|Syllabus ||Dissent |
[ Breyer ]
[ Kennedy ]
SANDRA JEAN DALE BOGGS, PETITIONER v. THOMAS
F. BOGGS, HARRY M. BOGGS and DAVID B. BOGGS
on writ of certiorari to the united states court of appeals for the fifth circuit
The question in this case is whether the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., "pre empts," and thereby nullifies, state community property law. The state law in question would permit a wife to leave to her children her share of the pension assets that her husband has earned (or, to put the matter in "community property" terms, that she and her husband together have earned) during their marriage. From the perspective of property law, the issue is unusually important, for, we are told, the answer potentially affects nine community property States, with more than 80 million residents, and over $1 trillion in ERISA qualified pension plans--plans that are often a couple's most important lifetime assets. In my view, Congress did not intend ERISA to pre-empt this testamentary aspect of community property law--at least not in the circumstances present here, where a first wife's bequest need not prevent a second wife from obtaining precisely those benefits that ERISA specifically sets aside for her. See §1055(a). The Fifth Circuit's
determination is consistent with this view. I would therefore affirm its judgment.
This case concerns the disposition of pension plan assets earned by an employee who was married; who had children; whose first wife died; who remarried; who retired; and who then died, survived by his second wife. To be more specific, the employee, Isaac Boggs, a resident of Louisiana, began work for South Central Bell Telephone Company (now known as Bell South) in 1949. He participated in its ERISA qualified pension plan for about 36 years. He was married to his first wife, Dorothy Boggs, during almost all of that time--from 1949 until 1979, when Dorothy died. The couple had three children. Isaac married his second wife, Sandra, in 1980. He retired in 1985. He died in 1989. Sandra survives him.
When Dorothy died, she left a will providing that Isaac would receive " `the maximum [share of her estate] permitted under the law,' " as well as a lifetime " `usufruct' " (rather like a common law life estate) in the remainder. Brief for Respondents 1, 2. The parties agree that this meant that Isaac received one third of her estate outright. Under Louisiana law, the three sons of Dorothy and Isaac would receive what was left of the remaining two thirds at Isaac's death (i.e., the "naked ownership," or the equivalent of a common law remainder).
Throughout his working life, and during his entire 30 year marriage to Dorothy, Isaac participated in a set of Bell South's ERISA qualified retirement plans. When Isaac retired in 1985 (six years after Dorothy's death), he received three assets from those plans: (1) 96 shares of AT&T stock (from Bell South's Employee Stock Ownership Plan); (2) a cash payment of about $150,000 (from Bell South's Savings Plan for Salaried Employees); and (3) an annuity of about $1,800 per month (from Bell South's Management Pension Plan) for his life and afterwards for that of his surviving second spouse, Sandra. Isaac almost immediately placed the $150,000 cash payment in an Individual Retirement Account (IRA), thereby avoiding immediate payment of an income tax. See 26 U.S.C. § 408(e)(1); see also S. Bruce, Pension Claims: Rights and Obligations 7 (2d ed. 1993). Isaac bequeathed a lifetime usufruct in his property, presumably including some or all of the AT&T stock and the funds in the IRA, to his second wife, Sandra. Sandra, as his survivor, also began to receive the $1,800 monthly annuity.
On December 17, 1992, Sandra Boggs filed an action for declaratory judgment in federal district court. See 29 U.S.C. § 1132(a)(1)(B) (plan participant or beneficiary may bring action to "clarify . . . rights to future benefits"). She said that the three children of Isaac and Dorothy had themselves brought an action in state court against her and against Isaac's estate, seeking a portion of the pension benefits from the Bell South plans. The children said that under Louisiana law, their mother, Dorothy, had owned a one half share in Isaac's rights under the Bell South retirement plans (insofar as they had accrued prior to Dorothy's death) and that she had left them a portion of that share (two thirds of the "naked interest" after Isaac's death). They asked (in Sandra's words) for "an accounting" as well as "for an undivided interest in, and/or the value of an undivided interest in, the assets and/or benefits" that were paid out of the pension plans. Petition for Declaratory Judgment in No. 92-4174 (ED La., Dec. 16, 1992), p. 3. Sandra asked the District Court to declare that, insofar as state law entitled the children to some of the plan benefits, ERISA pre-empted that state law. In a nutshell, she asked the court to say that the shares of stock, the cash, and the annuity payments were entirely hers.
The District Court disagreed with Sandra. It denied her motion for summary judgment and declared that "ERISA does not preempt Louisiana's community property laws." 849 F. Supp. 462, 467 (ED La. 1994); see also Judgment in No. 92-4174 (ED La., Mar. 9, 1994), p. 1. The Fifth Circuit Court of Appeals affirmed. We are reviewing the Fifth Circuit's decision in respect to pre-emption; and we must therefore assume its view of the relevant facts and state law.
Judge Wisdom, writing for the Fifth Circuit in this case, described Louisiana's community property law as a "system" that "conceives of marriage as a partnership in which each partner is entitled to an equal share." 82 F. 3d 90, 96 (1996); see also W. McClanahan, Community Property in the United States §2:27, p. 38 (1982) (hereinafter McClanahan) (community property law views marriage "as a civil contract between two persons who ente[r] into the relationship as equals and retai[n] their individual personalities"). Recognizing "the value a spouse, though non employed, contributes to a marriage," 82 F. 3d, at 96, the state law provides that the interest in pension benefits that accrued during Isaac's marriage to Dorothy belongs both to Isaac and to Dorothy--that is, to them as a community--and not to the one any more than to the other. La. Civ. Code Ann., Art. 2338 (West 1985) (community property includes "property acquired during the existence of the legal regime through the effort, skill, or industry of either spouse"); T. L. James & Co. v. Montgomery, 332 So. 2d 834, 841-844, 846 (La. 1975) (pension benefits are community property even if the employee spouse makes no cash contributions to plan).
Louisiana law, like the law of other States, today allows both women and men to leave their property to their children. La. Civ. Code Ann., Art. 2346 (West 1985) ("Each spouse acting alone may manage, control, or dispose of community property unless otherwise provided by law"). Cf. 16 K. Spaht & W. Hargrave, Louisiana Civil Law Treatise, Matrimonial Regimes 1-2 (1989) (until 1980, Louisiana law considered a husband to be the " `head and master' " and exclusive manager of community property). And we must assume, as did the Fifth Circuit, that Louisiana law would permit Dorothy's children, to whom she left her property, to obtain an accounting to determine the extent to which the stock, the IRA account, and the monthly annuity, in fact belong to them. See 82 F. 3d, at 97 ("[Dorothy's] spouse, or his estate, owes her an obligation to account for her share of the pension"); see also La. Civ. Code Ann., Art. 3261 (West 1961) (succession representative has broad power, subject to probate court approval, to liquidate an estate through sale or exchange of estate assets "to pay debts and legacies, or for any other purpose"). Cf. La. Rev. Stat. Ann. 9:2801 (West 1991 and Supp. 1997) (judicial partition of assets on divorce); Hare v. Hodgins, 586 So. 2d 118, 123 (La. 1991) (to equalize allocation of community assets on termination, court may grant "cash or other property in lieu of an actual percentage of the pension payments"); T. L. James, supra, at 851 n. 2 (opinion on rehearing) (same); Sims v. Sims, 358 So. 2d 919, 924 (La. 1978) (formula for calculating a former spouse's share of pension benefits); McClanahan §12:15, pp. 547-550 (state courts may allocate entire pension to employee spouse and allocate to other spouse other community property equal in value to half of pension); cf. also Succession of McVay, 476 So. 2d 1070, 1073-1074 (La. App. 1985) (decedent's IRA, which contained community property assets, could not be listed as an asset of his estate because he had designated a beneficiary; however, his estate would be deemed to contain the equivalent cash value). See generally La. Civ. Code Ann., Art. 4 (West 1993) ("When no rule for a particular situation can be derived from legislation or custom, the court is bound to proceed according to equity").
We ask here whether--or the extent to which--ERISA stands as an obstacle to the enforcement of this state law as applied in this case. It does so if state law "relate[s] to any employee benefit plan," 29 U.S.C. § 1144(a), or if it conflicts with specific provisions of ERISA. Applying the relevant criteria, I can find no basis for pre-emption.
Louisiana community property law "relates to" an ERISA plan within the meaning of §1144(a) if it expressly "refers" to such a plan, or if it has an impermissible "connection with" a plan. California Div. of Labor Standards Enforcement v. Dillingham Constr. N. A., Inc., 519 U. S. ___, ___ (1997) (slip op., at 7). Neither of these grounds for pre-emption is present here.
The relevant Louisiana statute does not refer to ERISA or to pensions at all. It simply says that "property acquired during the existence of the legal regime through the effort, skill, or industry of either spouse" is "community property." La. Civ. Code Ann., Art. 2338 (West 1985). Nor does the statute act exclusively on, or rely on the existence of, ERISA plans. See Dillingham, supra, at ___ (slip op., at 7). The statute's application to this case arises out of judicial interpretation, see T. L. James, supra, at 841; McClanahan §6:21, p. 365, of a sort that is likely to be present whenever a generally phrased state statute affects an ERISA plan among other things. Hence there is no specific "reference" problem.
The "connection" problem is more difficult. Insofar as that term refers to a conflict with an ERISA purpose, I discuss the matter primarily in Part II-B, infra. The term "connection," however, might also encompass the question whether state law intrudes into an area Congress (given ERISA's basic objectives) would have wanted to reserve exclusively for federal legislation. Dillingham, supra, at ___ (slip op., at 7-8) (quoting New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654 (1995)). Cf. Malone v. White Motor Corp., 435 U.S. 497, 504 (1978) (state law is pre-empted when it falls within a field that Congress has sought to occupy); San Diego Building Trades Council v. Garmon, 359 U.S. 236, 244-245 (1959) (States may not regulate activities that are protected or prohibited under National Labor Relations Act); Garner v. Teamsters, 346 U.S. 485, 498-499 (1953) (States may not add to or subtract from remedies provided in National Labor Relations Act). In my view, this latter problem (sometimes called "field pre-emption," see Dillingham, supra, at ___ (slip op., at 2-3) (Scalia, J., concurring)) is not present here.
The state law in question concerns the ownership of benefits. I concede that a primary concern of ERISA is the proper financial management of pension and welfare benefit funds themselves, Dillingham, supra, at ___ (slip op., at 9) (citing Massachusetts v. Morash, 490 U.S. 107, 115 (1989)), and that payment of benefits (which amounts to the writing of checks from those funds) is closely "connected with" that management. I also concede that state laws that affect those payments lie closer to ERISA's federal heart than do state laws that, say, affect those goods and services that ERISA benefit plans purchase, such as apprenticeship training programs, 519 U. S., at ___ (slip op., at 15-17), or medical benefits, DeBuono v. NYSA-ILA Medical and Clinical Serv. Fund, ante, at ___. But, even so, I cannot say that the state law at issue here concerns a subject that Congress wished to place outside the State's legal reach.
My reason in part lies in the fact that the state law in question involves family, property, and probate--all areas of traditional, and important, state concern. Rose v. Rose, 481 U.S. 619, 625 (1987) (domestic relations law traditionally left to state regulation); Hisquierdo v. Hisquierdo, 439 U.S. 572, 581 (1979) (same); Zschernig v. Miller, 389 U.S. 429, 440 (1968) ("The several States, of course, have traditionally regulated the descent and distribution of estates"). But see ante, at 14 (majority's effort to distinguish property interests passing at divorce from those passing by devise). When this Court considers pre-emption, it works "on the `assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.' " Dillingham, supra, at ___ (slip op., at 8) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947)).
I can find no reasonably defined relevant category of state law that Congress would have intended to displace. Obviously, Congress did not intend to pre-empt all state laws that govern property ownership. After all, someone must own an interest in ERISA plan benefits. Nor, for similar reasons, can one believe that Congress intended to pre-empt state laws concerning testamentary bequests. This is not an area like, say, labor relations, where Congress intended to leave private parties to work out certain matters on their own. See Machinists v. Wisconsin Employment Relations Comm'n, 427 U.S. 132, 144-148 (1976). The question, "who owns the property?" needs an answer. Ordinarily, where federal law does not provide a specific answer, state law will have to do so.
Nor can I find some appropriately defined forbidden category by looking to the congressional purpose of establishing uniform laws to regulate the administration of pension funds. Compare Ingersoll Rand Co. v. McClendon, 498 U.S. 133 (1990); Massachusetts v. Morash, supra, at 115. This case does not involve a lawsuit against a fund. I agree with the majority that ERISA would likely pre-empt state law that permitted such a suit. But this is not such a case; nor is there reason to believe Louisiana law would produce such a case. (Eskine v. Eskine, 518 So. 2d 505 (La. 1988), which is cited by the majority, involved a governmental plan that was not covered by ERISA. See id., at 506; 29 U.S.C. §§ 1002(32), 1003(b)(1).)
The lawsuit before us concerns benefits that the fund has already distributed; it asks not the fund, but others, for a subsequent accounting. And, as I discuss in Part II-B-3 below, this lawsuit will not interfere with the payment of a survivor annuity to Sandra. See §1055(a). Under these circumstances, I do not see how allowing the respondents' suit to go forward could interfere with the administration of the Bell South pension plan according to ERISA's requirements. Whether or not the children are allowed to seek an accounting, the plan fiduciaries will continue to owe a duty only to plan participants and beneficiaries. See §§1103(c)(1), 1104(a)(1). Contrary to the majority's suggestion, Dorothy's children are not the equivalent of plan "participants" or "beneficiaries" see §§1002(7), 1002(8), any more than would be a grocery store, a bank, an IRA account, or any other recipient of funds that have emerged from a pension plan in the form of a distributed benefit, and no one here claims the contrary. Moreover, the children here are seeking an accounting only after the plan participant has died. But even were that not so, any threat the children's lawsuit could pose to plan administration is far less than that posed by the division of plan assets upon separation or divorce, which is allowed under §1056(d). See infra, Part II-B-2.
Of course, one could look for a still more narrowly defined category, such as the category of "testamentary bequests of ERISA pension benefits by one spouse who dies before the other." But to narrow the category to this extent is to change the question from one about occupying the field, to one about whether, or the extent to which, Louisiana law frustrates or interferes with an important federal purpose.
That question is important. Indeed, the Court, in other cases, has found conflicts between state community property law and federal statutes governing retirement, insurance, and savings funds operated and/or funded by the Federal Government. See Mansell v. Mansell, 490 U.S. 581, 587-595 (1989); McCarty v. McCarty, 453 U.S. 210, 221-236 (1981); Ridgway v. Ridgway, 454 U.S. 46, 53-61 (1981); Hisquierdo, supra, at 582-590; Free v. Bland, 369 U.S. 663 (1962); Wissner v. Wissner, 338 U.S. 655, 658-660 (1950). But those cases turned on the particular federal purposes embodied in the particular federal statutes at issue. The question posed here similarly requires an examination of ERISA's specific statutory provisions to see whether they reveal language or an important purpose with which the State's community property laws conflict--either directly, or in the sense that the state laws "frustrate" the achievement of a statutory purpose. See Malone, 435 U. S., at 504. I now turn to that question.
Sandra Boggs, supported by the Solicitor General, points to three statutory provisions with which, she believes, Louisiana law conflicts--an anti alienation provision, 29 U.S.C. § 1056(d)(1), a provision dealing with an exception to the anti alienation section for "qualified domestic relations order[s]," §1056(d)(3)(A), and a provision that concerns joint and survivor pension annuities, §1055. I shall consider each in turn.
ERISA's "anti alienation" provision, §1056(d)(1), says that "benefits provided under the [qualified ERISA plan] may not be assigned or alienated." We have stated that this provision reflects "a decision to safeguard a stream of income for pensioners (and their dependents. . .)." Guidry v. Sheet Metal Workers Nat. Pension Fund, 493 U.S. 365, 376 (1990). Sandra Boggs and the Solicitor General claim that Louisiana law interferes with a significant "anti alienation" objective, both (1) by permitting Dorothy, the nonparticipant spouse, to obtain an undivided interest in the pension of Isaac, the participant spouse; and (2) by permitting Dorothy to transfer that interest on her death to her children, who, as far as ERISA is concerned, are third parties.
The first claim--simply attacking Dorothy's possession of an undivided one half interest in that portion of retirement benefits that accrued during her marriage to Isaac--does not attack any "assign[ment]" of an interest nor any "aliena[tion]" of an interest, for Dorothy's interest arose not through assignment or alienation, but through the operation of Louisiana's community property law itself. Thus, Sandra's claim must be that community property law's grant of an undivided one half interest in retirement benefits to a nonparticipant wife or husband itself violates some congressional purpose. But what purpose could that be? Congress has recognized that community property law, like any other kind of property law, can create various property interests for nonparticipant spouses. See 29 U.S.C. § 1056(d)(3)(B)(ii)(II). Community property law, like other property law, can provide an appropriate legal framework for resolving disputes about who owns what. §1056(d)(3). The anti alienation provision is designed to prevent plan beneficiaries from prematurely divesting themselves of the funds they will need for retirement, not to prevent application of the property laws that define the legal interest in those funds. One cannot find frustration of an "anti alienation" purpose simply in the state law's definition of property.
The second claim--attacking Dorothy's testamentary transfer to her children--is more plausible. Nonetheless, with one exception discussed below, ERISA does not concern itself with what a pension fund beneficiary, such as Isaac, does with his pension money at his death. That is not surprising, for after the death of a beneficiary the money is no longer needed for that beneficiary's support. And if ERISA does not embody a congressional purpose to restrict what Isaac can do with his pension funds after his death, there is no reason to believe it embodies some similar general purpose with respect to Dorothy. Insofar as the pension is community property, it belongs to both Dorothy and Isaac equally; it is just as much hers as his. Why, then, should ERISA restrict her testamentary power in respect to her property any more than it restricts his?
I see one possible answer to this question. One might argue that, because Dorothy was the first to die, her testamentary transfer gave to third parties (persons to whom ERISA is indifferent) funds that Isaac might otherwise have used during his retirement; and, for that reason, the testamentary transfer tends to frustrate the purpose of the "anti alienation" provision or some more general ERISA purpose. This argument (with one exception, see Part II-B-3, infra) is beside the point, however, for the state law action here seeks an accounting that will take place after the deaths of both Dorothy and Isaac. Moreover, the argument depends upon doubtful assumptions about Congress' purposes. Consider the 96 shares of stock and $150,000 cash that Isaac received from the plans when he retired. Dorothy's bequest affects those assets--the stock and the cash--not while they remain in Bell South's pension plan funds, but only after they have emerged from the plan in the form of a distributed payment. As far as ERISA is concerned, Isaac could have used the retirement benefits to pay for a vacation, to buy a house, to bet at the races, or he could have given the money to his children. ERISA would have left Dorothy similarly free to do what she wished with her share of the stock and the cash, had she been alive at the time of their receipt. That being so, I do not understand why or how ERISA could be concerned about Dorothy's creation of a will, which affected the retirement assets only after Isaac received them. I recognize that Isaac did not use the $150,000 to buy a new house, or to pay for medical expenses, or to gamble; rather, he put the money into an IRA account. But no one has explained why that fact--which in all likelihood reflects the exigencies of tax law, see 26 U.S.C. § 408(e)(1)--should make any difference here.
Sandra Boggs and the Solicitor General look for support to another portion of the anti alienation section--an amendment that was part of the Retirement Equity Act of 1984 (REA), Pub. L. 98-397, 98 Stat. 1426--that affects the division of assets upon divorce. That section says that the "anti alienation" provision, 29 U.S.C. § 1056(d)(1), "shall not apply if the order is determined to be a qualified domestic relations order" (QDRO). §1056(d)(3)(A). The provision defines QDROs to include certain court orders that are "made pursuant to a State domestic relations law (including a community property law)," §1056(d)(3)(B)(ii)(II), and meet certain other requirements, §§1056(d)(3)(B)(i), 1056(d)(3)(C), 1056(d)(3)(D). The Government argues that this provision shows that court orders count as "alienations" prohibited under §1056(d)(1), and that since the probate court orders effectuating Dorothy's testamentary transfers do not fall within the QDRO exception, the "anti alienation" section, as amended and taken as a whole, pre-empts Louisiana law.
The QDRO provisions, in my view, do not support the Government's argument. The QDRO exception does not purport to interpret the "anti alienation" provision (quoted supra, at 11). Rather, it simply says that the provision
"shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a participant pursuant to a domestic relations order . . . ." §1056(d)(3)(A).
The section defines "domestic relations order" (not "qualified domestic relations order") as a court order, judgment or decree made pursuant to state domestic relations law, 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." §1056(d)(3)(B)(ii)(I).
It then exempts "qualified" orders from the scope of the anti alienation provision. §1056(d)(3)(A). This language does not tell us what the word "alienation" would cover in its absence. It does not tell us whether the amendment taken as a whole clarified that the anti alienation provision covers court orders (which would help Sandra) or extended that coverage so that it included domestic relations orders (which would help the children). Hence, the amendment tells us virtually nothing relevant about whether the prohibition on anti alienation applies to matters not covered by the term "domestic relations orders," such as probate court orders.
Second, the amendment, taken as a whole, concerns divorce and separation, not probate. See Department of Labor Advisory Opinion 90-46A, issued Dec. 4, 1990 (citing 130 Cong. Rec. 13327 (1984); S. Rep. No. 98-575,pp. 18-19 (1984)) (in enacting REA, Congress focused on marital dissolution and dependent support). The amendment says that state court judges cannot award pension related property to a nonparticipant spouse unless the order doing so meets certain requirements, such as recordkeeping requirements and a prohibition against increasing the amount of benefits that an ERISA plan would otherwise have to pay. §§1056(d)(3)(C), 1056(d)(3)(D). As I have said, Congress did this by stating that the anti alienation section covers divorce related court orders, and then exempting "qualified" orders from the additional coverage just created. The amendment thus regulates transfers between living spouses; it does not intend to affect testamentary transfers taking place after death.
Third, the QDRO provision shows that Congress did not object to court orders that transfer pension benefits from an ERISA plan participant to a former spouse who is alive--at least if those court orders meet certain procedural requirements. Why then, one might ask, would Congress object to court orders that transfer benefits to a former spouse after her death? Had Dorothy Boggs remained with Isaac for many years and then divorced him, she could have obtained a QDRO that would have declared her community property interest in Isaac's pension benefits, and she could then have left that interest to her children. That being so, it would be anomalous to find a congressional purpose in ERISA--despite the absence of express statutory language and any indication that Congress even considered the question--that would in effect deprive Dorothy of her interest because, instead of divorcing Isaac, she "stay[ed] with him till her last breath." Tr. of Oral Arg. 15.
Finally, the language of §1056(d), even if taken literally, does not help Sandra significantly, for a probate court order awarding property to an estate or to children cannot easily be squeezed into the definition of "domestic relations order." An order placing property in the estate is not an order that provides property rights to a "spouse, former spouse, child, or dependent," and an order distributing an estate's property to a child is not readily described as an order relating to "marital property rights." See Department of Labor Advisory Opinion, supra (probate orders are not "domestic relations orders").
Sandra Boggs and the Solicitor General rely on a third statutory provision, §1055, which sets forth specific provisions concerning the payment of annuities to a plan participant's surviving spouse. Section 1055(a) says that an ERISA plan must ensure that "the accrued benefit" that is "payable" to the plan "participant" takes "the form of a qualified joint and survivor annuity," §1055(a)(1). The term "qualified joint and survivor annuity" means an "annuity" to a plan participant for his life, with a surviving spouse, such as Sandra, that is "not less than 50 percent of (and is not greater than 100 percent of) the amount of the annuity which is payable during the joint lives of the participant and the spouse." §1055(d).
The parties have not argued that this provision affects the shares of stock or the $150,000 lump sum. I need not decide whether that is so. That is because, if these assets do count as "accrued benefits" under §1055(d), the plan would then have had to insist on a waiver from Sandra in order to pay them out in the way that it did--i.e., in a form other than an annuity. Thus, I assume either that the stock and cash were not "accrued benefits" under §1055(d), or that Sandra waived her rights under §1055. Either way, §1055 would not affect the outcome as to the stock and the cash.
The $1,800 monthly annuity payments, however, area different matter. They were paid from the Bell South Management Pension Plan, a "defined benefit" pension plan, initially to Isaac during his lifetime, and then to his second wife, Sandra, for her life. These annuities do fall within the scope of §1055. This ERISA provision seeks to guarantee that the person who was a participant's spouse at the time of the participant's death will receive an annuity as described (unless the spouse has waived the right to receive the survivor annuity, §§1055(c) (waiver of survivor portion of annuity), 1055(g) (election of cash distribution rather than annuity)). See S. Rep. No. 98-575, at 12; 26 CFR § 1.401(a)-11 (1996). I agree with the majority that Louisiana cannot give Dorothy's children a share of the pension annuity that Sandra is receiving without frustrating the purpose of this provision.
This inconsistency does not end the matter, however, for Dorothy's children here sought different relief. Although the children apparently requested a portion of Sandra's monthly annuity payments in their state court pleading, Record 134, they stipulated at oral argument that they are seeking only an accounting, Tr. of Oral Arg. 33-34. And according to Sandra's complaint for declaratory judgment, the children have asked for an "accounting"; the Fifth Circuit, too, spoke only of an "accounting," and did not mention relief in the form of a percentage of Sandra's annuity. See 82 F. 3d, at 94, 97, 98.
The difference is important, for, as the children pointed out at oral argument, an accounting would simply declare that, when Dorothy died, she had a community property interest in Isaac's pension benefits. And it is possible that Louisiana law would permit Dorothy (or her heirs) to collect not the pension benefits themselves, but other nonpension community assets of equivalent value. See La. Civ. Code Ann., Art. 3261 (West 1961) (succession representative has broad power, subject to probate court approval, to liquidate an estate through sale or exchange of estate assets "to pay debts and legacies, or for any other purpose"). Cf. La. Rev. Stat. Ann. §9:2801 (West 1991 and Supp. 1997) (judicial partition of assets on divorce); Hare v. Hodgins, 586 So. 2d, at 123 (to equalize allocation of community assets on termination, court may grant "cash or other property in lieu of an actual percentage of the pension payments"); T. L. James, 332 So. 2d, at 851 n. 2 (opinion on rehearing) (same); Sims v. Sims, 358 So. 2d, at 924 (setting forth formula for calculating a former spouse's share of pension benefits); McClanahan §12:15, pp. 547-550 (state courts may allocate entire pension to employee spouse and allocate to other spouse other community property equal in value to half of pension).
In this case, Isaac apparently retained possession of other, nonpension assets from the Dorothy-Isaac community after Dorothy's death because her will gave him a lifetime usufruct in the portion of her estate that she did not bequeath to him outright. (And if Dorothy had not bequeathed that portion of her estate to anyone, it appears that Louisiana law would automatically have given him a usufruct until his death or remarriage. See La. Civ. Code Ann., Art. 890 (West Supp. 1997).) In such a circumstance, Louisiana law might provide an accounting to allow Dorothy's estate, or her heirs, to recover Dorothy's community property share of those nonpension assets, from Isaac's estate, or from his heirs, after his death. In applying such a law, a Louisiana court might allocate property so that federally granted property rights, such as Sandra's right to a survivor annuity, are fully protected. Cf. Bendler v. Marshall, 513 So. 2d 369 (La. App. 1987) (first wife is entitled to reimbursement of her community property share of husband's pension contributions, but not from second, surviving wife; first wife is not entitled to share of second wife's survivor annuity); Succession of McVay,476 So. 2d, at 1073-1074 (decedent's IRA, which contained community property assets, could not be listed as an asset of his estate because he had designated a beneficiary; however, his estate would be deemed to contain the equivalent cash value). See generally La. Civ. Code Ann., Art. 4 (West 1993) ("When no rule for a particular situation can be derived from legislation or custom, the court is bound to proceed according to equity").
Of course, the lower courts did not describe the precise nature of Dorothy's state law interest, nor did they explain exactly how the accounting worked. They did no more than deny Sandra's request for a declaratory judgment that ERISA prohibits an accounting. But that may reflect the fact that no one raised a §1055 argument until after the Court of Appeals panel's decision in this case. We therefore should not grant Sandra her declaratory judgment unless we are certain Louisiana law could not lawfully permit Dorothy to leave her community property interest in the pension assets to her children. And, given the authority just cited, state law might lawfully do so, very roughly in the way the following imaginary example illustrates:
Assume at the time of Dorothy's death Dorothy and Isaac own the following community property:
Pension assets $60,000
Stock investments 140,000
Louisiana law might then provide that Dorothy and Isaac each owned $100,000 worth of community assets. Louisiana law might also provide (or permit a probate court to decide) that the share belonging to Dorothy's estate consisted of $100,000 worth of stock, leaving Isaac with $40,000 in stock and $60,000 in pension assets. If that is so, why should ERISA care? And if Louisiana law should simply postpone the division of the Dorothy-Isaac community's property until after Isaac's death because of his lifetime usufruct, why should ERISA care any more? Moreover, if Isaac bequeathed the entire $140,000 worth of stock to a charity, I assume that the probate court would block most of the bequest on the ground that $100,000 worth of stock was not Isaac's to give away. I assume it would do the same if he tried to give Sandra the entire $140,000. And I do not see why ERISA would care about the stock (which, after all, belonged to Dorothy) in either case.
I cannot understand why Congress would want to pre-empt Louisiana law if (or insofar as) that law provides for an accounting and collection from other property--i.e., property other than the annuity that §1055 requires the Bell South plans to pay to Sandra. The survivor annuity provision assures Sandra that she will receive an annuity for the rest of her life. Louisiana law (on my assumption) would not take from her either that annuity or any other asset that belongs to her. The most one could say is that Sandra will not receive certain other assets--assets which belonged to the Dorothy-Isaac community and which Isaac had no right to give to anyone in the first place.
Nothing in ERISA suggests that it cares about what happens to those other assets. The survivor annuity provision says nothing about them. Indeed, Isaac, or the Dorothy-Isaac community, might, or might not, have had other assets. Isaac might, or might not, have tried to leave all, or some, of those other assets to Sandra, or to his children, or to charity. ERISA seems to indifferent to the presence, or absence, of other assets and to what Isaac did or did not try to do with them. After all, if Dorothy had divorced Isaac, ERISA would have permitted state law to give her not only other assets, but also half of the pension itself (which would have left a later appearing Sandra with a diminished annuity). See §1056(d)(3)(A). Given Congress' purpose of allowing state courts to give first wives their community property share of pension assets, why would Congress have intended to include a silent implication that strips Dorothy of an asset that may be the bulk of her community property--simply because, instead of divorcing Isaac, she remained his wife until she died?
On the assumptions I have made, to find a conflict in this case, one would have to depart from what Congress actually said in ERISA and infer some more abstract general purpose, say to help a second wife at the expense of a first wife's state law created interest in other property. But should we take anything like this latter approach, there would be no logical stopping place. Confusion and unnecessary interference with state property laws would become inevitable. Moreover, we should be particularly careful in making assumptions about the interaction of §1055 and Louisiana law, as the courts below did not consider §1055 as a possible ground for conflict pre-emption.
In sum, an annuity goes to Sandra, a surviving spouse; but otherwise Dorothy would remain free not only to have, but to bequeath, her share of the marital estate to her children. This reading of the relevant statutory provisions and purposes protects Sandra, limits ERISA's interference with basic state property and family law, and minimizes the extent to which ERISA would interfere with Dorothy's pre-existing property. Cf. Hodel v. Irving, 481 U.S. 704, 717 (1987) (federal statute stripping property owner of right to pass interest by descent or devise constitutes taking under Fifth Amendment); Babbitt v. Youpee, 519 U. S. ___, ___ (1997) (slip op., at 10-11) (statutory restriction on class of permissible heirs constitutes taking).
These general reasons, as well as the specific reasons provided above, convince me that ERISA does not pre empt the Louisiana law in question. And I would therefore affirm the judgment below.