Amicus Curiae Brief — Egelhoff v. Egelhoff

Hupsoine ourt, U.S, |

FILED

AUG 1 0 2000

G)

No. 99-152

IN THE

SUPREME COURT OF THEUNITHD'S#ATES |

—<

DONNA RAE EGELHOFF,

Petitioner,

Vv.

SAMANTHA EGELHOFT, A MINOR, BY AND THROUGH

HER NATURAL PARENT KATE BREINER,

AND DAVID EGELHOFF,

Respondents.

ON WRIT OF CERTIORARI TO THE

SUPREME COURT OF WASHINGTON

BRIEF AMICUS CURIAE OF AARP

IN SUPPORT OF NEITHER PARTY

Mary Ellen Signorille*

AARP FOUNDATION LITIGATION

Melvin Radowitz

AARP

601 E Street, N.W.

Washington, DC 20049

(202) 434-2060

Counsel for Amicus Curiae

AARP

*Counsel of Record

x)

——

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .......cccccccccccccves ili

INTEREST OF AMICUS CURIAE ..........00000008: l

SUMMARY OF ARGUMENT ............000eeeeeee 2

SEE beh dncedecdcawdetertecececessoccsens 4

I WASHINGTON STATE’S DESIGNATED

BENEFICIARY LAW MUST BE PREEMPTED

BECAUSE IT DIRECTLY CONFLICTS WITH

ERISA’S PENSION DISTRIBUTION SCHEME ...

A. If State Law Conflicts with the Provisions

of ERISA or Operates to Frustrate

ERISA’s Objectives, The State Law Must

EEE cotbadddesdcesscocscoeveccess

B. Because ERISA Provides Uniform

Standards Concerning The Form,

Payment, and Distribution of Pension

Benefits, Washington State’s Statute

Designating the Beneficiary of Benefits

Paid from ERISA-Covered Employee

Benefit Plans Is Conflict Preempted...........

Il. ERISA MUST PREEMPT WASHINGTON

STATE’S DESIGNATION OF BENEFICIARY

LAW BECAUSE IT UNDERCUTS

CONGRESS’ INTENT TO PROTECT

PARTICIPANTS AND TO PROMOTE

UNIFORM ADMINISTRATION OF

EMPLOYEE BENEFIT PLANS ................

Ill. BECAUSE WASHINGTON STATE’S LAW

REGULATES AN ERISA-GOVERNED

RELATIONSHIP, IT IS PREEMPTED ..........

CONCLUSION

,eee eo eeeoeeee ee ee eee eee eea eee ee es ee

— ee

ili

TABLE OF AUTHORITIES

CASES

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (1981) . 5

Arizona State Carpenters Pension Trust Fund v.

Citibank, 125 F.3d 715 (9th Cir. 1997) ......... passim

Boggs v. Boggs, 520 U.S. 833 (1997) ............ passim

Boyle v. Anderson, 68 F.3d 1093 (8th Cir. 1995),

cert. denied, 516 U.S. 1173 (1996) ................ 11

California Division of Labor Standards Enforcement v.

Dillingham Construction, 519 U.S. 316 (1997) ..... 2,8

Carpenters Local Union No. 26 v. United States Fidelity

& Guaranty Co., 215 F.3d 136 (1st Cir. 2000) ....... 11

Cipollone v. Liggett Group, Inc., 50S U.S. 504 (1992) .... 4

Coyne & Delany Co. v. Selman., 98 F.3d 1457

eee eek ee cesccecccecsce passim

DeCanas v. Bica, 424 U.S. 351 (1976) ............... 11

District of Columbia v. Greater Washington Board

of Trade, 506 U.S. 125 (1992) ................. aa?

FMC Corp. v. Holliday, 498 U.S. 52 (1990) ............ 5

Forbus v. Sears Roebuck & Co., 30 F.3d 1402

(11th Cir. 1994), cert. denied, 513 U.S. 1113 (1995) .. 11

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987) ... 10

General American Life Ins. Co. v. Castonguay,

EE, MED a cccccccccecccccees 11

iv

Hewlett-Packard Co. v. Barnes, 571 F.2.1 5U2 (9th Cir.),

cert. denied, 439 U.S. 831 (1978) .................. 5

John Hancock Mutual Life Ins. Co. v. Harris Trust

& Savings Bank, 510 U.S. 86 (1993) .............. 2,4

Mackey v. Lanier Collections Agency & Service,

ar ae 10

Malone v. White Motor Corp., 435 U.S. 497 (1978) ...... 5

Memorial Hospital System v. Northbrook Life Ins.

Car, SUS F.26 258 Go Cis. IGDED nw ccc ccccccccces 11

Metropolitan Life Ins. Co. v. Massachusetts,

Gre Gs Ca den tenecsceedecusocecees 3,5,7

Morstein v. National Ins. Services, Inc., 93 F.3d 715

RS eS an en eee ee 11

New York State Conference of Blue Cross & Blue Shield

Plans v. Travelers Ins. Co., 514 U.S. 645 (1995) . passim

Retail Clerks v. Schermerhorn, 375 U.S. 96 (1963) ...... 5

Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) .. 3,4

Rokohl v. Texaco, 77 F.3d 126 (Sth Cir. 1996) ......... ll

Rutledge v. Seyfarth, Shaw, Fairweather & Geraldson,

201 F.3d 1212, opinion amended, 208 F.3d 1170

PL Sn ¢néabududcéuascanbenddeudediaed 10

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983)... ... 6,8

Smith v. Provident Bank, 170 F.3d 609 (6th Cir. 1998)... 11

Stickney v. Muhlenberg College TIAA-CREF Retirement

Plan, 896 F. Supp. 412 (E.D. Pa. 1995) ............ 10

et ee

ee ee —

Travitz v. Northeast Dept. ILGWU Health & Welfare Fund,

13 F.3d 704 (3d Cir.), cert. denied, 511 U.S. 1143 (1994}1

UNUM Life Ins. Co. v. Ward, 526 U.S. 358 (1999) ..... 2,9

STATUTES & LEGISLATIVE MATERIALS

en oeesenndns 5

ERISA § 1001(b), 29 U.S.C. § 2(b) ...... 2.2.2... 3, 8,9

ERISA §§ 201-11, 29 U.S.C. §§ 1051-1061 ............ 6

i re OD vccesiccesecceocces 6,7

ERISA § 205(e), 29 U.S.C. § 1055(e) ................. 7

ERISA § 205(g)(1), 29 U.S.C. § 1055(g)(1) ............ 7

ERISA § 205(g)(2), 29 U.S.C. § 1055(g)(2) ............ 7

ED SP, ED ccccccccccccccccecses 7

ERISA § 206(a), 29 U.S.C. § 1056(a) ................. 7

ERISA § 206(d), 29 U.S.C. § 1056(d) ................. 7

ERISA § 514(a), 29. U.S.C. § 1144(a) ................ 8

LR.C. Ppa DURE BEREEED ccccccsccees 6

LR.C. § 414(p), 26 U.S.C. § 414(p) ... 2.2... eee eee. 7

LR.C. § 417, ort ary 2 TS ee nee 6

is Oe SP MED 6 coc ccccccesceseses 6

Wash. Rev. Code § 49.64 (West 2000) ................ 8

S. . No. 98-575 (1984), reprinted in

EE pe eee 3

MISCELLANEOUS

D. McGill and D. Grubbs, Jr., FUNDAMENTALS OF

PRIVATE PENSIONS (6th ed. 1989) .................. 6

No. 99-1529

IN THE

Supreme Court of the United States

DONNA RAE EGELHOFF,

Petitioner,

v.

SAMANTHA EGELHOFTF, A MINOR, BY AND THROUGH

HER NATURAL PARENT KATE BREINER,

AND DAVID EGELHOFF,

Respondents.

ON WRIT OF CERTIORARI TO THE

SUPREME COURT OF WASHINGTON

BRIEF AMICUS CURIAE OF AARP

IN SUPPORT OF NEITHER PARTY

INTEREST OF AMICUS CURIAE”

AARP is a nonprofit membership organization of more than

34 million persons age 50 or older that is dedicated to

addressing the needs and interests of older Americans. AARP

seeks through education, advocacy and service to enhance the

ea te cual d enue Gee dignity and

As a method of promoting

sauamagts to dectes tho cnsuatte security of individuals as they

” No counsel for any party authored any portion of this brief. No party

other than this amicus curiae, their members, or their counsel made a

monetary contribution to the preparation or submission of this brief.

2

age by seeking to increase the availability, security, equity, and

adequacy of public and Private pension, health, disability, and

other employee benefits.”

AARP’s members and other participants and beneficiaries in

private, employer-sponsored employee benefit plans rely on the

Employee Retirement Income Security Act (ERISA) to protect

their rights under those plans. ERISA's protections, and the

ability to enforce those protections, are of vital concern to older

workers, retirees and their designated beneficiaries, since the

quality of their lives depends heavily upon the security and

amount of their pension and welfare benefits. State beneficiary

designation laws, like the law from Washington State, take

control from participants as to whom to leave their benefits,

instead of allowing participants to follow their plan’s rules and

make their own designation. Thus, the decision in this case will

have a direct and vital bearing on the economic security of

AARP’s members and other older Americans. In light of the

significance to its members of the issues presented by this case,

AARP respectfully submits this brief amicus curiae.”

SUMMARY OF ARGUMENT

ERISA preemption analysis is no different from any other

preemption analysis. John Hancock Mutual Life Ins. Co. v.

Harris Trust and Savings Bank, 510 U.S. 86, 99 (1993). Any

State law that directly conflicts with a federal law, either on its

” As part of its advocacy efforts to ensure, to the greatest extent possible, —

that participants and beneficiaries receive the benefit of ERISA’s

protections, AARP has participated as amicus curiae in numerous Cases

involving the breadth of ERISA’s preemption clause. See, e.g., UNUM Life

Ins. Co. v. Ward, 526 U.S. 358 (1999); Boggs v. Boggs, 520 U.S. 833

(1997); California Division of Labor Standards Enforcement v. Dillingham

Construction, 519 U.S. 316 (1997); John Hancock Mutual Life Ins. Co. v.

Harris Trust & Savings Bank, 510 U.S. 86 (1993).

» The written consents of the parties have been filed with the Clerk of the

Court pursuant to Supreme Court Rule 37.3.

ee ~-

3

face or in application, must be preempted because it would

frustrate Congress’ in enacting the federal law. Rice v.

Santa Fe Elevator 331 US. 28, 230 (1947). Through

provisions in ERISA 2 as samented by the Retirement Equity Act,

Congress established a detailed procedure for receipt and

distribution of pension benefits. S. REP. NO. 98-575 at 12

(1984), reprinted in 1984 U.S.C.C.A.N. 2547, 2558.

Accordingly, state laws that conflict with the substantive

provisions of ERISA by regulating how pension benefits are to

be paid and by creating specific requirements concerning

distribution of pension benefits must be preempted. E.g.,

Boggs v. Boggs, 520 U.S. 833 (1997); District of Columbia v.

Greater Washington Board of Trade, 506 U.S. 125 (1992);

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739

(1985). Washington State’s beneficiary designation law should

be conflict preempted for pension benefits.

The primary objective of ERISA is to protect icipants

and beneficiaries. See Boggs v. Boggs, 520 U.S. at 845; ERISA

§ 1001(b), 29 U.S.C. § 2(b). And, Congress enacted ERISA’s

preemption clause to eliminate the threat of conflicting and

inconsistent state and local regulation in order to promote the

uniform administration of employee benefit plans. New York

State Conference of Blue ‘Gen & Blue Shield Plans v.

Travelers Ins. Co. (“Travelers”),514 U.S. 645, 655-61 (1995).

Accordingly, pursuant to Travelers, three types of state laws are

always preempted: (1) laws that mandate employee benefit

structures or their administration; (2) laws that bind employers

or plan administrators to particular choices or preclude uniform

administrative practice, thereby functioning as a regulation of

an ERISA plan itself; or (3) laws providing alternate

enforcement mechanisms for employees to obtain ERISA plan

benefits. See Travelers, 514 U.S. at 658; Arizona State

Carpenters Pension Trust Fund v. Citibank, 125 F.3d 715, 723

(9th Cir. 1997); Coyne & Delany Co. v. Selman, 98 F.3d 1457,

1468 (4th Cir. 1996). In this instance, protection of participants

and their beneficiaries would be decreased if this state law is

not preempted because participants could not decide to whom

their benefits should be paid. Moreover, Washington State law

not only mandates certain administrative practices, but also

precludes uniform administrative practices by requiring

4

employee benefit plans to comply with designated beneficiary

statutes in all 50 states. On this basis alone, Washington State’s

designated beneficiary law relates to employee pension and

welfare benefit plans and should be preempted.

Even if the Court determines that the Washington State law

does not fall within one of the categories of preempted state

laws, because the Washington State law is a law of general

application, whether it is preempted turns on the question of

whether the relationship involved is one which is regulated by

ERISA. ERISA should preempt state law claims as to those

relationships which it regulates comprehensively (e.g., between

plan and plan participant, plan and employer, plan and trustee).

See Arizona State Carpenters Pension Trust Fund v. Citibank,

125 F.3d at 724; Coyne & Delany Co. v. Selman, 98 F.3d at

1468. In this case, Washington State’s designated beneficiary

law regulates the relationship between the plan and the plan

participant, that is, who should receive the benefits earned by

the plan participant. Consequently, ERISA must preempt

Washington’s designated beneficiary statute because it relates

to employee pension and welfare benefit plans. The decision

below should be reversed.

ARGUMENT

I. WASHINGTON STATE’S DESIGNATED

BENEFICIARY LAW MUST BE PREEMPTED

BECAUSE IT DIRECTLY CONFLICTS WITH

ERISA’S PENSION DISTRIBUTION SCHEME.

A. If State Law Conflicts with the Provisions of ERISA

or Operates to Frustrate ERISA’s Objectives, The

State Law Must Be Preempted.

ERISA preemption analysis follows traditional preemption

analysis. John Hancock Mutual Life Ins. Co. v. Harris Trust

and Savings Bank, 510 U.S. at 99 (“[W]e discern no solid basis

for believing that, Congress, when it designed ERISA, intended

fundamentally to alter traditional preemption analysis.”).

“(T]he purpose of Congress is the ultimate touchstone of

preemption analysis.’” Cipollone v. Liggett Group, Inc., 505

Hs — -—_—-—-_

es —

5

U.S. 504, 516 (1992) (quoting Malone v. White Motor Corp.,

435 U.S. 497, 504 (1978) (quoting Retail Clerks v.

Schermerhorm, 375 U.S. 96, 103 (1963))); see U.S. CONST. art.

VI, cl. 2. Under traditional preemption analysis, any state law

that directly conflicts with a federal law, either on its face or in

application, must be preempted because it would frustrate

Congress’ — in enacting the federal law. See Rice v.

Santa Fe Elevator Corp., 331 U.S. at 230.

Following this traditional analysis, the Court in Boggs v.

Boggs, 520 U.S. at 841-42, stated that the first question in

ERISA preemption analysis is “if state law conflicts with the

provisions of ERISA or operates to frustrate its objects.” The

Court further stated that if a court determined that a state law

directly conflicted with ERISA’s provisions, no further analysis

was necessary. The Boggs majority stated that there was no

need to analyze the “relates to” clause. Jd. However, the Court

did not specifically overrule Metropolitan Life Ins. Co. v.

Massachusetts, 471 U.S. at 739, which held that state laws that

conflict with the substantive provisions of ERISA obviously

“relate to an employee benefit plan.” Under either the Boggs or

Metropolitan Life analysis, if a state law directly conflicts with

ERISA’s provisions, ERISA will preempt it.

State laws are preempted if they (1) regulate the types of

benefits or terms of a plan, e.g., District of Columbia v. Greater

Washington Board of Trade, 506 U.S. 125 (1992) (workers’

compensation law prohibiting termination of health benefits of

workers receiving workers’ compensation benefits is

preempted); (2) create specific requirements as to funding,

reporting and disclosure, vesting, and the like, e.g., Hewlett-

Packard Co. v. Barnes, 571 F.2d 502 (9th Cir.), cert. denied,

439 U.S. 831 (1978) (state law regulating funding and

disclosure requirements of ERISA — is preempted); or (3)

establish rules for the calculation of benefits, e.g., FMC Corp.

v. Holliday, 498 U.S. 52 (1990) (interference with calculation

of benefits through state antisubrogation statute); Alessi v.

Raybestos-Manhattan, Inc., 451 U.S. 504 (1981) (prohibition

of offset of workers’ compensation benefits against retirement

benefits). Failure to preempt such law would frustrate ERISA’s

objective to foster uniform administration of employee benefit

6

plans.” See Boggs v. Boggs, 520 U.S. at 841-42; cf. Travelers,

514 U.S. at 668 (recognizing that laws having direct effects on

plans are preempted).

B. Because ERISA Provides Uniform Standards

Concerning The Form, Payment, and Distribution of

Pension Benefits, Washington State’s Statute

Designating the Beneficiary of Benefits Paid from

ERISA-Covered Employee Benefit Plans Is Conflict

Preempted.

“ERISA is a comprehensive statute designed to promote the

interests of employees and their beneficiaries in employee

benefit plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90

(1983). “The statute imposes participation, funding, and

vesting requirements on pension plans.” Jd. at91. ERISA also

provides uniform minimum standards for the form, payment

and distribution of pension benefits. ERISA §§ 201-11, 29

§§ 1051-1061. See generally D. McGill and D. Grubbs, Jr.,

FUNDAMENTALS OF PRIVATE PENSIONS, Chapters 4 - 6 (6th ed.

1989).

Congress mandated an extremely detailed procedure in order

for participants and beneficiaries to receive pension benefits.

Not only must a participant work a certain number of years to

be vested, but even after the participant is vested, Congress

decreed certain other requirements in order for the participant

and beneficiaries to receive their benefits. Shaw v. Delta Air

Lines, Inc., 463 U.S. at 90-91. ERISA § 205 requires that

married participants can only receive a retirement benefit that

does not provide for their spouses if their spouses provide a

written consent to waive their rights, ERISA § 205, 29 U.S.C.

§ 1055; see also LR.C. §§ 401(ay(1l) & 417, 26 U.S.C.

§§ 401(a)(11) & 417, and pension plans will lose their tax

qualification if they do not include these provisions. LR.C.

§§ 401(a)(11) & 501(a), 26 U.S.C. §§ 401(a)(11) & 501(a).

Amicus notes that these cases were decided before Boggs, and none of

them focused on the concept of conflict preemption, even though the state

law at issue directly conflicted with ERISA provisions.

7

That section also requires the provision of a pre-retirement

pension benefit to a surviving spouse unless the spouse has

waived this benefit. ERISA § 205(e), 29 U.S.C. § 1055(e).

This section sets forth when consent must be obtained and

under what circumstances. ERISA §§ 205(g)(1) & (g)(2), 29

U.S.C. §§ 1055(g)(1) & (g)(2). ERISA § 206 not only permits

the division of pension benefits upon divorce, but it permits a

plan to pay some of these benefits directly to the spouse if a

court order meets certain conditions. ERISA § 206(d), 29

U.S.C. § 1056(d); see also LR.C. § 414(p), 26 U.S.C. § 414(p).

Finally, these sections specify the minimum time frame by

which the pension benefits must be paid. ERISA § 206(a), 29

U.S.C. § 1056(a). |

Washington State’s beneficiary designation law provides that

a participant’s employee benefit plan beneficiary designation

made prior to a divorce is “revoked” and that benefits which a

participant has earned from employee benefit plans pass upon

the participant’s death as if the former spouse had predeceased

the participant. This law directly conflicts with ERISA’s

distribution of pension benefits distribution scheme set forth in

Sections 205 and 206 because it creates specific requirements

as to whom and how pension benefits are to be paid.

Accordingly, the Washington State designated beneficiary law

directly regulates pension benefits and must be preempted. See

Boggs v. Boggs, 520 U.S. at 841-42; District of Columbia v.

Greater Washington Board of Trade, 506 U.S. 125 (1992);

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. at 739.

Il. ERISA MUST PREEMPT WASHINGTON

STATE’S DESIGNATION OF BENEFICIARY LAW

BECAUSE IT UNDERCUTS CONGRESS’ INTENT

TO PROTECT PARTICIPANTS AND TO

PROMOTE UNIFORM ADMINISTRATION OF

EMPLOYEE BENEFIT PLANS.

Even if the Court finds that ERISA does not preempt

Washington State’s law under traditional conflict preemption

analysis as to pension benefits, Washington State’s designation

of beneficiary law still must be preempted under ERISA

§ 514(a) as to all types of benefits because it relates to an

8

employee benefit plan.” In Travelers, the Court reiterated its

holding that a state law relates to an employee benefit plan if it

has a reference to or connection with a plan. 514 U.S. at 656,

quoting Shaw v. Delta Air Lines, Inc., 463 U.S. at 96-97.2 To

determine whether a state law has a connection with a plan, a

court must look to “the objectives of the ER. }A statute as a

guide to the scope of the state law that Congress understood

would survive, as well as to the nature of the effect of the state

law on ERISA plans.” California Division of Labor Standards

Enforcement v. Dillingham Construction, N.A., Inc., 519 U.S.

at 325.

The Court has stated that the general objective of ERISA is

to protect participants and beneficiaries. See Boggs v. Boggs,

520 U.S. at 845; ERISA § 1001(b), 29 U.S.C. § 2(b). The

Court has also concluded that “the basic thrust of the pre-

emption clause, then, was to avoid a multiplicity of regulation

in order to permit the nationally uniform administration of

employee benefit plans.” Travelers, 514 U.S. at 646.

Three types of state laws are always preempted: (1) laws that

mandate employee benefit structures or their administration; (2)

laws that bind employers or plan administrators to particular

choices or preclude uniform administrative practice, thereby

functioning as a regulation of an ERISA plan itself; and (3)

laws providing alternate enforcement mechanisms for

employees to obtain ERISA plan benefits. See Travelers, 514

U.S. at 658; accord, Arizona State Carpenters Pension Trust

* Section 514(a) states that ERISA “shall supersede any and all State laws

insofar as they. . . relate to any employee benefit plan” covered by the

Statute.

£ The Washington State statute specifically refers to employee benefit

plans, among other assets, in its definition of non-probate assets. WASH.

REV. CODE § 49.64 (West 2000). However, because the statute does not act

exclusively on employee benefit plans and will apply to assets other than

benefit plans, amicus submits that the Washington State statute would not

be preempted under the “reference to” analysis.

- —— <= —— ee ee

_— ee Cle OO

9

Fund yv. Citibank, 125 F.3d at 723; Coyne & Delany Co. v.

Selman, 98 F.3d at 1468.

Here, the Travelers’ test for preemption of a state law

dictates that ERISA should preempt the Washington State

designation of beneficiary law. By directing how employee

benefit plans will administer the method by which and to whom

beneficiary’s benefits are paid, Washington State law has “a

marked effect on plan administration.” See UNUM Life Ins.

Co. v. Ward, 526 U.S. at 378. This law also binds plan

administrators to particular choices as to how and to whom to

pay benefits by overriding the provisions of the plan itself,

thereby regulating the plan directly. Jd.

Moreover, if ERISA does not preempt Washington State’s

designation of beneficiary law, that state law will undercut

Congress’ general objective in enacting ERISA as well as its

reason for enacting the preemption clause. Failure to preempt

this designation of beneficiary law would decrease protection

of participants and their beneficiaries because it would wrest

control from the participant of the decision to whom the

participants’ benefits should be paid. The state law would

determine to whom the benefits should be paid instead of the

participants themselves. See Boggs v. Boggs, 520 U.S. at 845;

ERISA § 1001(b), 29 U.S.C. § 2(b). If the participants follow

the plan provisions, they should be assured that their choices

are followed.”

A conclusion by the Court that ERISA does not preempt

these designation of beneficiary laws would run counter to

Congress’ intent to foster uniform administration of employee

benefit plans. See Travelers, 514 U.S. at 645-46. Employee

benefit plans would be required to comply with conflicting

directives among 50 states, thereby increasing the

administrative and financial burdens they face. Compliance

Y This perspective places direct responsibility upon participants to review

their beneficiary designations when they experience a life change such as

marriage, divorce or widowhood, and follow the terms of their plan to make

any changes.

10

with different laws in 50 states would also make administration

of nationwide benefit plans more difficult and inefficient,

which might lead sponsoring employers with benefit plans to

reduce benefits or those employers without benefit plans to

refrain from offering them. See Fort Halifax Packing Co. v.

Coyne, 482 U.S. 1, 10-12 (1987). Moreover, there would be no

finality concerning payment of employee benefits. Instead,

plans would become embroiled in state probate and other

actions, also increasing their administrative costs. Asa way to

minimize their liability, pension plans might file interpleader

actions to request court determinations concerning to whom

payment will be made. E.g., Stickney v. Muhlenberg College

TIAA-CREF Retirement Plan, 896 F. Supp. 412 (E.D. Pa.

1995).

ERISA must preempt Washington State’s designation of

beneficiary law in order to accomplish Congress’ intent to

protect participants and beneficiaries and promote uniform

administration of employee benefit plans.

Ill. BECAUSE WASHINGTON STATE’S LAW

REGULATES AN _ ERISA-GOVERNED

RELATIONSHIP, IT IS PREEMPTED.

In an effort to further analyze whether ERISA preempts a

state law, many Circuit Courts apply a “relationship” test. See,

e.g., Rutledge v. Seyfarth, Shaw, Fairweather & Geraldson,

201 F.3d 1212, 1217, opinion amended, 208 F.3d 1170 (9th

Cir. 2000). One version of the relationship test may be

summarized as follows: where state law claims fall outside the

three areas of concern identified in Travelers, see ARGUMENT

in I, supra; arise from a state law of general application; do not

depend upon ERISA; and do not affect the relationships

between the principal ERISA entities, the state law claims are

not preempted. See Arizona State Carpenters Pension Trust

Fund v. Citibank, 125 F.3d at 724; see generally Mackey v.

Lanier Collections Agency & Service, 486 U.S. 825, 833 (1988)

(“[L]awsuits against ERISA plans for run-of-the-mill state-law

claims such as unpaid rent, failure to pay creditors, or even torts

committed by an ERISA plan” are against the plan in a capacity

1]

other than as a plan -- i.e., as a commercial entity -- and are not

preempted. )

Conversely, state laws that regulate an ERISA-governed

relationship -- between the plan and participants, the plan and

fiduciaries, the plan and sponsoring employer, the fiduciaries or

plan administrator and participants, or the fiduciaries and plan

administrator” — will Sceantily ediuts to an employee benefit

lan, and therefore will be preempted. See, e.g., Carpenters

al Union No. 26 v. United States Fidelity & Guaranty Co.,

215 F.3d 136 (1st Cir. 2000); Smith v. Provident Bank, 170

F.3d 609 (6th Cir. 1998); Arizona State Carpenters Pension

Trust Fund v. Citibank, 125 F.3d 715 (9th Cir. 1997); Coyne &

Delany Co. v. Selman, 98 F.3d 1457, 1468 (4th Cir. 1996);

Morstein v. National Ins. Services, Inc., 93 F.3d 715, 722-23

(11th Cir. 1996) (en banc); Boyle v. Anderson, 68 F.3d 1093,

1103 (8th Cir. 1995), cert. denied, 516 U.S. 1173 (1996);

Travitz v. Northeast Dept. ILGWU Health & Welfare Fund, 13

F.3d 704, 709 (3d Cir.), cert. denied, 511 U.S. 1143 (1994);

General American Life Ins. Co. v. Castonguay, 984 F.2d 1518,

1521-22 (9th Cir. 1993); Memorial Hospital System v.

Northbrook Life Ins. Co., 904 F.2d 236, 249 (Sth Cir. 1990).

State laws regulating these relationships are particularly likely

to interfere with ERISA’s regulatory scheme, and are

presumptively . See General American Life Ins. Co.

v. Castonguay, 984 F.2d at 1521-22.

There can be nothing more central affecting the relationship

between a plan and its participants than a state law dictating to

whom benefits are paid. Under the relationship test, ERISA

must preempt Washington State’s designation of beneficiary

law. See Arizona State Carpenters Pension Trust Fund v.

© The relationship between the employer and employee is not an ERISA-

governed relationship because that relationship concerns the employment

relationship, which has been regulated historically by the states, ¢.g.,

DeCanas v. Bica, 424 U.S. 351, 356 (1976), not a relationship growing out

of benefits. See Rokohl v. Texaco, 77 F.3d 126, 130 (Sth Cir. 1996);

Forbus v. Sears Roebuck & Co., 30 F.3d 1402, 1406-07 (11th Cir. 1994),

cert. denied, 513 U.S. 1113 (1995).

12

Citibank, 125 F.3d 715 (9th Cir. 1997); Coyne & Delany Co. v.

Selman, 98 F.3d at 1468.

CONCLUSION

For the foregoing reasons, yh wage

the decision of the Supreme Court of Washington.

August 10, 2000 Respectfully submitted,

Mary Ellen Signorille

(Counsel of Record)

AARP FOUNDATION LITIGATION

Melvin Radowitz

AARP

601 E Street NW

Washington, DC 20049

(202) 434-2060

Counsel for Amicus Curiae

AARP