Attorney Tom Carpenter (Photo courtesy Tom Carpenter)
LGBT Bankruptcy and the Al Capone Moment
By Tom Carpenter
One of the most infamous gangsters of the 1920’s, Al Capone, led a syndicate that was involved in numerous illegal activities including prostitution, gambling and bootlegging liquor during prohibition. He was also the mastermind behind the St. Valentine’s Day massacre where members of his gang, disguised as Chicago Police officers, lined up seven opposition gang members against the wall and executed them using machine guns and shotguns. He was never tried and convicted for any of these reprehensible crimes but was brought to justice for one of the most mundane felonies on the books-tax evasion.
You must be asking yourself what this has to do with any piece written about an LGBT/POV?
Boring is sometimes good. Simple is sometimes better than complex and exciting. That is what happened last week in Los Angeles. While most of us were paying attention to the motion filed by the opponents to the marriage equality to disqualify Judge Vaughn Walker in the Prop 8 case, 21 bankruptcy judges in the Central District of California had just signed an opinion finding the Defense of Marriage Act (DOMA) unconstitutional.
Yes, the Prop 8 case and the attempt to disqualify Judge Walker because he was gay and in a relationship at the time he ruled in favor of marriage equality was much more interesting and exciting than what was happening in the Bankruptcy Court in Los Angeles. If Judge Walker had been disqualified, Prop 8 proponents would have gotten a new trial and a second bite at the apple. Our opponents had prayed that Judge Ware would find that a gay judge could not be fair and impartial in a case involving a question of LGBT rights. The logic of this ridiculous position would lead to a judiciary made up of only straight white males. We should just call Justices Ruth Bader Ginsberg, Sonia Sotomayor, Elena Kagan and, yes, Clarence Thomas, and tell them to hang up their robes. In our opponents’ world, women judges could not hear cases of sexual discrimination brought by women and judges of color could not adjudicate racial discrimination cases.
On the day after the hearing, the decision came down from San Francisco where Judge James Ware, of course, ruled against the opponents of marriage equality and let stand Judge Walker’s decision that Prop 8 is unconstitutional. The Proposition 8 case still has a long way to go before we know the final outcome. The drama and excitement continues in California where Perry v Brown is on appeal in the 9th Circuit. The press is on top of this one.
Down south, the mundane case of In re: Gene Douglas Balas and Carlos A. Morales reached a critical point. This gay couple was legally married in California on August 20, 2008 and like many couples had suffered health problems, hospitalizations and unemployment. Overwhelmed by financial difficulties, they sought relief of the court to restructure and repay their debts under Chapter 13 or the Bankruptcy Code.
In Washington, DC, on February 23, 2011, Attorney General Eric Holder sent a letter to House Speaker Boehner in which he informed the Speaker that the Justice Department and President found portions of DOMA unconstitutional. As a result, the Attorney General said the Justice Department would no longer defend any lawsuits in which marriage was defined as the union of one man and one woman. He even went further by saying that his attorneys would inform the courts that heightened scrutiny should apply in any pending cases.
After reading this letter, Gene and Carlos’ attorney decided to file a joint petition of bankruptcy rather than filing two individual petitions.
In spite of the letter from the Attorney General saying that the Justice Department would no longer defend portions of DOMA, the United States Bankruptcy Trustee brought a motion to dismiss because the joint petition had been filed by two men. Thus the only issue before the court was “whether some legally married couples are entitled to fewer rights than other legally married couples, based solely on a factor (the gender and/or sexual orientation of the parties in the union) …..” The court answered succinctly that “no legally married couple should be entitled to fewer bankruptcy rights than any other legally married couple” and denied the government’s motion to dismiss.
Boring, boring, boring but very, very important.
Bankruptcy Judge Thomas Donovan’s well-crafted decision analyzes and concludes DOMA is unconstitutional as applied in this case. First, he ruled that DOMA violates the equal protection afforded citizens under the Constitution, whether applying the heightened scrutiny standard or the more differential rational-basis test. He concluded that Debtors also demonstrated that there is no valid governmental basis for DOMA.
“Although individual members of Congress have every right to express their views and the views of their constituents with respect to their religious beliefs and principles and their personal standards of who may marry whom, this court cannot conclude that Congress is entitled to solemnize such views in the laws of this nation in disregard of the views, legal status, and living arrangements of a significant segment of our citizenry that includes Debtors in this case. To do so violates the Debtors’ right to equal protection of those laws embodied in the due process clause of the Fifth Amendment.”
What really makes this case even more significant is that 19 of 23 Bankruptcy judges in the Central District of California signed the opinion. Occasionally, another judge will join a colleague’s decision, but in over 30 years as a lawyer, I have never seen so many judges sign an opinion. This sends a strong message that these Federal Judges support marriage equality.
Since Attorney General Holder will not defend DOMA, Speaker Boehner has retained former Solicitor General Paul Clement to represent the House. Boehner is under fire from Citizens for Responsibility and Ethics in Washington alleging he broke the Antideficiency Act when he ordered the House general counsel’s office to pay Clement $500,000, leaving the general counsel’s office without enough funds to pay staff salaries.
What does this mean? As more cases like this one are filed around the country, Clement will have to appear and will demand fees from Boehner. Where will the funding come from in a time when the Republicans are leading the charge to cut spending? Does any one think Clement and his firm will work for free? The writing is on the wall.
This sad and difficult situation for Gene and Carlos has not received near the amount of press as the litigation surrounding Prop 8. The reason for this is clear: the case is mundane, technical and quite frankly, boring.
But in the end this bankruptcy case is just like Capone’s tax evasion – not very exciting, but having great importance. The lesson learned is that small cases involving money can have a huge impact.
More to come on how we can use this lesson in our march to equality.
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