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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Record and brief
- **Published:** January 1, 2009
- **Citation:** 555 U.S. 285

## Text

No. 07-636

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

v.

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 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,
V.

PLAN ADMINISTRATOR FOR DUPONT
SAVINGS AND INVESTMENT PLAN;
E.1. DUPONT DE NEMOURS & COMPANY,

Respondents.

S

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

i
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)?

ii
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.

ii

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

iv

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...

I.

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..............

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

B. The “Plan Documents” courts.............
C. The new QDRO circuit-split ...............
D

. 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

12

13

A.

Vv

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

vi

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

ix

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

x

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

xl

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 10
26 C.F.R. § 1.401(a)-20, Q&A-25-31. 20... 10
OTHER AUTHORITIES
Civil Rights Attorney’s Fees Awards Act of 1976 ...... 16
S. Rep. No. 575, 98th Cong., 2d Sess. 11-18

Pa cniccacisetancnsienetliiienicasaeasiidtiinedbtiiadiieniatntaniaeieniggiel 10

1

BRIEF FOR THE RESPONDENT
IN OPPOSITION

INTRODUCTION

This case involves a very narrow issue of the
application of ERISA’s anti-alienation provision, 29
U.S.C. § 1056(d)(1), which bars the direct or indirect
alienation of pension benefits subject to ERISA.
Specifically, the court below found that the anti-
alienation provision prohibited a pension plan from
treating a state divorce decree that is not a QDRO as
a waiver of pension benefits of a spouse.

Each employee benefit plan covered by ERISA is
classified as either a pension plan or a welfare plan.
29 USC. § 1002(1), (2). ERISA’s anti-alienation
provision applies only to pension plans; it does not
apply to life insurance and other welfare plans.
Mackey v. Lanier Collection Agency & Serv., Inc., 486
U.S. 825, 836-37 (1988). The parties agree that the
DuPont Savings and Investment Plan (“SIP”) at issue
here is a pension plan and is therefore subject to
ERISA’s anti-alienation provision. Petitioner urges
the Court to grant her petition to resolve what she
contends is a division of authority on whether ER-
ISA’s anti-alienation provision prohibits a pension
plan from giving effect to a beneficiary’s divorce court
order regarding the beneficiary's right to benefits
under the pension plan.

Most of the cases that Petitioner invokes to
support her assertion that there is a circuit split on
this issue involve life insurance and other welfare

2

plans that are not subject to ERISA’s anti-alienation
provision. Although Petitioner also refers to circuit
court cases involving pension plans, only two of them
hold that the anti-alienation provision does not bar a
pension plan from giving effect to a waiver by a
beneficiary. Both decisions were based on the view
that ERISA’s anti-alienation provision did not apply
to a waiver, by a pension plan beneficiary. However,
that view was superseded by the Court in Boggs v.
Boggs, 520 U.S. 833, 846 (1997), which made clear
that ERISA’s anti-alienation provision applies to
beneficiaries as well as to participants under pension
plans.

ERISA allows benefits to be paid only to partici-
pants or their beneficiaries.' Specifically, ERISA
§ 403(c) requires that assets of the plan be used only
for these purposes and for the payment of plan ex-
wenses. 29 U.S.C. §1103(c). Furthermore, the Act
requires the administrator-fiduciary to act solely for
the benefit of the participants and their beneficiaries.
29 USC. § 1104(a)(1A)(i); Cent. States, Southeast

' Tine term “participant” means any employee or former
emplowee of an employer, or any member or former member of
am employce organization, who is or may become eligible to
receive a benefit of any type from an employee benefit plan
which covers employees of such employer or members of such
organization, or whose beneficiaries may be eligible to receive
any such benefit. 29 U.S.C. § 1002(7). A “beneficiary” is a person
designated by the participant or by the terms of the plan. 29
U.S.C. § 1002/8).

3

and Southwest Areas Pension Fund. v. Cent. Transp.,
Inc., 472 U.S. 559, 571 (1985).

9

STATEMENT

The Estate of William Patrick Kennedy (“Estate”)
seeks review of a final decision of the Fifth Circuit
that ERISA’s anti-alienation provision applied and
that because ERISA includes detailed, careful, and
comprehensive provisions for changing the beneficiar-
ies under a pension plan — provisions that were not
invoked by the parties in this case — there was no
basis for creating a federal common-law rule to
address an issue that Congress had already ad-
dressed in ERISA. The court of appeals also con-
cluded that while a Qualified Domestic Relations
Order (““QDRO”), 29 U.S.C. § 1056(d\(3)(B)(), pro-
vided a means of effecting a waiver, none was filed for
the SIP benefits.

Decedent, William Kennedy, was a DuPont
employee and participated in its SIP. There is n»
dispute that the SIP is an “employee pension benefit
plan,” as defined by ERISA. 29 U.S.C. § 1002(2). (Pet.
App. 37). In 1971, during his DuPont employment,
decedent married Liv Kennedy. Decedent signed
beneficiary-designation forms in 1974, identifying Liv
Kennedy as the SIP’s sole beneficiary. Decedent did
not name a contingent beneficiary. (Pet. App. 2).

Decedent and Liv Kennedy divorced in 1994.
Pursuant to the decree, Liv Kennedy agreed to be

4

divested 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.” (Pet. App. 64-65). In 1997, a QDRO
was approved by the state divorce court. It provided
benefit disbursement instructions for some of dece-
dent’s non-SIP employee benefit plans. (Pet. App. 54).
No QDRO for the SIP, however, was ever submitted.
Both William and Liv Kennedy were represented by
counsel.

Decedent retired from Dv "ont in 1998 and died
in 2001. Although permitted to do so, decedent never
executed any documents replacing or removing Liv
Kennedy as the SIP beneficiary. (Pet. App. 3).

Kari Kennedy, the daughter of the decedent and
Liv Kennedy, was appointed executrix of decedent’s
estate. By letter to DuPont, the Estate demanded the
SIP funds be distributed to the Estate, claiming the
beneficiary designation of Liv Kennedy was invalid.
DuPont refused, relying on the SIP beneficiary desig-
nation. The Estate also requested Liv Kennedy to
relinquish her SIP interest. She did not do so; in-
stead, pursuant to requests to DuPont, Liv collected
the SIP balance (approximately $400,000). (Pet. App.
3, 33).

The Estate filed this action, seeking to recover
the SIP benefits by presenting an ERISA claim, under
29 U.S.C. § 1132(a1)B), and a state-law breach-of-
contract claim. The Estate basically claimed that Liv

5

Kennedy had waived her rights to the SIP benefits
through the divorce decree, thus invalidating the SIP

beneficiary designation, and that DuPont incorrectly
distributed the SIP benefits.* (Pet. App. 3).

The district court, inter alia, granted summary
judgment for the Estate on its ERISA claim, holding
that the Estate 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. (Pet. App. 52).

In awarding summary judgment to the Estate,
the district court concluded, inter alia, that federal
common-law applied to determine whether Liv Ken-
nedy’s executing the divorce decree waived her right
to the SIP benefits, and that under federal common-
law, the divorce decree constituted a valid waiver.

The district court denied DuPont’s subsequent
motion for judgment as a matter of law or, alterna-
tively, a new trial. Also denied was the Estate’s ER-
ISA-based motion for attorney’s fees.

The court of appeals reversed the district court’s
holding that there was a common-law waiver of
pension benefits by Liv Kennedy. A unanimous panel
of the Fifth Circuit held that ERISA’s anti-alienation

* DuPont filed a third-party claim against Liv Kennedy,
asserting that, in the event she was not the correct beneficiary,
the SIP was entitled to return of the SIP benefits. This claim
was settled without any recovery to the SIP.

6

provision, 29 U.S.C. § 1056(d)(1), controlled because
the benefits involved were pension benefits to which
that provision specifically attached and that Liv
Kennedy’s “waiver” was an impermissible “assign-
ment or alienation” within the meaning of the appli-
cable Treasury Department regulations. (Pet. App. 8-
9). The court concluded that there was no statutory
gap that may allow a resort to a common-law theory
of waiver. (Pet. App. 7). The court also concluded that
the explicit exceptions to the anti-alienation provision
for a QDRO did not apply here because the plan
participant and beneficiary did not seek to obtain a
QDRO for the SIP benefit. (Pet. App. 11).

The court of appeals also affirmed the district
court’s decision not to award attorney’s fees to the
Estate, finding that the district court had applied the
correct standard and had not abused its discretion.
(Pet. App. 11-14),

°

REASONS FOR DENYING THE PETITION

I. THERE IS NO DIVISION OF AUTHORITY
ON WHETHER ERISA’S ANTI-ALIENATION
PROVISION BARS A_ BENEFICIARY’S
WAIVER OF PENSION PLAN BENEFTTS.

A. The very narrow ground on which the court
of appeals decided this case does not create or add to
a split of authority among the courts of appeals nor
does it present a question requiring a decision by this
Court. In the present case, the Fifth Circuit correctly

7

held that the anti-alienation provision of ERISA
controls and prohibits resort to a federal common-law
waiver in pension benefit cases.’ The court noted that
although ERISA provides for an exception to such a
prohibition through the device of obtaining a QDRO,
the parties to the divorce never sought such an order
for the SIP benefits at issue here. (Pet. App. 11). The
Fifth Circuit’s decision is consistent with the text of
ERISA’s anti-alienation provision, the applicable
Treasury Devartment regulations, and this Court’s
precedent."

There is no present division of authority among
the courts of appeals as to the application of the
statutory mechanism employed by the Fifth Circuit in
the instant case. Petitioner relies on two out-dated
decisions by the Seventh and Fourth Circuits which
took the position that the ERISA anti-alienation
provision did not apply to beneficiaries of a pension
plan in connection with the dissolution of a marriage.
(Pet. 10). However, those decisions were prior to this
Court’s decision in Boggs, 520 U.S. at 851-52, which
applied the anti-alienation provision to pension plan
beneficiaries.

* In that the anti-alienation provision applies to more than
domestic relations orders, the issue presented here is exceed-
ingly narrow. See Mackey, supra.

* Petitioner cites to an IRS General Counsel Memorandum
as authority. (Pet. 25-26). However, an internal memorandum
may not be used or cited as precedent. See 26 U.S.C. § 6110(jX3);
Fox Valley & Vicinity Constr. Workers Pension Fund v. Brown,
897 F.2d 275, 279 n.2 (7th Cir. 1990) (en banc).

8

In Fox Valley & Vicinity Constr. Workers Pension
Fund v. Brown, 897 F.2d 275, 279 (7th Cir. 1990) (en
banc), the Seventh Circuit found that ERISA’s anti-
alienation provision did not apply to a _ non-
participating spouse’s pension benefit where the
waiver was given in connection with the dissolution of
their marriage. The Fourth Circuit in Estate of Alto-
belli v. Int’l Bus. Mach. Corp., 77 F.3d 78, 81 (4th Cir.
1996), adopted the Seventh Circuit’s approach that
the anti-alienation clause does not apply to benefici-
aries. The Altobelli Court proceeded to apply a com-
mon-law theory of waiver to find that a former wife
had given up her pension benefits under a marital
settlement agreement that had been incorporated
into the state divorce decree. Jd. at 81-82.

Fox Valley and Altobelli do not reflect current
law. Since this Court in Boggs settled that the anti-
alienation clause does apply to beneficiaries, the
Seventh and Fourth Circuits have not revisited or
reaffirmed their prior opinions as to the applicability
of the anti-alienation provision to beneficiaries, such
as Liv Kennedy in this case.

Petitioner also maintains (Pet. 24, 25) that this
decision is contrary to earlier Fifth Circuit decisions.
However, the cases cited by Petitioner do not involve
waivers in conjunction with martial dissolutions.
Further, Petitioner never sought re-hearing before
the Fifth Circuit to resolve this perceived conflict.

No reported decision of any circuits that have
considered the application of the anti-alienation and

9

QDRO provisions of ERISA have found contrary to
the decision before this Court. Far from creating or
adding to a split of authority among the circuits, the
Fifth Circuit’s opinion in this case finds substantial
support from a recent opinion of the Third Circuit in
McGowan v. NJR Serv. Corp., 423 F.3d 241 (3d Cir.
2005), cert. denied, __ ~U.S. -__, 127 S.Ct. 1118
(2007). There, a retiree sought declaratory relief to
direct the employer’s benefit plan to recognize his
former wife’s waiver of beneficiary rights. The court of
appeals dismissed the retiree’s action finding that
ERISA’s anti-alienation provision applied to bar a
waiver by the former wife and noted that a QDRO
had not been filed. /d. at 250.

Petitioner’s reliance on state jurisprudence is
equally unavailing. Petitioner relies on state court
decisions involving facts and ERISA provisions mark-
edly different from the presen’ case. Petitioner claims
at some length that Kennedy conflicts with the Texas
Supreme Court’s decision in Keen v. Weaver, 121
S.W.3d 721 (Tex. 2003). (Pet. 27-32). Petitioner is
badly mistaken. There is no conflict between the two
decisions.

Keen involved a claim by a pension plan partici-
pant’s former wife to the surviving spouse benefits
that ERISA requires to be provided to the surviving
spouse of a married participant. Although the partici-
pant’s former wife executed a waiver in connection
with the divorce, and although the court relied on the
waiver in reaching its decision, the waiver was en-
tirely beside the point: the participant in Keen had

10

subsequently remarried, and ERISA’s surviving
spouse provisions treat only the participant’s spouse
at the time of the participant’s death (the second wife
in Keen) as the participant’s surviving spouse. As a
result, regardless of the waiver, the former wife had
no right to surviving spouse benefits under the pen-
sion plan.° There is thus no conflict between the
outcome in Keen and the outcome in this case,” and
the Court should not grant certiorari on the basis of
Petitioner’s claim that the Fifth Circuit’s decision in
this case conflicts with the decision in Keen.’

* Under ERISA’s surviving spouse provisions, where a
participant dies before his benefits are paid or begin to be paid,
the participant’s spouse on the date of the participant’s death is
the spouse who is entitled to receive the surviving spouse
benefits, subject to a limited number of exceptions (e.g., where
the spouse and the participant have been married for less than a
year, where a QDRO provides otherwise, or where the spouse
consents to the participant’s designation of someone else as the
beneficiary). See 29 U.S.C. § 1055; 26 C.F.R. §§ 1.401l(a)-11 and
1.401(a)-20, Q&A-25-31; S. Rep. No. 575, 98th Cong., 2d Sess.
11-18 (1984).

* If the Texas courts are faced in the future with a case like
this one, where the divorced participant does not remarry, it is
likely that the Texas courts will follow the Fifth Circuit's
decision in this case. In Keen, the Texas Supreme Court relied
heavily on Fifth Circuit decisions. See Manning v. Hayes, 212
F.3d 866 (5th Cir. 2000); Clift v. Clift, 210 F.3d 268 (5th Cir.
2000); Brandon v. Travelers Ins. Co., 18 F.3d 1321 (5th Cir.
1994). Keen also relied on a number of other courts’ decisions
that are now obsolete as a result of Boggs.

" Other state court cases cited by Petitioner (Pet. 10)
are also inapplicable. For example, MacInnes v. Rowley, 677
N.W. 2d 889 (Mich. CV. App. 2004) (welfare benefits case to

(Continued on following page)

11

In the final analysis, not only is the decision by
the Fifth Circuit not part of a split of authority
among the circuits, but also the case was rightly
decided. Petitioner does not dispute that the SIP is a
pension plan, that ERISA’s anti-alienation provision
applies to the SIP and its beneficiaries, that Liv
Kennedy was decedent’s sole beneficiary under the
SIP, and that decedent never replaced Liv as his
beneficiary under the SIP. (Pet. at 2-3). Petitioner
acknowledges that the divorce decree is a domestic
relations order within the meaning of § 1056(d)(3)(B)@i)
and that although the divorce court issued a QDRO,
the QDRO did not apply to the SIP. (Pet. at 3-4).

Although ERISA exempts QDROs from the anti-
alienation provision, ERISA provides that if a domes-
tic relations order is determined not to be a QDRO
the plan must pay the benefit in question to the
person who would have been entitled to receive the
benefit in question if there had been no order. See 29
U.S.C. § 1056(d)(3)(H)Gii). Petitioner has acknowl-
edged that the divorce court’s order was not a QDRO.
Thus, the QDRO provisions did not merely prohibit
the SIP from giving effect to the divorce order; they
also required the SIP to distribute decedent’s account
balance to decedent’s designated beneficiary.

which anti-alienation provision does not apply); Strong uv.
Omaha Constr. Ind. Pension Plan, 701 N.W. 2d 320 (Nebr. 2005)
largely ignoring the anti-alienation provision).

12

There are three alternative approaches that the
parties could have taken to assure that the SIP death
benefit would be paid to someone other than Liv
Kennedy:

° The parties could have asked the divorce
court to issue a QDRO directing the SIP
to pay decedent’s account balance to one
or more alternate payees;

° At any time during the roughly seven-
year period between the divorce and de-
cedent’s death, decedent could have des-
ignated someone else as his beneficiary

under the SIP; or

° Before the date of the divorce, if dece-
dent had been able to obtain his wife’s
consent, decedent could have designated
someone else as his beneficiary under

the SIP.

Liv Kennedy’s status as decedent’s beneficiary
under the SIP following the divorce was thus not the
result of a “gap” in the statute; it was due to the
parties’ failure to take any of the approaches that
ERISA offered them. In the absence of a gap in the
statute, there is no justification for formulating a
common-law rule, as Petitioner proposes, and no need
for the Court to grant the petition for a writ of certio-
rari.

B. In an effort to show that this case is worthy
of review, Petitioner attempts at some length (Pet.
9-12) to construct a series of conflicts among the

13

circuits. Although conflicts do exist, that division of
authority does not affect the narrow holding of the
Fifth Circuit in this case.*

More specifically, the courts have developed two
theories to deal with a claim of waiver of benefits by a
designated beneficiary. One theory addresses whether
ERISA authorizes courts to adopt common-law rules
that give effect to a waiver of benefits if the waiver
meets certain requirements, including specificity,
voluntariness, and good faith. See, e.g., Manning v.
Hayes, 212 F.3d 866, 874 (5th Cir. 2000); Clift v. Clift,
210 F.3d 268, 271 (5th Cir. 2000); Fox Valley, 897 F.2d
at 281.

The other theory is usually called the “plan
documents” approach, which requires all employee
benefit plans to be administered in accordance with
the terms of the plan and the forms on file with the
administrator. Thus, no alteration of beneficiaries
would be permitted except in accordance with terms
of the plan and not by other documents such as
private agreements between participants and benefi-
ciaries. See, e.g., McMillan v. Parrott, 913 F.2d 310

* In his amicus brief upon invitation from this Court in
McGowan, the Solicitor General did not sufficiently focus on the
difference between welfare and pension cases and their relation
to the anti-alienation provision in concluding that there is a split
of authority among the circuits.

14

(6th Cir. 1990); Krishna v. Colgc-te Palmolive Co., 7
F.3d 11, 16 (2d Cir. 1993).°

In the case at bar, the Fifth Circuit did not need
to resort to either of these theories because it based
its decision exclusively on the anti-alienation provi-
sion. Since a QDRO was prepared and submitted to
the state court in the divorce proceedings but did not
cover the SIP, the court of appeals reasoned that the
alienation or waiver of beneficiary rights was statuto-
rily barred. Finding no gap in the statutory regime,
there was no need to resort to either the waiver
theory or the plan documents approach.

Indeed, the Fifth Circuit emphasized that prior
Fifth Circuit decisions that adopted the other theories
were simply inapposite because they involved welfare
benefits to which the anti-alienation provision of
ERISA does not apply. (Pet. App. 5-6) Thus, any case
involving welfare benefits is not in conflict with the
ruling below on pension benefits.”

The anti-alienation provisior applies only to pen-
sion benefits and not to welfare benefits. Therefore,

* In the event this Court grants certiorari DuPont would
argue, in the alternative, that it also should prevail under this
“plan documents” approach.

Most of the cases to which the anti-alienation provision
was not applicable involved insurance disputes, as noted by the
Fifth Circuit. (Pet. App. 5-6). See also, Krishna, supra; Metro.
Life Ins. Co. v. Pettit, 164 F.3d 857 (4th Cir. 1998); Metro. Life
Ins. Co. v. Pressley, 82 F.3d 126 (6th Cir. 1996); Metro. Life Ins.
Co. v. Hanslip, 939 F.2d 904 (10th Cir. 1991).

15

any case involving welfare benefits is fully outside
the scope of the anti-alienation and QDRO provisions
that are the basis of the Fifth Circuit’s decision in
this case.

The difference of opinion among the circuits as to
the correct analysis of a beneficiary’s waiver of bene-
fits may be necessary in a future case that presents
the correct factuai context for its resolution. However,
the instant case is not an appropriate vehicle to
resolve any such division of authority on common-law
theories of waiver. In this case, the Fifth Circuit
simply did not choose between these different theo-
ries but rather based its decision solely on the anti-
alienation provision that applies only to pension
plans.

Il. THERE IS NO DIVISION OF AUTHORITY
REGARDING THE STANDARD GOVERN-
ING ATTORNEY’S FEE AWARDS IN ERISA
CASES.

There is no circuit split regarding the standard
governing the award of attorney’s fees in ERISA
cases. Petitioner’s argument to the contrary (Pet. 36-
37) relies upon overruled authority and is completely
wrong.

In deciding whether to grant the Estate attor-
ney’s fees, both the district court (Pet. App. 23) and
the court of appeals (Pet. App. 12) applied a five-
factor test set out by the Fifth Circuit in Jron Workers

16

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

Petitioner argued in both the district court and
the court of appeals that the five-factor test was the
correct test. Now, for the first time, Petitioner chal-
lenges the use of the five-factor test, and claims that
there is a division of authority on this point among
the courts of appeals. Petitioner has waived that
argument.

Petitioner argues that the courts of appeals view
the standard governing the award of attorney’s fees
in ERISA cases in two distinct ways. (Pet. 35-36).
Petitioner claims that some circuits utilize the five-
factor test first developed in Eaves v. Penn, 587 F.2d
453, 465 (10th Cir. 1978) (same five-factor test later
adopted by the Fifth Circuit in Bowen, supra). (Pet.
35-36), while other circuits utilize the standard
applied in the Civil Rights Attorney’s Fees Awards
Act of 1976, 42 U.S.C. § 1978. (Pet. 36). Under the
Civil Rights Fees Act, attorney’s fees are to be

" The five factors are:

1) degree of culpability or bad faith;
2) ability to satisfy an award;

3) deterrence value;

4) whether plaintiff sought to benefit all parties to
the ERISA plan or to resolve a significant legal
question regarding ERISA;

4) relative merits of parties’ positions.

(Pet. App. 23).

17

awarded to a prevailing party unless special circum-
stances would render the award unjust. Hensley v.
Eckerhart, 461 U.S. 424, 429 (1983).

Petitioner urges the adoption of the standard
used in civil rights cases to ERISA cases, stating that
the civil rights standard is “more consistent with
ERISA’s purposes” than the five-factor test. (Pet. 37).
In support of this argument, Petitioner relies on the
Eighth Circuit’s decision in Landro v. Glendenning
Motorways, Inc., 625 F.2d 1344 (8th Cir. 1980), and
the Ninth Circuit’s decision in Smith v. CMTA-IAM
Pension Trust, 746 F.2d 587 (9th Cir. 1984), categoriz-
ing these cases as the side which utilizes the civil
rights standard. (Pet. 36-37).

However, Petitioner is grossly misguided. The
Eighth Circuit overturned Landro in Martin v. Ark.
Blue Cross & Blue Shield, 299 F.3d 966, 972 (8th Cir.
2002) (en banc), and now currently applies the Eaves
five-factor test. See also, Starr v. Metro Sys., Inc., 461
F.3d 1036, 1041 (8th Cir. 2006) (recent case following
Martin and applying five-factor test).

In Martin, the Eighth Circuit stated that while,
in Landro, it was the first circuit to apply the civil
rights standard to an ERISA case, it now agreed, for
many reasons, “with the overwhelming majority of
circuits that have considered this issue and concluded

" Petitioner also heavily relies on two student-written law
review comments and an article written for a business publica-
tion by two lawyers, all of which pre-date Martin. (Pet. 36, 37).

18

that the presumption should not be employed in
ERISA cases.” Martin, 299 F.3d at 971-72. The Eighth
Circuit found that the five-factor test best facilitated
the exercise of the district court’s discretion, and
“overrule[d] Landro’s holding to the contrary.” Id.
at 972. Consequently, Petitioner’s argument rests
largely on an overruled decision.

The Ninth Circuit has always applied the five-
factor test, see Hummell v. S.E. Rykoff & Co., 634
F.2d 446, 452-53 (9th Cir. 1980), and did so even in
Smith. In Smith, the Ninth Circuit also decided to
incorporate the civil rights standard on top of the
five-factor test, while noting that the five-factor test
still applied. Smith, 746 F.2d at 589-90 (holding that
the Hummel five-factor test applies, but should be
taken in light of remedial purpose of ERISA); see also
McElwaine v. U.S. West, Inc., 176 F.3d 1167, 1172
(9th Cir. 1999) (noting that the Ninth Circuit applies
the five-factor test and also applies the special cir-
cumstances rule used in civil rights cases).

However, Smith, which was the genesis of the
civil rights standard “overlay” on the five-factor test
in the Ninth Circuit, relied exclusively on the subse-
quently overruled decision in Landro as authority for

" Hummell was the first case in which the Ninth Circuit
considered the award of attorney's fees in an ERISA case. The
court determined that the Fifth and Tenth Circuits in Bowen, 624
F.2d 1255 and Eaves, 587 F.2d 453, respectively, were correct in
using the five-factor test as a guideline for the district courts and
consequently adopted that standard. Hummel! , 634 F.2d at 450

19

superimposing the civil rights standard on top of the
five-factor test. Smith, 746 F.2d at 589. It is notewor-
thy that the Ninth Circuit has, on occasion, also
applied the five-factor test without incorporating the
civil rights standard. See, e.g., Tingey v. Pixley-
Richards West, Inc., 958 F.2d 908 (9th Cir. 1992).

Consequently, contrary to Petitioner’s argumenv
(Pet. 35-39), every court of appeals, including the
Eighth and the Ninth Circuits, employs some version
of the five-factor test." Accordingly, there is no circuit
split, and the Petition should be denied.

©

CONCLUSION

For the foregoing reasons, this Court should deny
the petition for a writ of certiorari.

Respectfully submitted,
RAYMOND MICHAEL RIPPLE

ELIZABETH PRATT (Counsel of Record)
MEHAFFYWEBER, PC. DONNA L. GOODMAN
2615 Calder Avenue, Legal D-7012

Suite 800 E. |. DU PONT DE NEMOURS
Beaumont, TX 77702 AND COMPANY
409/835-5011 1007 Market Street

Wilmington, DE 19898
302/773-3072
Counsel for Respondents

‘¢

See Sullivan v Randolph, 504 F3d 665, 670 (7th Cir
2007), and Martin, supra (collecting authorities).

@) File Date:

No. 07-636 Jan 24 2008
Sn The
Supreme Court of the United States

KARI ELL™N KENNEDY, INDEPENDENT
EXECUTRIX OF THE ESTATE OF
WILLIAM PATRICK KENNEDY, DECEASED,

Petitioner,
versus

PLAN ADMINISTRATOR FOR DUPONT
SAVINGS AND INVESTMENT PLAN;
E.I. DUPONT DE NEMOURS & COMPANY,

Respondents.

+

On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Fifth Circuit

¢

PETITIONER’S REPLY BRIEF

>
STACY L. KELLY DAVID A. FURLOW
Counsel of Record KEVIN PENNELL
MACINTYRE & MCCULLOCH, L.L.P. MORGAN GASKIN
3900 Essex, Ste. 220 THOMPSON & KNIGHT LLP
Houston, Texas 77027 333 Clay St., Ste. 3300
(713) 572-2900 Houston, Texas 77002
(713) 572-2902 (fax) (713) 654-8111

(832) 397-8253 (fax)

Attorneys for Petitioner Kari Ellen Kennedy

COCKLE LAW BRIEF PRINTING CO (800) 225-5964
OR CALL COLLECT (402) 442-2871

TABLE OF CONTENTS

Page
I ical a acta seriotaineisiiiealiih i
EEE TEIN EET Fe I RE ET TOOT ii
Reasons for Granting the Petition......................... 1

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............... 1

Il. The Fifth Circuit erred in applying a plan-
deferential five-factor abuse of discretion
test for awarding attorney’s fees that pe-
nalizes prevailing parties in ERISAcases.. 11

SSE EES OE COL LL OEE ADT Ee NC eT 14

li

TABLE OF AUTHORITIES

Page
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35

EXHIBIT 7
No. 7573
Letters Testamentary

The State of Texas IN COUNTY COURT.
County of Tyler Tyler County, Texas,
I, DONECE GREGORY Clerk of the County

Court of Tyler County, Texas, do hereby certify that on
the 16th day of April A.D. 2001 Kari Ellen Kennedy
Duckworth was duly granted by said Court Letters
Testamentary of the Estate of WILLIAM PATRICK
KENNEDY deceased and that she qualified as such
ndent Executrix of said Estate on the 16th day
of April A.D. 2001 as the law requires, and that said
appointment is still in full force and effect.

Witness my hand seal of office at Woodville this
7th day of November A.D. 2001

DONECE GREGORY Clerk,

County Court, Tyler County, Texas.

By Jean Jordan ____ Deputy.
Jean Jordan

36

EXHIBIT 8
Estate Return

Prepared for:
WILLIAM P. KENNEDY

Neil Chamberlain
Certified Public Accountant

* + *

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39

kk ee
Estate of: WILLIAM P. KENNEDY _ xxx-xx-xxxx

SCHEDULE C - Mortgages, Notes, and Cash
(For jointly owned property that must be disclosed
on Schedule E, see the instructions for Schedule E.)

Alternate Value at
Item valuation|Alternate| date of
Number| Description | date value | death
ME see on + ——

1 /|Citizens State 9/27/01 1,062, 1,062
Bank # xxxxxx |
Checking

Woodville, TX

2 |Merrill Lynch | 9/27/01\ 26,943] 26,943
CMA Acct#
XXX-XXXXX

3 |Citizens State 8/27/01) 25,958) 25,958
Bank #xxxxx
Checking

Woodville, TX

4 |Dupont SRW 9/27/01 162 162
Employees
FCE 4418-08
Savings,
Orange, TX

ML Dupont 9/27/01, 395,255| 395,255
‘Savings & | |
Investment Plan |

qu

Total from continuation schedules
(or additional sheets) attached to
this schedulle.......................cccc.00000 Bae

40

TOTAL. (Also enter on Part
5, Recapitulation, page 3,
a eiicinadicbiensnaltteadilicicansen 449,380! 449,380

(If more space is needed, attach the continuation
schedule from the end of this package or additional
sheets of the same size.)

(See the instructions on the reverse side.)

There are no continuation schedules attached

Schedule C

41

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43

EXHIBIT 14
{19} Details of the Plan
VESTING

You are always immediately vested in (that is, have a
nonforfeitable right to) your own contributions to the
plan and all investment earnings. After five years of
Company service, you are vested in all Company
contributions to your account.

IF YOU ARE REEMPLOYED

If you terminated plan participation or left DuPont
for any reason after you were eligible to participate in
SIP, you will be immediately eligible to participate in
SIP again if you are reemployed.

IF YOU DIE

If you die before receiving your SIP account balances,
your designated beneficiary(ies) will receive the
balance in your accounts. Federal law requires that,
if you are married, your spouse be designated as sole
beneficiary of your plan assets upon your death
unless:

* your spouse has consented in writing to
your naming another heneficiary (the
law requires that the consent be wit-
nessed by a notary public), or

¢ the consent cannot be obtained because
your spouse cannot be located.

44

Spousal consent is not required if you and your
spouse are legally separated or if you have been
abandoned (within the meaning of local law) unless a
Qualified Domestic Relations Order provides other-
wise.

You may also designate an irrevocable trust as the
beneficiary of your SIP assets. However, such a trust
will be treated by the plan as a non-spouse benefici-
ary, even if your spouse is the sole beneficiary of the
trust.

Whether your spouse is your sole beneficiary or one of
several beneficiaries, he or she may be able to elect a
total payout, periodic payments, or to defer payout
until December of the year in which you would have
reached age 70%, or December of the year after the
year in which you died, whichever is later.

All other beneficiaries (including trusts) have up to
12 months to receive their share, which will be paid
in a lump sum.

If you were repaying a loan via deductions from your
pension check when you died, any remaining loan
balance is automatically deducted from your account
balances as of the month of death.

If you have no surviving spouse and no beneficiary
has been named, distribution is made to your estate.

SALE OR OUTSOURCNG |sic] OF BUSINESS

If your plan participation is terminated because
of the sale of a business or facility and you accept

45

employment with the buyer, you may be permitted to
transfer part or all of your accounts to the buyer’s
plan, or you may elect to take full distribution of your
accounts. You may also elect to defer payout until
shortly after age 70%.

The arrangements for handling SIP account balances
can differ in these situations. Therefore, it is very
important to review carefully all of the information
provided to you if you are affected by a sale or out-
sourcing so that you understand exactly what options
are available to you.

KEEPING TABS ON YOUR ACCOUNT

Your savings in the SIP and DuPont’s matching
contributions are invested for you by the plan trustee.
Following the end of each calendar quarter, Merrill
Lynch will mail you a statement summarizing the
activity in your account during the quarter and your
account balances.

46

EXHIBIT 15

* * *

|21|)(3) a written authorization for Loan

(e)

(f)

(g)

repayment by means of payroll
deductions or other method of
repayment acceptable to the
Plan Administrator,

(4) an authorization to transfer an
amount described in Sec. VIII.2
to Fund L, and

(5) the consent required by Section
XIII.7.(b)(1).

A “qualified residential Loan” is a
Loan used to acquire or construct
any dwelling unit which within a
reasonable time (determined at the
time the Loan is made) is to be used
as a principal residence of the Par-
ticipant.

All Participants granted Loans un-
der this Section shall receive a
statement disclosing the terms of
the Loan, including the interest
rate, amount of interest to be paid
over the term of the Loan and pay-
ment conditions (disclosure state-
ment).

No Loan may be granted that would
adversely affect the status of the
Plan as one which qualifies under
Section 401(a) or 401(k) of the Code

or the status of the trust as one

47

which is exempt from Federal in-
come tax under Section 501(a) of the
Code.

(h) Notwithstanding anything above to
the contrary, the Loan Administra-
tor may deny a Loan if in its judg-
ment the Participant will not have
sufficient income to meet his Loan
payments as they become due.

(i) The Loan Administrator is responsi-
ble for the administration of the
loan program described in this sec-
tion.

WITHDRAWALS
General Conditions

(a) In addition to a distribution pursu-
ant to Section XVI. 1 an account
holder may make three withdrawals
in any calendar year under the pro-
visions of this Section from his
Regular and/or Before-Tax Accounts.
Withdrawals shall not be permitted:

(i) from the Before-Tax Account be-
fore the Participant attains age
59 1/2, becomes disabled, or in-
curs a hardship, or

Gi) from Fund L except as provided
in Section XIII.7.

*: + *

48

[29] (c) Beneficiary Designation

(1) A Participant, Former Partici-
pant, Retired Participant or
Spouse Beneficiary may desig-
nate any beneficiary or benefi-
ciaries he chooses to receive all
or part of his interests in Funds
B, C, D, E and F in case of his
death, and he may replace or
revoke such designation. How-
ever, in the event the Partici-
pant, or Spouse Beneficiary has
a spouse, no designation of a
person other than the spouse
shall be permitted, unless such
spouse has consented in writing
in the manner prescribed by the
Company to another benefici-
ary, or such consent could not be
obtained because the spouse
could not be located or because
of such other reasons as appli-
cable Treasury Regulations may
provide in which case distribu-
tion shall be made as provided
in Paragraph 4(a) of this Sec-
tion. If no surviving spouse
exists and no beneficiary desig-
nation is in effect, distribution
shall be made to, or in accor-
dance with the directions of, the
executor or administrator of the

decedent’s estate.

49

With respect to non-Spouse
Beneficiaries (including a bene-
ficiary who is a spouse of a
Former Participant), the bal-
ance of a deceased Participant’s,
Former Participant’s, Alternate
Payee’s or Retired Participant’s
Plan assets will remain in the
accounts and Funds as of the
time of his death, pending
distribution. Total distribution
shall be made to such benefici-
aries no later than the end of
the sixtieth month following
the death of the Participant,
Former Participant, Alternate
Payee or Retired Participant.

If in the opinion of the Company
there is a question as to the le-
gal right of any beneficiary to
receive a distribution under the
Plan, the amount in question
may be paid to the decedent’s
estate, in which event the Trus-
tee and the Company shall have
no further liability to anyone
with respect to such amounts.
Non-Spouse Beneficiaries may
not designate beneficiaries; ac-
count balances remaining at the
time of their death will be paid
to their estates as soon as prac-
ticable following the death of
the Non-Spouse Beneficiary.

XVII.

(2)

[39] (5)

50

If the Plan Administrator re-
ceives a qualified disclaimer (as
defined in Code section 2518)
from any designated beneficiary
entitled to benefits as a result
of, and within nine months
after, the death of a Participant,
Former Participant, Spouse
Beneficiary, Alternate Payee or
Retired Participant, such bene-
fits shall instead be paid to an

a: * *

A Participant who terminates
employment with the Company
and does not receive a distribu-
tion from the Plan shall not have
his unvested Company Contri-
butions forfeited until he has in-
curred five consecutive One-Year
Breaks in Service commencing
with his termination.

Computation Period

For purposes of this Section, a computa-
tion period shall be a period of 12 con-
secutive months commencing the later of
January 1, 1976, or the employee’s date
of employment or reemployment, which-
ever is applicabie, or any succeeding an-
niversary of such date.

NONASSIGNMENT

Except as provided by Section 401(a)(13) of
the Code, no assignment of the rights or in-
terests of account holders under this Plan

51

will be permitted or recognized, nor shall
such rights or interests be subject to attach-
ment or other legal processes for debts.

XVIII.

OPERATION OF THE PLAN AS A TOP-
HEAVY PLAN

If it is determined that the Plan is a top-
heavy plan, within the meaning of Section
41 6(g) of the Code, for any plan year, this
Section will supersede all other provisions to
the contrary and apply for such plan year.

i

Minimum Vesting

Each Participant shall have a nonfor-
feitable right to a percentage of the
Company Contributions and earnings
thereon in his Regular Account, as de-
termined in accordance with the follow-
ing table:

Years of Nonforfeitable
Participation Percentage
2 but less than 3 20%

3 but less than 4 40%
4 but less than 5 60%
5 and greater 100%

For purposes of determining the years of
participation of a reenrolled Participant,
the provisions of Sections XVI.6 (a) and
(b) shall apply. Vesting of nonforfeitable
rights to Company Contributions ac-
crued after

¥ + *

[41] XIX.

&

52

MISCELLANEOUS PROVISIONS

Plan Administration

(a)

(b)

The Company shall have the author-
ity to control and manage the opera-
tion and administration of the Plan
and to designate one or more per-
sons to carry out the responsibilities
of the operation and administration
of the Plan. The named fiduciary for
the investment aspects of the Plan
is the Vice President, Pension Fund
Investment; the named fiduciary for
all other aspects of the Plan is the
Director, Compensation and Bene-
fits. The named fiduciary for the in-
vestment aspects of the Plan may
appoint an investment manager or
managers to manage all or some of
the assets invested in Fund B, and,
by such appointment, unless specifi-
cally excluded in any agreement
with such investment manager,
delegates to such investment man-
ager or managers the power to
appoint additional investment man-
agers with respect to all or part of
the assets managed by such invest-
ment manager.

All authorizations, designations and
requests concerning the Plan shall
be made by employees in the man-
ner prescribed by the Company.

(c)

(d)

53

The Company, or its designee by
written instrument, shall have the
responsibility of appointing Trus-
tees, as provided in Paragraph 1 of
Section IX, Paragraph l(a) of Sec-
tion X, Paragraph 1 of Section XI
and Paragraph I of Section XII, and
the Compensation and Benefits
Committee, or its designee by writ-
ten instrument, shall have the
responsibility of making the desig-
nations called for pursuant Para-
graph l(b) of Section X.

The Company retains discretionary
authority to determine eligibility for
benefits hereunder and to construe
the teriis and conditions of the
Plan. The decision of the Company
shall be final with respect to any
questions arising as to interpreta-
tion of this Plan.

(e) The Company is the Plan Adminis-

(f)

trator.

Subject to the requirements of the
Code, the Company may authorize
the Trustees of the Plan to accept a
rollover of assets in cash and/or
Company common stock received in
a qualified distribution from a quali-
fied employer plan as described in
Code Sec. 402(a\5), or received in
a distribution from an individual
retirement account, as described
in Code Sec. 408(d 3AM). Any

54

Company common stock received
will be allocated to Regular Account
Fund D. The Account Holder shall

designate the manner

* * *

55

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

vs.

E. I. DUPONT DE NEMOURS
AND COMPANY AND

PLAN ADMINISTRATOR
FOR DUPONT SAVINGS
AND INVESTMENT PLAN

CIVIL ACTION
NO. 1:01CV-904

SP LP LP SNR SH SPH SPH SH SH LH

DEFENDANTS’ MOTION FOR SUMMARY
JUDGMENT AND SUPPORTING BRIEF

(Filed Apr. 2, 2004)

* * *

56

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64

IN THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF TEXAS

BEAUMONT DIVISION
KARI ELLEN KENNEDY, S
INDEPENDENT EXECUTRIX §
OF THE ESTATE OF §
WILLIAM PATRICK KENNEDY, §
DECEASED § CIVIL ACTION
§ NO. 1:01CV-904
vs. §
E. I. DUPONT DENEMOURS _ 5
AND COMPANY AND §
PLAN ADMINISTRATOR §
FOR DUPONT SAVINGS §
§

AND INVESTMENT PLAN

——— —

PLAINTIFF EXECUTRIX’S OBJECTIONS
TO THE AFFIDAVIT OF DEFENDANTS’

WITNESS MARY D. DINEEN
(Filed Jun. 14, 2004)
* * *
EXHIBIT G
AMENDED AFFIDAVIT

(Filed Jun. 14, 2004)
STATE OF DELAWARE §
COUNTY OF NEW CASTLE ;

BEFORE ME, on this day, personally appeared
MARY TD. DINEEN, the individual whose name is

65

subscribed below, and who, upon being placed under
oath, did state as follows:

1.

My name is Mary D. Dineen. I am the Senior
Consultant, Wealth Accumulation Plans for
E. I. du Pont de Nemours and Company
(“DuPont”), responsible for oversight of the
DuPont Savings and Investment Plan (“SIP”)
and the DuPont pension plan. In my posi-
tion, which I have held for iwo years, I
am responsible for monitoring and
maintaining the overall design of these
plans, responding to questions of policy
aud plan provision interpretation that
arise in the course of the operation of
these plans, and for strategic oversight
of the administration of these plans by
the third party firms that, pursuant to
contract with DuPont, review and proc-
ess claims for payment of benefits under
these plans. Accordingly, I work regu-
larly with the employees of the third
party vendors who administer these
plans for DuPont on a contracted basis,
and I respond to questions concerning
application of the written plan provi-
sions to questions that arise in connec-
tion with identifying proper plan
account payees for both of these plans. I
am familiar with the provisions of the
written plan documents for both the
SIP and the DuPont pension plan due to
my daily job responsibilities. Before
taking my current position, I worked as
the Administrative Manager for the SIP

66

and DuPont pension plan for two years.
In that position, I was responsible for
overseeing the day to day administra-
tion of both the SIP and DuPont
pension plan, which included daily co-
ordination of plan operations with third
party service providers and answering
questions about distribution decisions.
All facts set forth in this affidavit are true
and correct and are based on my personal
knowledge, except where expressly stated
otherwise. I am providing this testimony
subject to penalties of perjury.

On five occasions, Liv Kennedy has re-
quested that benefits from the SIP account of
William Patrick Kennedy be paid out to her.
Benefits from the SIP were paid to Liv Ken-
nedy at her request on or about August 1,
2001, August 31, 2001, November 9, 2001,
January 23, 2002, and July 31, 2002 in an
amount totaling $414,143.22. I verified
these transactions by reviewing the
transaction records available to me on
Merrill Lynch’s database, to which I
have direct access.

The SIP funds were paid to Liv Kennedy
upon her request because William Patrick
Kennedy had designated her as the benefici-
ary for the SIP funds. Benefits were paid
pursuant to the written SIP provisions
in the regular course of operation of
the SIP. The Summary Plan Description
for the SIP expressly provides, “If you
die before receiving your SIP account

67

balances, your designated benefici-
ary(ies) will receive the balance in your
accounts.” This is contained on page 19
of The Summary Plan Description. Pay-
ments were made to Liv Kennedy be-
cause the provisions of the SIP also
expressly require payment to the desig-
nated beneficiary. This is memorialized
in Section XVI(4)(c) of the plan, which
provides:

(c) Beneficiary Designation

(1) A Participant, Former Par-
ticipant, Retired Participant
or Spouse Beneficiary may
designate any beneficiary or
beneficiaries he chooses to
receive all or part of his in-
terests in Funds B, C, D, E
and F in case of his death,
and he may replace or re-
voke such designation.

The plan provisions I have quoted ap-
pear on page 29 of the Savings And In-
vestment Plan document. Further, Liv
Kennedy did not notify the SIP that she was
no longer a proper beneficiary or had know-
ingly or voluntarily waived her mght to
the SIP benefits. I have reviewed the
benefit plan file of William Patrick
Kennedy which contained Mr. Ken-
nedy’s beneficiary designations for the
benefit plans in which Mr. Kennedy par-
ticipated. The benefit plan file was

68

created and maintained by employees of
DuPont for the purpose of identifying
the beneficiary designations made by
Mr. Kennedy. It was within the regular
course of the business practices of Du-
Pont to keep and maintain a file of the
beneficiary designations made by Mr.
Kennedy. It was aiso within the regular
course of business for an employee of
DuPont, based on that employee’s per-
sonal knowledge, to transmit and retain
either the originals or true and correct
copies of such beneficiary designations
upon creation by the signer of the des-
ignations and/or to transmit the infor-
mation contained in the beneficiary
designations to be maintained as part of
the records of DuPont, either at the
time the designation was created or
reasonably soon thereafter. Had Liv
Kennedy disclaimed her designation as
the beneficiary of Mr. Kennedy’s SIP,
that declination or disclaimer, or a copy
thereof, would have been included in
the beneficiary designation file main-
tained for Mr. Kennedy. Upon review of
that file, I found no beneficiary designa-
tion forms replacing Liv Kennedy as Mr.
Kennedy’s SIP beneficiary, nor did I
find any disclaimer or declination by
Liv Kennedy requesting or attempting
to disclaim or remove herself as the
beneficiary for Mr. Kennedy’s SIP ac-
count.

on

69

Through the date of this Affidavit, Liv Ken-
nedy has not been required by either E. I. du
Pont de Nemours and Company or the Plan
Administrator for the DuPont SIP to accept
funds from the SIP under the terms of the
plan. In the normal course of SIP opera-
tions, for the first five years after the
participant dies, benefits are paid only
upon request from a designated benefi-
ciary. Under the SIP provisions, when
the designated beneficiary makes a re-
quest for payment, payment is then
made by Merrill Lynch, contractually
the third party recordkeeper, responsi-
ble for making such payments. The SIP
documents make no provision for pay-
ing accounts over $5,000 to a benefici-
ary during their first five years of
eligibility unless the beneficiary re-
quests withdrawal.

Liv Kennedy has not returned any funds to
the SIP which were paid to her from that
plan. This statement is based on my re-
view of the transactional records gen-
erated by Merrill Lynch, the SIP third
party recordkeeper, that were provided
to DuPont by Merrill Lynch. The Merrill
Lynch transactional statements which I
reviewed reflect the activity in the SIP
account of William Patrick Kennedy for
all quarters since April 2001.

Liv Kennedy has not notified the SIP or its
administrator that she is not the proper SIP
beneficiary for the SIP account of William

70

Patrick Kennedy. Liv Kennedy has not noti-
fied the SIP that she knowingly or voluntarily
intended to waive her rights to the SIP bene-
fit as part of her divorce from William Pat-
rick Kennedy. I base these statements on
my review of the file of beneficiary des-
ignations maintained by DuPont which
I describe in Section No. 3 of this affi-
davit.

The SIP provisions define the “Plan
Administrator” as DuPont. This is set
forth at Section XIX(1)(e) of the SIP
plan document. The Plan Administrator
made no representations to Liv Kennedy
that the plan was distributing funds to her
or that it was releasing them to her for any
reason other than her claim for release of the
benefits. I have reviewed the records of
DuPont which relate to the withdrawal
of benefits from William Patrick Ken-
nedy’s SIP account, including the file
containing Mr. Kennedy’s beneficiary
designations. Those records reflect that
the SIP benefits were paid to Liv Ken-
nedy as the designated beneficiary of
William Patrick Kennedy. In acting upon
the claims, the Plan Administrator inter-
preted those claims as representations that
Liv Kennedy was presenting herself as the
proper plan beneficiary. My review of the
file of beneficiary designation records
maintained by DuPont demonstrated
that Liv Kennedy was the beneficiary
designated by William Patrick Kennedy
for his SIP account. The SIP account

10.

11.

71

benefits were paid, as directed by the
plan provisions quoted above in Section
No. 3, to the designated beneficiary.

In the event that Liv Kennedy is not the cor-
rect beneficiary entitled to receive SIP pro-
ceeds, the SIP, acting through its Plan
Administrator, seeks prompt repayment of
the benefits paid out to Liv Kennedy. Such
benefits would constitute an overpayment for
which the plan is entitled to reimbursement
within thirty days after written demand for
repayment. (Section XIX(1)(j))

The 2lan Administrator seeks reimburse-
ment to comply with the provisions of the
SIP and to protect the assets of the SIP in
the interest of all plan beneficiaries and par-
ticipants. If the funds paid to Liv Kennedy
are not returned to the plan, this will result
in a loss to the plan because the SIP will be
required to pay the funds attributable to Wil-
liam Patrick Kennedy’s account twice.

Participation in SIP is made available to all
qualified DuPont employees who work
throughout the United States.

SIP benefits were paid from the account of
William Patrick Kennedy in accordance with
the written content of the Savings and In-
vestment Plan document. The Plan Adminis-
trator (which is DuPont, as explained in
Section No. 7 of this affidavit) concluded
that under that plan, Liv Kennedy was the
proper payee of the SIP benefits because Wil-
liam Patrick Kennedy had designated her in

72

writing as his beneficiary and not submitted
any revocations or redesignations in compli-
ance with the plan. The basis for the pay-
ment of SIP account benefits to Liv
Kennedy is described in this affidavit in
Sections Nos. 3, 6, and 7.

12. At the time the original affidavit was

13.

14.

15.

signed in March 2004, the SIP had ap-
proximately 64,688 participants, including
both active employees and former employees.
Approximately 32,171 are active employee
participants. DuPont conducts business in all
50 states. Former employee participants may
reside in any country in the world in which
they choose.

There are approximately 75,000 participants
in all DuPont pension plans (including the
SIP).

Electronic record systems for SIP re-
cord individuals’ status as either “mar-
ried” or “single.” The SIP does not
currently record whether participants
are divorced for any other purpose. Di-
vorce decrees are occasionally provided with
QDROs, but that is not required. Divorce de-
crees or settlement agreements may be sub-
mitted in connection with qualified domestic
relations orders (““QDROs”), although not all
divorced participants request QDROs in con-
nection with divorces.

To secure legal review of divorce decrees,
the state statutes, and other relevant in-
formation and laws, the SIP would have to

73

seek legal review from the DuPont Legal
Department. In my position, I am respon-
sible for ensuring that questions relat-
ing to SIP provision interpretation are
answered. If I conclude that responding
to a question requires a legal interpre-
tation, I am not qualified to provide a
legal interpretation because I am not a
lawyer. Accordingly, I must look to Du-
Pont’s Legal Department for that legal
interpretaticn. | am not authorized to
secure a legal interpretation from any
legal service or law firm other than the
DuPont Legal Department. I know this
based on my two years of experience in
my current position; this is the actual
practice I have followed. For the entire
DuPont company, there is only one attorney
who is currently dedicated to handling SIP
benefit and investment issues and who has
the expertise necessary to provide informed
counsel on questions of this nature. I know
this because I have been instructed by
representatives of the DuPont Legal
Department that I am to contact Du-
Pont attorney Lori Knauer. Ms. Knauer
has identified herself to me as the at-
torney in the DuPont Legal Department
dedicated to addressing benefit issues,
including benefit payment questions,
arising under the SIP. This is the prac-
tice I have actually followed for the six
years I have served in my current posi-
tion.

16.
17.

18.

19.

74

[Deleted. See Affidavit of Marsha Cauthen.]

Reviewing each divorce decree for compli-
ance with waiver requirements could require
a substantial amount of time by legal coun-
sel. Referring the interpretive issues to legal
counsel would delay the processing of benefit
claims.

If the SIP Plan Administrator hired outside
lawyers for review of divorce decrees, all
costs for legal review conducted by outside
legal counsel retained for that purpose would
reduce plan benefits available to the plan
participants.

Setting up systems for recording each divorce
decree received somewhere within DuPont
and ensuring the decree is forwarded to the
appropriate plan administrator for each plan
will require substantial revisions to existing
processes. DuPont relies upon separate third
party administrators to record beneficiary
designation forms and process claims for
plan benefits under the SIP, pension, and life
insurance plans The systems of these third
parties are not currently set up to track di-
vorces with regard to DuPont — sponsored
benefit plans. Thus, each of the systems util-
ized by these service providers would also
have to be modified to provide for maintain-
ing records of divorces, tracking legal as-
sessment of the impact of divorce decrees on
beneficiary designations, and similar issues
which are not currently required. I am fa-
miliar with the information tracked by

75

the third party vendors that assist Du-
Pont in administering the SIP because I
am responsible for overseeing the sys-
tems used by those vendors to ensure
that they meet SIP needs and for re-
sponding to problems involving use of
those systems as they impact DuPont. I
have access to the data tracked by those
vendors, identified below, as a part of
my ongoing job responsibilities, so I am
aware of the information tracked for
DuPont’s use. Furthermore, I was re-
sponsible for designing the methods
used by the third party vendors for
tracking data for SIP participants and
beneficiaries. The third party vendor
which was responsible for maintaining
current records of beneficiary designa-
tions for the period encompassing 2001,
2002, and 2003 was Mellon Financial
Services. The third party vendor re-
sponsible for making payments of SIP
benefits and maintaining records of
those payments in 2001, 2002, 2003, and
2004 has been Merrill Lynch. I am per-
sonally aware that DuPont has relied on
these third parties to maintain the da-
tabases I have described because I con-
sult these records in my oversight and
coordinator role. Neither of those ven-
dors has tracked “divorced” status for
the SIP or the DuPont Pension Plan;
rather they have noted in the databases
only whether a participant is “single” or
“married” at the current time. Marital

20.

21.

76

history is not tracked (e.g., prior di-
vorces or prior marriages). There has
been no tracking of the content of di-
vorce decrees or divorce property set-
tlements by either Mellon Financial
Services or Merrill Lynch.

Plaintiff initially demanded that the SIP
benefits be paid to the Kennedy estate based
on Texas Family Code Section 9.302. See,
Exhibit No. 1 to this affidavit, a true and cor-
rect copy of the April 26, 2001 letter from
Kari Ellen Kennedy Duckworth to DuPont
Connection. Upon its receipt, Exhibit
No.1 was maintained as a record of Du-
Pont with regard to the SIP account of
Wiliam Patrick Kennedy. It was within
the regular course of business of Du-
Pont to maintain a copy of this letter
with other DuPont records relating to
Mr. Kennedy’s SIP account at the time
the letter was received from its sender,
Kari Ellen Kennedy Duckworth.

I am over the age of 18, am of sound mind,
have never been convicted of any felonies or
crimes of moral turpitude, and am competent
to provide this affidavit. I have provided this
affidavit voluntarily and I have had the op-
portunity to make all changes that I chose to
make to its content before signing it.

FURTHER AFFIANT SAYETH NOT.

/s/ Mary D. Dineen
MARY D. DINEEN

77

SUBSCRIBED AND SWORN to before me, the
undersigned authority on this the 10th day of June,
2004.

/s/ Nancy Ann Miller
NOTARY PUBLIC, IN AND FOR
THE STATE OF DELAWARE

NANCY ANN MILLER
NOTARY PUBLIC
STATE OF DELAWARE
My Commission Expires
Aug. 16, 2006

78

EXHIBIT 1
April 26, 2001

DuPont Connection Overnight Mail

930 North Riverview Drive, Fax No. (919) 854-6402
Suite 800

Totowa, New Jersey 07512

Attention: Kim Brazinski

RE: No. 7573 — Estate of William Patrick Kennedy,
Deceased, County Court of Tyler County, Texas
Social Security Number: XXX-XX-XXXX

To Whom It May Concern:

By prior correspondence, you were informed of
the death of my father, William Patrick Kennedy, on
March 27, 2001.

On April 16, 2001, I qualified as Independent
Executrix of this Estate and I am enclosing current
Letters Testamentary for your file. Also, I am enclos-
ing a copy of my father’s Wiili.

One (1) of the assets of my father’s estate was an
investment through the DuPont Savings and Invest-
ment Plan established in October, 1973. I am enclos-
ing a copy of the investment account as of December
31, 2000. At the time this investment was created, my
father was married to my mother, Liv Kennedy, and I
understand my mother was designated beneficiary
under this plan at the time it was created in 1973.
Also, I understand that there is no named alternative
beneficiary.

79

For your information, my father and mother were
divorced on May 6, 1994 and I am enclosing a copy of
their divorce decree. Also, I am enclosing a copy of
Sec. 9.302 of the Texas Family Code.

In my conversation with a representative of your
company, it is my understanding you intend to pay
the proceeds under the above mentioned plan to my
mother, Liv Kennedy. I have found no evidence to
indicate the designating provision in the plan in favor
of my mother is effective because:

(1) the divorce decree does not designate my
mother as the beneficiary;

(2) my father did not redesignate my mother as
the beneficiary after rendition of the decree
on May 6, 1994; or

(3) my mother is not designated to receive the
proceeds or benefits in trust for, on behalf of,
or for the benefit of a child or dependent of
either my father or mother.

In my opinion, the designation of my mother as
beneficiary under the above mentioned plan is not
effective under subsection (a) of Sec. 9.302, Texas
Family Code and, since there is no named alternative
beneficiary, a request is hereby made for the proceeds
under the above mentioned plan be distributed to the
Estate of William Patrick Kennedy.

The attorney for the Estate and I will be agree-
able to discuss this matter to determine whether or
not you are in agreement with this request for distri-
bution to my father’s estate of the plan proceeds. You

80

can direct any inquiry regarding this matter to the
Estate attorney, James M. Alison, 300 West Bluff
Street, Woodville, Texas 75979, (409) 283-2532.

Sincerely,

/s/ Kari Ellen Kennedy Duckworth
Kari Ellen Kennedy Duckworth
Independent Executrix of the

Estate of William Patrick Kennedy,
Deceased

(w/enclosures)
Enclosures
ec: Merrill Lynch
265 Davidson Avenue, 4th Floor
Somerset, New Jersey 08873
Attention: Legal Department

81

[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
KENNEDY, Deceased,

Plaintiff,
§ CIVIL ACTION

as § NO. 1:01-CV-904
E.I. DUPONT DE NEMOURS §

AND COMPANY AND PLAN §
ADMINISTRATOR FOR
DUPONT SAVINGS AND
INVESTMENT PLAN,
Defendant.

Cr LP LP Lr Cr MN

LM Lr Lr LM

ORDER ON MOTIONS FOR
SUMMARY JUDGMENT

(Filed March 3, 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 Magis-
trate Judge’ at Beaumont, Texas, for all proceedings

' This civil action was previously assigned to the Honorable
Wendell C. Radford. Effective October 1, 2004, Judge Radford
(Continued on following page)

82

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-
strator [sic]”);

— 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 partie. the Court summarizes the material
backgrounma 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.

83

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 1
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 Independent Execu-
trix of her father’s estate. On April 26, 2001, she
demanded by letter that the DuPont plan pay the SIP
benefits to Mr. Kennedy’s estate. Said demand was
rejected. The plan administrator paid the benefits of
the SIP to Liv Kennedy as the beneficiary designated
by Mr. Kennedy. The benefits were paid to Ms. Ken-
nedy in an amount totaling $414,143.22. See Third
Party Plaintiff’s Alternative Motion for Summary
Judgment Against Third Party Defendant.

ii. Issues

In her motion, Plaintiff Kari Duckworth requests
that DuPont pay the value of the decedent’s SIP to
her as executrix of her father’s estate. She argues

84

that Liv Kennedy waived her interest in the SIP in
her divorce decree, and therefore, the interest belongs
to Plaintiff Duckworth under common law. Alterna-
tively, Defendant DuPont contends that 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 ERISA preempts the language
contained within the state 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 against
Liv Kennedy based upon theories of unjust enrich-
ment and the provisions of the SIP plan [C erk’s doc.
#37). DuPont specifically seeks this relief in the event
that it does not prevail on its Motion for Summary
Judgment and the Court finds that the benefits were
wrongly paid to Liv Kennedy. This request for recov-
ery of the funds paid to Ms. Kennedy is the basis for
DuPont’s Alternative Motion for Summary Judgment
Against Third Party Plaintiff the merits of which the
Court need not reach until the ultimate issue of the
proper SIP recipient is determined.

B. Discussion

General Summary Judgment Standard of Review

Summary judgment should be granted only “if
the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if

85

any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to
a judgment as a matter of law.” Fep. R. Civ. P. 56(c).
This rule places the initial burden on the moving
party to identify those portions of the record which it
believes demonstrate the absence of a genuine issue
of material fact. See Celotex Corp. v. Catrett, 477 U.S.
317, 323, 106 S. Ct. 2548 (1986) (Quoting Rule 56(c));
Stults v. Conoco, Inc., 76 F.3d 651, 655-56 (5th Cir.
1996) (Citations omitted). The movant’s burden is
only to point out the absence of evidence supporting
the non-movant’s case. Skotak v. Tenneco Resins, Inc.,
953 F.2d 909, 913 (5th Cir. 1992). When the moving
party has carried its 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.” Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986). In considering
a motion for summary judgment, “the evidence of the
non-movant is to be believed, and all justifiable
inferences are to be drawn in his favor.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505
(1986).

The parties agree that no genuine issue of mate-
rial fact exists in this case other than the voluntari-
ness of any waiver by Ms. Kennedy, if that issue
becomes relevant. The Stipulated Facts establish the
parties’ agreement that the key issues are legal, not
factual, in nature. Accordingly, the resolution of this
proceeding is to be decided as a matter of law, based

86

on the legal arguments presented in the pending
motions now before the Court.

Review of the ERISA Plan Administrator’s De-
nial of t state’ im

As noted above, the plan administrator distrib-
uted the proceeds of the SIP to Liv Kennedy instead
of filing an interpleader action to determine to appro-
priate beneficiary. Therefore, the plan administrator’s
decision that must be reviewed under the appropriate
standard of review. In Firestone Tire and Rubber Co.
V. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103
L.Ed.2d 80 (1989), the Supreme Court held that when
an administrator’s denial of benefits is challenged,
the decision is reviewed under a de novo standard
unless the plan gives the administrator discretionary
authority as to this decision. Dupont argues that, in
this case, the plan provided the administrator with
discretionary authority to interpret the plan, there-
fore this Court must evaluate the administrator’s
decision to pay Liv Kennedy under an abuse oi discre-
tion standard. At the same time, Dupont argues that
the plan clearly required payment to the designated
beneficiary and the administrator paid in accordance
with the beneficiary designation.

In this case, the Court finds that Dupont’s
distribution of the benefits was not discretionary in
nature. As Dupont itself contends, the administrator
paid benefits under the requirements of the plan.
Because there was no discretionary authority in the

87

administrator’s decision, the denial of benefits to the
estate is reviewed under a de novo standard. See
Brandon v. Travelers Insurance Company, et. al., 18
F.3d 1321, 1323-1324 (5th Cir. 1994), see also Gar-
land v. Metropolitan Life Ins. Co., 935 F.2d 1114, 1118
(10th Cir.) Cert. Denied, 502 U.S. 1020, 112 S.Ct. 670,
116 L.Ed.2d 761 (1991) (de novo standard applies
when a plan compels the company to pay proceeds to
the beneficiary of record).

ERISA Preemption and Waiver Issues

There is no dispute that the DuPont SIP is an
ERISA’ plan. ERISA broadly preempts “any and all
State laws insofar as they may now or hereafter
relate to any employee benefit plan.” 29 U.S.C.
§ 1144(a). The Fifth Circuit held that the Texas
beneficiary redesignation statute, Texas Family Code
Section 9.301, relates to employee benefit plans and
is preempted by ERISA. Manning v. Hayes, 212 F.3d
866, 870 (5th Cir. 2000). In Manning, the Fifth Cir-
cuit reaffirmed the rule set forth in Clift v. Clift, 210
F.3d 268 (5th Cir. 2000) and Brandon v. Travelers Ins.
Co., 18 F.3d 1321 (5th Cir. 1994), that federal common
law, rather than the text of ERISA itself, governs
resolution of cases in which a former spouse who is
still the designated beneficiary of a policy governed
by ERISA is alleged to have waived her rights to the

* Employment Retirement Income Security Act, Title 29
United States Code, Section 1001 et seq.

88

policy benefits. Manning, 212 F.3d at 872. The Fifth
Circuit 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 872. The court determined that in applying
federal common law, the courts 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 is that
“a named ERISA beneficiary may waive his or her
entitlement to the proceeds of an ERISA plan provid-
ing life insurance benefits, provided that the waiver
is explicit, voluntary, and made in good faith.” Jd. at
874.

Dupont questions whether this is still the law in
the Fifth Circuit, given the U.S. Supreme Court’s
decision in Egelhoff v. Egelhoff, 532 U.S. 141, 149
L. Ed. 2d 264, 121 S.Ct. 1322 (2001). In Egelhoff,
the Supreme Court held that ERISA preempted a
Washington state statute providing for automatic

* See Manning, at 871 (Citing Metropolitan Life Ins. Co. v.
Marsh, 119 F.3d 415 (6th Cir. 1997); Metropolitan Life Ins. Co.
v. Pressley, 82 F.3d 126 (6th Cir. 1996); McMillan v. Parrott, 913
F.2d 310 (6th Cir. 1990).

89

revocation of the designation of a former spouse upon
divorce. Egelhoff, 532 U.S. at 143. The Court noted
that preemption of such statutes is necessary to
prevent “requiring ERISA administrators to master
the relevant laws of 50 states.” Jd. at 149. However,
the Court limited its holding to the finding that the
Washington statute was expressly preempted by
ERISA and declined to address whether the princi-
ples of conflict preemption applied. /d. at 146. The
Court also failed to address the circuit split regarding
whether federal common law or ERISA itself governs
in cases of preemption and did not overrule the Fifth
Circuits common law approach as set out in Clift and

Brandon.

Accordingly, this court was left with the doubt
cast by Egelhoff on the state of Fifth Circuit 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 Ins. Co. v. Palmer, 238 F.Supp. 2d 821
(E.D. Tex. 2002).

First, as pointed out in Metropolitan Life, the
Egelhoff case is distinguishable from Brandon. Egel-
hoff involved a state statute that affected the desig-
nation of beneficiaries, while Brandon involved a
divorce decree that might constitute a waiver under
federal common law. Metropolitan Life, at 825-26.
Also, neither of the Fifth Circuit opinions discussing
Egelhoff have clearly overridden Brandon nor
adopted the Egelhoff holding in a case with facts
similar to those before the Court in this case.

90

Also, in Egelhoff, the Supreme Court declined to
address whether conflict preemption applies and did
not overrule the federal common law approach set
forth in Brandon and Clift. Absent a clear showing
that the Brandon rule is no longer applicable or that
it has been overruled by the Supreme Court, this
court was not in a position to depart from the estab-
lished law of the Fifth Circuit. See Metropolitan Life,
at 826. (Quoting Manning v. Hayes, 212 F.3d 866, 872
(5th Cir. 2000)).

Any doubt left regarding this issue was resolved
by the Fifth Circuit’s recent ruling in Guardian Life
Insurance Company v. Finch, 295 F.3d 238 (5th Cir.
2004). In Finch, the Fifth Circuit held that “Egelhoff
does not undermine this 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.” Jd. at 242. The Fifth Circuit again rec-
ognized the federal common law rule of waiver, reem-
phasizing its “longstanding approach of relying on
federal common law to determine if an ERISA plan’s
beneficiary has effected a common law waiver.” Jd. at
243. 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.

91

Did Liv dy voluntarily waiv e SIP
benefits in the divorce decree?

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, ciearly 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.

92

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

93

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

94

was submitted for the another [sic] 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. Intl 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 per-
centage is to be determined. 29 U.S.C. § 1056(d}(3)(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
court also stated that, even so, “[wJe have previously

95

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).” Id. 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 DuPont

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(a)(3)
of ERISA, codified at 29 U.S.C. § 1132(a)(3). This
section allows for “equitable relief,” and DuPont

96

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. /d.
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 legal because he sought to
obtain a judgment imposing a merely personal liabil-
ity upon the defendant to pay a sum of money. /d.

97

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 finds 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

98

that dicta in Knudson should not be viewed “as an
invitation to the lower courts to grant plan fiduciaries
a federal common law right to pursue claims for legal
remedies against participants.” Coop. Benefit Adm’n,
Inc. v. Ogden, 367 F.3d 323, 332-33 (5th 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 its unjust enrichment claim under federal
common law. Jd. at 328. 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 allows for the creation of the federal
common law remedy sought by the plaintiff. Jd. at
329. The Ogden court also stated that Knudson and
Mertens demonstrate that Congress, in drafting
Section 502(aX3)(B) to allow only equitable relief,
specifically contemplated the possibility of extending
to plan fiduciaries the right to sue a participant for
money damages and chose instead to limit fiduciaries’
remedies to those typically available in equity. Jd. at
331. Therefore, there is no “gap” in ERISA on this
question and thus no basis for granting a common
law remedy. Jd. In conclusion, the Fifth Circuit 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 against a participant,
both parties being members of categories expressly
identified in Section 502. Jd. at 333.

This Court finds Ogden dispositive on the issue.
ERISA is not silent on this matter. ERISA allows the

99

kind of equitable relief sought by the Plan Adminis-
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 this case.
Therefore, this Court cannot create a federal common
law right to the relief sought in this instance.

Also in Ogden, the Fifth Circuit distinguished its
previous decision of Jamail, Inc. v. Carpenters Dis-
trict Council of Houston Pension & Welfare Trusts,
954 F.2d 299 (5th Cir. 1992), a case upon which
DuPont relies heavily. Jamail is distinguishable from
the facts in Ogden, and the facts in this case, because
it involved an employer’s common law right to recover
contribution overpayments. Ogden, at 333 (emphasis
added). In Ogden, the Fifth Circuit noted that ERISA
Section 502 provides a private right cause of action
for fiduciaries, participants, and beneficiaries, but not
for employers and, therefore, reasoned that a “gap”
existed in ERISA’s text regarding an employer’s
rights to recover overpayment of contributions from
the plan to which such overpayments had been made.
Id. Thus, in Jamail, the Court held that recognition
of a federal common law right of restitution for an
employer vis-a-vis a plan was appropriate, as ERISA’s
text did not address the issue, and such a right would
further ERISA’s underlying purposes by encouraging
small employers to sponsor benefit plans for their
employers [sic]. /d.

In the case at bar, a private right of action for
equitable relief is enumerated under Section 502(a).
Therefore, there is no “gap” which would allow the

100

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 claims for restitution and unjust enrichment.
Ogden clearly decides against granting a federal
common law right of unjust enrichment or restitution
for a plan administrator under Section 502(a)(3).
Additionally, DuPont has not established that its
claims are equitable, rather than legal, in nature, as
defined by Knudson and Ogden. The Court cannot
differentiate the situation before it from the cases
discussed herein. By attempting to recover funds
from Ms. Kennedy, DuPont is seeking a legal remedy.
To impose personal liability on a defendant for a
contractual obligation to pay money is legal in nature
and unauthorized by Section 502(a)(3). See Knudson,
534 U.S. at 210, 221. Although DuPont couches its
claims in equitable terms, it continuously argues that
it would be against the

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385015_0052%3A0. Public record. Not legal advice.