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Court rules against Continental Airlines on divorce issue

A U.S. appeals court recently ruled in favor of a group of former Continental Airlines pilots accused of obtaining "sham" divorces so that their ex-spouses could benefit from their pensions before remarrying their former spouses.

Continental contended that the nine pilots split with their spouses because they lived in states that assigned a large portion of their retirement benefits to a spouse upon divorce. In Maryland and many other states, such benefits are considered marital property, allowing ex-spouses to claim a portion of the resulting funds.

The airline argued that the pilots abused a federal law that allows retirement benefits to be paid to a former spouse before the working spouse actually retires. They also suggested that the pilots were afraid that the airline might reduce their pensions as others have done. Continental sued the nine pilots in 2009, but the court ruled against the company.

The Fifth U.S. Circuit Court of Appeals ultimately upheld the lower court's decision, ruling that employers have no legal grounds to investigate why workers file for divorce, nor may they question whether an employee's divorce is genuine. A representative for the company announced that Continental plans to review the decision before deciding whether to appeal the case again. The company also said it paid between $10 million and $11 million in pension payments owed to the pilots' spouses.

A legal representative for several of the pilots lauded the court's decision, claiming that it marked a major milestone for the privacy rights of workers. He said that all of the pilots were either terminated or resigned. They plan to sue Continental for violating their pension rights and firing them wrongfully.

Source: ABC News, "Pilots Win 'Sham-Divorce' Case Against Continental," David Koenig, 20 July 2011

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