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Federal Court Applies U.S. v. Windsor Retroactively to Allow Lesbian Widow to Seek Pension Benefit

Posted on: January 11th, 2016 by Art Leonard No Comments

U.S. District Judge Phyllis J. Hamilton ruled on January 4 in Schuett v. FedEx Corporation, 2015 U.S. Dist. LEXIS 244, 2015 WL 39890 (N.D. Cal.), that the Supreme Court’s 2013 decision in U.S. v. Windsor, striking down Section 3, a key provision of the Defense of Marriage Act (DOMA), could be applied retroactively to allow Stacey Schuett, a lesbian widow, to sue her late spouse’s employer for a survivor annuity.  Although the judge rejected a claim that the lawsuit could be brought directly under the company’s pension plan or as a breach of fiduciary duty action against the plan’s administrators, she accepted the argument that the plan could be sued for violating the Employee Retirement Income Security Act (ERISA) by failing to authorize the annuity for the plaintiff.

The story is complicated.  This account is based on what Stacey Schuett alleged in her complaint, as summarized by Judge Hamilton.

Schuett lived together in a committed relationship for 27 years with Lesly Taboada-Hall, who passed away from cancer on June 20, 2013, just a week before the Supreme Court’s momentous June 26 decisions rejecting an appeal of the federal court ruling that struck down California Proposition 8 and striking down Section 3 of DOMA.  For almost the entire length of their relationship, Taboada-Hall had been employed by Federal Express (FedEx), and she was a fully-vested participant in the FedEx Pension Plan.

As required by ERISA, the plan states that if an employee with a vested pension dies before retiring, their surviving spouse is eligible to receive a “qualified joint and survivor annuity” for the rest of their life.  The written pension plan uses the federal definition of spouse, directly referring to Section 3 of DOMA, which defined a spouse as “a person of the opposite sex who is a husband or wife.”  This is the definition that the Supreme Court declared unconstitutional on June 26, 2013.

Ms. Taboada-Hall was diagnosed with cancer in February, 2010, and as her condition worsened she took a medical leave of absence from FedEx in November 2012.  In February 2013, facing the fact that she would not be able to resume working, she contacted a FedEx human resources representative about her pension and other employee benefits, since she was eligible for early retirement under the terms of the pension plan.  The representative advised her not to retire, since she could continue on medical leave and have her medical expenses covered under the FedEx employee benefits plan.  She was asked about her other benefits, and was advised to name Schuett as her sole beneficiary on the other plans.  She also asked whether Schuett would get the “defined pension benefit” to which Taboada-Hall would be entitled, if Taboada-Hall died before retiring.  The representative said he did not know the answer to that and said “ask someone else.”

On June 3, 2013, the doctor advised that Taboada-Hall was terminal and did not have long to live.  Schuett and Taboada-Hall looked again through the benefits package, and noticed that the plan defined “spouse” with reference to DOMA.  Between June 3 and June 13, they had several conversations with FedEx human resources personnel trying to find out what would happen to Taboada-Hall’s benefits, and on June 13 they received the answer: Schuett would not receive a surviving spouse benefit because only opposite-sex partners could be recognized under the plan.

They quickly arranged with a Sonoma County Supervisor to come to their home and perform a civil marriage ceremony, even though they could not get a marriage license because Proposition 8 was still in effect.  The ceremony was witnessed by friends and family members on June 19. The next day Taboada-Hall died, and six days later Prop 8 and DOMA were declared unconstitutional.

What to do next?  Two days after the Prop 8 decision, the 9th Circuit Court of Appeals lifted its stay and Judge Vaughan Walker’s 2010 ruling holding Prop 8 unconstitutional went into effect.  Of course, the logical implication of the Supreme Court’s decision that the proponents of Prop 8 did not have standing to appeal Judge Walker’s decision was that Walker’s ruling should have been in effect from the summer of 2010 when it was issued, so by rights Taboada-Hall and Schuett should have been able to get a marriage license at any time since then.  Furthermore, the logical implication of the DOMA decision was that the federal definition of marriage was unconstitutional from the date it was enacted in 1996.

Schuett went into Sonoma County Superior Court on August 6, 2013, filing a Petition to Establish the Fact, Date, and Place of Marriage, contending that the June 19 marriage should be retroactively validated.  That court agreed, ruling on September 18, 2013, that the marriage was valid as of June 19, 2013, issuing a delayed certificate of marriage carrying that date.  This means that Schuett was a surviving widow when Taboada-Hall died on June 20, and thus she should be entitled to be treated as a surviving spouse by FedEx.

But not so fast!  FedEx turned her down for the benefit, arguing that eligibility depended on the terms of the written plan, which was limited to surviving different-sex spouses.  In Schuett’s federal lawsuit against FedEx for the benefit, Judge Hamilton agreed with FedEx that Schuett could not sue for the benefit directly, since only beneficiaries under a plan can sue for benefits and under the terms of the written plan she was not a beneficiary.  Furthermore, Judge Hamilton agreed with FedEx that the administrators of the plan had not violated their fiduciary duty, which required them to follow a reasonable interpretation of the written plan’s terms.  The judge granted FedEx’s motion to dismiss Schuett’s claims under these two legal theories.

However, plan administrators are required to administer plans “in accordance with applicable law,” wrote Judge Hamilton.  ERISA provides that a plan must provide an annuity benefit to the spouse of an employee who has a fully vested pension benefit but dies before they have retired and begun to receive retirement benefits.  Schuett argued that since California recognized her as being married on June 19, 2013, the day before Taboada-Hall died, she should be considered a surviving spouse for purposes of this ERISA provision.  She pointed out that in the Windsor case, the Supreme Court not only declared DOMA unconstitutional but also ordered that the federal government refund with interest the money Edie Windsor had paid to cover estate taxes of her wife, Thea Speyer, which would not have been due if the federal government recognized their Canadian marriage.  Thus, the ruling in Windsor was itself retroactive.

Judge Hamilton accepted Schuett’s argument, finding that “ERISA requires a fiduciary to follow plan documents insofar as such documents are consistent with Title I of ERISA.  ERISA requires defined benefit plans such as the Plan at issue to provide a qualified preretirement survivor annuity to all married participants who are vested and die before the annuity starting date, unless the participant has waived the benefit and the spouse consented to the waiver.”  Furthermore, the Department of Labor had issued a “guidance” document making clear that “ERISA’s mandatory benefits provisions apply to all spouses, including same-sex spouses.”

Among the cases Judge Hamilton relied upon were Cozen O’Connor P.C. v. Tobits, 2013 U.S. Dist. LEXIS 105507, 2013 WL 3878688 (E.D. Pa. 2013), specifically on an ERISA survivor benefits claim involving a same-sex couple, and Harper v. Virginia Dep’t of Taxation, 509 U.S. 86 (1993), on retroactivity when the Supreme Court announces a new rule of federal law and applies it retroactively to the parties in the case.

Hamilton found that the Windsor decision “appears to invalidate Section 3 of DOMA retroactive to 1996, the date of enactment.  Notably, the decision in Windsor applied retroactively.”

“In the present case,” she wrote, “although California denied recognition of the term ‘spouse’ to same-sex couples at the time of Ms. Taboada-Hall’s death on June 20, 2013, the Sonoma County Superior Court determined that plaintiff and Ms. Taboada-Hall were married on June 19, 2013, and issued a delayed marriage certificate. . .  [T]his court defers to the California court’s certification of the marriage. . .  The court finds that plaintiff has adequately alleged that FedEx has violated Title I of ERISA by acting contrary to applicable federal law and failing to provide plaintiff with a benefit mandated by ERISA, and that she is entitled to pursue equitable relief to remedy that violation.”  She concluded on this point that she was not persuaded “under the facts alleged in the complaint that there is any basis for denying retroactive application of Windsor.” Thus, Judge Hamilton denied FedEx’s motion to dismiss Schuett’s claim under the ERISA violation theory.

Stacey Schuett is represented by Nina Rachel Wasow, an attorney with Feinberg, Jackson, Worthman & Wasow (Oakland); Amy Whelan, Christopher Francis Stoll, and Shannon Minter of the National Center for Lesbian Rights (San Francisco); Julie Wilensky of Civil Rights Education & Enforcement Center (Berkeley); and Tate A. Birnie (Sebastopol).  FedEx used in-house counsel to litigate its motion to dismiss, but would probably retain outside counsel if it seeks to appeal this ruling to the 9th Circuit.  Since the FedEx plan administrators are under a fiduciary duty not to pay out any benefits that are not required by the plan or the law, they might conclude that they have to appeal this ruling, although the pragmatic approach could be to avoid the costs of litigation and grant Schuett’s claim for the annuity.  Of course, it is also open to Schuett to appeal the court’s order dismissing her claim on the other legal theories.

Houston Mayor’s Order Sparks Court Battle on Partner Benefits

Posted on: December 18th, 2013 by Art Leonard No Comments

In November, recently re-elected openly lesbian Mayor Annise Parker of Houston, Texas, directed the city’s Human Resources department to recognize the out-of-state same-sex marriages of city employees for benefits
purposes, to be effective January 1, 2014.  Harris County Republican Chair Jared Woodfill found two taxpayers willing to be plaintiffs in an action challenging Parker’s directive, which was filed on December 17 in Harris County District Court.  District Judge Lisa Millard issued an order blocking Parker’s directive from going into effect, pending a hearing scheduled for January 6.

Mayor Parker premised her directive on the recent conclusion by a federal district judge in Ohio that a state’s refusal to recognize a same-sex marriage performed out-of-state would violate the equal protection rights of the couple in question, assuming that a different-sex marriage would have been recognized, and that the state’s own policy against recognizing same-sex marriages was overcome by federal equal protection requirements.  See Obergefell v. Kasich, 2013 WL 3814262 (S.D. Ohio July 22, 2013).

In his lawsuit, Pidgeon v. Parker, No. 2013-75301/Court 310 (Harris Co. Dist. Ct.), Woodfill raises the state’s DOMA and anti-gay marriage constitutional amendment, as well as a Houston initiative charter amendment that provided that only legal spouses and dependent children of city employees could receive employee benefits.

The court confronts questions about the plaintiffs’ standing to sue, in addition to the question whether federal supremacy compels the city to recognize same-sex marriages contracted elsewhere.  Interestingly, the complaint never mentions Section 2 of DOMA, which purports to relieve states of any obligation to extend full-faith-and-credit to same-sex marriages contracted in other states.   Perhaps there is an emerging recognition that Section 2 of DOMA is not the ground on which the same-sex marriage recognition issue will be fought.

According to a local news report, Millard’s brief order found that plaintiffs had sufficiently alleged “irreparable injury” should Parker’s directive go into effect to qualify for immediate injunctive relief.  A spokesperson for Mayor Parker said that the city would immediately appeal Judge Millard’s order.  The spokesperson, Janice Evans-Davis, also stated that the charter amendment, by its wording, allows benefits for “legal spouses” of city employees, and that Parker’s directive merely requires that the city comply with federal equal protection requirements by treating same-sex couples who married in jurisdictions that allow such marriages as “legal spouses.”  Thus, the charter amendment would not be an impediment to the directive.  Since the federal constitution takes priority over state laws, the Texas Marriage Amendment and Defense of Marriage Act would be overridden in this case.

Of course, this ultimately turns on whether the courts in Texas agree with the reasoning of the Obergefell case.  An adverse determination by the Texas courts could be appealed to the U.S. Supreme Court, which would give that court another opportunity to take a bite out of the marriage equality issue without the need for a direct ruling on whether same-sex couples enjoy a federal constitutional right to marry.

Same-sex partners of municipal employees enjoyed benefits participation in Austin, Dallas, El Paso, Fort Worth and San Antonio, but had been blocked from benefits eligibility in Houston by the charter amendment.  City Attorney David Feldman advised Parker that the charter amendment could be construed to allow benefits for legal same-sex spouses.

Immigration Review Panel Announces Same-Sex Marriage Recognition Rule

Posted on: July 19th, 2013 by Art Leonard 3 Comments

Shortly after the Supreme Court held Section 3 of the Defense of Marriage Act (DOMA) unconstitutional on June 26 in U.S. v. Windsor, Department of Homeland Security Secretary Janet Napolitano announced that the immigration service under her department would recognize same-sex marriages that were valid where they were performed, using the “place of celebration rule.”  But her announcement, which varied from standard practice of considering whether a marriage was recognized where the couple was residing, the “place of domicile rule,” was not binding outside her department.  On July 17, the administrative body whose opinion on this would be crucial also opted for the “place of celebration rule,” as the Board of Immigration Appeals (BIA), a body within the Justice Department’s Executive Office for Immigration Review, ruled on a pending petition by a U.S. citizen seeking lawful resident status for his same-sex spouse.

The case is Matter of Oleg B. Zeleniak, 26 I & N Dec. 158, Interim Decision 3787, 2013 WL 3777692 (BIA July 17, 2013).

Serge Polajenko, a U.S. citizen, filed a Petition for Alien Relative, called an I-130, on March 10, 2010, on behalf of his husband, Oleg Zeleniak, after the men were married in Vermont.  The petition was denied on July 27, 2010, on the ground that DOMA, Section 3, barred immigration authorities from recognizing same-sex marriages.  Polajenko appealed to the BIA, which issued a decision on April 18, 2012, sending the case back to the National Benefits Center Director to address two issues: first, whether the Polajenko-Zeleniak marriage was valid under state law, and second, whether the marriage qualifies as bona fide as required by the Immigration and Nationality Act.  At that time, of course, the Justice Department was on record as finding that DOMA Section 3 was unconstitutional, and it had stopped defending the statute in litigation, but was committed to continuing to enforce it pending a final decision from the Supreme Court.  Remanding the case for these further determinations was, in effect, a holding action.

 The questions posed by BIA are two distinctly separate issues, arising under two different bodies of law.  The second concerns the requirement that a marriage be “bona fide,” not a marriage of convenience entered for the purpose of getting a “green card” (authorization to live and work in the United States), but rather a “real marriage” of parties intending to live as spouses.  In response to the BIA, the Director issued a new decision on June 19, 2012, finding that the couple was validly married under Vermont law, but refusing to consider whether the marriage was bona fide for immigration purposes and again denying a visa for Zeleniak.  Again Polajenko appealed.  This time, as litigation involving DOMA was coming to a climax in several federal courts and clearly headed to the Supreme Court, the BIA sat on the appeal, as it has on many pending cases, waiting for the Supreme Court to rule.

 The BIA’s new decision on Polajenko’s petition holds that the Windsor decision “removed Section 3 of the DOMA as an impediment to the recognition of lawful same-sex marriages and spouses if the marriage is valid under the laws of the State where it was celebrated.  This ruling is applicable to various provisions of the Act, including but not limited to” fiancée and fiancée visas, immigrant visa petitions, refugee and asylee derivative status, inadmissibility and waivers of inadmissibility, removability and waivers of removability, cancellation of removal, and adjustment of status. 

 Thus, the BIA sustained Polajenko’s appeal, finding that the Director had already determined that the marriage is valid under Vermont law, “where the marriage was celebrated.  Thus, the sole remaining inquiry is whether the petitioner has established that his marriage to the beneficiary is bona fide.  We will remand the record to allow the Director to make that determination.” 

 The BIA’s ruling now becomes the precedent, and presumably a stream of rulings on backed-up appeals will follow. Although the BIA did not address the issue directly, presumably the place of celebration rule also extends to marriages between U.S. citizens and foreign nationals that take place outside the U.S., in one of the dozen or so other countries that allow same-sex marriages.  While Homeland Security has been issuing green cards over the past few weeks in response to I-130 petitions in accord with Napolitano’s direction, the BIA ruling lines up the Justice Department with Homeland Security on the important issue of “place of celebration,” which means that married same-sex couples will be recognized for immigration purposes, regardless of where they are living, so long as their marriages are found to be bona fide.

 

The New Military Benefits Policy Announcement

Posted on: February 11th, 2013 by Art Leonard No Comments

Today (February 11) the Defense Department announced a new list of benefits that will be made available to same-sex domestic partners of Servicemembers.  This will be on top of the accumulating list of benefits that have been made available since the “don’t ask don’t tell” policy was ended, together with the prohibition on service menbers entering into same-sex marriages.  (The memo from the office of Defense Secretary Leon Panetta is available on the DoD website and also by link from the Servicemembers Legal Defense Network website.)

Because of the Defense of Marriage Act, the unfolding story about DoD benefits is a continuing saga.  It seems that some of the most important and valuable benefits are authorized by statutes that define eligibility in terms of spouses.  Under the Defense of Marriage Act, no federal agency can recognize a same-sex partner as a spouse.  The way DoD works around this prohibition with respect to many benefits that are not so restricted by statute is to avoid entirely any mention of the fact that some service members are married under state law to persons of the same sex.  Instead, they establish a new status of domestic partnership for same-sex couples, requiring service members and their partners or spouses to file a form declaring themselves domestic partners.  This is more restrictive than the requirements for spousal benefits, since the form requires an affirmation that the partners either live together or would do so “but for the requirements of military service.”  Couples whose marriages are legally recognized by the federal government are not required to live together to be eligible for the military benefits covered by this memorandum.

The February 11 memo lists more than 20 benefits, including the very important Dependent ID cards which carry with them access to military bases, and Commissary and Exchange privileges.  However, some very important benefits are excluded, and not just those restricted by statute.  The memorandum asserts that there are “complex legal and policy challenges” involving on-base housing, burial, and benefits related to command sponsorship overseas,” and these are still under study.  The memo raises the difficulty of “scarce resources,” and one suspects that the reservations about on-base housing may relate to concerns about the need to come up with extra housing units to accommodate same-sex partners of service members. 

Thus, with this memorandum the DoD has expanded the benefits available to same-sex partners of service members (and their children), but they have not necessarily gone to the full extent that might be possible in light of the continued applicability of DOMA.  However, tacitly acknowledging the pending lawsuits (include some against DoD) challenging the constitutionality of DOMA, one of which will be argued in the Supreme Court on March 27, the memo indicates that should DOMA no longer apply to the military, same-sex couples married under state law would immediately be recognized and treated equally with different-sex married couples.

The memo’s introduction says “Discrimination based on sexual orientation no longer has a place in the military” and that “equal dignity and respect” should be extended to all service members.  This new policy gets us closer to that, but not all the way.  One recurring question that this memo doesn’t answer is why DoD has not adopted a formal policy banning sexual orientation discrimination in the uniformed forces, similar to the policy adopted during the Clinton Administration governing civilian employment by DoD?  If such discrimination has no place, why not outlaw it?  Could one reason be that this would put DoD in an awkward position when continuing to deny on-base housing for same-sex couples?