Kennedy v. Plan Adm'r for DuPont Sav. & Inv. Plan

Decision Date26 January 2009
Docket NumberNo. 07–636.,07–636.
Citation172 L.Ed.2d 662,555 U.S. 285,129 S.Ct. 865
PartiesKari E. KENNEDY, executrix of the Estate of Kennedy, Deceased, Petitioner, v. PLAN ADMINISTRATOR FOR DuPONT SAVINGS AND INVESTMENT PLAN et al.
CourtU.S. Supreme Court

David A. Furlow, for petitioners.

Leondra R. Kruger, for United States as amicus curiae, by special leave of the Court.

Mark I. Levy, for respondents.

Stacy L. Kelly, Houston, Texas, David A. Furlow, Kevin Pennell, Morgan Gaskin, Thompson & Knight LLP, Houston, Texas, for Petitioner Kari Ellen Kennedy.

John M. Vine, Seth J. Safra, Theodore P. Metzler, Covington & Burling LLP, Washington, DC, Raymond Michael Ripple, Lori K. Knauer, Donna L. Goodman, Wilmington, DE, Mark I. Levy, Adam H. Charnes, C. Allen Garrett, Jr., Sean M. Green, Kilpatrick Stockton LLP, Washington, DC, for Respondents.


Justice SOUTER delivered the opinion of the Court.

The Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, 29 U.S.C. § 1001 et seq ., generally obligates administrators to manage ERISA plans “in accordance with the documents and instruments governing” them. § 1104(a)(1)(D). At a more specific level, the Act requires covered pension benefit plans to “provide that benefits ... under the plan may not be assigned or alienated,” § 1056(d)(1), but this bar does not apply to qualified domestic relations orders (QDROs), § 1056(d) (3). The question here is whether the terms of the limitation on assignment or alienation invalidated the act of a divorced spouse, the designated beneficiary under her ex-husband's ERISA pension plan, who purported to waive her entitlement by a federal common law waiver embodied in a divorce decree that was not a QDRO. We hold that such a waiver is not rendered invalid by the text of the antialienation provision, but that the plan administrator properly disregarded the waiver owing to its conflict with the designation made by the former husband in accordance with plan documents.


The decedent, William Kennedy, worked for E.I. DuPont de Nemours & Company and was a participant in its savings and investment plan (SIP), with power both to “designate any beneficiary or beneficiaries ... to receive all or part” of the funds upon his death, and to “replace or revoke such designation.” App. 48. The plan requires [a]ll authorizations, designations and requests concerning the Plan [to] be made by employees in the manner prescribed by the [plan administrator],” id., at 52, and provides forms for designating or changing a beneficiary, id., at 34, 56–57. If at the time the participant dies “no surviving spouse exists and no beneficiary designation is in effect, distribution shall be made to, or in accordance with the directions of, the executor or administrator of the decedent's estate.” Id., at 48.

The SIP is an ERISA ‘employee pension benefit plan,’ 497 F.3d 426, 427 (C.A.5 2007) ; 29 U.S.C. § 1002(2), and the parties do not dispute that the plan satisfies ERISA's antialienation provision, § 1056(d)(1), which requires it to “provide that benefits provided under the plan may not be assigned or alienated.”1 The plan does, however, permit a beneficiary to submit a “qualified disclaimer” of benefits as defined under the Tax Code, see 26 U.S.C. § 2518, which has the effect of switching the beneficiary to an “alternate ... determined according to a valid beneficiary designation made by the deceased.” Supp. Record 86–87 (Exh. 15).

In 1971, William married Liv Kennedy, and, in 1974, he signed a form designating her to take benefits under the SIP, but naming no contingent beneficiary to take if she disclaimed her interest. 497 F.3d, at 427. William and Liv divorced in 1994, subject to a decree that Liv “is ... divested of all right, title, interest, and claim in and to ... [a]ny and all sums ... the proceeds [from], and any other rights related to any ... retirement plan, pension plan, or like benefit program existing by reason of [William's] past or present or future employment.” App. to Pet. for Cert. 64–65. William did not, however, execute any documents removing Liv as the SIP beneficiary, 497 F.3d, at 428, even though he did execute a new beneficiary-designation form naming his daughter, Kari Kennedy, as the beneficiary under DuPont's Pension and Retirement Plan, also governed by ERISA.

On William's death in 2001, petitioner Kari Kennedy was named executrix and asked DuPont to distribute the SIP funds to William's Estate. Ibid . DuPont, instead, relied on William's designation form and paid the balance of some $400,000 to Liv. Ibid . The Estate then sued respondents DuPont and the SIP plan administrator (together, DuPont), claiming that the divorce decree amounted to a waiver of the SIP benefits on Liv's part, and that DuPont had violated ERISA by paying the benefits to William's designee.2

So far as it matters here, the District Court entered summary judgment for the Estate, to which it ordered DuPont to pay the value of the SIP benefits. The court relied on Fifth Circuit precedent establishing that a beneficiary can waive his rights to the proceeds of an ERISA plan ‘provided that the waiver is explicit, voluntary, and made in good faith.’ App. to Pet. for Cert. 38 (quoting Manning v. Hayes, 212 F.3d 866, 874 (C.A.5 2000) ).

The Fifth Circuit nonetheless reversed, distinguishing prior decisions enforcing federal common law waivers of ERISA benefits because they involved life-insurance policies, which are considered ‘welfare plan[s] under ERISA and consequently free of the antialienation provision. 497 F.3d, at 429. The Court of Appeals held that Liv's waiver constituted an assignment or alienation of her interest in the SIP benefits to the Estate, and so could not be honored. Id., at 430. The court relied heavily on the ERISA provision for bypassing the antialienation provision when a marriage breaks up: under 29 U.S.C. § 1056(d)(3),3 a court order that satisfies certain statutory requirements is known as a qualified domestic relations order, which is exempt from the bar on assignment or alienation. Because the Kennedys' divorce decree was not a QDRO, the Fifth Circuit reasoned that it could not give effect to Liv's waiver incorporated in it, given that ERISA provides a specific mechanism—the QDRO—for addressing the elimination of a spouse's interest in plan benefits, but that mechanism is not invoked.” 497 F.3d, at 431.

We granted certiorari to resolve a split among the Courts of Appeals and State Supreme Courts over a divorced spouse's ability to waive pension plan benefits through a divorce decree not amounting to a QDRO.4 552 U.S. 1178, 128 S.Ct. 1225, 170 L.Ed.2d 57 (2008). We subsequently realized that this case implicates the further split over whether a beneficiary's federal common law waiver of plan benefits is effective where that waiver is inconsistent with plan documents,5 and after oral argument we invited supplemental briefing on that latter issue, upon which the disposition of this case ultimately turns. We now affirm, albeit on reasoning different from the Fifth Circuit's rationale.


By its terms, the antialienation provision, § 1056(d)(1), requires a plan to provide expressly that benefits be neither “assigned” nor “alienated,” the operative verbs having histories of legal meaning: to “assign” is [t]o transfer; as to assign property, or some interest therein,” Black's Law Dictionary 152 (4th rev. ed.1968), and to “alienate” is [t]o convey; to transfer the title to property,” id., at 96. We think it fair to say that Liv did not assign or alienate anything to William or to the Estate later standing in his shoes.

The Fifth Circuit saw the waiver as an assignment or alienation to the Estate, thinking that Liv's waiver transferred the SIP benefits to whoever would be next in line; without a designated contingent beneficiary, the Estate would take them. The court found support in the applicable Treasury Department regulation that defines “assignment” and “alienation” to include

[a]ny direct or indirect arrangement (whether revocable or irrevocable) whereby a party acquires from a participant or beneficiary a right or interest enforceable against the plan in, or to, all or any part of a plan benefit payment which is, or may become, payable to the participant or beneficiary.” 26 CFR § 1.401(a)–13(c)(1)(ii) (2008).

See Boggs v. Boggs, 520 U.S. 833, 851–852, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997) (relying upon the regulation to interpret the meaning of “assignment” and “alienation” in § 1056(d)(1) ). The Circuit treated Liv's waiver as an ‘indirect arrangement’ whereby the Estate gained an ‘interest enforceable against the plan.’ 497 F.3d, at 430.

Casting the alienation net this far, though, raises questions that leave one in doubt. Although it is possible to speak of the waiver as an “ arrangement” having the indirect effect of a transfer to the next possible beneficiary, it would be odd usage to speak of an estate as the transferee of its own decedent's property, just as it would be to speak of the decedent in his lifetime as his own transferee. And treating the estate or even the ultimate estate beneficiary as the assignee or transferee would be strange under the terms of the regulation: it would be hard to say the estate or future beneficiary “acquires” a right or interest when at the time of the waiver there was no estate and the beneficiary of a future estate might be anyone's guess. If there were a contingent beneficiary (or the participant made a subsequent designation) the estate would get no interest; as for an estate beneficiary, the identity could ultimately turn on the law of intestacy applied to facts as yet unknown, or on the contents of the participant's subsequent will, or simply on the participant's future exercise of (or failure to invoke) the power to designate a new beneficiary directly under the terms of the plan. Thus, if such a waiver created an “arrangement” assigning or transferring...

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