New York Law School

Art Leonard Observations

Court Awards Survivor’s Benefits to Same-Sex Spouse

Posted on: July 30th, 2013 by Art Leonard No Comments

U.S. District Judge C. Darnell Jones, II (E.D.Pa.), ruled July 29 that the federal Employee Retirement Income Security Act (ERISA) should be construed, now that DOMA Section 3 has been declared unconstitutional, to recognize a same-sex marriage for purposes of an employee benefit plan when the married couple resided in a state that recognized the validity of the marriage.  The ruling means that Jennifer J. Tobits will be entitled to a survivor’s benefit under the Profit Sharing Plan maintained by a Philadelphia-based law firm, Cozen O’Connor PC, which had employed her late wife, Sarah Ellyn Farley, in its Chicago office.  Tobits and Farley married in Canada in 2006, and lived together in Illinois.  Cozen O’Connor v. Tobits, 2013 U.S. Dist. LEXIS 105507.

Farley was diagnosed with cancer shortly after the women were wed, and she passed away on September 13, 2010.  Shortly after her death, Farley’s parents, who had not approved of her relationship with Tobits, presented Cozen O’Connor with a form dated September 12, 2010, which they represented to be a designation by their daughter of them as her beneficiaries entitled to the survivor’s benefit, which the court says amounts to about $49,000.  Tobits also submitted a claim for the benefits, based on her status as surviving spouse of Farley.

The Cozen O’Connor Profit Sharing Plan provides for retirement annuities for participants.  If a participant dies prior to retirement, the annuity payment they earned goes to their surviving spouse, unless the spouse has approved the participant’s determination to designate somebody else as the beneficiary.  Tobits never approved any designation of Farley’s parents as beneficiaries, and she disputed the validity of the designation form they presented, purportedly executed the day prior to Farley’s death.

Cozen O’Connor, caught in the middle of clashing claims, and confronting the definition of “spouse” under federal law as set forth in Section 3 of the Defense of Marriage Act, filed a suit in the U.S. District Court in Philadelphia, seeking a judicial determination of who is entitled to the benefit.  This kind of lawsuit is called an “interpleader action,” in which a party who has a financial obligation to two or more others can file an action in which the potential creditors are drawn in as defendants and will be bound by the determination of the court.

The Farleys, relying on Section 3 of DOMA as providing the definition of “spouse” for purposes of a federally-regulated employee benefit plan, argued that their daughter had died without leaving a legally recognized spouse.  Thus, under the terms of the Plan, her surviving parents would be entitled to the benefit.  Futher, they argued that the designation form was valid.  Tobits, represented by the National Center for Lesbian Rights, argued that she was the surviving legally-recognized spouse, and that she had never consented to waive her rights in favor of her wife’s parents in any case, so the designation form was invalid.

Judge Jones heard the arguments on pre-trial motions last year, then put the case on his “suspense calendar” to sit until the U.S. Supreme Court ruled on the constitutionality of Section 3 of DOMA.  Once that ruling came down on June 26, wrote Judge Jones, the case had to be decided in Tobits’ favor. 

“The Windsor Court held that because the state of New York recognized same-sex marriages as valid — and, to wit, the Canadian marriage of Edith Windsor and Thea Spyer — DOMA unlawfully deprived those couples of the equal liberty of persons that is protected by the Fifth Amendment,” wrote Jones.  “As it stood, DOMA ‘wrote inequality into the entire United States Code.’ That ‘written inequality’ in DOMA Section 3 extended to the ERISA definition of ‘Spouse.’ Prior to the Court’s decision in Windsor, under the plain language of ERISA, the [Internal Revenue] Code, and the Plan at issue in this case, qualified retirement plans were under no obligation to provide benefits to same-sex  Spouses.  Following the Court’s ruling, the term ‘Spouse’ is no longer unconstitutionally restricted to members of the opposite sex, but now rightfully includes those same-sex spouses in ‘otherwise valid marriages.'”

The problem for this case was to determine whether the Farley-Tobits marriage is an “otherwise valid marriage” for purposes of the Cozen O’Connor Plan.  The Plan itself provided that it terms would be defined according to their meaning under ERISA, and with the Supreme Court’s ruling striking down Section 3 of DOMA, there is no longer a federal statutory definition of “marriage” or “spouse” to be used in ERISA cases.  Thus, the court must fall back on the normal practice of asking whether the parties are in a marriage recognized by the state where they live.  Judge Jones rejected the idea that this should be based on Pennsylvania law just because the Cozen O’Connor firm is headquartered there and the plan documents refer to Pennsylvania law, since ERISA preempts state law and Tobits was never employed in Cozen O’Connor’s office in Pennsylvnia.  He warned that defining marriage according to the law of the state where a plan is written could lead employers to “forum shop” for a state that does not recognize same-sex marriages if they want to deny such benefits.

Thus, the question fell to Illinois law because Farley was employed in Illinois and that’s where the couple resided.  Illinois has a Civil Union Act but does not have same-sex marriage.  Thus, the Farley-Tobits marriage is treated as a civil union for purposes of Illinois law.  However, the issue in this case is not the meaning of “marriage” but rather the meaning of “spouse,” since that is the term used in the Plan to described the principal beneficiary, “surviving spouse.”  Wrote Jones, “By virtue of its civil union statute, Illinois can recognize same-sex marriages solemnized in other jurisdictions, such as Canada.”  He pointed out, in a footnote, that in the Illinois Civil Union Act, the statute provides “persons entering into a civil union with the obligations, responsibiltiies, protections and benefits afforded or recognzied by the law of Illinois to spouses.” 

This proved sufficient for Judge Jones.  “There can be no doubt that Ms. Tobits is Ms. Farley’s ‘surviving Spouse’ under the Plan in light of the Supreme Court’s decision in Windsor,” he wrote.  “Post-Windsor, where a state recognizes a party as a ‘Surviving Spouse,’ the federal government must do the same with respect to ERISA benefits — at least pursuant to the express language of the ERISA-qualified Plan at issue here.  There can be no doubt that Illinois, the couple’s place of domicile, would consider Ms. Tobits Ms. Farley’s ‘Surviving Spouse’ — indeed, it already has made that specific finding under state law,” he wrote, noting further that Tobits had secured from the Cook County Circuit Court an Order designating her as Ms. Farley’s sole heir at law as her surviving civil union partner. 

“Indeed, because the Illinois probate court recognized Ms. Tobits as the sole heir to a civil union, it accepted as valid the marriage between Ms. Tobits and Ms. Farley that took place in Canada in 2006.  As this Canadian marriage was deemed valid, albeit under the nominal title of ‘civil union’ in Illinois, there can be no dispute that Ms. Tobits is a ‘surviving Spouse’ pursuant to the Plan.”

Thus, it was fortuitous that Farley and Tobits lived in a state that provides legal recognition as spouses to same-sex couple residents who marry elsewhere.  This decision doesn’t answer — because it needn’t answer — the looming question of whether the result would have been the same had Farley worked in Cozen O’Connor’s Philadelphia office, inasmuch as Pennsylvania has a state DOMA amendment and does not afford any recognition to the status of same-sex couples married elsewhere but resident in Pennsylvania.  Although ERISA broadly preempts state laws relating to employee benefits plans, it still looks to state law to identify the marital status of employees covered by those plans.  As such, this decision’s persuasive precedential value seems limited, at least for now, to states that afford spousal recognition to same-sex marriages.

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