Opinion ID: 17522
Heading Depth: 3
Heading Rank: 1

Heading: The Nature of Matassarin’s Interest

Text: Congress created the QDRO structure in the Retirement Equity Act (“REA”) of 1984, which amended ERISA. Through the REA, Congress enhanced ERISA’s protection of divorced spouses and their interest in retirement funds earned during marriage. See Boggs, 520 U.S. at ---, 117 S. Ct. at 1763. “The QDRO provisions protect those persons who, often as a result of divorce, might not receive the benefits they otherwise would have had available -23- during their retirement as a means of income.” Id. at ---, 117 S. Ct. at 1767. In order to accomplish this, the REA amendments require that “[e]ach pension plan shall provide for the payment of benefits in accordance with the applicable requirements of any qualified domestic relations order.” 29 U.S.C. § 1056(d)(3)(A). Furthermore, “[e]ach plan shall establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distributions under such qualified orders.” 29 U.S.C. § 1056(d)(3)(G)(ii). The QDRO in this case assigned Matassarin one-half of Jenkins’s “[i]nterest [in] the assets accredited to [his] ESOP Accounts as of October 15, 1991.” It also “require[d] that the Administrator of the Great Empire Broadcasting, Inc. ESOP segregate [Matassarin’s assigned] Interest, and that said segregated account . . . continue to accumulate Interest at a rate equivalent to a one-year Certificate of Deposit.” These two requirements’ opaqueness makes it understandable that Matassarin might question the treatment of her account. We seek here to provide clarification. Matassarin contends that she is entitled to more than the simple interest that will accumulate on her segregated shares’ cash value as of the last valuation date before the segregation. She contends that she should receive the cash value of 520.086 shares at whatever time the Plan passes the benefits to her. We -24- disagree. The ESOP defines the “valuation date” as the December 31 “coinciding with or immediately preceding the date of actual distribution of Plan Benefits.” Matassarin states that because the Plan has not made a distribution to her, the administrator erred by valuing her shares as of the divorce date. The QDRO, however, contravenes the interpretation that Matassarin urges. Necessarily reducing Matassarin’s interest to cash value is implicit in the QDRO, because cash principal can accumulate interest, whereas shares, owing to their fluctuating value, cannot. To read the QDRO as requiring Matassarin to receive the total of 520.086 shares valued at the date of payment to Matassarin would render meaningless the QDRO provision pertaining to interest. The Plan administrator instead valued Matassarin’s interest at the date of segregation--that is, distribution to her interest-accumulating segregated account. In light of the QDRO provisions, the Plan administrator’s interpretation was legally correct. Matassarin also argues that the Great Empire ESOP-- specifically, restated § 18(e)(1)--supports her position. Under that provision, the Plan administrator must segregate a QDRO beneficiary’s account and “continue to [treat it] in the same manner as the affected Accounts of the Participant,” albeit absent further contributions or forfeitures from Great Empire. The appellees argue that the restated Plan, although retroactive to 1989, should not apply to Matassarin’s QDRO, because at the -25- time that the QDRO was entered, the original Plan provisions were effective. The appellees’ reasoning is not self-evident, and one might plausibly argue that the 1994 restatement should indeed apply to Matassarin’s QDRO.14 That issue, however, is a matter of Plan interpretation, which we review under the abuse-ofdiscretion standard. No matter which interpretation this Court might prefer, the Plan administrator did not act arbitrarily and capriciously in finding that the provisions added to § 18(e)(1) in 1994 do not govern Matassarin’s QDRO.