KENNEDY v. PLAN ADMINISTRATOR FOR DUPONT SAVINGS AND INVESTMENT PLAN
William Kennedy designated his wife, Liv, as the sole beneficiary of his Dupont pension and retirement savings plans. The couple subsequently divorced, and as part of the settlement Liv agreed to give up any interests she may have in the plans. However, William never submitted this portion of the settlement prior to his death in 2001, so the pension and retirement savings benefits were paid out to Liv. William's daughter, Keri, the executor of his estate, brought suit against Dupont to recover the benefits. The U.S. District Court for the Eastern District of Texas granted summary judgment for the estate, awarding it the value of the benefits.
The U.S. Court of Appeals for the Fifth Circuit reversed, explaining that because William had never submitted the portion of the settlement agreement denying the benefits to Liv, they were correctly paid out to her by Dupont.
Does the Employee Retirement Income Security Act's anti-alienation provision prevent the enforcement of a waiver recognized by federal common law which holds that a spouse’s right to the other spouse's pension benefits is rendered void upon divorce?
Legal provision: Employee Retirement Income Security Act
No. In a unanimous decision with Justice David Souter writing for the Court, the Supreme Court held that Liv's waiver of her former husband's pension benefits upon their divorce was not rendered void by the Employee Retirement Income Security Act's anti-alienation provision. However, the Court held that Liv was appropriately granted the benefits of her ex-husband's estate because the plan administrator properly disregarded her waiver. It reasoned that the pension plan was clearly laid out and recognized Liv as the beneficiary. The plan had a mechanism in which Liv could have disclaimed her interest, but she did not.
ORAL ARGUMENT OF DAVID A. FURLOW ON BEHALF OF THE PETITIONERS
Chief Justice Roberts: We'll hear argument next in Case 07-636, Kennedy v. The Plan Administrator for DuPont Savings and Investment Plan.
Mr. Furlow: Mr. Chief Justice, and may it please the Court: As this Court has confined consideration of the matters before the Court to certiorari issue number 5 concerning qualified domestic relations orders, or QDROs as they are called, I will confine my argument to arguing that the Fifth Circuit erred in holding that the only way a divorcing spouse can waive the right to pension benefits is by executing a QDRO.
I have four basic arguments to present today.
I'll give them in thumbnail sketch form first.
Justice Ginsburg: You did in your reply brief address the plan question?
Mr. Furlow: Yes, Your Honor.
I did so after stating that we believe that the matter was properly confined to the certiorari issue number three, but out of an abundance of caution and subject to objection I did respond to the argument leveled against us by I think it is five amici and by DuPont itself.
We nevertheless, I prepared my original briefing on the merits to address the QDRO issue and that's where you see it focused.
We have four basic issues.
Justice Ginsburg: The problem is that is that if you, even if we hold for you on that issue, you could still lose on the plan documents rule, right.
Mr. Furlow: Well, Your Honor, I think that instead this Court might choose well to follow what the concurrence said in the recent LaRue v. DeWolff, Boberg case, emphasizing that where the court of appeals below has not passed on the central issue of a case and where most of the fire that the one party is responding to comes from amici, that it is appropriate to remand the case to that court so that that court may pass on the central issue, especially in the situation where, as here, the Fifth Circuit did not even mention the plan document's role, but based its decision solely on a misinterpretation of the QDRO language.
Of course, here, in the interest of candor, Dupont did in fact address in brief format -- a page or to, several pages -- in its motion for summary judgment the plan document's role and raised that matter again in the Fifth Circuit.
It's just the Fifth Circuit did not consider or pass on that because it relied solely on Dupont's argument that the Fifth Circuit should adhere to what it believed to be the Department of Treasury's interpretation of the anti-alienation statute.
The Department of the Treasury and the Department of Labor, now in a harmonized stance, have come forth and in their amicus for the government supports our position that the Fifth Circuit erred in its interpretation of the QDRO statute, and that's the position we take.
Justice Breyer: At the end of your argument, could you just spend a minute because my state of mind is I'm sorry we limited it.
You've sort of briefed this question pretty fully.
Mr. Furlow: Yes, Your Honor.
Justice Breyer: And I'm tempted to try to decide it.
I know you want to make your four points.
Go right ahead.
But at the end, could you possibly say, why shouldn't we just go ahead and decide the substance, not as a technical matter.
Are we really going to get something out of remanding it that we don't already know?
But don't do that now, but whenever you want.
Justice Scalia: We know what's going to happen on remand, though, don't we?
Doesn't the Fifth Circuit already have case law on -- on that question?
Mr. Furlow: The Fifth Circuit already has case law.
They have stated that, but they consider some of the other cases and they might consider this Court's ruling addressing the interpretation of the QDRO provision; that might provide them additional enlightenment as to how they should address the other issue.
Justice Kennedy: But again as a preliminary matter, am I on the same page with Justice Ginsburg?
Or would it be a different question?
I'm curious to know why the beneficiary designation and change provisions at page 48, number 29c, beneficiaries, couldn't have been invoked here.
Is that the same question Justice Ginsburg was asking?
Mr. Furlow: I do not believe so, Justice Kennedy.
Justice Kennedy: Because the plan does contain a procedure for designating some other beneficiary, including the spouse.
I just don't understand why anybody doesn't talk about that.
Mr. Furlow: Well, Your Honor, there was that provision for invoking another beneficiary and we only pointed out that indeed three days after the divorce, and consistent with his ex-wife's waiver of any right, title, claim and interest in this 401(k) plan in specific, and that was the very first item of the things that he retained as the plan participant in that divorce decree, he did in fact designate his sole daughter Kari Kennedy as his sole beneficiary in a change of form plan for one part of this very complex series of multiple plans -- of plan retirement benefits where he said that he would give -- that she would be his sole beneficiary; and the form there that DuPont drafted for him said that it invoked and superseded any and all prior designations, and was not limited to that one particular part 6 pension and retirements plan.
And so we submit it is a reasonable explanation, if he did not believe that his wife had waived any right, title and interest to invoke that beneficiary clause, pursuant to the Fifth Circuit's decision just six weeks beforehand in the Brandon v. Travelers International case that said that a waiver of ERISA benefits, welfare benefits mainly -- but ERISA waiver of benefits, a voluntary waiver was enforceable, was valid and could be enforced at summary judgment.
We believe his counsel, you know, were aware of that in formulating, you know, this waiver of benefits.
Even if that didn't take care of Liv Kennedy's knowing, voluntary, attorney-negotiated, court-approved, signed-by-her waiver of any right, title, claim and interest in his pension benefits, then we believe he may have believed as a layman that by signing that beneficiary designation form prepared by DuPont, that he had indeed superseded and revoked all prior designations.
Justice Ginsburg: Or he might have -- he might have decided that he didn't want to revoke that one.
We -- we just have no way of knowing.
It's odd that he revoked as to one plan but not the 501(k) plan, as I understand.
Mr. Furlow: Your Honor, I might -- I might, if I would, just offer an explanation.
He almost certainly saw no reason to revoke that which his wife had just four days before voluntarily waived any right, title, claim and interest to in terms of the divorce.
He certainly would have expected that her word would be her bond and that it wouldn't turn out to be a junk bond as it turned out to be when years later she repudiated her own voluntary waiver; and that's just one of the issues that we address.
Justice Ginsburg: Well, because he could -- he could have -- despite her waiver, he could have named her as the beneficiary of that plan and that would have controlled.
Mr. Furlow: Well, Your Honor, the way I see it is that his attorneys who were advising him and guiding him through this process, they were acting, we must assume, in complete awareness of Texas and Fifth Circuit law; and the Fifth Circuit had just ruled some six weeks before in a case involving voluntary divorce decree waivers that such a waiver was enforceable.
Now you don't have to--
Chief Justice Roberts: I'm sorry; six weeks before what?
Mr. Furlow: --Before the divorce decree in the Brandon v. Travelers International case.
We believe that there was no sense there in bombing the rubble.
If it was already taken care of, it didn't have to be taken care of the second time.
Now, I and you might want a belt-and-suspenders approach to be absolutely, doubly, positively sure.
But the fundamental thing is if under Federal common law, as a majority of courts and almost all of the State courts have ruled, a voluntary waiver is enforceable, then that was already taken care of.
Chief Justice Roberts: Well, but how does the plan know that?
Mr. Furlow: The plan knows that, as here, when the court-appointed fiduciary, the executrix Kari Kennedy makes the plan aware of that on April 26, 2001, via fax and delivery, which is acknowledged by their plan administrator, Mary Deneen that's coming in, and there you have a copy of the divorce decree served on DuPont months before they make a payout.
And it is critical here, Your Honor, that when they chose to make this -- you know, when they chose to pay the beneficiary, they were working on a test case right there from the very beginning.
And if you look at their paralegal's letter, who actually notifies the estate that they are going to disregard the voluntary test case, they refer to DuPont's success in raising this issue before.
And then the paralegal actually quotes a Fifth Circuit case that holds for voluntary waivers, obviously not understanding the, you know, crucial import here; and we note--
Chief Justice Roberts: But the plan terms say that if you want to change the beneficiary, here's how you've got to change the beneficiary; and we are going to pay the beneficiary until it's changed.
Mr. Furlow: --Well, Your Honor, I would also say that the plan forms here at page 48 of your joint appendix, and 49 -- I ask this Court to scrutinize these two provisions because they are critical to the outcome of the case.
At page 48 you hear the following mandatory language in DuPont's own SIP.
And it says:
"If no surviving spouse exists and no beneficiary designation is in effect, distribution shall. "
--mandatory term --
"shall be made to or in accordance with the directions of the executor or administrator of the decedent's estate. "
And so we say that--
Chief Justice Roberts: I would have thought your friend on the other side would be quoting that language.
Mr. Furlow: --Well, Your Honor, I like to bring a fresh insight to the -- to the -- to the Petitioner's argument here because I see that language and we say it is not in effect.
This Court has ruled in several cases what the term ERISA cases saying this version of ERISA was in effect, meaning valid and operational.
Well, the voluntary waiver was in effect and that made the beneficiary designation some 10 years before during the course of the marriage ineffectual, invalid.
Chief Justice Roberts: But that's -- that's a bit of a stretch, isn't it?
It says no beneficiary designation is in effect.
If you look at the plan, he's got a beneficiary designation.
Mr. Furlow: --But it's not in effect at the time that it comes to be decided because their plan administrator Mary Deneen has a copy of the divorce decree with the knowing voluntary waiver.
And although, Your Honor, although they take the position that plan administrators can't understand knowing and voluntary waivers, that that's a law sort of thing, they have got one in-house counsel there who was never called upon to actually pass on this matter and it wouldn't have cost them a dime to go outside of that in-house counsel.
Justice Kennedy: Well, of course, that was the point of my earlier point.
I focused on -- on this whole paragraph.
Mr. Furlow: Yes.
Justice Kennedy: That just indicates that this would have been a different case if the provision of the plan that said there shall be no assignment, which is quoted in the Fifth Circuit thing, was the only provision in the plan; but when you look through this in retrospect, there are means for participants and beneficiaries to make a change, and they weren't followed here.
Mr. Furlow: Well--
Justice Kennedy: And I understand that you say in effect they were.
I understand that argument but it's not as if the plan didn't contain an adequate vehicle if the -- the parties had followed strictly the terms of the plan.
Mr. Furlow: --Your Honor, we submit that people all the time in situations like this may believe that a knowing voluntary waiver which has received the approval of the majority of the Federal appellate courts and the State courts is good enough.
In some other instances, they forget.
They forget to do this or to make those changes, or believe that one of a series of multiple and overlapping beneficiary designations has -- as the June 7th one did, we submit -- revoked and superseded any and all prior designations, and they are lay people not lawyers.
Now, I would submit that the critical thing is also on page 49 the very portion of the joint appendix that you're looking at, because that language says, in the DuPont SIP plan, quote,
"if in the opinion of the company there is a question as to the legal right of any beneficiary to receive a distribution under the plan, the amount in question may be paid to the decedent's estate in which event the trustee and the company shall have no further liability to anyone in respect to such amounts. "
Consider that when you've heard all of the fear mongering that's come in, in the amici briefs with respect to -- to interpleader actions.
And we submit that interpleader actions are a perfectly good means of disposing of this, but if you--
Chief Justice Roberts: It's in the opinion of the company.
That sounds -- and this is a plan -- as we've said often in ERISA cases, we want to enforce these according to the terms of the plan because the companies don't have to set these up at all.
So it makes perfect sense for the company to say, well, if we think this, then we can do this.
So, in other words, there's a doubt and we don't want to give it to somebody who might not end up being the person, but if we don't think there's a doubt, that's it.
Mr. Furlow: --And that's the first step in the analysis, Your Honor, because the second step is all of this Supreme Court case and all of the substantial expenses that this estate out of Jasper, Texas, has had to pay from the very beginning could have been avoided had they paid over to Kari Kennedy, a court-appointed executrix who would have taken that money in and would have been bound by the rules of the probate court to handle it as a fiduciary to consider Liv's claim that her voluntary waiver was not voluntary, to pay the creditors first, rather than get stuck with the tax liabilities, which happened here.
The important thing is DuPont could have avoided all of this litigation, would not have had to file an interpleader, would not have had to incur a dime's worth of attorney's fees, would not have had to put its own interest ahead of that of the participants and beneficiaries, had they simply invoked this clause as they had the power to do.
They chose this case.
Justice Souter: We can't decide this case based on sympathy to DuPont.
I would understand the point of your argument.
But if -- in theory the problem would be exactly the same, whether DuPont had expressed a doubt and paid it into the estate or hadn't.
Mr. Furlow: The problem--
Justice Souter: We have the same question before us.
Mr. Furlow: --The QDRO question, Your Honor?
Justice Souter: Yes.
Mr. Furlow: Yes, and that's why we say that if you look carefully at -- excuse me, but it's 29 U.S.C. section 1056(b) through (k) -- you look at the specific language, and I am asking this Court to adhere to the specific written terms of the ERISA statute because those require a transfer to an alternate payee.
That is our fundamental argument: A transfer to an alternate payee which is defined in 1056(d)(3)(K) as being someone--
Justice Scalia: Sorry.
Does this appear somewhere in the materials?
It's always helpful.
Mr. Furlow: --Respondents' brief, Your Honor, and you will find it specifically on pages 14A and 15A, in the appendix in the back.
And if you actually go to the language, we stand on a plain-meaning interpretation of the ERISA statute, this reticulated and complicated statute.
We say every word has its meaning.
Justice Kennedy: What do you want me to read here?
Mr. Furlow: Specifically, Your Honors, pages 14A and 15A of the Respondents' appendix, where he has actually given us all of the QDRO statute at 1056.
And we say that has meaning, and that means we prevail because, if you look at that language, every subpart is talking about payments to alternate payees.
1056(d)(3)(K), and you will find that, Your Honors, specifically at page, at page 22A to 23A in the appendix.
The alternate payees there that we are talking about are spouse, ex-spouse, child, or other dependent.
It does not refer to the plan participant Mr. Kennedy; and, therefore, there was no -- his mere retention of his pension benefits and his wife's waiver of her contingent beneficiary payments, which would only come to her upon the death of William Kennedy, meant there was no transfer, not a dime's worth of money, not a bit of pension benefits transferred on the date that she signed that waiver.
There was thus no--
Justice Alito: I'm not sure I'm getting this argument.
There's not -- the argument isn't that there was a QDRO; the argument was that he could have disposed of this through a QDRO.
And he could have done that, and he could have named an alternate payee in the QDRO.
He could have named his daughter, for example.
Mr. Furlow: --Your Honor, the way pension planners understand it is that you use a QDRO for a transfer of benefits, not for a bare waiver.
And that's where the U.S. Solicitor General supports our position and reads this and says that's consistent with Treasury's own, now harmonized with Labor's, interpretation of the anti-alienation clause.
It does not apply to bare waivers of benefits, and, therefore, the Fifth Circuit erred in putting within a QDRO context his wife's--
Justice Alito: All you're saying is that you couldn't effect a bare waiver through a QDRO, but why does that prove your case?
I don't understand that.
Mr. Furlow: --We think that--
Justice Alito: A QDRO could have been used to direct the payment to someone else other than the ex-spouse.
Mr. Furlow: --With respect to her waiver that would have required him in advance to decide who he would have transferred what alternate payee he would transfer way back at the time of his divorce in 1994.
He did not.
He did not transfer anything to his wife.
She didn't receive anything at that time.
She simply waived her contingent right to receive something upon his death, something that would occur in the future.
She thoroughly waived that.
Justice Scalia: That's not your point.
It would seem to me your point is that the QDRO is an exception to the assignment or alienation.
Mr. Furlow: I agree--
Justice Scalia: And your point is this has been no assignment or agency, so we don't need the QDRO exception.
There is nothing in here that violates anything in the statute.
Mr. Furlow: --I completely agree with that analysis.
Justice Scalia: So whether he could have done a QDRO or not is in your view irrelevant.
You don't have to come forward with excuses of why he didn't and so forth, your basic case is the QDRO is an exception from the prohibition on assignment or alienation, that provision has no application here, there has been no assignment or alienation, and therefore the waiver is effective.
Mr. Furlow: That's exactly our position Your Honor, yes.
So we find support in that and we find support in not only Treasury's interpretation of its own regulation, which deserves great deference under this Court's opinion, especially when DuPont in the Fifth Circuit asserted that it was Department of Treasury that had all of the expertise pursuant to congressional mandate in determining how QDROs should apply and told the Fifth Circuit to follow their outdated interpretation of the QDRO statute.
They certainly are not in a position to say that the expertise that they touted in the Fifth Circuit should be disregarded now, and we submit that the Attorney General and the Solicitor General are correct in saying that the regulation does not mean what DuPont says it does, but means what Kennedy says it does.
Chief Justice Roberts: Well, of course you only think the Solicitor General is right so far to a certain extent.
Mr. Furlow: To a certain extent.
Chief Justice Roberts: Then you throw them under the train because you don't -- you certainly don't think they are correct by saying, look, the only way you can do this is by modifying the plan.
I still don't know how the plan administrator is supposed to know that the person whose name appears on the plan documents, which the plan participant can change at any time, isn't the person that they are supposed to send the benefits to.
Now, you tell me here they knew about the divorce and all that stuff.
Maybe, maybe not.
But we are trying to develop a rule for all cases and it seems to me the easiest, most administrable rule is to say whoever's name appears there gets the money, and if they are not supposed to because of some collateral dispute, well, they can sort that out in litigation.
Maybe Kari has a suit against Mrs. Kennedy or her estate, but that's not a matter for the plan to worry about.
Mr. Furlow: Well, Your Honor, let me address that.
First, we don't throw the Solicitor General under the tracks.
We simply point out the fact that they have gone off track in terms of their plan documents.
And specifically, Your Honor, I would say I agree with the Manning versus, the Manning decision of the Texas, of the Fifth Circuit, which we cited.
In there that says that sections 1102 and 1104 of ERISA, that's, Justice Scalia, 29 U.S.C. Sections 1102 and 1104, are a very thin reed indeed to on which to cobble together a plan document's rule.
And specifically DuPont then goes one bridge too far going way beyond that to say that these ever meetable ever changeable beneficiary changes thousands of them constitute documents where the Ninth Circuit conity substitutes of what constitutes plan documents in the salaried employees of Hughes versus Hughes administrator case and said that a list of the participants and their addresses could not be considered a plan document cause it did not correspond with that detailed listing of the plan document under Section 1024 and 1025.
Indeed under Section 29 U.S.C. Section 1025, Your Honors, if these are plan documents then the administrator has a duty to disclose them to any person, participant, or beneficiary who asked and as the Ninth Circuit pointed out there is substantial dangers there of going way beyond what Congress, a very liberal Watergate Congress in 1974, intended ERISA to be, which is a protection for participants and beneficiaries, not for plan administrators.
And it exposes those participants and beneficiaries to loss of privacy, telemarketing, and other things because one person could get such a list and sell it to others.
Chief Justice Roberts: I must have missed -- where did Watergate come from.
Mr. Furlow: Just putting in context the intentions of the 1974 Congress, which was concerned about participants and beneficiaries.
Those were the sole purposes for which section 1102 was designed to protect, not the convenience of plan administrators as DuPont would lead this Court to believe.
I see that I'm into rebuttal time.
I would like to save some for the rest.
Chief Justice Roberts: Thank you, counsel.
ORAL ARGUMENT BY LEONDRA R. KRUGER ON BEHALF OF AMICUS CURIAE
Mr. Kruger: Mr. Chief Justice, and may it please the Court: The Fifth Circuit decided this case on the grounds that ERISA's anti-alienation provision forbids a divorcing spouse from relinquishing an interest in his or her ex-spouse's pension plan benefits unless the waiver takes the form of a qualified domestic relations order.
We agree with Petitioner that the Fifth Circuit misinterpreted both the anti-alienation provision and the QDRO exception to that provision.
But we disagree with Petitioner's further submission that merely because ERISA does not forbid waivers in the divorce context or otherwise, that a plan administrator may be required as a matter of Federal common law to recognize such waivers even when those waivers conflict with the beneficiary designation the plan administrator has on file.
Justice Kennedy: Well, are the provisions of page 49 of the appendix consistent with the statute?
Mr. Kruger: Indeed, Your Honor, we think that they are.
The statute directs plan administrators to administer the plan in accordance with the plan documents and further requires administrators to pay benefits to persons who are either participants under the plan or who are beneficiaries within the meaning of the statute.
Justice Kennedy: Did the Court of Appeals give short shrift or overlook that point?
Mr. Kruger: Well, the Court of Appeals determined that it need not reach this point because it decided the case on different grounds; namely, the anti-alienation grounds.
But, again, we think that if the Fifth Circuit was incorrect in its reasoning but reached the correct overall conclusion, then its judgment should be affirmed.
Justice Scalia: Well, we -- I mean, we could have -- you know, we should have thought of that when we limited our -- our grant of certiorari to the -- to the one question on which you agree with the Petitioner.
But we did do that, didn't we, even though the other one was -- was explicitly put under our nose, and we said we -- we are not going to get into that?
We just want to decide this question, which is an important question all by itself.
Mr. Kruger: Well, for several reasons, Your Honor, we think it would be appropriate for the Court to answer both the plan documents question as well as the anti-alienation question.
One is that it is an alternative ground for affirmance.
The other is that it was properly raised in the Court of Appeals.
It was raised in the cert petition as well as in the brief in opposition.
Justice Scalia: Do you know any other case in which we have explicitly declined to accept a question and then have used one of these other back doorways of -- of answering it anyway?
Mr. Kruger: I--
Justice Scalia: I don't know of any.
I mean maybe -- maybe we have but--
Mr. Kruger: --I'm -- I'm not sure that I know of any either, Your Honor.
Justice Breyer: Well, could we do this?
I mean, what's bothering me about this is -- is you have a very strong argument following the plan documents.
They have had some chance to reply to it, but not a full chance.
It seems a little unfair, and the Fifth Circuit had -- would probably know what they say.
Can we, say, grant the question now and ask that people file an additional brief if they want to say something?
It just seems to me an awful waste of money and everybody's time to send it back and have it make another trip.
So what's your suggestion as to how we proceed?
Mr. Kruger: Well, Your Honor, I think it would be possible to -- to either order for the briefing on the issue or to grant the question now at this juncture.
I think it would also be conceivable to read the question that the Court did grant on as encompassing the Federal common law--
Justice Breyer: You see, I want to be fair to them.
I mean, we want -- you want to be fair to the other side to be sure they have a chance to say everything they have to say.
That's what's worrying me.
Mr. Kruger: --Well, Your Honor, that is an important consideration.
I do think that in the opening brief the Petitioners did brief the question of what effect is to be given to a waiver if indeed a waiver is not prohibited by the anti-alienation clause.
And that Federal common law rule that Petitioners suggest is one that does, I think, naturally invite some consideration of the conflicting statutory directive in the form of the plan documents principle that this Court has recognized in its earlier cases.
And certainly in its reply brief Petitioners did address this issue in full.
Justice Scalia: --Did -- did we recognize in earlier cases that beneficiary designations are plan documents?
Mr. Kruger: Well, Your Honor, I think the question of whether beneficiary designation forms count as plan documents, is a little bit beside the point.
The -- the plan documents in this case do specify a procedure for determining who is to receive benefits.
It says that benefits will be paid to the designated beneficiary, the person who is designated by the participant.
And it says that changes to those beneficiary designations shall be made in the manner that's prescribed by the plan.
And so, because the plan sets out a procedure for changing beneficiary designations, we think that it would be inappropriate to look beyond that to require plan administrators to look to extrinsic documents in order to determine whether one of them overrides that designation.
Justice Scalia: Again, assuming there has been a change of beneficiary designation, and, of course, the argument you're confronted with is: I haven't changed anything.
The prior beneficiary simply -- simply refused to accept it, waived it.
I haven't changed the designation at all.
Mr. Kruger: Well, in this case there is a conflict then between the wishes of the participant, who by all accounts would have chosen not to change the beneficiary designation, and that of the beneficiary.
And in that case in order to effectuate the -- the interests of all parties involved in order to provide certainty to all parties in ascertaining what their rights are with respect to the plan, then it is incumbent on the plan administrator to abide by the designated beneficiary.
Justice Scalia: Well, I think it's a harder question than you make it; and I, for one, have not gone into it as deeply as I would like to, principally because we rejected that -- that question.
Mr. Kruger: Well, again, Your Honor, we think it would be appropriate for the Court to go on to address that question because the issues have been fully aired both in the Fifth Circuit and in the briefing in this Court.
But if the Court were inclined to -- to reserve that question for a later time, I think that would be fine as well.
Chief Justice Roberts: Am I right in understanding that there is a fairly sharp circuit split on that question, even that majority of the circuits are contrary to the Government's position?
Mr. Kruger: --That is correct.
There is a circuit split on the question as was raised in the petition for certiorari, and the Second and Sixth Circuits are the circuits that have to date agreed with the position that we are espousing here: That the plan documents control and preclude formulation of a Federal common law rule of the sort that Petitioner proposes.
Chief Justice Roberts: And which circuits are on the other side?
Mr. Kruger: There are a number of them including the Fifth, the Seventh, the Third.
The reason why the plan documents rule is so important in this case is because it serves important statutory interests in certainty, certainty of the parties as well as certainty of the administrators.
And it is clear; it is easy to apply; it makes it possible for administrators to do their jobs without fear of further litigation in case they happen to make what a court may later in the proceedings determine is the wrong choice.
For that reason, we think that ERISA is clear, and that it doesn't permit the kind of Federal common law rule that Petitioner proposes, which is one that would essentially revise the statute to override the plan documents rule and would require substantial burdens on the plan and would yield uncertainty for the parties.
For that reason we would ask the Court to affirm the judgment of the Court of Appeals on alternative grounds or, alternatively, it should remand for further proceedings.
Chief Justice Roberts: Thank you, counsel.
ORAL ARGUMENT BY MARK I. LEVY ON BEHALF OF THE RESPONDENTS
Mr. Levy: Mr. Chief Justice, and may it please the Court: In light of the Court's questions, I want to begin with the plan documents argument and first the procedural question of whether it's properly before the Court.
We think that it is.
It's well within the settled doctrine of an alternative ground for affirmance.
It was raised below, and the Fifth Circuit has decided the issue in other cases.
We don't dispute that.
So we know what the Fifth Circuit thinks about this issue, and, therefore, there is no point in a remand.
Justice Scalia: Do you know of any case in which we've done this--
Mr. Levy: I do.
Justice Scalia: --rejected the question and then decided it?
Mr. Levy: I apologize if it's not in the brief, but a case I could find was called Piper Aircraft versus Rayno 454 U.S. 235.
And in that case the court limited its grant of certiorari, but then went ahead and decided a question that wasn't subsumed within that question because they found it appropriate to the proper disposition of the case.
Chief Justice Roberts: No, no.
But is that a case in which the question the court decided was presented in the petition, the court said we are not going to take that question then they decided it on that ground anyway.
Justice Scalia: That's what I'm asking.
Mr. Levy: I'm not sure of the answer to that.
Justice Scalia: You are sure of the answer.
You don't know of any case.
Mr. Levy: I think Piper is at least a first cousin if not a direct sibling of the issue that we've got here.
I don't disagree that it is in the Court's discretion.
The Court has discretion, I think, one -- either way whether it wants to decide this or wants remand, but we think it would be appropriate--
Chief Justice Roberts: I guess you agree that it's a question of which the circuits have split, so presumably there are good arguments on both sides, and it's one that your friend hasn't had a full opportunity to brief here.
So we'd have to be pretty confident of the answer, I think, to go ahead and decide it.
Mr. Levy: --Well, actually I think the Court will be confident if it looks into it.
But beyond that this is the classic case of an alternative ground for affirmance of the judgment.
When that arises, the topside party always has to deal with that issue in its reply brief and only in its reply brief.
So there is nothing unfair about the--
Justice Scalia: It would be the classic case but for the fact that we had rejected that question.
Had we not been asked to decide it and said no, it would be the classic case, I agree.
Mr. Levy: --And I agree.
That makes it within the Court's discretion.
It doesn't have to decide it, but we think there are good reasons here.
It's been fully briefed, including by the Petitioner for the reason I just said.
Four amici have addressed it; we have addressed it.
So it's properly before the Court, and there is nothing unfair about deciding it.
Justice Scalia: Can we expect that to happen in future cases when we turn down a question and amici and people come in and brief the question anyway and then ask us to decide it?
Mr. Levy: --I wouldn't think so.
The fact that we can't find another case, either, I think makes this one unique.
And I think there are good reasons--
Justice Ginsburg: I think there is a question of the way it was phrased.
And perhaps the court just didn't get it, what that question on which we didn't grant cert was driving at.
Mr. Levy: --I would be loathe to make that suggestion, Justice Ginsburg.
But it may well -- it's possible that that could be the explanation or the Court with fuller consideration -- I mean, the issue has been fully briefed.
The Court knows more about the issues than it did at the time it granted cert, and we think it is for a -- to decide this.
And I do want to point out that there is a relationship between the questions.
Both the question granted and the question that wasn't granted -- wasn't denied, but it wasn't granted -- raise similar considerations.
They both get into the same statutory scheme.
They both get into the same considerations of plan administrability.
We think it would be most efficient for the Court to resolve the conflict now and not leave the uncertainty to continue any further.
Justice Scalia: Undoubtedly we should have granted it.
Mr. Levy: Well, in the fullness of time, the Court can now revisit that.
But again, I think it has been fully briefed and there is nothing unfair to the Petitioners.
The Court in its discretion--
Justice Kennedy: Would you like to argue the question that is here?
Mr. Levy: --Yes ----
I take it the Court doesn't need argument on the merits of the plan documents issues, since that's already been discussed, so let me turn to the QDRO question.
That is the question that was -- that was granted and was discussed fully in the briefs.
Now, as to the QDRO part of the case, the rule of law that governs this case is that pension plan administrators must pay benefits in accordance with a qualified domestic relations order, and they may not pay benefits in accordance with a nonqualified order.
That rule follows from two separate and different analyses.
One is the anti-alienation provision, and the other is the QDRO provision in subparagraph (H) of section 1056.
They are both discussed in our brief.
Justice Scalia: Where would I find the latter?
If I wanted to read it?
Which I do.
Mr. Levy: I don't find this all that pleasant reading, but it's on page 21A of the statutory appendix to the red brief.
Justice Scalia: 21A?
Mr. Levy: 21A.
And it's (H)(ii) and (iii).
And I want to start with this because it is really is the more straightforward analysis and avoids a lot of questions under the anti-alienation provision.
This argument would prevail whether or not the purported waiver is deemed to be an assignment or alienation under 1056(d)(1) and (d)(3).
Now, we think it is and I'll come back to that under the IRS regulation, but let me start with this alternative argument that's also made in the brief.
Under ERISA, a domestic relations order is either a qualified order or a nonqualified order.
And ERISA expressly provides that if it's a nonqualified order, as it is here, the plan administrator may not pay benefits pursuant to that order.
Justice Scalia, since you're on page 21A, let's look at subparagraph (H)(iii).
This is 21A of the red brief.
It provides that: If an order is not qualified, the plan administrator shall pay the benefits to the person or persons who would be entitled to such benefits if there had been no order.
If there had been no order.
In other words, the administrator disregards it and pays it to the person -- this is in (iii), Justice Scalia.
Contrast that with subparagraph (H)(ii) right above it, where the order is qualified: The administrator shall pay the benefits to the person entitled thereto under the order.
So, it gives you two choices.
If it's a qualified order, the plan must pay.
If it's not a qualified order, the plan--
Justice Breyer: Well, that doesn't make too much sense, does it, where all that happens is it's just waived.
The wife waived the amount because when she waived the amount, she doesn't give it to anybody.
She just doesn't take it.
So it goes to the beneficiary -- it goes to the person who made up the plan.
It's a little hard to pay to him, because he is dead.
So I mean if you read it literally, it doesn't seem to apply, these (ii) and (iii), to the case before us, which is a case of waiver.
And of course the argument, yes, she makes is that throughout the law, waiver is treated differently.
And if it weren't, you'd have to pay gift tax, for example, when you waive a benefit that's given to you by someone else.
And so let's interpret this and make sense of the language you quoted, and consistent with the rest of the law to say a waiver is waivered.
It's not giving something to somebody else.
Mr. Levy: --You've covered a lot of ground, Justice Breyer.
I want to give you several responses--
Justice Breyer: The argument is against you and I would like to hear what you have to say.
Mr. Levy: --And I appreciate that.
First of all, on this part of the argument under the QDRO provision under subparagraph (H), it doesn't matter whether this is a waiver or not.
That goes to the alienation question, and I will get to that in a little while.
Justice Scalia: No, it also goes to the question of who is the person or persons who would have been entitled to such amounts if there had been no order.
Mr. Levy: --If there were no--
Justice Scalia: If there was a waiver and there had been no order, your friend's contention is by traditional common law, the person who would have been entitled to it would have been his client.
Mr. Levy: --On the contrary, Justice--
Justice Scalia: I mean, I don't see how this language helps you.
It sort of restates the question, but--
Mr. Levy: --I don't believe so.
I think it is not only helpful but dispositive.
The order that is referred to is the divorce decree, the qualified domestic -- I'm sorry -- the domestic relations order.
Justice Scalia: --Right.
Mr. Levy: If there had been no order--
Justice Scalia: If there had been no order--
Mr. Levy: --then there wouldn't have been any waiver by Liv.
I mean, excuse me -- yes, by Liv.
There wouldn't have been any waiver if there weren't any divorce decree because the waiver is contained--
Justice Scalia: --Oh, I see.
Mr. Levy: --in the decree.
So, if there were no--
Justice Scalia: I see your point.
Does he agree with that, that apart from the divorce decree, there is no waiver?
Mr. Levy: --I'd hesitate to speak for him, but I think the language is--
Justice Scalia: I got you.
Mr. Levy: --quite clear, and that's why this is a more straightforward analysis than the waiver under anti-alienation.
I do hope to get to that.
Justice Scalia: I see.
Mr. Levy: But this is really very straightforward and dispositive.
And the legislative history confirms this.
The plain text is clear, but the legislative history confirms it.
Congress took a specific look at this specific issue in a specific context of marital dissolution, and it enacted this QDRO provision.
And the provision is comprehensive and complete.
Justice Breyer: I'm -- I didn't follow, I'd have to admit.
I think -- and you perhaps can explain it to me -- but, I thought the things that you are quoting are QDRO is about an effort to alienate some property that would otherwise go to the person who was setting up a QDRO, in other words, the wife here, in other words Liv here; is that right?
Mr. Levy: No.
It has to go to an alternate payee.
It doesn't have to be the wife.
Justice Breyer: Okay.
The one person who couldn't be an alternate payee is the payor.
And so, in fact, when you waive something, it isn't that it necessarily goes back to some alternate payee, as it didn't here.
It simply went back to the payor.
And so the language of this prevision you're quoting just doesn't deal with this case.
Mr. Levy: Well, I think it does, Justice Breyer.
Justice Breyer: I know you do, and that's what I need to ask.
Mr. Levy: It doesn't say anything about where it goes.
It just says if it's a QDRO, you pay it, and if it's not a QDRO, you don't pay it.
Justice Breyer: I'm sorry.
It says, if it's not, the issue to wit is not resolved, then the plan administrator shall pay the segregated amounts to the person or persons who would have been entitled to such amounts if there had been no order.
Mr. Levy: Yes.
Justice Breyer: Now, you think that includes the giver, the payor?
Mr. Levy: No.
Justice Breyer: Well, that's where this goes if you waive it.
Mr. Levy: I don't believe so, because the "if there had no order" clause refers to the domestic relations order, a divorce decree.
Justice Scalia: You say the waiver is in the order?
Mr. Levy: Yes.
Justice Scalia: And without the order, there has been no waiver.
Mr. Levy: That's correct.
And the statute says--
Justice Scalia: We'll have to see whether your friend agrees with that.
I'll bet he doesn't.
Mr. Levy: --That's what made horse races.
Let me just say a further word about the legislative history of this and then come back to the anti-alienation provision, Justice Breyer, if I -- if I might.
Congress made it clear that benefits are to be paid pursuant to an order QDRO; in other words, the order be a QDRO in order to be paid.
Congress was mindful of the burdens that nonqualified orders put on plan administrators and it purposely sought to avoid that by requiring that an order be a QDRO, a qualified order, in order for there -- for there to be payment.
The QDRO provision is an objective checklist that is easy for -- for plan administrators to follow.
Justice Scalia: What if they had agreed to the waiver apart from -- apart from the -- from the domestic relations order?
Just apart from that, they have a separate signed waiver.
We'd be in the same suit that you're -- that you say we have to avoid, wouldn't we?
Mr. Levy: I don't think so.
I mean I think that would be an alienation.
Justice Scalia: Well, if it's an alienation, but his point is that a waiver is not an alienation.
Mr. Levy: Right.
And I will come to that, but the point here is that this arises and can only arise in a domestic relations context.
That's where QDRO applies, and the Fifth Circuit's holding was that that was the sole mechanism for the--
Justice Scalia: What about some other waiver that's -- that's not in connection with a -- with a domestic relations thing?
You know --
"I've made my -- my eldest son a beneficiary. "
It turns out, you know, he is fat and happy; he doesn't need the money and he agrees to waive it, so -- so I can give it to an impecunious daughter.
What -- what happens with that?
Mr. Levy: --Well, first of all, that would run squarely into the plan document's argument.
Justice Scalia: Ah.
Oh, oh, oh.
You're jumping over to the other argument.
Let's leave that argument out.
Mr. Levy: If it's not a marital dissolution context, then QDRO wouldn't apply one way or the other.
Now, in that context, I think what you're suggesting, Justice Scalia--
Justice Scalia: Yes, but you would still -- the plan would still have to make some inquires, wouldn't it?
Mr. Levy: --Not -- well, just on -- not getting to the plan documents.
Justice Scalia: Yes.
Not getting in the plan documents.
Mr. Levy: It would be a different case.
I mean, this case involves what Congress specifically looked at and specifically did in the context of marital dissolution, and the reason for that is a marital dissolution comes up all the time.
Justice Scalia: Sure.
Mr. Levy: It's a commonplace in these benefits issues, and these are high-volumes operations.
The plan administrators aren't lawyers.
Congress wanted bright-line rules that could be easily applied here, not general principles to be applied for the facts and circumstances of each particular case, highly fact-intensive, highly subjective inquiries.
Congress didn't want any of that.
It didn't want the plan administrator to have to look behind the face of the order to the circumstances of the--
Justice Breyer: I'm five minutes behind.
I just got your point on the (iii)(1).
I see it.
Mr. Levy: --Okay.
Justice Breyer: Okay?
I get it.
Mr. Levy: It didn't want the plan administrators to have to try and divine the intention of the parties, didn't want the plan administrators to have to hold a factfinding hearing before it could pay plan benefits.
That is completely foreign to the efficient and simple operation that Congress had in mind.
Now let me turn to the anti-alienation issue about which there have been several questions.
Justice Ginsburg: Before you do, leaving the plan -- the beneficiary designation, you say that the plan administrator is not required to give effect to a waiver that conflicts with the beneficiary designation.
Is it just not required?
Does the administrator have discretion to give effect to the waiver, or it -- must it disregard the waiver and strictly follow the beneficiary designation?
Mr. Levy: I believe it must follow the beneficiary designation.
Indeed, my understanding is it has a fiduciary duty and a legal requirement to follow the plan designation.
Now, the plan might specify alternatives.
Here, for example, the plan said, here's a form that you fill out.
And William Kennedy filled it out with respect to a different plan, the pension and retirement plan.
But where the plan says,
"we will pay the designated beneficiary. "
--and that's what this plan says -- then the plan administrator is required, as I understand it, to pay that designated beneficiary.
Now let me say a word since this came up, although it's not really central to the change of beneficiary designation that William filed for this other plan that's not now before the Court, the pension and retirement plan.
And I would say only two things about that: One is at JA 62, and if you look at it, it says in the title and it says in the body of the document that this applies to the pension and retirement plan.
We don't think anyone could have thought that it applied to other plans and that William therefore was changing the beneficiary as to those other plans.
In fact, at JA 28 in paragraph 10, there was a stipulation of fact in the district court that William never changed the designation as to the savings and investment plan, the SIP that is before the Court today.
So it was not only not raised below, it was stipulated away and I think that was--
Justice Breyer: Let me go back for a second because, while I got it five minutes late, if I have it right, I still don't see why Congress would have done it literally.
I think what you're saying is:
"Read the full four pages. "
"What those four pages say are, Judge, you have an order, a divorce decree. "
"It's defined as an order. "
"Look at it. "
"It's qualified or it isn't. "
"If it's qualified, pay the money to the person it names. "
"If it's not qualified, pay the money to the person, namely Liv, who would have been entitled to the amount if there had been no order. "
You read that literally as you want and what it says is:
"Liv, you're being divorced. "
"You want a divorce; your husband wants a divorce; you're going to be divorced. "
"You cannot waive the benefit under the plan. "
Now, why would Congress not want her to be able to waive it?
Mr. Levy: --I don't think the issue -- I mean, a lot depends on the wording.
Justice Breyer: I can understand an antialienation provision.
That's some guy who is going to come along and grab this money when you want to take care of a widow, and you want to take care -- but -- but this isn't that.
It's just -- she just wants to waive it; she doesn't want it.
That's the widow herself.
Okay, so why would Congress--
Mr. Levy: Two things: One, we think that purpose does apply here.
I mean, the point of anti-alienation provision is to guard against the temptation to trade off future pension benefits in exchange for immediate economic gain or advantage.
That's exactly what Liv did in the divorce.
She got the Mercedes, she got other things.
She traded off her pension benefits, and we think that falls squarely within the purpose of the anti-alienation provision.
Justice Breyer: --I see.
Mr. Levy: That's the first and, I think, most important answer.
The other thing is that we are not saying -- our position today does not mean that divorcing parties can -- can be foreclosed from eliminating the death benefits -- the death benefits for the designated beneficiary; but they have to follow procedures that comply with ERISA.
The most -- the most direct and simplest one is the change of beneficiary form.
William didn't do that here.
They could have entered into a QDRO, and that would have gone -- the money would have gone to Liv as an alternate payee.
That would have taken the benefits, consistent with ERISA, away from Liv and given them to Kari.
They could have done that.
Chief Justice Roberts: Well, why -- why do they have to worry about that?
The simplest thing is for the participant to change the designation, and if there's a divorce, the divorcee is no longer a spouse under the terms of the plan, so he is free to do that.
It seems odd to me that they have this elaborate QDRO provision when it shouldn't be necessary.
Mr. Levy: It's not necessary.
It's simply another alternative, but I agree with you, Mr. Chief Justice, that the most direct and straightforward--
Chief Justice Roberts: But another alternative is that all you can -- you can cross out this name and put in another, or you can go to court, get this, qualify it as a QDRO, file it with the plan.
I mean, why would anybody do that?
Mr. Levy: --They wouldn't have to.
Now, let me turn to this issue about what is an assignment or alienation when we disagree with our friends from the Solicitor General's Office.
We think Liv's purported waiver here was an assignment or alienation within the IRS definition.
The IRS regulation is reprinted at page 15 of the body of the red brief, and it provides that assignment or alienation is defined to include any direct or indirect arrangement whereby a party acquires an interest from the beneficiary.
And I've left out the not -- the not-critical language for present purposes.
So it talks about an indirect arrangement whereby a party acquires an interest from the beneficiary.
Now, the government argues that that definition requires that the beneficiary, first, must direct the transfer and, second, it must direct it to a third party.
The government's argument rests not on the language of the regulation that I just read but on a legal argument that this is what terms meant at common law.
But that position simply can't be squared with the language of the regulation.
As I just said, the regulation includes an indirect arrangement within the definition of "assignment or alienation".
Justice Souter: But isn't -- isn't the problem that it must be an indirect arrangement, and what you are arguing for here is an indirect effect.
And it has that indirect effect on your reasoning because of the -- of the waiver and because of probate law.
And it seems to me, as I read the -- the IRS reg, the "arrangement" that it's referring to is an arrangement which in and of itself would -- would effect the transfer.
And that is not the case here.
Mr. Levy: Well, we think it is.
The arrangement here effected transfer to the estate under the plan default rule.
The estate was next in line.
So if this is a relinquishment -- I don't want to use the word "waiver".
But if this is a relinquishment of her interest, then it went to the estate.
That's what the plan provides, but it's not just the phrase "indirect arrangement" that we rely on, Justice Souter.
It's also the phrase "a party acquirer".
It doesn't say a party acquirer at or by the direction of the beneficiary.
Justice Scalia: Well, that's -- that's the point that troubles me.
It's -- it's the "acquirer's" language.
Does -- does the person who -- who receives the -- the refused benefit acquire it from the other person?
He certainly doesn't do so for Federal tax purposes.
Mr. Levy: Well, that's back to the disclaimer, Justice Scalia.
Justice Souter: The only person who acquires it -- the only entity that acquires it is the estate.
Mr. Levy: Yes, that's right under the default rule.
And if the default rule had a -- if the plan had a different default rule, under the default rule maybe it goes to the children.
Justice Scalia: Does he acquire it from a participant or beneficiary?
Mr. Levy: He acquires it from the beneficiary list.
Justice Scalia: I thought the -- the notion is it's as though the -- it's as though the devise to the person refusing it had never occurred.
I mean, there is -- there is no gift tax payable or anything else.
Mr. Levy: Well, there is no gift tax payable if it's a qualified disclaimer, and it won't be in a divorce case because there will be consideration and that prevents a qualified disclaimer.
So that's a different situation, but the word "acquired" doesn't mean--
Justice Ginsburg: You made the contention now -- and I think you have it in your brief -- that if you get something in return for a disclaimer, then the disclaimer is not effective.
That it's effective only if you receive nothing in return.
And what -- what is the source of that contention that you can't disclaim if you get something in return?
Mr. Levy: --The -- it's -- under the Gift Tax Code Justice Ginsburg, section 2518 defines a qualified disclaimer, which means you don't pay gift tax on it.
It's as if the interest had never been transferred.
And one of the conditions of that qualified disclaimer is that the disclaimant not accept any interest or any of its benefits.
So if there is consideration, if the person is in a better position than they would have been because they received consideration, then it won't be a qualified disclaimer for gift tax purposes.
But there won't ever be a disqualified disclaimer for that reason in a -- in the divorce context.
Justice Breyer: Is the -- is the wife -- I'm thinking of the Chief Justice's question, too.
If your -- the woman is the wife of X, and X has a pension.
Doesn't something vest, say if she's in California?
Doesn't she have some vested right to some of that pension?
Mr. Levy: --In her own pension?
Justice Breyer: Suppose she's married for 40 years to Joe Smith, Joe Smith earns a pension and then he wants a divorce.
Doesn't she have some right to some of that money.
Mr. Levy: Well, I think under section 1055 there's a right to different annuities.
That that was a new provision in the Retirement Equity Act in 1984.
Justice Breyer: Does she get some of the money he saved?
Mr. Levy: Yes, she's entitled to it.
Justice Breyer: So it's not exactly that you could have just changed the beneficiary.
If you just changed the beneficiary, you'd have to give her something else.
Mr. Levy: After the divorce she is not entitled.
It's only a spouse who is entitled to the benefits.
Justice Breyer: But in the divorce proceeding she's going to get some of the money, which is now Justice Ginsburg's point, to which she is entitled.
So obviously she will get something, but she's entitled to it.
Mr. Levy: Right, I think that's right.
Chief Justice Roberts: Not, not obviously.
I mean it depends what the divorce is.
She got the Mercedes, right?
I mean, she can get -- it depends on the divorce arrangement, not anything under ERISA, once she is a nonspouse.
Mr. Levy: Once she is a nonspouse she is no longer entitled to those benefits under ERISA section 1055.
Chief Justice Roberts: Thank you, counsel.
Mr. Furlow, you have three minutes remaining.
REBUTTAL ARGUMENT BY DAVID A. FURLOW ON BEHALF OF THE PETITIONERS
Mr. Furlow: Thank you, Your Honor.
Chief Justice Roberts, you were asking about the evidence earlier with respect to the possession in DuPont office own files of the divorce decree and of the notice that was given saying: Please don't pay Liv; she's already waived all of her benefits.
You will find that on page 76 of the joint appendix in the sworn amended affidavit of Mary Dineen, the plan's administrator, specifically at paragraph 20, page 76, where she says in bold: 26, 2001, letter from Kari Kennedy Duckworth --
"Exhibit No. 1 was maintained as a record of DuPont with regard to the SIP account of William Patrick Kennedy. "
That's joint appendix 76, paragraph 20.
It was within the regular course of business of DuPont to maintain a copy of this letter with other DuPont letters relating to Mr. Kennedy's SIP account at the time the letter was received from its sender.
The letter is then attached as the next exhibit that follows on.
That would be about pages 78 to 79.
And there it says the divorce decree was attached.
Make no mistake: DuPont had that divorce decree and could see the knowing, voluntary waiver and had it well in advance of making its decision to pay money to a woman who went off to Norway and paid her when she was over there, where there was no prospect of grabbing it back and turning it over to the executor.
Chief Justice Roberts: They look at it and say, is this a QDRO?
And if no, then they go back to the other provision, I guess on page 21a in the red brief, and say: If it's not a QDRO, ignore it.
Mr. Furlow: Well, Your Honor, it's more interesting than that, actually, in that if you look to page 68 of the joint appendix you'll see Mary Dineen, the administrator, was saying, quote:
"Had Liv Kennedy disclaimed her designation of the beneficiary of Mr. Kennedy's SIP, that declination or disclaimer or a copy would have been included in the beneficiary designation file. "
So they're taking disclaimers or waivers.
They're taking declinations, which is a fancy Latin way of saying waiver.
They've got them in their files.
They're acting on it.
But here they decided to pay the money to the person who has voluntarily waived, knowing the issue, not asking their in-house counsel at no cost to make an examination here.
So that they can later take this plan documents rule and take it all the way to this court.
Justice Scalia: Was this waiver only part of the divorce decree?
Do you agree with your friend on that point?
Mr. Furlow: --Well, this waiver was the part in which Liv Kennedy waived all right so that he retained all of his--
Justice Scalia: That's not separate and apart from the divorce decree.
Mr. Furlow: --It was not separate and apart.
In fact, when they were transferring benefits they knew what to do and they used the waiver to transfer part of the benefits.
It is interesting, Your Honors, that they talked about the plan documents rule, but their own documentation says, their own plan says, that the only plan documents -- and I quoted it here on page 25 of our reply brief --
"The official plan documents are the E.I. DuPont de Nemours & Company savings and investment plan and the trust agreement. "
not beneficiary designations.
So they give no notice.
Chief Justice Roberts: Do you have anything more to say on the plan document, the plan document issue than what you've said here.
Mr. Furlow: Oh, I could come up with lots of things.
That's a bad idea.
Chief Justice Roberts: Okay.
Thank you, counsel.
The case is submitted.