Continental Airlines Pilots Win “Sham Divorce” in Alabama, Nationwide Case

Posted by Steven D. Eversole | Jul 19, 2011 | 0 Comments

A federal appeals court recently ruled that benefit administrators don't have the right to decide whether employees' divorces are real or fake, in a case that involves Continental Airlines, The Associated Press reports.

Divorce in Alabama can be an emotional experience and one that no couple takes lightly. The last thing they need is their employer weighing in. There are many factors to consider in these kinds of cases, such as child custody, the splitting of assets and debts as well as how to protect against taxes that may be levied after the fact. For these reasons, relying on an experienced Birmingham Divorce Lawyer is critical.

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In this case, a group of Continental pilots were sued by the airline, which claimed they got "sham" divorces so their ex-spouses could tap into their lump-sum pensions while they still worked for the airline. And then the couples got remarried.

The 5th Circuit Court of Appeals recently upheld a lower court ruling that employers can't consider or investigate why employees get divorced or whether the divorce is genuine. The appeals court dismissed the airline's 2009 lawsuit, which was filed in a federal court in Houston.

The nine pilots were fired or resigned and they are suing the airline for wrongful termination and for interfering with their pension rights. The pilots got divorced in states were domestic-relations orders assigned all or nearly all of their retirement benefits to their ex-spouses, who then demanded payment.

The divorces took place in the midst of the airline being bought out by United Continental Holdings, Inc. The divorces resulted in $10 to $11 million in pension payouts by the company.

The airline alleged the pilots were taking advantage of a loophole in federal law that allows payment of pension benefits to an ex-spouse before a worker retires. Continental argued that the pilots were worried the pension obligations would be turned over to the government, as other airlines did, leaving them with reduced benefits.

In this case, the pilots used divorce laws in different states to their advantage, fearing they would not be able to recoup the benefits they had spent years working to earn. But there are many other types of concerns for people who are seeking divorce not to find a loophole in the law but because their marriage is ending.

One of the most important factors to consider in a divorce is how much you may have to end up paying in taxes in an Alabama divorce. While "who gets the house" and "who gets the kids" may be the more prominent questions in a person's mind, working it out so that you don't get slammed the following year during tax season may be as important.

Splitting investments, determining who gets to claim the children as dependents on their tax forms and whether or not child support should be claimed are duties a Birmingham Divorce Attorney should take the time to explain and plan out. There are ways to protect assets, businesses and retirement plans in order to set up a financial future that is bright rather than one that is constantly dogged by a mismanaged divorce.

Additional Resources:

Pilots Win ‘Sham-Divorce' Case Against Continental, by David Koenig, The Associated Press

About the Author

Steven D. Eversole

J.D., Samford University's Cumberland School of Law, Birmingham, Alabama B.A., University of Alabama, Tuscaloosa, Alabama

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