In Cozen O’Connor v. Tobits, No. 2:11-cv-00045-CDJ (E.D. Pa. 7/29/13), a Pennsylvania federal court ruled that United States v. Windsor, No. 12-307 (U.S. 6/26/13), required the recognition of a valid Canadian same-sex marriage for the purposes of a benefit distribution under a qualified plan.  In determining whether the spouse of a decedent qualified as a spouse under federal law, such that she would be entitled to a qualified pre-retirement survivor annuity upon the death of her wife, the court ruled that the law of the state of domicile applied – here, Illinois.  The court concluded that there was no doubt that Illinois would consider the women to be legally married spouses under applicable state law and, under Windsor, the federal government was bound to recognize their marital status.  In light of this fact, the surviving spouse was a spouse under the terms of the plan (which incorporated applicable federal law) and was entitled to a qualified pre-retirement survivor annuity upon the death of her wife.

While the case may seem cut-and-dry, the facts are actually quite interesting and bear closer inspection.   Of utmost importance is the fact that, in Illinois, marriage licenses to same-sex couples are ...SURPRISE…not issued!  Wait, you say -  if Illinois does not recognize same-sex marriages, how could the court come to a conclusion that there was no doubt that the women were married under Illinois law?  The court addressed this issue in a footnote by noting that, while Illinois does not issue marriage licenses to same-sex couples, Illinois can recognize same-sex marriages solemnized in other jurisdictions, such as Canada, by virtue of its civil union statute.  Seemingly, because Illinois’ civil union statute provides individuals with the obligations, responsibilities, protections and benefits afforded or recognized by the law of Illinois to spouses, the issue is really one of semantics; that is, whether their relationship is called a civil union or a marriage, the parties are really spouses under Illinois law and, under Windsor, spouses for federal law purposes.

One thing to keep in mind is that section 2 of the federal Defense of Marriage Act (DOMA) continues in full force and effect despite the Supreme Court’s opinion in Windsor.   Section 2 of DOMA provides that no state is required to give effect to any other state’s recognition of same-sex marriage and any right or claim arising from such relationship.  To the extent that Illinois contained a mini-DOMA statute prohibiting same-sex marriage, the court in Cozen O’Connor could not have reached its result (it is interesting to note that no mention of Section 2 of DOMA is made in the court’s opinion, although it may have indirectly addressed the issue by arguing that Illinois extended – i.e., did not prohibit - the benefits of marriage to same-sex individuals in civil unions).  To the extent that a state does not contain an absolute prohibition on same-sex marriage and provides for civil unions (or, perhaps even domestic partnership benefits), will the courts in such states follow Cozen O’Connor and rule that their same-sex residents are entitled to be treated as spouses under state (and ultimately federal) law if they were legally married in another jurisdiction?  Currently, Colorado, Hawaii, Illinois and New Jersey provide for civil unions, with Illinois and New Jersey specifically providing that the parties to such unions are entitled to the same rights and benefits as married individuals.   Domestic partnership benefits are provided under Nevada, Oregon and Wisconsin law.  

One other point that bears mentioning is that, despite the outcome, the court in this case actually took a more restrictive approach in determining the marriage status of the women.   In determining whether an individual is married for federal law purposes, the Supreme Court in Windsor did not opine on whether marriage status is incurred simply when spouses are married in a state that recognizes same-sex marriages, irrespective of their current residence, or whether the spouses must have been married and currently reside in a state that recognizes same-sex marriages.    This is commonly called the “state of celebration” versus “state of domicile” application.  In the Cozen O’Connor case, the latter more restrictive application was adopted.   This is contrary to the federal government’s own position.    With respect to the provision of federal benefits to federal employees, the United States Office of Personnel Management (OPM) has taken the position that federal benefits coverage is available to a legally married same-sex spouse of a federal employee or annuitant, regardless of the employee’s or annuitant’s state of residency.  Therefore, as long as the same-sex couple was married in a state that recognizes same-sex marriages, they would be entitled to federal benefits.  OPM has also taken the position that legal same-sex marriages outside of the United States will be recognized within the United States.  

The IRS is expected to release guidance soon on the application of Windsor.  What do you think the rules for determining marriage status will be?

-Shaun Terrill (Compensation Planning)