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

Grandparents Caring for Grandchildren without the Custody Battle: Ohio’s Caretaker Power of Attorney

        U.S. census figures indicate that some 6.7 million children in the United States are being raised by grandparents and other relatives. That's roughly one in 12 children, about 10 times the number of children in the U.S. foster care system. Often, grandparents are raising their grandchildren without having any legal custody, making it difficult for them to access services of any kind. Grand families, a term referring to situations where children are being raised by grandparents or other relatives, exist for many reasons, often because the parent(s) face a temporary crisis, such as a serious illness, financial problem, or lack of housing.

    
       In 2004, the Ohio Legislature addressed this problem by creating the caretaker power of attorney through which parents consent to the grandparent having parental rights and responsibilities for the children on a temporary basis. This parental consent to the grandparent(s) care allows the children to have access to educational and medical services which, in the past, might have been denied absent an order granting the grandparent legal custody, an expensive and emotional proposition. By providing legal documentation to the grandparent caregiver who has consent of parents, the power of attorney eliminates expensive legal custody battles and/or children services intervention.

       The Ohio caretaker power of attorney currently may be used only to allow grandparents to have parental rights and responsibilities; it does not cover any other relative or other third party who may be providing for children. However, the Ohio Legislature is considering expanding the power of attorney to allow other third parties, beyond grandparents, to act as caretakers. See 2009  Ohio HB 197, introduced in the Ohio House of Representatives in May, 2009.

       Intended to cover only temporary situations where parents are unable to care for their children, the power of attorney cannot be effective for longer than a one year period. The power of attorney may grant the grandparent the custodial parent’s rights and responsibilities regarding the care, physical custody, and control of the child, including the ability to enroll the child in school, receive information from the school, consent to school related matters and medical treatment. Notably, the power of attorney does not act as a grant of legal custody to the grandparent nor does it affect the rights of the parent in any future legal proceedings.

       The Ohio statute governing caretaker powers of attorney prescribes the form and content that must be used as well as specific notices that must be given. In most situations, the power of attorney must be signed by both parents. It must be filed with the juvenile court where the grandparent resides within 5 days of its creation.

       No court hearing is required to make the caretaker power of attorney effective, provided that it is the first power of attorney. Should subsequent powers of attorney be filed, the court is required to schedule a hearing no later than 10 days after filing.

      The Ohio Legislature’s creation of the grandparent caretaker power of attorney provides a cost effective way for grandparents to care for grandchildren in situations where parents are temporarily unable to do so and consent to the arrangement. I urge the Ohio Legislature to adopt 2009 Ohio HB 197 to expand the power of attorney beyond grandparents so that others caring for children may have an easier time getting access to education and medical services.

       For more information contact Carol L. Gasper at clgasper@msn.com

Terminating the Ohio Marriage: Divorce and Dissolution Overview

A Hudson, Ohio client met with me recently to discuss the possible termination of her marriage. While we would like to believe that the marriage contract lasts forever, more than fifty percent (50%) of all marriages will terminate before forever. In Ohio, Divorce and Dissolution are two separate legal actions by which the marital contract is terminated. The key difference between the two processes is that with divorce, there is heavy court involvement because the court system is used to resolve all issues relating to the termination of the marriage perhaps because you and your spouse cannot reach agreement on any number of issues, from how marital property will be divided to how parenting of the children will be arranged. With dissolution, the net result is the same, i.e., termination of the marriage, but there is much less court involvement than divorce because the husband and wife agree upfront on how issues will be resolved and simply petition the court to approve their agreement. Big difference.

As War of the Roses illustrates, divorces can be nasty, costly affairs, with couples fighting in high drama fashion about how the assets will be divided or, worse, fights about who will have custody of the children. These fights are usually presented to the court by way of legal filings and hearings ….think expensive lawyer fees. In addition, think long protracted court case. The typical divorce action takes one year to complete.

Dissolution is neither nasty nor costly. Step one in dissolution process is for you and your spouse to reach agreement on property division, parenting issues, and whether and to what extent spousal support will be provided. This agreement, the separation agreement, is then presented to the court with the Petition for Dissolution. Step two in the dissolution process is a hearing before the court scheduled no earlier than 30 days and no later than 90 days after the filing. The dissolution hearing is a very quick affair in which the court reviews the dissolution petition and separation agreement with the parties, assuring that it is, in fact, the agreement that was intended.

When you have decided to move on and terminate your marriage, it is a sad affair. You can make it less painful in terms of costs and time, by choosing the dissolution route. There are, however, many situations in which dissolution is not an option, perhaps because one party is simply unreasonable and wants the other party to enter into a lopsided agreement. Consult an attorney to explore these and other options.

Carol L. Gasper can be reached at (330) 425-1599.