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FedEx Must Face Gay Widow’s Benefits Suit

SAN FRANCISCO (CN) - In an important ruling for supporters of marriage equality, a federal judge refused to dismiss a lawsuit claiming that FedEx denied benefits to the surviving member of a same-sex couple.

Plaintiff Stacy Schuett and her wife Lesly Taboada-Hall were in a committed relationship for 27 years before they were married in a civil ceremony in Sonoma County on June 19, 2013, the day before Taboada-Hall died of cancer.

Taboada-Hall had worked for FedEx for 26 years and was a fully vested participant in the company's pension plan. When she died, marriage licenses for same-sex couples were not available. Six days later, the U.S. Supreme Court struck down the Defense of Marriage Act, lifting California's ban on same-sex marriage.

Schuett then submitted a claim for qualified preretirement survivor annuity under FedEx's pension plan, but FedEx denied it, saying the plan defined "spouse" by explicitly incorporating DOMA's definition of marriage and thus did not provide survivor benefits to same-sex spouses.

Schuett sued the company in January 2014, asserting a claim for benefits under the Employee Retirement Income Security Act (ERISA) and two claims for breach of fiduciary duty under ERISA, one for failure to administer the plan in accordance with applicable law and the other for failure to inform and providing misleading communications.

In a 19-page ruling on Monday, U.S. District Judge Phyllis Hamilton partially denied FedEx's motion for summary judgment, finding that Schuett had a valid argument on one claim.

Hamilton found for FedEx on Schuett's claim for benefits, because "notwithstanding the fact that plaintiff has plausibly alleged that she and Ms. Taboada-Hall were validly married in California on June 19, 2013, she has not alleged facts sufficient to show that FedEx abused its discretion in interpreting the FedEx Plan as barring plaintiff's eligibility for survivor benefits as of June 20, 2013, the date of Ms. Taboada-Hall's death."

Hamilton also found for FedEx on the failure-to-inform claim.

"Because there is no possibility that plaintiff could become entitled to a non-spouse benefit, she has no standing to pursue her third claim for relief," Hamilton wrote.

But she denied FedEx's motion on Schuett's remaining claim, for failure to lawfully administer the pension plan, finding that "ERISA requires defined benefit plans such as the plan at issue to provide a qualified preretirement survivor annuity to all married participants who are vested and die before the annuity starting date, unless the participant has waived the benefit and the spouse consented to the waiver."

"ERISA plans, by definition, must treat couples in same-sex marriages as married for the purposes of spousal benefits under ERISA, such as survivor benefits," Hamilton wrote.

She found that Schuett "has plausibly alleged that her marriage to Ms. Taboada-Hall was valid at the time of Ms. Taboada-Hall's death, and thus there is no previously existing independent legal basis for denying relief."

"The court finds that plaintiff has adequately alleged that FedEx has violated Title I of ERISA by acting contrary to applicable federal law and failing to provide plaintiff with a benefit mandated by ERISA, and that she is entitled to pursue equitable relief to remedy that violation," Hamilton wrote.

Schuett's attorney Nina Wasow said in an email that her client was "very pleased" with Hamilton's ruling.

"In addition to rejecting FedEx's shameful tactic of trying to have Ms. Schuett's marriage invalidated," Wasow said, Hamilton recognized that a precedential ruling applies retroactively to ERISA plans.

A FedEx spokesman said in a statement that the company is " reviewing the court's ruling on the remaining claim and will consider our options on that portion of the decision."

Wasow is with Feinberg Jackson in Oakland.

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