Record and brief — Kennedy v. Plan Administrator for DuPont Sav. and Investment Plan

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No. 07-636

Title: Kari E. Kennedy, et al., Petitioners

Plan Adininistrator for DuPont Savings and Investment Plan, et al.

Docketed: November 15, 2007

Lower Ct: United States Court of Appeals for the Fifth Circuit

Case Nos.: (05-41851)

Decision Date: August 15, 2007

Questions

Presented

~~~Date~~~ ~~~~~~~Proceedings and Orders~~~~~

Nov 13 2007 Petition for a writ of certiorari filed. (Response due December 17, 2007)

Dec 4 2007 Order extending time to file response to petition to and including January

16, 2008.

Jan 15 2008 Brief of respondents E.1 DuPont De Nemours and Company, et al. in

opposition filed.

Jan 24 2008 Reply of petitioner Kari E. Kennedy filed.

Jan 30 2008 DISTRIBUTED for Conference of February 15, 2008.

Feb 19 2008 Petition GRANTED limited to Question 3 presented by the petition.

Mar 4 2008 Record received from U.S.C.A. for the Sth Circuit. (1 envelope)

Mar 12 2008 Record received from the U.S.D.C. for the Eastern District of Texas. (1

box)

Mar 20 2008 The time within which to file the joint appendix and petitioners’ brief on

the merits is extended to and including May 5, 2008.

May 5 2008 Joint appendix filed. (Statement of costs received)

May 5 2008 Brief of petitioners Kari E. Kennedy, et al. filed.

May 12 2008 Brief amicus curiae of AARP in support of neither party filed.

May 12 2008 Brief amicus curiae of United States in support of neither party filed.

May 28 2008 The time within which to file respondents’ brief on the merits is extended to

and including July 8, 2008.

Jun 92008 SET FOR ARGUMENT ON Tuesday October 7, 2008.

Jul 3 2008 CIRCULATED

Jul 8 2008 _ Brief of respondents Plan Administrator for DuPont Savings and

Investment Plan, et al. filed. (DISTRIBUTED)

Jul 15 2008 Motion of the Acting Solicitor General for leave to participate in oral

argument as amicus curiae and for divided argument filed.

Jul 15 2008 Brief amicus curiae of Western Conference of Teamsters Pension Trust

Fund filed. (Distributed)

Jul 15 2008 Motion for leave to file amici brief filed by American Benefits Council, et

al.

Jul 17 2008

Jul 22 2008

Aug 7 2008

Sep 5 2008

Sep 30 2008

Oct 7 2008

Oct 28 2008

Opposition of petitioners in response to motion of amici American Benefits

Council, et al. for leave to file a brief as amici curiae.

Letter of consent to the filing of the motion of the Acting Solicitor General

for leave to participate in oral argument as amicus curiae and for divided

argument from counsel for the petitioner filed.

Reply of petitioners Kari E. Kennedy, et al. filed. (Distributed)

Motion of the Acting Solicitor General for leave to participate in oral

argument as amicus curiae and for divided argument GRANTED.

Motion for leave to file amici brief filed by American Benefits Council, et

al. GRANTED.

Exhibits received from the U.S.D.C. for the Eastern District of Texas.

Argued. For petitioners: David A. Furlow, Houston, Tex. For United States

as amicus curiae: Leondra R. Kruger, Assistant to the Solicitor General,

Department of Justice, Washington, D.C. For respondents: Mark I. Levy,

Washington, D.C.

The parties are directed to file supplemental briefs addressing the following

question: Whether 29 U.S.C. §1104(a)(1)(D), mandating administration of

a plan in accordance with plan documents, required that the distribution in

question be made to Liv Kennedy, even on the assumption that a waiver of

her interest was not otherwise subject to statutory bar. The briefs, not to

exceed 4,500 words, are to be filed simultaneously with the Clerk and

served upon opposing counsel on or before 2 p.m., Monday, November 10,

2008. Amicus curiae briefs, not to exceed 3,000 words, may be filed with

the Clerk and served upon counsel for the parties on or before 2 p.m.,

Monday, November 10, 2008.

Nov 10 2008 Supplemental brief of respondents filed. (Distributed)

Nov 10 2008 Supplemental brief of petitioners filed. (Distributed)

Nov 10 2008 Supplemental brief of United States supporting respondents filed.

(Distributed)

PETITION

FOR

WRIT OF

CERTIORARI

e: Supreme Court, U.

Pree oo

No.

mma, 1 3 TE

In The OFFICE GF THE CLERK

Supreme Court of the Anited States

KARI ELLEN KENNEDY, INDEPENDENT

EXECUTRIX OF THE ESTATE OF

WILLIAM PATRICK KENNEDY, DECEASED,

Petitioner,

PLAN ADMINISTRATOR FOR DUPONT

SAVINGS AND INVESTMENT PLAN;

E.1. DUPONT DE NEMOURS & COMPANY,

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

PETITION FOR WRIT OF CERTIORARI

STACY L. KELLY | Davip A. FURLOW

Counsel of Record KEVIN PENNELL

ERIN FE. EGGLESTON THOMPSON & KNIGHT LLP

MACINTYRE & MCCULLOCH, LLP 333 Clay St., Ste. 3300

3900 Essex, Ste. 220 Houston, Texas 77002

Llouston, Texas 77027 (713) 654-8111

(713) 572-2900 (832) 397-8253 (fax)

(713) 572-2902 (fax)

Attorneys for Petitioner Kart Ellen Kennedy

COWKLE LAW BRIEF PRINTING CO) 800) 2975-4961

OR CALL COLLECT. 0u) 517 24

QUESTIONS PRESENTED FOR REVIEW

Was the Estate of the late William P. Kennedy

the proper recipient of the pension funds in his

DuPont Savings and Investment Plan, as op-

posed to Mr. Kennedy’s Ex-Wife Liv Kennedy,

who entered into a 1994 divorce-decree that vol-

untarily waived those SIP benefits under federal

common law and the Employee Retirement In-

come Security Act, 29 U.S.C. §§ 1001 et seg. (“ER-

ISA”)?

Does federal common law, as applied to Ex-

Spouse Liv Kennedy’s waiver of any right to re-

ceive William P. Kennedy’s pension benefits in a

1994 divorce-decree, govern the judicial determi-

nation of whether DuPont’s Plan Administrator

wrongfully paid Mr. Kennedy’s SIP benefits to his

ex-spouse Liv Kennedy, as the District Court

ruled, or was that court restricted to examining

only DuPont’s “Plan Document,” that is, the late

William P. Kennedy’s 1974 beneficiary designa-

tion of his then-wife?

Was the Fifth Circuit correct in concluding that

ERISA’s Qualified Domestic Relations Order pro-

vision, 29 U.S.C. § 1056(d3)(B)(i), is the only

valid way a divorcing spouse can waive her right

to receive her ex-husband’s pension benefits un-

der ERISA?

What legal standards govern the award of fees to

prevailing parties under ERISA (an issue of first

impression for this Court)?

PARTIES TO THE PROCEEDINGS

Including the parties named in the caption of this

Petition, the parties are:

Petitioners: Kari Ellen Kennedy, Independent Execu-

trix of the Estate of William Patrick Ken-

nedy (the “Executrix”).

Respondents: The Plan Administrator for DuPont

Savings and Investment Plan and E. I.

DuPont de Nemours & Company.

CORPORATE DISCLOSURE STATEMENT

Petitioner Kari Ellen Kennedy is an individual

who does not fall within the scope of Supreme Court

Rule 29.6’s disclosure requirement.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW........ i

PARTIES TO THE PROCEEDINGB................... il

Te Ie GEE BE ovescescnsssssoveccsscccccsseccessees ill

TABLE OF AUT HIORE © EGS 000 .ccccccccccccscssecsccccesees viii

a cic ncicnmedsoaabeenbusionsouses 1

Re iititntaiinidiectidnenainetbantderieccenicsssete 1

STATUTORY PROVISIONS INVOLVED ........... 1

STATEMENT OF THE CASE ...................eceseseeees 2

A. William P. Kennedy’s employment at

DuPont and marriage to Liv Kennedy...... 2

B. William P. Kennedy’s 1994 divorce and

Ex-Wife Liv Kennedy’s waiver of her

right to receive her ex-husband’s SIP

benefits through the Kennedy divorce de-

COND vais iccsinsicnitsiitintnidcenninniibidumbitncdivisinnitatninies 3

C. William P. Kennedy retired from DuPont

in 1998 and died in 2001 without chang-

ing his 1974 beneficiary designation of

Ex-Wife Liv Kennedy in his DuPont pen-

I iinindadnctaldiniediaiieiininibiereiatiebiianeie 3

D. The Kennedy Estate sued to recover

$402,000 in pension benefits DuPont paid

to Ex-Spouse Liv Kennedy without first

filing an interpleader action to determine

ee iabatenticiieistniieeuriasnndsininanenneiniiee 4

TABLE OF CONTENTS - Continued

Page

The Fifth Circuit, basing its decision on

ERISA’s anti-alienation and REA’s QDRO

provisions, reversed the district court’s

award to the Estate

REASONS FOR GRANTING THE PETITION...

The circuits and state supreme courts are

divided — and dividing further -— about

whether federal common law or only plan-

documents control the determination of

whether an ex-spouse’s voluntary divorce-

decree waiver of pension benefits trumps

ERISA’s anti-alienation provision..............

A. The “Federal Common Law” courts....

B. The “Plan Documents” courts.............

C. The new QDRO circuit-split ...............

. A case simpler and more certiorari-

worthy than McGowan v. NJR Ser-

I itislincis vtcietisengtiemienesoninn

E. Acase in the collision-prone intersec-

tion of pension, family, and common

I iicsdniiitatletincstiatiditeinanaadabeibnlaimaenamuinniaes

The Fifth Circuit erred in holding that

ERISA’s QDRO provision is the only way

a divorcing spouse can waive an ex-

spouse’s pension benefits under ERISA’s

anti-alienation ProviSiON ...............0cceeeeeeee

TABLE OF CONTENTS - Continued

Page

The Federal Common Law approach

comports with ERISA’s intent, legis-

lative history, and the REA amend-

ment, which introduced the QDRO

safe-harbor to clarify the law of

waiver, not to displace it.................066 15

Given Ex-Wife Kennedy’s divorce-

decree waiver of pension benefits,

there was no need for the QDRO’s

protections here, so the Fifth Circuit

thwarted the expectations of Dece-

dent Kennedy and conferred a wind-

fall on Ex-Wife Kennedy ...................+. 21

A flexible Federal Common Law ap-

proach, as opposed to the Fifth Cir-

cuit’s “QDRO is the only waiver”

approach, avoids thwarting the ex-

pectations of participants, heirs, and

DONTE oicscsnncsesesinnsdasniduniadaiiuntiate 23

The Fifth Circuit’s opinion conflicts

with IRS General Counsel Memoran-

dum 39,858’s policy of recognizing

that post-death disclaimers of ERISA

benefits do not constitute prohibited

assignments or alienations................. 25

The new opinion conflicts with the

Texas Supreme Court’s 2003 Keen uv.

Weaver decision, creating a federal

versus State of Texas shootout leading

to forum-shopping, sharp practice,

and courtroom cha0S..............:..ceeeeeeeee 27

TABLE OF CONTENTS - Continued

Page

F. The new opinion conflicts with prior

Fifth Circuit precedent, maximizing

prospects for intra-circuit confusion.... 32

Ill. The Fifth Circuit erred in applying a

plan-deferential five-factor abuse of dis-

cretion test for awarding attorney’s fees

that penalizes prevailing parties in ER-

ISA cases — an issue of first impression

a aiednciatons 35

A. "THO BVO-TRCCOP COGF.......0...ccccccccccccccsceess 35

i cc cinscnedunsnecnesoes 36

C. Ajust solution to the circuit split con-

sistent with ERISA’s goals.................. 37

EE RE a 39

APPENDIX

The Fifth Circuit Court’s Opinion in this case,

TS iia cndibaaeimenentoupenenenenese App. 1

The District Court’s Final Judgment, October

dlls atiiiacacggdeisinntibentdesonesannonieine App. 15

The United States District Court for the East-

ern District of Texas, Beaumont Division’s

Order on Motion for Attorney’s Fees dated

se hee etenranetenioiidaiione App. 19

vil

TABLE OF CONTENTS ~— Continued

Page

The United States District Court for the East-

ern District of Texas, Beaumont Division’s

Order deciding the parties’ cross-motions for

summary judgment dated March 3, 2005..... App. 31

The Second, Amended Qualified Domestic

Relations Order, filed December 3, 1997...... App. 53

The Divorce Decree between William P. Ken-

nedy and Liv Kennedy, dated June 2, 1994... App. 60

The ERISA Anti-Alienation Provision, 29

U.S.C. § 1056(d1) and the Retirement Eq-

uity Act’s Qualified Domestic Relations Or-

der Provision, 29 U.S.C. § 1056(d)(3)............ App. 76

The ERISA Fiduciary Duties Provision, 29

eg a idiciiaidieiacctecenignavcnsdeniinnnnintedeniis App. 87

The ERISA Attorneys Fees Provision, 29

a TD isiriesisinsignnusiasennsanbinniniati App. 95

Vili

TABLE OF AUTHORITIES

Page

FEDERAL CASES

Admin. Comm. for the H.E.B. Inv. and Ret.

Plan v. Harris, 217 F.Supp.2d 759 (E.D. Tex.

Alberici Corp. v. Davis, No. 4:04-CV-545 CEJ,

2006 U.S. Dist. LEXIS 68539 (E.D. Mo. Sept.

12, 2006), aff’d, 186 Fed. Appx. 690 (8th Cir.

te IIE ccckniiicnenintnnsinniinieditiahintenigniceyiite 12

Armistead v. Vernitron Corp., 944 F.2d 1287

I aici cciinhatennsatectsteesineiitinnniitieiilasiiidceepenoa 35, 38

Bittner v. Sadoff & Rudoy Industries, Inc., 728

Se I IY I adecisainccinsensiensenscndetnnectenndsdtiis 36

Boggs v. Boggs, 520 U.S. 833 (1997)................ 5, 18, 29

Bombardier Aerospace Employee Welfare

Benefits Plan v. Ferrer, 354 F.3d 348 (5th Cir.

2003), rhg. and rhg. en banc denied, 89 Fed.

Appx. 905 (5th Cir. 2004), cert. denied, 541

Se CE SII isc actinititnignbdeddeliiiiidiintanneieees 10

Brandon v. Travelers Ins. Co., 18 F.3d 1321

(5th Cir. 1994), cert. denied, 513 U.S. 1081

ERE R PREC ee eee vers eA Roe Eew Ma 5, 24, 32

Celotex Corp. v. Catrett, 477 U.S. 317 (1986)............ 32

Chambless v. Masters, Mates & Pilots Pension

Plan, 815 F.2d 869 (2d Cir. 1999)...............scceeeeeeees 39

Dial v. NFL Player Supplemental Disability

Plan, 174 F.3d 606 (5th Cir. 1999)... 6, 35

Dorn v. Int'l Bhd. of Elec. Workers, 211 F.3d 938

SNS NUIT iscaachscrinrcaeikensecetinlscavccisuaieh lcimpetbuaghessisieagaiainaitdinia 19

TABLE OF AUTHORITIES — Continued

Page

Eaves v. Penn, £87 F.2d 453 (10th Cir. 1978)...... 35, 36

Egelhoff v. Egelhoff, 532 U.S. 141 (2001)....5, 7, 23, 24

In re Estate of Altobelli v. International Bus.

Machines Corp., 77 F.3d 78 (4th Cir. 1996) .....10, 22

Firestone Tire & Rubber Co. v. Bruch, 489 U.S.

RS een mi oe Oo hn 23

Fox Valley & Vicinity Constr. Workers Pension

Fund v. Brown, 897 F.2d 275 (7th Cir. 1990) (en

banc), cert. denied, 498 U.S. 820 (1990)....5, 10, 11, 23

Guardian Life Ins. Co. of Am. v. Finch, 395 F.3d

238 (5th Cir. 2004), cert. denied sub nom. Finch

v. Galaway, 544 U.S. 1056 (2005)... eee eee 7,24

Guidry v. Sheet Metal Workers Nat'l Pension

I, Gee ey ee iaaititttcnntnentctemntaesciasevses 22

Hamilton v. Washington State Plumbing &

Pipefitting Indus. Pension Plan, 433 F.3d

1091 (9th Cir. 2006), cert. denied, _U.S.__,

127 S. Ct. 86, 166 L. Ed. 2d 32 (U.S. Oct. 2,

SN iccisiacdsieuatinticeceddianseeindamebeidaaidiiidindianinidubeniieein 12

Hensley v. Eckerhart, 461 U.S. 424 (1983)................ 37

Hill v. AT&T Corp., 125 F.3d 646 (8th Cir.

Se isivrsinsniieheisiciiecilisininaaniatasineiabiainitaadiaiitigiideaiensiennnninnenneae 10

Kennedy v. Plan Adm’r for DuPont Savings and

Inv. Plan, 497 F.3d 426 (5th Cir. 2007).......... 1, 3, 12

Krishna v. Colgate Palmolive Co., 7 F.3d 11 (2nd

STII, MINIT istics chcchnacssdiciacedcadhcetpelbane a bciadaddianinnadidanbeaiaanaiiaaniadenaites ll

TABLE OF AUTHORITIES — Continued

Page

Landro v. Glendinning Motorways, Inc., 625

ee UNI EE AS ROI dics ccevesscccnecccsbicenncssvenesncones 36

Lyman Lumber Co. v. Hill, 877 F.2d 692 (8th

EE oer Nae? Ce a ey Sere a eee a 10

Mackey v. Lanier Collection Agency & Serv.

i, Sa ee I tibhecctieiedciticencninstintetenminsccsose 29

Manning v. Hayes, 212 F.3d 866 (5th Cir. 2000),

cert. denied, 532 U.S. 941 (2001)...............ccceescceeseees 7

McElwaine v. U.S. West, Inc., 176 F.3d 1167

I cl iii i a 39

McGowan v. NUR Service Corp., 423 F.3d 241

(3rd Cir. 2005), cert. denied, __U.S.___, 127

S. Ct. 1118, 166 L. Ed. 2d 906 (U.S. 2007)..... passim

McMillan v. Parrott, 913 F.2d 310 (6th Cir.

EET TE CR ESET TT NEOT AS SY ot Nene 11

Melton v. Melton, 324 F.3d 941 (7th Cir. 2003)......... 10

Meredith v. Navistar Int'l Transp. Corp., 935

I I RIED, IIIT ccscctscndecpdncinnionecienmmannesntues 38

Metropolitan Life Ins. Co. v. Flinkstrom, 303

F. Supp. 2d 34 (D. Mass. 2004)............ cc ceeeeeeeeeeeees 10

Metropolitan Life Ins. Co. v. Hanslip, 939 F.2d

ETE i ee ee ene OTe 10

Metropolitan Life Ins. Co. v. Marsh, 119 F.3d

I ase ariatennieibadleitelibb tiara aidninnades 11

Metropolitan Life Ins. Co. v. Pressley, 82 F.3d

I es 11

TABLE OF AUTHORITIES - Continued

Mohamed v. Kerr, 53 F.3d 911 (8th Cir. 1995),

cert. denied, 516 U.S. 868 (1995). .........cccccceecceeeeeees 10

National Auto Dealers & Assocs. Retirement

Trust v. Arbeitman, 89 F.3d 496 (8th Cir.

ESET Aer SN reer ome OSCE aE er On eR 10

Pitts v. Am. Sec. Life Ins. Co., 931 F.2d 351 (5th

IR, SI adcdichcailiadicinsic italia taleicalidcaiicinantialiat haeectdlinatinas 10

Red Lion Broadcasting Co. v. F-C.C., 395 U.S.

RETR E SI nts On Oe ae 20

Rhoades v. Casey, 196 F.3d 592 (5th Cir. 1999),

cert. denied, 531 U.S. 924 (2000).................. 7, 25, 32

Salovaara v. Eckert, 222 F.3d 19 (2nd Cir.

i ls 38

Smith v. CMTA-IAM Pension Trust, 746 F.2d

TASTES FPL eT RSET PONT Oe aC 36

Smith v. E. I. DuPont de Nemours & Co., 402

F.Supp.2d 519 (D. Del. 2005)......cccccescsssesseesesseeseeses 12

Stobnicki v. Textron, Inc., 868 F.2d 1460 (5th

EET ee Reon ner Ra ONIN Smee admuaid 5, 24

Tenneco, Inc. v. First Va. Bank of Tidewater,

698 F.2d 688 (4th Cir. 1983) ................ccccccesesceseeeees 20

Tingey v. Pixley-Richards West, Inc., 958 F.2d

SEIU ay ae Fe ey OE 37

Varity Corp. v. Howe, 516 U.S. 489 (1996).......00......... 9

xii

TABLE OF AUTHORITIES — Continued

Page

STATE CASES

Keen v. Weaver, 121 S.W.3d 721 (Tex. 2003),

cert. denied, 540 U.S. 1047 (2003).................. passim

MacInnes v. MacInnes, 677 N.W.2d 889 (Mich.

aa aaseineuonee 10

Silber v. Silber, 99 N.Y.2d 395, 786 N.E.2d

ITI sctithinsdcnsisnatendanicediicinebiitinaiasenisebiapecrnenes —

Strong v. Omaha Constr. Indus. Pension Plan,

270 Neb. 1, 701 N.W.2d 320 (Neb. 2005)......... 10, 28

FEDERAL STATUTES

Employee Retirement Income Security Act

‘ERISA), 29 U.S.C. §§ 1001 et seq. ..............08. passim

EE a a Ea 37

ESET TET eT tae eae RTD ae 32

29 U.S.C. § 1002(2)............ ih csiniediiaiadiitadaminiielicilaneambinniadaanl 2

I TT rin chin cnianetsennnnnespnnncncnsedbanipiniea 13

29 U.S.C. § 1055(c 1 MA) (1994) 00... cc ccecseseeeeeeeees 29

is. i csnscasiienuinnmnantiie passim

29 U.S.C. § 1056(d)(1) (1994)... 1, 6, 8, 15, 19

sii sc cd scarsctncanninniasenoepedmeiencadonta 2, 23

ELEN aR aR ae POTEET 4

as We IGE COD ccccenccsccccessscsccessssonsenes 2,35

Se IT ad accicinishisdinnnrinnnsenicendisdnniesibeccnioenasunneians 9

xill

TABLE OF AUTHORITIES — Continued

Page

4g 8 AEs nnw ae eat NRW PNP? 36

Section 2518 of the Internal Revenue Code.............. 27

STATE STATUTES

Texas Family Code § 9.303 ...............000.....cccccccsseces 4, 30

SCHOLARLY AUTHORITIES

Ryan P. Barry, Comment, ERISA’s Purpose:

The Conveyance of Information from Trustee

to Beneficiary, 31 CONN. L. REv. 735 (1999).......... 15

Jeffrey A. Brauch, The Federal Common Law of

ERISA, 21 Harv. J.L. & PuB. Pow’y 541, 549

ET iid nainiteieiarvtaesnlowciaietasiepeddindpbidiigiadilasidpl aa ail deisisidabode 23

Michael J. Collins, [t's Common, but Is It

Right? The Common Law of Trusts in ERISA

Fiduciary Litigation, 16 LAB. LAW. 391, 399

A GEE iettbicansnninccntunindis /oschebpiiigpabalibieamiisadininindaes 17

Comment, Who Is the Payee, Part VIII: Alto-

belli v. IBM and the Other Beneficiary Waiver

Cases, 14 ERISA Litic. REptTrR. 16 (Aug. 1996)...... 27

John H. Fanning, The Need for a Mandatory

Award of Attorney’s Fees for Prevailing

Plaintiffs in ERISA Benefits Cases, 41

CatrHouic U. L. Rev. 871 (Summer 2002) .............. 37

David E. Gordon & Robert N. Eccles, ERISA

Attorney's Fees: An Unpredictable Situation,

Bg Sk 2 Re ee 36

XiV

TABLE OF AUTHORITIES — Continued

Page

Internal Revenue Service Generali Counsel

Memorandum (“GCM”) 39,858, 1991 WL

Ns itis MR aiciittciniecinsinteddesnninieniannies 25, 26

Camilla FE. Watson, Broken Promises Revisited:

The Window of Vulnerability for Surviving

Spouses Under ERISA, 76 lowa L. REv. 431

+ ERTS Ie eave Oren eT aS Feeent <<a Ne 16

Jessica Michelle Westbrook, Resolving the Dispute

over When Attorney’s Fees Should Be Awarded

under ERISA in Two Words: Plaintiff Prevails,

53 ALA. L. REv. 1311 (Summer 2002).................. 36, 37

James A. Wooten, The Employee Retirement

Income Security Act of 1974: A Political History

(2004) (referencing S. Comm. on Labor and

Public Welfare, 94th Cong., Legislative History

of the Employee Retirement Income Security

Act of 1974, 4747 (Comm. Print 1976))..................4. 18

Keron A. Wright, Stuck on You: The Inability of

an Ex-Spouse to Waive Rights under an ER-

ISA Pension Plan [McGowan v. NJR Serv.

Corp., 423 F.3d 241 (3d Cir. 2005)}], 45

WASHBURN L.J. 687, 703 n.165 (Spring 2006) ....... 16

RULES

ois Oe RICE BE vc ccticiccocccccecestecesivantocncns 26

Eds TEs pa ae ener 25

TABLE OF AUTHORITIES — Continued

Page

OTHER AUTHORITIES

119 Conc. REC. 127, 12075 (1973)...........ccccccccccccccseee 16

119 CONG. REC. 318, 30392 (1973)............ccccccccssceseres 17

FBO Coonne. TBC. BEGGS (1G F SE) .00.ccccccccessccsccssccccecsesseses 17

Department of Labor’s National Compensation

Survey: Employee Benefits in Private Indus-

try in the United States, March 2006 (U.S.

Bureau of Labor Statistics, Aug. 2006).................. 13

H.R. Rep. No. 807, 93rd Cong., 2d Sess. 1974,

reprinted in 1974 U.S.C.C.A.N. 4639 at 4670....18, 19

H.R. Rep. No. 93-533 (1973), reprinted in 1974

Sere: AINE ccicenndenticcnncennieniasintiineinisniin 17, 19, 35

H.R. Conr. Rep, No. 93-1280 (1973), reprinted

Oe Be res Ci eictitnicenstiartntnciiidinaneinenceses 35

http://divorcemag.com/statistics/statsUS.shtml

(quoting U.S. Census Bureau and National

Center for Health Statistics)..................ccccccsseseeeres 14

S. Rep. No. 575, 98th Cong., 2d Sess. 18-19,

reprinted in 1984 U.S.C.C.A.N. 2547 and

SUIUIP TI scricicitianiaetatebasaandidtecbimiladabeelasabeitihaldntehdaieiaidiaiinnte 19, 20

KARI ELLEN KENNEDY, Independent Execu-

trix of the Estate of William Patrick Kennedy, De-

ceased, by undersigned counsel, under appropriate

rules of this Court, request that this Court issue a

writ of certiorari to the United States Court of Ap-

peals for the Fifth Circuit.

OPINIONS BELOW

The opinion of the United States Court of Ap-

peals for the Fifth Circuit (App. 1 at 1-14) is published

at 497 F.3d 426. The United States District Court for

the Eastern District of Texas’s final judgment (App. 2

at 15-18), order on motion for attorney’s fees (APP. 3

at 19-30) and order on motions for summary judg-

ment (App. 4 at 31-52) are unpublished.

JURISDICTION

The judgment of the court of appeals was entered

on August 15, 2007. This Court has federal question

jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

The Employee Retirement Income Security Act,

29 U.S.C §§ 1001 et seg. (“ERISA”); ERISA’s Anti-

Alienation provision, 29 U.S.C. § 1056(d)(1), and the

Retired Equity Act’s (“REA’s”) Qualified Domestic

Relations Order provision, 29 U.S.C. § 1056(d)(3),

collectively App. 7; ERISA’s Fiduciary Duties Provi-

sion, 29 U.S.C. § 1104, App. 8; and the ERISA Attor-

ney’s Fees Provision, 29 U.S.C. § 1132(g)(1), App. 9,

are involved in this appeal.

STATEMENT OF THE CASE

This is an ERISA appeal involving a divorce-

relate 1 dispute about entitlement to pension benefits

that pits the estate of a deceased, former DuPont

employee/participant in DuPont’s Savings and In-

vestment Plan (the “SIP”) against his ex-wife. The

DuPont SIP is an “employee pension benefit plan”

under ERISA, 29 U.S.C. § 1002(2).

A. William P. Kennedy’s employment at Du-

Pont and marriage to Liv Kennedy.

On June 30, 1971, the late William Patrick

Kennedy (“Decedent Kennedy”), while working for

DuPont, married Liv Kennedy (now, “Ex-Wife Ken-

nedy”). App. 4 at 32. While married, Kennedy signed a

DuPont beneficiary designation form on December 6,

1974 (and again on July 21, 1980) that identified Liv,

his then-wife, as the sole beneficiary of his SIP ac-

count. Jd. at 32-33. Decedent Kennedy named no

other or contingent SIP beneficiaries. /d.

B. William P. Kennedy’s 1994 divorce and Ex-

Wife Liv Kennedy’s waiver of her right to

receive her ex-husband’s SIP benefits

through the Kennedy divorce decree.

Decedent Kennedy divorced his wife Liv on June

2, 1994, resulting in a Final Decree of Divorce. App. 4

at 33. Under that divorce decree, Ex-Wife Kennedy

voluntarily agreed to her divestment of “all right,

title, interest, and claim in and to ... the proceeds

therefrom, and any other rights related to any ...

retirement plan, pension plan, or like benefit program

existing by reason of [decedent’s] employment.” App. 1

at 2 (497 F.3d at 427-28) and App. 6.

William P. Kennedy and Ex-Wife Liv Kennedy’s

attorneys prepared an ERISA Qualified Domestic

Relations Order (“QDRO”) under 29 U.S.C.

§ 1056(d\(3)(BXi), and later amended it, receiving

divorce court approval. It provided benefit-

disbursement instructions for part of decedent’s non-

SIP employee-benefit plans, which are not disputed in

this case. The divorcing Kennedys did not prepare a

separate QDRO for the SIP in this appeal.

C. William P. Kennedy retired from DuPont in

1998 and died in 2001 without changing his

1974 beneficiary designation of Ex-Wife Liv

in his DuPont pension plan.

William P. Kennedy retired from DuPont in 1998.

He died in 2001. His death occurred seven years after

divorcing Ex-Wife Kennedy, and twenty-seven years

after he executed the DuPont SIP that named his

then-wife as his sole beneficiary. He died without

replacing Ex-Wife Kennedy as his SIP beneficiary.

D. The Kennedy Estate sued to recover

$402,000 in pension benefits DuPont paid

to Ex-Spouse Liv Kennedy without first fil-

ing an irterpleader action to determine

their ownership.

Kari Kennedy, the daughter of decedent and Liv

Kennedy, was appointed Executrix of Decedent Ken-

nedy’s Estate. App. 1 at 3. In letters to DuPont, Kari

Kennedy (the Estate) demanded that her father’s SIP

funds be distributed to the Estate and pointed out

that the Ex-Wife, Liv Kennedy, had voluntarily

waived her right to receive her ex-husband’s pension

benefits under Texas Family Code § 9.302 (a law

providing that a spouse’s designation as a beneficiary

is invalidated by a later divorce). App. 1 at 3-4.

DuPont refused to pay Decedent Kennedy’s

pension benefits to the Estate, relying on the SIP

beneficiary-designation to justify its payment, in-

stead, to Decedent Kennedy’s Ex-Wife Liv. /d. at 4.

The Estate requested Liv Kennedy to relinquish her

SIP interest, but she refused, and DuPont paid Ex-

Wife Kennedy the SIP balance of some $402,000. Id.

at 3.

Seeking to recover the SIP benefits, the Estate

filed this claim under 29 U.S.C. § 1132(a)(1)(B) alleg-

ing that Ex-Wife Kennedy voluntarily waived her

rights by filing for divorce and entering into a divorce

decree and that DuPont had misdirected SIP benefits

by paying them to Ex-Wife Kennedy. App. 1 at 3; APP.

4 at 33-34. DuPont filed a third-party suit against Ex-

Wife Kennedy and demanded return of the SIP bene-

fits, a claim it later settled. App. 1 at 3-4; App. 4 at 34.

Although it is not part of this Record, Liv Kennedy

died on July 7, 2007 in Norway. Liv’s death does not

resolve the issues in this appeal.

The parties filed cross-motions for summary

judgment. App. 4 at 32-36. The district court granted

summary judgment after concluding that Ex-Wife Liv

Kennedy had waived her right to SIP benefits by

entering into a divorce decree enforceable under

Federal Common Law. Id. at 41-43.

“In this case,” the district court ruled, “the dece-

dent had no reason to submit a QDRO to the SIP due to

the fact that none of the proceeds of that account were

subject to division in the divorce.” App. 4 at 44. The

district court relied on ERISA; the Retirement Equity

Act’s QDRO amendment to ERISA; this Court’s rulings

in Boggs v. Boggs, 520 U.S. 833 (1997) and Egelhoff v.

Egelhoff, 532 U.S. 141 (2001); the Fifth Circuit’s rulings

in Brandon v. Travelers Insurance Company, 18 F.3d

1321, 1324 (5th Cir. 1994), cert. denied, 513 U.S. 1081

(1995) and Stobnicki v. Textron, Inc., 868 F.2d 1460,

1465 (5th Cir. 1989); and the Seventh Circuit’s opinion

in Fox Valley & Vicinity Construction Workers’ Pension

Fund v. Brown, 897 F.2d 275, 277-80 (7th Cir. 1990),

cert. denied, 498 U.S. 820 (1990). App. 4 at 43-45. The

district court concluded that “the benefits were

wrongly paid to Mrs. Kennedy” and awarded the

Estate $402,152.56 equal to the SIP funds DuPont

paid to Ex-Spouse Kennedy. Id. at 45.

Although the Executrix had been acting in a

fiduciary capacity and had prevailed on its substan-

tive claim, and although DuPont had been on notice

of the Estate’s claim when it acted without filing an

interpleader to determine the SIP funds’ owner, the

district court awarded no attorney’s fees to the Es-

tate. App. 3 at 19-30. It held, inter alia, that DuPont

had not shown enough “culpability” under the Fifth

Circuit’s five-factor abuse of discretion test in Dial v.

NFL Players Supplemental Disability Plan, 174 F.3d

606, 614 (5th Cir. 1999) to warrant reversal. App. 3 at

24-26.

E. The Fifth Circuit, basing its decision on

ERISA’s anti-alienation and REA’s QDRO

provisions, reversed the district court’s

award to the Estate.

The Estate defended the district court’s judgment

in DuPont's Fifth Circuit appeal by arguing that

ERISA’s_anti-alienation provision, 29 U.S.C.

§ 1056(d\1), does not apply to the knowing, inten-

tional waiver of beneficiary rights, the subject of this

appeal. The Estate explained that Federal Common

Law determined the outcome of issues involving

waiver of beneficiary rights. Jd. at 11-16.

On appeal, the Estate averred that a beneficiary

can alter or avoid her right to receive ERISA benefits

by means other than a QDRO, a position consistent

with the Fifth Circuit’s prior, pro-waiver decisions in

Rhoades v. Casey, 196 F.3d 592 (5th Cir. 1999) and

Manning v. Hayes, 212 F.3d 866 (5th Cir. 2000), cert.

denied, 532 U.S. 941 (2001), as well as the circuit’s

post-Egelhoff precedent in Guardian Life Ins. Co. v.

Finch, 395 F.3d 238 (5th 2004). See Appellee’s Brief at

7-17. The Estate cross-appealed the district court’s

refusal to award attorney’s fees, challenging that

decision as an abuse of discretion on pages 32-52 of

its Appellee’s Brief and throughout its Cross-

Appellant’s Brief.

On August 15, 2007, the Fifth Circuit reversed

the district court’s judgment awarding the Estate the

value of William P. Kennedy’s SIP funds. App. 1 at 5-

10. It noted that Mr. Kennedy had not memorialized

his de-designation of Ex-Wife Kennedy in a QDRO

and ruled that the absence of a QDRO precluded

enforcement of Ex-Wife Kennedy’s divorce-decree

waiver. /d. at 5-10. It ruled that, “[iJn the marital-

dissolution context, the QDRO provisions supply the

sole exception to the anti-alienation provision; they

exempt a state domestic-relations order determined

to be a QDRO, under the standards set forth in

ERISA.” App. 1 at 9-10. ERISA’s QDRO provision, 29

U.S.C. § 1056(d\(3)(A), states that the anti-alienation

provision “shall apply to the creation, assignment, or

recognition of a right to any benefit payable with

respect to a participant pursuant to a domestic rela-

tions order, except that ... [it] shall not apply if the

order is determined to be a [QDRO/]” (emphasis

added). The Fifth Circuit affirmed the district court’s

denial of attorney’s fees to the Estate and re-affirmed

the validity of the ERISA five-factor test. Jd. at 11-14.

REASONS FOR GRANTING THE PETITION

This Court should review the Fifth Circuit’s

August 15, 2007 decision for two reasons. First, this

appeal offers this Court an excellent opportunity to

heal the multiple fractures dividing the circuit courts

and state supreme courts about whether ERISA’s

anti-alienation provision, 29 U.S.C. § 1056(d)(1), and

its QDRO provision, 29 U.S.C. § 1056(d)(3)(B), negate

a non-participant beneficiary’s voluntary divorce-

court waiver of ERISA benefits. The Fifth Circuit

abandoned prior precedent by holding that a divorce-

court waiver is enforceable only if memorialized in a

QDRO, further confusing a chaotic body of law that

has grown ever more muddled during the past seven-

teen years. Second, this Court has never decided

what standard governs the recovery of attorney’s fees

in ERISA cases. The Court should grant certiorari to

resolve these multiple circuit conflicts and correct the

Fifth Circuit’s erroneous decision.

I. The circuits and state supreme courts are

divided - and dividing further - about

whether federal common law or only plan-

documents control the determination of

whether an ex-spouse’s voluntary divorce-

decree waiver of pension benefits trumps

ERISA’s anti-alienation provision.

Section 1144(a) of ERISA states that the statute

supersedes all state laws that relate to any employ-

ment benefit plan. But when ERISA does not ex-

pressly address a particular issue of state law, such

as beneficiary designations, circuit and state supreme

courts have reached remarkably different conclu-

sions, producing a multipolar hodge-podge of con-

trasting, conflicting interpretations of federal law.

The first, and now ever-widening, ERISA split

has existed for at least seventeen years. It divides the

majority “Federal Common Law” courts that look to

federal common law in interpreting voluntary waiv-

ers from the minority “Plan Documents” courts that

refuse to look past corporate plan documents. Most

courts follow this Court’s lead in ERISA cases by

using federal common law as the starting point in

ERISA statutory analysis. Varity Corp. v. Howe, 516

U.S. 489, 498, 502 (1996).

A. The “Federal Common Law” courts.

The “Federal Common Law” courts include the

First Circuit (a district court), the Fourth, Fifth,

Seventh, Eighth, and Tenth Circuits, and almost all

state courts. First Circuit: Metropolitan Life Ins. Co.

v. Flinkstrom, 303 F.Supp.2d 34, 39-43 (D. Mass.

2004); Fourth Circuit: In re Estate of Altobelli v.

International Bus. Machines Corp., 77 F.3d 78, 81-82

(4th Cir. 1996); Fifth Circuit: Pitts v. Am. Sec. Life

Ins. Co., 931 F.2d 351, 355 (5th Cir. 1991); Bombar-

dier Aerospace Employee Welfare Benefits Plan v.

Ferrer, 354 F.3d 348, 359 (5th Cir. 2003), rhg. and

rhg. en banc denied, 89 Fed. Appx. 905 (5th Cir.

2004), cert. denied, 541 U.S. 1072 (U.S. 2004); Sev-

enth Circuit: Melton v. Melton, 324 F.3d 941, 945 (7th

Cir. 2003); Fox Valley & Vicinity Constr. Workers

Pension Fund v. Brown, 897 F.2d 275, 280-81 (7th

Cir.) (en banc), cert. denied, 498 U.S. 820 (1990);

Eighth Circuit: National Auto Dealers & Assocs.

Retirement Trust v. Arbeitman, 89 F.3d 496, 500 (8th

Cir. 1996); Hill v. AT&T Corp., 125 F.3d 646, 648 (8th

Cir. 1997); Mohamed v. Kerr, 53 F.3d 911, 914 (8th

Cir. 1995), cert. denied, 516 U.S. 868 (1995); Lyman

Lumber Co. v. Hill, 877 F.2d 692, 693-94 (8th Cir.

1989); Tenth Circuit: Metropolitan Life Ins. Co. uv.

Hanslip, 939 F.2d 904, 907 (10th Cir. 1991); Michi-

gan: MaclInnes v. MacInnes, 677 N.W.2d 889, 893-894

(Mich. Ct. App. 2004); Nebraska: Strong v. Omaha

Constr. Ind. Pension Plan, Inc., 270 Neb. 1, 701

N.W.2d 320 (Neb. 2005) (per curiam); New_York:

Silber v. Silber, 99 N.Y.2d 395, 404, 786 N.E.2d 1263

(N.Y. 2003); and Texas: Keen v. Weaver, 121 S.W.3d

721 (Tex. 2003), cert. denied, 540 U.S. 1047 (2003).

B. The “Plan Documents” courts.

The opposing “Plan Documents” minority courts

include the Second, Third and Sixth Circuits. See,

e.g., Second Circuit: Krishna v. Colgate Palmolive Co.,

7 F.3d 11, 16 (2nd Cir. 1993); Third Circuit; McGowan

v. NJR Service Corp., 423 F.3d 241, 244-45 (3rd Cir.

2005), cert. denied, __: U.S. __, 127 S. Ct. 1118, 166

L. Ed. 2d 906 (2007) (Maj. Op.) (explaining the “Fed-

eral Common Law” approach but applying the minor-

ity “Plan Documents” approach to hold a waiver

invalid); Sixth Circuit: McMillan v. Parrott, 913 F.2d

310, 311-12 (6th Cir. 1990) (applying the “Plan Docu-

ments” approach to hold a divorce-waiver invalid);

Metropolitan Life Ins. Co. v. Marsh, 119 F.3d 415, 421

(6th Cir. 1997); Metropolitan Life Ins. Co. v. Pressley,

82 F.3d 126, 130 (6th Cir. 1996).

C. The new QDRO circuit-split.

A recent split within the Federal Common Law

camp separates “QDRO — one form of waiver” from

“QDRO is the only waiver” courts. The “QDRO — one

form of waiver” courts hold that a beneficiary of a

pension plan can waive benefits through a divorce

decree. Fox Valley & Vicinity Constr. Workers Pension

Fund v. Brown, 897 F.2d 275, 280-81 (7th Cir.) (en

banc), cert. denied, 498 U.S. 820 (1990); McGowan,

423 F.3d at 256-260 (Fuentes, J., dissenting); Keen v.

Weaver, 121 S.W.3d 721, 724-26 (Tex. 2003), cert.

denied, 540 U.S. 1047 (2003).

The “QDRO is the only waiver” courts conclude

that the QDRO provision, coupled with ERISA’s anti-

alienation clause, preclude enforcement of an ex-

spouse’s voluntary divorce-court waiver of pension

benefits. McGowan v. NJR Service Corp., 423 F.3d

241, 244-45 (3rd Cir. 2005); Smith v. E. I. DuPont de

Nemours & Co., 402 F.Supp.2d 519, 523 (D. Del.

2005). Cf. Hamilton v. Washington State Plumbing &

Pipefitting Indus. Pension Plan, 433 F.3d 1091, 1100

n.10 (9th Cir. 2006), cert. denied, ___ ~ U.S. __, 127

S. Ct. 86, 166 L. Ed. 2d 32 (U.S. Oct. 2, 2006) (citing

McGowan in its analysis of QDRO law); Alberici

Corp. v. Davis, No. 4:04-CV-545 CEJ, 2006 U.S. Dist.

LEXIS 68539 at *7-12 (E.D. Mo. Sept. 12, 2006),

aff’d, 186 Fed. Appx. 690 (8th Cir. 2006) (per curiam).

The Fifth Circuit joined this “QDRO — Only Form of

Waiver” faction in this case. See Kennedy v. Plan

Adm ’r for the DuPont Sav. & Inv. Plan, 497 F.3d 426,

431-32 (5th Cir. 2007).

D. A case simpler and more certiorari-

worthy than McGowan v. NJR Service

Corporation.

This case is more certiorari-worthy than

McGowan v. NJR Service Corporation, 423 F.3d 241,

244-45 (3rd Cir. 2005), cert. denied, ___ U.S. ___, 127

S. Ct. 1118, 166 L. Ed. 2d 906 (U.S. 2007), the ERISA/

waiver case this Court considered last year. While the

three-way division of the judges on the McGowan

panel mirrors the broadening conflict among the

courts of appeals and state courts about whether a

purported waiver by an ERISA beneficiary must be

given binding effect as a matter of federal common

law, there are substantial reasons to believe that

courts that had enforced waivers as a matter of

federal common law in other circumstances would not

have done so in the context of McGowan’s post-

retirement, Qualified Joint Survivor Annuity under

29 U.S.C. § 1055 (““QJSA”).

The Federal Common Law versus Plan-

Documents divide, and the more recent schism about

QDROs and anti-alienation provisions, are important

to pension-plan participants, beneficiaries, plan

administrators, the Department of Labor, and state

and federal courts. McGowan, which arose in an

unusual factual context that implicates special rules

on which there was no conflict, presented a less

appropriate vehicle to resolve the broader questions

of common law waiver that divide our courts. Accord-

ingly, this petition should be granted despite the

denial of the petition in McGowan.

E. A case in the collision-prone intersection

of pension, family, and common law.

The issues in this appeal have a nationwide

impact. According to the Department of Labor’s

National Compensation Survey: Employee Benefits in

Private Industry in the United States, March 2006

(U.S. Bureau of Labor Statistics, Aug. 2006), fifty-four

percent (54%) of workers had access to retirement

plans, and fifty-one percent (51%) participated in a

retirement plan of at least one type. Jd. at p. 1, Sum-

mary 06-05, and Tables 7 and 8, available at http://

www.bls.gov/ncs/ebs/sp/ebsm0004. pdf.

In 2005, the last year for which figures are

reported, there were some 2,230,000 marriages in the

United States. The marriage rate that year, per 1,000

people, was seven and one-half percent (7.5%), while

the divorce rate was three point six percent (3.6). Thus,

a little less than half of current marriages, or a little

more than a million per year, now end in divorce. Sce

http://divorcemag.com/statistics/statsUS.shtml (quot-

ing U.S. Census Bureau and National Center for

Health Statistics). Since fifty-one percent (51%) of

workers have pension plans, an appeal about pension

payments in a divorce context could have a major

impact on approximately 300,000 to 400,000 divorc-

ing workers per year, and on their families, friends,

and beneficiaries as well.

To put it simply, an appeal that examines the

intersection of divorce, pension, and common law - an

intersection fraught with case law collisions — will

clarify important issues that affect millions of pen-

sion-plan participants whose marriages end in di-

vorce, as well as many others. This is a certiorari-

worthy case.

II. The Fifth Circuit erred in holding that

ERISA’s QDRO provision is the only way a

divorcing spouse can waive an ex-spouse’s

pension benefits under ERISA’s anti-

alienation provision.

The Fifth Circuit erred in this case, in a manner

harmful to justice on a nationwide level, by holding

that the ERISA/REA QDRO provision, 29 U.S.C.

§ 1056(d\3)BXi), is the only form that a divorcing

spouse can use to waive her right to receive her ex-

husband’s pension benefits under ERISA’s anti-

alienation provision, 29 U.S.C. § 1056(d\(1).

A. The Federal Common L w approach

comports with ERISA’s intent, legisla-

tive history, and the REA amendment,

which introduced the QDRO safe-

harbor to clarify the law of waiver, not

to displace it.

A Federal Common Law analysis makes more

sense than the Fifth Circuit’s “QDRO is the only

waiver’ rule because the traditional approach com-

ports with ERISA’s overriding purpose of ensuring

that employees “receive the pensions and other

benefits that they were led to believe they would

receive upon retirement.” See Ryan P. Barry, Com-

ment, ERISA’s Purpose: The Conveyance of Informa-

tion from Trustee to Beneficiary, 31 CONN. L. REv. 735

(1999) (citing Welfare and Pension Plan Legislation:

hearings on H.R. 2 and H.R. 462 before the H. Sus-

COMM. ON LABOR OF THE COMM. ON EDUC. AND LABOR,

ParT 2, 93D CONG. 1 (1973) (statement of Rep. John

H. Dent, Chairman, Subcomm. On Labor) and 120

Conc. REC. H29, 197 (1974) (Rep. John Dent). See

also 29 U.S.C. §§ 1001-1461 (1994); Pub. L. No. 93-

406, 88 Stat. 829 (1974).

A review of ERISA’s legislative history demon-

strates that the statute’s overriding purpose is to

protect the interests of participants and beneficiaries,

and that enhancement of plan-administrators’ con-

venience was always a secondary objective.

In the late 1960s, New York Senator Jacob Javits

first proposed the tax bill that later evolved into a

labor bill and eventually resulted in ERISA. See

Keron A. Wright, Stuck on You: The Inability of an

Ex-Spouse to Waive Rights under an ERISA Pension

Plan {McGowan v. NJR Serv. Corp., 423 F.3d 241 (3d

Cir. 2005)], 45 WASHBURN L.J. 687, 703 n.165 (Spring

2006), citing Camilla E. Watson, Broken Promises

Revisited: The Window of Vulnerability for Surviving

Spouses Under ERISA, 76 lfowa L. REv. 431, 444

(1991). Congressional hearings led to recommenda-

tions that later evolved into important ERISA provi-

sions. See Wright, Stuck on You, 45 WASHBURN L.J. at

703.

Senator Javits proposed the legislation that

became the earliest draft of ERISA, styled the Wel-

fare and Pension Plans Disclosure Act. See 119 Conc.

REC. 127, 12075 (1973). He noted that his amendment

to existing law was aimed at “strengthening greatly

the disclosure requirements [and] ... establishing

fiduciary standards to protect the rights of workers

covered by ... pension benefit[] plans.” Jd. “The

fundamental purpose,” he explained, was to protect

the “interests of the participants and beneficiaries of

employee welfare and pension benefit plans.” Jd.

Senator Javits explained that Congress intended

federal courts to develop substantive law to address

issues regarding rights and obligations under the

plans, foreseeing the development of a federal com-

mon law of ERISA. See Wright, 45 WASHBURN L.J. at

703 at n.172, (citing Michael J. Collins, Jt’s Common,

but Is It Right? The Common Law of Trusts in ERISA

Fiduciary Litigation, 16 Las. LAW. 391, 399 n.61

(2001) (citing 120 Conc. Rec. 29942 (1974))). “In

addition, Senator Williams compared ERISA to the

Labor-Management Relations Act of 1947, which had

a well-developed common taw at the time of ERISA’s

passage.” Id. (citing 120 Conc. Rec. 29933 (1974),

reprinted in 1974 U.S.C.C.A.N. 5177, 5188). Senator

Javits explained that ERISA was intended to serve as

“a pension ‘bill of rights.’” 120 Conc. Rec. 29935

(1974).

Prior to the bill’s enactment in 1974, the Chair of

the General Subcommittee on Labor explained that

the bill’s “most important purpose will be to assure

American workers that they may look forward ... to

a retirement with financial security and dignity.”

H.R. Rep. No. 93-533 (1973), reprinted in 1974

U.S.C.C.A.N. 4639, 4646. The bill became known as

the Retirement Income Security for Employees Act

(“ERISA”). See 119 Conc. REc. 318, 30392 (1973). The

history of ERISA shows that Congress intended

ERISA to encompass common law and fiduciary duty

principles to ensure the protection of participants and

beneficiaries.

On Labor Day, 1974, President Gerald Ford

signed into law the Employee Retirement Income

Security Act of 1974. See Wright, 45 WASHBURN L.J.

at 690 n.31, (citing James A. Wooten, The Employee

Retirement Income Security Act of 1974: A Political

History 1 (2004) (referencing SEN. COMM. ON LABOR

AND PUBLIC WELFARE, 94TH CONG., LEGISLATIVE His-

TORY OF THE EMPLOYEE RETIREMENT INCOME SECURITY

ACT OF 1974 at 4747 (Comm, Print 1976))). President

Ford explained that, “this is really an historic Labor

Day, historic in the sense that this legislation will

probably give more benefits and rights and success in

the area of labor-management than almost anything

in the history of this country.” /d.

This Court analyzed ERISA’s legislative history

and emphasized the statute’s focus on providing

benefits. See Boggs v. Boggs, 520 U.S. 833, 852 (1997)

(“Besides the anti-alienation provision, Congress has

enacted other protective measures to guarantee that

retirement funds are there when a plan’s participants

and beneficiaries expect them.”). The legislative

history indicates that ERISA “is concerned with

improving the fairness and effectiveness of qualified

retirement plans in their role of providing retirement

income.” H.R. REP. No. 93-807, at 8 (1974), reprinted

in 1974 U.S.C.C.A.N. 4670, 4676.

In 1984, Congress enacted the Retirement Equity

Act that amended ERISA to create QDROs. The REA

did so to provide a clear safe-harbor mechanism for

recognizing the interest of a non-participant spouse

interested in protecting her right to receive benefits

under ERISA retirement plans. See, e.g., Dorn v. Int'l

Bhd. of Elec. Workers, 211 F.3d 938, 942 (5th Cir.

2000).

As amended, ERISA requires a pension plan to

prohibit the alienation or assignment of benefits. 29

USC §1056(d\(1). This “spendthrift” provision is

designed to “ensure that the employee’s accrued

benefits are actually available for retirement pur-

poses,” by preventing unwise assignment or alien-

ation. H.R. Rep. No. 807, 93rd Cong., 2d Sess. 1974,

reprinted in 1974 U.S.C.C.A.N. 4639 at 4670, 4734. In

short, Congress did not want pension plan partici-

pants squandering their life savings on trips to Vegas,

timeshares, and lavish, pre-retirement lifestyles.

Congress intended QDROs to serve as one excep-

tion to ERISA’s general prohibition on alienation or

assignment of benefits to allow the attachment of an

employee’s pension benefits to satisfy his or her

family support obligations. See S. Rep. No. 575, 98th

Cong., 2d Sess. 18-19, reprinted in 1984 U.S.C.C.A.N.

2547 and 2564-65. Congress’s Subcommitiee on Labor

stated that ERISA was enacted to ensure American

employees a retirement with “financial security and

dignity.” See H.R. Rep. No. 95-533, reprinted in 1974

U.S.C.C.A.N. 4639, 4646.

The 1984 REA amendments made clear that a

QDRO was a proper method for preserving the inter-

ests of a former spouse in pension benefits. See S.

REP. No. 575, 98th Cong., 2d Sess. 19, reprinted in

1984 U.S.C.C.A.N. 2547 at 2565. That legislative

history indicates that the Congress enacting the REA

did not view a QDRO as conflicting with ERISA’s

anti-alienation provision.

The Senate Committee Report on the REA states

that “in the case of a [QDRO], the bill clarifies that

such order does not result in a prohibited assignment

or alienation of benefits under the spendthrift provi-

sions of the Code or ERISA.” See SEN REP. No. 98-

575, at 3 (1984) (emphasis supplied), reprinted in

1984 U.S.C.C.A.N. 2547, 2549.

The important term “clarifies” demonstrates that

the 1984 Congress did not view the anti-alienation

provision as applying to QDROs, even prior to the

adoption of REA. Congress’ choice of clarifying lan-

guage suggests that its members viewed the anti-

alienation provision as containing certain inherent

exceptions. See, e.g., Tenneco, Inc. v. First Va. Bank of

Tidewater, 698 F.2d 688, 690 (4th Cir. 1983). In Red

Lion Broadcasting Co. v. F.C.C., 395 U.S. 367 (1969),

this Court noted that,

Subsequent legislation declaring the in-

tent of an earlier statute is entitled to great

weight in statutory construction ... the con-

struction of a statute by those charged with

its execution should be followed unless there

are compelling indications that it is wrong,

especially when Congress has refused to al-

ter the administrative construction.

Id, at 381-82. This Court properly gives due consid-

eration to Congress’ intent to clarify a statutory

scheme that already recognized and retained the

existence of waivers to ERISA’s anti-alienation provi-

sion while providing an additional safe harbor QDRO

provision to protect the interests of divorcing spouses

when that protection makes sense. ERISA’s legisla-

tive history weighs heavily against the argument that

the 1984 Congress intended QDROs to be the only

exception to the anti-alienation provision in divorce

proceedings.

B. Given Ex-Wife Kennedy’s divorce-decree

waiver of pension benefits, there was no

need for the QDRO’s protections here, so

the Fifth Circuit thwarted the expecta-

tions of Decedent Kennedy and con-

ferred a windfall on Ex-Wife Kennedy.

There was no need for the divorcing Kennedys to

submit a QDRO for the SIP benefits because none of

the remaining proceeds were subject to property-

division in divorce court. App. 4 at 44 (district court

opinion). After all, Ex-Wife Kennedy had agreed that

she would receive no SIP benefits belonging to Wil-

liam P. Kennedy.

A QDRO creates a right to benefits in the alter-

nate payee, but it does not reflect a waiver of rights. It

is a positive assignment of a participant’s retirement

benefit proceeds rather than a negative disclaimer of

those benefits. Jnless Ex-Wife Kennedy was to

receive a portion of the SIP benefits, submitting a

QDRO covering SIP benefits would have made no

sense to the Kennedys or their divorce lawyers.

The divorcing Kennedys agreed that Ex-Wife

Kennedy had no right to receive William P. Kennedy’s

SIP benefits. Decedent Kennedy never submitted a

QDRO covering the SIP benefits. If the Kennedys had

wished to provide Ex-Wife Kennedy with an interest

in the SIP benefits, they would have executed a

QDRO establishing such a right.

DuPont’s SIP benefits at issue here did not

become payable at retirement but only on Decedent

Kennedy’s death. Ex-Wife Kennedy had no right to

receive those benefits during Decedent Kennedy’s life.

Application of the spendthrift provisions of ERISA to

Ex-Wife Kennedy’s waiver of benefits does not further

the protect-benefits-until-retirement purpose of the

anti-alienation statute.

As this Court has noted, the purpose of the

spendthrift clause is to safeguard a stream of income

for pensioners and their dependents. To bar a waiver

in favor of the pensioner himself would not advance

that purpose. Jn re Estate of Altobelli v. International

Business Machines Corp., 77 F.3d 78 (4th Cir. 1996)

(quoting Guidry v. Sheet Metal Workers Nat'l Pension

Fund, 493 U.S. 365, 376 (1990)).

C. A flexible Federal Common Law ap-

proach, as opposed to the Fifth Circuit’s

“QDRO is the only waiver” approach,

avoids thwarting the expectations of

participants, heirs, and beneficiaries.

Opinions that refuse to recognize an exception to

ERISA’s anti-alienation provisions for an explicit,

voluntary waiver foster absurd results. As the dissent

recognized in Egelhoff v. Egelhoff, 532 U.S. 141

(2001), application of the minority approach would

result in the perversity of a plan administrator hav-

ing to give benefits to a named beneficiary who mur-

dered the participant. Egelhoff at 159-160.

The Fifth Circuit’s opinion undermines this

Court’s determination, as expressed in Firestone Tire

& Rubber Co., 489 U.S. at 110, that federal courts

have the power to shape federal common law in

response to the needs of a particular case. The Fifth

Circuit should have applied the Seventh Circuit’s

federal common law approach in Fox Valley to further

the authority this Court granted to create and apply

substantive law to issues not explicitly regulated by

ERISA. See Jeffrey A. Brauch, The Federal Common

Law of ERISA, 21 Harv. J.L. & Pus. POL’y 541, 549

(1998).

The Fifth Circuit erred when it failed to consider

ERISA Section 1104 as a whole and elevated a secon-

dary concern, the convenience of plan administrators,

over ERISA’s prime directive to protect the interests

of participants and beneficiaries. ERISA Section

1104(aX1) imposes a fiduciary standard on the plan

administrator, requiring him to “discharge his duties

with respect to a plan solely in the interest of the

participants and beneficiaries.” See, e.g., 29 U.S.C.

§ 1104(aX(1). The August 15, 2007 panel should have

adhered to its Guardian Life, Brandon, and Stobnicki

rulings rather than follow the Third Circuit into

McGowan’s quagmire of confusion. The Federal

Common Law courts reasonably recognize that ER-

ISA does not address waiver by a beneficiary.

The Fifth Circuit’s departure from past precedent

raises the prospect of awarding windfalls to murder-

ers who slay their own spouses. Under the typical

state slayer-statute, for example, a murderer relin-

quishes all right to receive any of the participant’s

property or other benefits. This reflects the sound

reasoning that those who kill loved ones should not

profit by their wrong-doing. As the Texas Supreme

Court observed in its analysis of the interaction of

ERISA pension law and divorce-decree waivers in

Keen v. Weaver, 121 S.W.3d 721 (Tex. 2003), “at least

one other court following Egelhoff has also held that a

murderer should not be permitted to receive benefits

from a victim’s plan, either under a slayer statute or

under federal common law.” Keen, 121 S.W.3d at 726

n.4, citing Admin. Comm. for the H.E.B. Inv. and Ret.

Plan v. Harris, 217 F.Supp.2d 759, 761-62 (E.D. Tex.

2002).

But, under either the minority Plan Documents

dogma or the zero-tolerance Fifth Circuit “QDRO is

the only waiver” test, he who slays his spouse or his

parents can still pocket the pension payments, for the

statute that denies those benefits to the murderous

beneficiary would constitute an unlawful “assignment

or alienation” (or “a direct or indirect arrangement”)

prohibited by ERISA’s anti-alienation provision. Cf.

Rhoades v. Casey, 196 F.3d 592 (5th Cir. 1999). The

flexible Federal Common Law approach, which uses

and enforces the experience of common law courts

acquired over centuries of jurisprudence, avoids such

absurd and irrational outcomes by interpreting

pension plan documents and anti-alienation provi-

sions in a more reasonable and less stringent manner.

The Fifth Circuit’s August 15, 2007 analysis

conflicts with other circuits’ and state supreme court

holdings on the interaction of federal common law in

ERISA cases. Not only has the Fifth Circuit “entered

a decision in conflict with the decision of another

United States court of appeals” under Sup. Cr. R.

10(A), it has also issued an opinion in conflict with its

own ERISA precedent.

D. The Fifth Circuit’s opinion conflicts

with IRS General Counsel Memorandum

39,858’s policy of recognizing that post-

death disclaimers of ERISA benefits do

not constitute prohibited assignments

or alienations.

The August 15, 2007 Opinion has the potential to

create mischief not only within the circuit but on a

nationwide level because it directly conflicts with the

policy of the Internal Revenue Service, as reflected in

its GENERAL COUNSEL MEMORANDUM 39,858, 1991 WL

776304 (Sept. 23, 1991) (the “IRS GCM”). It states

that disclaimers by named beneficiaries of ERISA

pension plans after the participant’s death do not

violate ERISA’s anti-alienation provision. I.R.S. GEN.

Couns. Mem. 39,858.

If it remains un-reversed, the August 15, 2007

Opinion wili prevent surviving ex-spouses from

disclaiming ERISA retirement benefits. GCM 39,858

concludes that “a disclaimer of benefits under a

qualified plan does not constitute a prohibited ‘as-

signment or alienation’ of plan benefits” under ER-

ISA. See I.R.S. GCM 39,858. It notes that numerous

areas of the law, including the Bankruptcy Code, the

Uniform Probate Code, and trust law, recognize that

waivers and disclaimers are not “transfers,” and that

it finds “no evidence that Congress intended to pre-

clude a spouse from disclaiming or renouncing bene-

fits under a qualified plan payable after the

participant’s death.” Jd. But the Fifth Circuit has

reached the opposite conclusion that will undermine

the IRS policy in Texas, Louisiana, and Mississippi.

In explaining this decision, the Fifth Circuit

defined an “assignment or alienation” as “[a]ny direct

or indirect arrangement ... whereby a party acquires

from a participant or beneficiary a right or interest

enforceable against the plan in, or to, all or any part

of a plan benefit payment which is, or may become,

payable to the participant or beneficiary.” APP. 1 at 8,

citing 26 C.F.R. § 1.401(a)-13(cX1)ii). Under this

rationale, an ex-spouse’s voluntary disclaimer of a

participant’s ERISA benefits under Section 2518 of

the Internal Revenue Code would violate ERISA’s

anti-alienation provisions since a disclaimer would be

an unlawful, “indirect arrangement” through which

someone else gains an interest enforceable against a

pension plan. The opinion thus infringes on freedom

of contract.

The August 15, 2007 ruling will thus compel

surviving spouses to accept pension benefits they

might not need and may not want — in cases where

such an inflexible and unnecessary rule could ad-

versely impact other benefits individuals receive

under law, contract, or public assistance. A surviving

spouse might want to disclaim certain plan benefits

to avoid creating a taxable estate at death or to

continue to receive governmental benefits. As one

commentator notes: “What is a plan to do: sneak by

the beneficiary’s house at night, jimmy open a win-

dow, and pour the cash into the bedroom?” Comment,

Who Is the Payee, Part VIII: Altobelli v. IBM and the

Other Beneficiary Waiver Cases, 14 ERISA LITIG.

REPTR. 16 (Aug. 1996).

E. The new opinion conflicts with the

Texas Supreme Court’s 2003 Keen v.

Weaver decision, creating a federal ver-

sus state of Texas shootout leading to

forum-shopping, sharp practice, and

courtroom chaos.

The August 15, 2007 Opinion conflicts materially

with the Texas Supreme Court’s reasoning and ruling

in Keen v. Weaver, 121 S.W.3d 721 (Tex. 2003), cert.

denied, 540 U.S. 1047 (2003), where the Texas Su-

preme Court enforced a divorce-decree waiver in

strikingly similar circumstances. A 5-4 majority

decided the Keen case, exemplifying the utter lack of

consensus in ERISA divorce-decree waiver jurispru-

dence as much as the 3-way split in the McGowan

panel decision this Court considered for certiorari last

year.

A similar fact scenario led the Nebraska Supreme

Court to rule in favor of a late plan-participant’s

estate and against his ex-spouse in Strong v. Omaha

Construction Industry Pension Plan, 701 N.W.2d 320,

327-31 (Neb. 2005) (per curiam). The dissent in the

Nebraska Supreme Court, like the dissent in the

Texas Supreme Court, reflects the need for a writ of

certiorari in this important field of law.

The Texas Supreme Court’s Keen majority opin-

ion showed a better appreciation for the intricacies of

the ERISA statutory scheme and the existence of

statutory and common law waiver within that scheme

in its analysis of a similar divorce-decree dispute:

While Patsy [Keen]’s interpretation is

simple and easy to apply, we do not believe

that ERISA’s text prohibits a plan adminis-

trator from recognizing a beneficiary's waiver,

disclaimer, or other repudiation of plan bene-

fits. First, other provisions of ERISA require

plan administrators to look beyond benefici-

ary designations in plan documents to de-

termine entitlement to plan benefits. For

example, while ERISA generally prohibits a

participant’s assignment or alienation of

pension benefits, since 1984 ERISA has pro-

vided a limited exception if the benefits are

the subject of a qualified domestic relations

order (QDRO). See 29 U.S.C. § 1056(d)(3)(A).

A plan administrator presented with a

QDRO that satisfies ERISA’s fairly detailed

requirements must pay an alternate payee

designated in the QDRO rather than the

beneficiary designated in plan documents.

Boggs v. Boggs, 520 U.S. 833, 846-47 ...

(1997). And a spouse who is a designated

beneficiary of a joint and survivor annuity

may waive entitlement to those benefits un-

der certain circumstances. 29 U.S.C.

§ 1055(c(1)(A). Furthermore, the Supreme

Court has recognized that ERISA welfare

plan benefits may be garnished under state

procedures. See Mackey v. Lanier Collection

Agency & Serv. Inc., 486 U.S. 825, 841 ...

(1988).

Keen, 121 S.W.3d at 724-25 (emphasis supplied). The

Kennedy Estate commends this analysis of waiver

law, which exemplifies the rationale of other courts

using the majority Federal Common Law analysis.

The Kennedy Estate pointed out the Texas Su-

preme Court’s Keen v. Weaver ruling on pages 11, 14,

and 28 of its Appellee’s Brief, thus making the Fifth

Circuit aware that any abandonment of its prior

federal common law waiver precedent could open a

gaping chasm between ERISA law in Texas state

courts and ERISA law in Texas’ four federal district

courts. This Fifth Circuit panel plowed ahead any-

way, heedless of the chaos its actions are bound to

cause businesses, individuals, courts, and plan ad-

ministrators in the Lone Star State.

The Texas Supreme Court’s Keen opinion noted

that “Section 9.302 of the Texas Family Code, known

as the ‘redesignation statute,’ provides that the

designation of a spouse as a retirement account

beneficiary is rendered ineffective by a subsequent

divorce.” Id., 121 S.W.3d at 723. The Majority further

observed that, “If the statute applied here, it would

operate to award Rita’s estate the plan proceeds as

the alternate beneficiary.” Yet the court held, prop-

erly, that ERISA pre-empted the _ re-designation

statute. Jd.

The state re-designation statute that the Texas

Supreme Court considered typifies similar statutes

from all across the country that reflect the accumu-

lated experience of the states that people who desig-

nate their spouses as beneficiaries of insurance

policies, pension plans, and other investments typi-

cally leave those persons as named beneficiaries aiter

divorces only because they forget to change those

policies or because they believe that courts will

enforce freely-negotiated, voluntarily-signed divorce-

decree property settlements. The Fifth Circuit's

August 15, 2007 opinion flies in the face of that

common sense experience and legislative wisdom.

As a result of this unnecessary state versus

federal conflict, an attorney, plan-administrator, or

judge in Texas will not be able to predict the outcome

of an ERISA pension plan dispute regarding waiver

in a divorce decree.

The first foreseeable result of this new federal

versus state conflict is forum-shopping. Savvy Texas

trial lawyers are certain to file declaratory judgment

actions and interpleader suits in federal court if they

want to supersede or negate voluntary divorce-decree

waivers. Equally canny advocates are sure to file

similar actions in state courts if they want to enforce

freely-negotiated divorce court property settlement

agreements. Clever clients represented by unscrupu-

lous counsel may even execute divorce court waivers

of pension plan proceeds with the intent to negate

those agreements by filing federal court declaratory

judgment actions, all for the purpose of using the

Fifth Cireuit’s new gotcha clause to renegotiate their

divorces salami-style, one slice of property at a time.

It takes little imagination to foresee the court-

room chaos that will ensue as spouses, family iaw

attorneys, and trial judges try to disentangle Texas

law. Should they follow the Texas Supreme Court's

2003 pro-waiver, Federal Common Law ruling, or

adhere to the Fifth Circuit’s anti-waiver, “QDRO is

the only waiver” holding? And what of ERISA pension

plan administrators in Texas? How will they make

their fiduciary decisions? The Fifth Circuit’s August

15, 2007 opinion augurs an era of uncertainty in

negotiating, interpreting, and enforcing divorce-court

property settlement agreements in Texas. This Court

holds a federal solution to this seventeen-year-old

federal problem: a writ of certiorari.

F. The new opinion conflicts with prior

Fifth Circuit precedent, maximizing

the prospects for intra-circuit confu-

sion.

The August 15, 2007 Opinion conflicts with the

Fifth Circuit’s prior precedent by carving out an

exception for ex-spouse cases involving QDROs.

Citing Celotex Corp. v. Catrett, 477 U.S. 317 (1986),

App. 1 at 5, the panel reversed the summary judg-

ment and stated that “It]hose cases are inapposite”

because they “concerned ERISA-governed _life-

insurance policies, which are “welfare plan[s],” as

defined by 29 U.S.C. § 1002(1), holding that “ERISA’s

anti-alienation provision was not at issue.”

The August 15, 2007 decision is at odds with the

reasoning of previous Fifth Circuit cases concerning

divorce-decree waivers where the circuit upheld

divorce-decree waivers of a beneficiary’s right to

receive pension proceeds payable under an ERISA

plan. Brandon v. Travelers Ins. Co., 18 F.3d 1321,

1322-24 (5th Cir. 1994), cert. denied, 513 U.S. 1081

(1995) (a decedent’s ex-wife and the beneficiary of an

ERISA life-insurance plan, waived them through a

divorce decree).

The Fifth Circuit’s novel, split-the-difference

opinion abandons Brandon, 18 F.3d at 598 and

Rhoades v. Casey, 196 F.3d 592, 598 (5th Cir. 1999),

where the circuit held that ERISA’s “anti-alienation

provision is not absolute.” This shift in law wiil

increase uncertainty among participants and benefi-

ciaries and lead to more litigation extraordinarily

expensive for heirs and estates.

Similarly, in McGowan v. NJR Service Corp., the

Third Circuit erred when it held that a beneficiary

had not effectively waived her rights to her ex-

husband’s pension plan. In that strikingly similar

decision, the Third Circuit opted not to recognize that

ERISA’s overriding policy objective is to protect

participants and their beneficiaries. It further failed

to consider the legislative history of ERISA and the

development of the QJSA, which should have per-

suaded the court to apply the federal common law

approach.

Here, as the Third Circuit did in McGowan, the

Fifth Circuit has not only misinterpreted the ERISA

statute, but also conferred an undeserved windfall on

an ex-spouse to the detriment of a participant's

estate. Rather than carrying out the fiduciary duties

under ERISA by filing an interpleader or declaratory

judgment action to determine the rightful recipients

of the late William P. Kennedy’s SIP account, the

DuPont administrator — actually, a paralegal in his

employ — did the easy but wrong thing, even after

being placed on notice of the contending claims to the

SIP proceeds. The August 15, 2007 panel ignored the

plan administrator’s fiduciary duties and focused,

erroneously, on that administrator’s convenience.

The resemblance of ERISA to the common law of

trusts, the structure of the statute, and ERISA’s

silence on the issue of waiver should have led the

court to determine that the federal common law

approach applied. Instead, the court neglected to

observe the common law and followed the minority

approach.

Additionally, the Fifth Circuit erred in setting

forth the policy grounds and case law it relied upon in

denying the Estate Decedent Kennedy’s SIP benefits.

The Fifth Circuit should have recognized that this

case differed from courts such as the Third Circuit

which have traditionally followed the minority ap-

proach and that the facts here warranted the tradi-

tional common law approach. if the Fifth Circuit had

applied the common law approach, the Estate would

have received the SIP benefits that Decedent Ken-

nedy would have reasonably expected his survivors

and creditors to receive.

The District Court correctly interpreted ERISA

and Federal Common Law when it entered a judg-

ment in favor of the Estate for the amount of the SIP

pension benefits DuPont erroneously paid to Ex-Wife

Liv Kennedy rather than the Estate.

Ill. The Fifth Circuit erred in applying a

plan-deferential five-factor abuse of dis-

cretion test for awarding attorney’s fees

that penalizes prevailing parties in ERISA

cases - an issue of first impression for

this Court.

This Court has never specified the standard

governing the award of ERISA attorney’s fees under

29 U.S.C. § 1132(g)(1). That law states that “liJn any

action ... by a participant, beneficiary, or fiduciary,

the court in its discretion may allow a reasonable

attorney's fee and costs of action to either party.” The

legislative history is sparse. See H.R. CONF. REP. No.

93-1280 (1973), reprinted in 1974 U.S.C.C.A.N. 5038,

5107; H.R. Rep. No. 93-533 (1973), reprinted in 1974

U.S.C.C.A.N. 4639, 2659. Courts lament the absence

of legislative and Supreme Court guidance when

awarding ERISA fees. Armistead v. Vernitron Corp.,

944 F.2d 1287, 1303 (6th Cir. 1991).

A. The five-factor test.

Confronted with a standard-less statute, circuit

courts have created tests in ERISA fee decisions,

including the five-factor test applied below, which

focuses on (1) culpability or bad faith; (2) ability to

pay; (3) deterrent effect; (4) benefit to all plan-

participants and beneficiaries; and (5) merits of party

positions. App. 1 at 11-14 (citing Dial v. NFL Player

Supplemental Disability Plan, 174 F.3d 606, 613 (5th

Cir. 1999)). That test began in Eaves v. Penn, 587 F.2d

453, 465 (10th Cir. 1978), when the Tenth Circuit

listed five factors to be considered in attorney’s fee

decisions — a test criticized as one “without citation

and apparently from thin air.” David E. Gordon &

Robert N. Eccles, ERISA Attorney’s Fees: An Unpre-

dictable Situation, 10 INSIDE LITIG. 17, 17 (1992).

B. The circuit split.

The First, Second, Third, Fifth, Sixth, and Tenth

Circuits nevertheless apply the Haves test. See Jes-

sica Michelle Westbrook, Resolving the Dispute over

When Attorney’s Fees Should Be Awarded under

ERISA in Two Words: Plaintiff Prevails, 53 ALA. L.

REV. 1311, 1314-15 (Summer 2002).

In Bittner v. Sadoff & Rudoy Industries, Inc., 728

F.2d 820 (7th Cir. 1984), Judge Posner noted but did

not apply the five-factor test, but instead looked to

the Equal Access to Justice Act for guidance about the

word “discretion” in a manner that weighed review of

discretion in favor of a prevailing party. Jd. at 826-

830.

In marked contrast, the Eighth Circuit in Landro

v. Glendinning Motorways, Inc., 625 F.2d 1344, 1356

(8th Cir. 1980) and the Ninth Circuit in Smith uv.

CMTA-IAM Pension Trust, 746 F.2d 587, 590 (9th Cir.

1984) have incorporated the logic of the Fees Award

Act, 45 U.S.C. § 1988, into their review of ERISA fee

awards, reasoning that a prevailing plan beneficiary

“should ordinarily recover an attorney’s fee unless

special circumstances would render such an award

unjust.”

C. Ajust solution to the circuit split con-

sistent with ERISA’s goals.

This Court should adopt the Eighth and Ninth

Circuits’ Attorney Fee Act analysis under 28 U.S.C.)

§ 1988 in Civil Rights Act cases, where this Court has

ruled that prevailing plaintiffs are ordinarily entitled

to recover their attorney’s fees unless some extraordi-

nary circumstances make a fee award unjust. Hensley

v. Eckerhart, 461 U.S. 424, 429 (1983).

The Eckerhart standard is more consistent with

ERISA’s purposes than the defendant-deferential,

five-factor test here. Tingey v. Pixley-Richards West,

Inc., 958 F.2d 908, 909 (9th Cir. 1992); John H. Fan-

ning, The Need for a Mandatory Award of Attorney’s

Fees for Prevailing Plaintiffs in ERISA Benefits

Cases, 41 CaTuotic U. L. REv. 871 (Summer 2002);

Westbrook, 53 ALA. L. REV. at 1320-26.

In furtherance of ERISA’s primary objective of

protecting participants and beneficiaries, the Estate

should recover the fees DuPont has already forced the

Estate to incur, and the money DuPont will subse-

quently cause the Estate to expend on appeal. ERISA

is remedial legislation enacted primarily to promote

the interests of employees and their beneficiaries,

and not to serve as a shield for plan-managers’ in-

competence.

In this case, DuPont could have easily protected

its own interests and ensured that the late William P.

Kennedy's SIP proceeds went to the rightful owner

simply by depositing those proceeds into the registry

of a court in a run-of-the-mill interpleader action.

Otherwise, the failure to reimburse reasonable

and necessary fees will substantially reduce partici-

pant-heir’s recovery and encourage costly, unreason-

able defenses of corporate error, where plans use their

superior financial resources to wage successful wars

of attrition against under-funded opponents. See, e.g.,

Salovaara v. Eckert, 222 F.3d 19, 28 (2nd Cir. 2000);

Meredith v. Navistar Intl Transp. Corp., 935 F.2d

124, 128 (7th Cir. 1991).

In short, a failure to award attorney’s fees to

prevailing plaintiffs representing pension plan par-

ticipants, their heirs, and their beneficiaries under-

mines ERISA’s primary purpose, as analyzed above,

of protecting those very parties.

Another reason to shift over to a Section 1988

model of fee awards is to encourage attorneys to

represent participants, their heirs, and their benefi-

ciaries in the extraordinarily intricate and remarka-

bly risky world of ERISA litigation, where the

benefits recovered are modest and the payout often

protracted. See, e.g., Armistead v. Vernitron Corp.,

944 F.2d 1287, 1302 (6th Cir. 1991) (where amici

curiae parties urged the court to adopt a “private

attorney general” theory of fee shifting because

employees have great difficulty finding attorneys

willing to handle these cases).

ERISA’s attorney's fees statute should be liberally

construed to further the statute’s remedial purpose, as

in Chambliss v. Masters, Mates, & Pilots Pension

Plan, 8 5 F.2d 869, 872 (2nd Cir. 1999) and McEIl-

waine v. U.S. West, Inc., 176 F.3d 1167, 1172 (9th Cir.

1999), rather than in a fashion that punishes prevail-

ing heirs of participants.

Accordingly, this Court should grant a writ of

certiorari to correct the error below, resolve the conflict

among the circuits and state supreme courts, and

establish a just, uniform, federal common law rule of

decision for these recurring and important ERISA

issues, including the unresolved issue of the proper

interrelationship of ERISA and federal common law.

CONCLUSION

Petitioner Kari Ellen Kennedy, Independent Execu-

trix of the Estate of William Patrick Kennedy, Deceased,

requests this Court to GRANT its Petition for a Writ of

Certiorari to the United States Court of Appeals for the

Fifth Circuit and order full briefing on the merits.

Respectfully submitted,

STACY L. KELLY DAVID A. FURLOW

Counsel of Record KEVIN PENNELL

ERIN E. EGGLESTON THOMPSON & KNIGHT LLP

MACINTYRE & MCCULLOCH, LLP 333 Clay St., Ste. 3300

3900 Essex, Ste. 220 Houston, Texas 77002

Houston, Texas 77027 (713) 654-8111

(713) 572-2900 (832) 397-8253 (fax)

(713) 572-2902 (fax)

Attorneys for Petitioner Kari Ellen Kennedy

App. 1

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

No. 05-41851

KARI ELLEN KENNEDY, Independent

Executrix of The Estate of William

Patrick Kennedy, Deceased,

Plaintiff-Appellee-Cross-Appellant,

versus

PLAN ADMINISTRATOR FOR DUPONT

SAVINGS AND INVESTMENT PLAN;

E.I. DUPONT DE NEMOURS & COMPANY,

Defendants-Appellants-Cross-Appellees.

Appeal from the United States District Court

for the Eastern District of Texas

(Filed Aug. 15, 2007)

Before GARWOOD, BARKSDALE and GARZA,

Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

The issues raised by each side are governed by

the Employee Retirement Income Security Act, 2

U.S.C. § 1001 et seg. (ERISA). The Plan Administra-

tor for DuPont Savings and Investment Plan and E.I.

DuPont de Nemours & Co. (DuPont) contests the

summary judgment awarded the estate of William

Patrick Kennedy for benefits under a retirement

App. 2

plan. The Estate challenges the denial of attorney’s

fees. VACATED AND RENDERED IN PART;

AFFIRMED IN PART.

Decedent was a DuPont employee and partici-

pant in its savings and investment plan (SIP). The

SIP is an “employee pension benefit plan”, as defined

by ERISA. 29 U.S.C. § 1002(2). Pursuant to ERISA,

the SIP provided, inter alia: “no assignment of the

rights or interests of account holders under this Plan

will be permitted or recognized”. See 29 U.S.C.

§ 1056(d)(1) (requiring that “[elach pension plan shall

provide that benefits provided under the plan may

not be assigned or alienated”) (anti-alienation provi-

sion).

In 1971, during his DuPont employment, dece-

dent married Liv Kennedy. Decedent signed a benefi-

ciary-designation form in 1974, identifying Liv

Kennedy as the SIP’s sole beneficiary. No contingent

SIP beneficiaries were named.

Decedent and Liv Kennedy divorced in 1994,

Pursuant to the decree, Liv Kennedy agreed to be

divested of “all right, title, interest, and claim in and

to... the proceeds there from, and any other rights

related to any ... retirement plan, pension plan, or

like benefit program existing by reason of |dece-

dent’s] employment”. In 1997, an ERISA Qualified

Domestic Relations Order (QDRO), pursuant to 29

U.S.C. § 1056(d) 3X Bi), was approved. It provided

App. 3

benefit-disbursement instructions for some of dece-

dent’s non-SIP employee-benefit plans. No QDRO for

the SIP, however, was ever submitted.

Decedent retired from DuPont in 1998 and died

in 2001. He never executed any documents replacing

or removing Liv Kennedy as the SIP beneficiary.

Kari Kennedy, the daughter of decedent and Liv

Kennedy, was appointed executrix of decedent’s

estate. By letter to DuPont, Kari Kennedy (the Es-

tate) demanded the SIP funds be distributed to the

estate, claiming Liv Kennedy’s beneficiary designa-

tion was invalid pursuant to Texas Family Code

§ 9.302 (providing, with certain exceptions, a spouse’s

designation as a retirement-plan beneficiary is in-

validated by a subsequent divorce). DuPont refused,

relying on the above-described SIP beneficiary-

designation. The Estate also requested Liv Kennedy

to relinquish her SIP interest. She did not do so;

instead, pursuant to requests to DuPont, she collected

the SIP balance (approximately $400,000).

Seeking to recover the SIP benefits, the Estate

filed this action, presenting an ERISA claim, under

29 U.S.C. § 1132(aX 1B), and a state-law breach-of-

contract claim. The Estate claimed: Liv Kennedy

waived her rigats to the SIP benefits through the

divorce decree, thus invalidating the SIP beneficiary-

designation; and, accordingly, DuPont incorrectly

distributed the SIP benefits. (DuPont filed a third-

party claim against Liv Kennedy, asserting that, in

the event she was not the correct beneficiary, it was

App. 4

entitled to return of the SIP benefits. This claim was

settled.)

Following discovery, the parties filed cross-

motions for summary judgment. The district court,

inter alia, granted summary judgment for the Estate

on its ERISA claim, holding it was entitled to the

value of the SIP benefits existing at the time of

decedent’s death, and for DuPont on the Estate’s

breach-of-contract claim, holding it was preempted by

ERISA.

In awarding summary judgment to the Estate,

the district court concluded, inter alia: federal com-

mon law applied to determine whether Liv Kennedy’s

executing the divorce decree waived her right to the

SIP benefits; and, as a matter of law, that decree

constituted a valid waiver.

DuPont’s subsequent motion for judgment as a

matter of law or, alternatively, a new trial, was de-

nied. Also denied was the Estate’s ERISA-based

motion for attorney’s fees.

Il.

At issue, under ERISA, are: did Liv Kennedy’s

divorce decree constitute a waiver of her rights as an

SIP beneficiary; and were attorney’s fees correctly

denied to the Estate? (The Estate does not contest the

adverse summary judgment on its state-law claim.)

App. 5

A summary judgment is reviewed de novo, apply-

ing the same standards as the district court. E.g.,

Keelan v. Majesco Software, Inc., 407 F.3d 332,

338 (5th Cir. 2005). Such judgment is proper when

“there is no genuine issue as to any material fact and

... the moving party is entitled to a judgment as a

matter of law”. FED.R.CIv.P. 56(c); see, e.g., Celotex

Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

Where, as here, an ERISA plan administrator’s

benefits decision is nondiscretionary, that decision is

reviewed de novo. See Brandon v. Travelers Ins.

Co., 18 F.3d 1321, 1324 (5th Cir.1994),

In granting summary judgment to the Estate, the

district court relied on a series of cases from our court

holding: when ERISA preempts state law, federal

common law applies to determine whether the named

beneficiary for an ERISA plan has waived his rights

(federal-common-law waiver approach); and the

waiver is valid if it is explicit, voluntary, and made in

good faith. See Guardian Life Ins. Co. of Am. v.

Finch, 395 F.3d 238, 240-41, 243 (5th Cir. 2004);

Manning v. Hayes, 212 F.3d 866, 874 (5th Cir. 2000);

Clift v. Clift, 210 F.3d 268, 270-72 (5th Cir. 2000);

Brandon, 18 F.3d at 1326-27. Several of these cases

concerned whether a divorce decree constituted a

waiver of a beneficiary's right to proceeds under an

ERISA plan. See, e.g., Brandon, 18 F.3d at 1322-24

(holding a decedent's ex-wife, who was the named

App. 6

beneficiary of an ERISA-governed life-insurance plan,

was not entitled to the proceeds of the plan because

she waived them through a divorce decree). The

Estate asserts these cases control, dictating applica-

tion of the federal-common-law waiver approach.

These cases are inapposite, however; they con-

cerned ERISA-governed life-insurance policies, which

are “welfare plan(s]”, as defined by ERISA. 29 U.S.C.

§ 1002(1) (defining “welfare plan” as one providing

“medical ... benefits, or benefits in the event of

sickness, accident, disability, death or unemploy-

ment” for plan participants or their beneficiaries

“through the purchase of insurance or otherwise”); see

also Brandon, 18 F.3d at 1324 (characterizing em-

ployer-provided life-insurance policy as “welfare

plan”). Accordingly, ERISA’s anti-alienation provision

was not at issue. As quoted supra, that provision

expressly applies not to “welfare plan[s]”, but to

ERISA “pension plan{s]”, as defined in 29 U.S.C.

§ 1002(2)A) (defining “pension plan” as one that

“provides retirement income to”, or “results in a

deferral of income by”, employees). See, e.g., Mackey

v. Lanier Collection Agency & Serv., Inc., 486 U.S.

825, 836-37 (1988); Brandon, 18 F.3d at 1324 (noting

that anti-alienation provision “applies only to pension

plans”). “According to the Supreme Court, the ab-

sence of ... anti-alienation protection with respect to

ERISA welfare ... plans must mean ... the benefits

of those plans are freely alienable.” Tango Transp. v.

Healthcare Fin. Servs. LLC, 322 F.3d 888, 893 (5th

Cir. 2003) (citing Mackey, 486 U.S. at 837).

App. 7

The SIP’s being an ERISA “pension plan”, the

anti-alienation provision applies. Because ERISA

preempts state law for the issue at hand, e.g., Bran-

don, 18 F.3d at 1325, the relevant inquiry is whether,

in the light of the anti-alienation provision, “the

federal law governing the resolution of [this action]

may be reasonably drawn from the text of ERISA

itself, or must instead be developed as a matter of

federal common law”. Manning, 212 F.3d at 870.

For the following reasons, contrary to the district

court, the anti-alienation provision controls. Accord-

ingly, the federal-common-law waiver approach is not

applicable.

The SIP complied with ERISA’s earlier-quoted

anti-alienation provision, which states: “Each pension

plan shall provide that benefits provided under the

plan may not be assigned or alienated”. 29 U.S.C.

§ 1056(dX1). The Estate contends, erroneously, that

“waiver” differs from “assignment” or “alienation”

and, therefore, a beneficiary’s waiver is not prohibited

by the anti-alienation provision. See Estate of Alto-

belli v. Int’l Bus. Machs. Corp., 77 F.3d 78, 81 (4th

Cir. 1996) (“the anti-alienation clause does not apply

to a beneficiary’s waiver’); Fox Valley & Vicinity

Constr. Workers Pension Fund v. Brown, 897 F.2d

275, 279 (7th Cir. 1990) (en banc) (anti-alienation

provision “focus[es] on the assignment or alienation of

benefits by a participant, not the waiver of a right to

App. 8

payment of benefits made by a designated benefici-

ary” (emphases added)).

An “assignment or alienation” is defined by

regulation as

lajny direct or indirect arrangement

whereby a party acquires from a participant

or beneficiary a right or interest enforceable

against the plan in, or to, all or any part of a

plan benefit payment which is, or may be-

come, payable to the participant or benefici-

ary.

26 C.F.R. § 1.401(a)-13(cX1\ii) (emphases added).

McGowan v. NUR Service Corp., 423 F.3d 241 (3rd

Cir. 2005), cert. denied, 127 S.Ct. 1118 (2007), relied

on that regulation to hold a beneficiary’s waiver of

her rights to a surviving spouse’s annuity, pursuant

to a marital-settlement agreement and in favor of

another spouse, fell under the anti-alienation clause

as an “indirect arrangement”. Id. at 248-53; see also

Boggs v. Boggs, 520 U.S. 833, 851-52 (1997) (rely-

ing on regulation to hold a testamentary transfer, by

a plan beneficiary, of an interest in her former

husband’s undistributed pension plan constituted

an “assignment or alienation” because, “[iJf ...

claim[ants] were allowed to succeed[,] they would

have acquired ... an interest in [participant’s] pen-

sion plan at the expense of plan participants and

beneficiaries”).

Similarly, Liv Kennedy’s divorce-decree “waiver”

constitutes an “indirect arrangement”, by which the

App. 9

Estate gains an “interest enforceable against the

plan” and, therefore, falls under ERISA’s anti-

alienation provision. See McGowan, 423 F.3d at 248-

53; see also Fox Valley, 897 F.2d at 282-83 (“Waiver

fin the ERISA context] is an anticipatory gift, to

whoever is next in line uader the Fund’s rules.”)

(Easterbrook, J., dissenting).

The Estate maintains this ruling is proscribed by

Rhoades v. Casey, 196 F.3d 592, 598 (5th Cir. 1999)

(applying, in the pension-plan context, an “exception

to ERISA’s anti-alienation provision for a knowing

and voluntary waiver of retirement benefits that is

executed to reach a settlement”), and Stobnicki v.

Textron, Inc., 868 F.2d 1460, 1465 (5th Cir. 1989)

(holding that “a controversy between good-faith

adverse claimants to pension plan benefits is subject

to settlement like any other, and that an assignment

made pursuant to a bona fide settlement of such a

controversy is not invalidated by the anti-alienation

provision”). We disagree.

Unlike the instant action, neither Rhoades nor

Stobnicki involved a divorce decree. Rhoades, 196

F.3d at 594-95; Stobnicki, 868 F.2d at 1461. Accord-

ingly, unlike here, neither involved ERISA’s QDRO

provisions, see 29 U.S.C. § 1056(d), which provide

significant support for our deciding the anti-

alienation provision controls.

In the marital-dissolution context, the

QDRO provisions supply the sole exception to the

anti-alienation provision; they exempt a state

App. 10

domestic-relations order determined to be a QDRO,

under the standards set forth in ERISA. 29 U.S.C.

§ 1056(d)(3)(A) (anti-alienation provisicr “shall apply

to the creation, assignment, or recognition of a right

to any benefit payable with respect to a participant

pursuant to a domestic relations order, except that...

[it] shall not apply if the order is determined to be a

[QDRO]” (emphasis added)).

To qualify as a QDRO, a divorce decree must

“c‘early specifly]” the identity of any beneficiary, the

particular plans affected, and the exact manner of

calculating benefits. 29 U.S.C. § 1056(d\3XC). “The

requirement of clear specification is designed to spare

the plan administrator from litigation-fomenting

ambiguities as to who the beneficiaries designated by

the divorce decree are.” Metro. Life Ins. Co. v.

Wheaton, 42 F.3d 1080, 1084 (7th Cir. 1994). If the

state domestic-relations order qualifies as a QDRO,

the plan must pay benefits “in accordance with [its]

applicable requirements”. 29 U.S.C. § 1056(d)(3)(A).

In Boggs, the Supreme Court noted the care with

which Congress created the QDRO mechanism in

order “to give enhanced protection to the spouse and

dependent children in the event of divorce or separa-

tion”, 520 U.S. at 847, and emphasized that the

QDRO exception, one of only two to the anti-

alienation provision, is “not subject to judicial expan-

sion”, id. at 851. Boggs further stated: “The axis

around which ERISA’s protections revolve is the

concepts of participant and beneficiary. When Con-

gress has chosen to depart from this framework, it

App. 11

has done so in a careful and limited manner”. Id. at

854.

The federal-common-law waiver approach is in

tension, to say the least, with the detailed, careful,

and comprehensive QDRO scheme created by ERISA.

“In other words, the QDRO provision, which recog-

nizes the right to designate alternate payees under

certain circumstances, ‘givels] rise to the strong

implication that’ the designation of alternate payees

under other circumstances (i.e. through waivers) is

‘not consistent with the _ statutory scheme”.

McGowan, 423 F.3d at 250 (quoting Boggs, 520 U.S.

at 847).

As noted, a QDRO for the SIP was never submit-

ted to DuPont. When, as here, ERISA provides a

specific mechanism — the QDRO - for addressing the

elimination of a spouse’s interest in plan benefits, but

that mechanism is not invoked, there is no basis to

formulate a federal-common-law rule. Requiring

DuPont to recognize the waiver in this situation

would conflict with ERISA by purporting to deter-

mine rights to pension-plan benefits in a manner not

authorized by the QDRO provisions, 29 U.S.C.

§ 1056(d)(3), and, therefore, not permitted by the

anti-alienation provision, 29 U.S.C. § 1056(d)(1).

The Estate contests the district court’s not

awarding its attorney’s fees pursuant to 29 U.S.C.

§ 1132(gX1) (“In any action under this subchapter .. .

App. 12

by a participant, beneficiary, or fiduciary, the court in

its discretion may allow a reasonable attorney’s fee

and costs of action to either party.”). Our vacating the

judgment awarded the Estate is not dispositive per se

for this issue, this court having held “a party need not

prevail in order to be eligible for an award of attor-

neyl’s] fees under § 1132(g)(1) of ERISA”. Gibbs v.

Gibbs, 210 F.3d 491, 503 (5th Cir. 2000).

The fees-denial is reviewed for abuse of discre-

tion. See Dial v. NFL Player Supplemental Dis-

ability Plan, 174 F.3d 606, 613 (5th Cir. 1999). Along

that line, in deciding whether to award fees, a district

court applies the test stated in Iron Workers Local

No. 272 v. Bowen, 624 F.2d 1255 (5th Cir. 1980),

which examines the following factors (Bowen fac-

tors): (1) the degree of the opposing party’s culpability

or bad faith; (2) the ability of the opposing party to

satisfy an award; (3) whether an award would deter

others acting under similar circumstances; (4)

whether the requesting party sought to benefit all

participants and beneficiaries of an ERISA plan, or to

resolve a significant question regarding ERISA; and

(5) the relative merits of the parties’ positions. Id. at

1266. The district court considered the Bowen factors

and concluded, inter alia, only the second and fifth

factors weighed in the Estate’s favor. For the follow-

ing reasons, it did not abuse its discretion in denying

fees.

For the first Bowen factor, the Estate contends

Dupont exhibited culpability by, inter alia: failing to

interplead the SIP funds upon being notified of the

App. 13

Estate’s demand; aad delegating the demand’s denial

to a person engaged in the unauthorized practice of

law.

Regarding its unauthorized-practice-of-law

contention, the Estate relies solely on a letter from a

legal assistant, conveying DuPont’s rejection of the

Estate’s demand. That letter, however, states: “We

continue to be of the opinion that the [SIP] proceeds

... are payable to the named beneficiary”. (Emphasis

added.) Because the Estate points to no additional

record evidence suggesting the legal assistant alone

made the denial decision, this contention fails.

Arguably, DuPont, having been put on notice that

Liv Kennedy’s status as beneficiary was contested,

should have interpleaded the SIP funds. In any event,

its actions do not show culpability. Notably, there is

no record evidence of the Estate’s requesting inter-

pleader. Further, DuPont’s benefits decision was not

inconsistent with our court’s precedent, which, as

discussed supra, ha’ not examined divorce-decree

waivers in the ERISA pension-plan context. More-

over, DuPont had no financial incentive to distribute

the SIP benefits to Liv Kennedy instead of the Estate.

See Dial, 174 F.3d at 614 (imputation of bad faith

unreasonable where, inter alia, benefits decision “did

not save the [plan] any money”).

For the third Bowen factor, there being insuffi

cient culpability or bad faith by DuPont, the deter.

rent effect of an award of attorney's fees is less

applicable. See Harms v. Cavenham Forest Indus.,

App. 14

Inc., 984 F.2d 686, 694 n. 12 (5th Cir. 1993) (“Given

the lack of any bad faith or culpability in ... this

case, we find the deterrent purpose that the third

Bowen factor purports to serve to be inapplicable to

our analysis.”). Moreover, it is questionable whether

such award would have a deterrent effect in these

circumstances, where DuPont’s benefits decision was

not incons's*ent with relevant precedent, and, in fact,

has been upheld on this appeal. See Dial, 174 F.3d at

614 (no deterrent effect where plan administraters

“merely chose to interpret an outside document in the

way they found correct”).

Concomitantly, for the fifth Bowen factor, our

vacating the judgment renders inaccurate the district

court’s concluding the Estate presented a more meri-

torious case. We need not examine the two remaining

Bowen factors.

Ii.

For the foregoing reasons, the judgment for the

Estate is VACATED; judgment is RENDERED for

DuPont; and the fees-denial is AFFIRMED.

| VACATED AND RENDERED IN PART; AF-

FIRMED IN PART.

App. 15

[SEAL]

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

BEAUMONT DIVISION

KARI ELLEN KENNEDY,

INDEPENDENT

EXECUTRIX OF THE

ESTATE OF WILLIAM

PATRICK KENNEDY,

Deceased,

Plaintiff,

Civil Action Number

1:01-CV-904

E.I. DUPONT DE

NEMOURS & CO., et al,

Defendants.

LP OP Cr ? OP Or (OR OR UL CP LR

FINAL JUDGMENT

(Filed Oct. 05, 2005)

The Court, having considered the issues pre-

sented in this civil action and granted summary

judgment, hereby ORDERS, ADJUDGES and

DECREES that this cause is dismissed with preju-

dice and judgment is entered as follows:

The Court, having jurisdiction over this matter

under 28 U.S.C. § 1331 and 29 U.S.C. §§ 1001 et segq.,

enters a final and appealable judgment on the merits

for the reasons fully set out in this court’s Order on

Motion for Summary Judgment [Clerk’s doc. # 61]

entered on March 3, 2005.

App. 16

The Court further finds that prejudgment inter-

est is governed by Texas law; Texas law provides for

prejudgment interest at the current rate of 6.25% per

annum, simple interests.

It is further ORDERED, as fully discussed and

previously ordered by this court’s Order on Motions

for Summary Judgment, that Plaintiff have and

recover from Defendant E.I. DuPont de Nemours

and Company and Plan Administrator for DuPont

Savings and Investment Plan, jointly and severally,

the amount of $402,152.56 (Amount 1), plus pre-

judgment interest at the rate of six and one quarter

percent (6.25%) simple interest on such amount from

October 24, 2001, through the day before entry of

this finel judgment (Amount 2), with post-judgment

interest on Amounts 1 and 2 thereon, from the date of

judgment until paid at the federal judgment rate: and

It is ORDERED that Defendant E.I. DuPont de

Nemours and Company and Plan Administrator for

DuPont Savings and Investment Plan take nothing

on their claims against Plaintiff Kari Ellen Kennedy;

and

It is further ORDERED that the Motion for

Entry of Agreed Judgment as to Third Party Claims

Against Liv Kennedy |Clerk’s doc. #71] is GRANTED;

and,

Based on the agreement of the parties, the funds

dispersed from the DuPont Savings and Investment

Plan Account of William Patrick Kennedy to third

party Defendant Liv Kennedy by E.I. DuPont de

App. 17

Nemours and Company and Plan Administrator for

DuPont Savings and Investment Plan, in the event

that they (or property traceable to such funds) are

recovered, returned, repaid or recouped in any way

from Magne Olav Hansen, Olav Ostnes, Roger Kerr,

and Dorvil Kerr; Liv Kennedy shall within ten (10)

business days pay all of those funds over to E.I.

DuPont de Nemours and Company at the attention of

Lori Knauer or her successor in the DuPont Legal

Department, 1007 Market Street, Wilmington, Dela-

ware, 19898, and shall execute all necessary transfer

documents.

The Court further ORDERS that, through this

judgment, an immediate constructive trust is imposed

upon all properties and funds previously transferred

to the individuals listed above to the extent that such

funds and/or properties are returned to Liv Kennedy

at any time, including through sale of the properties,

including the Mercedes Benz automobile and the pier

purchased by Liv Kennedy, or through actions under-

taken to collect upon or recoup loans or investments

made with such funds.

The Court, through this judgment, further im-

poses an immediate constructive trust on all security

interests held by Liv Kennedy with regard to loans

made to Magne Olav Hansen and Olav Ostnes or

others, and the Court directs that Liv Kennedy shall

not take any action which adversely affects these

security interests.

App. 18

It is finally ORDERED that all parties shall

bear their own attorney fees, with Defendant E.I.

DuPont de Nemours to bear the taxable court costs

expended by Plaintiff Kari Ellen Kennedy; and De-

fendant E.I. DuPont de Nemours and Liv Kennedy to

bear their own taxable court costs, respectfully.

This shall be considered the entry of final judg-

ment for purposes of appeal. All pending motions not

previously ruled upon are denied as MOOT and any

relief not specifically granted herein is DENIED.

It is so ordered.

App. 19

[SEAL]

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

BEAUMONT DIVISION

KARI ELLEN KENNEDY, §

INDEPENDENT §

EXECUTRIX OF THE §

ESTATE OF WILLIAM §

PATRICK KENNEDY, § Civil Action Number

Deceased, § 1:01-CV-904

Plaintiff,

Vv. §

E.I. DUPONT DE §

NEMOURS & CO.,et al, °

Defendants. ;

ORDER ON MOTION FOR ATTORNEY’S FEES

(Filed Oct. 5, 2005)

Pursuant to 28 U.S.C. § 636(c), Federal Rule of

Civil Procedure 73, the Local Rules of The United

States District Court for the Eastern District of

Texas, Appendix B, and order of the District Court,

this matter is before the undersigned United States

Magistrate Judge, at Beaumont, Texas, for all pro-

ceedings and entry of judgment in accordance with

the consent of the parties. Pending before the Court is

Plaintiff's Fed. R. Civ. P. 54(d)(2) Motion for ERISA

Prevailing Party Attorney Fees Under 29 U.S.C.

§ 1132(g)(1) (Clerk's doc. #72].

App. 20

Background

This proceeding is governed by ERISA (Employ-

ment Retirement Income Security Act, Title 29,

United States Code, Section 1001 et seq.). Plaintiff,

Kari Ellen Kennedy, as independent executrix of her

father’s estate, brought claims against Defendant E.I.

DuPont De Nemours and Company and Plan Admin-

istrator for DuPont Savings and Investment Plan

(collectively “DuPont”), seeking the payment of her

decedent father’s benefits under DuPont’s Savings

and Investment Plan (“SIP.”) The detailed factual

background giving rise to the complicated circum-

stances made the basis of the litigation are fully set

forth in the parties’ Stipulation(s) of Facts |Clerk’s

doc. #s 33, 70] and this court’s Order on Motions for

Summary Judgment [Clerk’s doc. #61]. Ultimately,

the Court entered summary judgment in favor of

Plaintiff Kari Kennedy, holding that, as a matter of

law, as executrix she was entitled to the value of her

father’s SIP benefits at the time of his death, totaling

$402,152.56. See Order on Motions for Summary

Judgment. DuPont also filed third party claims

against Liv Kennedy, the decedent’s ex-wife, for

reimbursement of those funds. DuPont and Liv

Kennedy later resolved those claims by agreement.

See Motion for Entry of Agreed Judgment as to Third

Party Claims Against Liv Kennedy |Clerk’s doc. #71].

App. 21

Accordingly, al! claims have been adjudicated and

the Court is prepared to enter final judgment.’ Fed-

eral Rule of Civil Procedure 58 directs that “entry of

judgment shall not he delayed, nor the time for

appeal extended, in order to tax costs or award fees,

except ... when a timely motion for attorneys’ fees is

made under Rule 54(d)(2), the court may act before a

notice or appeal has been filed and has become effec-

tive...” Feb. R. Civ. P. 58(c) (emphasis added). Rule

58(c)”s directive simplifies the determination of the

proper time for filing an appeal when there is a fee

dispute at the close of litigation. Cooper v. Pentecost,

77 F.3d 829, 833 (5th Cir. 1996). The Court finds it

“more efficient to decide [the] fee question[] before an

appeal is taken so that appeals relating to the fee

award can be heard at the same time as appeals

relating to the merits of the case,” Feb. R. Civ. P. 58

(1993 Adv. Comm.’s Note). This is because the two

parties apparently cannot agree on the fees and an

appeal is likely. Exercising the discretion granted to

the court under Rule 58,° the undersigned finds that

' The deadline for a prevailing party to file a motion for

attorney fees is “no later than 14 days after entry of judgment.”

Feb. R. Civ. P. 54(d 2B). Here, the Court has yet to enter final

judgment under Federal Rule of Civil Procedure 58. Therefore,

the motion is “early,” but for the reasons discussed herein, the

Court finds it proper to consider the fee dispute before entry of

judgment. See Couper v. Pentecost, 77 F.3d 829, 833 (5th Cir.

1996)

* The 1993 Advisory Committee’s Note to Rule 58 states

that:

(Continued on following page)

App. 22

final judgment should be delayed until the fee dispute

is resolved. Therefore, as a last matter, the Court will

address Plaintiff’s request for attorney fees before

closing the case.

Discussion

a. Standard for Recovery of Attorney Fees

The relevant ERISA fee provision provides in

pertinent part: “[iJn any action ... by a participant,

beneficiary, or fiduciary, the court in its discretion

may allow a reasonable attorney's fee and costs of

action to either party. 29 U.S.C. § 1132(g)(1). In fact,

the Fifth Circuit has stated that a party need not

prevail in order to be eligible for an award of attor-

neys’ fees under Section 1132(g\1) of ERISA. Gibbs v.

Gibbs, 210 F.3d 491, 504 (5th Cir. 2000). At the same

time, generally, a proper analysis of the applicable

Ordinarily the pendemey or post-yudgment filing of a

claim for attormey’s fees will not affect the time for

appeal from the underlying judgment ... |citation

omitted) ... Hewever, in many cases it may be more

efficient to decide fee questions before an appeal is

taken so that appeals relating to the fee award can be

heard at the same time as appeals rclating to the mer-

its of the case. This mevision permits, but does not re-

quire, the court to delay the finality of the judgment

for appellate purposes under revised Fed. R. App. P

4(a) until the fee dispute is decided. To accomplish this

result requires entry of an order by the district court

before the time a notice of appeal becomes effective for

appellate purposes.

FeD. R. Crv. P. 58 (1993 Adv. Comm.'s Note) (emphasis added).

App. 23

factors will in most instances favor an award of fees

to the party which has most substantially prevailed.

Id. The appropriate factors to be used in determining

the underlying awards of attorneys’ fees under ERISA

are as follows:

(1) the degree of the opposing parties’ culpabil-

ity or bad faith;

(2) the ability of the opposing parties to satisfy

an award of attorneys’ fees;

(3) whether an award of attorneys’ fees against

the opposing party would deter other persons act-

ing under similar circumstances;

(4) whether the parties requesting attorney’s

fees sought to benefit all participants and benefi-

ciaries of an ERISA plan or to resolve a signifi-

cant legal question regarding ERISA itself; and

(5) the relative merits of the parties’ position.

Id. (Citing Todd v. AIG Life Ins. Co., 47 F.3d

1448, 1458 (Sth Cir. 1995); Iron Workers Local No.

272 v. Bowen, 624 F.2d 1255 (5th Cir. 1980)). The

Fifth Circuit aiso stated, in dicta, that this list

should be non-exhaustive, and none among the five

factors is entitled to greater weight — much less

unilaterally determinative powers ~ than any of the

others. Riley v. Admin. of the Supersaver 401K

Capital Accumulation Plan, 209 F.3d 780, 782 (5th

Cir. 2000). Both parties advance their arguments on

the application of these factors in the extensive

briefing before the Court. See Plaintiff's Motion;

DuPont's Objections to Affidavits Submitted by

App. 24

Plaintiff in Support of Attorney Fee Claim [Clerk’s

doc. #74]; Defendants’ Response to Plaintiff’s Motion

for Attorney Fees [Clerk’s doc. #75]; Plaintiff’s Reply

to Defendant’s Response to Plaintiff’s Motion for

Attorney Fees and Objections to Affidavits Submitted

| by Plaintiff |\Clerk’s doc. #77]; Defendants’ Sur-Reply

to Plaintiff’s Reply to Defendants’ Response to Plain-

tiffs Motion for Attorney Fees and Objections to

Affidavits Submitted by Plaintiff |Clerk’s doc. #80).

b. Application of the Factors

i. The Degree of Culpability or Bad Faith

Plaintiff maintains that DuPont is culpable for

the loss of her father’s SIP funds to the improper

beneficiary. See Motion. She argues that DuPont

acted with reckless disregard, including, but not

limited to, failing to consider alternatives to paying

out the funds to Liv Kennedy and failing to inter-

plead the funds. Culpable conduct that does not rise

to the level of bad faith may weigh in favor of award-

ing fees. See, e.g., Dial v. NFL Players Supplemental

Disability Plan, 174 F.3d 606, 614 (5th Cir. 1999);

Wegner v. Standard Ins. Co., 129 F.3d 814, 821 (5th

Cir. 1997).

In ruling on Plaintiff’s claims, the undersigned

concluded that DuPont’s distribution of the plan

benefits was not discretionary in nature. See Order

on Motion for Summary Judgment. Also, rather than

basing its decision on wrongful conduct by DuPont,

such as the breach of fiduciary duty, the Court

App. 25

concluded that Liv Kennedy was the improper benefi-

ciary because she waived her SIP benefits. Jd.

These findings do not support any imputation of

bad faith or recklessness on the part of DuPont.

There was no evidence that the DuPont Plan Admin-

istrator’s decision affected the amount of money

expended by the Plan; instead the Plan paid the same

amount it would have paid if it had naid the Plaintiff

originally. See Diai, at 613. The Plan administrators

had no incentive to pay one beneficiary over another.

They merely chose to interpret the Plan documents

and the legal precedent in the way they found to be

correct. See id. Plaintiff is correct when she argues

that DuPont’s decision conflicted with the correct

statement of the federal common law rule of waiver

as announced by the Fifth Circuit. This court’s ruling

clearly reflects that. See Order on Motion for Sum-

mary Judgment. However, as DuPont argues, and

| this court’s prior discussion illustrates, at the time

DuPont made its decision, after the United States

Supreme Court’s ruling in Egelhoff v. Egelhoff,’ the

application of that case, especially in the Fifth Cir-

cuit, was unclear. DuPont relied on Egelhoff and

maintains that such reliance was proper. The fact

that this court and other courts have later applied

Egelhoff differently than DuPont did at the time of

the payment of the funds does not impute bad faith or

recklessness. Plan administrators are often faced

* 532 U.S. 141 (2001).

App. 26

with such choices and must simply make the decision

they find to be correct in light of the law. DuPont did

just this, and although the Court found that interpre-

tation to be incorrect, it would be improper to attrib-

ute wrongdoing, culpability, or even recklessness to

DuPont’s good faith decision on the payment of the

funds. In fact, their decision ultimately harmed the

Plan in forcing a double-payment to two beneficiaries.

The Court agrees with Plaintiff that an interpleader

action would have been the best and most efficient

means for resolving this dispute in the first piace.

However, as DuPont argues, filing the interpleader

would have been the best way to protect its own

interests, rather than that of the competing claim-

ants. DuPont’s decision to handle the funds in the

manner it did, and its decision to refrain from inter-

pleading the funds (while in hindsight not the best

decisions), surely do not rise to the level of bad faith

or culpability on its part. Accordingly, the Court finds

that the bad faith factor weighs against the award of

attorney fees to Plaintiff.

ii. DuPont’s Ability to Satisfy an Award of

Fees

The Court agrees with Plaintiff that DuPont, if

required, would be able to satisfy an award of fees.

There is no dispute that DuPont is a large, multi-

national corporation with assets far in excess of the

requested fee in this proceeding. Accordingly, this

factor weighs in favor of Plaintiff.

App. 27

iii. Whether the Award of Fees Would Deter

Others Acting in Similar Circumstances

Plaintiff generally argues that assessing attorney

fees against DuPont will deter it and other entities

from acting hastily in determining the proper benefi-

ciary when dispensing the funds of an ERISA-

governed benefit plans [sic]. See Motion. She further

contends that the award of an attorney fee will en-

courage DuPont and other plan administrators to

apply the correct legal standard when determining

the “proper payee.” At the same time, DuPont argues

that it is already being punished by having to pay the

benefits of the SIP plan twice — firs. to Liv Kennedy,

and now, to Plaintiff. DuPont also contends that

because there is no culpability on its part and it acted

in good faith, an award of fees in an attempt to deter

future conduct would be improper.

Again, the Court finds the Fifth Circuit’s analysis

in the Dial case to be instructive. There, the Court

held that the award of attorney’s fees would have no

deterrent effect, as the plan administrators were

merely choosing “to interpret an outside document in

the way they found correct.” Dial, 174 F.3d at 613.

Because the undersigned found that DuPont made

the same type of decision here, it also concludes that

an award of fees would not necessarily deter future

plan administrators from acting similarly. Using the

fee award as punishment does no more than encour-

age plan administrators to employ the correct legal

standard when determining the proper beneficiary.

This is exactly what DuPont attempted to do. The

App. 28

Court has already instructed DuPont on the correct

legal standard with its summary judgment ruling and

finds that such instruction will serve to defer similar

incorrect decisions in the future. Further, the Court

agrees that DuPont having to double-pay the SIP

funds’ is a large enough sum of money to deter any

wrongful conduct in the future.

iv. Whether the Parties Requesting Fees

Sought to Benefit All Participants and

Beneficiaries of the Plan or to Resolve a

Significant Legal Question Involving

ERISA Itself

Here, the issues related only to the parties spe-

cifically involved with the decedent’s SIP benefits.

Plaintiff sought to recover amounts due to her. Plain-

tiff’s claims do not benefit all of the SIP beneficiaries

or necessarily resolve a significant legal issue. The

relief granted to Plaintiff is not injunctive in nature

and does not directly affect the methods employed by

DuPont in dispensing funds to beneficiaries. Compare

Phillips v. Maritime Assoc. L.L.A., 198 F. Supp. 2d

838, 845 (E.D. Tex. 2002). Accordingly, this factor does

not weigh in favor of the award of fees.

* The value of the SIP funds due to Plaintiff is $402,152.56.

See Order on Motions for Summary Judgment. Accordingly, due

to the double-payment, DuPont could end up paying over

$800,000 under decedent’s SIP.

App. 29

v. The Relative Merits of the Parties’ Posi-

tions

As evidenced by its ruling in her favor, the Court

found that the Plaintiff’s position was with merit and

ultimately correct. In contrast, the Court found that

DuPont erred in dispensing funds to Liv Kennedy and

that it continued to err when defending this decision

under what the Court found to be incorrect legal

standards. The Court therefore concludes that be-

cause Plaintiff’s position was meritorious, this factor

weighs in her favor. However, the Court also notes

that the plaintiff’s “prevailing party” status in not

determinative under the Bowen’ factors in [sic]

assessing attorney fees in an ERISA case. Gibbs uv.

Gibbs, 210 F.3d 491, 504 (5th Cir. 2000).

Conclusion

Having considered the governing factors when

determining a request for attorney fees under ERISA,

the Court finds that it should not award Plaintiff her

attorney fees. Only two out of the five Bowen factors

weigh in her favor, and of these, the merit factor

weighs in her favor only slightly. Additionally, the

Court finds that DuPont did not act in bad faith or

with recklessness but rather simply made the deci-

sion it thought best under the circumstances, how-

ever erroneous it may have been in hindsight.

* The applicable factors were first announced in Iron

Workers Local No. 272 v. Bowen, 624 F.2d 1255 (5th Cir. 1980).

App. 30

Considering these reasons as a whole and using the

explication of the Bowen factors contained herein as

support,* the Court ORDERS that the Plaintiff's Fed.

R. Civ. P. 54(d)(2) Motion for ERISA Prevailing Party

Attorney Fees Under 29 U.S.C. § 1132(g)(1) (Clerk’s

doc. #72] is DENIED. Having made such determina-

tion, the Court need not assess the reasonableness or

amount of any fee.

It is so ordered.

SIGNED this the 5th day of October, 2005.

/s/ Keith F. Giblin

KEITH F. GIBLIN

UNITED STATES

MAGISTRATE JUDGE

* When considering a request for attorneys’ fees under

Section 502(g) of ERISA, the court should consider and explicate

the five Bowen factors, and should do so without giving pre-

dominance or preclusive effect to any one of them. Riley v.

Admin. of the Supersaver 401K Capital Accumulation Plan, 209

F.3d 780, 782-83 (5th Cir. 2000).

App. 31

[SEAL]

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

BEAUMONT DIVISION

KARI ELLEN KENNEDY,

INDEPENDENT EXECU-

TRIX OF THE ESTATE OF

WILLIAM PATRICK KEN-

NEDY, Deceased,

Plaintiff,

Vv. §

EI. DUPONT DE NEMOURS

AND COMPANY AND PLAN §

ADMINISTRATOR FOR §

DUPONT SAVINGS AND §

Or Or Or OG

CIVIL ACTION NO.

1:01-CV-904

INVESTMENT PLAN,

Defendant.

ORDER ON MOTIONS FOR

SUMMARY JUDGMENT

(Filed Mar. 03, 2005)

Pursuant to 28 U.S.C. § 636(c), Federal Rule of

Civil Procedure 73, the Local Rules of The United

States District Court for the Eastern District of

Texas, Appendix B, and order of the District Court,

this matter is before the undersigned United States

Magistrate Judge’, at Beaumont, Texas, for all

' This civil action was previously assigned to the Honorable

Wendell C. Radford. Effective October 1, 2004, Judge Radford

(Continued on following page)

App. 32

proceedings and entry of judgment in accordance with

the consent of the parties. The following motions are

pending before the Court:

-Defendants’ Motion for Summary Judgment

[Clerk’s doc. #40] filed by E.I. du Pont de Nemours

and Company (“DuPont”) and Plan Administrator for

DuPont Savings and Investment Plan (“Plan Admin-

istrator”);

-Plaintiff’s Motion for Summary Judgment, filed

by Kari Ellen Kennedy [Clerk’s doc. #41]; and

-Third Party Plaintiffs’ Alternative motion for

Summary Judgment Against Third Party Defendant

asserted by DuPont and Plan Administrator [Clerk’s

doc. #39].

A. Background

i. Facts

According to the pleadings, motions and the

agreed Stipulation of Facts (Clerk’s doc. #33] filed by

the parties, the Court summarizes the material

background facts as follows. William Patrick Kennedy

was an employee of DuPont and participated in

DuPont’s Savings and Investment Plan (“SIP”). While

an employee of DuPont, on June 30, 1971, Mr. Ken-

nedy married Liv Kennedy. On December 6, 1974, Mr.

retired and his docket was reassigned to the undersigned United

States Magistrate Judge.

App. 33

Kennedy signed a written designation form identify-

ing Liv Kennedy as his sole beneficiary under the SIP.

Additionally, Mr. Kennedy signed a beneficiary desig-

nation form for his DuPont Tax Reform Act Stock

Ownership Plan (“TRASOP”) on July 21, 1980, also

designating Liv Kennedy as the sole beneficiary.

According to the parties, the SIP and TRASOP

merged prior to Mr. Kennedy’s death and are referred

to, collectively, as the SIP. The Kennedys divorced on

June 2, 1994, in Jasper County, Texas, which is

evidenced by a Final Decree of Divorce. See Exhibit I

to Stipulation of Facts. On June 30, 1998, Mr. Ken-

nedy retired from DuPont. He passed away March 27,

2001.

On April 16, 2001, Kari Ellen Kennedy

Duckworth (“Kari Duckworth”) qualified as Inde-

pendent Executrix of her father’s estate. On April 26,

2001, she demanded by letter that the DuPont plan

pay the SIP henefits to Mr. Kennedy’s estate. Said

demand was rejected. The plan administrator paid

the benefits of the SIP to Liv Kennedy as the benefi-

ciary designated by Mr. Kennedy. The benefits were

paid to Ms. Kennedy in an amount totaling

$414,143.22. See Third Party Plaintiff’s Alternative

Motion for Summary Judgment Against Third Party

Defendant.

li. Issues

In her motion, Plaintiff Kari Duckworth requests

that DuPont pay the value of the decedent’s SIP to

App. 4

her as executrix of her father's estate, She argues

that Liv Kennedy waived her interest in the SIP in

her divorce decree, and therefore, the intereat belongs

to Plaintiff Duckworth under common law, Alterna:

tively, Defendant DuPont contends chat it did not

wrongly pay the SIP proceeds to Liv Kennedy, Du.

Pont relies on federal law preemption, arguing that

as a matter of law BRISA preempta the language

wontained within the atate divorce decree and over:

rides the waiver argument, Therefore, the under:

signed must analyze which argument prevails legally

to determine the proper recipient of the SIP interest,

Additionally, DuPont and the Plan Administrator

filed their Amended Third Party Complaint againat

Liv Kennedy based upon theories of unjust enrich

mont and the provisions of the SIP plan (Clerk's doe,

#47), DuPont apecifically saeeka this relief in the event

that it does not prevail on ite Motion for Summary

Judgmen: and the Court finda that the benefits were

wrongly paid to Liv Kennedy, This requeat for recov.

ery of the funda paid to Ma, Kennedy ia the basis for

DuPont's Alternative Motion for Summary Judgment

Againat Third Party Plaintiff, the merita of which the

Court need not reach until the ultimate issue of the

proper SIP recipient is determined,

B. Discussion

Summary judement should be mented only “if

the pleadings, depositions, answers to interrogatories,

App, U6

and admissions on file, together with the affidavits, if

any, show that there ia no genuine issue as to any

material fact and that the moving party is entitled to

a judgment as a matter of law,” Pap, R, Civ, BP 6600),

This rule places the initial burden on the moving

party to identify those portions of the record whieh it

believes demonstrate the absence of a genuine issue

of material fact, See Celatex Corp, vu, Catrett, 477 U8,

817, O24, 106 8, Ct, 2648 CLOAG) (Quoting Rule S6(e));

Stulte vu, Conoeo, Ine, 76 Fd 661, 656-66 (6th Cir,

1900) (Citations omitted), The movant's burden ia

only to point out the absence of evidence supporting

the non-movant's case, Shotak v, Tenneco Resina, Ine,

055 Vd 900, 015 (Oth Cir, 1002), When the moving

party has carried ite burden of demonstrating the

absence of a genuine issue of material fact, the non.

moving party bears the burden of coming forward

with “specific facts showing that there is a genuine

issue for trial,” Mateushita Rleo, Indus, Co, v, Zenith

Radio Corp, 476 U,8, 074, 687 (L080), In considering

a motion for summary judgment, “the evidence of the

nonemovant ia to be believed, and all justifiable

inferences are to be drawn in his favor,” Anderson v,

Liberty Lobby, Ine,, 477 U.S, 848, 856, 106 8, Ct, 4606

(1ON0),

The parties agree that no genuine issue of mate-

rial fact existe in this case other than the voluntari-

ness of any waiver by Ma, Kennedy, if that issue

becomes relevant, The Stipulated Facts eatabliah the

parties’ agreement that the key issues are legal, not

factual, in nature, Accordingly, the resolution of this

App. 46

proveeding is to be decided as a matter of law, based

on the legal arguments presented in the pending

motions now before the Court,

Keview of the ERISA Plan Administrator's

Denial of the Batate's Claim

Aa noted above, the plan administrator distrib.

uted the proceeds of the SIP to Liv Kennedy inatead

of filing an interpleader action to determine to [aie]

appropriate beneficiary, Therefore, the plan adminis

trator's decision that (sic) must be reviewed under the

appropriate standard of review, In Firestone Tire and

Rubber Co, V Bruch, 480 U,8, 101, 116, 100 8.0, O48,

OH6, 108 L.Bd.@d 80 (1080), the Supreme Court held

that when an administrator's denial of beneflite is

challenged, the decision is reviewed under a de nove

standard unless the plan gives the administrator

diseretionary authority as to this decision, Dupont

argues that, in this ease, the plan provided the admin:

iatyrator with diseretionary authority to interpret the

plan, therefore thie Court must evaluate the adminis

trator's decision to pay Liv Kennedy under an abuse of

discretion standard, At the same time, Dupont argues

that the plan clearly required payment to the desig:

nated beneficiary and the administrator paid in accor.

dance with the beneficiary designation,

In this case, the Court finds that Dupont’s diatri-

bution of the benefita was not diseretionary in nature.

As Dupont itself contends, the administrator paid

benefite under the requirements of the plan, Because

App, 47

there was no discretionary authority in the adminis

trator's decision, the denial of benefits to the estate is

reviewed under a de nove standard, See Brandon v,

Travelers Insurance Company, et, al, 16 Fd 1991,

1444-1984 (Oth Cir, 1004), see alao Carland vu, Metro:

politan Life Ine, Co,, O86 Fd ibd, 1118 Oth Cir)

Cert, Denied, 608 U.S, 1080, 118 B.C, 670, 116

L, Wd. 2d 761 (1001) (de nove stendard applies when a

plan compels the company to pay proceeds to the

beneficiary of record),

There is no dispute that the DuPont SIP is an

ERISA’ plan, ERISA broadly preempts “any and all

State lawa insofar as they may now or hereafler

relate to any employee benefit plan,” 20 U.S.C,

§lidda), The Fifth Cireuit held that the ‘Texas

beneficiary redesignation statute, Texas Family Code

Section V.401, relates to employee benefit plans and

is preempted by ERISA, Manning vu. Hayes, 218 Pid

A866, 870 (Sth Cir, 2000), In Manning, the Filth Cir-

cult reaffirmed the rule set forth in Clift vo, Clift, 210

Fd 268 (5th Cir, 2000) and Brandon v, Travelers Ina.

Co, 1A Pod 1921 (ith Cir, 1004), that federal common

law, rather than the text of ERISA itself, governs

resolution of cases in which a former spouse who is

atill the designated beneficiary of a policy governed

' Employment Retirement Income Seeurity Act, Tithe 20

United States Code, Seetion 1001 ef seg.

App. 44

by IERISA ie alleged to have waived her rights to the

polley benefite, Manning, 212 P.Gd at 472, The Fifth

Cireuit opted not to follow the minority view adopted

by the Sixth Circuit’, which employs the principles of

conflict preemption, noting that “the law of family

relations, which includes an individual's right to

expressly apportion property upon divorce, has tradi.

tionally been a fairly sacrosanct enclave of state law.”

id, at #72, The court determined that in applying

federal common law, the courte should borrow from

state law when determining the law that should

control, Jd, According to the Fifth Circuit, the rule of

federal common law applicable to disputes concerning

waiver by a designated beneficiary of an ERISA plan

ia that “a named ERISA beneficiary may waive his or

her entitlement to the proceeds of an ERISA plan

providing life insurance benefits, provided that the

waiver is explicit, voluntary, and made in good faith,”

Id, at B74,

Dupont questions whether thie ie etill the law in

the Fifth Cireuit, given the U.S, Supreme Court's

decision in Agelhoff v. Rgelhoff, 648 UB, 141, 140

L, Bd, Yd 964, 121 8, Ct, 1922 (2001), In Ryelhoff, the

Supreme Court held that ERISA preempted a Waash-

ington state statute providing for automatic revoca-

tion of the designation of a former spouse upon

— See Manning, at 871 (Citing Metropolitan Life Ina, Co. v

Marsh, 110 F Gd 416 (0th Cir, 1007), Metropolitan Life Ine Co

v Pressley, 02 F Od 186 (0th Cir, 1006), MeMillan vo Parrott, 018

Fed O10 Gth Ole 1000)

App, 40

divorcee, Kgelhoff, 608 U.S, at 144, The Court noted

that preemption of such statutes is necessary to

prevent “requiring ERISA administrators to master

the relevant lawe of 60 states,” /d, at 140, However,

the Court limited ite holding to the finding that the

Washington statute was expressly preempted by

ERISA and declined to address whether the princi:

plea of conflict preemption applied, /d, at 146, The

Court aleo failed to address the cireuit aplit regarding

whether federal common law or ERISA itself governs

in cases of preemption and did not overrule the Filth

Circuit's common law approach as set out in Clift and

Hrandon,

Accordingly, this court was left with the doubt

cast by Aygelhoff on the etate of Fifth Cireuit law

regarding the divorced beneficiary/ERISA preemption

issue, However, the undersigned derived much guid-

ance from Judge Schell's detailed analysis in Metro-

politan Life Ine, Co, » Palmer, 244 F.Supp, Yd #21

(B.D, Tex, 2009).

Firet, as pointed out in Metropolitan Life, the

Kyelhoff case ie distinguishable from Arandon. Ryel-

hoff involved a state statute that affected the desig-

nation of beneficiaries, while Mrandon involved a

divorce decree that might constitute a waiver under

federal common law, Metropolitan Life, at 626-26.

Also, neither of the Fifth Cireuit opinions discussing

Kyelhoff have clearly overridden Aranden nor

adopted the Aygelhoff holding in a case with faete

similar to those before the Court in this ease.

App. 40

Also, in Kgethoff the Supreme Court declined to

address whether conflict preemption applies and did

not overrule the federal common law approach set

forth in Arandon and Clift. Absent a clear showing

that the Arandon rule ia no longer applicable or that

it has been overruled by the Supreme Court, this

court was not in a position te depart from the estab

lished law of the Fifth Circuit. See Metropolitan Life,

at [26, (Quoting Manning v. Hayes, 218 Fld 806, H72

(Sth Cir, 2000)),

Any doubt left regarding this issue was reselved

by the Fifth Cireuit's recent ruling in Guardian Life

Insurance Company v. Finch, 206 F.Od 298 (6th Cir,

2004). In Fineh, the Fifth Cireuit held that "“Ayelhoff

does not undermine thie court's longstanding ap-

proach of relying on federal common law to determine

if an ERISA plan's beneficiary has effected a common

law waiver.” /d. at 244, The Fifth Cireuit agein ree

ognized the federal common law rule of waiver, reem-

phasising ite “longstanding approach of relying on

federal common law to determine if an ERISA plan's

beneficiary has effected a common law waiver.” /d, at

245, This Court therefore concludes that since no

resolution of the case maybe reasonably drawn from

the text of ERISA itself, we must look to federal

common law. Accordingly, Plaintiff prevails on her

argument,

App. 41

Did Liv Kenn voluntarily waiv I

nefits i ivo ree?

The Court now turns to the federal common law

of waiver. As stated supra, In Manning, the Fifth

Circuit reiterated the rule that any waiver of ERISA

benefits must be explicit, voluntary, and made in good

faith. 212 F.3d at 874. The Final Decree of Divorce’,

signed and executed by decedent, Liv Kennedy, and

their respective attorneys, clearly states that Liv

Kennedy is divested of all right, title, interest and

claim in and to such property including “the proceeds

therefrom, and any other rights related to any profit-

sharing plan, savings plan, employee thrift plan,

employee stock, ownership plan, retirement plan,

pension plan, or like benefit program, existing by

reason of Respondent’s ... employment, except for

that portion awarded to Liv Kennedy, hereinabove.”

The portion reserved and awarded to Ms. Kennedy, as

mentioned in the divorce decree, was addressed

separately by a Qualified Domestic Relations Order

and a Second Amended Qualified Domestic Relations

Order: DuPont Pension and Retirement Plan, both

filed in the District Court in Jasper County, Texas.

See Exhibit 5 to Plaintiff’s Motion. The amount

awarded to her by the QDRO is not in dispute.

The Court must address the facts presented in

Liv Kennedy’s Affidavit, attached to her Response to

* See Exhibit 1 to Stipulation of Facts and Exhibit 4 to

Plaintiff's Motion for Summary Judgment.

App. 42

Plaintiff’s Motion for Summary Judgment and Third-

Party Plaintiff's Alternative Motion for Summary

Judgment. Ms. Kennedy claims that she “had no

actual knowledge” that she was giving up her right as

beneficiary of the SIP funds. She does not recall

reading over the divorce decree, “opting instead to

simply take the advice of my attorney.” This language

is problematic because, assuming Liv Kennedy’s

assertions are true, they directly controvert her

knowing waiver set forth in the divorce decree. How-

ever, the Court finds that the facts presented by the

affidavit do not create a genuine issue of fact as to the

waiver presented in the divorce decree. The cases

clearly establish that a divorce decree such as the one

presented constitute a knowing and voluntary waiver

as a matter of law. See Brandon v. Travelers Ins. Co.,

18 F.3d 1321, 1325 (5th Cir. 1994). The Court is not in

a position to second-guess Liv Kennedy’s state of

mind at the time she signed the decree. Although she

makes conflicting statements in her affidavit, they

are only asserted now that the SIP proceeds are the

subject of litigation. The divorce decree stands on its

own, and Liv Kennedy’s intentions to waive her right

to the SIP proceeds are corroborated by the QDROs,

discussed supra, filed long after the period surround-

ing the execution of her divorce decree. For these

reasons, the Court cannot give full credit to Ms.

Kennedy’s statements.

Liv Kennedy initiated the divorce, was repre-

sented by counsel, and executed the decree. The

Court finds that the language contained within the

App. 43

divorce decree is virtually identical to the language of

the decree in Brandon. The decree clearly evidenced

Ms. Kennedy’s explicit, voluntary and good faith

waiver of any rights to the proceeds of the SIP.

Additionally, this is not a case such as Metropoli-

tan Life where the divorce decree is unsigned by the

parties and entered as a court order, thus creating

factual issues as to the voluntariness of the waiver.

238 F. Supp. 2d at 826. Instead, it is clear that Ms.

Kennedy’s waiver of the SIP proceeds was done under

the advice of counsel and voluntarily. The parties

have stipulated to its validity. The waiver is further

supported by the entry of the Second Amended

QDRO, expressly addressing the DuPont plan bene-

fits. Applying the federal common law of waiver in

this matter, it is clear that Ms. Kennedy waived her

rights to the SIP benefits at issue.

Dupont argues that finding of waiver on Liv

Kennedy’s part would violate the anti-alienation

provision of ERISA set forth in Title 29, United States

Code, Section 1056(d\1). Section 1056(d)(1) provides

that each pension plan shall provide that benefits

may not be assigned or alienated. 29 U.S.C.

§ 1056(d)(1) (emphasis added). Dupont correctly notes

that Manning, Clift, and Brandon all involve insur-

ance proceeds which are not subject to the anti-

alienation provision. In addition, Dupont points out

that a domestic relations order qualifying as a QDRO

(which is a listed exception to the anti-alienation

rule) was never submitted for the SIP, although one

App. 44

was submitted for the [sic] another account not in

controversy in this case.

In 1984, Congress passed the Retirement Equity

Act (“REA”), which amended ERISA. The REA cre-

ated the Qualified Domestic Relations Order “QDRO,”

which is a mechanism for recognizing the interest of

the non-participant spouse in benefits under ERISA

retirement plans. See Dorn v. Int'l Bhd. of Elec.

Workers, 211 F.3d 938, 942 (5th Cir. 2000). The QDRO

protects divorced spouses, who, as a result of the

divorce, might not receive the benefits they otherwise

would have had available during their retirement as

a means of income. Boggs v. Boggs, 520 U.S. 833, 847,

117, S.Ct. 1754, 138 L.Ed.2d 45 (1997). Among other

things, a QDRO must contain the name of the alter-

nate payee and amount or percentage of the partici-

pant’s benefits to be paid by the plan to each

alternate payee, or the manner in which such amount

or percentage is to be determined. 29 U.S.C.

§ 1056(dX3)C).

In this case, the decedent had no reason to sub-

mit a QDRO to the SIP due to the fact that none of

the proceeds of that account were subject to division

in the divorce. This Court looks once again to the

Fifth Circuit’s decision in Brandon for guidance and

determines that Liv Kennedy’s voluntary waiver does

not violate the anti-alienation provision of ERISA. In

Brandon, the Fifth Circuit noted that the ERISA plan

in question was a welfare plan and, therefore, was

not subject to the anti-alienation provision of ERISA.

Brandon, 18 F.3d at 1324. However, the Brandon

App. 45

court also stated that, even so, “[w]e have previously

held that a controversy between good-faith adverse

claimants to pension plan benefits is subject to set-

tlement like any other, and that an assignment made

pursuant to a bona fide settlement of such a contro-

versy is not invalidated by the anti-alienation provi-

sion of ERISA, 29 U.S.C. § 1056(d)(1).” Jd. at 1324,

n.4 (Citing Stobnicki v. Textron, Inc., 868 F.2d 1460,

1465 (5th Cir. 1989). The Seventh Circuit also held

that an ex-spouse’s waiver does not violate the anti-

alienation provision of ERISA. See Fox Valley &

Vicinity Constr. Workers’ Pension Fund v. Brown, 897

F.2d 275, 277-280 (7th Cir. 1990), cert. denied, 498

U.S. 820 (1990).

Accordingly, the benefits were wrongly paid to

Ms. Kennedy and, as Executrix of the decedent’s

estate, Kari Kennedy Duckworth is entitled to the

value of decedent’s SIP at the time of his death,

which, according to the Stipulation of Facts, was

$402,152.56 on March 31, 2001 (four days after his

death). Ms. Kennedy Duckworth prevails on her

motion for summary judgment.

Alternative Motion Regarding Liv Kennedy’s

Reimbursement to DuPon

Having found that Ms. Kennedy waived her right

to the SIP proceeds, the Court must analyze the Plan

Administrator’s request for reimbursement from Ms.

Kennedy. The relevant provision is Section 502(aX3)

of ERISA, codified at 29 U.S.C. § 1132(a\3). This

App. 46

section allows for “equitable relief,” and DuPont

argues that it is entitled to restitution and recovery

for unjust enrichment, specifically the recovery of the

improper payment to Ms. Kennedy, as equitable

relief.

Section 502(a\3) arms plan administrators with

a cause of action “to obtain ... appropriate equitable

relief” to redress any act in violation of ERISA or the

terms of the plan. 29 U.S.C. § 1132(a)(3). The Su-

preme Court has interpreted the boundaries of “equi-

table relief” under Section 502(a)(3) as limiting a

plaintiff’s remedies to those that were traditionally

considered equitable in nature. Great-West Life &

Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210 (2002)

(Quoting Mertens v. Hewitt Associates, 508 U.S. 248,

256 (1993)). The Court emphasized that Congress’ use

of the word “equitable” was not inadvertent, but

rather was a deliberate act on its part to limit a

Section 502(a\3) plaintiff's remedies to those that

were traditionally considered equitable in nature. Id.

at 221. The Court noted that in cases in which the

plaintiff could not assert title or right to a particular

piece of property, but in which he might be able to

show just grounds for recovering money to pay for

some benefit the defendant had received from him,

the plaintiff had a right to restitution at law through

an action derived from the common-law writ of as-

sumpsit. Jd. at 213. In cases such as this, the plain-

tiff’s claim was considered lega! because he sought to

obtain a judgment imposing a merely personal liabil-

ity upon the defendant to pay a sum of money. /d.

App. 47

In contrast, a plaintiff could seek restitution in

equity, ordinarily in the form of a constructive trust

or an equitable lien, where money or property identi-

fied as belonging in good conscience to the plaintiff

could clearly be traced to particular funds or property

in the defendant’s possession. Jd. However, if the

property sought to be recovered or its proceeds have

been so dissipated so that no product remains, the

plaintiff’s claim is only that of a general creditor, and

the plaintiff cannot enforce a constructive trust of or

an equitable lien upon the property of the defendant,

Id. at 213-214. Thus, for an action in restitution to lie

in equity, ordinarily in the form of a constructive

trust or an equitable lien, an ERISA plaintiff must

“seek not to impose personal liability on the defen-

dant, but to restore to the plaintiff particular funds or

property in the defendant’s possession.” Jd. at 214.

The Plan Administrator has submitted no sum-

mary judgment evidence establishing that the funds

sought have been identified and traced to a particular

account or property owned by Liv Kennedy. Indeed, it

appears that the funds have been spent. See Exhibit

E to Liv Kennedy’s Response (Clerk’s doc. #47]. There-

fore, at this stage of the litigation, the Plan Adminis-

trator stands as a general creditor and, under

Knudson, is not entitled to restitution.

The Plan Administrator next contends that it is

entitled to restitution under the common law theory

of unjust enrichment. The Fifth Circuit Court of

Appeals has recently addressed this issue, interpret-

ing Knudson. Specifically, the Fifth Circuit stated

App, 48

that dicta in Knudson should not be viewed “as an

invitation to the lower courta to grant plan fiduciaries

a federal common law right to pursue claims for legal

remedies againat participants,” Coop, Benefit Adm'n,

Tne, uv. Ogden, 867 F.Od 980, 808-09 (6th Cir, 2004), In

Ogden, Judge Wiener noted that a plan fiduciary's

failure to state a statutory cause of action under

ERISA does not bar federal subject matter jurisdic:

tion over ite unjuat enrichment claim under federal

common law, Jd, at S84, However, the ability of a

plaintiff to state a federal common law cause of action

depends on the existence of a “gap” in the text of

ERISA that allowa for the creation of the federal

common law remedy sought by the plaintiff, Jd, at

820, The Ogden court also stated that Knudson and

Mertena demonstrate that Congress, in drafting

Section HO8(AX NR) to allow only equitable relief,

apecifieally contemplated the possibility of extending

to plan fiduciaries the right to sue a participant for

money damages and chose inatead to limit fiduciaries

remedies to those typically available in equity, fed. at

O01, Therefore, there ia no “gap” in BRISA on this

question and thus no basie for granting a common

law remedy, /d, In conclusion, the Fifth Cireuit re

fused to create a federal common law right of unjust

enrichment that would allow a plan fiduciary to

assert an action for legal relief againgt a participant,

both partion being members of categories exprowely

identified in Seetion 608, Ja, at 448,

Thia Court finds Ogden dispositive on the issue.

ERISA ia not alent on thie matter, HRISA allows the

App. 49

kind of equitable relief sought by the Plan /dminia-

trator only if the proceeds are clearly traced to par-

ticular funds or property in Liv Kennedy's possession,

There has not been such a showing in thie case,

Therefore, this Court cannot create a federal common

law right to the relief sought in this instance,

Also in Ogden, the Fifth Cireult distinguished its

previous decision of Jamail, Ine, vu, Carpenters Dis

triet Couneil of Houston Pension & Welfare Truata,

Oh4 WYd B00 (Oth Cir, 1002), a case upon which

DuPont relies heavily, Jamail ia distinguishable (rom

the facta in Ogden, and the fhete in this case, because

it involved an employer's common law right to recover

contribution overpayments, Ogden, at S43 (emphasis

added), In Ogden, the Fitth Cireuit noted that BRISA

Section 608 provides @ private right cause of action

for fiduciaries, participants, and beneficiaries, bul not

for employers and, therefore, reasoned that a “gap”

existed in ERISA text regarding an employer's

righta to recover overpayment of contributions from

the plan to which sueh overpayments had been made,

fd. Thus, in /amail, the Court held that recognition

of a federal common law right of restitution for an

employer vie-a-vie a plan was appropriate, as HRISA's

text did not address the issue, and auch a right would

further ERISA’® underlying purposes by encouraging

amall employera to sponsor benefit plans for their

employers (aie), dd,

In the case at bar, a private eight of action for

oquitable relief ia enumerated under Seetion b0U(a),

Therefore, there ia no “gap” whieh would allow the

App, 50

Court to “rewrite” ERISA and create a common law

right,

Directed by Ogden, the undersigned cannot allow

DuPont and the Plan Administrator to proceed with

their claima for restitution and unjust enrichment,

Ogden clearly decides against granting a federal

common law right of unjust enrichment or reatitution

for a plan administrator under Seetion S502%(a\4).

Additionally, DuPont has not established that its

defined by Knudson and Ogden, The Court cannot

differentiate the situation before it from the cases

discussed herein, By attempting to recover finds

from Ma, Kennedy, DuPont io seeking a logal remedy,

To impose personal liability on a defendant for a

contractual obligation to pay money is legal in nature

and unauthorised by Section 508A), See Knudeon,

H44 U.S, at 210, 221, Although DuPont couches its

claima in equitable terma, it continuously argues that

it would be againat the terme of the plan if Ma, Ken.

nody were not required to reimburse the proceeds,

This clearly indicates a contractual liability aa Due

on Ma, Kennedy, See id, at 211, Further, there is no

evidence that the proceeds are in Ma, Kennedy's

possession or that they exist in the form of a eon:

structive trust or an equitable lien, See id, at 214,

None of the cases presented by DuPont establish that

their claim is equitable in nature and therefore valid

under ERISA, In feet, DuPont relies on cases whieh

are either factually distinguishable or predate the

App, 51

law as announced in Knudson and Ogden, Accord.

ingly, the Court finda tha, DuPont's claim for reatitu-

tion and unjust enrichment is legal, not equitable, in

nature, and therefore, according to Ogden and

Knudson, ia not a claim that is available under See-

tion H02(aX5), The Alternative Motion for Summary

Judgment should therefore be denied,

In her pleadings, Plaintiff originally set forth a

cause of action against DuPont for breach of contract,

See Amended Complaint (Clerk's doe, #24), DuPont

has requested summary judgment on these state law

contractual claima, arguing that they are preempted

by ERISA, See Defendants’ Motion for Summary

Judgment (Clerk's doe, #40), Having engaged in the

analysis under BRISA and granted Plaintiff relief as

a beneficiary, the undersigned agrees with DuPont

that the state law elaima are preempted. After a

review of Plaintiff's reaponses, the parties seem to be

in agreement on this issue, Accordingly, the Court

will grant DuPont summary judgment on Plaintiff

Kari Kennedy Duckworth's atate law breach of con.

tract claima.

Fully incorporating the findings and legal conclu.

siona set forth herein, the Court ORDERS as follows

App. 62

Plaintiff's Motion for Summary Judgment

(Clerk's doe, #41) is GRANTED; and Plaintiff is

accordingly entitled to the value of decedent's benefits

at the time of his death, $402,162.56;

Defendant's Motion for Summary Judgment

[Clerk's doe, #40) is DENIED in par. and GRANTED

in part, being granted with reapect to Plaintiff's state

law contractual claima; and

-the Third Party Plaintiff's Alternative Motion for

Summary Judgment againat Third Party Defendant

It is so ordered,

SIGNED this the Ord day of March, 2005,

KEITH F GIBLI

App. 63

STATE OF TEXAS

IN THE MATTER OF THE \

MARRIAGE OF \

WILLIAM PATRICK KENNEDY x NO: '#5#

, 4

(Filed Dee, 9, 1007)

William Patrick Kennedy (“Participant”), is an

employee of E.1, du Point de Nemours and Company

and is a Participant in the DuPont Pension and

Retirement Plan (“the Plan”),

The partion to this action fir divorcee were mar

ried to each other on June 40, 1071, and were di-

voreed by this Court in this action on May 6, 1004,

This Court has personal jurisdiction over both

partios and jurisdiction over the subject matter of

thie Order in this divoree action,

The parties to thie action and the Court intend

thie Order to be a “qualified domestic relations order”

(“QDRO") as that term is used in the Retirement

_ App. 54

Equity Act of 1944, PL. 08-907 and defined as

(200(dXSX BMI) of ERISA and (414(pX1MA) of the

Internal Revenue Code to create and recognize the

interest of Liv Kennedy in certain Plan benefits

otherwise payable to Participant.

This Order is entered pursuant to Texas domeatic

relations law, specifically Texas Family Code Section

5.68 and 5,695 governing the division of marital

property retirement benefite and financial plans

between spouses and former spouses in divorce

actions and applies to the Plan.

The parties have stipulated that the Court

should enter this Order.

Now, therefore, it is ORDERED as follow

1, The Participant ie William Patrick Kennedy,

Sovial Seeurity Number XXX-AX-AXXAX. The Parties.

pant's last known mailing address is |address omit-

ted!, and the Participant's date of birth ia XXXX.

2. The Alternative Payee ie Liv Kennedy, Social

Security Number XXX-XX-XXXX. The Alternate

Payee's mailing address is [address omitted), and the

Alternate Payee's date of birth ie XXXX

‘, The plan to whieh the order applies DuPont

Pension and Retirement Plan and any suceessor

plans.

App. 55

4. This Order creates and recognizes the existence of

Alternate Payee’s right to receive a portion of the

benefits payable with respect to the Participant in the

Plan. Such accrued benefit is an amount determined

under the Plan formula that is payable as a monthly

annuity at the Participant’s normal retirement age

(65) and for the Participants lifetime. The formula to

calculate the benefits is as follows:

Participant’s Number of months

Accrued Benefit Participant and Alter-

as of 05/06/94 nate Payee were married

while Participant was in

X Pian through 05/06/91 * °°%

Total number of months

Participant was in the

Plan as of 05/06/94.

5. The Alternate Payee’s portion of the Participant’s

accrued benefit shall be paid in the form of a monthly

annuity for the Alternate Payees lifetime.

6. Alternate Payee may elect to begin receiving her

portion of the accrued benefit at the Participant’s

earliest retirement age under the Fian (age 50 with

at least 15 years’ service) or anytime thereafter at her

election. If the Alternate Payee elects to begin receiv-

ing her share of benefits prior to the Participant’s

normal retirement age (65), then she will receive the

actuarial equivalent of the amount of retirement

under the formula provided. The Alternate Payce

must begin receiving benefits no later than the date

App. 56

the Participant commences receiving benefits from

the Plan.

7. If the alternate Payee elects early payment and

the participant subsequently retires under a provi-

sion of the Plan which provides a subsidized early

retirement benefit, |e alternate payee’s benefit will

be recalculated to include the early retirement sub-

sidy attributable to the Alternate Payee’s share of the

accrued benefit.

8. Under the provisions of this Order, and specifi-

cally paragraph four (4) above, if the Plan pays a cost-

of-living increase to the participant after the partici-

pant has commenced receiving his benefit, the alter-

nate payee will not receive a share of such increase. If

the alternate payee elects to receive a benefit from

the Plan, the alternate Payee will forfeit any cost-of-

living increases she would otherwise share in.

9. The Alternate Payee is awarded the status of

surviving spouse for a portion of the available quali-

fied pre-retirement survivor annuity (QPSA) until the

earliest of (1) when the alternate Payee elects to

begin receiving benefits from the Plan; or (2) when

the Participant elects to begin receiving benefits from

the Plan. This benefit shall be payable in the form of

a monthly annuity for the Alternate Payee's lifetime.

The accrued benefit will be reduced in accordance

with Plan provisions to cover the cost of the QPSA.

This benefit shall be calculated as follows:

App. 57

The Alternate Payee shall receive a portion of the

available qualified pre-retirement survivor annuity

(QPSA) calculated as follows:

follows:

Number of months Partici-

pant and Alternate Payee

were married while Partici-

pant was in Plan

Number of months Partici- * 50% Available QPSA

pant was in the Plan as of

the Earlier of his separation

from service or his death.

10. This order is not intended to: (a) require the

Plan to provide any type or form of benefit, or any

option, not otherwise provided under the Plan; (b)

required the Plan to provide increased benefits (de-

termined on the basis of actuarial value), (c) require

the payment of benefits to an Alternate Payee which

are required to be paid to another Alternate Payee

under another order previously determined to be a

qualified domestic relations order.

11. This Order is intended to be a QDRO made

pursuant to the Retirement Equity Act of 1984 and

its provision shall be administered and interpreted in

conformity with that Act.

12. This Order requires the Plan to distribute

benefits directly to the Alternate Payee.

13. the Alternate Payee shall include all benefits

received pursuant to this Order in her gross income

App. 58

and Participant need not do so. For purposes of

Section 72 and Section 402(aX1) of the Internal

Revenue code, the Alternate Payee and not the Par-

ticipant shall be treated as the distributee of any

distribution or payment made to her by the Plan

pursuant to this Order.

14. To the extent that this Order is inconsistent or

in conflict with applicable regulations to be enacted

by the United States Labor or Treasury Department,

the Order shall be null and void.

15. The Court retains jurisdiction over this matter

to clarify or amend this Order if necessary to estab-

lish or maintain its qualifications as a QDRO under

the Retirement Equity Act of 1984 to establish or

maintain Alternate Payee’s right to receive benefits

under the Plan.

16. Copies of this Order shall be sent by ordinary

mail to Plan Administrator, DuPont Legal, D-7033,

1007 Market Street, Wilmington, Delaware, 18898.

17. The Plan Administrator shall promptly notify

the Participant, the alternate Payee, and their attor-

neys of the receipt of a copy of this Order and the

Plan’s procedures for determining the qualified status

of domestic relations orders, and within a reasonable

period of time after receipt of a copy of this Order,

determine whether this Order is a qualified domestic

relations order and notify the Participant and the

Alternate Payee of such determination.

App. 59

SIGNED the 3 day of December, 1997.

/s/ Monte D. Lawlis_

JOE-BOB-GOLDEN Monte D. Lawlis

JUDGE PRESIDING

App. 60

NO. 16.352

IN THE MATTER OF $§ IN THE DISTRICT

THE MARRIAGE OF § COURT OF

LIV KENNEDY AND 3 JASPER COUNTY,

WILLIAM PATRICK ; TEXAS

ewe § 1ST JUDICIAL

AND IN THE INTEREST OF § DISTRICT

THEIR MINOR CHILD g

FINAL DECREE OF DIVORCE

On the 6th day of May, 1994, this case came on

for hearing.

Appearances

Petitioner, LIV KENNEDY, Social Security

Number XXX-XX-XXXX, appeared in person and

through attorney of record, BRUCE N. SMITH.

Respondent, W.P. KENNEDY, Social Security

Number XXX-XX-XXXX, appeared in person and

through attorney of record, A.W. DAVIS, JR.

Record

The record of testimony was made by the Court’s

duly authorized court reporter.

Jurisdiction and Domicile

The Court finds that the pleadings of Petitioner

are in due form and contains all the allegations,

App. 61

information, and prerequisite required by law. The

Court, after receiving evidence, finds that it has

jurisdiction over this cause of action and the parties

and that at least 60 days have elapsed since the date

the suit was filed. The Court finds that Petitioner has

been a domiciliary of this state for at least a six

month period preceding the filing of this action and a

resident of the county in which this proceeding is filed

for at least a 90 day period preceding the filing of this

action. All persons entitled to citation were properly

cited.

Jury

A jury was waived, and all questions of fact and

of law were submitted to the Court.

Divorce \

IT IS ORDERED AND DECREED that Peti-

tioner, LIV KENNEDY, and Respondent, WOILLIAM

PATRICK KENNEDY, be and they are hereby

divorced.

Children of the Marriage

The Court finds that there are no children of the

marriage under the age of 18 years, and none are

expecting.

App, 68

—

The Court finde that the following ia a just and

right division of the partion’ marital estate, having

due regard for the rights of each party,

IT 18 ORDERED AND DECREED that the

oatate of the partion ie divided aa follows:

Petitioner ia awarded the following aa Peti-

tioner’s sole and separate property and Reapondent ia

divested of all right, tithe, Interest, and elaim in and

to auch property!

1, All monies and proceeds and interest in

and from the Merril Lyneh Account Ac.

oount WXAXXXXNNX, aald account in the

names of Willlam P, Kennedy and Liv

Kennedy,

4. The 1H89 Mervedea Beng S008D automo:

bile, VINW#WDRCTHROAIDBOATOAT, — toe

wether with all tithe documents, prepaid

insurance and keys,

4. A portion of Reapondent’s retirement

benefita with HB. 1, Dupont De Nemours

and Company, pursuant to the Qualified

Domestic Relations Order whieh ia at:

tached hereto and incorporated herein

for all purposes,

4, All household fMarniture, Mentahings, (x

tures, goods, appliances and equipment

in the possession of or subject to sole

control of Potitioner,

App, 68

All clothing, jowelry, and othor personal

affecta in the possession

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