Tuesday, August 19, 2008
Friend of the blog and prominent ERISA practitioner, Albert Feuer, has penned an indispensable commentary for anyone who is following the ERISA Supreme Court case of Kennedy v. Plan Administrator for Dupont Savings and Invest Plan. Kennedy is set to be argued in front of the Supreme Court this October.
In the Introduction, Albert writes:
The filings in Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, 497 F.3d 426 (5th Cir. 2007), cert. granted, 2008 U.S. LEXIS 1291 (U.S. Feb. 19, 2008) are complete, and oral argument is scheduled for October 7, 2008.
The case, which is a dispute about who is entitled to a participant’s death benefits, has many curious elements. In my view, neither party addresses the certified question which refers to the entitlements of an ERISA beneficiary rather than the payment obligations of an ERISA plan administrator. The AARP amicus brief suggests that ERISA should no longer protect entitlements to retirement benefits after their distribution. Under the approach of the amicus brief of the United States, that the Department of Treasury, the Internal Revenue Service, and the Department of Labor presented, for which the Solicitor General ("SG") was the counsel of record, divorcing spouses may not retain spousal survivor benefits with qualified domestic relations orders ("QDROs"), even though Congress introduced QDROs for this very purpose, because the United States approach limits QDROs to orders that transfer benefit rights and no right is transferred if rights are retained.
The result may be a Supreme Court decision or dicta that substantially change basic ERISA provisions with respect to benefit entitlements, benefit designations, the alienation prohibition and QDROs.
The core ERISA principle that plan terms determine ERISA benefit entitlements is at stake in this case. This is the case whether or not the plan is subject to the administrator responsibility provisions that advocates of the importance of plan documents, including the Supreme Court, regularly cite. The Petitioner and many circuits have rejected these provisions as a thin reed unable to withstand the common-law preference for waivers. Moreover, those provisions do not determine the extent of a person’s ERISA benefit entitlements. If the Supreme Court rules in favor of the Respondent and cites benefit entitlements, as the certified question does, rather than administrator responsibilities, the core principle will be dramatically enhanced. If the Supreme Court rules in favor of the Petitioner or remands, the principle will be seriously eroded unless the remanded issue is whether the waiver complied with the plan terms.
It is most likely that the Supreme Court will rule in favor of the Respondent, but the incorrect assertions in the briefs may lead to dicta that in practice changes basic ERISA principles.
Albert's whole piece, A Curious ERISA Case Before the Supreme Court, can be found here.
It is by far the most comprehensive and compelling piece on this complex QDRO/anti-alienation/waiver subject, including all of the Amici briefs filed with the Court (you can find those Amici brief here (scroll down). We are proud to be the first to publish it here on the Workplace Prof.