119 F. Supp. 3d 1155
N.D. Cal.2016Background
- Stacey Schuett and Lesly Taboada-Hall, long-term partners and registered domestic partners in California, had a private civil ceremony on June 19, 2013; Taboada-Hall died June 20, 2013. The Sonoma County Superior Court later issued an order (and delayed certificate) establishing the marriage as of June 19, 2013.
- Taboada-Hall was a fully vested participant in FedEx’s defined Traditional Pension Benefit Plan (TPB). The Plan then defined “spouse” by reference to DOMA (a marriage of one man and one woman).
- Schuett submitted a claim (QPSA) for pre-retirement surviving spouse benefits; FedEx denied the claim and denied her administrative appeal, applying the Plan’s DOMA-based definition as of the date of death.
- Schuett sued under ERISA: (1) claim for benefits under § 1132(a)(1)(B); (2) breach of fiduciary duty under § 1132(a)(3) for failure to administer the Plan according to controlling federal law (i.e., post-Windsor); and (3) breach of fiduciary duty under § 1132(a)(3) for misleading communications and failure to disclose non-spousal benefit options.
- Defendants moved for judgment on the pleadings. The court granted the motion as to counts 1 and 3 (with prejudice) and denied it as to count 2.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FedEx abused its discretion in denying spousal survivor benefits (ERISA § 1132(a)(1)(B)) | Schuett: Superior Court’s order established the June 19, 2013 marriage; Windsor makes DOMA § 3 invalid, so federal law requires recognition of same-sex spouses for ERISA benefits | FedEx: Plan definition controlling as of date of death; DOMA was still in effect on date of death so denial was consistent with unambiguous plan terms | Granted for defendants — Schuett failed to plead facts showing FedEx abused its discretion in applying the Plan as of date of death |
| Whether plaintiff may pursue equitable relief for breach of fiduciary duty to administer the Plan according to federal law (ERISA § 1132(a)(3)) | Schuett: Plan’s DOMA-based definition conflicts with federal law post-Windsor; fiduciary must follow federal law; Windsor applies retroactively so equitable relief is available | FedEx: Plaintiff has adequate remedy under § 1132(a)(1)(B); Windsor should not be applied retroactively to private plans without plan amendment (IRS guidance); special circumstances limit retroactivity | Denied for defendants — Schuett can proceed on § 1132(a)(3) claim; court finds Windsor and DOL guidance support treating state-recognized same-sex spouses as spouses for ERISA and allows equitable relief at this stage |
| Whether Windsor must be applied retroactively to require benefits dating before Windsor (retroactivity / plan interpretation) | Schuett: Windsor’s rule applies retroactively (Harper/Davis principle); Windsor itself applied relief to pre-Windsor facts | FedEx: Special circumstances (private actor, plan terms, IRS guidance) and independent legal bases (no valid marriage in any jurisdiction at death) counsel against retroactive relief | Court: Not persuaded defendants established special circumstances to block retroactive application at pleading stage; allowed § 1132(a)(3) claim to proceed |
| Whether plaintiff states a fiduciary-duty claim for misleading communications/non-spousal benefit (ERISA § 1132(a)(3)) | Schuett: FedEx (a named plan fiduciary) failed to disclose accurate alternatives; had she known, participant would have elected retirement and designated Schuett as non-spouse beneficiary | FedEx: Schuett lacks beneficiary standing (not designated), cannot show she could become entitled to non-spouse benefit because participant did not retire before death | Granted for defendants — Schuett lacks standing as a beneficiary for the non-spouse benefit theory; claim dismissed with prejudice |
Key Cases Cited
- United States v. Windsor, 570 U.S. 744 (2013) (held DOMA § 3 unconstitutional and instructed federal recognition of state lawful same-sex marriages)
- Obergefell v. Hodges, 576 U.S. 644 (2015) (held same-sex marriage is a fundamental right and states must recognize lawful same-sex marriages)
- Harper v. Virginia Dep’t of Taxation, 509 U.S. 86 (1993) (discusses retroactivity of Supreme Court rules)
- Reynoldsville Casket Co. v. Hyde, 514 U.S. 749 (1995) (addresses limitations on retroactive application of new rules)
- Lance v. Dennis, 546 U.S. 459 (2006) (explains Rooker–Feldman doctrine restrictions on lower federal court review of state judgments)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard: plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (clarifies that courts need not accept legal conclusions as true)