US Supreme Court Briefs

No. 99-1529

In The
Supreme Court of the United States


DONNA RAE EGELHOFF,
Petitioner,

v.

SAMANTHA EGELHOFF, A MINOR, BY AND THROUGH HER NATURAL PARENT KATE BREINER,
AND DAVID EGELHOFF,
Respondents.


On Writ Of Certiorari
To The Supreme Court Of Washington


REPLY BRIEF FOR PETITIONER




HENRY HAAS
MCGAVICK GRAVES, P.S.
1102 Broadway, Suite 500
TACOMA, WA 98402
(253) 627-1181

WILLIAM J. KILBERG
Counsel of Record
THOMAS G. HUNGAR
GIBSON, DUNN & CRUTCHER LLP
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
(202) 955-8500

Counselfor Petitioner





I



TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES iii

RESPONDENTS' ATTEMPTS TO AVOID
A DECISION ON THE MERITS ARE
BASELESS 1
II. SECTION 11.07.010 "RELATES TO" AN
ERISA PLAN 5
A. The "Opt Out" Provision Does Not Save
Section 11.07.010 From Preemption 5
B. Section 11.07.010 Mandates Plan
Administration And Binds Plans To A
Particular Choice Regarding Core
ERISA Concerns 7

C. Section 11.07.010 Interferes With The Nationally Uniform Administration Of
Employee Benefit Plans 11
III. SECTION 11.07.010 CONFLICTS WITH
ERISA'S PROVISIONS AND OBJEC-
TIVES 13

A. Section 11.07.010 Conflicts With The
Definition Of "Beneficiary" 13

B. Section 11.07.010 Conflicts With
ERISA's Protections For Beneficiaries 16

C. Section 11.07.010 Conflicts With
ERISA's Anti-Alienation Clause 16



i
i
iii

TABLE OF AUTHORITIES

D. Respondents' Reliance On Federal
Common Law Is Misplaced 18
CONCLUSION 20


Page(s)
CASES
Ablamis v. Roper, 937 F.2d 1450 (9th Cir.
1991) 2
Astoria Federal Say. & Loan Ass 'n v.
Solimino, 501 U.S. 104 (1991) 9
Austin v. United States, 125 F.2d 816
(7thCir. 1942) 8
Baldus v. Jeremias, 145 A. 820 (Pa. 1929) 9
Boggs v. Boggs, 520 U.S. 833 (1997) 1, 12, 18
Burns v. United States, 200 F.2d 106
(4thCir. 1952) 8
California Div. of Labor Standards
Enforcement v. Dillingham ~onstr., NA.,
519 U.S. 316 (1997) 6

Chiles v. Ceridian Corp., 95 F.3d 1505
(l0thCir. 1996) 4
Colovos' Adm 'r v. Gouvas, 108 S.W.2d
820
(Ky. 1937) 9
Connecticut Mut. L~fe Ins. Co. v.
Schaefer,
94 U.S. 457 (1876) 10
Demarest v. Manspeaker, 498 U.S. 184
(1991) 1
Dunn v. New Amsterdam Cas. Co., 141 A.D.
478 (N.Y. 1910) 9
Edwards v. State Farm Mut. Auto. Ins. Co.,
851 F.2d 134 (6th Cir. 1988) 4
Farra v. Braman, 86 N.E. 843 (Ind. 1909) 10

Firestone Tire & Rubber Co. v. Bruch,
489
U.S. 101 (1989) 9,15,19





iv V


Fleming v. Grimes, 107 So. 420 (Miss.
1926) 9
Fort Halifax Packing Co. v. Coyne, 482
U.S. 1(1987) 12,13
Free v. Bland, 369 U.S. 663 (1962) 15
Hansen v. Continental Ins. Co., 940 F.2d
971 (5thCir. 1991) 4
Heidgerd v. Olin Corp., 906 F.2d 903
(2d Cir. 1990) 4
Ingersoll-Rand Co. v. McClendon, 498 U.S.
133 (1990) 11
Kamen v. Kemper Fin '1 Servs., Inc., 500
U.S. 90 (1991) 19
Lofton v. West, 198 F.3d 846 (Fed. Cir.
1999) 8-9
Mackey v. Lan ier Collection Agency &
Serv., Inc., 486 U.S. 825 (1988) 7, 8
Marquet v. Aetna L~fe Ins. Co., 159 S.W.
733 (Tenn. 1913) 10
Masonic Temple Ass 'n v. Hannum, 184 A.
414 (N.J. 1936) 9
Mertens v. Hewitt Assoc., 508 U.S. 248
(1993) 18
Metropolitan Lfe Ins. Co. v. Taylor,
481 U.S. 58 (1987) 13
Miller v. McCarthy, 270 N.W. 559 (Minn.
1936) 9
Mutual Life Ins. Co. v. Armstrong, 117 U.S.
591 (1886) 8
New York State Conf of Blue Cross & Blue
Shield Plans v. Travelers Ins. Co., 514
U.S. 645 (1995) 5,7,11,19
Oklahoma City v. Tuttle, 471 U.S. 808
(1985) 1
Pierce v. Security Trust Life Ins. Co.,
979 F.2d 23 (4th Cir. 1992) 4
Ridgway v. Ridgway, 454 U.S. 46 (1981) 9, 14
Riggs v. Palmer,22 N.E. 188 (N.Y. 1889) 8
Shoemaker v. Shoemaker, 263 F.2d 931
(6th Cir. 1959) 8
United States v. Kimbell Foods, 440 U.S.
715 (1979) 19
United States v. Leverett, 197 F.2d 30
(5th Cir. 1952) 18
Wissner v. Wissner, 338 U.S. 655 (1950) 14

STATUTES AND REGULATIONS
29 U.S.C. § 1002(8) 14, 17
29 U.S.C. § 1022(a) 4
29 U.S.C. § 1056(d)(3)(B)(ii) 3
29 U.S.C. § 1056(d)(3)(F)(i) 17
29 U.S.C. § 1102(a)(1) 16
29U.S.C.§ 1102(b)(4) 16
29 U.S.C. § 1104(a)(1)(D) 15,16
29 U.S.C. § 1132(a) 16
29 U.S.C. § 1132(a)(1) 15
29 U.S.C. § 1 144(b)(2)(A) 11
29 U.S.C. § 1 144(b)(4) 11
29 U.S.C. § 1 144(b)(7) 11
26 C.F.R. § 1.401(a)-13(c)(ii) (2000) 17
26 C.F.R. § 1.40 1(a)-20, A-25(b)(3) (2000) 14





vi vii
WASH. REV. CODE § 11.07.010 passim WASH. R. EVID. 602 4
WASH. REV. CODE § 11.07.010(2) 3 WASH. R. EvID. 802 4
WASH. REV. CODE § 11.07.010(2)(b)(i) 5
WASH. REV. CODE § 11.07.010(3) 2
WAsH. REV. CODE § 11.07.010(5)(a) 13

OTHER AUTHORITIES
H.R. REP. No. 98-65 5 (1984) 10
S. REP. NO. 98-575 (1984), reprinted in
1984 U.S.C.C.A.N. 2547 10

RESTATEMENT OF RESTITUTION § 187
(1937) 8

RESTATEMENT OF RESTITUTION § 189
(1937) 8

RESTATEMENT (SECOND) OF JUDGMENTS §
42(1982) 2

RESTATEMENT (SECOND) OF TRUSTS §§ 330,
333 (1959) 20
4 L. RuSS, COUCH ON INSURANCE § 64:9
(3D ED. 1996) 9-10

18 C. WRIGHT, A. MILLER & E. COOPER,
FEDERAL PRACTICE AND PROCEDURE
(1981) 2

G. BOGERT & G. BOGERT, THE LAW OF
TRUSTS AND TRUSTEES (REv. 2D ED.
1983) 20
UNIF. PROB. CODE § 2-804 (1990) 10
SUP.CT.R. 15.2 I


REPLY BRIEF FOR PETITIONER

I. RESPONDENTS' ATTEMPTS TO AVOID A DECISION ON THE MERITS ARE BASELESS
Respondents belatedly identify three purported grounds for avoiding a decision on the merits of the important questions raised in
this case. Respondents' objections are entirely without foundation.

First, Respondents contend that the question presented in this case is "entirely academic" because the decision below "does not
impose any duties on ERISA plans or create any rights against such plans." Resp. Br. 14, 15.1 Respondents' contention is nonsensical.

The court below expressly rejected the contention that "[§1 11.07.010 does not apply to ERISA plans," and refused to find ERISA
preemption even after making clear that § 11.07.010 "operate[s] upon the beneficiary designation in an ERISA plan." Pet. App. 18a-
19a, 21a. Unless reversed by this Court, therefore, the decision below will compel ERISA plans to comply with § 11.07.010, and will
subject them to enforcement actions in state court if they fail to do so. The fact that no plan is a party to this case is thus irrelevant, just
as it was in Boggs v. Boggs, 520 U.S. 833 (1997). See id. at 854 ("It does not matter that respondents have sought to enforce their rights
only after the retirement benefits have been distributed since their asserted rights are based on the theory that they had an interest in the
undistributed pension plan benefits. Their state-law claims are pre-empted.").

Nor is there any significance to the fact that lack of notice may give ERISA plans a limited defense to damI Respondents waived this
argument by failing to raise it
either in the courts below or in their brief in opposition. Sue.
CT. R. 15.2; Demarest v. Manspeaker, 498 U.S. 184, 188-
189 (1991); Oklahoma City v. Tuttle, 471 U.S. 808, 815-816
(1985).


2 3


ages claims under § 11.07.010(3). That limited defense
is irrelevant in this case: The insurance plan administrator
has already settled with Respondents (Resp. Br. 15 n.3)
and the pension plan still holds the pension funds at
issue here (and indeed, but for the stay issued by
Justice O'Connor, would already have been subjected to
the enforcement and contempt proceeding initiated by
Respondents in the trial court).2 More fundamentally,
Respondents' attempt to divert the focus of this case to
the varying damages provisions set forth in §
11.07.010(3) and (4) is wholly unpersuasive. The
crucial provision that forms the basis for their claim
against Petitioner is subsection 2(a), which purports to
revoke ERISA plan beneficiary designations upon
divorce and, in so doing, imposes a legal duty directly
on ERISA plans.

Second, Respondents contend that Petitioner's pre-
emption challenge is premature and should be rejected
because of the purported possibility that "the trial
courts on remand from the Washington Supreme Court
can and will expressly address the disputed benefits
and satisfy the technical requirements for QDROs."
Resp. Br. 16. That wholly speculative contention has
been waived because it was not raised previously (see
supra note 1), and in any event is without merit.
As previously explained (Pet. Br. 23), ERISA ex-
empts QDROs from the scope of its preemption provi-
sion. Contrary to Respondents' belated musings, how-
ever, no QDROs could be entered by the state courts in
this case. Ablamis v. Roper, 937 F.2d 1450, 1456 (9th
Cir. 1991) ("The limited QDRO exception applies only

2 See No. 99A803 (Apr. 7, 2000). Absent reversal, of
course, the decision below would be binding on the
pension plan administrator in any enforcement action,
both as a matter of stare decisis in the Washington
courts and by virtue of traditional collateral estoppel
principles. RESTATEMENT (SECOND) OF
JUDGMENTS § 42 cmt. g & illus. 13 (1982); 18
C. WRIGHT, A. MILLER & E. COOPER, FEDERAL
PRACTICE AND PROCEDURE § 4454, at 462-63
(1981).
to 'domestic relations' orders 'made pursuant to a state
domestic relations law,' not to 'probate' orders or orders
made pursuant to probate law.").

A QDRO must be a "domestic relations order,"
which ERISA defines as "any judgment, decree, or
order
which ... relates to the provision of child support,
alimony payments, or marital property rights to a
spouse, former spouse, child, or other dependent of a
participant." 29 U.S.C. § 1056(d)(3)(B)(ii). No orders
in this case could "relate[] to the provision of child sup-
port, alimony payments, or marital property rights" for
the simple reason that there are no such rights involved
here. Petitioner's entitlement to the ERISA benefits at
issue is founded upon her status as the designated bene-
ficiary of the plans, not on alimony or marital property
rights; Respondents' contrary claims are based on §
11.07.010(2), not on a child support order or any mari-
tal relationship. The only domestic relations order in-
volved in this casethe divorce decree between Peti-
tioner and David Egelhoffwas entered as a final decree
in a different case more than six years ago, and
concededly does not constitute a QDRO. Respondents'
untimely QDRO argument is a red herring.

Third, Respondents claim (Resp. Br. 47) that the
presence of summary plan descriptions ("SPDs") rather
than the full plan documents in the record provides a
"basis for affirmance or dismissing the petition as im-
providently granted." Once again, their claim has been
waived (see supra note 1) and is meritless.

There has never been any dispute in this case about
the material terms of the plans. Indeed, Respondents
stipulated that the record already contains "the relevant
provisions of' the pension plan (J.A. 21), and they are
also bound by their express admission that "[t]he plans
provided that benefits would be distributed upon David's
death to the named beneficiaty or, if the named
beneficiary predeceased David, to David's heirs." Br. in
Opp. 1 (emphasis added). Nor are Respondents in any





4 5


position to dispute, for the first time in the case, Peti-
tioner's status as the sole designated beneficiary of both
plans. Resp. Br. 43-~. As the courts below found, Pe-
titioner was "beneficiary of record under both [the] life
insurance policy and [the] pension plan," and "re-
mained" so "[a]t the time of [David Egelhoffs] death."
Pet. App. 4a; see id. at 29a, 30a, 46a, 48a.

Respondents' complaints about the record are also
wrong on the merits. The record contains the SPDs,
which provide compelling evidence of the pertinent
provisions of the plans. ERISA § 102(a), 29 U.S.C.
§ 1022(a); U.S. Br. 21 n.l0; Chiles v. Ceridian
Corp., 95 F.3d 1505, 15 18-19 (10th Cir. 1996);
Pierce v. Security Trust L~fe Ins. Co., 979
F.2d 23, 27 (4th Cir. 1992); Hansen v. Continental
Ins. Co., 940 F.2d 971, 981-82 (5th Cir. 1991);
Heidgerd v. Olin Corp., 906 F.2d 903, 907-
08 (2d Cir. 1990); Edwards v. State Farm Mut. Auto. Ins.
Co., 851 F.2d 134, 136 (6th Cir. 1988). If
Respondents were dissatisfied with the state of the record
in the trial court, they should have obtained additional
documents through discovery and introduced them in
an effort to rebut Petitioner's factual showing. Respon-
dents cannot now benefit from their own default merely
by suggestingwithout a shred of evidencethat they
might conceivably gain some wholly speculative and
dubious advantage if only the complete plan documents
were in the record.3


~ Respondents' claim that "[t]he record contains
uncontradicted, sworn testimony" that David Egelhoff
did not want her to receive benefits (Resp. 25) is
without merit. In the first place, Petitioner's alleged
post hoc speculations regarding the hypothetical
intentions of the deceased are irrelevant. The plans
make clear that a participant's intentions regarding
disposition of plan assets are ineffective unless and
until expressed in a beneficiary designation form.
Moreover, under Washington evidence law, the
statements cited by Respondents lack foundation and
are inadmissible hearsay. WASH.
R. EVID. 602, 802.
II. SECTION 11.07.010 "RELATES TO" AN
ERISA PLAN
A. The "Opt Out" Provision Does Not Save
Section 11.07.010 From Preemption

Respondents first contend that ERISA does not
preempt § 11.07.010 because the divorce-revocation
mandate does not apply if "[t]he instrument governing
disposition of the nonprobate asset expressly provides
otherwise." WASH. REv. CODE § ll.07.010(2)(b)(i).
According to Respondents, § 11.07.010 is "strictly
optional" and thus does not impose a "cognizable
burden" on ERISA plans. Resp. Br. 8, 11-12.
Respondents have waived this contention (see supra
note 1), however, and in any event it reflects a
fundamental misapprehension of the nature and scope
of ERISA preemption.
ERISA § 514(a) was intended to "establish the
regulation of employee welfare benefit plans 'as
exclusively a federal concern,"' thereby "avoid[ing] a
multiplicity of regulation in order to permit the
nationally uniform administration of employee benefit
plans." New York State Conf of Blue Cross & Blue Shield
Plans v. Travelers Ins. Co., 514 U.S. 645, 656, 657
(1995) (citation omitted). Thus, ERISA preempts state
laws that "mandat[e] employee benefit structures or
their administration." Id. at 657-58. As applied to
the plans at issue in this case, § 11.07.010 has precisely
that forbidden effect: It directly regulates ERISA plans
by invalidating the benefit structures and procedures
provided for in the plans and substituting a different,
state-conceived scheme for determining beneficiaries
and paying benefits.

Respondents' assumption that the plans could
have opted out of the particular benefit scheme
imposed by § 11.07.010 (if they had been aware of it)
is thus entirely beside the point. The crucial and
incontrovertible fact is that Washington has, by statute,
purported to replace these ERISA plans' beneficiary
provisions with a different rule that deprives
designated beneficiaries of rights they would otherwise
enjoy under the terms of the plans.





6 7


To say that such a law does not "relate to" an ERISA
plan would be absurd.
Far from advancing Respondents' argument, the opt-
out provision in fact constitutes yet another imper-
missible attempt by Washington to regulate the admini-
stration of ERISA plans. The opt-out provision
requires ERISA plans to "expressly provide[]" that
they reject the default divorce-termination rule, and
thus impose.s on ERISA plans an additional
administrative hurdle that must be overcome before
they can implement their desired benefit allocation
scheme. In effect, § 11.07.010 subjects ERISA plans to
a two-tiered state regulatory regime that "dictateEs] the
choices[] facing ERISA plans" (California Div. of Labor
Standards Enforcement v. Dillingham Constr., NA., 519
U.S. 316, 334 (1997)): A plan must either
amend its plan documents in a manner that satisfies the
requirements of Washington's "express[]" opt-out
provision, or pay benefits in accordance with
Washington's divorce-revocation rule, notwithstanding
the plan's contrary benefit-allocation scheme. In either
case, § 11.07.010 is imposing state-law administrative
requirements that regulate ERISA plans' benefit
allocation schemesprecisely the type of state regulation
that Congress intended to preempt.

The opt-out provision's inability to save §
11.07.010 from preemption is further demonstrated by
the implications of Respondents' contrary argument. If
the mere presence of an opt-out provision sufficed to
save otherwise impermissible statutes from
preemption, ERISA plans would be subjected to the very
burdens that Congress sought to eliminate. ERISA plan
administrators would have to acquire and maintain a
detailed familiarity with the ever-changing benefits
regulatory schemes of all 50 states and remain
constantly on their guard to adopt plan amendments
that satisfied the terms of any newly adopted opt-out
provisions in order to avoid the otherwise binding effect
of new state substantive regulations. Section 514(a) was
intended to avoid the need for
"'the tailoring of plans and employer conduct to the pe-
culiarities of the law of each jurisdiction,"' Travelers,
514 U.S. at 656-57 (citation omitted), but
Respondents' argument would lead to precisely
that impermissible result. The opt-out provision thus
cannot save § 11.07.010 from preemption.

B. Section 11.07.010 Mandates Plan Admini-
stration And Binds Plans To A Particular
Choice Regarding Core ERISA Concerns

Almost in passing, Respondents assert that §
11.07.010 does not mandate plan administration or bind
plan administrators to any particular choices, but
instead merely "sets up a rule that applies to family law
situations not anticipated or addressed by ERISA, by
the plan, or by the participant." Resp. Br. 34. To the
contrary, the plans at issue here establish a uniform,
clear and simple procedure for determining beneficiary
status in the circumstances of this case: The plan
confers beneficiary status on, and will pay benefits to,
the individual listed on the participant's official
beneficiary designation form on file with the plan
administrator. See Pet. Br. 2-3 n. 1. By purporting to
override that simple rule and substitute a different,
state-preferred result, § 11.07.010 clearly mandates
plan administration and binds plan administrators to
particular choices in an area that lies at the very core of
ERISA's concerns beneficiary status and rights. See
Pet. Br. 12-17; U.S. Br. 12-17.
Respondents rely on Mackey v. Lan ier Collection
Agency & Serv., Inc., 486 U.S. 825
(1988), but the state garnishment law
at issue there was merely "a 'procedural' mechanism for
the enforcement of judgments" and "d[id] not create the
rule of decision in any case affixing liability." Id. at 835
n. 10. That distinction was essential to the Court's
decision, and properly so. A law like § 11.07.010 that
intrudes directly into matters regulated by ERISA by
overriding and replacing an ERISA plan's "rule of
decision" for making beneficiary deter-





8 9


minations relates to ERISA plans in a
direct and substantial way, unlike a general
garnishment statute that merely permits the
enforcement of money judgments predicated on state
laws that have nothing whatsoever to do with ERISA
plans. Respondents' argument that § 11.07.010 is "no
less 'procedural' than the law in Mackey" (Resp. Br. 35)
is thus incorrect.

Respondents next argue that § 11.07.010 ought not
be preempted because, in their view, Congress did not
intend ERISA to preempt state slayer statutes or simul-
taneous death laws. Respondents' reliance on these
other state laws is misplaced. First, Respondents err in
contending that state slayer statutes are "functionally
indistinguishable" from § 11.07.010. Resp. Br. 26-27.
The "Slayer's Rule" has been universally recognized by
the common law for more than a century. See, e.g.,
RESTATEMENT OF RESTITUTION §§ 187, 189
(1937); Mutual Life lns. Co. v. Armstrong, 117 U.S. 591,
600 (1886) ("It would be a reproach to the
jurisprudence of the country, if one could recover
insurance money payable on the death of a party whose
life he had feloniously taken."); Riggs v. Palmer, 22
N.E. 188, 190 (N.Y. 1889). Indeed, by the time
Congress enacted ERISA in
1974, the "Slayer's Rule" was embodied in federal
common law and was consistently applied as a judicial
gloss in interpreting federal statutes governing benefits
payable on death. See, e.g., Shoemaker v. Shoemaker,
263 F.2d 931, 932 (6th Cir. 1959); Burns v.
United States, 200 F.2d 106, 106-07 (4th
Cir. 1952); United States v. Leverett, 197 F.2d 30,
31-32 (5th Cir. 1952); Austin v. United States, 125 F.2d
816, 819-20 (7th Cir. 1942).

Thus, the "Slayer's Rule" was an established part of
the common law backdrop against which
Congress enacted ERISA in 1974. Accordingly, ERISA
may incorporate the Slayer's Rule as reflective of
congressional intent, as an accepted doctrine of federal
common law, and in order to avoid absurd results.
Lofton v. West, 198
F.3d 846, 850 (Fed. Cir. 1999) ("Congress legislates
against a common law background," and "it is highly
unlikely that Congress would have wanted to confer...
benefits on persons whose claims to those benefits
result from their own acts of intentional or wrongful
homicide"); see Astoria Fed. Say. & Loan Ass 'n v.
Solimino, 501 U.S. 104, 108 (1991); Firestone Tire &
Rubber Co.
v. Bruch, 489 U.S. 101, 110 (1989) ("courts are
to develop a 'federal common law of rights and
obligations under ERISA-regulated plans"'); U.S. Br. 29
n.18.4

By contrast, the divorce-revocation statutes upon
which Respondents rely are a recent phenomenon. At
the time of ERISA's enactment, the uniform common-
law rule held that divorce did not revoke beneficiary
designations with respect to non-probate assets. See,
e.g., 4 L. RUSS, COUCH ON INSURANCE § 64:9, at
64-22


~ A similar analysis applies to the other state laws
invoked by Respondents. See Resp. Br. 29-31. Like the
common law "Slayer's Rule," definitions of terms like
"child," "death," "duress," and "capacity" comprised
part of the background common law of trusts in 1974
when Congress enacted ERISA. Similarly, the common
law addressed the issue of simultaneous death (while
ERISA does not). See, e.g.. Cobvos' Adm 'r v. Gouvas,
108 S.W.2d 820 (Ky. 1937); Masonic Temple Ass
'n v. Hannum, 184 A. 414 (N.J. 1936); Miller
v. McCarthy, 270 N.W. 559 (Minn. 1936); Baldus
v. Jeremias, 145 A. 820 (Pa. 1929); Fleming
v. Grimes, 107 So. 420 (Miss. 1926); Dunn v. New
Amsterdam Cas. Co., 141 A.D. 478 (N.Y. 1910). These
common law rules form part of the backdrop against
which Congress legislated in 1974, and would provide
an appropriate basis for development of federal
common law rules if necessary. Of course, there is no
need to resolve any of these hypothetical questions in
this case. See Ridgway v. Ridgway, 454 U.S. 46,
60 n.9 (1981) (rejecting attempt to use state divorce
decree to override beneficiary designation under federal
statute, but leaving open the question whether named
beneficiaries might be denied benefits in "extreme fact
situations" such as "where the named beneficiary
murders the insured").





10 11


to 23 (3D ED. 1996) ("Divorce per se
does not affect or defeat one spouse's
rights as a designated beneficiary in a policy
on the other spouse's life, absent a change in
beneficiary designation or a provision
in the contract of insurance" to the
contrary) (footnotes omitted); Con-
necticut Mut. L~fe Ins. Co. v. Schaefer, 94 U.S. 457, 461-
63 (1876); Marquet v. Aetna Life Ins. Co., 159 S.W.
733, 735 (Tenn. 1913); Farra v. Braman, 86 N.E. 843,
848-50 (md. 1909). Indeed, it was not until 1990 that
the Uniform Probate Code was revised
to propose a divorce-revocation rule
with respect to non-probate assets like
ERISA plans. See UNIF. PROB. CODE § 2-804
(1990). Even today, only about a third of the States
have adopted some version of that approach (Resp. Br.
23 n.9); the overwhelming majority
continue to adhere to the contrary
common-law rule.
Moreover, ERISA's structure makes clear that Con-
gress determined that divorce would not override
ERISA plan beneficiary rights except
when the divorce decree qualified as a
QDRO. See Pet. Br. 23-24; U.S. Br. 14-
17. Congress exempted QDROs from ERISA's preemp-
tion clause in order "to ensure that only those orders
[that qualify as QDROs] are not
preempted by ERISA."
S. REP. NO. 98-575, at 19 (1984), reprinted in 1984
U.S.C.C.A.N. 2547, 2565 (emphasis
added); see also H.R. REP. No. 98-655, at
42 (1984). Respondents' only response
to this point is to quote legislative
history out of context. Resp. Br. 21.
The relevant passage actually provides
that "State law providing for the[]
rights and payments under a qual~f led
domestic relations order will continue
to be exempt from Federal preemption
under ERISA." S. REP. No. 98-575, at
19 (emphasis added). Thus,
Respondents' selective quotation serves only to
reemphasize the narrow scope of the
QDRO exception and confirms the
impermissibility of Respondents' attempts to use state
divorce law to terminate beneficiary status and rights in
the absence of a QDRO.
C. Section 11.07.010 Interferes With The Na-
tionally Uniform Administration Of Em-
ployee Benefit Plans

Respondents also err in contending that §
11.07.010 does not interfere with the nationally
uniform administration of ERISA plans. First,
Respondents erroneously assume that "[wihere
Congress desired application of a uniform rule, it so
provided in the specific 'provisions~ of ERISA."
Resp. Br. 32. To the contrary, however, ERISA
preemption is not limited to
circumstances in which ERISA expressly
resolves the precise question at issue.
Congress instead chose to preempt state laws that
"relate to" ERISA plans regardless of whether those
laws violate a specific ERISA provision. See, e.g.,
Ingersoll-Rand Co. v. McClendon, 498
U.S. 133, 139 (1990) ("Pre-emption is ... not precluded
simply because a state law is consistent with ERISA's
substantive requirements.") .~
Second, Respondents are mistaken in asserting that
the variations in state divorce-revocation law are "basi-
cally imagined." Resp. Br. 36 n.23. Most fundamen-
tally, the law in states like Washington is directly
inconsistent with the law in the majority of states that
adhere to the common law rule. It was precisely to
avoid such a patchwork scheme of
inconsistent state regulation that
Congress enacted ERISA's preemption
provision. E.g., Travelers, 514 U.S. at 657; Pet. Br.
17-21. Moreover,


~ Respondents argue that uniformity is "one goal
among the many goals animating ERISA," relying on the
fact that ERISA plans are subject to state regulation of
insurance, banking, securities, and criminal law, and
through QDROs. Resp. Br. 32. But in each of these
instances, Congress expressly exempted such laws from
ERISA preemption and thereby expressly approved of
any resulting disuniformity in plan administration caused
by these laws. ERISA
§§ 514(b)(2)(A), (b)(4), (b)(7), 29 U.S.C. §§ 1
144(b)(2)(A). (b)(4), (b)(7). By contrast, Congress did
not exempt state divorce-revocation statutes from
preemption.





12 13


within the minority of states that currently provide for
revocation of beneficiary status upon divorce, the indi-
vidual state laws differ with regard to the types of
property to which they apply, the classes of
individuals whose rights are voided, and the specific
conditions under which they do and do not apply. See
Pet. Br. 20 n.8. The potential for additional variations
in the future is essentially limitless.
Next, Respondents argue that some
ERISA plans may already be aware of
state laws such as § 11.07.010 because they
administer assets that do not qualify
for ERISA preemption. Resp. Br. 39. But
the fact that some plans or insurers
may voluntarily subject themselves to
different state laws by administering particular assets
does not change Congress's intent to immunize ERISA
plans from state laws that would "result[] in a complex
set of requirements varying from State to State." Boggs,
520 U.S. at 851.6 Quite simply, if state laws such as §
11.07.010 were permitted to trump ERISA plan
beneficiary designations, plans would face a multiplicity of
inconsistent state regulation, contrary to this
congressional intent. Pet. Br. 17-21. Like the state laws
preempted in Shaw, Holliday, and Alessi, which would
have required plans to restructure themselves in
accordance with state law or to adopt different benefici-
ary payment schemes in different states (see Pet.
Br. 16-17), state laws such as § 11.07.010 would force
ERISA


6 Respondents' claim that § 11.07.010 would actually re-
duce administrative burdens by providing a "default rule" is
plainly erroneous. Resp. Br. 33. The plans at issue here
are not in need of a "default rule"they establish by their
own terms a clear rule for determining beneficiary status.
As the Court explained in Fort Hal~fax, "[t]he most
efficient way to meet these [plan] responsibilities is to
establish a uniform administrative scheme, which provides
a set of standard procedures to guide processing of claims
and disbursement of benefits"precisely what the plans at
issue here have done. Fort Halfax Packing Co.
v. Coyne, 482 U.S. 1, 9 (1987).
plans "to accommodate conflicting
regulatory schemes in devising and
operating a system for processing claims and
paying benefitsprecisely the burden
that ERISA pre-emption was intended to
avoid." Fort Halifax Packing Co. v. Coyne,
482 U.S. 1, 10 (1987) (emphasis added).7
Ill. SECTION 11.07.010 CONFLICTS WITH ER-
ISA'S PROVISIONS AND OBJECTIVES
A. Section 11.07.010 Conflicts With The
Definition Of "Beneficiary"

Respondents assert that § 11.07.010
does not conflict with ERISA's
definition of "beneficiary" because they
claim to be contingent beneficiaries under the pension
plan. Resp. Br. 39-41. To the contrary, however,
Respondents' claim to enjoy the status of contingent
beneficiaries merely confirms that
their attempt to obtain the ERISA benefits
at issue here is preempted. As previously discussed
(Pet. Br. 13-15 & n.4), claims for benefits brought by
purported beneficiaries fall within the "complete
preemption" doctrine and are so thoroughly federal in
nature that they arise exclusively under federal law,
even when, as here, the suit "purports to raise only
state law claims." Metropolitan Life Ins. Co.
v. Taylor, 481 U.S. 58, 67 (1987).
Respondents do not

~ Respondents claim that Fort Halifax upheld a state law
that "imposed a far more burdensome requirement than
[§] 11.07.010the obligation to pay a severance
benefit." Resp. Br. 33. Respondents' argument ignores the
crucial distinction that this Court found dispositive in Fort
Halifax. The state law at issue there did not purport to
regulate or affect ERISA plans at all; rather, it simply
required employers to provide a one-time, lump-sum
severance benefit. 482 U.S. at 12. Since the statute did
not regulate existing ERISA plans and "neither
establish[ed], nor require[d] an employer to maintain"
such a plan, it did not "relate to" an ERISA plan within
the meaning of§ 514(a). Id. By contrast, § 11.07.010 is
expressly directed at "employee benefit plan[s]." WASH.
REV. CODE § 1l.07.0l0(5)(a).





15
14
even respond to this point, much less offer any basis for
avoiding the complete preemption of their state-law
claims.
Even leaving aside the complete preemption doc-
trine, Respondents' claim of contingent beneficiary status
does nothing to advance their cause. For purposes of
conflict preemption analysis, the crucial point-essentially
ignored in Respondents' briefis that Petitioner is
unquestionably the sole designated beneficiary entitled to
receive benefits pursuant to the terms of the plan and
ERISA's definition of "beneficiary." As is confirmed by
the regulatory interpretation promulgated by the
Internal Revenue Service in the exercise of its regulatory
authority under ERISA, divorce does not invalidate a
participant's beneficiary designation, and "any elections
made while the participant was married to his former
spouse remain valid, unless otherwise provided in
a QDRO, or unless the participant changes them or is
remarried." 26 C.F.R. § l.401(a)-20, A-25(b)(3)
(2000).
Thus, by purporting to deprive Petitioner
of her "beneficiary" statusa status
conferred by the text of ERISA itself, 29
U.S.C. § 1002(8)-Washington's statute conflicts
directly with ERISA. That undeniable conflict, standing
alone, compels a finding of preemption. See Pet.
Br. 28-30, 39-40; see also Ridgway v. Ridgway,
454 U.S. 46, 59-60 (1981) (beneficiary
designation under Servicemen's Group
Life Insurance Act prevails over contrary
result mandated by state divorce law, because "[f]ederal
law and federal regulations bestow upon the service
member an absolute right to designate the policy
beneficiary"); Wissner v. Wissner, 338 U.S. 655, 658
(1950).
In addition, Respondents' claim to
be contingent beneficiaries is
unpersuasive. Upon the plan partici-
pant's death, Petitioner's rights as the designated
beneficiary became irrevocable, because she was the only
"person designated by [the] participant" in accordance
with the "terms of [the] employee benefit planEs]." 29
U.S.C. § 1002(8). Under the terms of the plan, there-
fore, Respondents are not persons "who... may become
entitled to a benefit thereunder," and accordingly
they are not contingent beneficianes.
Even if Respondents were contingent beneficiaries,
moreover, their rights would necessarily be
inferior to those of Petitioner, the
primary beneficiary under the plan terms.
As mere contingent beneficiaries, Respondents would
have no ability to divest Petitioner of her rights to the
plan benefits. Respondents' argument (Resp. Br. 44) that
ERISA has no preference for primary beneficiaries over
mere contingent beneficiaries is simply wrong. Upon the
death of the plan participant and vesting of Petitioner's
rights to the plan benefits, Petitioner alone was entitled
to the benefits, and ERISA protects her right to receive
them. 29 U.S.C. §§ 1104(a)


Respondents argue that "the statute triggers
the plan's alternate beneficiary provisions by deeming
the former spouse to have predeceased the plan
participant." Resp. Br. 40. But the federally
protected rights of beneficiaries who have been
designated by a plan participant in accordance with the
terms of an ERISA plan cannot be nullified by the
simple ruse of promulgating a state law that pretends
those beneficiaries do not exist. See Pet. Br. 29-30; see
also Free v. Bland, 369 U.S. 663, 669 (1962). For the
same reason, Respondents' claim that Petitioner's
designation is "invalid" is equally unpersuasive. Resp. Br.
47. If states were permitted to "invalidate" beneficiary
designations in this manner, ERISA's solicitude for the
protection of beneficiaries would be wholly illusory.8

8 Moreover, it is the ERISA plan administrators, not the
courts or state legislatures, who possess discretion to
determine whether a beneficiary designation is "invalid"
within the meaning of the plan. See Resp. Lodging, tab 4,
at 12-2 12.7; Bruch, 489 U.S. at 115. No such
determination has been made (or even requested) here.





16 17


B. Section 11.07.010 Conflicts With ERiSA's
Protections For Beneficiaries

Respondents also claim that § 11.07.010 does not
conflict with ERISA's provisions protecting beneficiaries'
rights to the benefits due under plan documents. Resp. Br.
46. This claim lacks merit. First, contrary to the straw
man put forward by Respondent, Petitioner does not
assert that ERISA preempts all state laws that conflict
with ERISA plan provisions. Instead, Petitioner's position
is much narrower: § 11.07.010 is preempted because it
imposes a state-law rule of decision for determination of
beneficiary status and distribution of benefits, and in so
doing compels plan administrators to breach their
ERISA-imposed, federally enforceable duties to make
benefit determinations in accordance with the terms of
the governing plan. Pet. Br. 31-33; U.S. Br. 20-22.
Whatever role state law might have in other circum-
stances, ERISA's comprehensive regulation of beneficiary
status and rights leaves no room for enforcement of laws
like § 11.07.010. Congress has expressly mandated
that ERISA plans shall "specify the basis on which
payments are made ... from the plan," plan administrators
"shall" comply with those plan documents, and
beneficiaries have an exclusively federal cause of action
"to enforce [their] rights under the terms of the plan."
29 U.S.C. §§ 1 102(a)(1), (b)(4), 1 104(a)(1)(D),
1132(a).
Congress intended that the rights of beneficiaries would be
determined by reference to readily accessible ERISA plan
documents, not on the basis of varying and inconsistent
state laws. Pet. Br. 3 1-33. By directing plan ad-
ministrators to pay benefits in a manner contrary to the
terms of ERISA plans, § 11.07.010 plainly conflicts
with ERISA's provisions and frustrates its objectives.

C. Section 11.07.010 Conflicts With ERISA's
Anti-Alienation Clause
Respondents' contention that § 11.07.010 does not
conflict with ERISA's anti-alienation provision is
equally unavailing. Resp. Br. 41. The IRS has defined
assignment" and "alienation" to include "[a]ny direct or
indirect arrangement (whether revocable or irrevocable)
whereby a party acquires from a participant or beneficiary
a right or interest enforceable against the plan in, or to,
all or any part of a plan benefit payment which is, or may
become, payable to the participant or beneficiary." 26
C.F.R. § 1 .401(a)-13(c)(ii) (2000). Respondents argue
that § 11.07.010 does not effect an "assignment or
alienation" because under that statute Respondents do not
acquire any interest "'from' the named beneficiary." Resp.
Br. 42. This reading defies common sense and the
ordinary meaning of the relevant terms.
Prior to David Egelhoffs death, Petitioner had a
revocable right to receive ERISA benefits upon his death.
According to Respondents, § 11.07.010 operated to
deprive Petitioner of her status as sole designated
beneficiary entitled to plan benefits in these circum-
stances, thereby causing those rights to pass to Respon-
dents. Thus, § 11.07.010 purports to effect an alienation
of ERISA benefits "from" the designated beneficiary to
another party. U.S. Br. 24-25. Respondents' attempt to
deny this reality is sheer sophistry, and cannot withstand
scrutiny.9
As this Court has explained,
ERISA's prohibition against alienation
"is mandatory and contains only two
explicit exceptions," for plan loans
and QDROs, "which


~ Respondents err in contending (Resp. Br. 42) that the
plain-language interpretation of the anti-alienation
provision would bar changes in beneficiary designations at
the instance of the participant or upon divorce. ERISA
expressly authorizes plan participants to determine
beneficiaries and specifically terminates guaranteed
spousal annuity rights upon divorce (29 U.S.C. §§
1002(8), 1056(d)(3)(F)(i)), making clear that such
occurrences are permissible without regard to the anti-
alienation provision. By contrast, no provision of ERISA
authorizes states to transfer beneficiary rights from one
individual to another.





18 19


are not subject to judicial expansion." Boggs, 520 U.S. at
851. Because § 11.07.010 purports to transfer pension
plan benefits from the designated beneficiary to other
individuals without the use of a plan loan or QDRO, it
attempts to effect an assignment or alienation and is
barred by ERISA's anti-alienation clause. See, e.g., id.
at 851-53; Pet. Br. 36~41.10

D. Respondents' Reliance On Federal
Common Law Is Misplaced

Finally, Respondents claim that, if
ERISA preempts § 11.07.010, the Court should
create a federal common-law rule that "look[s] to state
law for its content." Resp. Br. 49. This suggestion is
directly contrary to ERISA's provisions and purposes. As
this Court has explained, "[t]he authority of courts to
develop a 'federal common law' under ERISA ... is not the
authority to revise the text of the statute." Mertens v.
Hewitt Assocs., 508 U.S. 248, 258-59 (1993). Because a
divorce-revocation rule would conflict directly with
ERISA's specific definition


10 Respondents' attempt to distinguish Boggs, Guidry,
and Patterson fails. According to Respondents, these
cases demonstrate "that alienation has consistently been
understood to involve the transfer to third parties of a
person's continuing interest in a pension plan and not the
loss of an interest that results in the ripening of a
subsequent and nonderivative claim of tight by other
beneficiaries." Resp. Br. 42-43 n.28. Respondents'
comparison presents a distinction without a difference.
Section 11.07.010 would operate to "transfer to third
parties [i.e., Respondents] a person's [i.e., Petitioner's]
continuing interest in a pension plan." Moreover,
ERISA's anti-alienation prohibition is categoricalERISA
permits a transfer of pension plan benefits if and only if
the alienation occurs in a manner authorized by ERISA,
such as through a QDRO. See, e.g., Boggs, 520 U.S. at
851. Absent such statutory authorization, ERISA
expressly prohibits the transfer, regardless of whether the
beneficiary "los[es] ... an interest that results in the
ripening of a subsequent and non-derivative claim of tight
by other beneficiaries."
of and protections for the rights of designated benefici-
aries (Pet. Br. 28-41), there is no basis for creation of a
federal common law rule in this area. U.S. Br. 27-29.
Even if this Court were to find room for the opera-
tion of federal common law in this area, moreover, Re-
spondents' suggestion that the Court merely adopt state
laws like § 11.07.010 would have to be rejected. While
"state law may be incorporated as the federal rule of de-
cision" when "there is little need for a nationally uniform
body of law," the opposite result is required here, because
areas of law "that 'by their nature are and must be
uniform in character throughout the Nation~ necessitate
formulation of controlling federal rules." United States
v. Kimbell Foods, 440 U.S. 715, 728 (1979);
see, e.g., Kamen v. Kemper Fin '1 Set-
vs., Inc., 500 U.S. 90 (1991). In light of Congress's
express intent in ERISA to secure "the nationally
uniform administration of employee benefit plans,"
Travelers, 514 U.S. at 657, it would be entirely
impermissible to incorporate the laws of each state in
developing a common law rule regarding beneficiary
designations in the event of divorceto do so would result
in the very sort of inconsistency in ERISA plan
administration that Congress sought to avoid. Rather,
courts developing federal common law under ERISA
should apply a uniform, federal rule.

In cases in which it is appropriate for courts to de-
velop federal common law for ERISA, courts look to the
principles of trust law to determine the content of that
common law. See, e.g., Bruch, 489 U.S. at 110 (because
"ERISA abounds with the language and terminology of
trust law[,] .... we have held that the courts are to develop a
'federal common law of rights and obligations under
ERISA-regulated plans"') (citation omitted); id. at 111
("[W]e are guided by principles of trust law.").
The common law of trusts does not provide for
revocation by divorce. The basic rule is that once a
settlor successfully creates a trust, he or she may neither
revoke nor modify it unless the terms of the trust so pro-




20

vide, and revocation is permissible only under limited circumstances (such as fraud, duress, undue influence, or mistake)
that do not include divorce. See
RESTATEMENT (SECOND) OF TRUSTS §§ 330, 333 cmt. a (1959); G. BOGERT & G. BOGERT, THE LAW OF TRUSTS AND
TRUSTEES §§ 992-93, at 218-19 & n.2, 230-32 (REV. 2D ED. 1983). Indeed, the common law rule provides that divorce is a condition
for which the settlor should plan, not one for which courts will make provision by operation of law. Id. § 994, at 247-48. And, as discussed
above (supra pp. 9-10), this common law approach continues to be followed in an overwhelming majority of states. Thus, a federal common
law rule, guided by principles of trust law and in keeping with the common law background against which Congress enacted ERISA, would hold
that beneficiary designations are not revoked in the event of divorce.
CONCLUSION
Section 11.07.010 is preempted by ERISA because it "relates to" and has a "connection with" an ERISA
plan, and because it directly conflicts with ERISA's text, structure, and purposes. For all of the foregoing
reasons, the decision of the Supreme Court of Washington should be reversed, and Petitioner's entitlement to the plan benefits at issue in this
case should be confirmed.
Respectfully submitted.

HENRY HAAS WILLIAM J. KILBERO
MCGAVICK GRAVES, P.S. Counsel of Record
1102 Broadway, Suite 500 ThoMAs 0. HUNGAR
TACOMA, WA 98402 GIBSON, DUNN & CRUTCHER LLP
(253) 627-1181 1050 Connecticut Avenue, N.W. Washington, D.C. 20036
(202) 955-8500

Counsel for Petitioner

October 19, 2000

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