Legislators spoke out against the registry as “an attack on the family,” “abhorrent,” and as “undermin[ing] the traditional moral values that are the bedrock of this Nation.” Id. at 948-49. Discussion about domestic partnerships also occurred in the context of the DOMA. Id. at 949-50. It is undisputed that one significant consideration in enacting section 3 of the DOMA was Congress’s desire to foreclose federal recognition of same-sex marriage. But the limiting definition of marriage proposed in section 3 of the DOMA was also viewed as necessary to exclude registered domestic partners from federal recognition and benefits. Id. at 949-50 (quoting

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from Senator Don Nickles); see also House Comm. On the Judiciary, Report to Accompany Defense of Marriage Act, H.R. Rep. No. 104-664 at 11 (July 9, 1996), Docket No. 100-1. Thus, legislative history that is relevant to the challenged exclusion “contains evidence of moral condemnation and social disapprobation of same-sex couples.” Dragovich, 872 F. Supp. 2d at 950. Accord Dragovich v. U.S. Dep’t of Treas., 848 F. Supp. 2d 1091 (N.D. Cal. 2012). This Court further rejected the Federal Defendants’ argument that an exclusion of domestic partners is not a classification based on sexual orientation: “Laws limiting same-sex couples to registered domestic partnerships, while precluding them from marriage, turn on sexual orientation, and the availability of registered domestic partnership to different-sex couples does not negate the burdens faced by same-sex registered domestic partners.” Dragovich, 872 F. Supp. 2d at 961. “[L]aws excluding registered domestic partners use that status as a proxy for homosexuality …” Id. at 960. “Congress viewed registered domestic partnership as a quasimarital status, such as when Representative Istook referred to domestic partnership as the ‘equivalent to gay marriage,’ …, and Representative Stearns asserted that the District of Columbia domestic partnership registry was intended to give same-sex couples the legal and social benefits associated with marriage, … [The Court finds] that § 7702B(f)'s exclusion of registered domestic partners is a classification based on sexual orientation.” Id. at 961 (citing Personnel Adm’r of Massachusetts v. Feeney, 442 U.S. 256, 275 (1979) (“If the impact of this statute could not be plausibly explained on a neutral ground, impact itself would signal that the real classification made by the law was in fact not neutral.”). 9 Applying rational basis review, this Court found no permissible rationale for the

Accord Hernandez v. New York, 500 U.S. 352, 371 (1991) (“It may well be, for certain ethnic groups and in some communities, that proficiency in a particular language, like skin color, should be treated as a surrogate for race under an equal protection analysis.”); U.S. v. Bauer, 84 F.3d 1549, 1566 (9th Cir. 1996) (Noonan, J. dissenting in part) (“The only characteristics alleged [regarding disqualified jurors] were group stereotypes that served as pretextual surrogates for racial discrimination.”); Pacific Shores Properties, LLC v. City of Newport Beach, 730 F.3d 1142, 1160 n. 23 (9th Cir. 2013) (proxy discrimination “arises when the defendant enacts a law or policy that treats individuals differently on the basis of seemingly neutral criteria that are so closely associated with the disfavored group that discrimination on the basis of such criteria is, constructively, facial discrimination against the disfavored group.”).
9

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exclusion, rejecting each of the Federal Defendants’ proposed bases. Given Congress’s reaction to the D.C. domestic partnership registry, this Court found not creditable the asserted rationale that, at the time, domestic partnership was a novel legal status. Id. at 962. This Court found unpersuasive the argument that, at the time, domestic partners were not treated identically to spouses, as “treating registered domestic partners as eligible for enrollment in a state-maintained, long-term care plan does not entail extending to registered domestic partners all rights and responsibilities attached to marriage under a given state’s law.” Id. at 963. The Court rejected the argument that it would be easier to administer long-term care plans without verifying the eligibility of domestic partners, given the need to verify the relationships of distant relatives who are eligible to join. Id. at 963. And, this Court found, relegating gay and lesbian domestic partners to the private market was inconsistent with Congress’s “expressed policy goal of encouraging the purchase of long-term care coverage generally.” Id. “Because Congress’s restriction on state-maintained long-term care plans lacks any rational relationship to a legitimate government interest, but rather appears to be motivated by anti-gay animus, the exclusion of registered domestic partners of public employees from § 7702B(f)’s list of individuals eligible to enroll in state-maintained long-term care plans violates the Constitution’s equal protection guarantee.” Id. at 964. Under rational basis review, any government action resting upon a distinction between discrete classes “must be rationally related to a legitimate governmental purpose.” City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 446 (1985). “By requiring that the classification bear a rational relationship to an independent and legitimate legislative end, we ensure that classifications are not drawn for the purpose of disadvantaging the group burdened by the law.” Romer v. Evans, 517 U.S. 620, 633 (1996). “[E]ven in the ordinary equal protection case calling for the most deferential of standards, we insist on knowing the relation between the classification adopted and the object to be attained. The search for the link between classification and objective gives substance to the Equal Protection Clause.” Id. at 632. Further, “[t]he State may not rely on a classification whose relationship to an asserted goal is so attenuated as to render the distinction

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arbitrary or irrational.” Cleburne, 473 U.S. at 446. In other words, a challenged law can only survive this constitutional inquiry if it is “narrow enough in scope and grounded in a sufficient factual context for [the Court] to ascertain some relation between the classification and the purpose it serve[s].” Romer, 517 U.S. at 632-33. Following Windsor, 133 S. Ct. 2675 (2013), the Ninth Circuit has held that classifications based on sexual orientation are subject to heightened scrutiny. SmithKline Beecham Corp. v. Abbott Laboratories, 740 F.3d 471, 483 (2014). Because, as this Court found, the challenged exclusion fails rational basis review, it also fails heightened scrutiny. IV. This Court Should Further Hold that the Federal Defendants’ Exclusion of the Gay and Lesbian Class Members Who are Registered Domestic Partners From the Term “Spouse” Is Unconstitutional and Is an Unreasonable Construction of the Statute.

Plaintiffs have previously argued that the term “spouse” found in section 7702B(f), but for the DOMA, would include the class members who are in registered domestic partnerships.

13 Plaintiffs cited to the state laws that established that gay and lesbian couples in registered 14 domestic partnerships are entitled to all of the rights, obligations, and remedies of marriage, and 15 16 205); Strauss, 46 Cal. 4th at 403-04, 410-12; see also id. at 482-83 (Werdeger, J., concurring). 17 Plaintiffs noted the history of discrimination against gays and lesbians and their relationships, 18 19 20 21 the legislative history of the DOMA and of other federal enactments, which evidenced animus and 22 an intent to bar federal recognition of any form of relationship entered into by gay and lesbian 23 24 25 endeavors to base tax treatment on practical realities rather than labels. For example, the Federal 26 Defendants recognize the community property rights of gay and lesbian partners who are in 27 28
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argued that the couples should be considered legal “spouses.” 2003 Cal. Stat. 3081, ch. 421 (AB

which relegated gay and lesbian couples to registered domestic partnership. Plaintiffs’ Motion for Summary Judgment (Plaintiffs’ MSJ), Docket No. 111, pp. 26-30; Plaintiffs’ Combined Opposition and Reply (Plaintiffs’ Opposition), Docket No. 120, at pp. 17-19. Plaintiffs cited to

individuals, whether labeled marriage or domestic partnership. Plaintiffs’ MSJ, pp. 27-28; Plaintiffs’ Opposition, p. 18. Plaintiffs described the ordinary operation of federal tax law, which

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registered domestic partnerships with the State of California. Plaintiffs further noted that the Federal Defendants issued a letter in 2011 suggesting that a heterosexual couple in an Illinois civil union could file their federal taxes jointly. Plaintiffs’ MSJ, p. 29; Plaintiffs’ Opposition, pp. 1921; August 30, 2011 Letter of Pamela Wilson Fuller, Docket No. 111-30 (Exhibit C to Infanti Declaration); Amy S. Elliott, IRS Memo Indicates Civil Unions Are Marriages for Tax Purposes, 133 Tax Notes 794 (2011), Docket No. 111-29 (Exhibit B to Infanti Declaration). This Court declined to base its holding on Plaintiffs’ reasoning, stating: “Plaintiffs contend hypothetically that if § 3 of the DOMA were invalidated, but § 7702B(f) were upheld, California registered domestic partners, who are legally entitled to be treated as spouses under California law, would be permitted to enroll in the CalPERS long-term care plan, without triggering disqualification of the plan for favorable tax treatment under § 7702B(f). In effect, Plaintiffs ask the Court to issue an advisory opinion, which would be improper.” Dragovich, 872 F. Supp. 2d at 960. Given subsequent legal developments, however, the issue is no longer “hypothetical,” but is ripe for the Court’s determination. Post-Windsor, the term “spouse” found in section 7702B(f) is no longer defined to exclude persons of the same sex. But implementing Windsor, the Federal Defendants have issued Revenue Ruling No. 2013-17, which states: “For Federal tax purposes, the term ‘marriage’ does not include registered domestic partnerships, civil unions, or other similar formal relationships recognized under state law that are not denominated as a marriage under that state’s law, and the terms ‘spouse,’ ‘husband and wife,’ ‘husband,’ and ‘wife’ do not include individuals who have entered into such a formal relationship.” Id.10 Plaintiffs again contend that it is irrational, and thus a violation of equal protection, that the Federal Defendants continue to exclude the registered

See also U.S. Dep’t of Labor, Employee Benefits Security Administration, Guidance to Employee Benefit Plans on the Definition of “Spouse” and “Marriage” Under ERIS and the Supreme Court’s Decision in United States v. Windsor (Sept. 18, 2013), available at http://www.dol.gov/ebsa/newsroom/tr13-04.html (“The terms “spouse” and “marriage,” however, do not include individuals in a formal relationship recognized by a state that is not denominated a marriage under state law, such as a domestic partnership or a civil union, regardless of whether the individuals who are in these relationships have the same rights and responsibilities as those individuals who are married under state law.”).
10

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domestic partner class members from the category of “spouse.” There is no difference that should matter for purposes of equal protection, for example, between the “unmarried” registered domestic partner class members here, who are excluded by the Federal Defendants from the CalPERS plan, and the “converted” or “merged” married couples from Connecticut, Delaware, New Hampshire, or Washington state, who are permitted by the Federal Defendants to join such a plan. “Equal protection of the laws is not achieved through indiscriminate imposition of inequalities.” Shelley v. Kraemer, 334 U.S. 1, 22 (1948); Sweatt v. Painter, 339 U.S. 629, 635 (1950) (quoting Kraemer); Golinski v. U.S. Office of Personnel Management, 824 F. Supp. 2d 968, 981 (N.D. Cal. 2012) (quoting Sweatt). The exclusion imposed by Revenue Ruling No. 2013-17 is also an unreasonable statutory construction of the term “spouse.” “The principle of looking through form to substance … is the cornerstone of sound taxation.” Estate of H.H. Weinert v. Comm’r, 294 F.2d 750, 755 (5th Cir. 1961); see also Cenance v. Bohn Ford, Inc., 621 F.2d 130, 134 (5th Cir. 1980), aff’d in pertinent part, Ford Motor Credit Co. v. Cenance, 452 U.S. 155, 158 (1981) (courts should not celebrate form over substance in carrying out statutory purpose). Under California law, gay and lesbian couples who are registered domestic partners are “spouses” for all legal purposes. 2003 Cal. Stat. 3081, ch. 421; Strauss, 46 Cal. 4th at 403-04, 410-12, 482-83; Cal. Fam. Code § 297.5(a) (“Registered domestic partners shall have the same rights, protections, and benefits, and shall be subject to the same responsibilities, obligations, and duties under law, whether they derive from statutes, administrative regulations, court rules, government policies, common law, or any other provisions or sources of law, as are granted to and imposed upon spouses.”), (j) (“Where necessary to implement the rights of registered domestic partners under this act, gender-specific terms referring to spouses shall be construed to include domestic partners.”). Ignoring the ordinary operation of tax law, the Federal Defendants in this case and though the 2013 Revenue Ruling provide no rationale for imposing different treatment upon couples who share identical legal rights and obligations. Because it is arbitrary, it is not entitled to deference under either Skidmore v. Swift & Co., 323 U.S. 134 (1944) or Chevron, USA, Inc. v. National Resources
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Defense Counsel, Inc., 467 U.S. 837 (1984). Further, the Revenue Ruling was not the subject of notice and comment under the Administrative Procedures Act.11 Thus, this Court should further rule that that, as applied to this matter, the definition of “spouse” asserted by the Federal Defendants in this matter and through Revenue Ruling 2013-17 is unconstitutional and/or is an unreasonable statutory construction. V. The Court Should Hold a Hearing or Settlement Conference on Further Remedies.

Equal access for class members to the CalPERS Long-Term Care Plan today is not identical to equal access yesterday. Class members have grown older, altering underwriting and premiums. Further, over time, CalPERS has offered different long-term care products; the products are identified by CalPERS as LTC1 (policies issued 1995-2002), LTC2 (policies issued 2003-2004); LTC3 (policies issued 2005-2008); and LTC4 (policies issued December 2013 to the present). The later-issued policies have different benefit terms and higher premiums.12 Therefore, even with the exclusion struck for all of the class members, none will have the same access to the Plan as they would have had in the absence of unconstitutional discrimination. The plaintiff class seeks an opportunity to pursue additional relief to remedy the effects of the challenged exclusion. CONCLUSION For all of the reasons stated, the Court’s prior holding should be reaffirmed, and judgment entered in favor of the domestic partner members of the plaintiff class. Respectfully submitted, LEGAL AID SOCIETY – EMPLOYMENT LAW CENTER March 6, 2012
11

By:

/s/Claudia Center Counsel for Plaintiffs

See Kristin E. Hickman, “Unpacking the Force of Law,” 66 Vand. L. Rev. 465, 502 (2013) (discussing application of APA to IRS revenue rulings). 12 See, e.g., Long-Term Care Program LTC4 Product Pricing (Nov. 19, 2013), at http://www.calpers.ca.gov/eip-docs/about/committee-meetings/agendas/pension/201311/item-8-attach1.pdf, p. 7 (no lifetime benefit available for LTC4); Single Policy Annual Premiums Comparison among LTC1, LTC2, LTC3 and LTC4 based on $200 Daily Benefit Amount, page 3 of http://www.calpers.ca.gov/eip-docs/about/committee-meetings/agendas/pension/201302/item-7-attach3.pdf.
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