Filed: March 20, 1996

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 94-1592

(CA-93-3930-Y)

Estate of Thomas Angelo Altobelli,

Plaintiff - Appellee,

versus

International Business Machines Corporation,

Defendant - Appellant.

ORDER

The Court amends its opinion filed February 28, 1996, as

follows:

On page 7 -- "Wilkinson, Circuit Judge, dissenting" is corrected to read "Wilkinson, Chief Judge, dissenting."

For the Court - By Direction

/s/ Bert M. Montague

Clerk
PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

ESTATE OF THOMAS ANGELO

ALTOBELLI,

Plaintiff-Appellee,

v.

INTERNATIONAL BUSINESS MACHINES

CORPORATION,

Defendant-Appellant,

and No. 94-1592

THE PRUDENTIAL INSURANCE COMPANY

OF AMERICA,

Defendant,

and

HELEN V. DIETSCH, formerly known

as Helen V. Altobelli,

Third Party Defendant.

Appeal from the United States District Court

for the District of Maryland, at Baltimore.

Joseph H. Young, Senior District Judge.

(CA-93-3930-Y)

Argued: October 31, 1995

Decided: February 28, 1996

Before WILKINSON, Chief Judge, and WIDENER and ERVIN,

Circuit Judges.
Affirmed by published opinion. Judge Ervin wrote the opinion, in

which Judge Widener joined. Chief Judge Wilkinson wrote a dissenting opinion.

_________________________________________________________________

COUNSEL

ARGUED: John Mark Vine, COVINGTON & BURLING, Washington, D.C., for Appellant. Alan Barry Sternstein, SHULMAN, ROGERS, GANDAL, PORDY & ECKER, P.A., Rockville, Maryland, for

Appellee. ON BRIEF: Jeffrey G. Huvelle, Michael R. Bergmann,

COVINGTON & BURLING, Washington, D.C., for Appellant.

_________________________________________________________________

OPINION

ERVIN, Circuit Judge:

International Business Machines Corporation ("IBM") appeals the

award of benefits to the estate of a deceased employee under a plan

governed by the Employee Retirement Income Security Act of 1974

("ERISA"), 29 U.S.C. §§ 1001-1461 (1988). We must determine

whether an ERISA participant's ex-spouse can waive, in a separation

agreement incorporated into a divorce decree, her interest as a beneficiary in pension-plan proceeds. We hold that she can, and did. Therefore we affirm.

I.

From October 13, 1969, until his death on June 14, 1993, Thomas

Altobelli worked for IBM and participated in two IBM-sponsored

employee pension benefit plans. Altobelli did not designate a beneficiary under either plan, but designated his ex-wife, Ms. Helen

Dietsch, as the beneficiary of his IBM Group Life Insurance Plan.

The pension plans provide that, if the participant does not designate

a beneficiary, the default beneficiary is the person named in the life

insurance plan.

Altobelli and Dietsch divorced on December 27, 1985. They incorporated into the divorce decree a Voluntary Separation and Property

 2
Settlement Agreement, which provided that Dietsch surrendered any

rights in Altobelli's IBM plans:

"All of the following property is hereafter the sole and

exclusive property of the Husband, and the Wife hereby

waives and transfers to the Husband any interest that she

may have in the property:

* * *

(g) Husband's IBM pension and other deferred compensation plans, if any."

Altobelli likewise surrendered any rights he had in Dietsch's IBM

plans:

"All of the following property is hereafter the sole and

exclusive property of the Wife, and the Husband hereby

waives and transfers to the Wife any interest that she may

have in the property:

* * *

(g) Wife's IBM pension and other deferred compensation plans, if any."

Both parties signed the agreement and their signatures were notarized.

Altobelli did not designate a new beneficiary under either the pension plans or the life insurance plan. After he died, IBM notified his

estate's representative that it intended to distribute the pension-plan

proceeds to Dietsch, despite the separation agreement, because she

still was the default beneficiary under the plans' terms. The estate

responded by bringing this action for a Declaratory Judgment, claiming that Dietsch had waived her interest in both the life insurance proceeds and the pension-plan proceeds. Dietsch intervened as a

defendant, but contested only the estate's claim to the life insurance

proceeds. Agreeing that the facts were undisputed, the parties moved

for summary judgment.

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The district court determined that Dietsch was entitled to the life

insurance proceeds, but that she had waived her interest in the

pension-plan proceeds. It awarded the pension-plan proceeds to the

estate. The estate elected not to appeal the disposition of the insurance

proceeds, and Dietsch does not contest the finding of waiver regarding the pension-plan proceeds. But IBM timely appealed, arguing that

it must administer the pension plans only according to their terms,

without regard to the separation agreement.

II.

Summary judgment is proper if "there is no genuine issue as to any

material fact." E.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986) (quoting Fed. R. Civ. P. 56(c)). Since both parties agree that

the facts are undisputed, summary judgment is appropriate in this

case. This Court reviews a grant of summary judgment de novo.

Higgins v. E.I. DuPont de Nemours & Co., 863 F.2d 1162, 1167 (4th

Cir. 1988).

III.

The issue before this court is whether a divorced spouse, who was

the designated beneficiary under her ex-husband's ERISA plan, effectively waived her benefits via a marital settlement agreement that was

incorporated into a divorce decree. ERISA does not address this topic

directly, so federal courts may resolve it by developing federal common law. See Phoenix Mut. Life Ins. Co. v. Adams, 30 F.3d 554, 562

(4th Cir. 1994).

IBM presents two arguments to support its position that the waiver

should be ineffective. First, it notes that one of ERISA's purposes is

to facilitate "uniform, uncomplicated administration" of pension

plans. Krishna v. Colgate Palmolive Co., 7 F.3d 11, 16 (2d Cir. 1993).

ERISA expressly requires that the plan be administered "in accordance with the documents and instruments governing the plan." 29

U.S.C. § 1104(a)(1)(D) (Supp. II 1990). IBM interprets that requirement to mean that a plan administrator should be required to look

only to the plan to discharge his duties. Second, IBM contends that

the anti-alienation clause required by ERISA prohibits a plan beneficiary from waiving her benefits. ERISA mandates that "[e]ach pen-

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sion plan shall provide that benefits under the plan may not be

assigned or alienated." 29 U.S.C. § 1056(d)(1) (1988). The IBM pension plans comply with that provision.

Several other circuits have addressed the issue of waiver by a beneficiary. On facts very similar to this case, the Seventh Circuit decided

that a nonparticipant beneficiary can waive her benefits through specific language in a divorce settlement. Fox Valley & Vicinity Constr.

Workers Pension Fund v. Brown, 897 F.2d 275, 280-81 (7th Cir.) (en

banc), cert. denied, 498 U.S. 820 (1990). The anti-alienation clause,

the court determined, is a spendthrift device intended to ensure that

employees' accrued benefits are available for retirement: "These provisions focus on the assignment or alienation of benefits by a participant, not the waiver of a right to payment of benefits made by a

designated beneficiary." Id. at 279.

The Eighth Circuit did not address the anti-alienation clause, but

held that an ex-spouse can waive pension benefits in a divorce settlement if the waiver specifically refers to and modifies the beneficiary

interest. Lyman Lumber Co. v. Hill, 877 F.2d 692, 693-94 (8th Cir.

1989). The Tenth Circuit agreed, holding that the beneficiary designation on file only controls absent a divorce decree dictating otherwise.

Metropolitan Life Ins. Co. v. Hanslip, 939 F.2d 904, 907 (10th Cir.

1991).

Two circuits disagree. The Sixth Circuit, like the Eighth and Tenth

Circuits, did not address the anti-alienation clause, but held that a

divorce settlement cannot effectively waive pension plan benefits

because the plan administrator is to consider only the designation on

file. McMillan v. Parrott, 913 F.2d 310, 311-12 (6th Cir. 1990). To

look at other documents, it believed, would be unnecessarily burdensome. Id.; accord Krishna v. Colgate Palmolive Co., 7 F.3d 11, 16

(2d Cir. 1993) ("It would be counterproductive to compel the Policy

administrator to look beyond those designations into varying state

laws regarding wills, trusts and estates, or domestic relations to determine the proper beneficiaries of Policy distributions.").

We agree with the Seventh Circuit that the anti-alienation clause

does not apply to a beneficiary's waiver. As the Supreme Court has

noted, the purpose of the clause is "to safeguard a stream of income

 5
for pensioners (and their dependents . . . )." Guidry v. Sheet Metal

Workers Nat. Pension Fund, 493 U.S. 365, 376 (1990). To bar a

waiver in favor of the pensioner himself would not advance that purpose.

We also agree that giving effect to a waiver contained in a domestic relations order does not burden plan administrators in a manner

violative of ERISA. ERISA was designed to simplify plan administration as much as possible, but it still requires administrators to consider

divorce decrees to determine whether they are Qualified Domestic

Relations Orders,* which are enforceable. 29 U.S.C.

§ 1056(d)(3)(G)(i) (1988). Thus, as the Seventh Circuit determined,

"[n]o such additional burdens will be imposed" by enforcing waivers.

Fox Valley, 897 F.2d at 282.

In this case, each party clearly intended to relinquish all interests

in the pension plans of the other. Congress's provision for QDROs

reveals that, in some situations, it deems the intent of the parties sufficiently important to override the policy of simplified administration.

Because enforcement of a divorce agreement's specific waiver of

ERISA pension-plan benefits would require no marginal infringement

of that policy beyond the infringement already necessitated by the

QDRO provision, and since ERISA does not directly address the

issue, we join the Seventh Circuit in holding as a matter of federal

common law that such a waiver is to be given full effect.

_________________________________________________________________

* We refer to QDROs only to point out that there are situations when

ERISA requires plan administrators to consult documents outside the

plans themselves. The estate asks us to address them in greater depth,

arguing that the divorce order in this case was a QDRO. IBM responds

that the estate did not make that argument below and thus is precluded

from doing so here. We will not consider an issue not raised below

absent "exceptional circumstances." United States v. One 1971

Mercedes-Benz, 542 F.2d 912, 915 (4th Cir. 1976); accord, e.g.,

Maryland Dep't of Human Resources v. Department of Agriculture, 976

F.2d 1462, 1473-74 (4th Cir. 1992); Bakker v. Grutman, 942 F.2d 236,

242 (4th Cir. 1991) (requiring "denial of fundamental justice"). There

certainly are no exceptional circumstances in this case, since our decision

on other grounds favors the estate, so we do not address whether the

order was a QDRO.

 6
IV.

Dietsch specifically waived, in her marital settlement agreement,

any interest she had in her husband's pension plans. Because we hold

that her waiver is effective, we affirm the district court's order awarding the pension benefits to Altobelli's estate.

AFFIRMED

WILKINSON, Chief Judge, dissenting:

The majority decides this case on grounds of federal common law

when it need look no further than the terms of the statute. As we have

explained, "resort to federal common law generally is inappropriate

when its application would conflict with the statutory provisions of

ERISA." Singer v. Black & Decker Corp., 964 F.2d 1449, 1452 (4th

Cir. 1992). Here, the equities of the majority's disposition seem

tempting, but ERISA's provisions compel a contrary outcome. Fearing the long term consequences of replacing rules of Congress with

our own, I respectfully dissent.

ERISA requires that plan administrators perform their obligations

"in accordance with the documents and instruments governing the

plan." 29 U.S.C. § 1104(a)(1)(D). This simple statutory directive

requires that we heed the beneficiary designation on file with IBM's

pension plans. There is no question that Helen Dietsch is the designated beneficiary in those plans. While Altobelli never expressly

named a beneficiary, the plan documents stipulate that absent specification "the beneficiary shall be deemed to be the beneficiary under

the IBM Group Life Insurance Plan." The beneficiary under Altobelli's life insurance plan, and hence also his pension plans, is Helen

Dietsch.

IBM's pension plans allow participants to designate or change a

beneficiary: "Such designation or change of designation shall be in

writing in a form satisfactory to the Plan Administrator and shall be

submitted to the Company's Payroll Department and shall be effective upon receipt by that Department." Following Altobelli's divorce

from Dietsch, however, he did not specify a new beneficiary under his

 7
pension plans, nor did he remove Dietsch as the beneficiary under his

life insurance plan. Thus, according to the "documents and instruments governing the plan," 29 U.S.C. § 1104(a)(1)(D), the beneficiary

of Altobelli's pension plans is and always has been Helen Dietsch. In

short, the "clear statutory command, together with the plan provisions, answer the question; the documents control," McMillan v.

Parrott, 913 F.2d 310, 311-12 (6th Cir. 1990), and those documents

name Dietsch.

Sound reasons support the statutory rule of assigning benefits in

accordance with plan documents. Heeding "the federal rule favoring

beneficiary designations filed with a plan administrator" promotes the

"strong interest in uniform, uncomplicated administration of ERISA

plans." Krishna v. Colgate Palmolive Co., 7 F.3d 11, 16 (2d Cir.

1993); see also Fox Valley & Vicinity Construction Workers Pension

Fund v. Brown, 897 F.2d 275, 283 (7th Cir.) (en banc) (Easterbrook,

J., dissenting), cert. denied, 498 U.S. 820 (1990). "[R]eliance on the

face of written plan documents" also furthers another of ERISA's

central goals, that of "enabling beneficiaries[and employees] to learn

their rights and obligations at any time." Curtis-Wright Corp. v.

Schoonejongen, 115 S. Ct. 1223, 1230 (1995). Strict adherence to

§ 1104(a)(1)(D) ensures that all interested parties, including participants, beneficiaries, and plan administrators, can identify their rights

and duties with certainty, a primary objective of ERISA. Parrott, 913

F.2d at 312. This in turn limits costly disputes over the effect of outside documents on the distribution of plan benefits. See id.

Because the majority ignores the beneficiary designation on file

with the IBM plans, its approach compromises the principles underlying § 1104(a)(1)(D). Forcing plan trustees to examine a multitude of

external documents that might purport to affect the dispensation of

benefits frustrates the statutory goals of efficiency in administration

and certainty in expectations. See Krishna, 7 F.3d at 16. The costs

associated with these inefficiencies might well "lead those employers

with existing plans to reduce benefits, and those without such plans

to refrain from adopting them." Fort Halifax Packing Co. v. Coyne,

482 U.S. 1, 11 (1987). And uncertainties over the interpretation of

external documents will produce conflicts among parties asserting

rights to plan benefits, miring plan assets in expensive litigation.

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These concerns are not alleviated by construing the majority's ruling to apply only to beneficiary waivers in divorce decrees. Interpreting those decrees will cause problems for plan administrators. For

instance, waiver provisions are often sweeping in their terms, leaving

their precise effect on plan benefits unclear. See Equitable Life Assurance Soc'y v. Stitzel, 445 A.2d 523 (Pa. Super. 1982) (waiver of "any

and all claims . . . of whatsoever kind or nature" found not to waive

claim to beneficiary interest in life insurance plan). Even when facing

waiver terms that reference the affected plans, plan administrators

will have to assess whether the waiver is executed with sufficient

specificity to trump the beneficiary designation in the plan documents. Courts have reached contradictory conclusions in such situations. Compare Lyman Lumber Co. v. Hill, 877 F.2d 692 (8th Cir.

1989) (term stating that husband "shall have as his own, free of any

interest of [his wife], his interest in the profit-sharing plan of his

employer" held not to waive wife's beneficiary interest in plan), with

Fox Valley, 897 F.2d at 275 (term stating that the parties "waive any

interest or claim in and to any retirement, pension, profit-sharing

and/or annuity plans resulting from the employment of the other

party" held to waive wife's beneficiary interest in pension plan). Forcing plan trustees to make such determinations will only complicate

plan administration and will leave all parties unsure of their rights and

obligations. The better rule is the one dictated by the statute -- to

honor the designations on file with the plan documents.

The majority contends that examining the enforceability of waiver

provisions in divorce decrees will not unduly compromise plan

administration because plan trustees already must review divorce

decrees to determine whether they constitute Qualified Domestic

Relations Orders ("QDROs").* 29 U.S.C. § 1056(d)(3)(G)(i). I cannot

_________________________________________________________________

* QDROs were designed as a narrow exception to ERISA's general

prohibition on alienation or assignment of benefits, 29 U.S.C. §

1056(d)(1), to allow the attachment of an employee's pension benefits to

satisfy his or her family support obligations. See S. Rep. No. 575, 98th

Cong., 2d Sess. 18-19, reprinted in 1984 U.S.C.C.A.N. 2547, 2564-65.

The divorce decree at issue here is not a QDRO. A QDRO exists when,

among other things, a participant assigns benefits to an "alternate payee,"

defined as a "spouse, former spouse, child, or other dependent of a participant." 29 U.S.C. § 1056(d)(3)(K). Here the participant did not attempt

to assign his benefits to his former spouse or any other alternate payee;

rather, the former spouse attempted to waive her rights in favor of the

participant.

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agree. Congress was concerned with the very problems that face us

here when it defined the requirements to establish a QDRO, and it

took pains to assure that enforcement of QDROs would not produce

inefficiency and uncertainty. To constitute a QDRO, a divorce decree

must "clearly specif[y]" the identity of any benefit recipient, the particular plans affected, and the exact manner of calculating the amount

of benefits to be paid. See 29 U.S.C. § 1056(d)(3)(C). "The requirement of clear specification is designed to spare the plan administrator

from litigation-fomenting ambiguities as to who the beneficiaries designated by the divorce decree are," Metropolitan Life Ins. Co. v.

Wheaton, 42 F.3d 1080, 1084 (7th Cir. 1994), and to ensure that "the

decree provides an administrator with information needed to process

a claim efficiently so that assets are preserved and beneficiaries' interests are served," Carland v. Metropolitan Life Ins. Co., 935 F.2d

1114, 1122 (10th Cir.), cert. denied, 502 U.S. 1020 (1991). ERISA

also requires that all plans develop written procedures for determining

whether a divorce decree is a QDRO. See 29 U.S.C.

§ 1056(d)(3)(G)(ii). The statute contains no similar precautions to

assure efficiency in plan administration with respect to non-QDRO

divorce decrees.

In sum, I agree with the Second and Sixth Circuit's approach to

this question. Krishna, 7 F.3d at 11; Parrott, 913 F.2d at 310. Plans

should be administered "in accordance with the plan documents," not

extraneous ones. What seem like small equitable steps in a particular

case may lead to large administrative headaches in the aggregate.

IBM sought nothing more than to administer its plan as the statute and

the plan require. I am surprised that this court would prohibit it from

doing so. I would reverse the judgment.

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