Feeling overwhelmed by ambiguous employee benefits law? You’re not alone. A law firm recently filed an interpleader in the Eastern District of Pennsylvania, asking the court to decide whether its deceased employee had a “spouse” who was entitled to profit sharing plan benefits. Cozen O’Connor, P.C. v. Tobits. The dollar amount at issue is small ($37,000) relative to the significant amount of attention being paid to this case.
Cozen O’Connor sponsors a profit sharing plan in which its employee, Sarah Farley, participated. When Ms. Farley died, she had no children, and she did not have a beneficiary designation on file. Under the plan terms, the benefit would be payable to her spouse (the person to whom she had been married through the one-year period ending on the date of her death), or to her surviving parents. The plan provides that it will be construed in accordance with the Internal Revenue Code, ERISA, and the laws of the Commonwealth of Pennsylvania, to the extent not preempted.
Ms. Farley’s parents presented the plan with a beneficiary designation form purporting to list the parents as beneficiaries. Meanwhile, Jennifer Tobits provided the plan with a copy of a 2006 Toronto, Ontario, Canada marriage certificate between her and Ms. Farley, and informed the plan that she intended to claim the benefit as Ms. Farley’s “spouse.”
In its complaint, Cozen O’Connor asserted that it could not determine the proper beneficiary because the beneficiary designation form did not contain a spouse’s signature. Tobits appears to argue that the plan provisions regarding construing the plan in accordance with federal and state law should be disregarded. In addition, she has argued that Cozen O’Connor did not give Ms. Farley, an attorney, enough information for her to know that her Canadian marriage may not be recognized in the United States.
But the core issue in this case has seemingly become whether the Defense of Marriage Act (“DOMA”), and a similar Pennsylvania statute, violate the equal protection or substantive due process components of the Due Process Clause of the Fifth Amendment. DOMA defines marriage as a legal union between one man and one woman, and provides that no state or political subdivision may be required to recognize as a marriage a same-sex relationship considered a marriage in another state. You may recall that the Obama administration announced that it would enforce DOMA, but would not defend it in court, leaving uncertainty regarding the status of the law. The court has allowed the Bipartisan Legal Advisory Group of the U.S. House of Representatives to intervene to defend DOMA.
This is not the only case where the constitutionality of DOMA is under consideration. Given the developing patchwork quilt of state and local domestic partner laws, this uncertainty about the constitutionality of DOMA leaves employers struggling not only to comply with the law, but to figure out what the law is in the first place. We will continue to monitor these issues to help employers determine how to design and operate their benefit programs.