Court Opinion

ID: 9011
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:41:46+00
Date Added: 2024-06-11T14:55:07.007402
License: Public Domain

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