A federal court in Philadelphia has ruled in favor of a surviving same-sex spouse in a dispute over the deceased spouse’s ERISA-governed retirement plan benefits. The court in Cozen O’Connor, P.C. v. Tobits, No. 2:11-cv-00045 (E.D. Pa. July 29, 2013) cited the U.S. Supreme Court’s recent decision inU.S. v. Windsor, 133 S. Ct. 2675 (2013), for the notion that the retirement plan’s promise of a death benefit to a “surviving spouse” included a same-sex spouse.
By way of background, Sarah Farley and Jean Tobits, residents of Illinois, were married in 2006 in Canada. Shortly after the wedding, Ms. Farley was diagnosed with cancer and subsequently died in 2010. Ms. Farley, a participant in her employer’s ERISA-governed retirement plan, the Cozen O’Connor Profit Sharing Plan (the “Cozen Plan”), left behind a retirement account. Both Ms. Farley’s parents and Ms. Tobits claimed the proceeds of the retirement account. Cozen O’Connor filed an interpleader action asking the federal court to determine whether the retirement account proceeds should be paid to Ms. Tobits or to Ms. Farley’s parents.
As required under ERISA, the Cozen Plan document provided that absent a spousal waiver, the Plan’s death benefits were to be paid to the participant’s surviving spouse. If, however, there was no surviving spouse, the Cozen Plan provided that the participant’s death benefit would be paid to certain of the deceased participant’s relatives, including the participant’s parents. The Cozen Plan defined “spouse” as “the person to whom the participant has been married throughout the one-year period ending on the earlier of: (1) the participant’s annuity starting date; or (2) the date of the participant’s death.” Ms. Tobits had not waived her right to Ms. Farley’s benefit under the Cozen Plan.
The court recognized that prior to U.S. v. Windsor, due to the federal Defense of Marriage Act (DOMA), ERISA-governed retirement plans were not obligated to provide benefits to same-sex spouses, although many ERISA-governed plans did. Following U.S. v. Windsor, however, the court held that under the Cozen Plan, the term “spouse” was not unconstitutionally restricted to members of the opposite-sex, but included same-sex spouses of valid marriages. The court determined that Ms. Farley and Ms. Tobits were deemed validly married by Illinois, their state of domicile. Although Illinois does not recognize same-sex marriages, the court noted that it permits same-sex civil unions and recognizes same-sex marriages solemnized in other jurisdictions. Additionally, an Illinois probate court had accepted as valid the couple’s 2006 marriage in Canada when it declared Ms. Tobits a party to a civil union with Ms. Farley and declared her Ms. Farley’s sole heir.
The court rejected the notion that Pennsylvania state law, including the constitutionality of Pennsylvania’s law restricting marriage to a man and a woman, affected its decision. The Cozen Plan’s choice of law provision provided that Pennsylvania law governed to the extent it was not preempted by ERISA or the Internal Revenue Code. The court reasoned that based on the Cozen Plan’s terms, ERISA preempted Pennsylvania law entirely when the couple resided in another state that recognized their marriage.