520 U.S. 833 (1997), 96-79, Boggs v. Boggs

Docket Nº:No. 96-79
Citation:520 U.S. 833, 117 S.Ct. 1754, 138 L.Ed.2d 45, 65 U.S.L.W. 4418
Party Name:BOGGS v. BOGGS et al.
Case Date:June 02, 1997
Court:United States Supreme Court
 
FREE EXCERPT

Page 833

520 U.S. 833 (1997)

117 S.Ct. 1754, 138 L.Ed.2d 45, 65 U.S.L.W. 4418

BOGGS

v.

BOGGS et al.

No. 96-79

United States Supreme Court

June 2, 1997

Argued January 15, 1997

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

Syllabus

Respondents are the sons of Isaac and Dorothy Boggs. After Dorothy's death in 1979, Isaac married petitioner Sandra Boggs. When Isaac retired in 1985, he received various benefits from his employer's retirement plans, including a lump-sum savings plan distribution, which he rolled over into an individual retirement account (IRA); shares of stock from the company's employee stock ownership plan (ESOP); and a monthly annuity payment. Following his death in 1989, this dispute over ownership of the benefits arose between Sandra and the sons. The sons' claim is based on Dorothy's purported testamentary transfer to them, under Louisiana law, of a portion of her community property interest in Isaac's undistributed pension plan benefits. Sandra contested the validity of that transfer, arguing that the sons' claim is pre-empted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. The Federal District Court disagreed and granted summary judgment against Sandra, and the Fifth Circuit affirmed.

Held:

ERISA pre-empts a state law allowing a nonparticipant spouse to transfer by testamentary instrument an interest in undistributed pension plan benefits. Pp. 839-854.

(a) In order to resolve this case, the Court need not interpret ERISA's pre-emption clause, § 1144(a), but can simply apply conventional conflict pre-emption principles, asking whether Louisiana's community property law conflicts with ERISA and frustrates its purposes. Pp. 839-841.

(b) To the extent Louisiana law provides the sons with a right to a portion of Sandra's survivor's annuity, it is pre-empted. That annuity is a qualified joint and survivor annuity mandated by § 1055, the object of which is to ensure a stream of income to surviving spouses. ERISA's solicitude for the economic security of such spouses would be undermined by allowing a predeceasing spouse's heirs and legatees to have a community property interest in the survivor's annuity. Even a plan participant cannot defeat a nonparticipant surviving spouse's statutory entitlement to such an annuity. See § 1055(c)(2). Nothing in ERISA's language supports the conclusion that Congress decided to permit a predeceasing nonparticipant spouse to do so. Testamentary transfers such

Page 834

as the one at issue could reduce the annuity below the ERISA minimum. See § 1055(d)(1). Perhaps even more troubling, the recipient of the transfer need not be a family member; e. g., the annuity might be substantially reduced so that funds could be diverted to support an unrelated stranger. In the face of this direct clash between state law and ERISA's provisions and objectives, the state law cannot stand. See Gade v. National Solid Wastes Management Assn., 505 U.S. 88, 98. Pp. 841-844.

(c) The sons' state-law claim to a portion of Isaac's monthly annuity payments, IRA, and ESOP shares is also pre-empted. ERISA's principal object is to protect plan participants and beneficiaries. See, e. g., §§ 1001(b), (c), 1103(c)(1), 1104(a)(1), 1108(a)(2), 1132(a)(1)(B). The Act confers pension plan beneficiary status on a nonparticipant spouse or dependent only to the extent that a survivor's annuity is required in covered plans, § 1055(a), or a "qualified domestic relations order" awards the spouse or dependent an interest in a participant's benefits, §§ 1056(d)(3)(K) and (J). These provisions, which acknowledge and protect specific pension plan community property interests, give rise to the strong implication that other community property claims are not consistent with the statutory scheme. ERISA's silence with respect to the right of a nonparticipant spouse to control pension plan benefits by testamentary transfer provides powerful support for the conclusion that the right does not exist. Cf. Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147-148. The sons have no claim to a share of the benefits at issue because they are neither participants nor beneficiaries under §§ 1002(7) and (8), but base their claims on Dorothy's attempted testamentary transfer. It would be inimical to ERISA's purposes to permit them to prevail. Early cases holding that ERISA did not preempt spousal community property interests in pension benefits, regardless of who was the plan participant or beneficiary, are not applicable here in light of subsequent amendments to ERISA. Reading ERISA to permit nonbeneficiary interests, even if not enforced against the plan, would result in troubling anomalies that do not accord with the statutory scheme. That Congress intended to pre-empt respondents' interests is given specific and powerful reinforcement by § 1056(d)(1), which requires pension plans to specify that benefits "may not be assigned or alienated." Dorothy's testamentary transfer to her sons is such a prohibited "assignment or alienation" under the applicable regulations. Community property laws have, in the past, been pre-empted in order to prevent the diversion of retirement benefits. See, e. g., Free v. Bland, 369 U.S. 663, 669. It does not matter that respondents have sought to enforce their purported rights only after Isaac's benefits were

Page 835

distributed, since those rights are based on the flawed theory that they had an interest in the undistributed benefits. Pp. 844-854.

82 F.3d 90, reversed.

Kennedy, J., delivered the opinion of the Court, in which Stevens, Scalia, Souter, and Thomas, JJ., joined, and in which Rehnquist, C. J., and Ginsburg, J., joined as to Part III. Breyer, J., filed a dissenting opinion, in which O'Connor, J., joined, and in which Rehnquist, C. J., and Ginsburg, J., joined except as to Part II-B-3, post, p. 854.

Marian Mysing Livaudais argued the cause for petitioner. With her on the briefs were John Catlett Christian, F. Pierre Livaudais, and James F. Willeford.

Paul R. Q. Wolfson argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Acting Solicitor General Dellinger, Deputy Solicitor General Kneedler, J. Davitt McAteer, Allen H. Feldman, Nathaniel I. Spiller, and Judith D. Heimlich.

Edward J. Deano, Jr., argued the cause for respondents. With him on the brief were Guy L. Deano, Jr., and Theresa D. Bewig [*]

Justice Kennedy delivered the opinion of the Court.[†]

We consider whether the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 832, as amended, 29 U.S.C. § 1001 et seq., pre-empts a state law allowing a nonparticipant

Page 836

spouse to transfer by testamentary instrument an interest in undistributed pension plan benefits. Given the pervasive significance of pension plans in the national economy, the congressional mandate for their uniform and comprehensive regulation, and the fundamental importance of community property law in defining the marital partnership in a number of States, the question is of undoubted importance. We hold that ERISA pre-empts the state law.

I

Isaac Boggs worked for South Central Bell from 1949 until his retirement in 1985. Isaac and Dorothy, his first wife, were married when he began working for the company, and they remained husband and wife until Dorothy's death in 1979. They had three sons. Within a year of Dorothy's death, Isaac married Sandra, and they remained married until his death in 1989.

Upon retirement, Isaac received various benefits from his employer's retirement plans. One was a lump-sum distribution from the Bell System Savings Plan for Salaried Employees (Savings Plan) of $151,628.94, which he rolled over into an Individual Retirement Account (IRA). He made no withdrawals and the account was worth $180,778.05 when he died. He also received 96 shares of AT&T stock from the Bell South Employee Stock Ownership Plan (ESOP). In addition, Isaac enjoyed a monthly annuity payment during his retirement of $1,777.67 from the Bell South Service Retirement Program.

The instant dispute over ownership of the benefits is between Sandra (the surviving wife) and the sons of the first marriage. The sons' claim to a portion of the benefits is based on Dorothy's will. Dorothy bequeathed to Isaac one-third of her estate, and a lifetime usufruct in the remaining two-thirds. A lifetime usufruct is the rough equivalent of a common-law life estate. See La. Civ. Code Ann., Art. 535 (West 1980). She bequeathed to her sons the naked ownership

Page 837

in the remaining two-thirds, subject to Isaac's usufruct. All agree that, absent pre-emption, Louisiana law controls and that under it Dorothy's will would dispose of her community property interest in Isaac's undistributed pension plan benefits. A Louisiana state court, in a 1980 order entitled "Judgment of Possession," ascribed to Dorothy's estate a community property interest in Isaac's Savings Plan account valued at the time at $21,194.29.

Sandra contests the validity of Dorothy's 1980 testamentary transfer, basing her claim to those benefits on her interest under Isaac's will and 29 U.S.C. § 1055. Isaac bequeathed to Sandra outright certain real property including the family home. His will also gave Sandra a lifetime usufruct in the remainder of his estate, with the naked ownership interest being held by the sons. Sandra argues that the sons' competing claim, since it is based on Dorothy's 1980 purported testamentary transfer of her community property interest in undistributed pension plan benefits, is pre-empted by ERISA. The Bell South Service Retirement Program monthly annuity is now paid to Sandra as the surviving spouse.

After Isaac's...

To continue reading

FREE SIGN UP