Boggs v. Boggs , 89 F.3d 1169 ( 1996 )

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 94-30178
SANDRA JEAN DALE BOGGS,
Plaintiff-Appellant,
VERSUS
THOMAS F. BOGGS, HARRY P. BOGGS
and DAVID B. BOGGS,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Louisiana
April 17, 1996
Before WISDOM, KING, and DUHÉ, Circuit Judges.
WISDOM, Circuit Judge.
Sandra Boggs, the plaintiff/appellant, seeks a
declaratory judgment that the Employee Retirement Income Act of
1974 (ERISA) preempts Louisiana community property law and,
thereby, prevents the creation of a community property interest in
ERISA-qualified retirement benefit plans. The district court
rejected the plaintiff's contention and denied her request for a
declaratory judgment. We agree with the district court's decision.
We AFFIRM.
I.
Isaac Boggs was employed by South Central Bell from June
18, 1949 until his retirement on September 1, 1985. As an
employee, he participated in an ERISA-qualified pension plan.
Isaac Boggs was married to his first wife, Dorothy Boggs, when he
began employment with South Central Bell in 1949 and their marriage
continued until her death on August 14, 1979. Dorothy and Isaac
Boggs had three sons, David Bruce Boggs, Thomas Frank Boggs, and
Harry Maurice Boggs, the defendant/appellees. Isaac Boggs married
again in April of 1980. His second wife, Sandra Boggs, the
plaintiff/appellant, survived her husband who died in 1989.
The South Central Bell plan provided for several types of
retirement benefits. Upon his retirement, Isaac Boggs received a
lump sum payment of $151,628.94 which was rolled over into an IRA
account valued at $180,778.05 at his death. He was also paid a
monthly annuity of $1,777.67. This benefit was converted into a
survivor's annuity when Isaac Boggs died and is currently paid to
Sandra Boggs. Isaac Boggs also received 96 shares of AT&T stock
and a life insurance policy that names Sandra Boggs as beneficiary.
In her will, the first Mrs. Boggs bequeathed one-third of
her estate and a lifetime usufruct in the remaining two-thirds to
her husband. She designated her three sons as the owners of the
naked or revisionary interest in the portion of her estate over
which Isaac Boggs held a usufruct. Among the assets listed in the
succession of Dorothy Boggs was her community property interest in
her husband's pension valued at $42,388.57 in 1979. The succession
2
documents valued Dorothy Boggs' interest at $21,194.29.
The Boggs' sons, the defendants in this case, filed an
action in Louisiana state court seeking an accounting of their
father's usufruct and an award of some portion of the retirement
benefits. Sandra Boggs then filed this case seeking a declaratory
judgment that ERISA preempts the application of Louisiana community
property law to this qualified plan. Specifically, the plaintiff,
the second wife, argued that ERISA controls the disbursement of
benefits and, under those rules, she is the designated beneficiary.
The defendants responded by arguing that this case was not governed
by ERISA and, therefore, the court lacked jurisdiction. In
addition, the defendants argued that ERISA does not preempt
Louisiana community property law. The district court responded by
determining first that it had jurisdiction over the case under 29
U.S.C. section 1132. Further, the district court rejected the
plaintiff's contention that ERISA preempts Louisiana community
property law. The plaintiff asks us to review that decision.1
II.
Before we review the district court's determination
regarding ERISA preemption, we must address the defendant's
continuing contention that the district court lacked jurisdiction
to decide this case. 29 U.S.C. section 1132(a) creates ERISA
The plaintiff also requests attorney's fees under 29
U.S.C. section 1132(g)(1) which allows the court to award ERISA
beneficiaries, participants, and fiduciaries reasonable attorney's
fees and costs when they are the prevailing party. Since we affirm
the district court's denial of Sandra Boggs' request for a
declaratory judgment, she is not entitled to attorney's fees.
3
jurisdiction and provides that:
a civil action may be brought by a participant
or beneficiary . . . to recover benefits due
to him under the plan, to enforce his rights
under the terms of the plan, or to clarify his
rights to future benefits under the plan...".
In this case, Sandra Boggs, the plaintiff, is a
beneficiary of the benefits plan; she is currently receiving a
survivor's annuity. Further, she seeks to clarify her right to
pension benefits under the South Central Bell plan. This type of
action is expressly authorized by the jurisdictional provisions of
section 1132 and the district court properly concluded that it had
jurisdiction to resolve this case.
III.
The plaintiff, Sandra Boggs, seeks a declaratory judgment
that ERISA preempts Louisiana community property law and, thereby,
prevents the Boggs' children from receiving any portion of their
father's pension benefits. The district court rejected the
plaintiff's arguments and, on appeal, she asks us to reconsider the
preemption issue. We review the district court's preemption
analysis de novo.2
ERISA was enacted to protect the interests of the
beneficiaries of employee benefit plans.3 The Act "imposes
participation, funding, and vesting requirements on pension plans"
and also regulates issues such as "reporting, disclosure, and
Hook v. Morrison Milling Co., 38 F.3d 776, 780 (5th Cir.
1994).
Ingersoll-Rand Company v. McClendon, 498 U.S. 133, 137
(1990).
4
fiduciary responsibility".4 One important goal of ERISA is to
impose uniform standards on plan administrators. Congress
attempted to guarantee uniformity when it included ERISA's broad
preemption provision.5 29 U.S.C. section 1144(a) provides that the
provisions of ERISA "shall supersede any and all state laws insofar
as they may now or hereafter relate to any employee benefit plan
described in section 4(a) and not exempt under section 4(b)".
This provision has been interpreted broadly. Courts
recognize the "``deliberately expansive' language chosen by
Congress".6 Thus, any state law which "relates to" an ERISA-
qualified employee benefits plan is preempted. A state law
"relates to" an ERISA plan "in the normal sense of the phrase, if
it has connection with or reference to such a plan".7 A state law
can relate to an employee benefit plan even if it is not designed
to regulate in the area of employee benefits or if its effect is
indirect.8
The broad sweep of the ERISA preemption provision,
however, is not without limits.9 The language of the statute
Shaw v. Delta Airlines, Inc., 463 U.S. 85, 91 (1983).
Ingersoll-Rand Company, 498 U.S. at 137.
Hook, 38 F.3d at 781.
Shaw, 463 U.S. at 96-97.
Rozzell v. Security Services, Inc., 38 F.3d 819, 821 (5th
Cir. 1994) (citing Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41
(1987)).
Ingersoll-Rand Company, 498 U.S. at 139; see e.g., Mackey
v. Lanier Collection Agency & Service, Inc., 486 U.S. 825 (1988).
5
indicates that it preempts only state laws which relate to a
benefit plan. Further, we must recognize the general presumption
"that Congress does not intend to preempt areas of traditional
state regulation".10 The Supreme Court has warned that, in
determining the scope of ERISA's preemption provision, we must be
mindful of traditional principles of federalism.11 "[W]e must be
guided by respect for the separate spheres of governmental
authority preserved in our federalist system."12 For example, in
Mackey v. Lanier Collection Agency, the Supreme Court held that a
Georgia statute governing garnishment procedures in that state was
not preempted by ERISA even when it was used to garnish benefits
received under an ERISA plan.13
To determine whether ERISA preempts state law, this Court
engages in a two-part analysis. First, we are less likely to find
preemption when the state law at issue "involves an exercise of
traditional state authority".14 Second, we consider whether the
FMC Corporation v. Holliday, 498 U.S. 52, 62 (1990)
(citing Jones v. Rath Packing Co., 430 U.S. 519 (1977)).
See Hook, 38 F.3d at 781 (citing the Supreme Court's
warnings regarding placing some limit on the reach of the ERISA
preemption provision in Shaw v. Delta Airlines Inc., 463 U.S. 85
(1983) and Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504
(1981)).
Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 522
(1981).
486 U.S. 825 (1988).
Sommers Drug Stores v. Corrigan Enterprises, Inc., 793
F.2d 1456, 1467 (5th Cir. 1986), cert. denied, 479 U.S. 1034
(1987), 479 U.S. 1089 (1987); see also, Hook, 38 F.3d at 781;
Memorial Hospital System v. Northbrook Life Insurance Company, 904
F.2d 236, 245 (5th Cir. 1990).
6
state law "affects relations among the principal ERISA entities--
the employer, the plan, the plan fiduciaries, and the
beneficiaries" or whether it only "affects relations between one of
these entities and an outside party" or "two outside parties with
only an incidental effect on the plan".15
In this case, the plaintiff asks us to conclude that
ERISA preempts Louisiana community property law. The area of
domestic relations has long been the domain of the states. As this
Court has noted:
Federal respect for state domestic relations
law has a long and venerable history. When
courts face a potential conflict between state
domestic relations law and federal law, the
strong presumption is that state law should be
given precedence . . . . The law of family
relations has been a sacrosanct enclave,
carefully protected against federal intrusion.
One way our federalist system maintains the
integrity of the folkways and mores of
localities is through the conservation of
state control over the creation and separation
of families.16
A community property system governing the acquisition and ownership
of property during marriage goes back to the earliest days of
Louisiana as a French colony, and was carried on under the Spanish
regime, and was embedded in the first Louisiana Constitution. It
is an honored civilian institution, not the belated effort of a
common law state to seek a tax advantage. The use of a community
Sommers Drug Stores, 793 F.2d at 1467; see also, Hook, 38
F.3d at 781; Memorial Hospital, 904 F.2d at 245.
Brandon v. Travelers Insurance Company, 18 F.3d 1321,
1326 (5th Cir. 1994), cert. denied, 115 S. Ct. 732, 130 L. Ed. 2d 635
(1995) (engaging in the ERISA preemption analysis).
7
property system represents Louisiana's recognition of the value a
spouse, though non-employed, contributes to a marriage. The system
conceives of marriage as a partnership in which each partner is
entitled to an equal share.
Under Louisiana community property law, each spouse owns
"a present undivided one-half interest" in all community assets,
which vests from the moment of acquisition.17 Pension benefits, if
acquired during the marriage, are generally considered a community
asset.18 Thus, if one spouse receives benefits from a pension plan,
he or she must account to the other spouse for this benefit which
vests equally in both spouses from the instant of acquisition.
The plaintiff contends that the broad sweep of ERISA acts
to prevent the operation of Louisiana's marital property system and
bans the enforcement of ownership rights granted by Louisiana law
if those rights include an interest in employee benefits under an
ERISA plan. We do not agree. A state community property system
that affects what a plan participant does with his benefits after
they are received does not impermissibly intrude on the mandates
ERISA imposes on plan administrators. The controversy in this case
is between successive spouses and their heirs. The focus of this
case is not the relationship between the administrator of this
ERISA plan and its beneficiary. "ERISA's preemptive scope may be
broad but it does not reach claims that do not involve the
administration of plans, even though the plan may be a party to a
Hare v. Hodgins, 586 So. 2d 118, 122 (La. 1991).
Id.
8
suit or the claim relies on the details of the plan".19 And, as we
noted in the Hook decision:
a preemption provision designed to prevent
state interference with federal control of
ERISA plans does not require the creation of a
fully insulated legal world that excludes
these plans from regulation of any purely
local transaction . . . . In other words,
ERISA was not meant to consume everything in
its path.20
This Court concludes that, under the facts of this case,
the Louisiana community property law is not sufficiently "related
to" an employee benefit plan to necessitate ERISA preemption.
Nothing is sought from the plan or its fiduciary. No duty will be
imposed on the plan or the administrator. Benefits will continue
to be paid to the beneficiary in the manner provided in the plan.
A spouse's accounting obligation under community property law
affects employee benefit plans "in too tenuous, remote, or
peripheral a manner to warrant a finding that the law ``relates to'
the plan".21 Our decision relates not to the plan but to the
disposition of the proceeds only after payment to the designated
beneficiary. This is no greater effect than the state’s
garnishment laws. Mackey, 486 U.S. 825 (1988).
Hook, 38 F.3d at 784.
Id. at 786. (citations omitted).
Shaw, 463 U.S. at 100 n.21. The dissent suggests that
our decision today will create uncertainty regarding whether plan
participants will actually receive their anticipated retirement
income. The issue here, however, is not whether Isaac Boggs was
entitled to his benefits as against the plan administrators, but
whether, once received, he owed any of those benefits to the estate
of his deceased spouse based on their thirty year marriage.
9
The plaintiff attempts to rely on two additional
statutory sources to support her contention that Louisiana
community property law has been displaced. First, she cites
ERISA's spendthrift provision which prohibits the assignment or
alienation of plan benefits.22 She also cites 26 U.S.C. section
408, enacted as part of ERISA, which defines an IRA as a trust held
by the United States for the benefit of the employee "without
regard to any community property laws".23 First, it is important
to note that neither provision can substitute for an analysis under
the general preemption provision. Section 1144(a) carries out the
power of Congress to preempt and it controls any determination of
the boundaries of ERISA preemption. With this in mind, we examine
the individual statutes cited and determine what impact, if any,
they have on the operation of Louisiana community property law.
The purpose of the spendthrift provision is to prevent
plan participants from recklessly divesting themselves of plan
benefits before retirement. This provision was not intended to
affect support obligations among the members of a family.
Furthermore, a non-participant spouse's ownership of an interest in
29 U.S.C. section 1056(d)(1).
26 U.S.C. section 408 provides in pertinent part:
(a) . . . For purposes of this section, the
term "individual retirement account" means a
trust created or organized in the United
States for the exclusive benefit of an
individual or his beneficiaries . . .
(g) . . . This section shall be applied
without regard to any community property laws.
10
the participant spouse's retirement benefits involves neither an
alienation nor an assignment. Under community property law,
ownership vests immediately in the non-earning spouse, and no
transaction is needed to convey ownership. Thus, no transaction
prohibited by the ERISA spendthrift provision has occurred.
The plaintiff argues further that the bequest by Dorothy
Boggs of a portion of her interest in the retirement benefits was
an attempted alienation in violation of the spendthrift provision.
We disagree. Dorothy Boggs held an ownership right in the pension.
Her spouse, or his estate, owes her an obligation to account for
her share of the pension. Once her estate received this benefit,
her will operates to transfer ownership to her three sons. This
final alienation, two steps removed from the disbursement of
benefits, is not a violation of the provisions of ERISA. ERISA "is
concerned not so much with what the beneficiary does with his
pension checks or how they are spent but with whether those in
charge actually deliver the benefits".24
The plaintiff also relies on a Ninth Circuit Court case
interpreting the spendthrift provision, Albamis v. Roper.25 In that
case, the Ninth Circuit Court determined, based almost exclusively
on an analysis of this provision, that ERISA preempts California
community property law.26 The plaintiff asks this Court to adopt
United Association of Journeymen v. Myers, 488 F. Supp.
704, 712 (M.D. La. 1980), affirmed by, 645 F.2d 532 (5th Cir. 1981)
(reviewing the legislative history of ERISA).
937 F.2d 1450 (9th Cir. 1991).
Id.
11
the reasoning of the Albamis court and hold that ERISA preempts
Louisiana community property law. We cannot adopt the reasoning of
the Ninth Circuit Court because we feel their preemption analysis
places too much emphasis on a broad interpretation of the
spendthrift provision.
Finally, the plaintiff relies on 26 U.S.C. section 408.
This provision governs the trust relationship between the
government and the participant whose benefits are placed in an IRA
account. It does not affect that participant's later obligation to
his spouse to account for her portion of the benefits. This
provision governing the disbursement of IRA funds cannot reasonably
be interpreted to intervene in the marital relationship and divest
one spouse of ownership rights.
IV.
The district court correctly concluded that ERISA,
despite its exclusive control of benefits law and its broad
preemption provision, does not preempt the community property laws
created by the State of Louisiana. Accordingly, we AFFIRM.
KING, Circuit Judge, dissenting:
I respectfully dissent from the majority's conclusion that
ERISA does not preempt the provisions of the Louisiana community
property law that would operate here to divest a participant's
widow of a portion of the benefits from pension plans that she
12
would be entitled to receive under ERISA in favor of the heirs of
his predeceased spouse. It defies reality to say that the widow’s
rights under ERISA have only been ‘tenuously, remotely or
peripherally’ affected by Louisiana law. They have been gutted.
I recognize that the preemption issue is conceptually as difficult
as the bottom line is easy. But I am persuaded that the Ninth
Circuit in Ablamis v. Roper, 937 F.2d 1450 (9th Cir. 1991), and the
Department of Labor in DOL Advisory Opinion # 90-46A (December 4,
1990) and in its excellent amicus brief submitted at our request
have the better arguments. ERISA was enacted to protect the living
- plan participants and their dependents - and it was amended in
1984 to protect divorced spouses of plan participants. Key
objectives of the statute were to establish uniformity in the law
nationwide and certainty in its application, objectives that are
implemented in part by its preemption provision. Today's decision
will create great uncertainty in the principal tenet of the statute
that Congress strived to make certain: that a plan participant and
his or her spouse will actually receive their anticipated
retirement income.
13