Langston v. Wilson McShane Corp., No. A07-2034.

• Decision Date: 10 December 2009
• Docket Number: No. A07-2034.
• Citation: 776 N.W.2d 684
• Parties: Patricia Ann LANGSTON, Appellant, v. WILSON McSHANE CORPORATION, as Administrator for the Twin Cities Carpenters and Joiners Pension Fund, and the Twin Cities Carpenters and Joiners Pension Fund, Respondents.
• Court: Minnesota Supreme Court

776 N.W.2d 684

Patricia Ann LANGSTON, Appellant, v. WILSON McSHANE CORPORATION, as Administrator for the Twin Cities Carpenters and Joiners Pension Fund, and the Twin Cities Carpenters and Joiners Pension Fund, Respondents.

No. A07-2034.

Supreme Court of Minnesota.

December 10, 2009.

Thomas F. DeVincke, Bonner & Borhart, LLP, Minneapolis, MN, for appellant.

Pamela Hodges Nissen, Amanda R. Cefalu, Anderson, Helgen, Davis & Nissen, LLC, Minneapolis, MN, for respondents.

OPINION

GILDEA, Justice.

The question presented in this case is whether state courts have subject matter jurisdiction under the Employee Retirement Income Security Act (ERISA) to review a plan administrator's determination that a proposed qualified domestic relations order (QDRO) is not "qualified" for purposes of ERISA. The district court held that state courts have concurrent jurisdiction with federal courts to review such decisions by plan administrators. The court of appeals reversed, holding that federal jurisdiction over such decisions is exclusive. Because we conclude that state and federal courts have concurrent jurisdiction to review a plan administrator's determination of whether a proposed QDRO is "qualified," we reverse.

This action arises from the dissolution of the marriage between Gary Langston and appellant Patricia Ann Langston. The Anoka County District Court dissolved the Langston marriage in a judgment and decree dated August 3, 1993. Gary Langston (Gary) was a carpenter and was a participant in respondent Twin Cities Carpenters and Joiners Pension Fund (the Plan), which is administered by respondent Wilson-McShane Corporation. In the judgment and decree, the court awarded Patricia Langston (Langston) a one-half interest in the marital portion of all of Gary's pension benefits. Gary was required to elect survivor benefits and name Langston as his survivor beneficiary. Langston's attorney was responsible for drafting a domestic relations order (DRO) and submitting it for the court's review, and then to the plan administrator to be qualified. Langston's counsel did not submit the DRO to the district court for its consideration until 2005.¹

In July 2005, the district court issued a domestic relations order (2005 DRO) to implement the terms of the judgment and decree. Counsel submitted the 2005 DRO to the plan administrator, but the plan administrator refused to "qualify" the order because the benefits were already in "pay status." The plan administrator further explained that Langston would not be eligible for survivor benefits because the benefits had already vested, but that Langston could receive some benefits during Gary's lifetime under the "shared payment method" if she submitted a revised DRO.²

Langston did not submit a revised DRO to the respondents. Instead, she brought a motion to enforce the 2005 DRO in her marital dissolution action in district court. In this motion, Langston sought to require the Plan and Wilson-McShane to honor the 2005 DRO. The court denied the motion because neither the Plan nor Wilson-McShane were parties to the post-decree marital dissolution proceeding and therefore the court lacked personal jurisdiction over them.

Langston then commenced a new action by filing a complaint in district court seeking to obtain pension benefits pursuant to the 2005 DRO. Langston brought this action against the respondents, the Plan and Wilson-McShane, but neither appeared. Upon Langston's motion, the court entered a default judgment in her favor on April 18, 2007.

The respondents thereafter moved to vacate the default judgment, arguing both that the state court did not have subject matter jurisdiction over Langston's claim and that the default judgment should be vacated under the four-factor test announced in Hinz v. Northland Milk & Ice Cream Co., 237 Minn. 28, 28, 30, 53 N.W.2d 454, 456 (1952). The district court concluded that it had subject matter jurisdiction and denied the motion to vacate.

Respondents appealed, and the court of appeals reversed, holding that the district court lacked subject matter jurisdiction over Langston's claim. Langston v. Wilson McShane Corp., 758 N.W.2d 583, 590 (Minn.App.2008). The court also held that the district court abused its discretion in balancing the Hinz factors and determined that the default judgment should have been vacated. Id. at 594. We granted Langston's petition for review on the question of whether the district court had subject matter jurisdiction over Langston's claim.

This action arises under ERISA, which was enacted in 1974 to provide a comprehensive system of federal regulation of private employee benefit plans. See Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406, § 514(a), 88 Stat. 897 (codified at 29 U.S.C. § 1144(a) (2006)). Because ERISA provides that pension benefits are not assignable, 29 U.S.C. § 1056(d)(1) (2006), it was initially unclear whether such benefits could be divided between divorcing spouses, see Samaroo v. Samaroo, 193 F.3d 185, 187 (3d Cir.1999). In 1984, Congress passed the Retirement Equity Act ("REA"), which made clear that pension benefits could be divided if the division was provided for in a "qualified domestic relations order." See Retirement Equity Act of 1984, Pub. L. No. 98-397, § 104(a), 98 Stat. 1433 (codified at 29 U.S.C. § 1056(d)(3)(A) (2006)). To secure benefits, a divorcing spouse must first obtain a DRO that assigns benefits to him or her and then the relevant plan administrator must find that the DRO is "qualified." See 29 U.S.C. § 1056(d)(3)(G) (2006).

Congress provided that the plan administrator's determination of whether a DRO is "qualified" under ERISA is judicially reviewable. 29 U.S.C. § 1056(d)(3)(H)(i) (2006). The issue in this case is whether ERISA permits state courts to exercise subject matter jurisdiction and review the plan administrator's determination or whether ERISA vests jurisdiction exclusively in the federal courts. This question of statutory interpretation is subject to de novo review. See Bode v. Minn. Dep't of Natural Res., 612 N.W.2d 862, 866 (Minn.2000).

I.

Langston contends, and the district court held, that in 29 U.S.C. § 1132(e)(1) (2006), ERISA vests concurrent jurisdiction in state courts.³ Under section 1132(e)(1), federal courts have exclusive jurisdiction over most civil actions brought under ERISA. But the second sentence of this section provides that "[s]tate courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under paragraphs [ (a) ](1)(B)." Thus, in order to determine whether the state court had jurisdiction, we must determine whether, as Langston argues, her claim arises under 29 U.S.C. § 1132(a)(1)(B) (2006).

Section 1132(a)(1)(B) allows a "participant or beneficiary" to bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." Langston's complaint alleges that respondents have refused to pay "benefits due [to] her." But respondents offer two reasons why Langston's claim does not fall under section 1132(a)(1)(B). First, respondents argue that to bring a claim under section 1132(a)(1)(B), a plaintiff must be either a "participant" or a "beneficiary." Respondents argue that because Langston is neither, she cannot bring suit under this section. Second, respondents argue that Langston's complaint alleges a violation of ERISA rather than a violation of the "terms of the plan" and as such, her claim falls under 29 U.S.C. § 1132(a)(3) (2006) and must be brought in federal court. We examine each argument in turn.

A.

We first consider whether Langston is a "participant" or a "beneficiary" for purposes of section 1132(a)(1)(B). Under section 1132(a)(1)(B), only a "participant" or a "beneficiary" may bring a civil claim to recover benefits due to him or her under the terms of the plan. Langston was never enrolled in Gary's pension plan so she is clearly not a "participant." See 29 U.S.C. § 1002(7) (2006) (defining "participant"). Therefore, any claims Langston has to the proceeds of the pension must arise from her status as a "beneficiary."

Langston contends that she is a beneficiary under 29 U.S.C. § 1056(d)(3) (2006). This provision provides that an "alternate payee" can be a "beneficiary." See 29 U.S.C. § 1056(d)(3)(J). The statute defines "alternate payee" as "any spouse, [or] former spouse ... of a participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under a plan with respect to such participant." 29 U.S.C. § 1056(d)(3)(K). There is no dispute that Langston is an alternate payee, because the district court designated her as such in the 2005 DRO.

Respondents contend that Langston's status as an alternate payee is not sufficient because, under section 1056(d)(3)(J), not all alternate payees are treated as beneficiaries. Rather, respondents argue, only those alternate payees recognized by qualified domestic relations orders are beneficiaries. The section respondents cite provides: "A person who is an alternate payee under a qualified domestic relations order shall be considered for purposes of any provision of this chapter a beneficiary under the plan." 29 U.S.C. § 1056(d)(3)(J) (emphasis added). Under respondents' reading of the statute, the DRO must first be "qualified" before an "alternate payee" can be a "beneficiary." Because the plan administrator did not find that the 2005 DRO was "qualified," respondents argue Langston cannot be a "beneficiary."⁴ We disagree.

Congress clearly contemplated judicial review of a plan administrator's decision as to whether a DRO is or is not qualified. See 29 U.S.C. § 1056(d)(3)(H)(i). This section provides for consideration "by a court of competent jurisdiction" of "the issue of whether a domestic relations order...