Could This Supreme Court Case Affect Your Portfolio?

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The Supreme Court heard oral argument yesterday and today on the constitutionality of a provision in the Defense of Marriage Act. While the issue of marriage equality stokes intense social debate, the question I'd like to look at today is whether the law is hurting some of the companies you either own or are considering buying.

The corporate take on DOMA
One gauge of the corporate perception of DOMA is that 278 parties, including both corporate employers and other interested organizations, have put their names on an amicus brief filed in the case to give their views on the impact of DOMA on the way they treat their employees. The appendix of companies that joined the brief is longer than the brief itself.

Some corporate leaders have taken more vocal stances. At the Starbucks (NASDAQ: SBUX  ) shareholder meeting earlier this year, CEO Howard Schultz responded to one critic who argued that Starbucks' views on marriage equality cost the company money:

It is not an economic decision. ... If you feel, respectfully, that you can get a higher return than the 38% you got last year, it's a free country. You can sell your shares of Starbucks and buy shares in another company. Thank you very much.

Along similar lines, Goldman Sachs (NYSE: GS  ) CEO Lloyd Blankfein recently recorded a commercial in support of marriage equality in which he notes that "equality is just good business and is the right thing to do." He also points out that his position is the one shared by the majority of Americans. Goldman Sachs, which has one of the most conservative images on Wall Street, is just one of many financial firms sharing its view on the topic.

The financial impact
As the amicus brief makes clear, the need to navigate the provisions of the Defense of Marriage Act has had a real cost on companies that must address the issues it creates. Having to compete in the global marketplace has made finding and keeping employees and making them feel included a key part of worker productivity and company profitability.

Measuring the exact financial impact of the law is hard. With opposing groups supporting boycotts against companies on either side of the marriage equality issue, balancing lost revenue from one group of customers or another becomes almost impossible to do with any precision.

Yet the administrative costs of dealing with the law are real. MassMutual Financial's general counsel Mark Roellig explained that in order to handle the disparate treatment of employees that the law requires:

You have to keep separate sets of books. You've got to continually be adjusting. And then also picking up the potential legal risk if you make a mistake. So it's ongoing administrative costs that are pretty significant.

Because different states have different rules, insurance laws vary, and at the federal level there are a whole new set of standards. Signing the brief is a statement from dozens of major corporations that in their view, while they may be forced to comply with the law, they don't believe it's in their best interests as employers.

The Supreme Court will not rule on the case until sometime this summer. Quantifying the financial benefits to the companies you own may be difficult, but the mass of companies taking a vocal position in the case gives a strong indication of what decision corporate America would like to see on the case.

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