Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-13-04725/USCOURTS-ca2-13-04725-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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1

WESLEY, Circuit Judge, concurring in part and dissenting in part:

I concur with the majority that the 2008 Settlement Agreement does not

constitute a qualified domestic relations order (“QDRO”) both because it fails to

satisfy the specificity requirements of 29 U.S.C. § 1056(d) and because it is not

entitled to the substantial compliance rule announced in Metropolitan Life

Insurance Co. v. Bigelow, 283 F.3d 436 (2d Cir. 2002).  I also agree that, because the

two state court nunc pro tunc orders nowhere identify one of the retirement and

pension plans at issue, the District Court’s ruling as to that plan must be

reversed.  I dissent, however, from the majority’s holding that the two state court

nunc pro tunc orders here serve as valid QDROs.    

DISCUSSION

I. Background

A. 2008 Settlement Agreement and 2012 State Court Nunc Pro Tunc Orders

The basic facts set forth by the majority are undisputed and need only be

recounted here briefly.  Harold and Claire Nicholls were married for more than

twenty‐one years until their divorce in 2008, at which point they entered into a

Settlement Agreement.  That agreement was incorporated into their dissolution

of marriage judgment and provided, inter alia, that Harold’s pension and

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retirement accounts would be evenly divided between Harold and Claire.  To

accomplish this, the Settlement Agreement provided that Attorney Elizabeth

McMahon would prepare a QDRO necessary to accomplish the assignment, but

the QDRO envisioned by the Settlement Agreement was not prepared.   

Harold then married Barbara in 2009 and died a few years later in 2012

before having retired.  Harold does not seem to have been a very likeable fellow.  

Claire’s Rule 56 statement in the District Court indicated that at the time of his

death, Harold was in the throes of a divorce from Barbara and that he had failed

to make good on other property division aspects of his Settlement Agreement

with Claire.  Claire also alleges that Harold did not cooperate with attempts to

draft a QDRO.

At the time of his death, Harold was a participant in four retirement and

pension plans, with Barbara designated as the sole beneficiary for each of the

plans: (1) the Yale‐New Haven Hospital Cash Account Pension Plan (“CAP

Plan”); (2) the Yale‐New Haven Hospital Matching Tax Shelter Annuity Plan

(“Matching Plan”); (3) the Yale‐New Haven Hospital Section 403(b) Tax‐

Sheltered Annuity Plan (“403(b) Plan”); and (4) the Yale‐New Haven Hospital

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and Tax‐Exempt Affiliates 457 Non‐Qualified Deferred Compensation Plan (“457

Plan”).    

After Harold’s death, Claire contacted Attorney McMahon to prepare a

QDRO and the Connecticut Superior Court subsequently entered two

posthumous QDROs — dated June 18 and August 1, 2012, but purporting to

operate nunc pro tunc as of September 5, 2008, the dissolution of marriage

judgment date — authorizing the plan administrator to distribute to Claire her

portion of Harold’s plan benefits, as defined by the Settlement Agreement and

the QDROs.1  The nunc pro tunc orders name the CAP, Matching, and 403(b)

Plans, but nowhere specify the 457 Plan.  

The record on appeal includes only sealed excerpts of the three specified

plans, but there is no disagreement as to the general nature of these plans.  The

CAP and 403(b) Plans, whose terms include surviving spouse annuities, merit

special attention.  Both plans provide a preretirement death benefit for married

participants in the form of a qualified preretirement survivor annuity (“QPSA”),

                                           

1 No one contends that the QDROs misstate Claire’s interest in the three identified

plans, as provided for in the Settlement Agreement.  

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and both plans specify that the form of payment under the QPSA will be an

annuity for the life of the participant’s surviving spouse.2   

II. The Nunc Pro Tunc Orders Are Not Valid QDROs

The majority concludes that the two state court nunc pro tunc orders

qualify as QDROs because they comply with ERISA Section 206’s specificity

requirements, see 29 U.S.C. § 1056(d)(3)(C), and are not otherwise invalid.  

Specifically, the majority reasons (a) that posthumous domestic relations orders

(“DROs”) can serve as QDROs and (b) that the orders do not cause a

reassignment of plan benefits because those benefits never vested in Barbara.  See

Majority Opinion (“Op.”) 18–26.   

The majority is correct, of course, that posthumous DROs can serve as

QDROs, but it nonetheless errs in giving retroactive effect to the instant nunc pro

tunc orders for two reasons.  As a threshold matter, the orders cannot serve as

valid QDROs because they effect a reassignment of vested plan benefits from

Barbara — Harold’s surviving spouse and sole designated beneficiary — to

Claire, in contravention of ERISA’s statutory and regulatory scheme and

underlying principles.  Additionally, the orders fail as to at least two of the three

                                           

2 The CAP Plan also appears to permit the alternative election of an actuarially

equivalent lump sum.

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plans in question because the orders contravene congressionally authorized

regulations and interpretations thereof from the Department of Labor relating to

surviving spouse annuity benefits.    

A. The Pension Protection Act of 2006 and Its Regulations Do Not

Support the Majority’s Position

Through its enactment of the Pension Protection Act of 2006, Pub. L. No.

109‐280, § 1001, 120 Stat. 780 (2006) (“2006 Act”), Congress sought to provide

domestic relations law practitioners clarity regarding the interplay between

ERISA and marital property interests as asserted in QDROs.  Congress directed

the Secretary of Labor to issue regulations clarifying that a DRO otherwise

meeting the requirements to be a QDRO would not fail to be treated as a QDRO

(i) “solely because the order is issued after, or revises, another domestic relations

order or qualified domestic relations order,” 29 C.F.R. § 2530.206(b)(1)

(“Subsequent Domestic Relations Orders”), nor (ii) “solely because of the time at

which [the domestic relations order] is issued,” id. § 2530.206(c)(1) (“Timing”).  

See Pub. L. No. 109‐280, § 1001(1)(A)–(B).

The Department of Labor’s regulations were accompanied by a series of

examples that illustrate that a second QDRO is not invalid solely because it

follows a previous QDRO; rather, it is invalid only if, as a second QDRO, it

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purports to assign benefits already assigned to someone else.  For instance,

Subsequent Domestic Relations Orders Example 1 envisions a scenario in which

the same participant and a now former‐spouse secure a second QDRO either

reducing or increasing benefits that the former spouse was to receive under a

first QDRO.  See 29 C.F.R. § 2530.206(b)(2).  The example thus confirms the

ordinary proposition that a subsequent QDRO between a participant and former

spouse is not invalid simply by virtue of modifying an earlier QDRO’s

assignment of benefits between the same parties.  Example 2 further illustrates

the point, noting that where a valid QDRO assigns a portion of a participant’s

401k benefits to a first spouse, a second QDRO may later issue assigning a

different portion of the same 401k plan to a second spouse.  See id.  The second

QDRO is not invalid merely because it constitutes a second QDRO regarding the

same account but will be valid as long as it does not purport to assign to the

second spouse that portion of the benefits that had already been assigned to the

first spouse.   

Additionally, the regulation’s Timing examples illustrate several situations

in which timing alone does not affect a QDRO’s validity.  Example 1, relied upon

by the majority, see Op. 21, explains that an order issued after the death of the

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participant is not invalid solely because it is issued posthumously.  See 29 C.F.R.

2530.206(c)(2).  So, for example, where a noncompliant (non‐QDRO) DRO is

submitted to the plan administrator but the participant dies before it is corrected,

or even where no order at all is issued before the participant’s death, the QDRO

is not invalid solely because it is issued after the participant’s death.  Id.  

Critically, however, nothing in the 2006 Act or its regulations authorizes

the use of a subsequent DRO, posthumous or not, to reallocate benefits vested in

one payee to another payee.  The statute and regulations simply note that timing

alone cannot render a QDRO invalid.  But the majority would read these

authorities to say that the time of filing is irrelevant regardless of its impact on

the rights of others, as long as it occurs within a grace period provided to plan

administrators to sort out claims to a plan’s benefits.  In my view, neither the

statute nor regulations supports the majority’s conclusion that the two nunc pro

tunc orders here are valid QDROs.  The orders fail not “solely because the order

[was] issued after, or revises, another domestic relations order or qualified

domestic relations order,” nor “solely because of the time at which it [was]

issued.”  Id. § 2530.206(b)–(c).  The two orders fail because they are posthumous,

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subsequent domestic relations orders that cause an unlawful reassignment of

benefits nowhere sanctioned by the statutory or regulatory scheme.   

Thus, the majority’s first reason in support of its position — that

“[d]omestic relations orders entered after the death of the plan participant can be

QDROs,” Op. 19 — is as unremarkable as it is unhelpful in resolving the essential

issue underlying the validity of the two nunc pro tunc orders as QDROs: whether

plan benefits had already vested in Barbara to Claire’s exclusion at the time of

Harold’s death.  If plan benefits had already vested, then the two nunc pro tunc

orders here cause a reassignment of benefits from Barbara to Claire, in

contravention of ERISA, and cannot serve as valid QDROs.   

B. Plan Benefits Vested in Barbara upon Harold’s Death

The majority offers two reasons why plan benefits did not vest in Barbara

upon Harold’s death, in spite of her status as Harold’s surviving spouse and sole

designated beneficiary.  Neither reason is persuasive.

First, the two state nunc pro tunc orders — issued in June and August of

2012 — were “intended to be effective as of September 5, 2008,” and, thus,

according to the majority, “effectively assign[ed] benefits to Claire Nicholls

before Mr. Nicholls’s death and before any interest in the plans could vest with

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Barbara Nicholls.”  Op. 22–23.  This is a conclusion of seismic consequences that

cannot possibly be correct.  I am aware of no legal authority that permits a state

court to issue an order and adopt a legal fiction about the order’s existence

earlier in time such that the state order so easily thwarts the intricate federal

statutory scheme surrounding the antialienation of pension benefits.  Indeed,

many ERISA provisions would be inverted or rendered meaningless if state

courts could engage in such federal time travel at the stroke of a state judge’s

pen.3  

For example, ERISA Section 206 precludes a proposed, subsequent QDRO

from allocating benefit payments to an alternate payee where a valid, prior

QDRO has already designated those benefits to another alternate payee.  See 29

U.S.C. § 1056(d)(3)(D)(iii) (providing that a proposed QDRO is valid only if it

“does not require the payment of benefits to an alternate payee which are

required to be paid to another alternate payee under another order previously

                                           

3 The majority disagrees that the state court nunc pro tunc power it contemplates has any

potential for harm.  Op. 23 n.4.  But it never explores why these concerns are

unfounded.  Instead, the majority points to secondary sources to confirm the plain

notion that nunc pro tunc QDROs are not per se invalid.  I have no quarrel with certain

uses of nunc pro tunc QDROs, and neither do the Department of Labor’s regulations.  I

assert simply that state court nunc pro tunc powers are not unlimited and cannot be

permitted to subvert ERISA’s intricate antialienation scheme.  As explained above, the

nunc pro tunc orders here do just that.    

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determined to be a qualified domestic relations order”).  By the majority’s logic,

however, a state court could adopt a legal fiction placing the second QDRO prior

in time to the first.  This would then produce the baffling outcome of rendering

void the earlier, valid QDRO for its violation of Section 206.  This is but one

example of the bizarre results that would flow naturally from the majority’s

unconstrained view of state nunc pro tunc powers within ERISA’s federal

statutory context.

The majority’s second reason for concluding that plan benefits did not vest

in Barbara upon Harold’s death is that “[a] surviving spouse . . . does not gain an

irrevocable right to plan benefits until after the plan administrator has

determined that a domestic relations order is not [a QDRO].”  Op. 25–26.  This

theory lacks a firm foundation in ERISA’s statutory scheme and is at odds with

ERISA’s underlying principles.  A brief overview of the statutory landscape

within which DROs function is instructive.  

ERISA establishes an intricate and comprehensive federal regulatory

scheme that seeks to impose efficient, predictable, and uniform national

standards on employee benefit plans.  See Conkright v. Frommert, 559 U.S. 506, 517

(2010); Boggs v. Boggs, 520 U.S. 833, 841 (1997).  To that end, ERISA’s

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antialienation and preemption provisions broadly preempt the power of state

law and plan participants to alter, transfer, or encumber interests in covered

retirement benefits.  See 29 U.S.C. § 1056(d)(1); id. § 1144(a).  As noted by the

majority, Congress has recognized limited exceptions within which state

domestic relations laws affecting covered plans may operate.  Op. 5.  Most

pertinently, state DROs that comply with statutory requirements can qualify and

serve as QDROs that, for our purposes, seek to identify and distribute marital

property within a pension plan.  29 U.S.C. § 1056(d)(3).  In contrast, orders

purporting to assign interests in benefit plans but which do not qualify as

QDROs remain preempted.  See id. § 1056(d)(3)(A) (“[The antialienation

provision] shall apply to the creation, assignment, or recognition of a right to any

benefit payable with respect to a participant pursuant to a domestic relations

order, except that [the antialienation provision] shall not apply if the order is

determined to be a qualified domestic relations order.”).          

In light of this statutory scheme, numerous courts have concluded or

implied that surviving spouse benefits vest in the participant’s spouse at the time

of the participant’s retirement or preretirement death; I share that view.  See, e.g.,

Rivers v. Cent. & S.W. Corp., 186 F.3d 681, 683–84 (5th Cir. 1999) (holding that

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“pension benefits irrevocably vested in [surviving spouse] on the date of

[participant’s] retirement”); Hopkins v. AT&T Global Info. Solutions Co., 105 F.3d

153, 155–56 (4th Cir. 1997) (examining ERISA Sections 205 and 206 and

concluding that surviving spouse benefits under a qualified joint and survivor

annuity (“QJSA”) vest at the time of the participant’s retirement); Langston v.

Wilson McShane Corp., 828 N.W.2d 109, 116 (Minn. 2013) (“We find the reasoning

of the Carmona and Hopkins courts to be persuasive and adopt the rule that

surviving spouse benefits generally vest under ERISA at the time of the plan

participant’s retirement.”); see also Carmona v. Carmona, 603 F.3d 1041, 1059 (9th

Cir. 2010) (“[A] vesting rule also promotes one of the principal goals underlying

ERISA: ensuring that plans be uniform in their interpretation and simple in their

application.” (internal quotation marks omitted)).4    

                                           

4 The majority rejects these cases because they are purportedly “in tension with”

ERISA’s grace period provision.  Op. 26 n.7.  This begs the question, of course, since the

interplay of ERISA’s antialienation, QDRO, and grace period provisions is the very

thing we examine here.  The majority also rejects these cases because two of them —

Hopkins and Rivers — were decided prior to the Pension Protection Act of 2006.  Id.  This

is irrelevant because the 2006 Act does not address the competing claims to benefits

vesting question at issue here or in those cases.  Indeed, in the Department of Labor’s

statement following the 2006 Act, issued in June 2010, the Department employs both

Hopkins and Rivers as relevant authority in expressly rejecting the posthumous

reassignment of surviving spouse annuity benefits to a prior spouse.  See 75 Fed. Reg.

32848 n.6; Dissent 20–21.  If, as the majority implies, these cases are no longer good law,

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Once surviving spouse benefits vest, those benefits are no longer the

participant’s (or his estate’s) and, thus, cannot be subsequently reassigned from

the participant (or his estate) to an alternate payee through a posthumous QDRO

or otherwise.  See Hopkins, 105 F.3d at 156; Rivers, 186 F.3d at 683–84; Carmona,

603 F.3d at 1054–60.  Here, Harold’s preretirement death triggered the vesting of

survivor spouse benefits in Barbara.  The posthumous QDROs purporting to

assign benefits from Harold to Claire thus fail for the simple reason that Harold

no longer held the benefits sought.  And, as earlier discussed, it misapprehends

the nunc pro tunc power of state court orders to allow them to so easily

circumvent federally‐imposed time requirements.  

The majority resists this conclusion.  It references several Courts of

Appeals decisions in support of its position, but all of them are materially

distinguishable.  See Op. 19–20, 24–25 (citing Files v. ExxonMobil Pension Plan, 428

F.3d 478 (3d Cir. 2005); Patton v. Denver Post Corp., 326 F.3d 1148 (10th Cir. 2003);

Hogan v. Raytheon, Co., 302 F.3d 854 (8th Cir. 2002); Trs. of Dirs. Guild of Am.‐

Producer Pension Benefits Plans v. Tise, 234 F.3d 415 (9th Cir. 2000)).   

                                                                                                                                        

someone ought to inform the Department of Labor, the agency entrusted by Congress to

explain this thorny area of ERISA.  

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Files, Patton, and Hogan evaluated the validity of posthumous QDROs but

none involved a surviving spouse and a former spouse/alternate payee’s

competing claims to the same benefits and none addressed the unique vesting

question we confront here.  Indeed, the Third Circuit in Files expressly

distinguished the Fourth Circuit’s Hopkins decision on this basis: “The Fourth

Circuit held that the DRO was not a QDRO because the current wife’s right to the

survivor’s benefits had already vested upon the plan participant’s retirement.  

But, the key distinction between Hopkins and Files’s claim is that in Hopkins, there

was an attempt to divest benefits already vested in a subsequent spouse, whereas

here, there was no such vesting . . . .”  Files, 428 F.3d at 487 n.12 (citation

omitted).  The Files court further illustrated the key distinction by reference to a

district court case that “follow[ed] Hopkins in preventing [the] first wife, who

never put [the] plan on notice of [the] QDRO, from displacing [the] second wife

as the surviving spouse as those benefits vested in [the] second wife upon [the]

husband’s retirement.”  Id. (citing Singleton v. Singleton, 290 F. Supp. 2d 767 (W.D.

Ky. 2003)).

In support of its vesting theory, the majority also looks to ERISA

procedures requiring that the plan administrator segregate funds payable to an

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alternate payee while the administrator evaluates, within a specified eighteen‐

month grace period, whether a submitted DRO qualifies as a valid QDRO.  See

Op. 23–24 (citing 29 U.S.C. 1056(d)(3)(H)(i)).  But this provision cannot bear the

weight the majority places on it.  First, nowhere does the provision purport to

affect the vesting of benefits; it speaks only to allowing a plan administrator a

grace period to evaluate a DRO after benefits have already become payable.   

Second, the far‐reaching vesting theory that the majority infers from this

grace period provision would wreak havoc on the administrability and

predictability of plan benefits.  The majority’s theory would permit, for example,

the following nightmare situations:

Scenario One: Participant is three times married — not so far‐fetched in

today’s world.  Participant divorces Spouse One and executes a property

agreement that gives her an interest in his pension.  No QDRO is filed as a result

of attorney indolence.  Participant remarries but subsequently divorces Spouse

Two, who leaves acquiring a similar (and equal) interest in Participant’s pension.  

Spouse Two’s attorney diligently files a QDRO.  Participant again remarries but

Spouse Three is a tolerant soul who remains married to Participant at the time of

his preretirement death.  She is the sole named beneficiary of Participant’s death

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benefits.  In this scenario, Spouse Two and Spouse Three have interests in

Participant’s death benefits under ERISA.  By the majority’s logic, however, a

state court could issue a posthumous QDRO on behalf of Spouse One that results

in cutting off the interests of Spouse Three but, due to the regulations, could not

undermine the interests of Spouse Two.  This result is as absurd as it is

inequitable.

Scenario Two: Plan Administrator and Surviving Spouse, through no fault

of their own, operate wholly unaware of the existence of Former Spouse’s state

DRO‐created interest in Participant’s plan.  For nearly a year and a half after the

date on which the first payment would be required under the DRO, i.e., within

the grace period, Plan Administrator and Surviving Spouse are kept in the dark,

and Plan Administrator segregates no alternate payee funds because it has no

reason to do so.  Then, at the eleventh hour, Former Spouse sweeps in with a

posthumous DRO that she submits to Plan Administrator for qualification as a

QDRO, laying claim to benefits that neither Plan Administrator nor Surviving

Spouse ever had reason to believe were in jeopardy.   

These illustrations of the majority’s vesting theory are a far cry from the

predictable outcomes and easily administrable rules that ERISA’s intricate

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scheme would seem to envision, and they are too drastic a departure from that

scheme to justify on the basis of ERISA’s grace period provision.  Even courts

that generally share the majority’s view do not go so far.   

Although the majority does not fully articulate its vesting theory, the

Ninth Circuit’s Tise decision most closely resembles the reasoning on which the

majority likely rests its conclusion: a state DRO attempts to create an interest for

the alternate payee in the participant’s plan, the participant dies preretirement,

and the state DRO is subsequently upheld as enforceable through a posthumous

QDRO filed within the specified eighteen‐month period such that the named

beneficiary does not receive her designated benefits despite her status as such at

the time of the participant’s preretirement death.  

But Tise is distinguishable in at least one critical respect: the Ninth Circuit

impliedly adopts a limiting principle — nowhere found in the majority’s opinion

or implicit reasoning — that would assuage some of the predictability and

administrability concerns arising from the earlier‐identified nightmare scenarios.  

Tise involved competing claims to the same plan benefits but, there, the plan

administrator was placed on notice of the alternate payee’s state DRO‐created

interest in the participant’s plan before the triggering event occurred, that is,

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before the participant’s death.  See Tise, 234 F.3d at 417–18.  ERISA’s grace period

provision then allowed the plan administrator to segregate the alternate payee’s

proceeds while she sought to qualify her DRO as a QDRO within the allotted

period.  Id. at 422.

Pre‐death notice was integral to the Ninth Circuit’s conclusion that ERISA

allows an alternate payee armed with a state DRO prior to the participant’s death

“to perfect the DRO into a QDRO thereafter,” subject to the eighteen‐month

period.5  Id.  “Because [the alternate payee] had placed the plan on notice of her

interest in [the participant’s] pension plan proceeds before his death, the fact that

                                           

5 The majority takes issue with this pre‐death notice consideration, see Op. 25 n.6, but,

ironically, fails to realize that this limiting principle comes from cases that the majority

relies on to support its misuse of ERISA’s grace period provision in order to justify its

vesting theory.  Courts that share the majority’s view have adopted this limiting

principle in order to dampen the effects of an otherwise unconstrained theory capable

of absurd results.  See, e.g., Dissent 15–16.  The majority’s disavowal of this limiting

principle thus highlights the isolation and extremity of its position.   

Moreover, the majority misunderstands the Department of Labor’s statement on

pre‐death notices because it overlooks the confusion that the statement clarifies.  In

regards to the Timing regulation’s “Orders issued after death” example, the

Department explained that where a spouse has a DRO but does not qualify it before the

participant’s death, the spouse’s failure to submit pre‐death notification of the DRO to

the plan does not undermine her efforts to file a posthumous QDRO.  See 75 Fed. Reg.

32848.  But as earlier discussed, this example does not contemplate a competing claim

to benefits by a surviving spouse or second alternate payee.  Court decisions that the

majority cites in order to support its vesting theory have relied on pre‐death notice to

limit an otherwise unconstrained view of ERISA’s grace period provision where there

exists a competing claim to benefits.

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he died before the QDRO issued is immaterial.”  Id. at 426.  Indeed, the Ninth

Circuit made clear that it was “not decid[ing] whether a QDRO could issue after

a participant’s death if the plan had no notice of a DRO‐created interest before

the death.”  Id. at 426 n.9.

That is the more extreme scenario we are presented with here.  Nothing in

the record establishes that the plan administrator (or Barbara) was placed on

notice of Claire’s 2008 DRO prior to Harold’s death.  And for reasons earlier

described, it would seriously undermine ERISA’s statutory scheme and

animating principles to permit Claire’s posthumous orders to deny Barbara her

survivor benefits, not exclusively but especially when there was no pre‐death

notice of the competing interest.  In sum, even a generous view of ERISA’s

eighteen‐month grace period provision exposes the majority’s unbridled vesting

theory as excessive and renders the state court nunc pro tunc orders here invalid.

C. The Nunc Pro Tunc Orders Likely Violate Annuity Benefit Regulations

The nunc pro tunc orders also falter, with regard to at least two of the three

plans at issue, because they appear to violate surviving spouse annuity benefit

regulations.  The Department of Labor regulations issued pursuant to the 2006

Act delineate the permissible scope of DROs issued after the starting date of an

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annuity benefit.  Applying the Timing regulation to annuity benefits, Example 3

illustrates that an order issued after the starting date of an annuity benefit is not

invalid solely because it is issued after that start date.  See 29 C.F.R.

2530.206(c)(2).  Even after a life annuity has become payable to a participant, a

QDRO may still validly issue, assigning the proceeds from that life annuity to

another party.  Id.  

The example cautions, however, that although the QDRO does not fail

because it issues after an annuity start date, it would fail under ERISA Section

206 if it requires reannuitization of the annuity benefit.  Id.  In a statement issued

in conjunction with the regulations, the Department of Labor elaborates on a few

such scenarios:   

Examples of an order requiring a reannuitization with a new

annuity starting date would include an order issued after the

annuity starting date [(i)] directing the plan to substitute one

measuring life for another or [(ii)] directing the plan to change the

form of benefit, such as from a single life annuity to a qualified joint

and survivor annuity (QJSA) with a death benefit or from an annuity

to a lump sum payment.

75 Fed. Reg. 32848.  The Department’s statement also indicates that even where a

proposed QDRO does not require reannuitization, a posthumous reassignment

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of surviving spouse annuity benefits to a prior spouse would nonetheless be

invalid because it reallocates an already‐allocated benefit:

With regard to the principle, expressed above, that a domestic

relations order issued after the annuity starting date does not violate

the requirements [for QDROs] merely because the order requires the

allocation of some or all of the participant’s determined monthly

benefit payment to an alternate payee, the Department, based on its

review of sections 206 and 205 of ERISA, the case law, and other

relevant guidance, is of the view that such principle does not apply

to a domestic relations order that is received after the annuity

starting date and that requires an allocation to an alternate payee

of some or all of the death benefit that, under the form of benefit in

effect, is payable to another beneficiary.    An example of this is a

plan’s receipt of a domestic relations order after the annuity starting

date of a QJSA that assigns to the participant’s former spouse a

shared payment of the participant’s current spouse’s survivor

benefits under the QJSA.

Id. (emphasis added) (footnote omitted).  Here, two of the three plans at issue —

the CAP Plan and the 403(b) Plan — by their terms appear to include surviving

spouse annuity benefits in the form of a QPSA, which are subject both to the

reannuitization bar as well as to the Department’s threshold rejection of

posthumous QDROs purporting to reallocate “death benefits” after an annuity’s

starting date.

But the majority glosses over the annuity components of the CAP and

403(b) Plans.  Nowhere does it adequately evaluate whether the state court nunc

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pro tunc orders trigger reannuitization of Harold’s plan annuity benefits, for

example, by changing the annuity measuring life from Barbara’s to Claire’s, see

Aug. 1, 2012 Nunc Pro Tunc QDRO, App. 43 (“If applicable to the form of

benefits elected by the Alternate Payee [Claire], the Assigned Benefit shall be

adjusted in accordance with the Plan’s actuarial assumptions to be paid for the

life of the Alternate Payee [Claire].”), or by changing the form of the benefit from

an annuity to a lump sum payment, see June 18, 2012 Nunc Pro Tunc QDRO,

App. 48 (“The Alternate Payee [Claire] may elect, in writing, to receive the

Assigned Benefit in a single lump sum as soon as administratively feasible after

this Order is accepted by the Plan Administrator.”).  Moreover, the majority also

fails to engage in the threshold inquiry of whether these state court orders are

susceptible to the Department’s rejection of posthumous QDROs purporting to

transfer “some or all of the death benefit” from a surviving spouse to an alternate

payee after an annuity starting date.  See 75 Fed. Reg. 32848.

The reason that the majority offers for its failure to thoroughly engage

whether the two nunc pro tunc orders violate surviving spouse annuity benefit

regulations is that Barbara’s brief never raised the issue.  Op. 27 n.8.  But the

majority fails to honor its own limiting principle, since its arguments in favor of

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validating the two nunc pro tunc orders rely on statutory and regulatory

provisions — including the 2006 Act and related Department of Labor

regulations and statements — nowhere cited in either Claire’s or Barbara’s briefs,

or in the District Court opinion.

ERISA includes a host of federal protections for pensioners and

beneficiaries that exhibits multiple points of contact with state law.  Because this

case presents significant ERISA questions of first impression in this Circuit, both

the majority and I have looked beyond the presentments of the parties.  See

Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 99 (1991) (Marshall, J.) (“When an

issue or claim is properly before the court, the court is not limited to the

particular legal theories advanced by the parties, but rather retains the

independent power to identify and apply the proper construction of governing

law.”); cf. Hankins v. Lyght, 441 F.3d 96, 104 (2d Cir. 2006) (“We are required to

interpret federal statutes as they are written . . . and we are not bound by parties’

stipulations of law.”).   

But one cannot venture there halfway.  To understand this statutory and

regulatory scheme, one must scrutinize it from every available angle.  Guidance

from the agency that Congress entrusted to explain it would have been most

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helpful here but, unfortunately, the Department of Labor’s views have not been

solicited.

CONCLUSION

Matrimonial lawyers rarely come to federal court.  But the expansion over

the last forty years of how states define marital property has made federal law,

and more particularly ERISA, a very important part of domestic relations law

practice.  Often a pension earned during a marriage is one of the few predictable

streams of income or sources of value that can be found among the financial

wreckage that so frequently accompanies marital discord.  Juxtaposed against

the significance of pension benefits in marital disputes is the congressionally‐

recognized need for predictability in the management and distribution of

pension benefits.  For over thirty years now, state and federal courts, and on

occasion Congress, have sought to balance the two competing concerns by

recognizing that a spouse should be given access to and ownership of all, or a

portion, of the other spouse’s retirement benefits through state court orders as

long as those orders comply with federal law.   

In my view, that did not occur here.  And while Harold certainly seems the

scoundrel, that is not a good reason to rely on legal fictions that may cause far

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more harm than good in future cases simply to make right the wrong that Harold

visited upon his first wife, Claire.  I fear the majority’s resolution of this case will

only create more uncertainty and difficulty in an already muddled and

frustrating area of federal law.  Recognizing the two state court nunc pro tunc

orders as valid QDROs will contravene ERISA’s statutory and regulatory scheme

and undermine the bright‐line, predictable, and easily administrable rules critical

to the efficient administration of ERISA‐governed pension and retirement plans.  

Cf. Kennedy v. Plan Admin. for DuPont Sav. & Inv. Plan, 555 U.S. 285, 301–02 (2009).  

For these reasons, I respectfully concur in part and dissent in part.   

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