A group of airline pilots is flying high after a recent decision by a federal appeals court to dismiss a lawsuit by Continental Airlines accusing them of staging fake divorces in order to capitalize upon their pensions.

The rather bizarre lawsuit, filed by Continental Airlines in a federal district court in Houston back in 2009, alleged that nine former pilots (2 women and seven men) divorced their spouses in various state courts, and, as part of their divorce settlement, agreed to qualified domestic relations orders (QDROs) giving away the bulk of their retirement assets (including pension benefits).

(For the uninitiated, a qualified domestic relations order (QDRO) is semi-standard language inserted into final divorce papers. It establishes a former spouse's right to either receive a select percentage of a retirement plan balance or set payments from a retirement plan.)

According to Continental, the former spouses then immediately sought full payment under the QDROs. This is significant because federal law dictates that in divorce cases, former spouses can receive pension benefits from their former spouses before they retire.

Here, Continental alleged that the pilots were worried that the airline would eventually surrender payment/management of pension benefits to the federal government, resulting in slashed pension benefits across the board. As such, they simply entered into fake divorces to cash in on their pension benefits under optimal conditions and in one fell swoop (The suit even alleges that the pilots later remarried their former spouses.)

The federal district court in Houston, however, ultimately ruled that Continental Airlines did not have the right to investigate why, when and how their employees divorced.

Recently, the 5th Circuit Court of Appeals upheld this decision and dismissed the lawsuit, giving the pilots (who are planning to file their own suit against Continental for wrongful termination/unlawful interference with pension rights) a victory.

"[The decision] is a victory for employee privacy rights - nobody wants their employer looking into their divorce," said Steve Mitby, an attorney for five of the pilots.

Stay tuned for developments from our Phoenix divorce blog ...

If you would like more information regarding high net worth divorce or property division, you should strongly consider speaking with an experienced legal professional.

This post is provided for informational purposes only and is not to be construed as legal advice.

Related Resources:

Pilots win 'sham-divorce' case against Continental (ABC News)