Amicus Curiae Brief — Finch v. Galaway, Administrator, on Behalf of Estate of Galaway

— (=)

MAY 3 - 2005 No. 04-1283

IN THE

Supreme Court of the United States

KIMBERLYE FINCH,

Petitioner,

v.

EDDIE LEE GALAWAY, Administrator,

on behalf of Estate of Bradford Wayne Galaway,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES CourRT OF APPEALS

FOR THE FirtH Circuit

Motion Or THE GUARDIAN LIFE INSURANCE COMPANY OF

AMERICA For LEAVE To FILE BrieF Or Amicus CuRIAE

In Support OF PETITIONER AND BrieF OF Amicus CuRIAE

ALEXANDER H. WHITEAKER Respecca M. ALCANTAR

THE GUARDIAN LiFe INSURANCE Counsel of Record

COMPANY OF AMERICA WILson, ELser, Moskow!Tz

7 Hanover Square, Law — H23F EDELMAN & Dicker LLP

New York, NY 10004-2616 5000 Renaissance Tower

(212) 598-8441 1201 Elm Street

(212) 919-2711 Dallas, Texas 75270

(214) 698-8000

(214) 698-1101

Attorneys for Amicus Curiae

The Guardian Life Insurance Company of America

194234 g

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

MOTION FOR LEAVE TO FILE BRIEF

AND LATE FILING

Amicus moves the Court to grant it leave to file late its

motion for leave and brief. Amicus brief was due on April 25,

2005. Although amicus was a party to the lower court who filed

the interpleader action and an amicus at the Fifth Circuit, amicus

was never served or received notice that petitioner Kimberlye

Finch filed petition for writ of certiorari. Counsel for amicus

made numerous attempts to contact counsel for Kimberlye Finch

about the filing of his brief, but received no response until it

was too late to file a timely response.

Pursuant to Rule 37.2 of the Rules of this Court, Amicus

Curiae The Guardian Life Insurance Company of America

(“Guardian”) hereby moves for leave to file a brief amicus curiae

in support of the petition for a writ of certiorari filed by

Kimberlye Finch.*

As more fully explained in the accompanying brief, amicus

curiae Guardian issued a group insurance policy to Bradford

Wayne Galaway’s employer, which provided Bradford Wayne

Galaway with basic life insurance and accidental death benefits.

The policy constituted an insured employee welfare benefit plan

governed by Title I of the Employee Retirement Income Security

Act of 1974 § 3(21)(A), 29 U.S.C. § 1002 (“ERISA”).

Bradford Wayne Galaway named his then spouse,

Kimberlye Finch, as the beneficiary to the policy. On or about

June 20, 2002, Bradford Wayne Galaway and Kimberlye Finch

were divorced. The divorce decree divested Kimberlye Finch

of all rights, title, interest, and claims in and of all policies of

life insurance insuring Bradford Wayne Galaway’s life.

* Petitioner Kimberlye Finch consented to the submission of

the accompanying brief. Eddie Lee Galaway declined to extend his

unconditional consent to the filing of the accompanying brief.

uae. |

On November 8, 2002, Bradford Wayne Galaway was

killed in an airplane accident. He died intestate and had not

changed the named beneficiary on the life insurance policy

prior to his death. Kimberlye Finch, the named beneficiary,

and Eddie Lee Galaway, the administrator of Bradford Wayne

Galaway’s estate, both claimed sole entitlement to the

insurance proceeds.

On May 30, 2003, Guardian filed an interpleader action

in the United States District Court for the Northern District

of Texas, Dallas Division to resolve the competing claims to

the proceeds. Subsequently, Eddie Lee Galaway and

Kimberlye Finch filed competing motions for summary

judgment seeking the benefits under the plan.

The District Court granted summary judgment in favor

of Eddie Lee Galaway based on the Fifth Circuit’s precedent

of applying the federal common law to the facts of the case.

The appellate court affirmed. In reaching its decision, the

appellate court held that Kimberlye Finch “explicitly,

voluntarily and in good faith” waived her beneficiary status

in the policy, rather than deciding the case based on the

policy’s named beneficiary as the United States Supreme

Court recently did in Egelhoff v. Egelhoff, 532 U.S. 141, 148

(2001). However, no guidance was provided by the appellate

court on what constitutes an “explicit, voluntarily and good

faith relinquishment.”

The Fifth Circuit’s holding continues to deepen the

conflict among the circuits and burdens the administration

of ERISA plans in light of this Court’s decision in Egelhoff.

As such, review of the lower court decision is warranted.

The petition filed by Kimeberlye Finch provides a

compelling basis for granting a writ of certiorari.

The accompanying brief will assist the Court in determining

whether to grant certiorari because (1) amicus can

more broadly inform this Court of the uncertainty and

burdens engendered by the lower court’s decision; (2) the

accompanying brief addresses additional points to provide

substantial support on the burdens of companies who

administer ERISA plans; and (3) amicus discusses at length

the federal common law and the confusion among the courts

on what constitutes an “explicit, voluntarily and good faith

relinquishment” of benefits.

Accordingly, amicus respectfully requests that the Court

grant leave to file the accompanying brief amicus curiae.

Respectfully submitted,

ResBecca M. ALCANTAR

Counsel of Record

WILson, ELser, Moskow!Tz

EDELMAN & Dicker LLP

5000 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270

(214) 698-8000

(214) 698-1101

ALEXANDER H. WHITEAKER

THE GUARDIAN LIFE INSURANCE

COMPANY OF AMERICA

7 Hanover Square, Law — H23F

New York, NY 10004-2616

(212) 598-8441

(212) 919-2711

Attorneys for Amicus Curiae

The Guardian Life Insurance

Company of America

i

TABLE OF CONTENTS

TABLE OF CITED AUTHORITIES ............

STATEMENT OF INTEREST .................

STATEMENT OF THE CASE .................

i TOPE SPIE argu a areas

I. The Decision of the Fifth Circuit Deepens a

, Mature and Irreconcilable Conflict Among the

Circuits and this Court’s Decision in Egelhoff

v. Egelhoff on the Administration of ERISA

PO Seles eke bees dicen ee ae

II. Certiorari is Warranted Because Resolution of

the Conflict in the Lower Courts Over the

Question Presented is Vital to the Orderly

Administration of ERISA Plans ..........

CA 6 Novas Clb a eae cedaeer aus

Ft PE Pe ree fe ne Se Bit Paley a ate

Page

il

TABLE OF CITED AUTHORITIES

Page

CASES

Brandon v. Travelers Ins. Co.,

tye Breigi fe B.) errr 6,7

Central States, Southeast & Southwest Areas

Pension Fund v. Howell,

So1 F.3G O72 COG CIE. BED cccccccsccseccts 8

Clift v. Clift,

210 F.3d 268 (Sth Cir. 2000) ................ 7

Curtiss-Wright Corp. v. Schoonejongen,

584 UB. Fa CCSNee 065.000560060004n55n ee ll

Egelhoff v. Egelhoff,

Se Ue WEE CASED occ ci ccanddackemenaeel passim

Estate of Altobelli v. IBM,

uae wt le err re 7,8

Estate of Zienowicz v. Metro. Life Ins. Co.,

205 F. Supp. 2d 339 (D. N. J. 2002) .......... 7,8

Fort Halifax Packing Co. v. Coyne,

GS2 UB. 1 CIGD 6 <cce6nsskuaarenee 4,9, 10, 13

Fox Valley & Vicinity Constr. Workers Pension

Fund v. Brown,

O97 F.2G Zia CH Ge, BIRR) ccncwsscecsevuss 6,7

Guardian Life Ins. Co. v. Finch,

335 F362 COCA, BOO kiki icavisetiavaa 3,5,8

iii

Cited Authorities

Page

Ingersoll-Rand Co. v. McClendon,

sete trsthniacs-- in. KELTLPER OPT CO Pe 12

John Hancock Mut. Life Ins. Co. v. Timbo,

67 F.Supp.2d 339 (D.N.J. A Coon We ue. 8

Lyman Lumber Co. y. Hill,

877 F.2d 692 (8th Cir. cn a ee 6,8

Maclnnes v. MaclInnes,

677 N.W. 2d 889 (Mich. App. 2004) .......... 8

Manning v. Hayes,

212 F.3d 866 (Sth Cir. WE Ai cigecc se 5,7,9

McMillan vy. Parrott,

913 F.3d 310 (6th Cir. ey, MEE EEE ES 10, 15

Melton v. Melton,

324 F.3d 941 (7th Cir. ae, ET EL EER ee 6,8

Metro. Life Ins. Co. v. F linkstrom,

303 F. Supp. 2d 34 (D. Mass. ere 7

Mohamed v. Kerr,

53 F.3d 911 (8th Cir WE éesitevec tl 7

RULEs

1 on ha PS PEP POET PETE PRS Oat

iv

Cited Authorities

Page

STATUTES P

Employee Retirement Income Security Act of 1974

© SESE AD, AP Cian B BOOR ios csc cconicnses 1,5

Employee Retirement Income Security Act of 1974

§ 3(21)(A), 29 U.S.C. § 1104(a)(1)(D) ........ 5,9

Texas Family Code Annotated

§§ 9.301, 9.302 (Vernon 1998) ............... 5

l

BRIEF OF THE AMICUS CURIAE

Amicus Curiae The Guardian Life Insurance Company

of America (“Guardian”) submits this brief in support of the

petition filed by Kimberlye Finch for writ of certiorari to

the United States Court of Appeals for the Fifth Circuit.’

STATEMENT OF INTEREST

Guardian provides this disclosure of its interest.

Guardian is a mutual life insurance company organized and

incorporated under the laws of the State of New York, having

its principal place of business located at 7 Hanover Square,

New York, New York 10004. Guardian initiated this lawsuit

by interpleading the funds of a life insurance policy governed

by Title I of the Employee Retirement Income Security Act

of 1974 § 3(21)(A), 29 U.S.C. § 1002 (“ERISA”), due to

competing claims to the benefits. The interest of amicus

curiae are set forth in the motion and accompanying brief.

STATEMENT OF THE CASE

The facts of this case are not in dispute. Bradford Wayne

Galaway and Kimberlye Finch were married on September

22, 2001. On February 1, 2002, Guardian issued a group

insurance policy to Bradford Wayne Galaway’s employer,

which provided Bradford Wayne Galaway with basic

life insurance and accidental death benefits. The policy

constituted an insured employee welfare benefit plan

governed by ERISA.

1. Pursuant to Supreme Court Rule 37.6, this brief has been

authored in its entirety by undersigned counsel for the amicus curiae.

No person or entity, other than the named amicus and its counsel,

made any monetary contribution to the preparation and submission

of this brief.

2

Bradford Wayne Galaway named his then spouse,

Kimberlye Finch, as the beneficiary to the policy. On or about

June 20, 2002, Bradford Wayne Galaway and Kimberlye

Finch were divorced. The divorce decree divested Kimberlye

Finch of all rights, title, interest, and claims in and of all

policies of life insurance insuring Bradford Wayne Galaway’s

life.

On November 8, 2002, Bradford Wayne Galaway was

killed in an airplane accident. He died intestate and had not

changed the named beneficiary on the life insurance policy

prior to his death. Kimberlye Finch, the named beneficiary,

and Eddie Lee Galaway, the administrator of Bradford Wayne

Galaway’s estate, both claimed sole entitlement to the

insurance proceeds.

On May 39, 2003, Guardian filed an interpleader action

in the United States District Court for the Northern District

of Texas, Dallas Division to resolve the competing claims to

the proceeds. Subsequently, Eddie Lee Galaway and

Kimberlye Finch filed competing motions for summary

judgment seeking the interpled benefits under the Plan.

The District Court granted summary judgment in favor

of Eddie Lee Galaway based on the Fifth Circuit’s precedent

Finch “explicitly, voluntarily and in good faith” waived her

beneficiary status in the policy, the estate would be entitled

to the proceeds.

By its decision dated December 22, 2004, the Fifth

Circuit affirmed the district court’s decision holding that

3

Kimberlye Finch waived her rights under the plan. In doing

so, the Fifth Circuit concluded that application of federal

common law did not undermine this Court’s decision in

Egelhoff, because Egelhoff is inapplicable to the present case.

Guardian Life Ins. Co. v. Finch, 395 F.3d 238 (Sth Cir. 2004).

The circuit court reasoned that Egelhoff does not address the

application of federal common law to ERISA plans. “Rather,

Egelhoff only addresses whether ERISA preempts a state

statute that automatically revokes the designation of a spouse

as the beneficiary of a life insurance policy upon divorce.”

Id. at 242.

The Fifth Circuit further acknowledged that the goal of

uniformity espoused by. this Court in Egelhoff is not

undermined when courts rely on the federal common law of

waiver to determine if a beneficiary has waived her rights

under an ERISA plan. The court reasoned that Egelhoff never

held that uniformity would be undermined if courts relied

on federal common law, because plan administrators must at

times look to the federal common law when administering

ERISA plans. Rejecting the assumption that reliance on

federal common law would undermine national uniformity,

the circuit court further surmised that the Court in Egelhoff

strongly suggested that courts can at times rely upon common

law principles when determining the identity of the

beneficiary of an ERISA plan. /d. at 243.

The circuit court’s decision continues to cast doubt on

whether plan administrators are to follow the federal common

law or this Court’s decision in Egelhoff on how to determine

competing claims to an ERISA plan’s life insurance benefits

brought by a participant’s estate and that of participant’s

former spouse. The existing Fifth Circuit authority requires

the plan administrator to examine the federal common law

in making this determination. Whereas, Egelhoff mandates

that ERISA’s goal of uniform application can only be satisfied

4

by restricting the administrator’s decision to the beneficiary

designation set forth in the plan documents. It is this conflict

among the Circuits that amicus addresses herein.

ARGUMENT

I. The Decision of the Fifth Circuit Deepens a Mature

and Irreconcilable Conflict Among the Circuits and

this Court’s Decision in Egelhoff v. Egelhoff on the

Administration of ERISA Plans

Guardian administers retirement and employee benefit

plans, similar to the Plan at issue in this case, throughout the

United States of America. These plans are typically governed

by ERISA. As pronounced by the Supreme Court:

One of the principal goals of ERISA is to enable

employers ‘to establish a uniform administrative

scheme, which provides a set of standard

procedures to guide processing of claims

and disbursement of benefits.’ Uniformity is

impossible, however, if plans are subject to

different legal obligations in different States.

Egelhoff, 532 U.S. at 148 (quoting Fort Halifax Packing Co.

v. Coyne, 482 U.S. 1, 9 (1987)). Notwithstanding this goal

of uniformity, different jurisdictions apply different rules

regarding the distribution of plan benefits to plan participants’

estates and their former spouses. In cases where the

entitlement to benefits is contested, Guardian is forced to

interplead the plan funds to determine their proper recipient.

While the outcome of each interpleader action provides a

resolution as to that specific case, no uniform guidelines have

emerged to assist plan administitors with determining future

competing claims to plan proceeds. Hence, ERISA’s purpose

of providing uniformity in administration of qualifying plans

has been frustrated.

5

The Fifth Circuit, as exemplified in Finch, continues to

frustrate ERISA’s goal of uniformity. Its decision deepens a

mature and irreconcilable conflict among the circuits and is

inconsistent with the application of ERISA and this Court’s

decision in Egelhoff. ERISA requires that an employee benefit

plan be administered “in accordance with the documents

and instrumezi: governing the plan... .” 29 U.S.C.

§ 1104(a)(1)(D). Further, the plan “shall specify the basis

on which payments are made to and from the plan.”

Id. § 1102(b)(4). Rather than enforcing the provisions of

ERISA and allowing plan administrators to easily determine

beneficiary status by looking to the plan documents, the Fifth

Circuit simply circumvents preemption mandated by Egelhoff

in reviving state law under the guise of “federal common

law.” Specifically, the Fifth Circuit’s justification that

Egelhoff is inapplicable to this case — because Egelhoff

addresses a state statute and not federal common law —

provides a distinction with no meaning since the Fifth Circuit

federal common law was shaped by Texas Statutory law.

Manning v. Hayes, 212 F.3d 866, 870 (Sth Cir. 2000) (holding

that courts should borrow from state law; specifically,

sections 9.301 and 9.302 of the Texas Family Code? in

determining the federal common law to apply to these types

of cases). Thus, applying the federal common law provides

the same result as if the state law had not been preempted at

all. This result effectively renders ERISA nonsensical, as the

Act requires plans to be administered to their terms, preempt

State law to assure that end, and then reincorporate state law

2. Sections 9.301 and 9.302 of the Code provide that a pre-

divorce decree designation of a former spouse as beneficiary of a

life insurance policy is not effective unless (1) the decree designates

the insured’s former spouse as the beneficiary; (2) the insured

redesignates the former spouse as the beneficiary after rendition of

the decree; or (3) the former spouse is designated to receive the

proceeds in trust for, on behalf of, or for the benefit of a child or a

dependent of either former spouse. Tex. Fam. Code Ann. §§ 9.301,

9.302 (Vernon 1998).

6

into federal common law so that plans are not uniformly

administered according to their own terms.

Not only does the interpretation of the federal common

law by the Fifth Circuit, as well as the other circuits favoring

the federal common law approach, render administrative

provisions under ERISA illusory, but it further complicates

the process of determining beneficiary status under the federal

common law as no consensus among the circuits adopting

this approach has been achieved. This point is illustrated by

the recent decision of the Seventh Circuit in Melton v. Melton,

324 F.3d 941, 945 (7th Cir. 2003). Melton turned to the

federal common law concerning waiver in determining to

whom the plan administrator should have paid plan proceeds.

The court reasoned, “when we are evaluating whether a

waiver is effective in a given case, we are more concerned

with whether a reasonable person would have understood

that she was waiving her interest in the proceeds or benefits

in question than with any magic language contained in the

waiver itself.” Jd. at 945-946. This subjective approach to

applying the federal common law provides no guidance to

plan administrators in determining beneficiary status.

To further illustrate this point, the Fifth Circuit followed

the federal common law as set forth by the Seventh and

Eighth Circuit when initially determining the validity of a

waiver of plan benefits. See Brandon v. Travelers Ins. Co.,

18 F.3d 1321 (Sth Cir. 1994) (citing Fox Valley & Vicinity

Constr. Workers Pension Fund v. Brown, 897 F.2d 275 (7th

Cir. 1990); Lyman Lumber Co. v. Hill, 877 F.2d 692 (8th Cir.

1989)). Contrary to the holdings in these circuits, however,

the Fifth Circuit rejected any requirement that a waiver be

specific or explicitly identify the benefit that is waived. Jd.

The Fifth Circuit later refined what constitutes an effective

waiver of benefits when it held that the federal common law,

as influenced by state law, requires that a waiver of a

7

beneficiary interest be “explicit, voluntary, and made in good

faith.” Manning, 212 F.3d at 874. The guidance provided by

the Manning court, however, has provided little assistance

towards the uniform application of the federal common law.

Unfortunately, no clear guidelines have been established

to assist the lower courts in what constitutes an explicit,

voluntary, and good faith waiver so that the federal common

law can be uniformly applied. The Fifth Circuit has merely

Stated that “explicit” indicates something other than silence,

and “voluntary” means not coerced. Manning, 210 F.3d at

872. Further, the court set forth the following subjective

requirement for waiver: “We will only find waiver if, upon a

reading of the language in the divorce decree, a reasonable

person would have understood that she was waiving her

beneficial interest in the life insurance policy at issue.” Clift

v. Clift, 210 F.3d 268, 269 (Sth Cir. 2000), citing Brandon,

18 F.3d at 1326. As such, the Fifth Circuit has created

yet another ambiguous test, thereby perpetuating the

inconsistencies in the federal common law. See, e.g., Fox

Valley, 897 F.2d at 275 (specificity is required); Estate of

Altobelli v. IBM, 77 F.3d 78 (4th Cir. 1996) (the divorce

decree must include a specific waiver of benefits); Mohamed

v. Kerr, 53 F.3d 911 (8th Cir. 1995) (the analysis is fact

driven); Metro. Life Ins. Co. v, Flinkstrom, 303 F. Supp. 2d

34 (D. Mass. 2004) (specific intent is required); Estate

of Zienowicz v. Metro. Life Ins. Co., 205 F. Supp. 2d 339

(D.N.J. 2002) (agreements must identify the benefit being

waived).

Contrary to this Court’s recent decision in Egelhoff, these

subjective approaches to translating the federal common law

require plan administrators to disregard plan documents and

circumnavigate the legal waters of fifty states and divorce

litigation within those states. “It would be an overwhelming

burden to require plan administrators to decipher divorce

8

judgments to determine if an effective waiver had occurred

as opposed to simply examining plan documents for the

named beneficiary. Having to file interpleader actions, where

multiple parties are making claims to plan proceeds would

also be burdensome to plan administrators.” See MacInnes

v. MacInnes, 677 N.W.2d 889 (Mich. App. 2004).

In fact, not only would it be burdensome to require this

of a plan administrator, but it may be an impossible task as

the law is not only unsettled between the circuits, but within

the district courts, as well as the state courts. The Fourth,

Fifth, Seventh, and Eighth Circuits have adopted federal

common law approaches. See Estate of Altobelli, 77 F.3d at

81-82 (4th Cir. 1996); Lyman Lumber Co. v. Hill, 877 F.2d

at 693-94; Melton, 324 F.3d at 945-46. However, of those

Circuits, only the Fifth and Seventh have reaffirmed that

approach since Egelhoff. See Melton, 324 F.3d at 941;

Guardian Life Ins. Co., 395 F.3d at 238. The Sixth Circuit

and at least one district court in the Third Circuit hold that

a clear beneficiary designation in plan documents or

instruments cannot be disturbed by a waiver in external

documents. Central States, Southeast & Southwest Areas

Pension Fund v. Howell, 227 F.3d 672, 676-77 (6th Cir.

2000); Estate of Zienowicz, 205 F. Supp. 2d at 343-44.

Another case in the Third Circuit came to the opposite

conclusion before Egelhoff was decided. John Hancock Mut.

Life Ins. Co. v. Timbo, 67 F. Supp. 2d 339, 343-44 (D. N.J.

2002). Additionally, a conflict may also exist in the state

courts, as state courts are only bound by precedent from their

own courts and this Court. See Note: Egelhoff v. Egelhoff:

The Supreme Court's Latest Attempt to Clarify ERISA

Preemption and the Decision’s Effect on Texas State Law, 54

Baylor L. Rev. 503, 527-30 (2002); see also MacInnes, 677

N.W.2d at 892 n.3.

9

This lack of uniformity is contrary to one of the core

purposes of ERISA, to enable employers to establish a

uniform administrative scheme, which provides a set of

standard procedures to guide processing claims and

disbursing benefits. Egelhoff, 532 U.S. 148 (2001) (quoting

Fort Halifax Packing Co., 482 U.S. at 9). In Manning, the

Fifth Circuit stated: “While we can certainly appreciate the

simplicity of the bright line rule embraced by the Sixth

Circuit, that simplicity comes at too great a cost.” 212 F.3d

at 872. Yet, it is clear that the differences in how the federal

common law is applied within the majority circuits alone

will necessarily create significant confusion in the courts.

Without one single, simple, and objective standard, plan

administrators cannot promptly pay benefits, but must

undertake a subjective legal analysis of the law within the

applicable jurisdiction (often retaining counsel), without any

assurance that a decision to pay will not result in double

liability. The choice being, then, to take the risk of paying

the benefit twice or interpleading adverse claimants. The only

solution is for this Court to hold that ERISA plans must pay

benefits in accordance with plan documents as set forth in

the Act. 29 U.S.C. § 1104(a)(1)(D).

II. Certiorari is Warranted because Resolution of the

Conflict in the Lower Courts Over the Question

Presented is Vital to the Orderly Administration of

ERISA Plans

This Court has long recognized the host of obligations

and responsibilities associated with plan administration.

E.g., Fort Halifax Packing Co., 482 U.S. at 9 (plan

administrators must determine the eligibility of claimants,

calculate benefit levels, make disbursements, monitor the

availability of funds for benefit payments, and keep

appropriate records in order to comply with applicable

reporting requirements). Plan administration is unnecessarily

10

further complicated when administrators are required to

fulfill these obligations and responsibilities in many different

States, all potentially subject to varying laws. “Given the

vast number of tasks a plan administrator must perform,

Congress believed ‘[t]he most efficient way to meet these

responsibilities [was] to establish a uniform administrative

scheme, which provide[d] a set of standard procedures to

guide processing of claims and disbursement of benefits.’”

George A. Norwood, Who is Entitled to Receive a Deceased

Participant's ERISA Retirement Plan Benefits—an Ex-Spouse

or Current Spouse? The Federal Circuits Have an

Irreconcilable Conflict, 33 Gonz. L. Rev. 61, 81 (1998)

(citing Fort Halifax Packing Co., 482 U.S. at 9).

Moreover, it was Congress’ intent in enacting ERISA to

simplify an already chaotic system subject to multi-

jurisdictional standards by “bring[ing] a measure of

uniformity in an area where decisions under the same set of

facts may differ from state to state.” H.R. Rep. No. 93-533,

p. 12 (1973). Creating this uniformity was among the primary

goals for the Act. McMillan v. Parrott, 913 F.2d 310, 312

(6th Cir. 1990) (Congress intended “ERISA plans to be

uniform in their interpretation and simple in their

application.”) (citing H.R. Rep. No. 93-533 (1974), reprinted

in 1974 U.S.C.C.A.N. 4639, 4650). More than thirty years

after ERISA’s enactment, however, Congress’ goal of

uniformity and simplicity in plan administration has not been

realized.

Despite the federal scope of the legislation, the

administration of plans subject to ERISA has not been

uniform across the country, as the rules that plan

administrators are required to follow in identifying plan

beneficiaries are neither easily discerned nor simply applied.

The current split in the circuits requires plan administrators

to strictly adhere to plan documents in a minority of

11

jurisdictions in making this determination and, in the

remaining states, attempt to follow the nebulous federal

common law, as influenced by pre-empted state law.

When plan administrators attempting to identify plan

beneficiaries are forced to look beyond the plan documents

and analyze divorce decrees, various state statutes, state

case law interpreting the statutes and decrees, and the

federal common law, uniformity cannot be achieved.

“Uniformity is impossible . . . if plans are subject to different

legal obligations in different States.” Egelhoff, 532 US. at

148. When uniformity is compromised, plan participants,

plan administrators, and the courts pay the price.

Plan participants benefit from a uniform administrative

system because uniformity furthers another fundamental goal

of ERISA — it enables plan participants to easily learn their

rights and obligations under their plan at any given time.

Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83

(1995). In Schoonejongen, this Court reasoned that plan

participants can quickly determine their rights and obligations

under their ERISA plan because ERISA is based on an

“elaborate scheme” that is “built around reliance on the face

of written plan documents.” /d. This reliance is misplaced if

plan participants reside in jurisdictions that follow the

majority approach requiring plan administrators to analyze

a participant’s rights and benefits based on the vagaries of

the federal common law, rather than the plan documents

themselves.

Plan participants (and many plan administrators) are

unaware of how the federal common law operates and how

it can significantly impact ERISA plan benefits. It is

reasonable to conclude that plan participants expect their

entitlement to benefits to remain the same regardless of the

state in which they reside. While the reasonableness of this

expectation is manifest, it reflects a lack of understanding

12

regarding the current conflict in this area of the law. As a

result of the split in the circuits, a plan participant can not be

certain of his rights and obligations under an ERISA plan

until a court analyzes the plan and the law, makes the

determination by court order, and the order becomes final.

Conversely, plan participants could easily determine their

rights and obligations under an ERISA plan quickly and

without reliance on legal counsel or judicial interpretation if

those rights and obligations were defined by the plan

documents themselves. Adopting this approach, as the Sixth

Circuit has, would not only enable a plan participant to easily

determine his benefits, but would promote Congress’

fundamental goal that ERISA plans be efficiently and

uniformly administered.

Because the circuits are deeply divided regarding whether

plan documents or federal common law (as shaped by pre-

empted state iaw) should determine beneficiary status under

an ERISA plan, plan administrators are heavily burdened by

the necessity to administer plans differently depending upon

the state in which a participant resides. “Requiring ERISA

administrators to master the relevant laws of 50 States and

to contend with litigation would undermine the congressional

goal of ‘minimizing the administrative and financial burdens’

on plan administrators — burdens ultimately borne by the

beneficiaries.” Egelhoff, 532 U.S. at 149-50 (quoting

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142 (1990)).

Since it is often unclear as to how benefits should be

distributed under the federal common law approach, “the

potential for double liability if the plan administrator

inadvertently, but in good faith, pays the incorrect

beneficiary” is quite high. Norwood, supra, 33 Gonz. L. Rev.

at 80. If it is determined that a plan administrator

misconstrued the federal common law and paid benefits to

the wrong party, “the plan administrator must pay the correct

13

beneficiary and, at the same time, recover payment from the

incorrect beneficiary, further miring the plan and its assets

in legal costs.*” Jd.

Since a uniform system for determining beneficiary

status under an ERISA plan has not been adopted, contrary

to Congress’ stated intentions, plan administrators are forced

to retain the services of legal counsel to assist with plan

administration. However, “given the uncertainty in this area

of the law, it is less than prudent for counsel to provide an

unqualified opinion as to the proper beneficiary, unless the

facts or property settlement agreement [in the divorce decree]

are in direct alignment with recent circuit precedent.”

Norwood, supra, 33 Gonz. L. Rev. at 79. To minimize the

potential for double liability, plan administrators and their

counsel often resort to filing interpleader actions and

depositing the plan proceeds with an already overburdened

court to resolve the entitlement dispute.‘ Previously, the Court

expressed its concern with this problem and noted that the

filing of interpleader actions to resolve these disputes

“presents an example of how the costs of delay and

uncertainty can be passed on to beneficiaries, thereby

thwarting ERISA’s objective of efficient plan administration.”

Egelhoff, 532 U.S. at 150 n.3 (citing Fort Halifax Packing

Co., 482 U.S. at 9).

3. Amicus directs the Court to Kennedy v. E.1. Dupont De

Nemours and Co., Civil Action No. 1:01-C V-904, in the United States

District Court for the Eastern District of Texas Beaumont Division,

in which the plan administrator, Dupont, paid the benefits of an

ERISA plan according to the plan documents. The court in that case

held that Dupont wrongly paid the benefits, that Dupont was liable

to the proper beneficiary for these benefits, and that Dupont was not

entitled to restitution.

4. See Appendix for a survey of recent interpleader actions filed

by plan administrators.

14

Unfortunately, filing interpleader actions is often the only

way to ensure that the proper beneficiaries are paid in a

particular case, thereby eliminating a plan administrator’s

exposure to double liability, but adding to the overall cost

and burden of administering the plan. Moreover, because of

the fact-specific nature of the determination of such actions

and the differing federal common law as applied by the

various circuits, the resulting decisions lack significant

precedential value. Thus, even though many such

interpleaders have been filed, the decisions of lower courts

have not and will not generate a clear and uniform rule for

plan administrators to follow. Only a decision by this Court

resolving the conflict among the circuits will implement the

congressional intent to have a uniform system of plan

administration under ERISA.

The burden on plan participants resulting from the

present uncertainty is of paramount importance. As the Court

reasoned in Ege/lhoff, plan administrators and the courts are

not the only parties burdened by the filing of interpleader

actions; these court proceedings significantly add to the delay

beneficiaries experience while awaiting the benefits to which

they are entitled. Jd. As an example, the still-unresoived final

disposition of the ERISA plan proceeds in this case has been

argued in the courts for almost two years. Surely, the state of

today’s administrative scheme and the practical effect that it

has on plan administrators, plan participants, and the courts

is not what Congress had in mind when it contemplated

uniform administration of plans and benefits and simple

application of administrative procedures.

The only way that the Court can ensure that Congress’

goals of uniformity and simplicity in plan administration are

achieved is to adopt the minority rule among the circuits and

rule that the plan documents themselves control beneficiary

status. If plan administrators are no longer required to analyze

15

extraneous documents and interpret the ever-changing federal

common law, beneficiary status would be determined quickly

and accurately without legal guidance and proceeds disbursed

to plan beneficiaries in a timely fashion. If plan administrators

‘are no longer required to retain counsel to assist with plan

administration, it will significantly conserve both plan and

judicial resources. Specifically, plan administrators will no

longer be forced to incur such significant legal costs in

administering benefits to their plan participants, reducing a

primary cost factor that leads to increasing premiums.

Moreover, fewer interpleader actions filed with the courts

will conserve the resources of an already overburdened

judicial system.

Additionally, and most significantly, plan participants

will be able to easily determine their rights and obligations

under their plan solely by reviewing the plan documents.

In essence, the aspirational statement that “(a] participant

is master of his own ERISA plan” will become a reality.

See McMillan, 913 F.2d at 312. As a true master of his plan,

the participant will be able to review his beneficiary

designations, change those designations if he wishes, and

know that his intentions as expressed in the beneficiary

designation form in his plan documents will be followed by

the plan administrator. Plan administrators would no longer

be required to disregard a. participant’s last known wishes

for the beneficiaries under a particular ERISA plan or guess,

between two or more competing claims, which should be

honored. If the Court holds that plan documents are the only

consideration in identifying beneficiaries under an ERISA

plan, this issue will be resolved once and for all.

16

CONCLUSION

The division among the circuit courts is long standing

and acknowledged by the courts themselves. Amidst this

confusion among the courts, the concerns of upholding

uniform administrative schemes that were espoused in

Egelhoff have not been addressed. Accordingly, the contrary

views of the circuit courts concerning the application of

federal common law or whether plan documents themselves

should govern when determining competing claims to

benefits warrant review by this Court to resolve the conflict.

For the foregoing reasons, the writ of certiorari should be

granted.

Respectfully submitted,

ResBecca M. ALCANTAR

Counsel of Record

WILson, ELSER, Moskowi!Tz

EDELMAN & DickKER LLP

5000 Renaissance Tower

1201 Elm Street

Dallas, Texas 75270

(214) 698-8000

(214) 698-1101

ALEXANDER H. WHITEAKER

THE GUARDIAN LIFE INSURANCE

COMPANY OF AMERICA

7 Hanover Square, Law — H23F

New York, NY 10004-2616

(212) 598-8441

(212) 919-2711

Attorneys for Amicus Curiae

The Guardian Life Insurance

Company of America

APPENDIX

la

APPENDIX

Guardian Life Ins. Co. v. Finch,

393 F.3d 238 (Sth Cir. 2004).

Manning v. Hayes,

212 F.3d 866 (Sth Cir. 2000).

Clift v. Clift,

210 F.3d 268 (Sth Cir. 2000).

Metro. Life Ins. Co. v. Palmer,

238 F.Supp. 2d 831 (E.D. Tex. 2002).

Connecticut Gen. Life Ins. Co. v. Thomas,

910 F.Supp. 297 (S.D. Tex. 1995).

Lester v. Reagan Equip. Co. Profit Sharing Plan, etc.

(E.D. La. 1992).

Central States, Southeast & Southwest Areas

Health & Welfare Fund v. Boyd,

762 F.Supp. 1263 (S.D. Miss. 1992).

Keen v. Weaver,

121 S.W.3d 721; (Tex. 2003), cert. denied,

Keen v. Weaver,

124 S.Ct. 808 (2003).

Heggy v. Am. Trading Employee Ret. Account Plan,

56 S.W.3d 280 (Tex. App. — Houston

[14th Dist.] 2001).

2a

Appendix

Emmens v. Johnson,

923 S.W.2d 705 (Tex. App. — Houston

[1st Dist.] 1995).

Prudential Ins. Co. of Am. v. Schmid,

337 F.Supp. 2d 325 (D. Mass. 2004).

Metro. Life Ins. Co. v. Flinkstrom,

303 F.Supp. 2d 34 (D. Mass. 2004).

Metro. Life Ins. Co. v. Bigelow,

283 F.3d 436 (2nd Cir. 2002).

Grabois v. Jones,

89 F.3d 97 (2nd Cir. 1996).

Krishna v. Colgate Palmolive Co.,

7 F.3d 11 (2nd Cir. 1993).

Am. Int’! Life Assurance Co. v. Vazquez,

2003 U.S. Dist. LEXIS 2675 (S.D.N.Y. 2003).

Croskey v. Ford Motor Co.-UAW,

2002 U.S. Dist. LEXIS 8824 (S.D.N.Y. 2002).

Connecticut v. Patricia A. Mitchell,

195 U.S. Dist. LEXIS 11222 (S.D.N.Y. 1995).

Metro. Life Ins. Co. v. Benevent,

1993 U.S. Dist. LEXIS 14875 (S.D.N.Y. 1993).

3a

Appendix

Mendez v. Teachers Ins. & Indem. & Annuity Ass’n,

789 F. Supp. 139 (S.D.N.Y. 1992).

Estate of Zienowicz v. Metro. Life Ins. Co.,

205 F.Supp. 2d 339 (D.N.J. 2002).

John Hancock Mut. Life Ins. Co. v. Timbo,

67 F.Supp. 2d 413 (D.N.J. 1999).

Metro. Life Ins. Co. v. Reick,

1994 U.S. Dist. LEXIS 12995 (E.D. Pa. 1994).

Phoenix Mut. Life Ins. Co. v. Adams,

30 F.3d 554 (4th Cir. 1994).

Conneticut Gen. Life Ins. Co. v. Riner,

351 F. Supp. 2d 492 (W.D. Va. 2005).

Estate of Altobelli v. IBM,

849 F. Supp. 1079 (D. Md. 1994).

Brown v. Brown,

422 S.E.2d 375 (Va. 1993).

Metro. Life Ins. Co. v. Mulligan,

210 F. Supp. 2d 894 (E.D. Mich. 2002).

Metro. Life Ins. Co. v. Biggs,

2001 U.S. Dist. LEXIS 25280 (E.D. Mich. 2001).

4a

Appendix

Ford Motor Co. v. Ross,

129 F.Supp. 2d 1070 (E.D. Mich. 2001).

Metro. Life Ins. Co. v. Gibbs,

89 F.Supp. 2d 877 (E.D. Mich. 2000).

Metro. Life Ins. Co. v. Barlow,

884 F.Supp. 1118 (E.D. Mich. 1995).

Metro. Life Ins. Co. v. Pearson,

848 F.Supp. 1326 (E.D. Mich. 1994).

MaclInnes v. MaclInnes,

677 N.W.2d 889 (Mich. Ct. App. 2004).

Metro. Life Ins. Co. v. Johnson,

297 F.3d 558 (7th Cir. 2002).

Davis v. Combes,

294 F.3d 931 (7th Cir. 2002).

Metro. Life Ins. Co. v. Wheaton,

42 F.3d 1080 (7th Cir. 1994).

Fox Valley v. Vicinity Constr. Workers

Pension Fund v. Brown,

879 F.2d 249 (7th Cir. 1989).

Metro. Life Ins. Co. v. Johnson,

2001 U.S. Dist. LEXIS 10304 (N.D. Ill. 2001).

Sa

Appendix

In re Grogg,

2003 Bankr. LEXIS 582 (Bankr. C.D. Ill. 2003).

In re Pulley,

1989 Bankr. LEXIS 2305 (Bankr. N.D. Ind. 1989).

United States v. Taylor,

338 F.3d 947 (8th Cir. 2003).

Nat’l Auto. Dealers & Assocs. Ret. Trust v. Arbeitman,

89 F.3d 496 (8th Cir. 1996).

Equitable Life Assurance Soc’y of the

United States v. Chrysler,

66 F.3d 944 (8th Cir. 1995).

Mohamed v. Kerr,

53 F.3d 911 (8th Cir. 1995).

TCI Group Life Ins. Plan v. Knoebber,

244 F.3d 691 (9th Cir. 2001).

Boston Mut. Ins. v. Murphree,

242 F.3d 899 (9th Cir. 2001).

BankAmerica Pension Plan v. McMath,

2000 U.S. Dist. LEXIS 17740 (N.D. Cal. 2000).

Araiza-Klier v. Teachers Ins. & Annuity Ass'n,

2001 Cal. App. Unpub. LEXIS 1160

(Cal. App. 4th 2001).

28.8 A OOO ee

6a

Appendix

Torres v. Torres,

60 P.3d 798 (Haw. 2003).

Anderson v. Marshall,

856 F. Supp. 604 (D. Kan. 1994).

In re Marriage of Rahn,

914 P.2d 463 (Colo. Ct. App. 1995).

Liberty Life Assurance Co. v. Kennedy,

228 F.Supp. 2d 1367 (N.D. Ga. 2002).

8 este Ne Crem 2 a “tos