Clearing Up Questions Left By Doma Ruling

August 26, 2013
By Mark D. DeBofsky

Mark D. DeBofsky is a name partner of DeBofsky, Sherman & Casciari, PC. He handles civil and appellate litigation involving employee benefits, disability insurance and other insurance claims and coverage . He can be reached at [email protected]

Although the Supreme Court's ruling in United States v. Windsor, 133 S.Ct. 2675 (2013), invalidated Section 3 of the federal Defense of Marriage Act (DOMA) that stipulated a marriage may only be between one man and one woman, the ruling left unresolved a number of critical issues.

Recently, a Philadelphia federal judge, in Cozen O'Connor P.C. v. Tobits, 2013 U.S.Dist.LEXIS 105507 (E.D.Pa. July 29, 2013), examined one of those issues: Whether a valid same-sex marriage solemnized in Canada must be recognized for the purpose of distributing benefits due under an Employee Retirement Income Security Act (ERISA)-governed benefit plan.

Sarah Farley was an employee of the Cozen, O'Connor law firm and a participant in the firm's profit-sharing plan. In 2006, Farley married Jean Tobits in Toronto, Ontario, a union lawful under Canadian law. In 2010, Farley died of cancer, leaving Tobits as her survivor. Her other survivors were her parents, the Farleys. Both the Farleys and Tobits made claims for Sarah Farley's benefits, which were payable in the form of a qualified pre-retirement survivor annuity. Those funds were interpleaded by the law firm, leaving the parties to litigate their competing claims, which were presented in cross-motions for judgment on the pleadings.

The plan provided that benefits would be paid to the participant's surviving spouse and, so long as the participant was married, ERISA affords special protection to spousal benefits and only permits another beneficiary to be designated if the spouse explicitly waives the right to receive benefits. Although the Farleys presented a designation of beneficiary form dated the day before their daughter's death in support of their claim, because Tobits did not waive her rights as Farley's beneficiary, the question the court had to resolve was whether Tobits was a "surviving spouse." The court determined she was.

The plan contained no definition of "spouse," other than to specify that in order to be recognized as a spouse, the marriage must have lasted for at least one year. However, the court pointed to the "Dictionary Act," which applies to thousands of federal laws and regulations. Section 3 of DOMA amended that act, though, to provide:

"In determining the meaning of any Act of Congress, or of any ruling, regulation or interpretation of the various administrative bureaus and agencies of the United States, the word 'marriage' means only a legal union between one man and one woman as husband and wife and the word 'spouse' refers only to a person of the opposite sex who is a husband or a wife." 1 U.S.C. Section 7.

Based on DOMA, as it relates to ERISA, a "spouse" could mean only a person of the opposite sex joined in marriage to a plan participant. In Windsor, the specific question before the court was whether a New York resident who married her late wife in Canada was entitled to a federal estate tax exemption as a surviving spouse in light of DOMA. Windsorruled that because the state of New York recognizes same-sex marriages as valid, DOMA unlawfully denied validly married same-sex couples equal protection under the law as protected by the Fifth Amendment to the U.S. Constitution. Thus, after Windsor, the court explained "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.'"

As a result, the court decided that Tobits was Farley's "surviving spouse" under the plan based on their lawful marriage under the law of Canada. Hence, the court ruled: "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." Moreover, the state of Illinois, where Farley and Tobits lived prior to Farley's death, determined that Tobits was Farley's surviving spouse.

Under Illinois law, by virtue of the state's civil union statute, same-sex marriages solemnized in other jurisdictions are recognized in Illinois pursuant to 750 ILCS 75/5 ("provid[ing] persons entering into a civil union with the obligations, responsibilities, protections and benefits afforded or recognized by the law of Illinois to spouses."). The Cook County Circuit Court's Probate Division also issued an order declaring heirship finding that Tobits was Farley's surviving spouse. Consequently, the court had no difficulty reaching the same conclusion with respect to ERISA-governed benefits.

Another post- Windsor ruling of interest is Obergefell v. Kasich, 2013 U.S. Dist. LEXIS 102077, 7-21 (S.D. Ohio July 22, 2013), which involved a same-sex couple where one of the spouses was dying of amyotrophic lateral sclerosis (ALS, Lou Gehrig's disease). Under Ohio law, at his death, his death certificate would have indicated he was unmarried. The court issued a temporary restraining order directing the registrar of vital statistics to list the dying spouse as married on his death certificate and to identify the other spouse as the surviving spouse.

The court found that Ohio "unjustifiably created two tiers of couples: 1) opposite-sex married couples legally married in other states; and 2) same-sex married couples legally married in other states. This lack of equal protection of law is fatal."

The court noted that under Ohio law, the state historically recognized as valid any marriage solemnized outside the state so long as it complied with that jurisdiction's law. Even though Ohio would not permit marriages between first cousins or marriages of minors, the state recognized such marriages if they were performed in states that permitted them. Thus, as the Supreme Court ruled in Windsor, no legitimate state purpose is served by refusing to recognize same-sex marriages performed in states where such unions are legal.

The court found Ohio's actions, to use the words of the Supreme Court, "impose a disadvantage, a separate status and so a stigma upon all who enter into same-sex marriages made lawful by the unquestioned authority of the states." Windsor, 133 S.Ct. at 2639.

The court therefore issued an injunction prohibiting the registrar from denying the parties the status of marriage.