HOPKINS v. AT T GLOBAL INFO. SOLUTIONS

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Docket Number

No. 96-1363.

Attorney(S)

ARGUED: R. Vance Golden, III, Parkersburg, West Virginia, for Appellant. Julie D. Gallagher, Corporate Section, Law Department ECD-2, AT T Global Information Solutions Company, Dayton, Ohio, for Appellee. ON BRIEF: Janice Powell Epperly, Huddleston, Bolen, Beatty, Porter Copen, Huntington, West Virginia, for Appellee.

Judges

Karen J. Williams

Acts

Labor — Regulatory Provisions — Employee Retirement Income Security Program — Protection Of Employee Benefit Rights — Participation And Vesting — Requirement Of Joint And Survivor Annuity And Preretirement Survivor Annuity
Labor — Regulatory Provisions — Employee Retirement Income Security Program — Protection Of Employee Benefit Rights — Participation And Vesting — Form And Payment Of Benefits
Labor — General Provisions — Employee Retirement Income Security Program — Protection Of Employee Benefit Rights — Definitions
Labor — Regulatory Provisions — Employee Retirement Income Security Program — Protection Of Employee Benefit Rights — Administration And Enforcement — Civil Enforcement

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Smart Summary

Factual and Procedural Background

Vera Mae Hopkins filed suit against ATT Global Information Solutions Company (formerly NCR Corporation) under the Employee Retirement Income Security Act (ERISA), alleging that ATT failed to comply with a Qualified Domestic Relations Order (QDRO) that granted her rights to her ex-husband Paul Hopkins's pension benefits. The dispute centered on whether Vera Hopkins or Mr. Hopkins's current spouse, Sherry Hopkins, was entitled to the surviving spouse benefits payable upon Mr. Hopkins's death.

Paul and Vera Hopkins married in 1960 and divorced in 1986. The divorce order treated Mr. Hopkins's pension as marital property but awarded Vera only alimony, not a portion of the pension. Vera collected alimony by wage attachment until Mr. Hopkins retired in 1993, at which point the attachments ceased. Upon retirement, Mr. Hopkins became eligible for pension benefits under ATT's plan, which provided a qualified joint and survivor annuity: a fixed income for Mr. Hopkins's life and 50% of that income to his surviving spouse.

In 1994, Vera obtained a judgment for past-due alimony and sought a QDRO to collect from the pension. The Wood County Circuit Court issued two orders: one awarding Vera payments from the pension benefits (the Pension Order), and another awarding her the surviving spouse benefits (the Surviving Spouse Order). ATT conceded the Pension Order was a QDRO but argued the Surviving Spouse Order was not, because the surviving spouse benefits had vested in Sherry Hopkins at retirement.

Vera filed suit in state court seeking declaratory judgment that the Surviving Spouse Order was a QDRO and entitled her to the surviving spouse benefits. ATT removed the case to federal district court. Both parties filed cross-motions for summary judgment. The district court granted ATT's motion, holding that the surviving spouse benefits vested in Sherry Hopkins upon Mr. Hopkins's retirement and that Vera's Surviving Spouse Order was not a QDRO. Vera appealed.

Legal Issues Presented

Whether the Surviving Spouse Order obtained by Vera Hopkins qualifies as a Qualified Domestic Relations Order under ERISA.
Whether the surviving spouse benefits under the pension plan vest in the participant's current spouse at the time of the participant's retirement.
Whether Vera Hopkins is entitled to attorneys' fees and costs under 29 U.S.C.A. § 1132(g) despite her loss on the merits.

Arguments of the Parties

Appellant's Arguments (Vera Hopkins)

Argued that 29 U.S.C.A. § 1056(d)(3)(F) permits a former spouse to be treated as a surviving spouse eligible for surviving spouse benefits.
Contended that the Surviving Spouse Order should be recognized as a QDRO, entitling her to the surviving spouse benefits under the pension plan.

Appellee's Arguments (ATT Global Information Solutions Company)

Conceded that the Pension Order was a QDRO but argued the Surviving Spouse Order was not qualified because the surviving spouse benefits had vested in Sherry Hopkins upon Mr. Hopkins's retirement.
Asserted that the Surviving Spouse Order does not relate to benefits payable with respect to a participant, as required for a QDRO under 29 U.S.C.A. § 1056(d)(3)(B)(i)(I).
Argued, but the court did not address, that the Surviving Spouse Order failed to satisfy the statutory requirements of a "domestic relations order."

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Higgins v. E.I. Dupont de Nemours Co., 863 F.2d 1162 (4th Cir. 1988)	Standard of review for summary judgment (de novo review).	Used to affirm that summary judgment was appropriate as no material facts were in dispute and the issue was legal interpretation.
Celotex Corp. v. Catrett, 477 U.S. 317 (1986)	Summary judgment standard under Fed.R.Civ.P. 56.	Confirmed that summary judgment is proper when no genuine issue of material fact exists.
Dickerson v. Dickerson, 803 F. Supp. 127 (E.D. Tenn. 1992)	Definition of participant and beneficiary under ERISA.	Supported the distinction that a surviving spouse is a beneficiary, not a participant, relevant to QDRO qualification.
Anderson v. Marshall, 856 F. Supp. 604 (D. Kan. 1994)	Vesting and irrevocability of surviving spouse benefits upon retirement.	Supported the conclusion that surviving spouse benefits become irrevocable at retirement.
Fox Valley Vicinity Constr. Workers Pension Fund v. Brown, 897 F.2d 275 (7th Cir. 1990), cert. denied, 498 U.S. 820 (1990)	Waiver of surviving spouse benefits in divorce decrees entered prior to retirement.	Contrasted with the case at hand, emphasizing that waivers or changes must occur before retirement.
Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017 (4th Cir. 1993)	Guidelines for awarding attorneys' fees under ERISA.	Used to deny attorneys' fees since appellant conceded fees are only recoverable upon prevailing.

Court's Reasoning and Analysis

The court began by reviewing the statutory framework under ERISA and the Retirement Equity Act (REA). It acknowledged that ERISA permits a former spouse to be treated as a surviving spouse eligible for benefits, but only if the order is a qualified domestic relations order (QDRO). The court emphasized that pension benefits, including surviving spouse benefits, may not be assigned or alienated except pursuant to a QDRO.

The critical issue was whether the Surviving Spouse Order qualified as a QDRO. ATT argued that the surviving spouse benefits vested in the participant's current spouse, Sherry Hopkins, at the time of Mr. Hopkins's retirement, making Vera Hopkins's order ineffective as to those benefits. The court agreed, concluding that the surviving spouse benefits vest in the spouse married to the participant on the date of retirement.

To support this conclusion, the court examined the legislative history and regulatory framework, noting that initially surviving spouse benefits required marriage at both retirement and death, but REA amended this to require marriage only at retirement. The court found that this change signaled that the surviving spouse benefits vest at retirement. Further, the court pointed out that the participant can only change the form of benefits during the ninety-day period before retirement, with the current spouse's consent, and cannot alter the surviving spouse benefits after retirement, even with consent.

The court reasoned that this framework balances the interests of former and current spouses: former spouses must secure QDROs before retirement to obtain surviving spouse benefits, while current spouses' rights vest at retirement. Because Sherry Hopkins's interest vested at retirement, and she is a beneficiary, not a participant, Vera Hopkins's Surviving Spouse Order did not relate to benefits payable with respect to a participant and thus was not a QDRO.

Finally, the court addressed Vera Hopkins's request for attorneys' fees and costs under ERISA § 1132(g), noting her counsel's concession that fees are not recoverable absent prevailing. Since Vera did not prevail, the request was denied.

Holding and Implications

The court AFFIRMED the district court's grant of summary judgment in favor of ATT Global Information Solutions Company.

The holding establishes that surviving spouse pension benefits under ERISA vest in the participant's current spouse at the time of retirement, rendering subsequent domestic relations orders attempting to assign those benefits to former spouses non-qualified. The direct effect is that Vera Hopkins is not entitled to the surviving spouse benefits under the pension plan, and ATT is not required to honor the Surviving Spouse Order as a QDRO. The court did not set new precedent beyond this case but clarified the vesting point of surviving spouse benefits under ERISA and REA.

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VERA MAE HOPKINS, PLAINTIFF-APPELLANT, v. ATT GLOBAL INFORMATION SOLUTIONS COMPANY, FORMERLY KNOWN AS NCR CORPORATION, DEFENDANT-APPELLEE.

WILLIAMS, Circuit Judge:

Vera Hopkins brought suit against her ex-husband's former employer, ATT Global Information Solutions (ATT), under the Employee Retirement Income Security Act (ERISA), see 29 U.S.C.A. Section(s) 1055 and 1056 (West Supp. 1996), complaining that ATT had not complied with a Qualified Domestic Relations Order (QDRO) giving her rights in her ex-husband's pension. Specifically, Vera Hopkins contends that she, and not her ex-husband's current spouse, is entitled to the pension benefits that will be paid to Mr. Hopkins's spouse at his death. ATT, arguing that Vera Hopkins's court order is not a QDRO, moved for summary judgment. Finding that the pension benefits payable to the surviving spouse vested in Mr. Hopkins's current spouse upon his retirement, the district court determined that Vera Hopkins's court order was not a QDRO. Accordingly, the district court granted ATT summary judgment. Finding no error, we affirm.

Paul Hopkins and Vera Hopkins, who married in 1960, were divorced in 1986. In the divorce order, Mr. Hopkins's pension was deemed a marital asset; nevertheless, Vera Hopkins was not awarded a portion of the pension in the equitable distribution of the marital assets. Instead, Mr. Hopkins was ordered to pay Vera Hopkins alimony. After the divorce, Mr. Hopkins married Sherry Hopkins, to whom he remains married.

To collect the alimony, Vera Hopkins obtained a judgment allowing her to attach Mr. Hopkins's wages. This method of collecting alimony, both current and arrearage, continued until Mr. Hopkins's retirement in 1993, when the wages and attachments ceased. Upon Mr. Hopkins's retirement, he became eligible for pension benefits under a plan operated by ATT. Pursuant to ERISA and the Retirement Equity Act, pension benefits are generally paid in the form of a qualified joint and survivor annuity. See 29 U.S.C.A. Section(s) 1055. Under the joint and survivor annuity, Mr. Hopkins receives a fixed income for life (Pension Benefits), and if his spouse survives him, she will receive 50% of that fixed income for the remainder of her life (Surviving Spouse Benefits).

If the participant dies prior to retirement, pension benefits are paid as a preretirement survivor annuity. See 29 U.S.C.A. Section(s) 1055(e).

In August of 1994, Vera Hopkins obtained a judgment against Mr. Hopkins for $15,270.66 in past-due alimony. No longer able to attach Mr. Hopkins's wages, Vera Hopkins sought a QDRO, which would enable her to collect this money, and current alimony, from her ex-husband's pension. In response to a Family Law Master's Recommended Order, the Circuit Court of Wood County, West Virginia, ordered that Vera Hopkins be made the alternate payee of Mr. Hopkins's Pension Benefits, as provided in 29 U.S.C.A. Section(s) 1055 and 1056. In addition, the Circuit Court of Wood County ordered that Vera Hopkins, and not Sherry Hopkins, be made the payee of the Surviving Spouse Benefits, as provided in 29 U.S.C.A. Section(s) 1055 and 1056.

The Wood County Circuit Court's order was later separated into two orders, the first ordering monthly payments to Vera Hopkins from the Pension Benefits (the Pension Order), and the second ordering payment to Vera Hopkins from the Surviving Spouse Benefits (the Surviving Spouse Order). ATT concedes that the Pension Order is a QDRO, but argues that because the Surviving Spouse Benefits had already vested in Sherry Hopkins, the Surviving Spouse Order is not a QDRO.

Vera Hopkins filed a civil action against ATT in the Circuit Court of Wood County, seeking, among other things, a declaratory judgment that the Surviving Spouse Order was a QDRO entitling her to the Surviving Spouse Benefits. She also sought to recover attorneys' fees and costs. ATT removed the case to the United States District Court for the Southern District of West Virginia, where the parties filed cross-motions for summary judgment. The district court granted ATT's motion, denied Vera Hopkins's cross-motion, and held that the Surviving Spouse Order was not a QDRO because the Surviving Spouse Benefits had already vested in Sherry Hopkins upon Mr. Hopkins's retirement. This appeal followed.

II.

We review de novo the district court's decision to grant ATT summary judgment. See Higgins v. E.I. Dupont de Nemours Co., 863 F.2d 1162, 1167 (4th Cir. 1988). Summary judgment is proper only if no material facts are in dispute. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986) (citing Fed.R.Civ.P. 56). Because both sides concede that no material facts are in dispute, the only inquiry is whether the district court correctly interpreted the relevant ERISA provisions.

Vera Hopkins challenges the district court's interpretation of 29 U.S.C.A. Section(s) 1055 and 1056. She argues that 29 U.S.C.A. Section(s) 1056(d)(3)(F) expressly provides that a participant's former spouse can be treated as a surviving spouse. In so arguing, Vera Hopkins is absolutely correct. Under ERISA a former spouse can be treated as the surviving spouse, eligible to receive surviving spouse benefits. However, as 29 U.S.C.A. Section(s) 1056(d)(3)(F) explicitly notes, replacing the current spouse with a former spouse can be accomplished only pursuant to a "qualified domestic relations order." As a result, we must first determine whether the Surviving Spouse Order that Vera Hopkins obtained from the Circuit Court of Wood County, which treats her as the surviving spouse, is a QDRO.

Benefits provided under a pension "plan may not be assigned or alienated," 29 U.S.C.A. Section(s) 1056(d)(1), except pursuant to "a qualified domestic relations order," 29 U.S.C.A. Section(s) 1056(d)(3)(A). ERISA defines a "domestic relations order" as any judgment, decree, or order which, "(I) relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependant of a participant, and (II) is made pursuant to a State domestic relations law . . . ." 29 U.S.C.A. Section(s) 1056(d)(3)(B)(ii). A domestic relations order is "qualified" if it, among other things, gives an alternate payee the right to "receive all or a portion of the benefits payable with respect to a participant under a plan. . . ." 29 U.S.C.A. Section(s) 1056(d)(3)(B)(i)(I).

ATT argues that even if Vera Hopkins's Surviving Spouse Order is a "domestic relations order" for ERISA purposes, it is not "qualified." ATT contends that on the day Mr. Hopkins retired, the rights to the Surviving Spouse Benefits vested in Sherry Hopkins, his current spouse. As a result, ATT argues, the Surviving Spouse Benefits are no longer payable to a plan participant. Noting that a QDRO must relate to a benefit "payable with respect to a participant," 29 U.S.C.A. Section(s) 1056(d)(3)(B)(i)(I), ATT argues that Vera Hopkins's Surviving Spouse Order is not a QDRO.

ATT also argues that Vera Hopkins's Surviving Spouse Order does not satisfy the statutory requirements of a "domestic relations order." However, because we find that her Surviving Spouse Order is not "qualified," we need not address this issue.

Under ERISA, Sherry Hopkins is a "beneficiary," not a "participant." See, e.g., Dickerson v. Dickerson, 803 F. Supp. 127, 132 (E.D. Tenn. 1992) (holding that a participant's spouse may be the alternate payee or a beneficiary, but not the participant). If the Surviving Spouse Benefits vested in Sherry Hopkins upon Mr. Hopkins's retirement, Vera Hopkins's Surviving Spouse Order, entered after Mr. Hopkins retired, would relate to a benefit payable to a beneficiary. To be "qualified," however, a "domestic relations order" must relate to a benefit "payable with respect to a participant." 29 U.S.C.A. Section(s) 1056(d) (3)(B)(i)(I). Consequently, determining whether Vera Hopkins's Surviving Spouse Order is "qualified" turns on whether Sherry Hopkins's interest in the Surviving Spouse Benefits vested when Mr. Hopkins retired.

ERISA defines a "beneficiary" as "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." 29 U.S.C.A. Section(s) 1002(8) (West Supp. 1996).

ERISA defines a "participant" as "any employee or former employee of an employer . . . who is or may become eligible to receive a benefit . . . from an employee benefit plan . . . or whose beneficiaries may be eligible to receive any such benefit." 29 U.S.C.A. Section(s) 1002(7) (West Supp. 1996).

Determining whether a participant's current spouse has a vested interest in the Surviving Spouse Benefits is a question of first impression in the federal courts. Regrettably, ERISA does not explicitly state when a current spouse's interest in the Surviving Spouse Benefits vests. However, after carefully reviewing the overall framework of ERISA, especially the provisions governing joint and survivor annuities, we conclude that the Surviving Spouse Benefits vest in the participant's current spouse on the date the participant retires.

When ERISA was initially enacted in 1974, Surviving Spouse Benefits were payable to the surviving spouse only if the surviving spouse was married to the participant on both the date of the participant's retirement and the date of the participant's death. See 26 C.F.R. §(s) 1.401(a)-11(d)(3)(i), (ii), (iii) (1977). In 1984, however, the Retirement Equity Act (REA) amended ERISA's marriage requirement. Now, Surviving Spouse Benefits may be paid to a spouse who was married to the participant on the date of the participant's retirement, regardless of whether that spouse is married to the participant on the date of the participant's death. See 29 U.S.C.A. Section(s) 1055(a) and 1055(f) (noting that the joint and survivor annuity, with its Surviving Spouse Benefits, is the automatic form of payment for a participant who is married on the date of retirement). We find that the change in ERISA's marriage requirement is evidence that the Surviving Spouse Benefits vest in the spouse married to the participant on the date of retirement.

For a spouse to receive Surviving Spouse Benefits, REA also requires that the spouse either be married to the participant for at least the one-year period prior to the participant's retirement, see 29 U.S.C.A. Section(s) 1055(f)(1), or be married to the participant prior to the participant's retirement and for at least a one-year period prior to the participant's death, see 29 U.S.C.A. Section(s) 1055(f)(2).

In addition, REA makes it more difficult for a participant to replace a joint and survivor annuity — along with its Surviving Spouse Benefits — with another form of benefit. Under REA, the participant can change a joint and survivor annuity only during the ninety-day period prior to retirement, and only with the written consent of the participant's current spouse. See 29 U.S.C.A. Section(s) 1055(c)(2)(A), (7)(A). Unless the form of benefit is properly changed prior to retirement, the participant is locked into the joint and survivor annuity upon retirement. After retirement, the participant cannot change the form of benefit, even with the current spouse's consent. See, e.g., Anderson v. Marshall, 856 F. Supp. 604, 607 (D. Kan. 1994) (holding that upon retirement, the Surviving Spouse Benefit "became irrevocable and could not be changed [even by a] waiver of the designated beneficiary"); cf. Fox Valley Vicinity Constr. Workers Pension Fund v. Brown, 897 F.2d 275 (7th Cir.) (en banc), cert. denied, 498 U.S. 820 (1990) (allowing the waiver of the Surviving Spouse Benefit as required in a divorce decree entered prior to the participant's retirement).

The fact that a participant can replace a joint and survivor annuity — along with its Surviving Spouse Benefits — only during the ninety-day period prior to retirement, and only with the consent of the current spouse, is further evidence that the participant's spouse at the time of retirement has a vested interest in the Surviving Spouse Benefits. Even more telling is the fact that, after retirement, a participant cannot change the distribution of plan benefits, even with the current spouse's approval.

Finding that the Surviving Spouse Benefits vest in the participant's current spouse on the day the participant retires not only is consistent with the overall framework of ERISA, but also balances the competing interests of the former and current spouses. A former spouse's interest in the Surviving Spouse Benefits can be protected simply by obtaining a QDRO before the participant retires. In addition, a former spouse can obtain an interest in the participant's Pension Benefits by obtaining a QDRO at any time, as Vera Hopkins did here.

There remains the possibility of a subsequent spouse. However, because Surviving Spouse Benefits may not be paid to a spouse who marries a participant after the participant's retirement, see 29 U.S.C.A. Section(s) 1055(f), there is no need to consider the interests of a subsequent spouse in determining whether the current spouse has a vested interest in the Surviving Spouse Benefits.

Although ERISA and the terms of the plan, and not matters of administrative convenience, determine a person's pension rights, it is worth noting that our holding does not burden the efficient management of the plan. Because the disbursement of plan benefits is based on actuarial computations, the plan administrator must know the life expectancy of the person receiving the Surviving Spouse Benefits to determine the participant's monthly Pension Benefits. As a result, the plan administrator needs to know, on the day the participant retires, to whom the Surviving Spouse Benefit is payable.

Consequently, we find that the Surviving Spouse Benefits vested in Sherry Hopkins at the time of Mr. Hopkins's retirement. Because Sherry Hopkins is a "beneficiary" and not a "participant," Vera Hopkins's Surviving Spouse Order does not relate to a benefit "payable with respect to a participant." As a result, her Surviving Spouse Order is not a QDRO.

III.

As a part of her appeal, Vera Hopkins also asked, pursuant to 29 U.S.C.A. Section(s) 1132(g) (West 1985), that her attorneys' fees and costs be paid by ATT. During oral arguments, however, counsel for Vera Hopkins conceded that she would not be entitled to attorneys' fees and costs unless she prevailed. In light of our disposition and Vera Hopkins's concession, her request for attorneys' fees and costs is denied. See Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1028-29 (4th Cir. 1993) (providing general guidelines for determining whether attorneys' fees should be granted under ERISA).

IV.

For the reasons stated, the judgment of the district court is affirmed.

AFFIRMED