# Petition for Writ of Certiorari — Keen v. Weaver

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2003
- **Citation:** 540 U.S. 1047

## Text

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

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

pg

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Constitutional and Statutory Provisions Involved . .

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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

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26a

46a

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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_2145%3A1. Public record. Not legal advice.