OCTOBER TERM, 1996
Syllabus
BOGGS
v. BOGGS ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH
CIRCUIT
No. 96-79. Argued January 15, 1997-Decided June 2, 1997
Respondents are the sons of Isaac and Dorothy Boggs. After
Dorothy's death in 1979, Isaac married petitioner Sandra Boggs.
When Isaac retired in 1985, he received various benefits from his
employer's retirement plans, including a lump-sum savings plan
distribution, which he rolled over into an individual retirement
account (IRA); shares of stock from the company's employee stock
ownership plan (ESOP); and a monthly annuity payment. Following his
death in 1989, this dispute over ownership of the benefits arose
between Sandra and the sons. The sons' claim is based on Dorothy's
purported testamentary transfer to them, under Louisiana law, of a
portion of her community property interest in Isaac's undistributed
pension plan benefits. Sandra contested the validity of that
transfer, arguing that the sons' claim is pre-empted by the
Employee Retirement Income Security Act of 1974 (ERISA), 29 U. S.
C. § 1001
et seq. The Federal District Court disagreed and
granted summary judgment against Sandra, and the Fifth Circuit
affirmed.
Held: ERISA pre-empts a state law allowing a
nonparticipant spouse to transfer by testamentary instrument an
interest in undistributed pension plan benefits. Pp. 839-854.
(a) In order to resolve this case, the Court need not interpret
ERISA's pre-emption clause, § 1144(a), but can simply apply
conventional conflict pre-emption principles, asking whether
Louisiana's community property law conflicts with ERISA and
frustrates its purposes. Pp.839-841.
(b) To the extent Louisiana law provides the sons with a right
to a portion of Sandra's survivor's annuity, it is pre-empted. That
annuity is a qualified joint and survivor annuity mandated by §
1055, the object of which is to ensure a stream of income to
surviving spouses. ERISA's solicitude for the economic security of
such spouses would be undermined by allowing a predeceasing
spouse's heirs and legatees to have a community property interest
in the survivor's annuity. Even a plan participant cannot defeat a
nonparticipant surviving spouse's statutory entitlement to such an
annuity. See § 1055(c)(2). Nothing in ERISA's language supports the
conclusion that Congress decided to permit a predeceasing
nonparticipant spouse to do so. Testamentary transfers such
834
Syllabus
as the one at issue could reduce the annuity below the ERISA
minimum. See § 1055(d)(1). Perhaps even more troubling, the
recipient of the transfer need not be a family member;
e.
g., the annuity might be substantially reduced so that funds
could be diverted to support an unrelated stranger. In the face of
this direct clash between state law and ERISA's provisions and
objectives, the state law cannot stand. See
Gade v.
National Solid Wastes Management Assn., 505 U. S. 88, 98. Pp.
841-844.
(c) The sons' state-law claim to a portion of Isaac's monthly
annuity payments, IRA, and ESOP shares is also pre-empted. ERISA's
principal object is to protect plan participants and beneficiaries.
See,
e. g., §§ 1001(b), (c), 1l03(c)(1), 1l04(a)(1),
1l08(a)(2), 1132(a)(1)(B). The Act confers pension plan beneficiary
status on a nonparticipant spouse or dependent only to the extent
that a survivor's annuity is required in covered plans, § 1055(a),
or a "qualified domestic relations order" awards the spouse or
dependent an interest in a participant's benefits, §§ 1056(d)(3)(K)
and (J). These 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. ERISA's silence with respect to the
right of a nonparticipant spouse to control pension plan benefits
by testamentary transfer provides powerful support for the
conclusion that the right does not exist. Cf.
Massachusetts Mut.
Life Ins. Co. v.
Russell, 473 U. S. 134, 147-148.
The sons have no claim to a share of the benefits at issue because
they are neither participants nor beneficiaries under §§ 1002(7)
and (8), but base their claims on Dorothy's attempted testamentary
transfer. It would be inimical to ERISA's purposes to permit them
to prevail. Early cases holding that ERISA did not preempt spousal
community property interests in pension benefits, regardless of who
was the plan participant or beneficiary, are not applicable here in
light of subsequent amendments to ERISA. Reading ERISA to permit
nonbeneficiary interests, even if not enforced against the plan,
would result in troubling anomalies that do not accord with the
statutory scheme. That Congress intended to pre-empt respondents'
interests is given specific and powerful reinforcement by §
1056(d)(1), which requires pension plans to specify that benefits
"may not be assigned or alienated." Dorothy's testamentary transfer
to her sons is such a prohibited "assignment or alienation" under
the applicable regulations. Community property laws have, in the
past, been pre-empted in order to prevent the diversion of
retirement benefits. See,
e. g., Free v.
Bland,
369 U. S. 663,
669. It does not matter that respondents have sought to enforce
their purported rights only after Isaac's benefits were
835
distributed, since those rights are based on the flawed theory
that they had an interest in the undistributed benefits. Pp.
844-854.
82 F.3d
90, reversed.
KENNEDY, J., delivered the opinion of the Court, in which
STEVENS, SCALIA, SOUTER, and THOMAS, JJ., joined, and in which
REHNQUIST, C. J., and GINSBURG, J., joined as to Part III. BREYER,
J., filed a dissenting opinion, in which O'CONNOR, J., joined, and
in which REHNQUIST, C. J., and GINSBURG, J., joined except as to
Part II-B-3,
post, p. 854.
Marian Mysing Livaudais argued the cause for
petitioner.
With her on the briefs were John Catlett Christian, F. Pierre
Livaudais, and James F. Willeford.
Paul R.
Q. Wolfson argued the cause for the United States
as amicus curiae urging reversal. With him on the brief were Acting
Solicitor General Dellinger, Deputy Solicitor General Kneedler,
J. Davitt McAteer, Allen H. Feldman, Nathaniel 1. Spiller,
and Judith D. Heimlich.
Edward J. Deano, Jr., argued the cause for
respondents.
With him on the brief were Guy L. Deano, Jr., and Theresa D.
Bewig.*
JUSTICE KENNEDY delivered the opinion of the Court.t We consider
whether the Employee Retirement Income Security Act of 1974
(ERISA), 88 Stat. 832, as amended, 29 U. S. C. § 1001
et
seq., pre-empts a state law allowing a non-
*Briefs of
amici curiae urging reversal were filed for
the American Association of Retired Persons by
Mary Ellen
Signorille, Cathy VentrellMonsees, and
Melvin Radowitz;
and for the Employers Council on Flexible Compensation by
Daniel
B. Stone.
Richard P. Ieyoub, Attorney General of Louisiana,
Thomas S.
Halligan, Assistant Attorney General,
William A. Reppy, Jr., and
Cynthia A. Samuel filed a
brief for the State of Louisiana as
amicus curiae urging
affirmance.
Robert E. Temmerman, Jr., Keith P. Bartel, Randolph B.
Godshall, and
Michael J. Jones filed a
brief for the Estate Planning, Trust and Probate Law Section of the
State Bar of California as
amicus curiae.
tTHE CHIEF JUSTICE and JUSTICE GINSBURG join Part III of this
opinion.
836
participant spouse to transfer by testamentary instrument an
interest in undistributed pension plan benefits. Given the
pervasive significance of pension plans in the national economy,
the congressional mandate for their uniform and comprehensive
regulation, and the fundamental importance of community property
law in defining the marital partnership in a number of States, the
question is of undoubted importance. We hold that ERISA pre-empts
the state law.
I
Isaac Boggs worked for South Central Bell from 1949 until his
retirement in 1985. Isaac and Dorothy, his first wife, were married
when he began working for the company, and they remained husband
and wife until Dorothy's death in 1979. They had three sons. Within
a year of Dorothy's death, Isaac married Sandra, and they remained
married until his death in 1989.
Upon retirement, Isaac received various benefits from his
employer's retirement plans. One was a lump-sum distribution from
the Bell System Savings Plan for Salaried Employees (Savings Plan)
of $151,628.94, which he rolled over into an Individual Retirement
Account (IRA). He made no withdrawals and the account was worth
$180,778.05 when he died. He also received 96 shares of AT&T
stock from the Bell South Employee Stock Ownership Plan (ESOP). In
addition, Isaac enjoyed a monthly annuity payment during his
retirement of $1,777.67 from the Bell South Service Retirement
Program.
The instant dispute over ownership of the benefits is between
Sandra (the surviving wife) and the sons of the first marriage. The
sons' claim to a portion of the benefits is based on Dorothy's
will. Dorothy bequeathed to Isaac onethird of her estate, and a
lifetime usufruct in the remaining two-thirds. A lifetime usufruct
is the rough equivalent of a common-law life estate. See La. Civ.
Code Ann., Art. 535 (West 1980). She bequeathed to her sons the
naked owner-
837
ship in the remaining two-thirds, subject to Isaac's usufruct.
All agree that, absent pre-emption, Louisiana law controls and that
under it Dorothy's will would dispose of her community property
interest in Isaac's undistributed pension plan benefits. A
Louisiana state court, in a 1980 order entitled "Judgment of
Possession," ascribed to Dorothy's estate a community property
interest in Isaac's Savings Plan account valued at the time at
$21,194.29.
Sandra contests the validity of Dorothy's 1980 testamentary
transfer, basing her claim to those benefits on her interest under
Isaac's will and 29 U. S. C. § 1055. Isaac bequeathed to Sandra
outright certain real property including the family home. His will
also gave Sandra a lifetime usufruct in the remainder of his
estate, with the naked ownership interest being held by the sons.
Sandra argues that the sons' competing claim, since it is based on
Dorothy's 1980 purported testamentary transfer of her community
property interest in undistributed pension plan benefits, is
pre-empted by ERISA. The Bell South Service Retirement Program
monthly annuity is now paid to Sandra as the surviving spouse.
After Isaac's death, two of the sons filed an action in state
court requesting the appointment of an expert to compute the
percentage of the retirement benefits they would be entitled to as
a result of Dorothy's attempted testamentary transfer. They further
sought a judgment awarding them a portion of: the IRA; the ESOP
shares of AT&T stock; the monthly annuity payments received by
Isaac during his retirement; and Sandra's survivor annuity
payments, both received and payable.
In response, Sandra Boggs filed a complaint in the United States
District Court for the Eastern District of Louisiana, seeking a
declaratory judgment that ERISA pre-empts the application of
Louisiana's community property and succession laws to the extent
they recognize the sons' claim to an interest in the disputed
retirement benefits. The District
838
Court granted summary judgment against Sandra Boggs. 849 F.
Supp. 462 (1994). It found that, under Louisiana community property
law, Dorothy had an ownership interest in her husband's pension
plan benefits built up during their marriage. The creation of this
interest, the court explained, does not violate 29 U. S. C. §
1056(d)(1), which prohibits pension plan benefits from being
"assigned" or "alienated," since Congress did not intend to alter
traditional familial and support obligations. In the court's view,
there was no assignment or alienation because Dorothy's rights in
the benefits were acquired by operation of community property law
and not by transfer from Isaac. Turning to Dorothy's testamentary
transfer, the court found it effective because "[ERISA] does not
display any particular interest in preserving maximum benefits to
any particular beneficiary." 849 F. Supp., at 465.
A divided panel of the Fifth Circuit affirmed.
82 F.3d
90 (1996). The court stressed that Louisiana law affects only
what a plan participant may do with his or her benefits after they
are received and not the relationship between the pension plan
administrator and the plan beneficiary.
Id., at 96. For the
reasons given by the District Court, it found ERISA's pension plan
anti-alienation provision, § 1056(d)(1), inapplicable to
Louisiana's creation of Dorothy Boggs' community property interest
in the pension plan benefits. It concluded that the transfer of the
interest from Dorothy to her sons was not a prohibited assignment
or alienation, as this transfer was "two steps removed from the
disbursement of benefits."
Id., at 97.
Six members of the Court of Appeals dissented from the failure
to grant rehearing en bane.
89 F.3d
1169 (1996). In their view, a testamentary transfer of an
interest in undistributed retirement benefits frustrates ERISA's
goals of securing national uniformity in pension plan
administration and of ensuring that retirees, and their dependents,
are the actual recipients of retirement income. They believed
that
839
Congress' creation of the qualified domestic relations order
(QDRO) mechanism in § 1056(d)(3), whose requirements were not met
by the 1980 judgment of possession, further supported their
position. (A QDRO is a limited exception to the pension plan
anti-alienation provision and allows courts to recognize a
nonparticipant spouse's community property interest in pension
plans under specific circumstances.)
The reasoning and holding of the Fifth Circuit's decision is in
substantial conflict with the decision of the Court of Appeals for
the Ninth Circuit in
Ablamis v.
Roper, 937 F.2d
1450 (1991), which held that ERISA pre-empts a testamentary
transfer by a nonparticipant spouse of her community property
interest in undistributed pension plan benefits. The division
between the Circuits is significant, for the Fifth Circuit has
jurisdiction over the community property States of Louisiana and
Texas, while the Ninth Circuit includes the community property
States of Arizona, California, Idaho, Nevada, and Washington.
Having granted certiorari to resolve the issue, 519 U. S. 957
(1996), we now reverse.
II
ERISA pre-emption questions are recurrent, two other cases on
the subject having come before the Court in the current Term alone,
see
California Div. of Labor Standards Enforcement v.
Dillingham Constr., N.
A., Inc., 519 U. S. 316 (1997);
De Buono v.
NYSA-ILA Medical and Clinical Services Fund,
ante, p. 806. In large part the number of ERISA pre-emption
cases reflects the comprehensive nature of the statute, the
centrality of pension and welfare plans in the national economy,
and their importance to the financial security of the Nation's work
force. ERISA is designed to ensure the proper administration of
pension and welfare plans, both during the years of the employee's
active service and in his or her retirement years.
This case lies at the intersection of ERISA pension law and
state community property law. None can dispute the
840
central role community property laws play in the nine community
property States. It is more than a property regime. It is a
commitment to the equality of husband and wife and reflects the
real partnership inherent in the marital relationship. State
community property laws, many of ancient lineage, "must have
continued to exist through such lengths of time because of their
manifold excellences and are not lightly to be abrogated or tossed
aside." 1 W. de Funiak, Principles of Community Property 11 (1943).
The community property regime in Louisiana dates from 1808 when the
territorial legislature of Orleans drafted a civil code that
adopted Spanish principles of community property.
Id., at
85-89. Louisiana's community property laws, and the community
property regimes enacted in other States, implement policies and
values lying within the traditional domain of the States. These
considerations inform our pre-emption analysis. See
Hisquierdo v.
Hisquierdo, 439 U. S. 572, 581
(1979).
The nine community property States have some 80 million
residents, with perhaps $1 trillion in retirement plans. See Brief
for Estate Planning, Trust and Probate Law Section of the State Bar
of California as
Amicus Curiae 1. This case involves a
community property claim, but our ruling will affect as well the
right to make claims or assert interests based on the law of any
State, whether or not it recognizes community property. Our ruling
must be consistent with the congressional scheme to assure the
security of plan participants and their families in every State. In
enacting ERISA, Congress noted the importance of pension plans in
its findings and declaration of policy, explaining:
"[T]he growth in size, scope, and numbers of employee benefit
plans in recent years has been rapid and substantial; ... the
continued well-being and security of millions of employees and
their dependents are directly affected by these plans; ... they are
affected with a national public interest [and] they have become an
important factor affecting the stability of employment and
841
the successful development of industrial relations .... " 29 U.
S. C. § 1001(a).
ERISA is an intricate, comprehensive statute. Its federal
regulatory scheme governs employee benefit plans, which include
both pension and welfare plans. All employee benefit plans must
conform to various reporting, disclosure, and fiduciary
requirements, see §§ 1021-1031, 1101-1114, while pension plans must
also comply with participation, vesting, and funding requirements,
see §§ 1051-1086. The surviving spouse annuity and QDRO provisions,
central to the dispute here, are part of the statute's mandatory
participation and vesting requirements. These provisions provide
detailed protections to spouses of plan participants which, in some
cases, exceed what their rights would be were community property
law the sole measure.
ERISA's express pre-emption clause states that the Act "shall
supersede any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan .... " § 1144(a). We
can begin, and in this case end, the analysis by simply asking if
state law conflicts with the provisions of ERISA or operates to
frustrate its objects. We hold that there is a conflict, which
suffices to resolve the case. We need not inquire whether the
statutory phrase "relate to" provides further and additional
support for the pre-emption claim. Nor need we consider the
applicability of field preemption, see
Fidelity Fed. Sav.
&
Loan Assn. v.
De la Cuesta, 458 U. S. 141, 153
(1982).
We first address the survivor's annuity and then turn to the
other pension benefits.
III
Sandra Boggs, as we have observed, asserts that federal law
pre-empts and supersedes state law and requires the surviving
spouse annuity to be paid to her as the sole beneficiary. We
agree.
842
The annuity at issue is a qualified joint and survivor annuity
mandated by ERISA. Section 1055(a) provides:
"Each pension plan to which this section applies shall provide
that-
"(1) in the case of a vested participant who does not die before
the annuity starting date, the accrued benefit payable to such
participant shall be provided in the form of a qualified joint and
survivor annuity."
ERISA requires that every qualified joint and survivor annuity
include an annuity payable to a nonparticipant surviving spouse.
The survivor's annuity may not be less than 50% of the amount of
the annuity which is payable during the joint lives of the
participant and spouse. § 1055(d)(1). Provision of the survivor's
annuity may not be waived by the participant, absent certain
limited circumstances, unless the spouse consents in writing to the
designation of another beneficiary, which designation also cannot
be changed without further spousal consent, witnessed by a plan
representative or notary public. § 1055(c)(2). Sandra Boggs, as the
surviving spouse, is entitled to a survivor's annuity under these
provisions. She has not waived her right to the survivor's annuity,
let alone consented to having the sons designated as the
beneficiaries.
Respondents say their state-law claims are consistent with these
provisions. Their claims, they argue, affect only the disposition
of plan proceeds after they have been disbursed by the Bell South
Service Retirement Program, and thus nothing is required of the
plan. ERISA's concern for securing national uniformity in the
administration of employee benefit plans, in their view, is not
implicated. They argue Sandra's community property obligations,
after she receives the survivor annuity payments, "fai[l] to
implicate the regulatory concerns of ERISA."
Fort Halifax
Packing Co. v.
Coyne, 482 U. S. 1, 15 (1987).
843
We disagree. The statutory object of the qualified joint and
survivor annuity provisions, along with the rest of § 1055, is to
ensure a stream of income to surviving spouses. Section 1055
mandates a survivor's annuity not only where a participant dies
after the annuity starting date but also guarantees one if the
participant dies before then. See §§ 1055(a)(2), (e). These
provisions, enacted as part of the Retirement Equity Act of 1984
(REA), Pub. L. 98-397, 98 Stat. 1426, enlarged ERISA's protection
of surviving spouses in significant respects. Before REA, ERISA
only required that pension plans, if they provided for the payment
of benefits in the form of an annuity, offer a qualified joint and
survivor annuity as an option entirely within a participant's
discretion. 29 U. S. C. §§ 1055(a), (e) (1982 ed.). REA modified
ERISA to permit participants to designate a beneficiary for the
survivor's annuity, other than the nonparticipant spouse, only when
the spouse agrees. § 1055(c)(2). Congress' concern for surviving
spouses is also evident from the expansive coverage of § 1055, as
amended by REA. Section 1055's requirements, as a general matter,
apply to all "individual account plans" and "defined benefit
plans." § 1055(b)(1). The terms are defined, for § 1055 purposes,
so that all pension plans fall within those two categories. See §
1002(35). While some individual account plans escape § 1055's
surviving spouse annuity requirements under certain conditions,
Congress still protects the interests of the surviving spouse by
requiring those plans to pay the spouse the nonforfeitable accrued
benefits, reduced by certain security interests, in a lump-sum
payment. § 1055(b)(1)(C).
ERISA's solicitude for the economic security of surviving
spouses would be undermined by allowing a predeceasing spouse's
heirs and legatees to have a community property interest in the
survivor's annuity. Even a plan participant cannot defeat a
nonparticipant surviving spouse's statutory entitlement to an
annuity. It would be odd, to say the least, if Congress permitted a
predeceasing nonparticipant spouse
844
to do so. Nothing in the language of ERISA supports concluding
that Congress made such an inexplicable decision. Testamentary
transfers could reduce a surviving spouse's guaranteed annuity
below the minimum set by ERISA (defined as 50% of the annuity
payable during the joint lives of the participant and spouse). In
this case, Sandra's annuity would be reduced by approximately 20%,
according to the calculations contained in the sons' state-court
filings. There is no reason why testamentary transfers could not
reduce a survivor's annuity by an even greater amount. Perhaps even
more troubling, the recipient of the testamentary transfer need not
be a family member. For instance, a surviving spouse's § 1055
annuity might be substantially reduced so that funds could be
diverted to support an unrelated stranger.
In the face of this direct clash between state law and the
provisions and objectives of ERISA, the state law cannot stand.
Conventional conflict pre-emption principles require pre-emption
"where compliance with both federal and state regulations is a
physical impossibility, ... or where state law stands as an
obstacle to the accomplishment and execution of the full purposes
and objectives of Congress."
Gade v.
National Solid
Wastes Management Assn., 505 U. S. 88, 98 (1992)
(internal quotation marks and citation omitted). It would undermine
the purpose of ERISA's mandated survivor's annuity to allow
Dorothy, the predeceasing spouse, by her testamentary transfer to
defeat in part Sandra's entitlement to the annuity § 1055
guarantees her as the surviving spouse. This cannot be. States are
not free to change ERISA's structure and balance.
Louisiana law, to the extent it provides the sons with a right
to a portion of Sandra Boggs' § 1055 survivor's annuity, is
pre-empted.
IV
Beyond seeking a portion of the survivor's annuity, respondents
claim a percentage of: the monthly annuity pay-
845
ments made to Isaac Boggs during his retirement; the IRA; and
the ESOP shares of AT&T stock. As before, the claim is based on
Dorothy Boggs' attempted testamentary transfer to the sons of her
community property interest in Isaac's undistributed pension plan
benefits. Respondents argue further-and somewhat
inconsistently-that their claim again concerns only what a plan
participant or beneficiary may do once plan funds are distributed,
without imposing any obligations on the plan itself. Both parties
agree that the ERISA benefits at issue here were paid after
Dorothy's death, and thus this case does not present the question
whether ERISA would permit a nonparticipant spouse to obtain a
devisable community property interest in benefits paid out during
the existence of the community between the participant and that
spouse.
A brief overview of ERISA's design is necessary to put
respondents' contentions in the proper context. The principal
object of the statute is to protect plan participants and
beneficiaries. See
Shaw v.
Delta Air Lines, Inc.,
463 U. S. 85, 90
(1983) ("ERISA is a comprehensive statute designed to promote the
interests of employees and their beneficiaries in employee benefit
plans"). Section 1001(b) states that the policy of ERISA is "to
protect ... the interests of participants in employee benefit plans
and their beneficiaries." Section 1001(c) explains that ERISA
contains certain safeguards and protections which help guarantee
the "equitable character and the soundness of [private pension]
plans" in order to protect "the interests of participants in
private pension plans and their beneficiaries." The general policy
is implemented by ERISA's specific provisions. Apart from a few
enumerated exceptions, a plan fiduciary must "discharge his duties
with respect to a plan solely in the interest of the participants
and beneficiaries." § 1l04(a)(1). The assets of a plan, again with
certain exceptions, are "held for the exclusive purposes of
providing benefits to participants in the plan and their
beneficiaries and defraying reasonable expenses of
846
administering the plan." § 1l03(c)(1). The Secretary of Labor
has authority to create exemptions to ERISA's prohibition on
certain plan holdings, acquisitions, and transactions, but only if
doing so is in the interests of the plan's "participants and
beneficiaries." § 1l08(a)(2). Persons with an interest in a pension
plan may bring a civil suit under ERISA's enforcement provisions
only if they are either a participant or beneficiary. Section
1132(a)(1)(B), for instance, provides that a civil action may be
brought "by a participant or beneficiary ... to recover benefits
due to him under the terms of his plan, to enforce his rights under
the terms of the plan, or to clarify his rights to future benefits
under the terms of the plan."
ERISA confers beneficiary status on a nonparticipant spouse or
dependent in only narrow circumstances delineated by its
provisions. For example, as we have discussed, § 1055(a) requires
provision of a surviving spouse annuity in covered pension plans,
and, as a consequence, the spouse is a beneficiary to this extent.
Section 1056's QDRO provisions likewise recognize certain pension
plan community property interests of nonparticipant spouses and
dependents. A QDRO is a type of domestic relations order that
creates or recognizes an alternate payee's right to, or assigns to
an alternate payee the right to, a portion of the benefits payable
with respect to a participant under a plan. § 1056(d)(3)(B)(i). A
domestic relations order, in turn, is any judgment, decree, or
order that concerns "the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse,
child, or other dependent of a participant" and is "made pursuant
to a State domestic relations law (including a community property
law)." § 1056(d)(3)(B)(ii). A domestic relations order must meet
certain requirements to qualify as a QDRO. See §§
1056(d)(3)(C)-(E). QDRO's, unlike domestic relations orders in
general, are exempt from both the pension plan anti-alienation
provision, § 1056(d)(3)(A), and ERISA's general pre-emption
clause,
847
§ 1144(b)(7). In creating the QDRO mechanism Congress was
careful to provide that the alternate payee, the "spouse, former
spouse, child, or other dependent of a participant," is to be
considered a plan beneficiary. §§ l056(d)(3)(K), (J). These
provisions are essential to one of REA's central purposes, which is
to give enhanced protection to the spouse and dependent children in
the event of divorce or separation, and in the event of death the
surviving spouse. Apart from these detailed provisions, ERISA does
not confer beneficiary status on nonparticipants by reason of their
marital or dependent status.
Even outside the pension plan context and its antialienation
restriction, Congress deemed it necessary to enact detailed
provisions in order to protect a dependent's interest in a welfare
benefit plan. Through a § 1169 "qualified medical child support
order" a child's interest in his or her parent's group health care
plan can be enforced. A "medical child support order" is defined as
any judgment, decree, or order that concerns the provision of child
support "made pursuant to a State domestic relations law (including
a community property law) and relates to benefits under such plan."
§ 1169(a)(2)(B)(i). As with a QDRO, a "medical child support order"
must satisfy certain criteria in order to qualify. See §§
1169(a)(3)-(4). In accordance with ERISA's care in conforming
entitlements to benefits with participant or beneficiary status,
the statute treats a child subject to such a qualifying order as a
participant for ERISA's reporting and disclosure requirements and
as a beneficiary for other purposes. § 1169(a)(7).
The surviving spouse annuity and QDRO 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.
ERISA's silence with respect to the right of a nonparticipant
spouse to control pension plan benefits by testamentary transfer
provides powerful support
848
for the conclusion that the right does not exist. Cf.
Massachusetts Mut. Life Ins. Co. v.
Russell, 473 U. S. 134, 147-148
(1985). It should cause little surprise that Congress chose to
protect the community property interests of separated and divorced
spouses and their children, a traditional subject of domestic
relations law, but not to accommodate testamentary transfers of
pension plan benefits. As a general matter, "[t]he whole subject of
the domestic relations of husband and wife, parent and child,
belongs to the laws of the States and not to the laws of the United
States."
In re Burrus, 136 U. S. 586, 593-594 (1890).
Support obligations, in particular, are "deeply rooted moral
responsibilities" that Congress is unlikely to have intended to
intrude upon. See
Rose v.
Rose, 481 U. S. 619, 632
(1987); see also
id., at 636-640 (O'CONNOR, J., concurring).
In accord with these principles, Congress ensured that state
domestic relations orders, as long as they meet certain statutory
requirements, are not pre-empted.
We conclude the sons have no claim under ERISA to a share of the
retirement benefits. To begin with, the sons are neither
participants nor beneficiaries. A "participant" is defined as an
"employee or former employee of an employer, or any member or
former member of an employee organization, who is or may become
eligible to receive a benefit." § 1002(7). A "beneficiary" is a
"person designated by a participant, or by the terms of an employee
benefit plan, who is or may become entitled to a benefit
thereunder." § 1002(8). Respondents' claims are based on Dorothy
Boggs' attempted testamentary transfer, not on a designation by
Isaac Boggs or under the terms of the retirement plans. They do not
even attempt to argue that they are beneficiaries by virtue of the
judgment of possession qualifying as a QDRO.
An
amicus, the Estate Planning, Trust and Probate Law
Section of the State Bar of California, in support of respondents'
position, points to pre-REA case law holding that
849
ERISA does not pre-empt spousal community property interests in
pension benefits, regardless of who is the plan participant or
beneficiary. As did the District Court below, the
amicus
relies in particular upon
In re Marriage of Campa, 89 Cal.
App. 3d 113, 152 Cal. Rptr. 362 (1979), in which the California
Court of Appeal for the First District held that ERISA does not bar
California courts from joining pension funds in marriage
dissolution proceedings and ordering the pension plan to divide
pension payments between the employee and his or her former
nonparticipant spouse. We dismissed the pension plan's appeal for
want of a substantial federal question, 444 U. S. 1028 (1980), and,
although not entitled to full precedential weight, see
Edelman v.
Jordan, 415 U. S. 651, 670-671
(1974), that disposition constitutes a decision on the merits, see
Hicks v.
Miranda, 422 U. S. 332, 344
(1975). The state court in
Marriage of Campa was not alone
in refusing to find ERISA pre-emption in the divorce context. See,
e. g., Stone v.
Stone, 450 F. Supp. 919 (ND Cal.
1978), aff'd,
632 F.2d
740 (CA9 1980), cert. denied, 453 U. S. 922 (1981);
Savings
and Profit Sharing Fund of Sears Employees v.
Gago,
717 F.2d
1038 (CA7 1983);
Eichelberger v.
Eichelberger,
584 F. Supp. 899 (SD Tex. 1984). This judicial consensus,
amicus argues, was codified by the QDRO provisions which
were contained in the 1984 REA amendments. The
amicus
contends that since REA, or the pre-REA case law which it allegedly
adopted, did not consider the community property rights of a
nonparticipant spouse in the testamentary context, it should not be
construed to pre-empt state law governing this different
subject.
We disagree with this reasoning. It is true that the subject of
testamentary transfers is somewhat removed from domestic relations
law. The QDRO provisions address the rights of divorced and
separated spouses, and their dependent children, which are the
traditional concern of domestic relations law. The pre-REA federal
common-law extension of § 1002(8)'s definition of "beneficiary" by
courts in the con-
850
text of marital dissolution was in part based on an appreciation
of the fact that domestic relations law is primarily an area of
state concern, see
Marriage of Campa, supra, at 124, 152
Cal. Rptr., at 367-368, and the basic principle that a
beneficiary's interest in a spendthrift trust, despite otherwise
applicable protections, can be reached in the context of divorce
and separation. See E. Griswold, Spendthrift Trusts 389-391 (2d ed.
1947) (summarizing state case law); Restatement (Second) of Trusts
§ 157 (1959). The state court in
Marriage of Campa took its
implicit determination that the nonparticipant spouse was a
beneficiary to its logical conclusion, forcing the pension plan to
join the marital dissolution proceedings as a party and compelling
it to pay the spouse her share of the pension benefits. Whether or
not this extension of the definition of "beneficiary" was
consistent with the statute then in force, these authorities are
not applicable in light of the REA amendments. The QDRO and the
surviving spouse annuity provisions define the scope of a
nonparticipant spouse's community property interests in pension
plans consistent with ERISA.
Respondents and their
amicus in effect ask us to ignore §
1002(8)'s definition of "beneficiary" and, through case law, create
a new class of persons for whom plan assets are to be held and
administered. The statute is not amenable to this sweeping
extratextual extension. It is unpersuasive to suggest that third
parties could assert their claims without being counted as
"beneficiaries." A plan fiduciary's responsibilities run only to
participants and beneficiaries. § 1l04(a)(1). Assets of a plan are
held for the exclusive purposes of providing benefits to
participants and beneficiaries and defraying reasonable expenses of
administration. § 1l03(c)(1). Reading ERISA to permit
nonbeneficiary interests, even if not enforced against the plan,
would result in troubling anomalies. Either pension plans would be
run for the benefit of only a subset of those who have a stake in
the plan or state law would have to move in to fill the appar-
851
ent gaps between plan administration responsibilities and
ownership rights, resulting in a complex set of requirements
varying from State to State. Neither result accords with the
statutory scheme.
The conclusion that Congress intended to pre-empt respondents'
nonbeneficiary, nonparticipant interests in the retirement plans is
given specific and powerful reinforcement by the pension plan
anti-alienation provision. Section 1056(d)(1) provides that "[e]ach
pension plan shall provide that benefits provided under the plan
may not be assigned or alienated." Statutory anti-alienation
provisions are potent mechanisms to prevent the dissipation of
funds. In
Hisquierdo we interpreted an anti-alienation
provision to bar a divorced spouse's interest in her husband's
retirement benefits. See 439 U. S., at 583-590. ERISA's pension
plan antialienation provision is mandatory and contains only two
explicit exceptions, see §§ 1056(d)(2), (d)(3)(A), which are not
subject to judicial expansion. See
Guidry v.
Sheet Metal
Workers Nat. Pension Fund, 493 U. S. 365, 376
(1990). The anti-alienation provision can "be seen to bespeak a
pension law protective policy of special intensity: Retirement
funds shall remain inviolate until retirement." J. Langbein &
B. Wolk, Pension and Employee Benefit Law 547 (2d ed. 1995).
Dorothy's 1980 testamentary transfer, which is the source of
respondents' claimed ownership interest, is a prohibited
"assignment or alienation." An "assignment or alienation" has been
defined by regulation, with certain exceptions not at issue here,
as "[a]ny direct or indirect arrangement whereby a party acquires
from a participant or beneficiary" an interest enforceable against
a plan to "all or any part of a plan benefit payment which is, or
may become, payable to the participant or beneficiary." 26 CFR §
1.401(a)13(c)(1)(ii) (1997). Those requirements are met. Under
Louisiana law community property interests are enforceable against
a plan. See
Eskine v.
Eskine, 518 So. 2d 505, 508
(La. 1988). If respondents' claims were allowed to succeed
852
they would have acquired, as of 1980, an interest in Isaac's
pension plan at the expense of plan participants and
beneficiaries.
As was true with survivors' annuities, it would be inimical to
ERISA's purposes to permit testamentary recipients to acquire a
competing interest in undistributed pension benefits, which are
intended to provide a stream of income to participants and their
beneficiaries. See
Guidry, supra, at 376 ("[The
anti-alienation provision] reflects a considered congressional
policy choice, a decision to safeguard a stream of income for
pensioners ... and their dependents ... "). Pension benefits
support participants and beneficiaries in their retirement years,
and ERISA's pension plan safeguards are designed to further this
end. See § 1001(c). Besides the anti-alienation provision, Congress
has enacted other protective measures to guarantee that retirement
funds are there when a plan's participants and beneficiaries expect
them. There are, for instance, minimum funding standards for
pension plans and a pension plan termination insurance program
which guarantees benefits in the event a plan is terminated before
being fully funded. See §§ 1082, 13011461. Under respondents'
approach, retirees could find their retirement benefits reduced by
substantial sums because they have been diverted to testamentary
recipients. Retirement benefits and the income stream provided for
by ERISA-regulated plans would be disrupted in the name of
protecting a nonparticipant spouses' successors over plan
participants and beneficiaries. Respondents' logic would even
permit a spouse to transfer an interest in a pension plan to
creditors, a result incompatible with a spendthrift provision such
as § 1056(d)(1).
Community property laws have, in the past, been preempted in
order to ensure the implementation of a federal statutory scheme.
See,
e. g., McCune v.
Essig, 199 U. S. 382 (1905);
Wissner v.
Wissner, 338 U. S. 655 (1950);
Free v.
Bland, 369 U. S. 663 (1962);
Hisquierdo v.
Hisquierdo, 439
853
u. S. 572 (1979);
McCarty v.
McCarty, 453 U. S. 210 (1981);
Mansell v.
Mansell, 490 U. S. 581 (1989); cf.
Ridgway v.
Ridgway, 454 U. S. 46 (1981).
Free v.
Bland, supra, is of particular relevance
here. A husband had purchased United States savings bonds with
community funds in the name of both spouses. Under Treasury
regulations then in effect, when a co-owner of the bonds died, the
surviving co-owner received the entire interest in the bonds. After
the wife died, her son-the principal beneficiary of her
will-demanded either one-half of the bonds or reimbursement for
loss of the community property interest. The Court held that the
regulations pre-empted the community property claim,
explaining:
"One of the inducements selected by the Treasury is the
survivorship provision, a convenient method of avoiding complicated
probate proceedings. Notwithstanding this provision, the State
awarded full title to the coowner but required him to account for
half of the value of the bonds to the decedent's estate. Viewed
realistically, the State has rendered the award of title
meaningless." Id., at 669.
The same reasoning applies here. If state law is not preempted,
the diversion of retirement benefits will occur regardless of
whether the interest in the pension plan is enforced against the
plan or the recipient of the pension benefit. The obligation to
provide an accounting, moreover, as with the probate proceedings
referred to in
Free, is itself a burden of significant
proportions. Under respondents' view, a pension plan participant
could be forced to make an accounting of a deceased spouse's
community property interest years after the date of death. If the
couple had lived in several States, the accounting could entail
complex, expensive, and time-consuming litigation. Congress could
not have intended that pension benefits from pension plans would be
given to accountants and attorneys for this purpose.
854
Respondents contend it is anomalous and unfair that a divorced
spouse, as a result of a QDRO, will have more control over a
portion of his or her spouse's pension benefits than a predeceasing
spouse. Congress thought otherwise. The QDRO provisions, as well as
the surviving spouse annuity provisions, reinforce the conclusion
that ERISA is concerned with providing for the living. The QDRO
provisions protect those persons who, often as a result of divorce,
might not receive the benefits they otherwise would have had
available during their retirement as a means of income. In the case
of a predeceased spouse, this concern is not implicated. The
fairness of the distinction might be debated, but Congress has
decided to favor the living over the dead and we must respect its
policy.
The axis around which ERISA's protections revolve is the
concepts of participant and beneficiary. When Congress has chosen
to depart from this framework, it has done so in a careful and
limited manner. Respondents' claims, if allowed to succeed, would
depart from this framework, upsetting the deliberate balance
central to ERISA. It does not matter that respondents have sought
to enforce their rights only after the retirement benefits have
been distributed since their asserted rights are based on the
theory that they had an interest in the undistributed pension plan
benefits. Their state-law claims are pre-empted. The judgment of
the Fifth Circuit is
Reversed.
JUSTICE BREYER, with whom JUSTICE O'CONNOR joins, and with whom
THE CHIEF JUSTICE and JUSTICE GINSBURG join except as to Part
II-B-3, dissenting.
The question in this case is whether the Employee Retirement
Income Security Act of 1974 (ERISA), 29 U. S. C. § 1001
et
seq., "pre-empts," and thereby nullifies, state community
property law. The state law in question would permit a wife to
leave to her children her share of the pension
855
assets that her husband has earned (or, to put the matter in
"community property" terms, that she and her husband together have
earned) during their marriage. From the perspective of property
law, the issue is unusually important, for, we are told, the answer
potentially affects nine community property States, with more than
80 million residents, and over $1 trillion in ERISA-qualified
pension plans-plans that are often a couple's most important
lifetime assets. In my view, Congress did not intend ERISA to
pre-empt this testamentary aspect of community property law-at
least not in the circumstances present here, where a first wife's
bequest need not prevent a second wife from obtaining precisely
those benefits that ERISA specifically sets aside for her. See §
1055(a). The Fifth Circuit's determination is consistent with this
view. I would therefore affirm its judgment.
I A
This case concerns the disposition of pension plan assets earned
by an employee who was married; who had children; whose first wife
died; who remarried; who retired; and who then died, survived by
his second wife. To be more specific, the employee, Isaac Boggs, a
resident of Louisiana, began work for South Central Bell Telephone
Company (now known as BellSouth) in 1949. He participated in its
ERISA-qualified pension plan for about 36 years. He was married to
his first wife, Dorothy Boggs, during almost all of that time-from
1949 until 1979, when Dorothy died. The couple had three children.
Isaac married his second wife, Sandra, in 1980. He retired in 1985.
He died in 1989. Sandra survives him.
When Dorothy died, she left a will providing that Isaac would
receive" 'the maximum [share of her estate] permitted under the
law,'" as well as a lifetime "'usufruct'" (rather like a common-law
life estate) in the remainder. Brief for
856
Respondents 1, 2. The parties agree that this meant that Isaac
received one-third of her estate outright. Under Louisiana law, the
three sons of Dorothy and Isaac would receive what was left of the
remaining two-thirds at Isaac's death (i.
e., the "naked
ownership," or the equivalent of a commonlaw remainder).
Throughout his working life, and during his entire 30-year
marriage to Dorothy, Isaac participated in a set of BellSouth's
ERISA-qualified retirement plans. When Isaac retired in 1985 (six
years after Dorothy's death), he received three assets from those
plans: (1) 96
shares of AT&T stock (from BellSouth's
Employee Stock Ownership Plan); (2)
a cash payment of about
$150,000 (from BellSouth's Savings Plan for Salaried
Employees); and (3)
an annuity of about $1,800 per month
(from BellSouth's Management Pension Plan) for his life and
afterwards for that of his surviving second spouse, Sandra. Isaac
almost immediately placed the $150,000 cash payment in an
Individual Retirement Account (IRA), thereby avoiding immediate
payment of an income tax. See 26 U. S. C. § 408(e)(1); see also S.
Bruce, Pension Claims: Rights and Obligations 7 (2d ed. 1993).
Isaac bequeathed a lifetime usufruct in his property, presumably
including some or all of the AT&T stock and the funds in the
IRA, to his second wife, Sandra. Sandra, as his survivor, also
began to receive the $1,800 monthly annuity.
B
On December 17, 1992, Sandra Boggs filed an action for
declaratory judgment in Federal District Court. See 29 U. S. C. §
1132(a)(1)(B) (plan participant or beneficiary may bring action to
"clarify ... rights to future benefits"). She said that the three
children of Isaac and Dorothy had themselves brought an action in
state court against her and against Isaac's estate, seeking a
portion of the pension benefits from the BellSouth plans. The
children said that under Louisiana law, their mother, Dorothy, had
owned a one-half
857
share in Isaac's rights under the BellSouth retirement plans
(insofar as they had accrued prior to Dorothy's death) and that she
had left them a portion of that share (two-thirds of the "naked
interest" after Isaac's death). They asked (in Sandra's words) for
"an accounting" as well as "for an undivided interest in, and/or
the value of an undivided interest in, the assets and/or benefits"
that were paid out of the pension plans. Petition for Declaratory
Judgment in No. 924174 (ED La., Nov. 16, 1992), p. 3. Sandra asked
the District Court to declare that, insofar as state law entitled
the children to some of the plan benefits, ERISA pre-empted that
state law. In a nutshell, she asked the court to say that the
shares of stock, the cash, and the annuity payments were entirely
hers.
The District Court disagreed with Sandra. It denied her motion
for summary judgment and declared that "ERISA does not preempt
Louisiana's community property laws." 849 F. Supp. 462, 467 (ED La.
1994); see also Judgment in No. 92-4174 (ED La., Mar. 9, 1994), p.
1. The Fifth Circuit Court of Appeals affirmed. We are reviewing
the Fifth Circuit's decision in respect to pre-emption; and we must
therefore assume its view of the relevant facts and state law.
II
Judge Wisdom, writing for the Fifth Circuit in this case,
described Louisiana's community property law as a "system" that
"conceives of marriage as a partnership in which each partner is
entitled to an equal share."
82 F.3d
90, 96 (1996); see also W. McClanahan, Community Property in
the United States § 2:27, p. 38 (1982) (hereinafter McClanahan)
(community property law views marriage "as a civil contract between
two persons who ente[r] into the relationship as equals and
retai[n] their individual personalities"). Recognizing "the value a
spouse, though non-employed, contributes to a marriage," 82 F. 3d,
at 96, the state law provides that the interest in pension benefits
that accrued during Isaac's mar-
858
riage to Dorothy belongs
both to Isaac and to
Dorothy-that is, to them as a community-and not to the one any more
than to the other. La. Civ. Code Ann., Art. 2338 (West 1985)
(community property includes "property acquired during the
existence of the legal regime through the effort, skill, or
industry of either spouse");
T. L. James &
Co. v.
Montgomery, 332 So. 2d 834, 841-844, 846 (La. 1975) (pension
benefits are community property even if the employee spouse makes
no cash contributions to plan).
Louisiana law, like the law of other States, today allows both
women and men to leave their property to their children. La. Civ.
Code Ann., Art. 2346 (West 1985) ("Each spouse acting alone may
manage, control, or dispose of community property unless otherwise
provided by law"). Cf. 16 K. Spaht & W. Hargrave, Louisiana
Civil Law Treatise, Matrimonial Regimes 1-2 (1989) (until 1980,
Louisiana law considered a husband to be the" 'head and master'"
and exclusive manager of community property). And we must assume,
as did the Fifth Circuit, that Louisiana law would permit Dorothy's
children, to whom she left her property, to obtain an accounting to
determine the extent to which the stock, the IRA, and the monthly
annuity, in fact belong to them. See 82 F. 3d, at 97 ("[Dorothy's]
spouse, or his estate, owes her an obligation to account for her
share of the pension"); see also La. Civ. Code Ann., Art. 3261
(West 1961) (succession representative has broad power, subject to
probate court approval, to liquidate an estate through sale or
exchange of estate assets "to pay debts and legacies, or for any
other purpose"). Cf. La. Rev. Stat. Ann. § 9:2801 (West 1991 and
Supp. 1997) (judicial partition of assets on divorce);
Hare
v.
Hodgins, 586 So. 2d 118, 123 (La. 1991) (to equalize
allocation of community assets on termination, court may grant
"cash or other property in lieu of an actual percentage of the
pension payments");
T. L. James, supra, at 851, n. 2
(opinion on rehearing) (same);
Sims v.
Sims, 358 So.
2d 919, 924 (La. 1978) (formula for calculating a former
spouse's
859
share of pension benefits); McClanahan § 12:15, pp. 547-550
(state courts may allocate entire pension to employee spouse and
allocate to other spouse other community property equal in value to
half of pension); cf. also
Succession of McVay, 476 So. 2d
1070, 1073-1074 (La. App. 1985) (decedent's IRA, which contained
community property assets, could not be listed as an asset of his
estate because he had designated a beneficiary; however, his estate
would be deemed to contain the equivalent cash value). See
generally La. Civ. Code Ann., Art. 4 (West 1993) ("When no rule for
a particular situation can be derived from legislation or custom,
the court is bound to proceed according to equity").
We ask here whether-or the extent to which-ERISA stands as an
obstacle to the enforcement of this state law as applied in this
case. It does so if state law "relate[s] to any employee benefit
plan," 29 U. S. C. § 1144(a), or if it conflicts with specific
provisions of ERISA. Applying the relevant criteria, I can find no
basis for pre-emption.
A
Louisiana community property law "relates to" an ERISA plan
within the meaning of § 1144(a) if it expressly "refer[s]" to such
a plan, or if it has an impermissible "connection with" a plan.
California Div. of Labor Standards Enforcement v.
Dillingham Constr., N.
A., Inc., 519 U. S. 316, 324
(1997). N either of these grounds for pre-emption is present
here.
The relevant Louisiana statute does not refer to ERISA or to
pensions at all. It simply says that "property acquired during the
existence of the legal regime through the effort, skill, or
industry of either spouse" is "community property." La. Civ. Code
Ann., Art. 2338 (West 1985). Nor does the statute act exclusively
on, or rely on the existence of, ERISA plans. See
Dillingham,
supra, at 324-325. The statute's application to this case
arises out of judicial interpretation, see
T. L. James,
supra, at 841; McClanahan § 6:21, p. 365, of a sort that is
likely to be present whenever a generally
860
phrased state statute affects an ERISA plan, among other things.
Hence there is no specific "reference" problem.
The "connection" problem is more difficult. Insofar as that term
refers to a conflict with an ERISA purpose, I discuss the matter
primarily in Part II-B,
infra. The term "connection,"
however, might also encompass the question whether state law
intrudes into an area Congress (given ERISA's basic objectives)
would have wanted to reserve exclusively for federal legislation.
Dillingham, supra, at 324 (quoting
New York State
Conference of Blue Cross &
Blue Shield Plans v.
Travelers Ins. Co., 514 U. S. 645, 655
(1995)). Cf.
Malone v.
White Motor Corp., 435 U. S. 497, 504 (1978)
(state law is pre-empted when it falls within a field that Congress
has sought to occupy);
San Diego Building Trades Council v.
Garmon, 359 U.
S. 236, 244-245 (1959) (States may not regulate activities that
are protected or prohibited under National Labor Relations Act);
Garner v.
Teamsters, 346 U. S. 485, 498-499 (1953)
(States may not add to or subtract from remedies provided in
National Labor Relations Act). In my view, this latter problem
(sometimes called "field preemption," see
Dillingham, supra,
at 336 (SCALIA, J., concurring)) is not present here.
The state law in question concerns the ownership of benefits. I
concede that a primary concern of ERISA is the proper financial
management of pension and welfare benefit funds themselves,
Dillingham, supra, at 326-327 (citing
Massachusetts
v.
Morash, 490
U. S. 107, 115 (1989)), and that payment of benefits (which
amounts to the writing of checks from those funds) is closely
"connected with" that management. I also concede that state laws
that affect those payments lie closer to ERISA's federal heart than
do state laws that, say, affect those goods and services that ERISA
benefit plans purchase, such as apprenticeship training programs,
519 U. S., at 332-334, or medical benefits,
De Buono v.
NYSA-ILA Medical and Clinical Services Fund, ante, at
814-816. But, even so, I cannot say that the state law at
861
issue here concerns a subject that Congress wished to place
outside the State's legal reach.
My reason in part lies in the fact that the state law in
question involves family, property, and probate-all areas of
traditional, and important, state concern.
Rose v.
Rose,
481 U. S. 619, 625 (1987) (domestic relations law traditionally
left to state regulation);
Hisquierdo v.
Hisquierdo,
439 U. S. 572,
581 (1979) (same);
Zschernig v.
Miller, 389 U. S. 429, 440 (1968)
("The several States, of course, have traditionally regulated the
descent and distribution of estates"). But see
ante, at 848
(majority's effort to distinguish property interests passing at
divorce from those passing by devise). When this Court considers
pre-emption, it works "on the 'assumption that the historic police
powers of the States were not to be superseded by the Federal Act
unless that was the clear and manifest purpose of Congress.'"
Dillingham, supra, at 325 (quoting
Rice v.
Santa
Fe Elevator Corp., 331 U. S. 218 (1947)).
I can find no reasonably defined relevant category of state law
that Congress would have intended to displace. Obviously, Congress
did not intend to pre-empt all state laws that govern property
ownership. After all, someone must own an interest in ERISA plan
benefits. Nor, for similar reasons, can one believe that Congress
intended to pre-empt state laws concerning testamentary bequests.
This is not an area like, say, labor relations, where Congress
intended to leave private parties to work out certain matters on
their own. See
Machinists v.
Wisconsin Employment
Relations Comm'n, 427 U. S. 132, 144-148
(1976). The question, "who owns the property?" needs an answer.
Ordinarily, where federal law does not provide a specific answer,
state law will have to do so.
Nor can I find some appropriately defined forbidden category by
looking to the congressional purpose of establishing uniform laws
to regulate the administration of pension funds. Cf.
Ingersoll-Rand Co. v.
McClendon, 498 U. S. 133 (1990);
862
Massachusetts v.
Morash, supra, at 115. This case
does not involve a lawsuit against afund. I agree with the
majority that ERISA would likely pre-empt state law that permitted
such a suit. But this is not such a case; nor is there reason to
believe Louisiana law would produce such a case.
(Eskine v.
Eskine, 518 So. 2d 505 (La. 1988), which is cited by the
majority, involved a governmental plan that was not covered by
ERISA. See
id., at 506; 29 U. S. C. §§ 1002(32),
1003(b)(1).)
The lawsuit before us concerns benefits that the fund has
already distributed; it asks not the fund, but others, for a
subsequent accounting. And, as I discuss in Part II-B-3 below, this
lawsuit will not interfere with the payment of a survivor annuity
to Sandra. See § 1055(a). Under these circumstances, I do not see
how allowing the respondents' suit to go forward could interfere
with the administration of the BellSouth pension plan according to
ERISA's requirements. Whether or not the children are allowed to
seek an accounting, the plan fiduciaries will continue to owe a
duty only to plan participants and beneficiaries. See §§
1103(c)(1), 1104(a)(1). Contrary to the majority's suggestion,
Dorothy's children are not the equivalent of plan "participants" or
"beneficiaries," see §§ 1002(7), 1002(8), any more than would be a
grocery store, a bank, an IRA, or any other recipient of funds that
have emerged from a pension plan in the form of a distributed
benefit, and no one here claims the contrary. Moreover, the
children here are seeking an accounting only after the plan
participant has died. But even were that not so, any threat the
children's lawsuit could pose to plan administration is far less
than that posed by the division of plan assets upon separation or
divorce, which is allowed under § 1056(d). See Part II-B-2,
infra.
Of course, one could look for a still more narrowly defined
category, such as the category of "testamentary bequests of ERISA
pension benefits by one spouse who dies before the other." But to
narrow the category to this extent is to
863
change the question from one about occupying the field, to one
about whether, or the extent to which, Louisiana law frustrates or
interferes with an important federal purpose.
That question is important. Indeed, the Court, in other cases,
has found conflicts between state community property law and
federal statutes governing retirement, insurance, and savings funds
operated and/or funded by the Federal Government. See
Mansell v.
Mansell, 490 U. S. 581, 587595
(1989);
McCarty v.
McCarty, 453 U. S. 210, 221-236
(1981); Ridgway v.
Ridgway, 454 U. S. 46, 53-61
(1981);
Hisquierdo, supra, at 582-590;
Free v.
Bland, 369 U.
S. 663 (1962); Wissner v.
Wissner, 338 U. S. 655, 658-660
(1950). But those cases turned on the particular federal purposes
embodied in the particular federal statutes at issue. The question
posed here similarly requires an examination of ERISA's specific
statutory provisions to see whether they reveal language or an
important purpose with which the State's community property laws
conflict-either directly, or in the sense that the state laws
"frustrate" the achievement of a statutory purpose. See
Malone, 435 U. S., at 504. I now turn to that question.
B
Sandra Boggs, supported by the Acting Solicitor General, points
to three statutory provisions with which, she believes, Louisiana
law conflicts-an anti-alienation provision, 29 U. S. C. §
1056(d)(1), a provision dealing with an exception to the
anti-alienation section for "qualified domestic relations
order[s]," § 1056(d)(3)(A), and a provision that concerns joint and
survivor pension annuities, § 1055. I shall consider each in
turn.
1
ERISA's "anti-alienation" provision, § 1056(d)(1), says that
"benefits provided under the [qualified ERISA plan] may not be
assigned or alienated." We have stated that this provision reflects
"a decision to safeguard a stream of income for
864
pensioners (and their dependents ... )."
Guidry v.
Sheet Metal Workers Nat. Pension Fund, 493 U. S. 365, 376
(1990). Sandra Boggs and the Acting Solicitor General claim that
Louisiana law interferes with a significant "anti-alienation"
objective, both (1) by permitting Dorothy, the nonparticipant
spouse, to obtain an undivided interest in the pension of Isaac,
the participant spouse; and (2) by permitting Dorothy to transfer
that interest on her death to her children, who, as far as ERISA is
concerned, are third parties.
The first claim-simply attacking Dorothy's possession of an
undivided one-half interest in that portion of retirement benefits
that accrued during her marriage to Isaac-does not attack any
"assign[ment]" of an interest nor any "aliena[tion]" of an
interest, for Dorothy's interest arose not through assignment or
alienation, but through the operation of Louisiana's community
property law itself. Thus, Sandra's claim must be that community
property law's grant of an undivided one-half interest in
retirement benefits to a nonparticipant wife or husband itself
violates some congressional purpose. But what purpose could that
be? Congress has recognized that community property law, like any
other kind of property law, can create various property interests
for nonparticipant spouses. See 29 U. S. C. § 1056(d)(3)(B)
(ii)(II). Community property law, like other property law, can
provide an appropriate legal framework for resolving disputes about
who owns what. § 1056(d)(3). The antialienation provision is
designed to prevent plan beneficiaries from prematurely divesting
themselves of the funds they will need for retirement, not to
prevent application of the property laws that define the legal
interest in those funds. One cannot find frustration of an
"anti-alienation" purpose simply in the state law's definition of
property.
The second claim-attacking Dorothy's testamentary transfer to
her children-is more plausible. Nonetheless, with one exception
discussed below, ERISA does not concern itself with what a pension
fund beneficiary, such as Isaac,
865
does with his pension money at his death. That is not
surprising, for after the death of a beneficiary the money is no
longer needed for that beneficiary's support. And if ERISA does not
embody a congressional purpose to restrict what Isaac can do with
his pension funds after his death, there is no reason to believe it
embodies some similar general purpose with respect to Dorothy.
Insofar as the pension is community property, it belongs to both
Dorothy and Isaac equally; it is just as much hers as his. Why,
then, should ERISA restrict her testamentary power in respect to
her property any more than it restricts his?
I see one possible answer to this question. One might argue
that, because Dorothy was the
first to die, her testamentary
transfer gave to third parties (persons to whom ERISA is
indifferent) funds that Isaac might otherwise have used during his
retirement; and, for that reason, the testamentary transfer tends
to frustrate the purpose of the "antialienation" provision or some
more general ERISA purpose. This argument (with one exception, see
Part II-B-3,
infra) is beside the point, however, for the
state-law action here seeks an accounting that will take place
after the deaths of
both Dorothy and Isaac. Moreover, the
argument depends upon doubtful assumptions about Congress'
purposes. Consider the 96 shares of stock and $150,000 cash that
Isaac received from the plans when he retired. Dorothy's bequest
affects those assets-the stock and the cash-not while they remain
in BellSouth's pension plan funds, but only after they have emerged
from the plan in the form of a distributed payment. As far as ERISA
is concerned, Isaac could have used the retirement benefits to pay
for a vacation, to buy a house, or to bet at the races, or he could
have given the money to his children. ERISA would have left Dorothy
similarly free to do what she wished with her share of the stock
and the cash, had she been alive at the time of their receipt. That
being so, I do not understand why or how ERISA could be concerned
about Dorothy's creation of a will, which affected
866
the retirement assets only after Isaac received them. I
recognize that Isaac did not use the $150,000 to buy a new house,
or to pay for medical expenses, or to gamble; rather, he put the
money into an IRA. But no one has explained why that fact-which in
all likelihood reflects the exigencies of tax law, see 26 U. S. C.
§408(e)(1)-should make any difference here.
2
Sandra Boggs and the Acting Solicitor General look for support
to another portion of the anti-alienation section-an amendment that
was part of the Retirement Equity Act of 1984 (REA), Pub. L.
98-397, 98 Stat. 1426-that affects the division of assets upon
divorce. That section says that the "anti-alienation" provision, 29
U. S. C. § 1056(d)(1), "shall not apply if the order is determined
to be a qualified domestic relations order" (QDRO). §
1056(d)(3)(A). The provision defines QDRO's to include certain
court orders that are "made pursuant to a State domestic relations
law (including a community property law)," § 1056(d)(3)(B)(ii)(II),
and meet certain other requirements, §§ 1056(d)(3)(B)(i),
1056(d)(3)(C), 1056(d)(3)(D). The Government argues that this
provision shows that court orders count as "alienations" prohibited
under § 1056(d)(1), and that since the probate court orders
effectuating Dorothy's testamentary transfers do not fall within
the QDRO exception, the "anti-alienation" section, as amended and
taken as a whole, pre-empts Louisiana law.
The QDRO provisions, in my view, do not support the Government's
argument. The QDRO exception does not purport to interpret the
"anti-alienation" provision (quoted
supra, at 863). Rather,
it simply says that the provision
"shall apply to the creation, assignment, or recognition of a
right to any benefit payable with respect to a participant pursuant
to a domestic relations order .... " § 1056(d)(3)(A).
867
The section defines "domestic relations order" (not
"qualified domestic relations order") as a court order,
judgment, or decree made pursuant to state domestic relations law,
which
"relates to the provision of child support, alimony payments, or
marital property rights to a spouse, former spouse, child, or other
dependent of a participant." § 1056(d)(3)(B)(ii)(I).
It then exempts "qualified" orders from the scope of the
anti-alienation provision. § 1056(d)(3)(A). This language does not
tell us what the word "alienation" would cover in its absence. It
does not tell us whether the amendment taken as a whole
clarified that the anti-alienation provision covers court
orders (which would help Sandra) or
extended that coverage
so that it included domestic relations orders (which would help the
children). Hence, the amendment tells us virtually nothing relevant
about whether the prohibition on anti-alienation applies to matters
not covered by the term "domestic relations orders," such as
probate court orders.
Second, the amendment, taken as a whole, concerns divorce and
separation, not probate. See Department of Labor Advisory Opinion
90-46A, issued Dec. 4, 1990 (citing 130 Congo Rec. 13327 (1984); S.
Rep. No. 98-575, pp. 18-19 (1984)) (in enacting REA, Congress
focused on marital dissolution and dependent support). The
amendment says that state-court judges cannot award pension-related
property to a nonparticipant spouse
unless the order doing
so meets certain requirements, such as recordkeeping requirements
and a prohibition against increasing the amount of benefits that an
ERISA plan would otherwise have to pay. §§ 1056(d)(3)(C),
1056(d)(3)(D). As I have said, Congress did this by stating that
the anti-alienation section covers divorce-related court orders,
and then exempting "qualified" orders from the additional coverage
just created. The amendment thus regulates transfers between living
spouses;
868
it does not intend to affect testamentary transfers taking place
after death.
Third, the QDRO provision shows that Congress did not object to
court orders that transfer pension benefits from an ERISA plan
participant to a former spouse who is alive-at least if those court
orders meet certain procedural requirements. Why then, one might
ask, would Congress object to court orders that transfer benefits
to a former spouse after her death? Had Dorothy Boggs remained with
Isaac for many years and then divorced him, she could have obtained
a QDRO that would have declared her community property interest in
Isaac's pension benefits, and she could then have left that
interest to her children. That being so, it would be anomalous to
find a congressional purpose in ERISA-despite the absence of
express statutory language and any indication that Congress even
considered the question-that would in effect deprive Dorothy of her
interest because, instead of divorcing Isaac, she "stay[ed] with
him till her last breath." Tr. of Oral Arg. 15.
Finally, the language of § 1056(d), even if taken literally,
does not help Sandra significantly, for a probate court order
awarding property to an estate or to children cannot easily be
squeezed into the definition of "domestic relations order." An
order placing property in the estate is not an order that provides
property rights to a "spouse, former spouse, child, or dependent,"
and an order distributing an estate's property to a child is not
readily described as an order relating to "marital property
rights." See Department of Labor Advisory Opinion,
supra
(probate orders are not "domestic relations orders").
3
Sandra Boggs and the Acting Solicitor General rely on a third
statutory provision, § 1055, which sets forth specific provisions
concerning the payment of annuities to a plan participant's
surviving spouse. Section 1055(a) says that an ERISA plan must
ensure that "the accrued benefit" that is
869
"payable" to the plan "participant" takes "the form of a
qualified joint and survivor annuity," § 1055(a)(1). The term
"qualified joint and survivor annuity" means an "annuity" to a plan
participant for his life, with a surviving spouse, such as Sandra,
that is "not less than 50 percent of (and is not greater than 100
percent of) the amount of the annuity which is payable during the
joint lives of the participant and the spouse." § 1055(d).
The parties have not argued that this provision affects the
shares of stock or the $150,000 lump sum. I need not decide whether
that is so. That is because, if these assets do count as "accrued
benefits" under § 1055(d), the plan would then have had to insist
on a waiver from Sandra in order to pay them out in the way that it
did-i.
e., in a form other than an annuity. Thus, I assume
either that the stock and cash were not "accrued benefits" under §
1055(d), or that Sandra waived her rights under § 1055. Either way,
§ 1055 would not affect the outcome as to the stock and the
cash.
The $1,800 monthly annuity payments, however, are a different
matter. They were paid from the BellSouth Management Pension Plan,
a "defined benefit" pension plan, initially to Isaac during his
lifetime, and then to his second wife, Sandra, for her life. These
annuities do fall within the scope of § 1055. This ERISA provision
seeks to guarantee that the person who was a participant's spouse
at the time of the participant's death will receive an annuity as
described (unless the spouse has waived the right to receive the
survivor annuity, §§ 1055(c) (waiver of survivor portion of
annuity), 1055(g) (election of cash distribution rather than
annuity)). See S. Rep. No. 98-575, at 12; 26 CFR § 1.401(a)-1l
(1996). I agree with the majority that Louisiana cannot give
Dorothy's children a share of the pension annuity that Sandra is
receiving without frustrating the purpose of this provision.
This inconsistency does not end the matter, however, for
Dorothy's children here sought different relief. Although the
children apparently requested a portion of Sandra's
870
monthly annuity payments in their state-court pleading, Record
134, they stipulated at oral argument that they are seeking only an
accounting, Tr. of Oral Arg. 33-34. And according to Sandra's
complaint for declaratory judgment, the children have asked for an
"accounting"; the Fifth Circuit, too, spoke only of an
"accounting," and did not mention relief in the form of a
percentage of Sandra's annuity. See 82 F. 3d, at 94, 97, 98.
The difference is important, for, as the children pointed out at
oral argument, an accounting would simply declare that, when
Dorothy died, she had a community property interest in Isaac's
pension benefits. And it is possible that Louisiana law would
permit Dorothy (or her heirs) to collect not the pension benefits
themselves, but other nonpension community assets of equivalent
value. See La. Civ. Code Ann., Art. 3261 (West 1961) (succession
representative has broad power, subject to probate court approval,
to liquidate an estate through sale or exchange of estate assets
"to pay debts and legacies, or for any other purpose"). Cf. La.
Rev. Stat. Ann. § 9:2801 (West 1991 and Supp. 1997) (judicial
partition of assets on divorce);
Hare v.
Hodgins, 586
So. 2d, at 123 (to equalize allocation of community assets on
termination, court may grant "cash or other property in lieu of an
actual percentage of the pension payments");
T. L. James,
332 So. 2d, at 851, n. 2 (opinion on rehearing) (same);
Sims
v.
Sims, 358 So. 2d, at 924 (setting forth formula for
calculating a former spouse's share of pension benefits);
McClanahan § 12:15, pp. 547-550 (state courts may allocate entire
pension to employee spouse and allocate to other spouse other
community property equal in value to half of pension).
In this case, Isaac apparently retained possession of other,
nonpension assets from the Dorothy-Isaac community after Dorothy's
death because her will gave him a lifetime usufruct in the portion
of her estate that she did not bequeath to him outright. (And if
Dorothy had not bequeathed that portion of her estate to anyone, it
appears that Louisiana law
871
would automatically have given him a usufruct until his death or
remarriage. See La. Civ. Code Ann., Art. 890 (West Supp. 1997).) In
such a circumstance, Louisiana law might provide an accounting to
allow Dorothy's estate, or her heirs, to recover Dorothy's
community property share of those nonpension assets from Isaac's
estate, or from his heirs, after his death. In applying such a law,
a Louisiana court might allocate property so that federally granted
property rights, such as Sandra's right to a survivor annuity, are
fully protected. Cf.
Bendler v.
Marshall, 513 So. 2d
369 (La. App. 1987) (first wife is entitled to reimbursement of her
community property share of husband's pension contributions, but
not from second, surviving wife; first wife is not entitled to
share of second wife's survivor annuity);
Succession of
McVay, 476 So. 2d, at 1073-1074 (decedent's IRA, which contained
community property assets, could not be listed as an asset of his
estate because he had designated a beneficiary; however, his estate
would be deemed to contain the equivalent cash value). See
generally La. Civ. Code Ann., Art. 4 (West 1993) ("When no rule for
a particular situation can be derived from legislation or custom,
the court is bound to proceed according to equity").
Of course, the lower courts did not describe the precise nature
of Dorothy's state-law interest, nor did they explain exactly how
the accounting worked. They did no more than deny Sandra's request
for a declaratory judgment that ERISA prohibits an accounting. But
that may reflect the fact that no one raised a § 1055 argument
until after the Court of Appeals panel's decision in this case. We
therefore should not grant Sandra her declaratory judgment unless
we are certain Louisiana law could not lawfully permit Dorothy to
leave her community property interest in the pension assets to her
children. And, given the authority just cited, state law
might lawfully do so, very roughly in the way the following
imaginary example illustrates:
872
Assume at the time of Dorothy's death Dorothy and Isaac owned
the following community property:
Pension assets Stock investments
Total
$ 60,000 140,000
$200,000
Louisiana law might then provide that Dorothy and Isaac each
owned $100,000 worth of community assets. Louisiana law might also
provide (or permit a probate court to decide) that the share
belonging to Dorothy's estate consisted of $100,000 worth of stock,
leaving Isaac with $40,000 in stock and $60,000 in pension assets.
If that is so, why should ERISA care? And if Louisiana law should
simply
postpone the division of the Dorothy-Isaac
community's property until after Isaac's death because of his
lifetime usufruct, why should ERISA care any more? Moreover, if
Isaac bequeathed the entire $140,000 worth of stock to a charity, I
assume that the probate court would block most of the bequest on
the ground that $100,000 worth of stock was not Isaac's to give
away. I assume it would do the same if he tried to give Sandra the
entire $140,000. And I do not see why ERISA would care about the
stock (which, after all, belonged to Dorothy) in either case.
I cannot understand why Congress would want to preempt Louisiana
law if (or insofar as) that law provides for an accounting and
collection from other property-i.
e., property other than
the annuity that § 1055 requires the BellSouth plans to pay to
Sandra. The survivor annuity provision assures Sandra that she will
receive an annuity for the rest of her life. Louisiana law (on my
assumption) would not take from her either that annuity or any
other asset that belongs to her. The most one could say is that
Sandra will not receive certain other assets-assets that belonged
to the Dorothy-Isaac community and that Isaac had no right to give
to anyone in the first place.
873
Nothing in ERISA suggests that it cares about what happens to
those other assets. The survivor annuity provision says nothing
about them. Indeed, Isaac, or the DorothyIsaac community, might, or
might not, have had other assets. Isaac might, or might not, have
tried to leave all, or some, of those other assets to Sandra, or to
his children, or to charity. ERISA seems to be indifferent to the
presence, or absence, of
other assets and to what Isaac did
or did not try to do with them. After all, if Dorothy had divorced
Isaac, ERISA would have permitted state law to give her not only
other assets, but also half of the pension itself (which would have
left a later-appearing Sandra with a diminished annuity). See §
1056(d)(3)(A). Given Congress' purpose of allowing state courts to
give first wives their community property share of pension assets,
why would Congress have intended to include a silent implication
that strips Dorothy of an asset that may be the bulk of her
community property-simply because, instead of divorcing Isaac, she
remained his wife until she died?
On the assumptions I have made, to find a conflict in this case,
one would have to depart from what Congress actually said in ERISA
and infer some more abstract general purpose, say to help a second
wife at the expense of a first wife's state-law-created interest in
other property. But should we take anything like this latter
approach, there would be no logical stopping place. Confusion and
unnecessary interference with state property laws would become
inevitable. Moreover, we should be particularly careful in making
assumptions about the interaction of § 1055 and Louisiana law, as
the courts below did not consider § 1055 as a possible ground for
conflict pre-emption.
In sum, an annuity goes to Sandra, a surviving spouse; but
otherwise Dorothy would remain free not only to have, but to
bequeath, her share of the marital estate to her children. This
reading of the relevant statutory provisions and purposes protects
Sandra, limits ERISA's interference with
874
basic state property and family law, and minimizes the extent to
which ERISA would interfere with Dorothy's preexisting property.
Cf.
Hodel v.
Irving, 481 U. S. 704, 717 (1987)
(federal statute stripping property owner of right to pass interest
by descent or devise constitutes taking under Fifth Amendment);
Babbitt v.
Youpee, 519 U. S. 234, 244-245
(1997) (statutory restriction on class of permissible heirs
constitutes taking).
These general reasons, as well as the specific reasons provided
above, convince me that ERISA does not pre-empt the Louisiana law
in question. And I would therefore affirm the judgment below.
Comments
Be the first to comment
Leave a Comment