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Federal Court Refuses to Dismiss Discrimination Claims by Married Same-Sex Couples Denied Benefits Plan Participation

Posted on: September 25th, 2014 by Art Leonard No Comments

A Washington State employer that refused for almost a year to allow employees to enroll their same-sex spouses in the employer’s health plan lost its motion to dismiss a discrimination lawsuit pending before U.S. District Judge Ricardo S. Martinez on September 22.  The employer, BNSF Railway Company, insisted that it could not provide the benefits because the employee benefits plan defined marriage as “between one man and one woman.”  The employer did not extend the benefits until January 1, 2014, after it had amended its plan through collective bargaining with its employees’ union to adopt a more inclusive definition of marriage, most likely in response to the Supreme Court’s ruling last year in U.S. v. Windsor and the subsequent federal recognition of same-sex marriages.

Michael Hall and Amie Garrand are employees of BNSF Railway in the state of Washington, where voters approved a marriage equality law during the 2012 general election.  After that law went into effect, Hall married Elijah Uber on January 21, 2013, and sought to enroll him as a spouse under the BNSF health care plan.  BNSF and its plan administrator, United Healthcare, refused to enroll Uber.  Amie Garrand encountered the same problem after she married Carol Garrand.  The employer rejected repeated attempts by Hall and Garrand to persuade it that under Washington law their legally valid marriages were entitled to equal treatment.  Hall and Garrand have now enrolled their spouses, but brought suit seeking damages for the exclusionary period and an Order by the court determining that legally-married same-sex spouses living in a state that recognizes their marriage are entitled to equal treatment under employee benefits plans.

Hall and Garrand asserted claims under the federal Equal Pay Act, which forbids employers from discrimination in compensation and economic benefits because of the sex of an employee, the Employee Retirement Income Security Act (ERISA), which authorizes federal courts to entertain lawsuits by employees seeking benefits due to them under employee benefit plans, and Washington’s Law Against Discrimination, which forbids employment discrimination because of sex and sexual orientation.  Hall also added a claim under Title VII of the federal Civil Rights Act of 1964, which forbids sex discrimination in terms and conditions of employment.  The railroad moved to have all claims dismissed, arguing that the federal discrimination claims were invalid because federal law does not forbid sexual orientation discrimination, that the state law claim was preempted by ERISA, and that the ERISA claim was subject to an arbitration provision in the employee benefits plan and so could not be litigated in federal court. The railroad also argued that there was no need for prospective relief, since it had changed its plan to provide equal coverage for same-sex spouses through negotiations with the union.

Judge Martinez ruled against the railway on all of its assertions except arbitration, finding that the ERISA claim must be dismissed.

The key to Martinez’s ruling was his agreement with the plaintiffs that the employer’s action could be challenged as sex discrimination.    The railroad had argued that “Mr. Hall is really alleging a claim of discrimination based on his sexual orientation, not his sex, which cannot be maintained under Title VII.”

“While acknowledging that it is often difficult to distinguish sex discrimination claims by people identifying as homosexual from those claims based solely on alleged sexual orientation discrimination,” wrote the judge, “the Court disagrees with Defendant’s interpretation of the instant claims.”  Judge Martinez quoted from the factual allegations in Hall’s complaint to show that he was actually contending that he was subjected to discriminatory treatment because he was male.  Hall pointed out that had he married a woman his application would have been accepted, but that the railroad had refused to cover Elijah “based solely on the fact that Michael as male.”  That is, if Hall were a female employee who had married Elijah, his application to enroll his spouse would have been accepted without question.  He pointed out that BNSF employs female engineers (his job classification) and provides coverage for their male spouses.

Hall’s complaint concludes on this point, “The one man/one woman definition of spouse used by BNSF to limit its liability to cover spousal health benefits amounts to a BNSF policy to discriminate against Michael Hall simply because he is male; under this policy, if he were a female married to Elijah, the benefit would be paid.”

Or, as Judge Martinez put it in rejecting the motion to dismiss, “Plaintiff alleges disparate treatment based on his sex, not his sexual orientation, specifically that he (as a male who married a male) was treated differently in comparison to his female coworkers who also married males.”

Martinez found support for this conclusion in a 2009 ruling by 9th Circuit Judge Stephen Reinhardt, who published an opinion upholding a similar claim for benefits by the same-sex partner of a male federal public defender.  In that opinion, rendered as part of an internal 9th Circuit grievance procedure, Judge Reinhardt relied alternatively on the circuit court’s own internal ban on both sex and sexual orientation discrimination.  Martinez noted a handful of other federal trial court rulings that could be construed to have accepted similar arguments.

“While the court makes no comment with respect to the validity of Plaintiff Hall’s Title VII claim in the instant matter,” wrote Martinez, “it does  find that Plaintiff has satisfied the initial burden of stating a claim that is plausible on its face.  Accordingly, the Court denies Defendant’s motion to dismiss the Title VII claim.”  Martinez found on similar grounds that he should deny the motion to dismiss the Equal Pay Act claims by Hall and Garrand.  He also rejected the railroad’s claim of ERISA preemption of the state law claim, since ERISA preempts state anti-discrimination laws only to the extent that they go beyond the protections of Title VII. Having found that Title VII could plausibly apply to this case, Martinez found the motion to dismiss the Washington state law claim to be premature.

However, the Railway Labor Act, which applies to employment disputes affecting this employer, read in conjunction with the ERISA claim, would mandate that the ERISA claim go to arbitration rather than litigation, so Judge Martinez granted the motion to dismiss the ERISA claim.  That shouldn’t make any difference to the plaintiffs, who are now free to pursue their Title VII, EPA and Washington state discrimination claims in the federal lawsuit.  They could also file a grievance with the plan administrator and seek arbitration of their ERISA claim.

Rejecting the railroad’s argument that its extension of benefits effectively mooted the plaintiffs’ claim for prospective relief, Martinez observed that the railroad appeared to “misconstrue” that claim.  “Plaintiffs seek, inter alia, an Order determining whether health benefit for same-sex spouses in states where same-sex marriage is legal are mandated under current law and directing Defendant to provide health benefits to such same-sex spouses as a matter of right in the future.”  Since the court had found the sex discrimination claims to be plausible, wrote Martinez, “the Court cannot find at this time that their claims for such prospective relief are moot.”

The plaintiffs are represented by Seattle attorneys Duncan Calvert Turner and Cleveland Stockmeyer, with amicus assistance from Lambda Legal and Lambda’s cooperating attorney in Seattle, Jennifer S. Devine.  Lambda Legal’s involvement in the case signals that this litigation is about more than just financial recompense for the plaintiffs.  The public interest firm is in it for a published court order on the ultimate question of whether employers can refuse to provide benefits coverage to legally-married same-sex couples.  Thus a settlement of the financial claims, which might be in the offing in light of the court’s ruling on the motion to dismiss, may not be enough to end this litigation.

Interestingly, just days after this ruling, Gay & Lesbian Advocates & Defenders filed a similar Title VII claim with the Equal Employment Opportunity Commission on behalf of a Walmart employee, Jacqueline Cote, who was denied spousal health insurance for her wife, Diana Smithson.  Cote and Smithson married in 2004 in Massachusetts, where Cote is an associate at a Walmart store in Swansea.  Walmart denied their application for coverage repeatedly from 2006 through 2012.  In 2013, reacting to the Windsor decision and federal recognition of legal same-sex marriages, Walmart announced that it would change its policy effective January 1, 2014, so now Smithson is enrolled in the plan. But Cote and Smithson accumulated over $100,000 in unpaid medical bills for treatment of Smithson for several problems, including ovarian cancer that required expensive chemotherapy, during the period when Walmart refused to cover Smithson, for which they are seeking compensation in their discrimination case.