In a case involving Continental Airlines and a handful of their employees, a federal appeals court upheld a decision that ruled that benefit administrators are not authorized to decide whether or not their employee’s divorces are real or fake. A lawsuit was filed on behalf of Continental against nine of their pilots, alleging that they filed “sham” divorces in order to ensure that their ex-spouse could receive their lump-sum pensions, while they still were employed with the Airline.
The lawsuit was filed because Continental claims that each pilot was planning to remarry their spouse after they received the pensions. The 5th Circuit of Appeals shot down and dismissed the airline suit, claiming that employers cannot consider or investigate why employees get divorced or whether or not the divorce itself is genuine. Steve Mitby, an attorney for 5 of the former employees, claims that this judgment came at a good time and is considered a victory among employees and their privacy rights.
Each former employee is counter-suing the airlines for wrongful termination and interfering with their pension rights. United Continental Holdings, Inc. is the sole owner of the airlines and claims that the company has paid over $10 million in pension distributions that pilots have ordered for their spouses to receive. Continental alleges that each pilot filed divorces in states that would allow them to file a domestic-relation, which would then release their retirement benefits to their ex-spouse. The airline claimed that the pilots were wrongfully taking advantage of the retirement benefits and were not following a federal law that states in the case of divorce amongst one of their employees, the employee has to be retired to allow the pension benefits to be allotted to the ex-spouse. The court did not uphold the statements made on behalf on Continental Airlines. The airline is now deciding what their next step will be in the suit.