Tuesday, October 27, 2009

Get Divorced. Get Rich. The Continental Airlines Sham Divorce Case.

In a recent federal court case, a federal judge dismissed Continental Airlines’ lawsuit against 9 of its employees alleging in essence that the employees faked their divorces so that they could loot the pension plan by obtaining early lump sum retirement benefits.

According to the Houston Chronicle, Continental argued in pleadings before the Court that the defendant employees got divorced, collected their pensions and then remarried their spouses in order to collect the money in lump sums while they were still working.

The Continental pension plan, governed by federal law, allows pre-retirement payments to former spouses. Once divorced, the pilots' ex-spouses used this provision to collect lump-sum distributions of the pilots' pension plans, worth up to $900,000 per pilot. In its lawsuit, Continental called the divorces “subterfuges or sham transactions.”

In dismissing the Continental lawsuit against the employees, U.S. District Judge Gary Miller seems to acknowledge the sham. The Associated Press story quotes Judge Miller as saying: "the facts show, and the pilots do not seem to contest, that the pilots and their former spouses did not behave in a manner consistent with the breakup of a marriage." He said many of the pilots continued to cohabitate, remarried soon after obtaining the lump-sum payout and all essentially conducted themselves as if the divorce had never happened.”

Yet, Judge Miller found that Continental’s pension administrator has no right to consider the legitimacy of a divorce in deciding whether to distribute benefits. He said "the administrator may not refuse to qualify a domestic relations order based on criteria not present in the statute." The judge added that "the court finds that the motivation or good faith of the divorce and resulting domestic relations order is not an enumerated requirement."

Apparently Continental is considering an appeal. The case is of interest on a number of levels. Many familiar with this case have no sympathy for Continental. After all, Continent along with other airlines dumped their pension plans onto the Federal Pension Benefit Guaranty Corporation 4-5 years ago; thus, paying out far less than they should. Yet, the case is about more than those who may have been wronged by Continental for dumping its pension plan on the guaranty fund.

Our country has far too few pension plans these days. If employees can loot their pension plans because of a technicality, i.e., that pension plan administrators have no authority to review the legitimacy of someone’s divorce, those few people lucky enough to have a pension, are put in further jeopardy –beyond the jeopardy of bankrupt businesses that pass pension obligations to the guaranty fund.

Surely our legal system has the ability to stop shams.

Written by Carol L. Gasper, Attorney at Law, clg@clgasperlaw.com

Tuesday, October 6, 2009

Are You Really Married? What If You Were Not?

Oh no! Recently a Western Pennsylvania couple found out that 49 years of marital bliss was a fairy tale. The clergy member who performed the wedding ceremony simply did not file the marriage certificate with the Court. When, 49 years later, the happy couple went to apply for pension benefits they could not produce the marriage certificate.

While the couple sorts this out in Pennsylvania, I began to wonder what would happen in Ohio if a marriage certificate went missing or the validity of it questioned.

For years and years, Ohio recognized common law marriage, where no marriage certificate was required to deem a couple officially and legally married. If you held yourself out as a married couple, lived together and acted like a married couple, you were deemed married. That all changed in 1991 when Ohio's legislature determined that it would no longer recognize common law. Not to worry... If you were married before 1991 and don't have a marriage certificate, an Ohio probate court will be able to determine the validity of your common law marriage, looking to establish that you did, in fact, hold yourself out as a married couple.

After 1991, Ohio requires that your marriage be "solemnized" or officially performed by someone recognized by Ohio law as being authorized to marry people. In Ohio, judges of the county courts, municipal courts and probate courts may perform the marriage ceremony without any special license; however, ministers do need to be licensed. If you get married before a judge or a licensed minister, your marriage is presumed to be valid.

Within 30 days of the marriage ceremony, the minister or judge who solemnized the marriage is required to file the marriage certificate with the probate court of the county in which the ceremony occurred. If the marriage certificate is not timely filed, the minister or judge performing the ceremony is subject to a fine. If the marriage certificate is missing or lost, Ohio courts would seem to allow those who witnessed the ceremony to give an eyewitness account (Yes! I saw Sally and Tom get married and exchange the I dos!).

What if your minister did not obtain the license necessary to perform the ceremony? Looks like Ohio will uphold the marriage unless public policy is violated. In the case of Dodrill v. Dodrill, N.E.2d, 2004 WL 938476 (Ohio App. 4 Dist.), 2004 -Ohio- 2225, the Fourth District Court of Appeals upheld as valid a marriage performed by an unlicensed minister, stating that Ohio public policy favors sustaining marriages that are not "incestuous, polygamous, shocking to good morals, unalterably opposed to a well defined public policy, or prohibited.” (citing Mazzolini v. Mazzolini (1958), 168 Ohio St. 357, 358).

In sum, Ohio favors sustaining marriages. A good thing! For additional information, Carol Gasper can be reached at clg@clgasperlaw.com.