FedEx May Owe Same-Sex Spouse Pension Benefits

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By Jacklyn Wille

Jan. 5 — FedEx Corp. may owe pension benefits to the widow of a worker who died a week before the U.S. Supreme Court struck down bans on same-sex marriage in 2013, a federal judge ruled.

The judge found in her Jan. 4 decision that FedEx acted reasonably in interpreting its pension plan—which, prior to 2013, limited spousal benefits to opposite-sex spouses. But she said the company's denial of benefits may have violated the Employee Retirement Income Security Act, which now bars plans from distinguishing between same- and opposite-sex spouses.

In so ruling, Judge Phyllis J. Hamilton of the U.S. District Court for the Northern District of California said she saw no reason why the Supreme Court's 2013 decision invalidating the federal Defense of Marriage Act shouldn't be applied retroactively to ERISA plans.

Nina Wasow, an attorney with Feinberg, Jackson, Worthman & Wasow LLP and counsel for the widow, told Bloomberg BNA she's very pleased with the ruling.

“In addition to rejecting FedEx’s shameful tactic of trying to have Ms. Schuett’s marriage invalidated, the court recognized that the Windsor decision applies retroactively to ERISA plans,” Wasow said.

Jim McCluskey, a spokesman for FedEx, said the company is reviewing the decision.

“The court has dismissed two of Ms. Schuett's three claims. We are reviewing the court's ruling on the remaining claim and will consider our options on that portion of the decision,” McCluskey said.

Pension Claim 

Lesly Taboada-Hall worked for FedEx for 26 years, taking a medical leave of absence in 2010 after she was diagnosed with lung cancer. As her cancer progressed, she attempted to have her long-time partner, Stacey Schuett, recognized as her spouse for purposes of FedEx's pension plan.

Taboada-Hall and Schuett married on June 19, 2013, a time when marriage licenses weren't available to same-sex couples in California. Taboada-Hall died the following day. A week later, the Supreme Court issued decisions striking down portions of the federal Defense of Marriage Act and effectively ending California's voter-enacted ban on same-sex marriage.

Following these rulings, a California court issued the couple a delayed marriage certificate, showing the date of marriage as June 19, 2013. Schuett then sought benefits under the FedEx pension plan based on her status as Taboada-Hall's surviving spouse.

When FedEx denied her claim, Schuett filed a lawsuit asserting three claims: (1) wrongful denial of ERISA benefits; (2) fiduciary breach based on a failure to administer the plan in accordance with ERISA; and (3) fiduciary breach for providing misleading communications.

Benefit Claim Dismissed 

In considering Schuett's claim for spousal benefits under the pension plan, Hamilton first concluded that the retroactively issued marriage license was valid, meaning the couple was legally married prior to Taboada-Hall's death on June 20.

“Were it not for California's application of the unconstitutional law prohibiting same-sex marriage, there would be no question that plaintiff and Ms. Taboada-Hall were married as of the date of Ms. Taboada-Hall's death,” she reasoned. “Under the circumstances, the absence of a license at the time plaintiff and Ms. Taboada-Hall were married was arguably a curable defect.”

Although she agreed that the couple was legally married, Hamilton nevertheless found that Schuett couldn't maintain her claim for spousal pension benefits. The FedEx plan limited spousal benefits to opposite-sex spouses at the time of Taboada-Hall's death, and it wasn't an abuse of discretion for FedEx to interpret this provision as barring Schuett from receiving benefits, the judge explained.

ERISA Violation Advances 

Despite upholding FedEx's decision as a reasonable interpretation of the company's pension plan, Hamilton nevertheless found that the benefit denial may have been invalid, as a violation of ERISA.

Following the Supreme Court's decision in U.S. v. Windsor, 133 S.Ct. 2675, 57 EBC 1577 (U.S. 2013), ERISA requires pension plans to offer certain benefits to same- and opposite-sex spouses on equal terms, Hamilton said.

Because she found no reason at this stage of litigation to deny retroactive application of Windsor, Hamilton denied FedEx's request for judgment on the pleadings on this claim.

Miscommunication Claim Fails 

Finally, FedEx successfully persuaded Hamilton to dismiss Schuett's claim for alleged misrepresentations. In this claim, Schuett argued that Taboada-Hall would have retired prior to her death—thereby entitling Schuett to certain non-spousal benefits—if FedEx had accurately explained its position concerning same-sex spouses.

Hamilton found that Schuett lacked standing to bring this claim, because she wasn't a plan participant and had no colorable claim as a beneficiary of the non-spousal benefits in question.

Hamilton's decision was entered Jan. 4 in the U.S. District Court for the Northern District of California.

Schuett was represented by Nina R. Wasow of Feinberg Jackson Worthman & Wasow LLP, Oakland, Calif.; Amy Whelan, Christopher F. Stoll and Shannon Minter of the National Center for Lesbian Rights in San Francisco; Julie Wilensky of Civil Rights Education & Enforcement Center, Berkeley, Calif.; and Tate A. Birnie of Birnie Law Office, Sebastopol, Calif. FedEx was represented by Emily C. Pera and Sandra C. Isom of FedEx, Irvine, Calif., and Memphis, Tenn.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

Text of the opinion is at http://www.bloomberglaw.com/public/document/STACEY_SCHUETT_Plaintiff_v_FEDEX_CORPORATION_et_al_Defendants_No_.