NEW YORK, July 8 (Reuters) - The Department of Justice will no longer intervene to block same-sex married couples from filing joint petitions for bankruptcy, according to a department spokesperson.
All petitions for U.S. bankruptcy are filed in federal court. Before the policy change, the U.S. Trustee, a division of the Justice Department charged with enforcing the U.S. Bankruptcy Code, routinely intervened to dismiss joint bankruptcy filings by same-sex couples who were married under state law. The trustee's position was that the bankruptcy code only allows joint filings by opposite-sex spouses as defined under the federal Defense of Marriage Act (DOMA), which bars federal recognition of same-sex marriage.
The policy change is the latest setback for the 1996 law, which has come under increasing pressure since the Obama administration announced in February that it would no longer defend its constitutionality.
In June, a bankruptcy judge in Los Angeles held that the Defense of Marriage Act was unconstitutional and could not prevent a married gay couple from filing a joint bankruptcy petition. Twenty of the 24 federal bankruptcy judges in Los Angeles signed onto the opinion. In response to the ruling, the U.S. Trustee filed motion to dismiss the case under the Defense of Marriage Act.
In an unexpected turnabout on Wednesday, the U.S. Trustee filed a request to withdraw its appeal in the case.
"The Department of Justice has informed bankruptcy courts that it will no longer seek dismissal of bankruptcy petitions filed jointly by same-sex debtors who are married under state law," Justice Department spokesperson Tracy Schmaler wrote in an email to Reuters.
The California case involved Gene Douglas Balas and Carlos Morales, who were married in the state in 2008. They filed a joint bankruptcy petition on February 24, the day after Attorney General Eric Holder announced in a letter to members of Congress that the Obama administration would continue to enforce the Defense of Marriage Act, but would no longer defend the law in court.
"The decision to stop filing motions to dismiss bankruptcy petitions avoids generating costly and time-consuming constitutional litigation," Schmaler said in her email.
The U.S. Trustee has also withdrawn its objection to a joint filing by another same-sex couple in the Southern District of California, according to Schmaler.
The lawyer representing Balas and Morales, Robert Pfister of Klee, Tuchin, Bogdanoff & Stern, said he was "delighted" about the policy change and would no longer pursue an appeal to the 9th Circuit Court of Appeals challenging the trustee's motion. "It's more than we could have hoped for even before the 9th Circuit," he said. "Now we have a change in nationwide policy by the federal government."
Arthur Leonard, a professor at New York Law School, said the policy change is evidence that "DOMA is crumbling under its own weight."
On July 1, the Justice Department filed a supporting brief in a case brought by a federal worker seeking health insurance benefits for her wife. The brief represented the first time the Justice Department has gone beyond saying it won't defend the marriage law to actively arguing that the law is unconstitutional, according to Leonard.
Leonard said the bankruptcy case would have made a compelling challenge to the constitutionality of the marriage law had the case made its way to the Supreme Court. "It makes no sense for couples married under state law to file separate petitions when their marital assets and liabilities are treated jointly under state law," he said.
The case is In re: Balas and Morales, U.S. Bankruptcy Court, Central District of California, No. 2:11-bk-17831.
For Balas and Morales: Robert Pfister of Klee, Tuchin, Bogdanoff & Stern.
For the U.S. Trustee: Peter Anderson and Jill Sturtevant.
(Reporting by Terry Baynes)