The John Marshall Law Review
Volume 47 | Issue 1
Article 4
Spring 2013
When Do State Laws Determine ERISA Plan
Benefit Rights?, 47 J. Marshall L. Rev 145 (2013)
Albert Feuer
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Albert Feuer, When Do State Laws Determine ERISA Plan Benefit Rights?, 47 J. Marshall L. Rev 145 (2013)
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WH E N DO STATE LAWS DE TE RMINE
E RISA P LAN BENE F IT RIGH TS?
ALBE RT F E UE R
*
I.INTRODUCTION ......................................................................... 154
II.E RISA BASICS ........................................................................... 158
A. E RISA P r ot ect ion s for P la n P a r t icipa n t s a n d
Ben eficia r ies .................................................................. 158
B. Ba sic E RISA P r eem pt ion P r in ciples ............................ 162
III.TH E SUP RE MACY CLAUSE AND SOME NON -E RISA
P RE E MP TION DE CISIONS TH E SUP RE ME COURT
CITE D IN ITS E RISA P RE E MP TION DE CISIONS ......... 167
A. Th e Su pr em e Cou r t Decla r es t h a t a F eder a l La w
Th a t P er va sively Regu la t es a F ield P r eem pt s An y
St a t e La w Wit h in t h e Regu la t ed F iled, Bu t Th er e
is a P r esu m pt ion Aga in st Su ch Im plicit F ield
P r eem pt ion .................................................................... 169
B. Su pr em e Cou r t Decision s Dist in gu ish in g F eder a l
La ws Th a t P r eem pt a F ield F r om Th ose Th a t Do
Not .................................................................................. 172
IV.TH E SU P RE ME COURT H OLDS TH AT TH E MAJ OR
P RE -E RISA F E DE RAL E MP LOYE E BE NE F ITS LAW,
TH E
WE LF ARE
AND
P E NSION
P LANS
DISCLOSURE ACT
(“WP P DA”),
DOE S NOT
P RE E MP T TH E SUBSTANTIVE RE GULATION OF
E MP LOYE E BE NE F IT P LANS .......................................... 174
V.LE GISLATIVE H ISTORY OF E RISA P RE E MP TION
P ROVISIONS, RIGH TS OF P ARTICIP ANTS TO
E NF ORCE
BE NE F IT
RIGH TS,
SP OUSAL
P ROTE CTIONS AND ALIE NATION P ROH IBITION
UNTIL TH E AP RIL 1974 SUBMISSION OF H OUSE
AND
SE NATE
BILLS
TO
CON F E RE NCE
COMMITTE E ....................................................................... 178
A. Th e Ma r ch 1970 In it ia l P r oposa l by P r esiden t
Nixon Su pplem en t s t h e WP P DA, Au t h or izes
P a r t icipa n t s t o E n for ce Righ t t o Ben efit P a ym en t s,
In t r odu ces
F idu cia r y
Respon sibilit ies
and
P r eem pt s La ws Rela t ed t o Regu la t ion of F idu cia r y
Respon sibilit ies
and
Repor t in g,
Disclosu r e
Requ ir em en t s, Bu t P r eem pt ion E xplicit ly E xclu des
Ben efit Cla im s a n d Ba n kin g, In su r a n ce, a n d
Secu r it ies La ws ............................................................. 181
B. Th e Ma y 1972 Sen a t e P r ecu r sor t o E RISA
Su pplem en t s t h e WP P DA, Au t h or izes P a r t icipa n t s
t o E n for ce t h e Righ t Ben efit P a ym en t s, In t r odu ces
145
146
T h e J oh n M arsh all L aw R eview
[47:145
F idu cia r y Respon sibilit ies, a n d P r eem pt s La ws
Rela t ed t o Regu la t ed Su bject Ma t t er s, Wh ich
P r eem pt ion E xplicit ly E xclu des Ben efit Cla im s a n d
Ba n kin g, In su r a n ce, a n d Secu r it ies La ws ................... 183
C. Th e J a n u a r y 1973 H ou se P r ecu r sor s t o E RISA
Su per sedes t h e WP P DA, Au t h or izes P a r t icipa n t s
t o E n for ce t h e Righ t t o Ben efit P a ym en t s,
In t r odu ces F idu cia r y Respon sibilit ies, P r eem pt s
St a t e La ws Rela t ed t o Regu la t ed Respon sibilit ies,
Wh ich P r eem pt ion E xplicit ly E xclu des Ben efit
Cla im s a n d Ba n kin g, In su r a n ce, a n d Secu r it ies
La ws ............................................................................... 185
D. Th e J a n u a r y 1973 Sen a t e P r ecu r sor To E RISA
Su pplem en t s Th e WP P DA, Au t h or izes P a r t icipa n t s
To E n for ce t h e Righ t t o Ben efit P a ym en t s,
In t r odu ces
F idu cia r y
Respon sibilit ies,
and
P r eem pt s La ws Rela t ed t o Regu la t ed Su bject
Ma t t er s, Wh ich P r eem p t ion E xplicit ly E xclu des
Ben efit Cla im s a n d Ba n kin g, In su r a n ce, Secu r it ies
La ws ............................................................................... 187
E . Th e Apr il 1973 P r esiden t ia l P r ecu r sor t o E RISA
Su pplem en t s t h e WP P DA, Au t h or izes P a r t icipa n t s
t o E n for ce Ben efit Cla im s, In t r odu ces F idu cia r y
Respon sibilit ies a n d P r eem pt s La ws Rela t ed t o
Regu la t ed Respon sibilit ies, Wh ich P r eem pt ion
E xplicit ly E xclu des Ben efit Cla im s a n d Ba n kin g,
In su r a n ce, Secu r it ies La ws .......................................... 190
F . Th e In cor por a t ion in t h e E RISA P r ecu r sor s of (1)
Th e Spou sa l Su r vivor Ben efit Requ ir em en t a n d (2)
Th e P r oh ibit ion of P en sion Ben efit Alien a t ion s a n d
t h e F u r t h er Developm en t of E RISA ............................ 192
G. Th e F in a l P r e-Con fer en ce Revision s of t h e H ou se
a n d Sen a t e Bills Th a t Will Be Tr a n sfor m ed in t o
E RISA (1) E xplicit ly E xclu de Ben efit s Cla im s a n d
La ws Gover n in g Ba n kin g, In su r a n ce, a n d
Secu r it ies fr om P r eem pt ion , (2) Requ ir e a Spou sa l
Su r vivor Ben efit , a n d (3) P r oh ibit P en sion Ben efit
Alien a t ion ...................................................................... 200
VI.LE GISLATIVE H ISTORY OF E RISA P RE E MP TION
P ROVISIONS, RIGH TS OF P ARTICIP ANTS TO
E NF ORCE
BE NE F IT
RIGH TS,
SP OUSAL
P ROTE CTIONS, AND ALIE NATION P ROH IBITION
BE TWE E N AP RIL 1974 SUBMISSION OF H OUSE
AND
SE NATE
BILLS
TO
CON F E RE NCE
COMMITTE E AND TH E E NACTME NT OF E RISA ........ 204
A. Th e Apr il 1974 Adm in ist r a t ion P r oposa l t o t h e
Con fer en ce Com m it t ee Th a t On ly La ws Rela t ed t o
t h e Regu la t ion of Specified Ar ea s Be P r eem pt ed,
wit h E xplicit E xclu sion s for Ben efit Cla im s, Ta x,
Ba n kin g, In su r a n ce, a n d Secu r it ies La ws ................... 206
B. Th e Con fer en ce Com m it t ee Recom m en ds t h a t t h e
P r eem pt ion P r ovision (1) Applies t o St a t e La ws
t h a t Rela t e t o a n y E m ployee Ben efit P la n , (2) Does
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
147
n ot E xem pt Ben efit Cla im s or Ta x La w, a n d (3)
In clu des E xclu sion s on ly for La ws Gover n in g
Ba n kin g, In su r a n ce, a n d Secu r it ies, a n d Gen er a lly
Applica ble Cr im in a l La w .............................................. 208
C. Th e Au gu st 1974 Con fer en ce Com m it t ee Repor t
a n d F loor Discu ssion of t h e Br oa d E RISA
P r eem pt ion P r ovision s .................................................. 209
D. Th e
Con fer en ce
Com m it t ee
St a ff
Recom m en da t ion s, t h e Au gu st 1974 Con fer en ce
Com m it t ee Repor t a n d F loor Discu ssion of t h e
Spou sa l Su r vivor Requ ir em en t , a n d t h e Alien a t ion
P r oh ibit ion ..................................................................... 215
E . Th e
Con fer en ce
Com m it t ee
St a ff
Recom m en da t ion s, t h e Au gu st 1974 Con fer en ce
Com m it t ee Repor t a n d F loor Discu ssion of t h e
Ben efit E n for cem en t P r ovision s (In clu din g t h e
Cla im s Review Requ ir em en t ) a n d t h e P r ot ect ion
a ga in st In t er fer en ce wit h E RISA Righ t s .................... 217
F . Con gr ess Over wh elm in gly Appr oves E RISA wit h
t h e E xpect a t ion t h a t t h e E RISA E xpr ess
P r eem pt ion Will Assu r e t h a t E RISA, Not St a t e
La w, Det er m in es t h e E xt en t of t h e Ben efit
P r ot ect ion s for E m ployee Ben efit P la n P a r t icipa n t s
a n d Ben eficia r ies ........................................................... 219
VII.P RE E MP TION ISSUE S P RE SE NTE D IN TH E COURSE
OF
TH E SUBSTANTIAL E RISA RE VIE W AND
P RE P ARATION OF 1978 AND 1979 RE F ORM BILLS,
NE ITH E R OF WH ICH WAS ADOP TE D .......................... 223
A. A La w Review Ar t icle Descr ibin g t h e E RISA
P r eem pt ion Issu es Recogn ized in 1979 ....................... 223
B. Th e P r oposed E RISA Im pr ovem en t Act of 1979 a n d
t h e E RISA P r eem pt ion Issu es it Addr essed ................ 226
VIII. INITIAL E RISA P RE E MP TION DE CISION S BY TH E
SUP RE ME COURT WITH OUT OP INIONS ...................... 232
A. E RISA Does Not P r eem pt Com m u n it y P r oper t y
La w or Dom est ic Rela t ion s Or der s .............................. 233
B. E RISA P r eem pt s St a t e La w Ben efit Ter m s
Ma n da t e E ven if t h e Ma n d a t e is Ch a r a ct er ized a s
a St a t e Ta x .................................................................... 236
C. E RISA P r eem pt s St a t e Regu la t ion of In for m a l An d
Un fu n ded Sever a n ce P olicies ....................................... 237
IX.INITIAL E RISA P RE E MP TION DE CISIONS BY TH E
SUP RE ME COURT WITH OP INIONS .............................. 240
A. E RISA P r eem pt s St a t e La ws t h a t E n h a n ce E RISA
P r ot ect ion s of P la n P a r t icipa n t s or Ben eficia r ies,
In clu din g Ben efit Ter m s Ma n da t es ............................. 241
B. Th e Su pr em e Cou r t Cr ea t es Con fu sion Abou t t h e
Gen er a l E RISA P r eem pt ion by Obser vin g t h a t
“Refer en ce t o” is In clu ded Wit h in t h e Mea n in g of
t h e P h r a se “Rela t e t o” in t h e Cou r se of H oldin g
t h a t E RISA P r eem pt s On ly St a t e La ws wit h N on Ten u ou s E ffect s on E RISA P la n s ................................. 244
X.AME NDME NTS OF E RISA P RE E MP TION P ROVISIONS .... 247
148
T h e J oh n M arsh all L aw R eview
A.
[47:145
Con gr ess Rever ses Su pr em e Cou r t a n d P r ovides a
Lim it ed E xclu sion for t h e H a wa ii P r epa id H ea lt h
Ca r e Act fr om E RISA P r eem pt ion a n d Con fir m s
P r eem pt ion of St a t e Ta x La ws ..................................... 248
B. Con gr ess Rever ses t h e Su pr em e Cou r t a n d
Su bst a n t ia lly Lim it s Wh ich Dom est ic Rela t ion s
Or der s E RISA Does N ot P r eem pt ................................ 251
C. Con gr ess Im poses Two Dist in ct Ma n da t es for
Spou sa l Su r vivor Ben efit P la n s: (1) A Spou sa l
Su r vivor Ben efit Ma n da t e, a n d (2) Th e Spou sa l
Su r vivor QDRO Ben efit Ma n da t e ................................ 258
D. Con gr ess Im poses a Medica l Ch ild Su ppor t
Ma n da t e ......................................................................... 259
E . Con gr ess Addr esses t h e P r eem pt ion of St a t e La ws
Gover n in g E m ployee Con t r ibu t ion s t o P en sion
P la n s .............................................................................. 259
XI.TH E STATE LAWS F OR WH ICH TH E RE IS AN
AP P ARE NT CONSE N SU S TH AT E RISA P RE E MP TS
TH E M, AND TH E STATE LAWS F OR WH ICH SUCH
A CONSE NSU S IS LACKING ............................................ 260
XII.TRILOGY OF
F OLLY — SU P RE ME
COURT
DISRE GARDS
(1) TH E E RISA RE QUIRE ME NT
TH AT P LAN TE RMS
DE TE RMINE BE N E F IT
RIGH TS, AND (2) TH E E RISA RULE TH AT E RISA
DOE S NOT P RE E MP T A STATE
LAW WH ICH
AF F E CTS E RISA BE NE F IT P ROTE CTIONS IN A
NON -TE NUOUS MANNE R ................................................ 261
A. Su pr em e Cou r t H olds Th a t Beca u se it Asser t ed
Th a t a St a t e Ma n da t ed Sever a n ce P olicy Requ ir es
No On goin g Adm in ist r a t ive Sch em e, t h e P olicy is
n ot a n E RISA P la n , Th u s E RISA Does n ot P r eem pt
t h e Ben efit Ter m s Ma n da t e of t h e P olicy .................... 263
B. Su pr em e Cou r t H olds Th a t E RISA P r eem pt s An y
St a t e La w t o t h e E xt en t Th a t t h e La w Refer s t o a n
E RISA P la n Rega r dless of t h e Ten u ou sn ess of t h e
La w’s E ffect s on t h e P la n , a n d Su ggest s t h a t
E RISA P r eem pt s a n y St a t e La w t h a t Tr ea t s a n y
E RISA P la n Mor e F a vor a bly Th a n Sim ila r ly
Sit u a t ed E n t it ies ........................................................... 270
C. Th e Su pr em e Cou r t H olds t h a t E RISA Does Not
P r eem pt a St a t e La w if t h e La w Does Not Refer t o
a n E RISA P la n a n d Does N ot Con flict wit h a n y
E RISA P r ovision , Ot h er Th a n t h e P r ovision Givin g
E a ch E RISA P a r t icipa n t t h e Righ t t o E n for ce H is
or H er P la n Ben efit Righ t s ........................................... 272
XIII. SUP RE ME COURT DE CLARE S TH AT E RISA
P RE E MP TS AN Y STATE LAW TO TH E E XTE NT
TH E LAW RE F E RS TO E RISA P LAN S, MANDATE S
BE NE F IT
STRU CTURE
OR
BE NE F IT
ADMINISTRATION,
OR
P ROVIDE S
AN
E NF ORCE ME NT ME CH ANISM, BUT P E RMITS
STATE LAWS TH AT AF F E CT BE NE F IT AMOUNTS
AND P ROVIDE RS INDIRE CTLY WITH OUT AN Y OF
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
149
TH E ABOVE F E ATURE S ................................................... 274
A. Su pr em e Cou r t H olds t h a t E RISA Does Not
P r eem pt a St a t e La w Th a t Im poses Su r ch a r ges
On ly On Blu e Cr oss In su r er s Beca u se It s r ela t ion
t o E RISA P la n s is Too Ten u ou s ................................... 277
B. Su pr em e Cou r t H olds Th a t E RISA Does N ot
P r eem pt a St a t e La w Th a t Im poses Ta xes on
Oper a t or s of H ea lt h Ca r e F a cilit ies, In clu din g
E RISA P la n s, Beca u se It s Rela t ion t o E RISA P la n s
is t oo Ten u ou s ............................................................... 280
C. Su pr em e Cou r t H olds Th a t E RISA Does N ot
P r eem pt a St a t e La w Th a t Im poses Lower
P r eva ilin g Wa ges F or P a r t icipa n t s in Appr oved
Appr en t ice P r ogr a m s, Wh ich In clu ded Bu t Wer e
Not Lim it ed t o E RISA Appr en t ice P la n s ..................... 281
XIV.TH E SUP RE ME COURT H OLDS TH AT E RISA
P RE E MP TS A STATE LAW CLAIM OF A P E RSON
TH AT ARISE S F ROM A P ARTICIP AN T’S OR
BE NE F ICIARY’S RIGH T TO AN E RISA P LAN
BE NE F IT TH AT WOULD P RE VE N T TH E P LAN
F ROM
P AYING
TH E
P ARTICIP AN T
OR
BE NE F ICIARY SUCH BE NE F IT OR P E RMIT TH E
P E RSON TO WRE ST TH E BE NE F IT OR TH E
AMOUNT
OF
TH E
BE NE F IT
F ROM
TH E
P ARTICIP AN T OR BE N E F ICIARY ................................... 282
A. Su pr em e Cou r t H olds Th a t (1) E RISA P r eem pt s a
St a t e Com m u n it y P r oper t y La w Th a t Gives a
P a r t icipa n t ’s Spou se t h e Righ t t o Dispose of P a r t of
t h e P a r t icipa n t ’s P en sion Ben efit a t H er Dea t h if
Sh e P r edecea ses t h e P a r t icipa n t , a n d (2) H er
Lega t ees Do N ot H a ve t h e Righ t t o Obt a in t h e
Dist r ibu t ed Ben efit s of t h e P a r t icipa n t ....................... 283
B. Su pr em e Cou r t H olds Th a t (1) E RISA P r eem pt s a
St a t e La w Th a t Revok es a n E RISA P la n
Ben eficia r y Design a t ion Upon a Divor ce, (2) St a t e
La w Design a t ed Ben eficia r ies Ma y N ot Wr est t h e
Ben efit s F or m t h e E RISA Ben eficia r y, a n d (3)
E RISA P r eem pt s Gen er a lly Applica ble N on Cr im in a l La ws Th a t Viola t e a n E RISA Gen er a l
Ma n da t e ......................................................................... 288
C. Su pr em e Cou r t Affir m s Th a t St a t e La w Cla im s
Ar isin g fr om a Ben eficia r y’s Righ t t o E RISA
Ben efit s Ma y Not Be U sed t o Wr est t h e Ben efit s
F r om t h e E RISA Design a t ed Ben eficia r y.................... 290
XV.E RISA DOE S NOT P RE E MP T (1) GE NE RALLY
AP P LICABLE STATE CRIMINAL LAWS TH AT DO
NOT RE LATE TO E RISA P LANS, SUCH AS TH E F T
LAWS, (2) GE NE RALLY AP P LICABLE CRIMINAL
LAWS TH AT RE LATE TO E RISA P LANS, SUCH AS
WAGE AND WAGE SU P P LE ME NT COLLE CTION
LAWS, USURY LAWS, (3) LAWS TO IMP LE ME NT
GE NE RALLY
AP P LICABLE
CRIMIN AL
SANCTION S TH AT E XP LICITLY RE F E R TO E RISA
150
T h e J oh n M arsh all L aw R eview
[47:145
BE NE F ITS, SUCH AS LAWS TO COLLE CT
CRIMINAL F INE S AND RE STITUTION, or (4) CIVIL
SLAYE R
LAWS
TH AT
AU TOMATICALLY
IMP LE ME NT
SP E CIF IE D
H OMICIDE
CONVICTIONS, BUT P RE E MP TS (1) CRIMINAL
LAWS AP P LYING P RIMARILY TO E RISA P LANS OR
E RISA BE NE F ITS, or (2) GE NE RALLY AP P LICABLE
NON -CRIMINAL LAWS TH AT ARE INCONSISTE NT
WITH
P LAN
TE RMS
(WH ICH
DE TE RMINE
BE NE F IT
RIGH TS,
IMP OSE
P ROH IBITE D
MANDATE S, OR P ROVIDE E RISA E N F ORCE ME NT
ME CH ANISMS .................................................................... 293
A. Th e DOL Advisor y Opin ion s Sh ow t h e Dist in ct ion
Bet ween Gen er a lly Applica ble Cr im in a l La ws Th a t
E RISA Does Not P r eem pt , a n d Ot h er Cr im in a l
La ws t h a t E RISA P r eem pt s On ly t o E xt en t Th ey
Rela t e Non -Ten u ou sly t o E RISA P la n s ....................... 296
B. Cor r ect bu t P oor ly Rea son ed Cou r t Decision s Th a t
E RISA Does Not P r eem pt Cr im in a l La ws Wh ich
In ciden t a lly E n for ce E RISA Con t r ibu t ion or
Ben efit Obliga t ion s, Bu t P r eem pt s Cr im in a l La ws
if Th eir P r im a r y E ffect is t o (1) E n for ce E RISA
Con t r ibu t ion or Ben efit Obliga t ion s, or (2)
Ma n da t e P la n Ter m s .................................................... 299
C. In cor r ect a n d P oor ly Rea son ed Cou r t Decision s
Th a t E RISA P r eem pt s Cr im in a l La ws Wh ose
In ciden t a l Resu lt is t o E n for ce E RISA Con t r ibu t ion
or Ben efit Obliga t ion s, Su ch a s La ws t o Assu r e t h e
P a ym en t
of E m ployee Wa ges a n d Wa ge
Su pplem en t s .................................................................. 306
D. E RISA Does N ot P r eem pt a Cr im in a l La w Not
P r im a r ily Affect in g E RISA P la n s wh ich Requ ir es
t h e P a ym en t of F in es, Reim bu r sem en t s t o Cr im e
Vict im s, or Reim bu r sem en t s t o St a t es for t h e Cost s
of Im pr ison in g a n E RISA P la n P a r t icipa n t ................ 310
E . Th e P r eem pt ion Resu lt s a r e Un a ffect ed by
Tr a veler s a n d It s P r ogen y Wh ich Con fir m Th a t
E RISA P r eem pt s St a t e La ws Th a t P r ovide
E n for cem en t Mech a n ism s ............................................ 313
XVI.E RISA ONLY P RE E MP TS STATE TAX LAWS TH AT
SE E K
TO
BE
E RISA
E N F ORCE ME NT
ME CH ANISMS,
TO
AF F E CT
P ARTICIP AN T’S
BE NE F IT RIGH TS (SUCH AS IMP OSI NG TAX
LE VIE S
OR
WITH H OLDINGS
ON
P LAN
DISTRIBU TIONS), OR TO IMP OSE BE NE F IT
MANDATE S, RE P ORTING AND DISCLOSURE
MANDATE S,
F IDUCIARY
MANDATE S,
OR
F UNDING MANDATE S E XCE P T TO TH E E XTE NT
NE E DE D TO IMP LE ME NT A TAX LAW TH AT IS
NOT OTH E RWISE
P RE E MP TE D OTH E R TH AN
GE NE RALLY AP P LICABLE CRIMINAL LAWS .............. 313
A. E RISA a n d It s Dr a ft sm en E xplicit ly Addr ess t h e
P r eem pt ion of St a t e Ta x La ws ..................................... 314
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
B.
151
Th e Alien a t ion P r oh ibit ion Regu la t ion s Addr ess
t h e P r eem pt ion of St a t e Ta x La ws .............................. 317
C. E RISA P er m it s St a t e t o Ta x P la n s or P a r t icipa n t s
for Con t r ibu t ion s Ma de t o E RISA P la n s ..................... 318
D. A Cir cu it Cou r t H eld Th a t E RISA P er m it s (1)
St a t e Ta x Levies on Ben efit P a ym en t s fr om E RISA
P la n s ot h er Th a n Spou sa l Su r vivor P en sion P la n s,
a n d (2) Ma n da t or y St a t e Ta x Wit h h oldin gs for All
P la n s, Bu t Th ese H oldin gs P r eceded, a n d Ar e Not
Ten a ble Aft er Boggs, E gelh off, a n d Ken n edy ............. 321
E . E RISA P er m it s St a t es t o Im pose Ta xes, Wh ich
Refer t o or a r e Dir ect ed P r im a r ily a t E RISA P la n s,
if t h e Ta x is Not a Gen er a l E RISA Ma n da t e, Does
Not P r even t t h e E xer cise of Ben efit Righ t s, a n d is
Not a n E RISA E n for cem en t Mech a n ism , Alt h ou gh
Som e Cou r t s H a ve Disa gr eed ....................................... 327
XVII. E RISA P RE VE NTS A STATE LAW CRE DITOR OF A
P ARTICIP AN T OR A BE NE F ICIARY OF AN E RISA
P LAN F ROM RE DUCING TH E P LAN BE NE F IT
P AYME N T RIGH TS OF TH E P ARTICIP ANT OR TH E
BE NE F ICIARY UN LE SS TH E CRE DITOR IS A
BE NE F ICIARY UNDE R TH E P LAN TE RM, OR TH E
P LAN P E RMITS TH E ATTACH ME N T OF BE NE F ITS ... 336
XVIII. E RISA P RE VE NTS A STATE LAW CRE DITOR OF A
P OUSAL SURVIVOR BE NE F IT P LAN P ARTICIP ANT
OR BE NE F ICIARY F ROM WRE STING TH E P LAN
BE NE F IT
F ROM
TH E
P ARTICIP ANT
OR
BE NE F ICIARY .................................................................... 338
A. Th e E volu t ion of t h e Alien a t ion P r oh ibit ion in t h e
Developm en t of E RISA Im plies t h a t Con gr ess
In t en ded t o P r even t a St a t e La w Cr edit or of a
P a r t icipa n t or of a Ben eficia r y of a Spou sa l
Su r vivor Ben efit P la n fr om Wr est in g t h e P la n
Ben efit F r om t h e P a r t icipa n t or Ben eficia r y .............. 340
B. J u st ice Ca r dozo’s An a lysis of t h e Alien a t ion
P r oh ibit ion P r ovision s of t h e N ew Yor k Wor k er s
Com pen sa t ion La w Regu la t ion Im plies t h a t t h e
E RISA Alien a t ion P r oh ibit ion P r even t s a St a t e
La w Cr edit or of a P a r t icipa n t or of a ben eficia r y of
a Spou sa l Su r vivor Ben efit P la n fr om Wr est in g t h e
P la n Ben efit F r om t h e P a r t icipa n t or Ben eficia r y ...... 348
C. Th e
Alien a t ion
P r oh ibit ion
Regu la t ion
is
Con sist en t wit h t h e Alien a t ion P r oh ibit ion
P r even t in g a St a t e La w Cr edit or of a P a r t icipa n t
or of a Ben eficia r y of a Spou sa l Su r vivor Ben efit
P la n F r om Wr est in g t h e P la n Ben efit F r om t h e
P a r t icipa n t or Ben eficia r y ............................................ 350
D. Th e F eder a l P r ot ect ion of Ot h er Ret ir em en t
Ben efit s Im plies t h a t t h e Alien a t ion P r oh ibit ion
P r even t s a St a t e La w Cr edit or of a P a r t icipa n t or
of a ben eficia r y of a Spou sa l Su r vivor Ben efit P la n
F r om Wr est in g t h e P la n Ben efit F r om t h e
P a r t icipa n t or Ben eficia r y ............................................ 352
152
T h e J oh n M arsh all L aw R eview
E.
[47:145
Th e P r e-E RISA St a t e La w P r ot ect ion of
Ret ir em en t Ben efit s F r om Cr edit or s Im plies t h a t
t h e Alien a t ion pr oh ibit ion Wa s In t en ded t o
P r even t a St a t e La w Cr edit or of a P a r t icipa n t or of
a Ben eficia r y of a Spou sa l Su r vivor Ben efit P la n
F r om Wr est in g t h e P la n Ben efit F r om t h e
P a r t icipa n t or Ben eficia r y ............................................ 357
F . Th e Su pr em e Cou r t Decision s Im ply Th a t t h e
Alien a t ion P r oh ibit ion P r even t s a St a t e La w
Cr edit or of a P a r t icipa n t or of a Ben eficia r y of a
Spou sa l Su r vivor Ben efit P la n fr om Wr est in g t h e
P la n Ben efit F r om t h e P a r t icipa n t or Ben eficia r y ...... 366
G. Th e Lower Cou r t Ca se-La w H oldin gs a n d t h e
Com m en t a t or s Wh o Ar gu e Th a t t h e Alien a t ion
P r oh ibit ion F a ils t o P r ot ect P a r t icipa n t s or
Ben eficia r ies in Spou sa l Su r vivor Ben efit P la n s
fr om Th eir Cr edit or s a ft er Th ey Receive P la n
Ben efit Dist r ibu t ion s a r e Un con vin cin g ...................... 370
XIX.SP OUSAL SURVIVOR BE NE F IT P LAN S MAY DE F E R
ONLY TO QDROS, WH E RE AS SP ONSORS OF
OTH E R P LAN S MAY CH OOSE TH E E XTE N T, IF
ANY, TO WH ICH TH OSE P LANS MUST DE F E R TO
DOME STIC RE LATIONS ORDE RS .................................. 375
A. Th e Disclosu r e a n d t h e Su bst a n t ive Requ ir em en t s
of t h e Spou sa l Su r vivor QDRO ben efit Ma n da t e ........ 376
B. E RISA Requ ir es On ly Spou sa l Su r vivor Ben efit
P la n s t o F ollow t h e Spou sa l Su r vivor QDRO
Ben efit Ma n da t e............................................................ 378
XX.COMMON
LAW WAIVE RS AND P RE NU P TIAL
AGRE E ME N TS DO NOT AF F E CT A BE NE F ICIARY’S
BE NE F IT RIGH TS UN LE SS TH E P LAN TE RMS
P ROVIDE F OR SUCH DE F E RE NCE , BUT A
P RE NUP TIAL AGRE E ME NT MAY NOT AF F E CT A
BE NE F ICIARY’S BE N E F IT RIGH TS F ROM A
SP OUSAL SURVIVOR BE NE F IT P LAN UNLE SS
INCORP ORATE D INTO A QDRO ...................................... 382
XXI.E RISA
P RE E MP TS
STATE
DE SIGN ATION
MANDATE S SUCH AS COMMUNITY P ROP E RTY
LAWS, RIGH TS OF E LE CTIONS, OR RE VOCATIONS
OF DE SIGNATIONS UP ON DIVORCE S, BUT
P E RMITS P LAN TE RMS TO USE STATE LAW TO
MAKE BE NE F ICIARY DE SIGNATIONS IN WH OLE ,
OR IN P ART IF STATE LAW IS CONSISTE N T WITH
TH E TWO E RISA STATUTORY DE SIGNATION
MANDATE S ......................................................................... 385
A. Th e Spou sa l Su r vivor Ben efit Ma n da t e Requ ir es
Spou sa l Su r vivor Ben efit P la n s t o P r ovide E a ch
P a r t icipa n t ’s Spou se wit h a Defa u lt Spou sa l
Ben efit of a t Lea st 50% of t h e Va lu e of t h e
P a r t icipa n t ’s Ben efit ..................................................... 387
B. E RISA P r eem pt s St a t e Com m u n it y P r oper t y La ws
t o t h e E xt en t t h a t Th ey Seek t o Affect t h e Ben efit s
Th a t Ben eficia r ies Ma y Obt a in F r om An E RISA
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
153
P la n or Ret a in Wit h ou t Ma k in g An y Offset t in g
P a ym en t ......................................................................... 388
C. E RISA P r eem pt s St a t e E lect ive Sh a r e La ws t h a t
Seek t o Affect t h e Ben efit s t h a t Ben eficia r ies Ma y
Obt a in F r om a n E RISA P la n or Ma y Ret a in
Wit h ou t Ma k in g An y Offset t in g P a ym en t , Th u s
Su ch St a t u t es Mu st Disr ega r d E RISA Ben efit s ......... 389
D. E RISA P r eem pt s St a t e La ws Th a t Seek t o Revoke
a Spou sa l Design a t ion F ollowin g t h e Divor ce of a
P la n P a r t icipa n t ............................................................ 391
E . E RISA P r eem pt s St a t e La ws Th a t Seek To Revoke
t h e Design a t ion of a P er son Wh o Sla ys t h e P la n
P a r t icipa n t E xcept t o t h e E xt en t t h e La w
Au t om a t ica lly Revok es t h e Design a t ion if t h e
Sla yer is Con vict ed of a Specified H om icide ............... 392
XXII. CONCLUSIONS ................................................................... 395
Th e E m ployee Ret ir em en t In com e Secu r it y Act of 1974, a s
1
a m en ded (“E RISA”)
“sh a ll su per sede a n y a n d a ll St a t e la ws in sofa r a s t h ey m a y n ow or
h er ea ft er r ela t e t o a n y [E RISA] em ployee ben efit pla n .”2
Su ch pr eem pt ion does n ot “exem pt or r elieve a n y per son fr om
a n y la w of a n y St a t e wh ich r egu la t es in su r a n ce, ba n kin g, or
3
secu r it ies,” bu t a n em ployee ben efit pla n sh a ll n ot be “deem ed” t o
4
be en ga ged in su ch a ct ivit ies for pu r poses of su ch st a t e r egu la t ion .
Nor does t h e pr eem pt ion “a pply t o a n y gen er a lly a pplica ble
5
cr im in a l la w of a St a t e.” Th is E RISA pr eem pt ion sect ion is
6
“[p]er h a ps t h e br oa dest pr eem pt ion sect ion ever en a ct ed.”
Th e bill set t in g for t h t h e E m ployee Ret ir em en t In com e
* Th e La w Offices of Alber t F eu er , J .D., Ya le La w Sch ool, Ma t h em a t ics
P h . D., Colu m bia Un iver sit y. Th is a r t icle is dedica t ed t o t h e m em or y of
Sa m u el E ilen ber g, on e of t h e a u t h or ’s P h . D. t h esis a dvisor s, wh o wou ld h a ve
celebr a t ed h is 100t h bir t h da y in 2013. P r ofessor E ilen ber g sh owed h ow sen ior
fa cu lt y a n d pr a ct it ion er s m a y u se t h eir exper ien ce a n d kn owledge t o br in g
coh er en ce a n d cla r it y t o su bject s wit h a m u lt it u de of r esu lt s t h a t a ppea r t o be
su bject t o dispar a t e r u les.
1. Th e E m ployee Ret ir em en t In com e Secu r it y Act of 1974 [h er ein a ft er
“E RISA”], P u b. L. No. 93-406, 88 St a t . 829 (codified a s a m en ded in sca t t er ed
sect ion s of 29 U.S.C.).
2. E RISA § 514(a ), 29 U.S.C. § 1144(a ) (2012).
3. E RISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A).
4. See E RISA § 514(b)(2)(B), 29 U.S.C. § 1144(b)(2)(B) (in dica t in g t h a t
t h er e is n o pr eem pt ion for a pla n est a blish ed pr im a r ily for pu r pose of
pr ovidin g life in su r a n ce).
5. E RISA § 514(b)(4), 29 U.S.C. § 1144(b)(4).
6. J oh n n y H . Killia n et a l., Th e Con st it u t ion of t h e Un it ed St a t es of
Am er ica An a lysis a n d In t er pr et a t ion , S. Doc. No. 108-17, 262 (pr epa r ed by
Con gr ession a l
Resea r ch
Ser vice)
(2002),
a va ila ble
at
h t t p://www.gpo.gov/fdsys/pkg/GP O-CONAN-2002/pdf/GP O-CONAN-2002.pdf
(la st visit ed Ma r ch 24, 2013).
154
T h e J oh n M arsh all L aw R eview
[47:145
7
Secu r it y Act of 1974 h a d over wh elm in g Con gr ession a l su ppor t .
Th e com m it t ee m em ber s u n a n im ou sly a ppr oved t h e con fer en ce
8
r epor t for t h e bill (h er ein a ft er t h e “E RISA Con fer en ce Repor t ”).
Th e E RISA Con fer en ce Repor t wa s a ppr oved u n a n im ou sly by t h e
9
10
Sen a t e, a n d by a H ou se vot e of 407 t o 2.
I. INTRODUCTION
E RISA wa s en a ct ed beca u se exist in g feder a l a n d st a t e la w did
n ot a dequ a t ely pr ot ect em ployee ben efit p la n pa r t icipa n t s a n d
ben eficia r ies. Th u s, Tit le I of t h e Act , t h e focu s of t h is a r t icle, is
11
en t it led, “P r ot ect ion of E m ployee Ben efit Righ t s.”
Ot h er t it les
12
h a ve a sim ila r em ph a sis.
Th e br oa d pr eem pt ion of E RISA
in su r es t h a t st a t e la w will n eit h er dim in ish n or en h a n ce it s
pr ot ect ion s. Th is a r t icle discu sses t h e ext en t t o wh ich a n y of t h e
five followin g gen er a l st a t e la ws a ffect E RISA ben efit r igh t s: (1)
cr im in a l la w; (2) t a x la w; (3) debt or -cr edit or la w; (4) dom est ic
r ela t ion s la w; a n d (5) la ws per t a in in g t o pr oper t y t r a n sfer s on
13
dea t h . A sim ila r discu ssion of h ow st a t e power of a t t or n ey a n d
7. P u b. L. No. 93-406, 88 St a t 829-1035 (1974).
8. See 120 Con g. Rec. 29,928 (Au g. 22, 1974) [h er ein a ft er t h e “E RISA
Con fer en ce Repor t ”] (in dica t in g t h a t t h e con fer en ce r epor t wa s u n a n im ou sly
a ppr oved).
9. S ee 120 Con g. Rec. 29,963 (Au g. 22, 1974) (in dica t in g t h a t five a bsen t
Sen a t or s decla r ed t h a t if t h ey wer e pr esen t t h ey wou ld h a ve vot ed yes, bu t
n on e of t h e ot h er a bsen t Sen a t or s decla r ed t h a t if t h ey wer e pr esen t t h ey
wou ld h a ve vot ed n o).
10. S ee 120 Con g. Rec. 29,215-16 (Au g. 20, 1974) (in dica t in g t h a t t wen t yfou r of t h e t wen t y-five a bsen t m em ber s wer e pa ir ed, so if t h e pa ir ed
Con gr essm a n h a d vot ed t h e r esu lt wou ld h a ve been 419 t o 14).
11.
E RISA §§ 1-734.
12. Tit le II con t a in s a m en dm en t s t o t h e feder a l t a x pr ovision s, m a n y of
wh ich con dit ion t a x ben efit s on com plia n ce wit h pr ovision s sim ila r t o t h e Tit le
I pr ovision s. E RISA §§ 1001-2006. Tit le III descr ibes t h e r ole of differ en t
feder a l en t it ies in t h e en for cem en t of E RISA pr ovision s. E RISA §§ 3001-3042.
Tit le IV descr ibes h ow t h e feder a l gover n m en t will in su r e t h e pa ym en t of
r et ir em en t ben efit s fr om cer t a in pen sion pla n s. E RISA §§ 4001, 4402.
13. Th is a r t icle will n ot discu ss t he ext en t t o wh ich E RISA pr eem pt s st a t e
st a t u t e of lim it a t ion la ws, st a t e con t r a ct or m isr epr esen t a t ion la w cla im s for
em ployee ben efit s, st a t e in su r a n ce la ws (in clu din g cla im s r eview st a n da r ds),
st a t e ba n kr u pt cy r u les, st a t e r u les for r ecover in g Medica id expen dit u r es, or
m ost st a t e la bor la ws (ot h er t h a n pr eva ilin g wa ge st a t u t es a n d la ws
per t a in in g t o t h e wit h h oldin g of wa ge con t r ibu t ion s t o E RISA pla n s).
Th er e a r e m a n y excellen t gen er a l pr eem pt ion discu ssion s. S ee, e.g.,
J E F F RE Y L E WIS E T AL ., E MP LOYE E B E NE F ITS L AW l1-1-11-100 (BNA Books, 3d
ed. 2012) [h er ein a ft er “E MP LOYE E B E NE F ITS L AW ”] (discu ssin g t h e ext en sive
ca se-la w); see also Mich a el S. Gor don , In t r oduct ion t o F ir st E dit ion , in clu ded
in E MP LOYE E B E NE F ITS L AW cxvi-cxvii (discu ssin g t h e in t en t ion s of t h e
legisla t ive dr a ft sm en ); Da vid Gr egor y, T he S cope of ER IS A Preem ption of
S tate L aw , 48 U. P ITT . L. R E V. 427 (Win t er 1987) (discu ssin g t h e legisla t ive
h ist or y of E RISA, t h e st a t u e, an d t h e ca se-la w), Ka t h r yn J . Ken n edy a n d P a u l
Sh u lt z III, E MP LOYE E B E NE F ITS L AW : Q UALIF ICATION AND E RISA
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
155
gu a r dia n la ws a ffect E RISA ben efit r igh t s m a y be fou n d in a n
a r t icle en t it led, H ow S h ou ld E R IS A Plan s H an d le Pow ers of
Attorn ey an d Cou rt-Appoin ted Gu ard ian s an d th e Absen ce of S u ch
14
Agen ts for Participan ts L ack in g Capacity?
E RISA explicit ly a ddr esses ea ch of t h ese t r a dit ion a l st a t e
power s. E RISA sign ifica n t ly r edu ced, bu t did n ot elim in a t e, t h e
a bilit y of t h e st a t es t o exer cise t h ose power s wit h r espect t o E RISA
pla n s, a n d t h eir pa r t icipa n t s a n d ben eficia r ies.
Th er e a r e t h r ee cen t r a l pr eem pt ion qu est ion s con cer n in g t h e
in t er a ct ion bet ween E RISA ben efit en t it lem en t s a n d t h e five st a t e
la ws. F ir st , t o wh a t ext en t does E RISA per m it t h ose st a t e la ws t o
det er m in e wh o is en t it led t o r eceive ben efit pa ym en t s fr om E RISA
pla n s in wh ole or in pa r t ? Secon d, t o wh a t ext en t does E RISA
per m it t h ose st a t e la ws t o det er m in e wh et h er ot h er s m a y wr est
pla n ben efit pa ym en t s fr om pla n pa r t icipa n t s or ben eficia r ies in
wh ole or in pa r t ? Th ir d, t o wh a t ext en t does E RISA per m it t h ose
la ws t o det er m in e in dir ect ly t h e ch a r a ct er a n d va lu e of ben efit
r igh t s, su ch a s st a t e t a xes on pla n s or ben efit pr ovider s, wh ich
R E QUIRE ME NTS 469-71 (LexisNexis, 2006) (discu ssin g en for cem en t issu es);
J oh n H . La n gbein , Da vid A. P r a t t , a n d Su sa n J . St a bile, P E NSION AN D
E MP LOYE E B E NE F IT L AW 83-95, 818-905 (F ou n da t ion P r ess, 5t h ed. 2010)
[h er ein a ft er “L ANGBE IN P E NSION L AW ”] (discu ssin g t h e legisla t ive h ist or y, t h e
st a t u t or y st r uct u r e a n d t h e case-la w); C OLLE E N E . M E DILL , I NTRODUCTION TO
E MP LOYE E B E NE F ITS L AW : P OLICY AND P RACTICE 645-766 (Th om son West , 2d.
ed. 2007) [h er ein a ft er “ M E DILL E MP LOYE E B E N E F ITS L AW ”] (discu ssin g t h e
legisla t ive h ist or y a n d gen er a l pr in ciples in t h e con t ext of ext en sive excer pt s
fr om t h e ca se-la w); H owa r d Sh a pir o, Ren e E . Th or n e, a n d E dwa r d F . H a r old,
E R IS A Preem ption : to In fin ity an d B eyon d an d B ack Again ? (A H istorical
R eview of S u prem e Cou rt J u rispru d en ce), 58 L A. L. R E V. 997 (1998) (discu ssin g
t h e la ck of cla r it y in t h e ca se-la w a n d a r gu in g t h a t Con gr ess m a de E RISA
pr eem pt ion so br oa d beca u se of t h e n eed for a u n ifor m feder a l r egu la t or y a n d
a dm in ist r a t ive sch em e for E RISA pla n s),J AYNE E . ZAN GE LE IN E t Al.,
E RISA LITIGATION 121-80 (BNA Books, 4t h ed. 2011) [h er ein a ft er “E RISA
L ITIGATION ”] (discu ssin g t h e st a t u t or y la n gu a ge a n d t h e ext en sive ca se-la w),
645-766 (discu ssin g t h e legisla t ive h ist or y a n d gen er a l pr in ciples in t h e
con t ext of ext en sive excer pt s fr om t h e ca se-la w); Wa gn er , Bia n ch i, a n d
Ma r a t h a s, 374-3r d T.M., E R IS A— L itigation , Proced u re, Preem ption an d Oth er
T itle I Issu es, A-23-A-36 (2012) (discu ssin g t h e legisla t ive h ist or y, t h e st a t u t e,
a n d t h e ca se-la w); a n d E dwa r d A. Zelin sky, T ravelers, R eason ed T extu alism ,
an d th e N ew J u rispru d en ce of E R IS A Preem ption , 21 C ARDOZO L. R E V. 807
(1999) (discu ssin g t h e legisla t ive h ist or y a n d t h e ca se-la w a n d pr oposin g a n
a ppr oa ch in cor por a t in g t h e E RISA con t ext wh ich im plies t h a t st a t es m a y
r egu la t e H MOs a n d sim ila r m a n a ged ca r e pr ovider s a n d fu r n ish t or t r em edies
a ga in st t h em even wh en su ch pr ovider s a r e en ga ged by E RISA pla n s).
14. S ee Alber t F eu er , H ow Sh ou ld E RISA P la n s H a n dle P ower s of
At t or n ey a n d Cou r t -Appoin t ed Gu a r dia n s a n d t h e Absen ce of Su ch Agen t s for
P a r t icipa n t s La ckin g Ca pa cit y?, 54 B LOOMBE RG T AX M GMT . M E MO . 351 (Sept .
9, 2013) available at h t t p://ssr n .com /a bst r a ct =2324629 (la st visit ed Ma r ch 24,
2014) (set t in g for t h ben efit r igh t s in a ddit ion t o t h e r igh t t o r ecover ben efit s or
t o design a t e ben eficia r ies, wh ich a r e t h e pr in ciple focu s of t h is a r t icle). Th e
a r t icle did n ot obser ve t h a t a gu a r dia n m a y con sen t on beh a lf of a pa r t icipa n t ’s
in ca pa cit a t ed spou se t o a pa r t icipa n t ’s wa iver of t h e r equ ir ed spou sa l su r vivor
ben efit s. Tr ea s. Reg. § 1.401(a )(20), Q & A 27 (a m en ded 2006).
156
T h e J oh n M arsh all L aw R eview
[47:145
m a y dim in ish t h e fu n ds a va ila ble t o pa y ben efit s ?
Th is a r t icle seek s t o give r ea der s t h e t ools t o dr a w t h eir own
pr eem pt ion con clu sion s by r eviewin g a n d pr esen t in g ext en sive
excer pt s fr om E RISA, E RISA’s legisla t ive h ist or y, E RISA’s
r egu la t ion s, a n d E RISA ca se la w.
Th is a r t icle pr esen t s five E RISA pr eem pt ion pr in ciples t h a t
give E RISA a m odest r ole in r esolvin g t h e t h r ee ba sic pr eem pt ion
issu es, a lt h ou gh m a n y cou r t s h a ve n ot fu lly em br a ced t h ese
pr in ciples. Th e a r t icle a lso discu sses h ow t h e five pr in ciples
gover n ben efit r igh t s in t h eor y a n d in pr a ct ice. Th ese pr in ciples
pr ovide t h a t , a bsen t on e of t h e fou r explicit exclu sion s or a n
im plicit exclu sion (su ch a s t h a t for t h e st a t e r egu la t ion of h ea lt h
ca r e pr ovider s), a st a t e la w is pr eem pt ed if, a n d on ly if, t h e la w: (1)
pr even t s a n E RISA pla n pa r t icipa n t or ben eficia r y fr om exer cisin g
ben efit r igh t s u n der t h e t er m s of su ch a pla n ; (2) a ffect s a n E RISA
en for cem en t m ech a n ism ; or (3) im poses a specified m a n da t e on a n
E RISA pla n .
F ir st , E RISA pr eem pt s a n y st a t e la w t h a t pr even t s, in wh ole
or in pa r t , t h e exer cise by a pa r t icipa n t or a ben eficia r y of a ben efit
r igh t u n der t h e t er m s of a n E RISA pla n . In pa rt icu la r , E RISA
pr eem pt s a st a t e la w dir ect in g: (1) a n E RISA pla n t o pa y ben efit s
t o a per son ot h er t h a n t h e per son en t it led t o t h e ben efit s u n der t h e
pla n t er m s; or (2) a pa r t icipa n t t o design a t e a specific per son a s a
ben eficia r y.
Secon d, E RISA pr eem pt s a n y st a t e la w, ot h er t h a n a
gen er a lly a pplica ble cr im in a l la w, t h a t wou ld r en der a n y ben efit
r igh t of a pa r t icipa n t or ben eficia r y “m ea n in gless.” In pa r t icu la r ,
E RISA pr eem pt s t h e u se of: (1) a st a t e-la w la w cla im t h a t a r ises
fr om a pa r t icipa n t ’s or ben eficia r y’s r igh t t o a n E RISA pla n ben efit
t o (a ) com pel t h e pla n t o pa y t h e cla im a n t su ch ben efit , or (b) wr est
t h e ben efit or t h e a m ou n t of t h e ben efit fr om t h e per son en t it led t o
t h ose ben efit s u n der t h e pla n t er m s, i.e., t h e pa r t icipa n t or
ben eficia r y; or (2) a st a t e la w t o pen a lize a pa r t icipa n t , or t h e
pa r t icipa n t ’s est a t e, for fa ilin g t o m a k e a specified design a t ion .
H owever , a st a t e t a x la w cla im m a y be u sed t o wr est a por t ion of
a n in dividu a l’s E RISA dist r ibu t ed ben efit s t o p a y t h e st a t e t a xes
im posed on t h e in dividu a l for t h ose ben efit s.
Th ir d, E RISA pr eem pt s a n y st a t e la w t h a t a dds or
su pplem en t s a n E RISA en for cem en t m ech a n ism , or det er m in es:
 Wh o is en t it led t o a pla n r epor t , or disclosu r e, or wh a t m u st
be, or m a y be, r epor t ed or disclosed (a r epor t in g or disclosu r e
m a n da t e), ot h er t h a n on e n eeded t o im plem en t a s t a t e la w
t h a t is n ot ot h er wise pr eem pt ed. Th u s, st a t e a gen cies t h a t
r egu la t e h ea lt h ca r e pr ovider s m a y r equ ir e a n E RISA pla n ’s
h ea lt h ca r e fa cilit ies t o r epor t t h e in for m a t ion n eeded t o
im plem en t su ch r egu la t ion .
F u r t h er m or e, a st a t e la w
im posin g a t a x on E RISA pla n pa r t icipa n t s or ben eficia r ies
ba sed on t h eir ben efit s, or a st a t e la w t h a t (1) im poses n on e of
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
157
t h e below m a n da t es, (2) does n ot pr even t a n E RISA pla n
pa r t icipa n t or ben eficia r y fr om exer cisin g ben efit r igh t s, a n d
(3) does n ot a ffect a n E RISA en for cem en t m ech a n ism , m a y
im pose a r epor t in g or disclosu r e m a n da t e t h a t is lim it ed t o t h e
in for m a t ion n eeded t o im plem en t t h e t a x la w ;
 t h e pla n ’s ben efit t er m s, in clu din g wh et h er t h e pla n m u st , or
m a y, pr ovide a n y of t h ose ben efit s (a ben efit t er m s m a n da t e),
ot h er t h a n on e n eeded t o im plem en t a st a t e-la w t h a t is n ot
ot h er wise pr eem pt ed, su ch a s t h e ben efit s a n E RISA pla n
h ea lt h ca r e fa cilit y m a y pr ovide;
 wh o fu n ds ben efit s, or wh a t fu n din g r u les m u st be, or m a y be,
im posed (a fu n din g m a n da t e), ot h er t h a n on e n eeded t o
im plem en t a st a t e-la w t h a t is n ot ot h er wise pr eem pt ed, su ch
a s t h e per m issible pr em iu m s ch a r ged by a n E RISA pla n ’s life
in su r er ; or
 Wh o is a fidu cia r y, or wh a t fidu cia r y r espon sibilit ies m u st be,
or m a y be, im posed (a fidu cia r y m a n da t e).
E a ch su ch m a n da t e sh a ll h er ein a ft er be design a t ed a s a n
E RISA Gen er a l Ma n da t e, a n d t h ey sh a ll be collect ively design a t ed
a s t h e E RISA Gen er a l Ma n da t es.
F ou r t h , E RISA does n ot pr eem pt a st a t e la w t h a t in dir ect ly
a ffect s ben efit r igh t s by a ct in g dir ect ly on pla n s, r a t h er t h a n
dir ect ly on t h e pla n ben efit of a pa r t icipa n t or ben eficia r y, u n less
t h e la w pr even t s a pa r t icipa n t or ben eficia r y fr om exer cisin g h is or
h er pla n ben efit r igh t s, a dds, or su pplem en t s a n en for cem en t
m ech a n ism , or im poses a n E RISA Gen er a l Ma n da t e. Th u s, a st a t e
la w is n ot pr eem pt ed m er ely beca u se it r edu ces t h e a sset s a pla n
h a s a va ila ble t o dist r ibu t e a s ben efit s t o a ll it s pa r t icipa n t s a n d
ben eficia r ies, u n less t h e r edu ct ion pr even t s t h e pla n fr om pa yin g
a n y ben efit s. In pa r t icu la r , E RISA does n ot pr eem pt t h e st a t e
t a xa t ion of pla n s if t h e t a x la w does n ot (1) pr even t a pa r t icipa n t
or ben eficia r y fr om exer cisin g h is or h er pla n ben efit r igh t s, (2)
a dd or su pplem en t a n en for cem en t m ech a n ism , or (3) im pose a n
E RISA Gen er a l Ma n da t e ot h er t h a n t h ose m a n da t es n eeded t o
im plem en t t h e st a t e t a x.
F ift h , t h e E RISA pr eem pt ion of a st a t e st a t u t e is n ot
det er m in ed by wh et h er : (1) t h e st a t u e r efer s t o a n E RISA pla n or
pr im a r ily a ffect s E RISA pla n s; (2) t h e st a t u t e is a gen er a lly
a pplica ble la w (except for gen er a lly a pplica ble cr im in a l la ws t h a t
E RISA does n ot pr eem pt ); or (3) t h e st a t u t e im poses a n
a dm in ist r a t ive bu r den or econ om ic cost on a n E RISA pla n .
H owever , t h e st a t u t e is pr eem pt ed if t h e r efer en ce, bu r den , or cost
pr even t s a pa r t icipa n t or ben eficia r y fr om exer cisin g a ben efit
r igh t u n der a pla n ’s t er m s, r esu lt s in a n E RISA Gen er a l Ma n da t e
(ot h er t h a n t h ose n eeded t o im plem en t a st a t e-la w n ot ot h er wise
pr eem pt ed a s descr ibed su pra) or a n en for cem en t m ech a n ism .
Th u s, E RISA pr eem pt s con fisca t or y t a xes or bu r den s wh ich
pr even t a pla n fr om pr ovidin g ben efit s or pr even t a pa r t icipa n t or
158
T h e J oh n M arsh all L aw R eview
[47:145
ben eficia r y fr om r et a in in g a ben efit .
Th e In t er n a l Reven u e Code of 1986, a s a m en ded (t h e “Code”)
a ddr esses m a n y m a t t er s t h a t E RISA r egu la t es. H owever , t h e
Code, u n lik e E RISA, pr ovides n o m ea n s t o com pel pla n s or a n yon e
else t o pa y ben efit s t o pla n pa r t icipa n t s or ben eficia r ies or t o
disclose a n y in for m a t ion t o t h em . In st ea d, viola t ion s of t h e Code
r equ ir em en t s m a y r esu lt on ly in u n fa vor a ble in com e -t a x
con sequ en ces for pla n s, t h eir spon sor s, pa r t icipa n t s, a n d
ben eficia r ies. Th e In t er n a l Reven u e Ser vice (“IRS”) som et im es
per m it s a pla n t o a ddr ess a viola t ion of a Code r equ ir em en t
wit h ou t fu lly com plyin g wit h t h e r equ ir em en t even wh en t h e
15
r equ ir em en t is iden t ica l t o a n E RISA r equ ir em en t . In a ddit ion ,
t h e IRS m a y im pose t a x pen a lt ies on t h ose wh o en ga ge in specified
16
con flict of in t er est t r a n sa ct ion s wit h t a x-qu a lified pen sion pla n s.
Th u s, Code pr ovision s r a ise n o st a t e la w pr eem pt ion issu es.
II. E RISA BASICS
A. E R IS A Protection s for Plan Participan ts an d B en eficiaries
E RISA pr ot ect s pa r t icipa n t s a n d ben eficia r ies of t h ose
em ployee ben efit pla n s gover n ed by E RISA. Th ese pla n s, r efer r ed
17
t o h er ein a ft er a s “E RISA pla n s,” con sist of welfa r e pla n s a n d
18
19
pen sion pla n s. E RISA welfa r e pla n s in clu de h ea lt h ca r e, h ea lt h
15. S ee e.g., Cen t . La bor er s’ P en sion F u n d v. H ein z, 541 U.S. 739, 739-40
(2004) (h oldin g t h a t a n a m en dm en t t h a t r et r oa ct ively ch a n ged t h e su spen sion
of ben efit r u les viola t ed t h e a n t i-cu t ba ck r u les of E RISA § 204(g), 29 U.S.C.
§ 1054(g), n ot wit h st a n din g a con t r a r y r u lin g in IRS Rev. P r oc. 2005 -23, 20051 C.B. 991, wit h r espect t o t h e t a x qu a lifica t ion of t h ose sa m e pr ovision s). S ee
gen erally Alber t F eu er , S criven ers’ Errors, Draftin g Errors, Operation al
Failu res, R etroactive Am en d m en ts,
R eform ation s, E R IS A, an d th e T ax
Qu alification of Pen sion Plan T ru sts, Part I, 31 T AX M GM ’T W E E KLY. R E P . 34
(J a n . 9, 2012) available at h t t p://ssr n .com /a bst r a ct =1983524 (la st visit ed
Ma r ch 24, 2014); see also Alber t F eu er , S criven ers’ E rrors, Draftin g E rrors,
Operation al Failures, R etroactive Am en d m en ts, R eform ation s, E R I S A, an d th e
T ax Qu alification of Pen sion Plan T ru sts Part II, 31 T AX M GM ’T W E E KLY R E P .
75 (J a n . 16, 2012) available at h t t p://ssr n .com /a bst r a ct =1987303 (la st visit ed
Ma r ch 24, 2014) (discu ssin g t h e dist in ct ion bet ween Code com plia n ce a n d
E RISA com plia n ce).
16. Su ch t r a n sa ct ion s a r e ca lled pr oh ibit ed t r a n sa ct ion s. Th ey a r e defin ed
a n d gover n ed by Code § 4975. 26 U.S.C. § 4975 (2013).
17. E RISA § 3(1), 29 U.S.C. § 1002(1).
18. E RISA § 3(2), 29 U.S.C. § 1002(2).
19. Welfa r e pla n s a r e gen er a lly defin ed a s pla n s wh ich pr ovide
pa r t icipa n t s or t h eir ben eficia r ies wit h m edica l, su r gica l, or h ospit a l ca r e or
ben efit s, or ben efit s in t h e even t of sickn ess, a cciden t , disa bilit y, dea t h or
u n em ploym en t , or va ca t ion ben efit s, a ppr en t icesh ip or ot h er t r a in in g
pr ogr a m s, or da y ca r e cen t er s, sch ola r sh ip fu n ds, or pr epaid lega l ser vices.
E RISA § 3(1), 29 U.S.C. § 1002(1). Th ese pla n s do n ot in clu de pa yr oll
pr a ct ices, su ch a s sick pa y, h olida y pa y, ju r y pa y, or over t im e. 29 C.F .R.
§ 2510.3-1(b)(3). S ee also Ma ssa ch u set t s v. Mor a sh , 490 U.S. 107, 114-121
(1989) (dist in gu ish in g bet ween E RISA cover ed welfa r e ben efit pla n s a n d t h e
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
159
expen se-r eim bu r sem en t , life in su r a n ce, a n d disa bilit y, va ca t ion ,
a n d sever a n ce pla n s. Th er e a r e t wo ba sic kin ds of E RISA pen sion
20
pla n s.
F ir st , a r e pen sion pla n s m a in t a in ed pr im a r ily for t h e
pu r pose of pr ovidin g defer r ed com pen sa t ion for a select gr ou p of
21
m a n a gem en t or h igh ly com pen sa t ed em ployees. Su ch pla n s a r e
22
oft en ca lled Top-H a t P la n s.
Secon d, a r e t h e va st m a jor it y of
23
pen sion pla n s, wh ich do n ot h a ve su ch a lim it ed pu r pose. E RISA
r equ ir es t h a t t h ese m or e widely u sed pla n s pr ovide spou sa l
24
su r vivor ben efit s.
Accor din gly, t h ese pla n s will h er ein a ft er be
25
r efer r ed t o a s “Spou sa l Su r vivor Ben efit P la n s.”
E RISA pr ovides E RISA pla n pa r t icipa n t s a n d ben eficia r ies
26
wit h five in cr ea sin g levels of pr ot ect ion .
Th e m ost ext en sive
pr ot ect ion s a r e lim it ed t o cer t a in r et ir em en t pla n s, a s is su ggest ed
by t h e for m a l E RISA t it le con t a in in g t h e ph r a se, “r et ir em en t
in com e secu r it y.”
F ir st , E RISA pr ot ect s a pa r t icipa n t a n d ben eficia r y of a n y
E RISA pla n by a u t h or izin g ea ch su ch per son t o en for ce t h e
exer cise of h is or h er feder a l ben efit r igh t s u n der t h e pla n t er m s,
in clu din g, bu t n ot lim it ed t o t h e r igh t t o r ecover t h e per son ’s
cu st om a r y u n fu n ded va ca t ion ben efit pla n s, wh ich E RISA does n ot cover ).
20. E RISA § 3(2), 29 U.S.C. § 1002(2).
21. E RISA §§ 201(2), 301(a )(3), 401(a )(1), 29 U.S.C. §§ 1051(2), 1081(a )(3),
1101(a )(1). E RISA does n ot r egu la t ed u n fu n ded pen sion pla n s, wh ich a r e
excess ben efit pla n s. E RISA § 4(b)(5), 29 U.S.C. § 1003(b)(5).
22. S ee e.g., An dr ew L. Or in ger & St a cy L. DeWa lt , Cou rts Decid e a S elect
Grou p of N ew T op H at Cases, J . OF R E TIRE ME NT P LAN NIN G 19 (Ma y-J u n e
2008) available at h t t p://t a x.cch gr ou p.com /im a ges/F OT/J ORP _05-08_Or in ger DeWa lt .pdf (la st visit ed Ma r ch 24, 2014); Br u ce McNeil, Claim s for B enefits
Un d er N on qu alified Deferred Com pen sation Arran gem en ts, 41 C OMP . P . J . 239,
239-40 (Oct . 4, 2013).
23. P en sion pla n s, wh ich a r e n ot su bject t o t h e except ion s for excess
ben efit pla n s a n d pen sion pla n s, su ch a s Sim plified E m ployee P la n s,
con sist in g on ly of IRAs. E RISA § 201, 29 U.S.C. § 1051.
24. E RISA § 205, 29 U.S.C. § 1055.
25. S ee Alber t F eu er , H ow th e S u prem e Cou rt an d th e Departm en t of
L abor M ay Dispel M yth s Abou t E R IS A’s Fam ily L aw Provision s an d Protect
th e B en efit E n titlem en ts th at Arise T h ereu n d er, 45 J . M ARSH ALL L. R E V. 635,
705
(Spr in g
2012)
available
at
h t t p://r eposit or y.jm ls.edu /cgi/viewcon t en t .cgi?a r t icle=1003&con t ext =la wr eview
(la st visit ed Ma r ch 24, 2014) [h er ein a ft er “Feuer’s E R IS A Myth s”] (iden t ifyin g
a n d discu ssin g t wo m a jor E RISA m yt h s: t h e pla n a dm in ist r a t ive con ven ien ce
m yt h , i.e., t h a t a m a jor pu r pose of E RISA is t o r edu ce a dm in ist r a t ive bu r den s
on pla n spon sor s a n d a dm in ist r a t or s, a n d t h e wom en ’s m yt h , i.e., t h a t E RISA
wa s a m en ded in 1984 t o m a ke it ea sier for wom en t o en for ce dom est ic r ela t ion
or der s per t a in in g t o E RISA ben efit s).
26. Cf. P E TE R J . W IE DE NBE CK , E RISA: P RINCIP LE S OF E MP LOYE E
BE NE F IT LAW, a t 11-23 (2010) (br ea kin g E RISA in t o fou r differ en t
su ccessive levels of r egu la t ion : (1) som e em ployee ben efit s a r e n ot su bject t o
a n y (2) r epor t in g a n d disclosu r e r u les, st r ict fidu cia r y r u les, a n d pr eem pt ion;
(3) com plex r egu la t ion of pen sion pla n s, in clu din g m in im u m st a n da r ds; a n d (4)
t h e m ost st r in gen t r u les for defin ed ben efit pla n s, in clu din g m in im u m a ccr u a l
a n d fu n din g r u les a n d pla n t er m in a t ion r u les).
160
T h e J oh n M arsh all L aw R eview
[47:145
ben efit s (ot h er r igh t s m a y, bu t n eed n ot in clu de t h e r igh t t o ch oos e
27
a ben eficia r y).
E RISA fu r t h er pr ot ect s t h is en t it lem en t by: (1)
pr oh ibit in g a n yon e fr om in t er fer in g wit h t h e a t t a in m en t or
28
exer cise of E RISA r igh t s; (2) im posin g fidu cia r y r espon sibilit ies
on a n y per son wh o exer cises a n y discr et ion over su ch a pla n ’s
a sset s or oper a t ion s or is com pen sa t ed for givin g in vest m en t
a dvice t o su ch pla n s, in clu din g t h ose r espon sible for r eviewin g
29
ben efit cla im s; (3) r equ ir in g a ll ben efit den ia ls be given a fu ll a n d
30
fa ir r eview by a pla n fidu cia r y; a n d (4) a u t h or izin g t h e U.S.
Depa r t m en t of La bor (t h e “DOL”) t o en for ce a n y E RISA pr ovision ,
on e of wh ich r equ ir es t h a t pla n s m a k e ben efit pa ym en t s pu r su a n t
31
t o pla n t er m s. Th e t er m s of a n E RISA pla n descr ibe: (1) t h e pla n
ben efit s; (2) t h e r equ ir em en t s t h a t ea ch pla n pa r t icipa n t or
ben eficia r y m u st m eet in or der t o be en t it led t o t h ose pla n
ben efit s; (3) h ow t h e pla n ben efit s a r e fin a n ced; (4) h ow t h e pla n
ben efit s a r e det er m in ed a n d pa id; a n d (5) t h e pr ocedu r e for
m a kin g a n d r eviewin g a ben efit cla im .
Secon d, E RISA fu r t h er pr ot ect s pa r t icipa n t s a n d ben eficia r ies
in Spou sa l Su r vivor Ben efit P la n s a n d m ost welfa r e pla n s, su ch a s
h ea lt h ca r e, h ea lt h expen se-r eim bu r sem en t , life in su r a n ce,
32
disa bilit y, va ca t ion , a n d sever a n ce pla n s.
E RISA r equ ir es t h a t
su ch pla n s m u st com ply wit h r epor t in g a n d disclosu r e
33
r equ ir em en t s.
Th e DOL m a y, a n d does, exem pt som e welfa r e
pla n s fr om a ll of t h e E RISA r epor t in g a n d disclosu r e
34
r equ ir em en t s. E RISA, m a y, a n d does, pr ovide a lt er n a t ive wa ys
35
t o com ply wit h t h ese r equ ir em en t s for pen sion pla n s.
A DOL
r egu la t ion exem pt s Top -H a t P la n s fr om vir t u a lly a ll t h e r epor t in g
36
a n d disclosu r e r equ ir em en t s of E RISA.
27. S ee E RISA § 502(a )(1)(B), 29 U.S.C. § 1132(a )(1)(B) (a lso pr ovidin g
r igh t t o det er m in e ben efit r igh t s wit h ou t seekin g a dist r ibu t ion ).
28. S ee E RISA § 510, 29 U.S.C. § 1140 (pr ovidin g civil r elief for t h ose
su ffer in g fr om su ch in t er fer en ce); see also E RISA § 511, 29 U .S.C. § 1141
(pr ovidin g t h a t cr im in a l pen a lt ies m a y be im posed on t h ose wh o coer cively
in t er fer e wit h or pr even t t h e exer cise of E RISA r igh t s).
29.
S ee E RISA § 3(21), 29 U.S.C. § 1002(21) (decla r in g, n ot defin in g, su ch
per son s a s fidu cia r ies wit h ou t set t in g for t h t h eir du t ies a n d r espon sibilit ies).
30. 29 C.F .R. § 2560.503-1.
31. E RISA § 502(a )(5), 29 U.S.C. § 1132(a )(5).
32. Welfa r e pla n s t h a t a r e cover ed by E RISA, bu t n ot su bject t o t h e
r epor t in g a n d disclosu r e r equ ir em en t s, a r e set for t h in 29 C.F .R. § 2520.10422, 24, 25, a n d 43.
33. E RISA §§ 101-111, 29 U.S.C. §§1021-1031.
34. E RISA § 104(a )(3), 29 U.S.C. §1024(a )(3). S ee e.g., 29 C.F .R. §
2520.104-22 (exem pt in g a ppr en t ice pla n s fr om a ll r epor t in g an d disclosu r e
r equ ir em en t s ot h er t h a n t o r epor t t h e pla n t o t h e DOL).
35. E RISA § 110, 29 U.S.C. §1030.
36. P en sion pla n s t h a t a r e cover ed by E RISA, bu t n ot su bject t o t h e
r epor t in g a n d disclosu r e r equ ir em en t s, ot h er t h a n t o r epor t t h e pla n t o t h e
DOL, a r e set for t h in 29 C.F .R. § 2520.104-23, a lt h ou gh it m a y be a r gu ed t h a t
t h e DOL la cks t h e a u t h or it y t o est a blish su ch a br oa d exem pt ion .
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
161
Th ir d, E RISA fu r t h er pr ot ect s pa r t icipa n t s a n d ben eficia r ies
in Spou sa l Su r vivor Ben efit P la n s a n d welfa r e pla n s . E RISA
r equ ir es t h a t (1) su ch pla n s m u st be est a blish ed a n d m a in t a in ed
37
pu r su a n t t o a wr it t en docu m en t ; a n d (2) a n y per son wh o
exer cises a n y discr et ion over su ch a pla n ’s a sset s or oper a t ion s or
is com pen sa t ed for givin g in vest m en t a dvice t o su ch pla n s, n ot
m er ely t h ose r espon sible for r eviewin g ben efit cla im s, m u st
38
com ply wit h st r in gen t fidu cia r y r equ ir em en t s.
E RISA exem pt s
39
Top-H a t P la n s fr om t h ese r equ ir em en t s, a lt h ou gh a s discu ssed
su pra, t h eir fidu cia r ies a r e su bject t o u n specified E RISA fidu cia r y
r equ ir em en t s, a n d cla im fidu cia r ies a r e su bject t o t h e cla im s
fidu cia r y r equ ir em en t s.
F ou r t h , E RISA fu r t h er pr ot ect s pa r t icipa n t s a n d ben eficia r ies
in Spou sa l Su r vivor Ben efit P la n s by pr ovidin g t h a t t h ose pla n s
40
m u st : (1) pr ovide spou sa l su r vivor ben efit s; (2) defer t o specified
41
dom est ic r ela t ion s or der s a n d n o ot h er su ch or der s; (3) pr oh ibit
42
t h e a lien a t ion of ben efit s; (4) sa t isfy m in im a l pa r t icipa t ion
43
r equ ir em en t s; a n d (5) sa t isfy m in im a l ben efit a ccr u a l a n d vest in g
44
r equ ir em en t s. No su ch r equ ir em en t s a pply t o E RISA pla n s t h a t
45
a r e n ot Spou sa l Su r vivor Ben efit s P la n s, su ch a s a Top-H a t P la n ,
46
or a h ea lt h ca r e pla n .
H owever , t h er e a r e a lso dist in ct ben efit
t er m s m a n da t es for h ea lt h ca r e a n d h ea lt h ca r e expen se 47
r eim bu r sem en t pla n s, wh ich t h is a r t icle will n ot discu ss.
F ift h , E RISA fu r t h er pr ot ect s pa r t icipa n t s a n d ben eficia r ies
in a su bset of Spou sa l Su r vivor Ben efit P la n s by im posin g fu n din g
48
r equ ir em en t s on su ch pla n s, a n d pr ovidin g a feder a l gover n m en t
49
gu a r a n t ee for cer t a in ben efit s of t h ose pen sion pla n s.
Su ch
pr ot ect ion does n ot ext en d t o t h ose Spou sa l Su r vivor P la n s, wh ich
50
a r e in dividu a l a ccou n t pla n s, su ch a s 401(k) pla n s. In dividu a l
51
a ccou n t pla n s a r e n ot en t it led t o t h e feder a l ben efit gu a r a n t ees.
37. E RISA § 402(a )(1), 29 U.S.C. § 1102(a )(1).
38. E RISA §§ 3(21), 401-414, 29 U.S.C. §§ 1002(21), 1101-1114. S ee 29
C.F .R. § 2560.503-1 (set t in g for t h t h e r equ ir em en t s a pplica ble t o fidu cia r ies
m a kin g cla im s decision s).
39. E RISA § 401(a )(1), 29 U.S.C. § 1101(a )(1).
40. E RISA § 205, 29 U.S.C. § 1055.
41. E RISA § 206(d)(3), 29 U.S.C. § 1056(d)(3).
42. E RISA § 206(d), 29 U.S.C. § 1056(d).
43. E RISA §§ 202, 210, 211, 29 U.S.C. §§ 1052, 1060, 1061.
44. E RISA §§ 203, 204, 210, 211, 29 U.S.C. §§ 1053, 1054, 1060, 1061.
45. E RISA § 201(2), 29 U.S.C. § 1051(2).
46. E RISA § 201(1), 29 U.S.C. § 1051(1).
47. E RISA §§ 601-734, 29 U.S.C. §§ 1161-1191(c). Th is a r t icle will n ot
discu ss r igh t s u n der t h e P a t ien t P r ot ect ion a n d Affor da ble Ca r e Act , P u b. L.
No. 111-148, 124 St a t . 119 (2010).
48. E RISA §§ 301-305, 29 U.S.C. §§ 1081-1085.
49. E RISA §§ 4001-4067, 29 U.S.C. §§ 1301-1431.
50. E RISA § 3(34), 29 U.S.C. § 1002(34).
51. S ee E RISA § 4021(b)(1), 29 U.S.C. § 1321(b)(1) (exclu din g in dividu a l
a ccou n t pla n s fr om feder a l ben efit gu a r a n t ees).
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T h e J oh n M arsh all L aw R eview
[47:145
Th u s, t h er e a r e t h r ee ba sic E RISA ben efit pr ot ect ion s: (1)
E RISA gives E RISA pla n pa r t icipa n t s a n d ben eficia r ies t h e r igh t
t o exer cise ben efit r igh t s u n der t h e t er m s of a n E RISA P la n ; (2)
E RISA im poses E RISA Gen er a l Ma n da t es, i.e., r epor t in g or
disclosu r e m a n da t es, ben efit t er m s m a n da t es, a fu n din g
m a n da t es, or fidu cia r y m a n da t es, a n d (3) E RISA pr ovides
m ech a n ism s for en for cin g ben efit r igh t s a n d E RISA m a n da t es.
B . B asic E R IS A Preem ption Prin ciples
In gen er a l, E RISA pr eem pt s a n y st a t e la w t h a t m a y or does
52
“r ela t e t o a n y em ployee ben efit pla n ” r egu la t ed by E RISA. Th is
con cept sh a ll be den ot ed h er ein a s t h e “E RISA Gen er a l
P r eem pt ion Ru le.” Th e ph r a se “st a t e la w” in clu des a ll st a t u t es,
decision s, r u les, r egu la t ion s, or ot h er st a t e a ct ion h a vin g t h e effect
53
of st a t e la w. St a t e st a t u t es a r e oft en en for ced wit h a st a t e-cou r t
or a dm in ist r a t ive-a gen cy or der . Th u s, su ch or der s a r e pr eem pt ed
u n der t h e sa m e st a n da r ds a s st a t e st a t u t es. F or sim plicit y, t h e
E RISA § 514 pr ovision s, in clu din g bot h t h e E RISA Gen er a l
P r eem pt ion Ru le a n d t h e exclu sion s set for t h in t h a t st a t u t e, sh a ll
be den ot ed h er ein a s t h e “E RISA E xpr ess P r eem pt ion .”
Th e E RISA E xpr ess P r eem pt ion explicit ly exclu des fr om
pr eem pt ion su bset s of five gen er a l st a t e la ws, ea ch of wh ich is a
54
t r a dit ion a l st a t e police power . Th er e is a br oa d exclu sion for t h e
m ost obviou s police power , cr im in a l la w, bu t on ly for gen er a lly
55
a pplica ble cr im in a l la ws.
Th er e is a br oa d exclu sion for
in su r a n ce, ba n kin g, a n d secu r it ies r egu la t ion of t h ose pr ovidin g
56
su ch ser vices t o E RISA pla n s, bu t t h e exclu sion is n ot a pplica ble
57
t o E RISA pla n s en ga gin g in su ch a ct ivit ies. Th er e is a n a r r ow
exclu sion for t h e in su r a n ce r egu la t ion of a n E RISA pla n
58
est a blish ed pr im a r ily for pr ovidin g dea t h ben efit s, bu t n on e for
t h e in su r a n ce r egu la t ion of a n E RISA pla n est a blish ed pr im a r ily
for pr ovidin g h ea lt h ca r e r eim bu r sem en t s. Th er e a r e som e n a r r ow
59
h ea lt h ca r e r egu la t ion exclu sion s, bu t t h er e is n o exclu sion fr om
E RISA pr eem pt ion for h ea lt h ca r e r egu la t ion even t h ou gh st a t e
52. E RISA § 514(a ), 29 U.S.C. § 1144(a ).
53. E RISA § 514(c)(1), 29 U.S.C. § 1144(c)(1).
54. E xclu sion s for st a t e Medica id pr ogr a m s, m u lt iple em ployer welfa r e
a r r a n gem en t s, a n d a u t om a t ic em ployee con t r ibu t ion s a r e bein g disr ega r ded
for t h e pur pose of t h is discu ssion .
55. E RISA § 514(b)(4), 29 U.S.C. § 1144(b)(4).
56. E RISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A).
57. S ee E RISA§ 514(b)(2)(B), 29 U.S.C. § 1144(b)(2)(B) (pr ovidin g t h a t a n
E RISA pla n or a t r u st a ssocia t ed wit h su ch a pla n , sh a ll n ot be deem ed t o be
a n en t it y su bject t o t h e in su r a n ce, ba n kin g or secu r it ies la w exclu sion ).
58. E RISA§ 514(b)(2)(B), 29 U.S.C. § 1144(b)(2)(B).
59. S ee E RISA § 514(b)(5)(A), 29 U.S.C. § 1144(b)(5)(A) (givin g lim it ed
exclu sion for t h e H a wa ii P r epa id H ea lt h Ca r e Act ); see also E RISA § 514(b)(9),
29 U.S.C. § 1144(b)(9) (givin g lim it ed exclu sion for st a t e la ws per t a in in g t o
por t a bilit y of h ea lt h in su r a n ce cover a ge).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
163
r egu la t ion of h ea lt h ca r e pr ovider s ca n a ffect t h e ben efit s pr ovided
by h ea lt h ca r e pla n s.
Th e Su pr em e Cou r t in t er pr et s st a t u t es u sin g t h e followin g
60
five pr in ciples: (1) a st a t u t e sh ou ld be con st r u ed “in con for m it y
61
wit h it s dom in a t in g gen er a l pu r pose;” (2) st a t u t or y wor ds sh ou ld
be in t er pr et ed a s t a kin g t h eir or din a r y, con t em por a r y, com m on
62
m ea n in g wh en Con gr ess en a ct ed t h e st a t u t e; (3) a st a t u t e sh ou ld
be con st r u ed so a s t o a void r en der in g “su per flu ou s” a n y st a t u t or y
63
la n gu a ge;
(4) t h e in qu ir y sh ou ld begin a n d en d wit h t h e
64
st a t u t or y wor ds, if t h e wor ds a r e u n a m bigu ou s; a n d (5) if t h e t ext
is a m bigu ou s, on e m a y “h a ve r ecou r se t o t h e legisla t ive h ist or y of
t h e m ea su r e a n d t h e st a t em en t s by t h ose in ch a r ge of it du r in g it s
65
con sider a t ion by t h e Con gr ess.”
J u st ice Rober t H . J a ck son
st r essed t h e lim it ed cir cu m st a n ces in wh ich legisla t ive h ist or y is a
66
u sefu l t ool, wh ile J u st ice St eph en Br eyer st r essed t h e wide
60. S ee generally W ILLIAM E SKRIDGE , J R ., P H ILIP P . F RICKE Y & E LIZABE TH
G ARRE TT , L E GISLATIVE AND S TATUTORY I NTE RP RE TATION Ch s. 7 a n d 8 (2000)
(discu ssin g gen er a l st a t u t or y in t er pr et a t ion pr in ciples for a ll cou r t s); H E NRY
M. H ART , J R . & ALBE RT M. S ACKS , Th e Lega l P r ocess: Ba sic P r oblem s in Th e
Ma kin g a n d Applica t ion of La w 1111-1380 (Willia m N. E skr idge, J r . & P h ilip
P . F r ickey eds., 1994) (discu ssin g gen er a l st a t u t or y in t er pr et a t ion pr in ciples
wit h pa r t icu la r em ph a sis on wh en a n d h ow t o su pplem en t t h e st a t u t or y wor ds
for a ll cou r t s); Willia m N. E skr idge, J r ., T h e N ew T extu alism an d N orm ative
Can on s, 113 C OLUM . L. R E V. 531, 576-588 (2013) (discu ssin g ca n n on s of
st a t u t or y in t er pr et a t ion ); YULE K IM , S TATUTORY I NTE RP RE TATION : G E NE RAL
P RINCIP LE S AND R E CE NT T RE NDS C ONG . R E S . S E RV. (2008); L ARRY M. E IG ,
S TATUTORY I NTE RP RE TATION : G E NE RAL P RINCIP LE S AND R E CE NT T RE N DS
C ONG . R E S . S E RV. (2011).
61. S ee Sec. & E xch . Com m ’n v. C. M. J oin er Lea sin g Cor p., 320 U.S. 344,
350 (1943) (h oldin g t h a t oil lea se a ssign m en t s qu a lified a s r egu la t ed
“secu r it ies” or “in vest m en t con t r a ct s” u n der t h e st a t u t e, beca u se seller s wer e
offer in g explor a t ion ser vices in a ddit ion t o t h e lea seh olds).
62. S ee BedRoc Lt d., LLC v. Un it ed St a t es, 541 U.S. 176, 184 (2004)
(h oldin g t h a t m in er a l r eser va t ion s for Un it ed St a t es in feder a l la n d gr a n t
st a t u t e did n ot cover gr a vel).
63. S ee TRW In c. v. An dr ews, 534 U.S. 19, 31 (2001) (h oldin g t h a t t h e
t ollin g of st a t u t e of lim it a t ion s for cla im s u n der F a ir Cr edit Repor t in g Act
u n t il discover y of viola t ion is lim it ed t o t h e st a t ut or y fr a u d except ion ).
64. B ed R oc, 541 U.S. a t 183.
65. S ee Un it ed St a t es v. Gr ea t N. Ry. Co., 287 U.S. 144, 154-55 (1932)
(h oldin g t h a t Con gr ess in t en ded t o pr ovide t h a t r a ilr oa ds r eceivin g US
gu a r a n t y pa ym en t s in a ccor d wit h a n ICC cer t ifica t ion m a y n ot be r equ ir ed t o
r efu n d a n y pa r t of su ch pa ym en t on t h e ba sis of a post -pa ym en t ch a n ge by t h e
ICC of it s m et h od t o com pu t e gu a r a n t ee pa ym en t s, if t h e in it ia l cer t ifica t e did
n ot a r ise beca u se of fr a u d or a m ist a ke in t h e or igin a l com pu t a t ion ). B u t see
H ART , su pra n ot e 60, a t 1255-1344 (discu ssin g post -en a ct m en t a ids t o
in t er pr et a t ion ).
66. S ee Rober t H . J a ckson , T h e Mean in g of S tatu tes: Wh at Con gress S ays
or Wh at th e Cou rt S ays, 34 A.B.A. J . 535, 538 (1948) (st a t in g t h a t “[i]t is a poor
ca u se t h a t ca n n ot fin d som e pla u sible su ppor t in legisla t ive h ist or y, wh ich
oft en in clu des t en t a t ive r a t h er t h a n fin a l views of legisla t or s or lea ves
m isin t er pr et a t ion u n a n swer ed lest m or e defin it e st a t em en t s im per il t h e
ch a n ce of pa ssa ge.”).
164
T h e J oh n M arsh all L aw R eview
[47:145
67
cir cu m st a n ces in wh ich legisla t ive h ist or y is a u sefu l t ool.
In
con t r a st , J u st ice Th om a s h a s a r gu ed t h a t t h e Con st it u t ion ’s
Bica m er a l a n d P r esen t m en t Cla u ses im plies t h a t pr eem pt ion
a n a lysis con sist s of a skin g wh et h er t h e or din a r y m ea n in gs of st a t e
a n d feder a l la w con flict , a n d sh ou ld n ot con sider t h e legisla t ive
68
h ist or y or st a t u t or y pu r pose.
A r eview of t h e la n gu a ge of t h e E RISA E xpr ess P r eem pt ion in
con cer t wit h qu ick r eview of t h e ot h er E RISA sect ion s, u sin g t h e
fir st fou r pr in ciples wou ld a ppea r t o yield eigh t u n a m bigu ou s
con clu sion s, a lt h ou gh t h e cou r t s, a s d iscu ssed in fra, h a ve oft en
r ea ch ed differ en t con clu sion s.
 F ir st , t h e dom in a t in g gen er a l pu r pose of E RISA is t h e
pr ot ect ion of pla n pa r t icipa n t s a n d ben eficia r ies. Th is is wh y
Tit le I of E RISA is en t it led “P r ot ect ion of E m ployee Ben efit
Righ t s,” a n d t h e E RISA decla r a t ion of policy r efer s a ga in a n d
a ga in t o pr ot ect in g t h e in t er est s of pa r t icipa n t s (or em ployees)
69
a n d t h eir ben eficia r ies.
 Secon d, a n y st a t e la w, n ot exem pt ed t h er ein , t h a t expr essly
con flict s wit h a n y E RISA pr ovision r ela t es t o a n E RISA pla n .
Th u s, t h e E RISA E xpr ess P r eem pt ion pr eem pt s a n y su ch
con flict in g st a t e la w. In pa r t icu la r , E RISA pr eem pt s a n y st a t e
la w t h a t con flict s wit h t h e E RISA pr ovision t h a t pla n t er m s
det er m in e t h e ben efit r igh t s of a pla n ’s pa r t icipa n t s a n d
ben eficia r ies.
 Th ir d, E RISA does n ot pr eem pt som e st a t e la ws r ela t in g t o a n
em ployee ben efit pla n , su ch a s t h ose r equ ir in g: (1) su pplier s of
goods t o fu lfill t h eir con t r a ct obliga t ion t o a ll per son s,
in clu din g E RISA pla n s; (2) em ployer s, in clu din g E RISA pla n s,
t o com ply wit h st a t e m in im u m wa ge la ws; or (3) ph ysicia n s
em ployed by h ea lt h ca r e pr ovider s, in clu din g E RISA pla n s, t o
h a ve st a t e licen ses. Sim ila r ly, E RISA wou ld n ot pr eem pt t h e
a pplica t ion of a t h eft la w t o a per son wh o st ea ls m on ey fr om
a n E RISA pla n .
 F ou r t h , E RISA does n ot pr eem pt a st a t e la w t h a t on ly h a s a
n on -t en u ou s effect on a n y of t h e E RISA pr ot ect ion s for pla n
pa r t icipa n t s a n d ben eficia r ies. Th u s, E RISA does n ot pr eem pt
67. S ee St eph en Br eyer , On th e U ses of L egislative H istory in In terpreting
S tatu tes, 65 S. C AL . L. R E V. 845, 848-62 (1992) (descr ibin g a n d defen din g five
cir cu m st a n ces wh er e it is u sefu l for cou r t s ca n t o look t o legisla t ive h ist or y: (1)
a voidin g a n a bsu r d r esu lt ; (2) dr a ft in g er r or ; (3) det er min in g specia lized
m ea n in g; (4) iden t ifyin g a r ea son a ble pu r pose; a n d (5 ) ch oosin g a m on g
r ea son a ble in t er pr et a t ion s of a polit ica lly con t r over sia l st a t u t e).
68. S ee H illm a n v. Ma r et t a , 569 U.S. __, 2013 U.S. LE XIS 4167 a t **2829, 133 S. Ct . 1943, 1955 (2013) (Th om a s, J ., con cu r r in g) (h oldin g t h er e wa s
pr eem pt ion of a st a t e la w r evokin g a F eder a l Gover n m en t E m ployees Life
In su r a n ce design a t ion u pon a pa r t icipa n t ’s divor ce) (cit in g Wyet h v. Levin e,
555 U.S. 555, 585-88 (2009) (h oldin g t h a t F DA la belin g la ws do n ot pr eem pt
st a t e la w pr odu ct lia bilit y cla im s)).
69. E RISA § 2(a ), (b), (c), 29 U.S.C. § 1001(a ), (b), (c).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
165
la ws, su ch a s t h e con t r a ct , m in im u m wa ge, ph ysicia n
licen sin g, or t h eft la ws descr ibed su pra.
F ift h , E RISA pr eem pt s t h ose st a t e la ws t h a t n on -t en u ou sly
a ffect a n y of t h e r igh t s of a pa r t icipa n t t o ben efit s u n der a n
E RISA pla n ’s t er m s, in clu din g t h e r igh t t o r eceive ben efit
pa ym en t s, t o design a t e a ben eficia r y, or t o a fu ll a n d fa ir
r eview of a n y ben efit cla im . All E RISA pla n pa r t icipa n t s a n d
ben eficia r ies m u st h a ve t h ese r igh t s.
Th u s, t h e E RISA
E xpr ess P r eem pt ion is m ost lik ely t o pr even t st a t e la w fr om
m odifyin g t h ose r igh t s.
Sixt h , E RISA pr eem pt s st a t e la ws t h a t h a ve a n on -t en u ou s
effect on a n y of t h e E RISA’s ben efit pr ot ect ion s for pla n
pa r t icipa n t s a n d ben eficia r ies. Th eir pr ovision is t h e E RISA
dom in a t in g gen er a l pu r pose.
Th u s, t h e E RISA E xpr ess
P r eem pt ion is m ost lik ely t o pr even t st a t e la w fr om m odifyin g
su ch pr ot ect ion s.
Seven t h , a gen er a lly a pplica ble st a t e la w wit h m or e t h a n a
t en u ou s effect on r igh t s t o em ployee ben efit s u n der a n E RISA
pla n ’s t er m s is pr eem pt ed by E RISA if it is n ot a cr im in a l la w.
Ot h er wise, t h er e wou ld h a ve been n o n eed for a n explicit
exclu sion for on ly t h ose cr im in a l la ws t h a t a r e gen er a lly
a pplica ble.
E igh t h , E RISA pla n s a n d pla n ben efit dist r ibu t ion s m a y be
su bject t o st a t e in com e t a x beca u se E RISA does n ot exem pt
pla n s or su ch dist r ibu t ion s fr om t a x.
F u r t h er a n a lysis of t h e E RISA legisla t ive h ist or y, E RISA, a n d
t h e ca se la w is n eeded t o cla r ify t h e sign ifica n ce of t h e ph r a se
“r ela t e t o a n y em ployee ben efit pla n .” Th e ph r a se seem s t o depen d
on t h e sign ifica n ce of t wo ot h er ph r a ses “a n on -t en u ou s effect ,” a n d
“E RISA ben efit pr ot ect ion s.” Sever a l m a jor qu est ion s n eed t o be
a n swer ed t o det er m in e t h e pr ecise in t er a ct ion bet ween E RISA a n d
st a t e la w, i.e., t h e feder a lism r ole of E RISA:
 E m ployee Ben efit P la n Qu est ion : Wh a t is a n E RISA em ployee
ben efit pla n ?
E RISA on ly pr ot ect s pa r t icipa n t s a n d
ben eficia r ies in su ch pla n s.
 E m ployee Ben efit Righ t Qu est ion s: Wh a t is t h e ext en t of t h e
E RISA ben efit r igh t s, wh ich in clu de, bu t a r e n ot lim it ed t o t h e
r igh t t o r ecover ben efit s a n d t o design a t e ben eficia r ies? Un der
wh a t con dit ion s, if a n y, does E RISA pr eem pt a la w h a vin g a
t en u ou s effect on a n E RISA em ployee ben efit pla n , bu t a n on t en u ou s effect on pla n pa r t icipa n t s or ben eficia r ies? In
pa r t icu la r , u n der wh a t con dit ion s, if a n y, does E RISA pr eem pt
a st a t e la w per t a in in g t o ben efit s t h a t h a ve been dist r ibu t ed t o
pla n pa r t icipa n t s or ben eficia r ies?
 Cr im in a l La w Qu est ion s: Wh a t is a cr im in a l la w? Wh a t is a
gen er a lly a pplica ble cr im in a l la w?
 Ta x La w Qu est ion s: In 1983, t a x la ws beca m e t h e on ly gen er a l
166


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st a t e la ws t h a t a r e expr essly su bject t o t h e E RISA E xpr ess
70
P r eem pt ion . Wh ich t a x fea t u r es a r e pr eem pt ed, a n d wh ich
a r e per m it t ed? Wh ich t a xes, if a n y, m a y be im posed on pla n s?
Wh ich t a xes, if a n y, m a y be im posed on pla n pa r t icipa n t s a n d
ben eficia r ies? Un der wh a t con dit ion s, if a n y, m a y t a xes be
wit h h eld fr om E RISA pla n ben efit pa ym en t s? U n der wh a t
con dit ion s, if a n y, m a y t a x levies be a pplied t o a n E RISA
pla n ’s ben efit pa ym en t s? Un der wh a t con dit ion s, if a n y, m a y
t a x levies be a pplied wit h r espect t o ben efit s t h a t h a ve been
r eceived by E RISA pla n pa r t icipa n t s or ben eficia r ies ?
Debt or -Cr edit or La w: Debt or -cr edit or la ws a r e t h e on ly on e of
t h e five gen er a l la ws t h a t h a ve a lwa ys expr essly con flict ed
wit h a su bst a n t ive E RISA r equ ir em en t , viz., cer t a in pen sion
pla n s m u st pr oh ibit t h e a lien a t ion of ben efit s (t h e “Alien a t ion
71
P r oh ibit ion ”).
To wh a t ext en t , if a n y, does t h e Alien a t ion
P r oh ibit ion r en der in effect ive st a t e cou r t or der s by cr edit or s
for t h e pa ym en t of debt s? Un der wh a t con dit ion s, if a n y, m a y
a cr edit or com pel a pla n t o m a ke ben efit pa ym en t s t o su ch
cr edit or , a n d wh ich pla n s m a y be so com pelled? U n der wh a t
con dit ion s, if a n y, m a y a cr edit or com pel r ecipien t s of pla n
ben efit pa ym en t s t o pa y su ch cr edit or a por t ion of t h ose
pa ym en t s?
Dom est ic Rela t ion s La w Qu est ion s: In 1984, dom est ic r ela t ion
la ws beca m e t h e on ly on e of t h e five gen er a l st a t e la ws for
wh ich t h er e is a n a r r ow explicit exclu sion fr om t h e E RISA
E xpr ess P r eem pt ion , n a m ely for a dom est ic r ela t ion s or der
72
t h a t is a qu a lified dom est ic r ela t ion s or der (“QDRO”). Wh a t
is a dom est ic r ela t ion s or der ? Wh a t is a QDRO ? Un der wh a t
con dit ion s, if a n y, m a y per son s u se dom est ic r ela t ion s or der s
t o com pel pla n s t o m a ke ben efit pa ym en t s t o t h em , a n d wh ich
pla n s m a y be so com pelled? Un der wh a t con dit ion s, if a n y,
m a y a per son u se a dom est ic r ela t ion s or der t o com pel a
r ecipien t of pla n ben efit s t o pa y su ch per son t h ose ben efit s?
Tr a n sfer s on Dea t h La w: Tr a n sfer s on Dea t h la w is t h e on ly
on e of t h e five gen er a l la ws wh ich h a s a n im por t a n t fea t u r e
73
a ddr essed in a n E RISA defin it ion , viz., a ben eficia r y. Un der
wh a t con dit ion s, if a n y, m a y st a t e la w be u sed t o det er m in e
pla n ben eficia r ies for su r vivor ben efit s?
Un der wh a t
70. E RISA§ 514(b)(5)(B), 29 U.S.C. § 1144(b)(5)(B). Th is sect ion wa s
a dded by P u b. L. No. 97-473 § 301(a ), 96 St a t . 2605, 2611-2612 (1983).
71. E RISA § 206(d)(1), 29 U.S.C. § 1056(d)(1). A sim ila r E RISA con flict
wa s in t r odu ced in 1984 for dom est ic r ela t ion s or der s t h a t a r e n ot qu a lified
dom est ic r ela t ion s or der s wit h t h e a ddit ion of E RISA§ 206(d)(3), 29 U.S.C.
§ 1056(d)(3) by P u b. L. No. 98-397 § 104(a ), 98 St a t . 1426, 1433-36 (1984).
72. E RISA § 514(b)(7), 29 U.S.C. § 1144(b)(7). Th is sect ion wa s a dded by
P u b. L. No. 98-397 § 104(b), 98 St a t . 1426, 1436 (1984). A sim ila r exem pt ion
wa s la t er a dded t o t h e sa m e sect ion for qu a lified m edica l ch ild su ppor t or der s
by P u b. L. No. 103-66 § 4301(d), 107 St a t . 312, 377 (1993).
73. E RISA § 3(8), 29 U.S.C. § 1002(8).
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167
con dit ion s, if a n y, m a y st a t e la w be u sed t o com pel pla n
pa r t icipa n t s t o design a t e specified pa r t ies a s t h eir
ben eficia r ies? Un der wh a t con dit ion s, if a n y, m a y st a t e la w
ben eficia r ies, wh o a r e n ot pla n ben eficia r ies, com pel pla n s t o
m a k e ben efit pa ym en t s t o t h ose per son s, a n d wh ich pla n s m a y
be so com pelled? Un der wh a t con dit ion s, if a n y, m a y st a t e la w
ben eficia r ies, wh o a r e n ot pla n ben eficia r ies, com pel r ecipien t s
of pla n ben efit pa ym en t s t o pa y a por t ion of t h ose pa ym en t s t o
t h ose st a t e la w ben eficia r ies?
III.
TH E SUP RE MACY CLAUSE AND SOME NON -E RISA
P RE E MP TION DE CISIONS TH E SU P RE ME COU RT CITE D
IN ITS E RISA P RE E MP TION DE CISIONS
Th e Su pr em a cy Cla u se of t h e Un it ed St a t es Con st it u t ion
pr ovides t h a t feder a l la w is t h e “su pr em e La w of t h e La n d; a n d t h e
J u dges in ever y St a t e sh a ll be bou n d t h er eby, a n y Th in g in t h e
Con st it u t ion or La ws of a n y St a t e t o t h e Con t r a r y
74
n ot wit h st a n din g.”
In 1962, t h e Su pr em e Cou r t h eld in F r ee v. Bla n d, t h a t
com m u n it y-pr oper t y la w cou ld n ot be u sed t o defea t a r igh t t o a
75
feder a l en t it lem en t .
Th e Cou r t t h er ein con sider ed t h e
en t it lem en t t o su r vivor ben efit s fr om a feder a l U.S. sa vin gs bon d
t h a t h a d been a cqu ir ed wit h com m u n it y pr oper t y by a m a r r ied
cou ple a n d h a d been issu ed in t h e n a m e of bot h spou ses wit h a n
76
“or ” bet ween t h e n a m es. Un der t h e r eleva n t feder a l r egu la t ion s
su ch design a t ion pr ovided t h a t “[i]f eit h er co[-]own er dies wit h ou t
t h e bon d h a vin g been pr esen t ed a n d su r r en der ed for pa ym en t or
a u t h or ized r eissu e, t h e su r vivor will be r ecogn ized a s t h e sole a n d
77
a bsolu t e own er .”
Th u s, a su r vivin g spou se, r a t h er t h a n t h e
deceden t ’s sole h eir a n d son fr om a n ea r lier m a r r ia ge, wa s en t it led
78
t o fu ll own er sh ip of a sa vin gs bon d. Th e cou r t decla r ed:
Th e r ela t ive im por t a n ce t o t h e St a t e of it s own la w is not m a t er ia l
wh en t h er e is a con flict wit h a va lid feder a l la w, for t h e F r a m er s of
ou r Con st it u t ion pr ovided t h a t t h e feder a l la w m u st pr eva il. Ar t icle
VI, Cla u se 2. Th is pr in ciple wa s m a de clea r by Ch ief J u st ice
Ma r sh a ll [in 1824] wh en h e st a t ed for t h e Cou r t t h a t a n y st a t e la w,
h owever clea r ly wit h in a St a t e’s a ckn owledged power , wh ich
79
in t er fer es wit h or is con t r a r y t o feder a l la w, m u st yield.
Mor eover , t h e Cou r t in Free em ph a sized t h e ext en t of t h e
pr eem pt ion by fu r t h er st a t in g t h a t t h e fa t h er cou ld n ot be r equ ir ed
74.
75.
76.
77.
78.
79.
U.S. C ONST . a r t . VI, § 1, cl. 2.
F r ee v. Bla n d, 369 U.S. 663 (1962).
Id . a t 664-65.
Id . a t 667 n .5 (cit in g 31 C.F .R. § 315.20).
Id . a t 670.
Id . a t 666 (cit a t ion s om it t ed).
168
T h e J oh n M arsh all L aw R eview
[47:145
t o u se a ddit ion a l r esou r ces t h a t h e h a d t o pa y t h e son h a lf of t h e
va lu e of su ch bon d:
Not wit h st a n din g t h is [su r vivor sh ip] pr ovision , t h e St a t e a wa r ded
fu ll tit le t o t h e co-own er bu t r equ ir ed h im t o a ccou n t for h a lf of t h e
va lu e of t h e bon ds t o t h e deceden t ’s est a t e. View ed realistically, th e
S tate h as ren d ered th e aw ard of title m ean in gless . Ma kin g t h e
bon ds secu r it y for t h e pa ym en t con fir m s t h e a ccu r a cy of t h is view.
If t h e St a t e ca n fr u st r a t e t h e pa r t ies’ a t t em pt t o u se t h e bon ds’
su r vivor sh ip pr ovision t h r ou gh t h e sim ple expedien t of r equ ir in g t h e
su r vivor t o r eim bu r se t h e est a t e of t h e decea sed co-own er a s a
m a t t er of la w, t h e St a t e h a s in t er fer ed dir ect ly wit h a legit im a t e
80
exer cise of t h e power of t h e F eder a l Gover n m en t t o bor r ow m on ey.
It sh ou ld be n ot ed t h a t dom es t ic r ela t ion s la w, h owever , m a y
be a pplied t o obt a in a n own er sh ip in t er est in a feder a l sa vin gs
81
bon d.
Mu ch of t h e con fu sion a bou t t h e ext en t of pr eem pt ion of a
feder a l st a t u t e m a y st em fr om t h e Su pr em e Cou r t ’s a ppr oa ch in
82
1949 in H .P . H ood & Son s, In c. v. Du Mon d. Th e Cou r t descr ibed
a br oa d exem pt ion for pr ot ect ive st a t e st a t u t es t o t h e r u le t h a t t h e
83
com m er ce cla u se of t h e Con st it u t ion pr eem pt s st a t e la ws t h a t
bu r den in t er st a t e com m er ce, a s follows:
Th is dist in ct ion bet ween t h e power of t h e St a t e t o sh elt er it s people
fr om m en a ces t o t h eir h ea lt h or sa fet y a n d fr om fr a u d, even wh en
t h ose da n ger s em a n a t e fr om in t er st a t e com m er ce, a n d it s la ck of
power t o r et a r d, bu r den or con st r ict t h e flow of su ch com m er ce for
t h eir econ om ic a dva n t a ge, is on e deeply r oot ed in bot h ou r h ist or y
84
a n d ou r la w.
On e r espect ed com m en t a t or h a s sim ila r ly obser ved t h a t t h e
degr ee of defer en ce of feder a l st a t u t es t o st a t e la ws depen ds u pon
85
t h e pr ot ect ion a ffor ded by t h e st a t e la w in qu est ion .
Su ch a n
em ph a sis on t h e pr ot ect ive n a t u r e of t h e st a t e la w m a y dist r a ct
fr om t h e m ost im por t a n t fa ct or det er m in in g t h e pr eem pt ive effect
80. Id . a t 669 (em ph a sis a dded).
81. S ee 31 C.F .R. § 315.22 (pr ovidin g for defer en ce t o divor ce decr ee
pr ovision s t h a t det er m in e t h e pa r t ies’ in t er est in U.S. bon ds). Su ch pr ovision s
m a y be ba sed on com m u n it y pr oper t y in t er est s or equ it a ble dist r ibu t ion . Id .
H owever , it wou ld a ppea r t h a t st a t e elect ive-sh a r e la ws t h a t a t t em pt ed t o
in cor por a t e U.S. bon ds in t h e st a t u t or y elect ive est a t e wou ld be pr eem pt ed on
t h e sa m e ba sis a s t h e F r ee com m u n it y pr oper t y cla im . Id .
82. H . P . H ood & Son s, In c. v. Du Mon d, 336 U.S. 525 (1949).
83. U.S. C ONST . a r t . I, § 8, cl. 3.
84. H . P. H ood & S on s, In c., 336 U.S. a t 533.
85. S ee Willia m L. Lyn ch , A Fram ew ork for Preem ption An alysis, 88 YALE
L.J . 363, 369-71 (1978) [h er ein a ft er “Preem ption An alysis”] (st a t in g t h a t st a t e
la ws t h a t pr ot ect t h e people in side st a t e bor der s fr om ph ysica l in ju r y h a ve
r eceived t h e gr ea t est defer en ce). La ws t h a t pr ot ect t h e people in side st a t e
bor der s fr om ot h er da n ger s h a ve r eceived less defer en ce. Id . a t 363. St a t e
la ws t h a t pu r por t t o pr ot ect people m ost ly ou t side st a t e bor der s h a ve r eceived
lit t le defer en ce. Id .
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169
of a feder a l st a t u t e. Na m ely, t h e t er m s of t h e feder a l st a t u t e,
wh ich , a s discu ssed in Free su pra, pr eem pt s a n y con flict in g la w,
r ega r dless of t h e pr ot ect ive n a t u r e of t h e st a t e la w, a lt h ou gh t h e
86
com m en t a t or did n ot m a k e t h is m ist a k e.
A. T h e S u prem e Cou rt Declares th at a Fed eral L aw T h at
Pervasively R egu lates a Field Preem pts An y S tate L aw With in
th e R egu lated Filed , B u t T h ere is a Presu m ption Again st S u ch
Im plicit Field Preem ption
Th e k ey pr eem pt ion issu e of t h is a r t icle is t h e ext en t , if a n y,
t o wh ich E RISA pr eem pt s t h e five st a t e la ws. Su pr em e Cou r t
pr eem pt ion decision s oft en cit e a 1947 decision of t h e Cou r t , Rice
87
v. Sa n t a F e E leva t or Cor p. for t h e fir st of t wo con t r a st in g
pr in ciples t h a t it pr esen t ed. Th e fir st pr in ciple is t h a t a bsen t
expr ess pr eem pt ion la n gu a ge t h er e is a pr esu m pt ion a ga in st t h e
pr eem pt ion of st a t e police la ws, su ch a s t h e five u n der
con sider a t ion . Th e E RISA E xpr ess P r eem pt ion h a s su ch expr ess
la n gu a ge, so it is u n clea r wh y t h e Cou r t cit es t h is pr in ciple in
88
E RISA decision s a s it oft en does.
Th e secon d pr in ciple t h a t is
r a r ely cit ed in E RISA decision s is t h a t if t h er e is “per va sive”
r egu la t ion of a field by a feder a l la w, t h e feder a l la w pr eem pt s a n y
89
st a t e la w on a feder a lly r egu la t ed m a t t er wit h in t h e field.
H owever , t h e E RISA E xpr ess P r eem pt ion m a y pr eem pt even m or e
st a t e la ws beca u se it u ses t h e ph r a se “r ela t ed t o,” wh ich m ea n s
t h a t E RISA pr eem pt ion in clu des, bu t m a y go beyon d, m a t t er s t h a t
90
E RISA specifica lly r egu la t es. Th is br oa d in clu sion is su ppor t ed
by t h e fa ct t h a t a s discu ssed in fra, E RISA pr ecu r sor s lim it ed
pr eem pt ion t o m a t t er s r egu la t ed by E RISA.
86. S ee id . a t 364-369 (expla in in g t h a t expr ess pr eem pt ion pr ovision s
for eclose a n y n eed t o a n a lyze t h e st a t u t or y pu r pose).
87. Rice v. Sa n t a F e E leva t or Cor p., 331 U.S. 218 (1947).
88. S ee e.g., Ma lon e v. Wh it e Mot or Cor p., 435 U.S. 497 (1978); Alessi v.
Ra ybest os-Ma n h a t t a n , In c., 451 U.S. 504 (1981); D. C. v. Gr ea t er Wa sh in gt on
Bd. of Tr a de, 506 U.S. 125 (1992) [h er ein a ft er “Greater Wash in gton ”]; New
Yor k St a t e Con fer en ce of Blu e Sh ield & Blu e Sh ield P la n s v. Tr a veler s Inc.
Co., 514 U.S. 645 (1995) [h er ein a ft er “T ravelers”]; Boggs v. Boggs, 520 U.S.
833 (1997); E gelh off v. E gelh off, 532 U.S. 141 (2001).
89. F ield pr eem pt ion h a d been discu ssed ea r lier , a lt h ou gh n ot in t h e sen se
of a per va sive feder a l la w. S ee gen erally H in es v. Da vidowit z, 312 U.S. 52, 66
(1941) (r efer en cin g ea r lier decision s a n d h oldin g t h a t a n ew feder a l la w
r equ ir in g t h e r egist r a t ion of a ll a lien s pr eclu ded en for cem en t of a pr e -exist in g
st a t e la w m a n da t in g r egist r a t ion of a lien s wit h in su ch st a t e). B u t see
Preem ption An alysis, su pra n ot e 85, a t 369-71 (descr ibin g t h is pr in ciple a s
fin din g pr eem pt ion wh en t h er e is a “pot en t ia l con flict ” bet ween t h e feder a l
a n d t h e st a t e la w).
90. S ee also Alber t F eu er , Wh o Is E n titled to S u rvivor B en efits from
E R IS A Plan s?, 40 J . M ARSH ALL L. R E V. 919, 934-38 (Spr in g 2007), available at
h t t p://r eposit or y.jm ls.edu /cgi/viewcon t en t .cgi?a r t icle=1248&con t ext =la wr eview
[h er ein a ft er “Feu er’s S u rvivor B en efits”] (la st visit ed Ma r ch 24, 2014)
(discu ssin g h ow t h e “r ela t e t o” pr eem pt ion a llows cou r t s t o over com e t h eir
r elu ct a n ce t o fin d field or con flict pr eem pt ion of st a t e la ws).
170
T h e J oh n M arsh all L aw R eview
[47:145
R ice fou n d a st a t e la w wa s expr essly pr eem pt ed, bu t in a
dict u m la id t h e fou n da t ion for t h e im plicit field pr eem pt ion
91
doct r in e (“F ield P r eem pt ion ”). F ield P r eem pt ion pr ovides t h a t if
t h e sch em e of feder a l r egu la t ion is so per va sive t h a t it is
r ea son a ble t o in fer t h a t Con gr ess left n o r oom for t h e St a t es t o
su pplem en t it , t h en a n y su ch su pplem en t a r y la w is pr eem pt ed
92
beca u se it im plicit ly con flict s wit h t h e r egu la t ion . Of cou r se, t h is
lea ves t h e qu est ion s of h ow t o defin e t h e field a n d a
93
su pplem en t a r y la w.
94
Th e Su pr em e Cou r t h eld, in R ice, t h a t t h e Un it ed St a t es
95
Wa r eh ou se Act (t h e “Wa r eh ou se Act ”) pr eem pt ed a n Illin ois
st a t u t e, wh ich sou gh t t o im pose r equ ir em en t s on feder a lly licen sed
wa r eh ou sem en on m a t t er s a ddr essed by t h e Wa r eh ou se Act . Th e
decision r est ed u pon t h e followin g a ddit ion of expr ess pr eem pt ion
la n gu a ge t o t h e st a t u t e in 1931, t h a t “t h e m a n da t or y wor ds ‘t h e
power , ju r isdict ion , a n d a u t h or it y’ of t h e Secr et a r y con fer r ed
u n der t h e [Wa r eh ou se] Act ‘sh all be exclu sive wit h r espect t o a ll
96
per son s’ licen sed u n der t h e Act .”
Th e Cou r t obser ved t h a t bot h t h e H ou se Com m it t ee a n d t h e
Sen a t e Com m it t ee t h a t pr epa r ed t h e a ddit ion descr ibed t h e
a ddit ion a s design ed t o m a k e t h e feder a l a ct in depen den t of a n y
97
st a t e legisla t ion or r egu la t ion . Th u s, Illin ois cou ld n ot r egu la t e a
feder a l wa r eh ou se licen see on t h e m a t t er s r egu la t ed by t h e feder a l
98
a ct , a n d t h ose st a t e pr ovision s wer e pr eem pt ed. H owever , t h er e
wa s n o pr eem pt ion of pr ovision s on m a t t er s n ot expr essly
99
r egu la t ed.
Alt h ou gh , t h e Cou r t wa s n ot a pplyin g F ield
P r eem pt ion beca u se t h er e wa s expr ess pr eem pt ion , t h is a ppr oa ch
a ppea r s t o be m or e lim it ed t h a n t h e Cou r t ’s descr ipt ion of t h e
scope of F ield P r eem pt ion .
Th e R ice Cou r t decision discu ssed t h e a pplica ble pr eem pt ion
a n a lysis for feder a l st a t u t es t h a t , u n lik e t h e Wa r eh ou se Act ,
la ck ed expr ess pr eem pt ion la n gu a ge:
Con gr ess legisla t ed h er e in [a ] field wh ich t h e St a t es h a ve
t r a dit ion a lly occu pied. S o w e start w ith th e assu m ption th at th e
h istoric police pow ers of th e S tates w ere n ot to be su persed ed by th e
Fed eral Act u n less th at w as th e clear an d m an ifest pu rpose of
Con gress. Su ch a pu r pose m a y be eviden ced in sever a l wa ys [in
a ddit ion t o expr ess pr eem pt ion sect ion s, su ch a s on e in t h e
Wa r eh ou se Act ]. T h e sch em e of fed eral regu lation m ay be so
91. R ice, 331 U.S. a t 230.
92. S ee gen erally Killian , su pra n ot e 6, a t 266-268.
93. Id . a t 266-67.
94. R ice, 331 U.S. a t 230.
95. Un it ed St a t es Wa r eh ou se Act , 39 St a t . 486 (1916) (codified in
sca t t er ed sect ion of 7 U.S.C.S. § 241 et seq. (2012)).
96. R ice, 331 U.S. a t 233 (em ph a sis a dded).
97. Id . a t 234.
98. Id .
99. Id . a t 237-38.
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pervasive as to m ak e reason able th e in feren ce th at Con gress left n o
room for th e S tates to su pplem en t it. Or th e Act of Con gress m ay
tou ch a field in w h ich th e fed eral in terest is so d om in an t th at th e
fed eral system w ill be assu m ed to preclu d e en forcem en t of state law s
on th e sam e su bject. Likewise, t h e object sou gh t t o be obt a in ed by
t h e feder a l la w a n d t h e ch a r a ct er of obliga t ion s im posed by it m a y
r evea l t h e sa m e pu r pose. Or t h e st a t e policy m a y pr odu ce a r esu lt
in con sist en t wit h t h e object ive of t h e feder a l st a t u t e. It is oft en a
per plexin g qu est ion wh et h er Con gr ess h a s pr eclu ded st a t e a ct ion or
by t h e ch oice of select ive r egu la t or y m ea su r es h a s left t h e police
power of t h e St a t es u n dist u r bed except a s t h e st a t e a n d feder a l
100
r egu la t ion s collide.
Th e Cou r t did n ot defin e t h e scope of st a t e police power s or
descr ibe t h e fields wh ich t h e St a t es h a ve t r a dit ion a lly occu pied.
Th e Cou r t r ecen t ly cit ed t h is F ield P r eem pt ion la n gu a ge a n d
101
a n a lysis t o su ppor t it s h oldin g in Ar izon a v. Un it ed St a t es t h a t
pa r t s of t h e Ar izon a a lien -r egist r a t ion la w wer e pr eem pt ed.
F in a lly, t h e R ice Cou r t a ddr essed t h e ext en t t o wh ich a
feder a l st a t u t e pr eem pt s a st a t e st a t u t e if t h e st a t u t e con t a in s a
br oa d expr ess pr eem pt ion sect ion , su ch a s t h a t in t h e Wa r eh ou se
Act , a s follows:
Th e t est , t h er efor e, is wh et h er t h e m a t t er on wh ich t h e St a t e a sser t s
t h e r igh t t o a ct is in a n y wa y r egu la t ed by t h e F eder a l Act . If it is,
t h e feder a l sch em e pr eva ils t h ou gh it is a m or e m odest , less
102
per va sive r egu la t or y pla n t h a n t h a t of t h e St a t e.
H owever , in t h e ca se befor e it , t h e R ice Cou r t defin ed
r egu la t ed m a t t er s n a r r owly. As discu ssed su pra, it h eld t h a t st a t e
la ws per t a in in g t o t h ose wa r eh ou se m a t t er s r egu la t ed by t h e
103
Wa r eh ou se Act wer e pr eem pt ed by t h e Act .
H owever , it h eld
t h er e wa s n o pr eem pt ion of st a t e la ws per t a in in g t o t h ose
104
wa r eh ou se m a t t er s n ot expr essly r egu la t ed by t h e Act .
Th u s,
R ice su ggest s t h a t t h e cou r t s will sh ow a defer en t ia l a ppr oa ch
t owa r d st a t e la w even wh en t h er e is a n expr ess pr eem pt ion
pr ovision in a feder a l la w.
Th u s, R ice is of lim it ed r eleva n ce t o t h e fu n da m en t a l issu e of
t h e E RISA E xpr ess P r eem pt ion , n a m ely t h e ext en t t o wh ich it
pr eem pt s st a t e la w.
Th e R ice pr esu m pt ion a ga in st im plicit
pr eem pt ion is in a pplica ble beca u se t h e E RISA E xpr ess
P r eem pt ion a s discu ssed, su pra, h a s expr ess pr eem pt ion la n gu a ge.
Mor eover , t h e R ice defer en t ia l a ppr oa ch t owa r d expr ess
pr eem pt ion la n gu a ge is a lso in a pplica ble beca u se t h e expr ess
E RISA la n gu a ge is fa r br oa der t h a n t h a t in t h e Wa r eh ou se Act ,
100. Id . a t 230-31 (em ph a sis a dded) (cit a t ion s om it t ed).
101. Ar izon a v. Un it ed St a t es, 567 U.S. ___, 132 S. Ct . 2492, 2501-2504,
2012 U.S. LE XIS 4872 a t **18-30 (J u n e 25, 2012).
102. R ice, 331 U.S. a t 236.
103. Id .
104. Id . a t 236-37.
172
T h e J oh n M arsh all L aw R eview
[47:145
wh ich r esu lt ed on ly in t h e pr eem pt ion of st a t e la ws in m a t t er s
expr essly r egu la t ed by E RISA. Th e E RISA E xpr ess P r eem pt ion
la n gu a ge is n ot on ly br oa der bu t specifies t h r ee kin ds of st a t u t es,
ea ch of wh ich is a t r a dit ion a l police power , t h a t a r e n ot pr eem pt ed,
a n d on e k in d of st a t u t e, cr im in a l la w, t h e m ost u n a m bigu ou s
police power , t h a t is pa r t ia lly pr eem pt ed. R ice does n ot su ppor t
t h e pr oposit ion t h a t t h e “r ela t e t o” E RISA con cept depen ds in a n y
m a n n er u pon t h e ch a r a ct er of t h e st a t e la w, su ch a s wh et h er it is a
t r a dit ion a l police power , n ot expr essly exclu ded. Ra t h er , t h e
ext en t of pr eem pt ion wou ld seem t o be decided by t h e ba sic
st a t u t or y in t er pr et a t ion pr in ciple of con sider in g t h e ext en t t o
wh ich t h e st a t e la w a ffect s E RISA’s dom in a t in g gen er a l pu r pose of
pr ot ect in g pla n pa r t icipa n t s a n d ben eficia r ies, i.e., it s ben efit
pr ot ect ion pr ovision s.
B . S u prem e Cou rt Decision s Distin gu ish in g Fed eral L aw s T h at
Preem pt a Field From T h ose T h at Do N ot
Sever a l E RISA pr eem pt ion discu ssion s by t h e Su pr em e
105
Cou r t cit e a Su pr em e Cou r t decision in 1963, F lor ida Lim e &
106
Avoca do Gr ower s, In c. v. P a u l,
t h a t a st a t e la w wa s n ot
pr eem pt ed. Th e decision illu st r a t ed t h e difficu lt y of decidin g
wh et h er F ield P r eem pt ion a pplies, wh ich is a qu est ion on ly for
st a t u t es t h a t la ck expr ess pr eem pt ion pr ovision s. A closely
107
divided Cou r t h eld in Florid a L im e & Avocad o Grow ers, t h a t a
Ca lifor n ia st a t e m a r ket in g la w per m it t in g on ly m a t u r e a voca dos,
wh ich t h e la w defin ed a s t h ose wit h a n oil con t en t of a t lea st 8%
by weigh t , t o be sold in st a t e wa s n ot pr eem pt ed by t h e feder a l
a gr icu lt u r a l la w, wh ich m ea su r ed m a t u r it y by t h e weigh t , size a n d
108
pla n t in g da t e of t h e a voca dos.
F lor ida a voca do gr ower s r a ised
t h e issu e beca u se t h eir a voca dos cou ld be m a t u r e even t h ou gh t h ey
109
la ck ed t h e oil con t en t r equ ir ed by Ca lifor n ia .
F ir st , t h e Cou r t plu r a lit y con clu ded t h a t pr odu cer s cou ld
110
com ply wit h bot h t h e feder a l a n d st a t e la w, i.e., t h er e wa s n o
con flict pr eem pt ion .
Secon d, it cit ed t h e st a t em en t a bou t
111
defer en ce t o “h ist or ic police power ” in R ice, su pra.
Th e Cou r t
wa s u n a ble t o fin d eviden ce of “a n u n a m bigu ou s con gr ession a l
105. S ee e.g., Alessi, 451 U.S. a t 522 (1981) (cit in g Florid a L im e & Avocad o
Grow ers, In c. in it s E RISA pr eem pt ion discu ssion ); see also Sh a w v. Delt a Air
Lin es, 463 U.S. 85, 96 n .14 (1983) (st a t in g t h a t t h e Cou r t h a s fr equ en t ly
r esolved pr eem pt ion dispu t es in a sim ila r ju r isdict ion a l post u r e); Ca lifor n ia
Div. of La bor St a n da r ds En for cem en t v. Dillin gh a m Con st ., N.A., In c.
(“Dillin gh a m Con st r .”), 519 U.S. 316, 336 (1997) (cit in g t o Florid a L im e &
Avocad o Grow ers in it s discu ssion of pr eem pt ion ).
106. F lor ida Lim e & Avoca do Gr ower s, In c. v. P a u l, 373 U.S. 132 (1963).
107. Id . a t 136-37.
108. Id . a t 136-37, a n d 158-59.
109. Id . a t 137-40.
110. Id . a t 142-146.
111. Id . a t 146.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
173
m a n da t e” for pr eem pt ion .
Th e feder a l st a t u t e h a d n o la n gu a ge
per t a in in g t o pr eem pt ion or u n ifor m st a n da r ds, bu t in st ea d
113
r efer r ed t o m in im u m st a n da r ds.
Th e legisla t ive h ist or y sh owed
a n expect a t ion t h a t st a t e r egu la t ion wou ld con t in u e a ft er t h e
114
en a ct m en t of t h e la w.
F in a lly, t h e su bst a n t ia l loca l va r ia t ion in
t h e feder a l pr odu ct ion r u les wa s con sist en t wit h t h e exist en ce of
115
pa r a llel st a t e r egu la t ion .
In con t r a st , t h e dissen t er s obser ved t h a t t h e feder a l
gover n m en t r eject ed t h e va lidit y of t h e Ca lifor n ia t est for
116
m a t u r it y,
a n d Ca lifor n ia h a d r eject ed 6% of t h e F lor ida
117
a voca dos.
Th ey a sser t ed t h a t t h e feder a l st a t u t or y in t en t ion is
t o r egu la t e t h e m a t u r it y a n d qu a lit y of pr odu ce “wh ich m a y be
118
m a r k et ed in . . . a n y a n d a ll in t er st a t e m a r k et s.”
Th u s, t h ey
con clu ded t h a t Ca lifor n ia u n der m in ed t h e pu r pose of t h e feder a l
st a t u t e a t issu e, by im posin g m a t u r it y a n d qu a lit y st a n da r d
119
differ en t fr om t h e feder a l gover n m en t .
Th er efor e, t h e dissen t
con clu ded t h a t t h e R ice r equ ir em en t s for a per va sive sch em e of
120
feder a l r egu la t ion wer e sa t isfied.
Ma n y E RISA pr eem pt ion discu ssion s by t h e Su pr em e
121
122
Cou r t begin wit h a r efer en ce t o J on es v. Ra t h P a ckin g Co., In c.,
a 1977 decision in wh ich t h e Su pr em e Cou r t h a d lit t le difficu lt y in
fin din g field pr eem pt ion of a st a t e food la belin g st a t u t e beca u se
on e of t h e R ice cr it er ia wa s sa t isfied. In pa r t icu la r , t h e feder a l
F a ir P a cka gin g a n d La belin g Act (“F P LA”) per m it t ed weigh t
discr epa n cies beca u se of m oist u r e despit e good dist r ibu t ion
123
pr a ct ices, wh er ea s t h e st a t e did n ot a llow su ch discr epa n ci es.
112
112. Id . a t 147.
113. Id . a t 147-48. In con t r a st , t he Toba cco In spect ion Act , 49 St a t . 731 735 pa ssed t h e da y befor e h a d su ch u n ifor m st a n da r ds la n gu a ge.
114. F lor ida Lim e & Avoca do Gr ower s, In c., 373 U.S. a t 149-50.
115. Id . a t 150-51.
116. Id . a t 163.
117. Id . a t 166.
118. Id . a t 175.
119. Id . a t 167-175.
120. Id . a t 176.
121. S ee e.g., M alon e, 435 U.S. a t 504 (begin n in g it s E RISA pr eem pt ion
discu ssion wit h J on es v. P a ckin g Co.); see also Alessi, 451 U.S. a t 522
(r efer r in g t o J on es in it s discu ssion on wh en E RISA pr eem pt ion is or is n ot
fa vor ed); F r a n ch ise Ta x Bd. of St a t e of Ca l. v. Con st r . La bor er s Va ca t ion Tr u st
for S. Ca lifor n ia , 463 U.S. 1, 20, n .20 (1983) (cit in g J on es in it s discu ssion of
a va ila bilit y of in ju n ct ive r elief t o en join t h e en for cem en t of pr eem pt ed st a t e
la ws); Met r o. Life In s. Co. v. Ma ssa ch u set t s, 471 U.S. 724, 738 (1985) (qu ot in g
J on es a t t h e begin n in g of it s pr eem pt ion discu ssion ); T ravelers, 514 U.S. at
655 (cit in g J on es in su ppor t of t h e pr oposit ion t h a t t h e h ist or ic police power s
of t h e st a t es a r e n ot pr eem pt ed u n less t h er e is a clea r a n d m a n ifest pu r pose);
De Bu on o v. NYSA-ILA Med. & Clin ica l Ser vs. F u n d, 520 U.S. 806, 814 (1997)
(qu ot in g J on es for t h e pr in ciple t h a t st a t es t r a dit ion a lly r egu la t e h ea lt h
m a t t er s).
122. J on es v. Ra t h P a ckin g Com p. In c., 430 U.S. 519, 519 (1977).
123. Id . a t 536-38.
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T h e J oh n M arsh all L aw R eview
[47:145
H owever , t h e J on es Cou r t h eld t h a t t h e legisla t ive h ist or y sh owed
t h a t “a m a jor pu r pose of t h e F P LA is t o fa cilit a t e va lu e
com pa r ison s a m on g sim ila r pr odu ct s,” wh ich wou ld be u n der m in ed
124
if differ en t weigh t syst em s wer e per m it t ed in differ en t st a t es.
Th u s, t h e Cou r t con clu ded t h er e wa s a n im plicit con flict wit h st a t e
la belin g r equ ir em en t s, wh ich im plied t h a t t h ose r equ ir em en t s
125
wer e pr eem pt ed by field pr eem pt ion .
IV.
TH E SUP RE ME COURT H OLDS TH AT TH E MAJ OR P RE E RISA F E DE RAL E MP LOYE E BE NE F ITS LAW, TH E
WE LF ARE AND P E NSION P LAN S DISCLOSURE ACT
(“WP P DA”), DOE S NOT P RE E MP T TH E SUBSTANTIVE
RE GULATION OF E MP LOYE E BE NE F IT P LANS
126
Th e La bor Ma n a gem en t Rela t ion s Act of 1947, oft en ca lled
t h e Ta ft -H a r t ley Act , in t r odu ced t h e n on -t a x r egu la t ion of
em ployee ben efit pla n s, bu t t h e r egu la t ion wa s lim it ed t o
collevt ively ba r ga in ed pla n s. Sect ion 302 of t h e Ta ft -H a r t ley Act
r equ ir es t h a t con t r ibu t ion s t o su ch pla n s be m a de “for t h e sole a n d
exclu sive ben efit of t h e em ployees . . . a n d t h eir fa m ilies a n d
127
depen den t s.”
F eder a l ben efit cla im s cou ld be br ou gh t by
pa r t icipa n t s a n d ben eficia r ies a ga in st collect ively ba r ga in ed
em ployee ben efit pla n s ba sed on t h e a llega t ion t h a t t h e pla n a s
128
st r u ct u r ed viola t ed Sect ion 302 of t h e Ta ft -H a r t ley Act . In 1982,
t h e Su pr em e Cou r t in UMWA H ea lt h & Ret ir em en t F u n ds v.
129
Robin son ,
m en t ion ed in a dict u m t h a t t h er e wa s a n issu e
wh et h er t h e feder a l cou r t s cou ld en for ce t h e fidu cia r y du t ies
130
im posed by t h is sect ion on su ch pla n t r u st ees.
Th e Cou r t t h u s
declin ed t o r esolve a split in t h e feder a l cir cu it s a bou t su ch ju dicia l
131
a u t h or it y.
In 1982, t h er e wa s lit t le n eed t o r esolve t h e split
124. Id . a t 540-43.
125. Id . a t 525-26 a n d 543.
126. La bor Ma n a gem en t Rela t ion s Act (“Ta ft -H a r t ley Act ”), P u b. L. No. 80101, 61 St a t . 136 (codified a s a m en ded in sca t t e r ed sect ion s of 29 U.S.C.).
127. 29 U.S.C. § 186(c) (1947).
128. S ee e.g., In sley v. J oyce, 330 F . Su pp. 1228 (N.D. Ill. 1971) (den yin g
m ot ion t o dism iss ben efit cla im ba sed on a llega t ion t h a t br ea k ser vice r u le
viola t ed exclu sive ben efit r u le); see also Reh m a r v. Sm it h , 555 F .2d 1362,
1369-72 (9t h Cir . 1976) (r em a n din g a decision r ever sin g den ia l of su r vivor
ben efit s t o per son ot h er t h a n spou se so t h a t den ia l m a y be r eviewed u n der
a r bit r a r y a n d ca pr iciou s st a n da r ds r a t h er t h a n r esolvin g a m bigu it ies in fa vor
of pa r t icipa n t ).
129. Un it ed Min e Wor ker s H ea lt h & Ret . F u n ds v. Robin son , 455 U.S. 562
(1982).
130. S ee Id . a t 573, n .12 (1982) (h oldin g t h a t t h e pla n m a y be a m en ded by a
collect ive ba r ga in in g a gr eem en t t o in cr ea se h ea lt h ben efit s on ly for cer t a in
widows of pa r t icipa n t s). Thu s, t h er e wa s n o n eed t o con sider t h e cou r t ’s
a u t h or it y t o r eview a ben efit decision by t h e pla n t r u st ees. Id .
131. S ee generally J oh n A. McCr ea r y, J r , T he Arbitrary an d Capricious
S tan d ard Un d er ER IS A: Its Origin s an d Application , 23 D UQUE SNE L. R E V.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
175
beca u se a s discu ssed in fra, su ch en for cem en t wa s pr ovided in 1974
wh en E RISA wa s en a ct ed.
Befor e E RISA, t h e feder a l gover n m en t r egu la t ed em ployee
ben efit pla n s pr im a r ily wit h t h e Welfa r e a n d P en sion P la n s
132
Disclosu r e Act of 1958, a s a m en ded [h er ein a ft er “WP P DA”].
Th e
in it ia l a ct con t a in ed r epor t in g a n d disclosu r e r equ ir em en t s, bu t n o
su bst a n t ive pla n ben efit r equ ir em en t s. Th e WP P DA did n ot
pr ovide pa r t icipa n t s or ben eficia r ies wit h t h e r igh t t o en for ce
ben efit cla im s.
Th e Act cover ed welfa r e pla n s t h a t wer e est a blish ed for t h e
pu r pose of pr ovidin g “m edica l, su r gica l, or h ospit a l ca r e or
ben efit s, or ben efit s in t h e even t of sickn ess, a cciden t , disa bilit y,
133
dea t h , or u n em ploym en t .”
Collect ively ba r ga in ed pla n s wer e
134
cover ed by t h e WP P DA.
P la n s cover in g n o m or e t h a n t wen t y135
five em ployees wer e n ot su bject t o t h e WP P DA.
Th e WP P DA r equ ir ed pla n a dm in ist r a t or s t o file wit h t h e
DOL a n d m a k e a va ila ble u pon r equ est t o pla n pa r t icipa n t s a n d
ben eficia r ies a descr ipt ion of t h e pla n a n d a n a n n u a l r epor t
136
con t a in in g fin a n cia l in for m a t ion .
Th e on ly per son s wh o cou ld
en for ce t h e r equ ir em en t s in t h e in it ia l a ct wer e pla n pa r t icipa n t s
137
a n d ben eficia r ies.
Th e in it ia l ver sion pr ovided t h a t t h e WP P DA
did n ot pr eem pt st a t e la ws per t a in in g t o t h e oper a t ion or
138
a dm in ist r a t ion of t h e cover ed pla n s, even t h ou gh t h e a ssocia t ed
Sen a t e Repor t descr ibed t h e m a n y wea kn esses of t h ose st a t e
139
la ws.
1033, 1035-41 (1985) (discu ssin g t h e em ployee ben efit s pr ovision s im posed by
t h e Ta ft -H a r t ley Act ).
132. Welfa r e a n d P en sion P la n s Disclosu r e Act , P u b. L. No. 85 -836, 72
St a t . 997 (1958) a s a m en ded by t h e Welfa r e a n d P en sion P la n s Disclosu r e Act
Am en dm en t s, P u b. L. No. 87-420, 76 St a t . 35 (1962) [h er ein a ft er “WP P DA”].
F or a m or e gen er a l a n d det a iled discu ssion of t h is st a t u t e see J a m es A.
Woot en , L egislative an d Political H istory of E R IS A Preem ption Part 3 , J .
P E NSION B E NE F ITS 15, 15-18 (2008) (discu ssin g t h e evolu t ion of E RISA
pr eem pt ion ). We a r e disr ega r din g t h e t a x-qu a lifica t ion r u les, wh ich , as
discu ssed su pra, im posed t a x pen a lt ies for n on -com plia n ce bu t did n ot r equ ir e
pla n s t o pa y a n y ben efit s or t o disclose pla n in for m a t ion t o pla n pa r t icipa n t s
a n d ben eficia r ies. Id .
133. P u b. L. No. 85-836, 72 St a t . 997, § 3(a )(1).
134. S ee e.g., id . at 5(b)(1) (t h e a dm in ist r a t or defin it ion wou ld n ot
ot h er wise r efer en ce t h ose design a t ed u n der a collect ive ba r ga in in g
a gr eem en t ).
135. Id . a t § 4(b)(4).
136. Id . a t §§ 5-7.
137. Id . a t § 9(c).
138. S ee Welfa r e a n d P en sion P la n s Disclosu r e Act , P u b. L. No. 85 -836,
§ 10(b), 72 St a t . 997, 1003 (1958). B u t see Welfa r e a n d P en sion P la n s
Disclosu r e Act , P u b. L. No. 85-836, § 10(a ), 72 St a t . 997, 1002-03 (1958)
(pr oh ibit in g a st a t e, ot h er t h a n em ployer ’s h om e st a t e, fr om r equ ir in g a st a t e
filin g of it em s on feder a l r equ ir ed filin gs if copies of t h e feder a l filin g wer e
filed wit h su ch st a t e).
139. S ee S. R E P . 85-1440, a t 9-16 (2d. Sess. 1958) (descr ibin g t h e
176
T h e J oh n M arsh all L aw R eview
[47:145
140
Th e WP P DA wa s ext en sively a m en ded in 1962.
Th e
Secr et a r y of La bor wa s given t h e r igh t t o in vest iga t e a n d en join
141
142
viola t ion s of t h e WP P DA,
pr escr ibe disclosu r e for m s,
and
en for ce n ewly en a ct ed cr im in a l la ws ba n n in g kickba cks or br iber y
143
of pla n officia ls.
Th e bon din g r equ ir em en t s a dded a n ew Sect ion
144
13, wh ich su per seded a n y over la ppin g st a t e r equ ir em en t s.
H owever , t h e Am en dm en t pr ovided t h a t n ot h in g in t h e
Am en dm en t “a u t h or ize[d] t h e Secr et a r y [of La bor ] t o r egu la t e, or
in t er fer e in t h e m a n a gem en t of, a n y welfa r e or pen sion ben efit
145
pla n .” Th e exem pt ion for sm a ll pla n s wa s ch a n ged t o a pply on ly
t o on e wit h a t m ost t wen t y-five pa r t icipa n t s r a t h er t h a n on e wh ose
146
spon sor h a d less t h a n t wen t y-five em ployees.
In 1978, t h e Su pr em e Cou r t con fir m ed in Ma lon e v. Wh it e
147
Mot or Cor p., t h a t t h e WP P DA, a s in effect im m edia t ely befor e
E RISA beca m e effect ive, did n ot pr eem pt st a t e su bst a n t ive
148
r egu la t ion of em ployee ben efit pla n s.
Th e Cou r t t h er ein decided
t h a t t h e WP P DA did n ot pr eem pt a Min n esot a st a t u t e set t in g
for t h m in im u m fu n din g a n d vest in g r u les for pen sion pla n s.
Wh it e Mot or Cor p. ch a llen ged t h e la w beca u se t h e com pa n y h a d
t er m in a t ed a collect ively ba r ga in ed pla n , wh en t h e pla n la ck ed
su fficien t a sset s t o pa y a ll a ccr u ed ben efit s, a n d pr ovided t h a t
149
ben efit s cou ld on ly be pa id fr om t h e pla n ’s a sset s.
Th e Cou r t
fir st n ot ed in a foot n ot e t h a t E RISA pr eem pt ed t h e Min n esot a la w,
bu t su ch pr eem pt ion wa s m oot beca u se t h e pla n t er m in a t ion a t
150
issu e occu r r ed befor e E RISA’s effect ive da t e.
Aft er expr essin g
r elu ct a n ce t o fin d a st a t e la w wa s pr eem pt ed wit h ou t clea r
con gr ession a l in t en t t o do so, t h e Cou r t h eld t h a t t h e Na t ion a l
La bor Rela t ion Act of 1947 (com m on ly r efer r ed t o a s t h e Ta ft 151
H a r t ley Act ),
oft en does n ot pr eem pt st a t e r egu la t ion of
pen sion s, even t h ou gh pen sion s m u st be a su bject of ba r ga in in g
152
u n der su ch Ta ft -H a r t ley Act .
Th e Cou r t ba sed it s sim ila r
in a dequ a cies of t h e exist in g cr im in a l la ws, t r u st la w, a n d in su r a n ce
r egu la t ion ).
140. S ee gen erally Welfa r e a n d P en sion P la n s Disclosu r e Act Am en dm en t s
of 1962, P u b. L. No. 87-420, 76 St a t . 35 (1962) (set t in g for t h a m en dm en t s of
t h e WP P DA).
141. P u b. L. No. 87-420, § 15, 76 St a t . 35, 37-38 (1962).
142. P u b. L. No. 87-420, § 7, 76 St a t . 35, 36 (1962).
143. P u b. L. No. 87-420, § 17, 76 St a t . 35, 41-43 (1962).
144. P u b. L. No. 87-420, § 16, 76 St a t . 35, 39-40 (1962).
145. P u b. L. No. 87-420, § 15, 76 St a t . 35, 38 (1962).
146. P u b. L. No. 87-420, § 6, 76 St a t . 35, 36 (1962).
147. M alon e, 435 U.S. 497 (1978).
148. Id . a t 514.
149. Id . a t 499-502.
150. Id . a t 499, n .1.
151. La bor Ma n a gem en t Rela t ion s Act (“Ta ft -H a r t ley Act ”), P u b. L. No. 80101, 61 St a t . 136 (1947) (codified a s a m en ded in sca t t er ed sect ion s of 29
U.S.C.).
152. M alon e, 435 U.S. a t 504-505.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
177
con clu sion a bou t t h e WP P DA on bot h t h e st a t u t or y la n gu a ge a n d
it s legisla t ive h ist or y. In pa r t icu la r , t h er e wa s n o ba sis t o im pl y
con gr ession a l pr eem pt ion in t en t fr om t h e followin g r eleva n t
st a t u t or y la n gu a ge wit h in t h e WP P DA § 10(b) t it led “E ffect of
Ot h er La ws:”
Th e pr ovision s of t h is Act , except su bsect ion (a ) of t h is sect ion a n d
sect ion 13, a n d a n y a ct ion ta ken t h er eu n der , sh a ll n ot be h eld t o
exem pt or r elieve a n y per son fr om a n y lia bilit y, du t y, pen a lt y, or
pu n ish m en t pr ovided by an y presen t or fu tu re law of th e Un ited
S tates or of an y S tate affectin g th e operation or ad m in istration of
em ployee w elfare or pen sion ben efit plan s, or in an y m an n er to
au th orize th e operation or ad m in istration of an y su ch plan con trary
153
to an y su ch law .
Also, § 10(a ), a ft er sh ieldin g a n em ployer fr om du plica t in g
st a t e a n d feder a l filin g r equ ir em en t s, m a k es clea r t h a t ot h er st a t e
la ws r em a in ed u n a ffect ed:
Not h in g con t a in ed in t h is su bsect ion sh a ll be con st r u ed t o pr even t
a n y St a t e fr om obt a in in g su ch a ddit ion a l in for m a t ion r ela t in g t o
a n y su ch pla n a s it m a y desir e, or fr om ot h er wise r egu la t in g su ch
154
pla n .
Th e cou r t fou n d fu r t h er su ppor t for t h e la ck of pr eem pt ion in
155
t h e legisla t ive h ist or y of t h e WP P DA,
su ch a s t h e followin g
la n gu a ge fr om t h e r epor t of t h e Sen a t e Com m it t ee t h a t h elped
develop t h e in it ia l WP P DA la n gu a ge: “[Th e] legisla t ion pr oposed is
n ot a r egu la t or y st a t u t e. It is a disclosu r e st a t u t e a n d by design
156
en dea vor s t o lea ve r egu la t or y r espon sibilit y t o t h e St a t es.”
Th e Cou r t a lso dist in gu ish ed t h e WP P DA defer en t ia l
a ppr oa ch t o st a t e r egu la t ion s fr om t h e opposit e a ppr oa ch of E RISA
by cit in g a WP P DA dr a ft sm a n ’s st a t em en t :
Th is pr esen t bill [for WP P DA] pr ovides for fa r m or e t h a n
a n t icor r u pt ion legisla t ion dir ect ed a ga in st t h e m a ch in a t ion s of
dish on est m en wh o bet r a y t h eir t r u st . Ra t h er , it in a u gu r a t es a n ew
socia l policy of a ccou n t a bility. . . .Th is policy cou ld ver y well lea d t o
t h e est a blish m en t of m a n da t or y st a n da r ds by wh ich t h ese pla n s
157
m u st be gover n ed.
Th e Cou r t t h en dist in gu ish ed t h e WP P DA fr om E RISA a s
follows:
It is a lso clea r t h a t Con gr ess con t em pla t ed t h a t t h e pr im a r y
r espon sibilit y for developin g su ch ‘m a n da t or y st a n da r ds’ wou l d lie
153. S ee id . a t 505 (em ph a sis a dded).
154. S ee id .
155. Id . a t 506-512.
156. Id . a t 507 (cit in g S. R E P . N O . 1440, 85t h Con g., (2d Sess. a t 18 (1958)).
157. Id . a t 512 (cit in g t h e st a t em en t by Sen a t or H owa r d Sm it h , t h e
r a n kin g Repu blica n on t h e Sen a t e Com m it t ee t h a t pr epa r ed t h e r eleva n t bill
a t 104 C ONG . R E C . 7517 (Apr il 28, 1958)).
178
T h e J oh n M arsh all L aw R eview
[47:145
wit h t h e St a t es. Alt h ou gh Con gr ess ca m e t o a qu it e differ en t
con clu sion in 1974 wh en E RISA wa s a dopt ed, t h e 1958 Disclosu r e
158
Act clea r ly a n t icipa t ed a br oa d r egu la t or y r ole for t h e St a t es .
Th u s, t h e cou r t h eld t h a t t h e Min n esot a st a t u t e wa s n ot
159
pr eem pt ed by t h e WP P DA.
Th e dissen t m a de t wo poin t s. F ir st , t h e dissen t wa s dist u r bed
160
t h a t u n lik e E RISA t h e Min n esot a la w wa s r et r oa ct ively effect ive.
In pa r t icu la r , a ft er t h e pla n spon sor t er m in a t ed t h e pla n , t h e st a t e
161
la w in cr ea sed t h e pla n spon sor ’s obliga t ion .
Secon d, t h e dissen t
a r gu ed t h a t t h e n a t ion a l la bor la w pr efer en ce for collect ive
ba r ga in in g r esu lt ed in t h e pr eem pt ion of t h e st a t e st a t u t e for t h e
collect ively ba r ga in in g pla n a t issu e n ot wit h st a n din g t h e WP P DA
defer en ce t o st a t e la w on t h e r egu la t ion of em ployee ben efit
162
pla n s.
V.
LE GISLATIVE H ISTORY OF E RISA P RE E MP TION
P ROVISIONS, RIGH TS OF P ARTICIP AN TS TO E N F ORCE
BE NE F IT RIGH TS, SP OU SAL P ROTE CTION S AND
ALIE NATION P ROH IBITION UNTIL TH E AP RIL 1974
SUBMISSION OF H OUSE AND SE NATE BILLS TO
CONF E RE NCE COMMITTE E
Wh ite M otor lea ves n o qu est ion t h a t E RISA pr eem pt s st a t e
la ws t h a t a t t em pt t o r egu la t e t h e fu n din g of E RISA pla n s. It a lso
con fir m ed t h a t E RISA t r a n sfor m ed t h e em ployee ben efit
r egu la t or y r egim e fr om on e gover n ed pr in cipa lly by t h e st a t es t o
on e gover n ed pr in cipa lly by t h e feder a l gover n m en t . H owever , t h e
Cou r t did n ot h a ve t o a ddr ess t h er ein t h e sign ifica n ce of t h e
st a t u t or y ph r a se “r ela t e t o a n y em ployee ben efit pla n ” beca u se
t h er e wa s n o qu est ion t h a t E RISA pr eem pt ed a st a t e la w
gover n in g pen sion fu n din g a n d vest in g st a n da r ds. Th u s, t h e
decision pr ovides n o obviou s im plica t ion s for t h e E RISA
pr eem pt ion of a n y of t h e five st a t e la ws t h a t a r e t h e su bject of t h is
a r t icle.
Th e E RISA legisla t ive h ist or y sh eds m u ch ligh t on t h e
in t en ded a n d a ct u a l sign ifica n ce of t h e E RISA E xpr ess
163
P r eem pt ion .
Th is a r t icle’s r eview of t h e legisla t ive h ist or y of t h e
in it ia l ver sion of E RISA is ba sed in la r ge pa r t on t h e a n a lysis a n d
158. Id .
159. Id . a t 514.
160. Id . a t 517-18 n .* (P owell, J ., dissen t in g).
161. Id .
162. Id . a t 515-518.
163. S ee J a m es A. Woot en , su pra n ot e 132, a t 15-18 (pr ovidin g a gen er a l
a n d det a iled discu ssion of t h e h ist or y of t h e E RISA E xpr ess P r eem pt ion ).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
179
t h e sou r ces set for t h in J a m es A. Woot en ’s a ver y com pr eh en sive
a n d t h ou gh t fu l T H E E MP LOYE E R E TIRE ME NT I NCOME S E CURITY ACT
OF 1974 A P OLITICAL H ISTORY [h er ein a ft er “E RISA P OLITICAL
164
H ISTORY”]. Con sider a ble r elia n ce wa s a lso pla ced on t h e sou r ces,
a n d in dices set for t h in t h e E RISA legisla t ive h ist or y pr epa r ed by
t h e St a ff of Sen a t e Com m it t ee on La bor a n d P u blic Welfa r e
165
[h er ein a ft er “E RISA LE G. H ISTORY”].
It sh ou ld be n ot ed t h a t
t h is a ppr oa ch h a s been cr it icized a s u n lik ely t o gen er a t e a n y
u sefu l pr eem pt ion con clu sion s beca u se t h e h ist or y is so
166
a m bigu ou s.
P r esiden t F or d’s E RISA sign in g st a t em en t , wh ich focu sed
en t ir ely on t h e r et ir em en t pla n a spect s of E RISA, decla r ed t h a t
E RISA h a d “it s gen esis in a m essa ge t o t h e Con gr ess by P r esiden t
167
Nixon on Decem ber 8, 1971.”
Th e cit ed m essa ge of P r esiden t
Nixon wa s en t it led, “Specia l Mess a ge t o t h e Con gr ess on a P en sion
168
Refor m P r ogr a m ,” a n d a lso focu sed en t ir ely on r et ir em en t pla n s.
Th e P r esiden t t h er ein r efer r ed t o a pr oposa l h e offer ed in Ma r ch of
1970, wh ich lik e E RISA, wa s n ot lim it ed t o pen sion pla n s. It t h u s
seem s u sefu l t o begin t h e con sider a t ion of t h e developm en t of
E RISA wit h P r esiden t Nixon ’s pr oposed 1970 legisla t ion , wh ich
169
Sen a t or J a cob J a vit s in t r odu ced a s S. 3589 on Ma r ch 13, 1970.
E ver y pr oposed bill, a s discu ssed in fra, sh a r es t h e E RISA
dom in a t in g gen er a l pu r pose, a n d p r ovides a ddit ion a l ben efit
pr ot ect ion s t o pla n pa r t icipa n t s a n d ben eficia r ies. Mor eover , t h ose
164. S ee J AME S A. W OOTE N , T H E E MP LOYE E R E TIRE ME NT I NCOME
S E CURITY ACT O F 1974: A P OLITICAL H ISTORY (U.C. P r ess, 2004) [h er ein a ft er
“E RISA P OLITICAL H ISTORY”] (pr esen t in g a gen er a l a n d det a iled discu ssion of
t h e h ist or y of E RISA, wh er ea s t h is a r t icle is pr im a r ily focu sed on pr eem pt ion
issu es). S ee also T H E E MP LOYE E R E TIRE ME NT I NCOME S E CU RITY ACT OF 1974:
T H E F IRST D E CADE , S. P a r t . 98-221, 1-45 (Au g. 1984) (descr ibin g t h e
developm en t of E RISA in br oa d st r okes wit h a lm ost n o m en t ion of t h e
pr eem pt ion pr ovision s).
TH
165. St a ff Of S. Com m . On La bor a n d P u blic Welfa r e, 94 CONG. LE G.
H ISTORY OF TH E E MP LOYE E RE TIRE ME NT INCOME SE CURITY ACT
OF 1974: P UBLIC LAW 93-406, a t 3-65 (1976) [h er ein a ft er “E RISA LE G.
H ISTORY”].
166. S ee e.g., Ca t h er in e L. F isk, T h e L ast Article Abou t th e L an gu age of
E R IS A Preem ption ? A Case S tu d y of th e Failure of T extu alism , 33 H ARV. J .
L E G . 35, 52-57 (1996) (discu ssin g t h e a m bigu it y of t h e st a t u t e a n d t h e officia l
legisla t ive h ist or y).
167. S tatem en t by th e Presid en t, O F F ICE OF TH E W H ITE H OUSE ,
h t t p://www.for dlibr a r ym u seu m .gov/libr a r y/docu m en t /0248/wh pr 19740902 008.pdf (la st visit ed Ma r ch 24, 2014).
168. S pecial Message to th e Con gress on a Pen sion R eform Program , T H E
AME RICAN
P RE SIDE NCY P ROJ E CT
(Dec.
8,
1971),
available
at
h t t p://www.pr esiden cy.u csb.edu /ws/?pid=3248 (la st visit ed Ma r ch 24, 2014).
169. 116 C ON G . R E C . 7278 (Ma r ch 13, 1970). B u t see, t h e E RISA LE G.
H ISTORY, su pra n ot e 165 (begin n in g wit h t h e in t r odu ct ion of pen sion
legisla t ion in bot h h ou ses in J a n u a r y of 1973; E RISA P OLITICAL H ISTORY,
su pra n ot e 164 (begin n in g wit h t h e or igin s of t h e Am er ican pr iva t e pen sion
th
pla n syst em in t h e 19 cen t u r y).
180
T h e J oh n M arsh all L aw R eview
[47:145
bills, lik e E RISA t h a t is n ot r est r ict ed t o t a x pr ovision s, pr eem pt
st a t e la ws wh ich wou ld a ffect a n y of t h ose pr ot ect ion s, su bject t o
fou r explicit exclu sion s.
Th is a r t icle will focu s on fou r
ch a r a ct er ist ics of t h ese bills: (1) ben efit r igh t s pr ovided, (2) t h e
gen er a l pr eem pt ion r u le, (3) t h e exclu sion s fr om t h e gen er a l
pr eem pt ion r u le; a n d (4) ben efit t er m s m a n da t es im posed wit h
r espect t o spou sa l ben efit s a n d t h e a lien a t ion of ben efit s.
P r esiden t N ixon ’s legisla t ion pr esen t ed by Sen a t or J a vit s in
Ma r ch of 1970 im posed a ddit ion a l fidu cia r y, r epor t in g a n d
disclosu r e r espon sibilit ies on t h e welfa r e a n d pen sion pla n s
170
su bject t o t h e WP P DA.
It a lso h a d fou r per t in en t
ch a r a ct er ist ics, a s discu ssed in fra.
F ir st , pa r t icipa n t s a n d
ben eficia r ies a r e given t h e r igh t t o br in g feder a l civil a ct ion s t o
r ecover ben efit s du e t h em u n der t h e t er m s of t h e pla n s. Secon d,
t h e la w pr ovided t h a t t h e st a t e la ws r ela t ed t o t h e r espon sibilit ies
im posed by t h e pr oposed legisla t ion wou ld be pr eem pt ed. Th ir d,
t h er e wer e fou r explicit exclu sion s fr om pr eem pt ion . Ba n kin g la w,
in su r a n ce la w, secu r it ies la w, a n d a n y st a t e la w, wh ich a ffect s t h e
r igh t s of pa r t icipa n t s or ben eficia r ies t o r ecover pla n ben efit s,
wer e a ll exclu ded. F ou r t h , t h er e wer e n o ben efit t er m s m a n da t es.
Th u s, t h er e wer e n on e per t a in in g t o spou sa l ben efit s or t h e
a lien a t ion of t h eir ben efit s.
Th e con fer en ce com m it t ee a ppoin t ed t o pr epa r e legisla t ion
t h a t bot h h ou ses cou ld a ppr ove (t h e “Con fer en ce Com m it t ee”) wa s
pr esen t ed, a s discu ssed in fra, in Apr il 1974 wit h bills wh ich
sh a r ed sligh t ly differ en t ver sion s of t h e fou r ch a r a ct er ist ics in
a ddit ion t o im posin g su bst a n t ia l r epor t in g a n d disclosu r e
m a n da t es, ben efit t er m s m a n da t es, fu n din g m a n da t es, a n d
fidu cia r y m a n da t es on t h e em ployee ben efit pla n s cover ed by t h e
r espect ive bills. F ir st , bot h pr ovided pa r t icipa n t s a n d ben eficia r ies
wit h t h e r igh t t o br in g feder a l civil a ct ion s t o r ecover ben efit s du e
u n der t h e t er m s of t h e pla n s cover ed in t h e r espect ive bills.
Secon d, bot h pr ovided t h a t st a t e la ws t h a t r ela t ed t o su bject
m a t t er s r egu la t ed by t h e pr oposed legisla t ion wou ld be pr eem pt ed.
Th ir d, t h er e wer e fou r explicit exclu sion s fr om pr eem pt ion .
Ba n kin g la w, in su r a n ce la w, secu r it ies la w, a n d a n y st a t e la w
wh ich a ffect s t h e r igh t s of pa r t icipa n t s or ben eficia r ies t o r ecover
pla n ben efit s a r e a ll exclu ded. F ou r t h , bot h r equ ir ed som e pen sion
pla n s, bu t n ot welfa r e pla n s, t o pr ovide defa u lt spou sa l ben efit s
a n d pr oh ibit t h e a lien a t ion of t h eir ben efit s.
Th ese ch a n ges on t h eir fa ce cla r ify t h e in t en ded scope of t h e
pr eem pt ion pr ovision s for t h e Con gr ession a l bills t h a t im pose
m u ch m or e ext en sive m a n da t es t h a n t h e P r esiden t ’s pr oposed bill.
Th e pr oh ibit ed r ela t ion wou ld a ppea r t o be a n effect on a m a n da t e.
Th e bills do n ot discu ss h ow m u ch a n effect r esu lt s in pr eem pt ion .
170. S ee 116 C ON G . R E C . 7278-80 (Ma r ch 13, 1970) (Sen a t or J a vit s
descr ibin g t h e sign ifica n ce of t h e legisla t ion t h a t h e is in t r odu cin g).
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181
Th er e is n o in dica t ion t h a t pr eem pt ion is det er m in ed by wh et h er
t h e effect is in t en ded or dir ect . In gen er a l, t h ese bills a ppea r t o
pr eem pt a n y st a t e la w wh ich im poses a r epor t in g a n d disclosu r e
m a n da t e, ben efit t er m s m a n da t e, fu n din g m a n da t e, or a fidu cia r y
m a n da t e on a pla n su bject t o t h e bills. It sh ou ld be ir r eleva n t
wh et h er t h e effect is dir ect or in dir ect . H owever , t h e bills m u st
per m it t h ose r epor t in g m a n da t es n eeded t o en for ce st a t e la ws t h a t
a r e n ot ot h er wise pr eem pt ed, a lt h ou gh n ot explicit ly exclu ded
fr om t h e bill’s pr eem pt ion pr ovision s, su ch a s st a t e la ws t a xin g
pen sion pa ym en t s or st a t e la ws r egu la t in g t h e pr a ct ice of m edicin e
r equ ir in g a pla n t o file r epor t s wit h r espect t o t h e ph ysicia n s t h ey
em ploy t o t r ea t pla n pa r t icipa n t s. Qu est ion s r em a in wh et h er
t h er e is pr eem pt ion of a st a t e la w t h a t seeks t o im pose (1) a
m a n da t e t h a t differ s in ch a r a ct er fr om a bill m a n da t e, su ch a s
r equ ir in g a cost of livin g fea t u r e for pen sion pla n s, or (2) a
m a n da t e on a pla n t h a t is n ot su bject t o su ch a m a n da t e u n d er t h e
bill, su ch a s a ben efit t er m s m a n da t e on a n u n in su r ed h ea lt h ca r e
r eim bu r sem en t pla n .
Th e bills pr ovided, a s discu ssed in fra, t h a t st a t e la w m a y
a ffect t h e r igh t of pa r t icipa n t s a n d ben eficia r ies t o r ecover
ben efit s, su ch a s t o r eceive pla n ben efit pa ym en t s. A fortiori, st a t e
la w m a y a ffect su ch ot h er r igh t s a s t h e r igh t t o ch oose t h e t im e or
m a n n er of ben efit pa ym en t , t o design a t e a ben eficia r y or t o ch oose
pla n in vest m en t s, wh ich t h e bills do n ot a ddr ess. Th e bills
su bm it t ed t o t h e Con fer en ce Com m it t ee cou ld a lso r ea son a bly
h a ve been con clu ded n ot t o pr eem pt st a t e la ws t h a t r equ ir ed: (1)
pen sion pla n s t o wit h h old t a xes fr om pen sion pa ym en t s, (2)
em ployee ben efit pla n s t o ga r n ish ben efit pa ym en t s t o pa y a
pa r t icipa n t ’s debt s, (3) em ployee ben efit pla n s t o pa y a
pa r t icipa n t ’s ben efit s pu r su a n t t o t h e t er m s of dom est ic r ela t ion s
or der ; or (4) em ployee ben efit pla n s t o m a ke pla n pa ym en t s in
a ccor d wit h a pa r t icipa n t ’s com m u n it y pr oper t y in t er est in t h e
ben efit s. On t h e ot h er h a n d, t h er e wou ld be a qu est ion wh et h er
t h e fu n din g pr ovision s ca u sed t h e pr eem pt ion of st a t e la ws t h a t
cr im in a lized t h e fa ilu r e t o m a k e a r equ ir ed con t r ibu t ion t o a pla n
cover ed by t h e bills.
A. T h e M arch 1970 In itial Proposal by Presid en t N ixon
S u pplem en ts th e W PPDA, Au th orizes Participan ts to E n force
R igh t to B en efit Paym en ts, In trod u ces Fid u ciary
R espon sibilities an d Preem pts L aw s R elated to R egu lation of
Fid u ciary R espon sibilities an d R eportin g, Disclosu re
R equ irem en ts, B u t Preem ption E xplicitly E xclu d es B en efit
Claim s an d B an k in g, In su ran ce, an d S ecu rities L aw s
On Ma r ch 13, 1970 Sen a t or J a cob J a vit s in t r odu ced P r esiden t
171
Nixon ’s pr oposed 1970 legisla t ion , a s S. 3589.
Th e bill, wh ich
171. Id . a t 7278.
182
T h e J oh n M arsh all L aw R eview
[47:145
wou ld h a ve a m en ded t h e WP P DA, wa s ca lled t h e E m ployee
172
Ben efit s P r ot ect ion Act .
Th e bill im posed fidu cia r y
173
r espon sibilit ies on t h ose h a n dlin g pla n a sset s.
P a r t icipa n t s a n d
ben eficia r ies wer e given r igh t t o br in g a feder a l civil a ct ion t o
r ecover ben efit s u n der t h e t er m s of t h e pla n or cla r ify t h e r igh t t o
174
fu t u r e ben efit s.
H owever , t h e r igh t a pplied on ly t o pla n s su bject
t o t h e WP P DA, a n d t h u s exclu ded sm a ll pla n s a n d u n fu n ded pla n s
for execu t ives, a s discu ssed su pra. Th e bill con t a in ed t h e followin g
pr eem pt ion la n gu a ge:
Sec. 18. It is h er eby decla r ed t o be t h e expr ess in t en t of Con gr ess
t h a t except for a ct ion s a u t h or ized by sect ion 9(e) (1) (B) of t h is Act
[ben efit cla im s], t h e pr ovision s of t h is Act sh a ll su per sede a n y a n d
a ll la ws of t h e St a t es a n d of polit ica l sub-division s t h er eof in sofa r as
th ey m ay n ow or h ereafter relate to th e fid u ciary, r eportin g an d
d isclosu re respon sibilities of person s actin g on beh alf of em ployee
ben efit plan s: P r ovided, Th a t n ot h in g h er ein sh a ll be con st r u ed t o
exem pt or r elieve a n y per son fr om an y law of an y S tate w h ich
regu lates in su ran ce, ban k in g, or secu rities or t o pr oh ibit a St a t e fr om
r equ ir in g t h a t t h er e be filed wit h a St a t e a gen cy copies of r epor t s
r equ ir ed by t h is Act t o be filed wit h t h e Secr et a r y. Not h in g h er ein
sh a ll be con st r u ed t o a lt er , a m en d, m odify, in va lida t e, im pa ir , or
su per sede a n y la w of t h e Un it ed St a t es (ot h er t h a n t h e Welfa r e a n d
P en sion P la n s Disclosu r e Act of 1958 a s a m en ded (92 St a t . 994)) or
175
a n y r u le or r egu la t ion issu ed u n der a n y su ch la w.
Th u s, t h e in su r a n ce, ba n k in g, or secu r it ies la w exclu sion wa s
pr esen t in t h e P r esiden t ’s in it ia l bill. Th e bill u sed t h e ph r a se
“r ela t e t o,” bu t on ly t h ose la ws t h a t r ela t ed t o specified
176
r espon sibilit ies r egu la t ed by t h e legisla t ion wer e pr eem pt ed.
Th e bill h a d n o pr ovision s per t a in in g t o spou sa l ben efit s or a n
a lien a t ion pr oh ibit ion .
We will n ot discu ss a n y su bsequ en t legisla t ion u n t il t h e Ma y
1972 pr ecu r sor t o E RISA, wh ich , a s discu ssed in fra, wa s t h e fir st
em ployee ben efit s r efor m bill t o be a ppr oved by a con gr ession a l
177
com m it t ee a ft er t h e in t r odu ct ion of t h e P r esiden t ’s pr oposa l.
172. S. 3589, 91st Con g. (2d. Sess. 1970), reprin ted in 116 C ONG . R E C .
7280-84 (Ma r ch 13, 1970).
173. S ee id . § 3, a t 6 (a ddin g defin it ion (w) of fidu cia r y t o WP P DA); see also
id . § 11, a t 26 (a ddin g sect ion 14 t o WP P DA defin in g fidu cia r y r espon sibilit y).
174. S ee id . § 9, a t 23 (a ddin g sect ion 9(e) t o WP P DA).
175. S ee id . § 14 a t 37-38 (em ph a sis a dded) (a ddin g n ew sect ion 18 t o
WP P DA).
176. Id .
177. S ee E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 155-80 (discu ssin g
wh a t occu r r ed du r in g t h e t im e bet ween t h e in t r odu ct ion of t h e P r esiden t ’s bill
a n d t h e in t r odu ct ion of t h e Sen a t or s’ bill in Ma y 1972 ).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
183
B . T h e M ay 1972 S en ate Precu rsor to E R IS A S u pplem en ts th e
WPPDA, Au th orizes Participan ts to E n force th e R igh t B en efit
Paym en ts, In trod u ces Fid u ciary R espon sibilities, an d Preem pts
L aw s R elated to R egu lated S u bject M atters, Wh ich Preem ption
E xplicitly E xclu d es B en efit Claim s an d B an k in g, In su ran ce,
an d S ecu rities L aw s
On Ma y 11, 1972, Sen a t or s H a r r ison Willia m s a n d J a cob
178
J a vit s in t r odu ced S. 3598 wit h eleven cospon sor s.
Th e bill,
wh ich wou ld h a ve su pplem en t ed t h e WP P DA, wa s ca lled t h e
179
Ret ir em en t In com e Secu r it y for E m ployees Act . Th e bill, like t h e
P r esiden t ’s bill pr esen t ed in Ma r ch of 1970, im posed fidu cia r y
180
r espon sibilit ies on t h ose h a n dlin g pla n a sset s.
Th e DOL wa s t h e
feder a l a gen cy t h a t wa s a u t h or ized t o br in g a ct ion s t o com pel
181
com plia n ce wit h t h e st a t u t or y t er m s.
As in t h e P r esiden t ’s bill
pr esen t ed in Ma r ch of 1970, pa r t icipa n t s a n d ben eficia r ies wer e
given t h e r igh t t o r ecover ben efit s u n der t h e t er m s of t h e pla n or
182
cla r ify t h e r igh t t o fu t u r e ben efit s. Aga in , t h e bill a pplied on ly t o
pla n s su bject t o t h e WP P DA. Th u s, n on e of t h e bill’s su bst a n t ive
or en for cem en t pr ovision s a pplied t o pen sion pla n s t h a t cover ed n o
183
m or e t h a n t wen t y-five pa r t icipa n t s,
or wer e u n fu n ded pla n s
est a blish ed pr im a r ily for a select gr ou p of m a n a gem en t
184
em ployees.
On Sept em ber 15, 1972, wh en t h e bill wa s r epor t ed t o t h e
Sen a t e by t h e Sen a t e La bor a n d P u blic Welfa r e Com m it t ee, a s
a m en ded, wa s t h e fir st pen sion r efor m legisla t ion t o be a ppr oved
185
by a con gr ession a l com m it t ee.
Th e or igin a l bill h a d a dded a n ew
186
sect ion 15 t o t h e WP P DA, en t it led “F idu cia r y St a n da r ds.”
Th e
r epor t ed bill a dded a pr ovision t o t h ose st a n da r ds r equ ir in g pla n s
t o “pr ovide a dequ a t e a n d fa ir pr ocedu r es t o pa r t icipa n t s a n d
ben eficia r ies wh en t h eir ben efit cla im s or a pplica t ion s a r e
187
den ied.” Th e bill con t in u ed t o exclu de sm a ll pla n s a n d u n fu n ded
pla n s for execu t ives fr om it s en for cem en t pr ovision s.
178. S. 3598, 92d Con g. (2d. Sess. 1972).
179. Id . a t P r efa ce.
180. S ee id . § 502 a t 52 (a ddin g defin it ion (25) of fidu cia r y t o WP P DA); see
also id . § 509, a t 70 (a ddin g sect ion 15 t o WP P DA defin in g fidu cia r y
r espon sibilit y).
181. S ee id . §§ 601-02 a t 81-82 (givin g t h e DOL ext en sive a u t h or it y t o
com pel com plia n ce wit h t h e la w’s r equ ir em en t s). P a r t icipa nt s a r e a lso given
a u t h or it y t o com pel com plia n ce. Id . § 603 a t 82-83.
182. Id . § 604, a t 83-84.
183. Id . § 104(b)(4), a t 20.
184. Id . § 104(b)(6), a t 20.
185. J a m es A. Woot en , L egislative an d Political H istory of E R IS A
Preem ption Part 2, 14 J . P E NSION B E NE F ITS 5, 8 (2007).
186. S. 3598, 92d Con g. § 509, a t 70-80 (2d. Sess. 1972).
187. S ee S. R E P . N O . 92-1150, a t 43 (2d. Sess. 1972) (descr ibin g t h e
in t r odu ct ion of t h e cla im s r eview pr ocedu r es in S. 3598, 92n d Con g. § 510 a t
169, 181 (2d. Sess. 1972)).
184
T h e J oh n M arsh all L aw R eview
[47:145
Th e bill a s or igin a lly in t r odu ced a n d a s r epor t ed t o t h e Sen a t e
con t a in ed t h e followin g pr eem pt ion la n gu a ge:
Sec. 609 (a .) It is h er eby decla r ed t o be t h e expr ess in t en t of
Con gr ess t h a t , except for action s au th orized by section 604 of th is
title [ben efit claim s], t h e pr ovision s of t h is Act or t h e Welfa r e a n d
P en sion P la n s Disclosu r e Act sh a ll su per sede a n y a n d a ll la ws of
t h e St a t es a n d of polit ica l su bdivision s t h er eof in sofa r as th ey m ay
n ow or h ereafter relate to th e su bject m atters regu lated by th is Act or
th e Welfare an d Pen sion Plan s Disclosu re Act , except t h a t n ot h in g
h er ein sh a ll be con st r u ed
(1) t o exem pt or r elieve a n y em ployee ben efit pla n n ot su bject t o t h is
Act or t h e Welfa r e a n d P en sion P la n s Disclosu r e Act fr om a n y la w
of a n y St a t e;
(2) t o exem pt or r elieve a n y per son fr om an y Act of an y S tate w h ich
regu lates in su ran ce, ban k in g, or secu rities or t o pr oh ibit a St a t e fr om
r equ ir in g t h a t t h er e be filed wit h a St a t e a gen cy copies of r epor t s
r equ ir ed by t h is Act t o be filed wit h t h e Secr et a r y; or
(3) t o a lt er , a m en d, m odify, in va lida t e, im pa ir or su per sede a n y la w
of t h e Un it ed St a t es ot h er t h a n t h e Welfa r e a n d P ension P la ns
Disclosu r e Act or a n y r u le or r egu la t ion issu ed u n der a n y la w except
188
a s specifica lly pr ovided in t h is Act .
Th u s, t h e in su r a n ce, ba n k in g, or secu r it ies la w exclu sion wa s
pr esen t in t h e in it ia l bill. Th e bill u sed t h e ph r a se “r ela t e t o,” bu t
on ly t h ose la ws t h a t r ela t ed t o u n specified su bject m a t t er s
189
r egu la t ed by t h e legisla t ion or t h e WP P DA wer e pr eem pt ed.
Th e
bill, a s sh own su pra, per m it t ed st a t e la w t o a ffect em ployee ben efit
r igh t s by a ffect in g t h e en for cem en t by pa r t icipa n t s a n d
ben eficia r ies of t h ose r igh t s.
Th e r epor t t h a t a ccom pa n ied t h e bill a s r epor t ed fr om t h e
190
Sen a t e La bor a n d P u blic Welfa r e Com m it t ee descr ibed br oa d
pr eem pt ion a n d a sser t ed t h a t h a vin g pla n s gover n ed by u n ifor m
la w gives a n u n specified a dva n t a ge a s follows:
E xcept wh er e pla n s a r e n ot su bject t o t h e Ret ir em en t In com e
Secu r it y for E m ployees Act [i.e., t h e bill] or t h e Welfa r e a n d P en sion
P la n s Disclosu r e Act , a n d in cer t a in ot h er en u m er a t ed
cir cu m st a n ces, st a t e la w is pr eem pt ed. B ecau se of th e in terstate
ch aracter of em ployee ben efit plan s, th e Com m ittee believes it
essen tial to provid e for a u n iform sou rce of law in t h e a r ea s of
vest in g, fu n din g, in su r a n ce a n d por t a bilit y st a n da r ds, for eva lu a t in g
fidu cia r y con du ct , a n d for cr ea t in g a sin gle r epor t in g a n d disclosu r e
syst em in lieu of bu r den som e m u lt iple r epor t s. As in dica t ed
188. S ee S. 3598, 92d Con g. § 609(a ), a t 86, 181-82 (2d. Sess. 1972)
(em ph a sis a dded) (a ccom pa n yin g S. R E P . N O . 92-1150 (1970) Sect ion (b), wh ich
per m it s st a t e la ws t h a t com pel a ccou n t in gs or st a t e cou r t ju r isdict ion t o a pply
feder a l la w wit h t h e fidu cia r y, r epor t in g, a n d disclosu r e r equ ir em en t s, h a s
been om it t ed).
189. Id .
190. S. R E P . N O . 92-1150 (2d. Sess. 1972).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
185
pr eviou sly, h owever , t h e Act expr essly a u t h or izes cooper a t ive
a r r a n gem en t s wit h st a t e a gen cies a s well a s ot h er feder a l a gen cies,
a n d pr ovides t h a t st a t e la ws r egu la t in g ba n kin g, in su r a n ce or
191
secu r it ies r em a in u n im pa ir ed.
Th e bill r epor t ed ou t by t h e Sen a t e La bor Com m it t ee on
Sept em ber 15, 1972 wa s r efer r ed t o t h e Sen a t e F in a n ce
Com m it t ee on Sept em ber 19, 1972, wh ich r epor t ed ou t a bill on
192
Sept em ber 26, 1972.
Th is bill r et a in ed t h e r epor t in g a n d
fidu cia r y st a n da r ds, bu t elim in a t ed t h e vest in g a n d fu n din g
st a n da r ds a s well a s t h e pr ovision s pr ovidin g for in su r a n ce of
t er m in a t ed pla n s; t h u s, t h e pr opon en t s of t h e or igin a l bill decided
193
t o n ot pu sh it a n y fu r t h er in t h e 92n d Con gr ess.
C. T h e J an u ary 1973 H ou se Precu rsors to E R IS A S u persed es th e
WPPDA, Au th orizes Participan ts to E n force th e R igh t to
B en efit Paym en ts, In trod u ces Fid u ciary R espon sibilities,
Preem pts S tate L aw s R elated to R egu lated R espon sibilities,
Wh ich Preem ption E xplicitly E xclu d es B en efit Claim s an d
B an k in g, In su ran ce, an d S ecu rities L aw s
On J a n u a r y 3, 1973, t h e H ou se pr ecu r sor s of t h e legisla t ion
t h a t wou ld becom e E RISA wer e in t r odu ced by Repr esen t a t ives
194
195
J oh n Den t a n d Ca r l P er k in s a s H .R. 2 a n d a s H .R. 462.
Bot h
wer e r efer r ed t o t h e Com m it t ee on E du ca t ion a n d La bor on t h e
196
sa m e da y.
Th e fir st H ou se bill wa s en t it led t h e E m ployee
Ben efit Secu r it y Act . Un like t h e Sen a t e’s 1972 bill or t h e
P r esiden t ’s 1970 bill, t h e pr oposed r efor m a ct did n ot a m en d t h e
197
WP P DA, bu t su per seded it .
Th e H ou se bill im posed fidu cia r y
r espon sibilit ies n ot on ly on t h ose h a n dlin g pla n a sset s, bu t a lso on
198
t h ose a dm in ist er in g t h e pla n .
Th e Sen a t e 1972 bill ga ve
pa r t icipa n t s a n d ben eficia r ies t h e r igh t t o r ecover ben efit s u n der
199
t h e t er m s of t h e pla n or cla r ify t h e r igh t t o fu t u r e ben efit s.
191. Id . a t 43 (em ph a sis a dded).
192. E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 184-86.
193. Id . a t 186-89.
194. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. (1st Sess. 1973),
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 3-65.
195. E m ployee Ret ir em en t Ben efit Secu r it y Act , H .R. 462, 93d Con g. (1st
Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 67-87.
196. E RISA LE G. H ISTORY, su pra n ot e 165, a t 3 a n d 67.
197. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g., § 115, a t 49 (1st
Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 3, 51.
198. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. § 2, a t 3 (set t ing
for t h t h e policy of t h e a ct ), § 3(23), a t 10-11 (defin in g “fidu cia r y”), § 111, a t 3944 (im posin g fidu cia r y r espon sibilit y) (1st Sess. 1973), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 3, 5, 12-13, 41-46.
199. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. § 106(e)(1)(b), a t 31,
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 3, 33. P a r t icipa n t s
a lso h a d t h e r igh t t o en for ce disclosu r e a n d fidu cia r y r equ ir em en t s. Id . a t
§ 106(e)(1)(a ), (2) a t 31, reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165,
a t 3, 33.
186
T h e J oh n M arsh all L aw R eview
[47:145
Th er e wa s n o exem pt ion fr om t h is en for cem en t pr ovision for sm a ll
200
pla n s or for u n fu n ded pla n s for execu t ives.
Th e secon d bill, H .R.
462 wa s en t it led t h e E m ployee Ret ir em en t Ben efit Secu r it y Act ,
a n d wa s con cer n ed on ly wit h pr ovidin g feder a l in su r a n ce for
cer t a in pen sion pla n s. It con t a in ed n o pr eem pt ion pr ovision s.
Th e pr eem pt ion sect ion in t h e fir st H ou se bill is en t it led,
“E ffect on Ot h er La ws,” a n d r ea ds a s follows:
Sec. 114. It is h er eby decla r ed t o be t h e expr ess in t en t of Con gr ess
t h a t except for action s au th orized by section 106(e)(1)(B ) of th is Act
[ben efit claim s], t h e pr ovision s of t h is Act sh a ll su per sede a n y a n d
a ll la ws of t h e St a t es a n d of polit ica l s u bdivision s t h er eof in sofa r a s
t h ey m a y n ow or h er ea ft er relate to th e fid u ciary, reportin g, an d
d isclosu re respon sibilities of person s actin g on beh alf of em ployee
ben efit plan s: Provid ed , Th a t n ot h in g h er ein sh a ll be con st r u ed t o
exem pt or r elieve a n y per son fr om an y law of an y S tate w h ich
regu lates in su ran ce, ban k in g, or secu rities or t o pr oh ibit a St a t e fr om
r equ ir in g t h a t t h er e be filed wit h a St a t e a gen cy copies of r epor t s
r equ ir ed by t h is Act t o be filed wit h t h e Secr et a r y. N ot h in g h er ein
sh a ll be con st r u ed t o a lt er , a m en d, m odify, in va lida t e, im pa ir , or
su per sede a n y la w of t h e Un it ed St a t es (ot h er t h a n t h e Welfa r e a n d
P en sion P la ns Disclosu r e Act ) or a n y r u le or r egu la t ion issu ed u n der
201
a n y su ch la w.
Th u s, t h e in su r a n ce, ba n kin g, or secu r it ies la w exclu sion s
wer e pr esen t in t h e in it ia l H ou se bill, a s well a s t h e Sen a t e’s 1972
bill, a n d t h e P r esiden t ’s 1970 bill. All t h e bills u sed t h e ph r a se
“r ela t e t o,” bu t lim it ed t h e r ela t ion t o specified su bject m a t t er s t h e
bills r egu la t ed. Th e a bove H ou se pr eem pt ion pr ovision , lik e t h a t
for t h e Sen a t e’s 1972 bill, expr essly per m it s st a t e la w t o a ffect
em ployee ben efit r igh t s by a ffect in g t h e en for cem en t by
pa r t icipa n t s a n d ben eficia r ies of t h ose r igh t s. Un like t h e Sen a t e’s
1972 bill r epor t ed ou t by t h e Sen a t e La bor Com m it t ee, n o
pr ovision a ddr esses t h e pr ocessin g of cla im s.
Th e defin it ion of em ployee welfa r e pla n s in t h e H ou se’s fir st
202
bill is vir t u a lly iden t ica l t o t h e cu r r en t E RISA ver sion .
Th e
defin it ion of a pen sion pla n is less in clu sive t h a n t h e cu r r en t
203
E RISA ver sion ; t h e la t t er in clu des sever a n ce pla n s.
Neit h er
200. B u t see E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. § 101(b)(3),
a t 13, reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 3, 15
(expla in in g t h a t sm a ll pla n s wer e exclu ded fr om por t ion s of bill ot h er t h a n
t h ose for t h e en for cem en t of ben efit r igh t s).
201. E m ployee Ben efit Secu r it y Act , H.R. 2, 93d Con g., § 114, a t 48-49,
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 3, 50-51 (em ph a sis
a dded).
202. Cf. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g, § 3(1) a t 3, 4,
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5, 6 a n d E RISA § 3(1),
29 U.S.C § 1002(1).
203. Cf. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g, a t 3, 4-5,
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5, 6-7 t o E RISA § 3(2),
29 U.S.C § 1002(2).
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204
r equ ir es a pla n t o h a ve a wr it t en docu m en t .
On Oct ober 2, 1973, t h e Com m it t ee on E du ca t ion a n d La bor
205
r epor t ed t o t h e H ou se of Repr esen t a t ives a r evised H .R. 2. Th er e
con t in u ed t o be n o exem pt ion fr om t h is en for cem en t pr ovision for
sm a ll pla n s or u n fu n ded pla n s for execu t ives. Th er e wer e n o
sign ifica n t ch a n ges t o t h e pr eem pt ion pr ovision . H owever , t wo
pr ovision s wer e a dded t o pr oh ibit a n y in t er fer en ce wit h r ig h t s
206
pr ot ect ed u n der t h e pr oposed bill.
On e per m it t ed t h e im posit ion
of cr im in a l pen a lt ies on t h e coer cive in t er fer en ce wit h su ch
207
r igh t s.
D. T h e J an u ary 1973 S en ate Precu rsor T o E R IS A S u pplem en ts
T h e W PPDA, Au th orizes Participan ts T o E n force th e R igh t to
B en efit Paym en ts, In trod u ces Fid u ciary R espon sibilities, an d
Preem pts L aw s R elated to R egu lated S u bject M atters, Wh ich
Preem ption E xplicitly E xclu d es B en efit Claim s an d B an k in g,
In su ran ce, S ecu rities L aw s
On J a n u a r y 4, 1973, a Sen a t e pr ecu r sor of t h e legisla t ion t h a t
wou ld becom e E RISA wa s in t r odu ced by Sen a t or Willia m s,
Sen a t or J a vit s, a n d a la r ge n u m ber of ot h er spon sor s in t h e Sen a t e
208
a s S. 4.
Th e bill wa s ca lled t h e Ret ir em en t In com e Secu r it y for
E m ployees Act a n d r efer r ed t o t h e Com m it t ee on La bor a n d P u blic
209
Welfa r e.
It wa s iden t ica l t o S. 3598 a s r epor t ed a n d a ppr oved
u n a n im ou sly by t h e Com m it t ee on La bor a n d P u blic Welfa r e in
210
Sept em ber of 1972. Th e Su m m a r y of t h e Ma jor P r ovision s of t h e
bill pr epa r ed for con sider a t ion by t h e Com m it t ee on La bor a n d
P u blic Welfa r e in clu ded a br ief su m m a r y of t h e pr eem pt ion
211
sect ion .
Sen a t or J a vit s su ppor t ed h is a sser t ion t h a t t h e u n ifor m
r equ ir em en t s r esu lt in g fr om pr eem pt ion wou ld dim in ish ba d
beh a vior by fidu cia r ies a n d pla n s by r efer r in g t o on e of t h e
pr in cipa l fin din gs of t h e Sen a t e La bor Su bcom m it t ee a s follows:
F ift h . Th e la ck of u n ifor m r equ ir em en t s of con du ct by fidu cia r ies
a n d em ployer s in t h e a dm in ist r a t ion a n d oper a t ion of t h eir pen sion
204. Cf. E m ployee Ben efit Secu r it y Act , H.R. 2, 93d Con g, § 3(1),(2) a t 3, 4,
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5, 6 t o E RISA §§ 3(1)
a n d 3(2), 29 U.S.C §§ 1002(1) a n d 1002(2).
205. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g., reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 2181.
206. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g., §§ 510, 511, a t 16162, reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 2181, 2341-42.
207. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g., § 511, a t 161-62,
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 2181, 2341-42.
208. Ret ir em en t In com e Secu r it y for E m ployee Act , S. 4, 93d Con g. (1st
Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 93-189.
209. Ret ir em en t In com e Secu r it y for E m ployee Act , S. 4, 93d Con g. (1st
Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 93.
210. In t r odu ct or y Rem a r ks of Sen a t or J a cob J a vit s (J a n . 4, 1973), reprin ted
in E RISA LE G. H ISTORY, su pra n ot e 165, a t 203.
211. R eprin ted in E RISA LE G. H ISTORY, su pra n ot e 162, a t 191, 201-202.
188
T h e J oh n M arsh all L aw R eview
[47:145
fu n ds wh ich r esu lt s in a bu ses a n d u n sou n d pr a ct ices wh ich
jeopa r dize t h e secu r it y of t h e a sset s a n d t h r ea t en t h e a va ila bilit y of
212
fu n ds for em ployees.
On Ma r ch 13, 1973, a Sen a t e bill, wh ich pr esen t ed m a n y
a m en dm en t s t o t h e pen sion t a x-qu a lifica t ion t a x pr ovision s, wa s
in t r odu ced by Sen a t or Lloyd Ben t sen a s S. 1179 a n d r efer r ed t o
213
t h e Sen a t e F in a n ce Com m it t ee.
Th a t bill r elied on ly on Code
sa n ct ion s for t h e fa ilu r e of a pen sion pla n t o be t a x-qu a lified in
or der t o im pr ove ben efit pr ot ect ion s for pa r t icipa n t s a n d
ben eficia r ies of su ch pla n s, r a t h er t h a n pr ovidin g a n yon e wit h t h e
a bilit y t o go t o cou r t t o com pel t h e desir ed beh a vior .
On Apr il 18, 1973, a n a m en ded ver sion of S. 4 wa s r epor t ed t o
t h e Sen a t e by t h e Sen a t e Com m it t ee on La bor a n d P u blic
214
Welfa r e.
Civil a ct ion s t o r ecover ben efit s by pa r t icipa n t s
215
con t in u ed t o be lim it ed t o WP P DA pla n s,
t h er eby exclu din g
sm a ll pla n s a n d u n fu n ded pla n s for execu t ives. Th e fidu cia r y
st a n da r ds con t in u ed t o r equ ir e pla n s t o “pr ovide a dequ a t e a n d fa ir
pr ocedu r es t o pa r t icipa n t s a n d ben eficia r ies wh en t h eir ben efit
216
cla im s or a pplica t ion s a r e den ied.”
Th e pr eem pt ion sect ion
217
a ppea r s t o h a ve been u n ch a n ged.
H owever , a s wit h t h e H ou se
bill r epor t ed ou t in Oct ober of 1973, t wo pr ovision s wer e a dded t o
pr oh ibit a n y in t er fer en ce wit h r igh t s pr ot ect ed u n der t h e pr oposed
218
bill or t h e WP P DA.
On e per m it t ed t h e im posit ion of cr im in a l
219
pen a lt ies on t h e coer cive in t er fer en ce wit h su ch r igh t s.
Th e r epor t of t h e Sen a t e Com m it t ee on La bor a n d P u blic
Welfa r e descr ibed t h e en for cem en t pr ovision s of t h e r epor t ed bill,
in clu din g t h e pr eem pt ion pr ovision s, in la n gu a ge vir t u a lly
212. Id . a t 204.
213. Com pr eh en sive P r iva t e P en sion Secu r it y Act of 1973, S. 1179, 93d
Con g (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t
780-1062.
214. Ret ir em en t In com e Secu r it y for E m ployee Act , S. 4, 93d Con g. (1st
Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 389.
215. Cf. Ret ir em en t In com e Secu r it y for E m ployee Act , S. 4, 93d Con g.
§ 604 (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t
184 (in it ia l dr a ft ), 580-81 (fin a l dr a ft ).
216. S ee S. R E P . N O . 93-127, 93r d Con g., 1st Sess., 43 (1973) reprin ted in
E RISA LE G. H ISTORY, su pr a n ot e 165, a t 587, 620 (discu ssin g a m en ded bill).
Cf. Ret ir em en t In com e Secu r it y for E m ployee Act , S. 4, 93d Con g. § 510 (1st
Sess. 1973) (in t r odu cin g new WP P DA Sect ion 15 en t it led F idu cia r y
St a n da r ds), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 181
(in it ia l bill), 576-77 (a m en ded bill).
217. Cf. Ret ir em en t In com e Secu r it y for E m ployee Act , S. 4, 93d Con g.
§ 609 (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t
186-88 (in it ia l dr a ft ), a n d a t 582-85 (a m en ded dr a ft ).
218. Ret ir em en t In com e Secu r it y for E m ployee Act , S. 4, 93d Con g. §§ 610611, a t 197-98 (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra
n ot e 165, a t 389, 585.
219. Ret ir em en t In com e Secu r it y for E m ployee Act , S. 4, 93d Con g. § 611,
a t 197-98 (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e
165, a t 389, 585.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
189
iden t ica l t o t h a t u sed in t h e 1972 com m it t ee r epor t for t h e
pr edecessor bill except for t h e a ddit ion of la n gu a ge descr ibin g t h e
r ea son for t h e a ddit ion of t h e pr oh ibit ion on t h e in t er fer en ce wit h
220
r igh t s pr ot ect ed u n der E RISA or t h e WP P DA.
Vir t u a lly t h e
sa m e la n gu a ge wa s u sed by t h e H ou se E du ca t ion a n d La bor
Com m it t ee wit h r espect t o t h e sim ila r en for cem en t pr ovision s in
t h e ver sion of H .R. 2 it r epor t ed t o t h e H ou se of Repr esen t a t ives
221
on Oct ober 2, 1973.
Th e Sen a t e r epor t descr ibed t h e
en for cem en t pr ovision s of t h e r epor t ed bill in t h e sect ion by sect ion
a n a lysis a s follows:
TITLE VI. E NF ORCE ME NT
S ection 601.—Th is sect ion em power s t h e Secr et a r y t o pet it ion t h e
feder a l cou r t s t o com pel a . pen sion or pr ofit -sh a r in g-r et ir em en t pla n
t o com ply wit h t h e Act [r egist r a t ion a n d pla n fu n din g r equ ir em en t s]
or effect r ecover ies of m on eys wh ich be du e u n der t h e Act .
S ection s 602, 603, 604, an d 605. —Th ese sect ion s pr ovide t h a t wh en
t h e Secr et a r y h a s r ea son t o believe t h a t a pen sion , pr ofit -sh a r in g,
r et ir em en t pla n , or ot h er em ployee ben efit pla n is viola t in g t h e Act
or t h e pla n ’s gover n in g docu m en t s, h e m a y seek r e1ief in t h e feder a l
cou r t s t o com pel t h e r et u r n of a sset s t o t h e fu n d, t o r equ ir e
pa ym en t s t o be m a de, t o r equ ir e t h e r em ova l of a fidu cia r y, a n d t o
obt a in ot h er a ppr opr ia t e r elief. Plan participan ts also m ay seek
relief in fed eral an d state cou rts again st violation s com m itted by a
fid u ciary, in clu d in g h is rem oval from office. T h ey m ay also seek
relief to recover ben efits requ ired to be paid u n d er th e plan in th e
sam e cou rts. Th e Secr et a r y h a s t h e r igh t t o r em ove a n a ct ion
pen din g in st a t e cou r t t o t h e feder a l cou r t s for r elief pr ovided u n der
t h is Act .
S ection s 607 an d 608.—Th ese sect ion s pr ovide t h a t a dm in ist r a t or s
a n d fidu cia r ies h a ve t h e r igh t t o obt a in ju dicia l r eview of t h e a ct ion s
of t h e Secr et a r y. Th e bill pr ovides a st a t u t e of lim it a t ion s of five
yea r s for a ct ion s a r isin g u n der t h e Act .
S ection 609.—T h is section provid es th at th is Act su persed es state
law s coverin g th e sam e m atters. H owever , t h e Act does n ot exem pt
or r elieve a n y per son fr om com plyin g wit h an y state law regu latin g
in su ran ce, ban k in g, an d related m atters, a n d does n ot r em ove st a t e
ju r isdict ion over pla n s n ot su bject t o t h e Act . St a t e cou r t s a r e n ot
pr even t ed fr om a sser t in g ju r isdict ion in com pellin g t h e a ccou n t in g
of a fidu cia r y or r equ ir in g cla r ifica t ion of t h e pla n. Th e Secr et a r y or
a pla n pa r t icipa n t m a y r em ove su ch a ca se fr om t h e st a t e t o t h e
feder a l cou r t if it in volves t h e a pplica bilit y of t h e Act .
220. Cf. S. R E P . N O . 93-127, a t 35-36 (1st Sess. 1973), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 587, 621-22; S. R E P . N O . 92-1150, a t 43
(2d. Sess. 1972)).
221. Cf. S. R E P . N O . 93-127, a t 35-36 (1st Sess. 1973) reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 162, a t 587, 621-22; H .R. R E P . N O . 93-533, a t 17
(1st Sess. 1973), reprin ted in ERISA LE G. H ISTORY, su pra n ot e 165, a t 2348,
2364.
190
T h e J oh n M arsh all L aw R eview
[47:145
S ection 610.—Th is sect ion m a kes it u n la wfu l for a n y per son t o
disch a r ge, fin e, su spen d, expel, disciplin e or discr im in a t e a ga in st a
pa r t icipa n t or ben eficia r y for exer cisin g a n y r igh t t o wh ich h e is
en t it led u n der t h e pr ovision s or t h e pla n or t h e Act or t h e Welfa r e
a n d P en sion s Pla n s Disclosur e Act or for t h e pu r pose of in t er fer in g
wit h t h e a t t a in m en t of a n y r igh t t o wh ich su ch pa r t icipa n t m a y
becom e en t it led u n der t h e pla n or t h e Act or t h e WP P DA.
S ection 611.—This sect ion m a kes it a cr im ina l offen se for a n y
per son t o u se fr a u d, for ce, or violen ce or t h r ea t s t h er eof t o r est r a in ,
coer ce, in t im ida t e or a t t em pt t o r est r a in , coer ce, in t im ida t e a n y
pa r t icipa n t or ben eficia r y for t h e pu r pose of in t er fer in g wit h or
pr even t in g t h e exer cise of a n y r igh t t o wh ich h e is or m a y becom e
222
en t it led u n der t h e pla n , t h e Act or t h e WP P DA.
Th e Com m it t ee st r essed t h e im por t a n ce of t h e bill’s feder a l
en for cem en t r egim e, wh ich wou ld h a ve a u t h or ized pla n
pa r t icipa n t s a n d ben eficia r ies t o br in g t h eir own feder a l a ct ion s t o
r ecover ben efit pa ym en t s or t o com ba t fidu cia r y viola t ion s.
Addit ion a lly, t h e bill wou ld h a ve pr oh ibit ed in t er fer en ce wit h t h e
a t t a in m en t or exer cise of t h e st a t u t or y em ployee ben efit r igh t s of
pla n pa r t icipa n t s or ben eficia r ies.
E . T h e April 1973 Presid en tial Precu rsor to E R IS A S u pplem en ts
th e WPPDA, Au th orizes Participan ts to E n force B en efit Claim s,
In trod u ces Fid u ciary R espon sibilities an d Preem pts L aw s
R elated to R egu lated R espon sibilities, Wh ich Preem ption
E xplicitly E xclu d es B en efit Claim s an d B an k in g, In su ran ce,
S ecu rities L aw s
On Apr il 12, 1973, t h e P r esiden t ’s pr ecu r sor of t h e legisla t ion
t h a t wou ld becom e E RISA wa s in t r odu ced by Sen a t or J a vit s in t h e
223
Sen a t e a s S. 1557.
Th is bill wa s sim ila r t o S. 3589, discu ssed
su pra, wh ich J a vit s h a d a lso in t r odu ced on beh a lf of P r esiden t
Nixon on Ma r ch 13, 1970 wit h t h e sa m e t it le, t h e E m ployee
Ben efit s P r ot ect ion Act . P a r t icipa n t s a n d ben eficia r y wer e a ga in
a u t h or ized t o bein g a ct ion s t o r ecover ben efit s du e u n der t h e pla n
224
t er m s for WP P DA pla n s, a n d t h er eby con t in u ed t o exclu de sm a ll
pla n s a n d u n fu n ded execu t ive pla n s. Sen a t or J a vit s obser ved t h a t
t h is bill did n ot : (1) pr oh ibit in t er fer en ce wit h t h e r igh t s pr ovided
by t h e bill; (2) a ssu r e t h a t du e pr ocess wou ld be a ffor ded t o ben efit
cla im s; (3) pr even t defa u lt wa iver s of spou sa l ben efit s; or (4)
222. S ee S. R E P . N O . 93-127, a t 47-48 (1st Sess. 1973), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 587, 633-34 (em ph a sis a dded). Alt h ou gh ,
t h e su m m a r y does n ot m en t ion t h e secu r it ies exclu sion fr om t h e pr eem pt ion
pr ovision s, t h e bill explicit ly m en t ion s it .
223. E m ployee Ben efit s P r ot ect ion Act , S. 1557, 93d Con g, (1st Sess. 1973),
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 280-323.
224. E m ployee Ben efit s P r ot ect ion Act , S. 1557, § 9(b), a t 14, 93d Con g, (1st
Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 280, 303.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
191
225
per m it pa r t icipa n t s t o br in g feder a l a ct ion s for a ll ben efit cla im s.
Th is sh ows t h e im por t a n ce t h a t Sen a t or J a vit s a scr ibed t o t h e
in clu sion of t h ose fea t u r es in S. 4. Never t h eless, Sen a t or J a vit s
226
descr ibed t h e bill a s a n im por t a n t st ep for wa r d.
Th e bill
a m en ded t h e WP P DA t o st r en gt h en t h e disclosu r e r equ ir em en t s
a n d in t r odu ce feder a l fidu cia r y st a n da r ds. Th e n ew sect ion 18
en t it led “E ffect of Ot h er La ws,” wh ich follows, wa s ver y sim ila r t o
t h e cor r espon din g sect ion in S. 4 a n d in S. 3589:
Sec. 18 (a ) It is h er eby decla r ed t o be t h e expr ess in t en t of Con gr ess
t h a t except for action s au th orized by section 9(e)(1)(B ) of th is Act
[ben efit claim s],t h e pr ovision s of t h is Act sh a ll su per sede a n y a n d
a ll la ws of t h e St a t es a n d of polit ica l sub-division s t h er eof in sofa r a s
th ey m ay n ow or h ereafter relate to th e fid u ciary, reportin g, an d ,
d isclosu re respon sibilities of person s actin g on beh alf of em ployee
ben efit plan s: Provid ed , Th a t n ot h in g h er ein sh a ll be con st r u ed —
(1) t o exem pt or r elieve a n y em ployee ben efit pla n n ot su bject t o t h is
Act fr om a n y la w of a n y St a t e;
(2) t o exem pt or r elieve a n y per son from an y law of an y S tate w h ich
regu lates in su ran ce, ban k in g, or secu rities or t o pr oh ibit a St a t e fr om
r equ ir in g t h a t t h er e be filed wit h a St a t e a gen cy copies of r epor t s
r equ ir ed by t h is Act be filed wit h t h e Secr et a r y; or
(3) t o a lt er , a m en d, m odify, in va lida t e, im pa ir , or su per sede a n y
227
ot h er la w of t h e Un it ed St a t es.
Th u s, t h e in su r a n ce, ba n k in g, or secu r it ies la w exclu sion wa s
pr esen t . Th e legisla t ion a lso lim it ed t h e ph r a se “r ela t e t o,” t o
specified su bject m a t t er s r egu la t ed by t h e legisla t ion , i.e., t h e
a m en ded WP P DA. Aga in , t h e pr ovision expr es sly per m it s st a t e
la w t o a ffect em ployee ben efit r igh t s by a ffect in g t h e en for cem en t
by pa r t icipa n t s a n d ben eficia r ies of t h ose r igh t s.
Sen a t or J a vit s descr ibed h ow it wa s believed t h a t t h e
pr eem pt ion pr ovision wou ld en cou r a ge com plia n ce wit h t h e
st a t u t e’s r epor t in g, disclosu r e a n d fidu cia r y r equ ir em en t s:
Th e Act pr ovides for a u n ifor m sou r ce of la w for eva lu a t in g t h e
fidu cia r y con du ct of per son s a ct in g on beh a lf of em ployee ben efit
pla n s a n d a sin gu la r r epor t in g a n d disclosu r e syst em in lieu of
bu r den som e m u lt iple r epor t s. H owever , St a t e la w will con t in u e t o
a pply t o pla n s n ot subject t o t h e Act . T h is application of S tate law
w ill in clu d e action s brou gh t by participan ts an d ben eficiaries to
recover ben efits d u e u n d er th e plan or to clarify righ ts to fu tu r e
225. In t r odu ct or y St a t em en t of Sen . J a cob J a vit s t o E m ployee Ben efit s
P r ot ect ion Act , S. 1557, 93d Con g, (1st Sess. 1973), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 274.
226. Id .
227. R eprin ted in E RISA LE G. HISTORY, su pra n ot e 165, a t 274, 319
(em ph a sis a dded). Sect ion (b), wh ich r efer s t o st a t e la ws t h a t com pel
a ccou n t in gs or st a t e cou r t ju r isdict ion t o a pply feder a l la w wit h t h e fidu cia r y,
r epor t in g, a n d disclosu r e r equ ir em en t s, h a s been om it t ed a s wa s t h e ca se wit h
S. 3598. Id .
192
T h e J oh n M arsh all L aw R eview
[47:145
ben efits.
St a t es m a y r equ ir e t h e filin g wit h a St a t e a gen cy of copies of r epor t s
r equ ir ed u n der t h e Act , a n d a ct ion s in St a t e cou r t s for a ccou n t in gs
a r e expr essly a llowed if cer t a in con dit ion s a r e m et , in clu ding
a dequ a t e n ot ice t o pa r t icipa n t s a n d t h e Secr et a r y. F u r t h er m or e, t h e
Act expr essly a u t h or izes cooper a t ive a r r a n gem en t s wit h St a t e
a gen cies a s well a s ot h er F eder a l a gen cies a n d provid es th at S tate
law s regu latin g ban k in g, in su ran ce an d secu rities rem ain
228
u n im paired .
F. T h e In corporation in th e E R IS A Precu rsors of (1) T h e S pou sal
S u rvivor B en efit R equ irem en t an d (2) T h e Proh ibition of
Pen sion B en efit Alien ation s an d t h e Fu rth er Developm en t of
E R IS A
Th e legisla t ive h ist or y sh ows t h a t t h e spou sa l su r vivor ben efit
pr ovision s a n d pr oh ibit ion s wer e bot h in clu ded in E RISA a ft er
229
deliber a t ion , wh ich sh eds ligh t on t h eir sign ifica n ce.
Th er e wa s
ext en sive Con gr ession a l deba t e of t h e E RISA spou sa l su r vivor
ben efit pr ovision s. In or der t o com ply wit h t h e con st it u t ion a l
r equ ir em en t t h a t t a x m ea su r es or igin a t e in t h e H ou se of
230
Repr esen t a t ives, t h e Sen a t e E RISA pr ecu r sor , wh ich in clu ded
m a n y t a x qu a lifica t ion pr ovision s, wa s in cor por a t ed in t o a H ou se pa ssed t a x bill a ddr essin g t h e spou sa l su r vivor ben efit s of
m em ber s of t h e m ilit a r y. In con t r a st , t h e a lien a t ion p r oh ibit ion
wa s n ot ext en sively deba t ed, a n d a ppea r ed in differ en t por t ion s of
t h e differ en t pr ecu r sor s. H owever , t h e pr oh ibit ion , a s discu ssed
in fra, wa s in t en ded t o a ssu r e t h a t ben efit s fr om a cla ss of pen sion
pla n s wer e “a ct u a lly a va ila ble t o r et ir em en t pu r poses.”
231
Neit h er t h e 1970 P r esiden t ia l bill, n or t h e 1973 P r esiden t ia l
232
bill,
in clu ded a n y ben efit t er m s m a n da t es.
Th u s, n eit h er
im posed a n y spou sa l su r vivor ben efit t er m s m a n da t es n or
pr oh ibit ed t h e a lien a t ion of ben efit s. Ben efit t er m s m a n da t es fir st
233
a ppea r ed in S. 3598,
wh ich Sen a t or s Willia m s a n d J a vit s
in t r odu ced on Ma y 11, 1972, wit h eleven cospon sor s. Th ey
in clu ded m in im a l pa r t icipa t ion a n d vest in g pr ovision s for cover ed
234
pen sion pla n s.
Welfa r e pla n s wer e n ot su bject t o t h ese
228. R eprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 279
(em ph a sis a dded).
229. B u t see Ca m illa E . Wa t son , B rok en Prom ises R evisited : T h e Win d ow of
Vu ln erability for S u rvivin g S pou ses Un d er E R IS A , 76 I OWA L. R E V. 431, 440463 (1991) [h er ein a ft er “Watson ’s B rok en Prom ises”] (pr esen t in g a differ en t
a n a lysis of t h e developm en t of E RISA a n d it s spou sa l su r vivor ben efit
pr ovision s).
230. U.S. C ONST . a r t . I, § 7.
231. S. 3589, 91st Con g. (2d. Sess. 1970).
232. S. 1557, 93d Con g. (1st Sess. 1973).
233. S. 3598, 92d Con g. (2d. Sess. 1972).
234. Id . §§ 201-02, a t 24-27.
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193
235
r equ ir em en t s.
Th e bill exclu ded sm a ll pla n s a n d u n fu n ded
236
execu t ive pla n s fr om t h ese m a n da t es.
Th e Sen a t e La bor
Com m it t ee r epor t ed a n a m en ded bill on Sept em ber 15, 1972,
wh ich in clu ded a pr oh ibit ion on t h e a lien a t ion of pen sion
237
ben efit s.
Th e pr oh ibit ion in clu ded a pr ovision “for t h e fin a l
disposit ion ” of ben efit s wh en “ben eficia r ies ca n n ot be loca t ed or
238
a scer t a in ed wit h in a r ea son a ble t im e.”
Th e r epor t essen t ia lly
r epea t ed t h e legisla t ive la n gu a ge, bu t did n ot discu ss it s
239
pu r pose.
Neit h er t h e or igin a l bill n or t h e r epor t ed bill r equ ir ed
a n y spou sa l su r vivor ben efit .
On Sept em ber 21, 1972, t h e P r esiden t sign ed in t o la w a bill
t h a t im pr oved t h e pen sion pr ot ect ion s for spou ses of Am er ica n
240
ser vice m em ber s by in t r odu cin g t h e “Su r vivor Ben efit P la n .”
Un der t h e Su r vivor Ben efit P la n , t h e defa u lt pen sion opt ion for a
r et ir in g ser viceper son or a ser viceper son wh o died a ft er r ea ch in g
r et ir em en t a ge wou ld be a join t a n d 55% su r vivor ben efit , wh ich
wou ld be pa id t o t h e su r vivin g spou se, if a n y, a n d if n on e, t o a n y
241
su r vivin g depen den t ch ildr en .
Su ch defa u lt cou ld be r eject ed by
t h e ser vice m em ber wh o wou ld r eceive a sin gle life a n n u it y (wh ose
a n n u a l pa ym en t wou ld be m u ch gr ea t er t h a n t h e join t a n d 55%
242
su r vivor ben efit ),
bu t n ot ice wa s r equ ir ed t o be given t h e
243
spou se.
Befor e t h e in t r odu ct ion of t h is pla n , a ser vice m em ber
cou ld select su ch a join t a n d su r vivor pen sion , bu t t h e defa u lt
244
ch oice wa s t h e sin gle life a n n u it y.
H owever , wh en Con gr ess
a ppr oved t h e Su r vivor Ben efit P la n , Con gr ess fa iled t o a m en d t h e
Code t o pr ot ect a ser vice m em ber ch oosin g t o r eceive a join t a n d
su r vivor a n n u it y fr om bein g t a xed a s t h ou gh h e r eceived a n d
a ssign ed t o t h e a n n u it a n t t h e va lu e of t h e r esu lt in g ben efit
245
r edu ct ion .
Ben efit t er m s m a n da t es fir st a ppea r ed in a H ou se pr ecu r sor
246
t o E RISA discu ssed in t h is a r t icle in H .R. 2,
wh ich
Repr esen t a t ives Den t a n d P er kin s in t r odu ced on J a n u a r y 3, 1973.
Th e m a n da t es in clu ded m in im a l pa r t icipa t ion a n d vest in g
235. Id .
236. S ee id . § 104(b)(4) (exclu din g sm a ll pla n s); see also § 104(b)(6), a t 20
(exclu din g u n fu n ded execu t ive pla n s). Th er e wa s n o ch a n ge in t h e r evision ,
wh ich r et a in ed t h e sa m e sect ion s.
237. S. 3598 § 202(a )(4) in S. R E P . N O . 92-1150, a t 114-15 (2d. Sess. 1972).
238. Id .
239. S. R E P . N O . 92-1150, a t 18 (2d. Sess. 1972).
240. P u b. L. No. 92-425, 86 St a t . 706 (1972).
241. P u b. L. No. 92-425 §§ 1450-51, 86 St a t . 706, 708-10 (1972).
242. P u b. L. No. 92-425 § 1452, 86 St a t . 706, 710 (1972).
243. P u b. L. No. 92-425 § 1448(a ), 86 St a t . 706, 707 (1972).
244. S. R E P . N O . 93-394, a t 1-2 (2d. Sess. 1958) reprin ted in E RISA LE G.
H ISTORY, su pra n ot e,165 a t 1572-73.
245. Id .
246. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. (1st Sess. 1973),
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 3-65 (1976).
194
T h e J oh n M arsh all L aw R eview
[47:145
247
pr ovision s for cover ed pla n s.
On ly pen sion pla n s wer e su bject t o
248
t h ese r equ ir em en t s.
Life in su r a n ce a n d h ea lt h in su r a n ce pla n s
wer e n ot su bject t o t h ese r equ ir em en t s, a lt h ou gh t h eir
pa r t icipa n t s cou ld r ecover ben efit s u n der t h is bill, a s discu ssed
su pra. Th is bill con t a in ed n o spou sa l su r vivor ben efit pr ovision s,
249
a n d it did n ot pr oh ibit t h e a lien a t ion of ben efit s.
N eit h er
pr ovision wa s con t a in ed wit h in t h e r evised bill a s r epor t ed by t h e
H ou se E du ca t ion a n d La bor Com m it t ee t o t h e H ou se of
250
Repr esen t a t ives on Oct ober 2, 1973.
H owever , u n fu n ded
execu t ive pla n s beca m e exem pt fr om t h e pa r t icipa t ion a n d vest in g
251
r equ ir em en t s.
Th er e wa s n o ch a n ge in t h e r igh t of a pa r t icipa n t
or ben eficia r y t o br in g a feder a l a ct ion t o r ecover ben efit s fr om
252
su ch pla n s.
253
Ben efit t er m s m a n da t es a lso a ppea r ed in S. 4 wh ich wa s
in t r odu ced on J a n u a r y 4, 1973, by Sen a t or Willia m s a n d Sen a t or
J a vit s, a m on g ot h er s. S. 4 discu ssed su pra, a s iden t ica l t o S. 3598,
a s r epor t ed a n d a ppr oved u n a n im ou sly by t h e Com m it t ee on La bor
a n d P u blic Welfa r e on Sept em ber 15, 1972. Th u s, it in clu ded a
pr oh ibit ion on t h e a lien a t ion of pen sion ben efit s, bu t n o spou sa l
su r vivor pr ovision s. Th e Su m m a r y of t h e Ma jor P r ovision s of t h e
S. 4 bill, pr epa r ed for con sider a t ion by t h e Com m it t ee on La bor
254
a n d P u blic Welfa r e, in clu ded a descr ipt ion of t h e pr oh ibit ion ,
wh ich wa s sim ply a con den sed for m of t h e r est a t em en t of t h e
st a t u t or y la n gu a ge t h a t h a d a ppea r ed in t h e Com m it t ee’s 1972
255
r epor t on S. 3598.
256
Ben efit t er m s m a n da t es a lso a ppea r ed in S. 1179,
in t r odu ced on Ma r ch 13, 1973, by Sen a t or Lloyd Ben t sen , a s
discu ssed su pra. Th ey in clu ded m in im a l pa r t icipa t ion a n d vest in g
257
pr ovision s for cover ed pla n s a s t a x-qu a lifica t ion r equ ir em en t s.
Th is bill con t a in ed n o spou sa l su r vivor ben efit pr ovision s a n d did
247. Id . a t § 201-06 a t 49-55.
248. Id .
249. B u t see In dex E RISA LE G. H ISTORY, su pra n ot e 165, a t xxii (list in g a
r efer en ce t o a ssign m en t s or a lien a t ion a t 56, wh ich con t a in s H .R. 2 §§ 203(d)(f), n on e of wh ich per t a in t o ben efit a lien a t ion s).
250. 119 C ON G . R E C . 32455 (Oct . 2, 1973), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 2181-2347.
251. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. § 201(b)(5), a t 123,
(1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra not e 165, a t 2303.
252. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. § 503(e)(1)(b), a t 154
(1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra not e 165, a t 2334.
253. Ret ir em en t In com e Secu r it y for E m ployee Act , S. 4, 93d Con g. (1st
Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 93-189.
254. R eprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 191, 193.
255. S. R E P . N O . 92-1150, a t 18 (2d. Sess. 1972).
256. Com pr eh en sive P r iva t e P en sion Secu r it y Act of 1973, S. 1179, 93d
Con g (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t
230-272.
257. Id . § 321-22, a t 5-10, reprin ted in E RISA LE G. H ISTORY, su pra n ot e
165, a t 230, 234- 239.
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195
n ot pr oh ibit t h e a lien a t ion of ben efit s.
Th e r evised S. 4 bill wa s r epor t ed on Apr il 18, 1973 t o t h e
Sen a t e by t h e Sen a t e Com m it t ee on La bor a n d P u blic Welfa r e a n d
258
m a de n o ch a n ges t o it s a lien a t ion pr oh ibit ion .
H owever , a
spou sa l su r vivor ben efit pr ovision wa s a dded, wit h ou t u sin g t h ose
259
pr ecise wor ds.
In pa r t icu la r , t h e r evision a dded a pr ovision t o
t h e fidu cia r y st a n da r ds r equ ir in g t h a t on ly wr it t en wa iver s of
su r vivor ben efit s wer e effect ive, a lt h ou gh n o pla n s wer e r equ ir ed
260
t o pr ovide su r vivor ben efit s. Th e pr ovision does n ot u se t h e wor d
spou se.
Th e Sen a t e Repor t st a t ed, h owever , t h a t t h is wa s
in t en ded t o pr ot ect widows a s follows:
F in a lly, t h e Com m it t ee h a s becom e a wa r e of n u m er ou s in st a n ces in
wh ich th e w id ow s of d eceased pen sion plan participan ts h ave failed
to receive th e su rvivorsh ip or d eath ben efits w h ich th ey h ave relied on
beca u se t h e h u sba n d wh ile a live h a d t h r ou gh in a dver t en ce or
m isu n der st a n din g, fa iled t o exer cise t h e su r vivor sh ip or dea t h
ben efit opt ion in h is r et ir em en t pla n . In or der t o cor r ect t h e loss of
su r vivor sh ip or dea t h ben efit s wh ich a r ise by r ea son of fa ilu r e t o
com ply wit h pla n t ech n ica lit ies, t h e Com m it t ee a dopt ed a pr ovision
wh ich a ssu r es t h a t su r vivor sh ip or dea t h ben efit opt ion s ca n n ot be
lost by defa u lt on t h e pa r t of t h e wor ker . Th e pr ovision a dopt ed by
t h e Com m it t ee specifies t h a t in or der for t h e dea t h ben efit opt ion t o
be wa ived by t h e pa r t icipa n t , t h er e m u st be a wr it in g sign ed by t h e
pa r t icipa n t t o su ch effect , a ft er su ch pa r t icipa n t h a s r eceived a
wr it t en expla n a t ion of t h e t er m s a n d con dit ion s of t h e opt ion a n d
261
t h e effect of su ch wa iver .
On J u n e 27, 1973, t h e H ou se, wit h ou t a n y n a y vot e s,
a ppr oved H .R. 4200, wh ich a m en ded t h e Code t o pr ot ect a ser vice
m em ber ch oosin g t o r eceive a join t a n d su r vivor a n n u it y u n der t h e
262
Su r vivor Ben efit P la n fr om a dver se t a x con sequ en ces.
Th e
Sen a t e r eceived a n d im m edia t ely r efer r ed t h e bill t o t h e Sen a t e
263
F in a n ce Com m it t ee.
Less t h a n a m on t h la t er , on J u ly 18, 1973,
258. Cf. Ret ir em en t In com e Secu r it y for E m ployee Act , S.4, 93d Con g.
§ 202(a )(4) (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra n ot e
165, a t 119 (in it ia l dr a ft ); 511-12 (fin a l dr a ft ).
259. Th is a ddit ion wa s pr efigu r ed six da ys ea r lier wh en Sen a t or J a vit s
in t r odu ced t h e P r esiden t ’s 1973 pr oposa l. At su ch t im e h e h a d cr it icized t h e
bill’s a bsen ce of “pr ot ect ion s a ga in st loss by defa u lt of su r vivor sh ip ben efit
opt ion s.” S ee Int r odu ct or y St a t em en t of Sen . J a cob J a vit s t o E m ployee
Ben efit s P r ot ect ion Act , S. 1557, 93d Con g, (1st Sess. 1973), reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 274 (expla in in g t h a t t h is wa s
in clu ded in a list of fea t u r es h e descr ibed a s bein g in S.4, bu t n ot in t h e
P r esiden t ’s 1973 pr oposa l, a s discu ssed su pra).
260. Ret ir em en t In com e Secu r it y for E m ployee Act , S.4, 93d Con g. § 510
(1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra not e 165, a t 577.
261. S. R E P . N O . 93-127, a t 35 (1973) reprin ted in E RISA LE G. HISTORY,
su pra n ot e 165, a t 587, 621 (em ph a sis a dded).
262. 119 C ONG . R E C . 21,773 (J u n e 27, 1973), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 666-71.
263. 119 C ONG . R E C . 22,003 (J u n e 28, 1973), reprin ted in E RISA LE G.
196
T h e J oh n M arsh all L aw R eview
[47:145
Sen a t or F r eder ick Mon da le pr oposed t h a t , in or der t o pr ot ect
elder ly widows, bot h H .R. 4200 a n d S. 4 sh ou ld be a m en ded t o
pr ovide t h a t a ll pen sion pla n s cover ed by su ch legisla t ion pla n s
264
offer join t a n d su r vivor a n n u it y ben efit s.
Th is pr oposed
a m en dm en t wa s n ot a dopt ed a t t h a t t im e. H owever , com bin ed
wit h t h e pr ovision s in S. 4, pr even t in g defa u lt wa iver s of su r vivor
ben efit s, t h e pr oposa l likely h elped la y t h e gr ou n dwor k of t h e
su bsequ en t Sen a t e a dopt ion of t h e st r on ger spou sa l su r vivor
265
pr ovision s in S. 4 t h a t Sen a t or Mon da le pr a ised.
On Au gu st 21, 1973, t h e F in a n ce Com m it t ee r epor t ed t o t h e
Sen a t e a r evised S. 1179, wh ich st ill r elied on ly on Code
266
sa n ct ion s.
Th er e wa s n o a lien a t ion pr oh ibit ion , bu t t h e t a x
qu a lifica t ion pr ovision r equ ir ed t h a t a pa r t icipa n t be offer ed t h e
267
opt ion of a join t a n d su r vivor ben efit .
Th e Sen a t e Repor t st a t ed
t h a t t h is “m iscella n eou s pr ovision ” wa s in t en ded t o pr ot ect widows
a s follows:
Un der pr esen t la w, t h er e is n o r equ ir em en t t h a t a qu a lified
r et ir em en t pla n m u st offer t h e opt ion of a su r vivor a n n u it y. Th is
ca n r esu lt in a h a r dsh ip wh er e a n in dividu a l pr im a r ily depen den t
on h is pen sion a s a sou r ce of r et ir em en t in com e is u n a ble t o m a ke
a dequ a t e pr ovision for h is spou se’s r et ir em en t yea r s, sh ou ld h e
pr edecea se h er . To cor r ect t h is sit u a t ion , t h e com m it t ee pr ovision
r equ ir es t h a t a join t a n d sur vivor a n n u it y be offer ed a s a n opt ion
wit h r equ est t o a n y ben efit u n der a qu a lified r et ir em en t pla n , wh ich
is pa ya ble a s a n a n n uit y. If t h e opt ion is exer cised, a n d a su r vivor
a n n u it y is elect ed, t h e pa r t icipa n t ’s own a n n u it y m a y be r edu ced, so
t h a t t h e va lu e of t h e join t a n d su r vivor a n n u it y a n d t h e va lu e of t h e
a n n u it y t h e pa r t icipa n t wou ld h a ve been en t it led t o r ece ive h a d t h e
268
opt ion n ot been exer cised a r e a ct u a r ia lly equ iva len t .
H owever , t h er e wa s n o sim ila r r equ ir em en t for pla n s ot h er
t h a n t a x-qu a lified pen sion pla n s, su ch a s pen sion pla n s
est a blish ed pr im a r ily for a select gr ou p of m a n a gem en t em ployees,
life in su r a n ce pla n s, or disa bilit y pla n s.
On Sept em ber 13, 1973, Sen a t or Va n ce H a r t ke pr oposed t h a t
in or der t o pr ot ect elder ly widows, S. 1179 sh ou ld be a m en ded t o
pr ovide, a s S. 4 a lr ea dy did, t h a t t h e defa u lt pen sion ben efit be a
H ISTORY, su pra n ot e 165, a t 672.
264. 119 C ONG . R E C . 24,456-57 (J u ly 18, 1973), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 675-76 a n d 678-79.
265. Rem a r ks of Sen a t or Mon da le du r in g Sept em ber 19, 1973 Sen a t e floor
discu ssion of S. 4, 119 C ON G . R E C . 30410 (Sept . 19, 1973) reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 1864.
266. S. 1179, 93d Con g. (1st Sess. 1973) reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 780-1062.
267. S. 1179, 93d Con g. § 261, 95 (1st Sess. 1973) reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 780, 874.
268. S ee P r iva t e P en sion Refor m , S. R E P . N O . 93-383, 146 (1st Sess. 1973)
(descr ibin g S. 1179, 93d Con g. (1st Sess. 1973)), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 1063, 1214.
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269
join t a n d su r vivor ben efit t h a t t h e pa r t icipa n t cou ld declin e.
No
pr oposa l wa s m a de r equ ir in g spou sa l ben efit s fr om pla n s ot h er
t h a n t a x-qu a lified pen sion pla n s, su ch a s pen sion pla n s
est a blish ed pr im a r ily for a select gr ou p of m a n a gem en t em ployees,
life in su r a n ce pla n s, or disa bilit y pla n s. On Sept em ber 17, 1979,
t h e Sen a t e F in a n ce Com m it t ee r epor t ed H .R. 4200 wit h ou t a n y
270
ch a n ges a n d r ecom m en ded t h a t t h e Sen a t e a ppr ove t h e bill.
On Sept em ber 19, 1973, t h e Sen a t e a ppr oved, wit h ou t a n y
n a y vot es, H .R. 4200 wit h on e m a jor ch a n ge, a n a m a lga m a t ion of
271
S. 4 a n d S. 1179 h a d been a ppen ded t o t h e bill. On e n ew fea t u r e
of H .R. 4200 wa s a r equ ir em en t t h a t t a x qu a lified pen sion pla n s
pr ovidin g a n n u it y ben efit pa ym en t s m u st pr ovide t h a t t h e defa u lt
pa ym en t for a m a r r ied pa r t icipa n t is a join t a n d su r vivor
272
a n n u it y.
No pr ovision r equ ir ed spou sa l ben efit s t o be pr ovided
by pla n s ot h er t h a n t a x-qu a lified pen sion pla n s, even t h ou gh t h e
bill a u t h or ized ben eficia r ies of life in su r a n ce pla n s, h ea lt h pla n s,
a n d disa bilit y pla n s t o r ecover ben efit s fr om su ch pla n s.
Mor eover , t h e a lien a t ion pr oh ibit ion h a d been t r a n sfor m ed in t o a
pla n t a x qu a lifica t ion r equ ir em en t r a t h er t h a n a n in depen den t ly
273
en for cea ble obliga t ion a s it h a d been in S. 4.
If “ben eficia r ies
ca n n ot be loca t ed or a scer t a in ed wit h in a r ea son a ble t im e,” t h e
274
a lien a t ion pr oh ibit ion a lso h a d becom e com plet ely in a pplica ble.
Th e a m a lga m a t ion a lso in t r odu ced a n a lt er n a t ive t o civil
a ct ion s t o r ecover ben efit s fr om cover ed pla n s. P a r t icipa n t s a n d
ben eficia r ies cou ld br in g a civil a ct ion t o r ecover ben efit s du e
275
u n der t h e t er m s of a cover ed pla n .
H owever , cer t a in pen sion
pla n s m u st pr ovide “a pr ocedu r e for t h e fa ir a n d ju st r eview u n der
t h e pla n of a n y [ben efit ] dispu t e” wit h t h e a dm in ist r a t or , a n d give
t h e pa r t icipa n t or ben eficia r y t h e r igh t t o a r bit r a t e t o su ch dispu t e
if n ot sa t isfied wit h t h e a dm in ist r a t or ’s a ct ion r a t h er t h a n t o st a r t
276
a civil a ct ion . Th er e is n o su ch pr ovision for ot h er pla n s, su ch a s
h ea lt h ca r e r eim bu r sem en t pla n s or life in su r a n ce pla n s.
Mor eover , t h e DOL cou ld wa ive t h e pa r t icipa n t ’s a ccess t o cou r t or
a r bit r a t ion if it fin ds a collect ively ba r ga in ed dispu t e r esolu t ion
269. R eprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 1250-51.
270. Ta x Tr ea t m en t of Su r vivor Ben efit P la n s of t h e Un ifor m ed Ser vices, S.
R E P . N O . 93-394 (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra
n ot e 165, a t 1572-74.
271. 119 C ONG . R E C . 30,428 (Sept . 19, 1973) reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 1881-82. S ee gen erally E RISA P OLITICAL
H ISTORY, su pra n ot e 164, a t 212-216.
272. H .R. 4200, 93d Con g. § 261 (1st Sess. 1973), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 1882, 1946-47.
273. Id .
274. Id . (t h e pr ior ver sion , a s discu ssed su pra, on ly exem pt ed t h e
disposit ion s of ben efit s fr om t he a lien a t ion pr oh ibit ion in su ch ca ses).
275. H .R. 4200, 93d Con g. § 694, a t 218-19 (1st Sess. 1973), reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 1882, 2100-01.
276. H .R. 4200, 93d Con g. § 691(a ), (b), & (d), a t 214-15 (1st Sess. 1973),
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 1882, 2096.
198
T h e J oh n M arsh all L aw R eview
[47:145
277
pr ocess for su ch pen sion pla n s t o be fa ir a n d effect ive.
In la t e Sept em ber 1973, t wo H ou se bills wer e in t r odu ced a n d
r efer r ed t o t h e Wa ys a n d Mea n s Com m it t ee followin g. F ir st , on
Sept em ber 24, 1973, Repr esen t a t ive Al Ullm a n , a ct in g Ch a ir of
t h e Wa ys a n d Mea n s Com m it t ee, in t r odu ced H .R. 10470, wh ich
278
wa s r efer r ed t o t h e Wa ys a n d Mea n s Com m it t ee.
H .R. 10470
wa s iden t ica l t o t h e H .R. 4200 a ppr oved by t h e Sen a t e on
279
Sept em ber 19, 1973.
Th u s, t h e bill in clu ded a s n ew t a x
qu a lifica t ion r equ ir em en t s, a n a lien a t ion pr oh ibit ion a n d a
spou sa l su r vivor ben efit pr ovision . Th er e wer e n o pr eem pt ion
pr ovision s. Secon d, on Sept em ber 25, 1973, Repr esen t a t ive J oh n
E r len bor n , t h e r a n kin g Repu blica n on t h e H ou se Com m it t ee on
E du ca t ion a n d La bor , in t r odu ced H .R. 10489, wh ich wa s r efer r ed
280
t o t h e Wa ys a n d Mea n s Com m it t ee.
Th e bill con t a in ed n o
spou sa l su r vivor ben efit ’s pr ovision , a n d t h e a lien a t ion pr oh ibit ion
wa s n ot a t a x-qu a lifica t ion r equ ir em en t . H owever , t h e a lien a t ion
281
pr oh ibit ion wa s pa r t of t h e su bst a n t ive vest in g r equ ir em en t s,
282
a n d wa s a ccom pa n ied by a pr eem pt ion pr ovision .
On F ebr u a r y 5, 1974, Repr esen t a t ive Ullm a n in t r odu ced H .R.
283
12481, wh ich wa s r efer r ed t o t h e Wa ys a n d Mea n s Com m it t ee h e
ch a ir ed, a n d like S. 1179 discu s sed, su pra, ba sed it s em ployee
ben efit r egu la t ion on Code sa n ct ion s r a t h er t h a n in depen den t
obliga t ion s. H .R. 12481 pr ovided t h a t if a pen sion pla n pr ovides
for a n n u it y pa ym en t s, t h en t h e defa u lt ben efit m u st be a join t a n d
su r vivor , wh ich t h e pa r t icipa n t wa s per m it t ed t o wa ive wit h ou t
a n y n ot ice t o h is spou se, a lt h ou gh t h e r equ ir em en t wa s on ly a t a x 284
qu a lifica t ion r equ ir em en t .
Th e a ccom pa n yin g H ou se Repor t
obser ves t h a t t h is pr ovision is in t en ded t o per m it a pa r t icipa n t t o
pr ot ect h is spou se by r equ ir in g t a x-qu a lified pen sion pla n s t o give
ea ch pa r t icipa n t t h e opt ion of ch oosin g a join t a n d su r vivor
285
a n n u it y wh en t h e pa r t icipa n t select s h is ben efit .
H .R. 12481, lik e H .R. 10489, pr oh ibit ed t h e a lien a t ion of
pen sion pla n ben efit s, bu t u n lik e H .R. 10489, m a d e t h e pr oh ibit ion
286
on ly a t a x-qu a lifica t ion r equ ir em en t .
Th e bill did n ot t r ea t a s a n
277. H .R. 4200, 93d Con g. § 691(c), a t 215 (1st Sess. 1973), reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 1882, 2097.
278. H .R. 10470, 93d Con g. a t 1 (1st Sess. 1973).
279. E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 224.
280. H .R. 10489, 93d Con g. a t 1 (1st Sess. 1973).
281. Id . § 203(d) a t 75.
282. Id . § 414 a t 115.
283. H .R. 12481, 93d Con g. (2d Sess. 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 2394-2583.
284. H .R. 12481, 93d Con g. § 1021(a ) (2d Sess. 1974), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 2394, 2468-69.
285. P r iva t e P en sion Ta x Refor m , H . R E P . N O . 93-779 (2d Sess. 1974),
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 2584, 2654-655.
286. H .R. 12481, 93d Con g. § 1021(c) (2d Sess. 1974), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 2394, 2470-71.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
199
a lien a t ion “a n y volu n t a r y a n d r evoca ble a ssign m en t of n ot t o
exceed 10 per cen t of a n y ben efit pa ym en t for t h e pu r pose of pa yin g
pr em iu m s on life, m edica l, or h ospit a l in su r a n ce or for a n y
n on com m er cia l a n d n on pr ofit pu r pose specified u n der r egu la t ion s
287
pr escr ibed by t h e Secr et a r y or h is delega t e.”
Th e a ccom pa n yin g
H ou se Repor t descr ibes t h e pu r pose of t h is pr oh ibit ion a s “[t ]o
fu r t h er en su r e t h a t t h e em ployee’s a ccr u ed ben efit s a r e a ct u a lly
288
a va ila ble t o r et ir em en t pu r poses,”
a n d descr ibed t h e 10%
289
except ion a s design ed t o r ein for ce t h is pu r pose.
On F ebr u a r y 19, 1974, Repr esen t a t ive U llm a n in t r odu ced
290
291
H .R. 12855,
wh ich r epla ced H .R. 12481, a n d, in t u r n , r epla ced
H .R. 10470, a s t h e E m ployee Ben efit P r ot ect ion Act con sider ed by
t h e Wa ys a n d Mea n s Com m it t ee.
H .R. 12855 did n ot
292
su bst a n t ively ch a n ge t h e spou sa l ben efit .
No pr ovision r equ ir ed
spou sa l ben efit s fr om pla n s ot h er t h a n t a x-qu a lified pen sion pla n s,
su ch a s pen sion pla n s est a blish ed pr im a r ily for a select gr ou p of
m a n a gem en t em ployees, life in su r a n ce pla n s, or disa bilit y pla n s.
On F ebr u a r y 21, 1974, H .R. 12855 wa s r epor t ed ou t of t h e
Wa ys a n d Mea n s Com m it t ee. Am on g t h e ch a n ges wa s t h e
om ission of a n y r est r ict ion on t h e u se of t h e volu n t a r ily a ssign ed
293
pen sion ben efit fr om t h e 10% except ion .
As discu ssed su pra, t h e
m ost r ecen t Sen a t e bill a dopt ed pr ior t o t h is, i.e., H .R. 4200 a s
a dopt ed on Sept em ber 19, 1973, h a d n o 10% except ion , bu t h a d a n
except ion wh en ben eficia r ies “ca n n ot be loca t ed or a scer t a in ed
294
wit h in su ch r ea son a ble per iod of t im e.”
In F ebr u a r y of 1974, t h er e wa s a lso a ct ivit y in t h e H ou se
Com m it t ee on E du ca t ion a n d La bor . On F ebr u a r y 13, 1974,
Repr esen t a t ive Den t , wh o ch a ir ed t h e H ou se Gen er a l La bor
Su bcom m it t ee of t h e H ou se Com m it t ee on E du ca t ion a n d La bor ,
295
in t r odu ced H .R. 12781,
wh ich wa s r efer r ed t o t h e H ou se
Com m it t ee on E du ca t ion a n d La bor . Lik e H .R. 10489, in t r odu ced
by Repr esen t a t ive E r len bor n a n d discu ssed, su pra, H .R. 12781
h a d a su bst a n t ive r equ ir em en t t h a t pen sion pla n s pr oh ibit
287. H .R. 12481, 93d Con g. § 1021(c) (2d Sess. 1974), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 2394, 2471.
288. P r iva t e P en sion Ta x Refor m , H . R E P . N O . 93-779 (2d Sess. 1974),
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 2584, 2655.
289. P r iva t e P en sion Ta x Refor m , H . R E P . N O . 93-779, a t 67 (2d Sess.
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 2584, 2656.
290. H .R. 12855, 93d Con g. (2d Sess. 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 2924-3114.
291. E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 237.
292. H .R. 12855, 93d Con g. § 1021(a ) (2d Sess. 1974), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 2924, 2998-3000.
293. H .R. 12855, 93d Con g. § 1021(c) (2d Sess. 1974), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 2924, 3002.
294. H .R. 4200, 93d Con g. § 261 (1st Sess. 1973), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 1882, 1946-47.
295. H .R. 12781, 93d Con g. (2d Sess. 1974).
200
T h e J oh n M arsh all L aw R eview
[47:145
296
a ssign m en t s.
Mor eover , u n like H .R. 10489, t h e sect ion
gover n in g t h e dist r ibu t ion of pen sion ben efit s a lso in clu ded a
su bst a n t ive r equ ir em en t for spou sa l su r vivor pen sion ben efit s if
297
t h e pla n offer ed a n n u it y ben efit s.
On F ebr u a r y 20, 1974, Repr esen t a t ive Den t in t r odu ced a n d
su bm it t ed t o t h e H ou se Com m it t ee on E du ca t ion a n d La bor , H .R.
298
299
12906, wh ich r epla ced H .R. 12781, a n d a lso r evised H .R. 2.
Th is r evision m a de n o ch a n ge in t h e su bst a n t ive r equ ir em en t for
spou sa l su r vivor pen sion ben efit s or it s pla cem en t a m on g t h e
dist r ibu t ion r equ ir em en t s. H owever , t h e su bst a n t ive r equ ir em en t
pr oh ibit in g t h e a lien a t ion of ben efit s wa s m oved in a n u n ch a n ged
300
for m t o t h e sect ion con cer n in g fidu cia r y r espon sibilit ies.
On F ebr u a r y 25, 1974, Repr esen t a t ive P er kin s a n n ou n ced
t h a t H .R. 12906 wou ld be com bin ed wit h H .R. 12855, wh ich
con t a in ed a m en dm en t s t o t h e Code con sist en t wit h t h e
r equ ir em en t s t h a t n ot depen d on pla n s bein g t a x-qu a lified set
for t h in H .R. 12906, t o for m a com pr eh en s ive bill t o r epla ce H . R.
301
2.
Repr esen t a t ive P er kin s, Ch a ir of t h e H ou se Com m it t ee on
E du ca t ion a n d La bor su m m a r ized t h e bill in r em a r ks t o t h e H ou se
302
on t h e sa m e da y.
Th e n ew bill wou ld con t a in t wo t it les, t h e fir st
con t a in ed r egu la t ion s of em ployee ben efit pla n s der ived fr om H .R.
12906, a n d t h e secon d con t a in ed a m en dm en t s t o t h e Code
con sist en t wit h t h ose r egu la t ion s der ived fr om H .R. 12855.
G. T h e Fin al Pre-Con feren ce R evision s of th e H ou se an d S en ate
B ills T h at Will B e T ran sform ed in to E R IS A (1) E xplicitly E xclu d e
B en efits Claim s an d L aw s Govern in g B an k in g, In su ran ce, an d
S ecu rities from Preem ption , (2) R equ ire a S pou sal S u rvivor
B en efit, an d (3) Proh ibit Pen sion B en efit Alien ation
On Ma r ch 4, 1974, t h e Sen a t e a ppr oved a r evised for m of H .R.
4200, wh ich wa s pr esen t ed t o t h e H ou se a s a r evision of t h e H .R.
303
2. Ot h er t h a n ch a n gin g th e st a t u t or y r efer en ces t o be con sist en t
wit h t h e n u m ber s in t h e cu r r en t bill t h er e wa s n o ch a n ge in t h e
or igin a l pr eem pt ion sect ion , wh ich wa s a pplica ble t o st a t e la ws
296. S ee Id . a t § 204(d) (per t a in in g t o t h e dist r ibu t ion of ben efit s r a t h er
t h a n t h e vest in g of ben efit s a s in H .R. 10489).
297. Id . a t § 204(c).
298. E m ployee Ben efit Secu r it y Act , H .R.12906, 93d Con g. § 111(i) (2d
Sess. 1974), reprin ted in E RISA LE G. H ISTORY, su pra not e 165, a t 2761,
2820.
299. E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 237.
300. E m ployee Ben efit Secu r it y Act , H .R.12906, 93d Con g. (2d Sess. 1974),
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 2761-2923.
301. 120 C ON G . R E C . 3977 (F eb. 25, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 3293.
302. 120 C ON G . R E C . 3977-4001 (F eb. 25, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 3293-3350.
303. Ret ir em en t In com e Secu r it y Act , H.R. 2, 93d Con g. § 699 (2d Sess.
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 3599-3895.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
201
r ela t in g t o t h e u n specified su bject m a t t er s r egu la t ed by t h e
304
legisla t ion wit h t h e except ion of r igh t s t o r ecover ben efit s.
Th e
spou sa l su r vivor ben efit pr ovision s a n d t h e a lien a t ion pr oh ibit ion
wer e sim ila r ly u n ch a n ged, a n d bot h a ppea r ed on ly in t h e t a x
305
qu a lifica t ion r equ ir em en t s.
On F ebr u a r y 28, 1974, t h e H ou se a ppr oved a r evised for m of
306
H .R. 2 by a vot e of 376 t o 4.
Th e r evision s wit h t ech n ica l
307
cor r ect ion s a dded by t h e H ou se cler k in clu ded n o su bst a n t ive
ch a n ge in t h e r igh t of pa r t icipa n t s a n d ben eficia r ies t o br in g civil
308
a ct ion s t o r ecover ben efit s du e u n der t h e t er m s of t h e pla n , a n d
con t in u ed t o h a ve n o pr ovision gover n in g t h e cla im s r eview
pr ocess of t h e pla n . Th e r evision in clu ded t h e followin g m or e
ext en sive pr eem pt ion pr ovision :
Sec. 514. (a ) It is h er eby decla r ed t o be t h e expr ess in t en t of
Con gr ess t h a t , except for action s au th orized by section 503(e) (1) (B )
of th is A ct [ben efit claim s] a n d except a s pr ovided in su bsect ion (b) of
t h is sect ion t h e pr ovision s of pa r t 1 of t h is su bt it le sh a ll su pe r sede
a n y a n d a ll la ws of t h e St a tes a n d of polit ica l su bdivision s t h er eof
in sofa r a s th ey m ay n ow or h ereafter relate to th e reportin g an d
d isclosu re respon sibilities, an d fid u ciary respon sibilities , of per son s
a ct in g on beh a lf of a n y em ployee ben efit pla n t o wh ich pa r t 1
a pplies.
(b) Not h in g in pa r t 1 of t h is su bt it le sha ll be con st r u ed t o exem pt or
r elieve a n y per son fr om a n y la w of a n y St a t e wh ich regu lates
in su ran ce, ban k in g, or secu rities or t o pr oh ibit a St a t e fr om
r equ ir in g t h a t t h er e be filed wit h a St a t e a gen cy copies of r epor t s
r equ ir ed by t h is t it le t o be filed wit h t h e Secr et a r y. N o em ployee
ben efit plan su bject to th e provision s of th is title (oth er th an a plan
establish ed prim arily for th e pu rpose of provid in g d eath ben efits),
n or an y tru st establish ed u n d er su ch a plan , sh all be d eem ed to be an
in su ran ce com pan y or oth er in su rer, ban k , tru st com pan y, or
in vestm en t com pan y or t o be en ga ged in t h e bu sin ess of in su r a n ce or
ba n kin g for pu r poses of a n y la w of a n y St a t e pu r por t in g t o r egu la t e
in su r a n ce com pa n ies, in su r a n ce con t r a ct s, ba n ks, t r u st com pa n ies,
or in vest m en t com pa n ies.
304. Ret ir em en t In com e Secu r it y Act , H.R. 2, 93d Con g. § 699 (2d Sess.
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 3599, 3820.
305. Ret ir em en t In com e Secu r it y Act , H .R. 2, 93d Con g. § 261(a ) (2d Sess.
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 3599, 3664.
306. 120 C ON G . R E C . 4781-82 (F eb. 28, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 162, a t 3593-96 (st a t in g t h a t fift y of t h e fift y-on e a bsen t
m em ber s wer e pa ir ed, so if t h e pa ir ed Con gr essm a n h a d vot ed t h e r esu lt
wou ld h a ve been 401-29). Th e H ou se t h en u n a n im ou sly a u t h or ized t h e Cler k
t o m a ke t ech n ica l cor r ect ion s in pu n ct u a t ion , pa r a gr a ph h ea din gs a n d cr oss r efer en ces. 120 C ONG . R E C . 4782 (F eb. 28, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 3596.
307. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. (2d Sess. 1974),
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 3898-4250.
308. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. § 502(e)(1)(B), at
150 (2d Sess. 1974), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t
3898, 4047.
202
T h e J oh n M arsh all L aw R eview
[47:145
(c) It is h er eby decla r ed t o be t h e expr ess in t en t of Con gr ess t h a t t h e
pr ovision s of pa r t s 2, 3, a n d 4 of t h is su bt it le sha ll su per sede a n y
a n d a ll la ws of t h e St a t es a n d of polit ica l su bdivision s t h er eof
in sofa r a s th ey m ay n ow or h ereafter relate to th e n on forfeitability of
participan t’s ben efits in em ployee ben efit plan s d escribed in section
201(a) or 301(a) [i.e., su bject to su ch ru les], th e fu n d in g requ irem en ts
for su ch plan s, th e ad equ acy of fin an cin g of su ch plan s, portability
requ irem en ts for su ch plan s, or th e in su ran ce of pen sion ben efits
u n d er su ch plan s.
(d) Not h in g in t h is sect ion sh a ll be con st r u ed t o pr oh ibit a
delega t ion of a u t h or it y by t h e Secr et a r y t o a n a ppr opr ia t e St a t e
a gen cy a s per m it t ed u n der sect ion 506 of t h is Act .
(e) Not h in g in t h is t it le sh a ll be con st r u ed t o a lt er , a m en d, m odify,
in va lida t e, im pa ir , or su per sede a n y la w of t h e Un it ed St a t es (except
a s pr ovided in 115(a ) [u n der t h e a pplica ble t er m s of t h e WP P DA for
per iods befor e it s r epea l by t h is Act ]) or a n y r u le or r egu la t ion
309
issu ed u n der a n y su ch la w.
Th is sign ifica n t ly br oa den ed t h e scope of pr eem pt ion t h a t wa s
in t h e in it ia l H ou se legisla t ion . F ir st , t h e gover n m en t in su r a n ce of
ben efit s a n d t h e su bst a n t ive fu n din g, por t a bilit y, n on for feit a bilit y
r equ ir em en t s explicit ly h a ve pr eem pt ion effect s. Th e in it ia l H ou se
bill con t a in ed t h ose fea t u r es, bu t did n ot give a n y of t h em
pr eem pt ive effect . Th e bill la st a ppr oved by t h e Sen a t e con t a in ed
310
su ch fea t u r es, bu t it s pr eem pt ion pr ovision wa s ba sed on a less
311
explicit r en dit ion of t h e pr ovision s h a vin g a pr eem pt ive effect .
Secon d, u n like t h e bill la st a ppr oved by t h e Sen a t e, t h e H ou se bill
su bst a n t ia lly dim in ish ed t h e ba n k in g, in su r a n ce, a n d secu r it ies
exclu sion s by a ddin g a so-ca lled deem er cla u se, wh ich pr even t s
t h ose exclu sion s fr om bein g u sed t o t r ea t em ployee ben efit pla n s
312
a s en ga ged in a n y su ch a ct ivit ies.
Th u s, it wou ld a ppea r t h a t
t h e st a t es m a y u se t h ese la ws on ly t o r egu la t e pr ovider s of
ba n kin g, in su r a n ce, a n d secu r it ies ser vices t o em ployee ben efit
pla n s. Th e on ly except ion is for a pla n a ct in g pr im a r ily t o pr ovide
life in su r a n ce. H owever , t h er e is n o sim ila r except ion a ct in g
pr im a r ily t o pr ovide h ea lt h in su r a n ce. Th u s, t h e bill pe r m it s
pla n s t o self-in su r e for h ea lt h ca r e cost s, bu t n ot for life in su r a n ce,
u n less t h e la t t er is in ciden t a l t o a n ot h er pu r pose, su ch a s
pr ovidin g pen sion s. On t h e ot h er h a n d, a s discu ssed, in fra, st a t es
m a y r egu la t e t h e wa y em ployee ben efit pla n s ch oose t o pr ovide
309. E m ployee Ben efit Secu r it y Act , H .R. 2 § 514(a ), a t 160, 93d Con g. (2d
Sess. 1974), reprin ted in E RISA LE G. H ISTORY, su pra not e 165, a t 3898,
4057-59 (em ph a sis a dded).
310. Ret ir em en t In com e Secu r it y for E m ployees Act , H .R. 4200, Ti t les II-V,
a t 13- 202, 93d Con g. (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY,
su pra n ot e 165, a t 1883, 1895-2084.
311. Ret ir em en t In com e Secu r it y for E m ployees Act , H .R. 4200, § 699, a t
221, 93d Con g. (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pra
n ot e 165, a t 1883, 2103.
312. S ee gen erally E RISA L ITIGATION , su pra n ot e 13, 145-54 (4t h ed. 2011).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
203
h ea lt h ca r e, bu t n ot t h e wa y t h e pla n s ch oose t o pr ovide ba n k in g
ser vices, su ch a s pa r t icipa n t loa n s
Th e r evised for m of H .R. 2 a dopt ed by t h e H ou se r et a in ed t h e
spou sa l su r vivor a n d a lien a t ion pr oh ibit ion pr ovision s of it s t wo
pr ecu r sor s.
Th er e wa s n o ch a n ge in t h e H .R. 12855 t a x313
qu a lifica t ion r equ ir em en t s for spou sa l su r vivor ben efit s or t h e
314
a lien a t ion pr oh ibit ion .
Nor wa s t h er e a ch a n ge t o t h e spou sa l
su r vivor pr ovision s fr om t h e H .R. 12906 ben efit dist r ibu t ion
315
r equ ir em en t s, or t o t h e fidu cia r y r equ ir em en t of a n a lien a t ion
316
pr oh ibit ion .
Bot h r em a in ed pla n r equ ir em en t s in depen den t of
t h e pla n t a x qu a lifica t ion r u les.
Aft er a floor discu ssion , t h e H ou se a dopt ed m or e dem a n din g
ben efit t er m s m a n da t es design ed t o ben efit wom en , s u ch a s a n
a m en dm en t by Con gr esswom a n Bella Abzu g t o liber a lize t h e
pen sion pla n pa r t icipa t ion r u les, wh ich sh e a sser t ed wou ld be
pa r t icu la r ly h elpfu l t o wom en wh o a r e oft en in t h e pa id wor k for ce
317
for less t im e t h a n m en .
Con gr esswom en Sh ir ley Ch ish olm
offer ed con sider a ble da t a t o su ppor t pr oposa ls for m or e liber a l
pa r t icipa t ion r u les a n d qu a lifica t ion for spou sa l ben efit s, wh ich
pr oposa ls wou ld pa r t icu la r ly ben efit wom en a n d low -pa id
318
wor k er s.
P r ior t o t h e floor discu ssion , Con gr esswom a n P a t r icia
Sch r oeder expr essed h er en t h u sia st ic su ppor t for t h e pr oposed bill,
in clu din g it s defa u lt join t a n d su r vivor a n n u it y pr ovision , wh ich
319
cou ld on ly be wa ived by a n in for m ed pa r t icipa n t .
Alt h ou gh sh e
offer ed n o su ch a m en dm en t , Con gr esswom a n Sch r oeder expr essed
a pr efer en ce for a pr ovision in wh ich bot h t h e pa r t icipa n t a n d t h e
pa r t icipa n t ’s spou se wou ld h a ve t o con sen t t o t h e wa iver of t h e
320
defa u lt ben efit .
F in a lly, t h e H ou se r eject ed a pr oposa l by
Con gr esswom a n E liza bet h H olt zm a n , wh ich wou ld h a ve r equ ir ed
pen sion pla n s t o offer spou sa l su r vivor ben efit s in t h e even t a
pa r t icipa n t died befor e r ea ch in g t h e pla n ’s n or m a l r et ir em en t
321
ben efit .
313. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. § 1021(a ) (2d Sess.
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 3898, 4132-35.
314. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. § 1021(c) (2d Sess.
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 3898, 4136.
315. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. § 204(c)(1) (2d Sess.
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 3898, 3981-83.
316. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. § 111(i) (2d Sess.
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 3898, 3956.
317. 120 C ON G . R E C . 4722-23 (F eb. 28, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 3507-12.
318. 120 C ON G . R E C . 4773-75 (F eb. 26, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 1165, a t 3495-96.
319. 120 C ON G . R E C . 4316-17 (F eb. 26, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 3495-97.
320. 120 C ON G . R E C . 4317 (F eb. 26, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 3497.
321. 120 C ON G . R E C . 4723-26 (F eb. 28, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 3512-18.
204
VI.
T h e J oh n M arsh all L aw R eview
[47:145
LE GISLATIVE H ISTORY OF E RISA P RE E MP TION
P ROVISIONS, RIGH TS OF P ARTICIP AN TS TO E N F ORCE
BE NE F IT RIGH TS, SP OU SAL P ROTE CTION S, AND
ALIE NATION P ROH IBITION BE TWE E N AP RIL 1974
SUBMISSION OF H OUSE AND SE NATE BILLS TO
CONF E RE NCE COMMITTE E AND TH E E NACTME NT OF
E RISA
In Apr il 1974, t h e Con fer en ce Com m it t ee wa s pr esen t ed wit h
t wo bills, a s discu ssed in fra. E a ch bill sh a r ed sligh t ly differ en t
ver sion s of fou r ch a r a ct er ist ics, a n d im posed su bst a n t ia l r epor t in g
a n d disclosu r e m a n da t es, ben efit t er m s m a n da t es, fu n din g
m a n da t es, a n d fidu cia r y m a n da t es on t h e em ployee ben efit pla n s
cover ed by t h e r espect ive bills. F ir st , bot h pr ovided pa r t icipa n t s
a n d ben eficia r ies wit h t h e r igh t t o br in g feder a l civil a ct ion s t o
r ecover ben efit s du e u n der t h e t er m s of t h e pla n s cover ed in t h e
r espect ive bills. Secon d, bot h pr ovided t h a t st a t e la ws t h a t r ela t ed
t o su bject m a t t er s r egu la t ed by t h e pr oposed legisla t ion wou ld be
pr eem pt ed. Th ir d, fou r la ws wer e explicit ly exclu ded t o som e
ext en t fr om pr eem pt ion : ba n kin g la w, in su r a n ce la w, secu r it ies
la w, a n d a n y st a t e la w a ffect in g t h e r igh t s of pa r t icipa n t s or
ben eficia r ies t o r ecover pla n ben efit s. F ou r t h , bot h r e qu ir ed som e
pen sion pla n s, bu t n o welfa r e pla n s, t o pr ovide defa u lt spou sa l
ben efit s a n d t o pr oh ibit t h e a lien a t ion of t h eir ben efit s.
E a ch of t h ese fou r ch a r a ct er ist ics wa s ch a n ged, a s discu ssed,
in fra, in t h e bill r epor t ed by t h e Con fer en ce Com m it t ee, wh ich
beca m e t h e in it ia l ver sion of E RISA. F ir st , pa r t icipa n t s a n d
ben eficia r ies wer e given n ot on ly t h e r igh t t o r ecover ben efit s du e
u n der a ll pla n s, bu t t h e r igh t t o h a ve a cla im s fidu cia r y r eview
t h eir ben efit cla im , a n d t h e a bilit y t o “en for ce [in fede r a l cou r t ] h is
r igh t s u n der t h e t er m s of t h e pla n .” Secon d, pr eem pt ion wa s n o
lon ger lim it ed t o m a t t er s r egu la t ed by t h e legisla t ion , bu t r a t h er
a pplied t o a n y st a t e la w t h a t m a y “r ela t e t o a n y [E RISA] em ployee
ben efit pla n .” Th ir d, t h e m a jor pr eem pt ion exclu sion for la ws
a ffect in g t h e r igh t s of pa r t icipa n t s or ben eficia r ies t o r ecover pla n
ben efit s wa s r epla ced by a n a r r ow exclu sion lim it ed t o gen er a lly
a pplica ble cr im in a l la ws, a n d t h e ba n k in g, in su r a n ce, a n d
secu r it ies la w exclu sion wa s n a r r owed t o pr even t t h e r egu la t ion of
pla n a ct ivit ies (ot h er t h a n t h ose of a pla n pr im a r ily a ct in g a s a life
in su r er ). F ou r t h , pen sion pla n s ot h er t h a n u n fu n ded execu t ive
pla n s, wer e r equ ir ed t o pr ovide spou ses wit h defa u lt su r vivor
ben efit s if t h ey pr ovided a n n u it y ben efit s, a n d t o pr oh ibit t h e
a lien a t ion of t h eir ben efit s.
Th ese ch a n ges, on t h eir fa ce, cla r ify t h e t er m s of t h e r equ ir ed
spou sa l su r vivor pr ovision a n d a lien a t ion pr oh ibit ion wit h in
E RISA, a n d t h e scope of t h e E RISA E xpr ess P r eem pt ion . Th e
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
205
pr oh ibit ed r ela t ion a ppea r s t o be a n effect n ot on ly on m a n da t es,
bu t on en for cem en t m ech a n ism s a n d /or ben efit r igh t s. E RISA
does n ot discu ss h ow m u ch of a n effect r esu lt s in pr eem pt ion . Like
it s pr edecessor s, E RISA does n ot descr ibe h ow t o det er m in e
322
wh et h er a st a t e la w h a s t h e r ela t ion t h a t r esu lt s in pr eem pt ion .
As wa s t h e ca se wit h t h e pr e-con fer en ce bills, E RISA a ppea r s t o
pr eem pt a n y st a t e la w im posin g a r epor t in g a n d disclosu r e
m a n da t e, ben efit t er m s m a n da t e, fu n din g m a n da t e, or a fidu cia r y
m a n da t e on a pla n for wh ich E RISA im poses su ch m a n da t es.
H owever , a n y r a t ion a l in t er pr et a t ion wou ld per m it st a t e -la w
r egu la t ion s of h ea lt h , wh ich a r e n ot ot h er wise pr eem pt ed by
E RISA, t o im pose r epor t in g m a n da t es a n d ben efit r est r ict ion s a s
discu ssed su pra.
E RISA lea ves lit t le qu est ion t h a t E RISA pr eem pt s st a t e la ws
t h a t seek t o im pose a r epor t in g a n d disclosu r e m a n da t e, ben efit
t er m s m a n da t e, fu n din g m a n da t e, or a fidu cia r y m a n da t e on a n y
E RISA pla n , su ch a s ben efit t er m s m a n da t es on u n in su r ed h ea lt h
ca r e r eim bu r sem en t pla n s, even t h ou gh E RISA im poses n o su ch
m a n da t es on su ch pla n s except t o t h e ext en t , a s discu ssed su pra,
su ch pr ovision s a r e n eeded t o im plem en t a st a t e la w t h a t is n ot
ot h er wise pr eem pt ed. Th er e a lso seem s t o be lit t le qu est ion t h a t
E RISA pr eem pt s a n y st a t e la w t h a t a dds, su pplem en t s, or
dim in ish es a n E RISA en for cem en t m ech a n ism ot h er t h a n a
gen er a lly a pplica ble cr im in a l la w.
Th u s, t h er e seem s lit t le
qu est ion t h a t st a t e la ws cr im in a lizin g t h e fa ilu r e t o m a ke a
r equ ir ed em ployee ben efit pla n con t r ibu t ion wou ld be pr eem pt ed
u n less t h ey wer e gen er a lly a pplica ble.
F in a lly, E RISA pr ovides pa r t icipa n t s n ot on ly wit h t h e r igh t
t o r ecover ben efit s (in clu din g t h e r igh t t o r eceive ben efit pa ym en t s
fr om a cover ed pla n ), bu t su ch ot h er r igh t s a s t h e r igh t t o ch oos e
t h e t im e or m a n n er of ben efit pa ym en t , design a t e a ben eficia r y, or
t o ch oose pla n in vest m en t s. Th u s, t h ose r igh t s r ela t e t o pla n s
cover ed by t h e bills. Th er efor e, it wou ld a ppea r t h a t E RISA
pr eem pt s a n y st a t e la w pr even t in g t h e exer cise of a n y of t h ose
r igh t s. In pa r t icu la r , t h e fin a l bill r evision s m a de in dica t e t h a t
E RISA pr eem pt s st a t e la ws r equ ir in g: (1) pen sion pla n s t o
wit h h old t a xes fr om pen sion pa ym en t s; (2) em ployee ben efit pla n s
322. B u t see E m ployee Ret ir em en t In com e Secu r it y Act of 1974 § 514(c)(2)
in H .R. Rep. No. 93-1280 a t 82 (1974) reprin ted in E RISA LE G. H ISTORY,
su pra n ot e 165, a t 4277, 4358 (defin in g st a t es a s en t it ies wh ich pu r por t t o
r egu la t e t h e t er m s a n d con dit ion s of E RISA pla n s m a y su ggest t h a t E RISA
pr eem pt s on ly st a t e la ws t h a t a r e design ed t o r egu la t e su ch pla n t er m s). Th is
su ggest ion wou ld be m or e con vin cin g if t h e la n gu a ge wer e con t a in ed in t h e
defin it ion of st a t e la w a t § 514(c)(1) or in t h e r ela t e cla u se a t § 514(a ) of t h e
sa m e bill. Mor eover , su ch in t er pr et a t ion wou ld im ply t h a t E RISA does n ot
pr eem pt a n y gen er a lly a pplica ble la ws beca u se a gen er a lly a pplica ble st a t u t e
is pr esu m a bly n ot design ed, a t lea st n ot design ed pr in cipa lly t o r egu la t e
E RISA pla n s. Th u s, t h er e wou ld h a ve been n o r ea son t o exclu de gen er a lly
a pplica ble cr im in a l la ws fr om t h e E RISA E xpr ess P r eem pt ion Ru le.
206
T h e J oh n M arsh all L aw R eview
[47:145
t o ga r n ish ben efit pa ym en t s t o pa y a pa r t icipa n t ’s debt s; (3)
em ployee ben efit pla n s t o pa y a pa r t icipa n t ’s ben efit s pu r su a n t t o
t h e t er m s of dom est ic r ela t ion s or der ; or (4) em ployee ben efit pla n s
t o m a ke pla n pa ym en t s in a ccor d wit h a pa r t icipa n t ’s com m u n it y
pr oper t y in t er est in t h e ben efit s. Ta x wit h h oldin gs, u n lik e t a x
r epor t s, a r e n ot n eeded t o en for ce st a t e in com e t a xes, a s sh own by
t h e m a n y for m s of in com e su bject t o feder a l t a x r epor t in g bu t n o
m a n da t or y wit h h oldin g, su ch a s bu sin ess pa ym en t s t o
323
in depen den t con t r a ct or s.
Th u s, m a n da t or y wit h h oldin g m a y n ot
be ju st ified a s n eeded t o im plem en t a st a t e la w t h a t E RISA does
n ot pr eem pt in t h e sa m e fa sh ion t h a t E RISA does n ot pr eem pt t h e
m a n da t e t h a t E RISA pla n s r epor t a n n u a l ben efit pa ym en t s t o t h e
324
st a t es t a xin g su ch pa ym en t s.
Th is t ext u a l a n a lysis does n ot r esolve a ll pr eem pt ion issu es.
Qu est ion s r em a in a bou t st a t e la ws a ffect in g a n y E RISA ben efit
pr ot ect ion in a n on -t en u ou s m a n n er , h owever defin ed, wh ich does
n ot im pose a m a n da t e descr ibed a bove, ch a n ge a n en for cem en t
m ech a n ism , or pr even t t h e exer cise by a pa r t icipa n t or a
ben eficia r y of a ben efit r igh t u n der t h e t er m s of a n E RISA pla n .
Th er e a r e a lso qu est ion s a bou t t h e m ea n in g of t h e wor ds
“pr even t ,” “im pose,” or “ch a n ge,” a n d t h e ext en t of ben efit r igh t s ,
pa r t icu la r ly for dist r ibu t ed ben efit s .
A. T h e April 1974 Ad m in istration Proposal to th e Con feren ce
Com m ittee T h at On ly L aw s R elated to th e R egu lation of
S pecified Areas B e Preem pted , w ith E xplicit E xclu sion s for
B en efit Claim s, T ax, B an k in g, In su ran ce, an d S ecu rities L aw s
On Apr il 2, 1974, a con fer en ce com m it t ee wa s a ppoin t ed t o t r y
t o pr odu ce legisla t ion t h a t bot h h ou ses cou ld a ppr ove (t h e
325
“Con fer en ce Com m it t ee”).
Befor e t h e en d of Apr il, t h e
Adm in ist r a t ion pr epa r ed a n d su bm it t ed t o t h e Con fer en ce
Com m it t ee m em ber s (t h e “Con gr ession a l Con fer ees”) a n a n a lysis
326
of ea ch of t h e differ en t a ppr oa ch es in t h e t wo ver sion s of H .R. 2.
Th e Adm in ist r a t ion con clu ded t h er ein t h a t :
Th e pr eem pt ion pr ovision s u n der t h e H ou se bill a r e ext r em ely
va gu e, wh ile t h e Sen a t e bill is t oo br oa d sin ce it pr eem pt s a ll st a t e
la ws cover in g a r ea s r egu la t ed u n der t h e Act , wh ich in clu des th e tax
327
aspects of retirem en t plan s.
323. Code § 6041 (2013). B u t see Code § 3406 (r equ ir in g wit h h oldin g if t h e
pa yee does n ot pr ovide h is t a xpa yer iden t ifica t ion n u m ber t o t h e pa yor ).
324. S ee e.g., IRS 2013 F or m 1099-R Copy 1 wh ich m a y be u sed t o m a ke
a n n u a l filin gs r e pen sion pla n dist r ibu t ion s wit h st a t es.
325. Repr in t ed in E RISA LE G. H ISTORY, su pr a n ot e 165 a t 4276.
326. Adm in ist r a t ion Recom m en da t ion s t o t h e H ou se a n d Sen a t e Con fer ees
on H . R. 2 t o P r ovide for P en sion Refor m (Apr . 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 5047, 5047-5149.
327. Adm in ist r a t ion Recom m en da t ion s t o t h e H ou se a n d Sen a t e Con fer ees
on H . R. 2 t o P r ovide for P en sion Refor m , a t 108 (Apr . 1974), reprin ted in
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
207
Mor eover , t h e Adm in ist r a t ion pr oposed t h e followin g
la n gu a ge t o a ddr ess bot h it s gen er a l con cer n a bou t t h e ext en t of
t h e pr eem pt ion , a n d it s specific con cer n a bou t t h e a bilit y of st a t es
t o det er m in e h ow t o t a x r et ir em en t pla n s, a n d t h eir pa r t icipa n t s:
E F F E CT ON OTH E R LAWS
It is h er eby decla r ed t o be t h e expr ess in t en t of Con gr ess t h a t except
for action s au th orized by S ection (fill in th e S ection w h ich perm its a
participan t to brin g a civil action in S tate or Fed eral cou rt) t h e
pr ovision s of (list t h e Tit les or Sect ion s wh ich dea l wit h
pa r t icipa t ion , vest in g, fu n din g, r epor t in g, disclosu r e a n d fidu cia r y
st a n da r ds, t er m in a tion in su r a n ce, en for cem en t a n d a ddit ion a l pla n
r equ ir em en t s (a s set ou t in H ou se bill Sect ion 1021) [t h e Alien a t ion
P r oh ibit ion a n d Spou sa l Su r vivor Ben efit pr ovision s of t h e t a x328
qu a lifica t ion r u les ] or t h e Welfa r e a n d P en sion P la n s Disclosu r e
Act , sh a ll su per sede a n y a nd a ll la ws of t h e St a t es a n d of polit ica l
su bdivision s t h er eof in sofa r a s t h ey m ay n ow or h ereafter relate to
th e regu lation of participation , vestin g, fu n d in g, reportin g, d isclosu re
an d fid u ciary stan d ard s, term in ation , in su ran ce, en forcem en t an d
ad d ition al plan requ irem en ts (as set ou t in H ou se bill S ection 1021)
or su bject m atters regu lated by th e Welfare an d Pen sion S tates
Disclosu re Act, except t h a t n ot h in g sh a ll be con st r u ed —
(1) t o exem pt or r elieve a n y em ployee pen sion ben efit pla n n ot
su bject t o (list Tit les or Sect ion s a bove) or t h e Welfa r e a n d P en sion
P la n s Disclosu r e Act fr om a n y la w of a n y St a t e;
(2) t o exem pt or r elieve a n y per son fr om an y law of an y S tate w h ich
regu lates in su ran ce, ban k in g, or secu rities or t o pr oh ibit a St a t e fr om
r equ ir in g t h a t t h er e be filed wit h a St a t e a gen cy copies of r epor t s
r equ ir ed by t h is Act t o be filed wit h t h e Secr et a r y; or
(3) t o a lt er a m en d m odify, inva lida t e, im pa ir , or su per sede a n y ot h er
la w of t h e Un it ed St a t es.
Not wit h st a n din g t h e pr ovision s of t h is sect ion , a state sh all h ave th e
au th ority to prescribe ru les an d regu lation s con cern in g th e tax
qu alification an d taxation of con tribu tion s, d istribu tion s or in com e,
of an em ployee pen sion ben efit plan (in clu din g a t r u st for m in g a pa r t
of su ch pla n ) a s defin ed in t he Welfa r e a n d P en sion P la n s D isclosu r e
329
Act (H ou se bill).
Th u s, t h er e wa s n o qu est ion t h a t t h e Con gr ession a l Con fer ees
wer e a wa r e of la n gu a ge by wh ich t h ey cou ld a dopt : (1) a fa r
n a r r ower pr eem pt ion a ppr oa ch wit h r espect t o t h e m a t t er s
pr eem pt ed; (2) a fa r br oa der exclu sion for ba n k in g, in su r a n ce, a n d
E RISA LE G. H ISTORY, su pra n ot e 165, a t 5047, 5146 (em ph a sis a dded).
328. Th is is a som ewh a t odd r efer en ce beca u se t h e pr eem pt ion pr ovision s
gover n t h e pla n r equ ir em en t s r a t h er t h a n t h e cit ed t a x qu a lifica t ion
r equ ir em en t s.
329. Adm in ist r a t ion Recom m en da t ion s t o t h e H ou se a n d Sen a t e Con fer ees
on H . R. 2 t o P r ovide for P en sion Refor m , a t 109 (Apr . 1974), reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 5047, 5147 (em ph a sis a dded).
208
T h e J oh n M arsh all L aw R eview
[47:145
secu r it ies la w; a n d (3) a pr eem pt ion exclu sion for t h ose la ws
a ffect in g t h e en for cem en t by pa r t icipa n t s a n d ben eficia r ies of t h eir
ben efit r igh t s. N ever t h eless, t h ey r eject ed t h is Adm in ist r a t ion
a ppr oa ch a n d en a ct ed t h e E RISA E xpr ess P r eem pt ion , wh ich
con t a in ed n o exclu sion for st a t e t a x la ws. On e h a s t o a sk if t h e
Adm in ist r a t ion believed t h a t wit h ou t it s pr oposed la n gu a ge t h e
bill wou ld pr eem pt st a t e la ws “con cer n in g t h e t a x qu a lifica t ion
a n d t a xa t ion of con t r ibu t ion s, dist r ibu t ion s or in com e, of a n
330
em ployee pen sion ben efit pla n .”
If so, wa s a st a t e pr eclu ded
fr om t a xin g or exem pt in g fr om t a x su ch it em s, a n d if so, wh ich
wa s pr eclu ded, beca u se bot h cou ld n ot be t h e ca se.
Th e Adm in ist r a t ion fa vor ed t h e H ou se pr oposa l t h a t t h e join t
a n d su r vivor ben efit for m be t h e defa u lt on ly if t h e pa r t icipa n t h a s
331
been m a r r ied for a m in im u m per iod.
Th e Adm in ist r a t ion t ook
n o posit ion on t h e differ en t except ion s t o t h e a lien a t ion pr oh ibit ion
in t h e Sen a t e a n d H ou se bills, discu ssed su pra.
Th e
Adm in ist r a t ion t ook n o posit ion on p r oh ibit ion of in t er fer en ce wit h
t h e exer cise or a t t a in m en t of E RISA r igh t s or t h e du e pr ocess
r equ ir em en t s for cla im s r eview.
B . T h e Con feren ce Com m ittee R ecom m en d s th at th e Preem ption
Provision (1) Applies to S tate L aw s th at R elate to an y E m ployee
B en efit Plan , (2) Does n ot E xem pt B en efit Claim s or T ax L aw ,
an d (3) In clu d es E xclu sion s on ly for L aw s Govern in g B an k in g,
In su ran ce, an d S ecu rities, an d Gen erally Applicable Crim in al
L aw
Bet ween Ma y 15,
Con fer en ce Com m it t ee
Com m it t ee a n a n a lysis
332
ver sion s of H .R. 2.
1974 a n d J u n e 19, 1974, t h e st a ff of t h e
pr epa r ed a n d su bm it t ed t o t h e Con fer en ce
of ea ch t h e differ en t a ppr oa ch es in t h e t wo
Th e pa r t t h a t a ddr essed t h e pr eem pt ion
330. Id .
331. Adm in ist r a t ion Recom m en da t ion s t o t h e H ou se a n d Sen a t e Con fer ees
on H . R. 2 t o P r ovide for P en sion Refor m , a t 101-03 (Apr . 1974), reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 5047, 5141-43.
332. Su m m a r y of Differ en ces Bet ween t h e Sen a t e Ver sion a n d t h e H ou se
Ver sion of H .R. 2 t o P r ovide for P en sion Refor m —P a r t On e—P a r t icipa t ion
Vest in g, F u n din g, Act u a r ies, J u r isdict ion a n d P or t a bilit y (Ma y 15, 1974)
(“Su m m a r y of Differ en ces P a r t I”); Su m m a r y of Differ en ces Bet ween t h e
Sen a t e Ver sion a n d t h e H ou se Ver sion of H .R. 2 t o P r ovide for P en sion
Refor m -P a r t Two—Ter m in a t ion In su r a n ce, Repor t in g a n d Disclosu r e (J u n e 5,
1974) (“Su m m a r y of Differ en ces P a r t II”); Su m m a r y of Differ en ces Bet ween
t h e Sen a t e Ver sion a n d t h e H ou se Ver sion of H .R. 2 t o P r ovide for P en sion
Refor m -P a r t Th r ee-F idu cia r y a n d E n for cem en t (J u n e 12, 1974) (“Su m m a r y of
Differ en ces P a r t III”); a n d Su m m a r y of Differ en ces Bet ween t h e Sen a t e
Ver sion a n d t h e H ou se Ver sion of H .R. 2 t o P r ovide for P en sion Refor m -P a r t
F ou r -Lim it a t ion s on Con t r ibu t ion s a n d Ben efit s, E m ployee Sa vin gs for
Ret ir em en t , Lu m p-su m Dist r ibu t ion s, Adm in ist r a t ion a n d E n for cem en t ,
Miscella n eou s (J u n e 19, 1974) (“Su m m a r y of Differ en ces P a r t IV”), reprin ted
in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5151-5319.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
209
333
pr ovision s wa s issu ed on J u n e 12, 1974.
Th e st a ffer s
334
r ecom m en ded t h a t m ost of t h e H ou se a ppr oa ch be a dopt ed.
Th er e wa s disa gr eem en t a bou t Sect ion 514(b), wh ich n a r r owed t h e
335
in su r a n ce, ba n kin g, or secu r it ies la w exclu sion .
Th u s, som e
st a ffer s su ggest ed t h a t t h e exclu sion be a dopt ed for t h r ee yea r s so
336
t h a t a com m ission cou ld st u dy it s effect s.
Th e st a ff disr ega r ded
t h e pr eem pt ion exem pt ion exclu sion for st a t e la ws a ffect in g
a ct ion s t o r ecover ben efit s pr esen t in bot h bills fr om it s su m m a r y
337
of t h eir r espect ive pr eem pt ion pr ovision s.
On Au gu st 12, 1974, t h e Con fer en ce Com m it t ee pr esen t ed t o
t h e H ou se Repor t n u m ber 93-128, wh ich in clu ded a r evised H .R.
338
339
2. Th e pr eem pt ion pr ovision a t Sect ion 514 of t h e pr oposed bill
followed n eit h er t h e Adm in ist r a t ion r ecom m en da t ion s t o n a r r ow
t h e scope of pr eem pt ion n or t h eir own st a ff’s r ecom m en da t ion t o
r et a in t h e H ou se’s br oa d bu t lim it ed pr eem pt ion wit h t h e explicit
exclu sion for ben efit cla im s. In st ea d, t h e Con fer en ce Com m it t ee
a gr eed on essen t ia lly t h e E RISA E xpr ess P r eem pt ion (wit h ou t a n y
340
of t h e post -E RISA a m en dm en t s), wit h fa r br oa der pr eem pt ion
pr ovision s t h a n wer e pr esen t in eit h er bill.
H owever , t h e
341
Con fer en ce Com m it t ee pr ovided a t Sect ion 3022(a )(4) of t h e bill
t h a t wit h in t wo yea r s of t h e en a ct m en t a join t con gr ession a l t a sk
for ce wou ld r eview “t h e effect s a n d desir a bilit y of” t h e pr eem pt ion
wit h r espect t o on ly pen sion a n d sim ila r pla n s. Th is is fa r br oa der
t h a n t h e r eview su ggest ed by t h eir st a ff, discu ssed, su pra.
C. T h e Au gu st 1974 Con feren ce Com m ittee R eport an d Floor
Discu ssion of th e B road E R IS A Preem ption Provision s
A J oin t
E xpla n a t or y
St a t em en t
of t h e
Com m it t ee
of
333. Su m m a r y of Differ en ces P a r t III, su pra n ot e 332, reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 5249-87.
334. Su m m a r y of Differ en ces P a r t III, su pra n ot e 332, a t 32-34, reprin ted
in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5282-84.
335. Su m m a r y of Differ en ces P a r t III, su pra n ot e 332, a t 33, reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 5283.
336. Su m m a r y of Differ en ces P a r t III, su pra n ot e 332, a t 34 (J u n e 12, 1974)
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5284.
337. Su m m a r y of Differ en ces P a r t III, su pra n ot e 332, a t 32-33, reprin ted
in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5283-84.
338. H .R. R E P . N O . 93-1280 (1974), reprin ted in E RISA LE G. HISTORY,
su pra n ot e 165, a t 4277-4654.
339. E m ployee Ret ir em en t In com e Secu r it y Act of 1974, § 514 in H .R. R E P .
N O . 93-1280, a t 82-83, reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t
4277, 4357-58.
340. Th e on ly differ en ce wa s t h a t t h e pr ovision a bou t Dist r ict of Colu m bia
bein g t r ea t ed a s a st a t e wa s a dded a s t h e 72n d cor r ect ion wh en H . C ON . R E S .
609 wa s a dopt ed on Au g. 22, 1974. E RISA LE G. H ISTORY, su pra n ot e 165, a t
4733.
341. E m ployee Ret ir em en t I n com e Secu r it y Act of 1974, § 3022(a )(4) in
H .R. R E P . N O . 93-1280, a t 205 reprin ted in E RISA LE G. H ISTORY, su pra n ot e
165, a t 4277, 4476.
210
T h e J oh n M arsh all L aw R eview
[47:145
Con fer en ce (“J oin t St a t em en t ”) wa s su bm it t ed in con cer t wit h t h e
342
bill.
Th e st a t em en t did n ot expla in wh y t h e Con fer en ce
Com m it t ee dr a ft ed su ch a br oa d pr eem pt ion pr ovision . Th e bill
pr ovides t h a t it “sh a ll su per sede a n y a n d a ll St a t e la ws in sofa r a s
t h ey m a y n ow or h er ea ft er r ela t e t o a n y [E RISA] em ployee ben efit
343
pla n .”
Th e bill a lso n a r r ows t h e st a t e la w exclu sion s by n ot
per m it t in g st a t e ba n k in g, in su r a n ce, or secu r it ies la ws t o r egu la t e
344
pla n s, a n d elim in a t es t h e exclu sion for la ws per t a in in g t o t h e
r igh t t o en for ce r igh t s t o r ecover ben efit s du e u n der t h e t er m s of a
pla n .
Th e st a t u t or y la n gu a ge Con gr ess a ppr oved sh ows t h a t t h e
E RISA pr eem pt ion is qu it e br oa d. F ir st , t h e a r gu m en t u sed by t h e
R ice Cou r t t o lim it t h e pr eem pt ion of t h e la w a t issu e t o m a t t er s
expr essly r egu la t ed m a y n ot be u sed t o a r gu e t h a t beca u se t h e la w
does n ot est a blish fu n din g a n d ben efit t er m s m a n da t es for h ea lt h
345
r eim bu r sem en t pla n s, su ch st a t e la ws a r e n ot pr eem pt ed.
Th e
“r ela t e t o” la n gu a ge elim in a t es t h e r eleva n ce of Con gr ess’s fa ilu r e
346
t o expr essly r egu la t e su ch a spect s of t h ose pla n s.
Secon d, t h e
la w wou ld sim ila r ly pr eem pt a n y st a t e la w a t t em pt in g t o m a n da t e
t h e kin d or ben efit a m ou n t m a de a va ila ble by a pla n su bject t o t h e
347
bill, even if t h e la w is silen t on su ch a m a n da t e. Th ir d, t h e sa m e
“r ela t e t o” la n gu a ge im plies t h a t t h e la w pr eem pt s st a t e la ws t h a t
r ela t e t o pla n s by a ddin g, su pplem en t in g, or dim in ish in g t h e la w’s
en for cem en t m ech a n ism s, wit h on e n ot a ble exclu sion , n a m ely for
348
gen er a lly a pplica ble cr im in a l la ws.
H owever , a s discu ssed,
in fra, per m issible cr im in a l la ws a r e n ot lim it ed t o t h ose u sed t o
en for ce pla n r igh t s. F ou r t h , t h e a ddit ion of t h e pr eem pt ion of
st a t e la ws a ffect in g t h e en for cem en t of t h e r igh t s of a pla n
pa r t icipa n t or ben eficia r y im plies t h e pr eem pt ion of st a t e la ws
342. H .R. R E P . N O . 93-1280, a t 249-387 (1984) reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 4518-4654.
343. S ee E m ployee Ret ir em en t In com e Secu r it y Act of 1974 § 514(a ) in
H .R. R E P . N O . 93-1280, a t 82 (1974) reprin ted in E RISA LE G. H ISTORY,
su pra n ot e 165, a t 4277, 4357.
344. S ee E m ployee Ret ir em en t In com e Secu r it y Act of 1974
§ 514(b)(2)(A)(B) in H .R. R E P . N O . 93-1280 a t 82 (1974) reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 4277, 4357 (st a t in g, h owever , t h a t pla n s
a ct in g pr im a r ily a s life in su r er s m a y be r egu la t ed by t h e st a t es).
345. Th e st a t es m a y, h owever , r egu la t e t h e fu n din g a n d ben efit s offer ed by
h ea lt h ca r e in su r er s a s pa r t of t h eir in su r a n ce r egu la t ion . S ee Metro. Life In s.
Co., 471 U.S. a t 748 (1985) (expla in in g t h a t st a t es m a y r equ ir e in su r er s t o
pr ovide m en t a l h ea lt h ben efit s in a ll pr odu ct s t h ey offer t o E RISA h ea lt h
r eim bu r sem en t pla n s).
346. Cf. R ice, 331 U.S. a t 237-38 (h oldin g n o pr eem pt ion of st a t e wa r eh ou se
la ws on m a t t er s n ot expr essly r egu la t ed by t h e feder a l st a t u t e).
347. Th er e wer e n o explicit r efer en ces t o t h e level of ben efit s or ot h er kin ds
of ben efit s, su ch a s cost of livin g fea t u r es, in t h e pr eem pt ion pr ovision s of t h e
bills r efer r ed t o t h e Con fer en ce Com m it t ee.
348. H .R. R E P . N O . 93-1280, a t 383, reprin ted in E RISA LE G. H ISTORY,
su pra n ot e 165, a t 4277, 4650.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
211
per t a in in g t o wh o r eceives t h e ben efit s, wh o select s t h e for m of t h e
ben efit , or wh o is t h e pla n ben eficia r y.
Th e su bst a n t ia l br ea dt h of t h e E RISA pr eem pt ion is
su ppor t ed by t h e decision of t h e Con fer en ce Com m it t ee t o a dd t h e
followin g defin it ion s t o t h e pr eem pt ion sect ion :
(c) Defin it ion s. F or pu r poses of t h is sect ion :
(1) Th e t er m “St a t e la w” in clu des a ll la ws, decision s, r u les,
r egu la t ion s, or ot h er St a t e a ct ion h a vin g t h e effect of la w, of a n y
St a t e.
(2) Th e t er m “St a t e” in cludes a St a t e, a n y polit ica l su bdivision s
t h er eof, or a n y a gen cy or in st r u m en t a lit y of eit h er , wh ich pu r por t s
t o r egu la t e, dir ect ly or in dir ect ly, t h e t er m s a n d con dit ion s of
349
em ployee ben efit pla n s cover ed by t h is t it le.
No su ch defin it ion s a ppea r in a n y of t h e pr edecessor bills,
t h eir a ssocia t ed r epor t s or floor discu ssion s, or t h e r epor t s of t h e
st a ff of t h e Con fer en ce Com m it t ee, discu ssed su pra. Th e fir st
su bdivision , su pra, pr ovides t h a t t h e pr eem pt ed st a t e la ws a r e n ot
lim it ed t o st a t u t es. E RISA pr eem pt s a br oa d r a n ge of st a t e
a ct ion s, in clu din g, bu t n ot lim it ed t o, t h e a ct ion s set for t h . Th e
secon d su bdivision , su pra, pr ovides t h a t t h e pr eem pt ed a ct ion s a r e
n ot lim it ed t o t h ose by st a t es, wh ich t er m is defin ed in E RISA
§ 3(10). E RISA pr eem pt s a ct ion s by a br oa d r a n ge of st a t e a ct or s,
in clu din g, bu t n ot lim it ed t o, t h ose set for t h . H owever , a s wit h t h e
ph r a se “r ela t e t o a n y em ployee ben efit pla n ” in E RISA § 514(a ),
t h e pr ecise r ea ch of t h e ph r a se “pu r por t s t o r egu la t e, dir ect ly or
in dir ect ly, t h e t er m s a n d con dit ion s of em ployee ben efit pla n s” in
350
E RISA § 514(c) is n ot self-eviden t .
Th e floor discu ssion of t h e con fer en ce su bst it u t e bill sh owed
t h a t t h is su bst a n t ia l br oa den in g of t h e pr eem pt ion wa s qu it e
deliber a t e a n d in t en ded t o pr even t st a t e la w fr om u n der m in in g
E RISA’s pr ot ect ion s for pla n pa r t icipa n t s a n d ben eficia r ies.
H owever , t h e on ly on e of t h e five st a t e la ws u n der con sider a t ion in
t h is a r t icle t h a t wa s explicit ly m en t ion ed in t h e discu ssion is
cr im in a l la w.
Repr esen t a t ive Den t , on e of t h e pr in cipa l pr opon en t s a n d
m a n a ger s of t h e con sider a t ion of t h e bills t h a t beca m e E RISA in
t h e H ou se of Repr esen t a t ives, descr ibed t h e pr eem pt ion pr ovision
of t h e su bst it u t e bill a s follows:
349. E m ployee Ret ir em en t In com e Secu r it y Act of 1974 § 514(c) in H .R.
R E P . N O . 93-1280 a t 82 (1974) reprin ted in E RISA LE G. H ISTORY, su pra n ot e
165, a t 4277, 4358.
350. S ee e.g., Willia m J . Kilber g a n d P a u l D. In m a n , OB S E R VAT ION :
Preem ption of S tate L aw s R elatin g to E m ployee B en efit Plan s: An An alysis of
E R IS A S ection 514, 62 T E X. L. R E V. 1313, 1327-36 (1984) [h er ein a ft er Kilberg
an d In m an Preem ption ] (a r guin g t h a t if t h e secon d su bdivision did n ot lim it
E RISA pr eem pt ion t o t h ose st a t e la ws t h a t “pu r por t t o r egu la t e” t h e t er m s
a n d con dit ion s of E RISA, E RISA wou ld a bsu r dly pr eem pt a n y st a t e la w
a ffect in g a pla n ).
212
T h e J oh n M arsh all L aw R eview
[47:145
Fin ally, I w ish to m ak e n ote of w h at is to m an y th e crow n in g
ach ievem en t of th is legislation , th e reservation to Fed eral au th ority
th e sole pow er to regu late th e field of em ployee ben efit plan s. With
th e preem ption of th e field , w e rou n d ou t th e protection afford ed
participan ts by elim in a t in g th e t h r ea t of con flict in g a n d in con sist en t
St a t e a n d loca l r egu la t ion . We followed t o a la r ge ext en t t h e sa m e
a ppr oa ch a s in P u blic La w 93-222, 87 st a t u t e (4l4) [sic], wh er e t h e
r egu la t ion of h ea lt h m a in t en a n ce or ga n iza t ion s wa s for eclosed t o
351
St a t e a u t h or it y—sect ion 113(a ) [sic].
Th e con fer ees wit h t h e n a r r ow except ion s specifica 1ly en u m er a t ed,
a pplied t h is pr in ciple in it s br oa dest sen se t o for eclose a n y n on F eder a l r egu la t ion of em ployee ben efit pla n s. T h u s, th e provision s
of section 514 w ou ld reach an y ru le, regu lation , practice or d ecision
of an y S tate, su bd ivision th ereof or an y agen cy or in stru m en tality
th ereof — in clu d in g an y profession al society or association operatin g
u n d er cod e of law — w h ich w ou ld affect an y em ployee ben efit plan a s
352
descr ibed in sect ion 4(a ) a n d n ot exem pt u n der sect ion 4(b).
Repr esen t a t ive Den t u sed field pr eem pt ion la n gu a ge t o
descr ibe t h e legisla t ion even t h ou gh t h e legisla t ion h a d expr ess
pr eem pt ion la n gu a ge, a s wa s t h e ca s e in R ice, wh ich h a d
pr esen t ed t h e field pr eem pt ion con cept , su pra. Repr esen t a t ive
Den t st a t ed t h a t a st a t e la w wou ld be pr eem pt ed if it s r ela t ion t o a
cover ed pla n wa s t h a t it wou ld “a ffect ” a pla n .
Sen a t or Willia m s wa s on e of t h e pr in cipa l pr opon en t s a n d
m a n a ger s of t h e con sider a t ion of t h e bills t h a t beca m e E RISA in
t h e Sen a t e. H e im m edia t ely pr eceded h is discu ssion of t h e
pr eem pt ion pr ovision of t h e su bst it u t e bill wit h a descr ipt ion of t h e
pr ot ect ion s t h e bill pr ovided t o pla n pa r t icipa n t s a n d ben eficia r ies,
su ch a s t h e a bilit y of t h e Secr et a r y of La bor t o br in g a ct ion s t o
353
obt a in t h eir ben efit s or t h eir a bilit y t o br in g su ch feder a l a ct ion s.
Sen a t or Willia m ’s pr eem pt ion descr ipt ion , wh ich follows, wa s
br iefer t h a n t h a t of Repr esen t a t ive Den t .
It sh ou ld be st r essed t h a t wit h t h e n a r r ow except ion s specified in
351. Th e com m on a ppr oa ch in t h e t wo st a t u t es is t o pr eem pt st a t e
r egu la t ion . H owever , t h is ga r bled r efer en ce is n ot ver y h elpfu l in in t er pr et in g
t h e ph r a se “r ela t e t o a n y em ployee ben efit pla n .” S ee H ea lt h Ma in t en a n ce
Or ga n iza t ion Act of 1973, P u b. L. No. 93-222, 87 St a t . 914 (1978) (a ddin g a
pr eem pt ion sect ion en t it led, Rest r ict ive St a t e La ws a n d P r a ct ices, § 1311(a ) t o
t h e P u blic H ea lt h Ser vice Act , r a t h er t h a n t h e cit ed § 113(a ) a s t h e cor r ect
cit a t ion for t h e la w). Mor eover , t h e H MO pr ovision does n ot u se t h e ph r a se
“r ela t e t o,” bu t in st ea d descr ibes ver y explicit ly t h e fea t u r es of pr eem pt ed
st a t e la ws. Id .
352. S ee H ou se F loor Discu ssion on Con fer en ce Repor t on H .R. 2 E m ployee
Ret ir em en t In com e Secu r it y Act of 1974, 120 C ONG . R E C . 29,197 (Au g. 20,
1974), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 4656, 4670-71
(em ph a sis a dded) (followin g t h e qu ot e wa s a br ief discu ssion of t h e in t en de d
con t in u a t ion of t h e r epor t in g exem pt ion of a ppr en t ice pla n s).
353. Sen a t e F loor Discu ssion on Con fer en ce Repor t on H .R. 2, E m ployee
Ret ir em en t In com e Secu r it y Act of 1974, 120 C ON G . R E C . 29933 (Au g. 22,
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 1462 a t 4733, 4745.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
213
t h e bill, t h e su bst a n t ive a n d en for cem en t pr ovision s of t h e
con fer en ce su bst it u t e a r e in ten d ed to preem pt th e field for Fed eral
regu lation s th u s elim in atin g th e th reat of con flictin g or in con sist en t
S tate an d local regu lation of em ployee ben efit plan s . Th is pr in ciple
is in t en ded t o a pply in it s br oa dest sen se t o a ll a ct ion s of St a t e or
loca l gover n m en t s . . . wh ich h a ve t h e for ce or effect of la w.
Con sist en t wit h t h is pr in ciple, St a t e pr ofession a l a ssocia t ion s a ct ing
u n der t h e gu ise of St a t e-en for ced pr ofession a l r egu la t ion , sh ou ld n ot
be a ble t o pr even t u n ion s a n d em ployer s fr om m a in t a in ing t h e t ypes
of em ployee ben efit pr ogr a m s wh ich Con gr ess h a s a u t h or ized[,] for
exa m ple, pr epa id lega l ser vices pr ogr a m s-wh et h er closed or open
pa n el-a u t h or ized by P u blic La w 93-95. Th e pr eem pt ion pr ovision s
of t h e con fer en ce su bst it u t e sh a ll gen er a lly becom e a pplica ble on
354
J a n u a r y 1, 1975.
Sen a t or Willia m s, lik e Repr esen t a t ive Den t , descr ibed t h e
legisla t ion wit h field pr eem pt ion la n gu a ge. Sen a t or s Willia m s a n d
J a vit s su bsequ en t ly h a d a n exch a n ge wit h Sen a t or Rober t Ta ft
a bou t t h e ext en t t o wh ich t h e bill wou ld r egu la t e lega l ser vice
355
pla n s, bu t wer e n ot qu est ion ed a bou t a n y ot h er a spect s of t h e
pr eem pt ion pr ovision s.
Th is exch a n ge sh ows t h a t Con gr ess
in t en ded t h a t t h e E RISA E xpr ess P r eem pt ion wou ld pr even t st a t e
la ws fr om r egu la t in g t h e t er m s of welfa r e pla n s, su ch a s lega l
ser vices pr ogr a m s, even t h ou gh E RISA did n ot r egu la t e t h e t er m s
356
of su ch pla n s.
H owever , it a lso sh owed t h a t Con gr ess wa s n ot
con cer n ed a bou t st a t e r egu la t ion s of t h e lega l pr ofession , su ch a s
r equ ir in g a ll a t t or n eys t o com plet e con t in u in g lega l edu ca t ion ,
wh ich did n ot a ffect t h e t er m s of lega l ser vice pla n s.
Sen a t or J a vit s, lik e Sen a t or Willia m s, on e of t h e pr in cipa l
pr opon en t s a n d m a n a ger s in t h e Sen a t e of t h e con sider a t ion of t h e
bills t h a t beca m e E RISA, pr eceded h is discu ssion of t h e
pr eem pt ion pr ovision of t h e su bst it u t e bill wit h pr a ise of t h e
r equ ir em en t t h a t pla n s pr ovide a fu ll a n d fa ir r eview of a ll ben efit
357
cla im s.
Sen a t or J a vit s’s descr ipt ion of t h e pr eem pt ion pr ovision ,
wh ich follows, a lso em ph a sized t h a t t h e in t en t ion wa s t o pr eclu de
in t er fer en ce wit h feder a l r egu la t ion :
354. Sen a t e F loor Discu ssion on Con fer en ce Repor t on H .R. 2, E m ployee
Ret ir em en t In com e Secu r it y Act of 1974, 120 C ON G . R E C . 29933 (Au g. 22,
1974) (st a t em en t of Sen . Willia m s), reprin ted in E RISA LE G. H ISTORY,
su pra n ot e 165, a t 4745-46 (em ph a sis a dded).
355. Sen a t e F loor Discu ssion on Con fer en ce Repor t on H .R. 2, E m ployee
Ret ir em en t In com e Secu r it y Act of 1974, 120 C ONG . R E C . 29948-49 (Au g. 22,
1974) (st a t em en t s of Sen a t or s J a vit s, Ta ft , a n d Willia m s), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 4733, 4789-90.
356. S ee gen erally Mich a el S. Gor don , T h e H istory of E R IS A’s Preem ption
Provision an d Its B earin g on th e Cu rren t Debate Over H ealth Care R eform ,
E BRI I SSUE B RIE F 28-30 (No. 135, Ma r ch 1993), available at
h t t p://www.ebr i.or g/pdf/br iefspdf/0393ib.pdf (la st visit ed Ma r ch 24, 2014).
357. Sen a t e F loor Discu ssion on Con fer en ce Repor t on H .R. 2, E m ployee
Ret ir em en t In com e Secu r it y Act of 1974,120 C ONG . R E C . 29941 (Au g. 22,
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 4733, 4769.
214
T h e J oh n M arsh all L aw R eview
[47:145
Bot h H ou se a n d Sen a t e bills pr ovided for pr eem pt ion of St a t e la w,
bu t — wit h on e m a jor except ion a ppea r in g in t h e H ou se bill
[per h a ps t h e on e for Ba n kin g, In su r a n ce, a n d Secu r it ies, wh ich is
a lso in Sen a t e bill]—-defined t h e per im et er s of pr eem pt ion in
r ela t ion t o t h e a r ea s r egu la t ed by t h e [B]ill. S u ch a form u lation
raised th e possibility of en d less litigation over th e va1id ity of S tate
action th at m igh t im pin ge on Fed eral regu lation , a s well a s open in g
t h e door t o m u lt iple a n d pot en t ia lly con flict in g St a t e la ws h a st ily
con t r ived t o dea l wit h som e pa r t icu la r a sp ect of pr iva t e welfa r e or
pen sion ben efit pla n s n ot clea r ly con n ect ed t o t h e F eder a l r egu la t or y
sch em e.
Alt h ou gh t h e desir a bilit y of fu r t h er r egu la t ion —a t eit h er t h e St a t e
or F eder a l level—u n dou bt edly wa r r a n t s fu r t h er a t t en t ion , on
ba la n ce, th e em ergen ce of a com preh en sive an d pervasive Fed eral
in terest an d th e in terests of u n iform ity w ith respect to in terstate
plan s requ ired — bu t for certain exception s— th e d isplacem en t of S tate
action in th e field of private em ployee ben efit program s. Th e
con fer ees—r ecogn izin g t h e dim en sion s of su ch a policy—a lso a gr eed
t o a ssign t h e Con gr ession a l P en sion Ta sk F or ce t h e r espon sibilit y of
st u dyin g a n d eva lu a t in g pr eem pt ion in con n ect ion wit h St a t e
a u t h or it ies a n d r epor t in g it s fin din gs t o t h e Con gr ess. If it is
det er m in ed t h a t t h e pr eem pt ion policy devised h a s t h e effect of
pr eclu din g essen t ia l legisla t ion a t eit h er t h e St a t e or F eder a l level,
a ppr opr ia t e m odifica t ion s ca n be m a de.
In view of F eder a l pr eem pt ion , St a t e la ws com pellin g disclosu r e
fr om pr iva t e welfa r e or pen sion pla n s, im posing fidu cia r y
r equ ir em en t s on su ch pla ns, im posin g crim in al pen alties on failu re
to con tribu te to plan s— u n less a crim in al statu te of gen eral
application —est a blishin g Sta t e t er m in a t ion in su r a n ce pr ogr a m s, et
cet er a , w ill be su persed ed . It is a lso in t en ded t h a t a body of F eder a l
su bst a n tive la w will be developed by t h e cou r t s t o dea l wit h issu es
in volvin g r igh t s a n d obliga t ion s u n der pr iva t e welfa r e a n d pen sion
pla n s.
At t h e sa m e t im e, t h e Secr et a r y of La bor is a u t h or ized t o en t er in t o
a gr eem en t s wit h officia ls of St a t e a gen cies t o a ssist him in t h e
per for m a n ce of h is fu n ct ion s u n der t h e con fer en ce su bst it u t e, wh ich
cou ld in clu de a r r a n gem en t s, for exa m ple, for a u dit in g specific pla ns
358
or a ssist in g in t h e collect ion a n d m on it or in g of r equ ir ed pla n da t a .
Sen a t or J a vit s, like Repr esen t a t ive Den t a n d Sen a t or
Willia m s, u sed field pr eem pt ion la n gu a ge t o descr ibe t h e
legisla t ion . Sen a t or J a vit s m en t ion ed t h e pla n n ed r eview of
pr eem pt ion , wit h ou t cla r ifyin g t h a t t h e legisla t ion on ly pr ovided
for t h e r eview of pr eem pt ion issu es con cer n in g pen sion issu es.
Sen a t or J a vit s’s r efer en ce t o t h e gen er a l a pplica ble cr im in a l la w
exclu sion in t h e a bove qu ot e im plies t h a t Con gr ess in t en ded t o
358. Sen a t e F loor Discu ssion on Con fer en ce Repor t on H .R. 2, E m ployee
Ret ir em en t In com e Secu r it y Act of 1974, 120 C ON G . R E C . 29942 (Au g. 22,
1974), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 4733, 4770-71
(em ph a sis a dded).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
215
per m it gen er a l st a t e cr im in a l la ws im posin g cr im in a l pen a lt ies on
t h e fa ilu r e t o m a ke pla n con t r ibu t ion s, su ch a s t h ose t h a t
cr im in a lize t h e fa ilu r e t o pa y wa ges or wa ge su pplem en t s.
H owever , Sen a t or J a vit s pr esen t ed n o exa m ple.
Th u s, h e
descr ibed t h e exclu sion wit h ou t m en t ion in g t h e m ost gen er ic
cr im in a l la ws, su ch a s t h eft la ws. Th er e seem s lit t le qu est ion t h a t
beca u se t h ose la ws a r e t oo t en u ou sly r ela t ed t o t h e E RISA ben efit
pr ot ect ion s, E RISA does n ot pr eem pt t h e a pplica t ion of su ch la ws
a ga in st t h ose wh o m a y st ea l fr om em ployee ben efit pla n s.
D. T h e Con feren ce Com m ittee S taff R ecom m en d ation s, th e Au gu st
1974 Con feren ce Com m ittee R eport an d Floor Discu ssion of th e
S pou sal S u rvivor R equ irem en t, an d th e Alien ation Proh ibition
On Ma y 15, 1974, t h e st a ff of t h e Con fer en ce Com m it t ee
pr epa r ed a n d su bm it t ed t o t h e Con fer en ce Com m it t ee a n a n a lysis
of t h e differ en t a ppr oa ch es in t h e t wo ver sion s of H .R. 2 for t h e
359
spou sa l su r vivor pr ovision s a n d t h e a lien a t ion pr oh ibit ion .
Th e
st a ff r ecom m en ded t h a t pla n spon sor s be a ble t o im pose a yea r of
m a r r ia ge r equ ir em en t for spou sa l su r vivor pen sion s, a n d t h e
Con fer en ce Com m it t ee con sider ed t h e scope of t h e pr e-r et ir em en t
360
ben efit t h a t pla n s cou ld pr ovide.
Th e Com m it t ee a gr eed t o give
361
spon sor s t h e on e-yea r opt ion , a n d per m it t ed, bu t did n ot r equ ir e,
362
a n y pr e-r et ir em en t spou sa l ben efit .
Th e st a ff r ecom m en ded
363
a ccept a n ce of t h e 10% except ion t o t h e a lien a t ion pr oh ibit ion .
364
Th e Com m it t ee in clu ded a 10% except ion .
Th e J oin t St a t em en t discu ssed h ow t h e spou sa l su r vivor
pr ovision h a d been cr a ft ed t o: (1) pr ovide spou ses wit h r et ir em en t
a n d pr e-r et ir em en t pr ot ect ion ; (2) give pa r t icipa n t s a r ea son a ble
oppor t u n it y t o obt a in a n u n r edu ced a n n u it y pa ym en t ; a n d (3) give
pla n spon sor s t h e a bilit y t o pr ot ect t h em selves a ga in st a dver se
365
select ion by pa r t icipa n t s of join t a n d su r vivor a n n u it ies.
H owever , t h e J oin t St a t em en t did n ot discu ss wh y spou sa l
su r vivor ben efit s wer e on ly r equ ir ed for a su bset of pen sion
359. Su m m a r y of Differ en ces P a r t I, su pra n ot e 332, a t 24-26, reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 5151, 5177-79.
360. Su m m a r y of Differ en ces P a r t I, su pra n ot e 332, a t 25, reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 5151, 5177-78.
361. E m ployee Ret ir em en t In com e Secu r it y Act of 1974 § 205(d) in H .R.
R E P . N O . 93-1280, a t 43 (1984), reprin ted in E RISA LE G. H ISTORY, su pra
n ot e 165, a t 4277, 4318.
362. E m ployee Ret ir em en t In com e Secu r it y Act of 1974 § 205 in H .R. R E P .
N O . 93-1280, a t 43-44 (1984), reprin ted in E RISA LE G. H ISTORY, su pra n ot e
165, a t 4277, 4318-19.
363. Su m m a r y of Differ en ces P a r t I, su pra n ot e 332, a t 25-26, reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 5151, 5178-79.
364. E m ployee Ret ir em en t In com e Secu r it y Act of 1974 § 206(d)(2) in H .R.
R E P . N O . 93-1280, a t 45 (1984), reprin ted in E RISA LE G. H ISTORY, su pra
n ot e 165, a t 4277, 4320.
365. H .R. R E P . N O . 93-1280, a t 279-80 (1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 4277, 4546-47.
216
T h e J oh n M arsh all L aw R eview
[47:145
366
pla n s.
Th e pr ovision s wer e in a pplica ble t o pen sion pla n s
pr im a r ily for t h e h igh ly com pen sa t ed (i.e., Top-H a t P la n s), t o life
367
in su r a n ce pla n s, or t o disa bilit y pla n s.
Th e on ly r efer en ce in t h e H ou se floor discu ssion t o spou sa l
su r vivor ben efit s wa s a descr ipt ion of t h e pr ovision per m it t in g a
spon sor t o det er m in e t h e join t a n d spou sa l ben efit by r edu cin g t h e
pa r t icipa n t ’s life a n n u it y t o t a k e in t o a ccou n t bot h a ct u a r ia l
368
equ iva len t s a n d a n y a dver se select ion exper ien ce.
Sen a t or
Willia m s sim ila r ly r efer r ed on ly t o t h ose pr ovision s in h is
discu ssion of spou sa l su r vivor ben efit s in t h e Sen a t e floor
369
discu ssion .
Sen a t or J a vit s discu ssed t h e spou sa l su r vivor
ben efit s in m or e det a il, pa r t icu la r ly t h e pr e-r et ir em en t spou sa l
370
ben efit .
H owever , t h er e wa s n o discu ssion on t h e floor of t h e
H ou se or t h e Sen a t e a bou t wh y spou sa l su r vivor ben efit s wer e
371
on ly r equ ir ed for a su bset of pen sion pla n s.
Th e J oin t St a t em en t did n ot discu ss t h e pu r pose of t h e
372
a lien a t ion pr oh ibit ion , bu t did discu ss t h e t er m s of t h e a lien a t ion
pr oh ibit ion a s follows:
Un der t h e con fer en ce su bst it u t e, a pla n m ust pr ovide t h a t ben efit s
u n der t h e pla n m a y n ot be a ssign ed or a lien a t ed. H owever , t h e pla n
m a y pr ovide t h a t a ft er a ben efit is in pa y st a t u s, t h er e m a y be a
volu n t a r y r evoca ble a ssignm en t (n ot t o exceed 10 per cen t of a n y
ben efit pa ym en t ) by a n em ployee wh ich is n ot for pu r poses of
defr a yin g t h e a dm in ist r a t ive cost s of t h e pla n . F or pu r poses of t h is
r u le, [a ] ga r n ish m en t or levy is n ot t o be con sider ed a volu n t a r y
a ssign m en t .
Vest ed ben efit s m a y be u sed a s colla t er a l for
r ea son a ble loa n s fr om a pla n , wh er e t h e fidu cia r y r equ ir em en t s of
373
t h e la w a r e n ot viola t ed.
366. S ee id . E m ployee Ret ir em en t In com e Secu r it y Act of 1974 § 201 in
H .R. R E P . N O . 93-1280 a t 30-31 (1984) reprin ted in E RISA LE G. H ISTORY,
su pra n ot e 165, a t 4277, 4305-06 (pr ovidin g t h a t spou sa l su r vivor pr ovision s
a r e n ot a pplica ble t o Top -H a t P la n s, or in dividu a l r et ir em en t a ccou n t s in
pen sion pla n s, or a n y welfa r e pla n s).
367. Id .
368. H ou se F loor Discu ssion on H .R. 2, 120 C ON G . R E C . 29192, (Au g. 20,
2974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 4656, 4669.
369. Sen a t e F loor Discu ssion on Con fer en ce Repor t on H .R. 2, E m ployee
Ret ir em en t In com e Secu r it y Act of 1974, 120 C ON G . R E C . 29930 (Au g. 22,
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 4733, 4738.
370. Sen a t e F loor Discu ssion , 120 C ONG . R E C . 29935, 29937, 29940 (Au g.
22, 1974), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 4733, 4752,
4756-57, 4765.
371. S ee H ou se F loor Discu ssion on H .R. 2, 120 C ON G . R E C . 29192-215
(Au g. 20, 2974), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 162, a t 4656721; Sen a t e F loor Discu ssion , 120 C ONG . R E C . 29929-62 (Au g. 22, 1974),
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 4733-4828.
372. S ee Su m m a r y of Differ en ces P a r t I, su pra n ot e 332, a t 25-26,
reprin ted in E RISA LE G. HISTORY, su pra n ot e 165, a t 5151, 5178-79
(r ecom m en din g ch a n ges fr om t h e a lien a t ion pr oh ibit ion s in t h e t wo bills
wit h ou t discu ssin g t h e pu r pose of t h e pr oh ibit ion ).
373. H .R. R E P . N O . 93-1280, a t 280 (1974), reprin ted in E RISA LE G.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
217
Th e Com m it t ee a ppa r en t ly in t en ded t o pr ovide t h a t
r epa ym en t s of pla n loa n s sh ou ld n ot be t r ea t ed a s a ssign m en t s or
a lien a t ion s, a lt h ou gh t h e st a t u t e exem pt s t h e loa n s r a t h er t h a n
374
t h e r epa ym en t s fr om su ch ch a r a ct er iza t ion .
375
Th er e wa s n o floor discu ssion of t h e a lien a t ion pr oh ibit ion .
E . T h e Con feren ce Com m ittee S taff R ecom m en d ation s, th e Au gu st
1974 Con feren ce Com m ittee R eport an d Floor Discu ssion of th e
B en efit E n forcem en t Provision s (In clu d in g th e Claim s R eview
R equ irem en t) an d th e Protection again st In terferen ce w ith
E R IS A R igh ts
On J u n e 12, 1974, t h e st a ff of t h e Con fer en ce Com m it t ee
pr epa r ed a n d su bm it t ed t o t h e Con fer en ce Com m it t ee a n a n a lysis
of t h e differ en t a ppr oa ch es in t h e t wo ver sion s of H .R. 2 by wh ich
pa r t icipa n t s a n d ben eficia r ies cou ld en for ce t h eir pla n ben efit
r igh t s, a n d t h e pr oh ibit ion on t h e in t er fer en ce wit h E RISA
376
r igh t s.
Th e st a ff r ecom m en ded t h e a dopt ion of t h e com m on
a ppr oa ch of per m it t in g pa r t icipa n t s t o br in g civil a ct ion s t o
377
r ecover ben efit s a n d det er m in e fu t u r e r igh t s t o r ecover ben efit s.
Th e st a ff cou ld n ot r ea ch a con sen su s in wh et h er t o a dopt eit h er
t h e volu n t a r y or t h e in volu n t a r y a r bit r a t ion pr ovision s, a n d t h e
378
ext en t t o wh ich t o m a ke it a va ila ble.
H owever , som e
r ecom m en ded a ll pla n s h a ve a n u n specified cla im s pr ocedu r e,
wh ich wou ld h a ve t o be expla in ed t o pla n pa r t icipa n t s a n d
ben eficia r ies a n d cou ld on ly m a k e den ia ls in a wr it in g expla in in g
379
t h e r ea son for t h e den ia l.
Th e st a ff r ecom m en ded t h a t t h e
sligh t ly br oa der pr oh ibit ion of in t er fer en ce pr ovision s of t h e
380
Sen a t e bill be a dopt ed.
Th e J oin t St a t em en t ga ve n o expla n a t ion of t h e r ea son for t h e
Com m it t ee’s m or e expa n sive a ppr oa ch t o en for cem en t r igh t s in t h e
con fer en ce bill, wh ich a lso in clu ded t h e r igh t “t o en for ce h is [t h e
H ISTORY, su pra n ot e 165, a t 4277, 4547 (foot n ot e om it t ed).
374. Th e sa m e m ist a ke is r epea t ed in Tr ea s. Reg. § 1.401(a )-13(d)(2) (as
a m en ded 1988).
375. S ee H ou se F loor Discu ssion on H .R. 2, 120 C ONG . R E C . 29192-215
(Au g. 20, 1974), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 4656721 a n d Sen a t e F loor Discu ssion on Con fer en ce Repor t on H .R. 2, E m ployee
Ret ir em en t In com e Secu r it y Act of 1974, 120 C ONG . R E C . 29928-62 (Au g. 22,
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165, a t 4733-4828.
376. Su m m a r y of Differ en ces P a r t III, su pra n ot e 332, a t 23-25, 30-31,
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5249, 5273-75, 528081.
377. Su m m a r y of Differ en ces P a r t III, su pra n ot e 332, a t 23, reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 5249, 5273.
378. Su m m a r y of Differ en ces P a r t III, su pra n ot e 332, a t 24-25, reprin ted
in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5249, 5274-25.
379. Su m m a r y of Differ en ces P a r t III, su pra n ot e 332, a t 25, reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 5249, 5275.
380. Su m m a r y of Differ en ces P a r t III, su pra n ot e 332, a t 30-31, reprin ted
in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5249, 5280-81.
218
T h e J oh n M arsh all L aw R eview
[47:145
pa r t icipa n t ’s or ben eficia r y’s] r igh t s u n der . . . t h e pla n ,” n ot
m er ely t h e r igh t t o r ecover t h e ben efit du e a n d t o cla r ify t h e r igh t
t o fu t u r e ben efit s. In st ea d, it pr esen t ed t h e followin g br ief
su m m a r y t h a t ign or ed t h e expa n sion :
381
Civil a ct ion s by pa r t icipa n t s a n d ben eficia r ies. In a ddition , u n der
t h e bill a s pa ssed by bot h t he H ou se a n d Sen a t e, civil a ct ion m a y be
br ou gh t by a pa r t icipa n t or ben eficia r y t o r ecover ben efit s du e u n der
t h e pla n , t o c1a r ify r igh t s t o r eceive fu t u r e ben efit s u n der t h e pla n ,
a n d for r elief fr om br ea ch of fidu cia r y r espon sibilit y.
Un der t h e con fer en ce a gr eem en t , civil a ct ion s m a y be br ou gh t by a
pa r t icipa n t or ben eficia r y t o r ecover ben efit s du e u n der t h e pla n , t o
c1a r ify r igh t s t o r eceive fu t u r e ben efit s u n der t h e pla n , a n d for r elief
382
fr om br ea ch of fidu cia r y r espon sibilit y.
Th e J oin t St a t em en t obser ved t h a t t h e bill n ow r equ ir ed
ever y cover ed pla n t o pr ovide a fa ir a n d fu ll r eview of a n y ben efit
383
den ia l, wh ich h a d t o be in wr it in g.
Th er e wa s n o m en t ion of t h e
384
fa ct t h is r equ ir em en t wa s n ow in a dist in ct st a t u t e.
Th e J oin t
385
St a t em en t descr ibed t h e m or e dem a n din g coer cive pr ovision s t h e
386
Con fer en ce Com m it t ee ch ose t o in clu de in t h e Con fer en ce bill.
Sen a t or Willia m s su m m a r ized t o t h e Sen a t e t h e ben efit
en for cem en t pr ovision s (in clu din g t h e cla im s r eview r equ ir em en t ),
a n d t h e pr ot ect ion s a ga in st in t er fer en ce wit h E RISA r igh t s in t h e
387
Con fer en ce bill.
Lik e t h e J oin t St a t em en t , h is su m m a r y did n ot
m en t ion t h e gr a n t in g t o pa r t icipa n t s a n d ben eficia r ies t h e r igh t t o
br in g a civil a ct ion t o en for ce a n y of t h eir ben efit r igh t s, n ot
388
m er ely t h e r igh t t o r ecover ben efit s.
Sen a t or Willia m s, h owever ,
st a t ed in t h a t su m m a r y, t h a t civil a ct ion s for ben efit den ia ls cou ld
n ot be “ba sed on a pplica t ion of t h e su bst a n t ive r equ ir em en t s of
389
t h is legisla t ion .” H owever , t h er e is n o su ch lim it a t ion in E RISA,
wh ich gen er a lly r equ ir es t h a t su ch su bst a n t ive r equ ir em en t s be
381. E m ployee Ret ir em en t In com e Secu r it y Act of 1974 § 502(a )(1)(B) in
H .R. R E P . N O . 93-1280, a t 75 (1984), reprin ted in E RISA LE G. H ISTORY,
su pra n ot e 165, a t 4277, 4350.
382. H .R. R E P . N O . 93-1280, a t 326-27 (1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165 a t 4277, 4593-94.
383. H .R. R E P . N O . 93-1280, a t 328 (1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165 a t 4277, 4595.
384. E m ployee Ret ir em en t In com e Secu r it y Act of 1974 § 503 in H .R. R E P .
N O . 93-1280, a t 78 (1984), reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165
a t 4277, 4353.
385. H .R. R E P . N O . 93-1280, a t 330-31 (1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 4277, 4597-98.
386. E m ployee Ret ir em en t In com e Secu r it y Act of 1974, § 510-511 in H .R.
R E P . N O . 93-1280, a t 80 (1984), reprin ted in E RISA LE G. H ISTORY, su pra
n ot e 165 a t 4277, 4355.
387. Sen a t e F loor Discu ssion on Con fer en ce Repor t on H .R. 2, E m ployee
Ret ir em en t In com e Secu r it y Act of 1974, 120 C ON G . R E C . 29933 (Au g. 22,
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 165 a t 4733, 4745.
388. Id .
389. Id .
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
219
390
pa r t of t h e pla n t er m s.
Th er efor e, su ch a cla im wou ld be ba sed
on t h e t er m s of t h e pla n a s r equ ir ed u n der t h e en for cem en t
391
sect ion .
Sen a t or J a vit s su m m a r ized t o t h e Sen a t e h ow t h e cla im s
pr ocedu r e pr ovision s h a d a dopt ed t h e Sen a t e’s fu ll a n d fa ir r eview
392
a ppr oa ch t o ben efit den ia ls.
H e a lso defen ded a r bit r a t ion a s “a
r ela t ively in expen sive wa y for t h e r esolu t ion of m in or ben efit
dispu t es for t h e m a n y pa r t icipa n t s a n d ben eficia r ies wh o la ck t h e
r esou r ces t o pu r su e t h eir cla im s t h r ou gh t h e cou r t s,” a n d wa s
en cou r a ged t h a t t h e Con fer en ce Com m it t ee h a d dir ect ed a
com m it t ee t o look fu r t h er in t o t h e fea sibilit y of su ch a n
393
a ppr oa ch .
Sen a t or J a vit s n ot ed t h a t a n a r bit r a t ion opt ion h a d
been opposed on t h e ba sis t h a t t h ey wou ld st im u la t e “fr ivolou s
394
ben efit dispu t es.”
F. Con gress Overw h elm in gly Approves E R IS A w ith th e
E xpectation th at th e E R IS A E xpress Preem ption Will Assu re
th at E R IS A , N ot S tate L aw , Determ in es th e E xten t of th e
B en efit Protection s for E m ployee B en efit Plan Participan ts an d
B en eficiaries
No pa r t of t h e legisla t ive h ist or y su ggest s t h a t Con gr ess
a dopt ed t h e E RISA E xpr ess P r eem pt ion , in wh ole or in pa r t , t o
r edu ce t h e a dm in ist r a t ive or cost bu r den s on em ployee ben efit
pla n spon sor s a n d a dm in ist r a t or s. Ra t h er , E RISA’s dom in a t in g
gen er a l pu r pose is t h e pr ot ect ion of pla n pa r t icipa n t s a n d
ben eficia r ies. Con gr ess a ch ieved t h is pu r pose b y: (1) im posin g
pla n r equ ir em en t s (in clu din g, bu t n ot lim it ed t o cla im r eview
r equ ir em en t s, r epor t in g a n d disclosu r e r equ ir em en t s, fidu cia r y,
pa r t icipa t ion , ser vice, a n d vest in g r equ ir em en t s); (2) givin g
pa r t icipa n t s a n d ben eficia r ies a feder a l r igh t t o en for ce t h eir
ben efit r igh t s (in clu din g, bu t n ot lim it ed t o, obt a in in g pla n
ben efit s); a n d (3) pr oh ibit in g in t er fer en ce wit h t h ese ben efit
r igh t s. Th ese fea t u r es pla ced su bst a n t ia l a dm in ist r a t ive a n d cost
bu r den s on pla n spon sor s a n d a dm in ist r a t or s.
Th e E R ISA
E xpr ess P r eem pt ion lim it s st a t e la w in t er fer en ce wit h t h e E RISA
feder a l r egim e for a ssu r in g t h a t em ployee ben efit r igh t s a r e
en for cea ble, in clu din g t h e r igh t t o be pa id pr om ised em ployee
ben efit s. On t h e ot h er h a n d, a con sequ en ce of su bject in g spon sor s
390. S ee e.g., E RISA §§ 202, 203, 29 U.S.C. §§ 1052, 1053 (set t in g m in im a l
pa r t icipa t ion a n d vest in g r u les r espect ively).
391. P er h a ps, t h e Sen a t or m ea n t t o sa y t h a t a n a ct ion n eeds t o be br ou gh t
fir st u n der E RISA 502(a )(3), 29 U.S.C. § 1132(a )(3), t o r efor m t h e pla n t o
com ply wit h E RISA befor e t h e ben efit cla im m a y be br ou gh t .
392. Sen a t e F loor Discu ssion on Con fer en ce Repor t on H .R. 2, E m ployee
Ret ir em en t In com e Secu r it y Act of 1974, 120 C ON G . R E C . 29941 (Au g. 22,
1974), reprin ted in E RISA LEG. H ISTORY, su pra n ot e 162165, a t 4733, 4769.
393. Id .
394. Id .
220
T h e J oh n M arsh all L aw R eview
[47:145
a n d a dm in ist r a t or s t o on ly on e feder a l r egu la t or y r egim e by
pr eem pt in g a n y st a t e la ws r ela t in g t o t h a t r egim e, is t h a t st a t e
la ws will n ot in cr ea se t h e su bst a n t ive a n d a dm in ist r a t ive bu r den
395
of com plyin g wit h t h is r egim e.
On e of t h e m a jor r ea son s t h a t r epr esen t a t ives of la r ge
bu sin esses a n d u n ion s su ppor t ed t h e en a ct m en t of E RISA wa s
t h a t a t su ch t im e t h e st a t es’ r egu la t or y r egim e of pla n s a ppea r ed
t o be ch a n gin g fr om t h e d e m in im is r egu la t ion t h a t bot h pr efer r ed,
396
t o t h e m or e st r in gen t r egu la t ion t h a t bot h a bh or r ed. Th u s, t h ose
r epr esen t a t ives sa w E RISA E xpr ess P r eem pt ion , wh ich u n like it s
pr edecessor s, a s discu ssed su pra, did n ot lim it pr eem pt ion t o
feder a lly r egu la t ed m a t t er s, a s a wa y t o pr even t st a t es fr om
a dopt in g or a pplyin g wh a t t h ey con sider ed excessively
bu r den som e r u les, su ch a s t h e su bst a n t ia l t a xes t h a t N ew J er sey
sou gh t t o im pose on pla n spon sor s wh o t er m in a t ed pen sion pla n s
397
t h a t wer e n ot fu lly fu n ded.
On t h e ot h er h a n d, t h e pr ogr essive
pr opon en t s of gr ea t er feder a l pr ot ect ion s for em ployee ben efit
r igh t s pr oba bly su ppor t ed t h e E RISA E xpr ess P r eem pt ion , wh ich
u n like it s pr edecessor s, a s discu ssed su pra, a pplied pr eem pt ion t o
ben efit r igh t s a n d t h e en for cem en t of ben efit pr ot ect ion s, a s a wa y
t o pr even t st a t es fr om a dopt in g or a pplyin g la ws t h a t wou ld
dim in ish t h e ben efit r igh t s of pla n pa r t icipa n t s a n d ben eficia r ies
or t h e E RISA en for cem en t m ech a n ism s .
Th er efor e, t h e
pr ogr essives, like t h e la r ge bu sin esses a n d u n ion s, sa w t h e E RISA
E xpr ess P r eem pt ion a s a t ool t o pr even t t h e st a t es fr om
in t er fer in g wit h t h e feder a l r egu la t or y r egim e t h a t bot h h a d
a gr eed u pon . Th e st a t es, t h e fin a l pa r t y, wh ose su ppor t wa s
n eeded t o en a ct E RISA, pr oba bly su ppor t ed t h e E RISA E xpr ess
P r eem pt ion , wh ich u n lik e it s pr edecessor s, a s discu ssed su pra,
dim in ish ed t h e exclu ded st a t e la ws, bu t st ill exclu ded t h e on es
t h a t m a t t er ed m ost t o t h e st a t es. As discu ssed su pra, Con gr ess
fr om t h e st a r t of t h e E RISA dr a ft in g pr ocess u n t il t h e Con fer en ce
Com m it t ee pr oposa l exclu ded fr om pr eem pt ion (1) st a t e ba n kin g,
in su r a n ce, a n d secu r it ies la ws , a n d (2) st a t e la ws a ffect in g t h e
en for cem en t of em ployee ben efit r igh t s a n d pr ot ect ion s . H owever ,
a s discu ssed su pra, Con gr ess dr a m a t ica lly r edu ced t h e la t t er
exclu sion fr om pr eem pt ion in t h e fin a l ver sion of E RISA t o on e for
gen er a lly a pplica ble cr im in a l la ws. Th er e is n o eviden ce t h a t t h e
st a t es, or a n yon e else, m a de a n y effor t t o exclu de fr om t h e E RISA
E xpr ess P r eem pt ion st a t e dom est ic r ela t ion s la ws, pr oper t y la ws,
or cr edit or la ws du r in g a n y pa r t of t h e legisla t ive pr ocess.
H owever , a s discu ssed su pra, a ll t h e pr edecessor bills per m it t ed
395. B u t see Ka t h r yn Ken n edy, J u d icial S tan d ard of R eview in E R IS A
B en efit Claim Cases, 50 AM . U.L. R E V. 1083, 1089 (J u n e 2001) (st a t in g t h a t
“pr eem pt ion wa s obviou sly design ed t o r edu ce t h e cost of pla n
a dm in ist r a t ion ”).
396. S ee Woot en , su pra n ot e 132, a t 31.
397. E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 204-05.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
221
st a t e la ws, in clu din g t h ose la ws, t o a ffect ben efit r igh t s a n d t h eir
en for cem en t ot h er t h a n for t h e pla n s for wh ich E RISA pr oh ibit ed
t h e a lien a t ion of ben efit s.
In sh or t , a ll fou r m a jor pla yer s expect ed t h a t t h e r egu la t or y
r egim e t h a t wa s a gr eed u pon wou ld n ot be en h a n ced or dim in ish ed
by st a t e la ws ot h er t h a n t h e on e gen er a l st a t e la w t h a t is fu lly
exclu ded fr om E RISA pr eem pt ion , t h e lim it ed r egu la t ion of pla n s
est a blish ed pr im a r ily for life in su r a n ce, a n d t h e t h r ee st a t e la ws
t h a t a r e exclu ded on ly wh en a pplica ble t o pla n pr ovider s or t o a
398
pla n est a blish ed pr im a r ily t o pr ovide dea t h ben efit s.
Du r in g t h e
dr a ft in g pr ocess, Con gr ess did n ot explicit ly con sider exclu din g
a n y ot h er st a t e la ws, ot h er t h a n t a x la ws, wh ich exclu sion wa s
con sider ed a n d r eject ed by t h e Con fer en ce Com m it t ee. Th is
r eject ion im plies t h a t st a t es m a y u n der som e cir cu m st a n ces t a x
E RISA pla n s, t h eir pa r t icipa n t s or ben eficia r ies, con t r ibu t or s t o
E RISA pla n s, or t h ir d pa r t ies doin g bu sin ess wit h E RISA pla n s .
Th u s, E RISA E xpr ess P r eem pt ion wa s in t en ded t o a ssu r e t h a t a
st a t e la w, ot h er t h a n on e exclu ded in wh ole or in pa r t , m a y n ot
en h a n ce or u n der m in e t h e E RISA ben efit pr ot ect ion s of pla n
pa r t icipa n t s a n d ben eficia r ies , pa r t icu la r ly t h eir r igh t t o obt a in
pr om ised ben efit s, wh ich a pplied t o a ll E RISA pla n s . Obviou sly,
Con gr ess did n ot believe t h is cou ld be a ch ieved by t h e n a r r ower
a ppr oa ch of t h e su per seded pr ecu r sor bills, wh ich essen t ia lly
pr eem pt ed on ly st a t e la ws r ela t ed t o t h e su bst a n t ive r equ ir em en t s
set for t h in wh a t beca m e E RISA sect ion s n u m ber in g in t h e 100s,
399
200s, 300s, a n d 400s.
Th e “r ela t e t o” ph r a se r eflect ed a Con gr ession a l r ecogn it ion
t h a t E RISA per m it s som e st a t e la ws t o a ffect t h e E RISA ben efit
pr ot ect ion s. At lea st t wo k in ds of st a t e la ws a r e im plicit ly
398. Qu est ion s la t er a r ose a bou t t h e a gr eed r egu la t or y r egim e, m a n y of
wh ich wer e r esolved by Su pr em e Cou r t decision s. S ee F ir est on e Tir e &
Ru bber Co. v. Br u ch , 489 U.S. 101, 102 (1989) (decidin g t h a t t h e a r bit r a r y a n d
ca pr iciou s st a n da r d of r eview wa s n ot a pp lica ble t o pla n ben efit den ia ls). Th e
Su pr em e Cou r t descr ibed E RISA a s a r et icu la t ed st a t u t e wh en h oldin g t h a t
cer t a in pr ot ect ion s wer e u n a va ila ble for pla n pa r t icipa n t s an d ben eficia r ies.
S ee, e.g., Ma ssa ch u set t s Mu t . Life In s. Co. v. Ru ssell, 473 U.S. 134, 144 (1985)
(h oldin g n o ext r a -con t r a ct u al da m a ges a va ila ble u n der t h e r et icu la t ed
st a t u t e); Mer t en s v. H ewit t Assocs., 508 U.S. 248, 261 -62 (1993) (h oldin g n o
m on et a r y da m a ges m a y be im posed on n on -fidu cia r ies pa r t icipa t in g in a
fidu cia r y br ea ch ). Add it ion a l pr eem pt ion exclu sion s wer e a dded a ft er t h e
in it ia l en a ct m en t of E RISA, a s discu ssed, in fra.
399. B u t see Da n iel M. F ox & Da n iel C. Sch a ffer , S em i-Preem ption in
E R IS A: L egislative Process and H ealth Policy, 7 AM . J . T AX P OL ’Y 47 (1988)
(a r gu in g t h a t t h e E RISA E xpr ess P r eem pt ion wa s pr oposed by t h e Con fer en ce
Com m it t ee t o pr even t t h e st a t es fr om r egu la t in g E RISA self-in su r ed pla n s,
pa r t icu la r ly h ea lt h in su r a n ce a n d lega l ser vices pla n s). Th e a u t h or s did n ot
expla in wh y t h e Con fer en ce Com m it t ee a lso a d ded a pr ovision t o pr eem pt a ll
st a t e en for cem en t la ws ot h er t h a n gen er a lly a pplica ble cr im in a l la ws a n d
expa n ded t h e ben efit r igh t s beyon d t h e r igh t t o r ecover a n d det er m in e ben efit
pa ym en t s. Id . In con t r a st , t h is a r t icle focu ses on t h ese ext en sive r igh t s.
222
T h e J oh n M arsh all L aw R eview
[47:145
per m it t ed t o h a ve su bst a n t ia l effect s on t h e E RISA pr ot ect ion s
even t h ou gh t h ey a r e n ot explicit ly exclu ded fr om t h e E RISA
E xpr ess P r eem pt ion Ru le. Bot h t r a dit ion a lly gover n t h e pr ovision
of ben efit s by pla n s t h a t E RISA specifica lly a u t h or izes wit h ou t
m a kin g a n y a t t em pt t o r egu la t e su ch pr ovision . St a t es m a y
r egu la t e h ow la wyer s pr a ct ice, wh ich m a y det er m in e t h e ben efit s
a n E RISA lega l ser vices pla n m a y offer , a n d h ow t h e ben efit s a r e
offer ed. St a t es m a y r egu la t e h ow h ea lt h ca r e pr ovider s oper a t e,
wh ich m a y det er m in e t h e ben efit s a n E RISA h ea lt h ca r e clin ic
m a y offer , a n d h ow t h e ben efit s a r e offer ed. It is m ost r ea son a ble
t o in t er pr et “t h e r ela t e” t o ph r a se t o per m it t h ese la ws t o a void
pr eem pt ion on ly if t h ey h a ve m in im a l effect s on t h e ot h er E RISA
ben efit s pr ot ect ion s. In pa r t icu la r , t h e a s socia t ed r epor t in g a n d
disclosu r e m a n da t es t h a t E RISA per m it s t h ose la ws t o im pose so
t h e la ws a r e en for cea ble m a y on ly r equ ir e in for m a t ion n eeded t o
a dm in ist er t h e per m issible la w wit h ou t cr ea t in g u n du e bu r den s,
su ch a s clin ic r epor t s t o t h e loca l h ea lt h a gen cy. Mor eover , by n ot
exem pt in g E RISA pla n s or t h eir pa r t icipa n t s a n d ben eficia r y fr om
st a t e t a x Con gr ess a lso per m it t ed som e st a t e t a x la ws t o be
im posed. Th ese st a t e la ws m a y sim ila r ly im pose lim it ed r epor t in g
m a n da t es, su ch a s r equ ir in g E RISA pla n s t o file a n n u a l t a x
r epor t s a n d r espon d t o a u dit r equ est s.
On Au gu st 20, 1974, t h e H ou se a ppr oved t h e Con fer en ce
Com m it t ee’s r epor t , in clu din g t h e su bst it u t e bill, by a vot e of 407 400
2, a n d a set of sm a ll ch a n ges set for t h in H ou se Con cu r r en t
401
Resolu t ion 609 wit h ou t a n object ion .
On Au gu st 22, 1974, t h e
Sen a t e a ppr oved t h e Con fer en ce Com m it t ee’s r epor t a n d t h e
402
con cu r r en t r esolu t ion by a vot e of 85-0.
Th ese vot es pr ovide
con sider a ble eviden ce t h a t t h er e wa s over wh elm in g su ppor t for
E RISA, it s pr ovision s, a n d t h eir in t en ded m ea n in g. Th is m ea n in g
m a y be a scer t a in ed fr om (1) t h e evolu t ion of t h e bills t h a t wer e
t r a n sfor m ed in t o E RISA, (2) t h e st a t em en t s on t h e floor of t h e
Con gr ess, (3) t h e lega l a n d polit ica l con t ext in wh ich t h e
legisla t ion wa s developed, a n d (4) t h e Con gr ession a l r epor t s a n d
Adm in ist r a t ion r ecom m en da t ion s. At t h e sign in g cer em on y for
E RISA, P r esiden t F or d pr a ised t h e in cr ea sed ben efit r igh t s t h a t
E RISA pr ovided wor k er s, obser ved t h a t it wa s a ppr opr ia t e t h a t h e
wa s sign in g t h e E RISA bill on Sept em ber 2, 1974, wh ich wa s
403
La bor Da y.
400. 120 C ON G . R E C . 29215 (Au g. 20, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 4717-20.
401. H . C ON . R E S . 609, 93d Con g. (2d. Sess. 1974), 120 C ON G . R E C . 29,21619 (Au g. 20, 1974), reprin ted in E RISA LE G. H ISTORY, supra n ot e 165, a t
4722-30.
402. 120 C ONG . R E C . 29,925-28, 29,963 (Au g. 22, 1974), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 4827-4828, 4835. F ive of t h e sen a t or s n ot
pr esen t wer e r epor t ed a t t h e vot e t o h a ve decla r ed t h a t if pr esen t t h ey wou ld
h a ve vot ed t o a ppr ove t h e bill. Id .
403. E RISA LE G. H ISTORY, su pra n ot e 165, a t 5321.
2013]
VII.
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
223
P RE E MP TION ISSUE S P RE SE N TE D IN TH E COURSE OF
TH E SUBSTAN TIAL E RISA RE VIE W AND P RE P ARATION
OF 1978 AND 1979 RE F ORM BILLS, NE ITH E R OF WH ICH
WAS ADOP TE D
Th er e wer e n o Su pr em e Cou r t decision s on E RISA
404
pr eem pt ion befor e 1980 ot h er t h a n Wh ite M otor Corp., discu ssed,
su pra, wh ich con fir m ed t h a t E RISA pr eem pt ed st a t e la ws dir ect ly
a ddr essin g pen sion issu es, wh ich E RISA r egu la t ed, su ch a s t h e
fu n din g a n d vest in g of ben efit s. In 1979, t h er e wer e sign ifica n t
r eviews of t h e issu es r a ised by t h e im plem en t a t ion of E RISA
wit h in a n d wit h ou t Con gr ess discu ssed in fra. H owever , t h e in it ia l
E RISA § 3022 r equ ir em en t t h a t t h er e be a fu ll st u dy a n d r eview of
t h e E RISA E xpr ess P r eem pt ion wit h r espect t o pen sion m a t t er s
wit h in 24 m on t h s of t h e Sept em ber 24, 1974 en a ct m en t of
405
406
E RISA wa s n ever im plem en t ed.
Most E RISA pr ovision s h a d
a n effect ive da t e for exist in g pla n s wit h ca len da r yea r s of t h e fir st
407
da y of t h e yea r begin n in g J a n u a r y 1, 1976, wit h t h e except ion of
t h e pr ovision s in su r in g pen sion ben efit s, wh ich wer e effect ive a s of
408
t h e t im e of t h e en a ct m en t .
Th u s, it wa s sen sible t o wa it u n t il
t wo t o t h r ee yea r s a ft er t h a t effect ive da t e, i.e., u n t il 1978 or 1979,
t o eva lu a t e t h e effect s of t h e pr eem pt ion a n d ot h er fea t u r es of
409
E RISA.
A. A L aw R eview Article Describin g th e E R IS A Preem ption Issu es
R ecogn ized in 1979
A la w r eview a r t icle by J a m es D. H u t ch in son a n d Da vid M.
404. M alon e, 435 U.S. a t 497.
405. H .R. R E P . N O . 93-1280, § 3022(a )(4), a t 205 (1984), reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 4277, 4476.
406. In t r odu ct or y Rem a r ks of Sen a t or J a cob J a vit s on S. 209; H ea r in gs
Befor e t h e Sen a t e Com m it t ee on La bor a n d H u m a n Resou r ces, 96t h Con g. 1st
Sess. on S. 209, a t 99, 106 (F eb. 6-8, 1979) [h er ein a ft er “1979 Sen a t e E RISA
Review”]. H owever , t h e Su bcom m it t ee of La bor St a n da r ds of t h e H ou se
Com m it t ee on E du ca t ion a n d La bor h a d a P en sion Ta sk F or ce, wh ich
con du ct ed h ea r in gs on t h e im plem en t a t ion of E RISA a n d issu ed a r epor t , H .R.
R E P . N O . 94-1785 (2d. Sess. 1977). Th a t r epor t did n ot m en t ion spou sa l r igh t s,
dom est ic r ela t ion s, or t h e a lien a t ion pr oh ibit ion , bu t focu sed on t h e exclu sion
for st a t e r egu la t ion of ba n k in g, in su r a n ce, a n d secu r it ies pr ovider s a n d
su ggest ed t h a t t h e exclu sion be n a r r owed. Id . a t 46-49. Th e st a ff of t h e
Con fer en ce Com m it t ee h a d r ecom m en ded t h a t t h e st u dy be lim it ed t o t h e
issu e bu t E RISA dir ect ed t h a t a fa r m or e wide-r a n gin g r eview be con du ct ed,
a s discu ssed su pra.
407. P u b. L. N o. 93-406 §§ 111(b)(2), 211(b)(2), 306(b), 414(b)(2), 1017(b),
1024, 1034, 88 St a t . 829, 851, 867, 874, 889, 932, 943, 948 (1974).
408. P u b. L. No. 93-406, §§ 4082, 88 St a t . 829, 1034-35 (1974).
409. 1979 Sen a t e E RISA Review, su pra n ot e 406, a t 99-109 (In t r odu ct or y
Rem a r ks of Sen . J a vit s).
224
T h e J oh n M arsh all L aw R eview
[47:145
Ifsh in (“Ch icago Preem ption R eview ”), h a s a good discu ssion of
t h e pr eem pt ion issu es t h a t sch ola r s r ecogn ized a t t h e st a r t of
1979. In pa r t icu la r , t h e Ch icago Preem ption R eview dr a ws t h e
con clu sion s set for t h in fra, a bou t t h e five st a t e la ws t h a t a r e t h e
411
su bject of t h is a r t icle.
Th e Ch icago Preem ption R eview obser ves t h a t t h e gen er a lly
a pplica ble cr im in a l la w exclu sion wa s a m bigu ou s, bu t is u n a wa r e
412
of a n y decision a ddr essin g it s scope.
Th e a r t icle con clu des t h a t ,
“a st a t e la w m a kin g t h eft illega l wou ld be en for cea ble a ga in st on e
a ccu sed of st ea lin g a sset s fr om a pla n , wh er ea s a st a t u t e lim it ed t o
413
pr oh ibit in g on ly t h eft s fr om em ployee ben efit fu n ds wou ld n ot .”
Th is con clu sion is ba sed on a m or e lim it ed sen t en ce in dict a of a
t a x pr eem pt ion decision Na t ’l Ca r r ier s’ Con fer en ce Com m . v.
414
H effer n a n (h er ein a ft er “H effern an II”), cit ed in a foot n ot e of t h e
a r t icle t h a t “Con gr ess a ppa r en t ly in t en ded t o pr eem pt cr im in a l
415
la ws dir ect ed specifica lly a t em ployee ben efit pla n s.”
Mor eover ,
t h e a r t icle does n ot discu ss wh et h er t h e gen er a l t h eft la w wou ld be
su fficien t ly r ela t ed t o a n em ployee ben efit pla n t o be pr eem pt ed if
t h er e wer e n o except ion for gen er a lly a ccept ed cr im in a l la ws. Th e
Ch icago Preem ption R eview obser ves t h a t t h e cr im in a l la w wa s n ot
a ver y effect ive t ool for r egu la t in g em ployee ben efi t pla n s beca u se
su ch la w does n ot a ddr ess m a n y pla n a bu ses, su ch a s t h e fa ilu r e t o
fu n d pla n s a dequ a t ely, a n d t h e h igh st a n da r ds of pr oof r equ ir ed t o
416
im pose cr im in a l sa n ct ion s pr even t t h eir wide u se.
H owever , by
a ddr essin g som e a bu ses cr im in a l la w m a y st ill be a u sefu l t ool.
Th e Ch icago Preem ption R eview does n ot discu ss a n y issu es
wit h r espect t o t h e pr eem pt ion of t a x la w, a lt h ou gh t h ey cit ed a
410
410. J a m es D. H u t ch in son & Da vid M. Ifsh in , Fed eral Preem ption of S tate
L aw u n d er th e E m ployee R etirem en t In com e S ecurity Act of 1974, 46. U. C H I .
L. R E V. 23 (1978) [h er ein a ft er “Ch icago Preem ption R eview ”]. Despit e t h e
1978 da t e of t h e issu e wit h t h e a r t icle, t h e a r t icle r efer s t o a pr oposed bill, S.
209, 96t h Con g 1st Sess. (1979) t h a t wa s n ot in t r odu ced u n t il 1979. Id . S ee
also St eph en R. Sn odgr a ss, E R IS A Preem ption of S tate L aw : T h e M ean in g of
“R elate to” in S ection 514, 58 W ASH . U. L. Q. 143 (1980) (cit in g Ch icago
Preem ption R eview a n d pr oposin g fou r a ppr oa ch es t o in t er pr et in g t h e E RISA
E xpr ess P r eem pt ion wit h pa r t icu la r em ph a sis on in su r a n ce la w, dom est ic
r ela t ion s
la w,
and
civil
r igh t s
la w),
available
at
h t t p://digit a lcom m on s.la w.wu st l.edu /la wr eview/vol58/iss1/9 (la st visit ed Ma r ch
24, 2014).
411. B u t see Ch icago Preem ption R eview , su pra n ot e 410 (disr ega r din g t h e
a u t h or s’ ext en sive discu ssion of issu es a bou t t h e scope of t h e in su r a n ce,
ba n kin g, secu r it ies exclu sion s, a n d M alon e, 435 U.S. 497).
412. Id . a t 71-72.
413. Id . a t 72.
414. S ee Na t ’l Ca r r ier s’ Con fer en ce Com m . v. H effer n a n , 454 F . Su pp. 914
(D. Con n . 1978) [h er ein a ft er H effernan II] (h oldin g t h a t E RISA pr eem pt ed a
st a t e t a x equ a l t o a per cen t a ge of a n E RISA welfa r e pla n ’s a n n u a l ben efit
pa ym en t s).
415. Ch icago Preem ption R eview , su pra n ot e 410, a t 72 n .293 (cit in g
H effernan II, 454 F . Su pp. a t 916.
416. Id . a t 29.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
225
decision , su pra, t h a t E RISA pr eem pt ed a Con n ect icu t st a t u t e
im posin g a 2.75% t a x on t h e ben efit s dist r ibu t ed by a den t a l
417
ben efit pla n .
Th e a r t icle does n ot discu ss a n y issu es per t a in in g
t o debt or -cr edit or la ws, a lt h ou gh it cit ed in a foot n ot e t wo
decision s t h a t a cr edit or m a y a t t a ch 10% of a pa r t icipa n t ’s pen sion
pa ym en t s on t h e ba sis t h a t su ch a t t a ch m en t s qu a lify for t h e 10%
418
except ion for volu n t a r y a ssign m en t s.
Th e Ch icago Preem ption
R eview a lso does n ot m en t ion t r a n sfer u pon dea t h or r igh t s t o elect
a ga in st a deceden t ’s pr oper t y disposit ion s.
Th e Ch icago Preem ption R eview ext en sively discu sses
419
dom est ic r ela t ion s issu es.
Th e a r t icle sever ely cr it icizes a
420
Secon d Cir cu it decision , Am . Tel. & Tel. Co. v. Mer r y, a n d a
421
Nin t h Cir cu it dist r ict cou r t decision , St on e v. St on e, on wh ich
t h e Secon d Cir cu it r elied, t h a t dom est ic r ela t ion s or der s wer e n ot
pr eem pt ed by eit h er t h e E RISA E xpr ess P r eem pt ion or t h e
422
Alien a t ion P r oh ibit ion .
Th e a r t icle cr it icizes t h e S ton e cou r t for
ba sin g it s con clu sion , t h a t t h e E RISA E xpr ess P r eem pt ion is
in a pplica ble on t h e policy a sser t ion t h a t “bot h Ca lifor n ia ’s in t er est
in gover n in g t h e disposit ion of m a r it a l pr oper t y a n d ju st ice t o t h e
n on -em ployee spou se n ecessit a t e per m it t in g a dir ect ca u se of
a ct ion a ga in st t h e pla n ,” r a t h er t h a n on a n a n a lysi s of t h e
423
m ea n in g of t h e wor ds “r ela t e t o.”
Th e Ch icago Preem ption
R eview a lso cr it icizes t h e S ton e cou r t for a sser t in g t h a t t h e
pu r pose of E RISA is t o pr ot ect t h e fa m ily, a n d disr ega r din g t h e
pla in la n gu a ge of t h e Alien a t ion P r oh ibit ion , a n d t h e r egu la t ion s
424
issu ed t h er eu n der ,
t h a t con t a in n o except ion for dom est ic
425
r ela t ion s or der s or ot h er wor t h y cla im s a ga in st t h e pa r t icipa n t .
Th ey obser ve, h owever , t h a t sever a l ot h er dist r ict cou r t s a n d t h e
U.S. J u st ice Depa r t m en t su ppor t ed t h is ba sis for t h e S ton e
decision , in bot h com m on -la w a n d com m u n it y pr oper t y
426
ju r isdict ion s.
Th e Ch icago Preem ption R eview m en t ion s t wo dist r ict cou r t s
t h a t h eld E RISA pr eem pt ed dom est ic r ela t ion s la w ba sed on
com m u n it y pr oper t y r igh t s.
In on e, F r a n cis v. Un it ed
427
Tech n ologies Cor p., t h e a r t icle n ot es t h e cou r t h eld t h a t t h e
for m er spou se la cked st a n din g beca u se sh e wa s n ot a pa r t icipa n t
417. Id . a t 72.
418. S ee id . a t 58 n .218 (r efer r in g t o t h e except ion in E RISA § 206(d)(2), 29
U.S.C. § 1056(d)(2)).
419. Id . a t 58-65, 77-78.
420. Am . Tel. & Tel. Co. v. Mer r y, 592 F .2d 118 (2d Cir . 1979).
421. St on e v. St on e, 450 F . Su pp. 919 (N.D. Ca l. 1978).
422. Ch icago Preem ption R eview , supra n ot e 410, a t 58-62.
423. Id . a t 60.
424. Tr ea su r y Reg. § 1.401(a )-13.
425. Ch icago Preem ption R eview , supra n ot e 410, a t 50-61.
426. Id . a t 61-62.
427. F r a n cis v. Un it ed Tech n ologies. Cor p., 458 F . Su pp. 84 (N.D. Ca l.
1978).
226
T h e J oh n M arsh all L aw R eview
[47:145
428
or n a m ed a ben eficia r y by t h e pa r t icipa n t .
Th e a r t icle a lso
429
m en t ion s bu t does n ot discu ss, Gen . Mot or s Cor p. v. Town sen d ,
h oldin g dom est ic r ela t ion s la w did n ot viola t e t h e E RISA E xpr ess
P r eem pt ion , bu t did viola t e t h e Alien a t ion P r oh ibit ion .
Th e Ch icago Preem ption R eview r ecom m en ds t h a t Con gr ess
decide t h e con dit ion s, if a n y, u n der wh ich it wish es t o ca r ve ou t a n
exclu sion fr om t h e E RISA E xpr ess P r eem pt ion a n d t h e Alien a t ion
P r oh ibit ion t o in su r e u n ifor m t r ea t m en t of dom est ic r ela t ion s
430
or der s by em ployee ben efit pla n s.
In pa r t icu la r , t h e a r t icle
431
su ppor t s legisla t ion pr oposed by Con g. J oh n Seiber lin g in 1978
t h a t pr ovided if a pa r t icipa n t or ben eficia r y wer e r eceivin g pen sion
pa ym en t s, t h e Alien a t ion P r oh ibit ion wou ld n ot be viola t ed by a
dom est ic r ela t ion s or der pr ovidin g for pa ym en t s of a lim on y a n d
432
ch ild su ppor t fr om su ch pa ym en t s.
H owever , t h is pr oposa l
wou ld h a ve been in effect ive beca u se exem pt in g a n or der fr om t h e
Alien a t ion P r oh ibit ion does n ot m ea n t h a t t h e or der is t h er eby
in cor por a t ed wit h in t h e pla n t er m s. Th u s, t h e or der m a y be
in con sist en t wit h t h e pla n t er m s, in wh ich ca se t h e E RISA
433
E xpr ess P r eem pt ion wou ld pr eem pt it .
Th e fa lla cy of t h e Seiber lin g a ppr oa ch m a y be illu st r a t ed by a
pa r t icipa n t wh o m a k es a cla im for a pen sion ben efit of a n a n n u it y
begin n in g a t a ge 65 equ a l t o h is fin a l yea r ’s sa la r y of $100,000 per
yea r . Th er e is n o E RISA pr oh ibit ion on su ch a ben efit , bu t t h e
r igh t t o t h e ben efit is det er m in ed by wh et h er t h e pla n t er m s
pr ovide t h e pa r t icipa n t wit h su ch a ben efit .
B . T h e Proposed E R IS A Im provem en t Act of 1979 an d th e E R IS A
Preem ption Issu es it Ad d ressed
In 1979 Sen a t or s Willia m s a n d J a vit s in t r odu ced legisla t ion
434
en t it led t h e E RISA Im pr ovem en t s Act of 1979.
Th e Act wou ld
h a ve a m en ded E RISA § 2, 29 U.S.C. § 1002, wh ich is en t it led
Con gr ession a l F in din gs a n d Decla r a t ion of P olicy, by a ddin g t h e
followin g pa r a gr a ph :
(d) It is h er eby fu r t h er decla r ed t o be t h e policy of t h is Act t o fost er
t h e est a blish m en t a n d m a in t en a n ce of em ployee ben efit pla n s
428. Ch icago Preem ption R eview , supra n ot e 410, a t 62.
429. Gen . Mot or s Cor p. v. Town sen d, 468 F . Su pp. 466 (E .D. Mich. 1976)
430. Ch icago Preem ption R eview , supra n ot e 410, a t 64-65, 77-78.
431. H .R. 13446, 95t h Con g. (2d Sess. 1978), reprin ted in H ea r in gs Befor e
t h e Sen a t e Com m it t ee on La bor a n d H u m a n Resou r ces, 95t h Con g. 2d Sess. on
S. 3017, a t 1050-1052 (Au g. 15, 16, 17, 1978) [h er ein a ft er “1978 Sen a t e E RISA
Review”].
432. Ch icago Preem ption R eview , supra n ot e 410, a t 77-78.
433. B u t see E RISA § 206(d)(3). As discu ssed in fra, t h e Sect ion wa s
su bsequ en t ly a m en ded t o pr ovide t h a t a n or der t h a t is a qu a lified dom est ic
r ela t ion s or der becom es pa r t of t h e pla n t er m s a n d a ben eficia r y design a t ion .
434. E RISA Im pr ovem en t s Act of 1979, S. 209, 96t h Con g. (1st Sess. 1979),
reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t 9-94.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
spon sor ed by em ployer s, em ployee or ga n iza t ion s, or bot h .
227
435
Th e a ddit ion wa s ju st ified beca u se, “[i]n con sider in g
sim plifica t ion s t o E RISA Con gr ess sh ou ld t h u s eva lu a t e pr oposa ls
436
wit h t h e ba la n ce bet ween ben efit s a n d cost s clea r ly in focu s.”
H owever , t h e pr oposed a ddit ion wa s st r on gly cr it icized by Ka r en
F er gu son of t h e P en sion Righ t s Cen t er a s in con sist en t wit h t h e
437
n a t ion a l “n eeds for r et ir em en t in com e.” Th e bill wa s r epor t ed t o
438
t h e Sen a t e, bu t died wit h ou t bein g deba t ed on t h e floor .
Con gr ess n ever a dopt ed t h e pr ovision t o wea k en E RISA’s
fu n da m en t a l object ive of pr ot ect in g pla n pa r t icipa n t s a n d
ben eficia r ies, even t h ou gh t h e pr ovision wa s ch a r a ct er ized a s a
wa y t o im pr ove t h e ba la n ce bet ween ben efit s a n d cost s of
r et ir em en t pla n r egu la t ion . In con t r a st , pr ovision s in t h e sa m e
bill t o exem pt cer t a in dom est ic r ela t ion s or der s fr om t h e E RISA
E xpr ess P r eem pt ion , or t o en h a n ce t h e spou sa l su r vivor
pr ot ect ion s, wer e sim ila r t o pr ovision s a dopt ed in 1984 wit h t h e
439
en a ct m en t of Ret ir em en t E qu it y Act of 1984 (“RE ACT”),
as
discu ssed in fra. Mor eover , sim ila r la n gu a ge a bou t fost er in g
E RISA pen sion pla n s wa s in clu ded in t h e policy st a t em en t wit h in
t h e less ext en sive r efor m bill pr epa r ed in 1978 t h a t a lso h a d
pr ovision s t o r edu ce a dm in ist r a t ive bu r den s on pla n s a n d t h eir
440
spon sor s, a n d wa s a lso n ot a dopt ed by Con gr ess.
Th e pr oposed E RISA Im pr ovem en t s Act of 1979 a ddr essed
441
m a n y issu es, in clu din g pr eem pt ion .
Sen a t or J a vit s descr ibed
t wo con clu sion s r ea ch ed by h im per t a in in g t o t h e five st a t e la ws
t h a t a r e t h e su bject of t h is a r t icle.
F ir st , Sen a t or J a vit s
r ecom m en ded t h a t com m it t ee r epor t la n gu a ge, n ot st a t u t or y
la n gu a ge, sh ou ld r ea ffir m t h e cor r ect n ess of Na t ’l Ca r r ier s’
435. E RISA Im pr ovem en t s Act of 1979, S. 209, 96t h Con g. § 102, a t 5-6 (1st
Sess. 1979), reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t 9, 1314.
436. P r epa r ed St a t em en t of t h e Amer ica n Aca dem y of Act u a r ies a t 1979 a t
2-3, reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t 990, 991-92.
437. P r epa r ed St a t em en t of Ka r en W. F er gu son on beh a lf of t h e P en sion
Righ t s Cen t er a t 1979 a t 1-4, reprin ted in 1979 Sen a t e E RISA Review, su pra
n ot e 406, a t 892-96.
438. Sen a t e Com m it t ee on La bor a n d H u m a n Resou r ces, 96t h Con g.,
Legisla t ive Ca len da r 108 (fin a l ed., J a n . 4, 1981).
439. Ret ir em en t E qu it y Act of 1984, P u b. L. No. 98-397, 98 St a t . 1426
(1984).
440. S. 3017, 95t h Con g. § 101 (2d Sess. 1978), reprin ted in 1978 Sen a t e
E RISA Review, su pra n ot e 425, a t 3, 6-7. H owever , u n like t h e 1979 bill, t h e
policy la n gu a ge a pplied on ly t o t h e 1978 bill, n ot t o E RISA.
441. S ee Sen a t or J a vit s’ r em a r ks, reprin ted in 1979 Sen a t e E RISA Review,
su pra n ot e 406, a t 99-100 (descr ibin g h is in t r odu ct ion wit h Sen a t or Willia m s a
yea r ea r lier , t h e E RISA Im pr ovem en t s Act of 1978, S. 3017, 95t h Con g. (2d
Sess. 1978), wh ich wa s a lso a com pr eh en sive set of r efor m pr oposa ls). E ven
t h ou gh t h e 1978 legisla t ion h a d n o pr eem pt ion pr ovision s, it ser ved a s a ba sis
for t h e E RISA Im pr ovem en t s Act of 1979. Id .
228
T h e J oh n M arsh all L aw R eview
[47:145
Con fer en ce Com m . v. H effer n a n (h er ein a ft er “H effern an I”),
443
wh ich h e descr ibed a s u ph oldin g t h e pr eem pt ion of a st a t e la w.
H owever , H effern an I h a d h eld in 1977 t h a t t h e feder a l Ta x
In ju n ct ion Act does n ot pr even t a pla n fr om goin g t o feder a l cou r t
t o en join t h e en for cem en t of a st a t e t a x t h a t t h e pla n cla im ed wa s
444
pr eem pt ed by E RISA.
Sen a t or J a vit s pr oba bly in t en ded t o r efer
t o H effern an II cit ed in t h e Ch icago Preem ption R eview , wh ich
h eld in 1978 t h a t E RISA pr eem pt ed a Con n ect icu t t a x of 2.75% of
t h e ben efit s pa id by a n E RISA h ea lt h ca r e r eim bu r sem en t pla n ,
445
wh en t h e t a x on pr em iu m s pa id t o a n in su r er wer e 2.00%.
Secon d, Sen a t or J a vit s r ecom m en ded t h a t t h e legisla t ion r esolve
t h e con flict discu ssed in t h e Ch icago Preem ption R eview a bou t t h e
effect iven ess of dom est ic r ela t ion s or der s a s follows:
442
Th e secon d except ion t o br oa d F eder a l pr eem pt ion pr ovided in ou r
bill in volves St a t e com m on la w or com m u n it y pr oper t y dom est ic
r ela t ion s la ws. Th e bill pr ovides t h a t :
Fed eral preem ption d oes n ot reach a ju d gm en t, d egree or ord er,
in clu d in g an approval of a property settlem en t, pu rsu an t to a S tate
com m on law or com m u n ity property d om estic relation s law wh ich :
F ir st , a ffect s t h e m a r it a l pr oper t y r igh t s of a n y per son in a n y
ben efit pa ya ble u n der a pen sion pla n or t h e lega l obliga t ion s of a n y
per son t o pr ovide ch ild su ppor t or m a ke a lim on y pa ym en t s, a n d
secon d, does n ot r equ ir e a pen sion pla n t o a lt er t h e effect ive da t e,
t im in g, for m , du r a t ion or a m ou n t of a n y pa ym en t s u n der t h e pla n or
t o h on or a n y elect ion pr ovided u n der t h e pla n wh ich is m a de by a
per son ot h er t h a n a pa r t icipa n t or ben eficia r y.
Th e bill a lso pr ovides t h e E RISA’s a n t ia ssignm en t a n d a lien a t ion of
ben efit s r u le does n ot a pply t o su ch ju dgm en t , decr ee or or der . T h e
pu rpose of th ese provision s is to reserve for th e S tates th eir
trad ition al con trol over m arital an d fam ily m atters, an d to assist
plan ad m in istrators w h o are faced w ith th e con flictin g d u ties of
obeyin g S tate cou rt d ecrees to pay ben efits to plan participan ts’
form er spou ses an d also com plyin g w ith th e Fed eral an tialien ation
446
ru le u n d er pen alty of plan d isqu alification .
Un like t h e Seiber lin g 1978 legisla t ion , discu ssed su pra, t h is
legisla t ion wou ld h a ve m a de t h e specified dom est ic r ela t ion s
or der s effect ive, a lt h ou gh it did n ot r esolve a ll t h e t a x -qu a lifica t ion
issu es.
By exem pt in g t h e or der s fr om t h e E RISA E xpr ess
P r eem pt ion , t h e st a t e or der s wou ld over r ide a n y con t r a r y E RISA
442. N at’l Carriers’ Con ference Com m . v. H effern an , 440 F . Su pp. 1280 (D.
Con n . 1977) [h er ein a ft er “H effern an I”].
443. Sen a t or J a vit s pr epa r ed r em a r ks r ega r din g E RISA Im pr ovem en t s Act
of 1979, S. 209, 96t h Con g. (1st Sess. 1979), reprin ted in 1979 Sen a t e E RISA
Review, su pra n ot e 406, a t 106-107.
444. H effernan I, a t 1284.
445. Ch icago Preem ption R eview su pra n ot e 404, a t 72 n .293 (cit in g
H effernan II, a t 916 n .293)
446. Id . a t 107 (em ph a sis a dded).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
229
pr ovision in clu din g bot h t h e Alien a t ion P r oh ibit ion a n d t h e
pr ovision t h a t E RISA pla n ben efit r igh t s a r e det er m in ed by t h e
t er m s of t h e pla n . Th u s, t h e a m en dm en t t o t h e Alien a t ion
P r oh ibit ion wa s u n n ecessa r y, a lt h ou gh a n a m en dm en t t o t h e
447
cor r espon din g Code sect ion wa s n eeded t o m a in t a in t h e pla n ’s
t a x qu a lifica t ion if su ch or der s wer e per m it t ed. Th e legisla t ion did
n ot r esolve a ll t h e t a x-qu a lifica t ion issu es beca u se a pla n t h a t
com plies wit h t h e specified dom est ic r ela t ion s or der s m a y n ot
sa t isfy t h e qu a lifica t ion r equ ir em en t t h a t t h e pla n be oper a t ed in
448
a ccor d wit h t h e t er m s of t h e pla n docu m en t .
Th er e wa s con sider a ble discu ssion of t h is pr oposa l by
m em ber s of t h e a dm in ist r a t ion , a dvoca t es for wom en ’s r igh t s a n d
pla n spon sor s, a s discu ssed in fra. A sim ila r , bu t m or e lim it ed set
of exem pt ion s beca m e pa r t of RE ACT in 1984, a s discu ssed in fra.
Th e Secr et a r y of La bor su ppor t ed t h is pr opos a l by pr esen t in g
t h e a bove a r gu m en t s in t h e fr a m ewor k of pr ot ect in g wom en , wh ile
pr eser vin g u n ifor m n a t ion a l r egu la t ion of em ployee ben efit
449
pla n s.
Th e Secr et a r y of La bor , h owever , pr oposed a lt er n a t ive
450
la n gu a ge, wh ich m a de n o su bst a n t ive ch a n ges.
Th e Assist a n t
Tr ea su r y Secr et a r y for Ta x P olicy su ppor t ed t h e posit ion of t h e
Secr et a r y of La bor , bu t su ggest ed t h a t t h e legisla t ion cla r ify t h a t
451
t h is a m en dm en t is n ot ch a n gin g bu t cla r ifyin g t h e la w.
Th is is a
som ewh a t odd posit ion sin ce t h e r egu la t ion s descr ibin g t h e
m ea n in g of t h e Alien a t ion P r oh ibit ion , wh ich wer e pr om u lga t ed by
t h e U.S. Depa r t m en t of Tr ea su r y less t h a n t wo yea r s befor e, did
n ot exem pt a n y dom est ic r ela t ion s or der s fr om t h e pr oh ib it ion for
t a x-qu a lifica t ion pu r poses.
Sen a t or Sch r oeder su ppor t ed t h e
452
pr oposa l,
a s did Ms. An it a Nela m of t h e Na t ion a l Wom en ’s
447. Code § 401(a )(13).
448. S ee Tr ea s. Reg. § 1.401-1(a )(2) (a s a m en ded 1988) (r equ ir in g t a xqu a lified pla n s t o follow pla n docu m en t s). B u t see Rev. Ru l. 80-27; 1980-1 C.B.
85 (expla in in g t h a t t h e IRS disr ega r ded t h is r equ ir em en t in a pr e -RE ACT
r u lin g t h a t a pen sion pla n wou ld n ot lose it s t a x qu a lifica t ion for com plyin g
wit h a cou r t or der r equ ir in g t h e dist r ibu t ion of t h e ben efit s of a pa r t icipa n t in
pa y st a t u s t o t h e pa r t icipa n t ’s spou se or ch ildr en t o m eet t h e pa r t icipa n t ’s
a lim on y or su ppor t obliga t ion s); Tr ea s. Reg. 1.401(a )-13(g)(2) (a s a m en ded
1988) (in dica t in g a post -RE ACT h oldin g t h a t t h e la ck of pr ovision s per t a in in g
t o a QDRO does n ot disqu a lify t h e pla n ).
449. Secr et a r y of La bor Ra y Ma r sh a ll’s r em a r ks a t 1979 Sen a t e E RISA
Review, su pra n ot e 400, a t 113-114. S ee also P r epa r ed St a t em en t Secr et a r y of
La bor Ra y Ma r sh a ll a t 9-12, reprin ted in 1979 Sen a t e E RISA Review, su pra
n ot e 406, a t 124, 132-135.
450. Secr et a r y of La bor Ra y Ma r sh a ll Apr . 27, 1979 let t er in r espon se t o
r equ est by Sen a t or Willia m s, Ch a ir m a n of S. Com m . On La bor a n d H u m a n
Resou r ces, for com m en t s r ega r din g ea ch sect ion of S. 209 a t 30, reprin ted in
1979 Sen a t e E RISA Review, su pra n ot e 406, a t 154, 183.
451. Assist a n t Secr et a r y of Tr ea su r y (Ta x P olicy) Don a ld C. Lu bick Ma y 1,
1979 let t er r espon se t o r equ est by Sen a t or Willia m s, Ch a ir m a n of S. Com m .
On La bor a n d H u m a n Resou r ces, for com m en t s r e ea ch sect ion of S. 209 a t 5,
reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t 225, 230.
452. Test im on y by Ms. P a t r icia Sch r oeder da t ed F eb. 1, 1979 a t 7 , reprin ted
230
T h e J oh n M arsh all L aw R eview
[47:145
453
P olit ica l Ca u cu s.
P la n spon sor s pr oposed t h r ee set s of su bst a n t ive ch a n ges t o
t h e dom est ic r ela t ion s pr oposa ls.
F ir st , t h e E RI SA In du st r y Com m it t ee, a n a ssocia t ion of 100
m a jor cor por a t ion s pr ovidin g em ployee ben efit s, pr oposed t h a t t h e
pr ovision s on ly a pply t o pen sion pa ym en t s t h a t wer e bein g pa id
454
r a t h er t h a n t o ben efit s t h a t wer e pa ya ble.
Secon d, t h e West er n Cou n cil of Tea m st er s pr oposed t h a t t h e
la w: (1) “r equ ir e or der s t o con t a in su fficien t in for m a t ion t o per m it
t h e [pen sion ] pla n t o ea sily det er m in e wh a t it is su pposed t o do
a n d t o r equ ir e t h e or der t o be ser ved on t h e pla n n o m or e t h a n 90
455
da ys befor e ben efit s com m en ce;” (2) per m it pla n s t o a void bein g
join ed t o divor ce a ct ion s u n t il sh or t ly befor e pla n pa ym en t s a r e t o
be m a de; (3) pr ot ect in g pla n s, a gen t s, a n d in su r er s a ga in st dou ble
lia bilit y if t h ey m a k e pa ym en t s pu r su a n t t o a bill t h a t does n ot
m eet E RISA’s st a n da r ds; a n d (4) pr ovide t h a t dom est ic r ela t ion s
or der s n ot ca u se a pa r t icipa n t ’s depen den t or for m er spou se t o
456
becom e a pla n ben eficia r y.
Th e Tea m st er s a lso pr oposed
457
a lt er n a t ive st a t u t or y la n gu a ge.
Th e a lt er n a t ive defin ed t h e
per m issible or der s a n d t h eir effect s in t h e E RISA E xpr ess
P r eem pt ion sect ion , a n d a dded la n gu a ge t o t h e Alien a t ion
P r oh ibit ion decla r in g t h a t t h e or der s descr ibed in t h e pr eem pt ion
sect ion will n ot be a ffect ed by t h e P r oh ibit ion .
Th ir d, Ka iser Alu m in u m & Ch em ica l Cor p. expr essed con cer n
a bou t t h e cor r ect n ess of t h e u n der lyin g pr em ise t h a t pla n ben efit
opt ion s a r e a lwa ys so sim ple t h a t t h ey will a lwa ys be obviou s t o
in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t 1043, 1049.
453. Test im on y by Ms. An it a Nela m of t h e Na t ion a l Wom en ’s P olit ica l
Ca u cu s pr esen t ed on F eb. 7, 1979, reprin ted in 1979 Sen a t e E RISA Review,
su pra n ot e 406, a t 634, 636.
454. P r epa r ed St a t em en t of t h e E RISA In du st r y Com m it t ee (E RIC) Befor e
t h e Sen a t e Com m it t ee on H u m a n Resou r ces pr esen t ed on F eb. 7, 1979 t o t h e
S. Com m . on La bor a n d H u m a n Resou r ces a t 12-13, reprin ted in 1979 Sen a t e
E RISA Review, su pra n ot e 406, a t 351, 362-363. Th is posit ion wa s su ppor t ed
by t h e Ma r ch 22 let t er of Mr . H . P . Kn een , J r ., t h e P la n Adm in ist r a t or of t h e
IBM E m ployee Ben efit P la n s t o t h e S. Com m . on La bor a n d H u m a n
Resou r ces, a t 4, reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t
1053, 1056; Ma r . 23 wr it t en st a t em en t of Mr . H. West on Cla r ke, J r ., Vice
P r esiden t , H u m a n Resou r ces, Am er ica n Teleph on e a n d Telegr a ph Com pa n y t o
t h e S. Com m . on La bor a n d H u m a n Resou r ces, a t 10, reprin ted in 1979 Sen a t e
E RISA Review, su pra n ot e 406, a t 1068, 1078.
455. Th eodor e L. Gr oom Ma r . 23, 1979 Let t er on beh a lf of W. Con f.
Tea m st er s P en . Tr . F u n d t o Sen a t or Willia m s, Ch a ir m a n of S. Com m . On
La bor a n d H u m a n Resou r ces, su pplem en t in g F eb. 7, 1979 st a t em en t befor e
Com m it t ee, a t 9, reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t
589, 597.
456. Id . a t 6-13, reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406,
a t 589, 594-601.
457. Id . a t 1-3, fir st a t t a ch m en t 1-3, reprin ted in 1979 Sen a t e E RISA
Review, su pra n ot e 406, a t 589, 602-607.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
231
458
n on -pa r t icipa n t s.
Th u s, con sider a ble lit iga t ion wou ld be
spa wn ed a bou t wh et h er t h e or der r equ ir es a n a va ila ble pa ym en t
459
opt ion . Ka iser a lso su ggest ed t h a t if t h e pr oposa l is n ever t h eless
a dopt ed: (1) pa r t ies t o divor ce sh ou ld bea r t h e cost s of t h e pla n
r eviewin g a n d pr ocessin g su ch or der s; (2) pa r t icipa n t s sh ou ld
r et a in t h e r igh t t o select t h e pla n ben efit opt ion n ot wit h st a n din g
a n y st a t e or der t o t h e con t r a r y; (3) a n on -pa r t icipa n t sh ou ld be
r equ ir ed t o pr ovide a ll in for m a t ion n eeded t o m a ke pa ym en t s
wit h in 90 da ys of in it ia l pa ym en t ; a n d (4) dom est ic r ela t ion s
or der s sh ou ld n ot ca u se a pa r t icipa n t ’s depen den t or for m er spou se
460
t o becom e a pla n ben eficia r y.
Th e Secr et a r y of La bor , lik e Sen a t or J a vit s a n d t h e ot h er
pa r t ies wh o offer ed com m en t s, fa iled t o discu ss wh y it wa s
sen sible t o defer t o dom est ic r ela t ion s or der s on ly for t h ose
a pplica ble t o t h ose pen sion pla n s su bject t o t h e spou sa l su r vivor
461
pr ovision s.
It wou ld a ppea r t h a t t h e sa m e policy ju st ifica t ion s
t h a t a pply t o t h ose or der s a pply t o dom est ic r ela t ion s or der s
per t a in in g t o ben efit s fr om pen sion pla n s n ot su bject t o t h e
spou sa l su r vivor pr ovision s, su ch a s u n fu n ded pla n s pr im a r ily for
462
h igh ly com pen sa t ed em ployees (“Top -H a t P la n s”),
or welfa r e
pla n s, su ch a s disa bilit y pla n s, life in su r a n ce, or sever a n ce pla n s,
wh ich h ist or ica lly wer e oft en sou r ces of in com e for a pa r t icipa n t ’s
divor ced spou se or ot h er depen den t s. Th is la ck of con sider a t ion
m a y h a ve been a con sequ en ce of a n a bsen ce of decision s wit h
r espect t o su ch pla n s a t t h a t t im e. H owever , on e wou ld expect
458. Ma r ch 23 let t er of Mr . J oel H a ssen , Gen er a l At t or n ey, P en sion a n d
Ben efit s, Ka iser Alu m in u m & Ch em ica l Cor p t o t h e S. Com m . on La bor a n d
H u m a n Resou r ces, a t 2, reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e
406, a t 1061, 1062.
459. Id .
460. Id . a t 2-4, reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t
1061, 1062-1064.
461. S ee E RISA Im pr ovem en t s Act of 1979, S. 209, 96t h Con g. § 128
(a ddin g a n a lien a t ion exem pt ion a t E RISA § 206(d)(3)); a t 23-24, 155 (a ddin g
t h e pr eem pt ion exem pt ion ba sed on E RISA § 206(d)(3) a s ERISA § 514(b)(4));
a t 35-36 (1st Sess. 1979), reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e
406, a t 9, 31-32, 43-44.
462. Un fu n ded pen sion pla n s t h a t a r e m a in t a in ed pr im a r ily for t h e
pu r pose of pr ovidin g defer r ed com pen sa t ion for a select gr ou p of m a n a gem en t
or h igh ly com pen sa t ed em ployees. E RISA § 201(2), 29 U.S.C. § 1051(2). S ee
e.g., Da ft v. Advest , In c., 658 F .3d 583, 594-95 (6t h Cir . 2011) (discu ssin g t h e
st a n da r d of r eview of t op -h a t det er m in a t ion s by pla n a dm in ist r a t ion ,
pa r t icu la r ly t h eir select gr ou p n a t u r e); see also In r e IT Gr p., In c., 448 F .3d
661, 667-69 (3d Cir . 2006) (discu ssin g t h e ch a r a ct er ist ics of su ch pla n s,
pa r t icu la r ly t h eir u n fu n ded n a t u r e). Su ch pla n s a r e oft en ca lled n on -qu a lified
beca u se t h eir u n fu n ded n a t u r e pr even t s t h em fr om qu a lifyin g for t h e
fa vor a ble t a x t r ea t m en t t h a t is gen er a lly pr ovided t o E RISA defer r ed
com pen sa t ion pla n s u n der Code § 401(a ). S ee gen erally, M ICH AE L J . N ASSAU ,
D E F E RRE D C OMP E NSATION : D E SIGN I SSUE S AND TH E C ONSTRUCTIVE R E CE IP T
D OCTRINE IN E XE CUTIVE COMP E NSATION (Mich a el Sir kin & La wr en ce
Ca gn ey eds., 2012).
232
T h e J oh n M arsh all L aw R eview
[47:145
t h a t t h e ver y lim it ed lit iga t ion wou ld h a ve st im u la t ed a discu ssion
of t h e im plica t ion s of t h e lit iga t ion for t h ese ot h er pla n s. Th er e
wa s a sim ila r a bsen ce of su ch con sider a t ion of t h e sa m e poin t in
t h e developm en t of RE ACT, a s discu ssed in fra, wh ich a lso
con fin ed t h e pr ovision s for t h e defer en ce t o dom est ic r ela t ion s
or der s t o t h ose per t a in in g t o Spou sa l Su r vivor Ben efit P la n s.
VIII.
INITIAL E RISA P RE E MP TION DE CISIONS BY TH E
SUP RE ME COURT WITH OU T OP INIONS
F ive of t h e Su pr em e Cou r t ’s in it ia l E RISA decision s, wit h ou t
opin ion s, m a de pr eem pt ion h oldin gs.
Alt h ou gh t h e la ck of
opin ion s m ea n s t h a t t h e h oldin gs a r e r est r ict ed t o t h e pr ecise
463
issu es decided, a ll seem ed t o con sider r a t h er br oa d issu es. Th u s,
t h ey a r e of con sider a ble pr eceden t ia l va lu e. F ir st , E RISA did n ot
pr eem pt st a t e com m u n it y pr oper t y la w or or der s pu r su a n t t o st a t e
464
dom est ic r ela t ion la w.
Th u s, in ca se of con flict , bot h wou ld
su per sede t h e t er m s of a n E RISA pen sion pla n . Secon d, E RISA
did n ot pr eem pt st a t e cou r t or der s m a k in g pen sion pla n s pa r t ies t o
465
divor ce a ct ion s.
Th ir d, E RISA pr eem pt ed st a t e la ws t h a t
466
gover n ed welfa r e pa r t icipa t ion r u les
or t h e for m of welfa r e
467
ben efit s.
F ou r t h , pr eem pt ion m a y n ot be a voided by
ch a r a ct er izin g t h e m a n da t ed ben efit pa ym en t s a s exer cises of t h e
st a t e’s t a xin g power . Th u s, in ca se of con flict , pla n s t er m s wou ld
su per sede su ch st a t e la ws. F ift h , a n u n fu n ded sever a n ce pa y
policy is a n E RISA pla n even if t h e em ployer files n o E RISA
r epor t s, t h e policy h a s n o for m a l cla im s pr ocedu r e, a n d n o wr it t en
468
pla n docu m en t s wer e m a de a va ila ble t o pa r t icipa n t s.
Th u s,
st a t es m a y n ot r egu la t e su ch in for m a l a r r a n gem en t s.
Th e Su pr em e Cou r t h a s u n a n im ou sly pr ocla im ed t h a t
469
dism issa ls for wa n t of su bst a n t ia l feder a l qu est ion
and
463. S ee generally J oh n A. F r ey, S u prem e Cou rt’s view s as to preced en tial
w eigh t of S u prem e Cou rt m em oran d u m d ecision su m m arily affirm in g low er
fed eral cou rt ju d gm en t on appeal or su m m arily d ism issin g appeal from state
cou rt, 139 L. E D . 2d 979 (2012).
464. In r e Ma r r ia ge of Ca m pa , 152 Ca l. Rpt r . 362 (Ca l. Ct . App. 1979); see
also Ca r pen t er s P en sion Tr u st F u n d for N. Ca lifor n ia v. Ca m pa , 444 U.S. 1028
(1980) (st a t in g t h e ca se wa s dism issed for wa n t of a su bst a n t ia l feder a l
qu est ion ).
465. Id .
466. St on e & Webst er E n g’g Cor p. v. Ilsley, 690 F .2d 323 (2d. Cir . 1982),
aff’d su b n om . Ar cu di v. & Webst er E n g’g Cor p., 463 U.S. 1220 (1983).
467. St a n da r d Oil Co. of Ca lifor n ia v. Agsa lu d, 633 F . 2d 760 (9t h Cir .
1980); aff’d 454 U.S. 801 (1981).
468. Gilber t v. Bu r lin gt on In du s., In c., 765 F .2d 320 (2d. Cir . 1985) aff’d
477 U.S. 901 (1986), aff’d su b n om . Rober t s v. Bu r lin gt on In du s., In c., 477 U.S.
901 (1986)
469. Su ch decision s a pplied on ly t o a ppea ls of r igh t fr om pr eem pt ion
decision s of t h e h igh est cou r t s of a n y st a t e, wh ich r igh t wa s abolish ed in 1988
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
233
a ffir m a n ces wit h ou t opin ion s a r e n ot decision s t o den y r eview, bu t
470
r a t h er a r e “decision s on t h e m er it s.”
Th u s, t h e h oldin gs wer e
471
bin din g “on st a t e cou r t s a n d ot h er feder a l cou r t s.” Mor eover ,
Su m m a r y a ffir m a n ces a n d dism issa ls for wa n t of a su bst a n t ia l
feder a l qu est ion wit h ou t dou bt r eject t h e specific ch a llen ges
pr esen t ed in t h e st a t em en t of ju r isdict ion a n d do lea ve u n dist u r bed
t h e ju dgm en t a ppea led fr om . Th ey do pr even t lower cou r t s fr om
com in g t o opposit e con clu sion s on t h e pr ecise issu es pr esen t ed a n d
472
n ecessa r ily decided by t h ose a ct ion s.
H owever , in h is B rad ley con cu r r en ce, J u st ice Br en n a n
em ph a sized t h a t su ch h oldin gs a r e lim it ed t o t h e pa r t icu la r fa ct s
473
in volved, a n d t h e r ea son in g n eeded t o a ddr ess t h ose fa ct s.
Th e
Cou r t h a s n ot dist in gu ish ed a su m m a r y a ffir m a n ce, i.e., on e
wit h ou t a n opin ion , a n d a dism issa l for wa n t of a su bst a n t ia l
feder a l qu est ion , wh ich a lso h a s n o opin ion , in t h e ca se of a n
a ppea l t h a t t h e Su pr em e Cou r t m u st a ccept , su ch a s t h e on es
474
u n der con sider a t ion .
Th e on ly r a t ion a l con clu sion is t h a t t h e
la t t er a lwa ys a ffir m s by a n swer in g t h e qu est ion s pr esen t ed in t h e
ju r isdict ion a l st a t em en t in t h e n ega t ive, wh ile t h e for m er d oes n ot
a n swer a n y of t h ose qu est ion s, bu t sim ply a ffir m s t h e r esu lt below.
A. E R IS A Does N ot Preem pt Com m u n ity Property L aw or
Dom estic R elation s Ord ers
In 1979, t h e Ca lifor n ia Cou r t of Appea ls h eld in In r e
475
Ma r r ia ge of Ca m pa [h er ein a ft er “Californ ia Cam pa”],
that
E RISA did n ot pr eem pt : (1) a n or der join in g a n E RISA pen sion
by 28 U.S.C. §1257, revised in t h e Su pr em e Cou r t Select ion s Act of 1988 P u b.
L. No. 100-352, § 3, 102 St a t 662, 662 (1988). S ee gen erally R OBE RT L. S TE RN
& E UGE NE G RE SSMAN , S UP RE ME C OU RT P RACTICE 213, 215-17 (7t h . ed. 1993)
470. S ee Let t er fr om a ll n in e J u st ices of t h e Un it ed St a t es Su pr em e Cou r t
t o Sen . De Con cin i (J u n e 22, 1978), reprin ted in E u gen e Gr essm a n , R equ iem
for th e S u prem e Cou rt’s Obligatory J u risdiction , 65 A.B.A. 1325, 1328 (1979)
(discu ssin g t h e pr oposa l t o m a ke a ppea ls, su ch a s Ca m pa , n o lon ger a s of r ight
bu t su bject t o t h e Cou r t ’s discr et ion ). Vir t u a lly t h e sa m e let t er wa s wr it t en by
Ch ief J u st ice Bu r ger t o Rep. Ka st en m eier (J u n e 17, 1987), reprin ted in S. R E P .
N O . 300, 100t h Con g. 5 (2d Sess. 1988), in t h e yea r t h a t t h e pr oposa l wa s
a dopt ed.
471. Id . Bot h vir t u a lly iden t ica l let t er s (cit in g Ma n del v. Br a dley, 432 U.S.
173 (1977) (per cur ia m ); H icks v. Mir a n da , 422 U.S. 332 (1975)).
472. M an d el, 432 U.S. a t 176.
473. Id . a t 179-80 (Br en n a n , J ., con cu r r in g).
474. Th e Su pr em e Cou r t m a y dism iss t h e a ppea l for t h e la ck of a
su bst a n t ia l feder a l qu est ion wh en it does n ot con sider t h e issu e im por t a n t
en ou gh t o issu e a decision on t h e m er it s. In con t r a st , wit h a cer t ior a r i
pet it ion , Su pr em e Cou r t dism issa ls of cer t ior a r i pet it ion a ffir m t h e r esu lt
below, bu t wit h ou t expr essin g a n y view of t h e qu est ion s pr esen t ed. S ee e.g.,
Bou m edien e v. Bu sh , 549 U. S. 1328, 1329 (Br eyer J ., dissen t in g) (2007)
(den yin g Gu a n t a n a m o pr ison er cer t pet it ion r e den ia l of wr it of h a bea s
cor pu s).
475. In re Cam pa, 152 Ca l. Rpt r . a t 362.
234
T h e J oh n M arsh all L aw R eview
[47:145
pla n , t h e Ca r pen t er s P en sion Tr u st F u n d for Nor t h er n Ca lifor n ia
[h er ein a ft er “t h e Ca r pen t er s’ P la n ”] t o a st a t e dom est ic r ela t ion s
pr oceedin g r ega r din g t h e pen sion pa ym en t s; or (2) a dom e st ic
r ela t ion s or der ba sed on st a t e com m u n it y pr oper t y la w t h a t
dir ect ed t h e Ca r pen t er s’ P la n t o pa y a por t ion of t h e pa r t icipa n t ’s
ben efit t o h is spou se, wh en t h e pa r t icipa n t bega n t o r eceive h is
pla n ben efit s, even t h ou gh t h e pla n docu m en t pr oh ibit ed su ch pla n
476
pa ym en t s t o a spou se.
Th e Ca r pen t er s’ P la n filed a n a ppea l wit h t h e Su pr em e Cou r t
in 1979 a ft er t h e Ca lifor n ia Su pr em e Cou r t a ffir m ed Californ ia
477
Cam pa in a decision wit h ou t a n opin ion .
Th e ju r isdict ion a l
st a t em en t for t h e a ppea l con t a in ed on ly t h e followin g t wo
qu est ion s:
1. Do t h e pr ovision s of Tit le I of t h e E m ployee Ret ir em en t In com e
Secu r it y Act , com m on ly kn own a s E RISA, su per sede t h e pr ovision s
of t h e Ca lifor n ia Com m u n it y pr oper t y la w a n d im plem en t in g
st a t u t es a n d cou r t r u les insofa r a s t h ey r ela t e t o a n em ployee
pen sion ben efit pla n cover ed by t h a t Act ?
2. Does a st a t e cou r t h a ve ju r isdict ion t o or der t h e boa r d of t r u st ees
of a n em ployee pen sion ben efit pla n cover ed by E RISA t o m a ke
ben efit pa ym en t s in viola t ion of t h e pr ovision s of t h e docu m en t s a n d
478
in st r u m en t s gover n in g t h e pla n ?
Bot h sides r elied on a br ief filed by t h e DOL wit h t h e Nin t h
Cir cu it in 1979 wit h r espect t o a n a ppea l of t h e Dist r ict Cou r t
479
480
S ton e decision (t h e “S ton e DOL Br ief”).
Th e Ca r pen t er s’ P la n focu sed on t h e S ton e DOL Br ief’s t h r ee
pr eem pt ion con clu sion s. F ir st , a pa r t icipa n t ’s cu r r en t or for m er
spou se is n ot a n E RISA pla n pa r t icipa n t or ben eficia r y by vir t u e of
481
st a t e com m u n it y pr oper t y la w.
Th u s, t h e cu r r en t or for m er
spou se wou ld la ck st a n din g t o obt a in a ben efit pa ym en t fr om t h e
482
Ca r pen t er s’ P la n , wh ich sh ou ld h a ve led t o a r ever sa l of t h e
decision below. Secon d, st a t e com m u n it y pr oper t y la w m a y n ot be
u sed t o pr ovide a pa r t icipa n t ’s spou se or for m er spou se wit h r igh t s
483
gr ea t er t h a n t h ose of t h e pa r t icipa n t .
Th ir d, t o t h e ext en t t h e
in t er est of a pa r t icipa n t ’s spou se or for m er spou se is der ived on ly
fr om st a t e pr oper t y la w, su ch in t er est m a y n ot be en for ced a ga in st
476. Id . a t 363.
477. Appella n t s’ J u r isdict ion a l St a t em en t , Ca r pen t er s P en sion Tr u st F u nd
for N. Ca l., v. Ca m pa , 444 U.S. 1028 (J u n e 19, 1979) (No. 78 -1881).
478. Id . a t 7.
479. 450 F . Su pp. 919.
480. Th e br ief wa s r epr odu ced in fu ll a t BNA P en sion Repor t er No. 221,
J a n . 8, 1979, p. R-7-R-14 [h er ein a ft er “S ton e DOL Br ief”]; see also Ch icago
Preem ption R eview , su pra n ot e 410 (cr it icizin g a sim ila r J u st ice Depa r t m en t
br ief).
481. Id . a t R-11.
482. E RISA § 502(a )(1)(B), 29 U.S.C. § 1132(a )(1)(B).
483. S ton e DOL Br ief, su pra n ot e 480, a t R-12.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
235
484
a n E RISA pla n .
Th e for m er spou se cit ed a n d r epea t ed m u ch of t h e S ton e DOL
Br ief’s r ea son in g a n d con clu sion t h a t t h e DRO wa s en for cea ble
beca u se it wa s su bject t o a n im plicit exem pt ion fr om t h e
485
Alien a t ion P r oh ibit ion .
Th e DOL a sser t ed t h a t E RISA h a d n o
pr ovision givin g a pa r t icipa n t t h e r igh t t o select a ben eficia r y,
t h er eby defea t in g a com m u n it y pr op er t y cla im t o dea t h ben efit
486
pr oceeds.
H owever , t h e DOL disr ega r ded on e of t h e m ost
fu n da m en t a l pr ovision s of E RISA, viz., t h e pr ovision t h a t gives
pa r t icipa n t s en for cea ble ben efit r igh t s u n der t h e pla n t er m s,
in clu din g t h e r igh t t o select a ben eficia r y p u r su a n t t o t h ose
487
t er m s.
Th e S ton e DOL Br ief disr ega r ded t h e Tr ea su r y r egu la t ion on
t h e Alien a t ion P r oh ibit ion t h a t wa s issu ed in F ebr u a r y 1978 a n d
r eject ed t h e DOL posit ion , a lt h ou gh t h e br ief wa s filed in
488
Decem ber 1978.
Th e DOL, in st ea d, pr esen t ed t wo a r gu m en t s.
F ir st , sim ila r la n gu a ge in ot h er pr e-E RISA feder a l st a t u t es h a d
been fou n d n ot t o pr oh ibit t h e en for cem en t of fa m ily su ppor t
489
obliga t ion s.
H owever , n on e of t h e cit ed st a t u t es pr esen t ed t h e
issu e befor e t h e cou r t , i.e., wh et h er t h e en for cem en t wa s
pr eem pt ed by a pr ovision su ch a s t h e E RISA E xpr ess P r eem pt ion .
Secon d, t h e DOL a sser t ed t h a t pr oper t y division s ba sed on
com m u n it y pr oper t y la w, lik e fa m ily su ppor t obliga t ion s, r est ed on
equ it ies, n a m ely, on e in fa vor of a fa ir division of pr oper t y, wh ich
490
ju st ifies a n im plicit exem pt ion fr om t h e Alien a t ion P r oh ibit ion .
In ea r ly 1979, a s discu ssed su pra, t h e U.S. Depa r t m en t of
Tr ea su r y a sked Con gr ess t o con fir m t h is im plicit exem pt ion in it s
484. Id . a t R-8, R-9-R-12.
485. Appellees’ Mot ion t o Affir m Lower Cou r t Ru lin g, Ca r pen t er s P en sion
Tr u st F u n d for N. Ca l. v. Ca m pa , 444 U.S. 1028 (Sept . 17, 1979) (No. 78 -1881)
a t 4-7.
486. S ton e DOL Br ief, su pra n ot e 480, a t R-13.
487. E RISA § 502(a )(1)(B), 29 U.S.C. § 1132(a )(1)(B).
488. S ton e DOL Br ief, su pra n ot e 480, a t R-14.
B u t see Tr ea su r y
Regu la t ion § 1.401(a )-13 (a s issu ed on F eb. 17, 1978) (pr ovidin g t h a t t h e
E RISA ph r a se “a ssign ed or a lien a t ed,” h a s a fa r br oa der m ea n in g t h a n t h e
DOL cla im ed). In pa r t icu la r , t h e ph r a se in clu des a n y pa ym en t s t o a pa r t y
ot h er t h a n t h e on e en t it led t o t h ose pa ym en t s u n der t h e pla n t er m s. Id . Th e
r egu la t ion con t a in s a list of explicit exclu sion s, n on e of wh ich r efer s t o a n y
cla im s ba sed on dom est ic r ela t ion s or der s. Id .
489. S ton e DOL Br ief, su pra n ot e 480, a t R-12. Two decision s wer e cit ed:
In r e F la n a ga n , 31 F . Su pp. 402 (D.C. Cir . 1940) (h oldin g t h a t vet er a n s
disa bilit y ben efit s pa id t o a lu n a t ic’s r epr esen t a t ive wer e su bject t o a lim on y
cla im s); Sch la efer v. Sch la efer , 112 F .2d 177 (D.C. Cir . 1 940) (det er m in in g
t h a t DC disa bilit y pa ym en t s a r e su bject t o a lim on y cla im s t h a t a r e n ot debt s
bu t obliga t ion s). Th e la t t er wa s t h e cit ed ba sis for Flan agan . H owever ,
S ch laefer did n ot m en t ion or a ddr ess feder a l pr eem pt ion beca u se it on ly
con sider ed t h e in t er a ct ion of t wo D.C. st a t u t es. In pa r t icu la r , S ch laefer h eld
t h a t beca u se t h e a lim on y obliga t ion wa s n ot a pr oh ibit ed a lien a t ion , it cou ld
be en for ced a ga in st t h e disa bilit y pa ym en t s.
490. S ton e DOL Br ief, su pra n ot e 480, a t R-13.
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T h e J oh n M arsh all L aw R eview
[47:145
491
a n a lysis of S. 209, t h e E RISA Im pr ovem en t Act of 1979.
H owever , t h a t bill wa s n ot a ppr oved by t h e Sen a t e befor e t h e
Su pr em e Cou r t ’s decision in t h is ca se.
Th e Su pr em e Cou r t dism issed t h e Ca r pen t er s P la n ’s a ppea l
492
for wa n t of su bst a n t ia l feder a l qu est ion (“S u p Ct. Cam pa”).
Th e
Cou r t a lso h eld t h a t a t t or n eys’ fees sh ou ld n ot be a ssessed a ga in st
493
t h e Ca r pen t er s P la n , t h er eby fin din g t h a t t h e P la n ’s lit iga t ion
posit ion wa s n ot u n r ea son a ble. Th e br oa dn ess of t h e im plica t ion s
of t h e decision t h a t a dom est ic r ela t ion s or der ba s ed on com m u n it y
pr oper t y over r ides pen sion pla n t er m s t o t h e con t r a r y, depen ds on
t h e ext en t t o wh ich it ext en ds beyon d t h e h oldin gs of Californ ia
Cam pa. In fa ct , a ft er t h e Su pr em e Cou r t ’s decision , t h er e wer e
lower cou r t decision s ext en din g Californ ia Cam pa u sin g a n
a n a lysis sim ila r t o t h a t of t h e Ca lifor n ia Cou r t of Appea ls. Th er e
wer e a lso n o post -Su pr em e Cou r t decision s h oldin g t h a t E RISA
pr eem pt ed dom est ic r ela t ion s or der s. Th e Cam pa lit iga t ion a n d
it s pr ogen y a r e discu ssed in m or e det a il in a n a r t icle en t it led, H ow
th e S u prem e Cou rt an d th e Departm en t of L abor M ay Dispel M yth s
abou t E R IS A’s Fam ily L aw Provision s an d Protect th e B en efit
E n titlem en ts T h at Arise T h ereu n d er [h er ein a ft er “Feu er’s E R IS A
494
M yth s”].
B . E R IS A Preem pts S tate L aw B en efit T erm s M an d ate E ven if th e
M an d ate is Ch aracterized as a S tate T ax
In 1980, t h e Nin t h Cir cu it a ffir m ed in St a n da r d Oil Co. of
495
Ca lifor n ia v. Agsa lu d ,
t h a t E RISA pr eem pt ed t h e H a wa ii
P r epa id H ea lt h Ca r e Act , r equ ir in g a ll em ployer s in t h e st a t e t o
pr ovide t h eir em ployees wit h a com pr eh en sive pr epa id h ea lt h ca r e
496
pla n .
Th e cou r t did n ot discu ss t h e “r ela t e t o” r equ ir em en t , bu t
in st ea d focu sed on wh et h er a n y exem pt ion wa s a pplica ble. Th e
cou r t fou n d n o exem pt ion fr om t h e E RISA E xpr ess P r eem pt ion for
497
st a t e m a n da t ed pla n s.
Th e cou r t a lso r eject ed t h e
ch a r a ct er iza t ion of t h e m a n da t e t h a t em ployer s pa y h a lf t h eir
em ployee’s pr em iu m s a s a n exer cise of t h e st a t e’s t a xin g power
beca u se a t a x m u st be pa id t o t h e gover n m en t r a t h er t h a n t o a
498
t h ir d pa r t y.
It wa s n ot clea r wh y a n exer cise of t h e st a t e t a xin g
491. Assist a n t Secr et a r y of Tr ea su r y (Ta x P olicy) Don a ld C. Lu bick Ma y 1,
1979 let t er r espon se t o r equ est by Sen a t or Willia m s, Ch a ir m a n of S. Com m .
On La bor a n d H u m a n Resou r ces, for com m en t s r e ea ch sect ion of S. 209, a t 5 ,
reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t 225, 230.
492. In re Cam pa, 152 Ca l. Rpt r . a t 362; Carpen ters Pen sion T ru st Fu n d for
N . Cal., 444 U.S. a t 1028.
493. In re Cam pa, 152 Ca l. Rpt r . a t 362; Carpen ters Pen sion T ru st Fu n d for
N . Cal., 446 U.S. a t 906.
494. Feu er’s E R IS A M yth s, supra n ot e 25, a t 689-698.
495. Agsalu d , 633 F .2d a t 760.
496. Id . a t 763.
497. Id . a t 764.
498. Id . a t 765.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
237
power wou ld n ot be pr eem pt ed by E RISA, a lt h ou gh t h er e is a br ief
499
r efer en ce t o su ch a t en t h a m en dm en t a r gu m en t .
Th e cou r t a lso
r eject ed t h e r eleva n ce of t h e exem pt ion for dom est ic r ela t ion s
or der s beca u se su ch or der s a ffect ed pla n s fa r m or e t a n gen t ia lly
500
t h a n t h e la w a t issu e.
F in a lly, t h e cou r t obser ved t h a t in 1979
Con gr ess r eject ed a pr oposa l t o exem pt t h e H a wa iia n pla n fr om
t h e E RISA E xpr ess P r eem pt ion wh en it fa iled t o a dopt S. 209, a s
501
discu ssed su pra.
In 1981, t h e Su pr em e Cou r t a ffir m ed t h e a bove Nin t h Cir cu it
502
decision wit h ou t pr ovidin g a n opin ion .
In 1982, t h e Secon d Cir cu it a ffir m ed, in St on e & Webst er
503
E n gin eer in g Cor por a t ion v. Ilsley,
t h a t E RISA sim ila r ly
pr eem pt ed a st a t e la w r equ ir in g a n em ployer t o pr ovide h ea lt h
a n d life in su r a n ce cover a ge for a for m er em ployee r eceivin g
wor k er s’ com pen sa t ion du e t o a job-r ela t ed in ju r y. Th e cou r t
focu sed on t h e “r ela t e t o” r equ ir em en t a n d fou n d it sa t isfied t h e
r equ ir em en t beca u se t h e on ly pu r pose of t h e st a t e la w wa s t o a dd
a ben efit r equ ir em en t t o a n E RISA pla n . Th e cou r t r eject ed t h e
504
a sser t ion t h a t t h is wa s t oo r em ot e a r egu la t ion t o be pr eem pt ed.
Th e Ilsley cou r t dist in gu ish ed t h e la w a t issu e fr om t h a t it h a d
505
fou n d exem pt in M erry,
discu ssed su pra. Th e Ilsley cou r t
descr ibed t h e la t t er exem pt ion a s ba sed on “[t ]h e a n cien t fa m ily
la w con cept s of m a in t en a n ce a n d su ppor t of a spou se a n d t h e u se
of a st a t e cou r t ’s pr ocess t o u ph old a n d en for ce a spou se’s r igh t s
506
wer e n ot t h ou gh t t o h a ve been pr eem pt ed by E RISA.” H owever ,
a s discu ssed in t h e Ch icago Preem ption R eview , su pra, Con gr ess,
r a t h er t h a n t h e cou r t s, sh ou ld m a k e su ch policy ju dgm en t s, a n d
cou r t s sh ou ld focu s on t h e t en u ou sn ess of a st a t e la w’s effect on
em ployee ben efit pla n s in decidin g wh et h er E RISA pr eem pt s su ch
la w.
In 1983, t h e Su pr em e Cou r t a ffir m ed t h e a bove Secon d
507
Cir cu it decision wit h ou t pr ovidin g a n opin ion .
C. E R IS A Preem pts S tate R egu lation of In form al An d Un fu n d ed
S everan ce Policies
In 1985, t h e Secon d Cir cu it , in Gilber t v. Bu r lin gt on In du s.,
508
In c., con sider ed wh et h er a n in for m a l a n d u n fu n ded sever a n ce
policy wa s a n E RISA welfa r e pla n . Th e issu e a r ose wh en t h ir t y -
499.
500.
501.
502.
503.
504.
505.
506.
507.
508.
Id . a t 765.
Id . a t 766.
Id .
Agsalu d , 454 U.S. 801 (1981), aff’g. Agsalu d , 633 F .2d 760.
Ilsley, 690 F .2d a t 323.
Id . a t 329.
Id . (cit in g M erry, 592 F .2d a t 121).
Id .
Arcu d i, 463 U.S. 1220 (1983) aff’g. Ilsley, 690 F .2d 323.
Gilbert, 765 F .2d a t 320.
238
T h e J oh n M arsh all L aw R eview
[47:145
eigh t em ployees wer e den ied sever a n ce ben efit s a ft er Bu r lin gt on
509
In du st r ies sold it s oper a t ion s a s a goin g con cer n t o Ka yser -Rot h .
Th e sever a n ce pa y policy a t issu e pr ovided t h a t ben efit s wou ld be
pa id t o em ployees “in volu n t a r ily t er m in a t ed fr om t h e Com pa n y;”
510
in clu din g t er m in a t ion s “du e t o job elim in a t ion .”
Un der t h is
policy, sever a n ce ben efit s wer e a wa r ded or den ied a u t om a t ica lly
r a t h er t h a n t h r ou gh a for m a l cla im s pr ocess, a n d t h e ben efit s
va r ied fr om t wo weeks t o t welve m on t h s of pa y depen din g on t h e
pa r t icipa n t ’s ser vice a n d com pen sa t ion a t t h e t im e of
511
t er m in a t ion .
Sh or t ly befor e t h e sa le, Bu r lin gt on in for m ed it s
em ployees t h a t t h ey wou ld n ot qu a lify for sever a n ce ben efit s a s a
512
r esu lt of t h e Ka yer -Rot h sa le.
Th e pa r t icipa n t s a lleged t h a t
Bu r lin gt on h a d fa iled t o com ply wit h t h e E RISA r epor t in g a n d
disclosu r e r equ ir em en t s, in clu din g t h e r equ ir em en t t h a t pla n
513
pa r t icipa n t s be pr ovided wit h pla n docu m en t s u pon r equ est . Th e
fir st t im e t h a t Bu r lin gt on filed t h e r equ ir ed a n n u a l E RISA
disclosu r e r epor t r ega r din g sever a n ce wa s a ft er pla in t iffs filed
cla im s wit h t h e New Yor k St a t e Depa r t m en t of La bor (“N YS
514
DOL”).
Th e N YS DOL beca m e in volved a n d t h e lit iga t ion a r ose
beca u se E RISA did n ot a ppea r t o pr ot ect t h e pa r t icipa n t s in t h e
sever a n ce policy a t issu e. Th is a ppa r en t fa ilu r e a r ose beca u se
E RISA does n ot specify t h e st a n da r d u n der wh ich cou r t s sh ou ld
r eview ben efit den ia ls, a n d t h e cou r t s filled t h a t ga p wit h a ver y
defer en t ia l r eview st a n da r d, wh ich t h e Su pr em e Cou r t
su bsequ en t ly r eject ed in 1989 in F ir est on e Tir e & Ru bber v.
515
Br u ch .
Th e Secon d Cir cu it did n ot a pply t h e “con tra
proferen tem ” st a n da r d, i.e., t h a t a m bigu it ies in wr it t en d ocu m en t s
516
a r e con st r u ed a ga in st t h e dr a ft sm a n of t h e docu m en t .
Nor did it
509. Id . a t 322-23.
510. Id .
511. Id .
512. Id .
513. S ee id . a t 323 (st a t in g t h a t t h e a ppella n t a lleged, “t h a t Bu r lin gt on
n ever sou gh t t o com ply wit h E RISA r espect in g it s sever a n ce pa y policy. Th a t
is, t h ey cla im t h a t : it n ever pu blish ed or filed a n a n n u a l r epor t , a fin a n cia l
st a t em en t , a pla n descr ipt ion or a st a t em en t of pla n m odifica t ion s; it did n ot
design a t e a fidu cia r y for t h e pla n or in for m em ployees of t h eir r igh t s u n der
E RISA a n d t h e pla n ; t h er e wa s n o est a blish ed cla im s pr ocedu r e; a n d, a pa r t
fr om t h e com pa n y’s ‘open door ’” gr ieva n ce policy, t h er e was n o est a blis h ed
a ppea ls pr ocedu r e.”).
514. Id .
515. S ee Bru ch , 489 U.S. a t 101 (h oldin g t h a t a d e n ovo r eview st a n da r d is
a pplica ble t o den ia l of sever a n ce ben efit s t o em ployees wh o con t in u ed wit h
pu r ch a ser of bu sin ess).
516. S ee, e.g., Un it ed St a t es v. Seckin ger , 397 U.S. 203, 211 (1970)
(r eject in g t h e cla im t h a t a feder a l con t r a ct dr a ft ed by feder a l gover n m en t
pla ced fu ll bu r den on con t r a ct or wh o sh a r ed n egligen ce); see also Con n or v.
P h oen ix St eel Cor p. 249 A.2d 866, 869 (S. Ct . Del. 1969) (h oldin g t h a t a
disch a r ged em ployee wit h 28 yea r s’ ser vice wa s en t it led t o ea r ly r et ir em en t
ben efit s a n d t h e cou r t a pplied t h e con tra proferen tem doct r in e befor e t h e
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
239
a pply d e n ovo r eview, i.e., ch oosin g t h e m ost r ea son a ble posit ion .
In st ea d, t h e cou r t r eviewed a n d u ph eld t h e Bu r lin gt on den ia l
517
u n der a n a r bit r a r y a n d ca pr iciou s st a n da r d.
H owever , t h e cou r t
did su ggest t h a t a n em ployer ’s viola t ion s of E RISA’s r equ ir em en t s
m a y “su fficien t ly t a in t it s den ia l of sever a n ce pa y so a s t o wa r r a n t
518
a fin din g t h a t it wa s a r bit r a r y a n d ca pr iciou s.”
Th e F ou r t h
Cir cu it t ook a sim ila r posit ion in H olla n d v. Sla ck, a ca se in volvin g
519
t h e Bu r lin gt on sever a n ce pla n .
Th e cou r t t h er ein fou n d it wa s
n ot a r bit r a r y a n d ca pr iciou s for Bu r lin gt on t o in t er pr et t h e pla in
la n gu a ge t o r est r ict sever a n ce ben efit s t o em ploym en t
520
t er m in a t ion s wh er e a n em ployee’s job wa s elim in a t ed.
Th e Gilbert cou r t a ffir m ed a decision t h a t E RISA pla n s
in clu de in for m a l a n d u n fu n ded sever a n ce pla n policies.
Th e cou r t u sed t h r ee a r gu m en t s t o r eject t h e a ppella n t ’s
a r gu m en t t h a t “a pr om ise or a gr eem en t t o pa y sever a n ce ben efit s,
wit h ou t m or e, does n ot con st it u t e a welfa r e ben efit pla n wit h in t h e
521
m ea n in g of E RISA.” F ir st , a n E RISA pla n cou ld be fu n ded fr om
522
gen er a l a sset s.
Secon d, a lt h ou gh a n u n fu n ded sever a n ce ben efit
policy m a y be descr ibed a s a pa yr oll pr a ct ice, su ch a policy does
n ot im plicit ly fa ll wit h in t h ose pr a ct ices t h a t a r e exclu ded fr om
523
E RISA a n d a r e pa id du r in g em ploym en t .
Th e cou r t did n ot
discu ss wh ich u n fu n ded sever a n ce pla n s a r e pa yr oll pr a ct ices. F or
exa m ple, wou ld a pla n t h a t pr ovided sever a n ce t o a n y t er m in a t ed
em ployee equ a l t o t h e em ployee’s a ccr u ed, bu t u n u sed, va ca t ion
524
t im e be a pa yr oll pr a ct ice?
F in a lly, t h e cou r t h eld t h a t E RISA
pr ot ect ed sever a n ce policy ben efit s beca u se su ch ben efit s wer e
descr ibed a s welfa r e pla n ben efit s in 29 U.S.C. § 186(c), t h e
Na t ion a l La bor Rela t ion s Act pr ovision s cit ed by t h e E RISA
en a ct m en t of E RISA).
517. S ee Gilbert, 765 F .2d a t 322, 328 (followin g t h e pla in t iff’s lea d in
a pplyin g t h e a r bit r a r y st a n da r d of r eview).
518. Id . a t 329.
519. H olla n d v. Sla ck, 772 F .2d 1140, 1143 (4t h Cir . 1985); aff’d su b n om .
Br ooks v. Bu r lin gt on In s. In c., 477 U.S. 901 (1986).
520. Id . a t 1148-1150.
521. Gilbert, 765 F .2d a t 324.
522. Id . a t 324-25.
523. S ee id . at 326 (cit in g 29 C.F .R §§ 2510.3-1(a )(4) a n d 29 C.F .R.
§§ 2510.3-1(b)).
524. Cf. Ma ssa ch u set t s v. Mor a sh , 490 U.S. 107 (1989) (h oldin g t h a t a
policy of m a kin g pa ym en t s t o t er m in a t in g em ployees of a ccr u ed bu t u n u sed
va ca t ion pa ym en t fr om gen er a l a sset s wa s a pa yr oll pr a ct ice, a n d t h u s n ot a n
E RISA pla n ) t o Kosa kow v. New Roch elle Ra diology Associa t es, P .C., 274 F .3d
706 a t 736-37 (2d. Cir . 2001) (h oldin g t h a t t h er e wa s a n E RISA sever a n ce pla n
beca u se: (1) t h e em ployer h a d t o u n der t a ke “on goin g, pa r t icu la r ized,
a dm in ist r a t ive” a n a lysis of ea ch ca se; (2) “t h e r ea son a ble em ployee wou ld
per ceive a n on goin g com m it m en t by t h e em ployer t o pr ovide som e em ployee
ben efit s;” a n d (3) “t h e em ployer wa s r equ ir ed t o a n a lyze t h e cir cu m st a n ces of
ea ch em ployee’s t er m in a t ion sepa r a t ely in ligh t of cer t a in cr it er ia .”) (qu ot in g
Sch on h olz v. Lon g Isla n d J ewish Med. Ct r ., 87 F .3d 72, 76 (2d Cir . 1996)).
240
T h e J oh n M arsh all L aw R eview
[47:145
525
pa yr oll pr a ct ice r egu la t ion s.
Th e Gilbert cou r t sim ila r ly con clu ded t h a t t h e st a t e la w
r equ ir in g pa ym en t of t h e pla n ben efit s r ela t ed t o t h e E RISA pla n
526
beca u se t h e la w a ffect ed wh et h er ben efit s a r e pa id.
Th e cou r t
r eject ed t h e a r gu m en t t h a t t h ese wa ge collect ion st a t u t es a r e t h e
exer cise of fu n da m en t a l police power s, sim ila r t o dom est ic
r ela t ion s la ws, wh ich t h e Secon d Cir cu it h a d h eld E RISA did n ot
527
pr eem pt .
Th e cou r t fou n d su ch ch a r a ct er iza t ion wa s n ot
su fficien t t o a void pr eem pt ion , bu t t h e st a t e la w m u st a lso a ffect
528
a n E RISA pla n in “t oo t en u ou s, r em ot e or per iph er a l a m a n n er .”
In pa r t icu la r , det er m in in g wh o will r eceive E RISA pla n ben efit s is
529
fa r m or e t en u ou s t h a n wh et h er ben efit s will be pa id.
Th er e wa s
n o discu ssion of wh et h er su ch a dist in ct ion wa s sen sible or
wh et h er t h e st a t e la w cou ld be defen ded a s a gen er a lly a pplica ble
530
cr im in a l la w.
Th e cou r t , h owever , obser ved t h a t t h e em ployer ’s
fa ilu r e t o com ply wit h t h e E RISA r epor t in g, disclosu r e, a n d
fidu cia r y r equ ir em en t s cou ld in dica t e t h a t t h e em ployer wa s
a r bit r a r y a n d ca pr iciou s in exclu din g su ch em ployee t er m in a t ion s
531
fr om t h e sever a n ce policy.
In 1986, t h e Su pr em e Cou r t a ffir m ed t h e a bove Secon d
532
Cir cu it decision wit h ou t pr ovidin g a n opin ion .
IX.
INITIAL E RISA P RE E MP TION DE CISIONS BY TH E
SUP RE ME COURT WITH OP INIONS
Th er e wer e sever a l ea r ly E RISA pr eem pt ion decision s,
discu ssed in fra, by t h e Su pr em e Cou r t h oldin g t h a t en h a n cem en t s
t o E RISA pr ot ect ion s, in clu din g ben efit t er m s m a n da t es, wer e
r ela t ed t o E RISA pla n s. Th u s, E RISA pr eem pt ed t h ose la ws. Th is
525. Gilbert, 765 F .2d a t 324-25.
526. Id . a t 326-27.
527. Id . a t 327.
528. Id .
529. Id .
530. B u t see H ollan d , 772 F .2d a t 1144 (in volvin g a com pa n ion a ct ion
br ou gh t in Nor t h Ca r olin a feder a l cou r t s, a n a lyzin g a st a t e st a t u t e (N.C. Gen .
St a t . § 95-25.7 (1985), pr ovidin g on ly for civil pen a lt ies). In con t r a st , a New
Yor k st a t e st a t u t e (NY La bor L. § 198-c), wh ich wa s a t issu e in Gilbert, m a de
it a m isdem ea n or t o fa il t o pa y wa ge su pplem en t s.
531. S ee Gilbert, 765 F .2d a t 328-29. Th e Gilbert cou r t r efer r ed t o a
decision , Bla u v. Del Mon t e Cor p., 748 F .2d 1348, 1356 (9t h Cir . 1985) in
wh ich t h e cou r t h a d over t u r n ed a sever a n ce pa y den ia l on t h e ba sis t h a t t h e
pr ocedu r a l ir r egu la r it ies im plied t h a t t h e pla n h a d n ot been a m en ded t o
exclu de t h e em ployees.
In Gilbert, h owever , t h e issu e wa s n ot t h e
effect iven ess of a pla n a m en dm en t bu t t h e sign ifica n ce of t h e sever a n ce pla n
t er m s. Id .
532. S ee R oberts, 477 U.S. a t 901 (in dica t in g t h a t t h e a ppea l wa s br ou gh t
by t h e New Yor k St a t e Com m ission er of La bor ); see also B rook s, 477 U.S. at
901 (in dica t in g t h a t t h e a ppea l wa s br ou gh t by a for m er em ployee); Gilbert,
765 F .2d a t 320; H ollan d , 772 F .2d a t 1140.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
241
wa s con sist en t wit h t h e idea , discu ssed su pra, t h a t E RISA wa s
dr a ft ed t o be ca r efu lly ba la n ced t o a ccom m oda t e t h e in t er est s of
pla n pa r t icipa n t s a n d ben eficia r ies a s well a s t h ose of pla n
a dm in ist r a t or s a n d spon sor s.
Th u s, a s discu ssed su pra, by
a ppr ovin g t h e E RISA E xpr ess P r eem pt ion , Con gr ess a ssu r ed t h a t
it wou ld h a ve t o a m en d E RISA t o en h a n ce or dim in ish E RISA
pr ot ect ion s. H owever , a s discu ssed in fra, t h ese decision s la id t h e
fou n da t ion for fu t u r e qu est ion a ble decision s beca u se t h ey
con t a in ed obser va t ion s n ot n eeded for t h ese decision s.
In
pa r t icu la r , a s discu ssed in fra, som e obser ved t h a t on e r ela t ion t o
a n E RISA pla n is a r efer en ce t o su ch pla n s, bu t fa iled t o
em ph a size t h a t t h e key qu est ion wa s wh et h er t h e effect s of t h e
r esu lt in g r ela t ion wer e t oo t en u ou s t o r esu lt in pr eem pt ion .
A. E R IS A Preem pts S tate L aw s th at E n h an ce E R IS A Protection s
of Plan Participan ts or B en eficiaries, In clu d in g B en efit T erm s
M an d ates
Th er e wer e six ea r ly pr eem pt ion decision s by t h e Su pr em e
Cou r t h oldin g t h a t E RISA pr eem pt s st a t e la ws t h a t en h a n ced
E RISA pr ot ect ion s, in clu din g ben efit t er m s m a n da t es. Th e Cou r t
ga ve n o r ea son t o dou bt t h a t su ch r ela t ion s a r e a lwa ys n on t en u ou s. Th u s, a lt h ou gh t h e Cou r t n ever m a de su ch a st a t em en t ,
E RISA pr eem pt s a ll su ch la ws.
In 1981, t h e Su pr em e Cou r t decided, in Alessi v. Ra ybest os533
Ma n h a t t a n , t h a t E RISA pr eem pt s a N ew J er sey la w pr oh ibit in g
pen sion pla n ben efit s fr om bein g offs et by wor ker s com pen sa t ion
534
ben efit s.
Th e Alessi st a t e la w pr oh ibit ion con flict ed wit h a n
E RISA r egu la t ion per m it t in g, bu t n ot r equ ir in g, su ch a n offset t o
535
pen sion pla n ben efit s.
Th u s, if t h e r egu la t ion wa s cor r ect , t h e
st a t u t e wou ld h a ve been pr eem pt ed even if t h er e wer e n o E RISA
E xpr ess P r eem pt ion .
In 1983, t h e Su pr em e Cou r t decided in Sh a w v. Delt a
536
Air lin es, t h a t E RISA pr eem pt s a New Yor k la w r equ ir in g E RISA
537
disa bilit y pla n s
t o pr ovide m a t er n it y ben efit s wh en n eit h er
E RISA n or t h e feder a l n on -discr im in a t ion la ws con t a in ed su ch
538
m a n da t e.
E ven t h ou gh E RISA did n ot a ddr ess su ch cover a ge,
533. Alessi, at 504.
534. Id . a t 525.
535. S ee id . a t 517-18 (r efer r in g t o 26 CF R § § 1.411 (a )-(4)(a )).
536. S h aw , 463 U.S. a t 85.
537. Disa bilit y pla n s, wh ich a r e m a in t a in ed solely for t h e pu r pose of
com plyin g wit h loca l disa bilit y r u les, a r e exem pt fr om E RISA cover a ge.
E RISA § 4(b)(3), 29 U.S.C. § 1003(b)(3). Th e Su pr em e Cou r t r em a n ded t h e
ca se t o det er m in e t h e a pplica bilit y of t h is exem pt ion . S h aw , 463 U.S. a t 109.
538. Id . a t 108-09. Th e issu e befor e t h e Cou r t wa s wh et h er Delt a Air wa ys
wa s obliga t ed t o pa y t h e loca lly m a n da t ed ben efit s a ccr u in g befor e Apr il 29,
1979, wh en t h e feder a l P r egn a n cy Discr im in a t ion Act fir st pr oh ibit ed su ch
discr im in a t ion . Id . a t 88-89. Aft er su ch da t e, t h er e wa s n o E RISA pr eem pt ion
issu e beca u se t h e ben efit s a t issu e wer e r equ ir ed by a feder a l la w. Id .
242
T h e J oh n M arsh all L aw R eview
[47:145
t h e E RISA E xpr ess P r eem pt ion gover n s beca u se of it s a pplica t ion
t o st a t e la ws t h a t “r ela t e t o a n y” E RISA pla n , su ch a s a ben efit
539
cover a ge m a n da t e, wh ich con flict ed wit h pla n t er m s in t h is ca se.
540
E RISA pr eem pt s t h e la w beca u se t h e r ela t ion is n on -t en u ou s.
In 1985, t h e Su pr em e Cou r t decided, in Met r o. Life In s. Co. v.
541
Ma ssa ch u set t s, t h a t E RISA pr eem pt s a st a t e la w r equ ir in g a n y
h ea lt h ca r e expen se-r eim bu r sem en t pla n wit h su r gica l a n d
542
h ospit a l cover a ge t o in clu de m en t a l h ea lt h cover a ge.
In t h is
ca se, even t h ou gh E RISA did n ot a ddr ess su ch cover a ge, t h e
gen er a l pr ovision of t h e E RISA E xpr ess P r eem pt ion gover n ed
beca u se of it s a pplica t ion t o st a t e la ws t h a t “r ela t e t o a n y ” E RISA
543
pla n .
Th e con flict wit h t h e pla n t er m s in t h is ca se a ppea r s t o
est a blish a n on -t en u ou s r ela t ion . Ma ssa ch u set t s con ceded t h a t
t h e la w wa s r ela t ed t o a n E RISA pla n , a n d t h e Cou r t did n ot
544
discu ss t h e t en u ou sn ess of t h e r ela t ion . H owever , E RISA did n ot
pr eem pt t h e la w in t h e ca se befor e t h e Cou r t beca u se t h e
in su r a n ce pla n cover a ge except ion t o E RISA pr eem pt ion , wh ich
545
on ly a pplied t o in su r ed pla n s, sa ved t h e la w.
Th e Cou r t ,
h owever , obser ved t h a t t h e pr oposed E RISA Im pr ovem en t Act of
1979, wh ich wa s n ot a dopt ed, in clu ded a pr ovision t o pr eem pt
546
ben efit t er m s m a n da t es for in su r ed pla n s.
In 1987, t h e Su pr em e Cou r t decided in P ilot Life In s. Co. v.
547
Dedea u x (“Pilot”), t h a t E RISA pr eem pt s st a t e com m on -la w t or t
a n d con t r a ct a ct ion s a sser t in g im pr oper p r ocessin g of a ben efit
548
cla im u n der a n in su r ed em ployee ben efit pla n .
Th e Cou r t ’s
decision is som ewh a t con fu sin g beca u se it decla r es t h a t com m on
la w a ct ion s a r e su bject t o t h e gen er a l pr ovision of t h e E RISA
E xpr ess P r eem pt ion , bu t does t h er ein expla in t h e ir n on -t en u ou s
r ela t ion t o E RISA pla n s. Th er e seem s lit t le qu est ion of su ch
r ela t ion beca u se t h e a ct ion s wou ld en h a n ce t h e E RISA pr ovision s
for en for cin g ben efit cla im s a ga in st su ch pla n s. H owever , t h e
549
Cou r t pr esen t ed it s det a iled pr eem pt ion a n a lysis in t h e con t ext
of expla in in g wh y t h e in su r a n ce pla n cover a ge except ion t o t h e
gen er a l pr ovision of t h e E RISA E xpr ess P r eem pt ion is
550
in a pplica ble.
Th e Cou r t t h er ein set for t h it s br oa d con clu sion s
539. Id . a t 97.
540. Id . a t 100, n .21.
541. M etro. Life In s. Co., 471 U.S. at 724.
542. Id . a t 758.
543. Id . a t 739.
544. Id .
545. Id . a t 739-749.
546. S ee id . a t 740 (r efer r in g t o E RISA Im pr ovem en t s Act of 1979, S. 209,
96t h Con g. § 155, a t 34-35 (1st Sess. 1979)), reprin ted in 1979 Sen a t e E RISA
Review, su pra n ot e 406, a t 9, 42-43.
547. P ilot Life In s. Co. v. Dedea u x, 481 U.S. 41 (1987).
548. Id . a t 54.
549. Id . a t 52-56.
550. Id . a t 48-52, 56-57.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
243
a bou t t h e E RISA en for cem en t pr ovision s:
Th e deliber a t e ca r e wit h wh ich E RISA’s civil en for cem en t r em edies
wer e dr a ft ed a n d t h e ba la n cin g of policies em bodied in its ch oice of
r em edies a r gu e st r on gly for t h e con clu sion t h a t E RISA’s civil
551
en for cem en t r em edies wer e in t en ded t o be exclu sive.
In 1990, t h e Su pr em e Cou r t decided in In ger soll-Ra n d Co. v.
552
McClen don , t h a t E RISA pr eem pt s st a t e com m on -la w a ct ion s for
wr on gfu l disch a r ge t o pr even t t h e vest in g of ben efit s u n der a
553
pen sion pla n .
Th e Cou r t u n a n im ou sly em br a ced t h e Pilot
a n a lysis t h a t E RISA pr eem pt ed t h e st a t e la w en h a n cem en t of
554
E RISA en for cem en t a ct ion s.
H owever , t h e Cou r t in In gersollR an d Co. pr esen t ed t h is a n a lysis in t h e con t ext of im plicit con flict
pr eem pt ion , r a t h er t h a n t h e E RISA E xpr ess P r eem pt ion , wit h ou t
555
a n y expla n a t ion for t h is ch a n ge.
Th e plu r a lit y r elied on t h e
556
gen er a l pr ovision of t h e E RISA E xpr ess P r eem pt ion .
Th e Cou r t
cor r ect ly r eject ed t h e a sser t ion t h a t E RISA pr eem pt s on ly st a t e
557
la ws t h a t a ffect pla n t er m s, con dit ion s, or a dm in ist r a t ion .
Th e
Cou r t fa iled t o obser ve t h a t la ws t h a t en h a n ced E RISA
en for cem en t m ech a n ism s a r e pr eem pt ed, a s discu ssed su pra, or a s
it h a d h eld t h r ee yea r s ea r lier in Pilot, discu ssed su pra. Th e Cou r t
in st ea d obser ved t h a t :
Neit h er of t h ese lim it a t ion s [on pr eem pt ion ] is a pplica ble t o t h is
ca se. We are n ot d ealin g h ere w ith a gen erally applicable statu te
th at m ak es n o referen ce to [su ch as a gen eral garn ish m en t statu te],
or in d eed fu n ction s irrespective of, th e existen ce of an E R IS A pla n
[su ch a s a sever a n ce st a t u t e gover n in g ben efit s t h a t a r e n ot pa r t of
a pla n ].
Nor is t h e cost of defen din g t h is la wsuit a m er e
a dm in ist r a t ive bu r den . H er e, t h e exist en ce of a pen sion pla n is a
cr it ica l fa ct or in est a blish ing lia bilit y u n der t h e St a t e’s wr on gfu l
disch a r ge la w. As a resu lt, th is cau se of action relates n ot m erely to
pen sion ben efits, bu t to th e essen ce of th e pen sion plan itself . . .
Th e Texa s ca u se of a ct ion m a kes specific r efer en ce t o, a n d in deed is
pr em ised on , t h e exist en ce of a pen sion pla n. In t h e wor ds of t h e
Texa s cou r t , t h e ca u se of a ct ion ‘a llows r ecover y wh en t h e pla in t iff
pr oves t h a t t h e pr in cipa l r ea son for h is t er m in a t ion wa s t h e
em ployer ’s desir e t o a void con t r ibu t in g t o or pa yin g ben efit s u n der
t h e em ployee’s pen sion fu n d.’ 779 S.W.2d, a t 71. Th u s, in or der t o
pr eva il, a pla in t iff m u st plea d, a n d t h e cou r t m u st fin d, t h a t a n
E RISA pla n exist s a n d t h e em ployer h a d a pen sion -defea t in g m ot ive
in t er m in a t in g t h e em ploym en t . B ecau se th e cou rt’s in qu iry m u st be
551. Id . a t 54.
552. In ger soll-Ra n d Co. v. McClen don , 498 U.S. 133 (1990).
553. B u t see Id . a t 136 (expla in in g t h a t u n der t h e descr ibed fa ct s t he
disch a r ge did n ot depr ive t h e pla in t iff of t h e ben efit s a t issu e).
554. Id . a t 144-45.
555. Id . a t 142-45.
556. Id . a t 138-42.
557. S ee Id . a t 141-142 (dism issin g t h e r eleva n ce of t h e pla in t iffs’ a sser t ion
t h a t t h e st a t e la w did n ot so a ffect E RISA pla n s).
244
T h e J oh n M arsh all L aw R eview
[47:145
d irected to th e plan , th is ju d icially created cau se of action ‘relate[s]
558
to’ an E R IS A plan .
Th is expla n a t ion r a ises m a n y qu est ion s. Th e Cou r t ca n n ot
m ea n t h a t a n y st a t e la w a ct ion n a m in g a n E RISA pr eem pt ion pla n
is pr eem pt ed beca u se t h en gen er a l con t r a ct a ct ion s in volvin g
con t r a ct s per t a in in g t o a pla n ’s pu r ch a se of office su pplies wou ld
be pr eem pt ed. Th e Cou r t ca n n ot m ea n t h a t a st a t e cou r t a ct ion
r equ ir in g a n in qu ir y dir ect ed a t a n E RISA pla n is pr eem pt ed for
t h e sa m e r ea son . Wh a t is t h e essen ce of a n E RISA pla n ot h er
t h a n E RISA ben efit s? Th e Cou r t r efer en ce t o gen er a lly a pplica ble
la ws su ggest s t h a t E RISA wou ld n ot pr eem pt t h e u se of a st a t e
gen er a l con t r a ct st a t u t e t o r ecover ben efit pa ym en t s du e u n der t h e
pla n t er m s, wh ich a r e descr ibed by t h e Cou r t a s n ot bein g t h e
essen ce of E RISA pla n s. Th is is prim a facie a bsu r d.
In 1992, t h e Su pr em e Cou r t decided, in D.C. v. Gr ea t er
559
Wa sh in gt on Bd. of Tr a de (h er ein a ft er “Greater Wash in gton ”),
t h a t E RISA pr eem pt s a st a t e la w r equ ir in g em ployer s t o con t in u e
cover a ge u n der a h ea lt h ca r e r eim bu r sem en t pla n wh ile a n
560
em ployee is r eceivin g wor ker s’ com pen sa t ion .
In t h is ca se, even
t h ou gh E RISA did n ot a ddr ess su ch cover a ge, t h e E RISA E xpr ess
P r eem pt ion gover n ed beca u se of it s a pplica t ion t o st a t e la ws t h a t
“r ela t e t o a n y” E RISA pla n , su ch a s on e m a n da t in g ben efit
561
cover a ge.
Th e Cou r t r eject ed t h e a sser t ion t h a t in clu din g t h e
st a t e la w wit h in t h e st a t e’s per m issible r egu la t ion of E RISAexem pt wor k er s’ com pen sa t ion pla n s sa ved t h e la w fr om
pr eem pt ion , a n d in st ea d h eld t h a t t h e la w’s r ela t ion t o E RISA
562
pla n s is t h e det er m in a t ive fa ct or .
Th e Cou r t obser ved t h a t t h e
st a t e st a t u t e is pr eem pt ed on t h e ba sis of t h e st a t u t or y r efer en ce
t o E RISA welfa r e pla n s. Th e Cou r t t h en descr ibed h ow t h e st a t u t e
r equ ir es ch a n ges in t h e pla n ’s ben efit st r u ct u r e, wh ich is t h e kin d
of n on -t en u ou s r ela t ion t o a n E RISA pla n t h a t seem s t o r esu lt
prim a facie in E RISA pr eem pt ion .
B . T h e S u prem e Cou rt Creates Con fu sion Abou t th e Gen eral
E R IS A Preem ption by Observin g th at “R eferen ce to” is In clu d ed
With in th e M ean in g of th e Ph rase “R elate to” in th e Cou rse of
H old in g th at E R IS A Preem pts On ly S tate L aw s w ith N on T en u ou s E ffects on E R IS A Plan s
Th e con fu sion a bou t t h e sign ifica n ce of a st a t u t or y r efer en ce
t o em ployee ben efit pla n s or igin a t ed wit h t h e S h aw Cou r t ’s
a t t em pt in 1983, wh ile con sider in g wh et h er E RISA pr eem pt ed a
st a t e disa bilit y la w, t o cla r ify t h e m ea n in g of t h e ph r a se “r ela t e t o”
558.
559.
560.
561.
562.
Id . a t 139-40 (em ph a sis a dded).
Greater Wash in gton , 506 U.S. a t 125.
Id . a t 126.
Id . a t 129-133.
Id . a t 131.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
245
by r est a t in g t h e wor ds a s follows:
“A la w ‘r ela t es t o’ a n em ployee ben efit pla n , in t h e n or m a l sen se of
563
t h e ph r a se, if it h a s a con n ect ion wit h or r efer en ce t o su ch a pla n .”
Th is r est a t em en t is foot n ot ed wit h t h e followin g r efer en ce t o
t h e followin g Bla ck’s La w Dict ion a r y defin it ion :
Rela t e. To st a n d in som e r ela t ion ; t o h a ve bea r in g or con cer n ; t o
564
per t a in ; r efer ; t o br in g in t o a ssocia t ion wit h or con n ect ion wit h .
No expla n a t ion is given wh y t h e on ly wor ds t h e Cou r t
select ed fr om t h e a bove a r e “con n ect [ed] wit h ” a n d “r efer [en ce].”
Th e ir r eleva n ce of t h e Cou r t ’s r est a t em en t is sh own by t h e S h aw
Cou r t ’s con clu sion t h a t a la w r equ ir in g em ployer s t o pa y
em ployees specified ben efit s, n ot wit h st a n din g t h e pla n t er m s,
r ela t es t o E RISA pla n s. Th is con clu sion wa s ba sed on t h e
565
su bst a n t ia l effect s of t h e st a t e la w on su ch a n E RISA pla n .
Th e S h aw Cou r t pr ovides a fa r m or e per t in en t cla r ifica t ion of
t h e sign ifica n ce of “r ela t e t o” ph r a se in a foot n ot e t h a t decla r es
t h a t t h er e is n o E RISA pr eem pt ion for ver y t en u ou s r ela t ion s a s
follows:
Som e st a t e a ct ion s m a y affect em ployee ben efit pla n s in too ten u ou s,
r em ot e, or per iph er a l a m a n n er t o wa r r a n t a fin din g t h a t t h e la w
‘r ela t es t o’ t h e pla n . Cf. Am er ica n Teleph on e a n d Telegr a ph Co. v.
Mer r y, 592 F .2d 118, 121 (CA2 1979) (st a t e ga r n ish m en t of a
spou se’s pen sion in com e t o en for ce a lim on y a n d su ppor t or der s is
566
n ot pr e-em pt ed).
Th e Cou r t cor r ect ly m a de n o dist in ct ion bet ween r ela t ion s
t h a t depen d on E RISA r efer en ces a n d ot h er r ela t ion s in t h is
descr ipt ion of t h e “t en u ou s” t est . H owever , t h e foot n ot e r efer en ce
567
on ly t o M erry is odd. Wh y did t h e Cou r t n ot in st ea d r efer t o it s
own 1980 r u lin g in S u p Ct. Cam pa, discu ssed su pra, t h a t E RISA
did n ot pr eem pt a dom est ic r ela t ion s or der en for cin g t h e
com m u n it y pr oper t y r igh t s of t h e pa r t icipa n t ’s for m er spou se?
In 1985, t h e Su pr em e Cou r t r epea t s a n d cit es t h e S h aw
r est a t em en t of “r ela t e t o” in M etropolitan L ife In s. Co., wh ile
con sider in g wh et h er E RISA pr eem pt ed a st a t e la w r equ ir in g
h ea lt h ca r e expen se-r eim bu r sem en t pla n s t o in clu de a cer t a in
568
ben efit .
Th e Cou r t fir st sh ows t h e ir r eleva n ce of t h is “r efer en ce”
563. S h aw , 463 U.S. a t 96-97.
564. S ee id . a t 98, n .16 (r efer r in g t o Bla ck’s La w Dict ion a r y 1158 (5t h ed.
1979)). Th e decision a lso r efer en ces t h e Ch icago Preem ption R eview , su pr a
n ot e 410, for it s discu ssion of t h e h ist or y of t h e developm en t of t h e pr eem pt ion
la n gu a ge. Id . a t 99, n .19.
565. Id . a t 98-100.
566. Id . a t 100 n .21 (em ph a sis a dded).
567. M erry, 592 F .2d a t 118.
568. M etropolitan L ife In s. Co., 471 U.S. a t 739.
246
T h e J oh n M arsh all L aw R eview
[47:145
r eph r a sin g by fir st obser vin g t h a t t h e la w a t issu e is n ot ca lled a
569
“ben efit pla n la w.”
Th e Cou r t r ea ch ed t h e obviou s con clu sion
t h a t a la w r equ ir in g a n em ployee ben efit pla n t o pu r ch a se
specified ben efit s r ela t es t o t h e E RISA pla n beca u se t h e effect s of
t h e la w on su ch pla n ’s ben efit s a r e a ga in su bst a n t ia l r a t h er t h a n
570
t en u ou s.
571
In 1987, t h e Su pr em e Cou r t in Pilot L ife In s. Co., r epea t s
a n d cit es it s t wo ea r lier decision s for t h e r est a t em en t r eph r a sin g
“r ela t e t o.” Aga in , t h e ir r eleva n ce of t h e “r efer en ce” r eph r a sin g is
sh own , wh en t h e Cou r t cit es S h aw for t h e pr oposit ion t h a t
pr eem pt ion is n ot lim it ed t o “st a t e la ws specifica lly design ed t o
572
a ffect em ployee ben efit pla n s.”
Th e Cou r t r ea ch ed a sim ila r
obviou s con clu sion t h a t a st a t e la w pr ovidin g ca u ses of a ct ion for
t h e fa ilu r e t o pa y ben efit s u n der pla n t er m s r ela t es t o E RISA
pla n s beca u se t h e effect s of t h e la w on su ch a pla n a r e a ga in
573
su bst a n t ia l r a t h er t h a n t en u ou s.
In 1990, t h e Su pr em e Cou r t r epea t s a n d cit es t h e S h aw
574
r est a t em en t r eph r a sin g “r ela t e t o” in In gersoll-R an d Co., wh ile
con sider in g wh et h er E RISA pr eem pt ed a st a t e com m on -la w a ct ion
for wr on gfu l disch a r ge t o pr even t a t t a in m en t of ben efit s u n der a
pen sion pla n . Th e Cou r t ba sed it s pr eem pt ion con clu sion in la r ge
m ea su r e on t h e st a t e la w cla im ’s r efer en ce t o a pen sion pla n , a n d
t h e fa ct t h a t t h e a ct ion depen ded on t h e exist en ce of a n E RISA
575
pla n .
Mor eover , t h e Cou r t descr ibed t h e pu r pose of t h e E RISA
E xpr ess P r eem pt ion a s follows:
Th e con clu sion t h a t t h e ca u se of a ct ion in t h is ca se is pr eem pt ed by
§ 514(a ) is su ppor t ed by ou r u n der st a n din g of t h e pu r poses of t h a t
pr ovision . Sect ion 514(a ) wa s in t en ded t o en su r e t h a t pla n s a nd
pla n spon sor s wou ld be su bject t o a u n ifor m body of ben efit s la w; the
goal w as to m in im ize th e ad m in istrative an d fin an cial bu rd en of
com plyin g w ith con flictin g d irectives am on g S tates or betw een S tates
an d th e Fed eral Govern m en t . Ot h er wise, t h e in efficien cies cr ea t ed
576
cou ld wor k t o t h e det r im en t of pla n ben eficia r ies.
Th is is a biza r r e st a t em en t beca u se a few pa ges ea r lier t h e
Cou r t h a d obser ved t h a t a st a t e st a t u t e is n ot pr eem pt ed m er ely
577
beca u se it cr ea t es a n a dm in ist r a t ive bu r den for a n E RISA pla n .
Mor eover , in t h is ca se t h e st a t e la w cla im is for t h e wr on gfu l
569. Id .
570. Id .
571. Pilot L ife In s. Co., 481 U.S. a t 47.
572. Id . a t 47-48.
573. Id . a t 48.
574. In gersoll-R an d Co., 498 U.S. a t 139.
575. S ee Id . a t 139-40 (seem in g t o pr esu m e t h a t a ll pen sion pla n s a r e
E RISA pla n s, even t h ou gh t h er e a r e n on -E RISA pla n s, su ch a s ch u r ch pla n s
a n d pla n s r est r ict ed t o pa r t n er s).
576. Id . a t 142 (em ph a sis a dded).
577. S ee id . a t 139 (expla in in g t h a t t h e bu r den s im posed on pla n s of st a t e
la w levies do n ot ca u se t h em t o be pr eem pt ed).
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247
disch a r ge t o a void pa yin g pen sion ben efit s. Th u s, t h er e is n o
qu est ion t h a t t h e cla im is r ela t ed t o a n E RISA pla n wit h ou t a n y
n eed t o r esor t t o a n y bu r den a n a lysis or t o a n y Bla ck’s La w
Dict ion a r y defin it ion s beca u se t h e effect s of t h e st a t e la w cla im on
t h e r igh t s of pla n em ployee ben efit s, n a m ely t h e m ech a n ism s t o
578
en for ce t h ose r igh t s, a r e su bst a n t ia l r a t h er t h a n n on -t en u ou s.
In 1992, t h e Su pr em e Cou r t r epea t s a n d cit es t h e S h aw
579
r est a t em en t r eph r a sin g “r ela t e t o” in Greater Wash in gton , bu t
decla r es t h a t E RISA pr eem pt s a st a t e la w r efer r in g t o a n E RISA
pla n on t h a t ba sis a lon e wit h ou t expla n a t ion ot h er t h a n a cit a t ion
580
t o Ma ck ey v. La n ier Collect ion Agen cy & Ser v., In c., discu ssed
in fra. Th e Cou r t in Greater Wash in gton con sider ed wh et h er
E RISA pr eem pt ed a st a t e la w gover n in g t h e per son s cover ed by a
h ea lt h r eim bu r sem en t pla n . As in In gersoll-R an d Co., t h e Cou r t
581
n ot ed a r efer en ce in t h e st a t e la w a t issu e t o E RISA pla n s,
582
a lt h ou gh a ga in t h e r efer en ce wa s n ot lim it ed t o E RISA pla n s,
a n d h eld t h is r efer en ce est a blish ed t h e r ela t ion t o a h ea lt h
583
r eim bu r sem en t pla n .
Th e Cou r t obser ved, bu t did n ot r ely on ,
584
t h e fin din g of t h e cou r t below of t h e ser iou s im pa ct of t h e st a t e
la w on t h e em ployee ben efit pla n by r equ ir in g t h a t exist in g h ea lt h
ca r e cover a ge be con t in u ed a ft er a n em ployee becom es eligible for
wor k er s’ com pen sa t ion . Th u s, a ga in t h er e is n o qu est ion t h a t t h e
effect of t h e la w on t h e em ployee ben efit pla n ’s ben efit s is
su bst a n t ia l r a t h er t h a n t en u ou s.
J u st ice St eph en s a r gu ed in t h e Greater Wash in gton dissen t
t h a t t h e “r ela t e t o” pr eem pt ion con cept r equ ir es m or e t h a n a
r efer en ce t o E RISA pla n s; it m u st a lso h a ve m or e t h a n a t en u ou s
585
effect on a n em ployee ben efit pla n .
In pa r t icu la r , St eph en s
fou n d n o su ch effect beca u se h e in t er pr et ed t h e st a t e la w t o
r equ ir e t h e em ployer t o in clu de in wor ker s’ com pen sa t ion
pa ym en t s t h e cost of con t in u in g h ea lt h ca r e cover a ge, bu t n ot t o
r equ ir e t h e h ea lt h ca r e r eim bu r sem en t pla n t o con t in u e t o pr ovide
586
in dividu a ls r eceivin g wor k er s’ com pen sa t ion wit h pla n cover a ge.
X.
AME NDME NTS OF E RISA P RE E MP TION P ROVISION S
E RISA a m en dm en t s h a ve a ddr essed t h e pr eem pt ion
pr ovision s per t a in in g t o st a t e t a x, dom est ic r ela t ion s, a n d ben efit
578. Id . a t 139-140.
579. Greater Wash in gton , 506 U.S. a t 129.
580. Id . (cit in g Ma ckey v. La n ier Collect ion Agen cy & Ser v., In c., 486 U.S.
825 (1988)).
581. Id . a t 130.
582. Id . a t 128.
583. Id . a t 130.
584. Id . a t 129.
585. Id . a t 135-37 (St eph en s, J ., dissen t in g).
586. Id . a t 133-34, 137-38 (St eph en s, J ., dissen t in g).
248
T h e J oh n M arsh all L aw R eview
[47:145
587
pla n en for cem en t la ws.
In 1983, a pr ovision wa s a dded t h a t
decla r ed explicit ly t h a t st a t e t a x la w is su bject t o t h e E RISA
588
E xpr ess P r eem pt ion .
In 1984, a pr ovision wa s a dded t o t h e
E RISA E xpr ess P r eem pt ion decla r in g t h a t dom est ic r ela t ion s
or der s m eet in g en u m er a t ed con dit ion s a r e n ot pr eem pt ed , bu t
589
t h ose fa ilin g t o do so wer e pr eem pt ed.
In 1986, a pr ovision wa s
a dded t o a pr ovision ot h er t h a n t h e E RISA E xpr ess P r eem pt ion ,
wh ich con fir m ed explicit ly t h a t t h e pr eem pt ion exclu sion for
dom est ic r ela t ion s or der s wa s lim it ed t o or der s per t a in in g t o
590
pen sion pla n s wh ich a r e Spou sa l Su r vivor Ben efit P la n s.
In
1993, a pr ovision wa s a dded t o t h e E RISA E xpr ess P r eem pt ion
decla r in g t h a t dom est ic r ela t ion s or der s m eet in g en u m er a t ed
con dit ion s per t a in in g t o m edica l ca r e for a pa r t icipa n t ’s ch ildr en
591
wer e n ot pr eem pt ed, a n d t ech n ica l a m en dm en t s wer e m a de t o
592
t h is pr ovision in 1998.
In 2006, a pr ovision wa s a dded t o t h e
E RISA E xpr ess P r eem pt ion t h a t decla r ed explicit ly t h a t if cer t a in
en u m er a t ed con dit ion s a r e m et t h en a n a r r a n gem en t for
a u t om a t ic em ployee con t r ibu t ion s t o pen sion pla n s is su bject t o
593
t h e E RISA E xpr ess P r eem pt ion .
E a ch a m en dm en t set t in g for t h
a n exclu sion fr om t h e E RISA E xpr ess P r eem pt ion did so u n der
ver y lim it ed con dit ion s, su ppor t in g t h e con clu sion t h a t st a t e la ws
a r e pr eem pt ed if t h ey a ffect a n y of t h e t h r ee fu n da m en t a l ben efit
pr ot ect ion s a bsen t a n explicit exclu sion .
A. Con gress R everses S u prem e Cou rt an d Provid es a L im ited
E xclu sion for th e H aw aii Prepaid H ealth Care Act from E R IS A
Preem ption an d Con firm s Preem ption of S tate T ax L aw s
In 1983, t h e H a wa ii P r epa id H ea lt h Act wa s gr a n t e d a
594
lim it ed exclu sion fr om t h e E RISA pr eem pt ion .
In 1981, t h e
587. Am en dm en t s per t a in in g t o ot h er st a t e la ws, su ch a s t h e a ddit ion of
E RISA § 514(b)(8), 29 U.S.C. § 1144(b)(8) t o per m it st a t es t o r ecover Medica id
expen dit u r es, will n ot be discu ssed.
588. E RISA Am en dm en t s of 1983, P u b. L. No. 97-473 § 301(a ), 96 St a t .
2605, 2611-12 (1983) (codified a t E RISA § 514(b)(5)(B)(i), 29 U.S.C.
§ 1144(b)(5)(B)(i)).
589. Ret ir em en t E qu it y Act of 1984, P u b. L. No. 98-397 § 104, 98 St a t .
1426, 1434-36 (1984) (codified a t E RISA § 514(b)(7), 29 U.S.C. § 1144(b)(7)).
590. Ta x Refor m Act of 1986, P u b. L. No. 99-514, § 1898(c)(4), 100 St a t .
2085, 2953 (1986) (codified a t E RISA § 206(d)(3)(L), 29 U.S.C. § 1056(d)(3)(L)).
591. Om n ibu s Bu dget Recon cilia t ion Act of 1933, P u b. L. No. 103 -66 Tit le
IV, Su bt it le D § 4301(c)(4)(A), 107 St a t . 312, 377 (1993) (codified a t E RISA
§ 514(b)(7), 29 U.S.C. § 1144(b)(7)).
592. S ee Ch ild Su ppor t P er for m a n ce a n d In cen t ive Act of 1998, P u b. L. No.
105-200, Tit le IV, § 401(h )(2)(A)(i), (ii), 112 St a t . 645, 668 (1998) (r em ovin g
“su bsect ion (b)(7)(D)” fr om t he Om n ibu s Bu dget Recon cilia t ion Act of 1993,
a n d r epla cin g it wit h “su bsect ion (b)(7)”).
593. P en sion P r ot ect ion Act of 2006, P u b. L. No. 109-280 § 920(f)(1), 120
St a t . 780, 1039 (2006) (codified a t E RISA § 514(e), 29 U.S.C. § 1144(e)).
594. E RISA Am en dm en t s of 1983, P u b. L. No. 97-473 § 301(a ), 96 St a t .
2605, 2611-12 (1983) (codified a t E RISA § 514(b)(5)(B)(i), 29 U.S.C.
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
249
Su pr em e Cou r t h eld in a decision , wit h ou t a n opin ion , a s discu ssed
su pra, t h a t t h e Act wa s pr eem pt ed u n der E RISA a s or igin a lly
595
en a ct ed.
Th e exclu sion wa s expr essly lin k ed wit h a pr ovision
t h a t a ddr essed t h e pr eem pt ion of st a t e t a x la w by a ddin g t h e
followin g pr ovision :
(A) E xcept a s pr ovided in subpa r a gr a ph (B), su bsect ion (a ) sh a ll n ot
a pply t o t h e H a wa ii P r epa id H ea lt h Ca r e Act (H a w. Rev. St a t .
§§ 393-1 t h r ou gh 393-51). (B) Not h in g in su bpa r a gr a ph (A) sh a ll be
con st r u ed t o exem pt fr om su bsect ion (a )—(i) a n y St a t e t a x la w
596
r ela t in g t o em ployee ben efit pla n s.
Th e exclu sion wa s lim it ed by a pr ovision a s follows in a la t er
su bpa r a gr a ph n ot m en t ion ed in t h e a bove exclu sion su bpa r a gr a ph :
(C) Not wit h st a n din g su bpa ra gr a ph (A) [set t in g for t h t h e exclu sion
fr om E RISA pr eem pt ion ], pa r t s 1 a n d 4 of t h is su bt it le [t h e
r epor t in g a n d disclosu r e sect ion s a n d t h e fidu cia r y sect ion s], a n d t h e
pr ecedin g sect ion s of t h is pa r t [t h e en for cem en t sect ion s, in clu din g
t h e cla im s sect ion s] t o t h e ext en t t h ey gover n m a t t er s wh ich a r e
gover n ed by t h e pr ovision s of su ch pa r t s 1 a n d 4, sha ll su per sede t h e
H a wa ii P r epa id H ea lt h Ca r e Act (a s in effect on or a ft er t h e da t e of
t h e en a ct m en t of t h is pa r a gr a ph [en a ct ed J a n . 14, 1983]), bu t t h e
Secr et a r y m a y en t er in t o cooper a t ive a r r a n gem en t s u n der t h is
pa r a gr a ph a n d sect ion 506 [29 U.S.C. § 1136] wit h officia ls of t h e
St a t e of H a wa ii t o a ssist t h em in effect u a t in g t h e policies of
pr ovision s of su ch Act wh ich a r e su per seded by su ch pa rt s 1 a n d 4
[t h e r epor t in g a n d disclosu r e sect ion s a n d t h e fidu cia r y sect ion s]
a n d t h e pr ecedin g sect ion s of t h is pa r t [t h e en for cem en t sect ion s
597
in clu din g t h e cla im s sect ion s].
In pa r t icu la r , t h e a pplica ble pr eem pt ion disr ega r ded on ly t h e
sect ion s in P a r t 2, wh ich a ddr esses r equ ir ed ben efit t er m s, a n d in
P a r t 3, wh ich a ddr esses fu n din g.
Th e r epor t of t h e con fer en ce com m it t ee a ccom pa n yin g t h e
598
en a ct m en t of t h e bill does n ot discu ss wh y Con gr ess so lim it ed
t h e H a wa ii P r epa id H ea lt h Ca r e Act pr eem pt ion e xclu sion , n or
wh a t wa s in t en ded by pr eem pt in g t h e pa r t s of t h e Act r ela t in g t o
r epor t in g a n d disclosu r e m a n da t es. Con gr ess cou ld h a ve n ot
in t en ded t h a t E RISA pr eem pt ed t h e im plem en t a t ion of t h e Act by
pr even t in g a st a t e-la w m a n da t e t h a t a cover ed em ployer r epor t
wh et h er it h a d com plied wit h t h e Act r equ ir em en t t h a t t h e
em ployer h a d pr ovided it s em ployees wit h a com pr eh en sive
pr epa id h ea lt h ca r e pla n . As wit h t h e in it ia l en a ct m en t of E RISA,
Con gr ess pr oba bly in t en ded t o pr eem pt a n y r epor t in g m a n da t e in
t h e Act t h a t r equ ir ed in for m a t ion n ot n eeded t o im plem en t t h e
Act . N or did t h e r epor t discu ss wh y Con gr ess did n ot ch oose t o
§ 1144(b)(5)(B)(i)).
595. Agsalu d , 454 U.S. 801, aff’g. Agsalu d , 633 F .2d 760.
596. E RISA §§ 514(b)(5)(A), (B), 29 U.S.C. §§ 1144(b)(5)(A), (B).
597. E RISA § 514(b)(5)(C), 29 U.S.C. § 1144(b)(5)(C).
598. H .R. R E P . N O . 97-984, a t 11-22, 97t h Con g. (2d Sess. 1983).
250
T h e J oh n M arsh all L aw R eview
[47:145
give ot h er st a t es su ch leewa y. In con t r a st , t h e pr oposed bu t
u n a dopt ed E RISA Im pr ovem en t Act of 1979, S. 209, discu ssed
su pra, wh ich h a d t h e sa m e lim it a t ion s on t h e exclu sion for h ea lt h
ca r e pla n s, ext en ded t h e r elief t o a ll st a t es wit h sim ila r
599
legisla t ion .
Th e pr oposa l wa s vigor ou sly defen ded by t h e t wo
600
U.S. Sen a t or s fr om H a wa ii.
Th e r epor t a lso did n ot discu ss t h e pr ovision qu ot ed a bove
t h a t st a t e t a x la ws wer e pr eem pt ed lik e ot h er st a t e la ws n ot
601
ot h er wise exem pt ed.
Th e 1979 pr oposa l in clu ded n o st a t e t a x
602
603
la w r efer en ce.
Th e 1982 Con gr ess m a y h a ve wish ed t o lea ve
lit t le dou bt t h a t st a t es m a y n ot a void E RISA pr eem pt ion by
den om in a t in g a ben efit t er m s m a n da t e a s a t a x, a s H a wa ii did in
it s post -1979 lit iga t ion a r gu m en t s in defen se of t h e H a wa ii
P r epa id H ea lt h Ca r e Act , a s discu ssed su pra.
Som e in sigh t in t o t h e in t en ded scope of t h e st a t e la w t a x
pr eem pt ion t h a t Con gr ess r ea ffir m ed is pr ovided by t h e
expla n a t ion t h a t Sen a t or Rober t Dole pr esen t ed wh en h e r epor t ed
t h e bill t o t h e Sen a t e on beh a lf of t h e Sen a t e F in a n ce Com m it t ee.
Sen a t or Dole expla in ed t h e a ddit ion of t h e lim it ed exclu sion fr om
pr eem pt ion of t h e H a wa ii P r epa id H ea lt h Ca r e Act a s follows:
Th e bill a m en ds E RISA t o pr ovide t h a t H a wa ii la w r ela t in g t o
em ployer m a in t a in ed h ea lt h in su r a n ce pla n s wou ld n ot be
pr eem pt ed by E RISA t o t h e ext en t t h a t t h e H a wa iia n la w does n ot
r ela t e t o m a t t er s t h or ou gh ly r egu la t ed u n der E RISA or im pose tax
604
liability on in su ran ce prem iu m s or ben efits.
Th is view is con sist en t wit h in t r odu ct or y r em a r k s of Sen a t or
J a cob J a vit s a bou t t h e u n a dopt ed E RISA Im pr ovem en t Act of
605
1979, S. 209,
wh ich bill, a s discu ssed su pra, in clu ded t h e
pr edecessor t o t h e 1983 a ct . In pa r t icu la r , Sen a t or J a vit s, a s
606
discu ssed su pra, r ecom m en ded
t h a t t h e com m it t ee r epor t
607
a ccom pa n yin g t h e legisla t ion r ea ffir m t h a t H effern an II, h a d
599. E RISA Im pr ovem en t s Act of 1979, S. 209, 96t h Con g. § 155(2), a t 35
(1st Sess. 1979), reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t 9,
43.
600. S ee 1979 Sen a t e E RISA Review, su pra n ot e 406, a t 642-44, 645-51
(r epor t in g Sen a t or Spa r ky Ma t su n a ga r em a r ks a n d P r epa r ed st a t em en t of
Sen a t or Da n iel K. In ou ye a t t h e h ea r in gs befor e t h e Sen a t e Com m it t ee on
La bor a n d H u m a n Resou r ces on S. 209).
601. H .R. R E P . N O . 97-984, a t 11-22, 97t h Con g. (2d Sess. 1983).
602. E RISA Im pr ovem en t s Act of 1979, S. 209, 96t h Con g. (1st Sess. 1979),
reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406.
603. Th e bill wa s a dopt ed in 1983 by t h e 97t h Con gr ess t h a t b ega n it s
session in 1981.
604. 128 C ONG . R E C . 26902 (Oct . 1, 1982).
605. Sen a t or J a vit s pr epa r ed r em a r ks r ega r din g E RISA Im pr ovem en t s Act
of 1979, S. 209, 96t h Con g. (1st Sess. 1979), reprin ted in 1979 Sen a t e E RISA
Review, su pra n ot e 406, a t 99-108.
606. Id . a t 106-07.
607. H effernan II, a t 918.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
251
cor r ect ly decided, in 1978, t h a t E RISA pr eem pt ed a st a t e t a x on
t h e a m ou n t of ben efit s pa id by a n E RISA h ea lt h ca r e
r eim bu r sem en t pla n . Th is in t er pr et a t ion is a lso con sist en t wit h
t h e in t en t ion of t h e E RISA dr a ft sm en , a s descr ibed by Mich a el S.
608
Gor don , t o lim it t h e a bilit y of st a t es t o r egu la t e self-in su r ed
h ea lt h ca r e r eim bu r sem en t pla n s —dir ect r egu la t ion wa s lim it ed
by r est r ict in g t h e in su r a n ce exclu sion fr om t h e E RISA E xpr ess
609
P r eem pt ion t o pla n s in su r ed wit h t h ir d pa r t ies.
H owever , if t h e
a im is t o pr even t r egu la t ion , it is n ot clea r t h a t a ll pr em iu m -lik e
t a xes on ben efit s a ct a s a r egu la t ion , wh ich pr oposit ion seem s t o
h a ve been r eject ed by T ravelers a n d De B u on o, descr ibed in fra. If
t h e a im wa s t o st op su ch t a xes, wh y did Con gr ess n ot sim ply
pr oh ibit su ch t a xes on self-in su r ed pla n s?
B . Con gress R everses th e S u prem e Cou rt an d S u bstan tially L i m its
Wh ich Dom estic R elation s Ord ers E R IS A Does N ot Preem pt
Wh en Con gr ess a ppr oved RE ACT in 1984, it seem ed t o bu ild
u pon it s ea r lier pr oposa ls in 1978 a n d 1979 wit h r espect t o t h e
t r ea t m en t of dom est ic r ela t ion s or der s, discu ssed su pra. Th e 1979
pr oposa l, wh ich a ppa r en t ly bu ilt u pon t h e 1978 pr oposa l, h a d
t h r ee m a jor dom est ic r ela t ion s fea t u r es: (1) t h e pr eem pt ion
exclu sion wa s lim it ed t o t h ose dom est ic r ela t ion s or der s t h a t
gover n ben efit s fr om t h ose pla n s t h a t wou ld be Spou sa l Su r vivor
Ben efit P la n s; (2) t h e pr eem pt ion exclu sion wa s lim it ed t o t h ose
or der s t h a t r equ ir e n o ch a n ge in t h e effect ive da t e, t im in g, for m ,
du r a t ion , or a m ou n t of a n y ben efit pa ym en t s; a n d (3) t h e
pr eem pt ion ch a n ges wer e coor din a t ed wit h sim ila r ch a n ges in t h e
610
Alien a t ion P r oh ibit ion a n d t h e cor r espon din g Code pr ovision s.
RE ACT a r ose dir ect ly fr om legisla t ion in t r odu ced a yea r
ea r lier , i.e., in 1983, a n d ext en sive h ea r in gs con du ct ed in t h a t
yea r . Th er e wer e t wo m a jor Sen a t e pr oposa ls. S. 19 en t it led t h e
“Ret ir em en t E qu it y Act of 1983” wa s in t r odu ced by Sen a t or Dole
611
a n d ot h er sen a t or s on J a n u a r y 26, 1983.
S. 888 en t it led t h e
“E con om ic E qu it y Act ” wa s in t r odu ced by Sen a t or Da vid
608. Mich a el S. Gor don , m in or it y cou n sel for pen sion s on t h e Sen a t e La bor
a n d P u blic Welfa r e Com m it t ee fr om 1970 u n t il 1975, a ssist ed in t h e dr a ft in g
a n d en a ct m en t of E RISA.
609. S ee Gor don , su pra n ot e 356, a t 28-29 (discu ssin g h ow t h e E RISA
E xpr ess P r eem pt ion wa s a dopt ed in pa r t t o pr even t st a t es fr om im posin g
pr em iu m -like t a xes on n on -in su r ed h ea lt h ca r e r eim bu r sem en t pla n s).
610. S ee H .R. 13446, 95t h Con g. (2d Sess. 1978), reprin ted in E RISA
Im pr ovem en t s Act of 1978: J oin t H ea r in gs on S. 3017 Befor e t h e S. Su bcom m .
on La bor of t h e Com m . on H u m a n Res. a n d t h e S. Su bcom m . on P r iva t e
P en sion P la n s a n d F r in ge Ben efit s on t h e Com m . Of F in ., 95t h Con g. on S.
3017, a t 1050-1052 (Au g. 15, 16, 17, 1978) a n d S. 209, 96t h Con g. §§ 128, 155,
st
205(j), 23-24, 35-36, a n d 62-63 (1 Sess. 1979) reprin ted in 1979 Sen a t e
E RISA Review, su pra n ot e 406, a t 1, 32-32, 43-44, 70-71.
611. Ret ir em en t E qu it y Act of 1983, S. 19, 98t h Con g. (1st Sess. 1983).
252
T h e J oh n M arsh all L aw R eview
[47:145
612
Du r en ber ger a n d ot h er sen a t or s on Ma r ch 23, 1983.
Bot h bills
wer e con sider ed a t h ea r in gs wit h n u m er ou s wit n esses a n d
su bm ission s befor e t h e Sen a t e F in a n ce Com m it t ee on J u n e 20 a n d
613
21, 1983, a n d befor e t h e Sen a t e Com m it t ee on La bor a n d H u m a n
614
Resou r ces on Oct ober 3, 1983.
On Novem ber 18, 1983, t h e
615
616
Sen a t e a gr eed
on a com bin ed bill.
Th er e wer e t wo m a jor
H ou se pr oposa ls. H .R. 2090, t it led t h e “E con om ic E qu it y Act of
1983,” wa s in t r odu ced by Con gr esswom a n Sch r oeder a n d ot h er s on
617
Ma r ch 14, 1983.
Th e bill is iden t ica l t o t h e Sen a t e bill wit h t h e
618
sa m e n a m e. H .R. 2100, en t it led t h e “P r iva t e P en sion Refor m Act
of 1983,” wa s in t r odu ced by Con gr esswom a n Ger a ldin e F er r a r o
619
a n d ot h er s on Ma r ch 15, 1983.
Bot h bills wer e con sider ed a t
h ea r in gs wit h n u m er ou s wit n esses a n d su bm ission s befor e t h e
620
Select Com m it t ee on Agin g on J u n e 14, 1983,
befor e t h e
Su bcom m it t ee of La bor Rela t ion s of t h e Com m it t ee on E du ca t ion
621
a n d La bor or Sept em ber 29, 1983, a n d befor e t h e Wa ys a n d
622
Mea n s Com m it t ee on Oct ober 25, 1983.
As in 1978 a n d 1979, bot h RE ACT a n d it s legisla t ive h ist or y,
sh ow t h a t Con gr ess in t en ded t o exem pt fr om pr eem pt ion on ly
t h ose dom est ic r ela t ion s or der s t h a t a t t em pt ed t o gover n t h e
623
ben efit s of Spou sa l Su r vivor Ben efit P la n , wh ich wer e a lso t h e
on ly pla n s for wh ich spou sa l su r vivor ben efit s wer e r equ ir ed a n d
en h a n ced by RE ACT a s discu ssed in fra. Th er e wa s n o discu ssion
in a n y of t h e RE ACT h ea r in gs a bou t r equ ir in g spou sa l su r vivor
612. E con om ic E qu it y Act , S. 888, 98t h Con g. (1st Sess. 1983).
613. Poten tial Inequ ities Affectin g Wom en : Hearin gs of S . 19 & S . 888
B efore th e S . Com m . On Fin ., S. H RG . 98-313, 98t h Con g., P a r t s I, 2, a n d 3 (1st
Sess. 1983).
614. Ret ir em en t E qu it y Act of 1983: H ea r in g on S. 19 befor e t h e Su bcom m .
on La bor of t h e S. Com m . on La bor a n d H u m a n Res., S. H RG . 98-417, 98t h
Con g. (1st Sess. 1983).
615. 129 C ONG . R E C . 34,359 (Nov. 18, 1983).
616. Ret ir em en t E qu it y Act of 1983, H .R. 2769, 98t h Con g. (1st Sess. 1983).
617. E con om ic E qu it y Act of 1983, H .R. 2090, 98t h Con g. (1st Sess. 1983).
618. 129 C ONG . R E C . 5073, (Ma r ch 15, 1983) (in t r odu ct or y st a t em en t
con fir m in g t h e iden t it y of t h e t wo bills by a co-spon sor of on e of t h e bills,
Con gr esswom a n Ba r ba r a Miku lski).
619. P r iva t e P en sion Refor m Act of 1983, H .R. 2100, 98t h Con g. (1st Sess.
1983).
620. Wom en ’s Pen sion E qu ity, H earin g of H ou se S elect Com m ittee on Agin g,
H .R Com m . P u b. No 98-401, 98t h Con g. (1st Sess. 1983).
621. 129 C ON G . R E C . D1259 (1983) (da ily ed. Sept . 29, 1983); Wom en ’s
P en sion E qu it y, H ea r in g of Su bcom m it t ee of La bor Rela t ion s of t h e H ou se
Com m it t ee on E du ca t ion a n d La bor H .R. Com m . P u b. No. 98 -401, 98t h Con g.
(1st Sess. 1983).
622. 129 C ONG . R E C . D1383 (1983) (da ily ed. Oct . 25, 1983). E con om ic
E qu it y Act a n d Rela t ed Ta x a n d P en sion Refor m , H ea r in g of Wa ys a n d Mea n s
Com m it t ee, H .R Ser ia l. No 98-51, 98t h Con g. (1st Sess. 1983).
623. B u t see E liza bet h M. Wells, S tate Dom estic R elation s Orders Un d er
E R IS A an d th e Cod e-An Un fortu n ate H od gepod ge, N.Y.U. R EV. E MP . B E N . 157, 15-12, 15-15 (2011) (sh owin g h ow legisla t ive m a t er ia ls a n d policy
a r gu m en t s su ppor t br oa d E RISA pla n cover a ge).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
253
ben efit s for a n y pla n s ot h er t h a n Spou sa l Su r vivor Ben efit P la n s.
Th is m a y r eflect t h e belief t h a t t h ose ot h er pla n s, su ch a s life
in su r a n ce pla n s, did n ot pr ovide t h e kin d of on -goin g su ppor t t o
su r vivin g spou ses wit h few r esou r ce wh om Con gr ess wish ed t o
624
pr ot ect .
Nor wa s t h er e a n y discu ssion of t h e effect s of dom est ic
r ela t ion s or der s on a n y pla n s ot h er t h a n Spou sa l Su r vivor Ben efit
P la n s.
Th u s, u n der gen er a l pr in ciples, t h e E RISA E xpr ess
P r eem pt ion pr eem pt s st a t e dom est ic r ela t ion s or der s or st a t e
spou sa l su r vivor pr ovision s t h a t a r e a pplica ble t o a n y ot h er E RISA
pla n .
RE ACT r efin ed t h e 1979 a ppr oa ch by per m it t in g a dom est ic
r ela t ion s or der t o m a k e ben efit pa ym en t ch a n ges u n der lim it ed
cir cu m st a n ces if t h e ch a n ge does n ot in cr ea se t h e a ct u a r ia l va lu e
625
of t h e ben efit s.
RE ACT a lso in t r odu ced a n ew con cept , a
626
qu a lified dom est ic r ela t ion s or der (“QDRO”), wh ich is a dom est ic
r ela t ion s or der t h a t m eet s t h e st a t u t or y ben efit r est r ict ion s a n d
t h e st a t u t or y con dit ion s for givin g n ot ice t o pla n pa r t icipa n t s a n d
627
pla n a dm in ist r a t or s.
Mor eover , a lt h ou gh n on e of t h e in it ia l bills
h a d t h is fea t u r e, in a ccor d wit h som e su ggest ion s pr esen t ed a t
Sen a t e h ea r in gs in 1979 discu ssed, su pra, RE ACT (1) per m it s
pla n s t o a void a dou ble pa ym en t lia bilit y if pla n a dm in ist r a t or s
628
pr ovide a dva n ce n ot ice a n d ot h er wise beh a ve pr u den t ly, a n d (2)
t r ea t s in dividu a l wit h ben efit r igh t s u n der QDROs a s pla n
629
ben eficia r ies.
RE ACT, h owever , m a de on e fa r m or e m a jor ch a n ge in t h e
1979 a ppr oa ch . E RISA n ow t r ea t s people wh ose r igh t s a r e der ived
fr om a QDRO a s pla n ben eficia r ies, even t h ou gh pla n spon sor s h a d
opposed su ch ch a r a ct er iza t ion a t Sen a t e h ea r in gs in 1979, a s
630
discu ssed su pra, a n d in t h e 1983 h ea r in gs.
F in a lly, RE ACT
624. S ee e.g., Watson ’s B rok en Prom ises, su pra n ot e 229, a t 483 (a r gu in g
a ga in st pr oposa ls t o h a ve life in su r a n ce r a t h er t h a n pen sion pla n s pr ovide
su r vivor ben efit s).
625. E RISA § 206(d)(3)(E ), 29 U.S.C. § 1056(d)(3)(E ).
626. E RISA § 206(d)(3)(B), 29 U.S.C. § 1056(d)(3)(B).
627. All t h e m a jor bills t ook t h is a ppr oa ch wit h ou t givin g t h e or der s a
dist in ct n a m e. S ee Pr iva t e P en sion Refor m Act of 1983, H .R. 2100 §§ 3-4, a t
11-14, 98t h Con g. (1st Sess. 1983) (a u t h or izin g t h e t r a n sfer of pen sion ben efit s
pu r su a n t t o a st a t e dom est ic r ela t ion la w ju dgm en t , decr ee, or or der r ela t ed t o
ch ild su ppor t , a lim on y pa ym en t s, or m a r t ia l pr oper t y r igh t s); see also
E con om ic E qu it y Act of 1983, H .R. 2090 §§ 104-05, a t 13-15, 98t h Con g. (1st
Sess. 1983) (sa m e pr ovision s a s in H .R 2100); Ret ir em en t E qu it y Act of 1983,
S. 19 § 5, a t 6-14, 98t h Con g. (1st Sess. 1983) (differ s fr om H .R. 2 100 in
im posin g m or e r est r ict ion s on per m issible dist r ibu t ion s a n d la ckin g a n y
pr eem pt ion exclu sion s, bu t a ddin g a dom est ic r ela t ion s exclu sion t o t h e E RISA
a lien a t ion pr oh ibit ion ); E con om ic E qu it y Act , S. 888 §§ 104-05, a t 13-15, 98t h
Con g. (1st Sess. 1983) (sa m e pr ovision s a s in H .R 2090).
628. E RISA § 206(d)(3)(H)-(I), 29 U.S.C. §§ 1056(d)(3)(H)-(I).
629. S ee E RISA § 206(d)(3)(J ), 29 U.S.C. § 1056(d)(3)(J ).
630. S ee e.g., Poten tial In equ ities Affectin g Wom en : Hearin gs on S . 19 & S .
888 B efore the S . Com m . On Fin . Part 2, 98t h Con g. 468-69 (1st Sess. 1983)
(pr epa r ed st a t em en t of Na t ion a l E m ployees Ben efit In st it u t e) (expr essin g
254
T h e J oh n M arsh all L aw R eview
[47:145
m a de explicit wh a t wa s im plicit in t h e pr ior pr oposa ls. A dom est ic
r ela t ion s or der t h a t a t t em pt s t o gover n t h e ben efit s of a Spou sa l
Su r vivor Ben efit P la n viola t es t h e Alien a t ion P r oh ibit ion if it is
631
n ot a QDRO. Th u s, E RISA pr eem pt s su ch a n or der .
Th e RE ACT Con gr ession a l com m it t ee r epor t s issu ed in 1984
disr ega r d a fu n da m en t a l ch a n ge in t h e lega l en vir on m en t bet ween
1979, wh en t h e RE ACT pr ecu r sor s wer e con sider ed, a n d 1984,
wh en RE ACT wa s con sider ed a n d en a ct ed. In 1979, t h e Ch icago
Preem ption R eview , a s discu ssed su pra, descr ibed a sign ifica n t
division a m on g t h e cou r t s on wh et h er E RISA pr eem pt ed dom est ic
r ela t ion or der s t h a t sou gh t t o gover n pen sion pla n ben efit s. Th a t
division n o lon ger exist ed in 1984 a s discu ssed m or e fu lly in
632
Feu er’s E R IS A M yth s.
By su ch yea r , S u p Ct. Cam pa a n d it s
633
pr ogen y wer e well-est a blish ed. Th ose decision s h a d a lr ea dy h eld
t h a t Spou sa l Su r vivor Ben efit P la n s m u st follow t h e t er m s of a
dom est ic r ela t ion s or der even if t h e or der wa s n ot con sist en t wit h
pla n t er m s. Un der t h e r ea son in g of t h ese decision s, wh ich r est ed
on t h e pr in ciple t h a t E RISA did n ot pr eem pt dom est ic r ela t ion s
la w, a ll pen sion pla n s in clu din g Top -H a t P la n s, a n d a ll em ployee
ben efit pla n s, in clu din g life in su r a n ce pla n s, wou ld be r equ ir ed t o
follow t h e t er m s of dom est ic r ela t ion s or der s r ega r dless of t h e pla n
t er m s.
634
Th er e wa s ext en sive t est im on y a bou t t h is ch a n ge in la w,
a n d plea s by pla n spon sor s for explicit lim it s on t h e ext en t t o
wh ich dom est ic r ela t ion s or der s cou ld a n d did a ffect E RISA
635
pla n s.
Th u s, Ma r jor ie O’ Con n ell, a pr om in en t divor ce a t t or n ey
opin ion t h a t r eceipt of pen sion ben efit s in a ccor d wit h dom est ic r ela t ion s
or der s sh ou ld n ot est a blish t r a n sfer ee a s pla n ben eficia r y).
631. E RISA § 206(d)(3)(A), 29 U.S.C. § 1056(d)(3)(A).
Th is explicit
pr ovision wa s n ot in a n y of t h e fou r in it ia l bills, bu t wa s im plicit .
632. Feu er’s E R IS A M yth s, su pra not e 25, a t 703-07. Cf. Ter r en ce Ca in , A
Prim er on th e H istory an d Proper Draftin g of Qu alified Dom estic-R elations
Ord ers, 28 T.M. C OOLE Y L. R E V. 417 a t 449-457 (2011) (a r gu in g t h a t RE ACT
wa s a con sequ en ce of t h e con flict in g decision s a bou t t h e ext en t t o wh ich
E RISA pr eem pt ed dom est ic r ela t ion s or der s).
633. S ee e.g., Kilberg an d In m an Preem ption , su pra n ot e 350, a t 1320,
1326 (st a t in g a n d cr it icizin g t h e fa ct t h a t “[i]n t h e a r ea s of m a r it a l pr oper t y
a n d fa m ily su ppor t la ws, t h e cou r t s h a ve fou n d a n essen t ia lly ir r ebu t t a ble
pr esu m pt ion a ga in st pr e-em pt ion ”).
634. B u t see Wom en ’s Pension E qu ity: H earin g B efore th e H . Com m . on
Agin g, 98t h Con g. 129, H .R Com m . P u b. No 98-401 a t 129, 131-32, 98t h Con g.
(1st Sess. 1983) (st a t em en t of Dor is J on a s F r eed) (expr essin g con cer n t h a t t h e
Su pr em e Cou r t m a y a pply t h e h oldin gs of H isqu ierd o, McCarth y, a n d R id gw ay
t o dom est ic r ela t ion s cla im s for E RISA ben efit s, seem in gly u n a wa r e of t h e
decision in S u p. Ct. Cam pa).
635. S ee e.g., Poten tial In equ ities Affectin g Wom en : Hearin gs on S . 19 & S .
888 B efore th e S . Com m . On Fin . Part 1, a t 225, 98t h Con g. 237 (1s t Sess.
1983) (pr epa r ed st a t em en t of Rich a r d H . F a y, Ch a m ber of Com m er ce of t h e
Un it ed St a t es) (a dvoca t in g for explicit lim it s on t h e a bilit y of dom est ic
r ela t ion s or der s t o a ffect E RISA pla n s); Poten tial In equ ities Affectin g Wom en :
H earin g of S . 19 & S . 888 B efore th e S . Com m . On Fin . Part 2, 98t h Con g. 379-
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
255
wh o h a d wr it t en ext en sively in t h e a r ea , wr ot e of t h e n ea r
u n a n im it y of t h e cou r t s fin din g t h a t dom est ic r ela t ion s or der s did
636
n ot viola t e t h e Alien a t ion P r oh ibit ion .
J oh n Ch a pot on , t h e
Assist a n t Tr ea su r y Secr et a r y for Ta x P olicy, r efer r ed t o a
“diver gen ce of opin ion ” a bou t wh et h er E RISA pr eem pt com m u n it y
637
pr oper t y cla im s t o pen sion ben efit s wit h ou t cit in g a n y decision s.
In con t r a st , Ms. O’Con n ell a dvoca t ed on J u n e 20, 1983, t h a t
Con gr ess set lim it s on wh ich dom est ic r ela t ion s or der s E RISA
pr eem pt ed in or der t o pr even t r esu lt s su ch a s t h e h oldin g u ph eld
by t h e Su pr em e Cou r t . Th e Cou r t , in t h e pr ior week, r efu sed t o
cer t ify a pet it ion t o r eview a Nin t h Cir cu it h oldin g t h a t a for m er
spou se cou ld pu r su e E RISA ben efit cla im s on t h e ba sis of t h e
t er m s of a DRO t h a t wer e n ot con sist en t wit h t h e pla n
638
docu m en t s.
H owever , Con gr ess focu sed m u ch of it s a t t en t ion on t h e
a bu ses set for t h in per son a l st or ies. F or exa m ple, Millicen t O.
Goode fou n d t h a t Bet h leh em St eel r efu sed t o com ply wit h a
639
divor ce decr ee a wa r din g h er h a lf of h er h u sba n d’s pen sion ,
wh ich Con g. F er r a r o descr ibed a s a n exa m ple of a sit u a t ion
640
a ddr essed by h er bill. An n Moss, t h e Dir ect or of t h e Wom en ’s
P en sion P r oject su m m a r ized su ch a n eed for legisla t ion a s follows:
Ma n y wom en wh o a r e a wa r ded pen sion sh a r es wou ld like t o r eceive
t h eir ben efit s dir ect ly for m t h e pla n a n d Millicen t Goode wa s a n
exa m ple of t h a t . Bu t in spit e of a n or der fr om t h e divor ce cou r t som e
pla n s h a ve r efu sed t o pa y a divor ced wife h er sh a r e of t h e ben efit s
on t h e gr ou n ds t h a t E RISA m a kes it im possible for t h em t o pa y
86 (1st Sess. 1983) (let t er fr om At t or n eys Ch a r les A. St or ke & Lou is T.
Ma zewa y on beh a lf of t h e West er n Con fer en ce of Tea m st er s P en sion Tr u st
F u n d) (est a blish in g clea r r u les for t r ea t m en t of dom est ic r ela t ion s im por t a n t
pa r t of pr oposed bills).
636. Poten tial Inequ ities Affectin g Wom en : H earin gs on S . 19 & S . 888
B efore th e S . Com m . On Fin . Part 1, 98t h Con g. 237 (1st Sess. 1983)
(st a t em en t of Ma r jor ie O’Con n ell).
637. Poten tial Inequ ities Affectin g Wom en : H earin gs on S . 19 & S . 888
B efore th e S . Com m . On Fin . Part 3, 98t h Con g. 13 (1st Sess. 1983) (st a t em en t
of J oh n Ch a pot on ).
638. Poten tial Inequ ities Affectin g Wom en : H earin gs on S . 19 & S . 888
B efore th e S . Com m . on Fin . Part 1,98t h Con g. 198 (1st Ses s. 1983) (st a t em en t
of Ma r jor ie O’Con n ell). Th e R eyes decision m en t ion ed wit h ou t cit a t ion wa s
Bd. of Tr u st ees of Ca r pen t er s P en sion Tr u st F u n d F or N. Ca lifor n ia v. Reyes,
688 F .2d 671, 673 (9t h Cir . 1982), cer t . den ied, 462 U.S. 1120 (J u n e 13, 1983)
(t h e den ia l of cer t ior a r i m a y h a ve occu r r ed beca u se of t h e res ju d icata ba sis for
t h e decision ).
639. Wom en ’s Pen sion E qu ity: H earin g B efore th e H . Com m . on Agin g, 98t h
Con g. 20-22 (1st Sess. 1983) (st a t em en t of Millicen t O. Goode) (expla in in g h ow
t h e pla n wa s willin g t o m a ke su ppor t pa ym en t s bu t n ot pr oper t y pa ym en t s
beca u se t h e IRS h a d on ly a ppr oved t h e for m er for t a x-qu a lifica t ion pu r poses,
wh ich do n ot a ffect E RISA plan obliga t ion s).
640. Wom en ’s Pen sion E qu ity: H earin g B efore th e H . Com m . on Agin g, H .R
Com m . P u b. No. 98-401, a t 39, 98t h Con g. 39 (1st Sess. 1983) (st a t em en t of
Con g. Ger a ldin e F er r a r o).
256
T h e J oh n M arsh all L aw R eview
[47:145
ben efit s t o a n yon e ot h er t h a n t h e pen sion er h im self. T h e cou rts
alw ays ru les again st th e plan s, sayin g th at Con gress m ean t to protect
pen sion ers from cred itors, n ot sh ield th em from th eir fam ily
respon sibilities. Bu t u n t il t h is r u le is cla r ified in F eder a l la w, t h er e
will be divor ced wom en , like Mr s. Goode, wh o will h a ve t o go ba ck t o
cou r t , if t h ey ca n a ffor d it t o m a ke pla n s t o com ply wit h St a t e cou r t
641
or der s.
It is n ot clea r if t h e issu e wa s t h e fa ilu r e t o follow exist in g
la w. If so, t h e solu t ion m a y n ot h a ve been a n a ddit ion a l la w, bu t
r a t h er im pr oved edu ca t ion a bou t t h e la w. Nor is it clea r wh y, if
t h e la w pr ovides for defer en ce t o st a t e dom est ic r ela t ion s la w,
E RISA sh ou ld h a ve been ch a n ged t o lim it t h e kin d of dom est ic
r ela t ion s or der s t h a t E RISA does n ot pr eem pt , a s in ea ch of t h e
642
pr oposa ls.
Mr s. Goode’s sit u a t ion a lso su ggest s t h a t t h e
difficu lt y wa s n ot t h e E RISA r u les bu t t h e t a x-qu a lifica t ion r u les,
wh ich a t t h a t t im e did n ot explicit ly per m it pen si on pa ym en t s t o a
for m er spou se for m a r it a l pr oper t y r igh t s in a pen sion . P er h a ps,
t a x-qu a lifica t ion ch a n ges cou ld h a ve r esolved m a n y of t h e
643
sit u a t ion s.
Th e st a t u t or y la n gu a ge of RE ACT, u n lik e t h e 1984
Con gr ession a l com m it t ee r epor t s wh ich a ccom pa n ied t h e
legisla t ion , sh ows a r ecogn it ion of t h e 1984 st a t e of t h e la w wit h
r espect t o t h e effect of dom est ic r ela t ion s or der s on E RISA P la n s,
644
a n d a clea r in t en t ion t o ch a n ge t h e st a t e of la w pr ospect ively.
As
discu ssed in Feu er’s E R IS A M yth s t h er e is on ly on e r a t ion a l
expla n a t ion for t h e sign ifica n ce of t h e RE ACT a ddit ion of t h e
followin g exclu sion fr om t h e E RISA Gen er a l P r eem pt ion Ru le:
(7) Su bsect ion (a ) sh a ll n ot a pply t o qua lified dom est ic r ela t ion s
641. Wom en ’s Pen sion E qu ity: H earin g B efore th e H . Com m . on Agin g, 98t h
Con g. 64 (1st Sess. 1983) (st a t em en t of An n Moss), H .R Com m . P u b. No 98 -401
a t 62, 64 (em ph a sis a dded). S ee also Poten tial In equ ities Affectin g Wom en:
H earin gs on S . 19 & S . 888, Befor e t h e S. Com m . On F in . P a r t 2, S. H RG . 98313 P a r t 2, 98t h Con g. a t 106, 113-14 (1st Sess. 1983) (pr epa r ed st a t em en t of
J u dit h Avn er on beh a lf of NOW Lega l Defen se a n d E du ca t ion ) (spea kin g t o
t h e n eed for legisla t ive cla r ifica t ion pr eem pt ion beca u se con fu sion st ill exist s
despit e m ost cou r t s fin din g n o pr eem pt ion issu e).
642. S ee Wom en ’s Pension E qu ity: H earin g before th e H . Com m . on Agin g,
H .R Com m . P u b. No 98-401 a t 82-83 (1st sess. 1983) (discu ssion bet ween
Con g. Olym pia Sn owe a n d An n Moss) (discu ssin g wh et h er it wa s a dvisa ble t o
h a ve com plet e E RISA defer en ce t o st a t e dom est ic r ela t ion s or der or t o
est a blish E RISA r u les for dividin g pen s ion ben efit s on divor ce sim ila r t o t h ose
for civil ser vice pen sion s).
643. S ee Th e P r oposed Ret ir em en t E qu it y Act of 1983, S. 19, § 5 a t 6-14 8,
98t h Con g. (1st Sess. 1983) (disr ega r din g t h e E RISA E xpr ess P r eem pt ion a n d
a ddr essin g on ly t h e t a x qu a lifica t ion a n d E RISA issu es a ssocia t ed wit h t h e
Alien a t ion P r oh ibit ion , bu t n ot t h e t a x-qu a lifica t ion r equ ir em en t t h a t pla n s
follow pla n docu m en t s, discu ssed su pra).
644. S ee Feu er’s E R IS A M yth s, su pra n ot e 25, a t 711-12 (expla in in g
pr ovision s of RE ACT t o sh ow t h a t RE ACT did n ot a dver sely a ffect a n y pr eRE ACT dom est ic r ela t ion s or der s).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
or der s (wit h in t h e m ea n in g of sect ion 206(d)(3)(B)(I)). . . .
257
645
Con gr ess wa s n ot m er ely r ever sin g t h e S u p Ct. Cam pa
h oldin g a bou t t h e effect iven ess of dom est ic r ela t ion s or der s
seek in g t o gover n pen sion pla n ben efit s. Ra t h er , Con gr ess wa s
r epu dia t in g t h e Cou r t ’s u n der lyin g pr esu m pt ion t h a t E RISA did
n ot pr eem pt dom est ic r ela t ion s or der s. In pa r t icu la r , RE ACT
cla r ified t h a t E RISA pr eem pt ed a ll dom est ic r ela t ion s or der s t h a t
646
wer e n ot QDROs.
Un der t h is r ea son in g, st a t e cou r t s la ck t h e
a u t h or it y t o dir ect E RISA pla n s or t h eir fidu cia r ies t o do a n yt h in g
ot h er t h a n : (1) det er m in e wh et h er t h e or der is a QDRO; or (2)
follow t h e t er m s of a n or der t h a t is det er m in ed t o be a QDRO.
St a t e cou r t s h a ve t h is lim it ed a u t h or it y u n der t h e E RISA
647
pr ovision s per m it t in g t h em t o en for ce or cla r ify ben efit r igh t s.
Th u s, t h e S u p Ct. Cam p h oldin g t h a t st a t e cou r t s wer e per m it t ed
t o join E RISA pla n s t o dom est ic r ela t ion s pr oceedin gs, wou ld be
im plicit ly pr eem pt ed except t o t h e ext en t t h e cou r t is decidin g
wh et h er a n or der is a QDRO or is en for cin g a QDRO. H owever
beca u se t h er e is n o RE ACT pr ovision or ot h er E RISA pr ovision
a ddr essin g t h is issu e, on e m a y a r gu e t h a t t h e S u p Ct. Cam p
join der h oldin g m a y r em a in via ble a n d per m it a ddit ion a l r ela t ed
st a t e cou r t in t er ven t ion s.
Th e QDRO defin it ion is a pplica ble on ly t o Spou sa l Su r vivor
Ben efit P la n s. Th u s, t h e pr eem pt ion exclu sion for QDROs does
n ot a pply t o a dom est ic r ela t ion s or der t o t h e ext en t t h e or der
seek s t o gover n a n E RISA pla n ot h er t h a n a Spou sa l Su r vivor
Ben efit P la n , su ch a s a life in su r a n ce pla n . Th e 1986 en a ct m en t of
t h e RE ACT t ech n ica l cor r ect ion s, wh ich in clu ded t h e a ddit ion of
E RISA § 206(d)(3)(L), 29 U.S.C. § 1056(d)(3)(L), a n d a sim ila r
a ddit ion t o t h e cor r espon din g Code t a x qu a lifica t ion pr ovision ,
con fir m s t h a t Spou sa l Su r vivor Ben efit P la n s a r e t h e on ly E RISA
pla n s t h a t m u st follow dom est ic r ela t ion s or der s t h a t sa t isfy
648
QDRO-like r u les.
Con gr ess expr essly in t en ded t h a t t h e t wo
a dded pr ovision s “cla r if[y] t h a t t h e qu a lified dom est ic r ela t ion s
pr ovision s do n ot a pply t o a n y pla n t o wh ich t h e a ssign m en t or
649
a lien a t ion r est r ict ion s [t h e Alien a t ion P r oh ibit ion ] do n ot a pply.”
A m or e gen er a l discu ssion of t h e con t r a r y a r gu m en t s u sed by
m a n y cou r t s, a ll of wh ich r est on t h e belief t h a t Con gr ess sh ou ld
645. E RISA § 514(b(7), 29 U.S.C. § 1144(b)(7).
646. Feu er’s E R IS A M yth s, supra n ot e 25, a t 710-12.
647. E RISA §§ 502(a )(1)(B), (e)(1), 29 U.S.C. §§ 1132(a )(1)(B), (e)(1). S ee
gen erally Feu er’s E R IS A M yth s, su pra n ot e 25, a t 762-63 (discu ssin g t h e
a u t h or it y of st a t e cou r t s wit h r espect t o a ct ion s con cer n in g E RISA ben efit s
a n d pla n s).
648. Ta x Refor m Act of 1986, P u b. L. No. 99-514, § 1898(c)(4), 100 St a t .
2085, 2953 (1986).
649. S. R E P . N O . 99-313, a t 1106 (1986). Th e fin a l bill m a de n o ch a n ge t o
t h is sect ion ot h er t h a n ch a n gin g t h e sect ion n u m ber fr om 1897(c) t o 1898(c).
Th u s, t h e expla n a t ion r em a in ed u n ch a n ged. H .R. R E P . N O . 99-514, a t II-857,
reprin ted in 1986 U.S.C.C.A.N. 4075, 4941.
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T h e J oh n M arsh all L aw R eview
[47:145
h a ve n ot lim it ed t h e spou sa l su r vivor pr ovision s t o Spou sa l
650
Su r vivor Ben efit P la n s, is a va ila ble a t Feu er’s E R IS A M yth s.
C. Con gress Im poses T w o Distin ct M an d ates for S pou sal S u rvivor
B en efit Plan s: (1) A S pou sal S u rvivor B en efit M an d ate, an d (2)
T h e S pou sal S u rvivor QDR O B en efit M an d ate
RE ACT im poses t wo dist in ct ben efit t er m s m a n da t e s.
F ir st , Spou sa l Su r vivor Ben efit P la n s m u st pr ovide su r vivor
ben efit s t o a pa r t icipa n t ’s spou se, wh o t h er eby becom es a pla n
651
ben eficia r y.
Th ese ben efit s m a y be wa ived by a pa r t icipa n t on ly
wit h t h e con sen t of t h e pa r t icipa n t ’s spou se, if a n y, wit n essed by a
652
t h ir d pa r t y.
Th is m a n da t e is h er ein a ft er design a t ed a s t h e
653
Spou sa l Su r vivor Ben efit Ma n da t e.
In t h e in it ia l ver sion of
E RISA, spou sa l su r vivor ben efit s wer e n ot r equ ir ed for a s la r ge a
set of pla n s a n d cou ld be wa ived wit h ou t t h e con sen t of t h e
654
pa r t icipa n t ’s spou se.
N o ch a n ge wa s m a de t o t h e pr eem pt ion
pr ovision s. Th e on ly E RISA pr ovision t h a t wa s ch a n ged wa s t h e
in it ia l spou sa l su r vivor ben efit pr ovision , in wh ich t h e m a n da t e
r epla ced t h e pr ior pr ovision s.
Secon d, Spou sa l Su r vivor Ben efit P la n s m u st pr ovide
dom est ic r ela t ion s ben efit s t o a pa r t icipa n t ’s spou se, for m er
spou se, ch ild, or ot h er depen den t , wh o t h er eby becom es a pla n
ben eficia r y, if a n d on ly if, t h e r equ ir em en t s for a QDRO a r e
655
sa t isfied. Th is m a n da t e is h er ein a ft er design a t ed a s t h e Spou sa l
Su r vivor QDRO Ben efit Ma n da t e. Th e in it ia l ver sion of E RISA
m a de n o expr ess pr ovision for su ch ben efit s, bu t t h e cou r t s h a d
fou n d st a t e dom est ic r ela t ion s la w con t r olled t h ese ben efit s a s in
656
S u p Ct. Cam pa a n d it s pr ogen y.
Con gr ess declin ed t o ch a n ge
on ly t h e t a x la w t o pr even t a n y a dver se t a x con sequ en ces t h a t
cou ld a r ise fr om per m it t in g dom est ic r ela t ion s la w t o con t r ol
E RISA ben efit s.
In st ea d, RE ACT ch a n ged t h e pr eem pt ion
pr ovision s t o lim it t h e con dit ion s u n der wh ich st a t e dom est ic
r ela t ion s la w wa s con t r ollin g. Th e on ly ot h er E RISA pr ovision
t h a t wa s ch a n ged wa s t h e on e con t a in in g t h e Alien a t ion
650. Feu er’s E R IS A M yth s, supra n ot e 25, a t 741-45.
651. P u b. L. No. 98-397 § 103, 98 St a t . 1426, 1429-33 (1984).
652. E RISA § 205(c)(2), 29 U.S.C. § 1055(c)(2).
653. S ee gen erally Feu er’s E R IS A M yth s, su pra n ot e 25, a t 707-09
(descr ibin g h ow t h e m a n da t e per m it s spou sa l su r vivor ben efit s t o be wa ived).
654. E m ployee Ret ir em en t In com e Secu r it y Act of 1974, P u b. L. N o. 93 -406,
§ 205, 88 St a t . 829, 862-864. A sim ila r pr ovision wa s m a de pa r t of t h e t a x
qu a lifica t ion r u les a t I.R.C. § 401(a )(11). P u b. L. No. 93-406, § 1021(a ), 88 St a t .
829, 935-37. Qu a lifica t ion r equ ir em en t s, h owever , do n ot pr ovide pa r t icipa n t s
or ben eficia r ies wit h su bst a n t ive ben efit r igh t s u n less t h e pla n t er m s in clu de
t h ose r equ ir em en t s.
655. P u b. L. No. 98-397 § 104, 98 St a t . 1426, 1433-36 (1984).
656. S ee gen erally Feu er’s E R IS A M yth s, su pra n ot e 25, a t 694-96
(expla in in g h ow t h e cou r t s con sist en t ly h eld t h a t E RISA did n ot pr eem pt
dom est ic r ela t ion s or der s a ft er S u p Ct. Cam pa).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
259
P r oh ibit ion t o wh ich t h e Spou sa l Su r vivor QDRO Ben efit Ma n da t e
wa s a dded.
D. Con gress Im poses a M ed ical Ch ild S u pport M an d ate
In 1993, a st a t u t e wa s en a ct ed t o pr ovide t h a t dom est ic
r ela t ion s or der s m a y be u sed t o com pel a n E RISA h ea lt h
r eim bu r sem en t pla n t o pr ovide cover a ge t o t h e pa r t icipa n t ’s ch ild
657
if su ch cover a ge is ot h er wise a va ila ble fr om t h e pla n .
Or der s
fu lfillin g t h e st a t u t or y con dit ion s a r e qu a lified m edica l ch ild
su ppor t or der s, a n d a r e t r ea t ed a s t h e t er m s of t h e a ssocia t ed
E RISA h ea lt h r eim bu r sem en t pla n t o wh ich t h e or der r efer s, a n d
658
t h u s m u st be followed by su ch pla n .
Or der s a t t em pt in g t o
pr ovide ben efit s t o a pa r t icipa n t ’s for m er spou se do n ot m eet t h ese
con dit ion s. Th u s, t h ey m a y be disr ega r ded by E RISA pla n s if n ot
ot h er wise a u t h or ized by t h e pla n ’s t er m s.
E . Con gress Ad d resses th e Preem ption of S tate L aw s Govern in g
E m ployee Con tribu tion s to Pen sion Plan s
F in a lly, t h e P en sion P r ot ect ion Act of 2006 en cou r a ged
pa r t icipa t ion in 401(k) pla n s t h r ou gh a u t om a t ic em ployee
659
con t r ibu t ion pr ovision s.
If cer t a in en u m er a t ed con dit ion s a r e
m et , t h a n a n a r r a n gem en t for su ch a u t om a t ic em ployee
con t r ibu t ion s t o pen sion pla n s is su bject t o t h e E RISA E xpr ess
660
P r eem pt ion .
Th e r epor t by t h e J oin t Com m it t ee on Ta xa t ion did
n ot expla in t h e pu r pose of t h e pr ovision , a lt h ou gh t h e r epor t
st a t ed, “n o in fer en ce is in t en ded a s t o t h e effect of con flict in g St a t e
r egu la t ion s pr ior t o da t e of en a ct m en t [t h e effect ive da t e of t h e
661
pr ovision ].” Th e r epor t a lso st a t ed, “[t ]h e St a t e pr eem pt ion r u les
u n der t h e bill a r e n ot lim it ed t o a r r a n gem en t s t h a t m e et t h e
662
r equ ir em en t s of a qu a lified en r ollm en t fea t u r e.”
H owever ,
657. E RISA § 514(b)(7) (a m en ded by Om n ibu s Bu dget Recon cilia t ion Act of
1993, P u b. L. No. 103-66 Tit le IV, Su bt it le D, § 4301(c)(4)(A), 107 St a t . 312,
377 (1993)).
658. E RISA § 609(a )(2)(A), 29 U.S.C. § 1169(a )(2)(A).
659. P en sion P r ot ect ion Act of 2006, P u b. L. No. 109-280 § 902, 120 St a t .
780, 1033-39 (2006).
660. E RISA § 514(e), 29 U.S.C. § 1144(e) wa s a dded t o E RISA by t h e
P en sion P r ot ect ion Act of 2006, P u b. L. No. 109-280 § 902(f)(1), 120 St a t . 780,
1039 (2006).
661. T ech n ical E xplan ation of H.R . 4, th e ‘Pension Protection Act of 2006,’
as Passed by th e H ou se on J u ly 28, 2006, an d as Con sid ered by th e S en ate on
Au gu st 3, 2006, J . C OMM . R E P . T AX. No. 38-06, 230 (2006) [h er ein a ft er
“T ech n ical E xplan ation ”]. S ee also U.S. Dep’t of La bor Advisor y Opin ion 200802A (F eb. 8, 2008) [h er ein a ft er “Opin ion 2008 -02A”] (h oldin g E RISA
pr eem pt ed a Ken t u cky la w a pplica ble t o E RISA welfa r e pla n s; su ch pla n s m a y
n ot h a ve a st a t u t or y a u t om a t ic con t r ibu t ion a r r a n gem en t ). On t h e ot h er
h a n d, a ft er t h e pr ovision ’s effect ive da t e, E RISA does n t o pr eem pt st a t e la ws
t h a t gover n em ployee con t r ibu t ion a r r a n a gem et n s wh ich do n ot m eet t h e
st a t u t or y r equ ir em en t s. Id .
662. Opin ion 2008-02A, su pra n ot e 661; T ech n ical E xplan ation , su pra n ot e
260
T h e J oh n M arsh all L aw R eview
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n eit h er t h e r epor t n or t h e st a t u t e defin es t h e ph r a se “a qu a lified
en r ollm en t fea t u r e,” wh ich m a y be t h e n ot ice r equ ir em en t s
a pplica ble t o t h e cover ed a u t om a t ic em ployee con t r ibu t ion
663
a r r a n gem en t s.
Th e pr eem pt ion pr ovision pr esu m a bly a ddr essed
a con cer n t h a t a u t om a t ic em ployee con t r ibu t ion a r r a n gem en t s
wou ld viola t e st a t e r u les r ega r din g per m issible wa ge
664
wit h h oldin gs.
Th is is a n odd con cer n beca u se E RISA a ppea r s t o
pr eem pt st a t e la ws gover n in g a m ou n t s wit h h eld fr om a n
em ployee’s com pen sa t ion for pla n con t r ibu t ion s beca u se DOL
r egu la t ion s t r ea t t h ose a m ou n t s a s pla n a sset s “a s of t h e ea r liest
da t e on wh ich su ch con t r ibu t ion s ca n r ea son a bly be segr ega t ed
665
fr om t h e em ployer ’s gen er a l a sset s.”
XI.
TH E STATE LAWS F OR WH ICH TH E RE IS AN AP P ARE NT
CONSE NSUS TH AT E RISA P RE E MP TS TH E M, AND TH E
STATE LAWS F OR WH ICH SUCH A CON SE NSUS IS
LACKING
Th er e is a n a ppa r en t con sen su s t h a t , a s discu ssed in fra,
ba r r in g a n explicit exclu sion fr om t h e E RISA E xpr ess P r eem pt ion
Ru le, E RISA pr eem pt s st a t e la ws t h a t im pose r epor t in g a n d
disclosu r e m a n da t es, fu n din g m a n da t es, fidu cia r y m a n da t es, or a
ben efit t er m s m a n da t e. Addit ion a lly, ba r r in g on e of t h e explicit
exclu sion s, E RISA pr eem pt s st a t e la ws t h a t su pplem en t , en h a n ce,
666
or dim in ish E RISA en for cem en t m ech a n ism s.
E a ch of t h ese
m a t t er s m a y be su bsu m ed u n der t h e r u br ic of pr ot ect in g t h e r igh t s
of em ployee ben efit s u n der a pla n ’s t er m s. E a ch of t h e m a t t er s
ot h er t h a n t h e en for cem en t pr ovision s wa s in clu ded in t h e
pr eem pt ion pr ovision s of bot h t h e Sen a t e a n d H ou se pr ecu r sor s of
E RISA t h a t t h e Con fer en ce Com m it t ee con sider ed. Th er e seem s
t o be a con sen su s t h a t t h e explicit exclu sion s a r e in t er pr et ed
n a r r owly in or der t o pr even t t h em fr om becom in g t h e gen er a l r u le.
Upon fu r t h er r eflect ion t h er e is a con sen su s, a s discu ssed
in fra, t h a t t h er e a r e a lso im plicit exclu sion s fr om t h e E RISA
E xpr ess P r eem pt ion Ru le t h a t r esu lt fr om t h e st r u ct u r e of E RISA.
F or exa m ple, t h er e is con sen su s t h a t t h e st a t es m a y r egu la t e t h e
661, a t 230.
663. E RISA § 514(e)(3), 29 U.S.C. § 1144(e)(3).
664. S ee e.g., E MP LOYE E B E NE F ITS L AW , su pra n ot e 13, a t 6-19 n .131
(a sser t in g t h a t t h e a m en dm en t a ddr essed a con cer n t h a t E RISA did n ot
pr eem pt st a t e la ws gover n in g a u t om a t ic em ployee con t r ibu t ion s t o E RISA
pla n s).
665. 29 C.F .R. § 2510.3-102.
666. As discu ssed su pra, t h er e is a qu est ion a bou t t h e ext en t t o wh ich
E RISA pla n s m a y be join ed t o dom est ic r ela t ion s pr oceedin gs a s h eld by t h e
Su pr em e Cou r t in In re Cam pa, 152 Ca l. Rpt r . a t 362; Carpen ters Pension
T ru st Fu n d , 444 U.S. a t 1028 (1980) (dism issed for wa n t of a su bst a n t ia l
feder a l qu est ion ).
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261
pr ovision of h ea lt h ca r e. Un like t h e st a t e r egu la t ion of in su r a n ce
la w, t h er e is n o deem er except ion for pla n s a ct in g a s h ea lt h ca r e
pr ovider s. Th er e is division a bou t t h e ext en t of t h is im plicit
exclu sion , a n d for t h a t of t h e im plicit exclu sion for t a xa t ion of
E RISA pla n s. On t h e ot h er h a n d, t h e decision of Con gr ess in
RE ACT, discu ssed su pr a , t o lim it t h e pr eviou sly cou r t a ppr oved
exclu sion for dom est ic r ela t ion s or der s t o t h ose t h a t a r e QDROs
st r on gly su ggest s t h a t t h e im plicit exclu sion s, like t h e explicit
exclu sion s, a r e qu it e lim it ed in n u m ber a n d ext en t .
H owever , t h er e is n o con sen su s a bou t pr eem pt ion r esu lt in g
fr om st a t e la ws a ffect in g t h e m ost fu n da m en t a l pr ot ect ion
a va ila ble t o ever y E RISA pla n pa r t icipa n t a n d ben eficia r y, viz.,
t h e t er m s of t h e E RISA pla n t o det er m in e wh o h a s t h e r igh t t o a
ben efit a n d t o exer cise a ben efit r igh t . Th er e is a lso disa gr eem en t
a bou t t h e ext en t , if a n y, t o wh ich E RISA pr eem pt s st a t e la ws
in dir ect ly a ffect in g ben efit r igh t s, bu t r efer t o E RISA pla n s, or
im pose a dm in ist r a t ion or cost bu r den s on E RISA pla n s. All a r e
discu ssed, t oget h er wit h t h e ext en t of t h e pr eem pt ion of t h e five
st a t e la ws t h a t a r e t h e su bject of t h is a r t icle, in fra. In a ll ca ses,
t h e decisive fa ct or wou ld a ppea r t o be wh et h er t h e st a t e la w h a s a
n on -t en u ou s effect on a n E RISA ben efit pr ot ect ion .
XII.
TRILOGY OF F OLLY — SUP RE ME COURT DISRE GARDS
(1) TH E E RISA RE QUIRE ME N T TH AT P LAN TE RMS
DE TE RMINE BE NE F IT RIGH TS, AND (2) TH E E RISA
RULE TH AT E RISA DOE S NOT P RE E MP T A STATE LAW
WH ICH AF F E CTS E RISA BE NE F IT P ROTE CTIONS IN A
NON-TE NUOUS MANNE R
Th r ee Su pr em e Cou r t h oldin gs (t wo of wh ich wer e pa r t of a
sin gle decision ) in t h e la t e 1980s la id t h e fou n da t ion for la t er
con fu sion a bou t t h e ext en t of E RISA pr eem pt ion .
E a ch
disr ega r ded t h e key fea t u r e of E RISA pla n s, n a m el y t h a t t h ey a r e
em ployee ben efit pla n s, a n d t h e E RISA dom in a t in g gen er a l
pu r pose of pr ot ect in g pla n pa r t icipa n t s a n d ben eficia r ies. In t h ose
ca ses, t h e Cou r t disr ega r ded t h e pr in ciple t h a t E RISA pr eem pt s
st a t e la ws, su ch a s ben efit t er m s m a n da t es, t h a t m a y be
in con sist en t wit h pla n t er m s.
F ir st , in 1987, a closely divided Cou r t h eld in F or t H a lifa x
667
P a ck in g Co, In c. v. Coyn e, t h a t a st a t e m a n da t ed sever a n ce
668
ben efit s a r r a n gem en t did n ot con st it u t e a n E RISA pla n .
Th e
Cou r t con clu ded t h a t E RISA did n ot pr eem pt t h e st a t e la w. In t h e
cou r se of r ea ch in g t h is h oldin g, t h e Fort H alifax Cou r t descr ibed
667. F or t H a lifa x P a ckin g Co, In c. v. Coyn e, 482 U.S. 1 (1987).
668. Id . a t 6.
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T h e J oh n M arsh all L aw R eview
[47:145
t h e pu r pose of t h e E RISA E xpr ess P r eem pt ion a s pr even t in g
m u lt iple st a t e la ws fr om im posin g a dm in ist r a t ive bu r den s on
em ployee ben efit pla n s. Th is m a y som et im es be a con sequ en ce of
E RISA pr eem pt ion . H owever , t h is is n ot it s pu r pose. Th e pu r pose
of E RISA pr eem pt ion is t o a ssu r e t h a t st a t e la ws do n ot
su pplem en t , en h a n ce, or dim in ish a n y of t h e E RISA ben efit
pr ot ect ion s of pla n pa r t icipa n t s a n d ben eficia r ies, in clu din g t h e
m a n da t e t h a t ben efit r igh t s a r e det er m in ed solely by pla n t er m s.
Never t h eless, t h e Su pr em e Cou r t a lm ost t wen t y yea r s la t er
sim ila r ly con fu sed E RISA’s a dm in ist r a t ive con sequ en ces wit h it s
pu r poses:
Th e pu r pose of E RISA is t o pr ovide a u n ifor m r egu la t or y r egim e
over em ployee ben efit pla n s.
To t h is en d, E RISA in clu des
expa n sive pr e-em pt ion pr ovision s, see E RISA § 514, 29 U.S.C.
§ 1144, which a r e in t en ded t o en su r e t h a t em ployee ben efit pla n
669
r egu la t ion wou ld be “exclu sively a feder a l con cer n .”
Secon d, in 1988 t h e Cou r t u n a n im ou sly h eld in M ack ey, v.
670
La n ier Collect ion , t h a t E RISA pr eem pt ed a n y st a t u t e r efer r in g
t o E RISA pla n s wit h ou t r ega r d t o t h e t en u ou sn ess of t h e st a t u t e’s
671
effect s on t h e pla n s.
Un der t h is pr eem pt ion by r efer en ce r u le,
t h e Cou r t h eld t h a t E RISA pr eem pt ed t h e exem pt ion of a st a t e la w
of em ployee ben efit pla n s fr om t h e la w’s effect s even t h ou gh su ch
exem pt ion m ea n s t h a t t h e la w wou ld n ot a ffect E RISA pla n s.
Th ir d, a closely divided Cou r t in M ack ey decided t h a t E RISA
does n ot pr eem pt a st a t e la w viola t in g n o E RISA pr ovision , ot h er
t h a n t h e r equ ir em en t t h a t for a ll E RISA pla n s, pla n ben efit s a r e
672
det er m in ed by pla n t er m s.
Un der t h is pr eem pt ion by la ck of
E RISA pr oh ibit ion r u le, t h e Cou r t p er m it t ed st a t e la w
ga r n ish m en t s of welfa r e pla n ben efit s, wit h ou t con sider in g t h e
pla n t er m s or t h e ext en t of t h e a dm in ist r a t ive bu r den , im posed on
673
t h e pla n by t h e st a t e la w.
Th e Cou r t h eld, a s it h a d in S u p Ct.
Cam pa, a s discu ssed, in fra, wit h ou t a n opin ion , t h a t E RISA ga ve
pa r t icipa n t s n o r igh t t o r eceive t h eir ben efit s fr om t h e pla n .
Mor eover , a s discu ssed, in fra, t h e M ack ey Cou r t im plicit ly
pr esen t ed a sim ple pr eem pt ion r u le. E RISA does n ot pr eem pt
gen er a lly a pplica ble st a t e la ws bu t pr eem pt s st a t e la ws t h a t
r efer en ce E RISA. Th e Cou r t la t er disa vowed su ch a gen er a lly
674
a pplica ble r u le in E gelh off v. E gelh off discu ssed, in fra.
Th er e wa s a fou r t h foolish st a t em en t , wh ich wa s dict u m in
M ack ey II, t h a t t h e Alien a t ion P r oh ibit ion “pr oh ibit s t h e u se of
669. Aet n a H ea lt h , In c. v. Da vila , 542 U.S. 200 a t 208 (2004) (cit a t ion s
om it t ed) (h oldin g E RISA pr eem pt ed Texa s st a t u t e im posin g du t y t o exer cise
or din a r y ca r e in m edica l pla n cover a ge decis ion ).
670. M ack ey, 486 U.S. 825 (1988).
671. Id a t 830.
672. Id . a t 841.
673. Id . a t 831-41.
674. E gelh off v. E gelh off, 532 US 141 (2001).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
263
st a t e en for cem en t m ech a n ism s on ly in sofa r a s t h ey pr even t t h ose
675
ben efit s fr om bein g pa id t o pla n pa r t icipa n t s.”
Th is dict u m is
discu ssed in t h e discu ssion of t h e pr ot ect ion pr ovided by t h e
Alien a t ion P r oh ibit ion for dist r ibu t ed ben efit s, in fra.
A. S u prem e Cou rt H old s T h at B ecau se it Asserted T h at a S tate
M an d ated S everan ce Policy R equ ires N o On goin g
Ad m in istrative S ch em e, th e Policy is n ot an E R IS A Plan , T h u s
E R IS A Does n ot Preem pt th e B en efit T erm s M an d ate of th e
Policy
Th e Fort H alifax decision , t h a t t h er e wa s n o pr eem pt ion of
t h e st a t e la w, wa s ba sed on t h e Cou r t ’s con clu sion t h a t t h e Ma in e
la w set t in g for t h a com plex sever a n ce policy did n ot con st it u t e a n
676
677
E RISA pla n .
Th u s, E RISA did n ot pr eem pt t h e la w.
Th e Fort
H alifax Cou r t ’s con clu sion r est ed on t h e in cor r ect a sser t ion t h a t
t h e Ma in e policy r equ ir ed n o a dm in ist r a t ive sch em e, wh ich wa s
678
descr ibed a s a pr er equ isit e for a n E RISA pla n .
Th e dissen t
cor r ect ly obser ved t h a t t h is a sser t ion a n d t h e Cou r t h oldin g wer e
a t odds wit h it s ea r lier h oldin g, wit h ou t a n opin ion , in Gilbert a n d
679
wit h E RISA, n eit h er of wh ich pr esen t ed su ch a r equ ir em en t .
Mor eover , t h e Ma in e policy r equ ir es a n a dm in ist r a t ive sch em e,
in clu din g pa yin g t h e ben efit s a n d m a in t a in in g t h e r equ isit e cla im s
r eview pr ocedu r e, t o a ssu r e com plia n ce w it h t h e com plex
eligibilit y a n d ben efit a m ou n t r u les of t h e r equ ir ed policy,
discu ssed in fra.
Th e Cou r t in Fort H alifax wa s con fr on t ed wit h a sever a n ce
pa ym en t policy, set for t h in a Ma in e st a t u t e, r a t h er t h a n in a n
em ployer docu m en t , r equ ir in g a n em ployer t h a t closes or r eloca t es
a fa cilit y wit h m or e t h a n 100 em ployees t o pa y sever a n ce t o
eligible em ployees of on e week of pa y for ea ch yea r of em ploym en t
680
a t t h e fa cilit y. An em ployee wa s n ot eligible for t h e ben efit if t h e
em ployee a ccept s em ploym en t a t t h e n ew fa cilit y or wa s n ot
681
em ployed for a t lea st t h r ee yea r s pr ior t o t h e t er m in a t ion .
Th e
Cou r t h eld t h a t t h er e wa s n o E RISA pla n beca u se t h e st a t u t e did
n ot r equ ir e “a n on goin g a dm in ist r a t ive pr ogr a m for pr ocessin g
682
cla im s a n d pa yin g ben efit s.”
675. M ack ey, 486 U.S. a t 836.
676. Fort H alifax, 482 U.S. a t 15-19.
677. Fort H alifax, 482 U.S. a t 19.
678. Id . a t 18.
679. Id . a t 23-26.
680. Id . a t 1-2.
681. Id . a t 2.
682. Id . a t 12. S ee also E MP LOYE E B E NE F ITS L AW , su pra n ot e 13, a t 11-911-10 (discu ssin g h ow t h e cou r t s h a ve u sed t h is cr it er ia t o det er m in e wh et h er
a n a r r a n gem en t is a n E RISA pla n ). B u t see Da kot a , Minn esot a . & E . R.R.
Cor p. v. Sch ieffer , 648 F .3d 935, 938 (8t h Cir . 2011) (discu ssin g wh et h er a on e
per son sever a n ce a r r a n gem en t con st it u t es a n E RISA pla n a n d fin din g t h e
a r r a n gem en t a t issu e did n ot r equ ir e a n on goin g a dm in ist r a t ive a r r a n gem en t ;
264
T h e J oh n M arsh all L aw R eview
[47:145
Th e Fort H alifax Cou r t bega n a n d con du ct ed it s a n a lysis in a
ver y odd fa sh ion . Ra t h er t h a n a sk in g wh ich cr it er ia det er m in es
a n E RISA pla n , it pu t t h e ca r t befor e t h e h or se a n d a sk ed wh ich
cr it er ia det er m in es wh et h er a pla n is su bject t o t h e E RISA
E xpr ess P r eem pt ion wit h ou t descr ibin g wh a t con st it u t es a n
683
E RISA pla n . Th e Cou r t r efer r ed in a foot n ot e t o Don ova n v.
684
Dillin gh a m (“Dillin gh am ”),
wh ich con sider ed t h e qu est ion of
wh en a n E RISA pla n beca m e effect ive, r a t h er t h a n wh a t
685
con st it u t es a n E RISA pla n , bu t is oft en cit ed for t h e defin it ion of
686
a n E RISA pla n . In pa r t icu la r , in Dillin gh am t h e cou r t con clu ded
t h a t a n E RISA pla n beca m e effect ive wh en “fr om t h e su r r ou n din g
cir cu m st a n ces a r ea son a ble per son ca n [fir st ] a scer t a in t h e
in t en ded ben efit s, a cla ss of ben eficia r ies, t h e sou r ce of fin a n cin g,
687
a n d pr ocedu r es for r eceivin g ben efit s.”
H owever , it wou ld h a ve seem ed a ppr opr ia t e for t h e Cou r t t o
u se a sligh t ly differ en t a ppr oa ch for defin in g a n E RISA pla n . F ive
t er m s a ppea r t o defin e a n em ployee ben efit pla n : (1) t h e in t en ded
pla n ben efit s; (2) t h e ben efit s t o wh ich ea ch pa r t icipa n t a n d
ben eficia r y will be en t it led; (3) h ow t h e ben efit s a r e fin a n ced; (4)
h ow ben efit s a r e det er m in ed a n d pa id; a n d (5) h ow ben efit cla im s
688
a r e m a de a n d r eviewed.
Th e dom in a t in g gen er a l pu r pose of
E RISA is t h e pr ot ect ion of pa r t icipa n t s a n d ben eficia r ies. Th u s, it
is r ea son a ble t o pr esu m e t h a t if ben efit s a r e E RISA ben efit s, su ch
t h u s, it wa s n ot a n E RISA pla n ); Ca n t r ell v. Br iggs & Veselka Co., 2013 U.S.
App. LE XIS 17922 (5t h Cir . Au g. 27, 2013) (h oldin g t h a t in dividu a l
em ploym en t a gr eem en t s pr ovidin g for sever a n ce pa ym en t s did n ot con st it u t e
a n E RISA pla n , bu t t h e m a jor it y a n d dissen t a bou t disa gr e ed h ow t o a pply t h e
E RISA pla n cr it er ia r equ ir in g “a n a dm in ist r a t ive sch em e t o m a ke on goin g
discr et ion a r y decision s ba sed on su bject ive cr it er ia ” even t h ou gh m ost E RISA
pen sion pla n s r equ ir e n o su ch discr et ion a r y decision s). Th e r elu ct a n ce of som e
cou r t s t o fin d a n on goin g a dm in ist r a t ive a r r a n gem en t a n d t h er eby give
cla im a n t s a ccess t o st a t e la w r elief is illu st r a t ed by Agu ir r e -Sa n t os v. P fizer
P h a r m a ceu t ica ls, LLC, 2013 U.S. Dist . LE XIS 151515 (D. P .R. Oct . 21, 2013)
(h oldin g a sever a n ce a r r a n gem en t n ot a n E RISA pla n beca u se “t h er e is
n ot h in g discr et ion a r y a bou t t h e t im in g, a m ou n t or for m of t h e pa ym en t ,”
a lt h ou gh on ly em ployees in volu n t a r ily t er m in a t ed for specified r ea son s
exclu din g for ca u se qu a lified for pa ym en t s, wh ich wer e n ot lu m p su m
pa ym en t s bu t cou ld ext en d t welve, t wen t y-six or fift y-t wo weeks).
683. Fort H alifax, a t 12, n .6.
684. Don ova n v. Dillin gh a m (“Dillingh am ”), 688 F .2d 1367 (11t h Cir . 1982).
685. S ee id a t 1374-75 (h oldin g t h a t su bscr ibin g em ployer s a n d u n ion s t o a
m u lt iple em ployer t r u st h a d est a blish ed E RISA h ea lt h ca r e r eim bu r sem en t
pla n s).
686. S ee, e.g., E MP LOYE E B E NE F ITS L AW , su pra n ot e 13, a t l1-5-11-8. S ee
also Cox ex r el. Cox v. Relia n ce St a n da r d Life In s. Co., 1:13 -CV-00104 AWI,
2013 U.S. Dist . LE XIS 70601 a t *7-*19 (E .D. Ca l. Ma y 17, 2013) (h oldin g
su pplem en t a l fea t u r es of gr ou p life in su r a n ce pla n wa s a n E RISA pla n , a n d
pr ovidin g a good discu ssion of t h e Dillin gh a m cr it er ia a n d decision s r elyin g on
t h e cr it er ia ).
687. Dillin gh am , 688 F .2d a t 1372-73.
688. S ee id . at 1373 (descr ibin g t h e secon d t er m a s t h e ben eficia r ies a n d
con fla t in g t h e fin a l t wo t er m s).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
265
a s t h e sever a n ce ben efit s a t issu e, t h ey a r e der ived fr om a n E RISA
pla n . Th er efor e, it a ppea r s t h a t a n E RISA pla n is a n a r r a n gem en t
wit h t h e five r equ ir ed pla n t er m s in wh ich a n em ployer , em ployee
or ga n iza t ion , bot h , or t h eir or t h eir a gen t s (for sim plicit y we will
r efer on ly t h e em ployer ) pla y m or e t h a n a d e m in im is r ole beyon d
pa yin g sa la r y, wa ges, a n d sim ila r com pen sa t ion , wit h r espect t o
t h e fin a l t h r ee pla n t er m s, i.e., t h e fin a n cin g of E RISA ben efit s,
t h e det er m in a t ion a n d pa ym en t of t h e ben efit s, or t h e pr ocessin g
of cla im s. Th is is, a s discu ssed in fra, essen t ia lly h ow t h e DOL
r egu la t ion s defin e a n E RISA pla n . Th is a ppr oa ch is con sist en t
wit h t h e E RISA dom in a t in g gen er a l pu r pose of pr ot ect in g
em ployee ben efit pla n pa r t icipa n t s a n d ben efit s, in clu din g t h e
r igh t t o be pa id pr om ised em ployee ben efit s, wh ile r ecogn izin g
t h a t E RISA pla ys n o r ole in a ssu r in g t h e pa ym en t of sa la r y,
wa ges, a n d sim ila r com pen sa t ion .
Th e Cou r t in Fort H alifax a sser t ed t h a t t h e E RISA E xpr ess
P r eem pt ion a pplies t o a st a t e la w t h a t r ela t es t o “em ploy ee ben efit
pla n s,” r a t h er t h a n t o ben efit s so t h a t t h e Ma in e la w is n ot
689
pr eem pt ed beca u se it r equ ir es a ben efit r a t h er t h a n a pla n .
Th is
is a dist in ct ion wit h ou t a differ en ce. Ben efit s m u st be pa r t of a
ben efit pla n t h a t det er m in es h ow t h e ben efit s a r e fin a n ced, a n d
wh o is en t it led t o pla n ben efit s. Th is dist r a ct ed t h e Cou r t fr om
t h e k ey qu est ion . If t h e ben efit s a r e E RISA ben efit s, su ch a s t h e
sever a n ce ben efit s a t issu e, wh y is t h er e n ot a n em ployee ben efit
pla n ? Th u s, t h e issu e is a s discu ssed, in fra, wh et h er t h e em ployer
in volvem en t exceeds a d e m in im is r ole, in wh ich ca se t h er e is a n
E RISA pla n . Th e em ployer in Fort H alifax, becau se of th e com plex
eligibility con d ition s, as discu ssed, in fra, t ook on su ch a r ole wit h
r espect t o t h e det er m in a t ion of in dividu a l ben efit s, t h e pa ym en t of
690
ben efit s, a n d t h e pr ocessin g of ben efit cla im s.
Th er e a r e ext en sive E RISA pr ovision s descr ibin g wh ich
ben efit pla n s E RISA cover s. Th e Fort H alifax m a jor it y discu ssed
691
n on e. Th r ee gen er a l kin ds of ben efit pla n s t h a t cover em ployees
692
of n on -exem pt em ployer s a r e n ot E RISA pla n s. F ir st , t h ose t h a t
a r e n ot est a blish ed or m a in t a in ed by t h e em ployer or a n em ployee
or ga n iza t ion , i.e., wh er e t h e em ployer does lit t le m or e t h a n collect
689. S ee Fort H alifax, 482 U.S. a t 8 (discu ssin g t h e sign ifica n ce of t h e u se
of t h e ph r a se “em ployee ben efit pla n ” in t h e E RISA E xpr ess P r eem pt ion ).
690. B u t see Wor ker Adju st m en t a n d Ret r a in in g Not ifica t ion Act , P .L. No.
100-379, 102 STAT. 890 (1988), wh ich est a blish es a sim pler feder a l sever a n ce
pa y syst em , in wh ich ea ch eligible em ployee obt a in s u p t o 60 da ys of
com pen sa t ion if t h e em ployer gives n o n ot ice of a m a jor la yoff . . . Th is syst em
is codified a t 29 U.S.C. §§ 2101 –t o 2909. Un like E RISA, t h e syst em does n ot
pr eem pt st a t e la w. 29 U.S.C. § 2105.
691. S ee 29 C.F .R. § 2510.3-3(b) (2013), (st a t in g t h a t on ly pla n s t h a t cover
em ployees a r e con sider ed “em ployee ben efit pla n [s].”).
692. S ee E RISA § 4(b), 29 U.S.C. § 1003(b) (2012) (iden t ifyin g exem pt
em ployer s, su ch a s ch u r ch a n d gover n m en t pla n s, a lt h ou gh ch u r ch pla n s m a y
ch oose t o be cover ed).
266
T h e J oh n M arsh all L aw R eview
[47:145
a n d t r a n sm it volu n t a r y em ployee con t r ibu t ion s for a pla n t h a t it
693
m a k es a va ila ble t o it s em ployees.
A t r a dit ion a l exa m ple is a
Code § 403(b) pla n in wh ich em ployer s do lit t le m or e t h a n per m it
em ployees t o decide t h e ext en t , if a n y, t o wh ich t h ey wish t o m a ke
694
con t r ibu t ion s t o su ch pla n .
Secon d, som e pla n s on ly pr ovide
ben efit s t h a t so closely r esem ble t h e r egu la r pa ym en t of wa ges or
sa la r y t h a t t h e E RISA r egu la t ion s t r ea t su ch pla n s a s pa yr oll
695
pr a ct ices, r a t h er t h a n a s E RISA pla n s. Tr a dit ion a l exa m ples a r e
over t im e pa y or pa ym en t s t o em ployees fr om gen er a l a sset s for
t im e du r in g wh ich n o du t ies a r e per for m ed, su ch a s va ca t ion
696
t im e.
Aga in t h e em ployer t a k es on on ly d e m in im is
r espon sibilit ies beyon d t h ose it h a s wit h r espect t o t h e pa ym en t of
wa ges a n d sa la r ies wit h r espect t o: (1) fin a n cin g t h e pla n beyon d
m a kin g ben efit pa ym en t s; (2) det er m in in g a n d pa yin g pla n
ben efit s; a n d (3) pr ocessin g pla n cla im s. Th e E RISA r egu la t ion s
697
do n ot in clu de sever a n ce ben efit s a m on g pa yr oll pr a ct ices, bu t
gen er a lly in clu de sever a n ce pla n s a s E RISA welfa r e ben efit
698
pla n s.
Th e Su pr em e Cou r t h a d h eld sever a n ce ben efit s a r e n ot
699
im plicit ly in clu ded a s a pa yr oll pr a ct ice wh en it a ffir m ed Gilbert,
wit h ou t a n opin ion , t wo yea r s ea r lier in 1985, a s discu ssed su pra
a n d in fra. Th ir d, bon u s pla n s, wh ich do n ot syst em ica lly defer
pa ym en t s t o t h e t er m in a t ion of em ploym en t or beyon d, a r e n ot
700
E RISA pen sion pla n s.
Un like sever a n ce pla n s, wh ich a r e n ot
701
pen sion pla n s u n der cer t a in cir cu m st a n ces, bon u s pla n s a r e n ot
702
explicit ly in clu ded a s E RISA welfa r e pla n s.
Th u s, bon u s pla n s
a r e n ot E RISA pla n s. Un lik e pa yr oll pr a ct ices, bon u s pla n s oft en
h a ve ext en sive a dm in ist r a t ive sch em es, bu t , lik e pa yr oll pr a ct ices,
t h ey a r e m a in t a in ed a n d oper a t ed a s pa r t of t h e r egu la r
com pen sa t ion pr ogr a m s for exist in g em ployees, a n d h a ve a n
explicit exem pt ion .
Th e Cou r t t h en a r gu ed t h a t pr eem pt in g t h e Ma in e st a t u t e
wou ld n ot fu r t h er t h e pu r pose of t h e E RISA E xpr ess P r eem pt ion ,
wh ich it a sser t ed wa s “t o est a blish a u n ifor m a dm in ist r a t ive
693. S ee E RISA § 3(1)-(3), 29 U.S.C. § 1002(1)-(3) (r equ ir in g a n E RISA p la n
t o be est a blish ed or m a in t a in ed by a n em ployer or em ployee or ga n iza t ion , or
bot h ).
694. 29 C.F .R. § 2510.3-2(f).
695. 29 C.F .R § 2510.3-1(b).
696. Id . § 2510.3-1(b)(3).
697. S ee id . § 2510.3-1(b) (list in g pa yr oll pr a ct ices).
698. 29 C.F .R. § 2510.3-1(a )(3).
699. Gilbert, v. B u rlin gton In d u stries, 765 F .2d a t 326 (2d. Cir . 1985),
su m m arily aff’d 477 U.S. 901 (1986).
700. 29 C.F .R. § 2510.3-2(c).
701. 29 C.F .R. § 2510.3-2(b) (pla n s m a y n ot h a ve pa ym en t s in excess of
t wice t h e em ployee’s a n n u a l com pen sa t ion , m a k e pa ym en t s over m or e t h a n
t wo yea r s, or be con t in gen t u pon r et ir em en t ).
702. 29 C.F .R. § 2510.3-1 (descr ibin g welfa r e pla n s in gen er a l, in clu des
welfa r e pla n s in (a )(3) bu t does n ot m en t ion bon u s pla n s).
2013]
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sch em e.” As discu ssed su pra, t h is wa s a con sequ en ce r a t h er t h a n
t h e pu r pose of t h e pr ovision . Th e pu r pose of t h e E RISA E xpr ess
P r eem pt ion , a s discu ssed su pra, is t o pr even t st a t e la w fr om
in t er fer in g wit h t h e E RISA feder a l r egim e for a ssu r in g t h a t
em ployee ben efit r igh t s a r e en for cea ble, in clu din g t h e r igh t t o be
pa id pr om ised em ployee ben efit s. Th e Cou r t t h en a r gu ed t h er e is
n o su ch t h r ea t fr om t h e Ma in e in for m a l sever a n ce pa ym en t policy
beca u se:
703
Th e pu r poses of E RISA’s pr e-em pt ion pr ovision m a ke clea r t h a t t h e
Ma in e st a t u t e in n o wa y r a ises t h e t ypes of con cer n s t h a t pr om pt ed
pr e-em pt ion . Con gress in ten d ed pre-em ption to afford em ployers th e
ad van tages of a u n iform set of ad m in istrative proced u res govern ed
by a sin gle set of regu lation s. T h is con cern on ly arises, h ow ever, w ith
respect to ben efits w h ose provision by n atu re requ ires an on goin g
ad m in istrative program to m eet th e em ployer’s obligation . It is for
t h is r ea son t h a t Con gr ess pr e-em pt ed st a t e la ws r ela t in g t o pla n s,
r a t h er t h a n sim ply t o ben efit s. On ly a pla n em bodies a set of
a dm in ist r a t ive pr a ct ices vu ln er a ble t o t h e bu r den t h a t wou ld be
im posed by a pa t ch wor k sch em e of r egu la t ion .
Th e Ma in e st a t u t e n eit h er est a blish es, n or r equ ir es a n em ployer t o
m a in t a in , a n em ployee ben efit pla n . T h e requ irem en t of a on e-tim e,
lu m p-su m paym en t triggered by a sin gle even t requ ires n o
ad m in istrative sch em e w h atsoever to m eet th e em ployer’s
704
obligation .
H owever , t h is a r gu m en t disr ega r ds t h e fa ct t h a t lik e a ll
E RISA pla n s, t h e m a n da t ed a r r a n gem en t r equ ir es t h e em ployer t o
est a blish a n d m a in t a in a n a dm in ist r a t ive sch em e, n a m ely a
pr ocedu r e t o det er m in e a n d pa y sever a n ce ben efit s t o qu a lifyin g
for m er em ployees. Despit e t h e Cou r t ’s st a t em en t t o t h e con t r a r y,
m or e t h a n a d e m in im is pr ocedu r e is n eeded for t h e Ma in e
in for m a l sever a n ce pa ym en t policy, beca u se, u n like a policy t o
705
dist r ibu t e t u r k eys t o a ll em ployees a t Ch r ist m a s,
it s t er m s m a y
n ot be sa t isfied wit h ou t a su bst a n t ia l com plia n ce pr ocedu r e. In
pa r t icu la r , t h e sever a n ce p olicy r equ ir es det er m in a t ion s: (1) t h a t
t h er e is a fa cilit y wit h t h e m in im u m n u m ber of em ployees; (2)
wh et h er a n d wh en t h e fa cilit y h a s been closed; (3) h ow t o m ea su r e
ea ch em ployee’s len gt h of ser vice a t t h e pla n t t o det er m in e t h e
pa ym en t en t it lem en t ; (4) wh et h er t h e em ployee h a s wor k ed for
t h r ee yea r s a t t h e em ployer ; (4) wh et h er t h e em ployee a ccept s
703. Fort H alifax, 482 U.S. a t 9. S ee also Ka t h er in e A. McAllist er , A
Distinction With ou t a Differen ce? E R IS A Preem ption an d th e Un ten able
Differen tial T reatm en t of R evocation -on -Divorce an d S layer S tatu tes, 52 B.C.
L. R E V. 1481, 1485-86 (2011) (r elyin g on t h e Cou r t ’s Pilot decision t o a sser t
t h a t “t h e pr im a r y r a t ion a le for E RISA’s br oa d pr eem pt ion pr ovision is u n ifor m
pla n a dm in ist r a t ion ”).
704. Fort H alifax, 482 U.S. a t 11-12 (em ph a sis a dded).
705. S ee 29 C.F .R. § 2510.3-1(d) (holdin g t h a t h olida y gift policies a r e n ot
E RISA pla n s).
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T h e J oh n M arsh all L aw R eview
[47:145
em ploym en t a t a n ew fa cilit y; a n d (5) if ch a llen ged, wh et h er t h e
706
ben efit wa s com pu t ed cor r ect ly.
F in a lly, t h e Cou r t a r gu es t h a t t h e Ma in e st a t u t e does n ot
707
“im plica t e t h e r egu la t or y con cer n s of E RISA.”
Th e Cou r t
descr ibed t h ese con cer n s a s bein g wit h t h e a dm in ist r a t ive
a ct ivit ies cover ed by E RISA’s r epor t in g a n d disclosu r e
708
r equ ir em en t s a n d fidu cia r y st a n da r ds.
Th e Cou r t a sser t ed
E RISA is con cer n ed on ly wit h pr even t in g t h e em ployer a bu se
a ssocia t ed wit h a dm in ist r a t ive a ct ivit ies, su ch a s im pr oper
fin a n cia l t r a n sa ct ion s, wh ich a r e n ot a t r isk wit h t h e Ma in e
709
in for m a l sever a n ce pa y policy.
Th e Cou r t t h er eby disr ega r ded t h e m ost fu n da m en t a l
pr ot ect ion E RISA pr ovides t o a ll pla n pa r t icipa n t s a n d
ben eficia r ies. All h a ve t h e r igh t t o a fu ll a n d fa ir r eview of a ll
cla im s a n d t h e r igh t t o br in g feder a l a ct ion s t o en for ce t h eir pla n
ben efit r igh t s (in clu din g, bu t n ot lim it ed t o, t h e r ecover y of
ben efit s) u n der t h e p la n t er m s. P la n s, pa r t icu la r ly u n fu n ded on es,
su ch a s in for m a l sever a n ce pa ym en t policies or Top -H a t P la n s, ca n
a bu se pa r t icipa n t s by fa ilin g t o pa y pla n pa r t icipa n t s a ll t h eir
ben efit s. E RISA’s r egu la t or y con cer n s a r e t h u s im plica t ed by t h e
sever a n ce policy.
Th er efor e, t h e policy con st it u t es a st a t e
m a n da t ed E RISA pla n , wh ich E RISA pr eem pt s.
Th e dissen t obser ved t h a t t h e Cou r t wa s wit h ou t a n y
710
expla n a t ion r ever sin g it s h oldin g in Gilbert, t h a t a n in for m a l
711
sever a n ce pa ym en t policy wa s a n E RISA P la n .
Th e m a jor it y
r espon ded t h a t in Gilbert, “[t ]h e pr ecise qu est ion wa s sim ply
wh et h er sever a n ce ben efit s pa id by a plan ou t of gen er a l a sset s,
r a t h er t h a n ou t of a t r u st fu n d, sh ou ld be r ega r ded a s em ployee
712
welfa r e ben efit s u n der 29 U. S. C. § 1002.”
H owever , a s
discu ssed su pra, t h e Secon d Cir cu it cou ld on ly r ea ch t h e decision
a ffir m ed by t h e Su pr em e Cou r t by m a kin g t wo ot h er h oldin gs.
F ir st , a policy of pr ovidin g sever a n ce ben efit s con st it u t ed a ben efit
713
pla n . Secon d, su ch a pla n , even if in for m a l, wa s n ot exem pt fr om
E RISA cover a ge a s a pa yr oll pr a ct ice, su ch a s a sick n ess, va ca t ion ,
706. Fort H alifax, 482 U.S. a t 5.
707. S ee id . a t 13 (r elyin g in pa r t on r em a r ks in a post -E RISA H ou se
r epor t , H.R. R E P . N O . 94-1785 (1st Sess. 1977) su ppor t in g legisla t ion t h a t wa s
n ever a dopt ed).
708. Id . a t 15-16.
709. Id . a t 16.
710. S ee Gilbert, v. B u rlin gton In d u stries, 765 F .2d a t 326 (2d. Cir . 1985),
su m m arily aff’d 477 U.S. 901 (1986) (h oldin g t h a t a n u n fu n ded sever a n ce pa y
policy wa s a n E RISA em ployee welfa r e ben efit pla n ).
711. Fort H alifax, 482 U.S. a t 23-26 (Wh it e, J ., dissen t in g)
712. Id . a t 18 (em ph a sis a dded).
713. Gilbert, 765 F .2d a t 325-26 (descr ibin g it s a n a lysis a s fir st
det er m in in g t h a t t h e policy wa s a n E RISA pla n t h a n det er m in in g t h e pa yr oll
pr a ct ice except ion wa s in a pplica ble).
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714
h olida y pa y policy.
Th e Cou r t in Fort H alifax ga ve n o
expla n a t ion for it s disr ega r d of t h ose h oldin gs. In con t r a st , t wo
yea r s la t er t h e Su pr em e Cou r t in 1989 in Ma ssa ch u set t s v.
715
Mor a sh ,
discu ssed t h e sign ifica n ce of t h e pa yr oll pr a ct ices
except ion , wh en it det er m in ed t h a t a n em ployer policy of m a kin g
pa ym en t s t o t er m in a t in g em ployees of a ccr u ed bu t u n u sed
va ca t ion pa ym en t fr om gen er a l a sset s wa s a pa yr oll pr a ct ice, a n d
716
t h u s n ot a n E RISA pla n .
Un der t h e Gilber t /Mor a sh a ppr oa ch ,
t h e policy is a n E RISA pla n , u n less t h e policy con sist s of m a kin g
pa ym en t s of a ccr u ed bu t u n pa id on goin g com pen sa t ion u pon t h e
t er m in a t ion of a n y em ployee, su ch a s va ca t ion pa y, sick pa y, or
gen er a l lea ve, in wh ich ca se t h e policy is a pa yr oll pr a ct ice .. In
sh or t , a sever a n ce policy is a n E RISA pla n u n less t h e policy is pa r t
of t h e em ployer ’s pr ocess for m a kin g r egu la r ca sh com pen sa t ion
pa ym en t s t o em ployees, a n d is t h er eby a pa yr oll pr a ct ice.
In con t r a st , t h e ca se-la w follows F t . H a lifa x in det er m in in g
wh et h er a sever a n ce pla n pa ya ble fr om gen er a l a sset s is a n E RISA
pla n by a sk in g wh et h er t h er e is a n on goin g a dm in ist r a t ive sch em e
717
wit h ou t a n y ba selin e for est a blish in g su ch a sch em e.
Th is la t t er
a ppr oa ch r esu lt s in fewer pla n s bein g cover ed by E RISA, su ch a s
t h ose in Fort H alifax. Th u s, t h is a ppr oa ch , u n lik e t h e a r t icle’s
pr oposed a ppr oa ch , h a s t h e per ver se effect of givin g m or e
pr ot ect ion t o pla n pa r t icipa n t s beca u se it gives m or e for m er
em ployees a ccess t o st a t e pr ot ect ion s t h a t a r e su per ior t o t h e
718
E RISA pr ot ect ion s.
H owever , t h e Gilber t /Mor a sh a ppr oa ch
seem s m or e con sist en t wit h t h e pu r pose of t h e E RISA E xpr ess
P r eem pt ion , wh ich is t o pr even t st a t e la w fr om in t er fer in g wit h
t h e E RISA feder a l r egim e for a ssu r in g t h a t em ployee ben efit
r igh t s a r e en for cea ble, wh ile n ot in t er fer in g wit h t h e st a t e
r egu la t ion of r igh t s t o wa ges, sa la r y a n d sim ila r r egu la r
com pen sa t ion pa ym en t s.
714. Id . a t 326.
715. Ma ssa ch u set t s v. Mor a sh , 490 U.S. 107 (1989).
716. Id . a t 120-21.
717. S ee gen erally E RISA L ITIGATION , su pra n ot e13, 20-21 (4t h ed. 2011)
(discu ssin g h ow t h e cou r t s det er m in e wh et h er t h er e is “on goin g
a dm in ist r a t ive sch em e,” for policies t h a t r equ ir e t h e det er m in a t ion of wh ich
t er m in a t in g em ployees qu a lify for t h e be n efit , a n d t h e com pu t a t ion of ea ch
qu a lifyin g em ployee’s ben efit , n eit h er of wh ich r equ ir es a n y a ddit ion a l wor k
for a policy of pa yin g a ll t er m in a t ed em ployees t h eir a ccr u ed bu t u n pa id
va ca t ion pa y).
718. Cf. J a m es P . Ba ker , E RISA’s Bet t er Mou set r a p, 24 Ben . L. J . 1 (2011)
(descr ibin g h ow em ployer s fin d it a n a dva n t a ge for a n em ploym en t policy t o be
ch a r a ct er ized a s a n E RISA Top -H a t P la n for wh ich t h e E RISA E xpr ess
P r eem pt ion pr eem pt s st a t e pr ot ect ion s). A sim ila r r esu lt occu r s for sever a n ce
pla n s, See e.g., Gilber t , 772 F .2d 1140 aff’d 477 U.S. 901 (1986) (h oldin g st a t e
pr ot ect ive la bor la w wa s pr eem pt ed for E RISA sever a n ce pla n s).
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[47:145
B . S u prem e Cou rt H old s T h at E R IS A Preem pts An y S tate L aw to
th e E xten t T h at th e L aw R efers to an E R IS A Plan R egard less
of th e T en u ou sn ess of th e L aw ’s E ffects on th e Plan , an d
S u ggests th at E R IS A Preem pts an y S tate L aw th at T reats an y
E R IS A Plan M ore Favorably T h an S im ilarly S itu ated E n tities
Th e M ack ey I h oldin g, t h a t a r efer en ce in a st a t e la w t o a n
E RISA pla n r esu lt s in t h e pr eem pt ion of t h e la w r ega r dless of t h e
t en u ou sn ess of t h e la w’s effect s on t h e pla n , wa s ba sed on t h e
719
Cou r t ’s m isr ea din g of it s S h aw decision . Th e Cou r t u n a n im ou sly
h eld in M ack ey I t h a t E RISA pr eem pt ed a n exem pt ion fr om t h e
Geor gia gen er a l ga r n ish m en t st a t u t e for “[f]u n ds or ben efit s of a
pen sion , r et ir em en t , or em ployee ben efit pla n or pr ogr a m su bject
t o t h e pr ovision s of t h e feder a l E m ployee Ret ir em en t In com e
720
Secu r it y Act of 1974, a s a m en ded. . . .” In ot h er wor ds, t h e Cou r t
h eld t h a t a st a t e cou ld n ot explicit ly exem pt E RISA ben efit
pa ym en t s fr om ga r n ish m en t s.
Th e Cou r t cit ed t h e S h aw r est a t em en t of t h e “r ela t e t o”
ph r a se a s follows:
“A la w ‘r ela t es t o’ a n em ployee ben efit pla n , in t h e n or m a l sen se of
t h e ph r a se, if it h a s a con n ect ion wit h or referen ce t o su ch a pla n .”
Sh a w v. Delt a Air Lin es, In c., 463 U.S. 85, 96-97 (1983) (em ph a sis
a dded). On sever a l occa sion s sin ce ou r decision in S h aw , we h a ve
r ea ffir m ed t h is r u le, con clu din g t h a t st a t e la ws wh ich m a ke
“r efer en ce t o” E RISA pla n s a r e la ws t h a t “r ela t e t o” t h ose pla n s
wit h in t h e m ea n in g of § 514(a ). S ee, e. g., P ilot Life In s. Co. v.
Dedea u x, 481 U.S. 41, 47-48 (1987); Met r opolit a n Life In s. Co. v.
Ma ssa ch uset t s, 471 U.S. 724, 739 (1985). In fa ct , we h a ve vir t u a lly
t a ken it for gr a n t ed t h a t st a t e la ws wh ich a r e “specifica lly design ed
t o a ffect em ployee ben efit pla n s” a r e pr e-em pt ed u n der § 514(a ). Cf.
P ilot Life In s. Co. v. Dedea u x, su pra, a t 47-48; Sh a w v. Delt a Air
721
Lin es, In c., su pra, a t 98.
722
Th e ga r n ish m en t la w r efer r ed dir ect ly t o E RISA pla n s.
Th er efor e, t h e Cou r t con clu ded t h a t t h e st a t e la w r ela t ed t o
723
E RISA a n d t h u s wa s pr eem pt ed.
In a su bsequ en t decision ,
Greater Wash in gton , discu ssed, su pra, t h e Cou r t descr ibed a n on t en u ou s r ela t ion bet ween a st a t e la w a n d a n E RISA pla n befor e
a n d a ft er obser vin g t h er e wa s E RISA pr eem pt ion “on t h e ba si s
724
a lon e” of a pu r por t ed r efer en ce t o E RISA pla n s.
H owever ,
a lt h ou gh t h e pa r t y cla im in g pr eem pt ion t h er ein con ceded t h a t t h e
ben efit s r equ ir ed u n der t h e ch a llen ged la w “a r e set by r efer en ce t o
719. M ack ey, 486 U.S. a t 830.
720. Id . a t 828, n .2.
721. Id . a t 829 (em ph a sis in or igin a l) (in t er n a l qu ot a t ion s om it t ed) (qu ot in g
S h aw , 463 U.S. a t 96-97).
722. Id . a t 828, n .2.
723. Id . a t 829-30.
724. Greater Wash in gton , 506 U.S. a t 130-31.
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cover ed em ployee ben efit pla n s,” t h e st a t u t e cit ed t h er ein did n ot
m en t ion E RISA or lim it it s cover a ge t o E RISA pla n s, bu t in st ea d
726
r efer r ed t o h ea lt h in su r a n ce pla n s.
In Gr ea t er Wa sh in gt on , t h e
st a t e la w im posed a bu r den on E RISA pla n s, n a m ely a ben efit
t er m s m a n da t e, r a t h er t h a n best owin g a ben efit a s in M ack ey I, in
wh ich E RISA pla n pa r t icipa n t s wer e pr ot ect ed fr om ben efit
ga r n ish m en t s.
Th e Su pr em e Cou r t h a d n ever pr eviou sly pr eem pt ed a la w
solely on t h e ba sis of a n E RISA r efer en ce in a n y of t h e decision s
727
t h e Cou r t cit ed
or a n y ot h er decision s. Th is wa s pr oba bly
beca u se a s discu ssed, su pra, S h aw a lso con t a in s t h e followin g
r eleva n t st a t em en t in a foot n ot e: “[s]om e st a t e a ct ion s m a y a ffect
em ployee ben efit pla n s in t oo t en u ou s, r em ot e, or per iph er a l a
728
m a n n er t o wa r r a n t a fin din g t h a t t h e la w ‘r ela t es t o’ t h e pla n .”
Mor eover , a st a t e st a t u t e pr ovision pr even t in g a n E RISA pla n
fr om bein g a ffect ed by a n ot h er st a t e st a t u t e m ea n s t h a t t h e
st a t u t es in con cer t do n ot a ffect E RISA pla n s a n d con t r a r y t o t h e
a bove qu ot e wer e n ot “design ed” t o a ffect E RISA pla n s. Th u s,
E RISA does n ot pr eem pt a n y pa r t of t h e st a t u t es.
Th er efor e, t h e st a t u t or y pr oh ibit ion on t h e ga r n ish m en t of
E RISA pla n s sh ou ld h a ve been u ph eld, a n d t h e Cou r t sh ou ld h a ve
n ot gon e beyon d it s a u t h or it y t o decide on ly ca ses a n d
729
con t r over sy.
Th u s, it sh ou ld n ot h a ve con sider ed t h e t h eor et ica l
qu est ion of wh et h er E RISA wou ld pr eem pt t h e a pplica t ion t o a
va ca t ion pla n of t h e gen er a l ga r n ish m en t st a t u t e wit h ou t it s
730
E RISA exem pt ion .
Th e ir r a t ion a lit y of t h e M ack ey I pr eem pt ion h oldin g is sh own
beca u se t h e sa m e r ea son in g t h a t con sider s on ly t h e E RISA pla n
r efer en ce, bu t disr ega r ds t h e st a t u t e’s la ck of effect on E RISA
pla n s or t h eir ben efit s, wou ld a lso r esu lt in t h e pr eem pt ion of a
725
725. Id . a t 128.
726. Cf. Id . a t 130 (“Sect ion 2(c)(2) of t h e Dist r ict ’s E qu it y Am en dm en t Act
specifica lly r efer s t o welfa r e ben efit pla n s r egu la t ed by E RISA a n d on t h a t
ba sis a lon e is pr e-em pt ed”) t o id . a t 128 (Sect ion 2(c)(2) of t h e Dist r ict ’s E qu it y
Am en dm en t Act is qu ot ed).
727. S h aw , 463 U.S. a t 96-97; Pilot L ife In s. Co. 481 U.S. a t 47-48; a n d
M etro. Life In s. Co., 471 U.S. at 739.
728. S h aw , 463 U.S. a t 100 n .21. Th e Su pr em e Cou r t t h er ein cit ed Am .
T eleph on e an d T elegraph Co., 592 F .2d 118, 121 (1973) (“St at e ga r n ish m en t of
a spou se’s pen sion in com e t o en for ce a lim on y a n d su ppor t or der s is n ot
pr eem pt ed” a s, per h a ps, pr esen t in g su ch a n exa m ple ). S h aw , 463 U.S. a t
100m n .21.
729. See U.S. CONST a r t . III, sec. 2 (expla in in g wh en feder a l cou r t s m a y
exer cise ju r isdict ion ).
730. Th is m a y r eflect t h e Cou r t ’s st r on g a ppa r en t desir e t o decide wh et h er
E RISA pr eem pt ed t h e a pplica t ion of t h e gen er a l Geor gia ga r n ish m en t st a t u t e
t o E RISA pla n s ot h er t h a n Spou sa l Su r vivor Ben efit P la n s. Th is st r on g
a ppa r en t desir e is con sist en t wit h t h e Cou r t ’s decision t o a ppoin t a n a m icu s
cu r ia e wh en t h e cr edit or elect ed n ot t o a ppea r in Cou r t . M ack ey, 486 U.S. a t
829, n .3.
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T h e J oh n M arsh all L aw R eview
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st a t u t e explicit ly pr ovidin g for t h e ga r n ish m en t of E RISA pla n
ben efit s. Th is is a bsu r d. E RISA ca n n ot pr eem pt bot h t h e
ga r n ish m en t a n d a n exem pt ion fr om t h e ga r n ish m en t of E RISA
pla n ben efit s. A la w’s pr eem pt ion is n ot det er m in ed by wh et h er it
r efer en ces E RISA pla n s, or h ow it r efer en ces su ch pla n s, bu t h ow
it a ffect s E RISA ben efit pr ot ect ion s. Non -t en u ou s effect s a r e pr eem pt ed. Ten u ou s effect s a r e n ot .
Th e M ack ey I Cou r t su ggest ed t h a t t h e r efer en ce in t h e st a t e
la w t o a n E RISA pla n a t issu e h a s a n on -t en u ou s r ela t ion t o t h e
731
pla n wit h ou t u sin g t h e wor d “n on -t en u ou s.” Th e Cou r t obser ved
in a foot n ot e t h a t t h e pr oh ibit ion r esu lt ed in a ben efit t o E RISA
welfa r e ben efit pla n s beca u se n on -E RISA welfa r e pla n s wer e
732
su bject t o ga r n ish m en t .
H owever , if sim ply t r ea t in g E RISA
pla n s m or e fa vor a bly t h a n ot h er en t it ies, is a n on -t en u ou s r ela t ion
t h a t r esu lt s in t h e pr eem pt ion of a st a t e la w, t h en E RISA wou ld
pr eem pt (1) st a t e pr ovision s t h a t per m it t a x-fr ee r ollover s fr om
733
t a x-qu a lified pen sion pla n s, wh ich a r e pr im a r ily E RISA pla n s,
(2) st a t e pr ovision s t h a t exem pt t a x-qu a lified pla n s, fr om st a t e t a x,
a n d (3) cr im in a l st a t u t es wh ich do n ot in clu de em ployee pla n s in
t h eir cover a ge, su ch a s com pen sa t ion collect ion st a t u t es t h a t do
n ot a ddr ess em ployee ben efit pa ym en t s, su ch a s t h e for wa r din g of
h ea lt h r eim bu r sem en t pla n pr em iu m pa ym en t s. Non e of t h ese
pr eem pt ion s ca n be ju st ified on a n y r ea son a ble ba sis.
C. T h e S u prem e Cou rt H old s th at E R IS A Does N ot Preem pt a
S tate L aw if th e L aw Does N ot R efer to an E R IS A Plan a n d
Does N ot Con flict w ith an y E R IS A Provision , Oth er T h an th e
Provision Givin g E ach E R IS A Participan t th e R igh t to E n force
H is or H er Plan B en efit R igh ts
Th e M ack ey II h oldin g t h a t E RISA does n ot pr eem pt st a t e la w
ga r n ish m en t s of va ca t ion ben efit pla n pa ym en t s wa s ba sed on t h e
in a bilit y of t h e m a jor it y t o fin d a specific E RISA pr ovision
734
pr oh ibit in g t h e ga r n ish m en t of su ch ben efit s.
Th e fou r
dissen t er s, by con t r a st , a r gu ed t h a t beca u se ga r n ish m en t s h a d
731. S ee gen erally id .
732. Th e Cou r t obser ved t h a t n on -E RISA pen sion a n d r et ir em en t pla n s a r e
exem pt ed fr om ga r n ish m en t , bu t n o exem pt ion is pr ovided for n on -E RISA
em ployee welfa r e ben efit pla n s. Id . a t 831, n .4.
733. S ee e.g., Tr ea su r y In spect or Gen er a l for Ta x Adm in ist r a t ion,
S tatistical T ren d s in R etirem en t Plan s 9 (Au g. 9. 2010) (t h e va st m a jor it y of
t a x-qu a lified r et ir em en t pla n s file F or m 5500 a n n u a l r et u r n s r equ ir ed u n der
Code § 6058, bu t t h is exclu des n on -E RISA pla n s, su ch a s ch u r ch pla n s a n d on e
pa r t icipa n t
plan s)
available
at
h t t p://www.t r ea su r y.gov/t igt a /a u dit r epor t s/2010r epor t s/201010097fr .pdf (la st
visit ed J a n . 30, 2014). Alt h ou gh t h e st a t e t a x st a t u t e ma y sim ply follow
feder a l in com e t a x r u les, t h e st a t e t a x r egu la t ion s oft en in cor por a t e t h e
r ollover r u les explicit ly so u n der t h e pr eem pt ion by r efer en ce r u les of M ack ey I
t h er e wou ld be pr eem pt ion .
734. M ack ey, 486 U.S. a t 835-40.
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273
n on -t en u ou s effect s on t h e va ca t ion pla n su ch ga r n ish m en t s wer e
pr eem pt ed. N eit h er opin ion con sider ed wh et h er t h e ga r n ish m en t
viola t ed E RISA pr ovision givin g ea ch pa r t icipa n t in a n E RISA
pla n t h e r igh t t o en for ce h is or h er pla n ben efit r igh t s .
As in Fort H alifax, t h e J u st ices wer e dist r a ct ed by t h e expr ess
r efer en ce in t h e E RISA E xpr ess P r eem pt ion t o st a t e la ws t h a t
r ela t e t o “em ployee ben efit pla n s” r a t h er t h a n t o “em ployee
735
ben efit s.”
Th is r em a in s a dist in ct ion wit h ou t a differ en ce.
Ben efit s m u st be pa r t of t h e ben efit pla n t h a t det er m in es h ow t h e
ben efit s a r e fin a n ced, a n d wh o is en t it led t o pla n ben efit s. Th u s,
t h e cou r t m issed t h e r eleva n t poin t . E RISA pr eem pt s st a t e la ws
t h a t r ela t e t o t h e E RISA ben efit pr ot ect ion s a bsen t a st a t u t or y
except ion , a s discu ssed su pra. E RISA pr eem pt s a st a t e la w if t h e
la w h a s n on -t en u ou s effect s on a pla n ’s em ployee ben efit r igh t s,
su ch a s pr even t in g a pa r t icipa n t fr om obt a in in g h is ben efit
736
pa ym en t u n der t h e pla n t er m s, a s t h e ga r n ish m en t did in t h is
ca se.
Th e M ack ey II m a jor it y a r gu ed t h a t beca u se E RISA per m it s
r u n -of-t h e-m ill pla n cr edit or s t o ga r n ish pla n pr oper t y, su ch
737
ga r n ish m en t s wer e n ot r ela t ed t o a n E RISA pla n .
Con sequ en t ly,
t h e Cou r t a sser t ed t h a t t h er e wa s n o r ea son t o t r ea t ga r n ish m en t s
738
of a pa r t icipa n t ’s ben efit s a s a n y m or e r ela t ed t o a pen sion pla n .
Th e on ly E RISA r est r ict ion on ga r n ish m en t s t h e Cou r t per ceived
wa s t h e Alien a t ion P r oh ibit ion , wh ich it obser ved is lim it ed t o
739
Spou sa l Su r vivor Ben efit P la n s.
Th u s, t h e Cou r t a sser t ed
E RISA cou ld n ot pr eem pt t h e ga r n ish m en t of ot h er pla n s, su ch a s
va ca t ion pla n s.
Th is M ack ey II Cou r t a r gu m en t is fu n da m en t a lly fla wed.
E RISA per m it s r u n -of-t h e-m ill cr edit or s t o ga r n ish t h e pr oper t y of
a n E RISA pla n beca u se t h ose cla im s do n ot h a ve t h e kin d of
r ela t ion t h a t r esu lt s in E RISA pr eem pt ion . Th e M ack ey II Cou r t
fa iled t o con sider wh a t kin d of r ela t ion r esu lt s in pr eem pt ion . Th e
Cou r t disr ega r ded t h e r igh t of a pa r t icipa n t in a n y E RISA pla n t o
740
obt a in ben efit s u n der t h e t er m s of t h e pla n .
P r even t in g t h e
exer cise of su ch r igh t s is a n on -t en u ou s r ela t ion . Th u s, u n less t h e
pa r t icipa n t h a s pu r su a n t t o t h e pla n t er m s eit h er m a de t h e
cr edit or a pla n ben eficia r y by a ssign in g h is ben efit s t o t h e cr edit or
or dir ect ed t h e pla n t o pa y h is ben efit s t o t h e cr edit or , t h e pla n
741
m u st pa y t h e ben efit s a t issu e t o t h e pa r t icipa n t .
Un der t h e
735. Id . a t 836.
736. E RISA § 502(a )(1)(B), 29 U.S.C. 1132(a )(1)(B).
737. M ack ey, 486 U.S. a t 832-33.
738. Id . a t 835-36.
739. Id . a t 836-37.
740. E RISA § 502(a )(1)(B), 29 U.S.C. 1132(a )(1)(B).
741. E RISA does n ot pr even t t h e pla n fr om m a k in g ben efit pa ym en t s t o a
cr edit or wh o is n ot a pla n ben eficia r y. H owever , su ch pa ym en t does n ot
r elieve t h e pla n of t h e obliga t ion t o m a ke t h e ben efit pa ym en t s t o t h e
pa r t icipa n t , u n less t h e pa ym en t is m a de pu r su a n t t o t h e pla n t er m s a t t h e
274
T h e J oh n M arsh all L aw R eview
[47:145
Cou r t ’s r ea son in g beca u se E RISA does n ot pr oh ibit st a t e -la w
con t r a ct cla im s for ben efit s, bu t E RISA per m it s r u n of t h e m ill
ser vice pr ovider s t o en for ce con t r a ct cla im s a ga in st E RISA pla n s,
E RISA m u st a lso per m it st a t e-la w con t r a ct ben efit cla im s. Th is
red u ctio ad absu rd u m r esu lt s beca u se t h e Cou r t det er m in ed
wh et h er a st a t e la w is pr eem pt ed wit h ou t con sider in g t h e ext en t
t o wh ich t h e st a t e la w a ffect s a n E RISA ben efit pr ot ect ion .
Th e M ack ey II dissen t , u n like t h e m a jor it y, con sider ed t h e
a dm in ist r a t ive bu r den im posed on t h e pla n a dm in ist r a t or by
742
ga r n ish m en t s of a pa r t icipa n t ’s ben efit s.
Th e dissen t con clu ded
t h a t su ch ga r n ish m en t s wou ld im pose, “a su bst a n t ia l a n d on er ou s
743
obliga t ion ” on t h e ga r n ish ee, t h e pla n a dm in ist r a t or .
Mor eover ,
su ch ga r n ish m en t s m a y be dist in gu ish ed fr om ga r n ish m en t s of
pla n a sset s beca u se t h e bu r den of t h e la t t er wou ld fa ll on a t h ir d
744
pa r t y r a t h er t h a n on t h e pla n a dm in ist r a t or .
Th e dissen t a lso
obser ved t h a t t h e m er e a bsen ce of a n E RISA pr oh ibit ion does n ot
pr eclu de a su fficien t r ela t ion of a st a t e la w t o t h e pla n t o r esu lt in
745
pr eem pt ion .
All t h ese a r gu m en t s a r e cor r ect . Yet , a s wit h t h e
m a jor it y, n on e a ddr ess t h e dir ect effect s of a ga r n ish m en t on t h e
pa r t icipa n t , n a m ely h e wou ld be depr ived of t h e ben efit pa ym en t s
t o wh ich h e is en t it led u n der t h e pla n t er m s.
St a t e la w
ga r n ish m en t s a r e pr eem pt ed t o pr even t su ch depr iva t ion .
Th e M ack ey II a r gu m en t s a r e m or e fu lly discu ssed in Feu er’s
746
E R IS A M yth s.
XIII.
SUP RE ME COURT DE CLARE S TH AT E RISA P RE E MP TS
ANY STATE LAW TO TH E E XTE NT TH E LAW RE F E RS TO
E RISA P LAN S, MANDATE S BE NE F IT STRUCTU RE OR
BE NE F IT ADMINISTRATION, OR P ROVIDE S AN
E NF ORCE ME NT ME CH ANISM, BUT P E RMITS STATE
LAWS TH AT AF F E CT BE N E F IT AMOUN TS AND
P ROVIDE RS INDIRE CTLY WITH OU T ANY OF TH E ABOVE
F E ATURE S
In t h e m id-1990s t h e Su pr em e Cou r t , a s discu ssed in fra,
issu ed it s fir st decision s explicit ly a ddr essin g st a t e la ws t h a t
in dir ect ly a ffect ben efit en t it lem en t s u n der t h e t er m s of a n E RISA
pla n . Th e Cou r t , a s discu ssed in fra, fou n d t h a t n on e of t h e la ws
explicit r equ est of t h e pla n pa r t icipa n t or ben eficia r y. Th u s, a pr u den t pla n
fidu cia r y wou ld seek t o r ecover t h e pa ym en t t o t h e cr edit or fr om t h e cr edit or
a n d/or t h e pla n fidu cia r y t h a t a u t h or ized su ch pa ym en t .
742. M ack ey, 486 U.S. a t 841-45 (Ken n edy, J ., dissen t in g).
743. Id . a t 842 (Ken n edy, J ., dissen t in g).
744. Id . a t 844 (Ken n edy, J ., dissen t in g).
745. Id . a t 841-42 (Ken n edy, J ., dissen t in g).
746. Feu er ER IS A M yth s, su pra n ot e 25, a t 713-716, n .8.
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275
wer e pr eem pt ed beca u se n on e pr odu ced t h e dir ect effect s t h a t
wou ld give r ise t o E RISA pr eem pt ion . Th e Cou r t , a s discu ssed
in fra, a lso h eld t h a t E RISA does n ot pr eem pt a st a t e-la w wh ich
on ly a ffect s ben efit r igh t s by im posin g a cost on a n E RISA pla n
t h er eby r edu cin g t h e a sset s t h a t m a y be a lloca t ed t o t h e pla n ’s
ben efit s. Th is is con sist en t wit h t h e fa ct t h a t E RISA does n ot
exem pt E RISA pla n s fr om t a xes. If in dir ect r edu ct ion s of ben efit s
in a n d of t h em selves ca u sed pr eem pt ion , a ll st a t e t a xes on E RISA
pla n s wou ld be pr eem pt ed. Th u s, a ll E RISA pla n s wou ld be
exem pt fr om st a t e t a xes.
H owever , t h e Cou r t h a d ea r lier
per m it t ed dir ect r edu ct ion s of pa r t icipa n t r igh t s t o ben efit
pa ym en t s in M ack ey II, wh en it h eld t h a t E RISA did n ot pr eem pt
747
st a t e la w ga r n ish m en t s of va ca t ion pla n ben efit s, even t h ou gh
t h e Cou r t a ckn owledged wit h ou t a n y discu ssion t h a t t h is
748
pr even t ed a pa r t icipa n t fr om r eceivin g h is or h er pla n ben efit s.
Th e Su pr em e Cou r t decision s in t h e 1990s pr esen t ed five
br oa d con clu sion s, a lt h ou gh t h e fir st t h r ee wer e n ot a pplied t o t h e
m a t t er s a t issu es t h er ein .
F ir st , E RISA pr eem pt s a st a t e la w r efer r in g t o or a ct in g
exclu sively on E RISA pla n s. Th e Cou r t fa iled t o expla in wh y t h er e
is n o n eed t o con sider wh et h er t h e effect s of su ch la w on E RISA
pla n s a r e n on -t en u ou s pa r t icu la r ly wh en t h e Cou r t follows t h is by
a cr it icism of u sin g “a n u n cr it ica l lit er a lism ” t o in t er pr et t h e
749
sign ifica n ce of t h e “r ela t e t o” ph r a se.
Th er e is n o sim ila r
a u t om a t ic pr eem pt ion for la ws t h a t a ct pr im a r ily, bu t n ot
exclu sively u pon , E RISA pla n s, wit h ou t a specific r efer en ce t o
E RISA pla n s a s occu r r ed wit h t h e st a t e la w a t issu e in Greater
750
Wash in gton .
In a ll ca ses, a st a t e la w sh ou ld on ly be pr eem pt ed
if t h e la w a ffect s E RISA pla n s in a n on -t en u ou s m a n n er .
Secon d, if a st a t u t e pr ovides en for cem en t m ech a n ism s ot h er
t h a n t h ose pr ovided by E RISA, E RISA pr eem pt s t h ose
m ech a n ism s. Th er e is n o dispu t e a bou t t h is.
Th ir d, if a st a t u t e m a n da t es em ployee ben efit st r u ct u r es or
“t h eir a dm in ist r a t ion ,” E RISA pr eem pt s su ch m a n da t es. Th e
Cou r t did n ot discu ss t h e ph r a se “t h eir a dm in ist r a t ion ,” a n d ea ch
of t h e exa m ples cit ed by t h e Cou r t con cer n ed em ployee ben efit
st r u ct u r e.
F ou r t h , if a st a t u t e in dir ect ly a ffect s ben efit s u n der t h e t er m s
of a n E RISA pla n by im posin g bu r den s on a n E RISA pla n , t h e
effect s a r e n on -t en u ou s if t h e la w does n ot im plicit ly m a n da t e a n y
751
ben efit ch oice. In pa r t icu la r , E RISA does n ot pr eem p t pr eva ilin g
747. M ack ey, 486 U.S. a t 841.
748. Id . a t 831-32.
749. Dillin gh am Con str., 519 U.S., a t 325 (cit in g T ravelers, 514 U.S., a t
656, wh ich m a de t h e sa m e cr it icism a ft er it s pr eem pt ion by r efer en ce
a sser t ion ).
750. Greater Wash in gton , 506 U.S. 125 (1992).
751. T ravelers, 514 U.S. 645 (1995). In con t r a st , in M ack ey I, t h e st a t e la w
276
T h e J oh n M arsh all L aw R eview
[47:145
752
wa ge st a t u t es per t a in in g t o a ppr en t ice pla n s,
or la ws t h a t
753
im pose su r ch a r ges or t a xes on cer t a in ben efit pr ovider s.
In ea ch
decision , t h e Cou r t st a t ed t h er e wa s n o eviden ce of a n im plicit
ben efit t er m s m a n da t e wit h ou t discu ssin g t h e size of t h e cost
bu r den t h a t cou ld con st it u t e su ch a m a n da t e. Th e Cou r t a lso
st a t ed t h a t t h e st a t u t e did n ot pr eclu de a u n ifor m a dm in ist r a t ive
pr a ct ice, a lt h ou gh ea ch im posed t h e sa m e a dver se con sequ en ce of
a n a dm in ist r a t ive bu r den , n a m ely a cost bu r den for oper a t in g in
t h e st a t e wit h t h e la w a t issu e. Th is con clu sion im plies t h a t
E RISA on ly pr eem pt s a st a t e la w r ela t in g t o ben efit pa ym en t s if
t h e la w con flict s wit h t h e ben efit t er m s. Som e com m en t a t or s h a ve
a sser t ed t h is lim it a t ion of pr eem pt ion t o con flict pr eem pt ion
ext en ds t o a ll st a t e la ws n ot m er ely st a t e la ws wh ich in dir ect ly
a ffect ben efit en t it lem en t s, en for cem en t m ech a n ism a n d ben efit
754
m a n da t es.
Th e Cou r t n ever descr ibed h ow a st a t e la w m a y pr eclu de a
u n ifor m a dm in ist r a t ive pr a ct ice u n less t h e st a t e la w ot h er wise
im poses a n E RISA Gen er a l Ma n da t e, in wh ich ca se E RISA
pr eem pt s t h e la w.
Th u s, t h er e is n o a ppa r en t r ea son for
in t r odu cin g a pr eem pt ion t est focu sed on a dm in ist r a t ive bu r den s,
pa r t icu la r ly sin ce su ch bu r den s m a y be va lu ed, a n d t h e Cou r t
r u led t h a t im posin g a m on et a r y bu r den on t h e pla n does n ot r esu lt
in E RISA pr eem pt ion if t h er e is n o r esu lt in g ben efit t er m s
m a n da t e.
F ift h , E RISA does n ot pr eem pt t h e st a t e r egu la t ion of t h e
pr ovision of h ea lt h ca r e, su ch a s t h e r egu la t ion of m edica l-ca r e
755
qu a lit y a n d t h e h ospit a l wor kpla ce.
F in a lly, t h e Cou r t h oldin gs im ply t h a t E RISA per m it s a st a t e la w r epor t in g or disclosu r e m a n da t e for E RISA pla n s t h a t is
lim it ed t o t h e in for m a t ion n eeded t o im plem en t in a n on bu r den som e m a n n er a st a t e la w t h a t is n ot ot h e r wise pr eem pt ed,
su ch a s (1) t h e t a x r et u r n filin g a n d a u dit r equ est s t h a t a pla n
m a y be r equ ir ed t o com ply wit h for a t a x, su ch a s t h e on e a ppr oved
in De B u on o, descr ibed in fra; (2) t h e r equ ir em en t s t h a t a n E RISA
best owin g t h e ben efit of a n exem pt ion fr om ga r n ish m en t s, wh ich a ffect ed
n eit h er t h e pla n ’s ben efit st r u ct u r e n or t h e a dm in ist r a t ion of t h e ben efit
st r u ct u r e, r esu lt ed in t h e pr eem pt ion of t h e exem pt ion , a s discu ssed su pra.
752. Dillin gh a m Con st r ., 519 U.S. 316, 334 (1997).
753. T ravelers, 514 U.S. a t 646; De Bu on o v. NYSA-ILA Med. & Clin ica l
Ser vs. F u n d, 520 U.S. 806, 815-16 (1997).
754. S ee e.g., M E DILL E MP LOYE E B E NE F ITS L AW , su pra n ot e 13, a t 648
(a sser t in g t h a t t h e E RISA pr eem pt ion ju r ispr u den ce h a s “evolved fr om a
br oa d field pr eem pt ion a ppr oa ch in t h e Cou r t ’s ea r ly pr eem pt ion decision t o “a
m or e n a r r owly t a ilor ed con flict pr eem pt ion a n a lysis t oda y”). Un der t h is
a ppr oa ch , st a t es cou ld im pose r epor t in g a n d disclosu r e m a n da t es in a ddit ion
t o t h ose im posed by E RISA beca u se su ch a ddit ion a l r equ ir em en t s do n ot
con flict wit h t h e E RISA m a n da t es. Sim ila r ly, t h ey cou ld im pose m or e
st r in gen t fu n din g m a n da t es t h a n E RI SA.
755. T ravelers, 514 U.S., at 660-61, wh ich is cit ed by Dillin gh am Con str.,
519 U.S., a t 329.
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pla n ’s h ea lt h ca r e fa cilit ies file t h e in form ation n eeded by st a t e
a gen cies t o r egu la t e t h e m edica l ca r e qu a lit y a s descr ibed in
Kilian , descr ibed in fra; or (3) t h e r equ ir em en t s t h a t a n em ployer
m a in t a in pa yr oll r ecor ds for in spect ion for com plia n ce wit h t h e
st a t e-la w pr eva ilin g-wa ge r equ ir em en t s a ppr oved in Dillin gh am
756
Con str, descr ibed in fra.
A. S u prem e Cou rt H old s th at E R IS A Does N ot Preem pt a
S tate L aw T h at Im poses S u rch arges On ly On B lu e Cross
In su rers B ecau se Its relation to E R IS A Plan s is T oo
T en u ou s
In 1995, t h e Su pr em e Cou r t u n a n im ou sly h eld in N ew Y ork
S tate Con feren ce of B lu e Cross & B lu e S h ield Plan s v. T ravelers
757
In su ran ce Co. (“T ravelers”) t h a t E RISA did n ot pr eem pt a N ew
Yor k St a t e la w im posin g su r ch a r ges on h ospit a l pa t ien t s wit h n on Blu e Cr oss pr iva t e in su r a n ce (in clu din g self-in su r ed E RISA
758
pla n s).
Th e su r ch a r ges wer e design ed t o com pen sa t e Blu e Cr oss
for en r ollin g su bscr iber s t h a t t h e ot h er in su r er s wou ld n ot
759
en r oll.
Th e Cou r t obser ved t h a t t h e Secon d Cir cu it h a d fou n d
E RISA pr eem pt ion beca u se t h e su r ch a r ges wou ld m a k e it less
lik ely t h a t E RISA h ea lt h r eim bu r sem en t pla n s wou ld ch oose n on Blu e Cr oss pr iva t e in su r er s a n d t h er efor e wou ld “h a ve a n
im per m issible
im pa ct
on
E RISA pla n
st r u ct u r e
and
760
a dm in ist r a t ion .”
Th e Cou r t n ever t h eless h eld t h a t t h e la w did
761
n ot “r ela t e t o” a n y E RISA pla n .
Th e T ravelers Cou r t bega n it s a n a lysis by r efer r in g t o t h e
762
R ice pr esu m pt ion a ga in st t h e pr eem pt ion of st a t e la w, wh ich is a
bit odd sin ce t h e R ice cou r t wa s r efer r in g t o a la w wit h a n im plicit
pr eem pt ion r a t h er on e wit h a n expr ess pr eem pt ion , su ch a s t h e
E RISA E xpr ess P r eem pt ion .
Th e E RISA qu est ion is h ow
ext en sive is t h e explicit “r ela t e t o” pr eem pt ion .
Th e Cou r t
descr ibed t h e E RISA E xpr ess P r eem pt ion a s follows:
We sim ply m ust go beyon d t h e u n h elpfu l t ext a n d t h e fr u st r a t in g
756. S ee generally Alber t F eu er , Does E R IS A Perm it S tate-L aw R eportin g
an d Disclosure M an d ates to Im plem en t Crim in al L aw s, In su ran ce L aws, T ax
L aw s, L abor L aw s, Dom estic R elation s L aws, Health Care L aw s, or Oth er
S tate L aw s?, 42 B LOOMBE RG BNA C OMP P . J . (2014) (discussin g wh y E RISA
per m it s dom est ic a n d r epor t in g m a n da t es n eeded t o im plem en t a n y st a t e la w
t h a t E RISA does n ot ot h er wise pr eem pt ).
757. T ravelers, 514 U.S. a t 645.
758. Id . a t 649.
759. Id . a t 658.
760. Id . a t 654 (cit a t ion om it t ed) (qu ot in g t h e Secon d Cir cu it decision ,
Tr a veler s In s. Co. v. Cu om o, 14 F .3d 708, 721 (2d. Cir . 1994)). Th e Secon d
Cir cu it fin din g of pr eem pt ion wa s bein g a ppea led. Th e Cou r t did n ot con sider
wh et h er t h e st a t u t e wa s pr eem pt ed beca u se it im posed t h e su r ch a r ges on
pa t ien t s wit h E RISA self-in su r a n ce. T ravelers, 514 U.S. a t 652.
761. Id . a t 649.
762. Id . a t 655.
278
T h e J oh n M arsh all L aw R eview
[47:145
difficu lt y of defin in g it s key t er m , a n d look in st ea d t o t he object ives
of t h e E RISA st a t u t e a s a gu ide t o t h e scope of t h e st a t e la w t h a t
Con gr ess u n der st ood wou ld su r vive . . .
Th e ba sic t h r u st of t h e pr e-em pt ion cla u se, t h en , wa s t o a void a
m u lt iplicit y of r egu la t ion in or der t o per m it t h e n a t ion a lly u n ifor m
763
a dm in ist r a t ion of em ployee ben efit pla n s.
Th e Cou r t m a de a sim ila r in cor r ect ch a r a ct er iza t ion of
pr eem pt ion in Fort H alifax a s discu ssed su pra.
Th e Cou r t
r eviewed it s pr ior decision s a n d r ediscover ed t h e t en u ou s
lim it a t ion for t h e “r ela t e t o” con cept t h a t it h a d pr esen t ed in S h aw
in 1983, a lt h ou gh it a t t r ibu t ed t h e lim it a t ion t o t h e Gr ea t er
764
Wa sh in gt on , wh ich in 1992 ga ve cr edit t o S h aw .
Th e fir st pr eem pt ion t est t h e T ravelers Cou r t discover ed wa s
S h aw ’s r ecogn it ion t h a t t h e m ea n in g of t h e ph r a se “r ela t e t o”
in clu des “r efer t o,” bu t t h e Cou r t disr ega r ded S h aw ’s r equ ir em en t
765
of a n on -t en u ou s r ela t ion .
Th e Cou r t t h en r efer r ed t o t h e
Gr ea t er Wa sh in gt on h oldin g t h a t E RISA pr eem pt s a st a t e la w
wh ich “specifica lly r efer s t o welfa r e ben efit pla n s r egu la t ed by
E RISA,” even t h ou gh a s discu ssed, su pra, t h e Gr ea t er Wa sh in gt on
766
st a t u t e a s set for t h t h er ein h a d n o su ch r efer en ce.
Th e r u le t h a t
a st a t e la w t h a t r efer s t o E RISA is pr eem pt ed, sh a ll be h er ein a ft er
design a t ed a s t h e T ravelers P r eem pt ion by Refer en ce Ru le. Th e
su r ch a r ge la w, wh ich oper a t ed in dir ect ly on pla n s, h a d n o E RISA
767
r efer en ce.
Th u s, t h e st a t u t e a t issu e n eeded t o be fu r t h er
768
r eviewed.
Th e Cou r t t h en discover ed a secon d t est by or ga n izin g t h e
st a t e la ws it h a d pr eem pt ed in t o t h r ee ca t egor ies, t h ose t h a t
(1) m a n da t ed em ployee ben efit st r u ct u r es; (2) m a n da t ed pla n
a dm in ist r a t ion of em ployee ben efit st r u ct u r es; or (3) pr ovided
769
a lt er n a t ive en for cem en t m ech a n ism s.
Th e Tr a veler s Cou r t
m a de n o a t t em pt t o expla in wh y E RISA wou ld pr eem pt a st a t e la w en for cem en t m ech a n ism , bu t n ot pr eem pt a st a t e la w a ffect in g
wh a t t h e m ech a n ism wa s pr ot ect in g, i.e., t h e ben efit r igh t s of a n
E RISA pa r t icipa n t or ben eficia r y. Th e Cou r t a lso m a de n o
a t t em pt t o expla in h ow st a t e la w cou ld m a n da t e pla n
a dm in ist r a t ion ot h er t h a n by im posin g a n E RISA Gen er a l
Ma n da t e, wh ich a r e n ot lim it ed t o ben efit t er m s m a n da t es. Th e
T ravelers Cou r t decla r ed t h a t t h e su r ch a r ge’s in dir ect in flu en ce
did n ot “bin d pla n a dm in ist r a t or s t o a n y pa r t icu la r ch oice [of
ben efit s or ben efit pr ovider s] a n d t h u s fu n ct ion a s a r egu la t ion of
763.
764.
765.
766.
767.
768.
769.
Id .
Id .
Id .
Id .
Id .
Id .
Id .
a t 656-57.
a t 661.
a t 656.
a t 658.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
279
a n E RISA pla n it self.” Th u s, t h e su r ch a r ge la w did n ot fit wit h in
a n y of t h e t h r ee ca t egor ies. F in a lly, t h e Cou r t did n ot discu ss t h e
size of t h e a ccept a ble su r ch a r ges, bu t st a t ed t h a t , “t h er e is n o
eviden ce t h a t t h e su r ch a r ges will dr ive ever y h ea lt h in su r a n ce
771
con su m er t o t h e Blu es.”
Beca u se of t h is plea din g deficien cy,
wh ich seem s t o set a h igh pr eem pt ion t h r esh old, t h e Cou r t wa s
a ble t o a void t h e issu e of h ow la r ge of a cost differ en t ia l
con st it u t ed a m a n da t e, wh ich m a y be a n issu e beca u se com pet in g
in su r a n ce pr odu ct s oft en differ sign ifica n t ly in cost a n d ben efit s.
Th u s, t h e Cou r t con clu ded t h a t t h e la w wa s n ot pr eem pt ed
beca u se t h e cost differ en t ia l did n ot “for ce a n E RISA pla n t o a dopt
a cer t a in sch em e of su bst a n t ive cover a ge or effect ively r est r ict it s
772
ch oice of in su r er s.”
Th e T ravelers Cou r t decla r ed t h a t t h e su r ch a r ge’s in dir ect
in flu en ce did n ot “pr eclu de u n ifor m a dm in ist r a t ive pr a ct ice or t h e
pr ovision of a u n ifor m in t er st a t e ben efit pa cka ge if a pla n wish e[d]
773
t o pr ovide on e.” H owever , su ch pr eclu sion wou ld occu r if t h e la w
h a d a n y of t h e t h r ee list ed effect s, so it is u n clea r wh y t h e Cou r t
m en t ion ed eit h er cr it er ion .
Th e Cou r t obser ved t h a t if E RISA pr eem pt ed a n y st a t e la ws
t h a t a ffect ed ben efit cost s, E RISA wou ld a lso h a ve t o pr eem pt
ot h er h ea lt h ca r e r egu la t ion , su ch a s qu a lit y con t r ol la ws, wh ich
a ffect t h e cost of h ea lt h ca r e a n d t h e h ea lt h ca r e in su r a n ce
774
pr em iu m s pa id by E RISA pla n s.
Th e Cou r t con sider ed it m or e
r ea son a ble t o fin d t h a t t h e effect s on E RISA pla n s of a ll t h ese
h ea lt h ca r e r egu la t ion s wer e t oo t en u ou s for a n y of t h ese
r egu la t ion s t o be pr eem pt ed. Th is con clu sion wa s ba sed on t h e
a sser t ion t h a t h ea lt h r egu la t ion s h ist or ica lly a r e a m a t t er of loca l
775
con cer n a n d t h a t t h e r egu la t ion s wer e en cou r a ged by a feder a l
776
la w pa ssed a n d a dopt ed by Con gr ess in 1 974.
Th e Cou r t a lso
en dor sed it s pr ior disr ega r d of E RISA ben efit r igh t s in Ma ckey
wit h ou t m en t ion in g t h ose r igh t s, bu t a ga in r efer r ed t o t h e sm a ll
a dm in ist r a t ive bu r den of pa yin g ben efit s t o a per son ot h er t h a n a
777
pla n pa r t icipa n t or ben eficia r y.
778
Th e Cou r t , a s it h a d in In gersoll-R an d , discu ssed su pra, left
m a n y qu est ion s a bou t wh a t kin d of a dm in ist r a t ive or cost bu r den s
wou ld r esu lt in t h e pr eem pt ion of a st a t e la w. Aga in t h e bet t er
a ppr oa ch is t o disr ega r d a n y a dm in ist r a t ive or cost bu r den
770
770. Id . a t 659.
771. Id . a t 659.
772. Id . a t 668.
773. Id . a t 660.
774. Id . a t 661.
775. Id . a t 661.
776. Id . a t 665. H owever , t h e cit ed feder a l la w, t h e Na t ion a l H ea lt h
P la n n in g a n d Resou r ces Developm en t Act of 1974, did n ot a u t h or ize t h e st a t e
r u les a t issu e. 42 U.S.C. §§ 300k-300t ; P u b. L. No. 93-641 (1975).
777. T ravelers, 514 U.S. a t 662.
778. In gersoll-R an d Co., 498 U.S. at 142.
280
T h e J oh n M arsh all L aw R eview
[47:145
a n a lysis or con sider a t ion of wh et h er t h e la w is a t r a dit ion a l st a t e
power . Ra t h er , it is pr efer a ble t o a sk wh et h er t h e st a t e la w
r esu lt s in a ch a n ge in ben efit r igh t s u n der t h e pla n t er m s, a n ew,
en h a n ced, or dim in ish ed en for cem en t m ech a n ism , or a n E RISA
Gen er a l Ma n da t e. If n ot , t h e la w’s effect s on E RISA pr ot ect ion s
a r e t oo t en u ou s t o r esu lt in E RISA pr eem pt ion .
B . S u prem e Cou rt H old s T h at E R IS A Does N ot Preem pt a
S tate L aw T h at Im poses T axes on Operators of H ealth Care
Facilities, In clu d in g E R IS A Plan s, B ecau se Its R elation to
E R IS A Plan s is too T en u ou s
In 1997, t h e Su pr em e Cou r t in De B u on o v. N Y S A-IL A
779
M ed ical & Clin ical S ervices Fu n d , h eld t h a t E RISA did n ot
pr eem pt a New Yor k St a t e la w, t h e H ea lt h F a cilit y Assessm en t
(“H F A”), wh ich im posed t a xes on t h e gr oss r eceipt s of oper a t or s of
780
m edica l fa cilit ies.
Th e Cou r t obser ved t h a t t h e Secon d Cir cu it
h a d fou n d E RISA pr eem pt ion beca u se t h e t a x deplet ed t h e a sset s
of t h e E RISA pla n ; t h u s, it h a d a m or e im m edia t e im pa ct on t h e
pla n t h a n t h e su r ch a r ges on t h e in su r er s t h a t wer e n ot pr eem pt ed
781
in T ravelers.
Th e Cou r t r epea t ed it s T ravelers a n a lysis. It bega n by
obser vin g a s it h a d in T ravelers, t h a t t h e h ist or ic police power s of
782
t h e St a t e in clu de t h e r egu la t ion of m a t t er s of sa fet y a n d h ea lt h .
Th u s, t h e bu r den is on t h e pr opon en t s of pr eem pt ion t o over com e
t h e pr esu m pt ion t h a t Con gr ess does n ot in t en d t o over r u le st a t e
783
la w. Th er e is n o r efer en ce in t h e st a t e la w t o a n E RISA pla n a n d
784
t h e st a t u t e h a s n on e of t h e t h r ee list ed effect s on E RISA pla n s.
Th u s, t h e la w is n ot pr eem pt ed, a n d t h e st a t e la w is descr ibed
wit h t h e followin g con clu sor y la n gu a ge:
t h e H F A is on e of “m yr ia d st a t e la ws” of gen er a l a pplica bilit y t ha t
im pose som e bu r den s on t h e a dm in ist r a t ion of E RISA pla n s bu t
n ever t h eless do n ot “r ela t e t o” t h em wit h in t h e m ea n in g of t h e
785
gover n in g st a t u t e.
Th e Cou r t obser ves t h a t t h er e is n o differ en ce bet ween t h e
dir ect a n d in dir ect effect of t h e t a x beca u se if t h e pla n h a d
obt a in ed t h e ser vices fr om a t h ir d pa r t y, t h a t pa r t y, lik e T ravelers,
786
wou ld h a ve pa id t h e a s sessm en t .
Th e Cou r t m a de t h e sa m e
r eser va t ion a s it h a d in T ravelers. Th er e wou ld be pr eem pt ion if
779. De Bu on o v. NYSA-ILA Med. & Clin ica l Ser vs. F u n d, 520 U.S. 806
(1997).
780. Id . a t 816.
781. Id . a t 812 (cit in g NYSA-ILA Medica l a n d Clin ica l Ser v. F u n d v.
Axelr od, M. D., 74 F .3d 28, 30 (1996)).
782. Id . a t 814.
783. Id .
784. Id . a t 815.
785. Id .
786. Id . a t 816.
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
281
t h e t a x wer e so su bst a n t ia l a s t o “a s t o for ce a n E RISA pla n t o
a dopt a cer t a in sch em e of su bst a n t ive cover a ge or effect ively
r est r ict it s ch oice of in su r er s,” wit h ou t discu ssin g t h e size of t h e
787
t a x a t issu e a n d wh y it h a d n o su ch effect .
Th e Cou r t a ga in
fa iled t o discu ss wh et h er a la w wit h in dir ect effect s, t h a t h a d n on e
of t h e t h r ee dir ect effect s discu ssed, cou ld ever be pr eem pt ed. Th is
decision ’s a n a lysis su ggest s t h a t t h e a n swer is n o.
C. S u prem e Cou rt H old s T h at E R IS A Does N ot Preem pt a
S tate L aw T h at Im poses L ow er Prevailin g Wages For
Participan ts in Approved Appren tice Program s, Wh ich
In clu d ed B u t Were N ot L im ited to E R IS A Appren tice Plan s
In 1997, t h e Su pr em e Cou r t h eld in Californ ia Division of
L abor S tan d ard s E n forcem en t v. Dillin gh am Con stru ction N .A.
788
In c. (“Dillin gh am Con str.”),
t h a t E RISA did n ot pr eem pt a
Ca lifor n ia la w pr ovidin g t h a t pa r t icipa n t s in a ppr oved a ppr en t ice
pr ogr a m s m a y be pa id com pen sa t ion below t h e u su a l st a t e
789
pr eva ilin g r equ ir em en t s a pplica ble t o pu blic wor ks con t r a ct or s .
Th e Cou r t r epea t ed it s T ravelers a n a lysis. Th e Cou r t bega n
a s it h a d in T ravelers, wit h t h e R ice pr esu m pt ion of n o
790
pr eem pt ion .
It fou n d n o sh owin g t h a t t h e st a t e la w r egu la t ed
on ly E RISA a ppr en t ice pla n s; t h u s, t h e T ravelers P r eem pt ion by
791
Refer en ce Ru le did n ot pr ovide for pr eem pt ion .
Th e Cou r t h eld
t h a t t h e st a t u t e wa s in dist in gu ish a ble fr om t h e su r ch a r ge
pr ogr a m in T ravelers, wh ich it h eld wa s n ot pr eem pt ed beca u se it
did n ot m a n da t e em ployee ben efit st r u ct u r es or t h eir
792
a dm in ist r a t ion . As in t h a t ca se, t h e st a t e t r a dit ion a lly r egu la t ed
a ppr en t icesh ip st a n da r ds a n d t h e wa ges pa id on st a t e pu blic
wor k s, a n d t h ose st a n da r ds wer e r em ot e fr om t r a dit ion a l a r ea s of
E RISA r egu la t ion , su ch a s fidu cia r y r espon sibilit y a n d r epor t in g
793
a n d disclosu r e r equ ir em en t s.
As wit h t h e st a t e h ea lt h
su r ch a r ge, a feder a l la w en cou r a ged st a t e st a n da r ds for a ppr en t ice
794
pr ogr a m s, wh ich m a de pr eem pt ion u n likely.
H owever , m ost
im por t a n t , t h e st a t u t or y effect s wer e t oo t en u ou s beca u se:
Like New Yor k’s su r ch a r ge r equ ir em en t , t h e a ppr en t icesh ip por t ion
of t h e pr eva ilin g wa ge st a t u t e does n ot bin d E RISA pla ns t o
a n yt h in g. No a ppr en t icesh ip pr ogr a m is r equ ir ed by Ca lifor n ia la w
t o m eet Ca lifor n ia ’s st a n da r ds. See S ou th ern Cal. AB C, 4 Ca l. 4t h a t
428, 841 P .2d a t 1013. If a con t r a ct or ch ooses t o h ir e a ppr en t ices for
a pu blic wor ks pr oject , it n eed n ot h ir e t h em fr om a n a ppr oved
787.
788.
789.
790.
791.
792.
793.
794.
Id . a t 816, n .16.
Dillin gh am Con str., 519 U.S. 316 (1997).
Id . a t 319.
Id . a t 325.
Id . a t 325-28.
Id . a t 330.
Id . a t 331.
Id .
282
T h e J oh n M arsh all L aw R eview
[47:145
pr ogr a m (a lt h ou gh if it does n ot , it m u st pa y t h ese a ppr en t ices
795
jou r n eym a n wa ges).
In a con cu r r en ce, J u st ice Sca lia join ed by J u st ice Gin sber g
a r gu ed t h a t ca r efu l a n a lysis of t h e E RISA E xpr ess P r eem pt ion is
u n n ecessa r y beca u se t h e Cou r t is essen t ia lly in t er pr et in g it a s
796
iden t ifyin g t h e field in wh ich field pr eem pt i on a pplies. Th is m a y
descr ibe t h e pr eem pt ion of st a t e la ws t h a t con st it u t e E RISA
Gen er a l Ma n da t es, bu t m a y n ot en com pa ss t h e pr eem pt ion of
st a t e la ws t h a t pr even t a pa r t icipa n t fr om exer cisin g ben efit r igh t s
u n der t h e t er m s of a n E RISA pla n , wh ich t h e Con fer en ce
Com m it t ee a dded t o t h e pr eem pt ion pr ovision s of t h e bill t h a t wa s
a ppr oved by Con gr ess a s E RISA a s descr ibed, su pra.
XIV.
TH E SUP RE ME COURT H OLDS TH AT E RISA P RE E MP TS
A STATE LAW CLAIM OF A P E RSON TH AT ARISE S F ROM
A P ARTICIP ANT’S OR BE NE F ICIARY’S RIGH T TO AN
E RISA P LAN BE NE F IT TH AT WOULD P RE VE N T TH E
P LAN F ROM P AYING TH E P ARTICIP AN T OR
BE NE F ICIARY SUCH BE N E F IT OR P E RMIT TH E P E RSON
TO WRE ST TH E BE NE F IT OR TH E AMOUNT OF TH E
BE NE F IT F ROM TH E P ARTICIP ANT OR BE NE F ICIARY
In 1997, t h e Su pr em e Cou r t h eld t h a t a st a t e la w pr even t in g
t h e r et en t ion of E RISA pen sion pla n ben efit pa ym en t s wa s
797
pr eem pt ed.
In 2001, t h e Cou r t ext en ded t h e h oldin g t o n on 798
pen sion pla n ben efit s.
Mor eover , t h e Cou r t pr ocla im ed t h a t
E RISA did n ot pr ovide m ea n in gless t it le. Th u s, E RISA ben efit
r igh t s in clu de t h e r igh t of a pla n pa r t icipa n t or ben eficia r y t o
799
r eceive a n d r et a in pla n ben efit s.
Th u s, E RISA wa s h eld t o
pr eem pt a st a t e com m u n it y pr oper t y la w a n d a st a t e r evoca t ion
u pon divor ce la w t o t h e con t r a r y.
Th e r ea son in g of t h e t wo decision s im plies t h a t a per son wit h
a st a t e la w cla im t h a t a r ises fr om a pa r t icipa n t ’s or ben eficia r y’s
r igh t t o a n E RISA pla n ben efit m a y n ot com pel t h e pla n t o pa y it
su ch ben efit or wr est t h e ben efit or t h e a m ou n t of t h e ben efit fr om
t h e pa r t icipa n t or ben eficia r y. A st a t e la w cla im a r ises fr om a
pa r t icipa n t ’s or ben eficia r y’s r igh t t o a n E RISA pla n ben efit if su ch
cla im wou ld disa ppea r if t h e pa r t icipa n t or ben eficia r y h a d n ot
obt a in ed t h e ben efit . In pa r t icu la r , t h e cla im s in bot h decision s
wou ld h a ve disa ppea r ed if t h e ben eficia r y h a d n ot obt a in ed t h e
795.
796.
797.
798.
799.
Id . a t 332.
Id . a t 334-336 (Sca lia , J ., con cu r r in g).
B oggs, 520 U.S. a t 836.
E gelh off, 532 U.S. a t 143.
B oggs, 520 U.S a t 843; E gelh off, 532 U.S. a t 152.
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ben efit a t issu e. If t h e pla n t er m s h a d pr ovided for defer en ce t o
t h e st a t e la w cla im , t h e cla im a n t wou ld h a ve been a pla n
ben eficia r y, a n d t h er e wou ld h a ve been n o pr eem pt ion issu e.
H owever , a cla im a ga in st t h e ben eficia r y for t h e ben eficia r y’s
h om e m or t ga ge pa ym en t wou ld r em a in if t h e ben eficia r y h a d n ot
obt a in ed t h e ben efit a t issu e, a n d t h u s be en for cea ble a ga in st su ch
ben efit . Sim ila r ly, E RISA pr eem pt s a ph ysicia n ’s st a t e la w cla im
for pa ym en t of ser vices ba sed on t h e pa t ien t ’s E RISA pla n
cover a ge, bu t n ot on e ba sed on t h e va lu e of t h e ser vices pr ovided.
A fortiori, t h ese t wo decision s u n der m in e t h e via bilit y of t h e
(1) M ack ey II h oldin g t h a t per m it t ed a st a t e ga r n ish m en t la w t o
pr even t a n E RISA pla n ’s pa ym en t s of va ca t ion ben efit s t o a pla n
pa r t icipa n t , t o wh ich t h e pa r t icipa n t wa s en t it led u n der t h e pla n
t er m s, a n d (2) t h e su ggest ion t h a t E RISA does n ot pr eem pt
gen er a lly a pplica ble st a t e la ws , sin ce bot h pr eem pt ed la ws wer e
gen er a lly a pplica ble.
On t h e ot h er h a n d, t h is a n a lysis is n ot fu lly a pplica ble t o
st a t e-la w cla im s ba sed on t h e t a xa t ion of t h e pla n ben efit s
dist r ibu t ed t o a pa r t icipa n t or a ben eficia r y. Su ch cla im s a r ise
fr om t h e in dividu a l’s r igh t t o a n E RISA pla n ben efit , bu t m u st be
t r ea t ed lik e st a t e-la w cla im s t h a t do n ot so a r ise a n d r em a in
via ble. Th u s, t a x cla im s m a y be u sed by t h e st a t e t o wr est t h e t a x
a m ou n t of t h e ben efit fr om t h e in dividu a l. If t h is wer e n ot t h e
ca se, E RISA pla n pa ym en t s wou ld be r en der ed t a x-exem pt in fa ct ,
even t h ou gh E RISA does n ot m a ke a n in dividu a l’s E RISA ben efit s
t a x-exem pt . H owever , su ch t a x cla im s m a y n ot be u sed t o com pel
t h e pla n t o pa y t h e st a t e su ch t a x a m ou n t fr om t h e in dividu a l’s
ben efit , beca u se t a x la ws m a y st ill be im plem en t ed wit h ou t su ch
a u t h or it y, a n d t h e E RISA E xpr ess P r eem pt ion a ppea r s t o per m it
n on -t en u ou s effect s on t h e E RISA ben efit pr ot ect ion s on ly t o t h e
ext en t n eeded t o im plem en t a st a t e la w t h a t is ot h er wise n ot
pr eem pt ed. No su ch lim it s a pply t o st a t e la ws, su ch a s gen er a lly
a pplica ble cr im in a l la ws, t h a t a r e explicit ly exclu ded fr om t h e
E RISA E xpr ess P r eem pt ion .
A. S u prem e Cou rt H old s T h at (1) E R IS A Preem pts a S tate
Com m u n ity Property L aw T h at Gives a Participan t’s S pou se
th e R igh t to Dispose of Part of th e Participan t’s Pen sion B en efit
at H er Death if S h e Pred eceases th e Participan t, an d (2) H er
L egatees Do N ot H ave th e R igh t to Obtain th e Distribu ted
B en efits of th e Participan t
800
In 1997, t h e Su pr em e Cou r t h eld in B oggs v. B oggs, t h a t
E RISA pr eem pt s a Lou isia n a com m u n it y pr oper t y la w per m it t in g
a pa r t icipa n t ’s spou se t o t r a n sfer a por t ion of h is E RISA pen sion
800. B oggs, 520 U.S. 833. A m or e ext en sive discu ssion m a y be fou n d at
Feu er’s E R IS A M yth s, supra n ot e 25, a t 720-725.
284
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[47:145
801
ben efit t o t h eir ch ildr en wh en sh e pr edecea sed h im .
Th u s, t h ose
ch ildr en did n ot t h er eby der ive a n en t it lem en t t o t h e pen sion
a m ou n t s pa id t o h im or h is design a t ed ben eficia r ies followin g h is
dea t h . Th er e a ppea r ed t o be n o ch a llen ge of t h e decision below
802
t h a t t h e pla n s h a d n o dir ect lia bilit y t o t h e ch ildr en .
803
In B oggs t h e pa r t icipa n t ’s fir st wife, Dor ot h y, died in 1979.
In 1980, a Lou isia n a cou r t a scr ibed t o t h e fir st wife’s est a t e a n
in t er est of $21,194.29 in t h e u n dist r ibu t ed in t er est of t h e
804
pa r t icipa n t ’s sa vin gs pla n (t h e “Sa vin gs P la n ”).
Th e fir st wife’s
will ga ve (a ) t h e pa r t icipa n t a life in t er est in h er a sset s a n d on e
t h ir d of t h e r em a in der , a n d (b) h er ch ildr en t wo-t h ir ds of t h e
805
r em a in der .
Th e pa r t icipa n t r em a r r ied Sa n dr a wit h in a yea r of
806
t h e fir st wife’s dea t h , i.e., in 1980.
In 1985, h e r et ir ed a n d
r eceived (a ) a lu m p su m dist r ibu t ion of $151,628.94 fr om t h e
Sa vin gs P la n , wh ich h e r olled in t o a n IRA—h e m a de n o
wit h dr a wa ls befor e h is dea t h in 1989; (b) AT&T sh a r es fr om a n
E SOP , wh ich h e r et a in ed u n t il h is dea t h ; a n d (c) t h e in it ia l
pa ym en t s of a qu a lified join t a n d su r vivor a n n u it y wit h su r vivor
r igh t s in Sa n dr a , h is secon d wife, fr om a dist in ct r et ir em en t pla n
807
(t h e “Ret ir em en t P la n ”).
Un der t h e pa r t icipa n t ’s will, h is widow
Sa n dr a r eceived a life in t er est in t h e AT&T sh a r es a n d Sa n dr a
808
a ppea r ed t o be t h e sole ben eficia r y of t h e IRA.
Aft er t h e
pa r t icipa n t ’s dea t h , t h e a du lt ch ildr en of Dor ot h y a n d t h e
pa r t icipa n t , sou gh t t h e pr oper t y t h ey cla im ed t o h a ve been
en t it led t o a s of t h e da t e of t h eir m ot h er ’s dea t h , n a m ely a por t ion
of (a ) t h e a n n u it y pa ym en t s r eceived by t h e pa r t icipa n t du r in g h is
life, (b) t h e a n n u it y pa ym en t s bein g r eceived by t h e pa r t icipa n t ’s
809
widow, (c) t h e IRA a ccou n t , a n d (d) t h e E SOP sh a r es.
Th e Cou r t did n ot begin it s a n a lysis wit h t h e R ice
pr esu m pt ion a ga in st pr eem pt ion , bu t wit h t h e t r a dit ion a l
st a t em en t t h a t “E RISA is a com pr eh en sive st a t u t e design ed t o
pr om ot e t h e in t er est s of em ployees a n d t h eir ben eficia r ies in
810
em ployee ben efit pla n s.” Th e Cou r t decided by a vot e of 7-2 t h a t
t h e ch ildr en wer e n ot en t it led t o r eceive fr om t h e widow, pa ym en t
for a n y pa r t of t h e spou sa l su r vivor ben efit s pa id t o t h e
pa r t icipa n t ’s widow fr om t h e Ret ir em en t P la n in a ccor d wit h t h e
811
E RISA r equ ir em en t for t h e Spou sa l Su r vivor Ben efit Ma n da t e.
801. B oggs, 520 U.S. a t 842-44.
802. Id . a t 838.
803. Id . a t 836.
804. Id . a t 837.
805. Id . a t 836-37.
806. Id . a t 836.
807. Id .
808. Id . a t 837.
809. Id .
810. B oggs, 520 U.S. a t 845 (cit in g S h aw , 463 U.S. a t 90).
811. Id . a t 842. Th e Spou sa l Su r vivor Ben efit Ma n da t e is a t E RISA § 205,
29 U.S.C. § 1055 (2012).
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285
Th e dissen t , h owever , a r gu ed t h a t (a ) t o t h e ext en t t h a t t h e
spou se h a d r eceived ot h er a sset s fr om t h e est a t e sh e wa s lia ble t o
t h e ch ildr en t o u se t h em t o com pen sa t e t h e ch ildr en for t h e va lu e
of t h e su r vivor ben efit s t h a t sh e r eceived, a n d (b) E RISA wa s on ly
812
con cer n ed wit h t h e u n ifor m it y of pa ym en t s by E RISA pla n s.
Th u s, t h e dissen t a r gu ed t h er e wou ld be n o E RISA viola t ion if t h e
widow wa s r equ ir ed t o pr ovide t h e ch ildr en wit h pr oper t y ot h er
813
t h a n t h e su r vivor ben efit s t h a t sh e r eceived.
Th e m a jor it y
r eject ed t h is a r gu m en t . In pa r t icu la r , t h e m a jor it y obser ved t h a t
t h e st a t u t or y ben eficia r y design a t ion s of t h e Sp ou sa l Su r vivor
Ben efit Ma n da t e wer e design ed t o in su r e a n in com e st r ea m t o t h e
814
su r vivin g spou se.
Th u s, t h e ch ildr en ’s com m u n it y pr oper t y
cla im wa s a pr eem pt ed E RISA Gen er a l Ma n da t e:
It wou ld u n der m in e t h e pur pose of E RISA’s m a n da t ed su r vivor ’s
a n n u it y t o a llow Dor ot h y, t h e pr edecea sin g spou se, by h er
t est a m en t a r y t r a n sfer t o defea t in pa r t Sa n dr a ’s en t it lem en t t o t h e
a n n u it y § 1055 gu a r a n t ees her a s t h e su r vivin g spou se. Th is ca n n ot
815
be. St a t es a r e n ot fr ee t o ch a n ge E RISA’s st r u ct u r e a n d ba la n ce.
Th e Cou r t , by a vot e of 5-4, fou n d a st a t e la w con flict wit h
a n ot h er design a t ion m a n da t e, t h e r igh t of a pa r t icipa n t t o ch oose
h is ben eficia r y pu r su a n t t o t h e pla n t er m s, pr eem pt ed t h e
ch ildr en ’s cla im t o a por t ion of (a ) t h e Sa vin gs P la n ben efit s t h a t
t h e pa r t icipa n t h a d r eceived a n d r olled over in t o a n IRA, (b) t h e
st ock t h e pa r t icipa n t h a d r eceived fr om a n E SOP , a n d (c) t h e
Ret ir em en t P la n a n n u it y ben efit s t h a t t h e pa r t icipa n t r eceived,
816
bu t h a d n ot r olled over in t o a n IRA or ot h er t a x-qu a lified pla n .
Th e m a jor it y em ph a sized t h a t t h e ch ildr en wer e n ot pla n
817
ben eficia r ies u n der t h e pla n t er m s.
Th e m a jor it y st a t ed t h a t t h e en a ct m en t of RE ACT m a de
818
in a pplica ble it s pr ior 1980 decision , Su p Ct . Ca m pa ,
wh ich
812. B oggs, 520 U.S. a t 862-74 (Br eyer , J ., dissen t in g).
813. Id . a t 871-73.
814. Id . a t 843-44.
815. Id . a t 844.
816. Id . a t 844-50.
817. Id . a t 845-50.
818. Id . a t 849-50. Th e Su pr em e Cou r t a lso explicit ly over r u led decision s
t h a t r ea ch ed t h e sa m e r esu lt s a s Cam pa, su ch a s St on e v. St on e, 633 F .2d 740
(9t h Cir . 1980) (h oldin g E RISA does n ot pr eem pt st a t e -cou r t or der s r equ ir in g
a pen sion pla n t o pa y [in t h e fu t u r e] a com m u n it y pr oper t y sh a r e of a pla n
pa r t icipa n t ’s m on t h ly ben efit pa ym en t s dir ect ly t o h is or h er ex -spou se), Sa v.
& P r ofit Sh a r in g F u n d of Sea r s E m ps. v. Ga go, 717 F .2d 1038 (7t h Cir . 1983)
(h oldin g E RISA does n ot pr eem pt a dir ect ion by t h e pa r t icipa n t ’s for m er
spou se pu r su a n t t o a dom est ic r ela t ion s or der t h a t t h e pla n m a ke pla n
pa ym en t s t o h er wh en t h e pa r t icipa n t cou ld h a ve given , bu t h a d n ot yet given ,
dir ect ion for pla n pa ym en t s t o begin ), a n d E ich elber ger v. E ich elber ger , 584 F .
Su pp. 899 (S.D. Tex. 1984) (h oldin g E RISA does n ot pr eem pt r igh t of for m er
spou se pu r su a n t t o dom est ic r ela t ion s or der t o dir ect in vest m en t s of h er sh a r e
of pa r t icipa n t ’s pen sion a ccou n t ).
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T h e J oh n M arsh all L aw R eview
[47:145
per m it t ed dom est ic r ela t ion s cla im s t o over r ide E RISA pla n t er m s.
Mor eover , t h e Cou r t obser ved t h a t t h e E RISA’s spou sa l su r vivor
ben efit pr ovision s a n d QDRO pr ovision s a ddr essed t h e scope of a
819
n on pa r t icipa n t spou se's com m u n it y pr oper t y in t er est s.
Th e Cou r t “r ein for ced” it s design a t ion a r gu m en t by r efer r in g
820
t o t h e Alien a t ion P r oh ibit ion ,
bu t t h en r efer r ed t o t h e
pa r t icipa n t ’s design a t ion pu r su a n t t o t h e pla n t er m s “[a ]s wa s t r u e
wit h su r vivor s’ a n n u it ies, it wou ld be in im ica l t o E RISA’s pu r poses
t o per m it t est a m en t a r y r ecipien t s t o a cqu ir e a com pet in g in t er est
in u n dist r ibu t ed pen sion ben efit s, wh ich a r e in t en ded t o pr ovide a
821
st r ea m of in com e t o pa r t icipa n t s a n d t h eir ben eficia r ies.”
Th e Cou r t r epea t ed it s Free st a t em en t t h a t givin g fu ll t it le t o
a n in dividu a l bu t for cin g t h e in dividu a l t o a ccou n t for t h e va lu e is
822
t o pr ovide “m ea n in gless t it le.”
Th e Cou r t pa r a ph r a sed t h a t
st a t em en t :
If st a t e la w is n ot pr e-em pt ed, t h e diver sion of r et ir em en t ben efit s
will occu r r ega r dless of wh et h er t h e in t er est in t h e pen sion pla n is
823
en for ced a ga in st t h e pla n or t h e r ecipien t of t h e pen sion ben efit .
Th e m a jor it y in it s fin a l pa r a gr a ph em ph a sized t h e cr it ica l
im por t a n ce of ext en din g E RISA pr ot ect ion t o dist r ibu t ed E RISA
ben efit s a s follows:
T h e axis arou n d w h ich E R IS A’s protection s revolve is [sic] th e
con cepts of participan t an d ben eficiary. Wh en Con gr ess h a s ch osen
t o depa r t fr om t h is fr a m ewor k, it h a s don e so in a ca r efu l a n d
lim it ed m a n n er . Respon den t s’ cla im s, if a llowed t o su cceed, wou ld
depa r t fr om t h is fr a m ewor k, u pset t in g t h e deliber a t e ba la n ce
cen t r a l t o E RISA. It d oes n ot m atter th at respon d en ts h ave sou gh t to
en force th eir righ ts on ly after th e retirem en t ben efits h ave been
d istribu ted sin ce th eir asserted righ ts are based on th e th eory th at
th ey h ad an in terest in th e u n d istribu ted pen sion plan ben efits . Th eir
st a t e-la w cla im s a r e pr e-em pt ed. Th e ju dgm en t of t h e F ift h Cir cu it
824
is Rever sed.
Alm ost a h u n dr ed yea r s ea r lier , t h e Cou r t h a d r eject ed a
sim ila r a lch em y cla im t h a t a st a t e com m u n it y pr oper t y r igh t
m a gica lly spr a n g in t o effect a ft er t h e feder a l gover n m en t
t r a n sfer r ed a n ot h er feder a lly pr ot ect ed r igh t , a lbeit t o h om est ea d
825
pr oper t y, in M cCu n e v. E ssig, a n d obser ved t h a t u n r ela t ed st a t e
cla im s a ga in st t h e per son wit h t h e feder a l r igh t cou ld be en for ced
826
a ga in st t h e dist r ibu t ed h om est ea d .
819. B oggs, 530 U.S., a t 850.
820. Id . a t 851.
821. Id . a t 852.
822. Id . a t 853.
823. Id . (em ph a sis a dded).
824. Id . a t 854 (em ph a sis a dded).
825. McCu n e v. E ssig, 199 U.S. 382 (1905). A m or e ext en sive discu ssion of
t h e decision m a y be fou n d a t Feu er’s E R IS A M yth s, su pra n ot e 25, a t 653-654.
826. McCu n e, a t 390.
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287
Th e Cou r t ’s con clu sion does n ot depen d on t h e ben efit bein g
fr om a Spou sa l Su r vivor Ben efit P la n , or fr om a pen sion pla n . N or
do t h ey pr even t a ll st a t e-la w cla im s fr om bein g a pplied t o
dist r ibu t ed ben efit s. Th a t pr eem pt ion seem s t o be lim it ed t o st a t e la w cla im s ba sed on “a n in t er est in t h e u n dist r ibu t ed ben efit s.”
Su ch cla im s in clu de own er sh ip cla im s, a s in Boggs, con t r a ct cla im s
827
a n d cla im s of u n ju st en r ich m en t , a s discu ssed in H illm a n , in fra.
As discu ssed in fr a , t h e st r u ct u r e of E RISA det er m in es t h e ext en t
t o wh ich E RISA pr eem pt s su ch cla im s.
Un der t h e B oggs a n d t h e M cCu n e r ea son in g, it wou ld a ppea r
n o st a t e la w cla im t h a t a r ises fr om a pa r t icipa n t ’s or ben eficia r y’s
r igh t t o a n E RISA ben efit u n der t h e pla n t er m s m a y be u sed t o
wr est t h e ben efit fr om su ch pa r t icipa n t or ben eficia r y. A st a t e -la w
cla im a r ises fr om a pa r t icipa n t ’s or ben eficia r y’s r igh t t o a n E RISA
pla n ben efit if t h e cla im wou ld disa ppea r if t h e pa r t icipa n t or
ben eficia r y h a d n o su ch ben efit r igh t , wh ich is a r ea son a ble wa y of
det er m in in g wh et h er t h e st a t e-la w cla im ba sed on “a n in t er est in
t h e u n dist r ibu t ed ben efit s.”. In pa r t icu la r , a cla im a r ises fr om a
pa r t icipa n t ’s or ben eficia r y’s r igh t t o a n E RISA pla n ben efit if t h e
cla im wer e solely ba sed on a pr om ise by t h e pa r t icipa n t t o for wa r d
t h e pla n ben efit pa ym en t s t o t h e cla im a n t , su ch a s pen sion
a dva n ces discu ssed in fra, In su ch ca se t h er e wou ld h a ve been n o
cla im if t h e pa r t icipa n t h a d n o ben efit r igh t Th u s, t h e cla im wou ld
be pr eem pt ed , u n less t h e pr om ise com plied wit h t h e pla n t er m s, if
a n y, for t h e a ssign m en t of t h e ben efit so t h e cla im a n t wou ld h a ve
t h e r igh t t o obt a in t h e ben efit pa ym en t s fr om t h e pla n or fr om t h e
pa r t icipa n t . On t h e ot h er h a n d, a cla im t o en for ce a debt t h a t did
n ot depen d u pon a pa r t icipa n t ’s r igh t t o a n E RISA ben efit , su ch a s
a debt on a Ma cy’s cr edit ca r d wou ld n ot be so r ela t ed , a n d cou ld
be en for ced a ga in st t h e dist r ibu t ed ben efit u n der t h is a n a lysis.
Th e Cou r t r eject ed t h e dissen t ’s a ppea l t o t h e R ice
828
pr esu m pt ion a ga in st pr eem pt ion .
In st ea d, t h e Cou r t focu sed on
t h e E RISA pu r pose a n d t h e con flict wit h t h a t pu r pose, wh ich is
sim ila r t o it s Free a ppr oa ch . Th e Cou r t st a t ed, “[w ]e can begin ,
an d in th is case en d , th e an alysis by sim ply ask in g if state law
con flicts w ith th e provision s of E R IS A or operates to fru strate its
objects. We h old t h a t t h er e is a con flict , wh ich su ffices t o r esolve
829
t h e ca se.”
827. H illm a n v. Ma r et t a , 569 U.S. __, 133 S. Ct . 194, 2013 U.S. LE XIS
4167 (J u n e 3, 2013).
828. B oggs, 520 U.S. a t 861 (Br eyer , J ., dissen t in g) (cit in g R ice, 331 U.S. at
218).
829. Id . a t 841 (em ph a sis a dded).
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[47:145
B . S u prem e Cou rt H old s T h at (1) E R IS A Preem pts a S tate L aw
T h at R evok es an E R IS A Plan B en eficiary Design ation Upon a
Divorce, (2) S tate L aw Design ated B en eficiaries M ay N ot Wrest
th e B en efits Form th e E R IS A B en eficiary, an d (3) E R IS A
Preem pts Gen erally Applicable N on -Crim in al L aw s T h at
Violate an E R IS A Gen eral M an d ate
830
In 2001, t h e Su pr em e Cou r t h eld in E gelh off v. E gelh off,
t h a t E RISA pr e-em pt s a Wa sh in gt on st a t e la w t h a t a t t em pt s t o
over r ide a pa r t icipa n t ’s design a t ion of h is or h er spou se in a n
E RISA pen sion pla n or a n E RISA life in su r a n ce pla n u pon t h e
831
pa r t icipa n t ’s divor ce.
Th u s, t h e a du lt ch ildr en of t h e
pa r t icipa n t ’s fir st wife wer e a ga in n ot en t it led t o obt a in t h e
ben efit s eit h er dir ect ly fr om t h e pla n or in dir ect ly fr om t h e
pa r t icipa n t ’s secon d wife, wh o wa s t h e pa r t icipa n t ’s du ly
832
design a t ed ben eficia r y a t t h e t im e of h is dea t h .
Th e E gelh off Cou r t st a t ed: “[a ]n d a s we h a ve n ot ed, t h e
st a t u t e a t issu e h er e dir ect ly con flict s wit h E RISA’s r equ ir em en t s
t h a t pla n s be a dm in ist er ed, a n d ben efit s be pa id, in a ccor da n ce
833
wit h pla n docu m en t s.” Th ese E RISA r equ ir em en t s a r e fidu cia r y
834
r equ ir em en t s, a pplica ble t o m ost , bu t n ot a ll E RISA pla n s.
835
Th ese fidu cia r y r equ ir em en t s
a r e a con sequ en ce of t h e m or e
fu n da m en t a l r equ ir em en t t h a t pa r t icipa n t s a n d ben eficia r ies in a ll
E RISA pla n s m a y en for ce t h eir r igh t t o pla n ben efit
836
en t it lem en t s.
By defin it ion , pla n t er m s det er m in e E RISA pla n
837
ben eficia r y en t it lem en t s.
Th u s, st a t e st a t u t es pr ovidin g for
r evoca t ion of spou sa l design a t ion s u pon t h e pa r t icipa n t ’s divor ce
wou ld a lso be pr eem pt ed for pla n s n ot su bject t o t h e r efer en ced
838
fidu cia r y r u les, su ch a s Top -H a t P la n s.
Th e E gelh off Cou r t a lso dist in gu ish ed gen er a lly a pplica ble
la ws, wh ich r egu la t e “a r ea s wh er e E RISA h a s n ot h in g t o sa y,”
su ch a s st a t e la ws per m it t in g a lower pr eva ilin g wa ge for wor k er s
in a ppr oved a ppr en t ice pla n s, wh ich in clu de bu t a r e n ot lim it ed t o
E RISA pla n s, wh ich a r e n ot pr eem pt ed beca u se t h ey on ly
839
in ciden t a lly a ffect E RISA pla n s, fr om a st a t u t e, su ch a s t h e on e
a t issu e, wh ich is a ppa r en t ly a gen er a lly a pplica ble la w, bu t
830. E gelh off, 532 U.S. 141. A m or e ext en sive discu ssion of t h is decision
m a y be fou n d a t Feu er’s ER IS A M yth s, su pra n ot e 25, a t 725-29.
831. E gelh off, 532 U.S. a t 147-48.
832. Id . a t 144-46.
833. Id . a t 150.
834. S ee E RISA § 401(a ), 29 U.S.C. § 1101(a ) (2012) (iden t ifyin g t h e pla n s
t h a t a r e n ot su bject t o t h ose fidu cia r y r equ ir em en t s).
835. E RISA § 404(a )(1)(D), 29 U.S.C. § 1104(a )(1)(D) (2012) r equ ir es
com plia n ce wit h su ch en t it lem en t s t h a t m a y be en for ced u n der E RISA
§ 502(a )(1)(B), 29 U.S.C. § 1132(a )(1)(B).
836. E RISA § 502(a )(1)(B), 29 U.S.C. § 1132(a )(1)(B) (2012).
837. E RISA § 3(8), 29 U.S.C. § 1002(8) (2012).
838. E RISA § 401(a )(1), 29 U.S.C. § 1101(a )(1) (2012).
839. E gelh off, 532 U.S. a t 148 (cit in g Dillin gh am Con str., 519 U.S. a t 330).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
289
pr eem pt ed beca u se it “gover n s t h e pa ym en t of ben efit s, a cen t r a l
840
m a t t er of pla n a dm in ist r a t ion .”
Th u s, t h e Cou r t is decla r in g
t h a t E RISA m a y pr eem pt gen er a lly a pplica ble la ws, h owever , su ch
la ws a r e defin ed. Beca u se st a t e ga r n ish m en t la ws seek t o gover n
t h e pa ym en t of E RISA pla n ben efit s, even t h ou gh t h ey m a y be
841
gen er a lly a pplica ble la ws, t h ey a r e pr eem pt ed. Th er efor e, t h e
Cou r t im plicit ly r eject ed M ack ey II’s h oldin g t h a t E RISA
per m it t ed t h e st a t e la w ga r n ish m en t of E RISA ben efit pa ym en t s.
Th is ea r lier h oldin g h a d been r ea ch ed wit h ou t a n y con sider a t ion of
t h e “cor e E RISA con cer n ” of pa yin g ben efit s in a ccor d wit h pla n
842
t er m s.
Th e E gelh off Cou r t a lso decla r ed t h a t t h e st a t u t e a t issu e
con flict ed wit h “on e of t h e pr in cipa l goa ls of E RISA,” n a m ely, t o
en a ble em ployer s “t o est a blish a u n ifor m a dm in ist r a t ive sch em e,
wh ich pr ovides a set of st a n da r d pr ocedu r es t o gu ide pr ocessin g of
843
cla im s a n d disbu r sem en t of ben efit s.”
H owever , t h e Cou r t ’s
st a t em en t a bou t t h e pr in cipa l goa l of E RISA wa s ba sed solely on
it s ea r lier Ft. H alifax Pack in g Co. st a t em en t t h a t su ch u n ifor m it y
wa s t h e pr in cipa l goa l of t h e E RISA E xpr ess P r eem pt ion r a t h er
844
t h a n t h e goa l of E RISA.
Th e discu ssion su pra of Ft. H alifax
Pack in g Co. ch a llen ges even t h is m or e lim it ed ch a r a ct er iza t ion .
Th e Cou r t per ceived a con flict wit h t h is u n ifor m it y goa l
beca u se:
Plan ad m in istrators can n ot m ak e paym en ts sim ply by id en tifyin g
th e ben eficiary specified by th e plan d ocu m en ts. In st ea d t h ey m u st
fa m ilia r ize t h em selves with st a t e st a t u t es so t ha t t h ey ca n
det er m in e wh et h er t h e n a m ed ben eficia r y’s st a t u s h a s been
“r evoked” by oper a t ion of la w. An d in t his con t ext t h e bu r den is
exa cer ba t ed by t h e ch oice-of-la w pr oblem s t h a t m a y con fr on t a n
a dm in ist r a t or wh en t h e em ployer is loca t ed in on e St a t e, t h e pla n
pa r t icipa n t lives in a n ot h er , a n d t h e pa r t icipa n t ’s for m er spou se
lives in a t h ir d. In su ch a situ a t ion , a dm inist r a t or s m igh t fin d t h a t
845
pla n pa ym en t s a r e subject t o con flict in g lega l obliga t ion s.
Th e E gelh off Cou r t r elied on E RISA’s pu r pose of pr ot ect in g
840. Id .
841. Cf. De B u on o, 520 U.S. a t 811 n .6 (st a t in g t h a t “cer t a in la ws of gen er a l
a pplica t ion ” a r e n ot pr eem pt ed wh ile su m m a r izin g t h e r ea son in g of t h e cou r t
below).
842. S ee E gelh off, 532 U.S. a t 147 (set t in g for t h t h e “cor e E RISA con cer n ”).
843. Id . (in t er n a l qu ot a t ion s om it t ed a n d em ph a sis a dded) (qu ot in g Fort
H alifax Pack in g Co., 482 U.S. a t 9). Th is sen t en ce wa s u sed by t h e Coyn e
Cou r t t o descr ibe t h e pu r pose of t h e E RISA E xpr ess P r eem pt ion . Id . Th e
Cou r t t h er ein con sider ed t h e pu r pose of t h e E RISA E xpr ess P r eem pt ion in
or der t o det er m in e t h e sign ifica n ce of t h e ph r a se “em ployee ben efit pla n .” Id .
Th e Cou r t did n ot t h er ein ch a r a ct er ize u n ifor m it y a s a pr in cipa l goa l of
E RISA. Id .
844. Fort H alifax Pack in g Co., 482 U.S. a t 9 (t h e Cou r t wa s descr ibin g t h e
pu r pose of t h e E RISA E xpr ess P r eem pt ion in or der t o det er m in e t h e
sign ifica n ce of t h e ph r a se “em ployee ben efit pla n ” in su ch pr ovision ).
845. Id . a t 148-49 (em ph a sis a dded) (foot n ot es om it t ed).
290
T h e J oh n M arsh all L aw R eview
[47:145
pla n pa r t icipa n t s a n d ben eficia r ies t o r eject t h e a r gu m en t t h a t t h e
st a t e la w did n ot im pose a n u n du e bu r den on pla n a dm in ist r a t or s.
846
Th a t r eject ed a r gu m en t wa s ba sed on t h e st a t u t or y pr ovision s
per m it t in g a dm in ist r a t or s t o a void lia bilit y t o a secon d cla im a n t
eit h er by r efu sin g t o m a ke pa ym en t s u n t il t h e ben efit dispu t e is
r esolved or by followin g pla n design a t ion s u n less t h ey h a d n ot ice
847
of a m a r it a l dissolu t ion .
Th e Cou r t em ph a sized t h a t t h e pr im a r y E RISA con cer n wa s
n ot t o m in im ize a dm in ist r a t ive bu r den s on pla n s bu t t o pr ot ect
pa r t icipa n t ben efit r igh t s:
If t h ey [t h e pla n a dm in ist r a tor s] in st ea d decide t o a wa it t h e r esu lt s
of lit iga t ion befor e pa yin g ben efit s, t h ey will sim ply t r a nsfer t o t h e
ben eficia r ies t h e cost s of dela y a n d u n cer t a in t y. n .3 Requ ir in g
E RISA a dm in ist r a t or s t o m a st er t h e r eleva n t la ws of 50 St a t es a n d
t o con t en d wit h lit iga t ion wou ld u n d erm in e th e con gression al goal of
“m in im izin g th e ad m in istrative an d fin an cial bu rd en s” on plan
ad m in istrators— bu rd en s u ltim ately born e by th e ben eficiaries.
n .3 Th e dissen t obser ves t h a t t h e Wa sh in gt on st a t u t e per m it s a
pla n a dm in ist r a t or t o a void r esolvin g t h e dispu t e h im self a n d t o let
cou r t s or pa r t ies set t le t h e m a t t er . See post , a t 6 . T h is observation
on ly presen ts an exam ple of h ow th e costs of d elay an d u n certain ty
can be passed on to ben eficiaries, th ereby th w artin g E R IS A’s
848
objective of efficien t plan ad m in istration .
Th e E gelh off Cou r t did n ot t h er eby disa vow t h e T ravelers’
cor r ect h oldin g t h a t st a t e la ws a r e n ot pr eem pt ed sim ply beca u se
t h ey im pose a fin a n cia l bu r den on a n E RISA pla n . In st ea d, t h e
E gelh off Cou r t wa s obser vin g t h a t E RISA wa s in t en ded t o in su r e
t h a t pa r t icipa n t s r eceive t h eir ben efit en t it lem en t s fr om t h e pla n
wit h ou t a n y u n du e a dm in ist r a t ive dela y. Nor did t h e E gelh off
Cou r t t r ea t E RISA a s con cer n ed on ly wit h wh et h er a pa r t icipa n t
or ben eficia r y t im ely r eceives t h e ben efit fr om t h e pla n . Th u s, t h e
Cou r t a ga in pr even t ed a per son wit h a st a t e-la w cla im t h a t a r ises
fr om a ben eficia r y’s r igh t t o a n E RISA pla n ben efit (wh ich t h u s is
ba sed on “a n in t er est in t h e u n dist r ibu t ed ben efit s”) fr om wr est in g
t h e ben efit or t h e a m ou n t of t h e ben efit fr om t h e ben eficia r y.
C. S u prem e Cou rt Affirm s T h at S tate L aw Claim s Arisin g from a
B en eficiary’s R igh t to E R IS A B en efits M ay N ot B e U sed to
Wrest th e B en efits From th e E R IS A Design ated B en eficiary
In 2009, t h e Su pr em e Cou r t h eld in Ken n ed y v. Plan
849
Ad m in istrator of th e Du Pon t S avin gs an d In vestm en t Plan , t h a t
a wa iver by t h e pa r t icipa n t ’s for m er spou se of h is pen sion ben efit s
846. Id . a t 149.
847. Id .
848. Id . a t 149-50 (em ph a sis a dded) (cit a t ion s om it t ed).
849. Ken n edy v. P la n Adm ’r of t h e Du P on t Sa v. a n d In v. P la n , 555 U.S.
285 (2009).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
291
in t h eir divor ce decr ee did n ot give t h e pa r t icipa n t ’s est a t e, t h e
defa u lt design ee u n der t h e pla n t er m s, t h e r igh t t o obt a in t h ose
ben efit s fr om t h e pla n if t h e wa iver did n ot com ply wit h t er m s of
850
851
t h e pla n docu m en t . Th e Cou r t t h en declin ed in a foot n ot e t o
expr ess a view wh et h er t h e da u gh t er “cou ld h a ve br ou gh t a n
a ct ion in st a t e or feder a l cou r t ” t o wr est t h e ben efit fr om h er
852
m ot h er , t h e design ee.
Th er e a r e a t lea st t h r ee r ea son s t h is a
853
ver y odd dict u m a bou t a n issu e t h a t wa s n ot befor e t h e Cou r t .
F ir st , t h e Cou r t h a d been in for m ed t h a t t h e m ot h er la cked t h e
854
r esou r ces t o m a k e su ch a pa ym en t , so n o ca se or con t r over sy
a bou t t h e issu e cou ld be befor e t h e Cou r t . Secon d, t h e r eleva n t
qu est ion is n ot t h e a bilit y t o br in g a n a ct ion , wh ich is a lwa ys
possible, bu t wh et h er t h er e wer e a n y cir cu m st a n ces in wh ich su ch
a n a ct ion wou ld be su ccessfu l, wh ich t h e Cou r t did n ot discu ss.
Th ir d, t h e Cou r t followed t h e dict u m by com pa r in g it s own 1997
decision in B oggs wit h t wo st a t e su pr em e cou r t decision s t o t h e
855
con t r a r y.
H owever , n eit h er cit ed decis ion m a kes a n y con vin cin g
856
dist in ct ion bet ween it s h oldin g a n d B oggs. Never t h eless, t h er e
h a ve been n u m er ou s lower cou r t decision s h oldin g t h a t E RISA
does n ot pr eem pt a st a t e la w cla im t h a t a r ises fr om a pa r t icipa n t ’s
or ben eficia r y’s r igh t t o a n E RISA pla n ben efit . In pa r t icu la r ,
t h er e wer e h oldin gs of n o E RISA pr eem pt ion of a cla im ba sed on a
wa iver in cor por a t ed in t o a divor ce sim ila r t o t h a t in Ken n ed y, su ch
857
a s An d och ik v. B yrd .
Th ese decision s a r e a lso n ot ver y
850. Id . a t 299-300.
851. Id . a t 300, n .10.
852. Id .
853. Ken n ed y, 552 U.S. a t 1178 (gr a n t in g cer t ior a r i for qu est ion 3); Br ief
for P et it ion er a t i, Ken n edy v. P la n Adm ’r for Du P on t Sa v. & In v. P la n , 555
U.S. 285 (2009) (No. 07-636) 2008 WL 2008 WL 1989722.
854. S ee P et it ion er ’s Reply Br ief on t h e Mer it s at 33-34, Ken n edy v. P la n
Adm ’r for Du P on t Sa v. & In v. P la n , 555 U.S. 285, 2008 WL 3336770 (2009)
(filed
Au g.
7,
2008)
(No.
07-636)
at
33-34,
available
at
h ttp:/ / w w w .am erican bar.org/ con ten t/ d am / aba/ pu blish in g/ preview / pu blice
d _preview _briefs_pdfs_07_08_07_636_Petition erR eply.au th check d a m .pd f (la st
visit ed J a n . 30, 2014).
855. Ken n ed y, 555 U.S. a t 300, n .10 (com pa r in g B oggs, 520 U.S. 833 wit h
Sweebe v. Sweebe, 712 N.W.2d 708 (Mich . 2006) a n d P a r dee v. P a r dee, 112
P .3d 308 (Okla . Civ. App. 2004)).
856. S ee e.g., Alber t F eu er , T h e Ken n ed y S u prem e Cou rt Giveth w ith
footn ote 13, bu t T ak eth w ith footn ote 10, th e Departm en t of L abor an d M an y
L ow er Cou rts an d M iss th e Decision ’s Ultim ate Meanin g, 39 C OMP . P LAN J .
111, a t 119-124 (J u n e 3, 2011) available at h t t p://ssr n .com /a bst r a ct =1859809
(la st visit ed J a n . 31, 2014).
857. An doch ik v. Byr d, 709 F .3d 296 (4t h Cir . 2013) cert. d en ied 2013 U.S.
LE XIS 7046 (U.S. Oct . 7, 2013). S ee also Zolper v. Ba u er , 2008 U.S. Dist .
LE XIS 50858 (W. Ky. J u ly 2, 2008) (h oldin g E RISA does n ot pr eem pt con t r act
gover n m en t t h e ext en t t o wh ich su r vivin g spou se m a y keep dist r ibu t ed pla n
ben efit s beca u se t h e con t r a ct does n ot a ffect wh o is en t it led t o r eceive t h e
ben efit fr om t h e pla n ).
292
T h e J oh n M arsh all L aw R eview
[47:145
858
con vin cin g.
Th e Su pr em e Cou r t r ecen t ly im plicit ly r ea ffir m ed a n d
br oa den ed it s su ppor t for it s B oggs a n d E gelh off h oldin gs t h a t
st a t e-la w cla im s a r isin g fr om a per son ’s r igh t t o E RISA ben efit s
m a y n ot be u sed t o wr est ben efit s fr om t h e per son en t it led t o t h e
ben efit s u n der t h e t er m s of a n y E RIS A pla n . Th e Cou r t h eld in
859
H illm an v. M aretta
t h a t t h e F eder a l E m ployees’ Gr ou p Life
In su r a n ce Act of 1954 (F E GLIA) pr eem pt s a Vir gin ia r evoca t ion
u pon divor ce la w, wh ich r equ ir es t h e pa r t icipa n t ’s for m er spou se,
wh o wa s h is design ee u n der t h e feder a l la w, t o pa y t h e su r vivor
ben efit t o t h e defa u lt d esign ee. Th e m a jor it y focu sed on it s fin din g
t h a t t h e pu r pose of ben eficia r y design a t ion pr ovision wa s n ot t o
ser ve solely for t h e pla n spon sor ’s “a dm in ist r a t ive con ven ien ce”
bu t t o give t h e pa r t icipa n t t h e r igh t t o ch oose h is or h er
860
ben eficia r y in a ccor d wit h t h e clea r t er m s of t h e pla n .
J u st ice
Th om a s in a sepa r a t e con cu r r in g opin ion decla r ed t h er e wa s n o
n eed t o look a t t h e st a t u t or y pu r pose of t h e feder a l la w bu t fou n d
pr eem pt ion beca u se t h e st a t e la w wou ld ot h er wise r en der a
861
feder a l ben eficia r y design a t ion la w m ea n in gless.
J u st ice Alit o
obser ved t h a t t h e st a t e la w, lik e t h e feder a l la w, seem ed focu sed
on a dm in ist r a t ive con ven ien ce, a n d n eit h er look ed for eviden ce of
862
t h e pa r t icipa n t ’s a ct u a l in t en t a t t h e t im e of h is dea t h .
J u st ice
Alit o did n ot dist in gu ish bet ween t h e a dm in ist r a t ive con ven ien ce
of t h e feder a l gover n m en t , wh ich wou ld n ot ca r e wh et h er t h e
design ee k ept t h e ben efit , a n d t h e a dm in ist r a t ive con ven ien ce of
t h e pa r t icipa n t , wh o wou ld ca r e ver y deeply a bou t wh et h er h is or
h er du ly design a t ed design ee cou ld k eep t h e ben efit . All of t h ese
a r gu m en t s a r e a pplica ble t o E RISA wh ose dom in a t in g gen er a l
pu r pose is t h e pr ot ect ion of pla n pa r t icipa n t s a n d ben eficia r ies.
Th u s, t h e E RISA goa l is t o fu r t h er t h e a dm in ist r a t ive con ven ien ce
of t h e du ly design a t ed design ee. In pa r t icu la r , E RISA pr eem pt s
st a t e la ws t h a t pr even t a pa r t icipa n t fr om exer cisin g a n y of h is
ben efit r igh t s, in clu din g, bu t n ot lim it ed t o, t h e r igh t t o ch oose h is
863
ben eficia r y by com plyin g wit h t h e pla n design a t ion t er m s.
858. S ee generally Alber t F eu er , A M isgu id ed Ken n ed y Offsprin g from the
T h ird Circu it, 31 T AX M GMT . W E E KLY J . 564 (Apr il 23, 2012) (“Feu er’s
M isgu id ed Offsprin g”) available at h t t p://ssr n .com /a bst r a ct =2047238 (la st
visit ed J a n . 30, 2014).
859. H illm a n v. Ma r et t a , 569 U.S. ___, 133 S.Ct . 1943 2013 U.S. LE XIS
4167 (J u n e 3, 2013).
860. Id. a t *14-*25.
861. Id . a t *28-*33 (Th om a s, J . con cu r r in g) (expr essin g sim ila r poin t s t o
t h ose in J u st ice Th om a s’s cit ed st a t em en t in t h e E gelh off m a jor it y opin ion ).
862. Id . a t *35-*37 (Alit o, J . con cu r r in g) (su ggest in g t h a t a n explicit
expr ession in t en t con t r a r y t o t h e design a t ion descr ibed in t h e st a t u t e wou ld be
effect ive u n der cer t a in cir cu m st a n ces). Th e J u st ice m a y h a ve been t h in kin g of
a design a t ion t h a t su bst a n t ia lly com plied wit h t h e st a t u t or y r equ ir em en t s
su ch a s t h ose discu ssed, in fra, for E RISA pla n s.
863. S ee gen erally Alber t F eu er , T h e S u prem e Cou rt Fin d s Fed eral L ife
In su ran ce R ules Preem pt S tate L aw in H illm an v. M aretta an d R ein forces
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
293
Mor ever , t h e seven ju st ices wh o join ed t h e m a jor it y opin ion
m a de clea r t h a t t h e Cou r t h a d gr a n t ed cer t ior a r i in or der t o issu e
a wide-r a n gin g decision t h a t r eject ed st a t e-la w a t t em pt s t o wr est
ben efit s fr om a F E GLIA ben eficia r y, wh et h er ba sed on dom est ic
r ela t ion s cla im s, wa iver cla im s, con st r u ct ive t r u st cla im s, con t r a ct
864
cla im s, or u n ju st en r ich m en t cla im s.
Su ch r ea son in g m a y be
a pplied m u t a t is m u t a n dis t o pr eem pt a sim ila r br oa d r a n ge of
a t t em pt s t o wr est dist r ibu t ed E RISA ben efit s fr om a n E RISA
ben eficia r y u sin g st a t e-la w cla im s a r isin g fr om t h e ben eficia r y’s
E RISA ben efit en t it lem en t s.
XV.
E RISA DOE S NOT P RE E MP T (1) GE NE RALLY
AP P LICABLE STATE CRIMINAL LAWS TH AT DO NOT
RE LATE TO E RISA P LAN S, SUCH AS TH E F T LAWS, (2)
GE NE RALLY AP P LICABLE CRIMINAL LAWS TH AT
RE LATE TO E RISA P LANS, SUCH AS WAGE AND WAGE
SUP P LE ME N T COLLE CTION LAWS, USURY LAWS, (3)
LAWS TO IMP LE ME NT GE N E RALLY AP P LICABLE
CRIMINAL SANCTION S TH AT E XP LICITLY RE F E R TO
E RISA BE NE F ITS, SUCH AS LAWS TO COLLE CT
CRIMINAL F INE S AND RE STITUTION , OR (4) CIVIL
SLAYE R LAWS TH AT AUTOMATICALLY IMP LE ME N T
SP E CIF IE D H OMICIDE CONVICTIONS, BU T P RE E MP TS
(1) CRIMINAL LAWS AP P LYING P RIMARILY TO E RISA
P LAN S OR E RISA BE NE F ITS, OR (2) GE NE RALLY
AP P LICABLE NON -CRIMINAL LAWS TH AT ARE
INCONSISTE N T WITH P LAN TE RMS (WH ICH
DE TE RMINE BE NE F IT RIGH TS, IMP OSE P ROH IBITE D
MANDATE S, OR P ROVIDE E RISA E N F ORCE ME NT
ME CH ANISMS
Con gr ess a ppa r en t ly u sed t h e gen er a lly a pplica ble cr im in a l
la w exclu sion fr om t h e E RISA E xpr ess P r eem pt ion Ru le t o ba la n ce
E R IS A Protection s for E R IS A Plan Participan ts an d B eneficiaries , 32 T AX
M GMT . W E E KLY J . 1040 (Au g. 5, 2013) (“Feu er’s H illm an Article”) (st a t in g t h a t
a st a t e la w will be pr eem pt ed if it a t t em pt s t o: (1) com pel a pa r t icipa n t in a n
E RISA pla n or in t h e F eder a l Th r ift Sa vin gs pla n t o ch oose a ben eficia r y
specified u n der st a t e la w, (2) pu n ish t h e pa r t icipa n t ’s est a t e if t h e du ly
design a t ed ben eficia r y wa s n ot su ch specified ben eficia r y; or (3) pr even t a du ly
design a t ed ben eficia r y fr om r eceivin g or keepin g t h e design a t ed ben efit s).
available at h t t p://ssr n .com /a bst r a ct =2306911 (la st visit ed J a n . 30, 2014).
864. Id . a t *12-*13. S ee gen erally F eu er ’s H illm a n Ar t icle, su pra n ot e 867.
294
T h e J oh n M arsh all L aw R eview
[47:145
t wo con cer n s: (1) st a t es m u st be pr even t ed fr om en h a n cin g or
dim in ish in g a n y of t h e t h r ee fu n da m en t a l E RISA ben efit
pr ot ect ion s; (2) st a t es m u st be per m it t ed t o pu n ish t h ose wh o
viola t e st a t e cr im in a l st a t u t es n ot dir ect ed a t a n y of t h ose
pr ot ect ion s. In pa r t icu la r , t h e exclu sion a ssu r es t h a t E RISA does
n ot pr eem pt t h r ee cla sses of cr im in a l st a t u t es t h a t r ela t e n on t en u ou sly t o ben efit en t it lem en t s: (1) t h ose t h a t cr im in a lize t h e
fa ilu r e t o m a ke E RISA pla n con t r ibu t ion s, if t h e m or e t h a n h a lf
t h e va lu e of pr ot ect ed com pen sa t ion is n on -E RISA com pen sa t ion ,
(2) t h ose t h a t cr im in a lize beh a vior by E RISA pla n s, if m or e t h a n
h a lf of t h e r egu la t ed en t it ies a r e per son s ot h er t h a n E RISA pla n s,
a n d (3) t h ose cr im in a l la ws t h a t depr ive a cr im in a l of E RISA
ben efit s ,if m or e t h a n h a lf of t h e depr ived in com e of cr im in a ls is
n on -E RISA in com e Th er e is n o sim ila r exclu sion fr om E RISA
865
pr eem pt ion for gen er a lly a pplica ble feder a l la ws of a n y kin d.
Neit h er E RISA n or t h e r egu la t ion s t h er eu n der defin e t h e
ph r a se “gen er a lly a pplica ble.” It is r ea son a ble t o defin e gen er a lly
a pplica ble la ws a s t h ose wh ich a pply t o a ct or s, m ost of wh om a r e
n on -E RISA pla n s, or t o in com e (com pen sa t ion ), m ost of wh ich is of
a n on -E RISA ch a r a ct er . On e cou ld, h owever , a r gu e t h a t E RISA
per m it s cr im in a l la ws t h a t a ddr ess a sm a ller per cen t a ge of su ch
n on -E RISA com pen sa t ion or n on -E RISA a ct or s. F or exa m ple, on e
cou ld a pply t h e T ravelers a ppr oa ch discu ssed su pra, t h a t divides
st a t e la ws t h a t a ffect E RISA ben efit s in dir ect ly in t o t wo cla sses for
pr eem pt ion pu r poses. Th ose t h a t r efer t o E RISA a r e pr eem pt ed.
Ot h er la ws, wh ich , h owever , a r e n ot descr ibed in T ravelers a s
gen er a lly a pplica ble, a r e pr eem pt ed on ly if t h ey h a ve pr oh ibit ed
effect s on E RISA pla n s. On e cou ld sim ila r ly con clu de t h a t E RISA
does n ot pr eem pt cr im in a l la ws, wh ich do n ot r efer en ce E RISA
pla n s, E RISA pla n ben efit s, or E RISA pa r t icipa n t s or ben eficia r ies
Neit h er E RISA n or t h e r egu la t ion s t h er eu n der defin e t h e
ph r a se “cr im in a l la ws,” wh ich m a y im pose n ot on ly im pr ison m en t ,
pr oba t ion or fin es, bu t m a y a lso, lik e pr eem pt ed civil la ws, r equ ir e
866
wr on gdoer s t o pa y r est it u t ion or r epa r a t ion s.
It is r ea son a ble t o
defin e cr im in a l la ws t o in clu de t h ose st a t u t es t h a t im pose
sa n ct ion s den om in a t ed t h er ein a s cr im in a l sa n ct ion s. E RISA
pr ovides t h a t t h e Alien a t ion P r oh ibit ion does n ot a pply t o cr im in a l
ju dgm en t s, or der s, or decr ees in volvin g cr im es a ga in st E RISA
pla n s t h a t expr essly pr ovide for t h e offset of ben efit s equ a l t o a n
865. E RISA § 514(d), 29 U.S.C. § 1134(d) (pr ovidin g t h a t t h e in t er a ct ion
bet ween E RISA a n d ot h er feder a l la ws n eeds t o be con sider ed on a ca se -byca se ba sis).
866. S ee e.g., N.Y. P E NAL . L. § 60.27 (McKin n ey 2013). S ee gen erally Not e,
Victim R estitu tion in th e Crim in al Process: a Proced u ral An alysis , 97 H ARV. L.
R E V.931 (1984) (descr ibin g a n d dist in gu ish in g cr im in a l r est it u t ion fr om civil
da m a ges).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
295
867
a m ou n t t h a t t h e cr im in a l is or der ed t o pa y t h e pla n .
Th u s, it is
r ea son a ble t o pr esu m e t h a t st a t e cr im in a l or der s, ju dgm en t s,
or der s, or decr ees t h a t depr ive in dividu a ls of E RISA ben efit s m u st
a lso pr ovide explicit ly t h a t t h er e will be su ch depr iva t ion t o
qu a lify for t h e gen er a lly a pplica ble cr im in a l la w exclu sion . Th e
sla yer r u les discu ssed in fra, wh ich depr ive killer s of t h eir vict im ’s
dea t h ben efit s u n der specified cir cu m st a n ces , a r e difficu lt t o
in cor por a t e in cr im in a l la ws. Th e depr iva t ion of dea t h ben efit s
does n ot fit wit h in t h e u su a l cr im in a l sa n ct ion of pa ym en t s t o t h e
st a t e, viz., cr im in a l fin es, or pa ym en t s t o vict im s, viz., r epa r a t ion s
868
or r est it u t ion , beca u se t h e vict im wa s n ot depr ived of h is dea t h
ben efit by t h e k illin g, bu t of t h e difficu lt t o va lu e r igh t t o ch oose
869
wh o obt a in s t h e dea t h ben efit ,
Mor eover , dea t h ben efit
en t it lem en t s a r e u su a lly det er m in ed by pr oper t y la w or t h e la w of
870
wills.
Th u s, it seem s r ea son a ble t o t r ea t a n a u t om a t ic dea t h
ben efit depr iva t ion if a per son is con vict ed of specified h om icides,
su ch a s fir st degr ee or secon d degr ee m u r der , a s qu a lifyin g for t h e
gen er a lly a pplica ble cr im in a l la w exclu sion wh et h er t h e ben efit
depr iva t ion pr ovision s a r e in t h e pr oper t y la w or t h e cr im in a l la w.
Mor e gen er a lly, it wou ld a lso a ppea r t h a t civil la ws, t o t h e ext en t ,
t h ey a r e u sed t o im plem en t gen er a lly a pplica ble cr im in a l
sa n ct ion s, su ch a s m ech a n ism s t o en for ce t h e pa ym en t of cr im in a l
871
fin es, r est it u t ion or r epa r a t ion s,
qu a lify for t h e gen er a lly
a pplica ble cr im in a l la w exclu sion . On t h e ot h er h a n d, if a civil
cou r t r a t h er t h a n t h e cr im in a l cou r t is det er m in in g wh et h er t o
depr ive t h e sla yer of t h e ben efit , wh et h er it be of a ben eficia r y’s
dea t h ben efit s or a pa r t icipa n t ’s life ben efit s, t h e civil cou r t is n ot
sim ply im plem en t in g t h e cr im in a l cou r t decision , bu t decidin g h ow
t o t r ea t t h e cr im in a l. Th u s, su ch civil a ct ion sh ou ld n ot qu a lify for
t h e gen er a lly a pplica ble cr im in a l la w exclu sion , a n d t h e cr im in a l
867. E RISA § 206(d)(4), 29 U.S.C. § 1056(d)(4) (t h is sect ion seem s t o be
a pplica ble pr im a r ily t o feder a l a ct ion s, wh ich a r e n ot is explicit ly exclu ded
fr om t eh E RISA E xpr ess P r eem pt ion Ru le). H owever , pla n s do n ot n eed t o
defer t o ju dgm en t s, or der s, decr ees a n d a gr eem en t s, sim ply beca u se t h ey do
n ot viola t e t h e Alien a t ion P r oh ibit ion . Th e pla n t er m s m u st a lso pr ovide for
su ch defer en ce, a s is don e for QDROs, in E RISA § 206(d)(3)(J ), 29 U.S.C. §
1056(d)(3)(J ). If t h e st a t u t e su per seded E RISA, t h en it wou ld over r ide t h e
E RISA r equ ir em en t t h a t t h e pla n t er m s a n d t h e Alien a t ion P r oh ibit ion m u st
be followed.
868.
S ee e.g., Rober t J . Diet er , Rest it u t ion in Cr im in a l Ca ses, 30 Th e
Color a do La wyer 125 (2001).
869. B u t see E RISA § 205, 29 U.S.C. § 1055 (pr ovidin g t h a t t h e spou se of a
pa r t icipa n t in a Spou sa l S u r vivor Ben efit P la n m u st a ppr ove t h e pa r t icipa n t ’s
wa iver of t h e spou se’s dea t h ben efit , so t h a t if t h e spou se is t h e k iller , t h e
pa r t icipa n t wou ld h a ve h a d t o get divor ced t o obt a in t h e r igh t t o ch a n ge t h e
ben eficia r y).
870. S ee e.g., UNIF . P ROB. CODE (a m en ded 2010) (discu ssin g t h e la w of
wills, in t est a cy, a n d a lt er n a t ive pr oper t y disposit ion s).
871. S ee e.g., N.Y. C RIM . P ROC . L. § 420.10.6 (McKin n ey 2013) (descr ibin g
t h e u se civil en for cem en t t ools t o collect fin es, r est it u t ion or r epa r a t ion ).
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T h e J oh n M arsh all L aw R eview
[47:145
m a y n ot be depr ived of t h e dea t h ben efit .
E RISA, per m it s con t r a ct la w, t or t la w, or com m on la w
con cept s, su ch a s t h e la w pr even t in g u n du e en r ich m en t , t o be u sed
t o depr ive a ben eficia r y of dist r ibu t ed E RISA pla n ben efit s, on t h e
ba sis of t h e ben eficia r y’s cr im in a l beh a vior for n on -sla yer cr im es.
Th e a m ou n t of t h e cr im in a l’s lia bilit y u n der su ch cla im s r equ ir es a
civil cou r t det er m in a t ion even if t h e cr im in a l’s civil lia b ilit y
follows a u t om a t ica lly fr om t h e con vict ion . Th u s, u n lik e t h e
a u t om a t ic sla yer depr iva t ion s of t h e u n a m bigu ou s dea t h ben efit
a m ou n t or t h e en for cem en t of cr im in a l r est it u t ion ju dgm en t s,
t h ese cla im s a r e n ot eligible for t h e gen er a lly a pplica ble cr im in a l
la w exclu sion . Th er efor e, E RISA pla n s m a y n ot be com pelled t o
pa y t h e da m a ges t o t h e per son wit h t h e civil ju dgm en t n or m a y
t h e cr im in a l be com pelled by t h e civil cou r t t o dir ect t h e E RISA
pla n t o m a k e su ch pa ym en t t o t h e su ccessfu l cla im a n t . H owever ,
beca u se t h ese ju dgm en t s do n ot a r ise fr om a pa r t icipa n t ’s or
ben eficia r y’s r igh t t o a n E RISA pla n ben efit , t h e ju dgm en t s m a y
be en for ced a ga in st t h e cr im in a l a ft er h e r eceives t h e E RISA a s
discu ssed, su pra. Th e sa m e a n a lysis m a y even be u sed in sla yer
cr im es if t h e lia bilit y is n ot det er m in ed by r efer en ce t o t h e
em ployee ben efit , su ch a s a wr on gfu l dea t h ju dgm en t .
E RISA does n ot pr eem pt t h e u se of gen er a l t h eft la ws a ga in st
t h ose wh o st ea l fu n ds fr om E RISA pla n s ju st a s it does n ot
pr eem pt t h e u se of gen er a l con t r a ct la ws by E RISA pla n s or t h eir
pr ovider s t o en for ce con t r a ct s for goods a n d ser vices.
In gen er a l, E RISA pr eem pt s on ly t h r ee cla sses of st a t e
cr im in a l la ws viz., t h ose wh ose effect is pr im a r ily t o: (1) en for ce
E RISA con t r ibu t ion or ben efit obliga t ion s; (2) r egu la t e E RISA pla n
t er m s a n d (3) t o depr ive cr im in a ls of E RISA ben efit s . P r eem pt ion
is u n a ffect ed by st a t u t or y in t en t . Th e DOL a dvisor y opin ion s
pr ovide exa m ples of t h e dist in ct ion bet ween gen er a lly a pplica ble
cr im in a l la ws t h a t E RISA does n ot pr eem pt , even if t h e la ws a r e
r ela t ed n on -t en u ou sly t o E RISA pla n s, a n d ot h er cr im in a l la ws
t h a t E RISA pr eem pt s on ly t o t h e ext en t t h e la ws a r e r ela t ed n on t en u ou sly t o E RISA pla n s. In con t r a st , t h e con flict in g ca se la w
t h a t focu ses on cr im in a l la ws per t a in in g t o pa ym en t s t o E RISA
pla n s does n ot a lwa ys m a ke su ch a dist in ct ion . In st ea d, t h e ca sela w t h a t focu ses on cr im in a l la ws t h a t depr ive cr im in a ls of E RISA
ben efit s la r gely disr ega r ds t h e gen er a lly a pplica ble cr im in a l la w
exclu sion .
A. T h e DOL Ad visory Opin ion s S h ow th e Distin ction B etw een
Gen erally Applicable Crim in al L aw s T h at E R IS A Does N ot
Preem pt, an d Oth er Crim in al L aw s th at E R IS A Preem pts On ly
to E xten t T h ey R elate N on -T en u ou sly to E R IS A Plan s
In 1979, t h e DOL in it s fir s t a dvisor y opin ion on cr im in a l
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
297
872
la ws h eld, in Opin ion 79-35,
t h a t E RISA pr eem pt s t h e
Ma ssa ch u set t s “H ea lt h , Welfa r e a n d Ret ir em en t F u n ds” la w t o t h e
ext en t t h a t t h e la w pr ovides for fin es a n d/or im pr ison m en t wh er e
t h er e h a s been em bezzlem en t or fr a u d in volvin g em ployee pla n
873
a sset s or delin qu en t con t r ibu t ion s by a n em ployer . Th e la w wa s
n ot a gen er a lly a pplica ble cr im in a l la w beca u se it “a pplies on ly t o
874
welfa r e a n d pen sion pla n s.”
Th u s, t h e DOL focu sed on t h e
st a t u t or y effect , i.e., t h e a pplica t ion of t h e la w, r a t h er t h a n it s
pu r pose. Th e DOL, h owever , cr ea t ed con fu sion by it s st a t em en t
t h a t “[i]f t h e gen er a l gr a n d la r cen y pr ovision s of a st a t e code a pply
t o pen sion t r u st ees, t h e except ion pr ovided in § 514(b)(4) wou ld
875
a pply.”
H owever , t h e gen er a lly a pp lica ble cr im in a l la w
except ion , wh ich a s discu ssed, su pra, is n ot n eeded for su ch a
gen er a l la w t o a void E RISA pr eem pt ion . Th u s, t h e st a t em en t
wou ld m a k e t h e gen er a lly a pplica ble cr im in a l la w except ion a
n u llit y, wh ich viola t es t h e ca r din a l st a t u t or y in t e r pr et a t ion
pr in ciple t h a t st a t u t es sh ou ld be con st r u ed “so a s t o a void
876
r en der in g su per flu ou s” a n y st a t u t or y la n gu a ge.
In 1984, t h e DOL in it s secon d a dvisor y opin ion on cr im in a l
877
la ws pr esen t ed, in Opin ion 84-06, a good exa m ple of a gen er a lly
a pplica ble cr im in a l la w, n a m ely on e pr ovidin g cr im in a l pen a lt ies
878
for u su r y.
Th e DOL obser ved t h a t “[s]in ce t h e [cr im in a l la w]
pr oscr ipt ion s of t h e Con su m er Cr edit Code a t issu e a r e n ot
in t en ded t o a pply specifica lly t o a n a ct ivit y r ela t ed t o em ployee
ben efit pla n s, we believe t h a t t h e sect ion 514(b) except ion [for
879
gen er a lly a pplica ble cr im in a l la ws] t o pr eem pt ion sh ou ld a pply.”
Th er e wa s a n eed t o r esor t t o t h e gen er a lly a pplica ble cr im in a l la w
exclu sion beca u se t h e la w, u n less a gen er a l t h eft la w, r egu la t es a n
em ployee ben efit , n a m ely pla n loa n s, a n d t h u s r ela t es t o a n
E RISA pla n . Th e DOL obser ved t h a t t h is h oldin g wa s con sist en t
wit h it s ea r lier h oldin g t h a t E RISA pr eem pt s st a t e la ws, wh ich
880
pr oh ibit u su r y bu t do n ot im pose cr im in a l pen a lt ies.
Th u s,
E RISA pr eem pt s t h e gen er a lly a pplica ble civil ver sion of t h e u su r y
st a t u t e, bu t n ot t h e cr im in a l ver sion even t h ou gh bot h pr oh ibit t h e
sa m e E RISA ben efit pla n beh a vior , m a kin g pla n loa n s wit h
872. U.S. Dep’t of La bor Advisor y Opin ion 79-35A (Ma y 31, 1979), 1979
E RISA LE XIS 57.
873. Id .
874. Id . a t *3.
875. Id . a t *3.
876. TRW In c. v. An dr ews, 534 U.S. 19, 31 (2001) (h oldin g t h a t t h e t ollin g
of st a t u t e of lim it a t ion s for cla im s u n der F a ir Cr edit Repor t in g Act u n t il
discover y of viola t ion is lim it ed t o t h e st a t ut or y fr a u d except ion ).
877. Gr een lea f, U.S. Dep’t of La bor Advisor y Opin ion 84-06A (J a n . 17,
1984), 1984 E RISA LE XIS 42.
878. Id .
879. Id . a t *5.
880. Id . (r efer r in g t o Gr oga n , U.S. Dep’t of La bor Advisor y Opin ion 81-70A
(Sept . 9, 1981), 1981 E RISA LE XIS 19).
298
T h e J oh n M arsh all L aw R eview
[47:145
881
excessive in t er est r a t es.
On t h e ot h er h a n d, t h e DOL in it s n ext t h r ee a dvisor y
opin ion s h eld, a s it h a d in it s fir st opin ion , t h a t a t t a ch in g cr im in a l
la w pen a lt ies la ws dir ect ed exclu sively or pr im a r ily a t E RISA
pla n s does n ot sa ve t h e st a t u t es fr om E RISA pr eem pt ion , a lt h ou gh
t h e a n a lysis of t h e fir st opin ion is r a t h er qu est ion a ble. In 1984,
882
t h e DOL h eld in Opin ion 84-18A t h a t E RISA pr eem pt s cr im in a l
pen a lt ies for t h e viola t ion of P u er t o Rica n r u les for wit h h oldin g
com pen sa t ion pa ym en t s fr om em ployees a n d con t r ibu t in g su ch
883
wit h h oldin g t o em ployee ben efit pla n s.
Th e la t er h oldin g in
884
Opin ion 94-27A
(wh ich expr essly r elied on Opin ion 84-18A,
wh ich h eld t h a t E RISA pr eem pt s t h e N ew Yor k la w im posin g
cr im in a l pen a lt ies for fa ilin g t o obt a in a u t h or iza t ion s for a n y
pa yr oll dedu ct ion s, in clu din g bu t n ot lim it ed t o em ployee ben efit
885
pla n con t r ibu t ion s ) r a ises qu est ion s a bou t t h e DOL a n a lysis of
t h e P u er t o Rica n st a t u t e. In bot h ca ses, t h e DOL did n ot con sider
wh et h er t h e st a t e cr im in a l la w wa s a pplica ble pr im a r ily t o E RISA
886
pla n s, bu t con clu ded t h a t E RISA pr eem pt ed t h e la w beca u se it
“pr oh ibit s specified con du ct by em ployer s in t h eir ca pa cit y a s
887
pr ovider s of ben efit s,” wh ich is wh y it is n ecessa r y t o det er m in e
if t h e cr im in a l la w is gen er a lly a pplica ble. Th e DOL decla r ed t h is
wa s u n n ecessa r y in Opin ion 84-18A beca u se “[a ]lt h ou gh sect ion 7
[t h e sect ion est a blish in g cr im in a l pen a lt ies] t h u s dea ls wit h m a n y
a spect s of a n em ployer ’s r ela t ion s wit h it s em ployees, we believe
ea ch a ct ivit y pr oscr ibed by t h e Act m u st be sepa r a t ely eva lu a t ed
in or der t o det er m in e wh et h er t h e cr im in a l sa n ct ion , a s a pplied t o
881. Cf. In r e Seola s, 140 B.R. 266 (1992) (E RISA does n ot pr eem pt
a pplica t ion of st a t e u su r y pr oh ibit ion t o loa n s by E RISA t o per son s wh o a r e
n ot pa r t icipa n t s or ben eficia r ies).
882. Robbin s, U.S. Dep’t of La bor Advisor y Opin ion 84-18A (Apr il 19,
1984), 1984 E RISA LE XIS 29.
883. Id . S ee also Gu illot, U.S. Dep’t of La bor Advisor y Opin ion 88-17A (Dec.
19, 1988), 1988 E RISA LE XIS 17 (E RISA pr eem pt s t h e Pu er t o Rico la w on
pa yr oll dedu ct ion s for E RISA pla n con t r ibu t ion s of Tit le I E RISA pla n s);
J u dson , U.S. Dep’t of La bor Advisor y Opin ion 93-05A (Ma r . 9, 1993), 1993
E RISA LE XIS 5 (E RISA pr eem pt s t h e P u er t o Rico la w pr oh ibit ion on pa yr oll
dedu ct ion s by IBM for con t r ibu t ion s t o IBM Defer r ed Sa vin gs P la n ); a n d
P a dr o, U.S. Dep’t of La bor Advisor y Opin ion 96-01A (F eb. 8, 1996), 1996
E RISA LE XIS 1 (E RISA pr eem pt s a pplica t ion of P u er t o Rica n cr im in a l la w t o
pa yr oll dedu ct ion s for pen sion pla n loa n r epa ym en t s).
884. Ta ylor , U.S. Dep’t of La bor Advisor y Opin ion 94-27A (Au g. 31, 1994)
1994 E RISA LE XIS 52 a t *6-*7.
885. Id .
886. Th er e is a qu est ion a bou t wh et h er New Yor k la w a t issu e, N.Y. LAB.
L. § 193(1)(b), wa s a pplica ble pr im a r ily t o E RISA pla n s beca u se it a u t h or ized
n on -E RISA pla n dedu ct ion s for la bor du es, ch a r it a ble dedu ct ion s, a n d bon d
pu r ch a ses.
887. Robbin s, U.S. Dep’t of La bor Advisor y Opin ion 84-18A (Apr il 19,
1984), 1984 E RISA LE XIS 29 a t *6-*7, a n d Ta ylor , (U.S. Dep’t of La bor
Advisor y Opin ion 94-27A (Au g. 31, 1994), E RISA LE XIS 52, a t *6-*7.
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299
t h a t con du ct , is ‘gen er a lly a pplica ble.’”
Th e fa lla cy of t h is
a r gu m en t is sh own by t h e fa ct t h a t it wou ld r esu lt in t h er e bein g
n o gen er a lly a pplica ble cr im in a l la w exclu sion s beca u se t h e
qu est ion of gen er a l a pplica bilit y on ly a r ises if t h e la w a pplies t o a n
E RISA pla n or it s ben efit r igh t s. In 1987, t h e DOL h eld in
889
Opin ion 87-9A t h a t E RISA pr eem pt s cr im in a l pen a lt ies for t h e
viola t ion of st a t e r u les pr oh ibit in g h ea lt h r eim bu r sem en t pla n s
890
fr om r equ ir in g t h e u se of m a il or der ph a r m a cies.
Sim ila r ly, in
891
1989 t h e DOL h eld in Opin ion 89-01A t h a t E RISA pr eem pt s
cr im in a l pen a lt ies for t h e viola t ion of st a t e r u les pr oh ibit in g
h ea lt h r eim bu r sem en t pla n s fr om r equ ir in g t h e u se of ou t of st a t e
892
ph a r m a cies.
888
B . Correct bu t Poorly R eason ed Cou rt Decision s T h at E R IS A Does
N ot Preem pt Crim in al L aw s Wh ich In cid en tally E n force
E R IS A Con tribu tion or B en efit Obligation s, B u t Preem pts
Crim in al L aw s if T h eir Prim ary E ffect is to (1) E n force E R IS A
Con tribu tion or B en efit Obligation s, or (2) M an d ate Plan
T erm s
E RISA does n ot pr eem pt gen er a lly a pplica ble cr im in a l la ws,
su ch a s la ws cr im in a lizin g t h e in t en t ion a l n on -pa ym en t of bot h
wa ges a n d wa ge su pplem en t s.
H owever , E RISA pr eem pt s
gen er a lly a pplica ble civil la ws t h a t r equ ir e t h e pa ym en t of wa ges
a n d wa ge su pplem en t s, t o t h e ext en t t h a t t h ey a pply t o E RISA
ben efit s a n d con t r ibu t ion s t o E RISA pla n s. Th is is sim ila r t o t h e
DOL con clu sion t h a t E RISA pr eem pt s civil u su r y la ws, bu t n ot
cr im in a l u su r y la ws, wh ich bot h seek t o pr even t E RISA pla n s fr om
ch a r gin g excessive in t er est on pla n loa n s. On t h e ot h er h a n d,
E RISA pr eem pt s a cr im in a l la w t h a t is n ot gen er a lly a pplica ble,
su ch a s on e t h a t a pplies on ly t o or pr im a r ily t o E RISA pla n s,
wh et h er it be t o con t r ibu t ion d elin qu en cies or t o per m issible
ph a r m a cy ben efit s.
Mu ch con fu sion st em s fr om t h e fa ilu r e t o dist in gu ish n a r r ow
la ws a pplica ble pr im a r ily t o E RISA pla n s fr om la ws t h a t
cr im in a lize t h e fa ilu r e by a n em ployer or it s officer s t o pa y
em ployees a ll t h eir ea r n ed com pen sa t ion . Nea r ly 80% of su ch
893
com pen sa t ion con sist s of wa ges,
lega lly r equ ir ed n on -E RISA
888. Robbin s, U.S. Dep’t of La bor Advisor y Opin ion 84-18A (Apr . 19, 1984),
1984 E RISA LE XIS 29, a t *6-*7.
889. Kelly, U.S. Dep’t of La bor Advisor y Opin ion 87-9A (Nov. 25, 1987),
1987 E RISA LE XIS 7.
890. Id .
891. Mikit a , U.S. Dep’t of La bor Advisor y Opin ion 89-01A (F eb. 10, 1989),
1989 E RISA LE XIS, a t 7.
892. Id .
893. S ee e.g., B URE AU OF L ABOR S TATISTICS N E WS R E LE ASE E MP LOYE R
C OSTS F OR E MP LOYE E C OMP E NSATION , (Ma r ch 12, 2014) available at
h t t p://www.bls.gov/n ews.r elea se/ecec.n r 0.h t m (pr ovidin g t h a t wa ges a n d
sa la r y con st it u t e 69.4% of compen sa t ion for civilia n wor ker s).
300
T h e J oh n M arsh all L aw R eview
[47:145
894
ben efit s, su ch a s socia l secu r it y, a n d su pplem en t a l pa y, su ch a s
895
over t im e.
A su bst a n t ia l pa r t of t h e less t h a n 20% of
com pen sa t ion devot ed t o ot h er ben efit s goes t o n on -E RISA
896
ben efit s, su ch a s 7.0% t o pa id lea ve, wh ich is u su a lly a pa yr oll
pr a ct ice, or t o pr ofit -sh a r in g pla n s, wh ich a r e n ot E RISA pla n s
897
wh en in -ser vice dist r ibu t ion s a r e cu st om a r y.
Th u s, less t h a n
14% m a y be expect ed t o con st it u t e con t r ibu t ion s t o E RISA pla n s.
898
Th e ea r liest decision wa s Gold stein v. M an gan o, wh ich h eld
899
in 1978 t h a t E RISA does n ot pr eem pt N.Y. La b L. § 198-c.
Th a t
sect ion , wh ich m a kes it a cr im e t o fa il t o pa y “ben efit s or wa ge
su pplem en t s” wh ich su pplem en t s in clu de, bu t a r e n ot lim it ed t o
r eim bu r sem en t for expen ses; h ea lt h , welfa r e, a n d r et ir em en t
ben efit s, a n d va ca t ion , sepa r a t ion or h olida y pa y. Th e sect ion is
900
pa r t of a n a r t icle, en t it led P a ym en t of Wa ges,
and the
pu n ish m en t of t h e cr im e is set for t h in a com pa n ion st a t u t e, wh ich
t r ea t s t h e fa ilu r e t o pa y ben efit s or wa ge su pplem en t s in t h e sa m e
901
m a n n er a s t h e fa ilu r e t o pa y a n y ot h er com pen sa t ion .
Th u s, a s
descr ibed, su pra, t h e st a t u t e is pr im a r ily a pplica ble t o n on -E RISA
pa ym en t s. Th er efor e, it is a gen er a lly a pplica ble cr im in a l la w t h a t
is t h er eby sa ved fr om E RISA pr eem pt ion . Th e New Yor k Civil
Cou r t h ea r in g t h e ca se pr esu m ed t h a t if E RISA did n ot pr eem pt
t h e la w’s cr im in a l lia bilit y, t h a n t h er e wou ld be a ba sis for
im posin g civil lia bilit y on a cor por a t ion a n d it s cor por a t e officer s t o
m a k e r equ ir ed con t r ibu t ion s t o E RISA pla n s. Th u s, t h e cou r t
decided t h a t t h e on ly issu e it h a d t o r esolve wa s wh et h er E RISA
894. Id . (lega lly r equ ir ed n on -E RISA ben efit s con st it u t es 7.8% of
com pen sa t ion ).
895. Id . (su pplem en t a l pa y con st it u t es 2.4% of com pen sa t ion ).
896. Id . (u n pa id lea ve con st it u t es 7.4% of com pen sa t ion ). See 29 C.F .R.
§ 2510.3-1(b) (1975) (wh en su ch pa ym en t s a r e m a de fr om gen er a l a sset s t h ey
a r e pa yr oll pr a ct ices exem pt fr om E RISA).
897. S ee 29 C.F .R. § 2510.3-2(c) (a s a m en ded in 1982) (pr ovidin g t h a t bon u s
pla n s a r e pen sion pla n s if pa ym en t s a r e syst em a t ica lly defer r ed u n t il
t er m in a t ion of em ploym en t , wh ich su ggest s a pr ofit -sh a r in g pla n per m it t in g
in -ser vice dist r ibu t ion s of a ll ben efit s is n ot a n E RISA pla n ). Cf. McKin sey v.
Sen t r y In s., 986 F .2d 401, 406 (10t h Cir . 1993) (bon u s pla n n ot E RISA pen sion
pla n beca u se pa r t icipa n t s m a y wit h dr a w a ll vest ed ben efit s a t a n y t im e) t o
Bin gh a m v. F IML Na t u r a l Resou r ces, LLC 2013, U.S. Dist . LE XIS 85421(D.C.
Col. J u n e 18, 2013) (h oldin g t h a t a bon u s pla n wh ich defer s t h e pa ym en t of
som e ben efit s u n t il t h e t er m in a t ion of em ploym en t is a n E RISA pla n ).
898. Goldst ein v. Ma n ga n o, 417 N.Y.S.2d 368 (N.Y. Civ. Ct . 1978) (h oldin g
t h a t t h e cr im in a l lia bilit y pr ovision of t h e New Yor k La bor La w wa s wit h in
t h e E RISA pr eem pt ion except ion for a n y “gen er a lly a pplica ble cr im in a l la w of
t h e st a t e,” a n d per m it t ed a ssessm en t of lia bilit y a ga in st t h e cor por a t e officer
r espon sible for t h e fa ilu r e t o m a ke t h e r equ ir ed con t r ibu t ion s).
899. Id . a t 373-75.
900. N.Y. La b. La w Ar t 6 §§ 190-199a (Con sol. 2013).
901. N.Y. La b. La w § 198-a (Con sol. 2013). Mor eover , for pu r poses of t h a t
st a t u t e, wa ges in clu de ben efit s a n d wa ge su pplem en t s. N.Y. La b La w § 190
(Con sol. 2013).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
301
902
pr eem pt ed t h e cr im in a l pa r t s of t h e cit ed la bor la w.
Th e Gold stein cou r t bega n it s a n a lysis by obser vin g t h a t
Sen a t or J a vit s h a d descr ibed t h e gen er a lly a pplica ble cr im in a l la w
except ion a s follows:
In view of F eder a l pr eem pt ion , St a t e la ws com pellin g disclosu r e
fr om pr iva t e welfa r e or pen sion pla n s, im posing fidu cia r y
r equ ir em en t s on su ch pla ns, im posin g crim in al pen alties on failu re
to
con tribu te— u n less
a
crim in al
statu te
of
gen eral
903
application . . . w ill be su persed ed .
Th e Gold stein cou r t obser ved t h a t E RISA does n ot defin e a
“gen er a lly a pplica ble la w,” a n d t h u s looked t o N ew Yor k la w,
wh ich pr ovides t h a t su ch a la w is “on e wh ich ext en ds t o t h e en t ir e
904
St a t e a n d em br a ces a ll per son s or t h in gs of a pa r t icu la r cla ss.”
In pa r t icu la r , t h e la bor la w a t issu e is on e su ch la w; t h u s, E RISA
905
does n ot pr eem pt t h e la w.
H owever , t h e cit ed New Yor k la w r e t h e sign ifica n ce of a
gen er a lly a pplica ble la w a ddr esses a n u n r ela t ed issu e, n a m ely, t h e
a bilit y of a loca l gover n m en t t o a dopt la ws in con sist en t wit h New
Yor k st a t e la w a s sh own by a r eview of t h e decision t h e Gold stein
906
907
cou r t cit ed, People v. Wilk erson , for t h e m ea n in g of t h e ph r a se.
In pa r t icu la r , t h e Wilk erson cou r t t h er ein h eld t h a t t h e Cit y of
908
Roch est er wa s n ot per m it t ed t o cr im in a lize ca su a l ga m blin g.
Th e Wilk erson cou r t st a t ed:
Th e power of a m u nicipa lity t o en a ct loca l la ws is con fer r ed by
a r t icle IX of t h e St a t e Con st it u t ion . H owever , su ch loca l la ws m a y
n ot be in con sist en t wit h a gen er a l la w of t h e St a t e r ela t in g t o t h e
sa m e en u m er a t ed su bject . P a r a gr a ph (10) of su bdivision (C) of
sect ion 2 list s “pr ot ect ion , or der , con du ct , sa fet y, h ea lt h a n d well bein g of per son s or pr oper t y” a m on g t h e su bject s en u m er a t ed. . . .
Th e Con st it u t ion defin es a gen er a l la w a s on e wh ich “in t er m s a n d
in effect a pplies a like t o a ll cou n t ies, a ll cou n t ies ot h er t h a n t h ose
909
wh olly in clu ded wit h in a cit y, a ll cit ies, a ll t own s or a ll vill a ges.”
910
Addit ion a lly, t h e st a t e pen a l la w is su ch a gen er a l la w.
Th e
Roch est er la w is n ot con sist en t wit h t h e gen er a l st a t e pen a l la w,
wh ich cr im in a lizes ga m blin g, bu t exem pt s ca su a l ga m blin g fr om
902. Gold stein , 417 N.Y.S.2d a t 373 (r efer r in g t o t wo decision s h oldin g t h at
t h e st a t u t e cr ea t ed a n im plied civil a ct ion ).
903. Id . a t 374. Th is st a t em en t wa s pa r t of t h e Sen a t e F loor Discu ssion on
Con fer en ce Repor t on H .R. 2 E m ployee Ret ir em en t In com e Secu r it y Act of
1974 on Au g 22, 1974, 120 Con g Rec. 29942 (Au g. 22, 1974) reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 4747, 4771.
904. Gold stein , 417 N.Y.S.2d a t 374.
905. Id . a t 374-375.
906. P eople v. Wilker son , 342 N.Y.S.2d 936 (N.Y. Mon r oe Ct y. Ct . 1973).
907. Gold stein , 417 N.Y.S. 2d a t 375.
908. Wilk erson , 342 N.Y.S. 2d a t 942.
909. Id . a t 939.
910. Id .
302
T h e J oh n M arsh all L aw R eview
911
[47:145
912
it s pr oh ibit ion . Th u s, t h e Roch est er la w is of n o effect .
Th e Gold stein cou r t wou ld h a ve been bet t er a dvised t o look
m or e closely a t t h e com plet e st a t em en t of Sen a t or J a vit s, su pra,
wh o st a t ed a la w wh ich im posed “cr im in a l pen a lt ies on fa ilu r e t o
con t r ibu t e” t o a n em ployee ben efit pla n wou ld be pr eem pt ed
u n less it wa s a la w of gen er a l a pplica t ion . Th er e is su ch a la w,
n a m ely on e t h a t cr im in a lizes t h e fa ilu r e t o pa y em ployee wa ges
a n d ot h er com pen sa t ion . By con t r a st , a la w t h a t cr im in a lizes on ly
t h e fa ilu r e t o m a k e con t r ibu t ion s t o em ployee ben efit pla n fu n ds or
in su r er s wou ld n ot be gen er a lly a pplica ble a n d wou ld be
913
pr eem pt ed by E RISA.
As discu ssed, su pra, if t h e la w
cr im in a lizes t h e fa ilu r e t o pa y em ployee ben efit s in t h e con t ext of
t h e fa ilu r e t o pa y com pen sa t ion , wh ich a r e n ot pr im a r ily E RISA
ben efit s, t h a n t h e la w is a gen er a lly a pplica ble cr im in a l la w, a n d
t h u s n ot pr eem pt ed.
F in a lly, t h e Gold stein cou r t cor r ect ly obser ved t h a t a cr im in a l
la w is on e t h a t im poses cr im in a l pen a lt ies. Th er e is n o n eed for
t h e la w t o be ca lled a cr im in a l la w or t o be pa r t of t h e cr im in a l
la w, a s lon g a s it h a d cr im in a l pen a lt ies su ch a s t h e la w a t issu e,
wh ich h a d been in t h e pen a l la w u n t il 1965 wh en it beca m e pa r t of
914
t h e la bor la w.
Th e N ew Yor k Cou r t of Appea ls h eld in 1984, in S togan ovic v.
915
Din olfo, t h a t n o st a t e civil a ct ion wa s im plied by a viola t ion of
916
N.Y. La b L. § 198-c.
Th e cou r t a gr eed wit h t h e st a t em en t in
917
S togan ovic t h a t t h er e is n ot h in g in t h e st a t u t e descr ibin g t h e
918
lega l pen a lt ies for t h e cr im in a l viola t ion , n or in it s legisla t ive
h ist or y “su ggest in g t h a t t h e Legisla t u r e in t en ded t h a t t h e sect ion
919
sh ou ld im pose civil lia bilit y a s well.” On t h e ot h er h a n d, in 1985
920
t h e sa m e Cou r t of Appea ls u ph eld in S asso v. Vach aris a st a t e
911. Id . a t 939-940.
912. Id . a t 942.
913. H owever , if it ca n be sh own t h a t a la r ge por t ion of t h e pla n s a ssocia t ed
wit h su ch fu n ds a r e n ot E RISA pla n s, a s wou ld be t h e ca se if t h e spon sor s of
m a n y su ch pla n s wer e ch u r ch es, wh ich a r e exem pt fr om E RISA u n der E RISA
4(b)(2), 29 U.S.C. § 1003(b)(2) (2012), t h en t h ese la ws ma y be gen er a lly
a pplica ble. Th u s, E RISA wou ld n ot pr eem pt t h e la ws.
914. Gold stein , 417 N.Y. S. 2d a t 375. On t h e ot h er h a n d, t h er e ma y be a n
issu e if t h e st a t u t e on ly im poses fin es, wh ich a r e n ot a lwa ys cr im in a l
pen a lt ies. F or exa m ple, pa r kin g viola t ion fin es wou ld n ot seem t o be cr im in a l
fin es.
915. St oga n ovic v. Din olfo, 462 N.E .2d 149 (N.Y. 1984) (a dopt in g t h e
r ea son in g st a t ed in t h e m em or a n du m a t t h e Appella t e Division (461 N.Y.S.2d
121)).
916. S ee N.Y. La b. La w § 198-c (McKin n ey 2008) (set t in g for t h t h e
pen a lt ies for viola t ion s of N.Y. La b L. § 198-a , t h e sect ion a t issu e in
Gold stein , 417 N.Y.S.2d 368).
917. St oga n ovic v. Din olfo, 461 N.Y.S.2d 121 (N.Y. App. Div. 1983).
918. N.Y. La b. La w § 198-a (Con sol. 2013).
919. St oga n ovic, 461 N.Y.S.2d a t 122.
920. Sa sso v. Va ch a r is, 484 N.E . 2d 1359 (N.Y. 1985) (t h e sect ion h a d been
h eld t o be pr eem pt ed by E RISA in t h e lower cou r t s).
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303
n on -cr im in a l st a t u t e h oldin g t h a t t h e t en la r gest sh a r eh older s of a
cor por a t ion a r e civilly r espon sible for t h e cor por a t ion ’s
con t r ibu t ion sh or t fa ll t o E RISA pla n s. In 1989 t h e E igh t h Cir cu it
921
issu ed a con t r a r y decision in R ock n ey v. B loh orn wit h r espect t o
a sim ila r cla im of per son a l lia bilit y of cor por a t e officer s per t a in in g
922
t o Top-H a t ben efit s fr om a ba n kr u pt cor por a t e pla n spon sor .
In 1983, t h e Th ir d Cir cu it h eld in a foot n ot e t o Carpen ters
923
H ealth an d Welfare Fu n d v. Am brose wit h ou t expla n a t ion t h a t
E RISA did n ot pr eem pt t h e cr im in a l or civil a spect s of t h e
P en n sylva n ia Wa ge P a ym en t a n d Collect ion La w. In 1986, a n
Illin ois dist r ict cou r t r ea ch ed t h e sa m e con clu sion of n o
pr eem pt ion wit h n o expla n a t ion wit h r espect t o t h e cr im in a l a n d
explicit civil lia bilit y a spect s of t h e Illin ois Wa ge P a ym en t
Collect ion Act in Uph olster’s In tern ation al H ealth an d Welfare
924
Fu n d T ru st v. Pon tiac Fu rn itu re, In corporated .
In 1986, t h e Un it ed St a t es Su pr em e Cou r t con fir m ed t h a t n o
civil lia bilit y cou ld be im plicit ly or explicit ly im posed by wa ge
925
collect ion st a t u t es wh en a s discu ssed, su pra, it a ffir m ed Gilbert,
t h er eby h oldin g t h a t t h e civil a ct ion pr ovision s, if a n y, of N.Y. La b
926
L. § 198-c wer e pr eem pt ed.
Th er e wer e sever a l decision s begin n in g in 1981 wit h
927
M assach u setts v. Fed erico,
cor r ect ly h oldin g t h a t E RISA
pr eem pt ed n a r r ow cr im in a l st a t u t es, bu t for t h e wr on g r ea son s.
Th a t decision con sider ed a Ma ssa ch u set t s st a t u t e t h a t pr ovided
that
a n y per son or em ployee, a n d t h e pr esiden t , secr et a r y, a n d
t r ea su r er . . . of a cor por a t ion wh ich is a n em ployer , wh o is pa r t y t o
a n a gr eem en t t o pa y or pr ovide t h e con t r ibu t ion s or ben efit s cover ed
by [c. 151D en t it led H ea lt h , Welfa r e a n d Ret ir em en t F u n ds] . . . ,
a n d wh o r efu ses or fa ils or n eglect s t o pa y su ch con t r ibu t ion s or
pa ym en t s wit h in t h ir t y da ys a ft er [t h ey] a r e r equ ir ed t o be m a de
sh a ll be pu n ish ed by a fin e of n ot m or e t h a n five h u n dr ed dolla r s or
by im pr ison m en t in a ja il or h ou se of cor r ect ion for n ot m or e t h a n
928
on e yea r , or bot h .
Th er e wa s n o qu est ion t h a t t h e st a t u t e r ela t ed t o a n E RISA
pla n . Th e on ly issu e wa s t h e a pplica bilit y of t h e except ion for
929
gen er a lly a va ila ble cr im in a l la ws.
Ma ssa ch u set t s a sser t ed t h a t
921. Rockn ey v. Bloh or n , 877 F .2d 637 (8t h Cir . 1989).
922. Id . a t 638-639.
923. Ca r pen t er s H ea lt h a n d Welfa r e F u n d v. Am br ose, 727 F .2d 279, 282
n .5 (3d Cir . 1983).
924. Uph olst er ’s In t ’l H ea lt h a n d Welfa r e F u n d Tr s. v. P on t ia c F u r n it u r e,
In c., 647 F . Su pp. 1053 (D. Ill. 1986).
925. Gilbert v. B u rlin gton In d u stries, 765 F .2d 320 (2d. Cir . 1985)
su m m arily aff’d 477 U.S. 901 (1986).
926. Id . a t 327.
927. Com m on wea lt h v. F eder ico, 419 N.E . 2d 1374 (Ma ss. 1981).
928. Id . a t 1376.
929. Id .
304
T h e J oh n M arsh all L aw R eview
[47:145
t h e st a t u t e wa s a gen er a lly a pplica ble cr im in a l la w beca u se lik e
t h e on e in Gold stein it “pu n ish es a ll em ployer s, a s well a s cer t a in
cor por a t e officer s, wh o fa il t o a bide by t h eir con t r a ct u a l obliga t ion s
930
t o m a k e con t r ibu t ion s t o r et ir em en t ben efit pla n s.”
Fed erico
r eject ed t h a t a r gu m en t beca u se it a sser t ed “Con gr ess a ppa r en t ly
in t en ded t o pr eem pt St a t e cr im in a l st a t u t es a im ed specifica lly a t
em ployee ben efit pla n s” a s descr ibed in t h e Ch icago Preem ption
931
R eview a n d DOL Advisor y Opin ion 79-26, bot h of wh ich it cit ed.
Th e cou r t r epea t ed t h ose sou r ces’ in cor r ect a sser t ion s t h a t t h e on ly
gen er a lly a pplica ble cr im in a l la ws wer e gen er a l t h eft st a t u t es,
wh ich t h e cou r t a sser t ed wou ld ot h er wise be pr eem pt ed a s r ela t ed
932
t o E RISA pla n s.
H owever , a s descr ibed, su pra, t h ose gen er a l
la ws wou ld on ly be t en u ou sly r ela t ed t o E RISA pla n s a n d t h u s n ot
be pr eem pt ed. Th u s, t h is a r gu m en t wou ld m a k e t h e except ion for
gen er a lly a va ila ble cr im in a l la ws a n u llit y.
H owever , a s in Gold stein , t h e cou r t r ea ch ed t h e cor r ect r esu lt
despit e t h e in cor r ect r ea son in g a bou t t h e ext en t of t h e exclu sion .
Th e la w a t issu e in t h is ca se wa s n ot a gen er a lly a pplica ble la w
bu t on e in a ch a pt er en t it led “H ea lt h , Welfa r e a n d Ret ir em en t
F u n ds,” wh ich st a t u t e wa s dir ect ed pr im a r ily a t t h e collect ion of
pla n con t r ibu t ion s t o fu n ded ben efit pla n s, did n ot in clu de a n y
pa yr oll pr a ct ices, a n d t h u s wa s pr im a r ily focu sed on E RISA pla n s.
In 1986 a Con n ect icu t dist r ict cou r t , in S forza v. Ken co
933
Con stru ction al Con tractin g Com pan y,
a lso h eld t h a t E RISA
pr eem pt ed a n a r r ow cr im in a l la w, a lt h ou gh wit h t h e followin g
pr ovision s:
An y pr opr iet or or pa r t n er wh o fa ils t o pa y t h e con t r ibu t ion s wh en
du e t o a n em ployee welfa r e fu n d . . . or a n y officer , dir ect or or
em ployee of a n y cor por a t ion wh o h a s been m a de r espon sible by t h e
cor por a t ion for pa ym en t of su ch con t r ibu t ion s wh ich ha ve n ot been
pa id wh en du e, sha ll be fin ed n ot m or e t h a n t wo h u n dr ed dolla r s or
im pr ison ed n ot m or e t h a n t h ir t y da ys or bot h for ea ch week of
934
n on pa ym en t . . .
Th er e wa s n o qu est ion t h a t t h e st a t u t e r ela t ed t o a n E RISA
pla n . Th e on ly issu e wa s t h e a pplica bilit y of t h e except ion for
935
gen er a lly a va ila ble cr im in a l la ws.
Th e S forza cou r t decision
dism issed t h e Gold stein New Yor k St a t e la w a r gu m en t , wh ile
r elyin g on t h e Fred erico a r gu m en t t h a t E RISA pr eem pt s a ll
cr im in a l la ws ot h er t h a n gen er a l t h eft la ws, a n d a Th ir d Cir cu it
r u lin g t h a t E RISA pr eem pt ed t h e a ssocia t ed civil lia bilit y on
cor por a t e officer s a n d sh a r eh older s t o m a ke t h e pla n
930. Id . a t 1377.
931. Id . a t 1378.
932. Id .
933. Sfor za v. Ken co Con st r u ct ion a l Con t r a ct in g Co., 674 F . Su pp. 1493 (D.
Con n . 1986).
934. Id . a t 1494.
935. Id . a t 1494.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
305
936
con t r ibu t ion s.
As in Fred erico t h e la wsu it wa s bein g br ou gh t by
a n E RISA fu n d seek in g t o obt a in con t r ibu t ion s fr om t h e cor por a t e
937
officer s.
Mor eover , a s in Fred erico t h e st a t u t e wa s n ot gen er a lly
a pplica ble beca u se it wa s dir ect ed pr im a r ily a t t h e collect ion of
pla n con t r ibu t ion s t o fu n ded ben efit pla n s, wh ich did n ot in clu de
a n y pa yr oll pr a ct ices, a n d t h u s wa s pr im a r ily focu sed on E RISA
pla n s.
In 1987 a Ca lifor n ia st a t e a ppella t e cou r t , in Cairy v. S u perior
Cou rt for th e Cou n ty of L os A n geles, 237 Cal. R ptr. 715 (Ca l. Ct .
938
App. 1987), a lso h eld t h a t E RISA pr eem pt ed a n a r r ow cr im in a l
la w a lt h ou gh wit h t h e followin g pr ovision s:
Wh en ever a n em ployer h a s a gr eed wit h a n y em ployee t o
m a k e pa ym en t s t o a h ea lt h or welfa r e fu n d, pen sion fu n d or
va ca t ion pla n , or ot h er su ch pla n for t h e ben efit of t h e em ployees,
or a n egot ia t ed in du st r ia l pr om ot ion fu n d, or h a s en t er ed in t o a
collect ive ba r ga in in g a gr eem en t pr ovidin g for su ch pa ym en t s, it
sh a ll be u n la wfu l for su ch a n em ployer willfu lly or wit h in t en t t o
defr a u d t o fa il t o m a k e t h e pa ym en t s r equ ir ed by t h e t er m s of a n y
939
su ch a gr eem en t .
Th is ca se wa s ver y u n u su a l beca u se t h e st a t e wa s n ot seekin g
t o com pel pa ym en t of a delin qu en t E RISA pla n con t r ibu t ion bu t t o
940
pr osecu t e a cor por a t e officer for fa ilin g t o m a k e su ch pa ym en t .
Aft er decidin g t h a t t h e st a t u t e r ela t ed t o a n E RISA pla n , t h e on ly
issu e wa s t h e a pplica bilit y of t h e except ion for gen er a lly a va ila ble
941
cr im in a l la ws.
Aft er dism issin g t h e Gold stein a r gu m en t a s
942
per m it t in g a ll cr im in a l la ws ot h er t h a n bills of a t t a in der s t h e
cou r t wen t t o t h e legisla t ive h ist or y. Th e cou r t set for t h t h e sa m e
J a vit s qu ot e a bou t per m it t in g cr im in a l pen a lt ies for pla n
con t r ibu t ion s a s wa s pr esen t ed in Gold stein , bu t lik e t h e Gold stein
943
cou r t ign or ed it .
In st ea d, it focu sed on t h e st a t em en t s a bou t t h e
in t en ded br ea dt h of t h e E RISA E xpr ess P r eem pt ion t h er eby
944
pr eclu din g a br oa d exclu sion for a ll cr im in a l la ws.
Aga in t h e
r igh t a n swer wa s r ea ch ed beca u se t h e st a t u t e wa s n ot a gen er a lly
a pplica ble cr im in a l la w. In st ea d, t h e la w wa s dir ect ed pr im a r ily
a t t h e collect ion of pla n con t r ibu t ion s t o fu n ded ben efit pla n s, a n d
t h u s wa s pr im a r ily focu sed on E RISA pla n s. In con t r a st , gen er a lly
a pplica ble la ws a lso gover n pa yr oll pr a ct ices a n d ot h er n on -E RISA
pla n pa ym en t s on beh a lf of em ployees.
As in Gold stein , t h e Cairy cou r t wou ld h a ve been bet t er
936. Id . a t 1494-95.
937. Id . a t 1493.
938. Ca ir y v. Su per ior Cou r t for t he Cou n t y of Los An geles, 237 Ca l. Rpt r .
715 (Ca l. Ct . App. 1987).
939. Id . a t 716.
940. Id .
941. Id . a t 716-17.
942. Id . a t 717-18.
943. Id . a t 718.
944. Id .
306
T h e J oh n M arsh all L aw R eview
[47:145
a dvised t o u se a s a st a r t in g poin t t o det er m in e wh a t con st it u t es a
gen er a lly a pplica ble cr im in a l la w t h e st a t em en t of Sen a t or J a vit s,
su pra, t h a t t h e con cept m a y, bu t n eed n ot , in clu de a la w wh ich
im posed “cr im in a l pen a lt ies on fa ilu r e t o con t r ibu t e” t o a n
945
em ployee ben efit pla n .
It t h en wou ld h a ve r ea lized t h a t E RISA
exem pt ed som e bu t n ot a ll cr im in a l la ws. Th e Cairy cou r t wou ld
t h en h a ve n ot la id t h e fou n da t ion s for t h e m a n y in cor r ect decision s
t h a t followed.
C. In correct an d Poorly R eason ed Cou rt Decision s T h at E R IS A
Preem pts Crim in al L aw s Wh ose In cid en tal R esu lt is to E n force
E R IS A Con tribu tion or B en efit Obligation s, S u ch as L aw s to
Assu re th e Paym en t of E m ployee Wages an d Wage S u pplem en ts
Th e ea r liest decision for a st a t u t e n ot lim it ed t o em ployee
ben efit pla n s wa s T ru stees of S h eet M etal Work ers’ In tern ation al
Association Prod u ction W ork ers’ Welfare Fu n d v. Aberd een B low er
946
& S h eet M etal Work ers, In c., (h er ein a ft er , “Aberd een ”), in wh ich
a New Yor k dist r ict cou r t h eld in 1983 t h a t E RISA pr eem pt ed t h e
a pplica t ion of N.Y. La b L. § 198-c t o delin qu en t em ployer
con t r ibu t ion obliga t ion s t o E RISA pla n s. As in Gold stein t h e
pr esu m pt ion wa s t h a t if E RISA did n ot pr eem pt t h e la w’s cr im in a l
lia bilit y, t h a n t h er e wou ld be a ba sis for im posin g civil lia bilit y on
a cor por a t ion a n d it s cor por a t e officer s t o m a k e r equ ir ed
947
con t r ibu t ion s t o E RISA pla n s.
Th e Aberd een cou r t r eject ed t h e
Gold stein cou r t ’s r elia n ce on t h e st a t e la w sign ifica n ce of gen er a lly
a pplica ble la ws, wh ich a n a lysis wou ld h a ve left n o cr im in a l la ws
948
pr eem pt ed.
Th e Aberd een cou r t descr ibed t h e E RISA legisla t ive
949
h ist or y a s “n ot h elpfu l” wit h ou t cit in g a n y of t h e h ist or y.
Th e
cou r t expr essed it s a gr eem en t wit h t h e views in Fred erico a n d
dict a in n on -cr im in a l la w ca ses a s follows:
Th is cou r t a gr ees wit h t h ose views. N o dou bt Con gr ess did n ot wish
t o su per sede cr im in a l la ws a pplyin g in gen er a l t er m s t o con du ct
su ch a s la r cen y or em bezzlem en t . Bu t if t h e wor ds “gen er a lly
a pplica ble” con t a in ed in t h e except ion a r e t o m ea n a n yt h in g, la ws
950
a im ed specifica lly a t ben efit pla n s ca nn ot st a n d.
Ra t h er t h a n expla in wh a t it m ea n s for a la w t o be “a im ed
specifica lly a t ben efit pla n s” t h e Aberd een cou r t sim ply decla r ed
t h a t t h e N ew Yor k St a t u t e wa s so a im ed, even t h ou gh a s
945. S ee J a vit s qu ot e, su pra n ot e 818.
946. Tr u st ees of Sh eet Met a l Wor k er s’ In t ’l Ass’n P r od. Wor ker s’ Welfa r e
F u n d v. Aber deen Blower & Sh eet Met a l Wor ker s, In c., 559 F . Su pp. 561
(E .D.N.Y. 1983). S ee also St a t e of New Yor k v. Sa xt on , 907 N.Y.S.2d 316 N.Y.
(N.Y. App. Div. 2010) (sa m e con clu sion in cr im in a l pr osecu t ion wh en st a t e
con cedes t h a t N.Y. La b L. § 198-c wa s n ot a gen er a lly a pplica ble cr im in a l la w).
947. Id . a t 562.
948. Id . a t 562-63.
949. Id . a t 563.
950. Id .
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
307
discu ssed, su pra, m or e t h a n 85% of t h e com pen sa t ion a ddr essed by
951
t h e st a t u t e did n ot con cer n E RISA pla n s or ben efit s.
Th er e wa s
952
a sim ila r decision in 2010 in S tate of N ew Y ork v. S axton .
H owever , t h e St a t e a ccept ed t h e ch a r a ct er iza t ion of t h e la w a s n ot
953
bein g a gen er a lly a pplica ble cr im in a l la w,
so t h e decision
pr ovides lit t le gu ida n ce a bou t su ch ch a r a ct er iza t ion .
Th e n ext decision t h a t con sider ed a st a t u t e n ot lim it ed t o
em ployee ben efit pla n s wa s B ak er v. Caravan M ovin g
954
Corporation in wh ich a n Illin ois dist r ict cou r t h eld in 1983 t h a t
E RISA pr eem pt ed t h e a pplica t ion of t h e Illin ois Wa ge P a ym en t
Collect ion Act t o collect delin qu en t em ployer con t r ibu t ion
obliga t ion s t o E RISA pla n s. H owever , t h e cou r t focu sed on t h e
cr im in a l a spect s of t h e la w, even t h ou gh t h ey did n ot a ppea r t o be
in vok ed in t h e a ct ion befor e t h e cou r t . Th e B ak er cou r t obser ved
t h a t t h e Illin ois st a t u t e wa s br oa der t h a n t h e Ma ssa ch u set t s la w
pr eem pt ed in Fred erico beca u se t h e for m er gover n ed t h e en t ir e
em ployer -em ployee r ela t ion n ot m er ely t h e r ela t ion bet ween t h e
955
em ployer a n d E RISA pla n s.
Never t h eless t h e cou r t con clu ded
wit h ou t expla n a t ion t h a t t h e Illin ois la w wa s n ot a gen er a lly
a pplica ble cr im in a l la w, bu t cit ed t h e r ea son in g in Fred erico a n d
DOL Advisor y Opin ion 79-26, wh ich bot h r est r ict ed t h e ph r a se t o
956
gen er a l cr im in a l la ws, su ch a s t h e la r cen y la ws.
Th u s, t h e cou r t
957
h eld t h a t E RISA pr eem pt ed t h e st a t e la w. As discu ssed, su pra,
t h is a ppr oa ch m a kes t h e gen er a l a pplica ble cr im in a l la w except ion
a n u llit y, wh ich is n ot a per m issible in t er pr et a t ion of a st a t u t or y
pr ovision .
In 1986, a Br on x cr im in a l cou r t in S tate of N ew Y ork v. Art
958
S teel Com pan y In c. (“Art S teel”), cit ed Aberd een for it s h oldin g
t h a t E RISA pr eem pt ed t h e a pplica t ion of N.Y. La b L. § 198-c t o
br in g a cr im in a l a ct ion ba sed on t h e fa ilu r e t o m eet em ployer
con t r ibu t ion obliga t ion s t o a n E RISA pla n . Th e Cou r t offer ed t h r ee
dist in ct a r gu m en t s for it s con clu sion .
F ir st , N.Y. La b L. § 198-c wa s n ot a gen er a lly a pplica ble
cr im in a l la w beca u se t h e legisla t u r e h a d m oved it fr om t h e pen a l
la w t o t h e la bor la w t h er eby ca u sin g it t o be con st r u ed m or e
959
st r ict ly t h a n pen a l la ws.
It is n ot clea r wh a t su ch con st r u a l
951. B u t cf. 29 C.F .R. § 2510.3-2(c) (1975) (bon u s pla n s a r e pen sion pla n s if
som e pa ym en t s a r e syst em a t ica lly defer r ed u n t il t er m in a t ion of em ploym en t ,
wh ich su ggest s a pr ofit -sh a r in g pla n s per m it t in g in -ser vice dist r ibu t ion s of a ll
ben efit s is n ot a n E RISA pla n ).
952. St a t e of New Yor k v. Sa xt on , 907 N.Y.S.2d 316 (N.Y. App. Div. 2010).
953. Id . a t 757, n .2.
954. Ba ker v. Ca r a va n Movin g Cor p. 561 F . Su pp. 337 (N.D. Ill. 1983).
955. Id . a t 341.
956. Id .
957. Id . a t 342.
958. St a t e of New Yor k v. Ar t St eel Co. In c., 133 Misc. 2d 1001 (N.Y. Br on x
Cr im . Ct . 1986).
959. Id . a t 1008.
308
T h e J oh n M arsh all L aw R eview
[47:145
r u les h a ve t o do wit h det er m in in g wh et h er t h e la w is a gen er a lly
a pplica ble cr im in a l la w.
Secon d, t h e Art S teel Cou r t cit ed Aberd een , Fed erico a n d
S forza for t h e pr oposit ion t h a t “la ws a im ed specifica lly a t ben efit
960
pla n s ca n n ot st a n d.”
H owever , like t h e Aberd een cou r t t h e Art
S teel cou r t did n ot expla in wh y N.Y. La b L. § 198-c, wh ich h a s
gr ea t er br ea dt h of cover a ge t h a n t h e la ws in Fred erico a n d S forza,
is su ch a la w. As discu ssed, su pra, u n lik e t h ose st a t u t es m or e
t h a n 85% of t h e com pen sa t ion a ddr essed by N.Y. La b L. § 198-c
did n ot go t o E RISA pla n s. In st ea d, t h e cou r t dism issed t h e
Gold stein a r gu m en t wit h t h e followin g exa m ple:
F or exa m ple, u n der t h e P eople’s in t er pr et a t ion a St a t e cou ld en a ct a
la w m a kin g it a m isdem ea nor for a n em ployer t o con t r ibu t e t o a n
em ployee pen sion fu n d in com plia n ce wit h a collect ive ba r ga in in g
a gr eem en t a t a t im e t h a t t h e em ployer is delin qu en t in t he pa ym en t
961
of a n y St a t e t a x. Su ch a st a t u t e wou ld pr oba bly be pr eem pt ed.
H owever , a s discu ssed, su pra, gen er a lly a pplica ble cr im in a l
la ws m a y, a s Sen a t or J a vit s des cr ibed, be defin ed in a m a n n er
t h a t in clu des la ws su ch a s N.Y. La b. L. § 198-c, wh ich is pa r t of a
la w t o en for ce t h e pa ym en t of a ll com pen sa t ion t h a t t r ea t s a ll
com pen sa t ion a like, bu t exclu des su ch la ws t a r get ed specifica lly a t
962
pen sion pla n s, wh ich a r e p r im a r ily E RISA pla n s.
Th ir d, t h e Ar t St eel cou r t t u r n ed t h e Gold stein decision
u pside down a n d decla r ed t h a t if a s t h e Su pr em e Cou r t h eld in
Gilbert New Yor k m a y n ot im pose a civil lia bilit y for fa ilin g t o pa y
a pla n con t r ibu t ion obliga t ion , New Yor k m a y n ot im pose a
963
cr im in a l pen a lt y for su ch fa ilu r e. Th e cou r t seem ed t o fin d t h is a
du e pr ocess viola t ion a lt h ou gh it con ceded t h a t if t h e st a t u t e on ly
im posed cr im in a l pen a lt ies, a s it did in t h is ca se, t h er e wa s n o du e
964
pr ocess issu e.
965
In 1986 a New J er sey cou r t h eld, in N ew J ersey v. B u rten ,
t h a t E RISA pr eem pt ed a st a t u t e cr im in a lizin g t h e fa ilu r e t o m eet
t h e obliga t ion of a collect ive ba r ga in in g a gr e em en t t o pa y wa ges,
con t r ibu t ion s t o a n em ployee ben efit pla n , or ot h er
966
com pen sa t ion . Th e st a t u t e wa s n ot lim it ed t o wa ge su pplem en t s
967
bu t a pplied t o wa ges a n d wa ge su pplem en t s.
H owever , t h e
B u rten cou r t cit ed a n d r epea t ed m u ch of t h e a n a lysis of Aberd een ,
wh ich pr esu m ed t h a t t h e sim ila r NY la w wa s “a im ed specifica lly
a t em ployee ben efit pla n s.” Th e B u rten cou r t a lso did n ot expla in
960.
961.
962.
a r e n ot
963.
964.
965.
966.
967.
Id . a t 1009.
Id . a t 1009 (cit a t ion s om it t ed).
29 C.F .R. § 2510.3-3(b) (pen sion pla n s cover in g on ly own er -em ployees
E RISA pla n s).
Art S teel, 133 Misc. a t 1010-1011.
Id . a t 1011, n .13.
New J er sey v. Bu r t en , 530 A.2d 363 (N.J . Su p Ct . Un ion Ct y 1986).
Id . a t 370.
Id . a t 367.
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
309
h ow t h is cou ld be t h e ca se if a s discu ssed, su pra, m or e t h a n 85% of
968
t h e com pen sa t ion a ddr essed by t h e New J er sey la w did n ot go t o
E RISA pla n s, bu t u sed sim ila r con clu sor y la n gu a ge:
It is clea r fr om t h e ca ses cit ed a bove t h a t N.J .S.A. 2A:170 -90.2 does
n ot fa ll wit hin t h e except ion t o E RISA u r ged u pon t h is Cou r t a n d
fou n d in 29 U.S.C. § 1144(b)(4) [for gen er a lly a pplica ble cr im in a l
la ws].
N.J .S.A. 2A:170-90.2 is a cr im in a l st a t u t e t h a t wa s
specifica lly pr om u lga t ed t o dea l wit h em ployee ben efit pla n s; a s
su ch it is n ot a “gen er a lly a pplica ble” cr im in a l la w. If t h is Cou r t
wer e t o h old ot h er wise t h en a n y t im e t h e St a t e decided t o r egu la t e
em ployee ben efit pla n s, t h e Legisla t u r e cou ld sim ply en a ct a st a t u t e
969
im posin g pen a l sa n ct ion s.
F in a lly, in 1988 t h e Ma ssa ch u set t s Su pr em e J u dicia l Cou r t
970
explicit ly h eld, in M assach u setts v. M orash ,
t h a t E RISA
pr eem pt s t h e a pplica t ion of t h e cr im in a l pr ovision s of wa ge
collect ion st a t u t es t o t h e fa ilu r e t o con t r ibu t e E RISA pla n s. In
pa r t icu la r , t h e issu e wa s wh et h er t h e gen er a l wa ge collect ion
st a t u t e wa s a pplica ble t o t h e fa ilu r e t o pa y va ca t ion pa y fr om t h e
971
em ployer ’s gen er a l a sset s.
Th e Cou r t a ccept ed t h e a r gu m en t
t h a t t h e gen er a lly a pplica ble cr im in a l la w except ion :
a pplies t o la ws su ch a s t h ose pr oh ibit in g la r cen y a n d em bezzlem en t ,
wh ich a pply t o a ll per son s in a n y con t ext , a n d n ot t o cr im in a l la ws
lim it ed t o t h e em ployer -em ployee r ela t ion sh ip, a n d specifica lly
972
a im ed a t r equ ir in g t h e pa ym en t of em ployee com pen sa t ion .
Th er e a r e t h r ee fla ws wit h t h is a r gu m en t , n on e of wh ich t h e
M orash cou r t discu ssed. F ir st , E RISA is n o m or e r ela t ed t o t h e
a pplica t ion of a cr im in a l la w t o a per son wh o st ea ls fr om a n
E RISA pla n t h a n t o t h e a pplica t ion of st a t e con t r a ct la w t o com pel
a per son t o pr ovide a gr eed goods t o a n E RISA pla n . In bot h ca ses,
t h e r ela t ion t o t h e em ployee ben efit s a spect s of t h e E RISA pla n is
so t en u ou s a s t o pr even t E RISA pr eem pt ion .
Th u s, if t h e
gen er a lly a pplica ble cr im in a l la w except ion is lim it ed t o su ch la ws,
it is a n u llit y. Secon d, em ployee com pen sa t ion collect ion st a t u t es
a r e t h e on ly st a t u t es t h a t m a k e t h e fa ilu r e t o con t r ibu t e t o a n
E RISA pla n a cr im e t h a t a r e n ot lim it ed pr im a r ily t o E RISA pla n
con t r ibu t ion s. Th ese st a t u t es sa t isfy t h e cit ed expla n a t ion by
Sen a t or J a vit s of t h e pu r pose of t h is exclu sion fr om E RISA
pr eem pt ion . Th ir d, a s discu ssed su pra on a ver a ge m or e t h a n 85%
of em ployee com pen sa t ion does n ot go t o E RISA ben efit s, t h u s
968. S ee generally id. (illu st r a t in g t h a t t h e cou r t s oft en pr esen t n o fin din g
t h a t t h e com pen sa t ion cover ed by t h e st a t u t e wa s n ot pr im a r ily fr om E RISA
pla n s).
969. Id . a t 370.
970. Ma ssa ch u set t s v. Mor a sh , 522 N.E .2d 409 (Ma ss. 1988) over r u led on
ot h er gr ou n ds by Ma ssa ch u set t s v. Mor a sh , 490 U.S. 107 (1989) (h oldin g t h a t
u n fu n ded va ca t ion pla n s a r e n ot E RISA pla n s).
971. Id . a t 410-14.
972. Id . a t 415.
310
T h e J oh n M arsh all L aw R eview
[47:145
wa ge collect ion la ws a r e gen er a lly a pplica ble la ws beca u se n on E RISA cla im s fa r ou t weigh E RISA cla im s in va lu es. On t h e ot h er
h a n d, if t h e wa ge collect ion st a t u t e t r ea t s con t r ibu t ion obliga t ion s
t o E RISA fu n ds differ en t ly t h a n ot h er com pen sa t ion cla im s, su ch
a s im posin g differ en t pen a lt ies, t h e gen er a lly a pplica ble la w
except ion fr om E RISA pr eem pt ion m a y be in a pplica ble t o su ch a
st a t u t e.
D. E R IS A Does N ot Preem pt a Crim in al L aw N ot Prim arily
Affectin g E R IS A Plan s w h ich R equ ires th e Paym en t of Fi n es,
R eim bu rsem en ts to Crim e Victim s, or R eim bu rsem en ts to
S tates for th e Costs of Im prison in g a n E R IS A Plan Participan t
On ly on e cou r t a ppea r s t o h a ve discu ssed wh et h er gen er a lly
a pplica ble st a t e cr im in a l la ws for pu r poses of t h e exclu sion fr om
E RISA E xpr ess P r eem pt ion in clu de t h ose la ws, wh ich do n ot
pr im a r ily a ffect E RISA pla n s, bu t en for ce a ga in st a pa r t icipa n t ’s
a sset s a n d in com e, in clu din g bu t n ot lim it ed t o pen sion in com e,
r equ ir em en t s t o pa y (1) cr im in a l pen a lt ies, (2) t h e st a t e for t h e
cost of t h e pa r t icipa n t ’s im pr ison m en t , or (3) t h e st a t e for
973
r est it u t ion t o cr im e vict im s.
Th er e is ext en sive com m en t a r y on
t h e issu e of pr ison er r eim bu r sem en t s, su ch a s t h ou gh t fu l a r t icles
974
975
by Ms. Megh a n L. Br ower
a n d P r of. Ala n K. Ra ga n .
Bot h
976
discu ss t h e ext en sive ca se la w, wh ich focu ses on t h e con dit ion s
u n der wh ich a st a t e m a y obt a in a pr ison er ’s pen sion wit h ou t
977
viola t in g t h e Alien a t ion P r oh ibit ion .
Ms. Br ower r ecom m en ds
973. Cf. Th om a s v. Bost wick, 2013 U.S. Dist . LE XIS 134370 (N.D. Ca l.
Sept . 19, 2013) (dism issin g a cla im t h a t pla n cou ld r ely on em ployer ’s civil
ju dgm en t a ga in st for m er em ployee t o ju st ify pa ym en t of Spou sa l Su r vivor
Ben efit P la n ben efit t o em ployer , bu t disr ega r din g wh et h er em ployer cou ld
h a ve r elied on cr im in a l r est it u t ion or der t o obt a in ben efit , a lt h ou gh in t h is
ca se t h e or der wa s issu ed a ft er t h e pla n pa ym en t s t o t h e em ployer ).
974. Megh a n L. Br ower , Prison ers w ith Pen sion s Pay T h eir Ow n Way: An
E xam in ation of th e Michigan S tate Correction al Facility R eim bu rsem en t Act ,
37 N E W E NG . J . ON C RIM . & C IV. C ONF INE ME NT 139 (2011) [h er ein a ft er
“Br ower ’s Mich iga n P r ison er s”].
975. Ala n K. Ra ga n , B alan cin g E R IS A’S An ti-alien ation Provision s Again st
Garn ish m en t of a Con victed Crim in al’s R etirem en t Fu n d s , 39 U. B ALT . L. R E V.
63 (2009) [h er ein a ft er “Ra ga n ’s P r ison er s’ Ba la n ce”].
976. Br ower ’s Mich iga n P r ison er s , su pra n ot e 978, a n d Ra ga n ’s P r ison er s’
Ba la n ce, su pra n ot e 979, a t 87-89.
977. S ee e.g., U.S. v. Sm it h , 47 F .3d 681 (4t h Cir . 1995) (h oldin g t h a t st a t e
m a y wr est a por t ion of pr e-r et ir em en t pa ym en t s bu t n ot r et ir em en t a n n u it y
pa ym en t s fr om pa ym en t s deposit ed t o pr ison er a ccou nt s in or der t o
com pen sa t e t h eir cr im e vict im s); Wr igh t v. Ch a se Rivela n d, 219 F .3d 905 (9t h
Cir . 2000) (h oldin g t h a t st a t e la w m a y be u sed t o wr est a por t ion of E RISA
pen sion ben efit s fr om pa ym en t s deposit ed t o pr ison er a ccou n t s in or der t o
com pen sa t e t h eir cr im e vict im s); St a t e Tr ea su r er v. Abbot t , 660 N.W.2d 714,
717 (Su p. Ct . Mich . 2003) (h oldin g t h a t a st a t e m a y dir ect pension pla n t o sen d
pa ym en t s t o pr ison er a ccou n t r a t h er t h a n h is cr edit u n ion a ccou n t so it is
ea sier t o obt a in fu n ds); Da im ler -Ch r ysler Cor p v. Cox, 447 F .3d 967 (6t h Cir .
2006) (h oldin g t h a t st a t e m a y wr est a por t ion of E RISA pen sion ben efit s fr om
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
311
t h a t in or der t o a dva n ce “E RISA’s fou n da t ion a l object ives,”
E RISA be cla r ified t o pr even t t h e st a t e fr om obt a in in g t h e
979
pr ison er ’s pen sion ben efit s a t a n y t im e,” wh ile P r of. Ra ga n
r ecom m en ds t h a t E RISA be cla r ified t o a llow t h e st a t e t o obt a in
t h e pr ison er ’s pen sion ben efit s so t h a t “vict im s of cr im in a l a ct ivit y
deser ve t o r ecover fr om t h e p en sion pla n s of t h ose wh o h a ve
980
h a r m ed t h em .”
Th er e is a lso a n ext en sive com m en t a r y on t h e
issu e of vict im r eim bu r sem en t s u n der feder a l la w, su ch a s P r of.
981
982
Ra ga n ’s a r t icle a n d a t h ou gh t fu l a r t icle by P r of. Su sa n Reece,
wh ich a lso m en t ion s r eim bu r sem en t s u n der st a t e la w in clu din g a
decision discu ssed, in fra, in wh ich t h e gen er a lly a pplica ble
983
cr im in a l la w except ion wa s fou n d t o be a pplica ble.
P r of. Reece
r ecom m en ds t h a t E RISA be a m en ded t o per m it t h e ga r n ish m en t of
pen sion a sset s fr om pa r t icipa n t s wh o h a ve com m it t ed cr im es or
984
t or t s.
In 1992 a N ew J er sey cou r t h eld in S tate of N ew J ersey v.
985
Pu lasty, t h a t t h e gen er a lly a pplica ble cr im in a l la w except ion
per m it t ed t h e en for cem en t a ga in st E RISA pen sion ben efit s of a
r est it u t ion a gr eem en t t h a t wa s pa r t of a plea ba r ga in in volvin g
ch a r ges by t h e pa r t icipa n t of em bezzlin g $600,000 fr om t h e New
986
J er sey F ir em a n ’s Associa t ion .
Th e on ly in com e sou r ces t h a t
wer e a va ila ble t o m a k e t h e a gr eed $531 m on t h pa ym en t s wer e t h e
com bin ed Socia l Secu r it y t h e pa r t icipa n t r eceives wit h h is wife in
t h e a m ou n t of $1,581.00, a $558.00 per m on t h F ir em a n ’s
Associa t ion pen sion , a n d a $123.00 per m on t h pen sion fr om t h e
987
F ost er Wh eeler Cor por a t ion .
Th e decision did n ot descr ibe wh y
en for cem en t of t h e a gr eem en t wou ld n ecessa r ily be a pplica ble t o
t h e E RISA pen sion r a t h er t h a n t h e gover n m en t pen sion or n on pen sion a sset s, in sh or t wh y t h er e wa s a n E RISA issu e.
978
pa ym en t s deposit ed t o pr ison er a ccou n t s in or der t o com pen sa t e t h eir cr im e
vict im s bu t m a y n ot com pel pen sion pla n t o sen d E RISA pen sion ben efit s t o
pr ison ).
978. Br ower ’s Mich iga n P r ison er s, su pra n ot e 978, a t 157.
979. Id . S ee also Ben n et t v. Ar ka n sa s, 485 U.S. 395 (1988) (h oldin g for
sim ila r r ea son s t h a t t h er e is n o im plicit except ion t o t h e pr oh ibit ion on t h e
a t t a ch m en t of socia l secu r it y pa ym en t s t o pa y t h e cost s of in cu r r ed by a st a t e
pr ison h oldin g a ben eficia r y).
980. Ra ga n ’s P r ison er s’ Ba la n ce, su pra n ot e 979, a t 101.
981. Ra ga n ’s P r ison er s’ Ba la n ce, su pra n ot e 979, a t 64-65, 85-99.
982. Sh a r on Reece, T h e Gild ed Gates of Pen sion Protection : Am en d in g th e
An ti-Alien ation Provision of ER IS A S ection 206(d ), 80 O R . L. R E V. 379 (2001)
[h er ein a ft er “Reece’s Gilded Ga t es”].
983. Id . a t 406-07 (qu ot es t h e h oldin g in St a t e v. P u la st y, 612 A.2d 952,
956-57 (N.J . Su per . Ct . App. Div. 1992)).
984. B u t see R E STATE ME NT (T H IRD ) OF T RUSTS § 59 CMTS . A-A(2) a t 395,
399-400 (2003) (expla in in g wh y n o gen er a l except ion for t or t cla im s a ga in st a
spen dt h r ift t r u st wa s a dopt ed).
985. St a t e of New J er sey v. P u la st y, 612 A.2d 952 (N.J . Su per . Ct . App.
Div. 1992).
986. Id . a t 958.
987. Id . a t 953.
312
T h e J oh n M arsh all L aw R eview
[47:145
Th e Pu lasty cou r t fir st dist in gu ish ed Gu id ry v. S h eet M etal
988
Work ers N ation al Pen sion Fu n d , wh ich wa s n ot a pr eem pt ion
ca se. Th e Su pr em e Cou r t t h er ein h eld t h a t t h e Alien a t ion
P r oh ibit ion per m it t ed n o equ it a ble except ion s; t h u s, it pr even t ed a
pen sion pla n fr om r espon din g t o a feder a l a ct ion by pla cin g in a
con st r u ct ive t r u st t h e ben efit s of a pa r t icipa n t , wh o h a d em bezzled
989
fr om t h e pla n ’s u n ion spon sor . Th e Pu lasty cou r t t h u s obser ved:
Th e cr im in a l m iscon du ct elem en t of
Gu idr y wa s m er e
h a ppen st a n ce. Wha t wa s a t issu e t h er e wa s a civil su it by a vict im
wh ich r esu lt ed in a ju dgm en t wh ich t h e vict im sou gh t t o en for ce
t h r ou gh t h e debt or ’s pen sion . T h is situ ation is exactly w h at E R IS A
w as in ten d ed to proh ibit an d is w h olly d istin ct from w h at is before
u s: restitu tion ord ered as part of a crim in al pen alty w h ich resu lted
from a plea bargain in w h ich Pu lasty gain ed th e ben efit of h is
agreem en t w ith th e prosecu tor . . .
In sh or t , t h e ver y differ en t en ds ser ved by t h e cr im in a l ju st ice
syst em a n d t h e civil syst em su bst a n tia lly dist in guish cr im in a l
r est it u t ion fr om t h e civil ju dgm en t collect ion m ech a n ism s wh ich a r e
t h e a im of E RISA’s a n t i-a lien a t ion pr ovision . Th e goa l of E RISA is
t o pr ot ect t h e “spen dt h r ift ” pen sion ben eficia r y fr om squ a n der in g
h is pen sion by ou t spen din g h is ben efit s, a n d su ffer in g a ssign m en t of
t h ose ben efit s t o cr edit or s. It is n ot t o elim in a t e a legit im a t e
990
sen t en cin g t ool of t h e st a t e cr im ina l cou r t .
Th e Pu lasty cou r t t h en cit ed t h e gen er a lly a pplica ble cr im in a l
la w exclu sion fr om t h e E RISA E xpr ess P r eem pt ion Ru le, wh ich
per m it s t h e st a t e la w t o disr ega r d t h e Alien a t ion P r oh ibit ion , a n d
t h e r equ ir em en t t h a t pla n t er m s det er m in e ben efit r igh t s. In
pa r t icu la r , t h e cou r t decla r ed a ft er qu ot in g t h e B u rten decision
t h a t “t h e r est it u t ion pr ovision of N.J .S.A. 2C:44 -2 [wh ich is pa r t of
t h e N ew J er sey Code of Cr im in a l J u st ice] is a gen er a lly a ppli ca ble
cr im in a l la w a n d does n ot ‘r ela t e t o’ a n em ployee ben efit pla n ;
991
t h u s, it is n ot pr eem pt ed by E RISA.” H owever , t h is st a t em en t is
som ewh a t m islea din g. If a cr im in a l la w does n ot “r ela t e t o” t o a n
E RISA P la n , t h er e is n o n eed t o in vok e t h e gen er a lly a pplica ble
cr im in a l la w except ion . On a ppea l t h e decision wa s a ffir m ed, bu t
on differ en t gr ou n ds, viz., wh ich t h e Alien a t ion P r oh ibit ion does
992
n ot pr ot ect dist r ibu t ed ben efit s.
As discu ssed, in fra, t h is is a n
in cor r ect ba sis for t h e cor r ect h oldin g.
Rea son in g sim ila r t o t h a t of t h e lower cou r t wou ld a pply t o a
sim ila r gen er a lly a pplica ble cr im in a l la w t h a t wa s en for cin g eit h er
(1) a fin e im posed on a pa r t icipa n t wh o viola t ed a cr im in a l la w n ot
dir ect ed a t E RISA pla n s, or (2) a r equ ir em en t t h a t pr ison er s
988.
(1990).
989.
990.
991.
992.
Gu idr y v. Sh eet Met a l Wor ker s Na t ion a l P en sion F u n d, 493 U.S. 365
S ee gen erally Feu er ER IS A M yth s, su pra n ot e 25, a t 717-18.
Id . a t 376.
Pu lasty, 612 A.2d a t 957-58 (em ph a sis a dded).
Id . a t 958.
St a t e of New J er sey v. P u la st y, 642 A.2d 1392 (N.J . 1994).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
313
r eim bu r se t h e st a t e for t h e cost of im pr ison m en t for a viola t ion of
a cr im in a l la w n ot dir ect ed a t E RISA pla n s, su ch a s Mich iga n ’s
993
St a t e Cor r ect ion s F a cilit y Reim bu r sem en t Act ,
wh ich is
994
discu ssed in Ms. Br ower ’s a r t icle.
In bot h ca ses t h e st a t e la w is
a gen er a lly a pplica ble cr im in a l la w beca u se t h e la w is
im plem en t in g a cr im in a l sa n ct ion , i.e., t h e cr im in a l is bein g for ced
t o pa y a fin e or t h e cost of im pr ison m en t , r espect ively,
r espect ively. Th e a r gu m en t wou ld n ot , h owever , a pply t o a civil
cla im sepa r a t e a n d a pa r t fr om t h e cr im in a l con vict ion , su ch a s t h e
civil a ct ion in Gu id ry.
E . T h e Preem ption R esu lts are Un affected by Tr a veler s an d Its
Progen y Wh ich Con firm T h at E R IS A Preem pts S tate L aw s
T h at Provid e E n forcem en t M ech an ism s
T ravelers a n d it s pr ogen y do n ot a ffect t h e E RISA pr eem pt ion
of cr im in a l la ws. La ws cr im in a lizin g t h e fa ilu r e t o sa t isfy E RISA
pla n obliga t ion s a r e en for cem en t m ech a n ism s a n d r em a in
pr eem pt ed u n der t h e E RISA E xpr ess P r eem p t ion u n less t h ey a r e
gen er a lly a pplica ble cr im in a l la ws.
T ravelers r ea ffir m ed t h e
gen er a l r u le t h a t st a t e la ws t h a t pr ovide en for cem en t m ech a n ism s
a r e pr eem pt ed. Th u s, T ravelers does n ot ch a n ge t h e E RISA
E xpr ess P r eem pt ion Ru le or it s exclu sion s. Sim ila r ly, civil la ws t o
en for ce E RISA pla n obliga t ion s a r e en for cem en t m ech a n ism s a n d
r em a in pr eem pt ed u n der t h e E RISA E xpr ess P r eem pt ion , wh ich
h a s n o gen er a lly a pplica ble exclu sion for a n y civil la ws. H owever ,
t h er e h a ve been a n u m ber of lower cou r t h oldin gs t h a t T ravelers
995
a dded su ch a n except ion t o t h e E RISA E xpr ess P r eem pt ion .
XVI.
E RISA ONLY P RE E MP TS STATE TAX LAWS TH AT SE E K
TO BE E RISA E N F ORCE ME NT ME CH ANISMS, TO
AF F E CT P ARTICIP ANT’S BE NE F IT RIGH TS (SU CH AS
IMP OSING TAX LE VIE S OR WITH H OLDINGS ON P LAN
DISTRIBU TIONS), OR TO IMP OSE BE NE F IT MAN DATE S,
RE P ORTING AND DISCLOSURE MANDATE S, F IDUCIARY
MANDATE S, OR F UNDING MANDATE S E XCE P T TO TH E
E XTE NT NE E DE D TO IMP LE ME NT A TAX LAW TH AT IS
NOT OTH E RWISE P RE E MP TE D OTH E R TH AN
GE NE RALLY AP P LICABLE CRIMINAL LAWS
By descr ibin g t a x la w a s a st a t e la w t h a t E RISA pr eem pt s,
bu t n ot exem pt in g E RISA pla n s, t h eir pa r t icipa n t s or ben eficia r ies
993. M ICH . C OMP . L AWS S E RV., §§ 800.401-407 (LE XIS 2013).
994. Br ower ’s Mich iga n P r ison er s, su pra n ot e 978.
995. S ee e.g., E MP LOYE E B E NE F ITS L AW , su pra n ot e 13, a t l1-81—11-83.
314
T h e J oh n M arsh all L aw R eview
[47:145
fr om st a t e t a xa t ion , Con gr ess ba la n ced t wo con cer n s: (1) st a t e
la ws m a y n ot en h a n ce or dim in ish a n y of t h e t h r ee fu n da m en t a l
E RISA ben efit pr ot ect ion s, bu t (2) st a t es m u st h a ve t h e r igh t t o
t a x pla n s, pa r t icipa n t s a n d ben eficia r ies .
Th r ee ba sic t a x
pr eem pt ion pr in ciples r esu lt . F ir st , E RISA pla n s n eed n ot be
t r ea t ed in pari m ateria wit h n on -E RISA per son s, a n d m a y be
t r ea t ed m or e or less sever ely t h a n t h ose ot h er per son s. Th u s,
E RISA pla n s m a y be exem pt fr om som e, a ll, or n o st a t e t a xes.
Secon d, E RISA pr eem pt s t h ose st a t e t a x la ws t h a t a dd E RISA
en for cem en t m ech a n ism s, pr even t t h e exer cise of a pa r t icipa n t or
ben eficia r y’s r igh t s u n der t h e pla n , or is a n E RISA Gen er a l
Ma n da t e u n less t h e r epor t or disclosu r e is n eeded t o en for ce a
per m issible st a t e t a x, su ch a s filin g a t a x r et u r n . In pa r t icu la r
E RISA pr eem pt s (1) st a t e t a x levies a n d m a n da t or y wit h h oldin gs
on t h e ben efit s of t h e pa r t icipa n t u n less t h e E RISA pla n
a u t h or izes su ch a ct ion s, or (2) st a t e t a xes t h a t com pel a n em ployer
t o in st it u t e a n E RISA pla n or in clu de a specified ben efit or
ben efit s. Th ir d, E RISA does n ot pr eem pt a n y ot h er t a x la ws,
in clu din g t h ose im posin g t a xes ba sed on t h e a m ou n t of pla n
ben efit s or con t r ibu t ion s t h a t h a ve n on e of t h e effect s r esu lt in g in
pr eem pt ion . Th u s, E RISA pr eem pt s t a xes t h a t m a n da t e (1) t h e
select ion of a n in su r er t o pr ovide h ea lt h ben efit s r a t h er t h a n
per m it t h e pla n t o self-in su r e ben efit s, or (2) t h a t pen sion pla n s be
fu n ded in a specified fa sh ion .
H owever , t o t h e ext en t B oggs, E gelh off, a n d H illm an do n ot
over r u le M ack ey II wit h r espect t o st a t e t a x levies, E RISA per m it s
t a x levies on t h e ben efit s of pa r t icipa n t s a n d ben eficia r ies of a ll
E RISA pla n s ot h er t h a n Spou sa l Su r vivor Ben efit P la n s.
Mor eover , t o t h e ext en t , t h e M ack ey I pr in ciple, t h a t E RISA
pr eem pt s st a t e la ws t h a t t r ea t E RISA pla n s m or e fa vor a bly t h a n
ot h er en t it ies, is via ble, E RISA a lso pr eem pt s t a x la ws t h a t
exem pt or t r ea t E RISA pla n s, con t r ibu t ion s, or ben efit s m or e
996
fa vor a bly t h a n ot h er en t it ies or in com e.
Un der t h e sa m e
r ea son in g, E RISA pr eem pt s a n y t a x la ws t h a t t r ea t E RISA pla n s,
con t r ibu t ion s, or ben efit s less fa vor a bly t h a n ot h er en t it ies or
in com e. F in a lly, t o t h e ext en t t h e T ravelers P r eem pt ion by
Refer en ce Ru le is via ble, t a x la ws t h a t r efer t o E RISA pla n s a r e
pr eem pt ed r ega r dless of t h eir effect on su ch pla n s. H owever , for
t h e r est of t h e sect ion t h is a r t icle will a ssu m e t h ese pr in ciples
h a ve been over r u led, u n less ot h er wise specified.
A. E R IS A an d Its Draftsm en E xplicitly Ad d ress th e Preem ption of
S tate T ax L aw s
As discu ssed, su pra, Con gr ess r eject ed a n Adm in ist r a t ion
pr oposa l t o exem pt t h e followin g a spect s of st a t e t a x la w fr om t h e
E RISA E xpr ess P r eem pt ion wh en E RISA wa s en a ct ed:
996. S ee e.g., L ANGBE IN P E NSION L AW , su pra 13, a t 834.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
315
a st a t e sh a ll h a ve t h e a u t h or it y t o pr escr ibe r u les a n d r egu la t ion s
con cer n in g t h e t a x qu a lifica t ion a n d t a xa t ion of con t r ibu t ion s,
dist r ibu t ion s or in com e, of a n em ployee pen sion ben efit pla n
(in clu din g a t r u st for m in g a pa r t of su ch pla n ) a s defin ed in t h e
997
Welfa r e a n d P en sion P la ns Disclosu r e Act (H ou se bill).
Un der t h is pr oposa l E RISA, wou ld st ill h a ve pr eem pt ed a
st a t e t a x la w t h a t a dds E RISA en for cem en t m ech a n ism s, pr even t s
t h e exer cise of a pa r t icipa n t or ben eficia r y’s r igh t s u n der t h e pla n ,
or is a n E RISA Gen er a l Ma n da t e. In pa r t icu la r , even wit h t h is
pr oposa l a st a t e m a y n ot im pose a su bst a n t ia l t a x on pla n
spon sor s wh o t er m in a t e pen sion pla n s t h a t a r e n ot fu lly fu n ded,
su ch a s on e a dopt ed by New J er sey im m edia t ely befor e t h e
998
a dopt ion of E RISA, wh ich wa s a fu n din g m a n da t e. Mor eover ,
t h e pr oposa l wou ld n ot h a ve a ffect ed t h e t a xa t ion of E RISA
welfa r e pla n s. H owever , even t h ou gh t h e Adm in ist r a t ion pr oposa l
wa s n ot in clu ded in E RISA, T ravelers a n d De B u on o r ecogn ized
t h a t t h e la w wou ld be in t er pr et ed a s t h ou gh it in clu ded su ch a
pr ovision a pplica ble t o a ll E RISA pla n s. In pa r t icu la r , t h e fa ilu r e
t o in clu de a n y st a t e t a x exem pt ion s in E RISA a ppea r s t o lea ve t h e
st a t es fr ee t o decide h ow t o t a x pla n s, pla n con t r ibu t ion s, a n d pla n
dist r ibu t ion s, if t h e t a x is n ot ot h er wise pr eem pt ed.
As discu ssed, su pra, wh en Con gr ess in 1983 pr ovided t h e
H a wa ii P r epa id H ea lt h Act wit h a lim it ed exclu sion fr om t h e
999
E RISA pr eem pt ion ,
it a lso a dded t h e followin g pr ovision
a ddr essin g t h e pr eem pt ion of st a t e t a x la w:
(A) E xcept a s pr ovided in subpa r a gr a ph (B), su bsect ion (a ) sh a ll n ot
a pply t o t h e H a wa ii P r epa id H ea lt h Ca r e Act (H a w. Rev. St a t .
§§ 393-1 t h r ou gh 393-51).
(B) Not h in g in su bpa r a gr a ph (A) sh a ll be con st r u ed t o exem pt fr om
su bsect ion (a )—(i) a n y St a t e t a x la w r ela t in g t o em ployee ben efit
1000
pla n s
Alt h ou gh t h e a ccom pa n yin g com m it t ee r epor t is silen t a bou t
1001
t h e pu r pose of t h is pr ovision ,
t h e pr ovision m a y h a ve been
a dded t o em ph a size t h a t ch a r a ct er izin g a ben efit t er m s m a n da t e
a s a st a t e t a x, does n ot per m it t h e st a t e la w t o a void pr eem pt ion .
In 1981, t h e Su pr em e Cou r t h a d r eject ed su ch a n a t t em pt wh en in
a decision wit h ou t a n opin ion in Agsalu d v. S tan d ard Oil
1002
Com pan y of Californ ia
it a ffir m ed a h oldin g t h a t E RISA
997. Adm in ist r a t ion Recom m en da t ion s t o t h e H ou se a n d Sen a t e Con fer ees
on H . R. 2 t o P r ovide for P en sion Refor m a t 109 (Apr il 1974) reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 5047, 5147.
998. E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 204.
999. E RISA § 514(b)(5)(B)(i), 29 U.S.C. § 1144(b)(5)(B)(i) wa s a dded by P u b.
L. No. 97-47 § 301(a ), 96 STAT. 2605, 2611-12 (1983).
1000. E RISA §§ 514(b)(5)(A) a n d (B), 29 U.S.C. §§ 1144(B)(5)(A) a n d (B)
(2012).
1001. H .R. RE P . NO. 97-984 (1982).
1002. Agsa lu d v. St a n da r d Oil Co. of Ca l. 454 U.S. 801 (1981) aff’g, St a n da r d
316
T h e J oh n M arsh all L aw R eview
[47:145
pr eem pt ed t h e H a wa ii P r epa id H ea lt h Ca r e Act .
As discu ssed, su pra, dr a ft sm en of t h a t a m en dm en t a n d of t h e
in it ia l ver sion of E RISA in t en ded t o pr eem pt la ws t h a t t a xed
E RISA pla n s on t h eir con t r ibu t ion s or ben efit pa ym en t s. RE ACT
th
th
wa s a dopt ed by t h e 98 Con gr ess t h a t followed t h e 97 t h a t h a d
th
a dopt ed t h e H a wa ii exclu sion in 1983.
Th e 98 Con gr ess
expr essed t h e desir e n ot t o u n der m in e t h e t a x pr eem pt ion
pr ovision s on ly in a com m it t ee r epor t r a t h er t h a n in t h e E RI SA
a m en dm en t .
In pa r t icu la r , t h e H ou se Repor t per t a in in g t o
RE ACT decla r ed:
In m a kin g t h ese a m en dm en t s t o Sect ion 514, t h e Com m it t ee
em ph a sizes t h a t , except a s expr essly pr ovided, n ot h in g in t h e bill is
in t en ded t o lim it or ot h er wise ch a n ge t h e or igin a l b r oa d in t en t
beh in d E RISA’s r u le of pr eem pt ion . Th a t in t en t is a lwa ys been t o
pr eem pt st a t e or loca l gover n m en t la ws or a ct ion s of a n y t ype wh ich
dir ect ly or in dir ect ly r ela t e t o a n y em ployee ben efit pla n su bject t o
E RISA. Th u s, for exa m ple, t h e Com m it t ee r ea sser t s t h a t a st a t e t a x
levy on em ployee welfa r e ben efit pla n s is pr eem pt ed by E RISA (see
t h e h oldin g of t h e 9t h Cir cu it in Fran ch ise T ax B oard of Californ ia
v. Con stru ction L aborers V acation T ru st for S ou th ern Californ ia ,
th
679 F . 2d 1307 (9 Cir . 1982), va ca t ed a n d r em a n ded (on
1003
ju r isdict ion a l gr ou n ds) 103 S. Ct . 2841 (1983)).
As wa s t h e ca se wit h t h e H a wa ii exclu sion t h e focu s wa s on
t a x issu es sim ila r t o t h e pr eem pt ion exclu sion issu e u n der
con sider a t ion . Th e H a wa ii exclu sion con cer n ed t h e in t er a ct i on
bet ween h ea lt h ca r e expen se-r eim bu r sem en t pla n s a n d st a t e
r egu la t ion s of su ch pla n s. Th u s, t h e specific t a x la ws t h a t wer e
pr esen t ed by t h a t Con gr ess wer e t h ose t h a t r ela t ed t o t h e
r egu la t ion of h ea lt h ca r e in su r er s, n a m ely t a xes on a self-in su r ed
pla n ’s ben efit s a n d con t r ibu t ion s.
In con t r a st , RE ACT wa s
con cer n ed wit h t h e ext en t t o wh ich st a t e dom est ic r ela t ion s la ws
t h a t viola t ed pla n t er m s wer e pr eem pt ed, su ch a s on e seekin g t o
com pel a pla n t o pa y a pa r t icipa n t ’s ben efit s t o h is for m er spou se.
Th u s, t h e exa m ple pr esen t ed of a specific t a x la w pr eem pt ed wa s
of a t a x levy viola t in g a pla n ’s t er m s. Th e Com m it t ee did n ot
m en t ion t h e DOL a dvisor y opin ion r ea ch in g t h e sa m e
1004
con clu sion ,
wh ich m en t ion ed t h e decision , Con stru ction
1005
L aborers Vacation T ru st for S ou th ern Californ ia (“CL VT ”), cit ed
in t h e H ou se r epor t .
Oil Co. of Ca l. v. Agsa lu d, 633 F .2d 760 (9t h Cir . 1980).
1003. H .R. R E P . N O . 98-655, pt . 1, 98t h Con g., 2d Sess., 42 (1984).
1004. Rich m a n , U.S. Dep’t of La bor Advisor y Opin ion 79-90A (Dec. 28,
1979), 1979 E RISA LE XIS 1.
1005. Cf. Franch ise T ax B oard of S tate of Cal. v . Con stru ction L aborers
Vacation T ru st for S ou th ern Californ ia T679 F .2d 1307, 1312 (9t h Cir . 1982)
vacated , 463 U.S. 1 (1983) [h er ein a ft er “CL VT ”] (Th e DOL did n ot expla in t h e
ba sis for it s opin ion wh ich , u n lik e t h e cou r t h oldin g, wa s ba sed on t h e
a dm in ist r a t ive bu r den of t a x levies).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
317
B . T h e Alien ation Proh ibition R egu lation s Ad d ress th e
Preem ption of S tate T ax L aw s
In F ebr u a r y 1978, t h e Depa r t m en t of Tr ea su r y issu ed
Tr ea su r y Regu la t ion § 1.401(a )-13 per t a in in g t o t h e Alien a t ion
1006
P r oh ibit ion .
Th e r egu la t ion in clu ded t wo pr ovision s per t a in in g
t o st a t e t a x la w.
F ir st , t h e r egu la t ion a ddr essed t h e en for cem en t of t a x levies
a n d ju dgm en t s a s follows:
(2) F eder a l t a x levies a n d ju dgm en t s. A pla n pr ovision sa t isfyin g t h e
r equ ir em en t s of su bpa r a gr a ph (1) of t h is pa r a gr a ph [t h e Alien a t ion
P r oh ibit ion ] sh a ll n ot pr eclu de t h e followin g:
(i) Th e en for cem en t of a F eder a l t a x levy m a de pu r su a n t t o sect ion
6331 [26 U.S.C. § 6331].
(ii) Th e collect ion by t h e Un it ed St a t es on a ju dgm en t r esu lt in g fr om
1007
a n u n pa id t a x a ssessm en t .
Th is pr ovision r ecogn izes t h a t t h e Code su per sedes a ll feder a l
la w exem pt ion s fr om t a x levies ot h er t h ose set for t h in a list t h a t
1008
does n ot in clu de a n y E RISA ben efit s.
Th is pr ovision does n ot
descr ibe t h e ext en t t o wh ich feder a l t a x levies su per sede t h e
E RISA r equ ir em en t t h a t pla n t er m s det er m in e ben efit
en t it lem en t s. Ta x levies give t h e IRS t h e a bilit y t o exer cise t h e
E RISA pla n ben efit wit h dr a wa l r igh t s of t h e pa r t icipa n t or t h e
ben eficia r y wit h t h e u n pa id t a x lia bilit y e ven if t h e pa r t icipa n t or
1009
t h e ben eficia r y h a s n ot exer cised su ch r igh t .
Th u s, if t h e
t a xpa yer h a s n o su ch wit h dr a wa l r igh t s, t h e IRS h a s n o su ch
r igh t s. In con t r a st , t h e pr ovision ’s silen ce a bou t st a t e t a x levies
a n d t h e collect ion of st a t e t a x ju dgm en t s con fir m s t h a t E RISA
1010
pr eem pt s bot h .
Secon d, t h e r egu la t ion a ddr essed feder a l a n d st a t e t a x
wit h h oldin gs a s follows:
1006. 43 F ed. Reg. 6943 (F eb. 17, 1978).
1007. Tr ea s. Reg. §1.401(a )-13(b)(2) (a s a m en ded in 1988).
1008. Code §§ 6334(a ), (c) (2012).
1009. S ee U.S. v. Na t ion a l Ba n k of Com m er ce, 472 U.S. 713, 724-25 (1985)
(expla in in g wh y a n d h ow t h e IRS levy gives t h e IRS t h e sa m e wit h dr a wa l
r igh t s a s t h e t a xpa yer wit h r espect t o ba n k a ccou n t s). S ee also I.R.S. Ch ief
Cou n sel Advice Mem o 200032004 (Ma y 10, 2000) available at
h t t p://www.ir s.gov/pu b/ir s-wd/0032004.pdf (la st visit ed Ma r ch 19, 2014)
(h oldin g IRS m a y levy on pla n ben efit s t o t h e ext en t t h a t t h e pa r t icipa n t m a y
wit h dr a w ben efit s, wh ich m ea n s if a t a xpa yer r equ ir es spou sa l con sen t for
lu m p su m wit h dr a wa l u n der pla n t er m s, IRS r equ ir es a sim ila r con sen t t o
obt a in a lu m p su m r a t h er t h a n t h e defa u lt join t a n d su r vivor ben efit ).
1010. Nor t h west Air lin es v. Roem er , 603 F . Su pp. 7 (D. Min n . 1984)
(h oldin g E RISA pr eem pt ed st a t e t a x levies a n d st a t e m a n da t or y t a x
wit h h oldin g la ws per t a in in g t o t h e Spou sa l Su r vivor Ben efit P la n ben efit s of
E RISA pla n pa r t icipa n t s a n d ben eficia r ies); Ret ir em en t F u n d Tr u st of t h e
P lu m bin g v. F r a n ch ise Ta x Bd., 909 F .2d 1266, 1283 -84 (9t h Cir . 1990)
(h oldin g t h a t E RISA pr eem pt ed st a t e t a x levies p er t a in in g t o t h e Spou sa l
Su r vivor Ben efit P la n ben efit s of E RISA pla n pa r t icipa n t s a n d ben eficia r ies).
318
T h e J oh n M arsh all L aw R eview
[47:145
(c) (2) Specific a r r a n gem en t s n ot con sider ed a n a ssign m en t or
a lien a t ion . Th e t er m s “a ssign m en t ” a n d “a lien a t ion ” do n ot in clu de,
a n d pa r a gr a ph (e) of t h is sect ion [per m it t in g volu n t a r y a ssign m en t s
of 10% of pen sion pa ym en t s] does n ot a pply t o, t h e followin g
a r r a n gem en t s: . . .
(i) An y a r r a n gem en t for t h e r ecover y of a m ou n t s descr ibed in sect ion
4045(b) of t h e E m ployee Ret ir em en t In com e Secu r it y Act of 1974, 88
St a t . 1027 (r ela t in g t o t h e r eca pt u r e of cer t a in pa ym en t s),
(ii) An y a r r a n gem en t for t h e wit h h oldin g of F eder a l, St a t e or loca l
t a x fr om pla n ben efit pa ym en t s,
(iii) An y a r r a n gem en t for t h e r ecover y by t h e pla n of over pa ym en t s
1011
of ben efit s pr eviou sly m a de t o a pa r t icipa n t , . . .
Th is pr ovision r ecogn izes t h a t t h e Code pr ovides for
m a n da t or y feder a l wit h h oldin g fr om defer r ed com pen sa t ion
pa ym en t s, in clu din g pa ym en t s of pen sion ben efit s, a lt h ou gh
1012
pa yees m a y elect ou t of wit h h oldin g.
Th is pr ovision does n ot
m a k e clea r t h a t feder a l t a x wit h h oldin gs, lik e feder a l t a x levies,
a lso su per sede t h e E RISA r equ ir em en t t h a t pla n t er m s det er m in e
ben efit en t it lem en t s. In con t r a st , wh ile st a t e t a x wit h h oldin gs do
n ot viola t e t h e Alien a t ion P r oh ibit ion , like over pa ym en t
r ecover ies, t h ey a r e per m issible on ly if t h e pla n t er m s per m it
ben efit pa ym en t s t o be so diver t ed fr om t h e pa r t icipa n t or
ben eficia r y.
C. E R IS A Perm its S tate to T ax Plan s or Participan ts for
Con tribu tion s M ad e to E R IS A Plan s
In 1987, t h e Sixt h Cir cu it h eld in Fireston e v. N eu sser
1013
(“N eu sser”), t h a t Akr on m a y in clu de t h e con t r ibu t ion s r esiden t s
m a k e t o a h ea lt h ca r e r eim bu r sem en t pla n or t o a n E RISA pen sion
1014
pla n in t h e Akr on in com e t a x on t h e com pen sa t ion of r esiden t s.
1015
Th e N eu sser cou r t con sider ed t h e t en u ou sn ess of t h e r ela t ion .
Th e pa r t icipa n t s a r gu ed t h a t t h e r ela t ion wa s n ot t en u ou s beca u se
t h eir decision s a bou t t h e a m ou n t t o con t r ibu t e a r e a ffect ed by t h e
1016
t a x on t h e con t r ibu t ion .
Th e cou r t did n ot obser ve t h is wa s t h e
con sequ en ce of n ot exem pt in g pla n con t r ibu t ion s fr om st a t e t a x,
wh ich wou ld h a ve en cou r a ged con t r ibu t ion s. Th e cou r t , h owever ,
r espon ded t o t h e r eleva n t qu est ion , did t h e t a x ot h er wise a ffect t h e
E RISA pla n in a n on -t en u ou s fa sh ion . In st ea d, t h e N eu sser cou r t
r efer r ed t o a st a t e r egu la t ion of h ospit a l r a t es t h a t wa s n ot
1011. Tr ea s. Reg. §1.401(a )-13(c)(2) (a s a m en ded in 1988).
1012. Code § 3405.
1013. F ir est on e Tir e & Ru bber Co. v. Neu sser , 810 F .2d 550 (6t h Cir . 1987).
1014. Id . a t 551 (a lt h ou gh t h e st a t u t e a lso r equ ir ed t h e t a x t o be wit h h eld
fr om t h e wa ges of t h e em ployees, t h e per m issibilit y of t h is wit h h oldin g wa s
n ot befor e t h e cou r t ).
1015. Id . a t 553-54.
1016. Id . a t 554.
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319
pr eem pt ed even t h ou gh t h e r egu la t ion in cr ea sed pla n cost s
beca u se it did “n ot a ffect t h e st r u ct u r e, t h e a dm in ist r a t ion , or t h e
1017
t ype of ben efit s pr ovided by a n E RISA pla n .”
Th e cou r t a lso
dist in gu ish ed t h e Akr on la w fr om a pr eem pt ed t a x on a n E RISA
pla n m ea su r ed by t h e a m ou n t of t h e pla n ’s t ot a l ben efit
1018
dist r ibu t ion s
beca u se t h e Akr on t a x la w wa s of “gen er a l
a pplica t ion ” wh ich is u n a ffect ed by wh et h er t h e com pen sa t ion is
1019
con t r ibu t ed t o t h e pla n .
Mor eover , t h e t a x differ s fr om a
pr eem pt ed la w t h a t sou gh t t o im pose civil lia bilit y on pla n
spon sor s wh o fa iled t o pa y sever a n ce pa y beca u se t h ose la ws a ffect
1020
pla n a dm in ist r a t ion , n a m ely wh et h er pla n ben efit s a r e pa id.
Th e cou r t a lso obser ved t h a t t h e t en u ou sn ess of t h e r ela t ion wa s
su ppor t ed by t h e fa ct t h a t t h e la w did n ot a ffect r ela t ion s a m on g
t h e pr in cipa l E RISA en t it ies—t h e em ployer , t h e pla n , t h e pla n
fidu cia r ies, a n d t h e ben eficia r ies –bu t r a t h er r ela t ion s bet ween on e
1021
of t h ese en t it ies a n d a n ou t side pa r t y.
In pa r t icu la r , t h e la w
a ffect ed t h e r ela t ion bet ween pla n ben eficia r ies a n d a n ou t side
pa r t y, t h e Akr on t a xin g a dm in ist r a t ion .
F in a lly, t h e cou r t
con clu ded t h a t :
We h old on ly t h a t wh er e, a s h er e, a m u n icipa lit y en a ct s a n eu t r a l
in com e t a x of gen er a l a pplica t ion wh ich a pplies t o em ployees
wit h ou t r ega r d t o t h eir st a t u s a s E RISA pa r t icipa n t s, t h a t t a x is n ot
1022
pr eem pt ed by E RISA.
In 1996, t h e Sixt h Cir cu it h eld in T h iok ol Corp. v. R oberts
1023
(“T h iok ol”),
t h a t t h e em ployee com pen sa t ion u sed t o com pu t e
t h e Mich iga n bu sin ess t a x m a y in clu de t h e em ployer con t r ibu t ion s
1024
t o em ployee ben efit pla n s.
Th e cou r t a pplied a n a n a lysis sim ila r
t o t h a t in N eu sser t o fin d t h a t t h e t a x la w’s effect s on t h e E RISA
pla n wer e t en u ou s. In pa r t icu la r , t h e t a x la w wa s a lso on e of
gen er a l a pplica bilit y t h a t did n ot a ffect t h e r ela t ion a m on g t h e
1025
pr in cipa l E RISA en t it ies.
Th e T h iok ol cou r t h eld t h a t t h e pr eem pt ion by E RISA
r efer en ce r u le a ppa r en t ly pr esen t ed in Gr ea t er Wa sh in gt on wa s
in a pplica ble even t h ou gh t h e st a t u t e h a d a sim ila r r efer en ce t o
E RISA pla n s for t wo r ea son s. F ir st , t h e t a x st a t u t e, wh ich wa s a
va lu e-a dded t a x cou ld be com pu t ed wit h ou t a n y r efer en ce t o
em ployee com pen sa t ion , a n d in t a x m a t t er s su bst a n ce r u les over
1017. Id . a t 555.
1018. Id . a t 554 (r efer r in g t o Na t ’l Ca r r ier s’ Con fer en ce Com m . v. H effer n a n ,
454 F . Su pp. 914, 915-16 (D. Con n . 1978)).
1019. Id .
1020. Id . a t 554-55.
1021. Id . a t 555.
1022. Id . a t 556.
1023. Th iokol Cor p. v. Rober t s, 76 F .3d 751 (6t h Cir 1996).
1024. Id . a t 753.
1025. Id . a t 755.
320
T h e J oh n M arsh all L aw R eview
[47:145
1026
for m .
Secon d, su ch a n E RISA r u le of for m ign or es t h e
u n der lyin g pu r pose of E RISA pr eem pt ion , wh ich is t o pr even t
1027
im per m issible effect s, n ot r efer en ces.
Gr ea t er Wa sh in gt on does
n ot h old t h a t E RISA pr eem pt s a ll st a t e la ws wit h r efer en ces t o
E RISA pla n s beca u se: (a ) t h e Cou r t t h er ein fa iled t o u s e t h e
u n a m bigu ou s la n gu a ge of t h e cou r t below t o m a k e su ch a dr a m a t ic
ch a n ge wh en t h e Cou r t sh owed t h e ch a n ge wa s u n n eeded t h er ein
1028
beca u se of t h e st a t u t e’s n on -t en u ou s effect s t h e Cou r t descr ibed;
(b) bot h “r efer t o” a n d “con n ect ed wit h ” a ppr oxim a t e t h e p h r a se
“r ela t e t o, a n d t h er e is n o r ea son t o t r ea t on ly on e a s r equ ir in g a
1029
t en u ou s con n ect ion ”;
(c) t h e Cou r t defin it ion of “r ela t es t o”
sh ows t h a t t h e con cer n is t h e effect of a st a t u t or y r efer en ce r a t h er
1030
t h a n t h e r efer en ce per se; a n d (d) t h e M ack ey I Cou r t r efer en ce
la n gu a ge sh ows t h a t t h e Cou r t r efer en ce con cer n wa s on ly wit h
1031
st a t u t es “specifica lly design ed t o a ffect ” a cover ed pla n .
Th e
T h iok ol cou r t su m m a r ized it s con clu sion s a s follows:
Never t h eless, we declin e t o in effect a dopt J u st ice St even s’s
in t er pr et a t ion of t h e m a jor it y opin ion [t h a t it wa s sim ply ba sed on a
pr eem pt ion by r efer en ce r u le]. A per se r u le for pr e-em pt ion ba sed
on m er e r efer en ce wou ld a ffect su ch a h u ge ch a n ge in E RISA pr eem pt ion doct r in e, a n d h a ve su ch a m a ssive a n d in discr im ina t e
im pa ct on st a t e la ws t h r ou gh ou t t h e n a t ion , t h a t in t h e in t er est of
feder a lism we wou ld expect a clea r er st a t em en t fr om t h e Cou r t
befor e em ba r kin g on t h is pa t h . I n T h iok ol [lower cou r t decision
bein g r ever sed], J u dge H illm a n fou n d 432 st a t e la ws th a t u se t h e
wor ds E RISA or E m ployee Ret ir em en t In com e Secu r it y Act ; a s h e
n ot ed, m a n y m or e con t a in la n gu a ge descr ibin g pen sion or h ea lt h
ben efit pla n s t h a t “r efer t o” E RIS A wit h ou t u sin g t h e wor d E RISA.
If m ere referen ce alon e, w ith ou t an y im perm issible effect on a covered
plan , is en ou gh to pre-em pt a state law , th en all th ese law s are preem pted . S u ch a ru le w ou ld lead to paten tly absu rd resu lts. As th e
T h ird Circu it n oted , su ch a ru le w ou ld m ean th at a state law
provid in g th at “N o em ployer, in clu d in g an E R IS A plan , sh all
d iscrim in ate on th e basis of race or gen d er” w ou ld be pre-em pted . S ee
Un it ed Wir e, Met a l a n d Ma ch in e H ea lt h a n d Welfa r e F u n d v.
Mor r ist own Mem or ia l H osp., 995 F .2d 1179, 1192 n.6 (3r d Cir .
1993). A fina l exa m ple su ffices t o sh ow t h a t t h er e m u st n ecessa r ily
be a n a n a lysis of a st a t e la w’s effect a n d t h a t m er e r efer en ce is n ot
en ou gh : u n der a per se r efer en ce t est t h a t did n ot con cer n it self wit h
wh et h er a la w h a d on ly a ten u ou s, r em ot e, or per iph er a l effect or
even h a d n o effect , E RISA wou ld pr e-em pt a n on -bin din g r esolu t ion
pa ssed by a t own boa r d decla r in g F ebr u a r y 1996 a s “E RISA
Awa r en ess Mon t h .” Su r ely Con gr ess did n ot in t en d su ch a br oa d
1026.
1027.
1028.
1029.
1030.
1031.
Id . a t 756.
Id . a t 760.
Id . a t 757-58, 760-61.
Id . a t 758-59.
Id . a t 759.
Id . a t 759-60.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
a n d u n r ea son a ble pr e-em pt ion doct r in e.
321
1032
Th e difficu lt y wit h t h is cor r ect a n d well-r ea son ed a n a lysis is
t h a t on e yea r ea r lier in T ravelers, t h e Su pr em e Cou r t a n a lyzed t h e
la w a t issu e befor e it by fir st fin din g t h a t su ch la w wa s n ot
pr eem pt ed u n der t h e T ravelers P r eem pt ion by Refer en ce Ru le,
wh ich t h e Cou r t a t t r ibu t ed t o it s Greater Wash in gton B oard of
T rad e st a t em en t t h a t t h e la w “specifica lly r efer s t o welfa r e ben efit
pla n s r egu la t ed by E RISA a n d on t h a t ba sis a lon e is pr e 1033
em pt ed,”
a lt h ou gh a s discu ssed t h e specific r efer en ce t h er ein
in clu ded bu t wa s n ot lim it ed t o E RISA pla n s. Th e T h iok ol cou r t
disr ega r ded t h is poin t , bu t in st ea d dist in gu ish ed t h e decision s
t h a t t h e T ravelers Cou r t cit ed t o su ppor t t h e T ravelers P r eem pt ion
1034
by Refer en ce Ru le.
Mor eover , t h e T ravelers P r eem pt ion by
Refer en ce Ru le wa s r ea ffir m ed in bot h De B u on o a n d Dillin gh am
Con str., a lt h ou gh in n on e of t h e ca ses wa s a st a t u t e fou n d t o h a ve
been pr eem pt ed a s a r esu lt .
D. A Circu it Cou rt H eld T h at E R IS A Perm its (1) S tate T ax L evies
on B en efit Paym en ts from E R IS A Plan s oth er T h an S pou sal
S u rvivor Pen sion Plan s, an d (2) M an d atory S tate T ax
With h old in gs for All Plan s, B u t T h ese H old in gs Preced ed , an d
Are N ot T en able After Boggs, E gelh off, a n d Ken n edy
In 1990, t h e Nin t h Cir cu it h eld in R etirem en t Fu n d T ru st of
th e Plu m bin g, H eatin g an d Pipin g In d u stry of S ou th ern Californ ia
1035
v. Fran ch ise T ax B oard (“Plu m bin g R etirem en t Fu n d T ru st”),
t h a t r ega r dless of pla n t er m s t o t h e con t r a r y, E RISA does n ot
pr eem pt (1) st a t e t a x levies of E RISA va ca t ion ben efit
1036
pa ym en t s;
(2) m a n da t or y st a t e t a x wit h h oldin gs fr om E RISA
1037
va ca t ion pa ym en t s;
or (3) m a n da t or y st a t e t a x wit h h oldin gs of
Spou sa l Su r vivor Ben efit P la n ben efit pa ym en t s if pa r t icipa n t s
1038
a n d ben eficia r ies do n ot opt ou t of t h e wit h h oldin g.
Th e r ea son in g for t h ose h oldin gs does n ot wit h st a n d m u ch
scr u t in y. Mor eover , a ft er B oggs, E gelh off, a n d Ken n ed y, wh ich
con fir m t h a t t h er e is a cor e r equ ir em en t t h a t E RISA ben efit s be
pa id in a ccor d wit h pla n t er m s, t h er e ca n be lit t le qu est ion t h a t
E RISA pr eem pt s st a t e la w pr ovision s t o t h e con t r a r y, su ch a s
st a t e t a x levies a n d m a n da t or y st a t e wit h h oldin gs n ot a u t h or ized
by pla n t er m s. Th u s, a pr eem pt ion h oldin g wit h r espect t o
Spou sa l Su r vivor Ben efit P la n s, su ch a s t h e on e in N orth w est
1032. Id . a t 760 (em ph a sis a dded).
1033. Tr a veler s, 514 U.S. a t 656 (cit in g Gr ea t er Wa sh in gt on , 506 U.S. at
130).
1034. T h iok ol, 76 F .3d a t 758.
1035. Ret . F u n d Tr u st of t h e P lu m bin g, H ea t in g a n d P ipin g In d. of S. Ca l. v.
F r a n ch ise Ta x Bd., 909 F .2d 1266 (9t h Cir . 1990).
1036. Id . a t 1281.
1037. Id . a t 1282.
1038. Id . a t 1286.
322
T h e J oh n M arsh all L aw R eview
[47:145
1039
Airlin es v. R oem er, is good la w.
Plu m bin g R etirem en t Fu n d T ru st r ever sed a 1982 Nin t h
1040
Cir cu it decision in CL VT
t h a t wa s r ever sed by t h e Su pr em e
1041
Cou r t for ju r isdict ion a l r ea son s.
Th e 1982 h oldin g t h a t E RISA
pr eem pt ed a st a t e t a x levy seem ed t o be ba sed on t wo pr em ises.
F ir st , t h e cou r t a sser t ed wit h ou t expla n a t ion t h a t a st a t e t a x levy
r ela t es t o t h e E RISA pla n ; t h u s, t h e E RISA E xpr ess P r eem pt ion
1042
pr eem pt s it .
Secon d, t h er e is con flict pr eem pt ion beca u se wh ile
E RISA does n ot in so m a n y wor ds pr ot ect va ca t ion t r u st s fr om
cr edit or s’ cla im s, a s it does pr ot ect pen sion pla n s. 29 U.S.C.
§ 1056(d)(1). E xt en din g sim ila r pr ot ect ion t o va ca t ion fu n ds is
con sist en t wit h t h e st a t u t e, h owever , if n ot dem a n ded by it . Bot h
t ypes of E RISA pla n s h a ve t h e sa m e goa l: t o pr ovide a ccu m u la t ed
m on ey t o a wor ker for fu t u r e ben eficia l u se. Th e wor ker ’s m on ey
deser ves t r u st pr ot ect ion fr om dissipa t ion r ega r dless of t h e pu r pose
1043
for wh ich t h e m on ey h a s been set a side u n der E RISA.
Th e con clu sion is cor r ect , bu t it wou ld be m or e con vin cin g if it
h a d been m or e clea r ly lin ked t o t h e pr oh ibit ion on t h e a lien a t ion of
ben efit s in t h e pla n t er m s, wh ich wer e discu ssed in t h e
1044
im m edia t ely pr ecedin g pa r a gr a ph s of t h e decision .
Th u s, t h e
st a t e levy viola t ed t h e r equ ir em en t t h a t pla n t er m s det er m in e a
pa r t icipa n t ’s ben efit r igh t s. H owever , t h e con clu sion , a s discu ssed
in fra, wou ld r em a in t h e sa m e if t h e pla n t er m s did n ot pr oh ibit ,
bu t sim ply fa iled t o a u t h or ize su ch a lien a t ion of ben efit s. Th is is
beca u se a s discu ssed, su pr a , t h e Su pr em e Cou r t la t er h eld in 2009
in Ken n edy pla n t er m s det er m in e wh o is en t it led t o r eceive pla n
ben efit s. Th u s, if t h ose pla n t er m s do n ot a u t h or ize st a t e t a x
levies on pla n ben efit pa ym en t s, t h e pla n pa r t icipa n t s a n d
ben eficia r ies a r e en t it led t o t h eir ben efit s, a n d t h e levies a r e
pr eem pt ed.
Th e Plu m bin g R etirem en t Fu n d T ru st cou r t , wh ich h eld t h a t
t h e st a t e t a x levy wa s n ot pr eem pt ed, bega n it s su bst a n t ive
discu ssion by cit in g t h e M ack ey I h oldin gs t h a t (1) E RISA does n ot
pr eem pt st a t e la w ga r n ish m en t s of welfa r e ben efit s, a n d (2) t h e
cor r ect pr oposit ion t h a t t h er e is n o dist in ct ion bet ween a
1045
ga r n ish m en t pr ocedu r e a n d a levy.
Th e cou r t t h en discu ssed
1046
h ow t h e in it ia l ver sion of E RISA pr eem pt ed st a t e t a x la ws,
and
h ow su ch pr eem pt ion wa s r ea ffir m ed wh en E RISA wa s a m en ded
1039. Nor t h west Air lin es v. Roem er , 603 F . Su pp. 7 (D. Min n . 1984).
1040. CL VT , 679 F .2d, a t 1307.
1041. F r a n ch ise Ta x Bd. of Ca l. v. Con st r . La bor er s Va ca t ion Tr u st for S.
Ca l., 463 U.S. 1 (1983) (h eld t h er e wa s n o r em ova l ju r isdict ion for t h e a ct ion
or igin a lly br ou gh t by a t a xin g a u t h or it y t o en for ce st a t e t a x la w).
1042. CL VT , 679 F .2d a t 1309.
1043. Id .
1044. Id . a t 1308.
1045. Plu m bin g R etirem en t Fu n d T ru st , 909 F .2d a t 1276.
1046. Id . a t 1276-77.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
323
t o exclu de pa r t ia lly fr om pr eem pt ion t h e H a wa ii P r epa id H ea lt h
1047
Ca r e Act .
Th e Plu m bin g R etirem en t Fu n d T ru st cou r t r eject ed t h e
a sser t ion t h a t Con gr ess codified t h e CL VT pr eem pt ion h oldin g,
wh ich wa s issu ed in J u n e of 1982 befor e t h e J a n u a r y 1983
a dopt ion of t h e H a wa ii bill t h a t r ea ffir m ed t h e E RISA pr eem pt ion
of t a x la ws. Th e cou r t a sser t ed t h a t a t t h e t im e of t h e bill’s
a dopt ion t h er e wa s n o con sen su s a bou t t h e CL VT pr eem pt ion
h oldin g t h a t st a t e t a x levies viola t ed t h e E RISA pr oh ibit ion on t h e
1048
a lien a t ion of ben efit s.
H owever , a s discu ss ed, su pr a , t h e CL VT
pr eem pt ion h oldin g h a d n ot been solely ba sed on a t a x levy
viola t in g t h e E RISA pr oh ibit ion on t h e a lien a t ion of ben efit s.
Mor eover , t h e cit ed dist r ict cou r t h eld a st a t e n on -t a x levy wa s n ot
pr eem pt ed, wit h ou t con sider in g wh et h er t h e levy wa s con sist en t
wit h t h e pla n t er m s, a s t h e CLVT cou r t h a d don e, a s discu ssed,
1049
su pr a .
Th e Plu m bin g R etirem en t Fu n d T ru st cou r t a lso r eject ed
t h e r eleva n ce of t h e RE ACT com m it t ee r epor t ’s en dor sem en t of
CL VT h oldin g in 1984 beca u se (a ) su bsequ en t Con gr esses do n ot
det er m in e t h e in t en t of en a ct in g Con gr esses, pa r t icu la r ly wh en
t h e r epor t is fr om a com m it t ee t h a t did n ot pr epa r e t h e in it ia l
legisla t ion ; (b) n o ot h er com m it t ee r epor t s in clu de su ch a
r efer en ce; (c) t h e su bject wa s n ot deba t ed in t h e RE ACT
Con gr ession a l discu ssion s: (d) t h e u n set t led st a t e of t h e la w wa s
sh own by a n ot h er cir cu it r ea ch in g a n opposit e decision (a lbeit on
t h e va lidit y of lien s in gen er a l); a n d (e) n o a m en dm en t explicit ly
1050
a dopt ed t h e in t er pr et a t ion .
H owever , t h ese a r gu m en t s, wh ich
a r e sim ila r t o t h ose m a de in M ack ey fa il t o r ecogn ize t h a t a s
discu ssed, su pra, t h e ca se r efer en ce in t h e com m it t ee r epor t is
con sist en t wit h t h e RE ACT focu s on t h e in effect iven ess of st a t e
cou r t or der s, a lbeit dom est ic r ela t ion s or der s, t h a t , lik e t h e t a x
levies, a r e in con sist en t wit h t h e pla n t er m s on a pa r t icipa n t ’s
r igh t s t o pla n ben efit pa ym en t s.
Th e Plu m bin g R etirem en t Fu n d T ru st cou r t h eld t h a t t h e
a lien a t ion pr oh ibit ion in t h e pla n t er m s did n ot pr oh ibit t a x levies.
Th e cou r t obser ved t h a t t h e Su pr em e Cou r t h a d pr eviou sly
decla r ed t h a t pla n t er m s m a y n ot be in t er pr et ed t o “excu se E RISA
t r u st ees fr om t h eir du t ies u n der E RISA a n d t h e docu m en t s m u st
1051
be con st r u ed in ligh t of E RISA’s policies.”
Th e cit ed decision
h eld t h a t E RISA m u lt i-em ployer pla n t r u st ees h a ve a n E RISA
1047. Id . a t 1277-78.
1048. Id . a t 1279.
1049. Loca l 212 In t er n a t ion a l Br ot h er h ood of E lect r ica l Wor ker s Va ca t ion
Tr u st F u n d v. Loca l 212 IBE W Cr edit Un ion , 549 F . Su pp. 1299 (S.D. Oh io
1982) (h oldin g t h a t a cr edit u n ion is per m it t ed t o ga r n ish a pa r t icipa n t ’s
pa ym en t s fr om a n E RISA va cat ion pla n wit h ou t ch eckin g t h e pla n t er m s).
1050. Plu m bin g R et. Fu n d , 909 F .2d a t 1279-1280.
1051. Id . a t 1280.
324
T h e J oh n M arsh all L aw R eview
[47:145
1052
du t y t o en for ce em ployer con t r ibu t ion obliga t ion s.
Th e
Plu m bin g R etirem en t Fu n d T ru st cou r t h eld t h er e is com pa r a ble
du t y of E RISA t r u st ees t o fa cilit a t e t h e en for cem en t of a n y st a t e
la ws, in clu din g t a x la ws, bu t t h er e is n o E RISA policy t o fa cilit a t e
su ch en for cem en t . In con t r a st , t h er e is a n E RISA policy t o en for ce
pla n con t r ibu t ion obliga t ion s. In fa ct , t h e issu e befor e t h e cou r t
wa s wh et h er E RISA pr eem pt ed su ch en for cem en t . Aft er obser vin g
t h a t t h e E RISA fidu cia r y pr ovision s wer e der ived fr om com m on la w pr in ciples, t h e Plu m bin g R etirem en t Fu n d T ru st cou r t
decla r ed:
Un der t h e la w of t r u st s, a spen dt h r ift t r u st ca n n ot in sula t e a
ben eficia r y fr om a cla im by t h e st a t e ba sed on in com e or ot h er t a x
obliga t ion s. S ee 2 A. Scot t , L aw of T ru sts § 157.4 a t 1222-24 (3d ed.
1967); G. Boger t & G. Boger t , L aw of T ru sts an d T ru stees § 224 a t
464 (2d r ev. ed. 1980); R E STATE ME NT (S E COND ) OF T RUSTS § 157(D ) a t
1053
328, 331 (1959).
Th is a r gu m en t h a s t wo ser iou s wea kn esses.
F ir st , t h e
a r gu m en t m a k es n o a t t em pt t o expla in wh y t h e iden t ica l
spen dt h r ift la n gu a ge in Spou sa l Su r vivor Ben efit P la n s pr even t s
t a x levies on pla n pa ym en t s, bu t fa ils t o do t h e sa m e for n on pen sion pla n s. Secon d, t h e st a t em en t fa ils t o descr ibe a ccu r a t ely
spen dt h r ift la w a t su ch t im e, i.e., in 1990, a s sh own by t h e
followin g com m en t t o t h e R E STATE ME NT (T H IRD ) OF T RUSTS (2003),
wh ich r efer s t o t h e st a t e of t h e la w a t su ch t im e wit h vir t u a lly t h e
sa m e r efer en ces:
T axes an d govern m en tal claim s. Th e r eloca t ion of t h is except ion a n d
t h e ch a n ged m a n n er of expr essin g it h er e a r e in t en ded t o a void
eit h er over st a t in g or u n du ly n a r r owin g it , a n d t o st a te t h e t r u e
r a t ion a le a s sim ply a s possible. Alt h ou gh Rest a t em en t Secon d,
Tr u st s § 157(d), st a t es sim ply t h a t t h e ben eficia r y’s in t er est “ca n be
r ea ch ed . . . by t h e Un it ed St a t es or a St a t e,” F r a t ch er , Scot t on
Tr u st s, su pra a t § 157.4 [4t h ed. 1987], st a t es t h a t “wh et h er t h e
Un it ed St a t es or a st a t e ca n r ea ch t h e in t er est of a ben eficia r y of a
spen dt h r ift t r u st t o sa t isfy a cla im ot h er t h a n a cla im for u n pa id
t a xes is n ot so clea r .” In fa ct , a lt h ou gh t h e ca ses on feder a l t a xes a r e
clea r (e.g., Un it ed St a t es v. Da lla s Na t ’l Ba n k, 152 F .2d 582 (5t h
Cir . 1945), a n d La Sa lle Na t ’l Ba n k v. Unit ed St a t es, 636 F . Su pp.
874 (N.D.Ill.1986) (despit e Illin ois’s spen dt h r ift st a t u t e)), even th e
cases on state taxes are d ivid ed an d seem m ostly to d epen d on
statu te, su ch a s Ky. Rev. St a t . § 381.180(6)(c). See pa r t icu la r ly St a t e
v. Ca ldwell, 181 Ten n . 74, 178 S.W.2d 624 (1944), 151 A.L.R. 1410
(com m on -la w im m u nit y fr om st a t e cla im s ch a n ged by 1943 st a t u t e
per m it t in g collect ion of t h ose cla im s fr om spen dt h r ift in t er est s on a
“r et r oa ct ive” ba sis; h eld u n con st it u t ion a l).
On gover n m en t a l cla im s in gen er a l, see Gr iswold, su pr a §§ 342-345,
1052. Id . (cit in g Cen t . St a t es P en sion F u n d v. Cen t . Tr a n sp., In c. 472 U.S.
559 (1985)).
1053. Plu m bin g R et. Fu n d , 909 F .2d a t 1280.
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a n d Boger t & Boger t [Rev. 2d ed. 1992], su pr a § 24 (especia lly ca ses
1054
a n d st a t u t es in n ot e 31, pp. 474-477).
Mor eover , exa m in a t ion of t h e cit ed sou r ces, in clu din g t h e
cit ed B ogert & B ogert edit ion , sh ows t h e spen dt h r ift except ion s a r e
est a blish ed n ot by com m on -la w policies bu t by st a t u t es a s
descr ibed a bove. Th u s, con t r a r y t o t h e cou r t ’s st a t em en t t h e
va ca t ion t r u st ’s a n t i-a lien a t ion pr ovision m a y n ot be disr ega r ded
a s in con sist en t wit h eit h er E RISA or lon g-st a n din g pr in ciples of
1055
t r u st la w.
Th e Plu m bin g R etirem en t Fu n d T ru st cou r t t h en a n a lyzed
wh et h er st a t e t a x levies “r ela t e t o” E RISA welfa r e pla n s by
dist or t in g t h e M ack ey in a ccu r a t e descr ipt ion of t h e S h aw a n a lysis:
A “n eu t r a l” st a t e la w of gen er a l a pplica t ion wit h a “t a n gen t ia l”
im pa ct on a pla n does n ot “r ela t e t o” E RISA a n d is n ot pr eem pt ed.
Sh a w, 463 U.S. a t 100 n .21. Ca lifor n ia ’s t a x levy pr ocedu r e does n ot
sin gle ou t E RISA t r u st s. It is a n eu t r a l la w of gen er a l a pplica t ion
a u t h or izin g t h e a t t a ch m en t of fu n ds of delin qu en t t a xpa yer s.
Gen er a l st a t e a t t a ch m en t pr ocedu r es do n ot “r ela t e t o” E RISA
welfa r e pla n s a n d a r e n ot pr eem pt ed by E RISA. M ack ey, 486 U.S.
a t 834 . . .
Th e Ca lifor n ia ’s t a x levy pr ocedu r e does n ot a ffect t h e ca lcu la t ion of
ben efit s or ot h er wise “pu r por t t o r egu la t e” t h e va ca t ion t r u st . Like
t h e ga r n ish m en t in M ack ey, t h e fu n ds a r e a t t a ch ed “a ft er a pla n
det er m in es t h e a m ou n t of ben efit s t h e em ployee [is] eligible t o
r eceive. It does n ot a ffect t h e pla n ’s in itia l ca lcu la t ion of a n
em ployee’s ben efit s.” B orges, 869 F .2d a t 147 n. 3. Tha t t h e levy
pr ocedu r e m a y r esu lt in a lower a ct u a l pa ym en t t o t h e ben eficia r y is
1056
ir r eleva n t . M ack ey, 486 U.S. a t 831-32, 835.
H owever , t h e S h aw Cou r t n ever a sk ed wh et h er a st a t e la w is
of “gen er a l a pplica t ion ,” or “n eu t r a l,” or wh et h er t h e la w sin gle d
ou t E RISA pla n s, wh en it con sider ed wh et h er E RISA pr eem pt ed a
st a t e la w. In st ea d, t h e S h aw Cou r t h eld cor r ect ly t h a t pr eem pt ion
is det er m in ed by wh et h er t h e la w a ffect s a n E RISA pla n t en u ou sly
in t h e cit ed foot n ot e 21. M ack ey II did n ot u se t h e ph r a se “gen er a l
a pplica t ion ,” a lt h ou gh it descr ibed t h e la w a t issu e a s a gen er a l
ga r n ish m en t st a t u t e, wh ich it con clu ded did n ot r ela t e t o t h e
1057
welfa r e pla n .
Ra t h er t h a n con sider in g wh et h er t h e
ga r n ish m en t s “r egu la t ed” t h e pla n , M ack ey II con clu ded t h a t
beca u se E RISA did n ot pr eem pt ga r n ish m en t s of va ca t ion pla n
a sset s it cou ld n ot pr eem pt t h e ga r n ish m en t of t h e pa r t icipa n t ’s
pla n ben efit s beca u se t h e “r ela t e t o” con cept , wh ich per t a in s t o
E RISA pla n s per m it s ga r n ish m en t s, m u st per t a in t o E RISA
1054. R E STATE ME NT (T H IRD ) OF T RU STS § 59 C OMME NTS A-A(2) a t 395, 39899 (2003) (em ph a sis a dded) (pr ecedin g a discu ssion of t h e Un ifor m Tr u st Code
pr oposa l t h a t st a t e t a x cla im s su per sede spen dt h r ift pr ovision s).
1055. Plu m bin g R etirem en t Fu n d T ru st , 909 F .2d a t 1280.
1056. Id . a t 1280-1281.
1057. M ack ey, 486 U.S. a t 831-35.
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T h e J oh n M arsh all L aw R eview
[47:145
ben efit s except t o t h e ext en t t h er e is a specific pr oh ibit ion of su ch
ben efit ga r n ish m en t s. H owever , t h e M ack ey II cou r t a sser t ed t h a t
t h e on ly su ch pr oh ibit ion , t h e Alien a t ion P r oh ibit ion , is
in a pplica ble t o va ca t ion pla n s.
Th e Plu m bin g R etirem en t Fu n d T ru st cou r t t h en con clu des
t h a t E RISA does n ot pr eem pt m a n da t or y st a t e t a x wit h h oldin g
fr om t h e va ca t ion pla n by r eph r a sin g M ack ey:
E RISA does n ot gu a r a n t ee t h e r eceipt of welfa r e pla n ben efit s, bu t
pr ot ect s on ly welfa r e pla n s. Ma ckey, 486 U.S. a t 831 -32; see a lso
F or t H a lifa x, 482 U.S. a t 7, 19 . . .
Ca lifor n ia ’s t a x wit h h oldin g pr ocedu r es do n ot ot h er wise “r ela t e t o”
t h e va ca t ion t r u st . Th e st a t u t es do n ot sin gle ou t E RISA t r u st s. See
Ma ckey, 486 U.S. a t 830. Th e pr ocedu r es h a ve n o im pa ct on fu n ds
wh ile h eld in t r u st a n d on ly a t a n gen t ia l im pa ct on t h e
1058
a dm in ist r a t ion of t h e pla n .
Th is r epea t s t h e sa m e dist in ct ion wit h ou t a differ en ce u sed in
Fort H alifax bet ween ben efit s a n d ben efit pla n s. Aga in it lea ds t o
t h e wr on g r esu lt , viz., E RISA per m it s t a x levies of welfa r e pla n
pa ym en t s. Th e Plu m bin g R etirem en t Fu n d T ru st cou r t r eject ed
t h e a sser t ion t h a t beca u se t a x wit h h oldin g wa s ba sed on
per cen t a ge of t h e ben efit pa ym en t s it wa s pr eem pt ed t h e sa m e
m a n n er a s t h e pr eem pt ed pla n t a x on ben efit pa ym en t s in
1059
H effern an II.
Th e Cou r t a sser t ed t h a t t h e wit h h oldin g wa s in
fa ct ba sed n ot on t h e pa r t icipa n t ’s pla n in com e bu t on t h e
1060
pa r t icipa n t ’s t ot a l in com e,
wh ich is a lit t le disin gen u ou s sin ce
t h e wit h h oldin g a m ou n t is gen er a lly a per cen t a ge of t h e ben efit
pa ym en t .
Th e Plu m bin g R etirem en t Fu n d T ru st cou r t a lso h eld t h a t t h e
Alien a t ion P r oh ibit ion pr eem pt ed st a t e t a x levies on Spou sa l
1061
Su r vivor Ben efit P la n ben efit pa ym en t s.
Th e cou r t a lso h eld
t h a t E RISA did n ot pr eem pt m a n da t or y t a x wit h h oldin gs fr om
pen sion pla n pa ym en t s in wh ich pa r t icipa n t s cou ld opt wit h in
1062
t h ir t y da ys t o h a ve n o wit h h oldin g.
F ir st , t h e cou r t r elied on
t h e pr ovision s in t h e Alien a t ion P r oh ibit ion for a volu n t a r y
1063
a ssign m en t of u p t o 10% of t h e pen sion pa ym en t s.
Th e
difficu lt y wit h t h is a r gu m en t is t h a t t h e r eleva n t E RISA
1064
pr ovision s r equ ir e a n opt in g in t o t h e a ssign m en t ,
r a t h er t h a n
t h e opt in g ou t pr ocedu r e of t h e t a x wit h h oldin g r u les. Secon d, t h e
cou r t r elied on t h e exem pt ion of t a x wit h h oldin gs fr om t h e
1065
Alien a t ion P r oh ibit ion in t h e a ccom pa n yin g r egu la t ion s.
Th e
1058. Plu m bin g R et.Fu n d T ru st, 909 F .2d a t 1282.
1059. Id . a t 1281-82.
1060. Id . a t 1282.
1061. Id . a t 1284.
1062. Id . a t 1284-86.
1063. Id . a t 1284.
1064. E RISA § 206(d)(2), 29 U.S.C. § 1056(d)(2) (2012).
1065. Plu m bin g R et.Fu n d T ru st, 909 F .2d a t 1284-86.
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327
difficu lt y wit h t h is a r gu m en t is t h a t it im plies E RISA does n ot
pr oh ibit st a t e t a x wit h h oldin g per se. H owever , wit h ou t a pla n
pr ovision a u t h or izin g su ch wit h h oldin g pla n pa r t icipa n t s wou ld
st ill h a ve t h e r igh t t o obt a in t h eir en t ir e ben efit fr om t h e pla n .
Th u s, t h e m a n da t or y st a t e t a x wit h h oldin g wou ld r em a in
pr eem pt ed.
E . E R IS A Perm its S tates to Im pose T axes, Wh ich R efer to or are
Directed Prim arily at E R IS A Plan s, if th e T ax is N ot a Gen eral
E R IS A M an d ate, Does N ot Preven t th e E xerci se of B en efit
R igh ts, an d is N ot an E R IS A E n forcem en t M ech an ism ,
Alth ou gh S om e Cou rts H ave Disagreed
Despit e t h e T raveler’s P r eem pt ion by Refer en ce r u le, wh ich
som e cou r t s h a ve br oa den ed t o in clu de pr eem pt ion of t a x la ws
dir ect ed pr im a r ily a t E RISA, it seem s m or e pr u den t t o a dopt a
m or e m odest pr eem pt ion a ppr oa ch t h a t sh ows a gr ea t er defer en ce
for st a t e la w. It is a dvisa ble t o pr esu m e t h a t st a t e t a xes a r e n ot
pr eem pt ed u n less t h er e is a sh owin g t h a t t h ey pr even t t h e
exer cise of t h e ben efit r igh t s of pa r t icipa n t s or ben eficia r ies u n der
t h e t er m s of a n E RISA pla n , su pplem en t , en h a n ce or dim in ish a n
E RISA en for cem en t m ech a n ism , or im pose a Gen er a l E RISA
m a n da t e. Th is a ppr oa ch is con sist en t wit h t h e feder a list goa l of
t h e dr a ft sm en of E RISA a n d it s a m en dm en t s, n a m ely t o pr eem pt
t h e st a t e la ws t h a t wou ld a ffect a n y of t h e t h r ee ba sic E RISA
ben efit pr ot ect ion s, bu t n ot t o in t er fer e wit h a n y ot h er la ws.
1066
In 1978, a Con n ect icu t Dist r ict Cou r t h eld in H effern an II,
t h a t E RISA pr eem pt ed a st a t e t a x a pplica ble on ly t o em ployee
welfa r e pla n s, in wh ich t h e t a x equ a led a fr a ct ion of t h e pla n ’s
1067
ben efit pa ym en t s.
Th e cou r t h oldin g wa s ba sed on t h r ee
a r gu m en t s. F ir st , E RISA pr eem pt ion is n ot lim it ed t o st a t e la ws
1068
r egu la t in g E RISA pla n s,
bu t in clu des la ws r ela t ed t o E RISA
pla n s, su ch a s t h e on e a t issu e, wh ich wa s a ppa r en t ly focu sed on
E RISA welfa r e pla n s. H owever , t h er e is n o discu ssion a bou t
wh et h er a sign ifica n t por t ion of t h e pla n s cover ed m a y n ot h a ve
1069
been E RISA pla n s beca u se t h ey wer e ch u r ch pla n s
or pla n s
1070
r est r ict ed t o own er -em ployees.
Secon d, wh en en a ct in g E RISA
Con gr ess r eject ed a n Adm in ist r a t ion pr oposa l t o exem pt st a t e
1071
t a xa t ion fr om t h e E RISA E xpr ess P r eem pt ion ,
wh ich does n ot
sh ow wh y t h e t a x pr ovision a t issu e is pr eem pt ed. Th ir d, t h e t a x
r egu la t ed em ployee pla n s by en cou r a gin g in su r ed pla n s, wh ich a r e
1066. H effernan II, 454 F . Su pp. a t 914.
1067. Id . a t 918.
1068. Id . a t 917.
1069. E RISA 4(b)(2), 29 U.S.C. 1003(b)(2)(2012) (ch u r ch welfa r e pla n s a r e
n ot E RISA pla n s, t h e 410(b) elect ion is a pplica ble on ly t o pen sion pla n s).
1070. S ee 29 C.F .R. § 2510.3-3(b) (2013) (pr ovidin g t h a t pen sion pla n s
cover in g on ly own er -em ployees a r e n ot E RISA pla n s).
1071. H effernan II, 454 F . Su pp. a t 917.
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T h e J oh n M arsh all L aw R eview
[47:145
t a xed a t 2% of t ot a l pr em iu m s, r a t h er t h a n self-in su r ed pla n s,
1072
wh ich a r e su bject t o a 2.75% t a x on ben efit pa ym en t s,
pr esu m a bly sm a ller t h a n t h e pr em iu m s t h a t wou ld be pa id t o a n
in su r er , wh o wou ld dedu ct a pr ofit befor e m a k in g t h e sa m e ben efit
pa ym en t s. H effern an II wa s cit ed fa vor a bly a s discu ssed, su pra, in
t h e Ch icago Preem ption R eview . Its pred ecessor, H effern an I, w as
cited favorably by on e of t h e pr in cipa l E RISA dr a ft sm a n , Sen a t or
J a cob J a vit s in su ppor t of t h e u n a dopt ed E RISA Im pr ovem en t Act
of 1979, S. 209.
In 1987, t h e Nin t h Cir cu it h eld, in Gen eral M otors Corp. v.
1073
Californ ia S tate B oard of E qu alization ,
wh ich E RISA
pr eem pt ed a pr em iu m t a x on st op -loss in su r er s for em ployee
welfa r e pla n s, wh ich t a x wa s ba sed in pa r t on ben efit s pa id by t h e
pla n s. Th e cou r t descr ibed t h e r ela t ion of t h e t a x t o E RISA pla n s
a s follows:
Th e Cou r t ’s br oa d r ea din g of t h e pr eem pt ion cla u se lea ds u s t o
con clu de t h a t t h e t a x a t issu e “r ela t e[s] t o” ben efit pla n s. Th e t a x is
com pu t ed on t h e ba sis of ben efit s pa id by t h e pla n s; referen ce to plan
activities in com pu tin g th e tax is u n avoid able. In it s br oa dest sen se,
1074
t h er efor e, E RISA a pplies, a nd fu r t h er a n a lysis is r equ ir ed.
In con t r a st , t h e H effern an II cou r t focu sed on wh om t h e t a x
1075
wa s dir ect ed a t r a t h er t h a n h ow it wa s com pu t ed.
Th er e
a ppea r ed t o be n o H effern an II issu e wh et h er t h e t a x u n d u ly
discou r a ged self-in su r a n ce. H owever , beca u se t h e in clu sion of t h e
pla n ben efit s pa id in t h e t a x ba sis is con sist en t wit h t h e t a x bein g
a pr em iu m t a x, t h e cou r t fou n d t h e t a x wa s n ot pr eem pt ed beca u se
it wa s eligible for t h e in su r a n ce r egu la t ion exclu s ion fr om t h e
1076
E RISA E xpr ess P r eem pt ion .
Two cou r t s h eld t h a t E RISA pr eem pt ed a Texa s t a x on
a dm in ist r a t ive ser vice pr ovider s t o em ployee pla n s, wh ich t a x (t h e
“ASTA”) wa s a fr a ct ion of t h e su m of t h e a dm in ist r a t ive fees a n d
t h e ben efit s pa id by t h e pla n . In 1989, a Texa s dist r ict cou r t m a de
1077
su ch a h oldin g in B ird son g v. S m ith .
Th e cou r t focu sed on t h e
cost bu r den im posed by t h e t a x:
Wh ile t h er e h a s been m u ch h u bbu b over wh et h er t h e pla n s or t h e
fir st a dm in ist r a t or s a r e t h e ta xpa yer s u n der ASTA, it is th e pla n s or
t h eir spon sor s or pa r t icipa n t s t h a t will even t u a lly bea r t h e bu r den
of t h e t a x, n ot t h e a dm in istr a t or s. Ta x m ea su r es wh ich a r e a im ed
1072. Id . a t 918. Cf. Gor don , su pra n ot e 356, a t 28-29 (opin in g t h a t t h e
E RISA E xpr ess P r eem pt ion , wit h it s deem er cla u se, wa s a dopt ed in pa r t t o
pr even t st a t es fr om im posin g pr em iu m -like t a xes on n on -in su r ed h ea lt h ca r e
r eim bu r sem en t pla n s).
1073. Gen er a l Mot or s Cor p. v. Ca l. St a t e Bd. of E qu a liza t ion , 815 F .2d 1305,
1310-11 (9t h Cir . 1987).
1074. Id . a t 1309 (em ph a sis a dded).
1075. H effernan , 454 F . Su pp. a t 914.
1076. Gen eral M otors Corp., 815 F .2d a t 1310-11.
1077. Bir dson g v. Sm it h , 708 F . Su pp. 792, 801 (D.C. W.D. Tex. 1989).
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specifica lly a t em ployer con t r ibu t ion s do n ot differ in su bst a n ce fr om
t a xes im posed on t h e in com e of su ch pla ns; a n d on e sh ou ld n ot
esca pe pr eem pt ion wh er e t h e ot h er wou ld n ot . Un like ot h er for m s of
st a t e r egu la t ion t h a t m a y a ffect t h e cost s of t h ese pla n s in a n
in ciden t a l fa sh ion , state taxation d irectly d epletes th e fu n d s
oth erw ise available for provid in g ben efits. T o perm it th is to occu r
w ou ld fly in th e face of E R IS A’s goal of assu rin g th e fin an cial
1078
sou n d n ess of su ch plan s.
Th u s, t h e cou r t cor r ect ly focu sed on t h e effect s of t h e la w,
r a t h er t h a n wh om t h e la w focu sed on , or wh et h er it depen ded on
pla n ben efit ch a r a ct er ist ics, a lt h ou gh t h e cou r t obser ved t h a t t h e
pla n s con t em pla t ed by t h e la w “a r e vir t u a lly iden t ica l t o t h ose
1079
cover ed by E RISA”.
Th e F ift h Cir cu it a lso h eld E RISA
1080
pr eem pt ed t h e sa m e t a x in E -S ystem s, In c. v. A.W . Pogu e,
for
1081
t h e sa m e r ea son s.
Neit h er cou r t cla r ified wh et h er pr eem pt ion
wou ld occu r if t h e t a xes wer e n ot con fin ed t o E RISA pla n s. In
su ch ca se t h e con clu sion wou ld seem t o be t h e sa m e, wh ich im plies
t h a t even t h ou gh E RISA does n ot m a k e E RISA pla n s t a x-exem pt ,
E RISA n ever t h eless pr eem pt s a n y t a x on E RISA pla n s beca u se a
t a x dim in ish es pla n a sset s. Th is issu e a r ose in t h e n ext decision .
In 1992, t h e h igh est N ew Yor k St a t e Cou r t h eld in M organ
Gu aran ty T ru st Co. v. T ax Appeals T ribu n al (“M organ
1082
Gu aran ty”),
t h a t E RISA pr eem pt ed t h e N ew Yor k St a t e ga in s
1083
t a x, wh ich wa s a fr a ct ion of t h e ga in on t h e sa le of r ea l pr oper t y.
Th e cou r t a sser t ed t h a t t h e ga in s t a x wou ld a ffect t h e pla n ’s
in vest m en t policies by discou r a gin g N ew Yor k r ea l est a t e
1084
in vest m en t s.
H owever , it is n ot clea r wh y if E RISA pla n s a r e
n ot en t it led t o a st a t e t a x exem pt ion , E RISA pla n in vest m en t s
sh ou ld be t a xed differ en t ly t h a n t h e sa m e in vest m en t s by ot h er
in vest or s. Th e cou r t poin t ed t o t h e a dm in ist r a t ive bu r den of
h a vin g t o a pply differ en t a sset disposit ion pr ocedu r e s in differ en t
1085
st a t es.
Th e cou r t cit ed B ird son g a n d it s deplet ion of a sset s
1086
a r gu m en t .
Th e cou r t cor r ect ly h eld t h e ga in s t a x la w wa s n ot
sa ved fr om pr eem pt ion sim ply by bein g a gen er a lly a pplica ble
1087
la w.
Th e m a jor it y decla r ed wit h ou t expla n a t ion t h a t beca u se
t h e ga in s t a x wa s a pr ofit s t a x r a t h er t h a n a t r a n sfer t a x, E RISA
1078. Id . (em ph a sis a dded).
1079. S ee id . a t 796 (st a t in g t h a t som e of t h ese pla n s m a y qu a lify a s n on E RISA pla n s, su ch a s ch u r ch or gover n m en t pla n s).
1080. E -Syst em s, In c. v. A.W. P ogu e, 929 F .2d 1100 (5t h Cir . 1991).
1081. Id . a t 1101 (descr ibin g E RISA pla n cover a ge). S ee also id . a t 1103
(discu ssin g a sset deplet ion ).
1082. Mor ga n Gu a r a n t y Tr u st Co. v. Ta x Appea ls Tr ibu n a l, 599 N.E .2d 656
(N.Y. 1992).
1083. Id . a t 662.
1084. Id . a t 660.
1085. Id .
1086. Id . a t 661.
1087. Id . a t 661-62.
330
T h e J oh n M arsh all L aw R eview
[47:145
sh ou ld on ly pr eem pt t h e ga in s t a x, a lt h ou gh bot h im pose
a dm in ist r a t ive a n d cost bu r den s on t h e disposit ion of pla n
1088
a sset s.
P er h a ps t h e differ en ce is t h a t a pr ofit s t a x im poses a
gr ea t er t h e a dm in ist r a t ive bu r den t h a n a t r a n sfer t a x. A t r a n sfer
t a x r equ ir es t h e com pu t a t ion of t h e pr oceeds, bu t a pr ofit s t a x a lso
r equ ir es t h e com pu t a t ion of t h e ba sis of t h e pr oper t y.
Th e M organ Gu aran ty dissen t cor r ect ly obser ved t h a t t h e
m a jor it y did n ot expla in h ow t o dist in gu ish t h ose st a t e t a xes on
1089
pla n s t h a t wer e pr eem pt ed fr om t h ose t h a t wer e n ot .
H owever ,
t h e dissen t pr oposed a n a lt er n a t ive t h a t a lso fa iled t o dist in gu ish
t h e effect s of a pla n t a x t h a t wer e pr eem pt ed fr om on e t h a t wa s
n ot . In st ea d, t h e dissen t cit ed In gersoll-R an d a n d M ack ey for t h e
pr in ciple t h a t a gen er a lly a pplica ble la w is n ot pr eem pt ed “if it is
bein g a pplied t o a cover ed pla n in t h e sa m e wa y, a n d for t h e sa m e
r ea son s, a s it wou ld be a pplied t o a n y ot h er en t it y, even t h ou gh
1090
a pplica t ion of t h e la w m a y, in fa ct , bu r den t h e pla n .”
Th is
pr in ciple is fla wed beca u se a s E gelh off obser ved, su pra, it
disr ega r ds wh et h er su ch la w a ffect s a cor e r equ ir em en t , su ch a s
wh et h er pla n ben efit s m u st be pa id pu r su a n t t o pla n t er m s. Th is
fla w wit h a focu s on gen er a lly a pplica ble la ws sh ou ld h a ve been
qu it e a ppa r en t in 1992 beca u se RE ACT, wh ich wa s en a ct ed in
1984 specifica lly pr oh ibit ed Spou sa l Su r vivor Ben efit P la n s fr om
followin g st a t e or der s gen er a t ed u n der gen er a lly a pplica ble
1091
dom est ic r ela t ion s la w, if t h ey wer e n ot QDROs.
Th er e is a n excellen t su m m a r y of t h e st a t e of t h e pr eem pt ion
of st a t e t a x la ws pr ior t o T ravelers a n d De B u on o in a 1992 la w
1092
r eview a r t icle by Kevin Ma t z.
Th ose t wo decision s pr esen t ed a
r u le t h a t a n swer ed t h e M organ S tan ley qu est ion of h ow t o
det er m in e wh ich t a x la ws E RISA pr eem pt s. In pa r t icu la r , E RISA
pr eem pt s a n y st a t e la w t o t h e ext en t t h e la w r efer s t o E RISA
pla n s (t h e T ravelers P r eem pt ion by Refer en ce Ru le) a n d per h a ps
t a r get s su ch pla n s, m a n da t es ben efit st r u ct u r e or ben efit
a dm in ist r a t ion , or pr ovides a n en for cem en t m ech a n ism , bu t
per m it s st a t e la w t h a t a ffect s ben efit a m ou n t s in dir ect ly wit h ou t
a n y of t h e a bove fea t u r es. Th u s, t h er e wou ld be n o ch a n ge in t h e
h oldin gs of pr eem pt ion a bsen t a n in su r a n ce exce pt ion in H effern an
II, Gen eral M otors, B ird son g, a n d E -S ystem s, In c. wit h r espect t o
la ws t h a t seem ed t o t a r get E RISA welfa r e pla n s wit h ou t u sin g t h e
wor d E RISA, a lt h ou gh t h e decision s did n ot m en t ion eviden ce of
t h is t a r get in g. In con t r a st , M organ S tan ley wou ld be r ever sed,
a n d t h e t a x wou ld be pr eem pt ed. Th e t a x a t issu e t h er ein h a d n o
1088. Id . a t 661.
1089. Id . a t 662.
1090. Id . a t 663.
1091. Ret . E qu it y Act of 1984, P u b. L. No. 98-397 § 104, 98 St a t . 1426, 143336 (1984).
1092. Kevin Ma t z, E RISA’s P r eem pt ion of St a t e Ta x La ws, 61 F ORDH AM L.
R E V. 401 (1992).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
331
E RISA r efer en ce or ot h er fea t u r e descr ibed a bove, a n d did n ot
sa t isfy t h e r u le la t er set for t h in B oggs a n d E gelh off t h a t E RISA
pr eem pt s la ws t h a t a ffect E RISA cor e r equ ir em en t s by viola t in g
pla n t er m s or im posin g E RISA Gen er a l Ma n da t es.
Th e T ravelers/ De B u on o a n a lysis is fla wed beca u se it
in clu des t h e T ravelers P r eem pt ion by Refer en ce Ru le, a n d per h a ps
t h e expa n sion t o st a t e la ws t a r get in g E RISA pla n s. As discu ssed
in T h iok ol, a n E RISA r efer en ce or a t a r get in g of E RISA pla n s is
ir r eleva n t if t h e t a x does n ot a ffect t h e pla n in a n on -t en u ou s
m a n n er , su ch a s by im posin g a ben efit t er m s m a n da t e (in clu din g a
1093
ben efit st r u ct u r e m a n da t e or a ben efit pr ovider m a n da t e).
H owever , if t h e T ravelers P r eem pt ion by Refer en ce Ru le wer e
disca r ded, t h e la ws in Gen eral M otors, B ird son g, a n d E -S ystem s,
In c. wou ld h a ve n ot been pr eem pt ed r ega r dless of t h e in su r a n ce
except ion beca u se n on e h a d a pr oh ibit ed effect . It is n ot clea r if
H effern an II wou ld be pr eem pt ed beca u se t h e la t er T ravelers
decision does n ot pr ovide t h e t ools t o a n a lyze wh et h er , im posin g a
h igh er t a x on a self-in su r ed pla n ’s ben efit pa ym en t s t h a n on a n
in su r ed pla n ’s pr em iu m s, r esu lt s in a pr eem pt ed in su r er ben efit
pr ovider
m a n da t e
r a t h er
than
m er ely
a
per m issible
1094
en cou r a gem en t of t h e u se of su ch a pr ovider .
On t h e ot h er
h a n d, a pa yr oll t a x, wh ich wa s pa ya ble, on ly if a n em ployer ’s
h ea lt h ben efit pla n expen dit u r es fa iled t o exceed a t h r esh old
wou ld be pr eem pt ed even if t h e T ravelers P r eem pt ion by Refer en ce
1095
Ru le wer e disca r ded.
In con t r a st , for M organ S tan ley, t h e
T ravelers h oldin g of n o pr eem pt ion is n ot a ffect ed if t h e T ravelers
P r eem pt ion by Refer en ce Ru le wer e disca r ded.
1093. Cf. E dwa r d Zelin sky, E m ployer M an d ates an d E R IS A Preem ption : A
Critiqu e of Gold en Gate R estau ran t Association v. S an Fran cisco, St a t e Ta x
Not es (2008) available at h t t p://ssr n .com /a bst r act =1299128 (la st visit ed Ma r ch
5, 2014) (a r gu in g t h a t E RISA pr eem pt s t h e Sa n F r a n cisco r equ ir em en t t h a t
a n em ployer wh o fa ils t o m a ke m in im u m h ea lt h ca r e ben efit expen dit u r es
m u st m a ke a pa ym en t t o Sa n F r a n cisco t o pr ovide t h e ben efit s beca u se t h e
r equ ir em en t m a n da t es t h e em ployer ’s E RISA ben efit s) w ith Sa m u el C.
Sa lga n ik, Wh at th e Uncon stitu tion al Con d ition s Doctrin e Can T each Us abou t
E R IS A Preem ption : Is it Possible to Con sisten tly Id en tify "Coercive" Pay -orplay S chem es?,109 C OLUM . L. R E V.1482, 1507-08 a n d 1515-28 (2009) (a r gu in g
t h a t E RISA does n ot pr eem pt t h e Sa n F r a n cisco r equ ir em en t b eca u se t h e
r equ ir em en t gives em ployer s a m ea n in gfu l a lt er n a t ive t o ch a n gin g t h eir
E RISA pla n s a n d m or eover , E RISA does n ot pr eem pt gen er a lly a pplica ble
h ea lt h r efor m la ws). P r of. Zelin sky’s posit ion , a s discu ssed su pra, is m or e
con sist en t wit h E RISA pr oh ibit ion on st a t e la w ben efit m a n da t es.
1094. S ee e.g., L ANGBE IN P E NSION L AW , su pra n ot e 13, a t 844-46 (discu ssing
t h e dist in ct ion bet ween a Tr a veler s in du cem en t a n d a Tr a veler s m a n da t e, a n d
wh et h er E RISA pr eem pt s st a t e m a n da t es t h a t em ployer s m a ke m in im u m
h ea lt h ca r e expen dit u r es).
1095. S ee gen erally id . a t 846-48. S ee e.g., Ret a il In du st r y Lea der s Ass’n v.
F ielder , 475 F .3d. 180 (4t h Cir . 2007) (h oldin g a pa yr oll t a x t h a t wou ld be
r edu ced t o t h e ext en t of t h e em ployer ’s h ea lt h ca r e expen dit u r es wa s
pr eem pt ed beca u se it m a n da t ed a ben efit st r u ct u r e).
332
T h e J oh n M arsh all L aw R eview
[47:145
In 2006, t h e Secon d Cir cu it h eld in H attem v. S ch w arzen egger
1096
(“H attem ”),
t h a t E RISA did n ot pr eem pt t h e a pplica t ion of t h e
Ca lifor n ia u n r ela t ed bu sin ess t a x, ba sed on t h e feder a l u n r ela t ed
1097
bu sin ess t a x, t o a n E RISA pen sion pla n .
Th e cou r t essen t ia lly
r epea t ed T ravelers wit h a n expla n a t ion of t h e wor d “r efer en ce,”
wh ich seem s t o in clu de t a r get in g su ch pla n s. Th e cou r t fir st
obser ved t h a t sin glin g ou t E RISA pla n s for specia l t r ea t m en t is
con sider ed a “r efer en ce” t h a t r esu lt s in E RISA pr eem pt ion ,
a lt h ou gh sim ply m en t ion in g t h e wor d “E RISA” in t h e st a t u t e is
1098
n ot su ch a r efer en ce.
Th e st a t u t e did n ot specifica lly r efer t o
E RISA pla n s, bu t wa s a gen er a lly a pplica ble la w wh ich a pplied t o
a br oa d r a n ge of t a x exem pt en t it ies, even t h ou gh E RISA pla n s
1099
m a y h a ve con st it u t ed 80% of t h e t a x ba se.
Th e H attem cou r t
obser ved t h a t t h e pa r t of t h e st a t u t e r efer en cin g E RISA pla n s,
n a m ely t h e exem pt ion fr om t h e t a x for pla n s exem pt u n der Code
§ 401(a ) (a s discu ssed, su pra, su ch pla n s in clu de n on -E RISA pla n s,
1100
su ch a s own er -em ployee pla n s
a n d pr ofit -sh a r in g pla n s
1101
pr im a r ily pr ovidin g for in -ser vice dist r ibu t ion s)
wa s n ot bein g
1102
ch a llen ged.
Th e t a x did n ot com pel a specific in vest m en t or
1103
im pose a su bst a n t ia l a dm in ist r a t ive cost ,
ju st a s t h e T ravelers
in su r a n ce su r ch a r ge did n ot com pel a ch oice of in su r er or
r epr esen t a su bst a n t ia l cost . F in a lly, t h e t a x did n ot gover n a n
a r ea gover n ed by E RISA, su ch a s est a blish in g a ben efit t er m s
1104
m a n da t e.
As a r esu lt of t h e H attem decision N ew Yor k St a t e decided
t h a t E RISA did n ot pr eem pt t h e a pplica t ion of t h e New Yor k St a t e
1105
u n r ela t ed bu sin ess t a x t o E RISA pen sion pla n s.
Th is wa s a
r ever sa l of a New Yor k Ta x Tr ibu n a l decision in 2003 in M cKin sey
1106
M aster R etirem en t Plan T ru st .
Th e Tr ibu n a l h a d fou n d t h a t t h e
1096. H a t t em v. Sch wa r zen egger , 449 F .3d 423 (2d Cir . 2006).
1097. Id . a t 426.
1098. Id . a t 432.
1099. Id . a t 434-435. E RISA does n ot pr eem pt gen er a lly a pplica ble cr im in a l
st a t u t es.
Th u s, t h er e is a sim ila r qu est ion a bou t t h e pr opor t ion of
com pen sa t ion t h a t m u st be n on -E RISA com pen sa t ion cover ed by a gen er a lly
a pplica ble cr im in a l st a t u t e.
1100. 29 C.F .R. § 2510.3-3(b)(1975) (pen sion pla n s cover in g on ly own er em ployees a r e n ot E RISA pla n s).
1101. Cf. E RISA § 3(2)(A), 29 U.S.C. § 1002(2)(A) (pla n s pr ovidin g
r et ir em en t in com e or in com e a ft er t h e t er m in a t ion of em ploym en t a r e E RISA
pla n s).
1102. H attem , 449 F .3d a t 435.
1103. Id . a t 432. B u t see Ma r k F . Som m er , Ma r k A. Loyd, & J en n ifer Y.
Ba r ber , O Preem ption , Wh ere Art T h ou — E R IS A ’s L ost S tate an d L ocal T ax
Preem ption 64 T AX L AW . 783, 797-98 (2011) (discu sses t h e cost of com plia n ce,
a lt h ou gh t h e cou r t h oldin g fa ils t o con sider su ch cost ).
1104. H attem , 449 F .3d a t 433.
1105. New Yor k St a t e Dep’t of F in . a n d Ta xa t ion TSB-M-06(6)C (Nov. 9,
2006).
1106. McKin sey Ma st er Ret . P la n Tr u st , DTA NO. 817551, 2003 N.Y. Ta x
LE XIS 112 (Ma y 8, 2003).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
333
st a t u t e expr essly r efer r ed t o E RISA pla n s by t h e r efer en ce t o
1107
pla n s exem pt u n der Code § 401(a ).
Th e Tr ibu n a l did n ot a sk
wh et h er t h e t a x wa s gen er a lly a pplica ble. Th e decision below h a d
obser ved t h a t t h e t a x discou r a ged t h e E RISA r equ ir ed
diver sifica t ion of in vest m en t s by su bject in g on ly cer t a in
1108
in vest m en t s t o t a x.
Th e t r ibu n a l wa s a ble t o dist in gu ish
T ravelers a n d De B u on o beca u se t h e t a x h a d n ot h in g t o h ea lt h
1109
ca r e r egu la t ion , a n a r ea of t r a dit ion a l st a t e r egu la t ion .
F in a lly,
t h e t r ibu n a l descr ibed t h e sign ifica n t a dm in ist r a t ive bu r den s
im posed by t h e t a x:
Th e St a t e’s UBIT gives r ise t o filin g a n d pa ym en t du t ies wh ich
in volve est im a t ion a n d t im in g issu es, a ll of wh ich m ilita t e a ga in st
t h e con gr ession a l a im of a ch ievin g a u n ifor m body of pen sion la w
wit h m in im a l fin a n cia l a n d a dm in ist r a t ive bu r den s a n d con flict s
1110
bet ween t h e va r iou s st a t e a n d F eder a l ju r isdict ion s.
In 2012, a Mich iga n dist r ict cou r t sim ila r ly h eld in S elf
1111
In su ran ce In stitu te of Am erica v. S n yd er, (“S IAA”),
t h a t E RISA
did n ot pr eem pt a st a t e t a x of 1% on t h e va lu e of a ll cla im s pa id by
ever y ca r r ier or t h ir d pa r t y a dm in ist r a t or for m edica l ser vices t h a t
1112
a r e r en der ed in Mich iga n .
Th e cou r t followed T h iok ol a n d
disr ega r ded t h e fa ct t h a t t h e st a t u t e specifica lly r efer r ed t o E RISA
by t a xin g “com m er cia l in su r er s a n d h ea lt h m a in t en a n ce
or ga n iza t ion s, n on pr ofit h ea lt h ca r e cor por a t ion s, specia lt y
pr epa id h ea lt h pla n s, a n d E RISA pla n s” t h a t pa y m edica l cla im s
1113
in Mich iga n .
Th u s, t h e cou r t h eld t h a t t h er e wa s n o pr eem pt ion
beca u se t h e st a t u t e did n ot m a n da t e em ployee ben efit st r u ct u r es
or a ffect t h e pr im a r y a dm in ist r a t ive fu n ct ion s of ben efit pla n s,
su ch a s det er m in in g a n em ployee’s eligibilit y for a ben efit a n d t h e
1114
a m ou n t of t h a t ben efit .
It wou ld, h owever a ppea r t h a t u n der
t h e T ravelers P r eem pt ion by Refer en ce r u le t h e st a t u t e wou ld be
1115
pr eem pt ed.
Mr . Yon a t h a n Gelblu m r a ised ver y t h ou gh t fu l cr it icism s of
1107. Id . a t 28-30.
1108. Id . a t *21 (im plyin g t h a t E RISA per m it s t h e st a t es t o t a x eit h er a ll or
n on e of t h e E RISA pla n ’s in vest m en t s. An y ot h er policies wou ld fa vor cer t a in
in vest m en t s).
1109. Id . a t *18.
1110. Id . a t *28-*29.
1111. Self-In su r a n ce In st it u t e of Amer ica v. Sn yder , 2012 U.S. Dist . LE XIS
124405 (E .D. Mich . Sept 7, 2012).
1112. Id . a t *29.
1113. Id . a t *21-*22.
1114. Id . a t *24-*25.
1115. T H E S E LF I NSURANCE I NSTITU TE OF AME RICA, Lega l F igh t Con t in u es
Wh ile Ta x Cou ld Rise Sign ifica n t ly on Self-In su r ed E mployer s, (Nov. 12, 2012)
(la st
visit ed
J an.
30,
2014)
h t t p://www.siia .or g/i4a /pa ges/in dex.cfm ?pa geid=6243 (a n n ou n cin g t h a t t h ey
wer e a ppea lin g t h e pr eem pt ion r u lin g).
334
T h e J oh n M arsh all L aw R eview
[47:145
1116
H attem a n d pr esu m a bly wou ld be sim ila r ly cr it ica l of S IAA,
1117
a lt h ou gh Mr . Gelblu m descr ibed t h e H attem r esu lt a s cor r ect .
Mr . Gelblu m ch a r a ct er ized t h e H attem a n a lysis a s follows:
[T]h e cou r t ’s a pplica t ion of t h e Su pr em e Cou r t ’s E RISA
ju r ispr u den ce wa s fla wed in fou r wa ys, wh ich lea d t o a n over ly
br oa d h oldin g. F ir st , t h e cour t wr on gly a ssu m ed t h a t a high degr ee
of defer en ce is du e t o st a t e t a x la ws wh en decidin g E RISA
pr eem pt ion ca ses. Secon d, it specifica lly ext en ded it s h oldin g t o a ll
st a t e UBIT sch em es (r ega r dless of wh et h er t h ey m ir r or ed t h e
feder a l sch em e) despit e t h e fa ct t h a t t h e Ca lifor n ia la w’s m inim a l
im pa ct on E RISA pla n s is pr oba bly du e t o it s sim ila r it y t o feder a l
UBIT. Th ir d, it fa iled t o expla in wh y r edu cin g r isk t h r ou gh
diver sifica t ion of pla n a ssets is n ot a cor e a r ea of E RISA con cer n
pot en t ia lly im pa ct ed by t h e t a x. La st ly, t h e cou r t con fla t ed t h e
con n ect ion pr on g of E RISA pr eem pt ion wit h t h e sepa r a t e, a n d m u ch
st r ict er , r efer en ce pr on g by pa r t ia lly ba sin g it s h oldin g on t h e fa ct
t h a t Ca lifor n ia UBIT did not a pply exclu sively t o E RISA pla n s.
Beca u se of t h ese fla ws, H attem ’s h oldin g is t oo br oa d, a n d followin g
it s logic in ot h er ca ses cou ld im pr oper ly t er m in a t e E RISA ba sed
ch a llen ges t o va r iou s st a t e m ea su r es, pa r t icu la r ly t a xes, t h a t m a y
1118
effect ively r egu la t e E RISA pla n s.
H owever , t h ese good poin t s don ’t fu lly a ddr ess fu n da m en t a l
E RISA pr eem pt ion pr in ciples.
Mr . Gelblu m is cor r ect t h a t st a t e t a x la w deser ves n o m or e
defer en ce t h a n ot h er st a t e la ws, a n d t h a t t h e T ravelers Cou r t
spoke of givin g m or e r espect for t a xes u sed t o im plem en t
t r a dit ion a l st a t e r egu la t ion , su ch a s h ea lt h ca r e r egu la t ion t h a n
1119
t a xes u sed solely t o r a ise r even u e.
H owever , a s discu ssed,
su pra, t h e fu n da m en t a l E RISA pr eem pt ion pr in ciples sh ou ld n ot
con sider t h e pa r t icu la r ca t egor y of st a t e la w except t o t h e ext en t ,
Con gr ess pr ovided t h e ca t egor y wit h a pr efer en ce t h a t pr even t s
t h e exer cise of a pa r t icipa n t ’s ben efit r igh t s, a dds a n en for cem en t
m ech a n ism , or im poses a n E RI SA Gen er a l Ma n da t e.
Mr . Gelblu m is cor r ect t h a t t h e H attem cou r t fa iled t o
con sider t h e a dm in ist r a t ive bu r den of t a x com plia n ce, wh ich cou ld
1120
be m or e sign ifica n t for t a xes t h a t do n ot m ir r or a feder a l t a x.
H owever , a s discu ssed, su pra, t h e fu n da m en t a l E RI SA pr eem pt ion
1116. Yon a t a n
Gelblu m ,
H attem
v.
S ch w arzen egger—T erm in atin g
Preem ption Ch allen ges T o S tate T axation Of E R IS A Plan s’ UB T I , 60 T AX L AW .
215 (2006).
1117. Id . a t 222-225 (t h e sim ila r it y of t h e t a x t o t h e feder a l UBTI, wh ich it
m ir r or ed a t a m u ch lower r a t e, im plied t h a t t h e a dm in ist r a t ive bu r den s a n d
effect s on in vest m en t s wer e t en u ou s). Mr . Gelblu m a lso m en t ion ed t h a t su ch
la ws exist ed pr ior t o E RISA so t h er e is a pr esu m pt ion in fa vor of t h eir va lidit y.
H owever , t h e ea r lier Boggs decision t h a t E RISA pr eem pt ed com m u n it y
pr oper t y la w, disr ega r ded t h e fa ct t h a t com m u n it y pr oper t y pr eceded by m a n y
yea r s t h e en a ct m en t of E RISA a n d of t h e feder a l UBTI.
1118. Id . a t 220-21.
1119. Id . a t 226-28.
1120. Id . a t 228-29.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
335
pr in ciples do n ot t a k e a ccou n t t h e a dm in ist r a t ive bu r den of
com plia n ce wit h a st a t e la w, bu t r a t h er wh et h er t h ey pr even t t h e
exer cise of a pa r t icipa n t ’s ben efit r igh t s, a dd a n en for cem en t
m ech a n ism , or im pose a n E RISA Gen er a l Ma n da t e.
Mr . Gelblu m is cor r ect t h a t t h e H attem cou r t fa iled t o
con sider wh et h er t h er e wa s a cor e E RISA r equ ir em en t t o diver sify
1121
in vest m en t s.
H owever , u n less t h e st a t es a r e pr eclu ded fr om
t a xin g E RISA pla n in vest m en t s, wh ich t h ey a r e n ot , it is
in evit a ble t h a t t h e st a t e t a x will fa vor som e in vest m en t s a n d
disfa vor ot h er in vest m en t s. Th e De B u on o h oldin g t h a t E RISA did
n ot pr eem pt t h e im posit ion of fees im posed on m edica l ca r e
pr ovider s, wh et h er or n ot t h ey a r e E RISA pla n s, su ggest s t h a t if
E RISA pla n s m a y be su bject t o st a t e t a xes, E RISA pla n s sh ou ld
sim ila r ly n ot expect a n y m or e fa vor a ble t a x t r ea t m en t t h a n
sim ila r ly sit u a t ed in vest or s.
Mr . Gelblu m is cor r ect t h a t t h e H attem cou r t im pr oper ly
1122
con fou n ded t h e r efer en ce a n d con n ect ion t est s for pr eem pt ion .
H owever , a s discu ssed, su pra, t h e fu n da m en t a l E RISA pr eem pt ion
pr in ciples do n ot m a k e su ch a dist in ct ion a n d sim ply a sk wh et h er
t h e st a t e la w a ffect s ben efit s pla n s in a n on -t en u ou s m a n n er , i.e.,
does t h e la w pr even t t h e exer cise of a pa r t icipa n t ’s ben efit r igh t s,
a dd a n en for cem en t m ech a n ism , or im pose a n E RISA Gen er a l
Ma n da t e.
Mr . Gelblu m is cor r ect t h a t t h e H attem h oldin g of n o
1123
pr eem pt ion h a s a n excessive r ea ch beca u se of t h e a bove fla ws.
Mr . Gelblu m ’s a r t icle r eceived con sider a ble su ppor t fr om a r ecen t
T AX L AWYE R a r t icle by Ma r k F . Som m er , Ma r k A. Loyd, a n d
J en n ifer Y. Ba r ber , O Preem ption , Wh ere Art T h ou — E R IS A’s L ost
1124
S tate an d L ocal T ax Preem ption ,
wh ich pr ovides a n excellen t
r eview of t h e cu r r en t st a t e of su ch la w a n d r ecom m en ds t h a t
E RISA pr eem pt on ly t h ose st a t e la ws t h a t eit h er prim a facie
r ela t e t o E RISA pla n s or wer e a dopt ed wit h t h e pu r pose of
1125
a ffect in g a n E RISA pla n (effect s wou ld be disr ega r ded).
H owever , m u ch of t h e a bove com plexit y of t h e pr eem pt ion a n a lysis
m a y be a voided wit h t h e m odest a ppr oa ch pr oposed in t h is a r t icle.
In pa r t icu la r , t h e effect s of t h e st a t e la w det er m in es wh et h er
E RISA pr eem pt s it . Th ese pr in ciples a r e con sist en t wit h t h e
in t en t ion s of t h e E RISA dr a ft sm en . Th ey a ppa r en t ly wish ed t o
1121. Id . a t 229-30.
1122. Id . a t 230-31.
1123. Id . a t 231.
1124. Ma r k F . Som m er , Ma r k A. Loyd, a n d J en n ifer Y. Ba r ber , O
Preem ption , Wh ere Art T h ou — E R IS A’s L ost S tate an d L ocal T ax Preem ption
64 T AX L AW . 783, 797-800 (2011).
1125. Id . a t 802-805. S ee also Kilberg an d In m an Preem ption , su pra n ot e
350, a t 1332 n .93, 1334-36 (1984) (pr oposin g t h a t E RISA pr eem pt ion be ba sed
on wh et h er t h e pu r pose of t h e st a t e la w is t o r egu la t e E RISA pla n s a n d
a r gu in g t h a t E RISA pr eem pt s m a n da t or y st a t e t a x wit h h oldin g or t a xes
m ea su r ed by t h e ben efit a m ou n t s pa id by E RISA pla n s).
336
T h e J oh n M arsh all L aw R eview
[47:145
est a blish a syst em in wh ich st a t e la ws cou ld n ot a ffect a n y of t h e
t h r ee ba sic E RISA ben efit pr ot ect ion s, bu t h a d n o in t en t ion of
over t u r n in g a n y ot h er st a t e la ws.
XVII.
E RISA P RE VE N TS A STATE LAW CRE DITOR OF A
P ARTICIP AN T OR A BE N E F ICIARY OF AN E RISA P LAN
F ROM RE DUCING TH E P LAN BE NE F IT P AYME NT
RIGH TS OF TH E P ARTICIP ANT OR TH E BE NE F ICIARY
UNLE SS TH E CRE DITOR IS A BE NE F ICIARY U NDE R TH E
P LAN TE RM, OR TH E P LAN P E RMITS TH E
ATTACH ME NT OF BE NE F ITS
E RISA su bst a n t ia lly r edu ces t h e a bilit y of st a t e la w cr edit or s
t o obt a in pa ym en t s fr om E RISA pla n pa r t icipa n t s a n d
ben eficia r ies. Th e on ly per son s E RISA per m it s t o br in g a ct ion s for
1126
ben efit pa ym en t s a r e pla n pa r t icipa n t s a n d ben eficia r ies.
St a t e
la w cr edit or s of a pla n pa r t icipa n t or ben eficia r y m u st r ely on t h e
t er m s of t h e pla n t o obt a in a n y r igh t s t o pla n ben efit s. Th e t er m s
of a n y pla n m a y per m it a pa r t icipa n t or ben eficia r y t o dir ect t h e
pla n t o m a ke t h e ben efit pa ym en t s t o a t h ir d pa r t y. Th e on ly
E RISA pr ovision t h a t cou ld pr even t su ch dir ect ion s is t h e
Alien a t ion P r oh ibit ion , wh ich does n ot a pply t o r evoca ble t h ir d
1127
pa r t y pa ym en t dir ect ion s.
Mor eover , t h e t er m s of a pla n , ot h er
t h a n a Spou sa l Su r vivor Ben efit P la n , m a y per m it a pa r t icipa n t or
ben eficia r y eit h er t o a ssign ben efit s t o a cr edit or a n d t h er eby
m a k e t h e cr edit or a ben eficia r y, or t o per m it cr edit or s t o a t t a ch
t h e ben efit s. In t h ese t h r ee ca ses, beca u se t h e cr edit or will r eceive
t h e pa ym en t pu r su a n t t o t h e pla n t er m s, t h e pa r t icipa n t or
ben eficia r y m a y n ot seek a secon d pa ym en t of t h ose ben efit s, sin ce
1128
pla n t er m s det er m in e ben efit r igh t s.
F or Spou sa l Su r vivor
Ben efit P la n s, t h e Alien P r oh ibit ion pr oh ibit s pla n s fr om m a kin g
ben efit pa ym en t s t o a per son ot h er t h a n a pla n pa r t icipa n t or a
ben eficia r y, u n less t h e pla n t er m s pr ovide for su ch pa ym en t s, a n d
su ch pa ym en t s a r e wit h in on e of t h e st a t u t or y or r egu la t or y
except ion s, su ch a s for volu n t a r y r evoca ble a ssign m en t s of a t m ost
1129
1130
10% of t h e ben efit pa ym en t ,
st a t e wit h h oldin g t a x pa ym en t s,
1131
dir ect ba n k deposit s,
or a t t h e dir ect ion of t h e pa r t icipa n t or
1126. E RISA § 502(a )(1)(B), 29 U.S.C. § 1132(a )(1)(B) (2012).
1127. Tr ea s. Reg. § 1.401(a )-13(e) (a s a m en ded in 1988) (per m it t in g Spou sa l
Su r vivor Ben efit P la n s t o follow r evoca ble p a ym en t dir ect ion s fr om t h eir
pa r t icipa n t s a n d ben eficia r ies if design ee a ckn owledges in wr it in g t h a t it h a s
n o en for cea ble r igh t t o t h e pla n n ed pa ym en t s).
1128. E RISA § 502(a )(1)(B), 29 U.S.C. § 1132(a )(1)(B) (2012).
1129. E RISA § 206(d)(2), 29 U.S.C. § 1056(d)(2) (2012).
1130. Tr ea s. Reg. § 1.401(a )-13(c)(2)(ii) (a s a m en ded in 1988).
1131. Tr ea s. Reg. § 1.401(a )-13(c)(2)(v) (a s a m en ded in 1988).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
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1132
ben eficia r y, a n d t h e pla n t er m s pr ovide for su ch pa ym en t s.
Th e Su pr em e Cou r t h a s t h or ou gh ly su per seded t h e Cam pa
S u p. Cou rt a n d M ack ey II decision s t h a t per son s ot h er t h a n
pa r t icipa n t s or ben eficia r ies m a y ot h er wise r ely on st a t e la w t o
obt a in pla n ben efit s.
Cam pa S u p. Cou rt a s discu ssed, su pra, h eld t h a t E RISA
per m it t ed com m u n it y pr oper t y la w t o pr ovide for pen sion pla n
pa ym en t s t o per son s ot h er t h a n pla n ben eficia r ies a n d
pa r t icipa n t s. B oggs explicit ly over r u led t h a t h oldin g la r gely on
t h e ba sis t h a t
T h e axis arou n d w h ich E R IS A’s protection s revolve is [s ic] th e
con cepts of participan t an d ben eficiary. Wh en Con gr ess h a s ch osen
t o depa r t fr om t h is fr a m ewor k, it h a s don e so in a ca r efu l a n d
lim it ed m a n n er . Respon den t s’ cla im s, if a llowed t o su cceed, wou ld
depa r t fr om t h is fr a m ewor k, u pset t in g t h e deliber a t e ba la n ce
1133
cen t r a l t o E RISA.
M ack ey II a s discu ssed, su pra, h eld t h a t E RISA per m it t ed
st a t e la w ga r n ish m en t s t o pr ovide for n on -pen sion pla n pa ym en t s
t o per son s ot h er t h a n pla n ben eficia r ies a n d pa r t icipa n t s
r ega r dless of t h e pla n t er m s. E gelh off im plicit ly over r u led t h is
h oldin g by h oldin g t h a t E RISA pr eem pt ed a st a t e st a t u t e r evokin g
u pon t h e pa r t icipa n t ’s divor ce, t h e pa r t icipa n t ’s spou sa l
design a t ion for a n E RISA life in su r a n ce pla n . Th e E gelh off
h oldin g la r gely r est ed on “t h e [r evoca t ion ] st a t u t e a t issu e h er e
dir ect ly con flict [in g] wit h E RISA’s r equ ir em en t s t h a t pla n s be
a dm in ist er ed, a n d ben efit s be pa id, in a ccor da n ce wit h pla n
1134
docu m en t s.”
Mor eover , t h e E gelh off Cou r t left dou bt a bou t it s
im pa ct on st a t e la w ga r n ish m en t s wh en it dist in gu ish ed gen er a lly
a pplica ble la ws, wh ich r egu la t e “a r ea s wh er e E RISA h a s n ot h in g
t o sa y,” su ch a s st a t e m in im u m wa ge a n d ben efit for a ppr en t ices,
wh ich a r e n ot pr eem pt ed beca u se t h ey on ly in ciden t a lly a ffect
1135
E RISA pla n s,
fr om a st a t u t e, su ch a s t h e st a t u t e r evokin g
E RISA design a t ion s a t issu e, wh ich is pr eem pt ed beca u se it
“gover n s t h e pa ym en t of ben efit s, a cen t r a l m a t t er of pla n
1136
a dm in ist r a t ion .”
Th e Ken n ed y Cou r t st r essed t h e im por t a n ce of
t h e pr in ciple of m a kin g ben efit pa ym en t s con sist en t wit h t h e pla n
t er m s by st a t in g, “[t ]h e E st a t e’s cla im t h er efor e st a n ds or fa lls by
‘t h e t er m s of t h e pla n ,’ § 1132(a )(1)(B), a st r a igh t for wa r d r u le of
h ewin g t o t h e dir ect ives of t h e pla n docu m en t s t h a t let s em ployer s
‘est a blish a u n ifor m a dm in ist r a t ive sch em e, [wit h ] a set of
st a n da r d pr ocedu r es t o gu ide pr ocessin g of cla im s a n d
1137
disbu r sem en t of ben efit s.’”
1132. Tr ea s. Reg. § 1.401(a )-13(e) (a s a m en ded in 1988).
1133. B oggs, 520 U.S. a t 854 (em ph a sis a dded).
1134. E gelh off, 532 U.S. a t 150.
1135. Id . a t 148 (cit in g Dillin gh am Con str., 519 U.S. a t 330).
1136. Id .
1137. Ken n ed y, 555 U.S. a t 300 (cit a t ion s om it t ed).
338
T h e J oh n M arsh all L aw R eview
[47:145
Th e Alien a t ion P r oh ibit ion ser ves a ver y u sefu l pu r pose u n der
1138
t h is in t er pr et a t ion .
Th e P r oh ibit ion lea ves n o qu est ion t h a t t h e
t er m s of a Spou sa l Su r vivor Ben efit P la n m a y n ot per m it
pa ym en t s of ben efit s t o per son s ot h er t h a n pla n pa r t icipa n t s or
ben eficia r ies except a s specified in E RISA a n d it s a ssocia t ed
r egu la t ion s. Th ose r u les, a s discu ssed su pra, per m it spon sor s t o
ch oose t h e con dit ion s, if a n y, u n der wh ich t o per m it pa ym en t s t o
t h ir d pa r t ies a t t h e dir ect ion of pa r t icipa n t s or ben eficia r ies.
Sim ila r ly, t h e Spou sa l Su r vivor Ben efit Ma n da t e lea ves n o
qu est ion t h a t Spou sa l Su r vivor Ben efit P la n s m u st pr ovide t h e
spou sa l ben efit s set for t h in E RISA a n d it s a ssocia t ed r egu la t ion s.
In con t r a st , spon sor s of E RISA pla n s ot h er t h a n Spou sa l Su r vivor
Ben efit P la n s, a s discu ssed su pra, m a y ch oose t h e con dit ion s, if
1139
a n y, u n der wh ich t o per m it (1) ben efit a ssign m en t s,
(2)
pa ym en t s t o t h ir d pa r t ies a t t h e dir ect ion of pa r t icipa n t s or
ben eficia r ies, or (3) t h e a t t a ch m en t of pla n ben efit s .
XVIII.
E RISA P RE VE N TS A STATE LAW CRE DITOR OF A
P OUSAL SURVIVOR BE NE F IT P LAN P ARTICIP ANT OR
BE NE F ICIARY F ROM WRE STING TH E P LAN BE NE F IT
F ROM TH E P ARTICIP ANT OR BE NE F ICIARY
Con gr ess u sed t h e Alien a t ion P r oh ibit ion t o fu r t h er t h e
E RISA dom in a t in g gen er a l pu r pose of pr ot ect in g pla n pa r t icipa n t s
a n d ben eficia r ies by sever ely lim it in g t h e a bilit y of cr edit or s t o
obt a in ben efit s fr om pa r t icipa n t s a n d ben eficia r ies of Spou sa l
Su r vivor Ben efit P la n s. Befor e t h e en a ct m en t of E RISA, st a t e la w
oft en lim it ed t h e a bilit y of cr edit or s t o (1) ga r n ish t h e pen sion
ben efit pa ym en t s t o pa r t icipa n t s a n d ben eficia r ies, or (2) wr est
ben efit dist r ibu t ion s fr om pen sion pla n pa r t icipa n t s or
ben eficia r ies.
Th e E RISA lim it a t ion of ben efit cla im s t o
pa r t icipa n t s a n d ben eficia r ies pr ot ect s E RISA pla n pa r t icipa n t s
a n d ben eficia r ies fr om a n y st a t e la w cla im t h a t a r ises fr om a
pa r t icipa n t ’s or ben eficia r y’s r igh t t o a n E RISA pla n ben efit , i.e., a
cla im wh ich wou ld disa ppea r if t h e pa r t icipa n t or ben eficia r y did
1138. F or pu r poses of t h is pa r a gr a ph , we disr ega r d t h e discu ssion , in fra,
sh owin g h ow t h e P r oh ibit ion pr even t s cr edit or s fr om wr est in g dist r ibu t ed
ben efit s fr om pa r t icipa n t s a n d ben eficia r ies in Spou sa l Su r vivor Ben efit P la n s.
Cf. L ANGBE IN P E NSION L AW , su pra n ot e 13, a t 281-84 (discu ssin g a n d
qu est ion in g t h e wisdom of t h is policy).
1139. S ee Kevin Wiggin s, M ed ical Provid er Claim s: S tan d in g Assign m ents
an d E R IS A Preem ption , 45 J . M ARSH ALL L. R E V. 861, 879-884 (2012)
(discu ssin g wh en h ea lt h pr ovider h a s been a ssign ed a cla im u n der a n E RISA
h ea lt h ca r e r eim bu r sem en t pla n ), R E STATE ME NT (T H IRD ) OF T RUSTS § 58
CMTS . A-A(2) a t 395, 398-99 (2003) (r est r a in t s on a lien a t ion of t r u st in t er est s
a r e gen er a lly va lid) a n d Med. Un iv. H osp. Au t h ./Med. Cen . of Med. Un iv. of
S.C. vs. Ocea n a Resor t s, LLC, 2012 U.S. Dist . LE XIS 27897 (D.S.C. Ma r ch 2,
2012) (a descr ipt ion of t h e r ecen t ca se-la w r e a ssign a bilit y of m edica l cla im s).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
339
n ot h a ve t h e ben efit r igh t , by pr eem pt in g su ch cla im a n t s fr om
depr ivin g t h e pa r t icipa n t or ben eficia r y of pla n ben efit s befor e or
a ft er t h eir dist r ibu t ion . Th e Alien a t ion P r oh ibit ion sim ila r ly
pr ot ect s pa r t icipa n t s a n d ben eficia r ies in Spou sa l Su r vivor Ben efit
P la n s fr om a n y st a t e la w cr edit or cla im s t h a t wou ld ot h er wise
depr ive a pa r t icipa n t or ben eficia r y of pla n ben efit s befor e or a ft er
t h eir dist r ibu t ion .
H owever , pla n t er m s m a y per m it pla n
a dm in ist r a t or s t o follow r evoca ble dir ect ion s of pla n pa r t icipa n t s
a n d ben eficia r ies t o pa y t h eir ben efit s, in wh ole or in pa r t , t o
a n ot h er pa r t y. Aga in , t h er e wou ld h a ve t o be t h e sa m e except ion
for st a t e-la w t a x cla im s t h a t a r ise fr om a pa r t icipa n t 's or
ben eficia r y's r igh t t o a Spou sa l Su r vivor Ben efit P la n ’s ben efit s t o
per m it st a t e-la w t a x cla im s t o be u sed t o wr est t a x a m ou n t s fr om
pa r t icipa n t s or ben eficia r ies. Ot h er wise, t h e st a t es wou ld be
u n a ble t o t a x pa r t icipa n t s a n d ben eficia r ies on t h eir ben efit s,
wh ich , a s discu ssed su pra, is n ot t h e ca se.
Th is br oa d pr ot ect ion is con sist en t wit h t h e st a t u t or y
la n gu a ge, t h e evolu t ion of t h a t la n gu a ge in t h e legisla t ive pr ocess,
sim ila r feder a l pr ot ect ion for ot h er r et ir em en t pa ym en t s, t h e pr e E RISA st a t e la w pr ot ect ion of pen sion ben efit s, t h e r egu la t ion
per t a in in g t o t h e Alien a t ion P r oh ibit ion , a n d h ow t h e Su pr em e
Cou r t in t er pr et s t h e E RISA pr ot ect ion of pla n pa r t icipa n t s a n d
ben eficia r ies.
Never t h eless, m a n y lower cou r t s h a ve issu ed
u n con vin cin g decision s t o t h e con t r a r y.
As discu ssed, su pra, a per son wit h a st a t e la w cla im a r isin g
fr om a pa r t icipa n t ’s or ben eficia r y’s r igh t t o a n E RISA pla n
ben efit , ot h er t h a n a cla im a r isin g u n der a gen er a lly a pplica ble
1140
cr im in a l la w,
m a y n ot com pel t h e pla n t o pa y it su ch ben efit or
wr est t h e ben efit or t h e a m ou n t of t h e ben efit fr om t h e pa r t icipa n t
or ben eficia r y. A st a t e la w cla im a r ises fr om a pa r t icipa n t ’s or
ben eficia r y’s r igh t t o a n E RISA pla n ben efit if su ch cla im wou ld
disa ppea r , if t h e pa r t icipa n t or ben eficia r y h a d n ot obt a in ed t h e
ben efit .
Th e Spou sa l Su r vivor QDRO Ben efit Ma n da t e, a s
discu ssed, su pr a , r equ ir es Spou sa l Su r vivor Ben efit pla n s t o
in cor por a t e QDROs a s pla n ben efit t er m s, a n d t h u s m a k e su ch
st a t e la w cla im a n t s pla n ben eficia r ies. Th e Alien a t ion P r oh ibit ion
pr even t s t h e t er m s of a Spou sa l Su r vivor Ben efit P la n s fr om
per m it t in g defer en ce t o a n y n on -QDRO st a t e la w cla im s ot h er
1141
t h a n t h ose a r isin g u n der a gen er a lly a pplica ble cr im in a l la w.
Th e t er m s of a pla n , ot h er t h a n a Spou sa l Su r vivor Ben efit P la n ,
m a y pr ovide for defer en ce t o a n y st a t e la w cla im by t r ea t in g t h e
cla im a n t a s a pla n ben eficia r y, su ch a s by a u t h or izin g ben efit
1140. E RISA § 514(b)(4), 29 U.S.C. § 1144(b)(4)(2012) (gen er a lly a pplica ble
cr im in a l la ws a r e exclu ded fr om t h e E RISA E xpr ess P r eem pt ion , t h u s, t h ey
m a y over r ide pla n t er m s).
1141. B u t see E RISA § 514(b)(8), 29 U.S.C. § 1144(b)(8) (2012) (st a t e la w
cla im s for Medica id r ecover ies, wh ich a r e exclu ded fr om t h e E RISA E xpr ess
P r eem pt ion , m a y a lso be en for ced).
340
T h e J oh n M arsh all L aw R eview
[47:145
a ssign m en t s, a n d t h er eby elim in a t e a n y pr eem pt ion issu e.
Th e Alien a t ion P r oh ibit ion , a s discu ssed, in fr a , pr ot ect s
pa r t icipa n t s a n d ben eficia r ies in Spou sa l Su r vivor Ben efit P la n s
fr om cla im s n ot a r isin g fr om a pa r t icipa n t ’s or ben eficia r y’s r igh t
t o a ben efit . Th e P r oh ibit ion pr even t s a n y per son com pellin g a
Spou sa l Su r vivor Ben efit P la n t o pa y it t h e ben efit of a pa r t icipa n t
or a ben eficia r y or fr om wr est in g t h e ben efit fr om t h e pa r t icipa n t
or ben eficia r y wit h t h e except ion of a per son wit h a st a t e la w cla im
1142
a r isin g u n der a gen er a lly a pplica ble cr im in a l la w.
A. T h e E volu tion of th e Alien ation Proh ibition in th e Developm en t
of E R IS A Im plies th at Con gress In ten d ed to Preven t a S tate
L aw Cred itor of a Participan t or of a B en eficiary of a S pou sal
S u rvivor B en efit Plan from Wrestin g th e Plan B en efit From th e
Participan t or B en eficiary
Th e Alien a t ion P r oh ibit ion m a de a t lea st t wo m a jor ch a n ges
t o t h e pr e-E RISA la w. F ir st , it r ever sed a lon g-st a n din g feder a l
t a x policy. In 1956, m a n y yea r s befor e Con gr ess con sider ed
E RISA a n d it s pr ecu r sor s, t h e IRS h a d r u led t h a t t a x-qu a lified
pen sion pla n s cou ld per m it t h e cr edit or s of pa r t icipa n t s a n d
ben eficia r ies of su ch pla n s t o a t t a ch t h e pla n in t er est s of su ch
1143
per son s.
Th e t a x qu a lifica t ion cou n t er pa r t of t h e Alien a t ion
P r oh ibit ion t h a t h a s a lwa ys been pa r t of E RISA pr oh ibit s su ch
pr ovision s.
Secon d, it dr a m a t ica lly en h a n ced t h e feder a l
pr ot ect ion s a ga in st t h e a lien a t ion of pen sion ben efit s. In 1968, six
yea r befor e a dopt in g E RISA, Con gr ess h a d lim it ed t h e a bilit y of
cr edit or s t o ga r n ish a per son ’s disposa ble ea r n in gs, wh ich in clu ded
1144
per iodic pen sion pa ym en t s.
H owever , Con gr ess did n ot lim it t h e
ga r n ish m en t of n on -per iodic pen sion pa ym en t s. Th e Alien a t ion
P r oh ibit ion r epla ced t h e wide va r iet y of st a t e la ws t h a t r est r ict ed
t h e t r a n sfer of pen sion ben efit s, bu t a s discu ssed in fr a , oft en
per m it t ed cr edit or s t o a t t a ch or be a ssign ed su ch ben efit s, wit h a
m u ch m or e wide-r a n gin g pr ot ect ion for pa r t icipa n t s a n d
ben eficia r ies of Spou sa l Su r vivor Ben efit P la n s.
Th e pr ecu r sor of t h e Alien a t ion P r oh ibit ion seem ed t o h a ve
fir st a ppea r ed on Ma y 11, 1972, in a bill t h a t Sen a t or s H a r r ison
Willia m s a n d J a cob J a vit s in t r odu ced a n d wa s in clu ded wit h in t h e
1145
vest in g r equ ir em en t s of S. 3598 a s follows:
Sect ion 202(a )(2): th e pen sion ben efits provid ed u n d er th e term s of a
pen sion plan , a n d t h e in t er est in a pr ofit -sh a r in g- r et ir em en t pla n
r efer r ed t o in su bpa r a gr a ph (B) of pa r a gr a ph (1) [vest ed ben efit s of
1142. Id .
1143. Rev. Ru l. 56-432; 1956-2 C.B. 284 r en der ed obsolet e by Rev. Ru l. 8027; 1980-1 C.B. 85.
1144. Con su m er Cr edit P r ot ect ion Act , P u b L. No. 90-321, § 302(a ), 82 St a t .
146 a t 163 (1968).
1145. S. 3598, 92n d Con g. Tit le II —Vest in g a n d F u n din g Requ ir em en t s,
P a r t A—Vest in g Requ ir em en t s, (2d. Sess. 1972).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
341
pr ofit -sh a r in g pla n ] sh all n ot be capable of assign m en t or alien ation
a n d sh a ll n ot con fer u pon a n em ployee, per son a l r epr esen t a t ive, or
depen den t , or a n y ot h er per son , a n y r igh t or in t er est in su ch
pen sion ben efit s or pr ofit -sh a r in g-r et ir em en t pla n , ca pa ble of bein g
a ssign ed or ot h er wise a lien a t ed except t h a t wh er e a pla n fa ils t o
m a ke a ppr opr ia t e pr ovision s t h er efor , t h e Secr et a r y sh a ll, by
r egu la t ion , pr ovide for t h e fin a l disposit ion of pla n ben efit or
in t er est s wh en ben eficia r ies ca n n ot be loca t ed or a scer t a in ed wit h in
1146
a r ea son a ble t im e.
Th e r epor t t h a t a ccom pa n ied t h e bill a s r epor t ed in
Sept em ber of 1972 by t h e Sen a t e Com m it t ee on La bor a n d P u blic
1147
Welfa r e descr ibed it a s follows:
Vest ed plan ben efits acqu ired u n d er th e A ct m ay n ot be assign ed or
alien ated , except t h a t wh er e a pla n fa ils t o m a ke su ch pr ovision , t h e
Secr et a r y sh a ll be r equ ir ed t o pr ovide for fin a l disposit ion of su ch
1148
ben efit s.
H owever , a lt h ou gh , t h e bill r est r ict ion does n ot a ppea r t o
1149
h a ve been lim it ed t o vest ed ben efit s,
su ch a ch a r a ct er iza t ion
con t in u es t o descr ibe t h e sim ila r pr ovision in t h e Sen a t e bill
1150
con sider ed by t h e Con fer en ce Com m it t ee st a ff in 1974.
No ch a n ge wa s m a de t o t h e a lien a t ion pr oh ibit ion wh en it
1151
wa s pr esen t ed on J a n u a r y 4, 1973 a s pa r t of t h e Sen a t e bill S.4.
Th e ou t lin e of t h e m a jor pr ovision s of t h e bill r efer r ed t o t h e
1152
a lien a t ion pr oh ibit ion u sin g t h e sa m e wor ds
t h a t h a d been u sed
in Sen a t e Repor t N o. 92-1150 a n d wer e qu ot ed su pra. Th ose
wor ds wer e a ga in r epea t ed in t h e r epor t issu ed wh en t h e Sen a t e
Com m it t ee on La bor a n d P u blic Welfa r e r epor t ed ou t t h e bill wit h
a m en dm en t s n ot a ffect in g t h e a lien a t ion pr oh ibit ion on Apr il 18,
1153
1973.
On Sept em ber 19, 1973, t h e Sen a t e a ppr oved wit h ou t a n y n a y
vot es H .R. 4200, wh ich h a d a n a m a lga m a t ion of S.4 a n d S.1179
t oget h er wit h t a x pr ovision s per t a in in g t o spou sa l su r vivor
1146. Id. § 202(a )(2) a t 25-26 (em ph a sis a dded).
1147. S. R E P . N O . 92-1150, 92n d Con g., 2d Sess., (1972) (t h e pr ovision
beca m e § 202(a )(4)).
1148. S. R E P . N O . 92-1150, a t 18 (1972) (em ph a sis a dded).
1149. H owever , t h er e is su ch lim it a t ion on t h e pr ot ect ion for t h e ben efit s of a
pr ofit -sh a r in g pla n bu t n ot for t h e ben efit s of ot h er pen sion pla n s. See S. 3598,
§ 202(a )(4) (1972).
1150. Su m m a r y of Differ en ces Bet ween t h e Sen a t e a n d t h e H ou se Ver sion s
of H .R. 2 t o P r ovide for P en sion Refor m , P a r t On e—P a r t icipa t ion Vest in g,
F u n din g, Act u a r ies, J u r isdict ion a n d P or t a bilit y a t 25 (Ma y 15, 1974)
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 5151, 5178.
1151. Ret ir em en t In com e Secu r it y for E m ployees Act , S.4, 93d Con g.
§ 202(a )(4) a t 27 (1st Sess. 1973), reprin ted in E RISA LE G. H ISTORY, su pr a
165, a t 93, 119.
1152. E RISA LE G. H ISTORY, su pra n ot e 165, a t 190, 193.
1153. S. R E P . N O . 93-127, 93r d Con g., 1st Sess., 39 (1973) reprin ted in
E RISA LE G. H ISTORY, su pr a n ot e 165, a t 587, 625.
342
T h e J oh n M arsh all L aw R eview
[47:145
1154
pen sion ben efit s for m em ber s of t h e m ilit a r y.
H owever , in t h a t
bill, t h e a lien a t ion pr oh ibit ion wa s n o lon ger a n in depen den t ly
en for cea ble obliga t ion , bu t on ly t h e followin g sim plified pla n t a x
qu a lifica t ion r equ ir em en t :
A t r u st sh a ll n ot con st it u t e a qu a lified t r u st u n der t h is sect ion
u n less t h e pla n of wh ich su ch t r u st is a pa r t pr ovides t h a t ben efits
provid ed u n d er th e plan m ay n ot be assign ed or alien ated u n less t h e
ben eficia r y t h er eof ca n n ot be loca t ed or a scer t a in ed wit h in su ch
r ea son a ble per iod of t im e a s t h e Secr et a r y or h is delega t e m a y
1155
pr escr ibe by r egu la t ion .
Th is pr ovision r em a in ed u n ch a n ged in t h e H .R. 2 bill
1156
a ppr oved by t h e Sen a t e on Ma r ch 4, 1974
a n d sen t t o t h e
Con fer en ce Com m it t ee. Th e sa m e pr ovision a lso a ppea r ed in t h e
t a x qu a lifica t ion pr ovision s of, H .R. 10470, wh ich wa s in t r odu ced
on Sept em ber 24, 1973 a n d h a d copied a lm ost a ll of H .R. 4200 a s
pa ssed by t h e U.S. Sen a t e on Sept em ber 19, 1973, a n d a s
discu ssed, su pra, wa s a st a r t in g poin t for discu ssion of pen sion
1157
r efor m in t h e H ou se a n d Wa ys Com m it t ee.
Th e followin g da y,
Sept em ber 25, 1973, a r eph r a sin g of t h e or igin a l S.4 pr oposa l
1158
a ppea r ed in H .R. 10489,
wh ich wa s in t r odu ced by t h e r a n k in g
Repu blica n on t h e H ou se Com m it t ee on E du ca t ion a n d La bor , bu t
for wa r ded t o t h e H ou se Wa ys Com m it t ee. As wa s t h e ca se wit h
t h e Sen a t e bill, t h e bill in clu ded t h e followin g in depen den t
obliga t ion , wh ich wa s a m on g t h e bill’s vest in g pr ot ect ion s:
Th e ben efits provid ed u n d er th e term s of a pen sion plan sh all n ot be
capable of assign m en t or alien ation a n d sh a ll n ot con fer u pon a n
em ployee, per son a l r epr esen t a t ive, or depen den t , or a n y ot h er
per son , a n y r igh t , or in t er est in su ch ben efit s, ca pa ble of bein g
a ssign ed or ot h er wise a lien a t ed: except t h a t wh er e a pla n fa ils to
m a ke a ppr opr ia t e pr ovision s t h er efor , t h e Secr et a r y sh a ll, by
r egu la t ion , pr ovide for t h e fin a l disposition of pla n ben efit s or
in t er est s wh en ben eficia r ies ca n n ot be loca t ed or a scer t a in ed wit h in
1159
a r ea son a ble t im e.
Th is bill wa s n ever r epor t ed ou t of t h e H ou se Wa ys a n d
Mea n s Com m it t ee, bu t a s discu ssed, in fra, sim ila r pr ovision s
a ppea r ed in t h e bill r epor t ed ou t by t h e H ou se Com m it t ee on
E du ca t ion a n d La bor .
On F ebr u a r y 5, 1974, H ou se Wa ys a n d Mea n s r epor t ed ou t
1154. E RISA LE G. H ISTORY, su pra n ot e 162, a t 1881-82. See gen er a lly
E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 212-16.
1155. H .R. 4200, 93d Con g., § 261(a ) (1st Sess. 1973) reprin ted in E RISA
LE G. H ISTORY, su pra n ot e 165, a t 1947 (em ph a sis a dded).
1156. Ret ir em en t In com e Secu r it y for E m ployee Act , H .R. 2, 93d Con g.
§ 261(a ) (2d Sess. 1974), E RISA LE G. H ISTORY, su pra n ot e 165, a t 3664.
1157. E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 224.
1158. H .R. 10489, 93d Con g. (1st Sess. 1973).
1159. E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 75 (em ph a sis a dded).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
1160
H .R. 12481,
r equ ir em en t :
343
wh ich con t a in ed t h e followin g t a x-qu a lifica t ion
A t r u st sh a ll n ot con st it u t e a qu a lified t r u st u n der t h is sect ion
u n less t h e pla n of wh ich su ch t r u st is a pa r t pr ovides t h a t ben efits
provid ed u n d er th e plan m ay n ot be assign ed or alien ated . F or
pu r poses of t h e pr ecedin g sen t en ce, t h er e sh a ll n ot be t a ken in t o
a ccou n t a n y volu n t a r y a n d r evoca ble a ssign m en t of n ot t o exceed 10
per cen t of a n y ben efit pa ym en t for t h e pu r pose of pa yin g pr em iu m s
on life, m edica l, or h ospit a l in su r a n ce or for a n y n on com m er cia l a nd
n on pr ofit pu r pose specified u n der r egu la t ion s pr escr ibed by t h e
1161
Secr et a r y or h is delega t e.
Th e on ly differ en ce fr om t h e cor r espon din g Sen a t e bill
pr ovision is t h e in clu sion of a n except ion for sm a ll volu n t a r y a n d
r evoca ble a ssign m en t s r a t h er t h a n for disposit ion s of ben efit s of
m issin g pa r t icipa n t s or ben eficia r ies.
Th e fir st descr ipt ion of t h e pu r pose of t h e pr oh ibit ion a ppea r s
in t h e H ou se r epor t t h a t a ccom pa n ied H .R. 12481.
Th is
expla n a t ion wa s pa r t of t h e expla n a t ion of t h e vest in g pr ovision s
of t h e bill, a n d followed t h e expla n a t ion of t h e pr ovision r equ ir in g
t h a t ben efit s n ot be r edu ced on pla n m er ger s. In pa r t icu la r , t h e
pr oh ibit ion is “[t ]o fu r t h er in su r e t h a t t h e em ployee’s a ccr u ed
1162
ben efit is a ct u a lly a va ila ble t o r et ir em en t pu r poses.”
Mor eover ,
t h e r epor t descr ibes t h e 10% except ion a s in t en ded t o r ein for ce
t h is pu r pose a s follows:
Never t h eless, a pla n will be per m it t ed t o pr ovide for volu n tary an d
revocable assign m en ts (n ot t o exceed 10 per cen t of a n y ben efit
pa ym en t ) for t h e pu r pose of pa yin g pr em iu m s on h is life in su r a n ce,
on m edica l or h ospit a l in sur a n ce, or for a n y n on com m er cia l a n d
n on pr ofit pu r poses specified u n der Tr ea su r y r egu la t ion s. You r
com m it t ee u n der st a n ds t h a t m a n y pla n s pr ovide for pa ym en t s of
pr em iu m s for su pplem en t a l h ospit a l ben efit s (u n der t h e Socia l
Secu r it y Act ) a n d t h is pr ovision is in t en ded t o specifica lly per m it
su ch a n a lien a t ion . You r com m it t ee dea lt specifica lly wit h life,
m edica l, a n d h ospit a l in su r a n ce pr em iu m s beca u se su ch pr em iu m s
a r e in m a n y ca ses a lr ea dy pa id by pla n s ou t of pen sion ben efit s for
t h e con ven ien ce of t h e pla n r et ir ees. You r com m it t ee det er m in ed t o
per m it r ea son a ble flexibilit y t o ext en d t h is pr a ct ice t o ot h er t ypes of
pa ym en t s in t h e fu t u r e, con clu din g t h a t th e safegu ard s (r evoca bilit y,
10-per cen t lim it , a n d Tr ea su r y r egu la t ion s) w ou ld be su fficien t to
preven t abu ses w h ich m igh t en d an ger th e righ t of fu tu re retirees to
1163
be secu re in th eir retirem en t in com es.
st
1160. H .R. 12481, 93d Con g. (1 Sess. 1973) reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 2394-2583.
1161. H .R. 12481, 93d Con g. § 1021(c) a t 77-78 (2d Sess. 1974) reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 2394, 2470-71 (em ph a sis a dded).
1162. P r iva t e P en sion Ta x Refor m , H . R E P . N O . 93-779 a t 66 (2d Sess. 1974)
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 2584, 2655.
1163. P r iva t e P en sion Ta x Refor m , H . R E P . No. 93-779 a t 67 (1974) reprin ted
in E RISA LE G. H ISTORY, supra n ot e 165, a t 2584, 2656 (em ph a sis a dded)
344
T h e J oh n M arsh all L aw R eview
[47:145
Th er e wa s n o in dica t ion t h a t t h e pu r pose of t h e pr oh ibit ion
wa s t o per m it a pla n a dm in ist r a t or t o get r id of ben efit s, wh ich a r e
du e a n d pa ya ble, sim ply by pa yin g t h em over t o t h e pa r t icipa n t or
ben eficia r y en t it led t o t h ose ben efit s, a n d t h er eby pr ot ect su ch
per son fr om bein g h a r a ssed or obst r u ct ed by t h e im posit ion of a
du t y t o det er m in e a t h is per il t h e va lidit y of a ssign m en t s, t h ir d
pa r t y or der s, execu t ion s or a n y k in d of docu m en t pu r por t in g t o
con st it u t e lega l pr ocess.
On F ebr u a r y 21, 1974, t h e Wa ys a n d Mea n s Com m it t ee
com m it t ed t o t h e H ou se a su bst it u t e, H .R. 12855, a s discu ssed,
su pra.
Th e r epor t t h a t a ccom pa n ied t h e bill, like t h e on e
a ccom pa n yin g H .R. 12481, a lso descr ibed t h e pu r pose of t h e
pr oh ibit ion a s “[t ]o fu r t h er in su r e t h a t t h e em ployee’s a ccr u ed
1164
ben efit is a ct u a lly a va ila ble t o r et ir em en t pu r poses.”
Th is bill
sim plified t h e 10% except ion by om it t in g t h e la n gu a ge lim it in g t h e
1165
u se of t h e volu n t a r ily a ssign ed pen sion ben efit .
Th e H ou se E du ca t ion a n d La bor Com m it t ee t ook a differ en t
a ppr oa ch . On F ebr u a r y 13, 1974, Repr esen t a t ive J oh n Den t
1166
in t r odu ced H .R. 12781,
wh ich wa s r efer r ed t o t h e H ou se
Com m it t ee on E du ca t ion a n d La bor . Lik e H .R. 10489 discu ssed
1167
su pra, t h e vest in g pa r t
r equ ir ed pen sion pla n s t o pr oh ibit
a ssign m en t s, a lbeit in t h is ca se in t h e sect ion gover n in g t h e
1168
dist r ibu t ion of ben efit s.
In pa r t icu la r , t h e sect ion pr ovided t h a t :
Sect ion 204(d). E a ch pen sion pla n t o wh ich t h is pa r t [th e vest in g
r equ ir em en t s for pen sion pla n s] or pa r t I of t h is su bt it le [t h e
fidu cia r y r espon sibilit y r equ ir em en t s for a ll pla n s] a pplies sha ll
pr ovide t h a t ben efits provid ed u n d er th e plan m ay n ot be assign ed or
alien ated . F or pu r poses of t h e pr ecedin g sen t en ce, t h er e sh a ll n ot be
t a ken in t o a ccou n t a n y volu n t a r y a n d r evoca ble a ssignm en t of n ot t o
1169
exceed 10 per cen t of a n y ben efit pa ym en t .
Alt h ou gh qu it e sim ila r t o t h e pr ovision in t h e fin a l H ou se
Wa ys a n d Mea n s pr oposed bill, H .R. 12855, it differ s in t wo
su bst a n t ia l m a n n er s. F ir st , it is u n a ffect ed by wh et h er t h e pen sion
pla n is t a x-qu a lified. Secon d, a pa r t icipa n t h a s t h e r igh t t o
pr even t t h e a ssign m en t or a lien a t ion , wh ich is n ot t h e ca se if t h e
(om it t in g a discu ssion a t t h e en d descr ibin g t h e pr ovision per m it t in g pla n
ben efit s t o be u sed t o secu r e loa n s) reprin ted in E RISA LE G. H ISTORY, su pra
n ot e 165, a t 2584, 2656 (em ph a sis a dded) (discu ssin g a t t h e en d t h e pr ovision
per m it t in g pla n ben efit s t o be u sed t o secu r e loa n s).
1164. P r iva t e P en sion Ta x Refor m , H .R. R E P . N O . 93-807 a t 68 (2d Sess.
1974) reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 3115, 3188.
1165. H .R. 12855, 93d Con g. § 1021(c) a t 79 (2d Sess. 1974) reprin ted in
E RISA LE G. H ISTORY, su pra n ot e 165, a t 2924, 3002.
1166. H .R. 12781, 93d Con g. (2d Sess. 1974).
1167. Id . a t P a r t 2 of Su bt it le B-Th e Regu la t or y P r ovision s of Tit le I RE GULATION OF E MP LOYE E BE NE F IT P LANS, i.e., t h e bill sect ion s wit h
n u m ber s in t h e 200s.
1168. Id . a t Sec 204(d).
1169. Id .
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
345
pr oh ibit ion is a r equ ir em en t for t a x qu a lifica t ion .
On F ebr u a r y 20, 1974, Repr esen t a t ive J oh n Den t in t r odu ced
a n d su bm it t ed t o t h e H ou se Com m it t ee on E du ca t ion a n d La bor ,
1170
1171
H .R. 12906,
wh ich a s discu ssed su pra, r epla ced H .R. 12781,
a n d wa s pr esen t ed t o t h e wh ole H ou se in t h e sa m e m a n n er a s
H .R. 12855 wa s pr esen t ed by t h e Wa ys a n d Mea n s Com m it t ee. In
t h is r evision t h e su bst a n t ive r equ ir em en t pr oh ibit in g t h e
a lien a t ion of ben efit s wa s m oved in a n u n ch a n ged for m t o t h e
1172
sect ion set t in g for t h fidu cia r y r espon sibilit ies.
Repr esen t a t ive
Ca r l P er kin s pr esen t ed a su m m a r y of t h e bill t o t h e H ou se on
1173
F ebr u a r y 25, 1974.
Repr esen t a t ive P er kin s did n ot expla in wh y
t h e pr ovision wa s m oved a wa y fr om t h e vest in g sect ion bu t
descr ibed t h e pu r pose a n d su bst a n ce of t h e pr ovision a s follows:
T o fu rth er in su re th at th e em ployee’s accru ed ben efits are actu ally
available for retirem en t pu rposes, t h e com m it t ee bill a lso con t a in s a
pr ovision r equ ir in g t h a t pla n t o pr ovide t h a t ben efits m ay n ot be
assign ed or alien ated . (Of cou r se, t h is pr ovision is n ot in t en ded t o
pr even t t r a n sfer of ben efit r igh t s fr om on e qu a lified pla n t o
a n ot h er .)
Never t h eless, a pla n will be per m it t ed t o pr ovide for volu n t a r y a n d
r evoca ble a ssign m en t s (n ot t o exceed 10 per cen t of a n y ben efit
pa ym en t ).
You r com m it t ee u n der st a n ds t h a t m a n y pla n s pr ovide for pa ym en t s
of pr em iu m s for su pplem en t a l h ospit a l ben efit s (u n der t h e Socia l
Secu r it y Act ) a n d t h is pr ovision is in t en ded t o specifica lly per m it
su ch a n a lien a tion .
You r com m it t ee det er m in ed t o per m it
r ea son a ble flexibilit y t o ext en d t h is pr a ct ice t o ot h er t ypes of
pa ym en t s in t h e fu t u r e, con clu din g t h a t t h e sa fegu a r ds
(r evoca bilit y,10% lim it , a n d r egu la t ion s) wou ld ‘be su fficien t t o
pr even t a bu ses, w h ich m igh t en d an ger th e righ t of fu tu re retirees to
1174
be secu re in th eir retirem en t in com e.
Th is is qu it e sim ila r t o t h e descr ipt ion of t h e sim ila r t a x
qu a lifica t ion pr ovision in t h e H ou se r epor t t h a t a ccom pa n ied H .R.
12481 discu ssed, su pra. Aga in , t h er e wa s n o in dica t ion t h a t t h e
pu r pose of t h e pr oh ibit ion wa s t o per m it a pla n a dm in ist r a t or t o
get r id of ben efit s, wh ich a r e du e a n d pa ya ble, sim ply by pa yin g
t h em over t o t h e pa r t icipa n t or ben eficia r y en t it led t o t h ose
ben efit s, a n d t h er eby pr ot ect su ch per son fr om bein g h a r a ssed or
1170. E m ployee Ben efit Secu r it y Act , H .R. 12906, 93d Con g. (2d Sess. (1974)
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 2761-2923.
1171. E RISA P OLITICAL H ISTORY, su pra n ot e 164, a t 237.
1172. E m ployee Ben efit Secu r it y Act , H .R. 12906, 93d Con g. § 111(I) a t 59
(2d Sess. 1974) reprin ted in ERISA LE G. H ISTORY, su pra n ot e 165, a t 2761,
2819.
1173. 120 C ON G . R E C . 3977-4001 (F eb 25, 1974), reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 3293-3350.
1174. E RISA LE G. H ISTORY, supra n ot e 165, a t 3332 (om it t in g t h e
discu ssion a t t h e en d a bou t per m it t in g pla n ben efit s t o secu r e pla n loa n s).
346
T h e J oh n M arsh all L aw R eview
[47:145
obst r u ct ed by t h e im posit ion of a du t y t o det er m in e a t h is per il t h e
va lidit y of a ssign m en t s, t h ir d pa r t y or der s, execu t ion s or a n y kin d
of docu m en t pu r por t in g t o con st it u t e lega l pr ocess.
Th e H .R. 2 bill, wh ich wa s a ppr oved by t h e H ou se a n d sen t t o
1175
t h e Con fer en ce Com m it t ee on F ebr u a r y 28, 1974
in clu ded bot h
a ppr oa ch es, t h e su bst a n t ive pr oh ibit ion in Tit le I a n d t h e t a x
1176
qu a lifica t ion pr oh ibit ion in Tit le II a s discu ssed, su pra.
Th e
Adm in ist r a t ion in it s com m en t s t o t h e Con fer en ce Com m it t ee, a s
discu ssed, su pra, expr essed n o view wit h r espect t o t h e differ en t
a ppr oa ch es t o t h e a lien a t ion pr oh ibit ion wit h in t h e H ou se bill or
bet ween t h ose a ppr oa ch es a n d t h e Sen a t e’s t a x-qu a lifica t ion
a ppr oa ch wit h n o 10% except ion .
Th e Com m it t ee st a ff a s
discu ssed, su pra, r ecom m en ded a ccept a n ce of t h e 10% volu n t a r y
1177
pa ym en t except ion t o t h e a lien a t ion pr oh ibit ion .
1178
Th e Con fer en ce Com m it t ee pr oposed la n gu a ge,
wh ich it
descr ibed a ft er a descr ipt ion of t h e spou sa l su r vivor pen sion
pr ovision s a s follows:
Un der t h e con fer en ce su bst it u t e, a plan m u st provid e th at ben efits
u n d er th e plan m ay n ot be assign ed or alien ated . H owever , t h e pla n
m a y pr ovide t h a t a ft er a ben efit is in pa y st a t u s, t h er e m a y be a
volu n t a r y r evoca ble a ssignm en t (n ot t o exceed 10 per cen t of a n y
ben efit pa ym en t ) by a n em ployee wh ich is n ot for pu r poses of
defr a yin g t h e a dm in ist r a t ive cost s of t h e pla n . F or pu r poses of t h is
r u le, a ga r n ish m en t or levy is n ot t o be con sider ed a volu n t a r y
a ssign m en t . Vest ed ben efit s m a y be u sed a s colla t er a l for r ea son a ble
loa n s fr om a pla n , wh er e t h e fidu cia r y r equ ir em en t s of t h e la w a r e
1179
n ot viola t ed.
Th er e wa s n o m en t ion of t h e pr oh ibit ion in t h e floor
discu ssion for eit h er t h e H ou se or t h e Sen a t e.
Con gr ess a ccept ed t h e Con fer en ce Com m it t ee’s r ecom m en ded
la n gu a ge for t h e su bst a n t ive r equ ir em en t in P a r t 2 —P a r t icipa t ion
of Su bt it le B—Regu la t or y P r ovision s of Tit le I —P r ot ect ion of
E m ployee Righ t s of E RISA. Th e la n gu a ge follows:
Sect ion 206(d)(1): E ach pen sion plan sh all provid e th at ben efits
provid ed u n d er th e plan m ay n ot be assign ed or alien ated .
(2) F or t h e pu r poses of pa r a gr a ph (1) of t h is su bsect ion , t h er e sh a ll
1175. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. (2d Sess. 1974)
reprin ted in E RISA LE G. H ISTORY, su pra n ot e 165, a t 3898-4250.
1176. E m ployee Ben efit Secu r it y Act , H .R. 2, 93d Con g. §§ 111(I), 1021(c) (2d
Sess. 1974) reprin ted in E RISA LE G. H ISTORY, su pra n ot e165, a t 3898, 3956,
4136.
1177. Su m m a r y of Differ en ces, P a r t I a t 25-26 reprin ted in E RISA LE G.
H ISTORY, su pra n ot e 165, a t 5151, 5178-79.
1178. E RISA Con fer en ce Repor t a t 45 reprin ted in E RISA LE G. H ISTORY,
su pra n ot e 165, a t 4277, 4320 (em ph a sis a dded).
1179. E RISA Con fer en ce Repor t a t 280 reprin ted in E RISA LE G. HISTORY,
su pra n ot e 165, a t 4277, 4547 (em ph a sis a dded) (om it t in g a foot n ot e a bou t t h e
effect ive da t e).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
347
n ot be t a ken in t o a ccou n t a n y volu n t a r y a n d r evoca ble a ssign m ent
of n ot t o exceed 10 per cen t of a n y ben efit pa ym en t , or of a n y
ir r evoca ble a ssignm en t or a lien a t ion of ben efit s execu t ed befor e t h e
da t e of en a ct m en t of t h is Act . Th e pr ecedin g sen t en ce sh a ll n ot
a pply t o a n y a ssign m en t or a lien a tion m a de for t h e pu r poses of
defr a yin g pla n a dm in ist r a t ion cost s. F or pu r poses of t h is pa r a gr a ph
a loa n m a de t o a pa r t icipa n t or ben eficia r y sh a ll n ot be t r ea t ed a s a n
a ssign m en t or a lien a t ion if su ch loa n is secu r ed by t h e pa r t icipa n t ’s
a ccr u ed n on for feit a ble ben efit a n d is exem pt fr om t h e t a x im posed
by sect ion .4975 (r ela t in g to t a x on pr oh ibit ed t r a n sa ct ion s) by
1180
r ea son of sect ion 4975(d)(1).
Th e st a t u t e a n d it s pr ecu r sor s con sist en t ly u se t h e ph r a se
“ben efit pa ym en t ” in t h e on ly except ion t o t h e pr oh ibit ion , wh ich
a pplies t o t h e m or e gen er a l t er m “ben efit s.” Th is dist in ct ion
su ggest s t h a t Con gr ess m a y h a ve in t en ded t h a t t h e pr oh ibit ion
a pplies n ot on ly t o ben efit pa ym en t s by t h e pla n , bu t t o t h e ben efit
dist r ibu t ion s t h a t h a ve been r eceived by a pla n pa r t icipa n t or
ben eficia r y of a Spou sa l Su r vivor Ben efit P la n .
P ost -dist r ibu t ion pr ot ect ion is fu r t h er su ppor t ed by t h e
Con gr ession a l r epor t s, wh ich u sed iden t ica l wor ds t o descr ibe t h e
Alien a t ion P r oh ibit ion a n d t h e sim ila r t a x qu a lifica t ion pr ovision
wh ich wer e bot h in cor por a t ed in t o E RISA. Th ose r epor t s descr ibe
t h e pr oh ibit ion a s in t en ded t o “in su r e [t h a t ]t t o t h e em ployee’s
accru ed ben efit is actu ally available to retirem en t pu rposes .” Th is
wou ld be m ea n in gless in su r a n ce if E RISA m er ely pr even t s a
cr edit or fr om obt a in in g t h e ben efit fr om t h e pla n a dm in ist r a t or .
In su ch ca se, t h e ben efit pa ym en t , wh ich is a lm ost a lwa ys
deposit ed in t o a n a ccou n t in t h e n a m e of t h e pa r t icipa n t or
ben eficia r y wit h a n Am er ica n fin a n cia l in st it u t ion , cou ld be
im m edia t ely ga r n ish ed by t h e cr edit or . Th u s, t h e pa r t icipa n t or
ben eficia r y wou ld be pr even t ed fr om u sin g su ch ben efit s for
r et ir em en t pu r poses.
F in a lly, t h er e is n ot a scin t illa of eviden ce t h a t Con gr ess
in clu ded t h e pr oh ibit ion t o per m it a pla n a dm in ist r a t or t o get r id
of ben efit s, wh ich a r e du e a n d pa ya ble, sim ply by pa yin g t h em
over t o t h e pa r t icipa n t or ben eficia r y en t it led t o t h ose ben efit s,
a n d t h er eby pr ot ect su ch per son fr om bein g h a r a ssed or obst r u ct ed
by t h e im posit ion of a du t y t o det er m in e a t h is per il t h e va lidit y of
a ssign m en t s, t h ir d pa r t y or der s, execu t ion s or a n y kin d of
docu m en t pu r por t in g t o con st it u t e lega l pr ocess.
Th u s, t h er e seem s n o logica l ba sis for den yin g t h e obviou s
con clu sion t h a t Con gr ess in t en ded t o pr ot ect p a r t icipa n t s a n d
ben eficia r ies in Spou sa l Su r vivor Ben efit P la n s wit h t h e
Alien a t ion P r oh ibit ion . Nor is t h er e a n y r ea son t o believe t h a t
Con gr ess wou ld h a ve in t en ded t o pr ovide t h e m ea n in gless
pr ot ect ion t h a t wou ld r esu lt fr om n ot pr ot ect in g dist r ibu t ed
1180. P u b. L. No. 93-406, § 206(d)(1), 88 St a t 829, 864-65 (1974) (em ph a sis
a dded).
348
T h e J oh n M arsh all L aw R eview
[47:145
ben efit s.
B . J u stice Card ozo’s An alysis of th e Alien ation Proh ibition
Provision s of th e N ew Y ork Work ers Com pen sation L aw
R egu lation Im plies th at th e E R IS A Alien ation Proh ibition
Preven ts a S tate L aw Cred itor of a Participan t or of a
ben eficiary of a S pou sal S u rvivor B en efit Plan from Wrestin g
th e Plan B en efit From th e Participan t or B en eficiary
J u st ice Ben ja m in Ca r dozo’s a n a lysis of t h e pu r pose of t h e
a lien a t ion pr oh ibit ion of t h e New Yor k wor ker s com pen sa t ion la w
m a y be a pplied m u tatis m u tan d is t o sh ow t h a t t h e Alien a t ion
P r oh ibit ion pr ot ect s pa r t icipa n t s a n d ben eficia r ies in Spou sa l
Su r vivor Ben efit P la n s fr om t h eir cr edit or s or ot h er s t r yin g t o
a lien a t e t h eir ben efit s befor e a n d a ft er t h e pa ym en t of t h eir pla n
ben efit s. In pa r t icu la r , J u st ice Ca r dozo r elied on t h e pu r pose of
wor k er s com pen sa t ion ben efit s t o con clu de in 1928 in t h e m a jor it y
1181
opin ion of S u race v. Dan n a,
t h a t a cr edit or cou ld n ot wr est t h e
ben efit pa ym en t s fr om a for m er wor k er u n der a st a t u t e pr ot ect in g
“ben efit s du e u n der t h is [wor ker s com pen s a t ion ] ch a pt er ” fr om
1182
cr edit or s.
In t h is ca se, t h e cr edit or obt a in ed a ju dgm en t a ft er
t h e wor ker r eceived t h e pa ym en t of a lu m p su m a wa r d of wor k er s
1183
com pen sa t ion .
Th e dissen t cit ed a Su pr em e Cou r t decision per t a in in g t o
1184
vet er a n s’ ben efit s, M cIn tosh v. Au brey,
for t h e pr oposit ion t h a t
t h e cr edit or s cou ld wr est a wa y t h e wor k er s com pen sa t ion ben efit
pa ym en t s. H owever , t h e vet er a n s’ ben efit st a t u t e a t issu e t h er ein
pr oh ibit ed t h e a t t a ch m en t of t h e “t h e su m of m on ey
du e, . . . wh et h er t h e sa m e r em a in s wit h t h e P en sion Office, or a n y
officer or a gen t t h er eof, or is in cou r se of t r a n sm ission t o t h e
1185
pen sion er en t it led t h er et o.”
J u st ice Ca r dozo ea sily
dist in gu ish ed t h e vet er a n ’s st a t u t e a t t a ch m en t pr oh ibit ion a s
1186
in t en ded t o be lim it ed t o t h e gover n m en t pa ym en t of t h e ben efit .
J u st ice Ca r dozo’s m a jor it y opin ion r eject ed t h e dissen t ’s
1187
a r gu m en t
t h a t t h e pu r pose of t h e exem pt ion wa s t o
d irect[] a m od e of proced u re by w h ich th e S tate or th e em ployer m ay
be en abled to get rid of com pen sation , w h ich is d u e an d paya ble,
sim ply by payin g it over to th e person to w h om it h as been aw ard ed
or to w h om it is payable u n d er th e statu te. Th e a gen t , pu blic or
pr iva t e, wh o m a kes t h e disbu r sem en t sh a ll n ot be h a r a ssed or
obst r u ct ed by t h e im posit ion of a du t y t o det er m in e a t h is per il t h e
va lidit y of a ssign m en t s, t h ir d pa r t y or der s, execu t ion s or a n y kin d of
1181. Su r a ce v. Da n n a , 161 N.E . 315 (N.Y. 1928).
1182. Id . a t 317.
1183. Id . a t 315.
1184. McIn t osh v. Au br ey, 185 U.S. 122 (1902).
1185. Id . a t 124.
1186. S u race, 161 N.E . a t 317.
1187. Id . a t 318.
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docu m en t pu r por t in g t o con st it u t e lega l pr ocess.
349
1188
J u st ice Ca r dozo t h en decla r ed in wor ds a pplica ble t o t h e
Alien a t ion P r oh ibit ion , wh ose pu r pose is t o secu r e pen sion in com e
in a st a t u t e wh ose dom in a t in g gen er a l pu r pose is t h e pr ot ect ion of
pla n pa r t icipa n t s a n d ben eficia r ies:
S o n arrow a con stru ction th w arts th e pu rpose of th e statu te. Th e
Wor km en ’s Com pen sa t ion La w wa s fr a m ed t o su pply a n in ju r ed
wor km a n wit h a su bst it u t e for wa ges du r in g t h e wh ole or a t lea st a
pa r t of t h e t er m of disa bilit y. H e wa s t o be sa ved fr om becom in g on e
of t h e der elict s of societ y, a fr a gm en t of h u m a n wr ecka ge. . . .
T h e [cred itor claim ] exem ption m u st h ave a m ean in g con sisten t w ith
th e policy beh in d it. F ew wor ds a r e so pla in t ha t t h e con t ext or t h e
occa sion is wit h ou t ca pa cit y t o en la r ge or n a r r ow t h eir ext en sion .
Th e t h ou gh t beh in d t h e ph r a se pr ocla im s it self m isr ea d wh en t h e
ou t com e of t h e r ea din g is inju st ice or a bsu r dit y. Adh er en ce t o t h e
let t er will n ot be su ffer ed t o “defea t t h e gen er a l pu r pose a n d
m a n ifest policy in t en ded t o be pr om ot ed”. . . .
. . . At t h e r oot of t h e exem pt ion is som et h in g m or e ben ign a n t t h a n
bu r ea u cr a t ic for m a lism , a dislike of com plica t in g docu m en t s. T h e
1189
exem ption lik e th e com pen sation is for th e protection of th e m an .
J u st ice Ca r dozo obser ved t h a t a con t r a r y in t er pr et a t ion
r en der s t h e exem pt ion “n ext t o fu t ile” beca u se a cr edit or m a y
ea sily en for ce cla im s im m edia t ely a ft er t h e ben efit pa ym en t s a r e
1190
m a de.
J u st ice Ca r dozo a lso r efer r ed t o a n ea r lier h oldin g of t h e
1191
New Yor k Cou r t of Appea ls.
In 1890, t h a t cou r t u sed t h e sa m e
1192
r ea son in g t o h old, in Ya t es Cou n t y Na t ion a l Ba n k v. Ca r pen t er ,
t h a t a n exem pt ion fr om execu t ion for vet er a n ’s pen sion s a pplied t o
1193
t h e vet er a n ’s h om e pu r ch a sed wit h su ch pa ym en t s.
An In dia n a feder a l dist r ict cou r t , h owever , r ea ch ed a n
1194
opposit e con clu sion in 1998 in In re Weaver,
wit h r espect t o
In dia n a wor ker s com pen sa t ion pa ym en t s beca u se of (1) t h a t
st a t u t e’s focu s on t h e du t y of t h e em ployer t o m a ke su ch
pa ym en t s, a n d (2) t h e st a t e ca se-la w r equ ir em en t s of explicit
pr ot ect ion s for pa ym en t s t o be exem pt ed fr om t h e en for cem en t of
1195
cr edit or cla im s.
Th e In dia n a cou r t m a de n o r efer en ce t o S u race,
bu t m a de a McIn t osh -lik e obser va t ion , wit h ou t cit in g t h a t
decision , t h a t a n em ployer ’s com pen sa t ion obliga t ion cea sed
1188. Id . a t 317-18 (em ph a sis a dded).
1189. Id . a t 315-16 (cit a t ion s om it t ed) (em ph a sis a dded).
1190. Id . a t 315.
1191. Id . a t 317.
1192. Ya t es Cou n t y Na t ion a l Ba n k v. Ca r pen t er , 23 N.E . 1108 (N.Y. 1980).
1193. Id . a t 1109. Th e cou r t a lso decla r ed t h a t t h e exem pt ion wou ld cea se if
t h e pr oceeds wer e u sed for “t r a de, com m er ce, or specu la t ion , a n d becom e
m in gled wit h ot h er fu n ds so a s t o be in ca pa ble of iden t ifica t ion , or sepa r a t ion .”
Id .
1194. In r e Wea ver , 93 B.R. 172 (D. In d. 1988).
1195. Id . a t 174-75.
350
T h e J oh n M arsh all L aw R eview
followin g it s com pen sa t ion pa ym en t s .
[47:145
1196
C. T h e Alien ation Proh ibition R egu lation is Con sisten t w ith th e
Alien ation Proh ibition Preven tin g a S tate L aw Cred itor of a
Participan t or of a B en eficiary of a S pou sal S u rvivor B en efit
Plan From Wrestin g th e Plan B en efit From th e Participan t or
B en eficiary
Th er e a r e n o DOL r egu la t ion s on t h e Alien a t ion P r oh ibit ion ,
bu t t h er e is a Tr ea su r y r egu la t ion on t h e cor r espon din g t a x
qu a lifica t ion sect ion . Alt h ou gh , t h e Tr ea su r y decided n ot t o
a ddr ess a n y pr eem pt ion issu es t h er ein , t h e Tr ea su r y view of t h e
wide-r a n gin g effect of t h e sim ila r t a x qu a lifica t ion pr ovision s
design ed t o pr ot ect pa r t icipa n t s a n d ben eficia r ies of Spou sa l
Su r vivor Ben efit P la n s im plies t h a t t h e Alien a t ion P r oh ibit ion
pr even t s cr edit or s or ot h er s t r yin g t o a lien a t e t h ose ben efit s fr om
wr est in g ben efit pa ym en t s fr om su ch pa r t icipa n t s or ben efit s. If
n ot , t h ose wide-r a n gin g E RISA pr ot ect ion s wou ld be r en der ed
n u ga t or y except for t h ose few pen sion er s, wh o cou ld fr u st r a t e t h eir
cr edit or s by n ot deposit in g t h eir r et ir em en t in com e in a ccou n t s in
1197
t h eir n a m e wit h Am er ica n fin a n cia l in st it u t ion s.
In F ebr u a r y 1978, t h e Depa r t m en t of Tr ea su r y issu ed
Tr ea su r y Regu la t ion § 1.401(a )-13 per t a in in g t o t h e t a x1198
qu a lifica t ion pr ovision sim ila r t o t h e Alien a t ion P r oh ibit ion .
Th e Tr ea su r y r egu la t ion s descr ibed t h e st a t u t or y pr oh ibit ion for
t h e a lien a t ion a n d a ssign m en t of ben efit s a s follows:
Gen er a l r u le. Un der sect ion 401(a )(13) [26 U.S.C. § 401(a )(13)], a
t r u st will n ot be qu a lified u n less t h e pla n of wh ich t h e t r u st is a pa r t
pr ovides t h a t ben efit s pr ovided u n der t h e pla n m a y n ot be
a n t icipa t ed, a ssign ed (eit h er a t la w or in equ it y), a lien a t ed or
su bject t o a t t a ch m en t , ga r n ish m en t , levy, execu t ion or ot h er lega l or
1199
equ it a ble pr ocess.
Alt h ou gh t h e Tr ea su r y r egu la t ion does n ot defin e t h e
1196. Id .
1197. Su sa n Bu r h ou se a n d Ya zm in Osa ki, F DIC Na t ion a l Su r vey of
Un ba n ked a n d Un der ba n ked H ou seh olds 3 (Sept em ber 2012) available at
h t t p://www.fdic.gov/h ou seh oldsu r vey/2012_u n ba n kedr epor t _execsu m m .pdf
(la st visit ed J a n . 30, 2014) (descr ibin g t h a t in Sept em ber of 2012 t h e F eder a l
Deposit In su r a n ce Cor por a t ion det er m in ed t h a t 8.2 per cen t of h ou seh olds h a d
n o ch eckin g or sa vin gs a ccou n t ).
1198. 43 F ed. Reg. 6943-44 (F eb. 17, 1978). Th e fin a l r egu la t ion s a dded,
wit h ou t expla n a t ion or st a t u t or y ba sis, a pr ovision , Tr ea s. Reg.§ 1.401(a )-13(e)
(a m en ded 1988), per m it t in g a pa r t icipa n t or ben eficia r y t o dir ect in a
r evoca ble fa sh ion t h a t a ll or pa r t of h is ben efit pa ym en t s be m a de t o a n ot h er
per son . Cf. In it ia l dr a ft a t 41 F ed. Reg. 56334 (Dec. 28, 1976). As discu ssed,
in fr a , spen dt h r ift t r u st s cou ld per m it su ch dir ect ed pa ym en t s, bu t it a ppea r s
t h a t Con gr ess wish ed t o lim it su ch dir ect ed pa ym en t s t o a t m ost 10% of t h e
ben efit pa ym en t . S ee E RISA § 206(d)(2), 29 U.S.C. § 1056(d)(2) (fir st sen t en ce
set s for t h su ch a lim it ).
1199. Tr ea s. Reg. §1.401(a )-13(b)(1) (a s a m en ded in 1988).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
351
st a t u t or y ph r a se “a ssign m en t a n d a lien a t ion ,” t h e r egu la t ion s
en com pa ss a lm ost a n y ben efit pa ym en t t o a pa r t y ot h er t h a n t h e
pla n pa r t icipa n t or ben eficia r y, n ot ot h er wise per m it t ed, wit h t h e
followin g la n gu a ge:
(1) In gen er a l. F or pu r poses of t h is [ta x-qu a lifica t ion ] sect ion , t h e
t er m s “a ssign m en t ” a n d “a lien a t ion ” in clu d e—
(i) An y a r r a n gem en t pr ovidin g for t h e pa ym en t t o t h e em ployer of
pla n ben efit s wh ich ot h er wise wou ld be du e t h e pa r t icipa n t u n der
t h e pla n , a n d
(ii) An y dir ect or in dir ect a r r a n gem en t (wh et h er r evoca ble or
ir r evoca ble) wh er eby a pa r t y a cqu ir es fr om a pa r t icipa n t or
ben eficia r y a r igh t or in t er est en for cea ble a ga in st t h e pla n in , or t o,
a ll or a n y pa r t of a pla n ben efit pa ym en t wh ich is, or m a y becom e,
1200
pa ya ble t o t h e pa r t icipa n t or ben eficia r y.
Th e Tr ea su r y decla r ed wh en it issu ed t h is r egu la t ion
As t h e In t er n a l Reven u e Ser vice does n ot h a ve t h e a u t h or it y t o
pr escr ibe r egu la t ion s u n der -Tit le I of E RISA, wh ich in cludes sect ion
1201
514 [pr eem pt ion ], t h ese r egu la t ion s do n ot a ddr ess t h is issu e.
At su ch t im e t h e Tr ea su r y sim ila r ly la ck ed a u t h or it y t o
a ddr ess sect ion 206 of Tit le I of E RISA, i.e., t h e Alien a t ion
1202
P r oh ibit ion .
Th u s, t h e im pa ct of t h e r egu la t ion on det er m in in g
wh ich st a t e la ws a r e pr eem pt ed by t h e Alien a t ion P r oh ibit ion
1203
wou ld a ppea r t o be u n cer t a in .
Th e Su pr em e Cou r t , h owever ,
m oot ed t h e issu e by descr ibin g, wit h ou t a n y discu ssion , t h e
1204
r egu la t ion s a s a pplica ble t o t h e P r oh ibit ion .
It wou ld, h owever ,
seem r ea son a ble t o con clu de t h a t wh et h er t h e r egu la t ion gover n s
or m er ely ca st s ligh t on t h e in t er pr et a t ion of t h e Alien a t ion
P r oh ibit ion , t h e P r oh ibit ion wou ld pr oh ibit a ll t h e t r a n sfer s
1200. Id . § 1.401(a )-13(c)(1) (a s a m en ded in 1988) (em ph a sis a dded).
1201. 43 F ed. Reg. 6942 a t 6942 (F eb. 17, 1978).
1202. Su ch a u t h or it y wou ld n ot seem t o r est on 29 C.F .R. § 2509.75-10,
(issu ed on J a n u a r y 22, 1976), wh ich per m it t ed pla n spon sor s t o r ely on Ta x
In for m a t ion Relea se 1411 (issu ed in Decem ber of 1975) in dr a ft in g pla n s t h a t
com plied wit h E RISA beca u se t h e issu e is n ot t h e r equ isit e pla n t er m s, bu t t h e
im plica t ion s of t h ose pla n t er m s. Th e Ser vice obt a in ed t h e r espon sibilit y for
issu in g r egu la t ion s wit h r espect t o t h e Alien a t ion P r oh ibit ion , wh ile t h e DOL
r et a in ed ju r isdict ion over t h e pr eem pt ion sect ion s in Tit le III of E RISA u n der
Sect ion s 101(a ) a n d 104 of Reor ga n iza t ion P la n No. 4 of 1978, 43 F ed. Reg.
47,713 (Oct . 17, 1978), r espect ively. Alt h ou gh , u n der Sect ion 109 t h is
r eor ga n iza t ion wa s n ot effect ive u n t il Decem ber 31, 1978, r elia n ce of t h e
Reor ga n iza t ion P la n m a y be ba sed on t h e a m en dm en t t o t h e r egu la t ion s t h a t
t ook in t o a ccou n t t h e en a ct m en t of RE ACT. S ee 53 F ed. Reg. 31, 850 (Au gu st
22, 1988). S ee also Gu idr y v. Sh eet Met a l Wor ker Loca l Un ion s, 10 F .3d 700,
709 (10t h Cir . 1993) [h er ein a ft er “Gu id ry II”] for a discu ssion of t h e
gover n m en t ’s a u t h or it y t o issu e t h e r egu la t ion per t a in in g t o t h e Alien a t ion .
1203. Th is cou ld expla in t h e J u st ice Depa r t m en t ’s disr ega r d of t h e
r egu la t ion ’s posit ion in t h eir S ton e DOL Br ief descr ibed, su pra n ot e 480,
per t a in in g t o t h e E RISA effect s of a st a t e dom est ic r ela t ion s or der .
1204. Gu id ry, 493 U.S. a t 371-72.
352
T h e J oh n M arsh all L aw R eview
[47:145
descr ibed in t h e r egu la t ion s so t h a t t h e P r oh ibit ion pr ovides
pr ot ect ion s for pa r t icipa n t s a n d ben eficia r ies a t lea st a s ext en sive
a s t h e r egu la t ion .
Th e r egu la t ion is a Tr ea su r y r egu la t ion for t h e t a x
qu a lifica t ion sect ion cor r espon din g t o t h e Alien a t ion P r oh ibit ion .
Th u s, t h e r egu la t ion on ly a ddr esses pla n beh a vior . As discu ssed
su pr a , t h e r egu la t ion does n ot a ddr ess t h e r igh t of a pla n
pa r t icipa n t or ben eficia r y t o k eep ben efit pa ym en t s.
Th e
r egu la t ion is n ever t h eless u sefu l in det er m in in g t h e ext en t of
t h ose pr ot ect ion s u n der t h e Alien a t ion P r oh ibit ion .
Th e pu r pose of t h e Alien a t ion P r oh ibit ion is, a s discu ssed
su pr a , t o a ssu r e t h a t Spou sa l Su r vivor Ben efit P la n ben efit s a r e
“a ct u a lly a va ila ble t o r et ir em en t pu r poses.” Th er efor e, t h e t a x
r egu la t ion im plies t h a t t h e Alien a t ion P r oh ibit ion pr oh ibit s a n y
a ddit ion a l t r a n sa ct ion s t h a t wou ld pu t t h e pa r t icipa n t ’s ben efit s a t
r isk, bu t a r e n ot per t in en t t o t h e r egu la t ion focu s on pla n
qu a lifica t ion , a n d t h u s n ot m en t ion ed in t h e r egu la t ion . In
pa r t icu la r , t h e Alien a t ion P r oh ibit ion ba n s a t t em pt s t o wr est
ben efit pa ym en t s fr om pla n pa r t icipa n t s a n d ben eficia r ies, wh ich
wou ld pr even t t h e ben efit s fr om bein g u sed for r et ir em en t
pu r poses.
D. T h e Fed eral Protection of Oth er R etirem en t B en efits Im plies
th at th e Alien ation Proh ibition Preven ts a S tate L aw Cred itor
of a Participan t or of a ben eficiary of a S pou sal S u rvivor
B en efit Plan From Wrestin g th e Plan B en efit From th e
Participan t or B en eficiary
Th er e is lit t le ba sis for believin g t h a t in 1974, t h e yea r E RISA
wa s en a ct ed, Con gr ess, wh ich h a d secu r ed pot en t pr ot ect ion for
r igh t s t o socia l secu r it y r et ir em en t ben efit s, vet er a n s’ pen sion
1205
ben efit s, civil ser vice r et ir em en t ben efit s,
a n d r a ilwa y wor k er
r et ir em en t ben efit s, did n ot do t h e sa m e for pr iva t e r et ir em en t
ben efit s u n der a n a ct t h a t Con gr ess en t it led t h e E m ployee
Ret ir em en t In com e Secu r it y Act . Th e cu st om a r y st a t e la w cr edit or
en for cem en t t ools, su ch a s a t t a ch m en t s, ga r n ish m en t s, a n d levies,
wh ich a r e m en t ion ed in t h e r egu la t ion a ssocia t ed wit h t h e
Alien a t ion P r oh ibit ion , m a y n ot over r ide t h ose ben efit r igh t s.
Non e of t h e feder a l st a t u t es m a y be dist in gu ish ed fr om E RISA on
1205. P en sion ben efit s fr om t h e Civil Ser vice Ret ir em en t Syst em a r e
pr ovided on ly in t h e for m of a n n u it y ben efit s. 5 U.S.C. § 8345. Con gr ess
in cr ea sed t h e a m ou n t of t h ose ben efit s in Apr il of 1974. P u b. L. No. 93-273,
88 St a t 993 (1974). H owever , t h e F eder a l E m ployees’ Ret ir em en t Syst em
a dopt ed in 1986 ga ve feder a l em ployees t h e r igh t t o con t r ibu t e pa r t of t h eir
com pen sa t ion pla n t o t h e F eder a l Th r ift Sa vin g P la n a n d t h e r igh t t o obt a in
t h eir ben efit s in t h e for m of a lu m p su m pa ym en t or in t h e for m of a n n u it y
pa ym en t s. F eder a l E m ployees’ Ret ir em en t Syst em Act of 1986, P u b. L. No.
99-335, 100 St a t 514 (1986). S ee gen erally You r TSP Accou n t A Gu ide for
Ben eficia r y
P a r t icipa n t s
(Au gu st
2013)
available
at
h t t ps://www.t sp.gov/P DF /for mspu bs/t spbk33.pdf (la st visit ed J a n . 30, 2014).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
353
t h e ba sis t h a t t h ey a dd wor ds t o t h e Alien a t ion P r oh ibit ion ph r a se
“n ot be a ssign ed or a lien a t ed,” beca u se n on e u se t h e t er m
1206
“a lien a t ion .”
H owever , in 1974, it wa s r ea son a ble for Con gr ess
t o believe t h a t ea ch pr even t ed cr edit or s fr om wr est in g r et ir em en t
ben efit pa ym en t s fr om a debt or if t h e ben efit pa ym en t s h a d been
1207
r et a in ed in r ea dily wit h dr a wa ble for m .
In 1974, t h e Socia l Secu r it y Act (“SSA”) pr ot ect ed socia l
secu r it y ben efit s fr om a lien a t ion a s follows:
Th e r igh t of a n y per son t o a n y fu t u r e pa ym en t u n der t h is t it le [42
U.S.C. §§ 401 et seq.] sh a ll not be t r a n sfer a ble or a ssign a ble, a t la w
or in equ it y, a n d n on e of th e m on eys paid or payable or righ ts
existin g u n d er th is title [42 U.S.C. §§ 401 et seq.] sh a ll be su bject t o
execu t ion , levy, a t t a ch m en t , ga r n ish m en t , or ot h er lega l pr ocess, or
1208
t o t h e oper a t ion of a n y ba n kr u pt cy or in solven cy la w.
Th e sa m e la n gu a ge wa s in t h e in it ia l 1935 en a ct m en t , wh ose
pr oh ibit ion a lso in clu ded “a t t a ch m en t s,” bu t did n ot m en t ion
1209
“a lien a t ion s.”
In 1973, befor e t h e en a ct m en t of E RISA, t h e
1210
Su pr em e Cou r t , in Ph ilpott v. E ssex Cou n ty Welfare B oard ,
em ph a sized t h e ext en t of t h e SSA pr ot ect ion of socia l secu r it y
dist r ibu t ion s by h oldin g t h a t socia l secu r it y pa ym en t s r et a in ed t h e
1211
qu a lit y of m on ey by r em a in in g in “r ea dily wit h dr a wa ble” for m .
In pa r t icu la r , t h e Cou r t h eld socia l secu r it y ben efit s on deposit in
a ba n k a ccou n t wer e n ot su bject t o a t t a ch m en t by t h e loca l welfa r e
1212
boa r d.
H owever , t h e SSA st a t u t or y la n gu a ge is ver y s im ila r ,
1206. B u t see Lisa M. Sm it h , ER IS A Qu alified Pen sion Plan s as Part of the
B an k ru ptcy E state after Patterson v. S h u m ate, 21 C ARDOZO L. R E V. 2119, 2149
(2000) (a r gu in g t h a t t h e st a t u t es gover n in g socia l secu r it y, vet er a n ’s ben efit s
a n d r a ilwa y r et ir em en t ben efit s, u n like E RISA, explicit ly pr ot ect ed ben efit
dist r ibu t ion s).
1207. Th is a r t icle will n ot discu ss t h e ext en t t o wh ich t h e Alien a t ion
P r oh ibit ion pr ot ect s ben efit pa ym en t s t h a t do n ot r em a in in r ea dily
wit h dr a wa ble for m . Th is is m or e of a n issu e wit h E RISA t h a n wit h t h e ot h er
r et ir em en t ben efit s. E RISA ben efit s, u n lik e t h ose ot h er ben efit s a r e oft en n ot
pa id in a n a n n u it y for m . It is r ea son a ble t o expect t h a t a n n u it y pa ym en t s will
be u sed im m edia t ely for r et ir em en t expen ses. In st ea d, E RISA ben efit s a r e
oft en pa id in a lu m p su m , wh ich a r ecipien t is expect ed t o in vest t o pr ovide for
h is or h er r et ir em en t or for ot h er pu r poses. Th u s, r ecipien t s a r e per m it t ed t o
defer t a xes on su ch lu m p sum s u n t il a n d t o t h e ext en t t h ese a m ou n t s a r e
dist r ibu t ed, if t h ey a r e r olled over in t o a n a ppr opr ia t e a ccou n t . Code
§ 402(c)(2012).
1208. 42 U.S.C. § 407 (2012), SSA § 207 (2012).
1209. Th e sect ion n u m ber wa s ch a n ged t o t h e cu r r en t sect ion n u m ber on
Au gu st 10, 1939, by ch . 666, Tit le II, § 207, 53 St a t . 1372. Th e or igin a l sect ion
n u m ber wa s § 208 of t h e SSA en a ct ed on Au gu st 14, 1935, by ch . 531, Tit le II,
§ 208, 49 St a t . 625.
1210. P h ilpot t v. E ssex Cou n t y Welfa r e Boa r d, 409 U.S. 413 (1973).
1211. Id . a t 416.
1212. Id . a t 415-16. H owever , in 1974 Con gr ess a m en ded t h e la w t o per m it
loca lit ies t o r ecou p a n y pa ym en t s t h e loca lit ies h a d m a de on beh a lf of SSI
r ecipien t s. P u b. L. 93-368 § 5, (2d. Sess. 1974), 88 St a t . 420 (codified 42 U.S.C.
§ 1383).
354
T h e J oh n M arsh all L aw R eview
[47:145
bu t m u ch n a r r ower , t h a n t h e la n gu a ge in t h e r egu la t ion s for t h e
Alien a t ion P r oh ibit ion discu ssed, su pra. In pa r t icu la r , in fra,
E RISA pr ot ect ion is n ot lim it ed t o ben efit pa ym en t s, or t o
1213
t r a dit ion a l con cept s of lega l pr ocess or a ssign m en t .
In 1974, t h e Vet er a n ’s Ben efit Act pr ot ect ed vet er a n s’
ben efit s, in clu din g pen sion ben efit s, a s follows:
P a ym en t s of ben efit s du e or t o becom e du e u n der a n y la w
a dm in ist er ed by t h e Secr et a r y sh a ll n ot be a ssign a ble except t o t h e
ext en t specifica lly a u t h or ized by la w, a n d su ch paym en ts m ad e to, or
on accou n t of, a ben eficiary sh a ll be exem pt fr om t a xa t ion , sh all be
exem pt from th e claim of cred itors, a n d sh a ll n ot be lia ble t o
a t t a ch m en t , levy, or seizu r e by or u n der a n y lega l or equ it a ble
pr ocess wh a t ever , eith er before or after receipt by th e ben eficiary. Th e
pr ecedin g sen t en ce sh a ll n ot a pply t o cla im s of t h e Unit ed St a t es
a r isin g un der su ch la ws n or sh a ll t h e exem pt ion t h er ein con t a in ed
a s t o t a xa t ion ext en d t o a n y pr oper t y pu r ch a sed in pa r t or wh olly
ou t of su ch pa ym en t s. Th e pr ovision s of t h is sect ion sha ll n ot be
con st r u ed t o pr oh ibit t h e a ssign m en t of insu r a n ce ot h er wise
a u t h or ized u n der ch a pt er 19 of t h is title [38 U.S .C. §§ 1901 et seq.],
1214
or of ser vicem en ’s in dem n it y.
Th is la n gu a ge is sim ila r t o t h a t u sed in it s 1935 pr edecessor ,
wh ose pr oh ibit ion a lso in clu ded “a t t a ch m en t s,” bu t did n ot
1215
m en t ion “a lien a t ion s.”
In 1937, t h e Su pr em e Cou r t , wh ich
in clu ded J u st ice Ca r dozo, h eld u n a n im ou sly, in L aw ren ce v.
1216
S h aw ,
t h a t t h e explicit post -pa ym en t cr edit or pr ot ect ion for a
vet er a n ’s ben efit pa ym en t s a pplied t o t h ose ba n k deposit s t h a t
1217
wer e n ot t r ea t ed a s in vest m en t s.
Ch ief J u st ice H u gh es decla r ed
t h er ein :
We ca n n ot con ceive t h a t it wa s t h e in t en t of Con gr ess t h a t t h e
vet er a n sh ou ld lose t h e ben efit of t h is im m u n it y, which wou ld
a t t a ch t o t h e m on eys in h is h a n ds, by deposit in g t h e gover n m en t
wa r r a n t s or ch ecks in ba n k t o be collect ed a n d cr edit ed in t h e u su a l
m a n n er .
T h ese paym en ts are in ten d ed prim arily for th e
1213. Cf. Wa sh in gt on St a t e Depa r t m en t of Socia l a n d H ea lt h Ser vices v.
Keffeler , 537 U.S. 371 (2003) (per m it t in g st a t e t o u se SSI pa ym en t s t o
r eim bu r se it self for t h e cost of pr ovidin g fost er ca r e for ch ildr en on SSI
beca u se su ch u sa ge wa s a ch ieved wit h ou t con st it u t in g a n “execu t ion , levy,
a t t a ch m en t , ga r n ish m en t , or ot h er lega l pr ocess.”)
1214. 38 U.S.C. § 5301(a )(1) (2012).
1215. Act Au gu st 23, 1935 (c. 510, 49 St a t . 607, 609; 38 U.S.C. § 454a ). P r ior
t o su ch a m en dm en t t h e st a t u t e wa s in t h e for m discu ssed, su pra in McIn t osh
v. Au br ey, 185 U.S. 122 (1902).
1216. La wr en ce v. Sh a w, 300 U.S. 245 (1937).
1217. Id . a t 250. Th e Cou r t dist in gu ish ed Tr ot t er v. Ten n essee, 290 U.S.
354 (1933) (h oldin g t h a t r ea l est a t e pu r ch a sed wit h ben efit pa ym en t s wa s n ot
t a x exem pt u n der t h e pr edecessor st a t u t e, wh ich t h e La wr en ce Cou r t
descr ibed a s h a vin g t h e sa m e su bst a n t ive t er m s, a lt h ou gh t h a t st a t u t e did n ot
explicit ly decla r e t h a t (1) pr oper t y pu r ch a sed wit h su ch pa ym en t s wa s n ot
exem pt fr om t a x, or (2) pa ym en t s r eceived by ben eficia r ies wer e pr ot ect ed). Id .
a t 248.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
355
m ain ten an ce an d su pport of th e veteran . T o th at en d n eith er h e n or
h is gu ard ian is obliged to k eep th e m on eys on h is person or u n d er h is
1218
roof.
1219
In 1939, t h e Su pr em e Cou r t h eld in Carrier v. B ryan t, t h a t
t h e explicit post -pa ym en t cr edit or pr ot ect ion for a vet er a n ’s ben efit
pa ym en t s did n ot a pply t o n egot ia b le n ot es a n d Un it ed St a t es
1220
bon ds pu r ch a sed wit h t h e ben efit pa ym en t s.
On t h e ot h er h a n d,
in 1962, t h e Su pr em e Cou r t h eld in Porter v. Aetn a Casu alty &
1221
S u rety Com pan y,
wh ich t h e Ph ilpott Cou r t cit ed in it s SSA
a n a lysis, t h a t beca u se “legisla t ion of t h is t ype sh ou ld be liber a lly
con st r u ed . . . t o pr ot ect fu n ds gr a n t ed by t h e Con gr ess for t h e
1222
m a in t en a n ce a n d su ppor t of t h e ben eficia r ies,”
in vest m en t s of
vet er a n ’s ben efit s in cer t a in r ea dily a va ila ble ba n k a ccou n t s by
m em ber s of sa vin gs a n d loa n a ssocia t ion s wer e pr ot ect ed, bu t t h e
Cou r t su ggest ed t h a t t im e deposit s wou ld be u n pr ot ect ed
1223
in vest m en t s.
In 1974, t h e Ra ilwa y Ret ir em en t Act (“RRA”) pr ot ect ed
r a ilwa y wor k er s’ r et ir em en t ben efit s a s follows:
Not wit h st a n din g a n y ot h er la w of t h e Un it ed St a t es, or of a n y St a t e,
t er r it or y, or t h e Dist r ict of Colu m bia , n o an n u ity or su pplem en tal
an n u ity sh all be assign able or be su bject to an y tax or to
garn ish m en t, attach m en t, or oth er legal process u n d er an y
circu m stan ces w h atsoever, n or sh a ll t h e pa ym en t th er eof be
1224
a n t icipa t ed.
Th is
la n gu a ge,
wh ose
pr oh ibit ion
a lso
in clu ded
“a t t a ch m en t s,” bu t did n ot m en t ion “a lien a t ion s,” wa s in t r odu ced
1225
wh en t h e legisla t ion wa s en a ct ed in 1935.
Ma n y cou r t s h eld t h e
st a t u t e im plicit ly pr ot ect ed ben efit s pa id fr om cr edit or cla im s. F or
exa m ple, in 1978, a n Illin ois a ppella t e cou r t h eld in S h rad er v.
1226
M au ltz, t h a t a defa u lt t or t ju dgm en t a r isin g fr om a ca r a cciden t
cou ld n ot be en for ced a ga in st a ba n k a ccou n t wh ose a sset s con sist
1227
solely of fu n ds der ived fr om t h e debt or ’s RRA pen sion pa ym en t s.
1218. Id . a t 249-50 (em ph a sis a dded).
1219. Ca r r ier v. Br ya n t , 306 U.S. 545 (1939).
1220. Id . a t 550.
1221. P or t er v. Aet n a Ca su a lt y & Sur et y Com pa n y, 370 U.S. 159 (1962).
1222. Id . a t 162.
1223. Id . a t 161-62. B u t see id . a t 162-63 (Dou gla s, J ., con cu r r in g) (t h e
fu n ds, wh ich m a y be r ea dily liqu ida t ed, sh ou ld be pr ot ect ed r ega r dless of
wh et h er t h ey wer e in vest m en t s).
1224. 45 U.S.C. § 231m (2012) (em ph a sis a dded).
1225. Act of Au g. 29, 1935, ch . 812, § 14, a s r est a t ed Act of Oct . 16, 1974,
P u b. L. 93-445, Tit le I, § 101, 88 St a t . 1345.
1226. Sh r a der v. Ma u lt z, 374 N.E .2d 819 (Ill. App. Ct . 1978). B u t cf.
Com m on wea lt h of P en n sylva n ia v. Ber field, 51 A.2d 523 (P a . Su per . Ct . 1947)
(pr esu m in g t h e sole pu r pose of t h e cr edit or r est r a in t s wa s t o r elieve t h e
feder a l govt . of dea lin g wit h lega l pr ocess a s wa s t h e ca se in McIn t osh ; t h u s
cr edit or pr ot ect ion s for pa id ou t ben efit s wer e r eject ed).
1227. S h rad er, 374 N.E .2d a t 820.
356
T h e J oh n M arsh all L aw R eview
[47:145
Th e cou r t r elied on t h e Ph ilpott a n a lysis t h a t if t h e ben efit
pa ym en t s a r e k ept in “r ea dily wit h dr a wa ble for m ,” t h e fu n ds a r e
1228
pr ot ect ed fr om cr edit or s.
Th e cor r ect n ess of t h e a n a lysis wa s
con fir m ed t h e followin g yea r by t h e Su pr em e Cou r t in H isqu ierd o
1229
v. H isqu ierd o.
Th e Cou r t con clu ded t h a t t h e pr ovision n ot on ly
pr even t ed a for m er spou se fr om ga r n ish in g ben efit s pa id t o a
pa r t icipa n t bu t pr even t ed h er fr om wr est in g fr om t h e pa r t icipa n t
pr oper t y, ot h er t h a n t h e ben efit pa ym en t s, wh ose va lu e wa s
1230
equ iva len t t o t h ose pa ym en t s.
In 1974, t h e Civil Ser vice Ret ir em en t (“CSR”) Act pr ot ect ed
civil ser vice r et ir em en t ben efit s a s follows:
T h e m on ey m en t ion ed by t h is subch a pt er [en t it led Civil Ser vice
Ret ir em en t ] is n ot assign able, eith er in law or equ ity, or su bject to
1231
execu tion , levy, attach m en t, garn ish m en t, or oth er legal process .
Th is
la n gu a ge,
wh ose
pr oh ibit ion
a lso
in clu ded
“a t t a ch m en t s,” bu t did n ot m en t ion “a lien a t ion s,” wa s vir t u a lly
1232
iden t ica l t o it s pr edecessor , wh ich wa s en a ct ed in 1920,
and
1233
wh ich h a s a pplied t o m em ber s of Con gr ess sin ce 1946.
Sh or t ly
a ft er t h e en a ct m en t of E RISA, a 1978 Sen a t e r epor t decla r ed t h a t
“Un der exist in g la w 5 U .S.C. § 8346(a ), paym en ts u n d er th e civil
service retirem en t system are n ot assign able or su bject
1234
t o . . . ga r n ish m en t .”
H owever , t h er e wa s som e division in t h e
pr e-E RISA cou r t decision s a bou t t h is im plicit exem pt ion . On t h e
on e h a n d in 1938, a New Yor k Cou r t h eld wit h ou t expla n a t ion in
1235
In re Dick erson ’s E state, t h a t t h e pr ot ect ion ext en ded n ot on ly t o
ben efit pa ym en t s t o t h e for m er em ployee, bu t t o pa ym en t s t o t h e
1236
for m er em ployee’s est a t e.
On t h e ot h er h a n d, in 1971, a
1237
P en n sylva n ia cou r t h eld in In re E state of M cGreevy,
that a
r et ir ee’s gu a r dia n m u st u se t h e r et ir ee’s a ccu m u la t ed civil ser vice
r et ir em en t pa ym en t s t o r eim bu r se t h e st a t e for t h e cost of ca r in g
1238
for t h e gu a r dia n ’s wa r d.
Th e cou r t a sser t ed wit h ou t
expla n a t ion t h a t t h e st a t u t or y la n gu a ge sh owed a Con gr ession a l
in t en t t o pr ot ect t h e r et ir ee’s fu n ds on ly “u n t il t h e fu n ds r ea ch t h e
1228. Id . a t 821.
1229. H isqu ier do v. H isqu ier do, 439 U.S. 572 (1979).
1230. Id . a t 588.
1231. 5 U.S.C. § 8346(a ) (2012) (em ph a sis a dded).
1232. Civil Ser vice Ret ir em en t Act of 1920, P u b. L. No. 66 -215 § 14, ch a p.
195, 614, 620 (1920).
1233. Ka t elin P . Isa a cs, Ret ir em en t Ben efit s for Mem ber s of Con gr ess, Con g.
Res. Ser v. RL30631, 1 (Nov. 30, 2012).
1234. S. R E P . No. 95-1084, 95t h Con g., 2d Sess., 2 (1978) reprin ted in 1978
U.S. C ODE C ON G . & AD . N E WS 1379, 1380 (em ph a sis a dded).
1235. In r e Dicker son ’s E st a t e, 5 N.Y.S.2d 86, 168 Misc. 54 (N.Y. New Yor k
Ct y. Sur r . Ct . 1938).
1236. Id . a t 87 a n d 55.
1237. In r e E st a t e of McGr eevy, 286 A.2d 355 (P a . 1971).
1238. Id . a t 357.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
357
h a n ds of t h e r ecipien t s.”
Th e cou r t fa iled t o con sider J u st ice
H u gh es’s L aw ren ce poin t or J u st ice Ca r dozo’s S u race poin t , i.e.,
t h e cou r t in t er pr et a t ion t h wa r t s t h e st a t u t or y in t en t of t h e
exem pt ion , i.e., t o pr ot ect a r et ir ee’s ben efit s. Mor eover , u n like
S u race, t h er e wa s n o a ppa r en t disa gr eem en t t h a t t h is wa s t h e
pu r pose of t h e civil ser vice a t t a ch m en t pr oh ibit ion . Aft er t h e 1974
en a ct m en t of E RISA, t h er e seem ed, a s descr ibed in In re
1240
An d erson ,
t o h a ve been on ly on e ea sily dist in gu ish ed decision
per m it t in g cr edit or cla im s t o be en for ced a ga in st dist r ibu t ed civil
1241
ser vice r et ir em en t ben efit s.
1239
E . T h e Pre-E R IS A S tate L aw Protection of R etirem en t B en efits
From Cred itors Im plies th at th e Alien ation proh ibition Was
In ten d ed to Preven t a S tate L aw Cred itor of a Par ticipan t or of
a B en eficiary of a S pou sal S u rvivor B en efit Plan From
Wrestin g th e Plan B en efit From th e Participan t or B en eficiary
Th e Alien a t ion P r oh ibit ion , lik e ot h er E RISA sect ion s,
a ddr essed deficien cies in t h e pr ot ect ion s t h e st a t e la ws pr ovided t o
pa r t icipa n t s a n d ben eficia r ies of pen sion pla n s. Th e Alien a t ion
P r oh ibit ion ga ve t h ose pa r t icipa n t s a n d ben eficia r ies m or e
pr ot ect ion fr om cr edit or s a n d ot h er s seekin g t o a lien a t e t h eir
ben efit s.
Befor e t h e en a ct m en t of E RISA, t h r ee dist in ct kin ds of st a t e
la ws ga ve a pen sion pla n pa r t icipa n t or ben eficia r y lim it ed
pr ot ect ion fr om h is or h er cr edit or s wh en t h e pla n wa s fu n ded wit h
1242
a t r u st .
F ir st , t h e en for cem en t of m on ey ju dgm en t pr ovision s of
t h e civil pr a ct ice la w per m it t ed ju dgm en t cr edit or s t o obt a in t h e
ben eficia r y’s ben efit s fr om t h e pla n ’s t r u st ees, bu t on ly if t h e
1243
ben eficia r y cou ld obt a in t h e ben efit .
Secon d, t h e spen dt h r ift
pr ovision s of t h e la w of t r u st s per m it t ed t h e set t lor of a t r u st t o
lim it t h e a bilit y of a cr edit or of a t r u st ben eficia r y t o obt a in t h e
1244
ben eficia r y’s ben efit s fr om t h e pla n ’s t r u st ees.
Th ir d, t h e
exem pt ion pr ovision s of t h e en for cem en t of m on ey ju dgm en t
pr ovision s of civil pr a ct ice la w, lim it ed t h e a bilit y of a ju dgm en t
1239. Id . a t 356.
1240. In r e An der son , 410 B.R. 289 (W.D. Mo. 2009).
1241. B u t see In r e P r est ien , 427 F . Su pp. 1003 (S.D. F l. 1977) (h oldin g of n o
pr ot ect ion a ft er ben efit pa ym en t s wa s ba sed on McIn t osh , a lt h ou gh t h e
la n gu a ge a t issu e m a y be dist in gu ish ed a s descr ibed in Wa ggon er v. Ga m e
Sa les Co., In c., 702 S.W. 2d 808, 809 (Ar k. 1986)).
1242. Sim ila r pr ot ect ion s a pplied t o pla n s fu n ded by in su r a n ce policies,
wh ich wer e su bject t o r u les sim ila r t o t h ose of spen dt h r ift t r u st s. S ee e.g., N.Y.
E ST ., P OWE RS & T RUSTS L AW § 7-1.5(a )(1)(2) (a s of J a n u a r y 1, 1974, LE XIS
2013) (in su r a n ce pr oceeds m a y n ot be t r a n sfer r ed or su bject t o lega l pr ocess
except for n ecessit ies).
1243. S ee e.g., N.Y. C.P .L.R. § 5201(a )-(b) (McKin n ey 2011) (descr ibin g t h e
pr oper t y su bject t o en for cem en t of a cr edit or ’s cla im a s of J a n u a r y 1, 1974).
1244. S ee e.g., Tex. P r op. Code § 112.035 (2013) en t it led “Spen dt h r ift Tr u st s”
(exclu din g ben eficia l in t er est s t o t h e ext en t cr ea t ed by a set t lor ).
358
T h e J oh n M arsh all L aw R eview
[47:145
cr edit or of a t r u st ben eficia r y t o obt a in t h e ben eficia r y’s ben efit s
1245
1246
fr om eit h er t h e t r u st
or t h e ben eficia r y
u n less t h e cr edit or
beca m e en t it led t o t h e debt pa ym en t s u n der t h e t r u st t er m s.
Th er e wer e oft en ext en sive except ion s t o t h e pr ot ect ive fea t u r es of
t h ese la ws for fr a u du len t t r a n sfer s, a n d for pa r t icu la r ly wor t h y
cla im s, su ch a s t h ose ba sed on dom est ic r ela t ion s, t or t , or fr a u d,
discu ssed in fra.
Th e a bove pr ot ect ion s, a s discu ssed in fr a , do n ot fu lly a pply t o
self-set t led t r u st s, i.e., t h ose in wh ich t h e ben eficia r y con t r ibu t ed
t h e t r u st fu n ds. Th er e wer e qu est ion s , a s discu ssed in fr a , a bou t
t h e ext en t t o wh ich pen sion pla n t r u st s cou ld be ch a r a ct er ized a s
self-set t led t r u st s sin ce t h e pen sion ben efit s r esu lt ed fr om
pa ym en t s for t h e pa r t icipa n t ’s ser vices, a n d a lso a bou t t h e ext en t
t o wh ich cr edit or s cou ld obt a in ben efit s wh en pa r t icipa n t s a n d
ben eficia r ies h a d t h e r igh t t o dem a n d ben efit pa ym en t s. Th ese
qu est ion s r em a in for pen sion pla n s n ot su bject t o E RISA, su ch a s
1247
t h ose r est r ict ed t o own er -em ployees.
A spen dt h r ift t r u st is on e in wh ich t h e followin g t wo
r est r ict ion s on a lien a t ion a r e va lid: (1) t h e ben eficia r y m a y n ot
a lien a t e h is or h er in t er est , a n d (2) t h e ben eficia r y’s cr edit or s m a y
1248
n ot r ea ch t h a t in t er est in sa t isfa ct ion of t h eir cla im s.
Life
1249
in su r a n ce policies m a y pr ovide sim ila r pr ot ect ion s,
a lt h ou gh
t h ey a r e n ot t r u st s, a n d t h u s ca n n ot be spen dt h r ift t r u st s.
H owever , u n der som e st a t e la ws spen dt h r ift t r u st s do n ot pr ot ect a
ben eficia r y’s in t er est , t o t h e ext en t t h e ben eficia r y exer cises t h e
r igh t t o post pon e t a k in g a ben efit dist r ibu t ion , t o wh ich h e is
1250
im m edia t ely en t it led.
Th u s, spen dt h r ift t r u st s oft en give t h e
t r u st ee t h e discr et ion t o decide wh en a n d t o wh ich ben eficia r ies t o
dist r ibu t e in com e, or t o pa y on ly specified cr edit or s on beh a lf of
1251
t h e ben eficia r y.
1245. S ee e.g., N.Y. C.P .L.R. 5205(c) (McKin n ey 2011) (pr even t in g cr edit or s
a s of J a n u a r y 1, 1974 fr om en for cin g a cla im a ga in st ben eficia r y’s in t er est
wh ile in t er est is in t r u st ).
1246. S ee e.g., N.Y. C.P .L.R. 5205(d) (McKin n ey 2011) (pr even t in g cr edit or s
a s of J a n u a r y 1, 1974 fr om en for cin g a cla im a ga in st ben eficia r y’s in t er est
a ft er in t er est is dist r ibu t ed).
1247. 29 C.F .R. § 2510.3-3(b) (1975) (pr ovidin g t h a t pen sion pla n s cover in g
on ly own er -em ployees a r e n ot E RISA pla n s).
1248. E RWIN G RISWOLD , S P E NDTH RIF T T RUSTS : U NDE R TH E N E W YORK
S TATUTE S , AND E LSE WH E RE -I NCLU DING I NSURANCE P ROCE E DS 2-3 (2d ed.
1947) (“G RISWOLD S P E NDTH RIF T T RUSTS ”).
1249. Id . a t 13. (Ch a pt er III is en t it led “Life In su r a n ce P r oceeds” for t he
st a t e of la w in 1947). Cf. N.Y. E ST ., P OWE RS & T RUSTS L AW § 7-1.5(a )(1)(2)
(McKin n ey 2013) (a s of J a n u a r y 1, 1974 in su r a n ce pr oceeds m a y n ot be
t r a n sfer r ed or su bject t o lega l pr ocess except for n ecessit ies, wh ile ot h er
in t er est is n ot given a n y spen dt h r ift pr ot ect ion s fr om le ga l pr ocess).
1250. S ee e.g., R E STATE ME NT (T H IRD ) OF T RUSTS §58 CMT . (B )(1) (2003)
(“a bsen ce of own er sh ip equ iva len ce”).
1251. S ee G RISWOLD S P E NDTH RIF T T RUSTS , su pra n ot e 1252, a t 449. S ee
e.g., St eph en G. Gilles, Th e J u dgm en t -P r oof Societ y, 63 W ASH . & L E E L. R E V.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
359
Spen dt h r ift t r u st s pr ot ect ben eficia r ies fr om t h eir ju dgm en t
cr edit or s in t h r ee dist in ct wa ys, wh ich even if t h ey wer e
a pplica ble, pr ovided fa r m or e lim it ed pr ot ect ion t o pa r t icipa n t s
a n d ben eficia r ies of r et ir em en t pla n s t h a n Con gr ess in t en ded t o
pr ovide wit h t h e Alien a t ion P r oh ibit ion . Th is is beca u se a s t h e
a u t h or of t h e st a n da r d spen dt h r ift t r u st r efer en ce, Dea n E r win N.
Gr iswold of t h e H a r va r d La w Sch ool wr ot e, “Th e essen ce of th e
spen d th rift tru st lies in th e in alien ability of in com e to accru e in th e
1252
fu tu re.”
Th u s, spen dt h r ift t r u st s do n ot pr ot ect ben efit s fr om
ju dgm en t cr edit or s on ce t h e ben efit s h a ve been dist r ibu t ed t o a
1253
ben eficia r y.
In con t r a st , t h e essen ce of th e Alien ation
Proh ibition is th e in alien ability of retirem en t ben efits, , so t h a t
ben efit pa ym en t s m a y be u sed t o pa y t h e r et ir em en t expen ses of
pla n pa r t icipa n t s a n d ben eficia r ies. Th u s, t h e P r oh ibit ion sh ou ld
pr ot ect t h e ben efit pa ym en t s fr om ju dgm en t cr edit or s befor e a n d
a ft er t h eir dist r ibu t ion .
Th e fir st spen dt h r ift t r u st pr ot ect ion is t h e pr oh ibit ion of
t r a n sfer s of ben efit in t er est s by ben eficia r ies t o a n y per son ,
in clu din g a cr edit or . If a pplica ble, t h is fea t u r e is of lim it ed u t ilit y
t o m a n y of t h e pa r t icipa n t s a n d ben eficia r ies t h e Alien a t ion
P r oh ibit ion wa s design ed t o pr ot ect , n a m ely t h ose wh o ca n n ot
m a k e su ch t r a n sfer s beca u se t h ey n eed t o u se t h eir dist r ibu t ion s
fr om Spou sa l Su r vivor Ben efit P la n s t o pa y t h eir r et ir em en t
expen ses or t o in vest t o pr odu ce su fficien t fu n ds t o pa y su ch
expen ses. On t h e ot h er h a n d, t h is pr ot ect s t h ose people wh o m a y
be a t t em pt ed t o sell t h eir pen sion ben efit s t o t h ir d pa r t ies a t
1254
excessive discou n t s.
Th is wou ld seem t o discou r a ge len din g t o a
ben eficia r y ba sed on t h e ben eficia r y’s t r u st in t er est beca u se su ch
len der m a y n ot secu r e t h e loa n by get t in g a n in t er est in t h e t r u st .
Th u s, t h e len der wou ld h a ve t o com pet e wit h ot h er cr edit or s t o
obt a in it s pa ym en t s.
Th e spen dt h r ift pr oh ibit ion pr even t s
603, 637 (2006). S ee also Ba r ba r a H a u ser , E n glish T ru sts from an Am erican
Perspective, 9(1) T RUSTS & T RUSTE E S 15, 19 (Nov. 2002) (descr ibin g h ow in
E n gla n d, wh ich does n ot per m it spen dt h r ift t r u st s, set t lor s seek t o pr ot ect
ben eficia r ies fr om cr edit or s wit h bot h dist r ibu t ion con dit ion s a n d t r u st ee
discr et ion );S IMON G ARDNE R , AN I NTRODU CTION T O T H E L AW O F T RUSTS 3738, 199 (2d ed. 2002) (E n glish set t lor s u se “pr ot ect ive t r u st s,” wh ich pr ovide a
ben eficia r y wit h a fixed in t er est u n t il ba n kr u pt cy wh en t r u st ee h a s discr et ion
wh et h er t o give fu n ds t o ot h er ben eficia r ies).
1252. G RISWOLD S P E NDTH RIF T T RUSTS , su pra n ot e 1252, a t 449.
1253. S ee G RISWOLD S P E NDTH RIF T T RUSTS , su pra n ot e 1252, a t 452-54. See
a lso R E STATE ME NT (S E CON D ) OF T RUSTS §152 CMT . (J ) (1959) (“In com e pa id t o
ben eficia r y”) (pr e-E RISA la w). S ee also R E STATE ME NT (T H IRD ) OF T RUSTS §58
CMT . (D ) (2003) (“E ffect of spen dt h r ift r est r a in t ”)(post -E RISA la w).
1254. Th is is a r ea l r isk a s sh own by pen sion -ba sed loa n a bu ses. S ee e.g.,
J essica Silver -Gr een ber g, L oan s B orrow ed Again st Pen sion s S qu eeze R etirees,
N.Y. T IME S , Apr . 27, 2013 a t A1 (descr ibin g pen sion -ba sed loa n s m a de a t ver y
h igh r a t es by pen sion er s seekin g fu n ds t o pa y t h eir livin g expen ses in
exch a n ge for com m it m en t s t o pa y len der s fu t u r e pen sion pa ym en t s oft en fr om
a ccou n t s t h ey est a blish ed t o give len der s ea sy a ccess t o t h ose pa ym en t s).
360
T h e J oh n M arsh all L aw R eview
[47:145
t r a n sfer s of ben eficia l in t er est s t h a t a r e eit h er volu n t a r y—t h e
debt or did n ot r ea lize h e wa s m a k in g su ch a n a ssign m en t , or t h e
debt or did n ot r ea lize su ch a ssign m en t s a r e pr oh ibit ed —or
in volu n t a r y—t h e cr edit or is t r yin g t o en for ce h is cla im . H owever ,
t h is pr ot ect ion is “n ext t o fu t ile,” t o u se J u st ice Ca r dozo’s ph r a se, if
t h er e a r e cr edit or s wh o m a y en for ce cla im s a ft er t h e t r u st
dist r ibu t ion h a s been m a de.
Th e secon d spen dt h r ift t r u st pr ot ect ion is t h e r equ ir em en t
t h a t , u n less ot h er wise dir ect ed by a ben eficia r y, spen dt h r ift t r u st s
m a y pa y a ben eficia r y’s ben efit s on ly t o t h e t r u st ben eficia r y, or t o
t h e ext en t specified in t h e t r u st on beh a lf of t h e ben eficia r y t o a
1255
per son , su ch a s a pr ovider of n ecessa r y goods t o t h e ben eficia r y.
If a pplica ble, t h is fea t u r e is of lim it ed u t ilit y t o t h e pa r t icipa n t s
a n d ben eficia r ies t h e Alien a t ion P r oh ibit ion wa s design ed t o
pr ot ect , n a m ely t h ose wh o n eeded t o u se t h eir dist r ibu t ion s fr om
Spou sa l Su r vivor Ben efit P la n s t o pa y t h eir r et ir em en t expen ses,
in clu din g m a n y wh o r eceive a n d in vest lu m p su m dist r ibu t ion s t o
fu n d t h ose expen ses a s wa s t h e ca se wit h t h e S u race debt or wh o
r eceived a wor ker s’ com pen sa t ion a wa r d in t h e for m of a lu m p
su m . In con t r a st , in on e of t h e ea r liest spen dt h r ift decision s a
Ma ssa ch u set t s cou r t h eld in 1882 in B road w ay N ation al B an k v.
1256
Ad am s,
t h a t a cr edit or cou ld n ot en for ce a cla im a ga in st t h e
sem ia n n u a l in com e dist r ibu t ion s fr om a t r u st u n t il t h e m on ey wa s
1257
th
dist r ibu t ed t o h is debt or .
P er h a ps in t h e 19 cen t u r y it wa s
difficu lt t o iden t ify a n d ga r n ish fu n ds fr om a per son ’s a ccou n t s
wit h a n Am er ica n fin a n cia l in st it u t ion , bu t t h is wa s n ot t h e ca se
in 1974 n or a s is it n ow t h e ca se.
Th e t h ir d spen dt h r ift t r u st pr ot ect ion is t h e pr oh ibit ion on t h e
a t t a ch m en t of ben eficia l in t er est s t h a t is n ot a va ila ble for
dist r ibu t ion . If a pplica ble, t h is fe a t u r e is of lim it ed u t ilit y t o m a n y
of t h e pa r t icipa n t s a n d ben eficia r ies t h e Alien a t ion P r oh ibit ion
wa s design ed t o pr ot ect , n a m ely t h ose wh o n eed t o u se t h eir
dist r ibu t ion s fr om Spou sa l Su r vivor Ben efit P la n s t o pa y t h eir
r et ir em en t expen ses. Th e fea t u r e is, h owever , qu it e u sefu l t o
t h ose per son s wh o h a ve n o n eed for t h e t r u st in com e a n d ca n wa it
t o obt a in t h eir in com e u n t il t h ey h a ve n o cr edit or s, su ch a s a ft er a
1255. S ee e.g., G RISWOLD S P E NDTH RIF T T RUSTS , su pra n ot e 1252, a t 377-79;
R E STATE ME NT (T H IRD ) OF T RUSTS §58 CMT . (D )(1) (2003) (“Righ t s of
ben eficia r y’s pu r por t ed t r a n sfer ees”). S ee also Tr ea s. Reg. § 1.401(a )-13(e) (a s
a m en ded in 1988) (in cor por a t in g t h is pr in ciple by exem pt in g r evoca ble
pa ym en t dir ect ion s fr om t h e Alien a t ion P r oh ibit ion ). E RISA § 502(a )(1)(B), 29
U.S.C. § 1132(a )(1)(B) (2012) wou ld n ot a pp ea r t o let E RISA fidu cia r ies ch oose
wh et h er t o m a ke su ch pa ym en t s on beh a lf of a pa r t icipa n t or ben eficia r y
in depen den t of a dir ect ion by su ch per son . P la n t er m s det er m in e t h e
con dit ion s, if a n y, u n der wh ich a t r u st ee m u st follow a ben eficia r y’s dir ect ion s
t o pa y a t h ir d per son t h eir in t er est . H owever , t h e t r u st ee m u st follow t h e
r evoca t ion of su ch a u t h or it y.
1256. Br oa dwa y Na t ion a l Ba n k v. Ada m s, 133 Ma ss. 170 (1882).
1257. Id . a t 174.
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
361
ba n kr u pt cy a s wa s t h e ca se in t h e ea r liest Su pr em e Cou r t decision
1258
in 1875 in N ich ols v. E aton ,
wh ich en dor sed spen dt h r ift t r u st s
1259
in dict a .
Su ch t r u st s wit h t h e a ddit ion of discr et ion a r y in com e
fea t u r es a n d fr ien dly t r u st ees a r e oft en u sed by t h e wea lt h y t o
h elp a ben eficia r y a void t h e ben eficia r y’s cr edit or s, a n d a r e oft en
1260
ca lled a sset pr ot ect ion t r u st s.
Th is fea t u r e cou ld be of som e
a ssist a n ce t o t h ose pa r t icipa n t s or ben eficia r ies of Spou sa l
Su r vivor Ben efit P la n s wh o go ba n kr u pt a n d wish t o pr eser ve
t h eir u n dist r ibu t ed r et ir em en t a sset s. Th e m a jor difficu lt y for
pen sion er s, ot h er t h a n t h e possible in a pplica bilit y of t h e
spen dt h r ift t r u st r u les, a s discu ssed in fra, is t h a t t h is a ppr oa ch
gives n o pr ot ect ion t o fu n ds t h a t h a ve been dist r ibu t ed t o t h e
ben eficia r ies.
Mor eover , t h e spen dt h r ift pr ot ect ion is fu r t h er lim it ed a s
discu ssed, su pra, by t h e a llowa n ce of t h e en for cem en t of cla im s for
wor t h y obliga t ion s a t h r ift y per son cou ld in cu r . Th e Alien a t ion
P r oh ibit ion per m it s lit t le su ch en for cem en t . In sh or t , spen dt h r ift
t r u st s pr even t t h e en for cem en t of ju dgm en t s for cla im s t h a t wou ld
be in cu r r ed by a wa st r el.
H owever , t h e t r u st s per m it t h e
en for cem en t of wor t h y cla im s t o a ch ieve t h e t r a dit ion a l pu r pose
for a spen dt h r ift t r u st , h a vin g t h e ben eficia r y spen d h is in t er est
1261
pr u den t ly.
Th u s, befor e t h e en a ct m en t of E RISA cr edit or s of a
ben eficia r y of a spen dt h r ift t r u st cou ld en for ce wor t h y cla im s
a ga in st t h e ben eficia r y’s in t er est in t h e t r u st , a lt h ou gh differ en t
st a t es defin ed wor t h y cla im s differ en t ly. F or exa m ple, in 1947,
Dea n E r win N. Gr iswold descr ibed t h e wor t h y cla im s t o in clu de
1262
1263
obliga t ion s, su ch a s dom est ic r ela t ion s cla im s,
t or t s,
feder a l
1264
1265
1266
a n d st a t e cla im s,
t a x cla im s,
t r u st ee cla im s,
or ph ysicia n
1267
a n d a t t or n ey cla im s.
Sim ila r ly, in 1959 t h e Secon d Rest a t em en t
of Tr u st s descr ibed t h e followin g wor t h y cla im s a llowa ble a ga in st
spen dt h r ift t r u st s: (1) cla im s ba sed u pon dom est ic r ela t ion s; (2)
cla im s for n ecessa r y su pplies or ser vices t o t h e ben eficia r y; (3)
cla im s for su pplies or ser vices t h a t ben efit t h e ben eficia r y; a n d (4)
1268
cla im s for feder a l or st a t e obliga t ion s.
Th u s, Dea n Gr iswold
1258. Nich ols v. E a t on , 91 U.S. 716 (1875).
1259. Id . a t 724-27.
1260. S ee gen erally St ewa r t E . St er k, Asset Protection T ru sts: T ru st L aw ’s
R ace to the B ottom ?, 85 C ORNE LL L. R E V. 1035 (2000).
1261. G RISWOLD S P E NDTH RIF T T RUSTS , su pra n ot e 1252, a t 387-88
(em ph a sis a dded).
1262. Id . a t 388-403 (expla in in g su ch cla im s a r e oft en exem pt ed fr om
spen dt h r ift r est r ict ion s by st a t u t e).
1263. Id . a t 442-44.
1264. Id . a t 403-04.
1265. Id . a t 407-09.
1266. Id . a t 412-16.
1267. Id . a t 409-12.
1268. R E STATE ME NT (S E COND ) OF T RUSTS §157 CMT . (J ) (1959) (“P a r t icu la r
Cla sses of Cla im a n t s”). Th e R E STATE ME NT (T H IRD ) OF T RUSTS (2003) did n ot
a ppea r u n t il m a n y yea r s a ft er t h e 1974 en a ct m en t of E RISA.
362
T h e J oh n M arsh all L aw R eview
[47:145
descr ibed t h e st a t e of t h e New Yor k spen dt h r ift la w in 1947 a s
follows:
It t h u s a ppea r s t h a t t h e N ew Yor k st a t u t es h a ve n ow r ea ch ed a ver y
r ea son a ble st a t e of ba la n ce. A [spen dt h r ift ] t r u st m a y be cr ea t ed in
wh ich t h e pr oper r equ ir em en t s of t h e ben eficia r y a n d h is fa m ily
m a y be pr ot ect ed, bu t a n y fu r t h er in com e (t a kin g in t o a ccou n t
in com e fr om ot h er sou r ces a s well) m a y be a pplied t o t h e
1269
ben eficia r y’s debt s, a s t h e cou r t m a y deem pr oper .
Cr edit or s m a y collect t h eir debt s u sin g t h e en for cem en t of
ju dgm en t pr ovision s of civil pr a ct ice la w. Th u s, t h e r eleva n t pr e E RISA qu est ion for pen sion pa r t icipa n t s a n d ben eficia r ies wa s t h e
ext en t t o wh ich t h ey wer e pr ot ect ed by except ion s t o t h e
en for cem en t of ju dgm en t pr ovision s of civil pr a ct ice la w. St a t e
t r u st la w det er m in es wh et h er a ben eficia r y h a s a ssign ed a n y
por t ion of h is or h er in t er est t o a cr edit or , in wh ich ca se t h e
cr edit or m a y m a k e a cla im a s a t r u st ben eficia r y, a n d t h e effect of
a ben eficia r y’s dir ect ion t o pa y h is in t er est t o a cr edit or . In som e
st a t es, su ch a s Texa s, t h e t r u st la w m a y over r ide t h e civil pr a ct ice
r u les a n d pr even t t h e en for cem en t of ju dgm en t s a ga in st in t er est s
1270
in spen dt h r ift t r u st s,
a lt h ou gh in su ch ca ses t h er e m a y be
com m on -la w except ion s t o t h e spen dt h r ift t r u st pr ot ect ion .
H owever , in ot h er st a t es, su ch a s N ew Yor k, wh ich pr ovided t h e
1271
m odel for m u ch spen dt h r ift legisla t ion ,
t h e exem pt ion s fr om t h e
lega l pr ocess for t h e en for cem en t of ju dgm en t s a pplica ble t o t r u st s
1272
a r e set for t h in t h e civil pr a ct ice sect ion s.
F or exa m ple, in 1974
New Yor k h a d t h e followin g exem pt ion s t o t h e en for cem en t of
ju dgm en t s a ga in st in t er est s in t r u st s befor e a n d a ft er t h eir
dist r ibu t ion :
(d) Tr u st exem pt ion . An y pr oper t y wh ile h eld in t r u st for a ju dgm en t
debt or , wh er e t h e t r u st h a s been cr ea t ed by, or t h e fu n d so h eld in
t r u st h a s pr oceeded fr om , a per son ot h er t h a n t h e ju dgm en t debt or ,
is exem pt fr om a pplica t ion t o t h e sa t isfa ct ion of a m on ey ju dgm en t .
(e) In com e exem pt ion s. Th e followin g per son a l pr oper t y is exem pt
fr om a pplica t ion t o t h e sa t isfa ct ion of a m on ey ju dgm en t , except
su ch pa r t a s a cou r t det er m in es t o be u n n ecessa r y for t h e r ea son a ble
r equ ir em en t s of t h e ju dgm en t debt or a n d h is depen den t s:
1. n in et y per cen t of t h e in com e or ot h er pa ym en t s fr om a t r u st t h e
1273
pr in cipa l of wh ich is exem pt u n der su bdivision (d);
1269. G RISWOLD S P E NDTH RIF T T RUSTS , su pra n ot e 1252, a t 59.
1270. Cf. Tex. P r op. Code § 112.035(b), (d) (pr ot ect in g ben eficia r ies of
spen dt h r ift t r u st s fr om lega l pr ocess a n d decla r in g t h a t t h er e is n o su ch
pr ot ect ion t o t h e ext en t t h e ben eficia r y is t h e set t lor of h is int er est ).
1271. G RISWOLD S P E NDTH RIF T T RUSTS , su pra n ot e 1252, a t 60.
1272. Cf. N.Y. C.P .L.R. 5205(c), (d) (McKin n ey 2011) (pr ovidin g t h a t a s of
J a n u a r y 1, 1974 t r u st ben eficia r ies a r e pr ot ect ed except t o t h e ext en t t h e
fu n ds com e fr om t h e ben eficia r y).
1273. 1 McKin n eys 1962 Session La ws of New Yor k a t 774-76 (McKin n ey)
(t h e la st pr e-E RISA a m en dm en t t o t h e CP LR sect ion s wer e en a ct ed in 1962).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
363
Th is is con sist en t wit h Dea n Gr iswold’s descr ipt ion of t h e
New Yor k la w in 1947. Mor eover , t h e em ph a sis on t h e su ppor t of
t h e fa m ily wa s con fir m ed in 1963 in a decision by t h e New Yor k
1274
Cou r t of Appea ls in In th e M atter of Kn au th ,
per m it t in g a
for m er spou se t o en for ce a n a ssign m en t of a n in t er est in a
1275
spen dt h r ift t r u st .
Mor eover , t h e lim it a t ion s of t h e spen dt h r ift
pr ot ect ion s u n der pr edecessor s of t h is legisla t ion , wer e illu st r a t ed
by t h e New Yor k Cou r t of Appea ls h oldin g in 1936, in S an d v.
1276
B each , t h a t t h e spen dt h r ift t r u st r u les do n ot pr even t a cr edit or
of a ben eficia r y fr om en for cin g t h e ju dgm en t a ga in st t h e
ben eficia r y’s in t er est fr om t h e t r u st wh en t h e a m ou n t is du e a n d
1277
owin g t o t h e ben eficia r y.
Befor e t h e en a ct m en t of E RISA t h er e wer e con sider a ble
dist in ct ion s wit h in a n d a m on g t h e st a t es a bou t t h e
ch a r a ct er iza t ion of pen sion in t er est s a s self-set t led in t er est s, a n d
t h e con dit ion s u n der wh ich cr edit or s cou ld en for ce t h eir cla im s
a ga in st su ch in t er est s. Th e issu es a r e con sider ed in det a il in a n
a r t icle by Don a ld P . You n g t h a t discu sses t h e dist in ct ion s t h a t
a r ose wit h r espect t o t h e ch a r a ct er iza t ion of pen sion t r u st s a s
spen dt h r ift t r u st s, pr im a r ily in or der t o be eligible for a
ba n kr u pt cy except ion befor e t h e Su pr em e Cou r t m oot ed su ch
1278
1279
dist in ct ion s
by h oldin g in 1992, in Patterson v. S h u m ate, t h a t
t h e Alien a t ion P r oh ibit ion pr ovided t h e r equ isit e pr ot ect ion for
1280
Spou sa l Su r vivor Ben efit P la n s.
On e issu e a pplica ble t o selfset t led t r u st s is t h a t even if r ecogn ized, fr a u du len t t r a n sfer s t o
1281
t r u st s a r e n ot r ecogn ized,
wh ich m a y be r eleva n t t o t h e ext en t ,
pen sion pla n s a r e t r ea t ed a s self-set t led t r u st s, a s discu ssed in fra.
1282
F or exa m ple, in 1974 in Ford yce v. Ford yce,
t h e cou r t
ch a r a ct er ized pen sion con t r ibu t ion s by P a n Am er ica n Wor ld
1274. In t h e Ma t t er of Kn a u t h , 189 N.E .2d 482 (N.Y. 1963) (u ph oldin g t h e
a ssign m en t beca u se t h e a im of t h e spen dt h r ift pr ovision s wa s t o su ppor t
ben eficia r y a n d h is fa m ily, even t h ou gh a t t im e of a ct ion ben eficia r y r em a r r ied
a n d wa s su ppor t in g a n ot h er fa m ily).
1275. Id . a t 485.
1276. Sa n d v. Bea ch , 200 N.E . 821 (N.Y. 1936) (per m it t in g ga r n ish m en t of
in t er est in a t est a m en t a r y spen dt h r ift t r u st wh en t r u st ee exer cises discr et ion
t o m a ke in t er est pa ya ble for ben efit of ben eficia r y).
1277. Id . a t 823.
1278. Da vid B. You n g, T h e Pro T an to In valid ity of Protective T ru sts: Partial
S elf-settlem en t an d B en eficiary Con trol, 78 M ARQ . L. R E V. 807, a t 825-36
(1995). S ee also P a t r icia E . Dilley, H id d en in Plain View : T h e Pen sion S h ield
Again st Cred itors, 74 I ND . L.J . 355, 377-87 (1999) (discu ssin g t h e in t er a ct ion
a m on g pen sion s, ba n kr u pt cy, spen dt h r ift t r u st s, a n d E RISA).
1279. P a t t er son v. Sh u m a t e, 504 U.S. 753 (1992).
1280. Id. a t 760.
1281. See gen er a lly G RISWOLD S P E NDTH RIF T T RUSTS , su pra n ot e 1252 a t
538-39 (pr e-E RISA pr in ciples). See e.g., N.Y. C.P .L.R. §§ 5201(c) .5, 5225(a )
a n d N.Y. E st ., P ower s & Tr u st s La w § 7-3.1(b)(4). (McKin n ey 2013)
(fr a u du len t con veya n ces n ot su bject t o cr edit or pr ot ect ion s, a n d t r a n sfer or
m a y be or der ed t o con vey a sset s t o cr edit or ) (post -E RISA pr in ciples).
1282. F or dyce v. F or dyce, 365 N.Y.S.2d 323 (N.Y. Su p. Ct . Na ssa u Co. 1974).
364
T h e J oh n M arsh all L aw R eview
[47:145
Air wa ys a n d on beh a lf of a pilot t h ose by t h e pilot pu r su a n t t o a
1283
collect ive ba r ga in in g a gr eem en t a s n ot self-set t led.
Th u s, t h ey
wer e n ot su bject t o a t t a ch m en t wh en pa id by t h e t r u st u n der t h e
1284
civil pr a ct ice pr ovision s.
By con t r a st , a m ou n t s t h a t h a d been
volu n t a r ily con t r ibu t ed t o a P a n Am pla n a n d in vest ed t h er ein a r e
su bject t o a t t a ch m en t wh en pa id by t h e t r u st , bu t n ot wh ile in t h e
1285
t r u st a n d u n a va ila ble t o t h e pilot .
On t h e ot h er h a n d, beca u se
t h e cr edit or wa s a for m er spou se seek in g a lim on y, su ch in com e
wh en dist r ibu t ed is a lloca ble t o t h e for m er spou ses in a ccor d wit h
1286
t h eir n eeds.
Th e dist r ibu t ion s fr om t h e volu n t a r y con t r ibu t ion
a r e a va ila ble in fu ll t o t h e for m er spou se beca u se t h e lim it a t ion s
1287
on dist r ibu t ion s a r e in a pplica ble t o self-set t led t r u st s.
Sim ila r fin e dist in ct ion s a r e a ppa r en t in t h r ee Texa s
1288
decision s. F ir st , in 1958 it wa s h eld in H in es v. S an d s,
that
wh en con t r ibu t ion s wer e m a de volu n t a r ily by a n em ployer t o a
pr ofit -sh a r in g pla n on beh a lf of it s r a n k a n d file em ployees, t h e
ben efit s wer e n ot su bject t o ga r n ish m en t by a cr edit or befor e t h e
1289
pla n m a de a n y ben efit s a va ila ble t o t h e pa r t icipa n t .
H owever ,
t h e cou r t su ggest ed t h a t a s in S an d ga r n ish m en t s wou ld be
1290
per m issible wh en t h e pa r t icipa n t cou ld obt a in t h e pla n ben efit s.
1291
Th is wa s con fir m ed in 1960 in H igh lan d S tate B an k v. Gon zales.
Th e cou r t t h er ein per m it t ed ga r n ish m en t of fu n ds t h a t cou ld be
wit h dr a wn , bu t n ot t h ose t h a t cou ld n ot be wit h dr a wn fr om a
1292
set t lor t r u st .
Un like t h e Ford yce cou r t , t h e H igh lan d cou r t
m a de n o a t t em pt t o dist in gu ish t h e pen sion ben efit s a t t r ibu t a ble
t o pa r t icipa n t volu n t a r y con t r ibu t ion s fr om r equ ir ed em ployer
con t r ibu t ion s, a lt h ou gh u n der a m a t ch in g for m u la r a t h er t h a n a
1293
collect ive ba r ga in in g a gr eem en t .
F in a lly, in 1988 in In th e
1294
M atter of B rook s, t h e cou r t h eld t h a t a pen sion pla n t r u st is n ot
a spen dt h r ift t r u st t o t h e ext en t ben efit s a r e a t t r ibu t a ble t o on e of
1295
t h ir t y-t wo own er s of a pr ofession a l a ssocia t ion of r a diologist s.
Th e con t r ibu t ion for ea ch own er wa s fixed a t t h e st a t u t or y
m a xim u m of $30,000 per yea r by t h e a ssocia t ion ’s execu t ive
com m it t ee, wh ich h a s a r ot a t in g gr ou p of m em ber s, in clu din g t h e
1283. Id . a t 328.
1284. Id . a t 328-29.
1285. Id .
1286. Id . a t 329-331.
1287. Id . a t 329-330.
1288. H in es v. Sa n ds, 312 S.W.2d 275 (Tex. Ct . Civ. App. 1958).
1289. H in es, 312 S.W.2d a t 278.
1290. Id . a t 279.
1291. H igh la n d St a t e Ba n k v. Gon za les, 340 S.W.2d 828 (Tex. Civ. App.
1960).
1292. Id . a t 829-830.
1293. Id . a t 829.
1294. In t h e Ma t t er of Br ooks, 844 F .2d 258 (5t h Cir . 1988).
1295. Id . a t 263-64.
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1296
365
pa r t icipa n t .
Th e cou r t h eld t h a t t h e t r u st wa s n ot a spen dt h r ift
t r u st beca u se Dr . Br ook s, lik e a ll pa r t icipa n t s, h a d ext en sive
a ccess a n d con t r ol t o h is pla n ben efit s, su ch a s t h e a bilit y t o
con t r ol h is pla n in vest m en t s, bor r ow a ga in st h is pla n a sset s, a n d
obt a in h is pla n a sset s if h e t er m in a t ed h is em ploym en t ; m or eover ,
h e h a d a n own er sh ip a n d m a n a gem en t r ole in m a in t a in in g a n d
1297
fu n din g t h e t r u st s.
Th er e do n ot seem t o h a ve been ca ses wh er e
a cou r t h eld t h a t sim ila r a ccess a n d con t r ol by a n on -own er
pa r t icipa n t , wh ich is cu st om a r y in self-dir ect ed pen sion pla n s,
pr even t ed t h e pa r t icipa n t fr om t a k in g a dva n t a ge of t h e
spen dt h r ift pr ot ect ion s for su ch a pla n .
New Yor k a m en ded it s civil pr a ct ice r u les a ft er t h e a dopt ion
of E RISA so t h a t t a x-qu a lified pen sion pla n s a r e n ot t r ea t ed a s
self-set t led pla n s for t h e pu r pose of t h e exem pt ion s fr om t h e
1298
en for cem en t of civil ju dgm en t s.
Sim ila r ly, Texa s ch a n ged it s
la w t o t r ea t a ll t a x-qu a lified pla n s a s spen dt h r ift t r u st s for
ba n kr u pt cy pu r poses, bu t n ot for ot h er pu r pose s a ft er t h e effect ive
1299
da t e of t h e even t s in B rook s.
Th e Alien a t ion P r oh ibit ion pla ys a su bst a n t ia l r ole in
secu r in g r et ir em en t in com e befor e a n d a ft er t h e dist r ibu t ion of
su ch in com e wit h or wit h ou t t h ose st a t e a m en dm en t s for a t lea st
t h r ee r ea son s. F ir st , st a t e la ws m a y n ot pr ot ect a ll u n d ist r ibu t ed
r et ir em en t ben efit s. F or exa m ple, Texa s does n ot pr ot ect pen sion
ben efit s t h a t a r e im m edia t ely dist r ibu t a ble in a n y m a n n er fr om
t h e en for cem en t of cr edit or cla im s a ga in st su ch ben efit s wh ile in
t h e pla n . Secon d, a s discu ssed, su pr a , t h er e a r e m a n y decision s
per m it t in g cer t a in cr edit or s of pa r t icipa n t s t o collect ju dgm en t s
fr om ben efit dist r ibu t ion s t o pa r t icipa n t s. Th ir d, t h e st a t e la ws,
even a s a m en ded, m a y pr ot ect less pla n s t h a n t h e Alien a t ion
P r oh ibit ion . E RISA pr ot ect ion s a r e n ot r est r ict ed t o t a x-qu a lified
pla n s, a s is t h e ca se for a for em en t ion ed N ew Yor k la w. Th u s,
pa r t icipa n t s a n d ben eficia r ies of a n E RISA ben efit pla n do n ot lose
cr edit or pr ot ect ion s if t h e pla n s viola t e t h e t a x-qu a lifica t ion r u les.
Th e t a x-qu a lifica t ion r u les lim it t h e st a t e la w cr edit or
pr ot ect ion s a va ila ble t o t h e h igh ly com pen sa t ed. Th is is beca u se
t h ose r u les lim it con t r ibu t ion s t h a t h igh ly com pen sa t ed em ployees
1300
m a y m a k e t o pen sion pla n s bot h in a bsolu t e t er m s,
a n d r ela t ive
1301
t o t h e n on -h igh ly com pen sa t ed em ployees.
H owever , t h ese r u les
do n ot on ly lim it pr ot ect ion s for h igh ly com pen sa t ed em ployees.
All em ployees a r e depr ived of a n y st a t e la w cr edit or pr ot ect ion s for
t h eir pla n a sset s, if t h e pla n is n ot t a x-qu a lified even t h ou gh m ost
em ployees la ck t h e a bilit y t o a ffect t h e pla n ’s qu a lifica t ion . E RISA
1296. Id . a t 259-60.
1297. Id . a t 263-64.
1298. N.Y. C.P.L.R. 5205(c), (d) (McKin n ey 2011).
1299. In re B rook s, 844 F .2d a t 261.
1300. Code § 415 (2012).
1301. Code § 401(a )(4) (2012).
366
T h e J oh n M arsh all L aw R eview
[47:145
a n d t h e Alien a t ion P r oh ibit ion wer e en a ct ed t o secu r e t h e
r et ir em en t in com e of pa r t icipa n t s a n d ben eficia r ies, so t h ey cou ld
pa y r et ir em en t expen ses. Th is goa l will n ot be a ch ieved if
r et ir em en t pla n dist r ibu t ion s a r e su bject t o a cr edit or ’s cla im s
eit h er befor e or a ft er t h eir pla n dist r ibu t ion . Th e people m ost in
n eed of su ch pr ot ect ion depen d u pon t h eir r et ir em en t pla n
dist r ibu t ion s t o pa y t h eir cu r r en t livin g expen ses. Th e P r oh ibit ion
wa s n ot in t en ded t o a ssu r e t h a t E RISA pla n a dm in ist r a t or s “m a y
be en a bled t o get r id of com pen sa t ion , wh ich is du e a n d pa ya ble,
sim ply by pa yin g it over t o t h e per son t o wh om it is pa ya ble u n der
t er m s of t h e pla n .” Th is is a pa r a ph r a se of t h e posit ion t h a t
J u st ice Ca r dozo cor r ect ly r eject ed in S u race a s con t r a r y t o t h e
pu r pose of t h e a lien a t ion pr oh ibit ion for t h e wor k er s com pen sa t ion
ben efit s a t issu e , wh ich t h e cou r t h eld pr ot ect ed dist r ibu t ed pla n
ben efit s.
Ch ief J u st ice Ch a r les E va n s H u gh es’s u n a n im ou s
Su pr em e Cou r t opin ion in L aw ren ce, wh ich J u st ice Ca r dozo join ed,
sim ila r ly la t er h eld t h a t vet er a n ’s ben efit s deposit ed in ba n k
a ccou n t s wer e pr ot ect ed fr om cr edit or s.
F. T h e S u prem e Cou rt Decision s Im ply T h at th e Alien ation
Proh ibition Preven ts a S tate L aw Cred itor of a Participan t or
of a B en eficiary of a S pou sal S u rvivor B en efit Plan from
Wrestin g th e Plan B en efit From th e Participan t or B en eficiary
Th e Su pr em e Cou r t h a s r ea ffir m ed a ga in a n d a ga in t h a t
“E RISA is a com pr eh en sive st a t u t e design ed t o pr om ot e t h e
in t er est s of em ployees a n d t h eir ben eficia r ies in em ployee ben efit
1302
pla n s.”
On e of t h e wa ys t h a t E RISA does t h is is by it s cor e
r equ ir em en t t h a t E RISA ben efit r igh t s be det er m in ed by pla n
1303
t er m s,
wh ich a s discu ssed su pra, a pplies t o a ll E RISA pla n s.
Th u s, a s discu ssed su pra, in E gelh off t h e Cou r t r u led t h a t a st a t e
r evoca t ion u pon divor ce st a t u t e cou ld n ot be u sed t o depr ive t h e
ben eficia r y n a m ed pu r su a n t t o a life in su r a n ce pla n ’s t er m s of
1304
t h ose ben efit s.
Sim ila r ly in B oggs t h e Cou r t r u led t h a t a st a t e
com m u n it y pr oper t y la w cou ld n ot be u sed t o depr ive t h e
ben eficia r y n a m ed pu r su a n t t o a pen sion pla n ’s t er m s of t h ose
1305
ben efit s.
In bot h ca ses, a s t h e ca pt ion s su ggest ed t h e Cou r t
r u led t h a t t h e E RISA pr ot ect ion of ben efit en t it lem en t con t in u ed
a ft er t h e ben efit s wer e pa id ou t by t h e pla n s. Th e B oggs Cou r t
decla r ed t h a t if t h e pr ot ect ion of t h e ben efit en t it lem en t did n ot
con t in u e a ft er t h e ben efit wa s dist r ibu t ed, t h e “[E RISA] a wa r d of
1306
t it le wou ld be r en der ed m ea n in gless.”
As discu ssed su pra, t h ese
r esu lt s pr even t a per son wit h a st a t e la w cla im a r isin g fr om a
1302. B oggs, 520 U.S. a t 845 (qu ot in g S h aw , 463 U.S. a t 90) (in t er n a l
qu ot a t ion s om it t ed).
1303. E gelh off, 532 U.S. a t 147.
1304. Id .
1305. B oggs, 520 U.S. a t 833.
1306. Id . a t 853 (qu ot in g Free, 369 U.S. a t 669).
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367
pa r t icipa n t ’s or a ben eficia r y’s r igh t t o a n E RISA pla n ben efit fr om
wr est in g t h e ben efit or t h e a m ou n t of t h e ben efit fr om t h e
pa r t icipa n t or ben eficia r y.
Th e Alien a t ion P r oh ibit ion , a s
discu ssed in fra, a ddr esses t h e effect s of ot h er cla im s, su ch
u n r ela t ed cr edit or cla im s.
Th e Su pr em e Cou r t h eld in Gu idr y t h a t t h e Alien a t ion
P r oh ibit ion pr even t ed a u n ion fr om u sin g a feder a l la bor la w t o
im pose a con st r u ct ive t r u st a ga in st a n E RISA collect ively
ba r ga in ed pen sion pla n a n d dir ect ed t h e pla n t o pa y pla n ben efit s
t o a n in dividu a l wh o h a d em bezzled su bst a n t ia l fu n ds fr om t h e
1307
u n ion . Th e Cou r t st a t ed:
Sect ion 206(d) [t h e Alien a t ion P r oh ibit ion ] r eflect s a con sider ed
con gr ession a l policy ch oice, a decision t o sa fegu a r d a st r ea m of
in com e for pen sion er s (a n d t h eir depen den t s, wh o m a y be, a n d
per h a ps u su a lly a r e, bla m eless), even if th at d ecision preven ts oth ers
1308
from secu rin g relief for th e w ron gs d on e th em .
Ot h er s wou ld n ot be pr even t ed fr om secu r in g r elief if t h ey
cou ld en for ce a ju dgm en t a ga in st t h e ben efit s pa id by t h e pla n t o
t h e pa r t icipa n t . In fa ct , t h e u n ion sou gh t t o do so followin g
Gu id ry, bu t fa iled beca u se t h e cou r t below decided t h a t t h e
r eleva n t st a t e civil pr a ct ice r u les for t h e en for cem en t of ju dgm en t s
1309
pr ot ect ed t h e dist r ibu t ed pla n ben efit s.
Th e Su pr em e Cou r t
1310
declin ed t o r eview t h a t lower cou r t decision .
Th e Gu id ry Cou r t n ot ed M ack ey II con t a in ed dict u m t h a t t h e
Alien a t ion P r oh ibit ion pr oh ibit ed t h e ga r n ish m en t of E RISA
1311
pen sion pla n s.
Th e Gu id ry Cou r t sa id n ot h in g a bou t t h e
a pplica t ion of t h e Alien a t ion P r oh ibit ion t o ben efit s pa id by a
pen sion pla n a n d did n ot cit e t h e followin g fr om M ack ey II:
Wh er e Con gr ess in t en ded in E RISA t o pr eclu de a pa r t icu la r m et h od
of st a t e-la w en for cem en t of ju dgm en t s, or ext en d a n t i -a lien a t ion
pr ot ect ion t o a pa r t icu la r t ype of E RISA pla n , it did so expr essly in
t h e st a t u t e. Specifica lly, E RISA § 206(d)(1) ba r s (wit h cer t a in
en u m er a t ed except ion s) t h e a lien a t ion or a ssign m e n t of ben efit s
pr ovided for by E RISA pen sion ben efit pla n s.
29 U.S. C.
§ 1056(d)(1). Con gr ess did n ot en a ct a n y sim ila r pr ovision a pplica ble
1307. Gu id ry, 493 U.S. a t 375-76. S ee gen erally F eu er E R IS A M yth s, su pra
n ot e 25, a t 717-18 (discu ssin g t h e decision in m or e det a il). B u t see Lisa M.
Sm it h , E R IS A Qu alified Pension Plan s as Part of th e B an k ru ptcy E state after
Patterson v. S h u m ate, 21 C ARDOZO L. R E V. 2119, 2140-57 (2000) (su ggest in g
t h a t Gu idr y m a y per m it st a t e cou r t s t o or der pa r t icipa n t s t o wit h dr a w a n d
pa y pla n ben efit s t o cr edit or s, pa r t icu la r ly if t h e st a t e la w t r ea t s t h e
u n der lyin g con t r ibu t ion a s fr a u du len t t r a n sfer s beca u se m a de wh ile t h e
pa r t icipa n t wa s in solven t , a n d r ecom m en din g E RISA be a m en ded t o explicit ly
per m it t h e r ever sa l of con t r ibu t ion s t h a t a r e fr a u du len t t r a n sfer s).
1308. Gu id ry, 493 U.S. a t 376 (em ph a sis a dded).
1309. Gu idr y v. Sh eet Met a l Wor ker s Na t ion a l P en sion F u n d, 39 F .3d 1078
(10t h Cir . 1994)
1310. Gu id ry, cert. d en ’d , 514 U.S. 1063 (1995).
1311. Gu id ry, 493 U.S. a t 371.
368
T h e J oh n M arsh all L aw R eview
[47:145
t o E RISA w elfare ben efit pla n s, su ch a s t h e on e a t issu e in t h is ca se.
Sect ion 206(d)(1) is dou bly inst r u ct ive.
F ir st , § 206(d)(1) expr essly in clu des a dist in ct ion t h a t th e Un it ed
St a t es wou ld h a ve u s r ea d in t o § 514(a ). Sect ion 206(d)(1) ba r s t h e
a ssign m en t or a lien a t ion of pen sion pla n ben efits, a n d t h us pr oh ibits
t h e u se of st a t e en for cem en t m ech a n ism s on ly in sofa r a s t h ey
pr even t t h ose ben efit s fr om bein g pa id t o pla n pa r t icipa n t s. As
discu ssed a bove, § 514(a ), by con t r a st , dea ls wit h st a t e la ws a s t h ey
r ela t e t o plan s. Th e Un it ed St a t es a sks u s t o r ea d § 514(a ) a s
pr ot ect in g on ly ben efit s —bu t n ot pla n s a s a wh ole—fr om st a t e-la w
a t t a ch m en t or der s (r ecogn izin g t h e n u m er ou s pr oblem s t h a t wou ld
a r ise if we wer e t o con clu de t h a t welfa r e ben efit pla ns cou ld in n o
wa y be su bject ed t o st a t e-la w a t t a ch m en t ). Bu t by a dopt in g
§ 206(d)(1), Con gr ess dem on st r a t ed t h a t it cou ld, wh er e it wish ed
t o, st a y t h e oper a t ion of st a t e la w a s it a ffect s on ly ben efit s a n d n ot
pla n s. Th e Un it ed St a t es a sks u s t o im ply a lim it a t ion on a pr e em pt ion pr ovision in on e por t ion of t h e st a t u t e t h a t Con gr ess m a de
expr ess in a n ot h er por t ion of E RISA (§ 206(d)(1)). We see n o ba sis
for con st r u in g t h e st a t u t e in t h is m a n n er a n d t h er efor e, in ligh t of
§ 206(d)(1), r eject t h e Un it ed St a t es’ su ggest ed in t er pr et a t ion of
1312
§ 514(a ).
Th e st a t em en t r efer r in g t o t h e lim it ed n a t u r e of t h e
1313
Alien a t ion P r oh ibit ion in t h e secon d pa r a gr a ph is a dict u m .
1314
Th u s, it is n ot bin din g.
Mor eover , a s discu ssed, in fr a , it is a n
obit er dict u m r a t h er t h a n a con sider ed dict u m . Th e la t t er , n ot t h e
for m er , is en t it led t o con sider a ble bu t st ill n on -bin din g
1315
defer en ce.
Th e M ack ey II dict u m is obit er dict u m for five r ea son s. F ir st ,
t h e Cou r t fa ils t o expla in wh y t h e Alien a t ion P r oh ibit ion h a s su ch
a lim it ed effect . Secon d, t h e Cou r t n ever descr ibes t h e pu r pose of
t h e Alien a t ion P r oh ibit ion , wh ich cou ld be exa m in ed for
con sist en cy wit h su ch a lim it ed effect . Th ir d, t h er e wa s n o n eed for
t h e Cou r t t o decla r e wh et h er t h e Alien a t ion P r oh ibit ion h a d su ch a
lim it ed effect in t h e secon d pa r a gr a ph . Th e poin t bein g m a de in
t h e pa r a gr a ph is t h a t t h e Alien a t ion P r oh ibit ion pr even t s
en for cem en t m ech a n ism s per t a in in g t o pla n s r a t h er t h a n ben efit s,
wh ich is wh y t h ose wor ds a r e it a licized. F ou r t h , t h e Cou r t
1312. M ack ey, 486 U.S. a t 836 (em pha sis in or igin a l).
1313. S ee e.g., P ier r e N. Leva l, J u d gin g u n d er th e Con stitu tion : Dicta abou t
Dicta, 81 N.Y.U. L. R E V. 1249, 1257 (2006) (descr ibin g dict u m a s a n y
st a t em en t t h a t , if it s opposit e wer e in st ea d st a t ed, wou ld h a ve n o effect on t h e
cou r t ’s r ea son in g or ju dgm en t ).
1314. Id . a t 1274. Cf. E a r l M. Ma lt z, T h e Fu n ction of S u prem e Cou rt
Opin ion s, 37 H OUS . L. R E V. 1395, 1416-17 (2000) (st a t in g t h a t t h e Su pr em e
Cou r t h a s con sist en t ly h eld t h a t dict u m do n ot h a ve t h e for ce of la w).
1315. S ee e.g., U.S. v. Bell, 524 F .2d 202 (2d. Cir . 1975) (r ever sin g con vict ion
for fir ea r m s possession on ba sis of la ck of sh owin g of su fficien t in t er st a t e
n exu s). S ee also Ch a r les A. Wr igh t , L AW OF F E DE RAL C OU RTS § 58, a t 396 (4t h
ed. 1983) (m a kin g sim ila r st a t em en t wit h r espect t o t r ea t m en t of dict a fr om
h igh est st a t e cou r t s).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
369
pr esen t s t h e lim it ed effect s in n o ot h er pla ces a lt h ou gh it m a kes
m a n y ot h er r efer en ces t o a t t a ch m en t or der s a n d t h e Alien a t ion
P r oh ibit ion . F in a lly, t h e pa r a gr a ph deser ves lit t le defer en ce
beca u se it disr ega r ds t h e kin d of r ela t ion t h a t det er m in es wh et h er
a st a t e la w is pr eem pt ed. St a t e la ws a r e pr eem pt ed if t h er e is a
n on -t en u ou s r ela t ion bet ween t h e st a t e la w a n d a n E RISA ben efit
pr ot ect ion , a s occu r s wh en a st a t e la w, su ch a s t h e ga r n ish m en t a t
issu e, pr even t s a pa r t icipa n t fr om exer cisin g h is ben efit r igh t t o
r eceive t h e ben efit pa ym en t t o wh ich h e is en t it led u n der t h e pla n
t er m s. Th u s, if t h e welfa r e pla n a t issu e did n ot in clu de st a t e la w
ga r n ish m en t s in it s ben efit t er m s, E RISA pr eem pt s su ch
ga r n ish m en t s. H owever , t h e Cou r t n ever con sider ed t h a t issu e a s
discu ssed, su pra.
In sh or t , t h e on ly Su pr em e Cou r t decision s t h a t h a ve
ca r efu lly con sider ed post -dist r ibu t ion ben efit r igh t s of pa r t icipa n t s
a n d ben eficia r ies h a ve con clu ded t h a t E RISA pr ot ect ion s wou ld be
m ea n in gless u n less E RISA pr even t s a per son wit h a st a t e la w
cla im a r isin g fr om a pa r t icipa n t ’s or ben eficia r y’s r igh t t o a n
E RISA pla n ben efit fr om com pellin g t h e pla n t o pa y it su ch b en efit
of fr om wr est in g t h e ben efit or t h e a m ou n t of t h e ben efit fr om t h e
pa r t icipa n t or ben eficia r y. Th e on ly decision of t h e Cou r t t h a t
ca r efu lly con sider ed t h e Alien a t ion P r oh ibit ion descr ibed t h e
pr oh ibit ion a s pr even t in g t h e en for cem en t of st a t e la w ju dgm en t s
t h a t did n ot a r ise fr om t h e pa r t icipa n t ’s or ben eficia r y’s r igh t t o a
Spou sa l Su r vivor Ben efit P la n ben efit , a ga in st t h e pla n ’s ben efit
pa ym en t r ega r dless of t h e equ it y of t h e u n der lyin g obliga t ion
a ga in st pla n ben efit pa ym en t s. Su ch pr ot ect ion wou ld be sim ila r ly
m ea n in gless if t h e Alien a t ion P r oh ibit ion did n ot pr ot ect t h e
ben efit fr om t h e sa m e sym pa t h et ic ju dgm en t cr edit or s a ft er it s
dist r ibu t ion .
Th e on ly a ppa r en t Con gr ession a l legisla t ion r ela t in g t o
Gu id ry sh eds lit t le ligh t on t h is in t er pr et a t ion beca u se it
a ddr essed pla n offset s a ga in st pla n ben efit s r a t h er t h a n t h e a bilit y
of a st a t e la w cla im a n t t o obt a in a n y r ecou r se. In pa r t icu la r , t h e
1316
Ta x Relief Act of 1997
a dded a pr ovision t wo yea r s a ft er t h e
Gu id ry decision t o per m it t h e offset of a pa r t icipa n t ’s ben efit
a ga in st t h e a m ou n t t h e pa r t icipa n t owed t o a pla n a s a r esu lt of
t h e pa r t icipa n t br ea ch in g h is fidu cia r y du t y t o t h e pla n or
1317
com m it t in g a cr im e a ga in st t h e pla n .
Th e on ly r eleva n t
com m it t ee r epor t does n ot discu ss offset s for a n y ot h er ba d
beh a vior , su ch a s cr im in a l a ct ivit y, fr a u du len t a ct ivit y, t h eft fr om
1318
a pla n spon sor (a s occu r r ed in Gu id ry) or in t en t ion a l t or t s.
Th u s, E RISA pr even t s vict im s of su ch ba d con du ct fr om en for cin g
st a t e la w ju dgm en t s a ga in st a pa r t icipa n t ’s pen si on ben efit
1316. Ta xpa yer Relief Act of 1997, P u b. L. No. 105-34, § 1502, 111 St a t . 788
a t 1058-61 (1997).
1317. E RISA §§ 206(d)(4)-(5), 29 U.S.C. §§ 1056(d)(4)-(5) (2012).
1318. H .R. R E P . N O . 105-20(1997).
370
T h e J oh n M arsh all L aw R eview
[47:145
1319
pa ym en t s,
a lt h ou gh a s discu ssed in fra t h ose vict im s m a y be
per m it t ed t o en for ce su ch ju dgm en t s a ga in st t h e dist r ibu t ed
ben efit s.
G. T h e L ow er Cou rt Case-L aw H old in gs an d th e Com m en tators
Wh o Argu e T h at th e Alien ation Proh ibition Fails to Protect
Participan ts or B en eficiaries in S pou sal S u rvivor B en efit Plan s
from T h eir Cred itors after T h ey R eceive Plan B en efit
Distribu tion s are Un con vin cin g
Cit a t ion s t o ea ch of t h e feder a l cir cu it cou r t s t h a t h a ve r u led
on wh et h er t h e Alien a t ion P r oh ibit ion a pplies t o ben efit s
dist r ibu t ed fr om a Spou sa l Su r vivor Ben efit P la n m a y be fou n d by
com bin in g t h ose in t h e 2011 N or t h er n Dist r ict of Illin ois decision
1320
in S ecu rities an d E xch an ge Com m ission v. M osk op ,
wit h t h ose
in t h e 2012 Th ir d Cir cu it decision in E state of William Ken sin ger,
1321
J r. v. U R L Ph arm a.
Ma n y com m en t a t or s a n d a lm ost a ll t h e
decision s h old t h a t t h e Alien a t ion P r oh ibit ion does n ot a pply t o
ben efit s pa id ou t by a Spou sa l Su r vivor Ben efit P la n . Non e
dispu t e t h e Su pr em e Cou r t st a t em en t t h a t “Sect ion 206(d) r eflect s
a con sider ed con gr ession a l policy ch oice, a decision t o sa fegu a r d a
1322
st r ea m of in com e for pen sion er s.”
Un der t h e in t er pr et a t ion of
t h ese com m en t a t or s a n d cou r t s, civil ju dgm en t s m a y be u sed t o
depr ive pa r t icipa n t s of su ch st r ea m of in com e, a lbei t on ly a ft er t h e
ben efit s h a ve been pa id t o t h e pa r t icipa n t s. H owever , n on e give
a n y r ea son wh y Con gr ess wou ld h a ve pr ovided a n d did pr ovide
su ch fu t ile pr ot ect ion t o r et ir em en t in com e , wh en a s it s t it le
su ggest s, t h e E m ployee Ret ir em en t In com e Secu r it y Act of 1974
wa s design ed t o secu r e t h e r et ir em en t in com e of em ployees.
th
In 1994, t h e 10 Cir cu it , in Gu id ry v. S h eet M etal Work ers
1323
N ation al Pen sion Fu n d
(“Gu id ry III”), pr esen t ed t h e t h r ee m a jor
a r gu m en t s u sed t o su ppor t t h e pr oposit ion t h a t t h e Alien a t ion
P r oh ibit ion per m it s t h e en for cem en t of ju dgm en t s a ga in st ben efit s
t h a t h a ve been pa id t o pa r t icipa n t s or ben eficia r ies of Spou sa l
1324
Su r vivor Ben efit P la n s.
Th e cou r t con clu ded t h a t E RISA did
1319. H owever , a s discu ssed su pra, E RISA does n ot pr eem pt pen a lt ies
u n der gen er a lly a pplica ble cr im in a l la ws.
1320. Sec. a n d E xch . Com m . v. Moskop, 2011 U.S. Dist . LE XIS 68780 (N.D.
Ill J u n e 27, 2011) (h oldin g t h a t t h e Alien a t ion P r oh ibit ion did n ot pr even t
im plem en t in g a fr eeze on t h e pen sion ben efit s deposit ed in t o t h e ba n k a ccou n t
of a per son wh o h a d com m it t ed secu r it ies fr a u d).
1321. E st a t e of Willia m Ken sin ger , J r . v. URL P h a r m a , In c. 674 F .3d 131
(3r d Cir . 2012) (h oldin g t h a t 401(k) ben efit s cou ld be wr est ed fr om ben efici a r y
wh ose divor ce decr ee in clu ded a wa iver of su ch ben efit s a ft er obser vin g t h a t
Su pr em e Cou r t con clu ded t h a t su ch a wa iver wa s n ot a pr oh ibit ed a lien a t ion ).
1322. Gu id ry, 493 U.S. a t 376.
1323. Gu idr y v. Sh eet Met a l Wor ker s Na t ’l P en sion F u n d, 39 F .3d 1078
(10t h Cir . 1994) (“Gu idr y III”).
1324. Cf. L ANGBE IN P E NSION L AW , su pra n ot e 13, a t 338-40 (qu est ion in g
t h is decision on differ en t gr ou n ds).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
371
n ot pr eem pt t h e st a t e en for cem en t of a ju dgm en t by a u n ion
a ga in st t h e pen sion ben efit s of a for m er u n ion officia l wh o h a d
em bezzled fu n ds fr om t h e u n ion , wh ich spon sor ed t h e pen sion
1325
pla n .
H owever , t h e cou r t a lso con clu ded t h a t u n der M ack ey II
t h e Color a do st a t u t e la w exem pt in g a por t ion of r et ir em en t
ben efit s fr om t h e en for cem en t of civil ju dgm en t s is n ot pr eem pt ed
beca u se (1) t h e st a t u t e does n ot “r efer en ce” E RISA pla n s or
ben efit s, even t h ou gh it m en t ion s “pen sion ben efit s,” a n d (2) t h e
1326
st a t u t e a ffect s ben efit pa ym en t s r a t h er t h a n ben efit pla n s.
Th u s, t h e st a t u t e pr ot ect s t h e dist r ibu t ed ben efit s.
F ir st , t h e Gu id ry III cou r t a sser t ed t h a t t h e legisla t ive h ist or y
is in con clu sive a bou t “wh et h er E RISA pr ot ect ion [of ben efit s]
1327
ext en ds pa st t h e m er e a va ila bilit y of fu n ds wit h in t h e pla n .”
Th e cou r t fa iled t o expla in wh y Con gr ess wou ld give su ch fu t ile
pr ot ect ion t o t h e ben efit r igh t s of t h e ver y pa r t icipa n t s a n d
ben eficia r ies wh om E RISA wa s in t en ded t o pr ot ect .
Th is
in t er pr et a t ion im plies t h a t t h e pa r t icipa n t ’s a bilit y t o keep t h e
ben efit pa ym en t s m a y depen d u pon wh et h er t h e r eleva n t st a t e la w
pr ot ect s t h e pa ym en t s a s did occu r in t h is ca se.
Th e In dia n a Su pr em e Cou r t t ook a st r on ger posit ion t h a n t h e
a gn ost icism of Gu id ry III a bou t t h e legisla t ive h ist or y in 1990, in
1328
B rosam er v. M ark ,
a n d decla r ed t h a t per m it t in g t h e Alien a t ion
P r oh ibit ion t o pr ot ect dist r ibu t ed ben efit s “wou ld r u n con t r a r y t o
t h e legisla t ive h ist or y a n d t h e weigh t of t h e r eleva n t ca se la w a n d
st r et ch E RISA beyon d t h e pu r poses decla r ed by Con gr ess in t h e
1329
st a t u t e it self.”
Th e B rosam er cou r t a sser t ed t h a t a m a jor
pu r pose of E RISA is t o r edu ce a dm in ist r a t ive bu r den s on pla n
1330
spon sor s a n d a dm in ist r a t or s,
t h e sa m e a r gu m en t u sed wit h
r espect t o t h e M cIn tosh st a t u t e t h a t J u st ice Ca r dozo dist in gu ish ed
in S u race. Th e B rosam er cou r t descr ibed t h e pu r pose of E RISA a s
“t h e pr ot ect ion of E RISA pla n in t egr it y” beca u se:
Su bsect ion (a ) [of t h e sect ion en t it led “Con gr ession a l fin din gs a nd
Decla r a t ion of P olicy’] poin t s ou t t h e ext en sive pr oblem s exist in g in
pr iva t e pen sion pr ogr a m s a n d st a t es t h a t t h e Act is in ten d ed to
prom ote t h e set t in g of “m in im u m st a n da r ds . . . a ssu r in g t h e
equ it a ble ch a r a ct er of su ch [pen sion ] pla n s a n d t h eir fin a n cia l
1331
sou n dn ess.”“ 29 U.S.C. § 1001(a ).
1325. Gu id ry III, 39 F . 3d at 1080.
1326. Id . a t 1084-86.
1327. Id . a t 1082.
1328. Br osa m er v. Ma r k, 561 N.E .2d 767 (In d. 1990) (h oldin g a cla im for
u n pa id r en t cou ld be en for ced a ga in st a pa r t icipa n t ’s ba n k deposit of pen sion
ben efit pa ym en t s).
1329. Id . a t 769 (t h e “r eleva n t ca se la w” in clu ded t h e dict u m discu ssed,
su pra, in M ack ey II).
1330. S ee gen erally F eu er ’s E R IS A M yth s, su pra n ot e 25 (seekin g t o dispel
su ch pla n a dm in ist r a t ion m yt h ).
1331. Id . (em ph a sis a dded).
372
T h e J oh n M arsh all L aw R eview
[47:145
Mor eover , t h e cou r t poin t s t o t h e su m m a r y of t h e a r ea s in
wh ich st a n da r ds will be set in sect ion s (b) a n d (c). If t h e cou r t h a d
pr esen t ed a bit m or e of t h e st a t u t e, it wou ld h a ve been clea r t h a t
t h ese st a n da r ds wer e a m ea n s of im plem en t in g E RISA’s
dom in a t in g gen er a l pu r pose, t h e pr ot ect ion of pla n pa r t icipa n t s
a n d ben eficia r ies a s set for t h in t h e t it le of Tit le I, P r ot ect ion of
E m ployee Ben efit Righ t s, wh ich con t a in s a ll t h ese pr ot ect ive
fea t u r es. In pa r t icu la r , P a r a gr a ph (b) begin s a s follows:
(b) P ro te c tio n o f in te rs ta te c o m m e rc e a n d be n e fic ia rie s by
re qu irin g d is c lo s u re a n d re p o rti n g , s e ttin g s ta n d a rd s o f
c o n d u c t, e tc ., fo r fid u c ia rie s it is h ereby d eclared to be th e policy
of th is ch apter to protect in terstate com m erce an d th e in terests of
participan ts in em ployee ben efit plan s an d th eir ben eficiaries , by
r equ ir in g t h e disclosu r e a n d r epor t in g t o pa r t icipa n t s a nd
ben eficia r ies of fin a n cia l a n d ot h er in for m a t ion wit h r espect
1332
t h er et o.
Th is focu s on t h e pr ot ect ion of em ployee ben efit r igh t s is
con fir m ed by t h e even t s followin g t h e ext en sive h ea r in gs in 1979
a bou t legisla t ion en t it led t h e E RISA Im pr ovem en t s Act of 1979,
wh ich , a s discu ssed su pra, wou ld h a ve a dded t h e followin g
pa r a gr a ph t o t h e Con gr ession a l fin din gs a n d Decla r a t ion of P olicy:
(d) It is h er eby fu r t h er decla r ed t o be t h e policy of t h is Act t o fost er
t h e est a blish m en t a n d m a in t en a n ce of em ployee ben efit pla n s
1333
spon sor ed by em ployer s, em ployee or ga n iza t ion s, or bot h .
Con gr ess fa iled t o a dopt t h is legisla t ion or t h e pr oposed
a ddit ion , wh ich wou ld h a ve r equ ir ed m or e con sider a t ion in E RISA
for “pla n in t egr it y.”
Th e B rosam er cou r t ’s discu ssion of t h e E RISA legisla t ive
h ist or y is n o m or e con vin cin g. As is oft en t h e ca se, t h e cit ed
h ist or y is lim it ed t o Con gr ession a l r epor t s in t h e Un it ed St a t es
Code Con gr ession a l a n d Adm in ist r a t ive News. Th e cou r t cit ed
1334
in cor r ect ly a n Oct ober 1973 H ou se r epor t , wh ich a ccom pa n ied a
1335
bill wit h ou t a n y a lien a t ion pr oh ibit ion pr ovision s
for t h e
pr oposit ion t h a t “pen sion r igh t s a r e t o be pr ot ect ed t h r ou gh
1336
r egu la t ion of t h e pla n s.”
Th e Cou r t a lso cit ed in cor r ect ly a n
1337
Apr il 1973 Sen a t e r epor t ,
wh ich a ccom pa n ied a bill wit h a n
1332. E RISA § 2(b), 29 U.S.C. § 1003(b) (bold in or igin a l bu t em ph a sis
a dded).
th
1333. E RISA Im pr ovem en t s Act of 1979, S. 209, 96 Con g. § 102 a t 5-6 (1st
Sess. 1979) reprin ted in 1979 Sen a t e E RISA Review, su pra n ot e 406, a t 9, 1314.
1334. B rosam er, 561 N.E .2d a t 769 (H .R. R E P . N O . 93-533 wa s fr om t h e fir st
session n ot t h e secon d session of t h e 93r d Con gr ess).
st
1335. E m ployee Ben efit Secu r it y Act of 1973, H . 2, 93d Con g. (1 Sess. 1973)
as reprin ted in E RISA LE G. HISTORY, su pra n ot e 165, a t 2181-2347.
1336. B rosam er, 561 N.E .2d a t 769.
1337. Id . (Th e r epor t wa s cit ed in cor r ect ly beca u se S. R E P . N O . 93-127 wa s
rd
fr om t h e fir st session n ot t h e secon d session of t h e 93 Con gr ess).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
373
1338
a lien a t ion pr oh ibit ion for a sim ila r pr oposit ion .
In bot h ca ses,
t h e B rosam er cou r t fa ils t o discu ss wh y t h ese st a t em en t s im ply
t h a t ben efit pr ot ect ion cea ses a ft er a n E RISA pla n dist r ibu t es t h e
ben efit s. In st ea d, t h e B rosam er cou r t decla r ed:
Th e legisla t ive h ist or y specifica lly descr ibin g § 1056(d)(1) [set t in g
for t h t h e Alien a t ion P r oh ibit ion ] follows t h e sa m e t h em e. It focu ses
on pr ot ect in g t h e pen sion fu n ds in t h e pla n s t o en su r e t h eir a ct u a l
a va ila bilit y for dist r ibu t ion :
To fu r t h er en su r e t h a t t h e em ployee’s a ccr u ed ben efit s a r e a ct u a lly
a va ila ble for r et ir em en t pu r poses, t h e com m it t ee bill a lso con t a in s a
pr ovision r equ ir in g t h e pla n t o pr ovide t h a t ben efit s m a y n ot be
1339
a ssign ed or a lien a t ed. H .R. Rep. No. 807, 93d Con g., 2d Sess. . .
As discu ssed su pra, t h e cit ed st a t em en t con fir m s t h a t t h e
Alien a t ion P r oh ibit ion wa s in t en ded t o, a n d does, im plem en t
E RISA’s dom in a t in g gen er a l pu r pose, pr ot ect in g pla n pa r t icipa n t s
a n d ben eficia r ies. U sin g t h e com m on m ea n in g of wor ds t h e
Alien a t ion P r oh ibit ion a ch ieves t h a t goa l by in su r in g t h a t
pa r t icipa n t s m a y pa y for t h eir r et ir em en t wit h t h e pla n ben efit s
t h ey r eceive fr om t h e pla n . Th a t goa l m a y n ot be a ch ieved if t h e
pa r t icipa n t m a y be depr ived of t h ose ben efit s by a cr edit or , a s t h e
cou r t per m it t ed t o occu r in t h is ca se.
Secon d, t h e Gu id ry III cou r t a sser t ed t h a t t h e r eleva n t
r egu la t ion s pr ovide t h a t “[t ]h e t er m s ‘a lien a t ion ’ a n d ‘a ssign m en t ’
a r e m ea n t on ly t o cover t h ose a r r a n gem en t s t h a t gen er a t e a r igh t
1340
en for cea ble a ga in st a pla n .”
Th ose r egu la t ion s do n ot lim it t h e
t er m s “a ssign m en t ” a n d “a lien a t ion ” t o pla n t r a n sa ct ion s. In st ea d,
t h ey descr ibe t h ose t er m s a s in clu d in g a n y a r r a n gem en t s for t h e
t r a n sfer of ben efit pa ym en t s a wa y fr om pla n pa r t icipa n t s a n d
1341
ben eficia r ies n ot su bject t o a specific exem pt ion .
Th u s, t h ose
t er m s m a y in clu de ot h er a r r a n gem en t s. Th e cit ed r egu la t ion s
con sist of t h e Tr ea su r y r egu la t ion for t h e t a x qu a lifica t ion sect ion
cor r espon din g t o t h e Alien a t ion P r oh ibit ion . Th u s, t h e r egu la t ion
on ly gover n s pla n beh a vior a n d n ot t h e t r ea t m en t of pa ym en t s
m a de by t h e pla n . H owever , t h e pu r pose of t h e Alien a t ion
P r oh ibit ion is t h e pr ot ect ion of r et ir em en t in com e. Th er efor e, t h e
t a x r egu la t ion im plies t h a t t h e Alien a t ion P r oh ibit ion pr oh ibit s
a n y a ddit ion a l a ct ion s t h a t wou ld pu t t h e pa r t icipa n t ’s ben efit s a t
r isk, su ch a s a t t em pt s t o wr est ben efit pa ym en t s fr om pla n
pa r t icipa n t s a n d ben eficia r ies. Su ch a ct ion s wou ld h a ve n o effect
on t h e pla n ’s t a x qu a lifica t ion . Th u s, t h ey a r e n ot a n d sh ou ld n ot
be m en t ion ed in a r egu la t ion t h a t is lim it ed t o t a x qu a lifica t ion
issu es.
Th ir d, t h e Gu id ry III cou r t a sser t ed t h a t E RISA, u n like t wo
1338. B rosam er, 561 N.E .2d a t 769.
1339. B rosam er, 561 N.E .2d a t 769-70 (om it t in g fu ll cit a t ion t o r epor t ).
1340. Gu id ry, 39 F .3d a t 1082-83.
1341. Tr ea s. Reg. § 1.401(a )(13)(c) (a s a m en ded in 1988).
374
T h e J oh n M arsh all L aw R eview
[47:145
ot h er in com e pr ot ect ion st a t u t es, t h e Socia l Secu r it y Act a n d t h e
Vet er a n ’s Ben efit Act , does n ot expr essly pr ovide for pr ot ect ion
1342
a ft er t h e ben efit s a r e pa id.
Th e cou r t , h owever , pr esen t s n o
r ea son wh y Con gr ess wou ld h a ve in t en ded t o give fu t ile pr ot ect ion
t o pr iva t e pen sion ben efit s in a la w en t it led E m ployee Ret ir em en t
In com e Secu r it y Act of 1974. Nor did t h e cou r t m en t ion t h e t wo
ot h er feder a l r et ir em en t pr ot ect ion la ws, t h e Ra ilwa y Ret ir em en t
Act a n d t h e Civil Ser vice Ret ir em en t Act , wh ich a s discu ssed
su pra, like E RISA did n ot explicit ly pr ovide for pr ot ect ion a ft er t h e
ben efit s a r e pa id, bu t h a ve been in t er pr et ed t o pr ovide su ch
pr ot ect ion .
A sim ila r st a t u t or y a r gu m en t wa s m a de in 2004 by t h e F ir st
1343
Cir cu it in H ou lt v. H ou lt.
Th e Cou r t obser ved t h a t t h e gen er a l
r u le of t h e Alien a t ion P r oh ibit ion con sist s of t h e followin g
sen t en ce, “[e]a ch pen sion pla n sh a ll pr ovide t h a t ben efit s pr ovided
u n der t h e pla n m a y n ot be a ssign ed or a lien a t ed.” Th e cou r t t h en
obser ves t h a t t h is sen t en ce on it s fa ce a pplies on ly t o pla n s a n d
1344
con t a in s n o explicit la n gu a ge per t a in in g t o post -dist r ibu t ion s.
Th ese st a t em en t s a r e n ot t oo su r pr isin g. Th e Su p r em e Cou r t in
F or t H a lifa x a n d Ma ck ey II h a d sim ila r ly focu sed on t h e u se of t h e
wor d pla n r a t h er t h a n t h e ph r a se pla n ben efit s, a lt h ou gh , a s
discu ssed su pr a , t h is wa s a dist in ct ion wit h ou t a differ en ce in t h e
issu es befor e t h e Cou r t . Mor eover , t h e Su pr em e Cou r t h eld in
B oggs, th ree years later, in 1997, t h a t sim ila r st a t u t or y E RISA
1345
la n gu a ge r efer en cin g “r igh t s u n der t h e t er m s of t h e pla n ,”
r esu lt s in t h e pr eem pt ion of a per son ’s st a t e com m u n it y pr oper t y
la w cla im a r isin g fr om a pa r t icipa n t ’s or ben eficia r y’s r igh t t o a n
1346
E RISA pla n ben efit .
In Boggs, t h e cla im a n t s sou gh t t o wr est
t h e ben efit or t h e a m ou n t of t h e ben efit fr om t h e pa r t icipa n t or
1347
1348
ben eficia r y.
Th u s, u n der t h e sa m e r ea son in g,
E RISA, wh ich
u ses t h e Alien a t ion P r oh ibit ion t o pr ot ect t h e r igh t of pa r t icipa n t s
a n d ben eficia r ies in a Spou sa l Su r vivor Ben efit P la n t o ben efit s
u n der t h e t er m s of t h e pla n , a lso su per sedes a per son ’s st a t e la w
cla im n ot a r isin g fr om a pa r t icipa n t ’s or ben eficia r y’s r igh t t o a
1342. Gu id ry III, 39 F .3d a t 1083.
1343. H ou lt v. H ou lt , 373 F .3d 47 (1st Cir . 2004) (h oldin g t h a t a da u gh t er
m a y en for ce a ga in st h er fa t h er ’s E RISA pen sion pa ym en t s, a feder a l ju dgm en t
for da m a ges r esu lt in g fr om t h e a bu se h er fa t h er in flict ed on h er ).
1344. Id . a t 54.
1345. E RISA § 502(a )(1)(B), 29 U.S.C. § 1132(a )(1)(B) (2012).
1346. B oggs, 520 U.S. a t 853-54.
1347. Id . a t 836-37.
1348. Boggs wa s n ot decided on t h e ba sis of t h e Alien a t ion P r oh ibit ion , t h us
it is n ot con t r ollin g a u t h or it y on t h a t poin t . See gen er a lly F eu er E RISA
Myt h s, su pra n ot e 25, a t 720-725. Cf. Wr igh t v. Ch a se Rivela n d, 219 F .3d 905,
921 (9t h Cir . 2000) (Boggs is n ot con t r ollin g beca u se Cou r t r eser ved ju dgm en t
on t h e effect of st a t e la w on ben efit s dist r ibu t ed befor e t h e pa r t icipa n t ’s dea t h ,
wh ich disr ega r ds t h e fa ct t h a t t h e Boggs issu e wa s wh et h er E RISA per m i t s a
dist r ibu t ed ben efit t o be wr est ed a wa y fr om t h e r igh t fu l r ecipien t ).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
375
Spou sa l Su r vivor Ben efit P la n ben efit w h ich cla im is bein g u sed
eit h er t o com pel t h e pla n t o pa y it su ch ben efit or t o wr est t h e
ben efit fr om t h e pa r t icipa n t or ben eficia r y.
In 1995, t h e yea r a ft er Gu id ry III, t h e F ou r t h Cir cu it in
1349
Un ited S tates v. S m ith ,
h eld t h a t t h e Alien a t ion P r oh ibit ion
pr ot ect ed som e bu t n ot a ll ben efit dist r ibu t ion s. Th e cou r t
dist in gu ish ed pr e-r et ir em en t dist r ibu t ion s, wh ich it a sser t ed wer e
n ot pr ot ect ed by t h e Alien a t ion P r oh ibit ion , fr om post -r et ir em en t
a n n u it y pa ym en t s, i.e., t h e st r ea m of in com e descr ibed in Gu id ry,
1350
wh ich wer e pr ot ect ed.
H owever , a s t h e dissen t n ot ed, t h er e wa s
1351
n o su ppor t in t h e r egu la t ion s a n d st a t u t e for su ch a dist in ct ion .
Th e dissen t n ever t h eless con clu ded t h a t n o dist r ibu t ed ben efit s
wer e pr ot ect ed by t h e Alien a t ion P r oh ibit ion beca u se “E RI SA’s
st a t u t or y la n gu a ge a n d r egu la t ion s m ak e clear t h a t t h e ben efit s,
1352
on ce dist r ibu t ed, m a y be a t t a ch ed.”
As discu ssed, su pra, bot h
t h e st a t u t e a n d r egu la t ion s su ppor t t h e opposit e pr in ciple. Th e
a bsu r dit ies t h a t r esu lt fr om per m it t in g su ch a t t a ch m en t s a r e
1353
dem on st r a t ed by a well-wr it t en n ot e by Megh a n L. Br ower ,
wh ich r eviews t h e in t ellect u a l gym n a st ics t h e cou r t s h a ve en ga ged
in t o ju st ify h ow ea sily Mich iga n m a y wr est pen sion ben efit s fr om
t h ose in st a t e cor r ect ion fa cilit ies t o com pen sa t e t h e st a t e for t h e
cost s of im pr ison m en t , su ch a s for cin g pr ison er s t o h a ve pen sion
pa ym en t s deposit ed in pr ison a ccou n t s so t h ey m a y be m ost ea sily
1354
ga r n ish ed.
Ms. Br ower cor r ect ly obser ves t h a t a ll of t h ese
a ct ion s viola t e t h e pu r pose of t h e Alien a t ion P r oh ibit ion , viz., t o
1355
sa fegu a r d a st r ea m of r et ir em en t in com e,
a lt h ou gh sh e does n ot
discu ss wh et h er t h e gen er a lly a pplica ble cr im in a l la w exclu sion
fr om t h e E RISA E xpr ess P r eem pt ion Ru le su per sedes t h e
Alien a t ion P r oh ibit ion , a s discu ssed, su pra.
XIX.
SP OUSAL SURVIVOR BE NE F IT P LANS MAY DE F E R
ONLY TO QDROS, WH E RE AS SP ON SORS OF OTH E R
P LAN S MAY CH OOSE TH E E XTE N T, IF AN Y, TO WH ICH
TH OSE P LANS MU ST DE F E R TO DOME STIC RE LATION S
ORDE RS
E RISA n ega t es a st a t e dom est ic r ela t ion s la w cla im a r isin g
fr om a pa r t icipa n t ’s or a ben eficia r y’s r igh t t o a ben efit u n der t h e
1349. Un it ed St a t es v. Sm it h , 47 F .3d 681 (4t h Cir . 1995) (h oldin g a
pa r t icipa n t wh o defr a u ded ot her s m a y n ot be for ced t o pa y por t ion of pen sion
ben efit a n n u it y pa ym en t s a s com pen sa t ion t o h is vict im s).
1350. Id . a t 683.
1351. Id . a t 687.
1352. Id . (em ph a sis a dded).
1353. Br ower ’s Mich iga n P r ison er s, su pra n ot e 978.
1354. Id . a t 146-51.
1355. Id . a t 151-157.
376
T h e J oh n M arsh all L aw R eview
[47:145
t er m s of a n E RISA pla n . E RISA pr oh ibit s su ch a cla im fr om bein g
u sed t o (1) com pel t h e pla n t o pa y t h e cla im a n t su ch ben efit , or (2)
wr est t h e ben efit or t h e a m ou n t of t h e ben efit fr om t h e pa r t icipa n t
or ben eficia r y, r esp ect ively.
Th e Spou sa l Su r vivor QDRO Ben efit Ma n da t e r equ ir es a
Spou sa l Su r vivor Ben efit P la n t o t r ea t a QDRO a s a ben eficia r y
design a t ion a n d pr oh ibit s su ch a pla n fr om defer r in g t o a n y ot h er
dom est ic r ela t ion s or der . Th e Alien a t ion P r oh ibit ion a n d t h e
Spou sa l Su r vivor QDRO Ben efit Ma n da t e pr even t a per son u sin g
a n y st a t e dom est ic r ela t ion s la w cla im , ot h er t h a n on e ba sed on a
QDRO, t o (1) com pel a Spou sa l Su r vivor Ben efit P la n t o pa y it
su ch ben efit , or (2) wr est t h e ben efit or t h e a m ou n t of t h e ben efit
fr om t h e pa r t icipa n t or ben eficia r y.
Spon sor s of E RISA pla n s ot h er t h a n Spou sa l Su r vivor Ben efit
P la n s, su ch a s Top-H a t P la n s, disa bilit y pla n s, a n d life in su r a n ce
pla n s, m a y dr a ft su ch pla n s t o det er m in e t h e ext en t , if a n y, t o
wh ich a dom est ic r ela t ion s or der det er m in es ben eficia r y
en t it lem en t s. H owever , per son s wit h a st a t e dom est ic r ela t ion s
la w cla im n ot a r isin g fr om a pa r t icipa n t ’s or ben eficia r y’s r igh t t o
a n E RISA pla n ben efit u n der su ch a pla n ’s t er m s, su ch a s a cla im
for u n pa id a lim on y t h a t cou ld be pa id fr om a n y sou r ce, m a y wr est
t h e ben efit fr om t h e pa r t icipa n t or ben eficia r y. An a r t icle en t it led,
Determ in in g th e Death B en eficiary u n d er an E R IS A Plan an d th e
1356
R igh ts of su ch a B en eficiary (“Feu er’s B en eficiary Article”)
discu sses m a n y of t h ese issu es.
A. T h e Disclosu re an d th e S u bstan tive R equ irem en ts of th e
S pou sal S u rvivor QDR O ben efit M an d ate
Un der t h e Spou sa l Su r vivor QDRO Ben efit Ma n da t e, Spou sa l
Su r vivor Ben efit P la n s m u st (1) t r ea t per son s design a t ed t o
r eceive a ben efit u n der a dom est ic r ela t ion s or der t h a t is a QDRO
1357
a s a ben eficia r y u n der t h e t er m s of t h e pla n ;
a n d (2) disr ega r d
a n y ot h er dom est ic r ela t ion s or der (ot h er t h a n on e wa ivin g a
1358
ben efit ) seekin g t o est a blish a ben efit r igh t .
Wa iver s a r e
discu ssed in Sect ion XIX.
A dom est ic r ela t ion s or der (“DRO”) t h a t is a QDRO m u st
disclose fou r dist in ct it em s: (1) t h e n a m e a n d a ddr ess of t h e pla n
1356. Alber t F eu er , Det er m in in g t h e Dea t h Ben eficia r y u n der a n E RISA
P la n a n d t h e Righ t s of Su ch a Ben eficia r y, 54 T AX M GMT . W E E KLY
M E MORAN DUM 323, 331-33 (Au g. 26, 2013) (“F eu er ’s Ben eficia r y Ar t icle”)
available at ht t p://ssr n .com /a bst r a ct =2315889 (la st visit ed J a n . 30, 2014). S ee
also St ewa r t E . St er k & Mela n ie B. Leslie, Accid en tal In h eritan ce: R etirem en t
Accou n ts an d th e H id d en L aw of S u ccession 89 N.Y.U. L. R E V. (for t h com in g
2014) available at h t t p://ssr n .com /a bst r a ct =2263234 (la st visit ed J a n . 30,
2014). S ee also Da vid A. P r a t t , S tate L aws R ush in Where E R IS A Fears to
T read , 18 J . P E NSION 3 (2012) (bot h discu ssin g issu es wit h r espect t o
design a t ion s for E RISA pla n s a n d IRAs).
1357. E RISA § 206(d)(3)(J ), 29 U.S.C. § 1056(d)(3)(J ) (2012).
1358. E RISA § 206(d)(3)(A), 29 U.S.C. § 1056(d)(3)(A) (2012).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
377
pa r t icipa n t a n d ea ch per son en t it led t o ben efit pa ym en t s u n der
t h e t er m s of t h e DRO; (2) t h e pla n n a m e; (3) t h e ben efit
en t it lem en t est a blish ed by t h e DRO; a n d (4) t h e n u m ber of
1359
pa ym en t s or t h e per iod t o wh ich t h e DRO a pplies.
Requ ir in g
t h a t t h ese it em s be disclosed t o t h e pa r t icipa n t is sim ila r t o t h e
r equ ir em en t t h a t a Spou sa l Su r vivor Ben efit Ma n da t e con sen t by
t h e pa r t icipa n t ’s spou se t o t h e p a r t icipa n t ’s wa iver of spou sa l
ben efit s m u st in clu de a n a ckn owledgm en t of t h e effect of t h e
1360
spou se’s con sen t .
Th er e is con sider a ble division of a u t h or it y
1361
r ega r din g t h e r equ ir ed specificit y of su ch in for m a t ion .
Ma n y
cou r t s h a ve in cor r ect ly h eld t h a t QDROs m a y r equ ir e a
1362
pa r t icipa n t t o design a t e a per son a s a ben eficia r y.
Th er e a r e su bst a n t ive lim it s on t h e ben efit r igh t s t h a t a
QDRO m a y cr ea t e. Th e ben efit s m u st be con sist en t wit h t h e
1363
pen sion pla n ’s t er m s wit h ou t con sider in g t h e QDRO,
and may
1364
n ot in cr ea se t h e pla n ’s a ct u a r ia l cost s.
H owever , a QDRO m a y
pr ovide t h e followin g t wo ben efit s even if t h ey a r e n ot con sist en t
wit h t h e pen sion pla n ’s t er m s wit h ou t con sider in g t h e QDRO: (a )
sepa r a t e ben efit in t er est s in cer t a in cir cu m st a n ces, so t h a t
pa ym en t s m a y be m a de if t h e pa r t icipa n t is n ot collect in g pen sion
1365
ben efit s, a n d is st ill em ployed by t h e pla n spon sor ,
a n d (b)
spou sa l t r ea t m en t of for m er spou ses in cer t a in cir cu m st a n ces a s
1366
spou ses for pu r poses of spou sa l su r vivor ben efit s.
Th e cou r t s do
n ot a lwa ys r equ ir e sa t isfa ct ion of t h e pr er equ isit es for sepa r a t e
1367
in t er est pa ym en t s,
a n d t h er eby fa il t o disr ega r d DROs t h a t a r e
1359. E RISA §206(d)(3)(C), 29 U.S.C. §1056(d)(3)(C) (2012).
1360. E RISA §205(c)(2)(A)(iii), 29 U.S.C. §1055(c)(2)(A)(iii) (2012).
1361. S ee gen erally F eu er ’s E RISA Myt h s, supra n ot e 25, a t 758-59.
1362. Id . a t 745-48. S ee also Ya le-New H a ven H ospit a l v. Nich olls, 2013
U.S. Dist . LE XIS 171325 (D. Con n . Dec. 5, 2013) (h oldin g a DRO r equ ir in g a
pa r t icipa n t t o t r a n sfer a por t ion of h is r et ir em en t pla n a sset s is a QDRO, bu t
n ot con sider in g t h e la t er n u n c pro tu n c DROs wh ich m a y h a ve con for m ed t o
t h e DRO r equ ir em en t s t h a t t h e or der r equ ir e n o fu r t h er act ion by pa r t icipa n t
t o cr ea t e pla n ben efit r igh t s for a n ot h er per son ).
1363. E RISA § 206(d)(3)(D)(i), 29 U.S.C. § 1056(d)(3)(D)(i) (2012).
1364. E RISA § 206(d)(3)(D)(ii), 29 U.S.C. § 1056(d)(3)(D)(ii) (2012).
1365. E RISA § 206(d)(3)(E ), 29 U.S.C. § 1056(d)(3)(E ) (2012).
1366. E RISA § 206(d)(3)(F ), 29 U.S.C. § 1056(d)(3)(F ) (2012).
1367. S ee e.g., F iles v. E xxon Mobil P en sion P la n , 428 F .3d 478 (h oldin g t h a t
a sepa r a t e in t er est QDRO wa s cr ea t ed a ft er pa r t icipa n t h a d sepa r a t ed fr om
ser vice, a lt h ou gh t h e pa r t icipa n t h a d died befor e a skin g t h a t pla n ben efit s
begin t o be pa id); In r e Ma r r ia ge of Th om a s, 789 N.E .2d 821, 832 (Ill. App. Ct .
2003) (h oldin g t h a t a QDRO m a y pr ovide a n a lt er n a t e pa yee “a ll or a por t ion ”
of pen sion ben efit s u n der E RISA § 206(d)(3)(B)(i)(I); 29 U.S.C.
§ 1056(d)(3)(B)(i)(I) (2000)). In bot h ca ses, t h e a lt er n a t e pa yee did n ot n eed t o
wa it for t h e pa r t icipa n t t o r equ est pen sion pa ym en t s t o begin fr om h is for m er
em ployer ’s pla n . Neit h er cou r t discu ssed h ow t h is is a for m of pa ym en t
ot h er wise pr ovided by t h e pla n . It wou ld a ppea r t h a t bot h pla n s on ly per m it
pa r t icipa n t s t o decide on t im in g of t h e pa ym en t . Th e sepa r a t e in t er est r u les
wer e in a pplica ble beca u se t h e pa r t icipa n t wa s n o lon ger em ployed by eit h er
pla n spon sor wh en t h e sepa r a t e pen sion wa s per m it t ed t o be elect ed.
378
T h e J oh n M arsh all L aw R eview
[47:145
n ot QDROs. Th er e a r e a n u m ber of ver y good discu ssion s of t h e
1368
QDRO r equ ir em en t s.
In or der t o pr epa r e a DRO t h a t sa t isfies t h e QDRO
r equ ir em en t s, a pa r t y n eeds con sider a ble in for m a t ion a bou t t h e
E RISA pla n in wh ich t h e pa r t icipa n t pa r t icipa t es a n d t h e
1369
pa r t icipa n t ’s ben efit s. Feu er’s E R IS A M yth s
descr ibes t h is
in for m a t ion . To t h e ext en t t h e Cam pa S u p. Ct. h oldin g per m it t in g
join der of E RISA pla n s in dom est ic r ela t ion s a ct ion s r em a in s
via ble, E RISA m a y n ot pr eem pt a ct ion s by st a t e cou r t s t o com pel
E RISA pla n s t o pr ovide t h e in for m a t ion n eeded t o pr epa r e a
1370
QDRO.
B . E R IS A R equ ires On ly S pou sal S u rvivor B en efit Plan s to
Follow th e S pou sal S u rvivor QDR O B en efit M an d ate
Th e on ly a ppa r en t ba sis for believin g t h a t t h e Spou sa l
Su r vivor QDRO Ben efit Ma n da t e a pplies t o E RISA pla n s, r a t h er
t h a n on ly t o Spou sa l Su r vivor Ben efit P la n s, is a set of policy
a r gu m en t s t h a t Con gr ess sh ou ld h a ve dr a ft ed E RISA in su ch a
m a n n er , wh ich a r gu m en t s h a ve been pr esen t ed by dist in gu ish ed
1371
1372
com m en t a t or s,
a n d cou r t s.
A ca r efu l r eview of t h e st a t u t or y
la n gu a ge sh ows t h a t Con gr ess in t en ded t o so lim it t h e Spou sa l
Su r vivor QDRO Ben efit Ma n da t e t o Spou sa l Su r vivor Ben efit
1373
P la n s a n d did so lim it t h e m a n da t e.
H owever , if M ack ey II
r em a in s via ble in t h e dom est ic r ela t ion s con t ext , pla n s ot h er t h a n
Spou sa l P en sion Ben efit P la n s m u st defer t o a ll DROs t h a t r equ ir e
t h a t ben efit s be pa id t o a per son ot h er t h a n a pa r t icipa n t or
ben eficia r y a t t h e t im e wh en su ch ben efit pa ym en t s a r e du e t o
1368. S ee e.g., Ter r en ce Ca in , A Prim er on th e History an d Proper Draftin g
of Qu alified Dom estic-R elation s Orders, 28 T.M. C OOLE Y L. R E V. 417 (2011);
D AVID C. C ARRAD , T H E C OMP LE TE QDRO H ANDBOOK (3d ed. 2009) (“TH E
COMP LE TE QDRO H ANDBOOK”); G ARY S H ULMAN , T H E Q UALIF IE D
D OME STIC R E LATIONS O RDE R H ANDBOOK (3d ed. 2006 & Su pp. 2012).
1369. S ee gen erally F eu er ’s E R IS A M yth s, su pra n ot e 25, a t 755-57.
1370. Id . a t 751-52. Th is is a lso con sist en t wit h t h e pr in ciple t h a t E RISA
does n ot pr eem pt st a t e-la w r epor t in g m a n da t es t h a t a r e n eeded t o im plem en t
a st a t e la w t h a t is n ot ot h er wise pr eem pt ed by E RISA.
1371. S ee e.g., E liza bet h M. Wells, St a t e Dom est ic Rela t ion s Or der s Un der
E RISA a n d t h e Code-An Un for t u n a t e H odgepodge, N.Y.U. R EV. E MP . B E N . 157, 15-12-15-15 (2011) (sh owin g h ow legisla t ive m a t er ia ls a n d policy a r gu m en t s
m a y be u sed t o a dvoca t e br oa d a pplica t ion of t h e Spou sa l Su r vivor QDRO
Ben efit Ma n da t e). S ee also D AVID C. C ARRAD , T H E C OMP LE TE QDRO
H ANDBOOK 92 (3d ed. 2009).
1372. Met r o. Life In s. v. Wh ea t on , 42 F .3d 1080, 1083-84 (7t h Cir . 1994). S ee
gen erally J AME S F . J ORDE N , W ALDE MAR J . P F LE P SE N , J R ., S TE P H E N H .
G OLDBE RG , H ANDBOOK O N E RISA L ITIGATION 5-109 n . 417 (3d ed. 2012)
(list in g ca ses wit h su ch h oldin gs).
1373. See gen er a lly F eu er ’s E RISA Myt h s, su pra n ot e 25, a t 741-45. S ee also
Alber t F eu er , T h e E ffects of Marital Property R igh ts, Alim on y, Ch ild S u pport,
an d Dom estic R elation s Ord ers on T op -Hat Plan s, E xcess B en efit Plan s, an d
B on u s Plan s, 38 C OMP . P LAN . J . 319, (Dec. 3, 2010) available at
h t t p://ssr n .com /a bst r a ct =1719787 (la st visit ed Ma r ch 20, 2014).
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
379
pa r t icipa n t s or ben eficia r y, r ega r dless of t h e pla n t er m s or
1374
wh et h er t h e DRO sa t isfies QDRO-like r equ ir em en t s.
Th e E RISA la n gu a ge, t h e E RISA legisla t ive h ist or y, a n d t h e
Su pr em e Cou r t ca se la w a ll su ppor t t h e pr in ciple t h a t on ly
Spou sa l Su r vivor Ben efit P la n s m u st defer t o DROs t h a t a r e
QDROs. As discu ssed, su pra, E RISA a s in it ia lly en a ct ed, a n d t h e
bills t h a t wer e t h e pr ecu r sor s t o E RISA did n ot explicit ly a ddr ess
DROs. As discu ssed, su pra, t h er e wer e m a jor Con gr ession a l
pr oposa ls in 1978 a n d 1979 set t in g for t h t h e DROs t h a t E RISA
wou ld n ot pr eem pt . All t h ose pr oposa ls wer e lim it ed t o DROs
a pplica ble t o Spou sa l Su r vivor Ben efit P la n s. Th e pr ovision s in
t h e E RISA Im pr ovem en t s Act of 1979, a s discu ssed, su pra, seem t o
h a ve been t h e ba sis for Spou sa l Su r vivor QDRO Ben efit Ma n da t e
t h a t wer e in t r odu ced by RE ACT in 1984. Th er e is n o in dica t ion in
RE ACT or it s legisla t ive h ist or y t h a t Con gr ess in t en ded in
RE ACT, wh ich is en t it led t h e Ret ir em en t E qu it y Act of 1984, t o
exem pt fr om pr eem pt ion t h ose DROs t h a t a t t em pt ed t o gover n t h e
ben efit s of a pla n ot h er t h a n a r et ir em en t pla n t h a t is a Spou sa l
Su r vivor Ben efit P la n . Th e 1986 t ech n ica l cor r ect ion s t o RE ACT
t h a t con fir m ed t h a t t h e pr ovision s wer e lim it ed t o Spou sa l P en sion
1375
Ben efit P la n s, discu ssed, su pra, sh ow t h e con t r a r y.
F ou r qu est ion s sh ow t h e u n lik elin ess of a n E RISA
r equ ir em en t t h a t a ll pla n s, n ot m er ely Spou sa l Su r vivor Ben efit
P la n s, defer t o a DRO m eet in g t h e QDRO r equ ir em en t s, if
argu en d o, t h ose r equ ir em en t s a pplied t o a ll pla n s. F ir st , t h e
r ea son s for pr ot ect in g spou sa l ben efit s on a pa r t icipa n t ’s divor ce
for a ll E RISA pla n s wou ld seem t o ju st ify pr ot ect in g spou sa l
ben efit s du r in g t h e pa r t icipa n t ’s m a r r ia ge. Wh y did Con gr ess
t h en lim it su ch m a r it a l pr ot ect ion s t o a su bset of pen sion pla n s,
wh ich a r e descr ibed a s Spou sa l Su r vivor Ben efit P la n s a n d a r e
1376
r equ ir ed t o pr ovide spou sa l su r vivor ben efit s?
Secon d, t h e
r ea son s for set t in g for t h pr ocedu r e, by wh ich E RISA pla n s m u st
det er m in e wh et h er a DRO is a QDRO wou ld seem t o a pply t o a ll
pla n s r equ ir ed t o defer t o a DRO t h a t m eet s t h e QDROs
r equ ir em en t s. Wh y did Con gr ess t h en set for t h su ch pr ocedu r es
1377
on ly for Spou sa l Su r vivor Ben efit P la n s?
Th ir d, t h e r ea son s for
pr ot ect in g pla n s fr om dou ble pa ym en t lia bilit ies for pla n s t h a t
1374. B u t see F eu er ’s E RISA Myt h s, su pra n ot e 25, a t 739-40 (expla in in g
wh y Ma ckey II is n ot via ble in t h e dom est ic r ela t ion s con t ext ).
1375. S ee also Wa t son ’s Br oken P r om ises, su pra n ot e 229, (den ou n cin g t h e
wea kn esses of t h e spou sa l pr ot ect ion s pr ovided by E RISA, even a ft er t h e
a dopt ion of RE ACT). P r of. Wa t son , h owever , wr it es n a r y a wor d a bou t t h e
n eed or exist en ce of spou sa l pr ot ect ion s for pla n s ot h er t h a n Spou sa l Su r vivor
Ben efit P la n s. Id .
1376. S ee e.g., Dicker son v. Un it ed Wa y of New Yor k Cit y, 351 F ed. Appx.
506 (2d Cir . 2009) (h oldin g a Top -H a t P la n n eed n ot pr ovide spou sa l su r vivor
ben efit s).
1377. E RISA §§ 206(d)(3)(G) a n d (H ), 29 U.S.C. §§ 1056(d)(3)(G) a n d (H)
(2012).
380
T h e J oh n M arsh all L aw R eview
[47:145
r ea son a bly det er m in e if DROs a r e QDROs wou ld seem t o a pply t o
a n y pla n r equ ir ed t o defer t o a DRO t h a t m eet s t h e QDRO
r equ ir em en t s. Wh y did Con gr ess t h en lim it su ch pr ot ect ion s t o
1378
Spou sa l Su r vivor Ben efit P la n s?
F ou r t h , a r equ ir em en t t h a t a
pa r t icipa n t t o specify a life in su r a n ce ben eficia r y m a y be of n o
va lu e if t h e pa r t icipa n t n eed n ot m a in t a in t h e policy, beca u se
gr ou p life in su r a n ce u n lik e r et ir em en t pla n s, oft en pr ov ides n o life
ben efit s. Wh y t h en did Con gr ess n ot pr ovide t h a t a QDRO m a y
dir ect a n em ployee t o a ssign t h e in ciden t s of own er sh ip of t h e
policy t o a n ot h er per son , t h e wa y t h a t Con gr ess did for feder a l life
1379
in su r a n ce for civilia n em ployees?
It is t h u s n ecessa r y t o r eview t h e t er m s of Top -H a t P la n s,
disa bilit y pla n s or life in su r a n ce pla n s t o det er m in e t h e ext en t , if
1380
a n y, t h ose t er m s r equ ir e defer en ce t o DROs.
Th e r elief
pr ovision s t h a t pr even t a pla n fr om h a vin g a dou ble pa ym en t
obliga t ion if t h e pla n a dm in ist r a t or sa t isfied it s fidu cia r y
r espon sibilit ies wh en it pa id t h e pla n ben efit s t o t h e wr on g per son
1381
a r e a pplica ble on ly t o a Spou sa l Su r vivor Ben efit P la n .
If su ch
pr ovision s a r e in a pplica ble, t h e pla n is r equ ir ed t o pa y t h e
pa r t icipa n t or ben eficia r y r ega r dless of wh et h er it h a s been a ble t o
1382
r ecover t h e wr on gfu l pa ym en t .
H owever , t h er e m a y be
cir cu m st a n ces in wh ich t h e per son en t it led t o a ben efit u n de r a
DRO m a y be pr even t ed fr om obt a in in g t h e ben efit fr om t h e pla n
beca u se su ch per son m a y be r espon sible for t h e wr on gfu l pa ym en t .
Th er e a ppea r s t o be n o su ch ca se-la w, a lt h ou gh cou r t s m a y look t o
ca se-la w t h a t in effect t r ea t s pa r t icipa n t s a s dir ect in g pa ym en t t o
a spou se or for m er spou se, if t h e pa r t icipa n t ’s a ct ion s per m it su ch
1383
per son s t o a ccess t h e pa r t icipa n t ’s ben efit s wr on gfu lly.
It is
dou bt fu l if sim ply fa ilin g t o file t h e DRO wit h a pla n pr ior t o t h e
1378. E RISA § 206(d)(3)(I), 29 U.S.C. § 1056(d)(3)(I) (2012).
1379. Act t o Am en d P a ym en t of Life In s. Ben efit s, P u b. L. No. 105 -205 § 2,
112 St a t 683, 683-84 (1998).
1380. Tr ea s. Reg. § 1.409A-2(b)(4) (2007)(su ch pr ovision s do n ot u su a lly
cr ea t e issu es wit h r espect t o t h e defer r a l of in com e u n der Code § 409A for TopH a t P la n s).
1381. Th e r elief pr ovision s of E RISA §§ 206(d)(3)(H ) a n d (I), 29 U.S.C.
§§ 1056(d)(3)(H ) a n d (I)(2012) a r e on ly a pplica ble t o Spou sa l Su r vivor Ben efit
P la n s.
1382. S ee e.g., Milgr a m v. Th e Or t h opedic Assoc. Defin ed Con t r ibu t ion
P en sion P la n , 662 F .3d 187 (2d Cir . 2011) (h oldin g pla n lia ble t o pa y $750,000
t o pa r t icipa n t even t h ou gh pla n h a d n ot been a ble t o r ecover t h e su m
im pr oper ly pa id t o t h e pa r t icipa n t ’s for m er spou se).
1383. Cf. F ost er v. P P G In du s., In c. 693 F .3d 1226 (10t h Cir . 2012) (h oldin g
pla n n ot r espon sible for secon d ben efit pa ym en t wh en pla n followed it s
pr ocedu r es, bu t per m it t ed for m er spou se, wh o u sed p a r t icipa n t ’s iden t ifyin g
in for m a t ion , t o obt a in pa r t icipa n t pen sion ben efit s). S ee also Ga t lin v. Na t ’l
H ea lt h ca r e Cor p., 16 F ed. Appx. 283 (6t h Cir . 2001) (h oldin g pla n r espon sible
for secon d ben efit pa ym en t wh en pla n viola t ed pr ocedu r es a n d t h er eby
per m it t ed for m er spou se t o obt a in pa r t icipa n t pen sion ben efit s by wr on gfu lly
ch a n gin g t h e pa r t icipa n t ’s a ddr ess a n d for gin g t h e par t icipa nt ’s sign a t u r e).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
381
pla n ’s pa ym en t wou ld r esu lt in a sim ila r r elie f beca u se t h en t h er e
wou ld be lit t le n eed for t h e r elief pr ovision for Spou sa l Su r vivor
Ben efit P la n s.
If t h e t er m s of life in su r a n ce pla n s, Top -H a t P la n s, or
disa bilit y pla n s do n ot per m it a n y defer en ce t o DROs, pa r t ies
seek in g pa ym en t s fr om a ben eficia r y ba sed on a st a t e dom est ic
r ela t ion s la w cla im a r isin g fr om a ben eficia r y’s r igh t t o ben efit
fr om t h e pla n wou ld h a ve n o r ecou r se wit h r espect t o t h ose
ben efit s. In gen er a l, per son s wit h a dom est ic r ela t ion s la w
ju dgm en t a ga in st a pa r t icipa n t , r a t h er t h a n t h e ben eficia r y, m a y
n ot en for ce t h e ju dgm en t a ga in st t h e ben eficia r y of t h e dea t h
ben efit s beca u se su ch ju dgm en t s a r e on ly en for cea ble a ga in st
1384
pr oper t y t h a t t h e pa r t icipa n t cou ld obt a in ,
a n d a pa r t icipa n t
cou ld n ever h a ve obt a in ed h is or h er dea t h ben efit s.
P a r t ies seekin g pa ym en t s fr om a pla n pa r t icipa n t ba sed on a
DRO m a y en for ce su ch a cla im a ga in st t h e ben efit s a pa r t icipa n t
h a s r eceived fr om a Top -H a t P la n or a disa bilit y pa y pla n , if t h eir
cla im does n ot a r ise fr om a pa r t icipa n t ’s r igh t t o a ben efi t u n der
t h e t er m s of a n E RISA pla n , su ch a s a n or der pa y a fixed su m of
a lim on y.
H owever , E RISA offer s pla n pa r t icipa n t s in su ch
sit u a t ion s a pr ot ect ion n ot a lwa ys a va ila ble u n der st a t e la w t o t h e
ben eficia r ies of spen dt h r ift t r u st s. If t h ey ca n defer m a kin g
ben efit wit h dr a wa ls, cr edit or s m a y n ot en for ce cla im s a ga in st t h e
pen sion pla n u n t il t h e ben efit s a r e dist r ibu t ed. A cr edit or h a s n o
r igh t t o st ep in t o t h e sh oes of t h e pa r t icipa n t a n d dir ect t h e pla n t o
m a k e a ben efit pa ym en t . P la n s m u st on ly r espon d t o pa ym en t
dir ect ion s fr om pla n pa r t icipa n t s a n d ben eficia r ies. Life in su r a n ce
pla n s, oft en per m it t h e defer r a l of t h e pa ym en t of su r vivor
ben efit s. Th u s, ben eficia r ies of su ch E RISA pla n s m a y sim ila r ly
fr u st r a t e t h eir cr edit or s. Most Top -H a t P la n s a r e su bject t o t h e
1385
t a x defer r a l r u les of Code Sect ion 409A.
Su ch pla n s m a y per m it
t h e pa r t icipa n t s t o defer pa ym en t s for a t lea st five yea r s a ft er t h e
da t e t h e pa ym en t s a r e ot h er wise a va ila ble, wit h ou t a dver se t a x
1386
con sequ en ces.
1384. S ee e.g., N.Y. Civ. P r a c. L. & Ru les 5201(a ) a n d (b) (LE XIS 2013)
(descr ibin g t h e pr oper t y su bject t o en for cem en t of a cr edit or ’s cla im ).
1385. S ee gen erally R E GINA O LSH AN AND E RICA F . S CH OH N , 409A
H ANDBOOK , 461-538 (2010).
1386. Tr ea s. Reg. § 1.409A-2(b)(1)(ii) (2007).
382
T h e J oh n M arsh all L aw R eview
XX.
[47:145
COMMON LAW WAIVE RS AND P RE NUP TIAL
AGRE E ME N TS DO NOT AF F E CT A BE NE F ICIARY’S
BE NE F IT RIGH TS UN LE SS TH E P LAN TE RMS P ROVIDE
F OR SUCH DE F E RE NCE , BUT A P RE NUP TIAL
AGRE E ME N T MAY NOT AF F E CT A BE NE F ICIARY’S
BE NE F IT RIGH TS F ROM A SP OU SAL SURVIVOR
BE NE F IT P LAN UN LE SS INCORP ORATE D IN TO A QDRO
Wa iver s by ben eficia r ies of E RISA pla n s, wh et h er com m on la w or a s pa r t of pr en u pt ia l a gr eem en t , do n ot a ffect t h e
ben eficia r y’s ben efit r igh t s except t o t h e ext en t , if a n y, t h a t t h e
pla n t er m s pr ovide for su ch defer en ce.
E RISA pr oh ibit s
pr en u pt ia l a gr eem en t s fr om h a vin g a n y su ch effect for Spou sa l
Su r vivor Ben efit P la n s u n less t h e a gr eem en t s a r e in cor por a t ed
in t o a QDRO.
P a r t icipa n t s in Spou sa l Su r vivor Ben efit P la n s m a y ch a n ge
t h e defa u lt spou sa l design a t ion s r equ ir ed u n der t h e Spou sa l
Su r vivor Ben efit Ma n da t e on ly wit h t h e wr it t en con sen t of t h e
pa r t icipa n t ’s spou se, wh ich docu m en t a ckn owledges t h e effect of
1387
t h e con sen t , a n d is wit n essed by a t h ir d pa r t y.
An effect ive
con sen t t o t h e pa r t icipa n t ’s wa iver of spou sa l ben efit s m a y n ot be
pa r t of a pr en u pt ia l a gr eem en t , bu t m u st be execu t ed wh ile t h e
1388
spou se in qu est ion is m a r r ied t o t h e pa r t icipa n t .
E ven if t h e
pr en u pt ia l is execu t ed a secon d t im e a ft er t h e m a r r ia ge it will n ot
be va lid if it does n ot sa t isfy t h e t er m s of t h e Spou sa l Su r vivor
1389
Ben efit Ma n da t e.
E RISA wou ld pr eem pt a n y a t t em pt t o u se a
pr en u pt ia l a gr eem en t t o wr est t h e su r vivor ben efit s fr om a widow
wh o did n ot con sen t a ft er t h e m a r r ia ge t o t h e pa r t icipa n t ’s wa iver
1390
of t h e spou se’s su r vivor ben efit .
In pa r t icu la r , E RISA wou ld
1387. E RISA § 205(c)(2), 29 U.S.C. § 1055(c)(2) (2012). S ee gen erally F eu er ’s
Su r vivor Ben efit s, su pra n ot e 90, a t 958-62.
1388. Tr ea s. Reg. § 1.401(a )-20 Q & A-28 (a s a m en ded in 2006). S ee also
H a gwood v. Bellsou t h Sa v. P la n , 282 F .3d 285 (4t h Cir . 2002) (h oldin g t h a t
Sect ion 205 con sen t s m u st be execu t ed wh ile t h e in dividu a l is a spou se). B u t
see In r e E st a t e of H opkin s, 574 N.E .2d 230 (1991) (fin din g t h a t a widow
wa ived su r vivor r igh t s in pr en u pt ia l a gr eem en t , a n d t h e Tr ea su r y Regu la t ion
wa s dism issed a s bein g in t er pr et a t ive a n d t h u s deser vin g lit t le r espect
wit h ou t a n y con sider a t ion of t h e defer en ce r equ ir ed t o be given t o
in t er pr et a t ive r egu la t ion s by Ch evr on USA v. N a t ’l Res. Def. Cou n cil, 467 U.S.
837 (1984)). Cf. L ANGBE IN P E NSION L AW , su pra n ot e 13, a t 289-90
(qu est ion in g t h e wisdom of t h is policy).
1389. S ee e.g., MidAm er ica n P en sion a n d E m p. Ben efit s P la n s Adm in . Com .
v. Cox, 720 F .3d 715 (8t h Cir . 2013) (h oldin g su ch a n a gr eem en t n ot effect ive
beca u se it la cked a n a ckn owledgm en t by t h e spou se of t h e spou sa l ben efit s t o
wh ose wa iver sh e h a d con sen t ed).
1390. S ee e.g., Na t ’l Au t o. Dea ler s a n d Assoc. Ret . Tr u st v. Ar beit m a n , 89
F .3d 496 (8t h Cir . 1996) (fin din g t h a t a pr en u pt ia l a gr eem en t does n ot
est a blish a con st r u ct ive t r u st in t h e su r vivor ben efit s pa id t o t h e pa r t icipa n t ’s
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
383
pr eem pt a n y st a t e cou r t or der t h a t a spou se com ply wit h a
pr en u pt ia l a gr eem en t , a n d execu t e a con sen t t o a wa iver by t h e
pa r t icipa n t of su ch su r vivor ben efit s t h a t com plies wit h t h e E RISA
1391
r equ ir em en t s.
On t h e ot h er h a n d, a pr en u pt ia l a gr eem en t m a y
be a ba sis for a QDRO t h a t a s discu ssed su pra, det er m in es ben efit
en t it lem en t s.
Ma n y of t h e issu es per t a in in g t o per m issible
wa iver s of t h e ben efit r equ ir ed u n der t h e Spou sa l Su r vivor Ben efit
1392
Ma n da t e a r e discu ssed in Feu er’s B en eficiary Article.
Th e Ken n ed y Su pr em e Cou r t h eld t h a t a t h ir d pa r t y cou ld n ot
en for ce a ben eficia r y’s ben efit wa iver a ga in st a Spou sa l Su r vivor
Ben efit P la n beca u se t h e wa iver wa s n ot con sist en t wit h t h e t er m s
1393
of su ch pla n .
Th e Cou r t explicit ly st a t ed t h a t it did n ot a ddr ess
wh et h er t h e defa u lt design ee wou ld h a ve been a ble t o en for ce t h e
wa iver a ga in st t h e pla n if t h e wa iver h a d been con sist en t wit h
1394
t h ose t er m s.
It wou ld a ppea r t h a t t h e pla n t er m s det er m in e t h e
con dit ion s, if a n y, u n der wh ich t h e wa iver m a y be r evok ed. If
t h ose r evoca t ion con dit ion s a r e sa t isfied, t h en t h e pla n m u st pa y
t h e design a t ed ben eficia r y. If t h e con dit ion s a r e n ot sa t isfied, t h e
r evoca t ion is n ot per m it t ed, t h en t h e pla n m u st pa y t h e defa u lt
design ee. No decision s a ppea r t o h a ve a ddr essed t h is m a t t er .
Th er e a r e con flict in g P ost -Ken n ed y decision s on wh et h er
per son s m a y u se a st a t e la w wa iver t h a t does n ot com ply wit h t h e
pla n t er m s t o wr est ben efit s fr om a n E RISA design a t ed
ben eficia r y. Two cir cu it s a n d a Texa s feder a l dist r ict cou r t h a ve
1395
h eld t h a t su ch wr est in g is per m it t ed.
A Ma ssa ch u set t s feder a l
widow by a pen sion pla n ). Cf. Ma t t ei v. Ma t t ei, 126 F .3d 794, 809 (6t h Cir .
1997) (fin din g E RISA § 510 pr oh ibit ed self-h elp by deceden t ’s est a t e t o en for ce
pr en u pt ia l t h a t did n ot expr essly r efer t o a n y pen sion pla n in t er est s bu t
per m it t ed st a t e cou r t en for cem en t of pr en u pt ia l) a n d L ANGBE IN P E NSION L AW ,
su pra n ot e 13, a t 290 (obser vin g t h a t B oggs, 520 U.S. 833, pr even t ed st a t e la w
en for cem en t of pr en u pt ia l)
1391. S ee e.g., H u r wit z v. Sh er , 982 F .2d 778, 781 (2d Cir . 1992) (h oldin g
t h a t a spou se m a y n ot be or der ed t o com ply wit h pr en u pt ia l a n d wa ive p en sion
in t er est a ft er dea t h of pa r t icipa n t , a lt h ou gh t h e pla n a ppea r ed t o h a ve n o
em ployee pa r t icipa n t s a n d t h u s wa s n ot a n E RISA pla n ); accord Ar beit m a n ,
89 F .3d a t 501. B u t cf. Gr een ba u m Doll & McDon a ld P LLC v. Sa n dler , 458
F .Su pp.2d 420 (W.D. Ky. 2006) aff’d 256 F ed. Appx. 765 (6t h Cir . 2007)
(r eject in g a ch a llen ge t o a su r vivin g spou se’s su r vivor ben efit s u n der Sect ion
205, bu t in dict a poin t in g t o t h e la ck of a cla im t h a t t h e spou se br ea ch ed a pr e n u pt ia l a gr eem en t t o execu t e a pla n con sen t t o a n ew be n eficia r y design a t ion );
Ca lla h a n v. H u t sell, Ca lla h a n & Bu ch in o P .S.C Revised P r ofit Sh a r in g P la n ,
1993 U.S. App. LE XIS 34005 (6t h Cir . 1993) (r em a n din g t o det er m in e if
spou se br ea ch ed a pr en u pt ia l a gr eem en t t o execu t e a pla n con sen t t o a n ew
ben eficia r y design a t ion ). Neit h er of t h e Sa n dler cou r t s (a ppella t e or dist r ict ),
n or t h e Ca lla h a n cou r t , simply decla r ed t h a t if t h e pa r t icipa n t fa iled t o
execu t e a n ew ben eficia r y design a t ion t h e exist en ce of con sen t wa s ir r eleva n t
beca u se con sen t s a r e n ot ben eficia r y design a t ion s.
1392. F eu er ’s Ben eficia r y Ar t icle, supra n ot e 1360, a t 329-31.
1393. Ken n ed y, 555 U.S. a t 300.
1394. Id . a t 300.
1395. S ee E st a t e of Willia m Ken sin ger , J r ., 674 F .3d 131 (401(k) ben efit s
384
T h e J oh n M arsh all L aw R eview
[47:145
cou r t a n d a Ma ssa ch u set t s st a t e a ppella t e cou r t h a ve h eld t o t h e
1396
con t r a r y.
Neit h er cir cu it decision n or t h e Texa s dist r ict decision
m en t ion s t h e E RISA dom in a t in g gen er a l pu r pose of pr ot ect in g
pla n pa r t icipa n t s a n d ben eficia r ies. N on e gives a n y con vin cin g
1397
ba sis for disr ega r din g t h e B oggs con clu sion :
Respon den t s’ cla im s, if a llowed t o su cceed, wou ld depa r t fr om t h is
fr a m ewor k, u pset t in g t h e deliber a t e ba la n ce cen t r a l t o E RISA. It
d oes n ot m atter th at respon d en ts h ave sou gh t t o en force th eir righ ts
on ly after th e retirem en t ben efits h ave been d istribu ted sin ce th eir
asserted righ ts are based on th e th eory th at th ey h ad an in terest in
th e u n d istribu ted pen sion plan ben efits. Th eir st a t e-la w cla im s a r e
1398
pr e-em pt ed.
Aft er H illm an , a s discu ssed su pra, t h er e seem s lit t le ba sis for
su ch disr ega r d by t h e feder a l cir cu it s or a n y ot h er cou r t s.
Descr ibin g t h e wa iver cla im s a s feder a l com m on la w cla im s
a voids st a t e la w pr eem pt ion , bu t does n ot a void t h e fa ct t h a t t h ose
cla im s a r e ba sed on t h e “t h eor y t h a t t h e cla im a n t h a s a n in t er est
in t h e u n dist r ibu t ed pen sion pla n ben efit s.” Ken n ed y decided t h a t
feder a l com m on -la w wa iver cla im s do n ot cr ea t e su ch a n in t er est if
t h e pla n t er m s do n ot pr ovide for su ch wa iver s. Th u s, t h er e is n o
1399
ba sis for a n y feder a l or st a t e post -dist r ibu t ion cla im s.
m a y be wr est ed fr om ben eficia r y wh ose divor ce decr ee in clu ded a wa iver of
su ch ben efit s wh en pla n t er m s did n ot per m it su ch a wa iver ); An d och ik , 709
F .3d a t 296 (401(k) a n d life in su r a n ce ben efit s m a y be wr est ed fr om
ben eficia r y wh ose divor ce decr ee in clu ded a wa iver of su ch ben efit s wh en pla n
t er m s did n ot per m it such a wa iver ); a n d F lessn er v. F lessn er , 845 F . Su pp. 2d
791 (S.D. Tex. 2012) (life in su r a n ce ben efit s m a y be wr est ed fr om ben eficia r y
wh ose divor ce decr ee in clu ded a wa iver of su ch ben efit s wh en pla n t er m s did
n ot per m it su ch a wa iver ).
1396. S ee St a elen s v. St a elen s, 677 F . Su pp.2d 499 (D. Ma ss. 2010) a n d
La n gevin v. Ma r m or r ow, 2011 Ma ss. App. Un pu b. LE XIS 810 (Ma ss. App. Ct .
J u n e 10, 2011) (§401(k) ben efit s m a y n ot be wr est ed fr om ben eficia r y wh ose
divor ce decr ee in clu ded a wa iver of su ch ben efit s wh en pla n t er m s did n ot
per m it su ch a wa iver ).
1397. S ee gen er a lly F eu er ’s E R IS A M yth s, su pra n ot e 25, a t 729-33 (r efu t in g
t h e a r gu m en t s in fa vor of h on or in g st a t e la w wa iver s).
1398. B oggs, 520 U.S. a t 854 (em ph a sis a dded).
1399. S ee gen erally F eu er ’s M isgu id ed Offsprin g, su pra n ot e 862.
2013]
XXI.
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
385
E RISA P RE E MP TS STATE DE SIGNATION MANDATE S
SUCH AS COMMUNITY P ROP E RTY LAWS, RIGH TS OF
E LE CTIONS, OR RE VOCATIONS OF DE SIGNATION S
UP ON DIVORCE S, BUT P E RMITS P LAN TE RMS TO USE
STATE LAW TO MAKE BE NE F ICIARY DE SIGNATIONS IN
WH OLE , OR IN P ART IF STATE LAW IS CONSISTE NT
WITH TH E TWO E RISA STATUTORY DE SIGNATION
MANDATE S
Th e E RISA r equ ir em en t t h a t pla n t er m s det er m in e E RISA
ben efit r igh t s su bst a n t ia lly r edu ces t h e a bilit y of st a t es t o exer cise
t h eir t r a dit ion a l police power t o det er m in e h ow pr oper t y is
t r a n sfer r ed a t dea t h , a lt h ou gh pla n spon sor s oft en dr a ft pla n s t h a t
defer in som e m a n n er t o t h ose power s. Ma n y of t h ese st a t e la ws
1400
a r e descr ibed in Feu er’s B en eficiary Article.
Th e Spou sa l Su r vivor Ben efit Ma n da t e r equ ir es Spou sa l
Su r vivor Ben efit P la n s t o pr ovide spou ses wit h su r vivor ben efit s
u n less t h e spou se con sen t s t o a wa iver of su ch ben efit , bu t su ch
pla n s m a y pr ovide spou ses wit h m or e t h a n t h e st a t u t or y r equ ir ed
ben efit . Spon sor s of ot h er E RISA pla n s, su ch a s Top-H a t P la n s,
disa bilit y pla n s a n d life in su r a n ce pla n s, m a y decide t h e ext en t , if
a n y, t o wh ich su ch pla n s pr ovide spou sa l ben efit s, a n d, if so,
wh et h er t h ey wish t o r equ ir e spou ses t o con sen t t o t h e wa iver of
t h ose ben efit s. E RISA pr eem pt s st a t e des ign a t ion m a n da t es t h a t
wou ld a ffect pla n ben efit r igh t s befor e or a ft er t h e pla n dist r ibu t es
t h e ben efit s. Su ch m a n da t es m a y a r ise fr om com m u n it y pr oper t y
st a t u t es, r igh t t o elect ion st a t u t es, or r evoca t ion of design a t ion
st a t u t es.
Th is pr eem pt ion con clu sion is bu t t r essed by t h e
r ea son in g of t h e Su pr em e Cou r t ’s r ecen t H illm an decision t h a t t h e
F eder a l E m ployee Gr ou p Life In su r a n ce Act pr eem pt ed a Vir gin ia
1401
r evoca t ion u pon divor ce st a t u t e.
Spon sor s of a ll E RISA pla n s, m a y ch oose, h owever , t o r ely on
st a t e la w t o m a k e ben eficia r y design a t ion s, su ch a s by m a k in g t h e
pa r t icipa n t ’s est a t e t h e defa u lt design ee, or t o cla r ify ben efit
design a t ion s t h a t u se t er m s t h a t m a y depen d on st a t e la w. Su ch
1402
pr a ct ices a r e descr ibed ext en sively in Feu er’s B en eficiary Article.
Su pr em e Cou r t ca se la w, E RISA a n d t h e cor r espon din g
legisla t ive h ist or y a ll su ppor t t h e E RISA pr eem pt ion of st a t e
design a t ion m a n da t es, wh ich a r e design ed t o pr ot ect cu r r en t
spou ses (com m u n it y pr oper t y a n d elect ive sh a r e la ws) a n d fu t u r e
spou ses (r evoca t ion of design a t ion s u pon divor ces). As discu ssed
su pra, bot h B oggs a n d E gelh off h eld t h a t E RISA pr eem pt ed su ch
1400. F eu er ’s Ben eficia r y Ar t icle, supra n ot e 1360, a t 324-25.
1401. S ee gen erally F eu er ’s H illm a n Ar t icle, su pra n ot e 867.
1402. F eu er ’s Ben eficia r y Ar t icle, supra n ot e 1360, a t 334-35.
386
T h e J oh n M arsh all L aw R eview
[47:145
la ws wit h r espect t o a n y E RISA pla n s. Con gr ess m a de n o a t t em pt
t o over r u le eit h er Cou r t decision . In 2013 t h e Cou r t in H illm an
con fir m ed t h e pr in ciple wit h r espect t o feder a l em ployee ben efit
pla n s, wh ich su ppor t s t h e E RISA pr eem pt ion of t h ese st a t u t es. As
discu ssed su pra, t h e bills t h a t wer e t h e pr ecu r sor s t o E RISA a n d
E RISA a s in it ia lly en a ct ed h a d pr ovision s t o pr ot ect spou ses,
n a m ely t h e defa u lt join t a n d su r vivor a n n u it y pr ovision s. In a ll
ca ses t h ose pr ovision s wer e lim it ed t o t h ose pla n s, wh ich a r e
descr ibed h er ein a s Spou sa l Su r vivor Ben efit P la n s. As discu ssed
su pra, t h er e wer e m a jor Con gr ession a l E RISA r efor m pr oposa ls in
1978 a n d 1979, wh ich in clu ded gr ea t er E RISA pr ot ect ion s for
spou ses, a lt h ou gh n on e wer e en a ct ed. All t h ose pr oposa ls wer e
a ga in lim it ed t o Spou sa l Su r vivor Ben efit P la n s. RE ACT a n d it s
pr ecu r sor s in clu ded en h a n ced spou sa l pr ot ect ion s for pa r t icipa n t s
in Spou sa l Su r vivor Ben efit P la n s. Th er e is n o in dica t ion in
RE ACT, or it s pr ecu r sor s, or a n y ot h er E RISA pr ovision , or t h eir
legisla t ive h ist or y, t h a t Con gr ess t h er eby in t en ded t o exclu de fr om
t h e E RISA E xpr ess P r eem pt ion a n y of t h e st a t e design a t ion
st a t u t es eit h er for Spou sa l Su r vivor Ben efit P la n s, wh ich m u st
h a ve E RISA spou sa l pr ot ect ion pr ovision s, or for ot h er E RISA
pla n s, wh ich m a y ch oose wh et h er t o h a ve som e or n o spou sa l
pr ot ect ion pr ovision s.
Th u s, a n E RISA a m en dm en t wou ld be n eeded t o r econ cile
E RISA wit h a n y of t h e a bove st a t e design a t ion la ws discu ssed,
wh ich a s descr ibed, oft en a ct on dist r ibu t ed pla n ben efit s r a t h er
t h a n pla n dist r ibu t ion s. Th e Un ifor m P r oba t e Code com m en t
per t a in in g t o r evoca t ion s of design a t ion s u pon divor ces pr ovides
1403
t h e u su a l ju st ifica t ion for su ch a n a m en dm en t .
Th e com m en t
disr ega r ds t h e E RISA dom in a t in g gen er a l pu r pose of pr ot ect in g
t h e ben efit r igh t s of pa r t icipa n t s a n d ben eficia r ies u n der t h e t er m s
of a n E RISA pla n , wh ile focu sin g on a pa r t icipa n t ’s pr esu m ed
in t en t r a t h er t h a n h is or h er expr essed in t en t . In pa r t icu la r , t h e
com m en t t r ea t s E RISA a s in t er est ed pr im a r ily in en cou r a gin g
sm oot h pla n a dm in ist r a t ion , a s follows:
An ot h er a ven u e of r econ cilia t ion bet ween E RISA pr eem pt ion a n d
t h e pr im a cy of st a t e la w in t h is field is en vision ed in su bsect ion
(h )(2) of t h is sect ion . It im poses a per son a l lia bilit y for pen sion
pa ym en t s t h a t pa ss t o a for m er spou se or r ela t ive of a for m er
spou se. Th is pr ovision r espect s E RISA’s con cer n t h a t feder a l la w
gover n t h e a dm in ist r a t ion of t h e pla n , wh ile st ill pr even t in g u n ju st
en r ich m en t t h a t wou ld r esu lt if an u n in ten d ed ben eficiary wer e t o
r eceive t h e pen sion ben efit s. F eder a l la w h a s n o in t er est in wor kin g
a br oa der disr u pt ion of st a t e pr oba t e a n d n on pr oba t e t r a n sfer la w
t h a n is r equ ir ed in t h e in t er est of sm oot h a dm in ist r a t ion of pen sion
1404
a n d em ployee ben efit pla n s.
1403. U NIF . P ROBATE C ODE § 2-804 cm t . (1969) (a m en ded 2010).
1404. Id . (em ph a sis a dded). S ee generally J oh n La n gbein , Ma jor Refor m s of
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
387
Sim ila r a r gu m en t s m a y be m a de in fa vor of per m it t in g
elect ive sh a r e la ws a n d com m u n it y pr oper t y la w t o gover n E RISA
ben efit dist r ibu t ion s. H owever , in t h ose ca ses t h e st a t e la ws a r e
design ed t o a ch ieve t h e in t en t t h e dr a ft sm en believe a pa r t icipa n t
sh ou ld h a ve r a t h er t h a n t h e on e t h e pa r t icipa n t expr essed
pu r su a n t t o t h e pla n t er m s (wh ich in clu de defa u lt design a t ion s).
A. T h e S pou sal S u rvivor B en efit M an d ate R equ ires S pou sal
S u rvivor B en efit Plan s to Provid e E ach Participan t’s S pou se
w ith a Defau lt S pou sal B en efit of at L east 50% of th e Valu e of
th e Participan t’s B en efit
Th e Spou sa l Su r vivor Ben efit Ma n da t e r equ ir es Spou sa l
Su r vivor Ben efit P la n s t o (1) offer ea ch pa r t icipa n t ’s spou se
su r vivor ben efit s bot h befor e t h e pa r t icipa n t begin s t o r eceive pla n
ben efit s, a n d wh en t h e pa r t icipa n t wou ld begin t o r eceive
1405
ben efit s;
(2) design a t e t h e pa r t icipa n t ’s spou se a s t h e
ben eficia r y of specified su r vivor ben efit s for a n y pa r t icipa n t , wh o
1406
is m a r r ied; a n d (3) t o r equ ir e t h a t a ll wa iver s by a pa r t icipa n t of
t h e spou sa l ben efit be a ccom pa n ied by a wr it t en con sen t of t h e
1407
pa r t icipa n t ’s spou se wit n essed by a t h ir d pa r t y.
Th e m in im u m
r equ ir ed spou sa l ben efit is gen er a lly 50% of a pa r t icipa n t ’s a ccr u ed
1408
ben efit
r ega r dless of h ow m u ch of t h e ben efit wa s ea r n ed du r in g
1409
t h e m a r r ia ge.
Relief pr ovision s pr even t Spou sa l Su r vivor
t h e P r oper t y Rest a t em en t a n d t h e Un ifor m P r oba t e Code: Refor m a t ion ,
H a r m less E r r or , a n d Non pr oba t e Tr a n sfer s, 38 ACTE C 1, 1 a t 19-21 (2012)
available at h t t p://ssr n .com /a bst r a ct =2285582 (la st visit ed Ma r ch 24, 2014)
(a r gu in g t h a t t h e sa m e policy con sider a t ion s t h a t per su a ded t h e Un ifor m La w
P r ovision s t o in clu de st a t u t or y design a t ion s over r idin g in dividu a l n on -E RISA
design a t ion s sh ou ld a pply t o E RISA pa r t icipa n t design a t ion s beca u se
Con gr ess fa iled t o con sider t h ose pa r t icu la r st a t u t or y design a t ion s). H owever ,
Con gr ess set for t h on ly t wo st a t u t or y E RISA design a t ion s t h e Spou sa l
Su r vivor Ben efit Ma n da t e Spou sa l Su r vivor a n d t h e QDRO Ben efit Ma n da t e
(t h e QMSCO cou ld be con sider ed a t h ir d on e), n eit h er of wh ich wa s a UP C
su ggest ion . Th u s, it is m ost r ea son a ble t o con clu de t h a t Con gr ess in t en ded
t h a t pla n spon sor s be fr ee t o adopt or disr ega r d t h e UP C policies, or a n y ot h er
policies Con gr ess did n ot m a n da t e or pr oh ibit .
1405. E RISA § 205(a ), 29 U.S.C. § 1055(a ) (2012).
1406. E RISA §§ 205(c)-(e), 29 U.S.C. §§ 1055(c)-(e) (2012). Th e r equ ir ed
defa u lt ben efit is gen er a lly: (1) a t r et ir em en t is a join t a n d fift y per cen t
su r vivor ben efit a t r et ir em en t , wit h t h e spou se en t it led t o t h e su r vivor ben efit ;
a n d (2) befor e r et ir em en t , a n a n n u it y for t h e spou se’s life. P r ofit -sh a r in g pla n s
t h a t offer n o a n n u it ies m a y in st ea d pr ovide t h a t t h e su r vivin g spou se is
en t it led t o t h e fu ll a ccou n t ba la n ce if t h e pa r t icipa n t dies befor e wit h dr a win g
h is ben efit s. E RISA § 205(b)(1)(C), 29 U.S.C. § 1055(b)(1)(C). Ma n y pr ofit sh a r in g pla n s ch oose t o pr ovide t h e su r vivin g spou se wit h on ly 50% of t h e
pa r t icipa n t ’s a ccou n t ba la n ce if t h e par t icipa n t d ies befor e r et ir in g, by offer in g
t h em a n n u it ies of su ch va lu e. E RISA § 205(e)(2), 29 U.S.C. § 1055(e)(2) (2012).
1407. E RISA § 205(c)(2), 29 U.S.C. § 1055(c)(2) (2012).
1408. E RISA §§ 205(d), (e) 29 U.S.C. §§ 1055(d), (e) (2012).
1409. S ee gen erally H ea t h er Rose, B oggs v. B oggs: Creatin g R eal-L ife
Cin d erellas, 33 J . M ARSH ALL L. R E V. 271 (1999) (cr it icizin g t h e st a t u t or y
a lloca t ion , a n a logizin g it t o t h e in t er est s a cqu ir ed by Cin der ella ’s st ep -
388
T h e J oh n M arsh all L aw R eview
[47:145
Ben efit P la n fr om h a vin g a dou ble pa ym en t obliga t ion if t h e pla n
a dm in ist r a t or pa ys spou sa l pla n ben efit s t o t h e wr on g per son
1410
despit e m eet in g fidu cia r y r espon sibilit ies.
H owever , a s wit h t h e
Spou sa l Su r vivor QDRO Ben efit Ma n da t e, t h er e is n o sim ila r
pr ot ect ion for pla n s ot h er t h a n Spou sa l Su r vivor Ben efit P la n s,
wh ich ch oose t o pr ovide spou sa l su r vivor ben efit s, bu t pa y su ch
ben efit s t o t h e wr on g per son .
B . E R IS A Preem pts S tate Com m u n ity Property L aw s to th e E xten t
th at T h ey S eek to Affect th e B en efits T h at B en eficiaries M ay
Obtain From An E R IS A Plan or R etain With ou t M ak in g An y
Offsettin g Paym en t
Com m u n it y pr oper t y la ws t r ea t m a r r ia ge a s a n econ om ic
pa r t n er sh ip in wh ich bot h spou ses, by oper a t ion of la w, a cqu ir e
a n d h a ve equ a l own er sh ip in pr oper t y a cqu ir ed by t h eir effor t s
1411
du r in g t h e m a r r ia ge, bu t sepa r a t e own er sh ip in ot h er pr oper t y.
Th u s, t h e pa r t icipa n t ’s spou se t h er eby obt a in s a n in t er est in on ly
t h e por t ion of t h e pen sion ea r n ed by t h e pa r t icipa n t du r in g t h e
m a r r ia ge. Th is in t er est , u n lik e t h e Spou sa l Su r vivor Ben efit s,
becom es a va ila ble t o t h e spou se’s est a t e on t h e spou se’s dea t h
1412
r a t h er t h a n on t h e pa r t icipa n t ’s dea t h .
Th is in t er est is m or e
difficu lt for a pen sion pla n t o det er m in e t h a n t h e Spou sa l Su r vivor
Ben efit beca u se t h e pla n m u st k eep t r a ck of t h e t im e du r in g wh ich
ea ch pa r t icipa n t wa s m a r r ied, a n d if t h er e wa s m or e t h a n on e
m a r r ia ge, t h e t im e for ea ch spou se.
B oggs h eld t h a t E RISA pr eem pt s t h e a pplica t ion of
com m u n it y pr oper t y la w t o det er m in e t h e spou se’s sh a r e of a
pa r t icipa n t ’s pen sion ben efit s befor e t h eir dist r ibu t ion by t h e
1413
pla n .
Th e decision con t a in ed t h e cu st om a r y r eser va t ion t h a t t h e
Cou r t did n ot con sider a qu est ion n ot befor e t h e Cou r t , viz., wou ld
t h e post -dist r ibu t ion pr ot ect ion h a ve con t in u ed if t h e dist r ibu t ion s
wer e m a de wh en bot h t h e pa r t icipa n t a n d h is spou se wer e a live,
1414
i.e., wh en t h e t wo h a d a com m u n it y.
Th is r eser va t ion m a y be
r ea dily dism issed.
E RISA pr eem pt s, m u tatis m u tan d is, t h e
m ot h er ). Cf. Wa t son ’s Br oken P r om ises, su pra n ot e 229, a t 438, 85-86, 93-500
(cr it icizin g t h e in equ it ies cr ea t ed by t h e E RISA pr ovision r equ ir in g a spou se t o
be m a r r ied for a t lea st a yea r t o obt a in spou sa l su r vivor ben efit s).
1410. E RISA §§ 205(c)(1), (2) a n d (6), 29 U.S.C. §§ 1055(c) (1), (2) a n d (6)
(2012).
1411. S ee e.g., Ca r olin e Newcom be, T h e Origin an d Civil L aw Fou n d ation of
th e Com m u n ity Property S ystem , Wh y Californ ia Ad opted It, an d Wh y
Com m u n ity Property Prin ciples B en efit Wom en , 11 U. MD. L. J . R ACE ,
R E LIGION , G E NDE R & C LASS 1, 9-10 (2011).
1412. B u t see S ton e DOL Br ief, su pra n ot e 480, a t R-11 (a r gu in g t h a t
com m u n it y pr oper t y la w if n ot pr eem pt ed m igh t a lso pr ovide a m ea n s for t h e
n on -pa r t icipa n t spou se t o in t er fer e wit h a n em ployee’s r igh t s u n der h is pla n ,
su ch a s ben eficia r y ch oices or ben efit for m ch oices).
1413. B oggs, 520 U.S. a t 854.
1414. Id . a t 845.
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389
a pplica t ion of com m u n it y pr oper t y la w t o det er m in e t h e spou se’s
sh a r e of a pa r t icipa n t ’s pen sion ben efit s a ft er t h eir dist r ibu t ion by
1415
t h e pla n , wh ile t h e spou se is a live.
Th is im plica t ion is
r ein for ced by t h e r ecogn it ion t h a t t h e a r gu m en t s in fa vor of
pr ot ect in g dist r ibu t ed r et ir em en t ben efit s a r e fa r st r on ger if t h ey
a r e pa id t o t h e pa r t icipa n t , i.e., t h e r et ir ee, t h a n if t h ey a r e pa id a s
1416
dea t h ben efit s a s occu r r ed in B oggs.
F u r t h er m or e, B oggs con clu ded t h a t cla im a n t s cou ld n ot
com pel pla n ben eficia r ies t o m a k e pa ym en t s t o t h em fr om pr oper t y
1417
t h ey own ed in a ddit ion t o t h e pla n dist r ibu t ion s.
Th e Su pr em e
Cou r t decla r ed t h a t it h a d r eject ed t h e r equ ir em en t of su ch
1418
offset t in g pa ym en t s in Free.
B oggs did n ot depen d on t h e ben efit s bein g pen sion ben efit s,
bu t r a t h er on (1) t h e ben efit s bein g E RISA ben efit s, a n d (2) t h e
r eject ed st a t e cla im a r isin g fr om a pa r t icipa n t ’s or ben eficia r y’s
r igh t t o a n E RISA pla n ben efit (i.e., t h e cla im wou ld h a ve
disa ppea r ed if t h e pa r t icipa n t or ben eficia r y h a d n ot obt a in ed t h e
ben efit ). Th e Su pr em e Cou r t con fir m ed t h is a s discu ssed su pra,
by m a kin g a sim ila r h oldin g in E gelh off wit h r espect t o a st a t e
cla im a r isin g fr om a ben eficia r y’s r igh t t o life in su r a n ce ben efit s
a n d t o pen sion ben efit s. Th u s, com m u n it y pr oper t y la ws m a y n ot
be a pplied t o det er m in e t h e r igh t t o r et a in a n y E RISA ben efit
dist r ibu t ion or t h e a m ou n t of su ch dist r ibu t ion . It is ir r eleva n t
wh et h er t h e ben efit s com e fr om a Spou sa l Su r vivor Ben efit P la n , a
1419
Top-H a t P la n , a life in su r a n ce pla n or a disa bilit y ben efit pla n .
C. E R IS A Preem pts S tate E lective S h are L aw s th at S eek to Affect
th e B en efits th at B en eficiaries M ay Obtain From an E R IS A
Plan or M ay R etain With ou t M ak in g An y Offsettin g Paym en t,
T h u s S u ch S tatu tes M u st Disregard E R IS A B en efits
B oggs im plies t h a t E RISA pr eem pt s t h e st a t e n on -com m u n it y
la w a ppr oa ch t o det er m in e spou sa l ben efit en t it lem en t s for a n y
E RISA pla n s, i.e., elect ive sh a r e st a t u t es, wh ich like t h e Spou sa l
Su r vivor Ben efit s becom e pa ya ble t o t h e pa r t icipa n t ’s spou se wh en
t h e pa r t icipa n t pa sses a wa y.
E lect ive sh a r e st a t u t es give
su r vivin g spou ses t h e r igh t t o elect t o obt a in on e t h ir d t o on e h a l f
1415. S ee gen erally Alber t F eu er , A Misgu ided Ken n edy Offspr in g fr om t h e
Th ir d Cir cu it , 31 T AX M GMT . W E E KLY J . 564, 566-67 (Apr il 23, 2012) available
at h t t p://ssr n .com /a bst r a ct =2047238 (la st visit ed Ma r ch . 30, 2014) a n d F eu er ’s
E RISA Myt h s, su pra n ot e 25, a t 749.
1416. S ee gen erally F eu er ’s E RISA Myt h s, supra n ot e 25, a t 736-37.
1417. B oggs, 520 U.S. a t 853 (cit in g F r ee, 369 U.S. a t 669).
1418. Id .
1419. S ee e.g., Or r v. P r u den t ia l In s. Co. of Am er ica , 2012 U.S. Dist . LE XIS
82022 (D. Ida h o J u n e 12, 2012) (h oldin g t h a t “a pla in t iff ca n n ot u se a
con st r u ct ive t r u st t o m a ke a n en d -r u n a r ou n d E RISA r equ ir em en t s;” t h u s, a
pa r t icipa n t ’s widow cou ld n ot u se st a t e com m u n it y pr oper t y la w t o im pose a
con st r u ct ive t r u st on t h e life in su r a n ce ben efit pa ym en t r eceived by t h e
pa r t icipa n t ’s son a n d design ee).
390
T h e J oh n M arsh all L aw R eview
[47:145
of t h e pa r t icipa n t ’s elect ive est a t e.
Th e elect ive est a t e a u gm en t s
t h e pa r t icipa n t ’s pr oba t e est a t e wit h a sset s t h a t do n ot pa ss by
1421
m ea n s of a will, su ch a s pen sion pla n a sset s.
As wit h E RISA
1422
spou sa l ben efit r igh t s, spou ses m a y wa ive t h ese r igh t s.
Un like
t h e E RISA spou sa l ben efit r igh t s or com m u n it y pr oper t y r igh t s,
t h e r igh t t o a n elect ive sh a r e is per son a l, a n d it m a y n ot be
exer cised by a r epr esen t a t ive of t h e est a t e of t h e su r vivin g
1423
spou se.
E RISA pr even t s st a t e elect ive sh a r e st a t u t es fr om bein g u sed
1424
t o det er m in e wh o is en t it led t o r eceive or r et a in E RISA ben efit s.
Mor eover , if M ack ey I is st ill via ble wit h r espect t o t h ese st a t u t es,
t h en E RISA will pr eem pt t h ese st a t u t es t o t h e ext en t t h ose
st a t u t es r efer en ce E RISA pla n s.
As wit h com m u n it y pr op er t y st a t u t es, st a t e elect ive sh a r e
st a t u es m a y n ot be u sed t o for ce r ecipien t s of E RISA ben efit s t o
t r a n sfer ot h er pr oper t y of equ iva len t va lu e t o a n ot h er per son on
t h e ba sis t h a t t h e ot h er per son wa s en t it led t o t h e va lu e of t h e
1425
E RISA ben efit s.
F or exa m ple, su ppose a pa r t icipa n t ’s fr ien d
wa s en t it led t o t h e pa r t icipa n t ’s $1,200,000 dea t h ben efit fr om a
Top-H a t P la n , wh ile t h e su r vivin g spou se (a widow) wa s en t it led
t o t h e pr oba t e a sset s of $300,000. Let t h e r eleva n t elect ive sh a r e
st a t u t e en t it le t h e su r vivin g spou se t o on e-t h ir d of t h e elect ive
est a t e. If t h e elect ive est a t e in clu des t h e Top -H a t P la n a sset s, t h e
widow wou ld be en t it led t o on e-t h ir d of $1,500,000, i.e., $500,000.
Sh e, h owever , on ly r eceived $300,000. E RISA wou ld pr even t t h e
widow fr om obt a in in g t h e $200,000 fr om t h e n on -spou se. E RISA
wou ld ben efit t h e widow if sh e h a d been en t it led t o t h e
pa r t icipa n t ’s $1,200,000 dea t h ben efit fr om a Top -H a t P la n , wh ile
a pa r t icipa n t ’s fr ien d wa s en t it led t o t h e pr oba t e a sset s of
$300,000. If t h e elect ive est a t e in clu des t h e Top -H a t P la n a sset s,
t h e widow wou ld a ga in be en t it led t o $500,000, so sh e wou ld be
en t it led t o n o fu r t h er a sset s. E RISA wou ld, h owever , give h er a n
en t it lem en t t o on e t h ir d of $300,000, i.e., $100,000.
Mor e gen er a lly, E RISA pr even t s t h e elect ive sh a r e st a t u t es
fr om con sider in g t h e E RISA ben efit s in elect ive sh a r e
com pu t a t ion s beca u se su ch con sider a t ion ca n decr ea se t h e E RISA
ben efit s a ben eficia r y obt a in s. In bot h exa m ples, t h e r ecipien t of
t h e E RISA pla n ben efit s wou ld h a ve r eceived a sm a ller elect ive
sh a r e a s a r esu lt of r eceivin g t h ose ben efit s. Never t h eless, st a t e
cou r t s oft en a ct t o t h e con t r a r y, a s occu r r ed in t h e E state of Au brey
1420
1420. S ee gen erally F eu er ’s E RISA Myt h s, supra n ot e 25, a t 644-45.
1421. Id .
1422. S ee e.g., N.Y. E ST ., P OWE RS & T RUSTS L AW § 5-1.1-A. (e) (McKin n ey
2013).
1423. S ee e.g., N.Y. E ST ., P OWE RS & T RUSTS L AW § 5-1.1-A. (c)(3) (McKin n ey
2013).
1424. F eu er ’s E RISA Myt h s, su pra n ot e 25, a t 749-51.
1425. Id . a t 750.
2013]
Coh en .
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
391
1426
D. E R IS A Preem pts S tate L aw s T h at S eek to R evok e a S pou sal
Design ation Follow in g th e Divorce of a Plan Participan t
1427
Th e Su pr em e Cou r t in E gelh off,
a s discu ssed su pra, h eld
t h a t E RISA pr eem pt ed a st a t e st a t u t e r evokin g pla n design a t ion s
of a spou se followin g a pa r t icipa n t ’s divor ce fr om su ch spou se
u n less t h e pla n t er m s pr ovide ot h er wise, even if t h e la w a ct ed on
1428
ben efit s dist r ibu t ed by t h e pla n .
Su ch decision wa s followed by
t h e P en n sylva n ia Su pr em e Cou r t in In th e E state of Pau l J .
1429
S au ers, III, wh ich h eld t h a t E RISA pr eem pt ed a r evoca t ion a ft er
divor ce st a t u t e t h a t pr ovided t h a t t h e pla n wou ld be su bject t o n o
sa n ct ion s for dist r ibu t in g ben efit s in a ccor d wit h pla n t er m s
1430
u n less r est r a in ed by a st a t e cou r t or der .
Th e r ecen t Su pr em e
Cou r t h oldin g in H illm an , t h a t a pr ovision in t h e pr ogr a m for
feder a l gr ou p life in su r a n ce for civil ser va n t s pr eem pt ed a Vir gin ia
st a t u t e t h a t im posed n o obliga t ion on t h e pla n , con fir m s t h e
1431
via bilit y of t h is h oldin g.
Th er e is a qu est ion wh et h er t h e
Alien a t ion P r oh ibit ion pr even t s t h e in clu sion of r evoca t ion u pon
divor ce pr ovision s in t h e t er m s of a Spou sa l S u r vivor P la n , a n d if
1432
n ot , wh et h er it is pr u den t t o h a ve su ch a pr ovision .
1426. E st a t e of Au br ey Coh en , 2001 N.Y. Misc. LE XIS 1347 (N.Y. Su r . Ct .
N.Y. Cou n t y. J a n . 22, 2001) (discu ssin g t h e ext en t t o wh ich E RISA pla n s a r e
in clu ded in elect ive est a t e u n der New Yor k la w).
1427. E gelh off, 532 U.S. a t 141.
1428. Id . a t 150.
1429. In t h e E st a t e of P a u l J . Sa u er s, III, 32 A.3d 1241 (P a . 2011) (r ever sin g
t h e lower cou r t post -E gelh off con t r a r y decision per t a in in g t o dist r ibu t ed life
in su r a n ce pr oceeds).
1430. Id . a t 1245.
1431. S ee gen erally F eu er ’s H illm a n Ar t icle, su pra n ot e 867.
1432. S ee gen erally Alber t F eu er , Did a Un an im ou s S u prem e Cou rt M isread
E R IS A, M isread th e Cou rt’s Preced en ts, Un d erm in e B asic E R IS A Prin ciples,
an d E n cou rage B en efits L itigation ?, 37 C OMP . P LAN . J . 247, a t 261-64 (2009),
available at h t t p://ssr n .com /abst r a ct =1485204 (la st visit ed J a n . 30, 2014)
(discu ssin g t h e a r gu m en t s pr esen t ed a bou t su ch pr ovision s).
Cf. IRS,
Au t om a t ica lly Revokin g Ben eficia r y Design a t ion s on Le ga l Sepa r a t ion Ca n
Lea d t o P la n E r r or s, la st r eviewed or u pda t ed on 9/13/2013, (IRS decla r es in
web sit e st a t em en t a bou t t h e a pplica bilit y of t a x-qu a lifica t ion cou n t er pa r t of
t h e Spou sa l Su r vivor Ben efit Ma n da t e, wh ich st a t em en t is n ot pa r t of a
r egu la t ion , t h a t “Ret ir em en t pla n s m a y con t in u e t o pr ovide t h a t if pa r t icipa n t s
get a divor ce, t h eir design a t ion of t h eir for m er spou se a s pla n ben eficia r y is
a u t om a t ica lly
r evoked”)
available
at
h t t p://www.ir s.gov/Ret ir em en t P la n s/Au t om a t ica lly-Revok in g-Ben eficia r y-Design a t ion s-on -Lega l-Sepa r a t ion Ca n -Lea d-t o-P la n -E r r or s (la st visit ed J a n . 30, 2014).
392
T h e J oh n M arsh all L aw R eview
[47:145
E . E R IS A Preem pts S tate L aw s T h at S eek T o R evok e th e
Design ation of a Person W h o S lays th e Plan Participan t E xcept
to th e E xten t th e L aw Au tom atically R evok es th e Design ation if
th e S layer is Con victed of a S pecified H om icid e
1433
Th e Su pr em e Cou r t in E gelh off, declin ed t o decide wh et h er
sla yer la ws, wh ich r evok e a design a t ion of a per son wh o sla ys a n
1434
E RISA pla n pa r t icipa n t a r e pr eem pt ed.
Never t h eless, it wou ld
a ppea r t h a t u n der t h e sa m e r ea son in g a pplica ble t o r evoca t ion s
followin g divor ce st a t u t es, E RISA pr eem pt s su ch n on -cr im in a l
st a t u t es a n d sim ila r st a t e com m on -la w on t h e ben efit r igh t s of a
ben eficia r y wh o sla ys t h e pa r t icipa n t wh o design a t ed su ch per son
1435
a s t h e ben eficia r y,
u n less, a s discu ssed su pra, for a u t om a t ic
r evoca t ion s for specified h om icide con vict ion s. H owever , t h er e a r e
cer t a in cir cu m st a n ces in wh ich t h e object ives of a sla yer st a t u t e
m a y be a ch ieved con sist en t wit h t h e E RISA E xpr ess P r eem pt ion .
1436
F or exa m ple, in M ack v. Ku ch en m eister, t h e ben eficia r y slew t h e
pa r t icipa n t , h is spou se, a n d sh ot t h e ju dge pr esidin g a t t h eir
divor ce h ea r in g. A QDRO wa s issu ed n u n c pro tu n c followin g t h e
1437
sla yin g wh ich depr ived t h e pa r t icipa n t of t h e E RISA ben efit s.
Mor eover , a s discu ssed, su pra, t h e E RISA E xpr ess P r eem pt ion
per m it s cr im in a l la w t o com pel t h e per son t o m a ke r est it u t ion for
h is cr im e by pa yin g t h e ben efit t o t h e defa u lt ben eficia r y. F eder a l
com m on la w m a y n ot be u sed t o depr ive t h e sla yer of t h e ben efit
beca u se t h er e is n o st a t u t or y ga p t o be filled; E RISA gives t h e du ly
1438
design a t ed ben eficia r y t h e r igh t t o t h e ben efit .
1433. E gelh off, 532 U.S. 141.
1434. Id . a t 152. F or a good r ecen t a n a lysis of sla yer decision s see Ca del v.
Sh elt on , 2013 U.S. Dist . LE XIS 42766 (S.D. Oh io Ma r ch 26, 2013) (h oldin g
t h a t pa r t icipa n t ’s defa u lt design ees en t it led t o pr oceeds fr om pa r t icipa n t ’s
E RISA in su r a n ce on spou se wh o h e h a d k illed befor e com m it t in g su icide ). S ee
also xt r em E r isa , Sla yer ! (Ma y 6, 2011, 3:30 P M) available at
h t t p://xt r em er isa .blogspot .com /2011/05/sla yer .h t m l?m =1) (la st visit ed J a n . 30,
2014) (discu ssin g IRS pr iva t e let t er s h oldin g t h a t t h e a pplica t ion of sla yer
pr in ciples do n ot a dver sely a ffect pla n t a x qu a lifica t ion ).
1435. S ee generally F eu er ’s Su r vivor Ben efit s, su pra n ot e 90, a t 1048-1056.
S ee also Ka t h er in e A. McAllist er , A Distinction With ou t a Differen ce? E R IS A
Preem ption an d th e Un ten able Differen tial T reatm en t of R evocation -on -d ivorce
an d S layer S tatu tes, 52 B.C. L. R E V. 1481, a t 1507-08, 1513-14 (2011)
(a gr eein g wit h t h e cu r r en t st a t e of t h e la w, bu t a r gu in g t h a t Con gr ess sh ou ld
r espon d by ch a n gin g E RISA).
1436. Ma ck v. Ku ch en m eist er , 619 F .3d 1010 (9t h Cir . 2010).
1437. Id . a t 1014.
1438. S ee gen erally F eu er ’s Su r vivor Ben efit s, su pra n ot e 90, a t 1056-1059
a n d Alber t F eu er , Qu estion s of J u stice an d L aw R aised Wh en an E m ployee
B en efits Plan B en eficiary S tran gles H is Gran d m oth er, th e Participan t, to
Death , 32 T AX M GM ’T W E E KLY. J . 1756 (Dec. 23, 2013) a va ila ble a t
h t t p://ssr n .com /a bst r a ct =2372847 (la st visit ed J a n . 30, 20 14) (r eviewin g t h e
im plica t ion s of a sla yer ca se discu ssed in t h e New Yor k Da ily News). Cf.
L ANGBE IN P E NSION L AW , su pra n ot e 13, a t 340-43 (a r gu in g t h a t if st a t e sla yer
la ws a r e pr eem pt ed, t h en feder a l com m on la w wou ld pr even t t h e sla yer fr om
obt a in in g t h e pr oceeds) r efer r in g t o Mit ch ell v. Robin son , 2011 U.S. Dist .
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
393
Con t r a r y t o m y ea r lier wr it in gs it is a ppr opr ia t e t o per m it
civil cou r t s t o u se sla yer pr in ciples t o depr ive sla yer s of t h e
vict im ’s E RISA dea t h ben efit s if, a n d on ly if, t h e depr iva t ion
occu r s a u t om a t ica lly a s a r esu lt of specified h om icide cr im in a l
con vict ion , a n d t h e depr iva t ion a pplies t o dea t h ben efit s m ost of
wh ich a r e n ot E RISA ben efit s. Th is a ppr oa ch r ecogn izes (1) t h a t
a u t om a t ic su ch depr iva t ion s h a ve pr ecisely t h e sa m e effect on t h e
killer a s if t h ey wer e pa r t of t h e sen t en ce for t h e h om icide a s
discu ssed su pr a , (2) t h e h ist or ica l r ea son wh y sla yer pr in ciples a r e
n ot t r a dit ion a lly explicit ly in clu ded in st a t e cr im in a l la ws
descr ibed in fr a ; a n d (3) t h e r u le is gen er a lly a pplica ble beca u se it
a pplies t o a ll dea t h ben efit s t h a t a r e n ot pr im a r ily E RISA dea t h
ben efit s. In ot h er ca ses, E RISA pr eem pt s t h e civil la w depr iva t ion
of t h e sla yer ’s dea t h ben efit s beca u se su ch depr iva t ion s a r e n ot
a u t om a t ic con sequ en ces of t h e cr im in a l con vict ion , bu t r equ ir e t h e
cou r t t o m a k e a n in depen den t det er m in a t ion a ffect in g t h e killer ’s
r igh t s, viz., wh et h er h e is en t it led t o t h e dea t h ben efit s . Un der
t h is a ppr oa ch , E RISA wou ld n ot pr eem pt wr on gfu l dea t h civil
ju dgm en t s a ga in st t h e killer , a n d ot h er civil ju dgm en t s for
da m a ges by vict im s of cr im es. Su ch ju dgm en t s , wh ich a r e n ot
ba sed on t h e dea t h ben efit , differ fr om t h e pr oposed sla yer r u le
beca u se t h ey wou ld n ot va n ish if t h er e h a d been n o E RISA ben efit .
Th u s, t h e cla im s do n ot a r ise fr om t h e vict im ’s E RISA ben efit
r igh t . Th er efor e t h ey m a y be collect ed fr om t h e dea t h ben efit s
r eceived by t h e sla yer .
1439
Th e U.S. Con st it u t ion pr oh ibit ion on bills of a t t a in der s
led
t o t h e developm en t of t h e sla yer r u les a s descr ibed in fra. Bills of
a t t a in der pr ovide t h a t a per son con vict ed of a ca pit a l offen se is
depr ived of a ll h is pr oper t y, wh ich goes t o t h e st a t e u n der t h e
1440
a t t a in der .
In or der t o a void bein g ch a r a ct er ized a s bills of
a t t a in der st a t e cr im in a l la ws do n ot explicit ly depr ive sla yer s of
1441
t h e vict im ’s dea t h ben efit s.
It is n ot r ea dily a ppa r en t wh y
LE XIS 147226 (E .D. Mo. Dec. 22, 2011) (h oldin g E RISA pr eem pt s st a t e sla yer
la w bu t it s pr in ciples m a y be a pplied a s feder a l com m on la w, wh ich
“en com pa sses t h e equ it a ble pr in ciple t h a t a per son s h ou ld n ot ben efit fr om h is
wr on gs.”)
1439. U.S. CONST. a r t . I, sec. 10.
1440. Rober t F . H en n essy, Property - th e L im its of E qu ity: Forfeiture, Dou ble
J eopard y, an d th e M assach u setts "S layer S tatu te,” 31 W. N E W E NG . L. R E V.
159, a t 162 (2009).
1441. Id . a t 162-64 a n d 187-88 (2009) (st a t in g t h a t t h e Am er ica n r eject ion of
cr im in a l for feit u r e "a t t a in der , for feit u r e, cor r u pt ion of blood a n d esch ea t ”
elim in a t ed t h e cr im in a l st a t u t es depr ivin g killer s of dea t h ben efit s, a n d a skin g
wh et h er t h e civil for feit u r e st a t u t es viola t e t h e sa m e pr oh ibit ion s). S ee
gen erally Alison Reppy, Th e Sla yer 's Bou n t y-H ist or y of P r oblem in An gloAm er ica n La w, 19 N.Y.U. L Q. R E V. 229 (1942) (r eviewin g t h e developm en t
a n d r eject ion of t h ose doct r in es a n d cr it icized m u ch cit ed decision s u sed t o
ju st ify t h e sla yer r u les, su ch a s Riggs v. P a lm er , 22 N.E . 188 (N.Y.
1889)(depr ivin g a boy, wh o k illed h is gr a n dfa t h er , t o pr even t a will ch a n ge, of
dea t h ben efit s) a n d Mu t u a l Life In su r a n ce Co. v. Ar m st r on g, 117 U.S. 591
394
T h e J oh n M arsh all L aw R eview
[47:145
depr iva t ion s lim it ed t o t h e dea t h ben efit s of t h e killer ’s vict im
wou ld be ch a r a ct er ized a s bills of a t t a in der , wh en n on -excessive
fin es a r e per m it t ed. H owever , t h e m or e ser iou s object ion t o
h a vin g cr im in a l cou r t s a dm in ist er sla yer r u les, wh ich , u n like bills
of a t t a in der , do n ot give t h e dea t h ben efit s t o t h e sover eign , is t h a t
civil cou r t s cu st om a r ily decide h ow t o dispose of dea t h ben efit s.
F u r t h er m or e, t h ey a r e m a de explicit pa r t s of civil la ws for t h e
followin g r ea son :
Th e sla yer r u le occu pies a n im por t a n t bu t lim it ed
pla ce in t h e la w. T h e slayer ru le is n ot pu n itive, th at
bein g th e fu n ction of th e crim in al law . N or is it
com pen sa t or y, t h a t bein g t he fu n ct ion of t or t la w in a n
a ct ion for wr on gfu l dea t h (see Com m en t q). Th u s, t h e
sla yer r u le does n ot ca u se t he killer t o for feit a n y of h is
or h er own pr oper t y (see Com m en t o), bu t pr even t s t h e
killer fr om ben efit t in g fr om t h e wr on g t h a t h e or sh e h a s
1442
com m it t ed.
Th e st a t em en t cor r ect ly r ecogn izes t h a t t h e depr iva t ion is n ot
t h e pa ym en t of a cr im in a l fin e. F in es, like t r a dit ion a l a t t a in der s,
a r e pa id t o t h e st a t e. Nor is t h e depr iva t ion a pa ym en t of a
r epa r a t ion . Th e vict im of t h e killin g is t h e deceden t , so t h e
r epa r a t ion for t h e killin g is t h e wr on gfu l dea t h da m a ges. H owever ,
n eit h er r elief a ppea r s t o m a k e a n y a llowa n ce for t h e fa ct t h a t t h e
killin g depr ived t h e deceden t of t h e r igh t t o ch a n ge t h e
design a t ion . Th e pr oposed sla yer a ppr oa ch pu n ish es t h e k iller for
t h is depr iva t ion by depr ivin g h im of t h e E RISA dea t h ben efit if
t h is is a n a u t om a t ic con sequ en ce of t h e killin g.
F in a lly, a ll t h e st a t es a n d t h e Dist r ict of Colu m bia u se sla yer
pr in ciples t o depr ive killer s of t h e dea t h ben efit s of t h eir vict im s,
a lt h ou gh t h ey differ in t h e con dit ion s u n der wh ich su ch
depr iva t ion occu r , h ow t o det er m in e wh et h er t h e con dit ion s h a ve
1443
occu r r ed a n d wh o is en t it led t o t h e dea t h ben efit s.
Ma n y st a t es
pr ovide t h a t a felon iou s a n d in t en t ion a l m u r der r esu lt s in t h e
1444
depr iva t ion of t h e dea t h ben efit s.
Th ou gh t fu l com m en t a t or s
(1886)(depr ivin g a pa r t icipa n t ’s s pou se of dea t h ben efit s wh en t h e pa r t icipa n t
wa s m u r der ed by h is bu sin ess pa r t n er ).
1442. R E STATE ME NT (T H IRD ) O F R E STITUTION & U NJ UST E NRICH ME NT § 45
cm t . a (a m en ded 2003) (em ph a sis a dded).
1443. Ca r la Spiva ck, Killer s Sh ou ldn 't In h er it fr om Th eir Vict im s --or
Sh ou ld Th ey?, 48 G A. L. R E V. 145 a t 156 (2013). S ee gen erally, Br a dley Myer s,
T h e N ew N orth Dak ota S layer S tatu te: Does It Cau se A Crim in al Forfeitu re?,
83 N.D. L. R E V. 997, 1002-20 (2007) (discu ssin g t h e differ en t st a t e sla yer
a ppr oa ch es).
1444. Spiva ck, su pra n ot e 1447, a t 156, a n d UNIF . P ROB. CODE § 2-803(b)
a n d (g) (a m en ded 2010) (cr im in a l con vict ion is con clu sive pr oof of felon iou s
a n d in t en t ion a l k illin g ot h er wise clea r a n d con vin cin g pr oof of su ch killin g is
n eeded).
2013]
Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
395
h a ve a r gu ed t h a t t h e depr iva t ion (1) sh ou ld on ly occu r if t h e
killin g wa s wit h in t en t of obt a in in g t h e dea t h ben efit s or pa r t of
1445
dom est ic a bu se,
(2) sh ou ld a lso occu r if ben eficia r y a bu sed bu t
1446
did n ot kill t h e deceden t ,
a n d (3) sh ou ld be given specia l
1447
con sider a t ion if t h e killer wa s in sa n e a t t h e t im e of t h e sla yin g.
If t h e fir st t wo con clu sion s a r e m a de by a civil cou r t r a t h er t h a n a
cr im in a l cou r t , t h e depr iva t ion s do n ot a u t om a t ica lly follow fr om
t h e cr im in a l con vict ion . Th u s, t h e civil decision s wou ld n ot qu a lify
for t h e gen er a lly a pplica ble cr im in a l exclu sion fr om t h e E RISA
E xpr ess P r eem pt ion s Ru le.
If t h e depr iva t ion a u t om a t ica lly
followed, t h ey wou ld qu a lify for t h e exclu sion .
XXII.
CONCLUSIONS
Th e a r t icle u sed st a n da r d st a t u t or y in t er pr et a t ion pr in ciples
t o det er m in e t h e ext en t of E RISA ben efit r igh t s.
E RISA’s
dom in a t in g gen er a l pu r pose, pr ot ect in g t h e ben efit r igh t s of
pa r t icipa n t s a n d ben eficia r ies u n der t h e t er m s of a n E RISA pla n ,
wa s iden t ified. Th e E RISA st a t u t e wa s r eviewed in it s en t ir et y.
Th e com m it t ee r epor t s a n d floor discu ssion s per t a in in g t o t h e
legisla t ion t h a t beca m e E RISA, in clu din g it s a m en dm en t s, wer e
r eviewed. Con gr ession a l r epor t s a bou t h ow E RISA wor ked, a n d
did n ot wor k , in pr a ct ice wer e r eviewed. Th e st a t e of t h e la w,
in clu din g t h e ca se la w, a t t h e t im e of t h e en a ct m en t of E RISA a n d
of it s a m en dm en t s wa s r eviewed.
Th e wor k s of ot h er
com m en t a t or s wer e a lso con sider ed.
Th e a r t icle dr a ws six gen er a l con clu sion s a bou t t h e ext en t t o
wh ich E RISA pr eem pt s st a t e cr im in a l, t a x, debt or -cr edit or ,
dom est ic r ela t ion s, a n d t r a n sfer -on -dea t h la ws per t a in in g t o t h e
ben efit r igh t s of pla n pa r t icipa n t s a n d ben eficia r ies. All a r ise fr om
t h e fu n da m en t a l E RISA pr eem pt ion pr in ciple t h a t st a t e la ws m a y
n ot en h a n ce or dim in ish a n y of t h e t h r ee E RISA ba sic ben efit
pr ot ect ion s: (1) E RISA gives E RISA pla n pa r t icipa n t s a n d
ben eficia r ies t h e r igh t t o exer cise ben efit r igh t s u n der t h e t er m s of
a n E RISA P la n ; (2) E RISA im poses E RISA Gen er a l Ma n da t es, i.e.,
r epor t in g or disclosu r e m a n da t es, ben efit t er m s m a n da t es, fu n din g
m a n da t es, or fidu cia r y m a n da t es, a n d (3) E RISA pr ovides
m ech a n ism s for en for cin g ben efit r igh t s a n d E RISA m a n da t es.
Th u s, E RISA pr eem pt ion is det er m in ed by t h e effect of a st a t e la w
on t h e E RISA ba sic ben efit pr ot ect ion s, wh ich is t h e r eleva n t
1445. Spiva ck, su pra n ot e 1447, a t 216-19. Th e a u t h or m a de a n a lt er n a t ive
pr oposa l for a n exclu sion s for killer s wh o wer e eit h er in sa n e or vict im s of
dom est ic a bu se. Id . a t 219-25.
1446. Nili Coh en , T h e S layer R ule, 92 B.U. L. R E V. 793, 802-03 (2012).
1447. J en n ifer P iel & Gr egor y B. Leon g, T h e S layer S tatu te an d Insan ity, 38
J . AM . ACAD . P SYCH IATRY L AW 258 (2010) (discu ssin g a Wa sh in gt on decision
t h a t a per son h eld n ot gu ilt y by r ea son of in sa n it y cou ld be depr ived of t h e
deceden t ’s dea t h ben efit s).
396
T h e J oh n M arsh all L aw R eview
[47:145
r ela t ion t o E RISA ben efit pla n s. E RISA per m it s n on -t en u ou s
effect s on t h ese pr ot ect ion s on ly t o t h e ext en t t h ey a r e n eeded t o
im plem en t a la w t h a t E RISA does n ot ot h er wise pr eem pt . F or
exa m ple, E RISA per m it s sla yer la ws t o im plem en t a u t om a t ica lly a
cr im in a l h om icide la w, wh ich is explicit ly exclu ded fr om t h e
E RISA E xpr ess P r eem t pion . Con gr ess in dica t ed su ch im plicit
exclu sion s a r e qu it e r a r e by decidin g in RE ACT t o elim in a t e t h e
ju dicia lly r ecogn ized exclu sion fr om pr eem pt ion for dom est ic
r ela t ion s or der s, wa s discu ssed su pr a . In st ea d, pla n s m u st on ly
defer t o t h ose or der s t h a t qu a lify a s QDROs, a n d on ly Spou sa l
Su r vivor Ben efit P la n s m u st defer t o su ch or der s
F ir st , E RISA pr eem pt s a st a t e la w (ot h er t h a n a gen er a lly
a pplica ble cr im in a l la w, wh ich is n ot pr eem pt ed) if, a n d on ly if, t h e
la w (1) pr even t s a pa r t icipa n t or ben eficia r y of a n E RISA pla n
fr om exer cisin g a ben efit r igh t u n der t h e pla n ’s t er m s ot h er t h a n a
st a t e-la w t a x wh ich m a y dim in ish t h e va lu e of a dist r ibu t ed pla n
ben efit ; (2) su pplem en t s, dim in ish es or en h a n ces a n E RISA
en for cem en t m ech a n ism , or (3) im poses a n E RISA Gen er a l
Ma n da t e, i.e., a r epor t in g or disclosu r e m a n da t e, a ben efit t er m s
m a n da t e, a fu n din g m a n da t e, or a fidu cia r y m a n da t e ot h er t h a n
on e t h a t is n eeded t o im plem en t a st a t e la w t h a t E RISA ot h er wise
per m it s, su ch a s a m a n da t e t o file a n a n n u a l pla n r et u r n for a
st a t e-la w t a x t h a t E RISA per m it s, or a ben efit r est r ict ion t o
com ply wit h la w r egu la t in g h ea lt h ca r e pr ovider s t h a t E RISA
ot h er wise per m it s.
Secon d, E RISA does n ot pr eem pt (1) gen er a lly a pplica ble
st a t e cr im in a l la ws t h a t do n ot r ela t e t o E RISA pla n s, su ch a s
t h eft la ws, (2) gen er a lly a pplica ble cr im in a l la ws t h a t r ela t e t o
E RISA pla n s, su ch a s wa ge a n d wa ge su pplem en t collect ion la ws,
or u su r y la ws, (3) la ws t o im plem en t gen er a lly a pplica ble cr im in a l
sa n ct ion s t h a t explicit ly r efer t o E RISA ben efit s, su ch a s fin e or
r est it u t ion collect ion la ws, a n d (4) sla yer la ws t h a t a u t om a t ica lly
im plem en t specified h om icide con vict ion s.
Th ir d, E RISA pr eem pt ion depen ds on ly u pon wh et h er a st a t e
la w a s a n on -t en u ou s effect on a n y of t h e E RISA ba sic ben efit
pr ot ect ion s, in clu din g t h e r igh t t o exer cise ben efit r igh t s.
P r eem pt ion does n ot depen d u pon wh et h er a la w , wh ich a ffect s
a n y of t h e ba sic E RISA ben efit pr ot ect ion s, is gen er a lly a pplica ble
(ot h er t h a n a gen er a lly a pplica ble cr im in a l la w, wh ich is n ot
pr eem pt ed), is dir ect ed a t E RISA pla n s, or r efer s t o E RISA pla n s
or E RISA ben efit s. An y st a t e la w t h a t con flict s wit h on e of t h e
ben efit pr ot ect ion s will h a ve a n on -t en u ou s effect a n d be
pr eem pt ed u n less a n exclu sion , descr ibed in fra, is a pplica ble.
E RISA pr eem pt s a st a t e la w, if a n d on ly if, t h e la w h a s a
t en u ou s effect on a n y of t h e t h r ee ben efit pr ot ect ion s except t o t h e
ext en t a st a t e-la w is n ot r ela t ed t o E RISA pla n s beca u se of a n (1)
explicit exclu sion fr om t h e E RISA E xpr ess P r eem pt ion , su ch a s a
la w r egu la t in g in su r a n ce pr ovider s, wh ich m a y h a ve a n on -
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
397
t en u ou s effect on t h e fu n din g of a n E RISA pla n ’s ben efit s, or (2) a n
im plicit exclu sion beca u se of t h e st r u ct u r e of E RISA, su ch a s a
st a t e-la w r egu la t in g t h e pr ovision of h ea lt h ca r e, wh ich m a y h a ve
n on -t en u ou s effect on t h e ben efit s a n E RISA pla n m a y offer .
Th u s, E RISA does n ot pr eem pt gen er a lly a pplica ble t h eft la ws a n d
con t r a ct la ws, wh ich h a ve n on e of t h e pr oh ibit ed effect s on a n y
ben efit pr ot ect ion s, bu t m a y a ffect pla n in t er a ct ion s wit h t h ir d
pa r t ies.
F ou r t h , it a ppea r s E RISA per m it s t en u ou s dir ect effect s on
t h e t h r ee E RISA ba sic pr ot ect ion s. Th is is m or e len ien t t h a n
con flict pr eem pt ion , wh ich does n ot per m it d e m in im is con flict s
fr om st a t e la ws. It wou ld a ppea r a n y dir ect effect s on en for cem en t
m ech a n ism s a r e con sider ed t en u ou s. Th u s, t h ey a r e pr eem pt ed.
Th e on ly dir ect effect on t h e exer cise of a ben efit r igh t t h a t wou ld
a ppea r t o be t en u ou s, a n d t h u s is n ot pr eem pt ed by E RISA, is a
n on -con fisca t or y st a t e-la w t a x on pa r t icipa n t or ben eficia r ies for
t h eir ben efit s, wh ich dim in ish es t h e ben efit wh ich t h e pa r t icipa n t
or ben eficia r y m a y r et a in . Th u s, E RISA pr eem pt s a st a t e levy n ot
pr ovided for u n der t h e pla n t er m s, wh ich wou ld ot h er wise pr even t
a pa r t icipa n t fr om obt a in in g t h e ben efit pa ym en t t o wh ich h e is
en t it led u n der t h e pla n t er m s. Th e on ly dir ect effect on E RISA
Gen er a l Ma n da t es t h a t a ppea r s t o be t en u ou s, a n d t h u s is n ot
pr eem pt ed is on e t h a t is lim it ed t o wh a t is n eeded t o im plem en t a
la w t h a t is n ot ot h er wise pr eem pt ed. E RISA pr eem pt s a n y ot h er
st a t e la w t h a t dir ect ly a ffect s a n y of t h e ben efit pr ot ect ion s, n o
m a t t er h ow sm a ll t h e bu r den s, su ch a s a r equ ir em en t t h a t a ll t a x
exem pt en t it ies, wh ich en t it ies in clu de bu t a r e n ot lim it ed t o
E RISA pen sion pla n s, sen d copies of a n n u a l t a x r et u r n s t o t h e
secr et a r y of st a t e so t h a t copies of t h e r et u r n s m a y be m a de
a va ila ble t o t h e pu blic.
F ift h , t h e ext en t of t h e a dm in ist r a t ive or cost bu r den im posed
by a st a t e la w on E RISA pla n s is on ly r eleva n t t o E RISA
pr eem pt ion if t h e st a t e la w in dir ect ly a ffect s on e of t h e t h r ee
ben efit pr ot ect ion s. Th er e is n o pr eem pt ion if t h e on ly effect of a
st a t e la w is t o r edu ce in dir ect ly t h e ben efit pa ym en t s t o wh ich
pa r t icipa n t s a n d ben eficia r ies a r e en t it led u n der t h e pla n t er m s,
su ch a s a n a n n u a l fee on a n E RISA pla n , u n less t h e fee wou ld (1)
pr even t t h e pla n fr om pr ovidin g ben efit s , or (2) com pel a pla n t o
(a ) u se a n in su r er or ot h er ben efit pr ovider , (b) m a in t a in a n
E RISA pla n , or (c) in clu de a cer t a in ben efit or level of ben efit s.
Sixt h , E RISA pr ot ect ion s of t h e ben efit r igh t s of pa r t icipa n t s
a n d ben eficia r ies a r e n ot lim it ed t o t it le pr ot ect ion . Ot h er wise,
con t r a r y t o it s t it le a n d su bst a n t ive t er m s, t h e E m ployee
Ret ir em en t In com e Secu r it y Act of 1974, wou ld be pr im a r ily a bou t
pr ot ect in g pla n spon sor s a n d a dm in ist r a t or s by m in im izin g t h eir
pla n bu r den s r a t h er t h a n pr im a r ily a bou t a ch ievin g E RISA’s
dom in a t in g gen er a l pu r pose of secu r in g t h e ben efit s of em ployees
(pa r t icipa n t s) a n d t h eir ben eficia r ies.
398
T h e J oh n M arsh all L aw R eview
[47:145
Th u s, E RISA pr even t s a per son , wit h a st a t e-la w cla im t h a t
a r ises fr om a pa r t icipa n t ’s or ben eficia r y’s r igh t t o a n y E RISA pla n
ben efit , fr om com pellin g t h e pla n t o pa y t h e per son su ch ben efit or
fr om wr est in g t h e ben efit or t h e a m ou n t of t h e ben efit fr om t h e
pa r t icipa n t or t h e ben eficia r y, u n less t h e cla im (1) a r ises u n der a
gen er a lly a pplica ble cr im in a l la w or (2) is a st a t e-la w t a x cla im ,
wh ich m a y be u sed t o wr est t h e t a x a m ou n t fr om a pla n
pa r t icipa n t or ben eficia r y, bu t n ot t o com pel t h e pla n t o pa y t h e
st a t e su ch a m ou n t .
A st a t e-la w cla im t h a t a r ises fr om a
pa r t icipa n t ’s or ben eficia r y’s r igh t t o a n E RISA pla n ben efit , is on e
t h a t wou ld disa ppea r , if t h e pa r t icipa n t or ben eficia r y did n ot h a ve
t h e ben efit r igh t . A cla im ba sed on a ben eficia r y’s wa iver of t h e
ben efit in a dom est ic r ela t ion s or der t h a t is n ot con sist en t wit h t h e
pla n t er m s wou ld a r ise fr om a ben eficia r y’s ben efit r igh t , bu t a
cla im ba sed on a debt t h a t a r ises fr om a con su m er pu r ch a se wou ld
n ot so a r ise. If t h e pla n t er m s pr ovide for defer en ce t o a st a t e -la w
cla im , t h e cla im a n t wou ld t h er eby becom e a pla n ben eficia r y, a n d
t h er e be n o pr eem pt ion issu e.
Th e Alien a t ion P r oh ibit ion pr even t s a per son wit h a st a t e la w
cla im , r ega r dless of wh et h er it a r ises fr om a pa r t icipa n t ’s or
ben eficia r y’s r igh t t o a n E RISA pla n ben efit , fr om (1) com pellin g a
Spou sa l Su r vivor Ben efit P la n t o pa y t h e per son t h e ben efit of a
pa r t icipa n t or ben eficia r y, or (2) wr est in g t h e ben efit fr om t h e
pa r t icipa n t or ben eficia r y. H owever , t h is pr oh ibit ion does n ot
a pply t o a (1) cla im t h a t a r ises u n der a gen er a lly a pplica ble
cr im in a l la w (2) a st a t e-la w t a x cla im , wh ich m a y be u sed t o wr est
t h e t a x a m ou n t fr om a pla n pa r t icipa n t or ben eficia r y, bu t n ot t o
com pel t h e pla n t o pa y t h e st a t e su ch a m ou n t , or (3) a st a t e
dom est ic r ela t ion s cla im t h a t is pa r t of t h e pla n t er m s u n der t h e
Spou sa l Su r vivor QDRO Ben efit Ma n da t e.
Th e E RISA E xpr ess P r eem pt ion sign ifica n t ly r edu ces, bu t
does n ot elim in a t e, t h e a bilit y of t h e st a t es t o exer cise ea ch of
t h ese five t r a dit ion a l power s wit h r espect t o E RISA pla n s,
pa r t icipa n t s a n d ben eficia r ies. Th e E RISA E xpr ess P r eem pt ion
gives t h e st a t es con sider a ble leewa y t o a ffect ben efit oper a t ion s
a n d pr ot ect ion s a t t h e pla n level, wh ile st r ict ly lim it in g t h eir
a bilit y t o a ffect t h e E RISA ba sic ben efit pr ot ect ion s, pa r t icu la r ly
t h e r igh t of ever y E RISA pla n pa r t icipa n t or ben eficia r y t o exer cise
a ll h is or h er ben efit r igh t s u n der t h e pla n t er m s. Th u s, t h e
E RISA E xpr ess P r eem pt ion pr eser ves, bu t does n ot expa n d, t h e
t h r ee E RISA ba sic ben efit pr ot ect ion s by wh ich E RISA a ch ieves it s
dom in a t in g gen er a l pu r pose, t h e pr ot ect ion of E RISA pla n
pa r t icipa n t s a n d ben eficia r ies. Con sequ en t ly, E RISA pr eem pt ion
r epr esen t s bot h a br oa d a n d m odes t a ppr oa ch t o feder a lism .
As discu ssed, su pra, t h e fu ll im plem en t a t ion of t h e a r t icle’s
con clu sion s, pa r t icu la r ly t h ose a pplyin g t o t h e exer cise of ben efit
r igh t s, wou ld r equ ir e t h e Su pr em e Cou r t t o r epu dia t e, in wh ole or
in pa r t , som e of it s decision s, su ch a s
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Wh en d o S tate L aws Determ ine E R IS A Plan B en efit R igh ts
399
(1) Fort H alifax, wh ich h eld t h a t E RISA did n ot pr eem pt a Ma in e
sever a n ce-pa y m a n da t e. Th e Cou r t t h er ein descr ibed E RISA a s
1448
bein g focu sed on , t h e a dm in ist r a t ive in t egr it y of pla n s.
Th e Cou r t
t h er ein st a t ed “Con gr ess in t en ded pr e-em pt ion t o a ffor d em ployer s
t h e a dva n t a ges of a un ifor m set of a dm in ist r a t ive pr ocedu r es
1449
gover n ed by a sin gle set of r egu la t ion s.
H owever , E RISA’s
dom in a t in g gen er a l pu r pose is t h e pr ot ect ion of pla n pa r t icipa n t s
a n d ben eficia r ies, r a t h er t h a n t h e pr ot ect ion of pla n a dm in i st r a t or s.
Mor eover , t h e E RISA E xpr ess P r eem pt ion does, a n d wa s in t en ded t o
a ssu r e t h e in t egr it y of t h e t h r ee E RISA ba sic ben efit pr ot ect ion s. As
a con sequ en ce em ployee ben efit r igh t s a n d E RISA pla n s a r e
gover n ed by u n ifor m feder a l r egu la t ion , r a t h er t h a n dispa r a t e st a t e
r u les. Th e Cou r t sh ou ld h a ve fou n d t h a t t h e st a t e-la w sever a n ce
r equ ir em en t wa s a r equ ir em en t for a n E RISA pla n t h a t E RISA
pr eem pt ed.
(2) M ack ey I, wh ich h eld t ha t E RISA pr eem pt ed a st a t e la w t h a t
wou ld h a ve exem pt ed E RISA pla n fu n ds a n d ben efit s fr om m ost
levies. Th e h oldin g wa s ba sed on t h e pr in ciple t h a t E RISA
pr eem pt s st a t e la ws t h a t wou ld t r ea t E RISA pla n s differ en t ly t h a n
ot h er en t it ies. H owever , E RISA per m it s st a t es t o t r ea t E RISA
pla n s differ en t ly, if t h e differ en t st a t e t r ea t m en t h a s on ly t en u ou s
effect s on t h em E RISA ba sic ben efit pr ot ect ion s. In pa r t icu la r ,
beca u se t h er e wa s n o n on -t en u ou s effect on a n y of t h e pr ot ect ion s ,
t h e Cou r t sh ou ld h a ve h eld t h a t E RISA did n ot pr eem pt t h e st a t e la w levy exem pt ion .
(3) T ravelers, wh ich h eld t h a t a st a t e cou ld r equ ir e h ospit a ls t o
im pose su r ch a r ges on t h e fees t h ey ch a r ged pa t ien t s wit h ou t Blu e
Cr oss h ea lt h ca r e in su r a n ce. Th e Cou r t t h er ein pr esen t ed t h e
pr oposit ion t h a t E RISA pr eem pt s a n y st a t e la w t h a t “r efer [s] t o”
E RISA pla n s r ega r dless of t h e st a t e la w’s effect s on t h e pla n s or
ben efit en t it lem en t s t h er eu n der . H owever , E RISA is n ot a sa cr ed
t ext . E RISA does n ot pr oh ibit r efer en ces t o E RISA pla n s. E RISA
per m it s st a t e la w r efer en ces t o E RISA pla ns if t h e la w h a s on ly
t en u ou s effect s on t h em E RISA ba sic ben efit pr ot ect ion s. In
pa r t icu la r , beca u se t h er e wa s n o n on -t en u ou s effect on a n y of t h e
pr ot ect ion s, t h e Cou r t cor r ect ly h eld t h a t E RISA did n ot pr eem pt
t h e st a t e su r ch a r ges. T ravelers cor r ect ly r ecogn ized t h a t E RISA
does n ot pr eem pt (1) a ll st a t e la ws t ha t in cr ea se E RISA pla n ben efit
cost s or in cr ea se pla n a dm in ist r a t ive bu r den s a n d (2) st a t e la ws
t h a t r egu la t e t h e pr ovision of h ea lt h ca r e. H owever , T ravelers fa iled
t o r ecogn ize t h a t E RISA pr eem pt s st a t e la ws t h a t dim inish ben efit
r igh t s dir ect ly.
(4) M ack ey II, which h eld th a t st a t e-la w levies m a y be a pplied t o
ben efit pa ym en t s fr om a ll ERISA pla n s ot h er t h a n Spou sa l Su r vivor
Ben efit P la n s. Th is decision wa s ba sed on t h e pr in ciple t h a t st a t e
la ws m a y det er m in e wh o obt a in s ben efit s fr om E RISA pla n s ot h er
t h a n Spou sa l Su r vivor Ben efit P la n s. H owever , E RISA pr oh ibit s
st a t e la w fr om pr even t in g t h e exer cise of ben efit r igh t s, in clu din g ,
1448. Fort H alifax Pack in g Co., 482 U.S., a t 15.
1449. Id . a t 11.
400
T h e J oh n M arsh all L aw R eview
[47:145
bu t n ot lim it ed t o, t h e r igh t of a pa r t icipa n t or a ben eficia r y t o
obt a in ben efit s du e un der t h e pla n t er m s. In pa r t icu la r , beca u se t h e
st a t e-la w levy pr even t ed pa r t icipa n t s fr om obt a in in g t h eir pla n
ben efit s, t h e Cou r t sh ou ld h a ve h eld t h a t E RISA pr eem pt ed t h e levy
a ga in st pa ym en t s fr om a n E RISA va ca t ion pla n .
(5) M ack ey, wh ich con t a in ed t h e dict u m t h a t t h e Alien a t ion
P r oh ibit ion h a s n o effect a ft er a Spou sa l Su r vivor Ben efit P la n
dist r ibu t es t h e ben efit .
Cla im a n t s m a y oft en ea sily a t t a ch
dist r ibu t ed ben efit s, wh ich wou ld pr even t a pa r t icipa n t fr om u sin g
t h ose ben efit s t o pa y for t h e pa r t icipa n t ’s r et ir em en t . Th u s, su ch a n
in t er pr et a t ion wou ld r en der t h e Alien a t ion P r oh ibit ion pr ot ect ion of
a pa r t icipa n t ’s r et ir em en t ben efit s m ea n in gless.
Th e fu ll im plem en t a t ion of t h e a r t icle’s con clu sion s,
pa r t icu la r ly t h ose a pplyin g t o t h e exer cise of ben efit r igh t s, wou ld
a lso r equ ir e sever a l of t h e h igh est st a t e cou r t s t o r epu dia t e t h eir
decision s t h a t E RISA per m it s a st a t e-la w cla im , t h a t a r ises fr om a
ben eficia r y’s r igh t t o a n E RISA pla n ben efit , t o be u sed t o wr est
t h e ben efit fr om t h e ben eficia r y. Th ese decision s in clu de Appleton
1450
1451
v. Alford
in Geor gia , S w eebe in Mich iga n , S ilber v. S ilber
in
1452
New Yor k , Pard ee v. Pard ee in Okla h om a , a n d S tron g v. Om ah a
1453
Con stru ction Co. Pen sion Plan ,
in Nebr a sk a . Ot h er wise, t o
pa r a ph r a se J u st ice Ca r dozo, con t r a r y t o t h e in t en t of t h e E RISA
dr a ft sm en , t h e pr ot ect ion s t h ey fa sh ion ed for t h e ben efit r igh t s of
a ll E RISA pla n pa r t icipa n t s a n d ben eficia r ies wou ld be a lm ost
fu t ile.
1450. Applet on v. Alfor d, 728 S.E .2d 549 (Ga . 2012) (h oldin g t h a t su r vivor
ben efit s fr om a 401(k) pla n a n d life in su r a n ce pla n m a y be wr est ed fr om
pa r t icipa n t ’s spou se beca u se of wa iver in sepa r a t ion or der ).
1451. Silber v. Silber , 786 N.E .2d 1263 (N.Y. 2003) (h oldin g t h a t su r vivor
ben efit s fr om a pen sion pla n m a y be wr est ed fr om pa r t icipa n t ’s for m er spou se
beca u se of wa iver in divor ce decr ee).
1452. P a r dee v. P a r dee, 112 P .3d 308 (Okla . Civ. App. 2004) (h oldin g t h a t
pa r t icipa n t ’s widow wa s r equ ir ed t o give h a lf of a sur vivor ben efit fr om a
pen sion pla n t o h is for m er spou se in a ccor d wit h t h e t er m s of a dom est ic
r ela t ion s or der t h a t wa s n ot a QDRO).
1453. St r on g v. Om a h a Con st r . Co. P en sion P la n , 701 N.W.2d 320 (Neb.
2005) (h oldin g t h a t su r vivor ben efit s fr om a pen sion pla n m a y be wr est ed fr om
pa r t icipa n t ’s for m er spou se beca u se of wa iver in divor ce decr ee).