United States Court of Appeals, District of Columbia Circuit
Argued November 17, 2014
Appeal from the United States District Court for the District of Columbia. (No. 1:09-cv-01907).
Joseph R. Jeffery argued the cause and filed the briefs for appellants.
Charles F. Fuller argued the cause and filed the briefs for appellee.
Before: TATEL and MILLETT, Circuit Judges, and GINSBURG, Senior Circuit Judge.
Tatel, Circuit Judge.
The Employee Retirement Income Security Act of 1974 (ERISA) entitles certain spouses of pension plan participants to a survivor annuity unless waived pursuant to clearly defined procedures. In this case, the pension plan participant concedes that ERISA vested an annuity in his ex-wife, but nonetheless argues that Texas law, including his Texas divorce decree, requires entry now of a declaratory judgment that, after his death, she place her annuity payments into a constructive trust for his benefit. The district court rejected this claim, holding that ERISA preempts any state law or state-court decree that would otherwise defeat the spouse's vested annuity. For the reasons set forth in this opinion, we affirm.
ERISA protects retirement benefits for millions of pension plan participants and their beneficiaries. 29 U.S.C. § 1001(b). Finding that the stability of retirement benefits directly affects the national economy, id. § 1001(a), Congress acted to ensure that accrued benefits remain unaltered by individuals and states alike. It accomplished this by prohibiting participants from assigning or alienating their own benefits, id. § 1056(d)(1), and, with limited exceptions, superseding state laws that " relate to any employee benefit plan," id. § 1144(a). One exception rests on the fact that plan benefits are often considered marital community property, a domain traditionally reserved exclusively for state law. As a result, Congress exempted a narrow category of state-court orders, known as qualified domestic relations orders,
from ERISA's anti-alienation and preemption provisions. Id. § 1056(d)(3)(A); § 1144(b)(7). A qualified domestic relations order is a state-court decree regarding marital property that creates or recognizes an alternate payee's right to ERISA-governed benefits--for instance, changing the plan beneficiary from a soon-to-be ex-spouse to a child. Id. § 1056(d)(3)(B)(i). In order to qualify for the exemption, the state-court order may neither change the type or form of benefits nor increase the actuarial value of the plan. Id. § 1056(d)(3)(D).
Despite this narrow exception, the protection of beneficiaries--especially spouses--remains a paramount ERISA objective. The crown jewel of ERISA's spousal protection, the qualified joint and survivor annuity, provides monthly support for surviving spouses in the event of a participant's death, whether occurring before or after retirement. Id. § 1055(a). Survivor annuity payments, equal to at least 50 percent of the participant's benefits, continue for the remainder of the surviving spouse's life. Id. § 1055(d)(1)(A). Although for most ERISA benefits, like life insurance and 401(k) plans, participants may unilaterally waive benefits or designate beneficiaries, participants are powerless to " defeat a . . . surviving spouse's statutory entitlement to an annuity." Boggs v. Boggs, 520 U.S. 833, 843, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997). Without the spouse's written consent expressly acknowledging the effect of the waiver or new beneficiary designation, a participant can neither waive nor alter the survivor annuity in any way. 29 U.S.C. § 1055(c)(2). Under the version of the statute governing this case, moreover, the written consent must not only be witnessed by a plan representative or notary public, but also completed no more than 90 days before the annuity start date, i.e., the date the participant either dies or retires. Retirement Equity Act of 1984, Pub. L. No. 98-397, 98 Stat. 1426 (1984) (codified as amended at 29 U.S.C. § § 1055(c)(2), (c)(7) (1984)). If a participant fails to obtain this written and witnessed waiver within the 90-day time limit, the survivor annuity vests in the spouse upon the participant's retirement or death. Taken together, " [t]he surviving spouse annuity and [qualified domestic relations order] provisions, which acknowledge and protect specific pension plan community property interests, give rise to the strong implication that other community property claims are not consistent with the statutory scheme." Boggs, 520 U.S. at 847.
This case presents a conflict between state community property law and ERISA. Specifically, we must determine whether, after a survivor annuity has vested and absent a qualified domestic relations order, the plan participant may use state law to obtain legal control over his former spouse's survivor benefit.
John and Melissa VanderKam married in 1984. An employee of the Huffy Corporation, John enrolled in the company's retirement plan and designated Melissa as the beneficiary of a 100-percent qualified joint and survivor annuity. John retired in 1994, at which time the survivor annuity irrevocably vested in Melissa, and John began receiving monthly benefits. Eight years later, in March 2002, John and Melissa divorced, agreeing to a decree awarding John all " benefits existing by reason of [John's] past, present, or future employment." Final Divorce Decree 19, J.A. 290.
One year later, John remarried and sought to designate his new wife as the survivor annuity beneficiary. Counsel for Huffy's pension plan advised John that this designation would be permissible if done pursuant to a qualified domestic relations order that, in accordance with ERISA, ...