Petition for Writ of Certiorari — Keen v. Weaver

No.9392 425 SEP 17 2003

IN THE

Supreme Court of the United States

PATSY KEEN,

Petitioner,

V.

DIANA WEAVER, INDEPENDENT EXECUTRIX OF THE

ESTATES OF FRANCIS J. WEAVER AND

RITA MARIE WILSON WEAVER,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI

TO THE TEXAS SUPREME COURT

Sreceeeeeeneall —_

mai —

PETITION FOR A WRIT OF CERTIORARI

asididinianaemaaatinneiesentenaamameemenateiaaan wp rome

MAURICE BRESENHAN, JR.

Counsel of Record

PASCAL PAUL PIAZZA

CYNTHIA KEEN PERLMAN

ZUKOWSKI & BRESENHAN, L.L.P.

1177 West Loop South, Suite 1100

Houston, Texas 77027

(713) 965-9969

Attorneys for Petitioner

183021 g

COUNSEL PRESS

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

PERE EINE I SL OR YN RC OF Day te

1

QUESTIONS PRESENTED

1. The text of the Employment Retiremeni Income

Security Act, 29 U.S.C. §§ 1001, et seq. (ERISA) commands

the uniform rule of national application that the plan’

administrator shall distribute the benefits under an ERISA

plan to the beneficiary designated by the plan participant

unless one of the textual exceptions apply. In a 5-4 decision,

the majority of the Texas Supreme Court creates a new

exception to the text of ERISA through an alleged federal

common law that yields the same result as the preempted

Texas redesignation statute. The dissent rejects such a new

exception in reliance upon the text of ERISA. Did the

majority of the Texas Supreme Court err:

A. By creating a state law rule re-labeled as a federal

common law that is preempted by ERISA’s broad

- preemption clause;

B. By creating a rule that conflicts with the text of

ERISA;

C. By creating a rule in conflict with this Court’s

decisions in O’Melveny & Myers v. FDIC, 512 U.S.

79 (1994) and Mertens v. Hewitt Associates,

508 U.S. 248 (1993) and that alters the text of

ERISA through some nascent federal common law

when there is no such alleged applicable federal

common law;

D. By creating a rule of application that conflicts

with the textually driven uniform national standards

for such a rule mandated by this Court’s decision

in Egelhoff v. Egelhoff, 532 U.S. 141 (2001)

[Egelhoff];

il

By creating a rule that replaces ERISA’s textually

driven. “rm rule of national application with an

irrebuttabie presumption that a plan participant

spouse can never designate or retain a former spouse

as a plan beneficiary after a divorce;

By creating a rule that re-writes the text of ERISA

to deprive the right of a plan participant to designate

or retain the beneficiary of choice;

By creating a rule in conflict with Egelhoff that

replaces ERISA’s textually driven uniform rule of

national application with a fact-intensive variable

driven rule that will vary from case to case and from

state to state; and ;

By creating a rule that perpetuates the irreconcilable

conflict between the “strict plan” cases, e.g.

Egelhoff v. Egelhoff, 532 U.S. 141 (2001) and

McMillan v. Parrott, 913 F.2d 310 (6" Cir. 1990),

and the “variable common law waiver” cases, e.g.

Fox Valley & Vicinity Construction Workers Pension

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

Estate of Altobelli v. International Business

Machines Corp., 77 F.3d 78 (4" Cir. 1996) such that

the obligations of plan administrators vary from

jurisdiction to jurisdiction in lieu of the uniform

national standard that ERISA requires.

iil

TABLE OF CONTENTS

I ice bee ces eee Shera sews

a

Table of Cited Authorities .....................

pg

eee eee ee ee eee

ek eee wee

Constitutional and Statutory Provisions Involved . .

Ed. ccc ecawaseuceeessves

Be UE MMIII 5 nv cee vevesesenves

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I ccc ce csc eu eseresesns’s

Reasons for Granting the Petition ..............

I.

The Majority Opinion In Keen Conflicts With

The Text Of ERISA, Impermissibly Relies

Upon A Non-Existent Federal Common Law,

Conflicts With The Decisions Of This Court

And Creates A Preempted Rule Of State

Law That Together Or Singularly Usurps

II.

iv

Contents

The Simple Uniform Rule Of National

Application For The Distribution Of Plan

Benefits Required By ERISA. ...........

A. The Text of ERISA: the Unambiguous

ait An ba are

B. Preemption Precludes Looking Beyond

Ue Text OF BRIGA .... oo. cc cesses

C. There is No Available Federal Common

Law to Look Beyond the Text of

GEE abet ple a eek.

D. The Majority Rule in Keen Conflicts

with the Anti-Alienation Text of

I. sin kaa cedeseta ato. tree.

There Is An Irreconcilable Conflict Between

The Holdings In The Case Law (Including

Decisions Of This Court) That “Strictly

Follow” The Text Of ERISA And The

Holdings In The “Variable Common Law”

Case Law That Seek To Modify The Text Of

ERISA Such That The Obligations Of Plan

Administrators Vary From Jurisdiction To

Jurisdiction In Lieu Of The Uniform National

Standard That ERISA Requires. ..........

(AID ss sk ieee n eave ebinte Zoi abe

Page

12

15

18

20

Vv

TABLE OF CITED AUTHORITIES

; Page

CASES

Estate of Altobelli v. International Business

Machines Corp., 77 F.3d 78 (4" Cir. 1996) ..... 11, 18

Barnett v. Barnett, 67 S.W.3d 107 (Tex. 2001) .... 13

Boggs v. Boggs, 520 U.S. 833 (1997) ........... 10, 16

Brandon v. Travelers Ins. Ce. 18 F.3d 1321 (Sth Cir.

1994) (cert. denied, 513 U.S.1081, 1995) ........ 19

Egelhoff v. Egelhoff, 532 U.S. 141 (2001) ....... passim

Firestone Tire and Rubber v. Bruch, 489 U.S. 101

(err re reer rr rere y Pere fee 13,14

Fox Valley & Vacinity Const. Workers Pension Fund

v. Brown, 897 F.2d 275 (7" Cir. 1990) ...... li, 18, 19

Guidry v. Sheet Metal Workers Nat’! Pension Fund,

Re Oe. res rere 16, 17

Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001)

PTET SE TIE TTT TPE TT eee re 10

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

SED svn duncbcdvness beens 19

Manning v. Hayes, 212 F.3d 866 (5" Cir. 2000) ... 19

vi

Cited Authorities

Page

McMillan v. Parrott, 913 F.2d 310 (6th Cir. 1990)

+e nceeee bs bebe e eka eee li, 17-18, 19

Melton v. Melton, 324 F.2d 941 (7th Cir. 2003) ... 19

Mertens v. Hewitt Associates, 508 U.S. 248 (1993)

ISECPeT TTT ee ey ee i, 82, 17

New York State Conference of Blue Cross & Blue

Shield Plans v. Travelers Ins. Co., 514 U.S. 645

(LOWE ics va sbedee seve eee eee 10

O'Melveny & Meyers v. F.D.I.C., 512 U.S. 79 (1994)

I ee re Ce ee ee 1, 12

Patterson v. Shumate, 504 U.S. 753 (1992) ....... 16, 17

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) ... 16

Silber v. Silber, 99 N.Y.2d 395 (N.Y. App. 2003) .. 19

STATUTES AND REGULATIONS

oe UBL). § 199 RO «osc vias vee yee aeeneke ves |

29 U.S.C. § 1001, et seg. A 10 eh ne SwhN gee Reee 1

ae Wes & Sees CXS ee 8

OF VG TD 65san vixen 8

vii

Cited Authorities

WE OE Shs leer:

WULC SUR) oc ie:

29 U.S.C. § 1056(d)(3(A) .....eeeeeeeeeeees

29 U.S.C. § 1102(a)(1)(D) ...... 00... eee ee

i oe ener

29 U.S.C. § 1104(a)(1)(D) ........ 0... eee.

29 U.S.C. § 1132(a)(1(B) 20.2... eee eee eee

te one rn

MURS CUO oo cision

OTHER AUTHORITIES

Amicus Curiae Brief of the Secretary of Labor

.... http://www.dol.gov/sol/media/briefs/

re Ce on aus a ee oak a

10

Vili

TABLE OF APPENDICES

Appendix A — Opinion Of The Supreme Court Of

Texas Dated June 19, 2003 ..................

Appendix B — Opinion And Order Of The Court Of

Appeals Of Texas, Waco Dated April 18, 2001

ied ee ee ee eS A oe 2 Pe ee ee ey

Appendix C — Findings Of Fact And Conclusions

Of Law Of The County Court, Dallas County,

Texas Filed July 6, 1999 ....................

Appendix D — Final Judgment Of The County

Court, Dallas County, Texas Dated June 18,

DF Vanek hase hada meeen eo ete oe

Page

la

26a

46a

l

OPINIONS BELOW

The opinion of the Supreme Court of Texas (Pet. App.

A) is reported at__S.W. 3d __, 46 Tex. Sup. Ct. J. 804

(2003). The opinion of the Waco Court of Appeals (Pet. App.

B) is reported at 43 S.W.3d 537 (Tex. App. Waco 2001).

JURISDICTION

The judgment of the Supreme Court of Texas was entered

on June 19, 2003. This Court has jurisdiction of this

proceeding by virtue of 28 U.S.C. § 1257(a).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Pursuant to this Court’s Rule 24.1(f), the pertinent

constitutional and statutory provisions are set forth in the

appendix to this brief.

STATEMENT OF THE CASE

I. Factual Background

Francis J. (Frank) Weaver and Patsy Keen (Patsy)

were married in 1967. During a portion of their marriage,

Frank was employed by Baylor College of Medicine. In 1972,

Frank purchased two annuity contracts issued by Teacher’s

Insurance and Annuity Association and College Retirement

Equities Fund (TIAA-CREF). At all times during and after

the marriage, Frank was the plan participant with the

exclusive right to designate the plan beneficiary. He named

Patsy as the primary beneficiary of those annuity contracts.

Baylor College of Medicine made contributions to the annuity

2

contracts until 1980 when Frank terminated his employment.

In 1982, Frank and Patsy divorced. As part of the property

settlement, the divorce court decided the community property

issues that it had the jurisdiction to divide. Frank received

the annuity contracts as his sole and Separate property.

Patsy relinquished any interest that she had in the plans. Frank

never made any contributions to the plans after his divorce

from Patsy.

Frank married Diana Weaver (Diana) in 1983. They were

married for eleven and one-half years before his unexpected

death in 1995. During this time, Frank did not change the

plan beneficiary. Frank received annual notices reminding

him that Patsy remained the designated beneficiary.

He received the forms to change the plan beneficiary. At the

time of Frank’s death, Patsy was the designated beneficiary

of Frank’s TIAA-CREF annuity contracts. The plans’

administrators, relying on this designation and the plan

documents, paid benefits to Patsy until TIAA-CREF and

Petitioner were sued in this case.

II. Proceedings Below

Initially, Rita Marie Wilson Weaver (Rita), Frank’s

mother and the designated contingent plan beneficiary, sued

Patsy and the plans to recover the plan benefits. Upon Rita’s

death, Diana, as Rita’s independent executrix and Frank’s

independent executrix, substituted and joined as the plaintiff.

The plans interpleaded the funds and were dismissed with

the obligation to pay the benefits according to the final

judgment.

Diana’s claims as the successor for Frank were never

clear. Diana’s claims as the successor for Rita were brought

3

for breach of contract, conversion, waiver and redesignation

under the Texas redesignation statute. Patsy brought claims

for compliance with ERISA and the beneficiary designation.

After a bench trial, the trial court granted a final judgment

for Patsy. [Pet. App. D]. The trial court issued findings of

fact and conclusions of law. [Pet. App. C]. The trial court

found that ERISA preempted the Texas redesignation statute,

that ERISA controlled, that the plan beneficiary designation

controlled and that Patsy had not given up any rights to be

the designated plan beneficiary by waiver, estoppel or

otherwise.

On appeal, the Waco intermediate appellate court

reversed. It found that ERISA preempted the Texas

redesignation statute, but then curiously held that the Texas

redesignation statute could be revived through a federal

common law.

On further appeal, a sharply divided Texas Supreme

Court in a 5-4 decision affirmed the Waco intermediate court

of appeals but on different grounds with the same effect.

The majority adopted a federal common law of waiver that

coincidentally effected the same redesignation contemplated

by the preempted Texas redesignation statute. As detailed by

the dissent, the majority engaged the errors that form the

basis of this petition.

SUMMARY OF ARGUMENT

As this Court held in Egelhoff v. Egelhoff, 532 U.S. 141

(2001), ERISA unambiguously supplies each plan

administrator with a textually driven, unambiguous, easily

applied, uniform and harmonious national rule to distribute

4

plan benefits to the participant designated plan beneficiary.

The majority opinion of the Texas Supreme Court is one of

the most recent cases ia the vanguard of the judicial assault

on Egelhoff and the text of ERISA. The Court must intervene

to re-establish uniformity and order and respect for the

prudence of this Court and the text of ERISA.

The question in this case is whether the plan

administrator of an ERISA employee pension benefit plan

must pay according to the plan’s designated beneficiary as

the text of ERISA dictates or whether the plan administrator

must pay according to the unchartered variables of some

imported law of equitable waiver. This case, accordingly,

involves the core concepts under ERISA about the textual

scope of the right to designate or retain the beneficiary under

an ERISA plan and the accompanying payment of benefits

to that designated beneficiary.

At all times during the marriage and afterwards, Frank

alone had the sole right to designate or retain the beneficiary

under the plan. Frank’s exclusive right to designate or retain

the beneficiary controlled whether Patsy could claim any

community property interest in the plan or whether the plan

was Frank’s pre- or post marital separate property. Frank’s

exclusive right to designate or retain the beneficiary survived

the divorce decree and any agreement of the parties.

Frank exercised his exclusive right and, for his own

reasons, maintained Patsy as the sole beneficiary under the

ERISA plan. Thirteen years and a second marriage did not

persuade Frank to change the beneficiary. Annual reminders

that Patsy was the beneficiary and available annual

beneficiary change forms did not persuade Frank to change

the beneficiary. The plan administrator, following the text of

5

ERISA, sought to pay the benefits to Patsy as she was the

named beneficiary.

In a 5-4 decision, a majority of the Texas Supreme Court

holds that the plan administrator cannot rely upon the text of

ERISA and simply pay Patsy as the designated beneficiary.

Instead, the majority requires the plan adr ‘aistrator to decide

whether Frank could not exercise his right to designate or

retain the beneficiary. It shifts the focus from Frank’s right

to designate or retain to a focus on Patsy’s alleged waiver

under some imported equitable doctrine of waiver that is not

contained in the text of ERISA. The majority holds that the

divorce agreement or adjudication of any right, title and

interest in, to or under any community property character of

a plan irrebuttably presumes that Frank could never thereafter

designate or retain Patsy as the plan beneficiary after the

divorce. |

The dissent applies the literal text of ERISA. It refuses

to superimpose amorphous equitable dimensions to an

otherwise unambiguous text.

Curiously, both the majority and the dissent agree

(i) that the text of ERISA requires the plan administrator to

pay Patsy as the designated beneficiary, (2) that the text of

ERISA admits exceptions to that requirement of which none

apply in this case, (3) that the Texas Supreme Court recently

affirmed that equitable principles cannot be used to amend

the otherwise unambiguous text of ERISA, (4) that ERISA

preempts the Texas redesignation statute, (5) that the Texas

intermediate appellate court erred in using a federal common

law to reach the same result as the preempted Texas

redesignation statute, and (6) that the text of ERISA yields a

simple rule that is easily applied by plan administrators.

6

Yet, despite these concurrences, the majority diverges

from the dissent. The majority eschews the textually driven

parsimony of ERISA for a fact-intensive driven equitable

waiver analysis that, like the Texas intermediate appellate

court (but using different labels), used a federal common law

to achieve the same effect as the preempted Texas

redesignation statute. There is an analytical gap between the

majority’s reasoning and the majority’s holding that the

equitable doctrine of waiver cannot fill.

This Court-must review the majority’s holding. First, it

creates a state law rule that is preempted by ERISA. Second,

it conflicts with the text of ERISA. Third, it conflicts with

this Court’s holding in Egelhoff. Fourth, it uses a non-existent

federal common law to amend the text of ERISA. Fifth, it

replaces a simple rule of administration with an unpermitted

irrebuttable presumption. Sixth, it replaces a harmonious

uniform rule of national application with a fact-intensive

variable driven rule that will vary from case to case and state

to state. Seventh, it perpetuates a conflict in the law between

those cases that enforce the text of ERISA as written and

those that do not. Eighth, it eviscerates the uniformity

inherent in ERISA. Ninth, it impermissibly conflicts with

the anti-alienation provisions of ERISA.

Applicable to both I and II above is the stated position

of the Secretary of Labor in his Amicus brief filed with and

argued before the Texas Supreme Court. (The brief is

available at http://www.dol. gov/sol/media/briefs/main.htm).

7

REASONS FOR GRANTING THE PETITION

I. THE MAJORITY OPINION IN KEEN CONFLICTS

WITH THE TEXT OF ERISA, IMPERMISSIBLY

RELIES UPON A NON-EXISTENT FEDERAL

COMMON LAW, CONFLICTS WITH THE

DECISIONS OF THIS COURT AND CREATES A

PREEMPTED RULE OF STATE LAW THAT

TOGETHER OR SINGULARLY USURPS THE

SIMPLE UNIFORM RULE OF NATIONAL

APPLICATION FOR THE DISTRiBUTION OF

PLAN BENEFITS REQUIRED BY ERISA.

The majority opinion in Keen has further separated the

plan administrator’s obligation to pay plan benefits according

to the plan terms from its mooring in the text of ERISA and

this Court’s decisions construing that same text. This Court

should cure this suffusing legal error that, if not cured, will

destroy the simple, uniform and harmonious rule of national

application required by ERISA and this Court. The Court

should grant this petition to review this case, should hear

this case, should reverse the Texas Supreme Court’s decision

in Keen and should order the distribution of all plan benefits

‘to Patsy.

A. The Text of ERISA: the Unambiguous Simple

Rule:

The text of ERISA supplies the proper starting point.

This starting point yields the proper analysis that avoids

conflicts with the text of ERISA and with the opinions of

this Court.

Among its many provisions, the text of ERISA vests

Frank, as the plan beneficiary, with the right to designate the

8

beneficiary of the ERISA employee pension plan. ERISA

§§ 1002(7) and 1002(8). Predicated on this vested right,

ERISA recites that the plan must specify the basis upon which

payments are to be made, states that the plan administrator

must administer the plan in accordance with the plan

documents and then directs that the plan administrator must

pay the plan benefits to the designated beneficiary. ERISA

§§ 1002(8), 1102(a)(1)(D) and 1102(b)(4).

The plans, in this case, implement the text of ERISA.

They also vest Frank with the sole right to designate the

beneficiary and direct the plan administrator to pay the plan

benefits to the designated beneficiary. They also provide a

procedure for Frank to change the designated beneficiary — a

procedure that Frank never invoked.

ERISA and the plans also admit two exceptions to

the directed payment to the designated beneficiary.

Undisputedly, neither exception applies.

The text of ERISA speaks volumes by what it Says and

what it does not say. It sets forth a simple direction that is

easily applied uniformly and nationally. The majority of the

Texas Supreme Court admits this. Keen, 46 Tex. Sup. Ct. J.

at 805-806. The text of ERISA proves that Congress knows

how to impose exceptions to this Straight-forward rule

and that Congress only imposes two inapposite exceptions.

The text of ERISA does not admit any exception for the type

of waiver based upon the construction of a state law divorce

recognized in Keen.

It also states that Frank’s ability to designate or retain a

plan beneficiary is limited only by his personal choice.

It does not limit his choice to relatives. He can choose a

9

former spouse, his mother or even a totally unrelated person.

He can chose someone who has an interest in the plans or

someone who does not have any interest in the plans.

He may choose someone, like Patsy, who no longer has a

community interest in the plans. He can change his mind

and choose to designate Patsy regardless of what divorce

settlement had been reached.

It also states that the plan administrator does not have to

go behind Frank’s choice. The plan administrator does not

have to ask why Frank respectively designated or retained

his former spouse and his mother, rather than his then current

wife, as the designated primary and contingent beneficiaries.

The plan administrator does not have to inquire into the clean _

hands or unclean hands of the plan participant or the

designated beneficiary. The plan administrator does not have

to inquire into the speed, diligence or sloth of the plan

participant or the plan beneficiary. The text of ERISA gives

fruition to the ordered liberty of personal choice of the plan

participant.

B. Preemption Precludes Looking Beyond the Text

of ERISA:

The majority cannot rely upon Texas law to alter the text

of ERISA. The majority does so and thereby impermissibly

creates conflicts with the text of ERISA and the opinions of

this Court.

The text of ERISA prohibits attempts to add exceptions

to the text of ERISA directly or indirectly through state law.

It states that ERISA “shall supersede any and all State laws

insofar as they ... relate to any employee benefit plan.”

ERISA § 1144(a). It then broadly defines “state law” to

; 10

include all laws, rules, decisions, regulations, or other state

action having the effect of law of any state. ERISA § 1144(c).

This Court confirms the broad scope of preemption under

ERISA. Egelhoff, 532 U.S. at 146. It further confirms that

this preemption covers any state law that has an affect on the

objectives of ERISA. Jd. at 147. It concludes that the

regulation of employee welfare benefit plans is exclusively

a federal concern. New York State Conference of Blue Cross

& Blue Shield Plans v. Travelers Insurance Company,

514 U.S. 645, 656 (1995).

As such, the text of ERISA is the ultimate touchstone of

any preemption analysis. Lorillard Tobacco Co. vy. Reilly,

533 U.S. 525, 541 (2001). Any state law that relates to or is

connected to a core textual obligation, such as the plan

administrator’s obligation to pay the plan benefits to the

designated beneficiary, is preempted. Egelhoff, 532 U.S. at

147-148. Any state law that affects the designaiion of a

beneficiary under an ERISA plan is preempted. Boggs v.

Boggs, 520 U.S. 833, 845 and 854 ( 1997). Any state law that

interferes with nationally uniform plan administration and

that subjects a plan administrator to a rule that varies by state

or by the facts of each case usurps the purpose of ERISA and

is preempted. Egelhoff, 532 U.S. at 148.

The majority opinion in Keen is a state law under ERISA

§ 1144(c). More. ver, its reliance upon the legal and factual

effect of a Texas divorce decree or of a Texas agreement

incident to the Texas divorce decree to define the plan

administrator’s obligation encumbers the plan administrator

with construing the effect of Texas law to define the scope

of the plan administrator’s obligation. Consider the majority’s

own conjecture about the effect of the facts comprising

11

waiver: “If the agreement were limited to Section 4.02, it

might not be sufficient to waive Patsy’s beneficiary interest.”

Keen, 46 Tex. Sup. Ct. J. at 808. Therefore, each plan

administrator will have to review the scope of each divorce

decree or each divorce agreement as those scopes are defined

under Texas law, to determine whether the scope of the decree

or agreement will comprise a waiver. The majority rule in

Keen is a preempted state law that frustrates the purposes of

ERISA.

The majority in Keen grounds its approach in a rule that

looks to see if the effect of the Texas divorce decree or Texas

agreement incident to divorce waives “. . . Patsy’s beneficiary

interest.” The majority has shifted the analysis from ERISA’s

directive that Frank has the sole right to designate the plan

beneficiary regardless of whether the beneficiary owns an

interest or not in the plan, to a focus of whether Patsy can

designate herself as a plan beneficiary. The majority rule in

Keen is a preempted state law that frustrates the purposes of

ERISA.

The majority concedes that the Texas current and prior

redesignation statutes [Pet. App. E] are preempted. Keen, 46

Tex. Sup. Ct. J. at 807. That means that a Texas divorce decree

or a Texas divorce agreement cannot be the nexus through

which Patsy is redesignated as the plan beneficiary; any such

attempt to use a Texas divorce decree or Texas divorce

agreement is preempted. Egelhoff, 532 U.S. at 148-152.

The majority cannot escape this preemption by achieving

the same result through a different label. The majority

even admonishes the Texas intermediate appellate court

for doing this. Keen, 46 Tex. Sup. Ct. J. at 807. It then

did the exact admittedly forbidden same thing as the

Texas intermediate appellate court. Keen, 46 Tex. Sup.

12

Ct. J. at 805-808. It redesignated Patsy through the nexus of

the Texas divorce proceeding. The majority rule in Keen is a

preempted state law that frustrates the purposes of ERISA.

The majority indulges an unstated, but imposing,

presumption that Frank cannot choose to designate or retain

Patsy as a plan beneficiary after the divorce because of

the Texas divorce decree and Texas divorce agreement.

The majority admits no exceptions and thereby erects an

irrebuttable presumption using the bricks of Texas law

measured through the Texas divorce decree and the Texas

divorce agreement. The majority rule in Keen isa preempted

state law that frustrates the purposes of ERISA.

C. There is No Available Federal Common Law to

Look Beyond the Text of ERISA:

The majority in Keen cannot “find” a federal common

law to alter the text of ERISA. The majority so found and

thereby impermissibly creates more conflicts with the text

of ERISA and the opinions of this Court.

Under ERISA, this Court affirms that a federal common

law cannot be used to revise the text of ERISA. Mertens y.

Hewitt Associates, 508 U.S. 248, 259 (1993). This affirmation

is an application of the general rule that there is no available

federal common law that allows a court to create exceptions

to an otherwise unambiguous statute. O ‘Melveny & Myers v.

FDIC, 512 U.S. 79, 87 (1994). The majority, however, used

an alleged federal common law to create a new exception to

the text of ERISA in conflict with Mertens and O ‘Melveny.

The majority asserts that there is a general federal

common law of trust under ERISA that is a starting point for

13

courts to wreak havoc on the text of ERISA. Keen, 46 Tex.

Sup. Ct. J. at 806. The majority’s citation to Firestone Tire

& Rubber v. Bruch, 489 U.S. 101, 110 (1989) is misplaced.

In Firestone, this Court stated that, “[a]lthough [ERISA]

is a ‘comprehensive and reticulated statute,’ . .. ERISA does

not set out the appropriate standard of review for actions

under § 1132(a)(1)(B) challenging benefit eligibility

determinations. 7o fill this gap, federal courts have adopted

the arbitrary and capricious standard....” Jd. at 109.

[citations omitted] [Emphasis Added]]. Firestone represents

one of the few and restricted times this Court found a federal

common law, namely to fill a gap in the text of ERISA

necessary for the plan administrator to discharge its fiduciary

obligations.

This Court explains that there is no gap in the text of

ERISA that mandates that the plan administrator must pay

the designated plan beneficiary according to the plan.

Egelhoff, 532 U.S. at 148 and fn. 1. It rejects any attempt to

create a gap in the text simply because this language does

not list every possible payment scenario, including waiver.

Id

The majority, however, holds that there is a gap because

the text of ERISA does not mention waiver. The majority

did exactly what this Court holds a court cannot do.

The majority rule in Keen conflicts with Egelhoff.

The majority recognizes that the Texas Supreme Court

had recently held that equitable trust principles could not

be used to interfere with uniform ERISA administration.

Keen, 46 Tex. Sup. Ct. J. at 807, citing, Barnett v. Barnett,

67 S.W.3d 107 (Tex. 2001). Yet, it dismisses this prior correct

os

holding as a plurality decision that invited the development

of a federal common law. Jd. The dissent correctly notes the

lack of any rationale for the majority’s argument. Keen, 46

Tex. Sup. Ct. J. at 812.

The majority’s strained construction of its own precedent

underpins the majority’s improper ruling. It also explains why

the majority never addresses the true wellspring of the alleged

federal common law.

The majority relies upon Firestone, but it does not

discuss that the trust law it imports to alter the text of ERISA

is the full panoply of trust law developed over the two plus

centuries of American jurisprudence. That jurisprudence

includes (ERISA preempted) state case law and state statutory

law and treatises on trusis and the restatement of the Jaw of

trusts. Firestone, 489 U.S. at 954.

As such, under the majority rule in Keen, a plan

administrator will first have to wait until the federal courts

map out the contours of the alleged federal common law.

With eleven circuits and multiple federal district courts, plan

administrators can expect many years of uncertainties and

years of conflicting decisions before some uniform rules

emerge to decide who a proper beneficiary will be. It is also

unclear whether all or only part of the entire body of equitable

trust law and equitable maxims will be incorporated into the

new law of alleged waiver. The dissent correctly points out

that there presently is a lack of unanimity among the case

law the majority relies upon as to what the actual elements

of an alleged waiver are. Keen, 46 Tex. Sup. Ct. J. at 811-

812. In short, a plan administrator will not know for a long

time how to determine a proper beneficiary if the majority’s

waiver exception applies. There will not be a uniform national

rule of plan administration.

15

The wake of this rule will be that a plan administrator

will have to conduct a case-by-case, fact-intensive analysis

of each decision to pay plan benefits. For example, the plan

administrator will have to determine the intent of the plan

participant, if a designated plan beneficiary “waived” some

rights, whether the plan participant “waived” the “waiver,”

whether the plan participant was diligent or slothful or

whether all parties have clean hands. This resulting morass

is the antithesis to ERISA’s stated goal to have a simple,

harmonious and national administration unencumbered by

fact findings and unchartered variables.

The majority rule in Keen will perpetuate the same type

of litigation that Keen has had to endure. That will be the

only way in which a plan administrator would know for

certain who to pay.

That is exactly why the text of ERISA mandates the

payment to the designated beneficiary. That is why this Court

holds that there is no federal common law to create a waiver

exception not found in the text of ERISA.

D. The Maiority Rule in Keen Conflicts with the

Anti-Alienation Text of EKISA:

The majority rule in Keen compounds the prior conflicts

by further conflicting with the core anti-alienation text of

ERISA. This rule impermissibly tries to re-write the text of

ERISA.

The above cited relevant text of ERISA seeks and yields

nationally uniform plan administration. Egelhoff, 532 U.S.

at 142-152. This Court assiduously protects ERISA’s salutary

purpose. /d.

16

As a result and as stated above, plan administrators have

the rules that govern the payment duty. As a further result

and as stated above, Congress has mandated that the rules be

applied to plan documents with limited exceptions. These

rules are for the benefit of participants and beneficiaries.

Shaw v. Delta Air Lines, Inc. 463 U.S. 86, 90 (1983).

ERISA § 1056(d)(1) is one of those rules. It prohibits

the alienation or assignment of plan benefits except as

allowed under ERISA § 1056(d)(3)(A). The anti-alienation

provisions are designed to provide a dependable stream of

income for participants and their heirs or dependents. Guidry

v. Sheet Metal Workers Nat’! Pension Fund, 493 U.S. 365

(1990).

The scope of the anti-alienation provision is broad and

pervasive. The anti-alienation provision has prevented the

use of an equitable constructive trust to seize pension plan

benefits for repayment of amounts embezzled by a former

union official. Guidry, 493 U.S. 365, 371-72. The anti-

alienation provision also trumps ordinary bankruptcy rules

and prevents individual pension plan interests from becoming

assets of the bankruptcy estate subject to the claims of

creditors. Patterson v, Shumate, 504 U.S. 753, 760 (1992).

ERISA further prohibits the alienation of benefits

through the use of a domestic relations order; instead, the

order to be recognized must be a “qualified domestic relations

order.” ERISA § 1056(d)(3)(A), Boggs, 520 U.S. at 848.

ERISA preempts all other attempts to use state domestic

relations law to override ERISA plan beneficiary

designations. Jd.

17

In the teeth of the comprehensive nature of ERISA, of

its anti-alienation language and of its limited statutory

exceptions, the majority tries to find a permissible gap that

erodes the anti-alienation provisions. The majority’s rule of

waiver requires that a plan administrator must disregard the

provisions of ERISA §1056 and to make beneficiary

determinations in a manner contrary to the framework of the

statute. Thus a plan administrator is forced to make an

assignment or alienation of pension plan benefits in a way

that is incompatible with ERISA’s anti-alienation provision.

Plans may not give effect to an alienation not authorized

by an express ERISA exception, whether purportedly

imposed by state law or by some “generalized equitable

exception.” Guidry, 493 U.S. at 376; see also Patterson, 504

U.S. at 760. Yet giving effect to the common law rule does

exactly that.

While revision of ERISA is not exactly the same thing

as just ignoring the existing language of the statute in order

to find a gap, as applied to this dispute, there is no substantive

distinction. The Court in Mertens used essentially the same

analytical approach as it used in Egelhoff to find that the

federal common law in Mertens could not exist in the face

of the specific language of ERISA. Mertens, 508 U.S. 248.

The Secretary of Labor in its amicus brief before the

Texas Supreme Court concludes, “[b]ecause ERISA itself

provides the applicable rules governing payments to

beneficiaries, the . . . recognition of [a] federal common law

is misguided; ERISA simply leaves no room for a judge-made

creation of additional special ERISA rules in derogation of

existing rules expressly provided by the statute” (relying in

part on McMillan v. Parrott, 913 F.2d 310, 310-312 (6th Cir.

18

1990)). The Secretary of Labor advocates the holding of

Egelhoff that all but forecloses any resort to federal common

law in this context and instead strongly bolsters what the

language of ERISA provides: plan administrators are to

follow plan documents to determine beneficiary status under

any ERISA-governed plan.

Il. THERE IS AN IRRECONCILABLE CONFLICT

BETWEEN THE HOLDINGS IN THE CASE LAW

(INCLUDING DECISIONS OF THIS COURT)

THAT “STRICTLY FOLLOW” THE TEXT OF

ERISA AND THE HOLDINGS IN THE “VARIABLE

COMMON LAW” CASE LAW THAT SEEK TO

MODIFY THE TEXT OF ERISA SUCH THAT THE

OBLIGATIONS OF PLAN ADMINISTRATORS

VARY FROM JURISDICTION TO JURISDICTION

IN LIEU OF THE UNIFORM NATIONAL

STANDARD THAT ERISA REQUIRES.

Egelhoff resolves the conflict between the case law, such

as Egelhoff and McMillan, that strictly follows the text of

ERISA, and case law, such as Fox Valley & Vicinity

Construction Workers Pension Fund vy. Brown, 897 F.2d 275

(7" Cir. 1990) and Estate of Altobelli v. International Business

Machines Corp., 77 F.3d 78 (4" Cir. 1996), that alters the

text of ERISA through an alleged federal common !aw or

similar improper approach. Unfortunately, the resolving

influence of Egelhoff has been ignored. The Court should

grant this petition to review this case, to reverse the Texas

Supreme Court’s decision in Keen and to resolve this conflict

once and for all.

Since Egelhoff, there have been a series of decisions that,

for all apparent purposes, gives little weight or significance

19

to Egelhoff (e.g. Keen, Silber v. Silber, 99 N.Y.2d 395 (N.Y.

App. 2003), and Melton v. Melton, 324 F.2d 941 (7th Cir.

2003)). These decisions attempt to revive or to rely on the

reasoning in decisions such as Manning v. Hayes, 212 F.3d

866 (5" Cir. 2000), Fox Valley, 897 F.2d 275, Lyman Lbr.

Co. v. Hill, 877 F.2d 692 (8th Cir. 1989), and Brandon vy.

Travelers Ins. Co., 18 F.2d 1321 (Sth Cir. 1994). All of the

cases following Egelhoff recognize the existence of Egelhoff

but none appear to be willing to give it its due or to recognize

the significance of McMillan, 913 F.2d 310.

It cannot be doubted that Egelhoff intends to correct the

decisions, other than McMillan, that have deviated from

ERISA s framework and to re-establish the anchor of ERISA’s

unambiguous text. However, the failure of the post-Egelhoff

cases to recognize its significance and to properly analyze

the effect of ERISA § 1104(a)(1)(D) has resurrected the

problem identified and addressed by Egelhoff. This conflict

arising so soon after Egelhoff and the aggressive deviation

from the path established in that case is highly indicative of

the need to grant the writ of certiorari sought herein>

20

CONCLUSION

Petitioner Patsy Keen requests that, for the reasons stated

in her petition, the petition be granted and thereafter that

this Court reverse the decision of the Texas Supreme Court

and confirm her entitlement to the plan benefits in question.

Respectfully submitted,

MAURICE BRESENHAN, JR.

Counsel of Record

PascaL PAuL PIAzza

CYNTHIA KEEN PERLMAN

ZUKOWSKI & BRESENHAN, L.L.P.

1177 West Loop South, Suite 1100

Houston, Texas 77027

(713) 965-9969

Attorneys for Petitioner