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The court held that a state National Guard member could not be discharged for saying publicly that he is gay—but could be excluded from any of the many positions in the Guard that require federal recognition.
"Don’t Ask, Don’t Tell" was a policy introduced by President Bill Clinton during his first weeks in office in 1993 as an effort to address controversy over gays serving in the military. Under the earlier policy, military officials asked recruits and others in service whether they were gay, then discharged both gay people who answered "yes" and those who answered "no" but were found to have lied. The new policy barred officials from inquiring or probing the sexual orientation of people in military service, but it still provided for the discharge of people whose public statements or actions affirmed that they were gay.
Although Clinton intended the policy as a step forward in defending the rights of gays to serve in the military, in fact it continued harming the gay soldiers, sailors and others, who now had to lie covering up their identity and sexual orientation to keep their jobs.
Andrew Holmes, a California National Guardsman, claimed he was pressured by his superiors to issue a statement that he was not gay. Instead, he presented a memo to his commanding officer stating that as "a matter of conscience, honesty and pride, I am compelled to inform you that I am gay". This memo brought a counter statement by the U.S. Army National Guard, saying that as a "gay" person Holmes could not have a federal recognition, therefore he would never be called again to the reserve service.
Holmes sued in federal court and won, but the Ninth U.S. Circuit Court of Appeals held that Holmes continued to hold a position in the state National Guard that does not require federal recognition and is not subject to being called into federal service.