Ablamis V. Roper: Preemption Of TheNonemployee Spouse'S Community PropertyRights In Erisa Pension Plans

The Supremacy Clause of the United States Constitution gives Congress the power to establish areas of exclusive federal concern and to preempt a state's authority to legislate in these areas.(1) To find that Congress has explicitly or implicitly exercised the power of preemption, courts must find that Congress had a clear intent to nullify state law.(2) On July 3, 1991, the United States Court of Appeals for the Ninth Circuit provided an answer to the question whether Congress, in enacting the Employee Retirement Income Security Act (ERISA),(3) intended to preempt state community property law governing a predeceasing nonemployee spouse's interest in an employee spouse's pension plan.(4)In Ablamis v. Roper,(5) the Ninth Circuit Court of Appeals decided that ERISA did preempt California community property law that arguably would allow a predeceasing spouse to devise her interest in her living husband's pension plans.(6) ERISA grants a divorced nonemployee spouse the right to receive and dispose of benefits awarded in a divorce proceeding but does not explicitly recognize state-created property rights in a married nonemployee spouse.(7) The court's ruling that ERISA preempts state law creating rights in such a spouse, therefore, provides a strong incentive for a nonemployee spouse in a community property state to obtain a divorce before death as the only method of retaining transmissible property rights in the employee spouse's pension.(8) This result is contrary to congressional intent and contrary to state and federal law.I. THE PURPOSE AND PROVISIONS OF ERISAPrivate pension plans have emerged as an important method by which workers can provide for financial security in their retirement.(9) However, in the past the worker was at the mercy of unscrupulous plan administrators or unfortuitous investments.(10) To protect workers and their retirement savings, Congress enacted ERISA in 1974 to regulate public and private employee benefit plans.(11) Before the enactment of ERISA, lack of centralized regulation resulted in financially unstable plans and in lack of uniformity among state laws governing pensions.(12) Congress found that this instability and lack of uniformity deprived employees of anticipated benefits.(13) As one way to preserve retirement benefits for employees and their dependents, Congress included a provision in ERISA that forbids most transfers of the right to receive benefits.(14) Federal and state courts, however, were split on the question whether this bar to the transfer of plan benefits to third parties applied to the apportionment of benefits to a nonemployee spouse pursuant to a divorce settlement.(15)Congress enacted the Retirement Equity Act of 1984 (REA) as an amendment to ERISA, in part, as a response to this judicial uncertainty.(16) The REA was Congress' reaction to its perception that under the original ERISA provisions, some courts' refusal to allow partition of benefits pursuant to a divorce settlement resulted in unfair treatment of nonemployee spouses.(17) Congress, therefore, specifically authorized a procedure for transfers of benefits in a few situations.(18) Congress' goal, in part, was to recognize the contributions to the family unit made by nonemployed spouses and to provide a specific exception to the anti-alienation provision for alimony and child support payments.(19) Prior to enactment of the REA, some courts had granted such transfers without express statutory authority.(20) Under REA's procedural requirements, the only acceptable method of transferring the right to receive benefits is a court order pursuant to a "qualified domestic relations order" (QDRO).(21) The REA defines a QDRO as a court order made pursuant to a state domestic relations law, including state community property law.(22) With the QDRO exception, Congress now specifically permits a court dissolving a marriage to partition pension benefits in the same manner as other marital assets.(23) Enactment of REA was not Congress' recognition of joint ownership, but, rather, Congress' adoption of equitable distribution concepts into the common-law framework of ERISA. …