In the wake of the U.S. Supreme Court's decision in United States v. Windsor, a Pennsylvania federal judge has ruled the wife, and not the parents, of a deceased female Cozen O'Connor partner is entitled to her profit-sharing benefits.
U.S. District Judge C. Darnell Jones II of the Eastern District of Pennsylvania determined the terms of the federally-regulated profit-sharing plan at issue would dictate whether defendant Jennifer Tobits could be considered former partner Sarah Ellyn Farley's wife for purposes of collecting the benefits. The two were married in Canada in 2006 and the case came down to whether an Employee Retirement Income Security Act-qualified plan requires recognition of a Canadian marriage.
In narrowly tailoring his ruling, Jones said he did not have to decide any issues of Pennsylvania state law, which still defines marriage as between one man and one woman.
"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," Jones said. "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.'"
In its June 26 opinion in Windsor, the Supreme Court determined Section 3 of the federal Defense of Marriage Act defining marriage as between a man and a woman was unconstitutional. While the plan at issue doesn't expressly define "spouse," Jones said there can "be no doubt" that Tobits is Farley's surviving spouse under the plan in light of Windsor.
"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," Jones said.
He noted that Illinois, where Farley and Tobits lived before Farley's death, would recognize Tobits as Farley's surviving spouse. Jones said the state has done so in declaring Tobits as Farley's sole heir. After Farley died, Illinois enacted a civil union law that, while not allowing for same-sex marriage, allowed for the recognition of such marriages entered into in other states, according to Jones' opinion.
"Windsor makes clear that where a state has recognized a marriage as valid, the U.S. Constitution requires that the federal laws and regulations of this country acknowledge that marriage," Jones said.
Jones further noted that Cozen O'Connor's plan contains language that mirrors the mandates of ERISA and the Internal Revenue Code and expressly requires the plan be construed according to those laws. Jones said that means the federal laws supply the meanings to the plan and not the other way around.
"ERISA and the Code merely establish a floor for privately sponsored employee benefit plans with respect to spousal benefits," Jones said in a footnote. "Privately sponsored plans have discretion to go beyond these requirements — indeed many do. Today's holding makes clear, however, that Windsor leveled the floor."
Cozen O'Connor filed its interpleader action, Cozen O'Connor v. Tobits, in January 2011, asking the court to decide whether Tobits or Farley's parents, David and Joan Farley, were entitled to the benefits. Though both sides argued the court could answer that question without addressing the constitutionality of DOMA, the issue was extensively briefed. The U.S. Department of Justice declined to argue in support of the law and so the U.S. House of Representatives Bipartisan Legal Advisory Group stepped in to defend DOMA's constitutionality. The group withdrew from the case, however, after Windsor was issued. Jones had placed the case on the suspense docket to await a decision in Windsor. He reactivated it earlier this month.
Outside observers and those involved in the case debated after Windsor was decided whether Farley and Tobits' Canadian marriage would be recognized as legally valid in this case, where the plan was administered in Pennsylvania and the couple lived in Illinois.
Teresa S. Renaker of Lewis Feinberg Lee Renaker & Jackson in Oakland, Calif., represents Tobits in the matter.
She said in June that there is nothing in the pension plan that requires the marriage to be recognized by a particular state. She said opposite-sex couples get married wherever they feel like it and don't necessarily reside where they were married.
"So I think that certainly from the point of view of administering a pension plan, the most sensible rule is what we would call a 'place of celebration' rule, meaning if the marriage is recognized where it was entered, it's a marriage," Renaker had said.
Peter C. Breen of the Thomas More Society in Chicago is representing Farley's parents. He said in June that the retirement plan refers to a married individual. "There is no interpretation of federal or state law that makes Ms. Tobits a married spouse of Ms. Farley," Breen had said. "First off because Ms. Farley died prior to any legal change in Illinois and second because this is a private contract and not a government benefit. So the terms of the contract and their plain meaning indicate that, because they were not married, Ms. Tobits has no right to these funds. Period."
In a footnote to his opinion, Jones said the court didn't have to address the constitutionality of Pennsylvania's DOMA statute. Jones said it doesn't matter that the plan belongs to a company headquartered in Pennsylvania.
"Although the plan contains a choice of law provision that makes reference to Pennsylvania law, by the plan's terms, Pennsylvania law is only applicable to the extent it is not pre-empted by ERISA," Jones said. "Here, the court finds that, based on the terms of this plan, ERISA pre-empts Pennsylvania law entirely."
ERISA was enacted to establish national uniformity among benefit plans, Jones said, noting his ruling is consistent with that goal. He said the issue in this case regards the definition of "spouse" as supplied by ERISA, a federal regulation. If, for the purposes of determining that definition, courts were forced to look to the state in which the policy was drafted, plan administrators could forum shop in an effort to avoid providing benefits to same-sex couples in otherwise valid marriages, Jones said.
Renaker said Monday in response to Jones' ruling that she and her client were pleased with the result. She said this case is a good illustration of what ERISA-governed pension plans need to do after Windsor with respect to same-sex spouses.
H. Robert Fiebach of Cozen O'Connor represented his firm in the case. He said he was "extremely pleased" with the decision and would be paying the benefits into a registry, as the court ordered, immediately.
Breen said he still has to talk with his clients about whether they would appeal Jones' ruling. He said there are a number of differences between Tobits and Windsor. Breen took particular issue with the fact that Jones found Illinois would recognize Farley and Tobits' marriage considering the civil union law in the state didn't exist when Farley died in 2010. Breen said the state still doesn't recognize same-sex marriages.
"The court is treating an Illinois civil union as a same-sex marriage," Breen said.
Gina Passarella can be contacted at 215-557-2494 or at firstname.lastname@example.org. Follow her on Twitter @GPassarellaTLI.
(Copies of the 12-page opinion in Cozen O'Connor v. Tobits, PICS No. 13-2250, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •