Court Opinion

ID: 9498359
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:15:37.102908+00
Date Added: 2024-06-11T17:58:47.438157
License: Public Domain

FUENTES, Circuit Judge,
dissenting.
I disagree with the result reached by Judge Van Antwerpen and Judge Becker, that, although Rosemary knowingly and voluntarily signed a waiver of her pension benefits, in accordance with a negotiated and court-approved divorce settlement, the waiver is not permitted under ERISA. The primary question here is whether Rosemary may waive her pension benefits despite ERISA’s anti-alienation provision, which bars alienation or assignment of pension benefits absent a particular order not present here. This question is the subject of a long-standing “circuit split,” the minority position of which is adopted by my colleagues today.
Because I believe that both ERISA and the Plan are silent on the enforceability of waivers of benefits (as waivers are neither alienations nor assignments), and that federal common law ought to fill this gap by respecting the time-honored principle of state autonomy in the domestic law area, I would allow waivers of sufficient specificity to be given effect. I therefore respectfully dissent.11
A. ERISA’s Anti-Alienation Clause
My colleagues agree that ERISA’s anti-alienation (or “spendthrift”) clause, 29 U.S.C. § 1056(d), bars the waiver in this case. I, however, agree with the Courts of Appeals that have found that the anti-alienation provision does not address waivers. See, e.g., Estate of Altobelli v. Int’l Bus. Mach. Corp., 77 F.3d 78, 81 (4th Cir.1996); Fox Valley & Vicinity Constr. Workers Pension Fund v. Brown, 897 F.2d 275, 280 (7th Cir.1990) (en banc); cf. Metro. Life Ins. Co. v. Hanslip, 939 F.2d 904, 907 (10th Cir.1991) (noting that an “applicable divorce decree” may change a beneficiary designation); Lyman Lumber Co. v. Hill, 877 F.2d 692, 693 (8th Cir.1989) (finding that no provision of ERISA addresses waiver).12 ERISA is a detailed and care*256fully worded statute, and I am wary of expanding the prohibitions in § 1056(d) beyond those specifically enumerated by Congress. Cf. Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) (“[W]e have noted that ERISA’s carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.”) (internal quotations omitted).
As my colleagues recognize, absent a Qualified Domestic Relations Order (“QDRO”), the anti-alienation clause bars only assignments and alienations of benefits; it makes no reference to waivers. An “alienation” is a “[cjonveyance or transfer of property to another.” Black’s Law Dictionary 73 (7th ed.1999) (emphases added). “Assignment” is defined as “the transfer of rights or property.” Id. at 115 (emphasis added); see also id. (“ ‘An assignment is a transfer or setting over of property, or of some right or interest therein, from one person to another ....’”) (quoting Alexander M. Burrill, A Treatise on the Law and Practice of Voluntary Assignments for the Benefit of Creditors § 1, at 1 (James Avery Webb 6th ed. 1894)). In contrast, “waiver” is defined as “[t]he voluntary relinquishment or abandonment-express or implied-of a legal right or advantage.” Id. at 1574. Waiver does not involve a transfer of rights; it is merely a relinquishment. Congress understands this distinction between a waiver and an assignment, see 5 U.S.C. § 8465,13 and chose only to prohibit the latter (along with alienations) in the anti-alienation provision of ERISA.
I find the distinction between waiver and assignment or alienation to be a significant one. The anti-alienation provision serves specific purposes. It prevents spouses who have been given rights and benefits under a plan from unwisely squandering those rights. For example, it safeguards against unscrupulous predators preying upon participants and beneficiaries by offering inadequate immediate gratification in exchange for the long-term benefits ERISA is designed to guarantee. See Coar v. Kazimir, 990 F.2d 1413, 1420 (3d Cir.1993) 14 (noting that the legislative history of the anti-alienation provision suggests that it was “intended to protect plan beneficiaries by ensuring that plan assets are used only for payment of benefits”) (internal quotation omitted). These concerns are not nearly as strong with respect to waiver, as waiver is not likely to be induced by an offer from an unscrupulous, predatory character. Only the participant would derive benefits from a waiver (as *257one cannot waive rights to a third party), whereas anyone could pay a beneficiary for an assignment or alienation. Another concern animating the anti-alienation provision is creditor’s access to benefits, which is notably absent here.15 See Coar, 990 F.2d at 1420-21 (noting that “we do not believe that Congress intended the anti-alienation provision to dilute the potential relief available to pension beneficiaries. Instead, we read section 206(d)(1) and, by extension [Guidry v. Sheet Metal Workers National Pension Fund, 493 U.S. 365, 110 S.Ct. 680, 107 L.Ed.2d 782 (1990)], as shielding only the beneficiaries’ interest under the pension plan from third-party creditors.”).
Both of my colleagues find much import in 26 C.F.R. § 1.401(a) — 13(c)(l)(ii), a regulation promulgated by the Internal Revenue Service concerning the anti-alienation provision. The regulation interprets the statute as covering “[a]ny direct or indirect arrangement (whether revocable or irrevocable) whereby a party acquires from a participant or beneficiary a right or interest enforceable against the plan.” Id. As noted by my colleagues, allowing McGowan’s subsequent and independent attempt to nominate Donna appears to transform Rosemary’s waiver into an indirect assignment, as described by 26 C.F.R. § 1.401(a)-13(c)(l)(ii). However, such a reading allows third-party actions to invalidate what would otherwise be valid waivers. Indeed, the majority would appear to prohibit all waivers, even though in many cases, there will be no “renomination” at issue. The majority’s argument also puts the cart before the horse, inasmuch as it presupposes that the Plan must give effect to McGowan’s renomination of Donna. Were the combination of the waiver and the nomination to create a prohibited indirect assignment, only the latter action should be invalidated, as it is that action that creates the problematic arrangement.16 Conceiving of the waiver as an acquisition of rights by McGowan himself is also untenable, as he would not get rights to the benefit involved here (a survivor annuity) if the waiver is given effect. Instead, the right to the annuity would be destroyed by the waiver.
In Boggs v. Boggs, the Supreme Court “considered] whether [ERISA] pre-empts a state law allowing a nonparticipant spouse to transfer by testamentary instrument an interest in undistributed pension plan benefits.” 520 U.S. 833, 835-36, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997). The Court addressed whether state community property law was preempted by ERISA, and the Court rejected the argument that ERISA simply did not speak to the issue. It found that it could “begin, and in this case end, the analysis by simply asking if state law conflicts with the provisions of *258ERISA or operates to frustrate its objects” and held “that there is a conflict, which suffices to resolve the case.” Id. at 841, 117 S.Ct. 1754. All of the cases considering Boggs’s effect on waivers of the sort considered here recognize that ERISA broadly preempts state law, and go on to find that the federal common law approach is not in conflict with the holding of Boggs. See, e.g., Manning v. Hayes, 212 F.3d 866, 873 (5th Cir.2000) (holding that Boggs does not cast doubt on Brandon v. Travelers Ins. Co., 18 F.3d 1321 (5th Cir.1994)); Metro. Life Ins. Co. v. Pettit, 164 F.3d 857, 864 (4th Cir.1998) (reaffirming Altobelli after Boggs). Importantly, when discussing the surviving spouse annuity (which is the benefit here), the Boggs Court noted that the wife “has not waived her right to the survivor’s annuity.” 520 U.S. at 842, 117 S.Ct. 1754. Also, the Court, noted that the “anti-alienation provision can ‘be seen to bespeak a pension law protective policy of special intensity: Retirement funds shall remain inviolate until retirement.’ ” Id. at 851, 117 S.Ct. 1754 (quoting J. Langbein & B. Wolk, Pension and Employee Benefit Law 547 (2d ed.1995)). Here, Rosemary’s waiver occurred after McGowan’s retirement.
However, some of the language in Boggs may cast doubt on the policies behind the majority rule. The Court stated that the “principal object [of ERISA] is to protect plan participants and beneficiaries.” Id. at 845, 117 S.Ct. 1754 (emphasis added). This language seems to conflict with the language in the Fox Valley majority opinion discussing how the QDRO provision is meant to protect participants, not beneficiaries. Compare id. at 847, 117 S.Ct. 1754 (“In creating the QDRO mechanism Congress was careful to provide that the alternate payee, the ‘spouse, former spouse, child, or other dependent of a participant,’ is to be considered a plan beneficiary.”) (quoting §§ 1056(d)(3)(E) & (J)), with Fox Valley, 897 F.2d at 279 (noting that the anti-alienation provision “focus[es] 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”). Similarly, the Court noted that “[t]he QDRO provisions protect those persons who, often as a result of divorce, might not receive the benefits they otherwise would have had available during their retirement as a means of income.” Id. at 854, 117 S.Ct. 1754; see also id. at 853, 117 S.Ct. 1754 (“Even a plan participant cannot defeat a nonparticipant surviving spouse’s statutory entitlement to an annuity.”). I agree with my colleagues that Boggs makes clear that the anti-alienation clause provides a restraint on actions by both participants and beneficiaries. However, that does not change my view that the provision does not speak to waivers.
Given the silence of the anti-alienation provision on the issue of waiver, I find it inapplicable here. I agree with Judge Becker, for the reasons he states, that the fiduciary duty provision of ERISA, 29 U.S.C. § 1104(a)(1)(D), is of no import here.17 Because the QDRO exception applies only to assignments and alienations, *259it is also irrelevant to this case. See Fox Valley, 897 F.2d at 279 (“The QDRO requirements specify the procedures necessary to assign benefits, but those procedures need not be followed when a nonparticipant is waiving an interest in pension benefits. ERISA allows beneficiaries to waive their interests in benefits.”).
In accord with the majority of the courts of appeals that have faced the issue, given the comprehensive nature of ERISA, its broad preemptive scope, and its goal of uniformity in the law of employee benefit plans, I believe that ERISA’s silence on waiver should be filled by federal common law. See McGurl v. Trucking Employees of North Jersey Welfare Fund, Inc., 124 F.3d 471, 481 (3d Cir.1997) (“‘[W]here state law is preempted and no specific federal provision governs, a court is forced to make law or leave a void where neither state nor federal law applies. In such a situation it is a reasonable inference that Congress intended some law, and therefore federal law, to apply.’ ”) (quoting Wayne Chem., Inc. v. Columbus Agency Serv. Corp., 426 F.Supp. 316, 322 (N.D.Ind.1977)); see also Heasley v. Belden & Blake Corp., 2 F.3d 1249, 1257 n. 8 (3d Cir.1993) (“[Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) ] authorizes the federal courts to develop federal common law to fill gaps left by ERISA.”).
B. Federal Common Law
My conclusion that federal common law should fill the gap in ERISA concerning the enforceability of waivers does not end the inquiry, as it must be determined whether, and in what instances, federal common law should recognize waivers. Allowing waiver fulfills the intent of the parties to a divorce, allows spouses broader room to negotiate during the settlement of property attendant to divorce, and comports with longstanding common law domestic relations rules. The Fox Valley majority reasoned that, because ERISA does not prohibit or preempt a waiver and because enforcement will not create an undue burden for plan administrators, a proper waiver should be given effect. 897 F.2d at 279-80; see also Altobelli 77 F.3d at 81-82.
I agree with Judge Becker that the enforcement of waivers would not lead to disuniformity and complexity in the administration of ERISA plans. The Fox Valley court also disagreed with the suggestion that its “decision imposes burdensome obligations on plan administrators,” stating that “[n]o such additional burdens will be imposed because, under the ERISA statutory scheme, a plan administrator must investigate the marital history of a participant and determine whether any domestic relations orders exist that could affect the distribution of benefits.” 879 F.2d at 282. The Fifth Circuit has also discussed the “long and venerable history” of “[fjederal respect for state domestic relations law” in support of the federal common law approach. Brandon, 18 F.3d at 1326 (quoting De Sylva v. Ballentine, 351 U.S. 570, 580, 76 S.Ct. 974, 100 L.Ed. 1415 (1956) (citations omitted)). I find the reasoning of the Fox Valley and Brandon courts to be compelling.
Although I find that federal policy favors giving effect to waivers, it is still unclear whether federal common law should (1) allow waivers to be given effect if the plan provisions do not specifically prohibit it or (2) mandate that waivers be given effect notwithstanding any plan provisions to the contrary. Although the former option may be more in line with § 1104(a)(1)(D) (the fiduciary duty provision), the better option is the latter, which promotes uniformity and certainty in plan *260administration. However, given that the Plan here is silent on waiver, this case does not mandate resolution of this issue, as Rosemary’s waiver should be given effect under either approach.
Although in some cases there may be a dispute over whether particular language in a divorce settlement is specific and definite enough to constitute waiver of a pension benefit, there is no serious dispute here as to whether Rosemary’s waiver was insufficient. It clearly identified the Plan and waives all rights to benefits under the Plan. Accordingly, I would give effect to Rosemary’s waiver.

. I join Judge Van Antwerpen’s opinion as to Part III.B.

. I find it immaterial that the waiver here took place after McGowan's retirement. But see Anderson v. Marshall, 856 F.Supp. 604, 607 (D.Kan.1994). The Plan here does contain an anti-revocation provision, modeled after 29 U.S.C. § 1055(c), which bars revocation of the pension benefit involved here after retirement. However, a revocation (with consent) of one's election to a benefit is material*256ly different from a waiver of benefits by a vested beneficiary, as the language of § 1055(c) appears to be a limitation only on the participant’s actions, rather than on the beneficiary's actions.

. Section 8465, which governs the Federal Employees' Retirement System and is entitled "Waiver, allotment, and assignment of benefits,” reads:
(a) An individual entitled to an annuity payable from the Fund may decline to accept all or any part of the amount of the annuity by a waiver signed and filed with the Office. The waiver may be revoked in writing at any time. Payment of the annuity waived may not be made for the period during which the waiver is in effect.
(b) An individual entitled to an annuity payable from the Fund may make allotments or assignments of amounts from the annuity for such purposes as the Office considers appropriate.
§ 8465 (emphases added).

. Similar to the set-off in Coar, the waiver here is conceptually distinct from assignment and alienation. Accordingly, our comment that "inasmuch as a set-off is not an alienation, then the absence of an exception allowing a set-off to the restraint on alienation is meaningless” applies with equal force here. Coar, 990 F.2d at 1424.

. We also noted in Coar that the legislative history of the provision speaks of "a garnishment or levy” and that the there are remarks in the history that term it an "anti-garnishment provision.” 990 F.2d at 1420-21. Congress's concern regarding this sort of involuntary alienation further underscores my belief that it was not targeting knowing and voluntary waivers when drafting the provision.

. Although I would have remanded the question whether the renomination of Donna for the annuity option should be given effect, I note that there are good reasons not to honor it. If no renomination is allowed, waiver could only occur once, so there would be no danger of repealed divorces causing high administrative costs based on the need to do several actuarial recalculations. However, this is not to say that Donna would be without protection, as the waiver would likely result in the lump-sum death benefit under Section 6.2 of the Plan (as opposed to the survivor annuity under Option B of Section 8.2) going into effect, as the annuity option would then not be effective. Indeed, McGowan could change beneficiaries for the lump-sum benefit freely under Section 6.3.

. I note also that Judge Van Antwerpen's opinion reads this provision as allowing all documents filed with the Plan to govern its administration, including forms filed to designate beneficiaries. However, although I need not resolve this issue because this case is ultimately decided only on the anti-alienation provision, I note in passing that the governing documents could reasonably be limited to those that set forth the terms of the plan. Cf. McElroy v. SmithKline Beecham Health & Welfare Benefits Tmst Plan for U.S. Employees, 340 F.3d 139, 143-44 (3d Cir.2003) (“Clearly, the 'documents and instruments governing the plan’ do not necessarily include all relevant documents and, in particular, do not necessarily include the plaintiffs claim file.”).